<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 7, 2000
GTS Duratek, Inc.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 0-14292 22-2476780
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
10100 Old Columbia Road, 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)
- --------------------------------------------------------------------------------
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On February 7, 2000, GTS Duratek, Inc. (the "Company") sold its 80%
interest in DuraTherm, Inc. to DuraTherm Group, Inc. for total consideration of
approximately $8.4 million, consisting of $8.0 million in cash and a promissory
note for $355,000. DuraTherm Group, Inc. is a company recently formed by the
minority stockholders of DuraTherm, Inc. to purchase the Company's interest.
DuraTherm, Inc. processes petrochemical and petroleum industry wastes utilizing
a range of separation and recovery technologies including a patented thermal
desorption system located near Houston, Texas.
The Company initially intends to use the proceeds of the sale to repay
debt. Further information is contained in the Company's press release
announcing the sale of its interest in DuraTherm, Inc. as well as the Stock
Purchase Agreement, which are filed as exhibits to this current report on Form
8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information
(i) GTS Duratek, Inc. and Subsidiaries Pro Forma Financial
Information (Unaudited) and related notes.
(ii) GTS Duratek, Inc. and Subsidiaries Condensed Consolidated
Statement of Operations Nine months ended September 30, 1999
(Unaudited) and related notes.
(iii) GTS Duratek, Inc. and Subsidiaries Condensed Consolidated
Statement of Operations Year ended December 31, 1998 (Unaudited)
and related notes.
(iv) GTS Duratek, Inc. and Subsidiaries Consolidated Balance Sheet
September 30, 1999 (Unaudited) and related notes.
(c) Exhibits.
The following exhibits are filed with this report, and the foregoing
description is modified by reference to such exhibits:
99.1 GTS Duratek, Inc. Press Release dated February 8, 2000.
99.2 Stock Purchase Agreement between DuraTherm Group, Inc. and GTSD
Sub III, Inc. dated February 7, 2000.
-2-
<PAGE>
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.
Date: February 22, 2000 By: /s/ Craig T. Bartlett
--------------------------
Craig T. Bartlett
Treasurer
-3-
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The pro forma financial information should be read in conjunction with the
consolidated financial statements and related notes of GTS Duratek, Inc. and
subsidiaries (the "Company"), not included elsewhere herein.
On February 7, 2000, the Company completed the sale of substantially all the
assets, properties and rights of DuraTherm, Inc., an 80% owned subsidiary
("DTI"), to DuraTherm Group, Inc. (the "Buyer") for $8.0 million in cash and a
subordinated note for $355,000. Proceeds to the Company of $8.0 million net of
transaction and related costs were used by the Company to pay down borrowings
under its bank credit facilities. The note receivable bears interest at 14%,
payable semi-annually during the first year following the sale, and 18% during
the second year following the sale with the principal due on February 7, 2002.
The Company estimates that it will recognize a pre-tax gain of approximately
$1,500,000 on the sale.
Pro Forma Consolidated Balance Sheet - The pro forma consolidated balance sheet
reflects the accounts of the Company as of September 30, 1999 giving effect to
the disposition of assets, as if it had occurred on such date. The pro forma
consolidated balance sheet reflects the assets and liabilities of the Company
following the disposition.
The aggregate sale price for the DTI assets sold is as follows:
<TABLE>
<S> <C>
Cash received $ 8,000,000
Note received 355,000
Liabilities assigned to buyer 2,289,877
Transaction and related costs (455,000)
-----------
Net proceeds $10,189,877
===========
</TABLE>
The estimated pre-tax gain to be recognized by the Company based on asset
values at September 30, 1999 is as follows:
<TABLE>
<S> <C>
Net proceeds $10,189,877
Less:
Cash (25,841)
Accounts receivable (2,037,421)
Other receivables (614,521)
Prepaid expenses and other current assets (976,616)
Equipment and leasehold improvements (5,144,828)
Other assets (304,328)
Estimated decrease in net assets to date of closing 413,678
-----------
Estimated pre-tax gain $ 1,500,000
===========
</TABLE>
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The Company has not finalized the accounting for the asset disposition and,
accordingly, the gain to be recognized has not been finalized.
The pro forma consolidated balance sheet also reflects the pay down of
borrowings under the Company's bank credit facilities net of estimated taxes to
be paid on the gain.
The Pro Forma adjustments include the following:
(1) The elimination of assets and liabilities of DTI sold to buyer.
(2) To recognize the note receivable and the use of the proceeds, net of
transaction costs and income taxes payable on the gain, to reduce short-
term borrowings.
(3) To recognize gain on sale.
Pro Forma Consolidated Statements of Operations - The pro forma consolidated
statements of operations for the year ended December 31, 1998 and the nine
months ended September 30, 1999 give effect to the disposition of the assets of
DTI as if such had occurred on January 1, 1998. Results for the nine months
ended September 30, 1999 are not necessarily indicative of results expected for
the full year. Pro forma results are not necessarily indicative of results
expected for the remainder of 1999 or future years.
The pro forma adjustments include the following:
(1) The elimination of the operating results of DTI for the year ended December
31, 1998 and the nine months ended September 30, 1999.
(2) The adjustment of interest expense to reflect the pay down of borrowings
under the Company's bank credit facilities with proceeds of the sale.
(3) The adjustment of income tax expense as the result of the reduction in the
Company's income from the elimination of DTI's operating results offset by
lower interest expense.
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Actual Adjustments Pro Forma
------ ----------- ---------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,854,876 $ (25,841) (1) $ 1,829,035
Receivables, less allowance for doubtful accounts of 37,874,021 (2,037,421) (1) 35,836,600
Other accounts receivable 3,574,737 (614,521) (1) 2,960,216
Cost and estimated earnings in excess of billings
on uncompleted contracts 9,130,432 -- 9,130,432
Prepaid expenses and other current assets 6,019,292 (562,938) (1) 5,456,354
Deferred income taxes 1,006,066 -- 1,006,066
------------ ----------- ------------
Total current assets 59,459,424 (3,240,721) 56,218,703
Property, plant and equipment, net 59,586,850 (5,144,828) (1) 54,442,022
Investments in and advances to joint ventures, net 4,021,404 -- 4,021,404
Goodwill and other intangible assets, net 25,525,952 -- 25,525,952
Other assets 1,703,150 (304,328) (1) 1,753,822
355,000 (2)
Deferred income taxes 3,085,976 576,000 (3) 3,661,976
------------ ----------- ------------
$153,382,756 $(7,758,877) $145,623,879
============= ============ =============
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ 9,200,000 $(6,469,000) (2) $ 2,731,000
Accounts payable 13,947,018 (1,633,004) (1) 12,314,014
Accrued expenses and other current liabilities 12,724,120 (343,294) (1) 12,380,826
Unearned revenues 1,511,115 (258,294) (1) 1,252,821
Waste processing and disposal liabilities 1,886,902 -- 1,886,902
------------ ----------- ------------
Total current liabilities 39,269,155 (8,703,592) 30,565,563
Convertible debentures 12,261,336 -- 12,261,336
Long -term debt 19,200,000 -- 19,200,000
Facility and equipment decontamination and
decommissioning liabilities 8,310,873 (55,285) (1) 8,255,588
Other noncurrent liabilities 1,392,452 -- 1,392,452
------------ ----------- ------------
Total liabilities 80,433,816 (8,758,877) 71,674,939
------------ ----------- ------------
8% Cumulative Convertible Redeemable Preferred Stock 15,450,485 -- 15,450,485
------------ ----------- ------------
Stockholders' equity 57,498,455 1,000,000 (4) 58,498,455
------------ ----------- ------------
Commitments and contingencies $153,382,756 $(7,758,877) $145,623,879
============ =========== =============
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Actual Pro Forma
September Pro Forma September
30, 1999 Adjustments 30, 1999
----------------- ----------------- -------------------
<S> <C> <C> <C>
Revenues $125,355,405 $(10,930,572) (1) $114,424,833
Cost of revenues 90,986,457 (7,815,306) (1) 83,171,151
------------ ------------ ------------
Gross profit 34,368,948 (3,115,266) 31,253,682
Selling, general and administrative expenses 20,296,110 (1,305,966) (1) 18,990,144
Charge for asset impairment -- --
------------ ------------ ------------
Income from operations 14,072,838 (1,809,300) 12,263,538
Interest income (expense), net (1,532,286) 439,000 (2) (1,093,286)
------------ ------------ ------------
Income before income taxes and proportionate
share of losses of joint ventures 12,540,552 (1,370,300) 11,170,252
Income taxes 4,971,005 (441,538) (3) 4,529,468
------------ ------------ ------------
Income before proportionate share of
losses of joint ventures 7,569,547 (928,763) 6,640,785
Proportionate share of losses of joint ventures (150,000) -- (150,000)
------------ ------------ ------------
Net income 7,419,547 (928,763) 6,490,785
Preferred stock dividends and charges for accretion (1,132,306) -- (1,132,306)
------------ ------------ ------------
Net income attributable to common
stockholders $ 6,287,241 $ (928,763) $ 5,358,479
============ ============ ============
Net income per share
Basic $ 0.47 $ 0.40
============ ============
Diluted $ 0.31 $ 0.26
============ ============
Weighted average common shares outstanding:
Basic 13,449,605 13,449,605
============ ============
Diluted 20,493,780 20,493,780
============ ============
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Actual Pro Forma
December 31, Pro Forma December 31,
1998 Adjustments 1998
--------------------- ------------------- -------------------
<S> <C> <C> <C>
Revenues $160,313,077 $(9,684,931) (1) $150,628,146
Cost of revenues 123,839,031 (7,311,555) (1) 116,527,476
------------ ----------- ------------
Gross profit 36,474,046 (2,373,376) 34,100,670
Selling, general and administrative expenses 26,613,548 (1,814,150) (1) 24,799,398
Charge for asset impairment 9,223,948 -- 9,223,948
------------ ----------- ------------
Income from operations 636,550 (559,226) 77,324
Interest income (expense), net (544,902) 544,902 (2) --
------------ ----------- ------------
Income before income taxes and proportionate
share of losses of joint ventures 91,648 (14,324) 77,324
Income taxes 627,000 (5,586) (3) 621,414
------------ ----------- ------------
Income (loss) before proportionate share of
losses of joint ventures (535,352) (8,738) (544,090)
Proportionate share of losses of joint ventures (1,474,000) -- (1,474,000)
------------ ----------- ------------
Net income (loss) before cumulative effect
of change in accounting principle (2,009,352) (8,738) (2,018,090)
Cumulative effect of change in accounting principle (420,000) -- (420,000)
------------ ----------- ------------
Net income (loss) and comprehensive
income (loss) (2,429,352) (8,738) (2,438,090)
Preferred stock dividends and charges for accretion (1,506,754) -- (1,506,754)
------------ ----------- ------------
Net income (loss) attributable to common
stockholders $ (3,936,106) $ (8,738) $ (3,944,844)
============ =========== ============
Net income (loss) per share before cumulative effect
of change in accounting principle:
Basic $ (0.27) $ (0.27)
============ ============
Diluted $ (0.27) $ (0.27)
============ ============
Net income (loss) per share:
Basic $ (0.30) $ (0.30)
============ ============
Diluted $ (0.30) $ (0.30)
============ ============
Weighted average shares outstanding:
Basic 13,137,000 13,137,000
Diluted 13,137,000 13,137,000
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
Notes to Pro Forma Consolidated Financial Statements
As of September 30, 1999, the nine months then ended and
the year ended December 31, 1998
(Unaudited)
Pro Forma Consolidated Balance Sheet
(1) Eliminate assets sold and liabilities assigned to DuraTherm Group, Inc.
(2) Record pay down of borrowings under the Company's bank credit facility with
the net proceeds of the sale after income taxes.
(3) Adjust deferred tax assets as a result of the sale.
(4) Recognize after-tax gain on sale.
