Exhibit 99.2
Execution Copy
--------------
PURCHASE AGREEMENT
by and among
CHEMICAL WASTE MANAGEMENT INC., as a Seller,
RUST INTERNATIONAL, INC., as a Seller
CNS HOLDINGS, INC., as a Seller
and
GTS Duratek, Inc., as Purchaser
Dated as of March 29, 2000
TABLE OF CONTENTS
Page
----
1. SALE AND PURCHASE........................................ 1
1.1 Sale and Purchase of the Nuclear Services Shares.... 1
1.2 Closing............................................. 2
1.3 Purchase Price Adjustments.......................... 3
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS............ 5
2.1 Corporate Status and Authority...................... 6
2.2 No Conflicts; Consents and Approvals, etc........... 6
2.3 Corporate Status of the Companies................... 7
2.4 Capitalization...................................... 7
2.5 Subsidiaries........................................ 8
2.6 Financial Statements................................ 9
2.7 Absence of Undisclosed Liabilities.................. 9
2.8 Real Property; Assets............................... 9
2.9 Contracts........................................... 11
2.10 Employment Agreements and Benefits, etc............. 12
2.10.1 Employment Agreements and Plans............. 12
2.10.2 ERISA and Other Compliance.................. 13
2.10.3 Tax Qualification........................... 14
2.10.4 Post Retirement Medical Plans............... 14
2.10.5 Golden Parachutes........................... 14
2.10.6 Multi-Employer Plans........................ 15
2.11 Intellectual Property............................... 15
2.12 Governmental Authorizations; Compliance with Law.... 16
2.13 Litigation.......................................... 17
2.14 Taxes............................................... 17
2.15 Absence of Changes.................................. 19
2.16 Environmental and Nuclear Matters................... 21
2.17 Banking and Agency Arrangements..................... 24
2.18 Affiliate Transactions.............................. 24
2.19 Brokers............................................. 25
2.20 Insurance........................................... 25
2.21 Names, Business and Location of Assets.............. 26
2.22 No Other Pending Transactions....................... 26
2.23 Prohibited Payments................................. 26
2.24 Officers and Directors; Employee Compensation....... 26
2.25 Accounts Receivable................................. 26
2.26 Year 2000 Compliance................................ 27
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......... 27
3.1 Corporate Status and Authority...................... 27
3.2 No Conflicts; Consents and Approvals, etc........... 27
3.3 Financial Ability to Perform........................ 28
3.4 Litigation.......................................... 28
3.5 Purchase for Investment.................................. 28
3.6 Brokers.................................................. 28
4. COVENANTS..................................................... 28
4.1 Satisfaction of Closing Conditions....................... 28
4.2 Conduct of Business, etc................................. 29
4.3 Access and Information................................... 29
4.4 Taxes.................................................... 30
4.5 Supplements to Disclosures............................... 35
4.6 Contact with Customers and Suppliers..................... 36
4.7 Publicity................................................ 36
4.8 Release of Guarantees, Bonds, etc........................ 36
4.9 Transition Services...................................... 38
4.10 Intercompany Accounts.................................... 39
4.11 Indemnification of Directors and Officers................ 39
4.12 Right to Use Certain Marks............................... 39
4.13 Furnish Information for Purchaser's SEC Filings.......... 40
4.14 Termination of Obligations of the Companies and.......... 40
their Subsidiaries
4.15 HSR ACT.................................................. 40
4.16 Further Assurances....................................... 40
4.17 Confidentiality.......................................... 41
4.18 Non-Solicitation......................................... 42
4.19 Non-Interference......................................... 42
4.20 Non-Competition.......................................... 42
4.21 Specific Performance..................................... 43
4.22 Project Financing and Equipment Purchasing for........... 00
Xxx Xxxxx Project
4.23 Maintenance of Closure Surety Bond....................... 44
4.24 Computer Software........................................ 44
4.25 Waste Management Obligation.............................. 44
4.26 Purchase of Land......................................... 44
5. EMPLOYEES AND EMPLOYEE BENEFIT PLANS.......................... 44
6. CONDITIONS PRECEDENT.......................................... 47
6.1 General.................................................. 47
6.2 Conditions to Obligations of Both Parties................ 47
6.2.1 HSR Act........................................... 47
6.2.2 Consents.......................................... 47
6.2.3 No Injunction..................................... 48
6.2.4 Simultaneous Sale and Purchase.................... 48
6.3 Conditions to Obligations of the Sellers................. 48
6.3.1 Representations and Warranties of the Purchaser... 48
6.3.2 Officer's Certificate............................. 48
6.3.3 Opinion of Counsel................................ 48
6.3.4 Ancillary Agreements.............................. 48
6.4 Conditions to Obligations of Purchaser................... 48
6.4.1 Representations and Warranties of the Sellers..... 48
ii
6.4.2 Officer's Certificate............................. 49
6.4.3 Opinion of Counsel................................ 49
6.4.4 Resignations...................................... 49
6.4.5 Tax Certificate................................... 49
6.4.6 Material Adverse Change........................... 49
6.4.7 Deliveries........................................ 49
6.4.8 Ancillary Agreements.............................. 50
7. INDEMNIFICATION............................................... 50
7.1 Survival of Representations and Warranties............... 50
7.2 Indemnification.......................................... 50
7.2.1 By the Sellers.................................... 50
7.2.2 By the Purchaser.................................. 53
7.2.3 Indemnification Procedures........................ 54
7.2.4 Tax Treatment of Indemnity Payment................ 56
7.2.5 Exclusivity of Indemnification Provision.......... 56
7.2.6 Waiver of Contribution............................ 57
7.2.7 Guaranty of Parent Corporation; Successor......... 57
Indemnification Obligations
8. GENERAL PROVISIONS............................................ 57
8.1 Modification; Waiver.................................... 57
8.2 Entire Agreement........................................ 57
8.3 Certain Limitations..................................... 58
8.4 Termination............................................. 58
8.5 Expenses................................................ 59
8.6 Further Actions......................................... 59
8.7 Post-Closing Access..................................... 59
8.8 Notices................................................. 60
8.9 Assignment.............................................. 61
8.10 No Third Party Beneficiaries............................ 61
8.11 Counterparts............................................ 61
8.12 Interpretation.......................................... 61
8.13 Governing Law........................................... 62
8.14 Consent to Jurisdiction, etc............................ 62
8.15 Waiver of Jury Trial.................................... 62
8.16 Certain Definitions..................................... 63
8.17 Severability............................................ 63
8.18 Specific Performance.................................... 64
iii
PURCHASE AGREEMENT, dated as of March 29, 2000, between Chemical Waste
Management Inc., a Delaware corporation ("CWM"), Rust International, Inc., a
---
Delaware corporation ("Rust"), CNS Holdings, Inc., a Delaware corporation
----
("CNS"), and GTS Duratek, Inc., a Delaware corporation (the "Purchaser"),
--- ---------
relating to the purchase and sale of all of the outstanding membership interests
in Chem-Nuclear Systems L.L.C., a Delaware limited liability company ("Chem-
----
Nuclear"), and all of the shares of outstanding capital stock of Waste
-------
Management Federal Services, Inc., a Delaware corporation ("Federal Services").
----------------
Each of CWM, Rust and CNS may also be referred to herein individually as a
"Seller," and CWM, Rust and CNS may be referred to herein together as the
-------
"Sellers." Each of Chem-Nuclear and Federal Services may also be referred to
--------
herein individually as a "Company," and Chem-Nuclear and Federal Services may be
-------
referred to herein together as the "Companies."
---------
WHEREAS, CWM owns 99% of the outstanding membership interests (the
"Chem-Nuclear Interests") of Chem-Nuclear, and CNS owns 1% of the Chem-Nuclear
-----------------------
Interests;
WHEREAS, Rust owns all of the outstanding capital stock (the "Federal
-------
Services Shares") of Federal Services (the Federal Services Shares and the Chem-
---------------
Nuclear Interests being referred to herein collectively as the "Nuclear Services
----------------
Shares"); and
------
WHEREAS, each of CWM and CNS wishes to sell the Chem-Nuclear_Interests
owned by it, Rust wishes to sell the Federal Services Shares, and the Purchaser
wishes to purchase the Chem-Nuclear Interests and the Federal Services Shares.
NOW, THEREFORE, the parties hereto agree as follows:
1. Sale and Purchase.
-----------------
1.1 Sale and Purchase of the Nuclear Services Shares. Subject to the
------------------------------------------------
terms and conditions of this Agreement, at the Closing (as defined in Section
1.2), (i) CWM and CNS shall sell, and the Purchaser shall purchase, the Chem-
Nuclear Interests, and (ii) Rust shall sell, and the Purchaser shall purchase,
the Federal Services Shares, for an aggregate purchase price of $65.0 million
(the "Initial Purchase Price"), payable as set forth below in Section 1.2 and
----------------------
subject to adjustment as provided in Section 1.2(c) and Section 1.3, and to be
apportioned between the Chem-Nuclear Interests (such portion, the "Initial Chem-
------------
Nuclear Purchase Price"), and the Federal Services Shares (such portion, the
----------------------
"Initial Federal Services Purchase Price") and payable to CWM, CNS and Rust as
----------------------------------------
set forth in Schedule 1.1 hereto. Notwithstanding the foregoing, $10.0 million
of the Initial Chem-Nuclear Purchase Price will be deposited into an escrow
account with Wilmington Trust of Pennsylvania (the "Escrow Agent") as
------------
escrow agent pursuant to the terms of the Escrow Agreement substantially in the
form of Exhibit A hereto (the "Escrow Agreement").
--------- ----------------
1.2 Closing. The closing of the sale and purchase of the Nuclear
-------
Services Shares (the "Closing") will take place at the offices of Debevoise &
-------
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M., New York
time, on the date that is two business days after the satisfaction of the
conditions set forth in Sections 6.2.1 and 6.2.2 or at such other date and time
as the parties shall have agreed to in writing. Notwithstanding the foregoing,
in no event shall the Closing occur prior to thirty (30) days after the date of
this Agreement. The date on which the Closing shall occur is hereinafter
referred to as the "Closing Date." At the Closing:
------------
(a) CWM, CNS and Rust shall deliver to the Purchaser certificates
representing the Nuclear Services Shares that are certificated, accompanied by
such stock powers and other documents and instruments as shall be necessary to
vest full legal, record and beneficial title in the Nuclear Services Shares in
the Purchaser, free and clear of any Liens (as hereinafter defined), other than
Liens created by the Purchaser;
(b) the Sellers shall also deliver to the Purchaser the following:
(i) certificates representing the capital stock or other equity
interests owned by the Companies in their subsidiaries; and
(ii) a receipt for the payment of the Purchase Price made as
contemplated by Section 1.2(c);
(c) the Purchaser shall deliver, by wire transfers of immediately
available funds:
(i) to CWM and CNS, the Initial Chem-Nuclear Purchase Price,
except for the funds to be deposited into escrow pursuant to Section 1.1, plus
(x) an amount equal to the excess of the sum of the estimated adjusted
consolidated stockholders' equity of Chem-Nuclear and its subsidiaries, as
determined in accordance with Section 1.3(e), as of the close of business on the
Closing Date (the "Chem-Nuclear Estimated Adjusted Closing Stockholders
----------------------------------------------------
Equity"), which estimate shall be prepared by CWM and CNS and delivered to the
-------
Purchaser at least three business days prior to the Closing, over $55,822,711,
or minus (y) an amount equal to the excess of $55,822,711 over the Chem-Nuclear
Estimated Adjusted Closing Stockholders Equity to the respective accounts
previously designated by CWM and CNS to the Purchaser;
(ii) to Rust, the Initial Federal Services Purchase Price, plus
(x) an amount equal to the excess of the estimated adjusted consolidated
stockholders' equity of Federal Services and its subsidiaries, as determined in
2
accordance with Section 1.3(e), as of the close of business on the Closing Date
(the "Federal Services Estimated Adjusted Closing Stockholders Equity"), which
----------------------------------------------------------------
estimate shall be prepared by Rust and delivered to the Purchaser at least three
business days prior to the Closing, over $21,645,876, or minus (y) an amount
equal to the excess of $21,645,876 over the Federal Services Estimated Adjusted
Closing Stockholders Equity, to the account previously designated by Rust to the
Purchaser; and
(iii) $10.0 million to the Escrow Agent pursuant to the Escrow
Agreement.
1.3 Purchase Price Adjustments.
--------------------------
(a) Within 90 days after the Closing Date, the Sellers will prepare
and deliver to the Purchaser unaudited consolidated balance sheets of each of
Chem-Nuclear and its subsidiaries and Federal Services and its subsidiaries, in
each case as of the close of business on the Closing Date (the "Closing Balance
---------------
Sheets"), which shall be prepared on the basis of United States generally
------
accepted accounting principles ("GAAP"), except to the extent that the unaudited
----
consolidated balance sheets as of September 30, 1999 of each of Chem-Nuclear and
its subsidiaries and Federal Services and its subsidiaries (the "Offer Balance
-------------
Sheets") were not prepared in accordance with GAAP (which exceptions to GAAP are
------
disclosed in Section 2.6 of the Disclosure Letter), applied on a basis
consistent with the application of GAAP, subject to such exceptions, in the
preparation of the Offer Balance Sheets, and except as otherwise provided in
Section 1.3(a) of the Disclosure Letter. The Purchaser shall cause each of the
Companies and its subsidiaries and their respective employees (i) to assist the
Sellers in the preparation of the Closing Balance Sheets and (ii) to provide the
Sellers on-site access at all reasonable times to the personnel, properties,
books and records of each of the Companies and its subsidiaries necessary for
the preparation of the Closing Balance Sheets until final resolution of all
matters in dispute under this Section 1.3.
(b) During the 60-day period following the date of Purchaser's receipt
of the Closing Balance Sheets, the Purchaser and its accountants will be
permitted to review the working papers of the Sellers relating to the Closing
Balance Sheets, provided that the Purchaser and its accountants execute and
deliver a confidentiality agreement, reasonably satisfactory to the Sellers, and
adhere to whatever procedures the Sellers reasonably request to safeguard
confidential, non-public or privileged information relating to the Sellers or
any of their respective subsidiaries. The Closing Balance Sheets will become
final and binding upon the parties on the sixtieth day following the date of
delivery thereof, unless the Purchaser delivers a written notice (the
"Purchaser's Notice") to the Sellers prior to such sixtieth day which specifies
-------------------
in reasonable detail the amount by which and the reasons why it believes
particular line items in either or both of the Closing Balance Sheets either (i)
contain mathematical errors, (ii) contain
3
errors or misstatements, or (iii) were not prepared in accordance with the
methodology specified in the first sentence of Section 1.3(a) and Section
1.3(e). The Purchaser's Notice shall not specify any basis for disagreement with
the Closing Balance Sheets other than as set forth in the preceding sentence.
(c) If the Purchaser delivers a Purchaser's Notice in accordance with
Section 1.3(b), then the parties shall, during the 30-day period beginning on
the date of the Sellers' receipt of the Purchaser's Notice, seek in good faith
to resolve in writing any differences which they may have with respect to the
matters specified in the Purchaser's Notice. If the Purchaser and the Sellers
are unable to resolve all of the Purchaser's objections within such 30-day
period, then such unresolved objections shall be submitted to the New York
office of Deloitte & Touche LLP (the "Third Party Accountant") for review and
----------------------
final and binding resolution of any and all matters which remain in dispute and
which were properly included in the Purchaser's Notice. The Sellers and the
Purchaser shall use reasonable efforts to cause the Third Party Accountant to
render a decision resolving the matters in dispute within 30 days following the
submission of such matter to the Third Party Accountant for decision following
such briefing and other procedures as the Third Party Accountant shall
establish. The Sellers and the Purchaser agree that judgment may be entered
upon the determination of the Third Party Accountant in any court having
jurisdiction over the party against which such determination is to be enforced.
The fees and expenses of the Third Party Accountant shall be borne 50% by the
Sellers and 50% by the Purchaser.
(d) Within 10 days after (x) the Closing Balance Sheets become final
pursuant to Section 1.3(b) or (y) the parties reach agreement pursuant to
Section 1.3(c) or (z) the Third Party Accountant renders its decision pursuant
to Section 1.3(c), whichever occurs first, a final adjustment to the Initial
Purchase Price will be made as follows:
(i) if the sum of the amount of adjusted consolidated stockholders'
equity of Chem-Nuclear and its subsidiaries, plus the amount of adjusted
consolidated stockholders' equity of Federal Services and its subsidiaries, in
each case as shown on the Closing Balance Sheets as finally determined pursuant
to Section 1.3(b) or (c) ("Aggregate Final Adjusted Stockholders Equity")
--------------------------------------------
exceeds the sum of the Chem-Nuclear Estimated Adjusted Closing Stockholders
Equity and the Federal Services Estimated Adjusted Closing Stockholders Equity
("Aggregate Estimated Adjusted Stockholders Equity"), by $50,000 or more, then
------------------------------------------------
the Purchaser shall pay to the Sellers the amount of such excess, by wire
transfer of immediately available funds to the account or accounts designated by
the Sellers, and
(ii) if the Aggregate Final Adjusted Stockholders Equity is less
than the Aggregate Estimated Adjusted Closing Stockholders Equity by $50,000 or
more, then the Sellers shall pay to the Purchaser the amount of such
4
deficit, by wire transfer of immediately available funds to the account or
accounts designated by the Purchaser.
The parties agree that any difference between Aggregate Final Adjusted
Stockholders Equity and Aggregate Estimated Adjusted Stockholders Equity that is
less than $50,000 shall not give rise to any obligation to make a payment
pursuant to this Section 1.3.
(e) For purposes of Sections 1.2(c) and 1.3, "adjusted consolidated
stockholders' equity" shall be determined in accordance with GAAP (except to the
extent that the Offer Balance Sheets were not prepared in accordance with GAAP,
as reflected in Section 2.6 of the Disclosure Letter), applied on a basis
consistent with the application of GAAP in the preparation of the Offer Balance
Sheets, and except as otherwise specified in Section 1.3(a) of the Disclosure
Letter. The parties agree that, except as otherwise specified in Section 1.3(a)
of the Disclosure Letter, the adjustment contemplated by Sections 1.2(b) and 1.3
is intended to show the change, if any, of the sum of the consolidated
stockholders' equity of Chem-Nuclear and its subsidiaries, plus the consolidated
stockholders' equity of Federal Services and its subsidiaries, from the date of
the Offer Balance Sheets to the close of business on the Closing Date, and that,
except as otherwise specified in Section 1.3(a) of the Disclosure Letter, such
change is to be determined by calculating the consolidated stockholders' equity
in the same way, using the same methodologies and accounting practices
(including with respect to determining estimates and allowances) at both dates.
The scope of the disputes to be resolved by the Third Party Accountant is
limited to whether such calculations comply with the preceding sentence, and
whether there were mathematical errors or other errors or misstatements in the
Closing Balance Sheets, and the Third Party Accountant is not to make any other
determination.
(f) Notwithstanding anything in this Agreement to the contrary, any
matter which is the subject of an adjustment, or claimed adjustment, to the
Initial Purchase Price pursuant to this Section 1.3, or which would have been
the subject of such an adjustment but for the $50,000 thresholds set in Section
1.3(d), may not be asserted by the Purchaser as an alleged misrepresentation or
breach of any warranty or covenant in this Agreement.
2. Representations and Warranties of the Sellers. The Sellers,
---------------------------------------------
jointly and severally, represent and warrant to the Purchaser that, except as
set forth in the Disclosure Letter, dated the date of this Agreement (the
"Disclosure Letter"), from the Sellers to the Purchaser:
------------------
2.1 Corporate Status and Authority. Each Seller is a corporation
------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, the jurisdiction of incorporation for each, and has the
corporate power and authority to execute and deliver this Agreement, the Escrow
Agreement and the Loan Agreement (as hereinafter defined) (the Escrow
5
Agreement and the Loan Agreement shall be referred to herein as the "Ancillary
---------
Agreements") and perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Ancillary Agreements by each
Seller and the performance of such Seller's obligations hereunder and thereunder
have been duly authorized by such Seller's board of directors, and by the board
of directors or executive committee of Waste Management, Inc., which constitutes
all necessary corporate action on the part of such Seller or any affiliate of
such Seller for such authorization. This Agreement and, as of the Closing, the
Ancillary Agreements have been duly executed and delivered by each Seller and
constitute the valid and binding obligations of such Seller, enforceable against
such Seller in accordance with their terms, except as limited by laws affecting
the enforcement of creditor's rights generally or by general equitable
principles.
