<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A -- No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of earliest event reported - November 10, 1995
ATC Environmental Inc.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-10583 46-0399408
- ---------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
104 East 25th Street
Tenth Floor
New York, New York 10010
- ------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (212) 353-8280
- ------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ATC Environmental Inc. ("ATC") purchased certain assets and assumed certain
liabilities of Kaselaan & D'Angelo Associates, Inc., Hill Environmental, Inc.
(formerly the environmental division of Gibbs & Hill, Inc.) and Particle
Diagnostics, Inc., wholly owned subsidiaries of Hill International, Inc. (the
"Hill Businesses"). The Hill Businesses had revenues of $12,072,346 for the
calendar year ended December 31, 1994, and $10,061,553 for the nine month period
ended September 30, 1995.
The acquisition will be accounted for as a purchase. The assets
acquired by ATC consist of intangible assets including customer contract
rights, customer lists, order backlog, customer records, and certain tangible
assets consisting of work in process, deposits, and property including
laboratory, field, and office equipment, supplies, and general records. ATC
additionally entered into non-competition agreements with a key employee and the
former owners. Total consideration paid to the seller for the assets and
non-competition covenants was $3,571,950. This includes $2,571,950 cash
downpayment, and $1,000,000 payment commitments. In addition, the Company
assumed liabilities of $360,543 and incurred direct expenses related to the
acquisition of $113,775. The cash consideration paid by ATC was paid from funds
received from ATC's public offering completed in October 1995. The
consideration paid was based upon arms-length negotiations between the parties
and was in part based upon pro-forma anticipated earnings and discounted cash
flow analysis as well as the estimated fair value of the assets being acquired.
Prior to the completion of the transactions described herein, there existed no
material relationship between the Seller and ATC and its affiliates.
The Hill Businesses provide environmental consulting and engineering
services, including asbestos management, industrial hygiene and indoor air
quality consulting, environmental auditing and permitting, environmental
regulatory compliance, water and wastewater engineering, solid waste and
landfill management, hazardous waste management and analytical laboratory
services.
As a result of expense reductions and economies of scale, this
acquisition will be accretive to earnings. Based on the analysis of the
purchased assets and the client base, ATC expects to retain a significant
portion of their revenue base as a result of this transaction, although no
assurances can be given in this regard.
The Hill Businesses operated three locations in Boston, New York City,
and Willingboro, New Jersey. The Boston and New York City offices will be
consolidated into ATC's existing locations.
2
<PAGE>
Item 7. Exhibits and Financial Statements
The required financial statements, pro forma financial information, and
material contracts filed herewith are as follows:
(a) Financial Statements of Businesses Acquired
(i) Financial Statements of the Environmental Division of the New
York Region of Hill International, Inc. as of December 31, 1994
and for the year then ended, and Independent Auditors' Report.
(ii) Interim financial statements of the Environmental Division of
the New York Region of Hill International, Inc. as of September
30, 1995 and for the nine months then ended (unaudited).
(b) Pro Forma Financial Information
Pro Forma Financial Information of ATC Environmental Inc. for the
year ended February 28, 1995 and for the nine months ended November
30, 1995.
(c) Exhibits -- (10) Material Contracts
10.1 Asset Purchase Agreement between ATC Environmental Inc., a
Delaware corporation, and Hill International Inc., a Delaware corporation,
executed on November 10, 1995.
10.2 Six-Month Promissory Note executed and delivered by ATC
Environmental Inc. on November 10, 1995, payable to Hill International,
Inc. in the amount of $300,000.
10.3 Irrevocable Letter of Credit executed by Atlantic Bank of New
York on November 8, 1995, and delivered by ATC Environmental Inc. on
November 10, 1995, payable on or after May 1, 1996, to Hill International,
Inc. in the amount of $730,625.00.
10.4 Bill of Sale delivered on November 10, 1995, conveying assets
referenced in asset purchase agreement from Hill International, Inc. to
ATC Environmental Inc.
10.5 Non-Competition Agreement of Irvin E. Richter to ATC
Environmental Inc. delivered on November 10, 1995.
10.6 Non-competition Agreement of David L. Richter to ATC
Environmental Inc. delivered on November 10, 1995.
3
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF
HILL INTERNATIONAL, INC.
For the Year Ended December 31, 1994
Page
----
Independent Auditors' Report 1
Statement of Assets and Liabilities 2
Statement of Operations 3
Statement of Cash Flows 4
Notes to Financial Statements 5 - 8
a(i)-1
<PAGE>
[LETTERHEAD AMPER, POLITZINER & MATTIA]
Independent Auditors' Report
To the Stockholder of
Hill International, Inc.
We have audited the statement of assets and liabilities of the Environmental
Division of the New York Region of Hill International, Inc. as of December 31,
1994 and the related statements of operations and cash flows for the year ended
December 31, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the financial statments provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the Environmental Division
of the New York Region of Hill International, Inc. as of December 31, 1994 and
the results of its operations and its cash flows for the year ended December 31,
1994, in conformity with generally accepted accounting principles.
/s/ Amper, Politziner & Mattia
AMPER, POLITZINER & MATTIA
March 21, 1995
Edison, New Jersey
a(i)-2
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Statement of Assets and Liabilities
December 31, 1994
Assets
<TABLE>
<S> <C>
Current assets
Cash $ 115,250
Accounts receivable, net of allowance for
doubtful accounts of $841,001 4,741,023
Other current assets 204,196
-----------
5,060,469
Property and equipment, net 344,659
Intangible asset, net 342,624
Other assets 83,724
-----------
$ 5,831,476
-----------
-----------
Liabilities
Current liabilities
Accounts payable $ 863,475
Accrued expenses 547,869
-----------
1,411,344
Due to Hill International, Inc. 4,420,132
-----------
$ 5,831,476
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
-2-
a(i)-3
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Statement of Operations
For the Year Ended December 31, 1994
<TABLE>
<S> <C>
Revenue $12,072,346
-----------
Operating expenses
Direct expenses 6,755,377
Selling, general and administrative expenses 5,181,778
Depreciation and amortization 533,501
-----------
12,470,656
-----------
Net loss $ (398,310)
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
-3-
a(i)-4
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Statement of Cash Flows
For the Year Ended December 31, 1994
<TABLE>
<S> <C> <C>
Cash flows from operating activities
Net loss $(398,310)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities
Depreciation and amortization $ 533,501
Provision for bad debts 246,848
(Increase) decrease in
Accounts receivable 585,118
Other current assets (22,398)
Other assets 94,930
Increase (decrease) in
Accounts payable (674,285)
Accrued expenses (196,414)
----------
Total adjustments 567,300
----------
Net cash provided by operating activities 168,990
Cash flows used by investing activities
Payments for purchases of property and equipment (38,275)
Cash flows used by financing activities
Payments on notes payable (76,076)
----------
Net increase in cash 54,639
Cash - beginning 60,611
---------
Cash - ending $ 115,250
---------
---------
</TABLE>
See accompanying notes to financial statements.
-4-
a(i)-5
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Notes to Financial Statements
Note 1 - BACKGROUND AND BASIS OF PRESENTATION
Pursuant to an Asset Purchase Agreement, dated as of October 31, 1995
("The Purchase Agreement") between Hill International, Inc. ("Hill")
and ATC Environmental, Inc. ("ATC"), ATC purchased certain selected
assets and assumed selected liabilities associated with the
Environmental Division of the New York Region of Hill. Substantially
all assets and liabilities transferred consist of contract backlog,
equipment unbilled work-in-process, liabilities and obligations
related to performance of the contracts and the real estate leases of
the Environmental Division of the New York Region of Hill, as defined.
ATC paid $3,611,073 for the assets and non-competition covenants.
This included a $2,517,948 cash down payment, $1,032,625 in a
promissory note and irrevocable letter of credit, and $62,500 in
non-compete agreements.
The Statement of Operations reflects the historical revenue and
expenses attributable to the Environmental Division of the New York
Region of Hill for the year ended December 31, 1994 based upon the
assets and liabilities giving rise to such revenues and expenses at
that date and not based on the assets or liabilities acquired or
assumed by ATC. The revenues and expenses of the Environmental
Division of the New York Region of Hill as reported in the Statement
of Operations therefore differ from the revenues and expenses
associated with the assets and liabilities acquired by ATC.
No attempt has been made to identify any respect in which the
operations of the Environmental Division of the New York Region of
Hill would have differed had they operated as divisions of any other
company instead of Hill. The Statement of Operations is therefore not
indicative of future results that would be derived from the assets
and liabilities acquired by ATC from Hill.
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
All highly-liquid investments purchased with a maturity of three
months or less are considered to be cash equivalents. Temporary cash
investments are placed with high credit quality financial
institutions. At times, such investments may be in excess of the FDIC
insurance limit.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, less accumulated
depreciation. Depreciation is provided by the use of the straight-
line method over the estimated useful lives of the assets. Gains or
losses resulting from the sale, replacement or retirement of property
are charged to operations when incurred.
-5-
a(i)-6
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Notes to Financial Statements
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)
INTANGIBLE ASSET
Intangible asset includes goodwill which is being amortized on a
straight-line basis over its estimated useful life of 20 years.
Goodwill represents the excess of the purchase price over the value
assigned to net identified assets of the purchased businesses.
REVENUE RECOGNITION
The revenue recognition policies utilized by the Environmental
Division of the New York Region of Hill are based on the types of
contracts involved as follows:
Cost Reimbursement Contract - Revenue is recognized as services
are performed and costs are incurred at contracted rates and
fees.
Fixed Fee Contract - Revenue is recognized under the percentage
of completion accounting method. When the estimated cost of a
contract exceeds the contract sales price, the estimated loss is
recognized and cost reserves are established.
CONCENTRATION OF CREDIT RISK
The Environmental Division of the New York Region of Hill provides
professional services, under contractual arrangements, to foreign and
domestic governmental units, institutions and the private sector. The
Environmental Division of the New York Region of Hill performs ongoing
credit evaluations of its customers and does not require collateral,
beyond customary retainage. Additionally, the Environmental Division
of the New York Region of Hill maintains reserves for potential losses
from these contractual arrangements that have been within management's
expectations.
Note 3 - ACCOUNTS RECEIVABLE
December 31,
1994
----
Billed $ 5,136,930
Unbilled 437,104
Retainage 7,990
------------
5,582,024
Less allowance for doubtful accounts 841,001
------------
$ 4,741,023
------------
------------
-6-
a(i)-7
<PAGE>
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Notes to Financial Statements
Note 3 - ACCOUNTS RECEIVABLE - (continued)
Included in billed receivables are $1,428,000 of amounts on
contracts for which billings had not been presented to the customer
at December 31, 1994. These amounts were billed subsequently in
January. Unbilled receivables primarily represent revenue earned
on fixed fee contracts, which the Environmental Division of the New
York Region of Hill is contractually precluded from billing until
predetermined future dates.
Included in billed receivables are $159,210 of receivables from
foreign governments at December 31, 1994.
Note 4 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
1994
----
<S> <C>
Furniture and equipment $ 2,553,971
Leasehold improvements 4,535
Computer equipment and software 86,002
-----------
Less accumulated depreciation 2,644,508
Net property and equipment 2,299,849
-----------
$ 344,659
-----------
-----------
</TABLE>
Depreciation expense was $449,501 for the year ended December 31,
1994.
Note 5 - INTANGIBLE ASSETS
<TABLE>
<CAPTION>
December 31,
1994
----
<S> <C>
Goodwill $ 460,000
Less accumulated amortization 117,376
-----------
$ 342,624
-----------
-----------
</TABLE>
Note 6 - OPERATING LEASES
The Environmental Division of the New York Region of Hill leases
several offices under leases accounted for as operating leases.
Rent expense was approximately $478,633 in 1994. The Environmental
Division of the New York Region of Hill is required to pay property
taxes, utilities and other costs related to several of the leased
facilities.
Approximate future minimum payments under these leases that have
remaining noncancelable lease terms in excess of one year are as
follows:
<TABLE>
<S> <C>
1995 $ 162,000
1996 8,000
-----------
$ 170,000
-----------
-----------
</TABLE>
-7-
a(i)-8
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Notes to Financial Statements
Note 7 - BENEFIT PLANS
Hill has a qualified profit-sharing plan under which a percentage
of earnings before income taxes is contributed to the plan and is
distributed to individual employee accounts based on their relative
compensation levels. The contribution to the profit-sharing plan
is determined annually by the Board of Directors of Hill. There
was no contribution in 1994.
Hill maintains a 401(k) Savings Plan for qualified employees. The
terms of the plan define qualified employees as those over 21 years
of age, with at least 1,000 hours of service in their first twelve
months of employment with Hill. The Company matched 37 1/2% of the
Environmental Division of the New York Region employees'
contributions up to 4% of employee compensation in 1994. For the
year ended December 31, 1994, 401(k) expense was $64,501.
-8-
a(i)-9
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF
HILL INTERNATIONAL, INC.
For the Nine Months Ended September 30, 1995
(Unaudited)
Page
----
Statement of Assets and Liabilities 1
Statement of Operations 2
Statement of Cash Flows 3
Notes to Financial Statements 4
a(ii)-1
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Statement of Assets and Liabilities
September 30, 1995
(Unaudited)
Assets
<TABLE>
<S> <C>
Current assets
Cash $ 19,510
Accounts receivable, net of allowance for
doubtful accounts of $ 773,103 4,950,146
Other current assets 57,770
----------
5,027,426
Property and equipment, net 176,359
Intangible asset, net of accumulated amortization
of $ 135,376 324,624
Other assets 6,201
----------
$5,534,610
----------
----------
Liabilities
Current liabilities
Accounts payable $ 633,918
Accrued expenses 204,975
----------
838,893
Due to Hill International, Inc. 4,695,717
----------
$5,534,610
----------
----------
</TABLE>
See accompanying notes to financial statements.
