Document:

Exhibit 10.51

 

PURCHASE AND SALE
AGREEMENT

by and between

SITA U.S.A., INC.

and

CLEAN HARBORS, INC.

for

all of the
outstanding membership interests in

TERIS L.L.C.

dated as of

May 3, 2006

 

RECITALS

	
  ARTICLE I

  SALE AND PURCHASE OF MEMBERSHIP INTERESTS

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
   

  	
  Sale and Purchase of Membership Interests

  	
   

  	
  1

  
	
  SECTION 1.2

  	
   

  	
  Purchase Price

  	
   

  	
  1

  
	
  SECTION 1.3

  	
   

  	
  Final Determination of Purchase Price

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  CLOSING

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
   

  	
  Closing

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  REPRESENTATIONS AND WARRANTIES OF SELLER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
   

  	
  Organization and Good Standing

  	
   

  	
  3

  
	
  SECTION 3.2

  	
   

  	
  Capitalization.

  	
   

  	
  4

  
	
  SECTION 3.3

  	
   

  	
  Corporate Authority; Enforceability

  	
   

  	
  4

  
	
  SECTION 3.4

  	
   

  	
  Consents and Approvals

  	
   

  	
  4

  
	
  SECTION 3.5

  	
   

  	
  No Violations

  	
   

  	
  4

  
	
  SECTION 3.6

  	
   

  	
  Financial Statements

  	
   

  	
  5

  
	
  SECTION 3.7

  	
   

  	
  Absence of Certain Changes and Events

  	
   

  	
  6

  
	
  SECTION 3.8

  	
   

  	
  Litigation; Orders

  	
   

  	
  7

  
	
  SECTION 3.9

  	
   

  	
  Taxes

  	
   

  	
  8

  
	
  SECTION 3.10

  	
   

  	
  Employee Benefits; ERISA; Employees

  	
   

  	
  8

  
	
  SECTION 3.11

  	
   

  	
  Labor Matters

  	
   

  	
  8

  
	
  SECTION 3.12

  	
   

  	
  Compliance with Laws; Governmental Authorizations

  	
   

  	
  9

  
	
  SECTION 3.13

  	
   

  	
  Title to Properties

  	
   

  	
  9

  
	
  SECTION 3.14

  	
   

  	
  Contracts; No Default

  	
   

  	
  10

  
	
  SECTION 3.15

  	
   

  	
  Insurance

  	
   

  	
  12

  
	
  SECTION 3.16

  	
   

  	
  Environmental Matters

  	
   

  	
  12

  
	
  SECTION 3.17

  	
   

  	
  Intellectual Property

  	
   

  	
  13

  
	
  SECTION 3.18

  	
   

  	
  Brokers and Finders

  	
   

  	
  14

  
	
  SECTION 3.19

  	
   

  	
  Financial Assurances

  	
   

  	
  14

  
	
  SECTION 3.20

  	
   

  	
  Insurance Relating to El Dorado Incidents

  	
   

  	
  14

  
	
  SECTION 3.21

  	
   

  	
  No Other Representations or Warranties

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  REPRESENTATIONS AND WARRANTIES OF BUYER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
   

  	
  Organization and Good Standing

  	
   

  	
  14

  
	
  SECTION 4.2

  	
   

  	
  Corporate Authority; Enforceability

  	
   

  	
  15

  

 

 i
 

 

 

	
  SECTION 4.3

  	
   

  	
  Consents and Approvals

  	
   

  	
  15

  
	
  SECTION 4.4

  	
   

  	
  No Violations

  	
   

  	
  15

  
	
  SECTION 4.5

  	
   

  	
  Securities Act

  	
   

  	
  15

  
	
  SECTION 4.6

  	
   

  	
  Financing

  	
   

  	
  16

  
	
  SECTION 4.7

  	
   

  	
  Litigation

  	
   

  	
  16

  
	
  SECTION 4.8

  	
   

  	
  Brokers and Finders

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  COVENANTS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
   

  	
  Operation of the Company

  	
   

  	
  16

  
	
  SECTION 5.2

  	
   

  	
  Access

  	
   

  	
  17

  
	
  SECTION 5.3

  	
   

  	
  Required Approvals

  	
   

  	
  18

  
	
  SECTION 5.4

  	
   

  	
  Reasonable Best Efforts

  	
   

  	
  18

  
	
  SECTION 5.5

  	
   

  	
  Publicity

  	
   

  	
  18

  
	
  SECTION 5.6

  	
   

  	
  Expenses

  	
   

  	
  19

  
	
  SECTION 5.7

  	
   

  	
  Further Assurances

  	
   

  	
  19

  
	
  SECTION 5.8

  	
   

  	
  Notification

  	
   

  	
  19

  
	
  SECTION 5.9

  	
   

  	
  Non-Competition; Non-Solicitation

  	
   

  	
  20

  
	
  SECTION 5.10

  	
   

  	
  Employee Benefit Plans.

  	
   

  	
  21

  
	
  SECTION 5.11

  	
   

  	
  Retention of Records

  	
   

  	
  23

  
	
  SECTION 5.12

  	
   

  	
  Release of Financial Assurances

  	
   

  	
  23

  
	
  SECTION 5.13

  	
   

  	
  Plant Closings

  	
   

  	
  23

  
	
  SECTION 5.14

  	
   

  	
  Assignment of Certain Rights

  	
   

  	
  23

  
	
  SECTION 5.15

  	
   

  	
  Change of Name

  	
   

  	
  23

  
	
  SECTION 5.16

  	
   

  	
  Intercompany Obligations

  	
   

  	
  24

  
	
  SECTION 5.17

  	
   

  	
  Compliance with Insurance; Management of Litigation
  and Insurance

  	
   

  	
  24

  
	
  SECTION 5.18

  	
   

  	
  Pending Claims Related to El Dorado Incidents

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  CONDITIONS TO CLOSING AND DELIVERABLES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
   

  	
  Conditions to Obligations of Buyer

  	
   

  	
  24

  
	
  SECTION 6.2

  	
   

  	
  Conditions to Obligations of Seller

  	
   

  	
  26

  
	
  SECTION 6.3

  	
   

  	
  Documentation to be Delivered
  at Closing

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  TERMINATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
   

  	
  Termination

  	
   

  	
  27

  
	
  SECTION 7.2

  	
   

  	
  Effect of Termination

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  29

  

 

 ii
 

 

 

	
  SECTION 8.2

  	
   

  	
  Indemnification and Reimbursement by Seller

  	
   

  	
  29

  
	
  SECTION 8.3

  	
   

  	
  Indemnification and Reimbursement by Buyer

  	
   

  	
  30

  
	
  SECTION 8.4

  	
   

  	
  Limitations on Indemnification Obligations.

  	
   

  	
  31

  
	
  SECTION 8.5

  	
   

  	
  Notice and Payment of Claims

  	
   

  	
  31

  
	
  SECTION 8.6

  	
   

  	
  Procedure for Indemnification - Third Party Claims

  	
   

  	
  32

  
	
  SECTION 8.7

  	
   

  	
  Mitigation of Damages

  	
   

  	
  33

  
	
  SECTION 8.8

  	
   

  	
  Exclusive Remedy

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  TAX MATTERS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.1

  	
   

  	
  Liability for Taxes and Related Matters

  	
   

  	
  33

  
	
  SECTION 9.2

  	
   

  	
  Transfer Taxes

  	
   

  	
  35

  
	
  SECTION 9.3

  	
   

  	
  Allocation of Purchase Price

  	
   

  	
  35

  
	
  SECTION 9.4

  	
   

  	
  No Tax Withholding

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.1

  	
   

  	
  Assignments; Successors; No Third Party Rights

  	
   

  	
  36

  
	
  SECTION 10.2

  	
   

  	
  Entire Agreement

  	
   

  	
  36

  
	
  SECTION 10.3

  	
   

  	
  Amendment or Modification

  	
   

  	
  36

  
	
  SECTION 10.4

  	
   

  	
  Notices

  	
   

  	
  36

  
	
  SECTION 10.5

  	
   

  	
  GOVERNING LAW

  	
   

  	
  38

  
	
  SECTION 10.6

  	
   

  	
  Arbitration

  	
   

  	
  38

  
	
  SECTION 10.7

  	
   

  	
  Severability

  	
   

  	
  38

  
	
  SECTION 10.8

  	
   

  	
  Confidentiality

  	
   

  	
  38

  
	
  SECTION 10.9

  	
   

  	
  Actions of the Company

  	
   

  	
  39

  
	
  SECTION 10.10

  	
   

  	
  Descriptive Headings; Construction

  	
   

  	
  39

  
	
  SECTION 10.11

  	
   

  	
  Counterparts

  	
   

  	
  40

  
	
  SECTION 10.12

  	
   

  	
  Knowledge

  	
   

  	
  40

  
	
  SECTION 10.13

  	
   

  	
  Schedules

  	
   

  	
  40

  
	
  SECTION 10.14

  	
   

  	
  Definitions

  	
   

  	
  40

  

 

 iii

PURCHASE AND SALE AGREEMENT (the “Agreement”),
dated as of May 3, 2006, by and between SITA U.S.A., Inc., a Delaware
corporation (“Seller”), and Clean
Harbors, Inc., a Massachusetts corporation (“Buyer”).

RECITALS

WHEREAS, Seller owns all of the outstanding membership
interests (the “Membership Interests”) in Teris L.L.C., a Delaware limited liability company (the “Company”);

WHEREAS, Seller desires to sell to Buyer, and Buyer
desires to purchase from Seller, all of the Membership Interests in the Company
outstanding on the Closing Date (as defined in Section 2.1 hereof) upon
the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants, agreements, undertakings
and obligations set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows (with certain terms having the respective
meanings set forth in Section 10.14 hereof and Exhibit 1.2 hereto):

ARTICLE I

SALE AND PURCHASE OF MEMBERSHIP INTERESTS

SECTION 1.1         Sale and Purchase of
Membership Interests. Upon the terms and subject to the conditions set
forth in this Agreement and on the basis of the representations, warranties,
covenants, agreements, undertakings and obligations contained herein, at the
Closing, Seller hereby agrees to sell to Buyer, and Buyer hereby agrees to
purchase from Seller, all of the Membership Interests, free and clear of any
and all Liens, for the consideration specified in this Article I.

SECTION 1.2         Purchase Price. The
purchase price for the Membership Interests shall be an amount equal to the
Purchase Price, as calculated in accordance with Exhibit 1.2. Buyer shall
pay to Seller at the Closing the Closing Payment by delivery of cash by wire
transfer of immediately available funds. The Purchase Price shall be subject to
final determination as provided in Section 1.3.

SECTION 1.3         Final Determination of
Purchase Price.

(a)           Calculation of Purchase Price. As soon as
reasonably practicable, but in no event later than ninety (90) days after the
Closing Date, Buyer shall prepare and deliver to Seller the calculation of the
Purchase Price.

(b)           Examination by Seller. Upon receipt of Buyer’s
calculation of the Purchase Price, Seller and Seller’s Representatives shall be
permitted during the succeeding forty-five (45) day period (the “Review
Period”) full access at all reasonable times to the books and records of
the Company, and the personnel of, and work papers prepared by, Buyer and/or
Buyer’s Representatives to the extent that they relate to the Company and to
such historical financial information relating to the Company as Seller may
reasonably request for the purpose of reviewing 

 

Buyer’s calculation of the Purchase Price Adjustment
Items. The parties hereto acknowledge and agree that Seller may retain Moore
Stephens Frost for the purpose of assisting Seller in its review of Buyer’s
calculation of the Purchase Price Adjustment Items.

(c)           Objection
by Seller. On or prior to the last day of the Review Period, Seller may
object to Buyer’s calculation of the Purchase Price Adjustment Items by
delivering to Buyer a written statement setting forth a reasonable basis for
Seller’s objections to Buyer’s calculation of the Purchase Price Adjustment
Items (the “Statement of Objections”). If Seller fails to deliver the
Statement of Objections within the Review Period, Buyer’s calculation of the
Purchase Price Adjustment Items shall be deemed to have been accepted by Seller
and shall be used in computing the difference between the Purchase Price and
the Closing Payment (the “Adjustment Amount”). If Seller delivers the
Statement of Objections within the Review Period, Seller and Buyer shall
negotiate in good faith to resolve such objections, and, if the same are so
resolved, the calculation of the Purchase Price with such changes to the
Purchase Price Adjustment Items as may have been previously agreed in writing
by Seller and Buyer shall be final and binding.

(d)           Resolution
of Disputes. If Seller and Buyer shall fail to reach an agreement with
respect to all of the matters set forth in the Statement of Objections, then
such matters shall, not later than fifteen (15) days after one of the parties
affirmatively terminates discussions in writing with respect to the Statement
of Objections, be submitted for resolution to the New York office of KPMG LLP
(the “Accounting Expert”) who shall, acting as experts and not as
arbitrators, resolve the disputes set forth in the Statement of Objections and
make any adjustments to the calculation of the Purchase Price.

(e)           Fees of
the Accounting Expert. The fees of the Accounting Expert shall be divided
equally between Seller and Buyer.

(f)            Access to
Supporting Documentation. Subject to, and to the extent permitted by, any
applicable Laws, Seller and Buyer and their respective Representatives shall
each make readily available to the Accounting Expert all relevant work papers
and books and records relating to the Company and those relating to Seller (but
only to the extent that they relate to the Company), and copies of all such
materials and information provided by a party to the Accounting Expert shall be
concurrently delivered to the other party to the proceeding.

(g)           Determination
by Accounting Expert. The parties shall jointly instruct the Accounting
Expert to make a determination as soon as practicable within thirty (30) days
(or such other time as the parties hereto shall agree in writing) after its
engagement and its resolution of the dispute and its adjustments to the
calculation of the Purchase Price shall be conclusive and binding upon the
parties hereto.

(h)           Payment of
Adjustment Amount. Within two (2) Business Days of the later of (i) acceptance
of Buyer’s calculation of the Purchase Price Adjustment Items or (ii) the
resolution of Seller’s objections in connection therewith, to the extent that
the Purchase Price is less than or more than the Closing Payment, Seller shall
pay to Buyer (if the Purchase Price is less than the Closing Payment) or Buyer
shall pay to Seller (if the Purchase Price is greater than the Closing
Payment), as the case may be, the Adjustment Amount together with interest
thereon 

 2
 

 

equal to LIBOR calculated on the basis of a 360-day
year and the actual number of days elapsed from the Closing Date to the date on
which the Adjustment Amount is paid. Any such payment shall be in United States
dollars in federal or other immediately available funds as directed by Buyer or
Seller, as the case may be.

ARTICLE
II

CLOSING

SECTION 2.1             Closing.
Unless otherwise mutually agreed in writing between Seller and Buyer, the
closing for the sale and purchase of the Membership Interests (the “Closing”) shall take place at the
offices of Sullivan & Cromwell LLP, 125 Broad Street, New York,
New York, at 9:00 A.M. on the later of (i) July 31, 2006 or (ii) the
third (3rd) Business
Day (the “Closing Date”) following the day on which the last to be
fulfilled or waived of the conditions set forth in Article VI (other than
those conditions that either by their nature or expressly are to be satisfied
at the Closing, but subject to the fulfillment or waiver of those conditions)
shall be satisfied or waived in accordance with this Agreement.

ARTICLE
III

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as of
the date hereof as follows:

SECTION 3.1         Organization and Good
Standing.

(a)           Each of Seller and the Company is duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization, with full corporate or limited liability company
power and authority, as the case may be, to conduct its business as it is now
being conducted, to own or use the properties or assets that it purports to own
or use, and to perform all of its respective obligations under this Agreement. The
Company is duly qualified or licensed to do business as a foreign limited
liability company and is in good standing as a foreign limited liability
company in each jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by
it, requires such licensing, qualification or good standing, except for any
failure to be so licensed, qualified or in such good standing which is not
reasonably likely to have a Material Adverse Effect on the Company.

(b)           Seller has made available or delivered to Buyer a
true, complete and correct copy of the Company’s Certificate of Formation and
Third Amended and Restated Limited Liability Company Agreement and Operating
Agreement, each as amended to date (collectively, the “Company’s
Organizational Documents”). The Company’s Organizational Documents so made
available or delivered are in full force and effect.

(c)           The Company does not have any Subsidiaries. Except
as set forth in Schedule 3.1(c) of the Disclosure Schedule, the Company is
not party to any Contract to acquire any capital stock or equity interest,
investment or other securities of any Person or any direct or indirect equity
or ownership interest in any other business.

 3
 

 

SECTION 3.2         Capitalization.

(a)           The
Membership Interests constitute the entire membership interest in the Company.

(b)           Seller is and
shall be on the Closing Date the sole record and beneficial owner of the
Membership Interests, free and clear of all Liens.

(c)           There are no
membership interests of the Company reserved for issuance or subject to
preemptive rights, or any outstanding subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or other instruments
outstanding or in effect giving any Person the right to acquire any membership
interests of the Company. The Company does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the  Membership Interests on
any matter.

SECTION 3.3             Corporate
Authority; Enforceability. Seller has the full legal right, requisite
corporate power and corporate authority, and has taken all corporate action
necessary in order, to execute, deliver and perform fully its obligations under
this Agreement and to consummate the transactions contemplated herein. This
Agreement is a valid and binding agreement of Seller, enforceable against
Seller in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles (the “Bankruptcy Exception”). Seller Parent has the
full legal right, requisite corporate power and corporate authority, and prior
to delivery of the Seller Parent Guarantee, Seller Parent will have taken all
corporate action necessary, in order to execute, deliver and perform fully its
obligations under the Seller Parent Guarantee. Upon delivery of the Seller
Parent Guarantee, the Seller Parent Guarantee will be a valid and binding
agreement of Seller Parent, enforceable against Seller Parent in accordance
with its terms, subject to the Bankruptcy Exception.

SECTION 3.4             Consents
and Approvals. Except as set forth in Schedule 3.4 of the Disclosure
Schedule, no notices, reports, submissions, applications or other filings are
required to be made by Seller with, nor are any consents, registrations,
approvals, declarations, permits, expiration of any applicable waiting periods
or authorizations required to be obtained by Seller from, any Governmental
Entity, in connection with the execution or delivery of this Agreement by
Seller, the performance by Seller of its obligations hereunder or the
consummation by Seller of the transactions contemplated herein, the failure to
make or obtain any or all of which is reasonably likely to have a Material
Adverse Effect on the Company.

SECTION 3.5             No
Violations. Assuming the making of the filings and the procurement of the
consents set forth in Schedule 3.4 of the Disclosure Schedule and the
obtaining of the consents described in Schedule 3.5 of the Disclosure
Schedule, the execution and delivery of this Agreement by Seller does not, and
the performance and consummation by Seller of any of the transactions
contemplated herein will not, with respect to each of Seller and the Company,
directly or indirectly (with or without the giving of notice or the lapse of
time or both):

 4
 

 

(a)           violate the
Certificate of Incorporation or By-laws of Seller or the Company’s
Organizational Documents;

(b)           contravene,
conflict with, or constitute or result in a breach or violation of, or a
default under, or the cancellation, modification or termination of, or the
acceleration of, or the creation of a Lien on any properties or assets owned or
used by the Company pursuant to, any provision of any Contract under which
Seller or the Company is bound or by which any of their respective assets are
bound, in each case other than as set forth in Schedule 3.5(b) of
the Disclosure Schedule;

(c)           require the
Company to obtain the consent, waiver, authorization or approval of, or give
notice to, any Person under any Contract of the Company, other than as set
forth in Schedule 3.5(c) of the Disclosure Schedule; or

(d)           violate any applicable Law,

except, in the case of each of (b) through (d),
inclusive, as is not reasonably likely to have a Material Adverse Effect on the
Company.

SECTION 3.6         Financial
Statements.

(a)           Schedule 3.6(a)-1 of the Disclosure Schedule sets forth (i) the
audited balance sheets of the Company as at December 31, 2005 (the   “Balance Sheet”)   and December 31, 2004 and the audited
statements of income of the Company for the fiscal years ended December 31,
2005, December 31, 2004 and December 31, 2003 and (ii) the
unaudited balance sheet of the Company as at March 31, 2006 (the “Interim Balance Sheet”) and the unaudited statement of
income of the Company for the three months ended March 31, 2006
(collectively, the “Financial Statements”).
Prior to Closing, in accordance with Section 5.1(f), Seller shall deliver
to Buyer the unaudited balance sheet of the Company as at June 30, 2006
and the unaudited statement of income of the Company for the six months ended June 30,
2006 (collectively, the “Unaudited June 30
Financial Statements”). Except as set forth on Schedule 3.6(a)-2
of the Disclosure Schedule, the Financial Statements have been, and the
Unaudited June 30 Financial Statements will be, prepared in conformity
with GAAP (except that the financial statements in (ii) above do not, and
the Unaudited June 30 Financial Statements will not, reflect year-end
adjustments, and that GAAP may require financial statements to be accompanied
by footnotes, and the financial statements in (ii) above are not, and the
Unaudited June 30 Financial Statements will not be, accompanied by
footnotes) consistently applied during the periods involved, and present, or
will present, fairly in all material respects the financial condition and
results of operations of the Company as of the dates thereof and for the
periods indicated therein. Schedule 3.6(a)-3 of the Disclosure Schedule
sets forth the unaudited balance sheet of Seller Parent as at December 31,
2005 and the unaudited statement of income of Seller Parent for the fiscal year
ended December 31, 2005 (collectively, the “Seller Parent Financial
Statements”). The Seller Parent Financial Statements have been prepared in
conformity with IFRS consistently applied during the period involved, and
present fairly in all material respects the financial condition and results of
operation of Seller Parent as of and for the period indicated.

 5
 

 

(b)           Except as set forth
in Schedule 3.6(b) of the Disclosure Schedule, the Company has no
Liabilities or obligations of any nature required by GAAP to be reflected on
the Interim Balance Sheet except for (i) Liabilities or obligations in the
amounts disclosed, reflected or reserved against in the Interim Balance Sheet
and (ii) Liabilities incurred in the Ordinary Course of Business since March 31, 2006.

(c)           All accounts
receivable of the Company that are reflected on the Interim Balance Sheet or on
the accounting records of the Company as of the Closing Date (collectively, the
“Accounts Receivable”) represent or will represent obligations arising
from sales actually made or services actually performed in the Ordinary Course
of Business, and Seller knows of no reason why any of such accounts receivable,
over and above any reserves stated on the Interim Balance Sheet, should not be
fully collectible in the Ordinary Course of Business.

(d)           Since the
date of the Interim Balance Sheet through the date hereof, there have not been
any write-offs of any Accounts Receivable of the Company except for write-offs
that were made in the Ordinary Course of Business and that will be reflected in
the calculation of the Purchase Price.

SECTION 3.7             Absence
of Certain Changes and Events. Except as set forth in Schedule 3.7 of the
Disclosure Schedule and other than actions taken in respect of the transactions
contemplated herein, since December 31, 2005,
the Company has operated only in, and has not engaged in any transaction other
than in, the Ordinary Course of Business, and there has not been any:

(a)           event,
occurrence or development of which Seller has knowledge that has had, or is
reasonably likely to have, a Material Adverse Effect on the Company;

(b)           material
damage, destruction or other casualty loss with respect to any material asset
or property owned, leased or otherwise used by the Company that is reasonably
likely to have a Material Adverse Effect on the Company;

(c)           (i) increase
in the bonus, salary, severance or other compensation payable by the Company or
to become payable by the Company to the officers or employees of the Company
(except for increases made in accordance with existing Seller Benefit Plans,
required by Law or made in the Ordinary Course of Business) or (ii) adoption
or amendment of, or increase in the payments to or benefits under, any profit
sharing, bonus, thrift, stock option, deferred pension, retirement, or other
employment benefit plan payable by the Company in respect of any officer or
employee of the Company (other than as required by Law or made in the Ordinary
Course of Business);

(d)           effectuation
by the Company of (i) a “plant closing” (as defined in the Worker
Adjustment and Retraining Act of 1988, as amended (the “WARN Act”))
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or (ii) a “mass
layoff” (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facilities

 6
 

 

of the Company, except, in either case, after fully
complying with the notice and other requirements of the WARN Act;

(e)           sale, lease,
alteration, or other disposition of, or write down of the book value of (except
with respect to amortization and depreciation calculated in a manner consistent
with the Financial Statements) any material asset of the Company reflected on
the Interim Balance Sheet which has a book value in excess of $500,000 or any
items of property, plant and equipment which in the aggregate have a book value
in excess of $1,000,000;

(f)            (i) acquisition
(including by merger, consolidation or acquisition of stock or assets) by the
Company of any Person or any division thereof or material portion of the assets
thereof; or (ii) liquidation, dissolution or winding up of the Company;

(g)           entry into,
amendment to, termination of, or receipt of notice of termination of (i) any
material Contract or transaction involving a total remaining commitment by the
Company extending for more than one (1) year and of at least $500,000; or (ii) any
material leases or subleases for all or any portion of the Leased Real
Property;

(h)           (i) incurrence
of any indebtedness by the Company for borrowed money (other than intercompany
payables), guarantee issued by the Company of the obligations of any Person, or
any loans or advances made by the Company (other than intercompany
receivables), in each case except in the Ordinary Course of Business; or (ii) creation
or assumption by the Company of any Lien on any material asset other than in
the Ordinary Course of Business and in an amount less than $250,000
individually or $500,000 in the aggregate for all such Liens;

(i)            (i) cancellation,
settlement, compromise, release or waiver of any claims or rights with a value
to the Company in excess of $500,000; (ii) settlement, release or
compromise of any material Action in connection with the Company, other than
such Actions in which the amount paid in settlement, release or compromise,
including the cost to the Company of complying with any provision of such
settlement, release or compromise other than cash payments, does not exceed
$500,000; or (iii) modification, amendment, cancellation or termination of
any material Contract of the Company or waiver, release or assignment of any
material rights or claims other than in the Ordinary Course of Business; or

(j)            entry into
any Contract by the Company to do any of the foregoing.

