Exhibit 10.2
STOCK PURCHASE AGREEMENT
AMONG
DUQUESNE ENTERPRISES, INC.,
XXXXXXX ENGINEERS, INC.
AND
XXXXXXX ACQUISITION CORPORATION
March 17, 1997
TABLE OF CONTENTS
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Article I - The Transaction
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Section Page
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1.01 Purchase of Shares........................................ 1
1.02 Purchase Price; USF Shares; USF Shares Average Price...... 1
1.03 Anti-Dilution............................................. 1
1.04 Payment of Purchase Price................................. 1
1.05 Closing................................................... 2
1.06 Deliveries and Proceedings at Closing..................... 2
Article II - Representations and Warranties of DEI and the Company
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2.01 Title to Xxxxxxx Shares..................................... 4
2.02 Securities.................................................. 4
2.03 Organization and Qualification.............................. 4
2.04 Shares; Capitalization...................................... 5
2.05 Subsidiaries................................................ 5
2.06 Authorization and Enforceability............................ 6
2.07 No Violation of Laws or Agreements.......................... 6
2.08 Financial Statements; Minimum Equity........................ 7
2.09 Undisclosed Liabilities..................................... 7
2.10 No Changes.................................................. 7
2.11 Tax Matters................................................. 8
2.12 [not used].................................................. 9
2.13 Receivables; Retentions..................................... 9
2.14 Business; Discontinued Operations........................... 10
2.15 No Pending Litigation or Proceedings........................ 10
2.16 Contracts; Compliance....................................... 11
2.17 Permits..................................................... 12
2.18 Compliance with Laws........................................ 12
2.19 Real Property............................................... 12
2.20 Transactions with Related Parties........................... 12
2.21 Insurance................................................... 13
2.22 Liability for Services Provided............................. 14
2.23 Labor Relations............................................. 14
2.24 Patents and Intellectual Property Rights.................... 14
2.25 Benefit Plans............................................... 15
2.26 Customer/Supplier Relations................................. 17
2.27 Finder's Fees............................................... 17
2.28 Confidentiality Agreements.................................. 17
2.29 Compliance with Environmental Laws.......................... 17
2.30 Disclosure.................................................. 18
Article III- Representations and Warranties of Acquisition
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3.01 Title to USF Shares........................................ 18
3.02 Securities................................................. 18
3.03 Organization and Qualification............................. 19
3.04 Shares; Capitalization..................................... 19
3.05 Authorization and Enforceability........................... 19
3.06 No Violation of Laws or Agreements......................... 19
3.07 SEC Reports................................................ 20
3.08 Finder's Fees.............................................. 20
3.09 No Agreements with Management.............................. 20
3.10 Disclosure................................................. 20
Article IV - Covenants of DEI and the Company
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4.01 Conduct of Business Pending Closing........................ 20
4.02 Access, Information and Documents.......................... 22
4.03 Preserve Accuracy of Representations and Warranties........ 22
4.04 Filings and Authorizations................................. 23
4.05 Notice of Changes.......................................... 23
4.06 Section 338(h)(10) Election; Certain Tax Returns........... 23
4.07 Certain Additional Tax Matters............................. 23
4.08 Lease with PVL............................................. 24
4.09 Acquisition Proposals...................................... 25
4.10 Assurances................................................. 25
4.11 Accounts Receivable........................................ 26
4.12 Employee/Employee Benefits Matters......................... 26
4.13 Resale of USF Shares....................................... 26
Article V - Covenants of Acquisition
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5.01 Filings and Authorizations.................................. 26
5.2 Notice of Changes........................................... 26
5.3 Merger...................................................... 26
Article VI - Conditions to Closing
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6.01 Mutual Conditions Precedent................................. 27
6.02 Conditions Precedent to Obligations of Acquisition.......... 27
6.03 Conditions Precedent to Obligations of DEI.................. 29
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Article VII - Certain Additional Covenants and Agreements
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7.01 Costs and Expenses.......................................... 29
7.02 Confidentiality............................................. 29
7.03 Publicity................................................... 30
7.04 Further Assurances.......................................... 30
7.05 Termination................................................. 30
Article VIII - Survival of Representations; Indemnification
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8.01 Survival of Representations................................. 31
8.02 Indemnification by DEI...................................... 31
8.03 Indemnification by Acquisition.............................. 32
8.04 Notice of Claims............................................ 32
8.05 Third Party Claims.......................................... 33
8.06 Limitation on Damages, Insurance; Etc....................... 33
8.07 Additional Remedies......................................... 34
8.08 Good Faith Effort to Settle Disputes........................ 34
Article IX - Miscellaneous
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9.01 Construction................................................ 34
9.02 Notices..................................................... 35
9.03 Successors and Assigns...................................... 35
9.04 Governing Law............................................... 35
9.05 No Assignment............................................... 35
9.06 Amendment and Waiver; Cumulative Effect..................... 36
9.07 Entire Agreement............................................ 36
9.08 Severability................................................ 36
9.09 No Third Party Beneficiaries................................ 36
9.10 Counterparts................................................ 36
Exhibits
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Exhibit A Form of Opinion of Counsel to DEI
Exhibit B Form of Opinion of Counsel to USF
Exhibit C Affiliate's Letter
Schedules
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Schedule 1.06(a) Exceptions to Releases
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Schedule 2.03 Foreign Qualifications
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Schedule 2.04 Securities Rights
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Schedule 2.05 Subsidiaries
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Schedule 2.07 Consents
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Schedule 2.09 Other Liabilities
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Schedule 2.11 Tax Matters
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Schedule 2.12 Litigation
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Schedule 2.13 Receivables
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Schedule 2.14 Assets; Business
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Schedule 2.15 Litigation
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Schedule 2.16 Contracts
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Schedule 2.19 Real Property
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Schedule 2.20 Transactions with Related Parties
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Schedule 2.21 Insurance
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Schedule 2.22 Liabilities for Services
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Schedule 2.24 Intellectual Property
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Schedule 2.25 Benefit Plans
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Schedule 2.26 Customer/Supplier Relations
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Schedule 2.28 Confidentiality Agreements
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Schedule 2.29 Environmental Matters
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Schedule 4.06 Allocation Under Section 338(h)(10)
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Schedule 6.02(i) Certain Debt
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (this "Agreement") entered as of the
17/th/ day of March, 1997 by and among Duquesne Enterprises, Inc., a
Pennsylvania corporation ("DEI"), Xxxxxxx Engineers, Inc., a Pennsylvania
corporation (the "Company"), and Xxxxxxx Acquisition Corporation, a Delaware
corporation ("Acquisition");
WITNESSETH:
WHEREAS, DEI owns 4,000,000 shares of common stock of the Company, par
value $1.00 per share ("Xxxxxxx Common Stock"), which shares represent 100% of
the issued and outstanding shares of capital stock of the Company (the "Xxxxxxx
Shares"); and
WHEREAS, Acquisition desires to acquire from DEI, and DEI desires to
sell to Acquisition, the Xxxxxxx Shares in consideration for a certain number of
shares of the common stock of United States Filter Corporation, a Delaware
corporation ("USF"), valued at $43,400,000 and cash in the amount of $400,000,
all under and subject to the terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
ARTICLE I
THE TRANSACTION
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1.01 Purchase of Shares. Subject to the terms and conditions of this
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Agreement, DEI shall sell, assign, transfer and deliver to Acquisition at the
Closing (as defined in Section 1.05 below), and Acquisition shall purchase from
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DEI at the Closing, the Xxxxxxx Shares in exchange for the Purchase Price (as
defined in Section 1.02 below).
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1.02 Purchase Price; USF Shares; USF Shares Average Price. As used
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herein, "Purchase Price" means (i) the USF Shares plus (ii) $400,000 in cash;
"USF Shares" means that number of shares of common stock of USF, par value $0.01
per share, equal to the result obtained by dividing $43,400,000 by the USF
Shares Average Price; and "USF Shares Average Price" means the average (rounded
to the nearest eighth of a point) of the closing prices for shares of common
stock of USF as reported by the New York Stock Exchange for the 20 consecutive
trading days ending on the fifth trading day immediately preceding the Closing
Date.
1.03 Anti-Dilution. If between the date hereof and Closing the
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issued and
outstanding USF Shares shall have been changed into a different number of shares
as a result of a stock split, reverse stock split, stock dividend,
recapitalization, reclassification or other similar transaction with a record or
effective date within such period, the provisions of Section 1.02 and the
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computations of USF Shares Average Price shall be adjusted proportionately.
1.04 Payment of Purchase Price. Acquisition shall deliver to DEI on
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the Closing Date a certificate representing the USF Shares prepared by USF's
transfer agent and $400,000 in cash by wire transfer of federal funds in
accordance with written wire transfer instructions delivered to Acquisition by
DEI at least three business days prior to the Closing Date. Upon such
deliveries, the Purchase Price shall be paid in full.
1.05 Closing. The closing hereunder (the "Closing") shall take place
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at the offices of Xxxxxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx Xxxxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000 on May 1, 1997, effective at the close of business on April
30, 1997, except that if all of the conditions to closing under Article VI shall
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not have been satisfied on or before May 1, 1997, then closing shall take place
within six business days after all of the conditions to Closing under Article VI
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shall have been satisfied or waived in writing, but in no event after May 30,
1997, at 1:00 p.m. local time or at such other time, date or place as the
parties hereto agree (the date of the Closing is sometimes referred to herein as
the "Closing Date").
1.06 Deliveries and Proceedings at Closing.
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(a) Deliveries by DEI. DEI shall deliver or cause to be
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delivered to Acquisition at the Closing:
(i) Certificates representing the Xxxxxxx Shares duly endorsed
or with stock powers duly executed in blank with all transfer taxes, if
any, paid in full;
(ii) Duly executed copies of such other documents and
agreements provided for herein;
(iii) Good Standing certificates of the Company, DEI and each
Subsidiary (as defined in Section 2.05) issued by the Secretary of State
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for the respective states of formation issued within 20 days prior to
Closing and good standing certificates of the Company and the Subsidiaries
issued within 20 days prior to Closing in those states where they are
qualified to transact business as a foreign corporation;
(iv) An incumbency and specimen signature certificate signed by
the officers of the Company and DEI and certified by the Secretary of each;
(v) A true and correct copy of the Articles of Incorporation
(and all amendments thereto) of the Company, DEI and each Subsidiary in
effect as of the
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Closing Date and a complete charter history of the Company and each
Subsidiary, each certified by the Secretary of State for the respective
states of formation, and the Amended By-Laws of the Company and the By-Laws
of each Subsidiary and DEI (together with all amendments thereto) certified
by the Secretary of each;
(vi) Resolutions of the Board of Directors of the Company and
DEI authorizing the execution and delivery of this Agreement and each Other
Agreement to which it is a party and the performance by the Company and DEI
of the transactions contemplated hereby and thereby, certified by the
Secretary of each;
(vii) A certificate dated the Closing Date certifying to the
fulfillment of the conditions set forth in Section 6.02 hereof;
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(viii) An opinion of outside legal counsel to DEI in the form
attached hereto as Exhibit A;
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(ix) General releases by DEI (on behalf of its other
Affiliates) of all Liability (as defined in Section 2.09) of the Company
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and any Subsidiary to them and of any claim that they or any of them may
have against the Company, except with respect to the lease between the
Company and Property Ventures, Ltd., a Pennsylvania corporation ("PVL"),
and subject to the other arrangements identified on Schedule 1.06(a);
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(x) The minute books, stock ledgers and corporate seal of the
Company and each Subsidiary and all share certificates of each Subsidiary
representing shares of capital stock of such Subsidiary owned by the
Company to the extent that such share certificates are in DEI's possession;
(xi) Resignations of all of the directors of the Company and
each Subsidiary; and
(xii) The PVL Mortgage and the PVL Guaranty (as defined in
Section 4.10); and
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(xiii) Such other agreements and documents as Acquisition may
reasonably request.
(b) Deliveries by Acquisition. Acquisition shall deliver or
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cause to be delivered to DEI at the Closing:
(i) A certificate representing the USF Shares registered in
the name of "Duquesne Enterprises, Inc." using its address set forth in
Section 9.02 as its registered office for purposes of USF's stock transfer
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records and using its taxpayer identification
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number of 00-0000000;
(ii) Duly executed copies of such other documents and
agreements provided for herein;
(iii) A good Standing Certificate of Acquisition issued within
20 days prior to Closing certified by the Secretary of State of the State
of Delaware;
(iv) An incumbency and specimen signature certificate signed by
the officers of Acquisition and certified by the Secretary of Acquisition;
(v) A true and correct copy of the Certificate of
Incorporation (and all amendments thereto) of Acquisition in effect as of
the Closing Date certified by the Secretary of State of the State of
Delaware and bylaws of Acquisition (together with all amendments thereto)
certified by the Secretary of Acquisition;
(vi) Resolutions of the Board of Directors of Acquisition
authorizing the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby, certified by the
Secretary of Acquisition;
(vii) A certificate dated the Closing Date of an officer of
Acquisition certifying to the fulfillment of the conditions set forth in
Section 6.03;
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(viii) The opinion of the General Counsel to USF in the form
attached as Exhibit B;
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(ix) An amount equal to the good faith estimate by the parties
hereto of the Tax Reimbursement Amount (as defined in Section 4.07(b)); and
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(x) Such other agreements and documents that DEI may
reasonably request.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF DEI AND THE COMPANY
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DEI and the Company jointly and severally represent and warrant to
Acquisition as set forth in this Article II. All references in Sections 2.08
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through and including Section 2.30 to "Company" shall be deemed to include
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references to each Subsidiary.
2.01 Title to Xxxxxxx Shares. DEI has legal, valid, beneficial and
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exclusive title to the Xxxxxxx Shares free of all liens, claims, charges,
security interests, restrictions,
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burdens, pledges, Liabilities, defects in title, options and encumbrances of any
kind or nature whatsoever (all of the foregoing collectively, "Encumbrances"),
and upon delivery of the Xxxxxxx Shares at Closing against receipt of the
Purchase Price, Acquisition shall acquire legal and valid title to the Xxxxxxx
Shares free of any Encumbrances.
2.02 Securities. DEI is an "accredited investor" as such term is
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defined in Rule 501 of Regulation D of the U.S. Securities Act of 1933, as
amended ("Securities Act"). DEI is acquiring the USF Shares for investment only
and not with a view toward or in connection with any resale or distribution of
such shares, except for any resale or distribution of such shares in compliance
with the registration statements contemplated by Section 4.13.
