<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report July 21, 1994
(Date of earliest event reported)
CRSS Inc.
(exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-7477 74-1677382
____________________________ _________________________
(Commission File Number) (IRS Employer
Identification Number)
1177 West Loop South, Suite 800
Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
713-552-2000
(Registrant's telephone number, including area code)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On July 21, 1994, CRSS Inc. ("the Company") sold its design subsidiary, CRSS
Architects, Inc., to Hellmuth, Obata & Kassabaum, Inc. ("HOK") of St. Louis,
Missouri. Total consideration amounted to $6.8 million, consisting of $4.8
million in cash and a $2.0 million sharing of future net cash distributions
from a major overseas project.
On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc., to Jacobs Engineering Group
Inc. ("Jacobs"). Total consideration paid by Jacobs amounted to $33.5 million
in cash, representing a $14.0 million premium over the aggregate book value of
the businesses acquired. As part of the transaction, CRSS retained certain
assets and liabilities (representing net assets of approximately $10.9
million), the majority of which relate to specific engineering, procurement and
construction contracts which are substantially complete or in the later stages
of completion. Additionally, the Company has agreed to indemnify Jacobs
against certain legal claims arising from any acts, errors or omissions prior
to July 29, 1994 and share in the future profit margin improvement or
deterioration for three specific projects.
The Company does not anticipate recognizing a gain on the disposal of its
design, engineering and construction management operations.
CRSS Architects, Inc., CRSS Constructors, Inc. and CRS Sirrine Engineers, Inc.,
are the three primary wholly-owned operating subsidiaries of CRSS Services,
Inc. which is a wholly-owned subsidiary of CRSS Inc.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The sale of the design, engineering and construction management
operations and concurrent discontinuance of such operations will
be fully reflected in the annual financial statements of CRSS Inc.
included in the Annual Report on Form 10-K for the year ended June
30, 1994 to be filed no later than September 28, 1994.
(c) Exhibits
10.1 Purchase Agreement by and among Hellmuth, Obata and
Kassabaum, Inc. and CRSS Inc., and CRSS Services, Inc., dated
July 21, 1994.
10.2 Purchase Agreement by and between Jacobs Engineering Group
Inc. and CRSS Inc., dated July 29, 1994.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned hereunder duly authorized.
CRSS Inc.
Dated: August 4, 1994 /s/ Bruce W. Wilkinson
___________________________
Bruce W. Wilkinson
Chairman, Chief Executive
Officer and Director
Dated: August 4, 1994 /s/ William J. Gardiner
___________________________
William J. Gardiner
Senior Vice President/Chief
Financial Officer and
Treasurer
<PAGE> 1
EXHIBIT 10.1
================================================================================
PURCHASE AGREEMENT
BY AND AMONG
HELLMUTH, OBATA AND KASSABAUM, INC.,
a Delaware Corporation
CRSS INC.,
a Delaware Corporation
AND
CRSS SERVICES, INC.,
a Delaware Corporation
Dated as of July 21, 1994
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
SALE OF ARCHITECTS SHARES AND CRSS ASSETS . . . . . . . . . . . . . 1
-----------------------------------------
1.1 Architects Shares and CRSS Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------------------------------
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
--------------
1.3 June 30 Pro Forma Balance Sheet; Adjustment Amount . . . . . . . . . . . . . . . . . . . . . 4
--------------------------------------------------
1.4 Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
--------------------
ARTICLE II
THE CLOSING . . . . . . . . . . . . . . . . . . . . . 7
-----------
2.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------
2.2 Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------------------------
ARTICLE III
RELATED MATTERS . . . . . . . . . . . . . . . . . . . . 9
---------------
3.1 Certain Transactions At or Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------------------------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . . . . . . . 12
-----------------------------------------------
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
4.3 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------------------
4.4 Acquisition of Architects Shares for Investment . . . . . . . . . . . . . . . . . . . . . . 13
-----------------------------------------------
4.5 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CRSS AND SERVICES . . . . . . . . . . . 14
---------------------------------------------------
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------
5.3 Ownership of Shares; Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------------------
5.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------------------------------------
5.5 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------
5.6 Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------
5.7 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------------------
5.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------------------------
5.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------
5.10 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------------------------
5.11 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------
5.12 Contracts; Agreements and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------------------------
5.13 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------------
5.14 Labor Difficulties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------
5.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----
</TABLE>
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<TABLE>
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5.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------
5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------
5.18 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------
5.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------
5.20 Necessary Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------
5.21 Condition of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
---------------------
5.22 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------------
5.23 Foreign Operations and Export Control . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------------------------------
5.24 Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------------------
5.25 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------
5.26 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------------
5.27 Representations Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------------
ARTICLE VI
COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . 29
------------------------
6.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------
6.2 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------
6.3 WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
--------
6.4 Allocation of Employee Plan Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . 35
--------------------------------------------
6.5 Post-Closing Access to Information and Personnel; Cooperation . . . . . . . . . . . . . . . 36
-------------------------------------------------------------
6.6 Obligation to Replace Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--------------------------------
6.7 Medical Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
----------------
6.8 License of Problem-Seeking Service Mark and Methodology . . . . . . . . . . . . . . . . . . 37
-------------------------------------------------------
6.9 Written-Off Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----------------------
ARTICLE VII
INDEMNIFICATION; SURVIVAL OF
----------------------------
REPRESENTATIONS, WARRANTIES AND AGREEMENTS . . . . . . . . . . . . . 38
------------------------------------------
7.1 Survival of Representations; Time Limitations . . . . . . . . . . . . . . . . . . . . . . . 38
---------------------------------------------
7.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------------
7.3 Remedies Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
------------------
7.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
------------------------------
7.5 Notice and Control of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
--------------------------------
ARTICLE VIII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . 42
------------------------
8.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------------------------
8.2 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------------------------
8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-------
8.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------
8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------
8.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
------------
8.7 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------
8.8 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------------
8.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------
</TABLE>
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8.10 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-----------------------
8.11 Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------
8.12 Definition of "Affiliate" and "Knowledge" . . . . . . . . . . . . . . . . . . . . . . . . . 46
-----------------------------------------
</TABLE>
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DEFINITIONS
<TABLE>
<S> <C>
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CRSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Architects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Estimated Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Disagreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Arbiter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Adjustment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Assignment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Service Mark License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Transferring Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Retained Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Architects Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Architects Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Architects Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Tax Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tax Detriments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Independent Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tax Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tax Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Eligible Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Benefit Gap Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Constructors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Problem-Seeking License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Purchaser Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Seller Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Project Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Minimum Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Third Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Joint-Defense Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Third-Person Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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Schedule 1.1 CRSS Assets and Liabilities
Schedule 1.2(b)(i) Peace Shield Projections
Schedule 1.2(b)(v) Peace Shield Employees
Schedule 1.3 Pro Forma Adjustments
Schedule 2.2(a) Liddell Sapp Legal Opinion
Schedule 2.2(b) Lease for Building 1111 West Loop South
Schedule 2.2(c) Assignment Agreement
Schedule 2.2(d) Service Mark License Agreement
Schedule 2.2(e) Assignment of Trademarks
Schedule 2.2(f) Bryan Cave Legal Opinion
Schedule 2.2(g) Assignment
Schedule 3.1 Transferring Employees
Schedule 5.1(a) Architects' Qualifications to do Business
Schedule 5.1(b) Architects Subsidiaries' Qualifications to do
Business
Schedule 5.2 Architects Subsidiaries' Capitalization
Schedule 5.4 Consents and Approvals
Schedule 5.6 Balance Sheet of Architect
Schedule 5.8 Material Changes
Schedule 5.9 Project Claims
Schedule 5.10(a) Liens
Schedule 5.10(b) Fixed Asset Listing for Architect and Architect
Subsidiaries
Schedule 5.11 Leases
Schedule 5.12 Material Contracts
Schedule 5.13(a) Benefit Plans
Schedule 5.13(k) Disclosures of Benefit Plan
Schedule 5.13(l) Acceleration of Plans
Schedule 5.14 Labor Difficulties
Schedule 5.15 Taxes
Schedule 5.16 Environmental Matters
Schedule 5.17 Insurance
Schedule 5.18 Permits
Schedule 5.19 Intellectual Property
Schedule 5.23 Foreign Operations and Export Control
Schedule 5.24 Officers and Directors
Schedule 5.25 Bank Accounts
Schedule 6.8 License of Problem-Seeking Service Mark
Schedule 7.2(c)(i) Incomplete Customer Contracts - 85% or Less
Schedule 7.2(c)(ii) Incomplete Customer Contracts - More than 85%
- vi -
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PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of July 21, 1994 (this Agreement"), by and
among Hellmuth, Obata and Kassabaum, Inc., a Delaware corporation (the
"Purchaser"), CRSS Inc., a Delaware corporation ("CRSS") and CRSS Services,
Inc., a Delaware corporation ("Services").
R E C I T A L S
WHEREAS, CRSS is the owner of all the issued and outstanding shares of
capital stock of Services, and Services is the owner of all the issued and
outstanding shares of capital stock of CRSS Architects, Inc. ("Architects," and
such shares are the "Architects Shares," as described in Section 5.2 hereof);
and
WHEREAS, CRSS also is the owner of the CRSS Assets (as defined herein);
and
WHEREAS, the Purchaser desires to purchase from Services and CRSS, and
each of Services and CRSS desires to sell to the Purchaser, all of the
Architects Shares and the CRSS Assets, respectively.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE OF ARCHITECTS SHARES AND CRSS ASSETS
1.1 Architects Shares and CRSS Assets. Subject to the terms and
conditions of this Agreement, at the Closing (a) Services shall sell, transfer,
assign and deliver to the Purchaser, and the Purchaser shall purchase, the
Architects Shares, and (b) CRSS shall sell, transfer, assign and deliver to the
Purchaser, and the Purchaser shall purchase and assume, respectively, the CRSS
Assets and the CRSS Obligations (as defined below). The CRSS Assets shall
consist only of those assets of CRSS listed on the attached Schedule 1.1. The
CRSS Obligations shall be only those duties, liabilities and obligations of
CRSS that are listed on the attached Schedule 1.1.
1.2 Purchase Price.
(a) The purchase price (the "Purchase Price") for the Architects
Shares and the CRSS Assets shall be equal to the net
<PAGE> 9
equity reflected on the June 30 Pro Forma Balance Sheet of Architects prepared
in accordance with Section 1.3 below. As of the date hereof, the parties
estimate the purchase price to be $4,752,000 (the "Estimated Purchase Price").
As provided in Section 1.3(c), the appropriate party will pay the difference
between the actual Purchase Price and the Estimated Purchase Price upon
completion of the June 30 Pro Forma Balance Sheet. As additional consideration
for the transactions contemplated hereby, CRSS shall retain up to an additional
$2,059,000 pursuant to Section 1.2(b).
(b) (i) On and after the date hereof, CRSS agrees to pay to
the Purchaser, promptly following receipt of any cash distributions
from the CRS/Sirrine + Metcalf & Eddy Joint Venture (the Peace Shield
Joint Venture") formed for the purpose of performing the Peace Shield
Contract (defined below), including any phasedown thereof, pursuant to
that certain Joint Venture Agreement between CRSS and Metcalf & Eddy,
Inc., dated February 27, 1984 (the Joint Venture Agreement"), two-
thirds (2/3) of, and after CRSS has retained Net Distributions
(defined below) of $2,059,000 all of, the excess (such excess being
hereinafter referred to as the Net Distributions") of (i) any cash
distributions to CRSS from the Peace Shield Joint Venture in respect
of periods after June 30, 1994, over (ii) all of CRSS' costs and
expenses, including employee costs and other general overhead
expenses, incurred by CRSS in connection with the performance after
June 30, 1994 of its obligations with respect to the Peace Shield
Joint Venture (the Peace Shield Expenses"), except to the extent that
such costs and expenses are previously reimbursed to CRSS by the Peace
Shield Joint Venture. For a period of twelve months after the final
payment to the Purchaser pursuant to the preceding sentence, the
Purchaser agrees to reimburse CRSS for its appropriate share (whether
two-thirds (2/3) or all) of any Peace Shield Expenses which are not
included in the calculation of Net Distributions as provided in the
preceding sentence and CRSS shall pay to the Purchaser its appropriate
share (whether two-thirds (2/3) or all) of any reimbursed Peace Shield
Expenses received by it. For the purpose of this Section 1.2(b)(i),
CRSS shall not treat any costs and expenses not reimbursed by the
Joint Venture as Peace Shield Expenses without the approval of the
Purchaser, which shall not be unreasonably withheld. If Purchaser
does not approve CRSS' request for treatment of any such unreimbursed
costs and expenses as Peace Shield Expenses, CRSS shall be entitled to
establish a reserve for such costs and expenses and reduce Net
Distributions by the amount of such reserve until CRSS and Purchaser
agree on the treatment of such unreimbursed costs and expenses or
their proper treatment is finally determined in a final nonappealable
judgment. Attached hereto as Schedule 1.2(b)(i) is CRSS' internally
prepared projection (the "Projection") of the revenues and expenses
anticipated to be earned or incurred by the Peace Shield Joint Venture
from September 1993 through the completion of the Peace Shield
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<PAGE> 10
Joint Venture's future performance obligations under the Peace Shield
Contract (as defined in the Joint Venture Agreement). The Projection
represents CRSS' current estimates of Peace Shield Joint Venture
revenues and expenses, but is subject to change as future
circumstances dictate. There are no assurances as to the actual
amount of any such future revenues or expenses.
(ii) Concurrent with each payment to the Purchaser pursuant
to Section 1.2(b)(i), the Purchaser agrees to pay to CRSS an
Additional Payment. Each "Additional Payment" shall equal the amount
of interest that would have accrued at an annual rate equal to the
prime rate of interest announced by Chemical Bank (as such rate may
fluctuate from time to time) plus 1.5%, since the later of June 30,
1994 or the date of the most recent payment of an Additional Payment
(the Last Payment Dat") on a deemed principal amount equal to
$2,059,000 minus one-third (1/3) of the Net Distributions which were
made on or before the Last Payment Date. The Additional Payment also
shall include any prior accrued but unpaid Additional Payments. The
Purchaser hereby expressly authorizes CRSS to withhold from any
payment it would otherwise make to the Purchaser pursuant to Section
1.2(b)(i) an amount equal to the Additional Payment. No Additional
Payments shall be payable after the final payment to the Purchaser
pursuant to the first sentence of Section 1.2(b)(i).
(iii) The Purchaser agrees to indemnify CRSS and its
Affiliates against, and to hold harmless CRSS and its Affiliates from,
all Losses (as defined in Article VII, but excluding Peace Shield
Expenses) to the extent relating to the performance after June 30,
1994 of CRSS' obligations with respect to the Peace Shield Joint
Venture, even if caused in whole or in part by the negligence (but not
the gross negligence or willful misconduct) of CRSS or any of its
Affiliates, employees or agents, including without limitation Losses
arising from any obligation to repay to the U.S. Government or any
other person or entity any amounts paid to the Peace Shield Joint
Venture in respect of periods after June 30, 1994. CRSS agrees to
indemnify the Purchaser and its Affiliates against, and to hold
harmless the Purchaser and its Affiliates from, all Losses (as defined
in Article VII) to the extent relating to the performance on or before
June 30, 1994 of CRSS' obligations with respect to the Peace Shield
Joint Venture, including without limitation Losses arising from any
obligation to repay to the U.S. Government or any other person or
entity any amounts paid to the Peace Shield Joint Venture in respect
of periods on or before June 30, 1994. Such mutual indemnity
obligations shall be subject to the provisions of Section 7.5.
(iv) Subject to the provisions of this Section 1.2(b), CRSS
agrees to continue to manage the performance of its
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<PAGE> 11
obligations with respect to the Peace Shield Joint Venture in a manner
substantially consistent with its past practices. Without the prior
written consent of the Purchaser, which shall not be unreasonably
withheld, CRSS agrees not to terminate without cause the employment of
Truitt Garrison, Rogers Patton or Phil Sykes, or to change materially
without cause Truitt Garrison's, Rogers Patton's or Phil Sykes'
respective responsibilities with respect to the Peace Shield Joint
Venture. CRSS shall permit the Purchaser and its representatives to
examine its books and records with respect to the Peace Shield Joint
Venture at reasonable times and on reasonable notice for the purposes
of confirming the performance by CRSS of its obligations under this
Section 1.2(b). The Purchaser may appoint a representative who shall
consult with CRSS at regularly scheduled monthly meetings with respect
to material actions or decisions relating to the Peace Shield Joint
Venture. In the event that the Purchaser has a material disagreement
with any material proposed action or decision of CRSS relating to the
Peace Shield Joint Venture, CRSS agrees to cause its president or
chief executive officer to confer with the president or chief
executive officer of the Purchaser (who shall promptly make himself
available for such conference) prior to taking any such action or
making any such decision.
(v) Effective as of the date hereof, the Architects
employees involved in the performance of CRSS' obligations under the
Peace Shield Joint Venture, each of whom is listed on Schedule
1.2(b)(v) hereto, shall cease to be employed by Architects and shall
become employees of CRSS.
1.3 June 30 Pro Forma Balance Sheet; Adjustment Amount.
(a) As promptly as practicable after the Closing (as defined in
Section 2.1 hereof), but in any event within 45 days following the Closing,
CRSS shall cause to be delivered to the Purchaser a consolidated balance sheet
of Architects and the Architects Subsidiaries as of June 30, 1994, prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with the presentations in the Balance Sheet as of March 31, 1994
attached hereto as part of Schedule 5.6(a), reflecting on a pro forma basis the
adjustments set forth on Schedule 1.3 hereto, including without limitation the
CRSS Assets and CRSS Obligations (the "June 30 Pro Forma Balance Sheet"). The
June 30 Pro Forma Balance Sheet shall be based on an Architects' consolidated
balance sheet dated as of June 30, 1994, audited by Ernst & Young at the sole
expense of CRSS, and before any pro forma adjustments. The Purchaser shall,
and shall cause Architects and the Architects Subsidiaries to, cooperate with
CRSS in the preparation of the June 30 Pro Forma Balance Sheet.
(b) CRSS will request that Ernst & Young make available to the
Purchaser all of their work papers in connection with its audit of
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<PAGE> 12
the June 30, 1994 balance sheet of Architects and the Architects Subsidiaries.
Within 30 days after it receives from CRSS the June 30 Pro Forma Balance Sheet,
Purchaser shall notify CRSS if it disputes the June 30 Pro Forma Balance Sheet
as so delivered, such notification to specifically identify the points of
disagreement (the "Disagreements"). Such Disagreements must relate to the pro
forma adjustments or whether the June 30 Pro Forma Balance Sheet has been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with the presentations in the Balance Sheet. Upon receipt
of such notice, CRSS shall promptly consult with Purchaser with respect to the
Disagreements in an effort to resolve the Disagreements. If any such
Disagreements cannot be resolved by Purchaser and CRSS within 10 calendar days
after CRSS is notified of such Disagreements, the parties shall refer the
specific Disagreements to a mutually agreed partner in an independent public
accounting firm of recognized national standing (the "Arbiter"), as an
arbitrator to finally determine, as soon as practicable, and in any event
within 30 days after such reference, such Disagreements. The arbiter shall
apply the terms of this Section 1.3, and shall otherwise conduct the
arbitration under such procedures as the parties may agree or, failing such
agreement, such procedures as the Arbiter may determine. The fees and expenses
of the arbitration and the Arbiter incurred in connection with the arbitration
of the Disagreements shall be allocated between CRSS and the Purchaser by the
Arbiter as he deems appropriate based on the extent to which each such party
prevails on the arbitrated Disagreements; provided, that such fees and expenses
shall not include, so long as either party complies with the procedures of this
Section 1.3, the other party's outside counsel or accounting fees. All
determinations by the Arbiter shall be final, conclusive and binding with
respect to the Disagreement and the allocation of arbitration fees and
expenses. Notwithstanding any other provision hereof, including without
limitation Sections 5.6 and 5.22 and, to the extent Section 5.26 refers to
books of account, Section 5.26, this Section 1.3(b) constitutes the sole and
exclusive remedy of the Purchaser with respect to the pro forma adjustments set
forth in the June 30 Pro Forma Balance Sheet and any Disagreements raised by
Purchaser with respect to the June 30 Pro Forma Balance Sheet.
(c) In the event the final Purchase Price, based upon the net
equity reflected on the June 30 Pro Forma Balance Sheet determined pursuant to
subsection (a) above or, if necessary, subsection (b) above, is different than
the Estimated Purchase Price, the Purchaser shall pay to CRSS (if the final
Purchase Price is greater than the Estimated Purchase Price), or CRSS shall pay
to the Purchaser (if the final Purchase Price is less than the Estimated
Purchase Price) the amount of such difference (the "Adjustment Amount");
provided that, in no event shall the final Purchase Price be greater than the
net equity reflected on the June 30 Pro Forma Balance Sheet plus the payments
to be retained by CRSS described in Section 1.2(b). In either event, the
Adjustment Amount shall bear interest at the prime rate as announced from time
to time by Chemical Bank. The Adjustment Amount, plus accrued interest from
the Closing Date
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<PAGE> 13
through the date of payment, shall be paid within five (5) business days after
determination of the Adjustment Amount, in immediately available funds.
1.4 Retained Liabilities.
The obligations and liabilities of Architects, the Architects
Subsidiaries and, with respect to the Architects Business, CRSS, relating to
the following matters are being retained by CRSS or an Affiliate thereof
notwithstanding the transaction contemplated by this Agreement (the "Retained
Liabilities"):
(a) The Lease Agreement with respect to the PBX telephone
switching system;
(b) The Lease Agreement with respect to certain visualization
equipment related to the video creation and editing suite, dated July 1, 1992,
Lease #SL28214, Schedule CE17, by and between Comdisco and CRSS;
(c) Liabilities with respect to which CRSS is retaining or
otherwise indemnifying the Purchaser pursuant to Section 6.3 hereof;
(d) Tax liabilities with respect to which CRSS is retaining or
otherwise indemnifying the Purchaser pursuant to Section 6.2 hereof;
(e) Project Claims with respect to which CRSS is retaining or
otherwise indemnifying the Purchaser pursuant to Section 7.2(c);
(f) The death benefits payable to the estate of Paul Kennon
pursuant to the CRSS Supplemental Executive Retirement Plan;
(g) The Texas A&M commitment under the William Pena Endowed
Professorship, Wallie Scott Endowed Professorship and the Thomas Bullock
Endowed Chair Agreements;
(h) Liabilities and obligations, if any, arising from the payment
of overtime on a straight-time basis to certain exempt employees of Architects;
(i) Benefits to which Truitt Garrison is entitled pursuant to the
CRSS Supplemental Executive Retirement Plan and obligations to employees of
Architects who are participants in the CRSS Senior Management Deferred
Compensation Plan;
(j) Liabilities for accrued vacation for Transferring Employees
through the Closing Date;
(k) All liabilities and obligations arising from the ownership,
operation and occupancy of the real property located at 1111 West Loop South,
Houston, Texas, prior to and, except as
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otherwise provided in the Lease (as hereinafter defined), following the Closing
Date;
(l) All claims arising under that certain Owner/Architect
Agreement entered into by CRS Sirrine Engineers, Inc. and Glaxo dated August
1992 to the extent, if any, the liabilities arising from the contractual
commitments in Article 6.2.5 to review and approve the safety of design and
operability requirements of such Project are in excess of the liability
otherwise imposed by such Agreement or at law;
(m) All claims listed on Schedule 5.9 attached hereto;
(n) All employee benefits payable pursuant to the Plans listed on
Schedules 5.13(a) and 5.13(k);
(o) Obligations under Peace Shield Foreign Assignment Agreements
listed on Schedule 5.12; and
(p) Joint Venture Agreement between CRSS and Metcalf & Eddy, Inc.
CRSS will indemnify the Purchaser Indemnified Party (as
defined herein) with respect to the Retained Liabilities as described in
Article VII hereof.
ARTICLE II
THE CLOSING
2.1 The Closing.
Upon the terms and subject to the conditions contained in this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P., Texas Commerce Tower, Houston, Texas at 9:00 a.m., Houston
time, on the date hereof (the "Closing Date").
2.2 Deliveries at the Closing.
(a) At the Closing, CRSS or Services will deliver or cause to be
delivered to the Purchaser:
(i) Certificates representing the Architects Shares, duly
endorsed for transfer to the Purchaser, which shall transfer to the
Purchaser good title to the Architects Shares, free and clear of any
Liens (as defined in Section 5.3 hereof).
(ii) The resignations of certain directors and officers of
Architects and the Architects Subsidiaries as designated by the
Purchaser;
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<PAGE> 15
(iii) The stock books, stock ledgers, minute books and
corporate seal of Architects and the Architects Subsidiaries;
(iv) A legal opinion from Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P., in the form attached hereto as Schedule 2.2(a);
(v) A lease of certain space in the building located at
1111 West Loop South, Houston, Texas in the form attached hereto
asSchedule 2.2(b) (the "Lease");
(vi) The Problem-Seeking License (as defined herein);
(vii) An Assignment and Assumption Agreement in the form
attached hereto as Schedule 2.2(c) (the "Assignment Agreemen");
(viii) Such deeds, bills of sale, endorsements, assignments
and other good and sufficient instruments of conveyance, transfer and
assignments as shall be effective to vest in the Purchaser good and
marketable title to the other CRSS Assets, in form and substance
reasonably satisfactory to Purchaser and its counsel;
(ix) A Service Mark License Agreement in the form attached
hereto as Schedule 2.2(d) (the "Service Mark Licens");
(x) An Assignment of Trademarks in the form attached
hereto as Schedule 2.2(e); and
(xi) All other documents, instruments and writings
required to be delivered by CRSS or Services to the Purchaser pursuant
to this Agreement or otherwise required in connection herewith in form
and substance reasonably satisfactory to Purchaser and its counsel.
(b) At the Closing, the Purchaser will deliver or cause to be
delivered to CRSS or Services, at the election of CRSS:
(i) The Estimated Purchase Price, payable in immediately
available funds;
(ii) The Assignment Agreement;
(iii) The Lease;
(iv) The Problem-Seeking License;
(v) Assignment in the form attached hereto as Schedule
2.2(f); and
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(vi) All other documents, instruments and writings
required to be delivered by the Purchaser to CRSS or Services pursuant
to this Agreement or otherwise required in connection herewith in form
and substance reasonably satisfactory to CRSS and its counsel.
ARTICLE III
RELATED MATTERS
3.1 Certain Transactions At or Prior to Closing.
(a) Notwithstanding anything to the contrary in this Agreement,
this Agreement shall not constitute an agreement to assign any outstanding
contract, commitment, subcontract, purchase order, real property lease,
equipment lease, information technology obligation or other agreement of CRSS
or any of its Affiliates which would otherwise have constituted a CRSS
Obligation or a CRSS Asset (all of the contracts, commitments, subcontracts,
purchase orders, real property leases, equipment leases, information technology
obligations or other agreements subject to this Section 3.1 (being collectively
referred to herein as the "Contracts" and singularly as a "Contract") which is
not permitted under applicable law or pursuant to its terms or is not permitted
without the consent of any other party to the Contract or which purports to
restrict a change in control of such party, if such assignment would constitute
a breach of, or cause a loss of contractual benefits under, any of the
Contracts. If a consent to assignment of any Contract is not obtained, (i)
with respect to Customer Contracts and Contracts related thereto, Section
3.1(e) hereof shall apply, (ii) with respect to other Contracts, CRSS and
Architects will cooperate in any reasonable arrangement designed to provide to
Architects the economic consequences under such Contracts to the extent CRSS or
any of its Affiliates incurs such consequences, and (iii) CRSS shall use its
commercially reasonable efforts following the Closing to obtain such consents
if requested by Purchaser. In any event, whether the Contracts are assigned to
Architects or other arrangements are entered into with respect thereto in
accordance with this Section 3.1(a), Architects shall be solely responsible for
the performance of all such contracts after the Closing Date and shall assume
and discharge all obligations of CRSS and its Affiliates thereunder pursuant to
an assignment, assumption and indemnity agreement reasonably acceptable to the
parties hereto.
(b) On or prior to the Closing Date CRSS and Architects will
forgive any and all intercompany indebtedness between CRSS and Architects
existing at June 30, 1994. For federal income tax purposes such forgiveness
shall be treated as a contribution to the capital of Architects or a
distribution by Architects, as the case may be. The results of forgiving such
intercompany obligations will be reflected in Architects' shareholder's equity
for purposes of preparing the June 30 Pro Forma Balance Sheet. Indebtedness
between CRSS and Architects arising from July 1994 transactions shall be
9
<PAGE> 17
paid in full by CRSS or Architects, as applicable, on or before August 15,
1994.
(c) At or prior to the Closing, (i) CRSS will transfer to
Architects, and Architects will employ the CRSS employees listed on Schedule
3.1 hereof, (together with the other employees of Architects and the Architects
Subsidiaries as of the Closing Date other than the employees listed on Schedule
1.2(b)(v), the "Transferring Employees"), (ii) CRSS shall transfer to Purchaser
all trust funds, reserve accounts and other assets, if any, in or related to
the Plans and allocable to the employees of Architects or any Architects
Subsidiary, but only to the extent Purchaser, Architects, or any Architects
Subsidiary will have continuing liabilities with respect to the Plans after the
Closing Date to which such trust funds, reserve accounts, or other assets
relate, and (iii) CRSS will retain responsibility for any and all severance
obligations to Transferring Employees which arise before the Closing Date or
which arise as a result of the transactions contemplated by this Agreement.