SECTION 3.8             Litigation;
Orders.

(a)           Except
as set forth in Schedule 3.8(a) of the Disclosure Schedule, (i) there are no Actions pending or, to the knowledge
of Seller, threatened against or involving Seller or the Company that have
resulted or could be reasonably expected, individually or in the aggregate, to
result in a Material Adverse Effect on the Company and (ii) as of the date
hereof, there are no Actions pending or, to the knowledge of Seller,
threatened, against Seller or the Company that are reasonably likely to
question, challenge the validity of, or have the effect of preventing,
delaying, making illegal or otherwise interfering with, this Agreement, the
transactions contemplated herein

 7
 

 

or any action taken or proposed
to be taken by Seller or the Company pursuant hereto or in connection with the
transactions contemplated herein.

(b)           Except as set forth in Schedule 3.8(b) of
the Disclosure Schedule, since January 1, 2005, no Governmental Entity of
competent jurisdiction or any arbitrator or arbitrators or dispute resolution
body has issued any Order that has resulted in or could be reasonably expected
to have a Material Adverse Effect on the Company.

SECTION 3.9             Taxes.
Except as set forth in Schedule 3.9 of the Disclosure Schedule, (a) all
Tax Returns required to have been filed by or for the Company have been timely
filed (taking into account any extensions); (b) all Taxes shown to be
payable on such Tax Returns have been or will be timely paid;(c) no
Governmental Entity has asserted or assessed in writing a deficiency for any
Tax against the Company that has not been satisfied by payment, settled or
withdrawn; (d) no Governmental Entity has asserted in writing that the
Company is required to file a Tax Return in any jurisdiction where it has not
filed a Tax Return; (e) the Company has not made an election to be treated
as a corporation for United States federal income tax purposes pursuant to Section 301.7701-3
of the Code; and (f) Seller is a United States person as defined in Section 7701(a)(30)
of the Code.

SECTION 3.10           Employee
Benefits; ERISA; Employees.

(a)           Schedule 3.10(a) of
the Disclosure Schedule contains a list of all “employee pension benefit plans”
(as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder (“ERISA”)),
“employee welfare benefit plans” (as defined in Section 3(1) of
ERISA), and all other employee benefit plans, programs, arrangements, or
individual contracts providing employee benefits, formal or informal, funded or
unfunded, registered or unregistered, which in each case is maintained, or
contributed to, by Seller, the Company or any other ERISA Affiliate of Seller
for the benefit of any current employees, officers or members of the board of
managers of the Company or any former employee, including without limitation
bonus, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, stock appreciation,
retirement, vacation, severance, retention, disability, death benefit, fringe
benefit, hospitalization, medical, retiree medical, dental, tuition, sick
leave, maternity, paternity or family leave, health care reimbursement,
dependent care assistance, or other similar benefit arrangements (the “Seller
Benefit Plans”) but excluding for this purpose any plan maintained by a
Governmental Entity (including, without limitation, the U.S. Social Security
system, Medicare and other similar programs).

(b)           Schedule 3.10(b) of
the Disclosure Schedule contains a list of the name, job title, location, current
base salary and the amount of any bonus paid in respect of the 2005 fiscal
year, and Service Date of each employee of the Company.

SECTION 3.11           Labor Matters. As of
the date of this Agreement, except as set forth in Schedule 3.11 of the
Disclosure Schedule:

(a)           The Company
is not a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor 

 8
 

 

organization, nor, as of the date hereof, is the
Company the subject of any material proceeding asserting that the Company has
committed an unfair labor practice or seeking to compel it to bargain with any
labor union or labor organization nor is there pending or, to the knowledge of
Seller, threatened, nor has there been for the past two (2) years, any
labor strike, dispute, walk-out, work stoppage or slow-down involving the
Company.

(b)           There is no
lockout (or other similar action) of any employees by the Company, and no such
action is contemplated as of the date hereof by the Company.

(c)           The Company is not delinquent in payments to
any employees for any wages, salaries, commissions, bonuses or other
compensation for any services performed by them relating to the Company or
amounts required to be reimbursed to such employees.

SECTION 3.12           Compliance
with Laws; Governmental Authorizations.

(a)           Except as set
forth in Schedule 3.12(a) of the Disclosure Schedule:

(i)            The Company has not been, and is not being,
operated in violation of any Laws, except for violations or possible violations
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on the Company.

(ii)           No investigation or review by any Governmental
Entity with respect to the Company is pending or, to the knowledge of Seller,
threatened, nor has any Governmental Entity indicated an intention to conduct
the same, except for those the outcome of which are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on the Company.

(iii)          The Company has obtained and is in compliance in all
material respects with all material governmental permits, licenses, franchises,
registrations, certifications, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct its
business as presently conducted except those the absence of which are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on the Company.

(b)           This Section 3.12
does not relate to tax matters or environmental matters, such matters being the
subject of Section 3.9 and Section 3.16, respectively.

SECTION 3.13           Title to Properties.

(a)           Except as set
forth in Schedule 3.13(a) of the Disclosure Schedule, as of the Closing
Date, the Company will have good and valid title to all assets reflected on the
Interim Balance Sheet or acquired after the date of the Interim Balance Sheet,
except those sold or otherwise disposed of since the date of the Interim
Balance Sheet in the Ordinary Course of Business and not in violation of this
Agreement and, in each case, free and clear of all Liens of any 

 9
 

 

kind except (i) mechanics’, carriers’, workmen’s,
repairmen’s, warehouseman’s or other like statutory Liens arising or incurred
in the Ordinary Course of Business, (ii) Liens for Taxes, assessments not
yet due and payable or due but not delinquent and (iii) other
imperfections of title or encumbrances, if any, which individually, or in the
aggregate, are not material in amount and which do not materially impair the
continued use and operation of the assets to which they relate in the business
of the Company as presently conducted (collectively, the “Permitted Liens”).
This Section 3.13(a) does not relate to Owned Real Property or Leased
Real Property, such items being the subject of Section 3.13(b) and
(c), respectively, or intellectual property, which is the subject of Section 3.17.

(b)           Schedule
3.13(b)-1 of the Disclosure Schedule contains a true, complete and
correct list of all real property that is owned in fee by the Company (the “Owned
Real Property”). The Company has good and marketable title to and is the
record owner of the Owned Real Property, free and clear of all Liens except for
Permitted Liens, except as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on the Company. Except as
set forth in Schedule 3.13(b)-2 of the Disclosure Schedule, none of the
Owned Real Property is subject to any right or option of any other Person to
purchase or lease an interest in such Owned Real Property, and no Person (other
than the Company) has any right to use, occupy or lease any of the Owned Real
Property, other than any right pursuant to a Permitted Lien.

(c)           Schedule
3.13(c) of the Disclosure Schedule contains a true, complete and correct
list of all real property leased or subleased to the Company (the “Leased
Real Property”). The Company is not in material breach of or default under
any such lease or sublease except for breaches or defaults that would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Company, and the Company has not received any written
notice alleging any material breach or default by the Company or notice of
termination, modification or acceleration by any third party thereunder, except
for such breaches, defaults, terminations, modifications or accelerations that
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the Company. Seller has made available to Buyer true and
correct copies of each lease or sublease pursuant to which the Company has the
right to occupy any Leased Real Property (the “Real Property Leases”).

(d)           Neither
the Company nor Seller has received notice of any proceeding to change or
redefine the zoning classification of all or any portion of the Company’s Owned
Real Property or Leased Real Property, nor to the knowledge of Seller is any
such proceeding proposed or pending, except in each case as would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Company.

SECTION 3.14           Contracts; No Default.

(a)           Schedule
3.14 of the Disclosure Schedule contains a list of all of the following
Contracts relating to the Company as of the date of this Agreement:

(i)            each Contract for the
purchase of materials or personal property with any supplier or for the
furnishing of services to the Company under the terms 

 10
 

 

of which the Company is
obligated to pay or otherwise give annual consideration of more than $500,000;

(ii)           each Contract for the sale of
personal property by the Company that is reasonably likely to involve annual
consideration of more than $500,000;

(iii)          all Contracts that limit or
purport to limit the ability of the Company in any material respect to compete
in any line of business or with any Person or in any geographic area or during
any period of time, or otherwise materially restrict the conduct of the Company
or the use of the assets of the Company as presently conducted and used (other
than leases for personal property or software licenses);

(iv)          all Contracts that will
continue after the Closing of the transactions contemplated hereunder between
or among Seller or any of its Affiliates (other than the Company), on the one
hand, and the Company, on the other hand;

(v)           any material Contract that
requires the Company to conduct business exclusively with one or more Persons
in any particular geographic area or with respect to any particular product or
service;

(vi)          other than as disclosed on
Schedule 3.10(a) of the Disclosure Schedule, any Contract presently in
effect between the Company and any current or former officer, manager,
consultant or other employee (or group thereof) retained or employed by the
Company;

(vii)         any material partnership or
joint venture Contracts to which the Company is a party;

(viii)        any bonds or agreements of
guarantee or indemnification in which the Company acts as surety, guarantor or
indemnitor;

(ix)           any nondisclosure,
confidentiality or standstill Contract with any Person (excluding nondisclosure
or confidentiality agreements with any Person entered into in the Ordinary
Course of Business) to which the Company is a party; and

(x)            the ENSCO Agreement and the
HEAT Settlement Agreement.

(b)           Based
on Seller’s knowledge, the Company and each other Person that is a party
thereto is in compliance in all material respects under each such Contract,
except for such noncompliance as would not have, individually or in the
aggregate, a Material Adverse Effect on the Company.

(c)           Except
as set forth in Section 3.14(a) of the Disclosure Schedule, Seller
has  made available to Buyer copies of
all such written Contracts, and such copies are complete and correct in all
material respects, and include all material amendments and modifications
thereto.

 11
 

 

(d)           Each
of the ENSCO Agreement and the HEAT Settlement Agreement is in full force and
effect and, to Seller’s knowledge, there are no defenses to the Company’s
enforcement of its rights thereunder. Schedule 3.14(d) of the Disclosure
Schedule sets forth the aggregate dollar amount of costs and expenses and
related liabilities incurred by the Company, as of March 31, 2006, that
the Company asserts to be applicable to the $10,000,000 minimum amount
specified in the first sentence of Section 1.3(c) of the ENSCO
Agreement.

SECTION 3.15           Insurance.

(a)           Schedule 3.15(a)-1
of the Disclosure Schedule sets forth a true, complete and correct list of all
insurance policies maintained by the Company as of the date hereof. Except as
set forth in Schedule 3.15(a)-1 of the Disclosure Schedule, Seller has
made available to Buyer true, complete and correct copies of all such policies.
Schedule 3.15(a)-2 of the Disclosure Schedule sets forth a true, complete
and correct list of all insurance policies maintained by Seller or its
Affiliates (other than the Company) with respect to the Company or its assets
and properties as of the date hereof. All such policies are in full force and
effect, all premiums due and payable under such policies have been paid, and no
notice of cancellation or termination has been received with respect to any
such policy which has not been replaced on substantially similar terms prior to
the date of such cancellation or termination.

(b)           There
is no material default by the Company or, to the knowledge of Seller, any other
Person, with respect to any provision contained in any such policy or binder
listed in Schedule 3.15(a)-1 or Schedule 3.15(a)-2 of the
Disclosure Schedule.

(c)           Each
of the insurance policies set forth on Schedule 3.15(a)-2 of the
Disclosure Schedule will terminate with respect to the Company upon Closing.

(d)           Seller
has provided Buyer with a description of each claim made and currently
outstanding under any insurance policy, whether now in effect or no longer in
effect but under which the Company retains a right to payment, covering the
business or properties of the Company.

SECTION 3.16           Environmental Matters.

(a)           Except
as set forth in Schedule 3.16(a) of the Disclosure Schedule:

(i)            the Company is in compliance
with all Environmental Laws applicable to the operation of the Company except
for such noncompliance that is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company;

(ii)           the Company possesses all
permits, licenses, registrations, identification numbers, authorizations and
approvals required under applicable Environmental Laws for the operation of the
Company as currently conducted except for such failures to possess that are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the Company;

 12
 

 

(iii)          the Company has not received
any written claim, notice of violation, citation, formal administrative
proceeding, or investigation, inquiry or information request (including,
without limitation, any “potentially responsible person” notices) from any
Governmental Entity or other Person concerning any violation or alleged
violation of, or any potential liability (either directly or indirectly through
a claim for indemnity or contribution) arising under, any applicable Environmental
Law, except for matters that have been finally resolved or are no longer
outstanding or that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company; and

(iv)          there are no currently effective
Orders, or any Actions pending or, to the knowledge of Seller, threatened,
concern­ing compliance by the Company or its facilities or operations with any
Environmental Law, except for matters that have been finally resolved or are no
longer outstanding or that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company.

(b)           Schedule
3.16(b) of the Disclosure Schedule sets forth all third-party solid and
hazardous waste treatment, storage and disposal facilities and locations used
by the Company at any time since July 25, 2001.

(c)           Notwithstanding
any other representation and warranty in Article III, the representations
and warranties contained in this Section 3.16 constitute the sole
representations and warranties of Seller relating to any Environmental Law.

SECTION 3.17           Intellectual Property.

(a)           Except
as set forth in Schedule 3.17 of the Disclosure Schedule, to the knowledge of
Seller, the Company owns, is licensed or otherwise possesses all necessary rights
to use (i) all trademarks, service marks, trade names, logos and Internet
domain names, and all goodwill associated therewith, and registrations and
applications therefor, including any and all renewals; (ii) all processes,
methods, inventions, patents, registrations, and applications therefor,
including but not limited to divisionals, continuations, continuations-in-part,
reexaminations and reissues; (iii) tangible works of expression and
copyrights, including but not limited to computer software programs, and any
registrations or applications therefor including extensions, renewals,
restorations and applications therefor; (iv) confidential and/or
proprietary information, and trade secrets; and (v) similar intellectual
property rights in the United States ((i) through (v) collectively, “IP
Rights”), in each case that are used in the business of the Company as
currently conducted, except for any such failures to own, be licensed or
possess that are, individually or in the aggregate, not reasonably likely to
have a Material Adverse Effect on the Company.

(b)           Except
as is not reasonably likely to have a Material Adverse Effect on the Company:

(i)            no claims have been asserted
with respect to (A) the Company’s exclusive rights in, to and under any of
the IP Rights owned by the Company; or 

 13
 

 

(B) the Company’s
violation, misappropriation, wrongful use and/or infringement of any other
Person’s rights in, to or under any IP Rights; and

(ii)           to the knowledge of Seller,
there is no unauthorized use, infringement or other violation of any of the IP
Rights owned by the Company or the IP Rights exclusively licensed by the
Company by any Person, including but not limited to any employee or former
employee of the Company.

SECTION 3.18           Brokers and Finders. Except
for Deutsche Bank AG, whose fees, if any, shall be paid by Seller, no agent,
broker, investment banker, intermediary, finder, Person or firm acting on
behalf of Seller or the Company or which has been retained by or is authorized
to act on behalf of Seller or the Company is or would be entitled to any broker’s
or finder’s fee or any other commission or similar fee, directly or indirectly,
from any of the parties hereto in connection with the execution of this
Agreement or upon consummation of the transactions contemplated herein.

SECTION 3.19           Financial Assurances. Schedule
3.19 of the Disclosure Schedule sets forth a true, complete and correct list in
all material respects of each guaranty, performance bond, letter of credit or
similar instrument (collectively, “Financial Assurances”) under which
Seller or one of its Affiliates (other than the Company) is the obligor for the
benefit of the Company.

SECTION 3.20           Insurance Relating to El
Dorado Incidents. The Company maintains insurance policies, or has adequate
reserves on the Interim Balance Sheet, in such coverage amounts as are adequate
to insure against all costs, expenses and damages to the Company (including the
costs of defense and without deductible or retainage amounts) arising out of
third-party claims in respect of the El Dorado Incidents. 

SECTION 3.21           No Other Representations or
Warranties. Except for the representations and warranties contained in this
Agreement, none of Seller, the Company or any other Person makes any other
express or implied representation or warranty on behalf of or with respect to
Seller or the Company, and Seller, on behalf of itself, the Company and each of
its Representatives, hereby disclaims any such representation or warranty.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as of
the date hereof as follows:

SECTION 4.1             Organization and Good
Standing. Buyer is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with full corporate power
and authority to conduct its business as it is now being conducted, to own or
use the properties or assets that it purports to own or use. Buyer is duly
qualified or licensed to do business as a foreign corporation and is in good
standing as a foreign corporation in each jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such licensing, qualification or good
standing, except for 

 14
 

 

any failure to be so licensed, qualified or in such
good standing, which is not reasonably likely to have a Material Adverse Effect
on Buyer.

SECTION 4.2             Corporate Authority;
Enforceability. Buyer has the full legal right, requisite corporate power
and corporate authority and has taken all corporate action necessary in order
to execute, deliver and perform fully its obligations under this Agreement and
to consummate the transactions contemplated herein. This Agreement is a valid
and binding agreement of Buyer, enforceable against Buyer in accordance with
its terms, subject to the Bankruptcy Exception.

SECTION 4.3             Consents and Approvals.
Except as set forth in Schedule 3.4 of the Disclosure Schedule, and assuming
that the representations and warranties of Seller set forth in Section 3.4
are true and correct, no notices, reports, submissions, applications or other
filings are required to be made by Buyer with, nor are any consents,
registrations, approvals, declarations, permits, expiration of any applicable
waiting periods or authorizations required to be obtained by Buyer from, any
Governmental Entity, in connection with the execution or delivery of this
Agreement by Buyer, the performance by Buyer of its obligations hereunder or
the consummation by Buyer of the transactions contemplated herein the failure
to make or obtain any or all of which is reasonably likely to have a Material
Adverse Effect on Buyer. In addition, the parties hereto acknowledge that Buyer
will file one or more Current Reports on Form 8-K with the SEC
relating to the transactions contemplated herein.

SECTION 4.4             No Violations. Assuming
the making of the filings and procurement of the consents described in Section 4.3,
the execution and delivery of this Agreement by Buyer does not, and the
performance and consummation by Buyer of any of the transactions contemplated
herein will not, directly or indirectly (with or without the giving of notice
or the lapse of time or both):

(a)           violate
the Articles of Organization or By-Laws of Buyer;

(b)           contravene,
conflict with, or constitute or result in a breach or violation of, or a
default under, or the cancellation, modification or termination of, or the
acceleration of, any provision of any Contract by which Buyer is bound, or to
which any assets or property of Buyer is subject;

(c)           require
Buyer to obtain the consent, waiver, authorization or approval of, or give
notice to, any Person under any Contract by which Buyer is bound, or to which
any assets or property of Buyer is subject; or

(d)           violate
any applicable Law,

except, in the case of each of (b) through (d),
inclusive, which is not reasonably likely to have a Material Adverse Effect on
Buyer.

SECTION 4.5             Securities Act. Buyer
is acquiring the Membership Interests for its own account and not with a view
to their distribution within the meaning of Section 2(11) of the 

 15

 

Securities Act. Buyer has not, directly or indirectly,
offered the Membership Interests to anyone or solicited any offer to buy the
Membership Interests from anyone, so as to bring such offer and sale of the
Membership Interests by Buyer within the registration requirements of the
Securities Act. Buyer will not sell, convey, transfer or offer for sale any of
the Membership Interests except in 
compliance with the Securities Act and any applicable state securities
laws or pursuant to any exemption therefrom.

SECTION 4.6             Financing. Buyer has
available, and on the Closing Date will have available, sufficient funds,
available lines of credit or other sources of immediately available funds to
enable it to purchase the Membership Interests on the terms and conditions of
this Agreement. Buyer’s obligations hereunder are not subject to any conditions
regarding Buyer’s ability to obtain financing for the consummation of the
transactions contemplated herein.

SECTION 4.7             Litigation. As of the
date hereof, there are no Actions pending or, to the knowledge of Buyer,
threatened, against Buyer or any of its assets, at law, in equity or otherwise,
in, before, by, or otherwise involving, any Governmental Entity, arbitrator or
other Person that is reasonably likely to question, challenge the validity of,
or have the effect of preventing, delaying, making illegal or otherwise
interfering with, this Agreement, the transactions contemplated herein or any
action taken or proposed to be taken by Buyer pursuant hereto or in connection
with the transactions contemplated herein.

SECTION 4.8             Brokers and Finders.
No agent, broker, investment banker, intermediary, finder, Person or firm
acting on behalf of Buyer or which has been retained by or is authorized to act
on behalf of Buyer is or would be entitled to any broker’s or finder’s fee or
any other commission or similar fee, directly or indirectly, from any of the
parties hereto in connection with the execution of this Agreement or upon
consummation of the transactions contemplated herein.

ARTICLE V

COVENANTS

SECTION 5.1             Operation of the Company.
Except for matters set forth in Schedule 5.1 of the Disclosure Schedule, prior
to the Closing, except as requested or consented to by Buyer in writing, which
consent shall not be unreasonably withheld or delayed, and except as otherwise
expressly contemplated in this Agreement, Seller shall, and covenants and
agrees to cause the Company to:

(a)           operate
the Company only in the Ordinary Course of Business;

(b)           use
its commercially reasonable efforts to preserve intact the business of the
Company, keep available the services of the current officers, employees, and
agents of the Company, and maintain the relationships and goodwill with
suppliers, distributors, sales representatives, customers, clients, landlords,
lessors, creditors, employees, agents, and others having business relationships
with the Company; provided, however, that neither this
Section 5.1 

 16
 

 

nor any other provision of this Agreement shall
require Seller or the Company or any of their Affiliates to make any payment in
respect of the foregoing;

(c)           not
take any affirmative action, or fail to take any reasonable action within their
or its control, as a result of which any of the changes or events listed in
Section 3.7 is reasonably likely to occur;

(d)           subject
to, and to the extent permitted by, any applicable Laws, policies, practices,
procedures or direction of any Governmental Entity, confer with Buyer
concerning operational matters of a material nature;

(e)           provide
to Buyer reports on the Company’s monthly operating results, prepared on a
basis consistent with past practice, for each month after March 2006
within thirty (30) days after the end of such month; and

(f)            provide
to Buyer the Unaudited June 30 Financial Statements.

SECTION 5.2             Access.

(a)           Between
the date of this Agreement and the Closing Date, subject to, and to the extent
permitted by, any applicable Laws, policies, practices, procedures or direction
of any Governmental Entity, Seller shall, and shall cause its Related Persons
and the Company and each of their respective Representatives to,
(i) afford Buyer and its Representatives and Buyer’s prospective lenders
and their Representatives (collectively, “Buyer’s Advisors”) access, at
reasonable times during normal business hours after first obtaining the written
consent of Seller, to the Company’s personnel, premises, properties, Contracts,
books and records, and other documents and data; provided, that Seller
shall have the right to approve the number and identity of the Persons granted
such access and to impose such other reasonable limitations as may be necessary
to prevent unwarranted interruptions in the Company’s day-to-day operations,
including the right to limit Buyer’s and Buyer’s Advisors’ access to certain
specified individuals and the right to approve the purpose of any such access
to the Company’s personnel, premises and properties, Contracts, books and
records, and other documents and data, (ii) furnish Buyer and Buyer’s
Advisors with such additional financial, operating, and other data and
information as Buyer may reasonably request and (iii) otherwise cooperate
with the investigation by Buyer and its Representatives of the Company,
including, without limitation, any contact with regulators by or on behalf of Buyer
in connection with obtaining the consents, registrations, approvals,
declarations, permits or authorizations set forth in Schedule 3.4 of the
Disclosure Schedule. The foregoing shall not require Seller or the Company to
permit any inspection, or to disclose any information, that in the reasonable
judgment of Seller is reasonably likely to result in the disclosure of any
trade secrets of third parties, violate any of its obligations with respect to
confidentiality or disclose information that does not relate exclusively to the
Company. All requests for information made pursuant to this
Section 5.2(a) shall be directed to an executive officer of Seller or
such other person as may be designated by Seller, and shall not be granted to
the extent deemed inconsistent with any Law, policy, practice, procedure or
direction of any Governmental Entity.