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2.03 Organization and Qualification. Each of DEI and the Company is
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a corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania. Each of DEI and the Company has all
requisite corporate power and authority to (i) own, lease, operate and use its
properties and assets as now owned, leased, operated and used and (ii) make,
execute and deliver this Agreement and the Other Agreements to which it is a
party and perform its obligations hereunder and thereunder without the need for
the consent of any other Person. The Company has all requisite corporate power
and authority to conduct the Business (as defined in Section 2.14) as now
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conducted. As used herein, the term "Person" means any person, corporation,
association, partnership, limited liability company, trust, business trust,
joint venture, unincorporated organization or any other legal entity and the
term "Other Agreement" with respect to any party shall mean the other agreements
and documents contemplated hereby to be executed and delivered by such party or
any Affiliate thereof on or before the Closing (which shall include, without
limitation, that certain letter agreement between USF and DEI of same date
herewith (the "Letter Agreement")). Copies of the charter documents and bylaws
of DEI, the Company and each Subsidiary in effect on the date hereof and minute
books and stock transfer records of the Company and each Subsidiary previously
delivered to Acquisition, are correct and complete and are in full force and
effect. Except as set forth in Schedule 2.03, the Company and each Subsidiary
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is duly qualified or licensed to transact business and is in good standing as a
foreign corporation in those jurisdictions set forth on Schedule 2.03, which are
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the only jurisdictions wherein the character of the properties owned or leased
by it or the nature of activities conducted by it make such qualification or
licenses necessary. Schedule 2.03 separately identifies each country in which
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the Company or any Subsidiary has an office or employee on permanent assignment
and the extent to which the Company or any Subsidiary has any material assets
located in each such country.
2.04 Shares; Capitalization. The authorized capital stock of the
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Company consists solely of 10,000,000 shares of Common Stock, $1.00 par value
per share, of which 4,000,000 shares are issued and outstanding. Except as set
forth in Schedule 2.04, there are no Securities Rights with respect to the
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Xxxxxxx Shares nor are there any securities convertible into or exchangeable for
any Xxxxxxx Common Stock or any other Security Rights with respect to any
unissued Xxxxxxx Common Stock. "Security Right" means any option, warrant,
subscription
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right, preemptive right, other right, proxy, put, call, demand, plan,
commitment, agreement, understanding or arrangement of any kind relating to the
Xxxxxxx Shares, whether issued or unissued, or any other security convertible
into or exchangeable for the Xxxxxxx Shares. "Security Right" includes any right
relating to issuance, sale, assignment, transfer, purchase, redemption,
conversion, exchange, registration or voting and includes rights conferred by
statute, by the Company's Governing Documents or by agreement. All rights and
powers to vote the Xxxxxxx Shares are held exclusively by DEI. All of the
Xxxxxxx Shares are validly issued, fully paid and nonassessable, were not issued
in violation of the terms of any agreement or other understanding, and were
issued in compliance with all applicable federal and state securities or "blue-
sky" laws and regulations.
2.05 Subsidiaries. Except as set forth on Schedule 2.05, the Company
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does not own any equity interest in any Person. Schedule 2.05 discloses with
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respect to each such Person, (i) its name, (ii) the jurisdiction of its
organization, (iii) the number of its authorized shares or other equity
interests, (iv) the number of its outstanding shares or other equity interests
of each class or series, and (v) the name of the owner and the number and
percentage of outstanding shares or other equity interests of each class or
series of such Person owned of record and, if different, owned beneficially by
the Company, DEI and any other Person. Schedule 2.05 also identifies each
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Subsidiary that no longer conducts any business and that contains no assets
(each, an "Inactive Subsidiary") and describes the business in which each
Inactive Subsidiary was engaged prior to becoming inactive. No Inactive
Subsidiary has or has had since January 1, 1997 any material assets. Schedule
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2.05 also describes the business in which each Subsidiary is engaged. Each
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Person identified on Schedule 2.05 is sometimes referred to herein as a
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"Subsidiary"; provided, however, that, except for the immediately preceding
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sentence, the term "Subsidiary" as used herein shall not include any Inactive
Subsidiary. All of the outstanding capital stock and other equity interests of
each Subsidiary is validly issued, fully paid and nonassessable and was issued
in compliance with all applicable federal and state securities or "blue sky"
laws and regulations. There are no Security Rights relating to any shares of
capital stock, other equity interests or other securities of any Subsidiary.
The Company and each Subsidiary have good, marketable and exclusive title to the
shares or other equity interests disclosed on Schedule 2.05 as being owned by
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each of them, free and clear of all Encumbrances. All rights and powers to vote
such shares or other equity interests are held exclusively by the Company,
directly or indirectly through one or more of such Subsidiaries, as the case may
be. Each Subsidiary is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and has the power and
authority to own or lease its properties and to carry on its Business as now
conducted. Neither Xxxxxxx Environmental Ohio, Inc. nor Xxxxxxx Engineers of
Michigan, Inc. has any material net book value. Except as set forth in Schedule
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2.05, none of the joint ventures identified in Schedule 2.05 or 2.16 may
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obligate the Company to make a capital investment in or loan to such joint
ventures or create any other obligation of the Company to such joint ventures
without the prior consent of the Company. The Company's obligations under item
no. 3 on Schedule 2.05 shall not exceed $25,000.
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2.06 Authorization and Enforceability. The execution, delivery and
--------------------------------
performance by each of DEI and the Company of this Agreement have been duly
authorized by all necessary action on their part. This Agreement has been duly
executed and delivered by DEI and constitutes, and each Other Agreement which is
to be executed and delivered by DEI, when executed and delivered by DEI, shall
constitute, the legal, valid and binding obligation of DEI. This Agreement has
been duly executed and delivered by the Company and constitutes, and each Other
Agreement which is to be executed and delivered by the Company, when executed
and delivered by the Company, shall constitute, the legal, valid and binding
obligation of the Company.
2.07 No Violation of Laws or Agreements. Except as set forth on
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Schedule 2.07, none of the execution and delivery of this Agreement or any Other
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Agreement, the consummation of the transactions contemplated hereby or thereby
or the compliance with or fulfillment of the terms, conditions and provisions
hereof or thereof by DEI or the Company will: (i) contravene any provision of
the charter or bylaws of DEI, the Company or any Subsidiary, (ii) conflict with,
result in a breach of or constitute a default or an event of default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a default) under any term, condition or provision of, or results in
the termination or loss of any right (or give others the right to cause such a
termination or loss) under, any license, franchise, indenture, mortgage or any
other Contract, agreement or instrument to which DEI, the Company or any
Subsidiary is a party or by which any of them or any of their assets may be
bound or affected, (iii) violate any Law (as defined in Section 2.18) or violate
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any judgment or order of any court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority or instrumentality, whether federal, state, local or foreign
("Governmental Body") to which DEI, the Company or any Subsidiary or any of
their Affiliates are subject, (iv) result in the creation or imposition of any
Encumbrance upon the Xxxxxxx Common Stock or the assets of the Company or any
Subsidiary or gives to others any interests or rights therein, or (v) result in
the creation, maturation or acceleration of any Liability or obligation of DEI,
the Company or any Subsidiary (or gives others the right to cause such a
creation, maturation or acceleration). Without limiting the foregoing, the
claim by TRC Companies, Inc. ("TRC") briefly summarized on Schedule 2.07 against
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DEI and the Company has been fully and completely settled with no continuing
Liability of the Company or DEI to any Person, except as set forth in Schedule
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2.07. Except as may be required by the U.S. Xxxx-Xxxxx-Xxxxxx Anti-Trust
----
Improvements Act of 1976, as amended (the "HSR Act"), and except as provided in
Schedule 2.07 (collectively, the "Consents"), no consent, approval, declaration
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or authorization of, or registration or filing with, any Person (including any
Governmental Body) is required in connection with the execution and delivery by
DEI or the Company of this Agreement or the Other Agreements to which they are a
party and the consummation of the transactions contemplated hereby and thereby
by DEI or the Company.
2.08 Financial Statements; Minimum Equity. DEI has previously
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delivered to Acquisition the audited consolidated balance sheet, income
statement and statement of cash
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flows for the Company, together with the accompanying footnotes, for the twelve
month periods ending December 31, 1993, December 31, 1994, and December 31,
1995, and December 31, 1996 (such balance sheet is sometimes referred to herein
as the "12-31-96 Balance Sheet") (all of the foregoing referred to herein
collectively as the "Company Financial Statements"). The Company Financial
Statements have been prepared in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP") on a consistent basis throughout the indicated
periods. Without limiting the foregoing, the 12-31-96 Balance Sheet reflects the
Financial Accounting Standards Board's SFAS No. 121. The Company Financial
Statements fairly present the consolidated financial condition, assets and
Liabilities (as defined in Section 2.09) and results of operations and cash
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flows of the Company in accordance with GAAP at the dates and for the years
indicated. On the Closing Date, the Company shall have stockholders equity of at
least $11,300,000, (i) without taking into account any Liabilities of any kind
of the Company to any Related Party, (ii) without taking into consideration any
liabilities of the Company for borrowed money to any other Person, (iii)
accounting for Taxes in accordance with Sections 4.06 and 4.07 and without
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taking into account the adjustments for stock options as contemplated by
Section 7.07; such stockholders equity to be determined exclusively in
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accordance with GAAP on a basis consistent with the principles of GAAP used in
the 12-31-96 Balance Sheet.
2.09 Undisclosed Liabilities. Except as disclosed in the Company
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Financial Statements and as otherwise disclosed in Schedule 2.09 hereto, the
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Company has no liabilities of any nature whatsoever (whether absolute, fixed,
contingent or otherwise) whether due or to become due, including any unasserted
claim, whether incurred directly or by any predecessor, and whether arising out
of any act, omission, transaction, circumstance, sale of goods or services,
state of facts or other condition ("Liabilities"), except for Liabilities that
have arisen in the ordinary course of business of the Company after December 31,
1996 through the date hereof, all of which have been consistent in amount and
character with past practice and experience, and none of which, individually or
in the aggregate, has had or will have an adverse effect on the Business,
financial condition or prospects of the Company and none of which is a Liability
for breach of contract or warranty or has arisen out of tort, infringement of
any intellectual property rights, or violation of Law or is claimed in any
pending or threatened legal proceeding. Without limiting the foregoing, on the
Closing Date, the Company shall have no outstanding Liabilities of any kind or
nature to DEI or any other Affiliate of the Company and, except as disclosed on
Schedule 2.09, the Company shall have no outstanding Liabilities to any Person
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for borrowed money. As used herein, "Affiliate" means, with respect to any
Person, any other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with such
Person. Schedule 2.09 identifies all outstanding bonds or other assurances
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securing or attributable to the Company's activities (including the Contracts)
and further identifies any Affiliate of the Company that may be primarily or
contingently liable for any such bonds or assurances or has otherwise guaranteed
any obligation of the Company.
2.10 No Changes. Since December 31, 1996, the Company has conducted
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its business only in the ordinary course. Without limiting the generality of
the foregoing sentence,
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since December 31, 1996, there has not been any (i) material adverse change in
the financial condition, assets, Liabilities, net worth, Business or, to the
knowledge of DEI and the Company, prospects of the Company; (ii) declaration or
payment of any dividend or other distribution on or with respect to or
redemption or purchase by the Company of any shares of capital stock of the
Company, including any of the Shares; (iii) change in any method of accounting;
(iv) payment, prepayment or discharge of any Liability other than in the
ordinary course of business or any failure to pay any Liability when due; (v)
write-offs or write-downs of any assets of the Company in excess of $50,000 in
the aggregate; (vi) termination or waiver of any material right under, any
agreement of the Company; or (vii) agreement or commitment to do any of the
foregoing. During the one-year period ending on the date hereof, except as set
forth in Schedule 2.10, there has been no (a) damage or destruction to any
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material asset of the Company, whether or not covered by insurance; (b) strike
or other labor trouble at the Company; (c) increase in the salary, wage or bonus
of any employee of the Company; (d) asset acquisition or expenditure, including
capital expenditure, in excess of $50,000 individually or $250,000 in the
aggregate; (e) change in any Company Plan; (f) payment to or transaction with
any Related Party, which payment or transaction is not specifically disclosed on
Schedule 2.20; (g) disposition of any asset for more than $50,000 or for less
-------------
than fair market value; (h) material change in the manner in which the Company
conducts its Business; (i) exercise of any options or other Security Rights with
respect to Company capital stock; or (j) agreement or commitment to do any of
the foregoing.
2.11 Tax Matters.
-----------
(a) All federal, state, local and other income or franchise taxes,
gross receipts, payroll, withholding and capital stock taxes and any interest
and penalties related thereto (collectively, "Taxes") that were or are required
under Law to be paid by the Company (or by any Company Affiliate in respect of
the Company) have been paid, except for accrued Taxes that are not yet due in
the ordinary course of business and adequately reserved for on the 12-31-96
Balance Sheet, none of which are overdue, or subsequently arising Taxes. There
are no Tax liens upon any property or assets of the Company, except liens for
current Taxes not yet due that are fully reserved on the Balance Sheet of the
Company. Except as set forth in Schedule 2.11, the Company is not currently the
-------------
beneficiary of any extension of time within which to file any Tax Return.
Except as set forth in Schedule 2.11, no claim has been made by a taxing
-------------
authority of a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to taxation in that jurisdiction. All Taxes that the
Company (or any Company Affiliate in respect of the Company) was required by Law
to withhold or collect, have been and are being withheld or collected by it and
have been and are being timely paid over to the proper Governmental Body or are
being held by it for such payment.
(b) All Tax Returns that are required to be filed by the Company (or
by any Company Affiliate in respect of the Company) prior to or on the Closing
Date, pursuant to the Law of each governmental authority with taxing power over
it have been filed or caused to be filed on a timely basis, or will be filed or
cause to be
-9-
filed on a timely basis. All such Tax Returns were or will be, as the case may
be, correct and complete. All such Taxes that have become due as shown on such
Tax Returns or pursuant to any assessment received as an adjustment to such Tax
Returns have been paid. Each Tax Return of the Company which has been audited by
the relevant authorities and all deficiencies or proposed deficiencies resulting
from such audit have been paid or are adequately provided for in the Company
Financial Statements.