(d) Notwithstanding any other provisions hereof, CRSS is
retaining, without the payment of any consideration, the following rights,
assets and claims (collectively the "Retained Assets"):
(i) all of Architects' and the Architects Subsidiaries'
right, title and interest in and to any and all receivables from King
Saud University and any receivables otherwise relating to or arising
from services performed in connection with the HOK + 4 Consortium, as
well as any collections or other proceeds thereof received after March
31, 1994, all of which receivables were written off prior to June 30,
1988, and will not be reflected on the June 30 Pro Forma Balance
Sheet.
(ii) all claims listed on Schedule 5.9;
(iii) any claims, including counterclaims, cross-claims and
claims for contribution or indemnity, relating to the claims listed on
Schedule 5.9;
(iv) any claims, including counterclaims, cross-claims and
claims for contribution or indemnity, relating to any matters,
including Project Claims (as defined herein), with respect to which
CRSS is required to indemnify the Purchaser Indemnified Party (as
defined herein), regardless as to whether those matters are asserted
against CRSS or Services or any of their Affiliates by the Purchaser
or any of its Affiliates pursuant to Article VII or by a third party.
The Purchaser will reasonably cooperate, and cause Architects and each
Architects Subsidiary to reasonably cooperate, with CRSS in realizing the
benefit of the Retained Assets, and will, as reasonably necessary, cooperate
with CRSS in asserting any claims included in the Retained Assets in the name
of Architects or any
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Architects Subsidiary, as applicable. The Purchaser will cause any amounts
recovered by the Purchaser, Architects or any Architects Subsidiary with
respect to such claims to be paid promptly to CRSS. CRSS shall compensate
Purchaser at the Reimbursement Rate (as defined in Section 6.5 hereof) for the
personnel of Purchaser that provide any such assistance. CRSS shall consult
with the Purchaser prior to the assertion of any such claims that CRSS may wish
to assert against any person or entity to whom CRSS or its Affiliates provided
architectural or design services.
(e) With respect to Customer Contracts that require consent to
assignment in connection with the transactions contemplated by this Agreement,
and for which consents have not yet been obtained, CRSS and the Purchaser agree
that until such consents are obtained:
(i) The Purchaser will be deemed to have subcontracted
the remaining work, and the satisfaction of all the obligations, with
respect to such Customer Contracts, and any contracts related thereto
that require assignment in connection with this transaction but for
which consents have not been obtained (the "Related Contracts"). Such
Customer Contracts and Related Contracts shall be performed in the
name of the Affiliate of CRSS that is a party thereto (the "Corporate
Party") at the expense of and under the direction and by the employees
of the Purchaser, and the Purchaser shall receive all benefits and
shall satisfy all obligations remaining under such Customer Contracts
and Related Contracts as if such Contracts were initially in the name
of Purchaser.
(ii) Without limiting the generality of the foregoing, the
Purchaser, with respect to such Customer Contracts and Related
Contracts, shall satisfy and complete all related and incidental
project requirements, obligations, costs, expenses and expenditures
(including but not limited to the payment of costs of subcontractors,
sub-consultants, services or supplies of subcontractors and
sub-consultants, and the like; and all other costs required directly
or indirectly, chargeable or not, to complete such Contracts)
regardless of the status of such work on and status of such Customer
Contracts on the date hereof, as if such requirements, obligations,
expenses and expenditures were originally undertaken in the name of
the Purchaser, for the remaining compensation, if any, actually
received from the client with respect to such Customer Contracts. The
Purchaser shall maintain insurance in an amount sufficient to comply
with any insurance requirements of such Customer Contracts.
(iii) Each party shall account to the other party with
respect to payments received by such party in respect of any such
Customer Contract or Related Contract to which the other party is
entitled, which accounting shall be made promptly on an ongoing basis
during the performance of such Contracts.
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(iv) Amendments of, or expansion of services relating to,
any of such Customer Contracts on or after the date hereof will be
entered into by, and be the total responsibility and for the benefit
of, the Purchaser or its Affiliates. CRSS or its Affiliates shall
enter into any such amendment or expansion requested by Purchaser
unless in CRSS' commercially reasonable opinion there would be a
material increase in risk to CRSS or its Affiliates.
(v) CRSS and the Purchaser shall execute any and all
additional documents and take additional measures reasonably required
by each other further to effectuate the foregoing.
If an arrangement described above is challenged by the other party to
a Customer Contract in writing, then the Corporate Party will contract with (or
hire at no cost to CRSS on a part-time basis, as determined to be appropriate
by the Corporate Party) applicable personnel of the Purchaser or its Affiliates
as necessary to complete such Contract(s). In such case, the Corporate Party
will continue to receive fee payments from such other party to the Customer
Contract and remit proceeds to the Purchaser promptly upon the receipt of such
payment, less appropriate labor costs and reasonable out-of-pocket costs. Such
personnel of the Purchaser will have continued use (at no cost to CRSS or the
Corporate Party) of the Purchaser's office space, equipment, supplies, etc.,
needed to complete such Contracts, and the Purchaser shall manage the work on
the Corporate Party's behalf.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to CRSS and Services as follows:
4.1 Organization.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Delaware and has the corporate power to carry
on its business as it is now being conducted.
4.2 Authority.
The Purchaser has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Purchaser and the consummation of the transactions contemplated hereby by the
Purchaser have been duly and validly authorized by the Board of Directors of
the Purchaser and no other corporate proceedings on the part of the Purchaser
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
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executed and delivered by the Purchaser and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes a legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
4.3 Consents and Approvals; No Violation.
Except for filings, permits, authorizations, consents, approvals or
notices which have been obtained or actions which have been taken prior to the
Closing, no filing with, and no permit, authorization, consent, approval of, or
notice to, any governmental, administrative or judicial authority is necessary
for the consummation by the Purchaser of the transactions contemplated hereby.
Neither the execution, delivery and performance of this Agreement by the
Purchaser nor the consummation by the Purchaser of the transactions
contemplated hereby nor compliance by the Purchaser with any of the provisions
hereof (i) conflict with or result in any breach of any provision of the
certificate of incorporation or By-laws (or other similar charter documents) of
the Purchaser, (ii) result in an event which (with notice or lapse of time or
both) would constitute a breach of or default under (or give rise to any right
of termination, cancellation or acceleration of) any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement, lease
or other similar instrument or obligation to which the Purchaser is bound or by
which any of its properties or assets may be bound, or (iii) violate any order,
judgment, writ, injunction, decree, statute, rule or regulation of any court,
public body or authority or any other restriction of any kind or character
applicable to the Purchaser, or any of its properties or assets, in the case of
each of the foregoing clauses (i), (ii) and (iii), in a manner which would
prevent, hinder or delay the consummation of the transactions contemplated by
this Agreement.
4.4 Acquisition of Architects Shares for Investment.
The Purchaser is acquiring the Architects Shares for investment and
not with a view toward, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing or selling such
Architects Shares in violation of any securities laws.
4.5 Investigation.
The Purchaser acknowledges that it is making its own investigation of
Architects, the Architects Subsidiaries and the Architects Business and that it
has not, and will not, rely upon any representations or warranties, express or
implied, with respect to the transactions contemplated by this Agreement except
as expressly made in this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CRSS AND SERVICES
CRSS and Services hereby jointly and severally represent and warrant
to the Purchaser as follows:
5.1 Organization.
(a) Each of CRSS, Services and Architects is a corporation duly
organized, validly existing and in good standing under the laws of Delaware or,
with respect to Architects, California, and has the corporate power to carry on
its business as it is now being conducted. Architects is duly qualified to do
business, and is in good standing, in the jurisdictions listed on Schedule
5.1(a) hereto, which are the only jurisdictions where Architects is required to
be qualified to do business as a foreign corporation.
(b) Each of the Architects Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction listed on Schedule 5.1(b) hereto, and has the corporate power to
carry on its business as it is now being conducted. Each Architects Subsidiary
is duly qualified to do business, and is in good standing, in the jurisdictions
listed on Schedule 5.1(b) hereto, which are the only jurisdictions where each
such Architects Subsidiary is required to be qualified to do business as a
foreign corporation. Copies of the certificate of incorporation and bylaws or
other applicable organization documents, as currently in effect, including all
amendments thereto, of Architects and each of the Architects Subsidiaries have
heretofore been delivered to the Purchaser and such copies are accurate and
complete. "Architects Subsidiaries" means the corporations listed on Schedule
5.1(b) hereto.
5.2 Capitalization.
The authorized capital stock of Architects consists of 200,000 shares
of common stock, par value $.01 per share, of which 195,000 shares are issued
and outstanding (the "Architects Shares"), and all of the issued and
outstanding shares of such capital stock are owned beneficially and of record
by Services. The capitalization and ownership of the capital stock and other
equity securities of each of the Architects Subsidiaries, as of the date
hereof, is set forth in Schedule 5.2 hereto. All of the Architects Shares and
the outstanding shares of capital stock of each Architects Subsidiary are duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights. There is no subscription, option, warrant, call, right, agreement or
commitment relating to the issuance, sale, delivery, transfer or redemption of
the capital stock or other security of Architects or any Architects Subsidiary.
Except as set forth above, there are not any shares of capital stock of
Architects or any Architects Subsidiary issued or outstanding or any options,
warrants, subscriptions, calls, rights, convertible
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securities or other agreements or commitments obligating Architects, Services,
any Architects Subsidiary or CRSS to issue, transfer or sell any shares of the
capital stock or other security of Architects or any Architects Subsidiary.
Other than the joint ventures listed on Schedule 5.12, none of Architects or
any Architects Subsidiary owns any equity interest in any entity other than an
Architects Subsidiary.
5.3 Ownership of Shares; Title.
Services is the owner of record and beneficially of the Architects
Shares, free and clear of any liens, liabilities, obligations, claims, pledges,
security interests, conditional sale agreements, charges, restrictions or
encumbrances of any kind ("Liens"). At the Closing, Services will transfer
good title to the Architects Shares to Purchaser, free and clear of any Liens.
CRSS and its Affiliates have not received any notice of any adverse claim to
the ownership of any such Architects Shares, and there are no such adverse
claims that may be justified. Architects is the owner of record and the
beneficial owner of the capital stock of each of the Architects Subsidiaries,
free and clear of any Liens.
5.4 Consents and Approvals; No Violations.
Except for filings, permits, authorizations, consents, approvals or
notices which have been obtained or actions which have been taken at or prior
to the Closing, no filing with, and no permit, authorization, consent, approval
of, or notice to, any governmental, administrative or judicial authority or any
third party, except as set forth on Schedule 5.4 hereto, is necessary for the
consummation by CRSS and Services of the transactions contemplated hereby.
Except as set forth on Schedule 5.4 hereto, the execution, delivery and
performance of this Agreement by CRSS and Services and the consummation by CRSS
and Services of the transactions contemplated hereby and compliance by CRSS and
Services with the provisions hereof, do not (i) conflict with or result in any
breach of any provision of the certificate of incorporation or by-laws of CRSS,
Services, Architects or any Architects Subsidiaries, (ii) result in the
creation or imposition of any Lien on the Architects Shares, the shares of
capital stock of any Architects Subsidiary, the assets of Architects or any
Architects Subsidiary, or any of the CRSS Assets, (iii) result in an event
which (with notice or lapse of time or both) would constitute a breach of or
default under (or give rise to any right of termination, cancellation or
acceleration of) any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, lease or other similar instrument or
obligation to which CRSS, Services, Architects or any Architects Subsidiaries
is bound or by which any of their respective properties or assets may be bound,
or (iv) violate or conflict with any order, writ, injunction, decree, statute,
rule or regulation of any court, public body or authority or any other
restriction of any kind or character
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applicable to CRSS, Services, Architects or any Architects Subsidiaries or any
of their respective properties or assets.
5.5 Authority.
CRSS and Services have all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby to be performed by CRSS and Services. The execution and
delivery by CRSS and Services of this Agreement have been duly and validly
authorized by the respective Boards of Directors of CRSS and Services, and no
other corporate proceedings on the part of the CRSS shareholders, CRSS or
Services are necessary to authorize CRSS's and Services' execution and delivery
of this Agreement or the consummation by CRSS and Services of the transactions
contemplated hereby. Assuming the due authorization, execution and delivery by
the Purchaser of this Agreement, this Agreement constitutes a legal, valid and
binding obligation of CRSS and Services, enforceable against CRSS and Services
in accordance with its terms.
5.6 Financial Statements.
(a) Attached hereto as Schedule 5.6 are the consolidated balance
sheets of Architects and the Architects Subsidiaries as of March 31, 1994 and
June 30, 1994 (the "Balance Sheets") and the related statements of operations
for the nine month period and fiscal year then ended (together with the Balance
Sheets, the "Financial Statements"). The Financial Statements are true,
complete and correct, present fairly the consolidated financial position and
results of operations of Architects and the Architects Subsidiaries at the date
and for the period indicated, and have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
previous periods, except as may be stated on such statements.
(b) For purposes of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules promulgated thereunder, Architects, together with all
entities which it controls, did not have annual net sales or total assets of
$25 million or more for the fiscal year ended June 30, 1994.
5.7 Compliance With Laws.
Each of Architects and each Architects Subsidiary owns and operates,
and has owned and operated, its properties and assets, and CRSS owns and
operates, and has owned and operated, the CRSS Assets, and each of Architects,
each Architects Subsidiary and, with respect to the Architects Business, CRSS
and Services, carries on and conducts, and has carried on and conducted, its
business in full compliance with its articles of incorporation and bylaws and
all federal, foreign, state or local laws, statutes, ordinances, rules,
regulations or orders, including, without limitation, any Environmental Law,
applicable to Architects or any Architects
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Subsidiary, or, in connection with the Architects Business, CRSS or Services.
None of CRSS, Architects or any Architects Subsidiary has received any
complaint or notice from any governmental authority alleging that any of
Architects or any Architects Subsidiary or, in connection with the Architects
Business, CRSS or Services, has violated any law, rule, regulation, order,
licensing requirement, authorization or judicial or administrative decision.
5.8 Absence of Certain Changes or Events.
Except as set forth in Schedule 5.8 and except as otherwise permitted
by this Agreement, since March 31, 1994, there has not been with respect to
CRSS, Services, Architects or any Architects Subsidiary in connection with any
of the businesses or operations of Architects or any Architects Subsidiary,
specifically including the business or operations of CRSS or its Affiliates
relating to the Peace Shield Joint Venture (with such inclusion, the
"Architects Business"): (a) capital expenditures or commitments for capital
expenditures exceeding $20,000 in the aggregate; (b) commitments requiring
expenditures other than in the ordinary course of business and not exceeding
$20,000 in the aggregate; (c) termination of, or a failure to perform
obligations or the occurrence of any default under, any contract, lease,
agreement or license; (d) except as reflected on the June 30, 1994 Balance
Sheet, destruction, damage to, or loss of any asset (not covered by insurance);
(e) change in accounting methods, principles or practices that would affect the
preparation of the financial statements relating to the Architects Business;
(f) sale, assignment or transfer of any tangible or intangible asset, including
any rights to intellectual property, except in the ordinary course of business;
(g) (i) any increase in the compensation payable or to become payable to any
officers or key employees, except increases occurring in the ordinary course of
business, or (ii) any increase in any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with any such
officers or key employees except increases in the ordinary course of business
or as required by law; (h) change in the business or financial condition or
operations of the Architects Business, other than changes in the ordinary
course of business; (i) payment of fees and expenses of counsel, accountants or
other experts incurred by Architects or any Architects Subsidiary incident to
the negotiations, preparation or execution of this Agreement or the
transactions contemplated hereby; (j) transactions, other than those of the
kind addressed above in this Section 5.8, entered into or carried out by
Architects or any Architects Subsidiary, or, in connection with the Architects
Business, by CRSS or Services, other than in the ordinary course of the
Architects Business; or (k) agreement or understanding to take any of the
actions described above in this Section 5.8. Since June 30, 1994, there has
not been any: (x) declaration, setting aside or payment of any dividend or any
distribution (in cash or in kind) with respect to any securities of Architects;
or (z) sale or direct or indirect redemption, purchase or other acquisition of
any securities of Architects.
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5.9 Litigation.
Except as set forth in Schedule 5.9 hereto, there is no suit, action,
charge, claim, inquiry, investigation or proceeding pending or threatened
against or affecting CRSS or Services (in connection with the Architects
Business), or Architects or any Architects Subsidiary. There is no judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against CRSS or
Services (in connection with the Architects Business), or Architects or any
Architects Subsidiary.
5.10 Title to Properties; Encumbrances.
Except as described in the following sentence, each of Architects and
each Architects Subsidiary has good and valid title to all of its properties
and assets (real, personal and mixed, tangible and intangible), including,
without limitation, all the properties and assets reflected on the Balance
Sheet, except for property or assets disposed of in the ordinary course of
business since that date, and CRSS or its Affiliates has good and valid title
to the CRSS Assets. None of such properties or assets is subject to any Lien,
except (i) as set forth in Schedule 5.10(a) hereto, and (ii) any taxes or
statutory liens respecting payments which are not delinquent. Attached as
Schedule 5.10(b) is a true, complete and correct fixed asset listing for
Architects and the Architects Subsidiaries.
5.11 Leases.
All leases of real or personal property to which Architects or any
Architects Subsidiary is a party, or which are CRSS Assets or CRSS Obligations,
and all material amendments and modifications thereof, are listed on Schedule
5.11 hereto (true and correct copies of which have been delivered or made
available to the Purchaser). All such leases are in full force and effect and
have not been modified or amended in any material respect (except as set forth
in Schedule 5.11 hereto). There exists no event of default under the leases by
CRSS, Services, Architects or any Architects Subsidiary or, to the knowledge of
CRSS, by any other party thereto, nor any event which with notice or lapse of
time or both would constitute an event of default thereunder by CRSS, Services,
Architects or any Architects Subsidiary or, to the knowledge of CRSS, by any
other party thereto.
5.12 Contracts; Agreements and Commitments.
(a) Except as set forth on Schedule 5.12 hereto, and except for
bids or proposals made in the ordinary course of business, neither CRSS or
Services (in connection with the Architects Business), nor Architects or any
Architects Subsidiary is a party to or bound by any of the following written or
oral contracts, agreements, commitments or instruments: (a) employment
agreements
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or consulting or retainer agreements; (b) indentures, mortgages, notes,
installment obligations, capital leases, interest rate swap agreements,
agreements or other instruments relating to the borrowing of money by
Architects or any Architects Subsidiary, or the guarantee of any obligation for
the borrowing of money by Architects or any Architects Subsidiary; (c)
agreements which (i) provide for the receipt or payment by Architects or any
Architects Subsidiary of more than $20,000 in the aggregate, or (ii) commit
Architects or any Architects Subsidiary to capital expenditures of more than
$20,000 in the aggregate; (d) any agreement involving a sharing of profits or
any joint venture, partnership or similar arrangement; (e) any agreement
containing covenants limiting the freedom of Architects or any Architects
Subsidiary to compete in any line of business or with any third party or in any
geographic area; (f) any agreement with any Affiliate of CRSS (other than
Architects or any Architects Subsidiary); or (g) any other agreement not made
in the ordinary course of the Architects Business.
(b) True and complete copies of each contract described on
Schedule 5.12, have been delivered or made available to Purchaser. Each such
agreement is a valid and binding obligation of the parties thereto, enforceable
in accordance with its terms, and in full force and effect. Neither CRSS,
Services, Architects, nor any Architects Subsidiary, as applicable, nor, to the
knowledge of CRSS, any other party, is in breach or violation of any such
agreement or in default thereunder. No event has occurred which, through the
passage of time or the giving of notice, or both, would constitute, and, except
as set forth on Schedule 5.4 hereto, neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby do or will
constitute or result in, a breach or violation of or default thereunder of any
such agreement by CRSS, Services, Architects, or any Architects Subsidiary, or
to the knowledge of CRSS, any other party to any such agreement, or would cause
the acceleration of any obligation of CRSS, Services, Architects, or any
Architects Subsidiary, or the creation of a Lien upon the CRSS Assets or any
asset of Architects or any Architects Subsidiary.
5.13 Employee Benefit Plans; ERISA.
(a) Schedule 5.13(a) hereto contains a true and complete list of
each bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance or termination pay, hospitalization or other medical,
life or other insurance, supplemental unemployment benefits, profit sharing,
pension, retirement, welfare or fringe benefit, including without limitation
vacation, disability, tuition, company car, and sick leave, plan, program,
agreement or arrangement within the meaning of Section 3(3) of ERISA, and each
other material employee benefit plan, program, agreement or arrangement,
maintained or contributed to or required to be contributed to by Architects or
any Architects Subsidiary for the benefit of any employee or terminated
employee of Architects or any Architects Subsidiary, whether formal or informal
(the "Plans"). None of Architects or any Architects Subsidiary is a party to
any
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employment agreement or any consulting or retainer agreement or arrangement
that is subject to ERISA.
(b) With respect to each of the Plans, the Purchaser has had an
opportunity to review true and complete copies of each of the following
documents:
(i) copies of all Plans (including all amendments
thereto), policies and employee handbooks covering any employee, and
noncompetition, confidentiality, indemnification and similar
agreements entered into with any employee, of Architects or any
Architects Subsidiary;
(ii) a copy of the actuarial report, if required under
ERISA, with respect to each such Plan for the last three years;
(iii) a copy of the most recent Summary Plan Description;
(iv) if the Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements
thereof; and
(v) the most recent determination letter received from
the Internal Revenue Service with respect to each Plan that is
intended to be qualified under Section 401 of the Code.
(vi) copies of Form 5500 annual reports for each of the
last three years and, with respect to each top hat plan, a copy of the
reporting letter filed with the Department of Labor;
(vii) to the extent completed, an actuarial analysis of
Plan reserves or excess assets (including premium stabilization
reserves) as of the close of the most recently completed Plan year
ending on or before the Closing Date;
(viii) to the extent permitted by applicable law, a list of
employees of Architects and any Architects Subsidiary with medical
claims during the current or most recently completed plan year which
exceeded $5,000 in the aggregate for the employee or any covered
dependent and the amount of such claims and diagnoses;
(ix) number of employees on disability leave during each
of last five years;
(x) any collective bargaining agreement; and
(xi) copies of the general notification to employees of
their rights under Code Section 4980B and form of letter(s)
distributed upon the occurrence of a qualifying event
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described in Code Section 4980B, in the case of a Plan that is a
"group health plan" as defined in Code Section 4980B(g)(2).
(c) None of the Plans is a "multi-employer pension plan," as that
term is defined in Section 3(37) of ERISA.
(d) CRSS terminated its defined benefit pension plan on July 1,
1987, annuity contracts were purchased to cover all benefits accrued under the
plan and the remaining assets were returned to CRSS. Such termination was
carried out in accordance with all provisions of applicable law, including
without limitation all applicable reporting and other provisions of the Code
and ERISA. None of CRSS, Services, Architects or any Architects Subsidiary has
any liability to, or received notice alleging such liability from, any person
or entity, including without limitation the Pension Benefit Guaranty
Corporation, any other Government agency or any participant in or beneficiary
of the plan, nor is CRSS, Services, Architects or any Architects Subsidiary
liable for any excise, income or other tax or penalty as a result of or in
connection with such termination. CRSS has obtained a favorable determination
letter from the Internal Revenue Service with respect to the termination of
such plan (a true, complete and correct copy of which has been delivered to
Purchaser). The favorable determination letter was received after full and
accurate disclosure of all material facts to the appropriate government
agencies. Neither CRSS, Services, Architects, any Architects Subsidiary nor
any trade or business (whether or not incorporated) that together with CRSS,
Architects or any Architects Subsidiary would have been deemed a "single
employer" within the meaning of Section 4001(b) of ERISA has subsequently
contributed, or was required to contribute, to any defined benefit plan or
multi-employer plan subject to Title IV of ERISA.
(e) No Plan is subject to Title IV of ERISA, Section 302 of ERISA
or Section 412 of the Code.
(f) Neither Architects, any Architects Subsidiary, nor any of the
Plans has engaged in a transaction in connection with which Architects or any
Architects Subsidiary could be subject to any civil liability under Section 409
of ERISA or any civil penalty assessed pursuant to Section 502(i) of ERISA or
any tax imposed pursuant to Section 4975 or 4976 of the Code and there has not
been any "reportable event" (as defined in Section 4043(b) of ERISA) with
respect to any of the Plans.
(g) Full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Code, of all amounts which CRSS, Services, Architects
or any Architects Subsidiary is required to contribute under the terms of each
of the Plans for all periods ending prior to the Closing Date (including
periods from the first day of the current plan year to the Closing Date).
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(h) All insurance premiums (including premiums, if any, to the
PBGC) have been paid in full, subject only to normal retrospective adjustments
in the ordinary course, with regard to the Plans for policy years or other
applicable policy periods ending on or before the Closing Date.
(i) Each of the Plans and their attendant trust, if any, or other
funding medium has been operated and administered in all material respects in
accordance with its terms, ERISA, the Code and any other applicable law
(including but not limited to all filing and reporting requirements such as
Form 5500 Annual Reports, Summary Annual Reports and Summary Plan Descriptions)
and neither CRSS, Services, Architects, nor any Architects Subsidiary has any
direct or indirect liability with respect to such Plans or trusts under ERISA,
the Code or any other applicable law.
(j) Each of the Plans which is intended to be "qualified" within
the meaning of Section 401(a) or Section 501(c)(9) of the Code is so qualified
and has been so determined by the Internal Revenue Service to qualify, and
nothing has since occurred to cause the loss of the Plan's qualification.
(k) Except as disclosed on Schedule 5.13(k) hereto, no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
Architects or any Architects Subsidiary beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable law,
(ii) death benefits or retirement benefits under any Plan, (iii) deferred
compensation benefits accrued as liabilities on the books of Architects or any
Architects Subsidiary, or (iv) benefits the costs of which are borne by the
current or former employee (or his beneficiary).
(l) Except as disclosed on Schedule 5.13(l) hereto, the
consummation of the transactions contemplated by this Agreement will not (i)
accelerate the vesting, or increase the amount of compensation due, any current
or former employee or officer of Architects or any Architects Subsidiary, (ii)
result in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which a class exemption is not available unless an
individual exemption has been obtained, or (iii) entitle any current or former
officer or employee of Architects or any Architects Subsidiary to amounts
payable under the Plans which will fail to be deductible for federal income tax
purposes by virtue of Section 280G of the Code.
(m) There are no pending, threatened or anticipated lawsuits
against Architects or any Architects Subsidiary by or on behalf of any of the
Plans, by any employee or beneficiary covered under any such Plan or by any
other party with respect to such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
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(n) With respect to persons who experience a qualifying event as
defined in Section 4980B(f)(3) of the Code on or before the Closing Date, CRSS
retains all liabilities, obligations and duties for any continuation coverage
required under COBRA including COBRA liabilities, if any, arising as a result
of the transactions contemplated by this Agreement.
(o) CRSS will retain responsibility for any and all severance
obligations to Transferring Employees which arise before the Closing Date or
which arise as a result of the transactions contemplated by this Agreement.
5.14 Labor Difficulties.
CRSS and Services (in connection with the Architects Business), and
Architects and all Architects Subsidiaries (i) are in compliance with all
applicable laws respecting employment and employment practices, discrimination,
terms and conditions of employment and wages and hours and occupational safety
and health laws, and (ii) are not engaged in any unfair labor practice as
defined by the National Labor Relations Act or any similar state or foreign
agency. There is no unfair labor practice complaint against CRSS or Services
(in connection with the Architects Business), or Architects or any Architects
Subsidiary pending before the National Labor Relations Board. There is no
labor strike or lockout actually pending or, to the knowledge of CRSS,
threatened against or affecting Architects or any Architects Subsidiary. Except
as set forth in Schedule 5.14, none of the employees of Architects or any
Architects Subsidiary is represented by any labor organization and CRSS does
not have any knowledge of any current union organizing activities among such
employees. No grievance nor any arbitration proceeding arising out of or under
collective bargaining agreements is pending. No collective bargaining agreement
which is binding on Architects or any Architects Subsidiary restricts any of
them from relocating or closing any of their operations and, except as set
forth in Schedule 5.14, neither Architects nor any Architects Subsidiary is a
party to or bound by any collective bargaining agreement or similar agreement
with any labor organization or employee organization applicable to such
employees of Architects or any Architects Subsidiary. Neither Architects nor
any Architects Subsidiary has experienced any strike of their employees during
the last ten (10) years. There are no charges pending before the Equal
Employment Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices. CRSS has not received notice of
the intent of any federal, state, local or foreign agency responsible for the
enforcement of labor and employment laws to conduct an investigation with
respect to or relating to Architects or any Architects Subsidiary, and, to the
knowledge of CRSS, no such investigation is in progress. Since the enactment of
the Worker Adjustment and Retraining Notification Act (the "WARN Act"), neither
CRSS, Services, Architects nor any Architects Subsidiary has effectuated (i) a
"plant closing" (as defined in the WARN Act) affecting any site of employment
or one or more facilities or
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operating units within any site of employment; or (ii) a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or facility of CRSS,
Services, Architects or any Architects Subsidiary in connection with the
Architects Business except in compliance with the WARN Act; nor has CRSS,
Services, Architects or any Architects Subsidiary been affected by any
transaction or engaged in layoffs or employment terminations in connection with
the Architects Business sufficient in number to trigger application of any
similar state or local law except in compliance with any such law.
5.15 Taxes.
(a) Except as set forth in Schedule 5.15, CRSS, Services,
Architects, each Architects Subsidiary, or a Tax Affiliate (as defined in
Section 6.2(e)(v) herein) of any of the foregoing has (a) filed with the
appropriate federal, state, local and foreign taxing authorities all Tax
Returns (as defined in Section 6.2(e)(v) herein) and all federal, state, local
and foreign Tax Returns required to be filed by or with respect to Architects
and each Tax Subsidiary (as defined in Section 6.2(e)(v) herein) thereof and
such Tax Returns are true, correct and complete in all respects, and (b) paid
in full on a timely basis, or has made provision for the payment of, all Taxes
(as defined in Section 6.2(e)(v) herein) shown to be due on such Tax Returns.
