EXHIBIT 10.10
EXECUTION COPY
ESBU
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ASSET PURCHASE AGREEMENT
BETWEEN
CBS CORPORATION
AND
WGNH ACQUISITION, LLC
DATED AS OF JUNE 25, 1998
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS.................................. 4
SECTION 1.1. Specified Definitions.......................................... 4
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SECTION 1.2. Other Terms.................................................... 17
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SECTION 1.3. Other Definitional Provisions.................................. 17
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ARTICLE 2
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES............ 18
SECTION 2.1. Purchase and Sale.............................................. 18
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SECTION 2.2. Acquired Assets and Excluded Assets............................ 18
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(a) Acquired Assets.............................................. 18
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(b) Excluded Assets.............................................. 21
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(c) Nonassignable Rights......................................... 24
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(d) Termination of Rights of Sold Subsidiaries................... 24
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SECTION 2.3. Assumption of Liabilities...................................... 25
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(a) Assumed Liabilities.......................................... 25
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(b) Excluded Liabilities......................................... 27
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SECTION 2.4. Purchase Price................................................. 29
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SECTION 2.5. Purchase Price Adjustment...................................... 29
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ARTICLE 3
THE CLOSING.................................. 34
SECTION 3.1. Closing Date................................................... 34
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SECTION 3.2. Transactions to be Effected at the Closing..................... 34
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(a) Deliveries by Sellers........................................ 34
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(b) Deliveries by Purchaser...................................... 34
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(c) Nominee Shares............................................... 35
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES....................... 35
SECTION 4.1. Representations and Warranties of CBS.......................... 35
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(a) Organization, Standing and Power............................. 35
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(b) Authority.................................................... 35
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(c) Financial Statements; Undisclosed Liabilities................. 37
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(d) Compliance with Applicable Laws............................... 38
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(e) Litigation; Decrees........................................... 39
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(f) Title to Acquired Assets; Leasehold Interests................. 39
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(g) Real Property................................................. 40
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(h) Intellectual Property and Technology.......................... 42
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(i) Insurance..................................................... 43
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(j) Contracts..................................................... 44
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(k) Sufficiency of Acquired Assets................................ 47
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(l) Absence of Certain Changes or Events.......................... 47
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(m) Employee Benefits............................................. 48
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(n) Environmental Matters......................................... 51
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(o) Taxes......................................................... 53
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(p) Sold Subsidiaries............................................. 55
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(q) Labor Matters................................................. 55
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(r) Outstanding Bids.............................................. 56
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(s) Major Suppliers and Customers................................. 56
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(t) Year 2000..................................................... 57
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(u) Tangible Property............................................. 57
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SECTION 4.2. Representations and Warranties of Purchaser.................... 57
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(a) Organization, Standing and Power.............................. 57
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(b) Authority..................................................... 58
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(c) U.S.-Controlled Entity........................................ 59
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(d) U.K. Shareholder Approval..................................... 59
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ARTICLE 5
COVENANTS................................... 59
SECTION 5.1. (a) Covenants of CBS Relating to Conduct of Business............ 59
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(b) Advice of Changes............................................. 62
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SECTION 5.2. Access to Information; Consultation............................ 62
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SECTION 5.3. Governmental Approvals, Etc.................................... 64
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SECTION 5.4. Novations of Contracts and Third Party Consents................ 66
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SECTION 5.5. Employee Matters............................................... 68
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(a) Employee Matters.............................................. 68
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(b) Accrued Vacation.............................................. 69
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(c) Union Representation.......................................... 70
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(d) Pension Plan.................................................. 70
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(e) Savings Plan.................................................. 72
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(f) Welfare Benefits.............................................. 74
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(g) Severance Obligations......................................... 77
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(h) Executive Compensation...................................... 78
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(i) Cooperation................................................. 79
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(j) WARN Act.................................................... 79
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(k) COBRA....................................................... 79
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(l) Workers Compensation........................................ 79
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(m) Retained Liabilities........................................ 80
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(n) Actuarial Determinations and Payments....................... 80
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(o) Post-Closing Hiring of Employees............................ 81
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(p) Free-Standing Plans......................................... 81
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(q) Foreign Employment Matters.................................. 82
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(r) No Right to Employment...................................... 84
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(s) Alternative Procedure....................................... 84
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SECTION 5.6. Collection of Receivables..................................... 84
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SECTION 5.7. Expenses...................................................... 84
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SECTION 5.8. Brokers or Finders............................................ 84
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SECTION 5.9. Shared Technology and Trademark License Agreements............ 85
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SECTION 5.10. Certain Information.......................................... 86
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SECTION 5.11. Bulk Transfer Laws........................................... 87
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SECTION 5.12. Additional Agreements........................................ 87
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SECTION 5.13. Certain Understandings....................................... 88
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SECTION 5.14. Allocation; Tax Matters...................................... 88
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SECTION 5.15. Supplies..................................................... 93
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SECTION 5.16. Transfer of Assets of Sold Subsidiaries...................... 94
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SECTION 5.17. Removal of Excluded Assets and Liabilities from Sold
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Subsidiaries........................................................ 94
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SECTION 5.18. Credit Support............................................... 94
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SECTION 5.19. Non-Competition and Confidentiality.......................... 95
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SECTION 5.20. Related Agreements........................................... 97
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(a) Transitional Services....................................... 97
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(b) Business Supply Agreement................................... 97
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(c) Facilities.................................................. 97
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(d) Field Sales Offices......................................... 97
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SECTION 5.21. Business Relationships with Sellers.......................... 98
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SECTION 5.22. Science and Technology Center................................ 98
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SECTION 5.23. U.S.-Controlled Entity....................................... 99
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SECTION 5.24. Insurance Matters............................................ 99
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SECTION 5.25. Guarantee Agreement.......................................... 99
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SECTION 5.26. Waivers...................................................... 100
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SECTION 5.27. Third Party Agreements....................................... 100
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SECTION 5.28. [Intentionally omitted....................................... 100
SECTION 5.29. Year 2000 Matters............................................ 100
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SECTION 5.30. Joint Defense Agreement...................................... 101
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SECTION 5.31. Waltz Mill Service Center.................................... 101
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SECTION 5.32. Guarantee Agreement.......................................... 101
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ARTICLE 6
CONDITIONS PRECEDENT............................ 101
SECTION 6.1. Conditions to Each Party's Obligation......................... 101
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(a) Certain Waiting Periods...................................... 101
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(b) No Injunctions or Restraints................................. 101
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(c) Governmental Action.......................................... 102
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(d) Governmental Consents........................................ 102
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(e) Consummation of the GESCO Asset Purchase Agreement........... 102
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SECTION 6.2. Conditions to Obligation of Purchaser......................... 102
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(a) Representations and Warranties............................... 102
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(b) Performance of Obligations of CBS............................ 102
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(c) Material Permits............................................. 102
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(d) Conveyancing Documents....................................... 103
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(e) Opinion of CBS's Counsel..................................... 103
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SECTION 6.3. Conditions to Obligation of CBS............................... 103
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(a) Representations and Warranties............................... 103
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(b) Performance of Obligations of Purchaser...................... 103
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(c) Guarantee Agreement.......................................... 103
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(d) Opinion of Purchaser's Counsel............................... 104
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER..................... 104
SECTION 7.1. Termination................................................... 104
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SECTION 7.2. Amendments and Waivers........................................ 105
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ARTICLE 8
INDEMNIFICATION.............................. 106
SECTION 8.1. Indemnification By CBS........................................ 106
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SECTION 8.2. Indemnification by Purchaser.................................. 111
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SECTION 8.3. Characterization of Indemnification Payments.................. 112
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SECTION 8.4. Losses Net of Insurance; Tax Loss and Benefits; No
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Consequential Damages............................................... 112
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SECTION 8.5. Termination of Indemnification................................ 113
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SECTION 8.6. Procedures Relating to Third Party Claims (Other than Tax
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Controversies and Environmental Liabilities)........................ 114
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SECTION 8.7. Procedures Relating to Non-Third Party Claims................. 115
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SECTION 8.8. Arbitration of Certain Environmental Liabilities.............. 115
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SECTION 8.9. Procedures Relating to Claims Constituting an
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Environmental Liability............................................. 116
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SECTION 8.10. Steam Generator Matters...................................... 117
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SECTION 8.11. Subrogation.................................................. 117
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ARTICLE 9
GENERAL PROVISIONS............................. 118
SECTION 9.1. Notices....................................................... 118
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SECTION 9.2. Interpretation................................................ 120
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SECTION 9.3. Survival of Representations, Warranties and Covenants......... 120
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SECTION 9.4. Severability.................................................. 120
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SECTION 9.5. Counterparts.................................................. 121
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SECTION 9.6. Entire Agreement; No Third Party Beneficiaries................ 121
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SECTION 9.7. Governing Law................................................. 121
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SECTION 9.8. Mediation; Consent to Jurisdiction............................ 121
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SECTION 9.9. Publicity..................................................... 122
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SECTION 9.10. Assignment................................................... 123
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SECTION 9.11. Waiver of Jury Trial; Trial Costs............................ 123
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Exhibit A Terms of ESBU/PCD Business Supply Agreement
Exhibit B Shared Technology Agreement
Exhibit C Trademark and Trade Name License Agreement
Exhibit D Terms of Transitional Services Agreement
Exhibit E Guarantee Agreement
Exhibit F Joint Defense Agreement
List of Annexes
Annex S Steam Generator Matters
List of Schedules
Schedule 1.1(b) Leased Real Property
Schedule 1.1(c) Owned Real Property
Schedule 1.1(d) Permitted Liens
Schedule 1.1(e) Selling Subsidiaries
Schedule 1.1(f) Steam Generator Settlement Agreements
Schedule 1.1(g) Sold Subsidiaries
Schedule 2.2(a) Acquired Assets
Schedule 2.2(b) Excluded Assets
Schedule 2.3(a)(i) Contractual Liabilities
Schedule Other Assumed Liabilities
2.3(a)(xviii)
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Schedule 2.3(b) Non-excluded Liabilities
Schedule 2.5(a) Target Amount
Schedule 4.1(b)(i) Consents under Intellectual
Property, Technology and Other
Contracts
Schedule 4.1(b)(ii) Governmental Consents,
Approvals, and Filings
Schedule 4.1(c)(i)(A) Financial Statements:
Differences between the Business
and Assets and Liabilities in
Financial Statements
Schedule 4.1(c)(i)(B) Financial Statements:
Reconciliation
Schedule 4.1(c)(ii) Undisclosed Liabilities
Schedule 4.1(c)(iii) Accounts Receivable
Schedule 4.1(c)(v) Order Backlog Information
Schedule 4.1(d)(i) Compliance with Applicable
Laws
Schedule 4.1(d)(ii) Non-Compliance with Cost
Accounting Standards.
Schedule 4.1(e) Certain Lawsuits, Actions and
Proceedings
Schedule 4.1(g)(i) Leases of Owned Real Property
Schedule 4.1(g)(iv) Subleases Affecting Leased Real
Property.
Schedule 4.1(h)(i) Intellectual Property and
Technology
Schedule 4.1(h)(ii) Intellectual Property Subject
to Security Interest
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Schedule 4.1(h)(iii) Non-Sole Ownership -
Intellectual Property
Schedule 4.1(h)(iv) Written Challenges to Intellectual
Property Rights
Schedule 4.1(h)(v) CBS Infringement Claims
Schedule 4.1(h)(vi) Third Party Infringement Claims
Schedule 4.1(h)(vii) Copyright or Patent Proceedings
Schedule 4.1(i) Insurance
Schedule Employment Contracts
4.1(j)(A)(i)
Schedule Collective Bargaining
4.1(j)(A)(ii) Agreements
Schedule Affiliated Contracts
4.1(j)(A)(iii)
Schedule Credit Agreements
4.1(j)(A)(iv)
Schedule Non-Compete Covenants
4.1(j)(A)(v)
Schedule Real Property Leases
4.1(j)(A)(vi)
Schedule Personal Property Leases
4.1(j)(A)(vii)
Schedule Purchase Contracts
4.1(j)(A)(viii)
Schedule Products or Services Contracts
4.1(j)(A)(ix)
Schedule Joint Ventures, Long-Term
4.1(j)(A)(x) Alliances, Partnerships or
Teaming Agreements
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Schedule Options or Franchise Agreements
4.1(j)(A)(xi)
Schedule Take-or-Pay or Requirements
4.1(j)(A)(xii) Contracts
Schedule Sale or Disposition of Assets
4.1(j)(A)(xiii)
Schedule Contracts Outside the Ordinary
4.1(j)(A)(xiv) Course of Business
Schedule License or Development
4.1(j)(A)(xv) Agreements
Schedule Material Contracts
4.1(j)(A)(xvi)
Schedule 4.1 (j)(C) Allegations of Fraud by Federal
Agencies
Schedule 4.1(k) Sufficiency of Acquired Assets
Schedule 4.1(l) Non-Ordinary Course; Certain
Changes or Events
Schedule 4.1(m)(i) Employee Benefit Plans
Schedule 4.1(m)(ii) Governmental Filings; Litigation
and Termination Proceedings
Schedule 4.1(m)(iii) Compliance with ERISA
Schedule 4.1(m)(iv) Determination Letters; Qualified
Plans
Schedule 4.1(m)(v) Prohibited Transactions;
Reportable Events
Schedule Unfunded Benefit Liabilities
4.1(m)(vii)
Schedule Multiemployee Plans
4.1(m)(viii) Withdrawal Liabilities
Schedule 4.1(m)(ix) Bonus and Severance Payments
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Schedule 4.1(m)(xi) Amendments to Benefit Plans
Schedule COBRA Compliance
4.1(m)(xii)
Schedule Underfunding of Foreign Benefit
4.1(m)(xiii) Plans
Schedule Environmental Permits
4.1(n)(iii)(a)
Schedule 4.1 Material Legal or
(n)(iii)(b) Administrational Proceedings for
Permits
Schedule 4.1(n)(iv) Governmental Consent to
Transfer
Schedule 4.1(n)(v) Outstanding or Threatened
Government Authority Non-
Compliance Order or Notice of
Violation
Schedule 4.1(n)(vi) Agency Action Relating to
Environmental Compliance
Schedule CERCLA Potentially Responsible
4.1(n)(viii) Party (PRP) Sites
Schedule 4.1(o)(i) Taxes: Filings
Schedule 4.1(o)(ii) Taxes: Deficiency Claims
Schedule 4.1(o)(iii) Taxes: Extensions
Schedule 4.1(o)(iv) Taxes: Statute of Limitation
Waivers
Schedule 4.1(o)(v) Taxes: Assets Owned by Others
and Tax-Exempt Use Property
Schedule 4.1(o)(vi) Taxes: Adjustments due to
Change in Accounting Method
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Schedule 4.1(o)(vii) Taxes: Pending Audits or
Proceedings
Schedule Taxes: Powers of Attorney
4.1(o)(viii)
Schedule 4.1(o)(ix) Taxes: Adverse Ruling Against
Sold Subsidiary or Acquired
Assets
Schedule 4.1(o)(x) Taxes: Compliance with the Code
Schedule 4.1(o)(xi) Taxes: Covenants; Non-
deductible Payments
Schedule 4.1(q)(i) Labor Matters: Labor Strikes
Schedule 4.1(q)(ii) Labor Matters: Unfair Labor
Practice Charges
Schedule 4.1(q)(iii) Labor Matters: Union
Grievances
Schedule 4.1(q)(iv) Labor Matters:
Collective Bargaining
Schedule 4.1(q)(v) Labor Matters:
Organization Attempts
Schedule 4.1(r) Outstanding Bids
Schedule 4.1(s) Major Suppliers and Customers
Schedule 5.1(a)(ii) Ordinary Course of Business:
Collective Bargaining Agreement
Schedule 5.1(a)(iii) Ordinary Course of Business:
Executive Compensation
Increases
Schedule 5.1(a)(xi) Claims in Excess of 2.5 million
Schedule 5.1(a)(xiv) Severance or Termination
Payments
Schedule 5.5(d) Pension Plan (Assumptions)
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Schedule 5.5(f)(iv) OPEB Schedule
Schedule 5.14 Allocation to Foreign Sold
Subsidiaries
Schedule 5.16 Transfer of Assets of Sold
Subsidiaries
Schedule 5.18 Credit Support Arrangements
Schedule 5.22 STC Programs
Schedule 6.1(d) Governmental Consents
Schedule 6.2(c) Material Permits
Schedule 6.2(e) Opinion of CBS' Counsel
Schedule 6.3(d) Opinion of Purchaser's Counsel
Schedule 8.1(a)(vi) Warranty Obligations
Schedule 8.1(b) Certain Assumed Liabilities
Schedule 9.2 Persons with Knowledge
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of June
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25, 1998, between CBS CORPORATION, a Pennsylvania corporation ("CBS"), and WGNH
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ACQUISITION, LLC, a Delaware limited liability company ("Purchaser").
