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EXHIBIT (2)
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PURCHASE AGREEMENT
DATED AS OF JULY 30, 2000
BY AND BETWEEN
WEDGE GROUP INCORPORATED,
WGI TYLER, INC.,
CHICAGO BRIDGE & IRON COMPANY N.V.
AND
CB&I TYLER COMPANY
WITH RESPECT TO THE SALE OF
▇▇▇▇-▇▇▇▇▇ INTERNATIONAL, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..............................................................................................1
Section 1.01 Definitions................................................................................1
Section 1.02 Other Defined Terms.......................................................................11
Section 1.03 Cross References, Interpretation..........................................................11
Section 1.04 Knowledge.................................................................................11
ARTICLE II
PURCHASE AND SALE.......................................................................................12
Section 2.01 Purchase and Sale of HBI Shares...........................................................12
Section 2.02 Payment of Purchase Price.................................................................12
Section 2.03 Post-Closing Adjustment to Purchase Price.................................................13
ARTICLE III
CLOSING.................................................................................................15
Section 3.01 Other Transactions........................................................................15
Section 3.02 The Effective Time........................................................................15
Section 3.03 The Closing...............................................................................15
Section 3.04 Delivery of Documents.....................................................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER............................................................18
Section 4.01 Organization and Qualification; HBI Subsidiaries..........................................18
Section 4.02 Authorization; Enforceability; Absence of Conflicts; Required Approvals and Consents......19
Section 4.03 Ownership of HBI Shares...................................................................20
Section 4.04 Capitalization............................................................................20
Section 4.05 Financial Statements......................................................................20
Section 4.06 Litigation and Orders.....................................................................21
Section 4.07 Compliance with Worker Safety and Environmental Laws......................................22
Section 4.08 Permits and Compliance....................................................................23
Section 4.09 Material Contracts........................................................................24
Section 4.10 Intellectual Property.....................................................................25
Section 4.11 Receivables...............................................................................26
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Section 4.12 Real Properties and Leases................................................................26
Section 4.13 Other Tangible Assets.....................................................................26
Section 4.14 Tax Matters...............................................................................27
Section 4.15 Insurance.................................................................................28
Section 4.16 Employee Matters..........................................................................28
Section 4.17 ERISA.....................................................................................29
Section 4.18 Labor and Employment Matters..............................................................30
Section 4.19 Absence of Changes........................................................................31
Section 4.20 Brokers' Fees.............................................................................32
Section 4.21 Related Party Transactions................................................................32
Section 4.22 Investment Representations................................................................32
Section 4.23 Closing Confirmation by Seller............................................................34
Section 4.24 Limitations on Representations and Warranties.............................................34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER.............................................................35
Section 5.01 Organization; Power.......................................................................35
Section 5.02 Authorization; Enforceability; Absence of Conflicts; Required Consents....................35
Section 5.03 Charter Documents.........................................................................36
Section 5.04 SEC Documents.............................................................................36
Section 5.05 Capitalization............................................................................37
Section 5.06 Absence of Applicable Rights Agreements...................................................37
Section 5.07 Litigation................................................................................37
Section 5.08 Compliance with Worker Safety and Environmental Laws......................................38
Section 5.09 Liabilities and Obligations...............................................................38
Section 5.10 Intellectual Property.....................................................................38
Section 5.11 Material Contracts........................................................................39
Section 5.12 Insurance.................................................................................39
Section 5.13 Employee Matters..........................................................................39
Section 5.14 Compliance With ERISA, Labor Laws.........................................................40
Section 5.15 Absence of Changes........................................................................41
Section 5.16 Broker's Fees.............................................................................42
Section 5.17 Access to Data............................................................................42
Section 5.18 Closing Confirmation by Buyer.............................................................42
Section 5.19 Limitations on Representations and Warranties.............................................43
ARTICLE VI
COVENANTS AND AGREEMENTS OF THE PARTIES.................................................................43
Section 6.01 Reasonable Access and Mutual Cooperation..................................................43
Section 6.02 Conduct of Business Pending the Closing...................................................44
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Section 6.03 Prohibited Activities.....................................................................45
Section 6.04 Notification of Certain Matters...........................................................46
Section 6.05 HSR Act Matters...........................................................................47
Section 6.06 Fees and Expenses.........................................................................47
Section 6.07 Publicity.................................................................................48
Section 6.08 Calling of Shareholders' Meeting; Commercially Reasonable Efforts........................ 48
Section 6.09 Assumption of Earnouts....................................................................48
Section 6.10 Certain Leased Property...................................................................49
ARTICLE VII
CONDITIONS TO CLOSING AND CONSUMMATION..................................................................49
Section 7.01 Conditions to the Obligations of Each Party...............................................49
Section 7.02 Conditions to the Obligations of Seller...................................................49
Section 7.03 Conditions to the Obligations of Buyer....................................................49
ARTICLE VIII
COVENANTS FOLLOWING THE CLOSING.........................................................................50
Section 8.01 Records and Access........................................................................50
Section 8.02 Cooperation in Litigation.................................................................51
Section 8.03 Post-Closing Assistance...................................................................51
Section 8.04 Mail......................................................................................51
Section 8.05 Bonuses...................................................................................51
ARTICLE IX
INDEMNIFICATION.........................................................................................51
Section 9.01 Survival of Representations and Warranties................................................51
Section 9.02 Indemnification of Buyer..................................................................52
Section 9.03 Indemnification of Seller.................................................................54
Section 9.04 Conditions of Indemnification.............................................................54
Section 9.05 Remedies Exclusive........................................................................58
Section 9.06 Limitations on Indemnification............................................................58
Section 9.07 EXPRESS NEGLIGENCE........................................................................58
ARTICLE X
TAXES...................................................................................................59
Section 10.01 Liability for Taxes......................................................................59
Section 10.02 Tax Proceedings..........................................................................60
Section 10.03 Payment of Taxes.........................................................................60
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Section 10.04 Tax Returns..............................................................................61
Section 10.05 Tax Allocation Arrangements..............................................................61
Section 10.06 Cooperation and Exchange of Information..................................................61
Section 10.07 Survival of Obligations..................................................................62
Section 10.08 Tax Disputes.............................................................................62
Section 10.09 Conflict.................................................................................62
ARTICLE XI
GENERAL PROVISIONS......................................................................................62
Section 11.01 Treatment of Confidential Information....................................................62
Section 11.02 Assignment; No Third-Party Beneficiaries.................................................62
Section 11.03 Entire Agreement; Amendment; Waivers.....................................................63
Section 11.04 Notices..................................................................................63
Section 11.05 GOVERNING LAW, JURISDICTION AND VENUE....................................................64
Section 11.06 WAIVER OF CERTAIN CLAIMS.................................................................64
Section 11.07 Exercise of Rights and Remedies..........................................................64
Section 11.08 Reformation and Severability.............................................................65
Section 11.09 Incorporation of Exhibits and Schedules..................................................65
Section 11.10 Counterparts.............................................................................65
Section 11.11 Arbitration..............................................................................65
ARTICLE XII
TERMINATION.............................................................................................68
Section 12.01 Termination of this Agreement............................................................68
Section 12.02 Effect of Termination....................................................................69
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INDEX TO EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Shareholder Agreement
Exhibit B Form of Opinion of Seller's Legal Counsel
Exhibit C Form of Opinion of Buyer's Legal Counsel
Exhibit D HBI LLC Conversion Chart
SCHEDULES
Schedule 3.01 Excluded Items
Schedule 4.01 HBI Subsidiaries
Schedule 4.02 Violations, Approvals and Consents
Schedule 4.04 Outstanding Options, Rights
Schedule 4.05 Financial Statements
Schedule 4.06 Litigation
Schedule 4.07 Environmental Matters
Schedule 4.09 Material Contracts
Schedule 4.10 Intellectual Property
Schedule 4.12 Real Properties
Schedule 4.14 Taxes
Schedule 4.15 Insurance
Schedule 4.16(a) Employment Agreements
Schedule 4.16(b) HBI Plans
Schedule 4.19 Changes Since December 31, 1999
Schedule 4.21 Related Party Transactions
Schedule 5.01 CB&I Material Subsidiaries
Schedule 5.02 Violations, Approvals and Consents
Schedule 5.05 CB&I Capitalization
Schedule 5.06 Rights Agreements
Schedule 5.07 Litigation
Schedule 5.08 Environmental Matters
Schedule 5.10 Intellectual Property
Schedule 5.11 Material Contracts
Schedule 5.12 Insurance
Schedule 5.13(a) Employment Agreements
Schedule 5.13(b) CB&I Plans
Schedule 5.14 ERISA, Labor Matters
Schedule 5.15 Absence of Changes
Schedule 6.09 Earnout Agreements
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Schedule 9.02(a) Prepaid Insurance Contracts
Schedule 9.02(b) Known Environmental Conditions
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of July 30, 2000 by and between WEDGE Group Incorporated, a Delaware
corporation ("WGI"), WGI Tyler, Inc., a Delaware corporation ("WGI Sub", and
collectively with WGI, the "Seller"), Chicago Bridge & Iron Company N.V., a
Netherlands company ("CB&I"), and CB&I Tyler Company, a Delaware corporation
("CB&I Sub", and collectively with CB&I, the "Buyer").
I N T R O D U C T I O N
WHEREAS, Seller is the owner of all of the issued and
outstanding Capital Stock (the "HBI Shares") of ▇▇▇▇-▇▇▇▇▇ International, Inc.,
a Delaware corporation ("HBI");
WHEREAS, HBI is engaged in the business of providing
engineering services, including plant engineering, procurement and construction
services, and/or offering specialized equipment (the "Business"); and
WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to
purchase from Seller, all of the HBI Shares (the "Acquisition").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements stated herein, and upon
the terms and subject to the conditions hereinafter set forth, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used herein, the following terms shall
have the meanings set forth below:
"AAA" means the American Arbitration Association, New York
City.
"AAA Rules" means the Commercial Arbitration Rules of the
American Arbitration Association as in effect on the date of the applicable
Notice of Arbitration.
"Acquisition" has the meaning specified in the Introduction.
"Affiliate" means, as to any specified Person, any other
Person that, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "control" means the
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possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through ownership
of Capital Stock of that Person, by contract or otherwise).
"Agreement" means this Agreement, including all attached
Schedules, Annexes, Addenda and Exhibits, as the same may be amended, modified
or supplemented from time to time.
"Alternative Proposal" has the meaning specified in Section
12.01(c).
"Appeal Notice" has the meaning specified in Section 2.03(d).
"Arbitrator List" has the meaning specified in Section
11.11(a).
"Business" has the meaning specified in the Introduction.
"Buyer" has the meaning specified in the first paragraph of
this Agreement.
"Buyer Indemnified Loss" has the meaning specified in Section
9.02.
"Buyer Notice" has the meaning specified in Section 10.02.
"Callidus Reports" has the meaning specified in Schedule
9.02(b).
"Capital Stock" means, with respect to: (a) any corporation,
any share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in that corporation; and (b) any other
Entity, any share, membership or other percentage interest, unit of
participation or other equivalent (however designated) of an equity interest in
that Entity.
"Cash Amount" has the meaning specified in Section 2.02.
"CB&I" has the meaning specified in the first paragraph of
this Agreement.
"CB&I Proxy Statement" has the meaning specified in Section
6.08.
"CB&I Sub" has the meaning specified in the first paragraph of
this Agreement.
"CB&I Stock" means the common stock of CB&I, par value NLG .01
per share.
"Ceiling Amount" means $40,000,000 in respect of Buyer
Indemnified Losses and $40,000,000 in respect of Seller Indemnified Losses.
"Chair" has the meaning specified in Section 11.11(a).
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"Charter Documents" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time, (a) the
articles or certificate of formation, incorporation, association or organization
(or the equivalent organizational documents) of that Entity, (b) the bylaws,
limited liability company agreement or regulations, or partnership agreements
(or the equivalent governing documents) of that Entity, and (c) each document
setting forth the designation, amount and relative rights, limitations and
preferences of any class or series of that Entity's Capital Stock or of any
rights in respect of that Entity's Capital Stock.
"Claim Notice" has the meaning specified in Section 9.04(b).
"Closing" has the meaning specified in Section 3.03.
"Closing Date" has the meaning specified in Section 3.03.
"Closing Date Balance Sheet" shall mean the unaudited, pro
forma balance sheet of HBI and the HBI Subsidiaries prepared in accordance with
GAAP as of the close of business on the Deemed Date, which shall be prepared on
the same basis and utilizing the same accounting principles as the December 31,
1999 audited balance sheet included with the HBI Financial Statements.
"Closing Date Working Capital" has the meaning specified in
Section 2.03(a).
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Confidential Information" means, with respect to any Person,
all trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales programs,
capital expenditure projects, cost summaries, pricing formulae, contract
analyses, financial information, projections, confidential filings with any
Governmental Authority and all other confidential, nonpublic concepts, methods
of doing business, ideas, materials or information prepared or performed for, by
or on behalf of that Person.
"Covered Entities" has the meaning specified in Section
9.04(h).
"Damage" to any specified Person means any cost, damage
(including any consequential, exemplary, punitive or treble damage) or expense
(including reasonable fees of, and actual disbursements by, attorneys,
consultants, experts or other Representatives and Litigation costs) to, any fine
of or penalty on, or any liability (including loss of earnings or profits) of
any other nature of that Person; provided, that if any Indemnified Party should
have a claim against any Indemnifying Party that does not involve a Third-Party
Claim and for which the Indemnified Party seeks indemnification pursuant to
Section 9.04(e), the amount of Damages
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attributable to that claim will not include any amount representing indirect,
consequential, special, exemplary, punitive or treble damages.
"Damage Claim" means, (a) as asserted against any specified
Person, any claim, demand or Litigation made or pending against the specified
Person for Damages to any other Person, or (b) as asserted by the specified
Person, any claim or demand of the specified Person against any other Person for
Damages to the specified Person.
"Deemed Date" means the last day of the month immediately
preceding the month which includes the Closing Date; provided, however, that if
the Closing Date is the last day of a month, the "Deemed Date" means the Closing
Date.
"Disagreement Notice" has the meaning specified in Section
2.03(c).
"Dispute" has the meaning specified in Section 11.11.
"Earnout Agreements" has the meaning specified in Section
6.09.
"Effective Time" has the meaning specified in Section 3.02.
"Election Period" has the meaning specified in Section
9.04(b).
"Employee" means an employee of any or all of the Seller
Entities who is involved in the operation of the Business.
"Employee Policies and Procedures" means at any time all
employee manuals and all Material policies, procedures and work-related rules
that apply at that time to any employee, nonemployee director or officer of, or
any other natural person performing consulting or other independent contractor
services for, the Seller Entities.
"Employment Agreements" means those agreements listed on
Schedule 4.16(a).
"Entity" means any sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"Environmental Claim" has the meaning specified in Section
9.02(b)(i).
"Environmental Laws" means any and all Governmental
Requirements, common law rule (including but not limited to the common law
respecting nuisance and tortious liability), or other requirement having the
force and effect of law, relating to the environment, including ambient air,
surface water, land surface or subsurface strata, or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous
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substances or wastes (including Solid Wastes, Hazardous Wastes or Hazardous
Substances) or noxious noise or odor into the environment, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
recycling, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes (including petroleum,
petroleum distillates, asbestos or asbestos-containing material, polychlorinated
biphenyls, chlorofluorocarbons (including chlorofluorocarbon-12) or
hydrochloro-fluorocarbons).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Environmental Ceiling Amount" has the meaning specified in
Section 9.06(a).
"Estimated Closing Date Balance Sheet" shall mean the Seller's
unaudited good-faith estimate of the pro forma balance sheet of HBI and the HBI
Subsidiaries as of the close of business on the Deemed Date, which shall be
prepared on the same basis and utilizing the same accounting principles as the
December 31, 1999 audited balance sheet included with the HBI Financial
Statements.
"Estimated Closing Date Working Capital" has the meaning
specified in Section 2.02(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excess Working Capital" means the net working capital of HBI
and the HBI Subsidiaries on a consolidated basis as of the Deemed Date in the
amount of $32,000,000.
"Excluded Items" has the meaning specified in Section 3.01(a).
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time, which have been
or are applied on a basis consistent with past practice.
"Governmental Approval" means at any time any authorization,
consent, approval, permit, franchise, certificate, license, implementing order
or exemption of, or registration or filing with, any Governmental Authority,
including any certification or licensing of a natural person to engage in a
profession or trade or a specific regulated activity, at that time.
"Governmental Authority" means (a) any national, state,
county, municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality of any
such government, or (b) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes for its own account.
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"Governmental Requirement" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
writ, edict, award, or authorization of any Governmental Authority in effect at
that time or (b) any obligation included in any certificate, certification,
franchise, permit or license issued by any Governmental Authority or resulting
from binding arbitration, including any requirement under common law, at that
time.
"Group" has the meaning specified in Section 10.01(a).
"Guaranty" means, for any specified Person, without
duplication, any liability, contingent or otherwise, of that Person guaranteeing
or otherwise becoming liable for any obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any liability of the specified Person, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) that obligation
or to purchase (or to advance or supply funds for the purchase of) any security
for the payment of that obligation, (b) to purchase property, securities or
services for the purpose of assuring the owner of that obligation of its payment
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay that obligation; provided, that the term "Guaranty" does not
include endorsements for collection or deposit in the ordinary course of the
endorser's business.
"HBI" has the meaning specified in the Introduction.
"HBI Balance Sheet" has the meaning specified in Section
4.05(b).
"HBI Financial Statements" has the meaning specified in
Section 4.05(a).
"HBI Shares" has the meaning specified in the Introduction.
"HBI Subsidiaries" (or comparable references to "its
Subsidiaries" or "Subsidiaries of HBI") means all Subsidiaries of HBI other than
those Subsidiaries whose Capital Stock is listed on Schedule 3.01 as part of the
Excluded Items.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended from time to time.
"Hwy 850 Reports" has the meaning specified in Schedule
9.02(b).
"Indebtedness" of any Person means, without duplication, (a)
any liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds, letters of
credit, banker's acceptances and similar instruments), for the deferred purchase
price of property or services or arising under conditional sale or other title
retention agreements, other
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than trade payables arising in the ordinary course of business, (ii) evidenced
by notes, bonds, debentures or similar instruments, (iii) in respect of capital
leases or (iv) in respect of interest rate protection agreements, (b) any
liability secured by any Lien upon any property or assets of that Person (or
upon any revenues, income or profits of that Person therefrom), whether or not
that Person has assumed that liability or otherwise become liable for the
payment thereof or (c) any liability of others of the type described in the
preceding clause (a) or (b) in respect of which that Person has incurred,
assumed or acquired a liability by means of a Guaranty.
"Indemnity Notice" has the meaning specified in Section
9.04(e).
"Indemnified Party" has the meaning specified in Section
9.04(b).
"Indemnifying Party" has the meaning specified in Section
9.04(b).
"Information" means written information, including (a) data,
certificates, reports and statements (excluding the HBI Financial Statements,
Estimated Closing Date Balance Sheet and the Closing Date Balance Sheet) and (b)
summaries of unwritten agreements, arrangements, contracts, plans, policies,
programs or practices or of unwritten amendments or modifications of,
supplements to or waivers under any of the foregoing documents.
"Intellectual Property" means (a) patents, applications for
patents and patent rights, (b) in each case, whether registered, unregistered or
under pending registration, trademark rights, trade names, trade name rights,
service marks, logos, brand names, corporate names, business names, trade styles
or dress, and copyrights and (c) trade secrets and know-how and rights in any
jurisdiction to limit the use or disclosure thereof by any Person.
"IRS" means the Internal Revenue Service.
"Known Environmental Condition" has the meaning specified in
Section 9.02(b).
"Licensed Intellectual Property" has the meaning specified in
Section 4.10(a).
"Lien" means, with respect to any property or asset of any
Person (or any revenues, income or profits of that Person therefrom) (in each
case whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise), any mortgage, lien, security
interest, pledge, attachment, levy or other charge or encumbrance of any kind
thereupon or in respect thereof.
"Litigation" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or pending
before any Governmental Authority or any arbitration proceeding.
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"Material" means, as applied to any Entity or the Business,
material to the business, operations, property or assets, liabilities, condition
(financial or otherwise) or results of operations of that Entity or the
Business, as the case may be.
"Material Adverse Effect" means, with respect to the Business
or any Entity, the result of one or more events, changes or effects which,
individually or in the aggregate, would have a material adverse effect on the
business, operations, property or assets, liabilities or condition (financial or
otherwise) of the Business or, as the case may be, that Entity and its
Subsidiaries taken as a whole, except for (i) any event, change or effect
resulting from general economic, financial or market conditions or (ii) any
event, change or effect resulting from conditions or circumstances generally
affecting the engineering and construction industry; provided, however, that for
purposes of any claim for Buyer Indemnified Losses or Seller Indemnified Losses
made pursuant to Article IX that relates to an alleged breach of a
representation or warranty in Article IV or Article V which contains or is
qualified by the phrase "Material Adverse Effect", "Material Adverse Effect"
shall mean the consequences of any fact or circumstance (including the
occurrence or nonoccurrence of any event) to the Business, such that such fact
or circumstance has caused, is causing or will cause, directly, indirectly or
consequentially, singly or in the aggregate with other facts and circumstances,
any Material Damages.
"Material Contract" has the meanings specified in Section
4.09(a) and Section 5.11.
"Notice of Arbitration" has the meaning specified in Section
11.11(a).
"Organization State" means, as applied to (a) any corporation,
its state or other jurisdiction of incorporation or (b) any limited liability
company or limited partnership, the state or other jurisdiction under whose laws
it is organized and existing in that legal form.
"Owned Intellectual Property" has the meaning specified in
Section 4.10(a).
"Permits" has the meaning specified in Section 4.08.
"Permitted Liens" means, as applied to the property or assets
of any Person (or any revenues, income or profits of that Person therefrom): (a)
Liens for Taxes if the same are not at the time due and delinquent; (b) Liens of
carriers, warehousemen, mechanics, laborers and materialmen for sums not yet
due; (c) Liens incurred in the ordinary course of that Person's business in
connection with workmen's compensation, unemployment insurance and other social
security legislation (other than pursuant to ERISA or Section 412(n) of the
Code); (d) Liens incurred in the ordinary course of that Person's business in
connection with deposit accounts or to secure the performance of bids, tenders,
trade contracts, statutory obligations, surety and appeal bonds, performance and
return-of-money bonds and other obligations of like nature; (e)
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easements, rights-of-way, reservations, restrictions and other similar
encumbrances incurred in the ordinary course of that Person's business or
existing on property and not Materially interfering with the ordinary conduct of
that Person's business or the use of that property; (f) defects or
irregularities in that Person's title to its real properties that do not
Materially (i) diminish the value of the surface estate or (ii) interfere with
the ordinary conduct of that Person's business or the use of any of such
properties; (g) any interest or title of a lessor of assets being leased by any
Person pursuant to any capital lease or any lease that, pursuant to GAAP, would
be accounted for as an operating lease; and (h) Liens securing purchase money
Indebtedness disclosed in Schedule 4.12 so long as such Liens do not attach to
any property or assets other than the properties or assets purchased with the
proceeds of such Indebtedness.
"Person" means any natural person, Entity, estate, trust,
union or employee organization or Governmental Authority.
"Place of Arbitration" has the meaning specified in Section
11.11(a).
"Plan" has the meaning specified in Section 4.16(b).
"Pre-Closing Period" has the meaning specified in Section
10.01(a).
"Preliminary Hearing" has the meaning specified in Section
11.11(c).
"Prepaid Insurance Contract" has the meaning specified in
Section 9.02(a).
"Proceeding Notice" has the meaning specified in Section
10.02.
"Purchase Price" has the meaning specified in Section 2.02.
"Real Property" has the meaning specified in Section 4.12(b).
"Remedial Action" has the meaning specified in Section
9.02(b).
"Representatives" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents
of that Person, or any other representatives of that Person or of any of those
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents.
"Rights Agreements" has the meaning specified in Section 5.06.
"SEC" means the United States Securities and Exchange
Commission.
"SEC Documents" has the meaning specified in Section 5.04.
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"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning specified in the Introduction.
"Seller Entity" and "Seller Entities" means HBI and the HBI
Subsidiaries.
"Seller Indemnified Loss" has the meaning specified in Section
9.03.
"Shareholder Agreement" means that certain Shareholder
Agreement to be dated the Closing Date between WGI and CB&I attached as Exhibit
A hereto.
"Shareholders' Meeting" has the meaning specified in Section
6.08.
"Solid Wastes, Hazardous Wastes or Hazardous Substances" have
the meanings ascribed to those terms in CERCLA, RCRA or any other Environmental
Law applicable to the business or operations of HBI and its Subsidiaries, or
CB&I and its Subsidiaries, as the case may be, that imparts a broader meaning to
any of those terms than does CERCLA or RCRA, including but not limited to (i)
petroleum and petroleum products, including crude oil and any fractions thereof,
(ii) asbestos, (iii) PCBs, and (iv) natural gas, synthetic gas and any mixtures
thereof.
"Stock Consideration" means 8,146,665 shares of CB&I Stock.
"Subsidiary" of any specified Person at any time means any
Entity a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"Tax" or "Taxes" means all net or gross income, gross
receipts, net proceeds, sales, use, ad valorem, value added, franchise, bank
shares, withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges or assessments of any nature
whatsoever imposed by any Governmental Requirement, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.
"Tax Return" means any report, return, information statement,
payee statement or other information required to be provided to any federal,
state, local or foreign Taxing Authority, or otherwise retained, with respect to
Taxes.
"Taxing Authority" means any Governmental Authority having or
purporting to exercise jurisdiction with respect to any Tax.
"Third-Party Claim" has the meaning specified in Section
9.04(b).
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"Threshold Amount" means $5,000,000.
"Transaction Document" means this Agreement, the Shareholder
Agreement and the other written agreements, documents, instruments and
certificates executed pursuant to or in connection with this Agreement,
including those specified or referred to in Article III or Article VII to be
delivered at or before the Closing, all as amended, modified or supplemented
from time to time.
"Unadjusted Aggregate Purchase Price" has the meaning
specified in Section 2.02(a)(iii).
"WGI" has the meaning specified in the first paragraph of this
Agreement.
"WGI Sub" has the meaning specified in the first paragraph of
this Agreement.
"Worker Safety Laws" has the meaning specified in Section
4.07(a).
Section 1.02 Other Defined Terms. Words and terms used in this
Agreement that are defined elsewhere in this Agreement are used as so defined.
Section 1.03 Cross References, Interpretation. References to "Articles"
refer to Articles of this Agreement. References to "Sections" refer to Sections
and subsections of this Agreement. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa. Whenever the word "including" is used in this Agreement,
it shall be read to mean "including but not limited to." The headings in this
Agreement are inserted for convenience only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
Section 1.04 Knowledge. Where any statement is qualified by the
expression "to the Seller's knowledge" or by a similar expression, that
statement shall be deemed to be the actual personal knowledge, after due inquiry
of the relevant senior operating employees of Seller, HBI and the applicable HBI
Subsidiary, of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. Where any statement is qualified by
the expression "to the Buyer's knowledge" or by a similar expression, that
statement shall be deemed to be the actual personal knowledge, after due inquiry
of the relevant senior operating employees of CB&I and the applicable CB&I
Subsidiary, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
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ARTICLE II
PURCHASE AND SALE
Section 2.01 Purchase and Sale of HBI Shares. Upon the terms and
subject to the satisfaction of the conditions contained in this Agreement, at
the Closing (a) WGI shall sell, convey, assign, transfer and deliver to CB&I
Sub, and CB&I Sub shall purchase and acquire from WGI, by delivery of the Cash
Amount (as hereinafter defined), 35% of the HBI Shares, and (b) WGI Sub shall
sell, convey, assign, transfer and deliver to CB&I, and CB&I shall purchase and
acquire from WGI Sub, by delivery of the Stock Consideration, 65% of the HBI
Shares.
Section 2.02 Payment of Purchase Price. (a) Purchase Price.
(i) In consideration of the sale of 35% of the HBI Shares by
WGI to CB&I Sub, CB&I Sub shall pay to WGI in immediately available funds, by
wire transfer, Twenty-Eight Million U.S. Dollars (U.S. $28,000,000) at the
Closing plus an amount equal to Excess Working Capital within one business day
after the Closing (collectively, the "Cash Amount").
(ii) In consideration of the sale of 65% of the HBI Shares by
WGI Sub to CB&I, CB&I shall deliver to WGI Sub at the Closing the Stock
Consideration.
(iii) The Cash Amount and the Stock Consideration referred to
above shall constitute the "Unadjusted Aggregate Purchase Price" of the HBI
Shares; provided, however, that such Unadjusted Aggregate Purchase Price shall
be subject to adjustment, as it relates to the Cash Amount being paid by CB&I
Sub, as described in Sections 2.02(c) and 2.03 (as adjusted, the "Purchase
Price").
(b) Determination of Estimated Closing Date Working Capital. Seller
shall prepare (with Buyer's cooperation including reasonable access for Buyer to
the books and records of HBI and the HBI Subsidiaries for this purpose) the
Estimated Closing Date Balance Sheet setting forth the current assets and
current liabilities for HBI and the HBI Subsidiaries on a consolidated basis
(excluding the Excluded Items and any amounts relating to the Supplemental
Executive Retirement Plan for the Chief Executive Officer of HBI referred to in
Schedule 4.16(a)) as of the Deemed Date ("Estimated Closing Date Working
Capital").
(c) Pre-Closing Adjustment to Purchase Price. If the Estimated Closing
Date Working Capital, as determined pursuant to Section 2.02(b), is less than
the sum of (i) $30,000,000 plus (ii) any amount paid pursuant to Section
6.03(a)(i)(B), then the Cash Amount shall be reduced by the amount of such
shortfall. If the Estimated Closing Date Working Capital, as determined pursuant
to Section 2.02(b), is greater than $34,000,000, then the Cash Amount shall be
increased by the amount of such excess.
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Section 2.03 Post-Closing Adjustment to Purchase Price. (a) Preparation
of Closing Date Balance Sheet. As soon as practicable after the Closing, and in
any event within twenty (20) days following the Closing Date, Seller shall
prepare (and Buyer shall cooperate with Seller) the Closing Date Balance Sheet
setting forth the current assets and current liabilities for HBI and the HBI
Subsidiaries on a consolidated basis (excluding the Excluded Items and any
amounts relating to the Supplemental Executive Retirement Plan for the Chief
Executive Officer of HBI referred to in Schedule 4.16(a)) as of the Deemed Date
("Closing Date Working Capital").
(b) Review of Closing Date Balance Sheet. Seller shall submit the
Closing Date Balance Sheet, when prepared, to Buyer. For all purposes related to
this Section 2.03, Buyer shall provide Seller reasonable access to the books,
records and personnel of HBI and the HBI Subsidiaries.
(c) Objections to Closing Date Balance Sheet. If Buyer disagrees with
the calculation of the Closing Date Working Capital, it shall, within
twenty-five (25) days after receipt of the Closing Date Balance Sheet, deliver a
notice to Seller (the "Disagreement Notice"), setting forth its calculation of
the Closing Date Working Capital and specifying, in reasonable detail, those
items or amounts in the Closing Date Balance Sheet and/or Closing Date Working
Capital as to which Buyer disagrees and the reasons for such disagreement. Buyer
shall be deemed to have agreed with all items and amounts contained in the
Closing Date Balance Sheet and the Closing Date Working Capital other than those
specified in a timely Disagreement Notice. If Buyer does not deliver a
Disagreement Notice to Seller within such 25-day period, Buyer shall be deemed
to have accepted the Closing Date Balance Sheet and the Closing Date Working
Capital, whereupon the Closing Date Balance Sheet and the Closing Date Working
Capital shall be final and binding.
(d) Resolution of Closing Date Balance Sheet Disputes. If a
Disagreement Notice is timely delivered to Seller pursuant to this Section 2.03,
the parties shall use their good-faith efforts to reach agreement on the
disputed items or amounts in order to determine the adjustment to the Purchase
Price. If the parties do not resolve all disputed items or amounts within ten
(10) days after delivery of the Disagreement Notice, then the disputed items and
amounts will be submitted for determination to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. Seller and
Buyer may submit to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP any facts each deems relevant to the
determination. The written report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall be delivered to
Seller and Buyer within twenty-five (25) days after such disputed items and
amounts are submitted to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP for determination, or such longer
time as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP in its discretion may require, but in no event
longer than sixty (60) days. If either party disagrees with the determination of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall not have delivered its
written report within 60 days, such party shall, within ten (10) days after
receipt of such determination (or within 10 days after the expiration of such
sixty-day period), deliver a notice to the other party (the "Appeal Notice"),
setting forth and specifying, in reasonable detail, those items or amounts as to
which the appealing party disagrees
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and the reasons for such disagreement. The parties shall be deemed to have
agreed with all items and amounts contained in such determination other than
those specified in a timely Appeal Notice. If neither party delivers an Appeal
Notice to the other party within such 10-day period, the parties shall be deemed
to have accepted such determination, whereupon such determination shall be final
and binding. The fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP incurred solely in its
capacity as arbiter of the issues submitted pursuant to this Section 2.03(d)
shall be borne equally by Seller and Buyer. Any fees and expenses of Seller's
and Buyer's own independent public accountants incurred in connection with their
review of the Closing Date Balance Sheet shall be borne by the party retaining
such independent public accountants.
(e) Appeal of Determination. If either party timely delivers an Appeal
Notice to the other party pursuant to this Section 2.03, then the disputed items
and amounts will be submitted for determination to the accounting firm of
PricewaterhouseCoopers LLP, or if such firm shall decline to serve in such
capacity, the accounting firm of Deloitte & Touche LLP. Seller and Buyer may
submit to such accounting firm any facts each deems relevant to the
determination. The written report of such accounting firm shall be delivered to
Seller and Buyer within twenty-five (25) days after such disputed items and
amounts are submitted to such accounting firm for determination, or such longer
time as such accounting firm in its discretion may require, but in no event
longer than sixty (60) days. The determination of such accounting firm shall be
subject to appeal by Seller or Buyer by arbitration pursuant to Section 11.11;
provided, however, that the appealing party must first make any payment required
of it by such accounting firm consistent with Section 2.03(f). Either Seller or
Buyer may invoke the commencement of the procedures set forth in Section 11.11
if such accounting firm has not delivered its written report within the
specified sixty-day period. The fees and expenses of such accounting firm shall
be borne equally by Seller and Buyer. Any fees and expenses of Seller's and
Buyer's own independent public accountants incurred in connection with their
review of the Closing Date Balance Sheet shall be borne by the party retaining
such independent public accountants.
(f) Settlement of Closing Date Working Capital. If the Closing Date
Working Capital, as finally determined pursuant to this Section 2.03, is less
than the sum of (i) $30,000,000 plus (ii) any amount paid pursuant to Section
6.03(a)(i)(B) (after adding back any amount previously paid by WGI pursuant to
Section 2.02(c)), then WGI will pay to CB&I Sub, within two business days, by
wire transfer of immediately available funds, the amount of such shortfall. If
the Closing Date Working Capital, as finally determined pursuant to this Section
2.03, is greater than $34,000,000 (after subtracting any amount previously paid
by CB&I Sub pursuant to Section 2.02(c)), then CB&I Sub will pay to WGI, within
two business days, by wire transfer of immediately available funds, the amount
of such excess. Such payment shall be deemed an adjustment of the Purchase Price
in Section 2.02 in regard to the HBI Shares being acquired by CB&I Sub.
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ARTICLE III
CLOSING
Section 3.01 Other Transactions. (a) Immediately prior to the Closing,
HBI shall assign, transfer and deliver to Seller or its designee, and Seller or
its designee shall assume, the assets and liabilities relating to the items
listed in Schedule 3.01 (the "Excluded Items") held by HBI (including, in
respect of Items Nos. 2 and 3 on Schedule 3.01, any amounts received as payments
or reimbursable costs after December 31, 1999). Seller shall assume, or
guarantee the assumption by its designee of, and agree to pay, perform and
otherwise discharge in full, any liabilities relating to such Excluded Items and
thereby fully release HBI, Buyer and CB&I from each such liability.
(b) Prior to the Closing Date, Seller will cause each of HBI and
certain HBI Subsidiaries to convert its corporate form into a limited liability
company in accordance with the conversion chart set forth on Exhibit D;
provided, however, that Seller shall ensure that on the Closing Date HBI and all
HBI Subsidiaries are disregarded entities for federal income tax purposes and
Seller shall not take any position which is inconsistent therewith.
(c) Any management or tax sharing agreement between Seller or its
Affiliates and HBI or any HBI Subsidiary shall be terminated as of the Closing
Date; provided, however, that any fees or Taxes due to Seller or its Affiliates
for services performed or Taxes owed through the Closing Date pursuant to such
agreements, which have been specified in nature in writing to Buyer on the
Closing Date and which are adequately reserved on the Closing Date Balance
Sheet, shall remain due and payable to Seller or its Affiliates even beyond the
Closing Date.