There are no liens for Taxes upon the assets of Architects or any Tax
Subsidiary thereof except for liens for current Taxes not yet due or Taxes
being contested in good faith by appropriate proceedings. Except as set forth
in Schedule 5.15, none of CRSS, Services, Architects, any Architects Subsidiary
or any Tax Affiliate of any of the foregoing has received any written notice of
deficiency or assessment from any federal, state, local or foreign taxing
authority with respect to liabilities for Taxes of Architects or any Tax
Subsidiary thereof which have not been fully paid or finally settled, except
any such deficiency or assessment shown on such Schedule being contested in
good faith through appropriate proceedings. Except as set forth in Schedule
5.15, no waivers of statutes of limitations as to any matter relating to Taxes
have been given or requested by or with respect to Architects or any Tax
Subsidiary thereof, no extensions of time in which to file any Tax Return with
respect to Architects or any Tax Subsidiary thereof is in effect, and none of
Architects or any Tax Subsidiary thereof is under audit or other examination
and no notice of any such pending audit has been received.
(b) Architects and each Tax Subsidiary thereof have withheld
amounts from their respective employees and, with respect to such employees,
have filed all federal, state, local, foreign and other returns and reports
with respect to employee income tax withholding and social security,
unemployment taxes and all other payroll taxes in compliance with applicable
tax withholding provisions and have made all required remittances in respect of
such amounts withheld.
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(c) CRSS, Architects, and any Tax Affiliates of either of them
have complied with all laws relating to the withholding of Taxes and the
payment thereof (including, without limitation, withholding of Taxes under
Sections 1441 and 1442 of the Code, or any similar provision under foreign
laws), and have timely and properly withheld from employee wages and paid over
to the proper Government all amounts required to be withheld and paid over
under applicable Law.
(d) None of Architects or any Architects Subsidiary is a party to
any safe harbor lease within the meaning of section 168(f)(8) of the Code, as
in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982. None of the CRSS Assets or assets of Architects or any Architects
Subsidiary has been financed with or directly or indirectly secures any
industrial revenue bonds or debt the interest on which is tax-exempt under
Section 103(a) of the Code. None of Architects or any Architects Subsidiary is
a borrower or guarantor of any outstanding industrial revenue bonds, and is not
a tenant, principal user or related person to any principal user (within the
meaning of section 144(a) of the Code) of any property which has been financed
or improved with the proceeds of any industrial revenue bonds.
(e) None of CRSS, Services, Architects or any Architects
Subsidiary is a foreign person within the meaning of section 1445(b)(2) of the
Code and Treasury Regulations thereunder, and each of such entities shall so
certify pursuant to such Regulations upon Purchaser's request.
(f) None of the CRSS Assets or property owned by the Architects or
any Architects Subsidiary is tax-exempt use property within the meaning of
section 168(h) of the Code.
(g) As of the Closing Date, except as set forth in Schedule 5.4,
none of Architects or any Architects Subsidiary is a partner in any joint
venture, partnership or other arrangement or contract that could be treated as
a partnership for federal income tax purposes.
5.16 Environmental Matters.
(a) Architects and each Architects Subsidiary and, with respect to
the Architects Business, CRSS and Services are in compliance with all
applicable federal, state and local laws, ordinances, regulations and rules,
relating to air or water quality, waste management, hazardous or toxic
substances, or the protection of health or the environment ("Environmental
Laws") and holds all permits, licenses, registrations and other governmental
authorizations required under Environmental Laws (collectively, "Permits").
None of CRSS, Services, Architects or any Architects Subsidiary has been
notified by any governmental authority that any such Permit may be modified
(except as may occur in the normal course of Permit renewal), suspended or
revoked, or that any such Permit cannot be renewed in the ordinary course of
business.
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(b) No person has made any written allegation to CRSS that
Architects or any Architects Subsidiary (or, to the knowledge of CRSS, any
person or entity whose liability with respect to the matter alleged may have
been retained or assumed by Architects or any Architects Subsidiary under
contract or law) may have potential liability arising out of, based on or
resulting from the release or threatened release of hazardous or toxic
substances into the environment or workplace.
(c) Set forth on Schedule 5.16 hereto is a description of all
investigations, inquiries or other proceedings now pending or threatened by any
U.S. federal, state or local governmental entity or any foreign governmental
entity with respect to CRSS or Services (in connection with the Architects
Business), Architects or any Architects Subsidiary in connection with the
actual or alleged failure to comply with any Environmental Laws. CRSS and
Services (in connection with the Architects Business), and Architects and each
Architects Subsidiary has maintained all documents and records and made all
filings required by all applicable Environmental Laws. None of the assets of
Architects or any Architects Subsidiary, or any properties leased by Architects
or any Architects Subsidiary or otherwise used in connection with the
Architects Business, is contaminated with any hazardous waste or substance.
5.17 Insurance.
All current primary, excess and umbrella policies of insurance owned
or held by or on behalf of or providing insurance coverage to CRSS or Services
(in connection with the Architects Business), or Architects or any Architects
Subsidiary are listed on Schedule 5.17 hereto. With respect to all such
insurance policies, no premiums are in arrears, no notice of cancellation or
termination has been received with respect to any such policy, other than
notices of cancellation or termination routinely sent at the end of a policy
term, and all such insurance policies are valid policies. Except as set forth
in Schedule 5.17, all such insurance policies will cease to provide coverage to
Architects or any Architects Subsidiaries for any occurrences following the
Closing (with respect to occurrence-based policies) and for any claims asserted
following the Closing (with respect to claims-made policies); provided that
this in no way shall limit the rights of CRSS or any of its Affiliates with
respect to any insurance coverage, including coverage provided by CRSS
Insurance Ltd.
5.18 Permits.
Schedule 5.18 hereto lists all licenses and permits required for the
conduct of the Architects Business, together with the name of the government
agency or entity issuing such license or permit. Each of such licenses and
permits and the rights of CRSS, Services, Architects or any Architects
Subsidiary with respect thereto are valid and subsisting, in full force and
effect and enforceable by Architects or such Architects Subsidiary (depending
on the holder
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thereof), and each of CRSS, Services, Architects and such Architects Subsidiary
is in compliance with the terms of such licenses and permits. None of such
licenses and permits has been or, to the knowledge of CRSS, is threatened to
be, revoked, canceled, suspended or modified.
5.19 Intellectual Property.
Schedule 5.19 hereto sets forth all domestic and foreign patents,
copyrights (including computer programs and related documentation), and
copyright registrations, trademarks, trade names, service marks, or brand name
registrations, and all other intellectual property rights, and all pending
applications or applications to be filed, if any, owned or used under license
or other permission by each of CRSS and Services (in connection with the
Architects Business), and Architects and each Architects Subsidiary or utilized
or required in connection with the Architects Business and which in each case
is material to the Architects Business (collectively, the "Intellectual
Property"). Except as set forth on Schedule 5.19, there are (a) no existing
or, to the knowledge of CRSS, threatened claims of any third party challenging
the ownership, validity, or use of Intellectual Property; (b) no licenses or
other agreements to which CRSS or any of its Affiliates is a party concerning
the use of the Intellectual Property by third parties; (c) to the knowledge of
CRSS, no Liens affecting the Intellectual Property; and (d) no restrictions on
the transfer of any such Intellectual Property. Neither Architects nor any
Architects Subsidiary is in default under or has breached any license agreement
pursuant to which Intellectual Property is made available to Architects or any
Architects Subsidiary under license. None of CRSS or Services (in connection
with the Architects Business), Architects or any Architects Subsidiary is, to
the knowledge of CRSS, infringing upon the right of any third party under any
patent, trademark or other intellectual property right. No other person or
entity is infringing upon the Intellectual Property.
5.20 Necessary Property.
The CRSS Assets, CRSS Obligations and the assets owned by Architects
and the Architects Subsidiaries constitute all of the property now used in, and
necessary for the conduct of, the Architects Business in the manner and to the
extent presently conducted, and following the consummation of the transactions
contemplated hereby, subject to Section 3.1(a), Purchaser shall be entitled to
occupy and utilize the CRSS Assets, the CRSS Obligations and the assets of
Architects and the Architects Subsidiaries in the same manner and to the same
extent that Architects, the Architects Subsidiaries and, in connection with the
Architects Business, CRSS and Services are presently entitled to occupy and
utilize such assets.
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5.21 Condition of Property.
All of the assets and properties of Architects and the Architects
Subsidiaries, and the CRSS Assets, are in operating condition and repair
sufficient for their use in connection with the Architects Business as
presently conducted.
5.22 Undisclosed Liabilities.
None of Architects, the Architects Subsidiaries nor, in connection
with the Architects Business, CRSS or Services, has any liabilities or
obligations whatsoever, either accrued, absolute, contingent or otherwise,
except (a) to the extent same will be reflected in the June 30 Pro Forma
Balance Sheet; (b) to the extent set forth on any of the Schedules hereto, or
to the extent not required to be set forth on any of the Schedules hereto
pursuant to limitations and exceptions specified in the Sections to which such
Schedules relate; or (c) liabilities or obligations incurred in the normal and
ordinary course of business since June 30, 1994.
5.23 Foreign Operations and Export Control.
Since January 1, 1989, CRSS, Services, Architects and the Architects
Subsidiaries have conducted the Architects Business: (a) pursuant to valid
qualifications to do business in all jurisdictions outside the United States
where such qualification is required by local law; (b) in compliance with all
applicable foreign laws, including without limitation laws relating to foreign
investment, foreign exchange control, immigration, employment and taxation; (c)
without notice of violation of and in compliance with all relevant anti-boycott
legislation, including without limitation the Tax Reform Act of 1976, as
amended, the Export Administration Act of 1979, as amended and the Export
Administration Amendments Act of 1985, and regulations thereunder, including
all reporting requirements; (d) without violation of and pursuant to any
required export license granted under the Export Administration Act of 1979, as
amended, and the Export Administration Amendments Acts of 1981 and 1985, and
regulations thereunder, which licenses are described on Schedule 5.23; and (e)
without violation of the Foreign Corrupt Practices Act of 1977.
5.24 Officers and Directors.
Set forth on Schedule 5.24 is a list of directors and all current
officers (with office held) of Architects and each Architects Subsidiary.
5.25 Bank Accounts.
Set forth on Schedule 5.25 hereto is a list of all bank accounts and
safe deposit boxes maintained by Architects or any Architect Subsidiary,
together with the names of all persons who are authorized signatories or have
access thereto.
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5.26 Books and Records.
The books of account, stock record books and minute books and all
other corporate records of Architects and the Architects Subsidiaries are in
all material respects complete and correct, have been maintained in accordance
with good business practices and the matters contained therein are accurately
reflected on the financial statements to the extent appropriate. True and
complete copies of the Articles of Incorporation and Bylaws and all amendments
thereto of Architects and the Architects Subsidiaries have been delivered to
Purchaser prior to the date hereof. The minute books and stock books of
Architects and the Architects Subsidiaries have been made available to
Purchaser and are correct and complete to the date hereof.
5.27 Representations Exclusive.
Except for the representations and warranties contained in this
Agreement, neither Services nor CRSS nor any Affiliate thereof makes any
representation or warranty, express or implied (including, without limitation,
any implied warranty of merchantability or fitness for a particular purpose),
and any such representation or warranty is hereby disclaimed, whether by
Services, CRSS, Architects or any Architects Subsidiary or any of their
respective officers, directors, employees, agents, representatives, Affiliates
or any other person, with respect to this Agreement or the transactions
contemplated hereby.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred by the Purchaser in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the Purchaser, and all costs and expenses incurred by Services or CRSS in
connection with this Agreement and the transactions contemplated hereby shall
be paid by Services or CRSS. Neither Architects nor any Architects Subsidiary
will incur any transaction expenses in connection with this Agreement and the
transactions contemplated hereby.
6.2 Tax Matters.
(a) Section 338(h)(10) Election.
CRSS and the Purchaser will make a timely joint election under Section
338(h)(10) (and, if required, in order to effectuate a Section 338(h)(10)
election, an election under Section 338(g)) of the Internal Revenue Code of
1986, as amended (the "Code") in compliance with the applicable Treasury
Regulations in order that
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the transactions contemplated by this Agreement be treated for federal income
tax purposes as a sale of assets by Architects and each of the Architects
Subsidiaries and a subsequent subsidiary liquidation, and the Purchaser and
Services shall file any corresponding elections available under state, local or
foreign tax laws. Any liability or asset for Taxes resulting from the election
under Section 338(h)(10) and, if required, Section 338(g) of the Code will be
paid by or inure to the benefit of CRSS. In particular, and not by way of
limitation, in order to effect any such election, on or prior to the Closing
Date, the Purchaser and CRSS agree to jointly and properly execute and deliver
at the Closing, necessary copies of completed Internal Revenue Service Form
8023, Form 8594, and any other forms or statements required by the Code,
applicable Treasury Regulations or the Internal Revenue Service, together with
any and all attachments required to be filed therewith pursuant to applicable
Treasury Regulations. Taxes or recoverable amounts as a result of the joint
election under Section 338(h)(10) will be borne by or inure to CRSS in a manner
which will not affect the June 30 Pro Forma Consolidated Net Worth of
Architects.
(b) Taxes Prior to, Including, and After the Closing.
The Purchaser acknowledges that CRSS intends to include Architects and
the Architects Subsidiaries in its consolidated federal income Tax Return for
the period prior to and including the Closing Date. The liability or benefit
for any federal income Taxes and state or local income and franchise Taxes
reported on a consolidated basis for CRSS and its Affiliates for the periods
prior to and including the Closing Date shall be borne by or inure to the
benefit of CRSS, and CRSS shall indemnify and hold harmless the Purchaser, in
the manner set forth in Article VII, against any and all liability for or with
respect to such income Taxes claimed or assessed for the periods prior to and
including the Closing Date. CRSS also shall indemnify and hold harmless the
Purchaser, in the manner set forth in Article VII, against any and all
liability for or with respect to income Taxes arising from the making of the
joint election by Services and the Purchaser under Section 338(h)(10). The
liability or asset for any income Taxes of Architects and the Architects
Subsidiaries for the periods beginning after the Closing Date shall be borne by
or inure to the benefit of the Purchaser, and the Purchaser will indemnify and
hold harmless CRSS and its Affiliates, in the manner set forth in Article VII,
against any and all liability for or with respect to income Taxes of Architects
and the Architects Subsidiaries claimed or assessed for all taxable periods
beginning after the Closing Date.
(c) Cooperation.
After the Closing, the Purchaser and CRSS shall, and the Purchaser
shall cause Architects and the Architects Subsidiaries to, cooperate fully with
one another and shall make available to one another, as reasonably requested,
all information, records or
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documents relating to income Tax liabilities of Architects and the Architects
Subsidiaries for all periods prior to or ending on the Closing Date and shall
preserve all such information, records and documents until the expiration of
any applicable statutes of limitation or extensions thereof. The Purchaser,
CRSS, Architects and the Architects Subsidiaries also shall make available to
one another, as reasonably requested, personnel responsible for preparing or
maintaining information, records and documents in connection with income tax
matters.
(d) Tax Audits.
(i) So long as taxable periods of Architects and the
Architects Subsidiaries ending on or prior to the Closing Date remain
open for an assessment of income Taxes, the Purchaser and CRSS shall
promptly notify the other in writing within ten (10) days of receipt
by the Purchaser or CRSS of notice of (i) any pending or threatened
audits or assessments with respect to income Taxes of Architects and
the Architects Subsidiaries, and (ii) any pending or threatened audits
or assessments with respect to income Taxes of the Purchaser which may
affect the income Tax liabilities of Architects and the Architects
Subsidiaries for taxable periods ending on or prior to the Closing
Date. CRSS shall have the right to represent the interests of
Architects and the Architects Subsidiaries in any tax audit or
administrative or court proceeding relating to fiscal periods ending
on or prior to the Closing Date and to employ counsel of its choice at
its expense. The Purchaser agrees that it will, at CRSS's expense,
cooperate fully with CRSS and its counsel in the defense against or
compromise of any claim in any said proceeding.
(ii) If, as a result of the examination of the
consolidated or separate federal, state or local income Tax Returns of
CRSS or any of CRSS's Tax Subsidiaries for a taxable period ending on
or prior to the Closing Date, there shall be made after the Closing
Date any adjustment which decreases deductions, losses or credits
against income Taxes ("Tax Benefits") or which increases income, gains
or recaptures of credits against income Taxes ("Tax Detriments") for
any such taxable period and which will permit the Purchaser or any of
Architects and the Architects Subsidiaries (or any of the Purchaser's
Tax Affiliates) to increase the Tax Benefits or decrease the Tax
Detriments to which they would otherwise have been entitled for any
taxable period beginning after the Closing Date, CRSS will notify the
Purchaser of such adjustment and provide the Purchaser with such
information as may be necessary for the Purchaser to take account of
such increases or decreases through the filing of a claim for refund
or otherwise. The Purchaser shall take any reasonable action
necessary to secure the benefit of such increases or decreases and
shall pay CRSS the amount of such benefit (together with interest, if
any, received), such amount to be
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paid when, as and only to the extent such benefit is actually
recognized, less the amount, if any, of the Purchaser's reasonable
expenses incurred in securing such benefit for CRSS.
(iii) If, as a result of the examination of the
consolidated or separate federal, state or local income Tax Returns of
the Purchaser or any of the Purchaser's Tax Affiliates for a taxable
period beginning after the Closing Date, there shall be made after the
Closing Date any adjustment which decreases Tax Benefits or increases
Tax Detriments for any such taxable period and which will permit CRSS
or CRSS's Tax Subsidiaries to increase Tax Benefits or decrease Tax
Detriments to which CRSS would otherwise have been entitled for any
taxable period ending on or prior to the Closing Date, the Purchaser
will notify CRSS of such adjustment and provide CRSS with such
information as may be necessary for CRSS to take account of such
increase or decrease through the filing of a claim for refund or
otherwise. CRSS shall take any reasonable action necessary to secure
the benefit of such increases or decreases and shall pay to the
Purchaser the amount of such benefit (together with interest, if any,
received), such amount to be paid when, as and only to the extent such
benefit is actually recognized, less the amount, if any, of the
reasonable expenses of CRSS incurred in securing such benefit for the
Purchaser.
(e) Miscellaneous.
(i) Prior Tax Sharing Agreements.
This Agreement terminates and supersedes any and all other tax
sharing or other allocation agreements in effect on the date hereof as
between (x) CRSS and (y) Architects and the Architects Subsidiaries
for all Taxes, regardless of the taxable year for which such Taxes are
imposed.
(ii) Retention of Records.
For a period of ten (10) years from the Closing Date, none of
CRSS, the Purchaser or any Tax Affiliate of either shall dispose of or
destroy any of the business records and files of Architects or any Tax
Subsidiary thereof relating to Taxes in existence on the Closing Date
without first offering to turn over possession thereof to CRSS (in the
case of records and files held by the Purchaser or any Tax Affiliate
thereof) or the Purchaser (in the case of records and files held by
CRSS or any Tax Affiliate thereof) by written notice at least thirty
(30) days prior to the proposed date of such disposition or
destruction.
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(iii) Resolution of Disagreements Among Parties.
If (x) CRSS and (y) the Purchaser, Architects or any
Architects Subsidiary disagree as to the matters governed by this
Section 6.2, CRSS and the Purchaser shall promptly consult with each
other in an effort to resolve such dispute. If any such disagreement
cannot be resolved within fifteen days after either party asserts in
writing that such dispute cannot be resolved, CRSS and the Purchaser
shall jointly select a firm of nationally recognized independent
certified accountants mutually acceptable to CRSS and the Purchaser
(the "Independent Accounting Firm"), to act as an arbitrator to
resolve such disagreement. Such Independent Accounting Firm's
determination shall be binding and conclusive, and any expenses
relating to the engagement of such accounting firm shall be shared
equally by CRSS and the Purchaser.
(iv) Limitation to Income Taxes.
Notwithstanding anything to the contrary in this Section 6.2,
after the Closing the Purchaser, Architects and the Architects
Subsidiaries shall be responsible for all Taxes of Architects and any
of the Architects Subsidiaries, other than federal income Taxes and
state or local income Taxes reported on a consolidated basis for CRSS
and its subsidiaries, which income Taxes shall be subject to the
mutual indemnity and other provisions of this Section 6.2.
Appropriate reserves and accruals relating to all Taxes of Architects
and any of the Architects Subsidiaries, other than the aforementioned
income Taxes, shall be set forth on the June 30 Pro Forma Balance
Sheet.
(v) Definitions.
For purposes of this Agreement, (1) except as specifically
provided herein, the term "Tax" or "Taxes" shall mean all taxes,
levies or other like assessments, charges or fees, including, without
limitation, income, gross receipts, transfer, gains, excise, property,
sales, license, payroll, withholding, social security and franchise or
other governmental taxes, imposed by the United States, or any state,
county, local or foreign government and subdivision or agency thereof;
and such term shall include any interest, interest penalty, penalty or
additions to tax attributable to such taxes; (2) the term Tax Return"
shall mean any report, return, statement or other written information
(including elections, declarations, disclosures, schedules, estimates,
and information returns) required to be supplied to a taxing authority
in connection with Taxes; (3) the term "Tax Affiliate", with respect
to any corporation, shall mean another corporation if both such
corporations are members of the same affiliated group of corporations
within the meaning of Section 1504(a) of the Code or any similar group
defined
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under a similar provision of state, local, or foreign law, including
any consolidated, unitary or combined group of corporations; and (4)
the term "Tax Subsidiary", with respect to any corporation, shall mean
another corporation in which such first corporation owns a direct or
indirect interest and which is a member of the same affiliated group
of corporations within the meaning of Section 1504 of the Code or any
similar group defined under a similar provision of state, local or
foreign law, including any consolidated, unitary or combined group of
corporations as such first corporation.
(f) CRSS shall pay all applicable sales, use or other similar
transfer Taxes that are, or become, due or payable as a result of the sale,
conveyance, assignment, transfer or delivery of the CRSS Assets or as a result
of any section 338(h)(10) election, whether levied on the Purchaser, CRSS,
Services, Architects or any Architects Subsidiary or any of their assets. CRSS
shall prepare, subject to the Purchaser's reasonable approval, and file any
returns required in respect of such Taxes.
(g) The Purchaser, CRSS and their respective Tax Affiliates, upon
request, shall use their respective reasonable efforts to provide or obtain
from any taxing authority any certificate or other document necessary to
mitigate, reduce or eliminate any Taxes (including additions thereto or
interest and penalties thereon) that otherwise would be imposed with respect to
the transactions contemplated in this Agreement.
(h) CRSS shall furnish to the Purchaser, as provided in section
1445(b)(2) of the Code, an affidavit pursuant to section 1445(a), stating under
penalties of perjury, CRSS' and Services' United States taxpayer identification
number and that neither of them is a foreign person.
(i) In order to apportion any unconsolidated state income Taxes or
other unconsolidated state Taxes based on net income relating to a taxable
period that includes, but that would not except for this Section 6.2 close on,
the Closing Date, CRSS and the Purchaser will, to the extent permitted by
applicable law, elect with the relevant state taxing authority to close the
taxable period of Architects or any Architects Subsidiary on the Closing Date.
In any case where applicable law does not permit Architects or any Architects
Subsidiary to close its taxable year on the Closing Date, then such
unconsolidated state income Taxes or other unconsolidated state Taxes based on
net income, if any, attributable to the taxable period of Architects or any
Architects Subsidiary that includes the Closing Date shall be allocated to CRSS
for the portion of the taxable period up to and including the Closing Date and
to the Purchaser for the portion of the taxable period subsequent to the
Closing Date. For these purposes, the Taxes for the portion of the taxable
period up to and including the Closing Date shall be determined on the basis of
an interim closing of the books as of the Closing Date.
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6.3 WARN Act.
None of CRSS, Architects nor any Architects Subsidiary shall, at any
time before the Closing Date, without complying fully with the notice and other
requirements of the Worker Adjustment and Retraining Notification Act (the
"WARN Act"), effectuate (a) a "plant closing" as defined in the WARN Act
affecting any "single site of employment" (as that term is used in the WARN
Act) of the Architects Business; or (b) a "mass layoff" (as defined in the WARN
Act) affecting any "single site of employment" of the Architects Business; or
any similar action under applicable state or foreign law requiring notice to
employees in the event of a plant closing or layoff. In addition, CRSS hereby
agrees to indemnify the Purchaser and to defend and hold the Purchaser harmless
from and against any and all claims, losses, damages, expenses, obligations and
liabilities (including costs of collection, attorney's fees and other costs of
defense) which the Purchaser may incur in connection with any suit or claim of
violation brought against the Purchaser directly or indirectly under the WARN
Act or any similar state or foreign law, which relates to actions taken by
CRSS, Architects or any Architects Subsidiary prior to the Closing Date in
connection with the Architects Business with regard to any "single site of
employment" of the Architects Business affected by this Agreement. Similarly,
the Purchaser hereby agrees to indemnify CRSS and its Affiliates and to defend
and hold CRSS and its Affiliates harmless from and against any and all claims,
losses, damages, expenses, obligations and liabilities (including costs of
collection, attorney's fees and other costs of defense) which CRSS or any of
its Affiliates may incur in connection with any suit or claim of violation
brought against CRSS or any of its Affiliates under the WARN Act or any similar
state or foreign law, which relates to actions taken by the Purchaser,
Architects or any Architects Subsidiary on or after the Closing Date in
connection with the Architects Business with regard to any "single site of
employment" of the Architects Business affected by this Agreement.
6.4 Allocation of Employee Plan Responsibilities.
(a) In General. Effective as of the Closing, all participation
and continued accrual or provision of any benefits to any Transferring
Employee, or any covered dependent or beneficiaries thereof in any Plan
sponsored by CRSS shall cease and CRSS shall transfer to Purchaser all trust
funds, reserve accounts and other assets, if any, in or related to the Plans
and allocable to the employees of Architects or any Architects Subsidiary, but
only to the extent Purchaser, Architects or any Architects Subsidiary will have
continuing liabilities with respect to such Plans after the Closing Date to
which such trust funds, reserve accounts, or other assets relate.
(b) Employee Benefits. Except as specifically provided herein, the
Purchaser shall not be obligated to provide any particular level or quality of
employee compensation, welfare, pension or other
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benefits to individuals who, as of the Closing, (i) are Transferring Employees,
(ii) are the covered dependents or other beneficiaries under any benefit plans
of such an employee or (iii) are former employees of the Architects Business
(or dependents or beneficiaries thereof) entitled to coverage as required by
Title I, Part 6 of ERISA and Section 4980B of the Code under any of CRSS's
employee welfare or pension plans ((i), (ii) and (iii) collectively, the
"Eligible Individuals"). Provided that the applicable Transferring Employee
remains employed with Architects, an Architects Subsidiary, Purchaser or
another Affiliate of Purchaser for at least one year following the Closing Date
(or is terminated within such one year period by Architects, an Architects
Subsidiary, Purchaser or another Affiliate of Purchaser without cause), the
Purchaser agrees to provide prior service credit to each of the Transferring
Employees for their years of service at CRSS and its subsidiaries for purposes
of determining eligibility, participation and benefits under employee benefit
plans and policies of the Purchaser, including without limitation its severance
plans and policies.
6.5 Post-Closing Access to Information and Personnel; Cooperation.
In addition to the requirements of Section 6.2 hereof, each of the
Purchaser and CRSS will reasonably cooperate with the other, and will provide
the other, and the Purchaser shall cause Architects and the Architects
Subsidiaries to provide CRSS, with the right, at reasonable times and upon
reasonable notice, to have access to, and to copy and use, any records or
information and to have access to and consult any person which or who may be
relevant in connection with the conduct of their respective businesses, and
Purchaser and CRSS will reasonably cooperate with each other in connection with
preparation of the June 30 Pro Forma Balance Sheet, financial and accounting
reporting requirements, litigation, Completed Contracts, employee benefit plan
and ERISA matters and requirements of applicable securities laws. Other than
with respect to minimal routine assistance, for which there will be no charge,
the party requesting assistance shall compensate the other party (i) with
respect to the first twenty hours of service provided by the other party's
personnel on a particular project in response to such request, at the hourly
rate of 135% of the hourly wage or prorated hourly salary, as applicable, of
such personnel (such rate being the "DPE"), and (ii) with respect to any
additional hours, at the hourly rate of two times the DPE, and in each case
shall reimburse such other party for other reasonable out-of-pocket expenses
(such compensation rates, together with such expense reimbursement requirement,
is the "Reimbursement Rate"); provided that this shall constitute the sole
right such assisting party has to reimbursement for expenses incurred in
providing such assistance. Any information obtained pursuant to this Section
shall be held in strict confidence and shall be used solely in connection with
the purpose for which it was requested.
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6.6 Obligation to Replace Guarantees.
As promptly as practicable after CRSS' request, the Purchaser shall
use its best efforts to replace CRSS and its Affiliates on any specified
guarantees of any obligations of Architects or the Architects Subsidiaries
provided by CRSS or its Affiliates in the ordinary course of business.
Regardless of whether the Purchaser obtains any replacement guarantees, the
Purchaser shall indemnify CRSS and its Affiliates for any Losses (as defined
herein) arising from such existing guarantees to the extent the Purchaser has
the obligation to indemnify the Seller Indemnified Party pursuant to Article
VII hereof with respect to the underlying obligation.
6.7 Medical Benefits.
CRSS will continue to provide medical benefits pursuant to its
Voluntary Employee Benefits Association (the VEBA") to the Transferring
Employees from the Closing Date until July 31, 1994 (the "Benefit Gap Period").
