INVESTMENT AGREEMENT
DATED AS OF DECEMBER 11, 1995
BY AND AMONG
FLUOR XXXXXX, INC.,
FLUOR XXXXXX ENVIRONMENTAL SERVICES, INC.,
GROUNDWATER TECHNOLOGY, INC.
AND
GTI ACQUISITION CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I - THE PLAN OF RECAPITALIZATION 2
Section 1.1 The Recapitalization 2
Section 1.2 Filing 2
Section 1.3 Conversion 3
Section 1.4 No Post-Closing Transfers 3
Section 1.5 Surrender of Certificates 3
Section 1.6 Exchange Agent 4
ARTICLE II - THE MERGER 5
Section 2.1 The Merger 5
Section 2.2 Effective Time 6
Section 2.3 Effects of the Merger 6
Section 2.4 Obligation to Transfer Funds to the Company 7
Section 2.5 Further Assurances 7
Section 2.6 Articles of Incorporation and By-laws 7
Section 2.7 Directors 8
Section 2.8 Officers 8
Section 2.9 Closing; Closing Date 8
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8
Section 3.1 Corporate Existence and Power 9
Section 3.2 Corporate Authorization 9
Section 3.3 Governmental Authorization 11
Section 3.4 Non-Contravention 11
Section 3.5 Capitalization 12
Section 3.6 Joint Ventures; Subsidiaries 13
Section 3.7 SEC Filings 14
Section 3.8 Financial Statements 14
Section 3.9 Disclosure Documents 15
Section 3.10 Operations of the Company 16
Section 3.11 Litigation 17
Section 3.12 Taxes 18
Section 3.13 Employee Benefit Plans 20
Section 3.15 Opinion of Financial Advisor 21
Section 3.16 Intellectual Property 21
Section 3.17 Contracts and Other Agreements 21
Section 3.18 Properties 22
Section 3.19 Environmental Matters 23
Section 3.20 Confidentiality Agreements 24
Section 3.21 Disclosure 24
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HOLDINGS 24
Section 4.1 Corporate Existence and Power 25
Section 4.2 Corporate Authorization 25
Section 4.3 Governmental Authorization 26
Section 4.4 Non-Contravention 26
Section 4.5 Capitalization of FDESI 26
Section 4.6 FDESI Joint Ventures 27
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Section 4.7 FDESI Financial Statements 27
Section 4.8 Disclosure Documents 28
Section 4.9 Operations of FDESI 28
Section 4.10 Litigation of FDESI 30
Section 4.11 Taxes of FDESI 30
Section 4.12 Properties of FDESI 30
Section 4.13 FDESI Contract List 31
Section 4.14 Purchase for Investment; Legend 32
Section 4.15 Employees and Employee Benefit Plans 33
Section 4.16 Compliance with Laws 35
Section 4.17 Intellectual Property 35
Section 4.18 Contracts and Other Agreements 35
Section 4.19 Properties 36
Section 4.20 Confidentiality Agreements 37
Section 4.21 FDESI Disclosure 37
ARTICLE V - COVENANTS OF THE COMPANY 37
Section 5.1 Conduct of the Business 37
Section 5.2 Stockholder Meeting; Proxy Material 40
Section 5.3 Access to Information 40
Section 5.4 No Solicitation of Other Offers 41
Section 5.5 Board of Directors and Officers 43
Section 5.6 Amendments to Certificate of
Incorporation and By-laws 43
Section 5.7 Stock Options 43
Section 5.8 Update to Opinion of Financial Advisor 44
ARTICLE VI - COVENANTS OF HOLDINGS AND FDESI 44
Section 6.1 Conduct of FDESI Business 44
Section 6.2 Access to Information 47
Section 6.3 Certain Additional Agreements of Holdings 47
Section 6.4 Holdings Debt 49
Section 6.5 Tax Indemnification 49
Section 6.6 Termination of Tax-Sharing Agreements 49
Section 6.7 Contract Indemnification 50
ARTICLE VII - COVENANTS OF HOLDINGS AND THE COMPANY 50
Section 7.1 Reasonable Efforts 50
Section 7.2 Certain Filings 50
Section 7.3 Public Announcements 50
Section 7.4 Marketing Agreement 51
Section 7.5 Brokers or Finders 51
Section 7.6 Notices of Certain Events 51
Section 7.7 Post-Closing Tax Matters 51
Section 7.8 FDESI Employee Benefits 52
Section 7.9 Use of Fluor Xxxxxx Name 52
Section 7.10 Non-Permitted Actions 53
ARTICLE VIII - CONDITIONS TO THE CLOSING 53
Section 8.1 Conditions to the Obligations of Each Party 53
Section 8.2 Conditions to the Obligations of Holdings 54
Section 8.3 Conditions to the Obligations of the Company 55
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ARTICLE IX - TERMINATION 57
Section 9.1 Termination 57
Section 9.2 Effect of Termination 58
ARTICLE X - MISCELLANEOUS 58
Section 10.1 Notices 58
Section 10.2 Non-Survival of Representations, Warranties
and Covenants; Indemnification 60
Section 10.3 Amendments; No Waivers 60
Section 10.4 Fees and Expenses 60
Section 10.5 Successor and Assigns 61
Section 10.6 Entire Agreement 62
Section 10.7 Governing Law 62
Section 10.8 Counterparts; Effectiveness 62
Section 10.9 Severability 62
Section 10.10 "To Knowledge" 62
Exhibit A - Amended and Restated Certificate of Incorporation
Exhibit B - Amendments to the By-laws
Exhibit C - Marketing Agreement
iii
TABLE OF DEFINED TERMS
Term Section Page
Acquired Shares Recitals 1
Acquisition Proposal 5.4(b) 38
Acquisition Transaction 5.4(b) 38
Adjusted Option 5.7 43
Adjustment Fraction 5.7 43
Affiliate 3.17(c) 21
Agreement Recitals 1
Agreement of Merger 2.2 6
Balance Sheet 3.8 15
Balance Sheet Date 3.8 15
Board of Directors 3.1 9
By-law Amendments Recitals 2
California Code 2.1 5
Charter Amendments Recitals 2
Closing 2.8 8
Closing Date 2.8 8
Code 3.12 15
Commonly Controlled Entity 3.13(a) 16
Company Recitals 1
Company 8-K's 3.7(a) 14
Company 10-K's 3.7(a) 14
Company 10-Q 3.7(a) 14
Company Contract Backlog 3.22 23
Company Deposit 1.6 4
Company Disclosure Documents 3.9(a) 15
Company Disclosure Letter Article III 8
Company Material Adverse Change 3.10(a) 16
Company Material Adverse Effect 3.1 9
Company Proxy Statement 3.9(a) 15
Company Securities 3.5 12
Company Stockholder Meeting 5.2(a) 6
Constituent Corporations 2.3(d) 4
Control 3.17(c) 21
Current Market Price 5.7 43
Delaware Law 1.1 2
Director Stock Options 3.5 12
Director Stock Option Plan 3.5 12
Effective Time of the Merger 2.2 6
Employee Stock Options 3.5 12
Employee Stock Option Plans 3.5 12
Environmental Laws 3.19(a) 22
ERISA 3.13(a) 16
Exchange Act 3.2 9
Exchange Agent 1.5(a) 3
iv
Term Section Page
FDESI Recitals 1
FDESI Balance Sheet 4.7 27
FDESI Balance Sheet Date 4.7 27
FDESI Common Stock 2.3 6
FDESI Contract Backlog 4.13 31
FDESI Customer Contract 4.13 32
FDESI Deposit 1.6 4
FDESI Disclosure Letter Article IV 24
FDESI Employees 4.15(i) 33
FDESI Financials 4.7 27
FDESI Joint Venture 4.6 26
FDESI Joint Venture Agreements 4.6 26
FDESI Material Adverse Change 4.9(a) 28
FDESI Material Adverse Effect 4.1 25
FDESI Securities 4.5 26
Financials 3.8 15
GAAP 3.8 15
Governmental Entity 3.8 15
Governmental Entity 3.3 11
Hazardous Substance 3.19(a) 24
Holdings Recitals 1
Holdings Percentage 6.3 47
HSR Act 3.3 11
Indebtedness 3.17(b) 20
Independent Director 6.3
Intellectual Property Rights 3.16(a) 18
Interim Balance Sheet 3.8 15
Interim Balance Sheet Date 3.8 15
Interim Financials 3.8 15
Joint Venture 3.6 13
Joint Venture Agreements 3.6 13
License Rights 3.16(a) 18
Lien 3.4 11
Marketing Agreement 3.2 9
Merger Recitals 1
Merger Consideration 2.3(c) 6
Multiple Employer Plan 3.13(d) 19
Name Change Recitals 1
Newco Recitals 1
New Common Stock Recitals 1
NLRA 3.13(h) 17
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Term Section Page
Old Common Stock Recitals 1
Option Recitals 2
Option Agreement Recitals 1
Option Shares Recitals 2
Outstanding Old Common Stock 1.6 4
Parachute Payment 3.13(f) 17
Patents 3.16(a) 18
Payment Agreement 1.6 4
Payment Fund 1.6 4
Pension Plan 3.13(d) 16
Permit 3.4 11
Plan 3.13(a) 16
Prohibited Transaction 3.13(b) 16
Recapitalization Recitals 1
Recapitalization Consideration 1.3(a) 3
Recapitalization Payment 1.3(a) 3
Recapitalization Shares 1.3(a) 3
SEC 3.7(a) 14
SEC Reports 3.7(a) 14
Securities Act 3.7(a) 14
Standstill Period 6.3 47
Subsidiary 3.1 9
Surviving Corporation 2.1 5
Tasks 4.13 32
Tax 3.12 15
Termination Fee 10.4(b) 51
Trademarks 3.16(a) 18
Transactions Recitals 2
WARN 3.13(g) 17
Welfare Plan 3.13(e) 17
vi
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT, dated as of December 11, 1995 (this
"Agreement"), is made and entered into by and among Groundwater Technology,
Inc., a Delaware corporation (the "Company"), GTI Acquisition Corporation, a
California corporation and a wholly owned subsidiary of the Company ("Newco"),
Fluor Xxxxxx, Inc., a California corporation ("Holdings"), and Fluor Xxxxxx
Environmental Services, Inc., a California corporation and a wholly owned
subsidiary of Holdings ("FDESI").
WHEREAS, Holdings desires to make an equity investment in the Company
and the parties desire to enter into other arrangements to further cooperation
between the Company and Holdings in certain business matters;
WHEREAS, in furtherance of the foregoing, Holdings desires to acquire
from the Company, and the Company desires to issue to Holdings, 4,400,000 newly
issued shares (the "Acquired Shares") of a newly authorized class of the
Company's common stock, par value $.001 per share (the "New Common Stock");
WHEREAS, the acquisition of the Acquired Shares by Holdings will be
accomplished by the merger of FDESI with Newco, with FDESI to survive such
merger as a wholly owned subsidiary of the Company (the "Merger"), and Holdings
to receive the Acquired Shares as a result of the Merger; on the terms and
subject to the conditions contained herein;
WHEREAS, the Board of Directors of the Company deems it advisable and in
the best interests of its stockholders to implement, in conjunction with the
Merger, a plan of recapitalization (the "Recapitalization") pursuant to which
each share of common stock, par value $.01 per share, of the Company (the "Old
Common Stock") outstanding on the Closing Date (as defined in Section 2.9) will
be reclassified, cancelled and converted into the right to receive .5274 shares
of New Common Stock and $8.62 in cash, all as more specifically set forth
herein;
WHEREAS, to emphasize the close relationship of Holdings and the Company
after the Merger, at the completion of the transactions contemplated hereby,
upon the consummation of such transactions, the Company will change its name to
"Fluor Xxxxxx/GTI, Inc." (the "Name Change");
1
WHEREAS, concurrently with the execution and delivery of this Agreement,
Holdings and the Company are entering into a stock option agreement (the "Option
Agreement"), pursuant to which Holdings will purchase from the Company for a
cash payment of $1,650,000, and the Company will sell to Holdings on the date
hereof, an option (the "Option") to purchase up to an additional 1,366,000
shares of New Common Stock, as adjusted pursuant to the Option Agreement, or, if
exercised before the Closing in certain circumstances, Old Common Stock (the
"Option Shares"), on the terms and conditions set forth in the Option Agreement;
WHEREAS, the Board of Directors of the Company has approved this
Investment Agreement and the transactions contemplated hereby and resolved to
recommend that the stockholders of the Company approve the Merger, the
Recapitalization and the other transactions contemplated hereby, including the
adoption of the Amended and Restated Certificate of Incorporation (the "Charter
Amendments"), and amendments to the By-laws (the "By-law Amendments") of the
Company set forth in Exhibit "A" and Exhibit "B" hereof, (collectively, the
"Transactions").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE PLAN OF RECAPITALIZATION
Section 1.1 The Recapitalization. Upon the terms and conditions
hereinafter set forth and in accordance with the General Corporation Law of the
State of Delaware (the "Delaware Law"), as of the Closing Date (as defined in
Section 2.9), (i) the outstanding capital stock of the Company shall be
reclassified in accordance with the Charter Amendments and the stockholders of
record of the Company on the Closing Date shall be entitled to receive the
Recapitalization Consideration (as defined in Section 1.3); and (ii) the name of
the Company will be changed to "Fluor Xxxxxx/GTI, Inc."
Section 1.2 Filing. On the Closing Date, subject to the satisfaction or
waiver of the conditions set forth in Article VIII, other than the condition set
forth in Section 8.1, paragraph (a) which may not be waived, and conditions set
forth in Section 8.2, paragraph (f) and Section 8.3, paragraph (b), the Company
shall cause the Charter Amendments to be executed and filed with the Secretary
of State of Delaware in accordance with Sections 242 and 103 of the Delaware
Law.
2
Section 1.3 Conversion. At the Closing Date, by virtue of the
Recapitalization and without any action on the part of the holders thereof:
(a) Each issued and outstanding share of the Old Common Stock,
other than shares of Old Common Stock held in the treasury of the Company, shall
be reclassified and automatically converted into the right to receive
consideration per share consisting of .5274 of a share of the New Common Stock
(the "Recapitalization Shares") and $8.62 in cash without interest (the
"Recapitalization Payment," and collectively with the Recapitalization Shares,
the "Recapitalization Consideration").
(b) All shares of Old Common Stock which are held by the Company
as treasury shares shall be canceled and retired and cease to exist, without any
conversion thereof or payment with respect thereto.
(c) No fraction of a share of New Common Stock will be issued in
the Recapitalization, but, in lieu thereof, each holder of Old Common Stock who
would otherwise be entitled to a fraction of a share of New Common Stock (after
aggregating all fractional shares of New Common Stock received by the holder)
will be entitled to receive from the Company an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) the fraction multiplied by (ii)
the average of the closing price of the Old Common Stock on the NASDAQ National
Market for the five days immediately prior to the Closing Date.
Section 1.4 No Post-Closing Transfers. No transfer of shares of Old
Common Stock of the Company shall be made from and after the Closing. If, after
the Closing Date, certificates previously representing shares of Old Common
Stock are presented to the Company or the Exchange Agent (as defined in Section
1.5), they shall be canceled and exchanged for the Recapitalization
Consideration as provided in Section 1.3.
Section 1.5 Surrender of Certificates. From and after the Closing Date,
Boston EquiServ or such other bank and trust company as the Company, at least
five days prior to the mailing of the Company Proxy Statement (as defined in
Section 3.9), shall designate and Holdings shall approve (which approval shall
not be unreasonably withheld), shall act as exchange agent (the "Exchange
Agent") in effecting the reclassification by the exchange for cash and New
Common Stock of certificates that, prior to the Closing Date, represented shares
of Old Common Stock entitled to payment in cash and New Common Stock pursuant to
Section 1.3(a). As soon as practicable after the Closing Date, the Exchange
Agent shall send a notice and transmittal form to each holder of record of Old
Common
3
Stock immediately prior to the Closing Date advising such holder of the
effectiveness of the Recapitalization and the procedure for surrendering to the
Exchange Agent (who may appoint forwarding agents with the approval of the
Company) the certificate or certificates to be exchanged pursuant to the
Recapitalization. Upon the surrender for exchange of such a certificate,
together with such letter of transmittal duly completed and properly executed in
accordance with instructions thereto and such other documents as may be required
pursuant to such instructions, the holder shall be paid promptly, without
interest thereon and subject to any required withholding of taxes, the amount of
cash and New Common Stock to which such holder is entitled hereunder, and such
certificate shall forthwith be canceled. Until so surrendered and exchanged,
each certificate which immediately prior to the Closing Date represented
outstanding shares of the Old Common Stock shall represent solely the right to
receive the cash and New Common Stock into which the Old Common Stock it
theretofore represented shall have been converted pursuant to Section 1.3(a),
subject to any required withholding of taxes. If any payment for Old Common
Stock is to be made to a person other than the person in whose name the
certificates for such shares surrendered is registered, it shall be a condition
of the exchange that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the delivery of
such check to a person other than the registered owner of the certificate
surrendered or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable.
Section 1.6 Exchange Agent. Prior to the Closing Date, the Company and
FDESI shall enter into an agreement (the "Payment Agreement") with the Exchange
Agent. Immediately prior to the filing of the Charter Amendments, Holdings shall
deposit or cause FDESI to be deposited with the Exchange Agent (the "FDESI
Deposit") in trust for the benefit of stockholders of the Company, cash in the
amount of $33,350,000, and the Company shall deposit or cause to be deposited
with the Exchange Agent (the "Company Deposit") in trust for the benefit of the
stockholders of the Company cash in an aggregate amount equal to the amount
determined by subtracting the FDESI Deposit from the product obtained by
multiplying (i) the number of shares of Old Common Stock outstanding immediately
prior to the Closing Date (the "Outstanding Old Common Stock") by (ii) the
Recapitalization Payment. The deposits made by FDESI and the Company pursuant to
the preceding sentence is hereinafter referred to as the "Payment Fund." The
Payment Agreement shall provide, among other things, that (a) the Exchange Agent
shall maintain the Payment Fund as a separate fund to be held for the benefit of
the holders of the Old Common Stock of the Company, which shall be promptly
applied by the Exchange Agent to making the payments provided for in Section
1.5, (b) any portion of the Payment Fund that has not been paid to holders of
the Old Common Stock pursuant to Section 1.5 prior to that date which is six
months from the Closing Date shall be paid to the
4
Company, and any holders of Old Common Stock who shall not have theretofore
complied with Section 1.5 shall thereafter look only to the Company for payment
of the amount of cash and securities to which they are entitled under this
Agreement, (c) the Payment Fund shall not be used for any purpose that is not
provided for herein, (d) the Exchange Agent may invest, if so directed by the
Company, the cash portion of the Payment Fund in obligations of the United
States government or any agency or instrumentality thereof, or in obligations
that are guaranteed or insured by the United States government or any agency or
instrumentality thereof, (e) any net profit resulting from, or interest or
income produced by, such investments shall be payable to the Company on demand,
(f) the Exchange Agent shall make payment of the Recapitalization Consideration,
to any holder who validly delivers at least 100,000 shares of Old Common Stock
in the Recapitalization on or after the Closing Date, by wire transfer of the
Recapitalization Payment to such holder within one business day of the later of
the Closing Date or the date of such delivery, and by transmittal of the
Recapitalization Shares by overnight courier, insured, on the next business day
after the later of the Closing Date or the date of such delivery and (g) all
expenses of the Exchange Agent shall be paid directly by the Company. Promptly
following the date which is six months from the Closing Date, the Exchange Agent
shall return to the Company all cash, securities and any other instruments in
its possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate formerly representing Old Common Stock may surrender such
certificate to the Company and (subject to applicable abandoned property,
escheat and similar laws) receive in exchange therefor the consideration payable
in respect thereto pursuant to Section 1.3(a) hereof, without interest, but
shall have no greater rights against the Company than may be accorded to general
creditors of the Company under the Delaware Law.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the California Corporations Code
(the "California Code"), Newco shall be merged with and into FDESI at the
Effective Time of the Merger (as defined in Section 2.2). Following the Merger,
the separate corporate existence of Newco shall cease and FDESI shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Newco in accordance with the
California Code.
5
Section 2.2 Effective Time. As soon as practicable following the filing
of Charter Amendments and the satisfaction or waiver of the conditions set forth
in Article VIII, except the condition set forth in Section 8.3, paragraph (b),
the parties shall file an agreement of merger or other appropriate documents (in
any such case, the "Agreement of Merger") executed in accordance with the
relevant provisions of the California Code and shall make all other filings or
recordings required under the California Code. The Merger shall become effective
at such time as the Agreement of Merger is duly filed with the California
Secretary of State, notwithstanding that evidence of the acceptance of such
filing might not have been received on the filing date, or at such other time as
Newco and FDESI shall agree should be specified in the Agreement of Merger (the
time the Merger becomes effective being the "Effective Time of the Merger").
Section 2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 1107 of the California Code. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of the shares of common stock, no par value, of FDESI ("FDESI Common Stock") or
any shares of capital stock of Newco:
(a) Capital Stock of Newco. Each issued and outstanding share of
the capital stock of Newco shall be converted into and become one fully paid and
nonassessable shares of common stock, no par value, of the Surviving
Corporation.
(b) Treasury Stock. No shares of FDESI Common Stock are owned by
FDESI.
(c) Conversion of FDESI Common Stock. Each of the 1,000 issued
and outstanding shares of FDESI Common Stock shall be converted into the right
to receive from the Company 4,400 shares of New Common Stock of the Company (the
"Merger Consideration"), which shall be payable promptly upon the surrender of
the certificate representing such share at the Closing (as hereinafter defined)
against delivery of a certificate representing the aggregate Merger
Consideration. As of the Effective Time of the Merger, all such shares of FDESI
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and the holder of the certificate
representing such shares of FDESI Common Stock shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration,
without interest.