(d) Notwithstanding any provision to the contrary contained elsewhere
in this Agreement, on or before the Closing Date, Seller may cause HBI or any
HBI Subsidiary to capitalize or transfer to Seller or its designee any advance
receivables from Holdings Company of New Jersey, Inc. without penalty and such
action shall be ignored for all pre-closing and post-closing adjustments.
Section 3.02 The Effective Time. The effective time of the Acquisition
(the "Effective Time") will be 5:00 p.m., Central Daylight Time, on the Closing
Date.
Section 3.03 The Closing. The closing of the transactions contemplated
herein, including the purchase and sale of the HBI Shares, shall take place at
the offices of Winston & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at
10:00 a.m., local time, on a date within ten business days following
satisfaction of each of the conditions set forth in Sections 7.01 and 7.03(c)
(assuming satisfaction of the remaining conditions set forth in Article VII on
or prior to the Closing Date), or such other place or time as the parties may
mutually agree (the "Closing Date"). On or before the Closing Date, the parties
hereto will take all actions necessary to (i)
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effect the Acquisition and (ii) satisfy the document delivery requirements on
which the obligations of the parties to effect the Acquisition and the other
transactions contemplated hereby are conditioned by the provisions of Article
VII (all those actions collectively being the "Closing").
Section 3.04 Delivery of Documents. (a) At the Closing, Seller will
execute and deliver to Buyer the following documents:
(i) certificates or other instruments, if any, representing
the HBI Shares, duly endorsed in blank or accompanied by transfer powers;
(ii) all minute books and other corporate books and records of
HBI and the HBI Subsidiaries;
(iii) a copy, certified as of the Closing Date, by the
Secretary or Assistant Secretary of WGI and WGI Sub, respectively, of
resolutions duly adopted by the boards of directors of WGI and WGI Sub
authorizing the transactions contemplated by this Agreement;
(iv) a copy, certified as of the Closing Date, by HBI's
Secretary or Assistant Secretary, of the resolutions duly adopted by the Board
of Directors of HBI authorizing transfer of the Excluded Items;
(v) certificates of good standing for WGI, WGI Sub, HBI and
the HBI Subsidiaries in their respective Organization States and such other
jurisdictions set forth on Schedule 4.01;
(vi) copies of the certificate of incorporation or formation
for WGI, WGI Sub, HBI and the HBI Subsidiaries, as certified as of a recent date
by the Secretary of State of the applicable Organization State;
(vii) copies of the bylaws or operating agreements, as the
case may be, of HBI and the HBI Subsidiaries, as in effect on the Closing Date,
certified by the Secretary or the Assistant Secretary or similar authorized
person of HBI and the HBI Subsidiaries;
(viii) certificate of the Secretary or Assistant Secretary of
WGI and WGI Sub, respectively, certifying as of the Closing Date the incumbency
and signatures of the officer(s) of WGI and WGI Sub authorized to sign this
Agreement and the other documents to be delivered hereunder, together with
evidence of the incumbency of such Secretary or Assistant Secretary or similar
authorized person;
(ix) the written resignations of all directors or members of
the board of managers, as the case may be, of HBI unless Buyer and any director
agree to such director or member remaining in office;
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(x) the Shareholder Agreement executed by WGI;
(xi) copies of documents evidencing the termination of the
management, tax sharing and any other intercompany agreements between Seller or
its Affiliates and HBI and any of the HBI Subsidiaries;
(xii) a certificate of the President of Seller in such
capacity dated the Closing Date to the effect that the representations and
warranties of Seller set forth in Article IV are true and correct as of such
date, other than such changes and exceptions that (A) are contemplated by this
Agreement or (B) could not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect;
(xiii) a certificate or certificates of non-foreign status
covering Seller, its Affiliates, HBI and the HBI Subsidiaries which conforms
with the Code;
(xiv) the opinion or opinions of Seller's legal counsel
substantially in the form of Exhibit B;
(xv) evidence that HBI's credit facility with Bank of America
has been terminated and that all security interests and liens securing such
facility have been released; and
(xvi) any non-governmental, third party consents required for
the consummation of the transactions contemplated hereby.
(b) At the Closing, Buyer will execute and deliver to Seller the
following documents:
(i) the Purchase Price adjusted (if at all) in the manner and
amount specified in Section 2.02(c);
(ii) a copy, certified as of the Closing Date, by the
Secretary or Assistant Secretary of CB&I and CB&I Sub, respectively, of
resolutions duly adopted by the boards of directors of CB&I and CB&I Sub
authorizing the transactions contemplated by this Agreement;
(iii) (A) a certificate of good standing for CB&I Sub in its
Organization State, as certified as of a recent date by the Secretary of State
of such jurisdiction, and (B) an extract from the trade register regarding CB&I
as of a recent date provided by the Chamber of Commerce and Industry in
Amsterdam (the "Chamber of Commerce");
(iv) (A) a copy of the certificate of incorporation of CB&I
Sub, as certified as of a recent date by the Secretary of State of its
Organization State and (B) an official copy of the amended Articles of
Association of CB&I filed with the Chamber of Commerce as reflected in the
extract referred to above;
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(v) a certificate of the Secretary or Assistant Secretary of
CB&I and CB&I Sub, respectively, certifying as of the Closing Date as to the
incumbency and signatures of the officers of CB&I and CB&I; Sub authorized to
sign this Agreement, the Shareholder Agreement and the other documents to be
delivered hereunder, together with evidence of the incumbency of each such
Secretary or Assistant Secretary;
(vi) the Shareholder Agreement executed by CB&I;
(vii) a certificate of the Chief Financial Officer of Buyer in
such capacity dated the Closing Date to the effect that the representations and
warranties of Buyer set forth in Article V are true and correct as of such date,
other than such changes and exceptions that (A) are contemplated by this
Agreement or (B) could not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect;
(viii) the opinion or opinions of Buyer's legal counsel
substantially in the form of Exhibit C; and
(ix) any non-governmental, third party consents required for
the consummation of the transactions contemplated hereby (including the consent
of the required lenders under CB&I's outstanding revolving credit facility).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller represents and warrants to the Buyer as
follows:
Section 4.01 Organization and Qualification; HBI Subsidiaries.
(a) Each of WGI, WGI Sub, HBI and the HBI Subsidiaries is duly organized,
validly existing and in good standing under the laws of its Organization State
and has the requisite power and authority to own or lease and to operate its
properties and to carry on its business as now conducted. HBI and each of the
HBI Subsidiaries are duly qualified to do business, and are authorized and in
good standing, in each jurisdiction where the character of their properties
owned or held under lease or the nature of their activities makes such
qualification necessary, except where the failure to be so qualified, singly or
in the aggregate, would not have a Material Adverse Effect. Seller has caused
true, complete and correct copies of the Charter Documents, each as in effect on
the date hereof, and the minute books and similar corporate or other Entity
records of HBI and the HBI Subsidiaries to be delivered or otherwise made
available to Buyer. No breach or violation of any Charter Document of HBI or any
HBI Subsidiary has occurred and is continuing which would have a Material
Adverse Effect.
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(b) A true and complete list of each HBI Subsidiary, together with its
Organization State and the percentage of its outstanding Capital Stock owned by
HBI and any other HBI Subsidiary, is set forth in Schedule 4.01. Except as
disclosed in Schedule 4.01, HBI does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any Entity.
Section 4.02 Authorization; Enforceability; Absence of Conflicts;
Required Approvals and Consents. (a) Each of WGI and WGI Sub has full corporate
authority to enter into this Agreement, the Shareholder Agreement and the other
Transaction Documents and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement, the Shareholder Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of WGI and WGI Sub, and this
Agreement has been duly executed and delivered by WGI and WGI Sub. This
Agreement constitutes, and the Shareholder Agreement when executed and delivered
will constitute, the valid and binding obligation of WGI and WGI Sub, as
applicable, enforceable against each in accordance with its terms, subject to
applicable laws of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and to general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(b) The execution, delivery and performance in accordance with their
respective terms of this Agreement, the Shareholder Agreement and the other
Transaction Documents by WGI and WGI Sub have not and will not (i) violate,
breach or constitute a default under (A) the Charter Documents of WGI, WGI Sub,
HBI or any HBI Subsidiary, (B) any Governmental Requirement, order, writ,
injunction or decree applicable to WGI, WGI Sub, HBI or any HBI Subsidiary, or
(C) any note, bond, mortgage, indenture or material agreement, lease, instrument
or other obligation to which WGI or WGI Sub is a party, any Material Contract to
which HBI or any HBI Subsidiary is a party, or any such agreement or obligation
by which any of them or their respective properties are bound, except for such
violations, breaches, terminations and defaults that are set forth in Schedule
4.02, (ii) result in the acceleration or mandatory prepayment of any
Indebtedness, or any Guaranty not constituting Indebtedness, of WGI, WGI Sub,
HBI or any HBI Subsidiary, or afford any holder of any of such Indebtedness, or
any beneficiary of any of those Guaranties, the right to require WGI, WGI Sub,
HBI or any HBI Subsidiary, as the case may be, to redeem, purchase or otherwise
acquire, reacquire or repay any of such Indebtedness, or to perform any of those
Guaranties or (iii) result in the creation of any Lien upon any assets of HBI or
any HBI Subsidiary.
(c) Except (i) as may be required by the HSR Act or any applicable
state securities or blue sky laws or (ii) as set forth in Schedule 4.02, no
Governmental Approvals or consents of any third party are required to be
obtained, and no reports or notices to or filings with any Governmental
Authority are required to be made, by WGI, WGI Sub, HBI or any HBI Subsidiary
for the execution, delivery or performance by WGI and WGI Sub of this Agreement,
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the Shareholder Agreement or the other Transaction Documents to which it is a
party, the enforcement against WGI or WGI Sub of its obligations hereunder or
thereunder or the effectuation of the Acquisition and the transactions
contemplated hereby and thereby.
Section 4.03 Ownership of HBI Shares. Seller holds of record and owns
beneficially all of the outstanding Capital Stock of HBI, which consists of the
HBI Shares to be delivered by Seller pursuant to Section 2.01. Seller has good
title to the HBI Shares, free and clear of any Lien, claim, option, right of
first refusal, agreement limitation or restriction of any kind. Seller has full
voting power over the HBI Shares subject to no proxy, shareholders agreement or
voting trust, and has the full right, power and authority to sell and transfer
the HBI Shares to CB&I Sub and CB&I in the manner provided for in this
Agreement. Upon consummation of the sale of the HBI Shares contemplated hereby,
Seller will transfer to CB&I Sub and CB&I good title to all of the HBI Shares
free and clear of any Lien or adverse claim.
Section 4.04 Capitalization. The capitalization of HBI and each of the
HBI Subsidiaries is set forth in Schedule 4.01. The authorized Capital Stock of
HBI presently consists of 1,000 shares of common stock, par value $1 per share,
all of which shares have been duly authorized for issuance and are validly
issued, fully paid, nonassessable and free of preemptive rights. HBI has no
other shares of Capital Stock issued or outstanding or reserved for issuance.
There are no bonds, debentures, notes or other Indebtedness of HBI or any HBI
Subsidiary having general voting rights (or convertible into common shares
having such rights) issued and outstanding. All of the outstanding shares of
Capital Stock of the HBI Subsidiaries have been duly authorized for issuance and
are validly issued, fully paid and nonassessable, and are owned directly or
indirectly by HBI free and clear of any Lien, claim, option, right of first
refusal, agreement limitation or restriction of any kind, except as set forth on
Schedule 4.04 and Schedule 6.09. Except as set forth on Schedule 4.04 and
Schedule 6.09, and after giving effect to the transactions contemplated by
Section 3.01, there are no outstanding subscriptions, options, warrants, calls
or rights of any kind to acquire any shares of any class of securities or any
securities convertible into any shares of any class of securities of HBI or the
HBI Subsidiaries, nor are there any obligations to issue any such options,
warrants, calls, rights or securities or to repurchase, redeem or otherwise
reacquire any such shares or securities. Except as set forth in Schedule 4.01
and Schedule 6.09, neither HBI nor any HBI Subsidiary owns any Capital Stock or
other interest in any other Person nor is HBI or any HBI Subsidiary subject to
any obligation to make any investment in any other Person.
Section 4.05 Financial Statements. (a) Seller has delivered to Buyer
the audited consolidated balance sheet and related consolidated statements of
operations and retained earnings and cash flows (including the related notes and
schedules thereto) of HBI and its Subsidiaries for the fiscal years ending
December 31, 1999 and 1998 (the "HBI Financial Statements"). The HBI Financial
Statements present fairly the consolidated financial position and results of
operations and cash flows of HBI and its consolidated Subsidiaries as at the
dates
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and for the periods presented therein in accordance with GAAP applied on a
consistent basis throughout the periods indicated, except as otherwise noted
therein.
(b) Except as fully reflected or reserved against in the consolidated
balance sheet of HBI and its Subsidiaries as at December 31, 1999 (the "HBI
Balance Sheet") or as may be excepted in another representation herein that
covers the relevant topic, neither HBI nor any HBI Subsidiary has any Material
liability (including any Tax liability) or Material obligation of any nature
which would be required to be reflected on a balance sheet or in the notes
thereto prepared in accordance with GAAP, except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
December 31, 1999.
(c) Since December 31, 1999, except as set forth on Schedule 4.05 or as
may be excepted in another representation herein that covers the relevant topic,
(i) HBI and its Subsidiaries have not incurred any Material liability or
Material obligation (indirect, direct or contingent), or entered into any
Material Contract or other Material transaction, that is not in the ordinary
course of business, (ii) HBI and its Subsidiaries have not sustained any
Material loss or Material interference with their business or properties from
fire, flood, windstorm, accident or other calamity (whether or not covered by
insurance), (iii) except as contemplated by Section 3.01(b), there has been no
change in the Capital Stock of HBI and no dividend or distribution of any kind
has been declared, paid or made by HBI on its Capital Stock, and (iv) except as
contemplated by Section 6.03(a)(i)(B), there has not been (A) any granting by
HBI or any HBI Subsidiary to any officer of HBI or any HBI Subsidiary of any
increase in compensation, except in the ordinary course of business consistent
with prior practice or as was required under employment agreements in effect as
of December 31, 1999, (B) any granting by HBI or any HBI Subsidiary to any such
officer of any increase in severance or termination benefits or (C) any entry by
HBI or any HBI Subsidiary into any employment, severance or termination
agreement with any such officer.
Section 4.06 Litigation and Orders. There are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Authority against
or involving Seller, HBI or any HBI Subsidiary, or, to the knowledge of Seller,
against or involving any of the present or former directors, officers,
employees, consultants, agents or shareholders of Seller, HBI or any HBI
Subsidiary, any of their properties, assets or business, or any HBI Plan, that,
individually or in the aggregate, would have a Material Adverse Effect on HBI or
impair HBI's or the HBI Subsidiaries' ability to operate their business after
the Closing Date. As of the date of this Agreement, except as set forth in
Schedule 4.06, there is no Litigation pending or, to the Seller's knowledge,
threatened in writing against or involving Seller, HBI or any HBI Subsidiary or,
to the knowledge of Seller, any of their respective present or former directors,
officers, employees, consultants, agents or shareholders, as such, or any of
their respective properties, assets or business, or any HBI Plan, that,
individually or in the aggregate, would have a Material Adverse Effect on HBI.
No Governmental Authority has provided notification to Seller, HBI or any HBI
Subsidiary of an intention to conduct any audit, investigation or other review
with respect to HBI
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or any of the HBI Subsidiaries, which audit, investigation or review would, if
adversely determined, individually or in the aggregate, have a Material Adverse
Effect on HBI. Except as disclosed in Schedule 4.06, no Litigation is pending
or, to the knowledge of Seller, threatened in writing against WGI, WGI Sub, HBI
or any of the HBI Subsidiaries that (a) questions or involves the validity or
enforceability of any obligation of WGI or WGI Sub under this Agreement, the
Shareholder Agreement or any other Transaction Document, or (b) seeks (or
reasonably may be expected to seek) (i) to prevent or delay consummation by WGI
or WGI Sub of the transactions contemplated by this Agreement to be consummated
by WGI or WGI Sub or (ii) Damages from WGI or WGI Sub in connection with any
such consummation.
Section 4.07 Compliance with Worker Safety and Environmental Laws.
Except as set forth in Schedule 4.07:
(a) HBI and its Subsidiaries are in compliance with all applicable
Environmental Laws and all applicable Governmental Requirements relating to
public and worker health and safety (collectively, "Worker Safety Laws") except
for any such noncompliance which would have no Material Adverse Effect.
(b) (i) no release of Solid Wastes, Hazardous Wastes or Hazardous
Substances at, from, in or on any site currently or, to the knowledge of Seller,
previously used, owned or operated at any time by HBI or any of its current or
former Subsidiaries has occurred that, if all relevant facts were known to the
relevant Governmental Authorities, reasonably could be expected to require
remediation to avoid deed record notices, restrictions, liabilities or other
consequences that would not be applicable if that release had not occurred; (ii)
neither HBI nor any of its current or, to the knowledge of Seller, former
Subsidiaries nor any agent or contractor of HBI or any of its current or, to the
knowledge of Seller, former Subsidiaries has transported or arranged for the
transportation of any Solid Wastes, Hazardous Wastes or Hazardous Substances to,
or disposed or arranged for the disposition of any Solid Wastes, Hazardous
Wastes or Hazardous Substances at, any off-site location that could lead to any
claim against the Business or Buyer, as a potentially responsible party, for any
cleanup costs, remedial work, damage to natural resources, personal injury or
property damage, including any claim under CERCLA; (iii) no storage tanks exist
on or under any of the properties currently or, to the knowledge of Seller,
previously owned or operated by HBI or any of its current or, to the knowledge
of Seller, former Subsidiaries from which any Solid Wastes, Hazardous Wastes or
Hazardous Substances have, to the knowledge of Seller, been released into the
surrounding environment; and (iv) no Solid Wastes, Hazardous Wastes or Hazardous
Substances have been used, stored, manufactured or processed on the property
owned, used, leased or operated by HBI or any of its current or, to the
knowledge of Seller, former Subsidiaries at any time, except as necessary to the
conduct of the Business in compliance with Environmental Laws and except where
any noncompliance would not have a Material Adverse Effect.
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(c) Schedule 4.07 sets forth a list of, and the Seller has provided or
made available (or will provide prior to Closing) Buyer with, full, accurate and
complete copies of any and all Material reports, studies, assessments and other
Material information in the possession of Seller or HBI (or its current agents
or consultants) relating to Environmental Laws and/or investigating the presence
or suspected presence of any Solid Wastes, Hazardous Wastes or Hazardous
Substances on the properties owned, used, leased or operated by HBI or any HBI
Subsidiary at any time or relating to the existence of any underground storage
tank thereon, and agrees that it will, promptly following Seller's or HBI's
receipt thereof, furnish to Buyer full, accurate and complete copies of any such
reports, studies, tests and other information hereafter obtained by Seller or
HBI on or prior to the Closing.
(d) There are no pending claims or proceedings of any kind with respect
to the environmental compliance of the Real Properties owned, used, leased or
operated by HBI or any HBI Subsidiary at any time, and neither HBI nor any HBI
Subsidiary has received written notice of noncompliance with any applicable
Environmental Law where such notice is currently pending and unresolved. There
are no outstanding governmental or court orders, notices of potential
responsibility or letters of inquiry, written notice of which has been received
by HBI or any HBI Subsidiary, or of which Seller or HBI is otherwise aware,
relating to environmental matters and potentially requiring any ongoing or
future remediation, clean-up, permitting or construction or any capital
expenditures with respect to Real Properties owned, used, leased or operated by
HBI or any HBI Subsidiary. To the knowledge of Seller, no condition currently
exists with respect to Real Properties owned, used, leased or operated by HBI or
any HBI Subsidiary at any time which, with the passage of time, will result in a
breach of any Environmental Law.
Section 4.08 Permits and Compliance. HBI and its Subsidiaries are in
possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals and
orders of any Governmental Authority necessary for HBI or any of its
Subsidiaries to own, lease and operate its properties or to carry on its
business as now being conducted (the "Permits"), and, as of the date of this
Agreement, no suspension or cancellation of any of the Permits is pending or, to
the Seller's knowledge, threatened. Neither HBI nor any of its Subsidiaries is
in violation of (i) any applicable Governmental Requirement or Permit or (ii)
any order, decree or judgment of any Governmental Authority having jurisdiction
over HBI or any of its Subsidiaries, except any such violation of (i) or (ii)
that would not have a Material Adverse Effect. As of the date of this Agreement,
to the knowledge of Seller, except as set forth in Schedule 4.02, no event of
default or event that, with notice or the lapse of time or both, would
constitute an event of default, exists or, upon the consummation of the
transactions contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other Material agreement or instrument for
borrowed money, any Guaranty or any lease, contractual license or other
agreement or instrument to which HBI or any of its Subsidiaries is a party or by
which any of them is bound or to which any of their properties, assets or
operations is subject.
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Section 4.09 Material Contracts. (a) Schedule 4.09 sets forth a
complete list of all Material contracts and agreements and all documents
evidencing rights or commitments by HBI or any HBI Subsidiary to which HBI or
any HBI Subsidiary is a party or its property or assets are bound as of the
Closing Date that relates to the Business. For the purpose of this Agreement,
the following constitutes a Material contract, agreement or document (a
"Material Contract"):
(i) any partnership, joint venture agreement, joint bidding
("teaming") agreement or similar agreement;
(ii) any guaranty or suretyship, contribution agreement or
performance bond;
(iii) any instrument, agreement or other obligation evidencing
or relating to Indebtedness of HBI or any HBI Subsidiary or to money lent or to
be lent to another Person involving more than $100,000;
(iv) any contract to purchase or sell, lease or sublease real
property;
(v) any agreement with dealers or sales or commission agents
or representatives, public relations or advertising agencies, accountants or
attorneys (other than in connection with this Agreement and the transactions
contemplated hereby) involving the potential for total payments within any
12-month period in excess of $50,000;
(vi) any agreement for the acquisition or provision of
services, supplies, equipment, inventory, fixtures or other property involving
more than $500,000 individually and all earnout agreements;
(vii) the purchase and formation agreements relating to the
acquisition of Schedule A, Ltd., Matrix Engineering, Inc. and Callidus
Technologies, Inc., together with a summary of any claims made or paid to date
by any party pursuant to such indemnification provisions;
(viii) any contract containing any noncompetition covenant, or
containing any confidentiality or secrecy provision not made in the ordinary
course of business;
(ix) any agreement providing for the purchase from a supplier
of all or substantially all the requirements of HBI or any HBI Subsidiary of a
particular product or service; and
(x) any other agreement or commitment not made in the ordinary
course of business that is Material to the Business.
(b) To the knowledge of Seller, each Material Contract is in full force
and effect (and will be in full force and effect immediately following the
Closing Date, except where the
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contract has been fully performed or properly terminated pursuant to its terms
on or before the Closing Date) and is enforceable against the parties thereto
other than HBI and its Subsidiaries (and will be enforceable against such
parties immediately following the Closing Date, except where the contract has
been fully performed or properly terminated pursuant to its terms on or before
the Closing Date) in accordance with its terms, and no condition or state of
facts exists that, with notice or the passage of time, or both, would constitute
a material default by HBI or any HBI Subsidiary or, to the knowledge of Seller,
any third party under any such Material Contract. To the knowledge of Seller,
HBI or the applicable Subsidiary has duly complied in all material respects with
the provisions of each Material Contract to which it is a party.
Section 4.10 Intellectual Property. (a) Except as set forth in Schedule
4.10(a), (i) HBI and each of its Subsidiaries owns, or is licensed or otherwise
has the right to use (in each case, clear of any Liens of any kind), all
Intellectual Property used in or necessary for the conduct of its business as
currently conducted, (ii) no claims are pending or, to the knowledge of Seller,
threatened to the effect that HBI or any of its Subsidiaries is infringing on or
otherwise violating the rights of any Person with regard to any Intellectual
Property, and (iii) to the knowledge of Seller, no Person is infringing on or
otherwise violating any right of HBI or any of its Subsidiaries with respect to
any Intellectual Property owned by and/or licensed to HBI or any of its
Subsidiaries. Schedule 4.10(a)(i) contains a true, complete and correct list of
each Material Intellectual Property owned by HBI or any of its Subsidiaries
(collectively, the "Owned Intellectual Property"), and Schedule 4.10(a)(ii)
contains a true, complete and correct list of all such Material Intellectual
Property licensed to HBI or any of its Subsidiaries or licensed by HBI or any of
its Subsidiaries to any third party (the "Licensed Intellectual Property").
(b) To the knowledge of Seller, the rights of HBI or its Subsidiaries
in or to the Owned Intellectual Property do not conflict with, misappropriate or
infringe upon the Intellectual Property right of any third party and no written
notice to such effect has been received by HBI or any of its Subsidiaries.
Except as set forth in Schedule 4.10(a)(ii), neither HBI nor any of its
Subsidiaries has granted any license, sublicense or other right to any other
Person with respect to the Owned Intellectual Property or the Licensed
Intellectual Property. No claims have been made or asserted or are pending, nor,
to the knowledge of Seller, have any such claims been threatened against, HBI or
any of its Subsidiaries (i) based upon or challenging or seeking to deny or
restrict the use by HBI or any of its Subsidiaries of any of the Owned
Intellectual Property or Licensed Intellectual Property, or (ii) alleging that
any Licensed Intellectual Property is being licensed or used in violation of any
Intellectual Property right of any third party. To the knowledge of Seller, the
consummation of the Acquisition will not result in the termination or impairment
of any of the Owned Intellectual Property or Licensed Intellectual Property, nor
constitute a breach or default under any license of the Licensed Intellectual
Property, or otherwise give any party thereto a right to terminate such license.
(c) The Owned Intellectual Property has not been adjudged invalid or
unenforceable in whole or part, and to the knowledge of Seller, is valid and
enforceable. To the knowledge of Seller, is valid and enforceable. To the
knowledge of
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Seller, is valid and enforceable. To the knowledge of Seller, the Licensed
Intellectual Property is valid and enforceable.
(d) HBI and its Subsidiaries have taken reasonable measures in
accordance with normal industry practice to assure and maintain the
confidentiality of their trade secrets, processes and formulae, research and
development results, and other know-how and confidential Intellectual Property
of HBI and its Subsidiaries.
Section 4.11 Receivables. To the knowledge of Seller, all of the
accounts and notes or other advances receivable of HBI and its Subsidiaries
reflected on the HBI Balance Sheet are valid and enforceable claims arising in
the ordinary course of business in the respective amounts so reflected, net of
the reserves, if any, reflected in the HBI Balance Sheet.
Section 4.12 Real Properties and Leases. (a) Schedule 4.12 lists and
describes in all Material respects all real property and leasehold interests in
real property that will be held by HBI and the HBI Subsidiaries at the Closing
Date and, for each of those properties, the address thereof, and the use thereof
in the Business.
(b) Except for Permitted Liens, HBI and its Subsidiaries own in fee,
and have good, valid and indefeasible title to, free and clear of all Liens, the
real property listed in Schedule 4.12 as being owned (the "Real Property").
(c) No parcel of real property owned or leased by HBI or its
Subsidiaries is subject to any governmental decree or order to be sold, nor is
being condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the Seller's knowledge, has
any such condemnation, expropriation or taking been proposed.
(d) Seller has provided Buyer with true, correct and complete copies of
all leases under which HBI or its Subsidiaries are leasing each of the
properties listed in Schedule 4.12 as being leased, and (i) each of those leases
is, to the knowledge of Seller, valid and binding on the lessor party thereto,
(ii) neither HBI nor any HBI Subsidiary has sublet any of the leased space to
any Person, and (iii) to the knowledge of Seller, there exists no Material
default under any such lease by HBI or any HBI Subsidiary, nor any event which,
with notice or lapse of time or both, would constitute a Material default
thereunder by HBI or any HBI Subsidiary.
(e) To the knowledge of Seller, none of the Real Property is in
material violation of any use or occupancy restriction, limitation, commission
or covenant of record, or any Material zoning or building law, code or ordinance
or public utility or other easements.
Section 4.13 Other Tangible Assets. There are no leases, including
capital leases, that are Material to the Business under which HBI or any of its
Subsidiaries is leasing property, plant and equipment or other tangible assets
(other than real properties).
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Section 4.14 Tax Matters. (a) For purposes of this Section 4.14 and
Article X, HBI shall be deemed to include ▇▇▇▇-▇▇▇▇▇ International, Inc. and the
HBI Subsidiaries except that, if a breach of any of the representations or
warranties contained in this Section 4.14 by any person or entity owned directly
or indirectly by WGI or any predecessor thereof (other than ▇▇▇▇-▇▇▇▇▇
International, Inc. or an HBI Subsidiary) causes Buyer, HBI or any HBI
Subsidiary to incur a liability for Taxes that the Buyer, HBI or any HBI
Subsidiary would not have incurred but for such breach, then the term HBI shall
be deemed to also include (for purposes of Section 4.14 and Article X) any
person or entity owned directly or indirectly by WGI and any predecessor
thereof, but only with respect to the representation or warranty in Section 4.14
that is so breached.
(b) HBI has timely filed (and prior to the Closing Date will timely
file) true, correct and complete Tax Returns, all prepared in accordance with
applicable Governmental Requirements, for all years and periods (and portions
thereof), for all jurisdictions (whether federal, state, local or foreign) in
which any such Tax Returns are required to be filed by any applicable
Governmental Requirement on or prior to the Closing Date. All Taxes shown as due
and payable on such Tax Returns have been paid (or will be paid prior to the
Closing), and, to the knowledge of Seller, there is no current liability for any
Taxes due and payable in connection with any such Tax Returns. All Taxes not yet
due and payable attributable to periods ending on or before the Closing Date
will have been fully accrued on the Closing Date Balance Sheet and adequate
reserves have been established therefor. To the knowledge of Seller, there are
no unpaid assessments for additional Taxes for any period. Seller knows of no
basis for the assessment of any Tax in addition to the amount of Tax that has
been paid for any period ending on or before the Closing Date. There are no
existing liens for Taxes upon any of HBI's assets.
(c) HBI has collected and withheld all Taxes that it has been required
to collect or withhold and has timely submitted all such collected and withheld
Taxes to the appropriate Taxing Authority. HBI has complied with and is in
compliance with all applicable laws, rules and regulations relating to the
payment, withholding and information reporting requirements relating to any
Taxes required to be collected or withheld.
(d) Except as set forth on Schedule 4.14, HBI has no (and has not
previously had any) permanent establishment in any foreign country and HBI does
not engage (and has not previously engaged) in a trade or business within the
meaning of the Code relating to the creation of a permanent establishment in any
foreign country. Neither the Seller nor HBI is a foreign person within the
meaning of Code Section 1445(d). Neither the Code nor any other provision of
Governmental Requirements requires Buyer to withhold any portion of the Purchase
Price.
(e) Except as set forth in Schedule 4.14, HBI is not a party to any
joint venture, partnership or other arrangement that could be treated as a
partnership for federal income Tax purposes.
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(f) Neither the IRS nor any other Taxing Authority has proposed any
adjustment or change in accounting methods that has not yet occurred that
affects any taxable year ending after the Closing Date.
(g) Except as set forth in Schedule 4.14, no federal, state, local or
foreign Tax audits or other administrative proceedings, discussions or court
proceedings are presently pending with regard to any Taxes or Tax Returns of HBI
and no additional issues are being asserted against HBI in connection with any
existing audits of HBI.
(h) HBI has no application pending with any Taxing Authority requesting
permission for any changes in accounting methods that relate to its business or
operations and that affects any taxable year ending after the Closing Date.
(i) Except as set forth in Schedule 4.14, HBI is not and never has been
a party to any Tax sharing agreement or similar arrangement for the sharing of
Tax liabilities or benefits. HBI has not consented to the application of Code
Section 341(f).
(j) There is no contract or agreement covering any employee or former
employee of HBI that, individually or collectively, could give rise to the
payment by HBI of any amount that would not be deductible by reason of Code
Section 280G.
(k) HBI has not participated in any transaction required to be
disclosed or registered as a tax shelter under the Code.
Section 4.15 Insurance. Schedule 4.15 sets forth a list of all
insurance policies currently in force for the policy year 2000 which provide
coverage for HBI or any of its Subsidiaries which relate to the Business. Seller
has previously provided Buyer with (a) a complete list of all insurance loss
runs and worker's compensation claims relating to the Business and received for
the most recently ended two (2) policy years and (b) true, complete and correct
copies of all insurance policies carried by HBI or any of its Subsidiaries that
relate to the Business and are in effect, all of which (i) have been issued by
insurers of recognized responsibility and (ii) currently are, and will remain
without interruption to the Effective Time, in full force and effect.
Section 4.16 Employee Matters. (a) Employment Agreements. Schedule
4.16(a) contains a list of all of the following, whether written or unwritten:
(i) Employment Agreements remaining executory in whole or in part on the date
hereof (and Seller has provided Buyer with true, complete and correct copies of
such written Employment Agreements), (ii) severance agreements, programs and
policies, (iii) bonus agreements or arrangements and (iv) plans, programs,
agreements and other arrangements with or relating to employees containing
change of control or similar provisions, in each case relating to HBI or any of
the HBI Subsidiaries.
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(b) Employee Benefit Plans. For purposes of this Section 4.16 and
Section 4.17, all references to "HBI and its Subsidiaries" shall be deemed to
refer to HBI and its Subsidiaries and any trade or business, whether or not
incorporated, that together with HBI and its Subsidiaries would be deemed or
treated as a "single employer" within the meaning of ERISA Section 4001 or Code
Section 414.
(i) For purposes of this Agreement, the term "Plan" shall mean
any stock purchase, stock option, pension, profit-sharing, bonus, deferred
compensation, incentive compensation, commission, severance or termination pay,
hospitalization, medical, dental, life or other insurance, or supplemental
unemployment benefits plan or agreement or policy or contract or other
arrangement providing employment-related compensation or benefits to any
officer, consultant, director, annuitant, employee, former employee, retiree or
independent contractor or members of their respective families (other than
directors' and officers' liability policies), whether or not insured, sponsored
or maintained by, or under which any liability, contingent or otherwise, exists
with respect to, HBI or its Subsidiaries (or, for purposes of Article V of this
Agreement, CB&I or its Subsidiaries), including but not limited to "employee
benefit plans" as defined in ERISA and the rules and regulations thereunder.
(ii) Each Plan is listed on Schedule 4.16(b). No Plan is or
has been (w) covered by Title IV of ERISA, (x) subject to the minimum funding
requirements of Section 412 of the Code, (y) a "multi-employer plan" as defined
in Section 3(37) of ERISA or (z) a voluntary employees' beneficiary association
within the meaning of Code Section 501(c)(9).
(iii) HBI and its Subsidiaries have no obligation to make any
payments that would be "excess parachute payments" under Section 280G of the
Code; and no Plan provides for the continuation of medical or health benefits or
death benefits after an employee's termination of employment (including
retirement) (other than (x) coverage mandated by applicable law, (y) deferred
compensation benefits reflected as liabilities on the books of HBI and its
Subsidiaries or (z) benefits the full cost of which is borne by the current or
former employee or his beneficiary).
Section 4.17 ERISA. (a) With respect to each Plan, the Seller has
furnished to Buyer a true and correct copy of (i) the three most recent annual
reports (Form 5500) filed with the IRS, (ii) each such Plan and all amendments
thereto, (iii) each trust agreement, insurance contract or administration
agreement relating to each such Plan, (iv) the most recent summary plan
description of each Plan for which a summary plan description is required, (v)
the most recent determination letter and request therefor, if any, issued by the
IRS with respect to any Plan intended to be qualified under section 401(a) of
the Code, (vi) any request for a determination currently pending before the IRS
and (vii) all correspondence with the IRS, the Department of Labor or Pension
Benefit Guaranty Corporation relating to any outstanding controversy. Each Plan
complies in form and operation in all material respects with its governing
documents and
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ERISA, the Code and all other applicable Governmental Requirements except where
such noncompliance would not have a Material Adverse Effect.
(b) With respect to the Plans, no event has occurred and there exists
no condition or set of circumstances in connection with which HBI or its
Subsidiaries could be subject to any liability (except for contributions and
Plan expenses) under the terms of such Plans, ERISA, the Code or any other
applicable law, except where such failure would not have a Material Adverse
Effect. All Plans that are intended to be qualified under Section 401(a) of the
Code have been determined by the IRS to be so qualified, and nothing has
occurred to the knowledge of the Seller since the date of such determination
which would cause any such Plan to be disqualified.
Section 4.18 Labor and Employment Matters. (a) Neither HBI nor any of
its Subsidiaries is a party to any collective bargaining agreement or labor
contract. To the knowledge of Seller, neither HBI nor any of its Subsidiaries
has engaged in any unfair labor practice with respect to any Persons employed by
or otherwise performing services primarily for HBI or any of its Subsidiaries.