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WITNESSETH:
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WHEREAS, CBS is engaged,
(A) through its Energy Systems Business, in a worldwide business
which, among other things, primarily serves the electric power industry by,
among other things, (A) supplying (i) Nuclear Installation design technology,
equipment, technology licensing, construction and start-up services, (ii)
nuclear fuel, UF 6 conversion, associated materials, components, fuel
technology, zirconium and hafnium products, and engineering services, (iii)
technical services (including field and factory equipment refurbishment),
technical information, service tools, training services and equipment, including
simulators, total plant outage and maintenance services (including outage
management, refueling services and other operating plant services, including
renewal/spare parts and equipment and component repair/replacement services),
(iv) engineering, NRC and governmental licensing, start-up and operational
support services, (v) Nuclear Installation instrumentation and control systems,
engineered safeguard and primary plant protection systems, safety monitoring
systems, plant computer, display systems, distributed control, communicators,
data acquisition systems and information systems, monitoring and diagnostics
systems, diverse actuation systems, nuclear instrumentation systems, rod control
and position indication systems, traversing incore probe systems, flux mapping
systems and control room design, (vi) nuclear steam supply systems (including
the over 100 nuclear steam supply systems sold or licensed by the Energy Systems
Business operating worldwide), reactor coolant pumps, seals, motors, valves,
control rod drive mechanisms and other controlled mechanisms (other than for
military applications), steam generators, pressurizers, reactor vessels and
internals, other nuclear primary and secondary loop components, and auxiliary
motor/generator sets, (vii) project management for Nuclear Installation
construction and upgrades, (viii) decontamination and decommissioning equipment
and services, and (ix) spent nuclear fuel management and engineering products,
including canisters and transportation systems, and (B) maintaining and
operating certain research and development facilities and laboratories of the
Science and Technology Center (the "Energy Systems Business"), certain assets of
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which are owned by Subsidiaries of CBS; and
(B) through its Government and Environmental Services Company
("GESCO"), in businesses which serve the United States government by (i)
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managing and operating facilities, or providing services, for the United States
Department of Energy pursuant to contracts or subcontracts, (ii) constructing,
systemizing, operating and closing facilities for the United States Government,
pursuant to contracts or subcontracts, (iii) developing, designing,
manufacturing and processing United States Navy nuclear propulsion equipment and
providing training and operations and maintenance services, (iv) developing and
manufacturing low level radioactive waste containers, (v) providing safety
management consulting services to U.S. government facilities and (vi) (through
the Electro-Mechanical Division ("EMD") (which, effective January 1, 1998, was
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transferred to GESCO from the Energy Systems Business)) manufacturing pumps,
motors, generators and propulsion units for military applications; control rod
drive mechanisms, pumps, seals, spent fuel handling products, motors and motor
refurbishment services for Nuclear Installations, exclusively in connection with
or through, and employing intellectual property and technology owned by or
licensed to, the Energy Systems Business (the Energy Systems Business being the
exclusive owner of all such CBS-owned intellectual property and technology
relating to Nuclear Installations); and in businesses which serve other
governments (through U.S. government contracts), or commercial entities by (x)
providing advanced design deep ocean pumping systems to the oil industry, (y)
designing and manufacturing low level radioactive waste containers, and (z)
miscellaneous machining and fabrication services, which do not compete with the
Energy Systems Business (the "GESCO Businesses"), certain assets of which are
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owned by Subsidiaries of CBS; and
WHEREAS, CBS desires to (and to cause its appropriate Subsidiaries to)
sell, transfer and assign to Purchaser, and Purchaser desires to purchase and
assume from CBS and its appropriate Subsidiaries, substantially all of the
assets and liabilities of the Energy Systems Business together with the shares
of capital stock of certain Subsidiaries of CBS (including the Acquired Assets
and the Assumed Liabilities, but excluding the Excluded Assets and the Excluded
Liabilities (each as hereinafter defined), the "Business"), all as more
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specifically provided herein; and
WHEREAS, on the date hereof, concurrently with the execution of this
Agreement, the parties hereto are entering into an asset purchase agreement (the
"GESCO Asset Purchase Agreement") pursuant to which CBS, subject to the terms
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and conditions set forth therein, has agreed to (and to cause its appropriate
Subsidiaries to) sell, transfer and assign to Purchaser, and Purchaser has
agreed to purchase and assume from CBS and its
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appropriate Subsidiaries, substantially all of the assets and liabilities of the
GESCO Businesses; and
WHEREAS, CBS also is engaged, through its Power Generation Business
Unit, in a fossil fuel power generation business, which, among other things, (i)
designs, manufactures, sells, installs and services steam and combustion turbine
generators and components for the generation, transmission, distribution and
control of electric power, (ii) constructs turn-key fossil fuel power plants
worldwide, (iii) supplies, services and operates power plants for independent
power producers and utilities and supplies power generation equipment and
services to other non-utility customers, (iv) provides field service and factory
service on electrical apparatus and maintains repair facilities which perform
machine work on electrical apparatus (through its Electrical Systems Services
Division), and (v) sells replacement parts and components related to the
generators and components described in clause (i) above (the "Power Generation
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Business"), certain assets of which are owned by Subsidiaries of CBS; and
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WHEREAS, on November 14, 1997, CBS entered into an asset purchase
agreement (the "PGBU Asset Purchase Agreement") pursuant to which CBS, subject
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to the terms and conditions set forth therein, agreed to (and to cause its
appropriate Subsidiaries to) sell, transfer and assign to Siemens Power
Generation Corporation ("Siemens") substantially all of the assets and
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liabilities of the Power Generation Business; and
WHEREAS, CBS also is engaged, through its Process Control Division, in
a worldwide process control business that designs, manufactures, sells,
installs, services and supplies advanced industrial control and information
systems and systems components, software, training, servicing, support spares,
upgrade services and parts for power generation and conversion, water and
wastewater treatment, metals, mining, chemical and other process industry
applications (excluding products and services provided by the Energy Systems
Business specifically for nuclear applications) (the "Process Control
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Business"), certain assets of which are owned by Subsidiaries of CBS; and
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WHEREAS, CBS and Xxxxxxx Electric Co. ("Emerson") have entered into an
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asset purchase agreement, dated as of May 22, 1998 (the "PCD Asset Purchase
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Agreement"), pursuant to which CBS, subject to the terms and conditions set
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forth therein, agreed to (and to cause its appropriate Subsidiaries to), sell,
transfer and assign to Emerson substantially all of the assets and liabilities
of the Process Control Business and, among other things, enter into a business
supply agreement pursuant to which Emerson will provide certain goods and
services to the Energy Systems Business substantially on the terms set forth on
Exhibit A hereto; and
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WHEREAS, certain Subsidiaries of CBS, the capital stock of which will
be transferred to Purchaser hereunder, may hold assets utilized both in the
Business, on the one hand, and in the Power Generation Business, the Process
Control Business, the GESCO Businesses and/or other current and former
businesses of CBS, on the other hand, and certain assets relating to the Power
Generation Business, the Process Control Business, the GESCO Businesses and/or
such other businesses will be transferred by such Subsidiaries prior to the
Closing to CBS or other Subsidiaries of CBS or to the purchaser of the Power
Generation Business, the Process Control Business and/or the GESCO Businesses
pursuant to or in accordance with the terms hereof; and
WHEREAS, certain facilities, assets and services of CBS and its
Subsidiaries are utilized both in the Business, on the one hand, and in the
Power Generation Business, the Process Control Business, the GESCO Businesses
and/or other current and former businesses of CBS, on the other hand, and
certain of such facilities, assets and services will be shared by the owners of
the Business and the Power Generation Business, the Process Control Business,
the GESCO Businesses and/or such other businesses pursuant to the terms of
certain agreements contemplated hereby.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, and subject to and on the terms
and conditions herein set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. SPECIFIED DEFINITIONS. As used in this Agreement, the
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following capitalized terms have the meanings specified below:
"Accounts Receivable" means all trade accounts receivable and all
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notes, bonds and other evidences of indebtedness and rights to receive payments
arising out of sales of goods, provision of services or other transactions
occurring in the conduct of the Business.
"Acquired Assets" shall have the meaning specified in Section 2.2(a).
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"Affiliate" of a Person means a Person that directly or indirectly,
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through one or more intermediaries, controls, is controlled by or is under
common control with, such
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Person. Following the Closing, references to Purchaser's Affiliates shall
include the Sold Subsidiaries.
"Agency Action" means any investigation, request for information,
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notice of violation, complaint, order, directive, court order, injunction,
judgment or decree, consent order, consent agreement, administrative judgment,
decree or injunction or other enforcement inquiry or action brought by a
Governmental Authority having the requisite authority and jurisdiction to bring
such action.
"Agreement State" means each state authorized to regulate nuclear
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related materials based on authority delegated by the NRC pursuant to Section
274 of the Atomic Energy Act.
"Assumed Liabilities" shall have the meaning specified in Section
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2.3(a).
"Assumed Off-Site Disposal Liabilities" shall mean the first
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$10,000,000 of the aggregate amount of any Losses incurred in connection with
the conduct of the Business in respect of a Remedial Action required for any
Release of Hazardous Substances at a treatment, storage or disposal facility
other than (i) at the Premises or (ii) at the treatment, storage or disposal
facilities set forth in Schedule 4.1(n)(viii).
"Atomic Energy Act" means the Atomic Energy Act of 1954, as amended,
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42 U.S.C. (S) 2022.
"Balance Sheet" shall have the meaning specified in Section 4.1(c)(i).
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"Benefit Plans" means "employee welfare benefit plans" (as defined in
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Section 3(1) of ERISA), Pension Plans, bonus, stock option, stock purchase,
severance, employment, change-in-control, fringe benefit, incentive or deferred
compensation plans and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA, currently
maintained or contributed to by CBS or any of its Subsidiaries for the benefit
of (i) any officers or employees or Former Employees of the Business employed in
the United States ("U.S. Benefit Plans") and (ii) any Former Employees or
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officers or employees of the Business employed in foreign jurisdictions
("Foreign Benefit Plans").
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"BNFL" means British Nuclear Fuels plc, an English company.
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"Business" shall have the meaning specified in the recitals of this
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Agreement.
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"Business Employees" shall have the meaning specified in Section 5.5.
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"Business-Related Environmental Liability" means any Environmental
----------------------------------------
Liabilities arising under Environmental Laws and any Liability under any Permit
issued pursuant to any Environmental Law in connection with the Acquired Assets,
the Sold Subsidiaries or the Business, to the extent arising from any condition
existing or any act or omission of Sellers, any Sold Subsidiary or any other
Person (including any prior owner, occupant or user of any Premises and any
Person engaged in the removal, transportation or disposition of Hazardous
Substances that were originated or at any time stored or otherwise held at any
site associated with the Sold Subsidiaries or the Business, whether or not
included in whole or in part in the Acquired Assets or the Subsidiary Assets) at
or prior to the Closing Date, but excluding in all cases (i) any liability for
fines or penalties that arise as a result of any actual criminal violation of
any Environmental Law and (ii) any Decontamination and Decommissioning
Liabilities.
"Business Supply Agreement" shall have the meaning specified in
-------------------------
Section 5.20.
"CERCLA" shall have the meaning specified in the definition of
------
"Environmental Law."
"Closing" means the closing of the purchase, assignment and sale of
-------
the Acquired Assets and the assumption of the Assumed Liabilities contemplated
hereunder.
"Closing Date" means the time and date on which the Closing takes
------------
place, as established by Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended, and all
----
Laws promulgated pursuant thereto or in connection therewith.
"Contracts" means all contracts (including any subcontracts), leases
---------
(including any subleases), indentures, joint venture, governmental funding or
incentive program, guarantee, indemnity (including environmental indemnity),
license (including any sublicense or any license of third-party software),
development, settlement, teaming, divestiture and other agreements, commitments
and all other legally binding arrangements, including all interworks orders and
inter-divisional orders between the Business and other businesses of CBS, in
each case whether oral or written, relating primarily to the Business to which
any of Sellers or a Sold Subsidiary is a party or bound (including Government
Contracts, the Settlement Support
6
Agreements, the Settlement Agreements and the Business Supply Agreement), except
for Benefit Plans.
"Decontamination and Decommissioning Liabilities" means all costs,
-----------------------------------------------
Losses, Liabilities and Environmental Liabilities, to the extent inherent in or
incident to the termination of service, decommissioning or demolition of
facilities or equipment on the Premises required by the NRC or any foreign
Governmental Authority, but excluding any such costs, Losses, Liabilities and
Environmental Liabilities which are associated with the ongoing operations of
the Business or Acquired Assets and not inherent in or incurred incident to such
termination of service, decommissioning or demolition of facilities; provided,
--------
however, that all costs, Losses, Liabilities and Environmental Liabilities
-------
inherent in or incurred in any Remedial Action at or relating to any active or
inactive evaporation pond located on the property of the Western Zirconium
facility in Ogden, Utah shall be considered a Decontamination and
Decommissioning Liability regardless of whether such costs, Losses, Liabilities
or Environmental Liabilities are inherent in or are incurred incident to
termination of service, decommissioning or demolition of such ponds.
"Emerson" shall have the meaning specified in the recitals.
-------
"Environmental Law" means any Law (including common law), policy or
-----------------
any other legally binding requirement that governs or purports to govern the
existence of, relates to or provides a remedy for an actual or threatened
Release of Hazardous Substances, pollution or the protection of persons, natural
resources or the environment (including, without limitation, the protection of
ambient air, surface water, groundwater, land surface or subsurface strata,
endangered species or wetlands), occupational health and safety (excluding
workers' compensation), the manufacture, processing, distribution, use,
generation, handling, treatment, storage, disposal, transportation, Release or
management of solid waste or Hazardous Substances, or other activities involving
Hazardous Substances, including the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S) 9601 et seq., as
-- ----
amended by the Superfund Amendments and Reauthorization Act, the Hazardous
Materials Transportation Act, 49 U.S.C. (S) 1801 et seq., the Resource
-- ----
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the Clean Water Act,
-- ----
33 U.S.C. (S) 1251 et seq., the Clean Air Act, 33 U.S.C. (S) 2601 et seq., the
-- ---- -- ----
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Federal
-- ----
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. (S) 136 et seq., the Oil
-- ---
Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq., the Nuclear Waste Policy Act
-- ----
of 1982, 42 U.S.C. (S) 10101 et seq., Atomic Energy Act of 1954, 42 U.S.C. (S)
-- ----
2011 et seq. and the Occupational Safety and Health Act, 29 U.S.C. (S) 651 et
-- --- --
seq., as such laws have been amended or supplemented, and/or any other similar
----
foreign, federal, state,
7
local and/or county laws or regulations, in each case as in effect on or prior
to the Closing Date or, with respect to representations and warranties made on
the date hereof, on or prior to the date hereof.