After July 31, 1994, the Purchaser will provide medical benefits to the
Transferring Employees pursuant to its then existing medical benefit plans, and
on and after the date hereof, the Purchaser shall provide the benefits of its
stop loss medical insurance coverage to the Transferring Employees. The
Purchaser agrees that CRSS may retain the premiums paid by such Transferring
Employees through July 31, 1994. The Purchaser will indemnify and hold
harmless CRSS and its Affiliates against any Losses (as defined in Article VII)
incurred by CRSS and its Affiliates in complying with this Section 6.7 to the
extent those Losses exceed $150,000 per insured for claims in the Benefit Gap
Period.
6.8 License of Problem-Seeking Service Mark and Methodology.
At the Closing, Architects will enter into a license agreement with
CRSS Constructors, Inc. (Constructors"), and CRSS International, Inc.
("International") in the form attached hereto as Schedule 6.8, permitting
Constructors and International to use the Problem-Seeking Service Mark and
methodology in the conduct of their businesses, but not to assign or license
any rights to such Service Mark or methodology to any third party (the
"Problem-Seeking License").
6.9 Written-Off Receivables.
Neither the Purchaser nor any of its Affiliates (including Architects
and any Architects Subsidiary) will engage in any collection efforts with
respect to any receivable of the Architects Business that has been completely
written off prior to June 30, 1994 without the prior written consent of CRSS.
However, the Purchaser or the applicable Affiliate of the Purchaser shall be
entitled to retain any amounts received with respect to such receivables to the
extent such amounts are obtained without engaging in any such collection
efforts.
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6.10 Further Assurances.
Each of the parties hereto will, upon the request of the other party,
from time to time after the Closing, execute and deliver, and use its
reasonable efforts to cause other persons to execute and deliver, to such other
party all such further documents and instruments, and will do or use its
reasonable efforts to cause to be done such other acts, as such other party may
reasonably request more completely to consummate and make effective the
transactions contemplated hereby.
ARTICLE VII
INDEMNIFICATION; SURVIVAL OF
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
7.1 Survival of Representations; Time Limitations.
All representations and warranties made by any party to this Agreement
or pursuant hereto shall survive the Closing hereunder and any investigation at
any time made by or on behalf of any party hereto for a period of twenty-one
months after the Closing Date. An Indemnifying Party (as defined in Section
7.5) shall have no liability under this Article arising from a breach of a
representation or warranty contained in this Agreement unless notice of a claim
for indemnity shall have been given within twenty- one months after the Closing
Date.
7.2 Indemnification.
(a) Subject to the terms and conditions of this Article VII, CRSS
and Services jointly and severally hereby agree to indemnify, defend and hold
harmless the Purchaser and any Affiliate thereof, and the directors, officers,
employees, agents, contractors, successors and assigns of each of them (such
party or parties being indemnified are referred to herein as the "Purchaser
Indemnified Party"), at any time after consummation of the Closing, from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including without limitation,
interest, penalties, costs of preparation and investigation and the reasonable
fees and expenses of attorneys, accountants and other professional advisers
(collectively, "Losses"), asserted against, resulting to, imposed upon or
incurred by the Purchaser, directly or indirectly, by reason of or resulting
from any Retained Liabilities, a breach by Services or CRSS of any
representation or warranty contained in this Agreement, any claim arising out
of the performance of, or a failure to perform, the obligations pursuant to the
CRSS Obligations (other than as provided in Section 7.2(c)) arising on or prior
to the Closing Date on the part of CRSS, or any of its Affiliates, including
Architects or any Architects Subsidiary, or the violation of any covenant or
agreement of Services or CRSS contained in or made pursuant to this Agreement,
which in either case has not been
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waived in writing by Purchaser, or any actual or threatened action or
proceeding in connection therewith; provided that neither Services nor CRSS
shall be required to indemnify any Purchaser Indemnified Party to the extent
such Loss is reflected in the June 30 Pro Forma Balance Sheet.
(b) Subject to the terms and conditions of this Article VII, the
Purchaser hereby agrees to indemnify, defend and hold harmless CRSS and any
Affiliate thereof, and the directors, officers, employees, agents, contractors,
successors and assigns of each of them (such party or parties being indemnified
are referred to herein as the "Seller Indemnified Party"), at any time after
consummation of the Closing, from and against all Losses asserted against,
resulting to, imposed upon or incurred by any Seller Indemnified Party,
directly or indirectly, by reason of or resulting from (i) a breach by the
Purchaser of any representations or warranties contained in this Agreement, or
the violation of any covenant or agreement of the Purchaser contained in or
made pursuant to this Agreement, which in either case has not been waived in
writing by CRSS, or any actual or threatened action or proceeding in connection
therewith; (ii) the performance of, or a failure to perform, the obligations
pursuant to the CRSS Obligations from and after the Closing Date on the part of
Purchaser or any Affiliate thereof; and (iii) the conduct of the Architects
Business after the Closing Date.
(c) For purposes of this Agreement, "Project Claims" include any
and all Losses arising from demands, claims, actions or causes of action
asserted by a Project Claimant (as defined below) relating to project contracts
with customers for architectural services of Architects or any Architects
Subsidiary, or, to the extent such contracts are included as CRSS Assets or
CRSS Obligations (and whether or not any required approval or consent to an
assignment of any CRSS Asset or CRSS Obligation is obtained), CRSS or its
Affiliates ("Customer Contracts"). Without limiting the generality of the
foregoing, Project Claims shall include Losses arising from demands, claims,
actions or causes of action asserted by customers, or by subcontractors (e.g.,
consultants) or others (but excluding Purchaser or its Affiliates to the extent
any of them has directly or indirectly succeeded hereunder to the contractual
rights and obligations of CRSS or its Affiliates) providing goods or services
in connection with the performance of Customer Contracts (collectively,
"Project Claimants"), whether or not any required approval or consent to an
assignment of any contract with any such Project Claimant is obtained,
including without limitation claims relating to back charges and warranties.
CRSS and Services hereby jointly and severally agree to indemnify, defend and
hold harmless the Purchaser Indemnified Party from and against all Project
Claims relating to Customer Contracts that are completed on or prior to June
30, 1994 and Project Claims disclosed on Schedule 5.9 hereto. Subject to the
following sentence, the Purchaser hereby agrees to indemnify, defend and hold
harmless the Seller Indemnified Party from and against all Project Claims that
relate to Customer Contracts that are not completed prior to June 30, 1994 as
listed
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<PAGE> 47
in Schedule 7.2(c)(i) hereto, other than those Project Claims disclosed on
Schedule 5.9 hereto. With respect to Customer Contracts listed on Schedule
7.2(c)(ii) hereto, (i) CRSS and Services jointly and severally agree to
indemnify, defend and hold harmless the Purchaser Indemnified Party from and
against all Project Claims that relate to such Customer Contracts, but only to
the extent that the actions of CRSS, Architects or any Architects Subsidiary on
or prior to June 30, 1994 are shown to be the proximate cause of such Project
Claims; provided, however, if the Purchaser becomes aware of any such Project
Claim or any facts that would in the ordinary course of events constitute the
basis for a Project Claim, then the Purchaser shall take reasonable action to
mitigate the Losses relating to such Project Claim or such facts as is in
accordance with good professional and business practice and, to the extent that
actions beyond good professional and business practice are necessary, the
Purchaser will give CRSS notice of such Project Claim or such facts and provide
CRSS and Services reasonable cooperation in reducing CRSS's and Services'
exposure with respect to such Project Claim or such facts; and (ii) the
Purchaser hereby agrees to indemnify, defend and hold harmless the Seller
Indemnified Party from and against all Project Claims to the extent that the
actions of the Purchaser or any of its Affiliates after June 30, 1994, are
shown to be the proximate cause of such Project Claims. Notwithstanding any
other provision hereof, this Section 7.2(c) describes all of the
indemnification obligations under this Agreement with respect to Project
Claims, and specifically such indemnification obligations shall not be limited
or expanded by any representations, warranties or covenants herein, including
without limitation, the representations and warranties in Sections 5.9 and 5.12
hereof.
7.3 Remedies Exclusive.
The remedies provided herein shall be exclusive and shall preclude the
assertion by any party hereto of any other rights or the seeking of any other
remedies against the other party hereto; provided that this Section shall not
preclude either party from asserting that it was fraudulently induced by the
other party to enter into this Agreement; and provided that the right of
set-off described in Section 8.11 hereof shall apply to this Article VII.
7.4 Limitations on Indemnification.
(a) With respect to Losses arising from inaccuracies in any of
CRSS's or Services' representations and warranties (other than with respect to
Retained Liabilities or its representations and warranties in Sections 5.1,
5.2, 5.3, 5.4, 5.5, 5.6(b) and 8.7 hereof), (i) neither CRSS nor Services shall
be required to indemnify any Purchaser Indemnified Party unless the aggregate
of all amounts for which indemnity would otherwise be due to the Purchaser
Indemnified Party exceeds $225,000 (the "Minimum Amount"), in which case CRSS
and Services shall be responsible for the amount of all such indemnifiable
amounts, including those up to the Minimum
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<PAGE> 48
Amount, and (ii) CRSS shall only be liable to indemnify the Purchaser
Indemnified Party up to an aggregate amount equal to the Purchase Price.
(b) No indemnification shall be payable to the extent the
Indemnified Party (as defined in Section 7.5) is covered for such Loss by
insurance; provided, however, that indemnification shall be payable pursuant to
this Article VII to the extent of any deductible applicable to any such
insurance coverage or insurance coverage provided by CRSS Insurance Ltd.
7.5 Notice and Control of Litigation.
(a) In the event that Purchaser seeks indemnification on behalf of
a Purchaser Indemnified Party, or CRSS seeks indemnification on behalf of a
Seller Indemnified Party, such party seeking indemnification (the "Indemnified
Party") shall give prompt written notice to the other party (the "Indemnifying
Party") specifying the facts constituting the basis for such claim and the
amount, to the extent known, of the claim asserted. The Indemnifying Party
shall pay the amount of any valid claim not more than twenty days after the
Indemnified Party provides notice to the Indemnifying Party of such amount.
(b) If an Indemnified Party is entitled to indemnification
hereunder because of a claim asserted by any claimant (other than an
Indemnified Party hereunder) ("Third Person"), the Indemnified Party shall give
the Indemnifying Party notice within ten (10) business days after the assertion
of such claim is actually known to the Indemnified Party; provided, however,
that the right of a person to be indemnified hereunder in respect of claims
made by a Third Person shall not be adversely affected by a failure to give
such notice unless, and then only to the extent that, an Indemnifying Party is
prejudiced thereby, including without limitation by prejudicing the
Indemnifying Party's ability to defend, to obtain insurance coverage with
respect to, or otherwise to minimize the Indemnifying Party's liability with
respect to, such matter. CRSS and the Purchaser shall, upon the request of
either, reasonably and in good faith attempt to negotiate an agreement
reasonably satisfactory to both of them providing for the joint defense of the
Third-Person Claim (as defined below)("Joint-Defense Agreement"). The
Indemnifying Party shall have the right, upon written notice to the Indemnified
Party, to investigate, secure, contest, or settle the claim alleged by such
Third Person (a "Third-Person Claim"), provided that the Indemnifying Party has
unconditionally acknowledged to the Indemnified Party in writing his or its
obligation to indemnify the persons to be indemnified hereunder with respect to
such Third-Person Claim (subject to Section 7.4 hereof); the Indemnified Party
may thereafter participate in (but not control) the defense of any such
Third-Person Claim with its own counsel at its own expense. Unless and until
the Indemnifying Party so acknowledges his or its obligation to indemnify, the
Indemnified Party shall have the right, at its
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<PAGE> 49
option, to assume and control defense of the matter and to look to the
Indemnifying Party for the full amount of the costs of defense. The failure of
the Indemnifying Party to respond in writing to the aforesaid notice of the
Indemnified Party with respect to such Third-Person Claim within twenty (20)
days after receipt thereof shall be deemed an election not to defend the same.
If the Indemnifying Party does not so acknowledge his or its obligation to
indemnify and assume the defense of any such Third-Person Claim, (a) the
Indemnified Party may defend against such claim, in such manner as it may deem
appropriate, and (b) the Indemnifying Party may participate in (but not
control) the defense of such action, with its own counsel at its own expense.
If the Indemnifying Party thereafter seeks to question the manner in which the
Indemnified Party defended such Third-Person Claim or the amount or nature of
any such settlement, the Indemnifying Party shall have the burden to prove by
clear and convincing evidence that conduct of the Indemnified Party in the
defense and/or settlement of such Third-Person Claim constituted gross
negligence or wilful misconduct. The Parties shall make available to each
other all relevant information in their possession relating to any such
Third-Person Claim and shall cooperate in the defense thereof.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Amendment and Modification.
Subject to applicable law, this Agreement may be amended, modified or
supplemented only by written agreement of each of the parties hereto with
respect to any of the terms contained herein.
8.2 Waiver of Compliance; Consents.
Except as otherwise provided in this Agreement, any failure of any of
the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the party or parties entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 8.2.
8.3 Notices.
Except as otherwise provided herein, all notices and other
communications hereunder shall be in writing and shall be (i) delivered
personally against written receipt or by facsimile transmission, electronically
confirmed, or tested telex, (ii) mailed
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by registered or certified mail (return receipt requested), postage prepaid, or
(iii) sent by nationally recognized overnight courier service, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) if to the Purchaser, to
Hellmuth, Obata and Kassabaum, Inc.
One Metropolitan Square
211 North Broadway, Suite 600
St. Louis, Missouri 63102-2733
Attention: Jerome J. Sincoff
with a copy to
Hellmuth, Obata and Kassabaum, Inc.
One Metropolitan Square
211 North Broadway, Suite 600
St. Louis, Missouri 63102-2733
Attention: Paul L. Watson
and
Bryan Cave
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2730
Attention: William F. Seabaugh
(b) if to CRSS or Services, to
CRSS Inc.
1177 West Loop South, Suite 800
Houston, Texas 77021
Attention: Bruce W. Wilkinson
with a copy to
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
3400 Texas Commerce Tower
Houston, Texas 77002
Attention: Gene G. Lewis
Notices and other communications hereunder shall be deemed given when
received except for any notices or other communications sent by registered or
certified mail which shall be deemed given four (4) days after such notice or
communication was deposited in the U.S. mail.
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8.4 Assignment.
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, nor is this
Agreement intended to confer upon any other person except the parties hereto
any rights or remedies hereunder.
8.5 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas without giving effect to the provisions thereof
relating to conflicts of law.
8.6 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.7 No Brokers.
CRSS represents and warrants to the Purchaser, and the Purchaser
represents and warrants to CRSS, that no broker, finder or other person is
entitled to any brokerage fees, commissions or finder's fees in connection with
the transactions contemplated hereby. CRSS agrees to pay or discharge, and to
indemnify and hold the Purchaser harmless from and against, and the Purchaser
will pay or discharge, and will indemnify and hold CRSS harmless from and
against, any and all claims or liabilities for all brokerage fees, commissions
and finder's fees incurred by reason of any action taken by such party.
8.8 Interpretation.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement. As used in this Agreement, the term "Person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
8.9 Entire Agreement.
This Agreement, including the exhibits and schedules hereto and the
documents, schedules, certificates and instruments referred to herein, embody
the entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations,
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warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such transactions.
8.10 Consent to Jurisdiction.
(a) CRSS, SERVICES AND THE PURCHASER HEREBY IRREVOCABLY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF TEXAS LOCATED IN
HARRIS COUNTY AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF TEXAS FOR THE PURPOSE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND CRSS, SERVICES AND THE
PURCHASER HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH COURTS. TO THE EXTENT
PERMITTED BY LAW, EACH OF CRSS, SERVICES AND THE PURCHASER HEREBY WAIVES AND
AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH
ACTION OR PROCEEDING THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE ACTION OR PROCEEDING IS BROUGHT IN ANY INCONVENIENT FORUM
OR THAT THE VENUE OF THE ACTION OR PROCEEDING IS IMPROPER. CRSS, SERVICES AND
THE PURCHASER AGREE THAT A FINAL JUDGMENT IN ANY 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. NOTHING HEREIN SHALL LIMIT THE
ARBITRATION REQUIREMENT IN SECTION 1.3 HEREOF OR THE MEDIATION REQUIREMENT
BELOW.
(b) EACH OF CRSS, SERVICES AND THE PURCHASER IRREVOCABLY CONSENTS
TO THE SERVICE OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS IN ANY OTHER
ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SET FORTH IN
SECTION 8.3 HEREOF. NOTHING IN THIS SECTION 8.10 SHALL AFFECT THE RIGHT OF
CRSS, SERVICES OR THE PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
(c) ANY CONTROVERSY, CLAIM OR DISPUTE ARISING OUT OF OR RELATING
TO THE INTERPRETATION, CONSTRUCTION, OR PERFORMANCE OF THIS AGREEMENT, OR
BREACH THEREOF, SHALL BE REFERRED TO VOLUNTARY, NONBINDING MEDIATION TO BE
CONDUCTED BY A MUTUALLY ACCEPTABLE MEDIATOR PRIOR TO RESORTING TO LITIGATION OR
(EXCEPT AS PROVIDED IN SECTION 1.3) ARBITRATION.
8.11 Right of Set-Off.
Upon written notice to the other party specifying in reasonable detail
its justification therefor, either party may set-off against any payment
required to be made by such party the amount of any Loss or any other amount
due from the other party under this Agreement or under any of the agreements
contemplated by this Agreement which is undisputed or determined in a final,
nonappealable judgment to be owing. The exercise of such right of set-off
shall not
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constitute an event of default hereunder or under any such other agreement.
Neither the exercise of nor the failure to exercise such right of set-off shall
constitute an election of remedies nor limit either party in any manner in the
enforcement of any of the remedies that may be available to it.
8.12 Definition of "Affiliate" and "Knowledge".
"Affiliate": With respect to a specified entity, an "Affiliate" is
any entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the entity
specified. For purposes of this definition, "control" means the possession,
direct or indirect, of record and beneficial ownership of at least a majority
of the outstanding equity of such entity.
"Knowledge": As used in this Agreement, the terms "to the knowledge
of Services" and "to the knowledge of CRSS" (and all phrases of similar import)
shall mean only the actual knowledge, after reasonable inquiry, of William
Gardiner, Mary Gilbert, Frank Perrone, Craig Martin and Bruce Wilkinson, and
the knowledge of any other person shall not be imputed to Services or CRSS for
purposes of this Agreement. The Purchaser acknowledges that CRSS has described
to the Purchaser the steps it has taken to satisfy its obligation of reasonable
inquiry, and that the Purchaser agrees that such inquiry is reasonable.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
HELLMUTH, OBATA AND KASSABAUM, INC.
By:/s/ Jerome J. Sincoff
_____________________________________
Name: Jerome J. Sincoff
Title: President and CEO
CRSS INC.
By:/s/ Bruce W. Wilkinson
_____________________________________
Name: Bruce W. Wilkinson
Title: Chairman/CEO
CRSS SERVICES, INC.
By:/s/ Craig Martin
_____________________________________
Name: Craig Martin
Title: Executive Vice President
47
<PAGE> 1
EXHIBIT 10.2
PURCHASE AGREEMENT
by and between
Jacobs Engineering Group Inc.
and
CRSS Inc.
_____________________
dated
July 29, 1994
_____________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE: DEFINITIONS . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: CONVEYANCE, CONSIDERATION AND RELATED MATTERS 7
2.1 Agreement of Purchase and Sale . . . . . . . . . . 7
2.2 Determination of Purchase Price . . . . . . . . . 7
2.3 Closing . . . . . . . . . . . . . . . . . . . . . 10
2.4 Sales, Transfer and Documentary Taxes, etc. . . . 10
ARTICLE THREE: REPRESENTATIONS AND WARRANTIES OF CRSS . . . 10
3.1 Organization and Standing . . . . . . . . . . . . 10
3.2 Authorized and Outstanding Capitalization . . . . 11
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . 11
3.4 Financial Statements . . . . . . . . . . . . . . . 11
3.5 Absence of Changes . . . . . . . . . . . . . . . . 12
3.6 Tax and Other Returns and Reports . . . . . . . . 14
3.7 Real Property; Environmental Laws . . . . . . . . 14
3.8 Contracts . . . . . . . . . . . . . . . . . . . . 16
3.9 Equipment and Other Assets . . . . . . . . . . . . 17
3.10 Accounts Receivable . . . . . . . . . . . . . . . 17
3.11 Backlog . . . . . . . . . . . . . . . . . . . . . 17
3.12 Intellectual Property Rights . . . . . . . . . . . 18
3.13 Title to Assets . . . . . . . . . . . . . . . . . 18
3.14 Insurance Policies; Bonds . . . . . . . . . . . . 19
3.15 Material Contracts . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
3.16 Labor Matters. . . . . . . . . . . . . . . . . . 21
3.17 Compliance with Laws . . . . . . . . . . . . . . . 22
3.18 Litigation . . . . . . . . . . . . . . . . . . . . 23
3.19 (Intentionally Omitted) . . . . . . . . . . . . . 23
3.20 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . 23
3.21 Validity of Contemplated Transactions, etc. . . . 24
3.22 No Conflicts of Interest . . . . . . . . . . . . . 24
3.23 Inspection of Documents . . . . . . . . . . . . . 24
3.24 Officers, Directors and Agents . . . . . . . . . . 24
3.25 Bank Accounts . . . . . . . . . . . . . . . . . . 25
3.26 Employee Benefit Plans; ERISA . . . . . . . . . . 25
3.27 Contracts With Government Agencies . . . . . . . . 27
3.28 Disclosure . . . . . . . . . . . . . . . . . . . . 27
ARTICLE FOUR: REPRESENTATIONS AND WARRANTIES OF JACOBS . . 27
4.1 Organization and Standing . . . . . . . . . . . . 28
4.2 Authority . . . . . . . . . . . . . . . . . . . . 28
4.3 Corporate Power; Authorization Enforceable
Obligations . . . . . . . . . . . . . . . . . . . 28
4.4 Validity of Contemplated Transactions, etc. . . . 28
ARTICLE FIVE: (INTENTIONALLY OMITTED) . . . . . . . . . . . 29
ARTICLE SIX: OBLIGATIONS OF THE PARTIES . . . . . . . . . 29
6.1 Commercially Reasonable Efforts . . . . . . . . . 29
6.2 Hart-Scott-Rodino Filings . . . . . . . . . . . . 29
6.3 Public Announcements . . . . . . . . . . . . . . . 29
6.4 Tax Matters . . . . . . . . . . . . . . . . . . . 29
6.5 WARN Act . . . . . . . . . . . . . . . . . . . . . 34
6.6 Allocation of Employee Plan Responsibilities . . . 34
6.7 Post-Closing Access to Information and Personnel . 35
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ARTICLE SEVEN: CONDITIONS TO EACH PARTY'S OBLIGATIONS TO
EFFECT THE TRANSACTIONS CONTEMPLATED HEREBY . 35
7.1 H-S-R Act . . . . . . . . . . . . . . . . . . . . 36
7.2 No Injunctions . . . . . . . . . . . . . . . . . . 36
7.3 Absence of Other Matters . . . . . . . . . . . . . 36
7.4 Employment Agreements . . . . . . . . . . . . . . 36
7.5 Intercompany Indebtedness . . . . . . . . . . . . 36
7.6 Service Mark. . . . . . . . . . . . . . . . . . 36
ARTICLE EIGHT: CONDITIONS PRECEDENT TO PERFORMANCE BY JACOBS 36
8.1 Warranties and Representations . . . . . . . . . . 37
8.2 Covenants . . . . . . . . . . . . . . . . . . . . 37
8.3 No Adverse Changes . . . . . . . . . . . . . . . . 37
8.4 Officers' Certificates . . . . . . . . . . . . . . 37
8.5 Opinion of Counsel . . . . . . . . . . . . . . . . 37
8.6 Corporate Approvals . . . . . . . . . . . . . . . 39
8.7 Consents . . . . . . . . . . . . . . . . . . . . . 39
8.8 Deadline . . . . . . . . . . . . . . . . . . . . . 39
8.9 Form and Substance of Documents . . . . . . . . . 39
8.10 (Intentionally Omitted.) . . . . . . . . . . . . . 39
8.11 Financial Condition . . . . . . . . . . . . . . . 39
8.12 Covenant not to Compete . . . . . . . . . . . . . 39
8.13 Confidentiality Agreements . . . . . . . . . . . . 40
ARTICLE NINE: CONDITIONS PRECEDENT TO PERFORMANCE BY CRSS 40
9.1 Warranties and Representations . . . . . . . . . . 40
9.2 Covenants . . . . . . . . . . . . . . . . . . . . 40
9.3 Officers' Certificates . . . . . . . . . . . . . . 40
9.4 Opinion of Counsel . . . . . . . . . . . . . . . . 40
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9.5 Deadline . . . . . . . . . . . . . . . . . . . . . 41
9.6 Corporate Approvals . . . . . . . . . . . . . . . 41
9.7 Satisfaction of CRSS . . . . . . . . . . . . . . . 41
ARTICLE TEN: THE CLOSING . . . . . . . . . . . . . . . . . 42
10.1 Deliveries by the Corporations . . . . . . . . . . 42
10.2 Deliveries by Jacobs . . . . . . . . . . . . . . . 43
10.3 Other Deliveries at Closing . . . . . . . . . . . 44
10.4 Concurrent Deliveries . . . . . . . . . . . . . . 44
ARTICLE ELEVEN: OBLIGATIONS OF THE PARTIES AFTER CLOSING 44
11.1 Adjustments for At Risk Contracts . . . . . . . . 44
11.2 Trade Names . . . . . . . . . . . . . . . . . . . 46
11.3 Confidential Information . . . . . . . . . . . . . 46
11.4 Performance of Certain Contracts After Closing . . 47
11.5 Hiring of Employees of the Corporations . . . . . 48
11.6 Certified Financial Statements of the Corporations 48
11.7 Maintenance of Books and Records . . . . . . . . . 49
11.8 Payments Received . . . . . . . . . . . . . . . . 49
11.9 Further Assurances of CRSS . . . . . . . . . . . . 50
11.10 Further Assurances of Jacobs . . . . . . . . . . 50
11.11 Insurance Coverage . . . . . . . . . . . . . . . 51
11.12 Liabilities Not to be Assumed by Jacobs . . . . . 51
ARTICLE TWELVE: INDEMNIFICATION . . . . . . . . . . . . 53
12.1 General Indemnification Obligation . . . . . . . . 53
12.2 General Indemnification Obligation of Jacobs . . . 54
12.3 Method of Asserting Claims, Etc. . . . . . . . . . 54
12.4 Compensation for Claims . . . . . . . . . . . . . 56
12.5 No Waiver of Subrogation . . . . . . . . . . . . . 56
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12.6 Cooperation of the Parties . . . . . . . . . . . . 57
12.7 Claims Against Former Corporation Employees . . . 57
12.8 Limitation on Indemnification . . . . . . . . . . 57
12.9 Survival of Representations; Time Limitations . . 57
12.10 Attorneys' Fees . . . . . . . . . . . . . . . . . 58
12.11 Remedies Exclusive . . . . . . . . . . . . . . . 58
ARTICLE THIRTEEN: COSTS . . . . . . . . . . . . . . . . . 58
13.1 Brokers' Commissions . . . . . . . . . . . . . . . 58
13.2 Costs and Expenses . . . . . . . . . . . . . . . . 58
ARTICLE FOURTEEN: FORM OF AGREEMENT . . . . . . . . . . . 58
14.1 Usage Conventions . . . . . . . . . . . . . . . . 58
14.2 Integration . . . . . . . . . . . . . . . . . . . 58
14.3 Counterparts . . . . . . . . . . . . . . . . . . . 59
14.4 Warranties and Representations . . . . . . . . . . 59
ARTICLE FIFTEEN: PARTIES . . . . . . . . . . . . . . . . 59
15.1 No Third Party Beneficiaries . . . . . . . . . . . 59
15.2 Successors and Assigns . . . . . . . . . . . . . . 59
ARTICLE SIXTEEN: GOVERNING LAW . . . . . . . . . . . . . 59
ARTICLE SEVENTEEN: NOTICES . . . . . . . . . . . . . . . . 59
ARTICLE EIGHTEEN: CONSENT TO JURISDICTION . . . . . . . . 60
ANNEXES AND EXHIBITS TO AGREEMENT . . . . . . . . . . . . . 61
</TABLE>
<PAGE> 7
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is made and entered into on July
29, 1994, by and between Jacobs Engineering Group Inc., a Delaware corporation
("Jacobs"), and CRSS Inc., a Delaware corporation ("CRSS").
RECITALS
This Agreement is made and entered into with respect to the following
facts, each of which all parties deem to be material:
CRSS desires to sell to Jacobs, and Jacobs desires to purchase, all as
hereinafter provided, the Business to beAcquired. The Business to be Acquired
is owned and operated by Constructors, International, New York, Civil,
Illinois, Engineers and Enterprises, exclusive of their respective subsidiaries
(other than Illinois). Accordingly, it is the intention of the parties that
CRSS sell, or cause to be sold, to Jacobs, and that Jacobs purchase, all of the
issued and outstanding equity securities of Constructors, International and New
York and substantially all of the assets of Engineers, Civil and Illinois,
subject to agreed upon liabilities of Engineers, Enterprises, Civil and
Illinois, as hereinafter provided.
AGREEMENT
In consideration of the foregoing, the covenants, warranties and
conditions herein contained, and the mutual benefits to be derived therefrom
the parties hereby mutually warrant, represent, covenant and agree with each
other as follows:
ARTICLE ONE: DEFINITIONS
Unless otherwise stated in this Agreement or the context otherwise
requires, the following terms, whether or not capitalized, shall have the
meanings in this Agreement as set forth or referred to in this Article One.