Pro Forma Consolidated Statements of Operations
(1) Eliminate operating results of DTI.
(2) Adjust interest expense to reflect the pay down of borrowings under the
Company's bank credit facilities with net proceeds of the sale.
(3) Adjust income tax expense as a result of elimination of DTI's operating
results offset by a reduction in interest expense.
<PAGE>
INDEX TO EXHIBITS
Exhibit
- -------
Number
- ------
99.1 GTS Duratek, Inc. Press Release dated February 8, 2000.
99.2 Stock Purchase Agreement between DuraTherm Group, Inc. and GTSD Sub III,
Inc. dated February 7, 2000.
<PAGE>
Exhibit 99.1
GTS DURATEK CLOSES SALE OF DURATHERM SUBSIDIARY
Columbia, Md. - GTS Duratek, Inc. (DRTK - Nasdaq) announced today that it
has sold its 80% interest in DuraTherm, Inc. to DuraTherm Group, Inc. for total
consideration of approximately $8.4 million. DuraTherm Group, Inc. is a company
recently formed by the minority stockholders of DuraTherm, Inc. to purchase GTS
Duratek's interest. DuraTherm, Inc. processes petrochemical and petroleum
industry wastes utilizing a range of separation and recovery technologies
including a patented thermal desorption system located near Houston, Texas.
Robert E. Prince, President and CEO said, "DuraTherm has been a good
investment for GTS Duratek. We are selling our ownership in the Company because
we believe the timing is right for us to increase the focus on our expanding
radioactive businesses."
Robert F. Shawver, Executive Vice President and CFO added, "The proceeds
from the sale will initially be used to pay down debt. In the near term,
however, we will be looking to redeploy our investment into the highest growth
areas of our business."
GTS Duratek implements technologies and provides services which protect
people from radiation and the environment from radioactive wastes.
GTS Duratek has included in its periodic filings under the Securities
Exchange Act of 1934, including its Form 10-Q for the quarter ended September
30, 1999, pursuant to the "safe harbor" provisions contained in the Private
Securities Litigation Reform Act of 1995, certain cautionary statements which
are intended to identify certain important factors that could cause GTS
Duratek's actual results to differ materially from those contained in forward-
looking statements of GTS Duratek made by or on behalf of GTS Duratek. Reference
is made to such statements for a complete discussion of those factors.
<PAGE>
Exhibit 99.2
STOCK PURCHASE AGREEMENT
BETWEEN
DURATHERM GROUP, INC.,
and
GTSD SUB III, INC.
February 7, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
1. DEFINITIONS.......................................................... 1
2. SALE AND PURCHASE OF STOCK........................................... 1
2.1. Sale and Purchase of Stock.................................... 1
2.2. Purchase Price................................................ 2
2.3. Purchase Price Adjustment..................................... 2
2.4. Payment at the Closing........................................ 3
3. ADDITIONAL UNDERTAKINGS AND COVENANTS................................ 3
3.1. Consents and Approvals....................................... 4
3.2. News Releases................................................ 4
3.3. Subsequent Events............................................ 4
3.4. Schedule Disclosures......................................... 5
3.5. Transition................................................... 5
3.6. Indemnification of Directors and Officers.................... 5
3.7. Confidentiality.............................................. 5
3.8. Non-Competition.............................................. 6
3.9. Non-Solicitation of Employees................................ 7
3.10. Breach of Certain Covenants.................................. 7
3.11. Access and Information....................................... 8
3.12. Delivery of Documents........................................ 8
3.13. Employee Benefit Plans....................................... 8
4. REPRESENTATIONS AND WARRANTIES OF SELLER............................. 9
4.1. Organization and Standing.................................... 9
4.2. Subsidiaries................................................. 9
4.3. Charter and Bylaws........................................... 9
4.4. Capitalization............................................... 9
4.5. Taxes........................................................ 10
4.6. Pension and Benefit Plans.................................... 11
4.7. Binding Obligation........................................... 12
4.8. Title to Preferred and Common Stock.......................... 13
4.9. Authority and Capacity....................................... 13
4.10. Absence of Violation......................................... 13
4.11. Transfer of Title............................................ 13
4.12. Financial Statements......................................... 13
4.13. Liabilities.................................................. 14
4.14. Liens........................................................ 14
4.15. Legal Proceedings............................................ 14
4.16. Broker's Fees................................................ 14
4.17. Absence of Certain Changes; Absence of Certain Agreements.... 15
i
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 15
5.1. Organization and Standing.................................... 15
5.2. Authorization................................................ 16
5.3. Binding Obligation........................................... 16
5.4. No Registration Under the Securities Act..................... 16
5.5. Acquisition for Investment................................... 16
5.6. Evaluation of Merits and Risks of Investment;
Access to Information...................................... 17
5.7. Financial Ability to Perform................................. 17
5.8. Legal Proceedings............................................ 17
5.9. Broker's Fees................................................ 17
5.10. Liabilities.................................................. 17
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER........................ 18
6.1. Representations and Warranties................................ 18
6.2. Performance................................................... 18
6.3. Legal Proceedings............................................. 18
6.4. Buyer's Certificate........................................... 18
6.5. Documents at Closing.......................................... 18
6.6. Consents...................................................... 19
6.7. Termination of Certain Agreements and Release................. 19
6.8. License Agreement............................................. 19
6.9. Opinion of Buyer's Counsel.................................... 19
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER......................... 20
7.1. Intellectual Property Rights................................. 20
7.2. Capitalization of Indebtedness............................... 20
7.3. Representations and Warranties............................... 20
7.4. Performance.................................................. 20
7.5. Legal Proceedings............................................ 20
7.6. Officer's Certificate........................................ 21
7.7. Opinion of Seller's Counsel.................................. 21
7.8. Documents at Closing......................................... 21
7.9. Consents..................................................... 21
7.10. Resignations of Directors and Officers....................... 21
7.11. Financing for Acquisition.................................... 21
8. CLOSING.............................................................. 22
8.1. Closing of Sale and Purchase.................................. 22
8.2. Deliveries by Seller.......................................... 22
8.3. Deliveries by Buyer........................................... 22
9. INDEMNIFICATION; SURVIVAL............................................ 23
9.1. Indemnification by the Seller................................. 23
9.2. Indemnification by the Buyer.................................. 23
9.3. Procedures for Third Party Claims............................. 24
9.4. Limits for Recovery of Losses................................. 24
9.5. Survival of Representations and Warranties.................... 26
ii
<PAGE>
10. TERMINATION......................................................... 26
10.1. Termination................................................. 26
10.2. Effect of Termination....................................... 27
11. TAX MATTERS......................................................... 27
11.1. Returns and Payments........................................ 27
11.2. Refunds..................................................... 28
11.3. Contests.................................................... 28
11.4. Cooperation and Exchange of Information..................... 29
11.5. Section 338(h)(10) Election................................. 30
11.6. Tax Sharing Agreements...................................... 30
12. MISCELLANEOUS....................................................... 30
12.1. Additional Actions and Documents............................ 30
12.2. No Brokers.................................................. 30
12.3. Expenses.................................................... 31
12.4. Assignment.................................................. 31
12.5. Entire Agreement; Amendment................................. 31
12.6. Waiver...................................................... 32
12.7. Consent to Jurisdiction..................................... 32
12.8. Severability................................................ 32
12.9. Governing Law............................................... 33
12.10. Notices..................................................... 33
12.11. Headings.................................................... 34
12.12. Execution in Counterparts................................... 34
12.13. Limitation on Benefits...................................... 35
12.14. Binding Effect.............................................. 35
12.15. No Drafting Presumption..................................... 35
12.16. Waiver of Jury Trial........................................ 35
12.17. Post-Closing Access......................................... 36
iii
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of February 7, 2000
between DURATHERM GROUP, INC., a Delaware corporation ("Buyer"), and GTSD Sub
III, Inc., a Delaware corporation (the "Seller") (hereinafter, each of Buyer and
Seller shall be referred to individually as a "Party" and collectively as the
"Parties").
WHEREAS, Buyer desires to acquire the equity securities of DuraTherm,
Inc., a Maryland corporation ("DuraTherm"), not owned by it or the Minority
Shareholders;
WHEREAS, Seller owns all of the issued and outstanding equity
securities of DuraTherm not owned by the Minority Shareholders;
WHEREAS, Seller desires to sell and Buyer desires to purchase all of
the issued and outstanding equity securities of DuraTherm owned by Seller at the
price and upon the terms and conditions hereinafter set forth; and
WHEREAS, as an additional inducement for Buyer to enter into and
perform its obligations under this Purchase Agreement, GTS Duratek, Inc., a
Delaware corporation and the parent corporation of Seller ("GTS Duratek"), is
contemporaneously executing and delivering to Buyer a Guaranty Agreement
pursuant to which the payment and performance obligations of Seller under this
Purchase Agreement are guaranteed to Buyer.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. DEFINITIONS
For all purposes of this Purchase Agreement, certain capitalized terms
specified in Exhibit A shall have the meanings set forth in that Exhibit A,
except as otherwise expressly provided.
2. SALE AND PURCHASE OF STOCK
2.1. Sale and Purchase of Stock
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, Seller agrees
to sell to Buyer, and Buyer agrees to purchase from Seller, all of DuraTherm's
shares
<PAGE>
of issued and outstanding preferred stock, par value $0.01 per share (the
"Preferred Stock") owned by Seller at the purchase price specified in Section
2.2 and all of DuraTherm's shares of issued and outstanding common stock, par
value $0.01 per share (the "Common Stock") owned by Seller at the purchase price
specified in Section 2.2.
2.2. Purchase Price
The aggregate Purchase Price for all of DuraTherm's Preferred Stock
and Common Stock owned by Seller shall consist of, subject to adjustment
pursuant to Section 2.3 below:
(i) $8,000,000 in immediately available funds; and
(ii) a $500,000 principal amount subordinated note in the form of
Exhibit B hereto (the "Subordinated Note").
2.3. Purchase Price Adjustment
(a) The Purchase Price will be adjusted only for the following:
(i) upward for the amount that the Seller's outstanding cash
investment in DuraTherm exceeds $4,500,000;
(ii) downward for the amount that the Seller's outstanding cash
investment in DuraTherm is less than $4,500,000;
(iii) if the amount received by DuraTherm on its December 1998
business interruption insurance claim with Traveler's Insurance
Company (Policy No. 849K8108) (the "Business Interruption Insurance
Claim") exceeds $610,000, the Purchase Price will be adjusted upward
by one-half of such excess; and
(iv) if the amount received by DuraTherm on the Business Interruption
Insurance Claim is less than $610,000, the Purchase Price will be
adjusted downward by one-half of such shortfall.
(b) In all cases, the adjustments to the Purchase Price described
above will be reflected in the principal amount of the Subordinated Note and
will not in any way effect the cash portion of the Purchase Price or result in a
refund of the cash received by the Seller at Closing, unless the amount of the
adjustment exceeds the outstanding principal amount of the Subordinated Note,
without regard to the possible increase to the Subordinated Note in the event
that the Subordinated Note is not paid in full within 14 months of the issuance
thereof, and
2
<PAGE>
then only to the extent of such excess (in which case Seller shall refund the
excess amount in cash within 15 days of the final determination of the
adjustment).
(c) For purposes of this Section 2.3, the Seller's outstanding cash
investment in DuraTherm will be determined as of the Closing and will include
the outstanding cash investment balances of equity and debt that have been made
by Seller into DuraTherm or are due to Seller from DuraTherm.
(d) The Parties will estimate the Purchase Price adjustment with
respect to the Seller's outstanding cash investment in DuraTherm at the Closing.
The Seller's outstanding cash investment in DuraTherm will be finally determined
jointly by Buyer and Seller within ninety (90) days after the Closing.