(d) Rights and Duties Survive. The Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject to all the restriction, disabilities and
duties of each of FDESI and Newco (collectively, the "Constituent
6
Corporations"); and all and singular rights, privileges, powers and franchises
of each of the Constituent Corporations on whatever account, as well for stock
subscriptions as all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporation, and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations shall not revert or be in any way impaired; but all rights of the
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thence forth attach to the
Surviving Corporation and may be enforced against it to the same extent as if
such debts, liabilities and dues had been incurred or contracted by it.
Section 2.4 Obligation to Transfer Funds to the Company. Each of FDESI
and Newco acknowledges and agrees that at the Effective Time of the Merger, the
Surviving Corporation shall be obligated to irrevocably authorize the Exchange
Agent to allow the FDESI Deposit to be held on behalf of the Company for the
benefit of the stockholders of the Company, in accordance with the Company's
instructions under the Payment Agreement (the "Transfer Authorization").
Section 2.5 Further Assurances. If at any time after the Effective Time
of the Merger the Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other acts are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, the title to any property or right of the Constituent
Corporations acquired or to be acquired by reason of, or as a result of, the
Merger, or (ii) otherwise to carry out the purposes of this Agreement, the
Constituent Corporations agree that the Surviving Corporation and its proper
officers and directors shall and will execute and deliver all such deeds,
assignments and assurances in law and do all acts necessary, desirable or proper
to vest, perfect or confirm title to such property or right in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, and that
the proper officers and directors of the Constituent Corporations and the proper
officers and directors of the Surviving Corporation are fully authorized in the
name of the Constituent Corporations or otherwise to take any and all such
action.
Section 2.6 Articles of Incorporation and By-laws. (a) The Articles of
Incorporation of FDESI, as in effect immediately prior to the Effective Time of
the Merger, shall be the Articles of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
7
(b) The By-laws of FDESI as in effect at the Effective Time of
the Merger shall be the By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
Section 2.7 Directors. The directors of FDESI at the Effective Time of
the Merger shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 2.8 Officers. The officers of FDESI at the Effective Time of the
Merger shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 2.9 Closing; Closing Date. The closing of the sale and purchase
of the Shares and the Merger contemplated hereby (the "Closing") shall take
place at the offices of Fluor Corporation, 0000 Xxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx 00000, at 8:00 a.m. Los Angeles time, on a date to be mutually agreed
upon by the parties, which date shall, subject to the satisfaction, or, to the
extent permitted hereby, waiver, at or prior to the Closing, of all the
conditions set forth in Article VIII hereof, be no later than the third business
day after the satisfaction, or, to the extent permitted hereby, waiver, of the
conditions set forth in Sections 8.1(a), (b), (c) and (e). The time and date on
which the Closing occurs is herein called the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Holdings that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set forth in the disclosure
letter delivered by the Company to the Holdings on the date hereof and initialed
by the parties (the "Company Disclosure Letter"). Nothing in the Company
Disclosure Letter shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Company Disclosure
Letter identities the exception with particularity and describes the relevant
facts in reasonable detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a
8
representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other items itself). The Company
Disclosure Letter will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Article III.
Section 3.1 Corporate Existence and Power. Each of the Company and each
of its Subsidiaries (as defined herein), including, without limiting the
generality of the foregoing, Newco, is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated, and has all requisite corporate power and authority to carry on
its business as now or currently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a material
adverse effect on the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company and its Subsidiaries taken as
a whole (a "Company Material Adverse Effect"). The Company has heretofore
delivered to Holdings true and complete copies of the Company's Certificate of
Incorporation and By-laws and the certificates of incorporation and by-laws of
the Subsidiaries, in each case as in effect on the date hereof. The minute books
of the Company contain true and complete records of all meetings and consents in
lieu of meeting of its Board of Directors (the "Board of Directors") (and any
committees thereof), and of its stockholders. The term "Subsidiary" as used in
this Agreement shall mean any corporation or other legal entity of which the
Company or FDESI, as the case may be, (either alone or together with other
Subsidiaries of the Company or FDESI, as the case may be) owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders of
which are ordinarily and generally, in the absence of contingencies or
understandings, entitled to vote for the election of a majority of the board of
directors or governing body.
Section 3.2 Corporate Authorization. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, the
Agreement of Merger, the Option Agreement and the Marketing Agreement (as
defined herein) and to perform its obligations under such agreements and to
consummate the transactions contemplated hereby and thereby. Newco has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company of
this Agreement, the Agreement of Merger, the Option Agreement and the Marketing
Agreement, and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized and approved by the Board
9
of Directors and no further corporate action on the part of the Company (except
for the approval by the Company's stockholders of the Transactions and the
filing of a Certificate of Amendment with the Secretary of State of Delaware
with respect to the Charter Amendments as required by Delaware Law) is necessary
to authorize the execution, delivery and performance by the Company of such
agreements or the consummation by the Company of the transactions contemplated
hereby or thereby. The execution, delivery and performance by Newco of this
Agreement and the Agreement of Merger, and the consummation by Newco of the
transactions contemplated hereby and thereby have been duly authorized and
approved by the Board of Directors of Newco, and by the sole shareholder of
Newco, and no further corporate action on the part of Newco or shareholder
action on the part of Newco's sole shareholder (except for the approval by the
Company's stockholders of the Transactions) is necessary to authorize the
execution delivery and performance by Newco of such agreements or the
consummation by Newco of the transactions contemplated hereby or thereby.
Assuming Holdings is not and has not been the beneficial owner (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") of 15% or more of the outstanding New Common Stock prior to its execution
and delivery of this Agreement, the foregoing authorization and approval by the
Board of Directors constitutes prior approval by the Board of Directors of the
transaction which resulted in Holdings becoming an "interested stockholder"
within the meaning of paragraph (a)(1) of Section 203 of the Delaware Law. This
Agreement, the Agreement of Merger, and the Option Agreement have been, and upon
execution and delivery by the Company and, in the case of this Agreement and the
Agreement of Merger, Newco, at the Closing, the Marketing Agreement will be,
duly executed and delivered by the Company and constitute (or, in the case of
the Marketing Agreement, will constitute at the Closing) valid and binding
obligations of the Company and, in the case of this Agreement and the Agreement
of Merger, Newco, enforceable against the Company and, in the case of this
Agreement and the Agreement of Merger, Newco, in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
equity or redemption, moratorium or similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The Acquired Shares received by Holdings in the
Merger, and the shares to be issued upon exercise of the Option, will, when
issued and delivered in accordance with the terms hereof, or the Option
Agreement, as the case may be, be validly issued, fully paid and nonassessable
and free and clear of any claim, lien, encumbrance, preemptive right or
agreement. The term "Marketing Agreement" means that certain Marketing
Agreement, dated the date hereof, between the Company and Holdings, a copy of
which is attached hereto as Exhibit "C".
10
Section 3.3 Governmental Authorization. The execution, delivery and
performance by each of the Company and Newco of this Agreement, and by the
Company of the Option Agreement and the Marketing Agreement, and the
consummation by the Company and Newco of the transactions contemplated hereby
and thereby require no action by or in respect of, or filing by the Company or
Newco with, any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") other than: (i) compliance with
any applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act"); (ii) compliance with any applicable
requirements of the Exchange Act, and the rules and regulations promulgated
thereunder; and (iii) compliance with any applicable federal or state securities
laws.
Section 3.4 Non-Contravention. The execution, delivery and performance
by each of the Company and Newco of this Agreement, and by the Company of the
Option Agreement and the Marketing Agreement and the consummation by the Company
and Newco of the transactions contemplated hereby and thereby do not and will
not: (i) contravene or conflict with the Certificate of Incorporation or By-laws
of the Company or the Articles of Incorporation or By-laws of Newco; (ii)
violate, conflict with or result in the breach of any of the terms of, otherwise
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default (by way of substitution,
novation or otherwise) under, any contract or other agreement to which the
Company or any of the Subsidiaries is a party or by which any of its assets or
properties may be bound or affected; (iii) violate any order, judgment,
injunction, award or decree of any United States federal or state court,
domestic arbitrator or United States federal or state governmental or regulatory
body against, or binding upon, the Company or its Subsidiaries or upon the
properties or business of the Company or its Subsidiaries; (iv) violate any
statute, law or regulation of the United States or any of the several states
thereof as such statute, law or regulation relates to the Company or its
Subsidiaries or to the properties or business of the Company or its
Subsidiaries; (v) result in the creation or imposition of any Lien (as defined
herein) on any asset of the Company or its Subsidiaries; or (vi) violate any
Permit (as defined herein), except, with respect to clauses (ii), (iv), (v) or
(vi) of this Section 3.4, for violations or Liens, which, individually or in the
aggregate, would not have a Company Material Adverse Effect. For purposes of
this Agreement, "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, "Permit" means any license, permit, order
or approval of any federal, state, or local regulatory body.
11
Section 3.5 Capitalization. (a) As of the date hereof, the authorized
capital stock of the Company consists of 25,000,000 shares of Old Common Stock,
and 1,000,000 shares of preferred stock, par value $.01 per share, none of which
preferred stock is issued and outstanding. As of the date hereof, there are
outstanding (a) 6,962,196 shares of Old Common Stock, (b) Employee Stock Options
(as defined herein) to purchase an aggregate of 1,234,706 shares of Old Common
Stock, and (c) Director Stock Options (as defined herein) to purchase an
aggregate of 22,500 shares of Old Common Stock (Employee Stock Options and
Director Stock Options to purchase an aggregate of 304,916 shares of Old Common
Stock were vested and exercisable as of the date hereof). As of the date hereof,
1,459,600 shares of Old Common Stock were reserved for issuance pursuant to the
Employee Stock Option Plans (as defined herein) and 100,000 shares of Common
Stock were reserved for issuance pursuant to the Director Stock Option Plan (as
defined herein). The 1988 Non-Employee Director Stock Option Plan has been
terminated and no options are outstanding under such plan. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights. Except
as contemplated by this Agreement and the Option Agreement and as set forth in
this Section 3.5, as of the date hereof there are, and, except for changes
occurring after the date hereof resulting from (x) the exercise of Employee
Stock Options or Director Stock Options outstanding on such date or (y) the
grant of Employee Stock Options in the ordinary course of business and the
exercise of such Employee Stock Options, on the Closing Date there will be, no
outstanding (i) shares of capital stock or other securities of the Company, (ii)
securities of the Company convertible into or exchangeable for shares of capital
stock or other securities of the Company or (iii) options, rights,
subscriptions, warrants, calls, unsatisfied preemptive rights, or other
agreements to acquire or otherwise receive from the Company any capital stock or
other securities of, or securities convertible into or exchangeable for capital
stock or other securities of, the Company (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "Company Securities"). As of the
date hereof there are, and except for Employee Stock Options granted in the
ordinary course of business after the date hereof, as of the Closing Date there
will be, no options, grants, stock appreciation rights or other awards
outstanding under any Employee Stock Option Plan or any Director Stock Option
Plan other than the options to purchase the shares of Old Common Stock as
described in this Section 3.5. For purposes of this Agreement, the Company's
1986 Employee Stock Purchase Plan and 1987 Stock Plan shall be referred to
individually as an "Employee Stock Option Plan", and collectively as the
"Employee Stock Option Plans"; and the 1995 Director Stock Option Plan shall be
referred to as the "Director Stock Option Plan." The outstanding options to
purchase Old Common Stock granted under the Employee Stock Option Plans shall be
referred to as "Employee Stock Options" and under the Director Stock Option Plan
shall be referred to as "Director Stock Options".
12
(b) As of the date hereof, the authorized capital stock of Newco
consists in its entirety of 1,000 shares of common stock, no par value, of which
1,000 shares are outstanding and owned of record and beneficially by the
Company. All outstanding shares of capital stock of Newco have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as set forth in this Section 3.5, as of the date
hereof there are, and on the Closing Date there will be, no outstanding (i)
shares of capital stock or other securities of Newco, (ii) securities of Newco
convertible into or exchangeable for shares of capital stock or other securities
of Newco or (iii) options, rights, subscriptions, warrants, calls, unsatisfied
preemptive rights, or other agreements to acquire or otherwise receive from
Newco any capital stock or other securities of, or securities convertible into
or exchangeable for capital stock or other securities of, Newco.
Section 3.6 Joint Ventures; Subsidiaries. (a) The Company Disclosure
Letter sets forth a list of each entity in which the Company holds or has the
right to acquire one percent (1%) or more of the equity, partnership or other
interests of such entity (each such entity, except Subsidiaries, being referred
to as a "Joint Venture") and a list of all material agreements relating thereto
to which the Company is a party ("Joint Venture Agreements"). To the Company's
knowledge and belief, the Company and each other party thereto is in compliance
in all material respects with all of the terms, conditions and obligations
binding upon it in respect of each of the Joint Venture Agreements, and as of
the date hereof none of the Joint Venture Agreements has been terminated. The
Company has delivered true and correct copies of each Joint Venture Agreement,
as amended, modified or supplemented, to Holdings and all waivers executed
thereunder.
(b) The Company's interest in each of the Joint Ventures is directly
owned by the Company and, except for any restrictions on transfer contained in
the Joint Venture Agreements, free and clear of any material Lien or any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such interest). Except as expressly set forth in the
Joint Venture Agreements, there are no outstanding obligations of the Company to
fund or make a further investment in any Joint Venture.
(c) The Company Disclosure Letter also sets forth a list of each
Subsidiary of the Company. The Company or its Subsidiaries are, directly or
indirectly, the record and beneficial owner of the percentage of outstanding
shares of capital stock or other voting securities of each of its Subsidiaries
listed thereon; there are no proxies with respect to such securities, and no
securities of any of the Subsidiaries are or may become required to be issued,
transferred or sold for any reason including, without limitation, by reason of
any subscriptions, options, warrants, rights, calls, convertible securities
13
or other agreements or commitments of any character obligating the Company or
any such Subsidiary to issue, transfer or sell any of such securities. All of
such securities so owned by the Company or its Subsidiaries are validly issued,
fully paid and nonassessable and are owned free and clear of any claim, lien,
encumbrance, preemptive right or agreement with respect thereto.
Section 3.7 SEC Filings. (a) The Company has delivered or made available
to Holdings true and complete copies of: (i) its Annual Report on Form 10-K for
the fiscal years ended April 29, 1995, April 30, 1994, and May 1, 1993 (the
"Company 10-K's"), as filed with the Securities and Exchange Commission (the
"SEC"), (ii) its Quarterly Report on Form 10-Q for its fiscal quarter ended July
31, 1995, as filed with the SEC (the "Company 10-Q"), (iii) its Current Reports
on Form 8-K filed with the SEC since May 1, 1993 (the "Company 8-K's," and,
together with the Company 10-K's and the Company 10-Q, the "SEC Reports"), (iv)
its proxy or information statements relating to meetings of, or actions without
a meeting by, the stockholders of the Company held since May 1, 1993 and (v) all
of its other reports, statements, schedules and final registration statements
(except registration statements filed on Form S-8) filed with the SEC since May
1, 1993. The Company has filed all required documents, schedules, form,
statements and other documents with the SEC since May 1, 1992.
(b) As of its filing date, no such report, schedule or statement
(including all exhibits and schedules thereto and documents incorporated by
reference therein) referred to in clauses (a)(i)-(iv), as amended or
supplemented if applicable, filed pursuant to the Exchange Act contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) No such final registration statement (including all exhibits and
schedules thereto and documents incorporated by reference therein) referred to
in clause (a)(v), as amended or supplemented, if applicable, filed pursuant to
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act") as of the date such statement or
amendment became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading (in the case of any prospectus, in
light of the circumstances under which they were made).
Section 3.8 Financial Statements. The audited balance sheets of the
Company as at April 29, 1995, April 30, 1994, and May 1, 1993, and the related
audited statements of operations, changes in
14
stockholders' equity and cash flows for the fiscal years then ended, together
with the notes thereto certified by Ernst & Young, independent certified public
accountants, included in the Company 10-K's which have been delivered to
Holdings, comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis through the periods covered
thereby, and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and its results of
operations and cash flows for the periods then ended. The foregoing financial
statements of the Company as at April 29, 1995, and for the year then ended, are
sometimes herein called the "Financials," the balance sheet included in the
Financials is sometimes herein called the "Balance Sheet" and April 29, 1995 is
sometimes herein called the "Balance Sheet Date." The financial statements of
the Company for the three months ended July 31, 1995 and as included in the
Company 10-Q which has been delivered to Holdings, fairly present the financial
condition and results of operations of the Company as of and for the three
months ended (subject to year-end adjustments consisting only of normal
recurring accruals) in accordance with GAAP applied in a manner consistent with
the principles applied during the fiscal year ended 1995. The foregoing
unaudited financial statements of the Company as at July 31, 1995, and for the
three months then ended are sometimes herein called the "Interim Financials,"
the balance sheet included in the Interim Financials is sometimes herein called
the "Interim Balance Sheet" and July 31, 1995 is sometimes herein called the
"Interim Balance Sheet Date." Except as set forth in the SEC Reports, neither
the Company nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by GAAP
to be set forth on a consolidated balance sheet of the Company and its
consolidated Subsidiaries or in the notes thereto. Since the date of its
incorporation, Newco has had no assets other than a cash capital contribution of
$100 and no liabilities.
Section 3.9 Disclosure Documents. (a) The proxy statement of the Company
on Schedule 14A (the "Company Proxy Statement") to be filed with the SEC in
connection with the Transactions, and any amendments or supplements thereto (the
Company Proxy Statement, as amended or supplemented, being referred to as the
"Company Disclosure Documents") will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act, and the
rules and resolutions promulgated thereunder. At the time the Company Proxy
Statement or any amendments or supplements thereto are first mailed to
stockholders of the Company, and at the time such stockholders vote on approval
of the Transactions, the Company Proxy Statement will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
15
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.
(b) The representations and warranties contained in Section 3.9(a) shall
not apply to statements or omissions included in the Company Disclosure
Documents based upon information furnished in writing to the Company by Holdings
specifically for use therein.
Section 3.10 Operations of the Company. Except as contemplated by this
Agreement or as disclosed in the Interim Balance Sheet, since the Interim
Balance Sheet Date, the Company has conducted its business only in the ordinary
course and has not:
(a) suffered or incurred any material adverse change in the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company and its Subsidiaries, taken as a whole (a "Company
Material Adverse Change"), and the Company knows of no such change that is
threatened;
(b) amended its certificate of incorporation or by-laws or merged with
or into or consolidated with any other person, subdivided or in any way
reclassified any shares of its capital stock or changed or agreed to change in
any manner the rights of its outstanding capital stock or other securities;
(c) incurred any indebtedness for borrowed money other than in the
ordinary course of business under the letters of credit referred to in the
Company Disclosure Letter;
(d) declared or paid any dividends or declared or made any other
distributions or any kind to its shareholders, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares of its
capital stock or other securities;
(e) reduced its cash or short-term investments or their equivalent,
other than to meet cash needs arising in the ordinary course or business,
consistent with past practices;
(f) except as required by GAAP, made any change in its accounting
methods or practices or made any change in depreciation or amortization policies
or rates adopted by it;
(g) made any payment or commitment to pay any severance or termination
pay to any of its officers, directors, employees, consultants, agents or other
representatives, other than payments or
16
commitments to pay persons other than its officers, directors or shareholders
made in the ordinary course of business;
(h) made any acquisition of all or substantially all of the assets,
properties, capital stock or business of any other person;
(i) agreed to the sale, lease, transfer or other disposition (other than
sales of assets in the ordinary course of business), in one or more
transactions, of the business or assets of the Company (including by way of a
merger, consolidation, tender or exchange offer, sale of stock, liquidation or
dissolution or similar transaction);
(j) entered into any employment agreement with any executive officers of
the Company or any of its Subsidiaries, or granted any such executive officers
any material increase in compensation, except in the ordinary course of business
consistent with prior practice;
(k) adopted any stock option or other stock-based employee benefits
plans or agreed to accelerate the vesting or exercisability of any employee or
director stock option;
(l) incurred any damage, destruction or loss, whether or not covered by
insurance, that has had or could have a Company Material Adverse Effect; or
(m) issued, sold or otherwise disposed of any Company Securities or any
debt or equity securities of any of its Subsidiaries.
Section 3.11 Litigation. Except as set forth in the SEC Reports, as of
the date hereof, there are no outstanding orders, judgments, injunctions, awards
or decrees of any court, governmental or regulatory body or arbitration tribunal
against or involving the Company or any of its Subsidiaries which could
reasonably be expected to result in a Company Material Adverse Change. Except as
set forth in the SEC Reports, as of the date hereof, there are no actions, suits
or claims or legal, administrative or arbitral proceedings of which the Company
or any of its Subsidiaries has received notice, or, to the knowledge of the
Company or any of the Subsidiaries, investigations (whether or not the defense
thereof or liabilities in respect thereof are covered by insurance) pending or,
to the knowledge of the Company or any of its Subsidiaries, threatened against
or involving the Company or any of its Subsidiaries or any of their respective
properties or assets in which the amount in controversy or damages sought
exceeds $20,000.