2.2 No Conflicts; Consents and Approvals, etc.
-----------------------------------------
(a) The execution and delivery of this Agreement and the Ancillary
Agreements by each Seller and the performance of its obligations hereunder and
thereunder will not result in (i) any conflict with or violation of such
-
Seller's certificate of incorporation or by-laws, as amended or restated to
date, (ii) subject to obtaining the consents referred to in Section 2.2(b), any
breach or violation of or default (or give rise to any right of termination,
cancellation or acceleration) under any law, statute, rule, regulation,
judgment, order, writ, injunction, decree, license, permit or other governmental
authorization or any mortgage, lease, agreement, deed of trust, note, bond,
indenture, lien or any other instrument to which such Seller or Chem-Nuclear or
Federal Services or any of their respective subsidiaries is a party or by which
any of them or their respective properties or assets are bound, or (iii) the
creation or imposition of any liens, security interests, adverse claims,
pledges, charges or encumbrances ("Liens") other than Liens created by or
-----
resulting from the actions of the Purchaser or any of its affiliates, except in
the case of (ii) and (iii) above for such breaches, violations or defaults and
such Liens which would not, individually or in the aggregate, have a material
adverse effect on the business, assets, liabilities, operations, financial
condition or results of operations of Chem-Nuclear and Federal Services and
their subsidiaries taken as a whole (a "Material Adverse Effect").
-----------------------
(b) No consent, approval or authorization of or filing with any third
party or any governmental authority is required on the part of either Seller or
Chem-Nuclear or Federal Services or any of their respective subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except (i) filings required with
-
respect to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 (the "HSR
---
Act") and (ii) filings, consents or approvals which, if not made or obtained,
---
would not have a Material Adverse Effect.
2.3 Corporate Status of the Companies. Chem-Nuclear is a limited
---------------------------------
liability company duly formed, validly existing and in good standing under the
6
laws of the State of Delaware. Federal Services is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Each of the Companies has all requisite limited liability company
or corporate power and authority to conduct its business and to own or lease its
properties and assets, as now conducted, owned or leased. Each of the Companies
is duly qualified to do business in each jurisdiction set forth in Section 2.3
of the Disclosure Letter, which jurisdictions represent all of the jurisdictions
where each of the Companies is required to be qualified as the result of the
location of its assets or the conduct of its business, except where the failure
to be so qualified would not have a Material Adverse Effect. True and correct
copies of the organizational documents of the Companies, as amended to the date
hereof, including without limitation the charter, by-laws or operating
agreement, as applicable, have been made available to the Purchaser and such
documents are in full force and effect. None of the Companies is in violation,
breach or default of any of the provisions of its organizational documents.
Except for the services provided by any Seller or any Non-Company Affiliate to
any Company or its subsidiaries which are listed in Section 2.18 of the
Disclosure Letter, all of the business of Waste Management Nuclear Services,
which includes the Federal Services Division, the Commercial Services Division
and the Commercial Disposal Division (as described in the Waste Management
Nuclear Services Confidential Information Memorandum dated October 1999) is
conducted through the Companies and their subsidiaries.
2.4 Capitalization. The authorized capital stock of Federal
--------------
Services consists of 1,000 shares of common stock, par value $1 per share, one
hundred (100) of which are issued and outstanding and owned by Rust, free and
clear of all Liens, other than created by this Agreement. Of the outstanding
limited liability company interests in Chem-Nuclear, 99 percent are owned by CWM
and one percent are owned by CNS, in each case free and clear of all Liens,
other than created by this Agreement. The Nuclear Services Shares have been
duly authorized and validly issued and are fully paid, non-assessable and free
of preemptive rights. The Nuclear Services Shares comprise all of the issued
and outstanding equity interests of the Companies. There are no outstanding
options, warrants, conversion or other rights or agreements of any kind (other
than this Agreement) for the purchase or acquisition from, or the sale or
issuance by, either Seller or any of the Companies of any membership interests
or shares of capital stock of any of the Companies, and no authorization
therefor has been given. There are no voting agreements, voting trusts, proxies
or other agreements or understandings that are currently in effect or that are
currently contemplated with respect to the voting of any membership interests or
capital stock of the Companies. There are no agreements, instruments,
understandings, orders or decrees that would restrict the transfer by the
Sellers of the Nuclear Services Shares pursuant to this Agreement.
7
2.5 Subsidiaries.
------------
(a) Each of the subsidiaries of Chem-Nuclear and each of the
subsidiaries of Federal Services is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to conduct its
business and to own or lease its properties and assets, as now conducted, owned
or leased, and is duly qualified to do business in each jurisdiction set forth
in Section 2.5 of the Disclosure Letter, which jurisdictions represent all of
the jurisdictions where each of the subsidiaries is required to be qualified as
the result of the location of its assets or the conduct of its business, except
where the failure to be so qualified would not have a material adverse effect
on such subsidiary. Section 2.5 of the Disclosure Letter identifies each
subsidiary of the Companies and, with respect thereto, sets forth (i) the
authorized capital stock, (ii) the number of issued and outstanding shares of
capital stock and (iii) the record ownership as of the date of this Agreement of
the capital stock or other equity interests. True and correct copies of the
organizational documents of the subsidiaries of the Companies, as amended to the
date hereof, including without limitation the charter and by-laws, have been
made available to the Purchaser and such documents are in full force and effect.
None of the subsidiaries of the Companies is in violation, breach or default of
any of the provisions of its organizational documents.
(b) The authorized capital stock, the issued and outstanding shares
and the record ownership of the capital stock of each of the subsidiaries of
Chem-Nuclear and each of the subsidiaries of Federal Services is as set forth in
Section 2.5 of the Disclosure Letter. All such issued and outstanding shares
are owned directly or indirectly by Chem-Nuclear or Federal Services, free and
clear of all Liens, and have been duly authorized and validly issued and are
fully paid, non-assessable and free of preemptive rights. There are no
outstanding options, warrants, conversion or other rights or agreements of any
kind for the purchase or acquisition from, or the sale or issuance by, either of
Chem-Nuclear or Federal Services, or any of such subsidiaries of any shares of
capital stock of any of such subsidiaries, and no authorization therefor has
been given. There are no voting agreements, voting trusts, proxies or other
agreements or understandings that are currently in effect or that are currently
contemplated with respect to the voting of any capital stock of the Companies'
subsidiaries.
(c) Neither Chem-Nuclear nor Federal Services nor any of their
respective subsidiaries has any equity interest or investment in any person.
2.6 Financial Statements. The Sellers have made available to the
--------------------
Purchaser complete and correct copies of the unaudited consolidated balance
sheets and related consolidated statements of income and cash flows of Chem-
Nuclear and its subsidiaries and of Federal Services and its subsidiaries as of,
and for the years ending, December 31, 1997 and 1998 and as of, and for the nine
months ending September 30, 1999 (collectively, the "Financial Statements").
--------------------
The balance sheets of Chem-Nuclear and its subsidiaries and Federal Services and
its subsidiaries at September 30, 1999 are included in
8
Section 2.6 of the Disclosure Letter. The Financial Statements present fairly in
all material respects the financial condition and results of operations of each
of the Companies and its subsidiaries on a consolidated basis as of the dates
and for the periods indicated, and have been prepared in accordance with GAAP
(except that the Financial Statements have been presented without any notes
thereto, and the interim financial statements included in the Financial
Statements do not include period-end adjustments) and on a basis consistent with
that of preceding accounting periods. The income statements included in the
Financial Statements reflect all material costs and expenses incurred, during
the periods covered by such income statements, in connection with the operation
of the respective businesses to which such income statements relate, except for
the costs of the services rendered by the Sellers and other Non-Company
Affiliates described in Section 2.18 of the Disclosure Letter.
2.7 Absence of Undisclosed Liabilities. Except for liabilities
----------------------------------
reflected or reserved against in the Financial Statements, none of the Companies
and their subsidiaries has any liabilities, whether known or unknown, absolute,
accrued, contingent or otherwise, other than (i) liabilities that will be
reflected on the Closing Balance Sheets, (ii) liabilities incurred in the
ordinary course of business consistent with past practice since September 30,
1999 and which would not reasonably be expected to have a Material Adverse
Effect, and (iii) other liabilities or obligations which, individually or in the
aggregate, would not have a Material Adverse Effect.
2.8 Real Property; Assets.
---------------------
(a) Section 2.8 of the Disclosure Letter lists all material items of
real property either owned by the Companies or any of their respective
subsidiaries (the "Owned Real Property") or leased by the Companies or any of
-------------------
their respective subsidiaries (the "Leased Real Property"). The Companies or
--------------------
their respective subsidiaries have good and marketable title to the Owned Real
Property listed on Section 2.8 of the Disclosure Letter and valid leasehold
interests in the Leased Real Property listed on Section 2.8 of the Disclosure
Letter, in each case, free and clear of all Liens, except for (i) Liens for
taxes and other governmental charges and assessments which are not yet due and
payable or which are being contested in good faith by appropriate proceedings,
(ii) Liens of carriers, warehousemen, mechanics and materialmen and other like
Liens arising in the ordinary course of business and as to which adequate
reserves have been established in the Financial Statements to the extent
required by GAAP, (iii) easements, rights of way, title imperfections and
restrictions, zoning ordinances and other similar encumbrances affecting the
real property that do not, individually or in the aggregate, materially
adversely impair the continued use as currently conducted of the real property
as to which they relate, (iv) statutory Liens in favor of lessors arising in
connection with any property leased to the Companies or their subsidiaries and
that do not, individually or in the aggregate, materially adversely impair the
continued use as currently
9
conducted of the real property as to which they relate, (v) Liens reflected in
the Financial Statements or arising under the Contracts disclosed pursuant to
Section 2.9 and that do not, individually or in the aggregate, materially
adversely impair the continued use as currently conducted of the real property
to which they relate, and (vi) any other Liens which do not materially interfere
with the current use of properties affected thereby ("Permitted Liens").
---------------
Existing public utility services (including, without limitation, all applicable
electric lines, sewer and water lines, gas and telephone lines) necessary to the
continued use as currently conducted of any Owned Real Property or Leased Real
Property are available to service each such property.
(b) Each lease (including any option to purchase contained therein)
pursuant to which the Companies or any of their respective subsidiaries leases
any Leased Real Property listed on Section 2.8 of the Disclosure Letter (the
"Leases") is in full force and effect and, to the knowledge of the Sellers, is
-------
enforceable against the landlord which is party thereto in accordance with its
terms. There exists no material default or event of default (or any event that
with notice or lapse of time or both would become a material default) on the
part of the Companies or any of their respective subsidiaries under any Leases,
or to the knowledge of the Sellers, any other party thereto. The Sellers have
made available to the Purchaser complete and correct copies of all Leases
including all amendments thereto. None of the Companies or any of their
respective subsidiaries has received any notice of any default under any lease
by which it leases any Leased Real Property nor any other termination notice
with respect thereto.
(c) Each Company or its subsidiaries have legal and beneficial
ownership of all of their respective tangible personal property and assets
included in the Offer Balance Sheet relating to such Company and all personal
property acquired by each Company or its subsidiaries since the date thereof
except for properties and assets disposed of in the ordinary course of business
since the date of such Offer Balance Sheet, in each case, free and clear of all
Liens other than Permitted Liens. The Companies and their subsidiaries own or
have the right to use all of the properties and assets necessary for the conduct
of their business as currently conducted (the "Business"). Each tangible asset
--------
owned by the Companies or their subsidiaries is in such condition and repair
(subject to normal wear and tear) as is suitable for its current use, except for
such exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect.
2.9 Contracts. Section 2.9 of the Disclosure Letter lists all
---------
agreements, contracts and commitments of the following types to which any
Company or its subsidiaries is a party or by which any Company or its
subsidiaries or any of their respective properties is bound as of the date
hereof and will be bound following the Closing (other than real property leases
and labor or employment-related agreements, which are provided for in Sections
2.8 and
10
2.10, respectively): (a) joint venture, partnership, management and
development agreements, (b) mortgages, indentures, loan or credit agreements,
pledge agreements, security agreements and other agreements and instruments
relating to the borrowing of money or extension of credit in any case in excess
of $100,000, (c) facilities or operating agreements relating to facilities owned
by third parties and operated by any Company or any subsidiary thereof, (d)
waste disposal or waste services contracts which are not cancelable by any
Company or any of its subsidiaries on notice of 60 days or less without premium
or penalty and which require the payment by or to any Company or any of its
subsidiaries after the date hereof of more than $100,000; (e) other agreements,
contracts and commitments which are not cancelable by any Company or any of its
subsidiaries on notice of 60 days or less without premium or penalty and which
require payment by or to such Company or any of its subsidiaries after the date
hereof of more than $100,000; (f) each contract, commitment or arrangement
restricting any of the Companies or their subsidiaries or employees from
engaging in business or from competing in any line of business with any other
parties; (g) each contract, agreement or arrangement to which the Companies or
their subsidiaries is a party for a line of credit or guarantee, pledge or
undertaking of the indebtedness of any other person or entity; (h) each
outstanding performance bond which have been delivered to any person or entity
in connection with the business and operations of the Companies and their
subsidiaries; (i) each existing agreement, option, commitment or right with, to
or in any third party to acquire any assets or properties, real or personal, or
any interest therein, of the Companies or their subsidiaries having a value in
excess of $100,000; (j) each contract creating a Lien other than a Permitted
Lien; (k) each contract relating to capital expenditures in excess of $100,000;
(l) each executory contract for the purchase or sale of real property or any
business or line of business or for any merger or consolidation; (m) each
contract with any governmental authority which is not cancelable by any Company
or any of its subsidiaries on notice of 60 days or less without premium or
penalty and which requires payment by or to such Company or any of its
subsidiaries after the date hereof of more than $100,000; (n) each contract,
subcontract or other agreement between the Companies or their subsidiaries and a
prime contractor under a government contract which is not cancelable by any
Company or any of its subsidiaries on notice of 60 days or less without premium
or penalty and which requires payment by or to such Company or any of its
subsidiaries after the date hereof of more than $100,000; (o) each contract
involving the settlement of any litigation or litigation threatened involving in
excess of $100,000; and (p) each contract that would prohibit or restrict the
Companies' or their subsidiaries' ability to declare or pay dividends or to
repurchase or redeem the Companies' or their subsidiaries equity interests.
Section 2.9 of the Disclosure Letter lists all outstanding written proposals
made by any Company or any of its subsidiaries on or prior to the date hereof
that on their face reflect services to be performed (if awarded) by any Company
or any of its subsidiaries after the date hereof with a value in excess of
$100,000. The Sellers have made available to the Purchaser full and complete
copies of all of the contracts and proposals listed in Section 2.9 of the
Disclosure
11
Letter. Each such contract is a valid and binding agreement of a Company or one
of its subsidiaries and, to Sellers' knowledge, the other party or parties
thereto and is in full force and effect. No Company nor any of its subsidiaries
nor, to the knowledge of the Sellers, any other person is in default or has
failed to comply with or perform its obligations under any of the contracts
listed in Section 2.9 of the Disclosure Letter, except for such defaults or
failures to comply or perform which would not, individually or in the aggregate,
have a Material Adverse Effect. During the past three years, no Company nor any
subsidiary has received written notice of any stop work order, suspension of
work order, show cause order, proposed termination for default or convenience
with respect to any contract, or written notice of proposed debarment or
suspension from contracting with any governmental authority. During the past
three years, no principal (as defined in 48 C.F.R. 52.209-5(a)(2)) of any
Company or its subsidiaries has received written notice of proposed debarment or
suspension from contracting with any governmental authority. During the past
five years, no Company nor any of their respective subsidiaries has received any
still outstanding written claim, credit, proposed disallowance of costs, request
for equitable adjustment or request for contract funding, price or schedule
adjustment or change order between any of the Companies or their subsidiaries
and any of their customers or suppliers, nor to the Sellers' knowledge is any
threatened, except for such outstanding or threatened claims, credits, proposed
disallowances, requests or change orders that, individually or in the aggregate,
would not have a Material Adverse Effect.
2.10 Employment Agreements and Benefits, etc.
---------------------------------------
2.10.1 Employment Agreements and Plans. Section 2.10 of the
-------------------------------
Disclosure Letter lists all written agreements, contracts and commitments of the
following types to which any Company or any of its subsidiaries is a party: (a)
material employment and consulting agreements (including severance and retention
agreements), (b) labor and collective bargaining agreements and (c) profit
sharing, pension, retirement, bonus, incentive compensation, stock option, stock
purchase, deferred compensation, retirement, severance, welfare or other written
material employee benefit plans, agreements, contracts or commitments for the
benefit of the employees of such Company or its subsidiaries, including such
plans of either Seller or any affiliate of such Seller covering employees of
such Company or any of its subsidiaries or plans in which employees of such
Company or any of its subsidiaries participate (hereinafter referred to as
"Plans"). The Companies and their subsidiaries are not in default with regard
------
to any of such plans, agreements, contracts or commitments, except for such
defaults as would not, individually or in the aggregate, result in a Material
Adverse Effect. The Companies and their subsidiaries are in compliance in all
material respects with applicable laws relating to the employment of labor
including, without limitation, the provisions thereof relating to wages, hours,
collective bargaining and the payment of social security and taxes and is not
liable for any arrears of wages or any material tax or penalty for failure to
comply with any of the foregoing. There are no claims, cases, charges of
discrimination
12
or controversies pending or, to the best knowledge of Sellers, threatened
between the Companies and their subsidiaries and any of their employees or labor
unions or other collective bargaining units representing any of their employees.
No unfair labor practice complaints have been filed against the Companies or
their subsidiaries with the National Labor Relations Board nor has the Companies
or their subsidiaries received any notice or communication reflecting an
intention or threat to file any such complaint. As of the date hereof, (a) no
material strikes, slowdowns, lockouts or work stoppages or material labor
arbitrations, grievances or disputes involving any of the employees of the
Companies or their subsidiaries or against the Companies or their subsidiaries
are pending or, to Sellers' knowledge, are threatened and (b) to Sellers'
knowledge, (i) there is no organizational activity underway at the Companies or
their subsidiaries and (ii) no labor representative holds bargaining rights.