(e) In the event that DuraTherm has not received any proceeds with
respect to the Business Interruption Insurance Claim, as contemplated by Section
2.3(a)(iii) and (iv) above, by December 31, 2000, then Buyer may elect, at its
option, to transfer any right or claim to any of the proceeds from the Business
Interruption Insurance Claim to Seller in exchange for $305,000, which amount
will be applied first to reduce the outstanding principal amount of the
Subordinated Note and any excess thereof will be paid by Seller to Buyer within
15 days of such election. Buyer shall be required to make the election by
providing written notice of such election to Seller by January 15, 2001. In the
event that Buyer does not provide notice of its election in writing to Seller by
January 15, 2001, then this Section 2.3(e) shall be inapplicable and the
provisions of Section 2.3(a)(iii) and (iv) shall govern. In the event that
Buyer makes the election contemplated by this Section 2.3(e) in a timely manner,
then Buyer and its Affiliates waive all right or claim to any proceeds from the
Business Interruption Insurance Claim and any proceeds received thereon by
Buyer, DuraTherm or one of Buyer's Affiliates shall be promptly disbursed to
Seller.
2.4. Payment at the Closing
At the Closing, Buyer shall deliver to Seller the cash portion of the
Purchase Price by wire transfer of immediately available funds and shall deliver
to Seller the Subordinated Note.
3. ADDITIONAL UNDERTAKINGS AND COVENANTS
Buyer, on the one hand, and DuraTherm and Seller, on the other hand,
hereby covenant and agree with each other as follows:
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3.1. Consents and Approvals
(a) The Parties shall take all measures reasonably necessary or
advisable to secure such consents, authorizations and approvals of governmental
authorities and of private persons or entities with respect to the transactions
contemplated by this Purchase Agreement, and to the performance of all other
obligations of such Parties hereunder, as may be required by any applicable
statute or regulation of the United States or any country, state or other
jurisdiction or by any agreement of any kind whatsoever to which Buyer,
DuraTherm or Seller is a party or by which Buyer, DuraTherm or Seller is bound.
(b) The Parties shall (i) cooperate in the filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to applicable statutes, rules, regulations or orders of any
governmental authority in connection with the transactions contemplated by this
Purchase Agreement and (ii) use their respective good faith efforts to cause any
applicable waiting periods thereunder to expire and any objections to the
transactions contemplated hereby to be withdrawn before the Closing.
(c) The Parties agree to use their reasonable best efforts to obtain
all necessary third-party consents, including governmental approvals and permits
required for Buyer to continue to operate DuraTherm's business. Prior to the
Closing, the Parties will continue to maintain DuraTherm's plant, property and
equipment in safe and proper operating condition, and will not permit DuraTherm
to conduct business or transactions (whether commercial or financial) outside of
the usual and ordinary course of its business.
3.2. News Releases
Except as may be otherwise required for compliance with securities
laws and requirements, neither Buyer nor DuraTherm nor Seller shall issue or
approve any news release or other public announcement concerning the
transactions contemplated by this Purchase Agreement without the prior approval
of Buyer and GTS Duratek (which approval shall not be unreasonably withheld);
provided, however, that Buyer, DuraTherm and GTS Duratek shall agree in good
faith on the contents of a press release regarding the transactions contemplated
by this Purchase Agreement for issuance immediately following the Closing.
3.3. Subsequent Events
Seller shall notify Buyer promptly in writing of the occurrence of any
event, or the failure of any event to occur, prior to the Closing that results
in an omission from, or breach of, any of the covenants, representations or
warranties made by or on behalf of DuraTherm or Seller in this Purchase
Agreement, the Disclosure Schedule or any other Document Furnished in connection
with or
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pursuant to this Purchase Agreement, but such notification shall not excuse
breaches of representations, warranties, covenants or agreements disclosed in
such notification.
3.4. Schedule Disclosures
The parties agree that any fact or circumstance disclosed in the
Disclosure Schedule 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
applicability or relevance of such fact or circumstance is reasonably apparent
from the face thereof.
3.5. Transition
For a period of time following the Closing Date as determined by
Buyer, but in no event to exceed 90 days, the Seller or its Affiliates shall
make available their respective personnel to Buyer and its Affiliates for the
purpose of answering inquiries from Buyer and its Affiliates pertaining to the
business and affairs of DuraTherm to the extent that such requested information
is known to Seller and its Affiliates or is available to them (but not Buyer)
without undue effort and expense.
3.6. Indemnification of Directors and Officers
The Buyer shall cause DuraTherm to honor its obligations to indemnify
and advance expenses to each present and former officer or director of DuraTherm
pursuant to its Charter and by-laws and shall not permit the Charter or by-laws
of DuraTherm to be amended for a period of six years in a manner which adversely
affects the indemnification rights of present and former directors and officers
of DuraTherm, except as required by law.
3.7. Confidentiality
Seller acknowledges and agrees that it and its Affiliates may possess
certain data and knowledge of DuraTherm, its business and its operations which
are proprietary in nature and confidential. Seller agrees that neither it nor
any of its Affiliates will, at any time hereafter, use for its own benefit, or
reveal, divulge or make known to any other person, firm, corporation or entity,
any confidential information or trade secrets regarding DuraTherm, its business
and its operations. At the Closing, Seller and its Affiliates shall deliver to
DuraTherm all lists of customers, books, records and all other property
constituting confidential information belonging to DuraTherm. If at any time
Seller or its Affiliates are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoenas or similar
legal process) to disclose any such information, the Seller shall notify Buyer
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immediately and Seller and its Affiliates shall refrain from making such
disclosure so that Buyer may, at its own expense, seek an appropriate protective
order and/or waive compliance with the provisions hereof. If, in the absence of
a protective order or the receipt of a waiver hereunder, in the reasonable
opinion of Seller's counsel, Seller is compelled to disclose such information to
any tribunal or any governmental agency to avoid being liable for contempt or
suffering any other loss or penalty, Seller may disclose such information to
such tribunal or agency without liability hereunder; provided, however, that
Seller shall give Buyer prompt notice of such decision and of the confidential
information so disclosed. Seller shall use its best efforts to prevent its
directors, officers, stockholders, partners, owners, employees, agents,
representatives and Affiliates from violating the provisions of this Section
3.7. For purposes hereof, the term "confidential information" shall include,
but not be limited to, information related to the production, product
specifications, intellectual property, pricing policies, bid strategies, cost
structure, personnel policies, customer and marketing relationships, method or
practice of soliciting business, and business and financial information of
DuraTherm. The restrictions contained in this Section 3.7 shall not extend to
any information which can be demonstrated to have been in the public domain or
thereafter entered the public domain other than through disclosure by the Seller
or its directors, officers, stockholders, partners, owners, employees, agents,
representatives and Affiliates.
3.8. Non-Competition
(a) For a period of three (3) years from the Closing Date, GTS Duratek
or its Affiliates will not startup a new company that engages in the processing
of petroleum or petrochemical-based hazardous waste utilizing indirect-fired
thermal desorption within the following eight states: Texas, Arkansas,
California, Kansas, Louisiana, Mississippi, New Mexico and Oklahoma.
(b) For a period of fifteen (15) months from the Closing Date, GTS
Duratek or its Affiliates will not acquire a company that is in the business of
processing petroleum or petrochemical hazardous waste utilizing an indirect-
fired thermal desorption process from a fixed facility within 275 miles of San
Leon, Texas or in Andrews County, Texas.
(c) For a period of two (2) years from the Closing Date, GTS Duratek
or its Affiliates will not solicit any of the customers with whom DuraTherm
provided services for the two year period prior to the Closing Date for the
purpose of causing such customers to divert their petroleum or petrochemical-
based hazardous waste from DuraTherm to GTS Duratek, its subsidiaries or
Affiliates, except as permitted by Section 3.8(b) above.
(d) For a period of three (3) years from the Closing Date, all
international opportunities developed prior to the Closing Date by DuraTherm, or
GTS Duratek on behalf of DuraTherm, for DuraTherm to provide treatment of
petroleum or petrochemical wastes are the property of Buyer and Seller may not
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compete with Buyer on any of these activities. Those opportunities shall
include, but not be limited to, those listed on Section 3.8(d) of the Disclosure
Schedule.
(e) For a period of three (3) years from the Closing Date, to the
extent that GTS Duratek or its Affiliates identifies petroleum or petrochemical-
based hazardous waste processing opportunities outside of the United States, GTS
Duratek or its Affiliates will provide the first right of offer to DuraTherm to
use DuraTherm's services if such services meet the technical qualifications of
such waste processing operations and are at least as cost-effective as the
alternative waste processing services.
(f) Notwithstanding the other provisions of this Section 3.8 or any
other provision of this Agreement to the contrary, there shall be no limitations
or restrictions affecting GTS Duratek, its subsidiaries or Affiliates relating
to any treatment, processing or disposal of materials determined to be
radioactive by any federal, state or international regulatory authority or
pursuant to an federal, state or international law, statutue, rule or
regulation, regardless of the concurrent presence of petroleum or petrochemical-
based hazardous waste.
3.9. Non-Solicitation of Employees.
For a period of two (2) years following the Closing Date, Seller and
GTS Duratek each agree that neither it nor any of its Affiliates will, directly
or indirectly, solicit for employment or employ any person known to Seller or
GTS Duratek to have been an employee of Buyer or DuraTherm during the preceding
two year period prior to such solicitation or employment. For a period of two
(2) years following the Closing Date, Buyer agrees that neither it nor any of
its Affiliates will, directly or indirectly, solicit for employment or employ
any person known to Buyer to have been an employee of GTS Duratek or Seller
during the preceding two year period prior to such solicitation or employment.
3.10. Breach of Certain Covenants
(a) In the event of any breach of Sections 3.8 or Section 3.9, the
time period of the breached covenant shall be extended for the period of such
breach, in addition to any other remedies to which the non-breaching party may
be entitled. Seller and GTS Duratek each hereby acknowledge and agree that the
territorial, time and other limitations set forth in Sections 3.8 and 3.9 are
reasonable and are required for the protection of Buyer and DuraTherm. In the
event that any such territorial, time or scope or other limitation is deemed to
be unreasonable by a court or other tribunal of competent jurisdiction, Seller
and Buyer agree to the reduction of either or any of said territorial, time or
other limitations to such an area, period or scope as such court or tribunal
shall deem reasonable under the circumstances and thereafter to fully comply
with the provisions of such Sections as so modified.
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(b) The parties hereto acknowledge and agree that the breach of
Sections 3.7 through 3.9 could not be adequately compensated by monetary
damages, and despite any other provision of this Purchase Agreement to the
contrary, the parties hereto agree that injunctive relief and specific
performance shall be appropriate remedies to enforce the provisions of such
Sections. The parties hereto waive any claim or defense that there is an
adequate remedy at law for breach of such Sections; provided, however, that
nothing in this Agreement shall limit the remedies, legal or equitable,
otherwise available and all injunctive remedies shall be in addition to any
remedies available at law or otherwise.
3.11. Access and Information
Prior to the Closing, Seller and its Affiliates will, and will cause
their respective accountants, counsel, consultants, employees and agents to give
Buyer and the Buyer's prospective lenders and investors, and their respective
accountants, counsel, consultants, employees and agents, full access during
normal business hours to, and furnish them with, all Documents relating to
DuraTherm or its business and affairs as the Buyer may from time to time
reasonably request.
3.12. Delivery of Documents
At the Closing, Seller and Seller's Affiliates shall deliver to Buyer
for the benefit of DuraTherm, the originals of all Documents in their possession
or in the possession of third party consultants (such as accountants and
attorneys) relating to the business, operations or affairs of DuraTherm,
including DuraTherm's minute books, stock records, accounting records, and any
files, records and correspondence relating to: customer or supplier contracts;
litigation; Taxes (including Tax returns and work papers); DuraTherm personnel;
regulatory matters, any Plan or Other Arrangement; and correspondence relating
to such matters. No such Documents shall be required to be delivered if the
originals thereof are in the possession of DuraTherm or have been previously
delivered to Buyer or to Buyer's Affiliates, legal counsel or independent
accountants.