"Environmental Liability" means any Liability of Sellers or the Sold
-----------------------
Subsidiaries (other than any Liability of the type described in Section
2.3(a)(iii)) arising under the Environmental Laws, including all direct costs
and expenses associated with Remedial Action, and including claims, demands,
penalties, fines, liens, fees, reasonable costs of environmental consultants,
personal injuries, property damages, natural resource damages, response costs of
any Governmental Authority, administrative proceedings, assessments, judgments,
orders, causes of action (including toxic tort suits), contribution actions,
written notices of actual or alleged violations or liability (including such
notices, claims or any actions arising from or regarding the disposal,
transportation or Release or threatened Release of Hazardous Substances from or
upon any property), proceedings and any associated Losses; provided, however,
-------- -------
that except as expressly used in the definition of Decontamination and
Decommissioning Liabilities, "Environmental Liability" shall not include any
Decontamination and Decommissioning Liability.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Excluded Assets" shall have the meaning specified in Section 2.2(b).
---------------
"Excluded Liabilities" shall have the meaning specified in Section
--------------------
2.3(b).
"Existing Steam Generator Liabilities" shall have the meaning
------------------------------------
specified in Annex S.
"Exon-Xxxxxx Amendment" means 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)).
"Financial Statements" shall have the meaning specified in Section
--------------------
4.1(c)(i).
8
"Fixtures and Equipment" means all furniture, fixtures, furnishings,
----------------------
machinery, vehicles, equipment and other tangible personal property owned or
leased by Sellers or any Sold Subsidiary and used or held for use primarily in
connection with the Business.
"Foreign Benefit Plans" shall have the meaning specified under the
---------------------
definition of "Benefit Plans."
"Foreign Business Employees" shall have the meaning specified in
--------------------------
Section 5.5(q).
"Foreign Plan Participant" shall have the meaning specified in Section
------------------------
5.5(q).
"Foreign Sold Subsidiary" means any Sold Subsidiary other than a U.S.
-----------------------
Sold Subsidiary.
"Former Employee" shall mean any former employee or Inactive Employee
---------------
of the Business whose employment with the Business was terminated for any reason
(including retirement) prior to the Closing Date and who, as of the Closing
Date, is not employed by CBS or any of its Affiliates.
"Free Standing Plan" shall have the meaning specified in Section
------------------
4.1(m)(i).
"GAAP" means United States generally accepted accounting principles.
----
"GESCO" shall have the meaning specified in the recitals of this
-----
Agreement.
"GESCO Asset Purchase Agreement" shall have the meaning specified in
------------------------------
the recitals of this Agreement.
"GESCO Businesses" shall have the meaning specified in the recitals of
----------------
this Agreement.
"Government Contract" means any Contract entered into with any
-------------------
Governmental Authority and any subcontract relating to obligations to be
performed pursuant to a Contract entered into with any Governmental Authority.
"Governmental Authority" means any agency, board, body, bureau, court,
----------------------
commission, department, instrumentality, entity established or controlled by, or
administration
9
of any foreign government, the United States government, any state government or
any local or other governmental body in a state, territory or possession of the
United States or the District of Columbia or any political subdivision of any of
the foregoing, including any legislative, judicial or administrative body.
"Guarantee Agreement" shall have the meaning specified in Section
-------------------
5.25.
"Guarantors" means the signatories to the Guarantee Agreement.
----------
"Hazardous Substance" means (i) any petroleum or petroleum products
-------------------
(to the extent regulated under Environmental Law), flammable explosives,
radioactive materials, asbestos or polychlorinated biphenyls (PCBs); and (ii)
any substance, material or waste that is regulated under any Environmental Law
and is defined as, or included in the definition of, or deemed by any
Environmental Law or Governmental Authority to be "hazardous," "toxic," a
"contaminant," "waste," a "pollutant," "hazardous substance," "hazardous waste,"
"restricted hazardous waste," "hazardous material," "extremely hazardous waste,"
a "toxic substance," a "toxic pollutant" or words with similar meaning.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
-------
1976, as amended.
"Inactive Employees" shall have the meaning specified in Section
------------------
5.5(a)(i).
"Income Tax" means any Tax on or determined by reference to net income
----------
and all interest, fines and penalties imposed with respect to any such Tax.
"Indebtedness" of any Person means, without duplication, (i) the
------------
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the Ordinary Course of Business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) of any Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or
10
otherwise, including guarantees of such obligations; and (vi) all obligations of
the type referred to in clauses (i) through (v) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person).
"Intellectual Property" means all domestic and foreign patents,
---------------------
utility models, patent applications, trademarks, trademark registrations,
service marks, service xxxx registrations, tradenames, tradename registrations,
slogans, corporate names, corporate nicknames or initialisms, registered
copyrights, applications for registration of any of the foregoing, and trade
secret rights, owned by Sellers or any Sold Subsidiary that relate primarily to
the Business.
"Inventory" means all raw materials, work-in-process, finished goods,
---------
merchandise, office and other supplies, parts, packaging materials and other
accessories related thereto which are held at, or are in transit from or to, the
Premises or located at other locations at which the Business is conducted, or
located at suppliers' premises, in each case, which are used or held for use by
any Seller or Sold Subsidiary primarily in the conduct of the Business,
including any of the foregoing purchased subject to any conditional sales or
title retention agreement in favor of any other Person, together with all rights
of any Seller or Sold Subsidiary against suppliers of such inventories.
"Investments" means all capital stock, partnership interests and other
-----------
equity interests owned by any Seller in any Person which are held primarily in
connection with the Business, including the capital stock, partnership interests
and other equity interests owned by any Seller in the Sold Subsidiaries, and all
issued and outstanding capital stock, partnership interests and other equity
interests owned by any Sold Subsidiary in any Person (except as otherwise
provided by Section 5.16).
"Law" means, as to any Person, any foreign or United States federal,
---
state or local law, statute, code, ordinance, regulation, order, writ,
injunction, decision, directive, judgment or decree (or judicial or
administrative interpretations thereof having the force of law which are not
subject to appeal or challenge) applicable to such Person and to the businesses
and assets thereof.
"Leased Real Property" means all real property leased by any Seller as
--------------------
lessee or by any Sold Subsidiary as lessee and listed in Schedule 1.1(b).
"Liabilities" means, as to any Person, all debts, adverse claims,
-----------
fines, liabilities and obligations, direct, indirect, absolute or contingent,
known or unknown, of such Person,
11
whether accrued, vested or otherwise, whether in contract, tort, strict
liability or otherwise and whether or not actually reflected, or required by
GAAP to be reflected, in such Person's financial statements (including the notes
thereto) or other books and records.
"Liens" means mortgages, liens, security interests, easements, rights
-----
of way, pledges, restrictions or encumbrances of any nature whatsoever.
"Losses" means, subject to Section 8.4, any and all demands, claims,
------
complaints, actions or causes of action, suits, proceedings, investigations,
arbitrations, assessments, losses, damages, liabilities, obligations (including
those arising out of any action, such as any settlement or compromise thereof or
judgment or award therein) and any reasonable costs and expenses, including
attorney's and other advisors' fees and disbursements.
"Material Adverse Effect" means an effect or change that is materially
-----------------------
adverse to the business, assets, financial condition or results of operations of
the Business taken as a whole.
"MK" means Xxxxxxxx Xxxxxxx Corporation, a Delaware corporation.
--
"Novation Agreements" shall have the meaning specified in Section
-------------------
5.4(a).
"NRC" means 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 and, for purposes of
this Agreement, shall include any Agreement State.
"Nuclear Installation" means a nuclear powered electric generating
--------------------
facility and associated support facilities, nuclear processing facility,
military nuclear instrumentation and control systems and nuclear test
facilities.
"Ordinary Course of Business" means, with respect to any Seller or
---------------------------
Sold Subsidiary, actions taken in the ordinary course of business consistent
with past practices of such Seller or Sold Subsidiary in relation to the
Business.
"Owned Real Property" means all real property owned by any Seller or
-------------------
by any Sold Subsidiary and listed in Schedule 1.1(c).
12
"Parent Companies" means MK and BNFL.
----------------
"PCD Asset Purchase Agreement" shall have the meaning specified in the
----------------------------
recitals.
"Pension Plan" means an "employee pension benefit plan" (as such term
------------
is defined in Section 3(2) of ERISA) including multiemployer plans within the
meaning of Section 3(37) of ERISA, currently maintained or contributed to by CBS
or any of its Subsidiaries for the benefit of (i) any officers or employees or
Former Employees of the Business employed in the United States and (ii) any
Former Employees or officers or employees of the Business employed in foreign
jurisdictions.
"Permits" means all permits, licenses, registrations, filings,
-------
variances, exemptions, franchises and authorizations by or of any Governmental
Authority, or other indicia of authority necessary for the conduct of the
Business that (i) are owned or held by or otherwise have been granted to or for
the benefit of any Seller and that relate to the Business or any part thereof or
to any of the Acquired Assets or (ii) are owned or held by or otherwise have
been granted to or for the benefit of any Sold Subsidiary; provided, however,
-------- -------
that in no event shall a Government Contract constitute a Permit.
"Permitted Liens" means (i) Liens disclosed in Schedule 1.1(d),
---------------
specifically described in the notes to the Financial Statements or that secure
Indebtedness that is included in Assumed Liabilities and reflected as a
liability on the Balance Sheet, (ii) any progress payment Liens arising in the
ordinary course of business from progress payments made by the United States
Government or any agency thereof or any other Governmental Authority on
Government Contracts that are included in the Assumed Liabilities and (iii)(A)
mechanics' carriers', workmen's, repairmen's and other like Liens arising or
incurred in the Ordinary Course of Business that are included in the Assumed
Liabilities and that are not yet due and payable or that may thereafter be paid
without penalty or that are being contested in good faith by appropriate
proceedings, (B) Liens for Taxes, assessments and other governmental charges not
yet due and payable or that may thereafter be paid without penalty or that are
being contested in good faith by appropriate proceedings and (C) imperfections
of title and other Liens that do not materially affect the value of the
encumbered asset or the continued use and operation of the encumbered asset in
the Business for its intended purpose.
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, trust, unincorporated organization, other form
of business or legal entity or Governmental Authority.
13
"PGBU Asset Purchase Agreement" shall have the meaning specified in
-----------------------------
the recitals.
"Post-Closing Tax Period" means any taxable period commencing after
-----------------------
the Closing Date.
"Power Generation Business" shall have the meaning specified in the
-------------------------
recitals to this Agreement.
"Pre-Closing Tax Period" means any taxable period ending on or before
----------------------
the Closing Date.
"Premises" means, collectively, the Owned Real Property and the Leased
--------
Real Property, in each case to the extent included in the Acquired Assets, and
the portion of STC to be leased by Purchaser pursuant to Section 5.22 and the
leasehold interest in Waltz Mill Service Center contemplated by Section 5.31.
"Process Control Business" shall have the meaning specified in the
------------------------
recitals of this Agreement.
"Purchase Price" shall have the meaning specified in Section 2.4.
--------------
"Purchaser Affiliate" shall mean any Person that is wholly-owned
-------------------
directly or indirectly by Purchaser or directly or indirectly by either or both
of the Parent Companies.
"Purchaser Ancillary Documents" shall have the meaning specified in
-----------------------------
Section 4.2(b).
"Purchaser Permit" shall have the meaning specified in Section 5.3(c).
----------------
"Purchaser's Straddle Period" means any portion of a Straddle Period
---------------------------
beginning after the Closing Date.
"Release" means any releasing, spilling, leaking, discharging,
-------
disposing of, pumping, pouring, emitting, emptying, injecting, leaching, dumping
or allowing to escape into the environment (air, surface water, groundwater,
land surface, soil, substrata, sediment or rock) and includes any "release" as
defined in CERCLA.
14
"Remedial Action" means any action to investigate, clean up, monitor,
---------------
xxxxx, transport, remove, treat or in any way address any Hazardous Substance
that is required by any Environmental Law, whether or not such action is taken
pursuant or in response to any Agency Action or third party claim.
"Schedules" means the disclosure schedules delivered by CBS to
---------
Purchaser in connection herewith.
"Seller Ancillary Documents" shall have the meaning specified in
--------------------------
Section 4.1(b).
"Sellers" means, collectively, CBS and the Selling Subsidiaries.
-------
"Sellers' Straddle Period" means any portion of a Straddle Period
------------------------
ending on the Closing Date.
"Selling Subsidiary" means each of the Subsidiaries of CBS listed in
------------------
Schedule 1.1(e) and each other Subsidiary of CBS that has any right, title or
interest in, to, or under the Acquired Assets or any Liabilities included in the
Assumed Liabilities, but shall not include any Sold Subsidiary (unless retained
by Sellers pursuant to Section 5.17).
"Settlement Agreements" means all Steam Generator Settlement
---------------------
Agreements and all settlement agreements existing on the date hereof or entered
into prior to the Closing Date with respect to steam generators, uranium or the
matters specified in Schedule 1.1(f).
"Settlement Support Agreements" shall have the meaning specified in
-----------------------------
Annex S.
"Shared Technology Agreement" shall have the meaning specified in
---------------------------
Section 5.9.
"Siemens" shall have the meaning specified in the recitals.
-------
"Significant Real Property" means (i) any Owned Real Property having
-------------------------
improvements thereon in excess of 75,000 square feet, (ii) any Leased Real
Property of more than 25,000 square feet and (iii) any Owned or Leased Real
Property that is the site of any manufacturing, design, management, warehouse,
assembly, distribution, research, marketing or other operation that, in any
case, is material to the operation of the Business as presently conducted.
15
"Sold Subsidiary" means any Subsidiary of CBS listed in Schedule
---------------
1.1(g) under the caption "Sold Subsidiary."
"Specified Steam Generator Liabilities" shall have the meaning
-------------------------------------
specified in Annex S.
"Statement of Net Assets" shall have the meaning specified in Section
-----------------------
2.5.
"Statement of Working Capital" shall have the meaning specified in
----------------------------
Section 2.5(a).
"STC" shall have the meaning specified in Section 5.22.
---
"STC Employee" shall have the meaning specified in Section 5.22.
------------
"Steam Generator Liabilities" shall have the meaning specified in
---------------------------
Annex S.
"Steam Generator Settlement Agreements" shall have the meaning
-------------------------------------
specified in Annex S.
"Straddle Period" means any taxable period including, but not ending
---------------
on, the Closing Date.
"Subsidiary" means, as to any Person another Person of which an amount
----------
of the voting securities, other voting ownership or voting partnership interests
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests) is owned directly or indirectly by such Person.
"Subsidiary Assets" means all assets, properties, goodwill and rights
-----------------
of the Sold Subsidiaries of whatever kind or nature, real or personal, tangible
or intangible, other than as contemplated by Section 5.16.
"Surplus Property" means all real property owned, leased or occupied
----------------
by any Seller or Sold Subsidiary that is not listed in Schedule 1.1(b) or 1.1(c)
or that is entirely or substantially vacant, "mothballed" or held principally
for remediation or other risk
16
management purposes; provided, that the property located at Pensacola, Florida
--------
shall not be deemed a Surplus Property.
