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EXHIBIT 5
POST-CLOSING RISK ALLOCATION AGREEMENT
THIS POST-CLOSING RISK ALLOCATION AGREEMENT ("Agreement") is made this
7th day of February 2001, by and among Pitt-Des Moines, Inc., a Pennsylvania
corporation ("Seller"), Chicago Bridge and Iron Company N.V., a Netherlands
company ("CB&I"), and CB&I Constructors, Inc., a Texas corporation ("CB&I Sub"
and collectively with CB&I, the "Purchaser").
WITNESSETH:
WHEREAS, Seller and Purchaser are simultaneously entering into that
certain Asset Purchase Agreement dated of even date herewith (the "Asset
Purchase Agreement") (all capitalized terms used and not otherwise defined
herein shall have the meanings set forth in the Asset Purchase Agreement); and
WHEREAS, subject to the terms and conditions set forth in the Asset
Purchase Agreement, Seller has agreed to Transfer to Purchaser substantially all
of the assets used by Seller's Engineered Construction Division and Water
Division in the conduct of the businesses of engineering, fabricating and
erecting (a) tanks and systems for liquid and cryogenic storage and (b) water
storage systems; and
WHEREAS, in order to induce Seller to enter into and to consummate the
Transfer of the Assets and the other transactions contemplated by the Asset
Purchase Agreement, each of CB&I and CB&I Sub has agreed to enter into this
Agreement.
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1. Indemnity of Seller
(a) CB&I and CB&I Sub, jointly and severally, shall indemnify and
hold harmless Seller and its officers and directors (collectively, the "Seller
Parties" and individually, a "Seller Party"), and each of them, from and against
any and all liabilities, losses, judgments, amounts paid or to be paid in
settlement, fines, penalties, reasonable costs and expenses (including
reasonable attorneys' fees and other reasonable costs and expenses incident to
any claim, action, suit, proceeding or investigation by the Federal Trade
Commission ("FTC"), the U.S. Department of Justice ("DOJ") or any other
Governmental Authority in connection with any matters arising out of any
antitrust laws, rules or regulations) incurred or paid by the Seller Parties, or
any of them, after the date hereof (collectively , "Losses") by reason of or in
connection with any claim, investigation or threatened, pending or completed
action, suit or proceeding, by the FTC, the DOJ or any other Governmental
Authority in connection with any matters arising out of any antitrust laws,
rules or regulations, whether civil, administrative or investigative (any such
claim, investigation or threatened, pending or completed action, suit or
proceeding by the FTC, the DOJ or any such other Governmental Authority being
referred to hereinafter as a "Proceeding"), to which any Seller Party is, was or
at any time becomes a party, or is threatened to be made a party or is involved
(as a witness or otherwise), to the extent based on and by reason of the
Transfer of the Assets to Purchaser by Seller; provided, however, that CB&I and
CB&I Sub shall indemnify a Seller Party in connection with an action, suit or
proceeding (or part thereof) initiated by such Seller Party (other than an
action, suit or proceeding to enforce such Seller Party's rights to
indemnification under this Agreement) only if such action, suit or proceeding
(or part thereof) was authorized by CB&I; and provided further, that CB&I and
CB&I Sub shall have no duty to indemnify any Seller Party for any Losses
directly relating to any act of any Seller Party which gives rise to a claim for
indemnification
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hereunder and which is determined by a court to have constituted willful
misconduct of such Seller Party. The parties acknowledge and agree that the term
"willful misconduct" as used in the immediately preceding sentence shall not
include any act of a Seller Party directly associated with entering into the
Asset Purchase Agreement or performing the transactions contemplated thereby.
Each of CB&I and CB&I Sub acknowledges and agrees that for purposes of this
Agreement the term "Proceeding" shall include the CID and Subpoena (as defined
in Section 7) and any Proceeding relating thereto or arising therefrom.