3.13. Employee Benefit Plans
From and after the Closing, neither the Seller, GTS Duratek nor their
Affiliates shall incur or be responsible for any additional liabilities or
obligations to or in respect of each employee of DuraTherm arising under the
terms of or in connection with any Plan or Other Arrangement.
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4. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as specifically set forth in the Disclosure Schedule, Seller
represents and warrants (which representation and warranty shall be deemed to
include the disclosure with respect thereto so specified in the Disclosure
Schedule) to Buyer as follows:
4.1. Organization and Standing
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. DuraTherm is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland, and has the full power and authority, corporate or other, to
own, operate and lease its Assets, and to carry on its business as currently
conducted. There is no state, country or territory wherein the absence of
licensing or qualification as a foreign corporation would have a Material
Adverse Effect upon the business of DuraTherm as currently conducted, other than
where so licensed or qualified.
4.2. Subsidiaries
Since November 30, 1995, DuraTherm has had no Subsidiaries and has had
no equity investment or other interest in, nor has DuraTherm made advances or
loans to, any corporation, association, partnership, joint venture or other
entity.
4.3. Charter and Bylaws
DuraTherm has Furnished to Buyer a true and complete copy of the
articles of incorporation, as amended or supplemented to date of DuraTherm (the
"Charter"), as currently in effect, certified as of a recent date by the
Maryland State Department of Assessments and Taxation (the "MSDAT"), and a true
and complete copy of the bylaws of DuraTherm, as currently in effect, certified
by the appropriate corporate secretary. Such certified copies are attached as
exhibits to, and part of, the Disclosure Schedule.
4.4. Capitalization
The authorized capital stock of DuraTherm consists of (i) 75,000
shares of Common Stock, $0.01 par value per share, of which 1,400 shares are
currently issued and outstanding, all of which are duly authorized and validly
issued and outstanding, fully paid and nonassessable and (ii) 25,000 shares of
Preferred Stock, $0.01 par value per share, of which 4,358 shares are currently
issued and outstanding, all of which are duly authorized and validly issued and
outstanding, fully paid and nonassessable. Except as set forth in the
Disclosure Schedule, (i) no
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shares of capital stock of DuraTherm have been reserved for any purpose, (ii)
there are no outstanding securities convertible into or exchangeable for Common
Stock and no outstanding options, rights (preemptive or otherwise), contracts,
agreements, arrangements or warrants to purchase or to subscribe for any shares
of such stock or other securities of DuraTherm and (iii) there are no
outstanding agreements affecting or relating to the voting, issuance, purchase,
redemption, repurchase or transfer of DuraTherm's Common Stock, or any other
securities of DuraTherm, except as set forth in the Disclosure Schedule or as
contemplated hereunder.
4.5. Taxes
(a) Since November 29, 1995, DuraTherm and each Affiliated Group of
which it is or has been a member has (or, in the case of returns becoming due
after the date hereof and on or before the Closing Date, will have prior to the
Closing Date) duly filed all DuraTherm Tax Returns required to be filed by
DuraTherm and each Affiliated Group of which it is or has been a member on or
before the Closing Date with respect to all applicable Taxes, either separately
or as a member of a group of corporations. Each of the DuraTherm Tax Returns is
(or, in the case of returns becoming due after the date hereof and on or before
the Closing Date, will be) true and complete in all material respects.
DuraTherm: (i) has paid all Taxes shown as due on the DuraTherm Tax Returns, or
(ii) has established (or, in the case of amounts becoming due after the date
hereof and prior to the Closing Date, will have paid or established) in the
Financial Statements adequate reserves (in conformity with generally accepted
accounting principles consistently applied) for the payment of such Taxes.
(b) There is no action, suit, proceeding, audit, investigation or
claim pending or, to the knowledge of DuraTherm, threatened in respect of any
Taxes for which DuraTherm is or may become liable, nor has any deficiency or
claim for any such Taxes been proposed, asserted or, to the knowledge of
DuraTherm or Seller, threatened. DuraTherm has not consented to any waivers or
extensions of any statute of limitations with respect to any taxable year of
DuraTherm.
(c) DuraTherm has Furnished to Buyer true and complete copies of all
state and local DuraTherm Tax Returns which relate to tax years with respect to
which the statute of limitations has not expired. Notwithstanding the
foregoing, Seller makes no representation or warranty regarding any
environmental regulatory fine, tax, assessment, fee or penalty with respect to
DuraTherm.
(d) Since November 29, 1995, DuraTherm has not filed a consent under
Code (S)341(f) concerning collapsible corporations. Since November 29, 1995,
DuraTherm has not made any material payments, is not obligated to make any
material payments, or is not a party to any agreement that under certain
circumstances could obligate it to make any material payments that will not be
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deductible under Code (S)280G. DuraTherm has not been a United States real
property holding corporation within the meaning of Code (S)897(c)(2) during the
applicable period specified in Code (S)897(c)(1)(A)(ii).
(e) DuraTherm is a member of the Affiliated Group of which GTS Duratek
is the common parent, and DuraTherm is a member of the selling consolidated
group, of which GTS Duratek is the common parent, within the meaning of Treas.
Reg. Section 1.338(h)(10)-1.
4.6. Pension and Benefit Plans
(a) Except as set forth in the Disclosure Schedule, DuraTherm (i) does
not maintain and has not maintained since November 29, 1995 any Plan or Other
Arrangement, (ii) is not and has not since November 29, 1995 been a party to any
Plan or Other Arrangement or (iii) has no obligations under any Plan or Other
Arrangement.
(b) No Plan is or was a Multiemployer Plan.
(c) No Plan is or was an ESOP.
(d) No Plan is or was a Defined Benefit Plan.
(e) Since November 29, 1995, DuraTherm has made all contributions and
paid all premiums and other payments required by and due under the terms of each
Plan and Other Arrangement and has taken no action (including, without
limitation, actions required by Law) relating to any Plan or Other Arrangement
that will increase Buyer's or DuraTherm's obligation under any Plan or Other
Arrangement. No Plan or Other Arrangement is subject to a retroactive rate
adjustment or loss sharing arrangement.
(f) The Disclosure Schedule sets forth a list of all Qualified Plans.
Since November 29, 1995, all Qualified Plans and any related trust agreements or
annuity agreements (or any other funding Document) comply and have complied with
ERISA, the Code (including, without limitation, the requirements for Tax
qualification described in Section 401 thereof), and all other Laws, except
where the failure to be in compliance would not reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Seller, the trusts established
under such Plans are exempt from federal income taxes under Section 501(a) of
the Code. DuraTherm has received favorable determination letters issued by the
IRS with respect to each Qualified Plan, and DuraTherm has Furnished to Buyer
true and complete copies of all such determination letters and all
correspondence relating to the applications therefor. Since November 29, 1995,
all statements made by or on behalf of DuraTherm to the IRS in connection with
applications for determinations with respect to each Qualified Plan were true
and complete when made and
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continue to be true and complete. To its knowledge, nothing has occurred since
the date of the most recent applicable determination letter that would adversely
affect the tax-qualified status of any Qualified Plan.
(g) Since November 29, 1995, DuraTherm has complied in all material
respects with all applicable provisions of the Code, ERISA, the National Labor
Relations Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act, the Fair Labor Standards Act, the Securities Act, the
Securities Exchange Act of 1934, and all other Laws pertaining to the Plans,
Other Arrangements and other employee or employment related benefits, and all
premiums and assessments relating to all Plans or Other Arrangements, except
where the failure to be in compliance would not reasonably be expected to have a
Material Adverse Effect. Since November 29, 1995, each Plan and Other
Arrangement has been maintained and administered in all material respects with
its terms and any related documents. DuraTherm has no liability for any
delinquent contributions within the meaning of Section 515 of ERISA (including,
without limitation, related attorneys' fees, costs, liquidated damages and
interest) or for any arrearages of wages. DuraTherm has no pending or, to
Seller's knowledge, threatened unfair labor practice charges, contract
grievances under any collective bargaining agreement, other administrative
charges, claims, grievances, audits, investigations or lawsuits before any
court, governmental agency, regulatory body, or arbiter arising under any Law
governing any Plan or Other Arrangement, and there exist no facts that could
give rise to such a claim.
(h) No Plan promises or provides post-retirement medical, life
insurance or other benefits due now or in the future to current, former or
retired employees of DuraTherm. The execution and performance of the
transactions contemplated by this Purchase Agreement will not constitute an
event under any Plan or Other Arrangement that will result in any payment
(whether as severance pay or otherwise), acceleration, vesting or increase in
benefits with respect to any current, former or retired employees of DuraTherm,
other than the Minority Shareholders.
4.7. Binding Obligation
This Purchase Agreement constitutes a valid and binding obligation of
the Seller, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to the
rights of creditors generally. Each Document to be executed by Seller pursuant
hereto, when executed and delivered in accordance with the provisions hereof,
will be a valid and binding obligation of Seller, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to the rights of creditors generally.
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4.8. Title to Preferred and Common Stock
Seller is, and on the Closing Date will be, the lawful owner of all
of the outstanding shares of Preferred Stock and 1,120 outstanding shares of
Common Stock, and has, and on the Closing Date will have, good, valid and
marketable title, free and clear of all Encumbrances, to all of the outstanding
shares of Preferred Stock, and the 1,120 outstanding shares of Common Stock with
full right and lawful authority to sell and transfer the shares to Buyer
pursuant to this Purchase Agreement. Seller is the only shareholder of DuraTherm
other than the Minority Shareholders.
4.9. Authority and Capacity
The execution, delivery and performance of this Purchase Agreement and
all other Documents contemplated by this Purchase Agreement have each been duly
authorized by all necessary corporate action on the part of Seller and GTS
Duratek, including al necessary action by the shareholders of Seller. The
Seller has full and unrestricted right, capacity, power and authority (corporate
or otherwise) to execute this Purchase Agreement and all other Documents
contemplated hereby and to consummate the transactions contemplated hereby and
thereby.
4.10. Absence of Violation
The execution, delivery and performance by the Seller of this Purchase
Agreement and all other Documents contemplated hereby, the fulfillment of and
the compliance with the respective terms and provisions hereof and thereof, and
the consummation of the transactions contemplated hereby and thereby, do not and
will not (a) conflict with, or violate any provision of, any Law having
applicability to the Seller or GTS Duratek; or (b) conflict with, or result in
any breach of, or constitute a default under, any agreement to which the Seller
or GTS Duratek is a party.
4.11. Transfer of Title
Upon payment for the shares of Preferred Stock and Common Stock to be
purchased from Seller pursuant to the terms of this Purchase Agreement, Buyer
will acquire good, valid and marketable title thereto, free and clear of all
Encumbrances, except any Encumbrances created by the Buyer.
4.12. Financial Statements
The Seller has furnished to the Buyer complete and correct copies of
the unaudited balance sheets and related statements of income of DuraTherm for
the years ending December 31, 1996 through 1999 (collectively, the "Financial
Statements"). The Financial Statements present fairly in all material respects
the
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financial condition and results of operations of DuraTherm as of the dates and
for the periods indicated. The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles ("GAAP"),
consistently applied, except that the Financial Statements have been presented
without any notes thereto.
4.13. Liabilities
DuraTherm has no liabilities or obligations, whether absolute,
accrued, contingent or otherwise (including, without limitation, liabilities for
federal, state and local income, franchise, unemployment and other Taxes or
governmental charges or assessments), except for (i) liabilities reflected in or
reserved for in the Financial Statements; (ii) liabilities incurred in the
ordinary course of business since the date of the most recent balance sheet
included in the Financial Statements which are not delinquent, and which have
not had and will not have a Material Adverse Effect; (iii) any liabilities of
which the Buyer or its Affiliates are aware or have knowledge of, or (iv) any
liabilities caused by the Buyer or itsAffiliates that the Seller has no
knowledge of. All indebtedness of DuraTherm that is owed to Seller or its
Affiliates has been capitalized pursuant to Section 7.2 hereof. For purposes of
this Section, the Buyer's Affiliates shall include, without limitation, all of
the Minority Shareholders and all of the other employees of DuraTherm (other
than Robert Prince, Robert Shawver, Paul Deltete, Craig Bartlett, Diane Brown,
Diane Leviski and Chuck Stanley).