 17
 

 

(b)           Following
the Closing and subject to, and to the extent permitted by, any applicable
Laws, policies, practices, procedures or direction of any Governmental Entity,
Buyer shall and shall cause its Related Persons and the Company and each of
their respective Representatives to, (i) afford Seller and its
Representatives access, at reasonable times during normal business hours after
first obtaining the written consent of Buyer, to the Company’s personnel,
premises, properties, Contracts, books and records, and other documents and
data, (ii) furnish Seller and its Representatives with such additional
financial, operating, and other data and information as Seller may reasonably
request in order to prepare its Tax Returns and other documents and reports
required to be filed with Governmental Entities and its financial statements or
in connection with any Action against, investigations by any Governmental
Entity of, or in connection with any Tax examination of, Seller and
(iii) otherwise cooperate with the investigation by Seller and its
Representatives of the Company. The foregoing shall not require Buyer to permit
any inspection, or to disclose any information, that in the reasonable judgment
of Buyer is reasonably likely to result in the disclosure of any trade secrets
of third parties or violate any of its obligations with respect to
confidentiality if Buyer shall have used reasonable best efforts to obtain the
consent of such third party to such inspection or disclosure. All requests for
information made pursuant to this Section 5.2(b) shall be directed to
an executive officer of Buyer or such other person as may be designated by
Buyer.

SECTION 5.3             Required Approvals.
Buyer shall use its reasonable best efforts promptly to prepare and file all
documentation, including all applications, notices, petitions, filings and
other documents, and to obtain any consents, registrations, approvals,
declarations, permits or authorizations, necessary to consummate the
transactions contemplated herein. Seller agrees to fully cooperate with Buyer
in such matters, including, without limitation, executing, or causing the
Company to execute, as the case may be, such applications, notices, petitions,
filings and other documents required to be executed by Seller or the Company.
Buyer shall keep Seller apprised of the status of matters relating to
completion of the transactions contemplated herein, including promptly
furnishing Seller with copies of all material notices or other material
communications received by Buyer, from all third parties and Governmental
Entities with respect to the transactions contemplated herein.

SECTION 5.4             Reasonable Best Efforts.
Subject to Section 7.1(c), between the date of this Agreement and the
Closing Date, each of the parties hereto shall, unless otherwise specified, use
their respective reasonable best efforts to cause the conditions in Sections
6.1 and 6.2 to be satisfied as promptly as practicable.

SECTION 5.5             Publicity. The
initial press release announcing the transactions contemplated herein shall be
released jointly after consultation between the parties hereto and thereafter
the parties hereto shall consult with each other prior to issuing any press
releases or otherwise making any public announcements with respect to the
transactions contemplated herein and prior to making any filings with any
Governmental Entity or with any national securities exchange with respect
thereto, except as may be required by Law or by obligations pursuant to any
listing agreement with or rules of any national securities exchange on
which the securities of Ultimate Parent or Buyer are listed (in which case, the disclosing party shall make a
good faith effort to notify the other party of such press release or public
statement and provide the other party 

 18
 

 

a copy of the proposed press
release or public statement and an opportunity to provide comments thereon
(which comments the disclosing party shall not unreasonably refuse to
incorporate into such release or public announcement, except where such public
statement is a filing under the federal securities laws, in which case the
disclosing party may refuse to incorporate such comments in its sole
discretion) at least two (2) Business
Days prior to the time the release or statement is made public). Nothing in
this Section 5.5 shall be construed to require Seller or the Company to
consult with, or obtain the prior approval of, Buyer with respect to any
internal communications made prior to the Closing by Seller or the Company to
the Company’s employees.

SECTION 5.6             Expenses. Except as
otherwise expressly provided herein, whether or not the transactions
contemplated herein are consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated herein shall
be paid by the party incurring such expense. Without limiting the generality of
the foregoing, each party shall pay all legal, accounting and investment
banking fees, and other fees to consultants and advisors incurred by it,
relating to this Agreement and the transactions contemplated herein (it being
understood that expenses incurred directly by the Company shall be paid by the
Company and appropriately accounted for in the calculation of the Purchase
Price). Buyer shall pay all regulatory filing fees required in connection with
Section 4.3 and Section 5.3 of this Agreement. Seller shall bear all
expenses in respect of the Company’s redemption of the Financial Debt as
contemplated by Section 6.1(g) of this Agreement. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by the other party.

SECTION 5.7             Further Assurances.
To the extent permissible under Law and the policies, practices, procedures and
directions of each relevant Governmental Entity, and subject to
Section 7.1(c), at any time and from time to time after the Closing Date,
the parties hereto agree to (a) furnish upon request to each other such
further assurances, information, documents, instruments of transfer or
assignment, files and books and records, (b) promptly execute,
acknowledge, and deliver any such further assurances, information, documents,
instruments of transfer or assignment, files and books and records, and
(c) do all such further acts and things, all as such other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to herein.

SECTION 5.8             Notification. Between
the date of this Agreement and the Closing Date, Seller, on the one hand, and
Buyer, on the other hand, shall promptly notify the other in writing if it
becomes aware of any fact or condition that causes or constitutes a breach of
any of its representations and warranties as of the date of this Agreement, or
if it becomes aware of the occurrence after the date of this Agreement of any
fact or condition that it reasonably expects to (except as expressly
contemplated herein) cause or constitute a breach of any such representation or
warranty. If, in the reasonable opinion of Buyer, any such fact or condition of
which Seller has notified Buyer would cause the condition set forth in
Section 6.1(a) not to be satisfied (so that Buyer would not be
required to consummate the purchase of the Membership Interests and to take the
other actions to be taken by Buyer at the Closing), Buyer shall provide written
notice to Seller to that effect no later than ten (10) days following
receipt of any such notice from Seller. Between 

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the date of this Agreement and the Closing Date, the
notifying party shall promptly notify the other of the occurrence of any breach
of any covenant, agreement, undertaking or obligation of it in this
Article V or of the occurrence of any event that may make the satisfaction
of the conditions in Article VI impossible or not reasonably likely.

SECTION 5.9             Non-Competition;
Non-Solicitation.

(a)           Non-Competition.
In consideration of the benefits of this Agreement to Seller and in order to
induce Buyer to enter into this Agreement, Seller hereby covenants and agrees
that for a period of sixty (60) months following the Closing Date it shall not,
without the prior written consent of Buyer, engage in a business conducted in
the continental United States that provides hazardous waste incineration
services (a “Competing Business”); provided, however, that
nothing herein shall restrict Seller from continuing to engage in any business
that it engaged in (other than solely through the Company) at any time during
the twenty-four (24) months prior to the Closing. Nothing in this
Section 5.9(a) shall prohibit Seller from acquiring, directly or
indirectly, control of a company (a “Subject Company”) if the Subject
Company is not primarily engaged, directly or indirectly, in a Competing
Business; provided that if in respect of any fiscal year during the
sixty (60) months following the Closing Date the revenues Seller has received
from the Subject Company that were generated from the provision of services
that constitute a Competing Business exceed 10% of the total revenues Seller
has received from the Subject Company, Seller shall divest the business of the
Subject Company that provides the services that constitute a Competing Business
within twelve (12) months from such fiscal year end.

(b)           Non-Solicitation.

(i)            Seller hereby covenants and
agrees that for a period of twenty-four (24) months following the Closing Date
neither it nor any of its Subsidiaries or Related Persons shall, without the
prior written consent of Buyer, directly or indirectly, solicit for employment
any current employee of the Company (other than the individuals listed in
Schedule 5.9(b) of the Disclosure Schedule, such individuals the “Retained
Employees”); and

(ii)           Buyer hereby covenants and
agrees that for a period of twelve (12) 
months following the Closing Date neither it nor any of its Subsidiaries
or Related Persons shall, without the prior written consent of Seller, directly
or indirectly, solicit for employment any current employee of Seller or its
Affiliates (other than any Acquired Employee),

provided,
however, that (x) general solicitations of employment published in
a journal, newspaper or other publication of general circulation and not
specifically directed towards such employees shall not be deemed a solicitation
for purposes of this Section 5.9(b) and (y) a party, its Related
Persons and Representatives shall not be prohibited from employing any such
person who contacts it, its Related Persons and Representatives on his or her
own initiative and without any solicitation by such party, its Related Persons
and Representatives.

 20
 

 

SECTION 5.10           Employee Benefit Plans.

(a)           Following
the Closing Date, Buyer shall provide each of the Acquired Employees with
pension and welfare benefits that are at least as favorable as the pension and
welfare benefits that Buyer makes available to its similarly situated
employees.

(b)           Except
as otherwise required by Law, Buyer shall provide, or cause the Company to
provide, severance benefits, determined in accordance with the Company’s
severance payment schedule set forth in Schedule 5.10(b) of the Disclosure
Schedule, to any Acquired Employee (but exclusive of any Retained Employee)
whose employment is terminated during the one-(1) year period beginning on
the Closing Date. Buyer expressly acknowledges that the Closing Payment
reflects an adjustment in Buyer’s favor in respect of such anticipated
severance expenses. All service with Seller, the Company or any ERISA Affiliate
of Seller prior to the Closing Date by any Acquired Employee shall be treated
as if it were service with Buyer or any of Buyer’s Affiliates for purposes of
determining such severance benefits and for purposes of eligibility, vesting
and accrual of benefits under all employee benefit plans provided to such
Acquired Employee by the Company or Buyer following the Closing Date (other
than accrual of benefits under defined benefit retirement plans), such
determination, in each case, to be made on a basis consistent with Seller’s and
the Company’s policies, except to the extent prohibited by applicable Law.
Buyer shall, or shall cause the Company to, recognize for purposes of any
vacation policy and sick leave program provided by Buyer or the Company to
Acquired Employees following the Closing Date any benefits accrued by such
Acquired Employee under the Company’s vacation policy and sick leave program
through the Closing Date. Buyer shall, or shall cause the Company to, recognize
for purposes of any health care and welfare plans provided by Buyer or the
Company to Acquired Employees following the Closing Date any co-payments and
deductibles paid by any Acquired Employee or dependent of such Acquired
Employee under any Seller Benefit Plan with respect to health care expenses
incurred prior to the Closing Date, and shall not exclude any preexisting
conditions of any such Acquired Employee or dependents that were not excluded
under the Seller Benefit Plans immediately prior to the Closing Date.

(c)           Buyer
shall cause the Company to satisfy all obligations to reemploy or reinstate any
individual who is on a leave of absence, paid or unpaid (including but not
limited to a disability leave, a leave due to an injury or illness subject to
workers’ compensation, military leave or a leave under the Family and Medical
Leave Act), or is otherwise absent from active employment for any other reason
on the Closing Date and whose most recent employment prior to the Closing Date
was as an employee of the Company.

(d)           Prior
to the Closing Date, Seller shall cause the Company to adopt flexible spending
account plans that are materially identical to the Seller Benefit Plans that
are flexible spending account plans. As of the Closing Date, Seller shall spin
off from its flexible spending account plans to the Company’s plans the
portions of such plans attributable to Acquired Employees, and the Company
shall thereafter assume and satisfy all liabilities and obligations under the
spun-off portions of such plans, including the reimbursement of any expenses
which were incurred prior to the Closing Date but which were not submitted for
payment prior to the Closing Date.

 21
 

 

(e)           Buyer
shall cause one or more defined contribution plans maintained by Buyer, the
Company or their Affiliates after the Closing Date to accept a direct rollover
pursuant to Section 401(a)(31) of the Code of any eligible rollover
distribution from any Seller Benefit Plan that is a qualified defined benefit
or defined contribution plan which has been elected by any Acquired Employee
who remains an employee of the Company on the date the distribution is made.
Such a direct rollover may include the rollover in kind of any participant loan
outstanding to the individual under such a qualified defined contribution plan
on the date the direct rollover occurs.

(f)            Seller
shall take all actions necessary to cause the Company to cease, as and where
applicable, to be a participating employer in each Seller Benefit Plan as of
the Closing Date, and to cause each Acquired Employee or dependent of any
Acquired Employee to cease to be eligible for benefits under each Seller
Benefit Plan with respect to expenses incurred or events occurring on or after
the Closing Date, except for the Seller Benefit Plans set forth on Schedule
5.10(f) of the Disclosure Schedule.

(g)           Buyer shall be
responsible for the administration of and shall assume any and all obligations,
if any, arising on or after the Closing Date under the continuation coverage
requirements of §§ 601 et seq. of ERISA and § 4980B of the Code
(i.e., COBRA) with respect to the Acquired Employees and their beneficiaries.

(h)           No
provisions of this Agreement shall create any third party beneficiary or other
rights in any employee (including any beneficiary or dependent thereof) or any
other persons in respect of continued employment with any of the Company,
Seller or Buyer or any of their respective Affiliates, and no provision of this Agreement shall create any such
rights in any such persons in respect of any benefits that may be provided,
directly or indirectly, under any plan, policy or arrangement which may be
established or maintained by Seller, the Company or Buyer. No provision of this
Agreement shall constitute a limitation on the right of Buyer, the Company or
any of Buyer’s Affiliates to terminate at will, or cause the termination at
will of, any employee of the Company.

(i)            To
the extent that the Acquired Employees remain employed with the Company or
Buyer or any of its Affiliates after the Closing, such Acquired Employees shall
not be deemed to be in violation of any confidentiality or non-competition
agreements with Seller or any of its Affiliates (other than the Company), if
applicable, solely by virtue of their continuing employment by the Company from
and after the Closing Date.

(j)            Prior
to the Closing Date, Seller shall, or shall cause the Company to, satisfy the
Company’s success fee and accelerated incentive compensation payment
obligations existing under the letter agreements set forth on Schedule
5.10(j) of the Disclosure Schedule. Following the Closing Date, Buyer
shall, or shall cause the Company to, satisfy the Company’s severance
obligations existing under the letter agreements set forth on Schedule
5.10(j) of the Disclosure Schedule in accordance with their respective
terms.

(k)           Prior
to the Closing Date, Seller shall, or shall cause the Company to, satisfy any
payment obligations of the Company accrued through the Closing Date under the
annual incentive compensation plans set forth on Schedule 5.10(k) of the
Disclosure Schedule.

 22
 

 

SECTION 5.11       Retention of Records. Buyer shall retain, and
cause the Company to retain, all books and records relating to (i) the
Seller Benefit Plans, accounting or legal matters prior to the Closing for a
period of at least seven (7) years from the date hereof and (ii) Taxes
until the statute of limitations (inclusive of all extensions, waivers and
tolling periods) in respect of the Tax Return for which such Tax records relate
has expired; provided, however, that at the end of the period
referenced in clause (i) and (ii), as the case may be, any such document
or record may be disposed of by Buyer or the Company, if Buyer or the Company
first offers to surrender possession thereof to Seller at Seller’s expense.
Seller shall have the right during business hours, upon reasonable notice to
Buyer or the Company, to inspect and make copies of any such records.

SECTION 5.12           Release of Financial
Assurances.  In the event Seller or
one of its Affiliates (other than the Company) is the obligor on a guaranty,
performance bond, letter of credit or similar instrument for the benefit of the
Company immediately prior to Closing (other than in respect of the Financial
Debt), Buyer shall use its reasonable best efforts to cause Seller or such
Affiliate to be released from such obligations as of the Closing, and shall
provide substitute financial assurances that are substantially equivalent to
such obligations as of the Closing. Buyer shall promptly reimburse Seller for
any payments Seller or such Affiliate makes on or after the Closing in respect
of such obligations.

SECTION 5.13           Plant Closings.
Following the Closing, Buyer shall be (i) responsible for complying, or
causing the Company to comply, with the notice and other requirements of the
WARN Act with respect to any site of employment, or one or more facilities or
operating units within any site of employment, of the Company and
(ii) liable for any noncompliance by Buyer or the Company therewith.

SECTION 5.14           Assignment of Certain
Rights. On the Closing Date or as soon as reasonably practicable
thereafter, Seller and its Affiliates shall deliver to Buyer all duly
authorized and executed instruments required to effect an assignment to Buyer
of all of Seller’s and its Affiliates’ rights under each confidentiality
agreement to which Seller or an Affiliate of Seller is a party entered into
with a third-party in connection with the Company for the benefit of the
Company.

SECTION 5.15           Change of Name. Within
six (6) months after the Closing Date, Buyer shall, or shall cause the
Company to, file with the office of the secretary of state of the State of
Delaware documents to change the name of the Company to delete any reference to
“Teris”, and Buyer and its Affiliates (including the Company) shall cease using
all references to the name “Teris” or any other name, phrase or logo
confusingly similar to any trademark currently in use by Seller or its
Affiliates or any other trademark which may imply an association with or
sponsorship by Seller or its Affiliates. During such six-(6) month period,
Buyer and its Affiliates (including the Company) shall not use any reference to
the name “Teris” or any other name, phrase or logo confusingly similar to any
trademark currently in use by Seller or its Affiliates or any other trademark
which may imply an association with or sponsorship by Seller or its Affiliates,
other than within the continental United States. Following such
six-(6) month period, Buyer and its Affiliates (including the Company)
shall not create or order any new materials or displays which include the name
“Teris” or any of Seller’s or its Affiliates’ other trademarks or logos. Buyer 

 23
 

 

agrees to have removed any signage or use of Seller’s
trademarks and destroy any remaining marketing materials prior to the
conclusion of such six-(6) month period.

SECTION 5.16       Intercompany
Obligations. Prior to the Closing, Seller will cause the payment,
satisfaction and discharge of all intercompany loans outstanding between the
Company, on the one hand, and the Seller or any of its Affiliates, on the other
hand.

SECTION 5.17       Compliance
with Insurance; Management of Litigation and Insurance. Following the
Closing, Buyer shall, and shall cause the Company to, (i) fully comply
with the terms of any insurance coverage in respect of the El Dorado Incidents,
(ii) except as otherwise contemplated in this Section 5.17, manage
any litigation in respect of the El Dorado Incidents, (iii) use its
reasonable best efforts to pursue any available insurance in respect of
third-party claims relating to the El Dorado Incidents and (iv) cooperate
with Seller’s reasonable requests for informational updates regarding the
status of such litigation and any insurance recoveries related thereto.
Notwithstanding clause (ii) above, Seller may, at any time and at its
option, notify Buyer and the Company that it will assume and thereafter
control, at its own expense, the management of any specified litigation in
respect of the El Dorado Incidents. In the event Seller elects to assume and
control the management of any such litigation, Buyer shall, and shall cause the
Company to, fully cooperate with Seller with respect thereto, including
providing Seller access to such books and records of the Company, and to such
Company personnel, as Seller may deem necessary or desirable, and shall take
all such further actions as Seller may request from time to time, in order to
facilitate Seller’s management thereof.

SECTION 5.18       Pending
Claims Related to El Dorado Incidents. Immediately prior to Closing, in the
event that the Company has not recovered fully on receivables for expected
insurance reimbursement arising from the El Dorado Incidents (or on deductibles
paid or other uninsured loss related thereto), Seller may, at its option, cause
the Company to assign its rights in respect thereto to Seller or any of its
Affiliates, and thereafter, Seller or such Affiliate may, at its own expense,
continue to pursue such claims. In the event that Seller does not elect to
cause the Company to effect such assignment, or such assignment by the Company
is determined to be illegal or impermissible for any reason, then following the
Closing, Buyer agrees to, and to cause the Company to, use its reasonable best
efforts to pursue such claims, at Seller’s expense, and to promptly deliver to
Seller any receivables or recoveries that the Company receives in respect
thereof.

ARTICLE VI

CONDITIONS TO CLOSING AND DELIVERABLES

SECTION 6.1             Conditions to Obligations
of Buyer. The obligation of Buyer to consummate the purchase of the
Membership Interests and to take the other actions to be taken by Buyer at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived in whole or in part by
Buyer):

(a)           Representations
and Warranties. Each of the representations and warranties of Seller set
forth in this Agreement (other than any representation or warranty in respect
of which Seller has delivered a notice to Buyer, and Buyer has failed to
deliver a notice to Seller, in each 

 24
 

 

case pursuant to and in accordance with Section 5.8),
which representations and warranties shall be deemed for purposes of this
Section 6.1(a) not to include any qualification or limitation with
respect to materiality (whether by reference to “material,” “Material Adverse
Effect” or otherwise), shall be true and correct as of the Closing Date, with
the same effect as though such representations and warranties had been made on
and as of the Closing Date, except that such representations and warranties
that are made as of a specific date need only be true in all material respects
as of such date; provided, however, that notwithstanding anything herein
to the contrary, this Section 6.1(a) shall be deemed to have been
satisfied even if such representations or warranties are not true and correct
unless the failure of such representations or warranties to be so true and
correct, in the aggregate, has had, or is reasonably likely to have, a Material
Adverse Effect on the Company.

(b)           Covenants.
All of the covenants, agreements, undertakings and obligations that Seller is
required to perform or to comply with at or prior to Closing pursuant to this
Agreement and the Agreement, dated as of May 3, 2006, among
McKinsey & Company, Inc. United States, Seller and Buyer, shall
have been duly performed and substantially complied with in all material
respects or if breached, shall have been remedied, cured or waived at or prior
to the Closing.

(c)           No
Injunction. No temporary restraining order, preliminary or permanent
injunction or other Order issued by a Governmental Entity prohibiting,
preventing or enjoining the consummation of the transactions contemplated
hereby shall be in effect.

(d)           Consents.
Each of the consents, registrations, approvals, declarations, permits or
authorizations set forth in Schedule 6.1(d) of the Disclosure
Schedule shall have been obtained and be in full force and effect.

(e)           Resignations. Each of the members of the board of managers of the Company shall have
tendered his or her written resignation from the board of managers effective
upon consummation of the Closing.

(f)            Seller
Parent Guarantee. Seller Parent shall have delivered a guarantee
substantially in the form of Annex 6.1(f) hereto (the “Seller Parent
Guarantee”).

(g)           Redemption of Financial Debt. The Financial Debt shall have been redeemed
in whole.

(h)           Audit
Reports and Consents. Buyer shall have received (i) manually signed
counterparts of the reports of Moore Stephens Frost and Ernst & Young
LLP with respect to the audited financial statements of the Company described
in Section 3.6(a)(i) and (ii) consents, manually signed by each
of Moore Stephens Frost and Ernst & Young LLP, to Buyer’s inclusion of
such reports in the Report on Form 8-K to be filed by Buyer pursuant
to the Securities Exchange Act in connection with the transactions contemplated
hereunder, and Buyer’s incorporation by reference of such reports in Buyer’s
registration statements on Forms S-3 and S-8 under the Securities
Act, for which Buyer shall have provided to Seller prior to Closing the
applicable registration file numbers.

 25
 

 

SECTION 6.2         Conditions to Obligations of Seller. The
obligation of Seller to consummate the sale of the Membership Interests and to
take the other actions to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived in whole or in part by Seller):

(a)           Representations
and Warranties. Each of the representations and warranties of Buyer set
forth in this Agreement, which representations and warranties shall be deemed
for purposes of this Section 6.2(a) not to include any qualification
or limitation with respect to materiality (whether by reference to “material,”
“Material Adverse Effect” or otherwise), shall be true and correct as of the Closing
Date, with the same effect as though such representations and warranties had
been made on and as of the Closing Date, except that such representations and
warranties that are made as of a specific date need only be true in all
material respects as of such date; provided, however, that
notwithstanding anything herein to the contrary, this
Section 6.2(a) shall be deemed to have been satisfied even if such
representations or warranties are not true and correct unless the failure of
such representations or warranties to be so true and correct, in the aggregate,
has had, or is reasonably likely to have, a Material Adverse Effect on Buyer.

(b)           Covenants.
All of the covenants, agreements, undertakings and obligations that Buyer is
required to perform or to comply with at or prior to Closing pursuant to this
Agreement and the Agreement, dated as of May 3, 2006, among
McKinsey & Company, Inc. United States, Seller and Buyer, shall
have been duly performed and substantially complied with in all material respects
or if breached, shall have been remedied, cured or waived at or prior to
Closing.

