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ASSET PURCHASE AGREEMENT
by and between
WESTINGHOUSE GOVERNMENT SERVICES COMPANY LLC
and
XXXXXXX-XXXXXX ELECTRO-MECHANICAL CORPORATION
Dated as of October 25, 2002
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Terms Generally.......................................................1
1.2 Certain Terms.........................................................2
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Sale and Purchase of Assets..........................................12
2.2 Assumption of Liabilities, etc.......................................14
2.3 Purchase Price.......................................................16
2.4 Adjustment of Purchase Price.........................................16
2.5 Allocation of Purchase Price.........................................18
2.6 Closing..............................................................18
2.7 Payments Received After the Closing..................................19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Existence and Good Standing..........................................20
3.2 Authority............................................................20
3.3 No Violation.........................................................20
3.4 Consents.............................................................21
3.5 Books and Records; Financial Statements..............................21
3.6 Absence of Certain Changes...........................................21
3.7 Title to the Purchased Assets........................................21
3.8 Real Property........................................................21
3.9 Material Contracts...................................................22
3.10 Accounts Receivable..................................................23
3.11 No Proceedings.......................................................23
3.12 Compliance with Law..................................................23
3.13 Permits..............................................................23
3.14 Employee Relations...................................................24
3.15 Employees, Employment Agreements and Benefits, etc...................24
3.16 Environmental Matters................................................25
3.17 Intellectual Property................................................26
3.18 Brokers..............................................................27
3.19 Sufficiency of Assets................................................27
3.20 Inventories..........................................................27
3.21 No Material Adverse Change...........................................27
3.22 Insurance............................................................27
3.23 Relationships with Related Persons...................................28
3.24 Solvency.............................................................28
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TABLE OF CONTENTS
(continued)
Page
3.25 Taxes................................................................28
3.26 No Other Representations or Warranties...............................28
3.27 Disclaimer...........................................................29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Existence and Good Standing..........................................29
4.2 Authority............................................................29
4.3 No Violation.........................................................29
4.4 Consents.............................................................29
4.5 No Proceedings.......................................................29
4.6 Financing............................................................29
4.7 Solvency.............................................................30
4.8 Brokers..............................................................30
4.9 U.S.-Controlled Entity...............................................30
4.10 No Other Representations or Warranties...............................30
ARTICLE V
COVENANTS
5.1 Conduct of Business..................................................30
5.2 Access to Information................................................31
5.3 Governmental Approvals, etc..........................................32
5.4 Novations of Government Contracts and Third Party Consents...........33
5.5 Confidentiality......................................................35
5.6 Press Releases and Disclosure........................................36
5.7 Further Assurances...................................................36
5.8 Expenses; Transfer Taxes.............................................36
5.9 Bulk Transfer Laws...................................................36
5.10 Tax Matters..........................................................36
5.11 Non-Solicitation.....................................................37
5.12 Closing and Disclosure Schedules.....................................37
5.13 OCI Compliance.......................................................38
5.14 Supplies and Signage.................................................38
5.15 No Use of Trademarks.................................................38
5.16 Assumption of Teaming Agreement and WGS Shared Technology Agreement..38
5.17 Custody, Access, Segregation and Transfer of WEC Technology; Audit
Rights...............................................................39
5.18 NRC Licenses and NRC Bond............................................40
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TABLE OF CONTENTS
(continued)
Page
ARTICLE VI
EMPLOYEE MATTERS
6.1 Offer to Hire........................................................40
6.2 Compliance with Law and Collective Bargaining Agreements.............41
6.3 Employee Benefits....................................................41
6.4 WARN Liability.......................................................51
6.5 Employee Termination.................................................51
6.6 No Third Party Beneficiaries.........................................51
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Each Party's Obligations...............................51
7.2 Conditions to Buyer's Obligations....................................52
7.3 Conditions to Seller's Obligations...................................53
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations, Warranties, Covenants and Agreements....53
8.2 Indemnification......................................................54
8.3 Indemnification Procedures...........................................55
8.4 Limitation of Liability..............................................57
8.5 Special Indemnity Provisions Relating to Environmental Conditions....58
8.6 Other Matters........................................................61
ARTICLE IX
TERMINATION
9.1 Termination..........................................................62
9.2 Effect of Termination................................................62
ARTICLE X
MISCELLANEOUS
10.1 No Assignment........................................................62
10.2 Headings.............................................................62
10.3 Entire Agreement.....................................................63
10.4 Annexes and Exhibits; Disclosure Schedule............................63
10.5 Amendment; Waiver....................................................63
10.6 Construction.........................................................63
10.7 Severability.........................................................63
10.8 Notices..............................................................64
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TABLE OF CONTENTS
(continued)
Page
10.9 Binding Effect; Third Party Beneficiary Rights.......................65
10.10 Governing Law........................................................65
10.11 Counterparts.........................................................65
10.12 Specific Performance.................................................65
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ANNEXES AND EXHIBITS
ANNEXES
Annex 1 Description of the Ball Field
Annex 2 Cheswick Facility
Annex 3 Mount Pleasant Facility
Annex 4 Motor Vehicles
Annex 5 Purchased Intellectual Property
Annex 6 Excluded Properties and Assets
Annex 7 Addendum to Working Capital Statement
Annex 8 Basis for Valuation of Liabilities of Seller's Pension Plan
Annex 9 NGAP Schedule
Annex 10 Location of Former Gasoline Underground Storage Tanks
EXHIBITS
Exhibit A Guaranty Agreement
Exhibit B Form of Assignment Agreement for Specified Contracts
Exhibit C Assumption Agreement
Exhibit D Xxxx of Sale
Exhibit E Patent Assignment
Exhibit F Real Property Assignment
Exhibit G Real Property Deed
Exhibit H Trademark Assignment
Exhibit I Transition Services Agreement
DISCLOSURE SCHEDULE
Section 3.3 No Violation
Section 3.4 Consents
Section 3.5 Management Balance Sheet
Section 3.6 Certain Changes
Section 3.7 Exceptions to Title
Section 3.8(b) Real Property Leases
Section 3.8(c) Real Property Noncompliance and Encroachments
Section 3.9(a) Material Contracts
Section 3.9(b) Breaches of Assumed Contracts
Section 3.10 Accounts Receivable
Section 3.11 No Proceedings
Section 3.13 Permits
Section 3.15(a) Employees
Section 3.15(b) Employment and Labor Contracts
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Section 3.15(c) Employee Plans
Section 3.15(e) Funded Status of Seller's Pension Plan
Section 3.15(i) Vesting of Compensation
Section 3.16(a) Environmental Permits and Proceedings
Section 3.16(b) Noncompliance with Environmental Laws
Section 3.16(c) Releases
Section 3.17(a) Purchased Intellectual Property
Section 3.19 Sufficiency of Assets
Section 3.21 No Material Adverse Change
Section 3.22 Insurance
Section 3.23 Relationships with Related Persons
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of October 25, 2002, by and
between Westinghouse Government Services Company LLC, a Delaware limited
liability company ("Seller"), and Xxxxxxx-Xxxxxx Electro-Mechanical Corporation,
a Delaware corporation ("Buyer").
RECITALS:
A. Seller, through its Electro-Mechanical Division (the "Division"),
(i) designs, develops and manufactures reactor and main coolant pumps, canned
motor and pump derivatives, ship service generators, motors, secondary
propulsion systems, control rod drive mechanisms, seals, spare parts, power
conditioning electronics and other advanced electro-mechanical equipment, (ii)
provides engineering services and (iii) performs refurbishment services, for the
United States Navy, the petrochemical and hazardous waste management industries
and, currently through WEC, the commercial nuclear utility industry
(collectively, the "Business"). Capitalized terms used herein without definition
have the respective meanings set forth in ARTICLE I.
B. Seller desires to sell, transfer and convey to Buyer, and Buyer
desires to purchase and acquire from Seller, the Purchased Assets, and Buyer has
agreed to assume the Assumed Liabilities, all for the Purchase Price and upon
the terms and subject to the conditions set forth in this Agreement.
X. Xxxxxxxxxx Group International, Inc., a Delaware corporation and the
indirect sole member of Seller ("WGI"), has agreed to guaranty the obligations
of Seller hereunder pursuant to the Guaranty Agreement substantially in the form
of Exhibit A (the "Guaranty Agreement").
X. Xxxxxxx-Xxxxxx Corporation, a Delaware corporation and the parent
company of Buyer ("Xxxxxxx-Xxxxxx"), has agreed to guaranty the obligations of
Buyer hereunder pursuant to the Guaranty Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, covenants and agreements set forth herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Terms Generally. References to Articles, Sections, Annexes,
Schedules and Exhibits in this Agreement are references to Articles and Sections
of, and Annexes, Schedules and Exhibits to, this Agreement unless otherwise
indicated. The word "including" means including without limitation. Any
reference to the singular in this Agreement shall also include the plural and
vice versa. As used in this Agreement, the phrases "used primarily in" or "held
primarily for use in," "related primarily to" or "relating primarily to" the
Business, or the operation thereof, and similar phrases are intended to exclude
assets of Seller owned or held
(a) for use in the businesses or activities of Seller generally or (b) for use
by both the Business and any other business of Seller so long as such assets or
rights do not exclusively or primarily relate to the Business.
1.2 Certain Terms. As used in this Agreement, the following terms have
the following meanings:
Actuarial Arbitration Firm: the meaning set forth in Section 6.3(g)(v).
Advanced Funding Amount: the meaning set forth in Section 2.4(a)(iii).
Affiliate: with respect to a Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, the first
Person and any officer, director or controlling Person of such Person. As used
in this definition of the term "Affiliate," "control" (including the terms
"controlled by" and "under common control") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
voting trust, contract or similar arrangement, as trustee or executor, or
otherwise. For purposes hereof, neither WEC nor any Affiliate of WEC shall be
deemed an Affiliate of Seller or any of Seller's Affiliates.
Agreement: this Asset Purchase Agreement (including the Annexes,
Exhibits and Schedules hereto).
Ancillary Agreements: the Xxxx of Sale, the Assumption Agreement, the
Real Property Deed, the Real Property Assignment, the Patent Assignment, the
Trademark Assignment, the Assignment of Specified Contracts, the Transition
Services Agreement, the Guaranty Agreement, and any other documents,
certificates and instruments required to consummate the transactions
contemplated by this Agreement, in each case, only as applicable to the relevant
party or parties to such Ancillary Agreement as indicated by the context in
which such term is used.
Arbitration Firm: the meaning set forth in Section 2.4(b).
Assignment of Specified Contracts: the form for the assignment or
sublicense to be executed by Seller in favor of Buyer, substantially in the form
or forms set forth in Exhibit B, for the Specified Contracts.
Assumed Contracts: the meaning set forth in Section 2.1(a)(vii).
Assumed Liabilities: the meaning set forth in Section 2.2(a).
Assumption Agreement: the Assumption Agreement and Undertaking to be
executed by Buyer in favor of Seller, substantially in the form of Exhibit C,
pursuant to which Buyer will assume the Assumed Liabilities.
AWSE: the meaning set forth in Section 3.15(a).
AWSE CBA: the meaning set forth in Section 3.15(a).
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Balance Sheet Date: the meaning set forth in Section 3.5.
Ball Field: that certain parcel of real property included in the
Cheswick Facility and referred to as the "ball field," as more particularly
described in Annex 1.
Ball Field Investigation: the magnetometer survey and groundwater
assessment relating to the Ball Field, as described in the May 17, 2002 letter
from Xxxxxxxx/Xxxxx Consultants, Inc. to Xxxxxx X. Xxx of the Division and the
June 14, 2002 letter from Xxxxxxxx/Xxxxx Consultants, Inc. to Xxxxxxx Xxxxxx of
Enercon Services, Inc. (Phase I only), copies of which letters have been
previously furnished to Buyer.
Benefits Maintenance Period: the meaning set forth in Section
6.3(j)(i).
Xxxx of Sale: the General Assignment and Xxxx of Sale to be executed by
Seller in favor of Buyer, substantially in the form of Exhibit D.
Business: the meaning set forth in the recitals to this Agreement.
Business Information: the meaning set forth in Section 5.5(b).
Buyer: the meaning set forth in the introductory paragraph to this
Agreement.
Buyer Indemnitee: the meaning set forth in Section 8.2(a).
Buyer Permit: the meaning set forth in Section 5.3(c).
Buyer's Actuary: the meaning set forth in Section 6.3(g)(v).
Buyer's Flexible Spending Account Plans: the meaning set forth in
Section 6.3(e).
Buyer's 401(k) Plan: the meaning set forth in Section 6.3(h).
Buyer's Pension Plan: the meaning set forth in Section 6.3(g).
Buyer's Plans: the meaning set forth in Section 6.3(a).
Buyer's PRB Plan: the meaning set forth in Section 6.3(j)(i).
Buyer's SERP: the meaning set forth in Section 6.3(i).
Buyer's Welfare Plans: the meaning set forth in Section 6.3(b).
CERCLA: the Comprehensive Environmental Response, Compensation and
Liability Act, as amended.
Change in Working Capital: the meaning set forth in Section 2.4(a)(ii).
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Cheswick Facility: the real property located in or near Cheswick,
Pennsylvania and described in Annex 2, together with all buildings, structures,
improvements and fixtures located thereon and all appurtenances, rights,
easements, rights-of-way, tenements and heriditaments incident thereto.
Closing: the meaning set forth in Section 2.6(a).
Closing Date: the meaning set forth in Section 2.6(a).
Closing Working Capital: the meaning set forth in Section 2.4(a).
Code: the Internal Revenue Code of 1986, as amended.
Confidentiality Agreement: the meaning set forth in Section 5.5(a).
Consent: any consent, approval, authorization, declaration, order,
notice or filing or registration requirement.
Consultant: the meaning set forth in Section 8.5(b).
Contracts: the meaning set forth in Section 3.9.
Xxxxxxx-Xxxxxx: the meaning set forth in the recitals to this
Agreement.
Disclosure Schedule: the disclosure schedule delivered by Seller prior
to or concurrently with the execution and delivery of this Agreement, as such
disclosure schedule may be amended or supplemented by Seller from time to time
prior to the Closing pursuant to Section 5.12.
Dispute Notice: the meaning set forth in Section 6.3(g)(v).
Division: the meaning set forth in the recitals to this Agreement.
EdF Claim: the meaning set forth in Section 2.2(a)(i).
Employee Plan: any "employee benefit plan" (within the meaning of
section 3(3) of ERISA) or any other bonus, stock option, stock appreciation,
stock purchase, incentive, retention, severance, termination, lay-off, leave of
absence, disability, workers compensation, pension, health care, profit sharing,
retirement, vacation or holiday pay, insurance, deferred compensation or other
employee or welfare benefit plan, agreement or arrangement maintained or
contributed to by Seller that are applicable to Seller's employees who work for
the Business on the date of this Agreement.
Employees: the meaning set forth in Section 3.15(a).
Environment or Environmental: ambient air, indoor air, surface water,
groundwater, sediments, soil, land surface or land subsurface.
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Environmental Condition: the generation, receiving, handling, use,
storage, containment, treatment, transportation, shipment, disposition, Release
or Threat of Release prior to the Closing of any Hazardous Substance by any
Person (or the predecessors of any such Person) that has resulted in or may
result in response action under any Environmental Laws or as to which any
Liability is currently or may in the future be imposed on any Person based on
conditions existing prior to the Closing or the actions or omissions prior to
the Closing of any Person (or the predecessors of any such Person) with respect
to any Hazardous Substance or reporting with respect thereto.
Environmental Law: any Law (i) creating a cause of action for damage to
persons or property due to exposure to Hazardous Substances or (ii) relating to
the protection of human health or the Environment, including the Clean Air Act,
the Federal Water Pollution Control Act, CERCLA, the Emergency Planning and
Community Right to Know Act, the Solid Waste Disposal Act (including the
Resource Conservation and Recovery Act), the Toxic Substances Control Act, the
Safe Drinking Water Act and other substantially similar Laws, as amended from
time to time.
Environmental Losses: the meaning set forth in Section 8.5(d).
Environmental Permit: any Permit issued to Seller under an
Environmental Law in connection with the operation of the Business.
Equipment: the machinery, equipment, tools, office equipment, business
machines, computer systems and equipment, furniture and accessories owned or
leased by or licensed to Seller and existing on the Closing Date that are used
primarily in the Business, including any express or implied warranties by the
manufacturers, sellers or licensors thereof, or of any component thereof, to the
extent transferable.
ERISA: the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate: any corporation or trade or business controlled by,
controlling or under common control with Seller within the meaning of section
414 of the Code or section 4001(a) or 4001(b) of ERISA.
Excluded Assets: the meaning set forth in Section 2.1(b).
Excluded Liabilities: the meaning set forth in Section 2.2(b)(iii).
Existing Schedule: the meaning set forth in Section 6.3(j)(ii).
Exon-Xxxxxx Amendment: section 721 of the Omnibus Trade and
Competitiveness Act of 1988 (amending Title VII of the Defense Production Act,
50 U.S.C. App. Section 2170 (1997)).
Facilities: the meaning set forth in Section 3.8(c).
5
FAS 106: Statement of Financial Accounting Standards No. 106
(Employers' Accounting for Postretirement Benefits Other Than Pensions), as
issued by the Financial Accounting Standards Board.
FAS 106 Event: the meaning set forth in Section 6.3(j)(ii).
Financial Statements: the meaning set forth in Section 3.5.
Fixed Assets: all fixed assets of Seller on the Closing Date that are
located at the Cheswick Facility and the Mount Pleasant Facility.
FOCI: foreign ownership, control, or influence, as such term is defined
in and regulated by the National Industrial Security Program Operating Manual,
Department of Defense 5220.22-M (January 1995), as amended, modified and
supplemented from time to time.
414(l) Amount: the meaning set forth in Section 6.3(g)(iv).
GAAP: generally accepted accounting principles for financial reporting
in the United States, applied on a basis consistent with the historical
management accounting policies and procedures of the Division.
Gasoline UST Release: the meaning set forth in Section 8.5(b).
Governmental Authority: any government or political subdivision or
regulatory authority, whether foreign or domestic, federal, state, provincial,
territorial, local or municipal, or any agency or instrumentality of any such
government or political subdivision or regulatory authority, or any foreign or
domestic, federal, state, provincial, territorial, local or municipal court or
similar tribunal.
Government Contract: any Assumed Contract entered into with any
Governmental Authority and any subcontract relating to obligations to be
performed pursuant to an Assumed Contract entered into with any Governmental
Authority.
Guaranty Agreement: the meaning set forth in the recitals to this
Agreement.
Hazardous Substance: any chemical, material or substance in any form,
whether solid, liquid, gaseous, semisolid, or any combination thereof, whether
waste material, raw material, chemical, finished product, byproduct, or any
other material or article, that is listed or regulated under applicable
Environmental Laws as a "hazardous" or "toxic" substance or waste, or as a
"pollutant" or "contaminant," or is otherwise listed or regulated under
applicable Environmental Laws because it poses a hazard to human health or the
Environment, including petroleum, petroleum products, flammable explosives,
radioactive materials, asbestos, urea formaldehyde, foam insulation, and
lead-containing paints or coatings.
HSR Act: the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
IBEW: the meaning set forth in Section 3.15(a).
6
IBEW CBA: the meaning set forth in Section 3.15(a).
Indemnification Claim: the meaning set forth in Section 8.3(a).
Indemnifying Party: the meaning set forth in Section 8.3(a).
Indemnitee: a Buyer Indemnitee or Seller Indemnitee, as applicable.
Initial Transfer Date: the meaning set forth in Section
6.3(g)(viii)(A).
Intellectual Property: patents, know-how, trade secrets, confidential
and proprietary information, formulas, processes, trademarks, service marks,
trade dress, logos, trade names, industrial designs, copyrights and mask works,
and all registrations and applications therefor, and all goodwill associated
therewith.
Inventory: the raw materials, work-in-process, finished goods and other
inventory, store room parts and supplies existing on the Closing Date and
located at the Cheswick Facility, the Mount Pleasant Facility or other off-site
storage facilities, that are owned by Seller and used primarily in the Business.
IRS: the United States Internal Revenue Service.
Korean Profit Amount: the meaning set forth in Section 2.4(a)(iv).
Korean Projects: the meaning set forth in Section 2.4(a)(iii).
Law: any applicable federal, state or local law, statute, ordinance,
rule, Order, regulation or other requirement of any Governmental Authority.
Liabilities: any and all liabilities and obligations of every kind and
description whatsoever, whether such liabilities or obligations are known or
unknown, disclosed or undisclosed, matured or unmatured, accrued, absolute,
contingent or otherwise.
LIBOR Rate: the meaning set forth in Section 6.3(g)(viii)(B).
Lien: any mortgage, lien, pledge, encumbrance, security interest,
claim, charge, defect in title or other restriction.
Losses: any and all claims, Liabilities, losses, fines, costs,
royalties, proceedings, deficiencies or damages (whether or not resulting from
Third Party Claims), including out-of-pocket expenses and reasonable attorneys'
and accountants' fees incurred in the investigation or defense of any of the
same or in enforcing any rights hereunder.
Management Balance Sheet: the meaning set forth in Section 3.5.
Material Adverse Effect: a material adverse effect on the business,
results of operations or financial condition of the Business or the Purchased
Assets, taken as a whole, but shall not include, either alone or in combination,
any such effect that results from or arises out of any material change in the
procurement policies of the United States Navy as they relate to the
7
procurement of pumps and motors, or any other event, occurrence, fact,
condition, change or development that affects the economy generally, the
commercial nuclear industry or the petrochemical or hazardous waste management
industries.
Motor Vehicles: the leased or owned motor vehicles identified on Annex
4, and any leased motor vehicles leased to replace any thereof between the date
hereof and the Closing Date, that in each case is owned or leased by Seller and
used primarily by the Business on the Closing Date.
Mount Pleasant Facility: Seller's facility located in or near Mount
Pleasant, Pennsylvania that is leased under the Mount Pleasant Lease, together
with all improvements and fixtures located thereon and all appurtenances,
rights, easements, rights-of-way, tenements and heriditaments incident thereto.