4.14. Liens
DuraTherm has good and marketable title to its Assets free and clear
of all Encumbrances, except Permitted Encumbrances, and the continued use by
DuraTherm of its Assets will not infringe upon any rights of others (except with
respect to DuraTherm's patent and intellectual property rights as to which
Seller makes no representations or warranties).
4.15. Legal Proceedings
There is no litigation or governmental investigation or tax audit
pending or, to Seller's knowledge, threatened relating to DuraTherm, Seller's
ownership of capital stock of DuraTherm, or the transactions contemplated by
this Purchase Agreement.
4.16. Broker's Fees
Neither DuraTherm nor Buyer will be liable for any broker or
investment banker's fees, including any fees owed to First Security Van Kasper.
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4.17. Absence of Certain Changes; Absence of Certain Agreements.
(a) To the knowledge of Seller, since the date of the most recent
balance sheet included in the Financial Statements (the "Balance Sheet Date"),
DuraTherm has conducted its business in the ordinary course consistent with past
practice. To the knowledge of Seller, since the Balance Sheet Date, there has
not occurred: (a) any change, event or condition (whether or not covered by
insurance) that has resulted in a Material Adverse Effect; (b) any acquisition,
sale or transfer by DuraTherm of any material Asset, other than in the ordinary
course of business consistent with past practice; (c) any change in DuraTherm's
accounting policies, methods or practices (including any change in depreciation
or amortization policies or rates; (d) any revaluation of DuraTherm's Assets for
financial accounting or Tax purposes; (e) any material contract entered into,
other than in the ordinary course of business, or any material amendment or
termination of, or default under, any material contract to which DuraTherm is a
party or by which its Assets are bound; and (f) no agreement or arrangement
exists by DuraTherm, Seller or GTS Duratek to do any of the things described in
clauses (a) through (e) above, except as contemplated by this Purchase
Agreement.
(b) To the knowledge of Seller, there is no agreement, covenant not to
compete, confidentiality agreement, standstill agreement, judgment, injunction,
order or decree binding on DuraTherm or its Assets which has or could reasonably
be expected to have the effect of prohibiting or impairing any current or future
business practice of DuraTherm or the future acquisition by DuraTherm of any
property or business. Except as set forth on the Disclosure Schedule, DuraTherm
is not a party to any contract or agreement with Seller, GTS Duratek or any of
their respective Affiliates.
(c) To the knowledge of Seller, none of the Minority Shareholders have
intentionally obligated GTS Duratek or its Affiliates (other than DuraTherm) to
any matter outside of the scope of their employment with DuraTherm.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1. Organization and Standing
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the full and
unrestricted right, capacity, power and authority (corporate or otherwise) to
carry on its business as currently conducted, to enter into this Purchase
Agreement and all Documents contemplated hereby and to carry out the
transactions contemplated hereby and thereby.
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5.2. Authorization
The execution, delivery and performance by Buyer of this Purchase
Agreement and all other Documents contemplated hereby, the fulfillment of and
the compliance with the respective terms and provisions hereof and thereof, and
the consummation by Buyer of the transactions contemplated hereby and thereby
have been duly authorized by its Board of Directors and, if necessary,
stockholders, (which authorization has not been modified or rescinded and is in
full force and effect), and will not: (a) conflict with, or violate any
provision of, any term or provision of the certificate or articles of
incorporation or bylaws of Buyer, (b) conflict with, or violate any provision
of, any Law having applicability to the Seller, or (c) conflict with, or result
in any breach of, or constitute a default under, any agreement to which Buyer is
a party or by which Buyer is bound. No other corporate action is necessary for
Buyer to enter into this Purchase Agreement and all other Documents contemplated
hereby and to consummate the transactions contemplated hereby and thereby.
5.3. Binding Obligation
This Purchase Agreement constitutes a valid and binding obligation of
Buyer, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to the
rights of creditors generally. Each Document to be executed by Buyer pursuant
hereto, when executed and delivered in accordance with the provisions hereof,
shall be a valid and binding obligation of Buyer, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to the rights of creditors generally.
5.4. No Registration Under the Securities Act
Buyer understands that the shares of Preferred Stock and Common Stock
to be purchased by it under this Purchase Agreement have not been registered
under the Securities Act, in reliance upon exemptions contained in the
Securities Act or interpretations thereof, and cannot be offered for sale, sold
or otherwise transferred unless such Preferred Stock or Common Stock being
acquired hereunder subsequently is so registered or qualifies for exemption from
registration under the Securities Act.
5.5. Acquisition for Investment
The Preferred Stock and Common Stock are being acquired under this
Purchase Agreement by Buyer in good faith solely for its own account, for
investment and not with a view toward resale or other distribution within the
meaning of the Securities Act. Neither the Preferred Stock nor Common Stock
will
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be offered for sale, sold or otherwise transferred by Buyer without either
registration or exemption from registration under the Securities Act.
5.6. Evaluation of Merits and Risks of Investment; Access to
Information
Buyer has such knowledge and experience in financial and business
matters that Buyer is capable of evaluating the merits and risks of Buyer's
investment in such Preferred Stock and Common Stock being acquired hereunder.
Buyer understands and is able to bear any economic risks associated with such
investment (including, without limitation, the necessity of holding such
Preferred Stock or Common Stock for an indefinite period of time, inasmuch as
such Preferred Stock or Common Stock has not been registered under the
Securities Act). Due to Buyer's or its Affiliates' relationship with DuraTherm
or in the course of its due diligence, Buyer has had access to all information
regarding DuraTherm which it deems to be reasonably relevant and material to its
decision to purchase the securities from the Seller pursuant to this Purchase
Agreement.
5.7. Financial Ability to Perform
Buyer has non-binding commitments from proposed lenders and investors
which Buyer reasonably believes will result in it having at the Closing
available cash funds sufficient to consummate the transactions contemplated by
this Purchase Agreement.
5.8. Legal Proceedings
There is no litigation or governmental investigation pending or, to
Buyer's knowledge, threatened against Buyer or DuraTherm relating to the
transactions contemplated by this Purchase Agreement.
5.9. Broker's Fees
Seller will not be liable for any broker or investment banker's fees,
including any fees owed to WND'Angelo Associates, Inc.
5.10. Liabilities
To Buyer's knowledge, DuraTherm has no liabilities or obligations,
whether absolute, accrued, contingent or otherwise, except for (i) liabilities
reflected in or reserved for in the Financial Statements; or (ii) liabilities
incurred in the ordinary course of business since the date of the most recent
balance sheet included in the Financial Statements which are not delinquent, and
which have not had and will not have a Material Adverse Effect. To their
knowledge, none of the Minority
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Shareholders have intentionally obligated GTS Duratek or its Affiliates (other
than DuraTherm) to any matter outside of the scope of their employment with
DuraTherm.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Purchase Agreement are subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of Seller to carry out the provisions of this Purchase
Agreement, unless such failure is agreed to in writing by Seller:
6.1. Representations and Warranties
The representations and warranties made by Buyer in this Purchase
Agreement or in any Document Furnished by Buyer pursuant to this Purchase
Agreement shall be true and complete when made and on and as of the Closing Date
as though such representations and warranties were made on and as of such date,
except for any changes expressly permitted by this Purchase Agreement.
6.2. Performance
Buyer shall have performed and complied with all agreements and
conditions required by this Purchase Agreement to be performed or complied with
by Buyer prior to the Closing Date.
6.3. Legal Proceedings
There is no litigation or governmental investigation pending or, to
Seller's knowledge, threatened against Seller or DuraTherm relating to the
transactions contemplated by this Purchase Agreement.
6.4. Buyer's Certificate
Buyer shall have delivered to Seller a certificate, dated as of the
Closing Date and executed by a senior officer of Buyer, certifying to the
fulfillment of the conditions set forth in Sections 6.1 through 6.3.
6.5. Documents at Closing
All documents required to be furnished by Buyer to Seller prior to or
at the Closing shall have been so furnished.
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6.6. Consents
(a) Buyer shall have received all material consents, authorizations
and approvals of governmental and private parties which are required to be
obtained in order to consummate the transactions contemplated hereby.
(b) DuraTherm and Seller shall have received all material consents,
authorizations and approvals of governmental and private parties which are
required to be obtained in order to consummate the transactions contemplated
hereby.
6.7. Termination of Certain Agreements and Release
The (i) Stockholders' Agreement; (ii) Agreement by and among DuraTherm
and Jim S. Hogan dated as of November 29, 1995; (iii) Employment Agreement by
and between DuraTherm and Mark B. Hogan dated as of November 29, 1995; (iv)
Employment Agreement by and between DuraTherm and Barry K. Hogan dated as of
November 29, 1995; (v) Employment Agreement by and between DuraTherm and Sam J.
Lucas III dated as of November 29, 1995; (vi) Guaranty Agreement by GTS Duratek
for the benefit of Jim S. Hogan, Mark B. Hogan, Barry K. Hogan and Sam J. Lucas
III dated as of November 29, 1995; and (vii) the Technology License Agreement by
and among GTS Duratek, DuraTherm and Jim S. Hogan dated as of November 29, 1995
(the "1995 License Agreement") each shall have been terminated at or prior to
the Closing by mutual agreement of the parties thereto and (i) DuraTherm, GTS
Duratek, Seller and each of their Affiliates and (ii) the Minority
Shareholdersshall have been released from any and all obligations and
liabilities under such agreements or otherwise other than as may arise under
this Purchase Agreement or with respect to salaries, benefits and other
employment compensation payable to the Minority Stockholders up to the Closing
Date and any accrued but unpaid license fees under the 1995 License Agreement up
to the Closing Date.
6.8. License Agreement
DuraTherm and Jim S. Hogan shall have executed and delivered to Seller
the Technology License Agreement in the form of Exhibit C hereto.
6.9. Opinion of Buyer's Counsel
Seller shall have received an opinion of Porter & Hedges L.L.P.,
counsel to Buyer, dated as of the Closing Date, to the effect and substantially
in the form of Exhibit D (opinion to address due authorization, execution and
delivery of Purchase Agreement only).
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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Purchase Agreement are subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of Buyer to carry out the provisions of this Purchase Agreement,
unless such failure is agreed to in writing by Buyer:
7.1. Intellectual Property Rights
The Technology License Agreement dated November 29, 1995 by and among
Seller, DuraTherm and Jim S. Hogan (the "Technology License Agreement") shall be
terminated effective as of the Closing Date. All other intellectual property
rights that are necessary for DuraTherm's business, other than those covered by
the Technology License Agreement, that are owned by Seller or any of its
Affiliates (other than DuraTherm), are hereby licensed by Seller or its
Affiliates to DuraTherm on a perpetual, royalty-free, non-exclusive basis.
7.2. Capitalization of Indebtedness
Immediately prior to the Closing, Seller and its Affiliates will capitalize
any indebtedness owed to them by DuraTherm into additional shares of DuraTherm's
Common Stock.
7.3. Representations and Warranties
The representations and warranties made by Seller in this Purchase
Agreement and the statements contained in the Disclosure Schedule and Exhibits
attached hereto or in any Document Furnished by Seller pursuant to this Purchase
Agreement shall be true and complete when made, and on and as of the Closing
Date as though such representations and warranties were made on and as of such
date, except for any changes expressly permitted by this Purchase Agreement.
7.4. Performance
Seller shall have performed and complied with all agreements and
conditions required by this Purchase Agreement to be performed or complied with
prior to the Closing Date.