-1-
a(ii)-2
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Statement of Operations
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Revenue $10,061,553 $ 8,681,195
----------- -----------
Operating expenses
Direct expenses 5,886,554 4,913,729
Selling, general and administrative expenses 3,232,873 3,905,316
Depreciation and amortization 186,300 308,928
----------- -----------
9,305,727 9,127,973
----------- -----------
Net income (loss) $ 755,826 $ (446,778)
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
-2-
a(ii)-3
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Statement of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
1995 1994
---------- ---------
<S> <C> <C>
Cash flows from operating activities
Net Income $ 755,826 $(446,778)
---------- ----------
Adjustments to reconcile net income to net
cash provided (used) by operating activities
Depreciation and amortization $ 186,300 308,928
Provision for bad debts 144,000 99,000
(Increase) decrease in
Accounts receivable (60,271) 1,071,522
Other current assets (146,426) (155,986)
Other assets 77,523 17,502
Increase (decrease) in
Accounts payable (229,557) (648,921)
Accrued expenses (342,894) (164,244)
Due to Hill International Inc. (480,241) --
---------- ----------
Total adjustments (851,566) 527,801
---------- ----------
Net cash used by operating activities (95,740) 81,023
Cash flows used by investing activities
Payments for purchases of property and equipment -- (38,275)
Cash flows used by financing activities
Payments on note payables -- (76,076)
---------- ----------
Net decrease in cash (95,740) (33,328)
Cash - beginning 115,250 60,611
---------- ----------
Cash - ending $ 19,510 $ 27,283
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
-3-
a(ii)-4
<PAGE>
THE ENVIRONMENTAL DIVISION OF
THE NEW YORK REGION OF HILL INTERNATIONAL, INC.
Notes to Financial Statements
Note 1 - BACKGROUND AND BASIS OF PRESENTATION
Pursuant to an Asset Purchase Agreement, dated as of October 31,
1995 ("The Purchase Agreement") between Hill International, Inc.
("Hill") and ATC Environmental, Inc. ("ATC"), ATC purchased
certain selected assets and assumed selected liabilities
associated with the Environmental Division of the New York Region
of Hill. Substantially all assets and liabilities transferred
consist of contract backlog, equipment, unbilled work-in-process,
liabilities and obligations related to performance of the
contracts and the real estate leases of the Environmental Division
of the New York Region of Hill as defined. ATC paid $3,611,073 for
the assets and non-competition agreements. This included a
$2,517,948 cash down payment, $1,032,625 in a promissory note and
irrevocable letter of credit and $62,500 in non-compete agreements.
The Statement of Operations reflects the historical revenue and
expenses attributable to the Environmental Division of the New
York Region of Hill for the nine months ended September 30, 1995
based upon the assets and liabilities giving rise to such revenues
and expenses at that date and not based on the assets or
liabilities acquired or assumed by ATC. The revenues and expenses
of the Environmental Division of the New York Region of Hill as
reported in the Statement of Operations therefore differ from the
revenues and expenses associated with the assets and liabilities
acquired by ATC.
No attempt has been made to identify any respect in which the
operations of the Environmental Division of the New York Region of
Hill would have differed had they operated as divisions of any
other company instead of Hill. The Statement of Operations is
therefore not indicative of future results that would be derived
from the assets and liabilities acquired by ATC from Hill.
In the opinion of the Company, tha accompanying unaudited financial
statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly, in all material
respects, the financial position, the results of operations and the
cash flows for the periods presented herein. These results of
operations are not necessarily indicative of the results to be
expected for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These condensed financial
statements should be read in conjunction with the financial
statements and the notes included in the audited financial
statements for the year ended December 31, 1994.
Note 2 - ACCOUNTS RECEIVABLE
Included in receivables are $1,369,248 of amounts on contracts for
which billings had not been presented to the customer at September
30, 1995. Unbilled receivables primarily represent revenue earned
on fixed fee contracts, which the Environmental Division of the New
York Region of Hill is contractually precluded from billing until
predetermined future dates.
Note 3 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
September 30,
1995
----
<S> <C>
Furniture and equipment $ 2,553,871
Leasehold improvements 4,535
Computer equipment and software 86,002
------------
2,644,408
Less accumulated depreciation 2,468,049
------------
Net property and equipment $ 176,359
------------
------------
</TABLE>
Depreciation expense was $168,300 for the nine months ended September 30, 1995.
-4-
a(ii)-5
<PAGE>
ATC ENVIRONMENTAL INC.
PRO FORMA FINANCIAL INFORMATION
IN CONNECTION WITH THE ACQUISITION OF ASSETS OF THE HILL BUSINESSES
The following unaudited pro forma combined condensed financial statements for
ATC Environmental Inc., ("ATC") (as adjusted to give effect to the merger of
ATC with its parent, Aurora Environmental, Inc. and the acquisition of
Con-test, Inc. - "ATC As Adjusted") and the subsidiaries of Hill
International, Inc. comprising its New York Region Environmental Division
(the "Hill Businesses"), have been prepared based upon the historical
financial results of the companies. The pro forma combined financial data
give effect to the acquisition of the Hill Businesses under the purchase
method of accounting, based upon the assumptions set forth in the notes to
the pro forma combined condensed financial statements included herein.
The pro forma combined condensed statements of operations set forth the
combination of ATC's As Adjusted and the Hill Businesses' results of
operations for the twelve month period ended February 28, 1995 and nine month
period ended November 30, 1995 as if the acquisition had occured at March 1,
1994, the beginning of ATC's fiscal 1995 year.
The pro forma combined results are intended for informational purposes and are
not necessarily indicative of the results which would have actually been
attained had the acquisition been consummated at the beginning of ATC's fiscal
year or which may be attained in the future.
The pro forma combined condensed financial information should be read in
conjunction with the notes thereto and with the audited and unaudited
financial statements of ATC for its fiscal year ended February 28, 1995 and
the nine month period November 30, 1995, not appearing herein, and of the
audited and unaudited financial statements of the Hill Businesses for the
year ended December 31, 1994 and the nine month period ended September 30,
1995 appearing elsewhere herein.
b-1
<PAGE>
ATC ENVIRONMENTAL INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
ATC HILL Pro Forma Pro Forma
As Adjusted(3) BUSINESSES Adjustments Note 2 Combined
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $33,687,570 $10,061,553 $0 $43,749,123
Cost of revenues 17,545,989 5,886,554 23,432,543
--------------------------------------------- -------------
Gross profit 16,141,581 4,174,999 0 20,316,580
Operating expenses:
Selling 1,106,824 256,587 1,363,411
General and administrative 9,547,169 3,018,586 (620,369) (A) 11,945,386
Provision for bad debts 197,515 144,000 341,515
--------------------------------------------- -------------
10,851,508 3,419,173 (620,369) 13,650,312
--------------------------------------------- -------------
Operating income 5,290,073 755,826 620,369 6,666,268
Nonoperating expense:
Interest expense 335,910 0 0 (B) 335,910
Interest income (155,463) 0 (155,463)
Other, net (11,949) 0 (11,949)
--------------------------------------------- -------------
168,498 0 0 168,498
--------------------------------------------- -------------
Income before taxes 5,121,575 755,826 620,369 6,497,770
Income tax expense 1,648,377 0 536,716 (C) 2,185,093
--------------------------------------------- -------------
Net income $3,473,198 $755,826 $83,653 $4,312,677
----------- ---------------- ---------------- -------------
----------- ---------------- ---------------- -------------
Earnings per common share and
dilutive common equivalent share:
Primary $0.50 0.62
----------- -------------
----------- -------------
Fully diluted $0.50 0.62
----------- -------------
----------- -------------
Weighted average number of
shares outstanding during period:
Primary 7,003,329 7,003,329
----------- -------------
----------- -------------
Fully diluted 7,003,329 7,003,329
----------- -------------
----------- -------------
See Notes to Pro Forma Combined Condensed Financial Statements
b-2
<PAGE>
ATC ENVIRONMENTAL INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE MOST RECENT YEAR ENDED FEBRUARY 29, 1995
ATC HILL Pro Forma Pro Forma
As Adjusted(3) BUSINESSES Adjustments Note 2 Combined
------------------------------------------------------------------------
Revenues $40,807,600 $12,072,342 $0 $52,879,942
Cost of revenues 20,124,179 6,755,377 26,879,556
--------------------------------------------- -------------
Gross Profit 20,683,421 5,316,965 0 26,000,386
Operating expenses:
Selling 1,396,364 387,406 1,783,770
General and administrative 13,335,409 5,081,025 (880,548) (A) 17,535,886
Provision for bad debts 205,186 246,848 452,034
--------------------------------------------- -------------
14,936,959 5,715,279 (880,548) 19,771,690
--------------------------------------------- -------------
Operating income (loss) 5,746,462 (398,314) 880,548 6,228,696
Nonoperating expense:
Interest expense 420,869 0 43,750 (B) 464,619
Interest income (36,660) (4) (36,664)
Other, net (16,406) 0 (16,406)
--------------------------------------------- -------------
367,803 (4) 43,750 411,549
--------------------------------------------- -------------
Income (loss) before taxes 5,378,659 (398,310) 836,798 5,817,147
Income tax expense 2,074,084 0 171,010 (C) 2,245,094
--------------------------------------------- -------------
Net income (loss) $3,304,575 ($398,310) $665,788 $3,572,053
----------- ---------------- ---------------- -------------
----------- ---------------- ---------------- -------------
Earnings per common share and
dilutive common equivalent share:
Primary $0.53 $0.57
----------- -------------
----------- -------------
Fully diluted $0.51 $0.56
----------- -------------
----------- -------------
Weighted average number of
shares outstanding during period:
Primary 6,224,064 6,224,064
----------- -------------
----------- -------------
Fully diluted 6,419,454 6,419,454
----------- -------------
----------- -------------
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Statements.
b-3
<PAGE>
ATC ENVIRONMENTAL INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(1) GENERAL
ATC purchased certain assets and assumed certain liabilities of Kaagelaan &
D'Angelo Associates Inc., Hill Environmental, Inc. (formerly the environmental
division of Gibbs & Hill, Inc.) and Particle Diagnostics, Inc., wholly owned
subsidiaries of Hill International, Inc. ("Hill" or "Seller"). Collectively
these units represented the Environmental Division of the New York Region of
Hill International, Inc. and are referred to as the "Hill Businesses".
The pro forma unaudited combined financial data reflect the acquisition of
the Hill Businesses as if it had occured at March 1, 1994, the beginning of
fiscal 1995. The pro forma combined statements of operations for the nine
months ended November 30, 1995 and for the year ended February 28, 1995 are
based on the historical financial results of ATC for these periods and the
Hill Businesses for the nine months ended September 30, 1995 and the twelve
month period ended December 31, 1994. No adjustments have been made to
conform the Hill Businesses results to ATC's fiscal period due to the
proximity of their fiscal periods. ATC's historical balance sheet as of
November 30, 1995 reflects the acquisition of the Hill Businesses, therefore
a pro forma balance sheet is not included.
CONSIDERATION AND ACCOUNTING OF THE HILL BUSINESSES:
The acquisition has been accounted for as a purchase. The consideration for the
acquisition and the allocation of the purchase price is summarized as follows:
Consideration paid to Seller:
Cash $2,571,950
Letter of Credit, net of imputed interest at 8.75%,
due April 30, 1996 700,000
Note Payable at 8.75% interest, due April 30, 1996 300,000
Liabilities assumed 360,543
Direct expenses related to the acquisition 113,775
----------
$4,046,268
----------
----------
Assets acquired and liabilities assumed are included in the accompanying pro
forma condensed balance sheet at their estimated fair market value at the date
of purchase. The initial purchase price has been allocated as follows:
Cost in excess of billings on uncompleted contracts,
net of unrealizable amounts $620,000
Property & equipment-net 175,000
Goodwill 3,183,196
Covenant not to compete 37,500
Other assets 30,572
----------
$4,046,268
----------
----------
b-4
<PAGE>
ATC ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(2)PRO FORMA ADJUSTMENTS FOR THE ACQUISITION OF THE HILL BUSINESSES
The pro forma financial statements reflect the following adjustments related to
the acquisition of the Hill Businesses:
<TABLE>
<CAPTION>
Nine Months Year Ended
Nov. 30, 1995 Feb. 28, 1995
------------------------------
<S> <C> <C>
(A) To record the change in general & administrative expenses as follows:
(i) Changes in amortization to reflect purchase accounting adjustments:
Goodwill amortization, based on a 30 year amortization period $79,580 $106,107
Less: reported historical goodwill amortization (18,000) (84,000)
------------------------------
Net goodwill amortization adjustment 61,580 22,107
Covenant not to compete amortization 2,886 34,615
------------------------------
64,466 56,722
------------------------------
(ii) Reduction in certain other costs as a result of the integration of
acquired operations into ATC:
Employee costs of excess Hill employees not hired (387,492) (516,656)
Expenses of Hill facilities eliminated by integrating into ATC facilities (297,343) (420,614)
------------------------------
(684,835) (937,270)
------------------------------
($620,369) ($880,548)
------------------------------
------------------------------
(B) To record interest expense on acquisition debt issued to Seller:
$300,000 Note payable, interest at 8.75% for six month term --- $13,125
$700,000 Letter of credit, interest imputed at 8.75% for six months term --- 30,625
------------------------------
$0 $43,750
------------------------------
------------------------------
(C) To record the Federal income tax expense of the Hill Businesses'
Income (loss) as adjusted by the pro forma adjustments:
Reported income (loss) before taxes $755,826 ($398,310)
Pro forma income adjustments:
General and administrative 620,369 880,548
Interest expense 0 (43,750)
------------------------------
Adjusted income before taxes 1,376,195 438,488
Effective tax rate, net of state effect 39.0% 39.0%
------------------------------
Calculated tax provision 536,716 171,010
Recorded expense 0 0
------------------------------
Net adjustment $536,716 $171,010
------------------------------
------------------------------
</TABLE>
(3) ATC AS ADJUSTED RESULTS OF OPERATIONS The "ATC As Adjusted" results of
operations give effect to the merger of ATC with its parent, Aurora
Environmental, Inc. ("Aurora") on June 29, 1995, and ATC's acquisition of
Con-Test, Inc ("Contest") on October 1, 1994 as if each had occurred as of
March 1, 1994, the beginning of ATC's 1995 fiscal year. The merger of ATC and
Aurora has been accounted for under a method of accounting similar to a
pooling of interests, and the acquisition of Contest by ATC, under the
purchase method of accounting, both of which are in accordance with generally
accepted accounting principles. The pro forma results of operations are based
on the assumptions summarized in Notes 4 and 5 hereto.
b-5
<PAGE>
ATC ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(3) ATC AS ADJUSTED RESULTS OF OPERATIONS (CONTINUED)
The computation of the ATC As Adjusted results of operations for the nine months
ended November 30, 1995 follows. The statement of operations presented for
Aurora comprises Aurora's consolidated operations for the period from March 1,
1995 through June 29, 1995, the effective date of the merger.
