Exhibit 10.1
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
by and among
PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
(“PESI”)
HOMELAND SECURITY CAPITAL CORPORATION,
(“Parent”)
and
SAFETY & ECOLOGY HOLDINGS CORPORATION
(the “Company”)
for the purchase and sale of
all of the capital stock of the Company
dated as of
July 15, 2011

 

 

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TABLE OF CONTENTS

              Page  
 
       
ARTICLE I. PURCHASE AND SALE
    2  
 
       
1.1 The Acquisition
    2  
1.2 Purchase Price
    2  
1.3 Payment of Purchase Price
    2  
1.4 Estimated Net Working Capital Adjustment
    5  
1.5 Closing Net Working Capital Adjustment
    6  
1.6 Intentionally Omitted
    7  
1.7 Closing; Closing Transactions
    7  
 
       
ARTICLE II. REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND THE COMPANY
    8  
 
       
2.1 Organization and Qualification; Company Subsidiaries
    8  
2.2 Authority; Binding Nature of Agreement; Approval; Governing Documents
    8  
2.3 Capitalization
    9  
2.4 No Violation; Consents
    10  
2.5 Compliance With Laws
    11  
2.6 Permits
    11  
2.7 Certain Business Practices
    11  
2.8 Financial Statements
    12  
2.9 Absence of Certain Changes or Events
    13  
2.10 Absence of Undisclosed Liabilities
    13  
2.11 Litigation
    14  
2.12 Material Contracts
    14  
2.13 Customers and Suppliers
    16  
2.14 Employee Benefit Plans
    16  
2.15 Properties
    21  
2.16 Taxes
    22  
2.17 Environmental Matters
    24  
2.18 Labor Matters; Employees
    26  
2.19 Affiliate Transactions
    27  
2.20 Disclosure Controls and Procedures
    28  
2.21 Insurance
    28  
2.22 Intellectual Property
    29  
2.23 Derivative Transactions and Hedging
    30  
2.24 Bank Accounts, Letters of Credit and Powers of Attorney
    30  
2.25 Disclosure of Material Information
    30  
2.26 Brokers
    31  
2.27 Accounts Receivable
    31  
2.28 PESI SEC Filings
    31  

 

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              Page  
 
       
ARTICLE III. RESERVED
    31  
 
       
ARTICLE IV. REPRESENTATIONS AND WARRANTIES REGARDING PESI
    31  
 
       
4.1 Organization and Qualification; Subsidiaries
    31  
4.2 Governing Documents
    32  
4.3 Capitalization
    32  
4.4 Authority; Due Authorization; Binding Agreement; Approval
    32  
4.5 No Violation; Consents
    33  
4.6 Compliance
    33  
4.7 SEC Filings; Financial Statements
    34  
4.8 Absence of Certain Changes or Events
    34  
4.9 Tax Returns, Payments and Elections
    34  
4.10 Brokers
    35  
4.11 Litigation
    35  
4.12 Disclosure of Material Information
    35  
4.13 Information Statement
    35  
 
       
ARTICLE V. COVENANTS
    36  
 
       
5.1 Interim Operations of the Company
    36  
5.2 Acquisition Proposals
    40  
5.3 Access to Information and Properties
    43  
5.4 Further Action; Commercially Reasonable Efforts
    45  
5.5 Information Statement
    46  
5.6 Notification of Certain Matters
    47  
5.7 Publicity
    47  
5.8 Stock Exchange Listing
    47  
5.9 Employee Benefits
    47  
5.10 Tax Matters
    48  
5.11 No Takeover Statute Applies
    50  
5.12 Parent and Company Expenses
    51  
5.13 Non-Solicitation of Employees
    51  
5.14 Non-Solicitation of Customers
    51  
5.15 Non-Compete
    51  
5.16 Confidential Information
    52  
5.17 Remedies and Injunctive Relief
    52  
5.18 Acknowledgment
    53  
5.19 Disclosure Updates
    54  
5.20 Liabilities of Company and the Company Subsidiaries
    54  
5.21 Management Investors
    54  
5.22 Parent Required Vote
    55  
5.23 Parent Required Votes by Parent Stockholders; Shareholder Agreements
    55  
 
       
ARTICLE VI. CONDITIONS
    55  
 
       
6.1 Conditions to Each Party’s Obligation to Close the Acquisition
    55  
6.2 Conditions to Parent’s Obligation to Close the Acquisition
    56  
6.3 Conditions to PESI’s Obligations to Close the Acquisition
    58  

 

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              Page  
 
       
ARTICLE VII. TERMINATION
    61  
 
       
7.1 Termination
    61  
7.2 Effect of Termination
    62  
 
       
ARTICLE VIII. INDEMNIFICATION
    63  
 
       
8.1 Indemnification of PESI
    63  
8.2 Indemnification of Parent
    63  
8.3 Losses
    64  
8.4 Indemnification Procedures
    64  
8.5 Limitations on Indemnification
    65  
8.6 Exclusive Remedy
    67  
8.7 Application of Escrow Amount
    67  
 
       
ARTICLE IX. MISCELLANEOUS
    67  
 
       
9.1 Fees and Expenses
    67  
9.2 Amendment; Waiver
    68  
9.3 Offsets
    69  
9.4 Notices
    69  
9.5 Rules of Construction and Interpretation; Certain Definitions
    70  
9.6 Headings; Disclosure Letters
    75  
9.7 Counterparts
    75  
9.8 Entire Agreement
    75  
9.9 Severability
    76  
9.10 Governing Law
    76  
9.11 Assignment
    76  
9.12 Parties in Interest
    76  
9.13 Intentionally Omitted
    77  
9.14 Jurisdiction
    77  

Exhibit List:

         
Exhibit A = Promissory Note
       
Exhibit B = Escrow Agreement
       
Exhibit C = Representations, Warranties and Covenants as to Payoff Shares
       
Exhibit D = Registration Rights Agreement
       
Exhibit E = Subscription Agreement
       
Exhibit F = Leichtweis Employment Agreement
       

 

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TABLE OF DEFINED TERMS

      Defined Term   Location
Acceptable Confidentiality Agreement
  Section 5.2(b)
Acquisition
  Section 1.1
Acquisition Agreement
  Section 5.2(d)
Acquisition Proposal
  Section 5.2(f)
Affiliates
  Section 5.1(n)
Agreement
  Preamble
Annual Report Purposes
  Section 5.3(b)
Audited Financial Statements
  Section 6.3(v)
Business
  Preamble
Business Day
  Section 9.5(d)(i)
Cash Consideration
  Section 1.2(a)
CERCLA
  Section 2.17(a)
Claim
  Section 9.5(d)(ii)
Cleanup
  Section 9.5(d)(iii)
Closing
  Section 1.7
Closing Date
  Section 1.7
Closing Net Working Capital Amount
  Section 1.5(a)
Closing Statement
  Section 1.5(a)
COBRA
  Section 2.14(j)
Code
  Section 9.5(d)(iv)
Commercially Reasonable Efforts
  Section 9.5(d)(v)
Company
  Preamble
Company 401(k) Plan
  Section 5.9(b)
Company Board
  Preamble
Company Common Stock
  Preamble
Company Credit Agreement
  Section 9.5(d)(vi)
Company Employee Benefit Plan
  Section 2.14(a)
Company IP
  Section 9.5(d)(vii)
Company Material Contract
  Section 2.12(a)
Company Series A Preferred
  Preamble
Company Shares
  Preamble
Company Stock Plans
  Section 2.14(o)
Company Subsidiary/Subsidiaries
  Section 2.1(b)
Confidentiality Agreement
  Section 7.2
Continuing Employees
  Section 5.9(a)
Current Assets
  Section 1.4(b)
Current Liabilities
  Section 1.4(c)
Default Date
  Section 1.3.2
Disclosure Update
  Section 5.19
DGCL
  Section 5.11
DOL
  Section 2.14(c)
Employment and Withholding Taxes
  Section 9.5(d)(viii)
Environmental Laws
  Section 2.17(a)
Environmental Permits
  Section 2.17(b)
Environmental Reports
  Section 2.17(i)
ERISA
  Section 2.14(a)
ERISA Affiliate
  Section 2.14(b)
Escrow Agent
  Section 1.3.1(b)

 

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      Defined Term   Location
Escrow Agreement
  Section 1.3.1(b)
Estimated Closing Balance Sheet
  Section 1.4
Estimated Net Working Capital Adjustment
  Section 1.4(d)
Estimated Net Working Capital Amount
  Section 1.4
Estimated Net Working Capital Deficiency
  Section 1.4
Estimated Net Working Capital Surplus
  Section 1.4
Exchange Act
  Section 2.4(b)
FCPA
  Section 2.7(b)
Final Net Working Capital Amount
  Section 1.5(b)
Final Net Working Capital Deficiency
  Section 1.5(c)
Final Net Working Capital Surplus
  Section 1.5(c)
Financial Statements
  Section 2.8
Fundamental Warranty
  Section 8.5(a)
GAAP
  Section 2.8
GAAP Liabilities
  Section 9.5(d)(ix)
Governmental Entity
  Section 2.4(a)
Hazardous Material
  Section 9.5(d)(x)
Independent Accounting Firm
  Section 1.5(b)
Indemnitee
  Section 8.4
Indemnifying Party
  Section 8.4
Information Statement
  Section 5.5(a)
Initial Cash Consideration
  Section 1.3.1(a)
Intellectual Property
  Section 9.5(d)(xi)
IRS
  Section 2.14(c)
Knowledge
  Section 9.5(d)(xii)
Law
  Section 9.5(d)(xiii)
Leichtweis
  Section 9.5(d)(xiv)
Leichtweis Employment Agreement
  Section 6.2(k)
Liability/Liabilities
  Section 9.5(d)(xv)
Lien
  Section 9.5(d)(xvi)
Litigation
  Section 9.5(d)(xvii)
Losses
  Section 8.3
Management Investor/Management Investors
  Section 5.21
Material Adverse Effect
  Section 9.5(d)(xviii)
Material Customers
  Section 2.13
Money Laundering Laws
  Section 2.7(c)
Most Recent Company Balance Sheet
  Section 2.8
NASDAQ
  Section 4.5(a)
Net Working Capital Amount
  Section 1.4(a)
Note
  Section 1.2(b)
Note Consideration
  Section 1.2(b)
Notice of Claim
  Section 8.4(a)
Order
  Section 2.4(a)
Out-of-Pocket Expenses
  Section 9.1(b)
Parent
  Preamble

 

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      Defined Term   Location
Parent Adverse Recommendation Change
  Section 5.2(d)
Parent and Company Secretary Certificates
  Section 6.3(c)
Parent Board
  Preamble
Parent Common Stock
  Section 2.3(b)
Parent Disclosure Letter
  Article II
Parent Indemnitees
  Section 8.2
Parent Non-Solicitation Period
  Section 5.13
Parent Notice of Change
  Section 5.2(d)
Parent Release
  Section 6.3(k)
Parent Required Votes
  Section 2.2(a)
Parent Restricted Party/Parties
  Section 5.13(a)
Parent Termination Fee
  Section 9.1(b)
Parent Stockholders
  Section 5.5(e)
Payoff Amount
  Section 1.3.2(a)
Payoff Shares
  Section 1.3.2(b)
PBGC
  Section 2.14(f)
Permits
  Section 2.6
Permitted Lien
  Section 9.5(d)(xviii)
Person
  Section 9.5(d)(xix)
PESI
  Preamble
PESI Common Stock
  Section 5.21
PESI DC Plan
  Section 5.9(b)
PESI Disclosure Letter
  Article IV
PESI Governing Documents
  Section 4.2
PESI Indemnitees
  Section 8.1
PESI Lender
  Section 4.5(a)
PESI Options
  Section 4.3
PESI Preferred Stock
  Section 4.3
PESI Restricted Party/Parties
  Section 5.16
PESI SEC Documents
  Section 4.7(a)
PESI Secretary’s Certificate
  Section 6.2(g)
PESI Subsidiary
  Section 4.1(b)
Piggyback Rights
  Section 1.3.2(b)
Pre-Closing Tax Period
  Section 5.10(a)
Purchase Price
  Section 1.2
Registered IP
  Section 2.22(a)
Registration Rights Agreement
  Section 1.3.2(b)
Release
  Section 9.5(d)(xx)
Remaining Escrow Amount
  Section 9.3
Representatives
  Section 5.2(a)
Retained Portion of Purchase Price
  Section 1.3.1(a)
SEC
  Section 2.20(a)
Securities Act
  Section 9.5(d)(xxi)
Series F Preferred Stock
  Section 2.3(b)
Series H Preferred Stock
  Section 2.3(b)

 

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      Defined Term   Location
Series I Preferred Stock
  Section 2.3(b)
SOX
  Section 2.20(a)
SPRU Project
  Section 9.5(d)(xxii)
Straddle Period
  Section 5.10(b)
Subscription Agreement
  Section 5.21
Subsidiary
  Section 9.5(d)(xxiii)
Superior Proposal
  Section 5.2(f)
Tax
  Section 9.5(d)(xxiv)
Tax Claim
  Section 5.10(h)(ii)
Tax Return
  Section 9.5(d)(xxv)
Termination Date
  Section 7.1(b)(i)
Title IV Plan
  Section 2.14(b)
USG Authorities
  Section 5.4(e)
WARN Act
  Section 2.18(c)
Welfare Plan
  Section 2.14(j)
Written Demand Notice
  Section 1.3.2
Yorkville
  Section 6.3(p)

 

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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
July 15, 2011, by and among PERMA-FIX ENVIRONMENTAL SERVICES, INC., a Delaware
corporation (“PESI”); HOMELAND SECURITY CAPITAL CORPORATION, a Delaware
corporation (“Parent”); and SAFETY & ECOLOGY HOLDINGS CORPORATION, a Nevada
corporation (the “Company”).
WHEREAS, the Company is a subsidiary of Parent, and the Company and its
Subsidiaries are an international provider of environmental, nuclear and
radiological infrastructure remediation, disaster relief solutions and advanced
construction services (the “Business”);
WHEREAS, Parent is the owner of all of the issued and outstanding shares of
capital stock of the Company, consisting of 20 shares of common stock, par value
$0.001 per share (the “Company Common Stock”) and 10,550,000 shares of Series A
Preferred Stock, par value $0.001 per share (the “Company Series A Preferred”);
WHEREAS, the issued and outstanding shares of the Company Common Stock and the
Company Series A Preferred are collectively referred to herein as the “Company
Shares”;
WHEREAS, the Company Shares represent all of the issued and outstanding shares
of capital stock of the Company, and there shall not at the Closing be any other
issued and outstanding securities, notes, options, rights or other instruments
convertible or exercisable into any capital stock of the Company;
WHEREAS, PESI desires to purchase from Parent, and Parent desires to sell to
PESI, all of the Company Shares, subject to the terms of this Agreement;
WHEREAS, the Parent Board of Directors (the “Parent Board”) and the Company
Board of Directors (the “Company Board”) have approved the execution, delivery
and performance by Parent and the Company of this Agreement and the transactions
contemplated herein and the obligations of Parent and the Company hereunder,
respectively, and the Parent Board has determined to recommend that the
stockholders of Parent approve the transactions contemplated herein; and
WHEREAS, in addition to those capitalized terms defined above, the parties
intend that certain other capitalized terms used throughout this Agreement have
the respective meanings set forth in the Sections of this Agreement described in
the Table of Defined Terms which precedes this preamble.

 

 

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NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the benefits to be derived by each
party hereunder and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.1 The Acquisition. Pursuant to, and subject to the terms of, this Agreement,
at the Closing, Parent shall sell, assign and transfer to PESI, and PESI shall
purchase from Parent, all of the Company Shares, free and clear of any and all
Liens (the “Acquisition”). The Company Shares to be purchased by PESI represent
100% of the issued and outstanding capital stock of the Company.
1.2 Purchase Price. Subject to Section 1.3 and the other terms of this
Agreement, the aggregate purchase price for the Company Shares shall be the
amount equal to the sum of the following (the “Purchase Price”):
(a) $22,000,000, in cash, as may be adjusted pursuant to the Estimated Net
Working Capital Adjustment Amount and the Closing Net Working Capital Adjustment
Amount calculated as set forth in Sections 1.4 and 1.5, respectively (the “Cash
Consideration”), payable to Parent as set forth in Section 1.3.1 hereof, and
(b) a three (3) year unsecured promissory note in the principal amount of
$2,500,000 (the “Note”) issued by PESI to the order of Parent, with the Note
providing, among other things, the terms as set forth in Section 1.3.2 and the
Note being substantially in the form and substance as set forth in the
Promissory Note attached hereto as Exhibit A (the “Note Consideration”).
1.3 Payment of Purchase Price. Subject to the terms of this Agreement, the
Purchase Price will be paid to Parent, as follows:

  1.3.1  
Cash Consideration. At the Closing, PESI will pay:

  (a)  
$20,000,000 of the Cash Consideration, as may be adjusted by the Estimated Net
Working Capital Adjustment Amount, less the aggregate amount of the purchase
price due and owing PESI for the PESI Common Stock to be purchased by the
Management Investors in accordance with Section 5.21 (“Retained Portion of
Purchase Price”), to Parent by wire transfer of immediately available funds, to
the bank account designated in writing by Parent (the “Initial Cash
Consideration”), and

  (b)  
$2,000,000 of the Cash Consideration to SunTrust Bank, as escrow agent (the
“Escrow Agent”), by wire transfer of immediately available funds, to be held and
administered pursuant to the terms of the escrow agreement attached hereto as
Exhibit B (the “Escrow Agreement”), to satisfy all or part of any claims for
indemnity pursuant to Section 8.1 hereof and for any other purpose specifically
set forth in the Escrow Agreement.

 

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  1.3.2  
Note Consideration. The Note in the principal amount of $2,500,000 shall be
issued by PESI to the order of Parent. The Note (i) shall be unsecured and
subordinated; (ii) shall bear an annual interest rate equal to 6%; (iii) shall
be non-negotiable; (iv) may not be sold, transferred or assigned by Parent
without the prior written consent of PESI which may be withheld by PESI in
PESI’s sole discretion; (v) shall be subject to offset as provided in
Section 9.3 hereof; and (vi) shall be payable over a three (3) year period in
thirty-six (36) monthly installments of principal and interest, with each
monthly installment to be as follows: the principal sum of $69,444.44, plus
accrued interest, with the final installment to be in the sum of the remaining
unpaid principal balance due under the Note plus accrued interest, due thereon.
The first installment shall be payable on the 15th day of the month following
the Closing Date and an installment due on the 15th day of each of the next
35 months thereafter. The Note further provides that on the failure of PESI to
pay any monthly installment of principal and interest within 30 days when due
thereunder (“Default Date”), (x) the annual interest rate will automatically
increase (without any action on the part of Parent) as of such Default Date to
12% during the period of such default, and (y) Parent will have the option to
declare the Note in default and to be immediately due and payable where upon the
Note shall become forthwith due and payable upon written demand received by PESI
(“Written Demand Notice”), and Parent will thereafter, at its option and in its
sole discretion, have the right to elect by written election delivered to PESI
to receive in full and complete satisfaction of all of PESI’s obligations under
the Note, as more fully set forth therein, either:

  (a)  
the cash amount equal to the sum of the unpaid principal balance owing under the
Note and all accrued and unpaid interest thereon, plus the Expenses (as defined
in the Note) (the “Payoff Amount”);

  (b)  
the number of fully paid and non-assessable shares of PESI restricted Common
Stock (the “Payoff Shares”), equal to the quotient determined by dividing the
Payoff Amount by the average of the closing prices per share of the PESI Common
Stock as reported by the primary national securities exchange or automatic
quotation system on which PESI Common Stock is traded during the 30 consecutive
trading day period ending on the trading day immediately prior to receipt by
PESI of the Written Demand Notice in accordance with Section 9.4 and Parent’s
written election to receive Payoff Shares in full and complete satisfaction of
PESI’s obligations under the Note; provided, however, that the number of Payoff
Shares plus the number of shares of PESI Common Stock to be issued to the
Management Investors pursuant to Section 5.21 hereof shall not exceed 19.9% of
the voting power of all of PESI voting securities issued and outstanding as of
the date of this Agreement. In addition, the Parent shall not, at anytime or for
any reason, assign, transfer or convey the Payoff Shares or any portion thereof,
if issued by PESI to Parent, to Yorkville.

 

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If the Parent elects to receive the Payoff Shares, the issuance of the Payoff
Shares will be subject to PESI having received from Parent, within three
(3) Business Days prior to the issuance of the Payoff Shares, substantially the
same representations, warranties and covenants as set forth in Exhibit C
attached hereto, duly executed by the Parent. If issued, the Payoff Shares will
not be registered, and the Parent will not be entitled to registration rights
with respect to the Payoff Shares, except for certain piggyback rights
(“Piggyback Rights” as set forth in the Registration Rights Agreement in
substantially the form attached hereto as Exhibit D (the “Registration Rights
Agreement”), which Registration Rights Agreement shall be executed by HOMS and
PESI immediately prior to issuance of the Payoff Shares. The Payoff Shares that
will be issued to Parent will be subject to the restrictions, qualifications,
and limitations set forth in Exhibit C, this Agreement and the Note, including
without limitation, compliance with federal and state securities laws, the
percentage of the Payoff Shares to be issued to Parent, and the limitations on
the maximum number of Payoff Shares to be issued to Parent.

  (c)  
any combination of the Payoff Amount or the Payoff Shares, provided, however,
that the aggregate amount of the Payoff Amount and the Payoff Shares shall not
exceed the unpaid principal balance and accrued interest due under the Note as
of receipt by PESI of the Written Demand Notice, with the number of Payoff
Shares to be determined by dividing the amount of the Payoff Amount which is to
be paid in Payoff Shares by the average of the closing prices per share of the
PESI Common Stock as reported by the primary national securities exchange or
automatic quotation system on which PESI Common Stock is traded during the
thirty (30) consecutive trading day period ending on the trading day immediately
prior to receipt by PESI of the Written Demand Notice and Parent’s written
election to receive a portion of the Payoff Amount in Payoff Shares, with such
notice to specify the amount of the Payoff Amount to be paid in Payoff Shares;

  (d)  
If the Payoff Shares are to be issued, Parent shall be entitled to the Piggyback
Rights with respect to such shares for a period of two (2) years from the date
such Payoff Shares are issued to the Parent, pursuant to the terms and
conditions as set forth in Exhibit D attached hereto.

 

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1.4 Estimated Net Working Capital Adjustment. At least five (5) Business Days
before Closing, Parent shall deliver to PESI a balance sheet representing
Parent’s good faith estimate of the consolidated balance sheet of the Company
and the Company Subsidiaries as of the Closing Date (without giving effect to
the transactions contemplated herein) (the “Estimated Closing Balance Sheet”),
which shall include the estimated net working capital of the Company as of the
Closing Date (the “Estimated Net Working Capital Amount”). The Estimated Closing
Balance Sheet and the calculations of the Estimated Net Working Capital Amount
shall be determined pursuant to GAAP, except as otherwise provided in this
Section 1.4. If the Estimated Net Working Capital Amount, as stated in and
calculated in accordance with the Estimated Closing Balance Sheet, is greater
than $10,500,000, then the Initial Cash Consideration to be paid to Parent at
Closing pursuant Section 1.3.1(a) will be increased by such excess amount (such
amount, the “Estimated Net Working Capital Surplus”). If the Estimated Net
Working Capital Amount is less than $9,500,000, then the Initial Cash
Consideration to be paid to Parent at Closing pursuant Section 1.3.1(a) will be
decreased by such deficiency (such amount, the “Estimated Net Working Capital
Deficiency”). The Estimated Closing Balance Sheet of the Company shall be
subject to the reasonable approval of PESI. For purposes of this Agreement:
(a) “Net Working Capital Amount” shall mean the difference between the Company’s
“Currents Assets” minus “Current Liabilities;”
(b) “Current Assets” shall mean the balance as of the date of the Estimated
Closing Balance Sheet of the Company’s cash and cash equivalents, restricted
cash, trade and other receivables (less allowance for bad debts, receivables
outstanding longer than [120] days, obligations under all capital leases
surviving the Closing, both current and long-term), inventories, prepaid
expenses and other current assets (as determined under GAAP). Prior to the
Closing, PESI shall have the opportunity to review all receivables and identify
any receivables it considers to be at risk. The parties shall mutually agree, at
least three (3) Business Days prior to delivery of the Estimated Closing Balance
Sheet, as to which receivables of the Company and the Company Subsidiaries are
at risk of collection and the calculation of the Company’s Current Assets for
purposes of calculating the Estimated Closing Balance Sheet. All intercompany
agreements, receivables and payables between the Company and/or the Company
Subsidiaries, the Parent or its Affiliates shall have been terminated and
estimated prior to the Closing. Termination of such intercompany accounts shall
be a condition to the Closing of this Agreement by PESI.
(c) “Current Liabilities” shall mean the balance, as of the date of the
Estimated Closing Balance Sheet, of accounts payable, accrued expenses, accrued
compensation payable, and all amounts owing under the Company’s Credit
Agreement.
(d) “Estimated Net Working Capital Adjustment” shall mean the Estimated Net
Working Capital Surplus or Estimated Net Working Capital Deficiency, as
applicable.

 

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1.5 Closing Net Working Capital Adjustment.
(a) Within 75 days after the Closing, PESI shall prepare and deliver to Parent a
statement (the “Closing Statement”) which reflects, in reasonable detail, the
Net Working Capital Amount of the Company as of the Closing (the “Closing Net
Working Capital Amount”). The items reflected in the Closing Statement shall be
determined using the same principles, policies and methods used in connection
with the determination of the Estimated Working Capital Adjustment Amount,
except Current Liabilities and Current Assets shall be determined as of the
Closing Date. The parties agree to cooperate with each other in connection with
the preparation of the Closing Statement and PESI shall make available to Parent
all records and workpapers used in preparing the Closing Statement.
(b) Parent may dispute the Closing Net Working Capital Amount and the Closing
Statement by notifying PESI in writing of any disputed amounts, and provide a
reasonably detailed description of the basis of any such dispute, within 45 days
after Parent’s receipt of the Closing Statement. If Parent disputes the Closing
Net Working Capital Amount and the Closing Statement, Parent and PESI shall
attempt to reconcile their differences and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the parties. If
Parent and PESI are unable to reach a resolution of any such differences within
30 days after PESI’s receipt of Parent’s written notice of dispute, Parent and
PESI shall submit the amounts remaining in dispute for determination and
resolution to a firm of independent certified public accountants selected
jointly by Parent and PESI (or if Parent and PESI cannot agree within such
30 day period, a firm of independent certified public accountants as selected
jointly by Parent’s and PESI’s respective choices of independent certified
public accountants) (the “Independent Accounting Firm”), which shall be
instructed to determine and report to the parties, within 30 days after such
submission, a resolution of such remaining disputed amounts, and such resolution
shall be final, binding and conclusive on the parties hereto with respect to the
remaining amounts disputed. The Independent Accounting Firm may not assign a
value to any item in dispute greater than the greatest value for such item
assigned by PESI, on the one hand, or Parent, on the other hand. The Independent
Accounting Firm’s determination will be based solely on written submissions made
by PESI and Parent prepared in accordance with the guidelines and procedures set
forth in this Agreement and not on the basis of an independent review. PESI and
Parent will each pay their own fees and expenses (including any fees and
expenses of their accountants and other representatives) in connection with the
resolution of any dispute under this Section 1.5 (excluding the fees and
expenses of the Independent Accounting Firm). The fees and expenses of the
Independent Accounting Firm pursuant to this Section 1.5(b) shall be borne by
PESI and Parent, in inverse proportion as they may prevail on matters resolved
by the Independent Accounting Firm, which proportionate allocations shall also
be determined by the Independent Accounting Firm at the time the determination
of such firm is rendered on the merits of the matters submitted. The Closing Net
Working Capital Amount shall be deemed to be modified to the extent of any
changes thereto that become final, binding and conclusive on the parties based
on mutual agreement or a determination of the Independent Accounting Firm in
accordance with this Section 1.5(b). As used in this Agreement, the term “Final
Net Working Capital Amount” shall mean, as applicable, (i) the Closing Net
Working Capital Amount, if undisputed by Parent, (ii) the Closing Net Working
Capital Amount, as adjusted by mutual agreement pursuant to this Section 1.5(b),
or (iii) the Closing Net Working Capital Amount, as adjusted pursuant to this
Section 1.5(b) by the Independent Accounting Firm.