(c)           No
Injunction. No temporary restraining order, preliminary or permanent
injunction or other Order issued by a Governmental Entity prohibiting,
preventing or enjoining the consummation of the transactions contemplated
hereby shall be in effect.

SECTION 6.3             Documentation to be Delivered at Closing. In addition to the instruments and documents
required by this Agreement to be exchanged or delivered by the parties at
Closing:

(a)           As to Seller. At the
Closing, Seller shall deliver to Buyer:

(i)            a
certificate or certificates evidencing all of the then issued and outstanding
Membership Interests, duly endorsed in blank, in proper form for transfer, and
with any requisite transfer tax stamps properly affixed thereto;

(ii)           a certificate dated as of the
Closing Date and signed by a senior executive officer or officers, representing
that the conditions referred to in Sections 6.1(a) and
6.1(b) have been satisfied;

(iii)          an incumbency certificate certifying
as to the names and signatures of the officers authorized to sign this
Agreement and each of the documents to be delivered hereunder;

 26
 

 

(iv)          minute books and all books, papers, records, and
other property belonging to the Company;

(v)           resignation letters of each member of the board
of managers of the Company, effective upon consummation of the Closing;

(vi)          a certificate signed by an
officer of Seller stating that Seller is not a foreign person, in a form that
complies with Treasury Regulations Section 1.1445-2(b)(2)(i); and

(vii)         an opinion or opinions from
counsel (including in-house counsel as to the matters of authorization,
execution and delivery) addressed to Buyer and dated as of the Closing Date as
to the due authorization, execution and delivery of this Agreement by Seller
and the validity and enforceability thereof, and as to the due authorization,
execution and delivery of the Seller Parent Guarantee and the validity and
enforceability thereof.

(b)           As to Buyer. At the
Closing, Buyer shall deliver to Seller:

(i)            the
cash payment contemplated by Section 1.2 by wire transfer of immediately available funds or by such other means as
mutually agreed upon by the parties;

(ii)           a certificate, dated as of the
Closing Date and signed by a senior executive officer or officers, representing
that the conditions referred to in Sections 6.2(a) and
6.2(b) have been satisfied;

(iii)          an incumbency certificate
certifying as to the names and signatures of the officers authorized to sign
this Agreement and each of the documents to be delivered hereunder; and

(iv)          an opinion or opinions from
counsel (including in-house counsel as to the maters of authorization,
execution and delivery) addressed to Seller and dated as of the Closing Date as
to the due authorization, execution and delivery of this Agreement by Buyer and
the validity and enforceability thereof.

ARTICLE VII

TERMINATION

SECTION 7.1             Termination.
Notwithstanding anything in this Agreement to the contrary, this Agreement and
the purchase of the Membership Interests contemplated herein may, by written
notice, be terminated at any time prior to the Closing Date:

(a)           by
either Buyer or Seller, upon their mutual written consent;

 27
 

 

(b)           by
either Buyer or Seller, without liability to the terminating party on account
of such termination if the Closing has not occurred (other than through the
failure of the  party seeking to
terminate this Agreement to comply fully with its obligations hereunder) on or
before November 30, 2006, or such other date as Buyer and Seller may
mutually agree to (the “Outside Date”);

(c)           by either
Buyer or Seller, if any Governmental Entity shall have issued, enacted,
entered, promulgated or enforced any Order, or taken any other action
restraining, enjoining or otherwise prohibiting the purchase of the Membership
Interests or the consummation of any other transactions contemplated herein and
such Order or other action shall have become final and non-appealable; provided,
that the right to terminate this Agreement pursuant to this Section 7.1(c) shall
not be available to any party that has failed to comply fully with its
obligations hereunder in any manner that shall have proximately contributed to
the occurrence of such Order; provided  further, that in the event
any Governmental Entity with jurisdiction over the enforcement of any
applicable antitrust or competition Laws provides notice to Buyer that Buyer is
required, as a condition to the approval of the transactions contemplated
hereunder, to agree to dispose of or divest particular assets or categories of
assets, or businesses, of the Company (or, in lieu thereof, approximately
equivalent assets or categories of assets and businesses of Buyer or its
Subsidiaries or any Related Person of Buyer), and Buyer has used its reasonable
best efforts to cause such Governmental Entity to withdraw or otherwise waive
such condition to the approval of the transactions contemplated hereunder, but
such efforts have been unsuccessful, Buyer may terminate this Agreement
pursuant to this Section 7.1(c) by delivering to Seller written
notice of such termination and a cash payment in the amount of $2,500,000 by
wire transfer of immediately available funds to an account specified by Seller;

(d)           by Buyer, if
any of the conditions set forth in Section 6.1 becomes incapable of
satisfaction prior to the Outside Date and shall not have been waived by Buyer;
or

(e)           by Seller, if
any of the conditions set forth in Section 6.2 becomes incapable of
satisfaction prior to the Outside Date and shall not have been waived by Seller.

SECTION 7.2             Effect
of Termination. In the event of the termination and abandonment of this
Agreement pursuant to Section 7.1, this Agreement (other than Section 5.6
(Expenses), this Section 7.2, Section 10.4 (Notices), Section 10.5
(Governing Law), Section 10.6 (Arbitration) and Section 10.8
(Confidentiality), which shall remain in full force and effect) shall forthwith
become null and void and no party hereto (or any of their respective
Representatives or stockholders) shall have any Liability or further obligation
to any other party hereto, except as provided in this Section 7.2; provided,
however, that if this Agreement is terminated by a party because of the
breach of this Agreement by the other party or because one or more of the
conditions to the terminating party’s obligations under this Agreement is not
satisfied as a result of the other party’s failure to fully comply with its
obligations under this Agreement, the terminating party’s rights to pursue all
legal remedies will survive such termination unimpaired.

 28
 

 

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

SECTION 8.1             Survival of
Representations and Warranties. The representations and warranties made
herein shall terminate as provided in this Section 8.1. Upon such
termination, no party shall have any liability to the other party with respect
to a claim of violation of a representation or warranty unless the party
entitled to indemnification pursuant to this Article VIII (the “Indemnified
Party”) shall have complied with the provisions of Section 8.5 and
shall have given appropriate notice to the party liable for indemnification
pursuant to this Article VIII (the “Indemnifying Party”) before the
termination of the relevant representation or warranty as provided in this
section.

All of the representations and warranties of
the parties shall survive the Closing for twenty-four (24) months following the
Closing Date, except for (i) the representations and warranties
contained in Sections 3.1 (Organization and Good Standing), 3.2 (Capitalization),
3.3 (Corporate Authority; Enforceability), 3.20 (Insurance Relating to El
Dorado Incidents), 4.1 (Organization and Good Standing) and 4.2 (Corporate
Authority; Enforceability), which shall survive the execution and delivery of
this Agreement and the Closing without limitation, (ii) the
representations and warranties contained in Section 3.9 (Taxes), which
shall survive until sixty (60) days after the expiration of the applicable
statute of limitations with respect to the matters addressed in such Section and
(iii) the representations and warranties contained in Section 3.16
(Environmental Matters), which shall survive the execution and delivery of this
Agreement and the Closing for sixty (60) months following the Closing Date.

SECTION 8.2             Indemnification and
Reimbursement by Seller. Except as otherwise provided in this Article VIII,
Seller shall indemnify and hold harmless Buyer and its successors and assigns
permitted pursuant to Section 10.1 (collectively, the “Buyer
Indemnified Persons”) from and against, and shall reimburse the Buyer
Indemnified Persons for, any and all out of pocket losses, out of pocket
expenses (including costs of investigation and defense and reasonable attorneys’
and accountants’ fees) or out of pocket damages, whether or not involving a
third-party claim, in all cases net of amounts taken into account in accordance
with Section 8.7 (collectively, “Damages”), incurred thereby or
caused thereto, directly or indirectly, based on, arising out of, resulting
from, relating to, or in connection with:

(a)           Any
breach of or inaccuracy in any representation or warranty made by Seller in
this Agreement, other than those in Section 3.9 (Taxes), Section 3.16
(Environmental Matters), Section 3.20 (Insurance Relating to El Dorado
Incidents) or those, if any, that have been waived in writing by Buyer or of
which Seller notified Buyer in writing prior to the Closing and in respect of
which Buyer provided written notice to Seller in accordance with Section 5.8
that such breach would cause, in the reasonable opinion of Buyer, the condition
set forth in Section 6.1(a) not to be satisfied; provided,
that a claim in writing in reasonable detail with respect thereto is made by
Buyer to Seller on or before the applicable termination date set forth in Section 8.1;

 29
 

 

(b)           Any
breach or violation of or failure to fully perform any covenant, agreement,
undertaking or obligation of Seller set forth in this Agreement, other than
those, if any, that have been waived in writing by Buyer; or

(c)           Any
breach of or inaccuracy in any representation or warranty made by Seller in Section 3.16
(Environmental Matters) of this Agreement, other than those, if any, that have
been waived in writing by Buyer or of which Seller notified Buyer in writing
prior to the Closing and in respect of which Buyer provided written notice to
Seller in accordance with Section 5.8 that such breach would cause, in the
reasonable opinion of Buyer, the condition set forth in Section 6.1(a) not
to be satisfied; provided, that a claim in writing in reasonable detail
with respect thereto is made by Buyer to Seller on or before the applicable
termination date set forth in Section 8.1. Notwithstanding the foregoing,
the parties agree that Seller shall not have any indemnification obligations
pursuant to this Section 8.2(c) with respect to any Damages based on,
arising out of, resulting from, relating to, or in connection with (i) facts
and circumstances in existence prior to July 25, 2001, in which case Buyer
acknowledges its sole remedy shall be the Company’s right to indemnification
set forth in Section 9.1(a) of the ENSCO Agreement and (ii) conditions
or activities at the HEAT Site, in which case Buyer acknowledges its sole
remedy shall be the Company’s right to any indemnity proceeds under the
indemnification provisions set forth in the HEAT Settlement Agreement. In the
event that the Company makes any payment pursuant to Article I, Section H.2
of the HEAT Settlement Agreement following the Closing Date in respect of a
Loss (as defined in the HEAT Settlement Agreement), and subject to compliance
by the Company with Section 8.5 and Section 8.6 hereof, Seller will
promptly reimburse the Company in an amount equal to such amount paid by the
Company; provided, that in no event shall Seller be required to reimburse
the Company for any amounts paid in respect of a Loss for which Seller or
Seller Parent have previously made a payment pursuant to Article I, Section H.2
of the HEAT Settlement Agreement. Notwithstanding the foregoing, Seller shall
have no obligation to reimburse the Company for any payment made in respect of
a Liability taken into account for purposes of calculating the Purchase Price.

(d)           Any
breach of or inaccuracy in any representation or warranty made by Seller in Section 3.20
(Insurance Relating to El Dorado Incidents) of this Agreement, other than
those, if any, that have been waived in writing by Buyer.

SECTION 8.3             Indemnification and
Reimbursement by Buyer . Except as otherwise provided in this Article VIII,
Buyer shall indemnify and hold harmless Seller and its successors and assigns
permitted pursuant to Section 10.1 (collectively, the “Seller
Indemnified Persons”) from and against, and shall reimburse the Seller
Indemnified Persons for, any and all Damages incurred thereby or caused
thereto, directly or indirectly, based on, arising out of, resulting from,
relating to, or in connection with:

(a)           any
breach of or inaccuracy in any representation or warranty made by Buyer in this
Agreement, other than those, if any, that have been waived in writing by Seller
or of which Buyer notified Seller in writing prior to the Closing; provided,
that a claim in writing in reasonable detail with respect thereto is made by
Seller to Buyer on or before the applicable termination date set forth in Section 8.1;

 30
 

 

(b)           any
breach or violation of or failure to fully perform any covenant, agreement,
undertaking or obligation of Buyer set forth in this Agreement, other than
those, if any, that have been waived in writing by Seller;

(c)           the
WARN Act resulting or arising from or otherwise relating to any act or omission
to act by or of Buyer, the Company or an Affiliate (after the Closing Date)
with regard to any site of employment or one or more facilities or operating
units within any site of employment of the Company;

(d)           any
claim made against Seller or its Affiliates by an employee of the Company
relating to the termination of such employee by Buyer, the Company or an
Affiliate after the Closing; or

(e)           the
operations of the Company, except to the extent such Damages are subject to
indemnification by Seller pursuant to Section 8.2.

SECTION 8.4             Limitations on
Indemnification Obligations.

(a)           Seller’s
aggregate liability for all Damages under
Section 8.2(a) and Section 8.2(c) shall be limited to an
amount not to exceed $8,000,000 (the “Cap”); provided that Seller’s
aggregate liability for all Damages in respect of any liability of Seller for
Taxes as set forth in Section 9.1(a) shall not be subject to this
limitation and shall not be taken into account in applying this provision.

(b)           With
respect to all Damages subject to indemnification pursuant to Section 8.2(a),
Section 8.2(c) or Section 9.1, Seller shall not be required to
indemnify the Buyer Indemnified Persons for any Damages (or series of related
Damages) of less than $25,000 (“De Minimis Loss”).

(c)           Any
Liability taken into account for purposes of calculating the Working Capital
Adjustment or for which reserves are included on the Interim Balance Sheet
shall not be subject to indemnification under this Article VIII up to the
respective amounts included in such calculation or such reserves.

(d)           In
no event shall Seller be liable to Buyer for
damages on account of loss of anticipated profits or any consequential
damages whatsoever from the transactions contemplated by this Agreement.

(e)           Notwithstanding
anything to the contrary contained herein (other than Section 8.4(b) and
Section 8.7), the indemnification obligations of the parties in respect of
Taxes are exclusively the subject of Article IX and are not the subject of
or otherwise covered by this Article VIII.

 31
 

 

SECTION 8.5         Notice and Payment of Claims.

(a)           Notice.
Subject to the provisions of Section 8.6 of this Agreement, the
Indemnified Party shall notify the Indemnifying Party as soon as reasonably
practicable, but in no event later than ten (10) days, after the
Indemnified Party becomes aware of, and shall provide to the Indemnifying Party
as soon as practicable thereafter all information and documentation necessary
to support and verify, any Damages that the Indemnified Party shall have
determined to have given rise to a claim for indemnification hereunder, and the
Indemnifying Party shall be given access to all books and records in the
possession or under the control of the Indemnified Party which the Indemnifying
Party reasonably determines to be related to such claim. Notwithstanding the
foregoing, the failure to so notify the Indemnifying Party shall not relieve
the Indemnifying Party of any Liability that it may have to the Indemnified
Party, except to the extent that the Indemnifying Party is prejudiced by the
Indemnified Party’s failure to give such notice.

(b)           Payment.
In the event an action for indemnification under this Article VIII shall
have been finally determined, such final determination shall be paid to Seller
or Buyer, as the case may be, on demand in immediately available funds in U.S.
dollars. An action, and the liability for and amount of Damages therefor, shall
be deemed to be “finally determined” for purposes of this Article VIII
when the parties to such action have so determined by mutual agreement or, if
disputed, when a final non-appealable Order shall have been entered.

SECTION 8.6             Procedure
for Indemnification - Third Party Claims.

(a)           If
any third party shall notify the Indemnified Party with respect to any matter
(a “Third Party Claim”) which may give rise to a claim for
indemnification against the Indemnifying Party under this Article VIII,
then the Indemnified Party shall promptly (and in any event within ten (10) days
after receiving notice of the Third Party Claim) notify an Indemnifying Party
thereof in writing. Notwithstanding the foregoing, the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of any Liability
that it may have to the Indemnified Party, except to the extent that the
Indemnifying Party is prejudiced by the Indemnified Party’s failure to give
such notice.

(b)           Any
Indemnifying Party will have the right at any time to assume and thereafter
conduct the defense of the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party; provided, however,
that the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves only the
payment of money damages and does not impose an injunction or other equitable
relief upon the Indemnified Party.

(c)           Unless
and until an Indemnifying Party assumes the defense of the Third Party Claim as
provided in Section 8.6(b) above, however, the Indemnified Party may
defend against the Third Party Claim in any manner it reasonably may deem
appropriate.

(d)           In
no event will the Indemnified Party consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party.

 32

 

SECTION 8.7         Mitigation of Damages.

(a)           If
any event shall occur which would otherwise entitle an Indemnified Party to
assert a claim for indemnification hereunder, no Damages shall be deemed to
have been sustained by such Indemnified Party to the extent of any:

(i)            net proceeds received by such
Indemnified Party from any insurance policy of the Company in effect at any
time prior to the Closing (less the costs of recovering such proceeds,
retrospective premium adjustments, experience-based premium adjustments or
other forms of self-insurance), with respect thereto,  from which policies the parties hereto shall
make claims for recovery; or

(ii)           any offsetting Tax benefits
received or to be received by the Indemnified Party.

(b)           An
Indemnified Party shall pay over to the Indemnifying Party, immediately upon
receipt thereof, (i) all insurance recoveries received by the Indemnified
Party in respect of, and (ii) all other amounts recovered by the
Indemnified Party in reduction, refund or rebate of, or credit for, in each
case, any Liability in respect of which the Indemnifying Party has made a
payment to the Indemnified Party pursuant to this Article VIII.

SECTION 8.8             Exclusive Remedy. The
parties hereto acknowledge and agree that, subject to the provisions of Sections
10.6 and 10.8(e) of this Agreement, the foregoing indemnification
provisions in this Article VIII shall be the exclusive remedy of the
parties with respect to the transactions contemplated by this Agreement (other
than as otherwise expressly provided herein). Each party hereto hereby waives,
to the extent that it may do so, any other rights or remedies that may arise at
law or in equity, including under any applicable statute, rule or
regulation.

ARTICLE IX

TAX MATTERS

SECTION 9.1             Liability for Taxes and
Related Matters.

(a)           Seller
Liability for Taxes. Except to the extent treated as a liability in the
calculation of the Working Capital Adjustment, Seller shall be liable for and
indemnify Buyer for all Taxes imposed on or due from the Company (i) for
any taxable year or period that ends on or before the Closing Date (a “Pre-Closing
Period”), and (ii) with respect to any taxable year or period
beginning before and ending after the Closing Date (a “Straddle Period”),
the portion of such taxable year ending on and including the Closing Date.
Except to the extent treated as an asset in the calculation of the Working
Capital Adjustment, Seller shall be entitled to any refund of Taxes of the
Company received for such periods.

(b)           Buyer
Liability for Taxes. Buyer shall be liable for and indemnify Seller for all
Taxes imposed on or due from the Company for any taxable year or period that
begins after 

 33
 

 

the Closing Date (a “Post-Closing Period”) and,
with respect to any Straddle Period, the portion of such taxable year beginning
after the Closing Date.

(c)           Taxes
for Straddle Periods. To the extent permitted by law or administrative
practice in each relevant jurisdiction, the taxable year of the Company shall
be closed at the close of business on the Closing Date. To the extent that the
taxable year of the Company is not closed pursuant to the previous sentence and
it is therefore necessary to determine the liability for Taxes for a Straddle
Period, the determination of the Taxes for the portion of the year or period ending
on, and the portion of the year or period beginning after, the Closing Date
shall be determined by assuming that the Company had a taxable year or period
which ended at the close of business on the Closing Date, except that
exemptions, allowances or deductions that are calculated on an annual basis
(other than net operating losses and tax credits carried forward from years
ending prior to the Closing Date), shall be prorated on the basis of the number
of days in the annual period elapsed through the Closing Date as compared to
the number of days in the annual period elapsing after the Closing Date. Net
operating losses and tax credits carried forward from year ending prior to the
Closing shall be allocated first, to the extent that they can be utilized, to
the taxable year or period ending on the Closing Date.

(d)           Adjustment
to Purchase Price. Any payment by Buyer, on the one hand, or Seller, on the
other hand, under this Section 9.1, pursuant to Article VIII or
pursuant to Section 1.3 will be treated as an adjustment to the Purchase
Price for all Tax purposes.

(e)           Tax
Returns. Seller shall file, or cause to be filed, when due all Tax Returns
that are required to be filed by or for the Company for taxable years or
periods ending on or before the Closing Date, and Buyer shall file, or cause to
be filed, when due all Tax Returns that are required to be filed by or for the
Company for taxable years or periods ending after the Closing Date. If Seller
could be liable for any Taxes with respect to any Tax Return filed by Buyer,
Buyer shall (i) cause such Tax Return to be prepared on a basis which is
consistent with the Company’s Tax Returns previously filed and in accordance
with past practices, (ii) deliver a copy of such Tax Return along with
accompanying work papers to Seller not less than thirty (30) days prior to the
due date (as extended, if applicable) for the filing of such Tax Return (the “Due
Date”), (iii) if, at any time prior to the Due Date, Seller notifies
Buyer that Seller objects to any item reflected on such Tax Return which item
may affect Seller’s liability for Taxes, 
Buyer shall, prior to the Due Date, make any and all changes to such
item or items  requested by the Seller
and Buyer shall not file any such Tax Return until it has made such changes and
received Seller’s agreement thereto. If Buyer has fully complied with this
Section 9.1(e) with respect to a Tax Return to be filed by Buyer,
Seller shall pay Buyer the Taxes for which Seller is liable pursuant to
Section 9.1(a) but which are payable with such Tax Return within five
(5) days (x) prior to the Due Date for the filing of such Tax Returns
or (y) after the date that Buyer has provided Seller with the revised Tax
Return referred to in clause (iii) of the previous sentence, whichever is
later. If Buyer fails to satisfy any of its obligations pursuant to this
Section 9.1(e) with respect to any Tax Return, Seller shall, in
addition to any other remedies available to Seller, have no obligation to
indemnify Buyer for any Taxes reflected on such Tax Return.

 34
 

 

(f)            Contest
Provisions. Buyer shall promptly notify Seller and provide a copy of such
notification to the Tax Director of Seller Parent in writing upon receipt by
Buyer, any of its Affiliates or the Company of notice of any pending, proposed,
threatened or actual Tax audit or Tax deficiency, assessment or other claim
which may affect the Taxes for any Pre-Closing Period or any Straddle Period
for which Seller would be liable pursuant to Section 9.1(a). Seller shall
promptly notify Buyer in writing upon receipt by Seller or any of its
Affiliates of notice of any pending, proposed, threatened or actual Tax audit
or Tax deficiency, assessment or other claim which may affect the Taxes for any
Straddle Period for which Buyer would be liable pursuant to
Section 9.1(b). Seller shall have the sole right to control the defense in
any Tax audit or administrative or court proceeding (a “Tax Contest”)
relating to any Pre-Closing Period of the Company and to employ counsel and
other advisors of its choice at its expense.

In the event of any Tax
Contest relating to a Straddle Period of the Company, (i) to the extent
the issues can be separated into those for which Seller would be liable under
Section 9.1(a) and those for which Buyer would be liable under Section 9.1(b),
then each of Seller and Buyer shall control the defense of those issues for
which it would be liable, employing counsel and other advisors of its own
choice, at its expense, (ii) with respect to all other issues, Buyer shall
be entitled to control the defense employing counsel and other advisors of its
choice at its expense, provided that Seller (along with counsel and other
advisors of its choice) shall be entitled to participate in the defense of and
to take over such defense if Buyer is not prosecuting the defense diligently,
vigorously and professionally. Neither Buyer nor the Company may agree to
settle any Tax claim which may affect the Taxes for which Seller would be
liable under Section 9.1(a) without the prior written consent of
Seller, which consent shall not be unreasonably withheld.

SECTION 9.2             Transfer Taxes. Any
transfer taxes arising from the sale of the Membership Interests shall be borne
by Buyer.

SECTION 9.3             Allocation of Purchase
Price. Buyer and Seller acknowledge that for U.S. Federal income tax
purpose and certain state income tax purposes, the purchase of the Company will
be treated as the purchase of assets and the assumption of liabilities by the
Buyer. Buyer and Seller agree to determine the total amount of the consideration
for such purchase (which shall include the Purchase Price, all adjustments
thereto and the amount of the liabilities of the Company treated as assumed by
the Buyer for Tax purposes) and to allocate such consideration among the assets
of the Company for all Tax purposes in accordance with the rules under
Section 1060 of the Code. Prior to Closing, Seller will prepare and
provider to Buyer a preliminary allocation schedule setting forth the estimated
amount of the consideration and its allocation, and such schedule shall be
finalized and agreed to after the Purchase Price is determined.  Seller and Buyer agree to file IRS Forms 8594
reporting such determination and allocation and to follow such determination
and allocation for all Tax reporting purposes. If the total consideration is
adjusted after the final allocation schedule has been prepared and agreed to,
Seller will prepare and provide to Buyer a revised allocation schedule and
Buyer and Seller will file amended IRS Forms 8594 reflecting the revised allocation
schedule.

