<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 29, 1995
GTS DURATEK, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-14292 22-2476180
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
8955 Guilford Road, Suite 200, Columbia, Maryland 21046
(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code (410) 312-5100
(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On November 29, 1995, GTS Duratek, Inc. (the "Company") acquired 80%
of the outstanding capital stock of Bird Environmental Gulf Coast, Inc.
("BEGCI") from Bird Environmental Technologies, Inc. ("BETI"), a wholly-owned
subsidiary of Bird Corporation ("Bird"), for an aggregate consideration of
$1.00 and the Company committed to invest up to $5.1 million in the business
as described below. BEGCI owns a hazardous waste recycling facility in San
Leon, Texas, which has suspended operations pending the capital improvements
described below, which are intended to enable the facility to reach its full
design capacity. At August 31, 1995 (the date of BEGCI's most recently
available unaudited balance sheet), BEGCI had total assets of approximately
$14.1 million, including net fixed assets of approximately $12.6 million.
Under the terms of the purchase transaction, Bird agreed to fund the working
capital deficit of BEGCI as of August 31, 1995 and, accordingly, contributed
to BEGCI approximately $1.3 million upon the closing of the stock purchase.
The remaining 20% of the outstanding capital stock of BEGCI is owned
by certain individuals who have operated and will continue to operate the
facility and who will remain as minority shareholders (the "Minority
Shareholders"). The Minority Shareholders have entered into employment
agreements providing for incentive compensation tied directly to the
financial performance of the facility. The Company entered into a
stockholders' agreement with the Minority Shareholders pursuant to which,
among other terms and conditions, it agreed to invest up to $5.1 million in
BEGCI as needed, up to $2.4 million of which will be used for general working
capital purposes and up to $2.7 million of which will be used for capital and
plant start-up expenditures. The Company expects to make the capital
investments needed to return the BEGCI plant to commercial operations during
the fourth quarter of 1995 and the first quarter of 1996, and expects to
reopen the plant during the second quarter of 1996. The Company will use its
internal funds for the investment in BEGCI. As part of the purchase
transaction, the Company also acquired through a license arrangement the
exclusive worldwide rights to the patented technology used by BEGCI's
facility to process and treat the hazardous waste. The technology, known as
thermal desorption, was developed by one of the Minority Shareholders.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) and (b) FINANCIAL STATEMENTS AND PRO FORMA INFORMATION. It is
impracticable to provide the required financial statements of BEGCI and the
pro forma financial information required by this Item 7 of Form 8-K at this
time. The required financial statements and pro forma financial information
will be filed as soon as practicable, but no later than February 12, 1996.
(c) EXHIBITS. The following exhibits are filed with this report, and the
foregoing description is modified by reference to such exhibits:
(1) GTS Duratek, Inc. Press Release dated November 30, 1995.
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(2) Stock Purchase Agreement by and among Bird Environmental Gulf
Coast, Inc., Bird Environmental Technologies, Inc., Bird
Corporation, GTS Duratek, Inc. and GTSD Sub II, Inc. dated as
of November 29, 1995.
(3) Stockholders' Agreement by and among Bird Environmental Gulf Coast,
Inc., GTS Duratek, Inc., GTSD Sub II, Inc., Jim S. Hogan,
Mark B. Hogan, Barry K. Hogan and Sam J. Lucas III dated
November 29, 1995.
(4) Technology License Agreement by and among GTS Duratek, Inc., Bird
Environmental Gulf Coast, Inc. and Jim S. Hogan dated
November 29, 1995.
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 hereunto duly authorized.
GTS Duratek, Inc.
/s/ Robert F. Shawver
----------------------------------
Robert F. Shawver
Executive Vice President
and Chief Financial Officer
Date: December 8, 1995
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EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
(c)(1) Press Release of GTS Duratek, Inc. dated November 30, 1995 6
(c)(2) Stock Purchase Agreement by and among Bird Environmental 9
Gulf Coast, Inc., Bird Environmental Technologies, Inc.
Bird Corporation, GTS Duratek, Inc. and GTSD Sub II, Inc.
dated as of November 29, 1995.
(c)(3) Stockholders' Agreement by and among Bird Environmental 52
Gulf Coast, Inc., GTS Duratek, Inc. GTSD Sub II, Inc.,
Jim S. Hogan, Mark B. Hogan, Barry K. Hogan and Sam J.
Lucas III dated November 29, 1995.
(c)(4) Technology License Agreement by and among GTS Duratek, 101
Inc., Bird Environmental Gulf Coast, Inc. and Jim S.
Hogan dated November 29, 1995.
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EXHIBIT (c)(1)
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NEWS RELEASE
FOR IMMEDIATE RELEASE
Date: November 30, 1995 Contact: Robert E. Prince, Pres. & CEO
Robert F. Shawver, Exec. V.P.
(410) 312-5100
GTS DURATEK ACQUISITION OF BEGC
GTS DURATEK ACQUIRES HAZARDOUS WASTE RECYCLING CENTER
COLUMBIA MD--GTS Duratek (Nasdaq: DRTK) today announced that it has
acquired 80 percent of the San Leon, Texas,-based Bird Environmental Gulf
Coast (BEGC) hazardous waste recycling center.
BEGC uses patented technology to produce recyclable products from
hazardous refinery and petrochemical plant sludges under a broad-scope RCRA
Part B permit, which will allow expansion into other waste treatment and
recycling processes.
GTS Duratek president and CEO, Robert E. Prince, said, "This acquisition
is an important step in expanding into the hazardous waste field where GTS
Duratek can produce reusable, recyclable, value-added end products.
Moreover, coupling BEGC's patented thermal desorption technology with our
melters opens an additional universe of exciting possibilities for both
radioactive and hazardous wastes."
The facility is located in the Houston-Galveston corridor, one of the
nation's largest refinery and petrochemical centers. Based on petroleum
industry estimates, disposal or recycling of refinery and petrochemical
process sludges represents a niche market of approximately $700 million per
year.
GTS Duratek simultaneously acquired worldwide rights to the patented
thermal desorption technology, which reclaims usable fuels from sludges and
leaves a safe, dry, powdery residue. GTS Duratek sees the technology as an
excellent fit with its waste vitrification (conversion to glass) technology.
The company's engineers and scientists believe the residue can be converted
to glass or a ceramic-like material that can be recycled. The process is
also expected to enhance GTS Duratek's radioactive waste vitrification
process.
GTS Duratek purchased the facility from Bird Environmental Technologies,
Inc. for an undisclosed price. Bird Environmental Technologies, Inc. is a
subsidiary of Bird Corporation, a publicly-traded building material
manufacturer.
<PAGE>
Columbia, MD-based GTS Duratek is an environmental services and
technology firm that is a national leader in radioactive waste vitrification.
The hazardous waste recycling facility has suspended operations while it
undergoes capital improvements, which will enable the facility to reach its
full design capacity. GTS Duratek expects to reopen it in the second quarter
of 1996, providing expanded capacity for its "Fortune 500" customer base.
The facility's 20-percent founder-owners will remain with the business to
manage and operate the facility under incentive-based employment contracts.
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EXHIBIT (c)(2)
<PAGE>
STOCK PURCHASE AGREEMENT
BY AND AMONG
BIRD ENVIRONMENTAL GULF COAST, INC.;
BIRD ENVIRONMENTAL TECHNOLOGIES, INC.;
BIRD CORPORATION;
GTS DURATEK, INC.; AND
GTSD SUB II, INC.
DATED AS OF NOVEMBER 29, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II: SALE AND PURCHASE OF STOCK . . . . . . . . . . . . . . . . . . . 4
Section 2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III: REPRESENTATIONS AND WARRANTIES
OF BETI and BIRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Organization, Standing and Authority of BETI; Title
to Stock . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Organization, Standing and Authority of Bird . . . . . . . . 6
Section 3.3 Organization, Standing, Authority and Capitalization
of Company. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 No Other Pending Transactions. . . . . . . . . . . . . . . . 9
Section 3.6 Company's Names, Business, and Location of Company Assets. . 9
Section 3.7 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.8 Financial Statements . . . . . . . . . . . . . . . . . . . . 9
Section 3.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . .10
Section 3.10 Absence of Certain Changes, Events or Conditions . . . . . .10
Section 3.11 Litigation and Other Proceedings . . . . . . . . . . . . . .10
Section 3.12 Licenses and Approvals . . . . . . . . . . . . . . . . . . .11
Section 3.13 Legal Compliance . . . . . . . . . . . . . . . . . . . . . .11
Section 3.14. Material Contracts And Agreements. . . . . . . . . . . . . .12
Section 3.15 Title Matters. . . . . . . . . . . . . . . . . . . . . . . .12
Section 3.16 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . .13
Section 3.17 Employee Benefit Plans and Pension Plans . . . . . . . . . .13
Section 3.18 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .13
Section 3.19 Condition of Company Assets. . . . . . . . . . . . . . . . .14
Section 3.20 Intellectual Property. . . . . . . . . . . . . . . . . . . .14
Section 3.21 Environmental Matters. . . . . . . . . . . . . . . . . . . .15
Section 3.22 Customers and Suppliers. . . . . . . . . . . . . . . . . . .17
Section 3.23 Brokers and Finders. . . . . . . . . . . . . . . . . . . . .17
Section 3.24 Accounts Receivable. . . . . . . . . . . . . . . . . . . . .18
Section 3.25 No Material Adverse Change . . . . . . . . . . . . . . . . .18
Section 3.26 Books and Records. . . . . . . . . . . . . . . . . . . . . .18
Section 3.27 Disaster . . . . . . . . . . . . . . . . . . . . . . . . . .18
<PAGE>
Section 3.28 Tax Returns and Audits . . . . . . . . . . . . . . . . . . .18
Section 3.29 Due Diligence Review . . . . . . . . . . . . . . . . . . . .19
Section 3.30 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND GTSD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 4.1 Organizational Matters; Authority. . . . . . . . . . . . . .19
Section 4.2 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . .20
Section 4.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 4.4 Brokers and Finders. . . . . . . . . . . . . . . . . . . . .20
ARTICLE V: COVENANTS AND AGREEMENTS. . . . . . . . . . . . . . . . . . . . .20
Section 5.1 Consents; Cause Conditions to be Satisfied . . . . . . . . .20
Section 5.2 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . .21
Section 5.3 Certain Notifications. . . . . . . . . . . . . . . . . . . .21
Section 5.4 Competition. . . . . . . . . . . . . . . . . . . . . . . . .21
Section 5.5 Non-Interference Agreement . . . . . . . . . . . . . . . . .22
Section 5.6 Confidentiality. . . . . . . . . . . . . . . . . . . . . . .23
Section 5.7 Tax Election . . . . . . . . . . . . . . . . . . . . . . . .23
Section 5.8 Notification of Certain Events . . . . . . . . . . . . . . .23
Section 5.9 Sharing of Expenses for RFI Work Plan. . . . . . . . . . . .23
Section 5.10 Closure Trust Fund . . . . . . . . . . . . . . . . . . . . .24
Section 5.11 Knowledge of the Company . . . . . . . . . . . . . . . . . .24
Section 5.12 Vehicle Leases . . . . . . . . . . . . . . . . . . . . . . .24
Section 5.13 Use of Company Logo. . . . . . . . . . . . . . . . . . . . .25
ARTICLE VI: CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 6.1 Receipt of Stock Certificates. . . . . . . . . . . . . . . .25
Section 6.2 Minority Shareholders Agreements . . . . . . . . . . . . . .25
Section 6.3 Payments by Bird . . . . . . . . . . . . . . . . . . . . . .25
Section 6.4 Release from Liability . . . . . . . . . . . . . . . . . . .25
Section 6.5 Required Approvals . . . . . . . . . . . . . . . . . . . . .26
Section 6.6 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 6.7 Actions or Events Interfering with Agreement . . . . . . . .26
Section 6.8 Representations and Warranties . . . . . . . . . . . . . . .26
Section 6.9 Compliance with Agreements . . . . . . . . . . . . . . . . .26
Section 6.10 Delivery of Certificates . . . . . . . . . . . . . . . . . .27
Section 6.11 Resignation of Officers and Directors. . . . . . . . . . . .27
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Section 6.12 Termination of Certain Agreements. . . . . . . . . . . . . .27
ARTICLE VII: CONDITIONS PRECEDENT TO THE COMPANY'S,
BETI'S AND BIRD'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . .28
Section 7.1 Compliance with Agreements . . . . . . . . . . . . . . . . .28
Section 7.2 Release of Liabilities . . . . . . . . . . . . . . . . . . .28
Section 7.3 Representations and Warranties . . . . . . . . . . . . . . .28
Section 7.4 Compliance with Agreements . . . . . . . . . . . . . . . . .28
Section 7.5 Delivery of Certificates . . . . . . . . . . . . . . . . . .28
Section 7.6 Proceedings Taken. . . . . . . . . . . . . . . . . . . . . .29
ARTICLE VIII: INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . .29
Section 8.1 Indemnification by BETI and Bird . . . . . . . . . . . . . .29
Section 8.2 Indemnification by Purchaser and GTSD. . . . . . . . . . . .30
Section 8.3 Procedures for Third Party Claims. . . . . . . . . . . . . .30
Section 8.4 Limits for Recovery of Losses. . . . . . . . . . . . . . . .31
Section 8.5 Waiver of Contribution . . . . . . . . . . . . . . . . . . .31
Section 8.6 Sole Remedy. . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE IX: SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE X: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . .32
Section 10.1 No Assignment. . . . . . . . . . . . . . . . . . . . . . . .32
Section 10.2 Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Section 10.3 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . .32
Section 10.4 Confidentiality. . . . . . . . . . . . . . . . . . . . . . .32
Section 10.5 Parties in Interest. . . . . . . . . . . . . . . . . . . . .33
Section 10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . .33
Section 10.7 Construction . . . . . . . . . . . . . . . . . . . . . . . .33
Section 10.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . .35
Section 10.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . .35
Section 10.11 Specific Performance . . . . . . . . . . . . . . . . . . . .35
Section 10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . .36
Section 10.13 Further Assurances . . . . . . . . . . . . . . . . . . . . .36
Section 10.14 No Drafting Presumption. . . . . . . . . . . . . . . . . . .36
Section 10.15 Incorporation by Reference; Use of Certain Terms . . . . . .36
Section 10.16 Amendment and Waiver . . . . . . . . . . . . . . . . . . . .36
Section 10.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . .36
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<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of this 29th
day of November, 1995 by and among Bird Environmental Gulf Coast, Inc., a
Texas corporation (the "Company"); Bird Environmental Technologies, Inc., a
Delaware corporation and the sole stockholder of the Company ("BETI"); Bird
Corporation, a Massachusetts corporation and the parent corporation of BETI
("Bird"); GTS Duratek, Inc., a Delaware corporation ("GTSD"), and GTSD Sub
II, Inc., a Maryland corporation and a wholly-owned subsidiary of GTSD (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, BETI desires to sell to the Purchaser and the Purchaser desires
to purchase from BETI all of the capital stock of the Company held by BETI,
which constitutes 80% of the issued and outstanding stock of the Company,
upon the terms and provisions hereinafter set forth.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement and effective as of the date hereof, (i) the Company, the
Purchaser, GTSD and James Hogan, Mark Hogan, Barry Hogan and Samuel Lucas III
(collectively, the "Minority Shareholders") will execute and deliver that
certain Shareholders Agreement (the "Shareholders Agreement") outlining
certain rights between the parties as stockholders of the Company, (ii) the
Company will have executed with each of Mark Hogan, Barry Hogan and Samuel
Lucas III employment agreements (the "Employment Agreements") and (iii) the
Company, GTSD and James Hogan will have executed and delivered that certain
technology license agreement (the "License Agreement") pursuant to which
James Hogan will license to the Company and GTSD the technologies specified
therein. The Shareholders Agreement, the Employment Agreements and the
License Agreement shall be collectively referred to herein as the "Minority
Shareholders Agreements".
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I: DEFINITIONS
In addition to those terms defined elsewhere herein, when used herein,
the following capitalized terms shall have the meanings indicated:
"AFFILIATE" of a specified person means a person that (in the case of
Bird or BETI only, as of the date hereof) directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the person specified.
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"APPLICABLE AUTHORITY" shall mean any foreign, federal, state or local
governmental or quasi-governmental instrumentality, agency, department,
bureau, board or commission having authority or purporting to have authority
over the Company, any of the Company Assets, or the operation of the
Company's Business, including any entity with licensing or regulatory
authority concerning Company and the operation of Company's Business.
"APPLICABLE LAWS" shall mean all foreign, federal, state and local laws,
regulations, rules, orders, decrees, ordinances or judgments applicable to
the Company, the Company Assets, or the operation of the Company's Business,
including all laws concerning the licensing and regulation of the Company and
the conduct of the Company's Business.
"BIRD INSTRUMENTS" shall mean the following documents to which the
Minority Shareholders, certain of their Affiliates and certain Affiliates of
Bird are parties: (a) that certain Pre-Incorporation Agreement dated August
9, 1991; (b) that certain Stock Option Agreement dated August 9, 1991; (c)
that certain Voting Agreement dated August 9, 1991; (d) that certain Stock
Purchase Agreement dated August 9, 1991; (e) that certain Amendment Agreement
dated August 9, 1991; and (f) that certain Agreement dated June 18, 1994,
forms of which documents are attached hereto as APPENDIX I.
"BIRD LETTER OF INTENT" shall mean the letter of intent dated as of
September 6, 1995 addressed to Mr. Frank S. Anthony, Vice President and
General Counsel of Bird, from GTSD.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations thereunder.
"COMPANY ASSETS" shall mean all of the properties and assets owned or
leased by the Company, including without limitation, all of the following:
the Property, the Tangible Operating Assets, the Intellectual Property, the
Company Contracts, the Leases, and the Licenses and Approvals (as each term
is defined below).
"COMPANY'S BUSINESS" shall mean developing and implementing waste
treatment technologies, as such activity was conducted prior to the shutdown
or suspension of its operations as contemplated by the Bird Letter of Intent.
"COMPANY CONTRACTS" shall mean, collectively, all contracts or
agreements to which the Company is a party or by which the Company or any of
the Company Assets is bound, including personal property leases, franchise,
manufacturer's representative, distributorship, service, supply, maintenance,
employee, leasing and management contracts and agreements affecting or
involving the Property or the Company's Business.
"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
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"INVENTORY" means all of Company's inventories as of the Closing Date
relating to the Products, including all ingredients, finished goods, work in
progress, raw materials, marketing materials and production, shipping and
packaging supplies.
"LEASES" shall mean, collectively, all of the oral or written leases,
subleases, licenses, concession agreements or other use or occupancy
agreements pursuant to which the Company or any other party is entitled to
occupy and use any portion of the Property or pursuant to which Company
leases to or from any other party any real property, including all renewals,
extensions, modifications or supplements to any of the foregoing or
substitutions for any of the foregoing.
"LICENSES AND APPROVALS" shall mean all certificates, licenses, permits
or other approvals required or obtained by the Company in connection with the
use or ownership of the Company Assets, the operation of the Company's
Business or in connection with its use and occupancy of the Leased Facility
or any of the Property.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or other charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction and including any lien or
charge arising by statute or other law.
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse effect on
the assets, properties, liabilities, business affairs, results of operations,
condition (financial or otherwise) or prospects of the Company, provided that
an effect resulting solely from the shutdown or suspension of the operations
of and funding of the Company as described in the Bird Letter of Intent shall
not be deemed to constitute a Material Adverse Effect.
"MINORITY SHAREHOLDERS" shall mean Barry Hogan, Brad Hogan, Samuel
Lucas, III and James Hogan as shareholders holding in the aggregate 20% of
the issued and outstanding capital stock of the Company.
"MINORITY SHAREHOLDERS' LETTER OF INTENT" shall mean the letter of
intent dated as of September 7, 1995 addressed to Mr. Barry K. Hogan,
Executive Vice President of the Company from GTSD.
"ORGANIZATIONAL DOCUMENTS" shall mean a corporation's Articles or
Certificate of Incorporation and By-Laws, as amended or supplemented.
"PERSON" or "PERSON" means an individual, corporation, partnership,
firm, association, joint venture, trust, unincorporated organization,
government, governmental body, agency, political subdivision or other entity.
"PRODUCTS" means all of the products manufactured, distributed,
marketed, sold or packaged in connection with the operation of the Company's
Business.
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<PAGE>
"PROPERTY" shall mean, collectively, all of the land and the
improvements thereon, together with any tangible property located thereon
which would constitute a "fixture" under the laws of the State of Maryland
and all personal property owned or leased by Company and used or useful in
connection with the operation of the Company's business (other than that
personal property included within the definition of "Tangible Operating
Assets") and all of Company's right, title and interest in and to all
privileges, appurtenances, and advantages belonging or in any way
appertaining to any such land, including all easements, rights-of-way, water
and riparian rights, air rights above the land, development rights, and all
rights, title and interest in and to all adjoining streets, roads or alleys
(public or private, open or proposed).
"RESTRICTED AGREEMENT" shall refer to any of the Leases and Company
Contracts (as each is defined in this Article I), to the extent that any such
Lease or Company Contract contains any provision that, as a result of the
consummation of the transactions contemplated by this Agreement, causes one
or more of the following to occur: (i) Company is deemed to be in default
under such Lease or Company Contract (with or without the giving of notice
and any cure period); (ii) automatically voids such Lease or Company Contract
or renders voidable by any party other than Company, the Lease or Company
Contract or provides any party other than the Company with a right to
terminate or rescind such Lease or Company Contract; (iii) imposes any fine,
penalty, charge or increase in payments or other charges required to be made
by the Company under such Lease or Company Contract; or (iv) otherwise
modifies any of the material terms of such Lease or Company Contract.
"STOCK" shall mean the Company's common stock, $0.01 par value per
share.
"TANGIBLE OPERATING ASSETS" shall mean, collectively, all of the
tangible personal property owned or leased by the Company, wheresoever
located, including Inventory, trade fixtures, stock-in-trade, equipment, and
supplies.
ARTICLE II: SALE AND PURCHASE OF STOCK
SECTION 2.1 PURCHASE AND SALE.
Subject to the terms and conditions hereinafter set forth, at the
Closing, BETI will sell and transfer to Purchaser, and Purchaser will
purchase from BETI, 560 shares of Stock, which is all of the Stock owned by
BETI and which represents 80% of the issued and outstanding stock of the
Company, free and clear of any and all Liens.
SECTION 2.2 PURCHASE PRICE.
The purchase price for the purchase of the Stock shall be the sum of
$1.00 (the "Purchase Price") and no further payment from the Purchaser shall
be required for the Stock. BETI hereby acknowledges receipt of the Purchase
Price in full payment of the Stock.
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SECTION 2.3 CLOSING.
(a) GENERALLY. Subject to the terms and conditions of this Agreement,
the sale and purchase of the Stock contemplated hereby (the "Closing") shall
take place at 10:00 a.m., local time, on November 29, 1995 (the "Closing
Date") at the offices of Piper & Marbury L.L.P., or at such other time, date
or place as BETI, Bird and Purchaser may mutually agree; PROVIDED, HOWEVER,
that prior to the Closing, all of the conditions in Articles VI and VII of
this Agreement shall have been satisfied or waived, as the case may be.
(b) BETI'S OBLIGATIONS AT CLOSING. At the Closing, BETI will pay any
costs required to be paid by it hereunder and will deliver to Purchaser the
following (collectively, the "BETI Closing Documents"):
(i) all original stock certificates in due and proper form
evidencing the Stock to be sold by BETI;
(ii) an endorsement on each original Stock certificate or separate
stock powers duly executed in blank, together with such other instruments of
conveyance as may be reasonably acceptable to Purchaser and its counsel and
sufficient to transfer full, marketable title to the Stock to Purchaser, free
and clear of any Liens;
(iii)duly-executed resignations of each of the directors and
officers of the Company;
(iv) a good standing certificate of Company, dated no earlier than
5 calendar days prior to the Closing Date, certifying that the Company is in
good standing in the State of Texas; and
(v) such other documents and instruments as may be required to
consummate the transactions contemplated hereunder.
(c) PURCHASER'S OBLIGATIONS AT CLOSING. At the Closing, Purchaser will
pay any costs required to be paid by it hereunder and will deliver the
following to BETI:
(i) the Purchase Price; and
(ii) such other documents and instruments as shall be required to
consummate the transactions contemplated hereunder.
(d) BIRD'S OBLIGATIONS AT OR PRIOR TO THE CLOSING. To the extent that
the current liabilities of the Company exceed the current assets of the
Company as of August 31, 1995 (as determined by a nationally recognized
independent public accounting firm selected by mutual agreement of Purchaser
and Bird and set forth on SCHEDULE 2.3(d) hereto), Bird will either (i) at or
prior to the Closing, make payments on behalf of the Company to reduce the
Company's outstanding accounts payable in the amount and to the extent that
the Company's current
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liabilities exceed its current assets at August 31, 1995 or (ii) at the
Closing, pay to the Company the amount by which the Company's current
liabilities exceeded current assets at August 31, 1995.
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF
BETI AND BIRD
BETI and Bird hereby jointly and severally represent and warrant to
Purchaser and GTSD as of the Closing Date as follows:
SECTION 3.1 ORGANIZATION, STANDING AND AUTHORITY OF BETI; TITLE TO STOCK.
(a) BETI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) BETI has all requisite corporate power and authority to execute,
deliver and perform this Agreement and each of the instruments, documents,
and agreements contemplated herein to be executed and delivered by BETI
pursuant to this Agreement (collectively, the "BETI Instruments"). The
execution, delivery and performance of this Agreement and the BETI
Instruments have been duly authorized and approved by all necessary corporate
action, and this Agreement and the BETI Instruments, when duly executed and
delivered by BETI will constitute valid and legally binding obligations of
BETI, enforceable against BETI in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally.
(c) BETI owns 80% of the issued and outstanding capital stock of the
Company free and clear of any Liens, right of first refusal or restriction of
any kind other than to the Minority Shareholders. BETI is not a party to or
bound by any options, calls, contracts of commitments of any character
relating to any of the Stock or any other equity or debt security issued or
to be issued by the Company, including any agreement, instrument or
understanding, order or decree that would restrict the transfer by BETI of
the Stock pursuant to this Agreement, other than agreements with the Minority
Shareholders (which agreements will be terminated at or prior to the Closing).
SECTION 3.2 ORGANIZATION, STANDING AND AUTHORITY OF BIRD.
(a) Bird is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts.
(b) Bird has all requisite corporate power and authority to execute,
deliver and perform this Agreement and each of the instruments, documents,
and agreements contemplated herein to be executed and delivered by Bird
pursuant to this Agreement (collectively, the "Bird Instruments"). The
execution, delivery and performance of this Agreement and of the Bird
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Instruments have been duly authorized and approved by all necessary corporate
action, and this Agreement and the Bird Instruments, when duly executed and
delivered by Bird, will constitute valid and legally binding obligations of
Bird, enforceable against Bird in accordance with their terms.
SECTION 3.3 ORGANIZATION, STANDING, AUTHORITY AND CAPITALIZATION OF
COMPANY.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and has all requisite
corporate power and authority to carry on the Company's Business as it is now
being conducted and to own or lease the Company Assets. True, complete and
correct copies of the Organizational Documents of the Company have been
delivered to GTSD and the Organizational Documents are in full force and
effect. The Company is not in violation, breach or default of any of the
provisions of its Organizational Documents. The Company is duly qualified to
do business in the jurisdictions set forth in SCHEDULE 3.3(A) attached
hereto, which jurisdictions represent all of the jurisdictions where the
Company is required to be qualified as the result of the location of its
assets or the conduct of the Company's Business, other than where the failure
to qualify would not have a Material Adverse Effect.
(b) Company has all requisite corporate power and authority to execute,
deliver and perform this Agreement and each of the instruments, documents,
and agreements contemplated herein to be executed and delivered by Company
pursuant to this Agreement (collectively, the "Company Instruments"). The
execution, delivery and performance of this Agreement and of the Company
Instruments have been duly authorized and approved by all necessary corporate
action, and this Agreement and the Company Instruments, when duly executed
and delivered by the Company, will constitute valid and legally binding
obligations of Company, enforceable against the Company in accordance with
their terms.
