SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. - 20549
_________________________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-12588
_________________________
GILBERT ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2280922
(State of Incorporation) (IRS Employer
Identification No.)
P.O. Box 1498, Reading, Pennsylvania 19603
(Mailing address of principal executive offices) (Zip Code)
(610) 775-5900
(Registrant's telephone number, including area code)
_________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Class A Class B
Number of shares of each class of
common stock outstanding as of
March 31, 1995 (excluding 2,034,571
Class A treasury shares): 5,671,477 1,279,252
<PAGE>
GILBERT ASSOCIATES, INC.
INDEX
Part I. Financial Information Pages
Item I.
Consolidated Condensed Balance Sheets at
March 31, 1995 and December 30, 1994 (unaudited) 3
Consolidated Condensed Statements of Operations for the
three month periods ended March 31, 1995
and April 1, 1994 (unaudited) 4
Consolidated Condensed Statements of Cash Flows
for the three month periods ended March 31, 1995
and April 1, 1994 (unaudited) 5
Notes to Consolidated Condensed Financial Statements 6
Item II.
Management's Discussion and Analysis of Results of
Operations and Financial Condition 7-8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
<PAGE>
Part I. Financial Information
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS Mar. 31, 1995 Dec. 30, 1994
Current assets:
Cash and cash equivalents $ 5,305,000 $ 7,427,000
Accounts receivable, net of allowance
for doubtful accounts of $2,603,000 and
$2,677,000, respectively 29,905,000 33,452,000
Unbilled revenue 21,604,000 19,570,000
Inventories 6,846,000 6,761,000
Deferred income taxes 4,420,000 4,420,000
Other current assets 5,731,000 5,918,000
---------- ----------
Total current assets 73,811,000 77,548,000
---------- ----------
Property, plant and equipment 83,190,000 93,602,000
Less accumulated depreciation and amortization 41,281,000 51,534,000
---------- ----------
41,909,000 42,068,000
Deferred income taxes 1,610,000 1,610,000
Other Assets 2,607,000 2,441,000
Goodwill 23,254,000 23,418,000
------------ ------------
TOTAL ASSETS $143,191,000 $147,085,000
============ ============
See accompanying notes to consolidated condensed financial statements.
<PAGE>
Consolidated Condensed Balance Sheets (continued)
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ - $ 2,000,000
Accounts payable 4,246,000 3,784,000
Salaries and wages 8,361,000 8,239,000
Income taxes 2,212,000 1,496,000
Estimated liability for contract losses 3,716,000 5,272,000
Contractual billings in excess of
recognized revenue 1,859,000 2,474,000
Other accrued liabilities 10,762,000 11,400,000
---------- ----------
Total current liabilities 31,156,000 34,665,000
---------- ----------
Long-term debt 842,000 871,000
Self-insured retention 5,481,000 5,331,000
Other long-term liabilities 6,597,000 6,704,000
Commitments and contingencies - -
Stockholders' equity:
Common stock 8,985,000 8,985,000
Capital in excess of par value 38,673,000 38,707,000
Retained earnings 83,598,000 83,854,000
Treasury stock (32,141,000) (32,032,000)
------------ ------------
Total stockholders' equity 99,115,000 99,514,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $143,191,000 $147,085,000
============ =============
See accompanying notes to consolidated condensed financial statements.
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
Mar. 31, 1995 Apr. 1, 1994
Revenue:
Professional services revenue $ 50,636,000 $ 61,636,000
Communication equipment sales 11,849,000 11,629,000
Other income 2,099,000 1,587,000
---------- ----------
64,584,000 74,852,000
---------- ----------
Costs and expenses:
Professional services costs 39,488,000 47,396,000
Communication equipment costs 7,722,000 7,949,000
Selling, general and administrative
expenses 13,703,000 15,770,000
Depreciation and amortization 1,606,000 1,704,000
Interest expense 46,000 56,000
---------- ----------
62,565,000 72,875,000
Income before provision ---------- ----------
for taxes on income 2,019,000 1,977,000
Provision for taxes on income 885,000 810,000
------------ ------------
Net income $ 1,134,000 $ 1,167,000
============ ============
Per share of common stock:
Net Income $.16 $.17
Cash dividends $.20 $.20
Average number of shares of common
stock outstanding 6,956,124 7,028,261
See accompanying notes to consolidated condensed financial statements.
<PAGE>
GILBERT ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
Mar. 31, 1995 Apr. 1, 1994
Cash flows from operating activities:
Net income $ 1,134,000 $ 1,167,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Items not affecting cash 1,877,000 2,049,000
Changes in current assets and
current liabilities (45,000) (2,491,000)
Other, net (241,000) (486,000)
--------- ----------
Net cash provided by operating activities 2,725,000 239,000
--------- ----------
Cash flows from investing activities:
Payment for acquisition of GENSYS Corporation - (1,500,000)
Payments for property, plant and equipment (1,178,000) (1,270,000)
--------- ---------
Net cash used for investing activities (1,178,000) (2,770,000)
--------- ---------
Cash flows from financing activities:
Payments under note payable (2,000,000) (5,000,000)
Issuance of treasury stock in connection
with stock option, award and
purchase plans 99,000 431,000
Payments to acquire treasury stock (242,000) (520,000)
Cash dividends paid (1,391,000) (1,407,000)
Long-term debt payments (29,000) (286,000)
Other, net (106,000) (412,000)
--------- ---------
Net cash used for financing activities (3,669,000) (7,194,000)
--------- ---------
Net decrease in cash and cash equivalents (2,122,000) (9,725,000)
Cash and cash equivalents at beginning of period 7,427,000 10,716,000
--------- ----------
Cash and cash equivalents at end of period $ 5,305,000 $ 991,000
=========== ===========
Supplemental cash flow disclosures:
Income taxes paid, net of refunds received $ 170,000 $ (449,000)
See accompanying notes to consolidated condensed financial statements.
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The financial statements furnished herein reflect all adjustments
which are, in the opinion of management, necessary for a fair
presentation of financial position and results of operations for the
interim periods. The consolidated condensed statement of cash flow
has been restated to conform with the current period presentation.
2. Net income per share of common stock was determined using the
average number of Class A and Class B shares outstanding. The
effect on net income per share resulting from dilution upon exercise
of outstanding stock options is not material, and therefore is not
shown.
3. During the first quarter of 1994, the company paid the former
stockholders of GENSYS $1,500,000 as part of the April 1, 1991
purchase agreement, which resulted in an increase in goodwill of
$1,360,000, net of an income tax benefit of $140,000.
4. Other accrued liabilities as of March 31, 1995 and December 30, 1994
include a $2,200,000 reserve for costs associated with resolving a
series of claims filed by former employees of a subsidiary which was
closed in 1988. Also included in other accrued liabilities are
accruals relating primarily to health care and workers' compensation
which amounted to $3,530,000 and $3,494,000 at March 31, 1995 and
December 30, 1994, respectively.
5. On March 2, 1995, the company announced that it signed an agreement
in principle to sell its largest subsidiary, Gilbert/Commonwealth,
Inc. (G/C), to The Parsons Corporation for $46,000,000 subject to
certain adjustments. On March 30, 1995, a formal agreement to
purchase G/C was signed. As part of the agreement, the buyer will
sign a 10 year lease for 200,000 square feet of office space from
the company. The agreement is contingent upon a favorable
shareholder vote of the company's Class B shareholders, which is
anticipated to occur late in the second quarter of 1995. Assuming
this transaction is approved by the shareholders, the operations of
G/C beginning April 1, 1995, will be excluded from the company's
results of operations. The company anticipates recognizing a gain,
after income taxes, of approximately $20,000,000 or $2.88 per share.
The purchase price will increase or decrease on a dollar-for-dollar
basis to the extent that the agreed upon stockholders' equity of G/C
as of March 31, 1995 exceeds or is less than $15,000,000.
6. On March 13, 1995, the company announced that the Board of Directors
authorized the repurchase of up to $15,000,000 worth of its common
stock. The repurchases will be made from time to time in the open
market as well as from the company employees. The $15,000,000
program replaces the previously announced $6,000,000 Class A common
stock repurchase program.
<PAGE>
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Net income declined $33,000 and earnings per share decreased by $.01 in
the current quarter as compared to the first quarter of 1994. The
slight decline in earnings relates primarily to lower operating results
within the professional services segment offset in part by improvements
within the communication equipment segment.
The professional services segment reported a 18% decrease in revenue in
the first quarter of 1995 as compared to the same period in 1994. The
decline is primarily due to large decreases in services provided to the
nuclear power industry and public utility clients. The gross profit
percentage decreased from 23% to 22% in the current quarter due
primarily to lower margins realized on services provided to the U. S.
Government.
The communication equipment segment revenue increased 2% in the first
quarter of 1995 as compared to the same period in 1994 due primarily to
higher international sales and increased revenue from the Instrument
Associates, Inc. division. The gross profit percentage increased from
32% in the first quarter of 1994 to 35% in the current quarter. The
increase is due primarily to the benefits realized as a result of
consolidating operations and sales of higher margin products.
Other income increased 32% in the first quarter of 1995 compared to the
same period last year due primarily to higher income derived from a
joint venture within the professional services segment.
Selling, general and administrative expenses declined 13% in the current
quarter compared to the first quarter of 1994. The decline is primarily
due to the lower business activity within the power industry.
Depreciation and amortization decreased 6% in the first quarter of 1995
compared to the same period last year due primarily to lower goodwill
amortization as a result of the 1994 third quarter goodwill write-off.
Income before provision for taxes on income increased 2% in the first
quarter of 1995 compared to the same period in 1994 due primarily to
higher results within the communication equipment segment, which was
offset in part by a decline within the professional services segment.
The effective tax rate increased from 41% to 44% from the first quarter
of 1994 to the first quarter of 1995 due to a higher effective state
income tax rate, which in part is due to limitation in loss carrybacks
and carryforwards in certain jurisdictions.
Working capital decreased $228,000 and cash and cash equivalents
declined $2,122,000 in the first three months of 1995. The decline in
cash and cash equivalents is largely due to the repayment of a note
payable. The company does not anticipate requiring outside long-term financing
during the next year. Amounts generated from operations, combined with
available cash and cash equivalents and short-term lines of credit, should
provide adequate working capital to satisfy operating requirements,
contractual and lease obligations related to the third quarter 1994 charge and
the contingent payment to former IAI principals. The anticipated cash
proceeds from the disposition of Gilbert/Commonwealth, Inc. (G/C), as
discussed in Note 5, will provide enough cash to satisfy the $15,000,000
stock repurchase program as described in Note 6. Unused lines of credit
with three banks aggregating $16,500,000 are also available for short-
term cash needs. No restrictions on cash transfers between the company
and its subsidiaries exist.
Deregulation in the domestic power utility industry, excess power
generation capacity, demand side management programs and aversion to
nuclear power will continue to put downward pressures on the level of
services provided by the company, particularly to nuclear power related
customers, until additional power generation capacity is needed. If
G/C is divested, the company's reliance on the power industry is reduced
greatly, therefore, any future negative impact as a result of changes in
the power market should not be significant to the company.
As described in Note 5, the company has entered into an agreement to
sell G/C, its largest subsidiary. The sale, if approved by the Class B
shareholders, will be effective April 1, 1995. As a result, the
company's results of operations will exclude G/C beginning April 1,
1995. The immediate impact to the company's operations following the
sale of G/C will result in approximately a 37% decline in total revenue
based upon the financial information for the year ended December 30,
1994 and the three months ended March 31, 1995. This considers
additional annual rental revenue of $3,000,000 as a result of the buyer
signing a ten year lease, but excludes any revenue to be derived from
interest income earned on the sale proceeds. Net income may decline
slightly from the first quarter of 1995. This assumes interest income
earned on sale proceeds will partially offset net income derived from
G/C and the corporate overhead expense that it absorbed. It is,
however, difficult to project the impact to net income and earnings per
share given the uncertainties regarding the amount, if any, of
repurchases of common stock and the price per share thereof, operations
of the company's remaining units, the extent to which corporate overhead
expenses are reduced and possible acquisitions. At this time, no
acquisitions are imminent.
After the sale of G/C, the company's primary future focus will be in the
manufacture and sale of communication equipment and professional
services which may complement our existing professional service
businesses. The company, as a result of the sale, has reduced its reliance
on the power market and does not consider this to be an area of major
focus in the future.
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 2. The sales agreement of Gilbert/Commonwealth, Inc.
to the Parsons Corporation
Exhibit 3. By-laws of registrant as currently in effect.
(b) Reports on Form 8-K
The registrant filed Form 8K on March 2, 1995 which
announced that the registrant signed an agreement in
principle to sell its Gilbert/Commonwealth, Inc. subsidiary
to The Parsons Corporation for $46,000,000.
The registrant filed Form 8-K on March 13, 1995 which
announced that the Board of Directors has authorized the
registrant to repurchase up to $15,000,000 worth of its
common stock.
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 by the
undersigned thereunto duly authorized.
GILBERT ASSOCIATES, INC.
Timothy S. Cobb
President, Chief Executive Officer
and Acting Chief Financial Officer
Date: May 12, 1995
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement"), dated as of March 30,
1995, is among The Parsons Corporation, a Delaware corporation
("PARSONS"), Gilbert/Commonwealth, Inc., a Delaware corporation ("G/C"),
and Gilbert Associates, Inc., a Delaware corporation and the holder of
all the outstanding shares of G/C ("SHAREHOLDER").
A. At the date of this Agreement, G/C is authorized to have
outstanding 1,000 common shares, $1.00 par value ("Common Shares"), all
of which are currently outstanding and are owned by SHAREHOLDER.
B. PARSONS and SHAREHOLDER have heretofore entered into an
Agreement in Principle dated March 2, 1995 ("Agreement in Principle"),
which Agreement in Principle contemplates that PARSONS will purchase and
SHAREHOLDER will sell, at the Closing Date (as hereinafter defined), all
of the outstanding Common Shares of G/C for cash in the amount of Forty-
Six Million Dollars ($46,000,000), subject to the terms and provisions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions
hereinafter set forth, PARSONS, G/C and SHAREHOLDER agree as follows:
ARTICLE 1. THE PURCHASE OF COMMON SHARES
1.1. The closing on the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m. on the second
business day after the conditions and obligations set forth in Sections
5.1, 5.2, 6.4 and 6.7 hereof to be satisfied prior to Closing have been
met, or on such other date as may be agreed upon in writing by the
parties (the "Closing Date"), subject to the terms and conditions set
forth in this Agreement, PARSONS agrees to purchase from SHAREHOLDER and
SHAREHOLDER agrees to sell, assign, transfer and convey to PARSONS, all
of the outstanding Common Shares on the terms set forth below. On the
Closing Date, SHAREHOLDER will deliver to PARSONS a certificate or
certificates evidencing all of the outstanding Common Shares, together
with duly executed stock transfer powers relating thereto, against
payment by PARSONS in the amount contemplated by Section 1.2 hereof.
The closing will take place at the offices of G/C, at 10:00 a.m. local
time or at such other time and place as may be agreed upon by the
parties.
1.2. Subject to the terms and conditions set forth in this
Agreement, as payment of the purchase price for the Common Shares,
PARSONS will pay, by wire transfer, to such bank account as SHAREHOLDER
shall advise PARSONS in writing, Forty-Six Million Dollars
($46,000,000). The purchase price shall be adjusted as follows:
1.2.1. As soon as reasonably practical after March 31, 1995,
SHAREHOLDER and G/C shall prepare and deliver to PARSONS an adjusted
consolidated balance sheet of G/C as of March 31, 1995 (the "Adjusted
March Balance Sheet"). Such Adjusted March Balance Sheet shall be
prepared in accordance with generally accepted accounting principles,
except as noted thereon, using the same historic practices, methods and
criteria employed by G/C in connection with its preparation of the
adjusted consolidated balance sheet of G/C as of December 30, 1994, as
reviewed and accepted by PARSONS and attached hereto as Exhibit A (the
"G/C Balance Sheet"), to the extent such practices, methods and criteria
are consistent with generally accepted accounting principles. All
expenses incurred in connection with the preparation of the Adjusted
March Balance Sheet shall be the responsibility of SHAREHOLDER.
1.2.2. The Adjusted March Balance Sheet shall become final and
binding upon the parties unless within 60 days following its submittal
to PARSONS, PARSONS notifies SHAREHOLDER of its objection thereto. If
PARSONS notifies SHAREHOLDER of any objection to the Adjusted March
Balance Sheet, PARSONS, SHAREHOLDER and G/C shall negotiate in good
faith to resolve any differences. If within 30 days following the
receipt of such notice by SHAREHOLDER any of such differences have not
been resolved, they shall be resolved by a certified public accounting
firm mutually acceptable to PARSONS and SHAREHOLDER whose opinion
thereon and the resulting Adjusted March Balance Sheet shall be final,
binding and not subject to any appeal. The fees and expenses of such
certified public accounting firm shall be paid one-half by PARSONS and
one-half by SHAREHOLDER. If resolution is not reached prior to the
Closing Date, a post-Closing Date adjustment to the Purchase Price shall
be made.
1.2.3. After the Adjusted March Balance Sheet has been finally
determined, either (i) the purchase price for the Common Shares shall be
increased, on a dollar-for-dollar basis, by the amount, if any, by which
G/C's Stockholder's Equity as of March 31, 1995, as set forth on the
final Adjusted March Balance Sheet, exceeds $15,000,000, or (ii) the
purchase price for the Common Shares shall be reduced by the amount, if
any, by which $15,000,000 exceeds G/C's Stockholder's Equity as of March
31, 1995, as set forth on the final Adjusted March Balance Sheet, as the
case may be. If the Closing Date does not occur prior to May 1, 1995,
PARSONS agrees to pay interest at the IBOR rate plus 75 basis points,
calculated on the basis of actual days elapsed, on the purchase price,
as adjusted pursuant to this Section 1.2.3, from May 1, 1995 until the
earlier of the Closing Date or the termination of this Agreement in
accordance with its provisions.
1.2.4. Nothing in this Section 1.2 shall preclude any party from
exercising, or shall adversely affect or otherwise limit in any respect
the exercise of, any right or remedy available to it hereunder or
otherwise for any misrepresentation or breach of warranty hereunder, but
neither PARSONS, SHAREHOLDER nor G/C shall have any right to dispute the
Adjusted March Balance Sheet or any portion thereof once it has been
finally determined in accordance with Section 1.2.2 hereof.
1.2.5. The Purchase Price for the Common Shares shall be subject to
further adjustment as set forth in Section 3.1.9.
1.3. SHAREHOLDER shall submit this Agreement to the holders of its
Class B Voting Common Stock (the "Class B Stockholders") for approval at
a special meeting to be held as soon as practicable and will use its
reasonable best efforts to hold such meeting as soon as possible in
accordance with Sections 4.2 and 4.3 hereof.
1.4. SHAREHOLDER represents and warrants that its board of
directors has determined that the sale of the Common Shares pursuant to
this Agreement is fair to and in the best interests of SHAREHOLDER's
stockholders, has approved this Agreement and has resolved to recommend
approval of this Agreement by its stockholders. SHAREHOLDER further
represents and warrants that Dillon, Read & Co. Inc., SHAREHOLDER's
financial advisor, has advised its board of directors that the price to
be paid to SHAREHOLDER for the outstanding Common Shares is fair to
SHAREHOLDER and its stockholders from a financial point of view. In
addition, SHAREHOLDER represents and warrants that, to the best of its
knowledge, each of its directors and executive officers intends to vote
his or her shares of SHAREHOLDER common stock in favor of approval of
this Agreement.
ARTICLE 2. RELATED TRANSACTIONS
2.1. It is understood that the names "Gilbert" and
"Gilbert/Commonwealth" have value in the market place. All rights to
the name, "Gilbert/Commonwealth" will become the property of PARSONS
upon Closing hereunder. After the Closing Date SHAREHOLDER shall have
no continuing right to use the name "Gilbert" in combination with the
word "Commonwealth" and/or the name of PARSONS or any of its affiliates.