2.10.2 ERISA and Other Compliance. Plans in which any employee or
--------------------------
former employee (or any beneficiary of any of them) of the Companies or any of
their subsidiaries is entitled to participate and in which any employee or
former employee of only entities that would be treated as a single employer with
the Companies and their subsidiaries under section 414(b) or (c) of the Internal
Revenue Code of 1986, as amended (the "Code"), participate shall herein be
----
referred to as "WMI Plans". Plans in which any employee or former employee (or
---------
any beneficiary of any of them) of the Companies or any of their subsidiaries is
entitled to participate and in which any employee or former employee of any
entity that would not be treated as a single employer with the Companies and
their subsidiaries under section 414(b) or (c) of the Code participates shall
herein be referred to as "Non-WMI Plans". All WMI Plans and, to the knowledge
-------------
of the Sellers, all Non-WMI Plans comply in all material respects with the
requirements of applicable law. There are no pending or threatened
investigations, proceedings or other matters concerning the WMI Plans before the
Internal Revenue Service ("IRS"), the Department of Labor, the Pension Benefit
---
Guaranty Corporation ("PBGC") or any other forum, other than determination
----
letter applications filed with the IRS in the normal course of operating the
Plans. No Plan (other than a Non-WMI Plan) to which either Seller or any member
of the same controlled group of corporations as such Seller within the meaning
of section 4001(a)(3) of ERISA contributes and which is subject to Part 3 of
Subtitle B of Title I of ERISA has incurred any "accumulated funding deficiency"
within the meaning of section 302 of ERISA or section 412 of the Code and no
material liability (other than for annual premiums) to the Pension Benefit
Guaranty Corporation has been incurred by any Company or any of its subsidiaries
with respect to any such plan. No Seller and no Company nor any of its
subsidiaries, nor any director, officer, employee, agent or representative of
Sellers or of the Companies or any of their subsidiaries, nor any fiduciary of
any Plan has engaged in a transaction in connection with any of the Plans which
would subject the Companies or any of their subsidiaries to a material civil
penalty assessed pursuant to Section 502(i) of ERISA, or a material tax imposed
by Section 4975 of the Code, with respect to any WMI Plan. No Company nor any
of its subsidiaries has withdrawn at any
13
time within the preceding six years from any multiemployer plan, as defined in
section 3(37) of ERISA, which would subject the Companies or any of their
subsidiaries to liability. There are no material pending or, to the knowledge of
the Sellers, threatened claims by or on behalf of any WMI Plans or, to the
knowledge of the Sellers, any Non-WMI Plan or by any participants or
beneficiaries involving any WMI Plan or, to the knowledge of the Sellers, any
Non-WMI Plan (other than in each case routine claims for benefits). All
contributions required to have been made by any Company or any of its
subsidiaries to any Plan under the terms of such Plan or pursuant to any
applicable collective bargaining agreement or applicable law (including, without
limitation, ERISA and the Code) have been made within the time prescribed by any
such Plan, agreement or law. Neither Sellers, the Companies or their
subsidiaries nor any fiduciary of any Plan has given notice to any fiduciary
liability insurer of any claims or potential claims in connection with any of
the WMI Plans which would subject the Companies or their subsidiaries to
material liability.
2.10.3 Tax Qualification. Each WMI Plan and, to the knowledge of
-----------------
Sellers, each Non-WMI Plan intended to be qualified under section 401(a) of the
Code, and the trust (if any) forming a part thereof, has received a favorable
determination letter from the IRS (or, through at least December 31, 2000, the
"remedial amendment period" for the plan's effective date has not ended) as to
its qualification under the Code and to the effect that each such trust is
exempt from taxation under section 501(a) of the Code, and, to either Seller's
knowledge, nothing has occurred since the date of such determination letter that
will adversely affect such qualification or tax-exempt status.
2.10.4 Post-Retirement Medical Plans. Neither the Companies nor any
-----------------------------
of their subsidiaries have any liability for any retiree medical benefits for
any employee, former employee, or their beneficiaries, under any WMI Plans, and
to the knowledge of Sellers, under any Non-WMI Plans, other than as required by
Section 601 of ERISA or Section 4980B of the Code.
2.10.5 Golden Parachutes. No amount that could be received by
-----------------
(whether in cash or property or the vesting of property), or benefit provided
to, any officer, director or employee of the Companies or any of their
subsidiaries who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or WMI Plan currently
in effect would be an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code). No such person is entitled to receive any
additional payment from the Companies, their subsidiaries, the Purchaser, or any
other person (a "Parachute Gross Up Payment") in the event that the excise tax
--------------------------
of Section 4999(a) of the Code is imposed on such person. The Board of
Directors of the Companies has not granted to any officer, director or employee
of the Companies or any of their subsidiaries any right to receive any Parachute
Gross Up Payment.
14
2.10.6 Multi-Employer Plans.
--------------------
(a) Neither the Companies nor any of their subsidiaries is a
contributor or party to any pension plan or welfare benefit plan that is a
Multiemployer Plan within the meaning of section 4001(a)(3) of ERISA. Neither
the Companies nor any of their subsidiaries currently has an obligation or
liability to make withdrawal liability (as defined in section 4201(a) of ERISA),
shortfall liability, or any other post-withdrawal contributions or payments to
any Multiemployer Plan. Neither the Companies nor any of their subsidiaries is
delinquent in making any contributions required to be paid to any Multiemployer
Plan. There is no pending or, to the knowledge of the Sellers, threatened
dispute between the Companies, or any of their subsidiaries, and any
Multiemployer Plan concerning payment of contributions or payment of withdrawal
liability payments.
(b) Neither the Companies nor any of their subsidiaries has received
any notice of any failure by a Multiemployer Plan to satisfy the minimum funding
requirements of Section 412 of the Code, or of any application for or receipt of
a waiver of such minimum funding requirements with respect to any Multiemployer
Plan.
(c) Purchaser shall not acquire, assume, or become responsible for any
withdrawal liability imposed by any Multiemployer Plan (or, with respect to
each multiemployer welfare benefit plan, any post-withdrawal liability or
contribution obligation imposed by such Plan) upon the Companies or any member
of the controlled group of which either of the Companies is a member, (i)
arising from the transactions contemplated by this Agreement, or (ii) arising or
resulting from a complete or partial withdrawal incurred or experienced by the
Companies or any member of the controlled group of which either of the Companies
is a member prior to Closing. Purchaser shall have no obligation to indemnify
or hold harmless the Sellers, the Companies or any member of the controlled
group of which either of the Sellers or the Companies is a member for any such
withdrawal liability imposed by any Multiemployer Plan.
2.11 Intellectual Property. Section 2.11 of the Disclosure Letter
---------------------
lists all trademarks, copyrights, trade names, service marks, patents,
applications in respect thereof and similar intangible rights used by any
Company or any of its subsidiaries. For purposes hereof "Intellectual Property"
---------------------
means all (i) items identified in Section 2.11 of the Disclosure Letter, (ii)
patentable inventions, discoveries, improvements, ideas, know-how, formula,
methodology, processes and technology, (iii) computer software, (iv) trade
secrets, including confidential and other non-public information and the right
to limit the use or disclosure thereof and (v) claims or causes of action
arising out of or relating to infringement or misappropriation of any of the
foregoing owned or used by the Companies or
15
their subsidiaries. The Companies or their subsidiaries own, free and clear of
all Liens other than Permitted Liens, or have the right to use, the Intellectual
Property that is necessary to the business of the Companies or their
subsidiaries as currently conducted, or as proposed to be conducted pursuant to
pending written customer proposals or pending contract bids. The Intellectual
Property of the Companies and their subsidiaries constitutes sufficient
intellectual property rights for the Companies and their subsidiaries to conduct
their business as currently conducted. To the knowledge of either Seller, no
Company nor any of its subsidiaries has infringed the intellectual property
rights of any other person or entity and no Company nor any of its subsidiaries
has received any notice or claim that it is infringing on the intellectual
property rights of any person and no Seller has knowledge of any infringement by
any person of the Intellectual Property. To the Sellers' knowledge, the
trademarks, service marks and patents listed on Section 2.11 of the Disclosure
Letter are valid, subsisting and enforceable and there is no pending or
threatened action, suit or proceeding that in any way calls into question the
ownership, validity, enforceability or use of any of such Intellectual Property.
Section 2.11 of the Disclosure Letter sets forth a complete and correct list, as
of the date hereof, of all material written licenses to which any Company or any
of its subsidiaries is a party, pursuant to which (x) such Company or such
subsidiary permits any person or entity to use any of the Intellectual Property,
or (y) any person or entity permits such Company or such subsidiary to use any
trademarks, service marks, trade names, copyrights or patents not owned by such
Company or any of its subsidiaries except for off-the-shelf software licenses
(collectively, "Licenses"). The Sellers have made available to the Purchaser
---------
complete and correct copies of the Licenses listed in Section 2.11 of the
Disclosure Letter. No Company nor any of its subsidiaries, nor, to either
Seller's knowledge, any other party thereto, is in default under any License,
and each License is in full force and effect as to each Company or any of its
subsidiaries party thereto, and to either Seller's knowledge, as to each other
party thereto, except for such defaults and failures to be so in full force and
effect as, individually and in the aggregate, would not have a Material Adverse
Effect.
2.12 Governmental Authorizations; Compliance with Law. The Companies
------------------------------------------------
or their respective subsidiaries, as required, hold all licenses, permits and
other governmental authorizations necessary to conduct their businesses as now
conducted or as proposed to be conducted, except where the failure to own or
possess and hold such licenses, permits and other authorizations would not have
a Material Adverse Effect (the "Material Licenses"), and set forth in Section
-----------------
2.12 of the Disclosure Letter is a list of all such Material Licenses. The
Sellers have made available for the Purchaser true, correct and complete copies
of all Material Licenses. Each of the Companies and each of their subsidiaries
has complied with each, and is not in violation of any, law, statute, rule,
regulation, judgment, order, decree, license, permit, concession, franchise or
other governmental authorization or approval to which it or its business is
subject, except where the failure to be in compliance would not have a Material
Adverse Effect. No Company nor any of its subsidiaries has received any notice
of any
16
violation of any law, statute, rule, regulation, judgment, order, decree,
license, permit, concession, franchise or other governmental authorization or
approval applicable to it or to any of its properties, except for violations
which would not have a Material Adverse Effect. No proceedings are pending or,
to the knowledge of the Sellers, threatened to revoke or limit the scope of any
licenses, permits or other governmental authorizations. This Section 2.12 does
not relate to employee benefits matters, which are the subject of Section 2.10,
tax matters, which are the subject of Section 2.14, or environmental matters,
which are the subject of Section 2.16.
2.13 Litigation. There are no judicial or administrative actions,
----------
suits, proceedings, arbitrations or investigations pending or, to the knowledge
of either Seller, threatened against the Sellers or against the Companies or any
of their subsidiaries which (i) would have a Material Adverse Effect, or (ii)
question the validity of this Agreement or any action taken or to be taken by
the Sellers or by the Company or any of their subsidiaries in connection
herewith or which seeks to prohibit, restrict or delay consummation of the
transactions contemplated under this Agreement. Neither the Companies or their
subsidiaries, nor their assets, properties or business, is subject to any
judgment, order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal. Neither the Sellers, the Companies nor their subsidiaries
is subject to any judgment, decree, injunction, ruling or order of any court,
applicable governmental authority or arbitrator which could prohibit, restrict
or delay consummation of the transactions contemplated by this Agreement. To
the knowledge of the Sellers, no audit, investigation or enforcement proceeding
of a criminal, civil or administrative nature by any audit, investigative or
enforcement agency of any government (including any written notice of qui tam
action brought under the Civil False Claims Act) is pending against any of the
Companies or their subsidiaries.
2.14 Taxes.
-----
(a) Each Company, each of its subsidiaries and, with respect to the
conduct of the business and the ownership of the assets of each Company and its
subsidiaries, each affiliated, consolidated combined or unitary tax group of
which any Company or any of its subsidiaries has been a member (an "Affiliated
----------
Group"), have timely and accurately filed (or will timely and accurately file)
-----
all material federal, state, local and foreign Tax returns, reports and
declarations required to be filed by such entity on or prior to the Closing
Date, (b) all Taxes shown as due thereon or claimed to be due by any taxing
authority with respect to such Tax returns, reports and declarations, whether or
not shown as due thereon, have been paid or are being contested in good faith by
appropriate proceedings, (c) each of the Companies and their subsidiaries has
withheld and paid all material Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and (d) no claim for assessment and
17
collection of Taxes in respect of the business or assets of any Company or any
of its subsidiaries is being asserted or threatened in writing against any
Seller, any Company or any of its subsidiaries, or any Affiliated Group other
than assessments for Taxes neither due nor in default or are being contested in
good faith by appropriate proceedings. Chem Nuclear is, and since December 31,
1996 has been, treated as a "partnership," within the meaning of Section 761(a)
of the Internal Revenue Code of 1986, as amended (the "Code") and all relevant
----
provisions of state and local Tax law. There are no tax allocation, tax
indemnity or tax sharing agreements between either Company and its subsidiaries,
on the one hand, and any Seller or any affiliate of any Seller (other than the
Companies and their subsidiaries), on the other hand. "Taxes" means all
-----
federal, state, local or foreign taxes, however denominated, including, without
limitation, income taxes, franchise taxes, withholding taxes, unemployment
insurance taxes, social security taxes, sales and use taxes, excise taxes, real
and personal property taxes, stamp taxes, transfer taxes, workers' compensation
taxes, gross receipts taxes, value added taxes, ad valorem taxes, intangibles
taxes, payroll taxes, excise taxes, customs and other duties and other similar
taxes or governmental charges and assessments, together with all interest and
penalties payable with respect thereto.
(b) Except as set forth in Section 2.14 of the Disclosure Letter,
there is no action, suit, proceeding, audit or investigation pending or, to the
knowledge of the Sellers, threatened in writing regarding any Taxes in respect
of the business or assets of the Companies or their subsidiaries. There is no
agreement, waiver or consent providing for an extension of time with respect to
the assessment or collection of any Taxes against the Companies or their
subsidiaries and no power of attorney granted by the Companies or their
subsidiaries with respect to any Tax matters is currently in force.
(c) Section 2.14 of the Disclosure Letter sets forth (i) all federal
tax elections made in the form of separate documents since July 1, 1998 that are
currently in effect with respect to the Companies and their subsidiaries and
(ii) all elections made in the form of separate documents since July 1, 1998 for
purposes of foreign, state or local Taxes and all consents or agreements made in
the form of separate documents since July 1, 1998 for purposes of federal,
foreign, state or local Taxes in each case that reasonably could be expected to
affect or be binding on the Companies or their subsidiaries or their assets or
operations after the Closing Date. Section 2.14 of the Disclosure Letter sets
forth all material changes in accounting methods for Tax purposes made or agreed
to since July 1, 1998 with respect to the Companies or their subsidiaries.
(d) Except as set forth in Section 2.14 of the Disclosure Letter,
neither the Companies nor their subsidiaries have (i) executed or filed with the
Internal Revenue Service any consent to have the provisions of Section 341(f) of
the Internal Revenue Code apply to it, (ii) been subject to Section 999 of the
Code, or (iii) been a passive foreign investment company as defined in Section
1296(a) of
18
the Code, or (iv) since January 1, 1995, been a partner in a partnership or an
owner of an interest in an entity treated as a partnership for federal income
tax purposes.
(e) Each of the Sellers is a United States person within the meaning
of Section 7701(a)(30) of the Code.
(f) None of the Companies or their subsidiaries have any net operating
losses subject to limitation under Section 382 of the Code.
(g) Except as set forth in Section 2.14 of the Disclosure Letter,
there is no net operating loss, net capital loss, unused investment or other
credit, unused foreign tax, or excess charitable contribution allocable to the
Companies or their subsidiaries.
2.15 Absence of Changes. Since September 30, 1999, no event has
------------------
occurred or condition changed that has had, either individually or in the
aggregate, a Material Adverse Effect. Since September 30, 1999, other than in
connection with the transactions contemplated by this Agreement, the Companies
and their subsidiaries have conducted their business in the ordinary course, in
substantially the same manner in which it has been previously conducted and no
Company nor any of its subsidiaries has, without the written consent of the
Purchaser:
(a) purchased or redeemed any shares of its membership interests or
capital stock;
(b) mortgaged, pledged or subjected to any Lien any of its properties
or assets, except for Liens incurred in the ordinary course of business and
Permitted Liens;
(c) except as required by GAAP, made any material change in its
accounting principles or the methods by which such principles are applied for
financial reporting purposes;
(d) increased the compensation of any officer or employee, other than
(i) in the ordinary course of business and consistent with past practice or (ii)
to comply with applicable law;
(e) disposed or agreed to dispose of any material properties or assets
necessary for the conduct of their business, other than in the ordinary course
of business;
(f) canceled or forgiven any material debts or claims except in the
ordinary course of business;
19
(g) incurred any loss materially and adversely affecting any of its
assets or properties as the result of any fire, explosion, flood, windstorm,
earthquake, labor trouble, riot, accident, act of God, or public enemy or armed
forces or other casualty;
(h) incurred any indebtedness other than in the ordinary course of
business or assumed, guaranteed or otherwise became responsible for the
indebtedness of any other party other than in the ordinary course of business;
(i) declared or made payment of, or set aside for payment, any
dividends or distributions of any assets;
(j) written down the value of any material assets or written-off as
uncollectible any material notes or accounts receivable, except write-downs and
write-offs in the ordinary course of business, none of which individually or in
the aggregate, are material;
(k) entered into any transaction other than in the ordinary course of
business;
(l) entered into any government contract or any customer contract
involving in excess of $1,000,000;
(m) submitted a proposal involving in excess of $1,000,000;
(n) entered into any teaming agreement or joint venture agreement;
(o) entered into any employment, severance or change-of-control
agreement;
(p) directly or indirectly paid any severance or termination pay to
any officer or employee in excess of three months' salary;
(q) made capital expenditures or entered into commitments therefor,
aggregating more than $1,000,000;
(r) amended or otherwise changed any of the organizational documents
of the Companies or their subsidiaries;
(s) issued or sold, authorized for issuance or sale, granted any
options or made any other agreements with third parties with respect to any
equity interest in the Companies or their subsidiaries;
(t) established or adopted any Plan; modified, amended, or restated in
any material respect, or terminated any Plan;
20
(u) compromised or settled any material claim;
(v) acquired the capital stock or equity interests of another entity
or acquired all or substantially all of the assets of another entity; or
(w) made an agreement to do any of the foregoing.
provided, however, that no provision of this Agreement shall restrict the
-------- -------
ability of any Company or any of its subsidiaries to distribute all of its cash,
cash equivalents and intercompany accounts receivable or use all of its cash and
cash equivalents on or prior to the close of the business day immediately
preceding the Closing Date, through legal dividends to its stockholders,
repayment of outstanding liabilities or otherwise.
2.16 Environmental and Nuclear Matters.
---------------------------------
(a) Each Company and its subsidiaries have been duly issued, will
maintain through the Closing and have timely filed applications for, all
permits, licenses, authorizations, registrations and other governmental consents
necessary to operate their business ("Environmental Permits") under federal,
---------------------
state, local, and other governmental laws, regulations, statutes, rules,
judgments, orders, common law rulings, and ordinances governing any matters
arising out of, resulting from or relating to the pollution, contamination or
protection of the environment, including those relating to the manufacture,
processing, distribution, use, treatment, generation, storage, disposal,
transport, handling or Releases (as defined below) of Hazardous Substances (as
defined below) ("Environmental Laws") and all Environmental Permits are in full
------------------
force and effect, except where the failure to hold, obtain, or comply with such
permits would not have a Material Adverse Effect. All Environmental Permits are
listed on Section 2.16 of the Disclosure Letter. There has been no Release of
Hazardous Substances at, on, under or from (i) the Owned Real Property, (ii) the
Leased Real Property or (iii) any real property currently operated or formerly
owned, operated or leased by the Companies or their subsidiaries (for purposes
of this Section 2.16, (i), (ii) and (iii) shall be referred to as the "Real
----
Property"), during the period of such ownership, operation or tenancy, except
--------
(x) in accordance with Environmental Permits, (y) for Releases at, on, under or
from sites operated by the Companies or the subsidiaries for which neither the
Companies or their subsidiaries have or could have actual or potential
liability; or (z) as would not have a Material Adverse Effect. None of the
Environmental Permits listed on Section 2.16 of the Disclosure Letter require
consent, notification or other action to remain in full force and effect
following consummation of the transactions contemplated hereby.
(b) Each Company and its subsidiaries have complied and are in
compliance with all applicable Environmental Laws or any written notice or
21
demand letter issued thereunder, except where the failure to so comply would not
have a Material Adverse Effect.
