STOCK PURCHASE AGREEMENT
between
WESTINGHOUSE ELECTRIC CORPORATION
(Seller)
and
XXXXXXX ENVIRONMENTAL SERVICES, INC.
(Buyer)
for
NATIONAL ELECTRIC, INC.
A MINNESOTA CORPORATION
Dated as of this 7th day of March, 1995
ARTICLE 1
SALE OF APTUS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 THE SALE . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 THE SALE OF THE SHARES. . . . . . . . . . . . 1
ARTICLE 2
PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . 2
2.2 PAYMENT OF PURCHASE PRICE. . . . . . . . . . . . . . 2
2.2.1 CLOSING DATE PAYMENT. . . . . . . . . . . . . 2
2.2.2 ISSUANCE OF SECURITIES. . . . . . . . . . . . 2
2.2.3 ASSUMPTION OF IDB LOAN AGREEMENT. . . . . . . 2
2.3 PURCHASE PRICE ADJUSTMENT. . . . . . . . . . . . . . 3
2.3.1 POST CLOSING ADJUSTMENT OF
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . 3
2.3.2 ADJUSTMENTS PROCEDURE . . . . . . . . . . . . 3
2.4 INTEREST PAYMENT ON CASH . . . . . . . . . . . . . . 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . 4
3.1 ORGANIZATION; POWER AND AUTHORITY. . . . . . . . . . 4
3.2 AUTHORIZATION, EXECUTION AND VALIDITY OF
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 4
3.3 CAPITALIZATION . . . . . . . . . . . . . . . . . . . 4
3.3.1 NEI . . . . . . . . . . . . . . . . . . . . . 4
3.3.2 APTUS . . . . . . . . . . . . . . . . . . . . 5
3.4 ORGANIZATIONAL RECORDS . . . . . . . . . . . . . . . 5
3.5 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . 5
3.6 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . 5
3.7 ABSENCE OF CERTAIN CHANGES . . . . . . . . . . . . . 6
3.8 NO CONFLICT; SELLER CONSENTS . . . . . . . . . . . . 7
3.9 REAL PROPERTY. . . . . . . . . . . . . . . . . . . . 7
3.9.1 OWNED REAL PROPERTY . . . . . . . . . . . . . 7
3.9.2 LEASED REAL PROPERTY. . . . . . . . . . . . . 8
3.10 PERSONAL PROPERTY . . . . . . . . . . . . . . . . . 8
3.10.1 OWNED PERSONAL PROPERTY. . . . . . . . . . . 8
3.10.2 LEASED PERSONAL PROPERTY . . . . . . . . . . 8
3.10.3 COMPUTER AND TELECOMMUNICATIONS
EQUIPMENT AND SOFTWARE . . . . . . . . . . . 8
3.10.3.1 EQUIPMENT . . . . . . . . . . . . . . 9
3.10.3.2 SOFTWARE. . . . . . . . . . . . . . . 9
3.10.4 NEI PROPERTY . . . . . . . . . . . . . . . . 9
3.11 CONDITION OF ASSETS . . . . . . . . . . . . . . . . 9
3.12 INSURANCE . . . . . . . . . . . . . . . . . . . . . 9
3.13 CONTRACTS . . . . . . . . . . . . . . . . . . . . .10
3.14 INVENTORY . . . . . . . . . . . . . . . . . . . . . 11
3.15 ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . 11
3.16 LITIGATION. . . . . . . . . . . . . . . . . . . . . 11
3.17 LAWS AND PERMITS. . . . . . . . . . . . . . . . . . 12
3.17.1 COMPLIANCE WITH LAWS . . . . . . . . . . . . 12
3.17.2 PERMITS AND LICENSES . . . . . . . . . . . . 12
3.18 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . 12
3.19 PATENTS, TRADEMARKS AND SIMILAR RIGHTS. . . . . . . 13
3.19.1 INTELLECTUAL PROPERTY. . . . . . . . . . . 13
3.19.2 LICENSES; INFRINGEMENT. . . . . . . . . . . 13
3.20 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . 14
3.20.1 EMPLOYEES. . . . . . . . . . . . . . . . . . 14
3.20.2 UNIONS.. . . . . . . . . . . . . . . . . . . 14
3.20.3 EMPLOYEE AND CONSULTING CONTRACTS. . . . . . 14
3.20.4 NLRB . . . . . . . . . . . . . . . . . . . . 14
3.21 EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . 14
3.21.1 PLANS. . . . . . . . . . . . . . . . . . . 15
3.21.2 RECORDS. . . . . . . . . . . . . . . . . . 15
3.21.3 ACTIONS. . . . . . . . . . . . . . . . . . 15
3.21.4 FUNDING. . . . . . . . . . . . . . . . . . 15
3.21.5 MULTIEMPLOYER PLANS. . . . . . . . . . . . . 16
3.21.6 ACCELERATION OF BENEFITS . . . . . . . . . . 16
3.22 TAXES . . . . . . . . . . . . . . . . . . . . . . . 16
3.22.1 RETURNS. . . . . . . . . . . . . . . . . . . 16
3.22.2 EXTENSIONS. . . . . . . . . . . . . . . . . 16
3.22.3 AFFILIATED GROUPS. . . . . . . . . . . . . 17
3.22.4 AUDITS. . . . . . . . . . . . . . . . . . . 17
3.23 BROKERS . . . . . . . . . . . . . . . . . . . . . . 17
3.24 NO SUBSIDIARIES OR INVESTMENTS. . . . . . . . . . . 17
3.25 SUFFICIENCY OF ASSETS . . . . . . . . . . . . . . . 17
3.26 BANK ACCOUNTS . . . . . . . . . . . . . . . . . . . 17
3.27 CERTAIN RELATIONSHIPS . . . . . . . . . . . . . . . 17
3.28 FULL DISCLOSURE . . . . . . . . . . . . . . . . . . 17
3.29 SOPHISTICATED SELLER. . . . . . . . . . . . . . . . 18
3.30 SCHEDULE REFERENCES . . . . . . . . . . . . . . . . 18
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . 18
4.1 ORGANIZATION; POWER AND AUTHORITY. . . . . . . . . . 18
4.2 AUTHORIZATION, EXECUTION AND VALIDITY. . . . . . . . 18
4.3 NO CONFLICT; BUYER CONSENTS. . . . . . . . . . . . . 18
4.4 BROKERS. . . . . . . . . . . . . . . . . . . . . . . 18
4.5 PURCHASE FOR INVESTMENT. . . . . . . . . . . . . . . 19
ARTICLE 5
COVENANTS OF SELLER. . . . . . . . . . . . . . . . . . . . . . 19
5.1 COOPERATION BY SELLER. . . . . . . . . . . . . . . . 19
5.2 PRE-CLOSING ACCESS TO INFORMATION. . . . . . . . . . 19
5.3 CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . 20
5.3.1 BUSINESS IN ORDINARY COURSE . . . . . . . . . 20
5.3.2 BUYER'S CONSENT . . . . . . . . . . . . . . . 21
5.3.3 REPRESENTATIONS AND WARRANTIES. . . . . . . . 21
5.4 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . 21
5.4.1 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . 21
5.4.2 CERTAIN CONSENTS. . . . . . . . . . . . . . . 21
5.5 SUPPLEMENTS TO SCHEDULES . . . . . . . . . . . . . . 22
5.6 CERTAIN FINANCIAL COVENANTS. . . . . . . . . . . . . 22
5.7 EXCLUSIVE DEALING. . . . . . . . . . . . . . . . . . 23
5.8 CLOSURE AND POST CLOSURE COSTS AND FINANCIAL
ASSURANCES . . . . . . . . . . . . . . . . . . . . . 23
5.8.1 CLOSING DATE CLOSURE AND POST CLOSURE
COSTS DEFINED . . . . . . . . . . . . . . . . 23
5.8.2 FINANCIAL ASSURANCES DEFINED. . . . . . . . . 23
5.8.3 INCREASES IN COSTS OR REQUIRED ASSURANCES . . 23
5.8.4 INSURANCE PREMIUM PAYMENTS . . . . . . . . 23
5.8.5 LETTERS OF CREDIT . . . . . . . . . . . . . . 23
5.9 RIGHT TO SELLER BUSINESS POST CLOSING. . . . . . . . 25
5.10 RIGHT TO SELLER INTELLECTUAL PROPERTY POST
CLOSING . . . . . . . . . . . . . . . . . . . . . . 25
5.11 MIS AND TELECOMMUNICATIONS SERVICES POST CLOSING. . 25
5.12 INTERCOMPANY ACCOUNTS . . . . . . . . . . . . . . . 26
5.13 PREPARATION OF FINANCIAL STATEMENTS . . . . . . . . 26
5.14 . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.15 LEASED REAL PROPERTY. . . . . . . . . . . . . . . . 26
5.16 CERTAIN ENVIRONMENTAL CLEAN-UPS . . . . . . . . . . 26
ARTICLE 6
COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . 27
6.1 COOPERATION BY BUYER . . . . . . . . . . . . . . . . 27
6.2 DUE DILIGENCE ACTIVITIES . . . . . . . . . . . . . . 27
6.3 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . 27
6.4 HSR ACT COMPLIANCE . . . . . . . . . . . . . . . . . 27
6.5 RELEASE FROM GUARANTEES. . . . . . . . . . . . . . . 27
6.6 DUE DILIGENCE - POST-SIGNING . . . . . . . . . . . . 28
6.7 REPAYMENT OF WORKING CAPITAL ADVANCE . . . . . . . . 28
ARTICLE 7
MUTUAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . 28
7.1.1 EMPLOYMENT. . . . . . . . . . . . . . . . . . 28
7.1.2 UNION REPRESENTATION. . . . . . . . . . . . . 29
7.1.3 TERMINATION OF COVERAGE UNDER SELLER'S
EMPLOYEE BENEFIT PLANS
AND COVERAGE UNDERBUYER'S EMPLOYEE BENEFIT
PLANS . . . . . . . . . . . . . . . . . . . 30
7.1.4 PENSION PLANS . . . . . . . . . . . . . . . . 30
7.1.5 SAVINGS PROGRAM . . . . . . . . . . . . . . . 30
7.1.6 WELFARE AND FRINGE BENEFITS . . . . . . . . . 31
7.2 TAX COVENANTS. . . . . . . . . . . . . . . . . . . . 31
7.2.1 APPORTIONMENT OF INCOME TAXES BETWEEN PRE-
CLOSING AND POST-CLOSING PERIODS. . . . . . . 31
7.2.2 PAYMENT OF INCOME TAXES . . . . . . . . . . . 31
7.2.3 PREPARATION AND FILING OF INCOME TAX
RETURNS . . . . . . . . . . . . . . . . . . . 32
7.2.4 COOPERATION . . . . . . . . . . . . . . . . . 32
7.2.5 REFUND CLAIMS . . . . . . . . . . . . . . . . 33
7.2.6 TAX SHARING AGREEMENTS. . . . . . . . . . . . 33
7.2.7 NOTICE OF AUDIT . . . . . . . . . . . . . . . 33
7.2.8 AUDITS CONTROLLED BY SELLER . . . . . . . . . 33
7.2.9 AUDITS CONTROLLED BY BUYER. . . . . . . . . . 33
7.2.10 338(H)(10) ELECTION. . . . . . . . . . . . . 33
7.2.11 NET OPERATING LOSS . . . . . . . . . . . . . 34
7.2.12 CARRYBACKS . . . . . . . . . . . . . . . . . 34
7.3 BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . 34
7.3.1 ACCESS. . . . . . . . . . . . . . . . . . . 34
7.3.2 DESTRUCTION . . . . . . . . . . . . . . . . . 34
7.3.3 CONFIDENTIALITY . . . . . . . . . . . . . . . 34
7.3.4 ASSISTANCE. . . . . . . . . . . . . . . . . . 34
7.4 NON-COMPETITION. . . . . . . . . . . . . . . . . . . 35
7.5 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . 38
7.6 NON-SOLICITATION OF EMPLOYEES. . . . . . . . . . . . 38
7.7 RIGHTS AGREEMENT . . . . . . . . . . . . . . . . . . 38
7.8 REMARKETING OF IDBS AND COST SHARING . . . . . . . . 38
7.8.1 INITIAL REMARKETING. .. . . . . . . . . . . . 38
7.8.2 REMARKETING OF IDBS. .. . . . . . . . . . . . 38
7.8.3 EFFECTIVE CONVERSION DATE. .. . . . . . . . . 39
7.8.3.1 OPTION OF BUYER . . . . . . . . . . . 39
7.8.3.2 OPTION OF SELLER. . . . . . . . . . . 39
7.8.4 IDB COST SHARING . .. . . . . . . . . . . . . 40
7.8.4.1 CALCULATION AND PAYMENT . . . . . . . 40
7.8.5 COOPERATION. . .. . . . . . . . . . . . . . . 40
7.8.5.1 REMARKETING AGENT . . . . . . . . . . 41
7.8.5.2 INTEREST RATE CAP . . . . . . . . . . 41
7.8.6 UNDERWRITING COSTS . . . . . . . . . . . . . 41
7.8.7 CONVERSION . . . . . . . . . . . . . . . . . 41
7.8.8 REBATE OBLIGATION . . . . . . . . . . . . . . 41
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING. . . . . . . . . . . . . . . . 41
8.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. . . . . 41
8.1.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. . 41
8.1.2 LITIGATION. . . . . . . . . . . . . . . . . . 42
8.1.3 COVENANTS . . . . . . . . . . . . . . . . . . 42
8.1.4 DELIVERIES. . . . . . . . . . . . . . . . . . 42
8.1.5 CONSENTS. . . . . . . . . . . . . . . . . . . 42
8.1.6 CUSTOMERS . . . . . . . . . . . . . . . . . . 42
8.1.7 NO MATERIAL ADVERSE EFFECT. . . . . . . . . . 42
8.2 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS . . . . 42
8.2.1 TRUTH OF REPRESENTATIONS AND WARRANTIES . . . 42
8.2.2 LITIGATION. . . . . . . . . . . . . . . . . . 42
8.2.3 COVENANTS . . . . . . . . . . . . . . . . . . 42
8.2.4 DELIVERIES. . . . . . . . . . . . . . . . . . 42
8.2.5 [INTENTIONALLY LEFT BLANK]. . . . . . . . . . 42
8.2.6 PERMITS . . . . . . . . . . . . . . . . . . . 43
ARTICLE 9
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1 TIME AND PLACE . . . . . . . . . . . . . . . . . . . 43
9.2 DELIVERIES BY SELLER . . . . . . . . . . . . . . . . 43
9.3 DELIVERIES BY BUYER. . . . . . . . . . . . . . . . . 44
ARTICLE 10
TERMINATION PRIOR TO CLOSING DATE. . . . . . . . . . . . . . . 45
10.1 TERMINATION . . . . . . . . . . . . . . . . . . . . 45
10.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . 46
10.2.1 GENERAL . . . . . . . . . . . . . . . . . . 46
ARTICLE 11
INDEMNIFICATION AND PROCEDURES . . . . . . . . . . . . . . . . 46
11.1 INDEMNIFICATION BY SELLER . . . . . . . . . . . . . 46
11.2 INDEMNIFICATION BY BUYER. . . . . . . . . . . . . . 47
11.3 NOTICE AND RESOLUTION OF CLAIM. . . . . . . . . . . 48
11.3.1 NOTICE. . . . . . . . . . . . . . . . . . . 48
11.3.2 RIGHT TO ASSUME DEFENSE . . . . . . . . . . 48
11.3.3 FAILURE TO ASSUME DEFENSE . . . . . . . . . 48
11.4 LIMITS ON INDEMNIFICATION . . . . . . . . . . . . . 48
11.5 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . 49
11.6 EXCLUSIVE REMEDY. . . . . . . . . . . . . . . . . . 49
11.7 NO MITIGATION . . . . . . . . . . . . . . . . . . . 49
11.8 INDEMNITY PAYMENTS. . . . . . . . . . . . . . . . . 50
11.9 BUYER'S COOPERATION . . . . . . . . . . . . . . . . 50
11.10 PAYMENT AND ASSIGNMENT OF CLAIMS. . . . . . . . . . 50
11.10.1 PAYMENT . . . . . . . . . . . . . . . . . . 50
11.10.2 ASSIGNMENT. . . . . . . . . . . . . . . . . 50
11.11 OTHER BENEFICIARIES. . . . . . . . . . . . . . . . 50
11.12 CONSEQUENTIAL DAMAGES; OTHER LIMITATIONS . . . . . 50
ARTICLE 12
CERTAIN ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . 51
12.1 SELLER'S ENVIRONMENTAL RESPONSIBILITY . . . . . . . 51
12.1.1 SELLER INDEMNITY. . . . . . . . . . . . . . 51
12.2 BUYER ENVIRONMENTAL RESPONSIBILITY. . . . . . . . . 51
12.3 IDENTIFIED ENVIRONMENTAL CONCERNS . . . . . . . . . 52
12.4 OFF-SITE DISPOSAL . . . . . . . . . . . . . . . . . 52
12.5 ENVIRONMENTAL VIOLATIONS. . . . . . . . . . . . . . 52
12.6 THIRD PARTY ENVIRONMENTAL CLAIM . . . . . . . . . . 52
12.7 GOVERNMENT REMEDIATION CLAIM. . . . . . . . . . . . 53
12.8 LIMITATIONS AND DEDUCTIBLES . . . . . . . . . . . . 53
12.9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 54
12.10 CERTAIN REMEDIATION ACTIVITIES . . . . . . . . . . 54
12.10.1 COFFEYVILLE CONTAMINATION . . . . . . . . . 54
12.10.1.1 RESPONSIBILITY OF SELLER . . . . . . 54
12.10.1.2 TCE COST SHARING . . . . . . . . . . 55
12.10.1.3 SURVIVAL . . . . . . . . . . . . . . 55
12.10.2 CONTROL . . . . . . . . . . . . . . . . . . 55
12.10.3 ACCESS. . . . . . . . . . . . . . . . . . . 55
12.10.4 COOPERATION . . . . . . . . . . . . . . . . 56
12.10.5 MONITORING AND SAMPLING . . . . . . . . . . 56
12.10.6 CONDUCT . . . . . . . . . . . . . . . . . . 56
ARTICLE 13
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 14
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 65
14.1 SEVERABILITY. . . . . . . . . . . . . . . . . . . . 65
14.2 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . 65
14.3 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . 65
14.4 HEADINGS. . . . . . . . . . . . . . . . . . . . . . 65
14.5 WAIVER. . . . . . . . . . . . . . . . . . . . . . . 65
14.6 NO THIRD-PARTY BENEFICIARIES. . . . . . . . . . . . 65
14.7 SALES AND TRANSFER TAXES. . . . . . . . . . . . . . 66
14.8 OTHER EXPENSES. . . . . . . . . . . . . . . . . . . 66
14.9 NOTICES . . . . . . . . . . . . . . . . . . . . . . 66
14.10 GOVERNING LAW; INTERPRETATION. . . . . . . . . . . 67
14.11 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . 67
14.12 ARBITRATION. . . . . . . . . . . . . . . . . . . . 67
14.13 FINANCIAL PROJECTIONS. . . . . . . . . . . . . . . 68
14.14 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . 68
14.15 ENTIRE AGREEMENT; AMENDMENT. . . . . . . . . . . . 69
14.16 FURTHER ASSURANCES . . . . . . . . . . . . . . . . 69
14.17 EXCLUSIVE JURISDICTION AND CONSENT TO SERVICE OF
PROCESS. . . . . . . . . . . . . . . . . . . . . . 69
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of this 7th day
of March, 1995 by and between WESTINGHOUSE ELECTRIC CORPORATION, a Pennsylvania
corporation ("Seller"), and XXXXXXX ENVIRONMENTAL SERVICES, INC., a Delaware
corporation ("Buyer").
R E C I T A L S
- - - - - - - -
A. Seller through Aptus, Inc., a Delaware Corporation ("Aptus") is
engaged in the sale of services related to the transportation, storage,
laboratory analysis and incineration of certain types of hazardous waste.
Seller's transportation, storage, laboratory analysis, incineration and certain
of its sales functions are conducted through Aptus. The major facilities are
located in Aragonite, Utah; Coffeyville, Kansas; Denver, Colorado; Houston,
Texas; and Lakeville, Minnesota. Seller also conducts certain related sales
functions and provides related administrative support and information technology
through facilities owned or leased directly by the Seller which are located in
Pittsburgh, Pennsylvania. The foregoing business and operations shall
collectively be referred to as "the Business."
B. Aptus is a wholly owned subsidiary of National Electric, Inc.,
a Minnesota corporation ("NEI"), which is a wholly owned subsidiary of Seller.
C. Buyer wishes to acquire from the Seller, and Seller wishes to
sell to the Buyer all of the issued and outstanding shares of capital stock of
NEI in the manner, for the consideration, and subject to the terms and
conditions set forth herein;
NOW, THEREFORE, Buyer and Seller, intending to be legally bound,
hereby agree as follows:
ARTICLE 1
SALE OF APTUS
1.1 The Sale.
1.1.1 The Sale of the Shares. On the terms and subject to the
conditions of this Agreement, on the Closing, Seller shall sell and assign to
Buyer and Buyer shall purchase and acquire all of the Shares.
ARTICLE 2
PRICE
1
2.1 Purchase Price. The total consideration for the purchase of the
Business as set forth in Article 1 hereof shall be One Hundred Thirty-Five
Million Dollars ($135,000,000) ("Purchase Price"). The Purchase Price shall be
composed of:
(a) Six Million, Five Hundred Thousand Dollars ($6,500,000) (the
"Cash"); plus
(b) The assumption by Buyer of all of Seller's obligations and duties
under that certain Loan Agreement, dated as of June 1, 1990, between Tooele
County, Utah (the "Issuer") and the Seller (the "IDB Loan Agreement") entered
into in connection with the issuance by the Issuer of in the aggregate
Forty-Five Million Seven Hundred Thousand Dollars ($45,700,000) principal amount
of its Variable Rate Hazardous Waste Treatment Revenue Bonds (Westinghouse
Electric Corporation Project), Series A (the "IDBs"); plus
(c) The issuance by Buyer to Seller of Senior Unsecured Debentures
(the "Senior Unsecured Debentures") having an aggregate principal amount of
Sixteen Million Eight Hundred Thousand Dollars ($16,800,000) and having terms
and conditions set forth in the form of indenture on Exhibit 2.1 (c), as the
same may be adjusted by an amendment to such indenture pursuant to Section 2.4;
plus
(d) The issuance by Buyer to Seller of Subordinated Convertible
Debentures (the "Subordinated Debentures") having an aggregate principal amount
of Sixty-Six Million Dollars ($66,000,000) and having terms and conditions set
forth in the form of indenture on Exhibit 2.1 (d).