 

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(c) Within five (5) Business Days after the later of (i) the date on which
Parent’s written notice of dispute would have been required to be delivered to
PESI by Parent in accordance with Section 1.5(b), or (ii) the resolution of all
timely disputed amounts in accordance with Section 1.5(b), the Purchase Price
shall be increased or decreased pursuant to this Section 1.5(c) and the amount
of such increase or decrease paid pursuant to this Section 1.5(c). If the
Closing Net Working Capital Amount is greater than $10,000,000, PESI shall pay
to Parent an amount equal to such excess, less the Estimated Net Working Capital
Surplus, if any (such amount, the “Final Net Working Capital Surplus”). If the
Final Closing Net Working Capital Amount is less than $10,000,000, then Parent
shall pay to PESI an amount equal to such deficiency, less the Estimated Net
Working Capital Deficiency, if any (such amount, the “Final Net Working Capital
Deficiency”). Any Final Net Working Capital Deficiency or Final Net Working
Capital Surplus shall bear interest at the prime rate of Citibank, N.A. in
effect on the Closing Date commencing on the Closing Date through the date of
payment and calculated daily on the basis of a year of 365 days and the actual
number of days elapsed, without compounding, and shall be paid, together with
such interest, by wire transfer of immediately available funds to an account
designated in writing by the party to whom payment is owed.
1.6 Intentionally Omitted.
1.7 Closing; Closing Transactions. The closing (the “Closing”) of the
transactions contemplated by this Agreement will take place at 10:00 a.m. (local
time) on a date to be specified by the parties, which shall be no later than the
second Business Day after satisfaction or (to the extent permitted by applicable
Law) waiver of the conditions set forth in Article VI (other than any such
conditions which by their nature cannot be satisfied until the Closing Date,
which shall be so satisfied or (to the extent permitted by applicable Law)
waived by the party entitled to the benefit of those conditions on the Closing
Date), at the offices of Conner & Winters, LLP, 1700 One Leadership Square, 211
North Robinson, Oklahoma City, Oklahoma 73102, or remotely via the exchange of
documents and signatures, unless another time, date or place is agreed to in
writing by the parties (such date upon which the Closing occurs, the “Closing
Date”). For all purposes, the Closing shall be deemed to have occurred as of
12:01 a.m. on the Closing Date.

  1.7.1  
Parent’s Closing Deliveries. Subject to the conditions set forth in this
Agreement, at or prior to the Closing, Parent shall deliver to PESI all closing
deliverables set forth in Section 6.3.
    1.7.2  
PESI’s Closing Deliveries. Subject to the conditions set forth in this
Agreement, at or prior to the Closing, PESI shall deliver to Parent or the
Company, as appropriate, the closing deliverables set forth in Section 6.2 of
this Agreement.

 

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ARTICLE II.
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND THE COMPANY
Parent and the Company, jointly and severally, hereby represent and warrant to
PESI that, except as set forth in Parent’s disclosure letter delivered to PESI
at or prior to the execution of this Agreement (the “Parent Disclosure Letter”),
which letter has been arranged to correspond to the numbered and lettered
Sections in this Article II, provided that disclosure of any item in any Section
of the Parent Disclosure Letter shall not be deemed to be disclosed with respect
to any other Section of this Article II:
2.1 Organization and Qualification; Company Subsidiaries.
(a) The Company is a corporation duly incorporated and validly existing in good
standing under the laws of the State of Nevada and Parent is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Delaware. Each of the Company and Parent has the requisite corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character of the properties owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so qualified has not
had, and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) Each Subsidiary of the Company (each, a “Company Subsidiary”, and
collectively, “Company Subsidiaries”) (i) is duly incorporated and validly
existing under the laws of its respective jurisdiction of organization, (ii) has
the requisite corporate or other business entity power and authority to own or
lease its properties and to carry on its business as it is now being conducted,
and (iii) is duly licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character of the
properties owned or leased by it makes such licensing or qualification
necessary, in each case, except as has not had, and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 2.1(b) of the Parent Disclosure Letter sets forth a true and complete
list of all of the Company Subsidiaries, the state of incorporation or formation
of each Company Subsidiary and, as of the date hereof, the jurisdictions in
which each Company Subsidiary is qualified or licensed to do business. Other
than with respect to the Company Subsidiaries, the Company does not directly or
indirectly own any equity interest in, or any interest convertible into or
exchangeable or exercisable for, any equity interest in, any corporation,
partnership, joint venture or other business entity.
2.2 Authority; Binding Nature of Agreement; Approval; Governing Documents.
(a) Parent and the Company have the requisite corporate power and authority to
enter into this Agreement and to perform its obligations under this Agreement
subject to the approval of this Agreement by the affirmative vote of the holders
of a majority of the outstanding capital stock of Parent, with the holders of
Parent’s Series I Convertible Preferred Stock and Parent’s Series H Convertible
Preferred Stock, voting as a single class with the Parent Common Stock on an
as-converted basis, and the affirmative vote of the holders of 66% of the issued
and outstanding shares of Parent’s Series H Convertible Preferred Stock, voting
as a separate class (the “Parent Required Votes”).
(b) The execution, delivery and performance of this Agreement by Parent and the
Company and the consummation by Parent and the Company of the transactions
contemplated hereby have been duly and validly authorized by all requisite
corporate action on the part of Parent and the Company (other than, the approval
of this Agreement by the Parent Required Votes).
(c) This Agreement has been duly executed and delivered by Parent and the
Company and, assuming the due authorization, execution and delivery hereof by
PESI, constitutes a valid and binding obligation of Parent and the Company,
enforceable against Parent and the Company in accordance with its terms, except
as limited by bankruptcy, insolvency, moratorium, fraudulent transfer,
reorganization and other laws of general applicability relating to or affecting
the rights or remedies of creditors and by general equitable principles (whether
considered in a proceeding in equity or at law).

 

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(d) The Parent Board, at a meeting duly called and held, duly adopted
resolutions, among other things, (i) determining that this Agreement and the
transactions contemplated hereby are advisable and in the best interests of the
stockholders of Parent and the Company, (ii) approving this Agreement and
transactions contemplated hereby and all other corporate action required to be
taken in connection with the consummation of the transactions contemplated
hereby, (iii) directing that the approval of this Agreement be submitted to the
stockholders of Parent for consideration, and (iv) recommending approval of this
Agreement by the stockholders of Parent, which resolutions have not been, and
will not be, subsequently rescinded, modified or withdrawn in any way.
(e) The Parent represents and warrants that it can obtain more than the number
of holders of its capital stock necessary to obtain, the written consents of
holders of its outstanding capital stock having not less than the minimum number
of votes that would be necessary to obtain the Parent Required Votes to approve
this Agreement and the transactions contemplated by this Agreement at a meeting
at which all shares of Parent’s capital stock entitled to vote thereon were
present and voted pursuant to Section 228 of the DGCL.
(f) Parent and the Company have heretofore made available to PESI true and
complete copies of their respective certificates of incorporation and bylaws and
the comparable organizational documents of each Company Subsidiary, each as
amended to date. Such certificates of incorporation, bylaws and organizational
documents are in full force and effect.
2.3 Capitalization.
(a) The authorized capital stock of the Company consists of 50,000,000 shares of
Company Common Stock and 16,500,000 shares of Company Series A Preferred. As of
the date of this Agreement, (i) 20 shares of Company Common Stock and 10,500,000
shares of the Company’s Series A Preferred are issued and outstanding, all of
which were validly issued, fully paid and non-assessable, and none of which were
issued in violation of any preemptive or similar rights of any Company
securityholder, and (ii) no shares of Company Common Stock were held by the
Company in its treasury. There are no outstanding (i) options, warrants or other
rights, agreements, arrangements or commitments of any character obligating the
Company or any Company Subsidiary to issue or sell any shares of capital stock
of, or other equity interests in the Company or any Company Subsidiary, or
(ii) agreements of the Company or any Company Subsidiary to repurchase, redeem
or otherwise acquire any shares of capital stock of the Company or any Company
Subsidiary.
(b) The authorized capital stock of the Parent consists of 2,000,000,000 shares
of the Parent’s Common Stock, par value $0.001 per share (“Parent Common Stock”)
and 10,000,000 shares of the Parent’s Preferred Stock. As of the date of this
Agreement, Parent has issued and outstanding the following: (i) 54,491,449
shares of the Parent’s Common Stock, (ii) 1,000,000 shares of the Parent’s
Series F Preferred Stock, (iii) 9,574 shares of the Parent’s Series H Preferred
Stock, and (iv) 550,000 shares of the Parent’s Series I Preferred Stock, par
value $0.01 per share (respectively, the “Series F Preferred Stock, Series H
Preferred, and Series I Preferred”) and such shares of Preferred Stock are
convertible into shares of the Parent’s Common Stock, subject to certain
limitations. All of the shares of Series F Preferred Stock and Series H
Preferred Stock are owned by Yorkville. In addition, Parent has issued (i) to
Yorkville, warrants to purchase up to 85,133,333 shares of the Parent’s Common
Stock under certain conditions, (ii) to the Management Investors, warrants to
purchase up to 22,000,000 shares of Parent’s Common Stock, and (iii) to certain
third parties, warrants to purchase up to 400,000 shares of Parent’s Common
Stock.

 

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(c) All of the issued and outstanding shares of capital stock of the Company and
each Company Subsidiary have been duly authorized and validly issued, are fully
paid and non-assessable, and all outstanding shares of Company Common Stock are
owned by Parent, free and clear of any Lien, other than Liens in favor of
Yorkville and SunTrust Bank, and all outstanding shares of the Company Series A
Preferred are owned by Parent, free and clear of any Liens, other than Liens in
favor of Yorkville and SunTrust Bank. All outstanding capital stock of the
Company Subsidiaries are owned by the Company, free and clear of any Lien other
than Liens in favor of Yorkville and SunTrust Bank. None of the outstanding
shares of capital stock or equivalent equity interest of the Company and the
Company Subsidiaries were issued in violation of any preemptive or similar
rights arising by operation of law, or under the charter, bylaws or other
comparable organizational documents of the Company or any of the Company
Subsidiaries or under any agreement to which the Company or any Company
Subsidiary is a party. There are no outstanding bonds, debentures, notes,
warrants, options, rights or other indebtedness of the Company or any Company
Subsidiary having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matter on which the Company’s
stockholders may vote. As a condition to Closing of this Agreement by PESI, all
Liens covering the capital stock of, and all Liens, other than Permitted Liens,
covering the assets of, the Company and the Company Subsidiaries held by
Yorkville and SunTrust Bank must be released and terminated in all respects on
or prior to the Closing, with the terms of such release and termination to be
reasonably satisfactory to PESI.
2.4 No Violation; Consents.
(a) Except as set forth on Section 2.4(a) of the Parent Disclosure Letter, the
execution and delivery of this Agreement by each of Parent and the Company does
not, and the consummation by Parent and the Company of the transactions
contemplated hereby will not (i) conflict with or violate the certificate of
incorporation and bylaws of Parent or the Company or the comparable
organizational documents of any of the Company Subsidiaries, (ii) constitute a
breach or violation of, a default (or an event which, with notice or lapse of
time or both, would constitute such a default) under, require consent under, or
give rise to a right of termination, cancellation, creation or acceleration of
any obligation, payment of any consent or similar fee, or to the loss of any
benefit under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of the Company Subsidiaries under, any
indenture, mortgage, deed of trust, loan or credit agreement, note, bond, lease
or other agreement, including any Company Material Contract, instrument or
Permit to which Parent, the Company or any Company Subsidiary is a party or by
which any of them or any of their respective properties are bound or subject,
(iii) (assuming that the consents and approvals referred to in Section 2.4(b)
are duly and timely obtained and that the adoption of this Agreement by the
Parent Required Votes are obtained) conflict with or violate any Law or any
order, judgment, decree or injunction (each, an “Order”) of any federal, state
or local or foreign government, any court, administrative, regulatory or other
governmental agency, commission or authority or any non-governmental United
States or foreign self-regulatory agency, commission, body, entity or authority
or any arbitral tribunal (each, a “Governmental Entity”) directed to Parent or
the Company or any of the Company Subsidiaries or any of their properties,
except, in the case of clause (ii) and (iii), for such conflicts, breaches,
violations, consent requirements, terminations, obligations, fees, loss of
benefits, defaults or Liens, that have not had, and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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(b) Except for (i) obtaining the Parent Required Votes approving transactions
contemplated by this Agreement pursuant to the laws of the State of Delaware,
the Parent’s Certificate of Incorporation, the requirements of the Securities
Exchange Act of 1934 (the “Exchange Act”) and any other applicable U.S. state or
federal securities laws and the laws of the State of Nevada,
(ii) authorizations, consents, approvals or filings under any Environmental Laws
relating to the transfer or issuance of Environmental Permits in connection with
the Acquisition, and (iii) the consents, approvals, and authorizations listed on
Section 2.4(b) of the Parent Disclosure Letter, no other consent, approval or
authorization of, or registration with, any Governmental Entity or any third
party is required to be obtained or made by Parent or the Company for the
execution and delivery by Parent and the Company of this Agreement or the
consummation by Parent or the Company of the transactions contemplated hereby.
2.5 Compliance With Laws. Except as set forth on Section 2.5 of the Parent
Disclosure Letter, the Company and each Company Subsidiary is, and at all times
since June 27, 2010, has been, in material compliance with all applicable Law
and any Order of any Governmental Entity having jurisdiction over it.
2.6 Permits. The Company and the Company Subsidiaries hold all material
licenses, permits, variances, consents, authorizations, waivers, grants,
franchises, concessions, exemptions, registrations and approvals (“Permits”)
from Governmental Entities or other Persons necessary for the conduct of their
respective businesses as currently conducted. None of Parent, the Company nor
any of the Company Subsidiaries has received written notice that any such Permit
will be terminated or modified or cannot be renewed in the ordinary course of
business, and, to Parent’s Knowledge, there is no basis for any such
termination, modification or nonrenewal. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not violate any such Permit, or result in any termination,
modification or nonrenewals thereof, except as have not, individually or in the
aggregate, had, or could not be reasonably expected to have, a Material Adverse
Effect.
2.7 Certain Business Practices.
(a) None of the Company, any of the Company Subsidiaries, to Parent’s or the
Company’s Knowledge, any of their directors, officers, employees or agents, or
Parent, or to Parent’s Knowledge, any of Parent’s Affiliates acting on behalf of
the Company or any of the Company Subsidiaries, has, directly or indirectly,
(i) made, authorized or offered any contribution, payment or gift of funds or
property to any official, employee or agent of any Governmental Entity or
(ii) made any contribution to any candidate for public office, in either case,
where either the payment or the purpose of such contribution, payment or gift
was, is or would be prohibited under any applicable anti-bribery or
anti-corruption Law of any relevant jurisdiction covering a similar subject
matter as in effect on or prior to the Closing applicable to the Company or any
of the Company Subsidiaries or their respective operations.

 

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(b) None of the Company or any of the Company Subsidiaries and to Parent’s and
the Company’s Knowledge, none of their directors, officers, employees or agents,
or Parent or any of their Affiliates acting on behalf of the Company or any of
the Company Subsidiaries, is aware of or has taken any action, directly or
indirectly, that would result in a violation of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder
(“FCPA”), including, without limitation, any action in furtherance of any offer,
payment, promise to pay or authorization of the payment of any money or other
property, or offer, gift, promise to give, or authorization of the giving of
anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of FCPA, and the Company and the
Company Subsidiaries and, to Parent’s Knowledge, the Company and the Company
Subsidiaries have conducted their respective businesses in compliance with FCPA.
(c) To Parent’s and the Company’s Knowledge, the operations of the Company and
the Company Subsidiaries are and have been at all times since April 1, 2008
conducted in material compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental Entity
(collectively, “Money Laundering Laws”), and no action, suit or proceeding by or
before any Governmental Entity or any arbitrator involving the Company or any of
the Company Subsidiaries with respect to the Money Laundering Laws is pending
or, to Parent’s or the Company’s Knowledge, threatened.
(d) None of the Company or any of the Company Subsidiaries or, to the Parent’s
or the Company’s Knowledge, any Representatives or Affiliates of the Company or
any Company Subsidiary is in violation of any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department.
2.8 Financial Statements. The historical consolidated financial statements of
the Company, together with the related schedules and notes thereto, for fiscal
year ended June 27, 2010, together with the unaudited consolidated balance sheet
of the Company as of March 31, 2011 (the “Most Recent Company Balance Sheet”)
and unaudited statements of operations, cash flows and stockholders’ equity for
the nine months ended March 31, 2011, together with notes thereto, which are
attached to Section 2.8 of the Parent Disclosure Letter (collectively, the
“Financial Statements”), present fairly in all material respects the
consolidated financial position of the Company and the Company Subsidiaries at
the dates indicated and the operations, cash flows and stockholders’ equity of
the Company and the Company Subsidiaries, on a consolidated basis, for the
periods specified (except, in the case of Financial Statements, subject to
normal inter-period and year-end adjustments that are not material in amount or
significance in any individual case or in the aggregate). All of such Financial
Statements of the Company have been prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”) applied on a
consistent basis throughout the periods involved, except as noted therein.
Except as reflected in such historical financial statements, including the notes
thereto, or as otherwise disclosed in the Financial Statements, neither the
Company nor any of the Company Subsidiaries is a party to any material
off-balance sheet arrangement (as defined in Item 303 of Regulation S-K of the
Securities Act).

 

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2.9 Absence of Certain Changes or Events. Since June 27, 2010, except as
contemplated by this Agreement or disclosed in Section 2.9 of the Parent
Disclosure Letter, each of the Company and the Company Subsidiaries has
conducted its business only in the ordinary course consistent with past practice
and there has not been any event, circumstance, change, occurrence or state of
facts that has had, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Since June 27, 2010, except as
contemplated by this Agreement or disclosed in Section 2.9 of the Parent
Disclosure Letter, there has not been (u) any change by the Company in any of
its Tax methods or elections or in any of its accounting methods, principles or
practices materially affecting the consolidated assets, liabilities or results
of operations of the Company and its consolidated Company Subsidiaries, except
insofar as may have been required by a change in GAAP, applicable Law or
regulatory guidelines, (v) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of the Company or any
redemption, purchase or other acquisition for value of any of the Company’s
capital stock, (w) any granting by the Company or any of the Company
Subsidiaries of any increase in compensation or fringe benefits to any employee,
officer or director (except for increases in the ordinary course of business
consistent with past practice), or any payment by the Company or any of the
Company Subsidiaries of any bonus (except for bonuses made in the ordinary
course of business consistent with past practice), or any entry by the Company
or any of the Company Subsidiaries into any contract (or amendment of an
existing contract) to grant or provide severance, acceleration of vesting,
termination pay or other similar benefits (except in the ordinary course of
business consistent with past practice), (x) any revaluation by the Company or
any of the Company Subsidiaries of any of their respective assets, including
writing off notes or accounts receivable or any sale of assets of the Company or
any of the Company Subsidiaries, in excess of $75,000 in the aggregate, (y) any
sale, transfer or other disposition outside of the ordinary course of business
of any material property or material assets (whether real, personal or mixed,
tangible or intangible) by the Company or any of the Company Subsidiaries, or
(z) any commitment or agreement with respect to the items described in the
preceding clauses (u) through (y).
2.10 Absence of Undisclosed Liabilities. Except (a) as described on Section 2.10
to the Parent Disclosure Letter, (b) as reflected or reserved against in the
Most Recent Company Balance Sheet, (c) for obligations arising under this
Agreement and transactions contemplated by this Agreement, and (d) for
Liabilities and obligations incurred since the date of the Most Recent Company
Balance Sheet in the ordinary course of business consistent with past practice,
to the Parent’s or Company’s Knowledge, neither the Company nor any of the
Company Subsidiaries has any Liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, and whether due or to become due, that
have had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Section 2.10 of the
Parent Disclosure Letter, notwithstanding anything herein to the contrary,
neither the Company nor any of the Company Subsidiaries has any debts,
obligations or Liabilities of any kind, absolute or contingent, due or owing to
Yorkville. The Parent shall not permit the Company or any Company Subsidiary to
enter into any debt, obligation or Liability of any kind to Yorkville.

 

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2.11 Litigation.
Except as described in Section 2.11 of the Parent Disclosure Letter, (a) there
is no action, suit, investigation or proceeding pending before or by any Person
or, to Parent’s or the Company’s Knowledge, threatened, against the Company or
any of the Company Subsidiaries or any of their respective assets, and (b) the
Company and the Company Subsidiaries and their respective assets are not subject
to any Order, except as would not, individually or in the aggregate, have a
Material Adverse Effect.
2.12 Material Contracts.
(a) Except as otherwise disclosed in Section 2.12 of the Parent Disclosure
Letter, neither the Company nor any Company Subsidiary is a party to or bound by
any contract, arrangement, commitment or understanding (whether written or
oral):
(i) which is an employment agreement between the Company or a Company
Subsidiary, on the one hand, and any of its officers, directors or employees, on
the other hand, excluding any unwritten agreement that provides de minimis
working condition benefits and is terminable unilaterally by the Company or the
Company Subsidiaries without liability;
(ii) which, upon the consummation of this Agreement and the transactions
contemplated by this Agreement, will (either alone or upon the occurrence of any
additional acts or events, including the passage of time) result in any material
payment or benefit (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any right to any material payment or benefits, from
the Company or any of the Company Subsidiaries to any officer, director,
consultant, agent or employee of any of the foregoing;
(iii) which is a material contract (as defined in Item 601(b)(10)(i) or
601(b)(10)(ii) of Regulation S-K of the Securities Act) to be performed on or
after the date of this Agreement;
(iv) except for intercompany transactions among the Company and the Company
Subsidiaries in the ordinary course of business consistent with past practice,
relating to the borrowing of money (including any guarantee thereof) or that is
a mortgage, security agreement, capital lease or similar agreements, in each
case in excess of $75,000 or that creates a Lien on any asset of the Company or
any Company Subsidiary;
(v) relating to the sale of any of the assets or properties of the Company or
any of the Company Subsidiaries, except inventory sold or to be sold in the
ordinary course of the Company’s or the Company Subsidiaries’ business;

 

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(vi) relating to the acquisition by the Company or any of the Company
Subsidiaries of any assets, operating business or the capital stock of any other
Person, except inventory purchased in the ordinary course of the Company’s or
the Company Subsidiaries’ business;
(vii) which limits the ability of the Company or any Company Subsidiary to (x)
compete in or conduct any line of business or compete with any Person or in any
geographic area or distribution or sales channel, (y) sell, supply or distribute
any service or product, or (z) offer or purchase the assets or equity securities
of another Person, in each case, during any period of time;
(viii) which is a joint venture agreement, joint operating agreement,
partnership agreement or other similar contract or agreement involving a sharing
of profits and expenses with one or more other Persons;
(ix) which is a shareholder rights agreement or which otherwise provides for the
issuance, registration or voting of any securities of the Company or any of the
Company Subsidiaries; or
(x) which requires a consent to a change of control of the Company or any of the
Company Subsidiaries or to an assignment of the contract, arrangement,
commitment or understanding by the Company to another Person, as the case may
be; or
(xi) other than those agreements listed in clauses (i) to (x) above, which
provides for the annual aggregate payment or receipt by the Company or any of
the Company Subsidiaries of amounts in excess of $75,000 individually within the
next 12 months and is not terminable without premium or penalty on less than
30 days’ notice.
Each contract, arrangement, commitment or understanding of the type described in
this Section 2.12(a) is referred to herein as a “Company Material Contract” and
is listed in Section 2.12 of the Parent Disclosure Letters. The Company has made
available to PESI true, complete and correct copies of each Company Material
Contract.
(b) Each Company Material Contract is valid and binding and in full force and
effect and the Company and each of the Company Subsidiaries has performed all
obligations required to be performed by them to date under each Company Material
Contract, the failure of which, individually or in the aggregate, have a
Material Adverse Effect. Except as set forth on Section 2.12 of the Parent
Disclosure Letter, and except for such matters as have not had, and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (i) none of Parent, the Company or any of the Company
Subsidiaries has received written notice of, and to Parent’s or the Company’s
Knowledge, there does not exist, any breach of or violation or default under any
of the terms, conditions or provisions of any Company Material Contract and
(ii) neither Parent, the Company nor any of the Company Subsidiaries has
received written notice of, and to Parent’s or the Company’s Knowledge there
does not exist, the desire of the other party or parties to any such Company
Material Contract to exercise any rights such party has to cancel, terminate or
repudiate such Company Material Contract or exercise remedies thereunder. Each
Company Material Contract is enforceable by the Company or a Company Subsidiary
in accordance with its terms, except as such enforcement may be subject to or
limited by (x) bankruptcy, insolvency, reorganization, moratorium or other Laws,
now or hereafter in effect, affecting creditors’ rights generally and (y) the
effect of general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).