(c) Neither the Companies nor any of their subsidiaries have any
liability, known or unknown, under any Environmental Law, except for liabilities
(w) that are reflected or reserved against in the Financial Statements, (x) that
will be reflected on the Closing Balance Sheets, (y) incurred in the ordinary
course of business in accordance with commercially reasonable business practices
and in accordance with Environmental Law, or (z) would not have a Material
Adverse Effect. There are no pending or, to the knowledge of the Sellers,
threatened actions, fines, penalties, sanctions, suits, orders, claims, legal
proceedings or other proceedings under Environmental Laws ("Environmental
-------------
Proceedings") with respect to the business of the Companies or their
-----------
subsidiaries, the Owned Real Property, the Leased Real Property, any real
property currently operated by the Companies or any of their Subsidiaries, nor
to Seller's Knowledge, any real property formerly owned, operated, or leased by
the Companies or any of their Subsidiaries. No Environmental Proceedings are
pending against the Sellers or the Companies or the Companies' subsidiaries with
respect to any real property formerly owned, operated, or leased by the
Companies or their subsidiaries. Neither the Sellers, the Companies, nor any
subsidiary of the Companies, has received any written notice of any information
request pursuant to a governmental authority's information-gathering powers
under Environmental Laws such as an information request pursuant to section
104(e) of the Comprehensive Environmental Response, Compensation and Liability
Act or any complaint, order, directive, citation, notice of responsibility, or
notice of potential responsibility, from any governmental authority or any other
person or entity or is aware of any fact(s) which might reasonably form the
basis for any such actions or notices arising out of or attributable to: (i) the
current or past presence, Release, or threatened Release of Hazardous Substances
at, on, under or from any part of the Real Property; (ii) the off-site disposal
or treatment of Hazardous Substances originating at, on, under or from the Real
Property, or the businesses or assets of the Companies or any of their
subsidiaries (or any predecessors-in-interest of any of them); or (iii) any
violation of Environmental Laws at any part of the Real Property or arising from
the activities of the Companies, any of their subsidiaries or any of their
predecessors involving Hazardous Substances.
(d) Neither the Companies or any of their Subsidiaries owns or
operates or has owned or operated, and none of the real property currently owned
and, to Seller's knowledge, none of the real property currently leased by the
Companies or any of their subsidiaries contains septic systems, drywells, or
underground containers, including but not limited to treatment or storage tanks,
or underground piping associated with such containers, used currently or in the
past for the management of Hazardous Substances. No portion of such properties
is or has been used as a dump or landfill, except Chem-
22
Nuclear's permitted disposal facility in Xxxxxxxx, South Carolina, or consists
of or contains filled in land such that the Companies or their Subsidiaries
could incur losses or liabilities, nor to Seller's knowledge, do such properties
contain federally-protected wetlands. With respect to any real property formerly
owned or leased by the Companies or their subsidiaries (or their respective
predecessors-in-interest), during the period of such ownership or tenancy, no
portion of such property was used as a dump or landfill. Neither any of the
Companies, their subsidiaries, nor to the knowledge of the Sellers, any other
person, have disposed of any Hazardous Substances on any real property operated
by the Companies or any of their Subsidiaries in violation of any Environmental
Law or, except as would not have a Material Adverse Effect, in a manner that
could result in liability to the Companies or their Subsidiaries under
Environmental Law. To Seller's knowledge, neither PCBs nor asbestos-containing
materials are present on or in the Owned Real Property or Leased Real Property
or the improvements thereon such that the Company or any of their Subsidiaries
is or could be liable for the remediation or abatement of such materials.
(e) Sellers have made available to Purchaser copies of all written
reports, audits (including, but not limited to, internal compliance audits) and
other assessments or allegations concerning actual or potential liabilities
under Environmental Laws or environmental conditions in its possession or under
its control that relate to (i) the Real Property, (ii) compliance with
Environmental Laws, or (iii) any other real property that the Companies or their
subsidiaries (or their respective predecessors-in-interest) formerly owned,
operated, or leased.
(f) Neither the Companies, nor any of their Subsidiaries, nor any
other person for whom the Companies or their Subsidiaries are or could be
liable, has arranged, by contract, agreement, or otherwise, for the
transportation, disposal or treatment of Hazardous Substances at any location
that is not currently owned or operated by the Companies or their Subsidiaries,
except for facilities of customers of the Companies or their subsidiaries or as
set forth in Schedule 2.16. Neither the Owned Real Property, the Leased Real
Property, other property operated by the Companies or its Subsidiaries nor, to
the Knowledge of Sellers, any location listed on Schedule 2.16 or any real
property previously owned or leased by the Companies or their Subsidiaries is
listed or proposed to be listed on the National Priorities List or CERCLIS or on
any other governmental database or list of properties that may or do require
investigation or cleanup under Environmental Laws.
(g) No Lien in favor of any person relating to or in connection with
any claim under any Environmental Law has been filed or has attached to the
currently owned, operated or leased Real Property, or to Seller's knowledge, to
any formerly owned, operated, or leased Real Property.
23
(h) For purposes of this Agreement, "Hazardous Substances" means any
--------------------
wastes, substances, radiation, or materials (whether solids, liquids or gases)
(i) which are hazardous, toxic, infectious, explosive, radioactive,
carcinogenic, or mutagenic; (ii) which are or become defined as a "pollutants",
"contaminants", "hazardous materials", "hazardous wastes", "hazardous
substances", "toxic substances", "radioactive materials", "source material",
"byproduct materials", "special nuclear materials", "licensed materials", "solid
wastes", or other similar designations in, or otherwise subject to regulation
under, any Environmental Laws; (iii) without limitation, which contain
polychlorinated biphenyls (PCBs), asbestos and asbestos-containing materials,
lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum
products (including, without limitation, crude oil or any fraction thereof) or
(iv) which pose a hazard to human health, natural resources, or the environment.
(i) For purposes of this Agreement, "Release" means any emission,
-------
spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring,
emptying, dumping, disposal, or release or threatened release of Hazardous
Substances into or upon the environment, including the air, soil, improvements,
surface water, groundwater, the sewer, septic system, storm drain, publicly
owned treatment works, or waste treatment, storage, or disposal systems.
2.17 Banking and Agency Arrangements. Section 2.17 of the Disclosure
-------------------------------
Letter sets forth a list of:
(a) each bank or similar financial institution in which any Company or
any of its subsidiaries has an account or safe deposit box or other custodial
arrangement and the numbers of such accounts or safe deposit boxes maintained by
the Companies and their subsidiaries; and
(b) the names of all persons authorized to draw on each such account
or to have access to any such safe deposit box facility.
2.18 Affiliate Transactions. No Company nor any of its subsidiaries
----------------------
is a party to any agreement with (a) any of their respective directors or
officers or (b) any Seller or any affiliate of any Seller other than any of the
Companies and their subsidiaries (such affiliates, "Non-Company Affiliates").
----------------------
Section 2.18 of the Disclosure Letter sets forth a list of all material services
provided by any Seller or any Non-Company Affiliate to any Company or its
subsidiaries.
2.19 Brokers. All negotiations relating to this Agreement and the
-------
transactions contemplated hereby have been carried out without the intervention
of any person acting on behalf of either Seller or any Company in such manner as
to give rise to any valid claim against the Purchaser or any Company for any
brokerage or finder's commission, fee or similar compensation, except for
24
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corp., whose fees and expenses in
respect hereof will be the responsibility of the Sellers or one or more Non-
Company Affiliates.
2.20 Insurance. The Companies and their subsidiaries, or one or more
---------
Non-Company Affiliates, maintain and have maintained all such insurance policies
for the structures, facilities, fixtures, machinery, equipment, motor vehicles,
inventory and other properties and assets of the Companies and their
subsidiaries and with respect to their employees and operations as are set forth
on Section 2.20 of the Disclosure Letter. All such insurance policies are in
full force and effect, and the Companies and their subsidiaries are in
compliance with all requirements and provisions thereof. Said insurance
policies' applicable limits of insurance have not been materially impaired or
substantially compromised, and on the date hereof adequate limits of insurance
remain in force for all such policies to fully respond to pending and future
litigation, claims or losses covered by such policies. Neither the Companies nor
their subsidiaries have received any notice of cancellation or nonrenewal with
respect to, or disallowance of any claim under, any such insurance policies and
no policies maintained by the Companies or their subsidiaries are subject to any
retroactive rate or audit adjustments or coinsurance arrangements. Sellers have
no knowledge of the occurrence of any event giving rise to a material loss, or
which would, if a claim were asserted, give rise to a material loss, involving
the Companies' or their subsidiaries' business or operations or any of their
assets or properties which is covered by any such insurance. The Sellers have
received no notices that any of the Companies' or their subsidiaries' insurance
policies will not be renewed upon expiration thereof at premiums substantially
equivalent to those currently being paid. The Sellers have made available to
the Purchaser a list of all property damage, personal injury claims and workers'
compensation claims asserted against the Companies or their subsidiaries during
the past five years involving any claim in excess of $50,000. Neither the
Companies nor their subsidiaries have received any written notice from any
insurance company or insurance board of underwriters of the existence of any
default or unsafe condition with respect to the Companies' or their
subsidiaries' properties or business that remains unsatisfied or uncured or that
will remain unsatisfied or uncured as of the Closing Date. With respect to the
Companies' and their subsidiaries' insurance policies identified on Section 2.20
of the Disclosure Letter, (i) all premiums required to be paid with respect
thereto have been paid and (ii) there has been no lapse in coverage under such
policies during the last five years. Following the Closing, the Companies and
their subsidiaries shall have the right to timely tender claims under all of its
applicable insurance policies resulting from events or occurrences arising prior
to the Closing and the Sellers warrant that they will utilize reasonable
commercial efforts to pursue such claims. None of the insurance policies
applicable to the Companies or their subsidiaries contain change-of-control
provisions that would impact the insurance policies or the coverage following
the transactions contemplated hereby.
25
2.21 Names, Business and Location of Assets. Section 2.21 of the
--------------------------------------
Disclosure Letter sets forth the list of all names of entities under which the
Companies and their subsidiaries have conducted business. Set forth on Section
2.21 of the Disclosure Letter is a complete and accurate listing of all
locations at which, to the knowledge of the Sellers, the Companies and their
subsidiaries have conducted business as owner or lessor over the last ten years.
2.22 No Other Pending Transactions. Except for the transactions
-----------------------------
contemplated by this Agreement: (i) none of the Sellers is a party to or bound
by or the subject of any agreement, commitment or undertaking with respect to
the sale of the Nuclear Services Shares and (ii) neither the Companies nor their
subsidiaries is a party to or bound by or the subject of any agreement,
undertaking or commitment to merge or consolidate with, or acquire all or
substantially all of the property and assets of, any other person or entity, or
to sell all or substantially all of their properties and assets to any other
person or entity.
2.23 Prohibited Payments. To Sellers' knowledge, neither the
-------------------
Companies nor their subsidiaries, nor any of their directors, officers, owners
or affiliates, nor anyone acting on their behalf has (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds, (iii) established or
maintained any unlawful fund of corporate monies or other assets, or (iv) made
any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
2.24 Officers and Directors; Employee Compensation. Section 2.24 of
----------------------- ---------------------
the Disclosure Letter sets forth a list, as of the date hereof, of all corporate
officers and directors of the Companies and their Subsidiaries.
2.25 Accounts Receivable. The accounts and other receivables set
-------------------
forth in the Offer Balance Sheets, or arising after the date thereof, have or
shall have arisen in the ordinary course of business of the Companies or their
subsidiaries for goods sold and invoiced or services performed. To the best of
Sellers' knowledge, except as otherwise reflected in the Offer Balance Sheets,
all said receivables are collectible in amounts aggregating not less than the
full recorded amounts thereof (less allowance for doubtful accounts set forth in
the Offer Balance Sheets or accrued after the date thereof in the ordinary
course of business consistent with past practice) and are subject to no offsets,
except for normal trade discounts.
2.26 Year 2000 Compliance. Each system owned or used by the
--------------------
Companies and their subsidiaries comprised of software, hardware or databases,
the operational failure of which would be reasonably likely to result in a
Material Adverse Effect (collectively, a "System") is able to accurately
------
process date data
26
including, but not limited to, calculating, comparing and sequencing from, into
and between the twentieth century (through year 1999), the year 2000 and the
twenty-first century, including leap year calculations (having such ability
being referred to herein as "Year 2000 Compliant"). Neither the Companies nor
-------------------
any of their subsidiaries will incur material expenses arising from or relating
to the failure of any of their Systems to be Year 2000 Compliant.
3. Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Sellers as follows:
3.1 Corporate Status and Authority. The Purchaser is a corporation
------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements and perform its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the Ancillary Agreements have been duly authorized by the board of
directors of Purchaser, which constitutes all necessary corporate action on the
part of Purchaser for such authorization. This Agreement and, as of the
Closing, the Ancillary Agreements have been duly executed and delivered by the
Purchaser and constitute the valid and binding obligations of the Purchaser,
enforceable against it in accordance with their terms, except as limited by laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
3.2 No Conflicts; Consents and Approvals, etc.
-----------------------------------------
(a) The execution, delivery and performance of this Agreement and the
Ancillary Agreements by the Purchaser will not result in (i) any conflict with
or violation of the certificate of incorporation or by-laws of the Purchaser,
(ii) subject to obtaining the consents referred to in Section 3.2(b), any breach
or violation of or default (or give rise to any right of termination,
cancellation or acceleration) under any law, statute, rule, regulation,
judgment, order, writ, injunction, decree, license, permit or other governmental
authorization or any mortgage, lease, agreement, deed of trust, note, bond,
indenture, lien or any other instrument to which the Purchaser is a party or by
which it or its properties or assets are bound, (iii) the creation or imposition
of any Lien, except for such breaches, violations or defaults and such Liens
which would not, individually or in the aggregate, impair the ability of the
Purchaser to fulfill its obligations hereunder.
(b) No consent, approval or authorization of or filing with any third
party or governmental authority is required on the part of the Purchaser in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except (i) filings required with
respect to the HSR Act and (ii) filings, consents or approvals which, if not
27
made or obtained, would not impair the ability of the Purchaser to fulfill its
obligations hereunder.
3.3 Financial Ability to Perform. The Purchaser has available or
----------------------------
access to cash funds sufficient to consummate the transactions contemplated by
this Agreement.
3.4 Litigation. There are no judicial or administrative actions,
----------
suits, proceedings, arbitrations or investigations involving the Purchaser that
are pending or, to the knowledge of the Purchaser, threatened, which question
the validity of this Agreement or any action taken or to be taken by it in
connection herewith or which seek to prohibit, restrict or delay consummation of
the transactions contemplated under this Agreement. The Purchaser is not
subject to any judgment, decree, injunction, ruling or order of any court,
applicable governmental authority or arbitrator which could prohibit, restrict
or delay consummation of the transactions contemplated by this Agreement.
3.5 Purchase for Investment. The Purchaser is acquiring the Nuclear
-----------------------
Services Shares for investment and not with a view toward any resale or
distribution thereof except in compliance with the Securities Act of 1933, as
amended.
3.6 Brokers. All negotiations relating to this Agreement and the
-------
transactions contemplated hereby have been carried out without the intervention
of any person acting on behalf of the Purchaser in such manner as to give rise
to any valid claim against either of the Sellers or any of their affiliates for
any brokerage or finder's commission, fee or similar compensation.
4. Covenants.
---------
4.1 Satisfaction of Closing Conditions. The parties shall use their
----------------------------------
commercially reasonable best efforts to bring about the satisfaction as soon as
possible of all the conditions contained in Section 6. Without limiting the
generality of the foregoing, the parties shall apply for and diligently
prosecute all applications for, and shall use their commercially reasonable best
efforts promptly to obtain, such consents, authorizations and approvals from
such third parties and governmental authorities as shall be necessary to permit
the consummation of the transactions contemplated by this Agreement including,
without limitation, making the requisite filings with the Federal Trade
Commission and the Antitrust Division of the Department of Justice pursuant to
the HSR Act, provided that, except for customary filing fees and routine
--------
expenditures, in no event shall any party be required to expend material funds
or incur material obligations to obtain a third party or governmental consent,
authorization or approval. In the event that all such consents, authorizations
and approvals are not obtained by the Closing and the Purchaser waives the
condition set forth in Section 6.2.2, then the Purchaser will, and will cause
the Companies
28
to, indemnify, on a joint and several basis, each Seller and its affiliates from
and against any loss, obligation, cost or expense (including reasonable
attorneys' fees) that any of them may suffer as a result of such consents,
authorizations and approvals having not been obtained.
4.2 Conduct of Business, etc. From the date hereof until the
------------------------
Closing, except (i) for entering into and performing under this Agreement, (ii)
as set forth in the Disclosure Letter, (iii) for the effect of the consummation
of the transactions contemplated hereby, and (iv) as otherwise consented to by
the Purchaser in writing, such consent not to be unreasonably withheld, the
Sellers shall cause the Companies and their respective subsidiaries to conduct
the Business in the ordinary course in substantially the same manner in which it
previously has been conducted and not take any action that would cause a breach
of Section 2.15. From the date hereof until the Closing, Sellers shall use
commercially reasonable efforts to cause each Company and each of its
subsidiaries to (i) maintain its existence in good standing; (ii) maintain its
properties in good repair and condition, subject to ordinary wear and tear and
in accordance with past practice, and maintain all insurance in effect on the
date of this Agreement, except for changes to such insurance in the ordinary
course of business that do not materially adversely affect the extent or the
subject matter of the coverage provided thereby, and (iii) use commercially
reasonable efforts to preserve its business intact and to preserve for the
Companies and their subsidiaries the good will of its customers and others
having business relationships with the Companies and their subsidiaries.
4.3 Access and Information. The Sellers shall cause the Companies
----------------------
and their subsidiaries to give to the Purchaser and its representatives
reasonable access at all reasonable times to the properties, books and records
of the Companies and their subsidiaries and to furnish such information and
documents in their possession and/or control relating to the Companies and their
subsidiaries as the Purchaser may reasonably request, including, without
limitation, monthly consolidated balance sheets and income statements of each
Company and its subsidiaries, provided that the Purchaser shall not be entitled
to conduct tests of the soil, surface or subsurface waters, and air quality at,
in, on, beneath or about the Owned Real Property, the Leased Real Property or
any other real property operated by the Companies or their subsidiaries without
the prior written consent of the Sellers. Purchaser shall have the right but
not the obligation: (i) to inspect all records, reports, permits, applications,
monitoring results, studies, correspondence, data and any other information or
documents related to Hazardous Substances, compliance with Environmental Laws or
other environmental conditions; and (ii) to conduct visual, non-invasive
inspections of all buildings and equipment at the Owned Real Property and the
Leased Real Property for asbestos-containing materials or other Hazardous
Substances. Purchaser agrees to conduct such investigations in a manner that
minimizes the disruption to the business activities of the Companies and their
subsidiaries, and Sellers agree to permit Purchaser reasonable access to all
portions of the Owned
29
Real Property and Leased Real Property, both during business hours and after
business hours, upon reasonable notice to Sellers. All such information and
documents obtained by the Purchaser shall be subject to the terms of the
Confidentiality Agreement, dated October 13, 1999 (the "Confidentiality
---------------
Agreement"), between the Purchaser and the Sellers. The Purchaser hereby agrees
---------
that the provisions of the Confidentiality Agreement will apply to any
properties, books, records, data, documents and other information relating to
any Seller or any Non-Company Affiliate provided to the Purchaser or its
affiliates or any of their respective advisers or employees pursuant to this
Agreement whether before or after the Closing.
4.4 Taxes.
-----
(a) The Sellers shall pay (without duplication of amounts otherwise
payable), and shall indemnify and hold harmless the Purchaser Indemnitees (as
hereinafter defined) from and against, all Taxes of or payable by the Affiliated
Group or any member thereof, which includes the Sellers, the Companies and their
respective subsidiaries for all taxable periods or portions thereof ending on or
before the Closing Date (including, without limitation, reasonable out-of-pocket
attorneys' fees and other costs attributable to the assessment and collection
thereof), other than (x) any such Taxes and any interest and penalties arising
from any act or omission by the Purchaser or, after the Closing, any Company or
any of its subsidiaries or (y) any Xxxxxxxx-Related Taxes (as defined in Section
4.4(i)) accruing after December 31, 1999. The Purchaser shall be responsible for
all Taxes of or payable by any Company or its subsidiaries following the Closing
which are not described as being the responsibility of the Sellers in the first
sentence of this Section 4.4(a). In the case of Taxes, other than Xxxxxxxx-
Related Taxes accruing after December 31, 1999, that are payable with respect to
a taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon or related
to income or receipts, or (y) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or intangible),
deemed equal to the amount which would be payable if the taxable year ended at
the time of the Closing and Purchaser shall prepare books and working papers
(including a closing of the books) which will clearly demonstrate the income and
activities of the Companies and their subsidiaries for the period ending at the
time of the Closing and such post-closing partial period; and
(ii) in the case of Taxes, other than income taxes, imposed on a
periodic basis with respect to the assets of the Companies and their
subsidiaries or otherwise measured by the level of capital, revenue, sales,
equity or other comparable item, deemed to be the amount of such Taxes for the
entire period (or, in the case of such Taxes determined on an arrears basis, the
amount
30
of such Taxes for the immediately preceding period), multiplied by a fraction
the numerator of which is the number of calendar days in the period ending on
the Closing Date and the denominator of which is the number of calendar days in
the entire period.