<TABLE>
<CAPTION>
Merger ATC
ATC Aurora Adjustments Note 4 As Adjusted
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $33,687,570 $14,409,850 ($14,409,850) (A) $33,687,570
Cost of revenues 17,545,989 7,526,443 (7,526,443) (A) 17,545,989
---------------------------------------------- ------------
Gross Profit 16,141,581 6,883,407 (6,883,407) 16,141,581
Operating expenses:
Selling 1,106,824 439,638 (439,638) (A) 1,106,824
General and administrative 9,435,809 4,405,142 (4,293,782) (A) 9,547,169
Provision for bad debts 197,515 67,015 (67,015) (A) 197,515
---------------------------------------------- ------------
10,740,148 4,911,795 (4,800,435) 10,851,508
---------------------------------------------- ------------
Operating Income (loss) 5,401,433 1,971,612 (2,082,972) 5,290,073
Nonoperating expense:
Interest Expenses 335,910 150,991 (150,991) (A) 335,910
Interest Income (153,637) (45,489) 43,663 (A) (155,463)
Other, net 23,240 81,835 (117,024) (D) (11,949)
---------------------------------------------- ------------
205,513 187,337 (224,352) 168,498
---------------------------------------------- ------------
Income (loss) before taxes 5,195,920 1,784,275 (1,858,620) 5,121,575
Income tax expense 1,677,000 775,960 (804,583) (C) 1,648,377
---------------------------------------------- ------------
Income (loss) before
minority interest 3,518,920 1,008,315 (1,054,037) 3,473,198
Minority interest in net
income of subsidiary - (510,520) 510,520 (B) 0
---------------------------------------------- ------------
Net income $3,518,920 $497,795 ($543,517) $3,473,198
---------------------------------------------- ------------
---------------------------------------------- ------------
Earnings per common share
and dilutive common
equivalent share:
Primary $0.52 (E) $0.50
--------------- ------------
--------------- ------------
Fully diluted $0.52 (E) $0.50
--------------- ------------
--------------- ------------
Weighted average number of
shares outstanding during
period:
Primary 6,735,848 (E) 7,003,329
--------------- ------------
--------------- ------------
Fully diluted 6,735,848 (E) 7,003,329
--------------- ------------
--------------- ------------
</TABLE>
b-6
<PAGE>
ATC ENVIRONMENTAL INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(3) ATC AS ADJUSTED RESULTS OF OPERATIONS (CONTINUED)
The computation of the ATC As Adjusted results of operations for the year ended
February 28, 1995 is as follows:
<TABLE>
<CAPTION>
Acquisition ATC &
ATC Con-test Adjustments Note 5 Con-test
------------ ------------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C>
Revenues $36,271,557 $4,620,376 ($84,333) (A) $40,807,600
Cost of revenues 18,355,493 1,820,215 (51,529) (B) 20,124,179
------------ ------------ ---------- -----------
Gross Profit 17,916,064 2,800,161 (32,804) 20,683,421
Operating expenses:
Selling 1,105,937 290,427 1,396,364
General and administrative 10,996,709 3,652,236 (1,369,399) (C) 13,279,546
Provision for bad debts 188,819 16,367 205,186
------------ ------------ ---------- -----------
12,291,465 3,959,030 (1,369,399) 14,881,096
------------ ------------ ---------- -----------
Operating income (loss) 5,624,599 (1,158,869) 1,336,595 5,802,325
Nonoperating expense:
Interest Expense 285,570 94,121 41,178 (D) 420,869
Interest Income (34,073) (1,448) (35,521)
Other, net 72,582 (5,820) 66,762
------------ ------------ ---------- -----------
324,079 86,853 41,178 452,110
------------ ------------ ---------- -----------
Income (loss) before taxes 5,300,520 (1,245,722) 1,295,417 5,350,215
Income tax expense 2,044,000 0 19,133 (E) 2,063,133
------------ ------------ ---------- -----------
Income (loss) before
minority interest 3,256,520 (1,245,722) 1,276,284 3,287,082
Minority interest in net income
of subsidiary
------------ ------------ ---------- -----------
Net income $3,256,520 ($1,245,722) $1,276,284 $3,287,082
------------ ------------ ---------- -----------
------------ ------------ ---------- -----------
Earnings per common share and
dilutive common equivalent share:
Primary $0.57 (F) $0.56
------------ -----------
------------ -----------
Fully diluted $0.56 (F) $0.56
------------ -----------
------------ -----------
Weighted average number of
shares outstanding during period:
Primary 5,753,856 (F) 5,821,847
------------ -----------
------------ -----------
Fully diluted 5,850,233 (F) 5,918,224
------------ -----------
------------ -----------
<CAPTION>
Merger ATC
Aurora Adjustments Note 4 As Adjusted
------------ ------------ ------ -----------
<S> <C> <C> <C> <C>
Revenues $36,271,557 ($36,271,557) (A) $40,807,600
Cost of revenues 18,355,493 (18,355,493) (A) 20,124,179
------------ ------------ -----------
Gross Profit 17,916,064 (17,916,064) 20,683,421
Operating expenses:
Selling 1,105,937 (1,105,937) (A) 1,396,364
General and administrative 11,052,572 (10,996,709) (A) 13,335,409
Provision for bad debts 188,819 (188,819) (A) 205,186
------------ ------------ -----------
12,347,328 (12,291,465) 14,936,959
------------ ------------ -----------
Operating income (loss) 5,568,736 (5,624,599) 5,746,462
Nonoperating expense:
Interest Expense 285,570 (285,570) (A) 420,869
Interest Income (35,212) 34,073 (A) (36,660)
Other, net 144,252 (227,420) (D) (16,406)
------------ ------------ -----------
394,610 (478,917) 367,803
------------ ------------ -----------
Income (loss) before taxes 5,174,126 (5,145,682) 5,378,659
Income tax expense 2,044,000 (2,033,049) (C) 2,074,084
------------ ------------ -----------
Income (loss) before
minority interest 3,130,126 (3,112,633) 3,304,575
Minority interest in net income
of subsidiary (1,300,040) 1,300,040 (B) 0
------------ ------------ -----------
Net income $1,830,086 ($1,812,593) $3,304,575
------------ ------------ -----------
------------ ------------ -----------
Earnings per common share and
dilutive common equivalent share:
Primary (E) $0.53
-----------
-----------
Fully diluted (E) $0.51
-----------
-----------
Weighted average number of
shares outstanding during period:
Primary (E) 6,224,064
-----------
-----------
Fully diluted (E) 6,419,454
-----------
-----------
</TABLE>
b-7
<PAGE>
ATC ENVIRONMENTAL INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(4)PRO FORMA ADJUSTMENTS FOR THE AURORA AND ATC MERGER
The ATC As Adjusted results of operations financial reflect the following
adjustments related to the merger of Aurora and ATC:
(A) Elimination of ATC's account balances included in Aurora's consolidated
results.
(B) To reflect the effect of the conversion of Aurora's minority interest.
(C) To reflect the tax benefit of Aurora's net operating loss carryforward:
<TABLE>
<CAPTION>
Nine Months Year Ended
Nov. 30, 1995 Feb. 28, 1995
------------- -------------
<S> <C> <C>
(i) Income Statement Pro Forma Adjustment for the nine months
ended November 30, 1995:
Elimination of ATC's income tax expense through June 29, 1995 (Note A) ($775,960)
Tax benefit of Aurora's operating loss of $170,820 (65,766)
Tax effect of eliminating merger expenses (Note D) 37,143
-------------
($804,583)
-------------
-------------
(ii) Income Statement Pro Forma Adjustment for the year
ended February 28, 1995:
Elimination of ATC's expense (Note A) ($2,044,000)
Tax benefit of Aurora's operating loss of $126,394 (48,662)
Tax effect of eliminating merger expenses (Note D) 59,613
-------------
($2,033,049)
-------------
-------------
(D) The adjustment to other expense, net is comprised of the following:
Elimination of ATC's accounts included in the consolidated results (Note A) ($20,549) ($72,582)
Elimination of merger costs during the period that would not have been
incurred had the merger been effective as of the beginning of the period (96,475) (154,838)
------------- -------------
($117,024) ($227,420)
------------- -------------
------------- -------------
</TABLE>
(E) Assumes the ATC shares issued to Con-Test are outstanding as of the
beginning of the fiscal year and assumes the outstanding warrants and
options of Aurora which converted in the merger are outstanding from
the beginning of the fiscal year.
b-8
<PAGE>
ATC ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(5)PRO FORMA ADJUSTMENTS FOR THE ACQUISITION OF CON-TEST
The ATC As Adjusted results of operations reflect the adjustments below related
to the acquisition of Con-test. The results of operations of Con-test are based
on Con-test's interim unaudited results of operations from March 1, 1994 to
September 10, 1994, representing the last interim accounting period completed
prior to the purchase date. Con-Test's historical financial statements were
prepared as of each interim four-week accounting period.
<TABLE>
<CAPTION>
Year Ended
Feb. 28, 1995
-------------
<S> <C>
(A) To eliminate revenues of Con-Test branches not acquired ($84,333)
-------------
-------------
(B) To eliminate costs of revenues of Con-Test branches not acquired ($51,529)
-------------
-------------
(C) To record the change in general and administrative expenses as follows:
(i) Changes in depreciation and amortization as a result of the acquisition:
Depreciation of acquired assets recorded at fair market value $92,450
Less: Con-tests historical depreciation (247,121)
-------------
Net depreciation adjustment (154,671)
Goodwill amortization, based on a 30 year amortization period 82,941
Covenant not to compete amortization, based on 5 year term 11,667
-------------
(60,063)
-------------
(i) Reductions in certain other costs as a result of the integration of acquired
operations into ATC:
Expenses of Con-test branches not acquired (146,119)
Employee costs of Con-test employees not hired (800,896)
Expenses of Con-test facilities eliminated by integrating into ATC facilities (214,354)
Legal and accounting expenses of Con-test (60,000)
Reduction of professional and general insurance costs (87,967)
-------------
(1,309,336)
-------------
($1,369,399)
-------------
-------------
(D) To record the net additional interest expense calculated as follows:
<CAPTION>
Debt Incurred
-------------
<S> <C> <C>
ATC additional interest:
Amount borrowed for cash consideration paid at
close with interest at 8.1%, the average rate paid
under ATC's bank credit line during fiscal 1995 $2,100,000 $99,225
Note payable issued to seller, interest at 8.5% 536,000 26,527
Elimination of Con-test interest on bank debt paid by ATC (84,574)
-------------
$41,178
-------------
-------------
</TABLE>
b-9
<PAGE>
ATC ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(5) PRO FORMA ADJUSTMENTS FOR THE ACQUISITION OF CON-TEST (CONTINUED)
(E) To record the imputed Federal income tax expense as though Con-test had not
been a Subchapter S corporation and the income tax effect of the pro forma
adjustments at ATC's effective tax rate.
<TABLE>
<CAPTION>
Year Ended
Feb. 28, 1995
-------------
<S> <C>
Reported loss before taxes ($1,245,722)
Pro Forma income adjustments:
Revenues (84,333)
Cost of revenues 51,529
General and administrative 1,369,399
Interest (41,178)
-------------
Adjusted income before taxes 49,695
Tax rate 38.5%
-------------
Net adjustment $19,133
-------------
-------------
</TABLE>
The Company has recorded the pro forma income tax benefits of the taxable loss
of Con-test, without any valuation allowance, because ATC recognized taxable
income sufficient enough to utilize the Con-Test loss during the period
presented.
(F) Assumes the ATC shares issued for Con-Test are ouststanding as of the
beginning of the fiscal year.
b-10
<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.