SHAREHOLDER shall however, have the continuing right to use the name
"Gilbert" in any combination, other than with the word "Commonwealth"
and/or the name of PARSONS or any of its affiliates, and the
abbreviation "GAI" in the name of its Subsidiary corporation "GAI -
Tronics Inc." and its products and services or any other use.
Additionally, SHAREHOLDER shall have the limited right to use the name,
"Gilbert/Commonwealth" for the 12 months immediately following Closing,
for the sole purpose of allowing a transition period for SHAREHOLDER to
identify itself as the former owner of G/C.
2.2. The parties specifically acknowledge and agree that ownership
of certain real estate, personal property, inter-company note and
intercompany advances and indebtedness and stock in Subsidiary
corporations shall prior to the Closing Date be transferred to the
SHAREHOLDER and shall not be part of the sale to PARSONS contemplated
hereunder, all as more specifically described in Exhibit B hereto.
2.3. SHAREHOLDER shall retain responsibility for certain
liabilities after Closing hereunder, including the TVA Sequoyah Contract
Settlement, liability relative to the Mazur Case, payments under the
Dividend Unit Plan, open window pensions, post retirement life insurance
policies, and post retirement medical benefits to the individuals listed
on Exhibit E all as more specifically described in Exhibit B hereto.
PARSONS shall, however, assume responsibility for any bonds, guarantees
and the like which have been issued or granted by SHAREHOLDER in support
of G/C's operations.
2.4. The parties specifically acknowledge that PARSONS will not be
obligated to become responsible for any existing welfare or retirement
benefit plans in which G/C employees participate. SHAREHOLDER shall be
solely responsible for any expenses associated with the termination of
any such plans not continued by PARSONS subsequent to the Closing Date.
Should PARSONS continue any such welfare benefit plans after the Closing
Date, to the extent that continued participation therein by SHAREHOLDER
and its Subsidiaries can be achieved at no cost to PARSONS, SHAREHOLDER
and its Subsidiaries shall be allowed continued participation.
SHAREHOLDER shall retain participant accounts under the Retirement
Savings Plan for Employees of Gilbert Associates, Inc. and The Gilbert
Associates, Inc. Stock Purchase Program for the benefit of employees of
G/C and the Included Subsidiaries who participated in such plans prior
to the Closing Date and shall continue to administer, modify or
terminate such accounts, at its cost and expense, in accordance with the
terms of the plans.
2.5. The parties specifically acknowledge and agree that G/C and
SHAREHOLDER share many operating facilities and systems. PARSONS hereby
agrees that SHAREHOLDER shall be allowed to share joint use and access
to such facilities and systems for the time periods and under such
arrangements as more specifically described in Exhibit C hereto.
2.6. PARSONS and G/C shall execute a lease agreement,
substantially in the form of Exhibit D hereto, providing for the lease
from SHAREHOLDER of not less than 200,000 square feet of space for a
term of not less than 10 years. Said Lease shall become effective upon
the Closing Date.
2.7. The Parties specifically agree that March 31, 1995 shall be
the date that the Parties shall use to identify the effective transfer
of operations of G/C from SHAREHOLDER to PARSONS (the "Deal Date").
From this date forward, G/C shall be operated for the account of PARSONS
as if the Closing Date had actually occurred.
2.8. PARSONS and SHAREHOLDER will jointly elect to treat the
purchase of the outstanding Common Shares of G/C, and the deemed
purchases of the outstanding stock of Gilbert/Commonwealth of Ohio, a
Ohio corporation, Gilbert Investment Company, a Delaware corporation,
and GAICO Corporation, a Delaware corporation, as a purchase of assets
under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended (the "Code") pursuant to the regulations thereunder, and will
treat each such corporation as a section 338(h)(10) target, and will
each timely file IRS Form 8023 and any other forms required by law or
regulation. Subsequent to the transactions contemplated by this
Agreement, neither PARSONS, G/C or SHAREHOLDER will take any actions
inconsistent with this election. The parties will additionally, after
the Closing, use their best efforts to jointly prepare a schedule
setting forth the fair market value of each category of assets
transferred hereunder in order to allow computation of gain on the sale
and establish the cost of the assets purchased.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
3.1. SHAREHOLDER and G/C, jointly and severally, represent,
warrant and covenant that the following statements and representations
are true and correct.
3.1.1. G/C is a Delaware corporation duly organized, validly
existing and in good standing under the laws thereof. The information
set forth in Recital A to this Agreement is true and correct as of the
date hereof and will be true and correct as of the Closing Date. All of
the outstanding Common Shares are, and will be as of the Closing Date,
duly authorized, validly issued, fully paid and nonassessable, were not
issued in violation of the terms of any agreement or understanding
binding upon G/C and were issued in compliance with all applicable
charter documents of G/C and all applicable federal, state and foreign
securities laws, rules and regulations. There are, and have been, no
preemptive rights with respect to the issuance of the Common Shares or
any other capital shares of G/C.
3.1.2. Except as set forth in the Schedule entitled "Corporate
Data," separately provided to PARSONS prior to the date hereof, (a) G/C
has no Subsidiary corporation and has no interest in any partnership,
firm or corporation; (b) no shareholder, and to the best of
Shareholder's knowledge, no director or officer of G/C or any Subsidiary
(as hereinafter defined) has any interest in any partnership, firm or
corporation, which was or is doing business, directly or indirectly, as
professional engineers, other than shareholder and guardianships
interests of less than one percent of the outstanding shares of publicly
held corporations; (c) each Subsidiary is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and the outstanding shares of capital stock of each such
Subsidiary are duly authorized, validly issued, fully paid and
nonassessable; (d) G/C holds beneficially and of record all of the
issued and outstanding shares of capital stock and the entire voting
power of each Subsidiary; and (e) all shares of capital stock of
Subsidiaries shown to be held beneficially or of record by G/C or one of
its Subsidiaries in the aforementioned Schedule at the Closing Date will
be free and clear of all liens, encumbrances, claims, restrictions and
other charges of every kind except as disclosed on the aforementioned
Schedule. All partnerships, firms or corporations set forth on such
Schedule as subsidiaries are herein collectively referred to as the
"Subsidiaries" and individually referred to as a "Subsidiary."
3.1.3. Except as set forth in the Schedule entitled "Corporate
Data," separately provided to PARSONS prior to the date hereof, neither
SHAREHOLDER, G/C nor any Subsidiary has any commitment or obligation,
either firm or conditional, to issue, sell or purchase, whether under
offers, rights of first refusal, stock option agreements, stock bonus
agreements, warrants, conversion rights, partnership or joint venture
agreements or otherwise, any shares of capital stock or other securities
or interests of G/C or any Subsidiary. SHAREHOLDER has full right,
power and authority to execute and deliver and, subject only to the
requisite approval of its stockholders and compliance with the Hart-
Scott-Rodino Antitrust Improvements Act (the "H-S-R Act"), to perform
this Agreement. This Agreement has been duly executed and delivered by
SHAREHOLDER and constitutes the legal, valid and binding obligation of
SHAREHOLDER and is enforceable against SHAREHOLDER in accordance with
its terms. Except as set forth in such Schedule, SHAREHOLDER has no
claim, either accrued, absolute, contingent or otherwise and whether
known or unknown, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, against G/C or any Subsidiary for
any reason. SHAREHOLDER holds beneficially and of record, and on the
Closing Date will convey to PARSONS, all of the issued and outstanding
shares of capital stock and the entire voting power of G/C, and all
shares of capital stock of G/C are free and clear of all liens,
encumbrances, claims restrictions and other charges of every kind except
as disclosed in the aforementioned Schedule and approved in writing by
PARSONS. All outstanding Common Shares are duly authorized, validly
issued, fully paid and nonassessable and held of record and beneficially
by SHAREHOLDER, free and clear of all liens, encumbrances, claims,
restrictions or other charges of every kind.
3.1.4. G/C and each Subsidiary have power and authority to own
their properties and to carry on their businesses as they are presently
conducted in all jurisdictions in which such businesses are being
conducted. G/C and each Subsidiary are qualified to do business as a
foreign corporation and licensed to do business as professional
engineers in each jurisdiction in which G/C or any such Subsidiary, as
the case may be, is required under applicable laws to be so qualified
and licensed, except where the failure to be so qualified or licensed
would not result in a material liability or disability to G/C and its
Subsidiaries, and G/C and each such Subsidiary are doing business as
professional engineers in such jurisdictions in accordance with the laws
applicable thereto, in all material respects, and in a form of business
entity permitted thereby, and each of the businesses of G/C and each
Subsidiary is currently being conducted in all material respects in
compliance with all applicable laws and other requirements of
governmental authorities, including without limitation Environmental
Laws (as hereinafter defined); labor and safety laws, statutes,
ordinances and regulations; the Foreign Corrupt Practices Act; and the
Export Administration Act.
3.1.5. At the date of the G/C Balance Sheet, there were no material
liabilities, whether absolute, accrued, contingent or otherwise, and
whether due or to become due, that were of a type customarily reflected
in the balance sheets prepared by or on behalf of G/C and notes thereto
and that are not so reflected in the G/C Balance Sheet or notes thereto
and all material liabilities which have arisen since the date of the G/C
Balance Sheet were incurred in the ordinary course of business.
3.1.6. Since the date of the G/C Balance Sheet, (a) G/C and each
Subsidiary has conducted its businesses only in the ordinary and usual
course, and there has been no material adverse change in the condition,
financial or other, of G/C and any of its Subsidiaries, and (b) the
businesses, properties and assets of G/C and the Subsidiaries have not
been materially and adversely affected as the result of any strike,
fire, explosion, earthquake, disaster, accident or other catastrophic
event or casualty. Neither G/C nor any Subsidiary is liable for or
subject to any material liability as of the date hereof except for (i)
those liabilities and obligations adequately and specifically disclosed
on the G/C Balance Sheet and not heretofore paid or discharged; (ii)
those liabilities and obligations arising in the ordinary course of its
business consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this Agreement or
not required to be disclosed thereon because of the term or amount
involved or otherwise; and (iii) those liabilities and obligations
incurred, consistent with its past practice, in the ordinary course of
its business and either not required to be shown on the G/C Balance
Sheet or arising since the date of the G/C Balance Sheet, which
liabilities and obligations in the aggregate are of a character and
magnitude consistent with its past practice.
3.1.7. Except for property acquired or disposed of in the ordinary
course of business since the date of the G/C Balance Sheet, and for
property, real or personal, leased by G/C or any Subsidiary, the G/C
Balance Sheet reflects all of the property owned or leased by G/C and
each Subsidiary in their businesses, and G/C or one or more of its
Subsidiaries has good title, free and clear of any imperfections of
title, lien, claim, encumbrance, restriction, charge or equity of any
nature whatsoever, to all property (real and personal) owned by G/C or
any Subsidiary having a value in excess of $50,000, except for (i) such
assets which are not material to the conduct of the business of G/C or
any Subsidiary; (ii) assets being leased under capitalized leases; (iii)
minor imperfections of title which do not materially restrict the use of
such assets; or (iv) those items disclosed in the Schedule entitled
"Liens" provided separately to PARSONS prior to the date hereof. All of
the tangible properties owned or leased by G/C or any Subsidiary, having
a value in excess of $25,000, are in satisfactory operating condition
except for ordinary wear and tear.
3.1.8. Since the date of the G/C Balance Sheet, except as
contemplated by this Agreement, neither G/C nor any Subsidiary has: (a)
issued any stocks, bonds, notes, or other securities or instruments
convertible into equity securities or warrants, options or other rights
to acquire equity securities; (b) voluntarily incurred any material
obligation or liability (absolute or contingent) except in the ordinary
course of business; (c) discharged or satisfied any lien or encumbrance
or paid any obligation or liability (absolute or contingent) other than
current liabilities shown on the G/C Balance Sheet, current liabilities
incurred since the date of the G/C Balance Sheet in the ordinary course
of business, liabilities shown on the Schedules entitled "Contracts for
Services of G/C" and "Commitments of G/C" attached hereto, and
obligations incurred and due under contracts entered into in the
ordinary course of business; (d) declared or made any payment, dividend,
or distribution to the shareholders or holders of beneficial interest of
G/C or any Subsidiary as such, or purchased or redeemed any of the
capital stock or beneficial interests of G/C or any Subsidiary; (e)
mortgaged, pledged, or subjected to lien or any other encumbrance any of
the assets, tangible or intangible, having a value exceeding $50,000, of
G/C or any Subsidiary, except in connection with surety and bonding
contracts made in the ordinary course of business; (f) sold or
transferred any of the assets of G/C or any Subsidiary except in the
ordinary course of business; (g) suffered any extraordinary damage,
destruction or loss, whether or not covered by insurance, or waived any
right of substantial value; (h) entered into any transactions other than
in the ordinary course of business, except transactions in connection
with the making and performing of this Agreement and transactions
expressly permitted hereby or approved in writing by PARSONS; (i) paid
or committed itself to pay to or for the benefit of any of the
directors, officers, shareholders, holders of beneficial interest or
employees of G/C or any Subsidiary any compensation of any kind other
than wages and salaries at rates then in effect or agreed to in writing
by PARSONS and normal fringe benefits and bonuses paid in the normal
course; (j) made any capital expenditure or capital addition or
betterment except for such as may be involved in the ordinary repair,
maintenance and replacement of their assets; or (k) made or suffered any
amendment to or termination of any material contract or commitment to
which they are or were a party or by which they or any of their
properties are or were bound.
3.1.9. SHAREHOLDER shall be responsible for reporting and paying
all income taxes and all franchise or excise taxes based on income or
net worth of G/C and its Subsidiaries for all periods, partial periods,
and dates ending on or before the Closing Date (collectively, Pre-
closing IFE Taxes or Tax Returns). Any Pre-closing IFE Tax overpayments
shall be refunded to SHAREHOLDER. G/C or its successor shall execute
all documents and take all actions, in each case reasonably necessary to
facilitate SHAREHOLDER's receipt and negotiation of checks refunding
such tax overpayments.
SHAREHOLDER shall be responsible for scheduling, conducting and
resolving all audits, examinations or reviews by taxing authorities of
Pre-closing IFE Tax Returns and waiving or extending the applicable
statutes of limitation with respect to such returns; provided, however,
that SHAREHOLDER shall secure the prior written consent of G/C (which
shall not be unreasonably withheld) before disposing or otherwise
resolving any issues which could affect the tax liability of G/C or any
of its Subsidiaries for any period or partial period after the Closing
Date. G/C or its successors shall provide SHAREHOLDER's designated
employees or other representative and tax auditors reasonable access to
data and information relevant to the preparation and audit of Pre-
closing IFE Tax Returns during normal business hours as long as the
applicable statute of limitation for any such return remains open. Any
amounts owing as the result of such audits shall be the sole
responsibility of SHAREHOLDER.
As an adjustment to the purchase price set forth in Section 1.2
hereof, G/C shall pay SHAREHOLDER within 45 days following the Closing
Date an amount equal to 40% of the pre-tax book income of G/C and its
Subsidiaries (excluding Green Hills Management Company) for the period
commencing April 1, 1995 and ending on the Closing Date (periods of less
than one accounting month will be prorated on a daily basis).
As an adjustment to the purchase price set forth in Section 1.2
hereof, SHAREHOLDER shall pay G/C within 45 days following the Closing
Date an amount equal to 40% of the pre-tax book loss of G/C and its
Subsidiaries for the period commencing April 1, 1995 and ending on the
Closing Date (periods of less than one accounting month will be prorated
on a daily basis).
Except as set forth in the Schedule entitled "Tax Matters",
separately provided to PARSONS prior to the date hereof, G/C and its
Subsidiaries have filed all federal, foreign, state, county and local
income, excise, property and other tax returns or statements ("Returns")
which are required to be filed by law on or before the Closing Date and
all such Returns are complete and correct in all material respects and
correctly reflect the liability of G/C and its Subsidiaries for Taxes
(as hereinafter defined) for the periods, properties or events covered
thereby. Except as set forth on such Schedule, all Taxes shown as due
on the Returns or otherwise due thereunder, and all Taxes accruable or
otherwise attributable to events occurring on or prior to the Closing
Date, including all liability for taxes from the Section 338(h)(10)
election described in Section 2.8 hereof, whether disputed or not,
whether or not shown on any Return, and whether or not currently due or
payable, have been paid or will have been paid in full prior to the
Closing Date. The federal income tax returns of G/C for its fiscal
years through December 31, 1990 have been examined by the Internal
Revenue Service ("IRS"), and all assessments asserted have been paid.
No issue has been raised by the IRS which can reasonably be expected to
result in a material deficiency for any fiscal year not so examined that
has not been recorded on an accrual basis on the G/C Balance Sheet. The
G/C Balance Sheet includes adequate provision, on an accrual basis under
generally accepted accounting principles, for all unpaid Taxes other
than income and franchise or excise taxes based on income or net worth
for which SHAREHOLDER is responsible hereunder with respect thereto for
all periods through the date of the G/C Balance Sheet, whether or not
currently payable. All payroll taxes and other Taxes required to be
withheld by G/C and its Subsidiaries from its employees, creditors or
third parties have been withheld, deposited with the proper authorities
without material delays, or shown as a liability in the G/C Balance
Sheet if not yet due for deposit, and accounted for in accordance with
generally accepted accounting principles. No deficiency in respect of
any Taxes which has been assessed against G/C or any Subsidiary remains
unpaid and neither SHAREHOLDER nor G/C has any knowledge of any
unassessed Tax deficiencies or of any audits or investigations pending
or threatened against G/C or any Subsidiary with respect to any Taxes.
Except for income tax returns and franchise or excise tax returns based
on income or net worth due in 1995 prior to the Closing Date, there is
in effect no extension for the filing of any Tax Return and neither G/C
nor any Subsidiary has extended or waived the application of any statute
of limitations of any jurisdiction regarding the assessment or
collection of any Tax. No claim has ever been made by any Tax
authority in a jurisdiction in which G/C or any Subsidiary does not file
Tax returns that it is or may be subject to taxation by that
jurisdiction. There are no liens for Taxes upon any asset of G/C or any
Subsidiary except for liens for current Taxes not yet due. No issues
have been raised in any examination by any Tax authority with respect to
G/C or any Subsidiary which, by application of similar principles,
reasonably could be expected to result in a proposed deficiency for any
other period not so examined. Neither G/C nor any Subsidiary is a party
to any Tax allocation or sharing agreement or otherwise under any
obligation to indemnify any person with respect to any Taxes.
For purposes of this Agreement, "Taxes" means any taxes, duties,
assessments, fees, levies or similar governmental charges, together with
any interest, penalties and additions to tax, imposed by any taxing
authority, wherever located (i.e. whether federal, state, local,
municipal or foreign), including without limitation all net income,
gross income, gross receipts, net receipts, sales, use, transfer,
franchise, privilege, profits, social security, disability, withholding,
payroll, unemployment, employment, excise, severance, property, windfall
profits, value added, ad valorem, occupation or any other similar
governmental charge or imposition.
3.1.10. Except as disclosed in the Schedule entitled "Claims,"
separately provided to PARSONS prior to the date hereof, there is no
litigation, action, suit, government investigation, claim or proceeding
pending against, or to the best knowledge of SHAREHOLDER, G/C and each
Subsidiary threatened against or affecting, G/C or any Subsidiary, at
law or in equity or before any federal, foreign, state, municipal, local
or other governmental authority or any arbitration panel, nor is there
any known basis for any such litigation, action, suit, investigation,
claim or proceeding in the future, and neither G/C nor any Subsidiary
(a) is subject to or in default under any judgment, order, writ,
injunction or decree of any court or any federal, foreign, state,
municipal, local or other governmental authority or any arbitration
panel, or (b) to the best knowledge of SHAREHOLDER, G/C and each
Subsidiary, has been cited for or become aware of the existence of any
material violation of any federal, state, municipal, local or other
governmental law, rule or ordinance with regard to the environment,
occupational health and safety or discrimination on the basis of race,
sex, age, national origin, marital status, handicap or veteran status or
(c) is a direct party to any labor dispute or union organization
attempt.