(c) Except for the Company's federal income tax returns for the
taxable years ended December 31, 1993, December 31, 1994 and December 31, 1995,
and as otherwise provided in Schedule 2.11, no audit or examination of any Taxes
-------------
is now pending or currently in progress with respect to the Company, the Company
has not received from the Internal Revenue Service or from any other tax
authority from any state, foreign, county, local or other jurisdiction a notice
of underpayment of Taxes, a proposed assessment of Tax, a proposed adjustment to
any Tax return filed or other deficiency that has not been paid. Except as set
forth in Schedule 2.11, there is no pending, or threatened or anticipated,
-------------
assessment of any additional Tax against any member of the Selling Group (as
defined below) for any taxable period during which the Company or any
predecessor company was a member of the Selling Group. No member of the Selling
Group has waived any statute of limitations in respect of any Taxes or agreed to
any extension of time with respect to a Tax assessment or deficiency for any
taxable period during which the Company was a member of the Selling Group.
(d) Neither the Company nor any Affiliate of the Company has waived
restrictions on assessment or collection of Taxes or executed a waiver or
consented to the extension of any statute of limitations for federal income or
other Tax Liability that remains outstanding. Except as set forth on Schedule
--------
2.11, neither the Company nor any Company Affiliate in respect of the Company
----
has made any payments, is obligated to make any payments, or is a party to any
agreement that under any circumstances could obligate it to make any payments
that will not be deductible under Code Section 280G or 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
(e) Except as disclosed on Schedule 2.11, DQE, Inc., a Pennsylvania
-------------
corporation ("DQE"), DEI, each Subsidiary and the Company constitute an
affiliated group of corporations within the meaning of Section 1504 of the Code
and have joined in the filing of consolidated federal income Tax returns for the
taxable year beginning on September 1, 1995 and for each taxable year
thereafter. For purposes of this Agreement, "Selling Group" means a member,
whether past or present, of DEI's affiliated group of corporations within the
meaning of Code Section 1504(a).
2.12 [not used]
2.13 Receivables; Retentions. Schedule 2.13 discloses all trade and other
----------------------- -------------
-10-
accounts receivable of the Company ("Receivables") outstanding as of January
31, 1997 presented on an aged basis and separately identifies the name of each
account debtor and the total amount of each related Receivable. All
Receivables, whether reflected on the 12-31-96 Balance Sheet, disclosed on
Schedule 2.13 or created after January 31, 1997, arose from bona fide sale
-------------
transactions of the Company, and except as disclosed on Schedule 2.13, no
-------------
portion of any Receivable is subject to counterclaim, defense or set-off or is
otherwise in dispute. Except to the extent of the recorded reserve for doubtful
accounts specified on the 12-31-96 Balance Sheet, and the Receivables subject to
counterclaim, defense or set-off or otherwise in dispute disclosed on Schedule
--------
2.13, all of the Receivables are collectible in the ordinary course of business
----
and will be fully collected within 120 days after having been created using
commercially reasonable efforts with payments by each debtor being applied first
to accounts as specified by such debtor and, if no account is specified, to
accounts of such debtor first created. The Company's outstanding contract
retentions at January 31, 1997 were equal to $1,195,753.
2.14 Business; Assets; Discontinued Operations.
-----------------------------------------
(a) Business; Assets. The Company is engaged in the business of
----------------
providing fee-for-service engineering for water and waste water systems,
designing and building waste water systems and designing, building, owning and
operating waste water systems and the other businesses identified on Schedule
--------
2.14 (collectively, the "Business") and no other businesses. Except as set
----
forth in the Company's 1997 capital budget, the Company's equipment having a net
book value in excess of $25,000 individually and the Company's buildings,
fixtures, improvements, machinery, equipment, tools, furniture, improvements and
tangible personal property, including those reflected on the 12-31-96 Balance
Sheet, having a net book value in excess of $250,000 in the aggregate are in
good operating condition and repair and are suitable for the purposes for which
they are used in the Business. The Company has good, marketable, legal,
beneficial and exclusive title to all of its assets; all of such assets are
reflected on the 12-31-96 Balance Sheet or, under GAAP, are not required to be
reflected thereon; and none of such assets is subject to any Encumbrance or
impairment, whether due to its condition, utility, collectability or otherwise,
except Permitted Encumbrances. As used herein, the term "Permitted
Encumbrances" means liens for governmental charges that are not yet due and
payable, and liens identified in Schedule 2.14. Schedule 2.14 identifies any
------------- -------------
material asset of the Company that is not located on property owned or leased by
the Company and that is not otherwise disclosed in Schedule 2.20 and other than
-------------
vehicles owned or leased by the Company. Except as disclosed in Schedule 2.16,
-------------
the Company owns no material property in the United States.
(b) Discontinued Operations. Schedule 2.14 identifies each of the
----------------------- -----
businesses, divisions and segments of the Company that were sold, discontinued
or otherwise disposed of since August 18, 1993 (the "Discontinued Operations").
For purposes herein, the term "Discontinued Operations" shall include all
obligations under that certain Stock Purchase Agreement dated August 31, 1995
(as amended, if ever) between Mestek, Inc. and the Company,
-11-
that certain Asset Purchase Agreement dated July 29, 1993 among the Company, DEI
and Mestek, Inc. and all assignment and related documents identified on
Schedule 1.06(a) and the other matters identified in the Schedules as being part
----------------
of the Discontinued Operations. Schedule 2.16 identifies each contract effecting
-------------
each sale or transfer of the Discontinued Operations, and, except as provided on
Schedule 2.16, none of the Company's rights under such contracts have been
-------------
assigned or transferred to any Person.
2.15 No Pending Litigation or Proceedings. Except as set forth on
------------------------------------
Schedule 2.15 there are no actions, suits, investigations, claims or proceedings
-------------
of any nature or kind whatsoever ("Litigation") pending or threatened against or
affecting the Company, its assets, the Business, the Xxxxxxx Shares or the
transactions contemplated by this Agreement or any Other Agreement, at Law or in
equity, by or before any Governmental Body. There are no outstanding judgments,
decrees or orders of any Governmental Body against or affecting the Company, the
Xxxxxxx Shares, the Business or the Company's assets. The Company has not
commenced and does not have pending any action, suit or proceeding against any
third party, except as set forth on Schedule 2.15. Except as set forth in
-------------
Schedule 2.15, the Company has not been a party to any other Litigation during
-------------
the past three years. Schedule 2.15 separately identifies each Litigation
-------------
matter arising out of the Discontinued Operations.
-12-
2.16 Contracts; Compliance.
---------------------
(a) Disclosed on Schedule 2.16 is a brief description of each
--------------
contract, lease, indenture, mortgage, instrument, commitment or other agreement,
arrangement or understanding, oral or written, formal or informal, to which the
Company is a party or by which it or its assets may be affected with respect to
which the Company has continuing Liability and that (i) involves the purchase,
sale or lease of any asset, materials, supplies, inventory or services in excess
of $250,000 per year, (ii) has an unexpired term of more than twelve months from
the date hereof, taking into account the effect of any renewal options
(excluding contracts that are terminable with no continuing Liability by the
Company on thirty (30) days (or less) written notice), (iii) relates to the
borrowing or lending of any money or guarantee of any obligation, (iv) limits
the right of the Company to compete in any line of business or otherwise
restricts any right the Company may have (excluding contracts that are
terminable with no continuing Liability by the Company on thirty (30) days (or
less) written notice), (v) is an employment or consulting contract involving
payment of compensation and benefits in excess of $45,000 per year or is not
terminable at will by the Company, (vi) involves the pending or former purchase
or sale of any business; (vii) is with any Related Party; (viii) is a fixed
price contract, or (ix) was not entered into in the ordinary course (each, a
"Contract" and collectively, the "Contracts"). Schedule 2.16 separately
-------------
identifies all active design/build, own/operate contracts (all of the foregoing
contracts being included within the definition of "Contracts" herein). Schedule
--------
2.16 discloses any outstanding stand-by letters of credit issued for the account
----
of the Company (the "Letters of Credit"). Schedule 2.16 also separately
-------------
identifies each Contract that relates to or arose out of the Discontinued
Operations.
(b) Each Contract is a legal, valid and binding obligation of the
Company and is in full force and effect. Except as disclosed on Schedule 2.16,
-------------
the Company and each other party to each Contract has performed all obligations
required to be performed by it thereunder and is not in breach or default, and
is not alleged to be in breach or default, in any respect thereunder, and no
event has occurred and no condition or state of facts exists (or would exist
upon the giving of notice or the lapse of time or both) that would become or
cause a breach, default or event of default thereunder, would give to any Person
the right to cause such a termination or would cause an acceleration of any
obligation thereunder. Except as disclosed on Schedule 2.16, the Company is not
-------------
currently renegotiating any Contract nor has the Company received any notice of
non-renewal or price increase or sales or production allocation with respect to
any Contract. Without limiting the foregoing, except as disclosed on Schedule
--------
2.16, the Company has no borrowings outstanding under its credit facility with
----
PNC Bank, National Association and is in compliance with its loan covenants set
forth in such facility.
(c) All of the Company's fixed price contracts are accounted for in
the Company Financial Statements using the percentage-of-completion method of
accounting which takes into account the cost, estimated earnings and revenue to
date on contracts not yet completed. The percentage-of-completion revenues and
costs for each of the Company's fixed-price contracts
-13-
accounted for in the Financial Statements are fully recognized and accrued based
on sound engineering estimates of contract work performed through December 31,
1996. All construction Contracts with durations of less than 12 months are
accounted for in the Company Financial Statements on the basis of costs
incurred. All foreseeable losses on all Contracts are fully recognized or
accrued in the Company Financial Statements in accordance with GAAP. All
foreseeable costs, including all estimated cost overruns, on all long-term
construction Contracts are fully recognized or accrued in the Company Financial
Statements in accordance with GAAP. There has been no adverse change to any
long-term construction Contract since December 31, 1996. Total Contract backlog,
based upon Company practice as discussed orally with Acquisition, was
$67,119,000 as of January 31, 1997.
2.17 Permits. The Company and its engineers hold and are in
-------
compliance in all material respects with all permits, certificates, licenses,
franchises, privileges, approvals, registrations and authorizations required
under all Laws, rules and regulations or advisable in connection with the
operation of the Company's assets and the Business (collectively, the "Permits")
and all of such Permits are in full force and effect. No notice of cancellation
of or default, dispute or complaint concerning any Permit, or of any event,
condition or state of facts described in the preceding sentence, has been
received by the Company or any of its engineers.
2.18 Compliance with Laws. The Company is not, and has received no
--------------------
notice that it is, in violation in any material respect of any applicable
federal, state, municipal, local or foreign statutes, laws, ordinances, rules or
regulations (collectively, "Laws"), and no event has occurred or condition or
state of facts exists that could give rise to any such violation. Without
limiting the foregoing, the Company and its engineers are in compliance in all
material respects with all applicable engineering licensure laws and related
requirements in each state or foreign jurisdiction where the Company conducts
business.
2.19 Real Property. Schedule 2.19 sets forth a correct list and
------------- -------------
summary descriptions (showing the record title holder, location, uses being made
thereof and indebtedness secured by a mortgage or other Encumbrance thereon) of
all real properties currently used or leased by the Company or in which the
Company has an interest (including options) (collectively, the "Real Property").
The Company owns no real property. Schedule 2.19 also identifies all real
-------------
estate previously owned by the Company, and any other real estate with respect
to which the Company may be liable for violations of Environmental Laws under
theories of successor Liability, since August 18, 1993 and for the ten-year
period beginning on August 18, 1983. Schedule 2.19 separately identifies the
-------------
location of each design/build, own/operate water treatment facility owned,
leased or licensed by the Company and identifies whether such property is owned,
leased or licensed by the Company, and if leased or licensed, identifies the
agreement giving rise to such rights of lease or license. Except as described
in Schedule 2.19, there are no leases, subleases, tenancies or other rights of
-------------
occupancy affecting all or any part of the Real Property owned by the Company,
and the Company has not granted any options to purchase or otherwise acquire,
and there are no outstanding offers to purchase all or any part of
-14-
the Real Property owned by the Company. The Company has the right to quiet
enjoyment of all Real Property in which it holds a leasehold interest for the
full term, including all renewal rights, of the lease or similar agreement
relating thereto. The Company has not received any written or oral notice of
assessments for public improvements or condemnation against any Real Property.
2.20 Transactions With Related Parties. Except for employment
---------------------------------
relationships and salaries disclosed in Schedule 2.20 or as otherwise disclosed
-------------
on Schedule 2.20, no Related Party (as hereafter defined) has directly or
-------------
indirectly:
(a) Any Liability to or any right to receive property from the
Company;
(b) Any contractual or other claim against the Company or any
obligation under any contractual or other claim to or from the Company;
(c) Any interest in any property or assets used or owned by the
Company or necessary for use in the Business or used any of the assets of the
Company (other than directly in connection with the Business);
(d) Any agreement or plan providing payment or vesting (or
acceleration of either) of property, severance benefits or other benefits that
are contingent on the transactions contemplated by this Agreement or conditioned
upon a change of control after the termination of employment of such employee
regardless of the reason for such termination of employment or the value of any
of the benefits which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(e) An agreement relating to the Company providing any term of
employment that is not terminable at will;
(f) Is a party to any Contract or has any agreement or
understanding of any nature with any party to any Contract; or
(g) Has any other agreement or understanding or is engaged in
any other transaction of any nature with the Company, its officers or directors
(relating to the Company), its suppliers, vendors or customers.