 35
 

 

SECTION 9.4             No Tax Withholding.
Provided that Seller has delivered the certificate described in
Section 6.3(a)(vi), Buyer shall not withhold any amount in respect of
Taxes from the Purchase Price.

ARTICLE X

MISCELLANEOUS

SECTION 10.1           Assignments; Successors; No
Third Party Rights. No party may assign any of its rights under this
Agreement without the prior written consent of the other party hereto (which
may not be unreasonably withheld or delayed), and any purported such assignment
without such consent shall be void. Subject to the foregoing, this Agreement
and all of the provisions hereof shall apply to, be binding upon, and inure to
the benefit of the parties hereto and their successors and permitted assigns
and the parties indemnified pursuant to Article VIII. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
the parties hereto any rights or remedies of any nature whatsoever under or by
reason of this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and permitted assigns.

SECTION 10.2           Entire Agreement. This
Agreement, including the Disclosure Schedule and exhibits hereto and the other
agreements and written understandings referred to herein or otherwise entered
into by the parties hereto on the date hereof, constitutes the entire agreement
and understanding and supersedes all other prior covenants, agreements,
undertakings, obligations, promises, arrangements, communications,
representations and warranties, whether oral or written, by any party hereto or
by any director, manager, officer, employee, agent, Related Person or
Representative of any party hereto. There are no covenants, agreements,
undertakings or obligations with respect to the subject matter of this
Agreement other than those expressly set forth or referred to herein and no
representations or warranties of any kind or nature whatsoever, express or
implied, including any implied warranties of merchantability or fitness for a
particular purpose, are made or shall be deemed to be made herein by the
parties hereto except those expressly made herein.

SECTION 10.3           Amendment or Modification.
This Agreement may be amended or modified only by written instrument signed by
all of the parties hereto.

SECTION 10.4           Notices. All notices,
requests, instructions, claims, demands, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given on the date delivered by hand or by courier
service (such as Federal Express), or by other messenger (or, if delivery is
refused, upon presentment), or upon receipt by facsimile transmission, or upon
delivery by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses:

 36
 

 

(a)   If to Buyer:

Clean
Harbors, Inc.

1501
Washington Street

Braintree,
MA 02185

Telephone: 781-849-1800

Facsimile: 781-848-1632

Attention: Chief Financial Officer

With a copy to:

Davis,
Malm & D’Agostine, P.C.

One
Boston Place, 37th Floor

Boston,
MA 02108

Telephone: 617-589-3803

Facsimile: 617-305-3103

Attention: C. Michael Malm

(b)                                 If
to Seller:

SITA
U.S.A., Inc.

c/o
Suez Environnement, S.A.

1,
Rue d’Astorg

75383
Paris Cedex 08 France

Telephone: +33 (0) 1-58-185000

Facsimile: +33 (0) 1-58-184863

Attention: Directeur Juridique

With a copy to:

Suez
Environnement, S.A.

1,
Rue d’Astorg

75383
Paris Cedex 08 France

Telephone: +33 (0) 1-58-185000

Facsimile: +33 (0) 1-58-184863

Attention:
Directeur Juridique

And a copy to:

Sullivan &
Cromwell LLP

125 Broad Street

New York, New York 10004

Telephone: (212) 558-4000

Facsimile: (212) 558-3588

Attention: Richard A. Pollack

 37
 

 

or to such other persons or addresses as the person to
whom notice is given may have previously furnished to the other in writing in
the manner set forth above (provided that notice of any change of address shall
be effective only upon receipt thereof).

SECTION 10.5           GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN,
AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.

SECTION 10.6               Arbitration.

(a)           Except
as set forth in Section 10.6(b), any controversy or claim arising out of
or relating to this Agreement or the breach thereof shall be settled by
arbitration administered by the American Arbitration Association (the “AAA”)
in accordance with its Commercial Arbitration Rules, and Title 9 of the U.S.
Code. Judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. The number of arbitrators shall be one (1),
and such arbitrator shall be selected by mutual agreement of the parties, if
possible, and thereafter by the administering authority, and the place of
arbitration shall be New York, New York. The arbitrator may award the costs of
the arbitration to the prevailing party and should in so doing consider the
extent (in percentage terms, if possible) to which each party has prevailed on
its claims or counterclaims. The arbitrator will have no authority to award
punitive damages or any other damages not measured by the prevailing party’s
actual damages, and may not, in any event, make any ruling, finding or award
that does not conform to the terms and conditions of the Agreement. Either
party may make an application to the arbitrator seeking injunctive relief to
maintain the status quo until such time as the arbitration award is rendered or
the controversy is otherwise resolved. Either party may apply to any court
having jurisdiction hereof and seek injunctive relief in order to maintain the
status quo until such time as the arbitration award is rendered or the
controversy is otherwise resolved.

(b)           The
provisions of Section 10.6(a) shall not apply to the matters
described in Section 1.3 of this Agreement, which shall be resolved as
described therein.

SECTION 10.7           Severability. In case
any one or more of the provisions contained herein shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such provision or
provisions shall be ineffective only to the extent of such invalidity,
illegality or unenforceability, without invalidating the remainder of such
provision or provisions or the remaining provisions of this Agreement, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein, unless such a
construction would be unreasonable.

SECTION 10.8           Confidentiality.

(a)           Following
the Closing, Seller shall treat as confidential and shall safeguard and not use
to the detriment of Buyer or its Affiliates any and all information, knowledge
and data of the Company by using the same degree of care, but no less than a
reasonable standard of care, to 

 38
 

 

prevent the unauthorized use, dissemination or
disclosure of such information, knowledge and data as Seller used with respect
thereto prior to the execution of this Agreement.

(b)           Buyer shall treat as confidential and shall
safeguard and not use to the detriment of Seller or its Affiliates any
information relating to the business of Seller and its Affiliates; provided,
however, that nothing in this Section 10.8(b) shall prevent
the disclosure of any such information, knowledge or data to any directors,
officers or employees of Buyer to whom such disclosure is necessary or
desirable in the conduct of the business of the Company following the Closing
if such Persons are informed by Buyer of the confidential nature of such
information and are directed by Buyer to comply with the provisions of this Section 10.8(b).
Buyer acknowledges that its failure to
maintain as confidential any and all information of Seller and its Affiliates,
in accordance with this Section 10.8(b), could cause Seller and its
Affiliates irreparable harm and, thus, it agrees to use its best efforts to
maintain as confidential and safeguard such information.

(c)           The parties hereto acknowledge that the
confidentiality obligations set forth herein shall not extend to information,
knowledge and data that (i) is or becomes generally available to the
public other than as a result of disclosure of a party in breach of this Section 10.8,
(ii) is required to be disclosed by a court or Governmental Entity of
competent jurisdiction, (iii) was or becomes available to a party hereto
on a non-confidential basis from a source (other than the party owing a duty of
confidentiality under this Section 10.8) or (iv) is necessary or
appropriate to be disclosed in making a filing required by Law or for obtaining
any consent or approval required for the consummation of the transactions
contemplated herein.

(d)           If
the transactions contemplated by this Agreement are not consummated for any
reason, the parties hereto shall promptly return to each other all books,
records and any other information (whether written or in electronic form)
furnished by a party, its Affiliates or Representatives (including all copies,
if any, thereof).

(e)           In
the event of a breach of the obligations hereunder by Buyer or Seller, the
aggrieved party, in addition to all other available remedies, will be entitled
to injunctive relief to enforce the provisions of this Section 10.8 in any
court of competent jurisdiction.

SECTION 10.9              Actions of the Company. Whenever this
Agreement requires the Company to take any action, such requirement shall be
deemed to involve, with respect to actions to be taken at or prior to the
Closing, an undertaking on the part of Seller to cause the Company to take such
action and, with respect to actions to be taken after the Closing, an
undertaking on the part of Buyer to cause the Company to take such action.

SECTION 10.10            Descriptive Headings; Construction. The
descriptive headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning, construction or
interpretation of, this Agreement. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender
include all genders, (c) “or” has the inclusive 

 39
 

 

meaning frequently identified with the phrase “and/or,”
(d) “including” has the inclusive meaning frequently identified with the
phrase “including, but not limited to,” and (e) references to “hereunder”
or “herein” relate to this Agreement.

SECTION 10.11            Counterparts. For the convenience of
the parties hereto, this Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.

SECTION 10.12            Knowledge. When references are made
in this Agreement to information being “to the knowledge of Seller” or similar
language, such knowledge shall refer to the knowledge of the officers set forth
in Schedule 10.12 of the Disclosure Schedule. Such individuals shall be
deemed to have “knowledge” of a particular fact or other matter if such
individual is actually aware of such fact or other matter (and shall not
include any deemed or constructive knowledge or awareness).

SECTION 10.13            Schedules. The disclosure of any
matter in any schedule to the Disclosure Schedule shall be deemed to be a
disclosure for all other schedules of the Disclosure Schedule in respect of
which it is evident such matter relates, but shall expressly not be deemed to
constitute an admission by Seller or Buyer or to otherwise imply that any such
matter is material for the purposes of this Agreement.

SECTION 10.14            Definitions. For the purposes of this
Agreement:

“AAA” has the meaning set forth in Section 10.6(a) herein.

“Accounting Expert” has the meaning set forth in Section 1.3(d) herein.

“Accounts Receivable” has the meaning set forth in Section 3.6(c) herein.

“Acquired Employee” means
any active employee of the Company on the Closing Date, plus any employee of
the Company who is on leave of absence, paid or unpaid, or who is otherwise
absent from active employment for any other reason and whose employer-employee
relationship with the Company has not been terminated by the Company prior to
the Closing Date.

“Action” means a civil, criminal or administrative action, suit, demand, claim, hearing,
proceeding (including without limitation any dispute resolution proceeding) or
investigation.

“Adjustment Amount” has the meaning set forth
in Section 1.3(c) herein.

“Affiliate” means, with respect to any
specified Person, a Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, such specified Person, including, without
limitation, each Subsidiary of such specified Person. For the purposes of this
definition, “control”, when used with respect to any specified Person, means
the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through ownership of voting
securities or by contract, credit arrangement or

 40
 

 

otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.

“Agreement” has the meaning set forth in the
preamble hereto.

“Balance Sheet” has the meaning set forth in Section 3.6(a) herein.

“Bankruptcy Exception” has the meaning set forth
in Section 3.3 herein.

“Business Day” means any day other than a
Saturday, Sunday or a day on which banks are required or authorized to be
closed in the City of New York.

“Buyer” has the meaning set forth in the
preamble hereto.

“Buyer’s Advisors” has the meaning set forth in
Section 5.2(a) herein.

“Buyer Indemnified Persons” has the meaning set forth in Section 8.2
herein.

“Cap” has the meaning set forth in Section 8.4(a) herein.

“Closing” has the meaning set forth in Section 2.1 herein.

“Closing Date” has
the meaning set forth in Section 2.1 herein.

“Closing Payment”
has the meaning set forth in Exhibit 1.2 hereto.

“Code” means the
Internal Revenue Code of 1986, as amended, and the regulations thereunder.

“Company” has the meaning set forth in the recitals herein.

“Company’s Organizational Documents” has the
meaning set forth in Section 3.1(b) herein.

“Competing Business” has the meaning set forth
in Section 5.9(a) herein.

“Contract” means an agreement, license, lease,
sublease, insurance policy, understanding, contract, license, instrument of
indebtedness, mortgage, indenture, promise, undertaking or other commitment or
obligation.

“Damages” has the meaning set forth in Section 8.2
herein.

“De Minimis Loss” has the meaning set forth in Section 8.4(b) herein.

“Dollars”
and the sign “$” each mean the lawful money of the United States of
America.

“Due Date”
has the meaning set forth in Section 9.1(e) herein.

 41
 

 

“El Dorado
Incidents” means the fires at the Company’s El Dorado facility on January 2,
2005 and July 2, 2005.

“ENSCO
Agreement” means the Asset Purchase Agreement, by and among the Company,
Environmental Systems Company, ENSCO, Inc., MSE Environmental, Inc.
and ENSCO West, Inc., dated as of June 27, 2001, as amended by the
Settlement and Release Agreement and Amendment No. 1 to the Asset Purchase
Agreement, dated October 30, 2003.

“Environmental
Law” means any and all federal, state or local law, the common law, or
judicial or administrative decision, regulation or order, regulating,
pertaining to or imposing liability, penalties or fines for: (i) releases
or threatened releases of Hazardous Substances or materials containing
Hazardous Substances; (ii) the manufacture, recycling, sale, handling,
transport, use, reuse, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; (iii) pollution of the
environment or the protection of human health, safety or welfare from exposure
to any Hazardous Substance; or (iv) the protection of the environment,
wildlife, marine sanctuaries and wetlands, including but not limited to all
endangered and threatened species. Environmental Laws shall include, without
limitation, the federal Comprehensive Environmental Response, Compensation and
Liability Act; the Solid Waste Disposal Act; the Toxic Substances Control Act;
the Atomic Energy Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Clean Water Act; the Clean Air Act; the Oil Pollution Act of 1990; the
Emergency Planning and Community Right to Know Act; the National Environmental
Policy Act; the Endangered Species Act; and the Safe Drinking Water Act, in
each case, as amended.

“ERISA” has the meaning set forth in Section 3.10(a) herein.

“ERISA Affiliate” means any entity required to
be treated as a single employer with Seller under Section 414 of the Code
or Section 4001 of ERISA, other than the Company.

“Finally determined” has the meaning set forth in Section 8.5(b) herein.

“Financial Assurances” has the meaning set forth in Section 3.19
herein.

“Financial Debt” has the meaning set forth in Exhibit 1.2
hereto.

“Financial Statements” has the meaning set
forth in Section 3.6(a) herein.

“GAAP” means generally accepted accounting
principles in the United States of America as in effect immediately prior to
the Closing.

“Governmental Entity” means any federal, state,
local, municipal, county or other governmental, quasi-governmental, judicial,
legislative, administrative or regulatory authority, body, agency, court,
tribunal, commission or other similar entity (including any branch, department
or official thereof).

 42
 

 

“Hazardous Substance” means (i) those
materials, pollutants and/or substances defined as such in the following
federal statutes and their state counterparts, as each may be amended from time
to time, and all regulations thereunder: 
the Hazardous Materials Transportation Act, the Solid Waste Disposal
Act, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water Act,
the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide and Rodenticide Act and the Clean Air Act; (ii) petroleum and
petroleum products including crude oil and any fractions thereof; (iii) natural
gas, synthetic gas and any mixtures thereof; and (iv) radon.

“HEAT Settlement Agreement” means HEAT Site,
Sales and Marketing, and Procurement Settlement Agreement, among Seller Parent,
Seller, the Company, Rhodia, Inc., Rhodia S.A. and HEAT Treatment Services
Inc., dated December 13, 2004.

“HEAT Site” means the real property formerly
owned by the Company located at 4460 Singleton Boulevard, Dallas, Texas, 75212.

“IFRS” means International Financial Reporting
Standards as in effect immediately prior to the Closing.

“Indemnified Party” has the meaning set forth
in Section 8.1 herein.

“Indemnifying Party” has the meaning set forth
in Section 8.1 herein.

“Interim Balance Sheet” has the meaning set
forth in Section 3.6(a) herein.

“IP Rights” has the meaning set forth in Section 3.17(a) herein.

“IRS” means the United States Internal Revenue Service.

“Knowledge” has the meaning set forth in Section 10.12
herein.

“Law” means any federal, state, foreign or
local law, statute, ordinance, rule, regulation, Order, judgment, award,
declaration, decision or decree by any Governmental Entity.

“Leased Real Property” has the meaning set
forth in Section 3.13(c) herein.

“Liability” means any debt, liability,
commitment or obligation of any kind, character or nature whatsoever, whether
known or unknown, choate or inchoate, secured or unsecured, accrued, fixed,
absolute, contingent or otherwise, and whether due or to become due.

“LIBOR” means (i) an one-month London
interbank offered rate shown on page 3750 of Telerate or any successor page as
the composite offered rate for London interbank dollar deposits as shown under
the heading “USD,” as of 11:00 a.m. London time on the second Business Day
preceding the Closing Date; (ii) if the rate specified in clause (i) of
this definition does not appear, an interest rate per annum
based on the rates at which dollar deposits for such specified period are
displayed on page ”LIBO” of the Reuters Monitor Money Rates Service or
such other page as may 

 43
 

 

replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks as of 11:00 a.m.
London time on the second Business Day preceding the Closing Date, it being
understood that if two or more rates appear on such page, LIBOR will be the
arithmetic average of such displayed rates and if fewer than two such rates are
displayed, this clause (ii) of this definition shall not be
applicable; and (iii) if the rate specified in clause (i) does
not appear and if clause (ii) of this definition is not applicable,
an interest rate per annum equal to the average of
the rates per annum at which dollar deposits for
such specified period in immediately available funds for delivery two (2) Business
Days thereafter are offered by four leading banks in the London interbank
dollar market selected by Seller at approximately 11:00 a.m. London time
on such day.

“Liens” means any charges, claims, community
property interests, conditions, conditional sale or other title retention
agreements, covenants, easements, encumbrances, equitable interests,
exceptions, liens, mortgages, options, pledges, reservations, rights of first
refusal, building use restrictions, rights of way, security interests,
servitudes, statutory liens, variances, warrants, or restrictions of any kind,
including any restrictions on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.

“Material Adverse
Effect” on a Person means a material adverse effect on the financial
condition, properties, business, operations, assets, results of operations or
prospects of the Person and its Subsidiaries, taken as a whole; provided,
however, that a Material Adverse Effect shall not include an effect
resulting from any change (i) in Law (with respect to the Company, other
than any change in Law that has a materially disproportionate effect on the
operations of the Company’s El Dorado facility as compared to the industry as a
whole) or GAAP or interpretations thereof that apply to the Person, (ii) that
is the result of factors generally affecting the industries in which the Person
or its operations participates, (iii) in local, regional, national or
international conditions affecting the business of such Person generally, (iv) in
the United States economy or financial markets generally, (v) that is the
result of an unplanned shutdown or extended outage of the Company’s El Dorado
facility that has been remedied prior to Closing or (vi) that is the
result of the public announcement of the transactions contemplated hereunder.

“Membership Interests”
has the meaning set forth in the recitals herein.

“Order” means any
award, decision, injunction, judgment, decree, settlement, order, process,
ruling or verdict entered, issued, made or rendered by any court,
administrative agency, arbitrator, other Governmental Entity or other tribunal
of competent jurisdiction.

“Ordinary Course of
Business” means, with respect to any Person, the ordinary and usual course
of business of such Person, in a manner consistent with such Person’s past
practice.

“Outside Date” has the meaning set forth in Section 7.1(b) herein.

“Owned Real Property” has the meaning set forth in Section 3.13(b) herein.

“Permitted Liens” has the meaning set forth in Section 3.13(a) herein.

 44
 

 

“Person” means any individual, firm, corporation, general or
limited partnership, limited liability company, Governmental Entity, joint
venture, estate, trust, association, organization or other entity of any kind
or nature.

“Post-Closing Period”
has the meaning set forth in Section 9.1(b) herein.

“Pre-Closing Period”
has the meaning set forth in Section 9.1(a) herein.

“Purchase Price”
has the meaning set forth in Exhibit 1.2 hereto.

“Purchase Price
Adjustment Items” has the meaning set forth in Exhibit 1.2 hereto.

“Real Property Leases” has the meaning set forth in Section 3.13(c) herein.

“Related Person”
means, with respect to a Person, any Affiliate of such Person, and any officer,
director, manager, partner, stockholder, member, employee, agent or
representative of such Person or of any such Person’s Affiliates.

“Representatives” means, with respect to a
Person, the officers, directors, managers, employees, agents, consultants,
advisors or other representative of such Person, including legal counsel,
accountants and financial advisors.

“Retained Employees” has the
meaning set forth in Section 5.9(b) herein.

“Review Period” has
the meaning set forth in Section 1.3(b) herein.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Exchange Act” means the Securities Exchange Act of
1934, as amended.

“Seller” has the meaning set forth in the preamble hereto.

“Seller Benefit Plans” has the meaning set forth in Section 3.10(a) herein.

“Seller Group” means any “affiliated group” (as
defined in Section 1504(a) of the Code without regard to the
limitations contained in Section 1504(b) of the Code) that includes
Seller or any predecessor of or successor to Seller (or another such
predecessor or successor).

“Seller Indemnified Persons” has the meaning
set forth in Section 8.3 herein.

“Seller Parent” means Suez Environnement, S.A.

“Seller Parent Financial Statements” has the
meaning set forth in Section 3.6(a) herein.

“Seller Parent Guarantee” has the meaning set
forth in Section 6.1(f) herein.

 45
 

 

“Service Date” means, with respect to an
employee of the Company, the earlier of (i) the date such employee commenced
employment at the Company or (ii) the date on which such employee is
deemed to have commenced employment at the Company for purposes of the Seller
Benefit Plans by reason of credit for employment by a prior employer.

“Statement of Objections” has the meaning set forth in Section 1.3(c) herein.

“Straddle Period” has the meaning set forth in Section 9.1(a) herein.

“Subject Company” has the meaning set forth in Section 5.9(a) herein.

“Subsidiary” means with respect to any Person,
any corporation or other entity of which such Person has, directly or
indirectly, ownership of securities or other interests having the power to
elect a majority of such corporation’s board of directors (or similar governing
body), or otherwise having the power to direct the business and policies of
that corporation other than securities or interests having such power only upon
the happening of a contingency that has not occurred.

“Tax” or “Taxes” shall mean all federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, employment,
withholding or similar taxes imposed on the income, properties or operations of
the Company or the Seller Group, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties.

“Tax Contest” has the meaning set forth in Section 9.1(f) herein.

“Tax Returns” means any return, report, notice,
form, declaration, claim for refund, estimate, election, or information
statement or other document relating to any Tax, including any schedule or
attachment thereto, and any amendment thereof.

“Third Party Claim” has the meaning set forth in Section 8.6(a) herein.

“Ultimate Parent” means Suez, S.A.

“Unaudited June 30 Financial Statements” has the meaning
set forth in Section 3.6(a) herein.

“WARN Act” has the meaning set forth in Section 3.7(d) herein.

 46
 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers duly authorized as of the date
first written above.

	
  

  	
   

  	
  SITA U.S.A., INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ERIC GERNATH

  
	
   

  	
   

  	
  Name: Eric Gernath

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CLEAN HARBORS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ALAN S. McKIM

  
	
   

  	
   

  	
  Name: Alan S. McKim

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  

 

 47
 

 

EXHIBIT
1.2

The Purchase Price
shall be calculated in accordance with the table and defined terms as set forth
below:

	
   

  	
   

  	
  Amount

  	
   

  	
   

  
	
  Beginning with

  	
   

  	
  $52,700,000(1)

  	
   

  	
  (the Closing Payment),

  
	
  then plus (if positive) or minus (if negative)

  	
   

  	
  $

  	
   

  	
  (the CapEx Adjustment),

  
	
  then plus (if positive) or minus (if negative)

  	
   

  	
  $

  	
   

  	
  (the Working Capital Adjustment),

  
	
  then plus

  	
   

  	
  $

  	
   

  	
  (the Cash Balance at Closing),

  
	
  equals

  	
   

  	
  $

  	
   

  	
  (the “Purchase Price”), subject to the Purchase
  Price Cap.