 

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(c) Except for the Company Credit Agreement and except as disclosed in
Section 2.12 of the Parent Disclosure Letter, no agreement relating to any
indebtedness for borrowed money of the Company or any of the Company
Subsidiaries contains any restrictions (other than customary notice provisions)
upon (i) the prepayment of any indebtedness of the Company or any of the Company
Subsidiaries, (ii) the incurrence by the Company or any of the Company
Subsidiaries of any indebtedness for borrowed money, or (iii) the ability of the
Company or any of the Company Subsidiaries to grant any Lien on the properties
or assets of the Company or any of the Company Subsidiaries. Under the terms of
the Company Credit Agreement, the Company is permitted to prepay, upon 30 days
prior written notice and without any form of prepayment penalty, all
indebtedness outstanding thereunder and obtain a release of all Liens on the
assets of the Company and the Company Subsidiaries which secure such
indebtedness.
2.13 Customers and Suppliers. Section 2.13 of the Parent Disclosure Letter sets
forth the 15 largest customers of the Company and the Company Subsidiaries
(including, without limitation, primary contractors for which the Company or the
Company Subsidiaries provide goods or services as subcontractors) by revenue for
the fiscal year ended June 27, 2010, and for the eleven months ended May 31,
2011 (“Material Customers”). Since June 27, 2010, except as disclosed in
Section 2.13 of the Parent Disclosure Letter, (a) no Material Customer of the
Company or any of the Company Subsidiaries has canceled or terminated its
relationship with the Company or any of the Company Subsidiaries, (b) no
Material Customer of the Company or any of the Company Subsidiaries has overtly
threatened in writing, and to Parent’s or the Company’s Knowledge, has not
threatened to cancel or renegotiate, terminate (other than pursuant to the
termination provisions contained in such currently existing agreements with such
Material Customers) or modify (other than modifications in the ordinary course
of performing a contract) its relationship with the Company or any of the
Company Subsidiaries or its usage of the services of the Company or any of the
Company Subsidiaries, and (c) the Company and the Company Subsidiaries have no
direct or indirect ownership interest that is material to the Company and the
Company Subsidiaries taken as a whole in any customer of the Company or any of
the Company Subsidiaries.
2.14 Employee Benefit Plans.
(a) Section 2.14(a) of the Parent Disclosure Letter sets forth a true and
complete list of all written and oral plans, programs, arrangements or
agreements which the Company or any of the Company Subsidiaries either sponsor,
maintain or contribute to or have any obligation to maintain or contribute to,
or have any direct or indirect liability, whether contingent or otherwise, and
under which any current or former officer or director, employee, leased employee
or consultant (or their respective beneficiaries) of the Company or the Company
Subsidiaries has any present or future right to receive any pension,
profit-sharing, savings, retirement, employment or consulting (excluding any
unwritten agreement that provides de minimis working condition fringe benefits
and is terminable unilaterally by the Company or any of the Company Subsidiaries
without liability), severance pay, termination, executive

 

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compensation, incentive compensation, deferred compensation, bonus, stock
purchase, stock option, phantom stock or other equity-based compensation,
change-in-control, retention, salary continuation, vacation, sick leave,
disability, death benefit, group insurance, hospitalization, medical, dental,
life (including all individual life insurance policies as to which the Company
is the owner, the beneficiary, or both), Code Section 125 “cafeteria” or
“flexible” benefit plans, employee loan, educational assistance or other similar
benefit plans, policies or arrangements (each a “Company Employee Benefit
Plan”). The Company Employee Benefit Plans include, without limitation, any (i)
“employee benefit plan” within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974 (“ERISA”) or (ii) other employee benefit
plans, agreements, programs, policies, arrangements or payroll practices,
whether or not subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transaction contemplated by
this Agreement or otherwise).
(b) Except as described in Section 2.14(b) of the Parent Disclosure Letter, the
Company, its Subsidiaries and its ERISA Affiliates do not maintain, contribute
or have any liability, whether contingent or otherwise, with respect to, and
have not within the preceding six years maintained, contributed or had any
liability, whether contingent or otherwise, with respect to any employee benefit
plan, program, agreement or arrangement (including, for such purpose, any
“employee benefit plan,” within the meaning of Section 3(3) of ERISA, which the
Company, the Company Subsidiaries or an ERISA Affiliate previously maintained or
contributed to within such preceding six years), that is, or has been,
(i) subject to Title IV of ERISA (a “Title IV Plan”) or Section 412 of the Code,
(ii) maintained by more than one employer within the meaning of Section 413(c)
of the Code, (iii) subject to Sections 4063 or 4064 of ERISA, (iv) a
“multiemployer plan,” within the meaning of Section 4001(a)(3) of ERISA, (v) a
“multiple employer welfare arrangement” as defined in Section 3(40) of ERISA,
(vi) funded by a voluntary employees’ beneficiary association within the meaning
of Section 501(c)(9) of the Code or (vii) an “employee pension benefit plan”
within the meaning of Section 3(2) of ERISA and that is not intended to be
qualified under Section 401(a) of the Code. For purposes of this Section 2.14,
“ERISA Affiliate” means any Person that would be considered a single employer
with the Company under Sections 414(b), (c), (m) or (o) of the Code.
(c) Each Company Employee Benefit Plan has been established and administered in
all material respects in accordance with its terms and in compliance with the
applicable provisions of ERISA, the Code and all other applicable Laws. All
reports, returns, notices and other documentation with respect to each Company
Employee Benefit Plan that are required to have been filed with or furnished to
the Internal Revenue Service (the “IRS”), the United States Department of Labor
(“DOL”) or any other Governmental Entity, or to the participants or
beneficiaries of such Company Employee Benefit Plan, have been filed or
furnished on a timely basis, or there is a remaining period of time in which to
timely file. Each Company Employee Benefit Plan that is intended to be qualified
within the meaning of Section 401(a) of the Code is so qualified and has
received a favorable determination letter or is subject to an opinion letter
from the IRS to the effect that the Company Employee Benefit Plan satisfies the
requirements of Section 401(a) of the Code and that its related trust is exempt
from taxation under Section 501(a) of the Code, and to Parent’s or the Company’s
Knowledge, there are no facts or circumstances that could reasonably be expected
to cause the loss of such qualification or the

 

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imposition of any material liability, penalty or tax under ERISA, the Code or
any other applicable Laws. Other than routine claims for benefits, no Liens,
lawsuits or complaints to or by any Person or Governmental Entity have been
filed against any Company Employee Benefit Plan or the Company with respect to
any Company Employee Benefit Plan or, to Parent’s or the Company’s Knowledge,
against any other Person relating to a Company Employee Benefit Plan and, to
Parent’s or the Company’s Knowledge, no such Liens, lawsuits or complaints are
contemplated or threatened with respect to any Company Employee Benefit Plan or
the Company with respect to any Company Employee Benefit Plan. No individual who
has performed services for the Company has been improperly excluded from
participation in any Company Employee Benefit Plan. The Company has not
initiated any proceedings pursuant to the IRS Employee Plans Compliance
Resolution System (currently set forth in Revenue Procedure 2008-50), the
Company has made the required payments and filings necessary to satisfy the
requirements of the DOL’s Delinquent Filer Voluntary Fiduciary Correction
Program and the DOL’s Voluntary Fiduciary Compliance Program with respect to all
returns, reports or other documentation required to have been filed with the IRS
or the DOL and that initially were not properly filed, and there are no audits
or similar proceedings pending with the IRS or the DOL with respect to any
Company Employee Benefit Plan.
(d) For each Title IV Plan set forth in Sections 2.14(a) and (b) of the Parent
Disclosure Letter, as of the last day of the most recent plan year ended prior
to the date hereof, there is no “amount of unfunded benefit liabilities,” as
defined in Section 4001(a)(18) of ERISA, and there has been no material change
in the financial condition of any such Title IV Plan since the last day of its
most recent fiscal year.
(e) There has been no “reportable event,” as that term is defined in
Section 4043 of ERISA and the regulations thereunder, with respect to any Title
IV Plan set forth in Sections 2.14(a) and (b) of the Parent Disclosure Letter
that would require the giving of notice or any event requiring disclosure under
Section 4041(c)(3)(C) or 4063(a) of ERISA, and neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will constitute a reportable event.
(f) Neither the Company nor any ERISA Affiliate has terminated any Title IV Plan
set forth in Sections 2.14(a) and (b) within the last six years or incurred any
outstanding liability under Section 4062 of ERISA to the Pension Benefit
Guaranty Corporation (the “PBGC”), or to a trustee appointed under Section 4042
of ERISA, which could result in liability of the Company or any of the Company
Subsidiaries. All premiums due the PBGC with respect to the Title IV Plans set
forth in Sections 2.14(a) and (b) of the Parent Disclosure Letter have been
paid. Neither the Company nor any ERISA Affiliate has filed a notice of intent
to terminate any Title IV Plan set forth in Section 2.14(a) of the Parent
Disclosure Letter and has not adopted any amendment to treat such Title IV Plan
as terminated. The PBGC has not instituted or, to Parent’s or the Company’s
Knowledge, threatened to institute, proceedings to treat any Title IV Plan set
forth in Sections 2.14(a) and (b) of the Parent Disclosure Letter as terminated.
No event has occurred or circumstance exists that may constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan set forth in Sections 2.14(a) and (b) of the
Parent Disclosure Letter.

 

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(g) Neither the Company nor any of its ERISA Affiliates or organizations to
which the Company or an ERISA Affiliate is a successor, within the meaning of
Section 4069(b) of ERISA, has engaged in any transaction described in
Sections 4069 or 4212(c) of ERISA.
(h) Neither the Company nor, to Parent’s or the Company’s Knowledge, any other
“party in interest” or “disqualified person” with respect to any Company
Employee Benefit Plan has engaged in a non-exempt “prohibited transaction”
within the meaning of Section 406 of ERISA or Section 4975 of the Code involving
such Company Employee Benefit Plan which, individually or in the aggregate,
could reasonably be expected to subject the Company to a tax or penalty imposed
by Section 4975 of the Code or Sections 501, 502 or 510 of ERISA. To Parent’s or
the Company’s Knowledge, no fiduciary has any liability for breach of fiduciary
duty or any other failure to act or comply with the requirements of ERISA, the
Code or any other applicable Laws in connection with the administration or
investment of the assets of any Company Employee Benefit Plan.
(i) All liabilities or expenses of the Company which have not been paid in
respect of any Company Employee Benefit Plan have been properly accrued as a
Liability on the Company’s Financial Statements in compliance with GAAP. All
contributions (including all employer contributions and employee salary
reduction contributions) or premium payments required to have been made under
the terms of any Company Employee Benefit Plan, or in accordance with applicable
Law, have been timely made or reflected on the Company’s financial statements in
accordance with GAAP.
(j) Neither the Company nor any Company Subsidiary has any obligation to provide
or make available any post-employment benefit under any Company Employee Benefit
Plan which is a “welfare plan” (as defined in Section 3(1) of ERISA) (“Welfare
Plan”) for any current or former officer, director, employee, leased employee,
consultant or agent (or their respective beneficiaries) of the Company or any of
the Company Subsidiaries, except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or other applicable Law, and
at no expense to the Company or any Subsidiary of the Company except as imposed
by applicable Law.
(k) Except for as described in Section 2.14(k) of the Parent Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in combination with
another event) (i) result in any payment becoming due, or increase the amount of
any compensation due, to any current or former officer, director, employee,
leased employee, consultant or agent (or their respective beneficiaries) of the
Company or any of the Company Subsidiaries; (ii) increase any benefits otherwise
payable under any Company Employee Benefit Plan; (iii) result in the
acceleration of the time of payment or vesting of any such compensation or
benefits; (iv) result in a non-exempt “prohibited transaction” within the
meaning of Section 406 of ERISA or Section 4975 of the Code; or (v) result in
the payment of any amount that could, individually or in combination with any
other such payment, constitute an “excess parachute payment,” as defined in
Section 280G(b)(1) of the Code. No current or former officer, director,
employee, leased employee, consultant or agent (or their respective
beneficiaries) has or will obtain a right to receive a gross-up payment from the
Company with respect to any excise taxes that may be imposed upon such
individual pursuant to Section 409A of the Code, Section 4999 of the Code or
otherwise.

 

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(l) Parent has made available to PESI with respect to each Company Employee
Benefit Plan, to the extent applicable: (i) the most recent documents
constituting the Company Employee Benefit Plan and all amendments thereto;
(ii) any related trust agreement or other funding instrument and all other
material contracts currently in effect with respect to such Company Employee
Benefit Plan (including all administrative agreements, group insurance contracts
and group annuity contracts); (iii) the most recent IRS determination or opinion
letter; (iv) the most recent summary plan description, summary of material
modifications and any other written communication (or a written description of
any oral communications) by the Company to its employees concerning the extent
of the benefits provided under a Company Employee Benefit Plan; (v) the three
most recent (x) Forms 5500 and attached schedules, and (y) audited financial
statements; and (vi) for the last three years, all correspondence with the IRS,
the DOL and any other Governmental Entity regarding the operation or the
administration of any Company Employee Benefit Plan.
(m) Neither the Company nor any of the Company Subsidiaries has any contract or
commitment, whether legally binding or not, to create any additional employee
benefit or compensation plans, policies or arrangements relating to the Company
or any of the Company Subsidiaries or, except as may be required by Law, to
modify any Company Employee Benefit Plan.
(n) No disallowance of a deduction under Section 162(m) of the Code for any
amount paid or payable by the Company or any Company Subsidiaries has occurred
or is reasonably expected to occur. All Company Employee Benefit Plans that are
subject to Section 409A of the Code are in compliance with the requirements of
such Code Section and regulations thereunder.
(o) Parent, the Company, the Parent Board, the Company Board or Parent’s
compensation committee have taken all actions necessary under the Company’s 2008
Equity Incentive Plan and each other incentive program providing for the
issuance of Company Common Stock or rights thereto or equivalents therein (the
“Company Stock Plans”) and the award agreements thereunder to terminate all
options or other awards granted under the Company Stock Plan and to terminated
the Company Stock Plan without any liability to the Company or any Company
Subsidiary, and Parent and the Company have made or will make available to PESI
all documentation relating to such actions.
(p) Neither the Company nor any Company Subsidiary is liable to any employee
under any agreement (written or otherwise) providing for payment by the Company
or any Company Subsidiary to the employee immediately prior to or on or after
the Closing for any cash amount set forth in such agreement in exchange for the
waiver by the employee of all of the employee’s rights and benefits under the
employee’s existing contractual agreements with the Company and any of the
Company Subsidiaries.
(q) Upon the expiration of the term of the contract between SEC Radcon Alliance,
LLC with Bechtel Jacobs Company, LLC, with respect to services provided to the
Department of Energy, SEC Radcon Alliance, LLC may incur withdrawal liability
under ERISA §4201 with respect to the Betchel Jacobs Company LLC Pension Plan.
The 2010 Annual Funding Notice for the Betchel Jacobs Company LLC Pension Plan
states that as of January 1, 2010, the plan’s funded percentage is 82.46%.

 

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2.15 Properties.
(a) Section 2.15(a) of the Parent Disclosure Letter sets forth a true and
complete list of all real property, facilities and office space leased or
subleased by or from the Company and the Company Subsidiaries having an annual
payment, individually, in excess of $50,000, together with the physical address
of and primary use for each such property. The Company and the Company
Subsidiaries do not own any real property.
(b) Each of the Company and the Company Subsidiaries has a valid leasehold
interests or other comparable contract right in, all its real properties and
other assets necessary for the conduct of its business as currently conducted,
except as have been disposed of in the ordinary course of business and except
for defects in title, easements, restrictive covenants and similar encumbrances
that, individually or in the aggregate, have not materially interfered with, and
could not reasonably be expected to materially interfere with, its ability to
conduct its business as presently conducted. All such properties and other
assets, other than properties and other assets in which the Company or any of
the Company Subsidiaries has a leasehold interest or other comparable contract
rights, are free and clear of all Liens, except for Permitted Liens and certain
Liens described in Section 2.15(b) of the Parent Disclosure Letter which were
granted pursuant to the Company Credit Agreement and which will be discharged
upon payment of the indebtedness outstanding under the Company Credit Agreement
on or prior to the Closing. Except for any violations or non-compliances which
could, individually or in the aggregate, not reasonably be expected to have a
Material Adverse Effect, neither the Company nor any of the Company Subsidiaries
is in violation of any covenant, or not in compliance with any condition,
restriction, zoning, land use Law or Lien, affecting any leased real property.
(c) Each of the Company and the Company Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a party
and under which it is in occupancy, and all leases to which the Company or any
of the Company Subsidiaries is a party and under which it is in occupancy are in
full force and effect, except for any such failures to be in full force and
effect that have not had, and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Each of the Company
and the Company Subsidiaries is in possession of the properties or assets
purported to be leased under all its material leases.
(d) All items of operating equipment owned or leased by the Company and the
Company Subsidiaries are in good condition, ordinary wear and tear excepted.
Neither the Company nor any of the Company Subsidiaries has delivered, within
the last twelve months, a notice to the landlord of any leased real property
complaining about the physical condition of such leased real property.

 

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2.16 Taxes.
(a) Except as otherwise disclosed in Section 2.16 of the Parent Disclosure
Letter, (i) the Company and the Company Subsidiaries have filed all Returns
required to be filed by or with respect to the Company and the Company
Subsidiaries in accordance with all applicable Laws and all such returns are
true, correct and complete in all material respects; (ii) the Company and the
Company Subsidiaries have timely paid or deposited in full all Taxes due or
claimed to be due, except for those Taxes being contested in good faith and for
which adequate reserves have been established in the Financial Statements of the
Company, and listed as a Liability in the Financial Statements; (iii) all
Employment and Withholding Taxes and any other material amounts required to be
withheld from any employee, contractor, customer, shareholder or other Person
with respect to Taxes have been withheld and either duly and timely paid to the
proper Governmental Entity or properly set aside in accounts for such purpose in
accordance with applicable Laws; and (iv) all sales or transfer Taxes required
to be collected by the Company or any of the Company Subsidiaries have been duly
and timely collected, or caused to be collected, and either duly and timely
remitted to the proper Governmental Entity or properly set aside in accounts for
such purpose in accordance with applicable Laws. The charges, accruals and
reserves for Taxes with respect to the Company and the Company Subsidiaries are
reflected as Liabilities in the Most Recent Company Balance Sheet and are
adequate under GAAP to cover Tax liabilities accrued through the date of such
balance sheets, and no deficiencies for any material Taxes have been asserted or
assessed, or, to Parent’s or the Company’s Knowledge, proposed, against the
Company or any of the Company Subsidiaries that have not been paid in full,
except for those Taxes being contested in good faith and for which adequate
reserves have been established in such balance sheet. There is no judicial or
administrative action, suit, proceeding, investigation, audit or claim underway,
pending or, to Parent’s or the Company’s Knowledge, threatened or scheduled to
commence, against or with respect to the Company or any of the Company
Subsidiaries in respect of any material Tax.
(b) Neither the Company nor any of the Company Subsidiaries has any liability
for Taxes under Treasury Regulations Section 1.1502-6 or any similar provision
under the Laws of the United States, any foreign jurisdiction or any state or
locality.
(c) Other than any tax sharing agreements with Parent to be terminated as of the
Closing, there are no Tax sharing, allocation, indemnification or similar
agreements (other than such an agreement or arrangement exclusively between or
among the Company and the Company Subsidiaries and other than customary Tax
indemnifications contained in credit or similar agreements) in effect as between
the Company or any of the Company Subsidiaries or any predecessor or affiliate
of any of them and any other Person under which the Company or any of the
Company Subsidiaries could be liable for any Taxes of any Person other than the
Company or any Subsidiary of the Company; provided, however, that the Company
and the Company Subsidiaries file a consolidated income tax return with Parent.
(d) Neither Parent, the Company nor any of the Company Subsidiaries has made an
election under former Section 341(f) of the Code, prior to repeal by the Jobs
and Growth Tax Relief Act of 2003 (P.L. 108-27), which effect, directly or
indirectly, the Company or any of the Company Subsidiaries.
(e) Neither Parent, the Company nor any of the Company Subsidiaries has entered
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of Taxes owing by the Company or the Company Subsidiaries
or the time with respect to the filing of any Tax Return relating to any Taxes
owing by the Company or the Company Subsidiaries.

 

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(f) There are no Liens for Taxes on any asset of the Company or the Company
Subsidiaries, except for Liens for Taxes being contested in good faith and for
which adequate reserves are reflected in the Financial Statements and such are
noted as a Liability in the Financial Statements.
(g) Neither the Company nor any of the Company Subsidiaries has requested or is
the subject of or bound by any private letter ruling, technical advice
memorandum, closing agreement or similar ruling, memorandum or agreement with
any Governmental Entity with respect to any material Taxes, nor is any such
request outstanding.
(h) Each of the Company and the Company Subsidiaries has disclosed on its
Returns all material positions taken therein that could give rise to a
“substantial understatement of income tax” within the meaning of Section 6662 of
the Code.
(i) Neither the Company nor any of the Company Subsidiaries has entered into,
has any Liability in respect of, or has any filing obligations with respect to,
any transaction that constitutes a “reportable transaction,” as defined in
Treasury Regulations Section 1.6011-4(b)(1).
(j) Neither the Company nor any of the Company Subsidiaries (i) will be required
to include any material item of income in, or exclude any material item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of the installment method of
accounting, the long-term contract method of accounting, the cash method of
accounting or any change in method of accounting for a taxable period ending on
or prior to the Closing Date under Section 481(a) of the Code (or any
corresponding or similar provision of state, local or foreign Tax Law) or
(ii) is a party to a “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign Tax
Law) executed on or prior to the Closing Date.
(k) Except as shall occur in connection with the Acquisition, no ownership
change (within the meaning of Section 382(g) of the Code) has occurred for the
Company or any of the Company Subsidiaries that has caused or will cause a
Section 382 limitation (within the meaning of Section 382(b) of the Code) to
become applicable.
(l) Neither the Company nor any of the Company Subsidiaries has distributed the
stock of any corporation, or had its stock distributed by another Person, in a
transaction satisfying or intended to satisfy the requirements of Code
Section 355 or Section 361. Neither the Company nor any of the Company
Subsidiaries has been, within the past two years, a “distributing corporation”
or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the
Code), and neither the Company nor any of the Company Subsidiaries has been,
within the past two years or otherwise, a party to a “plan (or series of related
transactions)” (within the meaning of Section 355(e) of the Code) of which the
Acquisition is a part, in which the Company or any of the Company Subsidiaries
is a “distributing corporation” or a “controlled corporation” (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
intending to qualify for tax-free treatment under Section 355 of the Code.

 

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(m) Parent and the Company have made available to PESI correct and complete
copies of (i) all U.S. federal and state Returns of Parent, the Company and the
Company Subsidiaries relating to taxable periods ending on or after December 31,
2004, filed through the date hereof, (ii) any audit report (or notice of
proposed adjustment to the extent not included in an audit report) within the
last three years relating to any material Taxes due from or with respect to the
Company or any of the Company Subsidiaries, and (iii) any substantive
correspondence and memoranda relating to the matters described in clause (ii) of
this Section 2.16(m).
(n) Neither the Company nor any of the Company Subsidiaries is obligated to make
any payment of any salary or compensation that is not deductible under Section
162(a) of the Code or that is an “excess parachute payment” as defined in
Section 280G of the Code.
(o) Each of the Company’s Subsidiaries is a United States person for purposes of
the Code.
(p) Other than Safety and Ecology Corporation Limited, a United Kingdom
corporation, neither the Company nor any of the Company Subsidiaries is or has
ever been a Real Property Holding Corporation within the meaning of
Section 897(c)(2) of the Code.
2.17 Environmental Matters. Except as described in Section 2.17 of the Parent
Disclosure Letter:
(a) Each of the Company and the Company Subsidiaries is in compliance with all
applicable Laws relating to (i) the protection of human health, welfare, the
environment, natural resources, plant or animal life, or ecological systems,
(ii) worker or public safety, (iii) the use, generation, handling, treatment,
storage, disposal, discharge, release, emission, transportation of or exposure
to Hazardous Materials), including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §
9601, et seq. (“CERCLA”), the Resource Conservation and Recovery Act of 1976, 42
U.S.C. § 6901, et seq., the Clean Air Act, 42 U.S.C. § 7401, et seq., the
Federal Water Pollution Control Act, 33 U.S.C. § 1251, et seq., the Oil
Pollution Act of 1990, 33 U.S.C. § 2701, et seq., the Toxic Substances Control
Act, 15 U.S.C. § 2601 et seq., the Endangered Species Act, 16 U.S.C. § 1531 et
seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., and the Atomic
Energy Act, 42 U.S.C. § 2011 et seq., as each has been amended, and the
regulations promulgated or directives issued pursuant thereto, as well as any
analogous applicable international, foreign, state or local Laws (collectively,
“Environmental Laws”).
(b) Each of the Company and the Company Subsidiaries has obtained all Permits
required for the operations of the Company and the Company Subsidiaries under
all applicable Environmental Laws (“Environmental Permits”), and made all
filings and maintained all material data, documentation and records as required
under such Permits and all applicable Environmental Laws, and all such Permits
and filings remain in full force and effect. Neither the Company nor any of the
Company Subsidiaries is in default or violation, nor has received from any
Governmental Entity any written, or to the Parent’s or the Company’s Knowledge,
any verbal notice of default, nor, to Parent’s or the Company’s Knowledge, has
any event occurred which, with notice or the lapse of time or both, could
reasonably be expected to constitute a material default or violation, of any
term, condition or provision of any such Permit to which it is a party or by
which it is bound or of any term, condition or provision under any contract or
agreement to which it is a party or by which it is bound establishing
environmental, health or safety obligations. Section 2.17(b) of the Parent
Disclosure Letter contains a true and complete list of all Environmental Permits
now held by the Company and the Company Subsidiaries, and true and complete
copies of such Permits have been made available to PESI.

 

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(c) Except as described in Section 2.17(c) of the Parent Disclosure Letter, to
Parent’s or the Company’s Knowledge, there are no conditions or circumstances
related to any property currently or formerly owned or leased by the Company or
any of the Company Subsidiaries or on which the Company or any of the Company
Subsidiaries conducts or conducted any operations and which conditions or
circumstances arise or arose from the operations of the Company, or for which
the Company or any of the Company Subsidiaries have otherwise assumed
responsibility that could reasonably be expected to subject any of them to
liability or obligations under Environmental Laws, that could reasonably be
expected to result in a material fine or penalty, material expenditure, or
material impact on operations of the Company and the Company Subsidiaries taken
as a whole.
(d) To Parent’s or the Company’s Knowledge, no Hazardous Material has been
released into the environment on or from any property currently or formerly
owned or leased by the Company or the Company Subsidiaries which is required,
under applicable Environmental Laws or the terms of any Permit or contract to
which the Company or any of the Company Subsidiaries is a party or is bound, to
be investigated, abated, remediated by the Company or any of the Company
Subsidiaries or would otherwise impose a Cleanup obligation on the Company or
any of the Company Subsidiaries.
(e) No Governmental Entity or other Person has asserted in writing or, to
Parent’s or the Company’s Knowledge, threatened or has grounds to assert a
claim, make a demand, or institute any administrative proceeding, enforcement
action, lawsuit, investigation or other proceeding against, the Company or any
of the Company Subsidiaries relating to a failure to comply with Environmental
Laws in any material respect that could reasonably be expected to result in a
material fine or penalty, material expenditure, or material impact on
operations.
(f) Neither the Company nor any of the Company Subsidiaries has received any
written notice of violation or compliance orders or complaints under applicable
Environmental Laws from any Governmental Entity or other Person that has not
been resolved.
(g) Neither the Company nor any of the Company Subsidiaries (nor to Parent’s or
the Company’s Knowledge, any predecessor of the Company or any of the Company
Subsidiaries) has used any waste disposal site, or otherwise disposed of,
transported, or arranged for the transportation of, any Hazardous Materials to
any place or location (i) in material violation of any Environmental Laws,
(ii) listed on the “National Priorities List” established under CERCLA or any
comparable list of sites under the laws of states or foreign jurisdictions, or
(iii) in a manner that has given or would reasonably expected to give rise to
material liabilities pursuant to any Environmental Laws. Section 2.17(g) of the
Parent Disclosure Letter contains a true and complete list of all disposal sites
or facilities owned or leased by Persons other than the Company and the Company
Subsidiaries which have been used by the Company or the Company Subsidiaries for
the disposal of any Hazardous Materials.