2.2 Payment of Purchase Price.
2.2.1 Closing Date Payment. At the Closing, Buyer shall pay the
Cash to Seller by wire transfer in immediately available funds.
Payment shall be made to a bank designated by Seller in writing
not less than one business day prior to the Closing.
2.2.2 Issuance of Securities. At the Closing, Buyer shall issue
to Seller the Senior Unsecured Debentures and the Subordinated Convertible
Debentures (collectively the "Securities") pursuant to the Debenture Purchase
Agreement in the form attached as Exhibit 2.2.2.
2.2.3 Assumption of IDB Loan Agreement. At the Closing, Buyer
shall assume all of the obligations and duties of Seller under the IDB Loan
Agreement and will deliver the Assignment and Assumption Agreement in the form
attached as Exhibit 2.2.3.
2
2.3 Purchase Price Adjustment. The Purchase Price will be adjusted
based on changes in the amount of Net Worth between the date of the December
1994 Balance Sheet and the Closing Date as follows:
2.3.1 Post Closing Adjustment of Purchase Price. As soon as
practicable, but not later than sixty (60) days after the Closing Date, Seller
shall deliver to Buyer (i) the balance sheet of Aptus and NEI for the Date of
Closing and related statements of income and cash flows for the period from
December 31, 1994 to the Date of Closing, prepared in accordance with GAAP
applied on a basis consistent with that used by Price Waterhouse in the
preparation of the FYE 1993 and 1994 Financial Statements, (ii) the Financial
Statements required by Section 3.5 but not available at the execution hereof,
and (iii) Seller's calculation of net worth which shall be calculated as of
December 31, 1994 and adjusted in accordance with Schedule 2.3.1 (the "December
1994 Adjusted Net Worth") and at the Closing Date, also adjusted in accordance
with Schedule 2.3.1 (the "Final Adjusted Net Worth"). Within thirty (30) days
after receipt of the aforementioned items, Buyer shall either inform Seller in
writing that the calculation of Final Adjusted Net Worth is acceptable or object
to the calculation of Final Adjusted Net Worth in writing setting forth in
reasonable detail Buyer's objections and the basis for those objections. If
Buyer so objects and the Parties do not resolve such objections on a mutually
agreeable basis within thirty (30) days after Seller's receipt thereof, the
disagreement shall be resolved within an additional sixty (60) day period by a
"Big 6" accounting firm jointly selected by the Parties (the "Independent
Firm"). The decision of the Independent Firm shall be final and binding upon the
Parties. Upon the agreement of the Parties or the decision of the Independent
Firm, or if Buyer fails to deliver an objection to Seller within the thirty (30)
day period provided above, the calculation of Final Adjusted Net Worth shall be
deemed final. Each Party shall bear the fees, costs and expenses of its own
accountants and shall share equally the fees, costs and expenses of the
Independent Firm.
2.3.2 Adjustments Procedure. If Final Adjusted Net Worth is equal
to the December 1994 Adjusted Net Worth, no adjustment shall be made to the
amount of outstanding Senior Unsecured Debentures. If Final Adjusted Net Worth
is greater than the December 1994 Adjusted Net Worth, the amount of then
outstanding Senior Unsecured Debentures shall be increased on a
dollar-for-dollar basis to reflect such increase in the Final Adjusted Net Worth
in excess of December 1994 Adjusted Net Worth.
If Final Adjusted Net Worth is less than the December 1994 Adjusted Net Worth,
the amount of the then outstanding Senior Unsecured Debentures shall be
decreased on a dollar-for-dollar basis to reflect such decrease in the Final
Adjusted Net Worth below the December 1994 Adjusted Net Worth.
2.4 Interest Payment on Cash. At Closing, Buyer shall make an
additional payment to Seller of Sixteen Thousand Dollars ($16,000.00)
representing accrued interest on the Cash. This payment is to be made since no
down payment was made in connection with this Agreement.
3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer:
3.1 Organization; Power and Authority.
3.1.1 NEI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota. Aptus is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The jurisdictions in which NEI and Aptus are qualified
to conduct business as foreign corporations are set forth in Schedule 3.1.1,
listed separately for each company. NEI and Aptus are duly qualified to transact
business in each jurisdiction in which such qualification is required by Law,
except where failure to be qualified would not have a Material Adverse Effect.
NEI and Aptus have all corporate power needed to own or lease their respective
assets and to carry on their respective business as they are now being
conducted.
3.1.2 The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. The Seller has all corporate power needed to execute, deliver and
perform its obligations under this Agreement and to consummate the sale of the
Shares.
3.1.3 Schedule 3.1.3 sets forth a brief description of the
corporate history and ownership of Aptus and NEI, identifying all corporate or
partnership predecessors of NEI and Aptus, all Persons merged into NEI or Aptus,
and all Persons whose liabilities were assumed by NEI or Aptus as a result of an
acquisition, divestiture or reorganization, whether by operation of law or
contract.
3.2 Authorization, Execution and Validity of Agreement. The execution,
delivery and performance by Seller of this Agreement and the consummation by
Seller of the sale of the Shares of Aptus and the Transferred Assets have been
duly authorized by all necessary corporate action. This Agreement has been duly
and validly executed by Seller, constitutes its valid and binding obligation and
is enforceable against Seller in accordance with its terms.
3.3 Capitalization.
3.3.1 NEI. The authorized capital stock of NEI consists of the
Shares, all of which are issued and outstanding. All of the Shares have been
duly authorized and validly issued and are fully-paid and non-assessable. Seller
is the beneficial and record owner of all of the Shares. The Shares are not
subject to Liens or restrictions on transfer, other than restrictions imposed by
applicable securities Laws. There is no authorized or outstanding option,
subscription, warrant, call, right, commitment or other agreement
4
obligating NEI to issue or transfer any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock.
3.3.2 Aptus. The authorized capital stock of Aptus consists of
the Aptus Shares, all of which are issued and outstanding. All of the Shares
have been duly authorized and validly issued and are fully-paid and
non-assessable. NEI is the beneficial and record owner of all of the Aptus
Shares. The Aptus Shares are not subject to Liens or restrictions on transfer,
other than restrictions imposed by applicable securities Laws. There is no
authorized or outstanding option, subscription, warrant, call, right, commitment
or other agreement obligating NEI to issue or transfer any shares of its capital
stock or any securities convertible into or exercisable for any shares of its
capital stock.
3.4 Organizational Records. Neither NEI or Aptus has violated its
articles of incorporation or its by-laws. Copies of the articles of
incorporation of Aptus and all amendments thereto, and of the by-laws of NEI and
Aptus and all amendments thereto, certified to be complete and correct are
attached as Schedule 3.4 hereto.
3.5 Financial Statements.
3.5.1 Schedule 3.5 hereto includes all of the Financial
Statements. The Financial Statements have been prepared in connection with the
sale of the Business and are prepared in accordance with GAAP applied on a basis
consistent with that used by Price Waterhouse in connection with preparation of
the FYE 1993 and 1994 Financial Statements. The Financial Statements are correct
and complete and in accordance with the books and records of NEI and Aptus. The
balance sheets included in the Financial Statements in each case fairly present
in all material respects and in reasonable detail the financial condition,
assets and liabilities of NEI and Aptus as at the respective dates specified
therein, and the related statements of income and cash flows, for each of the
periods then ended, fairly present in all material respects the results of the
operations for the periods then ended.
3.5.2 "Financial Statements" shall mean the "Audited Financial
Statements" and the "Unaudited Financial Statements." "Audited Financial
Statements" shall mean the following: (i) audited balance sheets of Aptus and
NEI as of December 31, 1993 and December 31, 1994; and (ii) audited statements
of income and cash flows of Aptus and NEI for the periods ended December 31,
1993 and December 31, 1994. The Audited Financial Statements shall be prepared
by Price Waterhouse. "Unaudited Financial Statements" shall mean the unaudited
balance sheet of Aptus and NEI as of March 31, 1995 (the "March 1995 Balance
Sheet") and the related statements of income and cash flows for the period then
ended.
3.6 Absence of Undisclosed Liabilities. Neither NEI nor Aptus have any
debts, liabilities or obligations of any nature whatsoever, whether absolute,
accrued, contingent or otherwise (collectively, the "Undisclosed Liabilities")
except:
5
(a) liabilities that are referred to or reflected or reserved against
on the December 1994 Balance Sheet or the March 1995 Balance Sheet or the notes
thereto to the extent that the applicable accounting principles require such
action, including matters relating to deferred tax accounts;
(b) Retained Liabilities or other liabilities that were not required
to be referred to or reflected or reserved against on the December 1994 Balance
Sheet or the March 1995 Balance Sheet; and
(c) liabilities, not referred to or reflected or reserved against on
the December 1994 Balance Sheet or the March 1995 Balance Sheet, incurred in the
ordinary course of business and consistent with past practices, none of which,
individually or in the aggregate has a Material Adverse Effect.
3.7 Absence of Certain Changes. Except as set forth in Schedule 3.7 or
as contemplated by Section 5.12 hereto (Intercompany Accounts) or other
provisions of this Agreement, the business of Aptus has been conducted, since
December 31, 1994, in the ordinary course, and Aptus has not entered into any
transaction (or committed to enter into any such transaction) other than in the
ordinary course of its business. NEI is not conducting any business operations,
and has not entered into any transactions since December 31, 1994, except those
transactions necessary to vest title to the Owned Real Property in Aptus. In
particular, without limiting the generality of the foregoing, Aptus has not
since that date:
3.7.1 purchased or redeemed directly or indirectly any shares of
its capital stock;
3.7.2 issued or sold or agreed to issue or sell any shares of its
capital stock or any option, warrant, conversion or other right to acquire any
such share or any securities convertible into or exchangeable for such shares,
or amended its articles or by-laws;
3.7.3 declared or paid any dividend or declared or made any other
distribution on any of the shares of any class of their capital stock or on any
other of their securities;
3.7.4 acquired or sold, assigned, transferred, licensed,
terminated, leased or disposed of any intangible assets;
3.7.5 suffered or incurred any damage, destruction or liability
(whether or not covered by any insurance), or any strike or work stoppage, that
either by itself or in the aggregate has resulted in a Material Adverse Effect;
3.7.6 incurred any obligations or liabilities for money borrowed
(except for obligations to be discharged on or before Closing);
6
3.7.7 mortgaged or pledged or subjected to any Lien, any of its
material assets, tangible or intangible (excepting statutory liens of landlords,
carriers, warehousemen, mechanics, materialmen and similar Persons incurred in
the ordinary course of business for sums not yet due);
3.7.8 sold, transferred or disposed of any of its assets except
assets used or consumed in the ordinary course of business and obsolete
equipment and equipment which has been replaced in the ordinary course of
business;
3.7.9 made any individual capital expenditures or commitments
therefor in excess of $50,000.00;
3.7.10 altered or revised in any material way any of its
accounting principles, procedures, methods or practices;
3.7.11 made any material amendment to any Contracts, other than
in the ordinary course of business and consistent with past practices; or
3.7.12 increased the compensation of any employees, except for
normal periodic increases in the ordinary course of business and consistent with
past practices, or entered into any employment or consulting agreement not
terminable at will without penalty or continuing obligation.
3.8 No Conflict; Seller Consents. Except as set forth on Schedule 3.8
or as would not have a Material Adverse Effect, the execution, delivery and
performance by Seller of this Agreement will not (a) violate any Law, (b)
violate any Charter Document of Seller, (c) require any Consent from any
Governmental Authority, (d) breach any Charter Document, Material Contract,
Material Lease, or Material Permit of Aptus, or (e) result in the creation of
any Lien on any assets of Aptus, including Transferred Assets. No governmental
authorization, approval, order, permission, license, permit, certificate,
franchise or consent, and no registration, declaration or filing with any court,
governmental department, commission, authority, board, bureau, agency or other
instrumentality, is required in connection with the execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby, other than (a) those that have already been
obtained (and copies provided to Buyer), (b) the transfer of certain FCC
licenses identified on Schedule 3.8 from Seller to Aptus and (c) the transfer of
certain Financial Assurances.
3.9 Real Property.
3.9.1 Owned Real Property.
(a) Schedule 3.9.1 lists and sets forth the full legal
description for all of the real property owned by Aptus (the "Owned Real
Property"). Aptus has good and
7
marketable title to the Owned Real Property subject to no Liens, except
Permitted Liens and except as disclosed on Schedule 3.9.1. Aptus owns no other
real property and has no options or other interests in real property, except as
disclosed on Schedule 3.9.1.
(b) Aptus has not received any written notice for assessments for
public improvements against any of the Owned Real Property which remains unpaid
(nor is it negotiating any such assessments) and, to the best of Seller's
knowledge, no such assessment has been proposed. There is no pending
condemnation, expropriation, eminent domain or similar proceeding affecting all
or any portion of any of such properties and, to the best of Seller's knowledge,
no such proceeding is contemplated.
3.9.2 Leased Real Property. Schedule 3.9.2 lists all of the real
property leased by Aptus (as landlord or tenant) as of the date hereof (the
"Leased Real Property"). All Leases relating to the Leased Real Property (the
"Real Property Leases") and all amendments thereto are identified and described
on Schedule 3.9.2 and true and correct copies have been delivered or made
available to Buyer. All Leases are valid, binding and enforceable and in full
force and effect, except as would not have a Material Adverse Effect. There has
been no breach of any Real Property Lease by Aptus that would have a Material
Adverse Effect which has not been cured or waived.
3.9.3 NEI does not own, lease or have any interest in any real
property.
3.10 Personal Property.
3.10.1 Owned Personal Property. Except as set forth on Schedule
3.10.1 and except for Permitted Liens, Aptus has good and marketable title,
subject to no Liens, to all personal property owned by Aptus, including property
reflected on the books and records of Aptus and all personal property acquired
or leased by Aptus since the date thereof, including the Transferred Assets,
other than (a) property that has been disposed of in the ordinary course of
business, (b) as contemplated by Schedule 5.3 hereto and (c) Leased Personal
Property.
3.10.2 Leased Personal Property. Schedule 3.10.2
lists all of the personal property leased to Aptus pursuant to a Material
Personal Property Lease as of the date hereof ("Leased Personal Property"). All
Material Personal Property Leases and all amendments thereto are identified and
described on Schedule 3.10.2 and true and correct copies have been delivered or
made available to Buyer. All Material Personal Property Leases are valid,
binding and enforceable and in full force and effect, except as would not have a
Material Adverse Effect. There has been no material breach of any such Material
Personal Property Lease by Aptus that would have a Material Adverse Effect which
has not been cured or waived.
3.10.3 Computer and Telecommunications Equipment and Software.
8
3.10.3.1 Equipment. Schedule 3.10.3.1
sets forth a complete listing and description of all computer or
telecommunications equipment owned by Aptus or used by Aptus in the Business
(the "MIS Equipment") indicating for each item of MIS Equipment whether it is
owned by Aptus, owned by Seller, leased by Aptus or leased by Seller. Leased MIS
Equipment is further identified by applicable lease and maintenance agreements
(including date and vendor), remaining term and amount of monthly or yearly
payments. If any MIS Equipment is leased by Seller, the lease shall be
transferred to Aptus on or prior to Closing without modification and with no
increase in the lease payments for the then existing term. Certain MIS Equipment
is identified by Buyer on Schedule 3.10.3.1 as MIS Equipment not required by
Buyer past the MIS and Telecommunications Transition Period identified in
Section 5.11 and shall be retained by Seller, or if leased equipment, the lease
obligations shall be retained or assumed by Seller.
3.10.3.2 Software. Schedule 3.10.3.2 sets forth a
complete listing and description of all computer or telecommunications software
owned by Aptus or used by Aptus in the Business (the "MIS Software") indicating
for each item of MIS Software whether it is proprietary to Aptus, proprietary to
Seller, licensed by Aptus or licensed by Seller. Licensed MIS Software is
further identified by applicable license and support agreements (including date
and vendor), whether fully paid and if not, remaining term and amount of monthly
or yearly payments. If any MIS Software is licensed by Seller, the license shall
be transferred to Aptus (or to Buyer and all of its Subsidiaries) on or prior to
Closing without modification and with no increase in the license fee for the
then existing term of the license until the next renewal or change in license
fees. Certain MIS Software is identified by Buyer on Schedule 3.10.3.2 as MIS
Software not required by Buyer past the MIS and Telecommunications Transition
Period identified in Section 5.11 and shall be retained by Seller, or if
licensed software, the license obligations shall be retained or assumed by
Seller.
3.10.4 NEI Property. NEI does not own, lease or have
any interest in any personal property.
3.11 Condition of Assets. The personal property owned or leased by
Aptus, including the Transferred Assets, and the improvements and structures
located on the Real Property and the fixtures and appurtenances thereto are in
working order, reasonable wear and tear excepted, are reasonably suitable for
the uses for which they are intended and conform to the requirements of
applicable law in all material respects. Except as specifically set forth in
this Agreement, Seller makes no express or implied warranty of merchantability
or fitness for a particular purpose, or any other warranty as to the condition
or operation of the assets.
3.12 Insurance.
3.12.1 NEI, Aptus and its businesses and properties are insured
as provided for in and by the policies and contracts of insurance fully
described in Schedule
9
3.12.2. Schedule 3.12.2 also sets forth a three (3) year history of all claims
made under such policies and the status or disposition of such claims. Such
policies and contracts of insurance cover risks and are in such amounts as are
required by applicable laws, permits, regulations, certificates, agreements and
other instruments.
3.12.2 All such policies are in full force and effect, all
premiums with respect thereto have been paid to the extent due and no notice of
cancellation or termination has been received with respect to any such policy
(other than policies that have been replaced or are intended to be replaced
prior to expiration by policies providing substantially the same coverage).
3.13 Contracts. As of the date hereof, Schedule 3.13 sets forth a
listing of all written material leases, contracts or commitments of any kind,
or, to Seller's knowledge, all unwritten material leases, contracts or
commitments of Aptus (the "Material Contracts"), including:
(i) Contracts pertaining to the borrowing of money,
including any letters of credit;
(ii) Contracts creating Liens;
(iii) Contracts creating Guarantees;
(iv) Contracts relating to material employment or consulting services
which are not cancellable within sixty (60) days or are in excess
of Fifty Thousand Dollars ($50,000.00);
(v) Contracts relating to capital expenditures in
excess of Fifty Thousand Dollars ($50,000.00);
(vi) Contracts limiting the freedom of Aptus to engage
in or compete with any business;
(vii) Contracts not yet fully performed for the purchase, lease or sale
of real property or any business or line of business or for any
merger or consolidation;
(viii) Joint venture or partnership agreements;
(ix) Contracts or orders for future purchase or delivery of goods or
rendition of services involving the payment by any party of more
than Fifty Thousand Dollars ($50,000.00) or having a term greater
than one year;
10
(x) Powers of Attorney;
(xi) Performance Bonds; and
(xii) Contracts which commit Aptus to a volume guarantee or price level
and are not terminable within six (6) months.
All Material Contracts are valid and binding and in full force and
effect, except as would not have a Material Adverse Effect. There has been no
breach of any Material Contract by Aptus, that would have a Material Adverse
Effect which has not been cured or waived. True and correct copies of all
Material Contracts and all material amendments thereto have been delivered or
made available to Buyer.
NEI is not a party to any lease, contract or commitment of any kind.
3.14 Inventory.
3.14.1 Schedule 3.14 lists the amount of inventory held by Aptus
for incineration or disposal by other means. The list indicates inventory levels
at the end of each calendar month for the past twelve (12) months and is
categorized by type of waste. All inventory conforms to its corresponding waste
profile, except to the extent that nonconformance would not have a Material
Adverse Effect.
3.14.2 Inventory on the December 1994 Balance Sheet, other than
inventory held for incineration or other disposal as described in 3.14.1 above,
is of such a quantity that is historically usable in the ordinary course of
business, and it has not been consigned to third parties.
3.15 Accounts Receivable. All of the accounts and notes receivable of
Aptus represent amounts receivable for merchandise actually delivered or
services actually provided (or, in the case of non-trade accounts or notes
represent amounts receivable in respect of other bona-fide business
transactions), have arisen in the ordinary course of business, are not subject
to any counterclaims or offsets and have been billed and are generally due
within 30 days after such billing. All such receivables are fully collectible in
the normal and ordinary course of business, except to the extent of a reserve in
an amount not in excess of the reserve for doubtful accounts reflected on the
balance sheet of Aptus. Schedule 3.15 hereto sets forth (a) the total amount of
accounts receivable of Aptus outstanding as of the last day of the month
immediately preceding the present month and (b) the agings of such receivables
based on the following schedule: 0-30 days, 31-60 days, 61-90 days, and over 90
days, from the date of the invoice therefor.
3.16 Litigation. Except as set forth on Schedule 3.16, there is no
Action by any Person by or before any Governmental Authority that is pending or,
to Seller's Knowledge, threatened in writing against NEI, Aptus or Seller
dealing with the conduct or
11
operation of the Business that involves an amount in excess of Fifty Thousand
Dollars ($50,000.00). Except as set forth on Schedule 3.16, NEI, Aptus and
Seller are not subject to any Order dealing with the conduct or operation of the
Business.
3.17 Laws and Permits.
3.17.1 Compliance with Laws. Except as disclosed on Schedule
3.17.1, Aptus is in compliance with all federal, state and local laws, statutes,
rules and regulations in effect as of the Closing Date that are applicable to
Aptus, except where such noncompliance would not have a Material Adverse Effect.
3.17.2 Permits and Licenses. All Permits required by any federal,
state, local or foreign law, rule or regulation and necessary for the operation
of Aptus as of the Closing Date have been obtained. Aptus is in compliance with
all Permits in connection with the operation of the Business as of the Closing
Date, except where noncompliance would not have a Material Adverse Effect. All
Permits are current, valid and in full force and effect and will not be
terminated by the consummation of the transactions contemplated by this
Agreement. A listing of all Permits is set forth on Schedule 3.17.2 and complete
and correct copies of each have been made available to the Buyer. Except as set
forth in Schedule 3.17.2, neither NEI or Aptus has received from any
Governmental Authority any claim or notice of any violation or possible
violation, of any building, zoning, fire, health, employment, environmental or
other laws, ordinances, rules or regulations relating to its properties,
premises, business or employees, within the past five (5) years with respect to
environmental matters or within the past three (3) years with respect to other
matters, nor has either received any notice that any revocation or limitation of
any license, permit, certificate, approval or other authorization is threatened
or pending. Aptus has complied or, with respect to any such claim or notice
received within the prior 60 days, will resolve such claims or notices disclosed
in Schedule 3.17.2 and there are no outstanding issues resulting from any
environmental, health and safety inspections conducted by federal, state or
local regulatory bodies except as listed on Schedule 3.17.2 which would have a
Material Adverse Effect.