  

(1)             Reflects
a reduction in respect of anticipated severance expenses, which are for Buyer’s
account.

where:

“Closing Payment” means
$52,700,000. For the avoidance of doubt, the Closing Payment shall be
determined without taking into account the Financial Debt;

“Financial Debt” means
the aggregate principal amount outstanding of the (i) Tax-Exempt
Adjustable Mode Environmental Facilities Revenue Bonds (Ensco, Inc.
Project) Series 2000, (ii) Tax-Exempt Adjustable Mode Environmental
Facilities Revenue Bonds (Ensco, Inc. Project) Series 2001, and
(iii) Tax-Exempt Variable Rate Demand/Fixed Rate Environmental Facilities
Revenue Bonds (Teris L.L.C. Project) Series 2000, each of which was issued
by the Arkansas Development Finance Authority;

“CapEx Adjustment” means
the difference between (a) the aggregate amount of capital expenditures
that were included in the “2006 Budget Month by month.xls” file (attached as
Annex 1 hereto) and actually made by the Company during the period beginning on
January 1, 2006 and ending on the Closing Date and (b) the aggregate
amount of capital expenditures that were anticipated to have been made by the
Company during such period, according to the “2006 Budget Month by month.xls”
file (with proration as required to the extent that the Closing Date occurs
between measurement dates therein);

 48
 

 

“Working Capital
Adjustment” means the difference between (a) Working Capital as of Closing
and (b) Working Capital as of March 31, 2006, which is calculated
(utilizing the defined terms below) as follows:

Current Assets

	
  Trade Accounts Receivables,
  net

  	
   

  	
  22,627,000

  	
   

  
	
  Other Accounts
  Receivable

  	
   

  	
  4,235,000

  	
   

  
	
  Parts
  Inventories

  	
   

  	
  5,908,000

  	
   

  
	
  Prepaids and
  Other Current Assets

  	
   

  	
  2,278,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
  35,048,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LESS: Affiliate
  Receivables

  	
   

  	
  (2,179,000

  	
  )

  
	
  Receivables for Expected Insurance Reimbursement

  	
   

  	
  (1,980,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Current Assets

  	
   

  	
  30,889,000

  	
   

  

 

Current
Liabilities

	
  Accounts Payable

  	
   

  	
  11,067,000

  	
   

  
	
  Accrued
  Liabilities

  	
   

  	
  6,218,000

  	
   

  
	
  Accrued Disposal
  Costs

  	
   

  	
  3,485,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
  20,770,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LESS: Partial
  Reversal of Reserves

  	
   

  	
  (200,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Current Liabilities

  	
   

  	
  20,570,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WORKING CAPITAL AS OF
  MARCH 31, 2006

  	
   

  	
  10,319,000

  	
   

  

 

“Working Capital” means
the difference between:

(a) “Current Assets”, which for purposes of this Agreement is the
sum of (i) trade accounts receivables, net, (ii) other accounts
receivables, (iii) parts inventories and (iv) prepaid and other
current assets, less (x) receivables for expected insurance reimbursement
(which, as of March 31, 2006, was in the amount of $1,980,000)(2) and
(y) receivables, if any, from any Affiliate of the Company, but
(z) does not include cash; and

(2)           To the extent such
expected insurance reimbursement (or recoveries for deductibles or other
uninsured loss related thereto) is not received by the Company prior to
Closing, Seller shall have the option to cause the assignment by the Company of
such claims to Seller or any of its Affiliates. 
If Seller does not elect to cause such assignment, or if such assignment
is determined to be illegal or impermissible, then Buyer shall use its
reasonable best efforts to cause the Company to pursue such claims and to
promptly pay over any recoveries received following the Closing to Seller.  See Section 5.18.

 49
 

 

(b) “Current Liabilities”, which for purposes of this Agreement is
the sum of (i) accounts payables, (ii) accrued liabilities (including
interest on the Financial Debt and any benefits accrued by Acquired Employees
under the Company’s vacation policy and sick leave program) and
(iii) accrued disposal cost (as calculated based upon a physical inventory
conducted by Buyer as of the Closing Date, and using the same methodology
employed by the Company in preparing the Balance Sheet), less
(x) $200,000 (representing a partial reversal of reserves), but does not
include (y) the Company’s obligations in respect of the Financial Debt;

“Cash Balance at Closing”
means the amount of cash in the Company’s cash account as of Closing; and

“Purchase Price Adjustment
Items” means, collectively, the CapEx Adjustment, the Working Capital
Adjustment and the Cash Balance at Closing.

“Purchase Price Cap”
means $56,000,000. For the avoidance of doubt, in no event shall the Purchase
Price (as adjusted by all Purchase Price Adjustment Items) exceed $56,000,000.

 50

 

ANNEX
6.1(f)

GUARANTEE

GUARANTEE dated as of ______________, 2006 by Suez Environnement,
S.A., a société anonyme incorporated under
the laws of France (the “Guarantor”),
in favor of Clean Harbors, Inc., a Massachusetts
corporation (the “Guaranteed Party”).

Section 1. Guarantee. The Guarantor absolutely,
unconditionally and irrevocably guarantees to the Guaranteed Party the prompt payment when due, subject to any
applicable grace period, of all present and future payment obligations (the “Obligations”)
of SITA U.S.A., Inc. (the “Obligor”) to the Guaranteed Party under Section 8.2 and Section 9.1(a) of
the Purchase and Sale Agreement, dated as of May 3, 2006 (the “Guaranteed
Agreement”), between the Obligor and the Guaranteed Party. For the avoidance of
doubt, Guarantor’s obligations hereunder shall be subject to compliance by the
Guaranteed Party with the provisions of Article VIII and Article IX,
as the case may be, of the Guaranteed Agreement, and in no event shall exceed
the limitations on the Obligor’s indemnification obligations set forth in Section 8.4
of the Guaranteed Agreement.

Section 2. Nature of Guarantee. The Guarantor’s
obligations hereunder shall not be affected by the existence, validity,
enforceability, perfection or extent of any collateral for the Obligations or
by any other circumstance relating to the Obligations that might otherwise
constitute a legal or equitable discharge of or defense to the Guarantor,
except that, save as expressly provided herein, the Guarantor does not waive
any defense that is available to the Obligor. The Guarantor agrees that the Guaranteed Party may resort to the
Guarantor for payment of any of the Obligations whether or not such Guaranteed
Party shall have resorted to any collateral therefor or shall have proceeded
against the Obligor or any other obligor principally or secondarily obligated
with respect to any of the Obligations. The Guaranteed Party shall not be
obligated to file any claim relating to the Obligations in the event that the
Obligor becomes subject to a bankruptcy, reorganization or similar proceeding,
and the failure of the Guaranteed Party
so to file shall not affect the Guarantor’s obligations hereunder. In
the event that any payment to the
Guaranteed Party in respect of any Obligation is rescinded or must
otherwise be returned for any reason whatsoever, the Guarantor shall remain
liable hereunder with respect to such Obligation as if such payment had not
been made. The Guarantor reserves the right to assert defenses which the
Obligor may have to payment of any Obligation other than (a) defenses
arising from the bankruptcy or insolvency of the Obligor and (b) defenses
based on (i) the corporate status of the Obligor and (ii) the power
and authority of the Obligor to enter into the Guaranteed Agreement and to
perform its obligations thereunder or the failure by the Obligor to obtain any
necessary consents to enter into any of the Guaranteed Agreement or to perform
the said obligations.

Section 3. Subrogation. The Guarantor will not
exercise any rights which it may acquire by way of subrogation until all the
Obligations to the Guaranteed Party shall
have been indefeasibly paid in full. Subject to the foregoing, upon payment of
any of the Obligations, the Guarantor shall be subrogated to the rights of the Guaranteed Party against the
Obligor with respect to the Obligations, and the Guaranteed Party agree to take at the Guarantor’s expense such
steps as the Guarantor may reasonably request to implement such subrogation.

 

Section 4. No Waiver; Cumulative Rights. No failure on
the part of the Guaranteed Party to
exercise, and no delay in exercising, any right, remedy or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right,
remedy or power hereunder preclude any other or future exercise of any right,
remedy or power. Each and every right, remedy and power hereby granted to the Guaranteed Party or allowed it by
law or other agreement shall be cumulative and not exclusive of any other, and
may be exercised by the Guaranteed
Party at any time or from time to time.

Section 5. Representations and Warranties. The
Guarantor hereby represents and warrants as of the date of this Guarantee that:

(a)           the Guarantor is duly organized,
validly existing and in good standing under the laws of France and has full
corporate power to execute, deliver and perform this Guarantee;

(b)           the execution, delivery and
performance of this Guarantee have been and remain duly authorized by all
necessary corporate action and do not contravene any provision of the Guarantor’s
certificate of incorporation or bylaws, as amended to date, or any law,
regulation, rule, decree, order, judgment or contractual restriction binding on
the Guarantor or its assets; and

(c)           this Guarantee constitutes a legal,
valid and binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors’ rights and to general equity principles.

Section 6. Assignment. Neither the Guarantor nor the Guaranteed Party may assign its
rights, interests or obligations hereunder to any other person (except by
operation of law) without the prior written consent of the Guarantor or the Guaranteed Party, as the case may
be.

Section 7. Notices. All notices or demands on the
Guarantor shall be deemed effective when received, shall be in writing and
shall be delivered by hand or by registered mail, or by facsimile transmission
promptly confirmed by registered mail, addressed to the Guarantor at:

Suez Environnement,
S.A.

1, Rue d’Astorg

75383 Paris Cedex 08
France

Telephone: +33 (0) 1-58-185000

Facsimile: +33 (0) 1-58-184863

Attention: 
Directeur Juridique

 

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Telephone: (212) 558-4000

Facsimile: (212) 558-3588

Attention: Richard A. Pollack

or to such other address or facsimile
number as the Guarantor shall have notified the Guaranteed Party in a written notice delivered to the Guaranteed Party in accordance
with the Guaranteed Agreement.

Section 8. Continuing Guarantee.
This Guarantee shall remain in full force and effect and shall be binding on
the Guarantor, its successors and assigns until all of the Obligations have
been satisfied in full.

Section 9. GOVERNING LAW. THIS
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

Section 10.
Arbitration. Any controversy or claim arising out of or relating to this
Guarantee or the breach hereof shall be settled by arbitration administered by
the American Arbitration Association in accordance with its Commercial
Arbitration Rules, and Title 9 of the U.S. Code. Judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof. The
number of arbitrators shall be one (1), and such arbitrator shall be selected
by mutual agreement of the Guarantor and the Guaranteed Party, if possible, and
thereafter by the administering authority, and the place of arbitration shall
be New York, New York. The arbitrator may award the costs of the arbitration to
the prevailing party and should in so doing consider the extent (in percentage
terms, if possible) to which each party has prevailed on its claims or
counterclaims. The arbitrator will have no authority to award punitive damages
or any other damages not measured by the prevailing party’s actual damages, and
may not, in any event, make any ruling, finding or award that does not conform
to the terms and conditions of this Guarantee.

IN WITNESS WHEREOF, this Guarantee has been duly executed and
delivered by the Guarantor to the
Guaranteed Party as of the date first above written.

SUEZ
ENVIRONNEMENT, S.A.

	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:Exhibit 10.1

CONSTRUCTION MANAGEMENT AGREEMENT

(BUFFALO CREEK CASINO DEMOLITION PROJECT)

 

BETWEEN

 

SENECA ERIE GAMING CORPORATION

as Owner

 

AND

 

SENECA CONSTRUCTION MANAGEMENT CORPORATION

as Construction Manager

 

 

MAY 9, 2006

 

TABLE OF CONTENTS

	
  ARTICLE I. DEFINITIONS

  	
   

  	
  1

  	
   

  
	
  1.1

  	
   

  	
  Specific
  Definitions

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.
  CONSTRUCTION MANAGEMENT SERVICES

  	
   

  	
  4

  	
   

  
	
  2.1

  	
   

  	
  Appointment as
  Construction Manager

  	
   

  	
  4

  	
   

  
	
  2.2

  	
   

  	
  Work to be
  Performed

  	
   

  	
  4

  	
   

  
	
  2.3

  	
   

  	
  Use of Contractors

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.
  GENERAL OBLIGATIONS OF CONSTRUCTION MANAGER

  	
   

  	
  5

  	
   

  
	
  3.1

  	
   

  	
  Standard of
  Performance

  	
   

  	
  5

  	
   

  
	
  3.2

  	
   

  	
  Construction
  Manager’s Employees, Consultants and Contractors

  	
   

  	
  6

  	
   

  
	
  3.3

  	
   

  	
  Payments
  Pursuant to Agreements

  	
   

  	
  6

  	
   

  
	
  3.4

  	
   

  	
  Ownership and Custody
  of and Access to Data

  	
   

  	
  6

  	
   

  
	
  3.5

  	
   

  	
  Inspection and
  Rejection by Owner

  	
   

  	
  6

  	
   

  
	
  3.6

  	
   

  	
  Disclosure to
  Owner

  	
   

  	
  7

  	
   

  
	
  3.7

  	
   

  	
  Work Budget

  	
   

  	
  7

  	
   

  
	
  3.8

  	
   

  	
  Offsite Disposal

  	
   

  	
  7

  	
   

  
	
  3.9

  	
   

  	
  Environmental
  Report

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.
  COMMENCEMENT OF WORK

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V. ACCOUNTING
  AND COMPENSATION

  	
   

  	
  7

  	
   

  
	
  5.1

  	
   

  	
  Accounting
  Records

  	
   

  	
  7

  	
   

  
	
  5.2

  	
   

  	
  Contract Price

  	
   

  	
  8

  	
   

  
	
  5.3

  	
   

  	
  Request for
  Payment

  	
   

  	
  8

  	
   

  
	
  5.4

  	
   

  	
  Payments

  	
   

  	
  9

  	
   

  
	
  5.5

  	
   

  	
  Retainage

  	
   

  	
  10

  	
   

  
	
  5.6

  	
   

  	
  Taxes

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. CHANGES

  	
   

  	
  10

  	
   

  
	
  6.1

  	
   

  	
  General

  	
   

  	
  10

  	
   

  
	
  6.2

  	
   

  	
  Minor
  Modifications

  	
   

  	
  10

  	
   

  
	
  6.3

  	
   

  	
  Owner Requested
  Change Order

  	
   

  	
  11

  	
   

  
	
  6.4

  	
   

  	
  Change Orders

  	
   

  	
  11

  	
   

  
	
  6.5

  	
   

  	
  Construction
  Manager Requested Change Order

  	
   

  	
  11

  	
   

  
	
  6.6

  	
   

  	
  Owner’s
  Directive

  	
   

  	
  12

  	
   

  
	
  6.7

  	
   

  	
  General
  Requirements and Limitations

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. COMPLETION

  	
   

  	
  13

  	
   

  
	
      7.1

  	
   

  	
  Final Request
  for Payment

  	
   

  	
  13

  	
   

  
	
      7.2

  	
   

  	
  Completion

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  14

  	
   

  
	
      8.1

  	
   

  	
  General
  Representations and Warranties

  	
   

  	
  14

  	
   

  
	
      8.2

  	
   

  	
  Construction
  Manager Representations and Warranties

  	
   

  	
  14

  	
   

  
	
      8.3

  	
   

  	
  Warranties
  Related to the Work

  	
   

  	
  15

  	
   

  
	
      8.4

  	
   

  	
  Contractor
  Warranties

  	
   

  	
  15

  	
   

  
	
      8.5

  	
   

  	
  Warranty Period

  	
   

  	
  15

  	
   

  

 

 ii
 

 

 

	
  ARTICLE IX. TERMINATION

  	
   

  	
  16

  	
   

  
	
      9.1

  	
   

  	
  Term

  	
   

  	
  16

  	
   

  
	
      9.2

  	
   

  	
  Termination

  	
   

  	
  16

  	
   

  
	
      9.3

  	
   

  	
  Suspension by
  Owner

  	
   

  	
  16

  	
   

  
	
      9.4

  	
   

  	
  Effects of
  Termination

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X. FORCE
  MAJEURE

  	
   

  	
  17

  	
   

  
	
      10.1

  	
   

  	
  Suspension of
  Obligations

  	
   

  	
  17

  	
   

  
	
      10.2

  	
   

  	
  Notice

  	
   

  	
  17

  	
   

  
	
      10.3

  	
   

  	
  Resolution

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI.
  Indemnity

  	
   

  	
  17

  	
   

  
	
      11.1

  	
   

  	
  Damages

  	
   

  	
  17

  	
   

  
	
      11.2

  	
   

  	
  Indemnity

  	
   

  	
  18

  	
   

  
	
      11.3

  	
   

  	
  Claims

  	
   

  	
  20

  	
   

  
	
      11.4

  	
   

  	
  Insurance

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII.
  MISCELLANEOUS

  	
   

  	
  21

  	
   

  
	
      12.1

  	
   

  	
  Entire Agreement

  	
   

  	
  21

  	
   

  
	
      12.2

  	
   

  	
  Amendment and
  Modification

  	
   

  	
  22

  	
   

  
	
      12.3

  	
   

  	
  Counterparts

  	
   

  	
  22

  	
   

  
	
      12.4

  	
   

  	
  Parties Bound by
  Agreement

  	
   

  	
  22

  	
   

  
	
      12.5

  	
   

  	
  Terminology

  	
   

  	
  22

  	
   

  
	
      12.6

  	
   

  	
  Laws and
  Regulations

  	
   

  	
  22

  	
   

  
	
      12.7

  	
   

  	
  Governing Law

  	
   

  	
  22

  	
   

  
	
      12.8

  	
   

  	
  Exhibits and
  Schedules

  	
   

  	
  22

  	
   

  
	
      12.9

  	
   

  	
  Notices

  	
   

  	
  22

  	
   

  
	
      12.10

  	
   

  	
  Further
  Assurances

  	
   

  	
  23

  	
   

  
	
      12.11

  	
   

  	
  Survival of
  Representations, Warranties, Covenants and Agreements

  	
   

  	
  23

  	
   

  
	
      12.12

  	
   

  	
  Severability

  	
   

  	
  23

  	
   

  
	
      12.13

  	
   

  	
  Assignmen.

  	
   

  	
  24

  	
   

  
	
      12.14

  	
   

  	
  Waivers

  	
   

  	
  24

  	
   

  
	
      12.15

  	
   

  	
  Cumulative Rights,
  Obligations and Remedies

  	
   

  	
  24

  	
   

  
	
      12.16

  	
   

  	
  No Third Party
  Beneficiaries

  	
   

  	
  24

  	
   

  
	
      12.17

  	
   

  	
  Confidentiality

  	
   

  	
  24

  	
   

  

 

 iii
 

 

SCHEDULES AND EXHIBITS

Schedule 1:            Scope of Work

Schedule 2:            Project Schedule

Schedule 3:            Project Budget

Schedule 4:            Contractor Insurance Requirements

Exhibit A:               Form of Construction Manager
Partial Lien Waiver

Exhibit B:               Form of Contractor Partial
Lien Waiver

Exhibit C:               Form of Change Order

Exhibit D:               Form of Construction Manager
Final Lien Waiver

Exhibit E:                Form of Contractor Final
Lien Waiver

 iv

 

CONSTRUCTION
MANAGEMENT AGREEMENT

This Construction Management Agreement is made as of May 9,
2006 (the “Effective Date”),
by and between Seneca Construction Management Corporation (“Construction Manager”) and Seneca
Erie Gaming Corporation (“Owner”).

RECITALS

A.            Construction Manager has expertise
and experience in providing construction management services.

B.            Owner desires to retain Construction
Manager to provide management services and act as the construction manager in
connection with the Project (as defined in Section 1.1), and
Construction Manager desires to perform such services in accordance with the
terms of this Agreement.

NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements contained herein, the parties
hereby stipulate and agree as follows:

ARTICLE
I.

DEFINITIONS

1.1           Specific
Definitions.   The following capitalized terms shall have the meanings
ascribed to them in this Section 1.1.

“Affiliate” means, with respect to any relevant
Person, any other Person that directly or indirectly controls, is controlled by
or is under common control with, the relevant Person. For purposes of this
definition, the term “control” (including its derivatives and similar terms)
means owning, directly or indirectly, more than 25% of the voting interest in
the relevant Person.

“Agreement” means this Construction Management
Agreement (including any exhibits, supplements and other attachments), as
amended, restated, supplemented or otherwise modified from time to time.

“Business Day” means Monday through Friday of
each week, except that a legal holiday recognized as such by the government of
the Nation, the United States or the State of New York shall not be regarded as
a Business Day.

“Change” is defined in Section 6.3.

“Change of Law” means the enactment, adoption,
promulgation, issuance, modification, revision, change, repeal or cancellation
after the date of this Agreement of or to any Law, that prevents Construction
Manager from performing its obligations under this Agreement.

“Change Order” is defined in Section 6.4.

“Completion” is defined in Section 7.2.

 1
 

 

“Completion Certificate” shall have the meaning
ascribed to it in Section 7.2.

“Completion Date” is defined in Section 7.2.

“Construction Manager” is defined in the Preamble.

“Construction Manager Estimate” is defined in Section 6.2.

“Contract Price” is defined in Section 5.2.

“Contractor” means any Person performing all or
any portion of the Work, or performing any other services, or providing goods,
equipment, materials, supplies, or labor services related to the Work under
contract with Construction Manager, including contractors, subcontractors (and
every tier of subcontractors), vendors, suppliers, agents and representatives
of Construction Manager.

“Costs” means all verifiable, direct,
out-of-pocket costs incurred by Construction Manager in performing the Work,
but shall not include any costs or expenses (i) for general or overhead
expenses of Construction Manager or (ii) that would not have been incurred
absent the bad faith, gross negligence, or willful misconduct of Construction
Manager or any Contactor, or any of their respective employees, agents, or
representatives.

“Damages” is defined in Section 11.1(a).

“Data” is defined in Section 3.4.

“Day” means a period of twenty-four (24)
consecutive hours beginning at 7:00 a.m., Eastern Time, or at such other
hour as Construction Manager and Owner mutually agree.

“Defect” means any Work performed or provided
by, or within the responsibility of Construction Manager or any Contractor
which (i) fails to conform to the Scope of Work or is of improper or
inferior workmanship; (ii) could reasonably be expected to adversely
effect the completion of the Project; (iii) results in damages to the
Property; or (iv) otherwise fails to meet the warranties set forth in Section 8.3.

“Effective Date” is defined in the Preamble.

“Environmental Reports” is defined in Section 3.9.

“Estimated Contract Price” is defined in Section 3.7.

“Event of Default” or “Default” means
the occurrence of any of the following events, circumstances or conditions: (i) the
failure by either Party to perform or comply with any material agreement,
covenant, obligation or other provision contained in this Agreement when such
failure has not been remedied (after delivery of written notice thereof) within
thirty (30) Days following delivery of such notice; (ii) either Party (A) files
a petition for relief under any present or future law regarding bankruptcy,
reorganization or other relief to debtors, or, makes a general assignment for
the benefit of its creditors, or applies for a receiver, trustee, custodian or

 2
 

 

liquidator of its property, or files a petition, or
commences any other procedure to liquidate or dissolve its existence, or (B) fails
to effect a full dismissal of any involuntary petition under any present or
future law regarding bankruptcy, reorganization or other relief to debtors,
that is filed against such Party, within sixty (60) Days of such filing; or (iii) the
inaccuracy or breach of any material representation or warranty contained in Article VIII.

“Force Majeure” is defined in Section 10.1.

“Governmental Authority” means applicable
tribal, national, state and local governments and all agencies, authorities,
departments, instrumentalities, courts, corporations or the other subdivisions
of each having or claiming a regulatory interest in or jurisdiction over the
Project, the Work or the Parties

“Hazardous Materials” shall mean any hazardous
materials, hazardous wastes, hazardous constituents, hazardous or toxic
substances, petroleum products (including crude oil or any fraction thereof),
defined or regulated as such under any applicable environmental Law.

“Invoice” is defined in Section 5.3(a).

“Laws” means the laws, rules, regulations,
decrees and orders of the United States of America, the Nation and all other
governmental bodies having relevant jurisdiction, whether such now exist or
hereafter come into effect.

“Management Fee” is defined in Section 5.2.

“Nation” means the Seneca Nation of Indians, a
federally recognized Indian Tribe.

“Owner” is defined in the Preamble.

“Owner Directive” is defined in Section 6.6.

“Owner Indemnified Party” is defined in Section 11.2(a).

“Party” and “Parties” means each of
Owner and Construction Manager, individually or collectively, as the context
may require.

“Person” means any individual or entity,
including, without limitation, any corporation, limited liability company,
joint venture, joint stock company, general or limited partnership, trust,
agency, association, organization, government authority (including any agency
or administrative group thereof) or other entity.

“Progress Report” is defined in Section 5.3(e).

“Project” means the demolition of certain
structures located on the Property, as set forth on the Scope of Work.

“Project Schedule” is set forth on Schedule
2 (as may be amended pursuant to the terms of this Agreement).

 3
 

 

“Property” means the areas designated in the
Scope of Work for performance of the Work

“Repair” is defined in Section 8.3(a).

“Request for Payment” is defined in Section 5.3.

“Retainage” is defined in Section 5.5.

“Scope of Work” is set forth on Schedule 1
(as may be amended pursuant to the terms of this Agreement).

“Stated Rate” means an annual rate of interest
(compounded monthly) equal to the lesser of (i) two percent (2%) and (ii) the
maximum rate permitted under applicable law.

“Substantial Completion” is defined in Section 8.5.

“Term” is defined in Section 9.1.

“Warranty Period” is defined in Section 8.5.

“Work” is defined in Section 2.2.

ARTICLE
II.