(b) CB&I and CB&I Sub shall pay the reasonable expenses (including
reasonable attorneys' fees) incurred by each Seller Party in connection with any
Proceeding in advance of the final disposition thereof promptly after receipt by
CB&I of an at least monthly request therefor stating in reasonable detail, and
with reasonable substantiation (e.g., an invoice which provides a reasonable
description of the services rendered and the costs and expenses incurred) of,
the expenses incurred by each Seller Party.
(c) If a proper claim under paragraph (a) or (b) of this Section 1
is not paid in full by CB&I and/or CB&I Sub to a Seller Party within forty-five
(45) days after a proper written claim has been received by CB&I, such Seller
Party may, at any time thereafter, bring suit against CB&I and/or CB&I Sub to
recover the unpaid amount of the claim. The burden of proving that
indemnification is not appropriate shall be on CB&I and/or CB&I Sub. CB&I and
CB&I Sub shall pay such fees and expenses in advance of the final disposition of
such action on the terms and conditions set forth in Section 1(b).
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2. Continuation of Indemnity.
All agreements and obligations of CB&I and CB&I Sub contained in
this Agreement shall continue so long as any Seller Party shall be subject to
any possible Proceeding by reason of the Transfer of the Assets to Purchaser by
Seller.
3. Notification and Defense of Claim.
As soon as practicable after receipt by Seller of actual notice of
any Proceeding, Seller will notify CB&I thereof if a claim in respect thereof
may be or is being made by a Seller Party against CB&I and/or CB&I Sub under
this Agreement. With respect to any Proceeding as to which Seller has notified
CB&I that a claim in respect thereof may be or is being made by a Seller Party
against CB&I and/or CB&I Sub under this Agreement:
(a) CB&I and CB&I Sub will be entitled to participate therein at
its own expense; and
(b) except as otherwise provided below, CB&I and CB&I Sub may
assume the defense thereof, with counsel selected at the sole and absolute
discretion of CB&I. Except as otherwise provided in the immediately following
sentence, after CB&I and CB&I Sub notify Seller of their election to so assume
such defense, neither CB&I nor CB&I Sub will be liable to such Seller Party
under this Agreement for any legal or other costs or expenses subsequently
incurred by such Seller Party in connection with such defense, other than
reasonable costs of investigation, including an investigation in connection with
determining whether there exists a conflict of interest of the type described in
(ii) of this paragraph. Such Seller Party shall have the right to employ its
counsel in such Proceeding but the fees and expenses of such counsel and any
other costs and expenses incurred after CB&I and CB&I Sub notify Seller of its
assumption of the defense shall be at the expense of such Seller Party unless
(i) CB&I authorizes in writing
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such Seller Party's employment of counsel, or (ii) such Seller Party shall have
reasonably concluded that there is a conflict of interest between such Seller
Party, on one hand, and CB&I and CB&I Sub, on the other hand, in the conduct of
the defense (in which case CB&I shall select separate counsel for such Seller
Party which is satisfactory to CB&I in its sole and absolute discretion and as
to which such Seller Party shall not have made the conclusion described in this
paragraph (ii)), or (iii) CB&I and CB&I Sub shall not, in breach of their
obligations hereunder, have employed counsel to assume the defense of such
Proceeding, in each of which cases the reasonable fees and expenses of counsel
shall be at the expense of CB&I and CB&I Sub. Neither CB&I or CB&I Sub shall be
entitled to assume the defense of any Proceeding as to which a Seller Party
shall have made the conclusion described in (ii) of this paragraph.
(c) Neither CB&I or CB&I Sub shall be obligated to indemnify a
Seller Party under this Agreement for any amounts paid in settlement of any
Proceeding effected without CB&I's prior written consent, which consent will not
be unreasonably withheld, unreasonably conditioned or unreasonably delayed.
Neither CB&I or CB&I Sub shall settle any Proceeding in any manner which would
impose any material penalty or material limitation on the Seller or any Seller
Party without Seller's prior written consent, which consent will not be
unreasonably withheld, unreasonably conditioned or unreasonably delayed.