(c) The authorized capital stock of Company consists entirely of 3,000
shares of common stock, $0.01 par value, of which 700 shares are issued and
outstanding. Three hundred (300) shares of common stock of Company are held
in the Company's treasury and no shares of capital stock are reserved for
issuance. All outstanding shares of capital stock of the Company have been
duly authorized and are validly issued and are fully paid and non-assessable
with no personal liability attaching to the ownership thereof. The Company
is not a party to or bound by any options, warrants, rights, calls or other
preemptive rights or other agreements or plans under which the Company may
become obligated to issue, sell or transfer shares of its capital stock or
other securities other than agreements with the Minority Shareholders (which
agreements will be terminated at or prior to the Closing).
(d) The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of
authorized capital stock of the Company are as set forth in the
Organizational Documents of the Company, copies of which have been furnished
to GTSD.
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(e) There are no outstanding registration rights with respect to any
capital stock of the Company other than as set forth in agreements with the
Minority Shareholders (which agreements will be terminated at or prior to
Closing).
(f) The Company has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its capital stock or any interest therein
or to pay any dividend or make any other distribution in respect thereof
other than as set forth in agreements with the Minority Shareholders (which
agreements will be terminated at or prior to Closing).
(g) The Company has no knowledge of any voting agreements, voting
trusts, stockholders' agreements, proxies or other agreements or
understandings that are currently in effect or that are currently
contemplated with respect to the voting of any capital stock of the Company
other than as set forth in agreements with the Minority Shareholders (which
agreements will be terminated at or prior to Closing).
(h) All of the outstanding securities of the Company were issued in
compliance with all applicable federal and state securities laws.
(i) There are no outstanding contractual obligations (contingent or
otherwise) of the Company that would prohibit or restrict the Company's
ability to declare or pay dividends or to repurchase or redeem the Company's
capital stock other than as set forth in agreements with the Minority
Shareholders (which agreements will be terminated at or prior to Closing).
(j) Since December 31, 1994, the Company has not (i) issued any capital
stock, (ii) redeemed any capital stock, (iii) made any distributions on its
capital stock or (iv) changed the tax basis of any of the Company Assets.
SECTION 3.4 NO CONFLICTS.
Neither the execution and delivery of this Agreement nor the carrying
out of the transactions contemplated hereby or under any of the Company
Instruments, BETI Instruments or Bird Instruments will: (a) with or without
notice or the passage of time or both, result in any violation, termination
or modification of, or be in conflict with, (i) the Organizational Documents
of the Company, BETI or Bird, (ii) any License and Approval, Lease or Company
Contract, or any other instrument or agreement to which the Company, BETI or
Bird is a party or by which the Company, BETI or Bird is bound other than
agreements with the Minority Shareholders (which agreements will be
terminated at or prior to Closing)., or (iii) any law, rule, regulation,
ordinance, writ, injunction, judgment, decree or order applicable to the
Company, BETI or Bird, (b) result in the creation of any Lien upon the
Property or any of the other Company Assets or in the acceleration of any
indebtedness or other obligation of the Company; or (c) require the filing,
declaration or registration with, or permit, consent or approval of, or the
giving of any notice to, any Applicable Authority, excluding, those that have
already been obtained prior to the Closing.
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SECTION 3.5 NO OTHER PENDING TRANSACTIONS.
Except for the transactions contemplated by this Agreement: (i) neither
BETI nor Bird is a party to or bound by or the subject of any agreement,
commitment or undertaking with respect to the sale of all or any part of the
Stock of the Company; and (ii) the Company is not a party to or bound by or
the subject of any agreement, undertaking or commitment to merge or
consolidate with, or acquire all or substantially all of the property and
assets of, any other person, corporation, or entity, or to sell, lease or
exchange all or substantially all of the Company Assets to any other person,
corporation, or entity.
SECTION 3.6 COMPANY'S NAMES, BUSINESS, AND LOCATION OF COMPANY ASSETS.
The Company has conducted business under the name "Bird Environmental
Gulf Coast, Inc." and the "San Leon Recycling Center" and no other names.
The Company is in the business of developing and implementing waste treatment
technologies. The Company has not engaged in and does not currently engage
in any other business other than as described in the preceding sentence. The
Company's chief executive office and principal place of business is located
at 2700 Avenue S, San Leon, Texas 77539. Substantially all of the Company
Assets are located at same address as its chief executive office and the
Company does not currently have any places of business other than at such
address. Set forth on SCHEDULE 3.6 attached hereto is a complete and
accurate listing of all locations at which the Company has conducted
business, as owner, operator, lessor or otherwise over the last ten (10)
years.
SECTION 3.7 SUBSIDIARIES.
The Company does not own, or have any contract or other right to
acquire, directly or indirectly, any capital stock or other equity securities
of any Person, nor does the Company have any direct or indirect equity or
ownership interest in any business other than the Company's Business.
SECTION 3.8 FINANCIAL STATEMENTS.
(a) The Company, BETI or Bird has delivered to GTSD copies of: (i) the
unaudited balance sheet of the Company as of December 31, 1994 and the
unaudited balance sheet of the Company as of August 31, 1995, and (ii) the
related consolidated statements of income for the related annual and eight
month periods ended December 31, 1994 and August 31, 1995, respectively
(collectively, the "Financial Statements").
(b) The Financial Statements: (i) were prepared in accordance with
GAAP consistently applied throughout the periods covered thereby; (ii)
present fairly the financial condition and the results of operations of the
Company as at the respective dates of and for the periods referred to in such
financial statements; and (iii) are true, complete and correct in all
material respects.
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SECTION 3.9 NO UNDISCLOSED LIABILITIES.
Except as set forth on SCHEDULE 3.9 attached hereto, the Company does
not have any liabilities or obligations of any nature (whether known or
unknown, matured or unmatured, disputed or undisputed, liquidated or
unliquidated, fixed or contingent, secured or unsecured) except for
liabilities or obligations reflected or reserved against in the Financial
Statements and current liabilities incurred in the ordinary course of
business since the respective dates thereof and provided such liabilities do
not exceed $200,000 at Closing, which liabilities will be paid by Bird to
Purchaser pursuant to Section 6.3 hereof at or prior to the Closing.
SECTION 3.10 ABSENCE OF CERTAIN CHANGES, EVENTS OR CONDITIONS.
Except as set forth in SCHEDULE 3.10 attached hereto, since
August 31, 1995:
(a) the Company has not incurred any debt, obligation or liability
except for normal debt incurred in the ordinary course of business and the
Company Assets have not been subjected to any Liens other than those liens
described on SCHEDULE 3.10(A) attached hereto (the "Permitted Liens");
(b) the Company Assets have not been sold or transferred;
(c) there has not been any change in the Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of
capital stock of the Company; issuance of any security convertible into such
capital stock; grant of any registration rights; purchase, redemption,
retirement or other acquisition by Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(d) there has not been any payment or increase by the Company of any
bonuses, salaries, or other compensation to any stockholder, director,
officer, or employee (except in the ordinary course of business) or entry
into any employment, severance, or similar contract or agreement with any
director, officer or employee;
(e) there has not been any damage to or destruction or loss of any
asset or property of Company, whether or not covered by insurance, materially
and adversely affecting the properties, assets, business, financial condition
or prospects of the Company taken as a whole; and
(f) no agreements have been entered into, whether in writing or
otherwise, to take any of the actions set forth in this Section 3.10.
SECTION 3.11 LITIGATION AND OTHER PROCEEDINGS.
(a) Except as set forth on SCHEDULE 3.11 attached hereto, there is no
litigation, arbitration, mediation, or other investigation or proceeding
pending nor, to the best of BETI's and Bird's
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knowledge, threatened or in prospect, against or relating to the Company, the
Company Assets, the Company's Business, or the transactions contemplated by
this Agreement; nor, is there any valid basis for any such litigation,
arbitration, mediation, or other investigation or proceeding relating to the
transactions contemplated by this Agreement. Except as disclosed on SCHEDULE
3.11 attached hereto, Company is not subject to, or bound by, any order of
any court or Applicable Authority entered in any judicial, administrative or
other proceeding to which it is or was a party. Except as set forth on
SCHEDULE 3.11 attached hereto, no matter set forth on SCHEDULE 3.11 attached
hereto would, if adversely decided, have a Material Adverse Effect on the
business, operations, condition (financial or otherwise), liabilities,
assets, earnings, working capital or prospects of the Company.
(b) There is no litigation, arbitration, mediation, or other
investigation or proceeding pending nor, to the best of Bird's or BETI's
knowledge, threatened or in prospect, against or relating to Bird or BETI
which seeks to prohibit, restrict or delay consummation of the transactions
contemplated under this Agreement and there is no judgment, decree,
injunction, ruling or order of any Court, Applicable Authority or arbitrator
outstanding against Bird or BETI having any such effect.
SECTION 3.12 LICENSES AND APPROVALS
Attached hereto as SCHEDULE 3.12 is a complete and accurate list of all
of the Licenses and Approvals held by Company. Company has provided GTSD
with true, correct and complete copies of all of the Licenses and Approvals.
To Bird's and BETI's actual or constructive knowledge, the Company owns or
possesses and holds free from restrictions or conflicts with the rights of
others all franchises, licenses, permits, consents, approvals and other
authority (governmental or otherwise), and all rights and privileges with
respect to the foregoing, as are necessary for the conduct of its business as
now being conducted, and as proposed to be conducted, except where the
failure to own or possess and hold such franchises, licenses, permits,
consents, approvals and other authority (governmental or otherwise) would not
have a Material Adverse Effect. All of the Licenses and Approvals are in
full force and effect and Company is not in violation with respect to any of
them. No proceedings are pending or, to the best of BETI's and Bird's
knowledge, threatened by any Applicable Authority to revoke or limit the
scope of any of the Licenses and Approvals. Except as noted on SCHEDULE 3.12
attached hereto, none of the Licenses and Approvals would be rendered
ineffective or be required to be reissued as a result of the consummation of
the transactions contemplated hereby.
SECTION 3.13 LEGAL COMPLIANCE.
Except as set forth on SCHEDULE 3.13 attached hereto and except for
matters covered by Sections 3.16, 3.17 and 3.21 (which matters are addressed
exclusively in such respective sections), to Bird's and BETI's actual or
constructive knowledge, the Company's Business and the operations of the
Company are being conducted in compliance with all Applicable Laws and
neither the Company, BETI nor Bird has received notice from any Applicable
Authority that the
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Company, the Company's Business or the Company Assets is not in compliance
with any Applicable Laws.
SECTION 3.14. MATERIAL CONTRACTS AND AGREEMENTS.
Listed on SCHEDULE 3.14 is a listing of all material contracts,
agreements, leases, indentures or instruments of the Company. With respect
to such material contracts, agreements, leases, indentures or instruments of
the Company, the Company and, to the best of BETI's and Bird's knowledge,
each other party thereto have in all material respects performed all the
obligations required to be performed by them to date, have received no notice
of default and are not in default, in any material respect, (with due notice
or lapse of time or both) under any material contract, agreement, indenture
or other instrument now in effect to which the Company is a party or by which
it or its property may be bound. Bird and BETI have no knowledge of any
breach and have received no written notice of any anticipated breach by the
other party to any material contract or commitment to which the Company is a
party. Except as noted on SCHEDULE 3.14 attached hereto, none of the
Company's material contracts or agreements constitute a Restricted Agreement
or would require the consent or approval of any party thereto, other than
Company, or the consent or approval of any third party in connection with the
consummation of the transactions contemplated hereby. Except as disclosed on
SCHEDULE 3.14, the Company is not a party to, or bound by, any material
contract or agreement, any term of which materially adversely affects, or
which the Company expects in the future to have a Material Adverse Effect.
The Company is not a party to any contract or agreement with any Affiliate of
the Company other than the Minority Shareholders (which agreements will be
terminated at or prior to the Closing).
SECTION 3.15 TITLE MATTERS.
The Company has good and marketable title to the Company Assets owned by
it, free and clear of all Liens except for (i) certain mechanics' liens or
other similar statutory liens arising by operation of law in respect of
obligations that are adequately reflected in the Company's balance sheet as
of August 31, 1995, (ii) certain subsurface rights to the Company's real
property (iii) certain exceptions to title listed on the title report
effective October 11, 1995 and attached hereto as SCHEDULE 3.15 and (iv)
other encumbrances of record as of the date that title insurance was obtained
on the real property (collectively Items (i) through (iv) shall be referred
to as the "Encumbrances"). The Encumbrances that exist on the Company's real
property will not in any material way adversely affect the Company's use or
enjoyment of its real property and will not in any material way adversely
affect the Company's operations. The Company does not lease any real
property. None of the properties owned by the Company is subject to any
Liens which could reasonably be expected to materially and adversely affect
the assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects of the Company.
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SECTION 3.16 LABOR MATTERS.
To Bird's and BETI's actual or constructive knowledge, the Company has
complied in all material respects with all applicable federal and state laws
relating to the employment of labor including the provisions thereof relating
to wages, hours, collective bargaining and the payment of social security and
taxes and is not liable for any arrears of wages or any tax or any penalty
for failure to comply with any of the foregoing. No labor dispute, strike,
work stoppage, employee action or labor relations problem of any kind which
has affected or may affect Company has occurred since the inception of
Company or, to BETI's and Bird's knowledge, is currently pending or
threatened.
SECTION 3.17 EMPLOYEE BENEFIT PLANS AND PENSION PLANS.
Copies of all of the Company's employee policy manuals have been
provided to GTSD, which policy manuals contain a description of all material
employee benefit plans and pension plans of the Company. The Company's
employee benefit plans and pension plans comply in all material respects with
applicable laws relating thereto and have been maintained in accordance with
their plan documents. The Company has no liability (whether actual,
contingent, with respect to any of its assets or otherwise) with respect to
any of its employee benefit plans and other pension plans other than as
adequately reflected in the Financial Statements. The Company, GTSD or any
of GTSD's Affiliates will have no liability with respect to any benefit plans
or pension plans of BETI or BETI's control group as defined in Section
414(b), (c), (m) or (o) of the Code. None of the Company's employee benefit
plans and other pension plans contains any provisions which would prohibit
the transactions contemplated by this Agreement or which would give rise to
any severance, termination or other payments or liabilities as a result of
the transactions contemplated by this Agreement. SCHEDULE 3.17 attached
hereto contains the most recent quarterly listing of workers' compensation
claims and a schedule of workers' compensation claims of the Company for the
last three fiscal years.
SECTION 3.18 INSURANCE.
The Company maintains and has maintained all such general liability,
pollution liability, product liability, fire, casualty and motor vehicle
insurance set forth on SCHEDULE 3.18. All such insurance policies continue
to be in full force and effect, and the Company is in compliance with all
requirements and provisions thereof. True and correct copies of all
insurance policies relating to such coverage have been provided by the
Company to GTSD. No notice of cancellation has been given to or received by
the Company with respect to any of its insurance policies, and no such
policies are subject to any retroactive rate or audit adjustments or
coinsurance arrangements. The Company, BETI and Bird have no reason to
believe that the pollution liability insurance coverage will not be renewed
upon expiration thereof at premiums substantially equivalent to those
currently being paid by the Company. The Company is not currently involved
in any projects and, accordingly, the Company is not currently required to
post any completion performance and other bonds and indemnities. The
Company, BETI or Bird
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has provided GTSD with a list of all property damage, personal injury claims
and workers' compensation claims asserted against the Company with respect to
the Company's Business during the past five (5) years involving any claim in
excess of $10,000. The Company has not received any notice from any
insurance company or insurance board of underwriters of the existence of any
default or unsafe condition with respect to the Property that remains
unsatisfied or uncured or that will remain unsatisfied or uncured as of the
Closing Date.
SECTION 3.19 CONDITION OF COMPANY ASSETS.
(a) The Company Assets include all assets, properties, licenses and
other agreements necessary for the continued conduct of Company's Business
after the Closing in substantially the same manner as conducted prior to the
Closing.
(b) Attached as Schedule 3.19(b) is a complete and accurate summary of
all of the Tangible Operating Assets of Company.
SECTION 3.20 INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.20 hereto contains a complete and accurate list of all
patents, trademarks, servicemarks and copyrights (registered or
unregistered), trade names, assumed names, brand names and all applications
therefor, owned, used or filed by the Company and the Company has sufficient
trademarks, trade names, service marks, patent rights, copyrights,
manufacturing processes, formulae, applications, trade secrets, know how,
licenses, approvals and governmental authorizations (or rights thereto)
(collectively, the "Intellectual Property") to conduct its business as
conducted prior to the Closing Date except where the absence of such
Intellectual Property would not have a Material Adverse Effect. Except as
set forth in SCHEDULE 3.20 attached hereto, the patents, trademarks and the
copyrights that constitute Intellectual Property are valid, subsisting and
enforceable, and the patents, registered trademarks and registered copyrights
are duly recorded in the name of Company.
(b) The Company has the right, free from any Liens, to use the
Intellectual Property and the consummation of the transactions contemplated
hereby will not alter or impair any such rights. Except as set forth in
SCHEDULE 3.20 attached hereto, within the last five years, no claims have
been asserted by any entity or person with respect to, or challenging or
questioning, the ownership, validity, enforceability or use of the
Intellectual Property by the Company, nor, to the knowledge of BETI and Bird,
is there a valid basis for any such claim. The use or other exploitation of
such Intellectual Property by the Company prior to the Closing has not
infringed the rights of any other entity or person. To the best of BETI's
and Bird's knowledge, no entity or person is infringing the rights of the
Company with respect to such Intellectual Property and the Company has no
reasonable basis to claim such infringement. SCHEDULE 3.20 attached hereto
sets forth a complete and accurate list of all license agreements between
Company and third-parties with respect to the use of the Intellectual
Property.
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SECTION 3.21 ENVIRONMENTAL MATTERS.
(a) As used in this Environmental Matters Section, the following terms
shall have the definitions indicated:
(i) "Company's Properties" means any real property or facility
currently owned, leased or operated by the Company or previously owned,
leased or operated by the Company.
(ii) "Environmental Law" means any statute, regulation, rule, code,
common law, order or judgment of any applicable federal, state, local or
foreign jurisdiction relating to pollution, hazardous substances, hazardous
wastes, petroleum or otherwise relating to protection of the environment,
natural resources or human health, including, by way of example and not by
way of limitation, the Clean Air Act ("CAA"); Clean Water Act ("CWA");
Resource Conservation and Recovery Act ("RCRA"); Comprehensive Environmental
Response Compensation, and Liability Act ("CERCLA"); Emergency Planning and
Community Right-to-Know Act ("EPCRA"); Federal Insecticide, Fungicide and
Rodenticide Act; Safe Drinking Water Act ("SDWA"); Toxic Substances Control
Act ("TSCA"); Hazardous Materials Transportation Act ("HMTA"); Occupational
Safety and Health Act ("OSHA"); and Endangered Species Act of 1973, each as
currently amended;
(ii) "Regulated Substances" means any substance regulated under
Environmental Laws, including but not limited to: asbestos and
asbestos-containing materials ("ACMs"), polychlorinated biphenyls ("PCBs");
urea-formaldehyde in any of its forms; petroleum and its fractions;
radioactive materials; and any substances defined as "hazardous waste,"
"hazardous substances," "pollutants or contaminants," "toxic substances,"
"hazardous chemicals," "hazardous air pollutants," "toxic chemicals" or
"hazardous materials" under the CAA, CWA, RCRA, CERCLA, EPCRA, SDWA, TSCA,
HMTA or OSHA.
(iii) "Environmental Condition" means
(a) the Release of any Regulated Substances into the
environment in an amount and under circumstances that would require notice,
removal or remediation, or constitute a basis for a claim or cause of action;
(b) the environmental, health or safety aspects of the
transportation, storage, treatment, handling, use or disposal of materials in
connection with the operations or past operations of the Company's business;
or
(c) the violation, or alleged violation, of any
Environmental Law, order, permit or license of or from any governmental
authority, agency or court relating to environmental, health or safety
matters; and
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(iv) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment of any Regulated Substance.
(b) Except as set forth in SCHEDULE 3.21, there has been no Release at,
on, under or from any of the Company's Properties.
(c) Except as set forth in SCHEDULE 3.21, there has been no Release at,
on, under or from any nearby properties that has migrated or threatened to
migrate onto or under the Company's Properties or that would or could
otherwise affect the Company's Properties, and, to the best knowledge of BETI
and Bird, there is currently no threat of a Release at, on, under or from any
nearby properties that would or could migrate onto or under the Company's
Properties or that would or could otherwise affect the Company's Properties.
(d) No PCBs, asbestos or ACMs, urea-formaldehyde or radioactive
materials are located on the Company's Properties.
(e) Except as set forth in SCHEDULE 3.21, no storage tanks, underground
or otherwise, are or have been located on any of the Company's Properties.
To the knowledge of BETI and Bird, none of the storage tanks set forth in
SCHEDULE 3.21 is leaking or has ever leaked.
(f) Except as set forth in SCHEDULE 3.21, the Company has complied with
all Environmental Laws with respect to any operations now or previously
conducted by the Company. Except as set forth in SCHEDULE 3.21, the Company
has no existing or potential liability under any Environmental Laws.
(g) Except as set forth in SCHEDULE 3.21, the Company has not received
any notice, letter, citation, order, warning, complaint, inquiry, information
request or demand that: (i) it has violated or is in violation of any
Environmental Law; (ii) there has been a Release at or from the Company's
Properties, or any property where the company's wastes or products have been
sent; or (iii) it may be or is liable, in whole or in part, for the costs of
cleaning up, remediating, removing or responding to a Release.
(h) To the best knowledge of the Company, BETI or Bird, no other party
has received any notice, demand, suit, inquiry or information request
pursuant to CERCLA or any comparable state law relating to the Company, the
Company's Properties or any property where the Company's wastes or products
have been sent.
(i) None of the Company's Properties is listed on any regulatory list
of contaminated properties, including but not limited to the National
Priorities List promulgated pursuant to CERCLA, the CERCLIS or any federal,
state or local counterpart.
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(j) Except as set forth in SCHEDULE 3.21, no environmental approvals,
clearances or consents are required under applicable law from any
governmental entity or authority in order for the parties to this Agreement
to consummate the transactions contemplated herein or for the Company to
conduct its business as presently conducted or proposed to be conducted.
(k) The Company has disclosed, prior to the date of this Agreement, its
waste practices, its use of Regulated Substances and all potentially material
environmental matters, and has disclosed all reports, audits assessments,
studies, inspections, evaluations, surveys, remedial action plans or other
similar documents relating to any Environmental Condition, whether or not
material, of the Company's Properties or operations.
(l) Except as set forth in SCHEDULE 3.21, to the knowledge of BETI and
Bird, no location to which the Company transported or caused to be
transported any Regulated Substances for storage, recycling, treatment or
disposal is or has been the subject of any cleanup or remediation of such
location pursuant to any Environmental Law.
(m) The Company's Properties are not subject to any Lien in favor of
any governmental entity or other party for any liability, costs, or damages
incurred by such governmental entity or other party in response to a Release.
SECTION 3.22 CUSTOMERS AND SUPPLIERS.
The Company, BETI or Bird has delivered to GTSD a complete and accurate
list of the Company's ten largest customers and suppliers (measured by dollar
volume of purchases and sales, as applicable) and the dollar amount of the
Company's Business which each customer and supplier represented during the
fiscal year ended 1994 and the eight months ended August 31, 1995. Neither
the Company, BETI nor Bird has received any oral or written notice that any
such supplier or any customer of Company does not plan to continue to do
business with Company, or plans to reduce its supplies to or volume of orders
from the Company or will not do business on substantially the same terms and
conditions with Purchaser subsequent to the Closing Date as such supplier or
customer did with Company before such date, except for those suppliers that
may discontinue doing business with the Company or modify the terms upon
which they do business with the Company due to the fact that the Company is
delinquent in the payment for goods or services provided by such supplier.
SECTION 3.23 BROKERS AND FINDERS.
Neither the Company, BETI, Bird nor any of their officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
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SECTION 3.24 ACCOUNTS RECEIVABLE.
All accounts receivable of the Company that are reflected in the
Financial Statements (the "Accounts Receivable") represent valid obligations
arising from sales actually made or services actually performed in the
ordinary course of business. All Accounts Receivable have been collected in
full.
SECTION 3.25 NO MATERIAL ADVERSE CHANGE.
Since August 31, 1995, there has not been any material adverse change in
the Company Assets or the Company's financial condition, customer or business
prospects other than a change resulting from the shutdown or suspension of
operations or of funding of the Company as described in the Bird Letter of
Intent.
SECTION 3.26 BOOKS AND RECORDS.
The minute books, stock record books, and other records of the Company,
all of which have been made available to GTSD, are complete and correct and
have been maintained in accordance with sound business practices. The minute
books of the Company contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of the Company, and no
meeting of any such stockholders, Board of Directors, or committee has been
held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of such books and records will be in the
possession of the Company.
SECTION 3.27 DISASTER.
Neither the business nor the Property of the Company is currently
affected (or has been affected at any time since December 31, 1994) by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), of a kind which (individually
or in the aggregate) has, or could have, a Material Adverse Effect on the
assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company.
SECTION 3.28 TAX RETURNS AND AUDITS.
The Company has duly filed all income, franchise and other federal,
state and local tax returns, notices and reports that it has been or is
required to file. Except as may be otherwise disclosed in writing to the
Purchaser or GTSD, the Company is not delinquent in the payment of any taxes
nor has it requested any extension of time within which to file any tax
return which return has not since been or will not be timely filed. No
deficiency for any tax has been asserted or assessed against the Company
other than as reflected in the Financial Statements. The
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Company has withheld or otherwise collected all taxes or amounts it was
required to withhold or collect under any applicable federal, state or local
law, including, without limitation, any amounts required to be withheld or
collected with respect to employee state and federal income tax withholding,
social security, unemployment compensation, sales or use taxes or workmen's
compensation, and all such amounts have been timely remitted to the proper
authorities.
SECTION 3.29 DUE DILIGENCE REVIEW.
The Company, BETI or Bird has made available for GTSD's review all
information reasonably requested by the Purchaser in connection with GTSD's
due diligence examination.
SECTION 3.30 DISCLOSURE.
All schedules, exhibits, documents, certificates, reports or written
statements furnished or to be furnished to GTSD by or on behalf of the
Company, BETI or Bird with this Agreement or the transactions contemplated
hereby and delivered at Closing are true, complete and accurate in all
material respects, and no representation or warranty made in this Agreement
or information furnished pursuant hereto to GTSD (including information
contained in the schedules or documents referred to herein) contains any
untrue statement of a material fact or fails to include a material fact
necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they are made, not misleading. To
Bird's and BETI's knowledge, neither Bird, BETI nor the Company has failed to
disclose to GTSD any facts material to the business, operations, condition
(financial or otherwise), liabilities, assets, earnings or working capital of
the Company.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF PURCHASER AND GTSD
Purchaser and GTSD hereby jointly and severally represent and warrant to
BETI and Bird as of the Closing Date as follows:
SECTION 4.1 ORGANIZATIONAL MATTERS; AUTHORITY.
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland. GTSD is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) Purchaser and GTSD have all requisite corporate power and
authority to execute, deliver and perform this Agreement and each of the
instruments, documents, and agreements contemplated herein to be executed and
delivered by Purchaser pursuant to this Agreement to which each is a party
(collectively, the "GTSD Instruments"). The execution, delivery and
performance of this Agreement and of the GTSD Instruments have been duly
authorized and
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approved by all necessary corporate action and this Agreement and the GTSD
Instruments, when duly executed and delivered by Purchaser and GTSD, as
applicable, will constitute valid and legally binding obligations of
Purchaser and GTSD, as applicable, enforceable against each that is a party
thereto in accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of
creditors generally.
(c) Purchaser is purchasing the Stock for its own account, and the
Stock is being purchased by it for investment and not with a present view to
any distribution thereof in violation of applicable securities laws.
SECTION 4.2 NO CONFLICTS.
