AGREEMENT AND PLAN OF MERGER
by and among
Insituform Technologies, Inc., K Acquisition Corp. and TRX Acquisition Corp.,
Xxxxxx Industries, Inc. and Tracks of Texas, Inc.
and
the Xxxxxx/Tracks Shareholders
dated
January 13, 2001
Table of Contents
ARTICLE 1. DEFINITIONS.......................................................2
ARTICLE 2. TERMS OF MERGER...................................................2
2.1 The Xxxxxx Merger........................................................2
2.2 The Tracks Merger........................................................2
2.3 Closing and Effective Time...............................................2
2.4 Articles of Incorporation, Bylaws, Directors and Officers of Xxxxxx......3
2.5 Articles of Incorporation, Bylaws, Directors and Officers of Tracks......3
2.6 Other Effects of Merger..................................................3
2.7 Conversion; Merger Consideration.........................................3
2.8 Surrender and Exchange of Company Share Certificates.....................5
2.9 Holdback.................................................................6
2.10 Registration Statement..................................................7
2.11 Tax-Free Reorganization................................................12
2.12 Additional Actions.....................................................12
2.13 Xxxxxx/Tracks Shareholders' Representative and Durable
Power of Attorney....................................................12
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF XXXXXX, TRACKS AND THE
XXXXXX/TRACKS SHAREHOLDERS..................................................14
3.1 Company Organization, Qualification and Good Standing...................14
3.2 Company Authorization...................................................14
3.3 No Company Conflicts....................................................15
3.4 Company Consents........................................................15
3.5 Capitalization and Ownership............................................15
3.6 Company Financial Statements; Changes in Condition......................15
3.7 No Undisclosed Liabilities..............................................18
3.8 Taxes...................................................................18
3.9 No Company Subsidiaries.................................................21
3.10 Ownership of Assets....................................................21
3.11 Completeness of Assets.................................................21
3.12 Accounts Receivable....................................................21
3.13 Inventory..............................................................22
3.14 Other Personal Property................................................22
3.15 Facilities.............................................................22
3.16 Insurance..............................................................23
3.17 Contracts..............................................................23
3.18 Intellectual Property..................................................24
3.19 Employees..............................................................24
3.20 Labor Matters..........................................................25
3.21 Employee Benefit Plans.................................................25
3.22 Environmental Matters..................................................26
3.23 Litigation.............................................................27
3.24 Transactions with Affiliates...........................................27
3.25 Compliance with Laws...................................................28
3.26 No Insolvency..........................................................28
3.27 Business Relationships.................................................28
3.28 No Company Brokers.....................................................28
3.29 Books and Records; Disclosure..........................................28
3.30 JEA Contract and Joint Venture.........................................29
3.31 Permits................................................................29
3.32 Net Equity.............................................................29
3.33 Work in Progress.......................................................29
3.34 Former Shareholders....................................................29
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF XXXXXX/TRACKS SHAREHOLDERS.....29
4.1 Xxxxxx/Tracks Shareholders Authorization................................29
4.2 No Xxxxxx/Tracks Shareholders Conflicts.................................30
4.3 Xxxxxx/Tracks Shareholder Consents......................................30
4.4 Ownership...............................................................30
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF INSITUFORM.....................30
5.1 Insituform Organization, Qualification and Good Standing...............30
5.2 Insituform Authorization................................................31
5.3 No Insituform Conflicts.................................................31
5.4 Insituform Consents.....................................................31
5.5 Insituform Shares.......................................................31
5.6 Insituform Securities Filings...........................................31
5.7 No Insituform Brokers...................................................32
ARTICLE 6. COVENANTS OF THE PARTIES.........................................32
6.1 Operations Pending Closing..............................................32
6.2 Preservation of Organization............................................32
6.3 Similar Transactions Prohibited.........................................33
6.4 Change in Information...................................................33
6.5 Financial Reports.......................................................33
6.6 Fulfillment of Closing Conditions.......................................33
6.7 Due Diligence...........................................................34
6.8 Confidentiality.........................................................34
6.9 HSR Act.................................................................34
6.10 Comfort Letters........................................................34
6.11 Xxxxxx/Tracks Shareholder Approval.....................................34
6.12 Further Assurances.....................................................34
6.13 Use of Xxxxxx Name.....................................................35
6.14 Tax Returns............................................................35
ARTICLE 7. CLOSING CONDITIONS, DOCUMENTS AND PROCEDURES.....................35
7.1 Conditions to Obligation of Xxxxxx, Tracks and the Xxxxxx/Tracks
Shareholders................................................................35
7.2 Conditions to Obligations of Insituform.................................36
ARTICLE 8. SURVIVAL AND INDEMNIFICATION.....................................38
8.1 Survival of Representations, Warranties and Covenants...................38
8.2 Xxxxxx/Tracks Shareholders Indemnity....................................38
8.3 Insituform Indemnity....................................................39
8.4 Claims Procedure........................................................40
8.5 Offset and Interest.....................................................41
8.6 Limitations.............................................................42
ARTICLE 9. GENERAL PROVISIONS...............................................42
9.1 Termination.............................................................42
9.2 Transfer Taxes; Expenses................................................43
9.3 Risk of Loss............................................................43
9.4 Entire Agreement........................................................44
9.5 Modification, Amendment and Waiver......................................44
9.6 Successors and Assigns..................................................44
9.7 No Third Party Beneficiary..............................................44
9.8 Construction............................................................44
9.9 Interpretation in accordance with GAAP..................................45
9.10 Notices................................................................45
9.11 Equitable Relief; Remedies Cumulative..................................47
9.12 Governing Law..........................................................48
9.13 Dispute Resolution.....................................................48
9.14 Attorneys Fees.........................................................49
9.15 Severability...........................................................49
9.16 Captions...............................................................49
9.17 Counterparts...........................................................49
Exhibit and Schedule List
Exhibit No. Caption
Exhibit 2.1 Articles of Merger Form
Exhibit 2.7 Merger Consideration Promissory Note
Exhibit 2.9 Escrow Agreement
Exhibit 7.1(f) Legal Opinion of Insituform Counsel
Exhibit 7.1(g)(i) Employment Agreement
Exhibit 7.2(m) Legal Opinion of Xxxxxx, Tracks and the
Xxxxxx/Tracks Shareholders Counsel
Schedule No. Caption
Schedule 1 Definitions
Schedule 2.7(d) Cash Equivalent Consideration Election
Schedule 3 Xxxxxx/Tracks Disclosure Schedule
Schedule 3.5 Xxxxxx and Tracks Ownership
Schedule 3.6 Company Financial Statements
Schedule 5 Insituform Disclosure Schedule
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of the date set forth on the signature page hereto, by and among
INSITUFORM TECHNOLOGIES, INC., a Delaware corporation ("Insituform"), K
ACQUISITION CORP., a Texas corporation and wholly owned subsidiary of Insituform
("K Acquisition Sub"), TRX ACQUISITION CORP., a Texas corporation and a wholly
owned subsidiary of Insituform ("TRX Acquisition Sub", collectively with K
Acquisition Sub, the "Acquisition Subs"), XXXXXX INDUSTRIES, INC., a Texas
corporation ("Xxxxxx"), TRACKS OF TEXAS, INC., a Texas corporation ("Tracks",
Tracks and Xxxxxx are sometimes hereinafter referred to individually and
collectively as the "Company"), and each shareholder of each Company as listed
on the signature page hereto (collectively, the "Xxxxxx/Tracks Shareholders",
and individually a "Xxxxxx/Tracks Shareholder").
Preliminary Statement
A. Insituform desires to acquire all of the equity interests in Xxxxxx and
Tracks (the "Transaction"). Xxxxxx, Tracks and the Xxxxxx/Tracks Shareholders
desire Insituform to acquire all of the equity interests in Xxxxxx and Tracks. K
Acquisition Sub and TRX Acquisition Sub are wholly-owned subsidiaries of
Insituform formed for the purpose of effectuating the Transaction.
B. The Board of Directors of Xxxxxx and the Board of Directors of K
Acquisition Sub have determined the merger of K Acquisition Sub with and into
Xxxxxx (the "Xxxxxx Merger") in accordance with the provision of this Agreement
to be in the best interests of their respective Xxxxxx/Tracks Shareholders and
have approved the Xxxxxx Merger in accordance with the laws of the State of
Texas.
C. The Board of Directors of Tracks and the Board of Directors of TRX
Acquisition Sub have determined the merger of TRX Acquisition Sub with and into
Tracks (the "Tracks Merger, collectively with the Xxxxxx Merger, the "Mergers",
and individually a "Merger") in accordance with the provisions of this Agreement
to be in the best interests of their respective Xxxxxx/Tracks Shareholders and
have approved the Tracks Merger in accordance with the law of the State of
Texas.
D. The Xxxxxx/Tracks Shareholders are approving the Mergers by
executing this Agreement. Insituform is executing this Agreement, subject to
the approval of the Transaction and this Agreement by the Board of Directors
of Insituform.
X. Xxxxxx, Tracks, K Acquisition Sub, TRX Acquisition Sub, the
Xxxxxx/Tracks Shareholders and Insituform desire to make certain
representations, warranties, covenants and agreements in connection with, and
establish various conditions precedent to, the Mergers.
Agreement
NOW, THEREFORE, in consideration of the foregoing, the mutual
representations, warranties and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
Capitalized terms used, but not defined, in the various Sections of this
Agreement shall have the meanings ascribed to them in Schedule 1 hereto.
ARTICLE 2. TERMS OF MERGER
2.1 The Xxxxxx Merger. Upon the terms and subject to the conditions of this
Agreement, the Xxxxxx Merger shall be consummated in accordance with the Texas
Business Corporation Act (the "Texas Act"). At the Effective Time, upon the
terms and subject to the conditions of this Agreement, K Acquisition Sub shall
be merged with and into Xxxxxx in accordance with the Texas Act, and the
separate existence of K Acquisition Sub shall thereupon cease, and Xxxxxx, as
the surviving corporation in the Xxxxxx Merger (the "Xxxxxx Surviving
Corporation"), shall continue its corporate existence under the laws of the
State of Texas as a wholly-owned subsidiary of Insituform. In connection with
the Xxxxxx Merger, the parties shall prepare and execute articles of merger in
substantially the form attached hereto as Exhibit 2.1 (the "Articles of Merger")
in order to comply in all respects with the requirements of the Texas Act and
with the provisions of this Agreement.
2.2 The Tracks Merger. Upon the terms and subject to the conditions of this
Agreement, the Tracks Merger shall be consummated in accordance with the Texas
Act. At the Effective Time, upon the terms and subject to the conditions of this
Agreement, TRX Acquisition Sub shall be merged with and into Tracks in
accordance with the Texas Act, and the separate existence of TRX Acquisition Sub
shall thereupon cease, and Tracks, as the surviving corporation in the Tracks
Merger (the "Tracks Surviving Corporation", and collectively with the Xxxxxx
Surviving Corporation, the "Surviving Corporations"), shall continue its
corporate existence under the laws of the State of Texas as a wholly-owned
subsidiary of Insituform. In connection with the Tracks Merger, the parties
shall prepare and execute Articles of Merger in order to comply in all respects
with the requirements of the Texas Act and with the provisions of this
Agreement.
2.3 Closing and Effective Time. The Closing of the Mergers shall take place
at the offices of Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000, at 9:00 a.m. (local time) on February 28,
2001, unless another place, time or date is agreed to by the parties. If any
party is entitled not to close the Transaction on the scheduled date because a
condition to such party's obligation to close (as set forth in Section 7.1 or
Section 7.2 hereof) has not been met, or has not been waived by the party
entitled to waive it, such party may postpone the Closing from time to time to a
future date not less than five (5) days from the date notice is provided by the
party postponing Closing, but in no event to a date later than April 30, 2001.
The consummation of the Transaction shall be effective as of 12:01 a.m. (St.
Louis time) on the Closing Date. The Articles of Merger shall be filed on the
Closing Date or as soon as reasonably practicable thereafter. Each Merger shall
become effective at the time of the filing of each respective Articles of Merger
with the Secretary of State of Texas in accordance with the applicable
provisions of the Texas Act or at such later time as may be specified in each
respective Articles of Merger.
2.4 `Articles of Incorporation, Bylaws, Directors and Officers of Xxxxxx.
At and after the Effective Time, the Articles of Incorporation of Xxxxxx
Surviving Corporation shall be
amended and restated in their entirety to read as the Articles of Incorporation
of K Acquisition Sub in effect at the Effective Time except that Article I shall
be amended to read as follows: "The name of the corporation is Xxxxxx
Industries, Inc." (subject to any subsequent amendment). At and after the
Effective Time, the Bylaws of Xxxxxx Surviving Corporation in effect at the
Effective Time shall be amended and restated in their entirety to read as the
Bylaws of K Acquisition Sub in effect at the Effective Time (subject to any
subsequent amendment). At and after the Effective Time, the directors and
officers of Xxxxxx Surviving Corporation in office at the Effective Time shall
be removed and the directors and officers of K Acquisition Sub in office at the
Effective Time shall be the directors and officers of Xxxxxx Surviving
Corporation (subject to any subsequent resignation or removal).
2.5 Articles of Incorporation, Bylaws, Directors and Officers of Tracks. At
and after the Effective Time, the Articles of Incorporation of Tracks Surviving
Corporation shall be amended and restated in their entirety to read as the
Articles of Incorporation of TRX Acquisition Sub in effect at the Effective Time
except that Article I shall be amended to read as follows: "The name of the
corporation is Tracks of Texas, Inc." (subject to any subsequent amendment). At
and after the Effective Time, the Bylaws of Tracks Surviving Corporation in
effect at the Effective Time shall be amended and restated in their entirety to
read as the Bylaws of TRX Acquisition Sub in effect at the Effective Time
(subject to any subsequent amendment). At and after the Effective Time, the
directors and officers of Tracks Surviving Corporation in office at the
Effective Time shall be removed and the directors and officers of TRX
Acquisition Sub in office at the Effective Time shall be the directors and
officers of Tracks Surviving Corporation (subject to any subsequent resignation
or removal).
2.6 Other Effects of Merger. The Merger shall have all further effects as
specified in the applicable provisions of the Texas Act.
2.7 Conversion; Merger Consideration. The total consideration (the "Merger
Consideration") to be paid by Insituform for the issued and outstanding shares
(the "Xxxxxx Shares") of common stock, par value $.10 per share, of Xxxxxx
("Xxxxxx Common Stock") and the issued and outstanding shares ("Tracks Shares",
collectively with the Xxxxxx Shares, the "Company Shares") of common stock, par
value $1.00 per share, of Tracks ("Tracks Common Stock") is $15,350,000 in a
combination of cash and promissory notes in substantially the form set forth in
Exhibit 2.7 ("Cash Equivalent Consideration") and $64,650,000 in Insituform
Class A common shares, par value $.01 per share ("Insituform Common Stock"),
payable and valued as set forth in this Section 2.7; provided, however, such
$64,650,000 in Insituform Common Stock may be adjusted as provided in Section
2.7(c). The Insituform Common Stock issued pursuant to the Xxxxxx Merger and the
Tracks Merger is referred to herein collectively as the "Insituform Shares." For
purposes of allocating the Merger Consideration, 97.5% of the Merger
Consideration shall be attributed to the Xxxxxx Shares and 2.5% shall be
attributed to the Tracks Shares (collectively, the "Allocation Percentages").
For purposes of determining the Xxxxxx Exchange Ratio (as defined hereafter) and
the Tracks Exchange Ratio (as defined hereafter), the ratios, unless otherwise
adjusted in accordance with Section 2.7(c), shall be based on the issuance of a
total of 1,847,143 shares of Insituform Common Stock valued as of Closing at $35
per share.
(a) Subject to the provisions of this Agreement and any applicable
withholding requirements, each of the Xxxxxx Shares as of the Effective Time
shall be converted
into the right to receive, and there shall be paid and issued as hereinafter
provided, Cash Equivalent Consideration in the amount of $1,064.077, plus
128.046 shares (the "Xxxxxx Exchange Ratio") of Insituform Common Stock, subject
to the payment of cash in lieu of issuing any fractional shares as hereinafter
provided (the "Xxxxxx Merger Consideration"). The Xxxxxx Exchange Ratio shall be
subject to adjustment as set forth in Section 2.7(c) and shall be further
subject to appropriate adjustment in the event of a stock split, stock dividend
or recapitalization after the date of this Agreement applicable to shares of the
Insituform Common Stock or the Xxxxxx Common Stock.
(b) Subject to the provisions of this Agreement and any applicable
withholding requirements, each of the Tracks Shares as of the Effective Time
shall be converted into the right to receive, and there shall be paid and issued
as hereinafter provided, Cash Equivalent Consideration in the amount of $11.104,
plus 1.3362 shares (the "Tracks Exchange Ratio") of the Insituform Common Stock,
subject to the payment of cash in lieu of issuing any fractional shares as
hereinafter provided (individually, the "Tracks Merger Consideration"). The
Tracks Exchange Ratio shall be subject to adjustment as set forth in Section
2.7(c) and shall be further subject to appropriate adjustment in the event of a
stock split, stock dividend or recapitalization after the date of this Agreement
applicable to shares of the Insituform Common Stock or the Tracks Common Stock.
(c) The Xxxxxx Exchange Ratio and the Tracks Exchange Ratio (collectively,
the "Exchange Ratios") shall be adjusted as follows:
(i) if the Average Price at Closing is greater than $36.71, then
the respective Exchange Ratios shall be adjusted such that the total
number of shares of Insituform Common Stock to be issued pursuant to
the Merger shall equal the number of Insituform Common Stock as
determined by dividing $67,800,000 (allocated in accordance with the
Allocation Percentages) by the Average Price at Closing; provided,
however, that the total number of Insituform Shares shall not be less
than 1,653,659 and
(ii if the Average Price at Closing is less than $33.29, then the
respective Exchange Ratios shall be adjusted such that the total
number of shares of Insituform Common Stock to be issued pursuant to
the Merger shall equal the number of Insituform Common Stock as
determined by dividing $61,500,000 (allocated in accordance with the
Allocation Percentages) by the Average Price at Closing; provided,
however, that the total number of Insituform Shares shall be limited
to and shall not exceed 2,050,000.
(d) Each Xxxxxx/Tracks Shareholder may elect to receive all, or such
portion as set forth on Schedule 2.7(d), of the Cash Equivalent Consideration in
cash; provided, that Insituform shall not be obligated to pay more than
$10,000,000 of the Cash Equivalent Consideration in cash.
(e) No fractional shares of Insituform Common Stock shall be issued
pursuant to the Merger nor will any fractional share interest involved entitle
the holder thereof to vote, to receive dividends or to exercise any other rights
of a Xxxxxx/Tracks Shareholder of Insituform. In lieu thereof, any person who
would otherwise be entitled to a fractional share of Insituform
Common Stock pursuant to the provisions hereof shall receive an amount in cash
equal to the value of such fractional share. Any fractional shares shall be
determined consistent with the provisions of Section 2.7(a) or (b), as
applicable.
(f) Each share of Xxxxxx Common Stock and Tracks Common Stock held
in the treasury of Xxxxxx or Tracks, respectively, shall be canceled as of the
Effective Time and no Merger Consideration shall be payable with respect
thereto. From and after the Effective Time, there shall be no further transfers
on the stock transfer books of Xxxxxx or Tracks of any of the Xxxxxx Shares or
Tracks Shares, respectively, outstanding prior to the Effective Time.