7.5. Legal Proceedings
No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently settled, dismissed or
otherwise terminated) which is reasonably expected to restrain, prohibit or
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invalidate the transactions contemplated by this Purchase Agreement other than
an action or proceeding instituted or threatened by Buyer.
7.6. Officer's Certificate
Seller shall have delivered to Buyer a certificate, dated as of the
Closing Date and executed by a senior officer of Seller, certifying to the
fulfillment of the conditions specified in Sections 7.1 through 7.5.
7.7. Opinion of Seller's Counsel
Buyer shall have received an opinion of Hogan & Hartson L.L.P.,
counsel to Seller, dated as of the Closing Date, to the effect and substantially
in the form of Exhibit E.
7.8. Documents at Closing
All documents required to be Furnished by Seller to Buyer prior to or
at the Closing shall have been so Furnished.
7.9. Consents
(a) Buyer shall have received all material consents, authorizations
and approvals of governmental and private parties which are required to be
obtained in order to consummate the transactions contemplated hereby.
(b) DuraTherm and Seller shall have received all material consents,
authorizations and approvals of governmental and private parties which are
required to be obtained in order to consummate the transactions contemplated
hereby.
7.10. Resignations of Directors and Officers
The existing officers and directors of DuraTherm shall have submitted
resignations to be effective upon the Closing.
7.11. Financing for Acquisition
Buyer shall have obtained financing for the Purchase Price and working
capital from the sources, and on substantially the same terms, set forth in non-
binding commitment letters received from such sources, copies of which have been
supplied to Seller.
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8. CLOSING
8.1. Closing of Sale and Purchase
Subject to the terms and conditions of this Purchase Agreement, the
Closing shall take place at the offices of Hogan & Hartson L.L.P., 111 S.
Calvert Street, Suite 1600, Baltimore, Maryland 21202 on the Closing Date.
8.2. Deliveries by Seller
At the Closing, Seller shall deliver to Buyer the following:
(a) certificates representing the shares of Preferred Stock being sold
to Buyer pursuant to Section 2.1, duly endorsed in blank or with duly executed
stock powers attached;
(b) certificates representing the shares of Common Stock being sold
to Buyer pursuant to Section 2.1, duly endorsed in blank or with duly executed
stock powers attached;
(c) the certificate required by Section 7.6;
(d) an opinion of Hogan & Hartson L.L.P., counsel for Seller, dated as
of the Closing Date, to the effect and substantially in the form of Exhibit E,
as required by Section 7.7; and
(e) the Charter, bylaws, minute books and stock books of DuraTherm and
all other books and records reasonably requested by Buyer;
(f) duly-executed resignations of each of the directors and officers
of DuraTherm;
(g) assignment to Buyer of the lockbox accounts of DuraTherm where
payments owed to DuraTherm are sent; and
(h) such other Documents as Buyer may reasonably request.
8.3. Deliveries by Buyer
At the Closing, Buyer shall deliver the following to Seller:
(a) the cash portion of the Purchase Price by wire transfer of
immediately available funds;
(b) the Subordinated Note;
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(c) a certified copy of the resolutions adopted by the Board of
Directors of Buyer authorizing the transactions contemplated by
this Purchase Agreement;
(d) the certificate required by Section 6.4;
(e) the termination and release agreements contemplated by
Section 6.7;
(f) an opinion of Porter & Hedges L.L.P., counsel for Buyer, dated as
of the Closing Date, to the effect and substantially in the form
of Exhibit D, as required by Section 6.9; and
(g) such other Documents as Seller may reasonably request.
9. INDEMNIFICATION; SURVIVAL
9.1. Indemnification by the Seller
The Seller hereby covenants and agrees that it shall indemnify the
Buyer and its stockholders, officers, directors, employees, agents and
Affiliates 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 fees and expenses) actually suffered or incurred by them
(hereinafter, a "Loss"), arising out of or resulting from (i) the breach of any
representation or warranty by the Seller contained in this Purchase Agreement or
(ii) the breach of any covenant or agreement by the Seller contained in this
Purchase Agreement. Notwithstanding anything in this Purchase Agreement to the
contrary, the parties agree that for purposes of determining whether an
indemnified breach by Seller of any representation or warranty has occurred and
for purposesof determining the amount of indemnification for any Loss to which
Buyer is entitled under this Section 9, all qualifications of, or limitations
on, Seller's representations and warranties with respect to, or based on,
materiality, Material Adverse Effect, immateriality or similar limitations shall
be disregarded in view of the parties' agreement to the limits for recovery of
Losses contained in Section 9.4.
9.2. Indemnification by the Buyer
The Buyer hereby covenants and agrees that it shall indemnify the
Seller and its stockholders, officers, directors, employees, agents and
Affiliates and hold each of them harmless against and with respect to any and
all Losses, arising out of or resulting from (i) the breach of any
representation or warranty by the Buyer contained in this Purchase Agreement;
(ii) the breach of any covenant or
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agreement by the Buyer contained in this Purchase Agreement; or (iii) the
business or operations of DuraTherm after the Closing Date.
9.3. 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 Section 9 (the "Indemnitee")
that, in the judgment of such Indemnitee, may result in the incurrence of such
Indemnitee of Losses for which such Indemnitee would be entitled to
indemnification pursuant to this Purchase 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 acknowledgement 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 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, which shall not be
unreasonably withheld, conditioned or delayed; provided, however, that if
Indemnitor fails or refuses to acknowledge Indemnitee's right to indemnity with
respect to such claim or to assume and prosecute the defense of the claim in
accordance with this Purchase Agreement, the Indemnitee shall be under no
obligation to defend such claim and shall be entitled to settle or compromise
such claim in good faith without Indemnitor's consent, and such settlement or
compromise so effected shall not in any way prevent or limit any entitlement of
Indemnitee to indemnity under this Purchase Agreement.
9.4. Limits for Recovery of Losses
(a) Notwithstanding anything herein to the contrary, Seller shall not
be liable for any Losses of the Buyer or its stockholders, officers, directors,
employees, agents or Affiliates under this Section 9 unless and until (i) the
Loss for each individual matter, item or claim exceeds $5,000 (such excess over
$5,000 being the "Threshold Losses" for such matter, item or claim) and (ii) the
aggregate
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amount of all Threshold Losses hereunder by such persons collectively equals or
exceeds $200,000, in which event Seller shall be liable for all Threshold Losses
in the aggregate greater than $200,000. Notwithstanding anything herein to the
contrary, in no event shall the Seller be required to indemnify and hold
harmless the Buyer or its stockholders, officers, directors, employees, agents
or Affiliates for the amount, if any, by which the aggregate amount of such
Threshold Losses hereunder exceeds $4,000,000, provided that all claims for
indemnification for Threshold Losses against Seller hereunder which are deemed
final either by (i) written agreement of the Seller or (ii) a final, non-
appealable adjudication shall first be applied to offset the outstanding
principal amount of the Subordinated Note.
(b) Notwithstanding anything herein to the contrary, Buyer shall not
be liable for any Losses of the Seller or its stockholders, officers, directors,
employees, agents or Affiliates under this Section 9 unless and until (i) the
Loss for each individual matter, item or claim exceeds $5,000 (such excess over
$5,000 being the "Threshold Losses") for such matter, item or claim) and (ii)
the aggregate amount of all Threshold Losses hereunder by such persons
collectively equals or exceeds $200,000, in which event Buyer shall be liable
for all Threshold Losses in the aggregate greater than $200,000.
Notwithstanding anything herein to the contrary, in no event shall Buyer be
required to indemnify and hold harmless the Seller or its stockholders,
officers, directors, employees, agents or Affiliates for the amount, if any, by
which the aggregate amount of such Threshold Losses hereunder exceeds
$1,500,000.
(c) Notwithstanding anything in this Purchase Agreement to the
contrary, Seller makes no representation or warranty and shall not indemnify
Buyer or its stockholders, officers, directors, employees, agents and Affiliates
for any matter relating to (i) the patents and other intellectual property
rights owned or used by DuraTherm and (ii) any environmental regulatory fine,
tax, assessment, fee or penalty imposed on DuraTherm.
(c) Notwithstanding anything in this Purchase Agreement to the
contrary, the Seller shall not be liable for any Losses of Buyer or its
stockholders, officers, directors, employees, agents or Affiliates under this
Purchase Agreement for breaches of representations or warranties which either
(i) relate to matters over which the Buyer or its stockholders, officers,
directors, employees, agents or Affiliates exercised day-to-day control prior to
Closing, it being acknowledged and agreed by the parties that none of such
Persons exercised day-to-day control over DuraTherm's accounting matters, (ii)
were known by the Buyer or its stockholders, officers, directors, employees,
agents or Affiliates prior to the Closing, (iii) relate to the patents and other
intellectual property rights owned or used by DuraTherm, or (iv) relate to any
environmental regulatory fine, tax, assessment, fee or penalty imposed on
DuraTherm. For purposes of this Section, "control" means actual control
exercised by a Person, and does not have the more expansive meaning
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ascribed to the term in Exhibit A. For purposes of this Section, the Buyer's
Affiliates shall include, without limitation, all of the Minority Shareholders
and all of the other employees of DuraTherm (other than Robert Prince, Robert
Shawver, Paul Deltete, Craig Bartlett, Diane Brown, Diane Leviski and Chuck
Stanley).
(d) The amount of any Losses incurred by a party entitled to
indemnification hereunder shall be reduced by the net amount of the tax benefits
actually realized by such party or any of its Affiliates by reason of such Loss
but shall be increased by the amount of any Tax the indemnified party would be
required to pay as a result of the receipt of any indemnity payment with respect
to such Loss.
(e) This Section 9 provides the sole and exclusive remedy of the
parties and their Affiliates for breach of this Purchase Agreement; provided,
however, that Buyer and its Affiliates also shall be entitled to exercise the
rights and remedies set forth in the Parent Guaranty. In furtherance of the
foregoing, each party hereby waives, from and after the Closing, to the fullest
extent permitted under applicable law, any and all rights, claims and causes of
action it or any of its Affiliates may have against the other parties relating
to the subject matter of this Purchase Agreement arising under or based upon any
federal, state or local law, ordinance, rule or regulation or otherwise.
9.5. Survival of Representations and Warranties
All representations and warranties made pursuant to or in connection
with this Purchase Agreement shall survive the date hereof, but shall terminate
eighteen (18) months after the date hereof; provided, however, 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 prior to such date. No
claim for indemnification may be asserted by a party against another party under
this Section 9 for a breach of a representation or warranty after the expiration
of such survival period pursuant to the preceding sentence.
10. TERMINATION
10.1. Termination
This Purchase Agreement may be terminated at any time before the
Closing Date under any one or more of the following circumstances:
(a) by the mutual consent of the parties hereto;
(b) by Buyer, by written notice of termination delivered to Seller, if
any of the conditions set forth in Section 7 have not been fulfilled by February
15,
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2000, and such failure to fulfill conditions is not the result solely of the
necessity of obtaining government approvals or satisfying governmental
requirements;
(c) by Seller, by written notice of termination delivered to Buyer, if
any of the conditions set forth in Section 6 have not been fulfilled by February
15, 2000, and such failure to fulfill conditions is not the result solely of the
necessity of obtaining government approvals or satisfying governmental
requirements; and
(d) by Buyer or Seller, by written notice of termination to the other
parties hereto, if the Closing has not occurred by March 1, 2000.
10.2. Effect of Termination
In the event this Purchase Agreement is terminated as provided in this
Section 10, this Purchase Agreement shall forthwith become wholly void and of no
effect, and the parties shall be released from all future obligations hereunder;
provided, however, that the provisions of Section 12.3 relating to the payment
of expenses, shall not be extinguished but shall survive such termination. The
parties hereto shall have any and all remedies to enforce such obligations
provided at law or in equity (including, without limitation, specific
performance).