"Tax Return" means any return, report, form, supplementary or
----------
supporting schedules or other information filed with any taxing authority with
respect to Taxes.
"Taxes" means all federal, state, local, foreign or other governmental
-----
taxes, assessments, duties, fees, levies or similar charges of any kind,
including all income, profit, franchise, capital gains, transfer, excise,
property, use, intangibles, sales, value added, payroll, employment, social
security, withholding, capital and other taxes, all capital duties and all stamp
duties, and including all interest, fines and penalties imposed with respect to
such amounts, and "Tax" and "Taxation" shall have correlative meanings.
"Technology" means all trade secrets, inventions, invention
----------
disclosures under evaluation, know-how, formulae, processes, procedures,
research records, records of inventions, test information, market surveys and
marketing know-how, unregistered copyrights and software including source and
object code, and related documentation, supporting database information and
modification and enhancements thereof owned by any Seller or any Sold Subsidiary
that relate primarily to the Business.
"Transfer Taxes" shall have the meaning specified in Section 5.14.
--------------
"Transitional Services Agreement" shall have the meaning specified in
-------------------------------
Section 5.20(a).
"U.S.-Controlled Entity" shall have the meaning specified in Section
----------------------
4.2(d).
"U.S. Sold Subsidiary" means any Sold Subsidiary incorporated in the
--------------------
United States.
"WARN Act" means the Worker Adjustment and Retraining Notification
--------
Act, as amended.
"WELCO" means the Westinghouse Electric Company Division of CBS, which
-----
comprises certain businesses of CBS, including the GESCO Businesses, the Energy
Systems Business and the Process Control Business.
"Year 2000 Compliance" shall have the meaning specified in Section
--------------------
4.1(t)(ii).
17
"Year 2000 Plan" shall have the meaning specified in Section
--------------
4.1(t)(i).
SECTION 1.2. OTHER TERMS. Other terms may be defined elsewhere in
-----------
the text of this Agreement or Annex S hereto and, unless otherwise indicated,
shall have such meaning throughout this Agreement.
SECTION 1.3. OTHER DEFINITIONAL PROVISIONS.
-----------------------------
(a) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE 2
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
SECTION 2.1. PURCHASE AND SALE. Upon the terms and subject to the
-----------------
conditions of this Agreement, at the Closing, CBS agrees to sell, assign,
transfer, convey and deliver to Purchaser all of CBS's right, title and interest
in, to and under the Acquired Assets and to cause each Selling Subsidiary to
sell, assign, transfer, convey and deliver to Purchaser all of such Selling
Subsidiary's right, title and interest in, to and under the Acquired Assets held
by it, in each case free and clear of any Liens other than Permitted Liens, and
Purchaser agrees to purchase, acquire and accept from Sellers, all such right,
title and interest in, to and under the Acquired Assets; provided, that the
--------
transfer of the stock of each U.S. Sold Subsidiary shall be effected pursuant to
a forward taxable merger of each U.S. Sold Subsidiary with and into a Purchaser
Affiliate.
SECTION 2.2. ACQUIRED ASSETS AND EXCLUDED ASSETS.
-----------------------------------
(A) ACQUIRED ASSETS. The term "Acquired Assets" means all the
--------------- ---------------
business, properties, assets, goodwill and rights of Sellers of whatever kind
and nature, real or personal, tangible or intangible, and wherever located,
other than the Excluded Assets, primarily used or
18
held for use in, or primarily relating to or arising out of the conduct of, the
Energy Systems Business and the operation of the Premises, including all
Intellectual Property and Technology of the Energy Systems Business, whether or
not reflected on the books and records of the Sellers or the Schedules hereto,
as they exist on the date hereof, with such changes, deletions or additions
thereto as may occur from the date hereof to the Closing Date consistent with
the terms and conditions of this Agreement, including subject to Section 2.2(b):
(i) all parcels of Owned Real Property listed in Schedule 1.1(c)
(and all easements and rights of way appurtenant thereto) owned by any of
the Sellers, all rights of the Sellers as lessee to the parcels of Leased
Real Property listed in Schedule 1.1(b) and the leasehold interest in the
Waltz Mill Service Center as provided in Section 5.31;
(ii) all Inventory that is located on the Premises and all other
Inventory, including Inventory in transit;
(iii) all Fixtures and Equipment;
(iv) all Accounts Receivable of the Sellers and the security
agreements related thereto, including any rights of any of the Sellers with
respect to any third party collection proceedings or any other actions or
proceedings which have been commenced in connection therewith;
(v) [intentionally omitted];
(vi) subject to Section 2.2(c) and to the licenses to be granted
pursuant to Section 5.9(a), all Intellectual Property and Technology;
(vii) subject to Section 2.2(c), all Permits;
(viii) subject to Section 2.2(c), all Contracts, including all
Government Contracts;
(ix) subject to Section 2.2(c), all bids, quotations and proposals
for Contracts, including all Government Contracts, whether oral or written,
to which any of Sellers is a party or by which any of Sellers is bound that
relate primarily to the Business and including historical proposals,
historical records of indirect costs, Cost Accounting Standards submissions
and current and historical forward pricing policies;
19
(x) all Investments;
(xi) all books of account, general, financial, accounting and
personnel records, policies and procedures, files, invoices, customers' and
suppliers' lists and other data, both current and historical, owned by
Sellers on the Closing Date and used or held for use primarily by, in or
for the Business, including those which are located in Sellers' storage
facilities, except (A) to the extent relating to the Excluded Assets or the
Excluded Liabilities and (B) the materials described in Section
2.2(b)(vii);
(xii) subject to Section 2.2(c), all rights, claims and causes of
action of the Sellers to the extent relating to the Business or any of the
Assumed Liabilities or the Acquired Assets;
(xiii) all prepaid expenses of the Sellers, to the extent relating to
the Business;
(xiv) all motor vehicles owned by the Sellers and all rights of the
Sellers as lessee to any leased motor vehicles, in each case that are used
or held for use primarily in the conduct of the Business;
(xv) all security deposits (A) deposited by or on behalf of any
Seller as lessee or sublessee under any of the Contracts or (B) deposited
with or paid to any Seller pursuant to any Contract;
(xvi) all site plans, surveys, soil and substratus studies,
architectural drawings, plans and specifications, engineering, electrical
and mechanical plans and studies, floor plans, landscape plans, appraisals,
feasibility studies, environmental studies, audits and assessments and
other plans and studies of any kind if existing and in the possession or
subject to the control of or used by any Seller relating to the Business;
(xvii) all rights of any Seller under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and
contractors in connection with products sold to or services provided to any
Seller for the Business, or affecting the Acquired Assets, the Assumed
Liabilities or the property, machinery or equipment owned by Sellers or any
Sold Subsidiary and used in the conduct of the Business;
20
(xviii) subject to Section 5.24, (A) all rights to insurance proceeds
receivable after the Closing in respect of any Assumed Liabilities (x) that
reduced both the Target Amount and the Closing Date Working Capital or (y)
that did not reduce Closing Date Working Capital, in each case insured on a
"claims made" basis, or, in the case of workers' compensation losses, on an
"occurrence" basis, and (B) all insurance proceeds received subsequent to
December 31, 1997 and prior to the Closing, and all rights to insurance
proceeds receivable after the Closing, in each case in respect of any loss
or casualty occurring subsequent to December 31, 1997 and prior to the
Closing with respect to any asset that will be or would, if held by a
Seller or a Sold Subsidiary on the Closing Date, be an Acquired Asset
(except to the extent any such proceeds have been used to repair or replace
fixed assets);
(xix) all proceeds, net of any cost of disposition (including
Taxes), from the sale or other disposition after the date of this Agreement
and prior to the Closing Date of any asset that (A) is of a type permitted
or required by GAAP to be treated as a fixed asset on the books of the
Business and (B) but for such sale or other disposition prior to the
Closing would be an Acquired Asset (except to the extent any such proceeds
have been used to repair or replace fixed assets);
(xx) all transferable telephone exchange numbers used by the
Sellers in the Business;
(xxi) the Settlement Support Agreements and all Settlement
Agreements and the rights of Sellers thereunder;
(xxii) the assets of and the leasehold interest in STC, in each case
as described in Section 5.22, but only to the extent provided in or
contemplated by the arrangements described in Section 5.22;
(xxiii) all assets described in Schedule 2.2(a), whether or not
related to the Business; and
(xxiv) all (A) Tax Returns, Tax records, and Tax work papers of the
Foreign Sold Subsidiaries, (B) copies of Tax Returns, Tax records and Tax
work papers of the U.S. Sold Subsidiaries (other than Income Tax Returns
and the records and work papers relative thereto and other than Tax Returns
that include businesses other than the Business), and (C) copies of
separate company Income Tax Returns, Income Tax records, and Income Tax
work papers of the U.S. Sold Subsidiaries, provided that, in
--------
21
the case of the U.S. Sold Subsidiaries, such Tax Returns, Tax records, Tax
work papers, Income Tax Returns, Income Tax records, and Income Tax work
papers shall be for the six calendar years preceding the Closing Date or,
if longer, the taxable periods for which the applicable statute of
limitations has not yet run.
(B) EXCLUDED ASSETS. The term "Excluded Assets" means:
--------------- ---------------
(i) all cash on hand or in banks and all cash equivalents, on the
books of the Business immediately prior to the Closing, except any cash or
cash equivalents (A) described in Section 2.2(a)(xv)(B), (xviii) or (xix),
(B) constituting security deposits deposited with or paid to any Sold
Subsidiary pursuant to any Contract or (C) required to be held on hand or
in banks pursuant to Contracts, including joint venture Contracts;
(ii) all rights of Sellers under this Agreement and the agreements,
instruments and certificates executed in connection with this Agreement;
(iii) all records prepared in connection with the sale of the
Business, including bids received from third persons and analyses relating
to the Business (but not the Sellers' rights under any confidentiality
agreements with such bidders, which shall be, to the extent related to the
Business, included in Acquired Assets);
(iv) except as provided in Section 2.2(a)(xviii), all rights of
Sellers under insurance policies;
(v) all rights, claims and causes of action relating to any of the
Excluded Liabilities or the Excluded Assets, including rights, claims and
causes of action under Contracts and insurance policies relating thereto;
(vi) all rights to claims, available to or being pursued by Sellers
or any Sold Subsidiary, for refunds of or credits against Taxes (including
all investment tax credits, research credits and credits for prepayments of
Income Taxes) attributable to the Business for Pre-Closing Tax Periods and
Sellers' Straddle Periods, but only to the extent of Taxes that are
Excluded Liabilities; provided that Purchaser shall have no obligation for,
--------
and shall be indemnified by CBS against (without regard to Article 8
hereof), any expenses or Taxes incurred in connection therewith and that
Purchaser shall have the right, solely for its own account and the accounts
of its Affiliates, to make claims for refunds of or credits against Income
Taxes of the Foreign Sold Subsidiaries attributable to carry backs of items
of income, credit, loss, or deduction
22
from any taxable period beginning after the Closing Date to any taxable
period including or ending prior to the Closing Date to the extent Taxes
remain payable after all CBS tax benefits have been taken into account;
(vii) any consolidated, combined or unitary Tax Return relating to
Income Taxes that includes any of Sellers or any Sold Subsidiary, and
records and work papers used in preparation thereof;
(viii) all assets (other than the Intellectual Property and Technology
of the Business relating to Nuclear Installations) used primarily in the
Power Generation Business, the Process Control Business or the GESCO
Businesses and any other retained business of CBS (including the business
of CBS itself);
(ix) subject to the license to be granted pursuant to Section
5.9(b), all right, title or interest in or to (i) the names and marks
"Westinghouse Electric Corporation," "Westinghouse Electric Company,"
"WESTINGHOUSE," "WELCO," "CIRCLE W" (in logo type design or any other style
or design), and (ii) "129.228.x.x Class B internet address range" and the
xxxxxxxxxxxx.xxx, xxx.xxx and xxxxxxxxxxxxxxxxxxxx.xxx domain names, and
any name or xxxx derived from or including any of the foregoing;
(x) all Surplus Property owned by any of the Sellers or the Sold
Subsidiaries;
(xi) all assets of the Sold Subsidiaries not used or held for use
primarily in the Business or which pursuant to Section 5.16 will be
transferred by the Sold Subsidiaries to CBS, to other Subsidiaries of CBS
or to third parties designated by CBS, including the purchaser of the Power
Generation Business, the Process Control Business or the GESCO Businesses,
in the manner provided by Section 5.16;
(xii) all insurance policies of Sellers, including those described in
Schedule 4.1(i), and all insurance proceeds received prior to the Closing,
or rights to insurance proceeds receivable after the Closing, in each case
in respect of any Assumed Liability recognized on the Statement of Working
Capital (except to the extent the right to receive such proceeds is
reflected on the Statement of Working Capital);
(xiii) all assets, including facilities, equipment, intellectual
property and technology, that are subject to the provisions of (A) the
Transitional Services
23
Agreement and other arrangements described in Section 5.20 or (B) the
licenses described in Sections 5.9(a)(ii) or 5.9(b);
(xiv) CBS's Gateway Center corporate headquarters located in
Pittsburgh, Pennsylvania, the Shared Service Center located in Churchill,
Pennsylvania, the Information Technology shared service operations located
in Monroeville, Pennsylvania and, subject to the Transitional Services
Agreement and the arrangements contemplated by Section 5.20(b), all assets
used in connection with or relating to CBS's corporate headquarters or
corporate activities that are provided to or managed for the benefit of any
of the Sellers or any of the Sold Subsidiaries;
(xv) except to the extent provided in or contemplated by the
arrangements described in Section 5.22, the assets of STC; and
(xvi) all assets identified in Schedule 2.2(b).
(C) NONASSIGNABLE RIGHTS. Notwithstanding anything to the contrary
--------------------
contained herein but without limiting the rights and obligations of the parties
under the other provisions of this Agreement (including Section 5.4), this
Agreement shall not operate to assign, and there shall not be included in the
Acquired Assets, any Intellectual Property, Technology, Permit or Contract or
any claim, right or benefit arising thereunder or resulting therefrom if an
attempted assignment thereof, without the consent of any Person (except for
consents already received), would constitute a breach, default or other
contravention thereof or a violation of Law (it being understood that the
failure to obtain such consents shall not reduce the Purchase Price or, except
as provided in Section 6.1(d), relieve either party from its obligation to
consummate at the Closing the transactions contemplated by this Agreement). To
the extent that this Section 2.2(c) operates to exclude from the Acquired Assets
any such Intellectual Property, Technology, Permit or Contract or any claim,
right or benefit arising thereunder or resulting therefrom, the definition of
"Business" in the recitals hereto shall be modified to exclude such assets and
the business, goodwill and rights related thereto until such consents are
received, and provided that such assets shall be included in the definition of
"Business" to the extent that the benefits thereof inure to Purchaser pursuant
to Section 5.4.
(D) TERMINATION OF RIGHTS OF SOLD SUBSIDIARIES. Notwithstanding
------------------------------------------
anything to the contrary in any agreement or otherwise, any rights, express or
implied, of any Sold Subsidiary to use any and all domestic and foreign patents,
patent applications, trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, trade name registrations, slogans, corporate
names, corporate nicknames or initialisms, registered
24
copyrights, domain names, domain name registrations, trade secrets, inventions,
know-how, formulae, processes, procedures, research records, records of
inventions, test information, market surveys and marketing know-how,
unregistered copyrights and software, including source and object code and
related documentation, supporting database information and modifications and
enhancements thereof owned by Sellers shall terminate at the Closing, except to
the extent included in the Acquired Assets, Intellectual Property, Technology or
Contracts and except as otherwise contemplated by Sections 5.9(a) and 5.9(b).