(g) Subject to the provisions of this Agreement, at the Effective Time, the
shares of K Acquisition Sub common stock outstanding immediately prior to the
Xxxxxx Merger shall both be converted, by virtue of the Xxxxxx Merger, and
without any action on the part of the holder thereof, into one share of the
common stock of the Xxxxxx Surviving Corporation (the "Xxxxxx Surviving
Corporation Common Stock"), which one share of the Xxxxxx Surviving Corporation
Common Stock shall constitute all of the issued and outstanding capital stock of
the Xxxxxx Surviving Corporation. Subject to the provisions of this Agreement,
at the Effective Time, the shares of TRX Acquisition Sub common stock
outstanding immediately prior to the Tracks Merger shall both be converted, by
virtue of the Tracks Merger, and without any action on the part of the holder
thereof, into one share of the common stock of the Tracks Surviving Corporation
(the "Tracks Surviving Corporation Common Stock", and collectively with the
Xxxxxx Surviving Corporation Common Stock, the "Surviving Corporation Common
Stock"), which one share of the Tracks Surviving Corporation Common Stock shall
constitute all of the issued and outstanding capital stock of the Tracks
Surviving Corporation.
2.8 Surrender and Exchange of Company Share Certificates. Upon consummation
of the Mergers, the certificates which theretofore represented the Company
Shares (the "Certificates") shall cease to represent any rights with respect
thereto, and, subject to applicable Law and this Agreement, the Certificates
shall only represent the right to receive the Merger Consideration including the
amount of cash, if any, payable in lieu of fractional shares of Insituform
Common Stock into which the Company Shares have been converted pursuant to this
Agreement. At the Effective Time, each holder of Company Shares shall surrender
and deliver their Certificates to Insituform. Upon such surrender and delivery,
the holder shall receive an amount of cash into which such holder's Company
Shares have been converted pursuant to the Agreement, one or more certificates
representing the number of whole shares of Insituform Common Stock into which
such holder's Company Shares have been converted pursuant to this Agreement,
plus the amount of cash payable in lieu of any fractional shares. Until so
surrendered and exchanged, each outstanding Certificate after the Effective Time
shall be deemed for all purposes to evidence the right to receive that amount of
cash, number of whole shares of Insituform Common Stock into which the Company
Shares have been converted pursuant to this Agreement plus the amount of cash
payable in lieu of any fractional shares; provided, however, that no dividends
or other distributions, if any, in respect of the shares of Insituform Common
Stock, declared after the Effective Time and payable to holders of record after
the Effective Time, shall be paid to the holders of any unsurrendered
Certificates until such Certificates are surrendered and delivered as provided
herein. Subject to applicable Law, after the surrender and exchange of
Certificates, the record holders thereof will be entitled to receive any such
dividends or other distributions without interest thereon, which theretofore
have become payable with respect to the number of shares of Insituform Common
Stock for which
such Certificates were exchangeable. Holders of any unsurrendered Certificates
shall not be entitled to vote Insituform Common Stock until such Certificates
are exchanged pursuant to this Agreement.
2.9 Holdback. On the Closing Date, Insituform shall deposit with the Escrow
Agent pursuant to the terms of an escrow agreement entered into by Insituform
and the Xxxxxx/Tracks Shareholders in substantially the form attached hereto as
Exhibit 2.9 (the "Escrow Agreement"): (i) the Merger Consideration Promissory
Notes; and (ii) the number of shares (the "Holdback Shares") of the Insituform
Shares that equals 10% of the total value of the Merger Consideration minus the
principal amount of Merger Consideration Promissory Notes divided by the Average
Price at Closing (the "Escrow Account"). The Escrow Account shall be retained
pro rata from each Xxxxxx/Tracks Shareholder's portion of the Merger
Consideration. Any additional shares of Insituform Common Stock issuable with
respect to the Holdback Shares as a result of any stock splits, stock dividends
or similar transactions, shall serve as additional collateral for the
indemnification and other obligations of the Xxxxxx/Tracks Shareholders under
this Agreement and shall be included within the definition of "Holdback Shares."
The release (to the Xxxxxx/Tracks Shareholders or Insituform) of the Holdback
Shares shall be made in accordance with this Section:
(a) Claims. If Insituform makes a claim against the Xxxxxx/Tracks
Shareholders for any breach of a representation, warranty, covenant or
obligation (including, without limitation, indemnification obligations) under
this Agreement, such claim shall be handled as provided in Article 8. If any
Xxxxxx/Tracks Shareholder fails to satisfy its obligation to Insituform after
notice as required in Article 8 and pursuant to the claims procedures set forth
in Section 8.4 thereof, then Insituform may either (i) notify the Escrow Agent
to distribute to Insituform either (A) the number of Holdback Shares or (B)
other assets held in the Escrow Account (including an offset against the Merger
Consideration Promissory Notes), equal in value to its Damages or (ii) seek any
other remedy available to it under this Agreement, at law or in equity. In
satisfying a claim under (i) above, Insituform shall first offset any amounts
against the Merger Consideration Promissory Note before requesting any
distribution of the Holdback Shares. For purposes of this Section, the value of
a Holdback Share shall be deemed to equal the Average Price on the date such
value is to be determined. Any portion of the Escrow Account to be distributed
as provided in subsection (c) below shall be reduced by the amount of any
indemnification claims finally resolved pursuant to Article 8 and paid out of
the Escrow Account. To the extent any claim for indemnification has been
asserted by Insituform but not finally resolved, the Escrow Agent shall also
withhold distribution in an amount equal to Insituform's good faith estimate of
the amount of the claim, and the amount so withheld shall remain in the Escrow
Account. If the Xxxxxx/Tracts shareholders dispute the amount to be withheld,
the dispute resolution provisions set forth in Section 9.13 shall apply.
(b) Dividends and Voting. Except with respect to shares transferred to
Insituform pursuant to Section 2.9(a) (and in the case of such shares, until the
same are transferred), all Holdback Shares shall be deemed to be beneficially
owned by the Xxxxxx/Tracks Shareholders, and the Xxxxxx/Tracks Shareholders
shall be entitled to vote the same, and receive dividends thereon when and if
declared by the Insituform Board of Directors.
(c) Distribution. Subject to the terms of the Escrow Agreement, the Escrow
Agent shall distribute the assets in the Escrow Account to the Xxxxxx/Tracks
Shareholders as
follows: (i) (A) the first installment payment under the MergerConsideration
Promissory Note and (B) such number of Holdback Shares that equals 50% of the
value of the Escrow Account minus the first installment payment under the Merger
Consideration Promissory Notes, less the amount of any claims that may be offset
or withheld pursuant to subsection (a) above, shall be paid on the first
anniversary of the Closing Date and (ii) the remaining balance of the Escrow
Account, less the amount of any claims that may be offset or withheld pursuant
to (a) above, shall be paid on the second anniversary of the Closing Date.
2.10 Registration Statement.
(a) For the purposes of registering for resale 30% of the Insituform Shares
(including any shares of Insituform Common Stock issued as a dividend or other
distribution with respect to, or in exchange for, or in replacement of such
Insituform Shares) (the "Registrable Securities") with the SEC under the
Securities Act, and complying with applicable state securities Laws, Insituform,
the Company and the Xxxxxx/Tracks Shareholders will cooperate in the preparation
of a registration statement on Form S-3 (such registration statement, together
with any and all amendments and supplements thereto, being herein referred to as
the "Registration Statement"), including a prospectus satisfying all
requirements of applicable state securities Laws and the Securities Act. Such
prospectus, together with any and all amendments or supplements thereto, is
herein referred to as the "Prospectus."
(b) The Company will furnish Insituform with such information concerning
the Company as is necessary in order to cause the Prospectus, insofar as it
relates to the Company, to comply with applicable Law. None of the information
relating to the Company supplied by the Company for inclusion in the Prospectus
will be false or misleading with respect to any material fact or will omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Company agrees promptly to advise Insituform if, at
any time prior to the filing of the Registration Statement, any information
provided by it in the Prospectus is or becomes incorrect or incomplete in any
material respect and to provide Insituform with the information needed to
correct such inaccuracy or omission. The Company will furnish Insituform with
such supplemental information as may be necessary in order to cause the
Prospectus, insofar as it relates to the Company, to comply with applicable Law.
(c) All expenses incurred in connection with the registration under this
Section (including all registration, filing, qualification, legal, printing and
accounting fees, but excluding underwriting commissions and discounts, if any),
shall be borne by Insituform. In connection with registration under this
Section, Insituform will, consistent with the rules, regulations, interpretive
releases and positions of the SEC:
(i) Prepare and file within five (5) business days of the Closing
Date with the SEC the Registration Statement and use its best efforts
to cause the Registration Statement to become and remain effective.
Insituform shall be obligated to effect only one Registration
Statement for all Xxxxxx/Tracks Shareholders; provided, however, that
Insituform shall not be deemed to have satisfied its obligation under
this Section unless and until a Registration Statement covering all of
the Registrable Securities has been filed and become effective under
the Securities Act and has remained current and effective until the
holders
of the Registrable Securities may sell the Registrable Securities
pursuant to Rule 144(k) (or such shorter period as is required to
complete the distribution and sale of all shares registered
thereunder).
(ii) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective for a period as
may be requested by the Xxxxxx/Tracks Shareholder Representative until
the holders of the Registrable Securities may sell the Registrable
Securities pursuant to Rule 144(k) (or such shorter period as is
required to complete the distributions and sale of all shares
registered thereunder) and to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by the Registration Statement during such period in accordance
with the intended methods of disposition thereof set forth in the
Registration Statement; provided, that before filing a Registration
Statement or Prospectus relating to the sale of Registrable
Securities, or any amendments or supplements thereto, Insituform will
furnish to counsel to holders of Registrable Securities covered by the
Registration Statement or Prospectus, copies of all documents proposed
to be filed, which documents will be subject to the review of such
counsel, and Insituform will give reasonable consideration in good
faith to any comments of such counsel.
(iii) Furnish to each holder of Registrable Securities covered by
the Registration Statement such number of copies of a preliminary
prospectus and Prospectus for delivery in conformity with the
requirements of the Securities Act, and such other documents, as such
Person may reasonably request, in order to facilitate the public sale
or other disposition of the Registrable Securities.
(iv) Use its best efforts to register or qualify the Registrable
Securities covered by the Registration Statement under such other
securities or blue sky Laws of such jurisdictions as each
Xxxxxx/Tracks Shareholder shall reasonably request, and do any and all
other acts and things which may be reasonably necessary or advisable
to enable such Xxxxxx/Tracks Shareholder to consummate the disposition
of the Registrable Securities owned by such Xxxxxx/Tracks Shareholder,
in such jurisdictions, except that Insituform shall not for any such
purpose be required (x) to qualify to do business as a foreign
corporation in any jurisdiction where, but for the requirements of
this Subsection, it is not then so qualified, or (y) to subject itself
to taxation in any such jurisdiction, or (z) to take any action which
would subject it to general or unlimited service of process in any
such jurisdiction where it is not then so subject.
(v) Use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with and
approved by such other Governmental Authorities as may be necessary to
enable the Xxxxxx/Tracks Shareholders to consummate the disposition of
such Registrable Securities.
(vi) Immediately notify each Xxxxxx/Tracks Shareholder at any
time when a Prospectus relating to the Registrable Securities is
required to be delivered
under the Securities Act within the appropriate period mentioned in
Subsection 2.10(c)(ii) above, if Insituform becomes aware that the
Prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and, at the request of any such Xxxxxx/Tracks
Shareholder, deliver a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, each
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances then existing.
(vii) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make generally
available to its security holders, in each case as soon as
practicable, but not later than 45 calendar days after the close of
the period covered thereby (90 calendar days in case the period
covered corresponds to a fiscal year of Insituform), an earnings
statement of Insituform which will satisfy the provisions of Section
11(a) of the Securities Act.
(d) Insituform promptly will advise the Xxxxxx/Tracks Shareholders when the
Registration Statement has become effective and of any supplements or amendments
thereto, and Insituform will furnish the Xxxxxx/Tracks Shareholder with copies
of all such documents. Neither Company nor any Xxxxxx/Tracks Shareholder shall
distribute any written material that might constitute a "prospectus" relating to
the Merger or the Insituform Shares within the meaning of the Securities Act or
any applicable state securities Law without the prior written consent of
Insituform.
(e) Each holder of Registrable Securities covered by the Registration
Statement referred to in this Section will, upon receipt of any notice from
Insituform of the happening of any event of the kind described in Section
2.10(c)(vi) above, forthwith discontinue disposition of the Registrable
Securities pursuant to the Registration Statement until such holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
2.10(c)(vi) above.
(f) Insituform will, and it hereby agrees to, indemnify and hold harmless,
to the extent permitted by Law, each holder of any Registrable Securities
covered by the Registration Statement, and each other Person, if any, who
controls such holder within the meaning of the Securities Act, as follows:
(i) against any and all loss, liability, claim, damage or expense
whatsoever arising out of or based upon an untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of an untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or Prospectus
(or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order top make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of Insituform; and
(iii) against any and all expense reasonably incurred by them in
connection with investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission to the extent that any such expense is not paid
under Subsection 2.10(f)(i) or (f)(ii) above.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder of Registrable Securities or
any such director, officer, employee, agent, general or limited partner,
investment advisor or agent, underwriter or controlling person and shall survive
the transfer of such securities by such holder.
(g) Each Xxxxxx/Tracks Shareholder shall indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 2.10(f) above)
Insituform, and each of its officers, directors, and Person, if any, who
controls Insituform within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from the
Registration Statement, any preliminary, final or summary Prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to Insituform by or on behalf of such
Xxxxxx/Tracks Shareholder. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Insituform or any such
director, officer or controlling person and shall survive the transfer of such
securities by such Xxxxxx/Tracks Shareholder. In that event, the obligations of
the Insituform and such Xxxxxx/Tracks Shareholder pursuant to Subsections
2.10(f) and (g) are to be several and not joint; provided, however, that, with
respect to each claim pursuant to Subsections 2.10(f) and (g), Insituform shall
be liable for the full amount of such claim, and each such Xxxxxx/Tracks
Shareholder's liability under this Subsection shall be limited to an amount
equal to the net proceeds (after deducting the underwriting discount and
expenses) received by such Xxxxxx/Tracks Shareholder from the sale of
Registrable Securities by such Xxxxxx/Tracks Shareholder pursuant to this
Section.
(h) Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding involving a claim
referred to in this Section, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to such
indemnifying party of the commencement of such action; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section, except to
the extent
(not including any such notice of an underwriter) that the indemnifying party is
materially prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim (in which case the
indemnifying party shall not be liable for the fees and expenses of more than
one firm of counsel selected by holders of a majority of the shares of
Registrable Securities included in the offering or more than one firm of counsel
for the underwriters in connection with any one action or separate but similar
or related actions), the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses subsequently incurred by such indemnifying party in
connection with the defense thereof, provided that the indemnifying party will
not agree to any settlement without the prior consent of the indemnified party
(which consent shall not be reasonably withheld) unless such settlement requires
no more than a monetary payment for which the indemnifying party agrees to
indemnify the indemnified party (which consent shall not be unreasonably
withheld) and includes a full, unconditional and complete release of the
indemnified party; provided, however, that the indemnified party shall be
entitled to take control of the defense of any claim as to which, in the
reasonable judgment of the indemnifying party's counsel, representation of both
the indemnifying party and the indemnified party would be inappropriate under
the applicable standards of profession conduct due to actual or potential
differing interests between them. In the event that the indemnifying party does
not assume the defense of a claim pursuant to this Subsection, the indemnified
party will have the right to defend such claim by all appropriate proceedings,
and will have control of such defense and proceedings, and the indemnified party
shall have the right to agree to any settlement without the prior consent of the
indemnifying party. Each indemnified party shall, and shall cause its legal
counsel to, provide reasonable cooperation to the indemnifying party and its
legal counsel in connection with its assuming the defense of any claim,
including the furnishing of the indemnifying party with all papers served in
such proceeding. In the event that an indemnifying party assumes the defense of
an action under this Subsection, then such indemnifying party shall, subject to
the provisions of this Section, indemnify and hold harmless the indemnified
party from any and all losses, claims, damages or liabilities by reason of such
settlement or judgment.
(i) In order to provide for just and equitable contribution in
circumstances under which the indemnity contemplated by this Section is for any
reason not available or insufficient for any reason to hold harmless an
indemnified party in respect of any losses, claims, damages or liabilities
referred to therein, the parties required to indemnify by the terms thereof
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by
Insituform, any Company of Registrable Securities, except to the extent that
contribution is not permitted under Section 11(f) of the Securities Act. In
determining the amounts which the respective parties shall contribute, there
shall be considered the relative benefits received by each party from the
offering of the Registrable Securities by taking into account the portion of the
proceeds of the offering realized by each, and the relative fault of each party
by taking into account the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission and any other
equitable considerations appropriate under the circumstances. Insituform and
each person selling securities agree with each other that no holder of
Registrable Securities shall be required to contribute any amount in excess of
the amount such holder would have been required to pay to an indemnified party
if the indemnity under this Section were available. Insituform and each such
holder agree with each other, that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation. For
purposes of this Subsection, each director and each officer of Insituform who
signed the Registration Statement, and each person, if any, who controls
Insituform or a holder of Registrable Securities within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as
Insituform or holder of Registrable Securities, as the case may be.
(j) Insituform shall not be obligated to register shares of Registrable
Securities held by any Xxxxxx/Tracks Shareholder at any time when the resale
provisions of Rule 144(k) (or any similar or successor provision) promulgated
under the Securities Act are available to such Xxxxxx/Tracks Shareholder.
2.11 Tax-Free Reorganization. The parties intend that the Mergers qualify
as tax-free reorganizations pursuant to Section 368 of the IRC. The parties
hereto hereby adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the treasury regulations
promulgated under the IRC.
2.12 Additional Actions. If, at any time after the Effective Time, either
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in such Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets any Acquisition Sub or the Company or otherwise to carry
out this Agreement, the officers and directors of such Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of the
Acquisition Sub or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of the Acquisition Sub
or the Company, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in such Surviving Corporation or
otherwise to carry out this Agreement.
2.13 Xxxxxx/Tracks Shareholders' Representative and Durable Power of
Attorney. Each Xxxxxx/Tracks Shareholder hereby makes, constitutes and appoints
Xxxxxxx X. Xxxxxx, Xx. (the "Xxxxxx/Tracks Shareholders' Representative"), as
such Xxxxxx/Tracks Shareholder's true and lawful attorney-in-fact and agent,
with full power and authority, in the name and on behalf of each Xxxxxx/Tracks
Shareholder to act on behalf of each of them with respect to all matters which
are the subject of this Agreement, including without limitation:
(i) receiving or giving all instructions, other communications,
consents or agreements that may be necessary, required or given under this
Agreement;
(ii) asserting, settling, compromising, or defending, or determining
not to assert, settle compromise or defend any claim made by any party
entitled to indemnification under this Agreement;
(iii) to negotiate and compromise any dispute which may arise under,
and to exercise or refrain from exercising remedies available under, this
Agreement and to sign any releases or other documents with respect to any
such dispute or remedy;
(iv) to review calculations and statements rendered in connection with
any claim for which indemnification is available under this Agreement and
to approve and authorize the payment of any related fees and expenses;
(v) to negotiate, sign and deliver any document or documents called
for under this Agreement; and
(vi) to give such instructions, to execute and deliver such documents,
and to do such other things and refrain from doing such other things, as
the Xxxxxx/Tracks Shareholders' Representative shall deem necessary or
appropriate to carry out the provisions of this Agreement.