CONSTRUCTION MANAGEMENT SERVICES

2.1           Appointment
as Construction Manager.   Subject to the terms and conditions of this
Agreement, Owner hereby appoints Construction Manager to act hereunder as an
independent contractor to manage the Project, and Construction Manager hereby
accepts such appointment and agrees to act pursuant to the provisions of this
Agreement. Construction Manager is an independent contractor. Neither
Construction Manager nor any of its officers, directors, employees, agents or
representatives shall be deemed to be the agents, representatives or employees
of Owner. Nothing herein is intended to, or shall be deemed to, create a
partnership, joint venture, agency or other relationship creating fiduciary or
quasi fiduciary duties or similar duties and obligations or otherwise subject
the Parties to joint and several or vicarious liability or to impose any duty,
obligation or liability that would arise therefrom with respect to either or
both of the Parties.

2.2           Work
to be Performed.

Construction Manager’s obligation is to perform all work necessary to
complete the Project in every detail according to the Scope of Work (the “Work”), in accordance with the Project
Schedule and the terms of this Agreement.

2.3           Use of Contractors.

(a)           For
the purpose of providing the Work, Construction Manager may use independent
contractors, who are not employees of either Owner or Construction Manager, to
perform the Work in accordance with this Agreement. Construction Manager

 4
 

 

shall not engage any Contractor to perform
part of the Construction Work hereunder unless Construction Manager has a
written agreement with that Contractor which meets the requirements set forth
in Section 2.3(b). If any proposed written agreement between
Construction Manager and any Contractor fails to meet any of the requirements
set forth in Section 2.3(b), Construction Manager must submit the
proposed agreement to Owner for review and approval. Construction Manager shall
not have the right to waive any of the requirements of Section 2.3(b) without
the prior written consent of Owner.

(b)           Use of any Contractor by Construction
Manager shall not relieve Construction Manager of any of its obligations under
this Agreement and Construction Manager shall, at all times, be responsible for
the performance and completion of the Work. All Work performed by a Contractor
shall be pursuant to a written agreement between Contractor and Construction
Manager which shall:

(i)            conform
to and require Contractor to perform in accordance with the requirements, terms
and conditions of this Agreement;

(ii)           be assignable to Owner upon Owner’s
written request and at no cost to Owner;

(iii)          preserve
and protect the rights of Owner under this Agreement and with respect to the
Work to be performed;

(iv)          require that the Contractor provide
and maintain the insurance specified in Schedule 4;

(v)           require that the Contractor provide
the indemnification required by Section 11.2(b); and

(vi)          obligate Contractor
to execute a waiver and release with respect to any lien rights for each
payment received by such Contractor for the Work.

(c)           Prior to entering into any contract
with any Contractor, Construction Manager shall have performed a reasonable
level of due diligence to determine whether, for the portion of the Work the
Contractor is to perform, such Contractor is (i) fully experienced,
properly qualified, properly licensed, properly equipped and properly
organized; (ii) financially solvent at the time such Contractor enters
into a contract with Construction Manager; (iii) authorized to do business
in the jurisdictions in which such Contractor will perform; and (iv) familiar
with the portion of the Work to be performed.

(d)           Construction Manager shall provide to
Owner a copy of each contract entered into with a Contractor within two (2) Business
Days of execution.

ARTICLE
III.

GENERAL OBLIGATIONS OF CONSTRUCTION MANAGER

3.1           Standard
of Performance.   Construction Manager shall perform the Work and carry
out its other obligations hereunder, and shall require all of its employees,
Contractors, agents, 

 5
 

 

materialmen and vendors furnishing labor, materials or
services in any way relating to this Agreement or affecting the Project to
carry out their respective responsibilities in accordance with (a) the
terms of this Agreement, (b) safe, sound, efficient, workmanlike,
economically prudent, and environmentally sound practices, and (c) all
Laws, permits and licenses applicable to the Project and the completion thereof.
Construction Manager agrees to, and shall require its Contractors to, (i) use
its best professional judgment in the performance of the Work, and (ii) use
the degree of care and skill ordinarily exercised, under similar circumstances,
by reputable contractors performing comparable services.

3.2           Construction
Manager’s Employees, Consultants and Contractors.   Construction
Manager shall pay all expenses in connection with employing, retaining and
supervising the Contractors and any other Persons necessary or required for the
performance of the Work, including compensation, salaries, wages, overhead and
administrative expenses incurred by Construction Manager, and as applicable,
FICA and Medicare taxes, workers’ compensation insurance, retirement and
insurance benefits and other such expenses. All services performed or materials
supplied by any Affiliate of Construction Manager shall be performed or
supplied at terms and rates that are reasonably competitive with the terms and
rates known to Construction Manager to be prevailing in the industry at the
time for the area of operations.

3.3           Payments
Pursuant to Agreements.   Construction Manager shall promptly pay, when
due, all undisputed amounts due and payable to (a) all Contractors in
accordance with the terms of applicable Contractor contract, and (b) any
other third party providing goods or services in connection with the Work.

3.4           Ownership
and Custody of and Access to Data.   Owner shall be the sole and
exclusive owner of all reports, filings, agreements, instruments and other
documents (collectively, “Data”),
whether prepared by Construction Manager, Owner, any Contractor or any other
Person, related to the Work and any such Data shall be made available to Owner
at Construction Manager’s office during reasonable business hours on provision
of reasonable notice. Within a reasonable period of time after delivery of
the  Completion Certificate, or
immediately upon the termination of this Agreement, Construction Manager shall
deliver originals of all Data to Owner.

3.5           Inspection
and Rejection by Owner.   Owner, and its designated representatives,
shall have the right to inspect all Work including, without limitation,
testing, inspection, repairs, construction, installation, removal of equipment,
meetings or other communications with any Person, or similar activities
undertaken by Construction Manager in connection with this Agreement. Owner shall have the right to reject, or to
direct Construction Manager to reject, at any time, any such portion of the
Work which in Owner’s reasonable judgment does not conform to this Agreement,
including the Work Scope, or which contains Defects. Upon such rejection,
Construction Manager shall promptly remedy any condition identified by Owner as
giving rise to such rejection. Owner’s exercise of any right of inspection, observation,
rejection or approval shall not limit or reduce Construction Manager’s
obligations under this Agreement or constitute an acceptance by Owner.

 6
 

 

3.6          
Disclosure to Owner.

Construction Manager shall promptly notify Owner of
any (i) Defect, or (ii) other event, circumstance or condition known
to Construction Manager constituting or which reasonably could be expected to
constitute a material breach of this Agreement, or a violation of any Law, of
which Construction Manager has knowledge. Construction Manager shall promptly
notify Owner of any significant circumstance, event, occurrence or condition
(whether then existing or, in Construction Manager’s opinion, expected to exist
in the near future), including issues related to the acquisition (including eminent
domain proceedings) of rights of way and similar matters, of which Construction
Manager has knowledge and which could reasonably be expected to have a material
adverse effect on the completion of the Project pursuant to this Agreement.

3.7           Work
Budget.

Construction Manager has submitted to Owner for Owner’s
approval a budget for the Work, a copy of which is attached hereto as Schedule
3.  Such budget provides for an
estimated Contract Price of $2,530,345.47 (the “Estimated
Contract Price”).

3.8           Offsite
Disposal.   Construction Manager shall be solely responsible for the
selection of the offsite disposal facilities to which it transfers all
materials to be removed from the Property.

3.9           Environmental
Reports.   Construction Manager shall require its Contractors to prepare
or obtain all environmental assessments, reports, audits, and other documents
that relate to the environmental condition of the Property required under
environmental Law or pursuant to ASTM standard practices (or other standard
practices governing the performance of comparable services) that may be
necessary to complete the Project (the “Environmental
Reports”). Construction Manager shall provide Owner with copies
of all such Environmental Reports, as well as all correspondence with any
Governmental Authority related to the environmental conditions on the Property
or the compliance of the activities conducted thereon with environmental Law. Construction
Manager shall further require its Contractors to provide copies of the results
of any environmental investigations, monitoring, or sampling conducted on the
Property, including without limitation, certificates of analysis, chain of
custody reports, certificates of inspection, laboratory analysis, and sampling
data.

ARTICLE
IV.

COMMENCEMENT OF WORK

Promptly after receipt of Owner’s approval of the
budget for the Work (or on such other date as agreed upon by the Parties),
Construction Manager shall commence and continuously and diligently pursue and
perform the Work in compliance with this Agreement and in accordance with the
Project Schedule.

ARTICLE
V.

ACCOUNTING AND COMPENSATION

5.1           Accounting
Records.   Construction Manager shall keep complete and accurate
records of all costs, expenses and expenditures in connection with this
Agreement, to the reasonable satisfaction of Owner. To the extent necessary or
appropriate to verify the amounts billed to Owner pursuant to this Agreement,
Owner or its designated representatives, after five

 7
 

 

(5) Days’ prior written notice to Construction Manager, shall have
the right during normal business hours to audit or examine all books and
records maintained by Construction Manager relating to the Project, including
all documents and records relating to Invoices submitted by Construction
Manager pursuant to Section 5.3. Such right shall include the right
to meet with Construction Manager’s internal auditors to discuss matters
relevant to the audit or examination. Construction Manager agrees to implement
any reasonable practices or procedures recommended by Owner as a result of any
such audit for purposes of improving support for the payment of Construction
Manager’s billings to Owner. Owner shall have three (3) years after the
termination of this Agreement to initiate, at Owner’s expense, an audit of
Construction Manager’s records for any Work performed during the term of this
Agreement. Owner shall make every reasonable effort to conduct audits in a
manner that will result in a minimum of inconvenience to Construction Manager.

5.2           Contract
Price.

For the performance of the Work during the term of
this Agreement, Owner agrees to pay Construction Manager, an amount (the “Contract Price”) equal to the sum
of (a) the Costs plus (b) an amount equal to four percent (4%) of the
Costs (the “Management Fee”).
In no event will the Contract Price exceed the Estimated Contract Price, and
Owner shall have no obligation to reimburse Construction Manager for any Costs
incurred in connection with the Work in excess of the Estimated Contract Price,
except as otherwise agreed in connection with any Change pursuant to Article VI.
The Contract Price will be Construction Manager’s complete compensation for the
Work whether the Work is performed by Construction Manager’s personnel or by
Contractors.

5.3           Request
for Payment.

No later than the tenth (10th) Day of each calendar month,
Construction Manager shall submit to Owner a Request for Payment (a “Request for Payment”) which shall
include:

(a)           an invoice for the Costs incurred for
the Work performed during the previous calendar month (or, if applicable, prior
months in case of third party invoices received during the previous month), if
any, prepared in a form reasonably acceptable to Owner and supported by records
evidencing the actual Costs incurred, plus the Management Fee associated with
such Costs (an “Invoice”);

(b)           a certification that (i) such
Request for Payment represents the amount to which Construction Manager is
entitled to pursuant to the terms of this Agreement; and (ii) Construction
Manager has paid all amounts that are due and owing to the Contractors (other
than amounts for Work included on any unpaid Invoice, which will be paid by Construction
Manager upon receipt of Owner’s payment of such Invoice), subject only to such
disputed amounts as are specified by Construction Manager in the Progress
Report;

(c)           a partial lien waiver in the form of Exhibit A
from Construction Manager ;

(d)           a partial lien waiver in the form of Exhibit B
from each Contractor; and

 8
 

 

(e)           a progress report (a “Progress Report”) which shall be in
such form as may reasonably be requested by Owner, and which shall include,
without limitation:

(i)            a description of the Work performed
during the prior month;

(ii)           a description of the Work to be
performed during the next month and an estimate of the Costs to be incurred in
connection with such Work;

(iii)          a list of all Change Orders approved
as of the end of the prior month;

(iv)          a discussion of any problems
encountered during the prior month and remedies effected or planned; and

(v)           a description of any payment or other
disputes with any Contractors or Governmental Authorities.

If, in connection with any Request for Payment,
Construction Manager fails to provide Owner with Invoices or any supporting
materials required under this Section 5.3 in a form satisfying the
criteria mutually agreed upon by Owner and Construction Manager, and (i) such
failure is not cured by Construction Manager within ten (10) Days after
Construction Manager’s receipt of written notice from Owner of such failure,
and (ii) Owner is thereafter required to use its own accounting personnel,
professionals and resources to correct any deficiencies in any Invoice or
related materials provided by Construction Manager for purposes of processing
any Invoice, then the Management Fee payable by Owner to Construction Manager
with respect to any Costs included on such Invoice for which adequate
supporting documentation was not provided shall be reduced from four percent
(4%) to two percent (2%) of such Costs.

5.4           Payments.   Owner
shall pay to Construction Manager the amount of each Invoice (less the
Retainage described in Section 5.5) within thirty (30) Days of receipt
of each such Invoice. If Owner fails to make timely payments of any Invoice
amount, or portion thereof, then Construction Manager shall be entitled to
collect such unpaid amount, together with interest at the Stated Rate on any
unpaid amount. If Owner’s failure to pay is a result of a good faith dispute of
any Invoice amount and Owner has given notice to Construction Manager that it
disputes such amount, and has paid any undisputed amount, within thirty (30)
Days of receipt of such Invoice, then interest will be payable only on the
unpaid portion that is found or agreed by the Parties to be ultimately due.
Interest shall accrue on unpaid amounts for the period beginning on the payment
due date of the applicable Invoice and ending upon payment of such amount
(together with the interest thereon); provided, however, that interest shall
not accrue with respect to any Invoice if Construction Manager has failed to
supply, in accordance with Section 5.3, the required supporting
documentation for such Invoice, unless such Invoice is not paid within  thirty (30) Days of Owner’s receipt of all
such supporting documentation. Payment and failure to object to all or any
portion of an Invoice amount shall not be construed as an acceptance of
defective Work or a waiver of any right under this Agreement by Owner.

 9

 

5.5           Retainage.

To secure Construction Manager’s performance of its
obligations hereunder, Owner will withhold an aggregate amount of up to ten
percent (10%) of the Contract Price (the “Retainage”),
by withholding from each payment paid to Construction Manager by Owner (other
than the final payment and any payments due to Construction Manager that are
designated as payments for general conditions, for which there shall be no
Retainage) an amount equal to ten percent (10%) of the amount invoiced by
Construction Manager. Each Invoice submitted by Construction Manager shall
specify the amount of Retainage attributable to, and to be withheld from,
amounts due under such Invoice. Notwithstanding the foregoing, at such time as
the Project is deemed to be ninety percent (90%) complete, Owner shall in
accordance with the payment terms set forth in Section 5.4, pay to
Construction Manager an amount equal to fifty percent (50%) of the full amount
of Retainage (not including Retainage attributable to Management Fees) withheld
by Owner to date, and thereafter the amount to be withheld from each payment
(other than the final payment and any payments due to Construction Manager that
are designated as payments for general conditions, for which there shall be no
Retainage) due hereunder shall be five percent (5%), rather than ten percent
(10%); provided, however, that the Retainage amount applicable to the
Management Fee shall remain at ten percent (10%). In the event that amounts are
due under this Agreement from Construction Manager to Owner, and such amounts
are not paid when due, Owner shall have the right to withhold additional
amounts from Owner’s payments to Construction Manager equal to the amount owing
by Construction Manager. Owner will pay the remaining Retainage for the Project
to Construction Manager in accordance with the payment terms set forth in Section 5.4
upon receipt of the final Request for Payment pursuant to Section 7.1.

5.6           Taxes.

Construction Manager shall pay all applicable taxes of any kind,
including sales, use, excise, unemployment, income taxes and any and all other
taxes on any item or service that is part of the Work, whether such tax is
normally included in the price of such item or service or is normally stated
separately and any other taxes imposed by any Governmental Authorities on any
equipment, materials, labor and services furnished by Construction Manager or
its Contractors, or otherwise arising out of Construction Manager’s performance
of the Work, including any increases in any such taxes during the term of this
Agreement; and any duties, fees, and royalties imposed with respect to any
equipment, materials, labor or services.

ARTICLE
VI.

CHANGES

6.1           General.   Except
as set forth in Sections 6.2 and 6.6, no change or adjustment to the
Scope of Work will be valid except as agreed to by the Parties in accordance
with a duly issued Change Order executed in writing by Owner and Construction
Manager. All such changes shall be made in accordance with this Article VI
and shall be considered, for all purposes of this Agreement, as part of the
Work and shall not affect the validity of this Agreement.

6.2           Minor
Modifications.   Minor modifications or adjustments that do not involve
an increase to the Estimated Contract Price, do not affect the Project Schedule
and do not affect

 10
 

 

Construction Manager’s performance of the Work as specified in this
Agreement, may be made by Construction Manager and shall not require a Change
Order; provided, however, that
Construction Manager shall notify Owner thereof in writing prior to
Construction Manager effecting any such modification.

6.3           Owner
Requested Change Order.   Owner, at any time or from time to time, may
request a change to the Scope of Work (a “Change”)
by issuing a notice to Construction Manager. Within five (5) Business Days
of receipt of such notice, Construction Manager shall prepare and deliver to
Owner a detailed written estimate (the “Construction
Manager Estimate”) relating to the contemplated change, which
shall include:

(a)           any proposed change in the Estimated
Contract Price resulting from such Change;

(b)           any effect such Change could be
expected to have on the Project Schedule;

(c)           any potential effect of such Change
on Construction Manager’s ability to comply with any of its obligations
hereunder; and

(d)           documentation reasonably sufficient
to enable Owner to evaluate the impact of the Change or potential effects which
Construction Manager estimates the Change Order will have on the Contract
Price, the Project Schedule and any other provision of this Agreement affected
thereby, as the case may be.

6.4           Change
Orders.

Owner shall review the Construction Manager Estimate
and if the Parties reach agreement on the matters listed in the Construction
Manager Estimate, Owner and Construction Manager shall execute a change order
which reflects the nature of such agreement (a “Change
Order”), which Change Order shall be in the form set forth in Exhibit C
and shall constitute an amendment to this Agreement.

6.5           Construction
Manager Requested Change Order.

(a)           Construction Manager may submit a
request for a Change Order with respect to:

(i)            a Force Majeure Event; or

(ii)           a Change of Law, unless such Change
of Law is due to an act or omission of Construction Manager.

(b)           Construction Manager shall use
reasonable efforts to mitigate the adverse effects of any Force Majeure Event
or a Change of Law that is the subject of a Change Order request. No such event
shall excuse Construction Manager’s continuing obligation to perform the Work,
as affected by such event, while such request is pending, except as set forth
in Article X or if cessation of performance is required by a
Governmental Authority.

 11
 

 

(c)           Any Change Order request under this Section 6.5
shall be processed in accordance with Sections 6.3 and 6.4; provided, however, that no notice from Owner shall be
required and Construction Manager’s Change Order request shall include the
detailed written Construction Manager Estimate relating to the requested change
that is required by Section 8.3, without the need for Owner to
request same.

6.6           Owner’s
Directive.   In the event (i) Owner requests a Change under Section 6.3,
and (ii) Owner and Construction Manager are unable to agree in a timely
manner with respect to a Construction Manager Estimate, and (iii) the
Change is not technically impossible or illegal to implement, and (iv) Owner
has determined that it is in the best interests of the Project to implement the
Change, then Owner may direct Construction Manager in a written notice to
proceed in accordance with the Change (an “Owner
Directive”), prior to determining any adjustment to the Scope of
Work (and, if applicable, any proposed change to the Estimated Contract Price
or the Project Schedule) and Construction Manager shall proceed with the Work
in accordance with such Owner Directive. In the event that Owner issues an
Owner Directive with respect to the Project, then Construction Manager may
modify the Estimated Contract Price and/or the Project Schedule to the extent
appropriate, as follows:

(a)           To the extent the Change requested in
an Owner Directive would cause the Contract Price to exceed the Estimated
Contract Price due to an increase in Construction Manager’s Costs for
additional Work or materials, then the Estimated Contract Price may be adjusted
upward by an amount equal to the Costs attributable to the Change (plus the
Management Fee associated with such Costs).

(b)           To the extent the Change requested in
an Owner Directive adversely affects Construction Manager’s ability to complete
the Project in accordance with the Project Schedule, and such effect could not
be avoided or mitigated by Construction Manager’s reasonable efforts, then
Construction Manager may be entitled to an equitable adjustment of the Project
Schedule on a Day-for-Day basis (or part thereof) for the impact of such Change
on Construction Manager’s performance of the Work.

6.7           General
Requirements and Limitations.

(a)           No addition,
deletion, comment, modification or amplification by Owner to the Scope of Work
shall require a Change Order if such addition, deletion, comment, modification
or amplification is for the purpose of curing a Construction Manager Defect or
is required in connection with a Construction Manager Event of Default.

(b)           Notwithstanding any
dispute, Construction Manager shall be required to implement any Owner
Directive and in no event shall any disputes related to a Change, a proposed
Change Order or an Owner Directive entitle Construction Manager to stop, delay
or suspend the performance of the Work.

(c)           Construction Manager shall notify
Owner in writing in advance of its intended use of the contingency portion of
the budget established by Owner and Construction Manager for the Project.

 12
 

 

ARTICLE
VII. 

COMPLETION

7.1           Final
Request for Payment.   Upon Completion, Construction Manager shall
submit to Owner a final Request for Payment, which shall include:

(a)           the final Invoice;

(b)           original copies of permits, licenses
and other authorizations to the extent that such items are issued in the name
of or otherwise provided to Construction Manager;

(c)           a Final Lien Waiver from Construction
Manager in the form of Exhibit D;

(d)           a Final Lien Waiver from each
Contractor in the form of Exhibit E; and

(e)           a Completion Certificate which shall
include:

(i)            a statement that Construction
Manager’s obligations with respect to Project are complete;

(ii)           a statement that no Construction
Manager Event of Default shall have occurred and be continuing;

(iii)          representations and warranties that
Construction Manager has obtained all permits, licenses and other
authorizations necessary or appropriate for the completion of the Project
(other than those obtained by Owner) and that such authorizations are in full
force and effect;

(iv)          representations and warranties that
the Property is free and clear of all liens, security interests, or other
encumbrances upon Owner’s title arising by virtue of the actions or inactions
of Construction Manager or its Contractors or other representatives arising
from or related to the Work; and

(v)           representations and warranties that
Construction Manger has paid all amounts due, or which may become due (other
than amounts for Work included on any unpaid 
Invoice, which will be paid by Construction Manager upon receipt of
Owner’s payment of such Invoice), to all Contractors.

7.2           Completion.

Upon Owner’s (a) determination that the Project
has been completed in accordance with the Scope of Work, and otherwise in
accordance with the terms of this Agreement (“Completion”);
and (b) approval of the form of Completion Certificate submitted by
Construction Manager (the “Completion Certificate”),
an authorized representative of Owner will sign the Completion Certificate
evidencing Owner’s acceptance that the Project has been completed in accordance
with the terms of this Agreement. Promptly after receipt of a proposed

 13
 

 

Completion Certificate, Owner shall (i) conduct
such tests and inspections as may be necessary to determine whether the Project
has been completed in accordance with the terms of this Agreement, and (ii) advise
Construction Manager as to whether Owner accepts the Completion Certificate
submitted by Construction Manager. The “Completion Date”
shall be the date on which the Completion Certificate is duly executed and
delivered by Owner. Owner’s execution of the Completion Certificate shall not
limit, waive or otherwise affect any right or remedy Owner may have pursuant to
this Agreement, any Law or otherwise, including any right Owner may have
against Construction Manager for failure to perform the Work in accordance with
the terms of this Agreement. Upon receipt of final payment, Construction
Manager will assign to Owner all permits, licenses and title to any materials
used and paid for by Owner in the completion of the Project that were in the
name of Construction Manager.

ARTICLE
VIII.

REPRESENTATIONS AND WARRANTIES

8.1           General
Representations and Warranties.

Each Party represents and warrants to the other Party
that on and as of the date hereof:

(a)           it is duly formed and validly
existing and in good standing under the laws of its jurisdiction of formation,
with power and authority to carry on the business in which it is engaged and to
perform its respective obligations under this Agreement;

(b)           the execution and delivery of this
Agreement have been duly authorized and approved by all requisite corporate,
limited liability company, partnership or similar action;

(c)           it has all the requisite corporate,
limited liability company, partnership or similar power and authority to enter
into this Agreement and perform its obligations hereunder;

(d)           the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated herein
will not, violate any of the provisions of the organizational documents of such
Party, any agreement pursuant to which such Party or its property is bound or,
to its knowledge, any applicable Laws; and

(e)           this Agreement is valid, binding and
enforceable against such Party in accordance with its terms, subject to
bankruptcy, moratorium, insolvency and other Laws generally affecting creditors’
rights and general principles of equity (whether applied in a proceeding in a
court of law or equity).