As used herein, the term "Related Party" means (i) DEI, DQE and PVL, (ii) any
Affiliate of DEI, DQE, PVL or the Company, (iii) any officer or director or the
Company and any Person identified in clauses (i) and (ii) preceding, and (iv)
any spouse, sibling, ancestor or lineal descendant of any natural person
identified in preceding clauses. Without limiting the foregoing, (A) all
amounts owing by the Company to or receivable by the Company from any Related
Party on the 12-31-96 Balance Sheet are identified on Schedule 2.20, and all
-------------
services (such as, without limitation, general ledger, other accounting,
insurance, management, legal, tax, banking and
-15-
other financial services, if any) provided to or on behalf of the Company by any
Related Party are identified on Schedule 2.20; (B) Schedule 2.20 identifies any
------------- -------------
assets, arrangements or services to which the Company is a party or with respect
to which the Company benefits that will have to be replaced or would be
materially adversely affected after Closing because the Company will after
Closing no longer be owned directly by DEI or indirectly by any Affiliates of
DEI; (C) Schedule 2.20 identifies any asset, trade name, other Intellectual
-------------
Property and other rights, if any, that are currently shared by the Company and
its Affiliates; and (D) Schedule 2.20 identifies any and all assets (including
-------------
insurance claims files, legal files, accounting information, tax returns, etc.)
of the Company in the possession of DEI or any Affiliate of DEI. DEI has been
given assurance by DQE that DQE has no intention, before or after Closing, of
making any public announcement or public disclosure of the transactions
contemplated or consummated hereby which would name USF or any of its Affiliates
as purchaser.
2.21 Insurance. Schedule 2.21 sets forth a complete list of all
--------- -------------
policies of insurance (collectively, the "Insurance Policies") of which the
Company is the owner, insured or beneficiary or programs of self insurance and
identifies whether such policies are claims made or occurrence policies. Except
as set forth on Schedule 2.21, all premiums under the Insurance Policies have
-------------
been paid in accordance with the terms of the policies. There have been no
defaults with respect to any provision contained in any such Insurance Policies,
nor has there been any failure to give any notice or present any claim under any
such policies in a timely fashion or in the manner or detail required by the
Insurance Policies. No notice of cancellation or non-renewal with respect to,
or disallowance of any claim under, or increase of the premium for any such
insurance policy has been received by DEI or the Company except in the ordinary
course of business. Schedule 2.21 describes in detail any program of self-
-------------
insurance maintained by the Company or by any Affiliate of the Company for or on
behalf of the Company. Schedule 2.21 identifies a five year history of claims
-------------
in excess of $10,000 against the Company (whether covered by insurance or
falling under any program of self insurance) relating to or arising out of
services provided or warranties granted by the Company. All of the Company's
environmental pollution insurance coverage policies are identified on Schedule
--------
2.21.
----
2.22 Liability for Services Provided. Except as otherwise provided on
-------------------------------
Schedule 2.22, (i) there exists no pending suit, inquiry, proceeding or
-------------
investigation by or before any court or governmental or regulatory or
administrative agency or commission relating to any services and alleged to have
been provided in a negligent manner or otherwise in breach of any applicable
contract provisions, standards, representations or warranties ("Liability for
Services") provided to others by the Company, (ii) there exist no pending or
threatened claims against the Company for Liability for Services, and (iii)
there are no existing facts or circumstances that could reasonably lead to any
item described in clauses (i) or (ii) preceding. The Company shall have no
Liability after the Closing Date not fully covered by insurance relating to any
design made by the Company or for Liability for Services prior to the Closing
Date, other than as fully reserved in the warranty reserve on the 12-31-96
Balance Sheet.
-16-
2.23 Labor Relations. No employee of the Company is represented by
---------------
any union or other labor organization. Except as set forth in Schedule 2.23, no
-------------
representation election, arbitration proceeding, grievance, labor strike,
dispute, slowdown, stoppage or other labor trouble is pending or threatened
against, involving, affecting or potentially affecting the Company. No
complaint against the Company is pending or threatened before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any similar
state or local agency, by or on behalf of any employee of the Company. The
Company has no contingent Liability for sick leave, vacation time, severance pay
or any similar item not fully reserved on the 12-31-96 Balance Sheet. The
Company has no contingent Liability for any occupational disease of any of its
employees, former employees or others. Neither the execution and delivery of
this Agreement, the performance of the provisions hereof nor the consummation of
the transactions contemplated hereby will trigger any severance pay obligation
under any contract to which the Company or any Affiliate of the Company is a
party or under any Law.
2.24 Patents and Intellectual Property Rights.
----------------------------------------
(a) Schedule 2.24 contains a complete list of all trademark
-------------
rights, trademark applications, trademark registrations, service marks, trade
names and brand names, copyright registrations and copyright applications,
letters patent, patent applications, logos and licenses (except for licenses
whereby the Company licenses software not material to the Business from third
parties or the amount of the obligation for such license is less than $20,000 in
any one year) used in the Business including the expiration dates, if any, of
each such intellectual property right.
(b) The intellectual property rights identified pursuant to
subparagraph (a) above, any other processes, know-how and related know-how,
formulae, trade secrets, inventions, discoveries, improvements, blueprints,
specifications, drawings, designs, shop and royalty rights and other similar
types of proprietary intellectual property, including those with respect to zero
discharge/recycle systems, DENSE Sludge technology, ColOX(TM) advanced
biotechnology, absorption technology, TOXNOT sludge chemical complexation
technology, membrane separation technologies, hybrid dual-stage biooxidation
technology, selective ion exchange technology, biological metals absorption
process and microwave separation of oil-water sludges technology (collectively,
"Intellectual Property Rights") used in or applicable to the Business are not
the subject of any interference, opposition, reexamination or cancellation
proceeding. Schedule 2.24 identifies any Intellectual Property Right which is
-------------
used by the Company but not owned by the Company. The Company is not infringing
on any intellectual property rights of any other Person.
2.25 Benefit Plans.
-------------
(a) Benefit Plans; Company Plans. Schedule 2.25 discloses all
---------------------------- -------------
written and unwritten "employee benefit plans" within the meaning of Section
3(3) of the U.S. Employee
-17-
Retirement Income Security Act of 1974, as amended, and the applicable rulings
and regulations thereunder ("ERISA"), and any other written and unwritten profit
sharing, pension, savings, deferred compensation, fringe benefit, insurance,
medical, medical reimbursement, life, disability, accident, post-retirement
health or welfare benefit, stock option, stock purchase, sick pay, vacation,
employment, severance, termination or other plan, agreement, contract, policy,
trust fund or arrangement (each, a "Benefit Plan"), whether or not funded and
whether or not terminated within six (6) years prior hereto, () maintained or
sponsored by the Company, or (i) with respect to which the Company (or DEI with
respect to the Company) has or may have Liability or is obligated to contribute,
or (ii) that otherwise covers any of the current or former employees of the
Company or its beneficiaries, or (i) as to which any such current or former
employees or their beneficiaries participated or were entitled to participate or
accrue or have accrued any rights thereunder (each, a "Company Plan").
Separately disclosed on Schedule 2.25 are (i) the 1996 incentive compensation
-------------
awards that the Company has made or intends to make prior to Closing under the
Company's Incentive Compensation Plan and profit sharing plan, (ii) the 1996
discretionary annual contribution that the Company has made or intends to make
to its 401(K) Plan, and (iii) the outstanding options under the Xxxxxxx
Engineers 1996 Stock Option Plan.
(b) Company Group Matters; Funding. Neither the Company nor any
------------------------------
corporation that may be aggregated with the Company under Sections 414(b), (c),
(m) or (o) of the Code (the "Company Group") has any obligation to contribute to
or any direct or indirect Liability under or with respect to any Benefit Plan of
the type described in Sections 4063 and 4064 of ERISA or Section 413(c) of the
Code. The Company does not have any Liability, and after the Closing the
Company will not have any Liability, with respect to any Benefit Plan of any
other member of the Company Group, whether as a result of delinquent
contributions, distress terminations, fraudulent transfers, failure to pay
premiums to the Pension Benefit Guaranty Corporation (the "PBGC"), withdrawal
Liability or otherwise. No accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) exists nor has any funding
waiver from the IRS been received or requested with respect to any Company Plan
or any Benefit Plan of any member of the Company Group and no excise or other
Tax is due or owing because of any failure to comply with the minimum funding
standards of the Code or ERISA with respect to any of such plans.
(c) Compliance. Each of the Company Plans and all related trusts,
----------
insurance contracts and funds have been created, maintained, funded and
administered in all respects in compliance with all applicable Laws and in
compliance with the plan document, trust agreement, insurance policy or other
writing creating the same or applicable thereto. No Company Plan is or is
proposed to be under audit or investigation, and no completed audit of any
Company Plan has resulted in the imposition of any Tax, fine or penalty.
(d) Qualified Plans. Schedule 2.25 discloses each Company Plan that
--------------- -------------
purports to be a qualified plan under Section 401(a) of the Code and exempt from
United States
-18-
federal income Tax under Section 501(a) of the Code (a "Qualified Plan"). With
respect to each Qualified Plan, a determination letter (or opinion or
notification letter, if applicable) covering the U.S. Tax Reform Act of 1986 and
later Code changes for which the remedial amendment period has not closed has
been received from the IRS that such plan is qualified under Section 401(a) of
the Code and exempt from federal income Tax under Section 501(a) of the Code. No
Qualified Plan has been amended since the date of the most recent such letter.
No member of the Company Group, nor any fiduciary of any Qualified Plan, nor any
agent of any of the foregoing, has done anything that would adversely affect the
qualified status of a Qualified Plan or the qualified status of any related
trust.
(e) No Defined Benefit Plans. No Company Plan is a defined benefit
------------------------
plan within the meaning of Section 3(35) of ERISA (a "Defined Benefit Plan").
No Defined Benefit Plan sponsored or maintained by any member of the Company
Group has been terminated or partially terminated after September 1, 1974,
except as set forth on Schedule 2.25. Each Defined Benefit Plan identified as
-------------
terminated on Schedule 2.25 has met the requirement for standard termination of
-------------
single-employer plans contained in Section 4041(b) of ERISA. During the five
year period ending on the Closing Date, no member of the Company Group has
transferred a Defined Benefit Plan to a corporation that was not, at the time of
transfer, related to the transferor in any manner described in Sections 414(b),
(c), (m) or (o) of the Code.
(f) Multiemployer Plans. No Company Plan is a multiemployer plan
-------------------
within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA (a
"Multiemployer Plan"). No member of the Company Group has withdrawn from any
Multiemployer Plan or incurred any withdrawal Liability to or under any
Multiemployer Plan. No Company Plan covers any employees of any member of the
Company Group in any foreign country or territory.
(g) Prohibited Transactions; Fiduciary Duties; Post-Retirement
----------------------------------------------------------
Benefits. No prohibited transaction (within the meaning of Section 406 of ERISA
--------
and Section 4975 of the Code) with respect to any Company Plan exists or has
occurred that could subject the Company to any Liability or Tax under Part 5 of
Title I of ERISA or Section 4975 of the Code. No member of the Company Group,
nor any administrator or fiduciary of any Company Plan, nor any agent of any of
the foregoing, has engaged in any transaction or acted or failed to act in a
manner that will subject the Company to any Liability for a breach of fiduciary
or other duty under ERISA or any other applicable Law. With the exception of
the requirements of Section 4980B of the Code and except as disclosed on
Schedule 2.25, no post-retirement benefits are provided under any Company Plan
-------------
that is a welfare benefit plan as described in ERISA Section 3(1).
2.26 Customer/Supplier Relations. Except as set forth in Schedule
--------------------------- --------
2.26, (i) no single customer of the Company which accounted for more than 2% of
----
the total net sales of the Company for the twelve-month period ending on the
date hereof and (ii) no current supplier of the Company which accounted for more
than 2% of the total supplies purchased by the
-19-
Company for the twelve-month period ending on February 28, 1997 (if such
suppliers could not be replaced by the Company at comparable cost) will
terminate, limit or materially reduce or modify its business relationship with
Company other than in the ordinary course of business. A list of all of the
customer contracts and agreements for the Company involving a customer's
obligation to the Company of more than $100,000 on the date hereof is set forth
on Schedule 2.26, with the contracts being an exception to the first sentence of
-------------
this Section being separately identified on Schedule 2.26.
-------------
2.27 Finder's Fees. Neither DEI nor the Company nor any of their
-------------
respective officers, directors or employees has employed any broker or finder or
incurred any Liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated herein, except fees payable to
Xxxxxxx X. Xxxxxxx and Xxxx Xxxxx. The Company has not paid and neither
Acquisition, its Affiliates nor the Company shall pay or be liable for the fees
of Xxxxxxx X. Xxxxxxx or Xxxx Xxxxx. Except as set forth in the immediately
preceding sentence, DEI has made no agreement and taken no other action which
might cause anyone to become entitled to a broker's fee or commission as a
result of the transactions contemplated hereunder.
2.28 Confidentiality Agreements. Schedule 2.28 sets forth a true,
-------------------------- -------------
correct and complete list of all confidentiality agreements to which Company is
a party, which were entered into within three (3) years prior to the date hereof
and which were entered into outside the ordinary course of business. All such
agreements are valid and binding agreements, enforceable in accordance with
their terms and are in full force and effect (i) subject to bankruptcy,
insolvency, reorganization, moratorium and other Laws now or hereafter in effect
relating to creditors' rights and (ii) except that the remedy of specific
performance and injunctive and other terms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The Company has performed all obligations
required to be performed by Company under such agreements and is not in breach
or default in any respect thereunder, and there has been no event which, with
the giving of notice or the lapse of time or both, would become a breach or
default thereunder.
2.29 Compliance with Environmental Laws. Except as provided in
----------------------------------
Schedule 2.29:
-------------
(a) Compliance; No Liability. The Company has operated its Business
------------------------
and each parcel of Real Property in compliance with all applicable Environmental
Laws. The Company is not subject to any Liability, penalty or expense
(including legal fees) and will not hereafter suffer or incur any loss,
Liability, penalty or expense (including legal fees) by virtue of any violation
of any Environmental Law occurring prior to the Closing, any environmental
activity conducted on or with respect to any property at or prior to the Closing
or any environmental condition existing on or with respect to any property at or
prior to the Closing, in each case whether or not the Company permitted or
participated in such act or omission.
-20-
"Environmental Law" means any applicable Law relating to public health and
safety or protection of the environment, including common law nuisance, property
damage and similar common law theories. Schedule 2.29 separately identifies any
-------------
actual or potential Liability to the Company in connection with the handling or
disposal of waste waters and any Regulated Materials in such waste waters.