4. Acknowledgement Of The Parties.
Each party hereto acknowledges and agrees that this Agreement is an
integral part of the transactions contemplated by the Asset Purchase Agreement
and that each party is entering into the Asset Purchase Agreement and
consummating the transactions contemplated thereby
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with the expectation of, and in reliance upon, the full and complete
performance, when due, by each party of each of its obligations hereunder.
5. Representations and Warranties.
Each party represents and warrants as to itself:
(a) It has full corporate authority to enter into this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of it, and this
Agreement has been duly executed and delivered by it. This Agreement constitutes
its legal, valid and binding obligation , enforceable against it in accordance
with its terms.
(b) The execution, delivery and performance of this Agreement does
not and will not (i) violate, breach or constitute a default under (A) its
charter documents, (B) any Law, order, writ, injunction or decree applicable to
it, or (C) any note, bond, mortgage, indenture or material agreement or
obligation to which it is a party or by which it is bound, (ii) result in the
acceleration or mandatory prepayment of any Indebtedness of it, or afford any
holder of any of the Indebtedness the right to require it to redeem, purchase or
otherwise acquire, reacquire or repay any of that Indebtedness, (iii) cause or
result in the imposition of, or afford any Person the right to obtain, any Lien
upon any property or assets of it, or (iv) result in the revocation,
cancellation, suspension or material modification, in any single case or in the
aggregate, of any material Permits possessed by it at the date hereof and
necessary for the ownership or lease and the operation of its properties or the
carrying on of its business as now conducted.
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6. Cooperation.
The parties shall cooperate with each other and their respective
counsel and representatives in all commercially reasonable respects in
connection with any Proceeding. Seller shall provide to CB&I and CB&I Sub such
information and documentation in its possession and relating to the Businesses
and Divisions as CB&I and CB&I Sub shall reasonably request. At the request of a
party hereto, each of the other parties hereto agrees to enter into a
commercially reasonable and customary joint defense and confidentiality
agreement with respect to the subject matter hereof. Nothing in this Section 6
shall require the expenditure or payment of any funds or the giving of any other
consideration by Seller or any Seller Party in connection with any Proceeding if
(a) CB&I or CB&I Sub is in default of any of its material obligations hereunder
or (b) such expenditure or payment of funds or giving of other consideration is
not subject to indemnification pursuant to Section 1 above.
7. CID and Subpoena.
Each of CB&I and CB&I Sub hereby assumes and agrees to perform,
when due, all obligations of Seller under that certain Civil Investigative
Demand and Subpoena of the FTC received by Seller on January 3, 2001 or any
similar legal obligation, as the same may be supplemented, amended or modified
from time to time (the "CID and Subpoena"); provided, however, notwithstanding
the foregoing provisions of this Section 7, the parties acknowledge and agree
that CB&I and CB&I Sub shall have no duty to perform the obligations of Seller
under the CID and Subpoena with respect to any employee of Seller, or
information or documentation which is in the control or possession of Seller,
following the date hereof. Each of CB&I and CB&I Sub acknowledge and agree that
any breach by CB&I or CB&I Sub of the covenant contained in this Section 7 shall
be subject to the provisions of Section 1 above.
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8. Notice.
Unless otherwise provided in this Agreement, all notices and other
communications required or permitted hereunder will be in writing and will be
deemed to have been duly given when delivered in person or sent by confirmed
telefax transmission or one business day after having been dispatched by a
recognized overnight courier service to the appropriate party at the address
specified below:
(a) If to Seller to:
Pitt-Des Moines, Inc.
Town Center One
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X Xxxxx, Vice President-Finance
With copy to:
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre, 20th Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxx, Esq.
(b) If to Purchaser to:
Chicago Bridge & Iron Company
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Secretary
With a copy to:
Winston & Xxxxxx
00 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx XxXxxxxxx, Esq.