3.18 Environmental Matters.
3.18.1 Except as set forth in Schedule 3.18.1, neither NEI nor
Aptus has received written notice from any third party including, without
limitation any Governmental Authority, (i) that any Hazardous Substance which it
has generated, transported or disposed of, has been found at any site at which a
Governmental Authority or other Person has conducted, plans to conduct, or has
demanded that NEI or Aptus conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (ii) that it is or shall
be a named party to any claim, action, cause of action, complaint, legal or
administrative proceeding arising out of any Person's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
presence or release of Hazardous Substances.
12
3.18.2 Except as set forth in Schedule 3.18.2: (i) no portion of
the real property or other assets of NEI or Aptus has been used by NEI or Aptus
for the handling, processing, storage or disposal of Hazardous Substances except
in compliance with applicable Environmental Laws, Permits, and Real Property
Leases, unless any such non-compliance would not have, or not be reasonably
expected to have, a Material Adverse Effect; (ii) in the course of any
activities conducted by NEI or Aptus, no Hazardous Substances have been
generated or are being used on such properties except in compliance with
applicable Environmental Laws, Permits, and Real Property Leases unless any such
non-compliance would not have, and would not be reasonably expected to have, a
Material Adverse Effect; and (iii) to the best of Seller's knowledge, (I) there
have been no releases of Hazardous Substances on, upon, from or into any real
property owned or leased by NEI or Aptus which would have, or would be
reasonably expected to have, a Material Adverse Effect; (II) no underground tank
or other underground storage receptacle for Hazardous Substances is located on
such properties; and (III) no friable asbestos is located on such properties.
3.18.3 Schedule 3.18.3 hereto lists by category or individual
item all environmental inspections, investigations, studies, audits, tests,
data, reviews or other analysis conducted by or on behalf of NEI or Aptus in the
past five (5) years in relation to compliance with Environmental Laws at any
property or business now or previously owned, operated or leased by NEI or Aptus
which have been submitted to a Governmental Authority or conducted by or on
behalf of any Governmental Authority and submitted by such Governmental
Authority to NEI or Aptus, true and correct copies of which have been provided
or made available to Buyer.
3.18.4 To the best of Seller's knowledge, neither NEI nor Aptus
has disposed of any Hazardous Waste or PCBs generated by Aptus or its customers
(or under applicable Environmental Laws deemed to have been generated by Aptus
or its customers) at any facility, except these set forth on Schedule 3.18.4.
3.19 Patents, Trademarks and Similar Rights.
3.19.1 Intellectual Property. Schedule 3.19 sets forth a true and
complete list of all patents, patent applications, customized software, trade
names, registered trademarks, registered copyrights and registered service marks
and all applications therefor that are owned, licensed or used by Aptus (the
"Intellectual Property") on the date of this Agreement. Except as set forth on
Schedule 3.19, Aptus owns all right, title and interest in and to all
Intellectual Property necessary to the conduct of its business as presently
conducted, subject to no Lien or restriction (including confidentiality
agreements). To Seller's knowledge, Aptus has not suffered any infringement or
misappropriation of any Intellectual Property. No Action is pending or, to
Seller's Knowledge, threatened asserting any such infringement or
misappropriation by Aptus.
3.19.2 Licenses; Infringement. Schedule 3.19 sets forth a true
and
13
complete list, as of the date of this Agreement, of all licenses for
Intellectual Property between Aptus and any other entity. All such licenses are
valid and in full force and effect. Except as set forth on Schedule 3.19, there
is no pending or, to Seller's Knowledge, threatened, Action against Aptus
contesting, its rights to or the validity of any Intellectual Property that it
owns or licenses.
3.20 Employees.
3.20.1 Employees. Schedule 3.20.1 lists all of the employees who
perform the majority of their work for Aptus as of the most recent date for
which such information is available ("Employees") and sets forth the position
and job classification of each such Employee as of that date, together with the
following additional information: employer (if other than Aptus), location
employed, date of hire, accrued vacation, and status (active, union/nonunion, on
worker's compensation, disability, lay-off or leave). Seller has separately
provided to Buyer information relating to the compensation of all Employees.
3.20.2 Unions. Except as set forth on Schedule 3.20.2, there are
no collective bargaining agreements or other union agreements applicable to any
Aptus location. Since January 1, 1994, there has not been and there is not
presently pending or existing any strike, slowdown, picketing, work stoppage,
labor arbitration or proceeding in respect of the grievance of any employee or
other labor dispute against or affecting Aptus or threatened against Aptus. No
application for certification of a collective bargaining unit has been
instituted or is pending or, to the best knowledge of Seller, has been
threatened. Seller has not received any written notification or threat of any
work stoppage or other labor dispute. There is no lock-out of any employee by
Aptus nor is Seller contemplating or threatening a lock-out. Aptus has complied
and is in compliance with all laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours
and collective bargaining except where failure to comply with such laws would
not have a Material Adverse Effect.
3.20.3 Employee and Consulting Contracts. Except as listed and
described in Schedule 3.20.3, the directors, officers, employees and agents of
Aptus are not covered by any written contract, agreement, indenture, instrument
or commitment providing for a specified notice of termination or fixed term of
employment. Schedule 3.20.3 hereto contains list of all written employment,
service, agency, consulting, termination and severance contracts and agreements
currently in effect entered into by Aptus with or for any or all of its
directors, officers, employees, agents, consultants or independent contractors.
3.20.4 NLRB. Except as set forth in Schedule 3.20.4, to Seller's
Knowledge, no Aptus location is engaged in, nor has it received any written
notice of any unfair labor practice, and no such complaints are pending before
the National Labor Relations Board or any other Governmental Authority.
3.21 Employee Benefits.
14
3.21.1 Plans. Schedule 3.21.1 lists, as of the date of this
Agreement, each written pension, retirement, profit- sharing, deferred
compensation, bonus, incentive, performance, stock option, stock appreciation,
phantom stock, stock purchase, restricted stock, medical, hospitalization,
vision, dental or other health, life, disability, severance, termination or
other employee benefit plan, program, arrangement, agreement or policy
(including each ERISA Plan) (collectively, "Plans") which currently covers any
Employee and to which Aptus or Seller on behalf of Aptus currently contributes
(each, an "Employee Benefit Plan"). Except as set forth in Schedule 3.21.1, on
the date of this Agreement each Employee Benefit Plan complies in all material
respects, and has been operated and administered in all material respects, in
accordance with all applicable requirements of all Laws, including ERISA and the
Code, and no "reportable event", "prohibited transaction" (as such terms are
defined in ERISA and the Code, as applicable) or termination has occurred with
respect to any Employee Benefit Plan. Each ERISA Plan intended to qualify under
Section 401(a) of the Code has received a ruling or determination letter or will
file for such determination letter within the applicable period, concluding that
such ERISA Plan so qualifies, and to Seller's Knowledge, no event has occurred,
amendment been adopted or action been taken that would cause such ERISA Plan to
lose its qualified status.
3.21.2 Records. Seller has delivered or made available to Buyer,
on or before the date of this Agreement, copies of each Employee Benefit Plan
and any amendments thereto and any related trust agreement, and, if applicable
(a) the most recent actuarial valuation report, (b) the last filed Form 5500 or
5500-C, (c) the summary plan description currently in effect for each Employee
Benefit Plan and all material modifications thereto, (d) the last financial
statements for each Employee Benefit Plan and its related trust, if any, (e) the
most recent determination letter issued with respect to each Employee Benefit
Plan, and (f) a sample form of loan document under the Savings Program.
3.21.3 Actions. Except as set forth on Schedule 3.21.3, on the
date of this Agreement, there are no Actions pending (other than routine claims
for benefits) or, to Seller's Knowledge, threatened, with respect to any
Employee Benefit Plan.
3.21.4 Funding. All contributions required under applicable Law
or the terms of any Plan to be made by Seller on behalf of Aptus or Aptus to an
Employee Benefit Plan have been made within the time prescribed by the
applicable Law or Plan. There does not exist, on the date of this Agreement, any
accumulated funding deficiency as to any ERISA Plan, nor has any waiver of the
minimum funding standards been issued with respect to any ERISA Plan. On the
date of this Agreement the fair market value of the assets of the Pension Plan
does not equal or exceed the actuarial present value of all accrued benefits
under such ERISA Plan, including early retirement subsidies, plant closing
benefits and all other amounts considered to be benefit liabilities upon a
standard termination of a defined benefit plan subject to Title IV of ERISA,
with the said actuarial present value being determined by application of the
actuarial methods and assumptions applied by such ERISA Plan's enrolled actuary
at the most recent annual valuation of such ERISA Plan.
15
3.21.5 Multiemployer Plans. On the date of this
Agreement:
(a) Schedule 3.21.5 sets forth the ERISA Plans which are
"multiple employer" plan within the meaning of Section 4063 or 4064 of ERISA;
(b) no ERISA Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA or other applicable employee benefit legislation;
(c) Aptus has no primary or secondary liability under the
provisions of Section 4204 of ERISA or any agreement entered into in accordance
with the provisions of that Section; and
(d) neither Seller nor Aptus has (i) engaged in any transaction
that could result in the imposition of any material liability pursuant to
Section 4069 or 4212 of ERISA or (ii) incurred any material liability under or
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, and no event or condition exists
with respect to Seller or Aptus that may result in the imposition of any
material liability with respect to Buyer, Seller or Aptus or pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
Employee Benefit Plans.
3.21.6 Acceleration of Benefits. Except as set forth on Schedule
3.21.6, on the date of this Agreement, the consummation of the transactions
contemplated by this Agreement will not result in any increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of any
benefits payable to or in respect of any Employee or former Employee or the
beneficiary or dependent of any Employee or former Employee.
3.22 Taxes.
3.22.1 Returns. All Covered Returns relating to NEI or Aptus that
were required to be filed on or before the Closing have or will be timely filed.
All Covered Taxes shown on such Covered Returns that are payable on or before
the Closing Date by NEI or Aptus or are chargeable as a Lien upon any of their
assets have been paid to the extent due and payable on or before the Closing
Date. All Covered Taxes required to be withheld by or on behalf of NEI or Aptus
have been withheld, and such withheld Covered Taxes have been duly and timely
paid to the proper Governmental Authorities or are being properly held by NEI or
Aptus for such payment.
3.22.2 Extensions. Except as set forth on Schedule 3.22.2, no
Contract extending the period of assessment or collection of any Covered Taxes
for which NEI or Aptus would be held liable has been executed or filed, on or
before the date of this Agreement, with the Internal Revenue Service or any
other Governmental Authority.
16
3.22.3 Affiliated Groups. Except as set forth on Schedule 3.22.3,
neither NEI nor Aptus is (a) a member of any combined, consolidated, affiliated
or unitary tax group (an "Affiliated Group") for purposes of filing Covered
Returns or paying Covered Taxes or (b) a party to or bound by any tax sharing or
similar Contract with respect to Covered Taxes.
3.22.4 Audits. Except as set forth on Schedule 3.22.4, to
Seller's Knowledge, (a) no unresolved issue has been raised in writing by any
Governmental Authority in the course of any audit with respect to Covered Taxes
for which NEI or Aptus would be held liable and (b) no taxing authority is now
asserting or threatening to assert against NEI or Aptus any deficiency or claim
for additional Covered Taxes or any adjustment of Covered Taxes. To Seller's
Knowledge, there is no reasonable basis for any such assertion.
3.23 Brokers. Except as set forth on Schedule 3.23, as to which Seller
agrees to indemnify Buyer, no Person is or will become entitled to receive any
brokerage or finder's fee, advisory fee or other similar payment for the
transactions contemplated by this Agreement because it was engaged by or acted
on behalf of Seller.
3.24 No Subsidiaries or Investments. Aptus has no Subsidiary nor any
investment or participation in any other Person. NEI has no Subsidiary other
than Aptus nor any investment or participation in any other Person.
3.25 Sufficiency of Assets. The assets of Aptus, including the
Transferred Assets, together with the rights and interests of Aptus under the
Material Contracts and the Material Leases, constitute all of the assets, rights
and/or interests which are used in, and are sufficient for, the operation of the
Business as it is currently being conducted in all material respects.
3.26 Bank Accounts. Schedule 3.26 hereto sets forth the name of each
bank in which Aptus has an account or safe deposit box, the identifying numbers
or symbols thereof and the names of all persons authorized to draw thereon or to
have access thereto. NEI has no bank accounts.
3.27 Certain Relationships. Seller has provided to Buyer access to the
conflicts of interest forms required to be completed by all Employees. Except as
disclosed on Schedule 3.27, neither Seller nor any Affiliate is a party to any
agreement with Aptus that will extend past Closing.
3.28 Full Disclosure.
Section 3.28.1 To Seller's Knowledge, this Agreement, including
the representations and warranties and schedules, does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements herein not
17
misleading in light of the circumstances under which they were made.
Section 3.28.2 There is no fact known to the persons listed on
Schedule 13 and not disclosed to Buyer which has a Material Adverse Effect or
could reasonably be expected to have a Material Adverse Effect.
3.29 Sophisticated Seller. Seller is an "accredited investor" as that
term is used in Section 4.5 hereto and has sufficient knowledge and experience
in financial and business matters so as to enable it to evaluate the risks and
merits inherent in the Securities which comprise the Purchase Price. Seller
acknowledges receipt and review of copies of Buyer's most recent Annual Report
to Shareholders, Proxy Statement, Form 10-K and other filings with the
Securities Exchange Commission and has had access to such information concerning
Buyer as it has felt necessary or appropriate for its evaluation.
3.30 Schedule References. Any item disclosed in one Section or
Schedule shall be deemed to be disclosed in any other Section or Schedule where
such disclosure is relevant, even if there is no express cross-reference,
provided that the relevance of the disclosure is reasonably apparent. Disclosure
of items that may or may not be required to be disclosed by this Agreement does
not mean that such items are material or create a standard of materiality.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Seller:
4.1 Organization; Power and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Buyer has all corporate power needed to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
4.2 Authorization, Execution and Validity. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
purchase of the Shares have been duly authorized by all necessary corporate
action. This Agreement has been duly and validly executed and delivered by
Buyer, constitutes its valid and binding obligation and is enforceable against
Buyer in accordance with its terms.
4.3 No Conflict; Buyer Consents. The execution, delivery and
performance by Buyer of this Agreement will not (a) violate any Law, (b) violate
any Charter Document of Buyer, (c) require any Consent from any Governmental
Authority, or (d) breach any material Contract to which Buyer is a party or by
which it is bound.
4.4 Brokers. No Person is or will become entitled to receive any
brokerage
18
or finder's fee, advisory fee or other similar payment for the transactions
contemplated by this Agreement because it was engaged by or acted on behalf of
Buyer.
4.5 Purchase for Investment. Buyer is acquiring the Shares for its own
account for investment and not with a view to their sale or distribution. Buyer
understands that the Shares have not been registered under the Securities Act of
1933, as amended, or under relevant state securities laws (the "Acts"). Buyer
further understands that the Shares cannot be sold except pursuant to an
effective registration statement, an exemption from such registration
requirements and in compliance with the Acts. Buyer is an accredited investor or
institutional investor under the Acts, and Buyer has sufficient knowledge and
experience in financial and business matters so as to enable it to evaluate the
risks and merits of purchasing the Shares and is capable of bearing the economic
risks of such investment. Buyer has had access to such information concerning
NEI and Aptus as Buyer has felt necessary or appropriate for its evaluation.
ARTICLE 5
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
5.1 Cooperation by Seller. Subject to its rights under Article 10,
prior to the Closing, Seller will use all reasonable efforts to take all actions
and to do all things necessary or advisable to consummate the transactions
contemplated by this Agreement and to cooperate with Buyer in connection with
the foregoing, including using reasonable efforts to obtain any Consents
contemplated by Section 3.8. However, Seller shall have no obligation to change
any Permit or make any payment to obtain any Consent.
5.2 Pre-Closing Access to Information. From the date hereof through
the Closing Date, Seller shall, subject to applicable contractual obligations,
afford to Buyer, its accountants and its counsel reasonable access, upon
reasonable notice, to all of the relevant properties, books and records of NEI
and Aptus that Buyer needs to complete its due diligence. Buyer's
representatives shall be permitted to make and remove photocopies of any
documents. Seller shall cause the representatives of NEI and Aptus to give to
the Buyer the fullest cooperation with the object of providing access to the
assets and to all information as the Buyer may deem necessary. The above
described access shall not extend to books and records or self- evaluative
audits subject to attorney-client privilege. In addition to the foregoing, upon
prior written notice to Seller, and in the company of Aptus's representative, if
Seller so requests, the Buyer shall have access to the customers of Aptus. Buyer
shall direct all requests for information to:
19
Xxxxx X. Xxxxxxxxxxx, Esquire
Westinghouse Electric Corporation
Room 1750
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
5.3 Conduct of Business.
5.3.1 Business in Ordinary Course. From the date hereof through
the Closing Date, Seller shall use all reasonable efforts to cause Aptus to: (a)
preserve its relationships with suppliers, customers, Employees, creditors and
Governmental Authorities, (b) maintain their existing insurance coverage in all
material respects, (c) perform their obligations under the Material Contracts
and Material Permits in all material respects, (d) comply with all applicable
Laws in all material respects and (e) conduct its business in the ordinary
course and consistent with past practice. Except as contemplated by Section 5.14
hereto (Intercompany Accounts) or unless otherwise required by this Agreement,
without the consent of Buyer, Seller will not permit Aptus to:
(i) amend its Charter Documents in any material respect;
(ii) issue, sell or transfer any equity securities;
(iii) incur any debt for borrowed money, or guaranty any debt;
(iv) sell, assign, transfer or permit the creation of any Lien (other
than Permitted Liens) on any of its (x) assets, or (y) real
property, provided that the sale of assets entered into in the
ordinary course of business and involving the payment by any
party of less than Fifty Thousand Dollars ($50,000.00) shall be
permitted;
(v) enter into (x) any Material Contract outside the ordinary course
of business or (y) any customer contract which commits Aptus to
a volume guarantee or price level and is not terminable within
six (6) months, provided that (z) contracts or orders for future
purchase or delivery of goods or rendition of services entered
into in the ordinary course of business and involving the
payment by any party of less than Fifty Thousand Dollars
($50,000.00) shall be permitted;
(vi) amend or terminate any Material Contract or Material Permit
outside the ordinary course of business;
(vii) waive any right, forgive any debt (other than intercompany debt)
or release any claim, except in the ordinary course of business,
if such waiver, forgiveness or release would have a Material
Adverse Effect;
20
(viii) change its current practices with respect to the payment of
accounts payable at forty-five (45) days (or as otherwise agreed
to with the vendor); or
(ix) agree to take any of the actions described in
Sections 5.3(i) through 5.3(viii).
5.3.2 Buyer's Consent. If Seller gives written notice to Buyer
that Aptus proposes to take any action for which Buyer's consent is required
under Section 5.3.1 and if Buyer has not delivered within five (5) business days
of Seller's notice Buyer's written objection to the proposed action, Buyer shall
be deemed to have consented to the action described in Seller's notice. Buyer
shall not unreasonably withhold its consent under Section 5.3.1 to any action
taken or to be taken by Aptus.
5.3.3 Representations and Warranties. Seller shall use reasonable
efforts, and shall cause Aptus to use reasonable efforts, to conduct its
business in such a manner that at the Closing the representations and warranties
of Seller contained in this Agreement shall be true and correct as though such
representations and warranties were made on, as of, and with reference to such
date. Seller will promptly notify the Buyer in writing of (i) any event or fact
which causes a breach of any of its representations, warranties, covenants or
agreements, or (ii) the occurrence of any condition or development (exclusive of
general economic factors affecting business in general) of a nature that is or
may be reasonably expected to have a Material Adverse Effect.
5.4 Further Assurances.
5.4.1 Additional Documents. Subject to the other terms and
conditions of this Agreement, at any time and from time to time, whether before
or after the Closing, Seller shall execute and deliver all instruments and
documents and take all other action that Buyer may reasonably request to
consummate or to evidence the consummation of the transactions contemplated by
this Agreement.
5.4.2 Certain Consents. Notwithstanding anything to the contrary
in this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any interest in any Contract, Lease, Agreement or other instrument or
arrangement or any claim, right or benefit, or an agreement to assume any
liability, obligation or commitment arising thereunder or resulting therefrom,
if an assignment or transfer or an attempt to make such an assignment or
transfer without the Consent of a third party would constitute a breach or
violation thereof or a breach of Law, or affect adversely the rights of the
Buyer or the Seller, or Aptus thereunder; and any transfer or assignment to, or
any assumption by, Buyer of any interest in, or liability, obligation or
commitment under, any such Contract, Lease, Agreement or other instrument or
arrangement that requires the Consent of a third party shall be made subject to
such Consent being obtained. Prior to the Closing, each party will use all
21
reasonable efforts and cooperate in obtaining all Consents necessary to effect
the transfer of all such Contracts, Leases, Agreements and other instruments and
arrangements as contemplated hereby, provided that, neither party shall be
required to pay or commit to pay any amount to (or incur any obligation in favor
of) any Person from whom any such Consent may be required (other than nominal
governmental filing fees payable to any governmental authority or any fees which
may be imposed under Section 3.10.3).
In the event any such Consent is not obtained on or prior to the Closing Date,
the parties will cooperate in any lawful and reasonable arrangement to provide
that the Buyer shall receive the benefits under any Contract, Lease, Agreement
or other instrument or arrangement not assigned and transferred at the Closing
by reason of the failure to obtain such Consent (a "Non- Transferred
Instrument"), including, if necessary, at the request and expense of Buyer,
enforcing performance by any third party of its obligations in respect of such
Non-Transferred Instrument; provided that Seller shall bear the expense of such
enforcement to the extent it relates to Seller's failure to obtain such consent
prior to Closing; and provided that, to the extent the parties are successful in
providing the benefits of such Non- Transferred Instruments to the Buyer, the
Buyer will pay, honor and discharge when due all liabilities, obligations and
commitments of the Seller or Aptus related thereto to the extent due to the
operations of Aptus conducted after the Closing Date. Seller shall use
reasonable efforts to obtain any consents necessary with respect to the transfer
of Permits. Primary responsibility shall rest with Seller and Buyer agrees to
fully cooperate.