(b) Treatment; CERCLIS. The Company has not treated, stored,
------------------
recycled or disposed of any Regulated Material on any real property except in
compliance with applicable Environmental Laws, and no other Person has treated,
stored, recycled or disposed of any Regulated Material on any part of the Real
Property except in compliance with applicable Environmental Laws. There has
been no release of, and there is not present any Regulated Material at, on or
under any Real Property. The Company has not transported any Regulated Material
or arranged for the transportation of any Regulated Material to any location
that is listed or proposed for listing on the National Priorities List pursuant
to Superfund, on CERCLIS or any other location that is the subject of federal,
state or local enforcement action or other investigation that may lead to claims
against the Company for cleanup costs, remedial action, damages to natural
resources, to other property or for personal injury including claims under
Superfund. None of the Real Property is listed or proposed for listing on the
National Priorities List pursuant to Superfund, CERCLIS or any state or local
list of sites requiring investigation or cleanup. "Regulated Material" means
any hazardous substance as defined by any Environmental Law and any other
material regulated by any applicable Environmental Law, including,
polychlorinated biphenyls, petroleum, petroleum-related material, crude oil or
any fraction thereof. "CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List pursuant to Superfund.
"Superfund" means the U.S. Comprehensive Environmental Response Compensation and
Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
-- ----
(c) Notices; Existing Claims; Certain Regulated Materials; Storage
--------------------------------------------------------------
Tanks. The Company has not received any request for information, notice of
-----
claim, demand or other notification that it is or may be potentially responsible
with respect to any investigation, abatement or cleanup of any threatened or
actual release of any Regulated Material. The Company has not transported any
Regulated Material for recycling, treatment, disposal, other handling or
otherwise other than in compliance with applicable law. There has been no past,
and there is no pending or contemplated, claim by the Company under any
Environmental Law or Laws based on actions of others that may have impacted on
the Real Property, and the Company has not entered into any agreement with any
Person regarding any Environmental Law, remedial action or other environmental
Liability or expense. All storage tanks located on the Real Property and
installed thereon by the Company, whether underground or aboveground are in
sound condition and are not leaking and have not leaked, except as disclosed on
Schedule 2.29.
-------------
2.30 Disclosure. None of the representations or warranties of DEI or
----------
the Company contained herein and none of the information contained in the
Schedules referred to in
-21-
Article II is false or misleading in any material respect or omits to state a
----------
fact herein or therein necessary to make the statements herein or therein not
misleading in any material respect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
---------------------------------------------
Acquisition represents and warrants to DEI as follows:
3.01 Title to USF Shares. Upon delivery of the USF Shares at Closing
-------------------
against receipt of the Xxxxxxx Shares, DEI shall acquire legal and valid title
to the USF Shares free of any Encumbrances.
3.02 Securities. Acquisition is an "accredited investor" as such
----------
term is defined in Rule 501 of Regulation D of the Securities Act. Acquisition
understands that the Xxxxxxx Shares have not been registered under the
Securities Act or any state securities law by reason of specific exemptions
under the provisions thereof which depend in part upon the other representations
and warranties made by Acquisition in this Agreement. Acquisition understands
that the Xxxxxxx Shares are "restricted securities" under the Securities Act.
Acquisition is acquiring the Xxxxxxx Shares for investment only and not with a
view toward or in connection with any resale or distribution of such shares.
Acquisition has no present intention of making any sale, gift, transfer or other
disposition of such shares or any interest therein, except that Acquisition may
pledge the Xxxxxxx Shares to its lender or transfer the Xxxxxxx Shares to an
Affiliate of Acquisition.
3.03 Organization and Qualification. Acquisition is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Acquisition has all requisite corporate power and authority
to (i) own, lease, operate and use its properties and assets as now owned,
leased, operated and used and conduct the business of Acquisition as currently
conducted and (ii) make, execute and deliver this Agreement and perform its
obligations hereunder without the need for the consent of any other Person.
3.04 Shares; Capitalization. The authorized capital stock of USF
----------------------
consists of (i) 150,000,000 shares of USF Common Stock, of which 71,382,053 were
issued and outstanding as of January 13, 1997 and 26,491,496 were reserved for
issuance on exercise of outstanding warrants or options or upon conversion of
outstanding convertible securities, or otherwise, as of January 13, 1997; and
(ii) 3,000,000 shares of Preferred Stock, $0.10 par value, subject to a
Certificate of Designations of the Series A Voting Cumulative Convertible
Preferred Stock, none of which is issued and outstanding. On the Closing Date,
the USF Shares will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute, USF's
Certificate of Incorporation or By-Laws or any agreement to which Acquisition is
a party or is bound.
-22-
3.05 Authorization and Enforceability. The execution, delivery and
--------------------------------
performance by Acquisition of this Agreement has been duly authorized by all
necessary action on its part. The execution, delivery and performance by USF of
each Other Agreement to which USF is a party has been duly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by and constitutes, and each Other Agreement which is to be executed
and delivered by USF and Acquisition, when executed and delivered by USF and
Acquisition, shall constitute the legal, valid and binding obligation of USF and
Acquisition.
3.06 No Violation of Laws or Agreements. None of the execution and
----------------------------------
delivery of this Agreement or any Other Agreements, the consummation of the
transactions contemplated hereby or thereby or the compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof by
Acquisition, nor the execution and delivery of any Other Agreement, the
consummation of the transactions contemplated thereby or the compliance with or
fulfillment of the terms, conditions and provisions thereof by USF, will: (i)
contravene any provision of the charter or bylaws of USF or Acquisition, (ii)
conflict with, result in a breach of or constitute a default or an event of
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under any term, condition or provision of,
or results in the termination or loss of any right (or give others the right to
cause such a termination or loss) under, any license, franchise, indenture,
mortgage or any other contract, agreement or instrument to which USF or
Acquisition is a party or by which one or more of them or any of their assets
may be bound or affected, (iii) violate any judgment or order of any
Governmental Body to which USF or Acquisition is subject, (iv) result in the
creation or imposition of any Encumbrance upon the USF Shares or gives to others
any interests or rights therein, or (v) result in the maturation or acceleration
of any Liability or obligation of USF or Acquisition (or gives others the right
to cause such a maturation or acceleration). Except as may be required by the
HSR Act and the Exchange Act (as defined below), the registration of the USF
Shares with the SEC and the listing of the USF Shares on the New York Stock
Exchange, no consent, approval, declaration or authorization of, or registration
or filing with, any Person (including any Governmental Body) is required in
connection with the execution and delivery by Acquisition of this Agreement and
the Other Agreements and the consummation of the transactions contemplated
hereby and thereby by Acquisition or the execution and delivery by USF of the
Other Agreements to which it is a party and the consummation of the transactions
contemplated thereby by USF.
3.07 SEC Reports. Acquisition has delivered to DEI a copy of each
-----------
report, proxy statement or information statement filed by it since December 31,
1995 and prior to the date hereof, each in the form (including exhibits and any
amendments thereto and all documents incorporated by reference therein) filed
with the Securities and Exchange Commission ("SEC") under the U.S. Securities
Exchange Act of 1934, as amended (the "Exchange Act") and a copy of Amendment
No. 3 to Registration Statement No. 333-07763, as filed by USF with the SEC.
3.08 Finder's Fees. Neither Acquisition, its Affiliates nor any of
-------------
its respective
-23-
officers, directors or employees has employed any broker or finder or incurred
any Liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated herein. Neither Acquisition nor its
Affiliates has made an agreement or taken any other action which might cause
anyone to become entitled to a broker's fee or commission as a result of the
transactions contemplated hereunder.
3.09 No Agreements with Management. As of the date hereof, neither
-----------------------------
Acquisition nor any of its Affiliates has any agreements with any employee of
the Company.
3.10 Disclosure. None of the representations or warranties of
----------
Acquisition contained herein is false or misleading in any material respect or
omits to state a fact herein or therein necessary to make the statements herein
or therein not misleading in any material respect.
ARTICLE IV
COVENANTS OF DEI AND THE COMPANY
---------------------------------
4.01 Conduct of Business Pending Closing. During the period
-----------------------------------
commencing on the date of this Agreement and ending on the earlier to occur of
(i) the Closing or (ii) the termination of this Agreement (the "Interim
Period"), and unless Acquisition shall otherwise consent or agree in writing and
without limiting any other provision herein, the Company shall, and DEI shall
cause the Company to, conduct its affairs and the affairs of its Subsidiaries as
follows:
(a) Ordinary Course; Compliance. The Business shall be
---------------------------
conducted in the ordinary course and substantially consistent with past
practice. The Company and each Subsidiary shall use reasonable best efforts to
maintain its property, equipment and other assets consistent with past practice
and shall comply timely in all material respects with the provisions of all its
leases, agreements, contracts and commitments in connection with the Business or
its assets.
(b) Preservation of Business. During the Interim Period, the
------------------------
Company and each Subsidiary shall use reasonable efforts to preserve its
business organization intact, keep available the services of its present
engineers and other employees and preserve the goodwill of its suppliers,
customers and others having business relations with it.
(c) Prohibited Transactions. During the Interim Period, the
-----------------------
Company shall not, nor shall DEI cause the Company or any Subsidiary to:
(i) Amend its charter documents or bylaws;
(ii) Enter into any contract or commitment the performance of
which may
-24-
extend beyond the Closing, except those contracts or commitments made in
the ordinary course of business, the terms of which are consistent with
past practice, except that the Company may confirm in writing its
agreements regarding the joint ventures identified on Schedule 2.05;
-------------
(iii) Enter into any employment or consulting contract or
similar arrangement that is not terminable at will, without penalty or
continuing obligation; provided, however, that the Company may permit to be
-------- -------
extended employment agreements during the Interim Period under the same
terms and conditions thereof for a period not to exceed one year;
(iv) Fail to pay all Taxes when due (as any such due date may
be extended) or fail to pay when due any other Liability or charge
inconsistent with past practice;
(v) Make, change or revoke any Tax election or make any
agreement or settlement with any taxing authority that relates to the
period after Closing;
(vi) Create any Encumbrance, other than Permitted Encumbrances,
on any assets, tangible or intangible;
(vii) Declare, set aside or pay any dividend or other
distribution (whether in cash, stock, property or any combination thereof)
in respect of the Xxxxxxx Common Stock or any securities of any Subsidiary,
or directly or indirectly issue, sell, redeem, purchase or otherwise
acquire or dispose of, or create any Securities Rights with respect to, the
Xxxxxxx Common Stock or any securities of any Subsidiary or any rights to
purchase the Xxxxxxx Common Stock or any securities of any Subsidiary or
securities convertible into or exchangeable for the Xxxxxxx Common Stock or
any securities of any Subsidiary;
(viii) Except as set forth in Schedule 4.01, increase any of the
-------------
salaries or other compensation payable or to become payable to, or make any
advance or loan to, any employee, or make any increase in, or any addition
to, other benefits (including any Company Benefit Plan) to which any
employee may be entitled, or make any payments to or in respect of any
Company Benefit Plan or any change in any Company Benefit Plan;
(ix) Except as set forth in Schedule 4.01, make or authorize
-------------
any single capital expenditure in excess of $75,000 or capital expenditures
in excess of $200,000 in the aggregate or acquire (by merger, consolidation
or acquisition of stock or assets) any corporation, partnership or other
business organization or division thereof, or make any investment either by
purchase of stock or securities, contribute capital, make any loan or
advance of funds to any Person or, except in the ordinary course of
business, purchase
-25-
any property or assets;
(x) Cancel or waive any right or cancel or waive any debts or
claims of value or against any Related Party in excess of $50,000 in the
aggregate or terminate or modify (through course of performance or
otherwise) any Contract (other than terminations through performance in
accordance with its terms), except in the ordinary course of business;
(xi) Sell, transfer or otherwise dispose of any assets, except
sales of assets (other than inventory) in the ordinary course of business
not in excess of $25,000; sell, transfer or otherwise dispose of any assets
for less than fair market value; or purchase any assets for greater than
fair market value; or
(xii) Except as set forth in Schedule 4.01, make any payment,
-------------
loan or advance of any amount to or in respect of, or any sale, transfer or
lease of any properties or assets (whether real, personal or mixed,
tangible or intangible) to, or consummate any transaction or create any
agreement or arrangement with, any Related Party, except for compensation
to the officers and employees at rates not exceeding the rates of
compensation existing on the date hereof and as contemplated by this
Agreement.
4.02 Access, Information and Documents. During the Interim Period,
---------------------------------
DEI and the Company shall give to Acquisition and to its employees and
representatives (including independent public accountants, attorneys,
environmental consultants and engineers) access during normal business hours to
all of the properties (including Real Property for purposes of an environmental
assessment), books, Tax returns, contracts, commitments, records, officers,
personnel and accountants (including independent public accountants) of the
Company and the Subsidiaries and shall furnish to Acquisition all such documents
and copies of documents and all information with respect to the affairs of
Company and the Subsidiaries as Acquisition may reasonably request.
4.03 Preserve Accuracy of Representations and Warranties. DEI shall
---------------------------------------------------
use its reasonable efforts to ensure that the Company conducts, and the Company
shall use its reasonable best efforts to conduct, the Business in such a manner
that, at the Closing, the representations and warranties of DEI and the Company
contained in this Agreement shall be true and correct in all material respects
as though such representations and warranties were made on, as of, and with
reference to such date. DEI and Company shall each promptly notify Acquisition
of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced after the date hereof against the Company or any
Subsidiary. DEI and Company shall each notify Acquisition of any facts or
circumstances as to which it obtains knowledge that cause any representation and
warranty contained in Article II of this Agreement or relating to any matters
required to be set forth in the Schedules hereto to be untrue.
-26-
4.04 Filings and Authorizations. As promptly as practicable, each of
--------------------------
the Company and DEI shall make, or cause to be made, such filings and
submissions under law, rules and regulations applicable to it, including the HSR
Act, as may be required for it to consummate the purchase and transfer of the
Xxxxxxx Shares hereunder, and shall use its best efforts to obtain, or cause to
be obtained, all authorizations, approvals, consents and waivers from all
Governmental Bodies necessary to be obtained by it.
4.05 Notice of Changes. During the Interim Period, DEI and the
-----------------
Company shall give Acquisition prompt written notice of any material change or
inaccuracies in any data previously given or made available to Acquisition
pursuant to this Agreement.