The Xxxxxx/Tracks Shareholders' Representative hereby accepts such authorization
and appointment as attorney-in-fact and agent and agrees to serve entirely
without compensation. The durable power of attorney granted by this Agreement
and all authority conferred hereby is granted and conferred subject to and in
consideration of the interests of the Xxxxxx/Tracks Shareholders and the
Xxxxxx/Tracks Shareholders' Representative for the purpose of completing the
actions contemplated in this Section. Accordingly, the authority conferred
hereby, including the appointment of the Xxxxxx/Tracks Shareholders'
Representative, is an agency coupled with an interest and (i) shall be
irrevocable and (ii) shall not be terminated by any act of a Xxxxxx/Tracks
Shareholder or by operation of law, whether by the death, disability, incapacity
or liquidation of a Xxxxxx/Tracks Shareholder or by the occurrence of any other
event or events (including without limitation the termination of any trust or
estate for which any Xxxxxx/Tracks Shareholder is acting as a fiduciary or
fiduciaries), and if, after the execution hereof, any Xxxxxx/Tracks Shareholder
shall die or become disabled or incapacitated or is liquidated, or if any other
such event or events shall occur before the completion of the transactions
contemplated by this Agreement, the Xxxxxx/Tracks Shareholders' Representative
shall nevertheless be authorized and directed to complete all such transactions
as if such death, disability, incapacity, liquidation or other event or events
had not occurred and regardless of notice thereof. Upon the death, disability or
resignation of the Xxxxxx/Tracks Shareholders' Representative, the Xxxxxx/Tracks
Shareholders shall unanimously appoint a substitute agent to serve as their
agent and attorney-in-fact pursuant to the terms of this Agreement, and third
parties shall be entitled to rely on such substitute agent to the same extent as
they were theretofore entitled to rely on the Xxxxxx/Tracks Shareholders'
Representative named herein.
THIS IS A DURABLE POWER OF ATTORNEY AND THE AUTHORITY OF THE XXXXXX/TRACKS
SHAREHOLDERS' REPRESENTATIVE OR ANY SUBSTITUTE REPRENTATIVE HEREUNDER WITH
RESPECT TO ANY XXXXXX/TRACKS
SHAREHOLDER SHALL NOT TERMINATE IF SUCH XXXXXX/TRACKS SHAREHOLDER BECOMES
DISABLED OR INCAPACITATED OR IN THE EVENT OF LATER UNCERTAINTY AS TO
WHETHER SUCH XXXXXX/TRACKS SHAREHOLDER IS DEAD OR ALIVE.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF XXXXXX, TRACKS AND THE
XXXXXX/TRACKS SHAREHOLDERS
Subject to, and except as specifically disclosed in, Schedule 3 to this
Agreement (the "Xxxxxx/Tracks Disclosure Schedule"), Xxxxxx, Tracks and the
Xxxxxx/Tracks Shareholders, jointly and severally, represent and warrant to
Insituform and the Acquisition Subs, as of the date hereof and as of the Closing
Date, the following:
3.1 Company Organization, Qualification and Good Standing. Each Company is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Texas. Each Company has all requisite power and authority
to own, lease and operate its assets and to carry on its business as now owned,
leased, operated and conducted and as intended to be conducted. Each Company is
duly qualified as a foreign business entity, and is in good standing, in all
other jurisdictions in which such qualification or licensing is required. The
Xxxxxx/Tracks Disclosure Schedule contains a true, accurate and complete list of
all such jurisdictions. True, accurate and complete copies of each Company's
articles of incorporation and bylaws, together with any and all amendments
thereto, as presently in effect, have been delivered or made available to
Insituform.
3.2 Company Authorization. Each Company has all requisite power and
authority (i) to execute and deliver this Agreement and the other Transaction
Documents to which it is a party and (ii) to consummate the Transaction. Each
Company and its respective directors and shareholders have taken all actions
necessary for the authorization, execution, delivery and performance of all
obligations of each Company under this Agreement and the other Transaction
Documents to which each such Company is a party. This Agreement and the other
Transaction Documents to which each such Company is a party, when executed and
delivered, shall constitute valid and legally binding obligations of each such
Company enforceable against it in accordance with their respective terms, except
as enforcement thereof may be limited by bankruptcy, reorganization, insolvency
and similar Laws affecting creditors' rights generally, and general equitable
principles. This Agreement has been, and at Closing the other Transaction
Documents to be executed by each Company will be, duly executed and delivered by
each such Company.
3.3 No Company Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which each Company is or will
be a party, and the consummation of the Transaction, will not (i) conflict with,
or result in any violation or breach of or default or loss of any benefit under
(either alone or with the giving of notice or the passage of time or both) (A)
any provision of the organizational or governing instruments of either Company,
(B) any contract or agreement as specified in Section 3.17 to which either
Company is a party or (C) any Requirement of Law of any Governmental Authority
or arbitrator applicable to either Company or (ii) result in the creation or
imposition of any Encumbrance on either Company or their respective assets.
3.4 Company Consents. No Requisite Approvals are required in connection
with either Company's execution, delivery and performance of this Agreement or
the other Transaction Documents or the consummation of the Transaction, other
than (i) the filing of the Articles of Merger with the Secretary of the State of
Texas in accordance with the Texas Act and (ii) filings under the HSR Act.
3.5 Capitalization and Ownership. As of the date hereof, the authorized
capital stock of Xxxxxx consists of 500,000 shares of Xxxxxx Common Stock,
14,065 shares of which are issued and outstanding and held by the Xxxxxx/Tracks
Shareholders as shown on Schedule 3.5, free from any Encumbrance, and there are
no shares of Xxxxxx Common Stock issued and held in the treasury of Xxxxxx. No
other capital stock of Xxxxxx is issued or outstanding. As of the date hereof,
the authorized capital stock of Tracks consists of 1,000,000 shares of Tracks
Common Stock, 34,560 shares of which are issued and outstanding and held by the
Xxxxxx/Tracks Shareholders as shown on Schedule 3.5, free from any Encumbrance,
and there are no shares of Tracks Common Stock issued and held in the treasury
of Tracks. No other capital stock of Tracks is issued or outstanding. All issued
and outstanding shares of each Company's Common Stock are duly authorized,
validly issued, fully paid and nonassessable and were issued free of preemptive
rights and in compliance with applicable corporate and securities Laws. There
are no outstanding rights, reservations of shares, subscriptions, warrants,
puts, calls, unsatisfied preemptive rights, options, profits interests or other
agreements of any kind relating to any of the capital stock or any other
security of either Company, and there is no authorized or outstanding security
of any kind convertible into or exchangeable for any such capital stock or other
security. There are no voting trusts, voting agreements, restrictions upon the
transfer of or otherwise pertaining to any Company Shares (including the ability
to pay dividends thereon) or retained earnings of either Company or the
ownership thereof other than those imposed generally by the Securities Act,
applicable state or foreign securities Laws or applicable corporate Law.
3.6 Company Financial Statements; Changes in Condition.
(a) Attached as composite Schedule 3.6 to this Agreement are true, accurate
and complete copies of the Company Financial Statements. Except as noted herein
or therein, the Company Financial Statements were prepared in conformity with
GAAP and present fairly, in all material respects (subject, in the case of the
Xxxxxx Interim Financial Statements and the Tracks Interim Financial Statements,
to normal, recurring year-end audit adjustments and accompanying notes), the
financial position, assets, liabilities and retained earnings of each Company as
of the dates thereof and the revenues, expenses, results of operations, changes
in financial position and cash flows of each Company for the periods indicated
therein. The 2000 Xxxxxx Financial Statements and the 2000 Tracks Financial
Statements will be prepared in conformity with GAAP and present fairly, in all
material respects, the financial position, assets, liabilities and retained
earnings of each Company as of the dates thereof and the revenues, expenses,
results of operations, changes in financial position and cash flows of each
Company for the periods indicated therein.
(b) Since the date of the Xxxxxx Interim Financial Statements and the
Tracks Interim Financial Statements, (i) each Company has carried on and
operated its business in the Ordinary Course (other than in connection with the
Transaction) and (ii) there have been no changes in the condition (financial or
otherwise), profitability, business, affairs or prospects of either Company or
their respective businesses. Without limiting the generality of the foregoing,
since the date of the Xxxxxx Interim Financial Statements and the Tracks Interim
Financial Statements, neither Company has:
(i) incurred any obligation or entered into any
contract or agreement which (A) required a payment by any
party in excess of, or a series of payments which in the
aggregate exceed, $50,000 or (B) provides for the delivery
of goods or performance of services, or any combination
thereof, having a value in excess of $50,000;
(ii) acquired or leased, or committed to acquire or
lease, any assets other than (A) Inventory in the Ordinary
Course and (B) capital expenditures not exceeding $50,000 in
the aggregate;
(iii) made any borrowings, incurred any debt (other
than trade payables in the Ordinary Course), or assumed,
guaranteed, endorsed (except for the negotiation or
collection of negotiable instruments in transactions in the
Ordinary Course) or otherwise become liable (whether
directly, indirectly, contingently or otherwise) for the
obligations of any other Person, or made any payment or
repayment in respect of any indebtedness (other than trade
payables and accrued expenses in the Ordinary Course);
(iv) has taken any action which has resulted, or could
result in, any Material Adverse Effect;
(v) suffered any damage, destruction or loss to any of
its assets or properties (whether or not covered by
insurance);
(vi) taken any action or entered into or authorized any
Contract or transaction other than in the Ordinary Course;
(vii) entered into any agreement or commitment that
restricts its business;
(viii) merged or consolidated with, or acquired for
cash a substantial part of the assets or equity interests
of, any other Person;
(ix) sold, transferred, conveyed, assigned or otherwise
disposed of any of its assets or properties, except sales of
Inventory in the Ordinary Course;
(x) waived, released, settled, compromised or cancelled
any claims against third parties or debts owing to it or any
rights, which exceeded $10,000 individually, or $50,000 in
the aggregate;
(xi) settled or compromised, or agreed to settle or
compromise, any suits, actions or claims by or against
either Company;
(xii) made any changes in its accounting systems,
policies, principles or practices;
(xiii) entered into, authorized or permitted any
transaction with any Affiliate of either Company;
(xiv) authorized for issuance, issued, sold, delivered
or agreed or committed to issue, sell or deliver (whether
through the issuance or granting of options, warrants,
convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise) any equity
interests in either Company or any other securities, or
amended any of the terms of any such securities;
(xv) split, combined, or reclassified any equity
interests in either Company, declared, set aside or paid any
dividend or other distribution (whether in cash, securities
or property or any combination thereof) in respect of its
equity interests or redeemed or otherwise acquired any
securities of either Company;
(xvi) made any loans, advances or capital contributions
to, or investments in, any other Person;
(xvii) entered into, adopted, amended, terminated or
made any material interpretation with respect to any Plan,
or increased in any manner the overall work force of either
Company, or entered into any contract, agreement, commitment
or arrangement to do any of the foregoing;
(xviii) increased in any manner the compensation or
fringe benefits of any employee or officer, or paid any
benefit not required by any existing Plan, or entered into
any contract, agreement, commitment or arrangement to do any
of the foregoing;
(xix) made any Tax election or settled or compromised
any Tax liability, or waived or extended the statute of
limitations in respect of any Taxes; or
(xx) terminated, modified, amended or otherwise altered
or changed any of the terms or provisions of any Contract,
or paid any amount not required by any Requirement of Law or
by any Contract, other than in the Ordinary Course.
3.7 No Undisclosed Liabilities. There are no debts, liabilities,
obligations, losses, damages, claims or Encumbrances with respect to either
Company or their respective businesses or assets, either direct or indirect,
matured or unmatured, absolute, contingent or otherwise (and whether or not of a
kind required by GAAP to be set forth in a financial statement), except: (i)
those items set forth on the Company Financial Statements; (ii) those items
arising in the Ordinary Course under any Contract specifically disclosed in the
Xxxxxx/Tracks Disclosure Schedule (or not required to be disclosed because of
the term or amount involved); and (iii) those
items incurred, consistently with past business practice, in or as a result of
the operation of their respective business in the Ordinary Course since the date
of the Xxxxxx Interim Financial Statements and the Tracks Interim Financial
Statements.
3.8 Taxes.
(a) Each Company and its Subsidiaries have timely filed, or caused to be
timely filed, all returns or reports required to be filed by each such entity
relating to Taxes, and has paid, collected or withheld, or caused to be paid,
collected or withheld, all Taxes required to be paid, collected or withheld,
other than such Taxes for which adequate reserves have been established in the
Company Financial Statements, or for which reserves will be established,
consistent with the Company's policies and practices regarding such reserves
during the period between the date of such Company Financial Statements and the
Closing Date, for the payment thereof or which are being contested in good faith
and have been disclosed in writing to Insituform prior to the date of this
Agreement. There are no claims or assessments pending against either Company or
its Subsidiaries for any alleged deficiency in any Tax, and neither Company nor
the Xxxxxx/Tracks Shareholders know of any threatened Tax claims or assessments
against either Company or their Subsidiaries (other than those for which
adequate reserves have been established in the Company Financial Statements or
which are being contested in good faith and have been disclosed in writing to
Insituform prior to the date of this Agreement). Neither Company nor their
Subsidiaries has made an election under Section 338 of the IRC or has taken any
action that would result in any Tax liability of either Company or their
Subsidiaries as a result of a deemed election within the meaning of Section 338
of the IRC under former Treasury Regulation Section 1.338(h)(10)-1(d)(3).
Neither Company nor their Subsidiaries has any waivers or extensions of any
applicable statute of limitations to assess any Taxes. There are no outstanding
requests by either Company or their Subsidiaries for any extension of time
within which to file any return or within which to pay any Taxes shown to be due
on any return. No taxing authority is conducting or has notified or, to the
knowledge of each Company or any Xxxxxx/Tracks Shareholder, has threatened
either Company or their Subsidiaries that it intends to conduct, an audit of any
prior Tax period of either Company or any of their Subsidiaries. No taxing
authority has conducted an audit of any prior Tax period of either Company or
any of their Subsidiaries.
(b) Each Company is a "C" corporation, and neither Company has ever been an
"S" corporation under the IRC.
(c) Each Company is not, and has never been, a party to any Tax sharing
agreements or similar arrangements.
(d) Neither Company nor their Subsidiaries has made or becomes obligated to
make, or will, as a result of the transactions contemplated by this Agreement,
make or become obligated to make, any "excess parachute payment" as defined in
Section 280G of the IRC (without regard to subsection (b) (4) thereof).
(e) Neither Company nor their Subsidiaries is or has been a United States
real property holding company (as defined in Section 897(c)(2) of the IRC)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the IRC.
(f) Neither Company nor their Subsidiaries is a person other than a United
States person within the meaning of the IRC.
(g) None of the assets of either Company or their Subsidiaries is property
which either Company or their Subsidiaries is required to treat as being owned
by any other person pursuant to the so-called "safe harbor lease" provisions of
former Section 168(f)(8) of the IRC.
(h) Each Company and its Subsidiaries have disclosed on their federal
income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax liability within the meaning of
Section 6662(d) of the IRC.
(i) Each Company has filed all reports and has created and/or retained all
records required under IRC Section 6038A with respect to its ownership by and
transactions with related parties. Each related foreign person required to
maintain records under Section 6038A of the IRC with respect to transactions
between either Company and the related foreign person has maintained such
records. All documents that are required to be created and/or preserved by the
related foreign person with respect to transactions with such Company are
maintained in the United States, or such Company is exempt from the record
maintenance requirements of Section 6038A of the IRC with respect to such
transactions under Treasury Regulations Section 1.6038A-1. Each Company is not a
party to any record maintenance agreement with the Internal Revenue Service with
respect to IRC Section 6038A. Each related foreign person that has engaged in
transactions with either Company has authorized such Company to act as its
limited agent solely for purposes of Sections 7602, 7603, and 7604 of the IRC
with respect to any request by the Internal Revenue Service to examine records
or produce testimony related to any transaction with such Company, and each such
authorization remains in full force and effect.
(j) Neither Company nor their Subsidiaries has participated in or
cooperated with, and neither will participate in, an international boycott
within the meaning of Section 999 of the IRC.
(k) There are no liens or encumbrances for Taxes on the assets of either
Company or their Subsidiaries except for statutory liens for current Taxes not
yet due and payable.
(l) Each Company has not made any elections with respect to Taxes affecting
such Company and its Subsidiaries except as are reflected in the Tax returns of
such Company filed and provided to Insituform prior to the date of this
Agreement. Neither Company nor their Subsidiaries: (i) has made or will make a
deemed dividend election under former Treas. Reg. ss. 1.1502-32(f)(2) or a
consent dividend election under Section 565 of the IRC; (ii) has consented at
any time under Section 341(f)(l) of the IRC to have the provisions of Section
341(f)(2) of the IRC apply to any disposition of the assets of such Company or
its Subsidiaries; (iii) has agreed, or is required, to make any adjustment under
Section 481(a) of the IRC by reason of a change in accounting method or
otherwise; (iv) has made an express election, or is required, to treat any asset
of such Company or its Subsidiaries as owned by another person for federal
income tax purposes or as tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the IRC; or (v) has made any of
the foregoing elections or is required to apply any of the foregoing rules under
any comparable state, foreign or local income Tax provision.
(m) Each Company and its Subsidiaries are not and have never been
includable corporations in an affiliated group of corporations, within the
meaning of Section 1504 of the IRC.
(n) The net operating losses, net capital losses, foreign tax credits,
investment and other tax credits set forth on the Company's Tax returns are not
subject to any limitations under Section 382, Section 383 or the Treasury
regulations (whether temporary, proposed or final) under Section 1502 of the
IRC.
(o) Neither Company nor their Subsidiaries is a partner or member in or
subject to any joint venture, partnership, limited liability company or other
arrangement or contract that is or could be treated as a partnership for federal
income tax purposes.
(p) Neither Company nor their Subsidiaries is a party to or otherwise
subject to any arrangement having the effect of or giving rise to the
recognition of a deduction or loss before the Closing Date, and a corresponding
recognition of taxable income or gain after the Closing Date, or any other
arrangement that would have the effect of or give rise to the recognition of
taxable income or gain by such Company or its Subsidiaries after the Closing
Date without the receipt of or entitlement to a corresponding amount of cash.
(q) At the Closing Date, each Company will have only one class of stock
outstanding and it will not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any person could
acquire stock in such Company that, if exercised or converted, would affect
Insituform's acquisition or retention of control of such Company, as defined in
Section 368(c) of the IRC. Each Company has not sold, transferred, assigned or
otherwise disposed of any assets that will result in such Company not fulfilling
the Section 368(a)(2)(E)(i) requirement that after the Merger such Company holds
substantially all of the assets it held prior to the Merger. For purposes of
Section 368(a)(2)(E)(i), the parties acknowledge that "substantially all of the
assets" means at least 90% of the fair market value of the net assets and at
least 70% of the fair market value of the gross assets held by such Company
immediately prior to the transaction (including in the computation of assets of
such Company amounts paid by such Company to any dissenting shareholders,
amounts paid by such Company to shareholders of such Company who receive cash or
other property, assets of such Company used to pay its reorganization expenses,
and all redemptions and distributions [except for regular, normal dividends]
made by such Company immediately preceding, or in contemplation of, the
transaction contemplated by this Agreement). Each Company is not an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the IRC. Each
Company is not under the jurisdiction of a court in a Title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the IRC. At the Closing Date, the
fair market value of the assets of each Company will exceed the sum of its
liabilities, plus the amount of liabilities, if any, to which the assets are
subject. There are no loans or other extensions of credit outstanding from
either Company to the Xxxxxx/Tracks Shareholders.