 

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(h) Except as described in the Environmental Reports described in
Section 2.17(h), there are, to the Knowledge of Parent or the Company, no past
or present conditions, events, circumstances, facts, activities, practices,
incidents, actions, omissions or plans that could reasonably be expected to give
rise to any material liability on the Company or any of the Company Subsidiaries
under applicable Environmental Laws.
(i) Section 2.17(i) of the Parent Disclosure Letter contains a true and complete
list of all material environmental assessments, material audits, and any other
material reports, studies, analyses, tests, or monitoring possessed or initiated
by the Company or the Company Subsidiaries (all, collectively, “Environmental
Reports”) in connection with or pertaining to compliance with, or potential
liability under, any Environmental Laws at property owned or leased by the
Company or any of the Company Subsidiaries. The Company has delivered, or made
available, to PESI true and complete copies of such Environmental Reports.
(j) Section 2.17(j) of the Parent Disclosure Letter contains a true and complete
list of all guaranties, performance bonds, letters of credit, insurance policies
and other forms of financial assurance which have been provided by the Company
and the Company Subsidiaries to any Governmental Entity and are now outstanding
in connection with each Environmental Permit now held by the Company or any of
the Company Subsidiaries.
2.18 Labor Matters; Employees.
(a) Except as described in Section 2.18(a) of the Parent Disclosure Letter,
(i) none of the Company or any of the Company Subsidiaries is a party to or
bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company or any of the
Company Subsidiaries, (ii) none of the employees of the Company or any of the
Company Subsidiaries are represented by any labor organization, and (iii) to
Parent’s or the Company’s Knowledge, there are no current union organizing
activities among the employees of the Company or any of the Company
Subsidiaries.
(b) Except as described in Section 2.18(b) of the Parent Disclosure Letter, none
of the Company or any of the Company Subsidiaries is, or since June 30, 2008 has
been, subject to any pending or, to Parent’s or the Company’s Knowledge,
threatened, (i) labor strike, dispute, slowdown, work stoppage or lockout,
(ii) written notice or written claim asserting that the Company or any of the
Company Subsidiaries is not in compliance with any applicable Law respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work, or occupational safety and health practices, (iii) unfair labor
practice charge or complaint against the Company or any of the Company
Subsidiaries before the National Labor Relations Board or any similar state or
foreign agency, (iv) grievance or arbitration proceeding arising out of any
collective bargaining agreement or other grievance procedure relating to the
Company or any of the Company Subsidiaries, (v) citation issued by the
Occupational Safety and

 

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Health Administration or any other similar foreign, federal or state agency
relating to the Company or any of the Company Subsidiaries, (vi) claim submitted
to a Governmental Entity or an investigation or other proceeding by a
Governmental Entity, whether initiated by an employee or Governmental Entity,
with respect to employment, terms or conditions of employment or working
conditions, including any charges submitted to the Equal Employment Opportunity
Commission or state employment practice agency, audits by the DOL or state
agency with respect to wages and hours of work or investigations regarding Fair
Labor Standards Act compliance, audits by the Office of Federal Contractor
Compliance Programs, or workers’ compensation claims, or (vii) claim, suit,
action or governmental investigation, in respect of which any director, officer,
employee or agent of the Company or any Company Subsidiary is or may be entitled
to claim indemnification from the Company or any Company Subsidiary.
(c) Each of the Company and the Company Subsidiaries is in compliance with all
applicable Law respecting employment and employment practices, terms and
conditions of employment, wages, hours of work, occupational safety and health
and unfair labor practices. None of the Company or any Company Subsidiary has
any liabilities under the Worker Adjustment and Retraining Act and the
regulations promulgated thereunder (the “WARN Act”) or any similar Law as a
result of any action taken by the Company or any of the Company Subsidiaries
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(d) Section 2.18(d) of the Parent Disclosure Letter contains a true, complete
and correct list of the names of all directors and officers of the Company and
each of the Company Subsidiaries, together with such Person’s position or
function. The Company has previously made available to PESI true and correct
information with respect to each such officer’s annual base salary or wages,
target bonus percentage and amount for 2009, 2010, and 2011, and any of the
Company Subsidiaries currently estimated severance payment due as a result of
the Acquisition, assuming such Person’s employment is terminated in connection
therewith.
2.19 Affiliate Transactions. Section 2.19 of the Parent Disclosure Letter
contains a true, complete and correct list of all agreements, contracts,
transfers of assets or liabilities or other commitments or transactions (other
than Company Employee Benefit Plans described in Section 2.14 of the Parent
Disclosure Letter and the Company Material Contracts), whether or not entered
into in the ordinary course of business, between the Company or any of the
Company Subsidiaries, on the one hand, and any of their respective Affiliates
(other than the Company or any of its Company Subsidiaries) on the other hand,
that (i) are currently pending, in effect or have been in effect at any time
since June 30, 2008 or (ii) involve continuing liabilities and obligations that,
individually or in the aggregate, have been, are or could be material to the
Company and the Company Subsidiaries taken as a whole. Each such agreement,
contract, transfer of assets or liabilities or other commitment or transaction
contains terms no less favorable to the Company or to such Company Subsidiary
than could be obtained with an unaffiliated third party on an arm’s-length
basis.

 

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2.20 Disclosure Controls and Procedures.
(a) The Company has established and maintains “disclosure controls and
procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act)
that are reasonably designed to ensure that all material information (both
financial and non-financial) required to be disclosed by the Company in the
reports that Parent files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the U.S. Securities and Exchange Commission (the “SEC”) and
that all such information is accumulated and communicated to Parent’s management
as appropriate to allow timely decisions regarding required disclosure and to
make the certifications of the chief executive officer and chief financial
officer of Parent required under the Exchange Act with respect to such reports.
Since January 1, 2008, Parent has not identified, and has not been advised by
its independent auditors as to, any “significant deficiencies” or “material
weaknesses” in the Company’s or any of the Company Subsidiaries’ internal
controls as contemplated under Section 404(a) of the Sarbanes-Oxley Act of 2002
(“SOX”).
(b) Except as disclosed on Section 2.20 of the Parent Disclosure Letter, since
June 27, 2010, none of the Company, any of the Company Subsidiaries nor the
auditor or accountant of the Company or any of the Company Subsidiaries has
received any material complaint, allegation, assertion or claim, whether written
or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any of the Company Subsidiaries,
including any material complaint, allegation, assertion or claim that the
Company or any of the Company Subsidiaries has a `significant deficiency” or
“material weakness” (as such terms are defined in the Public Company Accounting
Oversight Board’s Auditing Standard No. 2, as in effect on the date hereof) in
the Company’s or such Subsidiary’s internal control over financial reporting.
2.21 Insurance. Section 2.21 of the Parent Disclosure Letter lists each
insurance policy (including fire and casualty, general liability, workers’
compensation, employment practices, liability, pollution liability, directors
and officers and other liability policies) owned by the Company or any of the
Company Subsidiaries or which names the Company or any of the Company
Subsidiaries as an insured (or loss payee) or self-insurance arrangements that
are currently in effect, and the Company has made available to PESI a true and
complete copy of each such policy or the binder therefore, but excluding any
such policy maintained in connection with a Company Employee Benefit Plan made
available pursuant to Section 2.14(l). Each such policy is in full force and
effect, is in such amount and covers such losses and risks as is reasonable, in
the judgment of senior management of the Company, to protect the properties and
businesses of the Company and the Company Subsidiaries, and all premiums due
under each such policy have been paid. With respect to each such insurance
policy, none of the Company, any of the Company Subsidiaries or, to Parent’s and
the Company’s Knowledge, any other party to the policy is in breach or default
thereunder (including with respect to the payment of premiums or the giving of
notices), and to Parent’s and the Company’s Knowledge, no event has occurred
that (with notice or the lapse of time or both) would constitute such a breach
or default or permit termination under the policy, except for such breaches or
defaults which have not had or could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. None of the Company
or any of the Company Subsidiaries has been refused to purchase any insurance
with respect to its assets or operations since April 1, 2008.

 

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2.22 Intellectual Property.
(a) Schedule 2.22(a) of the Parent Disclosure Letter (i) lists all U.S.,
international and foreign patents, published patent applications, trademark and
service mark applications and registrations, copyright registrations (the
“Registered IP”), as well as custom software (not including off-the-shelf
software) which are part of the Company IP and are owned or licensed by the
Company or any Company Subsidiary or are material to the business of the Company
or any Company Subsidiary as currently conducted, (ii) indicates the owner of
the Registered IP, (iii) lists all agreements (excluding shrinkwrap or other
similar licenses with respect to off-the-shelf-software) whereby the Company or
any Company Subsidiary has the legal right to use any Company IP which the
Company or any Company Subsidiary does not own, and (iv) lists all agreements
whereby the Company or any of the Company Subsidiaries has granted to any Person
the right to use any Company IP that the Company or any Company Subsidiary owns.
(b) The Company or the Company Subsidiaries owns or has the legal right to use,
free and clear of all Liens, all the Company IP, in each case free of any claims
or infringements known to the Company or any of the Company Subsidiaries. The
Registered IP identified on Section 2.22(a) of the Parent Disclosure Letter as
being owned by the Company or a Company Subsidiary is owned by either the
Company or such Company Subsidiary. No consent of any Person will be required
for the use of any of the Company IP by PESI or any of its Subsidiaries in
connection with the conduct of the business now being conducted by the Company
and the Company Subsidiaries. No governmental registration of any of the
Registered IP has lapsed or expired or been canceled, abandoned, opposed or the
subject of any reexamination request, and the Company and each of the Company
Subsidiaries has diligently protected its legal rights to the Company IP,
including paying all fees and meeting all deadlines reasonably necessary to
maintain the Registered IP. To the Knowledge of Parent, the Company and the
Management Investors, the Company IP is sufficient to enable the Company and all
of the Company Subsidiaries, following the Acquisition, to operate the business
of the Company and the Company Subsidiaries as currently conducted.
(c) There is no prohibition or restriction invoked by a Governmental Entity on
the use of any of the Company IP, except for any prohibitions or restrictions
imposed by any Law pursuant to which such Company IP has been established, and
no Claim against the Company or any of the Company Subsidiaries regarding any
Company IP is pending or, to Parent’s or the Company’s Knowledge, threatened. To
Parent’s or the Company’s Knowledge, no Person is infringing or misappropriating
the Company IP, and to Parent’s or the Company’s Knowledge, no product or
service of the Company or any of the Company Subsidiaries infringes or
misappropriates the Intellectual Property of any Person. Neither Parent, the
Company nor any of the Company Subsidiaries has received any written charge,
complaint, claim or notice alleging any infringement, misappropriation or
violation by the Company or any of the Company Subsidiaries of the Intellectual
Property of any Person or alleging that the operation of the business of the
Company or any of the Company Subsidiaries as currently conducted requires a
license to the Intellectual Property of any Person. Neither Parent, the Company
nor any of the Company Subsidiaries has received any charge, complaint, claim or
notice that any of the Registered IP is unenforceable or invalid.

 

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(d) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) constitute a
breach of any instrument or agreement governing any Company IP other than
consents required for licenses, (ii) cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any Company IP or (iii) to
Parent’s or the Company’s Knowledge, otherwise impair the right of PESI, the
Surviving Entity or their Subsidiaries, following the Acquisition, to use or
otherwise exploit, assert or enforce any Company IP.
(e) No employee of the Company or any of the Company Subsidiaries has entered
into any contract or agreement that restricts or limits in any way the scope or
type of work in which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning such employee’s work to
anyone other than the Company or the Company Subsidiaries. Each Person who has
participated in the authorship, invention or creation of Company IP (other than
those rights required to be listed pursuant to Section 2.22(a)(iii)) has entered
into an agreement with the Company or the applicable Company Subsidiary
assigning all rights, title and interests in such Company IP to the Company or
such Subsidiary. Neither the Company nor any of the Company Subsidiaries has
received written notice from any of its current or prior directors, officers,
employees, consultants or contractors claiming to have an ownership interest in
any of the Company IP and, to Parent’s or the Company’s Knowledge, there is no
basis for any such claim.
2.23 Derivative Transactions and Hedging. There are no outstanding commodity,
financial or other hedging positions entered into by the Company or any Company
Subsidiary or for the account of any of its customers as of the date of this
Agreement.
2.24 Bank Accounts, Letters of Credit and Powers of Attorney. Section 2.24 of
the Parent Disclosure Letter lists (i) all bank accounts, lock boxes and safe
deposit boxes relating to the Business and operations of the Company and the
Company Subsidiaries (including the name of the bank or other institution where
such account or box is located and the name of each authorized signatory
thereto), and (ii) all outstanding letters of credit issued by financial
institutions for the account of the Company or any of the Company Subsidiaries
(setting forth, in each case, the financial institution issuing such letter of
credit, the maximum amount available under such letter of credit, the expiration
date of such letter of credit and the party or parties in whose favor such
letter of credit was issued), and (iii) the name and address of Person who has a
power of attorney to act on behalf of the Company or such Subsidiary. The
Company has heretofore made available to PESI true and complete copies of each
such letter of credit.
2.25 Disclosure of Material Information. To the Parent’s or the Company’s
Knowledge, neither this Agreement (including the Schedules and Exhibits) nor any
document, certificate, or instrument furnished in connection herewith contains,
with respect to the Company or any of the Company Subsidiaries, any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading, except as would not, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect. There
is no fact known to Parent, the Company or any of the Company Subsidiaries which
has or would reasonably be expected in the future to result in a Material
Adverse Effect and which has not been set forth in this Agreement or in any
other document delivered in connection herewith.

 

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2.26 Brokers. Except for fees or commissions for which Parent is solely liable,
no broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission payable by the Company or any of the Company
Subsidiaries in connection with the transactions contemplated by this Agreement.
2.27 Accounts Receivable. The unpaid balance owing on all of the accounts
receivable and notes receivable of the Company and the Company Subsidiaries
reflected in the Financial Statements, as well as those arising between June 27,
2010, and the Closing, are and will be good and collectible and will be paid in
full in the ordinary and usual course of business, except to the extent that a
reserve against the accounts receivable has been established and is reflected on
the Estimated Company Balance Sheet.
2.28 PESI SEC Filings. Neither the information supplied, or to be supplied, by
or on behalf of Parent, the Company and/or any of the Company Subsidiaries for
inclusion or incorporation by reference into any document to be filed by PESI
with the SEC in connection with the Acquisition and the other transactions
contemplated herein, contains or will, on the date of its filing or at the date
it is mailed to the stockholders of PESI, contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If, at any time prior to the Closing, any
event with respect to Parent and/or the Company or any of the Company
Subsidiaries shall occur which is required under applicable SEC rules to be
described in the Information Statement or any of PESI SEC Filings, Parent shall
promptly disclose such event to PESI.
ARTICLE III.
RESERVED.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES REGARDING PESI
PESI hereby represents and warrants to Parent that, except as otherwise set
forth in PESI’s disclosure letter delivered to Parent at or prior to the
execution of this Agreement (the “PESI Disclosure Letter”), which letter has
been arranged to correspond to the numbered and lettered Sections in this
Article IV, provided that disclosure of any item in any section of the PESI
Disclosure Letter shall not be deemed to be disclosed with respect to any other
Section of this Article IV):
4.1 Organization and Qualification; Subsidiaries.
(a) PESI is a corporation duly incorporated and validly existing in good
standing under the laws of the State of Delaware. PESI has the requisite
corporate power and authority to own or lease its properties and to carry on its
business as it is now being conducted and as proposed to be conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character of the properties owned
or leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified has not had, and could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

 

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(b) Each Subsidiary of PESI, except for those PESI Subsidiaries that have been
classified as a discontinued operations in Section 4.1(b) of the PESI Disclosure
Letter, (each a “PESI Subsidiary”), (i) is duly incorporated and validly
existing under the laws of its respective jurisdiction of organization, (ii) has
the requisite corporate or other business entity power and authority to own or
lease its properties and to carry on its business as it is now being conducted,
and (iii) is duly licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character of the
properties owned or leased by it makes such licensing or qualification
necessary, in each case, except as has not had, and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Section 4.1(c) of the PESI Disclosure Letter sets forth a true and complete
list of all of the PESI Subsidiaries, the state of incorporation or formation of
each PESI Subsidiary and, as of the date hereof, the jurisdictions in which each
PESI Subsidiary is qualified or licensed to do business.
4.2 Governing Documents. PESI has heretofore furnished to Parent true and
complete copies of its certificate of incorporation and bylaws (the “PESI
Governing Documents”), each as amended to date. The PESI Governing Documents are
in full force and effect.
4.3 Capitalization. The authorized capital stock of PESI consists of 75,000,000
shares of PESI Common Stock and 2,000,000 shares of preferred stock, $0.001 par
value per share (“PESI Preferred Stock”). As of June 30, 2011, (i) 55,137,687
shares of PESI Common Stock were issued and outstanding, but excluding shares
held in treasury), all of which were validly issued, fully paid and
non-assessable, and none of which were issued in violation of any preemptive or
similar rights of any PESI securityholder, (ii) 38,210 shares of PESI Common
Stock were held in treasury, (iii) options to purchase an aggregate of 2,466,833
shares of PESI Common Stock (“PESI Options”) were issued and outstanding, and
(iv) no shares of PESI Preferred Stock were issued and outstanding.
4.4 Authority; Due Authorization; Binding Agreement; Approval.
(a) PESI has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement by PESI and the
consummation by PESI of the transactions contemplated hereby have been duly and
validly authorized by all requisite corporate action on the part of PESI.
(c) This Agreement has been duly executed and delivered by PESI and, assuming
the due authorization, execution and delivery hereof by Parent and the Company,
constitutes a valid and binding obligation of PESI, enforceable against PESI in
accordance with its terms, except as limited by bankruptcy, insolvency,
moratorium, fraudulent transfer, reorganization and other Laws of general
applicability relating to or affecting the rights or remedies of creditors and
by general equitable principles (whether considered in a proceeding in equity or
at law).

 

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(d) The Board of Directors of PESI, at a meeting duly called and held, duly
adopted resolutions unanimously (i) determining that this Agreement and the
transactions contemplated hereby are advisable and in the best interests of the
stockholders of PESI and (ii) approving this Agreement and transactions
contemplated hereby and all other corporate action required to be taken in
connection with the consummation of the transactions contemplated hereby, which
resolutions, as of the date of this Agreement, have not been subsequently
rescinded, modified or withdrawn in any way.
4.5 No Violation; Consents.
(a) Except as disclosed in Section 4.5 of the PESI Disclosure Letter, the
execution and delivery of this Agreement by PESI does not, and the consummation
by PESI of the transactions contemplated hereby will not (i) conflict with or
violate the PESI Governing Documents, (ii) constitute a breach or violation of,
a default (or an event which, with notice or lapse of time or both, would
constitute such a default) under, require consent under, or give rise to a right
of termination, cancellation, creation or acceleration of any obligation,
payment of any consent or similar fee, or to the loss of any benefit under, or
result in the creation of any Lien upon any of the properties or assets of PESI
under any indenture, mortgage, deed of trust, loan or credit agreement, note,
bond, lease or other agreement, instrument or Permit to which PESI is a party,
except the consent of PNC Bank, National Association (the “PESI Lender”) and the
listing of the PESI Shares on the Nasdaq Capital Market (“NASDAQ”) and
compliance with the Securities Act, the Exchange Act and other applicable
federal and state securities laws in connection herewith; (iii) (assuming that
the consents and approvals referred to in Section 4.5(b) are duly and timely
made or obtained) conflict with or violate any Law or any Order of any
Governmental Entity to which PESI is subject or by which any of its properties
are bound, except, in the case of clause (ii) or (iii), for such conflicts,
breaches, violations, consent requirements, terminations, obligations, fees,
loss of benefits, defaults or Liens, that have not had, and could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
(b) Except for (i) compliance with any applicable requirements of (x) the
Securities Act, the Exchange Act and any other applicable U.S. state or federal
securities laws and (y) the NASDAQ, (ii) authorizations, consents, approvals or
filings under any Environmental Laws relating to the transfer or issuance of
Environmental Permits in connection with the Acquisition, (iii) consents and
approvals of the PESI Lender, and (iv) such other authorizations, consents,
approvals or filings the failure of which to obtain or make has not had, and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, no authorizations, consents or approvals of, or filings
with, any Governmental Entity or any third party is required to be obtained or
made by PESI for the execution and delivery by PESI of this Agreement or the
consummation by PESI of the transactions contemplated hereby.
4.6 Compliance. PESI is not, and at all times since January 1, 2011 has not
been, in (i) violation of its certificate of incorporation and bylaws,
(ii) except as disclosed in Section 4.6 of the PESI Disclosure Letter, violation
of any Law applicable to it or Order of any Governmental Entity having
jurisdiction over it, or (iii) except as disclosed in Section 4.6 of the PESI
Disclosure Letter, default in the performance of any obligation, agreement,
covenant or condition under any indenture, mortgage, deed of trust, loan, credit
agreement, note, bond, lease or other agreement, instrument or Permit to which
PESI is a party or by which it or any of its properties are bound or subject,
except, in the case of clauses (ii) and (iii), for such violations or defaults
that have not had, and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

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4.7 SEC Filings; Financial Statements.
(a) PESI has timely filed all reports, registration statements, proxy statements
and exhibits to the foregoing documents required to be filed by it with the SEC
since January 1, 2011 (collectively, the “PESI SEC Documents”). As of their
respective dates of filing with the SEC, (i) PESI SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations thereunder, and
(ii) except to the extent that information contained in any PESI SEC Document
has been revised or superseded by a later-filed PESI SEC Document, none of PESI
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No PESI Subsidiary is currently required to file any form,
report or other document with the SEC under Section 13(a) or 15(d) of the
Exchange Act. No event has occurred since the filing of the most recent PESI SEC
Documents that would require PESI to file a current report on Form 8-K other
than the execution of this Agreement and amendments to the loan agreement with
the PESI Lender.
(b) The historical financial statements of PESI, together with the related
schedules and notes thereto, included in PESI SEC Documents (i) comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC as of their respective dates of
filing with the SEC and (ii) present fairly the consolidated financial position
of PESI and its consolidated Subsidiaries at the dates indicated and the income,
cash flows and stockholders’ equity of PESI and its consolidated Subsidiaries
for the periods specified; (except, in the case of such unaudited financial
statements, subject to normal year-end adjustments that are not material in
amount or significance in any individual case or in the aggregate). All of such
historical financial statements of PESI have been prepared in accordance with
GAAP (except, in the case of the unaudited statements, as permitted by the SEC)
applied on a consistent basis throughout the periods involved, except as noted
therein.
4.8 Absence of Certain Changes or Events. Since January 1, 2011, there has not
been any event, circumstance, change, occurrence or state of facts that has had,
or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect with respect to PESI.
4.9 Tax Returns, Payments and Elections. To PESI’s Knowledge, PESI has filed all
tax returns and reports (federal, state and local) as required by law, and such
returns and reports are true and correct in all material respects. To PESI’s
Knowledge, PESI has paid all taxes and other assessments due. PESI has not made
any elections pursuant to the Code (other than elections that relate solely to
methods of accounting, depreciation or amortization) that would have a Material
Adverse Effect on PESI’s business, properties, assets or financial condition;
except that PESI’s consolidated income tax return for 2010 is on extension and
has not been filed and the related taxes, if any, have not been paid.

 

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4.10 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of PESI.
4.11 Litigation. Except as disclosed in Section 4.11 of the PESI Disclosure
Letter, there is no action, suit, investigation or proceeding pending before or
by any Person or, to PESI’s Knowledge, threatened, against PESI or any of the
PESI Subsidiaries or any of their respective assets, and (b) to PESI’s
Knowledge, PESI and the PESI Subsidiaries and their respective assets are not
subject to any Order, except as would not, individually or in the aggregate,
have a Material Adverse Effect.
4.12 Disclosure of Material Information. To PESI’s Knowledge, neither this
Agreement (including the Schedules and Exhibits) nor any document, certificate,
or instrument furnished in connection herewith contains, with respect to PESI,
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein not misleading, except as would not,
individually or in the aggregate, have a Material Adverse Effect. There is no
fact known to PESI which has or would reasonably be expected in the future to
result in a Material Adverse Effect and which has not been set forth in this
Agreement or in any other document delivered in connection herewith.
4.13 Information Statement. Neither the information supplied, or to be supplied,
by or on behalf of PESI for inclusion or incorporation by reference into the
Information Statement or any other documents to be filed by Parent with the SEC
in connection with the Acquisition and the other transactions contemplated
herein, contains or will, on the date of its filing or at the date it is mailed
to the Parent Stockholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. If, at any time prior to the Closing, any event with
respect to PESI shall occur which is required under applicable SEC rules to be
described in the Information Statement, PESI shall promptly disclose such event
to Parent.