4.06 Section 338(h)(10) Election; Certain Tax Returns. DEI and DQE
------------------------------------------------
shall join with USF in the timely filing of a joint election pursuant to Section
338(h)(10) of the Code (the "Section 338(h)(10) Election") under which, for
federal (and state, where permissible) income tax purposes, the sale of the
Xxxxxxx Shares and the shares of the corporate Subsidiaries will be treated as
if it were a sale of all of the assets of the Company and the corporate
Subsidiaries in a single transaction on the Closing Date, with the Company and
the corporate Subsidiaries being treated as members of DQE's consolidated group
with respect to such sale. DEI, DQE and Acquisition agree to cooperate fully
in order to make the Section 338(h)(10) Election valid, including, but not
limited to, the filing of IRS Form 8023 (and any state equivalent) and any
accompanying statements or schedules that may be required on a timely basis. The
allocation of Acquisition's "adjusted grossed-up basis" among the tangible and
intangible assets of the Company and the corporate Subsidiaries shall be in
accordance with Schedule 4.06 hereto. Such allocation shall be used by DQE,
-------------
DEI, Acquisition, and the Company and the corporate Subsidiaries for purposes of
allocating the "deemed selling price", and DQE, DEI, USF, and the Company shall
not file any tax return or schedule that is inconsistent with such allocation.
DQE and DEI shall be responsible for and shall indemnify and hold USF,
Acquisition and the Company and the Subsidiaries harmless for any Taxes that
arise from the deemed sale of the assets of the Company and the Subsidiaries
pursuant to the Section 338(h)(10) Election, including, but not limited to,
state and local income or franchise taxes.
4.07 Certain Additional Tax Matters.
------------------------------
(a) Tax Returns and Payment of Taxes for Periods Through the
--------------------------------------------------------
Closing Date. DQE and DEI shall cause DQE to include the income of the Company
------------
and each Subsidiary on DQE's consolidated federal income Tax Return for all
periods up to and including the Closing Date and will pay any Tax due thereon.
DQE and DEI shall be responsible for and pay all Taxes of the Company and each
Subsidiary up to and including the Closing Date, including any Taxes
attributable to the audits of the Company's federal income Tax returns currently
in process. All Taxable items of the Company and each Subsidiary shall be
apportioned for the period of time up to and including the Closing Date and the
period of time
-27-
after the Closing Date by closing the books of Company and each Subsidiary as of
the close of business on the Closing Date. All Tax sharing arrangements between
DQE or DEI (or any Affiliate of DQE) and the Company and any Subsidiary ("Tax
Sharing Arrangements") shall be terminated on or prior to Closing with no
Liability from the Company or any Subsidiary to DQE or DEI or any Affiliate of
the Company and each Subsidiary is hereby released (and DEI shall cause the
Company and each Subsidiary to be released) from any and all obligations to DQE
or DEI (and any Affiliate of DEI) for any and all Taxes regardless of when such
taxes have or shall have accrued. DQE and DEI shall indemnify and hold harmless
USF, Acquisition, the Company and each Subsidiary from Tax Liabilities for all
periods through the Closing Date and from any Tax Liabilities of DEI and DQE or
any of their past or current subsidiaries and Affiliates for all taxable periods
that end on or before the Closing Date or that include the Closing Date with
respect to which the Company may be liable under Treas. Reg. (S) 1.1502-6 or
similar foreign, state, local or other governmental statutes, regulations or
administrative procedures. DEI shall be entitled to all income tax refunds for
all taxable periods ending on or before the Closing Date and shall be entitled
to deal directly with all taxing authorities and make all decisions with respect
to audits for all taxable periods of the Company and each Subsidiary ending on
or before the Closing Date.
(b) Tax Reimbursement Amount. Notwithstanding the foregoing, the
------------------------
Company shall pay to DEI an amount equal to thirty (35%) percent of the pretax
income of the Company and the Subsidiaries for the period beginning January 1,
1997 and ending on the Closing Date (the "Tax Reimbursement Amount"). At the
Closing Date, the Company shall deliver to DEI an amount equal to the parties'
good faith estimate of the Tax Reimbursement Amount. Within 45 days after the
Closing Date, the parties shall reach definitive agreement on the Tax
Reimbursement Amount and settle on the difference between such definitive amount
and the estimated amount paid at Closing. Taxable income shall be determined in
a manner consistent with the 1995 federal income tax return for the Company and
the Subsidiaries (computed on a stand-alone basis). The parties hereto agree
that payment of the Tax Reimbursement Amount is based on a compromise for
certain pre-Closing Taxes and is not intended to be a computation of actual
Taxes owed or accrued by the Company prior to or at the Closing Date.
(c) Mutual Cooperation. Acquisition, DQE and DEI shall each provide
------------------
the other, and USF shall cause the Company and each Subsidiary to provide and
DQE and DEI, with such assistance as may reasonably be requested by any of them
in connection with the preparation of any Tax Return, any Tax audit, or any
judicial or administrative proceedings relating to any Tax, and each will retain
and provide the other with any records or information that may be relevant to
such Tax Return, Tax audit, proceeding or determination. The party requesting
assistance hereunder shall reimburse the other for direct expenses incurred in
providing such assistance.
4.08 Lease with PVL. DEI shall cause the lease between the Company
--------------
and PVL
-28-
to be amended to permit a six-month right of termination at any time by the
Company subject to a termination payment by the Company equal to the product
obtained by multiplying $250,000 by a fraction, the numerator of which is the
number of days between the date of termination of the lease and the date of
expiration of such lease by its terms (without renewal or extension), and the
denominator of which is the number of days between the Closing Date and the date
of expiration of such lease by its terms (without renewal or extension).
4.09 Acquisition Proposals. Neither DEI, the Company nor any
---------------------
Subsidiary shall (nor shall DEI permit any of its Affiliates to) directly or
indirectly, solicit, initiate or encourage any inquiries or the making of any
proposals from, engage or participate in any negotiations or discussions with,
provide any confidential information or data to, or enter into (or authorize)
any agreement or agreement in principle with any Person or announce any
intention to do any of the foregoing, with respect to any offer or proposal to
acquire all or any substantial part of the assets, properties, or the Business
or the Xxxxxxx Shares, whether by merger, purchase of capital stock or assets or
otherwise. Notwithstanding the foregoing, if this Agreement is terminated by
Acquisition because of an alleged default hereunder by DEI or the Company, then
this Section 4.09 shall remain in effect and shall thereafter terminate only
------------
upon receipt by Acquisition of the Liquidated Damages or the date that
Acquisition receives notice from a bank or trust company who is not engaged in
any material business with any of DQE, USF or their Affiliates that such bank or
trust company is holding in escrow an amount of readily available federal funds
equal to the Liquidated Damages, and confirmation that such funds will not be
released from escrow until such bank or trust company receives joint
instructions to do so from Acquisition (or any of its Affiliates) and DEI or a
final non-appealable order from the Arbitrators (as defined in Section 7.05).
------------
4.10 Assurance. At the Closing, DEI shall deliver or cause to be
---------
delivered to Acquisition an unconditional guarantee of payment and performance
(and not collection) by PVL of the indemnification obligations of DEI pursuant
to Section 8.02 hereof (which guarantee is sometimes referred to herein as the
------------
"PVL Guarantee"), secured by a first and only mortgage on the property known as
000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx ("PVL Mortgage"). The PVL
Guarantee and the PVL Mortgage shall be standard commercial mortgage and
guarantee documents of a type customarily used in the commercial middle-market
banking industry providing to Acquisition customary remedies under Pennsylvania
law, without offset or condition, for a transaction of the size and nature
contemplated herein in forms reasonably acceptable to Acquisition; provided,
--------
however, that the PVL Mortgage shall not provide for escrows or approvals over
-------
any leases or modifications thereto, and provided, further, that during the term
-------- -------
of the PVL Mortgage all material transactions between PVL and any Affiliate of
PVL with respect to the property subject to the PVL Mortgage shall be at arms'
length. The PVL Mortgage shall be released by Acquisition on the second
anniversary of the Closing (the period commencing on the Closing and ending on
the second anniversary thereof is sometimes referred to herein as the
"Indemnification Period"). At any time and from time to time during the
Indemnification Period, DEI may, upon written notice to Acquisition, cause an
alternative
-29-
method of assuring adequate resources of DEI (in an amount not less than $26
million of unencumbered assets) to satisfy any obligations of DEI pursuant to
Section 8.02 of the Agreement during the Indemnification Period to be
------------
implemented, which shall be subject to Acquisition's prior written approval
(which approval shall not be unreasonably withheld, conditioned or delayed), in
which event, upon implementation of such alternative method, Acquisition shall
cause the PVL Guarantee to be canceled and the PVL Mortgage to be satisfied.
4.11 Accounts Receivable. Within 10 business days after the date
-------------------
180 days after the Closing Date, Acquisition may at its sole discretion require
DEI to purchase (with all rights of collection) from the Company for cash on
such 10th business day any account receivable existing on the Closing Date which
is not collected within 180 days after the Closing Date, for a purchase price
equal to the stated amount thereof; provided, however, that as a condition to
-----------------
such obligation, (i) the Company shall not have made any formal or informal
arrangement whatsoever with such customer, including, without limitation,
arrangements involving offset, recoupment, additional products or services or
barter directly or indirectly related to such uncollected receivable, (ii) the
Company shall have applied all cash receipts from such customer against the
invoice specified in the payment, and if no invoice is specified, then to the
oldest outstanding invoice, and (iii) the Company shall have made its best
efforts to collect such accounts (without having to file suit against any
account debtor).
4.12 Employee/Employee Benefit Matters. The Company shall cause its
---------------------------------
committee designated by the Board of Directors to administer the Xxxxxxx
Engineers 1996 Stock Option Plan (the "Xxxxxxx Option Plan") to exercise its
authority under Section 6.03(e) of the Xxxxxxx Option Plan to specify that all
Participants in the Xxxxxxx Option Plan shall (i) be granted replacement Non-
Qualified Stock Options to purchase shares of USF Common Stock ("Reset Options")
subject to the unexercised portion of the vested and non-vested Options held by
such Participants (as defined in the Xxxxxxx Option Plan) under, and in
accordance with, the Xxxxxxx Option Plan, and (ii) receive such other
consideration as provided in Section 6.03 of the Xxxxxxx Option Plan as shall be
determined by USF. Each Reset Option shall (i) have a purchase price per share
of USF Common Stock equal to the USF Shares Average Price; (ii) expire on the
stated expiration date of the original Option; and (iii) otherwise meet all of
the requirements of Section 6.03(e) of the Xxxxxxx Option Plan which shall be
deemed to be incorporated by reference herein.
4.13. Resale of USF Shares. DEI (and any assignee of the USF Shares)
--------------------
shall not sell the USF Shares in the public market, unless it does so by or
through Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation ("DLJ") or such
other investment banking firm as may be reasonably satisfactory to DEI, and,
further, DEI shall sell the USF Shares in the public market only in such
quantities and at such times as DLJ or such investment banking firm reasonably
believes will not be materially disruptive to the market for the USF Shares.
Acquisition shall pay for any sales commissions in excess five cents per share
on such sales through such investment banking firm. DEI shall not transfer the
USF Shares (other than in the public market) to any Person without first
requiring that Person to be bound to USF by the provisions of this Section
-------
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4.13.
----
ARTICLE V
COVENANTS OF ACQUISITION
------------------------
5.01 Filings and Authorizations. As promptly as practicable,
--------------------------
Acquisition shall make, or cause to be made, such filings and submissions under
law, rules and regulations applicable to it, including the HSR Act, as may be
required for it to consummate the purchase and transfer of USF Shares hereunder,
and shall use its best efforts to obtain, or cause to be obtained, all
authorizations, approvals, consents and waivers from all Governmental Bodies
necessary to be obtained by it.
5.02 Notice of Changes. During the Interim Period, Acquisition
-----------------
shall deliver to DEI copies of any material public disclosures made by USF.
5.03 Merger. Immediately after Closing, Acquisition shall cause the
------
Company to merge into Acquisition (or an Affiliate of Acquisition), or
Acquisition (or an Affiliate of Acquisition), shall merge into the Company,
subject to the determination by USF in its judgment that such merger shall not
adversely affect any material right of the Company, cause any additional
Liability to the Company, accelerate any then existing Liability of the Company,
require any significant expenditures by the Company, adversely affect any then
existing contract to which the Company is a party or license held by the Company
otherwise have a material adverse effect on the Company, or cause any
significant Tax liability to USF or its Affiliates.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
6.01 Mutual Conditions Precedent. The obligations of Acquisition and
---------------------------
DEI to proceed with the Closing under this Agreement are subject to the
fulfillment prior to the Closing of the following conditions:
(a) Litigation. No order of any Governmental Body shall be
----------
in effect that enjoins, restrains or prohibits the transactions contemplated
hereby or that would limit or adversely affect Acquisition's ownership of the
Xxxxxxx Shares or DEI's ownership of the USF Shares, and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any Governmental Body challenging any of the transactions contemplated by
this Agreement or the Other Agreements or seeking monetary relief by reason of
the consummation of such transactions.
(b) Filings. The filing and waiting period requirements of any
-------
applicable federal or state law or Governmental Body relating to the
consummation of the transactions contemplated by this Agreement and the Other
Agreements shall have been complied with.
-31-
(c) Listing on NYSE. The USF Shares to be issued pursuant
---------------
hereto shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
(d) S-4 Registration of USF Shares. USF shall have filed a
------------------------------
registration statement with the SEC on Form S-4 to register, among others, the
USF Shares and such registration statement shall have been declared effective
and no stop order shall be in effect with respect thereto. USF shall consent in
writing to allow DEI to use such registration statement in connection with the
resale of the USF Shares in the public market.
6.02 Conditions Precedent to Obligations of Acquisition. The
--------------------------------------------------
obligation of Acquisition to proceed with the Closing under this Agreement is
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in whole or in part by Acquisition at
Acquisition's option):
(a) Accuracy of Representations and Warranties. Each of the
------------------------------------------
representations and warranties of DEI and the Company contained in Article II of
this Agreement shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such representations
and warranties had been made on, as of and with reference to such date;
provided, however, that this Section 6.02(a) shall not be a condition to
-------- ------- ---------------
Acquisition's obligations to close hereunder if DEI indemnifies Acquisition for
the failure to be true of any of the representations and warranties as of the
Closing Date.
(b) Performance and Compliance. DEI and the Company shall
--------------------------
each have performed in all material respects all of the covenants and complied
in all material respects with all of the provisions required by this Agreement
to be performed or complied with by it on or before the Closing.