17
Section 3.12 Taxes. Each of the Company and each of its Subsidiaries has
paid all federal, state, county, local, foreign and other taxes, including,
without limitation, income taxes, estimated taxes, excise taxes, sales taxes,
gross receipts taxes, franchise taxes, employment and payroll-related taxes,
property taxes and import duties, whether or not measured in whole or in part by
net income (hereinafter, "Taxes" or, individually, a "Tax") required to be paid
by it through the date hereof and all deficiencies or other additions to tax,
interest and penalties owed by it, in connection with any such Taxes (other than
Taxes and deficiencies not material in the aggregate), and shall timely pay any
Taxes, including additions, interest and penalties, required to be paid by it
after the date hereof and on or before the Closing Date (other than Taxes being
contested in good faith and the liability for which is reserved for by the
Company in accordance with GAAP). All reserves or other provisions for taxes
reflected in the Financials and the Interim Financials are, or will be,
adequate, and there are no liens for delinquent taxes upon any property or asset
of the Company or any of its Subsidiaries. The Company Disclosure Letter sets
forth the status of the audit of any income tax returns of the Company or any of
its Subsidiaries for each fiscal year for which the statute of limitations has
not expired, including the amounts of any deficiencies and additions to tax,
interest and penalties indicated on any notices of proposed deficiency of
statutory notices of deficiency that may have been issued in connection
therewith. The Company Disclosure Letter sets forth all federal tax elections
under the Internal Revenue Code of 1986, as amended (the "Code") that are in
effect with respect to the Company for the fiscal years ended May 1, 1993, April
30, 1994, and April 29, 1995. No extension of time with respect to any date on
which any Tax return was or is to be filed by the Company or any of its
Subsidiaries is in force, and no waiver or agreement by the Company or any of
its Subsidiaries is in force for the extension of time for the assessment or
payment of any Tax. The Company has not made any election under Section 341(f)
of the Code. Each of the Company and each of its Subsidiaries has timely filed
all tax returns required through the date hereof, and shall prepare and timely
file, in a manner consistent with prior years and applicable laws and
regulations, all tax returns to be filed on or before the Closing Date.
Section 3.13 Employee Benefit Plans. Except as set forth in the SEC
Reports:
(a) There are no plans, practices, arrangements, policies or
commitments, including, without limitation, any employment, consulting or
deferred compensation arrangements or agreements, executive compensation, bonus
or severance pay plans or practices, health or life insurance arrangements,
vacation pay plans or any other fringe benefit plans, including, without
limitation, any pension, profit sharing, savings or other plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (whether or not covered by ERISA) (each
18
individually, a "Plan") maintained or contributed to by or on behalf of the
Company, or with respect to which the Company has or could have any material
liability or obligation, whether actual or contingent, direct or indirect,
through any Commonly Controlled Entity (as defined below or otherwise), other
than the Employee Stock Option Plans and the Director Stock Option Plan. A
"Commonly Controlled Entity" of a person shall mean any other person who is
treated as a single employer (within the meaning of Code Section 414) with such
person.
(b) Each Plan is (and the Company is with respect to each Plan) in
compliance in all material respects with all applicable laws, regulations,
reporting and disclosure requirements and has been administered and operated in
all material respects in accordance with its terms. With respect to each Plan:
(i) no "prohibited transaction" (within the meaning of Code Section 4975 or
ERISA Section 406) or breach of fiduciary duty has occurred; and (ii) there are
no material actions, liens, claims or disputes pending or, to the knowledge of
the Company, threatened.
(c) With respect to each Plan (where applicable); on or before the date
hereof, the Company has delivered or made available to Holdings complete copies
of (i) each Plan document and individual agreement related thereto; and (ii) the
most recent summary plan description, annual report, actuarial valuation and
Internal Revenue Service determination letter.
(d) No Plan is a "pension plan" (within the meaning of ERISA Section
3(2)) or a "multiple employer plan" (as described in Code Section 413(c)). The
Company has not incurred any actual or contingent liability arising under Title
IV of ERISA which is reasonably likely to have a Company Material Adverse
Effect. Without limiting the foregoing, the Company has no secondary liability
under any agreement described in ERISA Section 4204, or has been a party to a
transaction described in ERISA Section 4069, in each case, which is reasonably
likely to have a Company Material Adverse Effect.
(e) With respect to each Plan which is a "welfare plan" (within the
meaning of ERISA Section 3(1)): (i) except as required under Code Section 4980B
or Part 6 of Title I of ERISA, no such plan provides medical or death benefits
with respect to any individual beyond his or her termination of employment or
service; and (ii) there are no reserves, assets, surplus or prepaid premiums
under any such Plan.
(f) The consummation of the Transactions and the exercise of the Option
will not: (i) entitle any individual to severance pay, unemployment compensation
or any similar payment; (ii) accelerate
19
the time of payment or vesting or increase the amount of compensation due to any
individual; or (iii) entitle any individual to a "parachute payment" (within the
meaning of Code Section 280G).
(g) Neither the Company nor any Commonly Controlled Entity has incurred
within the last two years or reasonably expects, as of the date hereof, to incur
any liability or obligation under the Workers Adjustment Retraining Notification
Act or any similar state law ("WARN").
(h) Each of the Company and each of its Subsidiaries is not, and has not
been, a party to any collective bargaining agreement or any agreement with a
labor union or association. There is no pending work stoppage, organizing
effort, strike, slowdown, picketing or similar event affecting the Company or
any of the Subsidiaries or, to the knowledge of the Company and each of its
Subsidiaries, threatened, and no application for certification of a collective
bargaining agent is pending or, to the knowledge of the Company and each of its
Subsidiaries, threatened. Each of the Company and each of its Subsidiaries has
not been cited for any unfair labor practice or other practice or conduct
prohibited by the National Labor Relations Act (the "NLRA"). There is no pending
or, to the knowledge of the Company and each of its Subsidiaries, threatened,
complaint, charge or proceeding before the National Labor Relations Board or any
other governmental authority alleging any violation of the NLRA by the Company
or any of its Subsidiaries.
Section 3.14 Compliance with Laws. Except as previously disclosed in
writing in a letter to Holdings or in the SEC Reports, and except for violations
which are not reasonably likely to have a Company Material Adverse Effect, each
of the Company and each of its Subsidiaries is not, to its knowledge, in
violation of, and to its knowledge has not violated, (i) any federal, state or
local law, statute, ordinance or regulation or any other requirement of any
federal, state or local governmental or regulatory body of competent
jurisdiction applicable to the Company or any of its Subsidiaries or the
business of the Company or any of its Subsidiaries or (ii) any term of any
applicable judgment, decree, injunction, law and/or order issued by a
governmental or regulatory body of competent jurisdiction. Except as set forth
in the SEC Reports, each of the Company and each of its Subsidiaries, to its
knowledge, has all Permits required as of the date hereof for the conduct of the
business of the Company and each of its Subsidiaries as now conducted; to the
Company's knowledge, such Permits are in full force and effect; the Company has
not received notice of any violation in respect of any Permits and no proceeding
is pending of which the Company has received notice or, to the knowledge of the
Company, threatened to revoke or limit any Permit which revocations or
limitations would have, in the aggregate, a Company Material Adverse Effect.
20
Section 3.15 Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx, dated December 11, 1995, to the effect
that the consideration to be received by the Company and its stockholders,
pursuant to the Transactions, taken as a whole, is fair from a financial point
of view to the Company and its stockholders, a true and complete copy of which
opinion has been delivered to Holdings prior to the date hereof.
Section 3.16 Intellectual Property. The Company is not aware of any
patents held by any person or entity under which a license is reasonably likely
to be required in connection with the conduct of the business of the Company as
now conducted or as currently proposed to be conducted. The Company has not
received any written notice of any adverse claim of any person or entity with
respect to any intellectual property right or asserted against or threatened to
be asserted against, the Company with respect to any intellectual property
right.
Section 3.17 Contracts and Other Agreements. (a) Except as set forth the
SEC Reports (or filed as an exhibit thereto), there are no contracts or
agreements to which the Company or any of its Subsidiaries is a party that are
material to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
Subsidiaries taken as a whole. Each agreement, contract, lease, license,
commitment or instrument of the Company set forth in the Company Disclosure
Letter or the SEC Reports is in full force and effect and is a legal, valid and
binding agreement of the Company and, to the best knowledge of the Company, of
each other party thereto, enforceable in accordance with its terms except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles. Neither the Company nor any
of its Subsidiaries is in violation of or in default under (nor, to the
knowledge of the Company, does there exist any condition which upon the passage
of time or the giving of notice would cause such a violation of or default
under) any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that could
not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect.
(b) Set forth in the Company Disclosure Letter is (x) a list of all loan
or credit agreements, notes, bonds, indentures, and other agreements and
instruments pursuant to which any Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount in excess of $1,000,000 is
outstanding or may be incurred and (y) the respective principal amounts
currently outstanding
21
thereunder. For purposes of this Agreement, "Indebtedness" shall mean, with
respect to any person, without duplication, (A) all obligations of such person
for borrowed money, or with respect to deposits or advances of any kind to such
person, (B) all obligations of such person evidenced by bonds, debentures, notes
or similar instruments, (C) all obligations of such person upon which interest
charges are customarily paid, (D) all obligations of such person under
conditional sale or other title retention agreements relating to property
purchased by such person, (E) all obligations of such person issued or assumed
as the deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such person's business), (F) all capitalized
lease obligations of such person, (G) all obligations of others secured by any
lien on property or assets owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of such
person under interest rate or currency hedging transactions (valued at the
termination value thereof), (I) all letters of credit issued for the account of
such person and (J) all guarantees and arrangements having the economic effect
of a guarantee of such person of any Indebtedness of any other person.
(c) The Company is not a party to or bound by any material written or
oral (w) employment agreement or employment contract that is not terminable at
will by the Company, (x) covenant not to compete, or (y) agreement, contract or
other arrangement with (A) any stockholder of the Company, (B) any Affiliate (as
defined herein) of the Company or, to the knowledge of the Company, any
Affiliate of any stockholder of the Company or (C) any officer, director or
employee of the Company (other than employment agreements covered by clause (w)
above), or of any stockholder of the Company or of any Affiliate of the Company.
The term "Affiliate" means, with respect to any person, any other person
controlling, controlled by or under direct or indirect common control with such
person (for the purposes of this definition "control," when used with respect to
any specified person, shall mean the power to direct the management and policies
of such person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing).
(d) The Company is not a party to or bound by any material written or
oral mortgage, pledge, security agreement, deed of trust or other document
granting a Lien or security interest (including, but not limited to, Liens upon
properties acquired under conditional sales, capital leases or other title
retention or security devices).
Section 3.18 Properties. (a) Except as set forth in the Company
Disclosure Letter, each of the Company and each of its Subsidiaries has good and
marketable title to, or valid leasehold interests
22
in, all its properties and assets except for such as are no longer used or
useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in the
aggregate, do not and will not materially interfere with its ability to conduct
its business as currently conducted.
(b) Each of the Company and each of its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are in full force and
effect. Each of the Company and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
Section 3.19 Environmental Matters. (a) Neither the Company nor any of
its Subsidiaries has (x) placed, released, transported, arranged for
transportation of or disposed of any Hazardous Substances (as defined herein)
on, under, from or at any of the Company's or any of its Subsidiaries'
properties or any other properties (which for purposes of this Section 3.19
includes any facility formerly owned or operated by the Company), in violation
of any applicable Environmental Laws (as defined herein) except where such
violation would not have a Company Material Adverse Effect, (y) any knowledge of
the presence of any Hazardous Substances on, under or at any of the Company's or
any of its Subsidiaries' properties or any other property but arising from the
Company's or any of its Subsidiaries' properties, in violation of any applicable
Environmental Laws except where such violation would not have a Company Material
Adverse Effect, or (z) during the preceding three years, received any written
notice (A) from a Governmental Entity that the Company or any of its
Subsidiaries is in violation of any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity relating to any matter of
pollution, protection of the environment, environmental regulation or control or
regarding Hazardous Substances (collectively, "Environmental Laws") on or under
any of the Company's or any of its Subsidiaries' properties or any other
properties, (B) of the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party in
connection with any such violation, (C) from a Governmental Entity requiring the
response to or remediation of a release or threatened release of Hazardous
Substances at or arising from any of the Company's or any of its Subsidiaries'
properties or any other properties, or (D) demanding payment by the Company or
any of its Subsidiaries for response to or remediation of a release or
threatened release of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties. For
purposes of this Agreement, the term "Hazardous Substance" shall mean any toxic
or hazardous materials, wastes or substances, including asbestos, buried
contaminants, chemicals, flammable explosives, radioactive materials,
polychlorinated biphenyls, petroleum and petroleum products and
23
any substances defined as, or included in the definition of, "hazardous wastes",
"hazardous materials" or "toxic substances" under any Environmental Law.
(b) To the knowledge of the Company, no Environmental Law imposes any
obligation upon the Company or its Subsidiaries arising out of or as a condition
to any transaction contemplated by this Agreement or the Option Agreement,
including, without limitation, any requirement to modify or to transfer any
Permit or license, any requirement to file any notice or other submission with
any Governmental Entity, the placement of any notice, acknowledgement or
covenant in any land records, or the modification of or provision of notice
under any agreement, consent order or consent decree. No Lien has been placed
upon any of the Company's or its Subsidiaries' owned properties, or, to the
knowledge of the Company, leased properties under any Environmental Law.
Section 3.20 Confidentiality Agreements. To the Company's knowledge, all
officers and employees of the Company who have access to confidential
information have entered into confidentiality agreements and all employees
providing services of a scientific nature have entered into invention agreements
in the form then utilized by the Company. To the Company's knowledge, no officer
or employee has disavowed his or her obligations under any such agreement and
the Company is not aware of any facts or circumstances which would constitute a
material breach of any such agreement.
Section 3.21 Disclosure. No representations or warranties by the Company
in this Agreement and no statement contained in any document (including, without
limitation, the Financials, Interim Financials, Company Disclosure Letter,
certificates, or other writings) furnished or to be furnished by the Company to
Holdings or any of its representatives pursuant to the provisions hereof
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings represents and warrants to the Company that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as
24
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV), except
as set forth in the disclosure letter delivered by FDESI to the Company on the
date hereof and initialed by the parties (the "FDESI Disclosure Letter").
Nothing in the FDESI Disclosure Letter shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the FDESI
Disclosure Letter identities the exception with particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other items itself). The FDESI Disclosure Letter
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article IV.
Section 4.1 Corporate Existence and Power. Each of Holdings and FDESI is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted or currently proposed to be
conducted. FDESI is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the business, properties, condition (financial or otherwise), results of
operations or prospects of FDESI (a "FDESI Material Adverse Effect"). FDESI has
heretofore delivered to the Company true and complete copies of the Company's
Articles of Incorporation and By-laws in each case as in effect on the date
hereof. The minute books of FDESI contain true and complete records of all
meeting and consents in lieu of meeting of its Board of Directors (and any
committees thereof), and of its stockholder.
Section 4.2 Corporate Authorization. Each of Holdings and FDESI has all
requisite corporate power and authority to execute and deliver this Agreement,
the Option Agreement and the Marketing Agreement and perform its obligations
under such agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Holdings and FDESI of this
Agreement, the Option Agreement and the Marketing Agreement and the consummation
by Holdings and FDESI of the transactions contemplated hereby and thereby have
duly authorized by the board of directors of Holdings, FDESI and Fluor
Corporation, and no other corporate action on the part of Holdings or FDESI is
necessary to authorize the execution, delivery and performance of such
agreements and consummation of the transactions contemplated hereby and
25
thereby. This Agreement and the Option Agreement have been, and the Marketing
Agreement at the Closing will be, duly executed and delivered by Holdings and
FDESI and constitute valid and binding obligations of Holdings and FDESI
enforceable against Holdings and FDESI in accordance with their respective terms
subject to applicable bankruptcy, insolvency, moratorium and similar laws
relating to or affecting creditors' rights and to general equitable principles.
Section 4.3 Governmental Authorization. The execution, delivery and
performance by Holdings and FDESI of this Agreement, the Option Agreement and
the Marketing Agreement and the consummation by Holdings and FDESI of the
transactions contemplated hereby and thereby require no action by or in respect
of, or filing by Holdings or FDESI with any Governmental Entity other than (i)
compliance with any applicable requirements of the HSR Act; (ii) compliance with
any applicable requirements of the Exchange Act, and the rules and regulations
promulgated thereunder; and (iii) compliance with any applicable requirements of
foreign or state securities laws.
Section 4.4 Non-Contravention. The execution, delivery and performance
by Holdings and FDESI of this Agreement, the Option Agreement and the Marketing
Agreement and the consummation by Holdings and FDESI of the transactions
contemplated hereby and thereby do not and will not (i) contravene or conflict
with their respective certificate of incorporation or by-laws; (ii) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of the effect of, otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default (by way of substitution, novation or otherwise)
under, any contract or other agreement to which Holdings or FDESI is a party or
by or to which Holdings or FDESI or any of their respective assets or properties
may be bound; (iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon Holdings or FDESI or upon the securities, properties or business of
Holdings or FDESI; (iv) violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to Holdings or FDESI or
to the securities, properties or business of Holdings or FDESI; (v) result in
the creation or imposition of any Lien on any asset of Holdings or FDESI, or
(vi) violate any Permit, except, with respect to clauses (ii), (iv), (v) and
(vi) of this Section 4.4, for violations, or Liens, which, individually or in
the aggregate, are not reasonably likely to have (x) a material adverse effect
on the ability of Holdings to consummate the transactions contemplated hereby or
(y) a FDESI Material Adverse Effect.
Section 4.5 Capitalization of FDESI. As of the date hereof, the
authorized capital stock of FDESI consists in its entirety of 1,000 shares of
common stock, no par value, of which 1,000 shares
26
are outstanding and owned of record and beneficially by Holdings. All
outstanding shares of capital stock of FDESI have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights.
Except as set forth in this Section 4.5, as of the date hereof there are, and on
the Closing Date there will be, no outstanding (i) shares of capital stock or
other securities of FDESI, (ii) securities of FDESI convertible into or
exchangeable for shares of capital stock or other securities of FDESI or (iii)
options, rights, subscriptions, warrants, calls, unsatisfied preemptive rights,
or other agreements to acquire or otherwise receive from FDESI any capital stock
or other securities of, or securities convertible into or exchangeable for
capital stock or other securities of, FDESI (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "FDESI Securities").
Section 4.6 FDESI Joint Ventures. (a) The FDESI Disclosure Letter sets
forth a list of each entity in which FDESI holds or has the right to acquire one
percent (1%) or more of the equity, partnership or other interests of such
entity (each such entity, except Subsidiaries, being referred to as an "FDESI
Joint Venture") and a list of all material agreements relating thereto to which
FDESI is a party ("FDESI Joint Ventures Agreements"). To FDESI's knowledge and
belief, FDESI and each other party thereto is in compliance in all material
respects with all of the terms, conditions and obligations binding upon it in
respect of each of the FDESI Joint Ventures Agreements, and as of the date
hereof none of the FDESI Joint Ventures Agreements has been terminated. FDESI
has delivered true and correct copies of each FDESI Joint Ventures Agreement, as
amended, modified or supplemented, to the Company and all waivers executed
thereunder.
(b) FDESI's interest in each of the FDESI Joint Ventures is directly
owned by FDESI and, except for any restrictions on transfer contained in the
FDESI Joint Ventures Agreements, free and clear of any material Lien or any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such interest). Except as expressly set forth in
the FDESI Joint Ventures Agreements, there are no outstanding obligations of
FDESI to fund or make a further investment in any FDESI Joint Ventures.
(c) FDESI has no Subsidiaries.
Section 4.7 FDESI Financial Statements. The unaudited balance sheets of
FDESI as at April 30, 1995 and October 31, 1995, and the related unaudited
statements of operations for the fiscal year and six month period, respectively,
then ended, (except for the absence of footnotes and for normal year end
adjustments and for the other matters set forth in that certain letter from Xxx
X. Xxxxxxx to Xxxxxx X. Xxxxxx, Xx. dated November 30, 1995) have been prepared
in accordance with GAAP
27
applied on a consistent basis through the periods covered thereby, and fairly
present the consolidated financial position of FDESI as of the date thereof and
its results of operations for the period then ended. The foregoing unaudited
financial statements of FDESI as at October 31, 1995, and for the period then
ended, are sometimes herein called the "FDESI Financials," the balance sheet
included in the FDESI Financials is sometimes herein called the "FDESI Balance
Sheet" and October 31, 1995 is sometimes herein called the "FDESI Balance Sheet
Date." Except as set forth in the FDESI Disclosure Letter, FDESI does not have
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) to Holdings or any Affiliate of Holdings ("Holdings
Debt") or otherwise required by GAAP to be set forth on a balance sheet of FDESI
or in the notes thereto.
Section 4.8 Disclosure Documents. The information with respect to
Holdings and its Affiliates furnished to the Company by Holdings in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, in the case of the Company Proxy
Statement, at the time the Company Proxy Statement and or any amendment or
supplement thereto is first mailed to stockholders of the Company, and, in the
case of the Company Proxy Statement, at the time the stockholders vote on
approval of the Transactions.
Section 4.9 Operations of FDESI. Except as contemplated by this
Agreement or as disclosed in the FDESI Balance Sheet, since the FDESI Balance
Sheet Date, FDESI has conducted its business only in the ordinary course and has
not:
(a) suffered or incurred any material adverse change in the business,
properties, condition (financial or otherwise), results of operations or
prospects of FDESI (a "FDESI Material Adverse Change"), and FDESI knows of no
such change that is threatened;
(b) amended its certificate of incorporation or by-laws or merged with
or into or consolidated with any other person, subdivided or in any way
reclassified any shares of its capital stock or changed or agreed to change in
any manner the rights of its outstanding capital stock or other securities;
(c) incurred any indebtedness for borrowed money other than in the
ordinary course of business;
28
(d) declared or paid any dividends or declared or made any other
distributions or any kind to its shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares of its
capital stock or other securities;
(e) reduced its cash or short-term investments or their equivalent,
other than to meet cash needs arising in the ordinary course or business,
consistent with past practices;
(f) except as required by GAAP, made any change in its accounting
methods or practices or made any change in depreciation or amortization policies
or rates adopted by it;
(g) made any payment or commitment to pay any severance or termination
pay to any of its officers, directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay persons other than
its officers, directors or shareholders made in the ordinary course of business;
(h) made any acquisition of all or substantially all of the assets,
properties, capital stock or business of any other person;
(i) agreed to the sale, lease, transfer or other disposition (other than
sales of assets in the ordinary course of business), in one or more
transactions, of the business or assets of FDESI (including by way of a merger,
consolidation, tender or exchange offer, sale of stock, liquidation or
dissolution or similar transaction);
(j) entered into any employment agreement with any executive officers of
FDESI or granted any such executive officers any material increase in
compensation, except in the ordinary course of business consistent with prior
practice;
(k) adopted any stock option or other stock-based employee benefits
plans or agreed to accelerate the vesting or exercisability of any employee or
director stock option;
(l) incurred any damage, destruction or loss, whether or not covered by
insurance, that has had or could have a FDESI Material Adverse Effect; or
(m) issued, sold or otherwise disposed of any FDESI Securities.