 

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ARTICLE V.
COVENANTS
5.1 Interim Operations of the Company. Parent and the Company, jointly and
severally, covenant and agree as to the Company and the Company Subsidiaries
that during the period from the date of this Agreement until the Closing or the
date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1, except as (w) set forth in Section 5.1 of the Parent Disclosure
Letter, (x) expressly permitted by this Agreement, including Section 5.2 of this
Agreement, (y) required by applicable Law, or (z) consented to in writing by
PESI after the date of this Agreement and prior to the Closing, which consent
shall not be unreasonably withheld or conditioned:
(a) the business of the Company and its Subsidiaries shall be conducted only in
the ordinary course of business consistent with past practice, and Parent and
the Company shall use Commercially Reasonable Efforts to (i) preserve intact the
Company’s business organization and goodwill and the business organization and
goodwill of the Company Subsidiaries and (ii) to keep available the services of
their current officers and key employees and preserve and maintain existing
relations with material customers, suppliers, officers, employees, creditors and
other Persons having business dealings with them;
(b) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to (i) enter into any new line of business or (ii) incur or
commit to any capital expenditures, or any obligations or liabilities in
connection with any capital expenditures, other than in the ordinary course of
business consistent with past practice
(c) the Company shall not, nor shall Parent or the Company permit any the
Company Subsidiaries to, amend any of their respective certificates of
incorporation or bylaws or similar organizational documents;
(d) the Company shall not declare, set aside or pay any dividend or other
distribution, whether payable in cash, stock or any other property or right,
with respect to its capital stock;
(e) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries, to split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in lieu of, or in substitution
for, shares of its capital stock;
(f) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries, to redeem, repurchase or otherwise acquire directly or
indirectly any of its capital stock;
(g) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, issue, sell, dispose of or encumber, or authorize the
issuance, sale, disposition or encumbrance of, any shares of its capital stock
or grant, enter into or accept any options, warrants, convertible securities or
other rights to acquire any shares of such capital stock or any other ownership
interest in the Company or any Company Subsidiary;
(h) other than in the ordinary course of business, the Company shall not, nor
shall Parent or the Company permit any of the Company Subsidiaries to: (i) grant
any increase in the compensation or benefits payable to any officer of the
Company or any of the Company Subsidiaries, (ii) except as required to comply
with applicable Law or any agreement in existence on the date of this Agreement
or as expressly provided in this Agreement, adopt, enter into, amend or
otherwise increase, or accelerate the payment or vesting of the amounts,
benefits or rights payable or accrued or to become payable or accrued under any
Company Employee Benefit Plan, or (iii) enter into or amend any employment
agreement or, except in accordance with existing contracts or agreements, grant
any severance or termination pay to any officer, director or employee of the
Company or any of the Company Subsidiaries;

 

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(i) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, revalue any of its material assets or change its
methods of accounting in effect at June 27, 2010, except changes in accordance
with and required by GAAP, applicable Law or regulatory guidelines as concurred
with by the Company’s independent auditors;
(j) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to (i) acquire or invest in any Person or other business
organization, division or business of such Person (whether by merger or
consolidation or by purchase of an equity interest in such Person or by any
other manner) or (ii) other than in the ordinary course of business consistent
with past practice, acquire any material assets;
(k) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, sell, lease, exchange, transfer or otherwise dispose
of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any
material assets of the Company or the Company Subsidiaries, except for inventory
and equipment in the ordinary course of business consistent with past practice;
(l) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, mortgage, pledge, hypothecate, sell and leaseback,
grant any security interest in, or otherwise subject to any other Lien, other
than Permitted Liens, any material assets of the Company or Company
Subsidiaries;
(m) except for Taxes, to which Section 5.1(o) shall apply, the Company shall
not, nor shall Parent or the Company permit any of the Company Subsidiaries to,
(i) except as set forth in clause (ii) below, pay, discharge or satisfy any
material Claims (including claims of stockholders), liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) where such
payment, discharge or satisfaction would require any material payment except for
the payment, discharge or satisfaction of liabilities or obligations in
accordance with the terms of the Company Material Contracts as in effect on the
date of this Agreement or entered into after the date of this Agreement in the
ordinary course of business consistent with past practice and not in violation
of this Agreement, in each case to which the Company or any of the Company
Subsidiaries is a party; provided, however, that nothing in this Section 5.1(m)
shall prohibit the Company or any of the Company Subsidiaries from paying,
discharging or satisfying accounts payable existing on or arising after, in each
case in the ordinary course of business consistent with past practice, the date
of this Agreement, or (ii) compromise, settle or grant any waiver or release
relating to any Litigation, other than settlements or compromises of Litigation
fully covered by insurance or where the amount paid or to be paid does not
exceed $75,000 in the aggregate for all Claims;
(n) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, engage in any transaction with (except pursuant to
agreements in effect at the time of this Agreement insofar as such agreements
are disclosed in Section 2.19 of the Parent Disclosure Letter), or enter into
any agreement, arrangement, or understanding, directly or indirectly, with any
of the Company’s Affiliates; provided that, for the avoidance of doubt, for
purposes of this Agreement, the term “Affiliates” shall not include any
employees of the Company or any of its Subsidiaries other than the directors and
executive officers thereof and employees who share the same household with such
directors and executive officers;

 

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(o) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, enter into any closing agreement with respect to
material Taxes, make any change to any material Tax method of accounting, fail
to prepare all Returns using Tax principles consistent with those used for
preceding tax periods, unless a change is required by applicable Law, make,
revoke or change any material Tax election, authorize any indemnities for Taxes,
extend any period for assessment of any Tax, file any request for a ruling or
determination, amend any material Return (including by way of a claim for
refund) or settle or compromise any material Tax liability or any material Tax
refund;
(p) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of its Subsidiaries (other than
the Acquisition) or any agreement relating to an Acquisition Proposal, except as
provided under Section 5.2;
(q) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, (i) incur or assume any indebtedness for borrowed
money, (ii) modify any material indebtedness or other liability to increase the
Company’s (or any of its Subsidiaries’) obligations with respect thereto,
(iii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person (other than a Company Subsidiary), except in the ordinary course of
business and consistent with past practice and in no event exceeding $75,000 in
the aggregate at any time outstanding, (iv) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to a Company
Subsidiary, or by such Company Subsidiary to the Company, or customary loans or
advances to employees consistent with past practice or short-term investments of
cash in the ordinary course of business in accordance with the Company’s cash
management procedures), or (v) enter into any material commitment or
transaction, except in the ordinary course of business and consistent with past
practice and in no event exceeding $75,000 in the aggregate, except as permitted
under Section 5.1(b); provided, however, that the restrictions in this
Section 5.1(m) shall not prohibit the incurrence of any long-term debt or
short-term indebtedness or other liability or obligation between the Company and
any Company Subsidiaries;
(r) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, enter into any agreement, understanding or commitment
that restrains, limits or impedes the ability of the Company or any Company
Subsidiary, or would limit the ability of the Company or any Company Subsidiary
after the Closing, to compete in or conduct any line of business or to solicit
customers or employees;
(s) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, enter into any material agreement, understanding or
commitment containing any restriction on the ability of the Company or any of
Company Subsidiaries to assign its rights, interests or obligations thereunder,
unless such restriction excludes or is not applicable to any assignment to PESI
or any of its Subsidiaries in connection with or following the consummation of
the transactions contemplated by this Agreement;

 

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(t) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, enter into any material joint venture, partnership or
other similar arrangement or materially amend or modify in an adverse manner the
terms of (or waive any material rights under) any existing material joint
venture, partnership or other similar arrangement (other than any such action
between the Company’s Subsidiaries);
(u) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, terminate any Company Material Contract to which it is
a party or waive, release, relinquish or assign any of its rights or Claims
under any Company Material Contract in a manner that is materially adverse to
the Company or, except in the ordinary course of business consistent with past
practice, modify or amend in any material respect any Company Material Contract;
(v) the Company shall not, nor shall Parent or the Company permit any of its
Subsidiaries to, take any action that would give rise to a claim under the WARN
Act or any similar state Law because of a “plant closing” or “mass layoff” (each
as defined in the WARN Act) without in good faith attempting to comply with the
WARN Act or such state Law;
(w) the Company shall not enter into, amend or otherwise change the terms of any
agreements with brokers, finders or investment bankers (including the Parent
Financial Advisor) that would result in the Company or the Company Subsidiaries
being liable in any manner for any fees, commissions or otherwise to such
brokers, finders or investment bankers;
(x) the Company shall not, nor shall Parent or the Company permit any of the
Company Subsidiaries to, enter into an agreement, contract, commitment or
arrangement to do any of the actions described in clauses (b) through (w) above;
or take any action that would prevent Parent or the Company from performing or
cause Parent or the Company not to perform its covenants under this Agreement;
and
(y) prior to the Closing the Company shall obtain, and Parent and the Company
shall cause each Company Subsidiary to obtain, and shall deliver to PESI at the
Closing, resignations of each of the directors of the Company and each Company
Subsidiary and Michael T. Brigante as an officer of the Company and the Company
Subsidiaries, with such resignations to become effective as of the Closing.
Notwithstanding the foregoing, with respect to SEC Radcon Alliance, LLC, only
the directors appointed by the Company will resign.

 

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5.2 Acquisition Proposals.
(a) Parent agrees that, except as expressly contemplated by this Agreement,
neither it nor the Company shall, and Parent shall cause its and the Company’s
officers, directors, investment bankers, attorneys, accountants, financial
advisors, agents and other representatives (collectively, “Representatives”) not
to, (i) directly or indirectly, initiate, solicit or encourage or take any
action to facilitate (including by way of furnishing non-public information) any
inquiry regarding or the making or submission of any proposal that constitutes,
or could reasonably be expected to lead to, an Acquisition Proposal,
(ii) participate or engage in discussions or negotiations with, or disclose to
any Person (other than a party hereto or its Representatives) any information
relating to the Company or any of the Company’s Subsidiaries, or afford access
to the properties, books or records of the Company or any of the Company’s
Subsidiaries to, or otherwise cooperate in any way with, any Person that has
made an Acquisition Proposal or that the Company, any of the Company’s
Subsidiaries or any of their respective Representatives knows or has reason to
believe is contemplating making an Acquisition Proposal, or (iii) accept an
Acquisition Proposal or enter into any agreement, arrangement or understanding,
including any letter of intent or agreement in principle (other than an
Acceptable Confidentiality Agreement under circumstances contemplated in
Section 5.2(b)), (x) providing for, constituting or relating to an Acquisition
Proposal or (y) that would require, or could have the effect of causing, the
Company to abandon, terminate or fail to consummate the Acquisition or any other
transaction contemplated by this Agreement. Other than with respect to PESI,
Parent shall not (A) waive, modify, terminate, or fail to enforce any
“standstill” obligation of any Person, and (B) render the restrictions, if any,
under the Nevada Corporate Code relating to business combinations inapplicable
to any Person. Any violation of the foregoing restrictions of this
Section 5.2(a) by any of Parent, the Company, or any of their Subsidiaries or by
any Representative of Parent, the Company or any of their Subsidiaries, whether
or not such Representative is so authorized and whether or not such
Representative is purporting to act on behalf of Parent, the Company or any of
their Subsidiaries or otherwise, shall be deemed to be a breach of this
Agreement by Parent.
(b) Notwithstanding anything to the contrary in Section 5.2(a) or elsewhere in
this Agreement, Parent and the Parent Board may take any actions described in
clause (ii) of Section 5.2(a) with respect to a third party at any time prior to
obtaining the Parent Required Votes if, prior to such vote, (i) the Company
receives a bona fide written Acquisition Proposal from such third party (and
such Acquisition Proposal was not initiated, solicited, encouraged or
facilitated by Parent, the Company or any of their Subsidiaries or any of their
respective Representatives in violation of this Section 5.2), (ii) the Parent
Board determines in good faith by resolution duly adopted (after consultation
with financial advisors and its outside legal counsel, Mintz Levin Cohn Ferris
Glovsky and Popeo, P.C., that such proposal constitutes or is reasonably likely
to result in a Superior Proposal from the third party that made the applicable
Acquisition Proposal, (iii) the Parent Board determines in good faith by
resolution duly adopted after consultation with financial advisors and its
outside legal counsel (Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.) that the
third party making such Acquisition Proposal has the financial capacity to
consummate such Acquisition Proposal, and (iv) the Parent Board determines after
the receipt of advice from such outside legal counsel (Mintz Levin Cohn Ferris
Glovsky and Popeo, P.C.) that the failure to take such action would result in a
breach of its fiduciary duties under applicable Law; provided that (x) Parent or
the Company shall not deliver any information to such third party without
entering into a confidentiality agreement on terms no less favorable to Parent
and the Company than the Confidentiality Agreement between the Company and PESI
and which shall in no event permit Parent and the Company not to comply with the
terms of this Agreement (an “Acceptable Confidentiality Agreement”) and
(y) Parent shall immediately provide or make available to PESI any material
non-public information concerning the Company or any of its Subsidiaries that is
provided to any Person making such Acquisition Proposal or such Person’s
Representatives that was not previously provided or made available to PESI.
Nothing contained in this Section 5.2(b) shall prohibit Parent from disclosing
any information as required by applicable Law.

 

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(c) Parent agrees that in addition to the obligations of Parent set forth in
Sections 5.2(a) and (b), as promptly as practicable after receipt thereof (but
in no event more than 24 hours after Parent’s receipt thereof), Parent shall
advise PESI orally and in writing in the event that Parent or any of its
Subsidiaries or Representatives receives, directly or indirectly: (i) any
Acquisition Proposal or indication by any Person that it is considering making
an Acquisition Proposal or proposals or offers with respect to an Acquisition
Proposal, (ii) any request for non-public information relating to the Company
and/or any of the Company Subsidiaries other than a request for information in
the ordinary course of business or unrelated to an Acquisition Proposal, or
(iii) any inquiry or request for discussions or negotiations regarding any
Acquisition Proposal or potential Acquisition Proposal. Parent shall promptly
(and in any event within 48 hours) notify PESI orally and in writing of the
identity of any such Person and provide to PESI a copy of any such Acquisition
Proposal, inquiry or request (or, where no such copy is available, a written
description of such Acquisition Proposal, inquiry or request), including any
material modification to any Acquisition Proposal. Parent shall keep PESI
reasonably informed (orally and in writing) on a prompt basis (and in any event
within 48 hours) of the status and details of any such Acquisition Proposal,
indication, inquiry or request (including the material terms and conditions
thereof and of any modification thereto). Without limiting the foregoing, Parent
shall promptly (and in any event within 24 hours) notify PESI orally and in
writing if it determines to engage in any actions described in clause (ii) of
Section 5.2(a) and shall keep PESI reasonably informed (orally and in writing)
on a prompt basis (and in any event within 24 hours) of the status and details
of any such actions. In addition, Parent shall not, and shall cause its
Subsidiaries not to, enter into any confidentiality agreement with any Person
that would restrict Parent’s ability to provide information to PESI as required
by Section 5.2(b) or this Section 5.2(c).
(d) Neither (i) Parent Board nor any committee thereof shall directly or
indirectly (x) withdraw (or amend, qualify or modify in a manner adverse to
PESI), or propose to withdraw (or amend, qualify or modify in a manner adverse
to PESI), the approval, recommendation or declaration of advisability by the
Parent Board or any such committee thereof of this Agreement, the Acquisition or
the other transactions contemplated by this Agreement or (y) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Acquisition
Proposal (any action described in this clause (i) being referred to as a “Parent
Adverse Recommendation Change”), nor (ii) shall Parent or any of its
Subsidiaries execute or enter into, any agreement, including any letter of
intent, memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement, arrangement or understanding,
(x) constituting or related to, or that is intended to or could reasonably be
expected to lead to, any Acquisition Proposal (other than an Acceptable
Confidentiality Agreement permitted pursuant to Section 5.2(b)) (each an
“Acquisition Agreement”) or (y) requiring it to abandon, terminate or fail to
consummate the Acquisition or any other transaction contemplated by this
Agreement. Notwithstanding anything to the contrary in this Agreement, at any
time prior to obtaining the Parent Required Vote, and subject to Parent’s
compliance at all times with the provisions of this Section 5.2 and Section 5.6,
Parent Board may, in response to a Superior Proposal, make a Parent Adverse
Recommendation Change if Parent Board (A) determines in good faith, after
consultation with outside legal counsel, that the failure to make a Parent
Adverse Recommendation Change would be reasonably likely to result in a breach
of its fiduciary duties to the

 

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stockholders of Parent, and (B) provides prior written notice to PESI (a “Parent
Notice of Change”) advising PESI that the Parent Board is contemplating making
such Parent Adverse Recommendation Change and specifying the material facts and
information constituting the basis for such contemplated determination,
including the terms and conditions of such Superior Proposal; provided, however,
that (1) Parent Board may not make such Parent Adverse Recommendation Change
until the third Business Day after receipt by PESI of the Parent Notice of
Change (it being understood and agreed that any change to the financial terms or
any other material term of such Superior Proposal shall require a new Parent
Adverse Recommendation, a new Parent Notice of Change and a new three Business
Day period) and (2) during such third Business Day period, at the request of
PESI, Parent shall negotiate in good faith with respect to any changes or
modifications to this Agreement which would allow Parent Board not to make such
Parent Adverse Recommendation Change consistent with its fiduciary duties.
(e) Nothing contained in Section 5.2(d) shall prohibit Parent or the Parent
Board from taking and disclosing to Parent’s stockholders a position with
respect to an Acquisition Proposal pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making any similar disclosure, in
either case to the extent required by applicable Law, provided, however, that
(i) compliance with such rules shall in no way limit or modify the effect that
any such action pursuant to such rules has under this Agreement and (ii) in no
event shall the Parent Board or any committee thereof take any action prohibited
by Section 5.2(a) except as specifically permitted by Section 5.2(b).
(f) For purposes of this Agreement, “Acquisition Proposal” shall mean any
proposal, whether or not in writing (other than by PESI or any of its
Subsidiaries), for the (i) direct or indirect acquisition or purchase of a
business or assets that generates or constitutes 20% or more of the net
revenues, net income or the assets (based on the book or fair market value
thereof) of the Company and the Company Subsidiaries, taken as a whole
(including capital stock of or ownership interest in the Company and/or any
Company Subsidiary), (ii) direct or indirect acquisition or purchase of 20% or
more of any class of equity securities or capital stock of the Company or any of
the Company Subsidiaries, or (iii) merger, consolidation, restructuring,
transfer of assets or other business combination, sale of shares of capital
stock, tender offer, exchange offer, recapitalization, stock repurchase program
or other similar transaction that if consummated would result in any Person or
Persons beneficially owning, directly or indirectly, equity securities or
capital stock in the Company or equity securities or capital stock of any of the
Company’s Subsidiaries, or (iv) other transaction the consummation of which
would reasonably be expected to impede, interfere with, prevent or materially
delay the Acquisition, in each case other than the transactions contemplated by
this Agreement. The term “Superior Proposal” shall mean any bona fide written
Acquisition Proposal that was not initiated, solicited, encouraged or
facilitated by Parent or any of its Subsidiaries or any of its Representatives
in violation of this Agreement, made by a third party to acquire, directly or
indirectly, pursuant to a tender offer, exchange offer, merger, share exchange,
asset purchase or other business combination, (x) all or substantially all of
the assets of the Company and the Company Subsidiaries, taken as a whole, or
(y) 50% or more of the equity securities of Parent or the Company, in each case
on terms which the Parent Board determines (after consultation with its
financial advisors and outside legal counsel, Mintz Levin Cohn Ferris Glovsky
and Popeo, P.C., in good faith by resolution duly adopted (A) would result in a
transaction that, if

 

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consummated, is more favorable to the stockholders of Parent (in their capacity
as stockholders) than the Acquisition, taking into account all the terms and
conditions of such Acquisition Proposal, the Person making such proposal, and
the terms and conditions of this Agreement (including, without limitation, any
break-up fees, expense reimbursement provisions, conditions to consummation and
any changes to the terms of this Agreement offered by PESI in response to such
Superior Proposal or otherwise pursuant to this Section 5.2) and (B) is
reasonably likely to be completed on the terms proposed, taking into account all
financial, regulatory, legal and other aspects of such Acquisition Proposal;
provided, further, that a proposal shall be deemed to be a Superior Proposal:
(x) if such proposal sets forth consideration that is greater than the Purchase
Price (plus the payment of Out of Pocket Expenses and Parent Termination Fee)
and such proposal is subject to a financing condition (unless the Parent Board,
after consultation with its financial advisors, concludes that the proposed
acquiror has adequate financial resources to consummate the transaction); or
(y) such proposal sets forth consideration that is equal to the Purchase Price
(plus the payment of Out of Pocket Expenses and Parent Termination Fee) and
there is no financing condition.
(g) Immediately after the execution and delivery of this Agreement, Parent
shall, and shall cause its Subsidiaries and Representatives to, cease and
terminate any existing activities, discussions or negotiations with any Person
conducted heretofore with respect to any possible Acquisition Proposal. Parent
agrees that it shall promptly inform its Representatives involved in the
transactions contemplated by this Agreement of the obligations undertaken in
this Section 5.2.
5.3 Access to Information and Properties.
(a) Upon reasonable notice and subject to the Confidentiality Agreement and
applicable Laws relating to the exchange of information, Parent shall, and shall
cause each of its Subsidiaries to, afford to the authorized Representatives of
PESI reasonable access during normal business hours during the period prior to
the Closing, to all of the Company’s and the Company Subsidiaries properties,
offices, contracts, books, commitments, records, and data and, during such
period, it shall, and shall make available to the Representatives of PESI all
information concerning its business, properties and personnel of the Company and
the Company Subsidiaries as PESI may reasonably request. Without limiting the
foregoing, Parent shall cooperate and provide the authorized Representatives of
PESI with all relevant information reasonably required by PESI or any of such
Representatives, in order to successfully transition to PESI, the business of
the Company and the Company Subsidiaries. In connection with the overall
transitioning, Parent and its Subsidiaries will make reasonably available the
Company’s and the Company Subsidiaries’ personnel, including senior management
and personnel responsible for compliance, internal audit, finance,
investigations, logistics, sales and marketing and other areas PESI reasonably
considers to be relevant to overall transitioning of the business. Parent
understands and agrees that the matters discussed in this Section 5.3(a) may
extend to and include on-site interviews and visits to the Company’s and the
Company Subsidiaries’ locations and that the determination of the site of any
such interviews and visits shall be at the sole decision of PESI acting
reasonably. PESI shall coordinate all such on-site interviews and visits through
SunTrust Robinson Humphrey or Leichtweis. The cooperation provisions of this
Section 5.3(a) extend fully to all of the Company’s and the Company
Subsidiaries’ business locations. Parent shall have the right, in its sole
discretion, to have a Company Representative present for all interviews and
visits. Notwithstanding the foregoing provisions of this Section 5.3(a), neither
Parent, the Company nor any of the Company Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of its customers, jeopardize any
attorney-client privilege or contravene any Law or binding agreement entered
into prior to the date of this Agreement; provided, however, that Parent shall
use Commercially Reasonable efforts to provide such access or information in a
manner that avoids or removes the impediments described in this sentence.

 

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(b) Upon reasonable notice and subject to the Confidentiality Agreement and
applicable Laws relating to the exchange of information, for a period not to
exceed twelve (12) months from the Closing Date, PESI shall, and shall cause the
Company and the Company Subsidiaries to, afford to the authorized
Representatives of Parent reasonable access during normal business hours, to all
of the Company’s and the Company Subsidiaries books, records and data, and it
shall, and shall make available to the Representatives of Parent, all
information concerning its business, properties and personnel of the Company and
the Company Subsidiaries as Parent or its Representatives may reasonably
request, in connection with Parent’s preparation of its audited financial
statements and annual report on Form 10-K for its fiscal year ended June 30,
2011 and income tax returns for fiscal year ended June 30, 2011 (collectively,
“Annual Report Purposes”). In connection therewith, PESI will make reasonably
available the Company’s personnel during normal business hours in a manner not
to interfere with such personnel performing his or her duties that Parent
reasonably considers to be relevant to Annual Report Purposes. Parent shall
coordinate all such access with PESI’s Chief Financial Officer, and PESI shall
have the right to have a Representative present during all such inspection of
such Company’s and the Company’s Subsidiaries books, records and data.
Notwithstanding the foregoing provisions of this Section 5.3(b), neither PESI,
the Company nor any of the Company Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of its customers, jeopardize any attorney-client
privilege or contravene any Law or binding agreement entered into prior to the
date of this Agreement; provided, however, that PESI shall use Commercially
Reasonable efforts to provide such access or information in a manner that avoids
or removes the impediments described in this sentence.
(c) Subject to compliance with applicable Law, from the date hereof until the
Closing, each party shall confer, to the extent reasonably needed, with one or
more Representatives of the other parties to report operational matters of
materiality and the general status of ongoing operations.

 

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5.4 Further Action; Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions herein provided, and subject to
Section 5.2, each of the parties hereto agrees to use its Commercially
Reasonable Efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable Laws or
otherwise to consummate and make effective the transactions contemplated by this
Agreement, including (i) to satisfy the conditions precedent to the obligations
of any of the parties hereto, (ii) preparing and filing as promptly as
practicable with any Governmental Entity or other third party all documentation
to effect all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents and (iii) obtaining
and maintaining all authorizations, consents, approvals, and filings required to
be obtained from any Governmental Entity or other third party that are
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement. Each of the parties will furnish to the other parties such
necessary information and reasonable assistance as such other parties may
reasonably request in connection with the foregoing and, subject to applicable
Laws and any applicable privilege relating to the exchange of information, will
provide the other parties with copies of all filings made by such party with any
Governmental Entity (except for filings available publicly on the SEC’s EDGAR
system) or any other information supplied by such party to or received from a
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(b) Each of PESI and Parent shall use their respective Commercially Reasonable
Efforts and shall cooperate with the other parties to resolve such objections,
if any, as may be asserted with respect to the transactions contemplated hereby
under any applicable Law.
(c) Each of the parties shall use Commercially Reasonable Efforts to prevent the
entry of, and to cause to be discharged or vacated, any Order of a Governmental
Entity precluding, restraining, enjoining or prohibiting the consummation of the
Acquisition; provided, however, that no party hereto shall be required to
dispose of any assets or limit its freedom of action with respect to any of its
businesses, or to consent or commit to consent to such disposition or limit on
its freedom of action, which, in the reasonable good faith judgment of the
parties, could be reasonably likely to (i) give rise to a Material Adverse
Effect to either party or (ii) materially impair the benefits or advantages that
either expects to receive from the Acquisition and the transactions contemplated
thereby.
(d) Each of PESI, Parent and the Company shall give the other reasonable
opportunity to participate in the defense of (i) any inquiry by a Governmental
Entity and (ii) any Litigation against PESI, Parent or the Company, as
applicable, or their respective directors relating to the transactions
contemplated by this Agreement.
(e) Parent will provide PESI advance notice and the opportunity to participate
in any discussions relating to any investigation by any U.S. government agency
such as the Department of Justice, the Department of Energy or other government
bodies with enforcement authority (collectively, the “USG Authorities”) relating
to the SPRU Project or any other material matter relating to the Company or any
of the Company Subsidiaries; and with respect to any discussions by Parent or
the Company with the USG Authorities where PESI has agreed not to participate,
Parent or the Company will in all such cases provide PESI with a review of all
discussions held with the USG Authorities regarding such issues. Prior to the
Closing, PESI and Parent shall jointly consider in good faith whether and, if
so, how to disclose or attempt to resolve any issues with the USG Authorities as
contemplated by this Section 5.4(e).