11. TAX MATTERS
11.1. Returns and Payments
The Seller shall prepare and file or otherwise furnish in proper form
to the appropriate governmental authority (or cause to be prepared and filed or
so furnished) when due (taking into account any extension of a required filing
date) all Tax returns, reports and forms ("Returns") relating to DuraTherm with
respect to any taxable period ending on or before the Closing Date and the Buyer
shall do the same with respect to any taxable period ending after the Closing
Date. Seller will include the income of DuraTherm (including any deferred
income triggered into income by Reg. (S)1.1502-13 and Reg. (S)1.1502-14 and any
excess loss accounts taken into income under Reg. (S)1.1502-19) on Seller's
consolidated federal income Tax Returns for all periods up to and including the
Closing Date and pay any federal income Taxes attributable to such income.
Seller shall indemnify Buyer for any Taxes of any Person other than DuraTherm
arising under Reg. (S)1.1502-6 (or any similar provision of state, local or
foreign law). Any Returns prepared by Buyer that include periods beginning
prior to and ending on or after the Closing Date shall be prepared on a basis
consistent with the last previous such Returns, unless the Seller agrees that
there is a reasonable basis for a changed position. The Seller shall pay or
cause to be paid when due and payable all Taxes with respect to DuraTherm for
any taxable period ending on or before the Closing Date, and the Buyer shall so
pay or cause to be paid all Taxes for any taxable period after the
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Closing Date. Taxes for any period that begins before the Closing Date and ends
after the Closing Date shall be allocated between the Seller and the Buyer by
treating the Closing Date as the end of the Seller's tax year and the day after
the Closing Date as the beginning of the Buyer's tax year. Notwithstanding the
foregoing or anything in this Purchase Agreement to the contrary, Seller's
liability for any Taxes with respect to DuraTherm pursuant to this Section 11
shall be in proportion to its ownership interest in the outstanding shares of
Common Stock of DuraTherm as of the Closing Date and Seller shall only be
required to indemnify Buyer for such proportionate share of any Taxes. With
respect to any Return required to be filed by the Buyer with respect to
DuraTherm and as to which an amount of Tax is allocable to the Seller, the Buyer
shall provide to the Seller and its authorized representatives a copy of such
completed Return and a statement certifying the amount of Tax shown on such
Return that is allocable to the Seller, together with appropriate supporting
information and schedules at least fifteen (15) days prior to the due date
(including any extension thereof) for the filing of such Return, and the Seller
and its authorized representatives shall have the right to review and comment on
such Return and statement prior to the filing of such Return. Buyer shall not
file nor permit to be filed any amended Returns of DuraTherm with respect to any
tax period ending on or before or including the Closing Date. Buyer agrees that
it will not, and will not permit any other person to take any action or omit to
take any action on or after the Closing Date that could result in any increased
liability for any Tax on the part of the Seller.
11.2. Refunds
Any Tax refund (including any interest with respect thereto) shall be
for the account of the party liable for the related Taxes under this Purchase
Agreement and any party who receives a refund that is for the account of another
party shall promptly forward such refund to the other party.
11.3. Contests
(a) After the Closing, the Buyer shall promptly notify the Seller in
writing of any written notice of a proposed assessment or claim in an audit or
administrative or judicial proceeding of the Buyer or DuraTherm that relates to
a Tax Return filed, or required to be filed, by the Seller pursuant to Section
11.1. The failure of the Buyer to give such notice on a timely basis shall
relieve the Seller of any liability which the Seller would otherwise have under
this Purchase Agreement for any additional Taxes resulting from resolution of
such proceeding to the extent that the Seller has been prejudiced by such
failure.
(b) In the case of an audit or administrative or judicial proceeding
that relates to periods ending on or before the Closing Date, the Seller shall
have the right at its expense to participate in and control the conduct of such
audit or proceeding but only to the extent that such audit or proceeding relates
to a potential
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adjustment for which the Seller could have liability under this Purchase
Agreement. With respect to issues relating to a potential adjustment for which
both the Seller and the Buyer or DuraTherm could be liable, (i) each party may
participate in the audit or proceeding and (ii) the audit or proceeding shall be
controlled by that party which would bear the burden of the greater portion of
the sum of the adjustment and any corresponding adjustments that may reasonably
be anticipated for future Tax periods.
(c) Neither the Buyer nor the Seller shall enter into any compromise
or agree to settle any claim pursuant to any Tax audit or proceeding which would
adversely affect the other party for such year or a subsequent year without the
written consent of the other party, which consent may not be unreasonably
withheld. The Buyer and the Seller agree to cooperate, and the Buyer agrees to
cause DuraTherm to cooperate, in the defense against or compromise of any claim
in any audit or proceeding.
(d) If the Seller would have liability under this Purchase Agreement
in respect of an adjustment which makes allowable to Buyer or DuraTherm any
deduction, amortization, exclusion from income or other allowance (a "Tax
Benefit") which would not, but for such adjustment, be allowable, the value of
such Tax Benefit shall be taken into account as a reduction to the Seller's
liability.
11.4. Cooperation and Exchange of Information
The Seller and the Buyer will provide each other with such cooperation
and information as either of them reasonably may request of the other in filing
any Return or claim for refund, determining a liability for Taxes or a right to
a refund of Taxes, participating in or conducting any audit or other proceeding
in respect of Taxes or making representations to or furnishing information to
parties subsequently desiring to purchase any of DuraTherm or any part of its
business from the Buyer. Such cooperation and information shall include
providing copies of relevant Returns or portions thereof, together with
accompanying schedules, related work papers, and documents relating to rulings
or other determinations by Tax authorities, as well as signing and delivering
powers of attorney, information authorization, closing or settlement agreements,
and all other necessary or appropriate documents. Each of the Seller and the
Buyer shall retain all Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of DuraTherm for each
taxable period first ending after the Closing Date and for all prior taxable
periods until the later of (i) the expiration of the statute of limitations of
the taxable periods to which such Returns and other documents relate, without
regard to extensions except to the extent notified by the other party in writing
of such extensions for the respective Tax periods, or (ii) seven years following
the due date (without extension) for such Returns.
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11.5. Section 338(h)(10) Election
(a) At Buyer's option, GTS Duratek and Seller will join with Buyer in
making an election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local, or foreign tax law) (collectively a "Section
338(h)(10) Election") with respect to the purchase and sale of the stock of
DuraTherm hereunder. Except as set forth in the following sentence, Seller will
pay any Tax attributable to the making of the Section 338(h)(10) Election and
will indemnify Buyer, DuraTherm, and its Subsidiaries against any claims arising
out of any failure to pay any such Tax. Buyer will cause DuraTherm to pay any
Texas franchise tax attributable to the Section 338(h)(10) Election with respect
to the purchase and sale of the stock of DuraTherm hereunder and Buyer will
indemnify Seller, GTS Duratek and their Affiliates against any claims arising
out of any failure to pay such tax. The parties believe the federal income tax
deduction for such Texas franchise tax shall be claimed by Buyer's Affiliated
Group, and agree to report such deduction on this basis.
(b) The Parties agree that the Consideration and the liabilities of
DuraTherm (plus other relevant items) will be allocated to the assets of
DuraTherm for all purposes (including Tax and financial accounting purposes) in
a manner consistent with the fair market values of such assets. Buyer,
DuraTherm and their Affiliates and Seller will file all Tax Returns (including
amended returns and claims for refund) and information reports in a manner
consistent with such values.
11.6. Tax Sharing Agreements
Any tax sharing agreement between Seller and DuraTherm is terminated
as of the Closing Date and will have no further effect for any taxable year
(whether the current year, a future year, or a past year).
12. MISCELLANEOUS
12.1. Additional Actions and Documents
Each of the parties hereto hereby agrees to take or cause to be taken
any further actions, to execute, deliver and file or cause to be executed,
delivered and filed any further Documents, and will obtain the consents, as may
be necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Purchase Agreement.
12.2. No Brokers
With the exception of First Security Van Kasper, who has been engaged
by GTS Duratek, and WND'Angelo Associates, Inc., who has been engaged
30
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by Buyer or its Affiliates, each of the parties hereto represents and warrants
to the other parties (and to each of them) that such party has not engaged any
broker, finder or agent in connection with the transactions contemplated by this
Purchase Agreement and has not incurred (and will not incur) any unpaid
liability to any broker, finder or agent for any brokerage fees, finders' fees
or commissions, with respect to the transactions contemplated by this Purchase
Agreement. Each party agrees to indemnify, defend and hold harmless each of the
other parties from and against any and all claims asserted against such parties
for any such fees or commissions by any persons purporting to act or to have
acted for or on behalf of the indemnifying party.
12.3. Expenses
Seller and Buyer each shall pay its own expenses incident to this
Purchase Agreement and the transactions contemplated hereunder, including all
legal and accounting fees and disbursements, and no such expenses shall be
charged to DuraTherm.
12.4. Assignment
Buyer shall have the right to assign its rights and obligations under
this Purchase Agreement, in whole or in part, to an Affiliate or to designate
any of its Affiliates (to the extent not prohibited by Law) to receive directly
the shares of Preferred Stock and/or Common Stock to be purchased hereunder or
to exercise any of the rights of Buyer, or to perform any of its obligations.
Except as permitted by the previous sentence, DuraTherm, Buyer and the Seller
shall not assign its rights and obligations under this Purchase Agreement, in
whole or in part, whether by operation of law or otherwise, without the prior
written consent of the other parties hereto, and any such assignment contrary to
the terms hereof shall be null and void and of no force and effect. In no event
shall the assignment by DuraTherm, Buyer or the Seller of its respective rights
or obligations under this Purchase Agreement, whether before or after the
Closing, release DuraTherm, Buyer or the Seller from its respective liabilities
and obligations hereunder.
12.5. Entire Agreement; Amendment
This Purchase Agreement, including the Disclosure Schedule, the
Exhibits and other Documents referred to herein or Furnished pursuant hereto,
constitutes the entire agreement among the parties hereto with respect to the
transactions contemplated herein, and it supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters provided
for herein. No amendment, modification or discharge of this Purchase Agreement
shall be valid or binding unless set forth in writing and duly executed and
delivered
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by the party against whom enforcement of the amendment, modification, or
discharge is sought.
12.6. Waiver
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Purchase Agreement or under any other
Documents Furnished in connection with or pursuant to this Purchase Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
12.7. Consent to Jurisdiction
(a) This Purchase Agreement and the duties and obligations of Buyer,
DuraTherm and Seller hereunder and under each of the Documents referred to
herein shall be enforceable against any of Buyer, DuraTherm or Seller in any
State or Federal court located in the State of Maryland. For such purpose,
Buyer, DuraTherm and Seller hereby irrevocably submit to the non-exclusive
jurisdiction of such courts, and agree that all claims in respect of this
Purchase Agreement and such other Documents may be heard and determined in any
of such courts.
(b) Buyer, DuraTherm and Seller hereby irrevocably agree that a final
judgment of any of the courts specified above in any action or proceeding
relating to this Purchase Agreement or to any of the other Documents referred to
herein or therein shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law.
12.8. Severability
If any part of any provision of this Purchase Agreement or any other
agreement or document given pursuant to or in connection with this Purchase
Agreement shall be invalid or unenforceable in any respect, such part shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining parts of such provision or the remaining
provisions of this Purchase Agreement.
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12.9. Governing Law
This Purchase Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Maryland (excluding the
choice of law rules thereof).
12.10. Notices
All notices, demands, requests, or other communications which may be
or are required to be given, served, or sent by any party to any other party
pursuant to this Purchase Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telecopy, addressed as follows:
(i) If to Buyer:
DuraTherm Group, Inc.
P.O. Box 58466
Houston, Texas 77258-8466
Telecopy No.: (281) 339-1351
Attn: Barry K. Hogan
with a copy (which shall not constitute notice) to:
Porter & Hedges, L.L.P.
700 Louisiana Street, Suite 3500
Houston, Texas 77002
Telecopy No.: (713) 226-0237
Attn: Nick D. Nicholas
(ii) If to GTS Duratek:
GTS Duratek, Inc.
