EXECUTION
COPY
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") dated October 10, 1996, is by
and between Hathaway Corporation, a Colorado corporation ("Hathaway"), and ▇▇▇▇
Engineering Services Corporation, a Maryland corporation ("▇▇▇▇").
Recitals
▇▇▇▇ owns all of the issued and outstanding capital stock of ▇▇▇▇
Integrated Systems, Inc., (the "TISI Shares") a Maryland corporation ("TISI").
TISI is the sole general partner of ▇▇▇▇ Integrated Systems, L.P., a Delaware
limited partnership ("TIS"). Certain limited partners owned all of the limited
partnership interests of TIS ("TIS Limited Partnership Interests"). (The TIS
general partnership interest owned by TISI and the TIS Limited Partnership
Interests may be referred to together as the "TIS Partnership Interests.") On
or before Closing ▇▇▇▇ Engineering Services, Inc. ("TESI") an Affiliate of ▇▇▇▇
shall acquire all the outstanding TIS Limited Partnership Interests from the
holders thereof (the "Former Limited Partners"). ▇▇▇▇ desires to sell the TISI
Shares and TESI desires to sell all the TIS Limited Partnership Interests to
Hathaway, and Hathaway desires to purchase all such shares and interests. TIS
is indebted to ▇▇▇▇ and ▇▇▇▇▇▇▇▇ intends that TIS shall pay that indebtedness
after Closing of the purchase of the TISI shares and TIS Limited Partnership
Interest pursuant to this Agreement.
Certain key employees of TIS have executed employment agreements with
TISI, or its successor, as required by Hathaway.
Agreement
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
Terms used in this Agreement have the meanings specified or referred
to in Schedule 1 attached hereto.
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2. SALE AND TRANSFER OF TISI SHARES AND TIS LIMITED PARTNERSHIP
INTERESTS; CLOSING.
2.1 Shares And Partnership Interests. Subject to the terms and conditions
of this Agreement, at the Closing ▇▇▇▇ will sell and transfer all of its
interests in the TISI Shares and TESI will sell and transfer all of its
interests in the TIS Limited Partnership Interests to Hathaway or its Affiliate
designees, and Hathaway will purchase such shares and limited partnership
interests from ▇▇▇▇ and TESI. (TIS and TISI may be referred to herein together
as the "Acquired Companies.")
2.2 Purchase Price.
(a) The purchase price (the "Purchase Price") for the TISI Shares and
TIS Limited Partnership Interests will be $1.00 payable in cash at Closing,
together with
(b) An assignment without guarantee of collection to ▇▇▇▇ of the
following accounts receivable of the Acquired Companies.
Accounts Receivable Amount
------------------- ------
City of Austin $162,844
CITGO 24,000
Entech 21,157
SAIC 87,368
St. Louis 245,520
▇▇▇ ▇. Arundel 60,611
SAIC 13,000
--------
Total $614,500
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The first $400,000 collected on the above receivables immediately shall be
paid over to Hathaway as a loan and will be repaid to ▇▇▇▇ on June 30, 1997,
together with interest thereon from the date collected at the rate of ten
percent (10%) per year. All remaining amounts collected on the above
receivables will be retained by ▇▇▇▇ or paid to ▇▇▇▇ by TIS immediately
after collection. All other accounts receivable of the Acquired Companies
shall be for the account of Hathaway, and any payments received by ▇▇▇▇ with
respect to such accounts receivable immediately shall be forwarded to the
Acquired Companies.
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(c) TIS has a contract dated December 4, 1995 to provide
services for the South Nevada Water Association relating to the design
of automated water treatment facilities (the "Nevada Contract")
utilizing the TIS 4000 Technology. The Acquired Companies will be
responsible for completing the Nevada Contract after the Effective
Date. The Nevada Contract has been accounted for on the percentage of
completion basis. As of the date hereof, the portion of the Nevada
Contract released to date provides for a total contract payment to
TISLP of $3,510,647 (the "Total Contract Payment"). As of the
Effective Date, ▇▇▇▇ has projected costs to complete this portion of
the Nevada Contract at $551,021. If the Total Cost to Complete the
Nevada Contract exceeds the ▇▇▇▇ Estimate of the Cost to complete the
Nevada Contract, then ▇▇▇▇ shall pay the difference up to $100,000
(the Adjustment Amount) to Hathaway as a reduction in the Purchase
Price. The Total Cost to Complete the Nevada Contract shall be an
amount equal to the actual direct costs incurred by TIS after Closing
to complete the Nevada Contract (including project related overhead
allocated and applied at a rate not to exceed the actual rate incurred
by TIS during the period beginning June 1, 1996 and ending at Closing,
but excluding G&A) less any such costs incurred as a result of the
negligence, misconduct, failure to perform, of gross mismanagement by
TIS after Closing. Hathaway shall perform the foregoing analysis in
accordance with generally accepted accounting principals consistently
applied within 60 days following completion of the Nevada Contract and
promptly provide ▇▇▇▇ with an accounting of the Adjustment Amount
together with complete detailed records and calculations in support
thereof. If, within 15 days following the delivery of the Nevada
Contract Accounting, ▇▇▇▇ has not given Hathaway notice of its
objection to the Nevada Contract Accounting, then the Nevada Contract
Accounting shall be the basis for payment of the Adjustment Amount. If
▇▇▇▇ gives notice of objection and the differences cannot be settled
by agreement between ▇▇▇▇ and Hathaway, then the issues in dispute
will be submitted to a mutually acceptable public accounting firm (the
"Accountants") for resolution. If issues in dispute are submitted to
the Accountants for resolution: (i) the Acquired Companies and ▇▇▇▇
shall furnish to the Accountants such work papers and other documents
and information relating to the disputed issues as the Accountants may
request and are available to the Acquired Companies and ▇▇▇▇, and the
Acquired Companies and ▇▇▇▇ will be afforded the opportunity to
present to the Accountants any material relating to the determination
and to discuss the determination with the Accountants; (ii) the
determination of the Adjustment Amount by the Accountants, as set
forth in a notice delivered to both ▇▇▇▇ and Hathaway by the
Accountants, will be binding and conclusive on the parties; and (iii)
the expense of such determination will be born by the unsuccessful
party, or as the Accountants shall otherwise allocate between the
parties based on their determination of relative responsibility for
costs of any issues raised. The Adjustment Amount shall be payable to
Hathaway within ten days
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after determination. If not so paid, the full amount of the Adjustment
Amount may be offset against the indebtedness of Hathaway to ▇▇▇▇ with
respect to accounts receivable as provided in Section 2.2(b) of this
Agreement.
Notwithstanding any other provision of this Agreement, ▇▇▇▇ shall not
be liable for any costs the Acquired Companies may incur with respect to
obligations of TIS to the KUB-TIS Joint Venture described in Section 3.2(c)
of this Agreement by reason of a requirement to pay additional capital
pursuant to Section 5.3.1 of the Joint Venture Agreement and default on
performance under Article XII of the License Agreement. Hathaway accepts the
ownership position of TIS as stated in the Joint Venture Agreement to be
11.42%. ▇▇▇▇ shall have no liability for any obligation to indemnify
Hathaway under this Section 7.2 up to the first $20,000 in the aggregate of
such liabilities, but shall be liable for any obligations hereunder in
excess of $20,000 in the aggregate. Any amount due Hathaway hereunder shall
be paid within 10 days after notice of payment due and if not so paid may be
offset against the indebtedness of Hathaway to ▇▇▇▇ with respect to accounts
receivable as described in Section 2.2(b) of that Agreement.
2.3 Closing. The purchase and sale (the "Closing") provided for in
this Agreement is taking place in Baltimore, Maryland at 10:00 a.m. (local time)
on October 10, 1996 ("Closing Date"). The Transaction shall be effective as of
the close of business on September 30, 1996 (the "Effective Date"). All
operations of TISI prior to the Effective Date shall be the responsibility of
▇▇▇▇ and all operations after the Effective Date shall be the responsibility of
Hathaway.
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2.4 Closing Obligations. At the Closing:
(a) ▇▇▇▇ will deliver to Hathaway the following ("▇▇▇▇'▇ Closing
Documents"):
(1) certificates representing the TISI Shares, duly endorsed
(or accompanied by duly executed stock powers) for transfer to
Hathaway or its designee, in form satisfactory to Hathaway;
(2) evidence of the acquisition by TESI of all the TIS
Limited Partnership Interests;
(3) evidence of transfer of the TIS Partnership Interests to
Hathaway or its designee, in form and substance satisfactory to
Hathaway;
(4) releases in form acceptable to Hathaway executed by all
Former Limited Partners (collectively, "Former Limited Partners'
Releases");
(5) evidence of the consents described in Section 3.3(c);
and
(6) acknowledgment of KUB and that there have been no
transactions in its equity shares of the KUB-TIS Joint Venture
as required by Section 3.2(c)(4).
(7) estimate of remaining commitment on work in process as
required by Section 5.11.
(8) the sum of $_______________________ to reimburse TIS for
the employer portion of FICA and federal and state unemployment
taxes with respect to payments to employees of TIS as described
in Section 2.4(c).
(9) evidence of the reduction of indebtedness of TIS to ▇▇▇▇
to $421,000.
(10) resignations of officers and directors of TISI.
(b) Hathaway will deliver to ▇▇▇▇ the following:
(1) the amount of $1.00 payable by check; and
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(2) security interest in accounts receivable described in
Section 2.2(b).
(3) promissory note for $400,000 to evidence the obligation
described in Section 2.2(b).
(c) After acquisition of the TISI Shares and the TIS Limited
Partnership Interests, Hathaway will pay to TIS as a contribution to
capital the amount of $718,000, and will cause TIS to pay to ▇▇▇▇ the
amount of $421,000 in satisfaction of all indebtedness of TIS to ▇▇▇▇. In
addition TIS shall pay the amounts shown on Schedule 2 due to the persons
named thereon in satisfaction of certain obligations reflected in
employment and consulting agreements.
3. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇.
Except as specifically set forth in the Disclosure Letter ▇▇▇▇ represents
and warrants to Hathaway as follows effective as of the Effective Date unless
otherwise noted:
3.1 Transfer Of Limited Partnership Interests. On or before the Closing
TESI shall acquire all of the TIS Limited Partnership Interests and no consent
or approval of any other Person will be required in connection with such
transfer other than such consents and approvals which shall be duly and validly
obtained in connection therewith. TISI and TIS own all the property and assets
reflected on TISI's and TIS' Balance Sheet (described in Section 3.5) together
with all property and assets acquired by TISI and TIS after May 31, 1996 subject
only to disposition in the Ordinary Course of Business and all such subsequently
acquired property and assets will be reflected on TISI's and TIS' balance sheet
at the Effective Date which will be included in the Financial Statements. All
costs and expenses of the acquisition of the TIS Limited Partnership Interests
including any Tax incurred by reason of the acquisition will be paid by TESI and
will not appear as an expense of TISI or TIS. Part 3.1 of the Disclosure Letter
contains a complete and accurate list of the Former Limited Partners and the
Percentage Interests (as defined in Section 3.4) held by each such Former
Limited Partner and sold to TESI as described in Section 3.4.