Mount Pleasant Lease: the lease described on Annex 3, creating Seller's
rights in the Mount Pleasant Facility, as amended, modified and assigned to
date, and as hereafter amended or modified as permitted hereby.
Notice Period: the meaning set forth in Section 8.3(c).
Novation Agreements: the meaning set forth in Section 5.4(a).
NGAP Schedule: the meaning set forth in Section 6.3(j)(ii).
NRC: the United States Nuclear Regulatory Commission or any successor
agency or other Governmental Authority to whom jurisdiction over radiological
materials has been transferred or delegated.
NRC Bond: the meaning set forth in Section 5.18(b).
NRC Licenses: the meaning set forth in Section 5.18(a).
Order: any order, judgment, injunction, award, decree, ruling, charge
or writ of any Governmental Authority.
Ordinary Course of Business: the ordinary course of business consistent
with past custom and practice.
Other Substance Discovery: the meaning set forth in Section 8.5(b).
Patent Assignment: the Patent Assignment executed by Seller,
substantially in the form of Exhibit E, assigning Seller's entire right, title
and interest in, to and under the patents and patent applications listed on
Annex 5.
PBGC: the Pension Benefit Guaranty Corporation.
8
Permits: permits, licenses, franchises, registrations, consents,
waivers, approvals and authorizations issued or granted by any Governmental
Authority, other than those issued by the U.S. Patent and Trademark Office or
equivalent state or foreign office.
Permitted Liens: (i) Liens for Taxes, assessments and similar charges
not yet due and payable, or the nonpayment of which is being contested in good
faith by appropriate proceedings, and for which adequate reserves have been set
aside; (ii) Liens in connection with workers' compensation, unemployment
insurance or other social security obligations; (iii) Liens to secure bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of like
nature arising in the Ordinary Course of Business; (iv) any progress payment
Liens arising in the Ordinary Course of Business from progress payments made by
any Governmental Authorities on Government Contracts that are included in the
Assumed Liabilities; (v) mechanics', workers', materialmen's, carriers',
bankers' and other like Liens arising or incurred in the Ordinary Course of
Business; (vi) for leased property or assets, Liens of lessors or of mortgagees
of lessors arising by operation of law or pursuant to the terms of leases; (vii)
such zoning restrictions, easements, covenants, rights-of-way, restrictions on
the use of the property, matters which would be revealed by an accurate survey
or record search, and other similar encumbrances incurred in the Ordinary Course
of Business, as would not reasonably be expected to materially and adversely
affect the value or utility of the property so encumbered; (viii) Liens listed
in Section 3.7 of the Disclosure Schedule or reflected as a liability on the
Management Balance Sheet; and (ix) such imperfections of title and such other
Liens, if any, as would not reasonably be expected to materially and adversely
affect the value or utility of the property so affected.
Person: any individual, sole proprietorship, partnership, corporation,
limited liability company, joint stock company, association, trust, joint
venture, Governmental Authority or other entity.
Petrobras Cooperation Agreement: the Cooperation Agreement No.
540.4.101.97, dated as of March 3, 1997, by and between Westinghouse Industry
Products International Company and Petroleo Brasileiro S.A., as subsequently
amended by the First Amendment, dated as of October 29, 1997, the Second
Amendment, dated as of May 20, 1998, the Third Amendment, dated as of April 29,
1999, the Fourth Amendment, dated as of August 15, 2000, and the Fifth
Amendment, dated as of August 15, 2001.
Proceeding: the meaning set forth in Section 3.11.
PRB Participants: the meaning set forth in Section 6.3(j)(i).
Purchase Price: the meaning set forth in Section 2.3.
Purchased Assets: the meaning set forth in Section 2.1(a).
Purchased Intellectual Property: the meaning set forth in Section
2.1(a)(viii).
Real Property Assignment: the assignment and assumption agreement
conveying to Buyer Seller's interests in the Mount Pleasant Lease, substantially
in the form of Exhibit F, to be executed by Seller and Buyer.
9
Real Property Deed: one or more limited warranty deeds conveying to
Buyer Seller's interests in the Cheswick Facility, substantially in the form of
Exhibit G, to be executed by Seller.
Related Party: as to any Buyer Indemnitee, Buyer, and as to any Seller
Indemnitee, Seller.
Release: any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, dumping or disposing of a Hazardous Substance
into the Environment, that (i) requires remedial action under an applicable
Environmental Law or (ii) exceeds the reportable quantity for such substance
established under an applicable Environmental Law.
Revised Schedule: the meaning set forth in Section 6.3(j)(ii).
Seller: the meaning set forth in the introductory paragraph to this
Agreement.
Seller Indemnitee: the meaning set forth in Section 8.2(b).
Seller's Actuary: the meaning set forth in Section 6.3(g)(iv).
Seller's Flexible Spending Account Plans: the meaning set forth in
Section 6.3(e).
Seller's 401(k) Plan: the meaning set forth in Section 6.3(h).
Seller's knowledge or any similar term or phrase, as used herein: the
actual knowledge of Xxxxx X. Xxxxx, Vice President and General Manager, Xxxx X.
Xxxxxxxxxx, Chief Financial Officer of the Division, Xxxxxx X. Xxxxxx (other
than with respect to Sections 3.14, 3.15(g), 3.16 and 3.17(a)), Xxxxx X. Xxxxxx
(but only with respect to Section 3.17(a)), Xxxxx X. Xxxxx (but only with
respect to Sections 3.14 and 3.15(g)), Xxxxxxx X. Xxx (but only with respect to
Section 3.16) or Xxxx X. Xxxxxx (but only with respect to Section 3.15(g)), in
each case, obtained in the normal course of their respective duties as such
officers or managers, but without any further investigation or inquiry by any
such officers or managers. For purposes of this definition, neither Seller nor
any of such officers or managers shall be deemed to have constructive knowledge
of matters that are of public record, nor shall any knowledge be imputed to any
of such officers, managers or Seller (except that the actual knowledge of such
officers or managers will be imputed to Seller).
Seller's Pension Plan: the meaning set forth in Section 6.3(g).
Seller's PRB Plan: the meaning set forth in Section 6.3(j)(ii).
Seller's SERP: the meaning set forth in Section 6.3(i).
Seller's Welfare Plans: the meaning set forth in Section 6.3(b).
10
Specified Contracts: the Teaming Agreement; the WGS Shared Technology
Agreement; the Mount Pleasant Lease; the Petrobras Cooperation Agreement; the
Joint Cooperation/Development Agreement, dated as of August 1, 1995, by and
between Xxxxx Seal Company and the Division; and the WEE Teaming Agreement.
Supplies: the meaning set forth in Section 5.14.
Tax: any tax or other fiscal levy imposed by any Governmental
Authority, including any net income, alternative or add-on minimum, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, registration, recording, documentary, conveyancing,
gains, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
like assessment, together with any interest, penalty, addition to tax or
additional amount imposed or assessed by any Governmental Authority with respect
thereto.
Tax Return: any return, declaration, report, form, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Teaming Agreement: that certain (i) Teaming Agreement, dated as of
November 16, 2001, between WEC and Seller and (ii) side letter, dated November
16, 2001, from Xxxx X. Xxxxxxx to Xxxxx X. Xxxxx.
Third Party Claim: any claim made, or action, suit or other proceeding
(including a binding arbitration or an audit by any Taxing authority) commenced,
against any Indemnitee, including any Environmental Claim to or against such
Indemnitee.
Threat of Release: a substantial likelihood of a Release that requires
action to prevent or mitigate damage to the Environment that might result from
such Release.
Top-Up Amount: the meaning set forth in Section 6.3(g)(xiii).
Trade Secrets: the meaning set forth in Section 2.1(a)(viii).
Trademark Assignment: the Trademark Assignment, executed by Buyer,
substantially in the form of Exhibit H, assigning Seller's entire right, title
and interest in, to and under the trademarks listed on Annex 5.
Transfer (including the term Transferred): with respect to any asset,
property, right or interest, the sale, transfer, assignment, conveyance and
delivery of such asset, property, right or interest.
Transferred Employees: the meaning set forth in Section 6.1.
Transferred Non-Union Employees: the meaning set forth in Section 6.2.
Transferred Union Employees: the meaning set forth in Section 6.2.
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Transition Services Agreement: the Transition Services Agreement,
executed by Buyer and Seller, substantially in the form of Exhibit I.
Unadjusted Purchase Price: the meaning set forth in Section 2.3.
U.S.-Controlled Entity: the meaning set forth in Section 4.9.
WARN: the Federal Worker Adjustment Retraining and Notification Act of
1988, as amended, or any similar state or local "plant closing" law.
WEC: Westinghouse Electric Company LLC, a Delaware limited liability
company.
WEE Teaming Agreement: the Revised Teaming Agreement, dated as of
November 7, 2001, by and between Westinghouse Electric Europe S.A. and the
Division.
WGI: the meaning set forth in the recitals to this Agreement.
WGS Shared Technology Agreement: the WGS Shared Technology Agreement,
dated as of March 22, 1999, by and between CBS Corporation (now known as Viacom,
Inc.) and Seller.
Working Capital Statement: the meaning set forth in Section 2.4(a).
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Sale and Purchase of Assets.
(a) Purchased Assets. Upon the terms and subject to the conditions of
this Agreement, at the Closing and effective as of the time set forth in Section
2.6(a), Seller shall Transfer to Buyer, and Buyer shall purchase and acquire
from Seller, all of Seller's right, title and interest in and to all of Seller's
property and assets, real, personal or mixed, tangible or intangible, of every
kind and description, wherever located, owned by Seller and relating primarily
to the Business, and any and all goodwill associated therewith, including the
following assets, but excluding the Excluded Assets (such assets, excluding the
Excluded Assets, the "Purchased Assets"):
(i) the Cheswick Facility;
(ii) the Mount Pleasant Lease;
(iii) the Fixed Assets;
(iv) the Inventory;
(v) the Equipment;
(vi) the Motor Vehicles;
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(vii) all contracts, purchase orders, leases of personal property,
commitments, bids, orders, proposals, instruments and other agreements
entered into in the Ordinary Course of Business on behalf of the Division
and relating primarily to the Business and existing on the Closing Date
and the rights to the Specified Contracts as provided in the Assignment of
Specified Contracts (collectively, the "Assumed Contracts");
(viii) all trade secrets, know-how, industrial designs, formulas,
processes and other confidential and proprietary information owned by
Seller and used primarily in the Business (collectively, "Trade Secrets"),
the other Intellectual Property listed in Annex 5, and the goodwill
associated therewith (the "Purchased Intellectual Property");
(ix) copies of all books, records, ledgers, files, data, documents and
correspondence relating to the Business, including customer, supplier or
other lists, telephone, telecopy and email addresses and listings,
manufacturing and engineering drawings and specifications, patterns, jigs,
program maps, sales information, environmental records and files, business
and marketing plans, studies and proposals, service, maintenance and
warranty records, equipment logs, operating guides and procedure manuals,
computer records, personnel records and files, promotional materials,
financial and accounting records and other technical and business records
owned by Seller and relating primarily to the Business and existing on the
Closing Date; provided, however, that Seller shall be entitled to retain
copies of any such materials that are necessary in its reasonable judgment
for its Tax, accounting, personnel or legal purposes (including Securities
and Exchange Commission reporting);
(x) to the extent assignable or transferable, all Permits (including
applications for issuance or renewal thereof and application materials in
process) that are used exclusively in the operation of the Business;
(xi) any accounts, notes and other receivables carried on Seller's
books relating exclusively to the Business and the full benefit of all
security therefor and any claim, remedy or other right of Seller related
thereto;
(xii) any rights of Seller relating to any prepaid expenses, deposits
or claims for refund or right of offset against any Person, other than
refunds and deposits relating to Taxes;
(xiii) any rights to insurance proceeds and defense costs actually
received by Seller after the Closing under Seller's insurance policies for
an act, omission or other occurrence committed or omitted, or alleged to
have been committed or omitted, prior to the Closing relating to the
Business, except to the extent that (A) the claim arising therefrom is an
Excluded Liability hereunder or (B) the claim arising therefrom relates to
an asset which would otherwise be included in the definition of Purchased
Assets and which is replaced with a substitute asset of comparable value
and function on or prior to the Closing Date; and
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(xiv) the rights of Seller under, and any funds and property held in
trust or any other funding vehicle pursuant to, or any insurance contract
providing funding for, any Employee Plan, to the extent provided pursuant
to ARTICLE VI.
(b) Excluded Assets. The Purchased Assets shall not include, and Seller
shall not Transfer, and Buyer shall not purchase or acquire, any right, title or
interest in or to any of the following properties and assets (collectively, the
"Excluded Assets"):
(i) any cash and cash equivalents or similar types of investments owned
by Seller, including certificates of deposit, treasury bills and other
marketable securities;
(ii) the certificate of formation, Taxpayer and other identification
numbers, minute and limited liability company interest record books and the
company seals of Seller;
(iii) any Intellectual Property not listed on Annex 5, including any
trademarks, corporate names, trade names, logos, domain names, or any
variation thereof, and any rights or interests therein and the goodwill
associated therewith incorporating the name "Westinghouse," the "Circle W"
logo xxxx, the slogan "You can be sure . . . if it's Westinghouse" or
"Washington," or any abbreviation thereof;
(iv) the WEC Technology (as defined in the Teaming Agreement), except
to the extent that Buyer shall have the right to use such WEC Technology
pursuant to the assumption agreement contemplated by Section 5.16;
(v) any items of finished goods Inventory that are sold by Seller in
the Ordinary Course of Business of the Division after the date of this
Agreement;
(vi) any rights to any refunds, and any deposits of Seller with any
Governmental Authority, relating to Taxes;
(vii) the properties and assets described in Annex 6;
(viii) all books, records, manuals and other materials that (A)
originate from the corporate headquarters of Seller and set forth
accounting, financial, personnel or other corporate policies applicable to
substantially all the operations of Seller, (B) are held for use primarily
in connection with any Excluded Liability, (C) are at any location other
than the Cheswick Facility or the Mount Pleasant Facility and do not relate
substantially to the Business or (D) are the subject of Section 5.17; and
(ix) the rights of Seller under, and any funds and property held in
trust or any other funding vehicle pursuant to, or any insurance contract
providing funding for, any Employee Plan, except to the extent provided
pursuant to ARTICLE VI.
2.2 Assumption of Liabilities, etc.
(a) Assumed Liabilities. Effective from and after the Closing, Buyer
shall, as partial consideration for the Purchased Assets, assume and be
responsible for, pay, perform,
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satisfy and discharge in a timely manner all of the following Liabilities
(collectively, the "Assumed Liabilities"):
(i) all Liabilities in respect of products manufactured or sold by the
Division (including product warranty and product liability claims), other
than any Liability relating to the claims of Westinghouse Electric Europe
S.A. and Electricite de France described in Section 3.9 of the Disclosure
Schedule under the caption "EdF Claim" (the "EdF Claim");
(ii) all Liabilities for Taxes related to the conduct of the Business
after the Closing;
(iii) all Liabilities in respect of performance obligations (other
than to the extent such obligations are for the payment of money and are
due and payable prior to the Closing or are owed in respect of performance
by the other party before Closing) with respect to the Assumed Contracts
(but, in the case of the Liabilities under the WGS Shared Technology
Agreement, only insofar as the same are applicable to the Division, the
Business or the rights under such agreement that are sublicensed to Buyer
pursuant to Section 5.16);
(iv) all Liabilities in respect of any current or former employee of
the Business or the beneficiary or dependent of any such current or former
employee for whom Buyer is to be responsible pursuant to ARTICLE VI;
(v) all Liabilities under or in respect of any Environmental Law or
any Environmental Condition (A) associated with Building 5B at the Cheswick
Facility and (B) to the extent provided to be the responsibility of Buyer
as set forth in Section 8.5, but excluding any Liability arising from the
breach of any of Seller's representations and warranties set forth in
Section 3.16 (but subject to the limitations of Section 8.4);
(vi) all Liabilities set forth in the Management Balance Sheet or
arising in the Ordinary Course of Business since the Balance Sheet Date;
and
(vii) all Liabilities otherwise resulting from or arising out of the
operation of the Business by Buyer, or Buyer's ownership, operation or use
of the Purchased Assets, or the actions or omissions of Buyer, its
Affiliates, agents, contractors or subcontractors in connection therewith,
following the Closing.
(b) Excluded Liabilities. Except as expressly provided in Section
2.2(a), Buyer shall not assume, and shall not be deemed to have assumed:
(i) any Liability relating to the EdF Claim;
(ii) all Liabilities under or in respect of any Environmental Law or
any Environmental Condition to the extent provided to be the responsibility
of Seller as set forth in Section 8.5; or
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(iii) any other Liability of Seller not expressly assumed by Buyer
under Section 2.2(a) (the foregoing excluded Liabilities being referred to
herein as the "Excluded Liabilities").
(c) No Novation, etc. Each party hereto agrees that no Transfer by
Buyer of all or part of the Purchased Assets or the Business to any other Person
shall relieve Buyer of its obligations hereunder with respect to the Assumed
Liabilities. Buyer further covenants that Buyer will do, execute and deliver, or
will cause to be done, executed and delivered, all such further acts and
instruments that Seller or any of its successors and assigns may reasonably
request in order to more fully evidence the assumption of the Assumed
Liabilities provided for in this Section 2.2.
2.3 Purchase Price. Subject to and upon the terms and conditions of
this Agreement, in consideration for the Transfer to Buyer of the Purchased
Assets, Buyer shall pay to Seller at the Closing $80,000,000 (the "Unadjusted
Purchase Price"), by wire transfer of immediately available funds in U.S.
dollars to Seller at one or more previously designated accounts of Seller. The
Unadjusted Purchase Price shall be adjusted after the Closing pursuant to
Section 2.4. The Unadjusted Purchase Price, plus or minus the adjustment amount,
shall be the "Purchase Price."
2.4 Adjustment of Purchase Price.
(a) Within 90 days after the date of this Agreement, Buyer shall
prepare and deliver, or cause to be prepared and delivered, to Seller a working
capital statement (the "Working Capital Statement"), prepared in a form attached
as Annex 7 setting forth:
(i) the Division's accounts receivable, inventory and other current
assets, excluding cash, as of the Closing Date less the Division's accounts
payable, progress xxxxxxxx and other current liabilities as of the Closing
Date ("Closing Working Capital"). The Closing Working Capital shall be
prepared in accordance with GAAP, taking into account the exceptions to
GAAP described in the notes to the Management Balance Sheet and Seller's
Closing Date obligations under ARTICLE VI, and shall exclude the reserve
established by the Division for the EdF Claim. For purposes of reference
for this Section 2.4 and for purposes of this Agreement, the working
capital of the Division as of January 31, 2002 as reflected on the
Management Balance Sheet is calculated as total current assets of
$45,623,000, less total current liabilities of $53,061,000, for a working
capital of negative $7,438,000;
(ii) the amount by which Closing Working Capital is greater than (or
less) than the working capital of the Division as of January 31, 2002
("Change in Working Capital");
(iii) the calculation of distribution of advanced funding on customer
orders referred to by the Division as project numbers U573 and U574 (the
"Korean Projects") and project number F028, as described and set forth on
Annex 7, as of the Closing Date (the "Advanced Funding Amount");
16
(iv) the project to date profit on the Korean Projects, as described
and set forth on Annex 7, as of the Closing Date (the "Korean Profit
Amount"); and
(v) the amount of the Purchase Price adjustment, which shall be an
amount equal to the Change in Working Capital, minus the Advanced Funding
Amount, plus the Korean Profit Amount.
(b) Within 60 days following receipt by Seller of the Working Capital
Statement, Seller shall deliver written notice to Buyer of any dispute it has
with respect to the preparation or content of the Working Capital Statement. In
the event that Seller does not notify Buyer of a dispute with respect to the
Working Capital Statement within such 60-day period, such Working Capital
Statement will be final, conclusive and binding on the parties. In the event of
such notification of a dispute, Buyer and Seller shall negotiate in good faith
to resolve such dispute. If Buyer and Seller, notwithstanding such good faith
effort, fail to resolve such dispute within 60 days after Seller advises Buyer
of its objections, then Buyer and Seller jointly shall engage the firm of KPMG
LLP or another nationally recognized accounting firm mutually acceptable to
Buyer and Seller (the "Arbitration Firm") to resolve such dispute. The
determinations made by the Arbitration Firm shall (i) not result in a downward
adjustment to the Purchase Price greater than that sought by Buyer or in an
upward adjustment to the Purchase Price greater than that sought by Seller, and
(ii) be final, conclusive and binding on the parties. The Arbitration Firm shall
base its determination on GAAP, taking into account the exceptions to GAAP
described in the footnotes to the Management Balance Sheet and excluding the
reserve established by the Division for the EdF Claim. Buyer and Seller shall
share equally the fees and expenses of the Arbitration Firm.
(c) For purposes of complying with the terms set forth in this Section
2.4, Buyer and the Division, on the one hand, and Seller, on the other hand,
shall cooperate with and make available to the other party and its
representatives all information, records, data and working papers, and will
permit access to their facilities and personnel, as may be reasonably required
in connection with the preparation and analysis of the Working Capital Statement
and the resolution of any disputes thereunder.
(d) If the Purchase Price adjustment (as finally determined pursuant
to Section 2.4(b)) is negative, then the Unadjusted Purchase Price will be
decreased by the amount of such shortfall and Seller shall pay or cause to be
paid, by bank wire transfer of immediately available funds to an account
designated in writing by Buyer, an amount in cash equal to such shortfall,
within five business days from the date on which Closing Working Capital is
finally determined pursuant to Section 2.4(b).
(e) If the Purchase Price adjustment (as finally determined pursuant
to Section 2.4(b)) is positive, then the Unadjusted Purchase Price will be
increased by the amount of such excess and Buyer shall pay or cause to be paid
by bank wire transfer of immediately available funds to an account, designated
in writing by Seller, an amount in cash equal to such excess, within five
business days from the date on which Closing Working Capital is finally
determined pursuant to Section 2.4(b).