5.5 Supplements to Schedules. If prior to Closing, to Seller's
Knowledge, any event occurs or condition changes that causes any of its
representations or warranties in this Agreement to be inaccurate as of any date
that is relevant for the particular representation or warranty, Seller shall
notify Buyer in writing. With Buyer's consent, Seller may supplement the
Schedules to account for such event or change. Buyer need not consent if the
change discloses an item that is material or is in violation of Seller's
covenants under this Agreement. The supplemental Schedules will cure and correct
any breach of any representation or warranty that otherwise would have existed.
5.6 Certain Financial Covenants. At Closing, Seller shall have (i)
satisfied all long-term liabilities required to be disclosed as such on the
balance sheet of NEI or Aptus (other than capitalized leases); (ii) contributed
sufficient cash to Aptus such that at Closing, Aptus shall have a cash account
of not less than One Million Dollars ($1,000,000) (the "Working Capital
Advance"); and (iii) canceled any indebtedness or amounts owing from NEI or
Aptus to Seller or any Affiliate of Seller by classifying such indebtedness as
additional capital provided by parent company and reflected as such in
shareholder's equity (if not already so classified). The Working Capital Advance
is (a) not to be used by Seller or Aptus prior to Closing to satisfy any
liabilities or obligations of Aptus and must be available in full to Buyer
immediately after Closing; (b) not to be included as part of the assets of Aptus
for purposes of calculating the Final Adjusted Net Worth; and (c) to be treated
as an interest free advance by Seller to Buyer. Aptus or Buyer shall repay this
advance in accordance with Section 6.7.
22
5.7 Exclusive Dealing. Seller agrees not to enter into or continue any
discussions or negotiations relating to the sale of Aptus or the Business prior
to March 31, 1995 or, in the event this Agreement is extended, prior to the date
this Agreement terminates.
5.8 Closure and Post Closure Costs and Financial
Assurances.
5.8.1 Closing Date Closure and Post-Closure Costs Defined.
Closure and post-closure costs with respect to the three primary facilities of
Aptus (Aragonite, Utah; Coffeyville, Kansas; and Lakeville, Minnesota) pursuant
to 40 C.F.R. Section 265.110 et seq and as implemented by applicable state and
federal regulatory agencies as of the date of Closing, shall be referred to
herein as "Closing Date Closure and Post-Closure Costs."
5.8.2 Financial Assurances Defined. Statutorily imposed financial
assurances provided to various state and federal regulatory agencies with
respect to Closing Date Closure and Post-Closure Costs, pursuant to 40 C.F.R.,
Section 265.140 et seq, shall be referred to herein as "Financial Assurances."
5.8.3 Increases in Costs or Required Assurances. For purposes of
this Section 5.8, the amount of Closing Date Closure and Post-Closure Costs and
Financial Assurances shall be fixed at the date of Closing. Any increases in
Closing Date Closure and Post-Closure Costs or Financial Assurances, whether
brought about by inflation factors, facility changes or additions, or changes in
applicable law, shall be the responsibility of Buyer and Aptus.
5.8.4 Insurance Premium Payments. At Closing, Seller shall pay to
an insurance company designated by Buyer a premium payment on behalf of Buyer in
the amount of One Million, Five Hundred Thousand Dollars ($1,500,000.00). Buyer
agrees make a similar premium payment in the amount of One Million, Seven
Hundred and Fifty Thousand Dollars ($1,750,000.00). The total amount of Three
Million, Two Hundred and Fifty Thousand Dollars ($3,250,000.00) shall be applied
to Buyer's insurance program for the purpose of satisfying a portion of the
Financial Assurances.
5.8.5 Letters of Credit.
5.8.5.1 For the period beginning on the date of Closing and ending on the third
anniversary thereof, Seller shall procure and/or maintain in effect letters of
credit in an amount equal to the Financial Assurances less the Three Million,
Two Hundred and Fifty Thousand Dollars ($3,250,000.00) provided for in Section
5.8.4 above, provided that Seller's obligation with respect to such letters of
credit shall not exceed an aggregate of Twenty-five Million Dollars
($25,000,000.00). Buyer shall reimburse Seller for the amount charged to Seller
by its lender or lenders for providing the letters of credit. For letters of
credit in effect prior to the date of Closing, this reimbursement shall be
limited to a reimbursement for the prorated cost relative to the period the
letters of credit are in effect
23
after the date of Closing. Payment shall be made in cash, without deduction or
offset, within ten (10) business days of Buyer's receipt of proof of payment by
Seller. The letters of credit shall be provided by Seller without recourse,
except as provided below. In the event that all or a portion of the letters of
credit are collected upon for any reason, Seller shall have no right of
indemnity or other claim against Buyer arising therefrom; provided that Buyer
agrees to indemnify and hold harmless Seller from and against Damages relative
to its providing the letters of credit to the extent arising from (a) any
Increases in Costs or Required Assurances set forth in Section 5.8.3; (b) any
failure of Buyer to replace the letters of credit with alternative financial
assurances at the end of the three (3) year period specified herein; (c) any
voluntary facility closure initiated by Buyer; or (d) any violation of a permit
by Buyer or its Subsidiaries, or any negligent acts or omissions of Buyer or its
Subsidiaries, that result in the closure of a facility.
5.8.5.2 For the period beginning on the third anniversary of
the date of Closing and ending on the fifth anniversary of the date of Closing,
responsibility for satisfying the Financial Assurances and obtaining letters of
credit shall rest with Buyer. Seller shall reimburse Buyer for the amount
charged to Buyer by its lender or lenders for providing letters of credit in an
amount equal to the Financial Assurances less the Three Million, Two Hundred and
Fifty Thousand Dollars ($3,250,000.00) provided for in Section 5.8.4 above,
provided that Seller's obligation with respect to such reimbursement shall be
limited to letters of credit in the aggregate amount of Twenty Five Million
Dollars ($25,000,000.00). Payment shall be made in cash, without deduction or
offset, within ten (10) business days of Seller's receipt of proof of payment by
Buyer. Should Buyer choose to satisfy its obligation to provide Financial
Assurances by some alternative method, it may, upon presenting proof that the
alternative method is acceptable to the applicable federal and state regulatory
agencies, require that Seller reimburse it for the amount that its lender or
lenders would have charged for the letters of credit.
5.8.5.3 This Section 5.8 contemplates that a portion of the
letters of credit already being provided by Seller immediately prior to the date
of Closing in order to satisfy the Financial Assurances will be replaced by an
insurance certificate issued by the insurance company of Buyer designated in
Section 5.8.4. The parties recognize that there may be some delay in
accomplishing this replacement. Accordingly, and notwithstanding Section
5.8.5.1, for a period of time equal to the lesser of thirty (30) days or the
date on which said insurance certificate is issued, Seller agrees to maintain in
effect all letters of credit already being provided by Seller immediately prior
to the date of Closing to satisfy the Financial Assurances. Buyer shall be
obligated to reimburse Seller for the cost of the letters of credit in
accordance with Section 5.8.5.1.
5.8.5.4 The letters of credit provided by Seller in 5.8.5.1
above shall be issued by a lender chosen by Seller, shall designate Aptus as the
applicant and shall designate the relevant governmental authorities as the
beneficiaries. Notwithstanding the designation of Aptus as the applicant,
Seller's lender shall issue the letters of credit based solely on the credit of
Seller and shall have no recourse against Aptus.
24
5.9 Right to Seller Business Post Closing. For a period of five (5)
years from the Closing Date, Seller shall include Buyer on its approved list of
vendors that provide off- site Hazardous Waste incineration disposal services.
Buyer will remain on the Approved Vendor list during this time to the extent
Buyer's facilities maintain their permitted status and are not barred by any
governmental agency from accepting waste in accordance with U.S. EPA's CERCLA
off-site rule found at 40 CFR 300.440 et seq. or under imminent threat of being
so barred by any governmental agency. Seller will send a notice to its operating
divisions and facilities informing them of Buyer's inclusion on such Approved
Vendor list. In addition, Buyer will be afforded the opportunity to bid on any
project work originating with the Seller's corporate Environmental Affairs group
during this five (5) year period, that requires Hazardous Waste incineration
services. For purposes of this Section, Buyer shall include any Subsidiary of
Buyer.
5.10 Right to Seller Intellectual Property Post Closing. For five (5)
years after Closing, Seller, to the extent legally and contractually possible,
shall provide technology directly relating to the incineration of Hazardous
Waste to Buyer for Buyer's review. If Buyer desires, Seller will grant Buyer a
nonexclusive, nonassignable, nontransferable, royalty-free license in perpetuity
to use the technology for the incineration of Hazardous Waste and for no other
purpose. Seller will not be liable to Buyer for the accuracy or commercial
usefulness of the technology. Seller will offer to Buyer access to its technical
personnel, if available, for a period not to exceed forty (40) man hours per
year. Buyer, to the exclusion of Seller, is liable for all damages from the use
of the technology by Buyer. These terms and conditions will be set forth in a
license agreement between Seller and Buyer. For purposes of this Section, Buyer
shall include any Subsidiary of Buyer. None of the technologies listed in
Section 7.4.1 (j) (i) shall be considered to be incineration technology.
5.11 MIS and Telecommunications Services Post Closing.
5.11.1 Seller provides to Aptus: (i) certain MIS services,
including payroll, accounts receivable and collections, general ledger and fixed
assets applications (the "Seller MIS Services"); and (ii) certain
telecommunications services, including long distance, 800 service and voice
communications (the "Seller Telecommunications Services"). Seller agrees to
continue to provide the Seller MIS Services and the Seller Telecommunications
Services to Aptus after Closing (collectively, the "Post Closing Services") in
substantially the same manner as provided prior to Closing, and agrees to
cooperate with Buyer in transferring such services to applications to be
provided by Buyer.
5.11.2 Seller's obligations under this Section shall continue
until the transition to Buyer's applications is completed, but not longer than
six (6) months after Closing unless extended by mutual agreement (the "MIS and
Telecommunications Transition Period"). Seller and Buyer agree to use reasonable
efforts to effect the transfer of the Post Closing Services to applications to
be provided by Buyer as promptly as practicable.
25
5.11.3 During the MIS and Telecommunications Transition Period,
Seller shall provide the Seller MIS Services pursuant to the terms of the
agreement attached as Exhibit 5.11.3 (1) hereto. During the MIS and
Telecommunications Transition Period, Seller shall provide personnel to assist
Buyer in transferring the Post Closing Services at no cost to Buyer or Aptus.
During the MIS and Telecommunications Transition Period, Seller shall provide
the Seller Telecommunications Services to Aptus pursuant to the terms of the
agreement attached as Exhibit 5.11.3 (2) hereto. Buyer shall be entitled to
cancel either agreement on thirty (30) days advance written notice with no
further liability or obligation, except for charges which may have accrued up to
the date of termination.
5.11.4 Seller's obligation under Section 3.10.3.2 to transfer to
Buyer or Aptus software presently licensed to Seller shall not require that
Seller obtain the written consent to a software license transfer if the software
is what is commonly understood in the industry to be "shrink wrap" software,
provided that the "shrink wrap" software license is not part of a master license
with Seller that prohibits a transfer to a third party without consent or
payment of a fee. For a period of three (3) years after Closing, Seller will
indemnify Buyer against any Actions for license fees or infringement made by the
licensors of such "shrink wrap" software arising out of the transfer of the
software to Buyer or Aptus hereunder.
5.12 Intercompany Accounts. Between execution hereof and Closing,
intercompany accounts shall be handled substantially in the manner prior to
Closing. At the Closing Date, intercompany receivables, payables and loans then
existing between Seller, NEI or Aptus shall be terminated in accordance with
Section 5.6.
5.13 Preparation of Financial Statements. The Financial Statements
referred to in Section 3.5 shall include such detail as is required by Form 8-K
of the Securities Act of 1934 and be prepared at Seller's expense, except that
Buyer agrees to pay one-half of the fees of Seller's outside auditors up to a
maximum of Thirty Thousand and 00/100 Dollars ($30,000.00). Buyer shall, at its
expense, prepare any pro forma financial statements required in connection with
its Form 8-K filing. To the extent additional audited or unaudited financial
information relating to the operations of NEI or Aptus prior to the Closing is
necessary or desirable in connection with the remarketing of the Bonds or the
registration rights set forth in the Senior Unsecured Debentures or Subordinated
Convertible Debentures, the preparation of such financial information shall be
at Seller's cost.
5.14 [Intentionally Left Blank]
5.15 Leased Real Property. On or prior to Closing, Seller shall assume
all obligations under certain Real Property Leases that have been identified by
notation on Schedule 3.9.2 as Leases that Buyer does not require.
5.16 Certain Environmental Clean-ups.
26
5.16.1 Prior to Closing, or as soon thereafter as is reasonably
practicable, Seller shall clean up and properly dispose of the construction
debris presently stockpiled on the southeast corner of the Coffeyville Facility.
ARTICLE 6
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
6.1 Cooperation by Buyer. Subject to its rights under Article 10,
prior to the Closing, Buyer will use all reasonable efforts to take all actions
and to do all things necessary or advisable to consummate the transactions
contemplated by this Agreement and to cooperate with Seller in connection with
the foregoing, including using reasonable efforts to obtain any Consents
contemplated by Section 4.3.
6.2 Due Diligence Activities. Each party shall comply with the
limitations on the disclosure and use of information set forth in the
Confidentiality Agreement with respect to information that the other party
provides in and pursuant to this Agreement. Buyer shall coordinate its contacts
with Employees with officers of Seller and shall not conduct any soil,
groundwater or other environmental sampling in connection with the transactions
contemplated hereby without the prior written consent of Seller. Buyer shall
refrain from imposing any undue burden upon Aptus and from interfering with its
operations while conducting due diligence activities and preparing for the
Closing. Buyer has concluded its due diligence investigation of the Business.
6.3 Further Assurances. Subject to the other terms and conditions of
this Agreement, at any time and from time to time, whether before or after the
Closing, Buyer shall execute and deliver all instruments and documents and take
all other action that Seller may reasonably request to consummate or to evidence
the consummation of the transactions contemplated by this Agreement.
6.4 HSR Act Compliance. Buyer shall file any notification required to
be filed under the HSR Act to consummate the transactions contemplated hereby.
Buyer shall use all reasonable efforts to comply as promptly as practicable with
any request made pursuant to the HSR Act for additional information. Buyer shall
cooperate with Seller in such compliance and shall pay the statutory filing fees
required by the HSR Act.
6.5 Release from Guarantees. Seller has not guaranteed any obligations
of Aptus, except for the Guarantees listed on Schedule 6.5. Seller shall
maintain the Guarantees in effect until the Closing Date, but shall be entitled
to terminate the Guarantees effective after the Closing Date with respect to
operations of Aptus conducted after the Closing Date. After the Closing Date,
Buyer shall indemnify and hold Seller harmless from and against all Damage
attributable to any claims made under such Guarantees, but only to
27
the extent that they relate to operations of Aptus conducted after the Closing
Date.
6.6 Due Diligence - Post-Signing. Buyer agrees that during the period
from the signing of this Agreement through Closing, Seller shall have reasonable
access to senior management of Buyer, the books and records of the Buyer,
subject to any attorney-client privilege so as to permit continued due diligence
by Seller of Buyer.
6.7 Repayment of Working Capital Advance. The Working Capital Advance
identified in Section 5.6 shall be repaid by Aptus or Buyer, without deduction
or offset, in accordance with the following repayment schedule:
Number of Days Amount of
After Closing Payment
60 $200,000.00
90 $200,000.00
120 $200,000.00
150 $200,000.00
180 $200,000.00
ARTICLE 7
MUTUAL COVENANTS
7.1 Employee Matters.
7.1.1 Employment.
7.1.1.1 From the Employees designated on Schedule 3.20.1,
Buyer shall provide a list to Seller placing the Employees into three (3)
categories: (a) Employees that Buyer shall offer employment to at Closing (the
"Continuing Employees"); (b) Employees that do not fall into category (c) below
and that Buyer shall not offer employment to at Closing (the "Terminating
Employees"); and (c) Employees that Buyer shall not offer employment to at
Closing but whose services Buyer desires to retain on a contract basis for a
limited transition period (the "Transition Employees"). The parties acknowledge
that each category may be comprised of both exempt and non-exempt Employees.
Buyer shall provide this list to Seller as soon as practicable, but in any event
no later than ten (10) days prior to the Closing Date. Seller shall have
provided Buyer access to the Employees and their personnel files in order to
assist Buyer in this process, subject to the terms of the December 12, 1994
Letter Agreement between Buyer and Seller.
7.1.1.2 Buyer agrees that the sum of the number of
Terminating Employees and Transition Employees shall not exceed One Hundred
(100). Buyer agrees that the number of Transition Employees shall not exceed
Twenty (20). To the
28
extent that Employees are hired or replaced by Seller or Aptus prior to Closing,
Buyer agrees to include such Employees on one of the lists referred to in
Section 7.1.1.1 above; provided that if the number of Employees on Schedule
3.20.1 increases, Buyer reserves the right to a corresponding increase in the
number of Terminating Employees or Transition Employees, provided that no
adjustment shall be allowed to Buyer with respect to the hiring by Aptus of one
personnel manager at its Coffeyville facility.
7.1.1.3 Buyer shall offer employment to the Continuing
Employees with (a) wages or salaries equal to such wages and salaries as such
Employees are now paid by Aptus or Seller, and (b) benefits, including a defined
benefit pension plan, as set forth on Schedule 7.1.1.3. With respect to
Transition Employees, Seller agrees to continue the employment of or hire such
Employees as employees of Seller upon the same terms and conditions as their
present employment, except that such Employees shall be leased to Aptus as
contract employees of Aptus for a period of time determined by Buyer but not to
exceed one hundred and twenty (120) days after the date of Closing (the
"Transition Period"). Buyer shall provide to Seller thirty (30) days notice
prior to terminating the contract with Seller for any Transition Employee.
Seller makes no guarantee that any Transition Employee will choose to continue
as an employee of Seller under this Section 7.1.1.3 and Seller shall have no
obligation to replace any Transition Employee that leaves Seller's employment.
Employees whose services may be separately provided post Closing pursuant to the
MIS Services Agreement will be included in the number of Terminating Employees,
but will not be deemed Transition Employees. Seller's wage and benefits costs
for such employees will be reimbursed pursuant to the MIS Services Agreement.
Seller shall be required to maintain sufficient agreed upon staffing levels
under the MIS Services Agreement whether or not employees terminate their
employment with Seller. Buyer shall indemnify Seller against its out-of- pocket
costs for wages and benefits for Transition Employees to the extent applicable
to the Transition Period. Buyer reserves the right to offer employment to any
Transition Employee in the manner and upon the same terms, conditions, wages and
benefits prescribed herein for Continuing Employees.
7.1.1.4 Any liability to an Employee that is not designated
as a Continuing Employee for severance pay or other separation benefits that
arises out of such Employee's termination and any liability that arises out of
any breach by Seller of any of the provisions of the Benefits Sections, shall be
a Retained Liability. Buyer agrees to assume responsibility for and retain any
liability associated with these reductions in employment levels to the extent
that they trigger compliance with the federal Worker Adjustment and Retraining
Notification Act. With respect to any claims, proceedings or lawsuits brought
against Buyer, Seller or Aptus alleging that Buyer's listing of employees under
Section 7.1.1.1 violates Title VII of the Civil Rights Act, the Americans with
Disabilities Act or the Family Medical Leave Act or discriminates against an
Employee in violation of any applicable state or federal laws, each party shall
bear its own respective defense costs and expenses (including attorneys' fees)
and afford reasonable cooperation to the other parties. In the event that Buyer
is ultimately found liable in any such proceeding, it shall indemnify Seller
against the judgment or settlement and also reimburse Seller's reasonable
defense costs and expenses (including attorneys' fees).
7.1.2 Union Representation. With respect to the collective
bargaining agreement identified on Schedule 3.20 which expired by its terms on
October 31, 1994, the
29
parties agree as follows: (i) Seller has postponed negotiations on a new
collective bargaining agreement by extending the existing agreement until March
15, 1995 or thirty (30) days after Closing and by agreeing that any wage
increases will be effective retroactively to October 31, 1994; (ii) Buyer agrees
to cause Aptus to assume the obligations under the collective bargaining
agreement and its extension and to continue to recognize the union signatory
thereto as the collective bargaining representative of the employees covered by
the agreement post Closing, provided that Aptus will not be able to continue
providing any Westinghouse benefits but will instead provide the Xxxxxxx
benefits outlined on Schedule 7.1.1.3; and (iii) Seller shall promptly reimburse
Aptus within five (5) business days after written notification (with
documentation) to Seller of payment by Aptus for any compensation paid to
covered employees, for the period between October 31, 1994 and Closing, provided
that this reimbursement by Seller shall be limited to not more than three (3)
percent of the prior regular hourly wages of the covered employee for the period
between October 31, 1994 and Closing.
7.1.3 Termination of Coverage Under Seller's Employee Benefit
Plans and Coverage Under Buyer's Employee Benefit Plans.
7.1.3.1 Effective as of the Closing, each Continuing
Employee who is a participant in an Employee Benefit Plan sponsored by Seller (a
"Seller's Plan") shall cease to be a participant in each such Seller's Plan, and
all of the Continuing Employees (including Transition Employees hired by Buyer
pursuant to Section 7.1.1.3) effective as of the date of hire of such Continuing
Employee by Buyer shall become eligible to participate in the employee benefit
plans of Buyer in accordance with the applicable provisions of this Agreement
and the terms and conditions of each such plan. Effective as of the Closing, if
Aptus has adopted any of Seller's Plans, Aptus shall withdraw as an employer
thereunder.
7.1.3.2 Employees of Aptus shall be entitled to the accrued
and vested benefits due to them as a result of Aptus's termination of
participation as described in Section 7.1.3.1 above or their termination of
employment, under all employee benefit plans, programs, practices or
arrangements of Seller, and Seller shall retain liability for the payment of
such accrued and vested benefits under and in accordance with such plans,
programs, practices and arrangements and shall indemnify and hold Buyer and
Aptus harmless from and against same.