Neither the execution and delivery of this Agreement nor the carrying
out of the transactions contemplated hereby or under any of the GTSD
Instruments will: (a) with or without notice or the passage of time or both,
result in any violation, termination or modification of, or be in conflict
with, (i) the Organizational Documents of the Purchaser or GTSD, or (ii) any
law, rule, regulation, ordinance, writ, injunction, judgment, decree or order
applicable to the Purchaser or GTSD, (b) result in the creation of any Lien
upon the property or assets of the Purchaser or GTSD or in the acceleration
of any indebtedness or other obligation of the Purchaser or GTSD; or (c)
require the filing, declaration or registration with, or permit, consent or
approval of, or the giving of any notice to, any Applicable Authority,
excluding, those that have already been obtained prior to the Closing.
SECTION 4.3 LITIGATION.
There is no litigation, arbitration, mediation, or other investigation
or proceeding pending or, to Purchaser's and GTSD's knowledge, threatened or
in prospect, against Purchaser or GTSD with respect to the transactions
contemplated by this Agreement.
SECTION 4.4 BROKERS AND FINDERS.
Neither Purchaser, GTSD nor any of their officers, directors or
employees have employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
ARTICLE V: COVENANTS AND AGREEMENTS
SECTION 5.1 CONSENTS; CAUSE CONDITIONS TO BE SATISFIED.
The Company, BETI and Bird agree to take all necessary corporate or
other action, and will use their reasonable best efforts to complete all
filings and obtain, or assist Purchaser or GTSD in obtaining, such licenses,
permits, consents, waivers, approvals, and authorizations of
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third parties and Applicable Authorities as may be necessary or appropriate
in connection with: (i) the execution and delivery of this Agreement; (ii)
the consummation of the transactions contemplated hereby or (iii) the
ownership or use of the Company Assets or the operation of the Company's
Business.
SECTION 5.2 BEST EFFORTS.
(a) Each of the Company, BETI and Bird shall use their reasonable best
efforts to cause all of the conditions contained in Article VI of this
Agreement to be satisfied.
(b) Purchaser and GTSD shall use their reasonable best efforts to cause
all of the conditions contained in Article VII of this Agreement to be
satisfied.
SECTION 5.3 CERTAIN NOTIFICATIONS.
At all times prior to the Closing, each party hereto shall as promptly
as reasonably practicable notify the other in writing of the occurrence of
any event as to which it obtains knowledge that would make the
representations, warranties and disclosures made herein untrue or misleading
or which is reasonably likely to result in the failure of a condition
specified in Article VII or Article VIII hereof.
SECTION 5.4 COMPETITION.
(a) The following terms when used in this Section 5.4 shall have the
following meanings:
"Competition" means (i) the treatment and disposal of hazardous and
other wastes, and (ii) any business which is competitive with the Company's
Business as it is now operated.
"Directly or Indirectly" means either for one's own account or as a
partner, shareholder, director, officer, principal, agent or employee of
another person.
"Person" means an individual, corporation, partnership, joint venture,
trust or other entity.
"Restricted Territory" means the United States, Canada and all other
jurisdictions worldwide in which the Company is conducting or has conducted
the Company's Business at or prior to the Closing.
(b) BETI and Bird shall not, for a period of five years after the date
hereof, Directly or Indirectly, engage in any Competition in the Restricted
Territory; PROVIDED, that BETI or Bird may, without violating this covenant
(i) own as a passive investment not in excess of 5% of the outstanding
capital stock of a corporation which engages in Competition if such capital
stock is a security which is actively traded on an established national
securities exchange; and (ii) have an ownership interest otherwise proscribed
by this Section 5.4 if such interest arises as a result of
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the acquisition of a business entity not principally engaged in a business in
Competition with that of the Company.
(c) Neither BETI nor Bird shall, directly or indirectly, for itself or
on behalf of any other Person, induce or attempt to induce any employee of
the Company to leave his or her employment with the Company at any time
within three years from the Closing Date.
(d) BETI and Bird each acknowledges that in view of the nature of the
Company's Business and the business objectives of Purchaser in acquiring it,
the foregoing territorial and time limitations are reasonable and properly
required for the adequate protection of Purchaser and that in the event that
any such territorial or time limitation is deemed to be unreasonable and is
then reduced by a court of competent jurisdiction, then, as reduced, the
territorial and/or time limitation shall be enforced.
(e) BETI and Bird further acknowledge that the remedy at law for any
breach by it of the agreements contained in this Section 5.4 will be
inadequate and that Purchaser will be entitled to seek injunctive relief
without being required to prove actual damages or post bond. This Section
5.4 constitutes an independent and severable covenant and if any or all of
the provisions of this Section 5.4 are held to be unenforceable for any
reason whatsoever, it will not in any way invalidate or affect the remainder
of this Agreement which will remain in full force and effect.
SECTION 5.5 NON-INTERFERENCE AGREEMENT.
BETI and Bird covenant and agree that neither they nor any Affiliate of
either of them will, at any time after the Closing, directly or indirectly,
for whatever reason, whether for their own account or for the account of any
other person, firm, corporation or other organization: (i) solicit, deal
with or otherwise interfere with any of the Company's Business or Company's
existing or potential contracts or relationships with any affiliate,
employee, officer, director or any independent contractor whether or not the
person is employed by or associated with the Company on the Closing Date or
at any time thereafter; (ii) solicit, accept, deal with or otherwise
interfere with the continuance of supplies to Company (or the terms relating
to such supplies), from any suppliers who have been supplying goods,
materials or services to Company at any time during the last five years prior
to the date of this Agreement; (iii) solicit, accept, deal with or otherwise
interfere with the Company's Business or Company's existing or potential
contracts or relationships with any independent contractor, customer, client
or consultant of the Company, or any person who is a bona fide or prospective
independent contractor, customer, client or consultant thereof; or (iv)
solicit or otherwise interfere with any existing or proposed contract between
the Company and any other party whatsoever.
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SECTION 5.6 CONFIDENTIALITY.
BETI and Bird agree that they may possess certain data and knowledge of
the operations of the Company which are proprietary in nature and
confidential. BETI and Bird covenant and agree that they will not, for a
period of three years after the Closing, reveal, divulge or make known to any
person (other than Purchaser, GTSD or the Minority Shareholders) or use for
its own account or for the account of any person, firm, corporation or other
organization, any confidential or proprietary information, method, record,
data, trade secret, pricing policy, bid amount, bid strategy, rate structure,
personnel policy, method or practice of soliciting or obtaining or doing
business by the Company, or any other confidential or proprietary information
whatsoever relating to the Company or its Affiliates, whether or not obtained
with the knowledge and permission of Purchaser or its Affiliates. BETI and
Bird further covenant and agree that for a period of three years from the
Closing Date, they shall not divulge any such confidential or proprietary
information which it may acquire during any transition period in which it
assists or consults with Purchaser or its Affiliates to facilitate the
transfer and the continued success of the Company, respecting such
confidential and proprietary information in trust for the sole benefit of
Purchaser and its Affiliates and their successors and assigns. The foregoing
provisions shall not be applicable to any disclosure or use of confidential
information or knowledge that can be demonstrated to have (i) been publicly
known prior to the date of this Agreement, (ii) become well known by
publication or otherwise not due to the unauthorized act or omission on the
part of BETI or Bird or their Affiliates, or (iii) been supplied to BETI or
Bird by a third party without violation of the rights of the Company or the
Purchaser or any other party.
SECTION 5.7 TAX ELECTION.
The Company, Bird or BETI will not make any elections which changes the
tax basis of the Company's assets or liabilities for any date subsequent to
December 31, 1994 other than (i) depreciation of fixed assets through methods
established in the 1994 federal income tax returns of the Company or (ii)
changes in the normal course of business.
SECTION 5.8 NOTIFICATION OF CERTAIN EVENTS.
Bird covenants and agrees that it shall provide written notice to GTSD
within 15 days of execution of an agreement providing for: (i) the merger or
consolidation of Bird with or into any other entity, (ii) the sale of all or
substantially all of the assets of Bird to another entity, (iii) the
liquidation, dissolution or any other similar fundamental corporate
transaction.
SECTION 5.9 SHARING OF EXPENSES FOR RFI WORK PLAN.
The Company and Bird covenant and agree that they shall share equally
all costs and expenses for Phase I of the RFI Work Plan which has been
submitted to the Texas Natural Resource Conservation Commission ("TNRCC").
In connection therewith, the Company covenants and agrees that it shall use
all reasonable efforts to minimize the costs and expenses of
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such work and to use the Company's personnel to perform such work wherever
reasonably possible.
SECTION 5.10 CLOSURE TRUST FUND.
The parties hereto covenant and agree that all contributions by, or on
behalf of, the Company to the date hereof to the closure trust fund pursuant
to that certain Trust Agreement between the Company, as grantor, and Texas
Commerce Bank, N.A., as trustee, dated December 8, 1992 as required by the
Texas Water Commission, the predecessor to the TNRCC, shall remain an asset
of the Company following the Closing, and Bird, BETI or its Affiliates shall
have no right or claim to such contributions. The parties further covenant
and agree that the closure trust fund shall not be deemed to be a current
asset for purposes of Bird's obligations pursuant to Section 2.3(d). GTSD
and GTSD Sub covenant and agree that they will use their reasonable efforts
to cause the Company to self-insure for any of the plant closure obligations
mandated by the TNRCC and, in the event the Company is able to do so within
two (2) years from the date of Closing hereunder, without any additional
direct or indirect cost to the Company, effect on the Company's credit, or
credit enhancement by GTSD or its Affiliates, it will distribute any funds
contributed by the Company, BETI or Bird prior to the Closing and received
from the termination of the trust fund, less any reasonable out of pocket
expenses incurred by GTSD, the Company or their Affiliates in connection
therewith, promptly to Bird. In the event the Company is able to reduce the
plant closure obligations mandated by the TNRCC within two (2) years from the
date of Closing hereunder, it will distribute to Bird a portion of the funds
contributed by the Company, BETI or Bird prior to the Closing, and such
portion shall equal the product of the aggregate amount of funds contributed
prior to the Closing and the percentage reduction in the aggregate funding
obligation of $2 million. The distributions to Bird required by the previous
sentence will be made either (i) when funds are released from the trust fund,
(ii) as the annual payments to the trust fund are reduced to the extent of
such reduction or (iii) when the trust fund is terminated earlier than when
it would have terminated otherwise but for the reduction.
SECTION 5.11 KNOWLEDGE OF THE COMPANY.
For purposes of Article III hereof, the knowledge of the Company or the
Minority Shareholders shall not be imputed to the knowledge of Bird or BETI
whenever a representation or warranty contained therein is made to the
knowledge of Bird or BETI.
SECTION 5.12 VEHICLE LEASES.
The Company agrees to assume the current leases for the Company's
automobiles that are reflected on SCHEDULE 5.12 hereto pursuant to the terms
that are reflected on such schedule.
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SECTION 5.13 USE OF COMPANY LOGO.
If and to the extent that the logo used by the Company prior to the date
hereof is owned by BETI, Bird or an Affiliate thereof, then such party hereby
assigns to the Company the right to use such logo for a period of two (2)
years from the date hereof and such party agrees to execute any and all
documents or instruments that may be reasonably necessary, as determined by
counsel to the Company, to evidence such assignment.
ARTICLE VI: CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
Unless waived in writing by Purchaser in its sole discretion, the
obligations of Purchaser hereunder shall be subject to the fulfillment, prior
to or at the Closing, of each of the following conditions precedent:
SECTION 6.1 RECEIPT OF STOCK CERTIFICATES.
The Purchaser shall concurrently receive the certificates for the Stock
contemplated by Article II, Section 2.1 hereof.
SECTION 6.2 MINORITY SHAREHOLDERS AGREEMENTS.
The Purchaser, GTSD and the Minority Shareholders shall have entered
into the Minority Shareholders Agreements, including the Shareholders
Agreement, the Employment Agreements and the License Agreement in forms
acceptable to the Purchaser and GTSD.
SECTION 6.3 PAYMENTS BY BIRD.
Bird shall have paid (i) any amount required pursuant to Article II,
Section 2.3(d) of this Agreement and (ii) any costs incurred by the Company
in connection with putting the Bird Gulf Coast Recycling Center in a state of
suspension during the period of August 31, 1995 until the Closing Date, which
includes putting the desorber and other processing equipment in a safe
shutdown condition, removing substantially all processed and unprocessed
inventory and residuals from the site, emptying tanks that were being used by
the Company and continuing the employment of the employees listed on SCHEDULE
6.3 and providing the necessary support from the Company to complete GTSD's
due diligence effort, provided that Bird will be limited to a maximum payment
amount of $200,000 for such costs pursuant to this clause (ii) of this
Section 6.3.
SECTION 6.4 RELEASE FROM LIABILITY.
The Minority Shareholders shall have released Purchaser, its Affiliates
and their officers, directors, stockholders, employees, agents, successors
and assigns from any and all obligations,
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liabilities, claims, causes of action and damages whether past or present,
real or contingent, in tort or contract or otherwise, in law or equity,
including but not limited to, obligations in connection with the payment of
severance benefits to any Minority Shareholders, whether arising under such
individual's current employment agreements and arrangements with Bird, BETI,
or any other subsidiary of Bird, or otherwise and such release shall be in
form and substance reasonably acceptable to Purchaser and its counsel.
SECTION 6.5 REQUIRED APPROVALS.
All approvals, consents, waivers, actions or consents from any
Applicable Authority or any other Person required for the consummation of the
transactions contemplated hereby and necessary for the Company to engage in
the Company's Business following the Closing shall have been obtained and
shall be effective and in form and substance satisfactory to the Purchaser.
SECTION 6.6 FILINGS.
The Company, BETI and Bird shall make all filings and take all other
actions necessary to cause the transaction contemplated hereby to become
effective under applicable law.
SECTION 6.7 ACTIONS OR EVENTS INTERFERING WITH AGREEMENT.
No investigation, suit, action or other proceeding shall be threatened
or pending before any court or governmental agency which seeks to restrain,
prohibit or delay, or seeks damages or other relief in connection with, this
Agreement or the transactions contemplated hereby, or which could have a
Material Adverse Effect upon the financial condition, Company's Business,
Company Assets or prospects of the Company. The Company shall not have been
adversely affected in any material way by any act of God, fire, flood, war,
labor disturbance, legislation (proposed or enacted) or other event or
occurrence, and there shall have been no change in the Company Assets,
financial condition, customer or business prospects since August 31, 1995
other than a change resulting from the shutdown or suspension of operations
of the Gulf Coast Recycling Center.
SECTION 6.8 REPRESENTATIONS AND WARRANTIES.
The representations and warranties set forth in Article III shall be
true and accurate at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
SECTION 6.9 COMPLIANCE WITH AGREEMENTS.
The Company, BETI and Bird shall have performed and complied in all
respects with all of the agreements, covenants and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing Date.
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SECTION 6.10 DELIVERY OF CERTIFICATES.
(a) Each of the Company, BETI and Bird shall have delivered to
Purchaser a certificate of its president or any vice president certifying (i)
the fulfillment of the conditions set forth in this Article VI, (ii) that
attached as exhibits thereto are certified, true, correct and complete copies
of resolutions of the Board of Directors of such corporation authorizing the
execution and delivery of this Agreement, the performance of that party's
obligations hereunder and appointing one or more specific individuals to
execute and deliver all of the instruments and documents required to be
executed and delivered by such party pursuant to the terms and conditions
hereof and (iii) the names and signatures of the officers authorized to
execute and deliver this Agreement and the other documents and instruments
required hereby and that all such officers still hold the office or position
set forth in such certificate.
(b) The Company shall have delivered a certificate, dated as of the
Closing Date, executed by the President and the Secretary of the Company,
that: (i) certifies that attached as exhibits thereto are certified true,
correct and complete copies of the Company's Organizational Documents and
(ii) certifies that as of the Closing Date, the Company's Organizational
Documents have not been revoked, rescinded or amended and remain in full
force and effect.
(c) The Company shall have furnished to Purchaser certificates of valid
existence and good standing from the jurisdictions in which the Company is
organized and certificates of qualification to do business as a foreign
company in each of the jurisdictions in which such qualification is necessary.
SECTION 6.11 RESIGNATION OF OFFICERS AND DIRECTORS.
If and to the extent requested by the Purchaser, the existing officers
and directors of the Company shall have submitted resignations to be
effective upon the Closing.
SECTION 6.12 TERMINATION OF CERTAIN AGREEMENTS.
The Bird Instruments, the License Agreement between Jim Hogan and the
Company dated April 1, 1993, the Employment Letter between the Company and
Brad Hogan dated August 9, 1991 and the Employment Letter between the Company
and Barry Hogan dated July 1, 1994 shall have been terminated at or prior to
the Closing and the Company, GTSD and its Affiliates shall have been released
from any and all obligations and liabilities under such agreements.
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ARTICLE VII: CONDITIONS PRECEDENT TO THE COMPANY'S, BETI'S AND
BIRD'S OBLIGATIONS
Unless waived in writing by the Company, BETI or Bird, the obligations
of the Company, BETI or Bird hereunder shall all be subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
precedent:
SECTION 7.1 COMPLIANCE WITH AGREEMENTS.
Purchaser and GTSD shall have performed and complied in all material
respects with all of its agreements, covenants and conditions required by
this Agreement to be performed or complied with by Purchaser and GTSD prior
to or at the Closing Date.
SECTION 7.2 RELEASE OF LIABILITIES.
The Minority Shareholders shall have released the Company, BETI, Bird,
any of their Affiliates and any of their officers, directors, stockholders,
employees, agents, successors and assigns from any and all obligations,
liabilities, claims, causes of action and damages, whether past or present,
real or contingent, in tort or contract or otherwise, in law or equity,
including but not limited to, obligations in connection with the payment of
severance benefits to any Minority Shareholders, whether arising under such
individual's current employment agreements and arrangements with Bird, BETI,
or any other subsidiary of Bird, or otherwise, and such release shall be in
form and substance reasonably acceptable to the Company, BETI and Bird and
their counsel.
SECTION 7.3 REPRESENTATIONS AND WARRANTIES.
The representations and warranties set forth in Article IV shall be true
and accurate at and as of the Closing Date as though such representations and
warranties were made at and as of such time.
SECTION 7.4 COMPLIANCE WITH AGREEMENTS.
The Purchaser and GTSD shall have performed and complied in all respects
with all of its agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing
Date.
SECTION 7.5 DELIVERY OF CERTIFICATES.
The Purchaser and GTSD shall have delivered to the Company, BETI and
Bird a certificate of their president or any vice president certifying (i)
the fulfillment of the conditions set forth in this Article VII, (ii) that
attached as exhibits thereto are certified, true, correct and complete copies
of resolutions of the Board of Directors of such corporation authorizing the
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execution and delivery of this Agreement, the performance of the Purchaser's
and GTSD's obligations hereunder and appointing one or more specific
individuals to execute and deliver all of the instruments and documents
required to be executed and delivered by the Purchaser and GTSD pursuant to
the terms and conditions hereof and (iii) the names and signatures of the
officers authorized to execute and deliver this Agreement and the other
documents and instruments required hereby and that all such officers still
hold the office or position set forth in such certificate.
SECTION 7.6 PROCEEDINGS TAKEN.
All proceedings, corporate or other, to be taken by the Purchaser and
GTSD, in connection with the transactions contemplated by this Agreement,
shall have been taken.
ARTICLE VIII: INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION BY BETI AND BIRD.
(a) BETI and Bird hereby jointly and severally covenant and agree to
indemnify the Purchaser, GTSD and their officers, directors, employees,
agents, Affiliates, successors and assigns and hold each of them harmless
against and with respect to any and all liabilities, losses, damages, claims,
deficiencies, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, reasonable legal costs and expenses) actually
suffered or incurred by it, (hereinafter, a "Loss"), arising out of or
resulting from:
(i) the breach of any representation or warranty by the BETI or
Bird contained herein or in any document delivered hereunder at the Closing;
(ii) the breach of any covenant or agreement by the Company, BETI
or Bird contained herein or in any document delivered hereunder at the
Closing; or
(iii) any investigation, suit, action, demands, assessments,
judgments or other proceeding by or before any court or governmental or
regulatory agency which seeks to restrain, modify, prohibit or revoke, or
seeks damages or other relief in connection with the consummation of this
transaction.
Notwithstanding anything herein to the contrary, the fact
that an item may be disclosed on a schedule to this Agreement in response to
a representation or warranty contained in Article III hereto, shall not in
any way limit any rights that an indemnified party referred to in this
Section 8.1(a) shall have to indemnification for any Losses resulting
therefrom, except to the extent a statement in such schedule expressly limits
or excludes any right to indemnity in respect thereof. The inclusion of an
item on a schedule attached hereto is merely for purposes of disclosure and
not to release Bird or BETI from any liability therefor, except as may be
otherwise expressly provided on the schedule.
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(b) In addition to any other indemnification provided herein, BETI and
Bird hereby jointly and severally covenant and agree to indemnify the
Company, Purchaser, GTSD and their officers, directors, employees, agents,
Affiliates, successors and assigns and hold each of them harmless against and
with respect to any and all Losses arising out of or resulting from:
(i) the litigation between Universal Process Equipment, Inc. and
Universal Industrial Refrigeration, Inc. and the Company and an Affiliate of
Bird and the litigation between BAC Holdings Inc. and the Company;
(ii) any additional assessment against the Company for taxes of
any kind due and payable for the period up to and including the Closing Date;
and
(iii) items II, III, IV and VI reflected on SCHEDULE 3.9 hereto.
SECTION 8.2 INDEMNIFICATION BY PURCHASER AND GTSD.
Purchaser and GTSD (but not their officers, directors, stockholders,
employees, agents or Affiliates) hereby jointly and severally covenant and
agree to indemnify BETI and Bird and their officers, directors, employees,
agents, Affiliates, successors and assigns and holds each of them harmless
against and with respect to any and all Losses, arising out of or resulting
from:
(a) the breach of any representation or warranty by Purchaser or GTSD
contained herein or in any document delivered hereunder at the Closing;
(b) the breach of any covenant or agreement by Purchaser or GTSD
contained herein or in any document delivered hereunder at the Closing;
(c) payment claims by any of the Company's vendors or suppliers to the
extent such claims are fully reflected as payables on the August 31, 1995
balance sheet of the Company; or
(d) payment claims that arise pursuant to the leasing of the Company's
automobiles, which leases are assumed by the Company pursuant to Section 5.12
hereto, to the extent of the payment obligations reflected on SCHEDULE 5.12
hereto.
SECTION 8.3 PROCEDURES FOR THIRD PARTY CLAIMS.
Promptly after the assertion by any third party of any claim against any
party entitled to be indemnified under this Article VIII (the "Indemnitee")
that, in the judgment of such Indemnitee, may result in the incurrence by
such Indemnitee of Losses for which such Indemnitee would be entitled to
indemnification pursuant to this Agreement, such Indemnitee shall deliver to
the other party or parties who has indemnified such Losses hereunder
("Indemnitor") a written notice describing such claim. Such Indemnitor may
participate in and, at its option upon acknowledgment of Indemnitee's right
to indemnification for such matter, assume the defense of the Indemnitee
against such claim, including the employment of counsel,
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who shall be reasonably satisfactory to such Indemnitee. In such case, any
Indemnitee shall have the right to employ separate counsel in any such action
or claim and to participate in the defense thereof, but the fees and expenses
of such counsel shall not be at the expense of the Indemnitor unless (i) the
Indemnitor shall have failed, within a reasonable time after having been
notified by the Indemnitee of the existence of such claim as provided in the
preceding sentence, to assume the defense of the such claim, (ii) the
employment of such counsel has been specifically authorized in writing by the
Indemnitor or (iii) the named parties to any such action (including impleaded
parties) include both such Indemnitee and the Indemnitor and such Indemnitee
shall have been advised in writing by such counsel that there may be
conflicting interests between Indemnitee and the Indemnitor in the legal
defense thereof. No Indemnitor shall be liable to indemnify any Indemnitee
for any compromise or settlement of any such action or claim effected without
the consent of the Indemnitor.
SECTION 8.4 LIMITS FOR RECOVERY OF LOSSES.
Notwithstanding anything herein to the contrary, BETI and Bird shall not
be liable as Indemnitors for any Losses of Purchaser under this Article VIII
unless and until the aggregate amount of all Losses hereunder by Purchaser
equals or exceeds $50,000, in which case BETI and Bird shall be jointly and
severally liable for all Losses pursuant to Section 8.1(a) of the indemnified
parties identified in Section 8.1 up to a maximum aggregate amount of
$500,000 (in excess of the $50,000 referred to above) and BETI and Bird shall
be jointly and severally liable for all Losses pursuant to Section 8.1(b)(ii)
of the indemnified parties identified in Section 8.1 up to a maximum
aggregate amount of $125,000.
SECTION 8.5 WAIVER OF CONTRIBUTION.
Neither BETI nor Bird shall have any right to seek contribution from the
Company in the event that BETI and/or Bird is required to make any payments
under this Article VIII.
SECTION 8.6 SOLE REMEDY.
Recourse under this Article VIII shall be Purchaser's, GTSD's and their
officers, directors, employees, agents, Affiliates, successors and assigns
sole remedy against BETI or Bird.
ARTICLE IX: SURVIVAL
Except for actions based upon a claim of fraud (which shall survive
without limitation), all representations and warranties made pursuant to or
in connection with this Agreement shall survive the Closing, but shall
terminate two (2) years after the Closing Date; provided, that there shall be
no such termination with respect to any representation or warranty as to
which a bona fide claim has been asserted prior to such date.
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ARTICLE X: MISCELLANEOUS
SECTION 10.1 NO ASSIGNMENT.
No assignment by any of the parties of their respective rights nor
delegation by any of the parties of their respective duties shall be
permitted hereunder without the prior written consent of all other parties
hereto.
SECTION 10.2 COSTS.
Each party hereto shall pay all fees and expenses incurred by it in
connection with the negotiation, preparation, and performance of this
Agreement, including fees and disbursements of their respective counsel,
accountants and financial advisors.
SECTION 10.3 PUBLICITY.
Prior to Closing, Purchaser, GTSD, the Company, BETI and Bird agree not
to issue any statement or communication to the public or the press regarding
the transactions contemplated by this Agreement without the prior written
consent of the other parties; provided, however, that each party shall be
permitted, upon notice to the other, to make such disclosures to the public
or such governmental entities as its counsel reasonably should deem necessary
to maintain compliance with applicable law.
SECTION 10.4 CONFIDENTIALITY.
Purchaser, GTSD, the Company, BETI and Bird will hold, and will cause
their employees, representatives, agents and affiliated persons to hold in
strict confidence, and not disclose to any other party, and not use in any
way except in connection with the transactions contemplated hereby, without
the prior written consent of the other party, all confidential information
obtained from the other party in connection with the transactions
contemplated by this Agreement (including the existence of this Agreement,
any of the terms hereof, and the negotiations between the parties hereto),
except such information may be disclosed: (a) to Applicable Authorities and,
where necessary, to any other person in connection with the obtaining of the
Licenses and Approvals and the consents or waivers contemplated or required
by the terms of this Agreement; (b) if required by court order or decree or
any Applicable Law; (c) if it is publicly available through no act or failure
to act of such party; (d) was already known to such party on a confidential
basis on the date of receipt; (e) during the course of or in connection with
any litigation, governmental investigation, arbitration or other proceedings
based upon or in connection with the subject matter of this Agreement,
including the failure of the transactions contemplated hereby to be
consummated; or (f) if it is otherwise expressly provided for herein.
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SECTION 10.5 PARTIES IN INTEREST.
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the respective successors, heirs, personal representatives,
and assigns permitted under the terms of this Agreement.
SECTION 10.6 ENTIRE AGREEMENT.
This Agreement, any Exhibits, Schedules and any other writings delivered
pursuant hereto which form a part hereof and all other documents delivered
contemporaneous with the execution hereof contain the entire understanding of
the parties with respect to its subject matter and supersede all prior oral
and written agreements and understandings between the parties with respect to
its subject matter. In this regard, although the Bird Letter of Intent and
the Minority Shareholders' Letter of Intent shall be merged into and
superseded by this Agreement, certain descriptive language contained therein
is expressly referred to herein and shall be interpreted as if expressly set
forth herein.
SECTION 10.7 CONSTRUCTION.
The Article and Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The masculine pronoun shall include the
feminine and neuter, and vice versa, where the context so requires.
SECTION 10.8 NOTICES.