17
2.5 Allocation of Purchase Price. The parties will mutually agree upon
the allocation of the Purchase Price among the Purchased Assets within 30 days
following the Closing. Each of the parties hereto shall report the purchase and
sale of the Purchased Assets in accordance with such allocations in all reports
and returns (including Tax Returns) prepared and filed with any Governmental
Authority.
2.6 Closing.
(a) Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") will take place on the second business day following
the satisfaction or waiver of the conditions set forth in ARTICLE VII at the
offices of Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000, or at such other date and place as is mutually agreed upon in writing by
the parties. The date on which the Closing occurs is referred to herein as the
"Closing Date." Legal title, equitable title and risk of loss with respect to
the Purchased Assets will pass to Buyer at the Closing, which transfer will be
deemed effective for Tax, accounting and other computational purposes as of
11:59 p.m. (Eastern Standard Time) on the Closing Date.
(b) Deliveries by Seller at the Closing. Subject to and upon the terms
and conditions of this Agreement, at the Closing, Seller shall deliver, or cause
to be delivered, to Buyer the following:
(i) the Ancillary Agreements to which Seller is a party, duly executed
by Seller;
(ii) the Guaranty Agreement duly executed by WGI, together with
certified copies of resolutions duly adopted by the board of directors of
WGI evidencing the approval of such guaranty;
(iii) a certificate of good standing of Seller, issued by the
Secretary of State of the State of Delaware, dated within 15 days of the
Closing;
(iv) certified copies of the relevant provisions from Seller's Amended
and Restated Limited Liability Company Operating Agreement and of
resolutions duly adopted by the Board of Directors of Seller evidencing the
taking of all limited liability company action necessary to authorize the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby;
(v) a certificate of an executive officer of Seller certifying,
pursuant to Treasury Regulations section 1.1445-2(b)(2), that Seller and
Seller's parent are not foreign persons within the meaning of sections 1445
and 897 of the Code;
(vi) a certificate of an executive officer of Seller, dated as of the
Closing Date, certifying that the conditions set forth in Sections 7.2(a)
and 7.2(b) have been satisfied;
(vii) a certificate of the Secretary or Assistant Secretary of Seller
identifying the name and title and bearing the signatures of the officers
of Seller authorized to
18
execute and deliver this Agreement and the other agreements and
instruments contemplated hereby;
(viii) Consents, in form and substance reasonably satisfactory to
Buyer, to the assignment of the Specified Contracts; and
(ix) such other deeds, bills of sale, assignments, certificates of
title, documents and other instruments of transfer and conveyance of the
Purchased Assets as may be reasonably requested by Buyer, each in form and
substance reasonably satisfactory to Buyer, and executed by Seller.
(c) Deliveries by Buyer at the Closing. Subject to and upon the terms
and conditions of this Agreement, at the Closing, Buyer shall deliver, or cause
to be delivered, to Seller the following:
(i) the Unadjusted Purchase Price payable to Seller as set forth in
Section 2.3;
(ii) the Guaranty Agreement duly executed by Xxxxxxx-Xxxxxx, together
with certified copies of resolutions duly adopted by the board of directors
of Xxxxxxx-Xxxxxx evidencing the approval of such guaranty;
(iii) the Ancillary Agreements to which Buyer is a party, duly
executed by Buyer;
(iv) a certificate of good standing of Buyer, issued by the Secretary
of State of the State of Delaware, dated within 15 days of the Closing;
(v) certified copies of Buyer's certificate of incorporation and
bylaws and of resolutions duly adopted by the Board of Directors of Buyer
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby;
(vi) a certificate of an executive officer of Buyer, dated as of the
Closing Date, certifying that the conditions set forth in Sections 7.3(a)
and 7.3(b) have been satisfied; and
(vii) a certificate of the Secretary or Assistant Secretary of Buyer,
identifying the name and title and bearing the signatures of the officers
of Buyer authorized to execute and deliver this Agreement and the other
agreements and instruments contemplated hereby; and
(viii) any other documents or instruments relating to Buyer's payment
of the Purchase Price or assumption of the Assumed Liabilities as Seller
may reasonably request.
2.7 Payments Received After the Closing. In the event that, after the
Closing, (a) Buyer shall receive any payment of any amount that is an Excluded
Asset or (b) Seller shall
19
receive any payment of any amount that is a Purchased Asset, the party receiving
such payment shall promptly deliver it to Seller (in the case of any such
amounts received by Buyer) or Buyer (in the case of any such amounts received by
Seller), endorsed where necessary, without recourse in favor of such other
party, except to the extent that such amount has previously been reflected in
any adjustment to the Purchase Price pursuant to, or for which provision is made
under, Section 2.4. In the event that, after the Closing, (i) Buyer shall pay
any amount that is an Excluded Liability or (ii) Seller shall pay any amount
that is an Assumed Liability, the party making such payment shall be entitled to
indemnification in respect thereof as and to the extent provided in Section
8.2(a)(iii) or 8.2(b)(iii), respectively, unless and to the extent that such
amount has previously been reflected in any adjustment to the Purchase Price
pursuant to, or for which provision is made under, Section 2.4.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Sections of the Disclosure Schedule
indicated below, Seller hereby represents and warrants to Buyer as of the date
of this Agreement (or, if made as of a specified date, as of such date) as
follows:
3.1 Existence and Good Standing. Seller is a limited liability company
duly formed, validly existing and in good standing under the laws of the State
of Delaware, and the Division is a division of Seller. Seller has the requisite
limited liability company power and authority to (a) own, operate and lease the
Purchased Assets as and where currently owned, operated and leased and (b)
conduct the Business as currently conducted.
3.2 Authority. Seller has the requisite limited liability company
power and authority to execute, deliver and perform its obligations under this
Agreement and the Ancillary Agreements. The execution and delivery of this
Agreement and the Ancillary Agreements, and the consummation by Seller of the
transactions contemplated hereby, have been duly authorized by all requisite
limited liability company action of Seller. This Agreement has been duly
executed and delivered by Seller and, assuming the due execution and delivery by
Buyer, constitutes, and each Ancillary Agreement that is to be executed and
delivered by Seller will constitute when executed and delivered, a valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and
other similar Laws affecting creditors' rights or remedies generally and by
general principles of equity (whether considered at law or in equity).
3.3 No Violation. Except as set forth in Section 3.3 of the Disclosure
Schedule, neither the execution and delivery of this Agreement or any Ancillary
Agreement, nor the performance by Seller of its obligations hereunder or
thereunder, will (a) violate Seller's certificate of formation or limited
liability company operating agreement, (b) result in a violation or breach of,
or constitute a default under, any Permit necessary for the operation of the
Business or any Specified Contract or (c) violate in any material respect any
Law applicable to the Business or the Purchased Assets.
20
3.4 Consents. Except for completion of the review procedures
established by the Exon-Xxxxxx Amendment, if applicable, and the requirements of
the HSR Act, if applicable, and except as set forth in Section 3.4 of the
Disclosure Schedule, no Consent of any Governmental Authority or any other
Person is necessary for the consummation by Seller of the transactions
contemplated by this Agreement, except for those Consents the failure of which
to be made or obtained would not reasonably be expected to have a Material
Adverse Effect or materially delay the consummation of the transactions
contemplated hereby.
3.5 Books and Records; Financial Statements.
(a) The books of account and other financial records of Seller relating
to the Division, all of which have been made available to Buyer, are complete
and correct in all material respects and represent actual, bona fide
transactions and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
(b) Section 3.5 of the Disclosure Schedule contains the unaudited
balance sheet of the Division (the "Management Balance Sheet") as of January 31,
2002 (the "Balance Sheet Date"). Seller has previously provided to Buyer copies
of (a) the unaudited income statements of the Division for the fiscal years
ended November 30, 2000 and 2001 and (b) the unaudited balance sheets of the
Division as of November 30, 2000 and 2001 (the income statements and balance
sheets described in the foregoing clauses (a) and (b), collectively, the
"Financial Statements"). Except as otherwise described in the notes or in the
adjustments to the Management Balance Sheet, the Management Balance Sheet and
the Financial Statements were prepared by the Division from the books and
records of the Business in accordance with GAAP, and fairly present in all
material respects the financial condition and results of operations of the
Division as of and for the periods ending on the respective dates thereof.
3.6 Absence of Certain Changes. Since the Balance Sheet Date, except as
expressly permitted by this Agreement or as set forth in Section 3.6 of the
Disclosure Schedule, Seller (a) has conducted the Business only in the Ordinary
Course of Business, (b) has not incurred any Assumed Liability in excess of
$50,000 individually or $1,000,000 in the aggregate, (c) has not mortgaged,
pledged or subjected any Purchased Asset to any Lien other than Permitted Liens,
(d) except in the Ordinary Course of Business, has not Transferred to any third
party any material Inventory and (e) except in the Ordinary Course of Business,
has not surrendered, revoked or otherwise terminated or had terminated any
material Permit or Consent from any Governmental Authority relating primarily to
the conduct of the Business.
3.7 Title to the Purchased Assets. Except as specifically set forth in
Section 3.7 of the Disclosure Schedule, Seller has good and marketable title to
the Cheswick Facility, and good and valid title to, or a valid leasehold
interest in, all of the other Purchased Assets, in each case free and clear of
all Liens, other than Permitted Liens.
3.8 Real Property.
(a) To Seller's knowledge, Annex 2 contains a complete and correct
legal description as of December 13, 2001 of the real property of the Cheswick
Facility. True copies
21
of any current surveys, abstracts, title commitments and title opinions in
Seller's possession and all policies of title insurance currently in force and
in the possession of Seller with respect to the Cheswick Facility have
heretofore been made available to Buyer.
(b) The Mount Pleasant Facility is leased to Seller pursuant to the
Mount Pleasant Lease, a copy of which has previously been made available to
Buyer. Other than with respect to the Mount Pleasant Lease and except as set
forth in Section 3.8(b) of the Disclosure Schedule, there are no other material
real property leases under which Seller is a lessee or lessor and that relate
exclusively to the Purchased Assets.
(c) Except as set forth in Section 3.8(c) of the Disclosure Schedule,
all improvements at the Cheswick Facility and the Mount Pleasant Facility are in
material compliance with all Laws, including those pertaining to zoning and
building. Except as revealed in the survey of the Cheswick Facility previously
made available to Buyer and as set forth in Section 3.8(c) of the Disclosure
Schedule, no part of any improvement encroaches on any real property not
included in the Cheswick Facility, and there are no buildings, structures,
fixtures or other improvements situated on adjoining property which encroach on
any part of the Cheswick Facility. There are no encroachments that materially
affect Seller's operations at the Mount Pleasant Facility.
(d) Seller has not received any written notice of any pending or
threatened condemnation proceedings relating to the Cheswick Facility or the
Mount Pleasant Facility.
3.9 Material Contracts.
(a) Section 3.9 of the Disclosure Schedule lists each contract and
agreement (oral or written) as in effect and not closed out on the date hereof
to which Seller is a party or by which it or any of the Purchased Assets is
bound or which constitutes or will generate any Assumed Liability and which was
entered into through or on behalf of the Division or otherwise primarily relates
to the Business (other than Employee Plans), that is (i) a real property lease
requiring the payment of more than $500,000 per fiscal year, (ii) a contract or
agreement for the purchase or leasing of materials, inventory, equipment,
personal property or services requiring the payment by Seller of more than
$500,000 through the term of such contract or agreement, (iii) a sale contract
or agreement exclusively applicable to the Business with a customer not
affiliated with Seller who is required to pay, individually or in the aggregate,
more than $1,000,000 through the term of such contract or agreement, (iv) a
written agreement or arrangement between Seller and the Division involving
financial obligations of more than $500,000 per fiscal year, (v) a contract or
agreement with an agent, dealer, distributor, sales representative or franchisee
of the Business involving payment obligations in excess of $250,000 per fiscal
year or not terminable in less than 180 days, (vi) a contract or agreement with
an employee or officer of the Business that is not terminable at will by Seller
without cost and that will require payments of amounts after the Closing Date in
excess of $50,000 per fiscal year, (vii) a contract or agreement for the
storage, transportation, treatment or disposal of any hazardous material under
CERCLA, or a contract for the storage, transportation, treatment or disposal of
any waste or by-product requiring the payment of more than $500,000 per fiscal
year or (viii) a license or royalty agreement concerning Intellectual Property
that will require
22
payments by Buyer after the Closing Date in excess of $500,000 per fiscal year
(collectively, the "Contracts").
(b) Except as otherwise set forth in Section 3.4 or 3.9 of the
Disclosure Schedule, (i) each Assumed Contract is in full force and effect, is
valid and enforceable in accordance with its terms as against Seller, and, to
Seller's knowledge, against the other party thereto, and is assignable by Seller
to Buyer without the Consent of any other Person, (ii) Seller is in material
compliance with all applicable terms and requirements of each Assumed Contract,
and, to Seller's knowledge, each other party thereto is in material compliance
therewith, (iii) to Seller's knowledge, no event has occurred or circumstance
exists that (with or without lapse of time or notice) would reasonably be
expected to violate or result in a breach of any Assumed Contract, and (iv) none
of the Assumed Contracts would restrict Buyer's conduct of the Business or limit
the freedom of Buyer to engage in any line of business or to compete with any
Person.
3.10 Accounts Receivable. All Seller's accounts receivable which have
arisen in connection with the Business and which are reflected in the Management
Balance Sheet, and all such receivables which will have arisen since the Balance
Sheet Date, shall have arisen only from bona fide transactions in the Ordinary
Course of Business. Section 3.10 of the Disclosure Schedule accurately lists, as
of January 31, 2002, all accounts receivable arising out of or relating to the
Division, the amount owing, the aging of such receivable and the name and last
known address of the party from whom such receivable is owing.
3.11 No Proceedings. Except as set forth in Section 3.11 of the
Disclosure Schedule, there is no action, suit or proceeding pending or, to
Seller's knowledge, threatened against or related to Seller in respect of the
Purchased Assets or the conduct of the Business (a "Proceeding") to or in
respect of which Buyer would become a party or otherwise liable as a result of
the consummation of the transactions contemplated hereby. Except as set forth in
Section 3.11 of the Disclosure Schedule, Seller is not subject to any Order with
respect to any litigation, action, suit, investigation or proceeding asserted,
brought or, to Seller's knowledge, threatened against Seller in respect of the
Purchased Assets or the conduct of the Business. Information regarding all
workers' compensation claims brought by employees of the Business against Seller
since April 1, 1999 has been made available to Buyer, and a true and complete
description of all product liability and warranty claims above $10,000 brought
against Seller in respect of the Business since April 1, 1999 is set forth in
Section 3.11 of the Disclosure Schedule.
3.12 Compliance with Law. The Business has not been, and is not being,
conducted in material violation of any Law or Permit. No investigation or review
by a Governmental Authority with respect to the Division or the conduct of the
Business is pending or, to Seller's knowledge, threatened, nor has any
Governmental Authority indicated an intention to conduct the same. This Section
3.12 does not relate to employee benefits matters, which are instead the subject
of Section 3.15, or environmental matters, which are instead the subject of
Section 3.16.
3.13 Permits. Seller has all Permits that are necessary for it to
conduct the operations of the Business in the manner in which they are presently
conducted, and Section 3.13 of the Disclosure Schedule sets forth a complete
list of all material Permits. All such Permits are
23
in full force and effect and all applications required to have been filed for
the renewal thereof have been duly filed on a timely basis with the appropriate
Governmental Authorities, and all other filings required to have been made with
respect to such Permits have been duly made on a timely basis with the
appropriate Governmental Authorities. No event has occurred or other fact exists
with respect to the material Permits that allows, or after notice or lapse of
time or both would allow, revocation or termination of any of the material
Permits or would result in any other impairment of the rights of the holder of
any of the material Permits. There is not pending or, to the knowledge of
Seller, threatened, any application, petition, objection or other pleading with
any Governmental Authority that challenges or questions the validity of or any
rights of the holder under any Permit. This Section 3.13 does not relate to
environmental matters, which are instead the subject of Section 3.16.
3.14 Employee Relations. No labor strike, work stoppage, slowdown or
dispute is pending or, to Seller's knowledge, threatened that involves any
employees of Seller employed in the operation of the Business, and Seller is in
material compliance with all Laws relating to employment practices, terms and
conditions of employment and occupational safety and health.
3.15 Employees, Employment Agreements and Benefits, etc.
(a) Section 3.15(a) of the Disclosure Schedule sets forth the name,
title, beginning service date and annual salary, hourly wage and commission
and/or bonus structure (as applicable) of each full-time and part-time employee
of Seller assigned exclusively to the operations of the Business as of the date
specified therein (which date shall be within 30 days of the date of this
Agreement), including each employee covered by the International Brotherhood of
Electrical Workers ("IBEW") collective bargaining agreement with Seller (the
"IBEW CBA"), each employee covered by the Association of Westinghouse Salaried
Workers District 16 ("AWSE") collective bargaining agreement with Seller (the
"AWSE CBA"), and any such employee who is out on short-term or long-term
disability or other approved or legally mandated leave of absence (collectively,
the "Employees"). Seller has furnished to Buyer draft copies of the IBEW CBA and
AWSE CBA, each effective September 2, 2002.
(b) Section 3.15(b) of the Disclosure Schedule sets forth a list of all
written agreements, contracts and commitments of the following types to which
Seller is a party: (i) employment, employee severance and employee retention
agreements, other than those agreements providing for annual base salary or
other payments not exceeding $75,000, and other than any employee retention
agreements that will be paid and performed by Seller; and (ii) the IBEW CBA and
the AWSE CBA in effect on the date hereof, in each such case under clauses (i)
and (ii), covering Seller's employees who work for the Business on the date
indicated therein.
(c) Section 3.15(c) of the Disclosure Schedule sets forth a complete
and correct list of all Employee Plans. Seller has delivered or made available
to Buyer (i) all current plan documents for each Employee Plan and (ii) any
other documents, forms or other instruments relating to any Employee Plan
reasonably requested by Buyer.
(d) The form of all Employee Plans is in compliance in all material
respects with the applicable terms of ERISA, the Code, and any other applicable
Laws, and all Employee
24
Plans have at all times been operated in compliance in all material respects
with ERISA, such other Laws and the applicable Employee Plan documents.
(e) The funded status of Seller's Pension Plan is disclosed in Section
3.15(e) of the Disclosure Schedule in a manner consistent with the Statement of
Financial Accounting Standards No. 87 as of the date indicated on the Disclosure
Schedule.
(f) Seller has no Liability, and the transactions contemplated by this
Agreement will not result in any Liability, for the withdrawal by Seller from
any multiemployer plan within the meaning of section 3(37) of ERISA, to which
Seller has an obligation to contribute with respect to the Transferred
Employees.
(g) Each Employee Plan that is intended to be qualified under section
401(a) of the Code has received or has timely applied for a favorable
determination letter from the IRS, and Seller has no knowledge of any
circumstances that will result in revocation of any such favorable determination
letter. With respect to each Employee Plan, no event has occurred or condition
exists that will give rise to a loss of any intended tax consequence or to any
Tax under section 511 of the Code. There is no material pending or threatened
proceeding relating to any Employee Plan.
(h) Seller has maintained workers' compensation coverage as required by
applicable state law.
(i) Except as provided in Section 6.3 and as set forth in Section
3.15(i) of the Disclosure Schedule, none of the transactions contemplated by
this Agreement will accelerate the time of vesting or the time of payment, or
increase the amount, of compensation due to any director, employee, officer,
former employee or former officer of Seller.
3.16 Environmental Matters.
(a) Except as would not reasonably be expected to have a Material
Adverse Effect and as set forth in Section 3.16(a) of the Disclosure Schedule:
(i) Seller has obtained or applied for all material Environmental Permits that
are required for the operation of the Business as currently conducted and all
such Environmental Permits and applications are listed in Sections 3.13 and
3.16(a) of the Disclosure Schedule; and (ii) no proceeding is pending to revoke
any such Environmental Permit.
(b) Except as would not reasonably be expected to have a Material
Adverse Effect and as set forth in Section 3.16(b) of the Disclosure Schedule,
(i) Seller is in compliance with applicable Environmental Laws in connection
with the operation of the Business; (ii) neither Seller, and to Seller's
knowledge, any prior owner or operator of the Business has received, within the
three preceding years, any order or notice from any Governmental Authority
alleging a violation or failure to comply with any applicable Environmental Law
in connection with the operation of the Business and no Governmental Authority
has stated to Seller that any such order or notice is likely to be forthcoming;
(iii) Seller has not received from any Governmental Authority any notice or
order alleging that Seller is responsible for (or must bear any part of the cost
of) the investigation or remediation of any Environmental Condition at the
Cheswick Facility or the Mount Pleasant Facility, nor has Seller been informed
by any
25
Governmental Authority or by any prior owner or operator of the Business that it
will receive any such notice or order; and (iv) no Lien in favor of any
Governmental Authority for any Liabilities under any applicable Environmental
Law has been filed in respect of or attached to the Cheswick Facility or the
Mount Pleasant Facility.
(c) Except as would not reasonably be expected to have a Material
Adverse Effect and as set forth in Section 3.16(c) of the Disclosure Schedule,
to Seller's knowledge, there has been no Release or Threat of Release of any
Hazardous Substance at or from either the Cheswick Facility or the Mount
Pleasant Facility or at any other location to which Hazardous Substances
generated by the Cheswick Facility or the Mount Pleasant Facility were
transported for storage, processing or disposal.
(d) Except as would not reasonably be expected to have a Material
Adverse Effect, Seller has delivered or made available to Buyer true and
complete copies and the results of any non-privileged studies, analyses, tests
or monitoring for the past five years currently in the possession of Seller
pertaining to Environmental Conditions in, on or under the Cheswick Facility or
the Mount Pleasant Facility, or concerning compliance by Seller with
Environmental Laws in connection with the operation of the Business.
3.17 Intellectual Property. Notwithstanding anything to the contrary in
the foregoing and subsequent representations and warranties with respect to the
Purchased Assets generally, only the following representations and warranties
shall apply to the Purchased Intellectual Property.