(b) Returns. The Sellers shall cause Federal Services and each of its
-------
subsidiaries to join, for all taxable periods ending on or prior to the Closing
Date, (i) in the consolidated federal income tax returns which include the
Sellers and (ii) in the consolidated, combined or unitary state, local or
foreign income tax returns of or including the Sellers or any Non-Company
Affiliate with respect to which any Company or any of its subsidiaries (A) has
joined in the most recent taxable year or (B) is required by law to join in
filing, and shall prepare and file all such tax returns. CWM and CNS shall, to
the extent required by law, cause all Tax items attributable to Chem-Nuclear to
be reported on the federal income tax return of the Affiliated Group of which
they are members and on all state, local and foreign income and franchise tax
returns that either of them is required to file, in either case for all taxable
periods ending on or before the Closing Date, provided that if the Sellers
determine that they are unable to file any such return under applicable law, the
Purchaser shall, upon a Seller's request, cause such return (as prepared by
Sellers) to be duly and timely filed by Chem-Nuclear. The Sellers shall prepare
or cause to be prepared and file or cause to be filed on a timely basis all
other Tax returns in respect of each Company or its subsidiaries that are
required to be filed on or prior to the Closing Date or that relate to any
taxable period ending on or before the Closing Date and such returns will be in
proper form and filed with the appropriate governmental authority. The Sellers
shall also prepare, or cause to be prepared, and file, or cause to be filed, all
information returns required to be filed by or with respect to Chem-Nuclear
pursuant to Section 6031 of the Code, or any comparable provision of state,
local or foreign law, for all Tax periods ending on or before the Closing Date.
The Purchaser shall prepare or cause to be prepared and file or cause to be
filed Tax returns for any taxable period ending after the Closing Date required
of each Company and its subsidiaries and shall report on such returns (including
any consolidated federal income tax return filed by the Purchaser) any
transactions by or relating to such Company or any of its subsidiaries occurring
after the Closing. Any such tax returns which the Purchaser is responsible for
preparing and filing pursuant to the immediately preceding sentence that include
the taxable periods prior to the Closing Date shall, insofar as they relate to
any Company or any of its subsidiaries, be prepared on a basis consistent with
the last previous such returns filed in respect of such Company and its
subsidiaries (except to the extent counsel for the Purchaser renders a legal
opinion that there is no reasonable basis in law therefor or determines that a
return cannot be so prepared and filed without being subject to penalties).
Each party shall timely file any return for which it is responsible. The
Sellers shall not, or cause any Non-Company Affiliate to, amend any Tax returns
relating to periods or portions thereof ending on or prior to the Closing Date
that would result in any Tax
31
liability or obligation for the Purchaser or the Companies or their subsidiaries
for any period after the Closing Date.
(c) Election. On or before the due date for filing the federal income
--------
tax information return required to be filed by Chem-Nuclear (pursuant to Section
6031 of the Code) for the tax period ending on the Closing Date, at the option
of the Purchaser, an election pursuant to Section 754 of the Code shall have
been filed with respect to Chem-Nuclear.
(d) Refunds. The Sellers shall be entitled to retain, or receive
-------
immediate payment from any Company, its subsidiaries or the Purchaser of, any
tax refund (including, without limitation, refunds arising by reason of amended
returns filed after the Closing Date) or credit of federal, state, local or
foreign taxes (plus any interest thereon received with respect thereto from the
applicable taxing authority) relating to any Company or any of its subsidiaries,
that were paid with respect to a period ending on or prior to the Closing Date
and if Sellers were liable under this Agreement for the payment of such Taxes,
provided that there is no corresponding increase in a Tax attributable to the
Purchaser, the Companies or their subsidiaries after the Closing Date. In
addition, any reduction of Taxes ("Reduced Taxes") due with respect to the
-------------
assets or business of the Companies or their subsidiaries for any period or
partial period ending after the Closing Date that is attributable to an
adjustment on audit by a taxing authority requiring the Companies or their
subsidiaries to capitalize expenses or otherwise defer deductions that were
currently deducted on a Tax return as originally filed for periods ending on or
prior to the Closing Date shall be credited to the Sellers, and Purchaser shall
pay over such Reduced Taxes to the Sellers promptly after the receipt of any
refund of Taxes attributable thereto or the payment of any Reduced Tax or the
reporting of any Tax liability in an amount reflecting such Reduced Taxes, less
the reasonable expenses incurred by the Purchaser, if any, to amend any Tax
returns in order to pursue such refund. Any dispute with respect to Reduced
Taxes shall be resolved by the Third Party Accountant, and any such
determination by the Third Party Accountant shall be final. The Purchaser shall
be entitled to the benefit of any refund or credit of federal, state, local or
foreign taxes (plus any interest thereon received with respect thereto from the
applicable taxing authority) relating to any Company or any of its subsidiaries,
that were paid with respect to a period after the Closing Date. In addition,
any tax refund for a period before the Closing Date arising out of the carryback
of a loss or credit incurred by the Companies or their subsidiaries in a taxable
period ending after the Closing Date shall be the property of Purchaser and, if
received by the Sellers, shall be paid over promptly to the Purchaser. The
Purchaser and the Sellers agree to cooperate, and the Purchaser agrees to cause
each Company, its subsidiaries and its other affiliates to cooperate with the
Sellers, with respect to claiming any refund referred to in this Section 4.4(d),
provided that the Sellers shall not be obligated by the terms of this Section
4.4(d) to amend any Tax return previously filed in order to claim a
32
refund attributable to the carryback of a loss or credit incurred by the
Companies or their subsidiaries in a taxable period after the Closing Date.
(e) Cooperation. The Sellers and the Purchaser will provide each
-----------
other with such cooperation and information in their possession or to which they
have reasonable access as either of them reasonably may request of the other in
filing any return, amended return or claim for refund, determining a liability
for Taxes or a right to a refund of Taxes, or participating in or conducting an
audit or other proceeding in respect of Taxes. Each of the Purchaser and the
Sellers shall retain all returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Companies and their
subsidiaries for each taxable period first ending after the Closing Date and for
all prior taxable periods until the later of (i) the expiration of the statute
of limitations of the taxable periods to which such returns and other documents
relate, without regard to extensions except to the extent notified by the other
party in writing of such extensions for the respective Tax periods or (ii) six
years following the due date (without extension) for such returns. After the
Closing Date each tax return and report prepared or caused to be prepared by the
Purchaser, any Company or any of its subsidiaries with respect to such Company
or any of its subsidiaries which relates to any period that includes days on or
before the Closing Date shall be subject to pre-filing review by the Sellers.
In the event of any disagreement between the Purchaser, any Company or any of
its subsidiaries, on the one hand, and the Sellers, on the other hand, such
disagreement shall be resolved by the Third Party Accountant, and any such
determination by the Third Party Accountant shall be final. The fees and
expenses of the Third Party Accountant shall be borne 50% by the Purchaser and
50% by the Sellers. Unless otherwise agreed to by the parties, tax returns and
reports subject to such pre-filing review shall be submitted by the party
preparing such return to the other at least 30 days prior to the due date
(including extensions) of such return or report and the recipient shall either
complete its review or provide written comments on such return or report within
15 days of receipt of such return or report. After the Closing Date, each tax
return and report prepared or caused to be prepared by the Sellers or Non-
Company Affiliate with respect to the Companies or any of their subsidiaries
shall be prepared on a basis consistent with the last previous such returns
filed with respect to the Companies or such subsidiaries (except to the extent
counsel for the Sellers renders a legal opinion that there is no reasonable
basis in law therefor or determines that a return cannot be so prepared and
filed without being subject to penalties). The Sellers agree to provide
Purchaser with copies of all separate company state and federal income tax
returns, or information returns for partnerships, for the Companies and their
subsidiaries for the stub period ending in 2000 and the prior three tax periods
(1997 through 1999) within 30 days after they have been filed.
(f) Audits. Each of the Purchaser and the Sellers shall promptly
------
notify the other in writing within ten days from its receipt of notice of (i)
any pending or threatened federal, state, local or foreign tax audits or
assessments of
33
any Company or any of its subsidiaries, so long as any taxable periods of such
Company or subsidiary ending on or prior to the Closing Date remain open, and
(ii) any pending or threatened federal, state, local or foreign tax audits or
assessments of the Purchaser or any Seller which may affect the tax liabilities
of any Company or any of its subsidiaries, in each case for taxable periods
ending on or prior to the Closing Date. The Sellers shall have the right to
control the conduct and disposition of any tax audit or administrative or court
proceeding relating to any Company, its subsidiaries and any Affiliated Group
for taxable periods ending on or prior to the Closing Date and to employ counsel
of their choice at their expense and the Purchaser shall have the right to
consult with the Sellers during such proceedings at its own expense. The
Purchaser agrees that it shall, at its own expense, cooperate fully, and cause
each Company and its subsidiaries to cooperate fully, with the Sellers and its
counsel in the defense against or compromise of any claim in said proceeding. If
the Sellers do not assume the defense of any such audit or proceeding within a
reasonable period of time, the Purchaser may control the conduct and disposition
of the same in such manner as it may deem appropriate, and in such event the
Sellers shall indemnify the Purchaser for all its liabilities, obligations, and
out-of-pocket costs and expenses in connection therewith. In the event that
issues relating to a potential adjustment for which the Sellers would be liable
pursuant to this Section 4.4 are required to be dealt with in the same
proceeding as separate issues relating to a potential adjustment for which the
Purchaser would be liable, the Purchaser shall have the right, at its expense,
to control the audit or proceeding with respect to the latter issues. With
respect to issues relating to potential adjustment for which both the Sellers
and the Purchaser, the Companies or their subsidiaries could be liable, (i) each
party may participate in the audit or proceeding, and (ii) the audit or
proceeding shall be controlled by that party which would bear the burden of the
greater portion of the sum of the adjustment and any corresponding adjustments
that may reasonably be anticipated for future Tax periods. The principle set
forth in the immediately preceding sentence shall govern also for purposes of
deciding any issue that must be decided jointly (including, without limitation,
choice of judicial forum) in situations in which separate issues are otherwise
controlled under this Section 4.4 by the Purchaser and the Sellers. Neither the
Purchaser nor any Seller shall enter into any compromise or agree to settle any
claim pursuant to any Tax audit or proceeding which would adversely affect the
other party for such year or subsequent year, or would give rise to a claim for
indemnification under this Section 4.4, without the written consent of the other
party, which consent may not be unreasonably withheld.
(g) Conduct of Business. On the Closing Date, as to matters which
-------------------
could affect the tax returns of any Company or any of its subsidiaries with
respect to periods ending on or prior to the Closing Date, the Purchaser shall
cause such Company and each of its subsidiaries to carry on its business only in
the ordinary course in substantially the same manner as heretofore conducted.
34
(h) Payment of Transaction-Related Taxes. All transfer, sales, use
------------------------------------
and similar taxes, duties and transfer fees, including fees to record
assignments, arising out of the sale of the Nuclear Services Shares pursuant to
this Agreement shall be paid (or caused to be paid) one-half by the Purchaser
and one-half by the Sellers.
(i) Barnwell-Related Taxes. In addition to the foregoing, the Sellers
----------------------
shall pay all Taxes related to the operation of the Xxxxxxxx Facility
("Xxxxxxxx-Related Taxes") that are due to the State of South Carolina after the
----------------------
Closing Date to the extent that funds therefor have been collected by the
Companies or their subsidiaries from their customers prior to the Closing Date
and distributed by the Companies or their subsidiaries to the Sellers or a Non-
Company Affiliate.
(j) Tax Sharing Agreements. The Sellers shall hold harmless and
----------------------
indemnify the Purchaser against any Tax liabilities of the Companies or their
subsidiaries resulting from the existence of any tax sharing agreement between
the Sellers or a Non-Company Affiliate, on the one hand, and the Companies or
their subsidiaries on the other hand.
(k) Liability for Taxes of Other Persons. Each of the Sellers agrees
------------------------------------
to indemnify the Purchaser from and against any adverse consequences the
Purchaser may suffer resulting from, arising out of, relating to, in the nature
of, or caused by any liability of the Companies or their subsidiaries for Taxes
of the Sellers or any Non-Company Affiliate under Regulation Section 1.1502-6 of
the Code (or any similar provision of state, local or foreign law).
(l) Retention of Carryovers. Sellers will not elect to retain any net
-----------------------
operating loss carryovers or capital loss carryovers of the Companies or their
subsidiaries under Regulation Section 1.1502-20(g) of the Code.
4.5 Supplements to Disclosures. From time to time prior to the
--------------------------
Closing Date, the Sellers may amend or supplement the Disclosure Letter with
respect to any matter that, if existing or occurring at or prior to the Closing
Date, would have been required to be set forth or described therein or that is
necessary to complete or correct any information in any representation or
warranty contained in Section 2 and Sellers shall notify Purchaser in writing of
such amendment or supplement. For purposes of determining the fulfillment of
the condition precedent set forth in Section 6.4.1, no such amendment or
supplement shall be given effect; for all other purposes, including, without
limitation, Section 7.2.1, each such amendment and supplement shall be given
effect. At all times prior to the Closing, the Sellers shall as promptly as
possible notify the Purchaser in writing of the occurrence of any event as to
which any of them obtains knowledge that would make any of the representations,
warranties and disclosures made herein with respect to the Sellers, the
Companies or their subsidiaries untrue or misleading or which is reasonably
likely to result in the failure of a condition specified in Section 6 hereof.
35
4.6 Contact with Customers and Suppliers. Neither the Purchaser nor
------------------------------------
any of its agents, affiliates, employees, directors or officers shall contact
and communicate with any employees, customers, suppliers or licensors of any
Company and its subsidiaries in connection with the transactions contemplated
hereby except with the prior written consent of the Sellers, which consent will
not be unreasonably withheld, but may be conditioned upon an officer of either
of the Sellers being present at any such meeting or conference, among other
conditions as may be required by the Sellers.
4.7 Publicity. No press release or public announcement related to
---------
this Agreement, or the transactions contemplated hereby, shall be issued or made
without the joint approval of the Sellers and the Purchaser, unless required by
law (in the reasonable opinion of counsel) in which case the Sellers and the
Purchaser shall have the right to review such press release or announcement
prior to publication.
4.8 Release of Guarantees, Bonds, etc.
---------------------------------
(a) The Sellers, the Companies and their subsidiaries and certain Non-
Company Affiliates have, with respect to the business of the Companies and their
subsidiaries, (i) issued certain guaranties, and (ii) obtained certain surety or
performance bonds with respect to which a Seller or one or more Non-Company
Affiliates has reimbursement or indemnification obligations and, after the date
hereof and prior to the Closing, the Sellers, the Companies and their
subsidiaries and certain Non-Company Affiliates may, in its sole discretion but
after consulting with Purchaser, in the ordinary course of conduct of their
business, modify such guaranties or issue additional guaranties, or obtain
additional bonds. The Purchaser also acknowledges the Sellers, the Companies
and their subsidiaries and certain Non-Company Affiliates have been, or may be,
required to furnish security for the benefit of the issuer or issuers of such
bonds or in connection with such guaranties, including in the form of an
irrevocable stand-by letter or letters of credit. Such guaranties and such
additional guaranties, if any, and any security furnished in connection
therewith, are referred to herein as the "Guaranties", and such bonds and such
----------
additional bonds, if any, and any security furnished in connection therewith,
are referred to herein as the "Bonds". The Sellers have used reasonable efforts
-----
to list all Guaranties and Bonds outstanding as of the date hereof in Section
4.8 of the Disclosure Letter.
(b) The Purchaser shall use its commercially reasonable best efforts
(i) to obtain complete and unconditional release of the Sellers and any relevant
Non-Company Affiliates at the Closing with respect to all of the Guaranties and
Bonds identified in Section 4.8 of the Disclosure Letter or otherwise identified
by the Sellers to the Purchaser in writing at any time, including after the
Closing, and (ii) to cause the issuer or issuers thereof to terminate and
redeliver to the Sellers and such Non-Company Affiliates any
36
stand-by letters of credit or other security provided by the Sellers or such
Non-Company Affiliates in connection with any such identified Guaranties or
Bonds. The releases and the terminations referred to above in this Section
4.8(b) are collectively referred to as the "Guarantee Release".
-----------------
(c) If the Guarantee Release shall not have occurred in full on or
prior to Closing, then Purchaser shall (i) at the Closing, deliver to the
Sellers or to one or more Non-Company Affiliates designated by the Sellers an
irrevocable, standby letter of credit (the "Standby LoC") from a bank or other
-----------
financial institution reasonably satisfactory to the Sellers (the "Issuer"), in
------
an amount equal to the aggregate face amount of the Bonds and Guaranties
identified in Section 4.8 of the Disclosure Letter with respect to which any
Seller or any Non-Company Affiliate shall not have been completely and
unconditionally released (any such Bonds or other Guarantees being referred to
as "Outstanding") and (ii) indemnify and hold harmless each Seller and each Non-
-----------
Company Affiliate that is party to, or has furnished security in connection
with, any Outstanding Bond or Guaranty from any and all losses, claims,
liability or damage (including reasonable attorneys' fees and other costs and
expenses) in respect of any such Outstanding Bonds or Guaranties, including,
without limitation, interest on any unreimbursed payment made by such Seller or
Non-Company Affiliate at the prime rate posted from time to time by the Chase,
N.A. plus two percent (2%) per annum from the date of payment until the date
reimbursed, except that the Purchaser shall not be required to indemnify or hold
harmless any Seller or Non-Company Affiliate to the extent that the losses,
claims, liability or damage arise from events or conditions that entitle any
Purchaser Indemnitee to indemnification pursuant to Section 7.2 hereof, taking
into consideration the deductible and the maximum limitation, as applicable, in
Section 7.2.1(c). The Standby LoC shall have the following terms and
conditions:
(i) The Standby LoC shall be for an initial term of one year
following the Closing Date and shall provide that it shall be automatically
renewed from time to time at each renewal date thereafter for an additional one-
year term unless and until all Outstanding Guaranties and Bonds identified in
Section 4.8 of the Disclosure Letter shall have been terminated. The Standby LoC
shall further provide that the issuer shall give the Sellers notice not more
than 60 nor less than 30 days prior to each renewal date whether the Standby LoC
has been renewed for an additional year and, if it has been renewed, the amount
for which it has been renewed;
(ii) The Sellers shall be entitled to draw upon the Standby LoC
upon presentation of a sight draft of either Seller accompanied by a certificate
of such Seller stating that (x) a claim in respect of any of the Guaranties or
the Bonds identified in Section 4.8 of the Disclosure Letter has been asserted
against such Seller or any Non-Company Affiliate, or (y) the Purchaser shall not
have notified the Sellers at least 30 days prior to any scheduled renewal date
and within 15 days of the written request therefor by the
37
Sellers that either (A) the Standby LoC has been renewed, or (B) all Outstanding
Guaranties and Bonds identified in Section 4.8 of the Disclosure Letter have
been terminated (and all security furnished in connection therewith shall have
been released and redelivered to the Sellers or such Non-Company Affiliate) and
delivered to the Sellers reasonably satisfactory evidence of such termination;
(iii) The right of any Seller to draw upon the Standby LoC and to
receive any notices relating thereto shall be assignable by such Seller in whole
or part (from time to time and at any time), without the consent of the
Purchaser to any affiliate of such Seller or any trustee or agent for lenders to
such Seller or any of its affiliates, provided that the Seller has provided
written notice thereof to the Purchaser.