There is no grievance or unfair labor practice charge against HBI or any of its
Subsidiaries before the National Labor Relations Board or any comparable state
agency pending or threatened in writing with respect to any such Persons. There
is no labor strike, dispute (to the knowledge of Seller), slowdown, work
stoppage, and, to the knowledge of Seller, there is not threatened nor has there
been threatened, any organizing effort or activity by any employees or labor
unions at or relating to HBI or any of its Subsidiaries, any petition for
certification of a collective bargaining representative regarding employees of
HBI or any of its Subsidiaries, pending or, to the knowledge of Seller,
threatened against or affecting HBI or any of its Subsidiaries which may
interfere with the business activities of HBI or any of its Subsidiaries.
(b) There has not been, nor is there presently pending or existing,
and, to the knowledge of Seller, there is not threatened nor has there been
threatened any claims, lawsuits, charges, complaints, grievances,
investigations, audits, arbitrations, or disputes initiated or brought before
any federal or state judicial, administrative or governmental body, agency or
tribunal against or affecting HBI or any of its subsidiaries relating to any
actual or alleged violation of any and all laws, regulations, ordinances,
statutes or codes enacted by any federal or state judicial, administrative or
governmental body, agency or tribunal regarding or pertaining to labor,
employment, hiring, firing, equal employment opportunity, discrimination,
layoffs, cessation of employment, leaves of absence, immigration, wages, hours,
benefits, collective bargaining, labor relations, the payment of social security
and similar taxes, occupational safety and health, plant closing, employment
loss (as that term is used in the WARN Act), independent contracting,
affirmative action, or continuation or portability of insurance benefits,
including but not limited to, any charge or complaint filed by any employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, the Department of Labor, the Office of Federal Contract Compliance
Programs, the Immigration and Naturalization Service,
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the Occupational Safety and Health Administration or any comparable state or
local governmental body which would have a Material Adverse Effect.
(c) HBI and any of its Subsidiaries have, and at all previous times
when required have had, Workers' Compensation insurance covering all of their
employees, former employees and contractors.
Section 4.19 Absence of Changes. Since December 31, 1999, except as set
forth in Schedule 4.19, none of the following has occurred with respect to the
Business:
(a) except as contemplated by Section 6.03(a)(i)(B), any increase in,
or any commitment or promise to increase, other than ordinary and customary
bonuses and salary increases for Employees at the times and in the amounts
consistent with its past practice, (i) the rates of cash compensation or (ii)
except as would not have a Material Adverse Effect on HBI or as required by
applicable laws, any increase in the amounts or other benefits paid or payable
under any Plans;
(b) any distribution, sale or transfer of, or any commitment to
distribute, sell or transfer, assets of HBI or any HBI Subsidiary of any kind
that singly is, or in the aggregate are, Material to the Business, other than
distributions, sales or transfers in the ordinary course of its business and
consistent with its past practices;
(c) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to HBI or its Subsidiaries, including any
Indebtedness, obligation or other liability of any Affiliate, provided that HBI
and its Subsidiaries may negotiate and adjust bills and invoices in the course
of good-faith disputes with customers in a manner consistent with past practice;
(d) any plan, agreement or arrangement granting any preferential rights
to purchase or acquire any interest in any of the Material assets of HBI or any
of its Subsidiaries or requiring the consent of any Person to the transfer and
assignment of any such asset;
(e) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the ordinary
course of operating the Business consistent with its past practices;
(f) any waiver of any of HBI's or its Subsidiaries' rights or claims
that singly is, or in the aggregate are, Material to the Business;
(g) any transaction by HBI or any of its Subsidiaries outside the
ordinary course of operating the Business or not consistent with the past
practices of the Business;
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(h) any incurrence by HBI or any of its Subsidiaries of any
Indebtedness or any Guaranty not constituting Indebtedness, or of any commitment
to incur any Indebtedness or any such Guaranty; or
(i) any cancellation or termination of a Material Contract of the
Business.
Section 4.20 Brokers' Fees. Neither HBI nor any HBI Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
Section 4.21 Related Party Transactions. Except as set forth in
Schedule 4.21, no director, officer, partner, employee, "affiliate" or
"associate" (as such terms are defined in Rule 12b-2 under the Exchange Act) of
HBI or any of its Subsidiaries (a) has borrowed any monies from or has
outstanding any Indebtedness or other similar obligations to HBI or any HBI
Subsidiary; (b) to the knowledge of Seller, owns any direct or indirect interest
of any kind in, or is a director, officer, employee, partner, affiliate or
associate of, or a consultant or lender to or borrower from, or has the right to
participate in the management, operations or profits of, any Person or Entity
which is (i) a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of HBI or any HBI Subsidiary, (ii) engaged in a business
related to the business of HBI or any HBI Subsidiary, or (iii) participating in
any transaction to which HBI or any HBI Subsidiary is a party; or (c) is
otherwise a party to any contract, arrangement or understanding with HBI or any
HBI Subsidiary.
Section 4.22 Investment Representations. (a) Seller understands that
the offer, sale and transfer of the shares of CB&I Stock to be issued to Seller
hereunder (i) have not been registered with the SEC or pursuant to any state
securities laws in reliance on the exemption afforded by Section 4(2) of the
Securities Act and comparable exemptions from applicable state laws, and (ii)
that such shares will be restricted securities under the Securities Act and
various states' securities laws, and that these laws impose limitations on the
Persons to whom sales of shares may be made. The certificates representing
shares of the CB&I Stock to be delivered to Seller as part of the Stock
Consideration will bear a legend substantially as follows:
"THE ISSUANCE OF THE SHARES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY
MERGER OR OTHERWISE), ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSFER IS EXEMPT FROM REGISTRATION, AND CHICAGO BRIDGE & IRON COMPANY
N.V. (THE "COMPANY") SHALL HAVE BEEN FURNISHED WITH AN
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OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO SUCH EFFECT.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER AS SET FORTH IN THAT CERTAIN SHAREHOLDER
AGREEMENT DATED AS OF _________, 2000 BETWEEN THE COMPANY AND WEDGE
GROUP INCORPORATED (THE "SHAREHOLDER AGREEMENT"). NO TRANSFER OF THESE
SHARES WILL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF
SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH IN FULL AND NO
PERSON MAY REQUEST THE COMPANY TO RECORD THE TRANSFER OF ANY SHARES IF
SUCH TRANSFER IS IN VIOLATION OF SUCH SHAREHOLDER AGREEMENT. A COPY OF
THE SHAREHOLDER AGREEMENT IS ON FILE AT THE ADMINISTRATIVE OFFICES OF
THE COMPANY IN PLAINFIELD, ILLINOIS AND WILL BE FURNISHED WITHOUT
CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN REQUEST. THE SHARES
EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON VOTING
PROVIDED FOR IN THE SHAREHOLDER AGREEMENT AND NO VOTE OF SUCH SHARES
THAT CONTRAVENES THE SHAREHOLDER AGREEMENT SHALL BE EFFECTIVE."
(b) Seller represents that it (i) is an "accredited investor" (as
defined in Rule 501(a)(8) under the Securities Act, (ii) has such knowledge,
sophistication and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment in the CB&I Stock
constituting the Stock Consideration, and (iii) is able to bear the economic
risk of its investment in the CB&I Stock. Seller is acquiring the CB&I Stock for
its own account for investment and (subject to the disposition of its property
being at all times within its control) not with a present view to, or for sale
or other disposition in connection with, any distribution of all or any part of
such CB&I Stock. Seller acknowledges that (x) neither CB&I nor any Person
representing CB&I has made any representation to Seller with respect to CB&I or
the CB&I Stock other than as contained in this Agreement and (y) Seller has had
access to such financial and other information concerning CB&I and the CB&I
Stock as Seller has deemed necessary in connection with its investment decision
to purchase the CB&I Stock constituting the Stock Consideration, including an
opportunity to ask questions of and request information from CB&I.
(c) Notwithstanding anything to the contrary in this Section 4.22,
Seller is not waiving any of its rights or remedies under this Agreement or the
Shareholder Agreement or any representations, warranties or obligations of the
Buyer under this Agreement (including the terms of Article V and Article IX) or
the Shareholder Agreement.
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Section 4.23 Closing Confirmation by Seller. THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT BY SELLER SHALL CONSTITUTE A
CONFIRMATION BY SELLER TO BUYER THAT (i) AMONG THE INFORMATION AND MATERIALS
FURNISHED BY CB&I TO SELLER WERE FINANCIAL PROJECTIONS BASED ON ASSUMPTIONS
CONCERNING CB&I'S BUSINESS PROSPECTS, REVENUES, OPERATIONS AND OTHER MATTERS;
THE FINANCIAL PROJECTIONS ARE BASED ON ASSUMPTIONS AND ESTIMATES INHERENTLY
SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES,
ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL
OF CB&I AND ITS SUBSIDIARIES; THERE CAN BE NO ASSURANCE THAT THE FINANCIAL
PROJECTIONS WILL BE REALIZED OR THAT ACTUAL RESULTS WILL NOT BE SIGNIFICANTLY
HIGHER OR LOWER; THE PROJECTIONS WERE NOT PREPARED IN ACCORDANCE WITH ANY
PARTICULAR GUIDELINES AND WERE NOT REVIEWED BY AN INDEPENDENT ACCOUNTANT; AND
CB&I OR ITS AFFILIATES AND ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS, ADVISORS OR REPRESENTATIVES DOES NOT ASSUME ANY RESPONSIBILITY OR
LIABILITY AND SELLER SHALL NOT HOLD ANY SUCH PARTY RESPONSIBLE OR LIABLE FOR THE
ACCURACY OR VALIDITY OF THE FINANCIAL PROJECTIONS, AND (ii) IN ENTERING INTO
THIS AGREEMENT AND CONSUMMATING THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT,
SELLER HAS RELIED SOLELY ON THE EXPRESS REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BUYER IN THIS AGREEMENT, SELLER'S INDEPENDENT INVESTIGATION OF, AND
JUDGMENT WITH RESPECT TO, CB&I AND THE PROPERTIES AND ASSETS OWNED BY CB&I AND
THE ADVICE OF SELLER'S OWN LEGAL, TAX, ECONOMIC, ENVIRONMENTAL, ENGINEERING AND
OTHER ADVISORS AND NOT ON ANY COMMENTS OR STATEMENTS OF ANY REPRESENTATIVES OF,
OR CONSULTANTS OR ADVISORS ENGAGED BY, CB&I.
Section 4.24 Limitations on Representations and Warranties. Except as and
to the extent expressly set forth in this Article IV, included on any Schedule
hereto or included in any writing delivered by Seller concurrently herewith or
subsequent hereto expressly pursuant to this Agreement, Seller makes no other
representations or warranties, and disclaims all liability and responsibility
for any representation, warranty, statement or information made or communicated
(orally or in writing) to Buyer or any of its Affiliates, employees, agents,
consultants or representatives (including, without limitation, any opinion,
information, projection or advice that may have been provided to Buyer by any
officer, director, employee, agent, consultant or representative of Seller, HBI,
the HBI Subsidiaries or any Affiliate thereof, or by any other agent, consultant
or representative of Seller, HBI or the HBI Subsidiaries).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer represents and warrants
to Seller as follows:
Section 5.01 Organization; Power. (a) CB&I is an N.V. company duly
organized and validly existing under the laws of the Netherlands. CB&I Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of CB&I and CB&I Sub has all requisite corporate
power and authority under the laws of its Organization State and its Charter
Documents to own or lease and to operate its properties presently and following
the Effective Time and to carry on its business as now conducted and as proposed
to be conducted following the Effective Time.
(b) A true and complete list of each Material CB&I subsidiary, together
with its Organization State and the percentage of its outstanding Capital Stock
owned by CB&I and any other CB&I Subsidiary, is set forth in Schedule 5.01.
Except as disclosed in Schedule 5.01, CB&I does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any Entity
which is Material to CB&I. Except as set forth in the SEC Documents or Schedule
5.01, neither CB&I nor any of its Subsidiaries is subject to any obligation to
make any Material investment in any other Person.
Section 5.02 Authorization; Enforceability; Absence of Conflicts; Required
Consents. (a) Each of CB&I and CB&I Sub has full corporate authority to enter
into this Agreement, the Shareholder Agreement and the other Transaction
Documents and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement, the Shareholder Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of CB&I and CB&I Sub, and this Agreement has been
duly executed and delivered by CB&I and CB&I Sub. This Agreement constitutes,
and the Shareholder Agreement when executed and delivered will constitute, the
legal, valid and binding obligation of CB&I and CB&I Sub, as applicable,
enforceable against each in accordance with its terms, except that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
(b) The execution, delivery and performance in accordance with their
respective terms by CB&I and CB&I Sub of this Agreement, the Shareholder
Agreement and the other Transaction Documents to which each is a party have not
and will not (i) violate, breach or constitute a default under (A) either of
their Charter Documents, (B) any Governmental
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Requirement, order, writ, injunction or decree applicable to them, or (C) any
note, bond, mortgage, indenture or material agreement or obligation to which
either is a party or by which either is bound, except for such violations,
breaches, terminations, and defaults that are set forth in Schedule 5.02, (ii)
result in the acceleration or mandatory prepayment of any Indebtedness, or any
Guaranty not constituting Indebtedness, of CB&I or CB&I Sub, or afford any
holder of any of that Indebtedness, or any beneficiary of any of those
Guaranties, the right to require CB&I or CB&I Sub to redeem, purchase or
otherwise acquire, reacquire or repay any of that Indebtedness, or to perform
any of those Guaranties, (iii) cause or result in the imposition of, or afford
any Person the right to obtain, any Lien upon any property or assets of CB&I or
CB&I Sub (or upon any revenues, income or profits of CB&I or CB&I Sub
therefrom), except for certain covenants of CB&I contained in its bank credit
facilities, or (iv) result in the revocation, cancellation, suspension or
material modification, in any single case or in the aggregate, of any
Governmental Approval possessed by CB&I or CB&I Sub at the date hereof and
necessary for the ownership or lease and the operation of its properties or the
carrying on of its business as now conducted, including any necessary
Governmental Approval under any applicable Environmental Law.
(c) Except (i) as may be required by the HSR Act or applicable state
securities or blue sky laws or (ii) as set forth in Schedule 5.02, no
Governmental Approvals or consents of any third party are required to be
obtained, and no reports or notices to or filings with any Governmental
Authority are required to be made, by CB&I or CB&I Sub for the execution,
delivery or performance by CB&I and CB&I Sub of this Agreement, the Shareholder
Agreement or the other Transaction Documents to which it is a party, the
enforcement against CB&I or CB&I Sub of its obligations hereunder or thereunder
or the effectuation of the Acquisition and the transactions contemplated hereby
and thereby.
Section 5.03 Charter Documents. No breach or violation of any Charter
Document of CB&I or CB&I Sub has occurred and is continuing that could
reasonably be expected to have a Material Adverse Effect.
Section 5.04 SEC Documents. Buyer has made available to Seller a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by CB&I with the SEC since January 1, 1998 and prior to
the date of this Agreement (the "SEC Documents") which are all the documents
(other than preliminary material) that CB&I has been required to file with the
SEC since such date. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of CB&I contained in the SEC Documents complied as to form
in all material respects with the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved
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(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present in accordance with applicable requirements of GAAP (subject,
in the case of the unaudited statements, to normal, recurring adjustments, none
of which will be Material) the consolidated financial position of CB&I and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of CB&I and its
consolidated Subsidiaries for the periods presented therein, respectively.
Section 5.05 Capitalization. The capitalization of CB&I is set forth on
Schedule 5.05. As of the Closing Date, all of the Stock Consideration will be
duly authorized for issuance and will be validly issued, fully paid and
nonassessable. Except as set forth in Schedule 5.05, there are no outstanding
subscriptions, options, warrants, calls or rights of any kind to acquire any
shares of any class of securities or any securities convertible into any shares
of any class of securities of CB&I, nor are there any obligations to issue any
such options, warrants, calls, rights or securities. There are no restrictions
of any kind on the transfer by CB&I to Seller of the Stock Consideration, except
as may be imposed by applicable securities laws.
Section 5.06 Absence of Applicable Rights Agreements. Except as set forth
in CB&I's 2000 Proxy Statement or on Schedule 5.06, there are no rights
agreements or other agreements by or between CB&I and any of its shareholders
that could ultimately result in the grant of additional shares of CB&I Stock,
additional rights to purchase any such CB&I Stock, any new class or type of
security of CB&I or other rights or benefits to CB&I's shareholders as of the
date hereof ("Rights Agreements") which would apply to the execution and
delivery of this Agreement, the issuance to Seller of the Stock Consideration,
the execution and delivery of the Shareholder Agreement or any other transaction
contemplated hereby or thereby. Further, no such grant of additional shares of
CB&I Stock, additional rights to purchase any such CB&I Stock, any new class or
type of security of CB&I or other rights or benefits to CB&I's shareholders as
of the date hereof will result by operation of (i) the law of CB&I's
Organization State, (ii) any provision of its Charter Documents or (iii) or any
combination thereof.
Section 5.07 Litigation. Except as set forth in the SEC Documents or on
Schedule 5.07, no Litigation is pending or, to the knowledge of Buyer,
threatened to which CB&I or any of its Subsidiaries is or may become a party
that (a) questions or involves the validity or enforceability of any obligation
of CB&I or CB&I Sub under any Transaction Document, (b) seeks (or reasonably may
be expected to seek) (i) to prevent or delay consummation by CB&I or CB&I Sub of
the transactions contemplated by this Agreement to be consummated by CB&I or
CB&I Sub or (ii) Damages from CB&I or CB&I Sub in connection with any such
consummation, or (c) which would have, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. No Governmental
Authority has provided notification to CB&I or any of its Subsidiaries of an
intention to conduct any audit, investigation or other review with respect to
CB&I or any of its Subsidiaries, which audit, investigation or review would, if
adversely determined, individually or in the aggregate, have a Material Adverse
Effect on CB&I.
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Section 5.08 Compliance with Worker Safety and Environmental Laws. Except
as disclosed in the SEC Documents or on Schedule 5.08: (a) CB&I and its
Subsidiaries have complied and remain in compliance in all material respects
with all applicable Environmental Laws and all applicable Worker Safety Laws,
except for any such noncompliance which would have no Material Adverse Effect;
(b) no release of Solid Wastes, Hazardous Wastes or Hazardous Substances at,
from, in or on any site owned or operated by CB&I or its Subsidiaries as of the
Closing Date has occurred that, if all relevant facts were known to the relevant
Governmental Authorities, reasonably could be expected to require remediation to
avoid deed record notices, restrictions, liabilities or other consequences that
would not be applicable if that release had not occurred; (c) neither CB&I, its
Subsidiaries nor any agent or contractor of CB&I or its Subsidiaries has
transported or arranged for the transportation of any Solid Wastes, Hazardous
Wastes or Hazardous Substances to, or disposed or arranged for the disposition
of any Solid Wastes, Hazardous Wastes or Hazardous Substances at, any off-site
location that could lead to any claim against CB&I or its Subsidiaries, as a
potentially responsible party, for any cleanup costs, remedial work, damage to
natural resources, personal injury or property damage, including any claim under
CERCLA; (d) no storage tanks exist on or under any of the properties owned or
operated by CB&I or its Subsidiaries as of the Closing Date from which any Solid
Wastes, Hazardous Wastes or Hazardous Substances have, to the knowledge of
Buyer, been released into the surrounding environment; and (e) no Solid Wastes,
Hazardous Wastes or Hazardous Substances have been used, stored, manufactured or
processed on the property owned, used, leased or operated by CB&I or any of its
current or former Subsidiaries at any time, except as necessary to the conduct
of its business in compliance with Environmental Laws and Worker Safety Laws and
except where any noncompliance would not have a Material Adverse Effect.
Section 5.09 Liabilities and Obligations. There are no Material liabilities
of any kind, character and description and whether accrued, absolute, or fixed,
of CB&I that (a) reasonably could be expected to have a Material Adverse Effect
on CB&I other than as set forth on Schedule 5.07 or as disclosed in the SEC
Documents, and (b) (i) had been incurred prior to the most recent SEC Document
but are not reflected on that SEC Document or (ii) were incurred after the most
recent SEC Document otherwise than in the ordinary course of business and
consistent with past practice.
Section 5.10 Intellectual Property. To the knowledge of Buyer, except as
set forth in Schedule 5.10, CB&I or its Subsidiaries owns, free and clear of all
Liens other than Permitted Liens, or has the legal right to use, all
Intellectual Property that is necessary to the conduct of the Business as now
conducted, in each case free of any claims or infringements. Schedule 5.10 (a)
lists the Material Intellectual Property of CB&I and its Subsidiaries and (b)
indicates that owned by CB&I or its Subsidiaries and, for those not listed as so
owned, the agreement or other arrangement pursuant to which they are possessed.
Except as set forth in Schedule 5.10, to the knowledge of Buyer, (a) no consent
of any Person will be required for the use of any of this Material Intellectual
Property by CB&I or any Subsidiary of CB&I following the Effective Time
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and (b) no governmental registration of any of this Material Intellectual
Property has lapsed or expired or been canceled, abandoned, opposed or has been
the subject of any reexamination request.
Section 5.11 Material Contracts. Schedule 5.11 sets forth a complete list
of all Material Contracts (as defined below) not listed on the Exhibit Index to
CB&I's Form 10-K Annual Report for the fiscal year ended December 31, 1999,
previously made available to Seller. Each such Material Contract is in full
force and effect and is enforceable against the parties thereto other than CB&I
and its Subsidiaries in accordance with its terms, and no condition or state of
facts exists that, with notice or the passage of time or both, would constitute
a material default by CB&I or its applicable Subsidiary or, to the knowledge of
Buyer, any third party under any such Material Contract. CB&I or its applicable
Subsidiary has duly complied in all material respects with the provisions of
each such Material Contract to which it is a party. For the purpose of this
Agreement, a Material Contract with respect to CB&I or its Subsidiaries shall
mean:
(i) those material agreements required to be filed by CB&I pursuant
to applicable SEC rules and regulations;
(ii) any instrument, agreement or other obligation evidencing or
relating to Indebtedness of CB&I or any of its Subsidiaries or to money lent or
to be lent to another Person involving more than $500,000; and
(iii) any agreement for the acquisition or provision of services,
supplies, equipment, inventory, fixtures or other property involving more than
$500,000 individually the costs for which are not passed through to the
customers of CB&I or its Subsidiaries in the ordinary course of business, and
all earnout agreements.
Section 5.12 Insurance. Schedule 5.12 sets forth a list of all insurance
policies currently in force carried by CB&I or its Subsidiaries which relate to
their business. CB&I has previously made available to Seller (a) a complete list
of all insurance loss runs and worker's compensation claims relating to CB&I's
business and received for the most recently ended two (2) policy years, and (b)
true, complete and correct copies of all insurance policies, binders or similar
documentation carried by CB&I that relate to CB&I's business and are in effect,
all of which (i) have been issued by insurers of recognized responsibility and
(ii) currently are, and will remain without interruption to the Effective Time,
in full force and effect.
Section 5.13 Employee Matters. (a) Employment Agreements. Schedule 5.13(a)
contains a list of all of the following, whether written or unwritten: (i)
Employment Agreements and (ii) plans, programs, agreements and other
arrangements with or relating to employees containing change of control or
similar provisions not otherwise listed in the SEC Documents remaining executory
in whole or in part on the date hereof, and CB&I has provided Seller with true,
complete and correct copies of all those Employment Agreements and such plans,
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programs, agreements and other arrangements. CB&I is not party to any oral
Employment Agreement.
(b) Employee Benefit Plans. For purposes of this Section 5.13 and Section
5.14, all references to "CB&I" shall be deemed to refer to CB&I and its
Subsidiaries and any trade or business, whether or not incorporated, that
together with CB&I and its Subsidiaries would be deemed or treated as a "single
employer" within the meaning of ERISA Section 4001 or Code Section 414.
(i) Each Plan is listed on Schedule 5.13(b). Except as discussed on
Schedule 5.13(b), no Plan is or has been (w) covered by Title IV of ERISA, (x)
subject to the minimum funding requirements of Section 412 of the Code, (y) a
"multi-employer plan" as defined in Section 3(37) of ERISA or (z) a voluntary
employees' beneficiary association within the meaning of Code Section 501(c)(9).
(ii) Except as described on Schedule 5.13(b), (x) CB&I has no
obligation to make any payments that would be "excess parachute payments" under
Section 280G of the Code; and (y) no Plan provides for the continuation of
medical or health benefits or death benefits after an employee's termination of
employment (including retirement) other than (A) coverage mandated by applicable
law, (B) deferred compensation benefits reflected as liabilities on the books of
CB&I or (C) benefits the full cost of which is borne by the current or former
employee or his beneficiary.
Section 5.14 Compliance With ERISA, Labor Laws. (a) Each Plan complies in
form and operation in all material respects with its governing documents and
ERISA, the Code and all other applicable Governmental Requirements except where
such noncompliance would not have a Material Adverse Effect. CB&I has no
commitment or obligation to establish or adopt any new or additional Plans or to
Materially increase the benefits under any existing Plan.
(b) To the knowledge of Buyer, with respect to the Plans, no event has
occurred and there exists no condition or set of circumstances in connection
with which CB&I could be subject to any liability (except for contributions and
Plan expenses) under the terms of such Plans, ERISA, the Code or any other
applicable law except where such failure would not have a Material Adverse
Effect. All Plans that are intended to be qualified under Section 401(a) of the
Code have been determined by the IRS to be so qualified, and nothing has
occurred to the knowledge of Buyer since the date of determination which could
cause any such Plan to be disqualified.
(c) Except as set forth on Schedule 5.14, neither CB&I nor any of its
Subsidiaries is a party to any Material collective bargaining agreement or labor
contract. Except as set forth on Schedule 5.14, to the knowledge of Buyer,
neither CB&I nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any Persons employed by or otherwise performing
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services primarily for CB&I or any of its Subsidiaries. Except as set forth on
Schedule 5.14, there is no grievance or unfair labor practice charge against
CB&I or any of its Subsidiaries before the National Labor Relations Board or any
comparable state agency pending or threatened in writing with respect to any
such Persons. There is no labor strike, dispute (to the knowledge of Buyer),
slowdown, work stoppage, and, to the knowledge of Buyer, there is not threatened
nor has there been threatened, any organizing effort or activity by any
employees or labor unions at or relating to CB&I or any of its Subsidiaries, any
petition for certification of a collective bargaining representative regarding
employees of CB&I or any of its Subsidiaries, pending or, to the knowledge of
Buyer, threatened against or affecting CB&I or any of its Subsidiaries which
would have a Material Adverse Effect.
Section 5.15 Absence of Changes. Since the most recent SEC Document, except
as set forth in Schedule 5.15, none of the following has occurred with respect
to CB&I's business:
(a) any increase in, or any commitment or promise to increase, other than
ordinary and customary bonuses and salary increases for employees at the times
and in the amounts consistent with its past practice, (i) the rates of cash
compensation or (ii) except as would not have a Material Adverse Effect on CB&I
or as required by applicable laws, any increase in the amounts or other benefits
paid or payable under any Plans;
(b) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, that will have a Material Adverse
Effect on CB&I following the Effective Time;
(c) any distribution, sale or transfer of, or any commitment to distribute,
sell or transfer, assets of CB&I or any of its Subsidiaries of any kind that
singly is, or in the aggregate are, Material to CB&I's business, other than
distributions, sales or transfers in the ordinary course of its business and
consistent with its past practices;
(d) any cancellation, or agreement to cancel, any Material Indebtedness,
obligation or other liability owing to CB&I or its Subsidiaries, including any
Material Indebtedness, obligation or other liability of any Affiliate, provided
that CB&I and its Subsidiaries may negotiate and adjust bills and invoices in
the course of good-faith disputes with customers in a manner consistent with
past practice;
(e) any plan, agreement or arrangement granting any preferential rights to
purchase or acquire any interest in any of the Material assets of CB&I or its
Subsidiaries or requiring the consent of any Person to the transfer and
assignment of any of such asset;
(f) any purchase or acquisition of, or agreement, plan or arrangement to
purchase or acquire, any property, rights or assets outside of the ordinary
course of operating CB&I's business consistent with its past practices;
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(g) any waiver of any of the rights or claims of CB&I or its Subsidiaries
that singly is, or in the aggregate are, Material to CB&I's business;
(h) any transaction by CB&I or its Subsidiaries outside the ordinary course
of operating CB&I's business or not consistent with the past practices of its
business;
(i) any incurrence by CB&I or its Subsidiaries of any of the following: any
Material Indebtedness or any Material Guaranty not constituting Indebtedness, or
any commitment to incur any such Indebtedness or any such Guaranty (except as
referred to in Section 5.17 below and except for CB&I Guaranties of the
performance of its Subsidiaries and Affiliates in the ordinary course of
business); or
(j) any cancellation or termination of a material agreement relating to
CB&I's business (other than the termination of existing bank revolving credit
facilities in connection with the financing referred to in Section 5.17).
Section 5.16 Broker's Fees. Except for certain fees payable by CB&I to
Credit Suisse First Boston Corporation, CB&I and CB&I Sub have no liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
Section 5.17 Access to Data. (a) Buyer and its Representatives have
reviewed or received copies of, or had the opportunity to review, including in a
data room maintained by Seller, such information from Seller and HBI as they
have requested, and have had the opportunity to make such inquiry of
Representatives of Seller and HBI as they deem appropriate. Buyer acknowledges
that prior to the Closing Date, Seller has caused HBI to give Buyer and its
authorized Representatives reasonable access to HBI's employees, offices,
properties and a data room containing certain books and records of HBI and its
Subsidiaries, has permitted Buyer to make inspections of and tour the facilities
of HBI and its Subsidiaries, and has furnished Buyer with certain financial and
operating data and other information with respect to the business, assets,
properties, operations, liabilities and obligations of HBI and its Subsidiaries.
(b) Notwithstanding anything to the contrary in this Section 5.17, Buyer is
not waiving any of its rights or remedies under this Agreement or the
Shareholder Agreement or any representations, warranties or obligations of the
Seller under this Agreement (including the terms of Article IV and Article IX)
or the Shareholder Agreement.
Section 5.18 Closing Confirmation by Buyer. THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED IN THIS AGREEMENT BY BUYER SHALL CONSTITUTE A CONFIRMATION BY BUYER
TO SELLER THAT (i) AMONG THE INFORMATION AND MATERIALS FURNISHED BY SELLER TO
BUYER WERE FINANCIAL PROJECTIONS BASED ON ASSUMPTIONS CONCERNING HBI'S
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BUSINESS PROSPECTS, REVENUES, OPERATIONS AND OTHER MATTERS; THE FINANCIAL
PROJECTIONS ARE BASED ON ASSUMPTIONS AND ESTIMATES INHERENTLY SUBJECT TO
SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF
WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF
SELLER, HBI AND ITS SUBSIDIARIES; THERE CAN BE NO ASSURANCE THAT THE FINANCIAL
PROJECTIONS WILL BE REALIZED OR THAT ACTUAL RESULTS WILL NOT BE SIGNIFICANTLY
HIGHER OR LOWER; THE PROJECTIONS WERE NOT PREPARED IN ACCORDANCE WITH ANY
PARTICULAR GUIDELINES AND WERE NOT REVIEWED BY AN INDEPENDENT ACCOUNTANT; AND
SELLER OR ITS AFFILIATES AND ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS, ADVISORS OR REPRESENTATIVES DOES NOT ASSUME ANY
RESPONSIBILITY OR LIABILITY AND BUYER SHALL NOT HOLD ANY SUCH PARTY RESPONSIBLE
OR LIABLE FOR THE ACCURACY OR VALIDITY OF THE FINANCIAL PROJECTIONS, AND (ii) IN
ENTERING INTO THIS AGREEMENT AND CONSUMMATING THE TRANSACTIONS CONTEMPLATED IN
THIS AGREEMENT, BUYER HAS RELIED SOLELY ON THE EXPRESS REPRESENTATIONS,
WARRANTIES AND COVENANTS OF SELLER IN THIS AGREEMENT, BUYER'S INDEPENDENT
INVESTIGATION OF, AND JUDGMENT WITH RESPECT TO, THE SELLER ENTITIES AND THE
PROPERTIES AND ASSETS OWNED BY THE SELLER ENTITIES AND THE ADVICE OF BUYER'S OWN
LEGAL, TAX, ECONOMIC, ENVIRONMENTAL, ENGINEERING AND OTHER ADVISORS AND NOT ON
ANY COMMENTS OR STATEMENTS OF ANY REPRESENTATIVES OF, OR CONSULTANTS OR ADVISORS
ENGAGED BY, SELLER.
Section 5.19 Limitations on Representations and Warranties. Except as and
to the extent expressly set forth in this Article V, included on any Schedule
hereto or included in any writing delivered by Buyer concurrently herewith or
subsequent hereto expressly pursuant to this Agreement, Buyer makes no other
representations or warranties, and disclaims all liability and responsibility
for any representation, warranty, statement or information made or communicated
(orally or in writing) to Seller or any of its Affiliates, employees, agents,
consultants or representatives (including any opinion, information, projection
or advice that may have been provided to Seller by any officer, director,
employee, agent, consultant or representative of Buyer or any Affiliate thereof,
or by any other agent, consultant or representative of Buyer or the CB&I
Subsidiaries).
ARTICLE VI
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 6.01 Reasonable Access and Mutual Cooperation. (a) From the date
hereof and until the Closing, Buyer and its Subsidiaries and Seller and the
Seller Entities will (i) afford
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to the Representatives of the other parties reasonable access to their key
employees, sites, properties, books and records and (ii) provide such additional
financial and operating data and other Information relating to their businesses
as the other parties may from time to time reasonably request. Seller and Buyer
will cooperate with each other and their Representatives in the preparation of
any documents or other material that may be required in connection with any
Transaction Document. Buyer and Seller will treat all Confidential Information
obtained by them in connection with the negotiation and performance of this
Agreement as confidential in accordance with the provisions of Section 11.01.
(b) The parties hereby acknowledge that any in-house counsel of Seller, HBI
and any HBI Subsidiary, on the one hand, and of CB&I and any CB&I Subsidiary, on
the other hand, who are employees and who participated in the preparation,
negotiation or consummation of this Agreement or the transactions contemplated
hereby were providing legal representation for the Seller or the Buyer, as the
case may be, and that, notwithstanding any other provision of this Agreement,
neither Seller, HBI, any HBI Subsidiary, CB&I, any CB&I Subsidiary, nor such
counsel shall be required to disclose under any circumstance any information or
documents covered by the attorney-client privilege or the work-product doctrine
as such information or documents were developed in the course of such
representation. All such information and documents shall remain the sole and
exclusive property of Seller or Buyer, as the case may be. Any claims made
against such in-house counsel arising out of the opinions given pursuant to this
Agreement shall be treated as a claim against the party who employed such
in-house counsel, and shall be subject to the indemnification provisions of
Article IX.
(c) Buyer and Seller will use their best efforts to secure, as soon as
practicable after the date hereof, all approvals and consents of third Persons
as may be necessary to consummate the transactions contemplated hereby.
(d) If this Agreement is terminated pursuant to Article XII, Buyer and
Seller will promptly return all Confidential Information of the other party it
then possesses to such other party.
Section 6.02 Conduct of Business Pending the Closing. From the date hereof
and until the Closing, Buyer will, and WGI shall cause the Seller Entities to:
(a) carry on their respective businesses (including the Business with
respect to the Seller Entities) in substantially the same manner as they have
heretofore and not introduce any Material new method of management, operation or
accounting;
(b) perform all its obligations under agreements relating to or affecting
their respective businesses (including the Business with respect to the Seller
Entities) consistent with past practices;
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(c) keep in full force and effect without interruption all its present
insurance policies relating to their respective businesses (including the
Business with respect to the Seller Entities) and the assets of Buyer and the
Seller Entities', respectively, or other comparable insurance coverage;
(d) use reasonable commercial efforts to (i) maintain and preserve its
business organizations operating their respective businesses (including the
Business with respect to the Seller Entities) intact, (ii) retain present key
employees who are involved in the operation of their respective businesses
(including the Business with respect to the Seller Entities) and (iii) maintain
relationships with suppliers, customers and others having business relations
with their respective businesses (including the Business with respect to the
Seller Entities); and
(e) comply with all applicable Governmental Requirements relating to their
respective businesses (including the Business with respect to the Seller
Entities).
Section 6.03 Prohibited Activities.