(a) Except as set forth on Annex 6 and as set forth in Section 3.17(a)
of the Disclosure Schedule, the Purchased Intellectual Property constitutes all
of the Intellectual Property that is owned by or licensed to Seller and that is
necessary for the conduct of the Business. Except as set forth in Section
3.17(a) of the Disclosure Schedule: (i) Seller is the sole and exclusive owner
of all right, title and interest in and to the Purchased Intellectual Property
free and clear of all Liens; (ii) Seller has not granted any license or other
right that does or that will, subsequent to the Closing, permit or enable anyone
other than Buyer to use or receive royalties or other payments in respect of any
of the Purchased Intellectual Property; (iii) to the knowledge of Seller, no
Person other than Seller has any rights to use any Purchased Intellectual
Property or sell any products or services that use or incorporate or that were
developed using or incorporating any Purchased Intellectual Property; (iv) there
is no pending claim, and Seller has not received any notice and, to the
knowledge of Seller, there is no threatened claim against Seller asserting (A)
that any of the Purchased Intellectual Property infringes or violates the rights
of any Person or (B) that the present or past conduct of the Business since
March 22, 1999 has infringed or violated, or will infringe or violate, any
Intellectual Property right of any Person; and (v) no contract, agreement,
understanding or, to Seller's knowledge, Law exists that would impede or prevent
Seller from selling, assigning, transferring, conveying and delivering to Buyer
the entire right, title and interest of Seller in and to the Purchased
Intellectual Property.
(b) Buyer acknowledges that this Section 3.17 relates solely to the
Purchased Intellectual Property and does not relate to any other Intellectual
Property of Seller.
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3.18 Brokers. Except for CIBC World Markets Corp., no Person has acted
directly or indirectly as a broker, finder or financial advisor for Seller in
connection with the negotiations relating to the transactions contemplated by
this Agreement, and no Person is entitled to any fee or commission or like
payment in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of Seller.
3.19 Sufficiency of Assets. Except as set forth in Section 3.19 of the
Disclosure Schedule, the Purchased Assets (a) constitute all of the assets,
tangible and intangible, of any nature whatsoever, necessary to operate the
Business in the manner presently operated by Seller and (b) include all of the
operating assets of the Division.
3.20 Inventories. All items included in the Inventory consist of a
quality and quantity usable and, with respect to finished goods, saleable, in
the Ordinary Course of Business except for obsolete items and items of
below-standard quality, all of which are reflected in accordance with GAAP in
the reserve in the Management Balance Sheet or on the accounting records of the
Division as of the Closing Date, as the case may be. All items of Inventory have
been valued at their average cost. The quantities of each item of Inventory
(whether raw materials, work-in-process or finished goods) are not excessive but
are reasonable in the present circumstances of the Division, except for such
amounts as are reflected in the reserve in the Management Balance Sheet.
Work-in-process Inventory is now valued, and will be valued on the Closing Date,
according to GAAP in accordance with current authoritative accounting
requirements for inventory as promulgated by the Financial Accounting Standards
Board and the American Institute of Certified Public Accountants.
3.21 No Material Adverse Change. Except as set forth in Section 3.21 of
the Disclosure Schedule, since the Balance Sheet Date, there has not been any
material adverse change in the Business, operations, assets, results of
operations or condition (financial or other) of the Business, and no event has
occurred or circumstance exists that would reasonably be expected to result in
such a material adverse change.
3.22 Insurance.
(a) Seller has made available to Buyer: (i) complete and correct
summaries of all policies of insurance (and correspondence relating to coverage
thereunder) to which Seller is a party or under which Seller is or has been
covered at any time relating to the Business or the Purchased Assets since March
22, 1999, a list of which is included in Section 3.22 of the Disclosure
Schedule; (ii) complete and correct summaries of all pending applications by
Seller for policies of insurance relating to the Business or the Purchased
Assets; and (iii) any statement by the auditor of Seller's financial statements
or any consultant or risk management advisor with regard to the adequacy of
Seller's coverage or of the reserves for claims relating to the Business or the
Purchased Assets.
(b) Section 3.22 of the Disclosure Schedule sets forth, by year, for
the current policy year and each of the policy years since March 22, 1999: (i) a
summary of the loss experience under each policy of insurance; (ii) a statement
describing each claim under a policy of insurance which sets forth: (A) the name
of the claimant; (B) a description of the policy by insurer, type of insurance
and period of coverage; and (C) the amount and a brief description of
27
the claim; and (iii) a statement describing the loss experience for all claims
that were self-insured, including the number and aggregate cost of such claims,
in each case, to the extent relating to the Purchased Assets or the Business.
3.23 Relationships with Related Persons. Except as set forth in Section
3.23 of the Disclosure Schedule, none of Seller's Affiliates has, or since
January 1, 2001, has had, any interest in any of the Purchased Assets. Except as
set forth in Section 3.23 of the Disclosure Schedule, no Affiliate of Seller is
a party to any Contract with, or has any claim or right against, Seller relating
to the Business or the Purchased Assets.
3.24 Solvency.
(a) Seller is not now insolvent and will not be rendered insolvent by
any of the transactions contemplated by this Agreement. As used in this Section,
"insolvent" means that the sum of the debts and other probable Liabilities of
Seller exceeds the present fair saleable value of Seller's assets.
(b) Immediately after giving effect to the consummation of the
transactions contemplated in this Agreement: (i) Seller will be able to pay its
Liabilities as they become due in the usual course of its business; (ii) Seller
will not have unreasonably small capital with which to conduct its present or
proposed business; (iii) Seller will have assets (calculated at fair market
value) that exceed its Liabilities; and (iv) taking into account all pending and
threatened litigation, final judgments against Seller in actions for money
damages are not reasonably anticipated to be rendered at a time when, or in
amounts such that, Seller will be unable to satisfy any such judgments promptly
in accordance with their terms (taking into account the maximum probable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered) as well as all other obligations of Seller.
The cash available to Seller, after taking into account all other anticipated
uses of the cash, will be sufficient to pay all such debts and judgments
promptly in accordance with their terms.
3.25 Taxes. Seller has filed or caused to be filed on a timely basis
all Tax Returns with respect to Taxes that are or were required to be filed
pursuant to applicable Law. All Tax Returns filed by Seller are true, correct
and complete. Seller has paid, or made provision for the payment of, all Taxes
that have or may have become due for all periods covered by the Tax Returns or
otherwise, or pursuant to any assessment received by Seller, except such Taxes,
if any, as are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been established by Seller. Seller
currently is not the beneficiary of any extension of time within which to file
any Tax Return. All Taxes that Seller is or was required by Law to withhold,
deduct or collect have been duly withheld, deducted and collected and, to the
extent required, have been paid to the proper Governmental Authority or other
Person.
3.26 No Other Representations or Warranties. Except for the
representations and warranties contained in this ARTICLE III, neither Seller nor
any other Person makes any representation or warranty whatsoever, express or
implied, on behalf of Seller.
28
3.27 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS
ARTICLE III, THE PURCHASED ASSETS (INCLUDING THE CHESWICK FACILITY, THE MOUNT
PLEASANT FACILITY, THE EQUIPMENT, THE FIXED ASSETS, THE INVENTORY AND THE
ACCOUNTS RECEIVABLE) ARE TRANSFERRED "AS IS, WHERE IS" AND WITH "ALL FAULTS" AND
WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the date of this
Agreement as follows:
4.1 Existence and Good Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
4.2 Authority. Buyer has the requisite corporate power and authority to
execute, deliver and perform fully its obligations under this Agreement and the
Ancillary Agreements. The execution and delivery of this Agreement and the
Ancillary Agreements, and the consummation by Buyer of the transactions
contemplated hereby, have been duly authorized by all requisite corporate action
of Buyer. This Agreement has been duly executed and delivered by Buyer and,
assuming the due execution and delivery by Seller, constitutes, and each
Ancillary Agreement that is to be executed and delivered by Buyer will
constitute when executed and delivered, a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance and other similar
Laws affecting creditors' rights or remedies generally and by general principles
of equity (whether considered at law or in equity).
4.3 No Violation. Neither the execution and delivery of this Agreement
or any Ancillary Agreement, nor the performance by Buyer of its obligations
hereunder or thereunder, will (a) violate Buyer's certificate of incorporation
or bylaws, (b) result in a violation or breach of, or constitute a default
under, any contract, agreement or instrument to which Buyer is a party or by
which any of its assets or properties are bound or (c) violate any Law
applicable to Buyer or its assets or properties.
4.4 Consents. Except for completion of the review procedures
established by the Exon-Xxxxxx Amendment, if applicable, and the requirements of
the HSR Act, if applicable, no Consent of any Governmental Authority or any
other Person is necessary for the consummation by Buyer of the transactions
contemplated by this Agreement.
4.5 No Proceedings. There is no action, suit or proceeding pending or,
to Buyer's knowledge, threatened against or related to Buyer which could affect
Buyer's ability to consummate the transactions contemplated by this Agreement
and each Ancillary Agreement.
4.6 Financing. Buyer has (through cash on hand, existing credit
arrangements or otherwise) as of the date hereof, and will have at the Closing,
sufficient funds to pay the Purchase Price, any expenses to be incurred by Buyer
in connection with this Agreement and all
29
other amounts payable by Buyer at the Closing and to perform its obligations
hereunder following the Closing and to provide adequate working capital to the
Business.
4.7 Solvency.
(a) Buyer is not now insolvent and will not be rendered insolvent by
any of the transactions contemplated by this Agreement. As used in this Section,
"insolvent" means that the sum of the debts and other probable Liabilities of
Buyer exceeds the present fair saleable value of Buyer's assets.
(b) Immediately after giving effect to the consummation of the
transactions contemplated in this Agreement: (i) Buyer will be able to pay its
Liabilities as they become due in the usual course of its business; (ii) Buyer
will not have unreasonably small capital with which to conduct its present or
proposed business; (iii) Buyer will have assets (calculated at fair market
value) that exceed its Liabilities; and (iv) taking into account all pending and
threatened litigation, final judgments against Buyer in actions for money
damages are not reasonably anticipated to be rendered at a time when, or in
amounts such that, Buyer will be unable to satisfy any such judgments promptly
in accordance with their terms (taking into account the maximum probable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered) as well as all other obligations of Buyer. The
cash available to Buyer, after taking into account all other anticipated uses of
the cash, will be sufficient to pay all such debts and judgments promptly in
accordance with their terms.
4.8 Brokers. No Person has acted directly or indirectly as a broker,
finder or financial advisor for Buyer in connection with the negotiations
relating to the transactions contemplated by this Agreement, and no Person is
entitled to any fee or commission or like payment in respect thereof based in
any way on any agreement, arrangement or understanding made by or on behalf of
Buyer.
4.9 U.S.-Controlled Entity. Buyer is (a) a legal Person incorporated or
organized under the laws of a state of the United States or (b) a legal Person
owned or controlled entirely by citizens of the United States or a legal Person
incorporated or organized under the laws of a state of the United States, in
either case, whose business is administered principally in the United States and
that is capable of holding any licenses issued by the NRC that are contemplated
to be Transferred to Buyer under this Agreement (a "U.S.-Controlled Entity").
4.10 No Other Representations or Warranties. Except for the
representations and warranties contained in this ARTICLE IV, neither Buyer nor
any other Person makes any representation or warranty whatsoever, express or
implied, on behalf of Buyer.
ARTICLE V
COVENANTS
5.1 Conduct of Business. During the period from the date hereof to the
Closing or the earlier termination of this Agreement in accordance with the
terms hereof, Seller shall, except as otherwise contemplated by this Agreement,
use commercially reasonable efforts to operate the Business only in the Ordinary
Course of Business and shall use commercially reasonable efforts to preserve
intact the Purchased Assets and the Business. Without limiting the
30
generality of the foregoing, and except as otherwise contemplated by this
Agreement, from the date of this Agreement to the Closing or the earlier
termination of this Agreement, without the prior written consent of Buyer (which
consent shall not be unreasonably withheld or delayed), Seller:
(a) shall not mortgage, pledge or subject to any Lien other than
Permitted Liens any of the Purchased Assets;
(b) shall use commercially reasonable efforts to maintain the Purchased
Assets, to keep available the services of its officers, employees and agents and
to maintain its relationships with suppliers, landlords, creditors and customers
in connection with the conduct of the Business;
(c) shall not transfer title to any of the Purchased Assets, other than
the sale of finished goods in the Ordinary Course of Business;
(d) shall provide reasonable assistance to Buyer in identifying the
Permits required by Buyer to operate the Business from and after the Closing
Date and transferring existing Permits of Seller to Buyer, where permissible;
and
(e) except as required by Law or as is necessary to maintain the
tax-qualified status of any Employee Plan under section 401(a) of the Code,
shall not amend or supplement any Employee Plans so as to increase the
Liabilities relating to any Employees or former employees of the Business that
are to be assumed by Buyer under Section 6.3, provided that, in each case,
Seller will give notice to Buyer of any amendments or supplements permitted by
this Section 5.1(e).
5.2 Access to Information.
(a) Prior to the Closing Date or the earlier termination of this
Agreement in accordance with its terms, Seller will provide Buyer and its
representatives with reasonable access during normal business hours, and upon
reasonable notice, to the facilities, assets and books and records of the
Business so as to afford Buyer a reasonable opportunity to make, at its sole
cost and expense, such review, examination and investigation of the existing
assets, books and records of the Business as Buyer may reasonably desire to make
to the extent related to the Purchased Assets and the Business. Notwithstanding
the foregoing, Seller need not disclose to Buyer any information, or provide
access to any restricted area, which would violate any Law or breach any
contract, agreement or understanding with any third Person.
(b) After the Closing Date, Seller shall provide Buyer with reasonable
access during normal business hours, and upon reasonable notice, to any records
relating to the Business that are retained by Seller. Seller shall preserve and
maintain any books and records relating to the Business and retained by Seller
for seven years following the Closing Date. From and after the Closing Date,
Buyer shall permit Seller to have reasonable access during normal business hours
to any business records turned over to Buyer pursuant to this Agreement as may
be required by Seller in connection with any audit of such business records
covering periods on and before the Closing Date, any audit or investigation by
any Governmental Authority or any matter relating to insurance coverage or
third-party claims, in each such case, to the extent relating to
31
the operation of the Business by Seller prior to the Closing. Buyer shall
preserve and maintain the records relating to the Business that are part of the
Purchased Assets for at least seven years following the Closing Date. From and
after the Closing, Buyer shall afford Seller reasonable access at all reasonable
times and as Seller may reasonably request to the officers, employees, agents,
properties, offices and other facilities employed, retained or used by Buyer in
connection with the operation of the Business by Buyer after the Closing.
5.3 Governmental Approvals, etc.
(a) If applicable, each of Buyer and Seller shall as promptly as
practicable, but in no event later than 10 business days following the execution
and delivery of this Agreement, file with the United States Federal Trade
Commission and the United States Department of Justice a notification and report
form under the HSR Act for the transactions contemplated hereby and, thereafter,
any supplemental information requested in connection therewith pursuant to the
HSR Act. Each of Buyer and Seller shall as promptly as practicable comply with
any other Laws of any country which are applicable to the transactions
contemplated hereby and pursuant to which any Consent of any Governmental
Authority or any other Person in connection with such transactions is necessary.
Each of Buyer and Seller shall furnish to the other such necessary information
and reasonable assistance as the other may request in connection with its
preparation of any filing, registration or declaration which is necessary under
the HSR Act or any other such Laws. Buyer and Seller shall keep each other
apprised of the status of any communications with, and any inquiries or requests
for additional information from, any Governmental Authority, and shall comply
promptly with any such inquiry or request. Buyer and Seller shall each use
commercially reasonable efforts and take all necessary action to obtain any
clearance under the HSR Act or any other Consent of any Governmental Authority
necessary in connection with the transactions contemplated hereby or to resolve
any objections which may be asserted by any Governmental Authority with respect
to the transactions contemplated hereby.
(b) Subject to the terms and conditions of this Agreement, each party
shall use commercially reasonable efforts to cause the Closing to occur as
promptly as practicable, including (i) as contemplated by Section 5.3(a) or 5.4,
(ii) defending against any lawsuits, actions or proceedings, judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to prevent the entry or
imposition of any Order, stay or other legal restraint or prohibition by any
Governmental Authority and to appeal and seek to have vacated or reversed as
promptly as possible any such Order, stay or other restraint or prohibition that
is not yet final and nonappealable; provided, however, that neither Seller, nor
any of its Affiliates, shall be required to make any material monetary
expenditure or asset divestiture, commence or be a plaintiff in any litigation
or offer or grant any material accommodation (financial or otherwise) to any
third Person.
(c) Buyer shall use its commercially reasonable efforts to obtain as
promptly as practicable all Permits and Consents of Governmental Authorities
required by Law or contract for Buyer to conduct the Business following the
Closing and to own the Purchased Assets (each, a "Buyer Permit"), and Seller
shall cooperate with Buyer in connection therewith. Notwithstanding the
foregoing, neither Seller nor Buyer shall be required to expend any material sum
or agree to a material concession to any Governmental Authority to obtain, or,
in the case of
32
Seller, to assist Buyer to obtain, as the case may be, any such Buyer Permit.
Buyer acknowledges that certain facilities owned or serviced by the Business and
certain related documents, records and information are classified for United
States government security purposes as high as the level of "Top Secret," which
may require, in addition to any Buyer Permits required under applicable Law to
conduct the Business at such facilities, the employment of individuals holding
United States government security clearances as high as the level of "Top
Secret." Notwithstanding anything to the contrary in this Agreement, Seller
shall not be required to provide access to such facilities or any such related
documents, records or information to any representative or employee of Buyer
unless such individual presents evidence reasonably satisfactory to Seller of
such individual's security clearance meeting the security clearance level
prescribed for such access.
5.4 Novations of Government Contracts and Third Party Consents.
(a) As soon as practicable following the execution of this Agreement,
Seller shall prepare (with Buyer's assistance, as necessary), in accordance with
Federal Acquisition Regulations Part 42, P. 42.12 and any applicable agency
regulations or policies, a written request for the novation of the Government
Contracts meeting the requirements of the Federal Acquisition Regulations Part
42, as reasonably interpreted by the Responsible Contracting Officer (as such
term is defined in Federal Acquisition Regulations Part 42, P. 42.1202(a)). The
request for novation shall be submitted by Seller to each Responsible
Contracting Officer for the United States government (or, in the case of
Government Contracts not subject to the Federal Acquisition Regulations, Buyer
and Seller shall cooperate in seeking to cause the applicable Governmental
Authority) to (i) recognize Buyer as Seller's successor in interest to the
Government Contracts and all the Purchased Assets used in the performance of the
Government Contracts and (ii) enter into one or more novation agreements
(collectively, "Novation Agreements") in form and substance reasonably
satisfactory to Seller and its counsel, pursuant to which all of Seller's right,
title and interest in and to, and all of Seller's Liabilities under, each such
Government Contract, including the portion of the CAS 412 prepayment credit
allocable to Buyer's Pension Plan under Section 6.3(g), shall be validly
conveyed, transferred and assigned and novated to Buyer by all parties thereto.
Buyer shall promptly provide to Seller any information regarding Buyer required
in connection with such request.
(b) Seller and Buyer will cooperate and use their respective
commercially reasonable efforts to obtain as promptly as practicable (i) all
Consents (A) required for the purpose of processing, entering into and
completing the Novation Agreements with regard to any of the Government
Contracts, including responding to any requests for information from the United
States government with regard to such Novation Agreements or (B) required by
third Persons to Transfer any Assumed Contracts and the Purchased Intellectual
Property to Buyer in a manner that will avoid any default, conflict or
termination of rights under any Assumed Contract or Purchased Intellectual
Property and (ii) without limiting the provisions of clause (B) above, novations
of all Assumed Contracts other than Government Contracts. Notwithstanding
anything to the contrary in this Agreement, nothing in this Section 5.4 shall
require Seller to expend any material sum, make a material financial commitment
or grant or agree to any material concession to any third Person to obtain any
such Consent.
33
(c) If any and all Consents necessary for the Transfer or novation of
any Assumed Contract or Purchased Intellectual Property, or any claim, right or
benefit arising thereunder or resulting therefrom, shall not have been obtained
prior to the Closing Date, then subject to the provisions of Section 7.2, as of
the Closing, this Agreement, if permitted by Law, shall constitute full and
equitable Transfer by Seller to Buyer of all of Seller's right, title and
interest in and to, and all of Seller's Liabilities under, such Assumed
Contracts and Purchased Intellectual Property, and, in the case of such Assumed
Contracts, Buyer shall be deemed Seller's agent for purpose of completing,
fulfilling and discharging all of Seller's Liabilities under any such Assumed
Contract. The parties shall take all commercially reasonable steps and actions
to provide Buyer with the benefits of such Assumed Contracts and Purchased
Intellectual Property, and, in the case of such Assumed Contracts, to relieve
Seller of the performance and other Liabilities thereunder, including entry into
subcontracts for the performance thereof. Subject to the other provisions of
this Section 5.4, Buyer agrees to pay, perform and discharge, and, pursuant to
Section 8.2(a)(iv), indemnify Seller against and hold Seller harmless from, all
Liabilities of Seller relating to such performance or failure to perform under
such Assumed Contracts, including any related guarantees.
(d) If Seller shall be unable to make the equitable assignment
described in Section 5.4(b), or if such attempted Transfer would adversely
affect the rights of Seller or Buyer under such Assumed Contract or Purchased
Intellectual Property, or would not assign all of Seller's rights thereunder at
the Closing, Seller and Buyer shall continue to cooperate and use all
commercially reasonable efforts to provide Buyer with all such rights. To the
extent that any such Consents are not obtained, or until the impediments to such
Transfer are resolved, Seller shall use all commercially reasonable efforts
(without the expenditure, in the aggregate, of any material sum) to the extent
permitted by Law to (i) provide to Buyer the benefits of any such Assumed
Contract or of any such Purchased Intellectual Property, to the extent related
to the Business, (ii) cooperate in any lawful arrangement designed to provide
such benefits to Buyer and (iii) enforce, at the request of and for the account
of Buyer, any rights of Seller arising from any such Assumed Contract or
Purchased Intellectual Property against any third Person in accordance with the
terms thereof, provided that, if requested by Buyer, Seller shall use
commercially reasonable efforts to enforce any right of termination contained in
an Assumed Contract that is the subject of this Section 5.4(d) on condition that
such termination would not, or would not reasonably be expected to, result in or
give rise to any Liability to Seller unless Buyer shall have agreed to assume
and be responsible for such Liability. To the extent that Buyer is provided the
benefits (including payment rights) of any Assumed Contract or Purchased
Intellectual Property (whether from Seller or otherwise), (i) Buyer shall
perform for the benefit of any third Person the obligations of Seller thereunder
or in connection therewith and (ii) Buyer shall pay, perform and discharge, and,
pursuant to Section 8.2(a)(iv), indemnify Seller against and hold Seller
harmless from, all Liabilities of Seller relating to such performance or failure
to perform, and in the event of a failure of such indemnity, Seller shall cease
to be obligated under this Agreement in respect of the Assumed Contract or
Purchased Intellectual Property which is the subject of such failure.