(d) Following the Closing, if there shall exist any Outstanding
Guaranties or Bonds:
(i) The Purchaser will use its commercially reasonable best efforts
to obtain the complete and unconditional release of the Sellers and any Non-
Company Affiliate with respect to such Outstanding Guaranties and Bonds (whether
by replacement of such Guaranties and Bonds or otherwise) and the Sellers shall,
and shall cause the Non-Company Affiliates to cooperate with Purchaser to secure
such releases. The commercially reasonable best efforts obligation in the
immediately preceding sentence shall include, without limitation, the obligation
to pay commercially reasonable consideration.
(ii) The Purchaser shall promptly pay to the Sellers, after receipt
by Purchaser of any invoice therefor, all reasonable out-of-pocket costs and
expenses of the Sellers and any Non-Company Affiliate (to the extent relating to
any period of time after the Closing) relating to Outstanding Guaranties and
Bonds which shall be deemed to include, without limitation, all fees, expenses
and other amounts payable under credit and bonding arrangements in respect
thereof, in each case until the complete and unconditional release of the
Sellers' and such Non-Company Affiliates' obligations with respect thereto.
(iii) Following the initial annual term of the Standby LoC, the
Purchaser shall cause the Standby LoC to be renewed each year, for an amount
equal to not less than the aggregate face amount of the Outstanding Guaranties
and Bonds identified in Section 4.8 of the Disclosure Letter at the time of
renewal plus the amount of any unreimbursed drawings or payments thereunder as
of the date of such renewal, and the Purchaser shall pay all fees, costs and
expenses relating to each such renewal.
4.9 Transition Services. The Sellers or their affiliates shall
-------------------
continue to provide to the Companies and their subsidiaries the services listed
in Section 4.9 of the Disclosure Letter on a cost basis (including agreed upon
38
allocated overhead expense) and otherwise on the terms and conditions set forth
in Section 4.9 of the Disclosure Letter.
4.10 Intercompany Accounts. All intercompany accounts between any
---------------------
Company or any of its subsidiaries, on the one hand, and any Seller or any Non-
Company Affiliate, on the other hand, shall be canceled as of the close of
business on the business day immediately preceding the Closing Date, except for
trade payables arising in the ordinary course of business. The accounts shall
be settled as follows: (a) to the extent that any Company and its subsidiaries
are indebted to any Seller or any Non-Company Affiliate, such debt shall be
canceled and the amount of the debt so canceled shall be deemed a capital
contribution by such Seller to such Company, and (b) to the extent that any
Seller or any Non-Company Affiliate is indebted to any Company and its
subsidiaries such debt shall be canceled and the amount of the debt so canceled
shall be deemed a dividend from such Company to such Seller.
4.11 Indemnification of Directors and Officers. The Purchaser shall
-----------------------------------------
cause each Company and its subsidiaries to honor their obligations to indemnify
and advance defense costs to each present and former officer or director of such
Company and its subsidiaries pursuant to its By-Laws and shall not permit the
Certificate of Incorporation or By-Laws of any Company or any of its
subsidiaries to be amended for a period of seven years in a manner which
adversely affects the indemnification rights of present and former directors and
officers of such Company or any of its subsidiaries, except as required by
applicable law.
4.12 Right to Use Certain Marks.
--------------------------
(a) To the extent that any trademarks, service marks, brand names or
trade, corporate or business names of either Seller or of any Non-Company
Affiliate ("Seller Marks") are used by any Company or any of its subsidiaries on
------------
stationery, signage, equipment, invoices, receipts, forms, packaging,
advertising and promotional materials, product, training and service literature
and materials, software or like materials ("Marked Materials") or appear on any
----------------
Company's or any of its subsidiaries' inventory at the Closing, such Company and
its subsidiaries may use such Marked Materials or sell such inventory for a
period of one year after the Closing, but the Purchaser shall not without prior
written consent of the Sellers, which consent shall not be unreasonably
withheld, use such Seller Marks in any other manner during such time. The
Seller Marks are listed in Section 4.12 of the Disclosure Letter.
(b) After the Closing, the Purchaser shall use reasonable commercial
efforts to cause each Company and its subsidiaries not to use any Marked
Materials (other than training materials or software for internal use only)
without first crossing out or marking over such Seller Marks or otherwise
clearly indicating on such Marked Materials that such Company and its
subsidiaries are no longer affiliates with either Seller or any Non-Company
Affiliate. After the
39
Closing the Purchaser shall procure that the Companies and their respective
subsidiaries do not reorder any Marked Materials. Within one year following the
Closing, the Purchaser shall cause each Company and its subsidiaries to replace
or alter any signage to remove any reference to Seller Marks and shall remove
any Seller Marks from any equipment, training materials or software.
4.13 Furnish Information for Purchaser's SEC Filings. The Sellers
-----------------------------------------------
will, and will cause the Companies to, as promptly as possible furnish all data
and information in their possession, or in the possession of any Non-Company
Affiliate, relating to the Companies and their subsidiaries as the Purchaser may
reasonably request in connection with its preparation of disclosures relating to
the transactions contemplated hereby for filing with the Securities and Exchange
Commission ("SEC") on a Current Report on Form 8-K or any other filing required
---
by the Securities Exchange Act of 1934, as amended.
4.14 Termination of Obligations of the Companies and their
-----------------------------------------------------
Subsidiaries. Sellers shall cause the Companies and their subsidiaries to be
------------
terminated or released as guarantors or parties to loan and financing agreements
between the Sellers or Non-Company Affiliates and their lenders as of the
Closing Date.
4.15 HSR Act. Sellers and the Purchaser shall, promptly after the
-------
execution and delivery of this Agreement, file with the Federal Trade Commission
and the Antitrust Division of the Department of Justice the notification
required to be filed with respect to the transactions contemplated by this
Agreement under the HSR Act and the rules and regulations thereunder (the
"Notification"). The parties hereto shall use their best efforts to (i) respond
-------------
promptly to any requests for additional information made by such agencies and
(ii) resist vigorously at their respective cost and expense any assertion that
the transactions contemplated hereby constitute a violation of the antitrust
laws, all to the end of expediting the Closing. Purchaser shall not be required
to dispose of or make any change in any portion of its business to obtain
consent, authorization or approval under the HSR Act. All fees required to file
the Notification and any related filings shall be paid by the Purchaser.
4.16 Further Assurances. From and after the Closing, each of the
------------------
Sellers and Purchaser agree to execute and deliver such further documents and
instruments and to do such other acts and things as the other party may
reasonably request (at the expense of the requesting party to the extent it
involves a material out-of-pocket expense) in order to effectuate the
transactions contemplated hereby. In the event any party shall be involved in
litigation, threatened litigation or government inquiries with respect to a
matter involving the Companies or their subsidiaries, the other parties shall
also make available to such first party, at reasonable times and subject to
reasonable requirements of its own business, such of its personnel as may have
information relevant to the matters provided such first party shall reimburse
the providing party for its
40
reasonable costs for employee time incurred in connection therewith if more than
one business day is required. Each party shall provide to the other and its
employees, agents and representatives access at reasonable times and upon
reasonable notice to information and documentation relating to pre-Closing
matters concerning the Companies and their subsidiaries including, without
limitation, insurance information.
4.17 Confidentiality. Each of the Sellers acknowledges and agrees
---------------
that it may possess certain data and knowledge of the Companies and their
subsidiaries, their business and their operations which are proprietary in
nature and confidential. Each of the Sellers agrees that it will not, and will
use reasonable efforts to cause its subsidiaries not to, at any time following
the Closing Date, use for its own benefit any confidential information or trade
secrets of the Companies or their subsidiaries that relate specifically to
Competition (as defined in Section 4.20 hereof), or reveal, divulge or make
known to any other person, firm, corporation or entity, any confidential
information or trade secrets regarding the Companies and their subsidiaries,
their business and their operations. At the Closing, Sellers shall deliver to
the Companies all lists of customers, books, records and all other property
constituting confidential information belonging to the Companies or their
subsidiaries. If at any time a Seller is requested or required (by oral
questions, interrogatories, requests for information or documents, subpoenas or
similar legal process) to disclose any such information, the Seller shall notify
Purchaser immediately and shall cooperate with Purchaser so that Purchaser may,
at its own expense, seek an appropriate protective order and/or waive compliance
with the provisions hereof. If, in the absence of a protective order or the
receipt of a waiver hereunder, in the reasonable opinion of the relevant
Seller's counsel, Seller is compelled to disclose such information to any
tribunal or any governmental agency to avoid being liable for contempt or
suffering any other loss or penalty, such Seller may disclose such information
to such tribunal or agency without liability hereunder; provided, however, that
such Seller shall give Purchaser prompt notice of such decision. Sellers shall
use commercially reasonable efforts to prevent their respective directors,
officers, employees, agents and representatives from violating the provisions of
this Section 4.17. For purposes hereof, the term "confidential information"
shall include, but not be limited to, information related to the production,
product specifications, intellectual property, pricing policies, bid strategies,
cost structure, personnel policies, customer and marketing relationships, method
or practice of soliciting business, and business and financial information of
the Companies and their subsidiaries. The restrictions contained in this
Section 4.17 shall not extend to any information which can be demonstrated to
have been (i) in the public domain prior to the Closing, or (ii) entered the
public domain after the Closing other than through disclosure by any of the
Sellers or their respective subsidiaries, directors, officers, employees, agents
or representatives.
41
4.18 Non-Solicitation. Each of the Sellers agrees that it will not,
----------------
and will use reasonable efforts to cause its subsidiaries not to, at any time
during the period of three years following the Closing Date, directly or
indirectly, solicit for employment or retention of, in any capacity, any
employee, or any consultant listed on Schedule 4.18 of the Disclosure Letter,
currently employed, retained or paid by the Companies or their subsidiaries,
provided that this covenant shall not apply to the general advertisement of
employment opportunities.
4.19 Non-Interference. Each of the Sellers agrees that it will not,
----------------
during the period of three years following the Closing Date, directly or
indirectly, for whatever reason, whether for its own account or for the account
of any other person, firm, corporation or entity solicit any of the customers
with whom the Companies or their subsidiaries provided services for the two year
period prior to the Closing Date for the purpose of causing such customers not
to engage, or continue to engage, the Companies or their subsidiaries to perform
---------
the services described in Section 4.20(i). Sellers shall use their best efforts
-------
to prevent their respective subsidiaries from violating the provisions of this
Section 4.19.
4.20 Non-Competition.
---------------
(a) The following terms, when used in this Section 4.20, shall have
the following meanings:
(i) "Competition" means (A) the provision of services with respect
to the management, packaging, consolidation, processing, treatment,
transportation and disposal of radioactive wastes, and (B) the operation of
radioactive waste treatment facilities, storage facilities and disposal sites.
For purposes of this Section 4.20, "radioactive waste" means "low-level
radioactive waste" and "high-level radioactive waste" or "spent nuclear fuel"
each as defined in the Nuclear Waste Policy Act of 1982, 42 U.S.C. (S) 10101 or
waste containing "source material" or "special nuclear material" as defined in
the Atomic Energy Act of 1954, 42 U.S.C. (S) 2014, provided, however,
-----------------
"radioactive waste" shall not include any type or quantity of "high-level
radioactive waste", "low-level radioactive waste", "spent nuclear fuel", "source
material" or "special nuclear material" that is not regulated as such by any
state or federal agency, commission or similar entity having jurisdiction over
possession, transportation, use, or disposal of such material.
(ii) "Directly or Indirectly" means either for one's own account
or as a partner, stockholder, owner, consultant or agent of another Person.
(iii) "Person" means an individual, corporation, partnership,
limited liability company, joint venture, trust or other entity.
42
(iv) "Restricted Territory" means the United States, Canada and
all other jurisdictions worldwide in which the Companies or their subsidiaries
is conducting or has conducted business at or prior to the Closing Date.
(b) The Sellers shall not, for a period of three years after the date
hereof, Directly or Indirectly, engage in Competition in the Restricted
Territory; provided that the Sellers may, without violating this covenant, own
as a passive investment not in excess of 5% of the outstanding equity interests
in a Person which engages in Competition.
(c) Sellers shall use their best efforts to prevent their respective
subsidiaries from violating the provisions of this Section 4.20.
(d) Each of the Sellers acknowledges and agrees that in view of the
nature of the business of the Companies and their subsidiaries and the business
objectives of the Purchaser in acquiring them, the foregoing territorial and
time limitations are reasonable and properly required for the adequate
protection of Purchaser and that in the event that any such territorial or time
limitation is deemed to be unreasonable, then such limitations shall be
automatically reduced to the maximum extent permitted by a court of competent
jurisdiction and, as reduced, the territorial and/or time limitation shall be
enforced.
4.21 Specific Performance. Sellers acknowledge that a violation of
--------------------
the foregoing covenants contained in Sections 4.17 through 4.20 may cause
irreparable injury to the Purchaser, the Companies or their subsidiaries and
that the Purchaser shall be entitled, in addition to any other rights and
remedies it may have, to injunctive relief without being required to prove
actual damages or post bond.
4.22 Project Financing and Equipment Purchasing for Oak Ridge
--------------------------------------------------------
Project. The Sellers or a Non-Company Affiliate shall provide to Purchaser, the
-------
Companies or their subsidiaries financing with respect to certain capital
expenditures to be incurred by the Companies or their subsidiaries on the Oak
Ridge Environmental Disposal Facility Contract (the "Oak Ridge Contract"), that
------------------
involves constructing and operating a landfill on the U.S. Department of
Energy's property in Oak Ridge, Tennessee pursuant to a loan agreement, security
agreement and related agreements agreed by the Sellers and the Purchaser and
having the terms and conditions set forth in Exhibit B (collectively, the "Loan
--------- ----
Agreement"). Notwithstanding the provisions of Section 4.8 hereof, the Sellers
---------
or a Non-Company Affiliate will also maintain and the Purchaser will pay or
reimburse for, as applicable, any premiums or other costs or expenses of any
letters of credit or bonds that are required under the terms of the Oak Ridge
Contract for as long as such letters of credit or bonds are required under the
terms of the Oak Ridge Contract. Purchaser will indemnify and promptly
reimburse the Sellers or a Non-Company Affiliate if and to the extent that such
43
letters of credit or bonds are drawn upon, for such amount drawn, in each case,
together with interest thereon at the prime rate announced from time to time by
Chase, N.A. plus two percent (2%) per annum from the date that the letters of
credit or bonds were drawn upon to the date of payment by the Purchaser.
4.23 Maintenance of Closure Surety Bond. Notwithstanding the
----------------------------------
provisions of Section 4.8 hereof, the Sellers or a Non-Company Affiliate shall
maintain and pay any premiums or other costs or expenses for the $3 million
closure surety bond on Chem-Nuclear's waste disposal facility in Xxxxxxxx, South
Carolina (the "Xxxxxxxx Facility") for as long as such closure surety bond is
-----------------
required by the applicable regulatory authorities of the State of South
Carolina, but in no event more than three years from the Closing Date.
Purchaser will indemnify and promptly reimburse the Sellers or a Non-Company
Affiliate if and to the extent that the closure surety bond is drawn upon, for
such amount drawn, together with interest thereon at the prime rate announced
from time to time by Chase, N.A. plus two percent (2%) per annum from the date
that the closure surety bond was drawn upon to the date of payment by the
Purchaser.
4.24 Computer Software. The Sellers will, or will cause their
-----------------
subsidiaries or affiliates to, transfer or assign to Purchaser, for no
additional consideration, all licenses and rights to use the Microsoft computer
software that is used in the business of the Companies or their subsidiaries, so
that the Purchaser may use such software after the Closing Date without cost or
expense. To the extent that the Companies or their subsidiaries do not have
sufficient licenses to use the Microsoft computer software, then the Sellers
will obtain such licenses at their cost and expense.
4.25 Waste Management Obligation. Waste Management, Inc. ("Waste
--------------------------- -----
Management") hereby agrees to become a party to this Agreement with respect to
----------
the covenants contained in Sections 4.17 through 4.24 and the term "Sellers" as
used therein shall also refer to Waste Management.
4.26 Purchase of Land. The Purchaser or one of its affiliates shall
----------------
use commercially reasonable efforts to purchase or acquire, within five (5)
years following the Closing, the parcels of property described in Section 4.26
of the Disclosure Letter.
5. Employees and Employee Benefit Plans.
------------------------------------
(a) Each employee of any Company or any of its subsidiaries and each
former employee of any Company or any of its subsidiaries entitled to any
compensation, benefits or other payments arising in connection with such former
employee's employment with any Company or any of its subsidiaries shall be
referred to as the "Company Employees." Nothing herein expressed or implied by
-----------------
this Agreement shall confer upon any Company Employee, or legal representative
thereof, any rights or remedies, including, without limitation, any
44
right to employment for any specified period, of any nature or kind whatsoever,
under or by reason of this Agreement. Except as otherwise provided by any
applicable collective bargaining agreement or other agreement pursuant to which
Company Employees participate in a Non-WMI Plan, the Purchaser will, or will
cause any Company or one of its subsidiaries or the Purchaser's subsidiaries, as
applicable, to provide each Company Employee who is employed by the Purchaser,
the Companies or their subsidiaries after the Closing Date with a salary or wage
level and bonus opportunity, to the extent applicable, and with employee
benefits and other terms and conditions of employment that are the same as the
benefits and terms and conditions provided to the Purchaser's employees of like
position with length of service with the Companies and their subsidiaries, up to
the Closing Date, to be recognized by the Purchaser for all purposes, including,
without limitation, for the purposes of the Purchaser's benefit plans (other
than accrual of benefits). From and after the Closing, the Purchaser shall, or
shall cause any Company or one of its subsidiaries or one of the Purchaser's
subsidiaries, as applicable, to honor, pay, perform, and satisfy any and all
liabilities, obligations and responsibilities to or in respect of each Company
Employee arising under the terms of or in connection with any of Purchaser's
benefit plans (which may include any WMI Plans in which, pursuant to the mutual
consent of the Sellers and Purchaser, Company Employees participate during a
transition period after the Closing Date) or any Non-WMI Plans and the Waste
Management Federal Services, Inc. M&I 401(k) Plan and the Waste Management
Federal Services, Inc. 125 Plan in which Company Employees continue to
participate after the Closing Date (except for any liabilities, obligations or
responsibilities for which the Purchaser Indemnitees are entitled to
indemnification under Section 7.2.1, taking into consideration the deductible
and the maximum limitation, as applicable, in Section 7.2.1(c)).
(b) Effective from and after the Closing, except as otherwise provided
by any applicable collective bargaining agreement or other agreement pursuant to
which Company Employees participate in a Non-WMI Plan and the Waste Management
Federal Services, Inc. M&I 401(k) Plan and the Waste Management Federal
Services, Inc. 125 Plan, the Purchaser shall cause each Company Employee and his
or her eligible dependents to be eligible to participate immediately in each
employee benefit plan maintained by the Purchaser and each other benefit
arrangement maintained by the Purchaser for the benefit of similarly situated
employees of the Purchaser (which may include any WMI Plans in which, pursuant
to the mutual consent of Sellers and Purchaser, Company Employees participate
during a transition period after the Closing Date) ("Purchaser's Plans"). In
-----------------
connection therewith, the Purchaser shall cause each of Purchaser's Plans that
are health benefit plans to give credit under Purchaser's Plans for the co-
payments and deductible expenses of the Company Employees and their eligible
dependents incurred prior to the Closing for the plan year in which the Closing
occurs under the Purchaser's Plans for similarly situated employees of
Purchaser. From and after the Closing, except to the extent accrued on the
Closing Balance Sheets, the Sellers shall remain solely responsible for
45
liabilities for contributions payable with respect to periods prior to the
Closing Date and claims of the Company Employees and their eligible dependents
incurred prior to the Closing Date under all of the WMI Plans which are employee
welfare benefit plans (as such term is defined in Section 3(l) of ERISA),
including, but not limited to, those Plans that are severance, health, short-
term disability, accident or life insurance plans (but not including the Waste
Management Federal Services, Inc. 125 Plan and the Waste Management Inc. Flex
Spending Account) and the Purchaser shall be solely responsible for all such
liabilities for contributions payable with respect to periods commencing on or
after the Closing Date and claims incurred by any Company Employee and his or
her eligible dependents on or after the Closing Date under any of the
Purchaser's Plans (which may include any WMI Plans in which, pursuant to the
mutual consent of Sellers and Purchaser, Company Employees participate during a
transition period after the Closing Date) or any Non-WMI Plans and the Waste
Management Federal Services, Inc. M&I 401(k) Plan and the Waste Management
Federal Services, Inc. 125 Plan in which Company Employees continue to
participate after the Closing Date. The Purchaser and the Sellers shall
cooperate in ensuring that welfare benefit coverage for Company Employees and
their eligible dependents prior to the Closing is coordinated with such coverage
provided after the Closing. Purchaser agrees to indemnify and hold harmless the
Seller Indemnitees from and against any Damages (other than negative claims
experience in excess of $100,000 per Transitional Employee, Qualified
Beneficiary and each dependent, if any, of such Transitional Employee or
Qualified Beneficiary) incurred or sustained by Seller Indemnitees as a result
of the continuing of such Company Employees in the WMI Plans pursuant to Section
4.9 including without limitation any liability under Section 4980B of the Code
or Section 601 through 607 of ERISA (COBRA).