3.1.11. The Schedule entitled "Contracts for Services of G/C,"
separately provided to PARSONS prior to the date hereof, is a full and
complete list of each partially or wholly executory contract or
agreement for the performance of services by G/C or any Subsidiary which
has resulted in or is expected to result in revenues to G/C exceeding
$100,000, such Schedule being as of the date recorded in the headings
thereof. To the best knowledge of SHAREHOLDER, G/C and each Subsidiary,
no such contracts are subject to renegotiation or other possible
reduction of fees or other payments to G/C or any Subsidiary. No such
contract is reasonably expected, to the best knowledge and belief of
SHAREHOLDER, G/C and each Subsidiary, to result in any material loss
which has not been recorded in G/C's financial statements. Except as
may be disclosed on the aforementioned Schedule, each of the agreements,
contracts, commitments, arrangements, leases and other instruments,
documents and undertakings listed on the aforementioned Schedule hereto,
to the best knowledge of SHAREHOLDER, G/C and each Subsidiary, is valid
and enforceable in accordance with its terms, and the parties thereto
are in compliance with the material provisions thereof, no party is in
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein, and no event has
occurred which with or without the giving of notice or lapse of time, or
both, would constitute a default thereunder; furthermore, except as may
be disclosed on the aforementioned Schedule, no such agreement,
contract, commitment, arrangement, lease or other instrument, document
or undertaking, in the reasonable opinion of SHAREHOLDER or G/C,
contains any contractual requirement with which there is a reasonable
likelihood G/C, any Subsidiary or any other party thereto will be unable
to comply, provided that no representation or warranty is made with
respect to the future profitability of any such agreement, contract,
commitment, arrangement, lease or other instrument, document or
undertaking.
3.1.12. The Schedule entitled "Commitments of G/C," separately
provided to PARSONS prior to the date hereof, constitutes a full and
complete list (except as otherwise indicated thereon) of each partially
or totally executory contract or agreement obligating G/C or any
Subsidiary to pay or provide services in the amount of $75,000 or more
such Schedules being as of the date recorded in the headings thereof,
other than such contracts or agreements listed in the Schedule entitled
"Contracts for Services of G/C," including, without limiting the
generality of the foregoing, (a) all contracts for consulting,
engineering or other professional services rendered to G/C or any
Subsidiary; (b) all notes, mortgages, loan agreements, security
agreements, guarantees, credit agreements and other evidences of
indebtedness; (c) all contracts and agreements with employees,
directors, officers, consultants, holders of beneficial interest or
shareholders, including without limitation those relating to salary,
bonus and other remuneration or reimbursement arrangements; (d) all
leases, subleases and other agreements relating to real or personal
property used or occupied by or intended to be used or occupied by G/C
or any Subsidiary, except for those that are terminable at the option of
G/C or any Subsidiary on 30 days or less notice; (e) all agreements and
contracts relating to ownership of the Common Shares or the ownership by
G/C or any Subsidiary or any third party of securities in Subsidiaries
that are corporations, or partnership or other interests in Subsidiaries
that are not corporations; (f) all licenses, sublicenses and other
contracts and agreements to which G/C or any Subsidiary is party or
otherwise subject relating to patents, trademarks, trade names or
copyrights or applications for any thereof, inventions, trade secrets or
other proprietary know-how or technical assistance; and (g) all
contracts and agreements between labor unions and G/C or any Subsidiary.
As used in this Section 3.1.12 the terms "contract" and "agreement" mean
and include every contract, agreement and promise, whether written or
oral, if enforceable against G/C or any Subsidiary. Except as may be
disclosed on the aforementioned Schedule, each of the agreements,
contracts, commitments, arrangements, leases and other instruments,
documents and undertakings listed on the aforementioned Schedule hereto,
to the best knowledge of SHAREHOLDER, G/C and each Subsidiary, is valid
and enforceable in accordance with its terms, and the parties thereto
are in compliance with the provisions thereof, no party is in default in
the performance, observance or fulfillment of any material obligation,
covenant or condition contained therein, and no event has occurred which
with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder; furthermore, except as may be disclosed
on the aforementioned Schedule, no such agreement, contract, commitment,
arrangement, lease or other instrument, document or undertaking, in the
reasonable opinion of SHAREHOLDER or G/C, contains any contractual
requirement with which there is a reasonable likelihood G/C, any
Subsidiary or any other party thereto will be unable to comply, provided
that no representation or warranty is made with respect to the future
profitability of any such agreement, contract, commitment, arrangement,
lease or other instrument, document or undertaking.
3.1.13. G/C and its Subsidiaries have in full force and effect,
with all billed premiums thereon paid, the policies of insurance set
forth in the Schedule entitled "Insurance," separately provided to
PARSONS prior to the date hereof, which Schedule constitutes a full and
complete list of all policies of insurance to which G/C or any
Subsidiary is a party, other than life insurance policies and insurance
policies related to employee benefit plans shown on the Schedule
entitled "Employee Benefits," separately provided to PARSONS prior to
the date hereof. No notice of cancellation or termination has been
received with respect to any such policy, and neither SHAREHOLDER, G/C
nor any Subsidiary has any knowledge of any act or omission which could
reasonably be expected to result in cancellation of any such policy
prior to its scheduled expiration date. Neither G/C nor any Subsidiary
has been refused any insurance with respect to any aspect of the
operations of its business nor 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 last three years. G/C and each
Subsidiary have duly and timely made all claims they have been entitled
to make under each policy of insurance. Since January 1, 1990, all
general liability policies maintained by or for the benefit of G/C and
each Subsidiary have been "occurrence-based" policies, and all
professional and umbrella liability policies maintained by or for the
benefit of G/C and each Subsidiary have been "claims made" policies.
Except as may be disclosed in the Schedule entitled "Claims" separately
provided to PARSONS prior to the dater hereof, there is no claim by G/C
or any Subsidiary pending under any such policies as to which coverage
has been questioned, denied or disputed by the underwriters of such
policies, and neither SHAREHOLDER, G/C nor any Subsidiary knows of any
basis for denial of any claim under any such policy. Such policies are
sufficient in all material respects for compliance by G/C and the
Subsidiaries with all requirements of law and with the requirements of
all material contracts to which they are parties.
3.1.14. The Schedule entitled "Corporate Data," separately
provided to PARSONS prior to the date hereof, contains a full and
complete list of (a) all direct and indirect Subsidiary corporations of
G/C, all partnerships, firms and corporations in which G/C has any
interest, and all partnerships, firms or corporations which were or are
doing business, directly or indirectly, as professional engineers and in
which any director or officer of G/C has any interest other than
interests of less than one percent in publicly held corporations; (b)
all states or equivalent governmental entities, including without
limitation foreign countries, in which G/C or any Subsidiary is
qualified as a foreign corporation or is licensed to do business and the
manner in which licensed (e.g., engineer, etc.); (c) all states or
equivalent governmental entities, including without limitation foreign
countries, in which G/C or any Subsidiary is obligated to register as an
employer or pay taxes, during the last two years; (d) all investments of
G/C and each Subsidiary in debt securities having a maturity in excess
of 90 days, and equity securities; (e) the jurisdictions, domestic and
foreign, in which G/C and each Subsidiary currently is doing business
and it is necessary for an individual to be licensed as a professional
engineer or otherwise in order for G/C or any Subsidiary to conduct its
business in such jurisdiction, including without limitation the name and
position held with G/C or any Subsidiary of each such individual except
where the failure to be so qualified or licensed would not result in a
material liability or disability to G/C and its Subsidiaries; and (f)
all SHAREHOLDER guarantees or bonds issued on behalf of G/C which are to
be assumed, reissued or guaranteed by PARSONS.
3.1.15. There are no receivables of G/C or any Subsidiary owing
by directors, officers, employees, holders of beneficial interest or
shareholders of G/C or any Subsidiary or, to the best knowledge of
SHAREHOLDER, G/C and each Subsidiary, owing by corporations,
partnerships, firms and organizations in which directors, officers,
employees, holders of beneficial interest or shareholders of G/C or any
Subsidiary have any interest, other than advances in the ordinary and
usual course of business to officers and employees for reimbursable
business expenses.
3.1.16. For purposes of this Agreement, the term "Employee Plan"
includes any pension, retirement, savings, disability, medical, dental,
health, life (including without limitation any individual life insurance
policy under which any employee of G/C or any Subsidiary is the named
insured and as to which G/C or any Subsidiary makes premium payments,
whether or not G/C or such Subsidiary is the owner, beneficiary or both
of such policy), death benefit, group insurance, profit-sharing,
deferred compensation, stock option, bonus, incentive, vacation pay,
severance pay, or other employee benefit plan, trust, arrangement,
contract, agreement, policy or commitment (including without limitation
any pension plan as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("Pension Plan"), and any
welfare plan as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("Welfare Plan")), whether or
not any of the foregoing is funded or insured and whether written or
oral, which is intended to provide or does in fact provide benefits to
any or all employees of G/C or any Subsidiary, and (i) to which G/C or
any Subsidiary is a party or by which G/C or any Subsidiary (or any of
the rights, properties or assets of G/C or any Subsidiary) is bound, or
(ii) with respect to which G/C or any Subsidiary has any liability or
potential liability (whether or not G/C or any Subsidiary still
maintains or ever maintained such plan, trust, arrangement, contract,
agreement, policy or commitment). With respect to the Employee Plans:
(i) There are no Employee Plans other than those disclosed in
the Schedule entitled "Employee Benefits," separately provided to
PARSONS prior to the date hereof.
(ii) No Pension Plan is a "multiemployer pension plan" within
the meaning of Section 3(37) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), nor has G/C or any ERISA Affiliate at
any time after January 1, 1986 contributed, or had any obligation to
contribute, to a multiemployer pension plan. An "ERISA Affiliate" is
any entity that is or has been at any time during the five years
preceding the Closing Date (i) a member of a controlled group of
corporations, within the meaning of Section 414(b) of the Code, of which
G/C or any Subsidiary is or was a member; (ii) a trade or business under
common control with G/C or any Subsidiary, within the meaning of Section
414(c) of the Code; (iii) a member of an affiliated service group with
G/C or any Subsidiary, within the meaning of Section 414(m) of the Code;
or (iv) related to G/C or any Subsidiary within the meaning of Section
414(o) of the Code or the proposed regulations thereunder.
(iii) Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter from the IRS stating that the plan meets the requirements of the
Code, including without limitation the requirements of the Tax Equity
and Fiscal Responsibility Act of 1982, the Retirement Equity Act of 1984
and the Deficit Reduction Act of 1984, and that the trust associated
with the plan is tax-exempt under Section 501(a) of the Code, copies of
which determination letters have been furnished to PARSONS. Each such
Employee Plan has been operated and administered in material compliance
with all applicable requirements under Section 401(a) of the Code and
(i) has received a favorable determination from the IRS that the plan
meets the requirements of the Tax Reform Act of 1986 and all applicable
legislation and regulatory requirements for tax qualification that
become effective for the plan prior to January 1, 1995 ("TRA 86
letter"); or (ii) has been submitted to the IRS with an application for
a TRA 86 letter but no determination has yet been made by the IRS; or
(iii) will be submitted to the IRS with an application for a TRA 86
letter before the end of the applicable remedial amendment period under
Section 401(b) of the Code.
(iv) To the best knowledge of SHAREHOLDER, G/C and each
Subsidiary, no facts exist that could be reasonably expected to affect
adversely the tax-qualified status of any Employee Plan that has
received a favorable determination letter from the Internal Revenue
Service.
(v) No lawsuits, claims (other than routine claims for benefits)
or complaints to, or by, any person or governmental entity have been
filed, are pending or, to the best knowledge of SHAREHOLDER, G/C or any
Subsidiary, have been threatened, and no facts or contemplated event
exist that could be expected to give rise to any such lawsuit, claim
(other than a routine claim for benefits) or complaint, with respect to
any Employee Plan where G/C or any Subsidiary may be either (i) liable
directly on such lawsuit, claim or complaint, or (ii) obligated to
indemnify any person, group or persons, or entity with respect to such
lawsuit, claim or complaint.
(vi) Each Employee Plan, the administrator and fiduciaries of
each Employee Plan, and G/C, its Subsidiaries and SHAREHOLDER have
complied in all material respects with the applicable requirements of
ERISA (including without limitation the fiduciary responsibilities
imposed by Part 4 of Title I, Subtitle B of ERISA), the Code and any
other applicable law (including without limitation regulations and
rulings thereunder) governing each Employee Plan, and each Employee Plan
has at all times been properly administered in all material respects in
accordance with all such requirements of law, and in accordance with its
terms to the extent consistent with all such requirements of law.
(vii) Neither G/C nor any Subsidiary has made, or committed to
make, any payment, contribution or award into, or under, any Employee
Plan except in accordance with the terms of such Employee Plan.
(viii) Neither G/C nor any Subsidiary is delinquent as to
contributions or payments to or in respect of any Employee Plan as to
which G/C or any Subsidiary is in any way obligated, directly or
indirectly, to make contributions or payments, nor has G/C or any
Subsidiary failed to pay any assessments made with respect to any such
Employee Plan by any governmental authority or the fiduciaries of such
Employee Plan. All contributions and payments with respect to Employee
Plans that are required to be made by G/C or any Subsidiary with respect
to periods ending on or before the Closing Date (including without
limitation periods from the first day of the then current plan or policy
year to and including the Closing Date) have been made or will be
accrued before the Closing Date by G/C or such Subsidiary in accordance
with the appropriate accounting standards or insurance contracts or
arrangements.
(ix) With respect to each Employee Plan, there has not
occurred, nor is any person or entity contractually bound to enter into,
any non-exempt "prohibited transaction" within the meaning of Section
4975 of the Code or Section 406 of ERISA which would result in the
imposition of any liability to G/C or any Subsidiary.
(x) Neither G/C nor any ERISA Affiliate does currently or has at
any time since September 2, 1974, sponsored, adopted, contributed,
maintained or been obligated to contribute to any single employer plan
(as defined in Section 4001(15) of ERISA, including without limitation a
plan described in Section 4063 and 4064 of ERISA) which is or was
subject to Title IV of ERISA.
(xi) Neither G/C nor any Subsidiary has engaged in any
transaction, failed to make required contributions, committed any act or
omission, or otherwise incurred any liability for any excise tax under
Section 4971 through 4980B of the Code, inclusive, other than excise
taxes that have heretofore been paid and fully reflected in the G/C
Balance Sheet, which would result in the imposition of any liability to
G/C or any Subsidiary.
(xii) As of the Closing Date, there will be no accumulated
funding deficiency within the meaning of Section 302 of ERISA or Section
412 of the Code, with respect to any Pension Plan or any pension plan
(as defined in Section 3(2) of ERISA) sponsored, maintained or
contributed by any ERISA Affiliate.
(xiii) Neither SHAREHOLDER, G/C nor any Subsidiary has
knowledge of any investigative proceedings, administrative review or
other administrative agency process which could result in imposition on
G/C or any Subsidiary of any penalty or other assessment in connection
with any Employee Plan.
(xiv) Neither G/C nor any Subsidiary has any obligation to
provide health care, life insurance or death benefits to or with respect
to any former employee, except for statutory obligations and such
obligations that SHAREHOLDER has assumed hereunder, including the
obligation to provide health care benefits to the individuals listed on
Exhibit E hereto.
3.1.17. Neither SHAREHOLDER, GILBERT nor any Subsidiary or
holder of beneficial interest of GILBERT or any Subsidiary has incurred,
or will incur, directly or indirectly, any liability for brokerage,
finder's, financial advisor's or agent's fees or commissions in
connection with this Agreement or any transaction contemplated hereby,
except for SHAREHOLDER's engagement of Dillon, Read & Co. Inc., whose
fees and expenses are the sole responsibility of SHAREHOLDER.
3.1.18. Except as set forth in the Schedule entitled "Liens,"
separately provided to PARSONS prior to the date hereof, the execution
of this Agreement and, subject only to the requisite approval of
SHAREHOLDER's stockholders, the performance of its obligations under
this Agreement will not (a) conflict with or constitute a default under
the articles of organization and by-laws of SHAREHOLDER, G/C or of any
Subsidiary that is a corporation, or under the partnership agreement or
other organic document of any Subsidiary that is not a corporation, or
under any note, debt instrument, security agreement or mortgage, or any
other agreement or commitment, binding upon G/C or any Subsidiary or any
of their properties; (b) result in the creation or imposition of any
lien, possibility of lien, encumbrance, equity or restriction on G/C or
any Subsidiaries; (c) contravene or violate any law, rule or regulation
to which SHAREHOLDER or G/C is subject; (d) contravene or violate any
judgment, order, writ, injunction or decree of any court, arbitrator or
governmental or regulatory official, body or authority which is
applicable to SHAREHOLDER or G/C; or (e) violate, be in conflict with or
result in the breach (with or without the giving of notice or lapse of
time, or both) of any term, condition or provision of, or require the
consent which has not been obtained of any other party to, any contract,
commitment, agreement, lease, license, permit, authorization, document
or other understanding, oral or written, to or by which SHAREHOLDER or
G/C is a party or otherwise bound or affected. Except for (i) filings
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder, (ii) the running of the waiting
period under the H-S-R Act, and (iii) such consents or approvals as may
be required under the state securities or anti-takeover laws, no notice
to nor consent or approval of any governmental authority or third party
is required to be obtained in order for SHAREHOLDER and G/C to carry out
the transactions contemplated hereby which will not have been obtained
prior to Closing.
3.1.19. G/C and each Subsidiary has in all respects performed,
or is now performing, the obligations of and is not in default (and
would not by the lapse of time and/or the giving of notice be in
default) in respect of, any note, debt instrument, security agreement or
mortgage, or any other financing agreement or commitment binding upon
it. Each of the instruments, commitments and obligations shown on the
Schedules referred to in this Agreement is a legal, binding and
enforceable obligation by or against G/C or a Subsidiary, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by applicable law that
may affect the availability of remedies (regardless of whether
enforcement is sought in a proceeding in equity or at law).
3.1.20. Except as set forth in the Schedule entitled "Directors
and Officers Interests," separately provided to PARSONS prior to the
date hereof, to the best knowledge of SHAREHOLDER, G/C and each
Subsidiary no officer or director or G/C or any Subsidiary has a direct
or indirect financial interest in, or receives any compensation or other
benefits from, any individual or business firm (i) from which G/C or any
Subsidiary purchases supplies, materials or property; (ii) which renders
any service to G/C or any Subsidiary; (iii) which is a party to leases
or assignments to or from G/C or any Subsidiary; (iv) to which G/C or
any Subsidiary sells or leases any of its services, facilities or
properties; or (v) which has any other contractual relations or business
dealings with G/C or any Subsidiary; provided that ownership of one
percent or less of the outstanding shares of a publicly held corporation
need not be disclosed hereunder. No officer or director of G/C or any
Subsidiary has any contractual relations or business dealings (except
for his employment by G/C or any Subsidiary) with G/C or any Subsidiary,
except as set forth on such Schedule.
3.1.21. (i) G/C and each Subsidiary are in compliance in all
material aspects with all Environmental Laws; there is no Environmental
Claim pending against G/C or any Subsidiary; and, to the best knowledge
of SHAREHOLDER, G/C and each Subsidiary there are no past or present
events, conditions, circumstances, activities, investigations,
inquiries, practices, incidents, notices, actions, omissions or plans
which could reasonably be expected to result in noncompliance by G/C or
any Subsidiary with any Environmental Law, or which could reasonably be
expected to give rise to liability under any Environmental Law, or
otherwise form the basis of any Environmental Claim, including without
limitation Environmental Claims against G/C, any Subsidiary or any
person whose liability for such Environmental Claims G/C or any
Subsidiary has retained, assumed or incurred, whether contractually or
by operation of law.
(ii) G/C and each Subsidiary has obtained all material
Permits which are required under the Environmental Laws for operation of
its business, delivery of professional engineering or consulting
services, and use of G/C's and each Subsidiary's assets or leased
properties, including without limitation those for the storage,
treatment, recycle, transportation, release, emission or disposal of
Hazardous Materials used or produced by or otherwise relating to the
G/C's or any Subsidiary's business, assets or properties, and G/C and
each Subsidiary is in compliance in all material respects with the
requirements of said Permits. For purposes of this Section 3.1.21,
"Permit" means any permit, approval, authorization, license, variance,
permission, agreement or similar item required pursuant to or under any
of the Environmental Laws.