(r) All transactions between or among either Company and their
Subsidiaries have occurred on an arm's-length basis consistent with the results
that would have been realized if unrelated and uncontrolled individuals or
entities had engaged in the same transaction under similar circumstances on an
arm's-length basis. No income, deductions, credits, or allowances
could be reallocated by the Internal Revenue Service under Section 482 of the
IRC for any transactions between or among either Company and their Subsidiaries.
(s) Neither Company has participated in a transaction pursuant to Section
355 of the IRC such that the consummation of the transaction contemplated by
this Agreement would cause the recognition of gain pursuant to Section 355(e) of
the IRC.
3.9 No Company Subsidiaries. Neither Company (i) has any Subsidiaries, (ii)
owns or controls, directly or indirectly, any capital stock, equity interests,
bonds or securities of any Person, other than certificates of deposit and
commercial paper held as short term investments or (iii) controls the management
of any such Persons.
3.10 Ownership of Assets. Each Company has good and marketable title to all
of its assets, whether real, personal or mixed, tangible or intangible,
including the assets reflected in the Xxxxxx Interim Financial Statements and
the Tracks Interim Financial Statements, or acquired subsequent thereto (except
for Inventory disposed of in the Ordinary Course), subject to no Encumbrances,
except (i) those Encumbrances reflected in the Xxxxxx Interim Financial
Statements or the Tracks Interim Financial Statements and (ii) liens for taxes
not yet due and payable.
3.11 Completeness of Assets. Each Company owns full right, title and
interest to, or has the right to use (on terms disclosed to Insituform), all
assets necessary for the conduct of its respective business.
3.12 Accounts Receivable. Each Company has provided or made available to
Insituform a true, accurate and complete list of all of such Company's Accounts
Receivable as of the date hereof, showing the account debtor, balance and aging
for each such account. All Accounts Receivable of each Company, whether
reflected in their respective Interim Financial Statements or otherwise, (i)
represent amounts owed to such Company from third parties for services actually
rendered or sales actually made from bona fide transactions in the Ordinary
Course, (ii) are in all respects genuine and valid, (iii) except as reserved
against in the respective Interim Financial Statements or reserved subsequent to
the dates of the Interim Financial Statements consistent with the Company's
reserve policies and practices, shall be or have been fully collected when due
without resort to litigation and (iv) except as reserved against in the
respective Interim Financial Statements or reserved subsequent to the dates of
the Interim Financial Statements consistent with the Company's reserve policies
and practices, are not subject to any defense or offset or otherwise
uncollectible. Any Account Receivable, other than retainage, not collected
within 120 days after the Closing Date, shall be conclusively deemed to be a
breach of this representation and warranty, and shall be available for offset
against the Escrow Account. Amounts carried as retainage shall be collected
within one hundred and twenty days after completion or closing of the contract
for which the retainage is carried, but in any event prior to the second
anniversary of the Closing Date.
3.13 Inventory. Each Company has provided or made available to Insituform a
true, accurate and complete list of all of such Company's tangible Inventory as
of the date hereof. All Inventories reflected in the Xxxxxx Interim Financial
Statements and the Tracks Interim Financial Statements or thereafter acquired
(i) are merchantable, or suitable and useable for the production or completion
of merchantable products, for sale in the Ordinary Course as first quality goods
at
normal xxxx-ups, (ii) are valued at actual cost and are the property of the
respective Company and (iii) are listed on the respective Company's current
price list. No such Inventory items have been or are held by either Company on
consignment from or for the benefit of any other Person.
3.14 Other Personal Property. Each Company has provided or made available
to Insituform a true, accurate and complete list of all of such Company's
Personal Property as of the date hereof. All Personal Property other than
Inventory that is shown on the Xxxxxx Interim Financial Statements and the
Tracks Interim Financial Statements was and currently is owned by each
respective Company in its respective business. Such Personal Property is
functional for the use for which it was intended in the normal operation of each
Company's business, and is, to the best knowledge of the Xxxxxx/Tracks
Shareholders, in good operating condition and repair (ordinary wear and tear
excepted).
3.15 Facilities. The Xxxxxx/Tracks Disclosure Schedule contains a true,
accurate and complete list of all Facilities owned or occupied by either Company
or used in connection with their businesses.
(a) With respect to Facilities that are owned by either Company, title to
each of such Facilities is good and indefeasible, fee simple absolute, free and
clear of all Encumbrances, excepting only such easements, restrictions and
covenants presently of record, which will not interfere with or impair the
Company's intended use, or the marketability, of such Facilities.
(b) With respect to Facilities that are leased by either Company, such
Company (as lessee) has the right under valid and subsisting leases to occupy,
use, possess and control such Facilities as now occupied, used, possessed and
controlled by such Company, subject in each case to the applicable terms and
conditions of the leases (true, accurate and complete copies of which have been
provided to Insituform).
(c) All of the buildings, fixtures and other improvements located on the
Facilities (i) are, to the best knowledge of the Xxxxxx/Tracks Shareholders, in
good operating condition and repair (subject to ordinary wear and tear), (ii)
have been properly maintained and (iii) are available for immediate use in the
conduct of each Company's respective business. Since the first date of its
occupancy of the Facilities, neither Company has experienced any material
interruption in the delivery of adequate quantities of any utilities (including
electricity, natural gas, potable water, water for cooling or similar purposes
and fuel oil) or other public services (including sanitary and industrial sewer
service) required in the operation of its business.
(d) Neither Company has received any written notice relating to (i) any
pending or threatened condemnation or eminent domain proceeding with regard to
all or any part of the Facilities, (ii) the imposition of any special Taxes or
assessments, or payments in lieu thereof, against the Facilities (for which
either Company is responsible under its lease), (iii) the curtailment of any
utility services supplied to the Facilities or (iv) any planned public
improvement which will result in any charge being levied or assessed against, or
will result in the creation of any Encumbrance upon, any of the Facilities.
(e) No Facility is in violation of, and each Facility and the operation
thereof is in compliance with, all comprehensive plan, zoning, subdivision and
all other applicable land use laws, regulations or ordinances.
(f) None of the Facilities are located within a flood hazard zone, as
described in the Flood Disaster Protection Act of 1973 (as amended) and the
National Flood Insurance Act of 1968 (as amended), or, if any such Facility is
so located and has buildings located thereon, then proper federal insurance has
been obtained in the maximum amount permitted respecting such risk and is in
full force and effect.
3.16 Insurance. Each Company has been continuously insured and is presently
insured in the amounts set forth on the Xxxxxx/Tracks Disclosure Schedule with
insurance companies believed by such Company to be responsible and financially
sound against such risks as companies competitive with its business are, in
accordance with good business practice, customarily insured, including but not
limited to casualty and life insurance. Each Company has provided or made
available to Insituform true, accurate and complete copies of all insurance
policies owned by such Company or inuring to such Company's benefit which insure
any part of such Company, its assets or its business, all of which are listed on
the Xxxxxx/Tracks Disclosure Schedule. All such insurance policies are in full
force and effect. There is no inaccuracy in any application for such policies or
any failure to pay any premiums when due, or any other set of facts or
circumstances which might form the basis for termination of any such policies.
The Xxxxxx/Tracks Disclosure Schedule contains a true, accurate and complete
summary of all material customer claims against each Company currently pending,
and those that are being defended by either Company's insurance carriers,
together with each Company's best estimate of the likely damage or other adverse
exposure to such Company and its business. Neither Company has received any
written notice, and no Xxxxxx/Tracks Shareholder has received any notice,
whether or not in writing, of any threatened material claim.
3.17 Contracts. The Xxxxxx/Tracks Disclosure Schedule contains a true,
accurate and complete list of all Contracts for each Company (i) involving an
amount of cash consideration due (by or to either Company) following the Closing
Date in excess of $50,000, (ii) containing any covenant restricting the freedom
of either Company to compete in any line of business or with any Person, (iii)
continuing for a period of more than one (1) year from the date hereof and not
terminable at will without payment or premium or penalty or upon notice of not
more than 30 days, (iv) providing for participation in any results of either
Company's business by a Person, including any Xxxxxx/Tracks Shareholder,
employee, supplier or customer or (v) providing for any payment to any Affiliate
of either Company. To the best knowledge of the Xxxxxx/Tracks Shareholders,
there are no other Contracts of a similar character that are material to the
Company's business or operations. Each Company has delivered or made available
to Insituform true, accurate and complete (A) copies of all written Contracts
described in this section, including amendments, and (B) summaries of all
material provisions of Contracts that are not reduced to written documents, as
contained in the Xxxxxx/Tracks Disclosure Schedule. Neither Company is, and to
the best of each Company's knowledge no other party to any Contract is, in
default under any material Contract, nor, to each Company's knowledge, has any
event occurred which, but for the giving of notice or passage of time or
otherwise, would constitute a breach or default under any material Contract. The
consummation of the Transaction will not result in the breach of any term or
provision of, or constitute a default under,
any material Contract, or constitute an event which with notice, lapse of time
or both could result in any such violation.
3.18 Intellectual Property. The Xxxxxx/Tracks Disclosure Schedule contains
a true, accurate and complete list of all Intellectual Property (except know-how
and goodwill) and Intellectual Property Licenses used by either Company. Each
Company has full right, title and interest in and to the Intellectual Property
shown as owned by it on such Xxxxxx/Tracks Disclosure Schedule. Except as set
forth in the Xxxxxx/Tracks Disclosure Schedule and identified as an Intellectual
Property License, neither Company is (i) a licensor or licensee in respect of
any Intellectual Property or (ii) making any royalty or other payments with
respect to any Intellectual Property, and no Person has a right to any such
payments. Each Company has delivered or made available to Insituform true,
accurate and complete copies of all Intellectual Property Licenses, and such
licenses are in full force and effect. Neither Company is, and, to the best of
each Company's knowledge, no other party to any Intellectual Property License
is, in default under any such license, nor, to either Company's knowledge, has
any event occurred which, but for the giving of notice or passage of time or
both, could constitute a breach or default under any Intellectual Property
License. The consummation of the Transaction will not result in the breach of
any term or provision of, or constitute a default under, any Intellectual
Property License, or constitute an event which with notice, lapse of time or
both could result in any such violation. Neither Company is infringing upon or
otherwise acting adversely to the intangible personal property owned by any
other Person, and there is no notice, claim or action by any such Person pending
with respect thereto.
3.19 Employees. Each Company has provided or made available to Insituform a
true, accurate and complete list of the following information for each employee
of each Company (including each employee on leave of absence or layoff status):
job title, base rate of pay (together with any other compensatory arrangement),
fringe benefits (including any Company-owned or leased vehicles, club
memberships and similar arrangements maintained or sponsored by Company), date
of hire, and, if readily available, number of dependents. Neither Company has
any employment or consulting agreements. No former or current employee of either
Company is a party to, or is otherwise bound by, any agreement or arrangement
which in any way adversely affected or affects (i) the performance of his (or
her) duties if he (or she) shall become an employee of Insituform or any of its
Affiliates after the Closing or (ii) Insituform's ability own either Surviving
Corporation (or either Surviving Corporation to operate their respective
businesses), including the enforcement of any non-competition agreement by any
such employee. Neither Company has any outstanding commitment or agreement to
effect any general wage or salary increase for any of its employees. The
employment of all of each Company's employees is terminable at will without any
penalty of any kind, including severance or compensation benefits.
3.20 Labor Matters. Each Company has complied and is complying with all
Requirements of Law with respect to employment and employment practices
(including, without limitation, all applicable federal and state civil rights
statutes and the hiring, recordkeeping and other requirements of the Immigration
Reform and Control Act of 1986 and the rules and regulations thereunder and as
amended). Neither Company has, and neither Company is, engaged in any unfair
labor practice or unlawful discriminatory act. There are no pending or
threatened charges or complaints by or against either Company before the
National Labor Relations Board, the Equal Employment Opportunity Commission, any
other federal
Governmental Authority relating to labor or employee matters or any similar
state or local Governmental Authority. No labor strike, slowdown, work stoppage
or other labor trouble is pending or threatened by or against either Company.
During the last five (5) years, neither Company has experienced any strike, work
stoppage, slowdown or other labor difficulty. Neither Company has any union or
collective bargaining agreements. No collective bargaining agent has been
certified as a representative of any employee of either Company, and no
representation campaign or election is now in progress with respect to any
employees of either Company. Neither Company has been, and neither Company is in
(and has not been and is not being charged with being in), default under or in
violation of (and there has not been and there is not any basis for any claim of
default against either Company under, or violation of) any Requirement of Law
applicable to such Company or to any of such Company's former or current
employees or to applicants for employment by such Company, including the
National Labor Relations Act (as amended), the Fair Labor Standards Act (as
amended), the Age Discrimination in Employment Act of 1967, Title VII of the
Civil Rights Act of 1964, any Executive Order administered by the Office of
Federal Contract Compliance Programs or any similar state or local fair
employment practice laws.
3.21 Employee Benefit Plans. Neither Company maintains nor contributes to
any Benefit Plan.
With respect to each Benefit Plan (where applicable): each Company has
provided or made available to Insituform complete and accurate copies of (i) all
plan and trust texts and agreements, insurance contracts and other funding
arrangements; (ii) annual reports on the Form 5500 series for the last three (3)
years; (iii) financial statements and/or annual and periodic accountings of plan
assets for the last three (3) years; (iv) the most recent determination letter
received from the IRS; (v) actuarial valuations for the last three (3) years;
and (vi) the most recent summary plan description as defined in ERISA.
With respect to each Benefit Plan while maintained or contributed to by
each Company: (i) if intended to qualify under IRC Sections 401(a) or 403(a),
the Benefit Plan has received a favorable determination letter from the IRS that
it so qualifies, its trust is exempt from taxation under IRC Section 501(a),
taking into account all legislation enacted through 1999, and nothing since the
issuance of the determination letter has occurred to cause the loss of the
Benefit Plan's qualification or its trust's exempt status; (ii) the Benefit Plan
has been administered in accordance with its terms and applicable Laws and all
applicable reporting and disclosure requirements have been timely met; (iii)
except for payment of benefits made in the ordinary course of the plan
administration, no event has occurred and there exists no circumstance under
which either Company or any fiduciary (as defined in Section 3(21)(A) of ERISA)
of the Benefit Plan could incur liability under ERISA, the IRC or otherwise;
(iv) no accumulated funding deficiency as defined in IRC Section 412 has
occurred or exists; (v) no non-exempt prohibited transaction as defined under
ERISA and the IRC has occurred; (vi) no reportable event as defined in Section
4043 of ERISA has occurred; (vii) all contributions and premiums due have fully
been made and paid on a timely basis; (viii) all contributions made or required
to be made under the Benefit Plan meet the requirements for deductibility under
the IRC, and all contributions accrued prior to the Effective Time which have
not been made have been properly recorded on the Company's Financial Statements;
(ix) the Benefit Plan currently is not, and in the past has not been, the
subject of an examination by any governmental agency; and (x) no
assets are invested in employer securities or employer real estate, or in any
investment that could result in unrelated business taxable income.
No Benefit Plan is a defined benefit pension plan subject to Title IV of
ERISA or Section 412 of the IRC. Neither Company contributes to, or has any
outstanding liability with respect to, any Multiemployer Plan. Each Company has
the unrestricted right to amend or terminate any Benefit Plan without incurring
any liability thereunder other than normal liabilities for benefits.
With respect to each Benefit Plan that is a welfare plan (as defined in
ERISA Section 3(1)): (i) no benefits are provided for employees or their
beneficiaries for periods extending beyond termination of employment, except as
required by law; (ii) there are no reserves, assets, surplus or prepaid premiums
under any such plan; and (iii) each Company has fully complied with IRC Section
4980B, and Part 6 and 7 of Title I of ERISA.
The consummation of the Merger will not, either alone or in conjunction
with another Event: (i) entitle any individual to severance pay, or (ii)
accelerate the time of payment or vesting of benefits or increase the amount of
compensation due to any individual.
3.22 Environmental Matters.
(a) The operations, practices, policies and procedures of each Company have
been conducted in compliance with all, and have not given rise to any Damages
under any, Requirement of Law, including any Environmental Laws.
(b) There are no outstanding notices of violations or consent orders under
any Requirement of Law concerning protection of the environment and health and
safety to which either Company or their respective assets, businesses or
Facilities are subject.
(c) Neither Company has filed with, nor made any notification to, any
Governmental Authority or other Person (nor has either Company received any
notification from any Governmental Authority or other Person) with respect to,
and with respect to their respective businesses or any Facility there has not
been, (i) any burying, dumping, leaking, tank failure, spillage, evaporation,
underground injection or disposal of any Hazardous Materials, (ii) any
unpermitted discharge, emission or release of any Hazardous Materials (other
than at a facility permitted by the Environmental Protection Agency to treat,
store or dispose of such Hazardous Materials, (iii) any soil, surface water or
groundwater contamination or (iii) any unpermitted dumping or disposal of
Nonhazardous Solid Waste. None of the Facilities or the respective businesses
contains, generates, handles, treats, stores or disposes of any Hazardous
Materials. The Xxxxxx/Tracks Disclosure Schedule contains a true, accurate and
complete list of all off-site locations or facilities to which any wastes or any
Hazardous Materials have been transported or conveyed for treatment, storage,
disposal, reuse, recycling or other similar disposition.
(d) Neither Company owns, possesses or controls, directly or indirectly,
any PCB's or PCB-contaminated fluids or PCB-contaminated or PCB containing
equipment, nor does any Facility contain in or on its premises any waste, scrap,
raw material, work-in-progress, inventory, product, residue or other material or
substance containing PCB's. The Xxxxxx/Tracks Disclosure Schedule contains a
true, accurate and complete list, with respect to the Facilities, of all
locations at which PCB's or any substance containing PCB's have at any time been
located, used or stored, whether as a raw material, process ingredient,
hydraulic fluid or otherwise.
Neither Company owns, possesses or controls, directly or indirectly, any
asbestos or asbestos-containing material, nor does any Facility contain in or on
its premises any waste, scrap, raw material, work-in-progress, inventory,
product, residue or other material containing asbestos. The Xxxxxx/Tracks
Disclosure Schedule contains a true, accurate and complete list, with respect to
the Facilities, of all locations at which asbestos or any material containing
asbestos has been located, used or stored. No Facility contains any building
component on which lead-based paints were applied. The Xxxxxx/Tracks Disclosure
Schedule contains a true, accurate and complete list, with respect to the
Facilities, of all locations where lead-based paints were applied to building
components.
(e) There are no Environmental Permits necessary to conduct either
Company's respective businesses.
(f) Each Company has delivered or made available to Insituform true,
accurate and complete information in its possession pertaining to the matters
set forth in this Section 3.22, including all documents pertaining to all
environmental audits or assessments prepared by or for either Company with
respect to any Facility or their respective businesses and all Environmental
Reports in its possession or control.