7.1.4 Pension Plans. Buyer shall grant to each Continuing
Employee covered by the Pension Plan immediately before the Closing credit for
his or her period of employment with Aptus and Seller prior to the Closing Date
for the purpose of eligibility and vesting under any defined benefit pension
plan maintained by Buyer ("Buyer's Pension Plan") for the benefit of such
Employees following the Closing, but not for the purpose of benefit accrual, it
being understood that the Buyer's pension plan is a defined benefit plan based
on salary earned with the Buyer (beginning on Closing) and that no credit will
be provided for any earnings prior to the Closing Date.
7.1.5 Savings Program. As of the Closing Date, the Savings
Program of Seller shall not accept contributions from Employees. Buyer shall
grant to each Continuing Employee covered by the Savings Plan immediately before
the Closing credit for his or her period of employment with Aptus and Seller
prior to the Closing Date for the
30
purpose of eligibility and vesting under Buyer's defined contribution plan (the
"Buyer's Savings Plan"), but not for the purpose of benefit accrual. The Buyer's
Savings Plan will accept "rollovers" of account balances of Continuing Employees
from the Savings Program with respect to before tax contributions only, in
accordance with the terms and administrative policies of the Seller's Plan.
Outstanding loans under the Savings Program will not be transferable to the
Buyer's Savings Plan.
7.1.6 Welfare and Fringe Benefits.
(a) Buyer shall grant to each Continuing Employee who is covered
immediately before the Closing under Employee Welfare Benefit Plans sponsored by
Seller ("Seller's Employee Welfare Benefit Plans") credit for his or her period
of employment prior to the Closing with Seller and Aptus under any Employee
Welfare Benefit Plan maintained by Buyer for the benefit of such Employees
following the Closing (a "Buyer's Employee Welfare Benefit Plan") (including but
not limited to arrangements providing disability, vacation, severance and sick
time benefits) and shall grant credit for deductibles and co-payments previously
paid under any Seller's Employee Welfare Benefit Plan for the year in which
Closing occurs. Buyer's Employee Welfare Benefit Plans shall not exclude from
coverage or limit coverage for any pre-existing condition of any of the
Employees.
(b) All claims of Employees described in Section 7.1.6(a) which are
made against Employee Welfare Benefit Plans and which are incurred prior to the
Closing (treating for this purpose costs for hospital confinements that begin
before the Closing and continue after the Closing as having been incurred before
the Closing) shall be paid in accordance with the provisions and administrative
policies of Seller's Employee Welfare Benefit Plans. All claims of Employees
described in Section 7.1.6(a) which are made against Employee Welfare Benefit
Plans and which are incurred after the Closing shall be paid under Buyer's
Employee Welfare Benefit Plans.
7.2 Tax Covenants.
7.2.1 Apportionment of Income Taxes Between Pre- Closing and
Post-Closing Periods. In order to appropriately apportion any Income Tax
relating to any taxable year or any other period that is treated as a taxable
year (a "Period") that includes (but that would not, but for this Section, close
on) the Closing Date, the Parties will, unless specifically prohibited by
applicable law, elect with the relevant taxing authority to treat for all
purposes the Closing Date as the last day of a taxable period of NEI or Aptus,
and such Period shall be treated as a Short Period and a Pre-Closing Period for
purposes of this Agreement. In any case where applicable law specifically
prohibits NEI or Aptus from treating the Closing Date as the last day of a Short
Period, then for purposes of this Agreement, the portion of such Income Tax that
is attributable to the operations of NEI or Aptus for such Interim Period shall
be the Income Tax that would be due with respect to the Interim Period if such
Interim Period were a Short Period.
7.2.2 Payment of Income Taxes. In furtherance of the foregoing,
any Income Tax in respect of any Short Period shall, except to the extent
accrued or reserved for in the aggregate on the balance sheet of NEI or Aptus at
Closing, be borne by Seller, and any refunds or credits in respect of such
Income Tax for any such Short Period or any Pre-
31
Closing period, in excess of the amount reflected on the balance sheet of NEI or
Aptus at Closing, shall be the property of Seller. Any Income Tax in respect of
any Interim Period (including amounts payable as a result of an audit or other
adjustment), to the extent not paid on or before the Closing Date or accrued or
reserved for on the balance sheet of NEI or Aptus at Closing, shall be paid by
Seller to Buyer, which shall pay such Income Tax to the relevant Governmental
Authority, no later than fifteen (15) days prior to the date such payment is
due, and any refunds or credits received by Buyer, NEI or Aptus in respect of
such Income Tax for such Interim Period, in excess of the amount reflected on
the balance sheet of NEI or Aptus at Closing, shall be the property of Seller.
Any Income Tax attributable to the operations of Buyer, NEI or Aptus for any
Post-Closing Period shall be borne by Buyer, NEI or Aptus, as the case may be.
Any refunds or credits in respect of such Income Tax for any such Post-Closing
Period shall be the property of Buyer, NEI or Aptus, as the case may be.
7.2.3 Preparation and Filing of Income Tax Returns. Seller shall
be responsible, at its expense, for the preparation and filing of all Income Tax
Returns for any Short Period. Seller shall prepare such Income Tax Returns in a
manner consistent with prior years and shall, in respect of such Income Tax
Returns, determine the income, gain, expenses, losses, deductions and credits of
NEI or Aptus in a manner consistent with prior practice. The results of
operations of NEI or Aptus from the first day of the taxable year through the
Closing Date shall be included in Seller's consolidated federal income tax
return and in any consolidated, combined or unitary Income Tax Returns required
to be filed by Seller after the Closing Date. The results of operations of NEI
or Aptus from the first day of the taxable year through the Closing Date shall
be included in any separate Income Tax Returns filed by NEI or Aptus after the
Closing Date; provided, however, that Seller shall prepare (without cost to
Buyer, NEI or Aptus) all such separate Income Tax Returns for any Short Period
(but not for any Period which includes or ends after the Closing Date) and
submit them to Buyer, and Buyer shall have all such separate Income Tax Returns
appropriately executed and filed on a timely basis. With respect to any Income
Tax Return to be prepared by Seller, Buyer shall, and shall cause NEI or Aptus
to, provide to Seller information in a manner consistent with past practice for
use in preparation of such Income Tax Returns, in each case, no later than sixty
days (60) after the relevant Period ends. Notwithstanding the foregoing, Buyer
shall be responsible for preparing and filing all Income Tax Returns of NEI or
Aptus for Periods not ending on or before the Closing Date, even if such Income
Tax Returns cover Periods prior to the Closing Date.
7.2.4 Cooperation. Seller and Buyer shall, and shall cause NEI or
Aptus to, provide each other with such assistance as may reasonably be requested
by them in connection with the preparation of any Income Tax Return, any Income
Tax audit or other examination by any Governmental Authority, or any judicial or
administrative proceedings related to liability for Income Taxes. Seller and
Buyer shall, and shall cause NEI or Aptus to, retain and provide each other with
any records or information which may be relevant to such preparation, audit,
examination, proceeding or determination. Such assistance shall include making
employees available on a mutually convenient basis to provide and explain such
records and information and shall include providing copies of any relevant
Income Tax Returns and supporting work schedules. The Party requesting
assistance hereunder shall reimburse the other for reasonable out-of-pocket
expenses incurred in providing such assistance.
32
7.2.5 Refund Claims. Subject to Section 7.2.11, Seller will
provide Buyer, NEI and Aptus with such assistance as it may reasonably request
to prepare any refund claim attributable to the carryback of any tax losses or
tax credits incurred by Buyer, NEI or Aptus in any Pre-Closing Period to any
consolidated, combined or unitary Income Tax Return of Seller or to any separate
Income Tax Return of NEI or Aptus for any Pre- Closing Period, and Seller shall
receive and retain the amount of any resulting refunds together with any
interest thereon upon receipt by any party.
7.2.6 Tax Sharing Agreements. Any and all Tax (or similar)
agreements, arrangements or undertaking among Seller, NEI and Aptus that relate
to any liability of NEI or Aptus for the Taxes of Seller shall terminate as of
the Closing Date and any rights or obligations resulting from such agreements
shall be eliminated as of the Closing Date.
7.2.7 Notice of Audit. If, in connection with any examination,
investigation, audit or other proceeding concerning any Income Tax Return
covering the operations of NEI or Aptus through the Closing Date, any
Governmental Authority issues to any of the Parties, NEI or Aptus a notice of
deficiency, a proposed adjustment, an assertion of claim or a demand concerning
the Period covered by such Income Tax Return, the recipient shall notify the
other Party that it has received the same within twenty (20) days of its
receipt.
7.2.8 Audits Controlled by Seller. Seller shall have the sole and
exclusive right, power and authority to negotiate, resolve, settle or contest
any such notice of deficiency, proposed adjustment or assertion of claim or
demand and to represent and act for and on behalf of NEI or Aptus in connection
with any such examination, investigation, audit or other proceeding, including
refund claims of any Income Tax Return of NEI or Aptus for Periods ending on or
before the Closing Date. Seller agrees to keep Buyer informed of the progress of
any such proceedings.
7.2.9 Audits Controlled by Buyer. Buyer shall have the sole and
exclusive right, power and authority to negotiate, resolve, settle or contest
any such notice of deficiency, proposed adjustment or assertion of claim or
demand in connection with any such examination, investigation, audit or other
proceeding of any Income Tax Return of Buyer, NEI or Aptus for Periods ending
after the Closing Date. To the extent that Seller has indemnified Buyer, NEI and
Aptus with respect to any such notice of deficiency, proposed adjustment or
assertion or claim or demand herein, Buyer shall not, and shall not permit NEI
or Aptus to, resolve, settle, compromise, or abandon any issue or claim without
the prior written consent of Seller if such action would materially and
adversely affect the Income Tax of Seller for any Period. Such consent shall not
be unreasonably delayed or withheld, and shall not be necessary to the extent
that Buyer notifies Seller that Buyer will forego any obligation of Seller to
indemnify Buyer, NEI and Aptus against the effects of any such settlement. Buyer
shall keep, and shall cause NEI or Aptus to keep, Seller informed of the
progress of any such proceedings and to consult with Seller in good faith in
connection therewith.
7.2.10 338(h)(10) Election. Buyer and Seller agree that no
election under Code Section 338(h)(10) shall be made as a result of this
transaction.
33
7.2.11 Net Operating Loss. NEI and Aptus presently have a net
operating loss ("NOL") for fiscal year ended December 31, 1993 equal to or
greater than $16,200,000, representing their apportioned share of Seller's NOL
for that year. Seller agrees that the amount of the NOL shall equal or exceed
$16,200,000. To the extent that it does not, Seller shall provide to Buyer
thirty-five percent (35%) of the difference in cash within thirty (30) days of
its determination. Buyer and Seller acknowledge that all NOL amounts are subject
to adjustment by the IRS and will not be final until the audit covering the
relevant period has been completed by the IRS. To the extent that the NOL is
less than or equal to $19,200,000, Buyer shall be entitled to retain the full
amount. To the extent that the NOL exceeds $19,200,000, Seller shall be entitled
to make the appropriate election under the Code to enable it to utilize any
amount in excess of $19,200,000, provided that if Seller is unable to utilize
such amount, it shall be retained by Buyer, if possible. There shall be no
adjustments to Final Adjusted Net Worth under Section 2.3.1 due to any payments
by Seller under this Section.
7.2.12 Carrybacks. Buyer agrees that it shall make any election
or exercise any option available to it under the Code (or similar provisions, if
any, under state, local or foreign Tax laws) to waive the carryback of any
post-Closing net operating loss, net capital loss, foreign tax credit or other
tax benefit to a pre-Closing Period.
7.3 Books and Records.
7.3.1 Access. Each Party shall provide the other Party with
reasonable access during normal business hours to its books and records and the
books and records of NEI or Aptus (other than books and records protected by the
attorney-client privilege) to the extent that they relate to the condition or
operation of NEI or Aptus prior to the Closing and are requested by such Party
to prepare its Income Tax Returns, to respond to Third Party Claims, or for any
other legitimate purpose specified in writing. Each Party shall have the right,
at its own expense, to make copies of any such books and records.
7.3.2 Destruction. For a period of ten (10) years, or the
expiration of any longer period if required under applicable law, neither Party
shall dispose of or destroy any books and records of NEI or Aptus to the extent
that they relate to the condition or operation of NEI or Aptus prior to Closing
or any facility operated by NEI or Aptus prior to Closing and any records
dealing with the personal medical records of any present or former Employees
prior to the Closing without first offering to turn over possession thereof to
the other Party by written notice at least thirty (30) days prior to the
proposed date of disposition or destruction, provided however that this section
shall not be applicable to records required under applicable law to be preserved
longer than ten (10) years.
7.3.3 Confidentiality. Each Party may take such action as it
deems reasonably appropriate to separate or redact information unrelated to NEI
or Aptus from documents and other materials requested and made available
pursuant to this Section and to condition access to materials that it deems
confidential to the execution and delivery of an Agreement by the other Party
not to disclose or misuse such information.
7.3.4 Assistance. Each Party shall, upon written request and at
the requesting Party's expense, make personnel available to assist in locating
and obtaining any
34
books and records of NEI or Aptus to the extent that they
relate to Retained Liabilities or the condition or operation of NEI or Aptus
prior to the Closing (or after the Closing with respect to information relating
to Identified Environmental Concerns) and make personnel available whose
assistance, participation or testimony is reasonably required in anticipation
of, preparation for or the prosecution or defense of any Third Party Action in
which the other Party does not have any adverse interest.
7.4 Non-Competition.
7.4.1 Seller covenants that upon Closing and until the expiration
of five (5) years from the Closing Date, Seller shall not, and shall not allow
any Affiliate to i) engage in the commercial business of fixed based
incineration of Hazardous Waste (as now defined under RCRA or TSCA) or ii)
engage in the commercial business of mobile incineration by treating a stream of
active industrial Hazardous Waste (as now defined under RCRA or TSCA) at its
manufacturing or processing point of origin of such stream, (For purpose of this
Section, the Business shall mean those activities described in (i) and (ii).)
within the continental United States; provided, however, that the covenants
contained within this Section 7.4 shall not prevent Seller or any Affiliate
from:
(a) Maintaining and continuing existing
standard business operations in accordance with current and past
practice;
(b) Continuing to own its current shares of
capital stock, partnership or other equity interests in the
entities identified on Schedule 7.4;
(c) Acquiring shares of capital stock, partnership or other
equity interests in any Person as investments of Seller's pension funds or funds
of any other employee benefit plan of Seller whether or not such Person is
engaged in the same business as the Business;
(d) Acquiring no more than five percent (5%) of the
outstanding capital stock, partnership or other equity interests in any Person;
(e) Acquiring up to one hundred percent (100%) of the
outstanding capital stock, partnership or other equity interests in any Person
for which the annual revenues derived directly from the operations of such
Person from any business that competes with the Business are not more than the
lesser of (i) ten percent (10%) of such Person's total annual revenues or (ii)
$10,000,000;
(f) Acquiring less than fifteen percent (15%) but more than
five percent (5%) of the outstanding capital stock, partnership or other equity
interests in any Person for which the annual revenues derived directly from the
operations of such Person from any business that competes with the Business are
more than the lesser of (i) ten percent (10%) but less than twenty-five percent
(25%) of such Person's total annual revenues or (ii) $10,000,000;
(g) Acquiring more than fifty percent (50%) of the
outstanding capital stock, partnership or other equity interests (which includes
debt which is
35
convertible into an equity interest) in any Person for which the annual revenues
derived directly from the operations of such Person from any business that
competes with the Business are more than ten percent (10%) but less than
twenty-five percent (25%) of such Person's total annual revenues; provided,
however, that Seller shall use all commercially reasonable efforts to divest
that portion of such Person which competes with the Business on commercially
reasonable terms within three hundred sixty-five (365) days after the
acquisition of such ownership or interest; and provided further if such
divestiture cannot occur within this period then Seller shall pay to Buyer a sum
equal to five percent (5%) of the annual gross revenues of the Person attributed
to the Business and prorated for Seller ownership interest but never more than
operating profits prorated for Seller's ownership interest for the Business
until the earlier of divestiture of such Business or the expiration of this
Agreement;
(h) Acquiring no more than fifty percent (50%) but more than
fifteen percent (15%) of the outstanding capital stock, partnership or other
equity interests (I) in any Equity for which the annual revenues derived
directly from the operations of such Person from any business that competes with
the Business are more than ten percent (10%) but less than twenty-five percent
(25%) of such Person's total annual revenues; provided, however, that Seller,
directly or indirectly, will have control of such Person sufficient to cause
such Person to use all commercially reasonable efforts to divest that portion of
such Person which competes with the Business on commercially reasonable terms
within three hundred sixty-five (365) days after the acquisition of such
ownership or interest; and provided, that Seller shall, directly or indirectly,
so cause such Person to so divest; and provided further if such divestiture
cannot occur within this period then Seller shall pay to Buyer a sum equal to
five percent (5%) of the annual gross revenues of the Person attributable to the
Business and prorated for the Seller's ownership interest but never more than
operating profits prorated for the Seller's ownership interest for the Business
until the earlier of divestiture of such Business or the expiration of this
Agreement;
(i) Performing any act or conducting any
business contemplated by this Agreement or the agreements
attached hereto or contemplated thereby; or
(j) Any business currently or in the future:
(i) involving the processing or disposing of mixed /
hazardous radioactive waste, Hazardous Waste or
radioactive waste, including but not limited to
the following technologies:
(a) Plasma Torch technology and its applications;
(b) Thermal Desorption technology and its
applications;
(c) Catalytic Extraction Processing (CEP) and
Quantum CEP Technology, both
36
proprietary technologies of Molten Metal
Technology, Inc.;
(d) Soil Washing technology and its applications;
and
(e) Metal Melting technology and its applica-
tions;
(f) Steam Reformation technology and its appli-
cations;
(g) Wet Oxidation technology and its appli-
cations; and
(h) Electro-Magnetic or beam type processing
technology such as ultra violet (UV), radio
frequency (RF), laser, or electron beam and
their applications.
(ii) involving the incineration of Hazardous Waste as
part of a contract involving environmental
remediation of either a Superfund or non-Superfund
site.
The provisions of (e), (f), (g), and (h) do not apply to any
partnership, joint venture, corporation or limited liability company that is
using the technologies listed in (j) above.
7.4.2 In the event that any part of this Section 7.4 (including
any subparagraphs hereto) is declared invalid or unenforceable by a court of
competent jurisdiction, the validity or enforceability of the remainder of this
Section 7.4 shall nevertheless continue to be valid and enforceable as though
the invalid or unenforceable portions had not been a part hereof. The territory
and time limitations set forth in this Section 7.4 are reasonable and properly
required for the adequate protection of the Buyer and Aptus. In addition, the
parties acknowledge that the nature of the business of hazardous waste
incineration and laboratory analysis is such that competitive activities could
be conducted effectively regardless of the geographic distance between Aptus's
place of business and the place of any competitive business. In the event that
the territorial or time restrictions, or both, are determined by a court of
competent jurisdiction to be unenforceable, Seller hereby requests and
authorizes such court to modify said area or periods of duration to the extent
necessary to render them enforceable; and Seller shall accept and submit to such
modification(s).
7.4.3 Seller recognizes that immediate and irreparable damage
will result to Aptus or Buyer if Seller breaches any of the terms and conditions
of this Section 7.4 and accordingly, Seller acknowledges that Buyer may be
entitled under applicable law to an injunction against Seller to restrain any
such breach, in addition to any other remedies or
37
claims for money damages which Aptus or Buyer may otherwise have.
7.5 Access to Information. The parties shall cooperate in any
environmental due diligence and Buyer shall not engage in any environmental due
diligence investigation other than so-called "Phase I" (i.e., documentary review
and walk- through inspection) preliminary environmental evaluations without the
prior written consent of Seller.
7.6 Non-Solicitation of Employees.
(a) For a period of two (2) years after the Closing, Seller shall
not, without the prior written consent of Buyer, solicit the employment of, or
employ or offer to employ, any Continuing Employees or any employees of Buyer
that Seller had significant contact with during the negotiation of this
Agreement.
(b) For a period of two (2) years after the Closing, Buyer shall
not, without the prior written consent of Seller, solicit the employment of, or
employ or offer to employ, any employee listed on Schedule 3.20.1 not employed
by Buyer as a Continuing Employee or any employee of Seller that Buyer had
significant contact with during the negotiation of this Agreement.
(c) This Section shall apply to employees in senior management,
operations, regulatory, financial, marketing and sales, or permitting aspects of
each Party's business. This Section shall not apply to any employee ninety (90)
days after such employee has left the employ of either Party.
7.7 Rights Agreement. If necessary, Buyer shall take such action as it
determines is warranted to amend the Rights Agreement dated as of June 14, 1989,
between Buyer and Registrar and Transfer Company (the "Rights Agreement"), to
ensure that the issuance of the Subordinated Debentures shall not cause a
"Triggering Event" under and as defined in the Rights Agreement.
7.8 Remarketing of IDBs and Cost Sharing.
7.8.1 Initial Remarketing. In connection with the initial
remarketing: (i) within four to six weeks from the date of Closing (or as soon
thereafter as is reasonably practicable), Buyer shall use all reasonable efforts
to cooperate in good faith with the Remarketing Agent and Seller to effect the
remarketing of the IDBs to one or more third parties, including, without
limitation, entering into an underwriting agreement on customary terms and
conditions, obtaining a rating for the IDBs, assisting in the preparation of an
offering memorandum and participating in any sales efforts (including any road
shows).
7.8.2 Remarketing of IDBs. From and after the Closing Date and
until the IDB Backstop Expiry Date, (i) Seller shall either, at its option,
maintain a Letter of Credit enabling the IDBs to be remarketed to one or more
third parties at the principal amount thereof, or hold the IDBs, and (ii) Buyer
shall take all action necessary to permit the Remarketing Agent to remarket the
IDBs pursuant to Section 3.03 of the IDB Indenture at Weekly Rates or Flexible
Rates as determined by Buyer (subject to the consent of Seller, which consent
shall not be unreasonably withheld). Seller is to ensure that the Remarketing
38
Agent's total fees and expenses for remarketing the IDBs after the Closing Date
and prior to the Effective Conversion Date shall not exceed a rate of one-eighth
(1/8) of one (1) percent per annum of the average daily outstanding principal
amount of the IDBs (or such higher rate which is then the prevailing industry
rate).