ATC Environmental Inc.
--------------------------------------
(Registrant)
Dated: January 22, 1996 By: /s/ Richard L. Pruitt
----------------------------------
Richard L. Pruitt, Vice President
and Principal Accounting Officer
<PAGE>
ASSET PURCHASE AGREEMENT
BETWEEN
HILL INTERNATIONAL, INC.
AND
ATC ENVIRONMENTAL INC.
___________________________
DATED AS OF OCTOBER 31, 1995
___________________________
<PAGE>
TABLE OF CONTENTS
PAGE:
ARTICLE I PURCHASED ASSETS AND ASSUMED LIABILITIES. . . . . . . . . . . . . . 1
1.1. PURCHASED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. ASSUMED LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. ACCOUNTS RECEIVABLE NOT INCLUDED . . . . . . . . . . . . . . . . . 2
ARTICLE II PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. PROCEEDINGS AT CLOSING . . . . . . . . . . . . . . . . . . . . . . 2
3.3. DELIVERIES BY THE SELLER TO THE PURCHASER. . . . . . . . . . . . . 3
3.4. DELIVERIES BY THE PURCHASER TO THE SELLER. . . . . . . . . . . . . 3
3.5. PRORATIONS AS OF THE CLOSING . . . . . . . . . . . . . . . . . . . 4
3.6. REIMBURSEMENTS AS OF THE CLOSING . . . . . . . . . . . . . . . . . 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1. ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . . . . . 4
4.2. AUTHORIZATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . 5
4.3. NO CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4. TITLE TO PURCHASED ASSETS. . . . . . . . . . . . . . . . . . . . . 5
4.5. NO CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.6. ACCURACY OF INFORMATION. . . . . . . . . . . . . . . . . . . . . . 5
4.7. NO BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.8. NO CONTRACT BREACHES . . . . . . . . . . . . . . . . . . . . . . . 6
4.9. ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . 6
4.10. WIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.11. NO LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.12. RECOVERABILITY OF REIMBURSEMENTS . . . . . . . . . . . . . . . . . 6
4.13. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.14. WORK OF THE SELLER HAVING A SIGNIFICANT ENVIRONMENTAL COMPONENT . 6
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER. . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1. ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . . . . . 6
5.2. AUTHORIZATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . 6
5.3. NO CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4. NO CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(i)
<PAGE>
5.5. NO LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.7. NO BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI COVENANTS OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . 8
6.1. NO COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2. SLH AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3. PAYMENT OF ARREARAGES. . . . . . . . . . . . . . . . . . . . . . . 9
6.4. COLLECTION OF PURCHASER'S ACCOUNTS RECEIVABLE. . . . . . . . . . . 9
6.5. REIMBURSEMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . . . 9
6.6. MAINTENANCE OF INSURANCE . . . . . . . . . . . . . . . . . . . . . 9
6.7. NON-ASSIGNABLE CONTRACTS . . . . . . . . . . . . . . . . . . . . . 9
6.8. BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . .10
6.9. BEST EFFORTS; FURTHER ASSURANCES . . . . . . . . . . . . . . . . .10
ARTICLE VII COVENANTS OF THE PURCHASER. . . . . . . . . . . . . . . . . . . .10
7.1. COLLECTION OF THE SELLER'S ACCOUNTS RECEIVABLE . . . . . . . . . .11
7.2. COLLECTION OF THE WIP. . . . . . . . . . . . . . . . . . . . . . .11
7.3. REIMBURSEMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . . .11
7.4. MAINTENANCE OF INSURANCE . . . . . . . . . . . . . . . . . . . . .11
7.5. NON-ASSIGNABLE LEASES. . . . . . . . . . . . . . . . . . . . . . .12
7.6. BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . .12
7.7. BEST EFFORTS; FURTHER ASSURANCES . . . . . . . . . . . . . . . . .12
7.8. PUBLIC ANNOUNCEMENT. . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE VIII COVENANTS RELATING TO EMPLOYEE MATTERS. . . . . . . . . . . . . .13
8.1. OFFER OF EMPLOYMENT. . . . . . . . . . . . . . . . . . . . . . . .13
8.2. TERMINATION OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . .13
8.3. OTHER OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . .13
8.4. CREDITED SERVICE . . . . . . . . . . . . . . . . . . . . . . . . .13
8.5. EMPLOYEE OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . .13
8.6. NO SOLICITATION. . . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE IX INDEMNIFICATION AND RELATED MATTERS . . . . . . . . . . . . . . . .14
9.1. INDEMNIFICATION BY THE SELLER. . . . . . . . . . . . . . . . . . .14
9.2. INDEMNIFICATION BY THE PURCHASER . . . . . . . . . . . . . . . . .14
9.3. DETERMINATION OF DAMAGES AND RELATED MATTERS . . . . . . . . . . .15
9.4. LIMITED SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . .16
9.5. NOTICE OF INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . .16
9.6. INDEMNIFICATION PROCEDURE FOR THIRD-PARTY CLAIMS . . . . . . . . .16
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . .16
10.1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .16
10.2. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . .18
(ii)
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10.3. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . .19
10.4. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . .19
10.5. TRANSFER TAXES. . . . . . . . . . . . . . . . . . . . . . . . . .19
10.6. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
10.7. TABLE OF CONTENTS AND HEADINGS. . . . . . . . . . . . . . . . . .19
10.8. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
10.9. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . .20
10.10. BINDING EFFECT; NO ASSIGNMENT . . . . . . . . . . . . . . . . . .20
10.11. NO THIRD-PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . . .21
10.12. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
10.13. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . .21
(iii)
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SCHEDULES AND EXHIBITS
Schedule 1.1(a) -- Contracts
Schedule 1.1(c) -- Equipment
Schedule 1.1(d) -- WIP
Schedule 1.2(b) -- Leases
Schedule 3.6(a) -- Retainage
Schedule 3.6(b) -- Security Deposits and Prepaid Lease Payments
Schedule 4.14 -- Work of the Seller Having a Significant Environmental
Component
Schedule 8.1 -- Employees to be Offered Employment with the
Purchaser
Exhibit A -- Form of Note
Exhibit B -- Form of Bill of Sale
Exhibit C -- Form of IER Agreement
Exhibit D -- Form of DLR Agreement
Exhibit E -- Form of SLH Agreement
Exhibit F -- Form of Secretary's Certificate of the Seller
Exhibit G -- Form of Counsel Opinion of the Seller
Exhibit H -- Form of Secretary's Certificate of the Purchaser
Exhibit I -- Form of Counsel Opinion of the Purchaser
Exhibit J -- Form of Press Release
(iv)
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of October 31,
1995, between Hill International, Inc., a Delaware corporation (the "Seller"),
and ATC Environmental Inc., a Delaware corporation (the "Purchaser").
WHEREAS, the Seller, among other things, is engaged in the businesses
of providing environmental consulting and environmental engineering services
(the "Businesses"); and
WHEREAS, the Purchaser desires to purchase, and the Seller desires to
sell, certain of the assets of the Seller employed exclusively in the Businesses
and, as part of such purchase and sale, the Seller desires to assign, and the
Purchaser desires to assume, certain of the obligations and liabilities of the
Businesses, subject, in each case, to the exceptions, terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth herein, and upon
the terms and subject to the conditions set forth herein, the Purchaser and the
Seller hereby agree as follows:
ARTICLE I
PURCHASED ASSETS AND ASSUMED LIABILITIES
1.1. PURCHASED ASSETS. Upon the terms and subject to the conditions
set forth herein, the Seller shall sell, assign, transfer, convey and deliver to
the Purchaser, and the Purchaser shall purchase, acquire and accept from the
Seller, all of the Seller's right, title and interest in and to the following
(collectively, the "Purchased Assets"):
(a) the contracts of the Businesses listed on Schedule 1.1(a)
hereto (the "Contracts");
(b) all of the Seller's interest in and to the Associated
Engineers joint venture, encompassing the North River Water Pollution
Control Plant project, including all subsequent phases of such project;
(c) all furniture, fixtures, computer hardware and software,
inventory, supplies, telephone numbers and all field and office equipment
owned by the Seller and relating to the continuing operation of the
Businesses listed on Schedule 1.1(c) hereto (collectively, the
"Equipment");
(d) all of the unbilled work-in-process of the Businesses listed
on Schedule 1.1(d) hereto (the "WIP");
(e) copies of all books, records, files, reports, customer
lists, business development proposals and all other documents, data and
information relating to the continuing operation of the Businesses; and
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(f) the non-exclusive right to contact and solicit for future
business all current and former clients of the Businesses.
1.2. ASSUMED LIABILITIES. Upon the terms and subject to the
conditions set forth herein, the Seller shall assign to the Purchaser, and the
Purchaser shall assume from the Seller, all of the Seller's right, title and
interest in and to the following (collectively, the "Assumed Liabilities"):
(a) all liabilities and obligations of the Seller with respect
to the performance of the Contracts accruing after the Closing Date; and
(b) the real estate leases of the Businesses listed on Schedule
1.2(b) hereto (the "Leases").
All other liabilities and obligations of the Businesses and of the Seller other
than the Assumed Liabilities shall be retained by the Seller. All costs and
expenses shall be deemed to have "accrued" on the date services are performed,
goods are delivered or liabilities are incurred.
1.3. ACCOUNTS RECEIVABLE NOT INCLUDED. The Contracts that are
purchased by the Purchaser pursuant to Section 1.1(a) hereof shall not include
any billed accounts receivable of the Seller.
ARTICLE II
PURCHASE PRICE
2.1. PURCHASE PRICE. On the Closing Date, the Purchaser shall pay to
the Seller the following as the purchase price hereunder (collectively, the
"Purchase Price"):
(a) $2,443,850.58 by wire transfer of immediately available
funds;
(b) a promissory note in the amount of $300,000.00 made by the
Purchaser in favor of the Seller substantially in the form of Exhibit A
hereto (the "Note"); and
(c) an irrevocable letter of credit in favor of the Seller in
the amount of $730,625.00 payable in full on May 1, 1996.
ARTICLE III
THE CLOSING
3.1. CLOSING DATE. The Closing shall take place at the Willingboro,
New Jersey offices of the Seller and shall be deemed effective as of 12:00
midnight on October 31, 1995 (the "Closing Date").
3.2. PROCEEDINGS AT CLOSING. All proceedings to be taken and all
documents to be executed and delivered by the Seller in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Purchaser and
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its counsel. All proceedings to be taken and all documents to be executed and
delivered by the Purchaser in connection with the consummation of the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to the Seller and its counsel. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
deemed to have been taken, executed and delivered simultaneously, and no
proceedings shall be deemed taken nor any documents executed or delivered until
all have been taken, executed and delivered.
3.3. DELIVERIES BY THE SELLER TO THE PURCHASER. At the Closing, the
Seller shall deliver or cause to be delivered to the Purchaser the following:
(a) a counterpart of this Agreement executed by the Seller;
(b) an executed bill of sale, dated the Closing Date,
substantially in the form of Exhibit B hereto;
(c) certificates of insurance representing the insurance
discussed in Section 4.13 hereof;
(d) the non-competition agreement of Irvin E. Richter (the "IER
Agreement"), dated the Closing Date, substantially in the form of Exhibit C
hereto;
(e) the non-competition agreement of David L. Richter (the "DLR
Agreement"), dated the Closing Date, substantially in the form of Exhibit D
hereto;
(f) the amendment to the employment agreement of Susan L. Hayes
(as so amended, the "SLH Agreement"), dated the Closing Date, substantially
in the form of Exhibit E hereto;
(g) the secretary's certificate of the Seller, dated the Closing
Date, substantially in the form of Exhibit F hereto;
(h) a certificate of the Secretary of State of the State of
Delaware, dated the Closing Date, with respect to the good standing of the
Seller; and
(i) the opinion of the Seller's counsel, dated the Closing Date,
substantially in the form of Exhibit G hereto.
3.4. DELIVERIES BY THE PURCHASER TO THE SELLER. At the Closing, the
Purchaser shall deliver to the Seller the following:
(a) a counterpart of this Agreement executed by the Purchaser;
(b) the Purchase Price;
(c) $74,098.92 by wire transfer of immediately available funds
which represents the amount to be reimbursed to the Seller pursuant to
Section 3.6 hereof less the amount to be reimbursed to the Purchaser
pursuant to Section 6.5 hereof;
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(d) options to purchase 25,000 shares of the common stock of the
Purchaser at the closing market price on November 9, 1995 issued to Irvin
E. Richter which represent the consideration for the IER Agreement;
(e) options to purchase 25,000 shares of the common stock of the
Purchaser at the closing market price on November 9, 1995 issued to David
L. Richter which represent the consideration for the DLR Agreement;
(f) certificates of insurance representing the insurance
discussed in Section 5.6 hereof;
(g) the secretary's certificate of the Purchaser, dated the
Closing Date, substantially in the form of Exhibit H hereto;
(h) a certificate of the Secretary of State of the State of
Delaware, dated the Closing Date, with respect to the good standing of the
Purchaser; and
(i) the opinion of the Purchaser's counsel, dated the Closing
Date, substantially in the form of Exhibit I hereto.
3.5. PRORATIONS AS OF THE CLOSING. The Seller and the Purchaser
hereby agree that all reasonable operating expenses incurred in the ordinary
course of the Businesses shall be prorated between the parties as of the Closing
Date, and after such date shall become the obligation and responsibility of the
Purchaser.