3.2 Organization And Good Standing.
(a) Part 3.2 of the Disclosure Letter contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
formation, other jurisdictions in which it is authorized to do business,
and its capitalization. Each Acquired Company is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
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formation, with full power and authority to conduct its business as it is
now being conducted, to own or use the property and assets that it purports
to own or use, and to perform all its obligations under Applicable
Contracts. Each Acquired Company is duly qualified to do business in, and
is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or
the nature of the activities conducted by it on or before the Effective
Date, requires such qualification.
(b) ▇▇▇▇ has delivered to Hathaway copies of the Organizational
Documents of each Acquired Company, as currently in effect.
(c) TIS is a party to a joint venture (the "KUB-TIS Joint Venture")
pursuant to a joint venture agreement dated March 9, 1995 and amended only
once by supplemental agreement between the parties dated June 15, 1995 (the
"Joint Venture Agreement") between TIS and KUB Holdings Bhd., a Malaysian
company ("KUBH"). The KUB-TIS Joint Venture is incorporated in Malaysia as
KUB-TIS Controls Sdn. Bhd. True copies of the Joint Venture Agreement and
the Memorandum and Articles of Association of KUB-TIS Controls Sdn. Bhd.
have been provided by ▇▇▇▇ to ▇▇▇▇▇▇▇▇. The Joint Venture Agreement has
received all required Governmental Authorization, and is a valid and
binding obligation of the parties in accordance with its terms. KUB-TIS
Controls Sdn. Bhd. is duly organized, validly existing with full power and
authority to conduct its business as it is now being conducted, to own or
use the property that it purports to own or use, and to perform all its
obligations. TIS, as a joint venturer, is not liable for the acts or debts
of the KUB-TIS Joint Venture unless it has taken action that would cause it
to be so liable, and TIS has taken no such action. KUB-TIS Controls Sdn.
Bhd. is qualified to do business in each jurisdiction in which the
ownership of its properties or nature of its activities as conducted as of
the Effective Date require such qualification.
(1) TIS is not in violation of any covenants, representation and
warranties or any other provisions of the Joint Venture Agreement. No
dividends have been paid under the Joint Venture Agreement.
(2) TIS has no obligations to pay indemnities under the Joint
Venture Agreement, to provide additional funds under Section 5.3.1 or
contributions under Section 5.3.3, or additional capital or other
payments under any other provisions of the Joint Venture Agreement.
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(3) At the Closing Date TIS will have in its possession complete
copies of all minutes of action taken by the board of directors and
management committee of KUB-TIS Controls Sdn. Bhd.
(4) There have been no transactions in equity shares of KUB-TIS
Controls Sdn. Bhd. held by TIS after original issue. ▇▇▇▇ will
deliver to Hathaway at the Closing the acknowledgment of KUBH that
there have been no transactions in equity shares of the KUB-TIS Joint
Venture held by KUBH after original issue, although transactions in
the future are expected as described in Section 3.2 of the Disclosure
Letter.
3.3 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of ▇▇▇▇, enforceable against ▇▇▇▇ in accordance with its terms
subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights and
remedies of creditors generally. ▇▇▇▇ has the absolute right, power,
authority, and capacity to execute and deliver this Agreement and ▇▇▇▇'▇
Closing Documents, and to perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement by ▇▇▇▇ nor
the consummation or performance of any of the Transactions will, directly
or indirectly (with or without notice or lapse of time):
(1) contravene, conflict with, or result in a violation of (i)
any provision of the Organizational Documents of the Acquired
Companies or (ii) any resolution adopted by the board of directors,
stockholders or partners of any Acquired Company;
(2) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to successfully
challenge any of the Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order to which any
Acquired Company or ▇▇▇▇, or any of the Property and Assets owned or
used by any Acquired Company may be subject;
(3) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held
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by any Acquired Company or that otherwise relates to the business of,
or any of the property and assets owned or used by, any Acquired
Company;
(4) cause any Acquired Company to become subject to, or to become
liable for the payment of, any Tax pursuant to any contract rights;
(5) cause any of the property and assets owned by any Acquired
Company to be reassessed or revalued by any taxing authority or other
Governmental Body;
(6) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract, provided however, ▇▇▇▇ must obtain the prior consent of its
lenders and payments and performance bond insurers for the sale of the
Acquired Companies.
(7) result in the imposition or creation of any Encumbrance upon
or with respect to any of the Property and Assets owned or used by any
Acquired Company.
(c) The consent of ▇▇▇▇'▇ lenders is required in connection with the
consummation and performance of the Transactions and ▇▇▇▇ shall provide
such consents at the Closing as a part of ▇▇▇▇'▇ Closing Documents. Except
as provided in the preceding sentence of this Section 3.3(c), none of ▇▇▇▇
or any Acquired Company is or will be required to obtain any consent from
any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Transactions. ▇▇▇▇ shall
provide timely notice to any Person that ▇▇▇▇ or any Acquired Company is
required to notify in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Transactions.
3.4 Capitalization. The authorized equity securities of TISI consist of
100,000 shares of common stock, par value $1.00 per share, of which 100 shares
are issued and outstanding and constitute the TISI Shares and are owned as shown
in Part 3.4 of the Disclosure Letter. The authorized equity securities of TIS
are divided into 100 percentage interests (the "Percentage Interests")
consisting of the sole general partner interest and the TIS Limited Partnership
Interests which are owned of record and beneficially as shown in Part 3.4 of the
Disclosure Letter free and clear of all Encumbrances. No legend or other
reference to any purported Encumbrance appears
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upon any certificate representing the equity securities of any Acquired Company.
All of the outstanding equity securities of any Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
of any Acquired Company. None of the outstanding equity securities or other
securities of any Acquired Company was issued in violation of the Securities Act
or any other Legal Requirement. Except as stated in Part 3.4 of the Disclosure
Letter each Acquired Company does not own and has no Contract to acquire any
equity securities or other securities of any Person or any direct or indirect
equity or ownership interest in any other business.
3.5 Financial Statements. ▇▇▇▇ has delivered to Hathaway: (i) the
unaudited balance sheet ("Balance Sheet") of the Acquired Companies as at May
31, 1996, and the related unaudited statement of income ("Income Statement") for
the 12 months then ended. Within 15 days after the Closing ▇▇▇▇ will deliver to
Hathaway an unaudited balance sheet of the Acquired Companies as at the
Effective Date (the "Effective Date Balance Sheet") and the related unaudited
statement of income for the period from June 1, 1996 to the Effective Date (the
"Effective Date Income Statement") (the Effective Date Balance Sheet and the
Effective Date Income Statement together with the Balance Sheet and Income
Statement, are referred to herein as the "Financial Statements"). The only
differences between (i) the Balance Sheet and Income Statement and (ii) the
Effective Date Balance Sheet and Effective Date Income Statement shall be
changes in the Ordinary Course of Business and changes described in this
Agreement. The Balance Sheet and Income Statement do now and the Effective Date
Balance Sheet and Effective Date Income Statement will when delivered fairly
present the financial condition and the results of operations of the Acquired
Companies as at the respective dates of and for the periods referred to in such
Financial Statements, all in accordance with GAAP, subject only to the absence
of notes; the Financial Statements reflect the consistent application of such
accounting principles throughout the periods involved. No financial statements
of any Person other than the Acquired Companies are required by GAAP to be
included in the Financial Statements of the Acquired Companies.
3.6 Books And Records. The books of account, securities record books, and
other records including personnel files of employees of the Acquired Companies,
all of which have been made available to Hathaway, are complete and correct and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of the
Acquired Companies contain the consents of appropriate officials to matters
relating to the ownership of partnership interests and the insurance of certain
debt. ▇▇▇▇ will be liable for any Damages caused by reason of inaccurate or
incomplete records of meetings of the governing bodies and owners of equity
interests of the respective Acquired Companies. At the Closing all of those
books and records will be in the possession of the respective Acquired
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Companies, including all financial records necessary for audit purposes for the
three years ending May 31, 1996 and the period for May 31, 1996 to the Effective
Date, and ▇▇▇▇ will cooperate in providing information necessary or useful to
the Acquired Companies for completing such audits.
3.7 Title To Properties; Encumbrances. No Acquired Company owns any real
estate. Part 3.7 of the Disclosure Letter contains a complete and accurate list
of all leaseholds or other interests in real property owned by any Acquired
Company. ▇▇▇▇ has delivered or made available to Hathaway copies of the leases
and other instruments by which the Acquired Companies acquired such leasehold
interests. The Acquired Companies own (subject only to the matters permitted by
the following sentence) all the properties and assets (whether tangible or
intangible) that they purport to own and reflected as owned in the books and
records of the Acquired Companies, including all of the properties and assets
reflected in the Financial Statements (except for assets held under capitalized
leases disclosed or not required to be disclosed in Part 3.7 of the Disclosure
Letter and personal property sold since the date of the Balance Sheet, as the
case may be, in the Ordinary Course of Business), and all of the properties and
assets purchased or otherwise acquired by the Acquired Companies since the date
of the Balance Sheet (except for personal property acquired and sold since the
date of the Balance Sheet in the Ordinary Course of Business and consistent with
past practice), which subsequently purchased or acquired properties and assets
(other than inventory and short-term investments) are listed in Part 3.7 of the
Disclosure Letter. All material properties and assets reflected in the Balance
Sheet as being owned by the Acquired Companies are free and clear of all
Encumbrances and are not subject to any mortgages or security interests except
liens for current taxes not yet due.
3.8 Condition And Sufficiency Of Assets. To the Knowledge of ▇▇▇▇, ▇▇▇▇
or TIS, the buildings, plants and structures under lease, and equipment owned or
leased by the Acquired Companies are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are being put,
and none of such buildings, plants, structures, or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost; the building, plants, structures, and
equipment of or held by the Acquired Companies are sufficient for the continued
conduct of the Acquired Companies' businesses after the Effective Date in
substantially the same manner as conducted prior thereto.
3.9 Accounts Receivable. All accounts receivable of the Acquired
Companies that are reflected on the Financial Statements or on the accounting
records of the Acquired Companies as of the Effective Date and are payable for
the benefit of Hathaway pursuant to Section 2.2(b) (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from
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sales actually made or services actually performed in the Ordinary Course of
Business. Unless paid prior to the Effective Date or reserved against in the
Financial Statement, the Accounts Receivable are or will be as of the Effective
Date current and due. There is no contest, claim, or right of set-off, other
than returns in the Ordinary Course of Business, under any contract with any
obligor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Part 3.9 of the Disclosure Letter contains a complete and
accurate list of all Accounts Receivable as of the date of the Balance Sheet,
and the Effective Date Balance Sheet will include a list of Accounts Receivable
at the Effective Date, which list will include the aging of such Accounts
Receivable.
3.10 Inventory. All inventory owned by the Acquired Companies at the
Effective Date whether or not reflected in the Financial Statements, consists of
a quality and quantity usable or salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Financial
Statements. All inventories not written off have been priced at the lower of
cost or net realizable value on a first in, first out basis. The quantities of
each item of inventory intended for sale (whether raw materials, work-in-
process, or finished goods) are salable within one year after the Closing Date,
assuming continued operation of the Acquired Companies as currently conducted.