(iii) To the extent that G/C or any Subsidiary is subject to
or is required to comply with, or has responsibility for compliance
with, Permits, orders, decrees or judgements of others for whom G/C or
any Subsidiary provides services or has in the past provided services,
G/C and each Subsidiary is now and has been in compliance in all
material respects with the requirements of such Permits, orders, decrees
and judgements.
(iv) To the best knowledge of G/C, SHAREHOLDER and each
Subsidiary, there are no Environmental Claims pending or threatened
against any person whose liability for such Environmental Claims G/C or
any Subsidiary has or may have retained, assumed or incurred, whether
contractually or by operation of law, including without limitation
claims arising under CERCLA.
(v) Neither G/C nor any Subsidiary has reported (a) any actual
or threatened or suspected releases, discharges, emissions, spilling,
leaking or dumping of Hazardous Materials into the environment
(including without limitation ambient air, surface water, groundwater or
land) or (b) any violation of any Permit term or other requirement of
any Environmental Law within the past five years.
(vi) Other than the normal costs of performing existing
Agreements for Professional Services which are recoverable from the
other contracting party, to the best knowledge of SHAREHOLDER, G/C and
each Subsidiary, neither G/C nor any Subsidiary has any obligation or
liability with respect to the cleanup of any site or facility with
respect to any Hazardous Materials.
(vii) To the best knowledge SHAREHOLDER, G/C and each
Subsidiary, there is no site or facility under investigation by any
federal, state, local or foreign court, governmental, public or self-
regulatory body, agency or other authority, at which G/C or any
Subsidiary has disposed or treated or arranged for disposal or treatment
(with a transporter or otherwise) of any Hazardous Material.
(viii) During the past three years, neither G/C nor any
Subsidiary has received a governmental request under any of the
Environmental Laws for information or to take any action relating to any
activities, operation, business, assets or properties of G/C or any
Subsidiary, including without limitation activities conducted at the
properties of other persons for whom for it has in the past or currently
provides professional services.
(ix) None of the properties owned by G/C or any Subsidiary
and, to the best knowledge of SHAREHOLDER, G/C and each Subsidiary, none
of the properties leased by G/C or any Subsidiary at any time, are now,
or were in the past, listed on the National Priorities list of Superfund
Sites (the "NPL"), the CERCLA Information System ("CERCLIS") or any
other comparable state or local environmental database.
(x) The sale, purchase and transfer of stock that is the subject
of this Agreement will not require any governmental approvals under the
Environmental Laws.
(xi) SHAREHOLDER and G/C agree to cooperate with PARSONS in
connection with the PARSONS's application for the transfer, renewal or
issuance of any Permits necessary to satisfy any regulatory requirements
in connection with the assets, leased properties, operations or business
of G/C or any Subsidiary.
(xii) G/C's and each Subsidiary's operations in conducting its
business do not now involve (and have not in the past involved direct
responsibility for) the generation, transportation, treatment, recycle
or disposal of hazardous waste, as defined under 40 CFR Parts 260-270,
or of any waste regulated under Environmental Laws pertaining to
radioactive materials or the nuclear power industry, including without
limitation requirements under Volume 10 of the Code of Federal
Regulations.
(xiii) Without in any way limiting the foregoing, to the best
knowledge of SHAREHOLDER, G/C and each Subsidiary, (a) all onsite and
offsite locations where G/C or any Subsidiary has stored, disposed or
arranged for the disposal of Hazardous Materials are identified in the
Schedule entitled "Environmental Matters," separately provided to
PARSONS prior to the date hereof, (ii) all underground storage tanks or
storage impoundments, and the contents of such tanks or impoundments,
known to exist on property now operated, managed or leased by G/C or any
Subsidiary are identified in the such Schedule, and (iii) to the best of
knowledge of SHAREHOLDER, G/C and each Subsidiary, no polychlorinated
byphenyls ("PCBs") are used or stored at any property operated, managed
or leased by G/C or any Subsidiary.
(xiv) "Hazardous Material(s)" shall mean those substances,
whether waste materials, raw materials, finished products, coproducts,
byproducts or any other material or article, that are regulated by, form
the basis of liability, or are defined as, hazardous, extremely
hazardous or toxic, under any of the Environmental Laws, including
without limitation petroleum or any byproducts or fractions thereof, any
form of natural gas, asbestos, polychlorinated biphenyls ("PCBs"), radon
or other radioactive substances (including without limitation source,
special nuclear and byproduct material as defined by the Atomic Energy
Act, as amended, 42 U.S.C. 2011 et seq. and special nuclear
material), infectious, carcinogenic, mutagenic or etiologic agents,
pesticides, defoliants, explosives, flammables, corrosives or any other
material or substance which constitutes a health, safety or
environmental hazard to any person, property or natural resource.
(xv) "Environmental Law(s) shall mean, without limitation,
any and all federal, state, local and foreign laws, regulations or
requirements relating to health, safety or pollution or protection of
the environment, including without limitation those relating to
emissions, discharges, releases or threatened releases of Hazardous
Materials into or impacting the environment or natural resources
(including without limitation ambient air, surface water, groundwater or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, recycle, storage, disposal, transport or
handling of Hazardous Materials. Such Environmental Laws shall include
without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (42 U.S.C. 9601 et seq.) ("CERCLA"),
the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.),
the Clean Water Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42
U.S.C. 7401 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 et seq.), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the Safe Drinking
Water Act (42 U.S.C. 300(f) et seq.), the Toxic Substances Control
Act (15 U.S.C. 2601 et seq.), the Atomic Energy Act (42 U.S.C.
2011 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
651 et seq.), as such laws have heretofore been and hereafter may be
amended or supplemented, and any analogous state, local or foreign laws,
and all rules, orders, regulations and requirements promulgated pursuant
to any of such federal, state, local or foreign laws, and any common law
cause of action relating to the environment, natural resources, safety,
health, or the management of Hazardous Materials as defined herein.
(xvi) "Environmental Claim" shall mean any investigative,
enforcement, cleanup, removal, containment, remedial or other private or
governmental or regulatory action, at any time instituted pursuant to
any applicable Environmental Law, against G/C or any Subsidiary, and any
claim at any time, made by any person against G/C or against any
Subsidiary, relating to damage (including without limitation natural
resource damage), contribution, cost recovery, compensation, loss,
injury, fine or penalty resulting from any Hazardous Material or any
Environmental Law.
3.1.22. Information furnished by G/C and contained in the
Schedules referred to in this Agreement is not, and will not be, false
or misleading in any material respect, and does not and will not omit
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements are made, not misleading, it being understood that
representations relating to the G/C Balance Sheet are made on the basis
set forth in Section 3.1.5 hereof and that all representations and
warranties and all statements furnished on Schedules are correct and
complete except as otherwise indicated on such Schedules, and any
underlying documents incorporated in the Schedules referred to in this
Agreement or otherwise furnished to PARSONS by G/C are true and correct
copies, and there are no amendments or modifications thereto except as
set forth in Schedules in which such documents are incorporated or as
otherwise noted on any such document.
3.1.23. None of the statements included in the Proxy Statement
will, (a) at the time the Proxy Statement is mailed to SHAREHOLDER's
Class B Stockholders or (b) at the time of the meeting of stockholders
to which the Proxy Statement relates, be false or misleading with
respect to any material fact in light of the circumstances under which
they were made or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The Proxy Statement will comply in all material respects,
as to form and otherwise, with the requirements of the Exchange Act and
the applicable rules and regulations promulgated by the SEC thereunder.
No representation is made with respect to any information supplied by
PARSONS for inclusion in the Proxy Statement.
3.1.24. The representations and warranties of Shareholder and
G/C in Article 3 are the only representations and warranties made by
such parties with respect to the purchase and sale of the Common Stock.
SHAREHOLDER and G/C disclaim any liability or responsibility for any
representation or warranty that may have otherwise been made or alleged
to have otherwise been made or communicated to PARSONS, including but
not limited to, any opinion, information or advice provided to PARSONS
by any director, officer, employee, agent, consultant or representative
of SHAREHOLDER or G/C (or any of their affiliates) in respect of any
future cash flows or projections of G/C and its Subsidiaries.
3.1.25. As used herein, knowledge and best knowledge of
SHAREHOLDER, G/C or G/C Subsidiaries shall mean the knowledge or best
knowledge of directors, officers and key personnel of the entity to whom
the representation applies.
3.2. PARSONS represents, warrants and covenants that:
3.2.1. PARSONS has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware.
3.2.2. PARSONS has, and at all relevant times had, the corporate
power and authority to enter into and perform this Agreement and all
transactions contemplated herein. This Agreement has been duly executed
by PARSONS and constitutes the legal, valid and binding obligation of
PARSONS and is enforceable against PARSONS in accordance with its terms.
3.2.3. PARSONS has taken all necessary corporate action to
authorize this Agreement, its execution, delivery and performance and
all transactions contemplated herein, and except for the running of the
waiting period under the H-S-R Act, and such consents or approvals as
may be required under state securities or anti-takeover laws, no consent
or approval of any domestic governmental agency or authority is required
to be obtained in order for PARSONS to carry out the transactions
contemplated hereby.
3.2.4. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein will not
conflict with or result in a breach of any contractual obligation of
PARSONS, or a default under (a) the certificate of incorporation or
bylaws of PARSONS, (b) any law, rule or regulation to which PARSONS is
subject, (c) any judgment, order, writ, injunction or decree of any
court, arbitrator or governmental or regulatory official, body or
authority which is applicable to PARSONS, or (d) any term, condition or
provision of, or require the consent, which has not been obtained, of
any other party to, any contract, commitment, agreement, lease, license,
permit, authorization, document or other understanding, oral or written,
to or by which PARSONS is a party or otherwise bound or affected.
3.2.5. None of the statements relating to PARSONS that is supplied
by PARSONS for inclusion in the Proxy Statement will, (a) at the time
the Proxy Statement is mailed to SHAREHOLDER's Class B Stockholders or
(b) at the time of the meeting of stockholders to which the Proxy
Statement relates, be false or misleading, in light of the circumstances
under which such statements are made, with respect to any material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, except
that no representation or warranty is otherwise made by PARSONS with
respect to the Proxy Statement.
3.2.6. PARSONS has not retained any broker, finder or agent in
connection with the purchase of the Common Shares.
3.2.7. PARSONS acknowledges that: (a) it had the opportunity to
visit with SHAREHOLDER and G/C and meet with their respective officers
and other representatives to discuss the business and the assets,
liabilities, financial condition, cash flow and operations of G/C and
its Subsidiary; and (b) all materials and information requested by
PARSONS have been provided to PARSONS's reasonable satisfaction.
3.2.8. PARSONS acknowledges that it has made its own independent
examination, investigation, analysis and evaluation of G/C and its
Subsidiaries, including its own estimate of the value of the Common
Shares.
3.2.9. PARSONS acknowledges that it has undertaken such due
diligence (including a review of the assets, liabilities, books, records
and services of G/C and its Subsidiaries) as PARSONS deems adequate,
including that described in Sections 3.2.7 and 3.2.8 hereof. To the
best of PARSON's knowledge, based upon such due diligence none of the
representations of SHAREHOLDER or G/C herein are inaccurate in any
material respect.
3.2.10. PARSONS is purchasing the Common Shares for investment,
for its own account and not wit a view to distribute the Common Shares
within the meaning of applicable securities laws.
ARTICLE 4. CERTAIN AGREEMENTS
4.1. From the date hereof until the Closing Date:
4.1.1. Except for matters expressly required or permitted by this
Agreement and such other matters, if any, as may be consented to by
PARSONS in writing, G/C will, and will cause each Subsidiary to, conduct
its business and affairs only in the ordinary and usual course and will
not engage in any activity or enter into any material transaction
outside the ordinary and usual course of business.
4.1.2. Except as contemplated by this Agreement, G/C will not, and
will not permit any Subsidiary to, without PARSONS' prior written
consent, (a) declare or make any payment of dividends or distributions
to the stockholders of or holders of beneficial interest in G/C or any
Subsidiary as such (other than by a Subsidiary to its parent corporation
or to G/C), or purchase or redeem any of the Common Shares, or (b) issue
or sell, whether under offers, stock option agreements, stock bonus
agreements, warrants, conversion rights or otherwise, any shares of
capital stock or other securities of G/C or any Subsidiary, or enter
into any commitments or obligations, either firm or conditional, so to
issue or sell any shares of capital stock or other such securities.
4.1.3. G/C will use its reasonable best efforts to preserve its own
and each Subsidiary's business organization intact and to preserve the
goodwill of G/C and each Subsidiary as to clients and others having
business relations with them.
4.1.4. G/C will promptly correct any statement in any earlier
information furnished by it under this Agreement which has become false
or misleading in any material respect.
4.1.5. G/C will use its reasonable best efforts to keep, and to
cause each Subsidiary to keep, their respective properties and
operations protected by insurance for the risks they customarily cover
and in the amounts of coverage they customarily carry; provided that
PARSONS will reimburse SHAREHOLDER for the pro rata portion of premiums
paid by SHAREHOLDER attributable to G/C's operations for the period from
the Deal Date through and including the Closing Date. Any deductibles,
self-insured retentions or other amounts which are not covered by
SHAREHOLDER's insurance during the period from the Deal Date through and
including the Closing Date shall be paid by PARSONS as soon as practical
after the Closing Date.
4.1.6. G/C will permit PARSONS and its officers, attorneys,
accountants and representatives to examine the property, books and
records of G/C and its subsidiaries and such officers, attorneys,
accountants and representatives shall be afforded reasonable access
during normal business hours to such property, books and records, and
G/C and its Subsidiaries will upon request furnish PARSONS with any
information reasonably required in respect to their property, assets and
business.
4.1.7. Except as stated on the Schedule entitled "Officers'
Salaries," separately provided to PARSONS prior to the date hereof, G/C
will maintain the salary and benefit structure in effect on December 31,
1994 subject to annual increases in accordance with G/C's standard
business practice effective January 1, 1995 until the Closing Date,
PARSONS acknowledges that G/C anticipates that it will enter into
employment contracts with certain officers listed in the aforementioned
Schedule in the form attached hereto as Exhibit F. No new senior
officers will be appointed after the date hereof, nor will the
compensation of any officer except as set forth above be modified after
the date hereof, without PARSONS' prior consent.
4.1.8. The Parties will cooperate with one another in the
preparation and filing of all notices and reports required pursuant to
the H-S-R Act and will comply with the requirements for providing
information made pursuant thereto.
4.2. As soon as reasonably practicable following the date of this
Agreement, SHAREHOLDER shall take all action necessary in accordance
with the Exchange Act, the laws of the State of Delaware and its
Certificate of Incorporation and By-laws to call, give notice of and
convene a meeting (the "Meeting") of its stockholders to consider and
vote upon the approval of this Agreement and for such other purposes as
may be necessary or desirable. The board of directors of SHAREHOLDER
shall, subject to its fiduciary duties and responsibilities, recommend
without qualification of any nature that SHAREHOLDER's stockholders vote
to approve this Agreement and any other matters to be submitted to
SHAREHOLDER's stockholders in connection therewith. The board of
directors of SHAREHOLDER shall, subject to its fiduciary duties and
responsibilities, use its reasonable best efforts to solicit and secure
from Class B Stockholders of SHAREHOLDER such approval, which efforts
shall include without limitation causing SHAREHOLDER to diligently
solicit stockholder proxies therefor and to advise PARSONS promptly upon
its request from time to time as to the status of the stockholder vote
then tabulated.
4.3. Promptly following the date of this Agreement, SHAREHOLDER
shall prepare and file with the SEC under the Exchange Act and the rules
and regulations promulgated by the SEC thereunder, a preliminary draft
of the Proxy Statement. PARSONS shall cooperate fully with SHAREHOLDER
in the preparation and filing of the Proxy Statement and any amendments
and supplements thereto. The Proxy Statement shall not be filed, and no
amendment or supplement thereto shall be made by SHAREHOLDER, and no
material communication with the SEC shall be had with respect to any
matters relating to PARSONS or the transactions contemplated by this
Agreement without in each case prior consultation with PARSONS and its
counsel. SHAREHOLDER shall cause to be mailed a definitive Proxy
Statement to its Class B Stockholders entitled to vote at the Meeting as
promptly as possible following completion of any review by, or in the
absence of such review, the termination of any applicable waiting period
of, the SEC.
4.4. Effective as of the Closing Date in respect of The Parsons
Corporation Employee Stock Ownership Plan, or as soon thereafter as is
practicable, in respect of The Parsons Corporation Retirement Savings
Plan, PARSONS shall enroll in such plans each employee of G/C and the
Included Subsidiaries who are eligible to participate in such plans in
accordance with the terms thereof. PARSONS shall enroll employees of
G/C and the Included Subsidiaries in welfare benefit plans it maintains
for its employees no later than January 1, 1996. PARSONS acknowledges
that SHAREHOLDER will not be responsible for continuing to maintain any
employee welfare or retirement benefit plans for employees of G/C or any
Included Subsidiary except as set forth in Sections 2.3 and 2.4 hereof.
4.5. From the date of this Agreement until the Deal Date,
SHAREHOLDER and G/C shall take all reasonable effort to establish G/C as
an independent corporation. From the Deal Date forward, there will be
no further capital contributions by SHAREHOLDER to G/C nor any cash
distributions from G/C to SHAREHOLDER. All inter-company transactions
between G/C and the SHAREHOLDER or subsidiaries of SHAREHOLDER shall
from the Deal Date forward be treated as arm-length transactions and
handled within the ordinary scope of G/C's business. This shall
include, but not limited to, implementation of the Leasing Arrangement
provided in Exhibit D to the Stock Purchase Agreement, reimbursement by
PARSONS for the pro rata portion of premiums paid by SHAREHOLDER
attributable to G/C's operations from the Deal Date to the Closing Date
and of deductibles, self-insured retentions and other amounts not
covered by SHAREHOLDER's insurance during that period and any other
expenses or costs incurred by SHAREHOLDER or its Subsidiaries to the
extent that such costs and expenses are for the benefit of G/C and truly
a cost of the operation of G/C.
4.6. Should G/C require capital beyond that generated by its
normal operations during the period from the Deal Date to the Closing
Date, G/C will either request advances from the separate line of credit
arranged for G/C by SHAREHOLDER or obtain such advances from PARSONS.
After the Deal Date, the SHAREHOLDER shall no longer have any obligation
to make such advances, and any advances made under the separate line of
credit arranged by SHAREHOLDER shall be repaid by PARSONS within three
business days after the Closing Date. G/C shall invest all surplus
capital, if any, in interest bearing accounts, which shall become the
property of PARSONS at the Closing Date.
4.7. Should G/C in the ordinary course of business be required to
obtain parent company guarantees, bonds, or the like, SHAREHOLDER shall
provide such guarantees subject to the approval of PARSONS (not to be
unreasonably withheld or delayed), and with the understanding that any
such guarantees would be assumed by and become the obligation of the
PARSONS at the Closing Date.
ARTICLE 5. CONDITIONS ON OBLIGATIONS OF SHAREHOLDER
The obligations of SHAREHOLDER to consummate the transactions
contemplated by this Agreement and thus to cause the Closing Date to
occur shall be subject to the following conditions, except as
SHAREHOLDER may waive the same in writing in accordance with Section 9.1
below:
5.1. The waiting period under the H-S-R Act shall have expired; no
action or proceeding brought by or on behalf of any governmental body or
regulatory authority shall be pending or threatened questioning the
validity of this Agreement or seeking to restrain the consummation of
the transactions contemplated by this Agreement.
5.2. This Agreement and the transactions contemplated hereby shall
have been approved by the requisite vote of SHAREHOLDER's stockholders.
5.3. Those transactions that are identified in Exhibit B hereto
shall have been consummated in a manner reasonably satisfactory to
SHAREHOLDER and G/C and consistent with the terms of this Agreement.
5.4. The parties shall have entered into a Lease substantially in
the form of Exhibit D hereto.