 

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5.5 Information Statement.
(a) The Parent shall, in accordance with the requirements of Section 14(c) of
the Exchange Act and Regulation 14C promulgated under the Exchange Act, file a
preliminary and definitive information statement with the SEC and transmit to
all of its holders of record of its capital stock the definitive information
statement in accordance with the requirements of Regulation 14C. Parent shall
use its Commercially Reasonable Efforts to furnish the information and documents
contained in the information statement as required by the SEC to be included in
the information statement to be filed with the SEC and sent to Parent
stockholders of record in connection with the Parent Required Votes obtained by
written consents, as described in this Section 5.5 (such information statement,
as amended and supplemented, the “Information Statement”).
(b) The Parent shall, at the same time that it transmits the Information
Statement to its stockholders, transmit such Information Statement to all of the
Management Investors.
(c) PESI shall cooperate with Parent in the preparation of such Information
Statement. PESI shall use its Commercially Reasonable Efforts to furnish to
Parent the information and documents relating to PESI required by the SEC to be
included in the Information Statement.
(d) Neither the information supplied, or to be supplied, by or on behalf of
Parent, the Company and/or any of the Company Subsidiaries for inclusion or
incorporation by reference into any document to be filed by PESI with the SEC in
connection with the Acquisition and the other transactions contemplated herein,
contains or will, on the date of its filing or at the date it is mailed to the
stockholders of PESI, contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If, at any time prior to the Closing, any event with respect to
Parent and/or the Company shall occur which is required under applicable SEC
rules to be described in the Information Statement, Parent shall promptly
disclose such event to PESI.
(e) Neither the information supplied, or to be supplied, by or on behalf of PESI
for inclusion or incorporation by reference into the Information Statement or
any other documents to be filed by Parent with the SEC in connection with the
Acquisition and the other transactions contemplated herein, contains or will, on
the date of its filing or at the date it is mailed to the stockholders of Parent
(the “Parent Stockholders”), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. If, at any time prior to the Closing, any event with
respect to PESI shall occur which is required under applicable SEC rules to be
described in the Information Statement, PESI shall promptly disclose such event
to Parent.
(f) If at any time prior to the Closing, any event or circumstance relating to
Parent, PESI, the Company or any of their respective Affiliates, or its or their
respective officers or directors, should be discovered by Parent or PESI that
should be set forth in a supplement to the Information Statement so that such
document, including documents and financial statements incorporated by reference
therein, would not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, Parent or PESI shall promptly inform the other party in writing.
All documents that Parent or PESI is responsible for filing with the SEC in
connection with the transactions contemplated herein, respectively, will comply
as to form in all material respects with applicable requirements of the
Securities Act and the Exchange Act. Parent shall promptly notify PESI of the
receipt of any comments from the staff of the SEC, including any request by the
staff of the SEC for amendments or supplements to the Information Statement or
for additional information. Parent shall also supply PESI with copies of all
correspondence between it or any of its Representatives, on the one hand, and
the staff of the SEC, on the other hand, with respect to the Information
Statement or the Acquisition. No filing of, or amendment or supplement to the
Information Statement will be made by Parent, without providing PESI and its
respective counsel the reasonable opportunity to review and comment thereon and
giving due consideration to such comments.

 

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5.6 Notification of Certain Matters. Parent shall give prompt notice to PESI of
any fact, event or circumstance as to which Parent obtains Knowledge that would
be reasonably likely to result in a failure of a condition set forth in
Section 6.3(a) or 6.3(b). PESI shall give prompt notice to Parent of any fact,
event or circumstance as to which PESI obtains Knowledge that would be
reasonably likely to result in a failure of a condition set forth in
Section 6.2(a) or 6.2(b).
5.7 Publicity. Neither Parent nor PESI, nor any of their respective Affiliates,
shall issue or cause the publication of any press release or other announcement
or hold any press conferences, analyst calls or other meetings with respect to
the Acquisition, this Agreement or the other transactions contemplated by this
Agreement without the prior consultation of such other party (including giving
such other party a reasonable opportunity to review and comment on such
publication or the subject matter of such conferences, calls or meetings),
except as may be required by Law or by any listing agreement with, or regulation
of, any securities exchange or regulatory authority if all Commercially
Reasonable Efforts have been made to consult with the other party. In addition,
prior to Closing, each party shall, to the extent reasonably practicable,
consult with such other party regarding the form and content of any public
disclosure of any material developments or matters involving such other party,
including, without limitation, earnings releases, reasonably in advance of such
publication or release.
5.8 Stock Exchange Listing. If required under the rules and regulations of the
NASDAQ, PESI shall use its Commercially Reasonable Efforts to cause PESI Common
Stock to be issued in connection with the Acquisition to be listed on the
NASDAQ, subject to official notice of issuance as of the Closing.
5.9 Employee Benefits.
(a) PESI and Parent agree that if the Acquisition becomes effective, all
employees of the Company and the Company Subsidiaries immediately prior to the
Closing shall be deemed to be employed by the Company or the Company
Subsidiaries upon the Closing (“Continuing Employees”); it being understood,
however, that none of PESI or any of their Subsidiaries shall have any
obligation to continue employing the Continuing Employees for any length of time
thereafter.

 

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(b) Prior to the Closing, Parent or the Company shall take or shall cause the
Company Subsidiary that sponsors the Safety and Ecology Corporation 401(k)
Profit Sharing Plan maintained for employees of the Company and certain of its
Subsidiaries (the “Company 401(k) Plan”) to take such action immediately prior
to the Acquisition, as is necessary, assuming and subject to the Acquisition
becoming effective, to (i) adopt amendments to the Company 401(k) Plan required
to be adopted in accordance with the Code to reflect qualification requirements
that apply as of the date of termination of the Company 401(k) Plan, (iii) take
all necessary action to terminate the Company 401(k) Plan , and (iv) ensure that
each Company employee is fully vested in his or her account balance under the
Company 401(k) Plan. Following the Closing, to the extent provided under the
terms of the Company 401(k) Plan at the time of termination, PESI shall permit
participants in the Company 401(k) Plan who are employed by PESI or its
Subsidiaries to (x) make in-service withdrawals from the Company 401(k) Plan and
(y) continue to receive and repay any loans from the Company 401(k) Plan.
Following the Closing, PESI shall permit each participant in the Company 401(k)
Plan who terminates employment with the Company or its Subsidiaries after the
Closing Date the right to receive a distribution of such participant’s interest
under the Company 401(k) Plan, in accordance with the terms of the Company
401(k) Plan. As soon as reasonably practicable following IRS approval of the
termination of the Company 401(k) Plan, PESI shall, with respect to Continuing
Employees who remain actively employed with PESI at that time (A) provide an
election to roll over their interest under the Company 401(k) Plan, including
plan loans only if the entire balance of the participant’s account in the
Company 401(k) Plan is rolled over, to a tax-qualified defined contribution plan
maintained by PESI or an affiliate of PESI (a “PESI DC Plan”), (B) cause the
trustee of the Company 401(k) Plan to roll over the interest which the
participant elects to roll over to PESI DC Plan (including plan loans only if
the entire balance of the participant’s account in the Company 401(k) Plan is
rolled over), and (C) cause PESI DC Plan to accept any such rollovers (including
plan loans only if the entire balance of the participant’s account in the
Company 401(k) Plan is rolled over). The Continuing Employees shall be eligible
to participate in PESI’s or a Subsidiary’s 401(k) plan immediately following the
Closing.
5.10 Tax Matters.
(a) Parent shall pay and indemnify and hold harmless PESI, the Company and the
Company Subsidiaries from and against: (i) all income Taxes (or the nonpayment
thereof) owing by the Company with respect to business performed by the Company
and the Company Subsidiaries for any period ending on or before the Closing Date
(a “Pre-Closing Tax Period”) and any pre-Closing Straddle Period; (ii) any and
all Taxes of Parent or any Affiliate of Parent or any other business entity or
other Person imposed on the Company, the Company Subsidiaries or on PESI, as a
transferee or successor, by contract or pursuant to any Law, which Taxes relate
to their conduct of business or any other event or transaction occurring on or
before the Closing Date or as a result of the closing of the transactions
contemplated by this Agreement; and (iii) all Claims arising out of or incident
to the imposition, assessment or assertion of any Tax described in clauses
(i) and (ii) above. Notwithstanding anything in this Agreement to the contrary,
all matters relating to Taxes will be governed by this Section 5.10 and no
provision of Section 5.10 will limit, modify or offset the rights or obligations
of the parties hereunder.

 

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(b) For purposes of this Agreement, the portion of any income Tax, with respect
to the income, property or operations of the Company and the Company
Subsidiaries that is attributable to any Tax period that begins on or before the
Closing Date and ends after the Closing Date (a “Straddle Period”) will be
apportioned between the period of the Straddle Period that extends before the
Closing Date through the Closing Date and the period of the Straddle Period that
extends from the day after the Closing Date to the end of the Straddle Period in
accordance with this Section 5.10. The portion of such Tax attributable to the
pre-Closing Straddle Period will be deemed equal to the amount that would be
payable if the Straddle Period ended on and included the Closing Date, except
for periodic Taxes that are not based on or related to income, such Taxes shall
be apportioned based on the number of days in the Tax period through the Closing
Date compared to the number of days in the Tax period following the Closing
Date. The portion of Tax attributable to a post-closing Straddle Period will be
calculated in a corresponding manner.
(c) Any indemnity payment to be made pursuant to this Section 5.10 must be paid
by wire transfer of immediately available funds no later than ten (10) days
after PESI makes written demand upon Parent therefor.
(d) The indemnification provisions in this Section 5.10 are in addition to the
indemnity provision of Article VIII and will survive the Closing until thirty
(30) days after the expiration of the applicable statute of limitations.
(e) Parent shall prepare, or caused to be prepared, and timely file, all
original Tax Returns of the Company and Parent with respect to any Pre-Closing
Tax Period that have not yet been filed, on a basis consistent with past
practice, except to the extent required by applicable Law, and shall timely pay,
or cause to be timely paid, all Taxes shown as due and owing on such Tax
Returns. Parent shall allow PESI at least fifteen (15) days in which to review
any portion relating to the Company in such Pre-Closing Tax Period Tax Returns,
prior to their filing and shall provide to PESI such information that is
reasonably requested by PESI to confirm Parent’s adherence to past practice. If
PESI, within fifteen (15) days after delivery of such Tax Return, notifies
Parent in writing that it objects to any items relating to the Company in such
Tax Return, the disputed items shall be resolved pursuant to Section 1.5(b). If
PESI does not respond within fifteen (15) days, PESI shall not be entitled to
object to any item in such Tax Return, and Parent shall file such Tax Return.
The cost of preparing such Tax Returns shall be borne by Parent.
(f) If Parent on the one hand, and PESI, on the other, disagree as to the
treatment of any item on any Tax Return described in this Section 5.10 hereof,
Parent and PESI shall promptly consult each other in an effort to resolve such
dispute in good faith. If any such point of disagreement cannot be resolved in
ten (10) days of the date of consultation, the Independent Accounting Firm shall
resolve any remaining disagreements. The determination of the Independent
Accounting Firm shall be final, conclusive and binding on the parties. The
costs, fees and expenses of the Independent Accounting Firm shall be borne
equally by PESI, on the one hand, and Parent, on the other. Nothing in this
Agreement shall prevent the timely filing of a Tax Return by the preparing
party. However, the preparing party shall file an amended Tax Return to reflect
resolution of the items in dispute by the parties or the Independent Accountant
Firm, as the case may be.

 

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(g) All transfer, documentary, sales, use, stamp, registration, value added and
other such Taxes and fees (including any penalties and interest) imposed in
connection with this Agreement will be shared equally by Parent and PESI.
(h) Cooperation; Audits; Tax Claims.
(i) In connection with the preparation of Tax Returns, audit examinations, and
any administrative or judicial proceedings relating to the Tax liabilities
imposed on the Company, Parent, on the one hand, and PESI, on the other hand,
shall cooperate fully with each other, including, without limitation, the
furnishing or making available during normal business hours of records,
personnel (as reasonably required), books of account, powers of attorney or
other materials necessary or helpful for the preparation of such Tax Returns,
the conduct of audit examinations or the defense of claims by any Governmental
Entity as to the imposition of Taxes.
(ii) Notification. If a claim shall be made by any Taxing authority, which, if
successful, might result in an indemnity payment to the indemnified parties
pursuant to this Section 5.10, the indemnified parties shall notify any
Indemnifying parties reasonably promptly of such claim (a “Tax Claim”);
provided, however, that the failure to give such notice shall not affect the
Indemnifying parties’ obligations hereunder, except to the extent the
Indemnifying parties have actually been prejudiced as a result of such failure.
(iii) Control of Proceedings. The Indemnifying Party shall control all
proceedings taken in connection with any Tax Claim for which such Indemnifying
Party is liable under this Section 5.10 and may make all decisions in connection
with such Tax Claim; provided, however, that the Indemnified Parties and their
counsel or tax accountant shall have the right, solely at the Indemnified
Parties’ own expense, to participate in the prosecution or defense of such Tax
Claim.
(i) Tax Sharing Agreements. All Tax sharing agreements or similar agreements
with respect to or involving the Company and the Company Subsidiaries shall be
terminated as of the Closing Date and, after the Closing Date, the Company and
the Company Subsidiaries shall not be bound thereby nor have any liability
thereunder.
5.11 No Takeover Statute Applies. Parent shall take all actions necessary to be
taken such that no restrictive provision of any “moratorium,” “control share
acquisition,” “fair price,” “interested shareholder,” “affiliate transaction,”
“business combination,” or other similar anti-takeover statutes or Laws,
including the State of Delaware and Section 203 of the Delaware General
Corporation Law (“DGCL”), or any applicable anti-takeover provision in the
certificate of incorporation or bylaws of Parent and the Company, are or at the
Closing will be, applicable to Parent, Company Common Stock, this Agreement or
the transactions contemplated hereby.

 

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5.12 Parent and Company Expenses. All legal, accounting, professional, and other
out-of-pocket expenses incurred by Parent, the Company and/or the Company
Subsidiaries in connection with or relating to the Acquisition, this Agreement
and the transactions contemplated by this Agreement shall be paid in full by
Parent on or prior to the Closing, and neither the Company nor any of the
Company Subsidiaries shall be liable for or have any obligations in connection
with such legal, accounting, professional and other out-of-pocket expenses after
the Closing Date.
5.13 Non-Solicitation of Employees. For the period beginning on the Closing Date
and ending on the date that is two (2) years after the Closing Date (the “Parent
Non-Solicitation Period”), Parent shall not, and shall not permit any of its
Affiliates (collectively, the “Parent Restricted Parties,” and individually, a
“Parent Restricted Party”), for its own benefit or for the benefit of any Person
other than PESI, the Company and/or the Company Subsidiaries to: (i) solicit, or
assist any Person other than PESI to solicit, any employees of the Company or
the Company Subsidiaries to leave his employment with PESI, the Company or the
Company Subsidiaries; or (ii) hire or cause to be hired, any employee of PESI,
the Company or Company Subsidiaries, except nothing contained herein shall
prohibit any of the Parent Restricted Parties from hiring an employee that is no
longer employed by the Company, the Company Subsidiaries, PESI or their
Affiliates and such employee solicits such Parent Restricted Party for
employment after the termination of any such individual’s employment with the
Company, the Company’s Subsidiaries or PESI.
5.14 Non-Solicitation of Customers. During the Parent Non-Solicitation Period,
Parent shall not, and shall not permit any of the other Parent Restricted
Parties, to solicit or encourage any of the customers of the Company or the
Company Subsidiaries to divert, terminate, curtail or otherwise limit its
business relationship with the Company or the Company Subsidiaries or otherwise
direct or divert or attempt to direct or divert any customer to any other entity
or interfere with any business relationship between the Company and/or the
Company Subsidiaries and such customer.
5.15 Non-Compete. Parent acknowledges that the Company and the Company
Subsidiaries operate on an international basis and have clients throughout the
world. The parties acknowledge and agree that this covenant is reasonable and is
necessary to protect the interests of PESI, the Company and the Company
Subsidiaries. During the Parent Non-Solicitation Period, Parent shall not, and
shall not permit any of the other Parent Restricted Parties, directly or
indirectly, by or for itself or any of the Parent Restricted Parties, or for any
of their own account, or as an agent of another, or through others as an agent,
or by or through any joint venture, partnership, corporation, limited liability
company or other business entity in which Parent or any of the Parent Restricted
Parties has a direct or indirect interest, own, manage, operate, control, or be
engaged in any business, or be connected with or employed as an officer,
employee, partner, director, consultant, agent or otherwise in, or be involved
with, any business that (i) competes, directly or indirectly, with the Business
of the Company and/or the Company Subsidiaries, or (ii) conducts any other
related business or businesses similar to the Business of the Company and/or the
Company Subsidiaries, or enter into or carry on a business, one of the
activities of which is similar to the Business of the Company and/or the Company
Subsidiaries or the activities of the Business of the Company and/or the Company
Subsidiaries. Notwithstanding the above, the Parent Restricted Parties may hold
stock in a competing entity if said ownership is (i) not a direct purchase, but
merely part of a mutual-like fund investment made by its investment advisor,
provided that, the Parent Restricted Parties’ ownership of such stock does not
represent more than 5% of the issued and outstanding shares of voting stock, or
securities convertible into such voting stock, of such entity; or (ii) is
limited to 5%, on a fully-diluted basis, of the total shares of common stock of
a corporation having securities listed on a national or foreign stock exchange
or quoted on an automated quotation system.

 

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5.16 Confidential Information. PESI and the Parent shall not, and shall not
permit any of the Parent Restricted Parties or PESI Restricted Parties (as
defined below), as applicable, to, during the Parent Non-Solicitation Period,
directly or indirectly, by or for themselves, or as an agent, employee, partner,
joint venturer, shareholder, member, officer, director or manager of another, or
through others as an agent, or by and through any joint venture, partnership,
corporation, limited liability company, or other business entity in which he has
a direct or indirect interest:
(a) use or disclose for its benefit or the benefit of any other Person any
customer lists, or identify any customers of such other parties or the Company
or any of the Company Subsidiaries; or
(b) use or disclose any proprietary, secret or confidential information,
knowledge or data relating to the business of the other parties hereto or the
Company or any of the Company Subsidiaries.
For purposes of this Section 5.16 and Section 5.17, “PESI Restricted Parties”
shall mean PESI and its Affiliates, except PESI Restricted Parties shall not
include the Company, any of the Company Subsidiaries or any Person that served
as a director, officer or employee of the Company or any of the Company
Subsidiaries on or prior to the Closing Date.
5.17 Remedies and Injunctive Relief.
(a) Parent acknowledges that the provisions of Sections 5.13, 5.14, 5.15 and
5.16 of this Agreement are reasonable and necessary for the protection of PESI,
the Company and the Company Subsidiaries and that they will be irrevocably
damaged if such covenants are not specifically enforced. The parties hereto do
hereby declare and agree that it would be difficult to measure, in money, the
damages which will accrue to PESI, the Company, the Company Subsidiaries or any
of them, by reason of the failure of Parent or any of the Parent Restricted
Parties to perform the obligations under this Agreement. Therefore, if PESI or
the Company shall institute any action or proceeding to enforce the provisions
of Sections 5.13, 5.14, 5.15 or 5.16, Parent hereby waives the claim or defense
therein that PESI and/or the Company has an adequate remedy at law and such
other party shall not urge in any such action or proceeding the claim or defense
that such remedy at law exists. Accordingly, Parent agrees that, in addition to
any other rights or relief to which PESI or the Company may be entitled in the
form of actual damages, each party may be entitled to seek and obtain injunctive
relief from a court of competent jurisdiction (without posting a bond therefor)
for the purposes of restraining Parent or any Parent Restricted Party, as
applicable, from any actual or threatened breach of the provisions and covenants
contained in Sections 5.13, 5.14, 5.15 or 5.16 hereof. Such right to injunctive
relief shall be cumulative and in addition to any other remedies that PESI
and/or the Company may have at law and equity. If it becomes necessary for PESI
and/or the Company to bring legal action against Parent or any other Parent
Restricted Party as a result of Parent’s breach of any of the covenants
contained in Sections 5.13, 5.14, 5.15 or 5.16 hereof, the non-prevailing party
agrees to pay all of the costs and expenses of the prevailing party in
connection therewith (including, but not limited to, reasonable attorneys’
fees). Nothing shall be construed as prohibiting PESI and/or the Company from
pursuing any other remedies available to it against Parent or any Parent
Restricted Party for a breach of such provisions, including, without limitation,
the recovery of damages.

 

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(b) PESI acknowledges that the provisions of Section 5.16 of this Agreement are
reasonable and necessary for the protection of Parent and that it will be
irrevocably damaged if such covenant is not specifically enforced. The parties
hereto do hereby declare and agree that it would be difficult to measure, in
money, the damages which will accrue to Parent, by reason of the failure of PESI
or any of the PESI Restricted Parties to perform the obligations under this
Agreement. Therefore, if Parent shall institute any action or proceeding to
enforce the provisions of Section 5.16, PESI hereby waive the claim or defense
therein that Parent has an adequate remedy at law and such other party shall not
urge in any such action or proceeding the claim or defense that such remedy at
law exists. Accordingly, PESI agrees that, in addition to any other rights or
relief to which Parent may be entitled in the form of actual damages, Parent may
be entitled to seek and obtain injunctive relief from a court of competent
jurisdiction (without posting a bond therefor) for the purposes of restraining
PESI or any PESI Restricted Party, as applicable, from any actual or threatened
breach of the provisions and covenants contained in Section 5.16 hereof. Such
right to injunctive relief shall be cumulative and in addition to any other
remedies that Parent may have at law and equity. If it becomes necessary for
Parent to bring legal action against PESI or any other PESI Restricted Party as
a result of PESI’s breach of any of the covenants contained in Section 5.16
hereof, the non-prevailing party agrees to pay all of the costs and expenses of
the prevailing party in connection therewith (including, but not limited to,
reasonable attorneys’ fees). Nothing shall be construed as prohibiting Parent
from pursuing any other remedies available to it against PESI, the Company and
the Company Subsidiaries or any PESI Restricted Party for a breach of such
provision, including, without limitation, the recovery of damages.
5.18 Acknowledgment.
(a) Parent agrees that the restrictions and covenants set forth in
Sections 5.13, 5.14, 5.15 and 5.16 are manifestly reasonable on their face. The
parties expressly agree that the restrictions and covenants set forth in
Sections 5.13, 5.14, 5.15 and 5.16 have been designed to be reasonable and no
greater than is required for the protection of PESI, the Company and the Company
Subsidiaries. If the final judgment of a court of competent jurisdiction
declares any of the terms of Sections 5.13, 5.14, 5.15 and 5.16 invalid or
unenforceable, the parties agree that such court making such determination shall
have the power to reduce the scope or duration of such provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term with
a term or provision that is valid and enforceable and that comes closest to
expressing the intent of the invalid or unenforceable term or provision, and
Sections 5.13, 5.14, 5.15 and 5.16 of this Agreement shall be enforceable as so
modified after the expiration of the time which the judgment may be appealed.

 

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(b) PESI agrees that the restrictions and covenants set forth in Section 5.16
are manifestly reasonable on their face. The parties expressly agree that the
restrictions and covenants set forth in Section 5.16 have been designed to be
reasonable and no greater than is required for the protection of Parent. If the
final judgment of a court of competent jurisdiction declares any of the terms of
Section 5.16 invalid or unenforceable, the parties agree that such court making
such determination shall have the power to reduce the scope or duration of such
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term with a term or provision that is valid and enforceable and
that comes closest to expressing the intent of the invalid or unenforceable term
or provision, and Section 5.16 of this Agreement shall be enforceable as so
modified after the expiration of the time which the judgment may be appealed.
5.19 Disclosure Updates. At any time, and from time to time on or prior to the
Closing Date, Parent and the Company may supplement or amend the Parent
Disclosure Letter to reflect any fact necessary to make Parent’s and the
Company’s representations contained herein true and correct (any such supplement
or amendment, a “Disclosure Update”); provided, however, that if PESI
determines, in its reasonable discretion, that such Disclosure Update could
result in or be considered a Material Adverse Effect on the Company and the
Company Subsidiaries, taken as a whole, and if such Disclosure Update is
incapable of being cured by Parent or the Company prior to the Termination Date
or is not cured by Parent or the Company within 30 days following receipt of
written notice of such determination from PESI, PESI may, at its option,
terminate this Agreement.
5.20 Liabilities of Company and the Company Subsidiaries. As of the Closing,
GAAP Liabilities of the Company and the Company Subsidiaries, on a consolidated
basis, shall not exceed $15,000,000.
5.21 Management Investors. Contemporaneously with the Closing, Parent shall
cause certain of the individuals listed in Schedule 5.21 (each a “Management
Investor” and collectively, “Management Investors”) to purchase restricted
shares of common stock of PESI, par value $0.001 per share (“PESI Common
Stock”), at a per share price determined by dividing $1,000,000 by the average
of the closing prices of PESI Common Stock as reported by the NASDAQ for the 30
consecutive trading day period ending on the trading day immediately prior to
the earlier of (a) the Closing Date or (b) the public announcement of the
Acquisition by PESI. The Parent shall cause each Management Investor purchasing
PESI Common Stock hereunder to execute and deliver to PESI immediately prior to
Closing the Subscription Agreement, substantially in the form attached hereto as
Exhibit E, which completed Subscription Agreement shall be on terms reasonably
satisfactory to PESI (“Subscription Agreement”). Such purchase by a Management
Investor shall be pursuant to this section and the Subscription Agreement. All
such purchases by the Management Investors shall meet the requirements of
Rule 506 of Regulation D promulgated under the Securities Act. Parent covenants
that at the Closing it shall cause certain of the Management Investors to
purchase an aggregate number of restricted shares of PESI Common Stock valued at
not less than $900,000 nor more than $1,000,000, as calculated on the basis of
the per share price set forth in this Section 5.21, and PESI shall utilize and
retain the full amount of the Retained Portion of the Purchase Price in payment
of such PESI Common Stock acquired by the Management Investors pursuant to this
Section 5.21.