3.11 Liabilities; No Undisclosed Liabilities. The amount of all
liabilities of the Acquired Companies reflected in the Effective Date Balance
Sheet shall not exceed $684,000 (excluding the $421,000 of debt payable to ▇▇▇▇
pursuant to Section 2.4(c)); provided, that pursuant to Section 7.2 hereof, ▇▇▇▇
will be responsible for all liabilities of the Acquired Companies in excess of
such amount. The Acquired Companies have no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations (i) reflected or reserved
against in the Balance Sheet and current liabilities incurred in the Ordinary
Course of Business since the date of the Balance Sheet which shall be reflected
with no additions in the Effective Date Balance Sheet and (ii) disclosed in the
Disclosure Letter. ▇▇▇▇ will be responsible for any such liabilities not so
disclosed. This Section 3.11 does not include liabilities arising after the
Effective Date which are incurred by reason of events after the Effective Date.
3.12 Taxes.
(a) The Acquired Companies have filed or caused to be filed (on a
timely basis since inception) all Tax Returns that are or were required to be
filed by or with respect to the Acquired Companies, either separately or as a
member of a group, pursuant to applicable Legal Requirements. ▇▇▇▇ has
delivered to Hathaway copies of, and Part 3.12 of the Disclosure Letter contains
a complete and accurate list of, all such Tax Returns relating to income or
franchise taxes filed since inception.
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The Acquired Companies have paid, or with ▇▇▇▇ made provision for the payment
of, all Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by ▇▇▇▇ or any Acquired
Company, or by reason of the Transactions.
(b) No federal or state income Tax Returns of any Acquired Company
subject to such Taxes has been audited by the IRS or relevant state tax
authorities.
(c) The charges, accruals, and reserves with respect to Taxes shown
on the Effective Date Balance Sheet are adequate (determined in accordance with
GAAP) and are at least equal to the Acquired Companies' liability for Taxes at
the Effective Date. ▇▇▇▇ has no knowledge of any proposed tax assessment with
respect to the business of the Acquired Companies prior to the Effective Date.
No consent to the application of Section 341(f)(2) of the IRC has been filed
with respect to any property or assets held, acquired, or to be acquired by any
Acquired Company. All Taxes that any Acquired Company is or was required by
Legal Requirements to withhold or collect have been duly withheld or collected
or are adequately reserved for in the Balance Sheet and, to the extent required,
have been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated
basis) any Acquired Company are true, correct, and complete. There is no tax
sharing agreement that will require any payment of any Tax by any Acquired
Company after the Effective Date. During the consistency period (as defined in
Section 338(h)(4) of the IRC with respect to the sale of the TISI Shares to
Hathaway), no Acquired Company has sold or will sell any property or assets to
Hathaway or to any member of an affiliated group (as defined in Section
338(h)(5) of the IRC) that includes Hathaway.
(e) ▇▇▇▇ is responsible for the payment of any Tax assessed against
▇▇▇▇ or any Acquired Company by reason of the sale of the TISI Shares or TIS
Partnership Interests including any income tax or sales tax.
(f) ▇▇▇▇ and ▇▇▇▇▇▇▇▇ will cooperate with each other in the
preparation of tax returns for the Acquired Companies after Closing and in the
event of any tax audit or inquiry involving the Acquired Companies.
3.13 No Material Adverse Change. Since the date of the Balance Sheet, there
has not been any material adverse change in the business, operations,
properties, assets, or condition of any Acquired Company, and to the Knowledge
of ▇▇▇▇ and the Acquired Companies no event has occurred or circumstance exists
that may result in a material adverse change to the prospects of the Acquired
Companies.
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3.14 Employee Benefits.
(a) As used in this Section 3.14, the following terms have the
meanings set forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by an Acquired Company or an ERISA Affiliate of an
Acquired Company.
"Company Plan" means all Plans of which an Acquired Company or an ERISA
Affiliate of an Acquired Company is or (during the five-year period preceding
the Closing) was a Plan Sponsor, or to which an Acquired Company or an ERISA
Affiliate of an Acquired Company otherwise contributes or (during the five-year
period preceding the Closing) has contributed, or in which an employee or former
employee of an Acquired Company or an ERISA Affiliate of an Acquired Company
participates or is eligible to participate. All references to Plans are to
Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of any
Acquired Company or any ERISA Affiliate of an Acquired Company.
"ERISA Affiliate" means, with respect to an Acquired Company, any
other person that, together with the Acquired Company, would be treated as a
single employer under IRC (S) 414.
"Multi-Employer Plan" has the meaning given in ERISA (S) 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of IRC (S) 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
-14-
"Pension Plan" has the meaning given in ERISA (S) 3(2)(A).
"Plan" has the meaning given in ERISA (S) 3(3).
"Plan Sponsor" has the meaning given in ERISA (S) 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC (S) 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV of
ERISA, 29 U.S.C. (S) 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
(S) 501(c)(9).
"Welfare Plan" has the meaning given in ERISA (S) 3(1).
(b) (1) Part 3.14(b)(1) of the Disclosure Letter contains a
complete and accurate list of all Company Plans, Company Other Benefit
Obligations, and Company VEBAs, and identifies as such all Company Plans
that are (i) defined benefit Pension Plans, (ii) Qualified Plans,
(iii) Title IV Plans, or (iv) Multi-Employer Plans.
(2) Part 3.14(b)(2) of the Disclosure Letter contains a complete
and accurate list of (i) all ERISA Affiliates of each Acquired Company,
and (ii) all Plans of which any such ERISA Affiliate is or (during the
five-year period preceding the Closing) was a Plan Sponsor, in which any
employee or former employee of such ERISA Affiliate participates or is
eligible to participate, or to which any such ERISA Affiliate contributes
or (during the five-year period preceding the Closing) has contributed.
(3) Part 3.14(b)(3) of the Disclosure Letter sets forth, for
each Multi- Employer Plan, as of its last valuation date, the amount of
potential withdrawal liability of the Acquired Companies and the Acquired
Companies' other ERISA Affiliates, calculated according to information
made available pursuant to ERISA (S) 4221(e).
(4) Part 3.14(b)(4) of the Disclosure Letter sets forth a
calculation of the
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liability of the Acquired Companies for post-retirement benefits other
than pensions, made in accordance with Financial Accounting Statement 106
of the Financial Accounting Standards Board, regardless of whether any
Acquired Company is required by this Statement to disclose such
information.
(5) Part 3.14(b)(5) of the Disclosure Letter sets forth the
financial cost of all obligations owed under any Company Plan or Company
Other Benefit Obligation that is not subject to the disclosure and
reporting requirements of ERISA.
(c) ▇▇▇▇ has made available to Hathaway prior to the Closing:
(1) all documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any related
trust, including (i) all plan descriptions and summary plan descriptions
of Company Plans for which ▇▇▇▇ or the Acquired Companies are required to
prepare, file, and distribute plan descriptions and summary plan
descriptions, and (ii) all summaries and descriptions furnished to
participants and beneficiaries regarding Company Plans, Company Other
Benefit Obligations, and Company VEBAs for which a plan description or
summary plan description is not required;
(2) all personnel, payroll, and employment manuals and policies;
(3) all collective bargaining agreements pursuant to which
contributions have been made or obligations accrued (including both
pension and welfare benefits) by the Acquired Companies and the ERISA
Affiliates of the Acquired Companies, and all collective bargaining
agreements pursuant to which contributions are being made or obligations
are owed by such entities;
(4) a written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(5) all registration statements filed with respect to any
Company Plan;
(6) all insurance policies purchased by or to provide benefits
under any Company Plan;
(7) all contracts with third party administrators, actuaries,
investment
-16-
managers, consultants, and other independent contractors that relate to
any Company Plan, Company Other Benefit Obligation, or Company VEBA;
(8) all reports submitted within the three years preceding the
date of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent contractors with
respect to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(9) all notifications to employees of their rights under ERISA
(S) 601 et seq. and IRC (S) 4980B;
(10) the Form 5500 filed in each of the most recent three plan
years with respect to each Company Plan, including all schedules there-
to and the opinions of independent accountants;
(11) all notices that were given by any Acquired Company or any
ERISA Affiliate of an Acquired Company or any Company Plan to the IRS,
the PBGC, or any participant or beneficiary, pursuant to statute, within
the three years preceding the date of this Agreement, including notices
that are expressly mentioned elsewhere in this Section 3.14;
(12) all notices that were given by the IRS, the PBGC, or the
Department of Labor to any Acquired Company, any ERISA Affiliate of an
Acquired Company, or any Company Plan within the three years preceding
the date of this Agreement;
(13) with respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of the Acquired Companies that is a
Qualified Plan; and
(14) with respect to Title IV Plans, the Form PBGC-1 filed for
each of the three most recent plan years.
(d) Except as set forth in Part 3.14(b) of the Disclosure Letter:
(1) The Acquired Companies have performed all of their
respective obligations under all Company Plans, Company Other Benefit
Obligations, and Company VEBAs. The Acquired Companies have made
appropriate entries in the
-17-
Financial Statements for all obligations and liabilities under such
Plans, VEBAs, and Obligations that have accrued but are not due.
(2) No statement, either written or oral, has been made by any
Acquired Company to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other Benefit
Obligation and that could have an adverse economic consequence to any
Acquired Company or to Hathaway.
(3) The Acquired Companies, with respect to all Company Plans,
Company Other Benefits Obligations, and Company VEBAs, are, and each
Company Plan, Company Other Benefit Obligation, and Company VEBA is, in
full compliance with ERISA, the IRC, and other applicable Laws including
the provisions of such Laws expressly mentioned in this Section 3.14, and
with any applicable collective bargaining agreement.
(A) No transaction prohibited by ERISA (S) 406 and no
"prohibited transaction" under IRC (S) 4975(c) have occurred with
respect to any Company Plan.
(B) No Acquired Company has any liability to the IRS with
respect to any Plan, including any liability imposed by Chapter 43
of the IRC.
(C) No Acquired Company has any liability to the PBGC with
respect to any Plan or has any liability under ERISA (S) 502 or (S)
4071.
(D) All filings required by ERISA and the IRC as to each
Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely
provided.
(E) All contributions and payments made or accrued with
respect to all Company Plans, Company Other Benefit Obligations,
and Company VEBAs are deductible under IRC (S) 162 or (S) 404. No
amount, or any asset of any Company Plan or Company VEBA, is
subject to tax as unrelated business taxable income.
(4) Each Company Plan can be terminated within thirty days,
without
-18-
payment of any additional contribution or amount and, except as required
under IRC (S) 411, without the vesting or acceleration of any benefits
promised by such Plan. Each Company Plan shall be continued for thirty
days after the Closing Date or until terminated by Hathaway, with any
additional cost for such continuation to be Hathaway's expense.
(5) No event has occurred or circumstance exists that could
result in a material increase in premium costs of Company Plans and
Company Other Benefit Obligations that are insured, or a material
increase in benefit costs of such Plans and Obligations that are self-
insured.
(6) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any
Company Plan, Company Other Benefit Obligation, or Company VEBA is
pending or, to ▇▇▇▇'▇ Knowledge, is Threatened.
(7) No Company Plan is a stock bonus, pension, or profit-sharing
plan within the meaning of IRC (S) 401(a).
(8) Each Qualified Plan of each Acquired Company is qualified in
form and operation under IRC (S) 401(a); each trust for each such Plan is
exempt from federal income tax under IRC (S) 501(a). Each Company VEBA is
exempt from federal income tax. No event has occurred or circumstance
exists that will or could give rise to disqualification or loss of tax-
exempt status of any such Plan or trust.
(9) Each Acquired Company and each ERISA Affiliate of an
Acquired Company has met the minimum funding standard, and has made
all contributions required, under ERISA (S) 302 and IRC (S) 402.