5.5. The representations and warranties of PARSONS set forth in
Article 3 hereof shall be correct in all material respects on the date
of this Agreement and at the Closing Date as if made again at and as of
such time, and PARSONS shall have delivered to SHAREHOLDER a certificate
in form and substance satisfactory to SHAREHOLDER dated the Closing Date
to such effect.
5.6. All notices, approvals, consents and waivers that are
required to effect the transactions contemplated hereby shall have been
given or received, as the case may be.
5.7. SHAREHOLDER shall have received from Dillon Reed a written
opinion, for inclusion in the definitive Proxy Statement and dated the
date thereof satisfactory in form and substance to SHAREHOLDER, to the
effect that the price to be paid by PARSONS for the Common Stock is fair
from a financial point of view, and such opinion shall not have been
withdrawn prior to the Closing Date.
ARTICLES 6. CONDITIONS ON OBLIGATIONS OF PARSONS
The obligations of PARSONS to consummate the transactions
contemplated by this Agreement and thus to cause the Closing Date to
occur shall be subject to the following conditions, except as PARSONS
may waive the same in writing in accordance with Section 9.1 below:
6.1. G/C shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement
to be performed or satisfied by G/C on or prior to the Closing Date,
including without limitation the agreements contained in Sections 4.2
and 4.3 hereof.
6.2. The representations and warranties of SHAREHOLDER and G/C set
forth in Article 3 hereof shall be correct in all material respects on
the date of this Agreement and at the Closing Date as if made again at
and as of such time, subject to any transactions or changes which may
have taken place after the date of this Agreement and which are
contemplated or expressly permitted by this Agreement, and SHAREHOLDER
and G/C shall have delivered to PARSONS a certificate in form and
substance satisfactory to PARSONS dated the Closing date to all such
effects.
6.3. From the date of the G/C Balance Sheet to the Deal Date,
there shall have been no material adverse change in the financial
condition or results of operations or business of G/C or any of its
Subsidiaries.
6.4. The waiting period under the H-S-R Act shall have expired; no
action or proceeding brought by or on behalf of any governmental body or
regulatory authority shall be pending or threatened questioning the
validity of this Agreement or seeking to restrain the consummation of
the transactions contemplated by this Agreement or to materially
frustrate the ability of PARSONS to control and operate G/C after the
Closing Date and no action or proceeding brought by or on behalf of any
other person or entity (including without limitation any action or
proceeding pending or threatened on the date of this Agreement) shall be
pending, which in the judgment of counsel for PARSONS may reasonably be
expected to result in any order, judgment or decree (other than a
judgment for money damages) that would materially frustrate the ability
of PARSONS to control and operate G/C or any Subsidiary after the
Closing Date.
6.5. All notices, approvals, consents and waivers that are
required to effect the transactions contemplated hereby shall have been
given or received, as the case may be, and sufficient evidence thereof
shall have been delivered to PARSONS.
6.6. Berlack, Israels & Liberman, counsel for SHAREHOLDER and G/C,
shall, on the Closing Date, deliver to PARSONS their opinion, dated the
Closing Date and addressed to PARSONS, in form and substance reasonably
satisfactory to counsel for PARSONS, to the following effect: (a) G/C is
a corporation validly existing and in good standing under the laws of
the State of Delaware and has full power and authority to own its
property and assets and to conduct its business as it is presently being
conducted; (b) Gilbert/Commonwealth of Ohio, Gilbert Investment Company
and GAICO Corporation are corporations validly existing and (in the case
of corporations) in good standing under the laws of their respective
jurisdictions of incorporation or organization and each of them has full
power and authority to own its property and assets and to conduct its
business as it is presently being conducted; (c) the information as to
the capital stock of G/C set forth in Recital A to this Agreement is
true and correct as of the Closing Date and, to the best of their
knowledge, neither G/C nor any Subsidiary has any commitment, firm or
conditional, to issue or sell any of its capital stock or other
securities of G/C or any Subsidiary or other interest therein; (d) all
Common Shares which are issued and outstanding are duly authorized,
validly issued, fully paid and nonassessable and owned of record by
SHAREHOLDER; (e) all shares of capital stock of Gilbert/Commonwealth of
Ohio, Gilbert Investment Company and GAICO Corporation which are issued
and outstanding are duly authorized, validly issued, fully paid and
nonassessable, and the ownership of all shares of or interests in such
Subsidiaries is to the best of their knowledge, as shown on the Schedule
entitled "Corporate Data"; (f) this Agreement and the transactions
contemplated hereby have been duly authorized on behalf of SHAREHOLDER
and G/C by all requisite corporate and shareholder action; (g) this
Agreement constitutes a legal, valid and binding obligation of
SHAREHOLDER and G/C enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally and by
applicable law that may affect the availability of remedies (regardless
of whether enforcement is sought in a proceeding in equity or at law);
(h) the Proxy Statement, as of the date of mailing and the date of the
Meeting, complied in all material respects with the requirements of the
Exchange Act and the applicable rules and regulations of the SEC
thereunder as to form; and (i) with respect to information relating to
SHAREHOLDER or G/C and their businesses, properties, management,
stockholders or securities, as to which counsel has made no independent
investigation, such counsel has participated in the preparation of the
Proxy Statement and no facts have come to their attention to lead such
counsel to believe that the Proxy Statement on the date of mailing or
the date of the Meeting contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
6.7. This Agreement shall have been approved by the requisite vote
of SHAREHOLDER's Class B Stockholders.
6.8. Those transactions that are identified in Exhibit B hereto
shall have been consummated in a manner reasonably satisfactory to
PARSONS and consistent with the terms of this Agreement.
6.9. The parties shall have entered into a Lease substantially in
the form of Exhibit D hereto.
6.10. SHAREHOLDER and G/C shall furnish to PARSONS on the Closing
Date certificates dated the Closing Date to the effect that, to the best
of their knowledge and belief, the conditions set forth in Sections 6.1,
6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8 and 6.9 hereof have been satisfied.
ARTICLE 7. INDEMNIFICATION
7.1. Subject to the terms and conditions of this Article 7,
SHAREHOLDER hereby agrees to indemnify, defend and hold harmless
PARSONS, its officers, directors, employees, agents and controlled
(including without limitation after the Closing, G/C and the
Subsidiaries) and controlling persons (hereinafter "Affiliates") from
and against all Claims asserted against, resulting to, imposed upon, or
incurred by PARSONS or any Affiliate, directly or indirectly, by reason
of, arising out of, in connection with or resulting from:
(i) the inaccuracy or breach of any representation or warranty of
SHAREHOLDER or G/C contained in or made pursuant to this Agreement
(including without limitation any omission from any Schedule),
(ii) the breach of any covenant or agreement of SHAREHOLDER or G/C
contained in this Agreement,
(iii) any Employee Benefit Plan liability arising out of acts or
omissions of SHAREHOLDER or G/C which occur prior to the Closing Date,
(iv) Claims asserted, relating to or arising out of occurrences
prior to the Closing Date relating to or arising out of the business,
operations or assets of G/C or the Subsidiaries or the actions of G/C's
or the Subsidiaries' directors, officers, shareholders, employees or
agents, to the extent SHAREHOLDER actually recovers proceeds or
reimbursement from insurance coverage applicable to such claims,
(v) Claims by past or present shareholders, officers, directors
or employees of G/C for indemnification arising out of or in any way
related to any act, error or omission on or prior to the Closing Date,
(vi) any Tax of any affiliated group of corporations asserted
against G/C pursuant to Treas. Reg. 1.1502-6, or any similar or
successor provision thereto under federal, state, local or foreign law
relating to any taxable period ending on or before the Closing Date,
(vii) any liability or obligation of any kind, whether absolute,
accrued, contingent or otherwise, concerning the Environmental Laws
(including without limitation violations thereof and common law claims),
arising out of the operation or conduct of the business of G/C or any
Subsidiary or any product supplied or service performed by G/C or any
Subsidiary, or the use, operation or condition of the properties or
assets of G/C or any Subsidiary prior to or on the Closing Date and
(viii) the imposition or assertion against PARSONS or any Affiliate
of any liability, demand or obligation under CERCLA or equivalent state
or local law arising out of or in connection with (i) Contaminated
Properties previously owned, operated or leased by G/C or any
Subsidiary, where such contamination was caused by actions of G/C or any
Subsidiary prior to or on the Closing Date, or was part of the existing
condition of the Contaminated Properties prior to or on the Closing Date
(whether the source or cause of that condition be located on or from
G/C's or any Subsidiary's properties or elsewhere), (ii) G/C's or any
Subsidiary's performance of services to other persons in the course of
their business operations or (iii) G/C's or any Subsidiary's actions in
arranging for disposal or treatment, or arranging with a transporter for
disposal or treatment, of Hazardous Materials at properties owned by
other parties.
As used in this Article 7, the term "Claim" shall include (i) all
debts, liabilities, taxes and obligations; (ii) all losses, damages
(including without limitation consequential damages), judgments, awards,
settlements, costs and expenses (including without limitation interest
(including without limitation prejudgment interest in any litigated
matter)), penalties, fines, court costs and attorneys fees and
expenses); and (iii) all demands, claims, suits, actions, costs of
investigation (including without limitation consultants, contractors,
experts and laboratories), causes of action, proceedings and assessments
of any and every kind or character, contingent or otherwise, matured or
unmatured, known or unknown, foreseeable or unforeseeable, whether or
not ultimately determined to be valid. As used in this Article 7,
"Contaminated Properties" refers to properties, assets, facilities,
improvements or vessels from which there has been or is a release or
threatened release of Hazardous Materials.
7.2. Subject to the terms and conditions of this Article 7,
PARSONS hereby agrees to indemnify, defend and hold harmless SHAREHOLDER
and its Affiliates from and against all Claims asserted against,
resulting to, imposed upon or incurred by SHAREHOLDER or any Affiliate,
directly or indirectly, by reason of, arising out of, in connection with
or resulting from:
(i) the inaccuracy or breach of any representation or warranty of
PARSONS contained in or made pursuant to this Agreement;
(ii) the breach of any covenant or agreement of PARSONS contained
in this Agreement;
(iii) any additional tax interest, penalties, legal or accounting
fees incurred because of statements, actions, or failures to act by
any employees or agents of PARSONS or G/C after the Closing Date
including, without limitation any additional tax, interest, penalty
or other amount resulting from the failure of the transactions
contemplated by this Agreement to be taxed as a sale and purchase
of assets under Section 338(h)(10) of the Code.
(iv) any litigation, claim or judgment brought or continued
(except for matters that are being defended by SHAREHOLDER's
insurers) against SHAREHOLDER after the Closing Date, arising out
of the activities or operation of G/C unless specifically retained
by SHAREHOLDER as set forth in Exhibit B.
(v) any claim attributable to the operation of G/C and its
Subsidiaries after the Closing Date.
7.3. The obligations and liabilities of SHAREHOLDER to indemnify
PARSONS and its Affiliates and PARSONS to indemnify SHAREHOLDER under
this Article 7 with respect to Claims relating to third parties shall be
subject to the following terms and conditions:
7.3.1. The party or parties to be indemnified (whether one or more,
the "Indemnified Party") will give SHAREHOLDER or PARSONS, as the case
may be (the "Indemnifying Party") prompt written notice of any such
Claim, and the Indemnifying Party will undertake the defense thereof by
representatives chosen by it. Failure to give such notice shall not
affect the Indemnifying Party's duty or obligations under this Article
7, except to the extent the Indemnifying Party is prejudiced thereby.
So long as the Indemnifying Party is defending any such Claim actively
and in good faith, the Indemnified Party shall not settle such Claim.
The Indemnified party shall make available to the Indemnifying Party or
its representatives all records and other materials required by them and
in the possession or under the control of the Indemnified Party, for the
use of the Indemnifying Party and its representatives in defending any
such Claim, and shall in other respects give reasonable cooperation in
such defense.
7.3.2. If the Indemnifying Party, within a reasonable time after
notice of any such Claim, fails to defend such Claim actively and in
good faith, the Indemnified Party will (upon further notice) have the
right to undertake the defense, compromise or settlement of such Claim
or consent to the entry of a judgment with respect to such Claim, on
behalf of and for the account and risk of the Indemnifying Party, and
the Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to
judgment therein, provided, however, that no such failure to defend
shall be deemed an admission that such claim is subject to
indemnification hereunder.
7.3.3. Anything in this Section 7.3 to the contrary
notwithstanding, (i) if there is a reasonable probability that a Claim
may materially and adversely affect the Indemnified Party other than as
a result of money damages or other money payments, the Indemnified Party
shall have the right to defend, compromise or settle such Claim, and
(ii) the Indemnifying Party shall not, without the written consent of
the Indemnified Party, settle or compromise any Claim or consent to the
entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified
Party of a release from all liability in respect of such Claim;
7.4. Except for any willful or knowing breach or fraud, as to
which claims may be brought without limitation as to time or amount, no
claim or action shall be brought under this Article 7 or otherwise under
this Agreement for breach of a representation or warranty after the
lapse of two years following the Closing Date. Regardless of the
foregoing, however, or any other provision of this Agreement:
7.4.1. Claims or actions brought for breach of any representation
or warranty made by SHAREHOLDER or G/C in or pursuant to Section 3.1.1,
3.1.2, 3.1.3, 3.1.17 or 3.1.21 hereof shall be brought in accordance
with all applicable statutory limitation periods with respect thereto.
7.4.2. Any claim or action brought for breach of any representation
or warranty made by SHAREHOLDER or G/C in or pursuant to Section 3.1.9
hereof may be brought at any time until the underlying Tax is barred by
the applicable period of limitation under federal and state laws
relating thereto (as such period may be extended by waiver).
7.4.3. Any claim made by a party hereunder for breach of a
representation or warranty prior to the termination of the survival
period for such claim shall be preserved despite the subsequent
termination of such survival period.
7.4.4. If any act, omission, disclosure or failure to disclose
shall form the basis for a claim for breach of more than one
representation or warranty, and such claims have different periods of
survival hereunder, the termination of the survival period of one claim
shall not affect a party's right to make a claim based on the breach of
representation or warranty still surviving.
7.4.5. Notwithstanding any investigation or audit conducted before
or after the Closing Date or the decision of any party to complete the
Closing, each party shall be entitled to rely upon the representations
and warranties of the other party or parties set forth herein, unless
the party relying upon such representation or warranty had actual
knowledge that it was false prior to the date hereof.
7.4.6. SHAREHOLDER shall not be liable to PARSONS or any Affiliate
under Section 7.1 hereof or otherwise under this Agreement nor shall
PARSONS be liable to SHAREHOLDER under Section 7.2 hereof or otherwise
under this Agreement (a) for any misrepresentation or breach of warranty
until the aggregate amount for which they would otherwise (but for this
provision) be liable to any or all such parties for all such
misrepresentations and breaches of warranty exceeds in the aggregate
$50,000, or (b) for any amount in excess of $46,000,000 in the
aggregate.
7.4.7. Nothing herein shall be deemed to prevent the Indemnified
Party from making a claim hereunder for potential or contingent claims
or demands provided the claim notice sets forth the specific basis for
any such potential or contingent claim or demand to the extent then
feasible and the Indemnified Party has reasonable grounds to believe
that such a claim or demand may be made.
ARTICLE 8. TERMINATION
8.1. This Agreement may be terminated prior to the Closing Date:
(a) by mutual written consent of SHAREHOLDER and PARSONS, authorized by
their respective directors; or (b) by written notice from SHAREHOLDER to
PARSONS, if the conditions provided in Article 5 shall not be satisfied
by August 31, 1995, or the date of such notice, whichever is later; or
(c) by written notice from PARSONS to SHAREHOLDER, if the conditions
provided in Article 6 shall not be satisfied by August 31, 1995, or the
date of such notice, whichever is later.
8.2. In the event of the termination and abandonment hereof
pursuant to the provisions of this Article 8, this Agreement shall
become void and have no effect (except for Articles 7 and 8 hereof and
Sections 9.3, 9.4 and the last sentence of Section 9.6 hereof with
respect to governing law), without any liability on the part of PARSONS,
SHAREHOLDER or G/C or the directors, officers or shareholders of
PARSONS, SHAREHOLDER or G/C in respect of this Agreement.
Notwithstanding the foregoing, if such termination is due to the
intentional nonfulfillment of any covenant or agreement hereunder or the
fraud on the part of either party hereto, such party shall be liable to
the other party hereto (i) to the extent of the expenses incurred by
such other party in connection with this Agreement and the transactions
contemplated hereby and (ii) in the case of a fraud or intentional non-
fulfillment of a covenant or an agreement, for damages.
ARTICLE 9. MISCELLANEOUS
9.1. Any of the provisions of this Agreement may be waived at any
time prior to the Closing Date by PARSONS or Shareholder, whichever is
or are entitled to the benefit thereof. Any of the provisions of this
Agreement may be modified at any time prior to the Closing Date by
agreement in writing between the parties and executed in the same
manner, but not necessarily by the same persons, as this Agreement.
9.2. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly
given if sent by telefax (with confirming telefax receipt) or delivered
by recognized courier service (with receipt acknowledged) addressed as
follows (or addressed in such other manner as the party or parties
receiving such notice may specify by notice to the other parties):
If to SHAREHOLDER: GILBERT ASSOCIATES, INC.
Attn.: President and Chief Executive Officer
P.O. Box 1498 (19603)
Route 10 and Pheasant Road
Reading, PA 19607
Telefax: 610-856-5399
with a required copy to:
Berlack, Israels & Liberman
Attn: Douglas Davidson, Esq.
120 West 45th Street
New York, NY 10036
Telefax: 212-704-0196
If to PARSONS: THE PARSONS CORPORATION
Attn: Senior Vice President and
Chief Financial Officer
100 West Walnut Street
Pasadena, CA 91124
Telefax: 818-440-2630
with a required copy to:
Morgan, Lewis & Bockius
Attn: Timothy Maxwell, Esq.
2000 One Logan Square
Philadelphia, PA 19103
Telefax: 215-963-5299
or to such other address as any party shall furnish to the other by
notice given in accordance with this Section 9.2. Each such notice,
request, demand, application, service of process and other communication
shall be deemed to have been given as of the date telefaxed, delivered
or mailed, or, if given by any other means, shall be deemed given only
when actually received by the addressee.
9.3. All information disclosed heretofore or hereafter by any
party to any other party in connection with this Agreement shall be kept
confidential by such other party, and shall not be used by such other
party otherwise than for use in connection with this Agreement, except
to the extent as was known to such other party when received or as it is
or hereafter becomes lawfully obtainable from other sources, or to the
extent such duty as to confidentiality and non-use is waived by such
disclosing party. Such obligation as to confidentiality and non-use
shall survive termination of this Agreement. In the event of
termination of this Agreement each party shall use its reasonable best
efforts to return to the other parties all documents (and reproductions
thereof) received from such other parties (and, in the case of
reproductions, all such reproductions made by the receiving party) that
include information not within the exception contained in the first
sentence of this Section 9.3.
9.4. If this Agreement is terminated pursuant to Article 8 hereof,
or for any other reason, PARSONS, on the one hand, and SHAREHOLDER and
G/C, on the other hand, shall bear their respective expenses incurred in
connection with or arising out of this Agreement or its termination.
9.5. All Exhibits and Schedules referred to herein are intended to
be and hereby are specifically made a part of this Agreement. This
Agreement sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby. This Agreement may be
amended only by instrument in writing executed and authorized as
provided herein. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof,
whether written or oral, including without limitation the Agreement in
Principle, are superseded by this Agreement.
9.6. Nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person, firm or
corporation other than the parties hereto and their respective
shareholders any rights or remedies under or by reason of this
Agreement. The captions on this Agreement are for convenience only and
shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement. 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. This Agreement shall be governed by and construed in
accordance with the local law of the State of Delaware.
IN WITNESS WHEREOF, PARSONS, G/C and SHAREHOLDER, each intending to
be legally bound, have caused this Agreement to be signed by their
respective officers hereunto duly authorized, all as of the day and year
first above written.
THE PARSONS CORPORATION
BY:_____________________________________
GILBERT/COMMONWEALTH, INC.
BY:_____________________________________
GILBERT ASSOCIATES, INC.