Except as otherwise expressly stated, all notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
shall be deemed given upon the earlier of (i) when it is personally
delivered, (ii) three (3) days after having been mailed by certified mail,
postage prepaid, return receipt requested, (iii) two (2) days after having
been sent by recognized overnight delivery service or (iv) one (1) day after
having been sent by facsimile transmission, addressed as follows:
IF TO GTSD:
GTS Duratek, Inc.
8955 Guilford Road, Suite 200
Columbia, Maryland 21046
Attention: Robert E. Prince, President and Chief
Executive Officer
Telecopy No.: (301) 621-8211
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WITH A COPY TO:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Henry D. Kahn, Esquire
Telecopy No.: (410) 576-1700
IF TO PURCHASER:
GTSD Sub II, Inc.
8955 Guilford Road, Suite 200
Columbia, Maryland 21046
Attention: Robert E. Prince, President
Telecopy No: (301) 621-8211
WITH A COPY TO:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Henry D. Kahn, Esquire
Telecopy No.: (410) 576-1700
IF TO COMPANY:
Bird Environmental Gulf Coast, Inc.
2700 Avenue S
San Leon, Texas 77539
Attention: Bob Hensel, President
Telecopier No.: (713) 559-1364
WITH A COPY TO:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Henry D. Kahn, Esquire
Telecopy No.: (410) 576-1700
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IF TO BETI:
Bird Environmental Technologies, Inc.
1077 Pleasant Street
Norwood, Massachusetts 02062
Attention: Frank S. Anthony, Vice President and General Counsel
Telecopy No.: (617) 551-9507
IF TO BIRD:
Bird Corporation
1077 Pleasant Street
Norwood, Massachusetts 02062
Attention: Frank S. Anthony, Vice President and General Counsel
Telecopy No.: (617) 551-9507
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
SECTION 10.9 COUNTERPARTS.
This Agreement may be executed simultaneously in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 10.10 GOVERNING LAW.
This Agreement is governed by and construed and enforced in accordance
with the laws of the State of Maryland, excluding any laws thereof which
would direct the application of the law of another jurisdiction, and
exclusive venue for filing any lawsuit shall be in the federal courts in
Maryland.
SECTION 10.11 SPECIFIC PERFORMANCE.
The parties acknowledge and agree that the breach of the provisions of
this Agreement could not be adequately compensated with monetary damages, and
the parties hereto agree, accordingly, that injunctive relief and specific
performance shall be appropriate remedies to enforce provisions of this
Agreement and waive any claim or defense that there is an adequate remedy at
law for such breach; provided, however, that nothing herein shall limit the
remedies herein, legal or equitable, otherwise available and all remedies
herein are in addition to any remedies available at law or otherwise.
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SECTION 10.12 SEVERABILITY.
If any provision of this Agreement shall be held to be illegal, invalid
or unenforceable under any applicable law, then such contravention or
invalidity shall not invalidate the entire Agreement. Such provision shall
be deemed modified to the extent necessary to render it legal, valid and
enforceable, and if no such modification shall render it legal, valid and
enforceable, then this Agreement shall be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties
shall be construed and enforced accordingly.
SECTION 10.13 FURTHER ASSURANCES.
From time to time, at Purchaser's request and without further
consideration, BETI and Bird shall execute and deliver to Purchaser such
documents and take such other action as Purchaser may reasonably request in
order to consummate more effectively the transactions contemplated hereby.
SECTION 10.14 NO DRAFTING PRESUMPTION.
Each of the parties hereto shall be deemed to have participated equally
in the drafting and preparation of this Agreement and, accordingly, no
presumption shall arise concerning the interpretation of any of the
provisions hereof with respect to the party or parties responsible for its
preparation.
SECTION 10.15 INCORPORATION BY REFERENCE; USE OF CERTAIN TERMS.
All Exhibits and Schedules attached to this Agreement shall be deemed
incorporated herein by reference as if fully set forth herein. When the
context requires, the gender of all words used herein shall include the
masculine, feminine and neuter and the number of all words shall include the
singular and plural.
SECTION 10.16 AMENDMENT AND WAIVER.
This Agreement may not be amended or modified except by a written
instrument signed by the parties hereto. The waiver by any party of such
party's rights under this Agreement in any particular instance or instances,
whether intentional or otherwise, shall not be considered as a continuing
waiver which would prevent subsequent enforcement of such rights or of any
other rights.
SECTION 10.17 WAIVER OF JURY TRIAL.
THE COMPANY, BETI, BIRD, PURCHASER AND GTSD HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT, THE STOCK, OR ANY
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DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER
OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THE COMPANY, BETI, BIRD, PURCHASER AND GTSD FURTHER WARRANT AND REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR ASSIGNMENTS OF)
THIS AGREEMENT OR THE STOCK. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto on the date first above written.
WITNESS/ATTEST: BIRD ENVIRONMENTAL GULF COAST,INC.
By: /s/ Margaret M. Doak By: /s/ Frank A. Anthony (SEAL)
-------------------------- ------------------------------
Frank A. Anthony
Vice President
BIRD ENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/ Margaret M. Doak By: /s/ Frank A. Anthony (SEAL)
-------------------------- ------------------------------
Frank A. Anthony
Vice President
BIRD CORPORATION
By: /s/ Margaret M. Doak By: /s/ Frank A. Anthony (SEAL)
-------------------------- ------------------------------
Frank A. Anthony
Vice President
GTS DURATEK, INC.
By: /s/ Diane R. Brown By: /s/ Robert F. Shawver (SEAL)
-------------------------- ------------------------------
Robert F. Shawver
Executive Vice President
GTSD SUB II, INC.
By: /s/ Diane R. Brown By: /s/ Robert F. Shawver (SEAL)
-------------------------- ------------------------------
Robert F. Shawver
Vice President
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EXHIBIT (c)(3)
<PAGE>
STOCKHOLDERS' AGREEMENT
BY AND AMONG
BIRD ENVIRONMENTAL GULF COAST, INC.;
GTS DURATEK, INC.;
GTSD SUB II, INC.;
JIM S. HOGAN;
MARK B. HOGAN;
BARRY K. HOGAN; AND
SAM J. LUCAS III
DATED AS OF NOVEMBER 29, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF
THE MINORITY SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Authority of Minority Shareholders; Title to Stock. . . . . . 5
Section 2.2 Organization, Standing, Authority and Capitalization
of Company. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.4 No Other Pending Transactions . . . . . . . . . . . . . . . . 8
Section 2.5 Company's Names, Business, and Location of Company Assets . . 8
Section 2.6 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7 Financial Statements. . . . . . . . . . . . . . . . . . . . . 9
Section 2.8 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . 9
Section 2.9 Absence of Certain Changes, Events or Conditions. . . . . . . 9
Section 2.10 Litigation and Other Proceedings. . . . . . . . . . . . . . .10
Section 2.11 Licenses and Approvals. . . . . . . . . . . . . . . . . . . .11
Section 2.12 Legal Compliance. . . . . . . . . . . . . . . . . . . . . . .11
Section 2.13 Material Contracts and Agreements. . . . . . . . . . . . . . 11
Section 2.14 Title Matters. . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.15 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.16 Employee Benefit Plans and Workers' Compensation Matters. . .12
Section 2.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.18 Condition of Company Assets. . . . . . . . . . . . . . . . . 13
Section 2.19 Intellectual Property. . . . . . . . . . . . . . . . . . . . 14
Section 2.20 Environmental Matters. . . . . . . . . . . . . . . . . . . . 14
Section 2.21 Customers and Suppliers. . . . . . . . . . . . . . . . . . . 17
Section 2.22 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . 17
Section 2.23 No Material Adverse Change. . . . . . . . . . . . . . . . . .18
Section 2.24 Books and Records. . . . . . . . . . . . . . . . . . . . . . 18
Section 2.25 Disaster. . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 2.26 No Burdensome Agreements; Transactions with Affiliates. . . .18
Section 2.27 Due Diligence Review. . . . . . . . . . . . . . . . . . . . .19
Section 2.28 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE III: REPRESENTATIONS AND WARRANTIES
OF GTSD and GTSD SUB. . . . . . . . . . . . . . . . . . . . . .19
Section 3.1 Organizational Matters; Authority. . . . . . . . . . . . . . 19
<PAGE>
Section 3.2 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . .20
Section 3.3 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 3.4 Access to Information. . . . . . . . . . . . . . . . . . . . 20
Section 3.5 Disclosure of Current Material Plans. . . . . . . . . . . . .20
Section 3.6 Disclosure of Certain Financial Information. . . . . . . . . 21
ARTICLE IV: COVENANTS AND OTHER AGREEMENTS. . . . . . . . . . . . . . . . . 21
Section 4.1 Consents; Cause Conditions to be Satisfied. . . . . . . . . .21
Section 4.2 Non-Interference Agreement. . . . . . . . . . . . . . . . . .21
Section 4.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.4 Release from Liability . . . . . . . . . . . . . . . . . . . 23
Section 4.5 Termination of Certain Agreements. . . . . . . . . . . . . . 23
Section 4.6 Vote Stock on Certain Matters. . . . . . . . . . . . . . . . 23
Section 4.7 Investment by GTSD in Company. . . . . . . . . . . . . . . . 24
Section 4.8 Willingness and Ability to Perform Covenants. . . . . . . . .24
Section 4.9 Good Faith Performance in the Future. . . . . . . . . . . . .24
Section 4.10 Due Diligence Report. . . . . . . . . . . . . . . . . . . . .25
Section 4.11 Guaranty Agreement. . . . . . . . . . . . . . . . . . . . . .25
Section 4.12 Mitigation of Indemnified Losses. . . . . . . . . . . . . . .25
Section 4.13 Schedule Disclosures. . . . . . . . . . . . . . . . . . . . .25
Section 4.14 Tax Sharing Arrangement. . . . . . . . . . . . . . . . . . . 26
ARTICLE V: INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.1 Indemnification by the Minority Shareholders. . . . . . . . .26
Section 5.2 Indemnification by GTSD and GTSD Sub. . . . . . . . . . . . .26
Section 5.3 Procedures for Third Party Claims. . . . . . . . . . . . . . 27
Section 5.4 Limits for Recovery of Losses. . . . . . . . . . . . . . . . 27
Section 5.5 Waiver of Contribution. . . . . . . . . . . . . . . . . . . .28
Section 5.6 Holdback, Right of Setoff. . . . . . . . . . . . . . . . . . 28
ARTICLE VI: SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII: RESTRICTIONS ON TRANSFER; VOLUNTARY
TRANSFER; INVOLUNTARY TRANSFER. . . . . . . . . . . . . . . . .29
Section 7.1 Restrictions on Transfer. . . . . . . . . . . . . . . . . . .29
Section 7.2 Right of First Refusal Upon Voluntary Transfer of
Shares by Minority Shareholders. . . . . . . . . . . . . . . 29
Section 7.3 Option Upon Involuntary Transfer. . . . . . . . . . . . . . .30
Section 7.4 Right of First Offer Upon Transfer of Shares by GTSD. . . . .30
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Section 7.5 Permitted Transfers. . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII: BUYOUT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.1 Put Rights of Minority Shareholders. . . . . . . . . . . . . 32
Section 8.2 Call Rights of the Company and GTSD Sub. . . . . . . . . . . 33
Section 8.3 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . .34
Section 8.4 Payment of the Purchase Price. . . . . . . . . . . . . . . . 35
ARTICLE IX: OTHER RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.1 Legend on Certificates. . . . . . . . . . . . . . . . . . . .36
Section 9.2 Actions Requiring Vote or Consent of the
Minority Shareholders. . . . . . . . . . . . . . . . . . . . 36
Section 9.3 Composition of Board of Directors. . . . . . . . . . . . . . 37
Section 9.4 Formation of Management Committee. . . . . . . . . . . . . . 37
ARTICLE X: TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XI: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.1 No Assignment. . . . . . . . . . . . . . . . . . . . . . . .38
Section 11.2 Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 11.3 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 11.4 Parties in Interest. . . . . . . . . . . . . . . . . . . . .38
Section 11.5 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 38
Section 11.6 Construction. . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.7 Additional Documents. . . . . . . . . . . . . . . . . . . . 39
Section 11.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . .41
Section 11.11 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . .42
Section 11.12 Specific Performance. . . . . . . . . . . . . . . . . . . . 42
Section 11.13 Severability. . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.14 No Drafting Presumption. . . . . . . . . . . . . . . . . . .43
Section 11.15 Incorporation by Reference; Use of Certain Terms. . . . . . 43
Section 11.16 Amendment and Waiver. . . . . . . . . . . . . . . . . . . . 43
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STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (the "Agreement") is made as of this
29th day of November, 1995 by and among Bird Environmental Gulf Coast, Inc.,
a Texas corporation (the "Company"); GTS Duratek, Inc., a Delaware
corporation ("GTSD"), GTSD Sub II, Inc., a Maryland corporation and a
wholly-owned subsidiary of GTSD ("GTSD Sub"), Jim S. Hogan ("J. Hogan"), Mark
B. Hogan ("M. Hogan"), Barry K. Hogan ("B. Hogan") and Sam J. Lucas III
("Lucas"). For purposes of this Agreement, J. Hogan, M. Hogan, B. Hogan and
Lucas may be collectively referred to as "Minority Shareholders" and may be
individually referred to as a "Minority Shareholder."
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, GTSD Sub is purchasing from Bird Environmental Technologies, Inc.,
a Delaware corporation ("BETI"), all of the outstanding capital stock of the
Company owned by BETI, which represents 80% of the issued and outstanding
stock of the Company, upon the terms and provisions set forth in a Stock
Purchase Agreement of even date herewith by and among the Company, BETI, Bird
Corporation, a Massachusetts corporation ("Bird"), GTSD Sub and GTSD (the
"Stock Purchase Agreement").
WHEREAS, contemporaneously with the execution and delivery of this
Agreement and the Stock Purchase Agreement, effective as of the date hereof,
(i) the Company will have executed with each of M. Hogan, B. Hogan and Lucas
employment agreements (the "Employment Agreements"), (ii) the Company and J.
Hogan will have executed and delivered that certain technology license
agreement (the "License Agreement") pursuant to which J. Hogan will license
to the Company and to GTSD the technologies specified therein and (iii) the
Company and J. Hogan will have executed and delivered that separate agreement
(the "Hogan Agreement"). This Agreement, the Employment Agreements, the
License Agreement and the Hogan Agreement shall be collectively referred to
herein as the "Minority Shareholders Agreements".
WHEREAS, a significant inducement for GTSD Sub to purchase the
capital stock of the Company from BETI is its ability to enter into this
Agreement pursuant to the terms and conditions set forth herein and to enter
into the other Minority Shareholders Agreements on the terms and conditions
specified therein.
WHEREAS, with respect to this Agreement, GTSD Sub and the Minority
Shareholders wish to enter into this Agreement among themselves to assure
continuity in the ownership and management of the Company, to set forth their
rights and obligations as stockholders of the Company and to provide a market
and a purchase price for the shares of stock owned by them upon the
occurrence of certain events.
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:
ARTICLE I: DEFINITIONS
In addition to those terms defined elsewhere herein, when used
herein, the following capitalized terms shall have the meanings indicated:
"AFFILIATE" of a specified person means a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified.
"APPLICABLE AUTHORITY" shall mean any foreign, federal, state or
local governmental or quasi-governmental instrumentality, agency, department,
bureau, board or commission having authority or purporting to have authority
over the Company, any of the Company Assets, or the operation of the
Company's Business, including any entity with licensing or regulatory
authority concerning the Company and the operation of the Company's Business.
"APPLICABLE LAWS" shall mean all foreign, federal, state and local
laws, regulations, rules, orders, decrees, ordinances or judgments applicable
to the Company, the Company Assets, or the operation of the Company's
Business, including all laws concerning the licensing and regulation of the
Company and the conduct of the Company's Business.
"BIRD INSTRUMENTS" shall mean the following documents to which the
Minority Shareholders, certain of their Affiliates and certain Affiliates of
Bird are parties: (a) that certain Pre-Incorporation Agreement dated August
9, 1991; (b) that certain Stock Option Agreement dated August 9, 1991; (c)
that certain Voting Agreement dated August 9, 1991; (d) that certain Stock
Purchase Agreement dated August 9, 1991; (e) that certain Amendment Agreement
dated August 9, 1991; and (e) that certain Agreement dated June 18, 1994,
forms of which documents are attached hereto as APPENDIX I.
"BIRD LETTER OF INTENT" shall mean the letter of intent dated as of
September 6, 1995 addressed to Mr. Frank S. Anthony, Vice President and
General Counsel of Bird from GTSD.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations thereunder.
"COMPANY ASSETS" shall mean all of the properties and assets owned
or leased by the Company, including without limitation all of the following:
the Property, the Tangible Operating Assets, the Intellectual Property, the
Company Contracts, the Leases, and the Licenses and Approvals (as each term
is defined below).
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"COMPANY'S BUSINESS" shall mean developing and implementing waste
treatment technologies, as such activity was conducted prior to the shutdown
or suspension of its operations as contemplated by the Minority Shareholders'
Letter of Intent.
"COMPANY CONTRACTS" shall mean, collectively, all contracts or
agreements to which the Company is a party or by which the Company or any of
the Company Assets is bound, including personal property leases, franchise,
manufacturer's representative, distributorship, service, supply, maintenance,
employee, leasing and management contracts and agreements affecting or
involving the Property or the Company's Business.
"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
"INVENTORY" shall mean all parts, supplies, process additives,
marketing materials and other material held for use, consumption or sale in
the Company's Business.
"KNOWN" or "KNOWLEDGE" (regardless of whether such terms are
capitalized) when used in connection with a statement regarding the existence
or absence of facts, unless a different definition or standard is expressly
set forth in a particular context, are intended by the parties to qualify or
limit such statement to facts actually (and not constructively) known or
believed to exist by the individual or, in the case of a corporation, by its
current officers and directors.
"LEASES" shall mean, collectively, all of the oral or written
leases, subleases, licenses, concession agreements or other use or occupancy
agreements pursuant to which the Company or any other party is entitled to
occupy and use any portion of the Property or pursuant to which Company
leases to or from any other party any real property, including all renewals,
extensions, modifications or supplements to any of the foregoing or
substitutions for any of the foregoing.
"LICENSES AND APPROVALS" shall mean all certificates, licenses,
permits or other approvals required or obtained by the Company in connection
with the use or ownership of the Company Assets, the operation of the
Company's Business or in connection with its use and occupancy of any of the
Property.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien or other charge of any kind, including, without limitation,
any conditional sale or other title retention agreement, any lease in the
nature thereof and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction and including any lien
or charge arising by statute or other law.
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse
effect on the assets, properties, liabilities, business affairs, results of
operations, condition (financial or otherwise) or prospects of the Company,
provided that an effect resulting from the decision to
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shutdown or suspend the operations of the Company as described in the
Minority Shareholders Letter of Intent shall not be deemed to constitute a
Material Adverse Effect.
"MINORITY SHAREHOLDERS' LETTER OF INTENT" shall mean the letter of
intent dated as of September 7, 1995 addressed to B. Hogan, Executive Vice
President of the Company from GTSD.
"ORDINARY COURSE OF BUSINESS" or words of similar import mean
(whether or not capitalized) acts or omissions to act that are consistent
with the past practices of the Company and are taken or omitted to be taken
in the normal course of day-to-day operations of the Company.
"ORGANIZATIONAL DOCUMENTS" shall mean a corporation's Articles or
Certificate of Incorporation and By-Laws, as amended or supplemented.
"PERMITTED LIENS" shall mean (i) Liens for taxes, assessments or
other governmental charges or levies which are not yet due and payable or
which are being contested in good faith by appropriate action and for which a
reserve or other appropriate provision as shall be required in accordance
with GAAP shall have been made by the Company in its Financial Statements (as
hereinafter defined); (ii) statutory Liens of landlords, carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other like
Liens arising by operation of law in the ordinary course of the Company's
Business or incident to the construction or improvement of any property in
respect of obligations that are not yet due or that are being contested in
good faith by appropriate proceedings by or on behalf of the Company and for
which a reserve or other appropriate provision as shall be required in
accordance with GAAP shall have been made by the Company in its Financial
Statements; (iii) Liens incurred or deposits made by the Company in
connection with worker's compensation, unemployment insurance or other social
security arising by operation of law in the ordinary course of the Company's
Business; (iv) Liens incurred or deposits made by the Company to secure the
performance of performance of bids, statutory obligations, surety and appeal
bonds in the ordinary course of the Company's Business; (v) rights of a
common owner of any interest in real estate, rights of way or easements held
by the Company and such common owner as tenants in common or through other
common ownership; (vi) any other minor defects and irregularities of title
and other minor charges or encumbrances that do not (a) materially impair the
ownership, occupation, use or enjoyment of the Company's Assets, (b)
materially impair the value of the Company's Assets or (c) materially impair
the ability of the Company to sell the property affected thereby and (vii)
Liens disclosed on the schedules to this Agreement.
"PERSON" or "PERSON" means an individual, corporation, partnership,
firm, ssociation, joint venture, trust, unincorporated organization,
government, governmental body, agency, political subdivision or other entity.
"PRODUCTS" means all of the products manufactured, distributed,
marketed, sold or packaged in connection with the operation of the Company's
Business.
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"PROPERTY" shall mean, collectively, all of the land and the
improvements thereon, together with any tangible property located thereon
which would constitute a "fixture" under the laws of the State of Maryland
and all personal property owned or leased by Company and used or useful in
connection with the operation of the Company's Business (other than that
personal property included within the definition of "Tangible Operating
Assets") and all of Company's right, title and interest in and to all
privileges, appurtenances, and advantages belonging or in any way
appertaining to any such land, including all easements, rights-of-way, water
and riparian rights, air rights above the land, development rights, and all
rights, title and interest in and to all adjoining streets, roads or alleys
(public or private, open or proposed).
"RESTRICTED AGREEMENT" shall refer to any of the Leases and Company
Contracts (as each is defined in this Article I), to the extent that any such
Lease or Company Contract contains any provision that, as a result of the
consummation of the transactions contemplated by this Agreement, causes one
or more of the following to occur: (i) the Company is deemed to be in
default under such Lease or Company Contract (with or without the giving of
notice and any cure period); (ii) automatically voids such Lease or Company
Contract or renders voidable by any party other than the Company, the Lease
or Company Contract or provides any party other than the Company with a right
to terminate or rescind such Lease or Company Contract; (iii) imposes any
fine, penalty, charge or increase in payments or other charges required to be
made by the Company under such Lease or Company Contract; or (iv) otherwise
modifies any of the material terms of such Lease or Company Contract.
"SHARES" shall mean shares of Stock (as hereinafter defined).
"STOCK" shall mean the outstanding shares of capital stock of the
Company.
"TANGIBLE OPERATING ASSETS" shall mean, collectively, all of the
tangible personal property used or useful in the operation of Company's
Business, wheresoever located, including Inventory, trade fixtures,
stock-in-trade, equipment, and supplies.
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF
THE MINORITY SHAREHOLDERS
Except as disclosed on a schedule in response to a particular
representation or warranty or as otherwise disclosed on the schedules
contemplated by this Article II, each of the Minority Shareholders hereby
represents and warrants jointly and severally, except as otherwise provided
below, to GTSD and GTSD Sub as of the date hereof as follows:
SECTION 2.1 AUTHORITY OF MINORITY SHAREHOLDERS; TITLE TO STOCK.
(a) Each Minority Shareholder represents and warrants (severally and not
jointly and severally with the other Minority Shareholders) that (i) such
Minority Shareholder has all requisite power and authority to execute,
deliver and perform this Agreement and each of the
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instruments, documents, and agreements contemplated herein to be executed and
delivered by the Minority Shareholder pursuant to this Agreement
(collectively, the "Minority Shareholders Instruments"), (ii) when duly
executed and delivered by the Minority Shareholder and the other parties
thereto, each of the Minority Shareholders Instruments will constitute valid
and legally binding obligations of the Minority Shareholder, and (iii) will
be enforceable against him in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally.
(b) Each Minority Shareholder represents and warrants (severally and not
jointly and severally with the other Minority Shareholders) that such
Minority Shareholder owns 5% of the issued and outstanding capital stock of
the Company free and clear of any Liens, rights of first refusal or
restriction of any kind, except as may arise under the Bird Instruments or
under federal or applicable state securities laws. The Minority Shareholder
owns the number of Shares set forth on SCHEDULE 2.1(b) hereto. Each Minority
Shareholder represents and warrants (severally and not jointly and severally
with other Minority Shareholders) that such Minority Shareholder is neither a
party to or bound by any options, calls, contracts of commitments of any
character relating to any of the Stock or any other equity or debt security
issued or to be issued by the Company, except as may arise under the Bird
Instruments.
SECTION 2.2 ORGANIZATION, STANDING, AUTHORITY AND CAPITALIZATION
OF COMPANY.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and has all requisite
corporate power and authority to carry on the Company's Business as it is now
being conducted, to own the Company Assets (including the Property) and to
own or lease each of the other properties and assets it now owns or leases.
True, complete and correct copies of the Organizational Documents of the
Company have been delivered to GTSD and the Organizational Documents are in
full force and effect. The Company is not in violation, breach or default of
any of the provisions of its Organizational Documents. The Company is duly
qualified to do business in the jurisdictions set forth in SCHEDULE 2.2(a)
attached hereto which jurisdictions represent all of the jurisdictions where
the Company is required to be qualified as the result of the location of its
assets or the conduct of the Company's Business.
(b) The Company has all requisite corporate power and authority to
execute, deliver and perform this Agreement and each of the instruments,
documents, and agreements contemplated herein to be executed and delivered by
Company pursuant to this Agreement (collectively, the "Company Instruments").
The execution, delivery and performance of this Agreement and of the Company
Instruments have been duly authorized and approved by all necessary corporate
action, and this Agreement and the Company Instruments, when duly executed
and delivered by the Company and the other parties thereto, will constitute
valid and legally binding obligations of Company, enforceable against the
Company in accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of
creditors generally.
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(c) The authorized capital stock of Company consists entirely of 3,000
shares of common stock, $0.01 par value, of which 700 shares are issued and
outstanding. Three hundred (300) shares of capital stock of the Company are
held in the Company's treasury and no shares of capital stock are reserved
for issuance. All outstanding shares of capital stock of the Company have
been duly authorized and are validly issued and are fully paid and
non-assessable with no personal liability attaching to the ownership thereof.
To the Minority Shareholders' knowledge, the Company is not a party to or
bound by any options, warrants, rights, calls or other preemptive rights or
other agreements or plans under which the Company may become obligated to
issue, sell or transfer shares of its capital stock or other securities.
(d) The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of
authorized capital stock of the Company are as set forth in the
Organizational Documents of the Company, copies of which have been furnished
to GTSD.
(e) To the Minority Shareholders' knowledge, there are not any
outstanding registration rights with respect to any shares of capital stock
of the Company.
(f) To the Minority Shareholders' knowledge, the Company does not have
any obligation (contingent or other) to purchase, redeem or otherwise acquire
any of its capital stock or any interest therein or to pay any dividend or
make any other distribution in respect thereof.
(g) The Minority Shareholders have no knowledge of any voting
agreements, voting trusts, stockholders' agreements, proxies or other
agreements or understandings that are currently in effect, other than the
Bird Instruments, or that are currently contemplated with respect to the
voting of any capital stock of the Company, other than as contemplated hereby.
(h) To the Minority Shareholders' knowledge, all of the outstanding
securities of the Company were issued in compliance with all applicable
federal and state securities laws.
(i) To the Minority Shareholders' knowledge, there are not any
outstanding contractual obligations (contingent or otherwise) of the Company
that would prohibit or restrict the Company's ability to declare or pay
dividends or to repurchase or redeem the Company's capital stock.
(j) To the Minority Shareholders' knowledge, there have been no changes
to the capitalization of the Company, or any recapitalizations of the
Company, since December 31, 1994 other than advances provided to the Company
by Bird or its Affiliates.
SECTION 2.3 NO CONFLICTS.