10100 Old Columbia Road
Columbia, Maryland 21046
Telecopy No.: (410) 290-9112
Attn: Robert F. Shawver
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
111 South Calvert Street, Suite 1600
Baltimore, Maryland 21202
Telecopy No.: (410) 539-6981
Attn: Lawrence R. Seidman
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(iii) If to Seller:
GTSD Sub III, Inc.
10100 Old Columbia Road
Columbia, Maryland 21046
Telecopy No.: (410) 290-9112
Attn: Robert F. Shawver, Vice President
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
111 South Calvert Street, Suite 1600
Baltimore, Maryland 21202
Telecopy No.: (410) 539-6981
Attn: Lawrence R. Seidman
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent, mailed or telecopied in the manner described above, shall be deemed
sufficiently given, served, sent, received or delivered for all purposes at such
time as it is delivered to the addressee (with the return receipt, the delivery
receipt, or (with respect to a telecopy) the confirmation being deemed
conclusive, but not exclusive, evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
12.11. Headings
Section headings contained in this Purchase Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this Purchase
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
12.12. Execution in Counterparts
To facilitate execution, this Purchase Agreement may be executed in as
many counterparts as may be required. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Purchase Agreement
to produce or account for
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more than a number of counterparts containing the respective signatures of, or
on behalf of, all of the parties hereto.
12.13. Limitation on Benefits
The covenants, undertakings and agreements set forth in this Purchase
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the Parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
12.14. Binding Effect
Subject to any provisions hereof restricting assignment, this Purchase
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors, heirs, executors, administrators, legal
representatives and assigns.
12.15. No Drafting Presumption
Each of the Parties hereto shall be deemed to have participated
equally in the drafting and preparation of this Purchase 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
preparation.
12.16. Waiver of Jury Trial
THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PURCHASE
AGREEMENT OR ANY 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.
EACH OF THE PARTIES HERETO REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT 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 PURCHASE AGREEMENT. IN THE EVENT OF
LITIGATION, THIS PURCHASE AGREEMENT MAY BE
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FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
12.17. Post-Closing Access
In connection with any matter relating to any period prior to, or any
period ending on, the Closing, each Party shall, upon the request and at the
expense of the other Party, permit the other Party and its representatives full
access at all reasonable times to the books, records and personnel of DuraTherm,
and each Party shall execute (and shall cause DuraTherm to execute) such
documents as the other Party may reasonably request to enable the other Party to
file any required reports or tax returns relating to DuraTherm, to defend any
litigation involving the other Party or otherwise for a valid business purpose.
Each Party shall not dispose of such books and records during the seven year
period beginning with the Closing Date without the other Party's consent, which
shall not be unreasonably withheld. Following the expiration of such seven-year
period, each Party may dispose of such books and records at any time upon giving
60 days' prior written notice to the other Party, unless the other Party agrees
to take possession of such books and records within 60 days at no expense to the
requesting Party.
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SIGNATURE PAGE
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Purchase Agreement, or have caused this Purchase Agreement to be duly executed
on their behalf, as of the day and year first above written.
BUYER:
[Corporate Seal] DURATHERM GROUP, INC.
Attest:
/s/ Mark B. Hogan By: /s/ Barry K. Hogan
- -------------------------- ------------------------------------
Mark B. Hogan Name: Barry K. Hogan
Assistant Secretary Title: President
SELLER:
[Corporate Seal] GTSD SUB III, INC.
Attest:
/s/ Diane R. Brown By: /s/ Robert F. Shawver
- -------------------------- ------------------------------------
Diane R. Brown, Secretary Name: Robert F. Shawver
Title: Executive Vice President
and Chief Financial Officer
The undersigned hereby joins in this Purchase Agreement for the sole
purpose of acknowledging its agreement to be bound by the provisions of Sections
3.7 through 3.10 and Article 12 hereof. The undersigned is not bound by any
other provisions of this Purchase Agreement.
GTS DURATEK, INC.
By: /s/ Robert F. Shawver
------------------------------------
Name: Robert F. Shawver
Title: Executive Vice President
and Chief Financial Officer
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EXHIBIT A
TO STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 7, 2000
DEFINITIONS
In addition to those terms defined elsewhere herein, when used herein,
the following capitalized terms shall have the meanings indicated:
"Affiliate" means: (a) with respect to a person, any member of such
person's family; (b) with respect to an entity, any officer, director,
stockholder, partner or investor of or in such entity or of or in any Affiliate
of such entity; and (c) with respect to a person or entity, any person or entity
which directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such person or entity.
"Affiliated Group" means an affiliated group within the meaning of
Code Section 1504(a).
"Assets" means assets of every kind and everything that is or may be
available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property.
"Claims" means all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and attorneys' fees and disbursements.
"Closing" means the closing of the sale and purchase of shares of
Preferred Stock and Common Stock pursuant to the Purchase Agreement.
"Closing Date" means 10:00 a.m. local time on February __, 2000 or
such other time and date as shall be mutually agreed upon by Buyer, DuraTherm
and the Seller.
"Code" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.
"Control" means possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
voting securities, by agreement or otherwise).
"Defined Benefit Plan" means a Plan that is or was a "defined benefit
plan" as such term is defined in Section 3(35) of ERISA.
<PAGE>
"Disclosure Schedule" means the disclosure schedule identified as the
Disclosure Schedule to the Purchase Agreement.
"Documents" means any paper or other material (including, without
limitation, computer storage media) on which is recorded (by letters, numbers or
other marks) information that may be evidentially used, including, without
limitation, legal opinions, mortgages, indentures, notes, instruments, leases,
agreements, insurance policies, reports, studies, financial statements
(including, without limitation, the notes thereto), other written financial
information, schedules, certificates, charts, maps, plans, photographs, letters,
memoranda and all similar materials.
"DuraTherm Tax Returns" means all federal, state, local, foreign and
other applicable tax returns, declarations of estimated tax reports required to
be filed by or on behalf of DuraTherm, any such return which includes DuraTherm
or any return for an Affiliated Group that includes DuraTherm, in each case
since November 29, 1995.
"Encumbrance" means any mortgage, lien, pledge, encumbrance, security
interest, deed of trust, option, encroachment, reservation, order, decree,
judgment, condition, restriction, charge, claim or equity of any kind.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"ESOP" means an "employee stock ownership plan" as such term is
defined in Section 407(d)(6) of ERISA or Section 4975(e)(7) of the Code.
"Exhibit" means an exhibit attached to the Purchase Agreement.
"Furnished" means supplied, delivered or provided in any way.
"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. For purposes of this Purchase Agreement, the knowledge
of Seller shall also mean and include facts actually ( and not constructively)
known or believed to exist by the following individuals: Robert Prince, Robert
Shawver, Paul Deltete, Craig Bartlett, Diane Brown, Diane Leviski and Chuck
Stanley. For purposes of this Purchase Agreement, the knowledge of Buyer shall
also mean and include facts actually (and not constructively) known or believed
to exist by the Minority Shareholders and all of the other employees of
DuraTherm (other than the individuals listed in the prior
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sentence). No person is represented to have undertaken a separate investigation
in connection with the transactions contemplated hereby to determine the
existence or absence of facts in any statement qualified by "knowledge."
"Laws" means all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, determinations, writs,
injunctions, awards (including, without limitation, awards of any arbitrator),
judgments and decrees applicable to the specified persons or entities and to the
businesses and Assets thereof (including, without limitation, Laws relating to
securities registration and regulation; the sale, leasing, ownership or
management of real property; employment practices, terms and conditions, and
wages and hours; building standards, land use and zoning; safety, health and
fire prevention; and environmental protection).
"Material Adverse Effect" means any material and adverse effect on the
Assets, properties, liabilities, business affairs, results of operations or
financial condition of DuraTherm.
"Minority Shareholders" means, collectively, Barry K. Hogan, M.
Bradford Hogan, Jim S. Hogan and Samuel J. Lucas, III.
"Multiemployer Plan" means a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA.
"Other Arrangement" means a benefit program or practice providing for
bonuses, incentive compensation, vacation pay, severance pay, insurance,
restricted stock, stock options, employee discounts, cars, tuition reimbursement
or any other perquisite or benefit (including, without limitation, any fringe
benefit under Section 132 of the Code) to employees, officers or independent
contractors that is not a Plan.
"Parent Guaranty" means that certain Guaranty of even date with the
Purchase Agreement executed and delivered by GTS Duratek in favor of Buyer.
"Pension Plan" means an "employee pension benefit plan" as such term
is defined in Section 3(2) of ERISA.
"Permitted Encumbrance" means (i) Encumbrances for taxes, assessments,
governmental charges or claims which are not yet due and payable or are being
contested in good faith and for which a reserve or other appropriate provision,
if any, as shall be required in accordance with GAAP shall have been made in the
Financial Statements, (ii) statutory Encumbrances of landlords, carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen, or other like
Encumbrances with respect to amounts not yet delinquent or being contested in
good faith and for which a reserve or other appropriate provision, if any, as
shall be required in accordance with GAAP shall have been made in the Financial
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<PAGE>
Statements, (iii) Encumbrances incurred or deposits made by DuraTherm in
connection with workers' compensation, unemployment insurance, medical insurance
and other types of social security, (iv) Encumbrances incurred or deposits made
by DuraTherm to secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, performance bonds, and other obligations
of like nature, and (v) easements, rights-of-way, restrictions, minor defects
and irregularities of title and other charges or Encumbrances not interfering in
any material respect with DuraTherm's business or Assets.
"Plan" means any plan, program or arrangement, whether or not written,
that is or was an "employee benefit plan" as such term is defined in Section
3(3) of ERISA and (a) which was or is established or maintained by DuraTherm or
any Subsidiary since November 29, 1995; (b) to which DuraTherm contributed or
was obligated to contribute or to fund or provide benefits since November 29,
1995; or (c) which provides or promises benefits to any person who performs or
who has performed services for DuraTherm and because of those services is or has
been (i) a participant therein or (ii) entitled to benefits thereunder.
"Purchase Agreement" means this Stock Purchase Agreement, including
the Disclosure Schedule and all Exhibits hereto.
"Purchase Price" means the purchase price for the shares of Preferred
Stock and Common Stock to be sold and purchased pursuant to the Purchase
Agreement, which includes the cash portion thereof and the Subordinated Note.
"Qualified Plan" means a Pension Plan that satisfies, or is intended
by DuraTherm to satisfy, the requirements for tax qualification described in
Section 401 of the Code.
"Section" means a Section (or a subsection) of the Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and all
laws promulgated pursuant thereto or in connection therewith.
"Stockholders Agreement" means that certain Stockholders Agreement
dated November 29, 1995, by and among DuraTherm (formerly Bird Environmental
Gulf Coast, Inc.), GTS Duratek, Seller (formerly GTSD Sub II, Inc.) and the
Minority Shareholders.
"Subsidiary" means a corporation or other entity of which at least 80%
of the outstanding securities or other interests having rights to vote or
otherwise exercise Control are held, directly or indirectly, by DuraTherm.
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"Taxes" means all federal, state, local and foreign taxes (including,
without limitation, income, profit, franchise, sales, use, real property,
personal property, ad valorem, excise, employment, social security and wage
withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration fees,
withholdings, or other similar charges of every kind, character or description
imposed by any governmental or quasi-governmental authorities, and any interest,
penalties or additions to tax imposed thereon or in connection therewith.
5
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EXHIBIT B
TO STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 7, 2000
SUBORDINATED NOTE
<PAGE>
EXHIBIT C
TO STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 7, 2000
TECHNOLOGY LICENSE AGREEMENT
<PAGE>
EXHIBIT D
TO STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 7, 2000
PORTER & HEDGES L.L.P. OPINION
<PAGE>
EXHIBIT E
TO STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 7, 2000
HOGAN & HARTSON L.L.P. OPINION