7.8.3 Effective Conversion Date.
7.8.3.1 Option of Buyer. On any Mandatory Tender Date prior
to the IDB Backstop Expiry Date, Buyer shall have the right to convert the Rate
Period for the IDBs to a Term Period with a term expiring on the maturity date
for the IDB; provided, that in the event of such a conversion, from and after
such Mandatory Tender Date (the "Effective Conversion Date"):
(a) For purposes of Section 7.8.4, the IDB Interest
Rate shall be the lesser of (i) the actual IDB Interest Rate
and (ii) 10% per annum.
(b) On the Effective Conversion Date, the remarketing
proceeds shall be paid to the Letter of Credit issuer in
immediately available funds in an amount equal to the sum
drawn related to principal on the IDBs under the Letter of
Credit in connection with such Mandatory Tender Date, and
any interest on the IDBs drawn under the Letter of Credit
shall be reimbursed to the Letter of Credit issuer and shall
be treated as any other IDB Costs.
(c) The obligation of Seller to either cause the Letter
of Credit to remain outstanding or hold the IDBs shall
automatically and without further action terminate.
7.8.3.2 Option of Seller. At any time prior to the IDB
Backstop Expiry Date, in the event Seller delivers to Buyer a written notice
from the Remarketing Agent to the effect that at the time of such notice, a Term
Rate could be established pursuant to Section 2.03 (b) (iii) of the IDB
Indenture for a Term Period expiring on the maturity date for the IDBs equal to
or less than 10% per annum, unless there shall be an IDB Remarketing Exception,
(i) Buyer shall promptly give all notices required pursuant to Section 2.04 of
the IDB Indenture of its election to convert on a date specified by Seller
occurring no earlier than sixteen (16) days thereafter the Rate Period to a Term
Period expiring on the maturity date for the IDBs, (ii) Buyer shall cooperate
with the Remarketing Agent and Seller to enable the IDBs to be sold on such
Mandatory Tender Date at a price equal to the principal amount thereof,
including, without limitation, furnishing information and making representations
to the Remarketing Agent and agreeing to such other terms and conditions,
including indemnification obligations, as are customary or otherwise reasonably
requested by the Remarketing Agent in connection with the remarketing of the
IDBs for a Term Period expiring on the maturity date for the IDBs, and (iii)
unless either (a) when the Remarketing Agent determines that the Term Rate
described in Section 2.03 (b) (iii) of the IDB Indenture, would be likely to
exceed 10% per annum were the rate period to be converted to a Term Period or
(b) Seller gives notice to Buyer prior to the time required on
39
the Mandatory Tender Date to effect the conversion that it does not consent to
the conversion of the Rate Period to a Term Period expiring on the maturity date
for the IDBs, Buyer shall arrange for and comply with its delivery obligations
under Section 2.04 (d) of the IDB Indenture in order to cause such conversion to
be effected on such Mandatory Tender Date; provided, that in the event of such a
conversion, from and after such Mandatory Tender Date (the "Effective Conversion
Date"):
(a) For purposes of Section 7.8.4, the amount of IDB
Costs shall be the actual IDB Costs.
(b) On the Effective Conversion Date, the remarketing
proceeds shall be paid to the Letter of Credit issuer in
immediately available funds in an amount equal to the sum
drawn related to principal on the IDBs under the Letter of
Credit in connection with such Mandatory Tender Date, and
any interest on the IDBs drawn under the Letter of Credit
shall be reimbursed to the Letter of Credit issuer and shall
be treated as any other IDB Costs.
(c) The obligation of Seller to either cause the Letter
of Credit to remain outstanding or hold the IDBs shall
automatically and without further action terminate.
7.8.4 IDB Cost Sharing. If the IDB Costs for any 12-month
period following the Closing Date shall be (i) greater than an amount equal to
the interest on the aggregate principal amount of the IDBs, calculated at a rate
of 7-1/2 per annum, based on the actual number of days in the year (the "IDB
Cost Base"), Seller shall pay Buyer one-half of the difference between (a) the
Effective Annual IDB Costs and (b) the IDB Cost Base, or (ii) less than the IDB
Cost Base, Buyer shall pay Seller one-half of the difference between (a) the
Effective Annual IDB Costs and (b) the IDB Cost Base (in either event, the "IDB
Cost Spread"). Notwithstanding the foregoing, if the IDBs shall have been
converted at the option of Seller pursuant to Section 7.8.3.2 and the IDB Costs
exceed 10% per annum, then IDB Costs under 10% shall be addressed by the
foregoing and IDB Costs in excess of 10% shall be borne exclusively by Seller
and reimbursed to Buyer in accordance with 7.8.4.1.
7.8.4.1 Calculation and Payment.
Within ten business days after the end of each quarter during the term of the
IDBs, each of the parties shall provide the other with a statement of each of
the IDB Costs incurred by it for the prior quarter. If there is an IDB Cost
Spread, calculated on an annual (360 days) cost basis, then the party having
responsibility for such IDB Cost Spread shall pay that amount within 30 days
after the end of each quarter to the party entitled to such payment.
7.8.5 Cooperation. Each of the parties shall use all
reasonable efforts in good faith to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable (other
than to fund any payment obligations of the other party as provided in this
Section 7.8) to cooperate with the other party in connection with the foregoing.
40
7.8.5.1 Remarketing Agent. Until the
IDB Backstop Expiry Date, notwithstanding any provision herein or in the IDB
Indenture or the Remarketing Agreement entered into in connection therewith to
the contrary, Seller shall have the exclusive right to remove the Remarketing
Agent and to select a successor Remarketing Agent, subject in the case of the
selection of a successor Remarketing Agent, to the consent of Buyer, which
consent shall not be unreasonably withheld.
7.8.5.2 Interest Rate Cap. From time
to time until the IDB Backstop Expiry Date, Buyer shall have the right, subject
to the reasonable consent of the Seller, which consent shall not be unreasonably
withheld, to obtain an Interest Rate Cap and the cost of which shall be subject
to the provisions of Section 7.8.4.
7.8.6 Underwriting Costs. All Underwriting Costs will be
shared equally by Seller and Buyer; provided that in no event will Buyer's share
of the Underwriting Costs exceed $400,000 in the initial remarketing or $600,000
in the aggregate for both the initial remarketing and the conversion to a fixed
term.
7.8.7 Conversion. Any conversion of the IDBs under 7.8.3.1
(Option of Buyer) or 7.8.3.2 (Option of Seller) shall be accomplished such that
the IDBs be sold without a discount, with a term expiring on the current
maturity date for the IDB (2020), and with semi-annual interest payments.
7.8.8 Rebate Obligation. Seller shall take all steps
necessary to comply with the rebate provisions of Article IV of the Tax
Exemption Certificate and Agreement, including, without limitation, making the
calculations, transfers and payments that may be necessary to comply with the
rebate requirements contained in Section 148(f) of the Code. Seller shall
prepare the I.R.S. Form 8038-T required to be filed in 1995 on the fifth
anniversary of the Bond issue and Seller shall deposit in the Rebate Fund an
amount equal to the total rebate payment, if any, then due. Buyer and Seller
shall direct the Trustee to make the required payment from the Rebate Fund to
the U.S. Government. Any subsequent filing obligations shall be the
responsibility of Buyer.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Buyer's Obligations. The obligation of
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction of the following conditions, any of which may be
waived by Buyer:
8.1.1 Accuracy of Representations and Warranties.
The representations and warranties made by Seller in this Agreement shall be
true and correct as of the Closing Date except for (a) representations and
warranties made as of a specified date, which shall be true and correct as of
the specified date, (b) breaches and inaccuracies that do not have a Material
Adverse Effect and (c) breaches and inaccuracies that Seller is working
diligently to cure or remedy at its cost or expense, provided that Seller agrees
to either cure or remedy such breaches or inaccuracies as soon as practicable or
indemnify Buyer against
41
any Damages relating thereto.
8.1.2 Litigation. No Order shall be in effect forbidding or
enjoining the consummation of the transactions contemplated hereby and no Action
shall be pending or threatened which, if adversely determined, would result in
any such Order.
8.1.3 Covenants. Seller shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed by Seller prior to or at the Closing.
8.1.4 Deliveries. Seller shall have delivered to
Buyer the documents required by Section 9.2.
8.1.5 Consents. The execution, delivery and performance of this
Agreement by Seller shall not conflict with any Law or result in the creation of
any Lien (other than Permitted Liens) on any assets of Aptus. Seller and Aptus
shall have obtained the Consents, if any, set forth on Schedule 3.8. Such
consents shall be in form and content reasonably satisfactory to Buyer and shall
have been reviewed with Buyer in final (but unexecuted) form no less than
fifteen (15) days prior to Closing.
8.1.6 Customers. Aptus shall not have suffered the loss of
customers that would have a Material Adverse Effect.
8.1.7 No Material Adverse Effect. There shall have been no event
or occurrence since December 31, 1994 that has had a Material Adverse Effect on
NEI or Aptus.
8.2 Conditions Precedent to Seller's Obligations. The obligation of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction of the following conditions, any of which may be
waived by Seller:
8.2.1 Truth of Representations and Warranties. The
representations and warranties made by Buyer in this Agreement shall be true and
correct in all material respects as of the Closing Date.
8.2.2 Litigation. No Order shall be in effect forbidding or
enjoining the consummation of the transactions contemplated hereby and no Action
shall be pending or threatened which, if adversely determined, would result in
any such Order.
8.2.3 Covenants. Buyer shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed by Buyer prior to or at the Closing.
8.2.4 Deliveries. Buyer shall have delivered to
Seller the payment and documents required by Section 9.3.
8.2.5 [Intentionally Left Blank]
42
8.2.6 Permits. Seller shall have been able to obtain any consents
necessary to transfer the Permits.
ARTICLE 9
CLOSING
9.1 Time and Place. Subject to the terms and conditions of this
Agreement, the Closing shall take place at the offices of Seller in Pittsburgh,
Pennsylvania at 10:00 a.m., on Friday, March 31, 1995 or at such other time and
place as the Parties shall agree upon in writing (the "Closing Date"). The
Closing shall be deemed effective at 11:59 p.m. Pittsburgh time on the Closing
Date.
9.2 Deliveries by Seller. At the Closing, Seller shall deliver the
following to Buyer:
9.2.1 Certificates representing all of the Shares, together with
duly executed stock transfer powers in favor of Buyer.
9.2.2 The stock books, stock ledgers, minute books and corporate
seal of NEI and Aptus.
9.2.3 The recorded Charter Documents of NEI and Aptus recently
certified by the Delaware Secretary of State.
9.2.4 Certificates of the Secretary or Assistant Secretary of
Seller concerning (a) its good standing, (b) the adoption of resolutions by its
board of directors authorizing the transactions contemplated by this Agreement
and (c) the incumbency of its officers, all in form and substance satisfactory
to Buyer.
9.2.5 Certificates of the Secretaries or Assistant Secretaries
(or the comparable officials) of NEI and Aptus, or a certificate of an executive
officer of Seller, concerning the Charter Documents and good standing of NEI and
Aptus.
9.2.6 Recent (dated within thirty (30) days of the Closing) good
standing certificates (or the comparable documents) for NEI and Aptus issued by
the Secretary of State or (the comparable officials) of each of the
jurisdictions in which NEI is incorporated, Aptus is incorporated, or either is
qualified to do business as a foreign corporation.
9.2.7 A certificate signed by an executive officer of Seller and
dated the Closing Date certifying that (a) each of the representations and
warranties made by Seller in this Agreement is true and correct as of the
Closing Date in all material respects and (b) all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Seller on or
before the Closing Date have been complied with and performed in all material
respects.
9.2.8 Copies of the Consents obtained by Seller and Aptus pursuant
to
43
Section 3.8.
9.2.9 A receipt for the payment made as contemplated by Section
2.2.1.
9.2.10 A written opinion addressed to Buyer from counsel for
Seller, in the form attached as Exhibit 9.2.10.
9.2.11 The written resignation of each director and officer of
Aptus and NEI. A complete list of all such officers and directors is set forth
on Schedule 9.2.11 hereto.
9.2.12 An executed Patent Assignment to Aptus in the form of
Exhibit 9.2.12 relating to the patent identified in Schedule 3.19 as registered
in the name of Seller.
9.2.13 An executed Assignment and Assumption Agreement relating
to the IDB Bonds in the form of Exhibit 2.2.3.
9.2.14 An opinion of Counsel to Seller (or counsel to the IDB
Issuer) addressed to Buyer to the effect that the Assignment and Assumption
Agreement relating to the IDB Bonds will not adversely affect the excludability
of interest on the IDB Bonds from the gross income of the owners thereof for
purposes of federal income taxation.
9.2.15 An executed Assignment of Software License Agreement in
the form of Exhibit 9.2.15 relating to Seller's CORE System.
9.2.16 An executed Debenture Purchase Agreement in the form of
Exhibit 2.2.2.
9.2.17 Such other documents, instruments and certificates as
Buyer may reasonably request for the transactions contemplated by this
Agreement.
9.3 Deliveries by Buyer. At the Closing, Buyer shall deliver the
following to Seller:
9.3.1 The payment of the Cash required under Section 2.2.1.
9.3.2 The issuance of the Senior Unsecured
Debentures and Subordinated Convertible Debentures.
9.3.3 An executed Assignment and Assumption Agreement relating to
the IDB Bonds in the form of Exhibit 2.2.3.
9.3.4 An opinion of counsel to Buyer addressed to Security
Pacific National Trust Company (New York), as Trustee or its successor, to the
effect that Buyer has expressly assumed in a writing delivered to such Trustee
the obligations of Seller under the IDB Loan Agreement, satisfying the
requirements of Section 6.1(b)(i) of the IDB Loan
44
Agreement.
9.3.5 The recorded Charter Documents of Buyer, recently certified
by the Delaware Secretary of State.
9.3.6 A certificate of the Secretary or Assistant Secretary of
Buyer (or the comparable official) concerning (a) Buyer's Charter Documents and
good standing, (b) the adoption of resolutions by its board of directors
authorizing the transactions contemplated by this Agreement and (c) the
incumbency of its officers, all in form and substance satisfactory to Seller.
9.3.7 A recent good standing certificate for Buyer issued by the
Delaware Secretary of State.
9.3.8 A certificate signed by an executive officer (or the
comparable official) of Buyer and dated the Closing Date certifying that (a)
each of the representations and warranties made by Buyer in this Agreement is
true and correct as of the Closing Date in all material respects and (b) all of
the terms, covenants and conditions of this Agreement to be complied with and
performed by Buyer on or before the Closing Date have been complied with and
performed in all material respects.
9.3.9 A written opinion addressed to Seller from counsel for
Buyer, in the form attached as Exhibit 9.3.9.
9.3.10 An executed Assignment or Assignments of Software License
Agreement in the form of Exhibit 9.2.15 relating to Seller's CORE System and
Seller's WISHES System.
9.3.11 An executed Debenture Purchase Agreement in the form of
Exhibit 2.2.2.
9.3.12 Such other documents, instruments and certificates as
Seller may reasonably request for the transactions contemplated by this
Agreement.
ARTICLE 10
TERMINATION PRIOR TO CLOSING DATE
10.1 Termination. This Agreement may be terminated prior to the
Closing Date only as follows:
10.1.1 By the mutual written consent of the Parties;
10.1.2 By either Party immediately upon written notice to the
other Party, if the Closing has not occurred on or before March 31, 1995 and the
failure to close is not attributable to the fault of the party terminating; or
10.1.3 By either Party immediately upon written notice to the
other
45
Party if (a) a preliminary injunction is issued at the request of any
Governmental Authority that enjoins or prohibits the Closing or (b) a permanent
injunction is issued by a Governmental Authority that enjoins or prohibits the
Closing and becomes final and non-appealable.
10.2 Effect of Termination.
10.2.1 General. If this Agreement terminates pursuant to Section
10.1, no Party shall have any liability or obligation to the other Party
hereunder, other than the confidentiality obligation set forth in Section 6.2.
However, such termination shall not relieve any Party of liability for any
willful, material breach of this Agreement. Without limiting the foregoing, if
Closing does not occur due to a breach by Seller of its obligations under this
Agreement, then Seller shall promptly reimburse Buyer in full for the Forty-Five
Thousand Dollar ($45,000.00) HSR filing fee previously paid by Buyer.
ARTICLE 11
INDEMNIFICATION AND PROCEDURES
11.1 Indemnification by Seller. Subject to the other provisions of
this Article 11 and Article 12 relating to certain environmental indemnities,
Seller shall indemnify and hold Buyer, its Affiliates and their respective
employees, representatives, officers, directors and agents (the "Buyer
Indemnitees") harmless from and against any and all Damages suffered by any
Buyer Indemnitee arising out of:
(a) the breach of any representation or warranty made by Seller in
this Agreement or in any other agreement or certificate delivered by
Seller at the Closing;
(b) the breach of any covenant, undertaking or agreement by Seller
in this Agreement or in any other agreement executed and delivered at the
Closing;
(c) in addition to and without limiting the scope of paragraphs
(a) and (b) above:
(I) any claim against Aptus or NEI for xxxxxxx'x compensation
pending as of the Closing or any such claim made after the
Closing based upon or alleging an incident occurring
entirely prior to Closing, including any unsatisfied
judgments or other final awards or settlements reached,
whether or not scheduled in this Agreement, except to the
extent properly reserved for on the December 1994 Balance
Sheet;
46
(II) any litigation instituted or threatened against Aptus or NEI
as of the Closing, including any unsatisfied judgments or
other final awards or settlements reached, whether or not
scheduled in this Agreement, except to the extent properly
reserved for on the December 1994 Balance Sheet;
III) any litigation instituted or threatened against Aptus or NEI
after the Closing based upon or alleging an incident
occurring entirely prior to Closing;
(IV) any litigation instituted or threatened against Aptus or
NEI, other than litigation addressed by items (II) and (III)
above, but only to the extent attributable to the business
of Aptus or NEI prior to the Closing;
(V) any liability of any kind whatsoever (i) arising from any
incident or occurrence prior to July 1985 and relating in
any way to the business operations of NEI, any predecessor
of NEI, any Person merged into NEI or Aptus, or any Person
whose liabilities were assumed by NEI or Aptus as a result
of an acquisition, divestiture or reorganizations whether by
operation of law or otherwise, or (ii) relating in any way
to the business operations of National Oil Processing, Inc.,
Coffeyville Truck Center, Inc., National Investment Company,
or any Person required to be identified on Schedule 3.1.3
but omitted therefrom. This section is intended to extend to
any claims made against Aptus with regard to the one (1)
acre parcel of property owned by Hawks and Xxxxxx and
located at the Coffeyville Facility.
(VI) any Undisclosed Liabilities.
The foregoing items (a), (b) and (c) being collectively referred to as
the "Retained Liabilities."
11.2 Indemnification by Buyer. Subject to the other provisions of this
Article 11 and Article 12 relating to certain environmental indemnities, Buyer
shall indemnify and hold Seller, its Affiliates and their respective employees,
representatives, officers, directors and agents (the "Seller Indemnitees")
harmless from and against any Damages suffered by any Seller Indemnitee arising
out of:
(a) the breach of any representation or warranty made by Buyer in
this Agreement or in any other agreement or certificate delivered by
Buyer at the Closing;
(b) the breach of any covenant by Buyer in this Agreement or in
any other agreement executed and delivered at the Closing;
(c) any claim made against Aptus or NEI for xxxxxxx'x compensation
made after the Closing, except to the extent such claim constitutes a
Retained Liability;
(d) any litigation instituted or threatened against Aptus or NEI
after the Closing, except to the extent such claim constitutes a Retained
Liability;
(e) after the Closing Date, the failure by Buyer, NEI or Aptus to
perform
47
any of its obligations, except to the extent that such obligations arise
from events or conditions that entitle any Buyer Indemnitee to
indemnification pursuant to this Agreement; or
(f) the operation of the Business after the Closing Date,
including any liability of Seller as surety or indemnitor for NEI or
Aptus under any performance or surety bond or letter of credit (other
than those referred to and specifically handled pursuant to Section
5.8.5) relating to post closing operations of NEI or Aptus, except to the
extent that such Damages constitute a Retained Liability.
11.3 Notice and Resolution of Claims.
11.3.1 Notice. Each indemnified party (a "Beneficiary") shall
promptly give written notice to the indemnifying Party after obtaining knowledge
of any claim that it may have pursuant to this Article 11. Such notice shall set
forth in reasonable detail the claim and the basis for indemnification.
11.3.2 Right to Assume Defense. If such claim for indemnity shall
arise from a claim or Action involving a third party (a "Third Party Claim"),
the Beneficiary shall permit the indemnifying Party to assume its defense. If
the indemnifying Party assumes the defense of such Third Party Claim, it shall
take all steps necessary to investigate, defend or settle such Action and shall,
subject to Section 11.4, hold the Beneficiary harmless from and against any and
all Damages caused by or arising out of any settlement approved by the
indemnifying Party or any judgment in connection with such Third Party Claim.
Without the written consent of the Beneficiary, the indemnifying Party shall not
consent to entry of any judgment or enter into any settlement that does not
include an unconditional and complete release of the Beneficiary by the claimant
or plaintiff making the Third Party Claim (except in the case of an Action
involving a Governmental Authority where the Governmental Authority does not
typically provide an unconditional and complete release, in which case the
indemnifying Party shall not consent to entry of any judgment or enter into any
settlement that does not contain customary nonadmissions and settlement terms
peculiar to that Governmental Authority). The Beneficiary may participate in
such defense or settlement through its own counsel, but at its own expense.
11.3.3 Failure to Assume Defense. Failure by the indemnifying
Party to notify the Beneficiary of its election to assume the defense of any
Third Party Claim within thirty (30) days after its receipt of notice thereof
shall be deemed a waiver by the indemnifying Party of its right to assume the
defense of such Third Party Claim. In such event, the Beneficiary may defend
against such Third Party Claim in any manner it deems appropriate, at the cost
and expense of the Indemnifying Party. The Beneficiary may settle such Third
Party Claim or consent to the entry of any judgment with respect thereto,
provided that it acts reasonably and in good faith.