(a) From the date hereof and until the Closing, without the prior written
consent of the other parties to this Agreement or unless as required or
expressly permitted by this Agreement, Seller will not, and will cause HBI and
its Subsidiaries to not:
(i) increase or commit or promise to increase the cash compensation
payable or to become payable to any employee of the Seller Entities or make any
discretionary bonus or management fee payment to any such Person, except (A)
bonuses or salary increases to employees at the times and in the amounts
consistent with its past practice, and (B) up to an additional $500,000 in
bonuses to employees of HBI;
(ii) create, assume or permit to be created or imposed any Liens
(other than Permitted Liens) upon any of the assets of the Seller Entities,
whether now owned or hereafter acquired;
(iii) adopt, with respect to any Seller Entity, any new employee
benefits plans or amend any existing Plan or Employee Policies and Procedures in
any Material respect, except for changes that are less favorable to participants
in such Plans;
(iv) sell, assign, lease or otherwise transfer or dispose of any of
the assets of the Seller Entities' otherwise than (i) in the ordinary course of
business and consistent with its past practice or (ii) pursuant to Section 3.01
and the transactions contemplated therein;
(v) merge, consolidate or effect a share exchange with, or agree to
merge, consolidate or effect a share exchange with, any other Entity (or allow
the Seller Entities to do any of the foregoing);
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(vi) waive any Material rights or claims of the Seller Entities,
provided that they may negotiate and adjust bills in the course of good-faith
disputes with customers in the ordinary course of its Business;
(vii) commit a Material breach of or terminate any Material Contract
of the Business or any Governmental Approvals Material to the Business; or
(viii) enter into any other transaction relating to or Materially
affecting the Business that is not in the ordinary course of its business and
consistent with its past practice or is prohibited hereby.
(b) From the date hereof and until the Closing, without the prior written
consent of the other parties to this Agreement or unless as required or
expressly permitted by this Agreement, Buyer will not:
(i) create, assume or permit to be created or imposed any Liens
(other than Permitted Liens) upon any of the assets of Buyer, whether now owned
or hereafter acquired;
(ii) agree to sell, assign, lease or otherwise transfer or dispose
of substantially all of the assets of Buyer or agree to merge, consolidate or
effect a share exchange with, any other Entity;
(iii) commit a Material breach of any Material Contract of Buyer or
its Subsidiaries or of any Governmental Approvals Material to its business;
(iv) enter into any other transactions which would have a Material
Adverse Effect on its business that is not in the ordinary course of its
business and consistent with its past practice or is prohibited hereby; or
(v) (A) solicit, initiate or encourage, or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, an Alternative Proposal, or (B) participate
in any discussions or negotiations regarding an Alternative Proposal; provided,
however, that at any time prior to the approval of the transactions contemplated
by this Agreement by the CB&I shareholders, the CB&I Supervisory Board of
Directors, in response to a written Alternative Proposal that (x) was
unsolicited or that did not otherwise result from a breach of this covenant and
(y) is reasonably likely to lead to a superior transaction for the shareholders
of CB&I as compared to the transactions contemplated by this Agreement, may
authorize CB&I to furnish non-public information with respect to CB&I to the
Person making such Alternative Proposal pursuant to a customary confidentiality
agreement and participate in negotiations regarding such Alternative Proposal.
Section 6.04 Notification of Certain Matters. Seller shall give prompt notice to
Buyer of (a) the existence or occurrence of each condition or state of facts
that will or reasonably could
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be expected to cause any representation or warranty of Seller contained herein
to be untrue or incorrect in any Material respect at or prior to the Closing
Date and (b) any Material failure of Seller to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. Buyer shall give prompt notice to Seller of (a) the existence or
occurrence of each condition or state of facts that will or reasonably could be
expected to cause any representation or warranty of Buyer contained herein to be
untrue or inaccurate at or prior to the Closing Date, (b) any Material failure
of Buyer to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder and (c) Buyer's receipt of any
Alternative Proposal, or any requests for information or the initiation of
discussions or negotiations from any third party who states a desire to make or
consider making any Alternative Proposal, and Buyer shall include with such
notice the identity of the person or group initiating such discussions or
negotiations, requesting such information or making such Alternative Proposal,
and the material terms and conditions of any such Alternative Proposal (and any
subsequent material modifications thereof). The delivery of any notice pursuant
to this Section 6.04 shall not be deemed to (a) modify the representations or
warranties herein of the party delivering that notice, or any other party; (b)
modify the conditions set forth or referred to in Article VII; or (c) limit or
otherwise affect the remedies available hereunder to the party receiving that
notice.
Section 6.05 HSR Act Matters. Buyer and Seller promptly will compile and
file (or will cause their "ultimate parent entity" (as determined for purposes
of the HSR Act) to file) under the HSR Act such information respecting it as the
HSR Act requires, and the expiration or termination of the applicable waiting
period and any extension thereof under the HSR Act shall be deemed a condition
precedent set forth in Section 7.01. Buyer shall pay any filing fees relating to
Seller's filings under the HSR Act.
Section 6.06 Fees and Expenses. (a) Seller and Buyer shall bear their own
fees and expenses incurred in connection with this Agreement and in connection
with all obligations required to be performed by each of them under this
Agreement, except (i) as provided in Section 6.06(b) or as otherwise
specifically provided elsewhere in this Agreement, (ii) that Buyer shall bear
all liabilities that Seller or the Seller Entities may have pursuant to the
Employment Agreements listed on Schedule 4.16(a), including any liabilities to
provide post-employment benefits to the Chief Executive Officer of HBI (but
excluding any sale bonuses to any employees of any Seller Entity), and (iii)
that Buyer shall bear all accounting fees and expenses relating to the
preparation of the CB&I Proxy Statement.
(b) (i) To compensate Seller and its Affiliates for entering into this
Agreement and taking action to consummate the transactions contemplated hereby
and incurring the costs and expenses related thereto and other losses and
expenses, including the foregoing by Seller of other opportunities, Buyer and
Seller agree that Buyer shall pay to Seller $5,000,000 if this Agreement is
terminated by CB&I pursuant to Section 12.01(c) or by Seller pursuant to
12.01(d) (due to receipt of an Alternative Proposal).
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(ii) Buyer shall pay to Seller as liquidated damages $1,000,000 if the
transactions contemplated by this Agreement are not consummated by December 31,
2000 for any reason other than (v) mutual consent in accordance with Section
12.01(a), (w) entry of any preliminary or permanent injunction described in
Section 12.01(e), (x) failure to obtain a necessary approval from any
Governmental Authority, (y) a material default or failure to perform by Seller
or (z) pursuant to Section 12.01(c) or 12.01(d) in cases where Buyer is
obligated to make the payment set forth in Section 6.06(b)(i).
Section 6.07 Publicity. The parties hereto agree to consult with one
another prior to the issuance of any press release or public statement relating
to or concerning this Agreement or the matters contained herein. Such
consultation shall include prior notification of a party's intent to issue a
press release accompanied by a copy of the proposed language of such press
release or public statement. If Buyer or Seller is required to issue a press
release by law or a securities exchange, it shall use its best efforts to inform
the other party hereto prior to such issuance.
Section 6.08 Calling of Shareholders' Meeting; Commercially Reasonable
Efforts. CB&I will call a general meeting of its shareholders (the "Shareholders
Meeting") to be held as promptly as practicable for the purpose of voting upon
certain matters, including but not limited to the following: (i) the issuance of
the Stock Consideration by CB&I and the other transactions contemplated by this
Agreement, (ii) amendments to CB&I's Articles of Association necessary or
desirable to carry out the provisions of the Shareholder Agreement and (iii) the
appointment of members of CB&I's Board of Supervisory Directors consistent with
the provisions of the Shareholder Agreement. Each of Seller and Buyer will use
commercially reasonable efforts to take all actions and do all things necessary
in order to consummate and make effective the transactions contemplated by this
Agreement, including (i) the satisfaction, but not the waiver, of the closing
conditions set forth in Article VII and (ii) cooperating with each other in
providing all relevant information for the preparation of a proxy statement
relating to the Shareholders' Meeting (the "CB&I Proxy Statement"). If the
Federal Trade Commission or the Antitrust Division of the Department of Justice
raises an objection to the Acquisition and the transactions contemplated hereby,
and/or proposes or seeks to impose any divestiture, operating restriction or
other condition, Buyer agrees, expeditiously and in good faith, to discuss such
objection, conditions and possible resolutions with such Governmental Authority.
Notwithstanding the foregoing, CB&I's Board of Supervisory Directors shall not
be required to take any action that it has determined in good faith, based on
the advice of outside counsel, would constitute a breach of its fiduciary duties
to CB&I shareholders under applicable law.
Section 6.09 Assumption of Earnouts. The Buyer hereby acknowledges that (a)
it has knowledge of the earnout agreements listed in Schedule 6.09 (the "Earnout
Agreements"), (b) it will assume all liabilities and obligations related to the
Earnout Agreements upon the consummation of the transactions contemplated by
this Agreement, and (c) any liability incurred by Seller in connection with or
respect to the Earnout Agreements, other than any liability arising out of or
based upon any breach by Seller of any obligation under the Earnout Agreements
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occurring prior to the Closing Date, will constitute a Seller Indemnified Loss
for purposed of Section 9.03 hereof. Notwithstanding any contrary provision in
this Agreement, this covenant will survive until and terminate upon the
expiration of the statute of limitations applicable to claims relating to such
Earnout Agreements.
Section 6.10 Certain Leased Property. Seller will cause A & B Builders,
Ltd. to vacate the leased property located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
on or before the Closing Date. Buyer will not occupy, use or operate such
property after the Closing Date.
ARTICLE VII
CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.01 Conditions to the Obligations of Each Party. The obligation of
each party hereto to take the actions contemplated to be taken by that party at
the Closing is subject to receipt of all Governmental Approvals required to be
obtained by Seller or Buyer in connection with the consummation of the
Acquisition on or before the Closing Date.
Section 7.02 Conditions to the Obligations of Seller. The obligations of
Seller with respect to actions to be taken by it at or before the Closing Date
and the actions to be taken on the Closing Date are subject to the satisfaction,
or the waiver by Seller pursuant to Section 11.03, on or before the Closing Date
of the following:
(a) all of the representations and warranties of Buyer set forth in Article
V shall be true and correct as of the Closing Date as though made at that date
other than such changes and exceptions that (i) are contemplated by this
Agreement or (ii) could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect;
(b) Buyer shall have delivered the documents described in Sections 3.04(b);
and
(c) Buyer shall have made application for and received approval for listing
of the shares of CB&I Stock constituting the Stock Consideration on a
"when-issued" basis on the New York Stock Exchange, Inc.
Section 7.03 Conditions to the Obligations of Buyer. The obligations of
Buyer with respect to actions to be taken by it at or before the Closing Date
are subject to the satisfaction, or the waiver by Buyer pursuant to Section
11.03, on or before the Closing Date of the following:
(a) all of the representations and warranties of Seller set forth in
Article IV shall be true and correct as of the Closing Date as though made at
that date other than such changes or exceptions that (i) are contemplated by
this Agreement or (ii) could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect;
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(b) Seller shall have delivered the documents described in Section 3.04(a);
(c) the shareholders of CB&I shall have duly approved (i) the issuance of
the Stock Consideration by CB&I and the other transactions contemplated by this
Agreement, (ii) amendments to CB&I's Articles of Association necessary or
desirable to carry out the provisions of the Shareholder Agreement and (iii) the
appointment of members of CB&I's Board of Supervisory Directors consistent with
the provisions of the Shareholder Agreement;
(d) the credit facility of HBI with Bank of America shall be terminated and
all security interests and liens on the assets of HBI and its Subsidiaries
securing such facility shall have been released; and
(e) all third party, non-governmental consents or approvals necessary to
prevent the termination of any material right, privilege, license or agreement
of HBI or its Subsidiaries, or which is necessary for the consummation of the
transactions contemplated by this Agreement (including the required consent
referred to on Schedule 5.02(c)) shall have been obtained.
ARTICLE VIII
COVENANTS FOLLOWING THE CLOSING
Section 8.01 Records and Access. (a) After the Closing, Buyer shall, at its
own expense, cause the Seller Entities to preserve and keep, or transport to a
storage site of its own selection where it shall preserve and keep, the books
and records of the Seller Entities obtained by Buyer, including financial or
business transaction records, books of original entry, Tax records and
supporting documents; provided, however, that Seller may (i) make and retain
copies of such books and records of the Seller Entities as Seller reasonably may
determine are necessary in connection with (A) its Tax reporting or (B) its
ownership, operation or disposition of the Excluded Items and (ii) retain such
corporate books and records and such other original records as it is required to
maintain by applicable Governmental Requirements. After the Closing, to the
extent that Seller fails to retain copies of the records as described above,
Buyer will provide photocopies of such books and records to such Seller at
Seller's expense within a reasonable period after receipt of a request from
Seller.
(b) Buyer shall preserve and keep the books and records of the Seller
Entities obtained by Buyer for a period of seven (7) years from the Closing Date
or such longer period if required under applicable Governmental Requirements.
For a period of seven (7) years after the Closing Date, Buyer shall notify
Seller in writing, on an annual basis, of the document types and, if applicable,
inclusive dates of any such retained records that it intends to destroy during
the following one-year period. If Seller desires access to such records for a
period of time longer than that specified in Buyer's annual notice, Seller shall
notify Buyer in writing not more than ten
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(10) business days following Seller's receipt of Buyer's annual notice of its
desire to retain such records, and Buyer shall deliver such records to Seller.
If Seller does not notify Buyer of a desire to retain any such records within
such ten (10) day period, Buyer may dispose of such records according to prudent
records management practices in the ordinary course of business.
Section 8.02 Cooperation in Litigation. From and after the Closing Date,
each party shall fully cooperate in the defense or prosecution of any litigation
or proceeding already instituted or that may be instituted hereafter against or
by another party relating to or arising out of the conduct of the Business prior
to or after the Closing Date (other than litigation arising out of the
transactions contemplated by this Agreement). Except as otherwise provided in
this Agreement, the party requesting such cooperation shall pay the reasonable
out-of-pocket expenses incurred in providing such cooperation (including
reasonable legal fees and disbursements) by the party providing such cooperation
and by its officers, directors, employees or agents, but shall not be
responsible for reimbursing such party or its officers, directors, employees and
agents for their time spent in such cooperation.
Section 8.03 Post-Closing Assistance. From and after the Closing Date, upon
the reasonable request of the Buyer or the Seller, as the case may be, the
parties hereto shall do, execute, acknowledge and deliver all such further acts,
assurances, deeds, assignments, transfers, conveyances and other instruments and
papers as may be reasonably required or appropriate to carry out the
transactions contemplated by this Agreement.
Section 8.04 Mail. From and after the Effective Time, all mail (including
mail sent by private delivery) addressed to Seller and belonging to the Seller
Entities will be the property of Buyer, and Seller will deliver all such mail to
Buyer.
Section 8.05 Bonuses. For the year 2000, Buyer agrees to pay bonuses to the
employees of HBI and the HBI Subsidiaries at the times and in the amounts
consistent with past practice.
ARTICLE IX
INDEMNIFICATION
Section 9.01 Survival of Representations and Warranties. (a) Except as set
forth below in Sections 9.01(b) and (c), the representations and warranties
contained in Articles IV and V will terminate and expire 12 months after the
Closing Date.
(b) The representations and warranties set forth in or deemed to be set
forth in Section 4.07, Section 4.14, Section 4.17, Section 5.08 and Section 5.14
will terminate and expire
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five years after discovery of the condition, circumstance or fact constituting a
breach of any such representation or warranty.
(c) The representations and warranties set forth in or deemed to be set
forth in Section 4.03, Section 4.04, Section 4.06, Section 4.22, Section 4.23,
Section 4.24, Section 5.05, Section 5.07, Section 5.17, Section 5.18 and Section
5.19 will survive the Closing and Effective Time indefinitely.
(d) After a representation and warranty has terminated and expired, no
indemnification will or may be sought pursuant to this Article IX on the basis
of that representation and warranty by any Person who would have been entitled
pursuant to this Article IX to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that: (i) the amount of that claim shall be taken into account in determining
whether the aggregate amount of all claims against that Indemnifying Party (as
hereinafter defined) has exceeded the Threshold Amount and (ii) in the case of
each representation and warranty that will terminate and expire as provided in
this Section 9.01, any claim presented in writing for indemnification pursuant
to this Article IX on the basis of a representation and warranty prior to its
termination and expiration will toll the applicable survival period as to that
claim only until that claim is resolved.
Section 9.02 Indemnification of Buyer. (a) General. Subject to the
applicable provisions of this Article IX, Seller covenants and agrees that it
will indemnify and defend Buyer against, and hold Buyer harmless from and in
respect of, all Damage Claims which arise from, are based on or relate or
otherwise are attributable to (i) any breach of the representations and
warranties of Seller set forth herein or in certificates delivered in connection
herewith or (ii) any nonfulfillment of any covenant or agreement on the part of
Seller (including Seller's indemnifications set forth in Section 3.01(a) and
Section 9.02(b)) under this Agreement (each such Damage Claim being a "Buyer
Indemnified Loss"); provided, however, that (x) for any Damage Claim covered in
whole or in part by any prepaid insurance contract in place at the Closing Date
and listed on Schedule 9.02(a) ("Prepaid Insurance Contract"), only that portion
of the Damage Claim not insured and not actually paid (including any applicable
deductible) shall be deemed a Buyer Indemnified Loss, provided, however that any
amount actually paid pursuant to a Prepaid Insurance Contract or an insurance
contract referred to in Section 9.04(g)(i) shall be deemed to have been paid by
Seller for purposes of calculating the Ceiling Amount but shall not be taken
into account in determining whether the aggregate amount of all Buyer's claims
against Seller shall have exceeded the Threshold Amount, and (y) in respect of
any Damage Claim for which indemnification is available pursuant to the
indemnification provisions referenced in Section 4.09(a)(vii) and set forth in
Schedule 4.09, Buyer shall at its option be required either to pursue itself in
good faith such rights of indemnification contained in such provisions or to
permit Seller to pursue such rights of indemnification (provided Seller must
first satisfy its obligation to Buyer relating to such Buyer Indemnified Loss),
and any amounts actually paid pursuant to such indemnification rights shall be
deemed to have been paid by Seller for purposes
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of calculating the Ceiling Amount; provided, further, that Seller's obligations
to Buyer for the following types of claims are not subject to the provisions or
any limitations of this Article IX: (A) payment of Taxes as set forth in Section
3.01(c) or Article X; and (B) payment to Buyer of any adjustment to the Purchase
Price pursuant to Section 2.03(f).
(b) Environmental.
(i) Seller hereby agrees to indemnify, defend and hold harmless the
Buyer from any suits, causes of action, claims, judgments, losses, damages,
fines, penalties, settlements, investigation costs, remediation costs, cleanup
costs, expenses, liabilities or other costs (including but not limited to
reasonable consultant and attorneys fees), which Buyer may suffer, sustain, or
become subject to by reason of any claim, charge, order, notice of violation,
cause of action or suit brought by a Governmental Authority or any other third
party pursuant to any Environmental Law (an "Environmental Claim") that (A)
arises or results from a known environmental condition listed in Schedule
9.02(b) ("Known Environmental Condition"); and (B) arises or results from
activities on the following properties during the following time periods: (w) as
to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, any time prior to the Closing Date; (x) as
to Northwoods - West Industrial Park, ▇▇▇▇▇ ▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, from
October, 1998 through May, 1999; (y) as to Callidus Technologies Inc, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, from 1989 to the Closing Date; (z) as to the
Highway 850 Manufacturing Facility, ▇▇▇▇ ▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, from 1965
to the Closing Date; provided, however, as to the Hwy 850 Reports and the
Callidus Reports, the foregoing indemnification is limited to fines and
penalties arising out of the failure prior to the Closing Date to develop and/or
file such Reports.
(ii) The provisions of Section 9.04 herein shall apply to the
environmental indemnification in this Section 9.02(b) except for Sections
9.04(c) and (e). For the purposes of the environmental indemnification set forth
in this Section 9.02(b), if the Indemnifying Party does not dispute its
potential liability to the Indemnified Party and notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense, settlement, investigation, remediation, corrective action, clean up, or
any other such measures to resolve the Environmental Claim ("Remedial Action"),
then Indemnifying Party shall have the right to conduct such Remedial Action by
all appropriate means subject to the following conditions: (A) Indemnifying
Party shall not take any action that restricts the current industrial use or
existing operations of the property, without the written consent of the
Indemnified Party, which consent shall not be unreasonably be withheld; and (B)
neither party shall take any action that would prevent or hinder the other party
from complying in all material respects with Environmental Laws.
(iii) The following procedures shall be followed for any action that
may be subject to the indemnity set forth in this Section 9.02(b): (A)
Indemnifying Party shall provide Indemnified Party with the scope of work for
the Remedial Action prior to conducting such Remedial Action, Indemnified Party
may provide comments on such scope of work within 10
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business days after receipt thereof, and Indemnifying Party shall make all
reasonable efforts to incorporate such comments into the scope of work; (B) both
the Indemnifying Party and the Indemnified Party shall have the right to
participate in all meetings with Governmental Authorities and third parties
regarding Environmental Claims or potential Environmental Claims; (C) the
parties shall provide to each other copies of all communications with
Governmental Authorities and other third parties regarding Environmental Claims
or potential Environmental Claims; (D) Indemnified Party shall notify
Indemnifying Party prior to reporting to any Governmental Authority any
circumstances reasonably expected to lead to an Environmental Claim and provide
Indemnifying Party with an opportunity to discuss with Indemnified Party whether
such circumstances are required to be reported and, if so, to coordinate a
strategy for reporting such circumstances.
(iv) Nothing in this Agreement shall prevent Buyer from: (A) taking
any reasonable and prudent measures in the event of an imminent and substantial
endangerment to human health or the environment; (B) taking any reasonable
action for which Buyer does not elect to seek redress, in whole or part, under
this environmental indemnification; or (C) taking any action lawfully required
or directed by any Governmental Authority of competent jurisdiction, without
prejudice to Buyer's right to seek redress therefor under this environmental
indemnification, provided such action is taken in a reasonable manner.
Section 9.03 Indemnification of Seller. Subject to the applicable
provisions of Article IX, Buyer covenants and agrees that it will indemnify and
defend Seller against, and hold Seller harmless from and in respect of, all
Damage Claims which arise from, are based on or relate or otherwise are
attributable to (a) any breach by Buyer of its representations and warranties
set forth herein or in its certificates, if any, delivered to Seller in
connection herewith or (b) any nonfulfillment of any covenant or agreement on
the part of Buyer in this Agreement (each such Damage Claim being a "Seller
Indemnified Loss"); provided, however, that Buyer's obligations to Seller for
the following types of claims are not subject to the provisions or any
limitations of this Article IX: (i) payment for management fees due to Seller
pursuant to Section 3.01(c); (ii) payment of Taxes as set forth in Section
3.01(c) or Article X; and (iii) payments due to Seller pursuant to Article II
(including any adjustment to the Purchase Price pursuant to Section 2.03(f)).
Section 9.04 Conditions of Indemnification. (a) All claims for
indemnification under this Agreement shall be asserted and resolved as follows
in this Section 9.04.
(b) A party claiming indemnification under this Agreement (an "Indemnified
Party") shall promptly (i) notify the party from whom indemnification is sought
(the "Indemnifying Party") of any third-party claim or claims asserted against
the Indemnified Party ("Third-Party Claim") that could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying Party
a written notice ("Claim Notice") describing in reasonable detail the nature of
the Third-Party Claim, a copy of all papers served with respect to that claim
(if any), an estimate of the amount of Damages attributable to the Third-Party
Claim to the extent feasible
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(which estimate shall not be conclusive of the final amount of that claim) and
the basis for the Indemnified Party's request for indemnification under this
Agreement. Except as set forth in Section 9.01, the failure to promptly deliver
a Claim Notice shall not relieve the Indemnifying Party of its obligations to
the Indemnified Party with respect to the related Third-Party Claim, except to
the extent that the resulting delay is Materially prejudicial to the defense of
that claim. Within fifteen (15) days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
(i) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article IX with respect to that Third-Party Claim
and (ii) if the Indemnifying Party does not dispute its potential liability to
the Indemnified Party with respect to that Third-Party Claim, whether the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against that Third-Party Claim. If the
Indemnifying Party does not dispute its potential liability to the Indemnified
Party and assumes the defense of the Indemnified Party against a Third Party
Claim, all Damages arising from such Third Party Claim shall be the sole
responsibility and liability of, and shall be promptly satisfied or reimbursed
to the Indemnified Party by, the Indemnifying Party.
(c) If the Indemnifying Party does not dispute its potential liability to
the Indemnified Party and notifies the Indemnified Party within the Election
Period that the Indemnifying Party elects to assume the defense of the
Third-Party Claim, then, and only then, will the Indemnifying Party have the
right to defend, at its sole cost and expense, that Third-Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 9.04(c), and the Indemnified
Party will furnish the Indemnifying Party with all information in its possession
with respect to that Third-Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third-Party Claim; provided, however,
that the Indemnifying Party shall not enter into any settlement with respect to
any Third-Party Claim which purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party or any Affiliate of any Indemnified
Party without the prior consent of that Indemnified Party (which consent may be
withheld in the sole discretion of that Indemnified Party). The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer or other
pleadings that the Indemnified Party shall deem necessary or appropriate to
protect its interests or those of the Indemnifying Party. The Indemnified Party
may participate in, but not control, any defense or settlement of any
Third-Party Claim controlled by the Indemnifying Party pursuant to this Section
9.04(c) and will bear its own costs and expenses with respect to that
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party, and,
on its written notification of that
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employment, the Indemnifying Party shall not have the right to assume or
continue the defense of such action on behalf of the Indemnified Party.
(d) If the Indemnifying Party (i) within the Election Period (A) disputes
its potential liability to the Indemnified Party under this Article IX, (B)
elects not to defend the Indemnified Party pursuant to Section 9.04(c), or (C)
fails to notify the Indemnified Party that the Indemnifying Party elects to
defend the Indemnified Party pursuant to Section 9.04(c), or (ii) elects to
defend the Indemnified Party pursuant to Section 9.04(c) but fails diligently
and promptly to prosecute or settle the Third-Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third-Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the Indemnified Party to
the effect that the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article IX and if that dispute is resolved in favor
of the Indemnifying Party, the Indemnifying Party shall not be required to bear
the costs and expenses of the Indemnified Party's defense pursuant to this
Section 9.04 or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 9.04(d), and the Indemnifying Party shall bear its own costs and
expenses with respect to that participation.
(e) In the event that any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third-Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of Damages attributable to that claim to the extent
feasible (which estimate shall not be conclusive of the final amount of that
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party does not notify the Indemnified
Party within fifteen (15) days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes the claim specified by the Indemnified Party in the
Indemnity Notice, that claim shall be deemed a liability of the Indemnifying
Party hereunder.
(f) Payments of all amounts owing by an Indemnifying Party pursuant to this
Article IX relating to a Third-Party Claim shall be made within thirty (30) days
after the latest of (i) the settlement of that Third-Party Claim, (ii) the
expiration of the period for appeal of a final adjudication of that Third-Party
Claim, or (iii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement in respect of that Third-Party Claim. Payments of all amounts owing by
an Indemnifying Party
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pursuant to Section 9.04(e) shall be made within thirty (30) days after the
expiration of the 15-day Indemnity Notice period.
(g) Insurance. For purposes of this Section 9.04(g), "insurance" shall
include any type of insurance maintained on or before the Closing Date by Seller
for the benefit of HBI and HBI subsidiaries and their predecessors and
subsidiaries (hereinafter, the "Covered Entities") as well as any type of
insurance maintained at any time on or before the Closing Date by the Covered
Entities without limitation but not limited to commercial liability and/or
general liability insurance, commercial automobile insurance, products and
completed operations insurance, professional liability insurance, property
insurance, crime and fiduciary insurance, excess liability insurance, boiler and
machinery insurance, workers compensation insurance, pollution liability
insurance, directors and officers insurance or any other type of insurance
coverage maintained as provided above by Seller and/or the Covered Entities.
(i) Seller will provide to Buyer a complete list of all insurance
policies which are, to the knowledge of Seller, applicable to the Covered
Entities from 1971 to the present within 30 days of the Closing Date. Within 90
days of the Closing Date, Seller will provide to Buyer (A) copies of all
insurance policies or extracts which are in the possession of Seller and which
currently provide coverage to any of the Covered Entities and (B) access to all
insurance policies which formerly provided coverage to any of the Covered
Entities, for the purpose of review and copying as Buyer deems necessary.
Notwithstanding any other provision of this Agreement, Seller hereby
relinquishes any rights it has under insurance policies issued to the Covered
Entities prior to the time such entities or businesses were acquired by Seller.
(ii) Each of Seller, Buyer, the Covered Entities and each of their
respective subsidiaries and affiliates shall cooperate with each other and will
exercise their reasonable best efforts to maximize insurance recoveries for
losses suffered by a Covered Entity under policies of insurance issued on or
before the Closing Date to Seller and/or the Covered Entities.
(iii) With respect to any Indemnity Notice or Claim Notice by Buyer to
Seller received (A) before such time as the Threshold Amount for Buyer
Indemnified Losses is exceeded or (B) after the earlier of (x) the expiration of
Seller's indemnification obligations under Section 9.01 applicable to such
Notice, or (y) such time as the Ceiling Amount is exceeded, Seller agrees to
provide full cooperation and assistance to Buyer and/or the Covered Entities as
necessary with respect to presenting such claim and securing recoveries under
policies of insurance issued to Seller and/or the Covered Entities on or before
the Closing Date. Buyer shall have the right to pursue insurance recoveries
under any applicable insurance policies, whether issued to Seller or the Covered
Entities, with respect to any claim that is the subject of an Indemnity Notice
or Claim Notice, where the loss is (w) below the Threshhold Amount, (x) above
the Ceiling Amount, (y) disputed by Seller under the provisions of Section
9.04(d) or (z) otherwise not subject to indemnification of Buyer by Seller. With
respect to any claim indemnified by Seller pursuant to Section 9.04(c), Seller
shall retain all rights to pursue
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recoveries from applicable insurance policies, whether issued to Seller or the
Covered Entities. Where Seller disputes its obligation to indemnify Buyer
pursuant to Section 9.04(d), the consent of both Seller and Buyer shall be
required in regard to any agreement to settle with the insurers of Seller and/or
the Covered Entities relating to such claim. Alternatively, upon notice to
Seller of the proposed terms of the settlement, Seller may, upon payment of the
full amount of the settlement to Buyer and/or the Covered Entity, elect to take
an assignment of the claim of Buyer and/or the Covered Entity against the
insurer(s) and to retain any recoveries it receives from its prosecution of any
such claim so assigned.
(iv) Seller hereby releases and discharges Buyer and the Covered Entities
from any and all obligations with respect to the payment of insurance premiums,
losses, costs, fees, assessments, taxes, charges and other insurance-related
costs in connection with insurance policies issued to Seller or the Covered
Entities before the Closing Date and, with respect to the Covered Entities,
during the ownership of the Covered Entities by Seller.
Section 9.05 Remedies Exclusive. The remedies provided in this Agreement
shall be exclusive of any other rights or remedies available to any other party,
either at law or in equity.
Section 9.06 Limitations on Indemnification. (a) Notwithstanding the
provisions of Section 9.02, Seller shall not be required to indemnify, defend or
hold harmless the Buyer on account of any Buyer Indemnified Loss pursuant to the
provisions of this Article IX unless, as to the indemnification contained in
Section 9.02(a) and 9.02(b), when aggregated with the liability of the Seller in
respect of all Buyer Indemnified Losses under Section 9.02(a) and 9.02(b),
exceeds, and only to the extent the aggregate amount of all those Buyer
Indemnified Losses does exceed, the Threshold Amount. In no event shall the
liability of Seller for Buyer Indemnified Losses pursuant to this Article IX
exceed the Ceiling Amount; provided, however, that in the case of Buyer
Indemnified Losses pertaining to Seller's representations and warranties set
forth in Section 4.07 and pertaining to Seller's indemnification set forth in
Section 9.02(b), the separately aggregated ceiling amount shall be $60,000,000
(the "Environmental Ceiling Amount").
(b) Notwithstanding the provisions of Section 9.03, Buyer shall not be
required to indemnify, defend or hold harmless the Seller on account of any
Seller Indemnified Loss pursuant to the provisions of this Article IX unless the
liability of Buyer in respect of that Seller Indemnified Loss relates to (i)
Earnout Agreements to the extent set forth in Section 6.09(c), (ii) Employment
Agreements as provided in Section 6.06, or (iii) when aggregated with the
liability of the Buyer in respect of all Seller Indemnified Losses under Section
9.03, exceeds, and only to the extent the aggregate amount of all those Seller
Indemnified Losses does exceed, the Threshold Amount. In no event shall the
liability of Buyer for Seller Indemnified Losses pursuant to this Article IX
exceed the Ceiling Amount.
Section 9.07 EXPRESS NEGLIGENCE. THE INDEMNIFICATION, RELEASE, WAIVER,
EXCLUSIVITY OF REMEDIES AND ASSUMPTION PROVISIONS PROVIDED
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FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES, COSTS,
EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE,
PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF ANY PERSON
WHICH SEEKS THE BENEFIT OF SUCH PROVISION. BUYER AND SELLER ACKNOWLEDGE THAT
THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
ARTICLE X
TAXES
Section 10.01 Liability for Taxes. (a) Except to the extent such Taxes are
accrued as a liability on the Closing Date Balance Sheet, Seller shall be liable
for, and shall indemnify, defend and hold harmless Buyer, HBI, the HBI
Subsidiaries and their Affiliates from, (i) any Taxes due from Seller caused by
the sale of the HBI Shares; (ii) any Taxes imposed on or incurred by HBI or any
HBI Subsidiary (or any consolidated group of which HBI or any HBI Subsidiary is
a member with respect to the taxable items of HBI or any HBI Subsidiary (a
"Group")) for any taxable period ending on or before the Closing Date (or the
portion, determined as described in paragraph (c) of this Section 10.01, of any
such Taxes for any taxable period beginning on or before and ending after the
Closing Date which is allocable to the portion of such period occurring on or
before the Closing Date (the "Pre-Closing Period")); and (iii) any attorneys'
fees or other costs incurred by Buyer, HBI, the HBI Subsidiaries, or any
Affiliate thereof in connection with any payment from Seller under this Section
10.01(a).
(b) Buyer shall be liable for, and shall indemnify, defend and hold
harmless Seller and its Affiliates from, (i) any Taxes imposed on or incurred by
or with respect to HBI or any HBI Subsidiary for which Seller is not liable
under Section 10.01(a); and (ii) any attorneys' fees or other costs incurred by
Seller or any Affiliate thereof in connection with any payment from Buyer under
this Section 10.01(b).
(c) Whenever it is necessary for purposes of Section 10.01(a) or Section
10.01(b) to determine the portion of any Taxes imposed on or incurred by HBI or
any HBI Subsidiary (or any Group) for a taxable period beginning on or before
and ending after the Closing Date which is allocable to the Pre-Closing Period,
the determination shall be made, in the case of property, ad valorem or similar
Taxes (which are not measured by, or based upon, production) or franchise or
capital Taxes (which are not measured by, or based upon, net income), on a per
diem basis, and, in the case of other Taxes, by assuming that the Pre-Closing
Period constitutes a separate taxable period of HBI or the HBI Subsidiary and by
taking into account the actual taxable events occurring during such period
(except that exemptions, allowances and deductions for a taxable period
beginning on or before and ending after the Closing Date that are calculated on
an annual
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or periodic basis, such as the deduction for depreciation, shall be apportioned
to the Pre-Closing Period ratably on a per diem basis).
(d) Seller and Buyer will, to the extent permitted by applicable law, elect
with the relevant Taxing Authorities to close all taxable periods of HBI or any
HBI Subsidiary as of the close of business on the Closing Date.
(e) Buyer agrees to pay to Seller any refund received after the Closing
Date by Buyer or its Affiliates, including HBI or any HBI Subsidiary, in respect
of any Taxes for which Seller is liable under Section 10.01(a). Seller agrees to
pay to Buyer any refund received by Seller or its Affiliates in respect of any
Taxes for which Buyer is liable under Section 10.01(b). The parties shall
cooperate in order to take all necessary steps to claim any such refund. Any
such refund received by a party or its Affiliate for the account of the other
party shall be paid to such other party within thirty (30) days after such
refund is received.