3.23 Litigation. Except as set forth in the Xxxxxx/Tracks Disclosure
Schedule, (i) there are no suits, actions, claims, demands, citations, summons,
subpoenas, or legal, administrative, arbitration or other proceedings or
governmental inquiries or investigations of any nature (civil, criminal,
regulatory or otherwise), at law or equity, pending in any federal, state or
local court, or before any administrative agency arbitrator, mediator or other
Governmental Authority (A) against either Company (or any Person acting on
behalf of either Company or pursuant to an appointment by either Company) or any
of their assets or (B) which seeks to enjoin, prohibit, or otherwise question
the validity of any action taken or to be taken pursuant to or in connection
with this Agreement and (ii) there are no judgments, decrees, injunctions, rules
or orders of any Governmental Authority or arbitrator outstanding and
unsatisfied against either Company or their respective assets. In addition,
neither Company has received any written notice, and no Xxxxxx/Tracks
Shareholder has received any notice, whether or not in writing, threatening any
of the above matters.
3.24 Transactions with Affiliates. Neither Company is a party to any
agreement, arrangement, understanding or other obligation with any Xxxxxx/Tracks
Shareholder, director, officer or employee of either Company or any of their
respective Affiliates, including any indebtedness owed to or by any of its
Xxxxxx/Tracks Shareholders, directors, officers or employees or any of their
respective Affiliates (other than for reimbursements for reasonable business
expenses and accrued but unpaid salary payments incurred in the Ordinary
Course).
3.25 Compliance with Laws. Each Company has complied with all Requirements
of Law in connection with the conduct of their respective businesses and the
ownership of their respective assets. Neither Company has received any written
notice, and no Xxxxxx/Tracks Shareholder has received any notice whether or not
in writing, asserting any non-compliance with any such Requirement of Law.
3.26 No Insolvency. No insolvency proceedings of any character affecting
either
Company or their respective assets or businesses is pending or, to the
knowledge of either Company, threatened. Neither Company has taken any action in
contemplation of, or which would constitute the basis for, the institution of
any such insolvency proceedings.
3.27 Business Relationships. Neither Company has had a problem in
obtaining, in a timely manner and at market prices, any and all materials,
supplies, equipment or services used in its business, and neither Company has
received any notice to the effect that such Company may have problems out of the
Ordinary Course with respect to the availability of such materials, supplies,
equipment or services. No material customer or supplier of, or joint venturer
with, either Company has, within the previous twelve (12) months, cancelled or
threatened to cancel or otherwise modify its relationship with such Company.
3.28 No Company Brokers. All negotiations related to this Agreement and the
Transaction have been carried out by each Company directly with Insituform,
without the intervention of any broker, finder, investment banker or other
Person on behalf of either Company in such a manner as to give rise to any claim
by any such Person against Insituform for any finder's fee, brokerage commission
or similar payment.
3.29 Books and Records; Disclosure. The books of account and records of
each Company relating to its business are in all material respects complete and
correct, have been maintained in accordance with reasonable business practices
under the circumstances, and the matters contained therein are accurately
reflected, to the extent required, on the Company Financial Statements. None of
(i) the Company Financial Statements, (ii) the information concerning either
Company delivered or made available to Insituform, (iii) the representations and
warranties made by either Company in this Agreement or (iv) the statements made
by or on behalf of either Company in any certificate, document, exhibit or
schedule delivered or to be delivered in connection with the Transaction,
contains or will contain any untrue statement of a material fact, and there is
no omission and there will be no omission of any material fact necessary to make
such representation or warranty or any such statement not misleading, in light
of the circumstances in which they are made. Copies of all documents heretofore
or hereafter delivered or made available to Insituform pursuant hereto were or
will be true, accurate and complete copies of such documents. If any agreement,
instrument or other information would otherwise be required to be disclosed on
more than one of the schedules to this Agreement (or in more than one place on
any such schedule), a single reference to such agreement, instrument or other
information in a schedule hereto with an appropriate cross-reference to other
relevant schedule(s) (or places within such schedules) shall be sufficient for
purposes of this Agreement.
3.30 JEA Contract and Joint Venture. Nothing has come to the Company's or
any Xxxxxx/Tracks Shareholder's attention that would lead them to believe that
the Contract by and between Jacksonville Electric Authority ("JEA") Procurement
Department of Jacksonville, Florida and "PM Construction & Rehab., L.P., and
Xxxxxx Industries, Inc. a Joint Venture" will be cancelled, modified, or
otherwise not fulfilled to the fullest extent provided therein.
3.31 Permits. Each Company has (or has made timely application for) all
Permits necessary to enable it to carry on its respective business as currently
conducted, and its employees and agents also have all such Permits required of
them in carrying out their duties. The Xxxxxx/Tracks Disclosure Schedule
contains a true, accurate and complete list of all Permits required to be
obtained or maintained in order presently to conduct each Company's business.
All such Permits, are in full force and effect, there has been no violation of
or default or breach
thereunder, and there is no pending or, to the best of the
knowledge of each Company, threatened proceeding under which any may be revoked,
terminated or suspended.
3.32 Net Equity. The aggregate Net Equity of the Company is not less than
$22,500,000, excluding any Xxxxxx/Tracks Shareholders' loans that are classified
in a contra to equity account..
3.33 Work in Progress. Xxxxxx'x work in progress (consisting of cost and
estimated earnings in excess of xxxxxxxx on contracts in progress) as reflected
in its respective Company Financial Statements represents actual costs and
expenses incurred by the Company pursuant to legal, valid and enforceable
construction contracts, and such costs and expenses will be, or have been,
billed in the Ordinary Course of its business and shall be fully collectible,
subject to normal year-end audit adjustments.
3.34 Former Shareholders. No former shareholder of the Company has, or will
have as a result of this Agreement, any claim or cause of action against the
Company, or any of its officers and directors, with respect to his or her former
ownership or transfer of Company securities or the consummation of the
Transaction.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF XXXXXX/TRACKS SHAREHOLDERS
Subject to, and except as specifically disclosed in, the Xxxxxx/Tracks
Disclosure Schedule, the Xxxxxx/Tracks Shareholders, severally with respect to
themselves and not jointly, represent and warrant to Insituform and the
Acquisition Subs, as of the date hereof and as of the Closing Date, the
following:
4.1 Xxxxxx/Tracks Shareholders Authorization. Each Xxxxxx/Tracks
Shareholder has all requisite power and authority (i) to execute and deliver
this Agreement and the other Transaction Documents to which it is a party and
(ii) to consummate the Transaction. This Agreement and the other Transaction
Documents to which each such Xxxxxx/Tracks Shareholder is a party, when executed
and delivered, shall constitute valid and legally binding obligations of each
such Xxxxxx/Tracks Shareholder enforceable against it in accordance with their
respective terms, except as enforcement thereof may be limited by bankruptcy,
reorganization, insolvency and similar laws affecting creditors' rights
generally, and general equitable principles. This Agreement has been, and at
Closing the other Transaction Documents to be executed by each Xxxxxx/Tracks
Shareholder will be, duly executed and delivered by each such Xxxxxx/Tracks
Shareholder.
4.2 No Xxxxxx/Tracks Shareholders Conflicts. The execution, delivery and
performance of this Agreement and the other Transaction Documents to which each
Xxxxxx/Tracks Shareholder is or will be a party, and the consummation of the
Transaction, will not (i) conflict with, or result in any violation or breach of
or default or loss of any benefit under (either alone or with the giving of
notice or the passage of time or both) (A) any contract or agreement to which
such Xxxxxx/Tracks Shareholder is a party or (C) any Requirement of Law of any
Governmental Authority or arbitrator applicable to any Xxxxxx/Tracks Shareholder
or (ii) result in the creation or imposition of any Encumbrance on any
Xxxxxx/Tracks Shareholder or any Company Shares.
4.3 Xxxxxx/Tracks Shareholders Consents. There are no Requisite Approvals
required in connection with the Xxxxxx/Tracks Shareholders' execution, delivery
and performance of this Agreement or the other Transaction Documents or the
consummation of the Transaction, other than filings under the HSR Act.
4.4 Ownership. Each Xxxxxx/Tracks Shareholder is the holder of record and
owns beneficially that number of Company Shares set forth opposite his or her
name on Schedule 3.5 attached hereto. Each Xxxxxx/Tracks Shareholder owns such
Xxxxxx/Tracks Shareholder's Company Shares free and clear of any Encumbrances,
and has the right to sell and transfer such Xxxxxx/Tracks Shareholder's Company
Shares to Insituform hereunder; and such Xxxxxx/Tracks Shareholder has delivered
to Insituform a copy of its certificate representing its Company Shares,
registered in the name of such Xxxxxx/Tracks Shareholder. The transfer of such
Company Shares to Insituform hereunder in accordance with the terms hereof will
pass good and marketable title to such Company Shares to Insituform, free and
clear of any Encumbrances.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF INSITUFORM
Subject to, and except as specifically disclosed in, Schedule 5 to this
Agreement (the "Insituform Disclosure Schedule"), Insituform represents and
warrants to Xxxxxx, Tracks and the Xxxxxx/Tracks Shareholders, as of the date
hereof and as of the Closing Date, the following:
5.1 Insituform Organization, Qualification and Good Standing. Insituform is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
5.2 Insituform Authorization. The consummation of the Transaction is
subject to the approval of this Agreement and the Transaction by the Board of
Directors of Insituform. Assuming such approval is received and the Closing
occurs, this Agreement and the other Transaction Documents to which Insituform
is a party, when executed and delivered, shall constitute valid and legally
binding obligations of Insituform enforceable against it in accordance with
their respective terms, except as enforcement thereof may be limited by
bankruptcy, reorganization, insolvency and similar laws affecting creditors'
rights generally, and general equitable principles. This Agreement has been, and
at Closing the other Transaction Documents to be executed by Insituform will be,
duly executed and delivered by Insituform.
5.3 No Insituform Conflicts. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which Insituform is or
will be a party, and the consummation of the Transaction, will not (i) conflict
with, or result in any violation or breach of or default or loss of any benefit
under (either alone or with the giving of notice or the passage of time or both)
(A) any provision of the organizational or governing instruments of Insituform,
(B) any contract or agreement to which Insituform is a party or (C) any
Requirement of Law of any Governmental Authority or arbitrator applicable to
Insituform or (ii) result in the creation or imposition of any Encumbrance on
Insituform or in its assets.
5.4 Insituform Consents. No Requisite Approvals are required in connection
with Insituform's execution, delivery and performance of this Agreement and the
other Transaction Documents or the consummation of the Transaction, other than
(i) the filing of the Articles of
Merger with the Secretary of the State of Texas in accordance with the Texas
Act, (ii) filings under the HSR Act and (iii) filings with the NASD.
5.5 Insituform Shares. At the Effective Time, the Insituform Shares will be
duly and validly issued, fully paid and nonassessable.
5.6 Insituform Securities Filings. Insituform has made available to the
Xxxxxx/Tracks Shareholders true and complete copies of (i) its Annual Report on
Form 10-K, as amended, for the year ended December 31, 1999, as filed with the
SEC, (ii) its proxy statements relating to all of the meetings of stockholders
(whether annual or special) of Insituform since January 1, 2000 as filed with
the SEC, and (iii) all other reports, statements and registration statements and
amendments thereto (including Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, as amended) filed by Insituform with the SEC since January 1, 2000.
The reports and statements set forth in clauses (i) through (iii) above, and
those subsequently provided or required to be provided pursuant to this Section,
are referred to collectively as the "Insituform Securities Filings." As of their
respective dates, or as of the date of the last amendment thereof, if amended
after filing, none of the Insituform Securities Filings (including all schedules
thereto and disclosure documents incorporated by reference therein), contained
or, as to Insituform Securities Filings subsequent to the date hereof and prior
to Closing, will contain any untrue statement of a material fact or omitted or,
as to Insituform Securities Filings subsequent to the date hereof and prior to
Closing, will omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the Insituform Securities Filings
at the time of filing or as of the date of the last amendment thereof, if
amended after filing, complied or, as to Insituform Securities Filings
subsequent to the date hereof and prior to Closing, will comply in all material
respects with the Securities Exchange Act or the Securities Act, as applicable.
No event has occurred as a consequence of which Insituform would be required to
file a Current Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed with the SEC.
Any reports, statements and registration statements and amendments thereof
(including Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as amended) filed by Insituform with the SEC after the date
hereof and before Closing shall be provided to the Xxxxxx/Tracks Shareholders
upon such filing.
Insituform agrees that, during the two (2) year period that the resale of
any of the Insituform Shares are subject to Rule 144 (or any similar or
successor provision) promulgated under the Securities Act, it will use its best
efforts to file its reports and take such other actions that may be necessary to
comply with the Current Public Information requirements of that Rule.
5.7 No Insituform Brokers. All negotiations related to this Agreement and
the Transaction have been carried out by Insituform directly with each Company
and the Xxxxxx/Tracks Shareholders, without the intervention of any broker,
finder, investment banker or other Person on behalf of Insituform in such a
manner as to give rise to any claim by any such Person against any Xxxxxx/Tracks
Shareholder for any finder's fee, brokerage commission or similar payment.
ARTICLE 6. COVENANTS OF THE PARTIES
6.1 Operations Pending Closing. Except as otherwise agreed by the parties,
between the date of this Agreement and the Closing (or the sooner termination of
this Agreement), each Company shall conduct its business in substantially the
same manner as the Ordinary Course during the period preceding the date of this
Agreement. Without limiting the generality of the foregoing, neither Company
shall take any of the types of actions enumerated in Section 3.6(b) hereof.
Notwithstanding the foregoing, either Company may bid on new contracts provided:
(i) it is done in the ordinary course of business and at profit margins
consistent with the Company's prior practices; and (ii) the bid amount does not
exceed $500,000. Between the date of this Agreement and through the Effective
Time, no discretionary contribution, award or grant under any Plan of either
Company shall be made without the consent of Insituform, nor shall either
Company take any action or permit any action to be taken to accelerate the
vesting of any warrants or options previously granted pursuant to any such Plan.
Neither Company shall amend or terminate any Plan, amend any awards thereunder
or amend the terms of any security convertible into or exchangeable for capital
stock without the consent of Insituform.
6.2 Preservation of Organization. Prior to the Closing, each Company shall
use its commercially reasonable efforts to preserve its business, to keep
available the services of its employees, and to preserve its favorable business
relationships with its suppliers, customers and others with whom business
relationships exist. Notwithstanding any provision of this Agreement to the
contrary, neither Company shall (i) take any action that would cause a material
decrease in the value of the goodwill of its business, including relationships
with each of its customers or (ii) fail to take any reasonable action of which
it becomes aware that would prevent or would be reasonably likely to prevent a
material decrease in such value.
6.3 Similar Transactions Prohibited. Between the date of this Agreement and
the Closing (or the sooner termination of this Agreement), neither Company nor
any of their respective Xxxxxx/Tracks Shareholders, directors, officers,
employees, Affiliates, agents or representatives shall, directly or indirectly,
(i) make, encourage, facilitate, solicit, assist or initiate any inquiry or
proposal, or provide any information to or participate in any negotiations with,
any Person or group (other than Insituform) relating to any of the following
transactions: (A) liquidation, dissolution, recapitalization, share exchange,
business combination, merger or consolidation of either Company, (B) sale of a
significant amount of assets of either Company, (C) purchase or sale of shares
of capital stock of either Company or (D) any similar actions or transactions
involving either Company (other than the Transaction) or (ii) agree to or
consummate any transaction described above.
6.4 Change in Information. Each Company and Insituform will advise the
other in writing immediately, but in any event prior to the Closing, of:
(i) the occurrence of any event which renders any of the
representations or warranties set forth herein materially
inaccurate or the awareness of either of them that any
representation or warranty set forth herein was not materially
accurate when made; and
(ii) the failure of any party hereto to comply with or
accomplish in any material respect any of the covenants or
agreements set forth herein.
At or before the Closing, all schedules to this Agreement shall be updated as of
the Closing Date. Any party adversely affected by a change to a schedule may
elect to close the Transaction without prejudice to such party's rights to
indemnification relating to any such change.
6.5 Financial Reports. Each Company shall provide Insituform copies of all
operating and financial reports relating to its respective business prepared by
or for such Company as soon as such reports become available.
6.6 Fulfillment of Closing Conditions. Each party shall act or refrain from
acting, as the case may be, so that each of its representations and warranties
set forth in this Agreement shall be true on and as of the Closing, and each
party shall use its commercially reasonable efforts to ensure that the
Transaction will be consummated. If any event should occur, whether or not
within the control of any party hereto, which would prevent fulfillment of the
conditions upon the obligations of any party hereto to consummate the
Transaction, the parties hereto will use their commercially reasonable efforts
to cure the event as expeditiously as possible. Each party shall cooperate fully
with each other in taking any actions, including actions to obtain any Requisite
Approvals. If the Requisite Approval of any Governmental Authority contains any
condition, the party upon which such condition is imposed shall use its
commercially reasonable efforts to comply therewith before the Closing;
provided, however, that for purposes of this Section 6.6, the efforts of a party
shall not be deemed commercially reasonable where such efforts would be unduly
burdensome to the complying party or would have a Material Adverse Effect upon
the complying party.
6.7 Due Diligence. Between the date hereof and the Closing (i) authorized
representatives of Insituform shall have reasonable access to all properties,
books, records, contracts and documents of each Company, (ii) each Company shall
furnish to Insituform all information with respect to its affairs and business
that Insituform may reasonably request and (iii) Insituform shall have the right
to discuss the affairs and business of each Company with each Company's
employees, counsel and independent accountants; provided, however, subject to
Sections 8.1 and 7.1(h), that no investigation or examination by Insituform in
connection with the foregoing shall in any way diminish or obviate any
representation or warranty of either Company made in this Agreement.
6.8 Confidentiality. The Confidentiality Agreement shall survive the
execution of this Agreement and remain fully enforceable through the Closing. As
of the Closing, the Confidentiality Agreement shall be automatically terminated
without any further action by any party.
6.9 HSR Act. Each party agrees to cooperate in, and use its commercially
reasonable efforts to complete, any necessary filings under the HSR Act and any
other necessary governmental filings in respect of the Transaction. Xxxxxxx X.
Xxxxxx, Xx. agrees to comply with the HSR Act and the rules thereunder, and
agrees to notify Insituform prior to (i) any transaction, after which he would
hold 10% or more of the voting securities of Insituform (determined in
accordance with the rules under the HSR Act, including those relating to
attribution), and (ii) any
acquisition by him of voting securities of Insituform if, at the time of the
acquisition, he participates or intends to participate in the management of
Insituform or intends to influence its basic business decisions.
6.10 Comfort Letters. Upon the request of Insituform, each Company shall
use reasonable business efforts to provide to Insituform prior to the Effective
Time "comfort letters" from the independent certified public accountants for
such Company dated the date on which the Registration Statement, or last
amendment thereto, shall become effective, and dated the Closing Date, addressed
to the Board of Directors of each Company and Insituform, covering such matters
as Insituform shall reasonably request with respect to facts concerning the
financial condition of each Company and customary for such certified public
accountants to deliver in connection with a transaction similar to the Mergers.
6.11 Xxxxxx/Tracks Shareholder Approval. The entering into and execution of
this Agreement by the Xxxxxx/Tracks Shareholders shall act as their approval of
the Mergers for purposes of satisfying the shareholder approval requirement of
the applicable provisions of the Texas Act, including the waiver of any notices
that otherwise may be required for requesting such approval.