"Affiliate." Any Person controlling, controlled by, or under common
control with another "Person". For this sole purpose "control" shall mean the
ownership, directly or indirectly through the control of another person, of 50%
or more of the outstanding equity securities of a Person.
"Agreement." This Agreement.
"Ancillary Contracts" shall mean all contracts entered into by any of
the Corporations in order to conduct the Business to be Acquired (other than
Customer Contracts, Leases
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and Personal Property Leases) to which CRSS or a CRSS Subsidiary is a party for
the benefit of any of the Corporations.
"Asset Corporation" shall mean Engineers, Enterprises, Civil and
Illinois.
"Assumed Contract" shall mean a Customer Contract that is not Complete
on the Closing Date.
"At Risk Contracts." As defined in Section 11.1 of this Agreement.
"Audited Financial Statements." As defined in Section 3.4 of this
Agreement.
"Business to be Acquired" shall mean the engineering and construction
management businesses presently conducted by CRSS through or on behalf of the
Corporations, but including their respective corporate names, employees and all
cash, Intellectual Property Rights and any and all other assets and liabilities
(including off balance sheet assets and obligations) related to such
businesses. The Business to be Acquired includes all assets and liabilities
included in the Closing Date Consolidating Balance Sheet as well as off balance
sheet items such as proposals, future contracts, contracts, leases, letters of
credit, bonds, and guarantees, but the Business to be Acquired does not include
the Retained Assets or the Retained Liabilities.
"Civil" shall mean CRSS Civil Engineers, Inc., a Delaware corporation.
"Closing." The closing of the purchase and sale provided for in
Article Two of this Agreement.
"Closing Date." As defined in Section 2.3 of this Agreement.
"Closing Date Consolidating Balance Sheet." As defined in Section 2.2
of this Agreement.
"Complete" shall mean in reference to a Customer Contract, a Customer
Contract in which all contractually required engineering, contract
administration or construction management has been completed. A Customer
Contract may be complete even though there are outstanding accounts receivables
associated with the Customer Contract, or there is an unexpired warranty period
under the Customer Contract, or a client has made a claim for redesign or
warranty work pursuant to the Customer Contract.
"Completed Contracts" shall mean all Customer Contracts other than the
Assumed Contracts and the Continuing Contracts, and it shall also mean all
Power Plant Contracts.
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"Constructors" shall mean CRSS Constructors, Inc., a Delaware
corporation.
"Continuing Contract" shall mean a Customer Contract of a Stock
Corporation that is not Complete on the Closing Date.
"Contract" shall mean and include contracts, agreements, indentures,
leases, and license agreements.
"Corporation(s)" shall mean Constructors, International, New York,
Civil, Illinois, Engineers and Enterprises or any one or more of them as the
context may require.
"Corporation Stock" shall mean the outstanding equity securities of
any class of Constructors, International and New York.
"CRSS Companies" shall mean CRSS, Services, Seller, Constructors,
International, New York, Civil, Illinois and Engineers.
"CRSS Intellectual Property Rights" shall mean all Intellectual
Property Rights that are used, directly or indirectly, in connection with the
Business to be Acquired.
"CRSS Subsidiary" shall mean an Affiliate of CRSS that is controlled
by (but not controlling or under common control with) CRSS.
"Customer Contracts" shall mean all contracts with a client or
customer relating to the Business to be Acquired.
"Draft Closing Date Consolidating Balance Sheet." As defined in
Section 2.2 of this Agreement.
"Engineers" shall mean CRS Sirrine Engineers, Inc., a South Carolina
corporation.
"Enterprises" shall mean CRSS Enterprises, a Delaware corporation.
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, investigations,
proceedings, consent orders or consent agreements relating in any way to any
Environmental Law or any Environmental Permit (hereafter "Claims"), including
without limitation (i) any and all Claims by governmental authorities for
enforcement, cleanup, removal, response, remedial or similar actions or damages
for violation of any applicable Environmental Law, and (ii) any and all Claims
by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous
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Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Laws" means any federal, state or local law,
Governmental Order, regulation, ordinance, or code in effect and in each case
as amended as of the Closing Date, and any judicial or administrative
interpretation thereof as of the Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
42 U.S.C. Section 9601 et seq. ("CERCLA");the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 6901 et seq.; the Clean Water Act, 33
U.S.C. Section 1251 et seq.;the Clean Air Act, 42 U.S.C. Section 7401 et seq.;
the Safe DrinkingWater Act, 42 U.S.C. Section 300f et seq.; the Atomic Energy
Act, 42U.S.C. Section 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 136 et seq.; the OccupationalSafety and
Health Act, 29 U.S.C. Section 651 et seq.; and any similar federal, state, and
local laws and ordinances and the regulations adopted, and/or promulgated
pursuant thereto as of the Closing Date.
"Environmental Permits" means all permits, approvals, identification
numbers, licenses and other authorizations required under any applicable
Environmental Law as of the Closing Date.
"Hazardous Materials" means (i) any petroleum or petroleum products,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
radon gas and transformers or other equipment that contains dielectric fluid
containing polychlorinated biphenyls; and (ii) any chemicals, materials or
substances defined as or included in the definition of "hazardous materials,"
"acute hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import under any applicable
Environmental Law.
"H-S-R Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and the regulations of the Federal Trade Commission
thereunder.
"Illinois" shall mean CRSS of Illinois, Inc., an Illinois corporation.
"Intellectual Property." Patents, copyrights, trademarks, service
marks, trade names, whether or not registered, technology, processes, methods,
formulations, data bases, trade secrets, know-how, inventions and other
information commonly recognized as intellectual property whether or not
recorded in a written or electronic medium.
"Intellectual Property Rights." All legal rights to the ownership or
use of Intellectual Property, including but
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not limited to, patent, copyright and trademark registrations, secrecy rights,
licenses and leases.
"Interim Date" shall mean March 31, 1994.
"Interim Date Pro Forma Consolidating Balance Sheet." As defined in
Section 3.4.
"International" shall mean CRSS International, Inc., a South Carolina
corporation.
"Knowledge." As used in this Agrement the terms "to the knowledge of
CRSS" and "to the best knowledge of CRSS" (and all phrases of similar import)
shall mean only the actual knowledge of William Gardiner, Mary Gilbert, Frank
Perrone, Bruce Wilkinson, Socrates S. Christopher and Warren M. Dean, and the
knowledge of any other person shall not be imputed to CRSS for purposes of this
Agreement.
"Lease". As defined in Section 3.7 of this Agreement.
"Liabilities" includes, without limitation, any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured
or unsecured.
"Lien(s)" shall mean and include liens, pledges, security interests,
judgments, conditional sale agreements, mortgages, deeds of trust, charges and
encumbrances of any kind.
"Litigation." As defined in Section 3.18 of this Agreement.
"New York" shall mean CRSS of New York, Inc., a New York corporation.
"Party." A party to this Agreement.
"Person." An individual, partnership, joint venture, corporation,
limited liability company, or unincorporated association.
"Personal Property Lease(s)." As defined in Section 3.8 of this
Agreement.
"Power Plant Contracts" shall mean the Contracts for the projects
known as Olean/Indeck Energy Services, Lakewood Cogeneration, L'Energia and
Northwest Energy (NW Energy).
"Profit Plan." As defined in Section 11.1 of this Agreement.
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"Real Property." As defined in Section 3.7 of this Agreement.
"Retained Assets" shall mean the following:
(a) The lease of real property at 1177 West Loop South,
Houston, Texas,
(b) That certain promissory note in the sum of
approximately $2.3 million and that certain promissory note known as
the Siemans note, both of which relate to the L'Energia project,
(c) Receivables from the King Saud University and
otherwise relating to the HOK+4 Consortium,
(d) All Affiliates of CRSS other than the Corporations,
and all subsidiaries of Engineers, Constructors and International,
except as provided herein,
(e) The Armco Steel and other plaintiff litigation listed
on Exhibit 3.18,
(f) Rights to indemnification or subrogation with respect
to any Retained Liability;
(g) All contracts of insurance and rights thereunder;
(h) All claims existing on the Closing Date of any
Corporation against CRSS or any of its Affiliates or any officer,
director or employee of CRSS or any of its Affiliates;
(i) All claims, including counterclaims, cross-claims and
claims for contribution or indemnity, relating to any matters,
including Third Party Claims (as defined herein), with respect to
which CRSS is required to, and does, indemnify the Jacobs Indemnified
Party (as defined herein), regardless of whether those matters are
asserted against CRSS or any of its Affiliates by Jacobs or any of its
Affiliates or by a third party;
(j) All Power Plant Contracts, including all assets
associated therewith, including accounts receivable;
(k) The stock of CRS Sirrine Environmental,
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Inc., CRSS of Illinois, Inc., CRSS Resources, Inc., CRSS Constructors
of New Mexico, Inc., CRSS Far East Ltd., and Western Empire
Constructors, Inc.; and
(l) The four residential lots owned by Engineers and
located in Greenville, South Carolina.
"Retained Liabilities." As defined in Section 11.11 of this Agreement.
"Section." A Section of this Agreement.
"Seller" shall mean CRSS Constructors International, Inc., a Delaware
corporation.
"Services" shall mean CRSS Services, Inc., a Delaware corporation.
"Services Subsidiary" shall mean an Affiliate of Services controlled,
directly or indirectly through one or more of its Affiliates, by Services.
"Stock Corporations" shall mean Constructors, International and New
York.
"Subsidiary" shall mean an Affiliate of a Person that is controlled by
(but not controlling or under common control with) such Person.
"Termination Date" shall mean July 31, 1994.
ARTICLE TWO: CONVEYANCE, CONSIDERATION AND RELATED MATTERS
2.1 Agreement of Purchase and Sale. Upon the terms and conditions
hereinafter set forth, CRSS agrees to sell to Jacobs, and Jacobs agrees to
purchase from CRSS, the Business to be Acquired for a purchase price (the
"Purchase Price") equal to the Closing Date Net Asset Value of the Business to
be Acquired plus $14,000,000.00, payable in cash.
2.2 Determination of Purchase Price. The Purchase Price shall be
determined in accordance with this Section 2.2.
(i) Not later than two business days prior to the Closing
Date, Jacobs and CRSS shall agree on a preliminary Net Asset Value of
the Business to be Acquired. This value (the "Preliminary Net Asset
Value") shall reflect the consolidated net assets of the Business to
be Acquired as of a recent date, and shall be based on the Business to
be Acquired as reflected in the Interim Date Pro Forma Consolidating
Balance Sheet, but shall be adjusted as
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reasonably agreed between the parties to take account of differences
between the Business to be Acquired and the businesses reflected in
the Interim Date Pro Forma Consolidating Balance Sheet.
(ii) (a) Following the Closing Date CRSS shall cause
to be delivered to Jacobs an audited consolidating balance
sheet of the Business to be Acquired as of the Closing Date
(the "Closing Date Consolidating Balance Sheet"), together
with the unqualified report thereon issued by Ernst & Young
certifying the Closing Date Consolidating Balance Sheet in
accordance with generally accepted accounting principles
applied on a basis consistent with the presentation of
Services' consolidated balance sheets as of June 30, 1993.
Jacobs and CRSS shall, and shall cause their respective
Subsidiaries to, cooperate in the preparation of the Closing
Date Consolidating Balance Sheet.
(b) Not later than 25 days after the Closing
Date, CRSS shall deliver to Jacobs a draft of the Closing Date
Consolidating Balance Sheet (the "Draft Closing Date
Consolidating Balance Sheet"). Thereupon, Jacobs shall have
the right during the succeeding 20 days (the "examination
period") to examine (at Jacobs' sole cost and expense)
said Draft Closing Date Consolidating Balance Sheet. Jacobs
shall notify CRSS and Ernst & Young in writing, on or before
the last day of the examination period, of any good faith
objections to the Draft Closing Date Consolidating Balance
Sheet, setting forth a reasonably specific description of such
objections and, if practicable, the dollar amount of each
objection (such objections are hereinafter referred to as
"Disputed Matters"). If Jacobs does not deliver such notice
within the examination period, the Draft Closing Date
Consolidating Balance Sheet shall be deemed to have been
accepted by Jacobs, and Ernst & Young shall thereafter
promptly deliver to Jacobs the Closing Date Consolidating
Balance Sheet, together with its unqualified report thereon.
During the examination period, CRSS shall notify Jacobs
immediately of any change to the Draft Closing Date
Consolidating Balance Sheet. If CRSS presents any change,
additions or deletions to the Draft Closing Date Consolidating
Balance Sheet, then the Examination Period shall end 20 days
from the date of such later presentation. During the
examination period, CRSS shall cooperate in assisting Jacobs
with its examination of the Draft Closing Date Consolidating
Balance Sheet including, without limitation, providing Jacobs
with full and complete access to all relevant books and
records during regular business hours, as
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well as access to CRSS' independent auditors and, to the
extent permitted by such auditors, its working papers, as
Jacobs may reasonably require to complete its examination of
the Draft Closing Date Consolidating Balance Sheet.
(c) If Jacobs in good faith objects to the Draft
Closing Date Consolidating Balance Sheet in accordance with
Section 2.2(ii)(b) above, then CRSS, Jacobs and Ernst & Young
shall attempt to resolve the Disputed Matters within 20 days
of the receipt of notice of such matters by CRSS. If the
parties are unable to resolve the Disputed Matters within such
20 day period, Ernst & Young shall, after considering the
objections raised by Jacobs and the responses of CRSS,
promptly request CRSS to make changes, if any, to the Draft
Closing Date Consolidating Balance Sheet that Ernst & Young
deems necessary in order for the Closing Date Consolidating
Balance Sheet to present fairly the financial condition of the
Business to be Acquired in accordance with generally accepted
accounting principles, consistently applied, and CRSS shall
complete the Closing Date Consolidating Balance Sheet in
accordance with such requests and deliver it to Jacobs
together with the unqualified report issued thereon by Ernst &
Young. Such balance sheet shall be the "Closing Date
Consolidating Balance Sheet" as such term is used in this
Agreement.
(iii) "Net Asset Value of the Business to be Acquired" as
of any particular date means the excess, if a positive number, or the
deficit, if a negative number, of total assets minus total liabilities
of the Business to be Acquired as of such date.
(iv) Neither the Preliminary Net Asset Value nor the
Closing Date Net Asset Value of the Business to be Acquired shall
reflect any tax-related asset or liability for federal income taxes,
or state or local income taxes reported on a consolidated basis for
CRSS and its Affiliates.
(v) "Change in Net Asset Value," which may be a positive
or negative number, means the Closing Date Net Asset Value of the
Business to be Acquired as determined from the Closing Date
Consolidating Balance Sheet minus the Preliminary Net Asset Value of
the Business to be Acquired.
(vi) Within two days following the agreement of CRSS and
Jacobs as to the Closing Date Consolidating Balance Sheet, or the
final determination with respect thereto pursuant to Section
2.2(ii)(c), Jacobs and CRSS shall determine the Change in Net Asset
Value in accordance with Section 2.2(v). If the Change in Net Asset
Value is positive, then Jacobs shall pay CRSS such amount within five
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days of its determination; if the Change in Net Asset Value is
negative, then CRSS shall pay Jacobs such amount within five days of
its determination.
(vii) Notwithstanding any other provision hereof, including
without limitation Article Twelve and any representations and
warranties herein, this Section 2.2 constitutes the sole and exclusive
remedy of Jacobs with respect to the Closing Date Consolidating
Balance Sheet, the Interim Date Pro Forma Consolidating Balance Sheet
and the Audited Financial Statements (as defined in Section 3.4), and
any other financial or accounting records or statements relating to
the foregoing financial statements, except as to matters knowingly
misrepresented or willfully not disclosed to Ernst & Young by CRSS.
2.3 Closing. The Closing of the exchange contemplated hereby shall
take place on July 29, 1994 at 10:00 a.m., P.D.S.T. at the offices of Jacobs
in Pasadena, California or at such other time, date and place as shall be
mutually agreed upon by CRSS and Jacobs. For the purposes of accounting for the
transactions contemplated by this Agreement, such transactions shall be deemed
to have closed at 11:59 p.m. on July 31, 1994 (the "Closing Date"). If the
Closing shall not have occurred by July 31, 1994, then either CRSS or Jacobs
shall have the right, pursuant to Section 16.2, to terminate and cancel this
Agreement in its entirety.
2.4 Sales, Transfer and Documentary Taxes, etc. CRSS shall pay all
federal, state and local sales, documentary and other transfer taxes, if any,
due as a result of the transfer of the assets to be conveyed to Jacobs in
accordance herewith and shall indemnify, reimburse and hold harmless Jacobs in
respect of the liability for payment of or failure to pay any such taxes or the
filing of or failure to file any reports required in connection therewith.
ARTICLE THREE: REPRESENTATIONS AND WARRANTIES OF CRSS
CRSS shall furnish to Jacobs the exhibits specified below. All such
exhibits either shall be attached hereto or delivered concurrently with the
signing hereof; in either event all such exhibits shall be suitably marked for
identification as exhibits to this Agreement and shall be deemed incorporated
herein. CRSS hereby warrants and represents to Jacobs as follows:
3.1 Organization and Standing. Each of the CRSS Companies is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, has all necessary corporate powers to own
its properties and to carry on its business as now owned and operated by it.
Each of the Corporations is duly qualified to do intrastate business and is in
good standing in each of the jurisdictions in which the
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failure so to qualify would have a material and adverse effect on the business
or assets of any of the Corporations. Exhibit 3.1 lists all of the
jurisdictions in which each of the Corporations is qualified to do intrastate
business.
3.2 Authorized and Outstanding Capitalization.
(i) The authorized and outstanding capital stock of each
of Services, Seller and the Corporations ("Corporation Stock"), the
par value thereof, the number of shares of Corporation Stock of each
Corporation outstanding and the name of each record and beneficial
owner thereof are completely and accurately set forth on Exhibit 3.2.
All outstanding shares of the Corporation Stock are validly issued,
fully paid, and nonassessable. None of Services, Seller or the
Corporations has any other outstanding securities or any outstanding
subscriptions, options, rights, warrants, convertible securities or
other agreements or commitments obligating such corporation to issue
or to transfer from treasury any additional shares of its capital
stock of any class.
(ii) The CRSS Companies are the record and beneficial
owners of the Corporation Stock as shown on Exhibit 3.2, free and
clear of any Liens. No CRSS Company has received written notice of any
Lien upon or adverse claim to the ownership of any of the Corporation
Stock.
3.3 Subsidiaries and Joint Ventures. On the Closing Date, none of
the Corporations will own any equity interest in any other Person except as
listed in Exhibit 3.3 and except for a 50% interest in ASC, Inc. and
contractual joint ventures.
3.4 Financial Statements.
(i) The books, records and accounts of Services, Seller
and each Corporation maintained with respect to the Business to be
Acquired completely and accurately and fairly reflect, in reasonable
detail, the transactions and the assets and liabilities of those
respective corporations. None of Services, Seller or the Corporations
has engaged in any transaction with respect to the Business to be
Acquired, maintained any bank account for its business or used any of
its funds in the conduct of its business except for transactions, bank
accounts and funds that have been and are accurately reflected in its
normally maintained books and records.
(ii) Exhibit 3.4 to this Agreement sets forth the
following:
(a) The consolidated balance sheets of Services
at June 30, 1991, 1992 and 1993 and the
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related statements of income, changes in stockholder's equity
and cash flows for each of the three years ended June 30,
1993, together with the reports thereon by Services'
independent auditors (the "Audited Financial Statements"); and
(b) The Interim Date Pro Forma Consolidating
Balance Sheet as of March 31, 1994.
(iii) The Interim Date Pro Forma Consolidating Balance
Sheet has been, and the Closing Date Consolidating Balance Sheet will
be, prepared in accordance with generally accepted accounting
principles applied on a basis consistent with those used for the
Audited Financial Statements, except that the Interim Date Pro Forma
Consolidating Balance Sheet reflects, and the Closing Date
Consolidating Balance Sheet will reflect, the elimination therefrom of
all assets and liabilities not included in the Business to be
Acquired, and the inclusion therein of all assets and liabilities
included in the Business to be Acquired. The Interim Date Pro Forma
Consolidating Balance Sheet reflects all adjustments necessary for a
fair presentation of the consolidated financial position of the
Business to be Acquired as of the Interim Date, and the Closing Date
Consolidating Balance Sheet will reflect all adjustments necessary for
a fair presentation of the consolidated financial position of the
Business to be Acquired as of the Closing Date.
(iv) There are no material transactions that have not been
properly recorded in the books and records of the Corporations
underlying the Audited Financial Statements or the Interim Date Pro
Forma Consolidating Balance Sheet and the Closing Date Consolidating
Balance Sheet. There have been no material changes to the
Corporation's system(s) of internal accounting controls from March 31,
1994 through the Closing.
3.5 Absence of Changes. Since the Interim Date, except with the
consent of Jacobs given in writing prior to or at the Closing, except as
specifically contemplated or permitted by this Agreement, or except as set
forth in Exhibit 3.5, with respect to any of the Corporations there has not
been any:
(i) Transaction except in the ordinary course of its
business as conducted on that date;
(ii) Capital expenditure by any Corporation exceeding
$25,000.00 individually or $250,000.00 in the aggregate;
(iii) Change in its financial condition, properties,
liabilities, assets, or business operations, that, either individually
or in the aggregate, is materially adverse to such corporation;
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(iv) Destruction, damage to, or loss of any asset (whether
or not covered by insurance) that materially and adversely affects
its financial condition or business;
(v) Labor trouble or other event or condition of any
character materially and adversely affecting its financial condition,
properties, business, assets or operations;
(vi) Change in accounting methods or practices utilized by
it for financial reporting purposes;
(vii) Revaluation by it of any of its assets;
(viii) Declaration, setting aside, or payment of a dividend
or other distribution with respect to its capital stock, or any direct
or indirect redemption, purchase, or other acquisition by it of any of
its shares of capital stock;
(ix) Except in the ordinary course of business, increase
in the salary or other compensation payable or to become payable to
any of its officers or directors or the declaration, payment or
commitment or obligation of any kind for the payment by the
Corporations of a bonus or other additional salary or compensation to
any such person;
(x) Sale or transfer of any material asset except in the
ordinary course of business;
(xi) Amendment or termination of any contract, agreement
or license to which it is a party, except in the ordinary course of
business;
(xii) Loan to any Person other than CRSS or an Affiliate of
CRSS, or guaranty by it of any loan or obligation to any Person;
(xiii) Mortgage, pledge or other encumbrance of any asset;
(xiv) Waiver or release of any right or claim, other than
in the ordinary course of business;
(xv) Other event or condition of any character that has or
might reasonably be expected to have a material and adverse effect on
its financial condition, business or assets;
(xvi) Issuance or sale of any shares of its capital stock
of any class or of any other class or kind of its securities;
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(xvii) Transactions not in the ordinary course of business
with any bank or other financial institution, including, without
limiting the generality of the foregoing, any loans or withdrawals not
in the ordinary course of business;
(xviii) Acquisition or contract to acquire in any manner,
directly or indirectly, any of its outstanding capital stock or of any
other corporation;
(xix) Payment of or any obligation to pay any amounts
either in cash or other property to any Person for cancellation of any
outstanding options or agreements to acquire shares of its capital
stock;
(xx) Change in its capital structure or articles of
incorporation or bylaws; or
(xxi) Agreement by it to do any of the things described in
the preceding clauses (i) through (xx).
3.6 Tax and Other Returns and Reports. All Tax Returns (as defined
in Section 6.4(v)(e)) required to be filed by or on behalf of each of the
Corporations with respect to any Taxes (as defined in Section 6.4(v)(e)) have
been filed by CRSS or one of its Affiliates with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be
filed, and all such Tax Returns properly reflect the liabilities of each of the
respective Corporations for Taxes for the periods, property or events covered
thereby. All Taxes, including those without limitation that are called for by
the Tax Returns, or heretofore or hereafter claimed to be due by any taxing
authority from each Corporation, have been properly accrued or paid.
3.7 Real Property; Environmental Laws.
(i) Except as set forth on Exhibit 3.7 the Corporations
own no real property. Exhibit 3.7 to this Agreement contains a
complete list accurately identifying the address, term and rental
terms of all real property leased or occupied by the Corporations (the
"Lease(s)"). The real property described in said Leases or otherwise
occupied by one or more Corporations is hereinafter referred to as the
"Real Property". Exhibits 3.7 and 3.9 contain a description of all
buildings, fixtures, and other improvements located on the Real
Property. Each of the Corporations enjoys peaceful and undisturbed
possession under all Leases to which it is a party, and all Leases are
valid and subsisting and are in full force and effect. Except as set
forth on Exhibit 3.7 there is no condition on or under any such Real
Property that constitutes a violation of any law, regulation or
ordinance of any jurisdiction that would have a material adverse
effect on the business, operations or financial condition of any of
the
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Corporations.
(ii) With respect to the Real Property and with respect to
the operations of the Corporations at other sites, except as set forth
on Exhibit 3.7, and except for matters that would not have a material
and adverse effect on the business, operations or financial condition
of any of the Corporations:
(a) Neither the Real Property nor any portion
thereof is in violation of, or subject to any existing,
pending or threatened investigation by any governmental
authority under, any Environmental Law.
(b) None of the Corporations has been, or is,
required to obtain any Environmental Permits with respect to
the Real Property or its business operations that have not
been obtained.
(c) None of the Corporations has used, or does
now use or permit the use of, the Real Property in any manner
that violates any Environmental Law.
(d) All transportation and offsite disposal
arrangements used by each Corporation to dispose of Hazardous
Materials are in compliance with all Environmental Laws.
(e) The processes used by each Corporation in its
operations have not resulted, and do not currently result, in
the disposal, spill, discharge, leak, release or emission of
any Hazardous Materials on, under, in or about the Real
Property in violation of any Environmental Laws.
(f) Hazardous Materials have not been released or
disposed of on the Real Property or, to the actual knowledge
of CRSS, any property adjoining the Real Property;
(g) Each Corporation has disposed of all wastes,
including those containing any Hazardous Materials, in
compliance with all applicable Environmental Laws, and none of
them has received any notice or claim of liability for any
off-site contamination;
(h) All required Environmental Permits have been
obtained and are in effect for the operations conducted on the
Real Property, and there are no pending applications for
issuance or renewal of any Environmental Permit for the
operations conducted at the Real Property;
(i) None of the Real Property is listed
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<PAGE> 22
or, to the best knowledge of CRSS, proposed for listing on the
National Priorities List under CERCLA or on the CERCLA list or
any similar state list of sites requiring investigation or
cleanup or that is the subject of any Environmental Claim;
(j) None of the Corporations has transported or
arranged for the transportation of any Hazardous Materials to
any location that is listed or, to the best knowledge of CRSS,
proposed for listing on the National Priorities List under
CERCLA or on the CERCLA list or any similar state list;
(k) There are not now, and never have been, any
underground storage tanks located on the Real Property, or to
the best knowledge of CRSS, on any property adjoining the Real
Property;
(l) None of the Corporations has received any
notice or claim of liability under any Environmental Law,
including pending or threatened liens; and
(m) There are no circumstances with respect to
any Real Property that subject it to any restrictions on
ownership, occupancy, use or transferability under any
applicable Environmental Law. 3.8 Contracts.
(i) Exhibit 3.8(i) lists the Assumed Contracts.
(ii) Exhibit 3.8(ii) lists the Continuing Contracts.
(iii) Exhibit 3.8(iii) lists all Contracts pursuant to
which any of the Corporations leases, or CRSS or any CRSS Subsidiary
leases for the benefit of any Corporation, any tangible personal
property ("Personal Property Leases"), except for Personal Property
Leases providing for total payments of less than $5,000.00 or
terminating or terminable without penalty within 120 days after the
Closing Date.
(iv) Exhibit 3.8(iv) lists all Ancillary Contracts to
which any of the Corporations is a party or to which CRSS or any CRSS
Subsidiary is a party for the benefit of any Corporation, except for
Ancillary Contracts providing for total payments of less than
$5,000.00 or terminating or terminable without penalty within 120 days
after the Closing Date and except for subcontracts and other contracts
entered into in the ordinary course of business associated with the
performance of Customer Contracts.
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<PAGE> 23
(v) There are no material breaches by any of the
Corporations or, to the best knowledge of CRSS, any other party under
any Contract to which any of the Corporations is a party. None of the
Corporations has received any notice that there exists an event or
condition with respect to any Contract to which it is a party that has
not since been cured or waived and that, with or without the passage
of time or the giving of notice, or both, would constitute a default
by such Corporation under any such Contract.
(vi) There have been no changes to the completion bonuses
offered by any of the Corporations with respect to any of the At Risk
Contracts since May 26, 1994.
3.9 Equipment and Other Assets. Exhibit 3.9 to this Agreement is a
complete and accurate schedule describing in reasonable detail, and specifying
the location of, all trucks, automobiles, machinery, equipment, computers,
apparatus, furniture, supplies, tools, drawings and all other tangible personal
property owned by, in the possession of, or used by any of the Corporations in
connection with the Business to be Acquired. The property covered by the
Personal Property Leases listed in Exhibits 3.8(iii), to the extent required to
be listed therein, or 3.9 constitutes all such tangible personal property used
by any of the Corporations in connection with the Business to be Acquired.
Except as stated in Section 3.13, no personal property owned by any of the
Corporations in connection with the Business to be Acquired is held under or
subject to any contract, security interest, conditional sales contract or other
title retention or security arrangement or is other than in the possession or
control of one of the Corporations. The tangible personal property listed on
Exhibit 3.9 shall be sold to Jacobs "as is, where is".