Section 10.02 Tax Proceedings. In the event Buyer, HBI, the HBI
Subsidiaries or any of their Affiliates receive notice (the "Proceeding Notice")
of any examination, claim, adjustment or other proceeding with respect to the
liability of HBI or any HBI Subsidiary for Taxes for any period for which Seller
is or may be liable under Section 10.01(a), Buyer shall notify Seller in writing
thereof (the "Buyer Notice") no later than the earlier of (a) ten (10) days
after the receipt by Buyer, HBI, the HBI Subsidiaries or any of their Affiliates
of the Proceeding Notice or (b) ten (10) days prior to the deadline for
responding to the Proceeding Notice. As to any such Taxes for which Seller is or
may be liable under Section 10.01(a) except for Pre-Closing Period Taxes, Seller
shall be entitled at its expense to control or settle the contest of such
examination, claim, adjustment or other proceeding, provided Seller notifies
Buyer in writing that it desires to do so no later than the earlier of (i)
thirty (30) days after receipt of the Buyer Notice, or (ii) ten (10) days prior
to the deadline for responding to the Proceeding Notice. The parties shall
cooperate with each other and with their respective Affiliates, and will consult
with each other, in the negotiation and settlement of any proceeding described
in this Section 10.02. Neither Seller, HBI nor an HBI Subsidiary shall enter
into any closing agreement (as defined in Section 7121 of the Code, or any
comparable provisions of state, county, local or foreign law) that is binding on
Buyer, HBI or an HBI Subsidiary for any taxable period ending after the Closing
Date, without the prior written consent of Buyer. Further, neither Seller, HBI
nor an HBI Subsidiary shall agree to any settlement concerning Taxes for any
taxable period ending on or before the Closing Date, which settlement may result
in an increase in Taxes of HBI or an HBI Subsidiary for any taxable period
ending after the Closing Date, without the prior written consent of Buyer.
Section 10.03 Payment of Taxes. All Taxes with respect to HBI or the HBI
Subsidiaries shall be paid by the party that is legally responsible except as
provided to the contrary in this Article X. Except as otherwise provided in this
Article X, any amount to which a party is entitled under this Article X shall be
promptly paid to such party by the party obligated to make such
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payment following written notice to the party so obligated stating that the
Taxes to which such amount relates are due and providing details supporting the
calculation of such amount.
Section 10.04 Tax Returns. All Tax Returns which relate to any Taxes of HBI
or the HBI Subsidiaries shall be prepared and filed by the party that is legally
responsible therefor under applicable law. All taxable items of HBI for the
period beginning on January 1 of the calendar year in which the Closing occurs
and extending through the Closing (and, to the extent required in the applicable
regulations, through the close of business on the Closing Date, but in no event
including items arising from transactions by HBI or an HBI Subsidiary outside
the ordinary course of business after the Closing) will be included in the
consolidated United States federal income Tax Return of the Seller Group and
will be reported on a basis consistent with previously filed Tax Returns. Buyer
and its Affiliates, including HBI and the HBI Subsidiaries, shall cooperate with
Seller and shall make available all necessary records and timely take all action
necessary to allow Seller and its Affiliates to prepare and file the Tax Returns
that they are responsible for preparing and filing under this Section 10.04.
Section 10.05 Tax Allocation Arrangements. Effective as of the Closing and
subject to Section 3.01(c), all liabilities and obligations between HBI or any
HBI Subsidiary, on one hand, and Seller and any Affiliates thereof, on the other
hand, under any Tax indemnity, sharing, allocation or similar agreement or
arrangement in effect prior to the Closing shall be extinguished in full, and
any liabilities or rights existing under any such agreement or arrangement shall
cease to exist and shall no longer be enforceable. Seller and its Affiliates
shall execute any documents necessary to effectuate the provisions of this
Section 10.05.
Section 10.06 Cooperation and Exchange of Information. Each party will
provide, or cause to be provided, to the other party copies of all
correspondence received from any Governmental Authority by such party or any of
its Affiliates in connection with the liability of HBI or the HBI Subsidiaries
for Taxes for any period for which such other party is or may be liable under
Section 10.01(a) or Section 10.01(b). The parties will provide each other with
such cooperation and information as they may reasonably request of each other in
preparing or filing any Tax Return or claim for refund, in determining a
liability or a right of refund or in conducting any audit or other proceeding in
respect of Taxes imposed on the parties or their respective Affiliates. The
parties and their Affiliates will preserve and retain all Tax Returns,
schedules, work papers and all Material records or other documents relating to
any such Tax Returns, claims, audits or other proceedings until the expiration
of the statutory period of limitations (including extensions) of taxable periods
to which such documents relate and until the final determination of any payments
which may be required with respect to such periods under this Agreement and
shall make such documents available to the other party or any Affiliate thereof,
and their respective officers, employees and agents, upon reasonable notice and
at reasonable times, it being understood that such representatives shall be
entitled to make copies of any such books and records relating to HBI or the HBI
Subsidiaries as they shall deem necessary. Any information obtained pursuant to
this Section 10.06 shall be kept confidential,
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except as may be otherwise necessary in connection with the filing of Tax
Returns or claims for refund or in conducting any audit or other proceeding.
Each party shall provide the cooperation and information required by this
Section 10.06 at its own expense.
Section 10.07 Survival of Obligations. Each obligation of the parties set
forth in this Article X shall be unconditional and absolute and shall remain in
effect until the expiration of the statute of limitations (including extensions)
plus 30 days relating to the assessment of the Tax by a Governmental Authority
that gives rise to such obligation by Buyer or Seller under this Article X,
unless and to the extent that a claim for indemnification has been asserted
prior to such date.
Section 10.08 Tax Disputes. Any dispute between the parties to this
Agreement concerning (a) any party's rights or obligations pursuant to this
Article X, (b) the representations and warranties of Seller contained in Section
4.14, or (c) any indemnification claim pursuant to Article IX arising out of the
provisions of Section 4.14 or Article X shall be resolved pursuant to the
arbitration provisions of Section 11.11.
Section 10.09 Conflict. In the event of a conflict between the provisions
of this Article X and any other provisions of this Agreement, the provisions of
this Article X shall control.
ARTICLE XI
GENERAL PROVISIONS
Section 11.01 Treatment of Confidential Information. (a) Each of the
parties to this Agreement acknowledge that they have or may have had in the
past, currently have and in the future may have access to Confidential
Information of the other parties. Each of the parties agrees that it will keep
confidential all such Confidential Information furnished to it and, except with
the specific prior written consent of the other parties, will not disclose such
Confidential Information to any Person, except (i) Representatives of the
parties and (ii) its own Representatives, provided that these Representatives
(other than counsel) agree to the confidentiality provisions of this Section
11.01; provided, however, that Confidential Information shall not include such
information as (i) becomes known to the public generally through no fault of any
party, (ii) is required to be disclosed by law or the order of any Governmental
Authority under color of law, or (iii) the disclosing party reasonably believes
is required to be disclosed in connection with the defense of a lawsuit against
the disclosing party.
(b) The obligations of the parties under this Section 11.01 shall survive
the termination of this Agreement.
Section 11.02 Assignment; No Third-Party Beneficiaries. This Agreement and
the rights of the parties hereunder may not be assigned (except (i) by operation
of law or (ii) by Seller to First Reserve Corporation pursuant to a
contemporaneously executed Stock Purchase Agreement
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previously furnished to Buyer) and shall be binding on and inure to the benefit
of the parties hereto, the successors of Buyer, and the successors of Seller.
Neither this Agreement nor any other Transaction Document is intended, or shall
be construed, deemed or interpreted, to confer on any Person not a party hereto
or thereto any rights or remedies hereunder or thereunder, except as provided in
Article IX or as otherwise provided expressly herein or therein.
Section 11.03 Entire Agreement; Amendment; Waivers. This Agreement, the
confidentiality letter agreement dated January 4, 2000 between Seller and Buyer,
the Shareholder Agreement and the documents delivered pursuant hereto constitute
the entire agreement and understanding among Seller and Buyer and supersede all
prior agreements and understandings, both written and oral, relating to the
subject matter of this Agreement. This Agreement may be amended, modified or
supplemented, and any right hereunder may be waived, if, but only if, that
amendment, modification, supplement or waiver is in writing and signed by Seller
and Buyer. The waiver of any of the terms and conditions hereof shall not be
construed or interpreted as, or deemed to be, a waiver of any other term or
condition hereof.
Section 11.04 Notices. All notices required or permitted hereunder shall be
in writing, and shall be deemed to be delivered and received (a) if personally
delivered or if delivered by telex, telegram, facsimile or courier service, when
actually received by the party to whom notice is sent or (b) if delivered by
mail (whether actually received or not), at the close of business on the third
business day next following the day when placed in the mail, postage prepaid,
certified or registered, addressed to the appropriate party or parties, at the
address of such party set forth below (or at such other address as such party
may designate by written notice to all other parties in accordance herewith):
(1) if to Buyer, addressed to it at:
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman of the Supervisory Board
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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and
(2) if to Seller, addressed to it at:
WEDGE Group Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
WEDGE Group Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Section 11.05 GOVERNING LAW, JURISDICTION AND VENUE. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.
THE SELLER AND BUYER EACH HEREBY IRREVOCABLY AGREE THAT VENUE OF ANY LEGAL
PROCEEDINGS OR ARBITRATION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
IN NEW YORK CITY.
Section 11.06 WAIVER OF CERTAIN CLAIMS. EXCEPT AS PROVIDED IN SECTION
9.02(B), (A) NEITHER BUYER NOR SELLER SHALL BE ENTITLED TO RECOVER FROM THE
OTHER ANY LOSSES, COSTS, EXPENSES, OR DAMAGES ARISING UNDER THIS AGREEMENT OR IN
CONNECTION WITH OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED IN THIS
AGREEMENT IN ANY AMOUNT IN EXCESS OF THE ACTUAL COMPENSATORY DAMAGES, COURT OR
ARBITRATION COSTS AND REASONABLE ATTORNEY FEES AND EXPENSES SUFFERED BY SUCH
PARTY, AND (B) BUYER AND SELLER HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO
ASSERT ANY CLAIM FOR INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE
DAMAGES ARISING IN CONNECTION WITH OR WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED IN THIS AGREEMENT.
Section 11.07 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay or omission in the exercise of any right, power or remedy
accruing to any party hereto as a result of any breach or default hereunder by
any other party hereto shall impair any such
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right, power or remedy, nor shall it be construed, deemed or interpreted as a
waiver of or acquiescence in any such breach or default, or of any similar
breach or default occurring later; nor shall any waiver of any single breach or
default be construed, deemed or interpreted as a waiver of any other breach or
default hereunder occurring before or after that waiver.
Section 11.08 Reformation and Severability. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
Section 11.09 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof. Information disclosed on a certain Schedule shall be deemed
as disclosed on any other Schedule to which such information may also relate.
Section 11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 11.11 Arbitration. (a) General. If a dispute to which this Section
11.11. is applicable (a "Dispute") has not been resolved by the parties efforts
at voluntary negotiation or mediation within 45 days, the Dispute shall be
resolved by final and binding arbitration pursuant to the AAA Rules and as
provided for in this Section 11.11. Any party to a Dispute may commence
arbitration by giving the other parties to the Dispute a notice (the "Notice of
Arbitration") in the manner prescribed in Section 11.04, which notice shall name
one arbitrator. Within ten (10) days after commencement of arbitration, the
other party shall select one person to act as arbitrator. The third arbitrator,
who shall serve as the chair of the arbitration panel (the "Chair"), shall be
selected by the two party-appointed arbitrators within ten (10) days of their
appointment. In the event the two party-appointed arbitrators are unable or fail
to agree upon the third arbitrator, the parties shall promptly request the AAA
to appoint a qualified arbitrator. The parties shall each advise the AAA of the
qualifications of the arbitrator they desire and based on the advice received by
the AAA pursuant to the preceding subparagraph, the AAA shall provide the
parties with a list of three candidates (the "Arbitrator List"), with each party
entitled to strike one of those candidates. The AAA shall appoint an arbitrator
from among the candidates who have not been struck from the Arbitrator List; and
if for some reason the arbitrator appointed by the AAA is unable or unwilling to
serve, or resigns or is removed by the AAA as the result of a challenge, the AAA
shall repeat this process until an arbitrator is appointed who will preside over
the arbitration. The arbitration shall be conducted in the English language. The
place of arbitration shall be New York City at a site selected by the
arbitration panel (the "Place of Arbitration"); provided that the arbitration
panel may hold conferences, hear witnesses, or
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inspect property or documents at any place it deems appropriate having regard to
the contentions and convenience of the parties and the circumstances of the
arbitration, and the parties shall be given sufficient written notice of the
same to enable them to be present at such hearings. All statutes of limitation
that would otherwise be applicable shall apply to the arbitration proceeding. In
the event of any conflict between the AAA Rules and the provisions of this
Agreement, the provisions of this Agreement shall control.
(b) Measures to Preserve Status Quo. At any time after giving Notice of
Arbitration and prior to the selection of the Chair of an arbitration panel
constituted to decide such Dispute, any party to the Dispute may request a court
of competent jurisdiction to grant interim measures of protection to:
(i) preserve the status quo pending resolution of the Dispute;
(ii) prevent the destruction of documents and other information
related to the Dispute; or
(iii) prevent the transfer, dissipation, or hiding of assets;
provided that, if, at any time after the selection of the Chair of an
arbitration panel constituted to decide the Dispute, the Chair dies, resigns, or
is successfully challenged, then, in the period commencing with the death,
resignation, or successful challenge of the Chair and ending when a new Chair
has been selected, any party to the Dispute shall be entitled to request a court
of competent jurisdiction to grant the interim measures of protection outlined
above. At any other time, a request for interim measures shall be made to the
arbitration panel. A request for such interim measures to a judicial authority
shall not be deemed incompatible with the agreement to arbitrate or a waiver of
a right to arbitrate.
(c) Conduct and Schedule of Proceedings. The arbitration proceeding shall
be conducted in accordance with the AAA Rules, except as otherwise expressly
provided herein:
(i) Within fifteen (15) days after the arbitration panel has been
constituted, a preliminary hearing with the parties and/or their representatives
and the arbitrators shall be held to specify the issues to be resolved, to
stipulate to uncontested facts, and to consider other matters that will expedite
the arbitration proceedings (the "Preliminary Hearing"). At the Preliminary
Hearing, the arbitrators may establish (i) the extent of and schedule for the
production of relevant documents and other information, (ii) the identification
of any witnesses to be called, and (iii) a schedule for further hearings to
resolve the dispute.
(ii) At any hearing of evidence, the parties may offer such evidence
as is relevant and material to the dispute and shall produce such evidence as
the arbitrators may deem necessary to an understanding and determination of the
dispute. The Chair or other person
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authorized by law to subpoena witnesses or documents may do so upon the request
of any party or independently.
(iii) At any hearing of oral evidence, each party to the arbitration
proceeding or its legal counsel shall have the right to present and examine its
witnesses and to cross-examine the witnesses of the other party. No evidence of
any party's witness shall be presented by means of a written statement or
affidavit unless the other party shall have the opportunity to cross-examine
such witness, except as the parties to the arbitration proceeding otherwise
agree in writing or except under extraordinary circumstances where the interest
of justice requires a different procedure.
(iv) Consistent with the expedited nature of arbitration, each party
will, upon the written request of the other party, promptly provide the other
with copies of documents relevant to the issues raised by any claim or
counterclaim in the Dispute. Any dispute regarding discovery, or the relevance
or the scope thereof, shall be determined by the Chair, which determination
shall be conclusive. All discovery shall be completed within thirty (30) days
following the Preliminary Hearing.
(v) The arbitrators shall be the judge of the relevance and
materiality of the evidence offered, and conformity to legal rules of evidence
shall not be required. All evidence shall be taken in the presence of all of the
arbitrators and all of the parties, except where any of the parties is absent in
default or has waived the right to be present.
(vi) The arbitrators may issue such orders for interim relief as may
be deemed necessary to safeguard the property that is the subject matter of the
Dispute (which orders shall be immediately binding and enforceable on the
parties), without prejudice to the rights of the parties or the final
determination of the Dispute.
(d) The Arbitration Award. The arbitration panel is hereby authorized only
to decide and issue a damage award in accordance with the limitation of damages
provisions of this Agreement and any damage award not in accordance with such
provisions shall be unenforceable against any party. The arbitration panel shall
have no authority to award punitive or consequential damages or any other
damages not measured by a party's actual damages. Subject to the preceding
sentence, the arbitration panel shall have the authority to award any interim or
final remedy or relief, including:
(i) the award of monetary damages;
(ii) declaratory relief regarding the parties' rights and obligations
under this Agreement;
(iii) the issuance of an injunction;
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(iv) the imposition of sanctions for abuse or frustration of the
arbitration process; and
(v) notwithstanding, and in addition to, the damages and remedies
described above: (A) if the prevailing party makes a request during the
arbitration proceeding, the arbitral award in favor of such party may include an
award for pre-award interest and reasonable attorneys' fees and expenses; (B) at
the request of any party, the prevailing party shall be entitled to post-award
interest that may be assessed from the date the award is rendered to the date
the award is satisfied; and (C) costs may be fixed as allowed by and in
accordance with the AAA Rules; provided that costs may also include the costs of
enforcing the award.
The parties to the Dispute agree that no party shall have the right to demand or
enforce a remedy for such Dispute under the AAA Rules that conflicts with that
stipulated in this Agreement. The arbitrators shall agree (prior to appointment)
to use their best efforts to make the award within six (6) months of the filing
of the Notice of Arbitration. The arbitrators are not required to make specific
written finding of fact and conclusions of law in connection with the issuance
of any damage award.
(e) Judgment on the Award. The award shall be final and binding as between
the parties to the arbitration proceedings. The parties agree that the arbitral
award may be enforced against the parties to the arbitration proceedings or
their assets wherever they may be found, and that a judgment upon the award may
be entered in any court of competent jurisdiction. Nothing in this Agreement
should be construed or is intended to prevent a party in an action to enforce an
award to request the court to refuse recognition and enforcement of the award.
ARTICLE XII
TERMINATION
Section 12.01 Termination of this Agreement. This Agreement may be
terminated:
(a) by the mutual written consent duly authorized by the boards of
directors of Buyer and Seller and by the management board of CB&I;
(b) by Buyer or Seller at any time after December 31, 2000, if at the time
notice of such termination is given, the transactions contemplated by this
Agreement have not been consummated;
(c) by Buyer at any time prior to the Shareholders' Meeting if there shall
be an unsolicited proposal with respect to any business combination transaction
("Alternative Proposal") which the CB&I Supervisory Board of Directors in good
faith, in the exercise of its fiduciary duties to the shareholders of CB&I
determines, after consultation with outside counsel
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and its independent financial advisor, represents a superior transaction for the
shareholders of CB&I as compared to the transactions contemplated by this
Agreement; provided, however, that the right to terminate this Agreement
pursuant to this Section 12.01(c) shall not be available (i) if CB&I shall not
have provided Seller with at least five business days' prior written notice of
its intent to so terminate this Agreement together with a summary of the
material terms and conditions of the Alternative Proposal, or (ii) if, prior to
or concurrently with any termination pursuant to this Section 12.01(c), Buyer
shall not have paid the fees and expenses contemplated by Section 6.06(b)(i);
(d) by Seller, if the CB&I Supervisory Board of Directors shall have failed
to recommend, or shall have withdrawn, its approval or recommendation of the
transactions contemplated by this Agreement, or shall have recommended
acceptance of any Alternative Proposal, and immediately upon any such
termination Buyer shall pay the fees and expenses contemplated by Section
6.06(b)(i) or (b)(ii), as applicable; and
(e) by Buyer or Seller if, on the Closing Date, a preliminary or permanent
injunction has been entered restraining, prohibiting or declaring illegal the
sale of the HBI Shares by Seller or the purchase of the HBI Shares by Buyer.
Section 12.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 12.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, except that (i) the provisions of this
Section 12.02, Section 11.01 and Section 6.06 shall survive any such termination
and (ii) except as provided in Section 6.06, all costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses. Nothing contained in this Section 12.02 shall
relieve any party from its liability for any breach of this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as
of the date first written above.
WEDGE GROUP INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
------------------------------
WGI TYLER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: President
------------------------------
CHICAGO BRIDGE & IRON COMPANY N.V.
BY: CHICAGO BRIDGE & IRON COMPANY
B.V., ITS MANAGING DIRECTOR
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Managing Director
------------------------------
CB&I TYLER COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: President
------------------------------
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EXHIBIT A
SHAREHOLDER AGREEMENT
This Shareholder Agreement (this "Agreement") dated as of
_________, 2000 is by and between WEDGE Group Incorporated, a corporation
organized under the laws of the State of Delaware ("WGI"), and Chicago Bridge &
Iron Company N.V., a company organized under the laws of the Netherlands
("CB&I").
WHEREAS, as of the date hereof, an Affiliate of WGI is the
owner of 400,000 shares of CB&I Stock (as defined below);
WHEREAS, WGI, WGI Tyler, Inc., a Delaware corporation and
wholly-owned subsidiary of WGI, CB&I and CB&I Tyler Company, a Delaware
corporation and wholly-owned subsidiary of CB&I, have entered into a Purchase
Agreement dated as of July ____, 2000 (as amended from time to time pursuant
thereto, the "Purchase Agreement") pursuant to which CB&I and CB&I Tyler Company
have agreed to purchase all of the issued and outstanding Capital Stock of
▇▇▇▇-▇▇▇▇▇ International, Inc.;
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Purchase Agreement that WGI and CB&I enter into
this Agreement; and
WHEREAS, the parties hereto desire to enter into this
Agreement to provide for certain rights and restrictions with respect to the
Holders' Securities (as defined below) for the benefit of CB&I, its shareholders
and other constituencies so as to serve the long-term interests of CB&I, its
shareholders and other constituencies.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions.
"Affiliate" means any corporation, partnership or other person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with any Holder or any Shareholder, as the
case may be, and shall include any person acting on behalf of any Holder or any
Shareholder or Affiliate of any of them, as the case may be. For purposes of the
preceding sentence, "control" (including the terms "controlling,"
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"controlled by" and "under common control with") means possession, directly or
indirectly, of the power to direct or cause direction of management and policies
of a person through ownership of securities, by contract, pursuant to a voting
trust or otherwise. Notwithstanding the foregoing, a company will not be an
Affiliate of WGI due solely to a minority stock or board position.
"Applicable Acceptance Period" has the meaning provided in
Section 5.01(c).
"Articles of Association" means the articles of association of
CB&I, as amended from time to time.
"Assignee" means an assignee or transferee of WGI pursuant to
Section 7.01.
"Associate" has the meaning assigned to such term in Rule
12b-2 under the Exchange Act.
A Person shall be deemed to "beneficially own," to have
"beneficial ownership" of, or to be "beneficially owning" any Securities (which
Securities shall also be deemed "beneficially owned" by such Person) that such
Person is deemed to "beneficially own" within the meaning of Rule 13d-3 under
the Exchange Act.
"Business Combination" means a merger, combination or
consolidation (whether or not CB&I or a Subsidiary of CB&I is the surviving
entity in such transaction), tender offer or share exchange (whether for all or
part of the outstanding Securities of CB&I or any Subsidiary), business
combination, sale of significant assets, dissolution, liquidation or similar
transaction involving CB&I or any Subsidiary or division of CB&I.
"CB&I Stock" means the common stock, NLG .01 par value per
share, of CB&I.
"Commission" means the Securities and Exchange Commission of
the United States or any other U.S. federal agency at the time administering the
Securities Act.
"Competitor" means any Person or any of such Person's
Affiliates or Associates who has as a significant business activity (i) the
design and engineering, fabrication, field erection or repair of bulk liquid
terminals, storage tanks, process vessels, low temperature or cryogenic storage
facilities, or other steel plate structures and their associated systems, or
(ii) the provision of engineering services (including plant engineering,
procurement and construction services) or specialized equipment similar to that
provided by HBI or the HBI Subsidiaries.
"Continuing Directors" means, as of any date of determination,
any member of the Supervisory Board who (i) was a member of the Supervisory
Board on the date of this Agreement or (ii) was nominated for election to the
Supervisory Board with the affirmative vote of a majority of the Continuing
Directors who were members of such Board at the time of such
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nomination or election, or who was elected or appointed in the ordinary course
by Continuing Directors or other directors so elected or appointed.
"Demand Registration" has the meaning provided in Section
3.01(a).
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
"FRF Designee" has the meaning provided in Section 6.01(a).
"First Offer" has the meaning provided in Section 5.01(a).
"First Reserve" means First Reserve Fund VIII, L.P., a
Delaware limited partnership.
"First Reserve Deal" means the transaction contemplated by
that certain Stock Purchase Agreement dated July 30, 2000 between WGI and First
Reserve pursuant to which WGI or its Affiliates agreed to Transfer to First
Reserve or an Affiliate thereof 4,323,333 shares of CB&I Stock substantially
contemporaneously with the Closing and in connection with which First Reserve
enters into a Shareholder Agreement with CB&I in all material respects in the
form of Annex B hereto.
"First Reserve Shareholder Agreement" means that certain
Shareholder Agreement in all material respects in the form of Annex B hereto
that will be entered into between CB&I and First Reserve if the First Reserve
Deal is consummated.
"Holder" means WGI, its Affiliates and its Assignees as
permitted by Section 7.01 hereof, holding Holders' Securities or securities
convertible into, exchangeable or exercisable for Holders' Securities but
excludes First Reserve in the event of consummation of the First Reserve Deal.
"Holders' Securities" means (i) any shares of CB&I Stock held
by a Holder on the date hereof, (ii) any other Securities held by a Holder on
the date hereof or acquired hereafter and (iii) any shares of stock issued or
issuable in respect of such CB&I Stock or other Securities upon any
Recapitalization, in each case, held by Holders or any Affiliate of any Holder;
provided however, that Holders' Securities shall not include shares sold in a
transaction in which the rights conferred by this Agreement are not assigned or
transferred as provided in Section 7.01 hereof.
"Indemnified Party" has the meaning provided in Section
3.06(c).
"Indemnifying Party" has the meaning provided in Section
3.06(c).
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"Independent Director" means any individual who (i) qualifies
as a "non-employee director" as defined in Rule 16b-3(b)(3)(i) promulgated by
the Commission under the Exchange Act and (ii) is not a "person associated with
the issuer" as defined in Appendix X of the Listing and Issuing Rules of the
Amsterdam Exchanges N.V., where, for purposes of both such definitions, "issuer"
is deemed to refer both to WGI and its Affiliates and to CB&I and its
Affiliates.
"Institutional Investor" means a bank, investment company,
insurance company, as those terms are used in Rule 13(d)-1(b) of the Exchange
Act, or similar financial institution or any other Person that does not acquire
Voting Securities for the purpose of or having the effect of changing or
influencing the control of an issuer or in connection with or as a participant
in any transaction having such purpose or effect, and that would be eligible to
file, on the date of Transfer and after giving effect, to such Transfer, a
Schedule 13G statement under the Exchange Act with respect to all Voting
Securities.
"Noninvestor Director" has the meaning provided in Section
6.01(a).
"Notice of Exercise" has the meaning provided in Section
5.01(c).
"Notice of Intention" has the meaning provided in Section
5.01(b).
"Offered Shares" has the meaning provided in Section 5.01(b).
"Offer Price" has the meaning provided in Section 5.01(b).
"outstanding", when used in reference to equity or Voting
Securities, means all such equity or Voting Securities issued and held by
Persons other than CB&I.
"Person" means any individual, group, corporation, firm,
partnership, joint venture, trust, business association, organization,
governmental entity or other entity.
"Piggyback Registration" has the meaning provided in Section
3.02(a).
"Recapitalization" means any stock split, stock dividend,
stock combination, a significant recapitalization, reorganization, or
restructuring, or similar event involving CB&I or any Significant Subsidiary (as
defined in Regulation S-X of the Commission) of CB&I.
The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and all applicable blue sky or other
national, state or provincial securities laws), and the declaration or ordering
of the effectiveness of such registration statement (and qualification or
compliance with such laws).
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"Registration Expenses" has the meaning provided in Section
3.04(b).
"Securities" means (i) any and all securities issued and
outstanding by CB&I at any time, (ii) any shares of stock issued or issuable in
respect of such securities and (iii) any right to acquire by contract or
otherwise from CB&I or any Person, and whether or not then exercisable, any
security described in (i) or (ii).
"Securities Act" means the United States Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
"Selling Holder" means each Holder who holds Holders'
Securities to be included in a registration statement under the Securities Act
pursuant to this Agreement.
"Shareholder" means a holder of Securities other than a
Holder.
"Significant Transaction" means any transaction or activity
that results in, or is intended to result in, or may reasonably be expected to
result in, (i) the acquisition by any Person, alone or together with such
Person's Affiliates and Associates, of 33-1/3% or more of the Voting Securities
outstanding after such acquisition; (ii) any sale of all or substantially all of
CB&I's assets; (iii) any Business Combination in which CB&I is not the surviving
entity; (iv) any Business Combination or Recapitalization in which the
shareholders of CB&I (other than the Holders) immediately prior to such Business
Combination or Recapitalization own less than 33-1/3% of the Voting Securities
outstanding after such event; and (v) any change in the Supervisory Board not
consistent with Article VI of this Agreement or which would result in a majority
of the members of the Supervisory Board not being Continuing Directors.
"Supervisory Board" means the Board of Supervisory Directors
of CB&I.
"Third Party" means a Person other than CB&I, a Holder, a
Shareholder or their respective Affiliates.
"Transfer" means, with respect to all or any part of the
Securities, to directly or indirectly (whether or not through an underwriter)
offer, sell, convey, distribute, transfer (by merger or otherwise), assign,
devise, exchange, encumber, gift, pledge, grant any option with respect to,
hypothecate or otherwise dispose of such Securities, or enter into any
agreement, arrangement or understanding with respect to the foregoing.
"Voting Securities" means Securities then outstanding which
ordinarily have voting power for the election of directors (or Persons
performing similar functions) of CB&I, whether at all times or only so long as
no senior class of Securities has such voting power by reason of any
contingency.
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"WGI Designee" has the meaning provided in Section 6.01(a).
Section 1.02 Other Defined Terms. All capitalized terms used herein and
not otherwise defined shall have the respective meanings specified in the
Purchase Agreement.
ARTICLE II
STANDSTILL AND VOTING PROVISIONS
Section 2.01 Agreement of WGI. Unless specifically requested or
permitted in writing in advance by the Supervisory Board, WGI agrees that, so
long as this Agreement remains in effect, and except as contemplated elsewhere
herein, neither it nor any of its Affiliates or Associates shall, directly or
indirectly:
(a) acquire, offer to acquire, announce an intention to acquire,
solicit an offer to sell or agree to acquire by purchase or otherwise, any
Securities, except (i) as a result of a stock split, stock dividend or
Recapitalization approved by the Supervisory Board, (ii) in connection with a
Business Combination approved by the Supervisory Board, or (iii) if, as a result
of such acquisition, WGI and its Affiliates and Associates would beneficially
own in the aggregate no more than 10.1% of the total number of shares of Voting
Securities outstanding;
(b) acquire, offer to acquire, announce an intention to acquire,
solicit an offer to sell or agree to acquire by purchase or otherwise, directly
or indirectly, a material portion of assets of CB&I or any of its Subsidiaries;
(c) initiate, solicit, propose, seek to effect or negotiate, or
announce an intent to effect, directly or indirectly, alone or with any other
Person, (i) any form of Business Combination or joint venture transaction
involving CB&I or any Affiliate thereof, or (ii) any Recapitalization or similar
transaction with respect to CB&I or any Affiliate thereof;
(d) initiate, solicit, propose, seek to effect or negotiate, or
announce an intent to make, directly or indirectly, any merger, tender or
exchange offer, consolidation, share exchange for any Securities, or disclose an
intent, purpose, plan or proposal with respect to CB&I, any of its Affiliates or
any Securities inconsistent with the provisions of this Agreement;
(e) initiate, cause, encourage, "solicit," or become a "participant" in
the "solicitation" of, "proxies" (as such terms are defined or used in Rule
14a-1 under the Exchange Act) in opposition to the recommendation of the
majority of the Supervisory Board or become a "participant" in an election
contest with respect to the election of directors of CB&I or with respect to any
Significant Transaction;
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(f) initiate, solicit (or participate in a solicitation) or propose the
approval of one or more shareholder proposals with respect to CB&I or any of its
Affiliates or induce or encourage or attempt to induce or encourage any other
Person to initiate any such shareholder proposal;
(g) form, join, or in any way participate in, or encourage the
formation, of a partnership, limited partnership, syndicate or other "group" (as
defined in Section 13(d)(3) of the Exchange Act) or "person" (as defined in
Section 13(d)(3) of the Exchange Act and Section 2(2) of the Securities Act) or
enter into any contract, arrangement, understanding or relationship or otherwise
act in concert with any other Person for the purpose of acquiring or voting
Securities;
(h) except as expressly provided in Article VI herein, seek election to
or seek to place a representative on the Supervisory Board of CB&I or any of its
Affiliates or seek the removal of any member of the Supervisory Board of CB&I or
any of its Affiliates;
(i) except for participation by any Investor Designee on the
Supervisory Board, act in concert with any other Person not an executive of CB&I
to seek to affect the management or Supervisory Board of CB&I or any of its
Affiliates or the business, operations or affairs of CB&I or any of its
Affiliates;
(j) request CB&I to, or seek to cause CB&I (or its directors) to, call
any meeting of the shareholders of CB&I or any of its Affiliates;
(k) grant or agree to grant any proxy or other voting power to any
Person other than CB&I or the Persons designated by CB&I to vote at any meeting
of the shareholders of CB&I, or deposit any Voting Securities in a voting trust
or, except as specifically contemplated by this Agreement, subject them to a
voting agreement or other agreement or arrangement with respect to the voting of
such Voting Securities;
(l) disclose to any third party or in any filing with any governmental
authority any intention, plan or arrangement inconsistent with any of the
foregoing or with the restrictions on transfer set forth in this Agreement;
(m) make any public statements (or statements that must be publicly
disclosed) inconsistent with the provisions of this Agreement;
(n) (i) disclose any intention, enter into any discussions,
negotiations, arrangements or understandings with any third party with respect
to any of the foregoing, or (ii) initiate, advise, assist, induce or attempt to
induce, encourage or influence another Person to take any action with respect to
any of the foregoing or take any other action inconsistent with the foregoing;
or
(o) request a waiver, modification or amendment by the Supervisory
Board or CB&I of any of the foregoing restrictions.
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Nothing in this Section 2.01 shall be construed to limit the right of
any director to communicate with any member of the Supervisory Board, any
executive officer of CB&I, counsel to CB&I or auditors for CB&I, as may be
necessary in such director's reasonable judgment, for the normal conduct and
discharge of such director's duties as a CB&I director in such manner as will
preserve the confidentiality thereof and will not result in an obligation of
CB&I or WGI or any of their respective Affiliates to make a public disclosure
with respect thereto.
Section 2.02 Business Combinations. (a) WGI agrees that, so long as
this Agreement remains in effect, with respect to any proposed Business
Combination or Recapitalization involving CB&I or any Affiliate of CB&I and any
third party, each class of Holders' Securities owned by WGI and its Affiliates
and Associates will only be voted, or tendered or exchanged (or withheld or
withdrawn from tender or exchange), and WGI and its Affiliates and Associates
will otherwise act, only in accordance with the recommendation of the
Supervisory Board (and any special committee of the Supervisory Board
constituted for the purpose of evaluating one or more such proposals). Subject
to such restriction, WGI shall not be prohibited by the provisions of Section
2.01 from submitting a competing Business Combination or Recapitalization
proposal to the Supervisory Board in the event that the Supervisory Board
publicly announces its determination to recommend a Significant Transaction to
CB&I shareholders subsequent to the Effective Time.
(b) The parties hereto agree that the Articles of Association shall be
amended (i) to provide that any affiliate transaction involving WGI or its
Affiliates or any Business Combination with a Third Party or Recapitalization
otherwise requiring a shareholder vote shall require approval by at least 80% of
the Voting Securities then outstanding at a time when any Person (and its
Affiliates and Associates) or "group" owns 15% or more of the Voting Securities
then outstanding, and (ii) in such other respects listed on Annex A hereto as is
necessary or desirable to carry out the provisions and purposes of this
Agreement.
Section 2.03 Voting of Holders' Securities. WGI agrees that during the
term of this Agreement, with respect to any matter presented to shareholders of
CB&I for vote or approval (whether at a meeting or by written consent), each
class of Holders' Securities owned by WGI and its Affiliates and Associates
shall be present and voted (i) "for" the nominees recommended by the Supervisory
Board, provided CB&I is in compliance with the terms of Section 6.01 of this
Agreement, and (ii) "for" any proposal which is recommended by the Supervisory
Board and "against" any proposal that is not recommended by the Supervisory
Board; provided, however, that WGI and its Affiliates may, in their sole
discretion, vote the Securities held by them on any matter involving (i) the
appointment of auditors; (ii) the adoption of any Rights Agreement or any other
"poison pill" or similar shareholder rights plan which would preclude Seller
from effecting any transaction otherwise permitted herein; (iii) the migration
of CB&I from its current Organization State to any other Organization State
(other than in connection with a Business Combination with a Third Party); (iv)
the conversion of CB&I from its current corporate form to
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any other corporate form (other than in connection with a Business Combination
with a Third Party); or (v) the amendment of the Articles of Association as to
matters not contemplated by this Agreement which would have a disproportionate
material and adverse effect on WGI versus other CB&I shareholders not
contemplated by this Agreement. The provisions of this Section 2.03 shall apply
to both the casting of votes at general meetings of shareholders and any
execution of shareholder action by written consent. WGI agrees, and shall cause
its Affiliates, to execute and deliver to the Secretary of CB&I not later than
20 days prior to the date of any general meeting of shareholders of CB&I a proxy
(in such form as provided by and on behalf of the Supervisory Board)
representing all Voting Securities beneficially owned by WGI and its Affiliates
and Associates voted in accordance with the provisions of this Section 2.03 and
this Agreement.