29
Section 4.10 Litigation of FDESI. As of the date hereof, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or involving
FDESI which could reasonably be expected to result in a FDESI Material Adverse
Change. As of the date hereof, there are no actions, suits or claims or legal,
administrative or arbitral proceedings of which Holdings or FDESI has received
notice, or, to the knowledge of Holdings or FDESI, investigations (whether or
not the defense thereof or liabilities in respect thereof are covered by
insurance) pending or, to the knowledge of Holdings or FDESI, threatened against
or involving FDESI or any of its properties or assets.
Section 4.11 Taxes of FDESI. FDESI has paid all Taxes required to be
paid by it through the date hereof and all deficiencies or other additions to
tax, interest and penalties owed by it, in connection with any such Taxes (other
than Taxes and deficiencies not material in the aggregate), and shall timely pay
any Taxes, including additions, interest and penalties, required to be paid by
it after the date hereof and on or before the Closing Date (other than Taxes
being contested in good faith and the liability for which is reserved for by
FDESI in accordance with GAAP). All reserves or other provisions for taxes
reflected in the FDESI Financials are, or will be, adequate, and there are no
liens for delinquent taxes upon any property or asset of FDESI. The FDESI
Disclosure Letter sets forth the status of the audit of any income tax returns
of FDESI (and of any consolidated, unitary or combined returns which included
FDESI, but only insofar as such returns pertain specifically to FDESI) for each
fiscal year for which the statute of limitations has not expired, including the
amounts of any deficiencies and additions to tax, interest and penalties
indicated on any notices of proposed deficiency of statutory notices of
deficiency that may have been issued in connection therewith. The FDESI
Disclosure Letter sets forth all federal tax elections under the Code that are
in effect with respect to FDESI for the fiscal years ended May 1, 1993, April
30, 1994, and April 29, 1995. No extension of time with respect to any date on
which any Tax return was or is to be filed by FDESI is in force, and no waiver
or agreement by FDESI is in force for the extension of time for the assessment
or payment of any Tax. FDESI has not made any election under Section 341(f) of
the Code. FDESI has timely filed all tax returns required through the date
hereof, and shall prepare and timely file, in a manner consistent with prior
years and applicable laws and regulations, all tax returns to be filed on or
before the Closing Date.
Section 4.12 Environmental Matters of FDESI (a) FDESI has not (x)
placed, released, transported, arranged for transportation of or disposed of any
Hazardous Substances on, under, from or at any of FDESI's properties or any
other properties (which for purposes of this Section 4.12 includes any facility
formerly owned or operated by FDESI), in violation of any applicable
30
Environmental Laws, except where such violation would not have a FDESI Material
Adverse Effect, (y) any knowledge of the presence of any Hazardous Substances
on, under or at any of FDESI's properties or any other property but arising from
FDESI's properties, in violation of any applicable Environmental Laws, except
where such violation would not have a FDESI Material Adverse Effect, or (z)
except in each case for notices set forth in the FDESI Disclosure Letter, during
the preceding three years, received any written notice (A) from a Governmental
Entity that FDESI is in violation of any Environmental Laws on or under any of
FDESI's properties or any other properties, (B) of the institution or pendency
of any suit, action, claim, proceeding or investigation by any Governmental
Entity or any third party in connection with any such violation, (C) from a
Governmental Entity requiring the response to or remediation of a release or
threatened release of Hazardous Substances at or arising from any of FDESI's
properties or any other properties, or (D) demanding payment by FDESI for
response to or remediation of a release or threatened release of Hazardous
Substances at or arising from any of FDESI's properties or any other properties.
(b) Except as set forth in the FDESI Disclosure Letter, to the knowledge
of FDESI, no Environmental Law imposes any obligation upon FDESI or its
Subsidiaries arising out of or as a condition to any transaction contemplated by
this Agreement or the Option Agreement, including, without limitation, any
requirement to modify or to transfer any Permit or license, any requirement to
file any notice or other submission with any Governmental Entity, the placement
of any notice, acknowledgement or covenant in any land records, or the
modification of or provision of notice under any agreement, consent order or
consent decree. No Lien has been placed upon any of FDESI's or its Subsidiaries'
owned properties, or, to the knowledge of FDESI, leased properties under any
Environmental Law.
Section 4.13 FDESI Contract List. (a) Except as set forth in paragraph
4.13 of the FDESI Disclosure Letter, FDESI is not a party to or subject to any
contract to provide services, materials or goods to third parties (an "FDESI
Customer Contract").
(b) The FDESI Disclosure Letter sets forth with respect to the FDESI
Customer Contracts, a summary of work performed as of the date of this Agreement
and work to be performed after the date of this Agreement not yet completed.
(c) Neither FDESI or Holdings has received notice or any other
communication, written or oral, from any customer terminating or not renewing
any FDESI Customer Contract or indicating the
31
customer's formal non-acceptance of work performed by FDESI or Holdings under
any FDESI Customer Contract.
(d) FDESI or Holdings has completed in all material respects all work in
progress under all FDESI Customer Contracts pursuant to the terms of each such
contract, including all warranty terms, and substantially in accordance with
customer specifications. Neither FDESI nor Holdings has been provided with
written notice of any claims for material defects in performance under any of
the contracts, and neither FDESI nor Holdings has knowledge of any state of
facts or anticipated event which FDESI or Holdings in good faith, reasonably
believes may give rise to any such claim.
Section 4.14 Purchase for Investment; Legend. Holdings hereby:
(a) acknowledges that Holdings has been advised that the Acquired Shares
have not been registered under the Securities Act or under any state securities
laws;
(b) represents and warrants that the Acquired Shares are being acquired
by Holdings for Holdings' own sole benefit and account for investment and not
with a view to, or for resale in connection with, a public offering or
distribution thereof;
(c) agrees that the Shares will not be sold or otherwise disposed of
except in compliance with the registration requirements or exemption provisions
under the Securities Act and the rules and regulations promulgated thereunder,
or any other applicable securities laws;
(d) consents that stop transfer instructions in respect of the Acquired
Shares, relating only to the restrictions in Section 4.14 (c), may be issued to
any transfer agent, transfer clerk or other agent at any time acting for the
Company; and
(e) consents that the certificate or certificates representing the
Acquired Shares not registered under the Securities Act may be impressed with a
legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
32
SHARES UNDER SUCH ACT OR AN EXEMPTION THEREFROM. THE SHARES REPRESENTED BY
THIS AGREEMENT ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON SALE OR TRANSFER
PURSUANT TO THE PROVISIONS OF THAT CERTAIN INVESTMENT AGREEMENT DATED AS OF
DECEMBER 11, 1995 AS TO WHICH THE COMPANY AND REGISTERED OWNER ARE PARTIES."
Section 4.15 Employees and Employee Benefit Plans. Except as set forth
in the FDESI Disclosure Letter:
(a) There are no Plans maintained or contributed to by or on behalf of
FDESI or Holdings, or with respect to which FDESI has or could have any material
liability or obligation, whether actual or contingent, direct or indirect,
through any Commonly Controlled Entity.
(b) Each Plan is (and FDESI and Holdings is with respect to each Plan)
in compliance in all material respects with all applicable laws, regulations,
reporting and disclosure requirements and has been administered and operated in
all material respects in accordance with its terms. With respect to each Plan:
(i) no "prohibited transaction" (within the meaning of Code Section 4975 of
ERISA Section 406) or breach of fiduciary duty has occurred; and (ii) there are
no material actions, liens, claims or disputes pending or, to the knowledge of
FDESI or Holdings, threatened.
(c) With respect to each Plan (where applicable), (i) on or before the
date hereof, FDESI has delivered or made available to the Company complete
copies of (i) each Plan document and individual agreement related thereto; and
(ii) the most recent summary plan description, annual report, actuarial
valuation and Internal Revenue Service determination letter.
(d) No Plan is a "pension plan" (within the meaning of ERISA Section
3(2)) or a "multiple employer plan" (as described in Code Section 413(c)). FDESI
has not incurred any actual or contingent liability arising under Title IV of
ERISA which is reasonably likely to have a Company Material Adverse Effect.
Without limiting the foregoing, FDESI has no secondary liability under any
agreement described in ERISA Section 4204, or has been a party to a transaction
described in ERISA Section 4069, in each case, which is reasonably likely to
have a FDESI Material Adverse Effect.
33
(e) With respect to each Plan which is a "welfare plan" (within the
meaning of ERISA Section 3(1)): (i) except as required under Code Section 4980B
or Part 6 of Title I of ERISA, no such plan provides medical or death benefits
with respect to any individual beyond his or her termination of employment or
service; and (ii) there are no reserves, assets, surplus or prepaid premiums
under any such Plan.
(f) The consummation of the Transactions will not: (i) entitle any
individual to severance pay, unemployment compensation or any similar payment;
(ii) accelerate the time of payment or vesting or increase the amount of
compensation due to any individual; or (iii) entitle any individual to a
"parachute payment" (within the meaning of Code Section 280G).
(g) Neither Holdings, FDESI nor any Commonly Controlled Entity has
incurred within the last two years or reasonably expects, as of the date hereof,
to incur any liability or obligation under WARN.
(h) Each of Holdings (with respect to the business of FDESI) and FDESI
is not, and has not been, a party to any collective bargaining agreement or any
agreement with a labor union or association. There is no pending work stoppage,
organizing effort, strike, slowdown, picketing or similar event affecting FDESI
or Holdings (with respect to the business of FDESI) or, to the knowledge of
Holdings and FDESI, threatened, and no application for certification of a
collective bargaining agent is pending or, to the knowledge of the Holdings and
FDESI, threatened. Neither Holdings (with respect to the business of FDESI) nor
FDESI has been cited for any unfair labor practice or other practice or conduct
prohibited by the NLRA. There is no pending or, to the knowledge of Holdings and
FDESI, threatened, complaint, charge or proceeding before the National Labor
Relations Board or any other governmental authority alleging any violation of
the NLRA by FDESI or Holdings (with respect to the business of FDESI).
(i) Set forth in paragraph 4.15(i) of the FDESI Disclosure Letter is a
true, correct and complete list of all employees of FDESI (or employees of
Holdings whose duties relate primarily to the business of FDESI and who Holdings
intends to transfer to FDESI on or before the Closing)(the "FDESI Employees")
and their rates of pay. No FDESI employee has sued or threatened to xxx FDESI or
Holdings, or bought or threatened to bring any administrative complaint against
FDESI or Holdings, within the two years prior to the date hereof. FDESI has
possession of or access to all personnel files with respect to each FDESI
Employee.
34
Section 4.16 Compliance with Laws. Except for violations which are not
reasonably likely to have a FDESI Material Adverse Effect, each of Holdings
(with respect to the business of FDESI) and FDESI is not, to its knowledge, in
violation of, and to its knowledge has not violated, (i) any federal, state or
local law, statute, ordinance or regulation or any other requirement of any
federal, state or local governmental or regulatory body of competent
jurisdiction applicable to FDESI or Holdings (with respect to the business of
FDESI) or the business of FDESI or Holdings (with respect to the business of
FDESI) or (ii) any term of any applicable judgment, decree, injunction, law
and/or order issued by a governmental or regulatory body of competent
jurisdiction. Except as set forth in the FDESI Disclosure Letter, each of the
FDESI and Holdings (with respect to the business of FDESI), to its knowledge has
all Permits required as of the date hereof for the conduct of the business of
the FDESI or Holdings (with respect to the business of FDESI) as now conducted;
to the knowledge of Holdings and FDESI, such Permits are in full force and
effect; neither FDESI nor Holdings has received notice of any violation in
respect of any Permits and no proceeding is pending of which Holdings or FDESI
has received notice or, to the knowledge of Holdings or FDESI, threatened to
revoke or limit any Permit which revocations or limitations would have, in the
aggregate, a FDESI Material Adverse Effect.
Section 4.17 Intellectual Property. Except as set forth in the FDESI
Disclosure Letter, neither FDESI nor Holdings is aware of any patents held by
any person or entity under which a license is reasonably likely to be required
in connection with the conduct of the business of FDESI as now conducted or as
currently proposed to be conducted. Except as set forth in the FDESI Disclosure
Letter, neither Holdings nor FDESI has received any written notice of any
adverse claim of any person or entity with respect to any intellectual property
right relating to the business of FDESI or asserted against or threatened to be
asserted against FDESI or Holdings (with respect to the business of FDESI) with
respect to any intellectual property right.
Section 4.18 Contracts and Other Agreements. (a) Except as set forth in
the FDESI Disclosure Letter, there are no contracts or agreements to which
Holdings or FDESI is a party that are material to the business, properties,
assets, condition (financial or otherwise), results of operations or prospects
of FDESI. Each agreement, contract, lease, license, commitment or instrument of
FDESI set forth in the FDESI Disclosure Letter is in full force and effect and
is a legal, valid and binding agreement of the FDESI and, to the best knowledge
of Holdings and FDESI, of each other party thereto, enforceable in accordance
with its terms except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
Neither Holdings nor
35
FDESI is in violation of or in default under (nor, to the knowledge of Holdings
or FDESI, does there exist any condition which upon the passage of time or the
giving of notice would cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that could not, individually
or in the aggregate, reasonably be expected to result in a FDESI Material
Adverse Effect.
(b) Set forth in the FDESI Disclosure Letter is (x) a list of all loan
or credit agreements, notes, bonds, indentures, and other agreements and
instruments pursuant to which any Indebtedness of FDESI in an aggregate
principal amount in excess of $25,000 is outstanding or may be incurred and (y)
the respective principal amounts currently outstanding thereunder.
(c) Except as set forth in the FDESI Disclosure Letter, neither FDESI
nor Holdings is a party to or bound by any material written or oral (w)
employment agreement or employment contract that is not terminable at will by
the Company or FDESI, (x) covenant not to compete which would limit or restrict
the Company or FDESI from conducting business anywhere in the world, or (y)
agreement, contract or other arrangement with (A) any stockholder of FDESI, (B)
any Affiliate (as defined herein) of FDESI or, to the knowledge of FDESI or
Holdings, any Affiliate of any stockholder of FDESI or (C) any officer, director
or employee of FDESI (other than employment agreements covered by clause (w)
above), or of any stockholder of FDESI or of any Affiliate of FDESI.
(d) Except as set forth in the FDESI Disclosure Letter, FDESI is not a
party to or bound by any material written or oral mortgage, pledge, security
agreement, deed of trust or other document granting a Lien or security interest
(including, but not limited to, Liens upon properties acquired under conditional
sales, capital leases or other title retention or security devices).
Section 4.19 Properties. (a) Except as set forth in the FDESI Disclosure
Letter, FDESI has good and marketable title to, or valid leasehold interests in,
all its properties and assets except for such as are no longer used or useful in
the conduct of its businesses or as have been disposed of in the ordinary course
of business and except for defects in title, easements, restrictive covenants
and similar encumbrances or impediments that, in the aggregate, do not and will
not materially interfere with its ability to conduct its business as currently
conducted.
36
Section 4.20 Confidentiality Agreements. To the knowledge of Holdings
and FDESI, all FDESI Employees who have access to confidential information have
entered into confidentiality agreements and all employees providing services of
a scientific nature have entered into invention agreements in the form then
utilized by Holdings. The rights to all such agreements will be assigned by
Holdings to FDESI prior to Closing. To the knowledge of Holdings and FDESI, no
officer or employee has disavowed his or her obligations under any such
agreement and neither Holdings nor FDESI is aware of any facts or circumstances
which would constitute a material breach of any such agreement.
Section 4.21 FDESI Disclosure. No representations or warranties by FDESI
in this Agreement and no statement contained in any document (including, without
limitation, the Financials, Interim Financials, FDESI Disclosure Letter,
certificates, or other writings) furnished or to be furnished by FDESI to the
Company or any of its representatives pursuant to the provisions hereof contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
Section 5.1 Conduct of Business. (a) Ordinary Course. During the period
from the date of this Agreement to the Closing Date, the Company shall and shall
cause its Subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall, in all material respects, be unimpaired at the Closing
Date. Except for the matters listed in Section 5.1 of the Company Disclosure
Letter, without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Closing Date, the Company shall not, and shall
not permit any of its Subsidiaries, without the prior written consent of
Holdings, to:
37
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned Subsidiary of
the Company to its parent, (y) split, combine or reclassify an its capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or (z) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than (x) the issuance
of Common Stock upon the exercise of Employee Stock Options and Director Stock
Options outstanding on the date of this Agreement in accordance with their
present terms, and (y) the issuance of Common Stock pursuant to the Option
Agreement);
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents or reincorporate in any
jurisdiction;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof, except for such actions
undertaken in the ordinary course of business and consistent with past practice
and involving no more than $250,000 in the aggregate or (y) any assets that are
material, individually or in the aggregate, to the Company and its Subsidiaries
taken as a whole, except purchases of inventory in the ordinary course of
business consistent with past practice;
(v) sell, lease, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of, any of its properties or assets, except sales
of properties or assets no longer used by the Company or its Subsidiaries in the
conduct of its business and sales of inventory in the ordina course of business
consistent with past practice;
(vi) (y) incur any Indebtedness for borrowed money or guarantee
any such Indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its Subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of
38
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowing not in excess of $1,000,000 in
the aggregate incurred in the ordinary course of business consistent with past
practice, the endorsement of checks in the normal course of business and the
extension of credit in the normal course of business or (z) make any loans,
advances or capital contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned Subsidiary of the
Company;
(vii) make or agree to make any new capital expenditures or
commitments, purchases of property or acquisitions of other businesses, capital
assets or properties which, individually, is in excess of $250,000 or, in the
aggregate, are in excess of $1,000,000 or enter into any new real property lease
with an annual rental of more than $60,000;
(viii) make any Tax election (other than in the ordinary course
of preparing and filing its Tax returns) or settle or compromise any material
Tax liability;
(ix) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, or liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the SEC Reports or incurred after the date of such financial
statements in the ordinary course of business consistent with past practice, or
waive the benefits of, or agree to modify in any manner, any confidentiality or
similar agreement to which the Company or any of its Subsidiaries is a party;
(x) adopt any shareholder rights or similar plan or take any
other action with the intention of, or which may have the effect of,
discriminating against Holdings as a shareholder of the Company (or any
successor);
(xi) adopt or amend in any material respect any Plan;
(xii) enter into any contract, agreement, plan or arrangement
covering any director, officer or employee providing for the making of any
payments, the acceleration of vesting of any benefit or right or any other
entitlement contingent upon (A) the consummation of the transactions
contemplated hereby or by the Option Agreement or any acquisition by Holdings of
securities of the Company (whether by merger, tender offer, private or market
purchases or otherwise) or (B) the
39
termination of employment after the occurrence of any such contingency if such
payment, acceleration of entitlement would not have been provided but for such
contingency; or amend any existing contract, agreement, plan or arrangement to
so provide; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company shall not, and shall not permit any of
its Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement or the Option Agreement becoming untrue, or,
(ii) any of the conditions to the Merger set forth in Article VIII, not being
satisfied.
(c) Advice of Changes. The Company shall promptly advise Holdings orally
and in writing of any change or event having, or which, insofar as can
reasonably be foreseen, would have, a material adverse effect on the Merger or
the Recapitalization, or a Company Material Adverse Effect.
Section 5.2 Stockholder Meeting; Proxy Material. The Company shall cause
a meeting of its stockholders (the "Company Stockholder Meeting") to be duly
called and held as soon as practicable for the purpose of voting on approval of
the Transactions. Subject to Section 5.4(a), the Board of Directors shall
unanimously recommend approval and adoption of the matters submitted to the
Company's stockholders, including the issuance of the Acquired Shares to
Holdings pursuant to the Merger, as required pursuant to the rules of the NASDAQ
National Market, and the execution and filing of the Charter Amendments,
pursuant to the Recapitalization. In connection with the Company Stockholder
Meeting, the Company: (i) shall promptly prepare and file with the SEC in
accordance with the Exchange Act the Company Proxy Statement, shall use all
reasonable efforts to have the Company Proxy Statement and/or any amendment or
supplement thereto cleared by the SEC and shall thereafter mail to its
stockholders as promptly as practicable the Company Proxy Statement; (ii) shall
use all reasonable efforts to obtain the necessary approvals by its stockholders
of the Transactions; and (iii) shall otherwise comply with all legal
requirements applicable to such meeting. The Company shall make available to
Holdings prior to the filing thereof with the SEC copies of the preliminary
Company Proxy Statement and any amendments or supplements thereto and shall make
any changes therein reasonably requested by Holdings insofar as such changes
relate to any matters relating to Holdings, FDESI or the description of the
Transactions.
Section 5.3 Access to Information. From the date hereof until the
Closing, the Company shall give Holdings, its counsel, financial advisors,
auditors and other authorized representatives reasonable
40
access during normal business hours to the offices, properties, books and
records of the Company and its Subsidiaries and, to the extent the Company may
do so, its Joint Ventures, shall furnish to Holdings, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably request to
the extent available to the Company and shall instruct the Company's employees,
counsel and financial advisors to cooperate with Holdings in its investigation
of the business of the Company, its Subsidiaries and its Joint Ventures;
provided, that no investigation pursuant to this Section 5.3 shall affect any
representation or warranty given by the Company to Holdings hereunder. All
requests for information made pursuant to this Section 5.3 shall be directed to
the Chief Financial Officer of the Company or such other persons as may be
designated by him.