3.10 Accounts Receivable. Exhibit 3.10 contains complete and
accurate schedules of the accounts receivable of the respective Corporations
reflected on the Interim Date Pro Forma Consolidating Balance Sheet, together
with an accurate aging of these accounts as of March 31, 1994. These accounts
receivable, and all accounts receivable of each Corporation created after that
date to the Closing Date, have been booked, billed and recognized consistently
with past practice. The allowances for uncollectible accounts and collection
losses on the Interim Date Pro Forma Consolidating Balance Sheet have been, and
such allowances on the Closing Date Consolidating Balance Sheet shall be,
determined in accordance with generally accepted accounting principles on a
basis consistent with the presentations in the Audited Financial Statements.
3.11 Backlog. Exhibit 3.11 sets forth a substantially true and
correct statement of the backlog of each Corporation at March 31, 1994, as
determined in accordance with past practice consistently applied.
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3.12 Intellectual Property Rights.
(i) To the best knowledge of CRSS, none of the
Corporations has infringed or is now infringing any Intellectual
Property Rights owned by any other Person or has received any notice
or been served in any lawsuit alleging that it is infringing any
patent or other Intellectual Property Rights owned by any other
Person.
(ii) Except as set forth in Exhibit 3.12, to the best
knowledge of CRSS, each of the Corporations is the sole owner of, or
is licensed by one of the other CRSS Companies under, all of the CRSS
Intellectual Property Rights, free and clear of any liens,
encumbrances, restrictions, or legal or equitable claims of others. To
the best knowledge of CRSS, each of the Corporations has the right to
use all of the Intellectual Property reasonably necessary to conduct
its business as presently conducted.
(iii) To the best knowledge of CRSS none of the
Corporations uses any trademark, trade name or service mark other than
the trademarks listed on Exhibit 3.12. To the best knowledge of CRSS,
no other Person other than CRSS or one or more of CRSS Subsidiaries
owns any trademark, trade name or service mark listed on Exhibit 3.12.
(iv) To the best knowledge of CRSS, except as set forth in
Exhibit 3.12 neither CRSS nor any CRSS Subsidiary have granted or will
grant to any Person other than CRSS or a CRSS Subsidiary the right to
use, any of the names, listed in Exhibit 3.12 as a trade name,
trademark, service mark, corporate or firm name except as specifically
set forth in Annex VI hereto. Except as set forth on Exhibit 3.12 CRSS
has, to the best knowledge of CRSS, the right to grant the right to
use the names listed on Exhibit 3.12.
3.13 Title to Assets.
(i) Except as set forth in Exhibit 3.13 each of the
Corporations has good, valid and indefeasible title to all of the
tangible assets purported to be owned by it, whether real, personal,
or mixed. All tangible property owned by the Corporations is free and
clear of restrictions on or conditions to transfer or assignment, and
free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions or
restrictions, except for (a) those disclosed in the Audited Financial
Statements and (b) the lien of current taxes not yet due and payable.
To the best knowledge of CRSS none of the Real Property requires any
repairs or reconstruction that would have a material and
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adverse effect on the business, operations or financial condition of
any of the Corporations.
(ii) To the best knowledge of CRSS, neither CRSS nor the
CRSS Subsidiaries, any officer, director or employee of any of them or
any trust or corporation in which any of them have a beneficial
interest, owns, or has any interest, directly or indirectly, in any of
the Real Property or personal property owned by or leased to any of
the Corporations or any copyrights, patents, trademarks, trade names,
trade secrets or other Intellectual Property Rights owned by or
licensed to any of the Corporations except as disclosed in Exhibit
3.13.
3.14 Insurance Policies; Bonds.
(i) Exhibit 3.14 to this Agreement is a complete list
accurately describing all insurance policies held by or for the
benefit of the Corporations or concerning the respective businesses
and properties of one or more of the Corporations, including but not
limited to all casualty, errors and omissions insurance and officers'
and directors' liability insurance policies carried by CRSS or any of
its Affiliates that cover the Corporations or their officers and
directors. All these policies are in the respective principal amounts
set forth in Exhibit 3.14. All such policies are in full force and
effect in accordance with their terms, no notice of cancellation has
been received, and there is no existing default or event that, with
the giving of notice or lapse of time or both, would constitute a
default thereunder, and all premiums to date have been paid in full.
With respect to the Business to be Acquired none of CRSS or its
Affiliates has been refused any insurance, or has its coverage been
limited, by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the past five
years. Except as provided in Section 11.11, all insurance policies of
the Business to be Acquired will cease to provide coverage to Jacobs
or its Affiliates (including the Stock Corporations) for any
occurrences following the Closing (with respect to occurrence-based
policies) and for any claims asserted following Closing (with respect
to claims-made policies); provided, however, that this in no way shall
limit the rights of CRSS or any of its Affiliates with respect to any
insurance coverage, including coverage provided by CRSS Insurance Ltd.
(ii) Exhibit 3.14 also contains a true and complete
description of all outstanding bonds, letters of credit and other
surety arrangements (exclusive of parent company guarantees) issued or
entered into in connection with the business, assets and liabilities
of the Corporations.
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3.15 Material Contracts.
(i) None of the Corporations is a party to, nor is it
bound by, any representative or agency agreement, including any such
agreement for registration, qualification or representation in a
foreign country, any requirements agreement, or any Contract not
entered into in the ordinary course of business, except the Contracts
listed in Exhibits 3.7, 3.8(i)-(iv), 3.9 or 3.15. There is no default
by any of the Corporations, or to the best knowledge of CRSS, by any
other party or event that with notice or lapse of time, or both, would
constitute a default by any of the Corporations or, to the best
knowledge of CRSS, any other party to any of these Contracts that
would have a material and adverse effect on the financial condition,
business, properties or operations of any of the Corporations. To the
best knowledge of CRSS, none of the Contracts listed on Exhibit 3.15
is materially adverse to the business, properties or financial
condition of the Corporations or any of them.
(ii) None of the Corporations has received written notice
that any party to any Customer Contracts intends to cancel or
terminate any Customer Contracts or to exercise or not exercise any
options under any Customer Contracts.
(iii) To the best knowledge of CRSS, each of the Customer
Contracts under which Jacobs is to acquire rights or obligations
hereunder, including those to which Constructors, International or New
York are party, is valid and enforceable in accordance with its terms;
the Corporation that is a party thereto is, and, to the best knowledge
of CRSS, all other parties thereto are, in compliance with the
provisions thereof; such Corporation is not, and, to the best
knowledge of CRSS, no other party thereto is, in default in the
performance, observance or fulfillment of any material obligation,
covenant or condition contained therein; and to the best knowledge of
CRSS, no event has occurred which with or without the giving of notice
or lapse of time, or both, would constitute a default thereunder.
Furthermore, to the best knowledge of CRSS, no Customer Contract
contains any contractual requirement with which there is a reasonable
likelihood that such Corporation or any other party thereto will be
unable to comply.
(iv) None of the Corporations is subject to any charter or
other corporate restriction or any judgment, order, writ, injunction,
decree or award that materially and adversely affects or materially
restricts or, is expected to, materially and adversely affect or
materially restrict, the business, operations, assets, properties, or
financial condition of the Business to be Acquired after consummation
of the transactions contemplated hereby.
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3.16 Labor Matters. With respect to the Business to be Acquired:
(i) Each of CRSS and its Affiliates (a) is in compliance
in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of
employment and wages and hours and occupational safety and health
laws; (b) is not engaged in any unfair labor practice as defined by
the National Labor Relations Act or any similar state or foreign
agency, except any noncompliance or practices which are not materially
adverse to the financial condition of such corporation; and (c) there
is no unfair labor practice complaint against any such corporation
pending before the National Labor Relations Board. There is no labor
strike or lockout actually pending or threatened against or affecting
any such corporations. Except as set forth in Exhibit 3.16: None of
the employees of any of the Corporations is represented by any labor
organization and there is no current union organizing activities among
such employees; no material grievance nor any material arbitration
proceeding arising out of or under collective bargaining agreements is
pending; no collective bargaining agreement which is binding on the
Corporations restricts any of them from relocating or closing any of
their operations; and none of the Corporations is a party to or bound
by any collective bargaining agreement or similar agreement with any
labor organization or employee organization applicable to such
employees.
(ii) Since January 1, 1985 none of the CRSS Companies has
experienced any strike of their employees. There are no written
personnel policies, rules or procedures applicable to the employees of
any of the CRSS Companies in connection with Business to be Acquired,
except as set forth in the documents listed in Exhibit 3.16.
(iii) Except as set forth in Exhibit 3.16, there are no
charges involving any of the Corporations pending before the Equal
Employment Opportunity Commission or any other agency responsible for
the prevention of unlawful employment practices. None of the CRSS
Companies has received notice of the intent of any federal, state,
local or foreign agency responsible for the enforcement of labor and
employment laws to conduct an investigation with respect to or
relating to the Corporations, and no such investigation is in
progress.
(iv) Since the enactment of the Worker Adjustment and
Retraining Notification Act (the "WARN Act"), neither CRSS nor any of
its Affiliates has effectuated,
(a) a "plant closing" (as defined in the WARN
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Act) affecting any site of employment or one or more
facilities or operating units within any site of employment;
or
(b) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of CRSS or any of
its Affiliates except in compliance with the WARN Act; and
none of the Corporations has been affected by any transaction
or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local
law except in compliance with any such law.
3.17 Compliance with Laws.
(i) Each of the Corporations has complied with, and is
not in material violation of, any applicable treaties, statutes, laws
and regulations affecting its financial condition, business,
properties or operation of its business ("Regulations") except for
violations and failures to comply that do not and will not have a
material and adverse effect on the financial condition, business,
properties or operations of the Business to be Acquired. Without
limiting the generality of the foregoing, except as otherwise
disclosed herein, each of the Corporations owns, holds, possesses or
lawfully uses in the operation of its business all franchises,
licenses, permits, rights, applications, filings, registrations and
other authorizations ("Authorizations") that are in any manner
necessary for it to conduct the Business to be Acquired, free and
clear of all liens, charges, restrictions and encumbrances and in
compliance with all Regulations, except where the failure to hold or
keep current such Authorizations or failure to comply with such
Regulations would not have a material and adverse effect on its
financial condition, business, properties or the operation of its
business. None of the Corporations is in default or has received any
notice of any claim of default, with respect to any such
Authorization, except where the default or claimed default would not
have a material and adverse effect on its financial condition,
business, properties or the operation of its business. All such
Authorizations are renewable by their terms or in the ordinary course
of business. No shareholder, director, officer, employee or former
employee of CRSS or its Affiliates, or any other person, firm or
corporation owns or has any material, proprietary or financial
interest in any Authorization that any of the Corporations owns,
possesses or uses in the operation of the Business to be Acquired.
(ii) Neither CRSS nor any of its Affiliates has received
any notice of any asserted failure to comply with, or violation of,
any Regulation that would have a material and adverse effect on the
Business to be Acquired. Without
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limiting the generality of the foregoing, neither any of the
Corporations nor any employee or agent of any of them nor anyone on
their behalf has made any payments to any person, firm, corporation or
governmental or other entity that would have been required to be
disclosed by CRSS under applicable disclosure policies of the
Securities and Exchange Commission under Section 12 of the Securities
Exchange Act of 1934, as amended, or that would be unlawful under the
Foreign Corrupt Practices Act, 15 U.S.C. Section 78dd, United States
laws pertaining to the export of technical data, United States laws
pertaining to restrictive trade practices or boycotts or the
regulations under any of such statutes or laws and, since December 31,
1986, none of the Corporations nor any employee or agent acting on
behalf of any of them has had outstanding any offer, promise to pay or
authorization of the payment of money or anything of value that would
be in violation of said Foreign Corrupt Practices Act.
3.18 Litigation. Except as listed and briefly described in Exhibit
3.18 there is no demand, claim, suit, action, arbitration, or legal,
administrative or other proceedings or to the best knowledge of CRSS,
governmental investigation or audit ("Litigation") pending or to the best
knowledge of CRSS, threatened against any of the Corporations or their
respective businesses, assets, or financial condition nor does CRSS have
knowledge of any acts, errors or omissions that in the normal course of events
could lead to any of the same. CRSS has furnished or made available to Jacobs
copies of all relevant court papers and other documents relating to the matters
set forth in Exhibit 3.18 in their possession. Except as set forth in Exhibit
3.18, neither CRSS nor any of its Subsidiaries is a party to or subject to the
provisions of any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
that will materially and adversely affect the Business to be Acquired or the
transactions contemplated hereby. None of the Corporations is in default with
respect to any order, writ, injunction or decree of any federal, state, local
or foreign court, department, agency or instrumentality. Except as set forth in
Exhibit 3.18, none of the Corporations is presently engaged in any legal
proceeding to recover moneys due to it or damages sustained by it.
3.19 (Intentionally Omitted)
3.20 Corporate Power; Authorization; Enforceable Obligations. CRSS
has the corporate power, authority and legal right to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by CRSS have been duly authorized by all necessary corporate action.
This Agreement has been, and the other agreements, documents and instruments
required to be delivered by CRSS in accordance with
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the provisions hereof (the "Corporation Documents") will be, duly executed and
delivered on behalf of CRSS by duly authorized officers thereof, and this
Agreement constitutes, and the Corporation Documents when executed and
delivered will constitute, the legal, valid and binding obligations of CRSS
enforceable against CRSS in accordance with their respective terms.
3.21 Validity of Contemplated Transactions, etc. Except as
otherwise set forth on Exhibit 3.21, the execution, delivery and performance of
this Agreement by CRSS does not and will not violate, conflict with or result
in the breach of any term, condition or provision of, or require the consent of
any other person under, (a) any existing law, ordinance, or governmental rule
or regulation to which any of the CRSS Companies is subject, (b) any judgment,
order, writ, injunction decree or award of any court, arbitrator or
governmental or regulatory official, body or authority that is applicable to
any of the CRSS Companies, (c) the charter documents of any of the CRSS
Companies or any securities issued by any of the CRSS Companies, or (d)
Contracts not entered into in the ordinary course of business to which any of
the CRSS Companies is a party or by which any of the stock or assets to be
conveyed hereunder may be bound or affected. Except for required consents from
governmental authorities pursuant to Contracts with any of the CRSS Companies,
and except as aforesaid or as set forth in Exhibit 3.21, no authorization,
approval or consent of, and no registration or filing with, any governmental or
regulatory official, body or authority is required in connection with the
execution, delivery or performance of this Agreement by any of the CRSS
Companies.
3.22 No Conflicts of Interest. To the best knowledge of CRSS, and
except as set forth in Exhibit 3.22, neither CRSS nor any of its Affiliates nor
any officer or director of any of them or any trust or corporation in which any
of them have a beneficial interest has any material direct or indirect interest
in any competitor, supplier or customer of any of the Corporations or in any
Person from whom or to whom any of them leases any Real Property or personal
property, or in any other Person with whom any of the Corporations is doing of
business.
3.23 Inspection of Documents. Each of the Corporations has
furnished or made available to Jacobs for its examination (i) copies of their
respective certificates of incorporation and bylaws as amended to the date of
this Agreement; (ii) their respective minute books containing all records
required to be set forth of all proceedings, consents, actions and meetings of
their respective shareholders and board of directors; and (iii) their
respective stock transfer records setting forth all transfers of capital stock.
3.24 Officers, Directors and Agents. Exhibit 3.24 is a complete and
accurate list of the names and addresses of all
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officers and directors of each of the Corporations and all persons who are the
agents and representatives of the Corporations pursuant to written agreements.
3.25 Bank Accounts. CRSS has furnished to Jacobs a complete and
accurate list of the names and addresses of all banks or other financial
institutions in which each of the Corporations has an account, deposit or
safe-deposit box, with the names of all persons authorized to draw on these
accounts or deposits or to have access to these boxes.
3.26 Employee Benefit Plans; ERISA.
(i) CRSS has furnished to Jacobs a true and complete list
of each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, hospitalization
or other medical, life or other insurance, supplemental unemployment
benefits, profit sharing, pension, or retirement plan, program,
agreement or arrangement, and each other material employee benefit
plan, program, agreement or arrangement, maintained or contributed to
or required to be contributed to by any CRSS Company for the benefit
of any employee or terminated employee of any of the Corporations,
whether formal or informal (the "Plans").
(ii) With respect to each of the Plans, CRSS has
heretofore made available to Jacobs true and complete copies of each
of the following documents:
(a) copies of all Plans (including all amendments
thereto);
(b) a copy of the actuarial report, if required
under ERISA, with respect to each such Plan for the last two
years;
(c) a copy of the most recent Summary Plan
Description;
(d) if the Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other
funding agreement (including all amendments thereto) and the
latest financial statements thereof; and
(e) the most recent determination letter received
from the Internal Revenue Service with respect to each Plan
that is intended to be qualified under Section 401 of the
Code.
(iii) None of the Plans is a "multiemployer pension plan,"
as that term is defined in Section 3(37) of ERISA.
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(iv) CRSS terminated its defined benefit pension plan on
July 1, 1987, annuity contracts were purchased to cover all benefits
accrued under the plan and the remaining assets were returned to CRSS.
Neither CRSS, any of its Affiliates nor any trade or business (whether
or not incorporated) that together with any CRSS Company would have
been deemed a "single employer" within the meaning of Section 4001(b)
of ERISA has subsequently contributed, or was required to contribute,
to any defined benefit plan or multiemployer plan subject to Title IV
of ERISA.
(v) No Plan is subject to Title IV of ERISA, Section 302
of ERISA or Section 412 of the Code.
(vi) Neither CRSS, its Affiliates nor any of the Plans has
engaged in a transaction in connection with which CRSS or any of its
Affiliates, or any of the Plans could be subject to any civil
liability under Section 409 of ERISA or any civil penalty assessed
pursuant to Section 502(i) of ERISA or any tax imposed pursuant to
Section 4975 or 4976 of the Code.
(vii) Full payment has been made, or will be made in
accordance with Section 404(a)(6) of the Code, of all amounts CRSS or
any of its Affiliates is required to contribute under the terms of
each of the Plans as of the last day of the most recent plan year
thereof ended prior to the date of this Agreement.
(viii) Each of the Plans has been operated and administered
in all material respects in accordance with ERISA and the Code.
(ix) Each of the ERISA Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code is so
qualified.
(x) Except as disclosed on Exhibit 3.26 hereto, no Plan
provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former
employees of any of the Corporations beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable
law, (ii) death benefits, medical benefits or retirement benefits
under any Plan, (iii) deferred compensation benefits accrued as
liabilities on the books of the Corporations, or (iv) benefits the
costs of which are borne by the current or former employee (or his
beneficiary)).
(xi) Except as disclosed on Exhibit 3.26 hereto the
consummation of the transactions contemplated by this Agreement will
not (i) accelerate the vesting, or increase
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the amount of compensation due, any current or former employee or
officer of any of the Corporations, (ii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available, or (iii) entitle any
current or former officer or employee of any of the Corporations to
amounts payable under the Plans which will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(xii) There are no pending, threatened or anticipated
lawsuits by or on behalf of any of the Plans, by any employee or
beneficiary covered under any such Plan with respect to such Plan, or
otherwise involving any such Plan (other than routine claims for
benefits).
3.27 Contracts With Government Agencies. With regard to each
Contract, bid, offer, quotation, or report of any kind with or to any
governmental agency with respect to the Corporations, except as set forth in
Exhibit 3.27, each of CRSS and its Affiliates:
(i) has complied with all governmental procurement and
other regulations;
(ii) has not violated any statutes or regulations relative
to prohibited practices, including but not limited to the False Claims
Act, prohibitions against "Buying In", the Anti-Kickback Act, the
Federal Election Campaign Act, prohibitions against conflict of
interest and Anti-Trust laws or any governmental accounting
regulations;
(iii) has made no representations or certifications that
are untrue or filed any accountings that are inaccurate;
(iv) is unaware of any current or prospective governmental
audit concerning any of the above, concerning pricing, or relative to
debarment, other than regular audits in the ordinary course of
governmental contracts; or
(v) is unaware of any prospective disallowance of costs,
fees or money claims with respect to any governmental contract.
3.28 Disclosure. The examination by Jacobs of any document provided
to Jacobs by any person, or the receipt of any information by Jacobs from any
of the CRSS Companies or from any investigation by them or from any other
source shall not constitute a waiver by Jacobs of any covenant, warranty or
representation of CRSS contained in this Agreement.
ARTICLE FOUR: REPRESENTATIONS AND WARRANTIES OF JACOBS
Jacobs warrants and represents to and covenants with
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CRSS, as follows:
4.1 Organization and Standing. Jacobs is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, has all necessary corporate powers to own its properties and to
carry on its business as now conducted and operated by it and is duly qualified
to do intrastate business and is in good standing in all of the jurisdictions
in which the failure so to qualify would have a material and adverse effect on
the business or financial condition of Jacobs.
4.2 Authority. The execution, delivery and performance of this
Agreement by Jacobs have been duly authorized by all requisite corporate
action, and such execution, delivery, and performance do not and will not
violate Jacobs' certificate of incorporation, bylaws or any contract or
commitment to which it is a party or by which it is bound. No action on the
part of the shareholders of Jacobs is required for the approval of this
Agreement.
4.3 Corporate Power; Authorization Enforceable Obligations. Jacobs
has the corporate power, authority and legal right to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by Jacobs have been duly authorized by all necessary corporate
action. This Agreement has been, and the other agreements, documents and
instruments required to be delivered by Jacobs in accordance with the
provisions hereof (the "Jacobs Documents") will be, duly executed and delivered
on behalf of Jacobs by duly authorized officers of Jacobs, and this Agreement
constitutes, and the Jacobs Documents, when executed and delivered, will
constitute, the legal, valid and binding obligations of Jacobs enforceable
against Jacobs in accordance with their respective terms.
4.4 Validity of Contemplated Transactions, etc. The execution,
delivery and performance of this Agreement by Jacobs does not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under, (a) any
existing law, ordinance, or governmental rule or regulation to which Jacobs or
any of its Subsidiaries is subject, (b) any judgment, order, writ, injunction
decree or award of any court, arbitrator or governmental or regulatory
official, body or authority that is applicable to Jacobs or any of its
Subsidiaries, (c) the charter documents of Jacobs or any of its Subsidiaries or
any securities issued by Jacobs or any of its Subsidiaries, or (d) except to
the extent entered into in the ordinary course of business, any mortgage,
indenture, agreement, contract, commitment or lease to which Jacobs or any of
its Subsidiaries is a party. Except as set forth in this Agreement no
authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in
connection with the execution, delivery or performance of this Agreement by
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Jacobs.
ARTICLE FIVE:
(Intentionally Omitted)
ARTICLE SIX: OBLIGATIONS OF THE PARTIES
6.1 Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
6.2 Hart-Scott-Rodino Filings. As promptly as practicable, Jacobs
and CRSS will make all filings and submissions under the H-S-R Act and any
applicable state regulations as may be reasonably required to be made in
connection with this Agreement and the transactions contemplated hereby. CRSS
shall furnish to Jacobs, and Jacobs shall furnish to CRSS such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. CRSS shall provide Jacobs, and
Jacobs shall provide CRSS, with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby.
6.3 Public Announcements. Jacobs and CRSS agree that they and
their Affiliates will not issue any press release or otherwise make any public
statement or respond to any press inquiry with respect to this Agreement or the
transactions contemplated hereby without the prior approval of the other party,
which will not be unreasonably withheld, except as may be required by law or by
the New York Stock Exchange.
6.4 Tax Matters.
(i) Section 338(h)(10) Election. CRSS and Jacobs will
make a timely joint election under Section 338(h)(10) (and, if
required, in order to effectuate a Section 338(h)(10) election, an
election under Section 338(g)) of the Internal Revenue Code of 1986,
as amended (the "Code") in compliance with the applicable Treasury
Regulations in order that the transactions contemplated by this
Agreement be treated for federal income tax purposes as a sale of
assets and a subsequent subsidiary liquidation by CRSS of any and all
target corporations and target affiliates as defined in Section 338
and the regulations thereunder, including but not limited to
Constructors, International and
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New York, and Jacobs and CRSS shall file any corresponding elections
available under state, local or foreign tax laws. Any liability for
Taxes resulting from the election under Section 338(h)(10) and, if
required, Section 338(g) of the Code will be paid by CRSS. In
particular, and not by way of limitation, in order to effect any such
election, not later than the delivery to Jacobs of the Closing Date
Consolidating Balance Sheet, Jacobs and CRSS agree to jointly and
promptly agree to, and if required, execute necessary copies of
completed Internal Revenue Service Form 8023, Form 8594, and any other
forms or statements required by the Code, applicable Treasury
Regulations or the Internal Revenue Service, together with any and all
attachments required to be filed therewith pursuant to applicable
Treasury Regulations. Taxes or recoverable amounts as a result of the
joint election under Section 338(h)(10) will be borne by or inure to
CRSS in a manner which will not affect the Closing Date Consolidated
Net Worth of the Business to be Acquired.
(ii) Taxes Prior to, Including, and After the Closing.
Jacobs acknowledges that CRSS intends to include the Corporations in
its consolidated federal income Tax Return for the period prior to and
including the Closing Date. The liability (or asset) for any federal
income Taxes and state or local income Taxes reported on a
consolidated basis for CRSS and its subsidiaries, including Services
and the Services Affiliates, for the periods prior to and including
the Closing Date shall be borne by, or inure to the benefit of, CRSS
and CRSS shall indemnify and hold harmless Jacobs, subject to and in
the manner set forth in Article Twelve, against any and all liability
for or with respect to such income Taxes claimed or assessed for the
periods prior to and including the Closing Date. CRSS shall also
indemnify and hold harmless Jacobs, subject to and in the manner set
forth in Article Twelve, against any and all liability for or with
respect to income Taxes arising from the making of the joint election
by CRSS and Jacobs under Section 338(h)(10). The liability for any
income Taxes of Constructors, International and New York for the
periods beginning after the Closing Date shall be borne by Jacobs, and
Jacobs will indemnify and hold harmless CRSS, subject to and in the
manner set forth in Article Twelve, against any and all liability for
or with respect to income Taxes of Constructors, International and New
York claimed or assessed for all taxable periods beginning after the
Closing Date.
(iii) Cooperation. After the Closing, Jacobs and CRSS
shall, and Jacobs and CRSS shall cause their respective Affiliates to,
cooperate fully with one another and shall make available to one
another, as reasonably requested, all information, records or
documents relating to income tax liabilities of the Corporations for
all periods prior to or
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ending on the Closing Date and shall preserve all such information,
records and documents until the expiration of any applicable statutes
of limitation or extensions thereof. Jacobs, CRSS, and their
respective Affiliates also shall make available to one another, as
reasonably requested, personnel responsible for preparing or
maintaining information, records and documents in connection with
income tax matters.
(iv) Audits.
(a) So long as taxable periods of the
Corporations ending on or prior to the Closing Date remain
open for an assessment of income Taxes, Jacobs and CRSS shall
promptly notify the other in writing within ten (10) days of
receipt by Jacobs, CRSS, or their respective subsidiaries of
notice of (i) any pending or threatened audits or assessments
with respect to income Taxes of the Corporations, and (ii) any
pending or threatened audits or assessments with respect to
income Taxes of Jacobs which may affect the income Tax
liabilities of the Corporations for taxable periods ending on
or prior to the Closing Date. CRSS shall have the right to
represent the interests of the Corporations in any Tax audit
or administrative or court proceeding relating to fiscal
periods ending on or prior to the Closing Date and to employ
counsel of its choice at its expense. Jacobs agrees that it
will, subject to the provisions of the Services Agreement,
cooperate fully with CRSS and its counsel in the defense
against or compromise of any claim in any said proceeding.
(b) If, as a result of the examination of the
consolidated or separate federal, state or local income Tax
Returns of CRSS or any of CRSS's Tax Subsidiaries for a
taxable year ending on or before or including the Closing
Date, there shall be made after the Closing Date any
adjustment which decreases deductions, losses or credits
against income Taxes ("Tax Benefits") or which increases
income, gains or recaptures of credits against income Taxes
("Tax Detriments") for any such taxable year and which will
permit Jacobs or any of the Corporations (or any of Jacobs'
Tax Affiliates) to increase the Tax Benefits or decrease the
Tax Detriments to which they would otherwise have been
entitled for any taxable year beginning on or after the
Closing Date, CRSS will notify Jacobs of such adjustment and
provide Jacobs with such information as may be necessary for
Jacobs to take account of such increases through the filing of
a claim for refund or otherwise. Jacobs shall take any
reasonable action necessary to secure the benefit of such
increases or decreases and shall pay CRSS the
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amount of such benefit (together with interest, if any,
received), such amount to be paid when, as and only to the
extent such benefit is actually recognized, less the amount,
if any, of Jacobs' reasonable expenses incurred in securing
such benefit for CRSS.
(c) If, as a result of the examination of the
consolidated or separate federal, state or local income Tax
Returns of Jacobs or any of Jacobs' Tax Affiliates for a
taxable year beginning on or after the Closing Date, there
shall be made after the Closing Date any adjustment which
decreases Tax Benefits or increases Tax Detriments for any
such taxable year and which will permit CRSS or CRSS's Tax
Subsidiaries to increase Tax Benefits or decrease Tax
Detriments to which CRSS would otherwise have been entitled
for any taxable year ending on or before and including the
Closing Date, Jacobs will notify CRSS of such adjustment and
provide CRSS with such information as may be necessary for
CRSS to take account of such increase or decrease through the
filing of a claim for refund or otherwise, CRSS shall take any
reasonable action necessary to secure the benefit of such
increases or decreases and shall pay to the Purchaser the
amount of such benefit (together with interest, if any,
received), such amount to be paid when, as and only to the
extent such benefit is actually recognized, less the amount,
if any, of the reasonable expenses of CRSS incurred in
securing such benefit for Jacobs.