ARTICLE III
REGISTRATION RIGHTS
Section 3.01 Demand Registration.
(a) Subject to the terms of this Agreement, at any time after the date
hereof, the Holders of at least 75% of the then outstanding Holders' Securities
may request registration under the Securities Act of all or part of their
Holders' Securities on Form S-1 or S-3 or any similar registration (other than a
shelf registration); provided, that any such request shall cover either (i) at
least 20% of such Holders' Securities calculated as of the date of this
Agreement or (ii) such smaller number to the extent it represents all of the
remaining Holders' Securities. Within ten (10) days after receipt of any request
pursuant to this Section 3.01, CB&I will give written notice of such request to
all other Holders of Holders' Securities and will include in such registration
all Holders' Securities with respect to which CB&I has received written requests
for inclusion within thirty (30) days after delivery of CB&I's notice. All
registrations requested pursuant to this Section 3.01 are referred to herein as
"Demand Registrations."
(b) CB&I will not include in any Demand Registration any Securities
which are not Holders' Securities without the written consent of the Holders of
a majority of the Holders' Securities to be included in such Demand
Registration. If a Demand Registration is an underwritten public offering and
the managing underwriters advise CB&I in writing that in their opinion the
inclusion of the number of Holders' Securities and other Securities requested to
be included creates a substantial risk that the price per share of Securities
will be reduced, CB&I will include in such registration, prior to the inclusion
of any Securities which are not Holders' Securities, the number of Holders'
Securities requested to be included which in the opinion of such underwriters
can be sold without creating such a risk, pro rata among the respective Holders
of Holders' Securities on the basis of the number of Holders' Securities owned
by such Holders, with further successive pro rata allocations among the Holders
of Holders' Securities if any such
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Holder of Holders' Securities has requested the registration of less than all
such Holders' Securities such Holder is entitled to register.
(c) Notwithstanding any of the foregoing, CB&I shall not be obligated
to effect any Demand Registration as follows:
(i) CB&I will not be obligated to effect more than one Demand
Registration within any twelve month period;
(ii) CB&I will not be obligated to effect any Demand
Registration during the period starting on the date 60 days prior to CB&I's
estimated date of filing of, and ending on the date 90 days immediately
following the effective date of, any registration statement pertaining to
Securities of CB&I sold by CB&I, provided that CB&I is actively employing in
good faith all reasonable efforts to cause such registration statement to become
effective; and provided further that CB&I may not, pursuant to this Section
3.01(c)(ii), delay implementation of a Demand Registration more than once in any
twelve (12) month period;
(iii) With respect to any Demand Registration, if (A) the
Supervisory Board reasonably and in good faith determines that such filing would
be materially detrimental to CB&I or require a disclosure of a material fact
that might reasonably be expected to have a Material Adverse Effect on CB&I or
on any plan or proposal by CB&I or any of its subsidiaries to engage in any
acquisition or disposition of assets or equity securities (other than in the
ordinary course of business ) or any merger, consolidation, tender offer,
material financing or other significant transaction and (B) CB&I shall furnish
the Holders of Holders' Securities who have requested a Demand Registration a
certificate signed by an executive officer of CB&I to such effect, CB&I may
postpone for up to ninety (90) days the filing or the effectiveness of a
registration statement for a Demand Registration; provided, however, that CB&I
may not postpone the filing or effectiveness of a registration statement for a
Demand Registration for more than ninety (90) days during any twelve (12) month
period; and
(iv) CB&I will not be obligated to effect any Demand
Registration after CB&I has effected four (4) Demand Registrations pursuant to
this Section 3.01, and such registrations have been declared or ordered
effective; provided, however, that after consummation of the First Reserve Deal,
CB&I will not be obligated to effect any Demand Registration after CB&I has
effected two (2) Demand Registrations pursuant to this Section 3.01, and such
registrations have been declared or ordered effective.
Section 3.02 Piggyback Registration.
(a) Whenever CB&I proposes to register any of its Securities under the
Securities Act (other than pursuant to a Demand Registration hereunder) and the
registration form to be used may be used for the registration of any Holders'
Securities (a "Piggyback Registration") (except
▇-▇▇
▇▇
▇▇▇▇▇ ▇-▇ or S-4), CB&I will give written notice, at least thirty (30) days
prior to the proposed filing of a registration statement, to all Holders of the
Holders' Securities of its intention to effect such a registration and will use
reasonable best efforts to include in such registration all Holders' Securities
(in accordance with the priorities set forth in Sections 3.02(b) and 3.02(c)
below) with respect to which CB&I has received written requests for inclusion
within fifteen (15) days after the delivery of CB&I's notice, specifying the
number of Securities intended to be registered.
(b) If a Piggyback Registration is an underwritten primary registration
on behalf of CB&I and the managing underwriters advise CB&I in writing that in
their opinion the number of Securities requested to be included in the
registration creates a substantial risk that the price per share of Securities
will be reduced, CB&I will include in such registration first, the securities
that CB&I proposes to sell, second, the Holders' Securities requested to be
included in such registration under this Agreement together with any Holders'
Securities requested to be included in such registration under the First Reserve
Shareholder Agreement, pro rata among all the Holders of such Holders'
Securities on the basis of the number of shares which are owned by such Holders,
and third, other Securities requested to be included in such registration to be
allocated pro rata among the holders thereof.
(c) If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of CB&I's securities and the managing
underwriters advise CB&I in writing that in their opinion the number of
Securities requested to be included in the registration creates a substantial
risk that the price per share of Securities will be reduced, CB&I will include
in such registration first, the Securities requested to be included therein by
the holders requesting such registration and the Holders' Securities requested
to be included in such registration under this Agreement together with any
Holders' Securities requested to be included in such registration under the
First Reserve Shareholder Agreement, pro rata among all the holders of such
securities on the basis of the number of shares of Securities or Holders'
Securities which are owned by such holders, and second, other Securities
requested to be included in such registration.
(d) If CB&I has previously filed a registration statement with respect
to Holders' Securities pursuant to Section 3.01 or pursuant to this Section
3.02, and if such previous registration has not been withdrawn or abandoned,
CB&I will not file or cause to be effected any other registration of any of its
Securities or Securities convertible or exchangeable into or exercisable for its
Securities under the Securities Act (except on Form S-8 or Form S-4 or any
successor form thereto), whether on its own behalf or at the request of any
holder or holders of such Securities, until a period of at least one hundred
eighty (180) days has elapsed from the effective date of such previous
registration.
Section 3.03 Right to Terminate Registration. CB&I shall have the right
to terminate or withdraw any registration initiated by it under Section 3.02
prior to the effectiveness of such registration provided that no Holder has
elected to include Holders' Securities in such registration.
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Section 3.04 Expenses of Registration.
(a) CB&I will pay all Registration Expenses for Demand Registrations
pursuant to Section 3.01 and for an unlimited number of Piggyback Registrations
pursuant to Section 3.02, provided, however, that CB&I shall not be obligated to
pay more than $800,000 in the aggregate for Registration Expenses with respect
to Demand Registrations; and provided, further, that after consummation of the
First Reserve Deal, CB&I shall not be obligated to pay more than $400,000 in the
aggregate for Registration Expenses with respect to Demand Registrations. A
registration will not count as one of the CB&I paid Demand Registrations until
it has become effective; provided, however, that in any event CB&I will pay all
Registration Expenses in connection with any registration initiated as a Demand
Registration for which CB&I was obligated to pay. In excess of $800,000 (or
$400,000, as applicable), the Registration Expenses for Demand Registrations
shall be borne by the Holders of Holders' Securities to be registered thereunder
pro rata based on the number of Holders' Securities and other Securities
requested or permitted to be included in such registration pursuant to the terms
of this Agreement. If WGI effects a Piggyback Registration right hereunder
relating to a Demand Registration by First Reserve under the First Reserve
Shareholder Agreement, WGI agrees to share pro rata with First Reserve any
Registration Expenses which exceed the amount CB&I is obligated to pay, and CB&I
will cause any other Person which has a right to effect a Piggyback Registration
relating to a Demand Registration by WGI hereunder to agree to similarly share
such Registration Expenses.
(b) Except as provided in Section 3.04(a) hereof, all expenses incident
to CB&I's performance of or compliance with this Agreement, including, but not
limited to, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for CB&I and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other Persons retained by CB&I (all such expenses being herein called
"Registration Expenses"), will be borne by CB&I, provided that CB&I shall not be
required to pay sales commissions, discounts or transfer taxes or the cost of
legal counsel for the Holders. In addition, CB&I will pay its internal expenses
(including, but not limited to, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance obtained by
CB&I, and the expenses and fees for listing the Securities to be registered on
each securities exchange. If the registration request is subsequently withdrawn
at the request of a majority of the Holders of Holders' Securities to be
registered, the Holders of Holders' Securities shall forfeit their right to
reimbursement of expenses with respect to one Demand Registration unless the
Holders of Holders' Securities to be registered pay for all of the Registration
Expenses for such withdrawn registration or unless such registration is
withdrawn due to a material adverse change in the operations or results of CB&I.
Section 3.05 Registration Procedures. Whenever the Holders of Holders'
Securities have requested that any Holders' Securities be registered pursuant to
this Agreement, CB&I will
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use its reasonable best efforts to effect the registration and sale of such
Holders' Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, CB&I will as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Holders' Securities and use its reasonable best efforts to cause
such registration statement to become effective (provided that before filing a
registration statement or prospectus, or any amendments or supplements thereto,
CB&I will furnish copies of all such documents proposed to be filed to the
counsel or counsels for the Selling Holders of the Holders' Securities covered
by such registration statement);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus(es) used in
connection therewith as may be necessary to keep such registration statement
effective until the earlier of such time as all of such Holders' Securities have
been disposed of in accordance with the intended methods of disposition set
forth in such registration statement or the expiration of 135 days after such
registration statement becomes effective (provided that such 135-day period
shall be extended (i) in the case of a Demand Registration for such number of
days that equals the number of days elapsing from (A) the date written notice
contemplated by Section 3.05(e) hereof is given by CB&I to (B) the date on which
CB&I delivers to the Selling Holders the supplement or amendment contemplated by
Section 3.05(e) hereof and (ii) for a period of time equal to the period the
Holder refrains from selling any Holders' Securities included in such
registration at the request of CB&I or an underwriter), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in such registration statement;
(c) furnish to each Selling Holder of Holders' Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus(es) included in such registration statement (including each
preliminary prospectus) and such other documents as such Selling Holder may
reasonably request in order to facilitate the disposition of the Holders'
Securities owned by such Selling Holder;
(d) use its reasonable best efforts to register or qualify such
Holders' Securities under such other securities or blue sky laws of such
jurisdictions as any Selling Holder reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition in such jurisdictions of the
Holders' Securities owned by such Selling Holder (provided that CB&I will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
consent to general service of process in any such jurisdiction, or (iii) subject
itself to taxation in any such jurisdiction);
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(e) notify each Selling Holder of such Holders' Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, CB&I will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Holders' Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
(f) cause all such Holders' Securities to be listed on each securities
exchange on which similar securities issued by CB&I are then listed or if no
such securities are then listed, such securities exchange as the Selling Holders
of a majority of the Holders' Securities included in such registration may
request;
(g) provide a transfer agent and registrar for all such Holders'
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other customary actions as the
Selling Holders of a majority of the Holders' Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Holders' Securities (including, but not limited to,
effecting a stock split or a combination of shares);
(i) make available for inspection by any Selling Holder of Holders'
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such Selling Holder or underwriter, all financial and other records,
pertinent corporate documents and properties of CB&I, and cause CB&I's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such Selling Holder, underwriter, attorney,
accountant or agent in connection with such registration statement; provided,
however, that any records, information or documents that are furnished by CB&I
and that are non-public shall be used only in connection with such registration
and shall be kept strictly confidential by any Selling Holder of Holders'
Securities except to the extent disclosure of such records, information or
documents is required by written order of a court or other governmental
authority having jurisdiction;
(j) advise each Selling Holder of such Holders' Securities, promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
such purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued; and
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(k) furnish on the date or dates provided for in the underwriting
agreement: (i) an opinion of counsel, addressed to the underwriters, covering
such matters as such counsel and underwriters may reasonably agree upon,
including such matters as are customarily furnished in connection with an
underwritten offering, and (ii) a letter or letters from the independent
certified public accountants of CB&I addressed to the underwriters, covering
such matters as such accountants and underwriters may reasonably agree upon, in
which letter(s) such accountants shall state, without limiting the generality of
the foregoing, that they are independent certified public accountants within the
meaning of the Securities Act and that in their opinion the financial statements
and other financial data of CB&I included in the registration statement, the
prospectus(es), or any amendment or supplement thereto, comply in all material
respects with the applicable accounting requirements of the Securities Act.
Section 3.06 Indemnification; Contribution.
(a) By CB&I. To the extent permitted by law, (i) CB&I will indemnify
each Selling Holder, each of its officers and directors, and each person
controlling such Selling Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions or proceedings in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (except insofar as the
same are caused by or contained in any information furnished in writing to CB&I
by such Holder expressly for use therein or by such Holder's failure to deliver
a copy of the prospectus or any amendments or supplements thereto after CB&I has
furnished such Holder with a sufficient number of copies of the same), or any
violation by CB&I of the Securities Act or any rule or regulation promulgated
under the Securities Act applicable to CB&I in connection with any such
registration, qualification or compliance, and (ii) CB&I will reimburse each
such Selling Holder, each of its officers, directors, and each person
controlling such Selling Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing, settling or defending any
such claim, loss, damage, liability or action, provided, in the case of (i) and
(ii), any indemnification by CB&I shall be proportionate to reflect the relative
fault of CB&I on the one hand, and the Selling Holder on the other, with respect
to the statements or omissions which resulted in such expenses, claims, losses,
damages, liabilities or action in respect thereof, as well as any other
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
CB&I or
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the Selling Holder, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission, but not by reference to stock ownership in CB&I.
(b) By Selling Holders. To the extent permitted by law, each Selling
Holder (i) will indemnify CB&I, each of its officers and directors, and each
underwriter, if any, of Securities covered by such a registration statement,
each person who controls CB&I or such underwriter within the meaning of Section
15 of the Securities Act, and each other Selling Holder, each of its officers
and directors, and each person controlling such Selling Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions or proceedings in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) will reimburse CB&I, such Selling Holders, such
officers, directors, partners, legal counsel, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating, settling or defending any such claim, loss, damage,
liability or action, but, in the case of (i) and (ii), only to the extent that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to CB&I for the acknowledged purpose of inclusion in such registration
statement, prospectus or preliminary prospectus. Notwithstanding the foregoing,
the liability of each Selling Holder under this subsection (b) shall be limited
in an amount equal to the net proceeds of the shares sold by such Selling
Holder, unless such liability arises out of or is based on willful misconduct by
such Selling Holder.
(c) Procedure for Indemnification. Each party indemnified under
subsection (a) or (b) of this Section 3.06 (the "Indemnified Party") shall,
promptly after receipt of actual notice of any claim or the commencement of any
action against such Indemnified Party in respect of which indemnity may be
sought, notify the party required to provide indemnification (the "Indemnifying
Party") in writing of the claim or the commencement thereof, provided that the
failure of the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which it may have to an
Indemnified Party on account of the indemnity agreement contained in subsection
(a) or (b) of this Section 3.06, unless the Indemnifying Party was materially
prejudiced by such failure, and in no event shall relieve the Indemnifying Party
from any other liability which it may have to such Indemnified Party. If any
such claim or action shall be brought against an Indemnified Party, it shall
notify the Indemnifying Party thereof and the Indemnifying Party shall be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified Indemnifying Party, to assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Party. After notice from
the Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable
(except to the extent the
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proviso to this sentence is applicable, in which event it will be so liable) to
the Indemnified Party under this Section 3.06 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided that each
Indemnified Party shall have the right to employ separate counsel to represent
it and assume its defense (in which case, the Indemnifying Party shall not
represent it) if (i) upon the advice of counsel, the representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, or (ii) in the event the Indemnifying Party
has not assumed the defense thereof within 10 days of receipt of notice of such
claim or commencement of action, and in which case the fees and expenses of one
such separate counsel shall be paid by the Indemnifying Party. The Indemnifying
Party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the fees and expenses of more than one firm for
all such Indemnified Parties, unless conflicting interests of the Indemnified
Parties make the retention of one firm on behalf of all of them unreasonable. If
any Indemnified Party employs such separate counsel it will not enter into any
settlement agreement which is not approved by the Indemnifying Party, such
approval not to be unreasonably withheld. If the Indemnifying Party so assumes
the defense thereof, it may not agree to any settlement of any such claim or
action as the result of which any remedy or relief, other than monetary damages
for which the Indemnifying Party shall be responsible hereunder, shall be
applied to or against the Indemnified Party, without the prior written consent
of the Indemnified Party, which consent shall not be unreasonably withheld. In
any action hereunder as to which the Indemnifying Party has assumed the defense
thereof with counsel reasonably satisfactory to the Indemnified Party, the
Indemnified Party shall continue to be entitled to participate in the defense
thereof with counsel of its own choice, but, except as set forth above, the
Indemnifying Party shall not be obligated hereunder to reimburse the Indemnified
Party for the costs thereof. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) Contribution. If the indemnification provided for in this Section
3.06 shall for any reason be unavailable to an Indemnified Party in respect of
any loss, claim, damage or liability, or any action in respect thereof, referred
to therein, then each Indemnifying Party shall, in lieu of indemnifying such
Indemnified Party, contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the Indemnifying Party on the one hand, and the Indemnified Party on
the other, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party on the one hand, or the
Indemnified Party on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or
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omission, but not by reference to any Indemnified Party's stock ownership in
CB&I. In no event, however, shall a Selling Holder be required to contribute in
excess of the amount of the net proceeds received by such Selling Holder in
connection with the sale of Holders' Securities in the offering which is the
subject of such loss, claim, damage or liability. The amount paid or payable by
an Indemnified Party as a result of the loss, claim, damage or liability, or
action in respect thereof referred to above in this subsection (d) shall be
deemed to include, for purposes of this paragraph, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating,
settling or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Conflicts and Controlling Language. Notwithstanding the foregoing,
to the extent that the provisions on indemnification and contribution contained
in the underwriting agreement entered into in connection with an underwritten
public offering are in conflict with the foregoing provisions, the provisions in
the underwriting agreement shall control.
Section 3.07 Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell its Securities on the basis provided in any
underwriting arrangements approved by such Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements. The foregoing notwithstanding, with respect to any of the
documents and/or agreements referred to in this Section 3.07, (i) no Selling
Holder of Holders' Securities shall be required to make any representations and
warranties with respect to or on behalf of CB&I or any other shareholder of CB&I
and (ii) the liability of any holder of Holders' Securities shall be limited as
provided in Section 3.06(b).
Section 3.08 Information by Selling Holder. Selling Holders shall
promptly furnish to CB&I such information regarding such Selling Holders as
shall be necessary to enable CB&I to comply with the provisions hereof in
connection with any registration referred to in this Agreement.
Section 3.09 Rule 144 Reporting. At the request of any Selling Holder
of Holders' Securities who proposes to sell securities in compliance with Rule
144 of the Commission, CB&I will (i) forthwith furnish to such Selling Holder a
written statement of compliance with the filing requirements of the Commission
as set forth in Rule 144, as such rule may be amended from time to time and (ii)
make available to the public and such holders such information as will enable
the Selling Holders of Holders' Securities to make sales pursuant to Rule 144.
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Section 3.10 Consistent Restrictions on Transfer. CB&I shall be
permitted, and it shall not constitute a breach of the terms of this Article
III, to impose restrictions on transfer of Holders' Securities under a
registration statement consistent with the terms of Article IV hereof.
ARTICLE IV
TRANSFERS OF HOLDERS' SECURITIES
Section 4.01 Restrictions on Transfer.
(a) During the term of this Agreement, WGI agrees that it will not, and
it will cause each of its Affiliates who acquire Holders' Securities pursuant to
Section 4.02(d) of this Agreement not to, (i) Transfer any Holders' Securities,
except as permitted by or in accordance with this Agreement, or (ii) convert
registered shares of Holders' Securities into bearer shares of Holders'
Securities or acquire beneficial ownership of bearer shares of Holders'
Securities, and the parties hereby agree that notwithstanding the provisions of
the Articles of Association, WGI will not request and CB&I will not be bound to
honor a request for such conversion. All Holders' Securities will be held in
certificated form.
(b) Except for Transfers pursuant to Section 4.02, WGI and its
Affiliates may not, without the prior written consent of CB&I, transfer any
Holders' Securities to any Person who WGI or its Affiliates has reason to
believe after reasonable investigation (which shall include receipt of
appropriate written representations from the proposed transferee and a review of
statements filed with the Commission pursuant to Section 13(d) of the Exchange
Act) (i) either has filed a Schedule 13D under the Exchange Act with respect to
CB&I or would be required to file a Schedule 13D under the Exchange Act with
respect to CB&I due to a change in intent or percentage ownership, (ii) as a
result of such Transfer, would beneficially own more than 10% of Voting
Securities then outstanding, or (iii) is a Competitor.
Section 4.02 Exceptions to Restrictions. Subject to all applicable
laws, the restrictions on Transfer set forth in Section 4.01 hereof shall not
apply to any of the following:
(a) Transfer of some or all of the Holders' Securities pursuant to a
bona fide underwritten public offering;
(b) a Transfer of some or all of the Holders' Securities as permitted
under Rule 144 of the Securities Act in an unsolicited "broker's transaction"
(as defined in Rule 144) on a securities exchange in compliance with the volume
limitations of Rule 144 where WGI has no knowledge that the purchaser of such
Securities is any of the Persons described in subsections 4.01(b)(i), (ii) or
(iii) above;
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(c) a Transfer of some or all of the Holders' Securities in any
Business Combination or Recapitalization which is recommended to shareholders of
CB&I by the Supervisory Board;
(d) a Transfer of some or all of the Holders' Securities to an
Affiliate of WGI, provided that such Affiliate shall agree to the provisions of
this Agreement and WGI will remain liable for the performance by such Affiliate
of its obligations under this Agreement;
(e) a Transfer of some or all of the Holders' Securities in connection
with a pledge or hypothecation to a financial institution to secure a bona fide
loan; provided, however, that any foreclosure or enforcement of such pledge or
hypothecation by the pledgee shall be subject to the procedures set forth in
Article V; and
(f) a Transfer or Transfers, once per calendar quarter, to any
Institutional Investor which, together with its Affiliates as a result of such
Transfer, would beneficially own Securities not representing more than 5% of
Voting Securities.
Section 4.03 Other Transfers. In the event that WGI desires to Transfer
the Holders' Securities in a manner not specifically permitted under Section
4.02 of this Agreement, WGI may submit a written Notice of Intention to CB&I in
accordance with the procedures set forth in Article V.
Section 4.04 Improper Transfer. Any attempt to Transfer any shares of
Holders' Securities during the term of this Agreement not in accordance with
this Agreement will be null and void and CB&I will not give, nor permit the
transfer agent of CB&I to give, any effect to such attempted Transfer in its
stock records.
Section 4.05 Restrictive Legend.
(a) A copy of this Agreement will be filed with the Secretary of CB&I
and kept with the records of CB&I. All certificates representing shares of
Holders' Securities hereafter issued to or acquired by WGI will bear the
following legend noted conspicuously on such certificates:
"THE ISSUANCE OF THE SHARES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY
MERGER OR OTHERWISE), ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSFER IS EXEMPT FROM REGISTRATION, AND CHICAGO BRIDGE & IRON COMPANY
N.V. (THE "COMPANY") SHALL HAVE BEEN FURNISHED WITH AN
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OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO SUCH EFFECT.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER AS SET FORTH IN THAT CERTAIN SHAREHOLDER
AGREEMENT DATED AS OF ___________, 2000 BETWEEN THE COMPANY AND WEDGE
GROUP INCORPORATED (THE "SHAREHOLDER AGREEMENT"). NO TRANSFER OF THESE
SHARES WILL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF
SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH IN FULL AND NO
PERSON MAY REQUEST THE COMPANY TO RECORD THE TRANSFER OF ANY SHARES IF
SUCH TRANSFER IS IN VIOLATION OF SUCH SHAREHOLDER AGREEMENT. A COPY OF
THE SHAREHOLDER AGREEMENT IS ON FILE AT THE ADMINISTRATIVE OFFICES OF
THE COMPANY IN PLAINFIELD, ILLINOIS AND WILL BE FURNISHED WITHOUT
CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN REQUEST. THE SHARES
EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON VOTING
PROVIDED FOR IN THE SHAREHOLDER AGREEMENT AND NO VOTE OF SUCH SHARES
THAT CONTRAVENES THE SHAREHOLDER AGREEMENT SHALL BE EFFECTIVE."
(b) Until such time as the Holders' Securities have been registered
pursuant to a registration statement under the Securities Act or sold pursuant
to Rule 144 under the Securities Act, the certificates representing the Holders'
Securities (including, without limitation, all certificates issued upon Transfer
or in exchange thereof or substitution therefor) will also bear any legend
required under any other applicable laws, including state securities or blue sky
laws.
(c) CB&I may make a notation on its records or give stop-transfer
instructions to any transfer agents or registrars for the Holders' Securities in
order to implement the restrictions set forth in this Article IV.
(d) In the event WGI acquires any other or additional Holders'
Securities, WGI will submit all certificates representing such Holders'
Securities to CB&I so that the legend or legends required by this Section 4.05
may be placed thereon.
ARTICLE V
RIGHTS OF FIRST OFFER
Section 5.01 Sale by WGI.
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(a) Except for Transfers permitted by Section 4.02, during the term of
this Agreement, WGI shall not, and shall cause each of its Affiliates not to,
sell any shares of Holders' Securities to any Person until it has first made an
offer (the "First Offer") to sell such shares to CB&I in accordance with this
Article V and such First Offer shall have been rejected or not accepted within
the Applicable Acceptance Period (as hereinafter defined).
(b) The First Offer to CB&I shall be set forth in the form of a notice
made in writing (the "Notice of Intention") to the Chief Financial Officer (fax
(▇▇▇) ▇▇▇-▇▇▇▇) or General Counsel (fax (▇▇▇) ▇▇▇-▇▇▇▇) of CB&I setting forth
(i) WGI's desire to make a sale; (ii) the number of shares of Holders'
Securities proposed to be sold (the "Offered Shares"); and (iii) the price (the
"Offer Price") and other terms on which the Holders' intend to offer to sell the
Offered Shares.
(c) Upon receipt of the Notice of Intention, CB&I will have the right
to purchase the Offered Shares at the Offer Price, exercisable by the delivery
of an acceptance in the form of a notice in writing to WGI by CB&I (the "Notice
of Exercise") at any time within one business day from the date of CB&I's
receipt of the Notice of Intention (the "Applicable Acceptance Period"). In any
case, CB&I will use its best efforts to respond as promptly as possible to any
Notice of Intention and, at the request of WGI, may, in its sole discretion,
provide advance approval of certain Transfers or a waiver of its rights under
this Article V. The right of CB&I to purchase the Offered Shares will terminate
if such Notice of Exercise is not delivered within the Applicable Acceptance
Period or if CB&I sooner notifies WGI that it declines to exercise such right.
CB&I may assign its right to purchase the Offered Shares pursuant to a specific
Notice of Intention, once received by CB&I, to any Person, but may not otherwise
assign its rights under this Article V.
(d) In the event that CB&I exercises its right to purchase the Offered
Shares in accordance with Section 5.01(c) hereof, then WGI must sell, and CB&I
must purchase, the Offered Shares to CB&I at the Offer Price within thirty (30)
days from the date of receipt of the Notice of Exercise delivered by CB&I,
subject to receipt of any required material third-party or governmental
approvals, compliance with applicable laws and the absence of any injunction or
similar legal order preventing such transaction.
Section 5.02 Purchase of the Offered Shares. In the event CB&I rejects
the First Offer or fails to deliver a Notice of Exercise within the Applicable
Acceptance Period, then WGI and its Affiliates may sell such Offered Shares at
the Offer Price or higher within sixty (60) days after the delivery of such
rejection or, in the case of a failure to deliver a Notice of Exercise, within
sixty (60) days after the expiration of the Applicable Acceptance Period,
subject to the other terms and conditions of this Agreement. If WGI and its
Affiliates do not sell all of the Offered Shares during such sixty (60) day
period, any unsold Offered Shares shall again become subject to the Right of
First Offer contained in this Article V.
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ARTICLE VI
BOARD REPRESENTATION
Section 6.01 Supervisory Board Composition. (a) CB&I will have used its
best efforts to cause the Supervisory Board to increase the number of directors
comprising the Supervisory Board immediately after the Effective Time from eight
(8) to nine (9); provided, however, that in the event a definitive agreement
relating to the First Reserve Deal has been executed, CB&I will have used its
best efforts to cause the Supervisory Board to increase the number of directors
comprising the Supervisory Board immediately after the Effective Time and the
consummation of the First Reserve Deal from eight (8) to twelve (12). At the
Shareholders' Meeting prior to the Effective Time, CB&I will have used its best
efforts to cause the Supervisory Board to make binding nominations and to
recommend for approval by CB&I shareholders the appointment of up to three (3)
WGI nominees (whom WGI shall designate, together with a back-up nominee for each
position, prior to the mailing of the CB&I Proxy Statement) to serve from the
Effective Time in the classes of Supervisory Board directors expiring in 2001
and 2002; provided, however, that in the event a definitive agreement relating
to the First Reserve Deal is executed, CB&I will have used its best efforts to
cause the Supervisory Board to make binding nominations and to recommend for
approval by CB&I shareholders the appointment of up to two (2) WGI nominees
(whom WGI shall designate, together with a back-up nominee for each position,
prior to the mailing of the CB&I Proxy Statement) to serve from the Effective
Time and the consummation of the First Reserve Deal in the classes of
Supervisory Board directors expiring in 2001 and 2002. Directors nominated by
WGI pursuant to this Article VI are referred to herein as "WGI Designees,"
directors nominated by First Reserve pursuant to the First Reserve Shareholder
Agreement are referred to herein as "FRF Designees" and all other directors are
referred to herein as "Noninvestor Directors".
(b) Beginning with CB&I's 2001 annual general meeting of shareholders
and at each shareholders meeting for the appointment of directors thereafter at
a time when WGI and its Affiliates and Associates beneficially own at least
33-1/3%, or, after the consummation of the First Reserve Deal, 17 1/2%, of
Voting Securities (which for this purpose shall exclude derivative Securities)
then outstanding, CB&I will cause the Supervisory Board to include as nominees
for directors (pursuant to a binding nomination, if permitted by the Articles of
Association) and to solicit proxies for that number of WGI Designees such that
the total number of WGI Designees on the Supervisory Board immediately after
such election will be three (3), or, after the consummation of the First Reserve
Deal, two (2). WGI shall provide the Secretary of CB&I in writing within 10 days
after CB&I notifies WGI that CB&I is preparing its proxy statement with the
names and (i) required background information under Regulation 14A of the
Exchange Act, Dutch law and the rules of any exchange and (ii) such other
information regarding such individuals and their affiliations as CB&I may
reasonably request, regarding its WGI Designees (and back-up nominees) for the
next election of directors. The nominees for the remaining
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directors comprising the Supervisory Board, other than any FRF Designees, shall
be selected by the Noninvestor Directors (upon recommendation of the CB&I
Nominating Committee or otherwise), and WGI and the WGI Designees shall use
their best efforts (including voting as shareholders) to cause the election of
the slate of directors recommended by the Supervisory Board; provided, however,
that WGI and the WGI Designees shall not be so obligated if the WGI Designees
are not included in such slate of directors.
(c) At least 2 of the 3 WGI Designees (and their back-up nominees)
which WGI is entitled to designate hereunder shall be Independent Directors and
at least a majority of the Noninvestor Directors shall be Independent Directors;
provided, however, that after the consummation of the First Reserve Deal, no WGI
Designee and no Noninvestor Director shall be required to be an Independent
Director. Each WGI Designee shall have such business or technical experience,
stature and character as is commensurate with service on the board of directors
of a publicly-held enterprise (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and current Supervisory Board
members shall be deemed to have such qualifications). No WGI Designee who is an
officer, director, partner or principal shareholder of a Competitor shall serve
as a director of CB&I.
(d) In the event that the aggregate beneficial ownership of WGI and its
Affiliates and Associates shall be less than 33-1/3% or, after the consummation
of the First Reserve Deal, less than 17 1/2%, of the Voting Securities then
outstanding, the number of WGI Designees shall be reduced as follows:
WGI Percentage Ownership Number of
of Voting Securities WGI Designees
(no consummation of First Reserve Deal) --------------
---------------------------------------
Less than 33-1/3% but at least 20% two (2) (at least one of whom
is an Independent Director)
Less than 20% but at least 10% one (1)
Less than 10% 0
WGI Percentage Ownership Number of
of Voting Securities Investor Designees
(no consummation of First Reserve Deal) ------------------
---------------------------------------
Less than 17 1/2% but at least 10% one (1)
Less than 10% 0
If for any period of 30 consecutive days WGI and its Affiliates and Associates
beneficially own a percentage of Voting Securities then outstanding that would
entitle them to fewer than the number of WGI Designees that were in office
immediately after the last shareholders meeting to
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appoint directors, at the request of the Supervisory Board, WGI shall use its
best efforts to cause the resignation of such number of WGI Designees in excess
of the number to which it would be entitled pursuant to this Section 6.01(d). If
for any period of 30 consecutive days WGI and its Affiliates and Associates
beneficially own in the aggregate less than 10% of the Voting Securities then
outstanding, WGI shall not then or thereafter be entitled to designate any
nominee to the Supervisory Board.
(e) So long as WGI and its Affiliates and Associates are entitled to
designate at least two (2) WGI Designees, each committee of the Supervisory
Board (other than the Nominating Committee or any special committee of
Independent Directors constituted for the purposes set forth in the following
sentence) shall at all times include at least one WGI Designee and no action by
any such committee shall be valid unless taken at a meeting for which adequate
notice has been duly given to or waived by the members of such committee. The
WGI Designee designated by WGI to serve on any committee of the Supervisory
Board may designate as his alternate another WGI Designee designated by WGI. The
parties hereto agree that the regulations of the Supervisory Board shall provide
that a special committee of the Supervisory Board composed entirely of
disinterested Independent Directors shall be constituted for the purpose of
evaluating (i) any Significant Transaction or (ii) any transaction, issue or
matter involving WGI or its Affiliates or Associates, which special committee
shall report its conclusions and recommendations to the Supervisory Board as a
whole.
Section 6.02 Director Compensation. WGI Designees will be compensated
in the same manner as other nominees or directors (including reimbursement of
expenses).
Section 6.03 Indemnification. Upon the election of any WGI Designee to
the Supervisory Board, CB&I shall (a) indemnify and hold harmless (and
exculpate) against any and all liabilities and claims against him as a result of
his affiliation with CB&I and (b) provide to any WGI Designee liability
insurance, in each case of clause (a) and (b) above to the same extent provided
or made available to other members of the Supervisory Board.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Assignment of Holders' Rights; Third Party Beneficiaries.
(a) The rights and obligations of WGI under this Agreement may be assigned or
transferred by any Holder to an Assignee, provided that all of the following
conditions are satisfied: (i) such assignment is effected in accordance with
applicable securities laws and the provisions of this Agreement; (ii) such
Assignee agrees in writing to become subject to the terms of this Agreement
(provided, however, that such Assignee other than an Affiliate of WGI shall not
have the rights of WGI
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under Article VI hereof unless specifically agreed to by CB&I in writing); and
(iii) CB&I is given written notice by such Holder of such assignment, stating
the name and address of the Assignee and identifying the Holders' Securities
with respect to which such rights are being assigned. Notwithstanding the
foregoing or the restrictions set forth in Article IV or Article V, WGI may
enter into and consummate the First Reserve Deal.
(b) Except as provided in Section 7.01(a), this Agreement and the
rights of the parties hereunder may not be assigned and shall be binding on and
inure to the benefit of the parties hereto and their successors.
(c) This Agreement is expressly intended to confer upon the present and
future shareholders of CB&I (including ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as
signatories hereto), as third party beneficiaries, the benefits of all covenants
and agreements made by WGI herein with privity to enforce such provisions with
all rights and remedies under applicable law, including the right of specific
performance set forth in Section 7.08. Each CB&I shareholder not signatory to
this Agreement shall be deemed to have been notified of such intended third
party benefit by disclosure thereof in any public filing by CB&I concerning this
Agreement and, to the extent acknowledgment of such benefits is required by the
law of any jurisdiction, to have acknowledged and accepted such benefits as a
third party beneficiary by casting his vote concerning the transactions
contemplated by this Agreement and the Purchase Agreement at the Shareholders'
Meeting.