6.12 Further Assurances. From time to time after the Closing, each party
(for no additional consideration) shall take such acts and execute and deliver
such documents and instruments of sale, transfer, conveyance, assignment,
delivery and such consents, assurances, powers of attorney and other similar
instruments as may be reasonably requested in order to vest in Insituform all
right, title and interest in and to the Company Shares and to carry out the
purposes and intent of this Agreement.
6.13 Use of Xxxxxx Name. Xxxxxxx X. Xxxxxx, Xx., acknowledges that the
"Xxxxxx" name is a valuable Company asset. Accordingly, Xxxxxxx X. Xxxxxx, Xx.,
agrees that he will not directly, or indirectly, use the name "Xxxxxx" or any
derivation thereof in connection with any commercial enterprise, other than in
connection with the present Xxxxxx ranch operation, without the express written
consent of Insituform.
6.14 Tax Returns. Prior to filing a tax return for year 2000 with respect
to Xxxxxx or Tracks in a manner inconsistent with historical practices of such
Companies, Insituform shall notify the Xxxxxx/Tracks Shareholders Representative
and offer him the right to confer on the basis of such preparation.
ARTICLE 7. CLOSING CONDITIONS, DOCUMENTS AND PROCEDURES
7.1 Conditions to Obligation of Xxxxxx, Tracks and the Xxxxxx/Tracks
Shareholders. The obligation of Xxxxxx, Tracks and the Xxxxxx/Tracks
Shareholders to consummate the Transaction is subject to the fulfillment, prior
to or at Closing, of each of the following conditions, any of which the
Xxxxxx/Tracks Shareholders' Representative may waive in writing:
(a) Insituform Representations and Warranties True. All representations and
warranties of Insituform made in this Agreement, or in any exhibit, schedule, or
certificate delivered pursuant hereto shall be true and correct in all respects
on and as of the Closing Date with the same force and effect as if made on and
as of that date, except for changes contemplated by this Agreement.
(b) Insituform Covenants Performed. All of the terms, covenants and
conditions to be complied with and performed by Insituform on or prior to the
Closing Date shall have been complied with or performed in all respects.
(c) HSR Act. Any waiting period applicable to the Transaction under the HSR
Act shall have expired or earlier termination thereof shall have been granted,
and no action shall have been instituted by either the United States Department
of Justice or the Federal Trade Commission to prevent the consummation of the
Transaction or to modify or amend such Transaction in any material manner, or,
if any such action shall have been instituted, it shall have been withdrawn or a
final judgment shall have been entered against such Department or Commission, as
the case may be.
(d) No Adverse Proceedings. No suit, action or governmental proceeding
shall have been instituted or threatened against, and no order, decree, or
judgment of any court, agency, or other Governmental Authority shall have been
rendered against, any party hereto.
(e) Compliance Certificate. Insituform shall have delivered to Xxxxxx,
Tracks and the Xxxxxx/Tracks Shareholders a certificate, dated as of the Closing
Date and signed by an appropriate representative of Insituform, certifying that
the conditions specified in Sections 7.1(a) and 7.1(b) have been fulfilled.
(f) Legal Opinion of Counsel for Insituform. Xxxxxx, Tracks and the
Xxxxxx/Tracks Shareholders shall have received the favorable opinion of counsel
for Insituform, as to the matters set forth in Exhibit 7.1(f).
(g) Delivery of Other Documents and Agreements. Insituform shall have
delivered to the Xxxxxx/Tracks Shareholders the following documents or
agreements, each duly executed by the party indicated:
(i) an Employment Agreement for each Key Management
Employee signed by Insituform; and
(ii) the Escrow Agreement signed by Insituform.
(h) Pending Indemnification Claims. The aggregate amount of claims that
Insituform has notified the Xxxxxx/Tracks Shareholders it intends to make
pursuant to Article 8 after the Closing Date shall not exceed $4,000,000.
(i) Other Acts. Xxxxxx, Tracks and the Xxxxxx/Tracks Shareholders shall
have received from Insituform such other Closing documents as they may
reasonably request in connection with the Transaction, and all documents and
instruments incident to the Transaction shall be in form and substance
satisfactory to Xxxxxx, Tracks, the Xxxxxx/Tracks Shareholders and their
counsel.
(j) Average Price at Closing. The Average Closing Price on the Closing Date
shall not be less than $30.00.
7.2 Conditions to Obligations of Insituform. The obligation of Insituform
to consummate the Transaction is subject to the fulfillment, prior to or at
Closing, of each of the following conditions, any of which Insituform may waive
in writing:
(a) Xxxxxx, Tracks and Xxxxxx/Tracks Shareholders Representations and
Warranties True. All representations and warranties of Xxxxxx, Tracks and the
Xxxxxx/Tracks Shareholders made in this Agreement, or in any exhibit, schedule,
or certificate delivered pursuant hereto shall be true and correct in all
respects on and as of the Closing Date with the same force and effect as if made
on and as of that date, except for changes contemplated by this Agreement.
(b) Xxxxxx, Tracks and the Xxxxxx/Tracks Shareholders Covenants Performed.
All of the terms, covenants and conditions to be complied with and performed by
Xxxxxx, Tracks and the Xxxxxx/Tracks Shareholders on or prior to the Closing
Date shall have been complied with or performed in all respects.
(c) Consents and Qualifications. All Required Approvals to authorize,
approve or permit the execution, delivery and performance of this Agreement, and
the full, complete and effective consummation of the Transaction, shall have
been received.
(d) No Material Adverse Change. There shall have been no material adverse
change in the assets, business or business prospects of either Company.
(e) No Adverse Proceedings. No suit, action or governmental proceeding
shall have been instituted or threatened against, and no order, decree, or
judgment of any court, agency, or other Governmental Authority shall have been
rendered against, any party hereto.
(f) Compliance Certificate. Xxxxxx, Tracks and the Xxxxxx/Tracks
Shareholders shall have delivered to Insituform a certificate, dated as of the
Closing Date and signed by and an appropriate representative of Company,
certifying that the conditions specified in Sections 7.2(a) through 7.2(d) have
been fulfilled.
(g) HSR Act. Any waiting period applicable to the Transaction under the HSR
Act shall have expired or earlier termination thereof shall have been granted,
and no action shall have been instituted by either the United States Department
of Justice or the Federal Trade Commission to prevent the consummation of the
Transaction or to modify or amend such Transaction in any material manner, or,
if any such action shall have been instituted, it shall have been withdrawn or a
final judgment shall have been entered against such Department or Commission, as
the case may be.
(h) Due Diligence. Insituform shall have completed its due diligence
investigation and review of each Company, and the results of such investigation
and review (including with respect to the assets, liabilities, business and
business prospects) shall be satisfactory to Insituform in its sole,
unconditional, full and unfettered discretion.
(i) Insituform Board of Directors Authorization. Insituform's Board of
Directors shall have approved this Agreement and the consummation of the
Transaction, in its sole, unconditional, full and unfettered discretion.
(j) Fairness Opinion. Insituform shall have received a fairness opinion
with respect to the Merger Consideration at or prior to the Effective Time.
(k) 2000 Financial Statements. Insituform shall have received the 2000
Xxxxxx Financial Statements, with an audit report by Xxxxxx Xxxxxxxx LLP, and
the 2000 Tracks Financial Statements, with an audit report by Xxxxxx Xxxxxxxx
LLP.
(l) Certificate of No Tax Due. Any necessary certificate of no Taxes due or
similar certificate from any Tax authority shall have been delivered to
Insituform.
(m) Legal Opinion of Counsel for Xxxxxx, Tracks and the Xxxxxx/Tracks
Shareholders. Insituform shall have received the favorable opinion of counsel
for Xxxxxx, Tracks and the Xxxxxx/Tracks Shareholders, as to the matters set
forth in Exhibit 7.2(m).
(n) Delivery of Other Documents and Agreements. Xxxxxx, Tracks and the
Xxxxxx/Tracks Shareholders shall have delivered to Insituform the following
documents or agreements, each duly executed by the party indicated:
(i) an Employment Agreement signed by each Key Management Employee;
(ii) each Articles of Merger duly executed by the respective Company;
and
(iii) the Escrow Agreement signed by the Xxxxxx/Tracks Shareholders
Representative.
(o) Average Price at Closing. The Average Closing Price on the Closing Date
shall not be more than $41.00.
(p) Shareholder Loans. All loans and advances of the Xxxxxx/Tracks
Shareholders owed to either Company shall have been fully paid or satisfied (or
provisions shall have been made to withhold a part of the cash portion of the
Merger Consideration to pay such amounts).
(q) Other Acts. Insituform shall have received from the Company and the
Xxxxxx/Tracks Shareholders such other Closing documents as Insituform may
reasonably request in connection with the Transaction, and all documents and
instruments incident to the Transaction shall be in form and substance
satisfactory to Insituform and its counsel, and Insituform shall have received
all such counterpart originals or certified or other copies of such documents as
it may reasonably request.
ARTICLE 8. SURVIVAL AND INDEMNIFICATION
8.1 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, agreements and indemnification
obligations of the parties contained in this Agreement shall survive the
Closing. Each of the Parties represents that it has notified the other Parties
of any facts or circumstances that has come to its attention which could result
in a breach of any representation or warranty by a Party signing this Agreement.
The parties shall be
entitled to rely on the representations and warranties contained herein,
notwithstanding any due diligence investigation conducted by the parties after
the date hereof. If, as the result of any due diligence investigation or
otherwise, a party learns of a breach of any representation or warranty, such
party shall promptly inform the other parties hereto in writing of such breach.
The waiver of any closing condition related to such breach by the party intended
to benefit therefrom shall not waive or impair such party's right to seek
indemnification after Closing for such breach.
8.2 Xxxxxx/Tracks Shareholders Indemnity. Subject to the provisions of this
Article 8, the Xxxxxx/Tracks Shareholders shall indemnify, defend and hold
harmless Insituform and its directors, officers, employees, representatives and
agents from and against any and all Damages suffered, sustained, incurred or
required to be paid directly or indirectly by them in connection with, as a
result of or arising out of:
(a) any matter or event of any nature whatsoever relating to Xxxxxx, Tracks
or the Company Shares which occurred on or prior to the Closing and (i) is not
reflected on the Company Financial Statements or otherwise specified on the
Xxxxxx/Tracks Disclosure Schedule, (unless otherwise indicated therein) or (ii)
was not incurred in the Ordinary Course of each Company's respective business
since the date of the Company Financial Statements and consistent with this
Agreement, and without limiting the generality of the foregoing, such matters or
events shall include:
(i) any product liability or similar claim for injury
to person or property, regardless of when made or asserted,
which arises out of or is based upon any action or inaction
or express or implied representation, warranty, agreement or
guarantee made by either Company, or alleged to have been
made by either Company, or which is imposed or asserted to
be imposed by operation of law, in connection with any
service performed or product sold, manufactured or leased by
or on behalf of either Company on or prior to the Closing;
(ii) any workers' compensation, medical benefit or
other similar claim that has accrued or is allocable to any
period on or prior to Closing, including all obligations to
make payments to employees or former employees at or after
Closing with respect to medical expenses incurred or accrued
on or before Closing, or from accidents or events occurring
on or prior to Closing (or workers' compensation medical
benefits or other similar claims that have accrued or are
allocable to periods on or prior to Closing); or
(iii) any Taxes or other liabilities or operating costs
of either Company that have accrued or are allocable to any
period on or prior to Closing.
or
(b) any inaccuracy, breach or nonfulfillment of any representation,
warranty, covenant or agreement on the part of Xxxxxx, Tracks or the
Xxxxxx/Tracks Shareholders contained in this Agreement or any Transaction
Document without regard for any materiality or other qualification contained
therein, or otherwise specified on the Xxxxxx/Tracks Disclosure Schedule,
(unless otherwise indicated therein) including (i) any Environmental Liability
arising out of or in connection with the inaccuracy or breach of any
representation or warranty in Section 3.22 or otherwise in connection with any
condition or state or fact existing on or before the Closing Date, including
remediation costs and expenses incurred as a result of any Phase I or Phase II
audit undertaken by Insituform for the Company's properties, before Closing, and
not exceeding the good faith estimate of such cost and expenses delivered by
Insituform prior to Closing and (ii) any Damages relating to either Company's
employees as described in Sections 3.19, 3.20 and 3.21.
8.3 Insituform Indemnity. Subject to the provisions of this Article 8,
Insituform shall indemnify, defend and hold harmless the Xxxxxx/Tracks
Shareholders and their respective representatives and agents from and against
any and all Damages suffered, sustained, incurred or required to be paid
directly or indirectly by them in connection with, as a result of or arising out
of:
(a) any matter or event of any nature whatsoever relating to Insituform or
the ownership of the Surviving Corporations or the operation of the Surviving
Corporations which occurs after the Closing; or
(b) any inaccuracy or breach of any representation, warranty, covenant or
agreement on the part of Insituform under this Agreement or any Transaction
Document.
8.4 Claims Procedure. All claims for indemnification by an Indemnified
Party against an Indemnifying Party pursuant to this Article 8 shall be asserted
and resolved as set forth in this Section 8.4. The indemnification provisions
contained in Section 2.10 shall not be governed by any of the provisions
contained in this Article 8. As soon as reasonably practicable after becoming
aware of a claim for indemnification under this Agreement (including the
assertion of any claim, or the commencement of any suit, action or proceeding,
by any Person not a party hereto for which indemnity may be sought under this
Agreement), an Indemnified Party shall promptly, but in no event more than 30
days after such Indemnified Party becomes aware of such claim, notify the
Indemnifying Party of such claim and the amount or the estimated amount thereof
to the extent then feasible (which estimate shall not be conclusive of the final
amount of such claim) (the "Claim Notice"); provided, however, that the right of
an Indemnified Party to be indemnified hereunder shall not be adversely affected
by such party's failure to give such Claim Notice unless, and then only to the
extent that, an Indemnifying Party is prejudiced thereby; and provided further,
that notwithstanding the provisions of Section 2.13, Insituform shall send a
copy of any notice under this Section to any Xxxxxx/Tracks Shareholder who would
be an Indemnifying Party. The Indemnifying Party shall have 30 days from the
personal delivery or mailing of the Claim Notice (the "Notice Period") to notify
the Indemnified Party (i) whether or not the Indemnifying Party disputes its
liability to the Indemnified Party hereunder with respect to such claim and (ii)
if such claim involves a third party claim, whether or not the Indemnifying
Party desires to defend the Indemnified Party against such claim. If the
Indemnifying Party does not dispute its liability for such claim in writing
within the Notice Period, then the Indemnified Party shall be entitled to
recover immediately (or as soon as known) from the Indemnifying Party the amount
of such claim; provided, however, if the Indemnifying Party agrees that it has
an indemnification obligation, but disputes the amount of its obligation,
then the Indemnified Party shall be entitled to recover immediately (or as soon
as known) from the Indemnifying Party the amount not in dispute, without
prejudice to the Indemnified Party's claim for the amount in dispute. Any
dispute shall be resolved in accordance with the dispute resolution procedures
generally applicable to this Agreement.
(a) Defense of Third-Party Claims. If the Indemnifying Party notifies the
Indemnified Party in writing within the Notice Period that it desires to defend
the Indemnified Party against any third-party claim, then the Indemnifying Party
may assume such defense upon delivery to the Indemnified Party of a written
agreement acknowledging that (i) the Indemnified Party is entitled to
indemnification for all Damages arising out of such claim and (ii) the
Indemnifying Party shall be liable for the entire amount of any Damages, at any
time during the course of any such claim; provided, however, that (i) the
Indemnifying Party's counsel must be reasonably satisfactory to the Indemnified
Party and (ii) the Indemnifying Party shall thereafter consult with the
Indemnified Party upon the Indemnified Party's reasonable request for such
consultation from time to time with respect to such claim. All costs and
expenses incurred by the Indemnifying Party in defending such claim or demand
shall be a liability of, and shall be paid by, the Indemnifying Party. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right (but not the duty) to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party. If, however, the Indemnified Party reasonably determines in
its judgment that representation by the Indemnifying Party's counsel of both the
Indemnifying Party and the Indemnified Party would present such counsel with a
conflict of interest, then such Indemnified Party may employ separate counsel to
represent or defend it in any such claim and the Indemnifying Party shall pay
the fees and disbursements of such separate counsel. Notwithstanding anything
contained herein to the contrary, to the extent either the Indemnifying Party or
the Indemnified Party has insurance coverage that covers defense costs, such
insurance shall pay the defense of the third-party's claim costs.
If the Indemnifying Party elects not to defend the Indemnified Party
against such third-party claim, whether by not giving the Indemnified Party
timely notice as provided above or otherwise, then the amount of any such claim,
or, if the claim is contested by the Indemnified Party, then that portion
thereof as to which such defense is unsuccessful (and the reasonable costs and
expenses, including attorney fees, pertaining to such defense) shall be the
liability of the Indemnifying Party hereunder.
The Indemnifying Party and the Indemnified Party shall give each other and
their respective counsel access, during normal business hours, to relevant
business records and other documents, and shall permit them to consult with
their respective agents and employees regarding the defense of any third-party
claim.
(b) Settlement or Compromise. Any settlement or compromise made or caused
to be made in accordance with the provisions of this Section 8.4 by the
Indemnified Party or the Indemnifying Party, as the case may be, of any
third-party claim shall also be binding upon the Indemnifying Party or the
Indemnified Party, as the case may be, in the same manner as if a final judgment
or decree had been entered by a court of competent jurisdiction in the amount of
such settlement or compromise; provided, however, (i) no obligation, restriction
or Damages shall be imposed on the Indemnified Party as a result of any such
settlement or compromise without its prior written consent and (ii) no statement
or admission that could be detrimental to
Insituform, the Assets or the Business may be made as part of any such
settlement or compromise without the prior written consent of Insituform. The
Indemnified Party will give the Indemnifying Party at least 30 days' prior
written notice of any proposed settlement or compromise of any third-party claim
it is defending, during which time the Indemnifying Party may reject such
proposed settlement or compromise; provided, however, from and after such
rejection, the Indemnifying Party shall be obligated to assume the defense of
and full and complete liability and responsibility for such claim and any and
all Damages in connection therewith in excess of the amount of unindemnifiable
Damages which the Indemnified Party would have been obligated to pay under the
proposed settlement or compromise.
8.5 Offset and Interest. If the Xxxxxx/Tracks Shareholders fail to pay any
amount to Insituform that is owed pursuant to this Article 8, Insituform may
set-off any such amount against the amounts, if any, owed to them by Insituform
pursuant to this Agreement or any Transaction Document, including the Holdback
Shares. In addition to amounts recoverable by the Indemnified Party from the
Indemnifying Party pursuant to the foregoing provisions, the Indemnified Party
shall also be entitled to recover from the Indemnifying Party interest on such
amounts at the rate of 10% per annum, compounded continuously, from the date
such amounts were to be paid hereunder to the date payment is actually made by
the Indemnified Party.
8.6 Limitations.
(a) Insurance Proceeds. In calculating the amount of any Damages to be paid
hereunder, the amount of such Damages shall be reduced by all insurance
reimbursements credited to or received by the Indemnified Party, relating to
such Damages. Indemnified Party shall be obligated to assert against the
appropriate insurance company any covered third-party claim. In connection
therewith, upon request, each party shall obtain a waiver of subrogation with
respect to such reimbursements from it insurer(s).