Neither the execution and delivery of this Agreement nor the carrying
out of the transactions contemplated hereby (except for capital expenditures
or other actions to be taken as contemplated by Section 4.7) or under any of
the Company Instruments, will: (a) with or
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without notice or the passage of time or both, result in any violation,
termination or modification of, or be in conflict with, (i) the
Organizational Documents of the Company, (ii) any License and Approval, Lease
or Company Contract (other than the Bird Instruments), or any other
instrument or agreement to which the Company is a party or by which the
Company is bound, or (iii) any law, rule, regulation, ordinance, writ,
injunction, judgment, decree or order applicable to the Company, (b) result
in the creation of any Lien upon the Property or any of the other Company
Assets or in the acceleration of any indebtedness or other obligation of the
Company; or (c) require the filing, declaration or registration with, or
permit, consent or approval of, or the giving of any notice to, any
Applicable Authority or any other third party, excluding, those that have
already been obtained prior to the execution and delivery of this Agreement.
SECTION 2.4 NO OTHER PENDING TRANSACTIONS.
Except for the transactions contemplated by this Agreement: (i) neither
the Minority Shareholders nor, to the Minority Shareholders' knowledge, the
Company is a party to or bound by or the subject of any agreement, commitment
or undertaking with respect to the sale of all or any part of the Stock of
the Company, except as may arise under the Bird Instruments; and (ii) the
Company is not a party to or bound by or the subject of any agreement,
undertaking or commitment to merge or consolidate with, or acquire all or
substantially all of the property and assets of, any other person,
corporation, or entity, or to sell, lease or exchange all or substantially
all of the Company Assets to any other person, corporation, or entity.
SECTION 2.5 COMPANY'S NAMES, BUSINESS, AND LOCATION OF COMPANY ASSETS.
The Company has conducted business under the name "Bird Environmental
Gulf Coast, Inc." and no other names. The Company is in the business of
developing and implementing waste treatment technologies. The Company has
not engaged in, does not currently engage in, or currently have any intention
of engaging in, any other business other than as described in the preceding
sentence. The Company's chief executive office and principal place of
business is located at 2700 Avenue S, San Leon, Texas 77539. All of the
Company Assets are located at same address as its chief executive office and
the Company does not currently have any places of business other than at such
address. Set forth on SCHEDULE 2.5 attached hereto is a complete and
accurate listing of all locations at which the Company has conducted
operations or owned or leased property since its formation.
SECTION 2.6 SUBSIDIARIES.
The Company does not own, or have any contract or other right to
acquire, directly or indirectly, any capital stock or other equity securities
of any Person, nor does the Company have any direct or indirect equity or
ownership interest in any business other than the Company's Business.
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SECTION 2.7 FINANCIAL STATEMENTS.
(a) As used herein, the term "Financial Statements" shall mean and
include the following: (i) the audited balance sheet of the Company on a
consolidated basis as of December 31, 1994 and the unaudited balance sheet of
the Company on a consolidated basis as of August 31, 1995, and (ii) the
related consolidated statements of income, changes in stockholders' equity
and cash flow for the related annual and eight month periods ended December
31, 1994 and August 31, 1995, respectively.
(b) To the Minority Shareholders' actual or constructive knowledge, the
Financial Statements: (i) were prepared in accordance with GAAP consistently
applied throughout the periods covered thereby, subject, in the case of
interim financial statements to normal recurring year-end adjustments and
accruals and the omission of certain footnote disclosures; (ii) present
fairly the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company as at the respective dates
of and for the periods referred to in such financial statements; and (iii)
are true, complete and correct in all material respects. Copies of the
Financial Statements have been delivered by the Minority Shareholders to GTSD.
SECTION 2.8 NO UNDISCLOSED LIABILITIES.
Except as set forth on SCHEDULE 2.8 attached hereto, the Company does
not have any liabilities or obligations of any nature (whether known or
unknown, matured or unmatured, disputed or undisputed, liquidated or
unliquidated, fixed or contingent, secured or unsecured) except for (i)
liabilities or obligations reflected or reserved against in the Financial
Statements, (ii) current liabilities incurred in the ordinary course of
business (which shall include the current liabilities listed on SCHEDULE 2.8A
attached hereto which were incurred during the shutdown of the Company's
operations) since the respective dates thereof and (iii) liabilities required
to be paid or funded by Bird as contemplated by the Bird Letter of Intent.
SECTION 2.9 ABSENCE OF CERTAIN CHANGES, EVENTS OR CONDITIONS.
To the Minority Shareholders' knowledge, except as set forth in SCHEDULE
2.9 attached hereto, since August 31, 1995:
(a) the Company has not incurred any debt, obligation or liability
except for normal debts, obligations and liabilities incurred in the ordinary
course of business (which shall include the current liabilities listed on
SCHEDULE 2.8A attached hereto which were incurred during the shutdown of the
Company's operations) and except for advances from Bird to cover shortages of
working capital and the Company Assets have not been subjected to any Liens
other than Permitted Liens and those liens described on SCHEDULE 2.9(a)
attached hereto;
(b) no material Company Assets have been sold or transferred;
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(c) there has not been any change in the Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of
capital stock of the Company; issuance of any security convertible into such
capital stock; grant of any registration rights; purchase, redemption,
retirement or other acquisition by the Company of any shares of any such
capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(d) there has not been any payment by the Company of any bonuses or
other compensation (other than salaries)and there has not been any increase
of any salaries by the Company, to any stockholder, director, officer, or
employee (except in the ordinary course of business) or entry into any
employment, severance, or similar contract or agreement with any director,
officer or employee;
(e) there has not been any damage to or destruction or loss of any
asset or property of the Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business,
financial condition or prospects of the Company taken as a whole; and
(f) no agreements have been entered into, whether in writing or
otherwise, to take any of the actions set forth in this Section 2.9.
SECTION 2.10 LITIGATION AND OTHER PROCEEDINGS.
(a) Except as set forth on SCHEDULE 2.10 attached hereto, there is no
litigation, arbitration, mediation, or other investigation or proceeding
pending nor, to the Minority Shareholders' knowledge, threatened, against or
relating to the Company, the Company Assets, the Company's Business, or the
transactions contemplated by this Agreement. Except as disclosed on SCHEDULE
2.10 attached hereto, the Company is not subject to, or bound by, any order
of any court or Applicable Authority entered in any judicial, administrative
or other proceeding to which it is or was a party. Except as set forth on
SCHEDULE 2.10 attached hereto, no matter set forth on SCHEDULE 2.10 attached
hereto would, if adversely decided, have a Material Adverse Effect on the
business, operations, condition (financial or otherwise), liabilities,
assets, earnings, working capital or prospects of the Company.
(b) There is no litigation, arbitration, mediation, or other
investigation or proceeding pending nor, to the Minority Shareholders'
knowledge, threatened, against or relating to any of the Minority
Shareholders which seeks to prohibit, restrict or delay performance of this
Agreement and there is no judgment, decree, injunction, ruling or order of
any Court, Applicable Authority or arbitrator outstanding against any of the
Minority Shareholders having any such effect.
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SECTION 2.11 LICENSES AND APPROVALS.
Attached hereto as SCHEDULE 2.11 is a complete and accurate list of all
of the Licenses and Approvals held by the Company. The Company has provided
GTSD with true, correct and complete copies of all of the Licenses and
Approvals or given GTSD access thereto. To the Minority Shareholders' actual
or constructive knowledge, the Company owns or possesses and holds free from
restrictions or conflicts with the rights of others all franchises, licenses,
permits, consents, approvals and other authority (governmental or otherwise),
and all rights and privileges with respect to the foregoing, as are necessary
for the conduct of its business as now being conducted, and as proposed to be
conducted, except where the failure to own or possess and hold such
franchises, licenses, permits, consents, approvals and other authority
(governmental or otherwise) would not have a Material Adverse Effect. All of
the Licenses and Approvals are in full force and effect and the Company is
not in violation with respect to any of them. To the Minority Shareholders
actual or constructive knowledge, no proceedings are pending or, to the
Minority Shareholders' knowledge, threatened by any Applicable Authority to
revoke or limit the scope of any of the Licenses and Approvals. Except as
noted on SCHEDULE 2.11 attached hereto, none of the Licenses and Approvals
would be rendered ineffective or be required to be reissued as a result of
the consummation of the transactions contemplated hereby or by the
transactions contemplated by the Stock Purchase Agreement, except if such
Licenses and Approvals would be rendered ineffective or be required to be
reissued as a result of actions within the exclusive control of GTSD or its
Affiliates.
SECTION 2.12 LEGAL COMPLIANCE.
Except as set forth on SCHEDULE 2.12 attached hereto and except for
matters covered by Sections 2.15, 2.16 and 2.20 hereto (which matters are
addressed exclusively in such respective sections), to the Minority
Shareholders' knowledge, the Company's Business is being conducted in
compliance with all Applicable Laws and neither the Company nor any of the
Minority Shareholders has received notice from any Applicable Authority that
the Company, the Company's Business or the Company Assets is not in
compliance with any Applicable Laws.
SECTION 2.13 MATERIAL CONTRACTS AND AGREEMENTS.
Listed on SCHEDULE 2.13 is a listing of all material, executory
contracts, agreements, leases, indentures or instruments of the Company. With
respect to such material contracts, agreements, leases, indentures or
instruments of the Company, the Company and, to the Minority Shareholders'
knowledge, each other party thereto have in all material respects performed
all the obligations required to be performed by them to date, have received
no notice of default and are not in default, in any material respect, (with
due notice or lapse of time or both) under any material contract, agreement,
indenture or other instrument now in effect to which the Company is a party
or by which it or its property may be bound. The Minority Shareholders have
no knowledge of any breach and have received no written notice of any
anticipated breach by the other party to any material contract or commitment
to which the Company is a party. To the
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Minority Shareholders' actual or constructive knowledge, except as noted on
SCHEDULE 2.13 attached hereto, none of the Company's material contracts or
agreements constitute a Restricted Agreement or would require the consent or
approval of any party thereto, other than Company, or the consent or approval
of any third party in connection with the consummation of the transactions
contemplated hereby and by the Stock Purchase Agreement.
SECTION 2.14 TITLE MATTERS.
The Company has good and marketable title to the Company Assets owned by
it, free and clear of all Liens except Permitted Liens and certain subsurface
rights (the "Subsurface Rights") to the Company's real property. The
Subsurface Rights will not in any material way adversely affect the Company's
use or enjoyment of its real property and will not in any material way
adversely affect the Company's operations. The Company does not lease any
real property. None of the Properties owned by the Company is subject to any
Liens (excluding Permitted Liens) which could reasonably be expected to
materially and adversely affect the assets, Properties, business, affairs,
results of operations, condition (financial or otherwise) or prospects of the
Company.
SECTION 2.15 LABOR MATTERS.
To the Minority Shareholders' knowledge, the Company has complied in all
material respects with all applicable federal and state laws relating to the
employment of labor including the provisions thereof relating to wages,
hours, collective bargaining and the payment of social security and taxes and
is not liable for any arrears of wages or any tax or any penalty for failure
to comply with any of the foregoing. No labor dispute, strike, work
stoppage, employee action or labor relations problem of any kind which has
affected or may affect the Company has occurred since the inception of the
Company or, to the Minority Shareholders' knowledge, is currently pending or
threatened. Each Minority Shareholder represents severally (and not jointly
and severally) that he has no knowledge of any managerial or supervisory
employees of Company who are planning or intend to terminate their
relationship with the Company or do not intend to continue in the employ of
the Company (other than as a result of normal retirement) from and after the
date hereof.
SECTION 2.16 EMPLOYEE BENEFIT PLANS AND WORKERS' COMPENSATION MATTERS.
(a) The Minority Shareholders have provided to GTSD copies of all of the
Company's employee benefit plans currently in effect and, to the Minority
Shareholders' knowledge, such employee benefit plans comply in all material
respects with all applicable laws relating thereto.
(b) SCHEDULE 2.16 attached hereto contains the most recent quarterly
listing of workers' compensation claims and a schedule of workers'
compensation claims of the Company for the last three fiscal years.
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SECTION 2.17 INSURANCE.
To the Minority Shareholders' knowledge, the Company maintains and has
maintained all such general liability, pollution liability, product
liability, fire, casualty and motor vehicle insurance as is necessary to
adequately insure and protect the property and assets of the Company. To the
Minority Shareholders' knowledge, all such insurance policies continue to be
in full force and effect, and the Company is in compliance with all
requirements and provisions thereof. True and correct copies of all insurance
policies relating to such coverage have been provided by the Company or the
Minority Shareholders to GTSD. To the Minority Shareholders' knowledge, no
notice of cancellation has been given to or received by the Company with
respect to any of its insurance policies, and no such policies are subject to
any retroactive rate or audit adjustments or coinsurance arrangements. The
Company has posted all completion performance and other bonds and
indemnities, if any, required for all current projects and for the conduct of
its business in the ordinary course. The Minority Shareholders have provided
GTSD with a list of all property damage and personal injury claims asserted
against the Company with respect to the Company's Business during the past
five (5) years involving any claim in excess of $10,000. To the Minority
Shareholders' knowledge, the Company has not received any notice from any
insurance company or insurance board of underwriters of the existence of any
default or unsafe condition with respect to the Property that remains
unsatisfied or uncured as of the date hereof.
SECTION 2.18 CONDITION OF COMPANY ASSETS.
(a) The Company Assets include all assets, properties, licenses and
other agreements necessary for the continued conduct of Company's Business
after the execution of this Agreement and the closing of the transactions
contemplated by the Stock Purchase Agreement in substantially the same manner
as conducted prior thereto.
(b) The Company or the Minority Shareholders have delivered to GTSD a
complete and accurate list of all of the Tangible Operating Assets of the
Company. All of the Tangible Operating Assets were in good operating
condition, normal wear and tear excepted at the time of the shutdown of the
Company's operations, except for repairs and capital expenditures
contemplated by SCHEDULE 4.7 hereto, and were in a condition which was
adequate for the conduct of the Company's Business. EXCEPT AS EXPRESSLY SET
FORTH IN THIS ARTICLE II, NEITHER THE COMPANY NOR ANY MINORITY SHAREHOLDER
MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE COMPANY'S TANGIBLE
OPERATING ASSETS, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, ALL SUCH
EXPRESS OR IMPLIED WARRANTIES (OTHER THAN THOSE SET FORTH IN THIS ARTICLE II)
BEING HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.
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SECTION 2.19 INTELLECTUAL PROPERTY.
(a) SCHEDULE 2.19 hereto contains a complete and accurate list of all
patents, trademarks, servicemarks and copyrights (registered or
unregistered), trade names, assumed names, brand names, licenses and all
applications therefor, owned, used or filed by the Company. The Company has
sufficient trademarks, trade names, service marks, patent rights, copyrights,
manufacturing processes, formulae, applications, trade secrets, know how,
licenses, approvals and governmental authorizations (or rights
thereto)(collectively, the "Intellectual Property") to conduct its business
as conducted prior to the shutdown of the Company's operations. Except as
set forth in SCHEDULE 2.19 attached hereto, the patents, trademarks and the
copyrights that constitute Intellectual Property are valid, subsisting and
enforceable, and the patents, registered trademarks and registered copyrights
are duly recorded in the name of Company.
(b) The Company has the sole and exclusive ownership and right, free
from any Liens, to use the Intellectual Property and the consummation of the
transactions contemplated hereby will not alter or impair any such rights.
Except as set forth in SCHEDULE 2.19 attached hereto, within the last five
years, no claims have been asserted by any entity or person with respect to,
or challenging or questioning, the ownership, validity, enforceability or use
of the Intellectual Property. The use or other exploitation of such
Intellectual Property by the Company does not infringe the rights of any
other entity or person. To the Minority Shareholders' knowledge, no entity
or person is infringing the rights of the Company with respect to such
Intellectual Property. SCHEDULE 2.19 attached hereto sets forth a complete
and accurate list of all license agreements between Company and third-parties
with respect to the use of the Intellectual Property.
SECTION 2.20 ENVIRONMENTAL MATTERS.
(a) As used in this Environmental Matters Section, the following terms
shall have the definitions indicated:
(i) "Company's Properties" means any real property or facility
currently owned, leased or operated by the Company or previously owned,
leased or operated by the Company or any predecessor thereto.
(ii) "Environmental Law" means any statute, regulation, rule, code,
common law, order or judgment of any applicable federal, state, local or
foreign jurisdiction relating to pollution, hazardous substances, hazardous
wastes, petroleum or otherwise relating to protection of the environment,
natural resources or human health, including, by way of example and not by
way of limitation, the Clean Air Act ("CAA"); Clean Water Act ("CWA");
Resource Conservation and Recovery Act ("RCRA"); Comprehensive Environmental
Response Compensation, and Liability Act ("CERCLA"); Emergency Planning and
Community Right-to-Know Act ("EPCRA"); Federal Insecticide, Fungicide and
Rodenticide Act; Safe Drinking Water Act ("SDWA"); Toxic Substances Control
Act ("TSCA"); Hazardous Materials Transportation
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Act ("HMTA"); Occupational Safety and Health Act ("OSHA"); and Endangered
Species Act of 1973, each as currently amended;
(iii) "Regulated Substances" means any substance regulated under
Environmental Laws, including but not limited to: asbestos and
asbestos-containing materials ("ACMs"), polychlorinated biphenyls ("PCBs");
urea-formaldehyde in any of its forms; petroleum and its fractions;
radioactive materials; and any substances defined as "hazardous waste,"
"hazardous substances," "pollutants or contaminants," "toxic substances,"
"hazardous chemicals," "hazardous air pollutants," "toxic chemicals" or
"hazardous materials" under the CAA, CWA, RCRA, CERCLA, EPCRA, SDWA, TSCA,
HMTA or OSHA.
(iii) "Environmental Condition" means
(a) the Release of any Regulated Substances into the
environment in an amount and under circumstances that would require notice,
removal or remediation, or constitute a basis for a claim or cause of action;
(b) the environmental, health or safety aspects of the
transportation, storage, treatment, handling, use or disposal of materials in
connection with the operations or past operations of the Company's business;
or
(c) the violation, or alleged violation, of any Environmental
Law, order, permit or license of or from any governmental authority, agency
or court relating to environmental, health or safety matters; and
(iv) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment of any Regulated Substance, other than
pursuant to a permit therefor or in an amount or under circumstances which
would not have required notice, removal or remediation.
(b) To the actual or constructive knowledge of the Minority
Shareholders, except as set forth in SCHEDULE 2.20, there has been no Release
at, on, under or from any of the Company's Properties that would have a
Material Adverse Effect.
(c) To the actual or constructive knowledge of the Minority
Shareholders, except as set forth on SCHEDULE 2.20, there has been no Release
at, on, under or from any of the Company's Properties that has migrated or
threatens to migrate onto or under any properties of a third party and that
would have a Material Adverse Effect, and, to the Minority Shareholders'
knowledge, except as set forth on SCHEDULE 2.20 there has been no Release at,
on, under or from any nearby properties that has migrated or threatens to
migrate onto or under the Company's Properties and that would have a Material
Adverse Effect.
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(d) To the actual or constructive knowledge of the Minority
Shareholders, no PCBs, asbestos or ACMs, urea-formaldehyde or unpermitted
radioactive materials are located on the Company's Properties the presence or
removal of which would have a Material Adverse Effect.
(e) To the actual or constructive knowledge of the Minority
Shareholders and except as set forth in SCHEDULE 2.20, no storage tanks,
underground or otherwise, are or have been located on any of the Company's
Properties. To the knowledge of the Minority Shareholders, none of the
storage tanks set forth in SCHEDULE 2.20 is leaking or has ever leaked
regulated substances, or quantities thereof, that would have a Material
Adverse Effect.
(f) To the actual or constructive knowledge of the Minority
Shareholders, and except as set forth in SCHEDULE 2.20, the Company has
complied with all Environmental Laws with respect to any operations now or
previously conducted by the Company, except for matters of non-compliance
that would not have a Material Adverse Effect. To the actual or constructive
knowledge of the Minority Shareholders, and except as set forth in SCHEDULE
2.20, the Company has no existing or potential liability under any
Environmental Laws that would have a Material Adverse Effect.
(g) To the actual or constructive knowledge of the Minority
Shareholders, and except as set forth in SCHEDULE 2.20, the Company has not
received any notice, letter, citation, order, warning, complaint, inquiry,
information request or demand that remains unresolved alleging that: (i) it
has violated or is in violation of any Environmental Law; (ii) there has been
a Release at or from the Company's Properties, or any property where the
company's wastes or products have been sent; or (iii) it may be or is liable,
in whole or in part, for the costs of cleaning up, remediating, removing or
responding to a Release, except with respect to each of the foregoing clauses
(i) through and including (iii), matters that would not have a Material
Adverse Effect.
(h) To the knowledge of the Minority Shareholders, no other party has
received any notice, demand, suit, inquiry or information request pursuant to
CERCLA or any comparable state law relating to the Company, the Company's
Properties or any property where the Company's wastes or products have been
sent.
(i) None of the Company's Properties is listed on any regulatory list
of contaminated properties, including but not limited to the National
Priorities List promulgated pursuant to CERCLA, the CERCLIS or any federal,
state or local counterpart.
(j) To the actual or constructive knowledge of the Minority
Shareholders, the Company has secured and maintains all permits, licenses,
approvals and registrations required by any Environmental Law as a result of
the ownership or use of the Company's Properties or as a result of the
operations on the Company's Properties, except for those which if not held by
the Company would not have a Material Adverse Effect and except for permits
for work to be commenced as contemplated by SCHEDULE 4.7 hereto.
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(k) The Company has disclosed, prior to the date of this Agreement, its
waste practices, its use of Regulated Substances and has disclosed all
reports, audits assessments, studies, inspections, evaluations, surveys,
remedial action plans or other similar documents relating to any
Environmental Condition material to the Company's Properties or operations.
(l) To the actual or constructive knowledge of the Minority
Shareholders, and except as set forth in SCHEDULE 2.20, no location to which
the Company transported or caused to be transported any Regulated Substances
for storage, recycling, treatment or disposal is or has been the subject of
any cleanup or remediation of such location pursuant to any Environmental Law
that would have a Material Adverse Effect.
(m) To the actual or constructive knowledge of the Minority
Shareholders, the Company's Properties are not subject to any Lien in favor
of any governmental entity or other party for any liability, costs, or
damages incurred by such governmental entity or other party in response to a
Release, except for Permitted Liens and Liens that would not have a Material
Adverse Effect.
SECTION 2.21 CUSTOMERS AND SUPPLIERS.
The Company or the Minority Shareholders have delivered to GTSD a
complete and accurate list of the Company's ten largest customers and
suppliers (measured by dollar volume of purchases and sales, as applicable)
and the dollar amount of the Company's Business which each customer and
supplier represented during the fiscal year ended 1994 and the eight months
ended August 31, 1995. Neither the Company nor any of the Minority
Shareholders has received any oral or written notice that any such supplier
or any customer of Company does not plan to continue to do business with
Company, or plans to reduce its supplies to or volume of orders from the
Company or will not do business on substantially the same terms and
conditions with the Company subsequent to the date hereof and following the
closing of the transactions contemplated by the Stock Purchase Agreement as
such supplier or customer did with the Company before such date.
SECTION 2.22 ACCOUNTS RECEIVABLE.
All accounts receivable of the Company that are reflected in the
Financial Statements (the "Accounts Receivable") represent valid obligations
arising from sales actually made or services actually performed in the
ordinary course of business. Unless paid prior to the date hereof, the
Accounts Receivable are or will be as of the date hereof current and
collectible net of the respective reserves shown in the Financial Statements
(which reserves are adequate and calculated consistent with past practice).
Subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within ninety days after the
day on which it becomes due and payable.
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SECTION 2.23 NO MATERIAL ADVERSE CHANGE.
Since August 31, 1995, there has not been any material adverse change in
the Company Assets or the Company's financial condition, customer or business
prospects other than changes resulting from the shutdown or suspension of
operations of the Company as described in the Minority Shareholders Letter of
Intent.
SECTION 2.24 BOOKS AND RECORDS.
To the knowledge of the Minority Shareholders, the books of account,
minute books, stock record books, and other records of the Company, all of
which have been made available to GTSD, are complete and correct in all
material respects and have been maintained in accordance with sound business
practices. The minute books of the Company contain accurate and complete
records of substantially all meetings held of, and corporate action taken by,
the stockholders, the Boards of Directors, and committees of the Boards of
Directors of the Company. All of such books and records are in the
possession of the Company or Bird.
SECTION 2.25 DISASTER.
Neither the Company's Business nor the Property is currently affected
(or has been affected at any time since August 31, 1995) by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), of a kind which (individually
or in the aggregate) has, or could have, a Material Adverse Effect.
SECTION 2.26 NO BURDENSOME AGREEMENTS; TRANSACTIONS WITH AFFILIATES.
To the Minority Shareholders' knowledge, except as disclosed on SCHEDULE
2.26, the Company is not a party to, or bound by (nor is any of its
properties affected by), any commitment, contract or agreement, any term of
which materially adversely affects, or which the Company expects in the
future to materially adversely affect, the assets, properties, business,
affairs, results of operations, condition (financial or otherwise) or
prospects of the Company. Except as disclosed on SCHEDULE 2.26, the Company
is not a party to any contract or agreement with any Affiliate of the Company
or with any of the Minority Shareholders. The terms of any contracts or
agreements between the Company and any of its Affiliates or any of the
Minority Shareholders are no less favorable to the Company than those which
might have been obtained, at the time such contract or agreement was entered
into, from a person who was not such an Affiliate or Minority Shareholder.
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SECTION 2.27 DUE DILIGENCE REVIEW.
The Company and the Minority Shareholders have made available for GTSD's
review all information reasonably requested by GTSD in connection with GTSD's
due diligence examination.
SECTION 2.28 DISCLOSURE.
All agreements, schedules, exhibits, documents, certificates, reports or
written statements furnished to GTSD by or on behalf of the Company or the
Minority Shareholders in connection with this Agreement or the transactions
contemplated hereby, taken as a whole, are true, complete and accurate in all
respects, and no representation or warranty made in this Agreement or
information furnished pursuant hereto to GTSD (including information
contained in the schedules or documents referred to herein), when taken as a
whole, contains any untrue statement of a material fact or fails to include a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they are made, not
misleading. Neither the Company nor any Minority Shareholder has failed to
disclose to GTSD any facts material to the business, operations, condition
(financial or otherwise), liabilities, assets, earnings, working capital or
prospects of the Company, the Company's Business or the Company Assets.
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF GTSD AND GTSD SUB
GTSD and GTSD Sub hereby jointly and severally represents and warrants
to each of the Minority Shareholders as of the date hereof as follows:
SECTION 3.1 ORGANIZATIONAL MATTERS; AUTHORITY.
(a) GTSD is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. GTSD Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland.
(b) GTSD and GTSD Sub have all requisite corporate power and authority
to execute, deliver and perform this Agreement and each of the instruments,
documents, and agreements contemplated herein to be executed and delivered by
GTSD and GTSD Sub pursuant to this Agreement to which each is a party to
(collectively, the "GTSD Instruments"). The execution, delivery and
performance of this Agreement and of the GTSD Instruments by GTSD and GTSD
Sub have been duly authorized and approved by all necessary corporate action
and this Agreement and the GTSD Instruments, when duly executed and delivered
by GTSD and GTSD Sub, as applicable, will constitute valid and legally
binding obligations of GTSD and GTSD Sub, as applicable, enforceable against
each that is a party thereto in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally.
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SECTION 3.2 NO CONFLICTS.
Neither the execution and delivery of this Agreement nor the carrying
out of the transactions contemplated hereby or under any of the GTSD
Instruments will: (a) with or without notice or the passage of time or both,
result in any violation, termination or modification of, or be in conflict
with, (i) the Organizational Documents of GTSD or GTSD Sub, (ii) any law,
rule, regulation, ordinance, writ, injunction, judgment, decree or order
applicable to GTSD or GTSD Sub, or (iii) any material loan agreement,
indenture, license, lease or other contract or instrument, (b) result in the
creation of any Lien upon the property or assets of GTSD or GTSD Sub or in
the acceleration of any indebtedness or other obligation of GTSD or GTSD Sub;
or (c) require the filing, declaration or registration with, or permit,
consent or approval of, or the giving of any notice to, any Applicable
Authority, excluding, those that have already been obtained prior to the date
hereof.
SECTION 3.3 LITIGATION.