Section 5.4 No Solicitation of Other Offers. (a) From the date hereof
until the earlier of the Closing or the termination of this Agreement, the
Company shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly, take (nor shall the Company authorize or permit its officers,
directors, employees, representatives, investment bankers, attorneys,
accountants or other agents or affiliates, to take) any action to: (i)
encourage, solicit or initiate the submission of any Acquisition Proposal (as
defined below), (ii) enter into any agreement with respect to or propose any
Acquisition Proposal or (iii) participate in any way in any discussions or
negotiations with, or furnish any information to, any person or entity (other
than Holdings or its officers, directors, employees, representatives, investment
bankers, attorneys, accountants or other agents or affiliates of Holdings) in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal; provided, however, that (x) the Company may
participate in discussions or negotiations (including as a part thereof making
any counterproposal) with or furnish information to any third party pursuant to
a customary confidentiality agreement (so long as it has complied with the
prohibitions of paragraph (a), subparagraph (i) above) if (i) a majority of the
Board of Directors determines in good faith, after receipt of written advice of
outside counsel, that the failure to provide such information or participate in
such discussions or negotiations would be more likely than not to cause the
members of the Board of Directors to be in breach of their fiduciary duties
under Delaware Law and (ii) a majority of the Board of Directors, after
consultation with the Company's independent financial advisors, determines in
good faith that there is a reasonable possibility that such third party will
submit to the Company an Acquisition Proposal which is a Superior Proposal (as
defined below), (y) if a majority of the Board of Directors determines in good
faith, after receipt of written advice of outside counsel, that the failure to
recommend to the Company's stockholders an Acquisition Proposal which is a
Superior Proposal would cause the members of the Board of Directors to be in
breach of their fiduciary duties
41
under Delaware Law, the Company may withdraw its recommendation to the
stockholders in favor of the Transactions and recommend to its stockholders such
an Acquisition Proposal which is a Superior Proposal and (z) after termination
of this Agreement, the Company may enter into an agreement with any third party
with respect to any Acquisition Proposal which is a Superior Proposal; provided,
further however, that the Company shall not take any action described in clause
(x), (y) or (z) of the immediately preceding provision except after prompt
notice to Holdings of its receipt of any Acquisition Proposal or of any inquiry
or request for information contemplating an Acquisition Proposal. The Company
shall promptly notify Holdings of its receipt of any Acquisition Proposal or of
any inquiry or request for information contemplating an Acquisition Proposal.
The Company shall keep Holdings informed, on a current basis, of the status of
any such proposals, negotiations or discussions except to the extent that a
majority of the Board of Directors determines in good faith, after receipt of
written advice of outside counsel, that the provision of such information to
Holdings would be more likely than not to cause the members of the Board to be
in breach of their fiduciary duties under Delaware Law. Any actions permitted
under, and taken in compliance with, this Section 5.4 shall not be deemed a
breach of any other covenant or agreement of the Company contained in this
Agreement.
(b) (i) For purposes of this Agreement, "Acquisition Proposal"
shall mean any bona fide proposal made by a third party to acquire (A)
beneficial ownership (as defined under Rule 13(d) of the Exchange Act) of a
majority equity interest in the Company pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, tender offer or
exchange offer or similar transactions involving the Company including, without
limitation, any single or multi-step transaction or series of related
transactions which is structured in good faith to permit such third party to
acquire beneficial ownership of a majority or greater equity interest in the
Company or (B) all or substantially all of the business or assets of the Company
(other than the transactions contemplated by this Agreement and the Option
Agreement). Any transaction described in the preceding sentence is herein
referred to as an "Acquisition Transaction."
(ii) The term "Superior Proposal" shall mean any bona fide
Acquisition Proposal which a majority of the members of the Board of Directors
determines in its good faith judgment (based on the written advice of
independent financial advisors) to be more favorable to the Company and the
holders of Common Stock than the transactions contemplated hereby (including,
without limitation, the Marketing Agreement), taken as a whole, and for which
financing is then committed or which, in the good faith judgment of a majority
of such members (based on the written advice of independent financial advisors)
is capable of being financed by such third party.
42
Section 5.5 Board of Directors and Officers. The Company shall cause the
Board of Directors of the Company, effective upon the Closing, to consist of
seven members, and shall cause the filing of the Charter Amendments to terminate
the classification of the Board of Directors. Until such time as their
successors are duly elected or appointed, effective upon the Closing, the
directors who shall serve shall be Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxxxxxx, Xxxxx X. Xxxxx, J. Xxxxxx Xxxxxxx, Xxxxx X. Xxxxx and an additional
Independent Director to be named by Holdings prior to the mailing of the Company
Proxy Statement. The Company shall also cause the Board of Directors of the
Surviving Corporation, immediately following the Closing, to consist of three
members, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx and J. Xxxxxx Xxxxxxx, who shall serve
until their successors are duly elected or appointed. The Surviving Corporation
shall cause the following individuals to be appointed to the offices indicated,
effective upon the Closing, to serve at the pleasure of the Board of Directors:
Xxxxxx Xxxxxx President
Xxxxxx Xxxxxx Vice President and CFO
Xxxxx Xxxxxxxx Vice President
Xxxxx Xxxxxx Vice President
Xxxxxx Xxxxx Vice President
Xxxx Xxxx Vice President
Xxx Xxxxxxx Vice President
Section 5.6 Amendments to Certificate of Incorporation and By-laws. The
Board of Directors shall adopt, subject to stockholder approval, the Charter
Amendments and By-law Amendments and submit such amendments for approval by the
stockholders of the Company at the Company Stockholder Meeting. The Charter
Amendments shall include a provision changing the name of the Company as set
forth therein. The Board of Directors shall recommend approval and adoption of
such amendments by the Company's stockholders, subject to Section 5.4(a).
Section 5.7 Stock Options. The Company shall not take any steps to
accelerate the vesting or exercisability of any Employee Stock Options or
Director Stock Options outstanding on the date of this Agreement, or otherwise
modify the terms of such options on or before the Closing, without the prior
written consent of Holdings. Promptly after the Closing Date (but effective as
of the Closing Date of the Merger), each of the outstanding Employee Stock
Options and each of the outstanding Director Stock Options shall be canceled,
and the holder thereof shall receive, in exchange therefore, a substitute option
(an "Adjusted Option") to purchase a number of shares of New Common Stock equal
to the number of shares of Old Common Stock subject to such canceled option
multiplied by
43
the Adjustment Fraction (as defined below), at a per share exercise price equal
to the per share exercise price of such canceled option multiplied by a fraction
equal to one divided by the Adjustment Fraction. Any Adjusted Option issued as
described above shall be subject to the same terms and conditions (other than
number of shares and exercise price) as the option for which it is exchanged,
including the terms relating to vesting (treating such Adjusted Options as if
they were granted at the same time as the options for which they were exchanged)
and the conditions relating to exercise.
For purposes of the adjustments described in this section, the "Adjustment
Fraction" means a fraction, the numerator of which equals the Current Market
Price (as defined below) of a share of Old Common Stock, and the denominator of
which equals the Current Market Price of a share of New Common Stock. The
"Current Market Price" of a share of Old Common Stock or a share of New Common
Stock means the average per share closing price for the five trading days
immediately preceding the Closing Date, in the case of the Old Common Stock, and
the five trading days immediately following the Closing Date, in the case of the
New Common Stock, as reported on the NASDAQ National Market.
Section 5.8 Update to Opinion of Financial Advisor. The Company shall
request and thereafter use its best efforts to obtain, prior to the mailing of
the Company Proxy Statement, an additional opinion of Xxxxxxxxx, Lufkin &
Xxxxxxxx, to the effect that as of such date the consideration to be received by
the Company and its stockholders, pursuant to the Transactions, taken as a
whole, is fair from a financial point of view to the Company and its
stockholders.
ARTICLE VI
COVENANTS OF HOLDINGS AND FDESI
Section 6.1 Conduct of FDESI Business. (a) Ordinary Course. During the
period from the date of this Agreement to the Closing Date, Holdings and FDESI
covenant that FDESI and Holdings (with respect to the business of FDESI) shall
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall,
in all material respects, be
44
unimpaired at the Closing Date. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Closing
Date, FDESI shall not:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (z) purchase, redeem or otherwise acquire any shares of capital
stock of FDESI or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents or reincorporate in any
jurisdiction;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof, except for such actions
undertaken in the ordinary course of business and consistent with past practice
and involving no more than $250,000 in the aggregate or (y) any assets that are
material, individually or in the aggregate, to FDESI;
(v) sell, lease, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of, any of its properties or assets, except sales
of properties or assets no longer used by FDESI in the conduct of its business
and sales of inventory in the ordinary course of business consistent with past
practice;
(vi) (y) incur any Indebtedness for borrowed money or guarantee
any such Indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of FDESI, guarantee any
debt securities of another person, enter into any "keep well" other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowing on an inter-company basis not in excess of $1,000,000 in
the aggregate incurred in the ordinary course of business consistent with past
practice, the endorsement of checks in the normal course of business
45
and the extension of credit in the normal course of business or (z) make any
loans, advances or capital contributions to, or investments in, any other
person, other than to FDESI;
(vii) make or agree to make any new capital expenditures or
commitments, purchases of property or acquisitions of other businesses, capital
assets or properties which, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $250,000 or enter into any new real property lease;
(viii) make any Tax election (other than in the ordinary course
of preparing and filing its Tax returns) or settle or compromise any material
Tax liability;
(ix) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, or liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of FDESI
included in the FDESI Disclosure Letter or incurred after the date of such
financial statements in the ordinary course of business consistent with past
practice, or waive the benefits of, or agree to modify in any manner, any
confidentiality or similar agreement to which FDESI is a party;
(x) adopt any shareholder rights or similar plan or take any
other action with the intention of, or which may have the effect of,
discriminating against the Company as a shareholder of FDESI (or any successor);
(xi) adopt or amend in any material respect any Plan;
(xii) enter into any contract, agreement, plan or arrangement
covering any director, officer or employee providing for the making of any
payments, the acceleration of vesting of any benefit or right or any other
entitlement contingent upon (A) the consummation of the transactions
contemplated hereby or by the Option Agreement or any acquisition by the Company
of securities of FDESI (whether by merger, tender offer, private or market
purchases or otherwise) or (B) the termination of employment after the
occurrence of any such contingency if such payment, acceleration of entitlement
would not have been provided but for such contingency; or amend any existing
contract, agreement, plan or arrangement to so provide.
46
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. Neither FDESI nor Holdings shall take any action that
would, or that could reasonably be expected to, result in (i) any of the
representations and warranties of Holdings or FDESI set forth in this Agreement
or the Option Agreement becoming untrue, or (ii) any of the conditions to the
Merger set forth in Article VIII, not being satisfied.
(c) Advice of Changes. FDESI shall promptly advise the Company orally
and in writing of any change or event having, or which, insofar as can
reasonably be foreseen, would have, a material adverse effect on the Merger or
the Recapitalization, or a FDESI Material Adverse Effect.
Section 6.2 Access to Information. From the date hereof until the
Closing, FDESI and Holdings (with respect to the business of FDESI) shall give
the Company, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to the offices,
properties, books and records of FDESI and Holdings (with respect to the
business of FDESI) and, to the extent FDESI may do so, the FDESI Joint Ventures,
shall furnish to the Company, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information as such persons may reasonably request to the extent available to
FDESI and shall instruct FDESI's employees, counsel and financial advisors to
cooperate with the Company in its investigation of the business of FDESI and the
FDESI Joint Ventures; provided, that no investigation pursuant to this Section
6.2 shall affect any representation or warranty given by FDESI to the Company
hereunder. All requests for information made pursuant to this Section 6.2 shall
be directed to the President of FDESI or such other persons as may be designated
by him.
Section 6.3 Certain Additional Agreements of Holdings. With respect to
paragraphs (a), (b), (c), (d) and (e), until April 30, 1999, and with respect to
paragraph (f), for the periods specified therein (in each case the "Standstill
Period"), Holdings and the Company agree:
(a) Neither Holdings nor any of its Affiliates shall enter into any
contract, agreement or transaction with the Company or any of its Affiliates
after the Closing Date that is material to the Company's business, taken as a
whole, without the prior approval of a majority of the Independent Directors (as
defined herein) except for (i) any contract, agreement or transaction
contemplated by the Marketing Agreement or the Option Agreement, (ii) any
contract, agreement or transaction
47
which is entered into between such parties in the ordinary course of business,
and (iii) any contract, agreement or transaction governed by paragraphs (b),
(c), (d) or (f);
(b) Neither Holdings nor any of its Affiliates shall, directly or
indirectly, purchase or otherwise acquire, any New Common Stock, securities of
the Company convertible into or exchangeable for New Common Stock or options,
rights, warrants and similar securities issued by the Company to acquire New
Common Stock, without the prior approval of a majority of the Independent
Directors, unless immediately after such purchase or acquisition, the percentage
of then outstanding New Common Stock that would be owned of record or
beneficially by Holdings of its Affiliates ("Holdings' Percentage") would not
exceed 65%, provided, however, that the foregoing restrictions on purchases
shall not apply to the exercise by Holdings of the Option; provided, however,
further, that if the Option is exercised by Holdings, the Option Shares held,
directly or indirectly, by Holdings shall be counted in any determination of
Holdings' Percentage with respect to any purchases by Holdings or its Affiliates
after the date of such exercise of the Option;
(c) The Company shall not, directly or indirectly, purchase any shares
of New Common Stock without the prior approval of a majority of the Independent
Directors, unless immediately after such repurchase, Holdings' Percentage would
not exceed 65%;
(d) Holdings shall not sell, transfer, mortgage or otherwise dispose of
any of the New Common Stock held by Holdings without the prior approval of a
majority of the Independent Directors; provided, however, that the prior
approval of the Independent Directors shall not be required if there occurs a
substantial and extreme adverse change in the business, prospects, or condition
(financial or otherwise) of the Company that arises from corresponding
substantial adverse changes of expected long term duration in the market for
environmental services;
(e) The Company shall not enter into any amendment or terminate or waive
any provision of this Agreement, the Option Agreement or the Marketing Agreement
without the prior approval of a majority of the Independent Directors; and
(f) Until April 30, 1999, Holdings shall vote all shares of New Common
Stock owned by it in favor of fixing the size of the Board of Directors of the
Company at not more than seven and in favor of not less than three Independent
Directors. Until the annual stockholders' meeting of the Company (or written
consent in lieu thereof) held in 1998, Holdings shall vote all shares of New
48
Common Stock owned by it in favor of Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxxx
(whom Holdings shall also cause to be nominated) in any election of members of
the Company's Board of Directors.
For purposes of this Agreement, "Independent Director" means a director
of the Company who is not (apart from such directorship) (i) an officer,
Affiliate, employee, principal stockholder, consultant or partner of Holdings or
any Affiliate of Holdings or of any entity that was dependent upon Holdings or
any Affiliate of Holdings for more than 3% of its revenues or earnings in its
most recent fiscal year, (ii) an officer, employee, consultant or partner of the
Company or any Affiliate of the Company or an officer,employee, principal
stockholder, consultant or partner of an entity that was dependent upon the
Company or any Affiliate of the Company for more than 3% of its revenues or
earnings in its most recent fiscal year (unless agreed to in writing by
Holdings) or (iii) an officer, director, employee, principal stockholder,
consultant or partner of a person that is a competitor of Holdings or any of its
Affiliates (unless agreed to in writing by Holdings) or of the Company or any of
its Affiliates of such competitor for more than 3% of its revenues or earnings
in its most recent fiscal year.
Section 6.4 Holdings Debt. On or before the Closing Date, any and all
Holdings Debt shall be cancelled and forgiven.
Section 6.5 Tax Indemnification. Subject to the provisions of Section
7.7(c) from and after the Closing Date, Holdings shall pay or cause to be paid
and shall indemnify and hold harmless the Company and any director, officer,
employee, advisor, parent, subsidiary or Affiliate of the Company, and any
successor thereof from any liability for or arising out of, any Taxes of
Holdings (including, without limiting the generality of the foregoing, any
obligation (including any joint and several liability pursuant to Treasury
Regulations Section 1.1502-6 or otherwise) to contribute to the payment of
Taxes) determined on a combined or consolidated basis (x) of Holdings and any
current or former member of Holdings' group of corporations filing on a combined
or consolidated basis for any taxable period or (y) attributable to the income,
business, property or operations of Holdings for which FDESI may be liable on
any basis, including, but not limited to, liability as a transferee or on a
joint and several basis under the consolidated return provisions in respect of a
pre-Closing Date tax period, or resulting from FDESI ceasing to be affiliated
with the affiliated group of corporations (as defined in Section 1504 of the
Code) of which Holdings is a member.
Section 6.6 Termination of Tax-Sharing Agreements. Before the Closing
Date, all agreements between FDESI and any member of Holdings' consolidated,
unitary or combined group of
49
corporations with respect to the apportionment of consolidated, unitary or
combined tax liability imposed by any taxing jurisdiction shall have been
terminated and all payments required to be made by FDESI to any other member of
any such group pursuant to any such agreement shall have been made, other than
payments referred to in Section 7.7(c) hereof or reflected in the FDESI
Disclosure Letter.
Section 6.7 Contract Indemnification. From and after the Closing Date
Holdings shall indemnify and hold harmless the Company and its Subsidiaries
(including FDESI) from and against any and all loss, cost and expense arising
from or as a result of a breach by Holdings or FDESI of the representations and
warranties contained in Section 4.13 hereof.
ARTICLE VII
COVENANTS OF HOLDINGS AND THE COMPANY
The parties hereto agree that:
Section 7.1 Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each party will use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
Transactions, including, without limitation, all reasonable efforts to oppose
any judgments, decrees or orders of the type referred to in Section 8.2(c).
Section 7.2 Certain Filings. The Company and Holdings shall cooperate
with one another (a) in connection with the preparation of the Company
Disclosure Documents, (b) in determining whether any action by or in respect of,
or filing with, any governmental body, agency or official, or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
Transactions and (c) in seeking any such actions, consents, approvals or waivers
or making any such filings, furnishing information required in connection
therewith or with the Company Disclosure Documents and seeking timely to obtain
any such actions, consents, approvals or waivers.
Section 7.3 Public Announcements. Holdings and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and will
not issue any such press release or make any such
50
public statement prior to such consultation unless required by law or a party
has not responded to reasonable efforts to effect such consultation.
Section 7.4 Marketing Agreement. Holdings, FDESI and the Company each
agree to execute and deliver the Marketing Agreement concurrently with the
Closing.
Section 7.5 Brokers or Finders. Each of Holdings and the Company
represents, as to itself, its subsidiaries and its Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with this Agreement or any of the transactions contemplated by
this Agreement, except Xxxxxxxxx, Lufkin & Xxxxxxxx whose fees and expenses will
be paid by the Company in accordance with the Company's agreement with such
firm, and Xxxxxxx Xxxxx, whose fees and expenses, except as provided in Section
10.4, will be paid by Holdings in accordance with Holdings' agreement with such
firm, and each of the Company and Holdings respectively agrees to indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other broker's, finder's or similar fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates in
connection with this Agreement or any of the transactions contemplated hereby.
Section 7.6 Notices of Certain Events. The parties hereto will notify
one another of:
(a) any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
of which such party has received notice or, to its knowledge, threatened,
against the Company or which relate to the consummation of the transactions
contemplated by this Agreement.
Section 7.7 Post-Closing Tax Matters. The following provisions shall
govern the allocation of responsibility for certain Tax matters following the
Closing:
51
(a) The Company shall prepare and file all FDESI tax returns which are
due, originally or as extended, after the Closing (other than income tax returns
with respect to periods for which a consolidated, unitary or combined return
includes Holdings and the operations of FDESI).
(b) The Company, Holdings and FDESI shall cooperate fully, as and to the
extent reasonably requested, in connection with the filing of tax returns and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and, upon request, the provision of
records and information which are reasonably relevant to the filing of tax
returns or any such audit, litigation or other proceeding and employees shall be
made available on a mutually convenient basis to provide information and
explanation of any material provided hereunder.
(c) FDESI shall reimburse Holdings for such portion of the tax liability
on all consolidated, unitary and combined Tax returns which include FDESI and
Holdings, as is attributable to FDESI. This portion shall be determined as if
FDESI had filed a separate return for such purposes and the highest marginal
corporate tax rate had applied to all of FDESI's income. Holdings and the
Company shall cooperate to allocate on a fair and reasonable basis tax
liabilities which are reported for periods after the Closing Date on
consolidated, unitary or combined returns which include both Holdings or its
affiliates and the Company or its affiliates.
Section 7.8 FDESI Employee Benefits. Holdings agrees to provide, on a
reimbursed cost basis, continued participation by FDESI Employees in the
Holdings benefit plans and programs listed in Schedule 4.15(a) of the FDESI
Disclosure Letter during the period from the Closing through December 31, 1996.
Section 7.9 Use of Fluor Xxxxxx Name. Effective upon Closing, Holdings
hereby grants to the Company the right and license to use the name "Fluor
Xxxxxx" in its corporate name and in the conduct of its business, without
payment of any license fee or royalty. In the event that at any time Holdings
holds less than 20% of the outstanding New Common Stock of the Company and
provided that Holdings is not in breach of any of its obligations under Section
6.3(d) hereof, Holdings may by written notice to the Company revoke this right
and license; provided that the Company shall change its corporate name and cease
using the name Fluor Xxxxxx as soon as reasonably possible but in no event later
than three months after such revocation.
52
Section 7.10 Non-Permitted Actions. For a period of one year after the
Closing the Company shall cause FDESI to maintain its corporate existence and
will not allow it to transfer any of the contracts to which it is a party.