(b) Monetary Limitations. No claim for indemnification against the
Xxxxxx/Tracks Shareholders shall be made under Section 8.2, except with respect
to: (i) relating to breaches of any covenant; (ii) Section 8.2(b)(i); and (iii)
those representations and warranties contained in Sections 3.32 and 3.34 (in
which case the following limitation shall not apply), unless the aggregate
amount of all such claims exceeds $250,000, and then a claim for all such
amounts in excess of $100,000. No individual Xxxxxx/Tracks Shareholder shall
have liability hereunder for any claim for indemnification which is made: (i)
prior to the first anniversary of the Closing Date, in excess of 80% of the
total value of the Merger Consideration received by such Xxxxxx/Tracks
Shareholder; (ii) made after the first anniversary, but prior to the second
anniversary of the Closing Date, in excess of 40% of the total value of the
Merger Consideration received by such Xxxxxx/Tracks Shareholder; and (iii) after
the second anniversary of the Closing Date, in excess of 20% of the total value
of the Merger Consideration received by such Xxxxxx/Tracks Shareholder.
(c) Time Limitations. Claims for indemnification under Section 8.2, must be
made (i) prior to the second anniversary of the Closing Date for matters
relating to Section 8.2(a)(i) [except as provided in (ii) below], Section
8.2(a)(ii), Sections 3.6, 3.7, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16,
3.17, 3.18, 3.19, 3.20, 3.21, 3.23, 3.24, 3.25, 3.26, 3.27, 3.28 and 3.29; (ii)
prior to the expiration of the relevant statute of limitations, including any
tolling or extensions thereof, for matters relating to product warranty claims
under Section 8.2(a)(i)
and Section 8.2(a)(iii) and Section 3.8; and (iii) prior to the fifth
anniversary of the Closing Date for matters relating to Section 3.22 and
8.2(b)(i). All other claims for indemnification may be made at any time.
ARTICLE 9. GENERAL PROVISIONS
9.1 Termination. In addition to any other provisions expressly providing a
right to terminate this Agreement, this Agreement and the Transaction may be
terminated at any time prior to Closing by written notice thereof delivered by a
party to the other parties in the following instances:
(i) by Insituform, if (A) there has been a material
breach of any representation or warranty of either Company
or the Xxxxxx/Tracks Shareholders that is not otherwise
qualified by materiality or Material Adverse Effect, (B)
there has been a breach of any representation or warranty of
either Company or the Xxxxxx/Tracks Shareholders that is
qualified by materiality or Material Adverse Effect or (C)
there has been a breach of any covenants or agreements of
either Company or the Xxxxxx/Tracks Shareholders;
(ii) by either Company, if (A) there has been a
material breach of any representation or warranty of
Insituform that is not otherwise qualified by materiality or
Material Adverse Effect, (B) there has been a breach of any
representation or warranty of Insituform that is qualified
by materiality or Material Adverse Effect or (C) there has
been a breach of any covenants or agreements of Insituform;
(iii) by any party, if all parties mutual consent in
writing to termination; or
(iv) by any party, if the Closing has not occurred on
or before April 30, 2001.
If this Agreement is terminated pursuant to clause (i) or (ii) above, the
non-breaching party may avail itself of all rights, power and remedies now or
hereafter existing at law or in equity, by statute or otherwise. If this
Agreement is terminated pursuant to clause (iii) or (iv) above, this Agreement
shall become void and have no further effect, without any liability on the part
of any party hereto.
9.2 Transfer Taxes; Expenses. Sales and transfer Taxes, if any, assessable
upon the transfer of the Company Shares to Insituform shall be paid by the
Xxxxxx/Tracks Shareholders. Each party shall bear all of its own costs and
expenses incurred in connection with negotiating and consummating this Agreement
and the Transaction Documents. Expenses other than those provided for elsewhere
in this Agreement that are incurred in connection with the Transaction shall be
borne by the party incurring such expenses. Insituform acknowledges that, for
purposes of this Section, the legal and accounting expenses incurred by the
Company in connection with the Transaction will be deemed to be Company
expenses.
9.3 Risk of Loss. The risk of any loss, damage or destruction to any of
either Company's assets from fire or other casualty or cause shall be borne by
the such Company at all times prior and up to 11:59 p.m. (local time) on the
Closing Date. Either Company shall notify Insituform in writing immediately upon
the occurrence of any such loss, damage or destruction, stating with
particularity the extent of such loss, damage or destruction, the cause thereof
(if known) and the extent to which restoration, replacement and repair of the
assets lost, damaged or destroyed will be reimbursed under any insurance policy.
If the value of any such loss, damage or destruction exceeds 5% of the Merger
Consideration and the property cannot be substantially repaired, restored or
replaced with property of a comparable quality or utility within 30 days,
Insituform shall have the option exercisable within ten (10) days after receipt
of such notice from the Company (i) to terminate this Agreement or (ii) to
consummate the Agreement and accept the property in its "then" condition, in
which event Insituform shall have as recourse all rights under any insurance
claims covering such loss, damage or destruction. If Insituform elects to
consummate the Agreement, the Xxxxxx/Tracks Shareholders will have no further
liability to Insituform for the assets so lost, damaged or destroyed, except for
the reimbursement to Insituform for any deductible on insurance claims.
9.4 Entire Agreement. This Agreement incorporates by this reference the
Preliminary Statement at the beginning of this Agreement and any exhibits or
schedules hereto. Each party represents and warrants that any facts relating to
such party that are contained in the Preliminary Statement are true. This
Agreement and any agreement, instrument or document to be executed in connection
herewith (as referenced herein) contain the parties' entire understanding and
agreement with respect to the subject matter hereof. Any discussions,
agreements, promises, representations, warranties or statements between the
parties or their representatives (whether or not conflicting or inconsistent)
that are not expressly contained or incorporated herein shall be null and void
and are merged into this Agreement. If this Agreement and any agreement,
instrument or document to be executed in connection herewith contain provisions
which are inconsistent, then the provision which is most specific with respect
to the subject matter shall control.
9.5 Modification, Amendment and Waiver. Neither this Agreement, nor any
part hereof, may be modified or amended orally, by trade usage or by course of
conduct or dealing, but only by and pursuant to an instrument in writing duly
executed and delivered by the party sought to be charged therewith. No covenant
or condition of this Agreement can be waived, except by the written consent of
the party entitled to receive the benefit thereof. Forbearance or indulgence by
a party in any regard whatsoever shall not constitute a waiver of a covenant or
condition to be performed by the other party to which the same may apply, and,
until complete performance by such other party of such covenant or condition,
the party entitled to receive the benefit thereof shall be entitled to invoke
any remedy available to it under this Agreement, at law, in equity, by statute
or otherwise, despite such forbearance or indulgence.
9.6 Successors and Assigns. This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
permitted assigns. Except as expressly provided herein, neither this Agreement
nor any rights hereunder may be assigned or transferred, and no duties may be
delegated, by Company without the prior written consent of Insituform.
Insituform may assign or transfer it rights, and delegate its duties, hereunder
to any Affiliate of Insituform.
9.7 No Third Party Beneficiary. This Agreement is for the benefit of, and
may be enforced only by, the parties who are signatories hereto and their
respective successors and permitted assignees. This Agreement is not for the
benefit of, and may not be enforced by, any third party.
9.8 Construction. This Agreement shall not be construed more strictly
against one party than against another party merely by virtue of the fact that
this Agreement may have been physically prepared by such party, or such party's
counsel, it being agreed that all parties, and their respective counsel, have
mutually participated in the negotiation and preparation of this Agreement.
Unless the context of this Agreement clearly requires otherwise: (i) references
to the plural include the singular and vice versa; (ii) references to any Person
include such Person's successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement; (iii) references to one
gender include all genders; (iv) neither the term "including" nor the term
"include" is limiting; (v) "or" has the inclusive meaning represented by the
phrase "and/or"; (vi) the words "hereof", "herein", "hereby", "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement; (vii) article, section, subsection,
clause, exhibit and schedule references are to this Agreement unless otherwise
specified; (viii) reference to any agreement (including this Agreement),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms hereof; and (ix) general or specific references to
any Requirement of Law means such law as amended, modified, codified or
re-enacted, in whole or in part, and in effect from time to time.
9.9 Interpretation in accordance with GAAP. The parties acknowledge that
several terms and concepts (such as various financial and accounting terms and
concepts) used or referred to herein are intended to have specific meanings and
are intended to be applied in specific ways, but they are not so expressly and
fully defined and explained in this Agreement. In order to supplement
definitions and other provisions contained in this Agreement and to provide a
means for interpreting undefined terms and applying certain concepts, the
parties agree that, except as expressly provided herein, when amounts are to be
determined or other financial calculations are to be made, GAAP and the
applicable party's past accounting practice shall be used to interpret and
determine such terms and to apply such concepts.
9.10 Notices. All notices or other communications required or permitted
under this Agreement shall be made in writing and shall be deemed given (i) upon
delivery, if sent by (A) personal delivery or (B) courier (e.g., overnight
delivery), (ii) 3 days after being sent by certified mail, return receipt
requested, postage and registration fees prepaid and correctly addressed to a
party as set forth below or (iii) upon sending, if sent by telecopy to a party
at the number listed below for such party (with a telecopy machine generated
confirmation sheet retained by the sender):
(i) if to Xxxxxx, to:
Xxxxxx Industries, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., President
Telecopy: (000) 000-0000
and, if to Tracks, to:
Tracks of Texas, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxxx & Xxxxxxxx
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Xx.
Telecopy: (000) 000-0000
(ii) if to Insituform, TRX Acquisition Sub or K Acquisition Sub,
to:
Insituform Technologies, Inc.
702 Spirit 00 Xxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, CFO
Telecopy: (000) 000-0000
with a copy to:
Insituform Technologies, Inc.
702 Spirit 00 Xxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. X. Xxxx, General Counsel
Telecopy: (000) 000-0000
(iii) if to Xxxxxxx X. Xxxxxx, Xx., Individually and as
Xxxxxx/Tracks Shareholder Representative
000 Xxx Xxx
Xxxxxx Xxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx & Xxxxxxxx
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 7 7027
Attention: Xxxxx X. Xxxxxxxxxx, Xx.
Telecopy: (000) 000-0000
(iv) if to Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxx
Xxxxxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx & Snokhous
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Xx.
Telecopy: (000) 000-0000
(v) if to Xxxxxxx X. Xxxxxx
0000 Xxxx Xxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx & Xxxxxxxx
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Xx.
Telecopy: (000) 000-0000
(vi) if to H. R. "Bubba" Xxxxx
000 Xxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx & Xxxxxxxx
0000 Xxxx Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Xx.
Telecopy: (000) 000-0000
(vii) if to Xxxx X. XxXxxxxx
000 Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx & Xxxxxxxx
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Xx.
Telecopy: (000) 000-0000
Any address or telecopy number listed above may be changed by a party notifying
all other parties of such change in the manner provided above. A notice sent
only to a person to be copied with a notice shall not constitute notice to a
party hereunder. The parties shall acknowledge in writing any notice given by
personal delivery.
9.11 Equitable Relief; Remedies Cumulative. Each Company and the
Xxxxxx/Tracks Shareholders hereby acknowledge that irreparable injury will
result to Insituform in the event of a breach of this Agreement by them. It is
therefore agreed that, if they breach this Agreement, Insituform shall be
entitled, in addition to any other remedies and damages available: (i) to an
injunction to restrain the violation thereof by such party, or its agents,
servants, employers or employees of such party, and all Persons acting for or
with such party and (ii) to compel specific performance of the terms and
conditions of this Agreement; provided, however, nothing shall be construed to
prohibit Insituform from pursuing any other legal or equitable remedy available
for such breach, including the recovery of damages. All rights and remedies
granted in this Agreement or available under Requirement of Law shall be deemed
concurrent and cumulative, and not alternative or exclusive remedies, to the
full extent permitted by law and this Agreement. Any party may proceed with any
number of remedies at the same time or in any order. The exercise of any one
right or remedy shall not be deemed a waiver or release of any other right or
remedy. The parties waive any right they may have to require, or any obligation
on the part of, another party to post a bond in connection with any equitable
remedies.
9.12 Governing Law. Except as provided in Section 9.13, all questions with
respect to the formation and construction of this Agreement, and the rights and
obligations of the parties hereto, shall be governed by and determined in
accordance with the laws of the State of Texas applicable to agreements entered
into and performed entirely within the State of Texas, without giving effect to
the choice or conflicts of law provisions thereof.
9.13 Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be resolved in accordance with the procedures specified in this
Section, which shall be the sole and exclusive procedures for the resolution of
any such disputes; provided, however, that a party, without prejudice to the
procedures specified herein, may institute litigation for the limited purposes
of tolling any applicable statute of limitations, establishing venue or to seek
a temporary restraining order, preliminary injunction or other provisional
judicial relief, if in its sole judgement such action is necessary to avoid
irreparable damage or to preserve the status quo. Despite such action, the
parties will continue to participate in good faith in the procedures specified
in this Section.
(a) The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation. If the matter has
not been resolved within 30 days of a party's request for negotiation, either
party may initiate arbitration proceedings as provided below.
(b) Any dispute arising out of or relating to this Agreement or the breach,
termination or validity thereof, which has not been resolved within 30 days of
either party's
initiation of the nonbinding negotiation procedure provided above or otherwise
as provided above, shall be finally settled by arbitration in accordance with
the then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA") by an arbitration panel consisting of three arbitrators
selected as provided herein. The party seeking arbitration shall request the AAA
to provide promptly to the parties a list of ten qualified arbitrators. Each
party, beginning with the party against whom arbitration is sought shall, in
turn, eliminate a name from such list until only three names remain. Such
persons shall be the arbitrators for such dispute, and the arbitrators shall
designate one of them as the chairman of the panel. All decisions of the
arbitrators shall be by a majority vote of the three arbitrators, except that
the chairman of the panel may decide preliminary procedural issues prior to any
arbitration hearing. The arbitration shall be binding and shall be governed by
the United States Arbitration Act, 9 U.S.C. ss. 1-16, and judgment upon the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The place of arbitration shall be Houston, Texas. The arbitrators are
not empowered to award Damages that include punitive, exemplary or consequential
amounts, and each party hereby irrevocably waives any right to recover such
amounts with respect to any dispute resolved in arbitration. The arbitrators
shall determine the prevailing party in the arbitration and shall award the
prevailing party its reasonable attorneys' fees and expenses in the arbitration.
The award of the arbitrators shall be in writing and shall state the reasoning
on which the award is based.
All applicable statutes of limitation and defenses based upon the passage
of time shall be tolled while the procedures specified in the Section are
pending. The parties will take such action, if any, required to effectuate such
tolling. This Section is an essential part of this Agreement, is legally binding
upon the parties and may be enforced in any court having jurisdiction thereof.
9.14 Attorneys Fees. In any suit or proceeding (including arbitration,
insolvency, bankruptcy, investigative, administrative and regulatory
proceedings) arising in connection with this Agreement, the prevailing party
shall have the right to receive an award of the reasonable attorneys fees and
disbursements actually incurred by it in connection therewith. Each reference to
attorneys fees or attorneys fees and disbursements in this Agreement shall
include attorneys and paralegal fees, expert fees, court costs, expenses and
other disbursements, whether or not suit is brought (and, if suit is brought,
during all trial and appellate phases of litigation) and in any arbitration,
administrative, regulatory, investigative, insolvency or bankruptcy proceedings.
9.15 Severability. If any Section (or part thereof) of this Agreement is
found by an arbitrator or court of competent jurisdiction to be contrary to,
prohibited by or invalid under any Requirement of Law, such arbitrator or court
may modify such Section (or part thereof) so, as modified, such Section (or part
thereof) will be enforceable and will to the maximum extent possible comply with
the apparent intent of the parties in drafting such Section (or part thereof).
If no such modification is possible, such Section (or part thereof) shall be
deemed omitted, without invalidating the remaining provisions hereof. No such
modification or omission of a Section (or part thereof) shall in any way affect
or impair such Section (or part thereof) in any other jurisdiction.
9.16 Captions. The captions, headings or titles of the various Articles and
Sections of this Agreement are for convenience of reference only, and shall not
be deemed or construed to limit or expand the substantive provisions of such
Articles and Sections.
9.17 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single agreement. Each signature page of this
Agreement or any other Transaction Document may be executed and delivered in
original or by a facsimile of such signature page thereto.
[signature page next]
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Merger as of January 13, 2001.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
K ACQUISITION CORP., a Texas XXXXXX INDUSTRIES, INC., a Texas
corporation corporation
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx, Xx.
Name: Xxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxx, Xx.
Title: VP/CFO Title: President
TRX ACQUISITION CORP., a Texas TRACKS OF TEXAS, INC., a Texas
corporation corporation
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx, Xx.
Name: Xxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxx, Xx.
Title: VP/CFO Title: President
INSITUFORM TECHNOLOGIES, INC., a XXXXXX/TRACKS SHAREHOLDERS:
Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxx, Xx.
Title: VP/CFO Xxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
/s/ H. R. "Bubba" Xxxxx
X. X. "Bubba" Xxxxx
/s/ Xxxx X. XxXxxxxx
Xxxx X. XxXxxxxx
Schedule 1
Definitions
"1998 Xxxxxx Financial Statements" shall mean each of the following
financial statements of Xxxxxx, collectively: (i) audited balance sheet dated
December 31, 1998; (ii) audited statement of income for the 12 months ended
December 31, 1998; (iii) audited statement of cash flows for the 12 months ended
December 31, 1998; and (iv) audited statement of changes in owners' equity for
the 12 months ended December 31, 1998, together with the notes thereto and
together with the report of Xxxxxx, Xxxxx & Xxxxxxxxx.
"1998 Tracks Financial Statements" shall mean each of the following
financial statements of Tracks, collectively: (i) reviewed balance sheet dated
December 31, 1998; (ii) reviewed statement of income for the 12 months ended
December 31, 1998; (iii) reviewed statement of cash flows for the 12 months
ended December 31, 1998; and (iv) reviewed statement of changes in owners'
equity for the 12 months ended December 31, 1998, together with the notes
thereto and together with the report of Xxxxxx, Xxxxx & Xxxxxxxxx.
"1999 Xxxxxx Financial Statements" shall mean each of the following
financial statements of Xxxxxx, collectively: (i) audited balance sheet dated
December 31, 1999; (ii) audited statement of income for the 12 months ended
December 31, 1999; (iii) audited statement of cash flows for the 12 months ended
December 31, 1999; and (iv) audited statement of changes in owners' equity for
the 12 months ended December 31, 1999, together with the notes thereto and
together with the report of Xxxxxx, Xxxxx & Xxxxxxxxx.
"1999 Tracks Financial Statements" shall mean each of the following
financial statements of Tracks, collectively: (i) reviewed balance sheet dated
December 31, 1999; (ii) reviewed statement of income for the 12 months ended
December 31, 1999; (iii) reviewed statement of cash flows for the 12 months
ended December 31, 1999; and (iv) reviewed statement of changes in owners'
equity for the 12 months ended December 31, 1999, together with the notes
thereto and together with the report of Xxxxxx, Xxxxx & Xxxxxxxxx.
"2000 Xxxxxx Financial Statements" shall mean each of the following
financial statements of Xxxxxx, collectively: (i) audited balance sheet dated
December 31, 2000; (ii) audited statement of income for the 12 months ended
December 31, 2000; (iii) audited statement of cash flows for the 12 months ended
December 31, 2000; and (iv) audited statement of changes in owners' equity for
the 12 months ended December 31, 2000, together with the notes thereto and
together with the report of Xxxxxx, Xxxxx & Xxxxxxxxx.