There is no litigation, arbitration, mediation, or other investigation
or proceeding pending or, to GTSD's and GTSD Sub's knowledge, threatened or
in prospect, against GTSD or GTSD Sub with respect to the transactions
contemplated by this Agreement.
SECTION 3.4 ACCESS TO INFORMATION.
GTSD and GTSD Sub hereby acknowledge and represent that they have been
afforded the opportunity to ask questions of, and receive information from,
the Minority Shareholders and the Company, and have availed themselves of the
opportunity to do so to the extent they so desired. As contemplated by the
Minority Shareholders Letter of Intent, GTSD and GTSD Sub acknowledge and
agree that they have been given the opportunity to conduct a comprehensive
due diligence review of the business and operations of the Company, including
aspects of environmental compliance by the Company and such other due
diligence inquiries with respect to the Company, the Company's Business, the
Company Assets and the Minority Shareholders as they have deemed necessary in
connection with the transactions contemplated by this Agreement. This
Section 3.4 shall in no way act as a waiver to, or diminish or adversely
effect, the rights of GTSD or GTSD Sub to indemnification for a breach of the
representations and warranties contained in Article II by the Minority
Shareholders.
SECTION 3.5 DISCLOSURE OF CURRENT MATERIAL PLANS.
Neither GTSD nor GTSD Sub have any plans to terminate, for any reason
whatsoever, any Minority Shareholder from any position as an officer,
director, or employee of the Company held by him pursuant to his Employment
Agreement with the Company executed contemporaneously herewith. GTSD has
disclosed to, or discussed with, the Minority Shareholders all present plans
and proposals for material changes in the business, operations and personnel
of the Company following the execution and delivery of this Agreement.
Neither
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GTSD nor GTSD Sub have, or are considering, any plans or proposals for the
Company to enter into any contract or arrangement (other than this Agreement)
with GTSD, GTSD Sub or any of their respective Affiliates other than
contracts or arrangements with terms no less favorable to the Company than
could be obtained at the time from an unaffiliated third party.
SECTION 3.6 DISCLOSURE OF CERTAIN FINANCIAL INFORMATION.
The balance sheet of GTSD on a consolidated basis as of September 30,
1995 and the related consolidated statements of income, changes in
stockholders equity and cash flow for the nine and three month periods ended
September 30, 1995 contained in GTSD's Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission (i) were prepared in accordance
with GAAP consistently applied throughout the periods covered thereby,
subject to normal recurring year-end adjustments and accruals and the
omission of certain footnote disclosure, (ii) present fairly the financial
condition and the results of operations, changes in stockholders' equity and
cash flow of the Company as at the respective dates of and for the periods
referred to in such financial statements and (iii) are true, complete and
correct in all material respects.
ARTICLE IV: COVENANTS AND OTHER AGREEMENTS
SECTION 4.1 CONSENTS; CAUSE CONDITIONS TO BE SATISFIED.
The Company and the Minority Shareholders agree to take all necessary
corporate or other action, and will use their reasonable best efforts to
complete all filings and obtain, or assist GTSD and GTSD Sub in obtaining,
such licenses, permits, consents, waivers, approvals, and authorizations of
third parties and Applicable Authorities as may be necessary or appropriate
in connection with the transactions contemplated by the Stock Purchase
Agreement and the ownership or use of the Company Assets or the operation of
the Company's Business.
SECTION 4.2 NON-INTERFERENCE AGREEMENT.
GTSD, GTSD Sub and the Minority Shareholders mutually covenant and agree
that neither they nor any Affiliate of any of them will, at any time after
the date hereof, directly or indirectly, for whatever reason, whether for
their own account or for the account of any other person, firm, corporation
or other organization: (i) solicit, deal with or otherwise interfere with
any of the Company's Business or Company's existing or potential contracts or
relationships with any affiliate, employee, officer, director or any
independent contractor whether or not the person is employed by or associated
with the Company on the date hereof or at any time thereafter; (ii) solicit,
accept, deal with or otherwise interfere with the continuance of supplies to
the Company (or the terms relating to such supplies), from any suppliers who
have been supplying goods, materials or services to the Company at any time
during the last five years prior to the date of this Agreement; (iii)
solicit, accept, deal with or otherwise interfere with the Company's Business
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or Company's existing or potential contracts or relationships with any
independent contractor, customer, client or consultant of the Company, or any
person who is a bona fide or prospective independent contractor, customer,
client or consultant thereof; or (iv) solicit or otherwise interfere with any
existing or proposed contract between the Company and any other party
whatsoever. Notwithstanding anything herein to the contrary, GTSD or its
officers, directors, employees, agents or Affiliates may call on, deal with
and conduct business with the Company's customers, clients, suppliers,
vendors, consultants or independent contractors in connection with GTSD's or
its Affiliates' business without violating the terms of this Section 4.2,
provided that such dealings do not have a Material Adverse Effect on the
Company.
SECTION 4.3 CONFIDENTIALITY.
(a) The Minority Shareholders agree that, as the direct and indirect
owners of Stock of the Company and as a result of their involvement with the
Company, they possess certain data and knowledge of the operations of the
Company which are proprietary in nature and confidential. Each Minority
Shareholder covenants and agrees that he will not, at any time that he owns
Stock of the Company and for a period of three (3) years thereafter, reveal,
divulge or make known to any person (other than GTSD) or use for his own
account or for the account of any person, firm, corporation or other
organization, any confidential or proprietary information, method, record,
data, trade secret, pricing policy, bid amount, bid strategy, rate structure,
personnel policy, method or practice of soliciting or obtaining or doing
business by the Company, or any other confidential or proprietary information
whatsoever relating to the Company or its Affiliates, whether or not obtained
with the knowledge and permission of GTSD or its Affiliates.
(b) GTSD and GTSD Sub agree that, as the indirect and direct owners of
Stock of the Company and as a result of their involvement with the Company,
they possess certain data and knowledge of the operations of the Company
which are proprietary in nature and confidential. GTSD and GTSD Sub covenant
and agree that they will not, until the earlier of (i) the termination of
this Agreement and (ii) GTSD or any Affiliate no longer owns Stock of the
Company and any non-compete period applicable to GTSD or any Affiliate
resulting from the sale of the Stock to a third party has expired, reveal,
divulge or make known to any person (other than the Minority Shareholders) or
use for its own account or for the account of any person, firm, corporation
or other organization, any confidential or proprietary information, method,
record, data, trade secret, pricing policy, bid amount, bid strategy, rate
structure, personnel policy, method or practice of soliciting or obtaining or
doing business by the Company or its Affiliates, whether or not obtained with
the knowledge of the Minority Shareholders. Notwithstanding anything herein
to the contrary, GTSD or its Affiliates may use such confidential or
proprietary data provided such use does not have a Material Adverse Effect on
the Company.
(c) The foregoing provisions shall not be applicable to any disclosure
or use of confidential information or knowledge that can be demonstrated to
have (i) been publicly known prior to the date of this Agreement, (ii) become
well known by publication or otherwise not due
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to the unauthorized act or omission on the part of GTSD, GTSD Sub or the
Minority Shareholders or their Affiliates, or (iii) been supplied to either
the Minority Shareholders, GTSD or GTSD Sub by a third party without
violation of the rights of the Company, GTSD, GTSD Sub, the Minority
Shareholders or any other party, as applicable.
SECTION 4.4 RELEASE FROM LIABILITY.
The Minority Shareholders hereby covenant and agree to release (i) the
Company, GTSD and GTSD's Affiliates from any and all obligations and
liabilities in connection with the Bird Instruments, the License Agreement
between J. Hogan and the Company dated April 1, 1993, the Employment Letter
between the Company and M. Hogan dated August 9, 1991, and the Employment
Letter between the Company and B. Hogan dated July 1, 1994, payment of
severance benefits to any of the Minority Shareholders, whether arising under
such individual's current employment agreements and arrangements with the
Company, Bird, BETI, or any other subsidiary of Bird, or otherwise, which
liabilities or obligation arise as a result of or in connection with the
transactions contemplated by the Stock Purchase Agreement and (ii) GTSD and
GTSD's Affiliates (other than the Company) from any and all other obligations
or liabilities except for obligations or liabilities arising from the terms
and conditions of this Agreement and the other Minority Shareholders
Agreements. The Minority Shareholders hereby acknowledge and agree that the
only of obligations or liabilities of GTSD and its Affiliates (other than the
Company) to the Minority Shareholders are those that arise from the terms and
conditions of this Agreement and the other Minority Shareholder Agreements.
SECTION 4.5 TERMINATION OF CERTAIN AGREEMENTS.
The Minority Shareholders covenant and agree that contemporaneous with
the execution and delivery of this Agreement, they will have terminated the
Bird Instruments, the License Agreement between J. Hogan and the Company
dated April 1, 1993, the Employment Letter between the Company and M. Hogan
dated August 9, 1991 and the Employment Letter between the Company and B.
Hogan dated July 1, 1994 and hereby covenant and agree to release the
Company, GTSD and its Affiliates from any and all obligations and liabilities
under such agreements.
SECTION 4.6 VOTE STOCK ON CERTAIN MATTERS.
(a) Contemporaneous with the execution and delivery of this Agreement,
GTSD Sub and the Minority Shareholders agree to vote the shares of Stock
owned by them, or to sign a consent of stockholders of the Company, to
convert the Company to a corporation incorporated under the laws of the State
Maryland, to merge the Company into a newly formed Maryland corporation to
accomplish the same result (provided that the stock ownership of the Minority
Shareholders shall be the same in such new corporation) or take any other
action to cause the Company to be incorporated in, and governed by the
corporate laws of, the State of Maryland
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provided that the Company's Organizational Documents following such
reincorporation or merger are substantially in the form of those included in
APPENDIX II hereto.
(b) GTSD, GTSD Sub and the Minority Shareholders agree that following
the merger of the Company into the newly formed Maryland corporation as
contemplated by Section 4.6(a), this Agreement shall survive such merger,
shall be in full force and effect thereafter and the newly formed Maryland
corporation into which the Company is merged shall by virtue of such merger
become a party to this Agreement and assume all of the rights, liabilities
and obligations of the Company under this Agreement.
SECTION 4.7 INVESTMENT BY GTSD IN COMPANY.
GTSD Sub hereby covenants and agrees to invest funds in the Company for
capital improvements and start-up expenses, as required, in accordance with
SCHEDULE 4.7 attached hereto. GTSD Sub will also invest funds in the Company
for ongoing operations or working capital, as needed, to fund the growth of
the business in accordance with SCHEDULE 4.7, but GTSD Sub may, in its sole
discretion, decline to provide the specified funds for ongoing operations or
working capital per SCHEDULE 4.7 if the Company has incurred a net loss
during any twelve (12) month period following commencement of the Company's
operations. The investment by GTSD Sub in the Company will be in the form of
preferred stock of the Company having the relative rights, designations and
preferences as described in APPENDIX II hereto (the "Preferred Stock"). In
the event that GTSD Sub provides funds to the Company in excess of the
amounts specified in SCHEDULE 4.7 due to the fact that such amounts were
underestimated, such additional investment by GTSD Sub will take the form of
additional shares of Preferred Stock. All obligations to invest funds by
GTSD Sub in the Company pursuant to this Section 4.7 shall be guaranteed by
GTSD.
SECTION 4.8 WILLINGNESS AND ABILITY TO PERFORM COVENANTS.
None of the parties hereto are, or will become, parties to any
commitment, contract or agreement other arrangement any term of which
materially adversely affects or which could reasonably be expected to
materially adversely affect, the willingness or ability of such party to
perform its respective obligations under this Agreement or contemplated
hereby.
SECTION 4.9 GOOD FAITH PERFORMANCE IN THE FUTURE.
Each of the parties hereto hereby covenants and agrees to perform its
respective obligations under this Agreement, and to cause the business and
affairs of the Company to be conducted (insofar as it is within its control),
in good faith and without oppression so as not to deprive any of the other
parties hereto of the reasonable benefits of this Agreement or of their
reasonable expectations as stockholders of the Company. GTSD and GTSD Sub
further covenant and agree that all contracts and other arrangements between
the Company and
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Affiliates of either of them will be disclosed to the Minority Shareholders
prior to implementation or modification and, in any case, will be on terms no
less favorable to the Company than would be available from unaffiliated third
parties.
SECTION 4.10 DUE DILIGENCE REPORT.
GTSD and GTSD Sub covenant and agree that they have delivered, or made
available, to the Minority Shareholders, a true and complete copy of the
environmental report on the Company's Properties prepared by the
environmental consultant retained by GTSD and the Minority Shareholders
acknowledge that they have received such report.
SECTION 4.11 GUARANTY AGREEMENT.
GTSD covenants and agrees that contemporaneously with the execution and
delivery of this Agreement it will also execute and deliver to the Minority
Shareholders the Guaranty Agreement in the form attached hereto as SCHEDULE
4.11. GTSD hereby covenants and agrees to guarantee the payment of the Bonus
Payments pursuant to the Employment Agreements, but only to the extent that
GTSD or an Affiliate thereto, has received distributions from the Company
(other than distributions for redemptions of Preferred Stock). Such guaranty
will be reflected in the Guaranty Agreement.
SECTION 4.12 MITIGATION OF INDEMNIFIED LOSSES.
Each party hereto covenants and agrees that with respect to any Losses
(as defined below) that it incurs for which it is entitled to indemnification
pursuant to Article V hereto, it will use its best efforts to mitigate such
Losses by pursuing valid claims against, or seeking recoveries from,
appropriate third parties, and the amount of any recoveries by the party
incurring such Loss shall reduce on a dollar for dollar basis the amount of
the Loss for purposes of the indemnification pursuant to Article V.
SECTION 4.13 SCHEDULE DISCLOSURES.
The parties agree that any fact or circumstance disclosed in schedules
to this Agreement as an exception to a particular representation or warranty
shall also be deemed for all purposes to be a disclosed and agreed to
exception with respect to any other representation or warranty herein to
which the fact or circumstance disclosed may be deemed to be pertinent. The
parties further agree that any disclosed exception to a particular
representation or warranty in the Stock Purchase Agreement shall also
constitute a disclosed and agreed to exception with respect to all
representations or warranties in this Agreement to which the fact or
circumstance disclosed in or in connection with the Stock Purchase Agreement
may be deemed to be pertinent.
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SECTION 4.14 TAX SHARING ARRANGEMENT.
GTSD covenants and agrees to enter into a tax sharing arrangement with
the Company, reasonably acceptable to the Minority Shareholders, within a
reasonable time following the date hereof, whereby GTSD would reimburse the
Company for any tax benefits that it derives as a consolidated group from
losses incurred by the Company.
ARTICLE V: INDEMNIFICATION
SECTION 5.1 INDEMNIFICATION BY THE MINORITY SHAREHOLDERS.
The Minority Shareholders hereby jointly and severally covenant and
agree to indemnify GTSD, GTSD Sub and their officers, directors, stockholders
beneficially owning individually or as a group (within the meaning of Section
13(d) of the Securities Exchange Act of 1934, as amended) ten percent (10%)
or more of the capital stock of GTSD (such person shall be referred to herein
as a "Principal Stockholder"), and their respective successors and assigns
and hold each of them harmless against and with respect to any and all
liabilities, losses, damages, claims, deficiencies, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable legal costs and expenses) actually suffered or incurred by them,
(hereinafter, a "Loss"), arising out of or resulting from:
(a) the breach of any representation or warranty by the Minority
Shareholders contained herein or in any document delivered hereunder; or
(b) the breach of any covenant or agreement by the Minority
Shareholders contained herein.
Notwithstanding the foregoing, the Minority Shareholders hereby jointly
and severally covenant and agree to indemnify the indemnified parties
specified in this Section 5.1 and their respective successors and assigns and
hold each of them harmless against and with respect to 75% of any Losses
arising out of or resulting from the breach of any representation or warranty
contained in Sections 2.11, 2.18 and 2.20 hereto.
SECTION 5.2 INDEMNIFICATION BY GTSD AND GTSD SUB.
GTSD and GTSD Sub hereby jointly and severally covenant and agree to
indemnify the Minority Shareholders and their successors and assigns and hold
each of them harmless against and with respect to any and all Losses, arising
out of or resulting from:
(a) the breach of any representation or warranty by GTSD or GTSD Sub
contained herein or in any document delivered hereunder; or
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(b) the breach of any covenant or agreement by GTSD or GTSD Sub
contained herein or in any document delivered hereunder.
SECTION 5.3 PROCEDURES FOR THIRD PARTY CLAIMS.
Promptly after the assertion by any third party of any claim against any
party entitled to be indemnified under this Article V (the "Indemnitee")
that, in the judgment of such Indemnitee, may result in the incurrence by
such Indemnitee of Losses for which such Indemnitee would be entitled to
indemnification pursuant to this Agreement, such Indemnitee shall deliver to
the other party or parties who has indemnified such Losses hereunder
("Indemnitor") a written notice describing such claim. Such Indemnitor may
participate in and, at its option upon acknowledgment of Indemnitee's right
to indemnification for such matter, assume the defense of the Indemnitee
against such claim, including the employment of counsel, who shall be
reasonably satisfactory to such Indemnitee. In such case, any Indemnitee
shall have the right to employ separate counsel in any such action or claim
and to participate in the defense thereof, but the fees and expenses of such
counsel shall not be at the expense of the Indemnitor unless (i) the
Indemnitor shall have failed, within a reasonable time after having been
notified by the Indemnitee of the existence of such claim as provided in the
preceding sentence, to assume the defense of the such claim, (ii) the
employment of such counsel has been specifically authorized in writing by the
Indemnitor or (iii) the named parties to any such action (including impleaded
parties) include both such Indemnitee and the Indemnitor and such Indemnitee
shall have been advised in writing by Indemnitor's counsel that there may be
conflicting interests between Indemnitee and the Indemnitor in the legal
defense thereof. No Indemnitor shall be liable to indemnify any Indemnitee
for any compromise or settlement of any such action or claim effected without
the consent of the Indemnitor.
SECTION 5.4 LIMITS FOR RECOVERY OF LOSSES.
(a) Notwithstanding anything herein to the contrary, the Minority
Shareholders, either individually or collectively, shall not be liable for
any Losses of GTSD, GTSD Sub, their directors or officers or a Principal
Stockholder of GTSD under this Article V unless and until the aggregate
amount of all Losses hereunder by such persons collectively equals or exceeds
$100,000, in which event the Minority Shareholders shall be jointly and
severally liable (except as otherwise expressly provided herein) for all
Losses in the aggregate greater than $100,000, subject to the limit provided
in Section 5.4(b).
(b) The limit for recovery of any Losses of GTSD, GTSD Sub, their
directors or officers or a Principal Stockholder of GTSD under this Agreement
shall be the amount of the Bonus Payments to which the Minority Shareholders
are entitled, whether or not distributed, pursuant to their Employment
Agreements in the case of M. Hogan, B. Hogan and Lucas and, in the case of J.
Hogan, pursuant to his Agreement with the Company dated the date hereof and
attached hereto as APPENDIX III.
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(c) In the event that the aggregate amount of Losses for which GTSD,
GTSD Sub, their directors or officers or a Principal Stockholder of GTSD
seeks indemnification hereunder exceeds the aggregate limit for recovery of
such Losses pursuant to the preceding paragraph, then the put rights of the
Minority Shareholders pursuant to Section 8.1 hereof shall be suspended until
such time as GTSD or GTSD Sub, as applicable, has received distributions
representing its share of the Company's profits, or there are sufficient
lawful funds to make distributions representing its share of the Company's
profits (in either case, in excess of any liquidation preference of the
Preferred Stock) equal to the amount that the aggregate Losses of GTSD, GTSD
Sub, their officers or directors or the Principal Stockholders of GTSD exceed
the limit for recovery of such Losses pursuant to the preceding paragraph.
(d) This Article V provides the sole and exclusive remedies of GTSD,
GTSD Sub and their officers and directors and the Principal Stockholders of
GTSD against the Minority Shareholders under this Agreement, except for
equitable remedies that may be available.
SECTION 5.5 WAIVER OF CONTRIBUTION.
None of the Minority Shareholders shall have any right to seek
contribution from the Company in the event that any of the Minority
Shareholders is required to make any payments under this Article V.
SECTION 5.6 HOLDBACK, RIGHT OF SETOFF.
The Minority Shareholders agree that, upon a final, non-appealable
adjudication or a final, non-appealable arbitrator's determination that the
Minority Shareholders are liable for indemnity payments, the Company, GTSD or
GTSD Sub may hold back and set off the amount of any claim made by such party
against the Minority Shareholders under Article V of this Agreement against
the amount that may otherwise be due to the Minority Shareholders as a Bonus
Payment pursuant to their Employment Agreements in the case of M. Hogan, B.
Hogan and Lucas and in the case of J. Hogan pursuant to his agreement with
the Company attached hereto as APPENDIX III. GTSD and GTSD Sub agree that
they will not seek or exercise any right to hold back or set off the amount
of any claim against any Minority Shareholders for indemnity or for any other
claim unless and until such liability of the Minority Shareholders to GTSD or
GTSD Sub is determined by a final, non-appealable adjudication or arbitral
award.
ARTICLE VI: SURVIVAL
Except for actions based upon a claim of fraud (which shall survive
without limitation), all representations and warranties made pursuant to or
in connection with this Agreement shall survive the date hereof, but shall
terminate two and one-half (2-1/2) years after the date hereof; provided,
that there shall be no such termination with respect to any representation or
warranty as to which a bona fide claim has been asserted in writing and on
which a judicial or arbitration proceeding has been commenced prior to such
date. All covenants and agreements of the parties
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contained (other than those in Articles II and III and unless expressly
provided otherwise) shall survive and terminate in accordance with Article X.
ARTICLE VII: RESTRICTIONS ON TRANSFER; VOLUNTARY TRANSFER;
INVOLUNTARY TRANSFER
SECTION 7.1 RESTRICTIONS ON TRANSFER.
Except as provided under Section 7.2 below, no Minority Shareholder
shall sell, transfer, give, pledge, encumber or otherwise dispose of (a
"Transfer") any Shares without the written consent of (i) the Company and
(ii) GTSD Sub, which consent may be withheld for any reason or for no reason,
except in accordance with the terms of this Agreement, except for Permitted
Transfers. Any attempted Transfer in violation of this Agreement shall be
null and void and not recognized for any purpose. Notwithstanding anything
contained herein to the contrary, no Shares may be transferred by the
Minority Shareholders to any Person (including, without limitation, a
trustee, grantor or beneficiary of any trust, or a proposed transferee under
Section 7.2 hereof) unless such person is or becomes a party to this
Agreement by delivering a copy of this Agreement to the Company bearing the
signature of such person on a counterpart signature page and agrees to be
bound by all of the provisions of this Agreement.
SECTION 7.2 RIGHT OF FIRST REFUSAL UPON VOLUNTARY TRANSFER OF SHARES BY
MINORITY SHAREHOLDERS.
A Minority Shareholder may Transfer his Shares without restriction
provided that he has held the Shares for four (4) years from the date hereof
and he complies with the provisions of this Section 7.2, or, if prior to four
(4) years from the date hereof, the Transfer is a Permitted Transfer. If a
Minority Shareholder desires to Transfer all or any number of shares of Stock
to any other party in a bona fide transaction other than a Permitted
Transfer, such Minority Shareholder (a "Transferring Shareholder") shall be
obligated to offer those Shares (the "Offered Shares") for purchase by the
Company and GTSD Sub as hereinafter provided.
(a) NOTICE OF TRANSFER. The Transferring Shareholder shall give
written notice of the proposed Transfer (the "TRANSFER NOTICE") to the
Company and GTSD Sub, stating the date the Transfer Notice is mailed or sent
to the Company and GTSD Sub, the number of Offered Shares the Transferring
Stockholder wishes to Transfer, the name and address of the proposed
transferee, and, if the proposed transfer is a sale, the per-share price
offered by the proposed transferee and the other terms of the transfer.
(b) COMPANY'S OPTION TO PURCHASE. The Company may purchase all or
any of the Offered Shares for the price and upon the other terms hereinafter
provided by giving written
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notice to the Transferring Shareholder within twenty (20) days after the date
of the Transfer Notice stating the number of Offered Shares which the Company
desires to purchase.
(c) GTSD SUB'S OPTION TO PURCHASE. (i) If any Offered Shares are
not to be purchased by the Company pursuant to Section 7.2(b), GTSD Sub may
purchase such Offered Shares for the price and upon the other terms
hereinafter provided, by giving written notice to the Transferring
Shareholder within thirty (30) days after the date of the Transfer Notice of
the number of Offered Shares that GTSD Sub desires to purchase.
(d) SALE TO THIRD PARTY. If all of the Offered Shares are not
purchased by the Company and/or GTSD Sub pursuant to Sections 7.2(b) and (c)
above, then the Transferring Shareholder may sell the Offered Shares to the
proposed transferee upon terms and conditions no more favorable to the
proposed transferee than those specified in the Transfer Notice, subject to
the remaining provisions of this Agreement, including, without limitation,
that the proposed transferee shall become a party to this Agreement.
(e) REOFFER ON FAILURE TO SELL. If the Transferring Shareholder
fails to consummate a Transfer to the proposed transferee within sixty (60)
days after the expiration of GTSD Sub's option described in Section 7.2(c)
above, then no sale or transfer of the Offered Shares may be made thereafter
to the proposed transferee or to any other transferee without again complying
with the provisions of this Section 7.2.
SECTION 7.3 OPTION UPON INVOLUNTARY TRANSFER.
If any shares of Stock are transferred by operation of law to any person
other than the Company or GTSD Sub except by means of a Permitted Transfer,
such transfer shall be deemed a Transfer. At such time as the Company has
any written notice specifying such a Transfer, a Transfer Notice under
Section 7.2 hereof shall be deemed to have been given, the Company and GTSD
Sub may purchase the Shares upon the same terms as set forth in Section 7.2.
In the event of an involuntary Transfer pursuant to this Section 7.3, the
purchase price for the shares of Stock so transferred shall be deemed to be
the "fair market value" of such shares of Stock as determined in accordance
with Section 8.3 below.
SECTION 7.4 RIGHT OF FIRST OFFER UPON TRANSFER OF SHARES BY GTSD.
GTSD Sub may Transfer its Shares without restriction provided that it
has complied with the provisions of this Section 7.4. If GTSD Sub desires to
Transfer all or any of its Shares, it shall be obligated to offer those
Shares (the "Offered Shares") for purchase by the Minority Shareholders as
hereinafter provided.
(a) NOTICE OF TRANSFER. GTSD Sub shall give written notice of its
desire to Transfer shares of Stock of the Company (the "GTSD TRANSFER
NOTICE") to the Minority
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Shareholders, stating the date the Transfer Notice is mailed or sent to the
Minority Shareholders and the number of Shares that GTSD Sub desires to
Transfer.
(b) MINORITY SHAREHOLDERS OFFER TO PURCHASE. Any of the Minority
Shareholders desiring to purchase all or any of the Shares offered by GTSD
Sub shall submit to GTSD Sub a written offer specifying the number of Shares
that it wishes to purchase, the purchase price for such shares and the terms
of consideration if other than cash. Any Minority Shareholders desiring to
offer to purchase the Shares of GTSD Sub must provide the written offer to
GTSD Sub within thirty (30) days after the date of the GTSD Transfer Notice.
GTSD Sub may, in its sole and absolute discretion, accept or reject any
written offers received by any of the Minority Shareholders. In the event
that GTSD Sub accepts any of the written offers of the Minority Shareholders,
it shall provide written notice of its acceptance to such Minority
Shareholder and the closing for the Transfer of the Shares pursuant to the
terms of the offer shall occur within thirty (30) days of the written
acceptance of the offer by GTSD Sub.
(c) SALE TO THIRD PARTY. To the extent that GTSD Sub has not
accepted any of the offers of the Minority Shareholders that may have been
submitted pursuant to Section 7.4(b), GTSD Sub may freely Transfer the Shares
of the Company to a third party provided that (i) such third party has agreed
to become a party to this Agreement and (ii) either (x) such third party
agrees to assume the obligations of GTSD and GTSD Sub hereunder, with the
written consent of the Minority Shareholders, which consent will not be
unreasonably withheld, it being agreed that the Minority Shareholders refusal
to consent may be based on their reasonable assessment of the
creditworthiness of such third party and the ability of such third party to
perform its obligations under this Agreement or (y) GTSD reaffirms to the
reasonable satisfaction of the Minority Shareholders that the GTSD Guaranty
Agreement executed in connection herewith shall remain in effect, but shall
by virtue of such affirmation be automatically modified to provide that (i)
GTSD's liability to the Minority Shareholders is secondary to the liability
of the transferee and (ii) the Minority Shareholders are required to pursue
all legal and equitable remedies against such transferee prior to pursuing
such remedies against GTSD.