SECTION 2.3. ASSUMPTION OF LIABILITIES.
-------------------------
(A) ASSUMED LIABILITIES. Upon the terms and subject to the
-------------------
conditions of this Agreement and notwithstanding anything to the contrary in any
Novation Agreement, Purchaser hereby agrees to assume, effective as of the
Closing, and agrees to pay, perform and discharge when due all Liabilities of
Sellers (except Excluded Liabilities) only to the extent arising out of,
relating to or otherwise incurred in respect of the Acquired Assets, the
Business or the operations of the Business before, on or after the Closing Date
(collectively, the "Assumed Liabilities"), including (except Excluded
Liabilities): -------------------
(i) all Liabilities of Sellers under Contracts, including all
Government Contracts and any related guarantees and Novation Agreements and
the Contracts set forth in Schedule 2.3(a)(i) or any other Schedule hereto;
(ii) all accounts payable owed by Sellers arising out of operations
of the Business or otherwise incurred in respect of the Business;
(iii) all Liabilities in respect of any and all products sold or
licensed, services rendered or technology or intellectual property provided
or licensed by the Business, including Liabilities for refunds,
adjustments, allowances, repairs, exchanges, returns and warranty,
merchantability and product liability and other claims;
(iv) all Liabilities (other than Environmental Liabilities and
Decontamination and Decommissioning Liabilities) arising as a result of
being the owner or occupant of, or the operator of the activities conducted
at, (A) the Premises or (B) any other real property owned, leased or
operated at any time by any of Sellers and used or held for use primarily
in the Business, including (in the case of clause (A) only) all Liabilities
relating to personal injury and property damage;
25
(v) all Business-Related Environmental Liabilities but only to the
extent that (A) they arise as a result of being the owner or occupant of,
or the operator of the activities conducted at, the Premises or (B) they
relate to the treatment, storage, transportation or disposal of Hazardous
Substances on, to or at a waste site, treatment site, disposal site or
other location after they were produced, generated, used or stored at the
Premises;
(vi) all Decontamination and Decommissioning Liabilities, except for
such Liabilities incurred with respect to STC;
(vii) all Assumed Off-Site Disposal Liabilities;
(viii) all Liabilities relating to the employment or termination of
employment of any employee or Former Employee of the Business or an STC
Employee, other than as described in Section 2.3(a)(ix);
(ix) all Liabilities, with respect to an STC Employee or employees
or Former Employees of the Business, arising under or in connection with
any Benefit Plan, other than those Liabilities retained by CBS pursuant to
Section 5.5;
(x) all Liabilities for Taxes (other than Taxes described in
Sections 2.3(b)(ii) and (iii)) attributable to the Business for all taxable
periods;
(xi) all Liabilities in respect of lawsuits, actions and
proceedings, pending or threatened, and claims, whether or not presently
asserted, arising out of, relating to or otherwise in any way in respect of
the Business, including those that are set forth in Schedules 4.1(e),
4.1(m)(ii) and 4.1(q), except as specifically excluded in Sections
2.3(b)(v) and 2.3(b)(ix), but, in the case of employment-related matters
involving employees of the other businesses of CBS, only to the extent they
relate to employees or Former Employees of the Business or to STC
Employees;
(xii) all Liabilities of Sellers or any Sold Subsidiary with respect
to any guarantees (including guarantees of performance (including of
performance by Purchaser or its Affiliates) under Contracts), assumption of
obligations, letters of credit or other similar arrangements established in
connection with and in support of the purposes of the Business, including
surety and performance bonds, and foreign exchange contracts;
26
(xiii) all Steam Generator Liabilities;
(xiv) all Liabilities arising out of, relating to or otherwise
incurred in respect of the Settlement Agreements (other than the Steam
Generator Settlement Agreements) and any Liabilities, arising out of,
relating to or otherwise in any way in respect of uranium or the matters
set forth in Schedule 1.1(f);
(xv) all Liabilities relating to or associated with STC, but only
to the extent provided in or contemplated by the arrangements described in
Section 5.22;
(xvi) all Liabilities of Sellers or any Sold Subsidiary with respect
to the abatement of asbestos or asbestos-containing products present at the
Premises or claims with respect to exposure after the Closing Date to
asbestos or asbestos-containing products at the Premises;
(xvii) all Indebtedness reflected on the Statement of Net Assets; and
(xviii) all Liabilities described in Schedule 2.3(a)(xviii), whether
or not related to the Business.
(B) EXCLUDED LIABILITIES. The term "Excluded Liabilities" means:
-------------------- --------------------
(i) except as set forth in Schedule 2.3(b), any Liability of
Sellers to the extent related to the Excluded Assets;
(ii) any Liability of Sellers or any Sold Subsidiary for Income
Taxes attributable to the Business or the Sold Subsidiaries or for Taxes
other than Income Taxes of the Sold Subsidiaries to the extent not related
to the Business for Pre-Closing Tax Periods or Sellers' Straddle Periods,
including (A) any Liability for Income Taxes of any of the Sellers or any
Sold Subsidiary pursuant to Treasury Regulation (S) 1.1502-6(a) or any
comparable provision of state, local or foreign law and (B) Income Taxes
resulting from the sale and transfer from any Seller to Purchaser of the
Acquired Assets, but Excluded Liabilities shall not include any Taxes for
Post-Closing Tax Periods or for Purchaser's Straddle Periods;
(iii) any Liability attributable to the Business for Pre-Closing Tax
Periods or Sellers' Straddle Periods for (A) Monroeville, Pennsylvania
business privilege Taxes, (B) any Taxes attributable to the
reclassification for federal Tax purposes of any
27
individual from independent contractor status to employee status, and (C)
any Taxes (other than Income Taxes) attributable to the organization,
operations, business or activities of Foreign Sold Subsidiaries in excess
of the sum of (i) $1,500,000, (ii) the aggregate amount reflected on the
Statement of Working Capital for such Foreign Taxes (other than Income
Taxes), and (iii) the lesser of (x) the aggregate non-current liability
reflected on the Balance Sheet for such Foreign Taxes (other than Income
Taxes), or (y) the aggregate non-current liability reflected on the
Statement of Net Assets for such Foreign Taxes (other than Income Taxes);
(iv) any Environmental Liabilities of Sellers or any Sold Subsidiary
(other than those Business-Related Environmental Liabilities designated as
Assumed Liabilities pursuant to Section 2.3(a)(v)), including any that
relate to Surplus Property or any other real property owned, leased or
occupied at any time by any Seller or Sold Subsidiary and not included in
the Premises; any Environmental Liabilities of Sellers or any Sold
Subsidiary relating to PCB contamination other than at the Premises; and
any Environmental Liabilities of Sellers or any Sold Subsidiary relating to
any generation, handling, transportation, treatment, storage or disposal of
any Hazardous Substance at any location other than the Premises, other than
the Assumed Off-Site Disposal Liabilities;
(v) any Liabilities in respect of any claim, lawsuit, action or
proceeding before or after the Closing to the extent the same directly
pertain to any Excluded Asset or Excluded Liability;
(vi) any Liabilities relating to the capital stock of any Seller or
any shareholders' agreements to which any Seller is party (except for
agreements relating to the equity interests of any of the Sold
Subsidiaries);
(vii) any Liabilities relating to amounts required to be paid by CBS
pursuant to Section 2.5;
(viii) except for any Liabilities reflected on the Statement of
Working Capital and Liabilities contemplated by the agreements and
arrangements referred to in Sections 5.20 and 5.21, any Liabilities owed to
any Seller or any Affiliate of any Seller;
(ix) any Liabilities in respect of any claim, lawsuit, action or
proceeding that is asserted or brought by any Governmental Authority (in
any criminal proceeding),
28
before or after the Closing, based on any actual criminal violation of Law
occurring prior to the Closing;
(x) any Liabilities arising out of or in respect of (A) any
Subsidiary of CBS sold or otherwise divested prior to the Closing, or (B)
any business or business unit of CBS or any of its Subsidiaries sold or
otherwise divested prior to Closing;
(xi) any Liabilities with respect to Benefit Plans to be retained by
CBS pursuant to Section 5.5;
(xii) all Liabilities of Sellers or any Sold Subsidiary with respect
to death or personal injury actually or allegedly caused directly or
indirectly by asbestos or asbestos compounds or products or any Liabilities
relating to asbestos or asbestos compounds or products which are not
Assumed Liabilities covered by Section 2.3(a)(xvi);
(xiii) except to the extent provided in Section 5.5 or 5.22, all
Liabilities relating to or associated with STC;
(xiv) subject to Section 5.10(a), any Liability of Sellers or any
Sold Subsidiaries for patent infringement claims asserted in the name of
Xxxxxx X. Xxxxxxxx alone or as co-inventor or the Lemelson Medical,
Education and Research Foundation Limited Partnership or its successors or
assigns with respect to any of Sellers' businesses, including the Business,
and for trademark or trade name infringement claims asserted in any way,
including by way of declaratory judgment action, opposition proceeding, or
infringement suit involving White Consolidated Industries, Inc.;
(xv) Sellers' and Sold Subsidiaries' liabilities for outstanding
checks issued on or before the Closing Date which (x) are drawn on bank
accounts that are Excluded Assets and (y) have reduced Assumed Liabilities
as of the Closing; and
(xvi) any other Liabilities not assumed by Purchaser pursuant to the
provisions of Section 2.3(a).
Except for Assumed Liabilities, neither Purchaser nor any of its
Affiliates is assuming, or in any other way becoming responsible for the payment
or performance of, any Liabilities of any of the Sellers, whether known or
unknown, accrued, absolute, contingent,
29
changing, determinable, indeterminable, liquidated, unliquidated or otherwise
and whether due or to become due or relating to any existing or prior act,
omission, condition or state of facts.
SECTION 2.4. PURCHASE PRICE. Subject to Section 2.5 and Section
--------------
3(a)(iii)(B)(1) of Annex S, the purchase price for the Acquired Assets (the
"Purchase Price") shall consist of the assumption by Purchaser and its
---------------
Affiliates of the Assumed Liabilities.
SECTION 2.5. PURCHASE PRICE ADJUSTMENT.
-------------------------
(a) Within 90 days after the Closing Date, CBS shall at its expense
prepare and deliver to Purchaser a statement of Working Capital (the "Statement
---------
of Working Capital") and a statement of Net Assets (the "Statement of Net
------------------ ----------------
Assets") as of the close of business on the Closing Date setting forth Working
------
Capital (as defined below), and Net Assets (as defined below), respectively,
together with separate special-purpose reports of CBS's independent auditors to
the effect that the Statement of Working Capital and the Statement of Net Assets
have been prepared and audited in compliance with the requirements of this
Section 2.5. The Statement of Working Capital and Statement of Net Assets are
collectively the "Statements."
----------
During the 60-day period following Purchaser's receipt of the
Statements, Purchaser and its independent auditors shall be permitted to review
and make copies reasonably required of the working papers of CBS and its
independent auditors relating to the Statements and shall have reasonable access
to CBS representatives and its independent auditors. The Statement of Working
Capital shall become final and binding upon the parties on the 60/th/ day
following delivery thereof, unless Purchaser gives written notice of its
disagreement with the Statement of Working Capital ("Notice of Disagreement") to
----------------------
CBS prior to such date. Any Notice of Disagreement shall (A) specify in
reasonable detail the nature of any disagreement so asserted, (B) only include
disagreements based on mathematical errors or based on Working Capital not being
calculated in accordance with this Section 2.5, (C) only include disagreements
based on the Statement of Working Capital, (D) be accompanied by a signed
written confirmation by Purchaser that it has complied with the covenants set
forth in Section 2.5(e), and (E) if Purchaser's independent auditors are engaged
by Purchaser in connection with the preparation of the Notice of Disagreement,
be accompanied by a written confirmation of Purchaser's independent auditors
that they concur with each of the positions taken by Purchaser in the Notice of
Disagreement. If a Notice of Disagreement complying with the preceding sentence
is received by CBS in the period specified, then the Statement of Working
Capital (as revised in accordance with clause (I) and (II) below) shall become
final and binding upon the parties on the earlier of (I) the date CBS and
Purchaser resolve in writing
30
any differences they have with respect to the matters specified in the Notice of
Disagreement or (II) the date any disputed matters are finally resolved in
writing by the Accounting Firm (as defined below).
During the 60-day period following the delivery of a Notice of
Disagreement that complies with the preceding paragraph, CBS and Purchaser shall
seek in good faith to resolve in writing any differences which they may have
with respect to the matters specified in the Notice of Disagreement. During
such period, CBS and its independent auditors shall be permitted to review and
make copies reasonably required of the working papers of Purchaser and shall
have reasonable access to its representatives and its independent auditors,
including their working papers and make copies reasonably required relating to
the preparation of the Notice of Disagreement. If, at the end of such 60-day
period, CBS and Purchaser have not so resolved such differences, CBS and
Purchaser shall submit to an independent accounting firm (the "Accounting Firm")
---------------
mutually acceptable to the parties for review and resolution any and all matters
which remain in dispute and which were properly included in the Notice of
Disagreement. CBS and Purchaser shall use reasonable efforts to cause the
Accounting Firm to render a decision resolving the matters in dispute within 30
days following the submission of such matters to the Accounting Firm. CBS and
Purchaser agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. Except as specified in the following
sentence, the cost of any arbitration (including the fees and expenses of the
Accounting Firm) pursuant to this Section 2.5 shall be borne by CBS and
Purchaser in inverse proportion as they may prevail on matters resolved by the
Accounting Firm, which proportionate allocations shall also be determined by the
Accounting Firm at the time the determination of the Accounting Firm is rendered
on the merits of the matters submitted. The fees and expenses of CBS's
independent auditors incurred in connection with the issuance of their special-
purpose reportS relating to the Statements and review of any Notice of
Disagreement shall be borne by CBS, and the fees and expenses of Purchaser's
independent auditors incurred in connection with their review of the Statements
shall be borne by Purchaser.
(b) The Purchase Price shall be increased by the amount by which
Working Capital exceeds the Target Amount (as defined below), and the Purchase
Price shall be decreased by the amount by which Working Capital is less than the
Target Amount (the Purchase Price as so increased or decreased shall hereinafter
be referred to as the "Adjusted Purchase Price"). The Target Amount shall be
-----------------------
$14,600,000. If the Purchase Price is less than the Adjusted Purchase Price,
Purchaser shall, and if the Purchase Price is greater than the Adjusted Purchase
Price, CBS shall, within 10 business days after the Statement of Working
31
Capital becomes final and binding upon the parties, make payment to the other
party by wire transfer in immediately available funds of the amount of such
difference, together with interest thereon at the three-month treasury xxxx rate
(as reported by The Wall Street Journal or, if not reported thereby, by another
authoritative source) in effect on the Closing Date plus .25% (the "Rate"),
----
calculated on the basis of the actual number of days elapsed over 365, from the
Closing Date to the date of actual payment, compounded annually. Notwithstanding
the foregoing provisions of this Section 2.5, if the Statement of Working
Capital delivered by CBS pursuant to Section 2.5(a) and any Notice of
Disagreement delivered by Purchaser pursuant to Section 2.5(a) both reflect a
calculation of Working Capital that if correct would require a payment by the
same party, then within 10 days after delivery of the Notice of Disagreement
that party shall make a payment to the other, in the manner and with interest as
provided elsewhere in this Section 2.5(b), in an amount equal to the lesser of
(i) the amount payable by that party pursuant to the calculation reflected in
the Statement of Working Capital and (ii) the amount payable by that party
pursuant to the calculation reflected in the Notice of Disagreement. Any amount
paid pursuant to the preceding sentence shall be applied against, and
correspondingly reduce, the amount otherwise payable under this Section 2.5(b).