 

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The Parent shall cause each of the Management Investors that is not an
accredited investor (as defined in Rule 501 of Regulation D) and that is
purchasing PESI Common Stock in accordance with this Section 5.21, to appoint a
Purchaser Representative (as such term is defined in Rule 501 of Regulation D)
to evaluate the merits and risks of their investment in the PESI Common Stock;
provided that such Purchaser Representative (i) is not an Affiliate, director,
officer or other employee of PESI or the beneficial owner of 10% or more of any
class of equity securities of PESI and (ii) has such knowledge and experience in
finance and business matters and is capable of evaluating the merits and risks
of the prospective investment in PESI Common Stock.
5.22 Parent Required Vote.
(a) As provided in Section 2.2 hereof, Parent shall obtain the Parent Required
Votes necessary to approve this Agreement and the transactions contemplated
herein through written consents, without a meeting of, without prior notice to,
and without a vote of, Parent’s stockholders, and pursuant to the requirements
of Section 228 of the DGCL. All written consents obtained by Parent must be
obtained pursuant to, and in accordance with, Section 228 of the DGCL.
5.23 Parent Required Votes by Parent Stockholders; Shareholder Agreements.
(a) The Parent Required Votes are the only votes of the holders of capital stock
of Parent or any class or series of the capital stock of Parent required to
adopt this Agreement.
(b) There are no shareholder agreements, voting trusts, proxies or similar
agreements, arrangements or commitments to which Parent, the Company or any of
its Subsidiaries is a party with respect to any shares or other equity interests
of the Company or any of its Subsidiaries or any other agreement relating to
disposition or voting of any equity securities of the Company or any of its
Subsidiaries.
ARTICLE VI.
CONDITIONS
6.1 Conditions to Each Party’s Obligation to Close the Acquisition. The
respective obligation of each party to complete the Acquisition shall be subject
to the satisfaction on or prior to the Closing Date of each of the following
conditions (any or all of which may be waived by the parties in writing, in
whole or in part, to the extent permitted by applicable Law):
(a) This Agreement shall have been adopted by the Parent Required Votes in
accordance with the Laws of the State of Delaware and Parent’s certificate of
incorporation;
(b) No Law shall have been enacted or promulgated, and no action shall have been
taken, and there shall not be any Litigation pending or threatened, by any
Governmental Entity of competent jurisdiction or any other Person that
temporarily, preliminarily or permanently restrains, precludes, enjoins or
otherwise prohibits the consummation of the Acquisition or makes consummation of
the Acquisition illegal;
(c) Parent and PESI shall have agreed upon the collectability of each of those
receivables listed in the Estimated Closing Balance Sheet, and those unbilled
receivables not so listed, in which the amount of such receivable, individually
or in the aggregate, by customer is $500,000 or more. Such agreement will
include the receivables in question being part of the “allowance for doubtful
accounts” on the Estimated Closing Balance Sheet.

 

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(d) Each of the Management Investors have completed, executed and delivered to
PESI the Subscription Agreement and the Management Investor Questionnaire, in
form and substance reasonably satisfactory to PESI, and have delivered to PESI
the completed Purchaser Representative Questionnaire, executed by the Purchaser
Representative, in form and substance reasonably satisfactory to PESI.
6.2 Conditions to Parent’s Obligation to Close the Acquisition. The obligation
of Parent to close the Acquisition is further subject to the satisfaction on or
prior to the Closing Date of each of the following conditions (any or all of
which may be waived by Parent in writing, in whole or in part, to the extent
permitted by applicable Law):
(a) The representations and warranties of PESI in Article IV of this Agreement
shall be true and correct in all respects (except for any de minimis
inaccuracies therein) at and as of the Closing Date, as if made at and as of
such date (except to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as
to “materiality” or “Material Adverse Effect” set forth therein) individually or
in the aggregate has not had, and could not reasonably be expected to have or
result in, a Material Adverse Effect. Parent shall have received a certificate
signed on behalf of PESI by a senior executive officer of PESI to the foregoing
effect;
(b) PESI shall have performed or complied with in all material respects each of
its covenants and obligations under this Agreement required to be performed or
complied with by it on or prior to the Closing Date pursuant to the terms of
this Agreement, and Parent shall have received a certificate signed on behalf of
PESI by a senior executive officer of PESI to the foregoing effect;
(c) Since the date of this Agreement, there shall not have been any Material
Adverse Effect with respect to PESI that has occurred and is continuing. Parent
shall have received a certificate signed on behalf of PESI by a senior executive
officer of PESI to the foregoing effect;
(d) Parent shall have received from PESI (i) cash in an amount equal to the
Initial Cash Consideration, by wire transfer of immediately available funds of
the United States to the bank account designated by Parent, and (ii) the Note,
duly executed by PESI, to the order of Parent.
(e) The Escrow Agent shall have received from PESI $2,000,000, by wire transfer
of immediately available funds of the United States to the bank account
designated by the Escrow Agent representing the Escrow Amount for deposit in the
Escrow Account;
(f) PESI shall have delivered to Parent the Escrow Agreement, duly executed by
PESI and the Escrow Agent;

 

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(g) PESI shall have delivered a Secretary’s Certificate, in form and substance
reasonably satisfactory to Parent, dated as of the Closing Date, certifying as
to the truth, accuracy and completeness of (i) the resolutions of the board of
directors of PESI, authorizing and approving, among other things, the execution,
delivery and performance of this Agreement, the Leichtweis Employment Agreement
and the transactions contemplated thereby and stating that the resolutions
thereby certified have not been amended, modified, revoked or rescinded, and
(ii) PESI’s certificate of incorporation and bylaws (as in effect from the time
the resolutions described above were adopted until the Closing) (the “PESI
Secretary’s Certificate”).
(h) PESI shall have delivered to Parent certificates of good standing of PESI
from the jurisdiction of its incorporation certified by the appropriate
authority of the Governmental Entity issuing such certificate, dated within five
(5) days of the Closing Date;
(i) Parent shall have received the opinion of Conner & Winters LLP, counsel to
PESI, in form and substance reasonably satisfactory to Parent and its counsel,
dated as of the Closing Date;
(j) PESI shall have delivered an employment agreement, between PESI and
Leichtweis, in substantially the form attached hereto as Exhibit F, to be
effective as of and commence on the Closing Date, duly executed by PESI (the
“Leichtweis Employment Agreement”);
(k) PESI shall have delivered to Parent copies of all third party consents set
forth on Schedule 6.2(k);
(l) Parent, PESI, the Company and/or the Company Subsidiaries shall have
obtained all material Permits, approvals and consents (including, without
limitation, all required transfers or issuances of Environmental Permits)
required to consummate the transactions contemplated by this Agreement;
(m) The Company shall have delivered to Parent a duly executed release of all
Claims against Parent or any Subsidiary of Parent by the Company and all the
Company Subsidiaries relating to intercompany debts between the Parent, the
Company and the Company Subsidiaries arising prior to the Closing; provided,
however, such release shall not release the Parent from any and all Liabilities
or Claims for Losses arising under or in connection with this Agreement
(including, but not limited to, Article VIII hereof), with such release being in
form and substance reasonably satisfactory to Parent; and
(n) Intentionally Omitted.
(o) PESI shall have delivered such other separate instruments that may be
reasonably required by Parent or the Company in connection with the consummation
of the transactions contemplated hereby.

 

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6.3 Conditions to PESI’s Obligations to Close the Acquisition. The obligations
of PESI to close the Acquisition are further subject to the satisfaction on or
prior to the Closing Date of each of the following conditions (any or all of
which may be waived by PESI in writing, in whole or in part, to the extent
permitted by applicable Law):
(a) The representations and warranties of Parent and the Company set forth in
Article II of this Agreement shall be true and correct in all respects (except
for any de minimis inaccuracies therein) at and as of the Closing Date, as if
made at and as of such date (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to “materiality” or “Material Adverse Effect” set forth
therein) individually or in the aggregate has not had a Material Adverse Effect.
PESI shall have received a certificate signed on behalf of Parent and the
Company by a senior executive officer of each of Parent and the Company to the
foregoing effect;
(b) Parent and the Company shall have performed or complied with in all material
respects each of its covenants and obligations under this Agreement required to
be performed or complied with by it at or prior to the Closing Date pursuant to
the terms of this Agreement, and PESI shall have received a certificate signed
on behalf of Parent and the Company by a senior executive officer of Parent and
of the Company to the foregoing effect;
(c) Parent and the Company shall have delivered a Secretary’s Certificate, in
form and substance reasonably satisfactory to PESI, dated as of the Closing
Date, certifying as to the truth, accuracy and completeness of (i) the
resolutions of the Parent Board and the Company Board, in each case authorizing
and approving, among other things, the execution, delivery and performance of
this Agreement and the transactions contemplated thereby and stating that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded, (ii) the resolutions of the Parent Stockholders authorizing and
approving this Agreement and the transactions contemplated thereby and stating
that such resolutions have not been amended, modified, revoked or rescinded, and
(iii) each of Parent, the Company and the Company Subsidiaries certificates of
incorporation and bylaws (the “Parent and Company Secretary Certificates”).
(d) PESI shall have received the opinion of Mintz Levin Cohn Ferris Glovsky and
Popeo, P.C., counsel to Parent, in form and substance reasonably satisfactory to
PESI and its counsel, dated the Closing Date;
(e) Since the date of this Agreement, there shall not have been any Material
Adverse Effect with respect to the Company or the Company Subsidiaries that has
occurred and is continuing. PESI shall have received a certificate signed on
behalf of Parent by a senior executive officer of Parent to the foregoing
effect;
(f) Parent shall have delivered to PESI duly executed stock powers and
assignments executed by Parent as to all of the outstanding Company Common Stock
and the Company Series A Preferred, endorsed and assigned by Parent to PESI,
free and clear of any Liens, in form and substance reasonably satisfactory to
PESI;
(g) Parent shall have delivered to PESI all original stock certificates
evidencing all of the issued and outstanding shares of the Company Shares, free
and clear of all Liens, with any required stock transfer tax stamps affixed
thereto;

 

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(h) Parent shall have delivered to PESI certificates of good standing of Parent,
the Company and each Company Subsidiary from its respective jurisdiction of
incorporation, and such jurisdictions where the Company and the Company
Subsidiaries are qualified as a foreign corporation, certified by the
appropriate authorities of the Governmental Entities issuing such certificates,
each dated within five (5) days of the Closing Date;
(i) Parent shall have delivered to PESI organizational record books, minute
books and corporate seal of the Company and each Company Subsidiary and all
other books and records relating to the Company and each Company Subsidiary;
(j) Parent shall have delivered to PESI a certificate of non-foreign status of
Parent meeting the requirements of Treasury Regulation Section 1.1445-2(b)(2);
(k) Parent shall have delivered a duly executed release of all Claims against
the Company and all Company Subsidiaries by Parent and each Subsidiary of
Parent, substantially in the form and substance reasonably satisfactory to PESI
and its counsel (the “Parent Release”);
(l) Parent, PESI, the Company and the Company Subsidiaries, as appropriate,
shall have obtained all material Permits (including, without limitation, all
required transfers or issuances of Environmental Permits) set forth on
Schedule 6.3(l), which are required to consummate the transactions contemplated
by this Agreement or that allow the Company and the Company Subsidiaries to
continue to conduct their business and operations following the Closing in the
same manner as conducted immediately prior to the Closing Date;
(m) Parent shall have delivered to PESI the Escrow Agreement, duly executed by
Parent and the Escrow Agent;
(n) Parent shall have delivered to PESI written resignations of the directors of
the Company and each Company Subsidiary and Michael T. Brigante, as an officer
of the Company and the Company Subsidiaries, effective as of the Closing Date;
(o) Parent shall have delivered to PESI copies of all third party consents
required to be obtained pursuant to the terms of this Agreement;
(p) Parent shall have delivered releases of Liens from Yorkville Advisors, LLC,
YA Global Investments, L.P., Yorkville Bhn S.p.A. and their Affiliates
(collectively, “Yorkville”) and SunTrust Bank on the capital stock and all of
the assets of the Company and the Company Subsidiaries, in form and substance
reasonably satisfactory to PESI;
(q) Parent shall have delivered to PESI evidence that GAAP Liabilities of the
Company and the Company Subsidiaries, on a consolidated basis, do not exceed
$15,000,000 as of the Closing Date, in form and substance reasonably
satisfactory to PESI;
(r) None of the individuals identified in Section 6.3(r) of the Parent
Disclosure Letter shall have ceased to be employed by the Company or one of the
Company Subsidiaries, as the case may be, or shall have expressed any intention
to terminate his or her employment with the Company or such Company Subsidiary
or have declined to accept employment with PESI or any of its Subsidiaries;

 

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(s) PESI and Leichtweis shall have entered into the Leichtweis Employment
Agreement and PESI shall have received a fully-executed complete copy of such
employment agreement, duly executed by Leichtweis;
(t) All employment agreements and indemnification agreements between the Company
or a Company Subsidiary and any officer, director, employee or stockholder of
the Company or of a Company Subsidiary in effect prior to the Closing shall have
been terminated, without liability to PESI, the Company or any Company
Subsidiary, in form and substance reasonably satisfactory to PESI, except for
the indemnification agreement between the Company and Leichtweis relating to
Leichtweis’ and his wife’s guaranty of certain performance bonds issued on
behalf of the Company in connection with those projects listed in Section 6.3(t)
of the Parent Disclosure Letter and the employment agreement dated September 1,
2010 between Carrie Daniels and the Company;
(u) PESI shall have entered into a definitive agreement with the PESI Lender or
another lender approving the Acquisition and such lender shall provide the
financing to PESI to enable PESI to fund the payment of the Cash Consideration
and to consummate the Acquisition, with such agreement providing such terms and
conditions as satisfactory to PESI in its sole discretion;
(v) PESI shall have received from Coulter & Justus, P.C. audited consolidated
financial statements (“Audited Financial Statements”) of the Company and the
Company Subsidiaries for all years required to be included in a Form 8-K to be
filed by PESI as a result of consummation of this Agreement and as required by
Regulation S-X (17 CFR Part 210), and with such Audited Financial Statements to
be prepared in accordance with Regulation S-X (17 CFR Part 210) and GAAP,
consistently applied throughout the periods, and with the Coulter & Justis, P.C.
report and consent in connection therewith to be unqualified;
(w) PESI shall have received from each Management Investor acquiring PESI Common
Stock pursuant to Section 5.21 hereof a Subscription Agreement duly executed by
such Management Investor, the terms of which shall be reasonably satisfactory to
PESI, and such Management Investors shall have purchased from PESI the PESI
Common Stock pursuant to Section 5.21 hereof; and
(x) Parent, the Company and the Company Subsidiaries, as applicable, shall have
delivered such other separate instruments that may be reasonably required by
PESI in connection with the consummation of the transactions contemplated
hereby;

 

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ARTICLE VII.
TERMINATION
7.1 Termination. Notwithstanding anything herein to the contrary, this Agreement
may be terminated and the Acquisition may be abandoned at any time prior to the
Closing (notwithstanding any approval of this Agreement by the Parent
Stockholders:
(a) by the mutual consent of PESI and Parent in a written instrument;
(b) by either Parent or PESI upon written notice to the other, if:
(i) the Acquisition shall not have been consummated on or before the earlier of
(A) August 30, 2011, or (B) five Business Days after the expiration of the
20-day waiting period after the mailing date of the Information Statement, or
such later date, if any, as PESI and Parent agree upon in writing (as such date
may be extended, the “Termination Date”); provided, however that the right to
terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be
available to a party whose failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Acquisition
to have been consummated on or before such date; provided further, however, that
if on the Termination Date the conditions to the consummation of the Acquisition
set forth in either or both of Sections 7.1(c) and 7.1(e) shall not be fulfilled
but all other conditions shall be fulfilled or shall be capable of being
fulfilled, then the Termination Date shall be extended by 30 days, and such date
shall become the Termination Date for the purposes of this Agreement;
(ii) any Governmental Entity shall have issued a Law or taken any other action,
in each case permanently restraining, enjoining or otherwise prohibiting
consummation of the Acquisition or making consummation of the Acquisition
illegal and such Law or other action shall have become final and nonappealable;
provided, however, that the right to terminate pursuant to this
Section 7.1(b)(ii) shall not be available to any party whose failure to fulfill
any material obligation under this Agreement has been the cause of or resulted
in such action or who is then in material breach of Section 5.4 with respect to
such action; or
(iii) the Parent Stockholders fail to approve this Agreement because of the
failure to obtain the Parent Required Votes; provided, however, that Parent’s
right to terminate pursuant to this Section 7.1(b)(iii) shall not be available
to Parent if Parent’s failure to fulfill any material obligation under this
Agreement has been the cause of or resulted in such failure of the stockholders
of Parent to adopt this Agreement through written consents obtained pursuant to
Section 228 of the DGCL or Parent has not made the payments required to be made
by Parent to PESI pursuant to Section 9.1(b) hereof;
(c) by Parent, upon written notice to PESI, if PESI shall have breached or
failed to perform any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Sections 6.2(a)
or 6.2(b) and (ii) is incapable of being cured by PESI prior to the Termination
Date or is not cured by PESI within 30 days following receipt of written notice
from Parent of such breach or failure to perform; provided that Parent shall not
have the right to terminate this Agreement pursuant to this clause (c) if Parent
is then in material breach or has materially failed to perform any of its
representations, warranties or covenants in this Agreement;

 

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(d) by Parent, upon written notice to PESI, if, prior to obtaining the Parent
Required Vote, Parent Board or a committee thereof has made a Parent Adverse
Recommendation Change pursuant to Section 5.2 and Parent Board or any committee
thereof has authorized Parent to enter into an Acquisition Agreement in respect
of the related Superior Proposal; provided, however, that (i) Parent shall have
previously paid or shall concurrently pay to PESI the Parent Termination Fee and
reimbursement for Out-of-Pocket Expenses pursuant to Section 9.1(b) and
(ii) Parent has not breached its covenants or other agreements contained in
Section 5.2;
(e) by PESI, upon written notice to Parent, if Parent or the Company shall have
breached or failed to perform any of its representations, warranties, covenants
or other agreements contained in this Agreement, which breach or failure to
perform (i) would give rise to the failure of a condition set forth in
Sections 6.3(a) or 6.3(b), and (ii) is incapable of being cured by Parent prior
to the Termination Date or is not cured by Parent within 30 days following
receipt of written notice from PESI of such breach or failure to perform;
provided that PESI shall have no right to terminate this Agreement pursuant to
this clause (e) if PESI is then in material breach or has materially failed to
perform any of its representations, warranties or covenants in this Agreement;
or
(f) by PESI, upon written notice to Parent, (i) if a Parent Adverse
Recommendation Change shall have occurred or Parent Board or any committee
thereof shall have resolved to make a Parent Adverse Recommendation Change,
(ii) if Parent shall have recommended, adopted or approved, or proposed publicly
to recommend, adopt or approve any Acquisition Proposal or Acquisition Agreement
relating thereto, (iii) if Parent shall have failed to reaffirm the
recommendation of Parent Board that Parent stockholders vote in favor of the
adoption of this Agreement within three Business Days following receipt from
PESI of a written request for such reaffirmation or (iv) within 10 Business Days
after a tender or exchange offer relating to securities of Parent has first been
published or announced, Parent shall not have sent or given to Parent
stockholders pursuant to Rule 14e-2 promulgated under the Exchange Act a
statement disclosing that the Parent Board recommends rejection of such tender
or exchange offer.
(g) by PESI, upon written notice to Parent, if PESI terminates this Agreement
pursuant to Section 5.19.
7.2 Effect of Termination. In the event of the termination of this Agreement as
provided in Section 7.1, written notice thereof shall be given by the party who
is electing to terminate to the other party specifying the provision of this
Agreement pursuant to which such termination is made and, except with respect to
this Section 7.2 and Article IX, this Agreement shall forthwith become null and
void after the expiration of any applicable period following such notice. In the
event of such termination, there shall be no liability on the part of PESI or
Parent, except as set forth in Section 9.1 of this Agreement and except with
respect to the requirement to comply with the Confidentiality and Non-Disclosure
Agreement, dated March 25, 2010, by and between PESI and the Company (the
“Confidentiality Agreement”); provided that nothing herein shall relieve any
party from any liability with respect to any willful breach of any
representation, warranty, covenant or other obligation under this Agreement.

 

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ARTICLE VIII.
INDEMNIFICATION
8.1 Indemnification of PESI. Subject to the limitations, terms and conditions of
this Article VIII, Parent shall indemnify, defend and hold harmless PESI and its
officers, directors, employees, shareholders, agents, representatives,
subsidiaries, successors and permitted assigns (the “PESI Indemnitees”) from and
against any and all Losses suffered or to be suffered, asserted or to be
asserted against, imposed upon or to be imposed upon, or incurred or to be
incurred by any PESI Indemnitees arising out of or resulting from or in
connection with:
(a) the breach of any representation or warranty of the Company or Parent
contained in or made pursuant to this Agreement, the Parent Disclosure Letter or
any certificate delivered by Parent or the Company to PESI pursuant to this
Agreement with respect hereto or thereto in connection with the Closing;
(b) the breach of any covenant or agreement of the Company or Parent contained
in this Agreement;
(c) any claims by any employee of the Company or any of the Company Subsidiaries
in connection with matters or issues arising prior to the Closing Date;
(d) any environmental claims brought by any Governmental Entity or any other
Person under any Environmental Law arising out of any action or omission of,
release or threat of release by, the Company or any of the Company Subsidiaries
occurring prior to the Closing Date;
(e) any consolidated GAAP Liabilities of the Company and the Company
Subsidiaries, that existed prior to the Closing Date, but only to the extent
such consolidated GAAP Liabilities are, in the aggregate, in excess of
$15,000,000 as of the Closing Date; or
(f) any claims by Leichtweis in his personal capacity in connection with the
consideration he receives or is to receive from Parent on or after the Closing.
For purposes of this Article VIII, the term “PESI Indemnitees” shall also
include, without limitation, the Company, the Company Subsidiaries and their
officers, directors, employees, shareholders, agents, representatives,
successors and permitted assigns, and any Losses suffered or to be suffered,
asserted or to be asserted, against any of them shall be considered Losses
suffered by PESI.
8.2 Indemnification of Parent. Subject to the limitations, terms and conditions
of this Article VIII, PESI shall indemnify, defend and hold harmless Parent and
its officers, directors, employees, shareholders, agents, representatives,
subsidiaries, successors and permitted assigns (the “Parent Indemnitees”) from
and against any and all Losses suffered or to be suffered, asserted or to be
asserted against, imposed upon or to be imposed upon, or incurred or to be
incurred by any Parent Indemnitees arising out of or resulting from or in
connection with:
(a) the breach of any representation, warranty or covenant of PESI contained in
or made pursuant to this Agreement; or
(b) the breach of any covenant or agreement of PESI contained in this Agreement.

 

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8.3 Losses. As used in this Article VIII, the term “Losses” shall include all
claims, losses, liabilities, damages, judgments, awards, orders, penalties,
settlements, costs and expenses (including, without limitation, interest,
penalties, court costs and reasonable legal fees and expenses) including those
arising from any demands, claims, suits, actions, costs of investigation, causes
of action, proceedings and assessments whether or not made by third parties or
whether or not ultimately determined to be valid. The amount of any Losses shall
be computed net of any insurance benefits received in connection with such
Losses.
8.4 Indemnification Procedures. The party making a Claim for indemnification
under this Agreement shall be, for purposes of this Agreement, referred to as
the “Indemnitee” and the party against whom such Claim is asserted under this
Agreement shall be, for the purposes of this Agreement, referred to as the
“Indemnifying Party.” The indemnification obligations and liabilities under this
Article VIII and pursuant to Article VIII with respect to any action,
proceeding, lawsuit, investigation, demand or other Claim brought against any
Indemnitee shall be subject to the following terms and conditions:
(a) Notice of Claim. The Indemnitee will give the Indemnifying Party prompt
written notice after receiving written notice of any Claim or discovering the
liability, obligation or facts giving rise to such Claim (a “Notice of Claim”)
which Notice of Claim shall set forth (a) a description of the nature of the
Claim and (b) the total amount of the actual out-of-pocket Loss or the
anticipated potential Loss (including any costs or expenses which have been or
may be reasonably incurred in connection therewith).
(b) Defense. The Indemnifying Party shall have the right to participate in the
defense of a Claim at their expense. The Indemnifying Party shall have the
right, at their option (subject to the limitations set forth in Section 8.4(c)
below), by written notice to the Indemnitee, to assume the entire control of,
subject to the right of the Indemnitee to participate (at its expense and with
counsel of its choice) in, the defense, compromise or settlement of the Claim as
to which such Notice of Claim has been given, and shall be entitled to appoint
counsel reasonably acceptable to the Indemnitee to be the lead counsel in
connection with such defense. If the Indemnifying Party elects to assume the
defense of a Claim: (a) the Indemnifying Party shall keep the Indemnitees
reasonably informed of the status of such defense; provided, however, that in
the case of any settlement providing for remedies other than monetary damages
for which indemnification is provided, the Indemnitees shall have the right to
approve the settlement, which approval shall not be unreasonably withheld or
conditioned; and (b) the Indemnitees shall cooperate fully in all respects with
the Indemnifying Party in any such defense, compromise or settlement thereof,
including, without limitation, the selection of counsel, and the Indemnitees
shall make available to the Indemnifying Party all pertinent information and
documents under its control.
(c) Limitations of Right to Assume Defense. The Indemnifying Party shall not be
entitled to assume control of such defense if (a) the Claim relates to or arises
in connection with any criminal proceeding, action, indictment, allegation or
investigation; (b) the Claim seeks an injunction or equitable relief against any
of the Indemnitees; (c) there is a reasonable probability that a Claim may
materially and adversely affect the Indemnitees other than as a result of money
damages or other money payments; or (d) if counsel for the Indemnitees concludes
in good faith that there is a conflict of interest between the Indemnitees, or
any one of them, and the Indemnifying Party, in connection with the matter that
the Indemnifying Party desires to assume control of the defense.