(10) No Company Plan is subject to Title IV of ERISA.
(11) The Acquired Companies have paid all amounts due to the
PBGC pursuant to ERISA (S) 4007.
(12) No Acquired Company or any ERISA Affiliate of an Acquired
Company has ceased operations at any facility or has withdrawn from any
Title IV Plan in a manner that would subject TISI or Hathaway to
liability under ERISA
-19-
(S) 4062(e), (S) 4063, or (S) 4064.
(13) No Acquired Company or any ERISA Affiliate of an Acquired
Company has filed a notice of intent to terminate any Plan or has adopted
any amendment to treat a Plan as terminated. The PBGC has not instituted
proceedings to treat any Company Plan as terminated. No event has
occurred or circumstance exists that may constitute grounds under ERISA
(S) 4042 for the termination of, or the appointment of a trustee to
administer, any Company Plan.
(14) No amendment has been made, or is reasonably expected to be
made, to any Plan that has required or could require the provision of
security under ERISA (S) 307 or IRC (S) 401(a)(29).
(15) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding deficiency
as of the last day of the current plan year of any such Plan or to the
Effective Date.
(16) The actuarial report for each Pension Plan of each Acquired
Company and each ERISA Affiliate of each Acquired Company fairly
presents the financial condition and the results of operations of each
such Plan in accordance with GAAP.
(17) Since the last valuation date for each Pension Plan of each
Acquired Company and each ERISA Affiliate of an Acquired Company, no
event has occurred or circumstance exists that would increase the amount
of benefits under any such Plan or that would cause the excess of Plan
assets over benefit liabilities (as defined in ERISA (S) 4001) to
decrease, or the amount by which benefit liabilities exceed assets to
increase.
(18) No reportable event (as defined in ERISA (S) 4043 and in
regulations issued thereunder) has occurred.
(19) None of ▇▇▇▇ or any Acquired Company has Knowledge of any
facts or circumstances that may give rise to any liability of ▇▇▇▇ or
any Acquired Company to the PBGC under Title IV of ERISA.
(20) No Acquired Company or any ERISA Affiliate of an Acquired
-20-
Company has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to, or
otherwise participate in, any Multi-Employer Plan.
(21) No Acquired Company or any ERISA Affiliate of an Acquired
Company has withdrawn from any Multi-Employer Plan with respect to
which there is any outstanding liability as of the date of this
Agreement. No event has occurred or circumstance exists that presents a
risk of the occurrence of any withdrawal from, or the participation,
termination, reorganization, or insolvency of, any Multi-Employer Plan
that could result in any liability of either any Acquired Company or
Hathaway to a Multi-Employer Plan.
(22) No Acquired Company or any ERISA Affiliate of an Acquired
Company has received notice from any Multi-Employer Plan that it is in
reorganization or is insolvent, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any
excise tax, or that such Plan intends to terminate or has terminated.
(23) No Multi-Employer Plan to which any Acquired Company or any
ERISA Affiliate of an Acquired Company contributes or has contributed is
a party to any pending merger or asset or liability transfer or is
subject to any proceeding brought by the PBGC.
(24) Except to the extent required under ERISA (S) 601 et seq.
and IRC (S) 4980B, no Acquired Company provides health or welfare
benefits for any retired or former employee or is obligated to provide
health or welfare benefits to any active employee following such
employee's retirement or other termination of service.
(25) Each Acquired Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to both retired
and active employees.
(26) ▇▇▇▇ and all Acquired Companies have complied with the
provisions of ERISA (S) 601 et seq. and IRC (S) 4980B.
(27) No payment that is owed or may become due to any director,
officer, employee, or agent of any Acquired Company will be non-
deductible to the Acquired
-21-
Companies or subject to tax under IRC (S) 280G or (S) 4999; nor will any
Acquired Company be required to "gross up" or otherwise compensate any
such person because of the imposition of any excise tax on a payment to
such person.
(28) The consummation of the Transactions will not result in the
payment, vesting, or acceleration of any benefit.
3.15 Compliance With Legal Requirements; Governmental Authorizations.
(a) Each Acquired Company is in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
the business of the Acquired Companies or the ownership or use of any of
property and assets by the Acquired Companies;
(b) No event has occurred or circumstance exists at the Effective Date
that (with or without notice or lapse of time) (i) may constitute or result in a
violation by any Acquired Company of, or a failure on the part of any Acquired
Company to comply with, any Legal Requirement, or (ii) may give rise to any
obligation on the part of any Acquired Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature; and
(c) No Acquired Company has received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (i) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (ii) any actual, alleged,
possible, or potential obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature for a violation of a Legal Requirement.
(d) There are no approvals, consents, licenses, permits, waivers
or other authorizations by any Governmental Body or pursuant to any Legal
Requirements required for the Acquired Companies to conduct the business as
conducted by the Acquired Companies prior to the Closing that were not
obtained prior to Closing.
3.16 Legal Proceedings; Orders.
(a) There is no pending Proceeding against ▇▇▇▇ or the Acquired
Companies: (i) that has been commenced by or against any Acquired Company
or that otherwise relates
-22-
to or may affect the business of, or any of the assets owned or used by any
Acquired Company; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of
the Transactions. To the Knowledge of ▇▇▇▇ and any Acquired Company, no
such Proceeding has been Threatened, and no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding.
(b) There is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is subject;
neither ▇▇▇▇ nor any Acquired Company is subject to any Order that relates
to the business of, or any of the assets owned or used by, any Acquired
Company; and no officer, director, agent, or employee of any Acquired
Company is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct, activity, or
practice relating to the business of any Acquired Company.
3.17 Absence Of Certain Changes And Events. Subject to Section 3.1,
since the date of the Balance Sheet, the Acquired Companies have conducted their
business only in the Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued equity
securities; grant of any options or rights to purchase any equity
securities of any Acquired Company; issuance of any security convertible
into such equity securities; grant of any registration rights; purchase,
redemption, retirement, or other acquisition by any Acquired Company of any
equity securities; or declaration or payment of any dividend or other
distribution or payment in respect of equity securities;
(b) amendment to the Organizational Documents of any Acquired
Company,
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer,
partner, or (except in the Ordinary Course of Business) employee or entry
into any employment, severance, or similar Contract with any director,
officer, partner, or employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with
any employees of any Acquired Company;
-23-
(e) damage to or destruction or loss of any asset or property of
any Acquired Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition,
or prospects of any Acquired Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to any
Acquired Company;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of any
Acquired Company or mortgage, pledge, or imposition of any lien or other
Encumbrance on any material asset or property of any Acquired Company,
including the sale, lease, or other disposition of any of the Intellectual
Property Assets;
(h) cancellation or waiver of any claims or rights of any
Acquired Company;
(i) material change in the accounting methods used by any
Acquired Company; or
(j) agreement, whether oral or written, by any Acquired Company
to do any of the foregoing.
3.18 Contracts; No Defaults.
(a) ▇▇▇▇ has delivered to Hathaway true and complete copies of:
(1) each Applicable Contract that involves performance of
services or delivery of goods or materials by any Acquired Company;
(2) each Applicable Contract that involves performance of
services or delivery of goods or materials to any Acquired Company;
(3) each Applicable Contract that was not entered into in the
Ordinary Course of Business;
-24-
(4) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property;
(5) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former
employees, consultants, or contractors regarding the appropriation or
the non-disclosure of any of the Intellectual Property Assets;
(6) each Applicable Contract to or with any employee
representative of a group of employees;
(7) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by any Acquired Company with any other Person;
(8) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of any Acquired Company
or any Affiliate of an Acquired Company or limit the freedom of any
Acquired Company or any Affiliate of an Acquired Company to engage in
any line of business or to compete with any Person;
(9) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods;
(10) each power of attorney given by or to any Acquired
Company that is currently effective and outstanding;
(11) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by any Acquired Company to be responsible for
consequential damages;
(12) each Applicable Contract for capital expenditures;
(13) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any
Acquired Company; and
-25-
(14) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) None of ▇▇▇▇ or any Former Limited Partner (and no Related
Person of any of the foregoing) has or may acquire any rights under, and
none of the foregoing has or may become subject to any obligation or
liability under, any Contract that relates to the business of, or any of
the assets owned or used by, any Acquired Company; and no officer,
director, partner, agent, employee, consultant, or contractor of any
Acquired Company is bound by any Contract that purports to limit the
ability of such officer, director, partner, agent, employee, consultant, or
contractor to (i) engage in or continue any conduct, activity, or practice
relating to the business of any Acquired Company, or (ii) assign to or to
any other Person any rights to any invention, improvement, or discovery.
(c) Each Contract identified or required to be identified in
Part 3.18(a) of the Disclosure Letter is in full force and effect and is
valid and enforceable in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors generally.
(d) Each Acquired Company is, and at all times has been, in full
compliance with all applicable terms and requirements of each Contract
under which such Acquired Company has or had any obligation or liability or
by which such Acquired Company or any of the assets owned or used by such
Acquired Company is or was bound.
(e) To ▇▇▇▇'▇ Knowledge, no Person that has any obligation or
liability under any Contract under which an Acquired Company has any rights
is now in material default of any applicable terms and requirements of such
Contract.
(f) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result
in a material violation or material breach of, or give any Acquired
Company, and to the Knowledge of ▇▇▇▇ no other Person has, the right to
declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Applicable Contract.
(g) No Acquired Company has given to or received from any other
Person, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible, or potential material violation or
breach of, or default under, any Contract.
-26-
(h) There are no continuing renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid
or payable to any Acquired Company under current or completed Contracts
with any Person and no such Person has made written demand for such
renegotiation.
(i) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Acquired Companies have been
entered into in the Ordinary Course of Business and have been entered into
without the commission of any act alone or in concert with any other
Person, or any consideration having been paid or promised, that is or would
be in violation of any Legal Requirement.
3.19 Insurance. Without waiving any liability hereunder with respect
to matters covered by insurance prior to the Effective Date.
(a) ▇▇▇▇ has delivered to Hathaway:
(1) true and complete copies of all policies of insurance,
including payment and performance bonds, to which any Acquired
Company is a party or under which any Acquired Company, or any
director or partner of any Acquired Company (with respect to
liability as a director or partner), is or has been covered at any
time preceding the date of this Agreement;
(2) true and complete copies of all pending applications
for policies of insurance; and
(3) any statement received by any Acquired Company or ▇▇▇▇
with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Part 3.19(b) of the Disclosure Letter describes:
(1) any self-insurance arrangement providing insurance
coverage to any Acquired Company, including any reserves established
thereunder;
(2) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired
Company; and
(3) all obligations of any Acquired Company to third parties
with respect
-27-
to insurance (including such obligations under
leases and service agreements) and identifies the policy under
which such coverage is provided.
(c) Part 3.19(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each preceding policy year:
(1) a summary of the loss experience under each policy;
(2) a statement describing each claim under an insurance
policy;
(3) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate
cost of such claims.
(d) All policies to which any Acquired Company is a party or
that provide coverage to either ▇▇▇▇, any Acquired Company, or any
director, officer or partner with respect to their liability as such, of
any Acquired Company:
(1) are valid, outstanding, in full effect and enforceable
in accordance with their terms subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws affecting the rights and remedies of
creditors generally;
(2) to the Knowledge of ▇▇▇▇ and any Acquired Company and
in their good faith judgment, taken together, provide adequate
insurance coverage for the assets and the operations of the
Acquired Companies prior to the Effective Date;
(3) are sufficient for compliance with all Legal
Requirements and Contracts to which the Acquired Companies are a
party or by which they are bound;
(4) will not be invalidated by consummation of the
Transactions even though they may be terminated after Closing;
and
(5) do not provide for any retrospective premium adjustment
or other experienced-based liability on the part of any Acquired
Company.