Section 7.02 Term; Effectiveness. The term of this Agreement will begin
(and this Agreement will become effective) upon the date hereof and will
continue until the date on which WGI and its Affiliates and Associates no longer
beneficially own Securities representing in the aggregate at least ten percent
(10%) of the total number of shares of Voting Securities then outstanding;
provided, however, that the Holders shall continue to have the rights provided
for in Article III of this Agreement as long as they beneficially own in the
aggregate at least five percent (5%) of the total number of shares of Voting
Securities then outstanding. The provisions of Sections 3.04, 3.06 and 6.03
hereof shall survive the termination of this Agreement.
Section 7.03 Entire Agreement; Amendment; Waivers. This Agreement
constitutes the entire agreement and understanding between WGI and CB&I and
supersedes all prior agreements and understandings, both written and oral,
relating to the subject matter of this Agreement. This Agreement may be amended,
modified or supplemented, and any right hereunder may be waived, if, but only
if, that amendment, modification, supplement or waiver is in writing and signed
by WGI and CB&I and approved by a majority of the members of a special committee
of the Supervisory Board of the type referred to in Section 6.01(e) (but shall
not require the consent of any third party beneficiaries referred to in Section
7.01(c)). The waiver of any of the terms and conditions hereof shall not be
construed or interpreted as, or deemed to be, a waiver of any other term or
condition hereof.
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Section 7.04 Notices. All notices required or permitted hereunder shall
be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by facsimile, telex or courier service,
when actually received by the party to whom notice is sent or (b) if delivered
by mail (whether actually received or not), at the close of business on the
third business day next following the day when placed in the mail, postage
prepaid, certified or registered, addressed to the appropriate party or parties,
at the address of such party set forth below (or at such other address as such
party may designate by written notice to all other parties in accordance
herewith):
(1) if to CB&I, addressed to it at:
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman of the Supervisory Board
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
; and
(2) if to Seller, addressed to it at:
WEDGE Group Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
WEDGE Group Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇)▇▇▇-▇▇▇▇
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Section 7.05 GOVERNING LAW, JURISDICTION AND VENUE. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
(A) NEW YORK COURT, OR FEDERAL COURT OF THE UNITED STATES OF AMERICA, SITTING IN
THE STATE OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, OR (B) DUTCH
COURT SITTING IN THE NETHERLANDS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RELATING THERETO, AND EACH OF THE
PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY (i) AGREES THAT ANY CLAIM IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT (OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT) OR
IN SUCH DUTCH COURT, (ii) WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND
EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH NEW YORK STATE OR
FEDERAL COURT OR IN SUCH DUTCH COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH NEW YORK STATE OR FEDERAL COURT OR IN SUCH
DUTCH COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 7.04.
Section 7.06 WAIVER OF CERTAIN CLAIMS. NEITHER WGI NOR CB&I SHALL BE
ENTITLED TO RECOVER FROM THE OTHER ANY LOSSES, COSTS, EXPENSES OR DAMAGES
ARISING UNDER THIS AGREEMENT OR IN CONNECTION WITH OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT IN ANY AMOUNT IN EXCESS OF THE
ACTUAL COMPENSATORY DAMAGES, COURT OR ARBITRATION COSTS AND REASONABLE ATTORNEY
FEES AND EXPENSES, SUFFERED BY SUCH PARTY. WGI AND CB&I HEREBY IRREVOCABLY WAIVE
ANY AND ALL RIGHTS TO ASSERT ANY CLAIM FOR INDIRECT, CONSEQUENTIAL, SPECIAL,
EXEMPLARY OR PUNITIVE DAMAGES ARISING IN CONNECTION WITH OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED IN THIS
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AGREEMENT. THE WAIVER PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE
APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION
AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF ANY PERSON WHICH SEEKS THE
BENEFIT OF SUCH PROVISION. WGI AND CB&I ACKNOWLEDGE THAT THIS STATEMENT COMPLIES
WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
Section 7.07 Exercise of Rights and Remedies. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any party hereto as a result of any breach or default
hereunder by any other party hereto shall impair any such right, power or
remedy, nor shall it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver.
Section 7.08 Specific Performance. Each of the parties hereto
recognizes and acknowledges that this Agreement is an integral part of the
transactions contemplated in the Purchase Agreement, that CB&I would not have
entered into the Purchase Agreement unless this Agreement was executed and that
a breach by a party of any covenants or agreements contained in this Agreement
will cause the other party to sustain injury for which it would not have an
adequate remedy at law for money damages. Therefore each of the parties hereto
agrees that in the event of any such breach, the aggrieved party (including any
present or future shareholder of CB&I) shall be entitled to the remedy of
specific performance of such covenants and agreements and preliminary and
permanent injunctive and other equitable relief in addition to any other remedy
to which it may be entitled, at law or in equity, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.
Section 7.09 Conflict with Articles. It is expressly agreed that
whether or not the Articles of Association fully incorporate the provisions
hereof, or any of them, the parties' rights and obligations shall be governed by
this Agreement which shall prevail, to the extent lawful, in the event of any
ambiguity or inconsistency between this Agreement and the Articles of
Association.
Section 7.10 Reformation and Severability. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
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Section 7.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 7.12 Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.
WEDGE GROUP INCORPORATED
By:
----------------------------------
Title:
CHICAGO BRIDGE & IRON COMPANY N.V.
BY: CHICAGO BRIDGE & IRON COMPANY
B.V., its Managing Director
By:
----------------------------------
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
CB&I Shareholder
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
CB&I Shareholder
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Annex A
1. Amend the Articles of Association to provide that any transaction
involving WGI or First Reserve (or their respective Affiliates) or any
Business Combination or Recapitalization otherwise requiring a
shareholder vote shall require approval by at least 80% of the Voting
Securities then outstanding at a time when any Person (and its
Affiliates and Associates) or "group" owns 15% or more of the Voting
Securities then outstanding.
2. Amend the Articles of Association to provide that registered shares
shall be converted into bearer shares at the written request of a
shareholder, unless such conversion has been limited or excluded upon
issuance of those shares.
3. Amend the Articles of Association to add the requirement in a transfer
of registered shares that the endorsement by the company or its
transfer agent be made upon the share certificate and that the share
certificate must be delivered to the company or its agent upon
transfer; transfers not consistent with this requirement will not be
enforceable against the company.
4. Amend the Articles of Association to provide that the Supervisory Board
may draw up rules and regulations pertaining to voting, including as to
the nomination of directors, and provisions relating to Board
composition and governance, and to give effect to the matters agreed
upon in the Shareholder Agreements.
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Annex B
SHAREHOLDER AGREEMENT
This Shareholder Agreement (this "Agreement") dated as of
_________, 2000 is by and between First Reserve Fund VIII, L.P., a limited
partnership organized under the laws of the State of Delaware ("FRF"), and
Chicago Bridge & Iron Company N.V., a company organized under the laws of the
Netherlands ("CB&I").
WHEREAS, FRF has entered into a Stock Purchase Agreement dated
as of July ___, 2000 with WEDGE Group Incorporated, a Delaware corporation
("WGI"), and WGI Tyler, Inc., a Delaware corporation, pursuant to which FRF has
agreed to purchase 4,323,333 shares of CB&I Stock (as defined below) (the "First
Reserve Deal");
WHEREAS, it is a condition to the consummation of such
transaction that FRF and CB&I enter into this Agreement; and
WHEREAS, the parties hereto desire to enter into this
Agreement to provide for certain rights and restrictions with respect to the
Holders' Securities (as defined below) for the benefit of CB&I, its shareholders
and other constituencies so as to serve the long-term interests of CB&I, its
shareholders and other constituencies.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions.
"Affiliate" means any corporation, partnership or other person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with any Holder or any Shareholder, as the
case may be, and shall include any person acting on behalf of any Holder or any
Shareholder or Affiliate of any of them, as the case may be. For purposes of the
preceding sentence, "control" (including the terms "controlling," "controlled
by" and "under common control with") means possession, directly or indirectly,
of the power to direct or cause direction of management and policies of a person
through ownership of securities, by contract, pursuant to a voting trust or
otherwise. Notwithstanding the foregoing, a company will not be an Affiliate of
FRF due solely to a minority stock or board position.
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"Applicable Acceptance Period" has the meaning provided in
Section 5.01(c).
"Articles of Association" means the articles of association of
CB&I, as amended from time to time.
"Assignee" means an assignee or transferee of FRF pursuant to
Section 7.01.
"Associate" has the meaning assigned to such term in Rule
12b-2 under the Exchange Act.
A Person shall be deemed to "beneficially own," to have
"beneficial ownership" of, or to be "beneficially owning" any Securities (which
Securities shall also be deemed "beneficially owned" by such Person) that such
Person is deemed to "beneficially own" within the meaning of Rule 13d-3 under
the Exchange Act.
"Business Combination" means a merger, combination or
consolidation (whether or not CB&I or a Subsidiary of CB&I is the surviving
entity in such transaction), tender offer or share exchange (whether for all or
part of the outstanding Securities of CB&I or any Subsidiary), business
combination, sale of significant assets, dissolution, liquidation or similar
transaction involving CB&I or any Subsidiary or division of CB&I.
"CB&I Stock" means the common stock, NLG .01 par value per
share, of CB&I.
"Commission" means the Securities and Exchange Commission of
the United States or any other U.S. federal agency at the time administering the
Securities Act.
"Competitor" means any Person or any of such Person's
Affiliates or Associates who has as a significant business activity (i) the
design and engineering, fabrication, field erection or repair of bulk liquid
terminals, storage tanks, process vessels, low temperature or cryogenic storage
facilities, or other steel plate structures and their associated systems, or
(ii) the provision of engineering services (including plant engineering,
procurement and construction services) or specialized equipment similar to that
provided by HBI or the HBI Subsidiaries.
"Continuing Directors" means, as of any date of determination,
any member of the Supervisory Board who (i) was a member of the Supervisory
Board on the date of this Agreement or (ii) was nominated for election to the
Supervisory Board with the affirmative vote of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election, or who was elected or appointed in the ordinary course by Continuing
Directors or other directors so elected or appointed.
"Demand Registration" has the meaning provided in Section
3.01(a).
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"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
"FRF Designee" has the meaning provided in Section 6.01(a).
"First Offer" has the meaning provided in Section 5.01(a).
"First Reserve Deal" has the meaning provided in the recitals
to this Agreement.
"Holder" means FRF, its Affiliates and its Assignees as
permitted by Section 7.01 hereof, holding Holders' Securities or securities
convertible into, exchangeable or exercisable for Holders' Securities.
"Holders' Securities" means (i) any shares of CB&I Stock held
by a Holder on the date hereof, (ii) any other Securities held by a Holder on
the date hereof or acquired hereafter and (iii) any shares of stock issued or
issuable in respect of such CB&I Stock or other Securities upon any
Recapitalization, in each case, held by Holders or any Affiliate of any Holder;
provided however, that Holders' Securities shall not include shares sold in a
transaction in which the rights conferred by this Agreement are not assigned or
transferred as provided in Section 7.01 hereof.
"Indemnified Party" has the meaning provided in Section
3.06(c).
"Indemnifying Party" has the meaning provided in Section
3.06(c).
"Independent Director" means any individual who (i) qualifies
as a "non-employee director" as defined in Rule 16b-3(b)(3)(i) promulgated by
the Commission under the Exchange Act and (ii) is not a "person associated with
the issuer" as defined in Appendix X of the Listing and Issuing Rules of the
Amsterdam Exchanges N.V., where, for purposes of both such definitions, "issuer"
is deemed to refer both to FRF and its Affiliates and to CB&I and its
Affiliates.
"Institutional Investor" means a bank, investment company,
insurance company, as those terms are used in Rule 13(d)-1(b) of the Exchange
Act, or similar financial institution or any other Person that does not acquire
Voting Securities for the purpose of or having the effect of changing or
influencing the control of an issuer or in connection with or as a participant
in any transaction having such purpose or effect, and that would be eligible to
file, on the date of Transfer and after giving effect to such Transfer, a
Schedule 13G statement under the Exchange Act with respect to all Voting
Securities.
"Noninvestor Director" has the meaning provided in Section
6.01(a).
"Notice of Exercise" has the meaning provided in Section
5.01(c).
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"Notice of Intention" has the meaning provided in Section
5.01(b).
"Offered Shares" has the meaning provided in Section 5.01(b).
"Offer Price" has the meaning provided in Section 5.01(b).
"outstanding", when used in reference to equity or Voting
Securities, means all such equity or Voting Securities issued and held by
Persons other than CB&I.
"Person" means any individual, group, corporation, firm,
partnership, joint venture, trust, business association, organization,
governmental entity or other entity.
"Piggyback Registration" has the meaning provided in Section
3.02(a).
"Purchase Agreement" means that certain Purchase Agreement
dated as of July 30, 2000 among CB&I, WEDGE Group Incorporated and certain other
parties.
"Recapitalization" means any stock split, stock dividend,
stock combination, a significant recapitalization, reorganization, or
restructuring, or similar event involving CB&I or any Significant Subsidiary (as
defined in Regulation S-X of the Commission) of CB&I.
The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and all applicable blue sky or other
national, state or provincial securities laws), and the declaration or ordering
of the effectiveness of such registration statement (and qualification or
compliance with such laws).
"Registration Expenses" has the meaning provided in Section
3.04(b).
"Securities" means (i) any and all securities issued and
outstanding by CB&I at any time, (ii) any shares of stock issued or issuable in
respect of such securities and (iii) any right to acquire by contract or
otherwise from CB&I or any Person, and whether or not then exercisable, any
security described in (i) or (ii).
"Securities Act" means the United States Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
"Selling Holder" means each Holder who holds Holders'
Securities to be included in a registration statement under the Securities Act
pursuant to this Agreement.
"Shareholder" means a holder of Securities other than a
Holder.
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"Significant Transaction" means any transaction or activity
that results in, or is intended to result in, or may reasonably be expected to
result in, (i) the acquisition by any Person, alone or together with such
Person's Affiliates and Associates, of 33-1/3% or more of the Voting Securities
outstanding after such acquisition; (ii) any sale of all or substantially all of
CB&I's assets; (iii) any Business Combination in which CB&I is not the surviving
entity; (iv) any Business Combination or Recapitalization in which the
shareholders of CB&I (other than the Holders) immediately prior to such Business
Combination or Recapitalization own less than 33-1/3% of the Voting Securities
outstanding after such event; and (v) any change in the Supervisory Board not
consistent with Article VI of this Agreement or which would result in a majority
of the members of the Supervisory Board not being Continuing Directors.
"Supervisory Board" means the Board of Supervisory Directors
of CB&I.
"Third Party" means a Person other than CB&I, a Holder, a
Shareholder or their respective Affiliates.
"Transfer" means, with respect to all or any part of the
Securities, to directly or indirectly (whether or not through an underwriter)
offer, sell, convey, distribute, transfer (by merger or otherwise), assign,
devise, exchange, encumber, gift, pledge, grant any option with respect to,
hypothecate or otherwise dispose of such Securities, or enter into any
agreement, arrangement or understanding with respect to the foregoing.
"Voting Securities" means Securities then outstanding which
ordinarily have voting power for the election of directors (or Persons
performing similar functions) of CB&I, whether at all times or only so long as
no senior class of Securities has such voting power by reason of any
contingency.
"WGI Designee" has the meaning provided in Section 6.01(a).
"WEDGE Shareholder Agreement" means that certain Shareholder
Agreement dated ______, 2000 between CB&I and WEDGE Group Incorporated.
Section 1.02 Other Defined Terms. All capitalized terms used
herein and not otherwise defined shall have the respective meanings specified in
the Purchase Agreement.
ARTICLE II
STANDSTILL AND VOTING PROVISIONS
Section 2.01 Agreement of FRF. Unless specifically requested
or permitted in writing in advance by the Supervisory Board, FRF agrees that, so
long as this Agreement remains in effect, and except as contemplated elsewhere
herein, neither it nor any of its Affiliates or Associates shall, directly or
indirectly:
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(a) acquire, offer to acquire, announce an intention to acquire,
solicit an offer to sell or agree to acquire by purchase or otherwise, any
Securities, except (i) as a result of a stock split, stock dividend or
Recapitalization approved by the Supervisory Board, (ii) in connection with a
Business Combination approved by the Supervisory Board, (iii) up to an
additional 253,000 shares of CB&I Stock (including any shares acquired between
the execution of the First Reserve Deal and the execution of this Agreement) so
long as the total number of shares of Voting Securities owned by FRF and its
Affiliates and Associates and WEDGE Group Incorporated and its Affiliates and
Associates in the aggregate does not exceed 49.9% of the total number of shares
of Voting Securities then outstanding, or (iv) if, as a result of such
acquisition, FRF and its Affiliates and Associates would beneficially own in the
aggregate no more than 10.1% of the total number of shares of Voting Securities
outstanding;
(b) acquire, offer to acquire, announce an intention to acquire,
solicit an offer to sell or agree to acquire by purchase or otherwise, directly
or indirectly, a material portion of assets of CB&I or any of its Subsidiaries;
(c) initiate, solicit, propose, seek to effect or negotiate, or
announce an intent to effect, directly or indirectly, alone or with any other
Person, (i) any form of Business Combination or joint venture transaction
involving CB&I or any Affiliate thereof, or (ii) any Recapitalization or similar
transaction with respect to CB&I or any Affiliate thereof;
(d) initiate, solicit, propose, seek to effect or negotiate, or
announce an intent to make, directly or indirectly, any merger, tender or
exchange offer, consolidation, share exchange for any Securities, or disclose an
intent, purpose, plan or proposal with respect to CB&I, any of its Affiliates or
any Securities inconsistent with the provisions of this Agreement;
(e) initiate, cause, encourage, "solicit," or become a "participant" in
the "solicitation" of, "proxies" (as such terms are defined or used in Rule
14a-1 under the Exchange Act) in opposition to the recommendation of the
majority of the Supervisory Board or become a "participant" in an election
contest with respect to the election of directors of CB&I or with respect to any
Significant Transaction;
(f) initiate, solicit (or participate in a solicitation) or propose the
approval of one or more shareholder proposals with respect to CB&I or any of its
Affiliates or induce or encourage or attempt to induce or encourage any other
Person to initiate any such shareholder proposal;
(g) form, join, or in any way participate in, or encourage the
formation, of a partnership, limited partnership, syndicate or other "group" (as
defined in Section 13(d)(3) of the Exchange Act) or "person" (as defined in
Section 13(d)(3) of the Exchange Act and Section 2(2) of the Securities Act) or
enter into any contract, arrangement, understanding or relationship or otherwise
act in concert with any other Person for the purpose of acquiring or voting
Securities;
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(h) except as expressly provided in Article VI herein, seek election to
or seek to place a representative on the Supervisory Board of CB&I or any of its
Affiliates or seek the removal of any member of the Supervisory Board of CB&I or
any of its Affiliates;
(i) except for participation by any FRF Designee on the Supervisory
Board, act in concert with any other Person not an executive of CB&I to seek to
affect the management or Supervisory Board of CB&I or any of its Affiliates or
the business, operations or affairs of CB&I or any of its Affiliates;
(j) request CB&I to, or seek to cause CB&I (or its directors) to, call
any meeting of the shareholders of CB&I or any of its Affiliates;
(k) grant or agree to grant any proxy or other voting power to any
Person other than CB&I or the Persons designated by CB&I to vote at any meeting
of the shareholders of CB&I, or deposit any Voting Securities in a voting trust
or, except as specifically contemplated by this Agreement, subject them to a
voting agreement or other agreement or arrangement with respect to the voting of
such Voting Securities;
(l) disclose to any third party or in any filing with any governmental
authority any intention, plan or arrangement inconsistent with any of the
foregoing or with the restrictions on transfer set forth in this Agreement;
(m) make any public statements (or statements that must be publicly
disclosed) inconsistent with the provisions of this Agreement;
(n) (i) disclose any intention, enter into any discussions,
negotiations, arrangements or understandings with any third party with respect
to any of the foregoing, or (ii) initiate, advise, assist, induce or attempt to
induce, encourage or influence another Person to take any action with respect to
any of the foregoing or take any other action inconsistent with the foregoing;
or
(o) request a waiver, modification or amendment by the Supervisory
Board or CB&I of any of the foregoing restrictions.
Nothing in this Section 2.01 shall be construed to limit the right of
any director to communicate with any member of the Supervisory Board, any
executive officer of CB&I, counsel to CB&I or auditors for CB&I, as may be
necessary in such director's reasonable judgment, for the normal conduct and
discharge of such director's duties as a CB&I director in such manner as will
preserve the confidentiality thereof and will not result in an obligation of
CB&I or FRF or any of their respective Affiliates to make a public disclosure
with respect thereto.
Section 2.02 Business Combinations. (a) FRF agrees that, so long as
this Agreement remains in effect, with respect to any proposed Business
Combination or Recapitalization
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involving CB&I or any Affiliate of CB&I and any third party, each class of
Holders' Securities owned by FRF and its Affiliates and Associates will only be
voted, or tendered or exchanged (or withheld or withdrawn from tender or
exchange), and FRF and its Affiliates and Associates will otherwise act, only in
accordance with the recommendation of the Supervisory Board (and any special
committee of the Supervisory Board constituted for the purpose of evaluating one
or more such proposals). Subject to such restriction, FRF shall not be
prohibited by the provisions of Section 2.01 from submitting a competing
Business Combination or Recapitalization proposal to the Supervisory Board in
the event that the Supervisory Board publicly announces its determination to
recommend a Significant Transaction to CB&I shareholders subsequent to the
Effective Time.
(b) The parties hereto agree that the Articles of Association shall be
amended (i) to provide that any affiliate transaction involving FRF or its
Affiliates or any Business Combination with a Third Party or Recapitalization
otherwise requiring a shareholder vote shall require approval by at least 80% of
the Voting Securities then outstanding at a time when any Person (and its
Affiliates and Associates) or "group" owns 15% or more of the Voting Securities
then outstanding, and (ii) in such other respects listed on Annex A hereto as is
necessary or desirable to carry out the provisions and purposes of this
Agreement.
Section 2.03 Voting of Holders' Securities. FRF agrees that during the
term of this Agreement, with respect to any matter presented to shareholders of
CB&I for vote or approval (whether at a meeting or by written consent), each
class of Holders' Securities owned by FRF and its Affiliates and Associates
shall be present and voted (i) "for" the nominees recommended by the Supervisory
Board, provided CB&I is in compliance with the terms of Section 6.01 of this
Agreement, and (ii) "for" any proposal which is recommended by the Supervisory
Board and "against" any proposal that is not recommended by the Supervisory
Board; provided, however, that FRF and its Affiliates may, in their sole
discretion, vote the Securities held by them on any matter involving (i) the
appointment of auditors; (ii) the adoption of any Rights Agreement or any other
"poison pill" or similar shareholder rights plan which would preclude FRF from
effecting any transaction otherwise permitted herein; (iii) the migration of
CB&I from its current Organization State to any other Organization State (other
than in connection with a Business Combination with a Third Party); (iv) the
conversion of CB&I from its current corporate form to any other corporate form
(other than in connection with a Business Combination with a Third Party); or
(v) the amendment of the Articles of Association as to matters not contemplated
by this Agreement which would have a disproportionate material and adverse
effect on FRF versus other CB&I shareholders not contemplated by this Agreement.
The provisions of this Section 2.03 shall apply to both the casting of votes at
general meetings of shareholders and any execution of shareholder action by
written consent. FRF agrees, and shall cause its Affiliates, to execute and
deliver to the Secretary of CB&I not later than 20 days prior to the date of any
general meeting of shareholders of CB&I a proxy (in such form as provided by and
on behalf of the Supervisory Board) representing all Voting Securities
beneficially owned by FRF and its
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Affiliates and Associates voted in accordance with the provisions of this
Section 2.03 and this Agreement.
ARTICLE III
REGISTRATION RIGHTS
Section 3.01 Demand Registration.
(a) Subject to the terms of this Agreement, at any time after the date
hereof, the Holders of at least 75% of the then outstanding Holders' Securities
may request registration under the Securities Act of all or part of their
Holders' Securities on Form S-1 or S-3 or any similar registration (other than a
shelf registration); provided, that any such request shall cover either (i) at
least 20% of such Holders' Securities calculated as of the date of this
Agreement or (ii) such smaller number to the extent it represents all of the
remaining Holders' Securities. Within ten (10) days after receipt of any request
pursuant to this Section 3.01, CB&I will give written notice of such request to
all other Holders of Holders' Securities and will include in such registration
all Holders' Securities with respect to which CB&I has received written requests
for inclusion within thirty (30) days after delivery of CB&I's notice. All
registrations requested pursuant to this Section 3.01 are referred to herein as
"Demand Registrations."
(b) CB&I will not include in any Demand Registration any Securities
which are not Holders' Securities without the written consent of the Holders of
a majority of the Holders' Securities to be included in such Demand
Registration. If a Demand Registration is an underwritten public offering and
the managing underwriters advise CB&I in writing that in their opinion the
inclusion of the number of Holders' Securities and other Securities requested to
be included creates a substantial risk that the price per share of Securities
will be reduced, CB&I will include in such registration, prior to the inclusion
of any Securities which are not Holders' Securities, the number of Holders'
Securities requested to be included which in the opinion of such underwriters
can be sold without creating such a risk, pro rata among the respective Holders
of Holders' Securities on the basis of the number of Holders' Securities owned
by such Holders, with further successive pro rata allocations among the Holders
of Holders' Securities if any such Holder of Holders' Securities has requested
the registration of less than all such Holders' Securities such Holder is
entitled to register.
(c) Notwithstanding any of the foregoing, CB&I shall not be obligated
to effect any Demand Registration as follows:
(i) CB&I will not be obligated to effect more than one Demand
Registration within any twelve month period;
(ii) CB&I will not be obligated to effect any Demand
Registration during the
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period starting on the date 60 days prior to CB&I's estimated date of filing of,
and ending on the date 90 days immediately following the effective date of, any
registration statement pertaining to Securities of CB&I sold by CB&I, provided
that CB&I is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; and provided further that CB&I
may not, pursuant to this Section 3.01(c)(ii), delay implementation of a Demand
Registration more than once in any twelve (12) month period;
(iii) With respect to any Demand Registration, if (A) the
Supervisory Board reasonably and in good faith determines that such filing would
be materially detrimental to CB&I or require a disclosure of a material fact
that might reasonably be expected to have a Material Adverse Effect on CB&I or
on any plan or proposal by CB&I or any of its subsidiaries to engage in any
acquisition or disposition of assets or equity securities (other than in the
ordinary course of business ) or any merger, consolidation, tender offer,
material financing or other significant transaction and (B) CB&I shall furnish
the Holders of Holders' Securities who have requested a Demand Registration a
certificate signed by an executive officer of CB&I to such effect, CB&I may
postpone for up to ninety (90) days the filing or the effectiveness of a
registration statement for a Demand Registration; provided, however, that CB&I
may not postpone the filing or effectiveness of a registration statement for a
Demand Registration for more than ninety (90) days during any twelve (12) month
period; and
(iv) CB&I will not be obligated to effect any Demand
Registration after CB&I has effected two (2) Demand Registrations pursuant to
this Section 3.01, and such registrations have been declared or ordered
effective.
Section 3.02 Piggyback Registration.
(a) Whenever CB&I proposes to register any of its Securities under the
Securities Act (other than pursuant to a Demand Registration hereunder) and the
registration form to be used may be used for the registration of any Holders'
Securities (a "Piggyback Registration") (except Forms S-8 or S-4), CB&I will
give written notice, at least thirty (30) days prior to the proposed filing of a
registration statement, to all Holders of the Holders' Securities of its
intention to effect such a registration and will use reasonable best efforts to
include in such registration all Holders' Securities (in accordance with the
priorities set forth in Sections 3.02(b) and 3.02(c) below) with respect to
which CB&I has received written requests for inclusion within fifteen (15) days
after the delivery of CB&I's notice, specifying the number of Securities
intended to be registered.
(b) If a Piggyback Registration is an underwritten primary registration
on behalf of CB&I and the managing underwriters advise CB&I in writing that in
their opinion the number of Securities requested to be included in the
registration creates a substantial risk that the price per share of Securities
will be reduced, CB&I will include in such registration first, the securities
that CB&I proposes to sell, second, the Holders' Securities requested to be
included in such registration under this Agreement together with any Holders'
Securities requested to be included
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in such registration under the WEDGE Shareholder Agreement, pro rata among all
the Holders of such Holders' Securities on the basis of the number of shares
which are owned by such Holders, and third, other Securities requested to be
included in such registration to be allocated pro rata among the holders
thereof.
(c) If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of CB&I's securities and the managing
underwriters advise CB&I in writing that in their opinion the number of
Securities requested to be included in the registration creates a substantial
risk that the price per share of Securities will be reduced, CB&I will include
in such registration first, the Securities requested to be included therein by
the holders requesting such registration and the Holders' Securities requested
to be included in such registration under this Agreement together with any
Holders' Securities requested to be included in such registration under the
WEDGE Shareholder Agreement, pro rata among all the holders of such securities
on the basis of the number of shares of Securities or Holders' Securities which
are owned by such holders, and second, other Securities requested to be included
in such registration.
(d) If CB&I has previously filed a registration statement with respect
to Holders' Securities pursuant to Section 3.01 or pursuant to this Section
-3.02, and if such previous registration has not been withdrawn or abandoned,
CB&I will not file or cause to be effected any other registration of any of its
Securities or Securities convertible or exchangeable into or exercisable for its
Securities under the Securities Act (except on Form S-8 or Form S-4 or any
successor form thereto), whether on its own behalf or at the request of any
holder or holders of such Securities, until a period of at least one hundred
eighty (180) days has elapsed from the effective date of such previous
registration.
Section 3.03 Right to Terminate Registration. CB&I shall have the right
to terminate or withdraw any registration initiated by it under Section 3.02
prior to the effectiveness of such registration provided that no Holder has
elected to include Holders' Securities in such registration.
Section 3.04 Expenses of Registration.
(a) CB&I will pay all Registration Expenses for Demand Registrations
pursuant to Section 3.01 and for an unlimited number of Piggyback Registrations
pursuant to Section 3.02, provided, however, that CB&I shall not be obligated to
pay more than $400,000 in the aggregate for Registration Expenses with respect
to Demand Registrations. A registration will not count as one of the CB&I paid
Demand Registrations until it has become effective; provided, however, that in
any event CB&I will pay all Registration Expenses in connection with any
registration initiated as a Demand Registration for which CB&I was obligated to
pay. In excess of $400,000, the Registration Expenses for Demand Registrations
shall be borne by the Holders of Holders' Securities to be registered thereunder
pro rata based on the number of Holders' Securities and other Securities
requested or permitted to be included in such registration pursuant to the terms
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of this Agreement. If FRF effects a Piggyback Registration right hereunder
relating to a Demand Registration by WEDGE Group Incorporated under the WEDGE
Shareholder Agreement, FRF agrees to share pro rata with WEDGE Group
Incorporated any Registration Expenses which exceed the amount CB&I is obligated
to pay, and CB&I will cause any other Person which has a right to effect a
Piggyback Registration relating to a Demand Registration by FRF hereunder to
agree to similarly share such Registration Expenses.
(b) Except as provided in Section 3.04(a) hereof, all expenses incident
to CB&I's performance of or compliance with this Agreement, including, but not
limited to, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for CB&I and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other Persons retained by CB&I (all such expenses being herein called
"Registration Expenses"), will be borne by CB&I, provided that CB&I shall not be
required to pay sales commissions, discounts or transfer taxes or the cost of
legal counsel for the Holders. In addition, CB&I will pay its internal expenses
(including, but not limited to, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance obtained by
CB&I, and the expenses and fees for listing the Securities to be registered on
each securities exchange. If the registration request is subsequently withdrawn
at the request of a majority of the Holders of Holders' Securities to be
registered, the Holders of Holders' Securities shall forfeit their right to
reimbursement of expenses with respect to one Demand Registration unless the
Holders of Holders' Securities to be registered pay for all of the Registration
Expenses for such withdrawn registration or unless such registration is
withdrawn due to a material adverse change in the operations or results of CB&I.
Section 3.05 Registration Procedures. Whenever the Holders of Holders'
Securities have requested that any Holders' Securities be registered pursuant to
this Agreement, CB&I will use its reasonable best efforts to effect the
registration and sale of such Holders' Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, CB&I will as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Holders' Securities and use its reasonable best efforts to cause
such registration statement to become effective (provided that before filing a
registration statement or prospectus, or any amendments or supplements thereto,
CB&I will furnish copies of all such documents proposed to be filed to the
counsel or counsels for the Selling Holders of the Holders' Securities covered
by such registration statement);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus(es) used in
connection therewith as may be necessary to keep such registration statement
effective until the earlier of such time as all of such Holders'
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Securities have been disposed of in accordance with the intended methods of
disposition set forth in such registration statement or the expiration of 135
days after such registration statement becomes effective (provided that such
135-day period shall be extended (i) in the case of a Demand Registration for
such number of days that equals the number of days elapsing from (A) the date
written notice contemplated by Section 3.05(e) hereof is given by CB&I to (B)
the date on which CB&I delivers to the Selling Holders the supplement or
amendment contemplated by Section 3.05(e) hereof and (ii) for a period of time
equal to the period the Holder refrains from selling any Holders' Securities
included in such registration at the request of CB&I or an underwriter), and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in such registration statement;
(c) furnish to each Selling Holder of Holders' Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus(es) included in such registration statement (including each
preliminary prospectus) and such other documents as such Selling Holder may
reasonably request in order to facilitate the disposition of the Holders'
Securities owned by such Selling Holder;
(d) use its reasonable best efforts to register or qualify such
Holders' Securities under such other securities or blue sky laws of such
jurisdictions as any Selling Holder reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition in such jurisdictions of the
Holders' Securities owned by such Selling Holder (provided that CB&I will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
consent to general service of process in any such jurisdiction, or (iii) subject
itself to taxation in any such jurisdiction);
(e) notify each Selling Holder of such Holders' Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, CB&I will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Holders' Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
(f) cause all such Holders' Securities to be listed on each securities
exchange on which similar securities issued by CB&I are then listed or if no
such securities are then listed, such securities exchange as the Selling Holders
of a majority of the Holders' Securities included in such registration may
request;
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(g) provide a transfer agent and registrar for all such Holders'
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other customary actions as the
Selling Holders of a majority of the Holders' Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Holders' Securities (including, but not limited to,
effecting a stock split or a combination of shares);
(i) make available for inspection by any Selling Holder of Holders'
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such Selling Holder or underwriter, all financial and other records,
pertinent corporate documents and properties of CB&I, and cause CB&I's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such Selling Holder, underwriter, attorney,
accountant or agent in connection with such registration statement; provided,
however, that any records, information or documents that are furnished by CB&I
and that are non-public shall be used only in connection with such registration
and shall be kept strictly confidential by any Selling Holder of Holders'
Securities except to the extent disclosure of such records, information or
documents is required by written order of a court or other governmental
authority having jurisdiction;
(j) advise each Selling Holder of such Holders' Securities, promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
such purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued; and
(k) furnish on the date or dates provided for in the underwriting
agreement: (i) an opinion of counsel, addressed to the underwriters, covering
such matters as such counsel and underwriters may reasonably agree upon,
including such matters as are customarily furnished in connection with an
underwritten offering, and (ii) a letter or letters from the independent
certified public accountants of CB&I addressed to the underwriters, covering
such matters as such accountants and underwriters may reasonably agree upon, in
which letter(s) such accountants shall state, without limiting the generality of
the foregoing, that they are independent certified public accountants within the
meaning of the Securities Act and that in their opinion the financial statements
and other financial data of CB&I included in the registration statement, the
prospectus(es), or any amendment or supplement thereto, comply in all material
respects with the applicable accounting requirements of the Securities Act.
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Section 3.06 Indemnification; Contribution.
(a) By CB&I. To the extent permitted by law, (i) CB&I will indemnify
each Selling Holder, each of its officers and directors, and each person
controlling such Selling Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions or proceedings in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (except insofar as the
same are caused by or contained in any information furnished in writing to CB&I
by such Holder expressly for use therein or by such Holder's failure to deliver
a copy of the prospectus or any amendments or supplements thereto after CB&I has
furnished such Holder with a sufficient number of copies of the same), or any
violation by CB&I of the Securities Act or any rule or regulation promulgated
under the Securities Act applicable to CB&I in connection with any such
registration, qualification or compliance, and (ii) CB&I will reimburse each
such Selling Holder, each of its officers, directors, and each person
controlling such Selling Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing, settling or defending any
such claim, loss, damage, liability or action, provided, in the case of (i) and
(ii), any indemnification by CB&I shall be proportionate to reflect the relative
fault of CB&I on the one hand, and the Selling Holder on the other, with respect
to the statements or omissions which resulted in such expenses, claims, losses,
damages, liabilities or action in respect thereof, as well as any other
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
CB&I or the Selling Holder, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission, but not by reference to stock ownership in CB&I.