(v) Miscellaneous.
(a) Prior Tax Sharing Agreements.
Effective on the Closing Date this Agreement
terminates and supersedes any and all other tax sharing or
other allocation agreements in effect on the date hereof as
between (x) CRSS and (y) Constructors, International or New
York for all Taxes, regardless of the taxable year for which
such Taxes are imposed.
(b) Retention of Records.
For a period of ten (10) years from the Closing Date,
none of CRSS, Jacobs or any Tax Affiliates of either thereof
shall dispose of or destroy any of the business records and
files of Services or any Tax Subsidiary thereof relating to
Taxes in existence on the Closing Date without first offering
to turn over possession thereof to CRSS (in the case of
records and files held by Jacobs or any Tax Affiliate thereof)
or Jacobs (in the case of records and files held by CRSS) by
written notice at least thirty (30) days prior to the proposed
date of such
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disposition or destruction.
(c) Resolution of Disagreements Among Parties.
If (x) CRSS and (y) Jacobs disagree as to the
matters governed by this Section 6.4, CRSS and Jacobs shall
promptly consult with each other in an effort to resolve such
dispute. If any such disagreement cannot be resolved within
fifteen days after either party asserts in writing that such
dispute cannot be resolved, CRSS and Jacobs shall jointly
select a firm of nationally recognized independent certified
accountants mutually acceptable to CRSS and Jacobs (the
"Independent Accounting Firm") to act as an arbitrator to
resolve such disagreement. Such Independent Accounting Firm's
determination shall be binding and conclusive, and any
expenses relating to the engagement of such accounting firm
shall be shared equally by CRSS and Jacobs.
(d) Limitation to Income Taxes.
Notwithstanding anything to the contrary in this
Section 6.4, for all taxable years ending after the Closing
Date, Jacobs shall be responsible for all Taxes of
Constructors, International and New York, other than federal
income Taxes and state or local income Taxes reported on a
consolidated basis for CRSS and its subsidiaries, which income
Taxes shall be subject to the mutual indemnity and other
provisions of this Section 6.4.
(e) Definitions.
For purposes of this Agreement, (1) except as
specifically provided herein, the term "Tax" or "Taxes" shall
mean all taxes, levies or other like assessments, charges or
fees, including without limitation, income, gross receipts,
transfer, gains, excise, property, sales, license, payroll,
withholding, social security and franchise or other
governmental taxes, imposed by the United States, or any
state, county, local or foreign government and subdivision or
agency thereof; and such term shall include any interest,
interest penalty, penalty or additions to tax attributable to
such taxes; (2) the term "Tax Return" shall mean any report,
return, statement or other written information (including
elections, declarations, disclosures, schedules, estimates,
and information returns) required to be supplied to a taxing
authority in connection with Taxes; (3) the term "Tax
Affiliates", with respect to
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any corporation, shall mean another corporation if both such
corporations are members of the same affiliated group of
corporations within the meaning of Section 1504(a) of the Code
or any similar group defined under a similar provision of
state, local, or foreign law, including any consolidated,
unitary or combined group of corporations; and (4) the term
"Tax Subsidiary", with respect to any corporation, shall mean
another corporation in which such first corporation owns a
direct or indirect interest and which is a member of the same
affiliated group of corporations within the meaning of Section
1504 of the Code or any similar group defined under a similar
provision of state, local, or foreign law, including any
consolidated, unitary or combined group of corporations as
such first corporation.
6.5 WARN Act. None of the CRSS Companies shall, at any time before
the Closing Date, without complying fully with the notice and other
requirements of the WARN Act, effectuate (a) a "plant closing" as defined in
the WARN Act affecting any site of employment or one or more facilities or
operating units within any site of employment of the Business to be Acquired,
or (b) a "mass layoff" as defined in the WARN Act affecting any site of
employment of the Business to be Acquired; or any similar action under
applicable state or foreign law requiring notice to employees in the event of a
plant closing or layoff. Subject to and in the manner set forth in Article
Twelve CRSS hereby agrees to indemnify Jacobs and to defend and hold Jacobs
harmless from and against any and all claims, losses, damages, expenses,
obligations and liabilities (including costs of collection, attorney's fees and
other costs of defense) which Jacobs may incur in connection with any suit or
claim of violation brought against Jacobs under the WARN Act or any similar
state or foreign law, which relates to actions taken by any of the CRSS
Companies prior to the Closing Date in connection with the Business to be
Acquired with regard to any site of employment or one or more facilities or
operating units within any site of employment of the Business to be Acquired.
Similarly, subject to and in the manner set forth in Article Twelve, Jacobs
hereby agrees to indemnify CRSS and to defend and hold CRSS harmless from and
against any and all claims, losses, damages, expenses, obligations and
liabilities (including costs of collection, attorney's fees and other costs of
defense) which CRSS may incur in connection with any suit or claim of violation
brought against CRSS under the WARN Act or any similar state or foreign law,
which relates to actions taken by Jacobs on or after the Closing Date in
connection with the Business to be Acquired with regard to any site of
employment or one or more facilities or operating units within any site of
employment of the Business to be Acquired affected by this Agreement.
6.6 Allocation of Employee Plan Responsibilities.
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(i) In General. Effective as of the Closing, all
participation and continued accrual or provision of any benefits to
any employee of the Corporations, or any covered dependent or
beneficiaries thereof in any Plan sponsored by CRSS shall cease.
(ii) Employee Benefits. Except as specifically provided
herein, Jacobs shall not be obligated to provide any particular level
or quality of employee compensation, welfare, pension or other
benefits to individuals who, as of the Closing, (i) are employed by
any of the CRSS Companies, (ii) are the covered dependents or other
beneficiaries under any benefit plans of such an employee or (iii) are
former employees of the Business to be Acquired (or dependents or
beneficiaries thereof) entitled to coverage as required by Title I,
Part 6 of ERISA and Section 4980B of the Code under any of CRSS's
employee welfare or pension plans ((i), (ii) and (iii) collectively,
the "Eligible Individuals").
6.7 Post-Closing Access to Information and Personnel. In addition
to the requirements of Section 6.4(iii) hereof, each of Jacobs and CRSS will
provide the other, and Jacobs shall cause Constructors, International and New
York to provide CRSS, with the right, at reasonable times and upon reasonable
notice, to have access to, and to copy and use, any records or information and
to have access to and consult any person which or who may be relevant in
connection with the conduct of their respective businesses, including without
limitation with respect to preparation of the Closing Date Consolidating
Balance Sheet, financial and accounting requirements, litigation, employee
benefit plan and ERISA matters, Tax requirements (including with respect to
Form 1099's and preparation of Tax Returns), and requirements of applicable
securities laws. The party requesting assistance hereunder shall reimburse the
other party for reasonable out-of-pocket expenses incurred in providing such
assistance; provided, however that if CRSS or Jacobs needs to make any
extensive use of the employees of Jacobs or CRSS for any of the uses set forth
in this paragraph, it will be charged for such services pursuant to the
Services Agreement in the form of Annex IX to be entered into between the
parties. Any information obtained pursuant to this Section shall be held in
strict confidence and shall be used solely in connection with the reason it was
requested.
ARTICLE SEVEN: CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY
The respective obligations of each party to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing of the following conditions:
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7.1 H-S-R Act. Any waiting period applicable to the consummation
of the transactions contemplated hereby under the H-S- R Act shall have expired
or been terminated, and no action shall have been instituted by the Department
of Justice challenging or seeking to enjoin the consummation of this
transaction, which action shall have not been withdrawn or terminated.
7.2 No Injunctions. The absence of any effective injunction, writ,
or preliminary restraining order of a court of competent jurisdiction directing
that the transactions provided for herein not be consummated.
7.3 Absence of Other Matters. No action, suit, proceeding or
investigation by or before any court, admini- strative agency or other
governmental authority shall have been instituted (i) to restrain, prohibit or
invalidate the trans- actions contemplated by this Agreement, (ii) which seeks
material or substantial damages by reason of completion of such transaction or
(iii) which may materially affect the right of Jacobs to own, operate or
control, after the Closing Date, all or any material portion of the Business to
be Acquired.
7.4 Employment Agreements. All employment contracts to which CRSS
or any of the CRSS Subsidiaries is a party with respect to the Business to be
Acquired other than contracts terminable at will without financial penalty
shall have been terminated without liability to CRSS or any CRSS Subsidiary. It
is the intention of Jacobs to enter into employment agreements with A. S.
McCord, Michael W. McMahon, Warren M. Dean, Socrates S. Christopher and Craig
L. Martin on substantially the same financial terms as their current employment
contracts with CRSS or the applicable CRSS Subsidiary.
7.5 Intercompany Indebtedness. On or prior to the Closing Date,
CRSS and each of the CRSS Subsidiaries shall have forgiven any and all
intercompany indebtedness between it and each of the Corporations existing as
of the Closing Date. For federal income tax purposes such forgiveness shall
have been treated as a contribution to the capital of such corporations or a
distribution by the Corporations, as the case may be. The results of forgiving
such intercompany obligations shall have been reflected in the Preliminary Net
Asset Value and shall be reflected in the Closing Date Net Asset Value.
7.6 Service Mark. Jacobs and CRSS shall have entered into a
Service Mark License Agreement in the form of Annex IV, attached hereto and
hereby made a part hereof.
ARTICLE EIGHT: CONDITIONS PRECEDENT TO PERFORMANCE BY JACOBS
The obligations of Jacobs to consummate the
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transactions contemplated by this Agreement are subject to the satisfaction on
the Closing Date of all the conditions set out below in this Article Eight.
8.1 Warranties and Representations. Except as otherwise permitted
by this Agreement, all representations and warranties by CRSS in this
Agreement, in any Exhibit, or in any written statement delivered to Jacobs by
CRSS under this Agreement shall be true on and as of the Closing Date as though
made at that time.
8.2 Covenants. CRSS shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or before the Closing Date.
8.3 No Adverse Changes. Except as disclosed in or pursuant to, or
contemplated by, this Agreement, during the period from the Interim Date to the
Closing Date, there shall not have been any materially adverse change in the
financial condition or the results of operations of any of the Corporations,
and none of the Corporations shall have sustained any material loss or damage
to its assets, whether or not insured, that materially and adversely affects
its ability to conduct a material part of its business.
8.4 Officers' Certificates. Jacobs shall have received a
certificate, dated the Closing Date, signed and verified by the chief executive
officer and chief financial officer of CRSS certifying, in such detail as
Jacobs and its counsel may reasonably request, that the conditions specified in
paragraphs 8.1 through 8.3, 8.6, and 8.13 have been fulfilled.
8.5 Opinion of Counsel.
Jacobs shall have received from Messrs. Liddell, Sapp, Zivley, Hill
and LaBoon, L.L.P., counsel for each of the CRSS Companies, an opinion letter
dated the Closing Date, in form and substance satisfactory to Jacobs and its
counsel, stating that:
(i) Each of the CRSS Companies is a corporation duly
incorporated, existing and in good standing under the laws of the
state of its incorporation, which counsel shall specify, and has all
necessary corporate power to own its properties as now owned and to
operate its business as it is, to counsel's knowledge, now operated.
Each of the Corporations is duly qualified to do business and is in
good standing in all of the jurisdictions listed on Exhibit 3.1;
(ii) Exhibit 3.2 to this Agreement correctly sets forth
the authorized, issued and outstanding capitalization of each of the
Stock Corporations. All outstanding shares of each Stock Corporation
are validly issued, fully paid and nonassessable. To such counsel's
knowledge, none of the Stock Corporations has any other outstanding
securities and no outstanding subscriptions, options, rights,
warrants,
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convertible securities or other agreements or commitments obligating
such corporation to issue or transfer from treasury any additional
shares of its capital stock of any class;
(iii) CRSS has full power and authority to make, execute,
deliver and perform this Agreement; this Agreement and the
consummation of the transaction contemplated hereby have been duly
authorized and approved by all requisite corporate action; and except
insofar as enforcement thereof may be limited by bankruptcy,
insolvency and other laws of general application affecting the
enforcement of creditors' rights and except as equitable remedies may
not be available in certain circumstances, this Agreement constitutes
the valid and legally binding obligation of CRSS, enforceable in
accordance with its terms;
(iv) Neither the execution nor the delivery of this
Agreement nor the consummation of the transactions contemplated in
this Agreement will constitute a default, or an event that would with
notice or lapse of time or both constitute a default under, or
violation or breach of the articles of incorporation or bylaws of the
Corporations;
(v) No authorization, consent or approval of any
regulatory authority of the United States federal government or the
government of the State of Texas (other than matters pertaining to
contractor's, engineers' and similar professional licenses and other
than in connection with the transfer of any Customer Contract to which
either such government is a party), is necessary in connection with
the consummation of the transactions contemplated by this Agreement
except for compliance with the H-S-R Act;
(vi) The agreements and instruments of conveyance,
transfer and assignment executed and delivered by CRSS or any CRSS
Subsidiary to Jacobs under this Agreement at the Closing are duly and
properly authorized, executed and delivered and are binding and
effective in accordance with their terms except insofar as enforcement
thereof may be limited by bankruptcy, insolvency and other laws of
general application affecting the enforcement of creditors' rights and
except as equitable remedies may not be available in certain
circumstances; and
(vii) Except as may be set forth in Exhibit 3.18 to this
Agreement, such counsel does not know of any suit, action,
arbitration, or legal, administrative, or other proceeding or
governmental investigation pending against any of the Corporations.
In rendering their opinions, such counsel may rely on certificates of
governmental authorities and as to factual matters on the representations and
warranties of CRSS contained
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herein, certificates of officers of CRSS and on opinions of associate counsel
satisfactory to Jacobs, which may include Frank Perrone, general counsel of
CRSS. The phrases "to such counsel's knowledge", "counsel's attention", "such
counsel does not know", or phrases of similar import are intended to signify
that during the course of such counsel's representation of the CRSS Companies
and without independent investigation, counsel has no knowledge of facts
contrary to the opinion given. Such opinion may contain assumptions,
limitations and exclusions customarily included in opinions of this kind.
8.6 Corporate Approvals. The execution and delivery of this
Agreement by CRSS and the performance of this Agreement shall have been duly
authorized by all necessary corporate action of CRSS and the CRSS Subsidiaries,
and Jacobs shall have received copies of all resolutions pertaining to that
authorization, certified by the secretary of each of such corporations.
8.7 Consents. Jacobs shall have been reasonably satisfied with the
extent to which the necessary agreements and consents to the consummation of
the transactions contemplated by this Agreement, or otherwise pertaining to the
matters covered by it, shall have been obtained by the appropriate CRSS Company
and delivered to Jacobs.
8.8 Deadline. The Closing of the transaction contemplated by this
Agreement shall have taken place on or before July 31, 1994.
8.9 Form and Substance of Documents. The form and substance of all
certificates, instruments, opinions and other documents delivered to Jacobs
under this Agreement shall be reasonably satisfactory to Jacobs and its
counsel.
8.10 (Intentionally Omitted.)
8.11 Financial Condition. Jacobs shall have received from Ernst &
Young, a letter, prepared at Jacobs' expense, dated the Closing Date and
addressed to the Board of Directors of Jacobs, stating that on the basis of the
results of certain agreed-upon procedures (not constituting an audit) performed
on the latest available accounting records of the Corporations, which will
include consultations with officers of the CRSS Companies responsible for
financial and accounting matters and other pertinent inquiries that such
accountants may deem necessary, such accountants have no reason to believe that
during the period from March 31, 1994 to a specified date not more than five
business days before the Closing Date there was any change in the financial
condition or results of operations of the respective Corporations except for
changes that have occurred in the ordinary and usual course of their respective
businesses during that period.
8.12 Covenant not to Compete. Jacobs and CRSS shall
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have executed and delivered an Agreement in the form of Annex III, which is
attached hereto and hereby made a part hereof, pursuant to which CRSS shall
agree for itself and the CRSS Subsidiaries that they will not, for a period of
five years from the Closing Date, engage in the lines of business in the
respective geographical areas in which the Business to be Acquired engaged at
any time within five years prior to the Closing Date, except that CRSS and any
CRSS Subsidiary shall not be prohibited from providing design, engineering,
construction management or other services as owner's engineer to CRSS, any
Affiliate of CRSS or any other entity in which CRSS has a direct or indirect
ownership interest of at least 15%.
8.13 Confidentiality Agreements. All confidentiality agreements
entered into by CRSS with potential buyers of the Business to be Acquired shall
have been assigned to Jacobs, and CRSS shall have requested that all
confidential material furnished by CRSS to such potential buyers be returned to
CRSS or destroyed.
ARTICLE NINE: CONDITIONS PRECEDENT TO PERFORMANCE BY CRSS
The obligations of CRSS to consummate the transactions contemplated by
this Agreement are subject to the satisfaction on the Closing Date of all the
following conditions:
9.1 Warranties and Representations. All representations and
warranties by Jacobs contained in this Agreement or in any written statement
delivered by Jacobs under this Agreement shall be true on and as of the Closing
Date as though such representations and warranties were made on and as of that
date.
9.2 Covenants. Jacobs shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or before the Closing Date.
9.3 Officers' Certificates. Each of the Corporations shall have
received a certificate, dated the Closing Date, signed by the president or any
vice president and the chief financial officer of Jacobs, respectively,
certifying that the conditions specified in paragraphs 9.1, 9.2 and 9.6 have
been fulfilled.
9.4 Opinion of Counsel. Jacobs shall have furnished each
Corporation with an opinion, dated the Closing Date, of Barton, Klugman &
Oetting, counsel for Jacobs, in form and substance satisfactory to CRSS and its
counsel, to the effect that:
(i) Jacobs is a corporation duly incorporated, existing,
and in good standing under the laws of the State of Delaware and has
all requisite corporate power to perform its obligations under this
Agreement;
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(ii) Jacobs has full power and authority to make, execute,
perform and deliver this Agreement, and all corporate proceedings
required by law or by the provisions of this Agreement to be taken by
Jacobs on or before the Closing Date in connection with the execution
and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly and validly
taken;
(iii) Every consent, approval, authorization, or order of
any court or governmental agency or body that is required for the
execution and delivery of this Agreement, or the consummation by
Jacobs of the transactions contemplated by this Agreement has been
obtained and will be in effect on the Closing Date;
(iv) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement will
not violate or contravene any of the provisions of any charter, bylaws
or resolution of Jacobs or of any indenture, agreement, judgment or
order to which Jacobs is a party or by which Jacobs is bound; and
(v) This Agreement and the agreements and instruments of
assumption, conveyance, transfer and assignment executed and delivered
by Jacobs to the CRSS Companies under this Agreement at the Closing
are duly and properly authorized, executed and delivered and are
binding and effective in accordance with their terms except insofar as
enforcement thereof may be limited by bankruptcy, insolvency and other
laws of general application affecting the enforcement of creditors'
rights and except as equitable remedies may not be available in
certain circumstances.
In rendering their opinions, counsel for Jacobs may rely on certificates of
governmental authorities and on opinions of associate counsel reasonably
acceptable to CRSS.
9.5 Deadline. The Closing of the transaction contemplated by this
Agreement shall have taken place on or before July 31, 1994.
9.6 Corporate Approvals. The execution and delivery of this
Agreement by Jacobs, and the performance of its covenants and obligations under
it, shall have been duly authorized by all necessary corporate action, and CRSS
shall have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Jacobs.
9.7 Satisfaction of CRSS. The form and substance of all
certificates, instruments, opinions and other documents delivered to CRSS under
this Agreement shall be satisfactory in all reasonable respects to CRSS and its
counsel.
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ARTICLE TEN: THE CLOSING
10.1 Deliveries by the Corporations. At the Closing CRSS shall
deliver or cause to be delivered to Jacobs:
(i) The documents referred to in Article Eight hereof or
evidence reasonably satisfactory to Jacobs and its counsel that each
condition referred to therein has been satisfied;
(ii) The Bill of Sale of CRSS on behalf of itself and its
Affiliates in the form set forth in Annex I to this Agreement;
(iii) Certificates evidencing all of the issued and
outstanding stock of Constructors, International, and New York duly
endorsed for transfer to Jacobs, which shall transfer good title to
such stock to Jacobs;
(iv) The resignations of all of the officers and directors
of Constructors, International and New York and resignations of all
persons who will become employees of Jacobs or a Subsidiary of Jacobs
at Closing from all such positions as they may hold as officers or
directors of CRSS or any of its Affiliates;
(v) The stock books, stock ledgers, minute books and
corporate seals of Constructors, International, and New York;
(vi) Subject to Section 11.4, Assignments to Jacobs of all
Leases, Personal Property Leases and Ancillary Contracts (other than
Leases, Personal Property Leases and Ancillary Contracts to which
Constructors, International or New York are party) properly executed
and acknowledged by the CRSS Affiliate that is a party thereto and
accompanied by all consents of all other parties thereto whose
consents to assign have been obtained as of the Closing Date;
(vii) Subject to Section 11.4, Assignments to Jacobs of all
Assumed Contracts properly executed and acknowledged by the CRSS
Affiliate that is a party thereto, accompanied by all consents to such
assignment of the other party or parties that have been obtained as of
the Closing Date to each Assumed Contract requiring such consent;
(viii) A Service Mark License Agreement in the form attached
hereto as Annex IV;
(ix) All consents to changes in ownership required by any
Contracts to which Constructors, International or New York are party
that have been obtained as of the Closing Date; and
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(x) All such other documents, instruments and writings
required to be delivered by any of the CRSS Companies pursuant to this
Agreement, reasonably required to convey to Jacobs good and
indefeasible title to the Business to be Acquired or otherwise
required in connection herewith.
Each of the CRSS Companies shall, at or after the Closing Date,
execute, acknowledge and deliver any further deeds, assignments, conveyances
and other assurances, documents and instruments of transfer reasonably
requested by Jacobs and shall take any other action consistent with the terms
of this Agreement that may be reasonably requested by Jacobs for the purpose of
assigning, transferring, granting, conveying and confirming to Jacobs, or
reducing to Jacobs' possession, any or all of the Business to be Acquired.
10.2 Deliveries by Jacobs. At the Closing Jacobs shall deliver or
cause to be delivered to CRSS, the following:
(i) The amount equal to the Preliminary Net Asset Value
(as determined in accordance with Section 2.2(i)), plus
$14,000,000.00, payable in immediately available funds;
(ii) The documents referred to in Article Nine hereof or
evidence reasonably satisfactory to counsel for CRSS that each
condition referred to therein has been satisfied;
(iii) The assumption by Jacobs or a Jacobs Subsidiary by
its execution and delivery to CRSS and its Subsidiaries of an
Assumption Agreement in the form of Annex II attached hereto of all of
the rights and obligations of CRSS and its Subsidiaries under the
Assumed Contracts, the Leases, Personal Property Leases and Ancillary
Contracts to which CRSS or any of its Subsidiaries is a party or that
are to be assigned to Jacobs pursuant to Section 10.1, and all the
liabilities and obligations of the Business to be Acquired other than
the Retained Liabilities.
(iv) The Service Mark License Agreement attached hereto as
Annex IV;
(v) Appropriate instruments of transfer to convey the
Retained Assets to CRSS; and
(vi) All other documents, instruments and writings
required to be delivered by Jacobs to CRSS pursuant to this Agreement
or otherwise required in connection herewith.
Jacobs shall, at or after the Closing Date, execute, acknowledge and
deliver any further assignments, conveyances and other assurances, documents
and instruments reasonably requested by CRSS and shall take any other action
consistent with the terms of this Agreement that may be reasonably requested by
CRSS for
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the purpose of carrying out the intent and purpose of this Agreement.
10.3 Other Deliveries at Closing. The parties shall deliver the
contracts, documents and instruments required to be delivered at Closing by
Article Seven hereof.
10.4 Concurrent Deliveries. All documents and instruments to be
delivered at the Closing shall be regarded as having been delivered
concurrently, and no document or instrument shall be regarded as having been
delivered until all have been delivered.
ARTICLE ELEVEN: OBLIGATIONS OF THE PARTIES AFTER CLOSING
The provisions of this Article Eleven shall apply from and after the
Closing Date:
11.1 Adjustments for At Risk Contracts.
(i) Jacobs has designated certain contracts to which the
Corporations are party as "At Risk Contracts". The At Risk Contracts
are listed on Annex VI, which is attached hereto and hereby made a
part hereof. Notwithstanding anything to the contrary in this
Agreement, this Section 11.1 shall provide the sole and exclusive
remedy of the parties for any matter that affects Margin Improvement
or Margin Deterioration; to the extent that a claim of a third party
results in Liabilities that do not affect Margin Improvement or Margin
Deterioration, such Liabilities shall be subject to indemnification
under Article Twelve to the extent provided therein.
(ii) Jacobs and CRSS shall share the risk of any "Margin
Improvement" or "Margin Deterioration" in the At Risk Contracts as
hereinafter set forth.
(iii) For the purpose of this Section 11.1:
(a) "Margin Improvement" shall mean any increase
in the gross margin of a project at final completion over the
sum of the gross margin recognized for such project in the
Closing Date Consolidating Balance Sheet plus the Closing Date
Future Gross Margin for such project; and
(b) "Margin Deterioration" shall mean any
reduction in the gross margin (including negative gross
margin) of a project at final completion over the sum of the
gross margin recognized for such project in the Closing Date
Consolidating Balance Sheet plus the Closing Date Future Gross
Margin for such project.
(c) For purposes of this Section, gross
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margin shall be determined in a manner consistent with CRSS'
past practice.
(iv) The Margin Improvement and Margin Deterioration on
each At Risk Contract shall be added, or subtracted, as appropriate,
to obtain the Aggregate Margin Improvement or Deterioration, as the
case may be.
(v) (a) Jacobs shall bear the risk of the first
$1,000,000 of Aggregate Margin Deterioration; Jacobs and CRSS shall
each bear 50% of the Aggregate Margin Deterioration in excess of
$1,000,000 up to $4,000,000, and CRSS shall bear all of the risk of
any Aggregate Margin Deterioration in excess of $4,000,000.
(b) Jacobs shall receive the full benefit of the
first $1,000,000 of Aggregate Margin Improvement; Jacobs and
CRSS shall each receive 50% of the benefit of the Aggregate
Margin Improvement in excess of $1,000,000 up to $4,000,000,
and CRSS shall receive all of the benefit of Aggregate Margin
Improvement in excess of $4,000,000.
(vi) Jacobs and CRSS shall account to each other on each
anniversary of the Closing Date with respect to the Aggregate Margin
Improvement or Deterioration on all At Risk Contracts, and the Party
determined to owe the other party with respect thereto shall pay the
amount owed within 30 days thereafter.
(vii) In managing the At Risk Contracts after Closing,
Jacobs shall manage the At Risk Contracts in a good, workmanlike and
timely manner in accordance with the terms and conditions of such At
Risk Contracts, and in accordance with prudent practice and industry
standards. After the Closing, Jacobs shall use commercially reasonable
efforts to keep the project management and completion bonuses on each
At Risk Contract in place until completion, but Jacobs may, in its
reasonable discretion, change or alter any or all of such project
management if such changes or alterations are made in good faith and
would not reasonably be expected to materially and adversely affect
the gross margin on the At Risk Contract.
(viii) Annex VI, which is attached hereto and hereby made a
part hereof, contains a schedule of the forecasts of future gross
margins on each of the At Risk Contracts as reflected on the Profit
Plan per the Project Planning System or the Project Briefing Cost
Summary Report (such report or plan being referred to as a "Profit
Plan") for each At Risk Contract as of June 30, 1994. Contemporaneous
with the delivery to Jacobs of the Closing Date Consolidating Balance
Sheet, CRSS shall deliver to
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Jacobs a schedule of the forecast of future gross margin on each of
the At Risk Contracts as of the Closing Date (the "Closing Date Future
Gross Margin"), which Closing Date Future Gross Margins shall be
prepared consistent with the Closing Date Consolidating Balance Sheet.
(ix) Jacobs will provide CRSS on a quarterly basis a
report on the status of each At Risk Contract indicating the Margin
Improvement and Margin Deterioration, as well as the gross margin then
recognized for each At Risk Contract and the forecast of future gross
margin with respect to each At Risk Contract. CRSS and its
representatives may examine at their sole cost and expense Jacobs'
records with respect to the At Risk Contracts pursuant to Section 11.7
and may confer with the Project Manager assigned to such project at
any time, including without limitation if CRSS disputes Jacobs'
accounting for any At Risk Contract.
(x) The parties agree that if the AMD Contract referred
on Annex V is ultimately determined not to be guaranteed maximum price
contract as of the Closing Date, it will not be treated as an At Risk
Contract under this Agreement. Jacobs agrees that it will not enter
into any oral or written amendment, modification, restatement or other
evidence of the AMD Contract without the prior written consent of
CRSS.
11.2 Trade Names. After the Closing Date Jacobs shall have the
exclusive right, as between Jacobs and CRSS, to use the trade names and
logotypes listed on Annex VII hereto, which is attached hereto and hereby made
a part hereof, and neither CRSS nor any CRSS Subsidiary shall employ the same,
directly or indirectly, as a trade name, service mark, trademark or business or
corporate name and shall cause the CRSS Subsidiaries using the same, including
without limiting the generality of the foregoing, Engineers, to change their
corporate and trade names to names not using such trade names and to cease
using such logotypes. After the Closing, and solely in connection with the
Business to be Acquired, as Jacobs may hereafter expand the same, Jacobs shall
have the non-exclusive right and license to use the CRSS logotype and service
mark consisting of the letters "CRSS" in a block in close proximity to the
Jacobs name or service mark, and shall have the right to use all existing
stationery, brochures or other papers bearing the CRSS service mark, subject to
the reasonable requirements of CRSS, until the earlier of July 31, 1995 or the
date on which supplies thereof are exhausted. CRSS expressly disclaims any
warranty that it has the right to grant exclusive rights to any of the
foregoing trade names, logotypes or service mark.