(e) None of ▇▇▇▇ or any Acquired Company has received (i) any
refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (ii) any
-28-
notice of cancellation or any other indication that any insurance policy is
no longer in full force or effect or will not be renewed or that the issuer
of any policy is not willing or able to perform its obligations thereunder.
(f) The Acquired Companies have given notice to the insurer of all
claims that may be insured thereby.
3.20 Environmental Matters.
(a) Each Acquired Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable
under, any Environmental Law. None of ▇▇▇▇ or any Acquired Company has a
basis to expect, nor has any of them or, to the Knowledge of ▇▇▇▇ or any
Acquired Company, any other Person for whose conduct they are or may be
held to be responsible received, any actual or Threatened order, notice, or
other communication from (i) any Governmental Body or private citizen
acting in the public interest, or (ii) the current or prior owner or
operator of any Facilities, of any actual or potential violation or failure
to comply with any Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which ▇▇▇▇ or
any Acquired Company has had an interest, or with respect to any property
or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by ▇▇▇▇,
any Acquired Company, or any other Person for whose conduct they are or may
be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the Knowledge of ▇▇▇▇ and any
Acquired Company, Threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law, with
respect to or affecting any of the Facilities or any other properties and
assets (whether real, personal, or mixed) in which ▇▇▇▇ or any Acquired
Company has or had an interest.
(c) None of ▇▇▇▇ or any Acquired Company has any basis to expect,
nor has any of them or, to the Knowledge of ▇▇▇▇ or any Acquired Company,
any other Person for whose conduct they are or may be held responsible,
received, any citation, directive, inquiry, notice, Order, summons,
warning, or other communication that relates to Hazardous Activity,
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Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any
alleged, actual, or potential obligation to undertake or bear the cost of
any Environmental, Health, and Safety Liabilities with respect to any of
the Facilities or any other properties or assets (whether real, personal,
or mixed) in which ▇▇▇▇ or any Acquired Company had an interest, or with
respect to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used, or processed by ▇▇▇▇,
any Acquired Company, or any other Person for whose conduct they are or may
be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) None of ▇▇▇▇ or any Acquired Company, or, to the Knowledge
of ▇▇▇▇ or any Acquired Company, any other Person for whose conduct they
are or may be held responsible, has any Environmental, Health, and Safety
Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which ▇▇▇▇ or
any Acquired Company (or any predecessor), has or had an interest, or at
any property geologically or hydrologically adjoining the Facilities or any
such other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically
adjoining property, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers, either temporary
or permanent, and deposited or located in land, water, sumps, or any other
part of the Facilities or such adjoining property, or incorporated into any
structure therein or thereon. None of ▇▇▇▇ or any Acquired Company, or, to
the Knowledge of ▇▇▇▇ or any Acquired Company, any other Person for whose
conduct they are or may be held responsible, or any other Person, has
permitted or conducted, or, to the Knowledge of ▇▇▇▇ or any Acquired
Company, is aware of, any Hazardous Activity conducted with respect to the
Facilities or any other properties or assets (whether real, personal, or
mixed) in which ▇▇▇▇ or any Acquired Company has or had an interest.
(f) There has been no Release or Threat of Release, of any
Hazardous Materials at or from the Facilities or at any other locations
where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the
Facilities, or from or by any other properties and assets (whether real,
personal, or mixed) in which ▇▇▇▇ or any Acquired Company has or had an
interest, or any geologically or hydrologically adjoining property, whether
by ▇▇▇▇, any Acquired Company, or any other Person.
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(g) ▇▇▇▇ has delivered to Hathaway true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed
or initiated by ▇▇▇▇ or any Acquired Company pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or
concerning compliance by ▇▇▇▇, or any Acquired Company, or any other Person
for whose conduct they are or may be held responsible, with Environmental
Laws.
3.21 Employees.
(a) Part 3.21 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee of each
Acquired Company, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and
date and amount of any change in compensation and bonuses paid since June
1, 1994; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under any applicable pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare
Benefit Plan, or any other employee benefit plan or any Director Plan.
(b) No employee, director or partner of any Acquired Company is
a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition, or proprietary rights
agreement, between such employee, director or partner and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee, director or
partner of any Acquired Company, or (ii) the ability of any Acquired
Company to conduct its business, including any Proprietary Rights Agreement
with ▇▇▇▇ or any Acquired Company by any such employee, director or
partner.
(c) Part 3.21 of the Disclosure Letter also contains a complete
and accurate list of the following information for each retired employee of
any Acquired Company, or their dependents, receiving benefits or scheduled
to receive benefits in the future: name, pension benefit, pension option
election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.22 Labor Relations; Compliance. No Acquired Company has been or is
a party to any collective bargaining or other labor Contract. There has not
been, there is not presently pending or existing, and there is not Threatened,
(i) any strike, slowdown, picketing, work stoppage, or
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employee grievance process, (ii) any Proceeding against or affecting any
Acquired Company relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable Governmental
Body, organizational activity, or other labor or employment dispute, including
without limitation sexual harassment charges, against or affecting any Acquired
Company or their premises, or (iii) any application for certification of a
collective bargaining agent. To the Knowledge of ▇▇▇▇ or any Acquired Company,
no event has occurred or circumstance exists that could provide the basis for
any work stoppage or other labor dispute after the Effective Date. There is no
lockout of any employees by any Acquired Company, and no such action is
contemplated by any Acquired Company. Each Acquired Company has complied in all
respects with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. No Acquired Company is liable for the
payment of any compensation, damages, taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements.
3.23 Intellectual Property and Products.
(a) Intellectual Property Assets--The term "Intellectual
Property Assets" includes:
(1) the name "▇▇▇▇ Integrated Systems, Inc." and "▇▇▇▇
Integrated Systems, L.P.", all fictional business names, trading
names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(2) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(3) all copyrights in both published works and unpublished
works (collectively, "Copyrights"); and
(4) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned, used, or licensed by any Acquired Company as
licensee or licensor.
(b) Agreements--Part 3.23(b) of the Disclosure Letter contains a
complete and
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accurate lists, including any royalties paid or received by the Acquired
Companies, of all Contracts relating to the Intellectual Property Assets to
which any Acquired Company is a party or, to the Knowledge of ▇▇▇▇, by
which any Acquired Company is bound. There are no outstanding and, to
▇▇▇▇'▇ Knowledge, no Threatened disputes or disagreements with respect to
any such agreement.
(c) Know-How Necessary for the Business
(1) The Intellectual Property Assets are all those necessary for
the operation of the Acquired Companies' businesses as they are
currently conducted. Except as set forth in Part 3.23(c) of the
Disclosure Letter one or more of the Acquired Companies is the owner
of all right, title, and interest in and to each of the Intellectual
Property Assets, free and clear of all liens, security interests,
charges, Encumbrances, equities, and other adverse claims, and has the
right to use without payment to a third party all of the Intellectual
Property Assets.
(2) Except as set forth in Part 3.23(c) of the Disclosure
Letter, all former and current employees of TISI have executed written
Contracts with TISI that assign to TISI all rights to any inventions,
improvements, discoveries, or information relating to the business of
TISI. No employee of TISI has entered into any Contract that restricts
or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or
disclose information concerning his work to anyone other than TISI.
(d) Patents - TISI owns no Patents and has no Patent applications
pending.
(e) Trademarks
(i) Part 3.23(e) of Disclosure Letter contains a complete and
accurate list and summary description of all Marks. Except as set
forth in Part 3.23(c) of the Disclosure Letter TISI is the owner of
all right, title, and interest in and to each of the Marks, free and
clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability
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and renewal applications), are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
(iii) No ▇▇▇▇ has been or is now involved in any opposition,
invalidation, or cancellation and, to ▇▇▇▇'▇ Knowledge, no such action
is Threatened with the respect to any of the Marks.
(iv) To ▇▇▇▇'▇ Knowledge, there is no potentially interfering
trademark or trademark application of any third party.
(v) No ▇▇▇▇ is infringed or, to ▇▇▇▇'▇ Knowledge, has been
challenged or threatened in any way. None of the Marks used by the
Acquired Companies infringes or is alleged to infringe any trade name,
trademark, or service ▇▇▇▇ of any third party.
(vi) All products and materials containing a ▇▇▇▇ ▇▇▇▇ the
proper federal registration notice where permitted by law.
(f) Copyrights
(i) Part 3.23(f) of the Disclosure Letter contains a complete
and accurate list and summary description of all Copyrights. Except
as set forth in Part 3.23(c) of the Disclosure Letter TISI is the
owner of all right, title, and interest in and to each of the
Copyrights, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii) All the Copyrights have been registered and are currently
in compliance with formal legal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the date of Closing.
(iii) No Copyright is infringed or, to ▇▇▇▇'▇ Knowledge, has
been challenged or threatened in any way. None of the subject matter
of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work
of a third party.
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(iv) All works encompassed by the Copyrights have been marked
with the proper copyright notice.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in
detail and content to identify and explain it and to allow its full
and proper use without reliance on the knowledge or memory of any
individual.
(ii) All software and process technology operate in accordance
with applicable documentation and includes source code and all
material necessary or useful to enable use of the source code.
(iii) ▇▇▇▇ and the Acquired Companies have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(iv) The Acquired Companies have good, full and complete title
and an absolute (but not necessarily exclusive) right to use the Trade
Secrets. The Trade Secrets are not part of the public knowledge or
literature, and, to ▇▇▇▇'▇ Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person (other than the
Acquired Companies) or to the detriment of the Acquired Companies. No
Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
(h) License Agreement. Part 3.23 (h) of the Disclosure Letter
contains a complete and accurate list of license agreements identifying the
product and showing the parties thereto, dates thereof and date of
commencement and termination of rights thereunder for all products which
the Acquired Companies have acquired or granted right of use.
(i) Software Packages. Part 3.23(i) of the Disclosure Letter
contains a complete list of software packages or systems which are
manufactured, marketed or sold by the Acquired Companies and identifying
those which are proprietary to the Acquired Companies or are used under
rights acquired from others.
3.24 Certain Payments. No Acquired Company or any director, officer,
partner, agent, or employee of any Acquired Company, or any other Person
associated with or acting for or on
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behalf of any Acquired Company, has directly or indirectly (i) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (A) to obtain favorable treatment in securing business,
(B) to pay for favorable treatment for business secured, (C) to obtain special
concessions or for special concessions already obtained, for or in respect of
any Acquired Company or any Affiliate of any Acquired Company, or (D) in
violation of any Legal Requirement, or (ii) established or maintained any fund
or asset with respect to the business of the Acquired Companies that has not
been recorded in the books and records of the Acquired Companies.
3.25 Disclosure.
(a) No representation or warranty of ▇▇▇▇ in this Agreement and
no statement in the Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) There is no fact to the Knowledge of ▇▇▇▇ or the Acquired
Companies that has specific application to either ▇▇▇▇ or the Acquired
Companies (other than general economic or industry conditions) and that
materially adversely affects the assets, business, prospects, financial
condition, or results of operations of the Acquired Companies that has not
been set forth in this Agreement or the Disclosure Letter.