(b) By Selling Holders. To the extent permitted by law, each Selling
Holder (i) will indemnify CB&I, each of its officers and directors, and each
underwriter, if any, of Securities covered by such a registration statement,
each person who controls CB&I or such underwriter within the meaning of Section
15 of the Securities Act, and each other Selling Holder, each of its officers
and directors, and each person controlling such Selling Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions or proceedings in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact
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required to be stated therein or necessary to make the statements therein not
misleading, and (ii) will reimburse CB&I, such Selling Holders, such officers,
directors, partners, legal counsel, persons, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating, settling or defending any such claim, loss, damage, liability or
action, but, in the case of (i) and (ii), only to the extent that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to CB&I for the acknowledged purpose of inclusion in such registration
statement, prospectus or preliminary prospectus. Notwithstanding the foregoing,
the liability of each Selling Holder under this subsection (b) shall be limited
in an amount equal to the net proceeds of the shares sold by such Selling
Holder, unless such liability arises out of or is based on willful misconduct by
such Selling Holder.
(c) Procedure for Indemnification. Each party indemnified under
subsection (a) or (b) of this Section 3.06 (the "Indemnified Party") shall,
promptly after receipt of actual notice of any claim or the commencement of any
action against such Indemnified Party in respect of which indemnity may be
sought, notify the party required to provide indemnification (the "Indemnifying
Party") in writing of the claim or the commencement thereof, provided that the
failure of the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which it may have to an
Indemnified Party on account of the indemnity agreement contained in subsection
(a) or (b) of this Section 3.06, unless the Indemnifying Party was materially
prejudiced by such failure, and in no event shall relieve the Indemnifying Party
from any other liability which it may have to such Indemnified Party. If any
such claim or action shall be brought against an Indemnified Party, it shall
notify the Indemnifying Party thereof and the Indemnifying Party shall be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified Indemnifying Party, to assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Party. After notice from
the Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable
(except to the extent the proviso to this sentence is applicable, in which event
it will be so liable) to the Indemnified Party under this Section 3.06 for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that each Indemnified Party shall have the right to
employ separate counsel to represent it and assume its defense (in which case,
the Indemnifying Party shall not represent it) if (i) upon the advice of
counsel, the representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, or
(ii) in the event the Indemnifying Party has not assumed the defense thereof
within 10 days of receipt of notice of such claim or commencement of action, and
in which case the fees and expenses of one such separate counsel shall be paid
by the Indemnifying Party. The Indemnifying Party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the fees and expenses of more than one firm for all such Indemnified Parties,
unless conflicting
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interests of the Indemnified Parties make the retention of one firm on behalf of
all of them unreasonable. If any Indemnified Party employs such separate counsel
it will not enter into any settlement agreement which is not approved by the
Indemnifying Party, such approval not to be unreasonably withheld. If the
Indemnifying Party so assumes the defense thereof, it may not agree to any
settlement of any such claim or action as the result of which any remedy or
relief, other than monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the Indemnified Party,
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld. In any action hereunder as to which the
Indemnifying Party has assumed the defense thereof with counsel reasonably
satisfactory to the Indemnified Party, the Indemnified Party shall continue to
be entitled to participate in the defense thereof with counsel of its own
choice, but, except as set forth above, the Indemnifying Party shall not be
obligated hereunder to reimburse the Indemnified Party for the costs thereof.
Each Indemnified Party shall furnish such information regarding itself or the
claim in question as an Indemnifying Party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(d) Contribution. If the indemnification provided for in this Section
3.06 shall for any reason be unavailable to an Indemnified Party in respect of
any loss, claim, damage or liability, or any action in respect thereof, referred
to therein, then each Indemnifying Party shall, in lieu of indemnifying such
Indemnified Party, contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the Indemnifying Party on the one hand, and the Indemnified Party on
the other, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party on the one hand, or the
Indemnified Party on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission, but not by reference to any Indemnified Party's stock
ownership in CB&I. In no event, however, shall a Selling Holder be required to
contribute in excess of the amount of the net proceeds received by such Selling
Holder in connection with the sale of Holders' Securities in the offering which
is the subject of such loss, claim, damage or liability. The amount paid or
payable by an Indemnified Party as a result of the loss, claim, damage or
liability, or action in respect thereof referred to above in this subsection (d)
shall be deemed to include, for purposes of this paragraph, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating, settling or defending any such action or claim. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
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(e) Conflicts and Controlling Language. Notwithstanding the foregoing,
to the extent that the provisions on indemnification and contribution contained
in the underwriting agreement entered into in connection with an underwritten
public offering are in conflict with the foregoing provisions, the provisions in
the underwriting agreement shall control.
Section 3.07 Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell its Securities on the basis provided in any
underwriting arrangements approved by such Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements. The foregoing notwithstanding, with respect to any of the
documents and/or agreements referred to in this Section 3.07, (i) no Selling
Holder of Holders' Securities shall be required to make any representations and
warranties with respect to or on behalf of CB&I or any other shareholder of CB&I
and (ii) the liability of any holder of Holders' Securities shall be limited as
provided in Section 3.06(b).
Section 3.08 Information by Selling Holder. Selling Holders shall
promptly furnish to CB&I such information regarding such Selling Holders as
shall be necessary to enable CB&I to comply with the provisions hereof in
connection with any registration referred to in this Agreement.
Section 3.09 Rule 144 Reporting. At the request of any Selling Holder
of Holders' Securities who proposes to sell securities in compliance with Rule
144 of the Commission, CB&I will (i) forthwith furnish to such Selling Holder a
written statement of compliance with the filing requirements of the Commission
as set forth in Rule 144, as such rule may be amended from time to time and (ii)
make available to the public and such holders such information as will enable
the Selling Holders of Holders' Securities to make sales pursuant to Rule 144.
Section 3.10 Consistent Restrictions on Transfer. CB&I shall be
permitted, and it shall not constitute a breach of the terms of this Article
III, to impose restrictions on transfer of Holders' Securities under a
registration statement consistent with the terms of Article IV hereof.
ARTICLE IV
TRANSFERS OF HOLDERS' SECURITIES
Section 4.01 Restrictions on Transfer.
(a) During the term of this Agreement, FRF agrees that it will not, and
it will cause each of its Affiliates who acquire Holders' Securities pursuant to
Section 4.02(d) of this Agreement not to, (i) Transfer any Holders' Securities,
except as permitted by or in accordance
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with this Agreement, or (ii) convert registered shares of Holders' Securities
into bearer shares of Holders' Securities or acquire beneficial ownership of
bearer shares of Holders' Securities, and the parties hereby agree that
notwithstanding the provisions of the Articles of Association, FRF will not
request and CB&I will not be bound to honor a request for such conversion. All
Holders' Securities will be held in certificated form.
(b) Except for Transfers pursuant to Section 4.02, FRF and its
Affiliates may not, without the prior written consent of CB&I, transfer any
Holders' Securities to any Person who FRF or its Affiliates has reason to
believe after reasonable investigation (which shall include receipt of
appropriate written representations from the proposed transferee and a review of
statements filed with the Commission pursuant to Section 13(d) of the Exchange
Act) (i) either has filed a Schedule 13D under the Exchange Act with respect to
CB&I or would be required to file a Schedule 13D under the Exchange Act with
respect to CB&I due to a change in intent or percentage ownership, (ii) as a
result of such Transfer, would beneficially own more than 10% of Voting
Securities then outstanding, or (iii) is a Competitor.
Section 4.02 Exceptions to Restrictions. Subject to all applicable
laws, the restrictions on Transfer set forth in Section 4.01 hereof shall not
apply to any of the following:
(a) a Transfer of some or all of the Holders' Securities pursuant to a
bona fide underwritten public offering;
(b) a Transfer of some or all of the Holders' Securities as permitted
under Rule 144 of the Securities Act in an unsolicited "broker's transaction"
(as defined in Rule 144) on a securities exchange in compliance with the volume
limitations of Rule 144 where FRF has no knowledge that the purchaser of such
Securities is any of the Persons described in subsections 4.01(b)(i), (ii) or
(iii) above;
(c) a Transfer of some or all of the Holders' Securities in any
Business Combination or Recapitalization which is recommended to shareholders of
CB&I by the Supervisory Board;
(d) a Transfer of some or all of the Holders' Securities to an
Affiliate of FRF, provided that such Affiliate shall agree to the provisions of
this Agreement and FRF will remain liable for the performance by such Affiliate
of its obligations under this Agreement;
(e) a Transfer of some or all of the Holders' Securities in connection
with a pledge or hypothecation to a financial institution to secure a bona fide
loan; provided, however, that any foreclosure or enforcement of such pledge or
hypothecation by the pledgee shall be subject to the procedures set forth in
Article V; and
▇-▇▇
▇▇▇
(▇) a Transfer or Transfers, once per calendar quarter, to any
Institutional Investor which, together with its Affiliates as a result of such
Transfer, would beneficially own Securities not representing more than 5% of
Voting Securities.
Section 4.03 Other Transfers. In the event that FRF desires to
Transfer the Holders' Securities in a manner not specifically permitted under
Section 4.02 of this Agreement, FRF may submit a written Notice of Intention to
CB&I in accordance with the procedures set forth in Article V.
Section 4.04 Improper Transfer. Any attempt to Transfer any shares of
Holders' Securities during the term of this Agreement not in accordance with
this Agreement will be null and void and CB&I will not give, nor permit the
transfer agent of CB&I to give, any effect to such attempted Transfer in its
stock records.
Section 4.05 Restrictive Legend.
(a) A copy of this Agreement will be filed with the Secretary of CB&I
and kept with the records of CB&I. All certificates representing shares of
Holders' Securities hereafter issued to or acquired by WGI will bear the
following legend noted conspicuously on such certificates:
"THE ISSUANCE OF THE SHARES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY
MERGER OR OTHERWISE), ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH
TRANSFER IS EXEMPT FROM REGISTRATION, AND CHICAGO BRIDGE & IRON COMPANY
N.V. (THE "COMPANY") SHALL HAVE BEEN FURNISHED WITH AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, TO SUCH EFFECT.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER AS SET FORTH IN THAT CERTAIN SHAREHOLDER
AGREEMENT DATED AS OF ___________, 2000 BETWEEN THE COMPANY AND FIRST
RESERVE FUND VIII, L.P. (THE "SHAREHOLDER AGREEMENT"). NO TRANSFER OF
THESE SHARES WILL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND
CONDITIONS OF SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH IN
FULL AND NO PERSON MAY REQUEST THE COMPANY TO RECORD THE TRANSFER OF
ANY SHARES IF SUCH
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TRANSFER IS IN VIOLATION OF SUCH SHAREHOLDER AGREEMENT. A COPY OF THE
SHAREHOLDER AGREEMENT IS ON FILE AT THE ADMINISTRATIVE OFFICES OF THE
COMPANY IN PLAINFIELD, ILLINOIS AND WILL BE FURNISHED WITHOUT CHARGE TO
THE HOLDER OF SUCH SHARES UPON WRITTEN REQUEST. THE SHARES EVIDENCED BY
THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON VOTING PROVIDED FOR IN
THE SHAREHOLDER AGREEMENT AND NO VOTE OF SUCH SHARES THAT CONTRAVENES
THE SHAREHOLDER AGREEMENT SHALL BE EFFECTIVE."
(b) Until such time as the Holders' Securities have been registered
pursuant to a registration statement under the Securities Act or sold pursuant
to Rule 144 under the Securities Act, the certificates representing the Holders'
Securities (including, without limitation, all certificates issued upon Transfer
or in exchange thereof or substitution therefor) will also bear any legend
required under any other applicable laws, including state securities or blue sky
laws.
(c) CB&I may make a notation on its records or give stop-transfer
instructions to any transfer agents or registrars for the Holders' Securities in
order to implement the restrictions set forth in this Article IV.
(d) In the event FRF acquires any other or additional Holders'
Securities, FRF will submit all certificates representing such Holders'
Securities to CB&I so that the legend or legends required by this Section 4.05
may be placed thereon.
ARTICLE V
RIGHTS OF FIRST OFFER
Section 5.01 Sale by FRF.
(a) Except for Transfers permitted by Section 4.02, during the term of
this Agreement, FRF shall not, and shall cause each of its Affiliates not to,
sell any shares of Holders' Securities to any Person until it has first made an
offer (the "First Offer") to sell such shares to CB&I in accordance with this
Article V and such First Offer shall have been rejected or not accepted within
the Applicable Acceptance Period (as hereinafter defined).
(b) The First Offer to CB&I shall be set forth in the form of a notice
made in writing (the "Notice of Intention") to the Chief Financial Officer (fax
(▇▇▇) ▇▇▇-▇▇▇▇) or General Counsel (fax (▇▇▇) ▇▇▇-▇▇▇▇) of CB&I setting forth
(i) FRF's desire to make a sale; (ii) the number of shares of Holders'
Securities proposed to be sold (the "Offered Shares"); and (iii) the price (the
"Offer Price") and other terms on which the Holders' intend to offer to sell the
Offered Shares.
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(c) Upon receipt of the Notice of Intention, CB&I will have the right
to purchase the Offered Shares at the Offer Price, exercisable by the delivery
of an acceptance in the form of a notice in writing to FRF by CB&I (the "Notice
of Exercise") at any time within one business day from the date of CB&I's
receipt of the Notice of Intention (the "Applicable Acceptance Period"). In any
case, CB&I will use its best efforts to respond as promptly as possible to any
Notice of Intention and, at the request of FRF, may, in its sole discretion,
provide advance approval of certain Transfers or a waiver of its rights under
this Article V. The right of CB&I to purchase the Offered Shares will terminate
if such Notice of Exercise is not delivered within the Applicable Acceptable
Period or if CB&I sooner notifies FRF that it declines to exercise such right.
CB&I may assign its right to purchase the Offered Shares pursuant to a specific
Notice of Intention, once received by CB&I, to any Person, but may not otherwise
assign its rights under this Article V.
(d) In the event that CB&I exercises its right to purchase the Offered
Shares in accordance with Section 5.01(c) hereof, then FRF must sell, and CB&I
must purchase, the Offered Shares to CB&I at the Offer Price within thirty (30)
days from the date of receipt of the Notice of Exercise delivered by CB&I,
subject to receipt of any required material third-party or governmental
approvals, compliance with applicable laws and the absence of any injunction or
similar legal order preventing such transaction.
Section 5.02 Purchase of the Offered Shares. In the event CB&I rejects
the First Offer or fails to deliver a Notice of Exercise within the Applicable
Acceptance Period, then FRF and its Affiliates may sell such Offered Shares at
the Offer Price or higher within sixty (60) days after the delivery of such
rejection or, in the case of a failure to deliver a Notice of Exercise, within
sixty (60) days after the expiration of the Applicable Acceptance Period,
subject to the other terms and conditions of this Agreement. If FRF and its
Affiliates do not sell all of the Offered Shares during such sixty (60) day
period, any unsold Offered Shares shall again become subject to the Right of
First Offer contained in this Article V.
ARTICLE VI
BOARD REPRESENTATION
Section 6.01 Supervisory Board Composition. (a) CB&I will have used its
best efforts to cause the Supervisory Board to increase the number of directors
comprising the Supervisory Board immediately after the Effective Time and the
consummation of the First Reserve Deal from eight (8) to twelve (12). At the
Shareholders' Meeting prior to the Effective Time and the consummation of the
First Reserve Deal, CB&I will have used its best efforts to cause the
Supervisory Board to make binding nominations and to recommend for approval by
CB&I shareholders the appointment of up to two (2) FRF nominees (whom FRF shall
designate, together with a back-up nominee for each position, prior to the
mailing of the CB&I Proxy
▇-▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇) to serve from the time of consummation of the First Reserve Deal in
the classes of Supervisory Board directors expiring in 2001 and 2003. Directors
nominated by FRF pursuant to this Article VI are referred to herein as "FRF
Designees," directors nominated by WEDGE Group Incorporated pursuant to the
WEDGE Shareholder Agreement are referred to herein as "WGI Designees," and all
other directors are referred to herein as "Noninvestor Directors".
(b) Beginning with CB&I's 2001 annual general meeting of shareholders
and at each shareholders meeting for the appointment of directors thereafter at
a time when FRF and its Affiliates and Associates beneficially own at least
3,083,871 shares of Voting Securities (which for this purpose shall exclude
derivative Securities), CB&I will cause the Supervisory Board to include as
nominees for directors (pursuant to a binding nomination, if permitted by the
Articles of Association) and to solicit proxies for that number of FRF Designees
such that the total number of FRF Designees on the Supervisory Board immediately
after such election will be two (2). FRF shall provide the Secretary of CB&I in
writing within 10 days after CB&I notifies FRF that CB&I is preparing its proxy
statement with the names and (i) required background information under
Regulation 14A of the Exchange Act, Dutch law and the rules of any exchange and
(ii) such other information regarding such individuals and their affiliations as
CB&I may reasonably request, regarding its FRF Designees (and back-up nominees,
who shall be designated by FRF and who shall be the second nominee for each
position for which the FRF Designees are nominated) for the next election of
directors. The nominees for the remaining directors comprising the Supervisory
Board, other than any WGI Designees, shall be selected by the Noninvestor
Directors (upon recommendation of the CB&I Nominating Committee or otherwise),
and FRF and the FRF Designees shall use their best efforts (including voting as
shareholders) to cause the election of the slate of directors recommended by the
Supervisory Board; provided, however, that FRF and the FRF Designees shall not
be so obligated if the FRF Designees are not included in such slate of
directors.
(c) Each FRF Designee shall have such business or technical experience,
stature and character as is commensurate with service on the board of directors
of a publicly-held enterprise (any managing director of First Reserve
Corporation and current Supervisory Board members shall be deemed to have such
qualifications). No FRF Designee who is an officer, director, partner or
principal shareholder of a Competitor shall serve as a director of CB&I.
(d) In the event that the aggregate beneficial ownership of FRF and its
Affiliates and Associates shall be less than 3,083,871 shares of the Voting
Securities, the number of FRF Designees shall be reduced as follows:
FRF Ownership Number of
of Voting Securities FRF Designees
-------------------- -------------
Less than 3,083,871 shares, but at least 10% one (1)
of Voting Securities outstanding
Less than 10% of Voting Securities outstanding 0
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If for any period of 30 consecutive days FRF and its Affiliates and Associates
beneficially own such number of Voting Securities then outstanding that would
entitle them to fewer than the number of FRF Designees that were in office
immediately after the last shareholders meeting to appoint directors, at the
request of the Supervisory Board, FRF shall use its best efforts to cause the
resignation of such number of FRF Designees in excess of the number to which it
would be entitled pursuant to this Section 6.01(d). If for any period of 30
consecutive days FRF and its Affiliates and Associates beneficially own in the
aggregate less than 10% of the Voting Securities then outstanding, FRF shall not
then or thereafter be entitled to designate any nominee to the Supervisory
Board.
(e) So long as FRF and its Affiliates and Associates are entitled to
designate at least two FRF Designees, each committee of the Supervisory Board
(other than the Nominating Committee or any special committee of Independent
Directors constituted for the purposes set forth in the following sentence)
shall at all times include at least one FRF Designee and no action by any such
committee shall be valid unless taken at a meeting for which adequate notice has
been duly given to or waived by the members of such committee. The FRF Designee
designated by FRF to serve on any committee of the Supervisory Board may
designate as his alternate another FRF Designee designated by FRF. The parties
hereto agree that the regulations of the Supervisory Board shall provide that a
special committee of the Supervisory Board composed entirely of disinterested
Independent Directors shall be constituted for the purpose of evaluating (i) any
Significant Transaction or (ii) any transaction, issue or matter involving FRF
or its Affiliates or Associates, which special committee shall report its
conclusions and recommendations to the Supervisory Board as a whole.
(f) So long as FRF and its Affiliates and Associates are entitled to
designate at least one FRF Designee, FRF shall have a right (i) to receive all
notices, reports and other communications sent to CB&I directors at such time as
they are transmitted to CB&I directors and to receive reasonable notice, and to
have one representative attend, any meeting of the Supervisory Board and the
Management Board, (ii) to consult with and advise members of senior management
of CB&I, and (iii) upon reasonable notice, to have equivalent access to the
books and records of CB&I as that generally afforded to CB&I directors.
Section 6.02 Director Compensation. FRF Designees will be compensated
in the same manner as other nominees or directors (including reimbursement of
expenses).
Section 6.03 Indemnification. Upon the election of any FRF Designee to
the Supervisory Board, CB&I shall (a) indemnify and hold harmless (and
exculpate) against any and all liabilities and claims against him as a result of
his affiliation with CB&I and (b) provide to any FRF Designee liability
insurance, in each case of clause (a) and (b) above to the same extent provided
or made available to other members of the Supervisory Board.
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ARTICLE VII
MISCELLANEOUS
Section 7.01 Assignment of Holders' Rights; Third Party Beneficiaries.
(a) The rights and obligations of FRF under this Agreement may be assigned or
transferred by any Holder to an Assignee, provided that all of the following
conditions are satisfied: (i) such assignment is effected in accordance with
applicable securities laws and the provisions of this Agreement; (ii) such
Assignee agrees in writing to become subject to the terms of this Agreement
(provided, however, that such Assignee other than an Affiliate of FRF shall not
have the rights of FRF under Article VI hereof unless specifically agreed to by
CB&I in writing); and (iii) CB&I is given written notice by such Holder of such
assignment, stating the name and address of the Assignee and identifying the
Holders' Securities with respect to which such rights are being assigned.
(b) Except as provided in Section 7.01(a), this Agreement and the
rights of the parties hereunder may not be assigned and shall be binding on and
inure to the benefit of the parties hereto and their successors.
(c) This Agreement is expressly intended to confer upon the present and
future shareholders of CB&I (including ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as
signatories hereto), as third party beneficiaries, the benefits of all covenants
and agreements made by FRF herein with privity to enforce such provisions with
all rights and remedies under applicable law, including the right of specific
performance set forth in Section 7.08. Each CB&I shareholder not signatory to
this Agreement shall be deemed to have been notified of such intended third
party benefit by disclosure thereof in any public filing by CB&I concerning this
Agreement and, to the extent acknowledgment of such benefits is required by the
law of any jurisdiction, to have acknowledged and accepted such benefits as a
third party beneficiary by casting his vote concerning the transactions
contemplated by this Agreement and the Purchase Agreement at the Shareholders'
Meeting.
Section 7.02 Term; Effectiveness. The term of this Agreement will begin
(and this Agreement will become effective) upon the date hereof and will
continue until the date on which FRF and its Affiliates and Associates no longer
beneficially own Securities representing in the aggregate at least ten percent
(10%) of the total number of shares of Voting Securities then outstanding;
provided, however, that the Holders shall continue to have the rights provided
for in Article III of this Agreement as long as they beneficially own in the
aggregate at least five percent (5%) of the total number of shares of Voting
Securities then outstanding. The provisions of Sections 3.04, 3.06 and 6.03
hereof shall survive the termination of this Agreement.
Section 7.03 Entire Agreement; Amendment; Waivers. This Agreement
constitutes the entire agreement and understanding between FRF and CB&I and
supersedes all prior agreements
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and understandings, both written and oral, relating to the subject matter of
this Agreement. This Agreement may be amended, modified or supplemented, and any
right hereunder may be waived, if, but only if, that amendment, modification,
supplement or waiver is in writing and signed by FRF and CB&I and approved by a
majority of the members of a special committee of the Supervisory Board of the
type referred to in Section 6.01(e) (but shall not require the consent of any
third party beneficiaries referred to in Section 7.01(c)). The waiver of any of
the terms and conditions hereof shall not be construed or interpreted as, or
deemed to be, a waiver of any other term or condition hereof.
Section 7.04 Notices. All notices required or permitted hereunder shall
be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by facsimile, telex or courier service,
when actually received by the party to whom notice is sent or (b) if delivered
by mail (whether actually received or not), at the close of business on the
third business day next following the day when placed in the mail, postage
prepaid, certified or registered, addressed to the appropriate party or parties,
at the address of such party set forth below (or at such other address as such
party may designate by written notice to all other parties in accordance
herewith):
(1) if to CB&I, addressed to it at:
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman of the Supervisory Board
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
; and
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(2) if to Seller, addressed to it at:
First Reserve Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
First Reserve Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 7.05 GOVERNING LAW, JURISDICTION AND VENUE. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
(A) NEW YORK COURT, OR FEDERAL COURT OF THE UNITED STATES OF AMERICA, SITTING IN
THE STATE OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, OR (B) DUTCH
COURT SITTING IN THE NETHERLANDS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RELATING THERETO, AND EACH OF THE
PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY (i) AGREES THAT ANY CLAIM IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT (OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT) OR
IN SUCH DUTCH COURT, (ii) WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND
EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH NEW YORK STATE OR
FEDERAL COURT OR IN SUCH DUTCH COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH NEW YORK STATE OR FEDERAL COURT OR IN SUCH
DUTCH COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
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MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.04.
Section 7.06 WAIVER OF CERTAIN CLAIMS. NEITHER FRF NOR CB&I SHALL BE
ENTITLED TO RECOVER FROM THE OTHER ANY LOSSES, COSTS, EXPENSES OR DAMAGES
ARISING UNDER THIS AGREEMENT OR IN CONNECTION WITH OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT IN ANY AMOUNT IN EXCESS OF THE
ACTUAL COMPENSATORY DAMAGES, COURT OR ARBITRATION COSTS AND REASONABLE ATTORNEY
FEES AND EXPENSES, SUFFERED BY SUCH PARTY. FRF AND CB&I HEREBY IRREVOCABLY WAIVE
ANY AND ALL RIGHTS TO ASSERT ANY CLAIM FOR INDIRECT, CONSEQUENTIAL, SPECIAL,
EXEMPLARY OR PUNITIVE DAMAGES ARISING IN CONNECTION WITH OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT. THE WAIVER PROVISIONS PROVIDED FOR
IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES
AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE
OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF ANY PERSON WHICH
SEEKS THE BENEFIT OF SUCH PROVISION. FRF AND CB&I ACKNOWLEDGE THAT THIS
STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
Section 7.07 Exercise of Rights and Remedies. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any party hereto as a result of any breach or default
hereunder by any other party hereto shall impair any such right, power or
remedy, nor shall it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver.
Section 7.08 Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by a party of any covenants or
agreements contained in this Agreement will cause the other party to sustain
injury for which it would not have an adequate remedy at law for money damages.
Therefore each of the parties hereto agrees that in the event of any such
breach, the aggrieved party (including any present or future shareholder of
CB&I) shall be entitled to the remedy of specific performance of such covenants
and agreements and preliminary and permanent injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity, and the parties hereto further agree to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief.
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Section 7.09 Conflict with Articles. It is expressly agreed that
whether or not the Articles of Association fully incorporate the provisions
hereof, or any of them, the parties' rights and obligations shall be governed by
this Agreement which shall prevail, to the extent lawful, in the event of any
ambiguity or inconsistency between this Agreement and the Articles of
Association.
Section 7.10 Reformation and Severability. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
Section 7.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 7.12 Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.
FIRST RESERVE FUND VIII, L.P.
BY ITS GENERAL PARTNER,
FIRST RESERVE GP VIII, L.P.
BY ITS GENERAL PARTNER, FIRST RESERVE
CORPORATION
By:
----------------------------------
Title:
CHICAGO BRIDGE & IRON COMPANY N.V.
BY: CHICAGO BRIDGE & IRON COMPANY
B.V., ITS MANAGING DIRECTOR
By:
----------------------------------
Title: Managing Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
CB&I Shareholder
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
CB&I Shareholder
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Annex A
1. Amend the Articles of Association to provide that any transaction
involving WGI or First Reserve (or their respective Affiliates) or any
Business Combination or Recapitalization otherwise requiring a
shareholder vote shall require approval by at least 80% of the Voting
Securities then outstanding at a time when any Person (and its
Affiliates and Associates) or "group" owns 15% or more of the Voting
Securities then outstanding.
2. Amend the Articles of Association to provide that registered shares
shall be converted into bearer shares at the written request of a
shareholder, unless such conversion has been limited or excluded upon
issuance of those shares.
3. Amend the Articles of Association to add the requirement in a transfer
of registered shares that the endorsement by the company or its
transfer agent be made upon the share certificate and that the share
certificate must be delivered to the company or its agent upon
transfer; transfers not consistent with this requirement will not be
enforceable against the company.
4. Amend the Articles of Association to provide that the Supervisory Board
may draw up rules and regulations pertaining to voting, including the
nomination of directors, and provisions relating to Board composition
and governance, and to give effect to the matters agreed upon in the
Shareholder Agreements.
A-63
141
EXHIBIT B
FORM OF OPINION OF SELLER'S LEGAL COUNSEL
The Seller's legal counsel shall opine as to the following matters,
subject to standard exceptions and assumptions:
1. Each of WGI and WGI Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
the requisite corporate power and authority to enter into and perform the
Purchase Agreement and the Shareholder Agreement and the transactions
contemplated thereby.
2. HBI is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has the
requisite legal and limited liability power and authority to own or lease its
properties and to conduct its business as now being conducted. ▇▇▇▇-▇▇▇▇▇
Engineers is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware with the requisite corporate
power and authority to own or lease its properties and to conduct its business
as now being conducted.
3. The authorized Capital Stock of HBI consists of [_________
membership interests (the "Units")], all of which have been validly issued and
are outstanding, fully paid and non-assessable, and were not issued in violation
of the preemptive rights of any person.
4. Seller owns of record and beneficially the [Units] free and clear of
any pledge, lien, encumbrance or security interest, and, except for the Purchase
Agreement, there are no outstanding subscriptions, options or other agreements
or commitments to purchase or issue [interests or units] of HBI's Capital Stock
or securities convertible into or exchangeable for [interests or units] of HBI's
Capital Stock.
5. The execution, delivery and performance of the Purchase Agreement
and the Shareholder Agreement have been duly authorized by WGI and WGI Sub, as
applicable, and each of the Purchase Agreement and the Shareholder Agreement
constitutes the legal, valid and binding obligation of WGI and WGI Sub as
applicable, enforceable in accordance with its terms.
6. Neither the execution and delivery of the Purchase Agreement or the
Shareholder Agreement, nor consummation of the transactions contemplated
therein, nor performance by WGI and WGI Sub of the terms thereof, will (1)
violate any provision of law of the United States or of the State of Texas or
any published rule or regulation thereunder, as in effect on the date hereof, or
of any order, writ, injunction or decree applicable to WGI, WGI Sub or HBI, or
(2) conflict with, or result in a breach or default, or the creation of any
lien, under, any of the terms,
B-1
142
conditions or provisions of any note, indenture, mortgage, license or other
material agreement or obligation (including the Certificate of Incorporation and
By-Laws of WGI or WGI Sub and the [Limited Liability Company Agreement] of HBI)
to which WGI, WGI Sub or HBI is a party, or by which WGI, WGI Sub or HBI is
bound.
7. Except as set forth on Schedule 4.06 of the Purchase Agreement, the
undersigned is not aware of any litigation pending or threatened against or
involving WGI, WGI Sub, HBI or any HBI Subsidiary which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect on
HBI and the HBI Subsidiaries taken as a whole.
B-2
143
EXHIBIT C
FORM OF OPINION OF BUYER'S LEGAL COUNSEL
The Buyer's legal counsel shall opine as to the following matters,
subject to standard exceptions and assumptions:
1. CB&I has been duly incorporated and is validly existing as a legal
entity in the form of a limited liability company under the laws of the
Netherlands. CB&I has the requisite corporate power and corporate authority to
enter into and perform the Purchase Agreement and the Shareholder Agreement and
the transactions contemplated therein.
2. CB&I Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has the requisite
corporate power and authority to enter into and perform the Purchase Agreement
and the transactions contemplated therein.
3. CB&I has taken all necessary corporate action to authorize the
execution, delivery and performance by CB&I of the Purchase Agreement and the
Shareholder Agreement. The execution, delivery and performance of the Purchase
Agreement have been duly authorized by CB&I Sub. Each of the Purchase Agreement
and the Shareholder Agreement constitutes the legal, valid and binding
obligation of CB&I and CB&I Sub, as applicable, enforceable in accordance with
its terms.
4. Neither the execution and delivery of the Purchase Agreement or the
Shareholder Agreement, nor consummation of the transactions contemplated
therein, nor performance by CB&I and CB&I Sub of the terms thereof, will (1)
violate any provision of law of the Netherlands or of the United States or any
published rule or regulation thereunder, as in effect on the date hereof, or of
any order, writ, injunction or decree applicable to CB&I or CB&I Sub, or (2)
conflict with, or result in a breach or default, or the creation of any lien,
under, any of the terms, conditions or provisions of any note, indenture,
mortgage, license or other material agreement or obligation (including the
Articles of Association of CB&I and the Certificate of Incorporation and By-Laws
of CB&I Sub) to which CB&I or CB&I Sub is a party, or by which CB&I or CB&I Sub
is bound.
5. The issuance of 8,146,665 shares of common stock, par value NLG .01
per share ("CB&I Shares"), of CB&I to WGI Sub pursuant to the Purchase Agreement
has been authorized by all necessary corporate action on the part of CB&I. The
CB&I Shares have been validly issued, are fully paid and non-assessable, and
have not been issued in violation of the preemptive rights of any person.
▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇ LLC CONVERSION CHART
DETAILS OF LLC CONVERSION AT HBI
FEDERAL STATE NAME OF OWNER PRE-CLOSING CHANGES
NAME OF LEGAL ENTITY TAX CLASSIFICATION TAX CLASSIFICATION AND PERCENTAGE AND EFFECTIVE DATES
------------------------------------------------------------------------------------------------------------------------------------
1 ▇▇▇▇-▇▇▇▇▇ International, Inc. C corp. C corp. WEDGE Group Incorporated-100% Convert to LLC
------------------------------------------------------------------------------------------------------------------------------------
2 Process Management, Inc. C corp. C corp. ▇▇▇▇-▇▇▇▇▇ International-100% Convert to LLC
------------------------------------------------------------------------------------------------------------------------------------
3 Constructors International, C corp. C corp. ▇▇▇▇-▇▇▇▇▇ International-100% Convert to LLC
Inc.
------------------------------------------------------------------------------------------------------------------------------------
4 Callidus Technologies Inc. C corp. C corp. ▇▇▇▇-▇▇▇▇▇ International-100% Convert to LLC
------------------------------------------------------------------------------------------------------------------------------------
5 Callidus Technologies
International, Inc. C corp. C corp. Callidus Technologies Inc.-100% Convert to LLC
------------------------------------------------------------------------------------------------------------------------------------
6 ▇▇▇▇-▇▇▇▇▇ Engineers, Inc. C corp. C corp. ▇▇▇▇-▇▇▇▇▇ International-100% Convert to LLC
------------------------------------------------------------------------------------------------------------------------------------
7 ▇▇▇▇-▇▇▇▇▇ Management
Corporation C corp. C corp. ▇▇▇▇-▇▇▇▇▇ Engineers, Inc.-100% Convert to LLC
------------------------------------------------------------------------------------------------------------------------------------
8 ▇▇▇▇-▇▇▇▇▇, ▇.▇. Partnership Partnership ▇▇▇▇-▇▇▇▇▇ Engineers, Inc.-98% None
▇▇▇▇-▇▇▇▇▇ Management
Corporation -1%
Schedule A, Ltd.-1%
------------------------------------------------------------------------------------------------------------------------------------
9 HBI Holdings, LLC Limited Liability Co. Limited Liability Co. ▇▇▇▇-▇▇▇▇▇ International-100% None
DISREGARDED CORPORATION-TX
------------------------------------------------------------------------------------------------------------------------------------
10 ▇▇▇▇-▇▇▇▇▇ International
Management LLC Limited Liability Co. Limited Liability Co. ▇▇▇▇-▇▇▇▇▇ International-100% None
DISREGARDED CORPORATION-TX
------------------------------------------------------------------------------------------------------------------------------------
11 Matrix Engineering, Ltd. Partnership Partnership HBI Holdings, LLC-99% None
DISREGARDED ▇▇▇▇-▇▇▇▇▇ International
Management LLC-1%
------------------------------------------------------------------------------------------------------------------------------------
12 Matrix Management Limited Liability Co. Limited Liability Co. Matrix Engineering, Ltd.-100% None
Services, LLC DISREGARDED CORPORATION-TX
------------------------------------------------------------------------------------------------------------------------------------
13 A&B Builders, Ltd. Partnership Partnership Matrix Engineering, Ltd.-99% None
DISREGARDED CORPORATION-TX Matrix Management Services,
LLC-1%
------------------------------------------------------------------------------------------------------------------------------------
Note: Holdings Company of New Jersey, Inc., HoweBaker de Argentia, S.A. and
HoweBaker (Italiana), S.r.1. are excluded from above as they will be dividended
to WGI prior to closing.
D-1