ARTICLE VIII
CONDITIONS TO THE CLOSING
Section 8.1 Conditions to the Obligations of Each Party. The obligations
of each of the Company, Newco, Holdings and FDESI to consummate the Merger are
subject to the satisfaction of the following conditions (which may be waived in
whole or in part by the party against whom the waiver is to be effective, unless
such a waiver is prohibited by law):
(a) the Transactions, including the Charter Amendments and the
Recapitalization, shall have been approved by the holders of a majority of the
outstanding Common Stock;
(b) any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree of any court or other governmental body of competent
jurisdiction shall be in effect which prohibits or makes illegal the
consummation of the Merger or the effectiveness as between the parties of the
Marketing Agreement;
(d) all consents or actions by or in respect of or filings with any
governmental body, agency, official, or authority required to permit the
consummation of the Merger and the effectiveness as between the parties of the
Marketing Agreement as between the parties shall have been obtained, taken or
made (other than those consents, actions or filings which, if not obtained,
taken or made prior to the consummation of the Merger and the effectiveness as
between the parties of the Marketing Agreement, as would not have a Company
Material Adverse Effect); and
(e) there shall not be in effect any banking moratorium or suspension of
payments in respect of banks in the United States.
53
Section 8.2 Conditions to the Obligations of Holdings. The obligation of
Holdings and FDESI to consummate the Merger is subject to the satisfaction of
the following further conditions (which may be waived in whole or in part by
Holdings, unless such a waiver is prohibited by law):
(a) (i) the Company shall have performed, in all material respects, all
of its obligations hereunder required to be performed by it at or prior to the
Closing; (ii) each of the representations and warranties of the Company
contained in this Agreement shall be true in all material respects as of the
date hereof and as of the Closing (except to the extent such representations and
warranties are expressly made as of an earlier date) as if made at and as of
such time; and (iii) Holdings shall have received a certificate signed by an
officer of the Company to the foregoing effect;
(b) From the Interim Balance Sheet Date to the Closing Date, there shall
have been no Company Material Adverse Change;
(c) No action or proceeding before any court or governmental or
regulatory authority or body, United States federal or state or foreign, shall
have been constituted (and be pending) or threatened, by any government or
governmental authority, that seeks, or threatens to seek, to prevent or delay
the consummation of the Transactions or that challenges any of the terms or
provisions of this Agreement;
(d) No order, judgment or decree issued by any United States federal or
state or foreign governmental or regulatory authority or body, or by any court
of competent jurisdiction nor any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state or foreign
government or governmental authority that (i) prevents the consummation of the
Transactions; (ii) prohibits Holdings at any time after the Closing from
exercising all material rights and privileges pertaining to its ownership of the
Acquired Shares or the Option Shares purchasable upon exercise of the Option; or
(iii) materially and adversely affects the condition (financial or otherwise),
properties, assets, earnings, business or operations of the Company or a
Subsidiary shall be in effect;
(e) The Marketing Agreement shall have been executed and delivered by
the Company and shall be in full force and effect to the extent set forth
therein;
(f) The Charter Amendments shall have been filed with the Delaware
Secretary of State for filing in accordance with the Delaware Law;
54
(g) The Company shall have made the Company Deposit with the Exchange
Agent and furnished Holdings evidence, reasonably satisfactory to Holdings,
thereof; and
(h) The Company shall have furnished Holdings with:
(i) a copy of a resolution or resolutions duly adopted by the
Board of Directors of the Company approving this Agreement, the Option Agreement
and the Marketing Agreement, and the transactions contemplated hereby and
thereby and directing that a proposal to approve the Transactions submitted to a
vote of the stockholders of the Company, certified by the Secretary of the
Company;
(ii) a copy of a resolution or resolutions duly adopted by the
holders of a majority of the outstanding shares of Common Stock of the Company
approving the Transactions, certified by the Secretary of the Company; and
(iii) a favorable opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, counsel
for the Company, dated the Closing Date, with respect to the matters set forth
in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.9 and 3.11.
Section 8.3 Conditions to the Obligations of the Company. The obligation
of the Company to consummate the Merger and the Recapitalization is subject to
the satisfaction of the following further conditions (which may be waived in
whole or in part by the Company, unless such waiver is prohibited by law):
(a) (i) Each of Holdings and FDESI shall have performed, in all material
respects, all its obligations hereunder required to be performed by it at or
prior to the Closing; (ii) each of the representations and warranties of
Holdings and FDESI contained in this Agreement shall be true in all material
respects as of the date hereof and at and as of the Closing (except to the
extent such representations and warranties are expressly made as of an earlier
date) as if made at and as of such time; and (iii) the Company shall have
received a certificate signed by an officer of Holdings to the foregoing effect;
(b) The Agreement of Merger shall have been submitted to the California
Secretary of State for filing in accordance with the California Code;
55
(c) FDESI shall have made the FDESI Deposit with the Exchange Agent and
furnished the Company evidence, reasonably satisfactory to the Company, thereof
and evidence, reasonably satisfactory to the Company, of the Transfer
Authorization;
(d) Holdings shall have furnished the Company with:
(i) a certified copy of a resolution or resolutions duly adopted
by the Board of Directors of Holdings approving this Agreement, the Option
Agreement and the Marketing Agreement, and the transactions contemplated hereby
and thereby;
(ii) a certified copy of a resolution or resolutions duly
adopted by the Board of Directors and sole stockholder of FDESI approving this
Agreement; and
(iii) a favorable opinion of Xxxxxxxx X. Xxxxxx counsel for
Holdings, dated the Closing Date with respect to the matters set forth in
Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.8 and 4.10;
(e) from the FDESI Balance Sheet Date to the Closing Date there shall
have been no FDESI Material Adverse Change;
(f) No action or proceeding before any court or governmental or
regulatory authority or body, United States federal or state or foreign, shall
have been constituted (and be pending) or threatened, by any government or
governmental authority, that seeks, or threatens to seek, to prevent or delay
the consummation of the Transactions or that challenges any of the terms or
provisions of this Agreement;
(g) No order, judgment or decree issued by any United States federal or
state or foreign governmental or regulatory authority or body, or by any court
of competent jurisdiction nor any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state or foreign
government or governmental authority that (i) prevents the consummation of the
Transactions; (ii) prohibits Holdings at any time after the Closing from
exercising all material rights and privileges pertaining to its ownership of the
stock of the Surviving Corporation; or (iii) materially and adversely affects
the condition (financial or otherwise), properties, assets, earnings, business
or operations of FDESI, shall be in effect; and
56
(h) The Marketing Agreement shall have been executed and delivered by
Holdings and shall be in full force and effect to the extent set forth therein.
(i) The Company shall have received the additional opinion of Xxxxxxxxx,
Luftkin & Xxxxxxxx referenced in Section 5.8.
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Closing (notwithstanding any approval of the Transactions by the
stockholders of the Company):
(i) by mutual written consent of the Company and Holdings;
(ii) by the Company or Holdings, if the Closing shall not have
occurred on or before April 30, 1996; provided, however, that the right to
terminate this Agreement under this clause (ii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date;
(iii) by the Company or Holdings, if there shall be any law or
regulation adopted or amended after the date hereof that makes consummation of
the Merger or the effectiveness as between the parties of the Option Agreement
or the Marketing Agreement illegal or otherwise prohibited or any judgment,
injunction, order or decree enjoining Holdings or the Company from consummating
the Merger or the effectiveness as between the parties of the Option Agreement
and the Marketing Agreement is entered and such judgment, injunction, order or
decree shall become final and nonappealable; provided, that the party seeking to
terminate this Agreement pursuant to this clause (iii) shall have used all
reasonable efforts to remove such judgment, injunction, order or decree;
(iv) by Holdings, or by the Company so long as the Company has
complied with Section 5.4, if the Board of Directors of the Company fails to
recommend, or modifies or withdraws its recommendation to the Company's
stockholders that they vote to approve the Transactions or shall hav recommended
to the Company's stockholders an Acquisition Proposal.
57
(v) by Holdings if it is not in material breach of its
obligations under this Agreement, and a person or group (as defined in Section
13(d)(iii) of the Exchange Act) (other than Holdings or any of its Affiliates)
shall have (a) made an Acquisition Proposal and the Company shall hav commenced
discussions with such person or group or (b) become the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of at least 20% of the
outstanding shares of Common Stock;
(vi) (a) by Holdings or the Company, if the Company Stockholder
Meeting shall have been held and the stockholders of the Company shall have
failed to approve the Transactions at such meeting or (b) by Holdings if the
Company Stockholder Meeting shall not have been held on or before April 30,
1996;
(vii) by Holdings if there has been a breach of any
representation, warranty, covenant or agreement of the Company which breach is
incurable, or which is not cured on or prior to April 30, 1996; and/or
(viii) by the Company if there has been a breach of any
representation, warranty, covenant or agreement of Holdings contained in this
Agreement, which breach is incurable or has not been cured on or prior to April
30, 1996.
Section 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except (a) to the extent such
termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this Agreement
and (b) that the agreements contained in Section 7.5, Article X and this Section
9.2 shall survive the termination hereof.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given (and shall be deemed
to have been given upon receipt) if delivered in person or sent by facsimile,
telegram, telex, by registered or certified mail (postage prepaid, return
receipt requested) or by reputable overnight courier to the respective parties
at the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 10.1):
58
if to Holdings, to:
Fluor Xxxxxx, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Fluor Xxxxxx, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
if to the Company, to:
Groundwater Technology, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Groundwater Technology, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
and:
Xxxxx, Xxxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
Facsimile: (000) 000-0000
59
Section 10.2 Non-Survival of Representations, Warranties and Covenants;
Indemnification. All representations, warranties and agreements contained in
this Agreement or in any instrument delivered pursuant to this Agreement (except
the Option Agreement) shall terminate and be extinguished at the Closing or the
earlier date of termination of this Agreement pursuant to Section 9.1, as the
case may be, except that this Section 10.2 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Closing, (including, without limiting the generality of the foregoing, Sections
6.3, 6.5, 6.7, 7.5, 7.7, 7.8, 7.9, 7.10 and 10.4.)
Section 10.3 Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Closing, if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment, by the Company
and Holdings or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the authorization and approval of the
Transactions by the stockholders of the Company, no such amendment or waiver
shall, without the further approval of such stockholders, alter or change any
term of the Charter Amendments or the By-law Amendments, respectively, if such
alteration or change would adversely affect the holders of any shares of capital
stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 10.4 Fees and Expenses. (a) Except as otherwise provided in this
Section 10.4, all costs and expenses incurred by Holdings or FDESI in connection
with this Agreement shall be paid by Holdings, and all costs and expenses
incurred by the Company or Newco shall be paid by the Company.
(b) So long as Holdings shall not have materially breached its
obligations under this Agreement, the Company will pay Holdings, in immediately
available funds, the amounts referred to below (x) promptly, but in no event
later than two business days, after the termination of this Agreement pursuant
to clause (iv) of Section 9.1 hereof or (y) simultaneously with the consummation
of an Acquisition Transaction effected after the termination of this Agreement
pursuant to clause (v), or paragraph (a) of clause (vi) of Section 9.1 hereof,
provided that (i) prior to or within 60 days after the termination of this
Agreement as aforesaid, an Acquisition Proposal has been received and (ii)
60
if the Acquisition Transaction involves a merger, sale of assets, purchase of
shares from the Company or similar business combination, the agreement with
respect thereto shall have been entered into within twelve months of the date of
termination of this Agreement, or if the Acquisition Transaction involves a
tender or exchange offer, the tender or exchange offer shall have been commenced
within such twelve month period; and (z) simultaneously with the consummation of
an Acquisition Transaction effected after the termination of this Agreement
pursuant to clause (vii) of Section 9.1 due to a breach by the Company of a
covenant or agreement contained in this Agreement (it being understood that
termination pursuant to such clause (vii) due to a breach of a representation or
warranty shall not give rise to any fee payment or expense reimbursement
obligation hereunder, but without prejudice to any other rights of Holdings with
respect to such a breach), if (i) prior to or within 60 days after the
termination of this Agreement as aforesaid, any negotiations or discussions have
been held with, or information supplied to, any third party who makes an
Acquisition Proposal and (ii) the agreement with respect to such or any other
Acquisition Transaction is entered into, or if the Acquisition Transaction is a
tender or exchange offer, such offer is commenced, within twelve months after
such termination. In addition, if the Closing does not occur because of a
failure by the Company to obtain the additional opinion of Xxxxxxxxx, Xxxxxx and
Xxxxxxxx referenced in Section 5.8 and such failure is not due to an FDESI
Material Adverse Change, then within two business days after the termination of
the Agreement pursuant to Section 9.1 hereof, the Company shall pay Holdings, in
immediately available funds, the amounts referred to below. The amounts referred
to in each of the two preceding sentences are (a) a termination fee (the
"Termination Fee") of $3,000,000 and (b) up to an additional $750,000 as
reimbursement for fees and expenses actually incurred by Holdings and FDESI in
connection with this Agreement and the transactions contemplated hereby. For
purposes of the foregoing, the reimbursement referred to in clause (b) shall be
payable only if and to the extent Holdings provides a written statement to the
Company that it or FDESI has incurred such fees and expenses.
Section 10.5 Successor and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto. This Agreement shall be binding
upon and is solely for the benefit of each of the parties hereto and their
respective successors and assigns, and nothing in this Agreement is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
61
Section 10.6 Entire Agreement. This Agreement (including all Exhibits
and Disclosure Letters hereto), together with the Confidentiality Agreements
dated July 7, 1995, and September 26, 1995, between the Company and Holdings,
constitutes the entire agreement among the parties and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof.
Section 10.7 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
Section 10.8 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 10.9 Severability. If any provision of this Agreement or the
application of any provision hereof to any party hereto or set of circumstances
is held invalid, the remainder of this Agreement and the application of such
provision to the other parties hereto or sets of circumstances shall not be
affected, unless the provisions held invalid shall substantially impair the
benefits of the remaining portions of this Agreement.
Section 10.10 "To Knowledge". Any reference herein to the "knowledge of
the Company (or FDESI)" or "known to the Company (or FDESI)" or any variation
thereof shall mean to the actual knowledge of one or more officers of the
Company or FDESI, as the case may be.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date and year
first above written.
FLUOR XXXXXX, INC.
By: /s/ X.X. Xxxxx
Name: X.X. Xxxxx
Title: Vice President
FLUOR XXXXXX ENVIRONMENTAL SERVICES, INC.
By: /s/ X.X. Xxxxx
Name: X.X. Xxxxx
Title: President
GROUNDWATER TECHNOLOGY, INC.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President
GTI ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President
63
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GROUNDWATER TECHNOLOGY, INC.
GROUNDWATER TECHNOLOGY, INC., a Delaware corporation (the
"Corporation"), hereby certifies and provides as follows:
1. The name of the Corporation is Groundwater Technology, Inc.
2. This Amended and Restated Certificate of Incorporation (the "Restated
Certificate") was duly adopted in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware.
3. Immediately upon filing this Amended and Restated Certificate, the
text of the present Restated Certificate of Incorporation is hereby amended to
read in full as set forth below:
FIRST. The name of the Corporation is Fluor Xxxxxx/GTI, Inc.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH. At the time the filing of this Restated Certificate with the
Secretary of State of the State of Delaware becomes effective:
(a) Each outstanding share of Common Stock, $.01 par value per share, of
the Corporation (the "Old Common Stock"), shall be changed into and reclassified
as .5274 shares of the Common Stock, $.001 par value per share (the "New Common
Stock"), of the Corporation.
(b) If the event described in subsection (a) above results in any
stockholder being entitled to receive a fraction of a share, the holder thereof
shall be entitled to receive (after aggregating all fractional shares of New
Common Stock to be received by the holder) an amount of cash (rounded to
the nearest whole cent) equal to the product of (i) the fraction multiplied by
(ii) the average of the closing price of the Old Common Stock as quoted on the
Nasdaq National Market for the five (5) days immediately prior to the effective
date hereof.
(c) All authorized but unissued shares of Old Common Stock shall be
eliminated.
Upon the effective filing hereof, the conversion of the issued and
outstanding shares of Old Common Stock into issued and outstanding shares of New
Common Stock shall occur automatically without any further action by the holders
of such shares of Old Common Stock and whether or not the certificates
representing the shares of Old Common Stock are surrendered to the Corporation;
provided, however, that the Corporation shall not be obligated to issue
certificates evidencing the shares of New Common Stock issuable upon such
conversion unless certificates evidencing such shares of Old Common Stock which
have been converted are either delivered to the Corporation, as hereinafter
provided, or the holder notifies the Corporation that such certificates have
been lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection therewith and upon the request of the Corporation gives the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
Upon the occurrence of the automatic conversion of the Old Common Stock,
the holders of Old Common Stock shall surrender the certificates representing
such shares at the offices of the Corporation or such other location as the
Corporation may direct. Thereupon, there shall promptly be issued and delivered
to such holder, in the name shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of New
Common Stock, into which the shares of Old Common Stock surrendered are
convertible, dated as of the date on which such automatic conversion occurs.
Upon the effectiveness hereof and after giving effect to the conversion
set forth above, the authorized capital stock of the Corporation shall be as
follows:
The total number of shares of stock which the Corporation shall have
authority to issue is 25,000,000 shares of Common Stock, par value $.001 per
share (the "Common Stock"), and 1,000,000 shares of Preferred Stock, par value
$.01 per share (the "Preferred Stock"). A description of the respective classes
of stock and a statement of the designations, preferences, limitations and
relative rights of the Preferred Stock, and Common Stock and the limitations on
or denial of the voting rights of the shares of such classes and series of stock
are as follows:
A. PREFERRED STOCK.
The Board of Directors is expressly authorized to provide for the
issuance of all or any shares of the Preferred Stock, and to fix for the
Preferred Stock such voting powers, full or limited, or no voting power, and
such designations, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted by the
Board of Directors providing for the issuance of such shares and as may be
permitted by the General Corporation Law of the
2
State of Delaware, including, without limitation, the authority to provide that
any such shares may be (i) subject to redemption at such time or times, at such
price or prices at such rate or rates, and with such adjustments; (ii) entitled
to receive dividends (which may be cumulative or non-cumulative) at such rates,
on such conditions, and at such times, and payable in preference to, or in such
relation to, the dividends payable on any other class or classes or on any other
series of stock; (iii) entitled to such rights upon the dissolution of, or upon
any distribution of the assets of, the Corporation; or (iv) convertible into, or
exchangeable for, shares of any other class or classes of stock, or of any other
series of the same or any other class or classes of stock, of the Corporation at
such price or prices or at such rates of exchange and with such adjustments, all
as may be stated in such resolution or resolutions.
B. COMMON STOCK.
1. Relative Rights of Preferred and Common Stock. All voting powers,
designations, preferences or relative participating, optional or other special
rights, and such qualifications, limitations, or restrictions, thereof of the
Common Stock are expressly made subject and subordinate to those that may be
fixed with respect to any shares of the Preferred Stock.
2. Voting Rights. Except as provided by law or this Amended and Restated
Certificate of Incorporation, each holder of Common Stock shall have one vote in
respect of each share of stock held by him of record on the books of the
Corporation for the election of directors and on all matters submitted to a vote
of stockholders of the Corporation.
3. Dividends. Subject to the preferential rights, if any, of the
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when and if declared by the Board of Directors, out of the assets of
the Corporation which are by law available therefor, dividends payable either in
cash, in property, or in shares of capital stock.
4. Dissolution, Liquidation or Winding-Up. In the event of any
dissolution, liquidation or winding-up of the affairs of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock, holders of Common Stock shall be
entitled, unless otherwise provided herein by law, to receive all of the
remaining assets of the Corporation of whatever kind available for distribution
to stockholders ratably in proportion to the number of shares of Common Stock
held by them respectively. The Board of Directors may distribute in kind to the
holders of Common Stock such remaining assets to any other corporation, trust or
other entity and receive payment therefore in cash, stock or obligations of such
other corporation, trust or entity or any combination so received and distribute
any balance thereof in kind to holders of Common Stock. Neither the merger or
consolidation of the Corporation into or with any other corporation nor the
merger of any other corporation into it, nor any purchase or redemption of
shares of stock of the Corporation of any class, shall be deemed to be a
dissolution, liquidation or winding-up or the Corporation for the purposes of
this paragraph.
FIFTH. The Corporation is to have perpetual existence.
3
SIX. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the By-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole Board, to designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board may designate one or more of the directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The By-laws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
or in the By-laws of the Corporation, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution or amending the
By-laws of the Corporation; and, unless the resolution or By-laws, expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and assets
of the Corporation, including its good will and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in whole
or in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its Board of Directors
shall deem expedient and for the best interests of the Corporation.
SEVENTH. Meetings of stockholders may be held within or without the
State of Delaware, as the By-laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-laws of the Corporation.
4
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the matter now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this revision.
NINTH. The Corporation eliminates the personal liability of each member
of its Board of Directors to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that the foregoing
shall not eliminate the liability of the director (i) for any breach of such
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware
Code or (iv) for any transaction from which such director derived an improper
personal benefit.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seal this ____ day of _______________ 1996.
GROUNDWATER TECHNOLOGY, INC.
By:__________________________
ATTEST:_____________________ Xxxxxx X. Xxxxxx
President
5
EXHIBIT B
BY-LAWS
OF
FLUOR XXXXXX/GTI, INC.
(A Delaware Corporation)
As amended through: __________________
FLUOR XXXXXX/GTI, INC.