3.26 Relationships With Related Persons. None of ▇▇▇▇ or any Related
Person of ▇▇▇▇ or of the Acquired Companies has, or has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the Acquired Companies' businesses. None of ▇▇▇▇ or
any Related Person of ▇▇▇▇ or of any Acquired Company is, or has owned (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a Person that has (i) had business dealings or a material
financial interest in any transaction with any Acquired Company other than
business dealings or transactions conducted in the Ordinary Course of Business
with any Acquired Company at substantially prevailing market prices and on
substantially prevailing market terms and which may not be terminated on 30 days
notice, or (ii) engaged in competition with any Acquired Company with respect to
any line of the products or services of any Acquired Company (a "Competing
Business") in any market presently served by any Acquired Company except for
less than one percent of the outstanding capital stock of any Competing Business
that is publicly traded on any recognized exchange or in the over-the-counter
market. Except as set forth in Part 3.26 of the Disclosure Letter, none of ▇▇▇▇
or any Related Person of ▇▇▇▇ or of any Acquired Company is a party to any
Contract with, or has any claim or right against, any Acquired Company.
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3.27 Brokers Or Finders. ▇▇▇▇ has retained services of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Associates as its broker and will be solely responsible for their fees. ▇▇▇▇ has
incurred no obligation or liability, contingent or otherwise, for any other
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF HATHAWAY.
Hathaway represents and warrants to ▇▇▇▇ as follows:
4.1 Organization And Good Standing. Hathaway is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Colorado.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Hathaway, enforceable against Hathaway in accordance with its
terms subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights and
remedies of creditors generally. Hathaway has the absolute and
unrestricted right, power, and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement by Hathaway
nor the consummation or performance of any of the Transactions will give
any Person the right to prevent, delay, or otherwise interfere with any of
the Transactions pursuant to:
(i) any provision of Hathaway's articles of incorporation or
bylaws;
(ii) any resolution adopted by the board of directors or the
shareholders of Hathaway;
(iii) any Legal Requirement or Order to which Hathaway may be
subject; or
(iv) any Contract to which Hathaway is a party or by which
Hathaway may be bound, except the consent of its lender which has been
obtained.
4.3 Investment Intent. Hathaway is acquiring the TISI Shares and TIS
Partnership
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Interests for its own account and not with a view to their distribution within
the meaning of Section 2(11) of the Securities Act.
4.4 Certain Proceedings. There is no pending Proceeding that has been
commenced against Hathaway and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Transactions. To Hathaway's Knowledge, no such Proceeding has been Threatened.
4.5 Brokers Or Finders. Hathaway and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold harmless ▇▇▇▇ from any such payment
alleged to be due by or through Hathaway as a result of the action of Hathaway
or its officers or agents.
5. CERTAIN COVENANTS OF ▇▇▇▇.
5.1 Accuracy Of Representations. All of ▇▇▇▇'▇ representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), are accurate in all
material respects as of the date of this Agreement.
5.2 ▇▇▇▇'▇ Performance. Each of the documents required to be delivered by
▇▇▇▇ at Closing pursuant to Section 2.4(a) has been delivered and each of the
other covenants and obligation required to be fulfilled by ▇▇▇▇ at Closing have
been performed and complied with in all respects.
5.3 Opinion Of Counsel. There has been delivered to Hathaway an opinion
in form satisfactory to Hathaway of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., dated the Closing
Date covering the following matters:
(a) The Agreement and the Limited Partners' Releases are enforceable
against ▇▇▇▇ and the Former Limited Partners, respectively.
(b) The authorized capital stock of TISI consists of 100,000 shares of
common stock $1.00 par value of which 100 shares are outstanding. ▇▇▇▇ owns
all of the outstanding shares of record and beneficially, free and clear of
all adverse claims. The authorized equity interests of TIS consist of 100
Percentage Interests of which TISI, as general partner of TIS owns 60
Percentage Interests and ▇▇▇▇ as the owner of the TIS Limited Partnership
Interests is the owner of 40 Percentage Interests. TISI and ▇▇▇▇ own all of
the Percentage Interests
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of TIS of record and beneficially, free and clear of all adverse claims. As
a result of the delivery of certificates for the TISI Shares to Hathaway
and documents of transfer of the Percentage Interests of TIS to Hathaway,
and the payment to ▇▇▇▇ being made at the Closing, Hathaway is acquiring
ownership of all of the outstanding TISI Shares and TIS Partnership
Interests, free and clear of all adverse claims.
(c) TISI is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation as set
forth in Part 3.1(a) of the Disclosure Letter with full corporate power and
authority to own its properties and to engage in its business as presently
conducted, and is duly qualified and in good standing as a foreign
corporation under the laws of each other jurisdiction in which it is
authorized to do business as set forth in Part 3.1(a) of the Disclosure
Letter. All of the outstanding shares of capital stock of TISI have been
duly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of the pre-emptive rights of any Person.
(d) TIS is a limited partnership duly organized, validly existing
and in good standing under the laws of its jurisdiction of formation as set
forth in Part 3.1(a) of the Disclosure Letter, with full power and
authority to own its properties and to engage in its business as presently
conducted, and is duly qualified and in good standing to conduct its
business under the laws of each other jurisdiction in which it is
authorized to do business as set forth in Part 3.1(a) of the Disclosure
Letter. All of the outstanding TIS Partnership Interests have been duly
authorized and validly issued and are fully paid and nonassessable and were
not issued in violation of the rights of any Person.
(e) Neither the execution and delivery of the Agreement nor the
consummation of any or all of the Transactions (i) breaches or constitutes
a default (or an event that, with notice or lapse of time or both, would
constitute a default) under any Agreement or commitment to which ▇▇▇▇ or
any Acquired Company is a party or (ii) violates any statute, law,
regulation or rule, or any judgment, decree or order of any court or other
Governmental Body applicable to ▇▇▇▇ or any Acquired Company.
(f) Neither the execution and delivery of the Agreement nor the
consummation of any or all of the Transactions (i) violates any provision
of the Organizational Documents of ▇▇▇▇ or any Acquired Company, (ii)
breaches or constitutes a default (or an event that, with notice or lapse
of time or both, would constitute a default) under, or results in the
termination of, or accelerates the performance required by, or excuses
performance by any Person of any of its obligations under, or causes the
acceleration of the maturity of any debt
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or obligation pursuant to, or results in the creation or imposition of any
Encumbrance upon any property or assets of any Acquired Company under, any
Agreement or commitment to which any Acquired Company is a party or by
which any of their respective properties or assets are bound, or to which
any of the properties or assets of any Acquired Company are subject or
(iii) violates any statute, law, regulation, or rule, or any judgment,
decree or order of any court or other Governmental Body applicable to any
Acquired Company.
(g) No consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Body is required in
connection with the execution, delivery and performance of the Agreement
and the consummation of the Transactions.
(h) There is no Proceeding by or before any court or Governmental
Body pending or overtly threatened against or involving any Acquired
Company or that questions or challenges the validity of the Agreement or
any action taken or to be taken by any Acquired Company pursuant to the
Agreement or in connection with the Transactions, and none of the Acquired
Companies is subject to any judgment, order or decree having prospective
effect.
There has been delivered to Hathaway an opinion in form satisfactory to
Hathaway of ▇▇▇▇▇▇ & Co. of Kuala Lumpur Malaysia, dated at or near the Closing
Date covering the following matters:
The KUB-TIS Joint Venture is duly organized, validly existing and
in good standing as a Malaysian company under the laws of Malaysia, with
full power and authority to own its properties and to engage in its
business as presently conducted, and is duly qualified and in good standing
to do business under the laws of each other jurisdiction in which the
ownership of its properties or nature of its activities require such
qualification. All of the paid up capital interests of the KUB-TIS Joint
Venture have been duly authorized, are validly issued and are fully paid
and nonassessable, and were not issued in violation of the rights of any
Person. Under Section 5.3.1 of the KUB-TIS Joint Venture Agreement, a
joint venturer may arbitrarily withhold approval of the requirement of
additional funds.
5.4 No Injunction. There is not in effect any Legal Requirement or any
injunction or other Order that prohibits the sale of the TISI Shares or TIS
Partnership Interests.
5.5 No Claim Regarding Stock or Partnership Ownership Or Sale Proceeds.
There has not been made, or to the Knowledge of ▇▇▇▇, ▇▇▇▇ or TIS, Threatened,
by any Person any claim asserting that such Person (i) is the holder or the
beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any stock or partnership of, or any other voting, equity, or
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ownership interest in, any of the Acquired Companies, or (ii) is entitled to all
or any portion of the Purchase Price payable for the TISI Shares or TIS Limited
Partnership Interests.
5.6 No Prohibition. Neither the consummation nor the performance of any of
the Transactions will, directly or indirectly (with or without notice or lapse
of time), materially contravene, or conflict with, or result in a material
violation of, or cause Hathaway or any Person affiliated with Hathaway to suffer
any material adverse consequence under, (a) any applicable Legal Requirement or
Order by which ▇▇▇▇ or any Acquired Company is bound, or (b) to ▇▇▇▇'▇ Knowledge
any Legal Requirement or Order that has been published, introduced, or otherwise
proposed by or before any Governmental Body by which ▇▇▇▇ or any Acquired
Company would be bound.
5.7 Noncompetition Agreement. For a period of three years after the
Closing Date ▇▇▇▇ shall not, directly or indirectly, invest in, own, manage,
operate, finance, control, or participate in the ownership, management,
operation, financing, or control of in any manner any business whose products
compete in whole or in part with the products or activities of the Acquired
Companies anywhere within the Restricted Area.
(a) ▇▇▇▇ understands that it is Hathaway's intention that the Acquired
Companies' products ultimately will be sold in all 50 states and all
territories of the United States and any foreign countries. The 50 states
and all territories of the United States and any foreign country in which
the Acquired Companies' products are sold at the time of an asserted
violation of this covenant are referred to herein as the "Restricted Area."
The covenants contained in this Section 5.7 shall be deemed to be a series
of separate covenants, one for each county in each of the states of the
United States and each territory, and one for each foreign country and
political subdivision thereof, and each such separate covenant shall be
deemed identical in terms of the covenants contained in this Section 5.7.
(b) For purposes of this Section 5.7 the Acquired Companies' business
is the development and manufacturing of software products to provide system
automation, information and control in the process and power industries
including, without limitation, in the waste and waste water, oil and gas,
beverage, food processing and power generation, transmission and
distribution industries, and may be expanded into other industries.
(c) If any covenant in this Section 5.7 is held to be unreasonable,
arbitrary or against public policy, such covenant shall be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not
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against public policy, will be effective, binding, and enforceable against
▇▇▇▇.
5.8 Accrued Employee Costs. All liquidated amounts due employees of the
Acquired Companies with respect to compensation, incentive compensation and
benefits have been paid or accrued on the Effective Date Balance Sheet or are
reflected in employment agreements executed in connection with the Closing,
following review thereof by Hathaway, and no liability incurred prior to the
Effective Date with respect to employee costs remain after the Effective Date
other than amounts so accrued or reserved and accrued time for vacations, sick
leave and other benefits measured by the passage of time and not payable in
cash.