(e) Without limiting the generality of Section 5.2(b), from the Closing
Date until, with respect to each Government Contract, the sixth year following
the earlier of the release date or notice of final payment for such Government
Contract, Buyer agrees to provide Seller and its accountants, counsel and other
representatives access, during normal business
34
hours, to such information, personnel and assistance relating to the performance
by Buyer of the Government Contracts and its respective Liabilities under the
Novation Agreements as Seller shall reasonably request from time to time.
5.5 Confidentiality.
(a) Buyer. (i) Buyer confirms and agrees that, with respect to any
information directly or indirectly furnished by or on behalf of Seller,
whether before, on or after the date hereof, Buyer shall continue to be
bound by the terms of the Confidentiality Agreement, dated as of October
23, 2001, by and between Seller and Buyer (the "Confidentiality
Agreement").
(ii) Buyer understands and agrees that Seller is making available
confidential information and trade secrets to Buyer concerning the
operations of Seller and the Business, which information would be damaging
to Seller and its Affiliates or WEC if disclosed to a competitor or made
available to any other Person, and that such information has been divulged
in confidence. Buyer acknowledges that Seller has permitted Buyer to
conduct due diligence and/or a review of the premises of the Business.
Buyer shall not disclose to any Person, other than Buyer's attorneys,
accountants and consultants, any contents or results of any due diligence
or investigation by or on behalf of Buyer, including any information
concerning any alleged violation of any Environmental Law, without
obtaining prior written approval from Seller, except as may be required by
Law, in which case Buyer will notify Seller in writing of Buyer's intent to
make such disclosure and whereupon Seller shall have the option of making
such disclosure jointly with Buyer. Buyer agrees that Seller would be
irreparably harmed by any violation, or threatened violation, of this
Section 5.5(a) and that, therefore, Seller shall be entitled to an
injunction prohibiting Buyer from any violation, or threatened violation,
of this Section 5.5(a).
(iii) The agreements and undertakings of Buyer set forth in this
Section 5.5(a) shall survive the termination of this Agreement, and shall
not restrict Buyer from using confidential information of Seller in
performing its obligations under, or enforcing the terms of, this Agreement
or any Ancillary Agreement, or in exercising its rights relating hereto or
thereto or to the transactions contemplated hereby or thereby, provided any
such use is on a confidential basis.
(b) Seller. From and after the Closing Date, Seller shall not disclose
to any Person (other than any Affiliates, agents or representatives of Seller or
WEC or any of WEC's Affiliates) any Business Information (as defined below) that
is known to Seller on the Closing Date. The term "Business Information" means
any trade secret information concerning the Business or the Purchased Assets
that is confidential or proprietary and is necessary for the conduct of the
Business, other than information that (i) is or becomes generally available to
the public other than as a result of a disclosure by Seller after the Closing
Date or (ii) Seller is required to disclose by Law or legal process. In the
event that Seller is requested in any proceeding to disclose any Business
Information, Seller shall give Buyer prompt written notice of such request so
that Buyer may seek an appropriate protective Order. If in the absence of a
protective Order Seller is requested in a proceeding to disclose Business
Information, Seller may
35
disclose such portion of the Business Information that in the opinion of
Seller's counsel Seller is required to disclose, without liability under this
Agreement, provided that Seller shall give Buyer written notice of the Business
Information to be disclosed as far in advance of its disclosure as is
practicable and shall use commercially reasonable efforts to obtain assurances
that confidential treatment will be accorded to such Business Information. The
provisions of this Section 5.5(b) shall not restrict Seller from using Business
Information in performing its obligations under, or enforcing the terms of, this
Agreement or any Ancillary Agreement, or in exercising its rights relating
hereto or thereto or to the transactions contemplated hereby or thereby.
5.6 Press Releases and Disclosure. Neither of the parties hereto or any
of their respective Affiliates will issue or cause publication of any press
release or other announcement or public communication with respect to this
Agreement or the transactions contemplated hereby or otherwise disclose this
Agreement or the transactions contemplated hereby to any third party (other than
attorneys, advisors, lenders and accountants to Seller or Buyer and any Persons
whose Consent is required to consummate the transactions contemplated by this
Agreement) without the express prior approval of the other party hereto;
provided, however, that nothing herein will prohibit Seller from issuing or
causing publication of any press release, announcement, communication or filing
to the extent that Seller deems such action to be required by Law or applicable
stock exchange rules, provided that Seller shall provide Buyer with a copy of
any such press release, announcement, communication or filing as promptly as
practicable after it makes such determination. Subject to the foregoing, the
press releases relating to the execution of this Agreement shall be mutually
acceptable to Seller and Buyer.
5.7 Further Assurances. Seller and Buyer will each use commercially
reasonable efforts to implement the provisions of this Agreement, and for such
purpose any party, at the reasonable request of the other party, at or after the
Closing, will, without further consideration, furnish such further information,
execute and deliver such further instruments and take such other action as any
party may reasonably deem necessary or desirable to make effective the
transactions contemplated by this Agreement.
5.8 Expenses; Transfer Taxes. Except as expressly provided herein,
whether or not the transactions contemplated hereby are consummated, each party
shall bear its own fees and expenses incurred in connection with the
transactions contemplated hereby (including, in the case of Seller, all fees,
expenses and other amounts payable to CIBC World Markets Corp., which shall be
paid by Seller). Notwithstanding anything to the contrary herein, (a) Buyer and
Seller will be responsible in equal shares for all transfer, recordation and
documentary Taxes and fees, including any applicable state sales Taxes, that may
be payable in connection with the consummation of the transactions contemplated
by this Agreement, (b) Buyer will be responsible for all costs and expenses
associated with the obtaining of any title insurance policy and all endorsements
thereto that Buyer elects to obtain and (c) Buyer will be responsible for all
filing fees under the HSR Act relating to the Purchased Assets Buyer would
acquire hereunder.
5.9 Bulk Transfer Laws. Buyer waives compliance by Seller with the Laws
of any jurisdiction relating to bulk transfers that may be applicable in
connection with the transfer of the Purchased Assets to Buyer.
5.10 Tax Matters.
36
(a) Taxes. Seller will be responsible for the preparation and filing of
all Tax Returns of Seller for all periods prior to the Closing Date whether they
are due before or after the Closing Date (including the Tax Returns for Seller
which include the operations of the Business for any period ending on or before
the Closing Date and any gains recognized by Seller in connection with the sale
of the Purchased Assets to Buyer). Seller will make all payments required with
respect to any such Tax Return for which Seller is responsible. Buyer will be
responsible for the preparation and filing of all Tax Returns relating to the
Business and the Purchased Assets for all periods which begin after the Closing
Date. Buyer will make all payments required with respect to any such Tax Return
for which Buyer is responsible. For purposes of determining Tax periods, any
period which begins before and ends after the Closing Date shall be deemed to be
two periods, with the first period ending on the Closing Date and the second
period beginning the day immediately following the Closing Date.
(b) Cooperation. After the Closing Date, each of Seller and Buyer shall
(and shall cause their respective Affiliates to) cooperate fully with each other
with respect to the preparation and filing of Tax Returns, and any audits or
disputes with Taxing authorities regarding any Tax Returns of the Business or
the Purchased Assets, including the furnishing upon reasonable request of
records and other documents relating to Taxes of the Business or the Purchased
Assets and the provision of timely notice to the other party in writing of any
pending or threatened Tax audits or assessments relating to Taxes of the
Business or the Purchased Assets for taxable periods for which the other party
may be liable.
5.11 Non-Solicitation.
(a) Non-Solicitation by Seller. For a period of 12 months following the
Closing Date, Seller shall not, directly or indirectly, and shall cause its
Affiliates not to, solicit any employee of Buyer or its Affiliates for
employment by Seller or any of its Affiliates without the prior written consent
of Buyer. An employee shall be deemed not to have solicited for employment if
such employee responded to a general solicitation.
(b) Non-Solicitation by Buyer. For a period of 12 months following the
Closing Date, Buyer shall not, directly or indirectly, except as provided in
ARTICLE VI, and shall cause its Affiliates not to, solicit any employee of
Seller or its Affiliates for employment by Buyer or any of its Affiliates
without the prior written consent of Seller. An employee shall be deemed not to
have been solicited for employment if such employee responded to a general
solicitation.
5.12 Closing and Disclosure Schedules. Each of Buyer and Seller shall
use commercially reasonable efforts to cause the conditions set forth in Section
7.1, Section 7.2 (in the case of Seller) and Section 7.3 (in the case of Buyer)
to be satisfied by the Closing Date. During the period prior to the Closing
Date, Seller will advise Buyer in writing if it becomes aware of (a) any fact or
condition that causes or constitutes a breach of any of Seller's representations
and warranties made as of the date of this Agreement or (b) the occurrence after
the date of this Agreement of any fact or condition that would or would
reasonably be likely to (except as contemplated by this Agreement) cause or
constitute a breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
Seller's discovery of, such fact or condition. Should any such fact or condition
37
require any change to the Disclosure Schedule, Seller shall promptly deliver to
Buyer a supplement to the Disclosure Schedule specifying such change. Such
delivery shall not affect any rights of Buyer under Section 9.1, except that,
with respect to any fact or condition occurring or arising in the Ordinary
Course of Business at any time after the date hereof (and which does not have a
Material Adverse Effect) and prior to the Closing Date, (a) the specified
representations and warranties made by Seller shall be deemed automatically
modified to reflect such fact or condition as of the date that such fact or
condition occurs or arises and (b) Buyer shall not have the right to terminate
this Agreement pursuant to Section 9.1 on account of such modification of the
representations and warranties made by Seller herein.
5.13 OCI Compliance. Buyer shall, and shall cause its Affiliates to,
take such actions between the date hereof and the Closing such that Buyer (and,
to the extent applicable, its Affiliates) will be, immediately subsequent to the
Closing, in compliance with the Laws relating to Organizational Conflicts of
Interest (as such term is defined in Federal Acquisition Regulation Subpart 9.5
and Department of Energy Acquisition Regulation Subpart 909.5) with respect to
any Government Contracts (or outstanding bids for Government Contracts) included
in the Purchased Assets.
5.14 Supplies and Signage. As soon as practicable after the Closing,
Buyer shall cause the Division to discontinue use of any stationery, purchase
order forms, packaging or other similar paper goods or supplies, or advertising
and promotional materials, product, training and service literature and
materials, or computer programs or like materials (collectively, the "Supplies")
or signs, that state or otherwise indicate thereon that the Business is a
division or unit of Seller, or contain any trademarks, service marks, trade
names or corporate or business names, derived from or including "Washington,"
"Westinghouse," the "Circle W" logo xxxx, the slogan "You can be sure . . . if
it's Westinghouse," in whole or in part; provided, however, that Buyer (a) may
use any Supplies included in the Purchased Assets that are labeled with such
trademarks, service marks, trade names or corporate or business names for a
reasonable period after the Closing (which in no event shall be later than 180
days following the Closing Date), (b) shall have up to nine months following the
Closing to replace any signs that bear such trademarks, service marks, trade
names or corporate or business names and (c) Buyer shall be entitled to ship any
Inventory that is labeled with such trademarks, service marks, trade names or
corporate or business names for a reasonable period after the Closing (which in
no event shall be later than 180 days following the Closing Date). Buyer shall
not reorder or produce any Supplies which state or otherwise indicate thereon
that the Business is a division or unit of Seller or contain any such
trademarks, service marks, trade names or corporate or business names.
5.15 No Use of Trademarks. From and after the Closing, except as
provided in Section 5.14, neither Buyer nor any of its Affiliates shall use in
any way any trademarks, service marks, trade names or corporate or business
names, domain names, or other indicia, of origin including "Washington,"
"Westinghouse," the "Circle W" logo xxxx, the slogan "You can be sure . . . if
it's Westinghouse," or any abbreviation thereof, in whole or in part.
5.16 Assumption of Teaming Agreement and WGS Shared Technology
Agreement. On the Closing Date, (a) Seller shall assign, and Buyer shall assume,
all of the rights, benefits, obligations and responsibilities of the Division
under the Teaming Agreement, as required by section 11.2.2 thereof, and (b)
Seller shall assign or sublicense the WGS Shared
38
Technology Agreement in accordance with the terms thereof as and to the extent
such WGS Shared Technology Agreement pertains to the Division or the Business,
and Buyer shall assume the rights, benefits, obligations and responsibilities of
Seller under such WGS Shared Technology Agreement as and to the extent such
rights, benefits, obligations and responsibilities thereunder apply to the
Division or the Business. The assignment and assumption agreement relating to
the Teaming Agreement shall provide that (x) sections 6.2 and 10.5 thereunder
shall survive termination or expiration of such Teaming Agreement and (y) for
purposes of such section 6.2, the confidentiality restrictions shall not apply
to information that (i) is or becomes part of the public domain through no
breach of the Teaming Agreement by the Division, (ii) was or is disclosed to the
Division by a third party (other than WEC) having no obligation to WEC to keep
the information confidential or (iii) was or is independently developed by the
Division or Buyer (except for New Product Technology (as defined in the Teaming
Agreement) acquired by WEC during the term of the Teaming Agreement in
accordance with section 6.4 thereof) without reference to or benefit of the WEC
Technology. WEC shall be a third party beneficiary of the assumption and/or
sublicense agreements provided for in this Section 5.16, provided that, with
respect to the assumption or sublicense agreement relating to the WGS Shared
Technology Agreement, WEC shall have third party beneficiary rights only to the
extent permitted by clause (b) of section 7.3 of such WGS Shared Technology
Agreement. The assignment or sublicense of the WGS Shared Technology Agreement
shall not create any new Liabilities for Buyer (other than as set forth in the
WGS Shared Technology Agreement) or confer any new or additional rights or
benefits upon WEC or any of WEC's Affiliates (other than to enforce its or their
rights thereunder against Buyer).
5.17 Custody, Access, Segregation and Transfer of WEC Technology; Audit
Rights.
(a) Buyer shall (i) segregate and deliver a copy of the WEC Technology
(as such term is defined in section 6 of the Teaming Agreement) to WEC that
remains in the custody of Buyer after the Closing in accordance with the
provisions set forth in the Teaming Agreement and (ii) provide access to WEC to
the technology referenced in section 3.3 of the WGS Shared Technology Agreement
and deliver such technology to WEC in accordance with the terms thereof, subject
to any requirements under Law (including relevant United States security
clearances) and the terms and conditions of such WGS Shared Technology Agreement
and the Teaming Agreement. Upon completion of each delivery by Buyer to WEC of
the copies of the WEC Technology in accordance with the Teaming Agreement, Buyer
shall certify to WEC that the segregation and delivery of the copies of the
requested WEC Technology is complete with respect to such delivery.
(b) In the event that WEC shall dispute the completeness of Buyer's
delivery to WEC of the WEC Technology in accordance with the Teaming Agreement,
WEC shall have the right pursuant to this Section 5.17(b) to request an audit
to investigate such matter. Any such audit requested by WEC pursuant to this
Section 5.17(b) shall be conducted by a third party who would (i) be mutually
acceptable to WEC and Buyer, (ii) have, at a minimum, expertise relevant to the
respective businesses of Buyer and WEC and (iii) possess all security clearances
as may be required by Law or any Governmental Authority to perform such an
audit. Any request by WEC for an audit pursuant to this Section 5.17(b) must be
delivered to Buyer in accordance with Section 10.8, must state in reasonable
detail the basis for and scope of the proposed audit, and
39
provide Buyer with reasonable opportunity to respond to and address WEC's
request. Any costs and expenses arising from any audit request made by WEC
pursuant to this Section 5.17(b) will be paid by WEC; provided, however, that if
any audit performed hereunder shall reveal that Buyer failed to deliver any
material WEC Technology to WEC as required under the Teaming Agreement, then the
portion of the cost of the audit that is attributable to identifying and
locating such WEC Technology shall be allocated to Buyer, so long as the WEC
Technology located as a result of such audit was within the scope of WEC's
initial audit request and WEC furnishes to Buyer copies of invoices and such
other information as Buyer may reasonably request relating to the audit.
5.18 NRC Licenses and NRC Bond.
(a) As soon as practicable after the execution of this Agreement,
Seller and Buyer shall cooperate to effectuate the transfer from Seller to Buyer
of the following NRC licenses currently held by Seller and relating to the
Business (collectively, the "NRC Licenses"): (i) Special Nuclear Materials
License No. SNM-1120; (ii) Combined Materials License (Pump Repair Facility) No.
00-00000-00; and (iii) Combined Materials License (Industrial Radiography
Facility) No. 00-00000-00. Buyer and Seller shall complete all necessary
applications and amendment requests with the NRC in a timely fashion in order to
ensure the expeditious transfer of the NRC Licenses from Seller to Buyer after
the Closing Date.
(b) In connection with the transfer of the NRC Licenses from Seller to
Buyer as described in Section 5.18(a), Buyer and Seller shall cooperate to
procure the NRC's consent to the cancellation of Seller's NRC Bond Xx.
0000-00-00 (xxx "XXX Xxxx") associated with the NRC Licenses and the replacement
thereof by Buyer with a substitute bond satisfactory to the NRC. The parties
shall continue to cooperate after the Closing Date until the NRC Bond shall have
been cancelled. Buyer will indemnify, defend and hold harmless Seller from and
against and reimburse Seller for any and all amounts paid, including costs and
expenses, in connection with the NRC Bond, including Seller's expenses in
maintaining the NRC Bond whether or not the NRC Bond is drawn upon or required
to be performed, and shall in any event promptly reimburse Seller to the extent
the NRC Bond is called upon and Seller or its Affiliates make any payment or are
obligated to reimburse the party issuing the NRC Bond.
ARTICLE VI
EMPLOYEE MATTERS
6.1 Offer to Hire. On the Closing Date, Buyer shall make an offer of
employment to each Employee, including any employee hired since September 26,
2002. Each such offer of employment will (a) be effective as of the Closing, (b)
provide for employment at such Employee's present employment location, (c) be at
a salary or hourly wage rate that is no less than the salary or hourly wage rate
of each such Employee in effect as of the date hereof or as the same may have
been increased since the date hereof in the Ordinary Course of Business, (d)
provide for employee benefits for the period beginning on the Closing Date and
ending no earlier than December 31, 2002 that are substantially comparable in
the aggregate to the employee benefits available to such Employee immediately
prior to the Closing Date under the Employee Plans (or, in the case of
Transferred Union Employees, provide for the period from the Closing Date to the
expiration date of the applicable CBA employee benefits in accordance with
40
the applicable CBA) and (e) be for a position with Buyer comparable to such
Employee's position with Seller immediately before the Closing. Unless an
Employee declines Buyer's offer of employment, each of the Employees shall be
deemed to have accepted Buyer's offer of employment and shall become an employee
of Buyer as of the Closing Date. The Employees who accept (or are deemed to
accept) employment with Buyer shall be referred to herein as "Transferred
Employees." Seller shall be solely responsible for the payment of all wages and
other base compensation due to all Employees with respect to their service as
such through the close of business on the Closing Date.
6.2 Compliance with Law and Collective Bargaining Agreements. Effective
as of the Closing Date and subject to Section 7.2(a), Buyer shall assume all
right, title, obligation and benefit of Seller under the IBEW CBA and the AWSE
CBA. Buyer shall recognize the IBEW and the AWSE as the exclusive collective
bargaining representatives for Transferred Union Employees. All offers of
employment made by Buyer pursuant to Section 6.1 shall be made in accordance
with all Laws, and for those Transferred Employees covered by the IBEW CBA or
the AWSE CBA (such Employees, the "Transferred Union Employees"), in accordance
with the IBEW CBA or the AWSE CBA, as applicable (Transferred Employees not
covered by the IBEW CBA or the AWSE CBA are referred to herein as "Transferred
Non-Union Employees").
6.3 Employee Benefits.
(a) For purposes of any employee benefit plan, program or arrangement
established for or made available to Transferred Employees by Buyer ("Buyer's
Plans"), Buyer shall credit such Transferred Employees with service for all
periods of service with Seller, any Affiliate of Seller and any predecessor of
Seller to the extent that such service was credited under the equivalent
Employee Plans. Such service shall be credited for purposes of determining
benefit accruals, eligibility, vesting and retirement eligibility in benefits
under all of Buyer's Plans, in the same manner as if such service had been
completed while the Transferred Employees were employed by Buyer.
(b) Coverage for all Transferred Employees and their respective
dependents under the Employee Plans that are welfare benefit plans within the
meaning of section 3(1) of ERISA, including the Westinghouse Government Services
Group Welfare Benefits Plan ("Seller's Welfare Plans"), shall cease to be
effective as of the Closing. Seller and Seller's Welfare Plans shall be liable
for all claims incurred with respect to Transferred Employees and their
dependents prior to the Closing. The plans sponsored by Buyer that are welfare
benefit plans within the meaning of section 3(1) of ERISA ("Buyer's Welfare
Plans") shall provide coverage and benefits for all Transferred Employees and
their respective eligible dependents effective on the day after the Closing
Date. Buyer and Buyer's Welfare Plans shall be liable for all claims incurred
with respect to Transferred Employees and their eligible dependents after the
Closing. For purposes of this Section 6.3(b), a claim shall be deemed "incurred"
on the date that the event that gives rise to the claim occurs (for purposes of
life insurance, severance, sickness, accident and disability programs) or on the
date that treatment or services are provided (for purposes of health care
programs).