BY-LAWS
TABLE OF CONTENTS
Page
ARTICLE 1 CERTIFICATE OF INCORPORATION
Section 1.1 Contents
Section 1.2 Certificate in Effect
ARTICLE 2 MEETING OF STOCKHOLDERS
Section 2.1 Place
Section 2.2 Annual Meeting
Section 2.3 Special Meeting
Section 2.4 Notice of Meetings
Section 2.5 Affidavit of Notice
Section 2.6 Quorum
Section 2.7 Voting Requirements
Section 2.8 Proxies and Voting
Section 2.9 Stockholder List
Section 2.10 Record Date
Section 2.11 Notice of Stockholder Business
ARTICLE 3 DIRECTORS
Section 3.1 Enumeration; Election and Term of Office
Section 3.2 Duties
Section 3.3 Compensation
Section 3.4 Reliance on Books
ARTICLE 4 MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Place
Section 4.2 Annual Meeting
Section 4.3 Regular Meetings
Section 4.4 Special Meetings
Section 4.5 Quorum
Section 4.6 Action Without Meeting
Section 4.7 Telephone Meetings
ARTICLE 5 COMMITTEES OF DIRECTORS
Section 5.1 Designation
Section 5.2 Records of Meetings
-i-
ARTICLE 6 NOTICES
Section 6.1 Method of Giving Notice
Section 6.2 Waiver
ARTICLE 7 OFFICERS
Section 7.1 In General
Section 7.2 Election of President, Secretary and Treasurer
Section 7.3 Election of Other Officers
Section 7.4 Salaries
Section 7.5 Term of Office
Section 7.6 Duties of President and Chairman of the Board
Section 7.7 Duties of Vice President
Section 7.8 Duties of Secretary
Section 7.9 Duties of Assistant Secretary
Section 7.10 Duties of Treasurer
Section 7.11 Duties of Assistant Treasurer
ARTICLE 8 RESIGNATIONS, REMOVALS AND VACANCIES
Section 8.1 Directors
Section 8.2 Officers
ARTICLE 9 CERTIFICATE OF STOCK
Section 9.1 Issuance of Stock
Section 9.2 Right to Certificate; Form
Section 9.3 Facsimile Signature
Section 9.4 Lost Certificates
Section 9.5 Transfer of Stock
Section 9.6 Registered Stockholders
ARTICLE 10 EXECUTION OF PAPERS
ARTICLE 11 FISCAL YEAR
ARTICLE 12 SEAL
ARTICLE 13 OFFICES
ARTICLE 14 INDEMNIFICATION
Section 14.1 Actions other than by or in the Right of the Corporation
Section 14.2 Actions by or in the Right of the Corporation
Section 14.3 Success on the Merits
Section 14.4 Specific Authorization
Section 14.5 Advance Payment
Section 14.6 Non-Exclusivity
Section 14.7 Insurance
Section 14.8 Continuation of Indemnification and Advancement of Expenses
Section 14.9 Severability
Section 14.10 Intent of Article
ARTICLE 15 AMENDMENTS
iii
FLUOR XXXXXX/GTI, INC.
formerly
GROUNDWATER TECHNOLOGY, INC.
ARTICLE 1. CERTIFICATE OF INCORPORATION
Section 1.1 Contents. The name, location of principal office and
purposes of the Corporation shall be as set forth in its Amended and Restated
Certificate of Incorporation, These Bylaws, the powers of the Corporation and of
its Directors and stockholders, and all matters concerning the conduct and
regulation of the business of the Corporation shall be subject to such
provisions in regard thereto, if any, as are set forth in said Amended and
Restated Certificate of Incorporation. The Amended and Restated Certificate of
Incorporation is hereby made a part of the se Bylaws.
Section l.2 Certificate in Effect. All references in these By-laws to
the Amended and Restated Certificate of Incorporation shall be construed to mean
the Amended and Restated Certificate of Incorporation of the Corporation as from
time to time amended, including (unless the context shall otherwise require) all
certificates and any agreement of consolidation or merger filed pursuant to the
Delaware General Corporation Law, as amended.
ARTICLE 2. MEETING OF STOCKHOLDERS
Section 2.1 Place. All meetings of the stockholders may be held at such
place either within or without the State of Delaware as shall be designated from
time to time by the Board of Directors as stated in the notice of the meeting or
in any duly executed waiver of notice thereof.
Section 2.2 Annual Meeting. Annual meetings of stockholders shall be
held either in the month of September or October of each year at such specific
date and time as shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting. If such annual meeting has not been
held as herein provided, a special meeting of the stockholders in lieu of the
annual meeting may be held, and any business transacted or elections held at
such special meeting shall have the same effect as if transacted or held at the
annual meeting, and in such case all references in these By-laws, except in this
Section 2.2, to the annual meeting of the stockholders shall be deemed to refer
to such special meeting.
Section 2.3 Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Amended and Restated Certificate of Incorporation, may be called by the Board of
Directors and shall be called by the President or Secretary at the request in
writing of a majority of the Directors then in office. Such request shall state
the purpose or purposes of the proposed meeting.
Section 2.4 Notice of Meetings. A written notice of all meetings of
stockholders stating the place, date and hour of the meeting and, in the case of
a special meeting, the purpose or purposes for which the special meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
Section 2.5 Affidavit of Notice. An affidavit of the Secretary or an
Assistant Secretary or the transfer agent of the Corporation that notice of a
stockholders meetings has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. Section
2.6 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute or by the
Amended and Restated Certificate of Incorporation. If, however, such quorum
shall not be present or represented by any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, except as hereinafter provided, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be presented or represented any business may be transacted which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.7 Voting Requirements. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any questions brought
before such meeting, unless the question is one upon which, by express provision
of any applicable statute or of the Amended and Restated Certificate of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such questions.
Section 2.8 Proxies and Voting. Unless otherwise provided in the Amended
and Restated Certificate of Incorporation, each stockholder shall at every
meeting of the stockholders be entitled to one vote in person or by proxy for
each share of the capital stock having voting power held by such stockholder,
but no proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period. Persons holding stock in a fiduciary capacity
shall be entitled to vote the shares so held, and persons whose stock is pledged
shall be entitled to vote the pledged shares, unless in the transfer by the
pledgor on the books of the Corporation he shall have expressly empowered the
pledgee to vote said shares, in which case only the pledgee, or his proxy, may
represent and vote such shares. Shares of the capital stock of the Corporation
owned by the Corporation shall not be voted, directly or indirectly.
Section 2.9 Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days Prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be
2
specified in the notice of the meeting or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The original or duplicate stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list, the stock ledger or the books of the Corporation, or to vote
in person or by proxy at any meeting of stockholders.
Section 2.10 Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
If no record date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to Corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day which the first
written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
Section 2.11 No Stockholder Business. (a) For a proposal to be properly
brought before an annual meeting by a stockholder or for a stockholder to
nominate a person or persons for election as directors at an annual meeting or
any special meeting at which directors are to be elected, the stockholder must
give timely notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive offices of the Corporation not less than 45 days, but
not more than 60 days, prior to the meeting; provided, however, if less than 60
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the 15th business day following the day
on which such notice or public disclosure of the date of the meeting is made.
(b) A stockholder's notice to the Secretary relating to a proposal shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief
3
description of the proposal desired to be brought before the annual meeting,
(ii) the name and address, as they appear on the Corporation's books, of the
stockholder who intends to make the proposal and any other stockholders known by
such stockholder to support such proposal, (iii) the class and number of shares
of the Corporation's capital stock which are beneficially owned by the
stockholder and by any other stockholders known by such stockholder to support
such proposal as of the date of such stockholder notice, and (iv) any financial
interest of the stockholder in such proposal.
(c) A stockholder's notice to the Secretary relating to a nominee for
election as a director shall set forth (i) the name and address, as they appear
on the Corporation's books, of the stockholder who intends to make the
nomination and any other stockholder's known by such stockholder to support the
nomination, (ii) the class and number of shares of the Corporation's capital
stock which are beneficially owned by the stockholder and by any other
stockholders known by such stockholder to support such proposal as of the date
of such stockholder notice, (iii) a representation that such stockholder is a
holder of record of stock of the Corporation entitled to vote as such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice, (iv) a description of all
arrangements or understandings between such stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by such stockholder, (v) such other
information regarding each nominee proposed by such stockholder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had each nominee been nominated,
or intended to be nominated by the Board of Directors, and (vi) the consent of
each nominee to serve as a director of the Corporation if elected.
(d) The Board of Directors, or a designated committee thereof, may
determine whether a notice has complied with the requirements of this Section
2.11, and may reject as invalid any stockholder proposal or nomination which was
not the subject of a notice timely made in accordance with, and containing all
information required by, the terms of this Section 2.11. If neither the Board of
Directors nor such committee a determination as to the compliance with the
requirements of this Section 2.11, the presiding officers at the meeting shall
determine and declare at the meeting whether such notice has so complied. If the
Board of Directors or a designated committee thereof or the presiding officer
determines that a stockholder proposal or nomination was the subject of a notice
made in accordance with the terms of this Section 2.11, and if the stockholder
giving such notice shall make such proposal or nomination, the presiding officer
shall so declare at the meeting, and ballots shall be provided for use at the
meeting with respect to such proposal or nomination. If the Board of Directors
or a designated committee thereof or the presiding officer determines that a
stockholder proposal or nomination was not the subject of a notice made in
accordance with the terms of this Section 2.11, and if the stockholder giving
such notice shall make such proposal or nomination, the presiding officer shall
so declare at the meeting and any such proposal shall not be acted upon at the
meeting.
(e) Notwithstanding the foregoing, a stockholder may present at an
annual meeting any proposal which such stockholder has caused to be included in
the Corporation's
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proxy materials pursuant to Rule 14a-8 promulgated pursuant to the Securities
Exchange Act of 1934, as amended.
(f) This Section 2.11 shall not prevent the consideration and approval
or disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
ARTICLE 3. DIRECTORS
Section 3.l Enumeration; Election and Term of Office. The Board of
Directors shall consist of not more than seven Directors, except that whenever
there shall be only one stockholder the number of Directors shall be not less
than one. Except in the case of vacancies as set forth in Article 8, the
Directors shall be chosen at the annual meeting of the stockholders by such
stockholders as have the right to vote thereon, and each Director shall hold
office until the next annual meeting of the stockholders and until his successor
is elected and qualified, unless he sooner resigns or is removed in accordance
with Article 8 below.
Section 3 2 Duties. The business of the Corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Amended and Restated Certificate of Incorporation or by these
By-laws directed or required to be exercised or done by the stockholders.
Section 3.3 Compensation. Unless otherwise restricted by the Amended and
Restated Certificate of Incorporation or these By-laws, the Board of Directors
shall have the authority to fix the compensation of Directors. The Directors may
be paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefore. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 3.4 Reliance on Books. A member of Board of Directors or a
member of any committee designated by the Board of Directors shall, in the
performance of his duties, be duly protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any committee, or in relying in
good faith upon other records of the Corporation.
ARTICLE 4. MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Place. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
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Section 4.2 Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders or any special meeting held in lieu thereof and no notice of such
meeting shall be necessary to the newly elected Directors in order legally to
constitute the meeting.
Section 4.3 Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board.
Section 4.4 Special Meetings. Special meetings of the Board may be
called by the Chairman or President on two days' notice to each Director either
personally or by mail or by telegram; special meetings shall be called by the
President or Secretary in like manner and on like notice on the written request
of two Directors unless the Board consists of only one Director, in which case
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of the sole Director.
Section 4.5 Quorum. At all meetings of the Board a majority of the
Directors then in office shall constitute a quorum for the transaction of
business and, except as otherwise provided in the Amended and Restated
Certificate of Incorporation or these By-laws, the act of a majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
statute or by the Amended and Restated Certificate of Incorporation. If a quorum
shall not be present at any meeting of the Board of Directors, the Directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 4.6 Action Without Meeting. Unless otherwise restricted by the
Amended and Restated Certificate of Incorporation or these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 4.7 Telephone Meetings. Unless otherwise restricted by the
Amended and Restated Certificate of Incorporation or these By-laws, members of
the Board of Directors, or any committee designated by the Board of Directors,
may participate in a meeting of the Board of Directors, or any committee, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
ARTICLE 5. COMMITTEES OF DIRECTORS
Section 5.1 Designation. (a) The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the Directors of the Corporation. The
Board may designate one or more Directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
6
(b) In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
(c) Any such committee, to the extent provided in the resolution of the
Board of Directors designating the committee, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the Amended
and Restated Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the By-laws of the Corporation and, unless the
resolution or the Amended and Restated Certificate of Incorporation so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 5.2 Records of Meetings. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
ARTICLE 6. NOTICES
Section 6.1 Method of Giving Notice. Whenever, under any provision of
the law or of the Amended and Restated Certificate of Incorporation or of these
By-laws, notice is required to be given to any Director or stockholder, such
notice shall be given in writing by the Secretary or the person or persons
calling the meeting by leaving such notice with such Director or stockholder at
his residence or usual place of business or by mailing it addressed to such
Director or stockholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to Directors may also be given by telegram.
Section 6.2 Waiver. Whenever any notice is required to be given under
any provision of law or of the Amended and Restated Certificate of Incorporation
or of these By-laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting, except when the person
attends the meeting for express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
ARTICLE 7. OFFICERS
Section 7.1 In General. The officers of the Corporation shall be chosen
by the Board of Directors and shall include a President, a Secretary and a
Treasurer. The Board of Directors may also choose a Chairman of the Board, one
or more Vice Presidents, Assistant Secretaries and
7
Assistant Treasurers. Any number of offices may be held by the same person,
unless the Amended and Restated Certificate of Incorporation or these By-laws
otherwise provide. In addition, the President may designate one or more
employees of the Corporation having the title of vice president or assistant
vice president, but who shall not be officers of the Corporation, who shall hold
such titles at the pleasure of the President and who shall have such powers and
duties as the President may from time to time designate
Section 7.2 Election of President, Secretary and Treasurer. The Board of
Directors at its first meeting after each annual meeting of stockholders shall
choose a President, a Secretary and a Treasurer.
Section 7.3 Election of Other Officers. The Board of Directors may
appoint such other officers and agents as it shall deem appropriate who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board.
Section 7.4 Salaries. The salaries of all officers and agents of the
Corporation may be fixed by the Board of Directors.
Section 7.5 Term of Office. The officers of the Corporation shall hold
office until their successors are chosen and qualify. Any officer elected or
appointed by the Board of Directors may be removed at any time in the manner
specified in Section 8.2.
Section 7.6 Duties of President and Chairman of the Board. The Board
shall have a Chairman of the Board who shall preside at all meetings of
stockholders and at all meetings of the Board of Directors. The President shall
be the chief executive officer of the Corporation, shall preside at meetings of
the Board of Directors in the absence of the Chairman of the Board, shall have
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. The Chairman of the
Board, if any, shall make his counsel available to the other officers of the
Corporation, shall be authorized to sign stock certificates on behalf of the
Corporation, shall preside at all meetings of the Directors at which he is
present, and, in the absence of the President at all meetings of the
stockholders, and shall have such other duties and powers as may from time to
time be conferred upon him by the Directors.
Section 7.7 Duties of Vice President. In the absence of the President or
in the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated by the Directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the President not otherwise
conferred upon the Chairman of the Board, if any, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President. The
Vice Presidents shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
8
Section 7.8 Duties of Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the stockholders and record all
the proceedings of the meetings of the Corporation and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, except as otherwise provided in these By-laws, and shall perform such
other duties as may be prescribed by the Board of Directors or President, under
whose supervision he shall be. He shall have charge of the stock ledger (which
may, however, be kept by any transfer agent or agents of the Corporation under
his direction) and of the corporate seal of the Corporation.
Section 7.9 Duties of Assistant Secretary. The Assistant Secretary, or
if there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors (or if there be no such determination, then in the order
of their election) shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 7.10 Duties of Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers from such
disbursements, and shall render the President and the Board of Directors, at its
regular meetings, or when the Board of Directors so requires, an account of all
of his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of this office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 7.11 Duties of Assistant Treasurer. The Assistant Treasurer, or
if there shall be more than one, the Assistant Treasurers in the order
determined by the Board of Directors (if there be no such determination, then in
the order of their election), shall, in the absence of the Treasurer or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
ARTICLE 8. RESIGNATIONS, REMOVALS AND VACANCIES
Section 8.1 Directors. (a) Resignations. Any Director may resign at any
time by giving written notice to the Board of Directors or the President or the
Secretary. Such resignation shall take effect at the time specified therein; and
unless, otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
9
(b) Removals. Any Director may be removed from office or the entire
Board of Directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors, unless
otherwise specified by law or the Amended and Restated Certificate of
Incorporation.
The Directors may terminate or modify the authority of any agent or
employee. The Directors may remove any officer from office with or without
assignment of cause by vote of a majority of the Directors then in office.
If cause is assigned for removal of any Director or officer, such
Director or officer may be removed only after a reasonable notice and
opportunity to be heard before the body proposing to remove him.
No Director or officer who resigns or is removed shall have any right to
any compensation as such Director or officer for any period following his
resignation or removal, or any right to damages on account of such removal
whether his compensation be by the month or by the year or otherwise, provided,
however, that the foregoing provision shall not prevent such Director or officer
from obtaining damages for breach of any contract of employment legally binding
upon the Corporation.
(c) Vacancies. Vacancies resulting from any increase in the authorized
number of Directors or any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office or other
cause may he filled only by a majority vote of the Directors then in office,
though less than a quorum.
If the office of any officer becomes vacant, the Directors may choose or
appoint a successor by vote of a majority of the Directors present at the
meeting at which such choice or appointment is made.
Each successor director or officer shall hold office for the unexpired
term of his predecessor and until his successor shall be elected or appointed,
as the case may be, and qualified, or until he sooner dies, resigns, is removed
or becomes disqualified.
Section 8.2 Officers. The Board of Directors may, at any meeting called
for the purpose, by vote of a majority of their entire number, remove from
office any officer of the Corporation, with or without cause. The Board of
Directors may, at any meeting, by vote of a majority of the Directors present at
such meeting, accept the resignation of any officer of the Corporation or remove
or accept the resignation of any employee or agent or any member of any
committee regardless of how appointed, and any officer, agent or employee other
than an executive officer may also be removed with or without cause, or his
resignation accepted by the committee or officer which appointed such person.
Any vacancy occurring in the office of President, Secretary or Treasurer shall
be filled by the Board of Directors and the officers so chosen shall hold office
subject to the By-laws for the unexpired term in respect of which the vacancy
occurred and until their successors shall be elected and qualify.
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ARTICLE 9. CERTIFICATES OF STOCK
Section 9.1 Issuance of Stock. The Directors may, at any time and from
time to time, if all of the shares of capital stock which the Corporation is
authorized by its Amended and Restated Certificate of Incorporation to issue
have not been issued, subscribed for, or otherwise committed to be issued, issue
or take subscriptions for additional shares of its capital stock up to the
amount authorized in its Amended and Restated Certificate of Incorporation. Such
stock shall be issued and the consideration paid therefor in the manner
prescribed by law.
Section 9.2 Right to Certificate; Form. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a Vice
President and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation. Certificates may be issued for partly paid shares and in
such case upon the face or back of the certificates issued to represent any such
partly paid shares, the total amount of the consideration to be paid therefor,
and the amount paid thereon shall be specified.
Section 9.3 Facsimile Signature. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 9.4 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates. The Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 9.5 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 9.6 Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof except as otherwise provided
by the laws of Delaware.
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ARTICLE 10. EXECUTION OF PAPERS
Except as otherwise provided in these By-laws or as the Board of
Directors may generally or in particular cases otherwise determine, all deeds,
leases, transfers, contracts, bonds, notes, checks, drafts and other instruments
authorized to be executed on behalf of the Corporation shall be executed by the
President or the Treasurer.
ARTICLE 11. FISCAL YEAR
Except as from time to time otherwise provided by the Board of
Directors, the fiscal year of the Corporation shall be the twelve month period
ending on the Saturday closest to April 30.
ARTICLE 12. SEAL
The Corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE 13. OFFICES
In addition to its principal office, the Corporation may have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE 14. INDEMNIFICATION
Section 14.1 Actions other than by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceedings, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which be reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 14.2 Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened,
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pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such exereses
which the Court of Chancery of the State of Delaware or such other court shall
deem proper.
Section 14.3 Success on the Merits. To the extent that any person
described in Sections 14.1 or 14.2 has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in said
Sections, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 14.4 Specific Authorization. Any indemnification under Sections
14.1 or 14.2 (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
any person described in said Sections is proper in the circumstances because he
has met the applicable standard of conduct set forth in said Sections. Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders of the Corporation.
Section 14.5 Advance Payment. Expenses incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the Corporation in advance
of the final disposition of such action suit or proceeding upon receipt of an
undertaking by or on behalf of any person described in said Section to repay
such amount if it shall ultimately be determined that he is not entitled to
indemnification by the Corporation as authorized in this Article 14.
Section 14.6 Non-Exclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this Article
14 shall not be deemed exclusive of any other rights to which those provided
indemnification or advancement of expenses may be entitled under any By-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
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Section 14.7 Insurance. The Board of Directors may authorize, by a vote
of the majority of the full board, the Corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officers employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article 14.
Section 14.8 Continuation of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article 14 shall continue as to a person who has
ceased to be a director, officer employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 14.9 Severability. If any word, clause or provision of this
Article 14 or any award made hereunder shall for any reason be determined to be
invalid, the provisions hereof shall not otherwise be affected thereby but shall
remain in full force and effect.
Section 14.10 Intent of Article. The intent of this Article 14 is to
provide for indemnification and advancement of expenses to the fullest extent
permitted by Section 14.5 of the General Corporation Law of Delaware. To the
extent that such Section or any successor section may be amended or supplemented
from time to time, this Article 14 shall be amended automatically and construed
so as to permit indemnification and advancement of expenses to the fullest
extent from time to time permitted by law.
ARTICLE 15. AMENDMENTS
These By-laws may be altered, amended or repealed or new By-laws may be
adopted by the stockholders or by a majority of the full Board of Directors when
such power is conferred upon the Board of Directors by the Amended and Restated
Certificate of Incorporation, at any regular meeting of the stockholders or of
the Board of Directors, or at any special meeting of the stockholders or of the
Board of Directors if notice of such alteration, amendment, repeal or adoption
of new By-laws is contained in the notice of such special meeting, or by the
unanimous written consent of the Directors. If the power to adopt, amend or
repeal By-laws is conferred upon the Board of Directors by the Certificate of
Incorporation, it shall not divest or limit the power of the stockholders to
adopt amend or repeal By-laws.
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EXHIBIT C
MARKETING AGREEMENT
BETWEEN
GROUNDWATER TECHNOLOGY, INC.