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or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
9. Attorney Fees and Costs.
In the event a party hereto is required to (a) defend against any
action brought to enforce rights or collect moneys due under this Agreement or
(b) bring any action to enforce rights or to collect moneys due under this
Agreement, and in the event such party prevails (as determined by the judge
presiding over such action), then such party shall be reimbursed by the party or
parties instituting such action or against which such action is brought, as the
case may be, for the reasonable legal fees and costs (including court costs) of
defending against or prosecuting such action.
10. Severability.
If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
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11. Indemnification Under this Agreement Nonexclusive.
The indemnification provided by this Agreement shall not be deemed
exclusive of any other right which may be available to any Seller Party.
12. Governing Law, Jurisdiction and Venue.
This Agreement and the rights and obligations of the parties hereto
shall be governed by and construed and enforced in accordance with the
substantive laws of the State of Illinois, without reference to principles of
choice or conflict of laws. Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Illinois Court, or Federal Court of the United States of
America, sitting in the State of Illinois, and any Appellate Court from any
thereof, in any action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (a) agrees that any claim in respect of any such
action, suit or proceeding may be heard and determined in such state court (or,
to the extent permitted by law, in such Federal Court), (b) waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any such action or proceeding in
any such state or Federal Court, and (c) waives, to the fullest extent permitted
by law, the defense of any inconvenient forum to the maintenance of such action,
suit or proceeding in any such state or Federal Court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by Law. Each party to this agreement irrevocably
consents to service of process in the manner provided for notices in Section 8.
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13. Injunctive Relief.
Each party hereto agrees that in the event that its commits a
breach of any of the provisions hereof, each of the other parties hereto shall
have the right and remedy to have the provisions hereof specifically enforced to
the extent permitted by law by any court having jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
immediate irreparable injury to each of such other parties and that money
damages will not provide an adequate remedy at law for any such breach or
threatened breach. Such right and remedy shall be in an additional to, and not
in lieu of, any other rights and remedies available, at law or in equity.
14. Miscellaneous.
(a) This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns. If any party
hereto shall merge or consolidate with another corporation or shall sell, lease,
transfer or otherwise dispose of all or substantially all of its assets to one
or more persons or groups (in one transaction or series of transactions), (i)
that party, as appropriate, shall cause the successor in the merger or
consolidation or the transferee of the assets that is receiving the greatest
portion of the assets or earning power transferred pursuant to the transfer of
the assets, by agreement in form and substance satisfactory to the other, to
expressly assume all of its obligations under and agree to perform this
Agreement, and (ii) the terms "CB&I" or "CB&I Sub" or "Seller" whenever used in
this Agreement shall mean and include any such successor or transferee.
(b) This Agreement states the entire agreement of the parties, and
supersedes all prior agreements, negotiations and representations, with respect
to the subject matter hereof.
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No amendment, modification, termination or cancellation of this Agreement shall
be effective unless in writing signed by both of the parties hereto.
(c) This Agreement is expressly intended to confer upon the present
and future officers and directors of Seller, as third party beneficiaries, the
benefits of all covenants and agreements made by CB&I and CB&I Sub herein with
privity to enforce such provisions with all rights and remedies under applicable
law, including the right of specific performance and injunctive relief set forth
in Section 13. Each officer and director of Seller not signatory to this
Agreement shall be deemed to have been notified of such intended third party
benefit and, to the extent acknowledgment of such benefits is required by the
law of any jurisdiction, to have acknowledged and accepted such benefits as a
third party beneficiary unless written notice to the contrary shall have been
transmitted to the Seller.
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IN WITNESS WHEREOF, the parties have executed this Agreement on and
as of the day and year first above written.
PITT-DES MOINES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President, Finance
CHICAGO BRIDGE & IRON COMPANY N.V.
By: Chicago Bridge & Iron Company B.V.,
its managing director
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Managing Director
CB&I CONSTRUCTORS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Chairman
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