3.6. REIMBURSEMENTS AS OF THE CLOSING. The Purchaser, on and as of
the Closing Date, shall pay to the Seller such amounts as may be required to
replace:
(a) all the amounts which have been retained by continuing
clients of the Businesses with respect to the Contracts listed on Schedule
3.6(a) hereto; and
(b) all security deposits and prepaid lease payments held by
third parties with respect to the Assumed Liabilities listed on Schedule
3.6(b) hereto.
The Purchaser shall have the right to receive all retainages and security
deposits when released by such continuing client or third party, as the case may
be.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
4.1. ORGANIZATION AND GOOD STANDING. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business as it is now being conducted, and to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
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4.2. AUTHORIZATION OF AGREEMENT. The Seller has full corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Seller in connection with the consummation of the transactions
contemplated by this Agreement (all such other agreements, documents,
instruments and certificates required to be executed by the Seller being
hereinafter referred to, collectively, as the "Seller Documents"), and to
perform fully its obligations hereunder and thereunder. The execution, delivery
and performance by the Seller of this Agreement and each of the Seller Documents
has been duly authorized by all necessary corporate action on the part of the
Seller. This Agreement has been, and each of the Seller Documents will be, duly
executed and delivered by the Seller, and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and the Seller Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Seller, enforceable
against the Seller in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.3. NO CONFLICTS. None of the execution and delivery by the Seller
of this Agreement and the Seller Documents, or the consummation of the
transactions contemplated hereby or thereby, or compliance by the Seller with
any of the provisions hereof or thereof will: (i) conflict with, or result in
the breach of, any provision of the certificate of incorporation or by-laws of
the Seller, (ii) conflict with, violate, result in the breach or termination of,
or constitute a default under any material contract or agreement or Order to
which the Seller is a party or by which it is bound or subject, or (iii)
constitute a violation of any Law applicable to the Seller, except, in each
case, for violations, conflicts, breaches or defaults which in the aggregate
would not materially hinder or impair the transactions contemplated hereby or
have a Material Adverse Effect.
4.4. TITLE TO PURCHASED ASSETS. The Seller owns and has, and after
the Closing Date the Purchaser will own and will have, good and valid title to
all of the Purchased Assets, free and clear of all Liens.
4.5. NO CONSENTS. No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of the Seller in connection with
the execution and delivery by the Seller of this Agreement or the Seller
Documents, or the compliance by the Seller with any of the provisions hereof or
thereof.
4.6. ACCURACY OF INFORMATION. To the Seller's Knowledge, all
information provided by the Seller to the Purchaser in connection with the
Purchaser's due diligence review of the Businesses is true and correct in all
material respects.
4.7. NO BROKERS. No person has acted directly or indirectly as a
broker, finder or financial advisor for the Seller in connection with the
negotiations relating to or the transactions contemplated by this Agreement and
no Person is entitled to any fee, commission or similar payment in respect
thereof based in any way on any agreement, arrangement or understanding made by
or on behalf of the Seller.
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4.8. NO CONTRACT BREACHES. The Seller is not in material breach of
any Contract and, to the Seller's Knowledge, no client has threatened to cancel
or materially reduce in amount any Contract.
4.9. ACCOUNTS RECEIVABLE. All accounts receivable of the Seller have
been fully earned as of the Closing Date and none of Seller's accounts
receivable with respect to the Contracts are the result of advance billing or
overbilling.
4.10 WIP. The list of WIP listed on Schedule 1.1(d) hereto is true
and correct in all material respects and, to the Seller's Knowledge, all of the
WIP has been fully earned by the Seller as of the Closing Date and all of the
WIP will be collectible using reasonable and customary collection procedures.
4.11. NO LITIGATION. There is no Legal Proceeding pending or, to the
Seller's Knowledge, threatened against the Seller with respect to the Purchased
Assets or any of the Hired Employees. There is no Legal Proceeding pending or,
to the Seller's Knowledge, threatened that seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated by this Agreement
or that questions the validity of this Agreement, the Seller Documents or any
action taken or to be taken by the Seller in connection with the consummation of
the transactions contemplated hereby or thereby.
4.12. RECOVERABILITY OF REIMBURSEMENTS. All of the retainages and
security deposits listed on Schedules 3.6(a) and 3.6(b) hereto are fully
recoverable as of the Closing Date.
4.13. INSURANCE. The Seller has obtained insurance coverage which
insures against any of Seller's acts, omissions or liabilities occurring before
the Closing Date with respect to the Contracts and the Purchaser is included as
an additional insured with respect to such insurance.
4.14. WORK OF THE SELLER HAVING A SIGNIFICANT ENVIRONMENTAL
COMPONENT. Except as listed on Schedule 4.14 hereto, the Seller is not
offering, performing or subcontracting any environmental services as part of its
current dispute resolution or project management services as of the Closing Date
which would violate Section 6.1 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
5.1. ORGANIZATION AND GOOD STANDING. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite corporate power and authority to carry
on its business as it is now being conducted, and to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
5.2. AUTHORIZATION OF AGREEMENT. The Purchaser has full corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by the Purchaser in connection
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with the consummation of the transactions contemplated by this Agreement (all
such other agreements, documents, instruments and certificates required to be
executed by the Purchaser being hereinafter referred to, collectively, as the
"Purchaser Documents") and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance by the Purchaser of this
Agreement and each Purchaser Document has been duly authorized by all necessary
action on the part of the Purchaser. This Agreement has been, and the Purchaser
Documents will be, duly executed and delivered by the Purchaser and (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and the Purchaser Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
5.3. NO CONFLICTS. None of the execution and delivery by the
Purchaser of this Agreement and the Purchaser Documents, or the consummation of
the transactions contemplated hereby or thereby, or compliance by the Purchaser
with any of the provisions hereof or thereof, will: (i) conflict with, or result
in the breach of, any provision of the certificate of incorporation or by-laws
of the Purchaser, (ii) conflict with, violate, result in the breach or
termination of, or constitute a default under any material contract or agreement
or Order to which the Purchaser is a party or by which it is bound or subject,
or (iii) constitute a violation of any Law applicable to the Purchaser, except,
in each case, for violations, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair the transactions contemplated
hereby.
5.4. NO CONSENTS. No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of the Purchaser in connection with
the execution and delivery of this Agreement or the Purchaser Documents or the
compliance by the Purchaser with any of the provisions hereof or thereof.
5.5. NO LITIGATION. There is no Legal Proceeding pending or, to the
knowledge of the Purchaser, threatened that seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated by this Agreement
or that questions the validity of this Agreement, the Purchaser Documents or any
action taken or to be taken by the Purchaser in connection with the consummation
of the transactions contemplated hereby or thereby.
5.6. INSURANCE. The Purchaser has obtained insurance coverage, with
a retro date of January 1, 1990, which insures against any of Purchaser's acts,
omissions or liabilities occurring after the Closing Date with respect to the
Contracts (the "Required Insurance"). As of the Closing Date: (i) the Required
Insurance is of the same type and provides at least the same limits of coverage
as the insurance that the Purchaser has maintained with respect to its business,
(ii) the Seller is included as an additional insured with respect to the
Required Insurance for coverage up to $5,000,000, and (iii) the Purchaser has
caused the provider or providers of the Required Insurance to agree to provide
at least 30 days prior written notice to the Seller of any cancellation of the
Required Insurance for non-payment of premiums.
5.7. NO BROKERS. No Person has acted directly or indirectly as a
broker, finder or financial advisor for the Purchaser in connection with the
negotiations relating to or the
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transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or similar payment in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of the
Purchaser.
ARTICLE VI
COVENANTS OF THE SELLER
From and after the Closing Date, the Seller hereby covenants and
agrees with the Purchaser that:
6.1. NO COMPETITION. The Seller and its Affiliates shall not, during
the two years immediately after the Closing Date, either directly or indirectly,
offer or perform any of the services offered or performed by the Businesses as
of the Closing Date within 100 miles of the location of any office which the
Businesses maintained as of the Closing Date; PROVIDED, HOWEVER, that the Seller
shall in no way be prohibited from offering or performing any of its current
dispute resolution or project management services (including, without
limitation, the offering, performing or subcontracting of environmental services
when such services are related and incidental to, and necessary for, the
Seller's other services, and either (i) such offered, performed or subcontracted
services comprise less than 10% of the Seller's total project value, or (ii) if
such services comprise 10% or more of the total project value, the Seller has
received the consent of the Purchaser to offer, perform or subcontract such
services; PROVIDED, HOWEVER, that (x) the Purchaser shall notify the Seller of
its consent or lack thereof within 48 hours after notice from the Seller, and
(y) the Purchaser shall not withhold such consent if the Businesses do not have
the required experience, technical skills or financial or human resources to
perform such work). Upon the reasonable request of the Purchaser, the Seller
shall deliver to the Purchaser a certificate of an officer of the Seller
certifying as to the percentage of environmental services with respect to the
total project value on any of the Seller's projects. Nothing contained in this
Section 6.1 shall prohibit the Seller from continuing to perform or subcontract
any environmental services specified, as of the Closing Date, under any contract
of the Seller that it was performing or subcontracting as of the Closing Date.
The Seller shall not, during the two years immediately after the Closing Date,
offer, perform or subcontract any services with respect to the North River Water
Pollution Control Plant project other than its current dispute resolution
services. The Purchaser hereby agrees not to offer or perform any such dispute
resolution services with respect to such project during the two years
immediately after the Closing Date.
6.2. SLH AGREEMENT. The Seller shall enforce, for the benefit of the
Seller and the Purchaser, all provisions of the SLH Agreement. The Seller shall
timely make all payments required to be made under the SLH Agreement; PROVIDED
that the Purchaser shall timely make all payments required to be made to the
Seller pursuant to Section 7.3(ii) hereof. The Seller hereby warrants to the
Purchaser that, during the term of the SLH Agreement, Susan L. Hayes shall not,
either directly or indirectly: (i) within 150 miles of any office location of
the Seller or of the Businesses, engage in any aspect of asbestos abatement
management services, lead abatement, property assessments, storage tank
management, industrial health and safety, air quality, environmental
engineering, or any other environmental consulting services (collectively, the
"Services"), (ii) solicit, divert or attempt to divert away from the Purchaser
any business of the Businesses with any customers or clients of the Businesses
nor accept employment or retainer to perform any of the Services from or for the
benefit of any such customers or clients, or (iii)
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solicit, raid, recruit, offer employment to or otherwise divert or attempt to
divert from employment with the Purchaser any of the Hired Employees.
6.3. PAYMENT OF ARREARAGES. The Seller shall: (i) pay all
arrearages, if any, with respect to the Leases which accrued before the Closing
Date by no later than 30 days after the Closing Date, and (ii) pay all
arrearages, if any, with respect to subcontractors, vendors, suppliers or
service providers of the Businesses which accrued before the Closing Date by no
later than 90 days after the Closing Date; PROVIDED, HOWEVER, that if any such
subcontractors, vendors, suppliers or service providers of the Businesses
withhold or threaten to withhold any goods or services required for the
completion of any project or file or threaten to file a lien against the
property of the client of the Purchaser or such client notifies the Purchaser of
a default, breach or setoff as a result thereof, the Seller shall pay such
arrearages within ten business days of the Seller's receipt of notice from the
Purchaser of such withholding or threatened withholding (except to the extent
that the Seller reasonably believes that no such arrearage is due).
6.4. COLLECTION OF THE PURCHASER'S ACCOUNTS RECEIVABLE. The Seller
shall, in good faith, use its best efforts to cooperate with and assist the
Purchaser in collecting all of the accounts receivable owed to the Purchaser by
the continuing clients of the Businesses; PROVIDED, HOWEVER, that the Seller
shall not be required to perform collection services on behalf of the Purchaser
and the Seller in no way warrants the collectability of the Purchaser's accounts
receivable.
6.5. REIMBURSEMENT OF EXPENSES. The Seller shall reimburse the
Purchaser for $12,786.00 as the cost of obtaining the irrevocable letter of
credit to be delivered to the Seller in accordance with Section 2.1(c) hereof.
6.6. MAINTENANCE OF INSURANCE. The Seller shall maintain, for a
periood of no less than one year after the Closing Date, insurance coverage with
respect to work performed by the Businesses before the Closing Date.
6.7. NON-ASSIGNABLE CONTRACTS.
(a) To the extent any Contract is not capable of being
transferred or assigned to the Purchaser, whether for the failure to obtain any
necessary consent, approval or waiver or if such proposed transfer would
constitute a breach thereof or a violation of any Law, nothing in this Agreement
shall constitute a transfer of such Contract.
(b) With respect to any Contract not transferred or assigned to
the Purchaser (including all Contracts which require the performer thereunder to
have a New York State engineering license), the Seller shall use its best
efforts to: (i) subcontract such Contract to the Purchaser on the same terms and
conditions thereof, (ii) cooperate in any reasonable and lawful arrangement to
provide to the Purchaser all the benefits of such Contract (including, without
limitation, allowing the Purchaser to use the names "Hill International, Inc.",
"Kaselaan & D'Angelo Associates, Inc.", "Hill Environmental, Inc." or "Spicer-
Hayes Associates, Ltd." and any commonly used derivatives thereof in order to
effect any invoicing of clients, acceptance of proposals or transfer of
Contracts), or (iii) enforce on behalf of the Purchaser all rights arising
thereunder. The Seller shall have no obligation to permit the Purchaser to use
the benefit of its New York State engineering license after six months after the
Closing Date; PROVIDED, HOWEVER,
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that this shall not release the Purchaser in any way from its obligations under
Section 1.2(a) hereof.