AND
FLUOR XXXXXX, INC.
_____________, 1996
THIS MARKETING AGREEMENT is entered into effective as of the ___ day of ,
_____________, 1996.
BETWEEN: GROUNDWATER TECHNOLOGY, INC., a corporation organized under the laws of
the State of Delaware, having its principal office at 000 Xxxxx Xxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx. ("GTI")
AND FLUOR XXXXXX, INC. a corporation organized under the laws of the State of
California, having its principal office at 0000 Xxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx, ("FLUOR XXXXXX")
WHEREAS, prior to the execution and delivery of this Agreement, GTI and FLUOR
XXXXXX (both directly and through its wholly-owned subsidiary, Fluor Xxxxxx
Environmental Services, Inc. ("FDESI")) were each engaged in the business of
providing investigation, evaluation, project management and remediation services
with regard to the restoration of environmentally impacted sites and facilities;
and
WHEREAS, concurrently with the execution of this Agreement, Fluor Xxxxxx has
acquired a majority ownership interest in GTI and in connection therewith Fluor
Xxxxxx has transferred to GTI all of the issued and outstanding shares of FDESI.
2
WHEREAS, the Parties wish to enter into this Marketing Agreement to set forth
the basis upon which such Parties shall engage in the global conduct of the
environmental services business and the basis for providing mutual support and
assistance in conducting their own respective businesses.
NOW, THEREFORE, in consideration of the above premises and mutual covenants
contained herein, the Parties have agreed as follows:
1. DEFINITIONS
The following terms as used in this Agreement shall have the meanings
set out below:
1.1 "Affiliate" shall mean any corporation or other legal entity of
which a Party (either alone or together with other Affiliates of that Party)
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are ordinarily and generally, in the absence of
contingencies or other understandings, entitled to vote for the election of a
majority of the board of directors or governing body.
1.2 "Contract Support Services" shall mean services provided by one
Party to or on behalf of the other Party, in connection with a project being
performed for a client, but which by themselves do not constitute a scope of
work within the project being performed.
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1.3 "DOE Management and Operations/Operating and Maintenance/Management
and Integration (M&O/O&M/M&I) Projects" shall mean projects involving the
management and operation, and/or management integration of sites and facilities
and environmental engineering services for the U.S. Department of Energy.
1.4 "Duality" shall mean the joint resolution of issues by the Parties
to the overall best combined market approach of the Parties balancing short and
long term considerations, and consistent with the spirit of this Agreement.
1.5 "Engineering and Construction Business" and "Engineering and
Construction Services" shall mean the providing of feasibility studies,
conceptual design, engineering, procurement, project and construction
management, construction, maintenance, plant operations, technical, project
finance, quality control, start-up assistance, site evaluation, licensing and
consulting with respect to actual or proposed sites or facilities provided,
however, that "Engineering and Construction Business" and "Engineering and
Construction Services" does not include services that are typically provided in
connection with Environmental Services.
1.6 "Environmental Business" or "Environmental Services" shall mean the
providing of investigation, evaluation, design, feasibility studies, management
and pollution prevention, project management, remediation, permitting, quality
control, start-up assistance, licensing and consulting services (including
incidental project finance
4
procurement, construction and maintenance) relating to (a) the treatment of
groundwater, wastewater, soil and hazardous waste, or (b) air emissions
controls; provided, however, that such terms shall not include:
a). the Excluded Projects.
b). DOE Management and Operations/Operating and Maintenance/ Management and
Integration (M&O/O&M/M&I) Projects.
c). Substantial Infrastructure projects related to government or industrial
water supply, water treatment, wastewater treatment or pollution control
facilities. Industrial wastewater facilities may be performed by either
Party, and shall be a subject of Duality.
d). Molten Metal Technology and M4 (and successor) Projects.
e). Facilities that are built due to environmental drivers but that are mainly
capital plant investments by a client, such as waste-to-energy and oil
refinery clean air emission process upgrades. The Parties shall use Duality
where there is uncertainty as to where services wou fall under this
agreement.
1.8 "Excluded Projects" shall mean the Xxxxxxx environmental remediation
management contract and the contract with Ciba-Geigy for construction management
for remediation activities at their Toms River, New Jersey facility.
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1.9 "Fluor Xxxxxx Group" shall mean Fluor Xxxxxx and each of its
Affiliates, excluding members of the GTI Group.
1.10 "GTI Group" shall mean GTI and each of its Affiliates, including
without limitation, FDESI.
1.11 "Investment Agreement" shall mean that certain Investment Agreement
dated as of December 11, 1995 by and among Fluor Xxxxxx, FDESI, GTI and GTI
Acquisition Corporation.
1.12 "Marketing Agreement" or "Agreement" shall mean the present
Agreement together with its Exhibits, Schedules and any amendments thereof.
1.13 "Party" means either GTI on the one hand or FLUOR XXXXXX on the
other hand, depending on the context. "Parties" means both of them.
1.14 "Project Services" shall mean services provided by one Party to or
on behalf of the other Party which constitute a scope of work within a project
being performed for a client.
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1.15 "TBS Opportunities" shall mean the pursuit of environmental
opportunities with clients to provide total business solutions to
environmentally impacted real estate and operating facilities, which
opportunities are differentiated from Environmental Business or Environmental
Services in that they (a) include providing, in the context of a single project
or program, substantial non-environmental services to a client in addition to
investigation, assessment, remediation and monitoring services currently
provided by GTI, or (b) involve a substantial increase in the scale and scope
of, and the integration of, solutions to be provided, including, in the
aggregate, the potential for high value of work (greater than $5 million), the
complexity of the financing arrangement with the client and the strategic value
of the services to the client in connection with solving the client's
environmental issues.
1.16 The Exhibits to this Marketing Agreement are the following:
Exhibit A Terms and Conditions - Overhead Support Services
Exhibit B Intercompany Services Agreement
Exhibit C Contract Support Services - Billing Terms
Exhibit D Project Services - Billing Terms
2. BUSINESS PURPOSE/EXCLUSIVITY
2.1 The Parties agree that the purpose of this Marketing Agreement is to
establish the respective rights, roles and responsibilities of the Parties and
their Affiliates with regard to the pursuit of the Environmental Business and
TBS Opportunities on a
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worldwide basis. The Parties acknowledge that, in their opinion, the future
environmental services market will favor service providers that can
differentiate themselves from other providers by offering creative solutions to
environmental problems. These creative solutions may involve the service
provider becoming a "stakeholder" in the client's solution and may include
accepting more risk in exchange for more reward (beyond accepting a fee for
services rendered on a time and materials basis). The Parties acknowledge that
these creative solutions will be applicable to both the Environmental Business
and to TBS Opportunities, and the Parties have agreed to enter into this
Marketing Agreement and to work together in Duality to provide services to their
respective clients. The Parties also agree to operate in Duality for areas of
potential overlap, including where such overlap is created by agreements with
other parties.
2.2 The Parties agree that, subject to the terms of this Agreement, as
between the Fluor Xxxxxx Group and the GTI Group, the GTI Group shall have
primary responsibility for the marketing and execution of the Environmental
Business and the Fluor Xxxxxx Group shall have primary responsibility for the
marketing and execution of TBS Opportunities. Fluor Xxxxxx , on its behalf and
on behalf of the Fluor Xxxxxx Group, will promote the use of the GTI Group for
Environmental Services that are related or incidental to its Engineering and
Construction Business or its TBS Opportunities, provided that the use of GTI is
acceptable to the client, that GTI has adequate available personnel and other
resources to timely and
8
satisfactorily perform the work and its proposed commercial terms are
competitive with the market. GTI shall commit in good faith to perform such
Environmental Services as may be requested by Fluor Xxxxxx, but shall not be
obligated to provide such Environmental Services if there's a valid business
reason for its refusal to perform such services. For purposes of this Agreement,
Fluor Xxxxxx will evaluate the competitiveness of GTI's commercial terms by
comparing them to terms and conditions of other providers of Environmental
Services of the same quality and scope in the location of where the services are
to be provided, and reviewing them with GTI.
2.3 Within 30 days of the date of this Agreement, Fluor Xxxxxx shall
notify its management and the management of its Affiliates of the marketing
relationship formed between the Parties and of the obligations of the Fluor
Xxxxxx Group under this Agreement. Periodically throughout the terms of this
Agreement, Fluor Xxxxxx will communicate with its management and the management
of its Affiliates to remind them of the marketing relationship formed between
the Parties and of the obligations of the Fluor Xxxxxx Group under this
Agreement.
2.4 Within 30 days of the date of this Agreement, GTI shall notify its
management and the management of its Affiliates of the marketing relationship
formed between the Parties and of the obligations of the GTI Group under this
Agreement. Periodically throughout the term of this Agreement, GTI will
communicate with its
9
management and the management of its Affiliates to remind them of the marketing
relationship formed between the Parties and of the obligations of the GTI Group
under this Agreement.
2.5 Prior to either Party forwarding a written communication to their
respective management pursuant to Sections 2.3 and 2.4 above, the Party
preparing to forward the communication shall give the other Party a reasonable
opportunity to review and comment on the communication.
3. INTERCOMPANY SERVICES
3.1 Overhead Support Services. Subject to availability of qualified
personnel, each Party agrees to provide to the other Party, the services of its
employees (including technical, financial and administrative personnel) as may
be reasonably requested by the other Party in connection with activities of a
general nature which are not related to a specific contract upon the terms and
conditions set forth in Exhibit A attached, which terms and conditions shall be
reviewed by the Parties bi-annually.
3.2 Contract Support. All Contract Support Services to be provided by
one Party to the other Party, shall be performed pursuant to Work Releases
issued pursuant to the terms of the Intercompany Services Agreement attached
hereto as Exhibit B, and containing the commercial terms and conditions set
forth in Exhibit C, which terms and conditions shall be reviewed by the Parties
bi-annually.
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3.3 Project Services. All Project Services to be provided by one Party
to the other Party shall be performed pursuant to Work Releases issued pursuant
to the terms of the Intercompany Services Agreement attached hereto as Exhibit B
and containing commercial terms and conditions set forth in Exhibit D, which
terms and conditions shall be reviewed by the Parties bi-annually.
3.4 Facilities. If and to the extent that Fluor Xxxxxx provides office
space to GTI or a member of the GTI Group, applicable costs shall be charged for
such office space on the same basis as Fluor Xxxxxx charges its other operating
subsidiaries. Fluor Xxxxxx agrees to maintain appropriate health and safety
programs and procedures for the benefit of Fluor Xxxxxx and GTI employees at
such office locations.
3.5 Each Party understands that the other Party will be involved in
other activities and undertakings not within the scope of this Marketing
Agreement. The Parties hereby agree that the execution of this Marketing
Agreement and the assumption by each of the Parties of its duties hereunder
shall be without prejudice to its rights to have such other interests and
activities and to receive and enjoy the profits or compensation therefrom.
Except as otherwise provided herein, the Parties may engage in or possess any
interest in any other business, undertaking, or venture of any nature or
description independently or with others and neither Party shall have any right
by virtue of this Marketing Agreement in and to such business, undertaking or
venture of the other Party or the income or profits derived
11
therefrom. The Parties agree to meet periodically to discuss joint marketing
opportunities and initiatives, to use reasonable efforts to keep each other
fully advised of its own marketing efforts with common clients and, with respect
to the foregoing, to establish mutually acceptable communications procedures.
With any such common clients it is understood that GTI will have the marketing
lead for projects that primarily involve Environmental Services and that Fluor
Xxxxxx will have the marketing lead for TBS Opportunities and for projects that
primarily involve Engineering and Construction Services.
4. LIABILITIES
4.1 Neither Party shall hold itself out as being the agent,
representative, employee or the principal of the other Party. This Marketing
Agreement does not constitute either Party the agent of the other, nor does it
create a partnership, a consortium, an association, a joint venture, or any form
of juristic person or entity. Neither Party shall have any authority or right to
assume or create obligations of any kind or nature, express or implied, on
behalf of, or in the name of the other Party, not to accept service of any legal
process of any kind addressed to or intended for the other Party, nor to bind
the other Party in any respect, without the specific prior written authorization
of the other Party. If either Party acts in violation of the foregoing, said
Party hereby covenants to indemnify and hold harmless the other Party from and
against any and all claims, demands, losses, damages, liabilities, law suits,
and other proceedings, judgments and awards, and costs and expenses
12
(including, but not limited to, reasonable attorneys' fees) arising directly or
indirectly in whole or in part out of the breach of this Section by such Party
or out of the breach of Section 4.1, whether committed by the indemnifying
Party, its employees, agents, successors, assigns, or its Affiliates.
4.2 Each Party shall indemnify and hold harmless the other Party from
and against any and all claims, demands, losses, damages, liabilities, lawsuits
and other proceedings, judgments and awards, and the costs and expenses
(including, but not limited to, reasonable attorneys' fees) of any action
resulting from the death of any person, or for damage or destruction of
property, but only to the extent resulting solely from the negligent acts or
omissions of such Party.
4.3 In no event shall either Party ever be liable to, or required to
provide indemnity to, the other Party for any incidental, special, consequential
or punitive damages of the other Party, or its Affiliates, including without
limitation, liability for loss of profits or business interruption, however the
same may be caused.
4.4 Each Party shall be solely responsible for the accuracy and
completeness of information and representations supplied by each Party and
incorporated in any proposal, prime or sub contract, including, but not limited
to, cost or pricing data, materials, specifications, and certifications, and
each Party agrees to release defend, indemnify and hold the other harmless from
and against any and all claims,
13
liabilities and causes of action arising out of or relating to the provision of
such information and/or representations.
4.5 Indemnities against, releases from and limitation on liability
expressed in Sections 4.1 and 4.4 shall apply even in the event of the fault,
negligence or strict liability of the Party indemnified or released or whose
liability is limited.
4.6 The Parties make no other representations, covenants, warranties or
guarantees, express or implied, other than those set forth in this Marketing
Agreement, the Intercompany Services Agreement or in a Work Release. The
Parties' rights, and responsibilities with respect to the matters set forth in
this Marketing Agreement, shall be exclusively those set forth in this Marketing
Agreement, the Intercompany Services Agreement or in a Work Release.
5. CONFIDENTIALITY
5.1 Restrictions on Use and Disclosure. Each Party covenants and agrees
it will not, and it will not permit its Affiliates to, directly or indirectly,
or in any capacity whatsoever, divulge or disclose the Confidential Information,
in whole or in part, to any person or entity (including its Affiliates or
shareholders), except to the extent such divulgence or disclosure is
specifically permitted by the Party disclosing the Confidential Information or
is required by law. The Recipient (as hereinafter defined) shall use
Confidential Information for the purpose of carrying
14
out the activities that are the subject of this Agreement, and the Intercompany
Services Agreement, and for no other purpose.
5.2 Confidential Information Defined. As used herein, the term
"Confidential Information" shall mean: all technical, economic or descriptive
information, data, concepts, or know-how disclosed to a Party, including any
officers, directors, managers, partners or employees of such Party or any of
such Party's Affiliates (the "Recipient") by the other Party (the "Originator")
(1) in written or documentary form marked "Confidential" or with words of
similar import, or (2) in an oral presentation or visual demonstration and
identified as confidential at the time of such disclosure, and then, within ten
(10) days, confirmed in written or tangible form marked "Confidential", or with
words of similar import, except any portion of such information which:
(i) the Recipient can show was in its possession prior to the earliest
disclosure by the Originator, provided that the Recipient has the right
of free and unlimited disclosure thereof; or
(ii) is presently or hereafter becomes a part of the public knowledge or
literature without default by the Recipient of its obligations pursuant
to this Agreement; or
(iii) the Recipient can show was developed by the Recipient from independent
information not subject to restrictions of confidentiality; or
15
(iv) is or has been disclosed to the Recipient by a third Party, so long as
Recipient does not know or have reason to know such third Party acquired
that information directly or indirectly from the Originator under an
obligation of confidentiality, provided Recipient's use of suc
information is in accordance with the terms under which it is received.
5.3 Disclosure to Employees. The Recipient shall use all reasonable
efforts to (1) limit disclosure of Confidential Information within its
organization to only those employees who need to use such Confidential
Information for the purpose authorized in Section 5.3, and who are obligated to
the Recipient by a secrecy agreement with terms concerning disclosure and use at
least as restrictive as those herein in a form acceptable to the disclosing
Party, and (2) advise each of those employees of Recipient's obligations under
this Agreement.
5.4 No License. Nothing contained herein shall be construed to grant
Recipient any immunity or license under any patent or other intellectual
property right.
5.5 Term. The Parties' obligations concerning non-disclosure and the use
of Confidential Information contained in this Section 6 shall continue for five
(5) years from the termination of this Agreement and shall then terminate.
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6. USE OF FLUOR XXXXXX NAME
Fluor Daniel's name and logo are proprietary to Fluor Xxxxxx. Fluor
Xxxxxx hereby authorizes the use of the corporate name "Fluor Xxxxxx/GTI, Inc."
by GTI until such right is terminated as set forth below. In addition, Fluor
Xxxxxx will not unreasonably withhold its consent to the use of similar name
configurations by other Affiliates of GTI on the same terms and conditions. In
the event this Agreement is terminated pursuant to Article 8, or GTI or an
Affiliate of GTI that is using the Fluor Xxxxxx name (or any derivation thereof)
discontinues business operations or is otherwise liquidated, then the right of
GTI or any such member of the GTI Group to continue to use the Fluor Xxxxxx name
(or any derivation thereof) shall cease and the respective name shall be removed
from all company documents (including without limitation, its corporate name as
reflected in its charter documents) promptly and in any event within three
months after notice thereof and all future use is hereby prohibited. No further
notice of Fluor Daniel's rights pursuant to this Article is required.
7. TERM, TERMINATION
7.1 This Marketing Agreement shall commence on the date set forth on the
first page hereof and, subject to earlier termination pursuant to Section 7.2
hereof, the term of this Marketing Agreement shall be ten (10) years, whereupon
it shall lapse and terminate without formality unless it has been extended by
mutual written agreement.
17
7.2 If at any time during the ten year period referred to in Section 7.1
hereof, Fluor Xxxxxx shall cease to own at least twenty percent (20%) of the
then issued and outstanding common shares of GTI or any successor to GTI, then
either Fluor Xxxxxx, provided that Fluor Xxxxxx is not in breach of its
obligations pursuant to Section 6.3(d) of the Investment Agreement, or GTI may ,
elect to terminate this Agreement. For such termination to be effective Fluor
Xxxxxx or GTI, as the case may be, must give the other Party written notice of
its election to so terminate within 90 days after Fluor Xxxxxx first ceased to
maintain such level of ownership. Upon the giving of such notice, the
termination shall be effective 30 days after the receipt of such notice.
8. ASSIGNMENT, SUBCONTRACTING
8.1 Neither Party shall sell, assign or in any manner transfer, convey
or alienate its interest or part thereof in this Marketing Agreement without
first obtaining the written consent of the other Party.
8.2 This Marketing Agreement shall inure to the benefit of and be
binding upon the Parties, their successors, trustees, permitted assigns,
receivers and legal representatives, but shall not inure to the benefit of any
other person or entity.
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9. AMENDMENTS
No amendment of this Marketing Agreement or its Exhibits or Schedules
shall be of any force or effect unless reduced to writing and executed in the
same manner as the present agreement.
10. NOTICES
All notices under this Marketing Agreement shall be given in writing and
shall be delivered by (i) certified or registered mail, postage prepaid, return
receipt requested, or (ii) reputable overnight commercial courier or delivery
service, or (iii) by facsimile transmission confirmed by certified or registered
mail or commercial courier or delivery service as follows:
a) To: FLUOR XXXXXX, INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile number: 000-000-0000
b) To: GROUNDWATER TECHNOLOGY, INC.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
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Facsimile number: 000-000-0000
or to such other address of which either Party shall have notified the other.
All notices shall be effective only upon receipt by the receiving Party.
11. GOVERNING LAW
11.1 This Marketing Agreement shall be governed by the laws of the State
of Delaware without regard to conflict of law rules, whose courts, state or
federal, shall have sole and exclusive jurisdiction.
12. FORCE MAJEURE
A Party shall not be liable for non-performance or delay in performance
caused by any event reasonably beyond the control of such Party including, but
not limited to, hostilities, revolutions, riots, civil commotion, national
emergency, strikes, work stoppages, slowdowns, labor disputes, lockouts,
unavailability of supplies, epidemics, fire, flood, earthquake, force of nature,
explosion, embargo, or any other Act of God, or any law, proclamation,
regulation, ordinance, or other act or order of any court, government, or
governmental agency; provided, however, that this Article shall not affect the
liability of any Party for its failure to pay any sum of money required by this
Marketing Agreement.
13. SEVERABILITY
In the event that any of the provisions of this Marketing Agreement are
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall
20
not affect any other provision thereof and this Marketing Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein and the Parties shall to the fullest extent possible modify any
such provision to the extent required to carry out the general intention of this
Marketing Agreement and to impart validity thereto.
14. EFFECT OF WAIVERS
No forbearance, indulgence, or relaxation or inaction by any Party at
any time to require performance of any provisions of this Marketing Agreement
shall in any way affect, diminish or prejudice the right of a Party to require
performance of that provision and any waiver or acquiescence by either Party in
any breach of any provision of this Marketing Agreement shall not be construed
as a waiver or acquiescence in any continuing or succeeding breach of such
provision, a waiver or an amendment of the provision itself or a waiver of any
right under or arising out of this Marketing Agreement or acquiescence in or
recognition of rights and/or positions other than as expressly stipulated in
this Marketing Agreement.
15. COUNTERPARTS
This Marketing Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original and all of which shall
constitute one and the same Marketing Agreement.
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IN WITNESS WHEREOF the Parties have signed this Marketing Agreement effective on
the date first above written.
GROUNDWATER TECHNOLOGY, INC. FLUOR XXXXXX, INC.
By _______________________ By _______________________
Title _______________________ Title _______________________