(c) As soon as practicable after the Closing Date, employees of each
Company and its subsidiaries who were participants in the Waste Management
Retirement Savings Plan (the "Waste Management 401(k) Plan") and who are
----------------------------
actively employed by the Purchaser, the Companies or their subsidiaries after
the Closing Date shall commence participation in a tax-deferred savings plan
maintained by the Purchaser (the "Purchaser 401(k) Plan"). Prior to the Closing
---------------------
Date, each of the Purchaser and the Sellers shall deliver to the other party a
favorable determination letter from the IRS regarding the qualified status of
the Purchaser 401(k) Plan or the Waste Management 401(k) Plan, as the case may
be. Within two weeks after the signing of this Agreement, the Seller and the
Purchaser shall agree in writing to either (i) transfer assets from the Waste
Management 401(k) Plan in a trust to trust transfer to the Purchaser 401(k) Plan
(Alternative One) or (ii) permit Plan Participants to receive a distribution
under Section 401(k)(10) of the Code (Alternative Two), (in either case as
described below). Under Alternative One, as soon as practicable following the
later of (i) the expiration of a 30-day period following the date of filing of
any required notices with the IRS by the plan sponsor and the Purchaser, and
(ii) the Purchaser's reasonable determination that the transfer of assets will
not
46
jeopardize the qualified status of the Purchaser's 401(k) Plan, the Sellers
shall cause the transfer from the Waste Management 401(k) Plan to the Purchaser
401(k) Plan of the value of the full account balances of such employees in cash
and employee loans on the date of transfer (which account balances will have
been credited with appropriate earnings attributable to the period from the
Closing Date to the date of transfer described herein). Under Alternative Two,
the Sellers will permit each employee who is a participant in the Waste
Management 401(k) Plan to elect (i) to receive a distribution of the value in
his account less the amount of any outstanding loan to such participant under
such Plan (such participant's "Account Balance"), (ii) to roll over such
---------------
participant's Account Balance to an individual retirement account of such
participant or (iii) to roll over such participant's Account Balance (but for
purposes of this clause (iii) including the amount of any outstanding loan) in
cash and, if applicable, employee loan to the Purchaser 401(k) Plan as soon as
practicable after the Closing Date, and the Purchaser shall cause Purchaser
401(k) Plan to accept such transfers. WMI or the Sellers shall make all
matching and other contributions with respect to such employees that are
payable with respect to periods before the Closing Date.
(d) With respect to the Waste Management Inc. Spending Account ("WMI
---
Flex Plan"), WMI or Sellers shall take the reasonable and necessary action to
---------
transfer the account balances as of the date of transfer of the participants in
such plan who are employees of each Company and its subsidiaries ("Flex Plan
---------
Participants") to a plan established by the Purchaser with the current third
------------
party administrator of the WMI Flex Plan. Purchaser will reimburse the Sellers
or WMI for the aggregate amount, if any, advanced by Sellers or WMI under the
WMI Flex Plan for such Flex Plan Participants to the extent the account balance
transferred is not reduced by such amount.
6. Conditions Precedent.
--------------------
6.1 General. The respective obligations set forth herein of the
-------
Sellers and the Purchaser to consummate the sale and purchase of the Nuclear
Services Shares at the Closing shall be subject to the fulfillment, on or before
the Closing Date, in the case of the Sellers, of the conditions set forth in
Sections 6.2 and 6.3, and, in the case of the Purchaser, of the conditions set
forth in Sections 6.2 and 6.4.
6.2 Conditions to Obligations of Both Parties.
-----------------------------------------
6.2.1 HSR Act. The waiting period under the HSR Act shall have
-------
been terminated or expired.
6.2.2 Consents. All (i) governmental consents necessary to effect
--------
the transactions contemplated by this Agreement and to enable the Purchaser to
continue the business and operations of the Companies and their subsidiaries
after consummation of such transactions, and (ii) third party consents listed in
47
Section 6.2.2 of the Disclosure Letter, shall have been obtained. Such consents
shall be unqualified and unconditional or shall be subject only to such
qualifications or conditions as are consented to by the Purchaser and the
Sellers, such consent not to be unreasonably withheld.
6.2.3 No Injunction. There shall not be in effect any injunction or
-------------
other order issued by a court of competent jurisdiction restraining, prohibiting
or delaying the consummation of the transactions contemplated by this Agreement.
6.2.4 Simultaneous Sale and Purchase. The sale and purchase of all
------------------------------
of the Nuclear Services Shares shall be consummated simultaneously.
6.3 Conditions to Obligations of the Sellers.
----------------------------------------
6.3.1 Representations and Warranties of the Purchaser. The
-----------------------------------------------
representations and warranties in Section 3 shall be true and correct when made
and at and as of the Closing with the same effect as though made at and as of
such time, with such exceptions as are not, individually or in the aggregate,
material. The Purchaser shall have duly performed and complied in all material
respects with all agreements and covenants contained herein required to be
performed or complied with by it at or before the Closing.
6.3.2 Officer's Certificate. The Purchaser shall have delivered to
---------------------
the Sellers a certificate, dated the Closing Date and signed by an authorized
senior officer of it, as to the fulfillment of the conditions set forth in
Section 6.3.1.
6.3.3 Opinion of Counsel. The Sellers shall have received from Xxxxx
------------------
& Xxxxxxx L.L.P., counsel for the Purchaser, an opinion in substantially the
form of Exhibit C hereto.
---------
6.3.4 Ancillary Agreements. The Ancillary Agreements shall have been
--------------------
duly executed and delivered by Purchaser and shall be in full force and effect
with respect to the Purchaser.
6.4 Conditions to Obligations of Purchaser.
--------------------------------------
6.4.1 Representations and Warranties of the Sellers. The
---------------------------------------------
representations and warranties in Section 2 shall be true and correct when made
and at and as of the Closing with the same effect as though made at and as of
such time, with such exceptions as are not, individually or in the aggregate,
material. The Sellers shall have duly performed and complied in all material
respects with all agreements and covenants contained herein required to be
performed or complied with by either of them at or before the Closing.
6.4.2 Officer's Certificate. The Sellers shall have delivered to
---------------------
the Purchaser a certificate, dated the Closing Date and signed by an authorized
48
senior officer of each Seller, as to the fulfillment of the conditions set forth
in Section 6.4.1.
6.4.3 Opinion of Counsel. The Purchaser shall have received from
------------------
Debevoise & Xxxxxxxx, counsel for the Sellers, an opinion in substantially the
form of Exhibit D hereto.
---------
6.4.4 Resignations. The directors and officers of the Companies and
------------
their subsidiaries who are listed on Section 6.4.4 of the Disclosure Letter
shall have submitted their written resignations from the Boards of Directors and
other positions with the Companies and their subsidiaries, effective as of the
Closing Date.
6.4.5 Tax Certificate. Each Seller shall have delivered to the
---------------
Purchaser the certificate described in Treasury Regulation Section 1.1445-
2(b)(2)(i) to the effect that such Seller is not a foreign person within the
meaning of Section 1445 of the Code.
6.4.6 Material Adverse Change. After the date hereof, there shall
-----------------------
have been no event occur or condition change that has either individually, or in
the aggregate, a Material Adverse Effect.
6.4.7 Deliveries. Sellers shall have delivered to Purchaser the
----------
following:
(i) the recorded certificate of incorporation or other
organizational documents, as amended or supplemented to date, of the Sellers,
the Companies and their subsidiaries, recently certified by the Secretary of
State of the jurisdiction in which each such entity is domiciled;
(ii) a certificate of the Secretary of each of the Sellers
concerning (A) its certificate of incorporation and bylaws, (B) the adoption of
resolutions by its board of directors and, if applicable, stockholders
authorizing the transactions contemplated by this Agreement and (C) the
incumbency of its officers, all in form and substance reasonably satisfactory to
Purchaser;
(iii) recent long form (if available) good standing certificates
for the Sellers and the Companies and their subsidiaries issued by the
Secretaries of State of the jurisdictions in which the Sellers and the Companies
and their subsidiaries are domiciled and for the Companies and their
subsidiaries certificates of qualification to do business as a foreign
corporation in each of the jurisdictions in which such Company or subsidiary is
qualified; and
(iv) an owner's affidavit dated the Closing Date in a form
reasonably satisfactory to the applicable title company.
49
6.4.8 Ancillary Agreements. The Ancillary Agreements shall have been
--------------------
duly executed and delivered by each of the Sellers and shall be in full force
and effect with respect to each of the Sellers.
7. Indemnification.
---------------
7.1 Survival of Representations and Warranties; Time for Claims.
-----------------------------------------------------------
(a) The representations and warranties made by the Sellers and the
Purchaser made pursuant to this Agreement or any certificate to be delivered in
connection with the Closing hereunder shall survive the Closing and expire upon
the second anniversary of the Closing Date, except that the representations and
warranties made in or pursuant to (i) Sections 2.1, 2.3, 2.4, 2.5 and 3.1 shall
survive the Closing without limitation, and (ii) Section 2.10 (only to the
extent such representations relate to Tax liabilities) and Section 2.14 shall
survive until 60 days after the expiration (including extensions) of the
applicable statute of limitations.
(b) Any claim for indemnification may be brought without limit as to
time, except as expressly provided in this paragraph. Any claim for
indemnification under clause (ii) of Section 7.2.1 or clause (ii) of Section
7.2.2 must be brought in accordance with Section 7.2.3 prior to the expiration
of the applicable representation and warranty pursuant to Section 7.1(a). Any
claim for indemnification under clause (vii) of Section 7.2.1 must be brought in
accordance with Section 7.2.3 prior to the fifth anniversary of the Closing
Date. Any claim for indemnification under clause (iv) of Section 7.2.1 must be
brought in accordance with Section 7.2.3 prior to the second anniversary of the
Closing Date. However, the obligation to indemnify for a claim for which timely
notice in accordance with the terms and provisions of this Agreement was
provided by the party seeking indemnification hereunder shall extend until such
time as the remedy, including, without limitation, the payment of monetary
damages, is completed.
7.2 Indemnification.
---------------
7.2.1 By the Sellers. From and after the Closing, subject to Section
--------------
7.1, the Sellers agree to indemnify and hold harmless the Purchaser and its
officers, directors, employees, agents, representatives, affiliates, successors
and assigns (collectively, "Purchaser Indemnitees"), on a joint and several
---------------------
basis, from and against any loss, liability, damage, claim, deficiency, cost,
expense, interest, award, judgment or penalty, including, without limitation,
reasonable attorneys' fees and other costs and expenses (collectively,
"Damages"), incurred or sustained by the Purchaser Indemnitees as a result of
-------
(i) the breach or non-fulfillment by any Seller of any agreement or covenant set
forth in this Agreement or the Ancillary Agreements, (ii) the breach of any
representation or warranty set forth in this Agreement or made in any
certificate delivered pursuant hereto in connection with the Closing, (iii) any
liabilities of the Companies or their
50
subsidiaries existing as of the Closing Date (A) that consistent with past
practice, would be reflected on a balance sheet of a Seller or Non-Company
Affiliate and would not be reflected on a balance sheet of any of the Companies,
(B) of which, as of the Closing Date, the Sellers had knowledge, and (C) that
are not reflected on the Closing Balance Sheets, (iv) any liabilities of the
Companies or their subsidiaries which relate to or arise out (A) plans
maintained and sponsored by Waste Management ("Parent Plans"), including retiree
medical liability and pension underfunding under the Parent Plans or (B) a
complete or partial withdrawal under Title IV of ERISA incurred by either of the
Companies or any of their subsidiaries prior to the Closing Date under a
Multiemployer Plan or (C) failure to make contributions to the benefit plans
listed on Section 2.10 of the Disclosure Letter with respect to periods ending
prior to the Closing Date except in the case of each of the preceding clauses
(A), (B) and (C), to the extent that any such liabilities are (x) reflected on
the Closing Balance Sheets, (y) attributable to participation on and after the
Closing Date by a Company Employee who is employed by the Purchaser, the
Companies or their subsidiaries after the Closing Date, in any Parent Plan in
which pursuant to the mutual consent of the Sellers and the Purchaser, such
Company Employee participates during a transition period after the Closing Date
or (z) liabilities for severance of employees of either of the Companies or any
of their subsidiaries arising on or after the Closing, (v) the matters
identified in Section 7.2.1(A) of the Disclosure Letter, (vi) the matters
identified in Section 7.2.1(B) of the Disclosure Letter, (vii) any other
environmental liabilities (including, without limitation, environmental
regulatory liabilities) that are the result of acts or conditions that occurred
or existed prior to the Closing Date relating to the construction, operation,
maintenance and partial closure of the Barnwell Facility that are not otherwise
covered by the closure or long-term care trust funds or applicable insurance,
and (viii) in the event that the Purchaser or one of its affiliates notifies the
applicable regulatory authorities of the State of South Carolina in writing that
it intends to commence shutdown of the Barnwell Facility and the closure
activities and ceases permanently to accept waste for disposal at the Barnwell
Facility by a date (such applicable date being referred to herein as the
"Shutdown Deadline") no later than the later of (a) June 30, 2000 and (b)
------------------
twenty-eight (28) days after the earlier of (x) the date on which the spring
2000 session or any subsequent special session (called prior to June 30, 2000 in
which matters relating to the Barnwell Facility are on the agenda (a "Barnwell
--------
Special Session")) of the South Carolina state legislature adjourns and (y)
---------------
the date on which the legislation relating to South Carolina joining the
Atlantic Low-Level Radioactive Waste Compact and the repeal of the contingent
annual license tax imposed on the Barnwell Facility shall either (A) have become
effective or (B) have been rejected and no longer be on the agenda for the
spring 2000 session or a Barnwell Special Session, provided that in no event
shall the Shutdown Deadline be later than December 31, 2000, any liability for
the contingent annual license tax imposed on the Barnwell Facility, or the
operator thereof, by the State of South Carolina with respect to periods or
portions thereof beginning after June 30, 2000, provided that if the Purchaser
or any of its affiliates, successors or assigns accepts any waste at the
Barnwell
51
Facility after the Shutdown Deadline, the obligations of the Sellers under this
clause (viii) shall immediately terminate and the Purchaser shall repay to the
Sellers any payments made by the Sellers pursuant to this clause (viii) together
with interest on the amount of such payment at a rate equal to the prime rate
announced from time to time by Chase, N.A. plus two percent (2%) per annum from
the date of payment by the Sellers until the date of repayment by the Purchaser.
There shall not be any duplicative payments or indemnities by any Seller under
this Section 7.2.1.
The rights of the Purchaser Indemnitees to indemnification under this
Section 7 shall be limited as follows:
(a) The amount of any Damages incurred by the Purchaser Indemnitees
shall be reduced by the net amount of the Tax benefits actually realized by the
Purchaser Indemnitees or any of their affiliates by reason of such Damage.
(b) The amount of any Damages incurred by the Purchaser Indemnitees
shall be reduced by the net amount the Purchaser Indemnitees recovers (after
deducting all attorneys' fees, expenses and other costs of recovery) from any
insurer or other party liable for such Damages, and the Purchaser, on behalf of
the Purchaser Indemnitees, shall use reasonable efforts to effect any such
recovery.
(c) The Purchaser Indemnitees shall be entitled to indemnification
under Section 7.2.1(ii), (iv) and (vii) only to the extent that the aggregate
amount of such Damages (reduced as provided in paragraphs (a) and (b) above)
exceeds $750,000 and then only for the amount of such excess. In no event will
the Purchaser Indemnitees be entitled to indemnification exceeding the aggregate
purchase price received by the Sellers under this Agreement and the Escrow
Agreement other than Section 5(i) thereof (the "Purchase Price"), except as
--------------
expressly provided in this Section 7.2.1(c). The Sellers will indemnify the
Purchaser Indemnitees for the amount of the Purchaser Indemnitees' Damages
pursuant to Sections 7.2.1(i), (iii) and (viii) without limitation or deduction,
and any such Damages shall not count toward the aggregate limitation on
indemnifiable Damages referred to in the second sentence of this Section
7.2.1(c). For the purposes of applying the maximum limitation set forth in this
Section 7.2.1(c), the amount of Damages paid by the Sellers and Non-Company
Affiliates shall be deemed to include the amount of all losses, claims,
liabilities and damages (including reasonable attorneys' fees and other costs
and expenses) incurred by the Sellers and Non-Company Affiliates for which the
Purchaser would have been responsible under Sections 4.8 or 5 but for its rights
to indemnification under this Section 7.2.1.
(d) If the Purchaser gives the notice referred to in Section
7.2.1(viii), the Purchaser agrees that it will contribute up to an aggregate of
$1.0
52
million, on a dollar-for-dollar basis with Sellers and the Non-Company
Affiliates, solely for out-of-pocket legal expenses paid to unaffiliated third
parties associated with contesting liability for the tax referred to in Section
7.2.1(viii).
(e) If a Purchaser Indemnitee is or becomes entitled to recover by
contribution from a third party or otherwise any amount of Damages incurred by a
Purchaser Indemnitee as a result of a matter for which the Purchaser Indemnitees
have received indemnification payments from the Sellers pursuant to this Section
7, the Purchaser Indemnitees hereby assign to the Sellers all right to claim and
receive any such amount, and the Purchaser Indemnitees shall promptly pay over
any such amount received by them to the Sellers, to the extent of the
indemnification payments received from the Sellers.
7.2.2 By the Purchaser. From and after the Closing, subject to
----------------
Section 7.1, the Purchaser agrees to indemnify and hold harmless each Seller,
each Non-Company Affiliate and each director, officer employee, agent,
representative, successor or assign of any of the foregoing (collectively,
"Seller Indemnitees") from and against any Damages incurred or sustained by
-------------------
Seller Indemnitees as a result of (i) the breach or non-fulfillment by the
Purchaser of any agreement or covenant set forth in this Agreement or the
Ancillary Agreements, and (ii) the breach of any representation or warranty set
forth in this Agreement, and provided, that there shall not be any duplicative
--------
payments or indemnities by the Purchaser.
The rights of the Seller Indemnitees to indemnification under this
Section 7 shall be limited as follows:
(a) The amount of any Damages incurred by the Seller Indemnitees shall
be reduced by the net amount of the Tax benefits actually realized by any
Seller Indemnitees or any of their affiliates by reason of such Damages.
(b) The amount of any Damages incurred by Seller Indemnitees shall be
reduced by the net amount the Seller Indemnitees recover (after deducting all
attorneys' fees, expenses and other costs of recovery) from any insurer or other
party liable for such Damages, and the Sellers, on behalf of the Seller
Indemnitees, shall use reasonable efforts to effect any such recovery.