(c) No Material Adverse Change. Between the date hereof and the
--------------------------
Closing Date, there shall have been no material adverse change in the financial
condition, assets, Liabilities, net worth, Business or prospects of the Company
or any Subsidiary, and no event or condition shall have occurred or exist that
might be expected to cause such a change in the future.
(d) Closing Documents. Acquisition shall have received the
-----------------
deliveries referred to in Section 1.06(a).
---------------
(e) Estoppel Certificates. Acquisition shall have received an
---------------------
estoppel certificate in form and substance satisfactory to Acquisition from PVL,
and the Company shall permit Acquisition to use Acquisition's best efforts to
obtain estoppel certificates from each of the other lessors of the leases
identified in Schedule 2.19 (receipt of such other estoppel certificates not
-------------
being a condition to Closing hereunder).
-32-
(f) Consents. The consents set forth in Schedule 2.07 shall
-------- -------------
have been obtained; provided, however, that this Section 6.02(f) shall not be a
-------- ------- ---------------
condition to Acquisition's obligations to close hereunder if DEI indemnifies
Acquisition for the failure to obtain such consents.
(g) Lease with PVL. The terms of the lease between the
---------------
Company and PVL shall have been amended in the manner contemplated by Section
-------
4.08.
----
(h) Termination Agreement. All Tax Sharing Arrangements shall
---------------------
have been completely terminated with no payments by or continuing Liability of
the Company as a result of such termination, and evidence of such termination
by DEI and DQE shall be delivered to Acquisition.
(i) Absence of Debt. The Company shall have no Liabilities of
---------------
any kind to any Related Party, except as expressly provided herein, in any
Schedule or in any Other Agreement, and the Company shall have no Liabilities to
any other Person for borrowed money, except as disclosed on Schedule 6.02(i).
----------------
(j) Chrysler de Mexico. The Company shall have paid to USF
------------------
in cash an amount equal to $445,517.85 and shall have recorded such payment in
its pre-Closing financial accounting records as a loss on its contract with
Chrysler de Mexico, substantially in accordance with that certain letter dated
January 3, 1996 to Xxxx Xxxxx from Xxxx Xxxxxxxxx, as annotated by USF and
delivered by USF to the Company.
(k) Inactive Subsidiaries. All of the equity and other
---------------------
interests in each Inactive Subsidiary shall have been transferred and assigned
to DEI with no future Liability or Security Rights with respect thereto
remaining with the Company.
(l) DQE, Inc. Certificate. Acquisition shall have received a
---------------------
duly executed certificate of DQE, Inc. in the form attached as Exhibit C.
---------
(m) NJ-ISRA. The Company shall have obtained a letter of Non-
-------
Applicability with respect to its facility located in New Jersey under the New
Jersey Industrial Site Recovery Act (PL 1993, ch. 39).
6.03 Conditions Precedent to the Obligations of DEI. The
----------------------------------------------
obligation of DEI to proceed with the Closing hereunder is subject to the
fulfillment prior to or at Closing of the following conditions (any one or
more of which may be waived in whole or in part by DEI at DEI's option):
(a) Accuracy of Representations and Warranties. Each of the
------------------------------------------
-33-
representations and warranties of Acquisition contained in Article III of this
Agreement shall be true and correct in all material respects on, as of, and with
reference to the Closing Date, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such date, except with respect to Section 3.04 concerning the number of
------------
outstanding and reserved shares of stock, which number is likely to fluctuate
prior to Closing.
(b) Performance and Compliance. Acquisition shall have
--------------------------
performed in all material respects all of the covenants and complied in all
material respects with all of the provisions required by this Agreement to be
performed or complied with by it on or before the Closing. USF shall have
performed in all material respects all of the covenants and complied in all
material respects with all of the provisions required by the Other Agreements to
which it is a party to be performed or complied with by it on or before Closing.
(c) Closing Documents. DEI shall have received the deliveries
-----------------
referred to in Section 1.06(b).
---------------
ARTICLE VII
CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
-------------------------------------------
7.01 Costs and Expenses. Acquisition and DEI shall each pay all
------------------
their own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, but not limited to, all accounting,
legal and appraisal fees and settlement charges. DEI shall pay all such costs
and expenses of the Company and the Subsidiaries.
7.02 Confidentiality. In connection with this Agreement, each party
---------------
hereto has furnished and will furnish to the other parties confidential
information concerning its business and financial condition. Each party shall,
and shall cause its employees, agents, accountants, attorneys and investment
advisors to, maintain the confidentiality of such information received from the
other parties and shall not use such information for any purpose except in
furtherance of the transactions contemplated hereby. In the event of a
termination of this Agreement, upon written request of a party, the other
parties shall return or destroy all copies of written confidential information
received from such party, whether pursuant to this Agreement or otherwise, and
all documents prepared by them which contain such information.
7.03 Publicity. No party hereto shall issue any press release or
---------
make any public announcements to any Person the existence of, or any matter with
respect to, this Agreement, the Other Agreements or the transactions
contemplated hereby or thereby without the express prior written consent of the
other parties hereto, except that Acquisition shall be permitted to complete its
due diligence investigation of the Company and the Subsidiaries, the parties
shall make the required filing under the HSR Act, the filings to register the
USF Shares, DEI may obtain the consents identified on Schedule 2.07, USF may
-------------
obtain listing approval for the USF Shares and the parties may consult with
their outside advisers in connection herewith;
-34-
provided, however, that either party (or any Affiliate thereof) may issue a
-------- -------
press release, make any public statement or make a public disclosure regarding
the existence of, or any matter with respect to, this Agreement, the Other
Agreements or the transactions contemplated hereby without the prior written
consent of the other party if USF (or any Affiliate of USF) is not identified as
the purchaser of the Company. Notwithstanding the foregoing, either party may
make such other public disclosure as may be required by applicable law based on
advice of counsel that such disclosure is necessary in order to avoid material
violation of such law, subject to the prior reasonable approval of the content
of such disclosure by the other parties hereto. Discussions with analysts or the
like shall not constitute a breach hereof. This Section shall survive
termination hereof or Closing hereunder.
7.04 Further Assurances. DEI and Acquisition shall, respectively,
------------------
at any time and from time to time on and after the Closing Date, upon request by
Acquisition or DEI, as the case may be and without further consideration, take
or cause to be taken such actions and execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, such documents as may be convenient
or necessary to better convey the Xxxxxxx Shares to Acquisition or to issue or
deliver the USF Shares to DEI.
7.05 Termination. This Agreement may be terminated at any time prior
-----------
to Closing by: (i) mutual consent of Acquisition, DEI and the Company; (ii)
Acquisition, if any of the conditions specified in Section 6.02 hereof shall not
------------
have been fulfilled by May 30, 1997 and shall not have been waived by
Acquisition; or (iii) DEI and if any of the conditions specified in Section
-------
6.03 hereof shall not have been fulfilled by May 30, 1997 and shall not have
----
been waived by DEI. In the event of termination of this Agreement on or prior
to May 30, 1997 by DEI or the Company, on the one hand, or Acquisition, on the
other hand, as a result of a material breach by the other party or parties
hereto, then the breaching party shall promptly pay to the non-breaching party
the sum of $2 million cash as liquidated damages, and not as a penalty, which
remedy shall be in lieu of any other remedy at law or in equity ("Liquidated
Damages"). A material breach by USF under any Other Agreement to which it is a
party shall be a material breach hereunder by Acquisition. The parties have
agreed to liquidated damages of $2 million, because they mutually believe that,
considering, among other things, the effect of such breach on the ability of DEI
to sell the Company and the damage to USF in the marketplace for a failed
transaction, the measure of their respective damages in the event of a breach
would be impossible to determine. Notwithstanding the foregoing, in the event
that this Agreement is terminated by one party hereto pursuant to clause (ii) or
(iii) of the first sentence of this Section solely as a result of a breach by
another party hereto of a representation or warranty of such other party as of a
date after the date of this Agreement, which breach could not have been
reasonably anticipated by such other party and was beyond the reasonable control
of such other party, then neither party shall have any liability to the other
with hereunder. Any dispute arising under this Section 7.05 shall be resolved
------------
by arbitration in accordance with the rules of the American Arbitration
Association in the City of Pittsburgh using three arbitrators, one being chosen
by DEI, one being chosen by Acquisition and the third being chosen by the other
two arbitrators (collectively, the
-35-
"Arbitrators").
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
8.01 Survival of Representations. All representations, warranties,
---------------------------
covenants and agreements made by any party in this Agreement or pursuant hereto
shall survive the Closing, but no claim may be made with respect to any breach
of any representation or warranty hereunder after the twenty-fourth (24th) month
anniversary of the Closing Date; provided, however, that claims for breach of
the representations and warranties contained in Sections 2.11, and 2.25 and
-------------- ----
claims for breach of any representations and warranties relating to title and
claims for breach of any representations and warranties contained in Section
-------
2.20 may be made at any time during the period of the applicable statute of
----
limitations relating to the subject matter thereof plus 90 days, the
representations and warranties contained in the Section 2.14(b) shall survive
---------------
without limitation as to time and the representations and warranties contained
in Section 2.13 shall not survive Closing. DEI and the Company acknowledge that
------------
their representations and warranties in Article II shall not be affected or
mitigated by any investigation conducted by Acquisition or its representatives
prior to the Closing or any knowledge of Acquisition. Similarly, Acquisition
acknowledges that its representations and warranties in Article III shall not be
affected or mitigated by any investigation conducted by DEI or its
representatives prior to the Closing.
8.02 Indemnification by DEI. Subject to Section 8.06 below, DEI
---------------------- ------------
shall indemnify, defend, save and hold Acquisition and its officers, directors,
employees, Affiliates and agents (including, after Closing, the Company and the
Subsidiaries) (collectively, "Acquisition Indemnitees") harmless from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, deficiencies, Liabilities, costs and expenses, including reasonable
attorneys' fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing (collectively,
"Acquisition Damages") asserted against, imposed upon, resulting to or incurred
by any of the Acquisition Indemnitees, directly or indirectly, in connection
with, or arising out of, or resulting from (i) a breach of any of the
representations and warranties made by DEI or the Company in this Agreement,
except as set forth above in the first sentence of Section 8.01, (ii) a breach
------------
of any of the covenants or agreements made by DEI or the Company in or pursuant
to this Agreement and in any Other Agreement to which DEI or the Company is a
party, (iii) by virtue of the fact that the Company and the Subsidiaries are or
at any time were members of a controlled group or affiliated group of entities
of which DQE or DEI is a member, (iv) the Discontinued Operations and the
Inactive Subsidiaries, (v) indemnification obligations of the Company or any
Subsidiary to any of their officers or directors required by the Company's
Amended By-Laws or Articles or the organic documents of any Subsidiary arising
out of any facts or circumstances occurring on or prior to the Closing Date,
(vi) any material fact or facts that Acquisition discovers during the course of
its due diligence and investigation of the Company (including, without
limitation, review of the
-36-
Company's assets, properties and projects, and discussions with third parties
and Company employees) not fully disclosed in the Schedules hereto and
identified in writing by Acquisition to DEI prior to Closing that would
individually or in the aggregate adversely affect the financial condition,
results of operation, condition of assets, Business or prospects of the Company
and which would constitute a breach of representation or warranty by DEI
hereunder; (vii) replacement, modification or repair of equipment related to CM
Services, Inc.'s Engineering Procurement Construction Facilities Operation
Contract against AK Steel Corporation dated May 18, 1995, as amended, in
connection with the dispute describe in item 5(a) of Schedule 2.16, provided
-------------
that the indemnity in this clause (vii) shall not exceed $2 million and shall be
made only after CM Services, Inc. first exercises it best efforts to exhaust its
remedies under such contract with AK Steel Corporation (without arbitration or
litigation), provided further that this clause (vii) shall be Acquisition's sole
remedy with respect to the dispute identified in item 5(a) of Schedule 2.16 (but
-------------
not to any other matter involving Damages, if any, relating to such contract)
and, provided, further, that any such repairs shall be subject to the prior
-----------------
approval of DEI (which approval shall not be unreasonably withheld, conditioned
or delayed); (viii) a partial termination, if any, of the Employee Retirement
Plan of Xxxxxxx Environmental as a result of employee terminations during 1995
or 1996; and (ix) all of the matters and claims identified on Schedules 2.15 and
--------------
2.29 for amounts in excess (in the aggregate) of the balance of the applicable
----
reserves on the Company's 12-31-96 Balance Sheet. The waiver by Acquisition of
any condition to Closing set forth in Section 6.02 shall not be deemed to be a
------------
waiver by Acquisition of its rights of indemnification hereunder. DEI waives any
applicable statute of limitations with respect to the matter governed by clause
(iv) above. Failure by Acquisition to notify DEI of any fact identified with
respect to the matters governed by clause (vi) above shall not prejudice
Acquisition's rights to indemnification under clause (i) if Acquisition did not
know of such facts prior to Closing. DEI shall have no liability hereunder for
matters contained in clause (vi) above with respect to which it has not received
a notice or notices of claim pursuant to Section 8.04 within two years after the
------------
Closing Date. Notwithstanding the foregoing, Acquisition and the Company (and
not DEI) shall be solely liable for any breach by the Company after the Closing
Date (based on actions by the Company after the Closing Date) of the covenant
not to compete contained in Section 8.4 of the Asset Purchase Agreement between
the Company and Ground Water Technology, Inc. dated February 15, 1995.
8.03 Indemnification by Acquisition. Subject to Section 8.06 below,
------------------------------ ------------
Acquisition shall indemnify, defend, save and hold DEI and its officers,
directors, employees, Affiliates and agents (collectively, "Duquesne
Indemnitees") harmless from and against any and all demands, claims, actions or
causes of action, assessments, losses, damages, deficiencies, Liabilities, costs
and expenses, including reasonable attorneys' fees, interest, penalties, and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing (collectively, "Duquesne Damages") asserted against, imposed upon,
resulting to or incurred by any of the Duquesne Indemnitees, directly or
indirectly, in connection with, or arising out of, or resulting from, (i) a
breach of any of the representations and warranties made by Acquisition in this
Agreement, except as set forth above in the first sentence of Section 8.01 or
------------
(ii) a breach of
-37-
any of the covenants or agreements made by Acquisition in or pursuant to this
Agreement and in any Other Agreement to which Acquisition is a party.