(c) With respect to all work that was being performed by the
Businesses before the Closing Date on current dispute resolution or project
management contracts of the Seller not being purchased by the Purchaser, the
Purchaser shall continue to perform such work after the Closing Date at a rate
of 140% of the direct salary costs and 100% of the documented out-of-pocket
expenses incurred by the Purchaser with respect to such work. The Seller shall
pay the Purchaser within 30 days of being billed for such work; PROVIDED,
HOWEVER, that: (i) such work shall not continue for more than 60 days after the
Closing Date, and (ii) the total amount of such work shall not exceed $10,000 in
the aggregate. The Purchaser shall perform such work using the same Employees
as performed such work before the Closing Date to the extent possible and until
such work has been reasonably transitioned to other employees of the Purchaser.
6.8. BOOKS AND RECORDS. For a period of five years after the Closing
Date (or such longer period as may be required by any Governmental Body or
ongoing Legal Proceeding):
(a) The Seller shall not dispose of or destroy any of the
business records or files of the Businesses; PROVIDED, HOWEVER, that the
Seller shall have no liability to the Purchaser for any lost, misplaced or
accidentally destroyed records or files. If the Seller wishes to dispose
of or destroy any such records or files after that time, it shall first
give 30 days prior written notice to the Purchaser and the Purchaser shall
have the right, at its option and expense, upon prior written notice to the
Seller within such 30-day period, to take possession of such records or
files within 60 days after the date of the Purchaser's notice to the
Seller.
(b) The Seller shall allow the Purchaser and its employees,
agents and representatives access to all business records and files of the
Businesses which are not transferred to the Purchaser in connection
herewith, during regular business hours and upon reasonable notice at the
Seller's principal place of business or at any location where such records
are stored, and the Purchaser shall have the right, at its own expense, to
make copies of any such records and files; PROVIDED, HOWEVER, that any such
access or copying shall be had or done in such a manner so as not to
interfere with the normal conduct of the Seller's business or operations.
(c) The Seller shall make available to the Purchaser, upon
written request and at the Purchaser's sole cost and expense: (i) the
Seller's personnel to assist the Purchaser in locating and obtaining
records and files (including, without limitation, all accounting and other
financial records of the Businesses) maintained by the Seller, and (ii) any
of the Seller's personnel whose assistance or participation is reasonably
required by the Purchaser in anticipation of, or preparation for, any
existing or future litigation, arbitration, administrative proceeding, tax
return preparation or other matter in which the Purchaser or any of its
subsidiaries or affiliates is involved and which is related to the
Businesses.
6.9. BEST EFFORTS; FURTHER ASSURANCES. The Seller shall use its best
efforts to take any and all such action as the Purchaser may deem reasonably
necessary or appropriate
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consistent with the terms thereof in order to transfer to the Purchaser the
Purchased Assets and assure to the Purchaser the benefits thereof and to give
effect to the Purchaser's assumption of the Assumed Liabilities. From time to
time after the Closing Date, the Seller shall, at its sole cost and expense,
execute and deliver such other and further instruments of sale, assignment,
assumption, transfer and conveyance as the Purchaser may reasonably request or
the Seller shall deem necessary or appropriate in order to effect the transfer
to the Purchaser of the Purchased Assets and assure to the Purchaser the
benefits thereof and to effect the assumption by the Purchaser of the Assumed
Liabilities. In the event that the Seller shall receive any payment that is
properly payable to the Purchaser, the Seller shall, within 24 hours of
receiving such payment, forward such payment to the Purchaser. The Seller shall
prepare audited financial statements with respect to the Businesses and shall
use its best efforts to deliver such statements to the Purchaser within 60 days
after the Closing Date. The Seller shall use its best efforts to mitigate its
losses and out-of-pocket expenses in connection with the New York Lease. During
the term of the SLH Agreement, the Seller shall not file a voluntary petition
for bankrupcty and shall maintain sufficient liquid assets to make all payments
required to be made by the Seller pursuant to the SLH Agreement.
ARTICLE VII
COVENANTS OF THE PURCHASER
From and after the Closing Date, the Purchaser hereby covenants and
agrees with the Seller that:
7.1. COLLECTION OF THE SELLER'S ACCOUNTS RECEIVABLE. The Purchaser
shall, in good faith, use its best efforts to cooperate with and assist the
Seller in collecting all of the accounts receivable owed to the Seller by the
continuing clients of the Businesses; PROVIDED, HOWEVER, that the Purchaser
shall not be required to perform collection services on behalf of the Seller and
the Purchaser in no way warrants the collectability of the Seller's accounts
receivable.
7.2. COLLECTION OF THE WIP. The Purchaser shall, in good faith, use
its best efforts to collect all of the WIP. The Purchaser hereby warrants to
the Seller that it is not aware of any amounts other than the Seller's recorded
work-in-process and accounts receivable that should be collectible by the Seller
pursuant to any of the Contracts for work performed before the Closing Date.
7.3. REIMBURSEMENT OF EXPENSES. The Purchaser shall reimburse the
Seller for: (i) all of the Seller's actual out-of-pocket expenses (including
accounting fees of $12,000 and direct salary costs of the Seller) incurred in
connection with the preparation and delivery to the Purchaser of audited
financial statements with respect to the Businesses, (ii) all payments to be
made by the Seller pursuant to paragraph 3 of the SLH Agreement up to a maximum
of $62,500.00, (iii) all normal operating costs incurred by the Seller directly
related to the lease between the Seller and Everett Realty Company for the
premises located at 200 Park Avenue South, 7th Floor, New York, New York 10010
(the "New York Lease") for the period from the Closing Date through December 31,
1995, and (iv) all actual losses and out-of-pocket expenses, including brokerage
fees and commissions, incurred by the Seller in connection with the New York
Lease up to a maximum of $150,000 in the aggregate through the term of the New
York Lease.
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7.4. MAINTENANCE OF INSURANCE. The Purchaser shall maintain the
Required Insurance for a period of no less than three years after the Closing
Date. During such period: (i) the Required Insurance shall be of the same type
and shall provide at least the same limits of coverage as the insurance that the
Purchaser maintained immediately after the Closing Date, (ii) the Seller shall
be included as an additional insured with respect to the Required Insurance for
coverage up to $5,000,000, and (iii) the Purchaser shall cause the provider or
providers of the Required Insurance to agree to provide at least 30 days prior
written notice to the Seller of any cancellation of the Required Insurance for
non-payment of premiums.
7.5. NON-ASSIGNABLE LEASES.
(a) To the extent any Lease is not capable of being transferred
or assigned to the Purchaser, whether for the failure to obtain any necessary
consent, approval or waiver or if such proposed transfer would constitute a
breach thereof or a violation of any Law, nothing in this Agreement shall
constitute a transfer of such Lease.
(b) With respect to any Lease not transferred or assigned to the
Purchaser, the Purchaser shall use its best efforts to sublet such Lease from
the Seller on the same terms and conditions thereof.
7.6. BOOKS AND RECORDS. For a period of five years after the Closing
Date (or such longer period as may be required by any Governmental Body or
ongoing Legal Proceeding):
(a) The Purchaser shall not dispose of or destroy any of the
business records or files of the Businesses; PROVIDED, HOWEVER, that the
Purchaser shall have no liability to the Seller for any lost, misplaced or
accidentally destroyed records or files. If the Purchaser wishes to
dispose of or destroy any such records or files after that time, it shall
first give 30 days prior written notice to the Seller and the Seller shall
have the right, at its option and expense, upon prior written notice to the
Purchaser within such 30-day period, to take possession of such records or
files within 60 days after the date of the Seller's notice to the
Purchaser.
(b) The Purchaser shall allow the Seller and its employees,
agents and representatives access to all business records and files of the
Businesses which are transferred to the Purchaser in connection herewith,
during regular business hours and upon reasonable notice at the Purchaser's
principal place of business or at any location where such records are
stored, and the Seller shall have the right, at its own expense, to make
copies of any such records and files; PROVIDED, HOWEVER, that any such
access or copying shall be had or done in such a manner so as not to
interfere with the normal conduct of the Purchaser's business or
operations.
(c) The Purchaser shall make available to the Seller, upon
written request and at the Seller's sole cost and expense: (i) the
Purchaser's personnel to assist the Seller in locating and obtaining
records and files maintained by the Purchaser, and (ii) any of the
Purchaser's personnel previously in the Seller's employ whose assistance or
participation is reasonably required by the Seller in anticipation of, or
preparation for, any existing or future litigation, arbitration,
administrative proceeding, tax return preparation or other matter in which
the Seller or any of its subsidiaries or affiliates is involved and which
is related to the Businesses.
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7.7. BEST EFFORTS; FURTHER ASSURANCES. The Purchaser shall use its
best efforts to take any and all such action as the Seller may deem reasonably
necessary or appropriate consistent with the terms thereof in order to transfer
to the Purchaser the Purchased Assets and assure to the Purchaser the benefits
thereof and to give effect to the Purchaser's assumption of the Assumed
Liabilities. From time to time after the Closing Date, the Purchaser shall, at
its sole cost and expense, execute and deliver such other and further
instruments of sale, assignment, assumption, transfer and conveyance as the
Seller may reasonably request or the Purchaser shall deem necessary or
appropriate in order to effect the transfer to the Purchaser of the Purchased
Assets and assure to the Purchaser the benefits thereof and to effect the
assumption by the Purchaser of the Assumed Liabilities. In the event that the
Purchaser shall receive any payment that is properly payable to the Seller, the
Purchaser shall, within 24 hours of receiving such payment, forward such payment
to the Seller.
7.8. PUBLIC ANNOUNCEMENT. The Purchaser shall not make any public
announcements immediately after the Closing, except as required by Law, other
than a press release, dated the Closing Date, substantially in the form of
Exhibit J hereto.
ARTICLE VIII
COVENANTS RELATING TO EMPLOYEE MATTERS
8.1. OFFER OF EMPLOYMENT. The Purchaser shall offer employment as of
the Closing Date to each of the Employees listed on Schedule 8.1 hereto in
relatively the same position and location and, in each case, at a rate of pay
approximately equal to such Employee's rate of pay in effect on the business day
immediately preceding the Closing Date. The Purchaser shall employ all of the
Hired Employees. The Purchaser shall be solely responsible for all compensation
and benefits accruing after the Closing Date with respect to the Hired Employees
and any Employees terminated by the Seller after the Closing Date.
8.2. TERMINATION OBLIGATIONS.
(a) On and after the Closing Date, the Seller shall be liable
for all payments that may be required to be made under any termination,
severance or similar plan, policy or arrangement of the Seller with respect to
the termination of the Non-Hired Employees.
(b) After the Closing Date, the Purchaser shall be liable for
all payments that may be required to be made under any termination, severance or
similar plan, policy or arrangement of the Purchaser with respect to the Hired
Employees.
(c) In the event that the Purchaser shall employ any of the Non-
Hired Employees within 45 days after the Closing Date, the Purchaser shall
reimburse the Seller for all payments made by the Seller to such Non-Hired
Employees pursuant to Section 8.2(a) hereof.
8.3. OTHER OBLIGATIONS. The Seller shall be liable for all expenses
and other employee liabilities (whether known or unknown, recorded or
unrecorded) incurred on or before the Closing Date with respect to all
Employees. The Purchaser shall credit to the Hired
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Employees all accrued vacation of such Employees as of the Closing Date and the
Seller shall reimburse the Purchaser for all amounts so credited.
8.4. CREDITED SERVICE. From and after the Closing, the Purchaser
shall credit to the Hired Employees, for all purposes under all benefit plans,
benefit arrangements and compensation policies and practices of the Purchaser,
all previous service recognized by the Seller for such Hired Employees on the
business day immediately preceding the Closing Date.
8.5. EMPLOYEE OPTIONS. Promptly after the Closing, the Purchaser
shall distribute to certain Hired Employees, determined by the Purchaser in its
sole discretion, options to purchase shares of the common stock of the
Purchaser.
8.6. NO SOLICITATION. During the two years immediately after the
Closing Date, neither the Seller nor the Purchaser shall employ or offer to
employ any of the then current employees of the other party.
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
9.1. INDEMNIFICATION BY THE SELLER. Subject to the provisions of
this Article IX, the Seller agrees to indemnify and hold the Purchaser harmless
from and against all Damages resulting from or arising out of:
(a) the failure of any of the representations and warranties
contained in this Agreement to have been true in all material respects as
of the Closing Date;
(b) the failure of the Seller to comply in all material respects
with any of the covenants contained in this Agreement which are required to
be performed by the Seller;
(c) all liabilities and obligations of the Businesses and of the
Seller other than the Assumed Liabilities;
(d) the operation of the Businesses or ownership of the
Purchased Assets before the Closing Date; and
(e) all WIP which has remained uncollected as of the date six
months after the Closing Date; PROVIDED, HOWEVER, that payment by the
Seller of any amount pursuant to this Section 9.1(e) is conditioned upon
the following: (i) the Purchaser shall return to the Seller all of its
right, title and interest in and to such uncollected WIP and (ii) the
Purchaser shall not have taken any action which adversely affects the
Seller's ability to subsequently collect such uncollected WIP.