"2000 Tracks Financial Statements" shall mean each of the following
financial statements of Tracks, collectively: (i) audited balance sheet dated
December 31, 2000; (ii) audited statement of income for the 12 months ended
December 31, 2000; (iii) audited statement of cash flows for the 12 months ended
December 31, 2000; and (iv) audited statement of changes in owners' equity for
the 12 months ended December 31, 2000, together with the notes thereto and
together with the report of Xxxxxx, Xxxxx & Xxxxxxxxx.
"AAA" shall have the meaning ascribed to it in Section 9.13(b) hereof.
"Accounts Payable" shall mean all valid and unpaid trade accounts payable
owed by either Company to third parties (other than Insituform or any Affiliate
of either Company) for services actually rendered or sales actually made by such
third parties to such Company as the result of bona fide transactions in the
Ordinary Course.
"Accounts Receivable" shall mean uncollected accounts receivable,
including amounts carried as retainage, owing to either Company arising in the
Ordinary Course of the operation of its business.
"Acquisition Subs" shall have the meaning ascribed to it in the first
paragraph hereof.
"Affiliate" shall mean, with respect to a specified Person, any other
Person controlling, controlled by, or under common control with the Person
specified. Without limiting the generality of the foregoing, (i) an Affiliate of
an individual Person shall include all members of such Person's family within
the second degree of affinity or consanguinity and (ii) an Affiliate of any
Person shall include any other Person with respect to which either such Person,
directly or indirectly, (A) has the power to appoint or direct management of the
other Person or (B) owns an interest in the equity or profits or the other
Person of 25% or more.
"Agreement" shall mean this Agreement and Plan of Merger, together with
any modifications or amendments hereto as provided herein, and shall include any
exhibits or schedules attached hereto.
"Allocation Percentage(s)" shall have the meaning ascribed to it in
Section 2.7 hereof
"Articles of Merger" shall have the meaning ascribed to it in Section 2.1
hereof.
"Average Price" shall mean the average of the closing sales price of the
Insituform Common Stock on The Nasdaq Stock Market for the last 20 full trading
days immediately prior to the date for which such average price is being
determined.
"Benefit Plan" shall mean (i) an employee benefit plan as defined in
Section 3(3) of ERISA even if, because of some other provision of ERISA, such
plan is not subject to any or all of ERISA's provisions, and (ii) whether or not
described in the preceding clause, (a) any pension, profit sharing, stock bonus,
deferred or supplemental compensation, retirement, thrift, stock purchase or
stock option plan, or any other compensation, welfare, fringe benefit or
retirement plan, program, policy, course of conduct, understanding or
arrangement of any kind whatsoever, whether formal or informal, oral or written,
providing for benefits for or the welfare of any or all of the current or former
employees, agents or directors of Company or their beneficiaries or dependents,
(b) a Multiemployer Plan, (c) a multiple employer plan as defined in Section 413
of the IRC, or (d) any similar plan maintained by any entity that is aggregated
with either Company under Section 401(b), (c) or (m) of the IRC.
"Cash Equivalent Consideration" shall have the meaning ascribed to it in
Section 2.7 hereof.
"Certificates" shall have the meaning ascribed to it in Section 2.8
hereof.
"Claim Notice" shall have the meaning ascribed to it in Section 8.4
hereof.
"Closing" shall mean the closing of the Transaction in accordance with
this Agreement.
"Closing Date" shall mean the date on which the Closing occurs as
scheduled in Section 2.3, unless extended as provided therein.
"Company" shall have the meaning ascribed to it in the first paragraph
hereof.
"Company Financial Statements" shall mean (i) the 1998 Xxxxxx Financial
Statements, (ii) the 1999 Xxxxxx Financial Statements, (iii) the Xxxxxx Interim
Financial Statements, (iv) the 1998 Tracks Financial Statements, (v) the 1999
Tracks Financial Statements and (vi) the Tracks Interim Financial Statements.
"Company Shares" shall have the meaning ascribed to it in Section 2.7(b)
hereof.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement dated August 14, 2000, and executed by Insituform and Xxxxxx.
"Contracts" shall mean contracts, agreements, binding bids or proposals,
leases, purchase orders, life insurance policies, commitments, arrangements,
understandings and options, written or oral, of either Company or of any joint
venture or partnership of which either Company is a venturer or partner.
"Damages" shall mean any and all damages, losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, judgments,
amounts paid in settlement, suits, proceedings, costs, disbursements or expenses
(including reasonable attorneys' fees and experts' fees and disbursements as
provided below) of any kind or of any nature whatsoever (whether based on common
law, statute or contract; fixed or contingent; known or unknown) suffered or
incurred. Damages shall specifically include any of the foregoing matters
arising out of a subsequent sale of any assets or business owned or conducted by
Xxxxxx or Tracks.
"Effective Time" shall mean the time specified for the Merger becoming
effective as set forth in Section 2.3.
"Employment Agreement" shall mean the Employment Agreement executed and
delivered by Key Management Employees and Xxxxxx at Closing, in substantially
the form attached hereto as Exhibit 7.1(h)(i).
"Encumbrance" shall mean any mortgage, deed of trust (or other trust),
pledge, hypothecation, assignment, deposit arrangement, restriction, lease,
claim, liability, debt, lien (statutory or otherwise), security interest,
encumbrance, encroachment, boundary dispute, covenant, easement, right of way,
title objection, preferential arrangement of any kind or nature whatsoever,
conditional sale or other title retention agreement or any other matter
affecting title to or possession of property.
"Environmental Laws" shall mean any applicable federal, state, local or
foreign statutory or common law, and any regulation, code, plan, order, decree,
judgment, permit, license, grant, franchise, concession, restriction, agreement,
requirement, and injunction issued, entered, promulgated, or approved
thereunder, relating to the environment, or human health or safety relating to
occupational or environmental matters, including, without limitation, any law
relating to emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment (including, without limitation, air, surface
water, groundwater and land), relating to the presence, manufacture, generation,
refining, processing, distribution, use, sale, treatment, recycling, receipt,
storage, disposal, transport, arranging for transportation, treatment or
disposal, or handling of Hazardous Materials, including, but not limited to,
CERCLA, RCRA, FIFRA, CAA, CWA (as those terms are defined in the definition of
"Hazardous Material"), the Hazardous Material Transportation Act, as amended
from time to time, the Toxic Substances Control Act, as amended from time to
time, and the Occupational Safety and Health Act of 1970, as amended from time
to time, or relating to the disposal of Nonhazardous Solid Waste.
"Environmental Liabilities" shall mean Damages arising as a result, or by
reason, of any violation of Environmental Laws.
"Environmental Permit" shall mean any license, permit, authorization,
approval, qualification, franchise, registration, concession, manifest, or
filing required by or pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rules or regulations issued pursuant thereto.
"Escrow Account" shall have the meaning set forth in Section 2.9.
"Escrow Agent" shall have the meaning set forth in the Escrow Agreement.
"Escrow Agreement" shall mean that agreement to be entered into at Closing
by and between Insituform, Xxxxxx/Tracks Shareholders, and Escrow Agent
substantially in the form attached hereto as Exhibit 2.9.
"Exchange Ratio(s)" shall have the meaning ascribed to it in Section
2.7(c) hereof.
"Facilities" shall mean that portion of the Assets that consists of any
right, title or interest in or to any real property owned, leased or otherwise
used in connection with the Business, including all buildings, structures,
improvements and fixtures located thereon.
"GAAP" shall mean United States generally accepted accounting principles,
consistently applied throughout any period prior to the date of this Agreement
as set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, except for the absence of footnotes with respect to
such unaudited financial statements.
"Governmental Authority" shall mean any (domestic or foreign) federal,
state, county, provincial, municipal, governmental department, commission,
board, bureau, agency or instrumentality, or other political subdivision
exercising executive, legislative, judicial, regulatory or administrative
functions or pertaining to government.
"Hazardous Material" shall mean (i) any "hazardous substance", as defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended
from time to time ("CERCLA"), (ii) any "hazardous waste", as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time
("RCRA"), (iii) any "pesticides" or "defoliant", as defined in the Federal
Insecticide, Fungicide and Rodenticide Act, as amended from time to time
("FIFRA"), (iv) any "hazardous air pollutant," as defined by the Clean Air Act,
as amended from time to time ("CAA"), (v) any "pollutant" or "toxic pollutant,"
as defined by the Clean Water Act, as amended from time to time ("CWA"), (vi)
any asbestos, polychlorinated biphenyls ("PCB's"), infectious wastes, urea
formaldehyde or petroleum product, or (vii) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material or substance within the meaning
of any other applicable Federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, all as amended from time to time.
"Holdback Shares" shall have the meaning ascribed to it in Section 2.7(b)
hereof.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" shall mean a Person claiming indemnification to which
such Person is entitled pursuant to the provisions of Article 8 hereof.
"Indemnifying Party" shall mean a Person against whom a valid claim for
indemnification is asserted pursuant to the provisions of Article 8 hereof.
"Insituform" shall have the meaning ascribed to it in the first paragraph
hereof.
"Insituform Common Stock" shall have the meaning ascribed to it in Section
2.7(a) hereof.
"Insituform Disclosure Schedule" shall have the meaning ascribed to it in
Article 5 hereof.
"Insituform Securities Filings" shall have the meaning ascribed to it in
Section 5.6 hereof.
"Insituform Shares" shall have the meaning ascribed to it in Section
2.7(b) hereof.
"Intellectual Property" shall mean intangible intellectual property,
assets and rights of every kind and description used by either Company,
including (and shall include the goodwill associated therewith) inventions,
discoveries, trade secrets, processes, formulas, know-how, United States and
foreign patents and patent applications, trademarks, trademark registrations,
applications for trademark registrations, trade names, trade dress, service
marks, service names, copyrights and copyright registrations.
"Intellectual Property Licenses" shall mean licenses, consents, covenants
not to xxx and other authorizations issued or granted to a Person by another
Person with respect to intangible personal property of such other Person.
"Inventory" shall mean supplies, raw materials, work-in-progress and
finished goods owned by either Company.
"IRC" shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time (including for this purpose all provisions of any public law
regardless of whether consolidated in such code), together with any successor
statute thereto and any rules or regulations relating thereto.
"IRS" shall mean the Internal Revenue Service.
"JEA" is the Jacksonville Electric Authority.
"K Acquisition Sub" shall have the meaning ascribed to it in the first
paragraph hereof.
"Key Management Employees" shall mean Xxxxxxx X. Xxxxxx, Xx., Xxxxxxx
X. Xxxxxxx, Xxxxxxx X. Xxxxxx, H. R. "Bubba" Xxxxx and Xxxx X. XxXxxxxx.
"Xxxxxx" shall have the meaning ascribed to it in the first paragraph
hereof.
"Xxxxxx Common Stock" shall have the meaning ascribed to it in Section
2.7(a) hereof.
"Xxxxxx Exchange Ratio" shall have the meaning ascribed to it in Section
2.7(a) hereof.
"Xxxxxx Interim Financial Statements" shall mean each of the following
financial statements of Xxxxxx, collectively: (i) internally prepared balance
sheet dated November 30, 2000; (ii) internally prepared statement of income for
the 11 months ended November 30, 2000; (iii) internally prepared statement of
cash flows for the 11 months ended November 30, 2000; and (iv) internally
prepared statement of changes in owners' equity for the 11 months ended November
30, 2000, together with the notes thereto.
"Xxxxxx Merger" shall have the meaning ascribed to it in Recital B hereof.
"Xxxxxx Merger Consideration" shall have the meaning ascribed to it in
Section 2.7(a) hereof.
"Xxxxxx Shares" shall have the meaning ascribed to it in Section 2.7(a)
hereof.
"Xxxxxx Surviving Corporation" shall have the meaning ascribed to it in
Section 2.1 hereof.
"Xxxxxx Surviving Corporation Common Stock" shall have the meaning
ascribed to it in Section 2.7(e) hereof.
"Xxxxxx/Tracks Disclosure Schedule" shall have the meaning ascribed to it
in Article 3 hereof.
"Xxxxxx/Tracks Shareholder(s)" shall have the meaning ascribed to it in
the first paragraph hereof.
"Xxxxxx/Tracks Shareholders Representative" shall have the meaning
ascribed to it in Section 2.13 hereof.
"Law" shall have the same meaning as Requirement of Law.
"Material Adverse Effect" shall mean a material adverse change in (i) the
property, business, operations, profitability, prospects, condition (financial
or otherwise), liabilities or capitalization of either Company or (ii)
Insituform's ability to own either Surviving Corporation, or either Surviving
Corporation's ability to own or use its assets or operate its business, after
the Closing (in substantially the same manner as owned, used or operated by
prior to the Closing).
"Merger(s)" shall have the meaning ascribed to it in Recital C hereof.
"Merger Consideration" shall have the meaning ascribed to it in Section
2.7(b) hereof.
"Merger Consideration Promissory Notes" shall mean the promissory notes,
in substantially the form set forth in Exhibit 2.7, issued as part of the Merger
Consideration pursuant to Section 2.7.
"Multiemployer Plan" shall mean a multi-employer plan as defined in
Section 3(37) of ERISA.
"Net Equity" shall mean all amounts recorded in Shareholder Equity, as
determined in accordance with GAAP, as reflected on a Closing Date balance sheet
to be delivered to Insituform within four weeks after the Closing Date and
reviewed by Xxxxxx Xxxxxxxx, LLP, and agreed to by Insituform and the
Xxxxxx/Tracks Shareholder Representative within four weeks thereafter.
"Notice Period" shall have the meaning ascribed to it in Section 8.4
hereof.
"Ordinary Course" shall mean the operation of each Company's business in a
manner substantially consistent with the normal, usual, regular and ordinary
course of its previous operation.
"Permits" shall mean permits, licenses (except Intellectual Property
Licenses), consents, registrations, certificates, accreditations, approvals,
authorizations, rights and franchises held or used (pursuant to a Contract) by
either Company in connection with its business or otherwise necessary for the
operation of its business, including those issued by any Governmental Authority.
"Person" shall mean an individual (natural person), a corporation, a
partnership (general or limited), a joint venture, an association, a joint-stock
company, a limited liability company, a bank, a trust company, a land trust, a
vehicle trust, a business trust, a real estate investment trust, an estate, a
trust, an unincorporated organization, a Governmental Authority or any other
type of entity.
"Personal Property" shall mean (i) tangible goods of every kind and
description owned or used (pursuant to a Contract) by either Company, including
parts, accessories, tools and tooling, machinery, equipment, computers,
furniture and fixtures, leasehold improvements and
motor vehicles and (ii) intangible personal property owned or used (pursuant to
a Contract) by either Company, including computer and electronic processing
programs, computer software and processes, computer operating systems and
applications, books, files, records, logs, accounts, customer lists, business
documents and information.
"Plan" shall have the meaning ascribed to it in Section 3.21(b) hereof.
"Prospectus" shall have the meaning ascribed to it in Section 2.10(a)
hereof.
"Registrable Securities" shall have the meaning ascribed to it in Section
2.10(a) hereof.
"Registration Statement" shall have the meaning ascribed to it in Section
2.10(a) hereof.
"Requirement of Law" shall mean any (domestic or foreign) applicable
constitution, treaty, statute, law, ordinance, rule, regulation, policy,
standard, guideline, official interpretation, permit, order, award, decree,
judgment, injunction, ruling, judicial or administrative decision, opinion or
directive, or other requirement having the force of law and, where applicable,
any interpretation thereof by any authority having jurisdiction with respect
thereto or charged with the administration thereof.
"Requisite Approvals" shall mean any necessary consent, permit, approval,
waiver, order or authorization of, notice to or registration, qualification,
designation, declaration or filing with any Governmental Authority or other
Person.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Subsidiaries" shall mean, with respect to either Company, any Affiliates
who are involved in the operation of such Company's business or whose securities
(or other ownership interests) representing 50% or more of the ordinary voting
power or beneficial interest in such Affiliate are, at the time as of which any
determination is being made, owned or controlled by such Company or one or more
Affiliates of such Company.
"Surviving Corporations" shall have the meaning ascribed to it in Section
2.2 hereof.
"Surviving Corporation Common Stock" shall have the meaning ascribed to it
in Section 2.7(e) hereof.
"TRX Acquisition Sub" shall have the meaning ascribed to it in the first
paragraph hereof.
"Taxes" shall mean any and all federal, state, county, local and foreign
income, gross receipts, excise, real and personal property, ad valorem,
transfer, gains and other taxes (including
franchise, license, social security, withholding, payroll, unemployment
insurance and sales and use taxes), assessments and charges (including interest
and penalties).
"Texas Act" shall have the meaning ascribed to it in Section 2.1 hereof.
"Tracks" shall have the meaning ascribed to it in the first paragraph
hereof.
"Tracks Common Stock" shall have the meaning ascribed to it in Section
2.7(b) hereof.
"Tracks Exchange Ratio" shall have the meaning ascribed to it in Section
2.7(b) hereof.
"Tracks Interim Financial Statements" shall mean each of the following
financial statements of Tracks, collectively: (i) internally prepared balance
sheet dated November 30, 2000; (ii) internally prepared statement of income for
the 11 months ended November 30, 2000; (iii) internally prepared statement of
cash flows for the 11 months ended November 30, 2000; and (iv) internally
prepared statement of changes in owners' equity for the 11 months ended November
30, 2000, together with the notes thereto.
"Tracks Merger" shall have the meaning ascribed to it in Recital C hereof.
"Tracks Merger Consideration" shall have the meaning ascribed to it in
Section 2.7(b) hereof.
"Tracks Shares" shall have the meaning ascribed to it in Section 2.7(b)
hereof.
"Tracks Surviving Corporation" shall have the meaning ascribed to it in
Section 2.2 hereof.
"Tracks Surviving Corporation Common Stock" shall have the meaning
ascribed to it in Section 2.7(e) hereof.
"Transaction" shall have the meaning ascribed to it in Recital A hereof.
"Transaction Documents" shall mean this Agreement and all documents,
instruments and agreements to be signed by any of the parties hereto and
delivered in connection with the Closing of the Transaction hereunder.
Schedule 2.7(d)
(Revised)
Cash Equivalent Consideration Election
Shareholder Xxxxxx Tracks
Cash Notes Notes Cash
Xxxxxxx X. Xxxxxx, Xx. $ 7,702,500 $4,226,500 $203,125
Xxxxxxx X. Xxxxxxx $ 731,250 $ 401,250 $ 18,229
Xxxxxxx X. Xxxxxx $ 438,750 $ 240,750 $ 10,417
H. R. "Bubba" Xxxxx $ 438,750 $ 240,750 $ 10,417
Xxxx X. XxXxxxxx $ 438,750 $ 240,750 $ 7,812
Total $ 9,750,000 $5,350,000 $250,000
Schedule 3.5
Capitalization and Ownership
Shareholder Tracks Xxxxxx
Xxxxxxx X. Xxxxxx, Xx. 28,080 11,111
Xxxxxxx X. Xxxxxxx 2,520 1,055
Xxxxxxx X. Xxxxxx 1,440 633
H. R. "Bubba" Xxxxx 1,440 633
Xxxx X. XxXxxxxx 1,080 633
----- ---
Total 34,560 14,065
Schedule 5
Insituform Disclosure Schedule
None