BY:_____________________________________
EXHIBIT A
G/C Balance Sheet (000's)
Adjusted
Per Operating Trial Bal. Sheet
Balance 12/30/94 Adj. 12/30/94
Accounts receivable 11,659 (A) 11,659
Bad debt reserve (1,738) 1,338 (B) (400)
Unbilled revenue 8,488 8,488
Deferred income taxes 220 (220)(I) 0
Other current assets 728 (302)(C) 473
47 (J)
------ ------ ------
Total current assets 19,357 863 20,220
Deferred income taxes 170 (170)(I) 0
Equip. & furniture 22,197 2,506 (D) 24,703
Accumulated depr. (18,465) (2,116)(D) (20,581)
------- ------- --------
Net book value 3,732 390 4,122
------- ------- --------
Total assets 23,259 1,083 24,342
======= ======= =======
Accounts payable 1,460 1,460
Accrued salaries & wages 4,247 4,247
Accrued income taxes 679 (679)(E) 0
Billings in excess of
recognized revenue 1,921 1,921
Accrued medical & dental 816 816
Accrued 401K match 743 743
Other accrued liabilities 1,436 212 (F) 1,570
(78)(K)
------ ----- -----
Total current liabilities 11,302 (545) 10,757
Postretirement benefits 528 (528)(G) 0
Open window pension 1,387 (1,387)(G) 0
Other long-term obligations 326 (326)(H) 0
------ ------ -----
Total liabilities 13,543 (2,786) 10,757
Stockholders' equity 9,716 3,869 13,585
------ ------ ------
Total liabilities & equity 23,259 1,083 24,342
====== ====== ======
(A) To remove miscellaneous accounts receivable relative to GHMC
activities which are not part of the transaction.
(B) To reduce the bad debt reserve to $400.
(C) To remove prepaid real estate taxes.
(D) Add reprographics and communication equipment.
(E) To remove state income tax accrual.
(F) To remove debit balance relative to legal bills for the age
discrimination case.
(G) To remove retirement liabilities not assumed.
(H) To remove dividend unit award accrual.
(I) To remove state deferred taxes.
(J) To add prepaid maintenance agreement relative to phone switch.
(K) To remove Pennsylvania and Tennessee franchise tax liabilities.
Note: The above operating trial balance does not reflect the TVA
settlement, age discrimination case and intercompany and equity
accounts. The balance sheet will have to be adjusted for other
GHMC related accounts, if any, in G/C's operating trial balance which
are excluded from the transactions.
EXHIBIT B- Items Excluded from the Transaction
The adjusted Balance Sheet of G/C shall exclude the following
items:
1.) Stock of Excluded Subsidiaries and all assets and liabilities
of Excluded Subsidiaries.
2.) All real property owned by G/C and the Excluded Subsidiaries
and all assets related to such real property, including but not
limited to prepaid real estate taxes, prepaid insurance and
expenses, deferred rental income and all assets used in the real
estate management business conducted by GHMC and all liabilities
related to such assets and business except for telecommunication
and reprographics.
3.) All intercompany advances and indebtedness owed by
Shareholder to Gilbert Investment Company.
4.) All intercompany advances and indebtedness owed to or by G/C
and its Included Subsidiaries by or to Shareholder and any of its
subsidiaries other than G/C and its Included Subsidiaries.
5.) All assets and liabilities associated with taxes of G/C and
its Subsidiaries relating to income, franchise or excise taxes
based on the income or net worth of G/C and the Included
Subsidiaries for any period ending on or before the closing date.
6.) Accrued liabilities, reserves and assets relating to TVA
Sequoyah Contract Settlement, G/C Inc. of Michigan v. Stanley F.
Mazur(Age Discrimination Case), Dividend Unit Award Plan, Open
Window Pension, Postretirement Life Insurance Program and
postretirement medical benefits.
7.) The amount by which the bad debt reserve recorded by G/C and
its Subsidiaries exceeds $400,000.
8.) Any workers compensation claims made on or before March 31,
1995 against G/C and Included Subsidiaries.
For workers compensation insurance specifically provided to
GAICO's customer(Delmarva) prior to closing, the Shareholder
shall be permitted to charge G/C or will be required to reimburse
G/C for worker compensation costs, as finally determined in a
manner consistent with prior years, to the extent permitted in
the Delmarva's contract. The final determination of worker
compensation will be completed once the policy years have been
closed.
A more detailed listing of the items set worth above will be
supplied by SHAREHOLDER on or before Shareholder's submittal of
the Adjusted March Balance Sheet to Parsons as provided for in
Section 1.2.2.
Definitions - "Excluded Subsidiaries" shall mean Green Hills
Management Company(GHMC), GAI Inc., Gilbert Associates(Europe)
Limited and "Included Subsidiaries" shall mean G/C Subsidiaries
other than the Excluded Subsidiaries. Included Subsidiaries are
as follows:
GAICO, Inc.
Gilbert Architectural Company
Gilbert Construction Company
Gilbert Investment Company
Gilbert Associates of VA, Inc.
Gilbert/Commonwealth Inc. of Ohio
Gilbert Associates (Australia) Pty., LTD
Gilbert/Commonwealth Overseas Ltd.
Gilbert Associates - S.A.E. Engineers and Consultants
EXHIBIT C
Use of Operating Systems
Continued Use of Systems and Services
For a period up to six months following the date of closing, G/C
will continue to provide the following services:
1.) Accounting system - G/C will continue to allow the
Shareholder and GHMC to use the accounting system and will
continue to process all accounting transactions for the
Shareholder and GHMC. These transactions include, but are not
limited to, monthly financial closing, preparation of journal
entries, generation of monthly financial reports and other
related accounting duties. The monthly close will continue to be
completed by the fifth business day following the Shareholder's
month end.
2.) Use of the telecommunication switch, network and other
related services.
3.) Computer Network and Services - G/C will continue to allow
the Shareholder and GHMC the use of the computer network and
provide both hardware and software support.
EXHIBIT D
OFFICE LEASE
BETWEEN
GREEN HILLS MANAGEMENT COMPANY (GHMC)
and
GILBERT/COMMONWEALTH, INC. (Lessee)
Premises:
Green Hills Corporate Center
Rt. 10 & Pheasant Road
Phase I
Green Hills, Reading, PA 19607
COMMERCIAL OFFICE LEASE
THIS AGREEMENT OF LEASE, entered into as of the day of
, 1995, by and between GREEN HILLS MANAGEMENT CO., a corporation
authorized to do business in the Commonwealth of Pennsylvania,
P.O. Box 1498, Reading, Pennsylvania, 19603, Lessor, hereinafter
referred to as "GHMC" and GILBERT/COMMONWEALTH, INC., Route 10 &
Pheasant Road, Reading, Pennsylvania, 19607, a corporation
authorized to do business in the Commonwealth of Pennsylvania,
hereinafter referred to as "Lessee".
W I T N E S S E T H:
GHMC does hereby lease to Lessee, 200,000 rentable square feet
of office space located in Green Hills Corporate Center, Reading,
Pennsylvania, the Demised Premises. See Schedule "A" attached.
This Lease is made upon the following terms and conditions:
1. Term
This Lease is made for an initial term of 120 months
commencing on the date of closing pursuant to the Stock
Purchase Agreement between Lessee and Gilbert Associates,
Inc., and expiring 120 months later . Lessee shall have the
option to extend this lease for two additional 60 month
periods by giving GHMC written notice at least six (6)
months prior to the expiration date set out herein.
2. Rental
a. Base Rental
The initial base rental shall be Fifteen Dollars
($15.00) per office rentable square foot per year and
Four Dollars ($4.00) per storage rentable square foot
per year. Said rental shall be payable in advance on
or before the fifth day of each and every month during
the term hereof, in equal monthly installments of
$250,000.00, provided, however, that said rental shall
be prorated for partial months at the beginning and end
of the term. Escalation of the aforementioned rental
shall be calculated at three percent (3%) per annum on
lease anniversary date. Schedule "B" (attached)
defines the existing rental stream of this agreement.
b. Renewal Rental
In the event that Lessee desires to exercise its option
to renew for an additional 60 month term, the base
rental shall be negotiated based on the then existing
market conditions.
c. Late Payment
Any installment of rent accruing hereunder and any
other sum payable hereunder, if not paid when due shall
bear interest at the highest rate authorized by law
until paid.
3. Use of Demised Premises
Lessee shall, during standard business hours (7:00 A.M.
through 7:00 P.M., Monday through Friday) use the Demised
Premises for general office purposes, and for no other use
or purpose, or at other times, without the prior written
consent of GHMC. Lessee shall not conduct significant
operations within the Demised Premises at other than
standard business hours , but nothing contained herein shall
prevent Lessee from casual, not routinely scheduled,
overtime work at other than standard business hours as may
be required. This limitation shall, however, not apply to
Lessee's operation of a print or reproduction facility in
the Demised Premises, which shall be permitted. Any costs
incurred by GHMC, over and above the costs experienced by
GHMC elsewhere in the Demised Premises for general office
purpose operation shall, however, be added to the Base
Rental provided hereunder and treated as additional rent.
Such cost shall include but not be limited to high
electrical consuming machinery and equipment ,environmental
compliance and excessive water and sewer usage.
4. Parking
Lessee shall be entitled to the use 115 reserved parking
spaces in GHMC's parking areas (See Schedule "C" attached).
General parking is represented in Schedule "C" as parking
available on a first come-first served basis by all clients
at Green HillsCorporate Center. From time to time
maintenance is required on parking facilities. Cooperation
is requested of all GHMC clients while preventive
maintenance is accomplished.
5. Services and Utilities
GHMC covenants and agrees so long as the Lessee is not in
default under any of the covenants of this Lease to furnish:
a. Heat and air conditioning, in season, during normal
business hours, in such amounts and at such
temperatures as are considered by GHMC to be
reasonable, consistent with those supplied in the past
to the Premises and at substantially the same
temperatures maintained throughout the building
(excluding special air conditioning for any electronic
data processing machines, computers or similar machines
of high electrical consumption, the use of which has
not been expressly approved by GHMC);
b. Hot and cold water and sewage removal at those points
of supply or removal provided for general use of
tenancy (excluding high water and sewage usage by the
reproduction and print shop unless such additional
costs are paid for by Lessee);
c. Automatic elevator service;
d. Electric current for ordinary office use, and
additionally, as required for any normal office
machines, excluding electronic data processing
machines, computers or similar machines of high
electrical consumption, the use of which has not been
expressly approved by GHMC. Extraordinary use of
electrical services shall require separate metering by
GHMC for direct payment by Lessee.
e. Janitorial services for cleaning of the Demised
Premises five (5) days weekly in the manner and to the
extent provided by GHMC for itself elsewhere in the
building;
f. Electric lighting service in the manner and to the
extent provided by GHMC for itself elsewhere in the
building;
g. Use of the reception area of the building;
h. Electronic security services in the manner and to the
extent provided for by GHMC itself elsewhere in the
building;
i. Trash and snow removal to the same extent provided by
GHMC for itself in other areas of the building.
j. Repairs and maintenance to building and grounds
throughout Green Hills Corporate Center. Not included
but fee available:
- Tenant improvement services,
- Architectural space design services,
- Move and change planning and implementation,
- Conference room setup services; conference center services,
- Computer setup services
- Security guard services
GHMC reserves the right to stop the above-defined services
at any time when necessary or desirable in the judgment of
GHMC by reason of accident or emergency or for repairs,
maintenance, alterations, replacements or improvements.
GHMC shall use reasonable diligence to repair, maintain,
alter, replace, or improve same promptly, but Lessee shall
have no claim for rebate or reduction of rent or for damages
on account of any interruptions in said services occasioned
thereby or resulting therefrom.
If the Demised Premises are rendered totally or partly
untenable for a period of twenty (20) consecutive days,
Lessee is permitted to reduce its monthly base rental in
exact proportion to the rental space made untenable. The
rent abatement shall be calculated in exact proportion to
the number of days that the Demised Premises were made
untenable. For purposes of this Lease, and the rental
abatement period, even though Lessee must wait twenty (20)
days before abating the rent, once the twenty (20) days are
up, the rent abatement shall include the twenty (20) days'
period.
The term untenable shall include floods to the premises, the
need for structural repairs affecting Lessee's demised
premises, or any other situations where Lessee cannot
physically gain access to its premises during a regular
business day.
6. Preparation of Demised Premises
Demised premises, as occupied by Lessee is considered an "as
is" lease.
Lessee shall make no changes in or to the Demised Premises.
In the event that Lessee may from time to time require
electrical supply hook-ups for its equipment in the Demised
Premises or shall require other modifications of the Demised
Premises or installation of other equipment within the
Demised Premises, it shall so inform GHMC. If approved by
GHMC, GHMC will, on a mutually agreed upon schedule, provide
the necessary service. GHMC shall charge Lessee for service
on a time and material basis, at GHMC's scheduled rates.
GHMC shall bill Lessee for such service and Lessee shall
reimburse GHMC for the cost of such service within thirty
(30) days of the receipt of billing.
Should Lessee believe that GHMC's scheduled rates and
estimated time to complete any task requested by Lessee
hereunder, not be competitively priced; Lessee shall have
the right to obtain competitive bid or bids from qualified
outside contractors to perform the specified task. Should
such outside contractor or contractors provide a lower total
bid to complete such task, GHMC will, at its discretion,
either reduce its price to equal the lowest qualified bid or
authorize the outside contractor to perform the specified
task directly for Lessee.
7. Security
Security will be provided either by GHMC's standard security
force and / or electronic security. Lessee agrees that its
employees assigned to work within the Demised Premises and
any of its visitors to the Demised Premises shall observe
all GHMC security procedures which may from time to time be
in effect and that such procedures may include, without
limitation, the wearing of identification badges, signing of
building registers, photographing, and all other procedures
which GHMC may deem necessary or desirable.
8. Care of Premises
Lessee agrees that it will take good care of the Demised
Premises, fixtures and appurtenances, and suffer no waste or
injury; that it will be responsible to pay for all repairs
to the Demised Premises, fixtures and appurtenances
necessitated by the negligence or willful acts of Lessee,
its agents, employees or guests; that in its use of the
Premises it will conform to all laws, orders and regulations
of the Federal, State and County authorities or any of their
departments, and will not through its act or neglect cause
any situation to exist in or about the Leased Premises which
would constitute a violation of any Federal, State, or
County code, regulation or ordinance governing use,
occupancy, health, sanitation or fire (but nothing herein
shall make Lessee liable for any repairs or alterations to
the Premises or the building necessitated by the fault of
Lessor, its agents, employees, guests, or other tenants).
Lessee further agrees that it will not do, or permit
anything to be done, in the Premises which will in any way
increase the fire insurance premium on the building, or
conflict with the fire insurance policies on the building.
Lessee will defend and save harmless GHMC from any liability
arising from injury to person or property caused by any
negligence or willful act or omission of Lessee, its agents,
employees, or guests. Lessee will surrender the Leased
Premises at the expiration of the term (or the sooner
termination thereof for any reason) in as good condition as
they were at the beginning of the term, ordinary wear and
tear excepted. Should Lessee fail to occupy the premises
for sixty (60) days due to any cause other than breach by
the Lessor, all alterations, additions, renovations or
improvements to the premises made by Lessee shall become, at
GHMC's option, a part of the real estate and belong to GHMC
without payment of any consideration and shall remain in and
be surrendered with the premises as part thereof at the
expiration or sooner termination of the lease. If GHMC
elects not to have ownership of the alterations made to its
property, Lessee shall be obligated to restore the premises,
at its costs and expense, to the condition at the time of
leasing.
9. Insurance
It is understood that GHMC insures the building of which the
Demised Premises are a part for its own protection and that
it shall have no obligation to carry insurance on any of the
property of Lessee or its employees assigned to work in the
building. Lessee further agrees to procure and maintain at
Lessee's expense throughout the continuance of this Lease,
comprehensive general liability insurance with a minimum of
One Million Dollars ($1,000,000) per occurrence for bodily
injury including death and property damage, from a reputable
company. Such comprehensive general liability insurance
shall include, but not be limited to, contractual liability
insurance covering the hold harmless agreements contained in
Paragraphs entitled "Indemnification" and "Care of Premises"
of this Lease. Lessee also agrees to procure and maintain
fire legal liability insurance, either by endorsement to the
afore-mentioned comprehensive general liability policy or by
a separate policy, with a minimum of Two Million Dollars
($2,000,000) covering Lessee's legal liability for damages
to the leased Premises. Evidence of insurance coverage and
providing for thirty (30) days prior written notice to GHMC
of any material change in or cancellation of the foregoing
policy(ies) shall be furnished to GHMC promptly after the
date of execution of this Lease.
10. Damage, Destruction, or Eminent Domain
In the event that the Demised Premises or the building of
which they are a part shall be materially damaged or if the
said building of any material part thereof be taken in any
eminent domain proceedings and if, as a result thereof,
Lessee shall be substantially prevented from conducting its
operations within the Demised Premises for a period of
thirty (30) consecutive days, Lessee may thereupon terminate
this Lease by written notice to GHMC. Should only a portion
of the Demised Premises be unavailable for Lessee's use then
the rent on such space or spaces shall abate proportionately
on such space which was rendered unusable until such time
as such space can be repaired, restored or replaced, after
which the full amount of rent shall once again be payable as
herein set forth.
11. Notices
Any notice required or permitted to be given hereunder shall
be in writing and mailed, postage prepaid, by certified or
registered U.S. mail, return receipt requested, to the
address set forth herein for each notice. Notices shall be
deemed to have been given when mailed, as evidenced by
receipt for said mailing.
12. Signs and Advertising
No sign, advertising or notice shall be inscribed, affixed
or displayed on any part of the outside or inside of the
building, nor shall any advertising medium be used within
the Demised Premises, except as approved in writing in
advance by GHMC. Lessee shall obtain and pay for all
permits and licenses, if any, required in connection with
any approved sign and shall be responsible for the proper
installation and maintenance thereof. Copies of all such
required permits and licenses in connection with any
approved sign shall be delivered to GHMC within a reasonable
time after they are issued.
If any sign, advertisement or notice is improperly
exhibited, GHMC shall have the right to remove the same, and
Lessee shall be liable for any and all expenses incurred by
GHMC in said removal. Any such permitted use, including
directories and name plates, shall be at the sole expense
and cost of the Lessee, except as otherwise provided. GHMC
shall have the right to prohibit any advertisement of Lessee
which in its option tends to impair the reputation of the
building or its desirability as a high-quality office
building, and, upon written notice from GHMC, Lessee shall
immediately refrain from and discontinue any such
advertisement.
13. Inspection of Premises
Lessee agrees it will allow GHMC, its agents or employees,
to enter the Demised Premises at all reasonable times, but
only after giving Lessee advance notice, without charge
therefore to GHMC and without diminution of the rent payable
to Lessee, to examine, inspect or to protect the same, or to
prevent damage or injury to the same, or to make such
alterations and repairs as GHMC may deem necessary or to
exhibit the same to prospective tenants. The above
referenced advance notice requirement shall not apply to
security, maintenance, or janitorial personnel or emergency
situations.
14. Assignment - Subleasing
The Lessee shall not assign or sublet the whole or any part
of the leased Premises without GHMC's prior written consent,
which consent shall not be unreasonably withheld. Lessee
shall not, however, be required to obtain GHMC's written
consent to sublease to any company owned by Lessee or which
is owned by The Parsons Corporation. These related party
subleases shall be effective on notice to GHMC.
Notwithstanding such consent or notice, Lessee shall remain
liable to GHMC for the payment of all rent and for the full
performance of the covenants and conditions of this Lease,
unless GHMC specifically agrees in writing to release Lessee
from such obligations.
15. Default and Bankruptcy
In the event that:
a. Lessee shall default in the payment of any installment
of rent or other sum herein specified and such default
shall continue for ten (10) days after written notice
thereof; or
b. Lessee shall default in the observance or performance
of any other of the Lessee's covenants, agreements or
obligations hereunder and such default shall not be
corrected within thirty (30) days after written notice
thereof; or
c. Lessee shall be declared bankrupt or insolvent
according to law, or if any assignment shall be made of
Lessee's property for the benefit of creditors, then
GHMC shall have the right thereafter, while such
default continues, to re-enter and take complete
possession of the leased Premises, to declare the term
of this Lease ended, and remove Lessee's effects,
without prejudice to any remedies which might be
otherwise used for arrears of rent or other default.