8.2           Construction
Manager Representations and Warranties.

Construction Manager represents and warrants to Owner
that:

(a)           it has substantial experience,
knowledge and professional competence in the procurement, project management
and construction management of projects similar to the Project;

 14
 

 

(b)           it has the resources and personnel to
perform the Work; and

(c)           it is fully experienced, properly
qualified and properly licensed, equipped and organized to perform the Work.

8.3           Warranties
Related to the Work.

(a)           Construction Manager represents,
warrants and agrees as follows: (i) the Work will be of high quality, free
from Defects and in specific conformity with this Agreement; (ii) the Work
will be performed and the Project will be completed in accordance with the
requirements of this Agreement, and (iii) upon Completion, the Property
shall meet the standards set forth in the Scope of Work and shall have passed
all environmental or other testing required therein. Construction Manager shall
be required to repair, correct, refinish, or if insufficient, to re-perform the
Work, and generally take or cause to be taken such action as may be required,
to fully remedy (“Repair”)
any Defects discovered during the Term of this Agreement at no cost to Owner. The
cost to Repair any Defect shall not be part of the Contract Price. Construction
Manager’s warranties hereunder exclude remedy for damage or defect caused by
abuse, modifications not executed by Construction Manager or its agents or
Contractors, improper or insufficient maintenance, improper operation or normal
wear and tear under normal usage.

(b)           Upon notice by Owner to Construction
Manager of any Defect, Construction Manager shall Repair such Defect or cause
the Repair of such Defect; provided, however,
that no such notice shall be required in the event of a Defect discovered by
Construction Manager or any Contractor (notice of which Defect shall promptly
be given to Owner).

(c)           Construction Manager shall, at all
times during the Warranty Period, maintain sufficient personnel to respond
promptly to Owner’s request for warranty work.

(d)           Upon Completion, Construction Manager
shall cause any tools, equipment or materials placed on the Property to be
removed.

8.4           Contractor
Warranties.

Construction Manager shall obtain for Owner
commercially available warranties from all Contractors. Such warranties shall
extend for not less than the Warranty Period and shall obligate the respective
Contractors to Repair any Defects in the Work in substantially the same manner
and on terms and conditions substantially similar to those contained herein. During
the Term of this Agreement (including the Warranty Period) Construction Manager
shall be responsible at its own expense for enforcing all Contractor
warranties.

8.5           Warranty
Period.

Construction Manager’s warranty obligations and
liabilities under this Article VIII 
shall commence on the date of 
Substantial Completion of the Project, and shall cease upon the

 15
 

 

expiration of one year thereafter  (the “Warranty Period”).
For purposes of this Agreement, “Substantial Completion”
of the Project is the stage in the progress of the Work when the Work (or
designated portion thereof) is sufficiently complete in accordance with this
Agreement so that Owner can occupy or utilize for its intended use the Property
(or designated portion thereof) on which such Work was to be performed. The
Warranty Period for any Work requiring Repair under this Article VIII
shall be extended, solely with respect to the portion of the Work so Repaired,
for a period equal to the original Warranty Period after the date of completion
of such Repair.

ARTICLE
IX.

TERMINATION

9.1           Term.   Unless
terminated in accordance with Section 9.2, this Agreement shall be
effective as of the Effective Date and shall continue in effect through the
expiration of the Warranty Period (the “Term”).

9.2           Termination.   This
Agreement may be terminated or canceled prior to the end of the Term:

(a)           at any time, during an ongoing Event
of Default which was not cured during the applicable cure period and which has
not been waived by the non-defaulting Party upon the delivery of a notice of
termination by the non-defaulting Party to the defaulting Party;

(b)           at any time, by mutual written
agreement of the Parties; or

(c)           at any time, by Owner, in its sole
discretion upon thirty (30) Days notice to Construction Manager.

9.3           Suspension
by Owner.

Owner may, upon
written notice to Construction Manager, require Construction Manager to
suspend, delay or interrupt the Work, in whole or in part, for any reason
including, without limitation, the issuance of an order by a court or other
public authority having jurisdiction or the enactment of any law, regulation or
rule prohibiting the completion of the Project, for such period of time as
may be directed by Owner. Notwithstanding the foregoing, if the Work is
suspended in accordance with this Section 9.3 for a period of
ninety (90) days or more, Construction Manager may, on written notice to
Construction Manager, terminate this Agreement.

9.4           Effects
of Termination. Termination or cancellation of this Agreement shall not
relieve the Parties from any obligation accruing or accrued to the date of such
termination or deprive the Party not in default of any remedy otherwise
available to such Party. In the event this Agreement is terminated by Owner
pursuant to Section 9.2(a), Owner’s shall only be required to pay
Construction Manager for the Costs incurred for Work completed as of the date
of termination; provided, however, that if it is determined that
Owner’s termination under Section 9.2(a) was improper, such
termination shall be deemed to be a termination under Section 9.2(c) and
Owner shall pay Construction Manager the unpaid Management Fee and any

 16
 

 

Retainage, together with interest at the Stated Rate
from the time the payment would have otherwise been due. In the event this
Agreement is terminated by Owner pursuant to Section 9.2(b) above,
or by Construction Manager pursuant to Section 9.3, Owner shall pay
Construction Manager the payments owed as of the date of termination for Work
completed (including all Costs incurred in connection with such Work plus the
Management Fee and any Retainage). In the event this Agreement is terminated
pursuant to Section 9.2(c) above, Owner shall pay Construction
Manager (i) the payments owed as of the date of termination for Work
completed (including all Costs incurred in connection with such Work plus the
Management Fee and any Retainage), and (ii) Construction Manager’s costs
reasonably incurred incident to the termination, including actual and
reasonable Contractor cancellation costs.

ARTICLE
X.

FORCE MAJEURE

10.1         Suspension of Obligations.   Neither
Party shall be liable to the other Party for failure to perform any of its
obligations under this Agreement to the extent such performance is hindered,
delayed or prevented by Force Majeure. For purposes of this Agreement, “Force
Majeure” shall mean causes, events or circumstances which are beyond the
reasonable control of the Party claiming Force Majeure which cause such Party’s
performance hereunder to be hindered, delayed or prevented. Such causes or
events shall include, without limitation, acts of God, war (declared or
undeclared), insurrections, hostilities, riots, lockouts, strikes, labor
disputes, floods, fire, or hurricanes. Notwithstanding anything in this
Agreement to the contrary, a claim of Force Majeure shall not extend or
otherwise enlarge the term of this Agreement.

10.2         Notice.   A Party which is
unable, in whole or in part, to carry out its obligations under this Agreement
due to Force Majeure shall promptly give written notice to that effect to the
other Party stating in reasonable detail the circumstances underlying such
Force Majeure.

10.3         Resolution.   A Party
claiming Force Majeure shall diligently use all reasonable efforts to remove
the cause, event or circumstance of such Force Majeure, shall promptly give
written notice to the other Party of the termination of such Force Majeure and
shall resume performance of any suspended obligation as soon as reasonably
possible after termination of such Force Majeure; provided, however, that neither Party shall be required to
settle a labor dispute against its own best judgment.

ARTICLE XI.

INDEMNITY

11.1         Damages.

(a)           As
used in this Article XI, the term “Damages”
shall mean any and all (i) obligations; (ii) liabilities; (iii) compensatory
damages (including, but not limited to, damages for injury to or death of
persons and damages to or destruction or loss of property); (iv) to the
limited extent permitted under Section 11.1(b), punitive, indirect,
special, consequential, incidental and exemplary damages; (v) costs,
losses, liabilities, damages, and expenses in any way associated with the
containment, removal, or

 17
 

 

remediation of environmental (as to all
media) pollution or contamination pursuant to any current, past, or future
federal, state, or local laws, rules, permits, regulations, orders or
ordinances; (vi) fines; (vii) penalties; (viii) losses; (ix) actions;
(x) suits; (xi) claims; (xii) judgments, orders, directives, injunctions,
decrees or awards of any federal, state, or local court or administrative or
governmental authority, bureau or agency; and (xiii) costs and expenses (including,
but not limited to, reasonable attorney’s fees) incurred in the defense of any
of the foregoing.

(b)           AS
BETWEEN THE PARTIES, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, A PARTY’S DAMAGES RESULTING FROM A BREACH OR VIOLATION OF ANY REPRESENTATION,
WARRANTY, COVENANT, AGREEMENT OR CONDITION CONTAINED HEREIN OR ANY ACT OR
OMISSION ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE LIMITED TO ACTUAL
DIRECT DAMAGES AND SHALL NOT INCLUDE ANY OTHER DAMAGES, INCLUDING, WITHOUT
LIMITATION, INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE
DAMAGES AND EACH PARTY EXPRESSLY RELEASES THE OTHER FROM ALL SUCH CLAIMS FOR
DAMAGES OTHER THAN ACTUAL DIRECT DAMAGES.

(c)           Except as otherwise expressly limited
herein, it is the intent of the Parties that all release and indemnity
obligations in this Article XI be without monetary limit. Except as
otherwise expressly provided for in this Article XI, a Party’s
obligation to indemnify and hold the indemnified Parties harmless against
liability as provided for herein shall apply to liability based, in whole or in
part, upon any and all theories of law including, without limitation by
designation, liability based upon:  (i) any
negligent act, grossly negligent act, or omission; (ii) strict liability; (iii) breach
of warranty arising out of the alleged supplying of a defective or unreasonably
dangerous product; or (iv) noncompliance with any law, rule, regulation,
order, permit or policy.

11.2         Indemnity.   Without limiting other rights and remedies of
Owner under this Agreement, to the fullest extent permitted by law, Construction
Manager does hereby assume liability for,
and does hereby agree to indemnify, protect and defend, save and hold harmless
Owner and its respective employees, affiliates, successors, assigns, agents,
officers and directors, and anyone else acting for or on behalf of any of the
foregoing Persons (each, an “Owner
Indemnified Party”) from and against any and all Damages that may be imposed on, suffered or incurred by,
or asserted against, any Owner Indemnified Party, that arise out of, or result
from, events or circumstances in any way related to, or arising out of:

(i)            Construction Manager’s (or any
Contractor’s) fraud, negligence, intentional act or omission, willful
misconduct or breach of Law relating to the Work, the Project and/or this
Agreement;

(ii)           materials,
construction or workmanship of Construction Manager or any Contractor or the
execution of the Work;

(iii)          breach
of this Agreement by Construction Manager;

 18

 

(iv)          any third-party claims (including lien claims)
relating to the Work and/or Construction Manager’s obligations under this
Agreement;

(v)           losses and liabilities arising from any legal
obligation that Owner may have to withhold amounts from, or deduct any tax at
the source from, payments due to Construction Manager (which in each case shall
be treated as paid to Construction Manager for purposes of this Agreement) or
the assertion of any tax payable by Construction Manager or any Contractor
against Owner;

(vi)          the performance of the Work under any workers’
compensation, disability or similar benefit act;

(vii)         the vitiation of any insurance policies due to
Construction Manager’s or any Contractor’s breach of warranty, declaration or
condition contained in any insurance policy, including the provision of false
and misleading information;

(viii)        any
amount that Construction Manager shall have failed to pay to any Contractor as
compensation for the performance of any Work (to the extent that Construction
Manager received payment from Owner for such Work), and Construction Manager
shall assume the defense of any suit or proceeding in connection therewith;

(ix)           any and all claims against Owner by any employee
of Construction Manager or any Contractor or by anyone directly or indirectly
employed by Construction Manager or any Contractor or anyone for whose acts
Construction Manager or any Contractor may be liable (except for claims
arising from the negligence or willful misconduct of Owner or its employees,
agents or representatives); and

(x)            (i) Hazardous
Materials brought onto the Property by Construction Manager or any Contractor
or any of their respective representatives, agents or employees; (ii) off-site
treatment, storage, transportation, disposal, clean-up or remediation by
Construction Manager or any Contractor (or any of their respective
representatives, agents or employees) of any Hazardous Materials that
originated from the Property, or (iii) a violation of any environmental
Law by Construction Manager or any Contractor or any of their respective
representatives, agents or employees.

(b)           Construction
Manager shall require all Contractors to indemnify, defend, and hold harmless
the Owner Indemnified Parties and Construction Manager from and against all
Damages, including but not limited to, (i) Damages that may be imposed on,
suffered or incurred by , or asserted against any Owner Indemnified Party, that
arise out of, or result from, events or circumstances in any way related to, or
arising from any of the events listed in Section 11.2(a)(i) through
(x), and (ii) claims for personal injury or

 19
 

 

death of any Contractor employees, arising
out of the Work performed by any such Contractor. Construction Manager shall
not have the right to waive or alter any of the requirements of this Section 11.2(b).

11.3         Claims.

(a)           Whenever
any claim shall arise for indemnification hereunder, the indemnified Party
shall promptly notify the indemnifying party of the claim and, when known, the
facts constituting the basis for such claim, except that in the event of any
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceedings by a third party, except as otherwise expressly
provided in this Article XI such notice shall specify, if known, the
amount or an estimate of the amount of the liability asserted by such third
party.

(b)           In
connection with any claim giving rise to indemnity hereunder resulting from or
arising out of any claim or legal proceeding by a Person who is not a Party,
the indemnifying Party may, upon written notice to the indemnified Party,
assume the defense of any such claim or legal proceeding. Except with the
consent of the indemnified Party, the indemnifying Party shall not consent to
the entry of any judgment arising from any such claim or legal proceedings
which, in each case, does not include as an unconditional term thereof of the
giving by the claimant or the plaintiff to the indemnified Party of a release
from all liability in respect thereof, unless the indemnifying Party has
actually paid to the indemnified Party the full amount of such judgment
settlement. Any indemnified Party shall be entitled to participate in (but not
control) the defense of any such claim or litigation resulting therefrom. If
the indemnifying Party does not elect to control the litigation as provided
above, the indemnified Party may defend against such claim or litigation in
such manner as it may deem appropriate, including, but not limited to, settling
such claim or litigation, after giving notice of the same to the indemnifying
Party, on such terms as such indemnified Party may deem appropriate, and the
indemnifying Party shall promptly reimburse the indemnified Party. All
indemnification hereunder shall be effected by payment of cash or delivery of a
certified or official bank check in the amount of the indemnification
liability.

(c)           To
the extent Construction Manager or an Owner Indemnified Party elects not to
pursue any legal remedies it has against other Persons, but relies on the
indemnities provided for in this Agreement, Construction Manager or Owner
Indemnified Party will assign its legal remedies to the maximum extent allowed
by law to Owner or Construction Manager, as appropriate.

11.4         Insurance.

(a)           Construction
Manager, without limiting its obligations or liabilities hereunder, shall
obtain and maintain the following insurance with limits not less than those
indicated. Construction Manager shall procure a waiver of subrogation in favor
of

 20
 

 

Owner or any other Owner Indemnified Party or
any other person to the extent indemnified by Construction Manager and name
Owner as an additional insured.

(i)            Workers’
Compensation Insurance covering all employees engaged in the Work hereunder in
accordance with the statutory requirements of the jurisdiction in which such
services are to be performed.

(ii)           Employer’s
Liability Insurance with limits not less than one million dollars ($1,000,000)
for each accident or death of an employee engaged in Work hereunder.

(iii)          Automobile
Liability insurance covering all motor vehicles owned or leased by Construction
Manager engaged in the performance of Work hereunder. Limits of liability shall
not be less than one million dollars ($1,000,000) for the accidental injury to
or death of one or more persons or damage to or destruction of property as a
result of one accident.

(b)           Except
as otherwise specifically requested and approved by the Parties, no other
insurance shall be carried by Construction Manager for the benefit of Owner.

(c)           Construction
Manager shall require all Contractors employed by it under this Agreement to
obtain the insurance identified in Schedule 4. If any proposed written
agreement contains language different than what is contained in Schedule 4,
Construction Manager shall submit the proposed insurance language to Owner for
review and approval.

(d)           Owner
shall purchase and maintain, in a company or companies authorized to do
business in the jurisdiction in which the Property is located, property
insurance upon the Work and the Property to the full insurable value thereof.
Such property insurance shall be maintained, unless otherwise agreed to in
writing by all persons and entities who are beneficiaries of such insurance,
until final payment has been made or until no person or entity other than Owner
has an insurable interest in the Property. This insurance shall include the
interests of Owner, Construction Manager and the Contractors. Such property
insurance shall be on an all-risk policy form and shall insure against the
perils of fire and extended coverage and physical loss or damage including,
without duplication of coverage, theft, vandalism, malicious mischief,
collapse, temporary buildings and debris removal including demolition
occasioned by enforcement of any applicable legal requirements.

ARTICLE XII.

MISCELLANEOUS

12.1         Entire Agreement.   This
Agreement constitutes the entire agreement and supersedes (i) all prior
oral or written proposals or agreements, (ii) all contemporaneous oral
proposals or agreements and (iii) all previous negotiations and all other
communications or understandings between the Parties with respect to the
subject matter hereof.

 21
 

 

12.2         Amendment and Modification.   No
modifications of the terms and provisions of this Agreement shall be or become
effective except by the execution by each of the Parties of a supplementary written
agreement.

12.3         Counterparts.   This
Agreement may be executed in counterparts and each counterpart shall for all
purposes be an original and may be executed and delivered by telelcopier or
facsimile, but all such counterparts together shall constitute one and the same
instrument.

12.4         Parties Bound by Agreement.   This
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective successors and assigns.

12.5         Terminology.   All personal
pronouns used in this Agreement, whether used in the masculine, feminine or
neuter gender, shall include all other genders; the singular shall include the
plural, and vice versa. Articles and other titles or headings are for
convenience only, and neither limit nor amplify the provisions of the Agreement
itself, and all references herein to articles, sections or subdivisions thereof
shall refer to the corresponding article, section or subdivision thereof of
this Agreement unless specific reference is made to such articles, sections or
subdivisions of another document or instrument.

12.6         Laws and Regulations.   This
Agreement and all of the terms and conditions contained herein, and the
respective obligations of the Parties, are subject to all valid and applicable
Laws.

12.7         Governing Law.   This
Agreement shall in all respects be governed by and construed in accordance with
the laws of the Nation including all matters of construction, validity and
performance, without giving effect to any choice of law rules thereof
which may direct the application of the laws of another jurisdiction.

12.8         Exhibits and Schedules.   All
exhibits, schedules and the like contained herein or attached hereto are
integrally related to this Agreement, and are hereby made a part of this
Agreement for all purposes. To the extent of any ambiguity, inconsistency or
conflict between the body of this Agreement and any of the exhibits, schedules
and the like attached hereto, the terms of the body of this Agreement shall
prevail.

12.9         Notices.   Unless
specifically provided in this Agreement, any written notice or other
communication shall be deemed given when received by the Party entitled to
notice. Notices shall be directed as follows:

(a)           if to Construction Manager, to:

Seneca Construction
Management Corporation

Attn: Clayton Seneca,
President & CEO

345 Third Street, Suite 610

Niagara Falls, New York  14303

Telephone: (716) 713-1723

Facsimile: (716) 282-3636

 22
 

 

with a copy to:

Harter, Secrest &
Emery LLP

Twelve Fountain Plaza, Suite 400

Buffalo, New York  14202

Facsimile:  (716) 853-1617

Attn:  Phillip
A. Delmont, Esq.

(b)           if to Owner, to:

Seneca Erie Gaming
Corporation

Attn: John Pasqualoni,
President and Chief Executive Officer

310 Fourth Street

Niagara Falls, New
York  14303

Telephone: (716) 299-1100

Facsimile: (716) 299-1200

with a copy to:

Seneca Niagara Falls
Gaming Corporation

Attn: Office of General
Counsel

310 Fourth Street

Niagara Falls, New
York  14303

Telephone: (716) 299-1100

Facsimile: (716) 299-1200

In like manner either Party may change the address to
which notices to it should be directed.

12.10       Further
Assurances. Subject to the terms and conditions set forth in this
Agreement, each of the Parties agrees to use all reasonable efforts to take, or
to cause to be taken, all actions, and to do, or to cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement. In case, at any
time after the execution of this Agreement, any further action is necessary or
desirable to carry out its purposes, the proper officers or directors of the
Parties shall take or cause to be taken all such necessary action.

12.11       Survival
of Representations, Warranties, Covenants and Agreements. Subject to the
provisions of Section 8.5, the representations, warranties,
covenants and agreements given by the Parties including in particular the terms
and conditions of Article XI shall survive this Agreement without
regard to any action taken pursuant to this Agreement.

12.12       Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such invalidity or unenforceability, without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any terms and provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so

 23
 

 

broad as to be unenforceable, each provision shall be
interpreted to be only so broad as is enforceable. A bankruptcy or similar
trustee must accept or, to the extent permitted by law, reject this Agreement
in its entirety.

12.13       Assignment.   No
Party shall voluntarily or involuntarily, directly or indirectly transfer or
otherwise alienate any or all of its rights, title or interest under this
Agreement to any other Person without the express prior written consent of the
other Party, which consent may be granted or withheld in such Party’s sole
discretion; provided, however,
that either Party may (without seeking the consent of the other Party) transfer
or otherwise alienate any of its rights, title or interest under this Agreement
in connection with (i) a transfer to an Affiliate which remains an
Affiliate, (ii) the sale of all or substantially all of the assets of such
Party, (iii) participation in a merger, consolidation, share exchange, or
other form of statutory reorganization with another Person if the Party is the
sole surviving Person, (iv) the granting of a pledge, mortgage,
hypothecation, lien or other security interest and (v) the foreclosure (judicial
or non-judicial) or other settlement or rearrangement pursuant to or in
connection with any transfer made pursuant to item (iv) above. Each
transferee shall expressly assume all obligations of the transferor under this
Agreement. An attempted transfer made without the prior written consent of the
non-transferring Party, where required, is invalid and ineffective. Unless
otherwise agreed to by all Parties, a transferring Party (other than a
transferor pursuant to item (v) above) shall, nevertheless, continue to be
responsible and primarily liable for all obligations, liabilities and other
expenses arising from or related to this Agreement.

12.14       Waivers.   No
waiver by either Party of any one or more defaults by the other Party in
performance of any provisions of this Agreement shall be effective unless in
writing and signed by the Party against whom such waiver is sought to be
enforced. Any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given and shall not operate or
be construed as a waiver of any future default or defaults, whether of a like
or a different character. The failure of a Party to insist, in any instance, on
strict performance of any of the terms and conditions hereof shall not be
construed as a waiver of such Party’s right in the future to insist on such
strict performance.

12.15       Cumulative
Rights, Obligations and Remedies.   Except as expressly provided
herein, the rights, obligations and remedies created by this Agreement are
cumulative and in addition to any other rights, obligations or remedies
otherwise available at law or in equity.

12.16       No
Third Party Beneficiaries.   This Agreement is for the sole and
exclusive benefit of the Parties. Except as expressly provided herein to the
contrary, nothing herein is intended to benefit any other Person not a Party
hereto, and no such Person shall have any legal or equitable right, remedy or
claim under this Agreement.

12.17       Confidentiality.   The
Parties agree that this Agreement and all information and data exchanged by
them in accordance with this Agreement shall be maintained in strict and
absolute confidence, except upon prior written notice and with respect to
disclosure (i) pursuant to the sale, disposition or other alienation
(directly or indirectly) of a Party’s rights and interest in and to this
Agreement, (ii) pursuant to the sale or other disposition (directly or
indirectly) of all or substantially all of the assets of a Party, (iii) in
conjunction with a merger, consolidation, share exchange or other form of
statutory reorganization involving a Party, (iv) to lenders, accountants

 24
 

 

and other representatives of the disclosing Party with a need to know
such information, (v) as required to make disclosure in compliance with
any applicable Law, or under compulsion of judicial process, to comply with
this Agreement and its objectives or (vi) to those of a Parties’
Affiliates that have a “need to know”; provided that the disclosing Party shall
be liable for any disclosure by the receiving Person to the extent such
disclosure would not be permitted by this Section if made by the
disclosing Party.

[SIGNATURE PAGE
FOLLOWS]

 25
 

 

IN WITNESS WHEREOF, each Party has caused this
Agreement to be executed in its name by an officer thereunto duly authorized as
of the date first set forth above.

	
  

  	
   

  	
  SENECA ERIE GAMING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ John Pasqualoni

  
	
   

  	
   

  	
  Printed Name:

  	
   

  	
  John Pasqualoni

  
	
   

  	
   

  	
  Title:

  	
   

  	
  President & CEO

  
	
  Dated: May 9,
  2006

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SENECA CONSTRUCTION MANAGEMENT CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Clayton Seneca

  
	
   

  	
   

  	
  Printed Name:

  	
   

  	
  Clayton Seneca

  
	
   

  	
   

  	
  Title:

  	
   

  	
  President & CEO

  

 

 26

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