8.04 Notice of Claims. If any Acquisition Indemnitee or Duquesne
----------------
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or
will suffer or incur any Acquisition Damages or Duquesne Damages ("Damages") for
which it is entitled to indemnification under this Article VIII, or if any
legal, governmental or administrative proceeding which may result in such
damages is threatened or asserted (including any written notice from any taxing
authority), such Indemnified Party shall so notify the party or parties from
whom indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. Except as provided in the penultimate sentence of Section
-------
8.02, the failure of an Indemnified Party to give any notice required by this
----
Section 8.04 shall not affect any of such party's rights under this Article VIII
------------
except to the extent such failure is actually prejudicial to the rights or
obligations of the Indemnifying Party.
8.05 Third Party Claims. In case any legal, governmental or
------------------
administrative proceeding which may result in such Damages is instituted,
threatened or asserted (including any written notice from any taxing authority)
by or against a third party with respect to which an Indemnified Party intends
to claim any Damages and the Indemnified Party notifies the Indemnifying Party
of such proceeding as provided in Section 8.04, the Indemnifying Party shall be
------------
entitled to participate therein and, to the extent that it may wish, jointly
with any other Indemnifying Party similarly notified, to assume the defense
thereof, with counsel satisfactory to such Indemnified Party (who shall not,
except with the consent of the Indemnified Party, be counsel to the Indemnifying
Party), and after notice from the Indemnifying Party to such Indemnified Party
of its election so to assume the defense thereof, the Indemnifying Party will
not be liable to such Indemnified Party under this Article VIII for any legal or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened action in respect of
which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party unless such settlement
includes an unconditional release of such Indemnified Party from all Liability
on any claims that are the subject matter of such proceeding.
8.06 Limitation on Damages; Insurance; Etc. Notwithstanding any
--------------------------------------
provision under this Article VIII to the contrary, neither DEI nor Acquisition
shall have any indemnity liability under clauses (i) or (vi) of Section 8.02 or
------------
clause (i) of Section 8.03, respectively, for any Damages until the aggregate
------------
amount of such Damages incurred by the other party exceeds the sum of $350,000,
but if the aggregate amount of Damages thereunder exceeds
-38-
$350,000, indemnification shall be made to the full extent of Damages; provided,
--------
however, that, the foregoing limitations shall not apply to Section 2.11, the
------- ------------
last sentence of Section 2.08 or any matter relating to title to the Xxxxxxx
------------
Shares, title to the Company's or the Subsidiaries' assets or title to the USF
Shares. In no event shall DEI's indemnity liability for breach of any
representation or warranty contained herein exceed $25 million. All Damages
payable hereunder shall be paid promptly in cash. In determining Damages
hereunder, (i) the Company shall be required to pursue all valid claims against
any insurance carrier providing coverage with respect to the matter giving rise
to such Damages, (ii) if such Damages arise out of matters concerning any
customers of the Company, the Company shall use its best efforts to pursue its
rights and remedies against such customers (without litigation or arbitration),
and (iii) if such Damages arise out of matters involving Persons other than
customers of the Company and the Company has indemnification rights against such
Persons, then the Company shall permit DEI, at DEI's expense, to pursue any and
all remedies against such Persons and DEI shall be entitled to the proceeds
thereof to the extent of such Damages; provided, however, that no such
-----------------
requirement shall delay DEI's obligations to indemnify Acquisition or the
Company hereunder (except that DEI's indemnification obligation hereunder shall
be delayed if and to the extent that the applicable insurance company under
clause (i) above assumes the defense or acknowledges liability).
8.07 Additional Remedies. At the Closing, DEI will deliver to
-------------------
Acquisition a certified copy of the agreement pursuant to which it acquired the
Company from Mestek, Inc. (the "Mestek Purchase Agreement"). To the extent that
DEI's rights under the Mestek Purchase Agreement are assignable, DEI shall
assign those rights to Acquisition at the Closing. If such rights are not
assignable, then, without limiting any other rights or remedies of Acquisition
or the Company herein, if after Closing Acquisition or the Company sustain any
Damages with respect to which it is determined that Acquisition or the Company
would not be entitled to indemnification pursuant to Section 8.02 hereof, but
------------
with respect to which DEI would have rights of indemnification against Mestek,
Inc. under the Mestek Purchase Agreement, then DEI shall, at the Company's
notice, direction and expense, actively and timely pursue and prosecute its
claims and remedies against Mestek, Inc. (for the benefit of Acquisition and the
Company) under the Mestek Purchase Agreement and shall promptly deliver all
compensation that it receives from such claims and remedies, minus any
reasonable expenses (including attorney's fees) incurred by DEI in prosecuting
such claims and remedies, to the Company. Nothing herein shall be deemed to be
a waiver by DEI of any remedy that it may now or hereafter have under any
applicable securities laws with respect to the transactions contemplated hereby.
8.08 Good Faith Effort to Settle Disputes. The parties agree that,
------------------------------------
prior to commencing any litigation against the other concerning any matter with
respect to which such party intends to claim a right of indemnification in such
proceeding, the chief executive officers of Acquisition and DEI shall meet in a
timely manner and attempt in good faith to negotiate a settlement of such
dispute during which time such individuals shall disclose to the others all
-39-
relevant information relating to such dispute.
ARTICLE IX
MISCELLANEOUS
-------------
9.01 Construction. As used herein, unless the context otherwise
------------
requires: (i) the terms defined herein shall have the meaning set forth herein
for all purposes; (ii) references to "Article" or "Section" are to an article or
section hereof; (iii) all "Exhibits" and "Schedules" referred to herein are to
Exhibits and Schedules attached hereto and are incorporated herein by reference
and made a part hereof; (iv) "include", "includes" and "including" are deemed to
be followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; (v) "writing," "written" and comparable
terms refer to printing, typing, lithography and other means of reproducing
words in a visible form; (vi) "hereof", "herein", "hereunder" and comparable
terms refer to the entirety of this Agreement and not to any particular article,
section or other subdivision hereof or attachment hereto; (vii) references to
any gender include references to all genders, and references to the singular
include references to the plural and vice versa; (viii) references to an
agreement or other instrument or law, statute or regulation are referred to as
amended and supplemented from time to time (and, in the case of a statute or
regulation, to any successor provision) and all regulations, rulings and
interpretations promulgated pursuant thereto; (ix) the preliminary statements
made on page 1 hereof are incorporated herein and made a part hereof; (x) the
headings of the various articles, sections and other subdivisions hereof are for
convenience of reference only and shall not modify, define or limit any of the
terms or provisions hereof; (xi) the deadline for all deliveries and notices
hereunder shall be determined by reference to the local time of the place such
delivery or notice is properly made; and (l) all currency references herein are
to U.S. dollars.
9.02 Notices. All notices, and other communications given or made
-------
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made (i) the second day after mailing, if sent by registered or
certified mail, return receipt requested, (ii) upon delivery, if sent by hand
delivery, (iii) when received, if sent by prepaid overnight carrier, with a
record of receipt, or (iv) the first day after dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, return receipt requested), to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
(a) if to Acquisition, to:
Xxxxxxx Acquisition Corporation
00-000 Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
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(b) if to DEI, to:
Duquesne Enterprises, Inc.
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
with a copy to Xxxxx X. Xxxxxxxx
Assistant General Counsel, Esq.
00/xx/ Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
(c) if to the Company, to:
Xxxxxxx Engineers, Inc.
000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx, Chief Executive Officer
9.03 Successors and Assigns. This Agreement and all the rights and
----------------------
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
9.04 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the Commonwealth of Pennsylvania without regard
to its conflict of law doctrines.
9.05 No Assignment. This Agreement and the rights, interests and
-------------
obligations hereunder may not be assigned by any party hereto without the prior
written consent of the other parties hereto, except that Acquisition may assign
its rights hereunder to any direct or indirect wholly owned subsidiary of USF,
so long as Acquisition remains fully liable hereunder.
9.06 Amendment and Waiver; Cumulative Effect. The parties may by
---------------------------------------
mutual agreement amend this Agreement in any respect, and any party, as to such
party, may (i) extend the time for the performance of any of the obligations of
any other party, waive any inaccuracies in representations by any other party,
(ii) waive compliance by any other party with any of the agreements contained
herein and performance of any obligations by such other party, and (iii) waive
the fulfillment of any condition that is precedent to the performance by such
party of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
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Neither the failure of any party hereto to exercise any right, power or remedy
provided under this Agreement where otherwise available in respect hereof at law
or in equity, or to insist upon compliance by any other party with its
obligations hereunder, nor any custom or practice of the parties at variance
with the terms hereof, shall constitute a waiver by such party of its right to
exercise any such right, power or remedy or to demand such compliance. The
rights and remedies of the parties hereto are cumulative and not exclusive of
the rights and remedies that they otherwise might have now or hereafter, at law,
in equity, by statute or otherwise; provided, however, that Acquisition shall
-------- -------
not be entitled to injunctive relief prior to Closing and neither party hereto
shall be entitled to consequential or incidental damages after Closing.
9.07 Entire Agreement. This Agreement and the Schedules and Exhibits
----------------
set forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written.
9.08 Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
9.09 No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
confer upon any Person other than the parties hereto any rights or remedies
hereunder, except the provisions of Sections 8.02 and 8.03 relating to
------------- ----
Acquisition Indemnitees and Duquesne Indemnitees, respectively, which are
intended to benefit such indemnitees.
9.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: DUQUESNE ENTERPRISES, INC.
By: By: /s/ Xxxxxx X. Xxxxxxxx
-------------------- ----------------------
Title: Title: President
----------------- --------------------
ATTEST: XXXXXXX ACQUISITION CORPORATION
By: By: /s/ Xxxxxx Xxxxxxxx
-------------------- ----------------------
Title: Title:
----------------- --------------------
ATTEST: XXXXXXX ENGINEERS, INC.
By: By: /s/ Xxxxxxx X. Xxxxxxx
-------------------- ----------------------
Title: Title: CEO
----------------- --------------------
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AMENDMENT
---------
TO
--
STOCK PURCHASE AGREEMENT
------------------------
================================================================================
THIS AMENDMENT ("Amendment") is made and entered into as of the 30th
day of April, 1997 by and among DUQUESNE ENTERPRISES, INC., a Pennsylvania
corporation ("DEI"), XXXXXXX ENGINEERS, INC., a Pennsylvania corporation (the
"Company"), and XXXXXXX ACQUISITION CORPORATION, a Delaware corporation
("Acquisition").
W I T N E S S E T H:
WHEREAS, DEI, the Company and Acquisition entered into that certain
Stock Purchase Agreement, dated as of March 17, 1997, pursuant to which
Acquisition agreed to acquire from DEI, and DEI agreed to sell to Acquisition,
all the issued and outstanding shares of common stock of the Company (the "Stock
Purchase Agreement"); and
WHEREAS, the parties wish to amend the Stock Purchase Agreement,
under the terms and conditions set forth herein,
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Incorporation of Recitals/Definitions. The recitals set forth
-------------------------------------
above are incorporated into and made a part of this Amendment. Unless otherwise
defined herein, capitalized terms used herein shall have the definitions
ascribed thereto in the Stock Purchase Agreement.
2. Amendment. Section 8.02(vii) of the Stock Purchase Agreement
---------
is hereby amended and restated in full, as follows:
(vii) with respect to the CM Services, Inc. Engineering Procurement
Construction Facilities Operation Contract with AK Steel Corporation,
dated May 18, 1995, as amended (the "AK Steel Contract"), (A) the
dispute described in Item 5(a) on page 8 of Schedule 2.16 (the
--------------
"Dispute"), including, without limitation, replacement, modification
or repair of equipment, POTW charges,
fines and lost profits (as determined in accordance with Schedule 1
hereto) under the AK Steel Contract and (B) the exercise of a
termination for convenience by AK Steel pursuant to Sections 30.6,
30.7 and 30.8 of the AK Steel Contract (a "Termination for
Convenience"); provided that (x) the indemnity in this clause (vii)(A)
--------
(including, without limitation, a Termination for Convenience granted
to AK Steel for a failure of a performance test of the improvements
constructed to address the matters underlying the Dispute to be
successfully completed) shall not exceed $2,000,000 and the indemnity
on this clause (vii)(B) shall not exceed $500,000; (y) this clause
(vii) shall be Acquisition's sole remedy with respect to the Dispute
(but not to any other matter involving Damages, if any, related to
such contract) and a Termination for Convenience and (z) with respect
to a Termination for Convenience, the indemnity under this clause
(vii) shall include only the book value of the WWTP (as such term
defined in the AK Steel Contract) less sums payable by AK Steel
pursuant to a Termination for Convenience assuming (I) depreciation of
the WWTP in a manner consistent with past practice (of approximately
$110,000 per month), (II) no improvements to the WWTP beyond those
reflected on the 12/31/96 Balance Sheet and (III) no amendment to the
AK Steel Contract which would reduce the fees payable by AK Steel in
the event of a Termination for Convenience.
3 Miscellaneous.
-------------
(a) This Amendment may be amended only by a writing signed by
each of the parties, and any such amendment shall be effective only to the
extent specifically set forth in such writing.
(b) This Amendment may be executed in any number of
counterparts, and by each of the parties on separate counterparts, each of
which, when so executed, shall be deemed to be an original, but all of which
shall constitute but one and the same instrument.
(c) The Stock Purchase Agreement, as amended by this Amendment,
contains the entire agreement of the parties with respect to the transactions
contemplated hereby and thereby and supersedes all prior written and oral
agreements, and all contemporaneous oral agreements.
(d) All titles and headings in this Amendment are intended
solely for convenience of reference and shall in no way limit or otherwise
affect the interpretation of any of the provisions hereof.
(e) This Amendment shall be binding upon and shall inure to the
benefit of each of the parties and their respective successors and assigns.
(f) Except as expressly provided hereunder, the Stock Purchase
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
Witness: DUQUESNE ENTERPRISES, INC.
By: By: /s/ Xxxxxx X. Xxxxxxxx
-------------------- ----------------------
Title: Title: President
----------------- ---------------------
Witness: XXXXXXX ENGINEERS, INC.
By: By: /s/ Xxxxxxx X. Xxxxxxx
-------------------- ----------------------
Title: Title: CEO
----------------- --------------------
Witness: XXXXXXX ACQUISITION CORPORATION
By: By: /s/ Xxxxxx Xxxxxxxx
-------------------- ----------------------
Title: Title:
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