The Lessee shall indemnify GHMC against all loss of
rent and other payments which GHMC may incur by reason
of such termination during the residue of the term. If
the Lessee shall default, after reasonable notice
thereof, in the observance or performance of any
conditions or covenants on Lessee's part to be observed
or performed under or by virtue of any of the
provisions in any article of this Lease, GHMC, without
being under any obligation to do so and without thereby
waiving such default, may remedy such default for the
account and at the expense of the Lessee.
16. Subordination
This Lease shall be subject to and subordinate at all times
to the lien of any mortgages and/or deeds of trust now or
hereafter made on the Demised Premises, and to all advances
made or hereafter to be made thereunder. This subordination
provision shall be self-operative and no further instrument
of subordination shall be required.
Lessee shall, at any time during the term of this Lease,
within twenty (20) days after written request by GHMC,
certify by written instrument, the form of which shall be
furnished by GHMC, duly executed and acknowledged, to any
lender or proposed lender of the property containing the
Demised Premises: (a) as to whether this Lease has been
supplemented or amended and if so, the substance and manner
of such supplement or amendment; (b) as to the validity and
force and effect of this Lease in accordance with its tenor
as then constituted; (c) as to the existence, to Lessee's
knowledge, of any default hereunder; (d) as to the
commencement and expiration dates of the term of this Lease;
and (e) as to any other matters as may be reasonably so
requested.
17. Indemnification
Lessee will hold GHMC exempt and harmless for and on account
of any damage or injury to any person, or to the goods,
wares and merchandise, of any person, arising from the use
of the Premises or common areas of the building by Lessee,
or arising from the failure of Lessee to keep the Premises
in good condition as herein provided. Lessee agrees to
protect, indemnify, and save harmless GHMC on account of any
injury or damage to persons or their property, whether on
the Premises or in the common areas of the building, caused
or resulting from Lessee's occupancy of the Premises and the
building. GHMC shall not be liable to Lessee for any damage
by or from any act or negligence of any other occupant of
the same building. Lessee agrees to pay for all damage to
the building, and to defend, indemnify and hold GHMC
harmless with respect to damage to tenants or occupants
thereof to the extent such damage is caused by Lessee's
negligence or willful act on said Premises, its apparatus or
appurtenances.
18. Expansion / Surrender of Space
Lessee shall have the right of first refusal on any space
adjacent to the Demised Premises that may become available
during the terms of this lease, provided that at least
twenty-four (24) months remain on the term, and that such
right has not been granted to Penske (Penske has already
been granted a right of first refusal on space in the
existing complex, but has only exercised such right on space
contigious to their existing space). GHMC will, however,
exert all reasonable effort to meet Lessee's space needs,
including where possible relocation of existing tenants.
Such space to be rented "as-is". GHMC shall notify Lessee
in writing of the availability of any such space and Lessee
shall have ten (10) days to respond to such offering.
Beginning after Lessee has paid GHMC 60 monthly rental
payments, hereunder, and continuing through the remainder of
the original term, Lessee shall have the right, upon six (6)
months advance written notice to GHMC to surrender up to
10,000 rentable square feet of office space per annum to
GHMC. Such space shall be in contiguous units of not less
than 5,000 rentable square feet of office space and shall be
situated in such a fashion as to allow for re-rental by GHMC
to third party or parties. The maximum square footage which
may be returned under this Paragraph shall not exceed 10,000
square feet per year and 50,000 square feet over the term of
this Agreement.
19. Lessee's Covenants
Lessee agrees that it will keep the Demised Premises and the
fixtures therein in good order and condition, and will, at
the expiration or other termination of the term hereof,
surrender and deliver up the same in like good order and
condition as the same now is or shall be at the commencement
of the term hereof, ordinary wear and tear, and damage by
the elements, fire and other unavoidable casualty not due to
the negligence of Lessee, excepted. The Lessee further
agrees not to make any additions or alterations, structural
or otherwise, in or upon the Demised Premises, or the
building of which they are a part, without first having
obtained GHMC's written consent; and that any such additions
or alterations much conform to any and all applicable
building code standards, as well as any and all other
applicable requirements of the federal, state and local
government. It is distinctly understood that any and all
additions, alterations, installations, changes, replacements
or improvements upon the Demised Premises shall remain upon
the Demised Premises, and be surrendered with the Demised
Premises at the expiration or other termination of this
Lease without disturbance, molestation or injury.
Should GHMC elect that certain alterations, installations,
changes, replacements, additions to or improvements upon the
Demised Premises be removed upon expiration or other
termination of this Lease, or any renewal period hereof,
Lessee hereby agrees to cause the same to be removed at
Lessee's sole cost and expense, and to repair any damage to
the Demised Premises arising from the installation of or the
removal of same, and should Lessee fail to remove the same,
then and in such event, GHMC shall cause same to be removed
at Lessee's sole risk and expense, and Lessee hereby agrees
to reimburse GHMC for the cost of such removal, together
with any and all damages which GHMC may suffer and sustain
by reason of the failure of Lessee to remove the same.
20. Notices
All notices under this Lease shall be in writing and sent by
registered or certified mail as follows:
To Tenant: Green Hills Corporate Center
Rt. 10 and Pheasant Road
Reading, PA 19607
To Landlord: Green Hills Management Company
Attention: Director, Real Estate Services
P. O. Box 1498
Reading, PA 19603-1498
IN WITNESS WHEREOF, the parties hereto have caused this Lease to
be executed by their duly authorized representatives as of the
date and year first above written.
WITNESS: GREEN HILLS MANAGEMENT CO.
By: By:
Title:
WITNESS: GILBERT/COMMONWEALTH, INC.
By: By:
Title:
GUARANTY OF LEASE
In partial consideration of the covenants, conditions and
obligations contained in the Stock Purchase Agreement, to which
this Lease is attached as an Exhibit. The Parsons Corporation
hereby guarantees to GHMC and its successors and assigns the full
and punctual performance and observation by Lessee of all of the
material terms, covenants and conditions of this Lease. This
guaranty shall include any liability of Lessee or any related
company which may be occupying space pursuant to Section 14 of
the Lease. If, at any time, default shall be made by Lessee or
such related company, in the performance or observance of any of
the material terms, covenants or conditions, The Parsons
Corporation will keep, perform, and observe the same, as the case
may be, in their place and stead upon written notice from GHMC.
WITNESS: THE PARSONS CORPORATION
By:_________________________________
By:________________________________
EXHIBIT E
Health Care Benefits
Robert Hagenbaugh
Sally Magner
Mary Ann Shaw
Eunice Smith
Russell Smith
Richard A. Stoudt
Mike Tokolics
La Var Winsor
Shirley Adams
Peter L. Bretz
Janice M. Dobrosky
EXHIBIT F
EMPLOYMENT AGREEMENT
AGREEMENT, made as of the date of Closing, pursuant to the
Stock Purchase Agreement between Gilbert Associates, Inc. and The
Parsons Corporation, between Gilbert/Commonwealth, Inc. a
Delaware corporation (the "Company") and _________________ ["the
Employee").
WITNESSETH:
WHEREAS, the Company desires to retain the services of
Employee and Employee desires to be employed by Company upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and
Employee hereby agrees to serve in such position as shall be
assigned to Employee by the Company, for the period hereinafter
defined. Employee agrees to perform such services as shall from
time to time be assigned to him by the Company and, in the absence
of such assignment, such services customary to such position as
are necessary to the operations of Company. Employee further
agrees to use his best efforts to promote the interests of the
Company and to devote his full time, attention and energies to the
duties of his position and the business and affairs of the Company
during the Term of Employment (as hereinafter defined).
2. TERM OF EMPLOYMENT. The employment hereunder shall be
for a period of two [2] years (the "Term of Employment") which
shall commence on the effective date hereof and shall end twenty
four [24] months later unless earlier terminated (i) upon the
death of Employee, (ii) at the option of the Company upon 30 days'
prior written notice to Employee, in the event of the inability of
the Employee to perform his duties hereunder, whether by reason of
injury (physical or mental), illness or otherwise, incapacitating
Employee for a continuous period exceeding 180 days or (iii) upon
the discharge of Employee by the Company for cause as determined
by the Company. For purposes of this paragraph 2(iii), "discharge
for cause" shall mean:
a. willful or intentional violation of Company policies or
procedures, dereliction of Employee's duties or responsibilities,
insubordination, or any other actions knowingly taken in conflict
with the Company's interest and objectives;
b. commission of any grossly negligent, fraudulent or
dishonest act by Employee in connection with his employment with
the Company; or
c. the commission of any felony or act of moral turpitude.
3. COMPENSATION.
(a) Base Salary. As compensation for services hereunder,
the Company shall pay Employee an annual salary of $___________,
or such greater amount as may be established by Company, which
shall be payable in appropriate installments to conform with the
regular payroll dates for salaried personnel of the Company. The
salary rate for the Employee shall be periodically adjusted in
accordance with the salary administration policy of the Company,
but in no event shall such salary rate be decreased below the
salary rate in effect as of the date hereof.
(b) Vacation and Benefits. Employee shall receive paid
vacation days each year in accordance with prevailing Company
policies and shall participate on the same basis as other
employees of the Company in any other Company employee benefit
programs. The period of Employee's employment with Company prior
to the date hereof shall be credited in full to determine the
Employee's years of service for purposes of determining
eligibility for vacation and benefits.
(c) Payment Upon Early Termination. In the event of early
termination of employment for any reason specified in paragraph
2(i), (ii) or (iii) hereof, the Company shall no longer be
obligated to make any further compensation payments of any kind
under this Agreement to Employee or his estate. In particular,
the Employee shall not be entitled to any bonus payment for any
portion of the year in which his employment so terminates or for
any succeeding year except that in the case of death, the
Employee's estate shall be entitled to a pro rated bonus, if so
earned, for the portion of the year worked by the Employee prior
to his death. Any base salary payments earned but not yet paid
shall be made by the Company to Employee or his estate.
4. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY;
CONFIDENTIALITY
(a) Covenant Not To Compete. Until one [1] year after
Closing Date, Employee shall not without the Company's prior
written consent, directly or indirectly own, manage, operate,
control, be employed by or participate in the ownership,
management, operation or control of, or be connected in any manner
with, any business of a type and character engaged in and
competitive with that conducted by the Company. For these
purposes, Employee's ownership of securities of a public company
not in excess of 1% of any class of such securities shall not be
considered to be engaging in competition with the Company.
For the period set forth in the immediately preceding
paragraph, Employee agrees to refrain from interfering with the
employment relationship between the Company and its other
employees by soliciting any such individuals to participate in
independent business ventures or to accept other employment and
agrees to refrain from soliciting business from any client of the
Company for himself or for any entity in which Employee has an
interest.
It is the desire and intent of the parties that the
provisions of this paragraph 4(a) shall be enforced to the fullest
extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. If any
particular provision or portion of this paragraph 4(a) shall be
adjudicated to be invalid or unenforceable, this paragraph 4(a)
shall be deemed amended to delete therefrom such provision or
portion adjudicated to be invalid or unenforceable, such amendment
to apply only with respect to the operation of this paragraph in
the particular jurisdiction in which such adjudication is made.
Employee acknowledges and agrees that these provisions are
necessary for the Company's protection and are not unreasonable
because (i) his means of livelihood is not materially affected by
his abiding by the provisions hereof, and (ii) he is able to
obtain employment with companies whose businesses are not
competitive with those of the Company.
(b) Intellectual Property. During the Term of Employment,
Employee will disclose to the Company all ideas, inventions and
business plans developed by him during such period which relate
directly or indirectly to the business of the Company or its
subsidiaries or affiliates, including, without limitation, any
process, operation, product or improvement which may be patentable
or copyrightable. Employee agrees that such will be the property
of the Company and that he will at the Company's request and cost
do whatever is necessary to secure the rights thereto by patent,
copyright or otherwise to the Company.
(c) Confidentiality. Employee agrees that without the prior
written consent of the Company, such consent to be given only by
the Board of Directors of the Company, he will not use, publish or
otherwise divulge to anyone (other than the Company or any persons
employed or designated by the Company) any knowledge of or
information of any type whatsoever of a confidential nature
relating to the business of the Company or any of its subsidiaries
or affiliates, including, without limitation, all types of trade
secrets (unless readily ascertainable from public or published
information or trade sources).
(d) Survival. Employee agrees that it is necessary for the
protection of the Company that paragraphs 4(a), 4(b) and 4(c)
shall survive the Term of Employment until the date set out in
paragraph 4(a).
5. REIMBURSEMENT OF EXPENSES. Employee shall be entitled
to be reimbursed for reasonable travel and other expenses incurred
in connection with the services to the Company pursuant to and
during the term of this Agreement upon a basis consistent with the
policies of the Company.
6. BREACH BY EMPLOYEE. Both parties recognize that the
services to be rendered under this Agreement by Employee are
special, unique and extraordinary in character, and that in the
event of a breach by Employee of the terms and conditions of this
Agreement to be performed by him, including, but not limited to
the obligations in paragraph 4 herein, the Company shall be
entitled, if it so elects, to institute and prosecute proceedings
in any court of competent jurisdiction, either in law or in
equity, to obtain damages for any breach of this Agreement, or to
enforce the specific performance thereof by Employee, or to enjoin
Employee from performing services for any such other person, firm
or corporation.
7. ASSIGNMENT. This Agreement is a personal contract and,
except as specifically set forth herein, the rights and interests
of Employee herein may not be sold, transferred, assigned, pledged
or hypothecated. The rights and obligations of the Company
hereunder shall be binding upon and run in favor of the successors
and assigns of the Company. In the event of any attempted
assignment or transfer of rights hereunder by Employee, contrary
to the provisions hereof, the Company shall have no further
liability for payments hereunder.
8. GOVERNING LAW; CAPTIONS. This Agreement contains the
entire Agreement between the parties and shall be governed by the
laws of the Commonwealth of Pennsylvania except with respect to
the Commonwealth of Pennsylvania's laws concerning the conflict of
laws. This Agreement may not be changed orally, but only by
agreement in writing signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
Paragraph headings are for convenience of reference only and shall
not be considered a part of this Agreement.
9. PRIOR AGREEMENTS. This Agreement supersedes and
terminates all prior agreements between the parties relating to
the subject matter herein addressed, including, without
limitation, any executive benefits, incentives, severance,
deferred compensation, salary continuation, retirement, pensions,
etc. which are not made generally available to Company employees
under the Company's standard employee and management benefit
plans.
10. NOTICES. Any notices or other communications required
or permitted hereunder shall be in writing and shall be deemed
effective when mailed by Certified Mail, Return Receipt
Requested, to the party at his or its address as follows (or at
such other address as the party may specify by written notice to
the other):
If to the Company: Gilbert/Commonwealth, Inc.
2675 Morgantown Road
Reading, Pennsylvania 19607
With copies to President
If to the Employee
11. CONDITIONS OF EMPLOYMENT. The Company acknowledges that
it is the Employee's understanding that his principal place of
employment will initially be in the area of his current
employment, but that Company retains the right to require the
Employee to accept assignments at other locations from time to
time. Employee additionally acknowledges that he will be expected
to work reasonable business hours and engage in travel away from
his principal place of employment in accordance with the Company's
business practices.
12. ACKNOWLEDGMENT. Employee hereby acknowledges that he
has been given the opportunity to review the terms and conditions
of this Agreement with any legal or other advisor of his choice
and that he fully understands and knowingly consents to the terms
and conditions thereof.
IN WITNESS WHEREOF, the Company has, by its appropriate
officer, signed this Agreement and Employee has signed this
Agreement, on and as of the day and year set forth below.
DATE _________________ EMPLOYEE
___________________________________
DATE ___________________ GILBERT/COMMONWEALTH, INC.
By:
_______________________________ .
Title:
BYLAWS
OF
GILBERT ASSOCIATES, INC.
OFFICES
1. The registered office of the corporation in the State of
Delaware shall be established and maintained at the principal business
office of the individual or corporation acting as the corporation's
registered agent in said State.
2. The corporation may have offices at such other place or places
as the Board of Directors may from time to time determine or the
business of the corporation may require.
SEAL
3. The corporate seal shall have the name of the corporation, the
year of its organization and the words "CORPORATE SEAL, DELAWARE"
inscribed thereon. If authorized by the Board of Directors, the
corporate seal may be affixed to any certificates of stock, bonds,
debentures, notes or other engraved, lithographed or printed
instruments, by engraving, lithographing or printing thereon such seal
or a facsimile thereof, and such seal or facsimile thereof so engraved,
lithographed or printed thereon shall have the same force and effect,
for all purposes, as if such corporate seal had been affixed thereto by
indentation.
STOCKHOLDERS' MEETINGS
4. All meetings of the stockholders shall be held at such time and
place as may be fixed by the Board of Directors.
5. The annual meeting of stockholders shall be held on the first
Friday in May in each year, if not a legal holiday, and if a legal
holiday, then on the next succeeding business day, when the stockholders
shall elect by a plurality vote, by ballot, a Board of Directors of the
corporation and transact such other business as may properly be brought
before the meeting; provided that, if the Board of Directors shall
determine that in any year it is not convenient or advisable to hold the
meeting on such day, then in such year the annual meeting shall instead
be held on such other day, not more than thirty days before or ninety
days after the first Friday in May and not a legal holiday, as the Board
of Directors shall prescribe. All meetings of stockholders shall be
presided over by the Chairman of the Board, if present, and otherwise by
the President or the Executive Vice President, except when by statute
the election of a presiding officer shall be required.
6. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy,
shall be requisite for and shall constitute a quorum at all meetings of
the stockholders for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation, or by these
Bylaws. If, however, a quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote
thereat, present in person or by proxy, shall have power to adjourn the
meeting, until a quorum shall be present; provided that, if the
adjournment is for more than thirty days, or if after adjournment a new
record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting. At such adjourned meeting at which a quorum
shall be present, in person or by proxy, any business may be transacted
which might have been transacted at the meeting as originally noticed.
7. For all purposes including the election of each director, at
every meeting of the stockholders, each holder of Class B Common Stock
of the corporation shall be entitled to one vote in person or by proxy
(appointed by an instrument in writing subscribed by such stockholder
and bearing a date not more than three years prior to said meeting) for
each share of such stock registered in his name on the books of the
corporation; provided, however, that (except where the transfer books of
the corporation shall have been closed or a date shall have been fixed
as a record date for the determination of the stockholders entitled to
vote, as hereinafter provided) no share of stock shall be voted at any
election for directors which has been transferred on the books of the
corporation within twenty days next preceding such election. The vote
for directors and, upon the demand of any stockholder, the vote upon any
question before the meeting, shall be by ballot. All elections shall be
determined and all questions decided by a plurality vote.
8. A complete list of the stockholders entitled to vote at the
ensuing election of directors, arranged in alphabetical order, with the
residence of each and the number of voting shares held by each, shall be
prepared by the Secretary and filed in the office where the election is
to be held at least ten days before every election and shall at all
times during the usual hours for business and during the whole time of
said election, be open to the examination of any stockholder.
9. Special meetings of the stockholders for any purpose or
purposes, unless otherwise proscribed by statute or by the Certificate
of Incorporation, may be called by the Chairman of the Board, if there
be one, and shall be called by the Chairman of the Board or the
Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued
and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
10. Business transacted at all special meetings shall be confined to
the objects stated in the call.
11. Notice of meetings of stockholders shall be delivered personally
or mailed, not less than ten nor more than sixty days before the
meeting, to each person who appears on the books of the corporation as a
stockholder entitled to vote at said meeting, except that where the
matter to be acted on is a merger or consolidation or sale, lease or
exchange of all or substantially all of the corporation's assets, such
notice shall be given not less than twenty nor more than sixty days
prior to the meeting. Each such notice shall briefly state the place,
date and hour of the meeting and, in the case of a special meeting of
stockholders, the purpose or purposes of the meeting.