11.4 Limits on Indemnification.
11.4.1 Seller shall not be liable to defend, indemnify and hold
harmless Buyer against any Damages under this Article 11 unless and until the
aggregate Damages exceed Five Hundred Thousand ($500,000.00) Dollars (the
"Basket"), and then
48
shall be liable only for Damages in excess of the Basket. Furthermore, neither
Party shall be liable to indemnify, defend and hold harmless an Indemnitee
against Damages in respect of which indemnification may be available in excess
of $135,000,000 (the "Cap"); provided, however, that the breach or non-
fulfillment of any covenant, undertaking or agreement (as distinguished from a
breach of a representation or warranty) shall not be subject to, nor apply in
calculating, the Basket or the Cap. For purposes of determining the Basket, any
breach by Seller of a representation or warranty hereunder shall be determined
without regard to whether the breach resulted in a Material Adverse Effect.
Notwithstanding the foregoing, the liability of Seller with respect to the
following items shall not be subject to, nor apply in calculating, the Basket or
the Cap: Section 3.22 (Taxes); Section 7.2 (Tax Covenants); Section 7.1
(Employee Matters); Section 11.1 (c) (I) (relating to Xxxxxxx'x Compensation);
Section 11.1 (c) (II) (relating to pending litigation); Section 11.1 (c) (V)
(relating to certain potential predecessor liabilities); and Section 3.15
(Accounts Receivable). In addition, the limitations period provided in Section
11.5 shall not apply to the items enumerated in the immediately preceding
sentence and Seller's representations and warranties and indemnification
obligations related to such items shall survive indefinitely (subject only to
applicable statutes of limitations and any extensions thereto), with the
exception of Section 11.1 (c) (V) which shall survive for twenty-five (25)
years.
11.4.2 The determination of Final Adjusted Net Worth and the post
Closing adjustment of the Purchase Price in accordance with Section 2.4 hereto
shall not affect Buyer's ability to seek indemnification for a breach of a
representation or warranty relating to the Financial Statements. Buyer may not
make a claim against Seller for breach of Section 3.15 relating to accounts
receivable, unless it has attempted to collect same in accordance with its
normal collection procedures. Buyer shall also be required to apply amounts
which it collects on receivables in the order in which the accounts receivable
were created, except with respect to disputed receivables.
11.5 Survival. With the exception of those items identified in Article
12 or Section 11.4, Seller's representations and warranties and indemnification
obligations under this Agreement shall terminate three (3) years from the
Closing Date. Representations and warranties that are made as of a specified
date or are remade as of the Closing Date are not intended to be deemed to be
remade effective as of a date subsequent to the Closing Date.
11.6 Exclusive Remedy. The remedies of Buyer and Seller provided for
in this Agreement shall be the exclusive remedies of the Parties with respect to
the matters covered by this Agreement, the events giving rise to this Agreement,
the Purchased Assets and the Business. Without limiting the generality or effect
of the foregoing, as a material inducement to the other party entering into this
Agreement, except for the remedies set forth in this Agreement, each of the
Parties hereby waives any claim or cause of action which it might assert,
including, without limitation, under the common law, federal, state or foreign
securities, trade regulation, or other law, by reason of this Agreement, the
matters covered hereby, the events giving rise to this Agreement, the Purchased
Assets or the Business. Buyer shall not be entitled to a rescission of this
Agreement.
11.7 No Mitigation. The representations and warranties of either Party
shall not be mitigated by any investigation conducted by the other Party or its
representatives prior to Closing.
49
11.8 Indemnity Payments. All payments made pursuant to Section 11.1
(other than interest payments) will be treated by the Parties on all Returns as
an adjustment to the Purchase Price.
11.9 Buyer's Cooperation.
11.9.1 Buyer shall promptly provide Seller with (a) copies of all
notices concerning the Retained Liabilities and any indemnifiable claims that
Buyer or Aptus receives after the Closing Date, (b) the assistance, at Seller's
cost, of all directors, officers, employees, representatives and agents of
Aptus, and (c) all other information concerning the Retained Liabilities that
Seller needs or requests to manage and defend the Retained Liabilities.
11.10 Payment and Assignment of Claims.
11.10.1 Payment. Upon final determination by agreement of the
Parties or pursuant to arbitration as set forth in Section 14.12 that a Party is
entitled to indemnification under this Article, the indemnifying Party shall
promptly pay or reimburse, as appropriate, the Beneficiary for any Damages to
which it is entitled to be indemnified hereunder. Neither Party shall permit any
exercise of any right of set-off against the other Party until such final
determination is made.
11.10.2 Assignment. If any of the Damages for which an
indemnifying Party is responsible or allegedly responsible under this Article 11
are recoverable or potentially recoverable against any third party, other than a
Beneficiary's insurer, at the time when payment is due hereunder, the
Beneficiary shall assign any and all rights that it may have to recover such
Damages to the indemnifying Party or, if such rights are not assignable for any
reason, the Beneficiary hereunder shall attempt in good faith, at the other
party's cost and expense, to collect any and all damages and losses on account
thereof from such third party for the benefit of the indemnifying Party.
11.11 Other Beneficiaries. Buyer shall cause the Buyer Indemnitees,
and Seller shall cause the Seller Indemnitees, to comply with the provisions and
to abide by the limitations set forth in this Article 11.
11.12 Consequential Damages; Other Limitations.
11.12.1 Seller shall have no obligation to indemnify any of the
Buyer Indemnitees against any Consequential Damages suffered or alleged by any
of the Buyer Indemnitees. Buyer shall have no obligation to indemnify any of the
Seller Indemnitees against any Consequential Damages suffered or alleged by any
of the Seller Indemnitees. This restriction shall not apply to a party's
obligation to indemnify an Indemnitee against Consequential Damages suffered or
alleged by a Person other than the Indemnitee.
11.12.2 Neither party shall have any obligation to indemnify the
other party or its Indemnitees to the extent that Damages (including Retained
Liabilities) are caused, contributed to or exacerbated by the actions of the
party seeking indemnification or its contractors, subcontractors or agents.
50
ARTICLE 12
CERTAIN ENVIRONMENTAL MATTERS
12.1 Seller's Environmental Responsibility.
12.1.1 Seller Indemnity. Subject to the other provisions of this
Article 12, Seller shall indemnify and hold harmless the Buyer Indemnitees from
and against any and all Damages suffered by any Buyer Indemnitee arising out of
(collectively, the "Seller's Environmental Responsibility"):
(a) Identified Environmental Concerns;
(b) Off-Site Disposal to the extent attributable to the Business
prior to Closing;
(c) Existing Environmental Violations, except to the extent reserved
for on the December 1994 Balance Sheet;
(d) Environmental Violations discovered after Closing, to the extent
attributable to the Business prior to Closing;
(e) Existing Third Party Environmental Claims;
(f) Third Party Environmental Claims to the extent attributable to an
Identified Environmental Concern; and
(g) Third Party Environmental Claims (excluding those under Sections
12.1 (e) and 12.1 (f) above) to the extent attributable to the
Business prior to Closing.
(h) Government Remediation Claims to the extent attributable to the
Business prior to Closing.
12.1.2 For purposes of this Article 12, the "Business" shall
refer to any business conducted by NEI, Aptus or any Person identified or
required to be identified on Schedule 3.1.3.
12.2 Buyer Environmental Responsibility. Subject to the other
provisions of this Article 12, Buyer shall indemnify and hold harmless the
Seller Indemnitees from and against any and all Damages suffered by any Seller
Indemnitee arising out of (collectively, the "Buyer's Environmental
Responsibility"):
(a) Off-Site Disposal to the extent attributable to Buyer, Aptus or
NEI post Closing;
(b) Environmental Violations to the extent attributable to Buyer,
Aptus or NEI post Closing; and
51
(c) Third Party Environmental Claims to the extent attributable
to Buyer, Aptus or NEI post Closing.
12.3 Identified Environmental Concerns. "Identified Environmental
Concerns" shall refer to the following items and Seller's
responsibility therefor shall be as set forth in Section 12.10:
(a) "Coffeyville Contamination". The identified groundwater
contamination and other sources of contamination at the
Coffeyville, Kansas facility (the "Coffeyville Facility")
identified on Schedule 12.3 hereto.
12.4 Off-Site Disposal. "Off-Site Disposal" shall refer to the
disposal off-site of Hazardous Wastes or PCBs, provided that the off-site
migration of Hazardous Substances from on-site disposal at a facility being
transferred hereunder to Buyer shall be treated as a Third Party Environmental
Claim. In the case of Seller's Environmental Responsibility, Seller's indemnity
shall extend to disposal sites whether or not listed by Seller on Schedule 3.18
hereto, but shall not extend to (a) any sites ever owned or operated by Buyer or
its Subsidiaries, or (b) sites identified on Schedule 3.18 which Buyer, in its
sole discretion, shall have identified prior to the execution hereof, as
acceptable facilities.
12.5 Environmental Violations. "Environmental Violations" shall mean
any violation, as of the Closing Date, of Environmental Laws (as such laws exist
as of the Closing Date) in the operation of the Business, or the failure to have
any Permit, as of the Closing Date, required by Environmental Laws (as such laws
exist as of the Closing Date) which are imposed on or incurred by Buyer as a
result of an affirmative obligation imposed upon Buyer by the actions of a
Governmental Authority, except to the extent reserved for on the December 1994
Balance Sheet. "Existing Environmental Violations" shall be those that are
scheduled or required to be scheduled in this Agreement.
12.6 Third Party Environmental Claim.
12.6.1 "Third Party Environmental Claim" means any claim for
Damages, including those for personal injury or property damage, resulting from
or alleged to result from exposure to any Hazardous Substance as a result of the
operation of the Business asserted by any Person other than a party entitled to
indemnification under this Agreement, whether or not caused by an Environmental
Violation. Third Party Environmental Claims shall include (a) any claims made
under performance or surety bonds issued in connection with the Business prior
to Closing and (b) any claims that any Hazardous Substance generated,
transported or disposed of in connection with the Business, has been found at a
site at which any Person (other than a party entitled to indemnification under
this Agreement) has conducted, plans to conduct, or has demanded that the
receiver of the notice conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law. An "Existing Third Party
Environmental Claim" shall be one which has been made in writing prior to
Closing, whether or not scheduled in this Agreement.
12.6.2 With respect to Third Party Environmental Claims based
upon or alleging Damages as a result of exposure occurring or condition existing
from or on any
52
Real Property both before and after the Closing, responsibility shall be borne
pro rata by Seller and Buyer in proportion to the relative lengths of third
party exposure during their respective periods of occupancy of the Real
Property; provided that, for purposes of this allocation, (A) the respective
periods of occupancy for any claim shall be determined as of the date such claim
is first presented or filed and (B) subject to its right to pursue contribution
or indemnity from any other third party, Seller's occupancy shall include any
period of occupancy by its predecessors-in-interest during which exposure is
alleged.
12.7 Government Remediation Claim. "Government Remediation Claim"
means a Thirty Party Claim brought by a Governmental Authority (other than an
Identified Environmental Concern) relative to the remediation of any
contaminated property and shall extend to any investigation, remediation or
corrective action mandated by such Government Authority (including inspections,
monitoring, sampling and removal of contaminated property).
12.8 Limitations and Deductibles.
12.8.1 Seller's Environmental Responsibility shall be limited in
accordance with the following table which identifies by cross reference the
items in Section 12.1:
Category Limitations Period Deductible
12.1(a) (Identified Until remediated None
Environmental as set forth in
Concerns) Section 12.10
12.1(b) (Off-Site 5 years after Closing None
Disposal)
12.1(e) (Existing 30 months after Closing None
Environmental
Violations)
12.1(d) (Environmental 30 months after Closing $150,000
Violations in the
Discovered aggregate
after Closing)
12.1(e) (Existing Third 10 years after Closing None
Party Environ-
mental Claims)
12.1(f) (Third Party
Environmental The later of 10 years None
Claims attributable after Closing or until the
to an Identified Identified Environmental
Concern) Concern is remediated
as set forth in Section 12.10
12.1(g) (Third Party 10 years after Closing $1,000,000
Environmental in the
Claims) aggregate
12.1(h) (Government 5 years after Closing $400,000
Remediation in the
Claims) aggregate
53
12.8.2 With respect to the items set forth in Section 12.8.1
above: (a) Seller's Environmental Responsibility shall expire at the end of the
Limitations Period specified unless Buyer has made a written claim for Damages
prior to the expiration of such period or upon Seller's completion of a
scheduled or specific item; and (b) Buyer shall assume responsibility for
Damages up to the amount of the Deductible therein specified.
12.8.3 The responsibilities for Deductibles and Damages set forth
in this Article 12 shall be distinct from those in Article 11 and not be subject
to nor apply in calculating any Baskets set forth in Article 11. To the extent
that the recovery of Damages is addressed by one of the categories set forth in
Section 12.1.1, Article 12 shall govern to the exclusion of Article 11; provided
that to the extent any Damages are recoverable by any Buyer Indemnitee under
Section 11.1 (c) (V) (relating to certain potential predecessor liabilities), it
shall also be entitled to indemnification under such Section; provided further
that the exclusive remedy of any Buyer Indemnitee for Damages with respect to
Identified Environmental Concerns recoverable under Section 12.10 shall be as
set forth in that Section.
12.8.4 Seller shall have no obligation to indemnify and hold
harmless the Buyer Indemnitees under this Article 12 in excess of the
$135,000,000 cap set forth in Section 11.4; provided that (a) for purposes of
calculating this limitation, Seller shall be afforded a dollar for dollar credit
for Damages it has indemnified Buyer against under Article 11 to the extent that
such Damages are governed by the cap; and (b) the liability of Seller with
respect to Off-Site Disposal shall not be subject to, nor apply in calculating
any deductibles or cap.
12.9 Miscellaneous. The following Sections of Article 11 shall apply
equally to Article 12 and the obligations of Seller under this Article 12 shall
be deemed Retained Liabilities.
11.3 Notice and Resolution of Claims
11.6 Exclusive Remedy
11.7 Mitigation
11.8 Indemnity Payments
11.9 Buyer's Cooperation
11.10 Payment and Assignment of Claims
11.11 Other Beneficiaries
11.12 Consequential Damages; Other Limitations
12.10 Certain Remediation Activities.
12.10.1 Coffeyville Contamination.
12.10.1.1 Responsibility of Seller. In the case of the
remediation of the Coffeyville Contamination, Seller shall, at Seller's sole
cost and expense, perform such investigation, remediation or corrective action,
in full compliance with the requirements of any Governmental Authority (whether
or not pursuant to Environmental Laws in effect on or prior to Closing)
including inspections, monitoring, sampling and the removal of any groundwater
and associated soils and any other materials mandated by an affirmative action
of a Governmental Authority. Seller's obligation under this Section shall
54
extend to (a) the ongoing RCRA corrective action (the "RCRA Action") and (b) any
other investigation, remediation or corrective action initiated within ten (10)
years after Closing by any Governmental Authority in connection with the
Coffeyville Contamination or the items identified on Schedule 12.3 as sources or
potential sources of contamination. Seller shall also be responsible for
maintaining any financial assurances required by any Governmental Authority in
connection with the above, whether required under a RCRA corrective action order
or as part of the Coffeyville Facility's RCRA or TSCA permits; provided that
this obligation shall not extend to any Financial Assurances otherwise required
of Buyer as part of the Coffeyville Facility's RCRA or TSCA permits.
12.10.1.2 TCE Cost Sharing. Buyer shall not be restricted by
this Agreement in its ability post Closing to transport, store, handle,
incinerate or otherwise dispose of waste streams containing trichloroethylene
(TCE) at the Coffeyville Facility. However, in the event the Coffeyville
Facility engages in any of the foregoing activities or otherwise begins to use
TCE in its operations post Closing, Buyer and Seller agree that remediation
costs under the RCRA Action shall be borne by both Buyer and Seller in a ratio
such that Seller's percentage of liability decreases by five (5) percent for
each 100,000 pounds of TCE, if any, brought onto the Coffeyville Facility for
use in Buyer's operations post Closing or spilled by Buyer at the Coffeyville
Facility post Closing.
12.10.1.3 Survival. Seller's responsibility and liability under
this Agreement with respect to the RCRA Action shall terminate when the
remediation has achieved to the satisfaction of the Governmental Authority the
established remediation clean up levels required by the final remediation plan
and such levels have been sustained for one (1) year. After this has been
achieved, any post remediation monitoring of the Coffeyville Facility required
as a result of the facility's RCRA permit or the groundwater contamination shall
be the sole responsibility of Buyer.
12.10.2 Control. With respect to Identified Environmental
Concerns or Government Remediation Claims, Seller shall have full control in
dealing and negotiating with the cognizant regulatory authorities; provided that
(a) Buyer shall have the right to attend, at its own expense, any meetings with
the regulatory authorities and shall be provided copies of all correspondence,
reports, or other documents (including inspections, monitoring, sampling and
analytical results) submitted or received by or on behalf of Seller, and (b)
Seller shall not, without the prior written consent of Buyer (which shall not be
unreasonably withheld), take any measure or step that imposes any unreasonable
burden or encumbrance upon the operation or conduct of Buyer's business unless
mandated to do so by a Governmental Authority. In this regard, Seller agrees to
coordinate its activities with Buyer's plant manager and safety manager at the
facility in question. In the event that Buyer shares liability due to its
actions post Closing as provided herein, Buyer shall have equal responsibility
in proportion to its liability in dealing with the regulatory agency(ies). In
any event, Buyer shall have the right to review all submissions or proposals to
the cognizant regulatory agency(ies) reasonably in advance of such submissions
or proposals being offered to such agency(ies).
12.10.3 Access. Buyer hereby grants to Seller and its consultants
a right of reasonable access to its facilities (and those of its tenants, if
required) in order to meet its obligations under this Article 12; provided that
Seller shall conduct any such
55
remediation or corrective action in a manner so as to assure no unreasonable
interference with the ongoing operations or conduct of Buyer's business unless
mandated to do so by a Governmental Authority. Any dispute under this Section as
to the reasonableness of Seller's actions may be submitted for resolution to
arbitration as set forth in Section 14.12. Buyer shall allow Seller and its
representatives and agents to store all equipment and materials that are
necessary or desirable for undertaking remediation or corrective actions
required.
12.10.4 Cooperation. With respect to Identified Environmental
Concerns or Government Remediation Claims, each party shall reasonably cooperate
with the other towards effecting any remediation or corrective action required
and shall provide the other with copies of any studies, analytical test results
or reports which may come into its possession or control, including consultants
retained by or on its behalf with respect to environmental conditions. As long
as Seller's Environmental Responsibility at a facility is in effect, (a) each
party shall provide notice and documentation to the other of any spill
incidents, whether or not reportable, occurring after the Closing Date in, on or
around the Coffeyville Facility, Lakeville facility or Utah facility within ten
(10) days of such incident and (b) each party shall also promptly provide to the
other a copy of any written statement, report, notice, registration,
application, permit, license, claim, action or proceeding given to or received
from any Person entering or occupying the Coffeyville Facility, Lakeville
facility or Utah facility concerning the spill, release, discharge of or
exposure to any Hazardous Substance or contamination in, on, or about the
Coffeyville Facility, Lakeville facility or Utah facility including but not
limited to all such documents as may be involved in any air and water discharges
from the site. Further, the Buyer shall provide to Seller reasonable access to
its purchasing and disposal records and shall provide timely notice of any
material change in type or volume of product used in its operations at the
Coffeyville Facility greater than thirty-three and one-third (33 1/3%) percent
of the preceding year's annual inventory.
12.10.5 Monitoring and Sampling. Buyer agrees that Seller may for
the purposes of (a) complying with government ordered remediation; or (b)
establishing baseline assessments of contamination; or (c) monitoring of any
new, preexisting or suspected contamination; take soil samples or install
additional groundwater monitoring xxxxx and sample such xxxxx and soils as
needed in specific areas of concern; provided that Seller shall conduct any such
remediation or corrective action in a manner so as to assure no unreasonable
interference with the ongoing operations or conduct of Buyer's business unless
mandated to do so by a Governmental Authority. Any disputes under this Section
as to the reasonableness of Seller's actions may be submitted for resolution to
arbitration as set forth in Section 14.12 with the exception of government
mandated actions. Buyer shall be given advance notice of such testing and
sampling and shall be entitled to split samples, if requested, at its expense.
Buyer may also choose to conduct its own testing and sampling (including
sampling of groundwater xxxxx installed by Seller). Buyer and Seller agree, at
Seller's sole cost and expense (except as noted below) to the establishment and
permanent location, if necessary, of a Westinghouse representative on the
Coffeyville site and further agree to provide such representative with office
space to perform the remediation, monitoring and oversight of planned
remediation activities at the site as well as baseline monitoring of activities
at site. Buyer agrees to absorb the costs of office space for such full time
representative over the lifetime of the remedial action.
12.10.6 Conduct. If Seller or its officers, employees, agents or
56
representatives enter any properties of Aptus, pursuant to this Agreement after
the Closing, each Party shall indemnify and save harmless the other and its
Indemnitees from and against any Damages arising therefrom to the extent
resulting from the negligence or willful misconduct of the Indemnifying Party or
its contractors, subcontractors or agents.
ARTICLE 13
DEFINITIONS
For purposes of this Agreement, the terms set forth below shall have
the following meanings:
"AAA" shall have the meaning set forth in Section 14.12.
"Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"Affiliate" means, for any Person, any other Person controlling,
controlled by, or under common control with such Person. The term "control"
means the possession, directly or indirectly, of the power to direct the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreement" means this Purchase Agreement, together with the Schedules
and Exhibits.
"Aptus" shall have the meaning set forth in the recitals to this
Agreement.
"Aptus Shares" means 1,000 shares of Common Stock of Aptus,
constituting all of the issued and outstanding shares of capital stock of Aptus.
"Assignment and Assumption Agreement" shall have the meaning set forth
in Section 2.2.3.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.5.
"Authenticating Agent" shall have the meaning set forth in the IDB
Indenture.
"Basket" shall have the meaning set forth in Section 11.4 hereto.
"Beneficiary" shall have the meaning set forth in Section 11.3.1.
"Business" shall have the meaning set forth in the Recitals Section.
"Buyer" shall have the meaning set forth in the heading to this
Agreement.
"Buyer Indemnitees" shall have the meaning set forth in Section 11.1.
"Buyer's Employee Welfare Benefit Plan" shall have the meaning set
forth in
57
Section 7.1.6.
"Buyer's Environmental Responsibility" shall have the meaning set
forth in Section 12.2.
"Buyer's Pension Plan" shall have the meaning set forth in Section
7.1.4(a).
"Cap" shall have the meaning set forth in Section 11.4 hereto.
"Charter Documents" means the articles or certificate of incorporation
and its by-laws, as each has been amended or supplemented from time to time.