(c) The term "Working Capital" shall mean Total Current Assets minus
---------------
Total Current liabilities (in each case as defined below). The Target Amount
equals Working Capital at December 31, 1997, including a proforma adjustment for
certain restructuring actions. The terms "Total Current Assets" and "Total
-------------------- -----
Current liabilities" shall mean the total current assets and total current
-------------------
liabilities, respectively, of the Business (including amounts related to the
nuclear instrumentation and control business), determined in accordance with
GAAP (it being understood that (i) all Excluded Assets, (ii) all Excluded
Liabilities, (iii) all pension, postretirement, and postemployment (excluding
restructuring actions) benefit liabilities, (iv) all warranty liabilities for
(x) RCCA (control rods), (y) fuel element structural corrosion or (z) rod
internal pressure, (v) deferred Income Taxes, (vi) all Steam Generator
Liabilities, (vii) insurance proceeds receivable classified as a current asset
as of the Closing Date related to the loss of any asset for which as of such
date a replacement has not been placed in service and (x) is of a type permitted
or required by GAAP to be recognized as a fixed asset on the books of the
business as of the Balance Sheet date and (y) but for the loss prior to the
Closing would be an Acquired Asset, and (viii) any current assets and current
liabilities of STC, shall be excluded in determining Total Current Assets and
Total Current liabilities), using the same methodologies, practices (including
GAAP as in effect as of December 31, 1997), accounting applications and
assumptions (including discount rates and actuarial assumptions), policies,
valuations and estimation methodologies and judgments (including those relating
to balance sheet classification) as used in determining the Target Amount as set
forth in Schedule 2.5(a).
32
In calculating Working Capital or Net Assets, as the case may be, no
changes will be made in any valuation allowances, including but not limited to
contract estimates at completion, any inventory or accounts receivable valuation
allowances, any product warranty liabilities, environmental liabilities,
including decommissioning and decontamination liabilities, workers compensation
liabilities, government rate and cost disallowance liabilities, or Steam
Generator Liabilities except to reflect specific identifiable events, facts and
circumstances (other than any such events relating to or arising as a result of
the announcement of the transactions contemplated by this Agreement) occurring
between December 31, 1997 and the Closing Date. The parties agree that the
adjustment contemplated by this Section 2.5 is intended to show the change in
Working Capital from the Target Amount and that such change may only be measured
if the calculation is done in accordance with the preceding sentence and using
the same methodologies, practices (including GAAP as in effect as of December
31, 1997), accounting applications and assumptions (including discount rates and
actuarial assumptions), policies, valuations and estimation methodologies and
judgments (including those relating to balance sheet classification) as used in
determining the Target Amount. The scope of the disputes to be resolved by the
Accounting Firm is limited to whether the Statement of Working Capital
calculations were done in accordance with the foregoing provisions of this
Section 2.5 and whether there were mathematical errors in the Statement of
Working Capital.
(d) The term "Net Assets" shall mean Total Assets minus Total
liabilities (in each case as defined below). The terms "Total Assets" and
------------
"Total liabilities" shall mean the total assets and total liabilities,
------------------
respectively, of the Business (including amounts related to the nuclear
instrumentation and control business), determined in accordance with GAAP (it
being understood that (i) all Excluded Assets, (ii) all Excluded Liabilities,
(iii) all pension, postretirement, and postemployment (excluding restructuring
actions) benefit liabilities, and (iv) deferred Income Taxes shall be excluded
in determining Total Assets and Total liabilities), using the same
methodologies, practices (including GAAP as in effect as of December 31, 1997),
accounting applications and assumptions (including discount rates and actuarial
assumptions), policies, valuations and estimation methodologies and judgments
(including those relating to balance sheet classification) as used in
determining the Balance Sheet.
(e) Without limiting anything contained in this Section 2.5, no
decision announced or event initiated by Purchaser prior to Closing with respect
to matters to take effect on or after the Closing Date shall be taken into
account in determining Closing Working Capital or Closing Net Assets. Purchaser
further agrees that following the Closing, it shall not take any actions which
would affect preparation and audit of the Statements with respect to the
accounting books and records of the Business on which the Statements are to be
based that are
33
not consistent with past practices. Purchaser shall cause the employees of the
Business to cooperate in the preparation of the Statements, including providing
customary certifications, including management representation letters, to CBS's
independent auditors.
(f) During the period of time from and after the Closing Date through the
resolution of any adjustment to the Purchase Price contemplated by this Section
2.5, Purchaser shall cause the employees of the Business to afford to CBS and
any accountants, counsel or financial advisers retained by CBS in connection
with any adjustment to the Purchase Price contemplated by this Section 2.5 on-
site access reasonably required at all reasonable times to all personnel,
properties, books, contracts, records, schedules, analyses and working papers of
the Business.
ARTICLE 3
THE CLOSING
SECTION 3.1. CLOSING DATE. The Closing shall take place at the
------------
offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m. on a date specified by CBS that is not earlier than two (2)
days and not later than ten (10) days following the satisfaction or waiver of
the conditions to the Closing set forth in Sections 6.1(a) and 6.1(d), or, if
the other conditions to the Closing set forth in Article 6 shall not have been
satisfied or waived by such date, as soon as practicable after such conditions
shall have been satisfied or waived, and the Closing shall be deemed to take
place at 10:00 a.m. on such date.
SECTION 3.2. TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At the
------------------------------------------
Closing:
(A) DELIVERIES BY SELLERS. CBS shall deliver (and cause any Selling
---------------------
Subsidiaries to deliver) to Purchaser such appropriately executed deeds, bills
of sale, assignments, certificates or agreements of merger (with respect to the
U.S. Sold Subsidiaries) and other instruments of transfer providing for the
sale, assignment, transfer, conveyance and delivery of the Acquired Assets in
form and substance reasonably satisfactory to Purchaser and its counsel (it
being understood that any such instrument shall not provide for any
representations or warranties or any Liabilities that are not otherwise
expressly provided for in this Agreement), together with resignations as
director of each director of each Sold Subsidiary (together with, to the extent
obtained pursuant to Section 5.26, waivers of any claim such director may have
against the Purchaser or the Sold Subsidiaries) if requested by Purchaser at
least 10 days prior to Closing; and
34
(B) DELIVERIES BY PURCHASER. Purchaser shall deliver to CBS (or, at
-----------------------
CBS's direction, one or more Selling Subsidiaries) (i) by wire transfer at the
Closing, to an account or accounts designated in writing by CBS prior to the
Closing, of immediately available funds in an amount equal to the aggregate of
all amounts, if any, required to be paid by Purchaser to CBS pursuant to Section
3(a)(iii)(B) of Annex S, (ii) certificates or agreements of merger (with respect
to the U.S. Sold Subsidiaries) and (iii) such appropriately executed assumption
agreements and other instruments of assumption providing for the assumption of
the Assumed Liabilities in form and substance reasonably satisfactory to CBS and
its counsel (it being understood that any such instrument in clause (ii) or
(iii) shall not provide for any representations or warranties or any Liabilities
that are not otherwise expressly provided for in this Agreement).
(C) NOMINEE SHARES. At the Closing, or as promptly thereafter as
--------------
possible, with respect to any Foreign Sold Subsidiaries as to which directors or
other nominees of CBS or any of its Subsidiaries (other than one of the Sold
Subsidiaries) own shares of capital stock for the purpose of satisfying
requirements of Law (such shares, "Nominee Shares"), CBS shall cause the
--------------
applicable Selling Subsidiary to take all necessary or appropriate steps to
effect the transfer of the Nominee Shares to new directors or other nominees
designated by Purchaser as, when and to the extent permitted by Law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF CBS. CBS hereby
-------------------------------------
represents and warrants to Purchaser as follows:
(A) ORGANIZATION, STANDING AND POWER. CBS is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the requisite corporate power and authority
to own the Acquired Assets owned by it and to carry on the Business as now being
conducted. Each Sold Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has the requisite corporate power and authority to own its assets
and to carry on its business as now being conducted and is duly qualified to do
business in each jurisdiction in which the nature of its business or properties
requires such qualification, except for failures to qualify that, individually
or in the aggregate, would not have a Material Adverse Effect.
35
(B) AUTHORITY. CBS has the requisite corporate power and authority to
---------
execute, deliver and perform this Agreement. Sellers have the requisite
corporate power and authority to execute, deliver and perform the agreements to
be entered into by them at the Closing pursuant hereto (the "Seller Ancillary
----------------
Documents") and to consummate the transactions contemplated hereby and thereby.
---------
The execution and delivery of this Agreement and the Seller Ancillary Documents
to which CBS is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of CBS, and, in the case of the Seller Ancillary Documents, will be
authorized by all necessary corporate action on the part of the Selling
Subsidiaries prior to the Closing, and do not and will not require the approval
of the stockholders of CBS. This Agreement has been duly executed and delivered
by CBS and constitutes, and each Seller Ancillary Document to be entered into by
any of Sellers will be duly executed and delivered at the Closing and when so
executed and delivered will constitute, a legal, valid and binding obligation of
each of the Sellers party thereto enforceable against it in accordance with its
terms, subject to the Bankruptcy Exception (as defined below). The execution and
delivery of this Agreement by CBS do not, and the execution and delivery by
Sellers of the Seller Ancillary Documents, the consummation by Sellers of the
transactions contemplated hereby and thereby and the compliance by Sellers with
the terms hereof and thereof will not, conflict with, or result in any violation
of or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
(except, to the extent provided in any such program or plan, any acceleration of
vesting under the Westinghouse Savings Program or under any Pension Plan or
long-term incentive plan) or to the loss of a material benefit under, or result
in the creation of any Lien upon any of the Acquired Assets under, any provision
of (i) the Business Corporation Law of the Commonwealth of Pennsylvania, (ii)
the certificate of incorporation or by-laws (or comparable organizational
documents) of any of Sellers or the Sold Subsidiaries, (iii) except as disclosed
in Schedule 4.1(b)(i), any Intellectual Property, Technology, contract, lease,
indenture or other agreement of any Seller or Sold Subsidiary or (iv) subject to
the filings and other matters referred to in the following sentence, any Law
applicable to Sellers, the Sold Subsidiaries, the Acquired Assets or the
Subsidiary Assets, other than, in the case of clauses (iii) and (iv) above, any
such conflicts, violations, defaults, rights or Liens that, individually or in
the aggregate, would not (A) reasonably be expected to have a Material Adverse
Effect or (B) materially impair the ability of CBS to perform its obligations
under this Agreement. No consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to Sellers, the
Sold Subsidiaries, the Acquired Assets or the Subsidiary Assets in connection
with the execution and delivery of this Agreement or the Seller Ancillary
Documents or the consummation of the transactions contemplated hereby or
thereby, except as disclosed in
36
Schedule 4.1(b)(ii) and for (i) compliance with and filings under the HSR Act,
(ii) voluntary notification under the Exon-Xxxxxx Amendment, (iii) filings and
approvals under foreign laws, (iv) compliance with and filings under the
Exchange Act, (v) consents or novations which may be required for the assignment
of any Intellectual Property, Technology or Contract as contemplated in Section
5.4, (vi) compliance with, and notices and filings under, environmental permits,
statutes and regulations, (vii) compliance with, and notices and filings under,
the regulations of the NRC, including any application for licenses or license
transfers, (viii) those that may be required solely by reason of Purchaser's (as
opposed to any other Person's) participation in the transactions contemplated
hereby and (ix) those the failure of which to obtain or make, individually or in
the aggregate, would not (A) reasonably be expected to have a Material Adverse
Effect or (B) materially impair the ability of CBS to perform its obligations
under this Agreement.
(C) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
---------------------------------------------
(i) CBS has previously delivered to Purchaser the audited combined
balance sheet (the "Balance Sheet") and related statements of income and
-------------
cash flows of the Business (except as set forth in Schedule 4.1(c)(i)(A))
as of and for the fiscal year ended December 31, 1997, together with the
notes to such financial statements (collectively, the "Financial
---------
Statements"). The Financial Statements have been prepared from the books
----------
and records of CBS and its Subsidiaries relating to the Business and,
except as described in the notes thereto or the independent auditors'
report thereon, or otherwise indicated in the Financial Statements, have
been prepared in accordance with GAAP consistently applied and present
fairly, in all material respects, the financial position, results of
operations and cash flows of the Business (except as set forth in Schedule
4.1(c)(i)(A)) as at the dates and for the periods indicated. Schedule
4.1(c)(i)(B) sets forth a complete and correct reconciliation of the
Financial Statements to the 1997 balance sheet and income statement
contained in the information memorandum dated March 1998 provided by CBS to
potential purchasers (the "Memorandum").
----------
(ii) Except (A) as disclosed, reflected or reserved against in the
Balance Sheet and the notes thereto, (B) for items set forth in Schedules
4.1(c)(ii) and 4.1(e) or any other Schedule hereto, (C) for Liabilities
incurred in the Ordinary Course of Business since the date of the Balance
Sheet that would not reasonably be expected to have a Material Adverse
Effect, (D) for Liabilities incurred in connection with this Agreement and
the transactions contemplated hereby, (E) for Excluded Liabilities, (F) for
Liabilities pursuant to any lawsuit, action or proceeding and (G) for
Income
37
Taxes, as of the date hereof there is no material liability related to the
Business and none of the Sold Subsidiaries has any material liabilities, in
each case of a nature required to be reflected on a balance sheet for the
Business prepared in accordance with GAAP.
(iii) All Accounts Receivable reflected on the Balance Sheet and all
Accounts Receivable that have arisen since the date of the Balance Sheet,
(A) have arisen from bona fide sales transactions in the Ordinary Course of
Business, and (B) represent valid and binding obligations due to the
Sellers or Sold Subsidiaries, and are, and immediately following the
Closing will be, enforceable in accordance with their terms (subject to the
Bankruptcy Exception). Schedule 4.1(c)(iii) lists any obligor which
together with all of its Affiliates owed, as of May 31, 1998, amounts
billed and uncollected by Sellers and the Sold Subsidiaries in an aggregate
amount of $5,000,000 or more. Schedule 4.1(c)(iii) also sets forth a
complete and correct list in all material respects of all set-offs or
claims in respect of accounts receivable as of such date in an amount
billed and uncollected with an invoice amount in excess of $500,000.
(iv) All the Inventory held for use or sale by any Seller or Sold
Subsidiary consists of items that are of a quality and quantity usable and
salable in the Ordinary Course of Business consistent with past practice,
subject to normal and customary allowances in the industry for damage and
outdated items.
(v) The order backlog information of the Business at the date of the
Balance Sheet set forth in Schedule 4.1(c)(v) is true and correct in all
material respects. The orders comprising the backlog of the Business
reflect bona fide transactions entered into in the Ordinary Course of
Business.
(vi) The financial projections contained in the Memorandum were
prepared in good faith utilizing assumptions which management of CBS
believed to be reasonable as of the time of such preparation (it being
acknowledged by Purchaser that actual results may vary from such
projections, and that such variances may be material).