11.3 Confidential Information.
(i) CRSS shall not, and shall cause the CRSS
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Subsidiaries not to, divulge, communicate, or use to the detriment of
Jacobs or for the benefit of any other Person or Persons, or misuse in
any way, any confidential information or trade secrets of any of the
Corporations including personnel information, secret processes,
know-how, customer lists, receipts, formulas or other Intellectual
Property.
(ii) Jacobs shall not, and shall cause its Subsidiaries
not to, divulge, communicate, or use to the detriment of CRSS or its
Subsidiaries or for the benefit of any other Person or Persons, or
misuse in any way, any confidential information or trade secrets of
CRSS or its Subsidiaries not relating to the Business to be Acquired
that it shall have learned in the course of its investigation of the
Business to be Acquired, including personnel information, secret
processes, know-how, customer lists, receipts, formulas or other
Intellectual Property.
11.4 Performance of Certain Contracts After Closing.
(i) With respect to Contracts that cannot by their terms
be assigned or for which consent to assignment has not been obtained
or the performance of which requires Jacobs to obtain professional
licenses that will not be obtained for some time after the Closing,
Jacobs and the CRSS Companies agree that until such consents or
licenses are obtained or such contracts are completed:
(a) Such Contracts shall be performed in the name
of the Affiliate of CRSS that is a party thereto (the
"Corporate Party") at the expense of and under the direction,
and by the employees, of Jacobs.
(b) Jacobs shall on behalf of the Corporate Party
continue to conduct all dealings with the other contracting
parties in the name of the Corporate Party, shall issue all
billings in the name of the Corporate Party and shall collect
all payments.
(c) Jacobs shall furnish all such personnel,
equipment and facilities as may be required to complete such
Contracts and shall reimburse the Corporate Party for its
reasonable expenses in carrying out its obligations thereunder
and shall indemnify the Corporate Party with respect thereto
in the manner and to the extent provided in Section 12.2.
(d) Each party shall account to the other party
with respect to such contracts promptly on an ongoing basis
during the performance of the contract.
(e) This Agreement shall not constitute an
agreement to assign any such Contracts, and such Contracts
shall not be assigned to Jacobs until all such consents and/or
licenses are obtained.
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(f) Amendments of, or expansion of services
relating to, any of such Contracts on or after the date hereof
will be entered into by, and be the total responsibility of,
Jacobs.
(g) CRSS and Jacobs shall execute any and all
additional documents and take additional measures reasonably
required by each other further to effectuate the foregoing.
(ii) For any work that needs to be performed on any
Completed Contract after the Closing Date, Jacobs shall provide to
CRSS the necessary resources for CRSS to perform such work in
accordance with Annex VI (Services Agreement) attached hereto.
11.5 Hiring of Employees of the Corporations.
(i) Effective immediately after Closing all persons who
are employees of the Asset Corporations at the time of Closing (other
than Steve Williams) shall be deemed to have been terminated by CRSS
and its Subsidiaries. Effective immediately after Closing all persons
who are employed by an Asset Corporation (other than Steve Williams)
shall be hired by Jacobs or a subsidiary of Jacobs, and Jacobs shall
be deemed to have hired the employees of the Stock Corporations. To
the extent permitted under all benefit plans and policies of Jacobs,
any eligibility waiting periods imposed by such plans and policies
shall be deemed to have been waived, and such employees shall receive
credit for their service with CRSS and the CRSS Subsidiaries by which
they were employed for the purpose of determining any participation
and/or vesting rights under such plans and policies including any
severance and vacation plans.
(ii) For a period of two years following Closing neither
CRSS nor any of its Affiliates shall directly or indirectly solicit
any former employee of a Corporation who is an employee of Jacobs to
terminate his or her employment with Jacobs.
11.6 Certified Financial Statements of the Corporations. CRSS
shall, at the sole cost and expense of Jacobs, deliver to Jacobs within 45 days
after Closing balance sheets of the Business to be Acquired at June 30, 1994
and 1993, together with the related statements of income, cash flows and
shareholders' equity of the Business to be Acquired for each of the two fiscal
years then ended, together with the related notes thereto, certified without
qualification by Ernst & Young, independent public accountants.
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11.7 Maintenance of Books and Records. CRSS and the CRSS
Subsidiaries (and their respective successors and assigns) and Jacobs and its
Affiliates shall preserve until the tenth anniversary of the Closing Date all
records possessed or to be possessed by such party relating to the Business to
be Acquired, the Corporations, and, without limiting the generality of the
foregoing, the Assumed Contracts and the Continuing Contracts. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (i) the officers and employees
of such party and (ii) the books of account and records of such party, but, in
each case, only to the extent relating to the Business to be Acquired,
including the Assumed Contracts and the Continuing Contracts, and the other
parties and their representatives shall have the right to make copies of such
books and records; provided, however, that the foregoing right of access shall
not be exercisable in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further, provided, that, as
to so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party and its officers,
directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes
generally known to competitors of such party, through sources other than the
requesting party, its affiliates or its officers, directors or representatives.
Such records may nevertheless be destroyed by a party if such party sends to
the other parties written notice of its intent to destroy records, specifying
with particularity the contents of the records to be destroyed. Such records
may then be destroyed after the 30th day after such notice is given unless
another party objects to the destruction in which case the party seeking to
destroy the records shall deliver such records to the objecting party.
11.8 Payments Received.
(i) CRSS and Jacobs each agree that after the Closing
each of them shall hold and will promptly transfer and deliver to the
other, from time to time as and when received, any cash, checks with
appropriate endorsements (using their best efforts not to convert such
checks into cash), or other property that they or their Subsidiaries
may receive on or after the Closing that properly belongs to the other
party, and will account to the other for all such receipts. From and
after the Closing, Jacobs shall have the right and authority to
endorse without recourse the name of the named payee on any check or
any other evidences of indebtedness received by Jacobs on account of
the business and the assets transferred to Jacobs hereunder.
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(ii) Any payments made by Jacobs that are not payments or
obligations of the Business to be Acquired shall be reimbursed by CRSS
to Jacobs upon presentation of documentation.
(iii) Any payments made by CRSS that are payments or
obligations of the Business to be Acquired shall be reimbursed by
Jacobs to CRSS upon presentation of documentation.
11.9 Further Assurances of CRSS. In order to carry out the
conveyances, transfers and assignments contemplated by this Agreement, CRSS
shall execute and deliver to Jacobs on the Closing Date all such deeds, bills
of sale, assignments and other documents and instruments of conveyance,
transfer or assignment as shall be necessary or appropriate to vest in or
confirm to Jacobs good, valid and indefeasible title, free of any liens or
encumbrances other than those listed in Exhibit 3.13, to all of the properties,
assets, good will and business comprising the Business to be Acquired,
transferred and assigned to Jacobs under this Agreement, all of which documents
shall be in form and substance reasonably satisfactory to Jacobs and its legal
counsel. Subsequent to the Closing Date CRSS shall and shall cause the CRSS
Subsidiaries to use commercially reasonable efforts (not involving the payment
of consideration) to obtain such consents, subject to the obligations of the
Parties pursuant to Section 11.4 hereof, as may be reasonably necessary or
appropriate in order to vest in and confirm to Jacobs good, valid and
indefeasible title to, and the right to use, free of any liens or encumbrances,
except for liens and encumbrances described in Section 3.13, the properties,
assets, goodwill and business of the Corporations herein comprising the
Business to be Acquired and the Contracts to be assigned to Jacobs pursuant to
this Agreement.
11.10 Further Assurances of Jacobs.
(i) Jacobs shall use commercially reasonable efforts to
assist CRSS in obtaining all consents required to the assignment of
any Contracts to be assigned to Jacobs hereunder and consents to
changes of ownership with respect to contracts held by the Stock
Corporations.
(ii) Promptly following the Closing and in any event
within 30 days thereafter, Jacobs shall commence commercially
reasonable efforts to obtain the release of CRSS and the CRSS
Subsidiaries from any bonds, letters of credit and guarantees
pertaining to any Assumed Contracts or Continuing Contracts and from
any guaranties of any Assumed Contracts, Continuing Contracts, Leases,
Personal Property Leases, and Ancillary Contracts (the "Existing
Bonds, Letters of Credit and Guarantees"), including obtaining or
providing replacement bonds, letters of credit and guarantees in
Jacobs' own name.
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11.11 Insurance Coverage. CRSS shall arrange to have the casualty,
professional errors and omissions and directors' and officers' liability
insurance policies listed on Exhibit 3.14 provide coverage to CRSS for all
occurrences prior to Closing for which claims are made on or before June 30,
1995. CRSS shall also seek to have Jacobs, its subsidiaries and their
successors named as additional insureds, provided that the issuers of such
policies agree to such an endorsement and such endorsement can be obtained by
CRSS at no more than nominal additional cost. If the cost of such coverage of
Jacobs is more than a nominal amount, then Jacobs may elect to pay for such
coverage, in which event CRSS shall procure such coverage at Jacobs' cost. CRSS
shall promptly furnish Jacobs evidence of such coverage when it is obtained.
11.12 Liabilities Not to be Assumed by Jacobs.
Except as otherwise provided in this Agreement, Jacobs shall not
assume the Liabilities and obligations of CRSS or its Affiliates or their
predecessors in interest listed below (the "Retained Liabilities"), all of
which Retained Liabilities shall be and continue to be the liabilities and
obligations of CRSS and its Affiliates after the Closing Date:
(i) Liabilities of CRSS and its Subsidiaries, if any,
arising out of the transactions contemplated by this Agreement or
incurred in respect of any transaction occurring after the Closing
Date or attributable to the transfer of stock and assets hereunder,
the liquidation and dissolution of Engineers or any other Subsidiary
of CRSS or the distribution of its assets to its or their
shareholders;
(ii) Liabilities, if any, including attorneys' fees and
other expenses incurred by CRSS or any of its Affiliates in connection
therewith, on account of any lawsuit, action, arbitration or legal,
administrative or other proceeding or governmental investigation to
which any one or more of them is a party on or before the Closing
Date;
(iii) Liabilities or obligations of CRSS or any of its
Affiliates with respect to any employment contracts (to the extent not
reflected on the Closing Date Consolidating Balance Sheet), employee
benefit plans (including vacation plans, to the extent not accrued on
the Closing Date Consolidating Balance Sheet), employee stock purchase
plans, employee stock options, or other contracts or undertakings with
or for the benefit of the employees of CRSS or any of its Affiliates;
and
(iv) Without limiting any mitigation obligation of Jacobs
under Section 12.1. hereof, any Liability or obligation that may
arise, result from, or relate to the following:
(a) Any Completed Contract or Power Plant
Contract;
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(b) Any Liabilities associated with the Retained
Assets;
(c) Claims for injury to or death of any Person
or damage to property relating to the business, operations or
assets of CRSS or any Affiliate of CRSS or any subcontractor
or supplier, regardless of tier, of any of them (including
employee claims) to the extent the proximate cause was an act
or omission that shall have occurred prior to Closing;
(d) Warranty claims, and claims for failure to
perform warranty claims, for negligence in the performance of
or misfeasance in the performance of any contract or
undertaking of CRSS, any Affiliate of CRSS or any
subcontractor or supplier, regardless of tier, or any of them,
the proximate cause of which was acts or omissions that shall
have occurred prior to Closing;
(e) The termination of employment by CRSS or any
of its Affiliates of any employee prior to or at Closing,
whether or not such employee is hired by Jacobs, including but
not limited to claims arising on or prior to the Closing Date
for breach of any employment contract, accrued vacation,
pension or other retirement benefits, wages, and medical, life
insurance or disability benefit, except to the extent accrued
on the Closing Date Consolidating Balance Sheet and including
obligations to Dave Bassett under his employment agreement;
(f) Claims under the Equal Employment Opportunity
Act, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, as
amended, the Worker Adjustment and Retraining Notification
Act, ERISA, the Davis Bacon Act, the Miller Act, the Service
Contract Act, or other like federal and state legislation
against CRSS or any of its Affiliates to the extent
proximately caused by acts or omissions that occurred prior to
Closing;
(g) Any claim for any federal, state or local
taxes of any sort or kind, not accrued in the Closing Date
Consolidating Balance Sheet arising from the business,
property, assets or operations of CRSS or any of its
Affiliates or from their performance of this Agreement;
(h) Any claims related to the withdrawal of CRSS
or any of its Affiliates from any employee stock purchase,
pension, profit-sharing or other employee
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benefit plan maintained by them or any of them or by any
union, provided that such claims arise from acts, omissions or
transactions occurring prior to or at Closing or as a result
of this Agreement; and
(i) Any Liability or penalty imposed by the
federal or any state or local governmental body related to a
Customer Contract with such body and proximately caused by
acts or omissions that shall have occurred prior to Closing.
ARTICLE TWELVE: INDEMNIFICATION
12.1 General Indemnification Obligation of CRSS. From and after the
Closing, CRSS shall defend, indemnify and hold harmless Jacobs and its
Affiliates, successors and assigns (each of whom is referred to as an
"Indemnified Jacobs Party") against and in respect of:
(i) Any and all Liabilities, asserted by any Person other
than CRSS and its Affiliates or Jacobs and its Affiliates arising from
any acts, errors or omissions of CRSS or any of its Affiliates on or
before the Closing Date in connection with (a) the Completed Contracts
regardless of when performed, and (b) any portion of any of the
Assumed Contracts and the Continuing Contracts performed by CRSS or
any of its Affiliates prior to Closing (a "Third Party Claim"),
whether such Third Party Claim is made against a CRSS Company, Jacobs,
a Corporation, the Business to be Acquired or any Affiliate or
subsidiary of any of the foregoing; provided, however, that with
respect to any Assumed Contract or Continuing Contract the obligation
of CRSS shall apply only to the extent that the actions of CRSS or one
of its Affiliates on or before the Closing Date are shown to be the
proximate cause of such Third Party Claim. With respect to the Assumed
Contracts and the Continuing Contracts, if Jacobs becomes aware of any
Third Party Claim or any facts that would in the ordinary course of
events constitute the basis for a Third Party Claim, then Jacobs shall
take such reasonable action to mitigate such Third Party Claim as is
in accordance with good professional and business practice, and, to
the extent that actions beyond normal mitigation are necessary Jacobs
shall give CRSS notice of such Third Party Claim and provide CRSS
reasonable cooperation in reducing the exposure of CRSS to such Third
Party Claim. Notwithstanding any other provision hereof, this Section
12.1(i) describes all of the indemnification obligations of CRSS under
this Agreement with respect to Third Party Claims relating to Assumed
Contracts and Continuing Contracts and specifically such
indemnification obligations shall not be limited or expanded by any
representations, warranties or covenants herein.
(ii) Any and all Litigation listed in Exhibit 3.18;
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(iii) any and all Retained Liabilities;
(iv) any misrepresentation or breach of warranty or
nonfulfillment of any agreement or covenant on the part of CRSS under
this Agreement; and
(v) any claims of CRSS or any of its Affiliates against
any Corporation.
In determining the total dollar amount of all claims for which the Indemnified
Jacobs Parties are entitled to receive reimbursement pursuant to this Section
12.1 there shall be excluded any claims of $100,000.00, or less, for which
Jacobs would otherwise be entitled to reimbursement, but this limit shall not
exceed a total of $500,000.00 for all such claims.
12.2 General Indemnification Obligation of Jacobs. From and after
the Closing, Jacobs shall defend, indemnify and hold harmless CRSS and the CRSS
Subsidiaries and their successors and assigns (an "Indemnified CRSS Party")
against and in respect of any and all Liabilities incurred or suffered by any
Indemnified CRSS Party that result from, relate to or arise out of:
(i) any and all Liabilities and obligations of the
Business to be Acquired other than the Retained Liabilities;
(ii) any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of Jacobs
under this Agreement;
(iii) any acts, errors or omissions of Jacobs or any
Affiliate or subsidiary of Jacobs after the Closing Date, whether made
against CRSS, Jacobs, the Business to be Acquired or any Affiliate or
subsidiary of any of the foregoing ; provided, however, that, with
regard to any Assumed Contract or Continuing Contract, the obligations
of Jacobs will apply only to the extent that the actions of Jacobs
after the Closing Date are shown to be the proximate cause of such
claims; and
(iv) any Liability under the Existing Bonds, Letters of
Credit and Guarantees to the extent Jacobs has the obligation to
indemnify the Indemnified CRSS Party pursuant to Section 12.2 hereof
with respect to the underlying obligation; and
(v) any claim of any Corporation against CRSS or any of
its Affiliates.
12.3 Method of Asserting Claims, Etc.
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(i) In the event that any claim or demand for which CRSS
would be liable to an Indemnified Jacobs Party hereunder is asserted
against or sought to be collected from an Indemnified Jacobs Party by
a third party, the Indemnified Jacobs Party shall promptly notify CRSS
of such claim or demand, specifying the nature of such claim or demand
and the amount or the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the final amount
of such claim and demand) (the "Claim Notice"). CRSS shall have ten
days from the personal delivery or mailing of the Claim Notice (the
"Notice Period") to notify the Indemnified Jacobs Party, (A) whether
or not it disputes its liability to the Indemnified Jacobs Party
hereunder with respect to such claim or demand and (B) notwithstanding
any such dispute, whether or not CRSS desires, at its sole cost and
expense, to defend the Indemnified Jacobs Party against such claim or
demand. If CRSS does not respond to such notice within the Notice
Period, then CRSS shall be deemed to have disputed its liability.
(ii) If CRSS disputes its liability with respect to such
claim or demand or the amount thereof (whether or not CRSS desires to
defend the Indemnified Jacobs Party against such claim or demand),
such claim or demand shall not be settled without the prior written
consent of the Indemnified Jacobs Party which consent shall not be
unreasonably withheld.
(iii) In the event that CRSS notifies the Indemnified
Jacobs Parties within the Notice Period that it desires to defend the
Indemnified Jacobs Party against such claim or demand, then, except as
hereinafter provided, CRSS shall have the right to defend the
Indemnified Party by appropriate proceedings; provided, however, that
CRSS shall not, without the prior written consent of the Indemnified
Jacobs Party, which consent shall not be unreasonably withheld,
consent to the entry of any judgment against the Indemnified Jacobs
Party or enter into any settlement or compromise that does not
include, as an unconditional term thereof, the giving by the claimant
or plaintiff to the Indemnified Jacobs Party of a release, in form and
substance satisfactory to the Indemnified Jacobs Party, as the case
may be, from all liability in respect of such claim or litigation. If
any Indemnified Jacobs Party desires to participate in, but not
control, any such defense or settlement, it may do so at its sole cost
and expense.
(iv) If any material claim for which CRSS has accepted the
duty of indemnifying an Indemnified Jacobs Party involves a Person
that is or was during the three years immediately preceding the
Closing Date a customer of the Business to be Acquired (a "Customer"),
then CRSS shall not, without first consulting with the Indemnified
Jacobs
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Party, institute any lawsuit or other legal proceeding against any such
Customer.
In addition, and without prejudice to the foregoing, CRSS
shall, in the case of claims by a Customer against CRSS or any of its
Affiliates, permit Jacobs to have the sole right to control the
defense or settlement of such claim (including the sole right to
settle or otherwise terminate the proceedings) in exchange for Jacobs'
agreement to indemnify CRSS and its Affiliates as to such claim in
such manner as CRSS may reasonably require.
In case of a claim by CRSS or any of its Affiliates against a
Customer, CRSS shall assign such claim to Jacobs, if Jacobs so
requests, in return for the payment by Jacobs to CRSS of the amount of
the claim as reasonably determined by CRSS.
(v) In the event an Indemnified Jacobs Party shall have a
claim against CRSS hereunder that does not involve a claim or demand
being asserted against or sought to be collected from it by a third
party, the Indemnified Jacobs Party shall promptly send a Claim Notice
with respect to such claim to CRSS. The foregoing shall not serve to
create any Liability or obligation of CRSS to provide indemnity to an
Indemnified Jacob Party except as expressly provided in Section 12.1.
(vi) All claims for indemnification by an Indemnified CRSS
Party under this Agreement shall be asserted and resolved under the
procedures set forth in this Section 12.3 by substituting in the
appropriate place "Indemnified CRSS Party" for "Indemnified Jacobs
Party" and variations thereof and "Jacobs" for "CRSS".
(vii) In addition to the notice requirements of Section
12.3(i), Jacobs shall use its best efforts to notify CRSS of any
circumstances from which a Third Party Claim may reasonably be
expected to arise with respect to which Jacobs puts its insurance
carrier on notice of such circumstances.
12.4 Compensation for Claims.
(i) Upon a final determination of liability under Section
12.3 hereof whether by agreement of the Parties or by a final judgment
of a court, with all possibilities of appeal having been exhausted,
the Party found liable shall pay to the party to whom indemnification
is awarded within ten days after such determination, the amount so
awarded.
(ii) Upon the payment in full of any claim, the entity
making payment shall be subrogated to the rights of the Indemnified
Party against any Person with respect to the subject matter of such
claim.
12.5 No Waiver of Subrogation. Nothing herein shall be construed as
a waiver of any right of subrogation to which any
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insurance company may be entitled under any insurance policy maintained by
Jacobs or CRSS. Neither Jacobs nor CRSS shall be obligated to make any claim
against any insurance company should it elect not to do so. The indemnification
set forth in Section 12.1 and 12.2 above shall extend to cases of the
indemnitee's concurrent negligence.
12.6 Cooperation of the Parties. Each Party shall give the other
Party its full cooperation in defending all claims by third parties subject to
indemnification hereunder, including furnishing witnesses and documentary
evidence to the extent available.
12.7 Claims Against Former Corporation Employees. If Jacobs makes
any claim against CRSS or any of its Affiliates with respect to any matter or
occurrence arising prior to the Closing, then CRSS shall not, and shall cause
its Affiliates not to, make any claim against any former officer, director or
employee of any of the CRSS Companies who are employed by Jacobs or any
subsidiary of Jacobs following the Closing with respect to such claim of
Jacobs, notwithstanding that CRSS or any of its Affiliates may have placed
reliance upon any such person before entering into this Agreement, but this
Section shall not apply to claims arising from intentional acts or omissions of
such former officers, directors or employees or counterclaims against such
former officers, directors or employees in litigation brought by them.
12.8 Limitation on Indemnification. CRSS shall not be required to
indemnify the Jacobs Indemnified Party hereunder to the extent of the aggregate
contingency reserves as shown on the Closing Date Consolidating Balance Sheet
or, with respect to Assumed Contracts and Continuing Contracts, the contingency
reserves shown on their respective Profits Plans as of the Closing Date, which
Profit Plans shall be consistent with the Closing Date Consolidating Balance
Sheet, and to the extent of such reserves the Jacobs Indemnified Party shall be
deemed not to have suffered any indemnifiable loss.
12.9 Survival of Representations; Time Limitations. Except for the
representations and warranties contained in Sections 3.8, 3.15 and 3.16(i),
which shall survive until two years after the Closing Date, and except for the
representations and warranties contained in Sections 3.18 or 3.27, which shall
survive until four years after the Closing Date, all representations and
warranties made by any party to this Agreement or pursuant hereto shall survive
the Closing hereunder and any investigation at any time made by or on behalf of
any party hereto for a period of twelve months after the Closing Date. CRSS and
Jacobs shall have no liability under this Article Twelve for misrepresentation
or breach of any representation or warranty unless notice of a claim for
indemnity shall have been given to it within the applicable survival period;
provided,
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however, that nothing in this Section shall limit the time during which either
party may bring action for indemnification under Sections 12.1 or 12.2, except
under Sections 12.1(iv) or 12.2(ii).
12.10 Attorneys' Fees. If any legal action or any arbitration or
other proceeding is brought by either party with respect to this Agreement, or
because of an alleged dispute, breach, default, or misrepresentation in
connection with any of the provisions of this Agreement, the court shall award
the successful or prevailing party in addition to any other relief to which it
or they may be entitled, reasonable attorneys' fees and other costs incurred in
that action or proceeding including fees and costs incurred on appeal and in
collecting any judgment, as equitably determined by the court and the court
shall so provide in its judgment.
12.11 Remedies Exclusive. The remedies provided in this Agreement
shall be exclusive and shall preclude the assertion by any party hereto of any
other rights or the seeking of any other remedies against the other party
hereto; provided, that this Section shall not preclude either party from
asserting that it was fraudulently induced by the other party to enter into
this Agreement or from seeking injunctive relief.
ARTICLE THIRTEEN: COSTS
13.1 Brokers' Commissions. Neither Jacobs nor CRSS knows of any
Person who is entitled to claim a commission or finder's fee with respect to
the transactions contemplated by this Agreement except that CRSS will be
obligated to Merrill Lynch Investment Banking Group for such fees. CRSS on the
one hand and Jacobs on the other hand each agree to indemnify and hold harmless
the other against any loss, liability, damage, cost, claim or expense incurred
by reason of any brokerage commission or finder's fee alleged to be payable
because of any act, omission or statement of the indemnifying party.
13.2 Costs and Expenses. Except as otherwise provided herein each
of the parties shall pay all legal and other fees, costs and expenses incurred
or to be incurred by it in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
ARTICLE FOURTEEN: FORM OF AGREEMENT
14.1 Usage Conventions. The subject headings of the Articles and
Sections of this Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of its provisions;
unless the context otherwise requires, references to the singular include the
plural and vice versa, and references to any gender include all genders.
14.2 Integration.
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(i) This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement,
modification, or amendment of this Agreement shall be binding unless
executed in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
(ii) The Annexes and Exhibits to this Agreement form part
of this Agreement, take effect as if set out in this Agreement;
references to this Agreement shall include the Annexes and Exhibits.
14.3 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14.4 Warranties and Representations. There are no warranties or
representations, expressed or implied, with respect to the Business to be
Acquired or the transactions contemplated hereby except as set forth in this
Agreement.
ARTICLE FIFTEEN: PARTIES
15.1 No Third Party Beneficiaries. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.
15.2 Successors and Assigns. This Agreement shall be binding on and
shall inure to the benefit of the parties to it and their respective heirs,
legal representatives, successors and assigns.
ARTICLE SIXTEEN: GOVERNING LAW
This Agreement shall be governed by, and construed and enforced in
accordance with the laws of the State of Texas, without regard to its choice of
law rules.
ARTICLE SEVENTEEN: NOTICES
Except as otherwise provided herein, all notices and
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other communications hereunder shall be in writing and shall be (i) delivered
personally against written receipt or by facsimile transmission, electronically
confirmed, or tested telex, (ii) mailed by registered or certified mail (return
receipt requested), postage prepaid, or (iii) sent by nationally recognized
overnight courier service, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice; provided
that notices of a change of address shall be effective only upon receipt
thereof):
(i) if to Jacobs, to
Jacobs Engineering Group Inc.
251 South Lake Avenue
Pasadena, California 91101
Attention: Noel G. Watson
with a copy to
Barton, Klugman & Oetting
333 South Grand Avenue, 37th Floor
Los Angeles, California 90071
Attention: David F. Morgan
(ii) if to CRSS, to
CRSS Inc.
1177 West Loop South, Suite 800
Houston, Texas 77021
Attention: Bruce W. Wilkinson
with a copy to
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
3400 Texas Commerce Tower
Houston, Texas 77002
Attention: Gene G. Lewis
Notices and other communications hereunder shall be deemed given when
received except for any notices or other communications sent by registered or
certified mail which shall be deemed given four (4) days after such notice or
communication was deposited in the U.S. mail.
Any party may change its address for purposes of this paragraph by
giving the other parties written notice of the new address in the manner set
forth above.
ARTICLE EIGHTEEN: CONSENT TO JURISDICTION
(i) CRSS AND JACOBS (WHICH TERMS SHALL INCLUDE FOR THE
PURPOSES OF THIS ARTICLE EIGHTEEN ALL OF THEIR RESPECTIVE AFFILIATES)
HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE
COURTS OF THE STATE OF TEXAS LOCATED IN HARRIS COUNTY AND TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AND CRSS AND
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JACOBS HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH COURTS.
TO THE EXTENT PERMITTED BY LAW, EACH OF CRSS AND JACOBS HEREBY WAIVES
AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE,
IN ANY SUCH ACTION OR PROCEEDING THAT IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF SUCH COURTS, THAT THE ACTION OR PROCEEDING IS
BROUGHT IN ANY INCONVENIENT FORUM OR THAT THE VENUE OF THE ACTION OR
PROCEEDING IS IMPROPER; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL
PREVENT EITHER PARTY FROM REMOVING ANY CASE HEREUNDER BROUGHT IN A
STATE COURT TO THE FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
TEXAS. CRSS AND JACOBS AGREE THAT A FINAL JUDGMENT IN ANY 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.
(ii) EACH OF CRSS AND JACOBS IRREVOCABLY CONSENTS TO THE
SERVICE OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS IN ANY
OTHER ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, AT THE
ADDRESSES SET FORTH IN ARTICLE SEVENTEEN HEREOF. IN ADDITION, EACH OF
CRSS AND JACOBS HEREBY APPOINTS CT CORPORATION SYSTEM, 811 DALLAS
AVENUE, HOUSTON, TEXAS 77002, AS ITS AGENT FOR SERVICE OF PROCESS IN
ANY SUCH ACTION OR PROCEEDING. NOTHING IN THIS ARTICLE EIGHTEEN SHALL
AFFECT THE RIGHT OF CRSS OR JACOBS TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it on the day and year first above written.
JACOBS ENGINEERING GROUP INC.
By /s/ NOEL G. WATSON
Name: Noel G. Watson
Title: President/CEO
CRSS INC.
By /s/ BRUCE W. WILKINSON
Name: Bruce W. Wilkinson
Title: CHM/CEO
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