41
(c) Buyer shall cause deductibles and out-of-pocket payments expended
for coverage under Seller's Welfare Plans in the plan year in which the Closing
Date occurs to be counted towards the deductibles and out-of-pocket maximums
applicable to each Transferred Employee under Buyer's Welfare Plans. In
addition, no pre-existing condition limitation, exclusion or waiting period
applicable with respect to any Buyer Welfare Plan will apply to any Transferred
Employee or their dependents to the extent that such limitations, exclusions or
waiting periods exceed those in effect under Seller's Welfare Plans or were
satisfied by such Transferred Employees or their dependents under the applicable
Seller Welfare Plans.
(d) For purposes of the calendar year in which the Closing Date occurs,
at the Closing Buyer shall (i) assume all Liabilities for accrued vacation, sick
leave and personal days attributable to Transferred Employees as of the Closing
Date and (ii) credit each Transferred Employee with the same number or amount of
accrued vacation, sick leave and personal days as each such Transferred Employee
had accrued as of the day before the Closing Date, provided that if Seller shall
be required to pay Transferred Employees the cash value of their accrued
vacation, sick leave or personal days described in clause (i), then (A) Buyer
shall reimburse Seller for the amount so paid by Seller and (B) Buyer may adjust
its obligations under clause (ii) proportionately.
(e) Effective as of the day following the Closing Date, Buyer shall
establish medical and dependent care flexible spending account plans ("Buyer's
Flexible Spending Account Plans") for the benefit of Transferred Employees which
will recognize the elections that such Transferred Employees had in effect for
purposes of the plan year in which the Closing Date occurs under the medical and
dependent care flexible spending account plans of Seller ("Seller's Flexible
Spending Account Plans"). As soon as practicable after the Closing Date, Buyer
shall cause Buyer's Flexible Spending Account Plans to assume the account
balances associated with the Transferred Employees' flexible spending accounts
under Seller's Flexible Spending Account Plans. After the Closing Date, Buyer's
Flexible Spending Account Plans shall be responsible for reimbursement of all
previously unreimbursed reimbursable medical and dependent care claims incurred
by Transferred Employees in the year in which the Closing Date occurs.
(f) Buyer shall have the sole responsibility for "continuation
coverage" benefits provided after the Closing Date for all Transferred Employees
and "qualified beneficiaries" of Transferred Employees for whom a "qualifying
event" occurs after the Closing Date, and for all "qualified beneficiaries" of
Transferred Employees for whom a "qualifying event" occurred before the Closing
Date. Seller shall have the sole responsibility for "continuation coverage"
benefits provided for all Employees of Seller and "qualified beneficiaries" of
Employees of Seller for whom a "qualifying event" has occurred on or prior to
the Closing Date, except to the extent provided in the preceding sentence.
Provision of "continuation coverage" to any Employee who declines on or as of
the Closing Date to become a Transferred Employee shall be the responsibility of
Seller. The terms "continuation coverage," "qualified beneficiaries" and
"qualifying event" shall have the meanings ascribed to them under section 4980B
of the Code and sections 601-608 of ERISA.
(g) (i) Effective as of the day following the Closing Date, Buyer
shall establish a defined benefit pension plan and trust qualified under
section 401(a) of the
42
Code and tax-exempt under section 501(a) of the Code ("Buyer's Pension
Plan") for the benefit of Transferred Employees and each former employee of
the Business (and any beneficiary thereof) who has an accrued benefit under
the Westinghouse Government Services Group Pension Plan ("Seller's Pension
Plan") as of the Closing Date that provides benefits that are substantially
comparable to the benefits provided under Seller's Pension Plan. Each
Transferred Employee participating in Seller's Pension Plan at the Closing
Date shall thereon become a participant in Buyer's Pension Plan. Buyer's
Pension Plan trust shall be capable of receiving employee contributions on
the first payroll date following the Closing Date. Buyer shall be
responsible for all contributions related to these Transferred Employees
and former employees accrued after the Closing Date. For purposes of
Transferred Union Employees, benefits provided under Buyer's Pension Plan
shall be provided in accordance with the IBEW CBA and the AWSE CBA, as
applicable. Buyer's Pension Plan may not be terminated, nor may the rate of
benefit accruals under Buyer's Pension Plan be reduced, prior to December
31, 2002 (or in the case of Transferred Union Employees, until the
expiration date of the applicable CBA).
(ii) Effective as of the day following the Closing Date, in accordance
with the provisions of this Section 6.3(g), Seller shall cause Seller's
Pension Plan to transfer to Buyer's Pension Plan, and Buyer shall cause
Buyer's Pension Plan to accept from Seller's Pension Plan a transfer of all
Liabilities for benefits (including ancillary benefits) accrued under
Seller's Pension Plan by the Transferred Employees and by former employees
of the Business (or any beneficiary thereof) who have an accrued benefit
under Seller's Pension Plan as of the Closing Date, provided, however, that
the acceptance of such transfer of Liabilities shall be expressly
conditioned on the completion of the initial asset transfer described in
Section 6.3(g)(iv) below. Upon the completion of such transfer of
Liabilities, the former employees of the Business (or any beneficiaries
thereof) who have an accrued benefit under Seller's Pension Plan as of the
Closing Date, shall become participants in Buyer's Pension Plan. Without
limiting the generality of the foregoing, following the Closing Date,
Buyer's Pension Plan shall provide to Transferred Employees and to former
employees of the Business (or any beneficiary thereof) who have an accrued
benefit under Seller's Pension Plan as of the Closing Date all benefits
(including ancillary benefits) earned by such individuals under Seller's
Pension Plan, up to the Closing Date, as well as any benefits accrued by
such individuals under Buyer's Pension Plan after the Closing Date.
(iii) Buyer shall cause the trustee of the trust established pursuant
to Buyer's Pension Plan to accept the transfers of assets described below
from the trust(s) established pursuant to Seller's Pension Plan in a total
amount determined in accordance with the remainder of this Section 6.3(g).
In no event shall the total amount so transferred be less than the amount
which is necessary to satisfy the requirements of section 414(l) of the
Code.
(iv) At such time as is permitted pursuant to Section 6.3(g)(ix),
Seller shall cause an initial transfer in cash of the assets from Seller's
Pension Plan to Buyer's Pension Plan, and Buyer shall cause Buyer's Pension
Plan to accept such transfer (the date on which such transfer occurs is
referred to as the "Initial Transfer Date"). The amount of such cash
transfer shall be at least 85% of the estimate of the "414(l)
43
Amount." The 414(l) Amount is defined as the assets allocated as of the
Closing Date with respect to the Transferred Employees and each former
employee of the Business (and any beneficiary thereof) who has an accrued
benefit under Seller's Pension Plan as of the Closing Date under the safe
harbor rules of section 414(l) of the Code. The value of benefit
liabilities taken into account for purposes of the calculation of the
414(l) Amount shall be determined using the traditional unit credit cost
method and the actuarial assumptions and procedures set forth on Annex 8
and based on the January 1, 2002 valuation of Seller's Pension Plan
completed by the enrolled actuary for Seller's Pension Plan ("Seller's
Actuary"), as projected to the Closing Date, in accordance with the
requirements of section 414(l) of the Code. For purposes of the calculation
of the 414(l) Amount, the value of the assets of Seller's Pension Plan
shall include (A) those assets allocated to Seller's Pension Plan under the
trust(s) established pursuant to Seller's Pension Plan at market value on
the Closing Date as determined by the Plan's Trustee, Mellon Bank, (B) any
receivable employer contributions attributable to the 2001 plan year that
were taken into account by Seller's Actuary for the purpose of determining
the charges and credits to the Funding Standard Account of Seller's Pension
Plan for the 2002 plan year, under section 412(b) of the Code, in the
January 1, 2002 actuarial valuation of Seller's Pension Plan, and that
remain unpaid as of the Closing Date, (C) any receivable employer
contributions attributable to the 2002 plan year that remain unpaid as of
the Closing Date, as determined in accordance with Section 6.3(g)(xi), and
(D) any assets to the extent required by Section 6.3(g)(xii). The
provisions of this Section 6.3(g)(iv) shall be subject to the provisions of
Section 6.3(g)(xv).
(v) As soon as administratively feasible following the initial transfer
of assets as described in Section 6.3(g)(iv), but in no event more than 180
days thereafter, Seller shall cause Seller's Actuary to determine
reasonably and in good faith the final 414(l) Amount and shall cause a
final transfer in cash of the assets from the trust(s) established pursuant
to Seller's Pension Plan to the trust established pursuant to Buyer's
Pension Plan. The amount of the final cash transfer of the assets shall be
the 414(l) Amount as adjusted for gains and losses pursuant to Section
6.3(g)(viii) and reduced by (A) the amount of the initial transfer pursuant
to Section 6.3(g)(iv), (B) the amount of any payments made to any
Transferred Employee or any former employee of the Business (or any
beneficiary thereof) who has an accrued benefit under Seller's Pension Plan
as of the Closing Date by Seller's Pension Plan pursuant to Section
6.3(g)(vi) and (C) any administrative expenses of Seller's Pension Plan
(including, without limitation, PBGC premiums attributable to the
Transferred Employees or former employees of the Business) paid or incurred
after the Closing Date. Seller shall be responsible for the payment of all
fees and expenses incurred by Seller or Seller's Plan in the calculation
and transfer of the 414(l) Amount to the extent such fees and expenses are
not paid from the assets of Seller's Pension Plan. Buyer shall be
responsible for the payment of all fees and expenses incurred by Buyer in
connection with this Section 6.3(g). Buyer shall be given reasonable access
to all of Seller's and Seller's Actuary's work papers and calculations used
in determining the 414(l) Amount, including all data underlying the
actuarial and other assumptions applied therein. The determination of the
414(l) Amount by Seller's Actuary shall be subject to review by the
enrolled actuary for Buyer's Pension Plan ("Buyer's Actuary"). Within 60
days following receipt by Buyer of the determination of the 414(l) Amount
by Seller's Actuary, Buyer shall deliver written notice (a "Dispute
44
Notice") to Seller of any dispute that Buyer has with respect to the
determination of the 414(l) Amount. In the event that Buyer does not
deliver a Dispute Notice to Seller within such 60-day period, the
determination of the 414(l) Amount by Seller's Actuary shall become final
and binding upon the parties. If Buyer does give a Dispute Notice within
such 60-day period, Buyer and Seller shall cause Buyer's Actuary and
Seller's Actuary, respectively, to negotiate in good faith to resolve such
dispute. If Buyer's Actuary and Seller's Actuary, notwithstanding such good
faith effort, shall fail to resolve such dispute within 30 days after Buyer
delivers its Dispute Notice, then Buyer and Seller shall jointly engage a
reputable actuarial firm acceptable to Buyer and Seller (the "Actuarial
Arbitration Firm") to resolve such dispute. All determinations made by the
Actuarial Arbitration Firm shall be final and binding on the parties. Buyer
and Seller and their respective pension plans shall share equally the fees
and expenses of the Actuarial Arbitration Firm.
(vi) From and after the Closing Date until the initial transfer of
assets pursuant to Section 6.3(g)(iv), any benefit payable to a Transferred
Employee or a former employee of the Business (or any beneficiary thereof)
who has an accrued benefit under Seller's Pension Plan as of the Closing
Date shall be paid and continue to be paid out of Seller's Pension Plan. On
and after the date of the initial transfer of assets under Section
6.3(g)(iv), any such benefits shall be paid from Buyer's Pension Plan.
(vii) The assets transferred pursuant to Section 6.3(g)(iv) and Section
6.3(g)(v) shall be in cash, and Buyer shall cause Buyer's Pension Plan to
accept such transfer.
(viii) All amounts to be transferred between the trust(s) established
pursuant to Seller's Pension Plan and the trust established pursuant to
Buyer's Pension Plan pursuant to this Section 6.3(g) shall include
investment gains or losses on the 414(l) Amount from the Closing Date, as
follows:
(A) With respect to the period from the Closing Date to the
Initial Transfer Date, investment gains and losses shall mean the
aggregate net investment experience of the transferor plan during such
period; and
(B) With respect to the period from the Initial Transfer Date to
and including the day preceding the final transfer of assets pursuant
to Section 6.3(g)(v) or, if applicable, the date of any payment made
pursuant to Section 6.3(g)(xiii), 6.3(g)(xiv) or 6.3(g)(xv), investment
gains and losses shall mean the interest credited during such period on
one-year LIBOR securities during the one-month period ending on the
last day of the month preceding the Closing Date ("the LIBOR Rate")
regardless of the actual investment experience of Seller's Pension
Plan.
(ix) Notwithstanding any provision of this Section 6.3(g) to the
contrary, except as otherwise provided in this Section 6.3(g)(ix), Seller's
obligation to cause each transfer of assets from Seller's Pension Plan to
Buyer's Pension Plan is subject to the receipt by Seller of, and Seller
shall have no obligation to cause any such transfer to occur unless Seller
has received: (A) evidence reasonably satisfactory to it that Buyer
45
has timely completed all Governmental Authority filings or submissions
needed in order for Buyer's Pension Plan to receive a transfer of assets
from Seller's Pension Plan; and (B)(I) a current and valid favorable IRS
determination letter with respect to Buyer's Pension Plan, or (II) a
representation from Buyer that Buyer's Pension Plan is intended to so
qualify and that Buyer will timely file an application for such favorable
determination letter with respect to Buyer's Pension Plan with the IRS and
make any and all necessary amendments on a retroactive basis to Buyer's
Pension Plan as are required by the IRS to obtain such favorable
determination. Notwithstanding the foregoing, Seller may, on and after the
30th day following the Closing Date, cause to occur the transfer described
in Section 6.3(g)(iv) without having received the materials described in
the preceding sentence, and any such transfer described in this sentence
shall not excuse Buyer from its obligations pursuant to the preceding
sentence.
(x) Subject to the terms of the Novation Agreements, any existing Cost
Accounting Standard prepayment credit, per Cost Accounting Standard
9904-412-30(a)(23), as of the Closing Date shall be allocated between
Buyer's Pension Plan and Seller's Pension Plan in a manner agreed upon by
Buyer and Seller, but not in conflict with Cost Accounting Standard
9904-413 requirements.
(xi) For the purposes of determining the 414(l) Amount, the assets of
Seller's Pension Plan shall include an amount equal to the excess, if any,
of (A) the product of (I) the minimum required employer contribution for
the 2002 plan year, as determined by Seller's Actuary in the actuarial
valuation of Seller's Pension Plan as of January 1, 2002 and (II) a
fraction, the numerator of which shall be the number of calendar months of
2002 ending prior to the Closing Date and the denominator of which shall be
12, over (B) the amount of employer contributions made to Seller's Pension
Plan in 2002, excluding any contributions that have been taken into account
as of the close of the 2001 plan year for purposes of section 412 of the
Code. For purposes of this Section 6.3(g)(xi), the term "minimum required
employer contribution" shall mean that amount required to be contributed,
or to be deemed to have been contributed, on or before December 31, 2002,
in order to avoid an "accumulated funding deficiency" within the meaning of
section 412(a) of the Code, determined without regard to any transaction
provided for in this Section 6.3(g), and determined without regard to the
contribution required pursuant to the next following sentence. In addition,
Seller shall contribute to Seller's Pension Plan on or prior to the Closing
Date an additional $2,900,000, which amount also shall be included in the
assets of Seller's Pension Plan for purposes of determining the 414(l)
Amount.
(xii) In the event that any of the $9,813,333 (representing the sum of
$8,000,000 and $1,813,333 listed by Seller in its plan assets section of
its disclosures pursuant to FAS 87 as of February 1, 2002 as "Rough
estimate of non-governmental top-up for WGS pension plan and executive
plan" and "Estimated receivable investment earnings" respectively) is
received by the trust established pursuant to Seller's Pension Plan prior
to the final 414(l) transfer contemplated in Section 6.3(g)(v), such amount
received up to a maximum of $9,813,333 shall be included in plan assets for
purposes of the calculation of the 414(l) Amount. Furthermore, provided
that the amount received into Seller's Pension Plan Trust exceeds
$9,813,333, an amount equal to the lesser of
46
(A) such excess or (B) interest on $9,813,333 at the LIBOR Rate from
February 1, 2002 to the date of receipt into Seller's Pension Plan Trust,
shall also be included in plan assets for purposes of the calculation of
the 414(l) Amount.
(xiii) In the event that an amount less than the $9,813,333 plus
interest contemplated in Section 6.3(g)(xii) is included in plan assets for
purposes of the calculation of the 414(l) Amount under Section 6.3(g)(v),
Buyer and Seller agree that such shortfall plus interest from February 1,
2002 at the LIBOR Rate at the time of payment shall be carried forward into
the future and identified as the "Top-Up Amount." To the extent that
Seller's Pension Plan receives contributions before September 1, 2003
related to collection of the "Rough estimate of non-governmental top-up for
WGS pension plan and executive plan" and "Estimated receivable investment
earnings," such received amounts will be applied towards satisfaction of
the Top-Up Amount when received. Promptly upon receipt of cash applicable
to the Top-Up Amount, Seller's Actuary will recalculate the 414(l) Amount
including such Top-Up Amount in the Assets of the Seller's Pension Plan,
and subtract from such amount the 414(l) Amount previously calculated.
Seller will pay or cause Seller's Pension Plan to transfer and Buyer will
cause Buyer's Pension Plan to receive such transfer as soon as practical
following its calculation. To the extent that Seller's Pension Plan does
not receive sufficient cash specified above to satisfy the Top-Up Amount by
September 1, 2003, any remaining Top-Up Amount will be deemed to expire and
will have no further effect on Seller's Pension Plan.
(xiv) In the event any Top-Up Amount expires on September 1, 2003
pursuant to Section 6.3(g)(xiii), Seller will pay to Buyer and Buyer will
simultaneously contribute to Buyer's Pension Plan an amount of cash equal
to the amount calculated by Seller's Actuary by recalculating the 414(l)
Amount including such expired Top-Up Amount in the Assets of Seller's
Pension Plan, and subtracting the 414(l) Amount previously calculated.
(xv) In no event shall the amount of the asset transfer from Seller's
Pension Plan to Buyer's Pension Plan exceed the amount that Seller's
Actuary determines as the maximum amount that may be transferred in
compliance with section 414(l) of the Code, provided, however, that any
such determination shall be subject to the dispute resolution procedures
set forth in Section 6.3(g)(v). In the event that no portion of the Top-Up
Amount expires in accordance with Section 6.3(g)(xiii) but, because of a
determination made in accordance with the first sentence of this Section
6.3(g)(xv), the amount of assets actually transferred from Seller's Pension
Plan to Buyer's Pension Plan in accordance with Sections 6.3(g)(iv),
6.3(g)(v) and 6.3(g)(xiii) is less than the recalculated 414(l) Amount
determined in accordance with Section 6.3(g)(xiii), then Seller shall pay
to Buyer on September 1, 2003, and Buyer shall simultaneously contribute to
Buyer's Pension Plan, an amount equal to the excess of such recalculated
414(l) Amount, adjusted for interest to September 1, 2003 in accordance
with Section 6.3(g)(viii), over the sum of the amounts transferred in
accordance with Sections 6.3(g)(iv), 6.3(g)(v) and 6.3(g)(xiii), each as
adjusted for interest to September 1, 2003 in accordance with Section
6.3(g)(viii). In the event that any portion of the Top-Up Amount expires in
accordance with Section 6.3(g)(xiii) and, because of a determination made
in accordance with the first
47
sentence of this Section 6.3(g)(xv), the sum of (A) the amount of assets
actually transferred from Seller's Pension Plan to Buyer's Pension Plan in
accordance with Sections 6.3(g)(iv), 6.3(g)(v) and 6.3(g)(xiii), plus (B)
the amount paid by Seller to Buyer pursuant to Section 6.3(g)(xiv) is less
than the recalculated 414(l) Amount determined in accordance with Section
6.3(g)(xiv), then, in addition to the amount required to be paid in
accordance with Section 6.3(g)(xiv), Seller shall pay to Buyer on September
1, 2003, and Buyer shall simultaneously contribute to Buyer's Pension Plan,
an amount equal to the excess of such recalculated 414(l) Amount, adjusted
for interest to September 1, 2003 in accordance with Section 6.3(g)(viii),
over the sum of (A) the amounts transferred in accordance with Sections
6.3(g)(iv), 6.3(g)(v) and 6.3(g)(xiii), each as adjusted for interest to
September 1, 2003 in accordance with Section 6.3(g)(viii), plus (B) the
amount paid by Seller to Buyer in accordance with Section 6.3(g)(xiv).
(h) Buyer shall establish a defined contribution pension plan qualified
under section 401(a) of the Code ("Buyer's 401(k) Plan") for the benefit of
Transferred Employees and each terminated employee of the Business (and any
beneficiary thereof) who has an accrued benefit under the Westinghouse
Government Services Group Savings Plan ("Seller's 401(k) Plan") as of the day
following the Closing Date that provides benefits that are substantially
comparable to the benefits provided under Seller's 401(k) Plan. For purposes of
Transferred Union Employees, benefits provided under Buyer's 401(k) Plan shall
be provided in accordance with the IBEW CBA and the AWSE CBA, as applicable. As
soon as administratively feasible following the Closing Date, Buyer shall cause
the trustee of the trust established pursuant to Buyer's 401(k) Plan to accept a
transfer of assets and Liabilities, including outstanding loan notes and an
in-kind transfer of amounts held in participant-directed brokerage accounts,
from the trust established pursuant to Seller's 401(k) Plan. Buyer's 401(k) Plan
may not be terminated nor may employer contributions thereunder be reduced prior
to December 31, 2002 (or in the case of Transferred Union Employees, until the
expiration date of the applicable CBA). Notwithstanding the foregoing, in no
event shall Seller cause the trustee of the trust established pursuant to
Seller's 401(k) Plan to transfer any assets and Liabilities to the trust
established pursuant to Buyer's 401(k) Plan until Seller has received from Buyer
(i) a current and valid favorable IRS determination letter with respect to
Buyer's 401(k) Plan or (ii) a representation from Buyer that Buyer will timely
file an application for such favorable determination letter with respect to
Buyer's 401(k) Plan with the IRS and make any and all necessary amendments on a
retroactive basis to Buyer's 401(k) Plan as are required by the IRS to obtain
such favorable determination. Notwithstanding the foregoing, Buyer may adopt and
become a participating employer in Seller's 401(k) Plan for the period beginning
with the Closing Date and ending December 31, 2002. During this period, the
Transferred Employees who remain employed by Buyer who would be eligible for
Seller's 401(k) Plan but for the transaction contemplated by this Agreement will
be entitled to participate in Seller's 401(k) Plan. Buyer will promptly pay to
Seller's 401(k) Plan or reimburse Seller for all before-tax, after-tax, and
matching contributions made on behalf of employees.