9.2. INDEMNIFICATION BY THE PURCHASER. Subject to the provisions of
this Article IX, the Purchaser agrees to indemnify and hold the Seller harmless
from and against all Damages resulting from or arising out of:
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(a) the failure of any of the representations and warranties
contained in this Agreement to have been true in all material respects as
of the Closing Date;
(b) the failure of the Purchaser to comply in all material
respects with any of the covenants contained in this Agreement which are
required to be performed by the Purchaser;
(c) the Assumed Liabilities;
(d) the ownership of the Purchased Assets and the operation of
the Businesses associated therewith after the Closing Date;
(e) any Damages incurred by the Seller due to the Purchaser's
use of any of the Seller's trade names or any commonly used derivatives
thereof in order to effect any invoicing of clients, acceptance of
proposals or transfer of Contracts pursuant to Section 6.3(b) hereof;
(f) any non-payment under the irrevocable letter of credit to
be delivered to the Seller in accordance with Section 2.1(c) hereof; and
(g) all WIP collected by the Purchaser which is in excess of the
amount listed on Schedule 1.1(d) hereto or for which the Purchaser was paid
by the Seller pursuant to Section 9.1(e) hereof.
9.3. DETERMINATION OF DAMAGES AND RELATED MATTERS.
(a) In calculating any amount payable to the Purchaser pursuant
to Section 9.1 hereof or payable to the Seller pursuant to Section 9.2 hereof,
the Seller or the Purchaser, as the case may be, shall receive credit for (i)
any tax benefit allowable as a result of the facts giving rise to the claim for
indemnification, and (ii) any insurance recoveries; PROVIDED, HOWEVER, that no
amount shall be included for the Seller's or the Purchaser's, as the case may
be, special, consequential or punitive damages as between the Seller and the
Purchaser (as distinguished from third party recoveries).
(b) On the date six months after the Closing Date, the Seller
and the Purchaser shall calculate the amount payable to the Purchaser pursuant
to Section 9.1 hereof and the amount payable to the Seller pursuant to Section
9.2 hereof, which amounts remain unpaid and outstanding as of such time, and the
Purchaser shall add or subtract, as the case may be, the difference between such
amounts (the "Difference") from the total amount due to the Seller under the
Note. In the event the Seller and the Purchaser shall not agree on the
calculation of the Difference within five days after such date, the Purchaser
shall: (i) add or subtract, as the case may be, its calculation of the
Difference from the total amount due to the Seller at such time pursuant to the
Note, (ii) pay the total amount due to the Seller under the Note less the
Purchaser's calculation of the Difference, and (iii) the Seller and the
Purchaser shall resolve such dispute in accordance with Section 10.4 hereof.
(c) The Seller and the Purchaser agree that, except as
specifically set forth in this Agreement, neither party has made or shall have
liability for any representation or warranty, express or implied, in connection
with the transactions contemplated by this
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Agreement, including in the case of the Seller and its representatives any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Businesses, the Purchased Assets
and the Assumed Liabilities. The Purchaser acknowledges and agrees that the
Purchaser and its representatives have the experience and knowledge to evaluate
the Businesses, the Purchased Assets and the Assumed Liabilities, that the
Purchaser and its representatives have had access to such of the information and
documents and to such of the Businesses, the Purchased Assets and the Assumed
Liabilities as the Purchaser and its representatives shall have requested to see
and/or review, that the Purchaser and its representatives have had a full
opportunity to meet with appropriate management and other employees of the
Seller to discuss the Businesses, the Purchased Assets and the Assumed
Liabilities; and that, in determining to purchase the Purchased Assets and
assume the Assumed Liabilities, the Purchaser has made its own investigation
into, and based thereon the Purchaser has formed an independent judgment
concerning, the Businesses, the Purchased Assets and the Assumed Liabilities.
It is therefore expressly understood and agreed that, except for the
representations and warranties made and as otherwise expressly provided herein,
the Purchaser accepts the condition of the Businesses , the Purchased Assets and
the Assumed Liabilities "AS IS, WHERE IS" and without any representation,
warranty or guarantee, express or implied, as to merchantability, fitness for a
particular purpose or otherwise as to the condition, size, extent, quantity,
type or value of the Businesses, the Purchased Assets or the Assumed
Liabilities.
9.4. LIMITED SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties
hereto agree that the representations and warranties made in this Agreement and
any indemnification with respect thereto shall survive for two years after the
Closing Date. The foregoing time limitation shall be construed to apply only to
the indemnity obligations of the Seller under Section 9.1(a) hereof and only to
the indemnity obligations of the Purchaser under Section 9.2(a) hereof and not
to any other provisions of Section 9.1 or 9.2 hereof.
9.5. NOTICE OF INDEMNIFICATION. In the event any legal proceeding
shall be threatened or instituted or any claim or demand shall be asserted by
any person in respect of which payment may be sought by one party hereto from
the other party under the provisions of this Article IX or for breach of any of
the representations and warranties set forth herein, the party seeking
indemnification (the "Indemnitee") shall promptly cause written notice of the
assertion of any such claim of which it has knowledge which is covered by this
indemnity to be forwarded to the other party (the "Indemnitor"). Any notice of
a claim by reason of any of the representations, warranties or covenants
contained in this Agreement shall state specifically the representation,
warranty or covenant with respect to which the claim is made, the facts giving
rise to an alleged basis for the claim, and the amount of the liability asserted
against the Indemnitor by reason of the claim.
9.6. INDEMNIFICATION PROCEDURE FOR THIRD-PARTY CLAIMS. Except as
otherwise provided herein, in the event of the initiation of any legal
proceeding against an Indemnitee by a third party, the Indemnitor shall have the
absolute right after the receipt of notice, at its option and at its own
expense, to be represented by counsel of its choice, and to defend against,
negotiate, settle or otherwise deal with any proceeding, claim, or demand which
relates to any loss, liability or damage indemnified against hereunder;
PROVIDED, HOWEVER, that the Indemnitee may participate in any such proceeding
with counsel of its choice and at its sole cost and expense. The Seller and the
Purchaser agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such legal proceeding, claim or
demand. To the extent the Indemnitor elects not to defend such proceeding,
claim or demand, and the
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Indemnitee defends against or otherwise deals with any such proceeding, claim or
demand, the Indemnitee may retain counsel, at the expense of the Indemnitor, and
control the defense of such proceeding. If the Indemnitee shall settle any such
proceeding without the prior written consent of the Indemnitor, the Indemnitee
shall thereafter have no claim against the Indemnitor under this Article IX with
respect to any Damages occasioned by such settlement.
ARTICLE X
MISCELLANEOUS
10.1. DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
"ACCRUE" has the meaning set forth in Section 1.2 hereof.
"AFFILIATE" means any Person in which the Seller, either directly or
indirectly, owns more than 5% of the outstanding capital stock or over
which the Seller exercises control.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"ASSUMED LIABILITIES" has the meaning set forth in Section 1.2 hereof.
"BUSINESSES" has the meaning set forth in the first recital hereof.
"CLOSING" means the consummation of the transactions contemplated by
this Agreement.
"CLOSING DATE" has the meaning set forth in Section 3.1 hereof.
"CONTRACTS" has the meaning set forth in Section 1.1(a) hereof.
"DAMAGES" means all claims, actions, losses, damages, costs, expenses
and liabilities (including reasonable attorneys' fees incident to the
foregoing).
"DIFFERENCE" has the meaning set forth in Section 9.3(b) hereof.
"DLR AGREEMENT" has the meaning set forth in Section 3.3(e) hereof.
"EMPLOYEES" means all persons employed by Seller with respect to the
Businesses on the business day immediately preceding the Closing Date.
"EQUIPMENT" has the meaning set forth in Section 1.1(c) hereof.
"GOVERNMENTAL BODY" means any government, or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency or instrumentality thereof, or any
court or arbitrator (public or private).
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"HIRED EMPLOYEES" means all Employees who accept offers of employment
from the Purchaser on or within 45 days after the Closing Date.
"IER AGREEMENT" has the meaning set forth in Section 3.3(d) hereof.
"INDEMNITEE" has the meaning set forth in Section 9.6 hereof.
"INDEMNITOR" has the meaning set forth in Section 9.6 hereof.
"LAW" means any federal, state, local or foreign law (including common
law), statute, code, ordinance, rule, regulation or other requirement or
guideline.
"LEASES" has the meaning set forth in Section 1.2(b) hereof.
"LEGAL PROCEEDING" means any judicial, administrative or arbitration
action, suit, proceeding (public or private), claim or governmental
proceeding.
"LIEN" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
or other real estate declaration, covenant, condition, restriction or
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on, or any
effect that results in a material adverse change in, the Purchased Assets
or the Assumed Liabilities, as a whole, or the business, financial
condition, results of operations or liabilities of the Businesses, as a
whole.
"NEW YORK LEASE" has the meaning set forth in Section 7.3(iii) hereof.
"NON-HIRED EMPLOYEES" means all Employees who are not offered or who
do not accept offers of employment with the Purchaser on or within 45 days
after the Closing Date.
"NOTE" has the meaning set forth in Section 2.1(b) hereof.
"ORDER" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, limited liability
company, limited liability partnership, unincorporated organization or
Governmental Body.
"PURCHASED ASSETS" has the meaning set forth in Section 1.1 hereof.
"PURCHASE PRICE" has the meaning set forth in Section 2.1 hereof.
"PURCHASER" has the meaning set forth in the preamble hereto.
"PURCHASER DOCUMENTS" has the meaning set forth in Section 5.2 hereof.
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"REQUIRED INSURANCE" has the meaning set forth in Section 5.6 hereof.
"SELLER" has the meaning set forth in the preamble hereto.
"SELLER DOCUMENTS" has the meaning set forth in Section 4.2 hereof.
"SELLER'S KNOWLEDGE" means to the knowledge of Irvin E. Richter,
Donald R. Cruver, Robert S. Kahn, Susan L. Hayes, Ronald F. Emma or David
L. Richter.
"SLH AGREEMENT" has the meaning set forth in Section 3.3(f) hereof.
"WIP" has the meaning set forth in Section 1.1(d) hereof.
10.2. ENTIRE AGREEMENT. This Agreement, together with all of its
schedules and exhibits, contains, and is intended as, a complete statement of
all of the terms and the arrangements between the parties hereto with respect to
the matters provided for herein, and supersedes any and all previous agreements
and understandings between the parties hereto with respect to those matters.
10.3. GOVERNING LAW. This Agreement shall be governed by and
construed and interpreted in accordance with the law of the State of New Jersey.
10.4. DISPUTE RESOLUTION. All claims for monetary damages between
the Seller and the Purchaser with respect to this Agreement shall be settled by
binding arbitration administered under the rules and regulations of the American
Arbitration Association with the Federal Rules of Evidence applicable in all
respects thereto. The Seller and the Purchaser shall not be limited to
arbitration with respect to: (i) claims for equitable relief and (ii) claims for
damages brought by a third party or claims in which either the Seller or the
Purchaser intends to properly join a third party who has not agreed to
participate in an arbitration proceeding.
10.5. TRANSFER TAXES. The Purchaser shall pay: (i) all transfer and
documentary taxes and fees imposed with respect to instruments of conveyance in
the transactions contemplated hereby, and (ii) all sales, use, gains, excise and
other transfer or similar taxes on the transfer of the Purchased Assets and the
Assumed Liabilities hereunder. After the Closing, the Purchaser shall execute
and deliver to the Seller any certificates or other documents as the Seller may
reasonably request to perfect any exemption from any such transfer, documentary,
sales, gains, excise or use tax.
10.6. EXPENSES. Except as otherwise expressly provided in this
Agreement, each of the parties hereto shall bear its own expenses (including,
without limitation, fees and disbursements of its counsel, accountants and other
experts), incurred by it in connection with the preparation, negotiation,
execution, delivery and performance of this Agreement, each of the other
documents and instruments executed in connection with or contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby. Unless otherwise agreed to, the Seller and the Purchaser shall each
reimburse the other party for any costs and expenses due under this Agreement
within 30 days after the such party has received an invoice from the other party
with respect to such costs or expenses.
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10.7. TABLE OF CONTENTS AND HEADINGS. The table of contents and
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
10.8. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed given: (i) on the same day
when delivered personally, (ii) on the same day when sent by telecopy, (iii) one
day after being sent by nationally-recognized overnight courier service, or (iv)
three days after being sent by U.S. registered or certified mail, return receipt
requested, to a party at the following address (or to such other address as such
party may have specified by notice given to the other party pursuant to this
provision):
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If to the Seller, to:
Hill International, Inc.
One Levitt Parkway
Willingboro, New Jersey 08046
Telephone: (609) 871-5800
Facsimile: (609) 871-0802
Attention: Irvin E. Richter
Chairman and CEO
With a copy to:
Hill International, Inc.
One Levitt Parkway
Willingboro, New Jersey 08046
Telephone: (609) 871-5800
Facsimile: (609) 877-0775
Attention: David L. Richter, Esq.
Vice President and General Counsel
If to the Purchaser, to:
ATC Environmental Inc.
104 East 25th Street
New York, New York 10010
Telephone: (212) 353-8280
Facsimile: (212) 598-4283
Attention: Morry F. Rubin
President and CEO
With a copy to:
ATC Environmental Inc.
1515 East 10th Street
Sioux Falls, South Dakota 57103
Telephone: (605) 338-0555
Facsimile: (605) 338-2098
Attention: John J. Smith, Esq.
General Counsel
10.9. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validly or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
10.10. BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns. No assignment of this Agreement or of any rights or
obligations hereunder may be made by any party (by operation of law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without such required consent shall be void.
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10.11. NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement
shall create or be deemed to create any third-party beneficiary rights in any
Person not a party to this Agreement.