(D) COMPLIANCE WITH APPLICABLE LAWS. (i) Except as set forth in
-------------------------------
Schedule 4.1(d)(i), Sellers and the Sold Subsidiaries have complied with all
Laws which relate to the Business and the Acquired Assets, except where the
failure to so comply would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in Schedule
4.1(d)(i), since December 31, 1997, neither Sellers nor the
38
Sold Subsidiaries have (i) received any written notice alleging any non-
compliance with any such Laws which would reasonably be expected to have a
Material Adverse Effect or (ii) received any written notice of any
administrative, civil or criminal investigation or audit by any Governmental
Authority relating to the Business which if adversely determined would
reasonably be expected to have a Material Adverse Effect. None of the Sellers or
the Sold Subsidiaries has at any time since December 31, 1994, (a) made any
illegal payments for political contributions or any bribes, illegal kickback
payments or other illegal payments except for those that are not material or (b)
been disqualified, for any reason, from bidding on any public or private
contract or project. This Section 4.1(d) does not relate to litigation matters
(to which Section 4.1(e) is applicable), labor and employment matters (to which
Section 4.1(q) is applicable), employee benefits matters (to which Section
4.1(m) is applicable), Environmental Laws (to which Sections 4.1(j)(B) and
4.1(n) are applicable) or Tax matters (to which Section 4.1(o) is applicable).
(ii) Except as set forth in Schedule 4.1(d)(ii), with respect to the
Acquired Assets, all Sellers and Sold Subsidiaries are currently, and will
on the Closing Date be, in material compliance with the requirements of the
Cost Accounting Standards, the Federal Acquisition Regulations and agency
supplements, as applicable.
(E) LITIGATION; DECREES. Schedule 4.1(e) sets forth a list as of the
-------------------
date of this Agreement of all pending lawsuits, actions and proceedings to which
any of the Sold Subsidiaries is a party or to which any of the Sellers is a
party and which, if still pending on the Closing Date, would be an Assumed
Liability, provided that this Section 4.1(e) shall not require disclosure of any
lawsuit, action or proceeding (i) in which one of the Sellers or the Sold
Subsidiaries is the plaintiff and no counterclaim or cross-claim has been, or is
likely, to be made against any of the Sellers or the Sold Subsidiaries, or (ii)
in which the amount at issue is less than $5,000,000. Except for matters set
forth in Schedule 4.1(e), as of the date hereof, there is no lawsuit, action or
proceeding pending, or, to the knowledge of CBS, threatened, against any of
Sellers or the Sold Subsidiaries seeking to delay or prevent, or otherwise
challenging, the transactions contemplated hereby. Neither Sellers nor the Sold
Subsidiaries are in default in any material respect under any judgment, order,
injunction or decree of any Governmental Authority entered against any of
Sellers or the Sold Subsidiaries and relating to the Business.
(F) TITLE TO ACQUIRED ASSETS; LEASEHOLD INTERESTS.
---------------------------------------------
(i) Sellers have, and will convey and transfer (subject to Sections
2.2(c) and 5.4) to Purchaser at Closing, good and valid title to the
Acquired Assets, and the Sold
39
Subsidiaries have good and valid title to all the Subsidiary Assets, in
each case free and clear of all Liens, except Permitted Liens.
(ii) Sellers have and will convey and transfer to Purchaser at Closing
the right to possess and use all the properties held by them under any
lease, and the Sold Subsidiaries have the right to possess and use all the
properties held by them under any lease, in each case (i) free and clear of
all Liens, except Permitted Liens, and (ii) during the term, and subject to
the provisions, of the leases as being applicable to such properties.
This Section 4.1(f) does not relate to Intellectual Property or Technology (to
which Section 4.1(h) is applicable) or the Owned Real Property and Leased Real
Property (to which Section 4.1(g) is applicable).
(G) REAL PROPERTY.
-------------
(i) Owned Real Property. Schedule 1.1(c) is in all material respects
-------------------
a true, complete and correct list, as of the date hereof, of the street
addresses and square footage of improvements on each parcel of Owned Real
Property. The Owned Real Property constitutes all real property or
interests in real property owned in fee by Sellers or the Sold Subsidiaries
(other than any Excluded Assets) and primarily used in the operation of the
Business as presently conducted. None of the Owned Real Property is Surplus
Property. Each Seller and Sold Subsidiary has good and insurable fee title
to all Owned Real Property owned by it free and clear of all Liens other
than (A) Permitted Liens, (B) easements, covenants, rights-of-way and other
encumbrances or restrictions of record, (C) zoning, building and other
similar restrictions, (D) unrecorded easements, covenants, rights- of-way
or other restrictions, (E) Liens that have been placed by any developer,
landlord or other Person (other than Sellers or the Sold Subsidiaries) on
property (other than Owned Real Property) over which any of Sellers or the
Sold Subsidiaries has easement rights, none of which items set forth in
clauses (B), (C), (D) or (E) above, individually or in the aggregate,
materially impair the ability of the Sellers or the Sold Subsidiaries to
use the property for the purposes for which it is currently being used in
connection with the Business and, with respect to any Significant Real
Property, none of which items set forth in clauses (B), (C), (D) or (E)
would materially impair the continued use and operation thereof for the
same uses and operations as those conducted at the present time or grant to
any party any option or right to acquire or lease a material portion
thereof. Except as set forth in Section 5.8, no brokerage or finders
commissions shall be payable by Purchaser in connection
40
with the conveyance of the Owned Real Property to Purchaser. Except as set
forth in Schedule 4.1(g)(i), no material portion of any of the Owned Real
Property is leased by Sellers or the Sold Subsidiaries to any Person.
(ii) Leased Real Property. Schedule 1.1(b) is in all material
--------------------
respects a true, complete and correct list of all Leased Real Property. CBS
shall provide Purchaser a list of all leases of Leased Real Property not
later than 20 business days following the date of this Agreement. The
Leased Real Property constitutes all real property leased by any Seller or
Sold Subsidiary as Lessee (other than the Excluded Assets) and primarily
used in the operation of the Business as presently conducted. None of the
Leased Real Property is Surplus Property. With respect to each lease for
Significant Real Property: (A) each such lease is valid and subsisting and
in full force and effect as against the Seller or the Sold Subsidiary
therein designated and, to the best of Sellers' knowledge, as against the
landlord, and has not been amended, modified or supplemented except as set
forth in Schedule 1.1(b) or in a manner which would not reasonably be
expected to materially reduce the benefits to Purchaser of the transactions
contemplated by this Agreement; (B) no notice of a material default has
been sent or received by any Seller or Sold Subsidiary under such lease
which remains uncured and, to the best of Sellers' knowledge, no event has
occurred and is continuing which, with notice or lapse of time or both,
would constitute a material default by any Seller or Sold Subsidiary under
such lease; and (C) the tenant is in occupancy of the space demised
thereunder.
(iii) Significant Real Property. With respect to each Significant Real
-------------------------
Property (which for purposes of this representation and warranty shall also
include any Leased Real Property that is the subject of a sale/leaseback or
similar arrangement in which any Seller or Sold Subsidiary is the primary
occupant of the property demised thereunder): (A) CBS has no knowledge
that any condemnation or eminent domain proceedings are pending with
respect to any Significant Real Property; (B) each Significant Real
Property is an independent unit that does not rely in any material respect
on any facilities located on any property not included in such Significant
Real Property to fulfill any municipal or governmental requirement or for
the furnishing to such Significant Real Property or any essential building
systems or utilities, other than facilities provided to the Significant
Real Property pursuant to one or more valid easements; and (C) each
Significant Real Property has access to a dedicated, public street, either
by reason of such Significant Real Property abutting a dedicated, public
street or by way of good and insurable appurtenant easement(s), and such
access is
41
adequate for the present use and operation thereof. No real estate tax
certiorari proceedings are currently pending with respect to any
Significant Real Property.
(iv) Subleases Affecting Leased Real Property. Schedule 4.1(g)(iv)
----------------------------------------
sets forth in all material respects a true, complete and correct list of
all oral or written subleases (including all amendments and supplements
thereto) demising space on the Leased Real Property leased by any of the
Sellers or the Sold Subsidiaries under a lease (each, a "Sublease"). With
--------
respect to each Sublease for premises larger than 15,000 square feet of
rentable space (each, a "Material Sublease"): (A) each such sublease is
-----------------
valid and subsisting and in full force and effect as against the Seller or
the Sold Subsidiary therein designated and, to the best of the knowledge of
CBS, as against the subtenant, and has not been amended, modified or
supplemented expect as set forth in Schedule 4.1(g)(iv); and (B) no notice
of a material default has been sent or received by any Seller or Sold
Subsidiary under any Material Sublease which remains uncured and, to the
best of the knowledge of CBS, no event has occurred and is continuing
which, with notice or lapse of time or both, would constitute a material
default by any Seller or Sold Subsidiary under any Material Sublease.
(H) INTELLECTUAL PROPERTY AND TECHNOLOGY.
------------------------------------
Schedule 4.1(h)(i) sets forth a list, as of the date of this
Agreement, of all material patents, patent applications, registered
trademarks, trademark applications, registered service marks, service xxxx
applications, registered copyrights and copyright applications owned by
Sellers that relate primarily to the Business or owned by a Sold Subsidiary
(except as otherwise provided by Section 5.16 and subject (i) to rights
under development contracts under which the Intellectual Property and
Technology may have been generated, (ii) to the rights of the United States
government and (iii) to licenses granted to third parties) and included in
the Acquired Assets or the Subsidiary Assets and, to the extent indicated
on such Schedule, the Intellectual Property listed in Schedule 4.1(h)(i)
has been duly registered in, filed in or issued by the United States
Copyright Office or the United States Patent and Trademark Office, the
appropriate offices in the various states of the United States and the
appropriate offices of other jurisdictions. Except as set forth in
Schedule 4.1(h)(ii) and subject (i) to rights under development contracts
under which the Intellectual Property and Technology may have been
generated, (ii) to the rights of the United States government and (iii) to
licenses granted to third parties, a Seller or a Sold Subsidiary is the
sole and exclusive owner of all material Intellectual Property and material
Technology (other than licenses) included in the Acquired Assets or the
Subsidiary Assets, free and clear
42
of any security interests. Except as set forth in Schedule 4.1(h)(iii), and
subject (i) to rights under development contracts under which the
Intellectual Property and Technology may have been generated, (ii) to the
rights of the United States government and (iii) to licenses granted to
third parties, a Seller or a Sold Subsidiary is the sole and exclusive
owner of all right to xxx and keep any damage awards for any past
infringements by third parties of any material Intellectual Property or
Technology (other than licenses). Except as set forth in Schedule
4.1(h)(iv), since January 1, 1997, no Seller or Sold Subsidiary has
received any written notice from any other Person challenging in any
material respect the right of Sellers or the Sold Subsidiaries to use any
of the material Intellectual Property or material Technology included in
the Acquired Assets or the Subsidiary Assets or any rights thereunder.
Sellers have taken measures, consistent with Sellers' corporate practice,
to protect the secrecy, confidentiality and value of the material
Technology included in the Acquired Assets. Except for the Excluded Assets
(other than those described in clause (viii) of the definition of Excluded
Assets) and subject to Section 2.2(c), Seller does not own any material
intellectual property rights that it is not transferring to Purchaser that
are required for Purchaser (together with the rights of Purchaser under the
Purchaser Ancillary Documents, the Novation Agreements and the Purchaser
Permits) to operate the Business after Closing in the manner in which it
presently is operated. Except as set forth in Schedule 4.1(h)(v), since
January 1, 1997, no Seller or Sold Subsidiary has made any claim in writing
of a violation, infringement, misuse or misappropriation by others of their
rights to or in connection with any material Intellectual Property or
material Technology included in the Acquired Assets or the Subsidiary
Assets, which claim is still pending. Except as set forth in Schedule
4.1(h)(vi), to the knowledge of CBS, as of the date of this Agreement,
there is no pending or threatened claim by any third Person of a violation,
infringement, misuse or misappropriation by any Seller or Sold Subsidiary
of any intellectual property or technology owned by any third Person, or of
the invalidity of any patent or registration of a copyright, trademark,
servicemark or trade name included in the Acquired Assets or the Subsidiary
Assets, which if adversely determined would reasonably be expected to have
a Material Adverse Effect. Except as set forth in Schedule 4.1(h)(vii),
there are no interferences or other contested proceedings, either pending
or, to the knowledge of CBS, threatened, in the United States Copyright
Office, the United States Patent and Trademark Office or any Governmental
Authority relating to any pending application with respect to any material
Intellectual Property. The use by Purchaser and its Affiliates of the names
and marks of CBS as permitted under the licenses described in Section
5.9(b) will not infringe on the rights of third parties. Except as provided
in the immediately preceding
43
sentence, nothing in this Agreement shall imply an indemnity for the
infringement of third party intellectual property rights not within the
knowledge of CBS.
(I) INSURANCE. Schedule 4.1(i) sets forth a list and brief
---------
description (specifying the insurer, the policy number or covering note number
with respect to binders and the amount of any deductible, and the aggregate
limit, if any, of the insurer's liability thereunder) of all property and
liability policies or binders, including fire, liability, errors and omissions,
workers' compensation, vehicular and other property and liability insurance held
by or on behalf of Sellers or the Sold Subsidiaries with respect to the Acquired
Assets, the Subsidiary Assets and the Business. Such policies and binders are
valid and enforceable in accordance with their terms in all material respects
(subject to the Bankruptcy Exception), and, as of the date hereof, are in full
force and effect. None of the Sellers or the Sold Subsidiaries is in default
with respect to any material provision contained in any such policy or binder or
has failed to give any material notice or present any material claim under any
such policy or binder. As of the date hereof, none of Sellers or the Sold
Subsidiaries has received any notice of cancellation or non-renewal of any such
policy or binder.
(J) CONTRACTS. (A) Except for Contracts listed in Schedule
---------
4.1(j)(A), none of Sellers or any of the Sold Subsidiaries is a party to or
bound by any Contract that is (all such Contracts being referred to as "Material
Contracts"): --------
---------
(i) a Contract for the employment of any Person with an annual base
salary in excess of $100,000;
(ii) a collective bargaining agreement relating to the Business or
other Contract with a labor union;
(iii) a Contract with (A) CBS or any of its Subsidiaries (except for
any Sold Subsidiaries), other than Contracts in the Ordinary Course of
Business for the purchase or sale of products or services from or to the
Business, or (B) any director or officer of CBS or any of its Subsidiaries
that will not be terminated at or prior to the Closing that involves
expenditures or receipts in excess of $60,000 in any fiscal year;
(iv) other than letters of credit, foreign exchange contracts, bonds
and similar instruments obtained in the Ordinary Course of Business and
intercompany indebtedness owed by any Seller that will not constitute
Assumed Liabilities, an indenture, note, loan or credit agreement or other
Contract relating to (A) the borrowing of money in an amount in excess of
$1,000,000 by any of Sellers or the
44
Sold Subsidiaries or (B) the direct or indirect guarantee or assumption by
any of Sellers or the Sold Subsidiaries of the obligations of any other
Person (other than one of Sellers or the Sold Subsidiaries) for borrowed
money in an amount in excess of $1,000,000;
(v) a Contract containing a covenant not to compete, other than
those contained in project-related teaming, consortium or similar
agreements with respect to the project that is the subject of such
agreement, customary covenants contained in distributor agreements and
those of which the Business is the beneficiary in employee-related
agreements;
(vi) a lease or similar agreement under which (A) any of Sellers or
a Sold Subsidiary is a lessee of, or holds or operates, any real property
owned by any third Person for an annual rent in excess of $100,000 or (B)
any of Sellers or a Sold Subsidiary is a lessor of, or makes available for
use by any third Person, any real property owned or held as lessee by
Sellers or a Sold Subsidiary for an annual rent in excess of $250,000;
(vii) a lease or similar agreement under which (A) any of Sellers or
a Sold Subsidiary is lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any third Person for
an annual rent in excess of $50,000 or (B) any of Sellers or a Sold
Subsidiary is a lessor of, or makes available for use by any third Person,
any tangible personal property owned (including ownership for Tax purposes)
by Sellers or a Sold Subsidiary having a fair market value in excess of
$50,000;
(viii) a Contract (including purchase orders), involving the
obligation of Sellers or a Sold Subsidiary to purchase products or services
for payment by Sellers or a Sold Subsidiary of more than $1,000,000 (unless
terminable by one of Sellers or a Sold Subsidiary without payment or
penalty of not more than $250,000 upon no more than 60 days' notice);
(ix) a Contract (including sales orders) involving the obligation of
Sellers or a Sold Subsidiary to deliver products or services with an
unfilled order balance of more than $2,000,000 (unless terminable by one of
Sellers or a Sold Subsidiary without payment or penalty of not more than
$250,000 upon no more than 60 days' notice); or
45
(x) a Contract providing for the formation of any joint venture,
long-term alliance, partnership or material teaming agreement or
arrangement;
(xi) a Contract for the sale of any of the assets or properties of
any of the Sellers or the Sold Subsidiaries (other than sales orders) or
for the grant to any Person of any preferential rights to purchase any of
its assets or properties, in each case in an amount exceeding $250,000;
(xii) any take-or-pay or requirements Contract or any other Contract
requiring any Seller or Sold Subsidiary to pay regardless of whether
products or services are received;
(xiii) a Contract relating to the acquisition by any Seller or Sold
Subsidiary of any operating business or the capital stock of any other
Person;
(xiv) a Contract made outside the Ordinary Course of Business
relating to any Seller or Sold Subsidiary and involving executory
obligations of any Seller or Sold Subsidiary in an amount in excess of
$1,000,000; and
(xv) a material license or development agreement.