"Closing" shall have the meaning set forth in Section 2.2.1.
"Closing Date" shall have the meaning set forth in Section 9.1.
"Closing Date Closure and Post Closure Costs" shall have the meaning
set forth in Section 5.8 hereto.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Coffeyville Facility" shall have the meaning set forth in Section
12.3.
"Coffeyville Contamination" shall have the meaning set forth in
Section 12.3.
"Confidentiality Agreement" means the Confidentiality Agreement dated
as of November 30, 1993 between Seller and Buyer.
"Consent" means a consent, approval, authorization, waiver or
notification from any Person, including any Governmental Authority.
"Consequential Damages" are Damages that arise out of any interruption
of business, loss of profits, loss of use of the facilities, claims of customers
or other indirect damages. Consequential Damages shall exclude compensatory or
actual damages and incidental damages (as that term is used in the Uniform
Commercial Code).
"Continuing Employees" shall have the meaning set forth in Section
7.1.1.
"Covered Returns" means Returns with respect to Covered
Taxes.
"Covered Taxes" means any Taxes.
"Damages" means all losses, claims, damages, costs, fines, penalties,
obligations, payments and liabilities (including those arising out of any
Action), together with all reasonable costs and expenses (including reasonable
outside attorneys' fees and reasonable out-of-pocket expenses) incurred in
connection with any of the foregoing. Damages shall include any costs of actions
within the definition of "response action" under CERCLA
58
Section 101(25) or any similar or successor legislation, including the
installation of equipment at a facility required to address an Environmental
Violation.
"December 1994 Adjusted Net Worth" shall have the meaning set forth in
Section 2.3.2.
"December 1994 Balance Sheet" means the Balance Sheet dated December
31, 1994 and attached to Schedule 3.5 hereto.
"Dollars" or "$" means lawful currency of the United States.
"Effective Conversion Date" shall have the meaning set forth in either
Section 7.8.3.1 or Section 7.8.3.2, as applicable.
"Employee" shall have the meaning set forth in Section 3.20.1.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.21.1.
"Employee Welfare Benefit Plans" shall have the meaning set forth in
Section 3(1) of ERISA, whether or not such plans are subject to ERISA.
"Environmental Laws" means any of the following in effect and as
interpreted as of the Closing Date: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.; the Toxic Substance Control Act, as amended, 15 U.S.C. Section 2601 et
seq.; the Hazardous Materials Transportation Act, as amended 49 U.S.C. Section
1802 et seq.; the Resource Conservation Recovery Act, as amended, 42 U.S.C.
Section 9601, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section 1251
et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 7401 et seq.; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; and all
applicable U.S. federal, state, municipal, local and foreign laws, principles of
common law ordinances, codes, as well as orders, decrees, judgments, seizures or
injunctions issued, promulgated, approved or entered on or before the Closing
Date thereunder relating to pollution, protection of the environment, or
protection of the public from pollution or employee health and safety,
including, but not limited to the release or threatened release of Hazardous
Substances into the environment or otherwise relating to the presence,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"Environmental Violations" shall have the meaning set forth in Section
12.5.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plan" shall have the meaning set forth in Section 3(3) of ERISA
with respect to employee benefit plans maintained or contributed to by Seller on
behalf of Aptus or Aptus that currently cover Employees and are subject to
ERISA.
"Existing Environmental Violations" shall have the meaning set forth
in Section 12.5.
59
"Existing Third Party Environmental Claim" shall have the meaning set
forth in Section 12.6.
"Final Adjusted Net Worth" shall have the meaning set forth in Section
2.4.1.
"Financial Assurances" shall have the meaning set forth in Section
5.8.
"Financial Statements" shall have the meaning set forth in Section
3.5.
"Flexible Period" shall have the meaning set forth in the IDB
Indenture.
"Flexible Rate" shall have the meaning set forth in the IDB Indenture.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any federal, state or local government,
any of its subdivisions, agencies, authorities, commissions, boards or bureaus,
any special improvement district, any federal, state or local court or tribunal
of competent jurisdiction.
"Governmental Remediation Claim" shall have the meaning set forth in
Section 12.7.
"Guarantee" means any guarantee, any indemnification obligation and
any other contingent obligation to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss including performance bonds and letters of credit.
"Hazardous Substance" means any of the following in effect and as
interpreted as of the Closing Date: any "hazardous substance" as defined under
CERCLA or the rules and regulations promulgated thereunder, any Hazardous Waste,
radioactive materials, petroleum or petroleum-derived substance or waste, PCB,
asbestos, or any constituent or combination of any of the above.
"Hazardous Waste" means "hazardous waste" as defined in RCRA or the
rules and regulations promulgated thereunder (as in effect and as interpreted as
of the Closing Date).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the regulations promulgated thereunder.
"IDB Backstop Expiry Date" means the earliest to occur of (i) the
discharge of the lien of the IDB Indenture pursuant to Section 12.01 thereof,
(ii) June 1, 2020, and (iii) the Effective Conversion Date.
"IDB Costs" whether incurred by Buyer or Seller, shall consist of (i)
any annual or other periodic fees and expenses relating to a Letter of Credit,
(ii) any fees or premium payable with respect to an IDB Interest Rate Cap, (iii)
any annual or other periodic fees and expenses payable to the Remarketing Agent
(subject to Section 7.8.2 hereof), (iv)
60
any annual or other periodic fees and any expenses payable to any rating agency,
(v) the interest payable on the aggregate principal amount of the IDBs at the
IDB Interest Rate, but shall not include any Underwriting Costs.
"IDB Indenture" means the Indenture of Trust between Tooele County,
Utah and Security Pacific National Trust Company (New York), as Trustee, dated
as of June 1, 1990, as amended.
"IDB Interest Rate" means at any time the actual interest payable
(without giving effect to any penalty charges) on the IDBs by the Company (after
giving effect to the Interest Rate Cap but before giving effect to the cost
sharing provision of this Agreement), as it may be adjusted pursuant to Section
7.8.3.2 (a).
"IDB Interest Rate Cap" means a policy or contract allocating to the
provider thereof the obligation to pay a portion of the interest which Buyer
obligated to pay with respect to the IDBs, issued in accordance with Section
7.8.5.2, as the same may from time to time be reissued or extended in accordance
with its terms, or any substitute therefor which, in any case shall be issued by
a provider and be on terms and subject to conditions reasonably acceptable to
Seller.
"IDB Loan Agreement" shall have the meaning set forth in Section 2.1.
"IDBs" means the industrial development bonds defined in Section
2.1(b).
"Identified Environmental Concerns" shall have the meaning set forth
in Section 12.3.
"Immediate Notices" shall have the meaning set forth in the IDB
Indenture.
"Income Tax" means any federal, state or local income, alternative
minimum and franchise or other similar tax, duty, governmental charge or
assessment imposed by or on behalf of any Governmental Authority that is based
on or measured by income (including, interest and penalties on any of the
forgoing).
"Income Tax Returns" means any Returns with respect to
Income Tax.
"Independent Firm" shall have the meaning set forth in Section 2.3.1.
"Intellectual Property" shall have the meaning set forth in Section
3.19.1.
"Interim Period" means, with respect to any Tax, imposed on NEI or
Aptus on a periodic basis for which the Closing Date is not the last day of a
Short Period, the period of time beginning on the first day of the actual
taxable period that includes (but does not end on) the Closing Date and ending
on the Closing Date.
"Issuer" shall have the meaning set forth in the IDB Indenture.
"Law" means any statute, rule, regulation or ordinance.
61
"Lease" means any lease or sublease of real or personal property to
Aptus.
"Leased Personal Property" shall have the meaning set forth in Section
3.10.2.
"Leased Real Property" shall have the meaning set forth in Section
3.9.2.
"Letter of Credit" shall mean an irrevocable letter of credit to be
dated the Closing Date from a bank in favor of the trustee under the IDB
Indenture, issued at the request of Seller, as the same may from time to time be
reissued or extended in accordance with its terms, or any substitute therefor.
"Letter of Intent" shall mean the Letter of Intent entered into on
August 22, 1994 between Buyer and Seller.
"Lien" means any lien, mortgage, deed of trust, security interest,
charge, pledge, retention of title agreement, easement, encroachment, condition,
reservation, covenant or other encumbrance affecting title.
"Mandatory Tender Date" shall have the meaning set forth in the IDB
Indenture.
"Material Adverse Effect" means a material adverse effect on (a) the
Business, financial condition or results of operations of the Business, taken as
a whole (without giving effect to any effect in the Retained Liabilities), or
(b) the ability of Seller to consummate the transactions contemplated by this
Agreement.
"Material Contracts" means the Contracts identified on Schedule 3.13.
"Material Lease" means any Real Property Lease or
Material Personal Property Lease.
"Material Personal Property Lease" means any lease of personal
property involving one (1) year or rental obligations exceeding Fifty Thousand
Dollars ($50,000.00).
"NEI" shall have the meaning set forth in the recitals to this
Agreement.
"Non-Transferred Instrument" shall have the meaning set forth in
Section 5.4.2.
"Off-Site Disposal" shall have the meaning set forth in Section 12.4.
"Order" means any order, judgment, injunction, decree or award of any
Governmental Authority.
"Owned Real Property" shall have the meaning set forth in Section
3.9.1.
"Party" means Buyer or Seller.
62
"PCB" means PolyChlorinated Biphenyl.
"Pension Plan" means the Westinghouse Pension Plan.
"Period" has the meaning set forth in Section 7.2.1.
"Permit" means any permit, license, certificate (including a
certificate of occupancy) registration, authorization or approval issued by a
Governmental Authority.
"Permitted Liens" means (a) Liens for Taxes that are not yet due and
payable or that are being contested in good faith by appropriate proceedings and
as to which reserves have been established consistent with GAAP, (b) landlords'
and similar Liens imposed by Law that have been incurred in the ordinary course
of business, and (c) other title defects, easements, encroachments and
encumbrances that do not, individually or in the aggregate, materially impair
the value or continued use of the property to which they relate, assuming that
Aptus uses such property for commercial purposes.
"Person" means an individual, partnership, joint venture, association,
corporation, trust or any Governmental Authority.
"Plan" shall have the meaning set forth in Section 3.21.1.
"Post-Closing Period" means any Period that begins after the Closing
Date and, with respect to any Period beginning before and ending after the
Closing Date, the portion of such Period commencing on the day following the
Closing Date.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Rate Period" shall have the meaning set forth in the IDB Indenture.
"Real Property" means the Owned Real Property and the
Leased Real Property.
"Real Property Lease" shall have the meaning set forth in Section
3.9.2.
"Remarketing Agent" shall have the meaning set forth in the IDB
Indenture.
"Retained Liabilities" shall have the meaning set forth in Section
11.1 hereto.
"Returns" means any federal, state or local tax Returns, reports,
declarations and forms with respect to Taxes.
"Savings Program" means the Westinghouse Savings
Program.
"Seller" shall have the meaning set forth in the heading to this
Agreement.
"Seller Indemnitees" shall have the meaning set forth in Section 11.2.
63
"Seller's Employee Welfare Benefit Plan" shall have the meaning set
forth in Section 7.1.6.
"Seller's Environmental Responsibility" shall have the meaning set
forth in Section 12.1.
"Seller's Knowledge" or "to the knowledge of Seller" shall mean the
actual knowledge, after due and appropriate inquiry of the person identified on
Schedule 13.
"Seller's Plan" shall have the meaning set forth in Section 7.1.3.
"Senior Unsecured Debentures" shall have the meaning set forth in
Section 2.1.
"Shares" means 3,000 shares of Common Stock of NEI, constituting all
of the issued and outstanding shares of capital stock of NEI.
"Short-Period" means any Period ending on the Closing Date.
"Subordinated Debentures" shall have the meaning set forth in Section
2.1.
"Subsidiary" of any Person means any corporation of which 50% or more
of its shares of stock having general voting power under ordinary circumstances
to elect a majority of the board of directors, managers, or trustees of such
corporation, irrespective of whether or not at the time, stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency, are owned or controlled directly or indirectly by
such Person or by any other Subsidiary of such Person.
"Tax" or "Taxes" means all income, profits, franchise, gross receipts,
capital, sales, use, withholding, value added, ad valorem, transfer, employment,
social security, disability, occupation, property, severance, production, waste,
excise and other taxes, duties and similar governmental charges and assessments
imposed by or on behalf of any Governmental Authority (including interest and
penalties thereon).
"Tax Exemption Certificate and Agreement" shall mean such document
dated June 26, 1990 among Seller, Issuer and Trustee.
"Tax Laws" means the Code and all other Laws relating to Taxes.
"Tender Agent" shall have the meaning set forth in the IDB Indenture.
"Term Period" shall have the meaning set forth in the IDB Indenture.
"Terminating Employees" shall have the meaning set forth in Section
7.1.1.
"Third Party Claim" shall have the meaning set forth in Section
11.3.2.
"Third Party Environmental Claim" shall have the meaning set forth in
Section
64
12.6.
"Transition Employees" shall have the meaning set forth in Section
7.1.1.
"Trustee" shall have the meaning set forth in the IDB Indenture.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 3.5.
"Underwriting Costs" shall mean the underwriting fees and expenses of
the Remarketing Agent in connection with the remarketing of the IDBs at the
Closing Date and at the Effective Conversion Date, and all related underwriting
costs, including, without limitation, the fees and expenses of accountants and
bond counsel, fees and expenses in connection with the delivery of other legal
opinions or required in connection with obtaining a rating on the IDBs, fees and
expenses relating to any feasibility study required in connection with
remarketing the IDBs, fees and expenses incurred in connection with the initial
issuance of the Letter of Credit and the initial rating agency fees, and
printing and mailing fees, but shall not include any IDB Costs.
"Undisclosed Liabilities" shall have the meaning set forth in Section
3.6.
ARTICLE 14
MISCELLANEOUS
14.1 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement will not be affected or impaired
thereby.
14.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Parties; provided, however, that this Agreement may not be
assigned by any Party without the express written consent of the other Party.
14.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which when taken together shall constitute the same instrument.
14.4 Headings. The headings of the Sections are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof.
14.5 Waiver. Any of the terms or conditions of this Agreement may be
waived in writing at any time by the Party which is entitled to the benefits
thereof. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of such provision at any time in the future or a
waiver of any other provision hereof.
14.6 No Third-Party Beneficiaries. Nothing in this Agreement shall
create
65
any third-party beneficiary rights in any Person other than the Beneficiaries.
14.7 Sales and Transfer Taxes. Seller shall pay all sales, transfer,
deed, duties, stamp, notary public and other similar taxes, duties and transfer
fees applicable to the transactions contemplated by this Agreement, if any,
including fees to record assignments.
14.8 Other Expenses. Except as otherwise expressly provided for herein
or in any agreement entered into on the date hereof, Seller and Buyer shall each
pay all costs and expenses incurred by it or on its behalf in connection with
this Agreement and the transactions contemplated hereby, including fees and
expenses of its own financial consultants, accountants and legal counsel. Costs
or expenses of Seller shall be paid by Seller and not by Aptus or from the
assets of Aptus. Any and all fees, costs and expenses for title or survey work
related to any of the Real Property shall be paid by Buyer. Any further or
additional environmental investigations, studies or analyses relating to any of
the Real Property shall be paid by Buyer.
14.9 Notices. Any notice, request, instruction, consent or other
document to be given hereunder by either party hereto to the other party shall
be in writing and delivered personally, by nationally recognized overnight
courier service, or sent by registered or certified mail, postage prepaid, as
follows:
If to Seller:
Office of the Chairman
Westinghouse Electric Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Fax Number:
With a copy to:
Office of General Counsel
Westinghouse Electric Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Fax Number:
If to Buyer:
Office of the Vice Chairman
Xxxxxxx Environmental Services, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
66
With a copy to:
Xxxxx X. Xxxxxxxxxx, Esquire
Xxxxxxx Environmental Services, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
or at such other address for a Party as shall be specified in writing by that
Party. Any notice which is delivered personally or by nationally recognized
overnight courier service to the addresses provided herein shall be deemed to
have been duly given to the Party to whom it is directed upon actual receipt by
such Party. Any notice which is addressed and mailed in the manner herein
provided shall be deemed given to the Party to which it is addressed when
received.
14.10 Governing Law; Interpretation. This Agreement shall be construed
in accordance with and governed by the Laws of Pennsylvania applicable to
agreements made and to be performed wholly within the Commonwealth. Unless
specifically stated, otherwise, references to Articles, Sections, Exhibits and
Schedules refer to Articles, Sections, Exhibits and Schedules in this Agreement.
References to "includes" and "including" mean "includes without limitation" and
"including without limitation."
14.11 Public Announcements. Seller and Buyer shall agree on the terms
of the press releases to be issued upon the execution of this Agreement and
shall consult with each other before issuing any other press releases with
respect to this Agreement and the transactions contemplated hereby, including
any termination of this Agreement for any reason.
14.12 Arbitration.
14.12.1 In the event of any dispute arising between the parties
hereto, regarding any of the terms or provisions or breach of this Agreement,
such disputes shall be resolved by submitting same to arbitration, the results
of which shall be final and binding upon the parties and in accordance with the
Commercial Arbitration Rules of the American Association of Arbitrators ("AAA").
Such arbitration shall be held in Pittsburgh, Pennsylvania or Wilmington,
Delaware, as determined in the sole discretion of the arbitrators, before a
three person arbitration panel consisting of practicing attorneys familiar with
environmental law if the dispute involves environmental issues. The arbitrators
shall not reside in Pittsburgh or Wilmington and shall be subject to the AAA's
no conflict rules. The arbitration panel shall be selected from a list of
arbitrators supplied by AAA as follows: one arbitrator by Seller, one arbitrator
by Buyer, and the third arbitrator selected by the arbitrators appointed by
Seller and Buyer:
(a) Upon the written or telexed demand for arbitration by any of the
parties hereto, Buyer and Seller shall appoint their respective selection as
arbitrator not later than ten days following receipt of the list supplied by
AAA.
(b) The two arbitrators so selected by Buyer and Seller, shall appoint
a
67
third arbitrator not later than ten (10) days thereafter and the three man
arbitration panel so constituted shall call for an arbitration hearing not later
than thirty (30) days thereafter. The period of arbitration, from the time of
the first hearing, shall not exceed ninety (90) days unless such period be
extended by the arbitrators for good cause shown.
(c) The final decision of the arbitrators shall be a written decision
setting forth the findings of fact and conclusions reached by the arbitrators,
shall be rendered not more than thirty (30) days following the final hearing and
shall be sent to the parties by registered mail forthwith, thereafter.
(d) The prevailing party in any such arbitration shall be entitled to
interest on amounts due and to reimbursement of fees and expenses (including
reasonable attorneys' fees) as determined by the arbitrators.
(e) The decision of the arbitrators shall be final and nonappealable
in accordance with AAA rules, except as follows: to the extent that either the
claim for damages or the amount of damages awarded exceeds Ten Million and
00/100 Dollars ($10,000,000.00), then the arbitrators shall be required to
include in their decision both the factual and the legal conclusions reached in
support of the decision and either party shall be entitled to appeal the
decision to a court of competent jurisdiction based on error in the application
of governing legal principles only. In this regard, the arbitrators shall be
required to observe Section 11.6 to this Agreement (Exclusive Remedy). The
findings of fact shall remain undisturbed unless manifestly in error. The
prevailing party in any such litigation shall be entitled to interest on amounts
due and to reimbursement of fees and expenses (including reasonable attorneys'
fees) as determined by the court. For purposes of this Section, the parties
consent to the jurisdiction of federal and state courts within Pennsylvania and
Delaware.
14.12.2 This Section, with the exception of the last sentence of
14.1.2.1, shall not apply to disputes under Section 7.4 (Non-Competition). In
addition, any disputes brought under the Indentures governing the Senior
Unsecured Debentures or the Subordinated Debentures shall be governed by such
Indentures and not by this Section.
14.13 Financial Projections. Buyer and Seller may have shared with
each other certain financial projections relating to their respective businesses
or the combined business of Buyer and Aptus post Closing. Buyer and Seller
acknowledge that such financial projections should not be relied upon as
accurate or reliable since they are based on various estimates and assumptions
that may be unwarranted or speculative. Accordingly, neither Party shall have
any liability to the other based on the sharing of such financial projections.
14.14 Confidentiality. The terms of the Confidentiality Agreement
shall be extended for a period of five (5) years post Closing. Without limiting
the generality of the foregoing, the terms of the Confidentiality Agreement
shall extend to the Parties ongoing business and contractual relationships under
this Agreement as long as such relationships continue (whether or not beyond the
five (5) year period), including without limitation Section 5.9 (Right to Seller
Business Post Closing), Section 5.10 (Right to Seller Intellectual Property Post
Closing), and Articles 11 and 12 (relating to Indemnification Post Closing).
68
14.15 Entire Agreement; Amendment. This Agreement, the Confidentiality
Agreement and the other written agreements, if any, entered into on the date
hereof constitute the sole understanding of the Parties with respect to the
matters contemplated hereby and thereby and supersede all prior agreements and
understandings, including the Letter of Intent, between the Parties with respect
to such matters. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the Party against whom it would apply.
14.16 Further Assurances. At any time and from time to time prior to
and after the Closing Date, each party shall, at the reasonable request of the
other, execute and deliver any further instruments or documents and take all
such further action as such party may reasonably request in order to consummate
more effectively the transactions contemplated by this Agreement.
14.17 Exclusive Jurisdiction and Consent to Service of Process.
Subject to Section 14.12, the Parties agree that any legal action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, shall be instituted in a Federal or state court sitting in
either Pennsylvania or Delaware. Such courts shall be the exclusive jurisdiction
and venue of said legal proceedings and each Party hereto waives any objection
which such party may now or hereafter have to the laying of venue of any such
action, suit or proceeding, and irrevocably submits to the jurisdiction of any
such court in any such action, suit or proceeding. Any and all service of
process and any other notice in any such action, suit or proceeding shall be
effective against such Party when transmitted in accordance with this Agreement.
Nothing contained herein shall be deemed to affect the right of any Party hereto
to serve process in any manner permitted by law.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
WESTINGHOUSE ELECTRIC
CORPORATION
By: /s/ Xxxxxxxxx Xxxxxxxx
-----------------------
Title: EVP, Chief Financial Officer
-----------------------------
XXXXXXX ENVIRONMENTAL
SERVICES, INC.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------
Title: President & COO
--------------------
69