5.9 Los Alamos Agreement. The TIS 4000 Technology in TIS 4000 Systems has
been developed pursuant to the Nonexclusive Computer Software License Agreement
between the Regents of the University of California and the University of
Chicago with TIS, effective as of July 9, 1993. No further payments to licensors
under such license agreement with respect to operations prior to the Effective
Date are due or payable with respect to the TIS 4000 Technology and TIS 4000
System.
5.10 Work In Process. As a part of ▇▇▇▇'▇ Closing Documents, ▇▇▇▇ shall
provide at the Closing a letter setting forth reasonably complete details
concerning the Contracts referred to in Section 3.18(a), identifying the
Contracts and a good-faith estimate by ▇▇▇▇, based on the Knowledge of ▇▇▇▇ and
the Acquired Companies, of the amount of the remaining commitment by the
Acquired Companies under the Contracts, which may include specified written
assumptions.
5.11 Continuation Of Insurance. ▇▇▇▇ will continue in effect all policies
of insurance referred to under Section 3.19 until at least the close of business
on October 10, 1996, and Hathaway will place in effect such policies of
insurance as it elects to provide as of the close of business on September 30,
1996.
6. CERTAIN COVENANTS OF HATHAWAY.
6.1 Accuracy Of Representations. All of Hathaway's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), are accurate in all
material respects as of the date of this Agreement.
6.2 Hathaway's Performance. Each document required to be delivered by
Hathaway at Closing pursuant to Section 2.4(b) has been delivered and Hathaway
has made the cash payment required to be made by it pursuant to Section
2.4(b)(1) and has caused to be assigned to ▇▇▇▇ the
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accounts receivable referred to in Section 2.2(b).
6.3 Opinion Of Counsel. There has been delivered to ▇▇▇▇ an opinion
in form satisfactory to ▇▇▇▇ of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C. dated the Closing Date
covering the following matters:
(a) The Agreement is enforceable against Hathaway.
(b) Neither the execution and delivery of the Agreement, nor the
performance of Hathaway's obligations thereunder (i) violates any provision
of the articles of incorporation or bylaws (or other governing instrument)
of Hathaway, (ii) breaches or constitutes a default (or an event that, with
notice or lapse of time or both, would constitute a default) under any
agreement or commitment to which Hathaway is a party or (iii) violates any
statute, law, regulation or rule, or any judgment, decree or order of any
court or Governmental Body applicable to Hathaway.
6.4 No Proceedings. There has not been commenced or Threatened
against Hathaway, or against any Person affiliated with Hathaway, any Proceeding
(i) involving any challenge to, or seeking damages or other relief in connection
with, any of the Transactions, or (ii) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Transactions.
6.5 Accounts Receivable; Cooperation. Hathaway shall make TIS
employees and information available to ▇▇▇▇ as reasonably requested in order to
pursue collections of the accounts receivable referred to in Section 2.2(b), and
as necessary to assess, evaluate and respond to any claim by Hathaway hereunder.
7. INDEMNIFICATION; REMEDIES.
7.1 Survival; Right to Indemnification Not Affected By Knowledge.
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, and any other certificate or document delivered pursuant
to this Agreement will survive the Closing. The right to indemnification,
payment of Damages or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant,
or obligation except as specifically noted herein and in the Disclosure Letter.
The waiver of any condition based on the accuracy of any representation or
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warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages, or
other remedy based on such representations, warranties, covenants, and
obligations.
7.2 Indemnification And Payment Of Damages By ▇▇▇▇. Subject to the
limitation stated in the last paragraph of this Section 7.2, ▇▇▇▇ will indemnify
and hold harmless Hathaway, the Acquired Companies, and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage, expense (including
reasonable costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by ▇▇▇▇ in
this Agreement, the Disclosure Letter, or any other certificate or document
delivered by ▇▇▇▇ pursuant to this Agreement;
(b) any Breach by ▇▇▇▇ of any covenant or obligation of ▇▇▇▇ in
this Agreement;
(c) any product shipped or manufactured by, or any services
provided by, the Acquired Companies prior to the Effective Date;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either ▇▇▇▇ or the
Acquired Companies (or any Person acting on their behalf) in connection
with any of the Transactions.
The remedies provided in this Section 7.2 will not be exclusive of or
limit any other remedies that may be available to Hathaway or the other
Indemnified Persons.
Notwithstanding any other provision of this Agreement, (A) ▇▇▇▇ shall
not be liable for any costs the Acquired Companies may incur with respect to
obligations of TIS to the KUB-TIS Joint Venture described in Section 3.2(c) of
this Agreement by reason of (i) a requirement to pay additional capital pursuant
to Section 5.3.1 of the Joint Venture Agreement or (ii) default on performance
under Article XII of the License Agreement. Hathaway accepts the ownership
position of TIS as stated in the Joint Venture Agreement to be 11.42%; and (B)
▇▇▇▇ shall have no liability for any obligation to indemnify Hathaway under this
Section 7.2 up to the first $20,000 in the aggregate of such liabilities, but
shall be liable for any obligations hereunder in excess of $20,000
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in the aggregate. Any amount due Hathaway hereunder shall be paid within 15 days
after notice of payment due and, if applicable, resolution of any dispute
related thereto, and if not so paid may be offset against the indebtedness of
Hathaway to ▇▇▇▇ with respect to accounts receivable as described in Section
2.2(b) of this Agreement.
7.3 Indemnification And Payment Of Damages By ▇▇▇▇--Environmental
Matters. In addition to the provisions of Section 7.2, ▇▇▇▇ will indemnify and
hold harmless Hathaway, the Acquired Companies, and the other Indemnified
Persons for, and will pay to Hathaway, the Acquired Companies, and the other
Indemnified Persons the amount of, any Damages (including costs of cleanup,
containment, or other remediation) arising, directly or indirectly, from or in
connection with:
(a) any Environmental, Health, and Safety Liabilities arising
out of or relating to: (i) (A) the ownership, operation, or condition at
any time on or prior to the Effective Date of the Facilities or any other
properties and assets (whether real, personal, or mixed and whether
tangible or intangible) in which ▇▇▇▇ or any Acquired Company has or had an
interest, or (B) any Hazardous Materials or other contaminants that were
present on the Facilities or such other properties and assets at any time
on or prior to the Effective Date; or (ii) (A) any Hazardous Materials or
other contaminants, wherever located, that were generated, transported,
stored, treated, Released, or otherwise handled by ▇▇▇▇ or any Acquired
Company or by any other Person for whose conduct they are or may be held
responsible at any time on or prior to the Effective Date, or (B) any
Hazardous Activities that were, or were allegedly, conducted by ▇▇▇▇ or any
Acquired Company or by any other Person for whose conduct they are or may
be held responsible; or
(b) any bodily injury (including illness, disability, and death,
and regardless of when any such bodily injury occurred, was incurred, or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property),
or other damage of or to any Person, including any employee or former
employee of ▇▇▇▇ or any Acquired Company or any other Person for whose
conduct they are or may be held responsible, in any way arising from or
allegedly arising from any Hazardous Activity conducted or allegedly
conducted with respect to the Facilities or the operation of the Acquired
Companies prior to the Effective Date, or from Hazardous Material that was
(i) present or suspected to be present on or before the Effective Date on
or at the Facilities (or present or suspected to be present on any other
property, if such Hazardous Material emanated or allegedly emanated from
any of the Facilities and was present or suspected to be present on any of
the Facilities on or prior to the Effective Date) or (ii) Released or
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allegedly Released by ▇▇▇▇ or any Acquired Company or any other Person for
whose conduct they are or may be held responsible, at any time on or prior
to the Effective Date.
Hathaway and ▇▇▇▇ will jointly control any Cleanup, any related Proceeding, and,
except as provided in the following sentence, any other Proceeding with respect
to which indemnity may be sought under this Section 7.3. The procedure described
in Section 7.6 will apply to any claim solely for monetary damages relating to a
matter covered by this Section 7.3.
7.4 Indemnification And Payment Of Damages By Hathaway. Hathaway
will indemnify and hold harmless ▇▇▇▇, and will pay to ▇▇▇▇ the amount of any
Damages arising, directly or indirectly, from or in connection with (i) any
Breach of any representation or warranty made by Hathaway in this Agreement or
in any certificate delivered by Hathaway pursuant to this Agreement, (ii) any
Breach by Hathaway of any covenant or obligation of Hathaway in this Agreement,
or (iii) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by such Person with Hathaway (or any Person acting on its behalf) in
connection with any of the Transactions. Any amount due ▇▇▇▇ hereunder shall be
paid within 15 days after notice of payment due and, if applicable, resolution
of any dispute related thereto.
7.5 Procedure For Indemnification--Third-Party Claims.
(a) Promptly after receipt by an indemnified party under Section
7.2, 7.4, or (to the extent provided in the last sentence of Section 7.3)
Section 7.3 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying
party of the commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 7.5(a) is brought
against an indemnified party and it gives notice to the indemnifying party
of the commencement of such Proceeding, the indemnifying party will, unless
the claim involves Taxes, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is
also a party to such Proceeding and the indemnified party determines in
good faith that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such
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Proceeding and provide indemnification with respect to such Proceeding), to
assume the defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding,
the indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Section 7 for any
fees of other counsel or any other expenses with respect to the defense of
such Proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the
defense of a Proceeding, (x) it will be conclusively established for
purposes of this Agreement that the claims made in that Proceeding are
within the scope of and subject to indemnification; (xi) no compromise or
settlement of such claims may be effected by the indemnifying party without
the indemnified party's consent unless (A) there is no finding or admission
of any violation of Legal Requirements or any violation of the rights of
any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages
that are paid in full by the indemnifying party; and (xii) the indemnified
party will have no liability with respect to any compromise or settlement
of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten days after the indemnified party's
notice is given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will be bound
by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result
of monetary damages for which it would be entitled to indemnification under
this Agreement, the indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise, or settle such
Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
(d) ▇▇▇▇ and Hathaway hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters
alleged therein, and agree that process may be served on ▇▇▇▇ and ▇▇▇▇▇▇▇▇
with respect to such a claim anywhere in the world.
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7.6 Procedure For Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
7.7 Cross Indemnification. ▇▇▇▇ has provided performance bonds for
the benefit of ▇▇▇▇ and other companies Affiliated with ▇▇▇▇. TIS is secondarily
liable for default thereunder on bonds issued only by Midwest and not on bonds
issued by Amwest Surety Insurance Company or USF&G (except for the payment and
performance issued by USF&G as surety in the face amounts of $3,234,416.00 each
pursuant to an agreement between TISLP and the Colorado River Commission of
Nevada dated November 27, 1995). Schedule 3 contains a complete and accurate
list of all contracts of ▇▇▇▇ and its Affiliates on which TIS has any liability
as surety for ▇▇▇▇ and its Affiliates. ▇▇▇▇ and such other covered entities
shall reimburse TIS for any amounts paid by TIS in satisfaction of such claims
which are unrelated to claims for nonpayment or nonperformance by TIS. ▇▇▇▇ has
provided performance bonds for TIS with USF&G on which ▇▇▇▇ and other companies
Affiliated with ▇▇▇▇ are secondarily liable for default by TIS, and TIS shall
reimburse ▇▇▇▇ and such other companies for any amounts paid by ▇▇▇▇ or such
other companies thereunder in satisfaction of such claims which are unrelated to
claims for nonpayment or nonperformance by ▇▇▇▇. Any amount due TIS with respect
to such bonding obligations shall be an indemnity obligation of ▇▇▇▇ to Hathaway
hereunder, and any amount due ▇▇▇▇ or other companies Affiliated with ▇▇▇▇ with
respect to such bonding obligations shall be an indemnity obligation of Hathaway
to ▇▇▇▇ hereunder. ▇▇▇▇ will provide to Hathaway separate indemnity agreements
from ▇▇▇▇'▇ Affiliates which are benefited by Hathaway's indemnification
hereunder in form reasonably satisfactory to Hathaway. ▇▇▇▇ will pay over to
Hathaway any amounts received from Day & ▇▇▇▇▇▇▇▇▇▇ Incorporated or any of its
Affiliates with respect to indemnity obligations paid by TIS for its benefit.