(d) REOFFER ON FAILURE TO SELL. If GTSD Sub fails to consummate a
Transfer permitted by Section 7.4(c) to a third party within 180 days after
the expiration of the offer period to the Minority Shareholders pursuant to
Section 7.4(b) above, then no Transfer of the Shares owned by GTSD Sub may be
made thereafter to any third party without again complying with the
provisions of this Section 7.4.
SECTION 7.5 PERMITTED TRANSFERS.
Notwithstanding anything in this Agreement to the contrary, each
Minority Shareholder and subsequent transferees of Stock who acquired such
shares in a Permitted Transfer (as defined below) shall be entitled to
Transfer (whether voluntarily or by operation of law) any of such shares of
Stock free of any restriction on Transfer or right of any other person to
purchase such Stock provided that such Transfer is to the following classes
of transferees
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("Permitted Transfers"): (a) another Minority Shareholder and to persons to
whom such other Minority Shareholder could transfer his Shares in a Permitted
Transfer, (b) a Minority Shareholder's parents, brothers, sisters, children,
grandchildren and spouse provided that such Minority Shareholder (or other
Minority Shareholders) retains the right to vote, or to control the vote of,
the Shares so transferred by means of a proxy, voting trust or voting
agreement to the reasonable satisfaction of GTSD and its counsel and (c)
trusts, family partnerships or other entities the equity or beneficial
ownership of which is held by, or for the benefit of, persons to whom the
Minority Shareholder would be entitled to make a direct Transfer which would
be considered a Permitted Transfer provided that such Minority Shareholder
provided that such Minority Shareholder (or other Minority Shareholders)
retains the right to vote, or to control the vote of, the Shares so
transferred by means of a proxy, voting trust or voting agreement or by
means of his position as trustee or otherwise to the reasonable satisfaction
of GTSD and its counsel.
ARTICLE VIII: BUYOUT PROVISIONS
SECTION 8.1 PUT RIGHTS OF MINORITY SHAREHOLDERS.
(a) After four (4) years from the date hereof, each of the Minority
Shareholders shall have the right (but not the obligation) to sell, and GTSD
Sub or the Company shall have the obligation to purchase, all of the Shares
owned by each of the Minority Shareholders pursuant to the terms of this
Article VIII, provided that the Company has had cumulative net income during
such four (4) year period of at least $4,650,000.
(b) In the event that the employment of M. Hogan, B. Hogan or
Lucas is terminated pursuant to Sections 4(a)(5) or 4(b)(1) of their
respective Employment Agreements with the Company, then such individual shall
have the right (but not the obligation) to sell, and GTSD Sub or the Company
shall have the obligation to purchase, all of the Shares owned by such
individual upon such individual's termination of employment.
(c) In the event that the employment of both M. Hogan and B. Hogan
are terminated pursuant to Sections 4(a)(5) or 4(b)(1) of their respective
Employment Agreements with the Company, then each of the Minority
Shareholders shall have the right (but not the obligation) to sell, and GTSD
Sub or the Company shall have the obligation to purchase, all of the Shares
owned by each of the Minority Shareholders upon M. Hogan's and B. Hogan's
termination of employment.
(d) In the event that the employment of M. Hogan or B. Hogan is
terminated pursuant to Section 4(a)(4) of their respective Employment
Agreements with the Company, then such individual shall have the right (but
not the obligation) to sell, and GTSD Sub or the Company shall have the
obligation to purchase, all of the Shares owned by such individual upon
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such individual's termination of employment, provided that the Company has
had cumulative net income during such four (4) year period of at least
$4,650,000.
(e) In the event that the employment of both M. Hogan and B. Hogan
are terminated pursuant to Section 4(a)(4) of their respective Employment
Agreements with the Company, then each of the Minority Shareholders shall
have the right (but not the obligation) to sell, and GTSD Sub or the Company
shall have the obligation to purchase, all of the Shares owned by each of the
Minority Shareholders upon M. Hogan's and B. Hogan's termination of
employment, provided that the Company has had cumulative net income during
such four (4) year period of at least $4,650,000.
(f) The Minority Shareholders may exercise their right to sell
pursuant to Sections 8.1(a), (b), (c), (d) or (e) above by delivering a
written notice to the Company and GTSD Sub stating the number of Shares to be
sold, which shall be on an all-or-nothing basis. The closing of any such
sale and purchase shall take place no later than ninety (90) days after
delivery of such notice to the Company and GTSD Sub.
(g) Upon the exercise by any of the Minority Shareholders to sell
their Shares pursuant to this Section 8.1, the Company and GTSD Sub will
decide between themselves whether the Company or GTSD Sub shall purchase the
shares being sold, provided that the obligation to purchase such Shares shall
ultimately rest on GTSD Sub. GTSD will guarantee any and all of the payment
obligations of the Company or GTSD Sub including the promissory notes to be
issued pursuant to Section 8.4 below.
(h) In the event that a Minority Shareholder exercises his put
rights pursuant to this Section 8.1 by delivering written notice pursuant to
Section 8.1(f), he shall be obligated to sell and the Company or GTSD Sub
shall be obligated to purchase such Shares pursuant to the terms of this
Article VIII.
SECTION 8.2 CALL RIGHTS OF THE COMPANY AND GTSD SUB.
(a) After six (6) years from the date hereof, unless accelerated
pursuant to Section 8.2(b) below, the Company and GTSD Sub shall each have
the right (but not the obligation) to purchase, and the Minority Shareholders
shall have the obligation to sell, all of the Shares owned by each.
(b) In the event that either (i) the net profit before taxes of
the Company is less than the "Low Performance Case" Net Earnings Before Taxes
included on Schedule A of the Employment Agreements during any two (2)
consecutive years or (ii) the Company incurs a net loss in any of the first
four (4) years following the execution of this Agreement, then the right of
the Company or GTSD Sub to purchase the Shares of the Minority Shareholders
pursuant to Section 8.2(a) shall be accelerated to any time after four (4)
years from the date hereof.
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(c) The Company or GTSD Sub may exercise their right to purchase
pursuant to Sections 8.2(a) or (b) above by delivering a written notice to
each of the Minority Shareholders stating the number of shares to be
purchased from each such Minority Shareholder, which shall be on an
all-or-nothing basis. The closing of any such purchase and sale shall take
place no later than ninety (90) days after delivery of such notice to the
Minority Shareholders.
(d) The Company and GTSD Sub will decide between themselves
whether the Company or GTSD Sub shall purchase the Shares pursuant to this
Section 8.2. GTSD will guarantee any and all of the payment obligations of
the Company or GTSD Sub pursuant to this Section 8.2, including the
promissory notes to be issued pursuant to Section 8.4 below.
(e) In the event that either the Company or GTSD Sub exercises its
call rights pursuant to this Section 8.2 by delivering written notice
pursuant to Section 8.2(c), it shall be obligated to purchase and the
Minority Shareholder shall be obligated to sell such Shares pursuant to the
terms of this Article VIII.
(f) Neither the Company nor GTSD Sub shall have the right to
offset any amounts owed to such parties pursuant to Section 5.1(a) hereof
against the purchase price for the Shares pursuant to this Article VIII.
SECTION 8.3 PURCHASE PRICE.
The purchase price for the Shares sold and purchased pursuant to this
Article VIII shall be equal to the then current Fair Market Value (as
hereinafter defined) of such shares. The "Fair Market Value" of a share of
Stock shall be determined by an independent, nationally-recognized, third
party appraiser selected by the parties hereto and such appraiser shall be
qualified to value businesses similar to that of the Company. If the parties
are unable to agree on an appraiser, then GTSD Sub and the Minority
Shareholders acting collectively shall each select an appraiser meeting the
qualifications specified in the preceding sentence, and the appraisers so
selected shall select a single, neutral and independent appraiser meeting the
qualifications specified in the preceding sentence to conduct the appraisal.
The appraisal shall be completed within sixty (60) days of the date that the
appraiser is engaged and the appraisal shall be final and binding on the
parties for the purpose of the pending sale and purchase of Shares, and any
other sales and purchases of Shares occurring during the next six (6) months.
The cost of the appraisal shall be shared equally between GTSD Sub and the
selling Minority Shareholders. For any other transaction occurring within
six (6) months of another transaction, either of the parties to such
subsequent transaction may elect to obtain a new appraisal for the Fair
Market Value of the shares of Stock by the method specified herein provided
that the entire cost of such appraisal shall be paid by the party requesting
such new appraisal. The value of a share of Stock shall be determined by the
appraiser without any discount applied for the minority ownership position of
the Minority Shareholders and without premium applied to the majority
ownership position of GTSD or GTSD Sub. The parties hereto covenant and
agree that they will disclose to the appraiser so selected and each other
party hereto and their representatives, any and all
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information or documents in their possession that might reasonably be
expected to bear upon the valuation of the Company including, but not limited
to, any future plans or prospects with respect to the Company, the Company
Business, the Company Assets or the Stock of the Company, and any agreements
(written or oral) or plans for public offerings or potential sales of all or
any part of the business, assets or Stock of the Company following or in
connection with the transaction for which the appraisal is prepared.
SECTION 8.4 PAYMENT OF THE PURCHASE PRICE.
Unless other terms and conditions are agreed upon by the parties at the
time of the purchase and sale, the purchase price for the Shares shall be
payable according to the terms of a promissory note, mutually agreeable to
the parties of such purchase and sale, and which shall contain the following
terms and conditions:
(a) If the purchase and sale transaction occurs pursuant to
Sections 8.1(a), (d), (e) or 8.2, the purchase price for the Shares would be
payable in five (5) equal annual installments beginning six (6) months from
the date of the purchase and sale. Subsequent payments shall be made by the
purchaser of the shares on each one (1) year anniversary of the first payment
and shall include principal (equal to the amount of the initial installment
payment) plus simple accrued interest at the then current one-year London
Interbank Offered Rate as quoted in the WALL STREET JOURNAL ("LIBOR") on the
outstanding balance, provided that the installment payments shall be no less
than $150,000 per twelve (12) month period (per Minority Shareholder entitled
to such payment) until the obligation is paid in full.
(b) If the purchase and sale transaction occurs pursuant to
Sections 8.1(b) or (c), the purchase price for the Shares would be payable in
three (3) equal annual installments beginning six (6) months from the date of
the purchase and sale. Subsequent payments shall be made by the purchaser of
the shares on each one (1) year anniversary thereafter and shall include
principal (equal to the amount of the initial installment payment) plus
simple interest at the then current one-year LIBOR rate plus four percent
(4.0%) on the outstanding balance, provided that the installment payments
shall be no less than $250,000 per twelve (12) month period (per Minority
Shareholder entitled to such payment) until the obligation is paid in full.
(c) The promissory notes issued by the Company or GTSD Sub
evidencing the payment obligations referred to in Sections 8.4(a) and (b)
shall be guaranteed by GTSD.
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ARTICLE IX: OTHER RESTRICTIONS
SECTION 9.1 LEGEND ON CERTIFICATES.
The parties hereto shall cause the Company to note the following legend
conspicuously upon all certificates representing the Stock of the Company now
or hereafter owned by each of the stockholders:
"Transfer of any interest in the securities represented by
this certificate is subject to a Stockholders' Agreement dated November
29, 1995 by and among Bird Environmental Gulf Coast, Inc., GTS Duratek,
Inc., GTSD Sub II, Inc. and the persons referred to therein as the
Minority Shareholders, as the same may be from time to time amended,
modified or supplemented, and no such transfer may be made without
compliance with that Agreement. A copy of that Agreement and all
amendments, modifications and supplements thereto is available for
inspection at the office of the corporation upon appropriate request."
An executed copy of this Agreement and amendments, modifications and
supplements hereto shall at all times be kept on file at the office of the
Company and shall be open for inspection by each stockholder of the Company
or any person claiming any right or interest through a stockholder in any
Stock.
SECTION 9.2 ACTIONS REQUIRING VOTE OR CONSENT OF THE MINORITY
SHAREHOLDERS.
The following actions shall require the approval, or the consent, of a
majority of the shares of Stock owned by the Minority Shareholders and their
transferees, notwithstanding whether such affirmative vote or consent would
otherwise be required under the Company's Organizational Documents or
applicable law:
(a) the merger or consolidation of the Company with or into another
entity, except as contemplated by Section 4.6 to reincorporate the Company as
a Maryland corporation;
(b) the sale by the Company, other than in the ordinary course of
business, of all or substantially all of its property and assets;
(c) an amendment (whether in connection with a merger or
otherwise) of the Organizational Documents of the Company, except as
contemplated by Section 4.6;
(d) the issuance and sale of any equity or debt securities of the
Company, except for the Preferred Stock in an amount contemplated by SCHEDULE
4.7 or any additional amount reasonably needed by the Company to the extent
that SCHEDULE 4.7 is underestimated;
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(e) authorization for loans or borrowings in excess of $250,000
during the Measurement Period (as such term is defined in the Employment
Agreements and in the agreement between the Company and J. Hogan);
(f) any loans to a stockholder or an Affiliate of a stockholder
and/or the pledge of any assets of the Company for a loan for the benefit of
a stockholder or an Affiliate of a stockholder; and
(g) the pledge of all or substantially all of the assets of the
Company.
SECTION 9.3 COMPOSITION OF BOARD OF DIRECTORS.
For so long as the Minority Shareholders in the aggregate own at least
ten percent (10%) of the outstanding shares of Stock of the Company, they
shall be entitled as a group to designate up to ten percent (10%) of the
number of directors on the Company's Board of Directors, but in any event not
less than one (1) director. GTSD Sub agrees that it shall vote all of its
shares of Stock for the election of that director or directors nominated by
the Minority Shareholders. If the Minority Shareholders and their
transferees pursuant to Permitted Transfers in the aggregate own ten percent
(10%) or less of the outstanding shares of Stock of the Company, then GTSD
Sub and the Minority Shareholders shall mutually agree as to the appropriate
level of representation, if any, of the Minority Shareholders on the
Company's Board of Directors.
SECTION 9.4 FORMATION OF MANAGEMENT COMMITTEE.
The Company shall form a management committee to oversee the operations
of the Company and make recommendations to the Board of Directors of the
Company as appropriate. B. Hogan and M. Hogan shall be members of this newly
formed management committee so long as they are shareholders and desire to
serve on such committee as well as any members that GTSD Sub appoints in its
sole discretion. The management committee would meet at least quarterly. J.
Hogan would act as scientific advisor to the management committee and would
be invited to attend the management committee meetings.
ARTICLE X: TERMINATION
This Agreement shall terminate automatically upon (i) the dissolution,
liquidation or winding up of the Company, (ii) the occurrence of any event
which reduces the number of stockholders to one, or (iii) the merger of the
Company into another corporation (provided that the Company is not the
surviving corporation of such a merger and provided, further, that the
holders of a majority of the Stock owned by the Minority Shareholders and
their transferees pursuant to Permitted Transfers vote in favor of or consent
in writing to such merger). Notwithstanding the foregoing, the merger of the
Company into a newly formed Maryland corporation pursuant to Section 4.6
shall not cause the termination of this Agreement.
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ARTICLE XI: MISCELLANEOUS
SECTION 11.1 NO ASSIGNMENT.
Subject to Section 4.6(b), no assignment by any of the parties of their
respective rights nor delegation by any of the parties of their respective
duties shall be permitted hereunder without the prior written consent of all
other parties hereto, provided that GTSD Sub may assign its rights and
obligations hereunder to the transferee of its Shares of the Company provided
that it has satisfied the conditions of Section 7.4(c).
SECTION 11.2 COSTS.
Each party hereto shall pay all fees and expenses incurred by it in
connection with the negotiation, preparation, and performance of this
Agreement, including fees and disbursements of their respective counsel,
except that GTSD shall pay up to $60,000 of the legal fees reasonably
incurred by the Minority Shareholders in connection with this Agreement and
the transactions contemplated hereunder.
SECTION 11.3 PUBLICITY.
The parties hereto agree not to issue any statement or communication to
the public or the press regarding the transactions contemplated by this
Agreement without the prior written consent of the other parties; provided,
however, that each party shall be permitted, upon notice to the other, to
make such disclosures to the public or such governmental entities as its
counsel reasonably should deem necessary to maintain compliance with
applicable law.
SECTION 11.4 PARTIES IN INTEREST.
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the respective successors, heirs, personal representatives,
and assigns permitted under the terms of this Agreement.
SECTION 11.5 ENTIRE AGREEMENT.
This Agreement, any Exhibits, Schedules, any other writings delivered
pursuant hereto which form a part hereof and all other documents delivered
contemporaneous with the execution hereof contain the entire understanding of
the parties with respect to its subject matter and supersede all prior oral
and written agreements and understandings between the parties with respect to
its subject matter. In this regard, although the Minority Shareholders'
Letter of Intent and the Bird Letter of Intent shall be merged into and
superseded by this Agreement, certain descriptive language contained therein
is expressly referred to herein and shall be interpreted as if expressly set
forth herein.
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SECTION 11.6 CONSTRUCTION.
The Article and Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The masculine pronoun shall include the
feminine and neuter, and vice versa, where the context so requires.
SECTION 11.7 ADDITIONAL DOCUMENTS.
Each party hereto agrees to execute and deliver such documents and take
such further actions as may be reasonably necessary or desirable to effect
the purposes and objectives of this Agreement.
SECTION 11.8 NOTICES.
Except as otherwise expressly stated, all notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
shall be deemed given upon the earlier of (i) when it is personally
delivered, (ii) three (3) business days after having been mailed by certified
mail, postage prepaid, return receipt requested or (iii) two (2) days after
having been sent by recognized overnight delivery service, addressed as
follows:
IF TO GTSD:
GTS Duratek, Inc.
8955 Guilford Road, Suite 200
Columbia, Maryland 21046
Attention: Robert E. Prince, President and Chief
Executive Officer
WITH A COPY TO:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Henry D. Kahn, Esquire
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IF TO GTSD SUB:
GTSD Sub II, Inc.
8955 Guilford Road, Suite 200
Columbia, Maryland 21046
Attention: President
WITH A COPY TO:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Henry D. Kahn, Esquire
IF TO COMPANY:
Bird Environmental Gulf Coast, Inc.
c/o GTS Duratek, Inc.
8955 Guilford Road, Suite 200
Columbia, Maryland 21046
Attention: Robert F. Shawver
WITH A COPY TO:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Henry D. Kahn, Esquire
IF TO J. HOGAN:
Jim S. Hogan
1742 Country Club Drive
Sugar Land, Texas 77478
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IF TO M. HOGAN:
Mark B. Hogan
1742 Country Club Drive
Sugar Land, Texas 77478
IF TO B. HOGAN:
Barry K. Hogan
4501 Creekbend Street
Houston, Texas 77035
IF TO LUCAS:
Sam J. Lucas III
2220 Marina Way #325
Kemah, Texas 77565
WITH A COPY TO FOR ANY OF THE MINORITY SHAREHOLDERS:
Nick D. Nicholas
Porter & Hedges, L.L.P.
700 Louisiana
Suite 3500
Houston, Texas 77002-2764
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
SECTION 11.9 COUNTERPARTS.
This Agreement may be executed simultaneously in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 11.10 GOVERNING LAW.
The validity of this Agreement and of any of the terms or provisions as
well as the rights and duties of the parties hereunder shall be governed by
the laws of the State of Maryland, without reference to any conflict of law
or choice of law principles in the State of Maryland that might apply the law
of another jurisdiction.
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SECTION 11.11 ARBITRATION.
(a) Any disputes between the parties relating to the terms of
this Agreement, or the breach thereof, shall be submitted to binding
arbitration in Baltimore, Maryland, in accordance with the rules of the
American Arbitration Association. In the event that either party desires to
arbitrate any such dispute, such party shall so notify the other party and
the parties shall endeavor, for a period of thirty (30) days, to resolve such
dispute without arbitration. In the event that the parties cannot resolve
the dispute within such thirty (30) day period, then within ten (10) days
thereafter, the parties shall jointly designate an arbitrator to hear the
dispute, or, if the parties are unable to jointly select an arbitrator, an
arbitrator shall be chosen in accordance with the rules of the American
Arbitration Association. The decision of the arbitrator shall be binding
upon the parties.
(b) The Company, GTSD or GTSD Sub shall pay all of their own
expenses in connection with such arbitration and shall advance payment for
the reasonable expenses incurred by the Minority Shareholders in connection
with such arbitration, including without limitation travel expenses and the
fees and expenses of counsel, provided that the Minority Shareholders shall
be obligated to repay such advance in the event that the arbitrator
determines that the Minority Shareholders did not act in good faith or did
not have a good faith basis to bring or defend the claim. In the event that
the Minority Shareholders are required to repay such advance, such amount
shall be offset against the amount to be paid to each or all of them pursuant
to Article VIII hereof or to be paid to each or all of them as a Bonus
Payment pursuant to the Employment Agreements or the Hogan Agreement, as
applicable. The offset described in the preceding sentence shall be the sole
remedy of the Company, GTSD or GTSD Sub to recover the advance.
SECTION 11.12 SPECIFIC PERFORMANCE.
The parties acknowledge and agree that the breach of the provisions of
this Agreement could not be adequately compensated with monetary damages, and
the parties hereto agree, accordingly, that injunctive relief and specific
performance shall be appropriate remedies to enforce provisions of this
Agreement and waive any claim or defense that there is an adequate remedy at
law for such breach; provided, however, that, except as expressly provided
herein, nothing herein shall limit the remedies herein, legal or equitable,
otherwise available and all remedies herein are in addition to any remedies
available at law or otherwise.
SECTION 11.13 SEVERABILITY.
If any provision of this Agreement shall be held to be illegal, invalid
or unenforceable under any applicable law, then such contravention or
invalidity shall not invalidate the entire Agreement. Such provision shall
be deemed to be modified to the extent necessary to render it legal, valid
and enforceable, and if no such modification shall render it legal, valid and
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enforceable, then this Agreement shall be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties
shall be construed and enforced accordingly.
SECTION 11.14 NO DRAFTING PRESUMPTION.
Each of the parties hereto shall be deemed to have participated equally
in the drafting and preparation of this Agreement and, accordingly, no
presumption shall arise concerning the interpretation of any of the
provisions hereof with respect to the party or parties responsible for its
preparation.
SECTION 11.15 INCORPORATION BY REFERENCE; USE OF CERTAIN TERMS.
All Exhibits and Schedules attached to this Agreement shall be deemed
incorporated herein by reference as if fully set forth herein. When the
context requires, the gender of all words used herein shall include the
masculine, feminine and neuter and the number of all words shall include the
singular and plural.
SECTION 11.16 AMENDMENT AND WAIVER.
This Agreement may not be amended or modified except by a written
instrument signed by the parties hereto. The waiver by any party of such
party's rights under this Agreement in any particular instance or instances,
whether intentional or otherwise, shall not be considered as a continuing
waiver which would prevent subsequent enforcement of such rights or of any
other rights.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto on the date first above written.
WITNESS/ATTEST: BIRD ENVIRONMENTAL GULF COAST,
INC.
By: /s/Diane R. Brown By: /s/Robert F. Shawver (SEAL)
---------------------------- -----------------------------
Diane R. Brown, Secretary Robert F. Shawver
Vice President
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GTS DURATEK, INC.
By: /s/Diane R. Brown By: /s/Robert F. Shawver (SEAL)
---------------------------- -----------------------------
Diane R. Brown, Secretary Robert F. Shawver
Executive Vice President and
Chief Financial Officer
GTSD SUB II, INC.
By: /s/Diane R. Brown By: /s/Robert F. Shawver (SEAL)
---------------------------- -----------------------------
Diane R. Brown, Secretary Robert F. Shawver
Vice President
By: /s/Robert A. Hensel By: /s/Jim S. Hogan (SEAL)
---------------------------- -----------------------------
Jim S. Hogan
By: /s/Robert A. Hensel By: /s/Mark B. Hogan (SEAL)
---------------------------- -----------------------------
Mark B. Hogan
By: /s/Robert A. Hensel By: /s/Barry K. Hogan (SEAL)
---------------------------- -----------------------------
Barry K. Hogan
By: /s/Robert A. Hensel By: /s/Sam J. Lucas III (SEAL)
---------------------------- -----------------------------
Sam J. Lucas III
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EXHIBIT (c)(4)
<PAGE>
TECHNOLOGY LICENSE AGREEMENT
THIS TECHNOLOGY LICENSE AGREEMENT (the "Agreement") is made this 29th
day of November, 1995, by and among GTS Duratek, Inc., a Delaware corporation
("GTSD"), Bird Environmental Gulf Coast, Inc., a Texas corporation (the
"Company"), (GTSD and the Company each a "Licensee" and collectively, the
"Licensees") and Jim S. Hogan ("Hogan").
W I T N E S S E T H :
WHEREAS, Hogan is the owner of certain patents and patent
applications, and possesses certain technology and know-how relating to the
treatment of waste through a desorber;
WHEREAS, Licensees desire an exclusive license under said patents and
patent applications and the exclusive right to make, use and sell products
and services from such technology and know-how, and Hogan is willing to grant
such license and rights;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company and Hogan will have executed that certain agreement
pursuant to which Hogan will agree to provide ongoing advice and assistance
to the Company related to the Technology (as defined herein) and the Company
shall pay to Hogan a Bonus Payment (as defined therein) in consideration of
such continued advice and assistance.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, GTSD Sub II, Inc., a Maryland corporation and a wholly-owned
subsidiary of GTSD ("GTSD Sub"), is purchasing from Bird Environmental
Technologies, Inc., a Delaware corporation ("BETI"), all of the outstanding
capital stock of the Company owned by BETI, which represents 80% of the
issued and outstanding stock of the Company, upon the terms and provisions
set forth in a Stock Purchase Agreement of even date herewith by and among
the Company, BETI, Bird Corporation, a Massachusetts corporation ("Bird"),
GTSD Sub and GTSD (the "Stock Purchase Agreement").
WHEREAS, contemporaneously with the execution and delivery of this
Agreement and the Stock Purchase Agreement, effective as of the date hereof,
(i) the Company will have executed with each of Mark B. Hogan ("M. Hogan"),
Barry K. Hogan ("B. Hogan") and Samuel J. Lucas III ("Lucas") employment
agreements (the "Employment Agreements") and (ii) the Company, GTSD, GTSD
Sub, Hogan, M. Hogan, B. Hogan and Lucas will have entered into that certain
stockholders agreement (the "Stockholders Agreement") outlining certain
rights between
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the parties as stockholders of the Company. This Agreement, the Employment
Agreements and the Stockholders Agreement shall be collectively referred to
herein as the "Minority Shareholders Agreements".
WHEREAS, a significant inducement for GTSD Sub to purchase the
capital stock of the Company from BETI is its ability to enter into this
Agreement pursuant to the terms and conditions set forth herein and to enter
into the other Minority Shareholders Agreements on the terms and conditions
specified therein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:
I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
a. "Patent Rights" shall mean United States patents and foreign
patents, and United States and foreign patent applications listed on SCHEDULE
A, and all other future United States and foreign patents and patent
applications in the Licensed Field, including any continuations,
continuations-in-part, divisions, reissues, renewals, additions and
extensions thereof.
b. "Affiliate" of a specified person shall mean any entity which
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified.
c. "Technology" shall mean all ideas, inventions (patentable and
unpatentable), know-how, technical information and works of authorship
conceived, invented, discovered, created or possessed by Hogan, either alone
or jointly with others, prior to or after the date hereof, including but not
limited to processes, articles, devices, equipment, programs, techniques,
compositions, formulations, data, etc., and any use thereof, all in the
Licensed Field. Technology shall also include any and all copyrights,
trademarks and tradenames related to the Technology.
d. "Licensed Subject Matter" shall mean (i) any process, composition
of matter, article of manufacture, apparatus, item, service or sublicense
covered by any valid product or process claim, in any patent included in the
Patent Rights or involving the use of the Technology and (ii) all copyrights,
trademarks and tradenames related to the Technology.