 

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(d) Other Limitations. Failure to give prompt Notice of Claim or to provide
copies of relevant available documents or to furnish relevant available data
shall not limit the Indemnitee’s right to recover from such Claim and shall not
affect the duties or obligations of the Indemnifying Party under this
Article VIII, except to the extent such failure prejudices the defense of such
Claim. So long as the Indemnifying Party is defending any such action actively
and in good faith, the Indemnitees shall not settle such action without the
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. The Indemnitees shall make available to the Indemnifying Party all
relevant records and other relevant materials required by them and in the
possession or under the control of the Indemnitees, for the use of the
Indemnifying Party and its representatives in defending any such action, and
shall in other respects give reasonable cooperation in such defense.
(e) Failure to Defend. If the Indemnifying Party, after receiving a Notice of
Claim, fails to defend such Claim reasonably and in good faith, the Indemnitee
will (upon further written notice) have the right to undertake the defense,
compromise or settlement of such Claim as it may determine in its reasonable
discretion at the sole cost and expense of the Indemnifying Party subject to the
limitations contained in this Article VIII.
(f) Indemnitee’s Rights. Anything in this Section 8.4 to the contrary
notwithstanding, the Indemnifying Party shall not, without the written consent
of the Indemnitees, settle or compromise any action or consent to the entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnitees of a full and unconditional
release from all liability and obligation in respect of such action without any
payment by the Indemnitees.
8.5 Limitations on Indemnification.
(a) Survival; Time Limitation under Section 8.1. The representations,
warranties, covenants and agreements in this Agreement made by the Parent or the
Company or in any writing delivered by the Company and/or Parent in connection
with this Agreement shall survive the Closing until the expiration of (i) the
second anniversary from the Closing Date for Claims relating to breach of any of
the representations or warranties of the Parent and/or the Company contained
herein, except as otherwise provided below; (ii) the third anniversary from the
Closing Date for Claims relating to a breach of any covenant or agreement
contained herein except as otherwise provided below; and (iii) claims relating
to a Fundamental Warranty (as defined below) may be asserted or brought at any
time during the applicable statute of limitations period relating to the
applicable Fundamental Warranty. Any Claim made by a PESI Indemnitee hereunder
prior to expiration of its survival period shall be preserved despite the
subsequent expiration of the survival period and any Claim set forth in a Notice
of Claim sent prior to the expiration of such survival period shall survive
until final resolution thereof. No Claim for indemnification under this
Article VIII shall be brought after the end of the expiration of the survival
period, as set forth in this Section 8.5(a), as applicable to such Claim. The
term “Fundamental Warranty” means the following Claims:
(i) the intentional or willful misrepresentation of representations or
warranties;

 

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(ii) the intentional or willful breach of any covenant or agreement;
(iii) liability for Taxes of the Company or any Company Subsidiary for all
periods prior to the Closing Date;
(iv) Parent’s breach of the representations that it owns all of the outstanding
capital stock of the Company or the Company and the Company Subsidiaries own all
of their respective assets; or
(v) CERCLA or other offsite environmental Liabilities or Claims for all periods
prior to the Closing Date or arising due to acts or actions occurring prior to
the Closing Date.
(b) Survival; Time Limitations Under Section 8.2. The representations,
warranties, covenants and agreements made by PESI in this Agreement or in any
writing delivered by PESI in connection with this Agreement shall survive the
Closing until the expiration of (i) the second anniversary from the Closing Date
for Claims relating to breach of any of the representations and warranties of
PESI contained herein; and (ii) the third anniversary from the Closing Date for
Claims relating to breach of any covenant or agreement contained herein. Any
Claim made by a Parent Indemnitee hereunder prior to expiration of its survival
period shall be preserved despite the subsequent expiration of the survival
period and any Claim set forth in a Notice of Claim sent prior to the expiration
of such survival period shall survive until the final resolution thereof. No
Claim for indemnification under Section 8.2 shall be brought after the end of
the expiration of the survival period, as set forth in this Section 8.5(b), as
applicable to such Claim;
(c) Basket. The PESI Indemnitees shall not assert any indemnification claim
under this Article VIII, and Parent shall have no obligation to indemnify any
PESI Indemnitee, until the aggregate amount of all Claims for Losses by the PESI
Indemnitees exceeds $245,000, in which event Parent will be responsible for all
Losses, including without limitation, the Basket Amount, subject to the terms of
this Article VIII;
(d) Aggregate Amount Limitation of the Parent. Parent’s aggregate liability for
Losses of the PESI Indemnitees under this Article VIII shall not exceed the
following:
(i) Claims relating to breaches of representations and warranties, shall not
exceed, in the aggregate, the sum of $3,000,000, except as otherwise provided
herein;
(ii) Claims relating to breaches of covenants or agreements shall not exceed in
the aggregate the sum of $4,900,000, except as otherwise provided herein; and
(iii) Claims relating to any Fundamental Warranty shall be limited to the
Purchase Price.

 

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(e) Aggregate Amount Limitation of PESI. PESI’s aggregate liability for Losses
of the Parent Indemnitees under this Article VIII shall not exceed the
following:
(i) Claims relating to breaches of PESI’s representations and warranties shall
not exceed, in the aggregate, the sum of $500,000; and
(ii) Claims relating to PESI’s breach of covenants or agreements shall not
exceed, in the aggregate, the unpaid principal balance of the Note as of the
date of such breach
8.6 Exclusive Remedy. Except as provided under Sections 1.4 and 1.5, which shall
be the sole provisions with respect to final determination of the Net Working
Capital Amount, Section 5.17, Article VII and Sections 9.1, 9.3 and
Section 9.13, after the Closing Date, the rights and remedies of the parties
expressly provided for in this Article VIII shall be the sole and exclusive
remedy of the parties and their respective officers, directors, employees,
Affiliates, agents, representatives, successors and assigns for any breach or
inaccuracy of any representation, warranty or breach or non-fulfillment of any
covenant or agreement contained in this Agreement, and the parties shall not be
entitled to rescission of this Agreement or to any further indemnification or
other rights or claims of any nature whatsoever (including under statute,
regulation, common law, in equity or for negligence) in respect thereof, all of
which the parties hereby waive to the fullest extent permitted by Law.
8.7 Application of Escrow Amount. Neither the Escrow Amount nor the Escrow
Agreement shall in any manner limit Parent’s liability to PESI for Losses under
this Agreement, and if the amount of Parent’s Liability to PESI under this
Agreement exceeds the Escrow Amount, Parent shall pay such excess Losses to PESI
in accordance with the terms of this Agreement and will not be released from
Liability to PESI for such excess Losses.
ARTICLE IX.
MISCELLANEOUS
9.1 Fees and Expenses.
(a) All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses, except (i) as otherwise provided in this Section 9.1, and
(ii) Parent will bear and pay all such fees, costs and expenses incurred by
Parent, the Company and the Company Subsidiaries (including, without limitation,
expenses incurred by Parent in preparing, printing and mailing of the
Information Statement, and any and all amounts due to the Parent’s, Company’s
and the Company Subsidiaries’ investment bankers and brokers) in connection with
this Agreement and/or the transactions contemplated herein.
(b) (i) If this Agreement is terminated by Parent pursuant to Section 7.1(d), or
(ii) if this Agreement is terminated by PESI pursuant to Section 7.1(f), or
(iii) if this Agreement is terminated by either Parent or PESI pursuant to
Section 7.1(b)(iii), then Parent shall pay to PESI an aggregate amount equal to
the sum of (x) $625,000 (the “Parent Termination Fee”), and (y) reimbursement
for Out-of-Pocket Expenses of PESI as determined in accordance with Section
9.1(c).

 

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(c) “Out-of-Pocket Expenses” means, with respect to PESI all out-of-pocket
expenses and fees (including all fees and expenses payable to all legal,
accounting, financial, public relations and other professional advisors) of PESI
arising out of, in connection with or related to the Acquisition or the other
transactions contemplated by this Agreement, up to a maximum of $250,000 in the
aggregate. On any date on which PESI shall request reimbursement for
Out-of-Pocket Expenses or such reimbursement shall become payable in accordance
with the provisions of Sections 7.1 or 9.1, PESI shall provide to Parent a
written statement of the respective amounts and nature of such Out-of-Pocket
Expenses.
(d) Intentionally Omitted.
(e) Any payment required pursuant to Section 9.1(b) shall be made at the time of
such termination of this Agreement by wire transfer of immediately available
funds to the account designated by PESI set forth in Section 9.1(e) of the PESI
Disclosure Letter, as applicable. Each party acknowledges that the agreements
contained in this Section 9.1 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the other
party would not enter into this Agreement; accordingly, if Parent fails promptly
to pay or cause to be paid the amounts due from it pursuant to such sections,
and, in order to obtain such payment, the other party commences a suit that
results in a judgment for the amounts set forth in such sections, the
non-prevailing party shall pay to the prevailing party its reasonable costs and
expenses (including reasonable attorneys’ fees and expenses) in connection with
such suit and any appeal relating thereto, together with interest on the amounts
set forth in this Section 9.1 from the date payment was due at 6% per annum.
(f) This Section 9.1 shall survive any termination of this Agreement.
(g) The parties agree that payment of the Parent Termination Fee is as
liquidated damages (and not as a penalty) for termination of this Agreement and
that the actual damages to PESI in the event of such termination are impractical
to ascertain and the amount of the Parent Termination Fee is a reasonable
estimate thereof.
9.2 Amendment; Waiver.
(a) This Agreement may not be amended except by an instrument in writing signed
on behalf of each of PESI and Parent.
(b) At any time prior to the Closing, Parent and the Company, on one hand, and
PESI, on the other hand, may (i) extend the time for the performance of any of
the obligations or other acts of the other party or parties, (ii) waive in whole
or in part any inaccuracies in the representations and warranties of the other
party or parties contained herein or in any document, certificate or writing
delivered pursuant hereto by the other party or parties or (iii) waive in whole
or in part compliance with any of the agreements or conditions of the other
party or parties hereto contained herein. Any agreement on the part of any party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
none is exclusive of any other, or of any rights or remedies that any party may
otherwise have at law or in equity.

 

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9.3 Offsets. PESI may offset any amounts it owes to Parent under this Agreement
or the Note for any Claims it may have against Parent under Article VIII hereof,
except as otherwise provided in this Section 9.3. Unless the Escrow Agreement
has terminated pursuant to its terms or the Escrow Amount has been exhausted,
PESI or any PESI Indemnitee shall, in the first instance, satisfy that portion
of any Claim by PESI or any PESI Indemnitee for indemnification under Article
VIII that does not exceed the remaining Escrow Amount (less any amounts reserved
by the Escrow Agent pursuant to the Escrow Agreement for Claims being disputed
by the Parent) as of the date of such Claim (“Remaining Escrow Amount”) out of
the Remaining Escrow Amount before PESI may offset such Claim, or that portion
thereof that exceeds the Remaining Escrow Amount, against any amounts PESI owes
to Parent under this Agreement or the Note. In the event that the Escrow Amount
has been exhausted or the Escrow Agreement has terminated pursuant to its terms
or the Claim by PESI or any of the PESI Indemnitees under Article VIII exceeds
the Remaining Escrow Amount, PESI may then offset such portion of such Claim
that cannot be satisfied out of the Escrow Amount against its obligations to
make payments to Parent provided for in this Agreement (including, but not
limited to, payments under the Note). Any Claim that PESI makes to offset
against any of the obligations to Parent under this Agreement or the Note shall
be subject to the appropriate Indemnification Procedures set forth in Section
8.4 hereof.
9.4 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given upon (a) transmitter’s confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight carrier
or when delivered by hand, (c) the expiration of five Business Days after the
day when mailed in the United States by certified or registered mail, postage
prepaid, or (d) delivery in person, in each case addressed to the following
addresses (or at such other address for a party as shall be specified by like
notice):

     
if to Parent and the Management Investors, to:
  C. Thomas McMillen
Chief Executive Officer
Homeland Security Capital Corporation
4601 North Fairfax Drive
Arlington, VA 22203
 
   
 
  Fax: (703) 528-0956

 

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with a copy to (which copy shall not constitute notice):
  Kenneth R. Koch, Esq.
Mintz Levin Cohn Ferris Glovsky
    and Popeo, P.C.
666 Third Avenue
New York, NY 10017

 
   
 
  Fax: (212) 983-3115
 
   
and (b) if to PESI to:
  Dr. Louis F. Centofanti
Chairman and Chief Executive Officer
Perma-Fix Environmental Services, Inc.
8302 Dunwoody Place, Suite 250
Atlanta, GA 30350
 
   
 
  Fax: (770) 587-9937
 
   
with a copy to (which copy shall not constitute notice):
  Irwin H. Steinhorn, Esq.
Conner & Winters, LLP
1700 One Leadership Square
211 North Robinson Avenue
Oklahoma City, OK 73102
 
   
 
  Fax: (405) 232-2695

9.5 Rules of Construction and Interpretation; Certain Definitions.
(a) When a reference is made in this Agreement to Articles or Sections, such
reference shall be to an Article or a Section of this Agreement unless otherwise
indicated. Whenever the words “include,” “includes” or “including” are used in
this Agreement they shall be deemed to be followed by the words “without
limitation.” The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. References to “this
Agreement,” “hereof,” “herein,” and “hereunder” include any schedules, exhibits
or other attachments to this Agreement. The word “or” shall be deemed to mean
“and/or.” The phrase “made available” when used in this Agreement shall mean
that the information referred to has been made available to the party to whom
such information is to be made available. The word “affiliates” when used in
this Agreement shall have the meaning ascribed to it in Rule 12b-2 under the
Exchange Act. The phrase “beneficial ownership” and words of similar import when
used in this Agreement shall have the meaning ascribed to it in Rule 13d-3 under
the Exchange Act. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Any statute defined or referred to herein means such statute as from
time to time amended, modified or supplemented, including by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.

 

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(b) Each of the parties acknowledges that it has been represented by counsel of
its choice throughout all negotiations that have preceded the execution of this
Agreement and that it has executed the same with the advice of said counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto exchanged among the parties shall be deemed the work product of the
parties and may not be construed against any party by reason of its preparation.
Accordingly, any rule of law or any legal decision that would require
interpretation of any ambiguities in this Agreement against any party that
drafted it is of no application and is hereby expressly waived.
(c) The inclusion of any information in the Parent Disclosure Letter or PESI
Disclosure Letter shall not be deemed an admission or acknowledgment, in and of
itself and solely by virtue of the inclusion of such information in the Parent
Disclosure Letter or PESI Disclosure Letter, as applicable, that such
information is required to be listed in the Parent Disclosure Letter or PESI
Disclosure Letter, as applicable, or that such items are material to the Company
or PESI, as the case may be.
(d) The following terms have the following definitions:
(i) “Business Day” means any day other than Saturday and Sunday and any day on
which banks are not required or authorized to close in the State of New York,
provided that if any date on which any action is required to be taken under this
Agreement is not a Business Day, such action will be required to be taken on the
next day which is a Business Day.
(ii) “Claim” shall mean any claim, action, suit, proceeding or investigation.
(iii) “Cleanup” means all actions required under Environmental Laws or by any
applicable Governmental Entity to: (i) clean up, remove, treat or remediate
Hazardous Materials in the environment; (ii) prevent the Release or threatened
Release of Hazardous Materials so that they do not migrate, endanger or threaten
to endanger public health or welfare or the environment; (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care;
or (iv) respond to any government requests for information or documents in any
way relating to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Hazardous Materials in the environment.
(iv) “Code” means the U.S. Internal Revenue Code of 1986, as amended.
(v) “Commercially Reasonable Efforts” means, with respect to any party, the
agreement of such party to cooperate and to use its reasonable efforts
consistent with customary commercial practice without (i) payment or incurrence
of any liability or obligation, other than reasonable expenses, or (ii) the
requirement to engage in litigation.

 

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(vi) “Company Credit Agreement” means that certain Loan and Security Agreement,
dated March 17, 2008, by and among the Company, Company Subsidiaries, as
signatories thereto, and SunTrust Bank, as amended.
(vii) “Company IP” means all Intellectual Property used in or material to the
business of the Company or any of its Subsidiaries as currently conducted or as
currently proposed to be conducted.
(viii) “Employment and Withholding Taxes” means any federal, state, provincial,
local, foreign or other employment, unemployment, insurance, social security,
disability, workers’ compensation, payroll, health care or other similar Tax and
all Taxes required to be withheld by or on behalf of each of the Company and any
of its Subsidiaries, or PESI and any of its Subsidiaries, as the case may be, in
connection with amounts paid or owing to any employee, independent contractor,
creditor or other party, in each case, on or in respect of the business or
assets thereof.
(ix) “GAAP Liabilities” means the total amount of consolidated liabilities of
the Company and the Company Subsidiaries as reflected as the total liabilities
on the Estimated Closing Balance Sheet and determined in accordance with GAAP.
(x) “Hazardous Material” means (i) chemicals, pollutants, contaminants, wastes,
toxic, hazardous substances, any radioactive materials and waste, and oil and
petroleum products, (ii) carbon dioxide and other greenhouse gases; (iii) any
substance that is or contains asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes,
radon gas or related materials, lead or lead-based paint or materials or
radioactive materials or waste, (iv) any substance that requires investigation,
removal or remediation under any Environmental Law, or is defined, listed,
regulated or identified as hazardous, toxic or otherwise regulated under any
Environmental Law, (v) any substance that is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous to human health or the environment, (vi) naturally occurring
radioactive material (NORM), or (vii) any other substance which is subject of
regulatory action by any Governmental Entity or under any Environmental Law.
(xi) “Intellectual Property” means all patent applications, patents, trademarks,
service marks, corporate names, business names, brand names, trade names, all
other names and slogans embodying business or product goodwill (or both), trade
styles or dress, mask works, copyrights, works of authorship, moral rights of
authorship, rights in designs, trade secrets, technology, inventions, invention
disclosures, discoveries, improvements, know-how, program materials, processes,
methods, confidential and proprietary information, throughout the world and all
other intellectual and industrial property rights, throughout the world, whether
or not subject to statutory registration or protection and, with respect to each
of the foregoing, all registrations and applications for registration, renewals,
extensions, continuations, reissues, divisionals, improvements, modifications,
derivative works, goodwill, and common law rights, and causes of action relating
to any of the foregoing.

 

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(xii) “Knowledge” means, (i) with respect to Parent or the Company, the actual
Knowledge of C. Thomas McMillen, Michael T. Brigante, Christopher P. Leichtweis,
Raymond A. Peters, Robert M. Szozda, Donald J. Goebel, Carrie Z. Daniels, Andrew
J. Lombardo, Mark E. Kaye, Anne E. Smith and Andrew A. Henderson; and (ii) with
respect to PESI, the actual knowledge of Dr. Louis F. Centofanti and Ben
Naccarato.
(xiii) “Law” means any foreign, international, federal, state or local law,
treaty, convention, statute, code, ordinance, regulation, rule, order,
directive, principle of common law or other legally enforceable obligation
imposed by a court or other Governmental Entity.
(xiv) “Leichtweis” shall mean Christopher P. Leichtweis.
(xv) “Liability” and “Liabilities” means any debt, obligation, or liability of
any nature (including any undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, contingent, conditional or inchoate liability, including
strict liability).
(xvi) “Lien” means any mortgage, pledge, deed of trust, hypothecation, right of
others, claim, security interest, encumbrance, burden, title defect, title
retention agreement, lease, sublease, license, occupancy agreement, easement,
covenant, condition, encroachment, voting trust agreement, interest, option,
right of first offer, negotiation or refusal, proxy, lien, charge or other
restrictions or limitations of any nature whatsoever.
(xvii) “Litigation” means any action, claim, suit, proceeding, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal or
regulatory, in law or in equity, by or before any Governmental Entity or
arbitrator (including worker’s compensation claims).
(xviii) “Material Adverse Effect” means, with respect to Parent, the Company or
PESI, as the case may be, any (A) change, (B) effect, (C) event, (D) occurrence,
(E) state of facts or (F) development or developments, that results or could
reasonably be expected to result, individually or in the aggregate, in a
material adverse change on the business, properties, assets, liabilities
(contingent or otherwise), financial condition or results of operations of such
party and its Subsidiaries, taken as a whole, or on the ability of such party to
consummate the transactions contemplated by this Agreement; provided, that for
purposes of analyzing whether any change, effect, event, occurrence, state of
facts or development constitutes a Material Adverse Effect under this
definition, the parties agree that each of the terms contained in clauses
(A) through (F) above are intended to be separate and distinct. Notwithstanding
the foregoing, the following shall not be deemed to constitute a Material
Adverse Effect: (i) changes resulting from the announcement or pendency of this
Agreement, or any actions taken by any party in compliance with this Agreement
or the consummation of the Acquisition, (ii) any effect of any change in the
United States, or foreign economies or securities or financial markets in
general, (iii) changes in applicable Law or United States foreign or
international generally accepted accounting principles or financial reporting
standards or interpretations thereof after the date of this Agreement, (iv) any
effect of any change that has the same or similar affect on all companies within
the industry in which the Company or any of the Company Subsidiaries operate or
(v) any effect resulting from an act of war or terrorism.

 

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(xix) “Permitted Lien” means (A) statutory Liens for Taxes, assessments and
other governmental charges which are not yet due and payable, provided the
liabilities that are secured by for such Liens are listed on the Estimated
Closing Balance Sheet, (B) statutory or common law Liens to secure sums not yet
due to landlords or sublandlords under leases or rental agreements, (C) deposits
or pledges made in connection with, or to secure payment of, workers’
compensation, unemployment insurance, old age pension or other social security
programs mandated under applicable Laws, (D) statutory or common law Liens in
favor of carriers, warehousemen, mechanics, workmen, repairmen and materialmen
to secure claims for labor, materials or supplies and incurred in the ordinary
course of business for sums not yet due, (E) restrictions on transfer of
securities imposed by applicable state and federal securities Laws, (F) Liens
resulting from a filing by a lessor as a precautionary filing for a true lease,
(G) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business, and
(H) Liens granted and outstanding as of the date of this Agreement to a bonding
company in connection with guarantees issued by a bonding company on behalf of
the Company or a Company Subsidiary for bonded projects being performed by the
Company and the Company Subsidiaries as of the date of this Agreement which have
been entered into by the Company or a Company Subsidiary in the ordinary course
of business consistent with past practices. The above Permitted Liens will be
subject to future liens granted in favor of PNC Bank, National Association, as
agent or otherwise, under any financing documents it may enter into with PESI.
(xx) “Person” means any natural person, firm, individual, partnership, court,
joint venture, business trust, trust, association, corporation, company, limited
liability company, unincorporated entity or Governmental Entity.
(xxi) “Release” means any releasing, disposing, discharging, injecting,
spilling, leaking, pumping, dumping, emitting, escaping, emptying, dispersal,
leaching, migration, transporting or placing of Hazardous Materials or the
threatened Release of any Hazardous Materials, including into or upon, any land,
soil, surface water, ground water or air, or otherwise entering into the
environment.

 

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(xxii) “Securities Act” means the Securities Act of 1933, as amended.
(xxiii) “SPRU Project” means Subcontract No. 2008-SC-SPRU-001 between Safety and
Ecology Corporation and subcontract to URS Energy & Construction, Inc. for the
U.S. Department of Energy for the deactivation, demolition, and removal of the
Separations Process Research Unit at the Knolls Atomic Power Laboratory in
Niskayuna, New York.
(xxiv) “Subsidiary” means, with respect to any Person, any other Person of which
(i) such Person is directly or indirectly a manager or general partner or
(ii) 50% or more of the securities or other equity interests having by their
terms ordinary voting power for the election or appointment of directors,
managers or others performing similar functions are directly or indirectly owned
by such Person.
(xxv) “Tax” means all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, accumulated earnings, personal holding company, excess
profits, franchise, profits, license, withholding, excise, severance, stamp,
occupation, premium, property, disability, capital stock, or windfall profits
taxes, customs duties or other taxes, fees, assessments or governmental charges
of any kind whatsoever, including Employment and Withholding Taxes, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any Governmental Entity.
(xxvi) “Tax Return” means any return, estimated tax return, report, declaration,
form, claim for refund or information statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
(xxvii) “Yorkville” has the meaning as set forth in Section 6.3(p) hereof.
9.6 Headings; Disclosure Letters. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Disclosure of any matter pursuant to any
Section of the Parent Disclosure Letter or PESI Disclosure Letter shall not be
deemed to be an admission or representation as to the materiality of the item so
disclosed.
9.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall be considered
one and the same agreement.
9.8 Entire Agreement. This Agreement and the Confidentiality and Non-Disclosure
Agreement between PESI and the Company dated March 25, 2010 constitute the
entire agreement, and supersede all prior agreements and understandings (written
and oral), among the parties with respect to the subject matter of this
Agreement.

 

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9.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. Upon such determination that any term, provision, covenant or
restriction is invalid, void, unenforceable, overly broad or against public
policy by any court of competent jurisdiction, the parties intend that such
court modify such provision to the extent necessary so as to render it valid,
effective, enforceable, reasonable and not overly broad and such term,
provision, covenant or restriction shall be deemed modified to the extent
necessary to provide the intended benefits to modify this Agreement so as to
effect the original intent of the parties, as evidenced by this Agreement, as
closely as possible in a mutually acceptable manner in order that the
transactions as originally contemplated hereby are fulfilled to the fullest
extent possible.
9.10 Governing Law. This Agreement shall be governed, construed and enforced in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
9.11 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties.
9.12 Parties in Interest. This Agreement shall be binding upon and inure solely
to the benefit of each party to this Agreement and their permitted assignees,
and nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement. Without limiting the foregoing,
no direct or indirect holder of any equity interests or securities of any party
to this Agreement (whether such holder is a limited or general partner, member,
stockholder or otherwise), nor any Affiliate of any party to this Agreement, nor
any Representative or other controlling Person of each of the parties to this
Agreement and their respective Affiliates, except the Parent, shall have any
Liability or obligation arising under this Agreement or the transactions
contemplated hereby. Other than as set forth in this Section 9.10, Parent and
the Company acknowledge and agree that all provisions contained in this
Agreement with respect to the Company employees are included for the sole
benefit of the Company and PESI, and that nothing in this Agreement, whether
express or implied, shall create any third party beneficiary or other rights (i)
in any other Person, including, without limitation, any employees, former
employees, any participant in any Company Employee Benefit Plan or other benefit
plan or arrangement, or any dependent or beneficiary thereof, or (ii) to
continued employment with the Company, PESI, or any of their respective
Subsidiaries.

 

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9.13 Intentionally Omitted.
9.14 Jurisdiction. Each of the parties agrees that any claim, suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of, under or in connection with, this Agreement or the transactions
contemplated hereby shall be heard and determined in the Chancery Court of the
State of Delaware (and each agrees that no such claim, suit, action or
proceeding relating to this Agreement shall be brought by it or any of its
Affiliates except in such court), and the parties hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of such court in any such
claim, suit, action or proceeding and irrevocably and unconditionally waive the
defense of an inconvenient forum to the maintenance of any such claim, suit,
action or proceeding; provided, however, that if the Chancery Court of the State
of Delaware declines to accept jurisdiction over a particular matter, any state
or federal court within the State of Delaware shall be deemed sufficient for
purposes of this Section 9.14. Each of the parties hereto further agree that, to
the fullest extent permitted by applicable Law, service of any process, summons,
notice or document in any such claim, suit, action or proceeding may be served
on any Person anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in this Section 9.14 shall be
deemed effective service of process on such party. The parties hereto hereby
agree that a final, non-appealable judgment in any such claim, suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions in the
world by suit on the judgment or in any other manner provided by applicable Law.
[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, PESI, Parent and the Company have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.

            PERMA-FIX ENVIRONMENTAL SERVICES, INC.,
a Delaware corporation
      By:   /s/ Dr. Louis F. Centofanti         Name:   Dr. Louis F. Centofanti 
      Title:   President        (“PESI”)

HOMELAND SECURITY CAPITAL CORPORATION,
a Delaware corporation
      By:   /s/ C. Thomas McMillen         Name:   C. Thomas McMillen       
Title:   Chief Executive Officer        (“Parent”)

SAFETY & ECOLOGY HOLDINGS CORPORATION,
a Nevada corporation
      By:   /s/ Christopher Paul Leichtweis         Name:   Christopher Paul
Leichtweis        Title:   President, Chief Executive Officer        (the
“Company”)    

Signature to Stock Purchase Agreement

 

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