DIRECTORS
12. The number of directors which shall constitute the whole Board
for its first meeting shall be three (3). Thereafter the number of
directors may be changed to not less than three (3) nor more than eleven
(11) as fixed from time to time by a resolution adopted by a majority of
the entire Board of Directors. The directors shall be elected at the
annual meeting of stockholders and each director shall be elected to
serve until the annual meeting of stockholders next succeeding his
election and until his successor shall be elected and shall qualify, or
for such shorter term as may be specified at the time of his election.
Each employee director of this corporation shall be a holder of Class B
Common Stock of the corporation, if any such shares are outstanding.
13. The property and business of the corporation shall be managed by
its Board of Directors which, in addition to the powers and authorities
by the Certificate of Incorporation and by these Bylaws expressly
conferred upon them, may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute, or by the
Certificate of Incorporation, or by these Bylaws directed or required to
be exercised or done by the stockholders.
14. If the office of any director becomes vacant by reason of death,
resignation, retirement, disqualification, or otherwise, the directors
then in office, although less than a quorum, by a majority vote, may
choose a successor or successors, who shall hold office for the
unexpired term in respect of which such vacancy occurred.
COMMITTEES OF THE BOARD
15. The Board of Directors may, by resolution passed by majority of
the whole Board, designate one or more committees, each committee to
consist of three or more of the Directors of the corporation. Any such
committee shall have and may exercise all the powers and authority of
the Board of Directors to the extent provided in the resolution of the
Board. However, no such committee shall have the power or authority of
the Board of Directors in reference to amending the Certificate of
Incorporation; adopting an agreement of merger or consolidation;
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets; recommending
to the stockholders a dissolution of the corporation or a revocation of
its dissolution; amending the Bylaws of the corporation; or declaring a
dividend or authorizing the issuance of stock.
16. Regular minutes of the proceedings of any committee appointed by
the Board of Directors shall be kept by the Secretary or an Assistant
Secretary of the corporation or by a secretary designated from among the
members of the committee, and all proceedings shall be reported to the
Board of Directors at its first meeting following the taking of any
action by the committee. The minutes of the proceedings shall be
transcribed in the regular minute book of the corporation. The presence
of a majority of the members of any such committee shall be necessary to
constitute a quorum at any meeting, and the affirmative vote of a
majority of all the members present at any meeting at which there is a
quorum shall be necessary to the taking of any action or the adoption of
any resolution.
COMPENSATION OF DIRECTORS
17. Directors, as such, shall not receive any stated salary for
their services, but by resolution of the Board, a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board; but nothing herein contained shall be
construed to preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
18. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
MEETINGS OF THE BOARD
19. The directors may hold their meetings at such places, either
within or without the State of Delaware, as shall, from time to time, be
determined by the Board.
20. The first meeting of the Board of Directors in each year at
which a quorum shall be present, held next after the annual meeting of
stockholders at which directors shall have been elected, shall be held
for the purpose of organization, the election of officers, and the
transaction of any other business which may come before the meeting.
21. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board.
22. Special meetings of the Board may be called by the Chairman of
the Board, the President, or the Executive Vice President or any two
directors. The Secretary or other officer performing his duties shall
give notice of such meetings either personally or by mail or by telegram
at least twenty-four hours before the meeting. Meetings may be held at
any time and place without such notice if all the directors are present
or if those not present waive notice either before or after the meeting.
23. Members of the Board of Directors, or any committee thereof, may
participate in a meeting of such Board, or committee, by means of a
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at such meeting.
24. Whenever any action is required or permitted to be taken by vote
at a meeting of the Board of Directors, or any committee thereof, such
action may be taken without a meeting if, prior or subsequent to the
taking of such action, all members of the Board of Directors, or such
committee, consent thereto in writing and such written consent or
consents are filed with the minutes of the proceedings of the Board of
Directors, or such committee; and each such consent shall have the same
effect as a unanimous vote at a meeting of the Board of Directors, or
such committee, as the case may be.
QUORUM
25. A majority of the whole number of directors shall be requisite
for and shall constitute a quorum at all meetings of the Board for the
transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum, shall be the act of
the Board of Directors, except as may be otherwise specifically provided
by statute or by the Certificate of Incorporation or by these Bylaws.
If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting until a quorum
shall be present.
OFFICERS
26. The officers of the corporation may include a Chairman of the
Board, a President, an Executive Vice President, one or more Vice
Presidents, a General Counsel, a Treasurer, one or more Assistant
Treasurers, a Secretary, one or more Assistant Secretaries, a
Controller, and such other officers and agents as may be deemed
necessary, who shall be chosen by the Board of Directors as hereinabove
provided, and shall hold their offices until their respective successors
are chosen and qualified. None of the officers, except the Chairman of
the Board if there be one and the President, need be a director. One
person may hold the offices of Secretary and Treasurer, or Vice
President and Treasurer or Vice President and Secretary, but not the
offices of Vice President, Secretary and Treasurer. Any officer elected
or appointed by the Board of Directors may be removed at any time, with
or without cause, by the affirmative vote of a majority of the whole
Board of Directors. If the office of any officer of the corporation
shall become vacant for any reason, the Board, by a majority vote of
those present at any meeting at which a quorum is present, may choose a
successor or successors, who shall hold office for the unexpired term in
respect of which such vacancy occurred.
27. The salaries of all officers and agents of the corporation shall
be fixed by the Board of Directors.
CHAIRMAN OF THE BOARD
28. The Chairman of the Board if there be one, shall preside at all
meetings of the Board of Directors and of the stockholders, except when
by statute the election of a presiding officer shall be required. He
shall exercise or delegate the authority to exercise the functions of
the President during the absence or disability of the President. He
shall have such other powers and perform such other duties as may be
prescribed from time to time by law, by the Bylaws or by the Board of
Directors.
PRESIDENT
29. The President shall, in the absence of the Chairman of the
Board, preside at all meetings of the stockholders and of the Board of
Directors. He shall have general supervision of the affairs of the
corporation and may sign or countersign all certificates, contracts or
other instruments of the corporation, and shall perform such other
duties as are incident to his office or are properly required of him by
the Board of Directors.
EXECUTIVE VICE PRESIDENT - VICE PRESIDENTS
30. (a) The Executive Vice President, if there be one, shall
exercise the functions of the President during the absence or disability
of the President. He shall also perform such other and further duties
as may from time to time be assigned to him by the Board of Directors.
(b) The Vice President - Finance, if there be one, shall be the
principal financial and accounting officer of the corporation, shall be
generally responsible for the financial and accounting aspects of the
corporation and shall supervise and control the offices of the
Controller and Treasurer. He shall also perform such other and further
duties as may, from time to time, be assigned to him by the Board of
Directors.
(c) The Vice President or Vice Presidents shall perform the
duties of the President or Executive Vice President in their respective
absences or during their respective inability to act. Any action taken
by a Vice President in performance of the duties of the President or the
Executive Vice President shall be prima facie evidence of the absence or
inability to act of the President or the Executive Vice President at the
time such action was taken. The Vice Presidents shall have such other
and further powers and shall perform such other and further duties as
may from time to time be assigned to them respectively by the Board of
Directors or by the Chairman of the Board, the President or Executive
Vice President.
GENERAL COUNSEL
31. The General Counsel, if there be one, shall be the principal
legal officer of the corporation. The General Counsel shall be
generally responsible for all matters of a legal nature including, but
not limited to, administration of all litigation in which the
corporation, from time to time, may become involved, review of legal
opinions as required in connection with the business of the corporation
and review of legal principles involved in contracts of the corporation.
He shall report to the President and shall perform such other and
further duties as may from time to time be assigned to him by the Board
of Directors or the President.
SECRETARY
AND ASSISTANT SECRETARIES
32. The Secretary shall attend all meetings of the Board of
Directors and of the stockholders and record all votes and the minutes
of all proceedings in a book or books to be kept by him for that
purpose; and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors and shall perform such
other duties as may be prescribed by the Board of Directors, or the
Chairman of the Board, under whose supervision he shall be. Any records
kept by him shall be the property of the corporation and shall be
restored to the corporation in case of his death, resignation,
retirement or removal from office. He shall be the custodian of the
seal of the corporation, and, when authorized by the Board of Directors
or by the Chairman of the Board, the President or any Vice President,
shall affix the same to all instruments requiring it and shall attest
the same. He shall have control of the stock ledger, stock certificate
book and other formal records and documents relating to the corporate
affairs of the corporation.
The Assistant Secretary or Assistant Secretaries shall assist
the Secretary in the performance of his duties and shall exercise and
perform his powers and duties in his absence or inability, and such
powers and duties as may be conferred or required by the Board of
Directors.
TREASURER
AND ASSISTANT TREASURERS
33. (a) The Treasurer shall have the custody of the funds and
securities of the corporation and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and
shall deposit all moneys and other valuable effects in the name and to
the credit of the corporation in such depositories as may be designated
by the Board of Directors.
(b) He shall disburse the funds of the corporation in such
manner as may be ordered by the Board of Directors or by the Chairman of
the Board or the President or any Vice President, taking proper vouchers
for such disbursements, and shall render to the Chairman of the Board or
the President or the Vice President - Finance, and to the directors, at
the regular meetings of the Board, or whenever they may require it, an
account of all his transactions as Treasurer and of the financial
condition of the corporation.
(c) The Treasurer shall exercise the powers and duties of his
office subject to the supervision and control of the Vice President -
Finance, if there be one. He shall have such other and further powers
and shall perform such other and further duties as may, from time to
time, be assigned to him by the Board of Directors.
(d) He shall give the corporation a bond, if required by the
Board of Directors, in such sum and in form and with one or more
sureties satisfactory to the Board for the faithful performance of the
duties of his office, and for the restoration to the corporation, in
case of his death, resignation, retirement or removal from office, of
all books, papers, vouchers, money and other property of whatever kind
in his possession or under his control belonging to the corporation.
The Assistant Treasurer or Assistant Treasurers shall assist the
Treasurer in the performance of his duties and shall exercise and
perform his powers and duties, in his absence or inability, and such
powers and duties as may be conferred or required by the Board of
Directors.
CONTROLLER
34. The Controller of the corporation, subject to the supervision
and control of the Vice President - Finance, if there be one, shall have
full control of all the books of account of the corporation and keep a
true and accurate record of all property owned by it, of its debts and
of its revenues and expenses and shall keep all accounting records of
the corporation other than the record of receipts and disbursements and
those relating to the deposit or custody of money and securities of the
corporation, which shall be kept by the Treasurer, and shall also make
reports to the Chairman of the Board, if there be one, the President,
the Vice President - Finance, if there be one, and the Directors and
others of or relating to the financial condition of the corporation. He
shall have such other and further powers and shall perform such other
and further duties as may be assigned to him from time to time by the
Board of Directors. If a Controller shall not be elected, the duties of
the office of the Controller shall be included as part of those of the
Treasurer.
DUTIES OF OFFICERS MAY BE DELEGATED
35. In case of the absence of any officer of the corporation, or for
any other reason that the Board of Directors may deem sufficient, the
Board may delegate, for the time being, the powers or duties, or any of
them, of such officer to any other officer or to any director.
RIGHT OF INDEMNIFICATION OF DIRECTORS AND OFFICERS
36. (a) Each director and officer who was, or is a party, or is
threatened to be made a party, to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, may
be indemnified by the corporation against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in, or not opposed to, the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that this conduct was unlawful.
(b) Each director and officer who was, or is a party, or is
threatened to be made a party, to any threatened, pending, or completed
action or suit, by or in the right of the corporation, to procure a
judgment in its favor by reason of the fact that he is or was a director
or officer of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise, may
be indemnified by the corporation against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit, if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which such
person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation, unless,
and only to the extent that, the Court of Chancery of the State of
Delaware, or the court in which such action or suit was brought, shall
determine upon application that, despite the adjudication of liability,
but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnification for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director or officer of the corporation
has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsections (a) or (b) of this
section, or in defense of any claim, issue, or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) or (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set
forth in such subsection. Such determination shall be made:
(1) By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to
such action, suit, or proceeding, or
(2) If such a quorum is not obtainable, or, even if
obtainable, a majority vote of a quorum of
disinterested directors so directs, by independent legal
counsel in a written opinion, or
(3) By the stockholders.
(e) Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation
as authorized by this section.
(f) The indemnification provided by this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be otherwise entitled under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has
ceased to be a director or officer, and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
STOCKS OF OTHER CORPORATIONS
37. The Board of Directors shall have the right to authorize any
director, officer or other person on behalf of the corporation to
attend, act and vote at meetings of the stockholders of any corporation
in which the corporation shall hold stock, and to exercise thereat any
and all rights and powers incident to the ownership of such stock, and
to execute waivers of notice of such meetings and calls therefor; and
authority may be given to exercise the same either on one or more
designated occasions, or generally on all occasions until revoked by the
Board. In the event that the Board shall fail to give such authority,
such authority may be exercised by the Chairman of the Board or
President in person or by proxy appointed by him on behalf of the
corporation.
CERTIFICATES OF STOCK
38. The certificates of stock of the corporation shall be numbered
and shall be entered in the books of the corporation as they are issued.
They shall be in the form approved by the Board of Directors. They
shall exhibit the holder's name and number of shares and shall be signed
by the Chairman of the Board or President and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary, and the
seal of the corporation shall be affixed thereto. Where any such
certificates of stock are signed by a transfer agent or transfer clerk
and by a registrar, the signatures of the Chairman of the Board or
President and the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary upon any such certificates, if authorized by
the Board of Directors, may be made by engraving, lithographing or
printing thereon a facsimile of such signatures, in lieu of actual
signatures, and such facsimile signatures so engraved, lithographed or
printed thereon shall have the same force and effect as if such officers
had actually signed the same.
In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been affixed to any such
certificate or certificates, shall cease to be such officer or officers
of the corporation before such certificate or certificates shall have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate, or whose facsimile signature or signatures
shall have been affixed thereto had not ceased to be such officer or
officers of the corporation.
TRANSFERS OF STOCK
39. No holder of Class B Common Stock of the corporation, desirous
of selling or transferring any share or shares of such Class B Common
Stock of the corporation, shall have the power to sell or transfer any
such share or shares unless and until he shall first have offered the
same for sale to the corporation at the actual price at which it is
proposed to sell or transfer the same. Such offer shall be made in
writing signed by such stockholder and sent by mail to the corporation
at its principal place of business, and shall remain good for acceptance
by the corporation for a period of thirty days from the date of receipt
thereof and shall be accompanied by a written offer signed by the
proposed purchaser, giving his name and address and his offering price.
Any pledgee of any share or shares of Class B Common Stock of the
corporation, before bringing any suit, action or proceedings, or doing
any act to foreclose his pledge, shall first offer such stock for sale
to the corporation at the fair market value of such stock. Such offer
shall remain good for acceptance by the corporation for a period of
thirty days after receipt thereof. In case an offer above referred to
shall not be accepted by the corporation within such thirty-day period,
such share or shares may be sold or transferred to such proposed
purchaser. The provisions contained herein shall be embodied in,
written, printed or stamped on each certificate of the Class B Common
Stock of the corporation, and thereupon shall be a part thereof, binding
upon each and every present or future holder or owner thereof.
40. Transfers of stock shall be made on the books of the corporation
only by the person named in the certificate or by attorney, lawfully
constituted in writing, and upon surrender of the certificate therefor.
CLOSING OF TRANSFER BOOKS OR FIXING RECORD DATE
41. (a) The Board of Directors shall have the power to close the
stock transfer books of the corporation for a period not exceeding sixty
days preceding the date of any meeting of stockholders, or the date for
the payment of any dividend, or the date for the allotment of rights, or
the date when any change or conversion or exchange of capital stock
shall go into effect, or for a period of not exceeding sixty days in
connection with obtaining the consent of stockholders for any purpose,
during which period no transfer of stock shall be made on the books of
the corporation; provided, however, that in lieu of closing the transfer
books as aforesaid, the Board of Directors shall have power to fix, in
advance, a date, which shall not be more than sixty nor less than ten
days before the date of such meeting, as the record date for the
determination of the stockholders entitled to notice of, and to vote at,
any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and in such case
such stockholders and only such stockholders (of the class or classes
entitled to vote or participate in such dividend, allotment of rights,
or change, conversion or exchange of capital stock, as the case may be),
as shall be stockholders of record on the date so fixed shall be
entitled to such notice of and to vote at such meeting and any
adjournment thereof, or to receive payment of such dividends, or to
receive such allotment of rights, or to exercise such rights, or to give
such consent, as the case may be, notwithstanding any transfer of stock
on the books of the corporation, or the original issue of any such
stock, after any such record date fixed as aforesaid.
(b) When a determination of stockholders of record entitled to
notice of, or to vote at, any meeting of stockholders has been made as
provided in this section, such determination shall apply to any
adjournment thereof, unless the Board of Directors fixes a new record
date for the adjourned meeting.
REGISTERED STOCKHOLDERS
42. The corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim
to or interest in such shares on the part of any other person, whether
or not it shall have express or other notice thereof, save as expressly
provided by the laws of Delaware.
LOST CERTIFICATES
43. Any person claiming a certificate of stock to be lost or
destroyed shall make an affidavit or affirmation of that fact, whereupon
a new certificate may be issued of the same tenor and for the same
number of shares as the one alleged to be lost or destroyed; provided,
however, that the Board of Directors may require, as a condition to the
issuance of a new certificate, a bond of indemnity in such form and
amount and with such surety or sureties, or without surety, as the Board
of Directors shall determine and may also require the advertisement of
such loss in such manner as the Board may prescribe.
BOOKS, ACCOUNTS AND RECORDS
44. Except as otherwise provided by law, the books, accounts and
records of the corporation may be kept within or without the State of
Delaware at such place as the Board of Directors shall from time to time
determine.
CHECKS, DRAFTS AND NOTES
45. All checks or demands for money and notes of the corporation
shall be signed by such person or persons (who may or may not be an
officer or officers of the corporation) as the Board of Directors may
from time to time designate, either directly or through such officers of
the corporation as shall, by resolution of the Board of Directors, be
authorized to designate such person or persons.
If authorized by the Board of Directors, the signatures of the
authorized signers upon checks drawn on the payroll, general and
dividend accounts of this corporation may be made by printing thereon a
facsimile of such signatures, in lieu of actual signatures, and such
facsimile signatures so printed thereon shall have the same force and
effect as if such authorized signers had actually signed the same.
FISCAL YEAR
46. The fiscal year shall be fixed by the Board of Directors.
DIVIDENDS
47. Dividends upon the capital stock of the corporation may be
declared by the Board of Directors at any regular or special meeting out
of retained earnings of the corporation.
Before payment of any dividend or making any distribution of
surplus, there may be set aside out of surplus such sum or sums as the
directors from time to time, in their absolute discretion, think proper
as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for
such other purpose as the directors shall think conducive to the
interests of the corporation.
NOTICES
48. Whenever under the provisions of these Bylaws notice is required
to be given to any director, officer or stockholder, it shall not be
construed to require personal notice, but such notice may be given in
writing, either by telegram, or by mail, by depositing the same in a
post office, letter-box or mail chute, maintained by the U.S. Postal
Service, in a postpaid sealed wrapper, addressed to such stockholder,
officer or director at his address as the same appears on the books of
the corporation, and any notice so sent shall be deemed to have been
given at the time when the same shall be so sent.
WAIVER OF NOTICE
49. Whenever any notice whatever is required to be given under the
provisions of any statute or of the Certificate of Incorporation or of
these Bylaws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Attendance of a person at
a meeting of stockholders, directors or any committee of directors, as
the case may be, shall constitute a waiver of notice of such meeting,
except where the person is attending the meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
AMENDMENTS
50. These Bylaws may be altered, amended, repealed or added to by
the affirmative vote of a majority of the stock issued and outstanding
and entitled to vote or by the Board of Directors acting as above
provided; provided, however, that no change of the time or place of a
meeting for the election of directors, as fixed by these Bylaws, shall
be made within sixty days next before the day on which such election is
to be held, and that in case of any change of such time or place, notice
thereof shall be given to each stockholder in person or by letter mailed
to his last known post office address, at least twenty days before the
election is held.
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