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e. "Licensed Field" shall mean the complete process, now or hereafter
acquired or developed by Hogan, in connection with the treatment of waste of any
kind or description by means of a desorber (the "Desorber") or any other similar
process incorporating the Technology. A Desorber is defined as an apparatus for
the removal of liquids or gases from waste by application of heat.
f. "License Year" shall mean any calendar year, beginning January 1,
1996, during the term of this Agreement.
g. "Licensed Territory" shall mean the entire world.
II. GRANT OF LICENSES
Hogan hereby grants to Licensees an exclusive and unrestricted license,
with the right to grant sublicenses, to make, use and sell products and services
embodying or incorporating the Patent Rights and Technology and to practice the
inventions covered by the Patent Rights and the Technology in the Licensed Field
in the Licensed Territory to the full end of the term for which the Patent
Rights are issued. This grant shall include (i) the right to use, reproduce and
display derivative works based on any works of authorship which are part of the
Technology for as long as those works are protected by copyright and (ii) the
right to use any tradenames and tradenames associated with the Patent Rights or
the Technology for as long as Licensees or any of them is engaged in the
Licensed Field. Hogan agrees to provide to the Licensees copies of all
documentation, know-how, works and enhancements developed by him which includes
any of the Technology, including without limitation, designs and all necessary
information for the manufacture and operation of Desorbers, whether now or
hereafter developed or acquired.
III. DISCLOSURE AND ASSIGNMENT OF TECHNOLOGY (FUTURE)
All Technology in the Licensed Field which Hogan creates or develops
and comes into being during the term of the Agreement ("Future Technology")
shall be assigned or licensed, as appropriate, to Licensees, or to such party or
parties as the Licensees may designate, and such Future Technology shall be
fully disclosed to Licensees in a timely manner. Notwithstanding anything
herein to the contrary, all Future Technology (including without limitation any
improvements to the existing Technology and any Patent Rights) developed or
acquired by the Licensees, either singly or jointly with Hogan, during the term
of this Agreement shall be owned by the Licensees and such Licensees shall
retain all rights thereto and all Future Technology (including without
limitation any improvements to the existing Technology and any Patent Rights)
developed or created by Hogan which was funded or sponsored by the Licensees, in
whole or in part, shall be owned by the Licensees and such Licensees shall
retain all rights thereto. Hogan hereby agrees to assign any and all rights
that he may have to the Future Technology (including any Patent Rights)
described in the preceding sentence to the Licensees. Notwithstanding any other
provision of this Agreement, if Licensees, or either of them, retain
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and pays Hogan or Val Verde Corporation to do the engineering work for the
specific purpose of modifying the Technology to process a specific type or
quantity of material, such engineering work shall not be considered Future
Technology, but shall be considered part of the Technology, and the royalties
provided for in Section IV shall be paid on the use, sale or leasing of
equipment made pursuant to such engineering work.
IV. ROYALTY PAYMENTS
a. In consideration of the license and rights herein granted, the
Company and GTSD shall pay to Hogan in the manner herein provided unless
terminated as hereinafter provided the following (the following payments
reflect the aggregate amounts to be paid by the Company and GTSD
collectively):
1. No payments will be made with respect to the first Desorber or
its replacement located at the Gulf Coast Recycling Center ("GCRC"), and the
Company and GTSD will have a perpetual, royalty free license under Section II
above to operate such Desorber or its replacement, including the right to use
the Technology which is incorporated in the Desorber, notwithstanding any
termination of this Agreement.
2. With respect to Desorbers other than the first Desorber or its
replacement, and the operation of similar processes in the Licensed Field,
Licensees will pay Hogan a royalty equal to the greater of (i) $50,000 per
year or (ii) one percent (1.0%) of the net revenues per License Year of the
Company, GTSD and their subsidiaries, Affiliates and sublicensees from the
operation of the Desorbers (exclusive of any revenues generated from the
first Desorber or its replacement at the GCRC and sales or leasing of
equipment) and five percent (5.0%) of the net revenues per License Year of
the Company, GTSD and their subsidiaries, Affiliates and sublicensees from
the sales or leasing of equipment to unaffiliated third parties incorporating
any of the Technology. The royalty provisions of this paragraph shall govern
until $5.0 million in cumulative royalties have been paid to Hogan and
thereafter the provisions of the following paragraph shall govern the
royalties to be paid to Hogan.
3. Once $5.0 million in cumulative royalties have been paid to
Hogan pursuant to the preceding paragraph, the provisions of that paragraph
shall cease to apply and the provisions of this paragraph 3 shall govern.
With respect to Desorbers other than the first Desorber or its replacement,
and the operation of similar processes in the Licensed Field, Licensees will
pay to Hogan a royalty equal to the lesser of (i) $100,000 per year or (ii)
one percent (1.0%) of the net revenues per License Year of the Company, GTSD
and their subsidiaries, Affiliates and sublicensees from the operation of
Desorbers (exclusive of any revenues generated from the first Desorber or its
replacement at the GCRC and sales or leasing of equipment) and five percent
(5.0%) of the net revenues per License Year of the Company, GTSD and their
subsidiaries, Affiliates and sublicensees from the sales or leasing of
equipment to unaffiliated third parties incorporating any of the Technology.
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4. For purposes of this Agreement, the term "net revenues" shall
mean all amounts or proceeds received by the Company, GTSD or their
subsidiaries, Affiliates and sublicensees from the use, sales or leasing of
equipment incorporating the Technology, as applicable, including revenue
received by any of them as a result of operations by other entities, less the
following deductions: (i) discounts allowed and taken for prompt payment,
(ii) allowances for returns or other trade credits, (iii) all sales, use and
other taxes imposed which are paid to the Licensees by the customer, (iv)
packaging and transportation costs and (v) the cost of services contracted to
other subcontractors providing technologies and services complimentary to and
outside of the Licensed Field and packaged for sale with the Licensed Subject
Matter. For purposes of this Agreement, the "net revenues" from the sales or
leasing of equipment incorporating any of the Technology shall only refer to
the revenues from the sale or leasing of such specific equipment and shall
not include the net revenues from the sales or leasing of equipment not
incorporating the Technology but which may be sold with the equipment
incorporating the Technology as part of an entire system. When the net
revenues received by the Licensees includes both such types of equipment, the
Licensees and Hogan shall discuss in good faith the portion of the purchase
price for the system that should be allocated to the equipment incorporating
the Technology for purposes of determining the royalty payment pursuant to
this Section IV.
5. Notwithstanding anything herein to the contrary, the royalty
obligations provided in this Section IV shall not commence until the Company
has achieved cumulative earnings before interest, taxes, depreciation and
amortization ("EBITDA") during three (3) consecutive months of at least
$75,000 following the date of this Agreement.
6. If no royalties are paid to Hogan during the first and second
License Years of this Agreement due to the fact that the Company did not
achieve cumulative EBITDA during three (3) consecutive months of at least
$75,000, then the Company and GTSD may, at their sole discretion, either (i)
make the minimum annual royalty payments of $50,000 per year to Hogan in the
third, fourth and fifth License Years of this Agreement and continue this
Agreement, or (ii) terminate this Agreement pursuant to Section XII hereof,
provided that if such election is not made within 60 days of the end of the
second License Year and Hogan has provided the Company with a written request
to make such election at least 15 days prior to the end of the 60 day period,
then Hogan may elect to terminate this Agreement.
7. In the event the United States Government has or obtains
royalty-free rights under the Patent Rights or Technology, any amounts or
proceeds received by the Company, GTSD or their subsidiaries in respect of
any Licensed Subject Matter caused to be manufactured by or through the
Company, GTSD or their subsidiaries and sold, leased or otherwise transferred
to the United States Government or services performed for the United States
Government shall not be included within the definition of "net revenues" and
no royalty shall be required to be paid thereon.
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V. AVOIDANCE OF DUPLICATION OF ROYALTY PAYMENTS
In no event shall more than one royalty payment be due under this
Agreement on the same Licensed Subject Matter or component part thereof,
provided however, that if the Licensees receive from a third party a royalty
for the use of the equipment incorporating the Technology (in addition to the
revenues received by the Licensees for the sale or leasing of such
equipment), such royalty received by the Licensees shall be included in the
royalty calculation of Section IV.
VI. LICENSEE FEES PAYABLE TO THIRD PARTIES
In the event Licensees are charged with infringement of a valid patent
or other proprietary rights of a third party or are notified of such
infringement, and an attorney approved by Hogan and Licensees renders an
opinion that an injunction enjoining Licensees from infringing such patent or
proprietary rights would prevent Licensees from practicing in the Licensed
Field or otherwise using the Technology, then any royalty or other
compensation which the owner of such patent or proprietary rights requires
for Licensees to license or otherwise use such patent or proprietary rights
shall be deducted from the royalties payable to Hogan under Article IV hereof.
VII. PAYMENT OF ROYALTIES AND ACCOUNTING
Royalty payments pursuant to paragraphs 2 and 3 of Section IV(a) shall
be made quarterly, within sixty (60) days of the end of each calendar quarter
of each License Year once the royalty payments commence pursuant to paragraph
5 of Section IV(a). If paragraph 2 of Section IV(a) is applicable, the
amount paid for each calendar quarter shall be the greater of (i) $12,500 and
(ii) the percentage royalties described in paragraph 2 of Section IV(a) on
the net revenues during the calendar quarter just ended. If paragraph 3 of
Section IV(a) is applicable, the amount paid for each calendar quarter shall
be the lesser of (i) $25,000 and (ii) the percentage royalties described in
paragraph 3 of Section IV(a) on the net revenues during the calendar quarter
just ended. The net revenues for each calendar quarter shall be reasonably
determined by the Licensees in good faith and shall be subject to an annual
reconciliation within 90 days of the end of each License Year. All payments
required to be made under this Agreement shall be made in U.S. funds. At the
time of payment of such royalties, GTSD or the Company shall render to Hogan
a statement in writing showing the computation of such royalties payable for
such calendar quarter or License Year, as applicable. Notwithstanding
anything herein to the contrary, Hogan shall have no right to dispute or
audit the quarterly payment of royalties, but shall be required to wait until
the completion of the reconciliation within 90 days of the end of the License
Year to exercise his rights pursuant to Section VIII. Any statement
following the year-end reconciliation that covers the full License Year shall
be conclusively presumed to be accurate and deemed acceptable by Hogan unless
he notifies the Company and GTSD in writing as to any objections within one
(1) year of Hogan's receipt of such statement. For purposes of determining
the royalty payments owed to Hogan pursuant to Section IV, the first License
Year shall be the calendar year beginning January 1, 1996. The accounting
shall be in accordance with generally accepted accounting principles.
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VIII. AUDIT RIGHTS
Hogan shall have the right, at his option and sole expense, within one
(1) year after receipt of the annual statement for the full License Year
described in the previous section, to have each of Licensee's books and
records relating to the Technology audited by an independent certified public
accountant ("CPA") selected by Hogan and approved by Licensees, such approval
not to be unreasonably withheld provided that the CPA has signed an
appropriate confidentiality agreement. Licensees will make such books and
records available to such CPA during reasonable business hours. The CPA
shall agree to advise Hogan only of the accuracy or inaccuracy of Licensees'
statements and the royalty payments to him, and if not accurate, the actual
amounts as computed by such CPA.
IX. EXPENSES: PREPARATION, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.
a. Upon request for the duration of this Agreement, Hogan and
Licensees, at Licensees' expense, shall jointly review the question of
patentability or other protection of any idea, work, invention or discovery
which is conceived, invented or discovered by Hogan or Licensees in the
Licensed Field, or any idea, work, invention or discovery which results from
or arises out of any research work conducted by Hogan pursuant to a grant
guaranteed by, or other engagement by, either Licensee irrespective of
whether or not any such idea, work, invention or discovery is included or
required to be included in the Technology.
b. Licensees shall have the power and authority to file and prosecute
applications for patents on any idea, invention or discovery in the Licensed
Field in the Licensed Territory and to procure and maintain patents thereon.
The inventor of any such idea, invention or discovery shall, at Licensees'
request, execute such documents and perform such acts as Licensees' counsel
may deem necessary and advisable to perfect the filing of such applications
for patent throughout the world and to assist Licensees in procuring,
maintaining, enforcing and defending patents, and other applicable statutory
protection granted or issued thereon, all at the expense of Licensees.
Patent applications shall be prepared and prosecuted by attorneys selected by
the Licensees, provided that if such patent application relates to an idea,
invention or discovery by Hogan (a "Hogan Invention") such attorneys must be
reasonably acceptable to Hogan. If the patent application relates to a Hogan
Invention, the Licensees shall provide Hogan with copies of all
correspondence concerning such application and if Licensees decide to abandon
any pending patent applications or issued patents relating to a Hogan
Invention, they shall notify Hogan in writing sixty (60) days prior to the
final date for maintaining the pending patent application or issued patent.
c. The Licensees shall pay all attorneys fees and expenses associated
with the preparation, prosecution and maintenance of patent applications and
issued patents that they determine in their discretion to pursue and/or
maintain.
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d. Anything in this Agreement to the contrary notwithstanding,
Licensees may elect to relinquish their exclusive license under any
application for patent or patent included in the Patent Rights by giving
Hogan at least sixty (60) days prior written notice of such election. Any
such application for patent or patent thereafter shall be excluded from the
Patent Rights and Licensees thereafter shall not be liable for any costs
incurred in the prosecution, procurement, maintenance, enforcement and
defense thereof.
X. INFRINGEMENT
a. Licensees shall have the right, but shall not be obligated, to bring
and prosecute any suit or action against an infringer of any patent included in
the Patent Rights in the name of Licensees and/or Hogan, if appropriate, at
Licensees' cost and expense and for Licensees' own accounting, and in any such
case Licensees shall have control of the conduct or settlement of any such suit
or action. Any and all recoveries of any kind from any such suit or action
shall be the property of Licensees, except in the event any recoveries are
royalties for past infringement and/or future royalties and/or for a paid-up
license under any patent included in the Patent Rights, then any such recoveries
less pro rata costs incurred by Licensees for attorney's fees, witnesses' fees,
and court and out-of-pocket costs shall be included as net revenues according to
Section IV hereof. Hogan shall have no obligation to bring and prosecute any
suit or action against an infringer of any patent included in the Patent Rights.
b. Should Licensees exercise their rights under Section X(a), Licensees
agree to indemnify and defend Hogan from countersuit by an infringer of any
patent with respect to his role as inventor of the patents. Such
indemnification is limited to issues related to or arising out of patent
validity or patent infringement only.
c. Hogan shall give promptly upon request and without compensation (other
than reimbursement of reasonable out-of-pocket expenses and as provided in this
Article X) all reasonable information and assistance necessary to enable
Licensees to bring and prosecute any such suit or action.
d. In the event that Licensees shall fail to cause any infringement of
Patent Rights to terminate or shall fail to bring suit or action against any
such infringer within six (6) months after request in writing from Hogan to do
so, then in such event Hogan shall have the right, but shall not be obligated,
to bring and prosecute any such suit or action in his own name and/or Licensees
names, at Hogan's sole cost and expense, and in any such case, Hogan shall have
sole control of the conduct or settlement of any such suit or action. Any and
all recoveries for damages, royalties, costs and awards form any such suit or
action shall be the sole property of Hogan, less any costs which may be incurred
by Licensees in support such action or suit.
e. Should Hogan exercise his right under Section X(d), Hogan agrees to
indemnify and defend Licensees from countersuit by an infringer of any patent
with respect to Licensees
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role as licensees. Such indemnification is limited to issues related to
patent validity or patent infringement only.
f. The party not bringing such suit or action shall have the right, at
its sole expense, to be represented by counsel during all proceedings of such
suit or action.
XI. WARRANTIES
a. Each of the Licensees warrants to Hogan that:
(i) It has the power and authority to enter into this Agreement and
perform its obligations hereunder;
(ii) The execution and performance of this Agreement has been duly
and validly authorized by all necessary corporate action;
(iii) This agreement constitutes a valid and binding obligation
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of
creditors generally; and
(iv) The execution and performance of this Agreement does not and
will not violate the Licensees' articles of incorporation, bylaws, judgment,
decree or order of any court or administrative authority or the terms of any
agreement to which they are a party or by which they are bound.
b. Hogan warrants to each of the Licensees that:
(i) He has the power and authority to enter into this Agreement and
perform his obligations hereunder;
(ii) He has good and marketable title to the Patent Rights and the
Technology and can grant the rights contemplated by this Agreement;
(iii) The Intellectual Property representations and warranties
contained in Section 2.19 of the Stockholders Agreement are true and accurate;
(iv) This agreement constitutes a valid and binding obligation
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of
creditors generally; and
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(iv) The execution and performance of this Agreement does not and
will not violate the terms of any judgment, decree or order of any court or
administrative authority or any agreement to which he is a party or by which
he is bound.
XII. TERMINATION
a. In the event any party to this Agreement shall fail to perform or
fulfill, at the time and in the manner herein provided, any material obligation
or condition required to be performed or fulfilled by such party under this
Agreement, and in the event such party shall fail to remedy such default within
thirty (30) days after written notice thereof from a party not at fault, such
party not at fault shall have the right to terminate this Agreement by giving
written notice of termination to the party at fault, but such termination shall
be with respect only to the party at fault.
b. Either Licensee may, at its discretion, terminate this Agreement as
to such Licensee at any time upon thirty (30) days written notice furnished
to Hogan provided that the Licensees collectively have paid Hogan in the
aggregate at least $150,000 in royalties pursuant to Section IV hereof.
c. In the event of termination pursuant to this Section XII, the
licenses, rights, privileges, obligations and liabilities of the terminating
party hereunder shall terminate forthwith except for the perpetual
royalty-free license provided in paragraph 1 of Section IV(a) and the right
to own and operate for as long as they wish to do so any additional Desorbers
put into operation, or in the process of being put into operation, during the
term of this Agreement or their replacement, provided that the applicable
Licensee shall pay to Hogan for each such additional Desorber either, at
Licensee's sole discretion, (i) a one-time fee equal to the greater of
$300,000 or fifteen percent (15%) of the cost of the Desorber (which cost
shall be agreed upon between the Licensee and Hogan in good faith) or (ii) an
ongoing royalty fee equal to 1% of the net revenues (calculated consistent
with Section IV above) received from operation of such additional Desorbers
during each License Year. The payments hereunder shall be calculated and paid
pursuant to Section VII above.
XIII. TERMINATION: PRORATED ROYALTIES
In the event of any termination under Section XII hereof, the $50,000
minimum royalty and the $100,000 maximum royalty provided for in Section IV
for the License Year in which this Agreement is terminated shall be reduced
by an amount which bears the same relationship to such royalties that the
number of days of such License Year after such termination bears to three
hundred sixty-five (365).
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XIV. DISPOSITION OF SUBLICENSEES OF LICENSEES
In the event of termination of this Agreement under Section XII hereof
by any Licensees, any sublicenses theretofore granted by such Licensee shall
terminate, except for the continuing rights of the Licensees under Section
XII.
XV. RECORDS AND CONFIDENTIAL DATA
a. All memoranda, notices, files, records, databases and other documents,
and all copies thereof, made or compiled by Hogan during the term of this
Agreement in the ordinary course of business, or made available to him
concerning the business of the Licensees shall be the Licensees' property and
shall be delivered to the Licensees at their request therefor or automatically
on the termination of this Agreement, provided that Hogan may retain a copy,
subject to the confidentiality restrictions contained herein. Hogan shall not
at any time during or after the term hereof use for himself or others, or
divulge to others any trade secret or confidential or proprietary business
information, knowledge or data of the Licensees obtained by him as a result of
his relationship with the Licensees unless authorized in writing by the
Licensees or required by law.
b. All memoranda, notices, files, records and other information
disclosing any of the Technology shall be retained in confidence by the parties
hereto and their agents, and shall not be disclosed to any third party, except
to the extent reasonably necessary to pursue the business objectives of the
Licensees or to comply with the contractual commitments of this Agreement.
c. The parties agree that either the Licensees on the one hand or Hogan
on the other hand will be entitled (without posting bond or other security) to
injunctive or other equitable relief, as deemed appropriate by any such court or
tribunal, to prevent a breach of the other party's obligations set forth in this
Section XV.
XVI. NON-COMPETITION/NON-INTERFERENCE
Hogan agrees that, for the term of this Agreement and for a period of three
(3) years thereafter, he will not directly or indirectly (i) be employed by or
perform activities on behalf of any Competing Business in any state, country or
other jurisdiction in which the Licensees or any of their affiliates then
conducts business; or (ii) induce any employee of the Licensees or their
subsidiaries to terminate such employment or to become employed by any such
Competing Business. As used herein, "Competing Business" shall mean any
business (i) then currently deriving revenues from the treatment of any form of
waste through a thermal desorption process or (ii) then currently deriving
revenues from the treatment of any form of waste that then accounts for at least
ten percent (10%) of the revenues of either of the Licensees, irrespective of
the treatment technology used. To the extent Hogan will be employed by or
perform activities on behalf of a division or subsidiary of a Competing Business
that does not compete, and he can demonstrate to the Licensees' reasonable
satisfaction that such employment or provision of
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services will not have an adverse competitive effect on the Licensees, such
employment or provision of services shall not be prohibited hereunder. The
parties acknowledge and agree that the restrictions of this Section XVI have
been carefully negotiated at arm's length and are believed by the parties to
be reasonable and necessitated by legitimate business needs. In the event
that, notwithstanding the foregoing, any provision set forth in this Section
XVI shall be determined by any competent court or tribunal to be
unenforceable or invalid for any reason, the parties agree that this Section
XVI shall be interpreted to extend only over the maximum period of time for
which it may be enforceable, and/or over the maximum geographical area as to
which it may be enforceable, and/or to the maximum extent in any and all
respects as to which it may be enforceable, all as determined by such court
or tribunal. The parties further agree that the Licensees will be entitled
(without posting bond or other security) to injunctive or other equitable
relief, as deemed appropriate by any such court or tribunal, to prevent a
breach of Hogan's obligations set forth in this Section XVI.
XVII. TERM OF THE AGREEMENT
This Agreement shall commence on the date hereof, and unless sooner
terminated as herein provided shall continue in full force and effect until the
expiration of the last expiring patent or patent application included in the
Patent Rights.
XVIII. WAIVER AND SEVERABILITY
a. The waiver by any of the parties of any breach of any provision
hereof by another shall not be construed to be a waiver of any succeeding
breach of such provision or a waiver of the provision itself.
b. If one or more of the provisions of the Agreement shall be found to
be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render it
legal, valid and enforceable, then this Agreement shall be construed as if
not containing the provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced accordingly.
XIX. NOTICES
Except as otherwise expressly stated, all notices required to be given
or which may be given under this Agreement shall be in writing and shall be
deemed given upon the earlier of (i) when it is personally delivered, (ii)
three (3) days after having been mailed by certified mail, postage prepaid,
return receipt requested, (iii) two (2) days after having been sent by
recognized overnight delivery service or (iv) one (1) day after having been
sent by facsimile transmission, addressed as follows:
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If to:
(a) GTSD:
GTS DURATEK, INC.
8955 Guilford Road, Suite 200
Columbia, MD 21046
Attn: Robert E. Prince, President and Chief Executive Officer
Telecopy No.: (301) 621-8211
(b) the Company:
Bird Environmental Gulf Coast, Inc.
2700 Avenue S
San Leon, Texas 77539
Attn: Bob Hensel, President
Telecopy No.: (713) 559-1364
(c) Hogan:
Jim S. Hogan
1742 Country Club Drive
Sugar Land, Texas 77478
XX. COMPLETE AGREEMENT
This Agreement contains the complete agreement and understanding between
the parties concerning the subject matter hereof and shall supersede all other
agreements, understandings or commitments between the parties as to such subject
matter.
XXI. ASSIGNMENT
The obligations and rights of each party hereunder shall not be assignable
without the prior written consent of the other party; provided, however, that
the Licensees may without the consent of Hogan assign this Agreement to (i) an
Affiliate or (ii) any successor owner of the Licensees or their business
resulting from merger, consolidation, sale of the business or otherwise so long
as such successor agrees in writing to assume Licensees' obligations under this
Agreement in a form and manner reasonably acceptable to Hogan. The parties
hereto agree that following the merger of the Company into the newly formed
Maryland corporation as contemplated by Section 4.6(a) of the Stockholders'
Agreement, this Agreement shall survive such merger, shall be in full force and
effect thereafter and the newly formed Maryland
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corporation into which the Company is merged shall by virtue of such merger
become a party to this Agreement and assume all of the rights, liabilities and
obligations of the Company under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties'
respective heirs, legal representatives, successors and assigns.
XXII. WAIVER, MODIFICATION OR AMENDMENT
No waiver, modification or amendment of any provision of this Agreement
shall be effective, binding or enforceable unless in writing and signed by all
of the parties hereto.
XXIII. GOVERNING LAW
The validity of this Agreement and of any of the terms or provisions as
well as the rights and duties of the parties hereunder shall be governed by the
laws of the State of Maryland, without reference to any conflict of law or
choice of law principles in the State of Maryland that might apply the law of
another jurisdiction.
XXIV. ARBITRATION
a. Any disputes between the parties relating to the terms of this
Agreement, or the breach thereof, shall be submitted to binding arbitration in
Baltimore, Maryland, in accordance with the rules of the American Arbitration
Association. In the event that either party desires to arbitrate any such
dispute, such party shall so notify the other party and the parties shall
endeavor, for a period of thirty (30) days, to resolve such dispute without
arbitration. In the event that the parties cannot resolve the dispute within
such thirty (30) day period, then within ten (10) days thereafter, the parties
shall jointly designate a single neutral and independent arbitrator to hear the
dispute, or, if the parties are unable to jointly select an arbitrator, an
arbitrator shall be chosen in accordance with the rules of the American
Arbitration Association. The decision of the arbitrator shall be binding upon
the parties.
b. The Licensees shall pay all of their own expenses in connection with
such arbitration and shall advance payment for the reasonable expenses incurred
by Hogan in connection with such arbitration, including without limitation
travel expenses and fees and expenses of counsel, provided that Hogan shall be
obligated to repay such advance in the event that the arbitrator determines that
Hogan did not act in good faith or did not have a good faith basis to bring or
defend the claim. In the event that Hogan is required to repay such advance,
such amount shall be offset against the amount to be paid to Hogan pursuant to
Article VIII of the Stockholders' Agreement or to be paid to Hogan as a Bonus
Payment pursuant to the Agreement with Hogan dated the date hereof. The offset
described in the preceding sentence shall be the sole remedy of the Licensees to
recover the advance.
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XXV. CONSTRUCTION
Headings or captions of this Agreement are for reference only and are not
to be construed in any way as part of this Agreement, nor in the interpretation
of this Agreement. The masculine pronoun shall include the feminine and neuter,
and vice versa, where the context so requires.
XXVI. COUNTERPARTS
This Agreement may be executed in multiple original counterparts, each of
which shall be deemed an original and all of which together shall constitute but
one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WITNESS/ATTEST: GTS DURATEK, INC.
/s/ Diane R. Brown By: /s/ Robert F. Shawver
- --------------------------------- ---------------------------------
Diane R. Brown, Secretary Name: Robert F. Shawver
Title: Executive Vice President
BIRD ENVIRONMENTAL GULF
COAST, INC.
/s/ Diane R. Brown By: /s/ Robert F. Shawver
- --------------------------------- ---------------------------------
Diane R. Brown, Secretary Name: Robert F. Shawver
Title: Vice President
/s/ Robert A. Hensel /s/ Jim S. Hogan
- --------------------------------- ---------------------------------
Jim S. Hogan
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SCHEDULE A
PATENTS AND PATENT APPLICATIONS
Patent or Patent Application Number Description
- ----------------------------------- -----------
4,872,954 Apparatus for the Treatment of Waste
5,078,836 Method and Apparatus for Retorting
Material
5,227,026 Retort Heat Exchanger Apparatus
European Patent Application 91900646.0 Apparatus for the Thermal Processing
of Material
Serial No. 08/407,762 (pending) Apparatus for Treating Solid
Containing Waste
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