▇▇▇▇ will undertake such action as is reasonably possible to assure that
remedies against ▇▇▇▇ and its Affiliates are exhausted before action is taken
against Hathaway, and Hathaway shall undertake such action as is reasonably
possible to assure ▇▇▇▇ that remedies against Hathaway are exhausted before
action is taken against ▇▇▇▇. At ▇▇▇▇▇▇▇▇'▇ request ▇▇▇▇ will undertake
reasonable action to release TIS from its obligation as security for bonding
obligations of ▇▇▇▇ and other companies Affiliated with ▇▇▇▇ so long as ▇▇▇▇ is
concurrently released from its obligation as security for bonding obligations of
TIS. Hathaway and ▇▇▇▇ will undertake good faith efforts to effect the release
of each other as security for their respective bonding obligations as soon as
possible but in no event later than June 30, 1997.
8. GENERAL PROVISIONS.
8.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to
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this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Transactions,
including all fees and expenses of agents, representatives, counsel, and
accountants. ▇▇▇▇ will cause the acquired companies not to incur any out-of-
pocket expenses in connection with this Agreement. In the event of termination
of this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
8.2 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement or the Transactions will be issued, if
at all, at such time and in such manner as Hathaway determines. ▇▇▇▇ and
▇▇▇▇▇▇▇▇ will consult with each other concerning the means by which the Acquired
Companies' employees, customers, and suppliers and others having dealings with
the Acquired Companies will be informed of the Transactions.
8.3 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (i) delivered by hand (with written confirmation of
receipt), (ii) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed on the same date by registered or certified mail,
return receipt requested, or (iii) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):
▇▇▇▇: ▇▇▇▇ Engineering Services Corporation
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Hathaway: Hathaway Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.4 Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Colorado, County of ▇▇▇▇▇▇▇ or any other county in Colorado or another state
in which the principal office of Hathaway or the Acquired Companies is located,
or, if it has or can acquire jurisdiction, in the United States District Courts
for the District of Colorado or another state, and each of the parties consents
to the jurisdiction of such courts (and of the appropriate appellate courts) in
any such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
8.5 Further Assurances. The parties agree (i) to furnish upon
request to each other such further information, (ii) to execute and deliver to
each other such other documents, and (iii) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
8.6 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (i) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (ii) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (iii) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
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8.7 Entire Agreement And Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the Letter of Intent between Hathaway and ▇▇▇▇ dated July 10, 1996)
and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
8.8 Disclosure Letter. The disclosures in the Disclosure Letter must
relate only to the representations and warranties in the Section of the
Agreement to which they expressly relate and not to any other representation or
warranty in this Agreement.
8.9 Assignments, Successors, And No Third-Party Rights. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, which will not be unreasonably withheld, except
that Hathaway may assign any of its rights under this Agreement to any
subsidiary of Hathaway on the condition that Hathaway remains fully responsible
and liable for all obligations of Hathaway hereunder. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
8.10 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
8.11 Section Headings, Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
8.12 Time Of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
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8.13 Late Payment. Any amount due to a party under this Agreement
that is not paid as and when due in accordance with the terms hereof shall bear
interest at the rate of 15% per annum from the due date until such amount plus
accrued interest is paid in full.
8.14 Governing Law. This Agreement will be governed by the laws of
the State of Colorado without regard to conflicts of laws principles.
8.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Hathaway Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------
Executive Vice President
▇▇▇▇ Engineering Services Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------------
President
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Schedule 1
PURCHASE AGREEMENT
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Schedule 1:
"Acquired Companies"-- as defined in Section 3.1, and including any Affiliate.
"Affiliate"--a person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with, a
specified person.
"Applicable Contract"--any Contract entered into by an Acquired Company or an
Affiliate of an Acquired Company on or before the Closing Date (i) under which
any Acquired Company has or may acquire any rights, (ii) under which any
Acquired Company has or may become subject to any obligation or liability, or
(iii) by which any Acquired Company or any of its property and assets are or may
become bound.
"Balance Sheet"--as defined in Section 3.5.
"Breach"--a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been any inaccuracy
in or breach of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision, and the term "Breach" means
any such inaccuracy, breach, or failure.
"Closing"--as defined in Section 2.3.
"Closing Date"--October 8, 1996 or the date and time as of which the Closing
actually takes place.
"Consent"--any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"--as defined in Section 7.2.
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"Disclosure Letter"--the disclosure letter delivered by ▇▇▇▇ to Hathaway
concurrently with the execution and delivery of this Agreement.
"Effective Date"--September 30, 1996 or the date agreed between ▇▇▇▇ and
▇▇▇▇▇▇▇▇ as the date of effectiveness of this Agreement or any specific
provision thereof.
"Effective Date Balance Sheet"--as defined in Section 3.5.
"Effective Date Income Statement"--as defined in Section 3.5.
"Encumbrance"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), ground waters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages, expense,
liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off- site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational Safety
and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
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The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S)9601 et seq., as amended
("CERCLA").
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of intended
or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the Environment
when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"Facilities"--any real property, leaseholds, or other interests currently or
formerly owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired Company.
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"Financial Statements"--as defined in Section 3.5.
"Former Limited Partners"--as defined in the Recitals.
"GAAP"--generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Financial Statements referred to in
Section 3.5 were prepared.
"Governmental Authorization"--any approval, consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any court
or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hathaway"--as defined in the opening paragraph of this Agreement and including
any Affiliate and permitted designee.
"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"Hazardous Materials"--any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution
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thereof, and specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-containing materials.
"Intellectual Property Assets" --as defined in Section 3.23(a).
"IRC"--the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
"Knowledge"--an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, general partner, executor, or trustee
of such Person (or in any similar capacity) has, or at any time had, Knowledge
of such fact or other matter.
"KUB-TIS Joint Venture"--as defined in Section 3.2(c).
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty of general
applicability.
"Limited Partners' Releases"--as defined in Section 2.4(a)(2).
"Occupational Safety and Health Law"--any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order"--any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered,
1-5
issued, made, or rendered by any court, administrative agency, or other
Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority) [and is not required to be specifically authorized by the parent
company (if any) of such Person]; and
(c) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in the same line of
business as such Person.
"Person"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchase Price"--as defined in Section 2.2.
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such individual
or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
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(d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional.
"Representative"--with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
1-7
"▇▇▇▇"--as defined in the opening paragraph of this Agreement, including any
Affiliate and permitted designee.
"▇▇▇▇'▇ Closing Documents"--as defined in Section 2.4(a).
"Tax"--a contribution for the support of government including any income tax,
franchise tax, sales tax, property tax, tax on capital or other levy by a
government against a business.
"Tax Return"--any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or payment of any
Tax or in connection with the administration, implementation, or enforcement of
or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
"TIS"--as defined in the Recitals.
"TIS Limited Partners"--as defined in the Recitals.
"TIS Partnership Interests"--as defined in the Recitals.
"TISI"--as defined in the Recitals and includes all the property and assets, and
liabilities and obligations, of TIS.
"TISI Shares"--as defined in the Recitals.
"Transactions"--all of the transactions contemplated by this Agreement,
including:
(a) the sale of the TISI Shares and TIS Partnership Interests to Hathaway
pursuant to this Agreement;
1-8
(b) the execution, delivery, and performance of the Limited Partners'
Releases;
(c) the performance by Hathaway and ▇▇▇▇ of their respective covenants and
obligations under this Agreement regarding the transfer of TISI Shares and TIS
Partnership Interests.
1-9
Schedule 2
PURCHASE AGREEMENT
Employee Amount
-------- -------
▇▇▇▇▇▇ Uchnick $ 14,175.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 7,087.50
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ 3,543.75
▇▇▇ ▇▇▇▇▇▇▇▇▇ 7,087.50
▇▇▇ ▇▇▇▇▇▇▇▇▇ 3,543.75
▇▇▇▇▇▇ ▇▇▇▇▇ 7,087.50
▇▇▇▇ ▇▇▇▇▇▇ 3,543.75
▇▇▇ ▇▇▇▇ 104,038.00
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 56,748.00
Day ▇▇▇▇▇▇▇▇ 18,916.00
▇▇▇▇ ▇▇▇▇▇▇▇ 47,290.00
▇▇▇▇▇ ▇▇▇▇▇▇▇ 23,646.00
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SCHEDULE 3
OBLIGEE -- SURETY START COMPLETION BOND CONTRACT
CONTACT PERSON/PHONE BOND # DATE DATE PENALTY PRICE
------------------------------------------------------------------------------------------------------------------
TFS Midwest 02/01/94 01/31/97 263,619 1,054,476
General Services Administration NBE009232
▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Brooklyn, NY
------------------------------------------------------------------------------------------------------------------
TFS Midwest 08/01/94 07/31/97 191,880 959,400
General Services Administration GE5627980
▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
U.S. Courthouse, Detroit, MI
------------------------------------------------------------------------------------------------------------------
TFS Midwest 11/01/94 11/01/97 328,869 1,531,476
General Services Administration GE5644305
FOB, Varick St., NY, NY
------------------------------------------------------------------------------------------------------------------
TFS Midwest 01/01/94 12/31/97 74,061 296,244
General Services Administration ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ FOB
Courthouse, Utica, NY
------------------------------------------------------------------------------------------------------------------
United Co-Generators JV Midwest 02/01/95 02/01/98 167,435 167,435
The City of New York GE564447
Maintenance of HVAC - ▇▇▇▇ Stadium
------------------------------------------------------------------------------------------------------------------
TFS Midwest 03/01/95 02/29/96 155,960 779,800
General Services Administration ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Jefferson County, CO
------------------------------------------------------------------------------------------------------------------
TFS Midwest 09/01/94 08/30/96 500,000 500,000
U.S. Postal Service GE5630704
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Albany County, NY
------------------------------------------------------------------------------------------------------------------
TFS Midwest 06/01/93 05/31/96 571,126 2,856,628
General Services Administration NB150797
▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇/ / ▇▇▇▇▇▇▇, Washington, D.C.
------------------------------------------------------------------------------------------------------------------
TFS Midwest 10/01/93 09/30/96 188,107 940,636
General Services Administration NBE001832
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Chicago Federal Building, Chicago, IL
------------------------------------------------------------------------------------------------------------------
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OBLIGEE -- SURETY START COMPLETION BOND CONTRACT
CONTACT PERSON/PHONE BOND # DATE DATE PENALTY PRICE
------------------------------------------------------------------------------------------------------------------
TFS Midwest 01/01/94 01/01/97 311,013 1,244,052
General Services Administration NBE005760
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ Courthouse, Albany, NY
------------------------------------------------------------------------------------------------------------------
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