(i) Effective as of the day following the Closing Date, Buyer shall
assume all Liabilities under the Westinghouse Government Services Executive
Pension Plan ("Seller's SERP") related to the Transferred Employees and former
employees of the Business. Buyer shall establish a non-qualified supplemental
executive retirement plan ("Buyer's SERP") for the benefit of such Transferred
Employees and former employees of the Business. With respect to
48
benefits accrued after the Closing Date (if any), Buyer's SERP shall provide
benefits that are substantially comparable to the benefits provided to eligible
Transferred Employees and former employees of the Business under Seller's SERP
as of the Closing Date. Seller acknowledges that all benefit accruals under
Seller's SERP have been frozen since June 30, 2001, and that no additional
benefits have accrued thereunder since that date. Buyer agrees that vested
accrued benefits of Transferred Employees under Buyer's SERP may not be reduced.
(j)(i) Effective as of the day following the Closing Date, Buyer shall
assume all Liabilities under Seller's post-retirement welfare benefit plan
related to the Transferred Employees, former employees of the Business,
their spouses, and their dependents ("PRB Participants"), except as
otherwise provided in Section 6.3(j)(ii). Buyer shall establish a
post-retirement welfare benefit plan ("Buyer's PRB Plan") for the benefit
of PRB Participants that provides benefits that are substantially
comparable to the benefits provided under Seller's post-retirement welfare
plan . Buyer's PRB Plan will provide that the benefits payable under such
Plan will be offset by the benefits provided under the Seller's PRB Plan
(as described in Section 6.3(j)(ii) below). For purposes of Transferred
Union Employees, benefits provided under Buyer's PRB Plan shall be provided
in accordance with the IBEW CBA and the AWSE CBA. Benefits under Buyer's
PRB Plan may not be decreased or terminated prior to December 31, 2002 (or
in the case of Transferred Union Employees, until the expiration date of
the applicable CBA) (the "Benefits Maintenance Period").
(ii) Effective as of the day after the Closing Date, Seller shall
establish a new post-retirement welfare benefit plan, or amend Seller's
existing post-retirement welfare benefit plan ("Seller's PRB Plan"), to
provide post-retirement welfare benefit coverage, for each calendar year
thereafter, to PRB Participants. Such coverage shall be limited in each
calendar year to the lesser of (A) 30% of the benefits payable (on a cash
basis) in such year by Buyer's PRB Plan to PRB Participants determined
without regard to this Section 6.3(j)(ii) or (B) the amount shown for such
year in Column E of Annex 9, as such amount may be adjusted from time to
time pursuant to this subsection (j)(ii) (the "NGAP Schedule"). Seller may
amend Seller's PRB Plan after the Benefits Maintenance Period to conform to
the Buyer's PRB Plan as applicable to the Business after the Benefits
Maintenance Period. Seller's payment obligations under the Seller's PRB
Plan, as adjusted as described below, shall be the only obligation of
Seller to PRB Participants (or to Buyer) with respect to post-retirement
welfare benefits. Buyer shall indemnify Seller for any liability to PRB
Participants for all post-retirement welfare benefits other than
obligations of Seller under the Seller's PRB Plan as described in this
subsection (ii) and subsection (iii) below. The payment obligations of
Seller under the NGAP Schedule shall be actuarially adjusted downward in
the event of an "actuarial gain" (as defined below) arising from any of the
following events (a "FAS 106 Event") (whether applicable to some or all of
the PRB Participants): (A) a change in the benefit design (including but
not limited to any reduction of benefit levels or reduction or freezing of
the employer portion of benefit costs) or plan termination by Buyer of the
Buyer's PRB Plan applicable to PRB Participants (e.g., in the event of a
termination of the Buyer's PRB Plan, the NGAP Schedule shall be
reduced to zero), (B) an increase in the contribution rate paid (other than
an increase proportionate to an increase in overall plan costs or an
increase provided under Seller's PRB Plan as in existence immediately
before the Closing Date)
49
by PRB Participants instituted by Buyer under the Buyer's PRB Plan, (C) the
enactment of legislation which reduces or eliminates the requirement of
Buyer to provide retiree benefits under the Buyer's PRB Plan, (D) a sale or
other disposition of all or a portion of the assets related to the
Business, (E) a closing of a plant or plants by Buyer or (F) an event
triggering a notice requirement under WARN. Such adjustment shall be made
as of the January 1 following the calendar year in which the FAS 106 Event
occurs. Actuarial gain for purposes of this Section 6.3(j)(ii) shall be
determined by Seller's Actuary, on the basis of the actuarial assumptions
used by Seller for the determination of its "accumulated postretirement
benefit obligation" (as such term is defined) under FAS 106 for Seller's
fiscal year that includes the date of adjustment, but such determination
shall be subject to the dispute resolution procedures described in Section
6.3(g)(v), which procedures shall be applied by substituting "determination
of actuarial gain" for "determination of the 414(l) Amount" in each place
that it appears. Such gain shall be determined with respect to the Seller's
PRB Plan as if the FAS 106 Event applied to the Seller's PRB Plan to the
same extent and as of the same date it applied to the Buyer's PRB Plan and
shall be measured by the percentage change between the present value, as
calculated pursuant to FAS 106, of post-retirement benefit obligations with
respect to PRB Participants under Seller's PRB Plan immediately before and
immediately after the FAS 106 Event. If the FAS 106 Event results in a
decrease in present value, an actuarial gain shall have occurred, and the
NGAP Schedule (as subsequently modified pursuant to this Section
6.3(j)(ii)) (the "Existing Schedule") shall be multiplied by such
percentage change to create a new NGAP Schedule (the "Revised Schedule") to
be used on a prospective basis. In no event shall any actuarial losses in
connection with the Buyer's PRB Plan (other than arising in connection with
a FAS 106 Event which results in a net actuarial gain) offset any actuarial
gains as calculated under this Section 6.3(j)(ii). In no event shall the
NGAP Schedule ever be increased, except to the extent required by a final
non-appealable court order or as otherwise agreed to by the parties, but in
any event the NGAP Schedule shall not be increased above the amount as in
effect immediately prior to the change which triggered the reduction in
question. Any payment made by Seller hereunder that exceeds a payment
obligation for any year based on a Revised Schedule shall be utilized to
reduce a future payment obligation under the Revised Schedule.
(iii) Buyer and Seller shall cooperate with each other so that, to the
maximum extent practicable, benefits under the Seller's PRB Plan and the
Buyer's PRB Plan as applicable to PRB Participants shall be paid and
administered by Buyer or through the third-party service provider to be
selected by Buyer, subject to consent of Seller, not to be unreasonably
withheld, and Seller shall reimburse Buyer promptly on an annual basis upon
receipt of an invoice for such benefit payments, subject to the limits
provided in Section 6.3(j)(ii) above. Any expenses allocable to Seller
under such arrangement (including actuarial fees and expenses) shall reduce
Seller's payment obligation under the Seller's PRB Plan as reflected by the
NGAP Schedule on a dollar-for-dollar basis. Buyer shall notify Seller
within 30 days after any FAS 106 Event and shall cooperate with Seller in
providing data and other necessary information to determine any adjustments
in the NGAP Schedule.
(k) Buyer shall establish a severance plan or plans for the benefit of
Transferred Employees that provides benefits that are no less than the benefits
that would have
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been payable to Transferred Employees as of the Closing Date under Seller's
severance plans. For purposes of Transferred Union Employees, benefits under
Buyer's severance plan or plans shall be provided in accordance with the IBEW
CBA and AWSE CBA. Benefits under Buyer's severance plan or plans may not be
decreased nor terminated prior to December 31, 2002 (or in the case of
Transferred Union Employees, until the expiration date of the applicable CBA).
(l) With respect to workers' compensation claims, from and after the
Closing Date, (i) Seller shall remain solely responsible for all workers'
compensation claims of any Transferred Employee that relate entirely to an
accident that occurred or injury that was identifiably sustained on or prior to
the Closing Date, regardless of whether such claims are filed by such
Transferred Employee before or after the Closing Date and (ii) Buyer shall
assume and become solely responsible for all other workers' compensation claims
of any Transferred Employee (including (A) injuries identifiably sustained by
Transferred Employees after the Closing Date that are aggravations or reinjuries
of injuries or illnesses that were sustained on or before the Closing Date and
(B) treatment after the Closing Date required by Transferred Employees following
complete recovery from injuries sustained on or before the Closing Date).
(m) Seller shall use reasonable best efforts to furnish to Buyer after
the date hereof a list of former employees of the Business for which Buyer shall
be responsible pursuant to Section 6.3(j).
6.4 WARN Liability. Buyer shall be responsible for any Liabilities
under WARN for the Transferred Employees to the extent WARN thresholds are
exceeded as a result of action taken by Buyer after the Closing Date with
respect to the Transferred Employees; provided, however, that Seller shall be
responsible for any Liabilities to the Employees under WARN that result entirely
from actions taken by Seller prior to the Closing Date.
6.5 Employee Termination. Buyer will be solely responsible for, and
will indemnify, defend and hold harmless each Seller Indemnitee from and
against, any and all Losses arising out of or in connection with an actual or
alleged termination of employment (or constructive termination of employment) of
any of the Transferred Employees by Buyer after the Closing Date, or with
respect to the Employees on leave and receiving workers' compensation benefits
or long-term disability benefits, their applicable hire date, and/or in
connection with the closing of any facility by Buyer on or after the Closing
Date. In the event that any such claim, demand or cause of action is asserted
against Seller, Buyer's related indemnification obligations will be subject to
the general indemnification provisions set forth in ARTICLE VIII. Any provision
of this Section 6.5 to the contrary notwithstanding, Buyer will in no event be
liable to Seller for the claims of any Employee who is not a Transferred
Employee except with respect to claims premised on (a) any action or inaction of
Buyer on or after the Closing Date and/or (b) Buyer's failure to extend to such
Employee a good faith offer of employment, as contemplated by the terms of this
Agreement.
6.6 No Third Party Beneficiaries. The provisions of ARTICLE VI shall
not be construed as being for the benefit for any Person other than the parties
hereto, and shall not be enforceable by Persons other than such parties
(including the Transferred Union Employees and Transferred Non-Union Employees).
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Each Party's Obligations. The respective obligation
of each party to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction (or waiver, if permissible) at or prior to the
Closing of the following conditions:
(a) HSR Act. The waiting period (including any extensions thereof)
applicable to the consummation of the transactions contemplated by this
Agreement required pursuant to the HSR Act shall have expired or been
terminated.
(b) No Injunction or Restraints. There shall not be in effect any Law
which makes illegal or enjoins or prevents the consummation of the transactions
contemplated by this Agreement.
(c) NRC Arrangements. Seller and Buyer shall have entered into an
agreement or made arrangements satisfactory to Seller to comport with the
statements, representations and commitments set forth in correspondence dated
October 18, 2002 and October 23, 2002 among Seller, Buyer and the NRC.
7.2 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions provided for by this Agreement is subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Buyer:
(a) Representations and Warranties. (i) All of Seller's representations
and warranties in this Agreement (considered collectively), and each of
these representations and warranties (considered individually), shall have
been accurate in all material respects on the date of this Agreement, and
shall be accurate in all material respects as of the time of the Closing as
if then made.
(ii) Each of the representations and warranties in this Agreement that
contains an express materiality or Material Adverse Effect qualification,
shall have been accurate in all respects on the date of this Agreement, and
shall be accurate in all respects as of the time of the Closing as if then
made.
(b) Covenants. All covenants and agreements of Seller required to be
performed or complied with on or prior to the Closing (considered collectively),
and each such covenant and agreement (considered individually), shall have been
duly performed and complied with in all material respects.
(c) Closing Deliveries. Seller shall have delivered, or caused to be
delivered, to Buyer, all of the deliverables required by Section 2.6(b).
(d) Post-Closing Benefits Arrangements. The Buyer shall have entered
into a transition services agreement providing for the continuation after the
Closing Date of payroll and benefit plan administration services furnished to
the Division by Seller, independent contractors of Seller or WEC on the date
hereof.
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7.3 Conditions to Seller's Obligations. The obligation of Seller to
consummate the transactions provided for by this Agreement is subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Seller:
(a) Representations and Warranties. Each of the representations and
warranties of Buyer made in ARTICLE IV shall be true and correct in all material
respects when made and as of the Closing Date, with the same effect as though
those representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that speak as of a specific date, in
which case the representation or warranty only need be true and correct as of
the specified date).
(b) Covenants. All covenants and agreements of Buyer required to be
performed on or prior to the Closing Date shall have been duly performed in all
material respects.
(c) Closing Deliveries. Buyer shall have delivered, or caused to be
delivered, to Seller, all of the deliverables required by Section 2.6(c).
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations, Warranties, Covenants and Agreements.
(a) The representations and warranties of Seller contained in ARTICLE
III and the representations and warranties of Buyer contained in ARTICLE IV are
made only as of the date of this Agreement and as of the Closing Date. The
representations and warranties of Seller shall expire for all purposes at 12:01
a.m., Eastern Standard Time, on the date that is 18 months following the Closing
Date, except that Seller's representations and warranties contained in (i)
Sections 3.15 and 3.25 shall survive until the third anniversary of the Closing
Date, (ii) Section 3.16 shall survive until the fifth anniversary of the Closing
Date and (iii) Sections 3.1, 3.2, 3.7 and 3.17(a) (with respect only to clause
(i) of the second sentence thereof) shall not expire. The covenants and
agreements contained in this Agreement, except as otherwise expressly provided
herein, shall survive the Closing in accordance with their terms; provided,
however, that the covenants and agreements contained in Sections 5.1, 5.2(a),
5.3(a) and 5.3(b) shall terminate on the Closing Date. Without limiting the
foregoing, except solely as and to the extent provided in Sections 8.1(b) and
8.2, from and after the expiration of any such representation, warranty,
covenant or agreement of Seller, such representation, warranty, covenant or
agreement shall be of no further force or effect, and Buyer shall not, and shall
cause each other Buyer Indemnitee not to, assert any claim or bring any legal
action, suit or proceeding based upon any inaccuracy in or breach of, or any
breach of any obligation in respect of, or any other claim with respect to, such
representation, warranty, covenant or agreement.
(b) All claims for indemnification under Section 8.2 with respect to
the representations and warranties contained herein must be asserted on or prior
to the date of expiration of such representations and warranties set forth in
Section 8.1(a), by the transmittal of written notice to Seller on or prior to
such date of expiration in accordance with Section 8.3(a),
53
and all legal actions, suits or proceedings with respect to such claims must be
brought within 60 days after such date of expiration.
8.2 Indemnification. Subject to the terms, conditions and limitations
set forth in this ARTICLE VIII, from and after the Closing:
(a) Seller shall indemnify, defend and hold harmless Buyer and its
Affiliates (each, a "Buyer Indemnitee") from and against any Losses actually
incurred or sustained by any Buyer Indemnitee arising out of or resulting from:
(i) any breach of or inaccuracy in any representation or warranty made
by Seller in this Agreement;
(ii) the failure to perform any covenant or agreement of Seller set
forth in this Agreement or any of the Ancillary Agreements;
(iii) any Excluded Liability;
(iv) the failure to comply with the Laws of any jurisdiction relating
to bulk transfers which may be applicable in connection with the Transfer
of the Purchased Assets to Buyer;
(v) all Liabilities for Taxes payable by Seller pursuant to Section
5.10(a); and
(vi) any claim asserted by CIBC World Markets Corp. in connection with
the transactions contemplated herein.
(b) Buyer shall indemnify, defend and hold harmless Seller, its
Affiliates, and each of the directors, officers, employees and agents of Seller
and such Affiliates (each, a "Seller Indemnitee") from and against any Losses
actually incurred or sustained by any Seller Indemnitee arising out of or
resulting from:
(i) any breach of or inaccuracy in any representation or warranty of
Buyer in this Agreement;
(ii) the failure to perform any covenant or agreement of Buyer set
forth in this Agreement or any of the Ancillary Agreements in any material
respect;
(iii) any Assumed Liability;
(iv) any Third Party Claims (including claims, actions, suits or
proceedings of Governmental Authorities) against any Seller Indemnitee
arising under Environmental Laws to the extent such claims arise as a
consequence of any contribution to or exacerbation of conditions on or
under the real property at the Cheswick Facility or the Mount Pleasant
Facility by Buyer or any of its Affiliates after the Closing Date; and
(v) any claims with respect to benefit payments or account balances
paid or to be paid by Buyer's Pension Plan, Buyer's 401(k) Plan, Buyer's
SERP or Buyer's PRB
54
Plan, to any Transferred Employee or former employee (or any dependent or
beneficiary of any such Transferred Employee or former employee) of the
Business who was a participant in Seller's Pension Plan, Seller's 401(k)
Plan, Seller's SERP or Seller's PRB Plan, and on whose behalf assets,
account balances or Liabilities were transferred to Buyer's Pension Plan,
Buyer's 401(k) Plan, Buyer's SERP or Buyer's PRB Plan pursuant to Section
6.3.
8.3 Indemnification Procedures. All claims for indemnification under
this ARTICLE VIII shall be asserted and resolved as set forth in this Section
8.3.
(a) Notice. In the event that (i) any Third Party Claim is made or
commenced against any Indemnitee that (if prosecuted successfully) would be, or
such Indemnitee discovers facts that such Indemnitee or its Related Party
believes would otherwise be, a matter for which such Indemnitee is entitled to
indemnification under this ARTICLE VIII and (ii) a claim for indemnification
under this ARTICLE VIII (an "Indemnification Claim") is to be made against the
party hereto from which indemnification is sought (the "Indemnifying Party"),
such Indemnitee or Related Party shall promptly deliver a written notice to such
Indemnifying Party requesting such indemnification and specifying in reasonable
detail the basis on which indemnification is sought. Such notice, if related to
a Third Party Claim, shall contain or be accompanied by such other material
information as such Indemnitee and such Related Party shall have concerning such
Third Party Claim. Such notice shall be so given promptly after such Related
Party has actual knowledge of any Third Party Claim or such facts, provided that
any failure or delay in giving such notice as so provided shall not relieve such
Indemnifying Party of its indemnification and other obligations under this
ARTICLE VIII except to the extent that such failure or delay results in a
failure or delay of actual notice to such Indemnifying Party and such
Indemnifying Party is thereby prejudiced or damaged.
(b) Indemnification Disputes. If the Indemnifying Party notifies such
Indemnitee or Related Party that such Indemnifying Party believes that it is not
required to indemnify such Indemnified Party in respect of all or part of any
such Indemnification Claim, at the request of such Indemnifying Party or such
Related Party, such Indemnifying Party and such Related Party shall meet to
discuss the Indemnification Claim made and such Indemnifying Party's reason for
such belief. Such Indemnifying Party and such Related Party shall use their
commercially reasonable efforts to attempt in good faith to resolve any dispute
remaining after such meeting within 45 days from the date such Indemnified Party
delivers such notice. Such Indemnified Party or Related Party shall not commence
any legal action, suit or proceeding with respect to such Indemnification Claim
prior to the expiration of such 45-day period; provided the Indemnitee may
commence such legal action, suit or other proceeding during such period if
necessary to prevent such Indemnification Claim from being barred under any
applicable statute of limitations. If such Indemnifying Party and such Related
Party are unable to resolve such dispute as to such Indemnification Claim to
their mutual satisfaction, such Indemnitee or Related Party must commence any
legal action, suit or other proceeding against such Indemnifying Party with
respect to such Indemnification Claim on or prior to the date that is 180 days
from the date the Indemnifying Party delivers such notice.
(c) Defense of Third Party Claims. (i) In the event that any Third
Party Claim is made or commenced and an Indemnification Claim is delivered
hereunder, the
55
Indemnifying Party shall have 30 days from receipt of the Indemnification
Claim (the "Notice Period") to notify the Indemnitee whether or not the
Indemnifying Party will elect to assume the defense and management of such
Third Party Claim, and prior to such time as it has been notified by the
Indemnifying Party as to its intention, the Indemnitee shall take all
reasonable actions to preserve its defenses. Election of the Indemnifying
Party to defend and manage a Third Party Claim shall not be construed to be
an admission as to liability for indemnification hereunder. All costs and
expenses incurred by the Indemnifying Party in defending and managing such
Third Party Claim shall be a Liability of, and shall be paid by, the
Indemnifying Party; provided, however, that the amount of such costs and
expenses that shall be a Liability of the Indemnifying Party hereunder
shall be subject to the limitations set forth in Section 8.4. In the event
that the Indemnifying Party notifies the Indemnitee within the Notice
Period of its election to assume such defense and management, then such
Indemnitee shall permit such Indemnifying Party to assume and control such
defense and management, at such Indemnifying Party's expense, and such
Indemnifying Party shall not be liable to such Indemnitee for any legal or
other expenses subsequently incurred by such Indemnitee in connection with
the defense or management of such Third Party Claim (other than reasonable
out-of-pocket costs of investigation). If such Indemnitee desires to
participate in any such defense and management, it may do so at its sole
cost and expense. The Indemnitee shall not settle, admit or in any other
way materially prejudice a Third Party Claim for which it is indemnified by
the Indemnifying Party without the written consent of the Indemnifying
Party. Notwithstanding the foregoing, the Indemnitee shall have the sole
right to defend, settle or compromise any Third Party Claim with respect to
which it has agreed in writing to waive its right to indemnification
pursuant to this Agreement.