(c) In no event will the Seller Indemnitees be entitled to
indemnification exceeding 50% of the aggregate purchase price paid by the
Purchaser to the Sellers, provided that this limitation shall only apply to
indemnification under Section 7.2.2(ii).
(d) If a Seller Indemnitee is or becomes entitled to recover by
contribution from a third party or otherwise any amount of Damages incurred by a
Seller Indemnitee as a result of a matter for which the Seller Indemnitees have
53
received indemnification payments from the Purchaser pursuant to this Section 7,
the Seller Indemnitees hereby assign to the Purchaser all right to claim and
receive any such amount, and the Seller Indemnitees shall promptly pay over any
such amount received by them to the Purchaser, to the extent of the
indemnification payments received from the Purchaser.
7.2.3 Indemnification Procedures. A party entitled to
--------------------------
indemnification hereunder shall herein be referred to as an "Indemnitee." A
----------
party obligated to indemnify an Indemnitee hereunder shall herein be referred to
as an "Indemnitor."
----------
(a) Third Party Claims. Within 10 business days after an Indemnitee
------------------
receives notice of any third party claim or the commencement of any action by
any third party which such Indemnitee reasonably believes may give rise to a
claim for indemnification from an Indemnitor hereunder, such Indemnitee shall,
if a claim in respect thereof is to be made against an Indemnitor under Section
7, notify such Indemnitor in writing in reasonable detail of such claim or
action and include with such notice copies of all notices and documents
(including court papers) served on or received by the Indemnitee from such third
party. Failure to give such written notice within the time period described
above, shall not release the Indemnitor except to the extent such party is
prejudiced by such failure. Upon receipt of such notice, the Indemnitor shall
be entitled to participate in such claim or action, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnitee, and to settle or
compromise such claim or action, provided that if such settlement or compromise
--------
shall provide for any relief other than a monetary payment by the Indemnitor,
such settlement or compromise shall be effected only with the consent of the
Indemnitee, which consent shall not be unreasonably withheld or delayed. After
notice to the Indemnitee of the Indemnitor's election to assume the defense of
such claim or action, the Indemnitor shall not be liable to the Indemnitee under
Section 7 for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof other than reasonable costs of
investigation, provided that the Indemnitee shall have the right to employ
--------
counsel to represent it if (x) the employment of such counsel has been
-
specifically authorized in writing by the Indemnitor, (y) such claim or action
involves remedies other than monetary damages and such remedies, in the
Indemnitee's reasonable judgment, could have a material adverse effect on such
Indemnitee or (z) the named parties to any such third party claim (including
impleaded parties) include both the Indemnitee and the Indemnitor and such
Indemnitee shall have been advised in writing by its counsel that there may be
conflicting interests between the Indemnitor and the Indemnitee in the legal
defense of such third party claim, and in any such event the fees and expenses
of such separate counsel shall be paid by the Indemnitor, provided that the
--------
Indemnitor shall not be obligated to pay the fees or expenses of more than one
separate counsel for all Indemnitees arising out the same claim or action. If
the Indemnitor does not elect to assume the defense of such claim or action
within 30 days of the Indemnitee's delivery of
54
notice of such a claim or action, the Indemnitor shall be deemed to have waived
its right to assume the defense of such third party claim and the Indemnitee
shall be entitled to assume the defense thereof. If the Indemnitor fails to
acknowledge in writing its indemnification obligation to the Indemnitee for such
claim or action within a reasonable period following the request therefor by the
Indemnitee, the Indemnitee shall be entitled to assume the defense of such claim
or action in any manner it deems appropriate including, without limitation,
settling any such third party claim or consenting to the entry of any judgment
with respect thereto, provided that it acts reasonably and in good faith. Unless
it has been conclusively determined through a final judicial determination (or
settlement tantamount thereto) that the Indemnitor is not liable to the
Indemnitee under this Section 7.2.3., the Indemnitee shall act reasonably and in
accordance with its good faith business judgment with respect to such defense,
and shall not settle or compromise any such claim or action without the consent
of the Indemnitor, which consent shall not be unreasonably withheld or delayed.
The parties hereto agree to render to each other such assistance as may
reasonably be requested in order to insure the proper and adequate defense of
any such claim or action, including making employees available on a mutually
convenient basis to provide additional information and explanation of any
relevant materials or to testify at any proceedings relating to such claim or
action.
(b) Other Claims. Within 10 business days after an Indemnitee
------------
sustains any Damages not involving a third party claim or action which such
Indemnitee reasonably believes may give rise to a claim for indemnification from
an Indemnitor hereunder, such Indemnitee shall deliver notice of such claim to
the Indemnitor, specifying with reasonable detail the basis on which
indemnification is being asserted and the amount of such Damages. If the
Indemnitor does not notify the Indemnitee within 30 calendar days following its
receipt of such notice that the Indemnitor disputes its liability to the
Indemnitee under this Section 7, such claim specified by the Indemnitee in such
notice shall be conclusively deemed a liability of the Indemnitor under this
Section 7 and the Indemnitor shall pay the amount of such claim to the
Indemnitee on demand or, in the case of any notice in which the amount of the
claim (or any portion thereof) is estimated, on such later date when the amount
of such claim (or such portion thereof) becomes finally determined. If the
Indemnitor has timely disputed its liability with respect to such claim, as
provided above, the Indemnitor and the Indemnitee shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
(c) Prompt Payment. The Indemnitor shall promptly pay or reimburse,
--------------
as appropriate, the Indemnitee for any Damages to which it is entitled to be
indemnified hereunder. Neither party shall permit any exercise of any right of
set-off against the other party.
55
(d) Mitigation of Damages. In addition to any obligation of the
---------------------
Purchaser Indemnitees to mitigate Damages under applicable law, for any matter
as to which the Sellers are, or are reasonably likely to be liable to the
Purchaser Indemnitees for Damages covered by (A) clause (ii) of Section 7.2.1
(only to the extent such Damages arise out of a breach of Section 2.16), (B)
clause (vi) of Section 7.2.1 (provided that clauses (ii) and (v) below of this
Section 7.2.3(d) shall not apply to items (3) or (4) of Section 7.2.1(B) of the
Disclosure Letter, or (C) clause (vii) of Section 7.2.1, the Purchaser shall,
and shall cause its affiliates to (i) at all times act reasonably so as to
minimize Damages, (ii) not take any action the expense of which would constitute
Damages, unless and only to the extent that (A) such action is required by any
applicable law, regulation or governmental authority, (B) such action is
reasonably likely to minimize the amount of Damages for which the Purchaser
Indemnitees would be entitled to indemnification for under Section 7.2.1, or (C)
Waste Management or one of the Sellers requests in writing that the Purchaser or
one of its affiliates take such action, (iii) give the Sellers, Waste Management
and their respective representatives reasonable access at all reasonable times
to such information and documents in their possession and/or control relating to
the calculation of Damages, (iv) consult with the Sellers, Waste Management and
their respective representatives with respect to, and allow the Sellers and
Waste Management and their respective representatives to monitor, any remedial,
monitoring or similar activities the expense of which may constitute Damages and
(v) offer to Waste Management or the Sellers the opportunity on commercially
reasonable terms and at Waste Management's or the Seller's expense to control
and engage, directly or indirectly, in any required remedial activities,
provided that Waste Management or the Sellers, as applicable, agrees to
indemnify the Purchaser Indemnitees to the extent that such remedial activities
performed directly or indirectly by Waste Management or the Sellers results in
additional Damages to the Purchaser Indemnitees.
(e) Barnwell Legislation. Until the Shutdown Deadline, the
--------------------
Companies' participation in the consideration of the Barnwell Legislation by the
legislature of the State of South Carolina will be handled by Xxxxx X. Xxxx,
with the advice of the XxXxxx Law Firm, P.A. and Xxxxx X. Xxxxxxx. The
Purchaser, through Xx. Xxxx, shall keep WMI apprised of the status of the
Barnwell Legislation and advise WMI of any proposed changes in the Barnwell
Legislation as promptly as reasonably practicable.
7.2.4 Tax Treatment of Indemnity Payment. The Sellers and the
----------------------------------
Purchaser agree to treat any indemnity payment made pursuant to Section 7.2 as
an adjustment to the purchase price for all Tax purposes unless otherwise
required by law.
7.2.5 Exclusivity of Indemnification Provision. In the absence of
----------------------------------------
fraud and except as set forth in Section 4.21, the indemnity provided for in
this Section 7 shall be the sole and exclusive remedy for Damages owing from the
56
Sellers to the Purchaser Indemnitees and from the Purchaser to the Seller
Indemnitees that arise from the matters described in Sections 7.2.1 and 7.2.2.
In furtherance of the foregoing, each of the parties hereby waives, from and
after the Closing, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action it or any of its affiliates may have
against the other party or its affiliates relating to the subject matter of this
Agreement arising under or based upon any federal, state or local law,
ordinance, rule or regulation or otherwise, other than a claim on the basis of
fraud.
7.2.6 Waiver of Contribution. Sellers shall not have any right to
----------------------
seek contribution from any of the Companies or their subsidiaries in the event
that the Sellers are required to indemnify Purchaser Indemnitees under this
Agreement.
7.2.7 Guaranty of Parent Corporation; Successor Indemnification
---------------------------------------------------------
Obligations.
-----------
(a) Waste Management hereby unconditionally guarantees the payment
obligations of the Sellers under this Agreement which shall include, without
limitation, the payment obligations under Sections 1.3, 4.4, 4.22, 4.23, and the
indemnification obligations of the Sellers in this Section 7 and hereby joins in
and becomes a party to this Agreement for the purpose of signifying its
agreement with respect to such guaranty obligation.
(b) The indemnification obligations of Purchaser and WMI pursuant to
this Section 7 shall be binding upon any successor to Purchaser or WMI.
Without limiting the generality of the foregoing, the indemnification
obligations of Purchaser and WMI shall be binding upon any successor to a
significant portion of Purchaser's or WMI's business, by way of merger,
consolidation, statutory share exchange, sale of all, substantially all or any
significant part of a party's assets, or the distribution of any significant
amount of a party's business or assets by way of spin-off, split-off or similar
transaction.
8. General Provisions.
------------------
8.1 Modification; Waiver. This Agreement may be modified only by a
--------------------
written instrument executed by the parties hereto. Any of the terms and
conditions of this Agreement may be waived in writing at any time on or prior to
the Closing Date by the party entitled to the benefits thereof.
8.2 Entire Agreement. This Agreement, including the Disclosure
----------------
Letter, is the entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements, understandings,
documents, projections, financial data, statements, representations and
warranties, oral or written, express or implied, between the parties hereto and
their respective affiliates, representatives and agents in respect of the
subject matter hereof,
57
except that this Agreement does not supersede the Confidentiality Agreement, the
terms and conditions of which the parties hereto expressly reaffirm.
8.3 Certain Limitations. It is the explicit intent and understanding
-------------------
of each of the parties hereto that neither party nor any of its affiliates,
representatives or agents is making any representation or warranty whatsoever,
oral or written, express or implied, other than those set forth in Sections 2
and 3 and neither party is relying on any statement, representation or warranty,
oral or written, express or implied, made by the other party or such other
party's affiliates, representatives or agents, including, without limitation,
any such statement, representation or warranty contained in any offering
memorandum or any information, document or material made available to the
Purchaser in certain "data rooms", management presentations or any other form in
expectation of the transactions contemplated hereby, except for the
representations and warranties set forth in such Sections 2 and 3. EXCEPT AS
OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE PARTIES EXPRESSLY
DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY
OR SUITABILITY AS TO ANY OF THE ASSETS OF THE BUSINESS AND, EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT THE PURCHASER
TAKES THE ASSETS OF THE BUSINESS "AS IS" AND "WHERE IS". The parties agree that
this is an arm's length transaction in which the parties' undertakings and
obligations are limited to the performance of their obligations under this
Agreement. The Purchaser acknowledges that it is a sophisticated investor, that
it has undertaken a full investigation of the Business, and that it has only a
contractual relationship with the Sellers, based solely on the terms of this
Agreement, and that there is no special relationship of trust or reliance
between it and either Seller.
8.4 Termination.
-----------
(a) This Agreement may be terminated: (i) at any time prior to the
Closing Date by mutual consent of the Purchaser and the Sellers, (ii) by the
Purchaser or the Sellers, if the Closing shall not have taken place on or before
May 25, 2000 or such later date as the parties may have agreed to in writing, or
(iii) by either the Purchaser or the Sellers by written notice to the other
party if any event, fact or condition shall occur or exist that shall have made
it impossible to satisfy a condition precedent to the terminating party's
obligations to consummate the transactions contemplated by this Agreement, and
such event, fact or condition shall not have been cured within 30 days after the
non-terminating party is made aware of such event, fact or condition, unless the
occurrence or existence of such event, fact or condition shall be due to the
failure of the terminating party to perform or comply with any of the agreements
or covenants hereof to be performed or complied with by such party prior to the
Closing, provided that with respect to any termination pursuant to the foregoing
--------
clauses (ii) and (iii), the non-occurrence of the Closing is not attributable to
a
58
breach of the terms hereof by the party seeking termination or a breach of the
terminating party's representations and warranties made herein.
(b) In the event of termination by the Sellers or the Purchaser
pursuant to this Section 8.4, written notice thereof shall forthwith be given to
the other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) The Purchaser shall return to the Sellers all documents and
other materials received from the Sellers, and their respective affiliates and
agents (including all copies of or materials developed from any such documents
or other materials) relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof; and
(ii) All confidential information received by the Purchaser with
respect to the Sellers and their respective affiliates shall be treated in
accordance with the Confidentiality Agreement which shall remain in full force
and effect notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated as provided in this Section 8.4,
this Agreement shall become null and void and of no further force or effect,
except for the Confidentiality Agreement as amended by the last sentence of
Section 4.3, Section 4.7 relating to publicity, and Section 8.5 relating to
certain expenses. Nothing in this Section 8.4 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.
8.5 Expenses. Except as expressly provided herein, whether or not
--------
the transactions contemplated herein shall be consummated, each party shall pay
its own expenses incident to the preparation and performance of this Agreement.
8.6 Further Actions. Each party shall execute and deliver such
---------------
certificates and other documents and take such other actions as may reasonably
be requested by the other party in order to consummate or implement the
transactions contemplated hereby.
8.7 Post-Closing Access. In connection with any matter relating to
-------------------
any period prior to, or any period ending on, the Closing, each party shall,
upon the request and at the expense of the other party, permit the requesting
party and its representatives full access at all reasonable times to the non-
privileged books, records and personnel of the Companies and their subsidiaries,
and each party shall execute (and the Purchaser shall cause the Companies and
their respective subsidiaries to execute) such documents as the other party may
59
reasonably request to enable the first party to file any required reports or tax
returns relating to the Companies or any of their subsidiaries, to defend any
litigation involving any party or its affiliates or otherwise for a valid
business purpose. Each party shall not dispose of such books and records during
the seven-year period beginning with the Closing Date without the other party's
consent, which shall not be unreasonably withheld. Following the expiration of
such seven-year period, the first party may dispose of such books and records at
any time upon giving 60 days' prior written notice to the other party, unless
the second party agrees to take possession of such books and records within 60
days at no expense to the first party.
8.8 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given or
made as follows: (a) if sent by registered or certified mail in the United
States return receipt requested, upon receipt; (b) if sent by reputable
overnight air courier (such as DHL or Federal Express), two business days after
mailing; (c) if sent by facsimile transmission, with a copy mailed on the same
day in the manner provided in (a) or (b) above, when transmitted and receipt is
confirmed by telephone; or (d) if otherwise actually personally delivered, when
delivered and shall be delivered as follows:
if to the Sellers:
c/o Waste Management Inc.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax Number: (000) 000-0000
Attention: General Counsel
with copies to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Xx.
60
if to the Purchaser:
GTS Duratek, Inc.
00000 Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Executive Vice President and
Chief Financial Officer
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
or to such other address or to such other person as any party hereto shall have
last designated by notice to the other parties.
8.9 Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the parties hereto and their respective successors and assigns,
provided that any assignment, by operation of law or otherwise, by any party
hereto shall require the prior written consent of the other parties and any
purported assignment or other transfer without such consent shall be void and
unenforceable. Notwithstanding the foregoing, (a) the Purchaser may assign this
Agreement to any of its subsidiaries or affiliates without the Sellers' consent,
provided that the Purchaser shall remain jointly and severally liable for its
obligations hereunder and (b) the Purchaser and any of its subsidiaries or
affiliates may grant a security interest in their respective rights herein to
the lenders of the Purchaser and its subsidiaries providing financing for the
transactions contemplated by this Agreement (and any refinancings thereof).
8.10 No Third Party Beneficiaries. Except as provided in Sections
----------------------------
4.4, 4.8, 4.9, 4.11 and 7, nothing in this Agreement shall confer any rights
upon any person or entity which is not a party or a successor or permitted
assignee of a party to this Agreement.
8.11 Counterparts. This Agreement may be executed in counterparts,
------------
both of which shall constitute one and the same instrument.
8.12 Interpretation. The section headings in this Agreement are for
--------------
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof. Any references to the
Sellers' knowledge or the knowledge of either Seller shall mean the actual
knowledge of
61
the persons listed in Section 8.12 of the Disclosure Letter. Any reference to a
Schedule to this Agreement shall mean a Section of the Disclosure Letter.
8.13 Governing Law. This Agreement shall be construed, performed and
-------------
enforced in accordance with the laws of the State of Delaware, without regard to
the conflicts of law principles of such state.
8.14 Consent to Jurisdiction, etc.
----------------------------
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdictions of any
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, 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 hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York Federal 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.
(b) Each of the parties hereto hereby irrevocably and unconditionally
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 suit,
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby in any New York Federal court. Each of the
parties hereto hereby irrevocably 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 court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.8. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
8.15 Waiver of Jury Trial.
--------------------
(a) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
62
(b) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVER, (iii) IT MAKES SUCH WAIVER VOLUNTARILY, AND (iv) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER
AND CERTIFICATION IN THIS SECTION 8.15.
8.16 Certain Definitions . The following terms used herein shall
-------------------
have the following meanings:
(a) "affiliate" means, with respect to any specified person, a person
---------
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified;
(b) "control" (including the correlative terms "controlling,"
-------
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting equity interest,
by contract or otherwise;
(c) "person" means an individual, corporation, partnership, limited
------
liability company, association, joint-stock company, trust, unincorporated
organization or government or political subdivision thereof; and
(d) "subsidiary" means, with respect to any person, an affiliate that
----------
is controlled by such person directly, or indirectly through one or more
intermediaries.
8.17 Severability. If any provision of this Agreement shall be held
------------
to be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed modified to the extent necessary to render it legal,
valid and enforceable, and if no such modification shall render it legal, valid
and enforceable, then this Agreement shall be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties
shall be construed and enforced accordingly.
63
8.18 Specific Performance. In addition to any other remedies which
--------------------
Purchaser may have at law or in equity, each Seller hereby acknowledges that the
Nuclear Services Shares and the Companies and their subsidiaries are unique, and
that the harm to the Purchaser resulting from breaches by any Seller of its
obligations under Sections 1.1 and 1.2 cannot be adequately compensated by
damages. Accordingly, each Seller agrees that Purchaser shall have the right to
have such obligations specifically performed by the Sellers and that Purchaser
shall have the right to obtain an order or decree of such specific performance
in the courts referred to in Section 8.14 hereof.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
CHEMICAL WASTE MANAGEMENT INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President & Secretary
CNS HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President & Secretary
RUST INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President & Secretary
GTS DURATEK, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
65
The undersigned hereby joins in this Agreement for the purpose of
acknowledging its agreement to guaranty the payment obligations of the Sellers
pursuant to this Agreement which include, without limitation, Sections 1.3, 4.4,
4.22, 4.23 and Section 7 hereof. The undersigned also hereby joins in this
Agreement for the purpose of acknowledging its agreement to be bound by the
covenants set forth in Sections 4.17 through 4.24 and Section 5 hereof as if it
were a Seller for purposes thereof. The undersigned in not bound by any other
provision of this Agreement.
WASTE MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President & Assistant Secretary
66