10.12. AMENDMENTS. This Agreement may be amended, supplemented or
modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Agreement signed by each of the
parties hereto.
10.13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
HILL INTERNATIONAL, INC.
/s/ Irvin E. Richter
By:---------------------------------
Irvin E. Richter
Chairman and CEO
ATC ENVIRONMENTAL INC.
/s/ Nicholas J. Malino
By:---------------------------------
Nicholas J. Malino
Senior Vice President
23
<PAGE>
NOTE
$300,000.00 Willingboro, New Jersey
October 31, 1995
FOR VALUE RECEIVED, the undersigned, ATC ENVIRONMENTAL INC., a
Delaware corporation (the "Purchaser"), hereby PROMISES TO PAY to the order of
HILL INTERNATIONAL, INC., a Delaware corporation (the "Seller"), at the office
of the Seller at One Levitt Parkway, Willingboro, New Jersey 08046, or at such
other place as the holder of this Note may designate from time to time in
writing, in lawful money of the United States of America and in immediately
available funds, the principal amount of THREE HUNDRED THOUSAND DOLLARS
($300,000.00), together with simple interest on the unpaid principal amount of
this Note outstanding from time to time from the date hereof at the rate of
EIGHT POINT SEVEN FIVE PERCENT (8.75%) per annum. The unpaid principal plus all
accrued and unpaid interest thereon evidenced hereby shall be payable in full on
April 30, 1996.
The principal of this Note and all accrued interest hereon may be
prepaid in whole or in part at any time or from time to time without penalty or
premium. If any payment on this Note becomes due and payable on a day other
than a business day, the maturity thereof shall be extended to the next
succeeding business day and, with respect to payments of principal, interest
thereon shall be payable during such extension.
The Purchaser's obligation to make payment hereunder is subject to
setoff pursuant to and in accordance with the terms of that certain Asset
Purchase Agreement, dated the date hereof, between the Seller and the Purchaser.
If suit is brought to collect or enforce this Note, the holder hereof
shall be entitled to collect all reasonable costs and expenses of suit
including, without limitation, reasonable attorneys' fees.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Purchaser.
This Note may be sold, transferred, pledged, hypothecated or assigned
by the holder hereof without any restriction of any kind. All of the terms and
conditions of this Note shall be binding upon, inure to the benefit of and be
enforceable by each of the parties hereto and their respective legal
representatives, successors and assigns.
No failure to exercise or delay in exercising any right, power or
remedy with respect to this Note shall constitute a waiver hereof or preclude
the exercise of any right, power or remedy hereunder.
This Note may not be varied, amended or modified except in a writing
signed by the Purchaser and the holder hereof.
<PAGE>
This Note has been executed, delivered and accepted at Willingboro,
New Jersey and shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New Jersey.
ATC ENVIRONMENTAL INC.
By: /s/ Nicholas J. Malino
---------------------------------
Nicholas J. Malino
Senior Vice President
<PAGE>
[LOGO]
ATLANTIC BANK OF NEW YORK
960 AVENUE OF THE AMERICAS . NEW YORK, N.Y. 10001
November 8, 1995
Hill International, Inc.
One Levitt Parkway
Willingboro, NJ 08046
Gentlemen:
We hereby establish our Irrevocable Letter of Credit # 1995PS00121 in favor
of Hill International Inc. (the "Beneficiary") for the account of ATC
Environmental Inc. (104 East 25th Street, New York, NY 10010) ("Account
Holder") for US$730,625.00 available by the Beneficiary's draft(s) ("Drafts")
drawn on us at sight.
Drafts may not be submitted to Atlantic Bank of New York prior to May 1, 1996.
Drafts must be presented to Atlantic Bank of New York on or before May 30,
1996 at our offices at 960 Avenue of the Americas, New York NY 10001.
All Drafts must be marked 'Drawn under Atlantic Bank of New York Credit
# 1995PS00121 dated November 8, 1995' and must be accompanied by this advice.
We hereby engage with you that all Drafts drawn and presented under
compliance with the terms of this Letter of Credit that such Draft(s) will be
duly honored upon presentation to the Drawee.
This Credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce, Publication 500.
The original Letter of Credit was handed to openers for delivery to the
beneficiary.
/s/ Thomas DeFilippe
- --------------------
Authorized Signature
TEL. NO (212) 695-5400 . FAX NO. (212) 563-2729 . TELEX: 422195 ATLBANK
SWIFT: ABNYUS33
2277 (Rev. 6/94)
<PAGE>
BILL OF SALE
FOR VALUE RECEIVED, HILL INTERNATIONAL, INC., a Delaware corporation
(the "Seller"), pursuant to that certain Asset Purchase Agreement, dated as of
October 31, 1995 (the "Agreement"), between the Seller and ATC Environmental
Inc., a Delaware corporation (the "Purchaser"), does, as of the date hereof,
hereby sell, convey, assign, transfer and deliver to the Purchaser all of the
Seller's right, title, and interest in and to the following (collectively, the
"Purchased Assets"):
(a) the contracts of the Businesses listed on Schedule 1.1(a) to
the Agreement;
(b) all of the Seller's interest in and to the Associated
Engineers joint venture, encompassing the North River Water Pollution
Control Plant project, including all subsequent phases of such project;
(c) all furniture, fixtures, computer hardware and software,
inventory, supplies, telephone numbers and all field and office equipment
owned by the Seller and relating to the continuing operation of the
Businesses listed on Schedule 1.1(c) to the Agreement;
(d) all of the unbilled work-in-process of the Businesses listed
on Schedule 1.1(d) to the Agreement;
(e) copies of all books, records, files, reports, customer
lists, business development proposals and all other documents, data and
information relating to the continuing operation of the Businesses; and
(f) the non-exclusive right to contact and solicit for future
business all current and former clients of the Businesses.
TO HAVE AND TO HOLD the Purchased Assets hereby being sold, conveyed,
transferred, assigned and delivered unto the Purchaser and its successors and
assigns forever. The Purchased Assets are being sold and conveyed to the
Purchaser free and clear of all Liens. The Seller also acknowledges that the
Purchased Assets are being sold, conveyed, transferred, assigned and delivered
pursuant to the Agreement and that the Purchaser shall be entitled to the
benefits of the representations, warranties and covenants contained therein.
From time to time, at the request of the Purchaser, and without
further consideration or cost or expense to the Purchaser, the Seller shall do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances and assurances that may reasonably be required for the
conveyance, transfer, assignment, delivery, assurance and confirmation to the
Purchaser, or to its successors and assigns of, or for aiding and assisting in
collecting or reducing to possession, any or all of the Purchased Assets.
1
<PAGE>
THIS BILL OF SALE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Agreement.
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be duly
executed and delivered this 31st day of October, 1995.
HILL INTERNATIONAL, INC.
By: /s/ Irvin E. Richter
-------------------------------
Irvin E. Richter
Chairman and CEO
<PAGE>
IER AGREEMENT
NON-COMPETITION AGREEMENT (this "Agreement"), dated as of October 31,
1995, between ATC ENVIRONMENTAL INC., a Delaware corporation (the "Purchaser"),
and IRVIN E. RICHTER, an individual residing at 54 Fries Lane, Cherry Hill, New
Jersey 08003 ("IER").
WHEREAS, Hill International, Inc., a Delaware corporation (the
"Seller"), and the Purchaser have entered into an Asset Purchase Agreement,
dated as of the date hereof (the "Asset Purchase Agreement") for the sale of the
Seller's environmental consulting and environmental engineering businesses (the
"Businesses") to the Purchaser; and
WHEREAS, the Purchaser desires to protect the continuing value of the
Businesses; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth herein, and upon
the terms and subject to the conditions set forth herein, the Purchaser and IER
hereby agree as follows:
1. RESTRICTIVE COVENANTS. During the term of this Agreement, IER
shall not, either directly or indirectly:
(a) offer or perform any of the services offered or performed by the
Businesses as of the Closing Date within 100 miles of the location of any office
which the Businesses maintained as of the Closing Date, PROVIDED, HOWEVER, that
IER shall in no way be prohibited from offering or performing any of the
Seller's current dispute resolution or project management services (including,
without limitation, the offering, performing or subcontracting of environmental
services when such services are related and incidental to, and necessary for,
the Seller's other services, and either (i) such services comprise less than 10%
of the total project value, or (ii) if such services comprise 10% or more of the
total project value, the Seller has received the consent of the Purchaser to
offer, perform or subcontract such services); or
(b) employ or offer to employ any of the Hired Employees then
currently employed by the Purchaser.
2. TERM. The restrictive covenants provided by IER in Section 1
hereof shall commence on November 1, 1995 and shall terminate automatically on
October 31, 1997.
3. CONSIDERATION. As consideration for the restrictive covenants
provided by IER in Section 1 hereof, the Purchaser shall issue to IER options to
purchase 25,000 shares of the common stock of the Purchaser at the closing
market price on November 9, 1995 (the "Options"). IER hereby acknowledges that
he understands that the Options may have little or no value during the term
thereof and he expressly assumes the risk that the Options may in fact be
valueless but nevertheless he accepts the Options as the full and complete
consideration for the restrictive covenants provided by him in Section 1 hereof.
1
<PAGE>
4. REMEDIES OF THE PURCHASER. IER hereby acknowledges that the
restrictive covenants contained in Section 1 hereof are reasonable and necessary
for the legitimate business interests of the Purchaser, that any violation of
such restrictive covenants would cause substantial and irreparable injury to the
Purchaser and that the Purchaser's remedies at law for any breach or threatened
breach of such restrictive covenants would not be adequate. Accordingly, IER
hereby agrees that the Purchaser shall be entitled to injunctive relief with
respect to such breach or threatened breach of such restrictive covenants. This
remedy shall be in addition to, and not in limitation of, any other rights or
remedies to which the Purchaser is or may be entitled to at law or in equity.
5. DEFINITIONS. Capitalized terms used but not defined herein
shall have the meanings assigned thereto in the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
/s/ Irvin E. Richter
---------------------------------
IRVIN E. RICHTER
ATC ENVIRONMENTAL INC.
By: /s/ Nicholas J. Malino
------------------------------
Nicholas J. Malino
Senior Vice President
2
<PAGE>
DLR AGREEMENT
NON-COMPETITION AGREEMENT (this "Agreement"), dated as of October 31,
1995, between ATC ENVIRONMENTAL INC., a Delaware corporation (the "Purchaser"),
and DAVID L. RICHTER, an individual residing at 16 Versailles Blvd., Cherry
Hill, New Jersey 08003 ("DLR").
WHEREAS, Hill International, Inc., a Delaware corporation (the
"Seller"), and the Purchaser have entered into an Asset Purchase Agreement,
dated as of the date hereof (the "Asset Purchase Agreement") for the sale of the
Seller's environmental consulting and environmental engineering businesses (the
"Businesses") to the Purchaser; and
WHEREAS, the Purchaser desires to protect the continuing value of the
Businesses; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth herein, and upon
the terms and subject to the conditions set forth herein, the Purchaser and DLR
hereby agree as follows:
1. RESTRICTIVE COVENANTS. During the term of this Agreement, DLR
shall not, either directly or indirectly:
(a) offer or perform any of the services offered or performed by the
Businesses as of the Closing Date within 100 miles of the location of any office
which the Businesses maintained as of the Closing Date, PROVIDED, HOWEVER, that
DLR shall in no way be prohibited from offering or performing any of the
Seller's current dispute resolution or project management services (including,
without limitation, the offering, performing or subcontracting of environmental
services when such services are related and incidental to, and necessary for,
the Seller's other services, and either (i) such services comprise less than 10%
of the total project value, or (ii) if such services comprise 10% or more of the
total project value, the Seller has received the consent of the Purchaser to
offer, perform or subcontract such services); or
(b) employ or offer to employ any of the Hired Employees then
currently employed by the Purchaser.
2. TERM. The restrictive covenants provided by DLR in Section 1
hereof shall commence on November 1, 1995 and shall terminate automatically on
October 31, 1997.
3. CONSIDERATION. As consideration for the restrictive covenants
provided by DLR in Section 1 hereof, the Purchaser shall issue to DLR options to
purchase 25,000 shares of the common stock of the Purchaser at the closing
market price on November 9, 1995 (the "Options"). DLR hereby acknowledges that
he understands that the Options may have little or no value during the term
thereof and he expressly assumes the risk that the Options may in fact be
valueless but nevertheless he accepts the Options as the full and complete
consideration for the restrictive covenants provided by him in Section 1 hereof.
1
<PAGE>
4. REMEDIES OF THE PURCHASER. DLR hereby acknowledges that the
restrictive covenants contained in Section 1 hereof are reasonable and necessary
for the legitimate business interests of the Purchaser, that any violation of
such restrictive covenants would cause substantial and irreparable injury to the
Purchaser and that the Purchaser's remedies at law for any breach or threatened
breach of such restrictive covenants would not be adequate. Accordingly, DLR
hereby agrees that the Purchaser shall be entitled to injunctive relief with
respect to such breach or threatened breach of such restrictive covenants. This
remedy shall be in addition to, and not in limitation of, any other rights or
remedies to which the Purchaser is or may be entitled to at law or in equity.
5. DEFINITIONS. Capitalized terms used but not defined herein
shall have the meanings assigned thereto in the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
/s/ David L. Richter
-------------------------------------
DAVID L. RICHTER
ATC ENVIRONMENTAL INC.
By: /s/ Nicholas J. Malino
---------------------------------
Nicholas J. Malino
Senior Vice President