(ii) If the Indemnifying Party elects not to defend the Indemnitee
against such Third Party Claim, then the Indemnitee shall act reasonably
and in accordance with its good faith business judgment with respect
thereto, and may only consent to the entry of any judgment upon, or settle
or compromise, any such Third Party Claim with the prior written consent of
the Indemnifying Party. The amount required to be paid in respect of any
such Third Party Claim, or, if the same be contested by the Indemnitee,
then that portion thereof as to which such defense is unsuccessful (and the
reasonable costs and expenses pertaining to such defense) shall be the
Liability of the Indemnifying Party hereunder, subject to the limitations
set forth in Section 8.4. If the Indemnifying Party has elected to assume
the defense and management of such Third Party Claim pursuant to Section
8.3(c)(i), such Indemnifying Party shall be entitled to consent to the
entry of any judgment upon, or enter into any settlement or compromise of,
such Third Party Claim, which judgment, settlement or compromise shall be
binding upon such Indemnitee without such Indemnitee's consent, provided
that the Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement or compromise that provides for injunctive or
non-monetary relief affecting such Indemnitee or that does not include as
an unconditional term thereof the giving by each claimant or plaintiff to
such Indemnitee of a release of all liability with respect to such Third
Party Claim, without the prior written consent of such Indemnitee, which
consent shall not be unreasonably withheld or delayed.
56
(iii) Such Indemnitee and such Related Party, on the one hand, and such
Indemnifying Party, on the other hand, shall cooperate with each other in
all reasonable respects in connection with the defense and management of
any Third Party Claim, and render such assistance to each other as may be
reasonably requested in order to ensure the proper and adequate defense and
management thereof, including making available records relating to such
Third Party Claim and furnishing, without expense to such Indemnifying
Party, such employees of the Indemnitee and such Related Party as may be
reasonably necessary for the preparation of such defense and management or
for testimony as witnesses.
(d) Notwithstanding the foregoing provisions of this ARTICLE VIII, the
parties agree that Buyer shall assume the defense and management of the EdF
Claim, at Seller's expense. Buyer, as Indemnitee, shall act reasonably and in
accordance with its good faith business judgment with respect to the EdF Claim,
and may only consent to the entry of any judgment upon, settle, compromise,
admit or in any other way materially prejudice the EdF Claim with the prior
written consent of Seller (which consent shall not be unreasonably withheld).
The amount required to be paid in respect of the EdF Claim, or, if the same be
contested by Buyer, then that portion thereof as to which such defense is
unsuccessful (and the reasonable costs and expenses pertaining to such defense)
shall be the Liability of Seller, subject to the limitations set forth in
Section 8.4. Seller shall have the right to participate in the defense and
management of the EdF Claim at its sole cost and expense. Except as modified by
this Section 8.3(d), the other provisions of this ARTICLE VIII shall apply with
respect to the EdF Claim.
8.4 Limitation of Liability.
(a) Notwithstanding anything in this Agreement to the contrary, the
liability of the Indemnifying Party to indemnify the Indemnitee against any
Losses shall be limited to claims for indemnification with respect to which the
Indemnitee has given to the Indemnifying Party written notice thereof at or
prior to the survival date as set forth in Section 8.1. The written notice
referred to in the previous sentence must state the basis of the claim for
indemnification with reasonable specificity, including the Section or Sections
of this Agreement alleged to have been breached, or the Section or Sections of
this Agreement where the Liability for which indemnification is sought is
assigned to or assumed by the Indemnifying Party.
(b) In no event shall Seller be liable for indemnification pursuant to
Section 8.2(a)(i), 8.2(a)(ii) or 8.2(a)(iv) (excluding, for this purpose,
liability for indemnification for breach of Seller's covenants in Sections 5.8
and 5.10) unless and until the aggregate of all Losses which are incurred or
suffered by Buyer exceeds $250,000, in which case Buyer shall only be entitled
to indemnification for such Losses in excess of $250,000, provided that: (i) the
foregoing threshold shall not apply to claims made under Section 8.2(a)(i) for
Environmental Losses incurred by Buyer in respect of any Environmental Condition
that arose by reason of a breach of a representation in Section 3.16; (ii)
Seller shall not be required to make payments for indemnification pursuant to
Section 8.2(a) in an aggregate amount in excess of $20,000,000; and (iii) the
foregoing limitations shall not apply to any Losses arising by reason of fraud
committed by Seller.
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(c) Notwithstanding anything in this Agreement to the contrary, neither
party hereto, as an Indemnifying Party hereunder, shall be liable for any Losses
to the extent that the Losses suffered by any Indemnitee result from or have
been caused by, contributed to or exacerbated by any action or omission by any
Indemnitee (or any of its affiliated Indemnitees) or to the extent that any
Indemnitee (or any of its affiliated Indemnitees) fails to take reasonable and
prudent action to mitigate any such Losses.
(d) In calculating amounts payable to an Indemnitee, the amount of the
indemnified Losses shall be (i) computed net of (A) payments that the Indemnitee
is entitled to receive from any insurer or other Person with respect to such
Losses, (B) any prior or subsequent recovery by the Indemnitee from any Person
with respect to such Losses and (C) any net Tax benefit to the Indemnitee with
respect to such Losses and (ii) determined after giving effect to any reserves
or accruals on the books of the Business as of the Closing Date in respect of
such matter if and to the extent such reserves or accruals were reflected in the
Working Capital Statement or the Management Balance Sheet.
(e) Neither party shall be entitled to recover any indemnification
payment or other amounts due from the other party hereunder by retaining and
setting off the amounts (whether or not such amounts are liquidated or reduced
to judgment) against any amounts due or to become due from such party hereunder
or under any document delivered pursuant hereto or in connection herewith.
8.5 Special Indemnity Provisions Relating to Environmental Conditions.
(a) Notwithstanding the foregoing provisions of this ARTICLE VIII,
Sections 8.5(b), 8.5(c) and 8.5(d) shall govern the indemnification for the
Environmental Losses that may be incurred by Buyer in respect of Environmental
Conditions identified in such Sections, provided that Seller shall have no
liability under this Agreement for Environmental Conditions associated with
Building 5B at the Cheswick Facility, which Environmental Conditions shall be
assumed by, and be the sole responsibility of, Buyer pursuant to Section
2.2(a)(v).
(b) Seller shall be responsible for and shall indemnify the Buyer
Indemnitees for Environmental Losses arising directly from the Release of
Hazardous Substances from the former gasoline underground storage tanks located
in proximity to Building 2 of the Cheswick Facility (as depicted in Annex 10)
detected in the samples collected by Xxxxxxxx Xxxxx Consultants, Inc. (the
"Consultant") on October 1-2, 2002 (the "Gasoline UST Release"), as well as the
Release of those Hazardous Substances detected in the samples collected as part
of, and reported in, the soil-gas vapor survey conducted by Beacon Environmental
Services, Inc. for the Consultant during October 7 - 10, 2002 ("Other Substance
Discovery"). For the avoidance of doubt, Seller shall not be responsible under
this Section 8.5(b) for Hazardous Substances not detected in such soil-gas vapor
survey or any later discovered Hazardous Substance which is not continuous to
the areas in which those Hazardous Substances were detected during or as part of
the soil-gas vapor survey. The response to the Gasoline UST Release and Other
Substance Discovery shall be performed to the extent required in order to obtain
a release of liability with respect to such matters under the Pennsylvania Land
Recycling Program ("Act 2").
58
(c) Buyer shall be responsible for, and shall indemnify, defend and
hold harmless the Seller Indemnitees from and against, any Environmental Losses
that arise out of or in connection with the Ball Field, including the cost and
expenses associated with conducting the Ball Field Investigation, up to an
aggregate of $1,300,000. Thereafter, Seller shall be responsible for, and shall
indemnify, defend and hold harmless the Buyer Indemnitees from and against, any
Environmental Losses that arise out of or in connection with the Ball Field.
Neither Buyer nor Seller shall conduct or cause to be conducted the Ball Field
Investigation, or any corrective action, clean-up, removal, containment or other
remediation in connection with any Environmental Condition relating to the Ball
Field, unless and until so required by any Governmental Authority having
jurisdiction to do so.
(d) With respect to any Environmental Condition at the Cheswick
Facility or the Mount Pleasant Facility other than any Environmental Condition
associated with (i) the Gasoline UST Release, (ii) Other Substance Discovery,
(iii) the Ball Field or (iv) Building 5B at the Cheswick Facility, Buyer, on the
one hand, and Seller, on the other hand, shall be responsible for, and shall
indemnify, defend and hold harmless the Seller Indemnitees and the Buyer
Indemnitees, respectively, from and against, any Environmental Losses in
accordance with the following schedule: (A) Buyer shall be responsible for, and
shall indemnify, defend and hold harmless the Seller Indemnitees from and
against, Environmental Losses up to the first $5,000,000; (B) Seller shall be
responsible for, and shall indemnify, defend and hold harmless the Buyer
Indemnitees from and against, Environmental Losses in excess of such amount up
to $3,000,000; (C) to the extent that Environmental Losses exceed $8,000,000,
Buyer, on the one hand, and Seller, on the other hand, shall be responsible for,
and shall indemnify, defend and hold harmless the Seller Indemnitees and the
Buyer Indemnitees, respectively, from and against, 75% and 25%, respectively, of
such Environmental Losses up to $2,000,000; and (D) any Environmental Losses in
excess of $10,000,000 shall be the sole responsibility of Buyer, and Buyer shall
indemnify, defend and hold harmless the Seller Indemnitees from and against, any
such Environmental Losses. Seller's responsibility for and indemnification of
Environmental Losses under this Section 8.5(d) shall be reduced by 50% of the
amount of Environmental Losses Seller is responsible for relating to the
Gasoline UST Release and Other Substance Discovery under Section 8.5(b). For the
purposes of this Agreement, the term "Environmental Losses" shall mean any and
all Losses arising from an Environmental Condition.
(e) No claim for indemnification may be made against Seller pursuant to
(i) Section 8.5(c), more than 10 years after the Closing Date and (ii) Section
8.5(b) or 8.5(d), more than five years after the Closing Date, provided that if
any claim for indemnification under this Section 8.5 shall have been made prior
to the expiration date of the applicable indemnity period provided by this
Section 8.5(e) and such claim shall not have been finally resolved at such date,
such claim shall in no way be prejudiced or impaired by the passage of time, and
the obligations of Seller under this Section 8.5 with respect to such claim
shall continue to survive and shall remain a basis for indemnification until
such claim is finally resolved.
(f) Buyer and Seller further agree as follows: (i) Environmental Losses
shall be limited to Losses directly related to responding to Environmental
Conditions only as required under Environmental Laws as applicable to
industrial uses of property or otherwise for continued use of the property
in the Business as conducted on the Closing Date.
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(ii) Buyer shall exercise control of the response to any Environmental
Condition that is the subject of a claim under this Section 8.5, except
with respect to the response to the Gasoline UST Release and Other
Substance Discovery that is the subject of Section 8.5(b) over which Seller
shall exercise control and with respect to which Buyer shall not
communicate with any Governmental Authority or other third party without
Seller's consent. Buyer shall provide reasonable written notice to Seller
prior to undertaking any activities that may give rise to Environmental
Losses for which Seller is or may be responsible in whole or in part
hereunder. Buyer shall keep Seller regularly advised of and, at Seller's
request, furnish copies of, any studies, reports, correspondence or other
significant documents relating to the progress of any project undertaken by
Buyer or Buyer's representatives that may give rise to Environmental Losses
for which Seller is or may be responsible in whole or in part hereunder.
Prior to their submission, Seller shall be provided reasonable notice and
opportunity to comment upon Buyer's submissions to any Governmental
Authority relating to Environmental Conditions for which Seller is or may
be responsible in whole or in part hereunder, or the response thereto, and
shall be provided an opportunity to participate in any meetings with any
Governmental Authority relating thereto. Buyer shall take all commercially
reasonable measures to reduce the costs of any required remediation for
which Seller is or may be responsible in whole or in part hereunder. Buyer
shall provide Seller with documents evidencing any Environmental Losses
incurred by Buyer which are the subject of this Section 8.5, including but
not limited to copies of invoices from contractors or vendors specifying
the services or goods provided by such parties. To the extent that Buyer
does not keep Seller reasonably apprised of activities that may give rise
to Environmental Losses which are the subject of this Section 8.5 and does
not limit costs as described above, and Seller's interest is materially and
adversely affected thereby, any claim by Buyer for indemnification under
this Section 8.5 shall be of no force and effect.
(iii) With respect to any Environmental Condition which is the subject
of this Section 8.5, Seller or Seller's representative at Seller's cost
shall have the right to inspect, sample or monitor the property where such
Environmental Condition exists and Buyer hereby grants Seller or Seller's
representative access to such property in order to conduct such inspection,
sampling or monitoring.
(iv) In no event will Buyer effect remediation of any Environmental
Condition for which Seller is or may be responsible in whole or in part
hereunder unless and until so required by any Governmental Authority.
(v) Buyer hereby grants Seller or Seller's representative access to the
Cheswick Facility as may be necessary to conduct any response to the
Gasoline UST Release and Other Substance Discovery. Buyer agrees that, if
it will facilitate Seller's obtaining a release of liability under Act 2
with respect to the Gasoline UST Release or Other Substance Discovery, it
will establish an appropriate deed restriction on the Cheswick Facility
prohibiting the potable use of groundwater under the property and
restricting future use of the property to an industrial use. Buyer further
agrees that, if allowed to by the appropriate Governmental Authority,
Seller may landfarm any soils excavated in response to the Gasoline UST
Release and Other Substance Discovery at
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appropriate locations at the Cheswick Facility provided that such
landfarming does not unreasonably interfere with the operation of the
Business at the Cheswick Facility.
(vi) Notwithstanding any other provision of this Agreement, nothing in
this Section 8.5 shall limit or impair Seller's rights to make or file
claims with or commence a Proceeding against third Persons after the
Closing in respect of Environmental Losses suffered or incurred by Seller
in respect of the Purchased Assets or the Business.
8.6 Other Matters.
(a) Other than as expressly set forth herein, if the Closing shall
occur, the indemnification provisions of this ARTICLE VIII shall be the sole and
exclusive remedy of Seller and Buyer for any breach of any covenants,
representations or warranties made by the other party in this Agreement (other
than for claims based upon fraud) and each party hereby waives all statutory,
common law and other claims with respect thereto, other than claims for
indemnification pursuant to this ARTICLE VIII.
(b) There shall be no indemnification by Seller or Buyer for any
special, incidental, punitive or consequential damages.
(c) Upon making any payment to an Indemnitee for any Indemnification
Claim pursuant to this ARTICLE VIII, the Indemnifying Party shall be subrogated,
to the extent of such payment, to any rights which the Indemnitee or its
Affiliates may have against any other Persons with respect to the subject matter
underlying such Indemnification Claim and the Indemnitee shall take such actions
as the Indemnifying Party may reasonably require to perfect such subrogation or
to pursue such rights against such other Persons as the Indemnitee or its
Affiliates may have.
(d) If and to the extent that prior to the Closing a party has actual
knowledge of the breach of or inaccuracy in or of facts constituting the breach
of or inaccuracy in a representation, warranty or covenant made by the other
party, and the Closing nonetheless occurs, then such party shall not have the
right to assert an Indemnification Claim in respect of such breach or
inaccuracy, and the party against whom such Indemnification Claim could
otherwise be asserted shall have no liability or obligation in respect thereof.
(e) Any indemnification payment made hereunder shall be treated as an
adjustment to the Purchase Price hereunder.
(f) In the event that the Buyer Guarantor or the Seller Guarantor (as
each such term is defined in the Guaranty Agreement) shall become obligated in
accordance with the terms and conditions of the Guaranty Agreement to make a
payment under such Guaranty Agreement and shall satisfy its obligations
thereunder with respect to any underlying claim of Seller or Buyer hereunder,
each of Seller and Buyer agrees that such payment, when made, shall discharge
the underlying claim for all purposes of this Agreement.
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ARTICLE IX
TERMINATION
9.1 Termination. By written notice given prior to or at the Closing,
subject to the provisions of Section 9.2, this Agreement may be terminated as
follows:
(a) the written agreement of Seller and Buyer;
(b) either Seller or Buyer if the Closing shall not have occurred on or
before March 31, 2003 or such later date as the parties may agree upon, unless
the party seeking to terminate is in material breach of its obligations under
this Agreement;
(c) either Seller or Buyer if a material breach of any provision of
this Agreement has been committed by the other party and such breach has not
been waived;
(d) either Seller or Buyer if any of the conditions to such party's
obligation set forth in ARTICLE VII to perform has not been satisfied or waived
as of the date specified in Section 9.1(b), or if satisfaction of any such
unwaived condition becomes incapable of fulfillment; provided, however, that a
party hereto may not seek termination pursuant to this Section 9.1(d) if such
condition is incapable of fulfillment due to the failure of such party to
perform the agreements set forth herein required to be performed by such party
at or before the Closing; or
(e) either Seller or Buyer if any court of competent jurisdiction or
other competent Governmental Authority shall have issued a Law or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such Law or other action shall
have become final and nonappealable.
9.2 Effect of Termination. In the event of a termination of this
Agreement pursuant to Section 9.1, this Agreement shall become null and void and
of no further force or effect, and no Person shall have any Liability in respect
hereof or of the transactions contemplated hereby, except (a) with respect to
any willful and material breach of any covenant contained in this Agreement by
such Person prior to such termination and (b) that the provisions of the
Confidentiality Agreement, the provisions of Section 5.8 and ARTICLE IX shall
survive such termination and shall remain in full force and effect.
ARTICLE X
MISCELLANEOUS
10.1 No Assignment. The rights and obligations of the parties hereunder
may not be assigned without the prior written consent of the other party hereto.
Any purported assignment or transfer of this Agreement in violation of this
Section 10.1 shall be void and of no force or effect.
10.2 Headings. The headings and the table of contents contained in this
Agreement are included for purposes of convenience only, and shall not affect
the meaning or interpretation of this Agreement.
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10.3 Entire Agreement. This Agreement (and the Ancillary Agreements
when executed and delivered) and the Confidentiality Agreement constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements, understandings, statements,
representations, warranties, documents, instruments, communications and
correspondence, whether written or oral, express or implied, between the parties
hereto and their respective Affiliates, representatives and agents with respect
to the subject matter hereof and thereof.
10.4 Annexes and Exhibits; Disclosure Schedule. The Annexes, Exhibits
and Disclosure Schedule referenced herein are incorporated herein by reference
and are a part of this Agreement for all purposes. The Disclosure Schedule shall
identify the exceptions set forth therein with reasonable particularity and in
reasonable detail. Matters disclosed in any Section of the Disclosure Schedule
with respect to any representation or warranty of Seller contained herein shall
be deemed disclosed with respect to every other representation and warranty of
Seller contained herein, but only to the extent that such disclosure provides on
its face a reasonable correlation to the subject matter of such other
representations and warranties. The Sections of the Disclosure Schedule will
correspond to the numbered paragraphs contained in ARTICLE III.
10.5 Amendment; Waiver. No amendment, modification or discharge of this
Agreement, and no waiver hereunder, shall be valid or binding unless set forth
in a writing specifically referencing this Agreement and duly executed by the
party against whom enforcement of the amendment, modification, discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by either of the parties hereto of a breach of or a
default under any of the provisions of this Agreement, nor the failure by either
of the parties, on one or more occasions to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature, or as
a waiver of any of such provisions, rights or privileges hereunder.
10.6 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
10.7 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any other term or
provision of this Agreement in any other jurisdiction. If any term or provision
of this Agreement is so broad as to be invalid or unenforceable, the provision
shall be interpreted to be only so broad as is valid or enforceable. Subject to
the foregoing provisions of this Section 10.7, if any term or provision of this
Agreement is invalid or unenforceable for any reason, such circumstances shall
not have the effect of rendering such term or provision invalid or unenforceable
in any other case or circumstance.
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10.8 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given (a) when received if delivered in person, (b) five days after being sent
by registered or certified mail, return receipt requested, postage prepaid, (c)
when dispatched by facsimile (with confirmation of receipt) or (d) one business
day after being sent by a nationally recognized overnight delivery service, to
the appropriate party at the address or facsimile number specified below:
If to Seller:
Westinghouse Government Services Company LLC
000 Xxxxxxxx Xxxxxx, X.X.
Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with copies to:
Washington Group International, Inc.
000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
and
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
If to Buyer:
Xxxxxxx-Xxxxxx Electro-Mechanical Corporation
0000 Xxxx Xxxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxxxx, President
Facsimile No.: (000) 000-0000
with copies to:
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Xxxxxxx-Xxxxxx Corporation
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq., General Counsel
Facsimile No.: (000) 000-0000
and
Xxxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Any party hereto may change its address or facsimile number for the purposes of
this Section 10.8 by giving notice as provided herein.
10.9 Binding Effect; Third Party Beneficiary Rights. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns, and shall inure to the benefit of
the Indemnified Parties. This Agreement is not intended, and shall not be
construed, to give any Person other than Buyer and Seller, the Indemnified
Parties (solely as provided in ARTICLE VIII), and WEC (solely to enforce Section
5.5(a)(ii), Section 5.15, Section 5.16 and Section 5.17, as such provisions or
Sections relate to WEC, and Section 10.12 solely with respect to the immediately
preceding provisions and Sections), and their respective successors and
permitted assigns, any interest or rights (including third party beneficiary
rights) with respect to or in connection with any agreement or provision herein
or any matter contemplated hereby.
10.10 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without regard
to principles of conflicts of law.
10.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.12 Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity. Buyer agrees that WEC
will suffer irreparable harm if Buyer does not perform the obligations relating
to WEC under Sections 5.15, 5.16 and 5.17 within a reasonable time considering
the nature of the obligation, and hereby consents to the entry of an injunction,
after the expiration of such reasonable period, to enforce WEC's rights
hereunder, without the posting of any bond.
[Signature page follows this page.]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
WESTINGHOUSE GOVERNMENT SERVICES COMPANY LLC
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President & Assistant Secretary
XXXXXXX-XXXXXX ELECTRO-MECHANICAL CORPORATION
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