The term "Material Contracts" also includes the 20 largest (measured by unfilled
order balance as of May 31, 1998 and prior to reduction for obligations under
Settlement Agreements) Contracts (including sales orders) involving the
obligation of Sellers or a Sold Subsidiary to deliver products or services. Such
Contracts are listed in Schedule 4.1(j)(A)(xvi). All of the Material Contracts
are (or in the case of the Material Contracts referred to in Schedule
4.1(j)(A)(xvi), were as of May 31, 1998) valid, subsisting, in full force and
effect and binding upon the Sellers or Sold Subsidiaries that are named as
parties thereto and, to the best knowledge of CBS, the other parties thereto in
accordance with their terms, subject to the qualifications that enforcement of
the rights and remedies created thereby is subject to: (A) bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and (B) general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law) (clauses (A) and (B) being referred to herein collectively as
the "Bankruptcy Exception"). Each of the respective Sellers or Sold
--------------------
Subsidiaries has satisfied in full or provided for all of its liabilities and
obligations thereunder requiring performance prior to the date hereof in all
material respects, is not in default in any material respect under any of them,
nor does any condition exist that with notice or lapse of time or both would
constitute such a material default. To the
46
best knowledge of CBS, as of the date hereof, no other party to any such
Material Contract is in default in any material respect thereunder, nor does any
condition exist as of the date hereof that with notice or lapse of time or both
would constitute such a material default. This paragraph does not relate to real
estate matters (to which Section 4.1(g) is applicable).
(B) With respect to all Government Contracts, none of the managerial
personnel (as such term is defined in the relevant Government Contract) of the
Sellers or any of the Sold Subsidiaries have engaged in any act of willful
misconduct or lack of good faith and none have failed to exercise prudent
business judgment so as to deprive any Seller or Sold Subsidiary of the right to
government reimbursement for Environmental Liabilities to third persons or to
any Governmental Authority either under the Department of Energy Acquisition
Regulations ((A) 48 C.F.R. (S) 970.5204-31 (1997), (B) 48 C.F.R. (S) 970.5204-61
(1997), or (C) 48 C.F.R. (S) 970.3101-3 (1997)) or under the insurance,
litigation and claims or similar clauses in any Government Contract. None of
such managerial personnel have engaged in any negligent, unreasonable or other
behavior so as to create any Environmental Liability in connection with the
performance of the Government Contracts so as to deprive any Seller or Sold
Subsidiary of the right to government reimbursement for liabilities to third
persons or to any Governmental Authority. For purposes of this Section
4.1(j)(B), the terms "lack of good faith," "willful misconduct," and "prudent
business judgment" shall have the meanings provided in 48 C.F.R. (S) 970.5204-31
(1997).
(C) With respect to each of the Government Contracts included in the
Acquired Assets, the Sellers and the Sold Subsidiaries have submitted to the
appropriate Administrative Contracting Officer ("ACO") forward pricing,
provisional indirect cost rate proposals and indirect cost claims on a timely
basis. Final negotiated indirect cost rate agreements closing indirect costs
years have been settled with the ACO through 1992. To the knowledge of CBS,
government audits of open years do not contain questioned costs that would
reasonably be expected to have a Material Adverse Effect. Set forth in Schedule
4.1(j)(C) is a true and correct description of all allegations, presently known
to CBS and made during the period from January 1, 1998 through the date hereof
by Federal agencies, of willful misconduct or fraud as it relates to Federal
contracting activity.
(K) SUFFICIENCY OF ACQUIRED ASSETS. Except as disclosed in Schedule
------------------------------
4.1(k) and except for the Excluded Assets (other than those described in clause
(viii) of the definition of Excluded Assets), and subject to Section 2.2(c), the
Acquired Assets and the Subsidiary Assets on the Closing Date will comprise all
the assets owned by Sellers or the Sold Subsidiaries that, together with the
rights of Purchaser under the Purchaser Ancillary Documents, the Novation
Agreements and the Purchaser Permits, are necessary for (i) the
47
conduct of the Business in all material respects as presently conducted and (ii)
the discharge in all material respects of the Assumed Liabilities in the
ordinary course of business consistent with past practice in relation to the
Business.
(L) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
------------------------------------
Schedules hereto, including Schedule 4.1(l), or as contemplated by this
Agreement, from the date of the Balance Sheet and until the date hereof Sellers
have conducted the Business in all material respects only in the Ordinary Course
of Business. Except as set forth in the Schedules hereto, including Schedule
4.1(l), or as contemplated by this Agreement, and except for changes (A)
relating to or resulting from seasonal changes or that generally affect to the
same extent all participants in the industries in which the Business operates,
(B) relating to or resulting from the public announcement of the transactions
contemplated by this Agreement, or (C) relating to the identity of the Purchaser
or relating to or resulting from actions taken by Purchaser following the date
of this Agreement, from the date of the Balance Sheet there has not been any
Material Adverse Effect.
(M) EMPLOYEE BENEFITS.
-----------------
(i) Schedule 4.1(m)(i) contains a list of all written Benefit Plans.
Except as noted on Schedule 4.1(m)(i), CBS has made available to Purchaser
true, complete and correct copies of (A) each Benefit Plan, (B) the most
recent annual report on Form 5500 and attached schedules filed with the
Internal Revenue Service with respect to each U.S. Benefit Plan (if any
such report was required), (C) the most recent summary plan description for
each U.S. Benefit Plan for which such a summary plan description is
required, (D) each trust agreement and group annuity contract or other
funding mechanism (other than insurance contracts) relating to any U.S.
Benefit Plan, (E) the most recent audited financial statements and
actuarial valuation reports with respect to each U.S. Benefit Plan, to the
extent available, and (F) the most recent determination letter with respect
to each U.S. Benefit Plan intended to qualify under Section 401(a) of the
Code. Schedule 4.1(m)(i) also separately identifies each Benefit Plan
covering only employees or Former Employees of the Business ("Free Standing
-------------
Plans").
-----
(ii) Each Benefit Plan has been administered in all material respects
in accordance with its terms and is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other applicable
laws, rules and regulations (including, without limitation, all applicable
foreign laws). Except as set forth in Schedule 4.1(m)(ii), all material
reports, returns and similar documents with respect to the Benefit Plans
required to be filed with any Governmental Authority or
48
distributed to any Benefit Plan participant have been duly and timely filed
or distributed. Except as set forth in Schedule 4.1(m)(ii), there are no
suits, actions, termination proceedings or other proceedings pending, or,
to the knowledge of CBS, threatened against any Benefit Plan that relate to
any Former Employees or employees of the Business who will become Business
Employees and, to the knowledge of CBS and with respect to such employees,
there are no investigations by any Governmental Authority or other claims
(except claims for benefits payable in the normal operation of the Benefit
Plans) pending or threatened against any Benefit Plan or asserting any
rights to benefits under any Benefit Plan, which in each case is reasonably
likely to be adversely determined and which, if adversely determined, would
reasonably be expected to have an adverse effect on the Business.
(iii) Except as set forth in Schedule 4.1(m)(iii), (A) all
contributions to, and payments from, the Benefit Plans that may have been
required to be made in accordance with the Benefit Plans, collective
bargaining agreements and, when applicable, Section 302 of ERISA, Section
412 of the Code or applicable foreign laws, have been timely made, (B)
there has been no application for or waiver of the minimum funding
standards imposed by Section 412 of the Code with respect to any Pension
Plan for the benefit of any officers or employees of the Business employed
in the United States ("U.S. Pension Plans"), and (C) no U.S. Pension Plan
------------------
has an "accumulated funding deficiency" within the meaning of Section
412(a) of the Code as of the most recent plan year, except in each instance
as would not reasonably be expected to have an adverse effect on the
Business.
(iv) Except as set forth in Schedule 4.1(m)(iv), all U.S. Pension
Plans have been the subject of determination letters from the Internal
Revenue Service to the effect that such U.S. Pension Plans are qualified
and exempt from Income Taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of CBS, has revocation been threatened.
Except as set forth in Schedule 4.1(m)(iv), to the knowledge of CBS, (A)
each such U.S. Pension Plan which is intended to be so qualified is so
qualified, and (B) nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification, except in each
instance as would not reasonably be expected to have an adverse effect on
the Business.
(v) Except as set forth in Schedule 4.1(m)(v), no "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA) has occurred that involves the assets of any Benefit Plan and that
is reasonably likely to subject any Sold
49
Subsidiary or any employees of the Business to the tax or penalty on
prohibited transactions imposed by Section 4975 of ERISA or the sanctions
imposed under Title I of ERISA. Except as set forth in Schedule 4.1(m)(v),
none of the U.S. Pension Plans has been terminated nor have there been any
"reportable events" (as defined in Section 4043 of ERISA and the
regulations thereunder) with respect thereto and no event or condition
exists (other than reportable events triggered solely by pending sales,
dispositions and spin-offs by CBS of Subsidiaries, divisions and
businesses, including the sale contemplated by this Agreement) which is
likely to be deemed such a reportable event.
(vi) With respect to any U.S. Pension Plan subject to Title IV of
ERISA, CBS and its Affiliates have not incurred any Liability to the
Pension Benefit Guaranty Corporation, other than for payment of premiums,
all of which have been paid when due, and other than any Liabilities that,
individually or in the aggregate, would not be reasonably expected to have
an adverse effect on the Business.
(vii) Except as set forth in Schedule 4.1(m)(vii), as of the most
recent valuation date for each U.S. Pension Plan that is a defined benefit
pension plan, there was not any amount of "unfunded benefit liabilities"
(as defined in Section 4001(a)(18) of ERISA) under such U.S. Pension Plan.
(viii) Except as set forth in Schedule 4.1(m)(viii), at no time within
the five years preceding the Closing Date has CBS or any of its Affiliates
(including any of the Sold Subsidiaries) had any liability (including,
without limitation, any withdrawal liability) with respect to, or been
required to contribute to, any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) for the benefit of any officers or employees of the
Sold Subsidiaries or incurred any withdrawal liability, within the meaning
of Section 4201 of ERISA, with respect to any such multiemployer plan,
which liability has not been fully paid as of the date hereof, or announced
an intention to withdraw, but not yet completed such withdrawal, from any
such multiemployer plan.
(ix) Except as set forth in Schedule 4.1(m)(ix), no Former Employee
or employee of the Business will become entitled to any material bonus,
retirement, sever ance, job security or similar benefit or any materially
enhanced benefit or the acceleration of payment of any material benefit
contingent on the transactions contemplated hereby that, following the
consummation of the transactions contemplated
50
hereby, will be an obligation of (i) Purchaser or its Subsidiaries
(including the Sold Subsidiaries) or (ii) CBS or its Affiliates.
(x) No amount payable to any Business Employee in connection with
the transactions contemplated by this Agreement will fail to be deductible
by a Sold Subsidiary by reason of Code Section 280G.
(xi) Except as disclosed in Schedule 4.1(m)(xi), since December 31,
1996, there have been no Benefit Plan amendments which have resulted in a
material increase in liabilities of the Business.
(xii) Except as identified in Schedule 4.1(m)(xii), CBS and its
Affiliates and the Benefit Plans are in material compliance with the
requirements of Sections 4980B and 9801 et seq. of the Code and Sections
601 et seq. and 701 et seq. of ERISA.
(xiii) Except as identified in Schedule 4.1(m)(xiii) or as otherwise
set forth on the statutory accounts of Sellers or Sold Subsidiaries, and
except for statutory benefits with respect to which the Sold Subsidiaries
are, and have been, in material compliance, there is no significant
underfunding of Foreign Benefit Plans.
(N) ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 4.1(n):
---------------------
(i) For the purposes of this Section 4.1(n), "material" means any
Loss which individually or in the aggregate with respect to the same set of
facts, exceeds $5,000,000 and is not reimbursable by a Governmental
Authority, and "Sellers" and "Sold Subsidiaries" include their directors,
officers, agents, employees, representatives, consultants and shareholders;
(ii) Sellers and Sold Subsidiaries are in compliance in all material
respects with all Environmental Laws governing the operations of the
Business and the Acquired Assets, except where such failure to comply has
not resulted and will not result in an Agency Action in respect of which
the failure to comply would be material; and Sellers and Sold Subsidiaries
are not currently liable for any penalties, fines or forfeitures for
failure to comply with any of the foregoing, for which a failure to comply
would be material;
(iii) Sellers and the Sold Subsidiaries severally hold, and are in
material compliance with, all Permits required under the Environmental Laws
for Sellers and
51
the Sold Subsidiaries to conduct the Business, except where such failure to
comply has not resulted and will not result in an Agency Action, a list of
which Permits is identified in Schedule 4.1(n)(iii)(a); all such Permits
are in full force and effect and all charges and fees relating thereto have
been paid and, to the knowledge of CBS, there is no condition nor has any
event occurred which constitutes, or with the giving of notice would
constitute, a material violation of the terms of any such Permit; except as
set forth in Schedule 4.1(n)(iii)(b), there are no material legal or
administrative proceedings pending or, to the knowledge of CBS, threatened,
which involve the validity, modification or breach of any such Permit or
the entitlement of Seller or Sold Subsidiaries for any such Permit; and all
applications for renewal of such Permits have been timely filed;
(iv) Except as set forth in Schedule 4.1(n)(iv), no Governmental
Authority has indicated any unwillingness to grant any such consent
required for the transfer or reissuance of any Permit to Purchaser;
(v) Except as set forth in Schedule 4.1(n)(v), none of the Sellers
or Sold Subsidiaries have received, nor, to the knowledge of CBS, is there
any notice of any outstanding or threatened noncompliance order or notice
of violation issued by any Governmental Authority administering the
Environmental Laws in connection with the operation of the Business, the
Premises or the Acquired Assets by any of the Sellers or Sold Subsidiaries,
or, to the knowledge of CBS, issued to their predecessors in interest,
which has not been resolved to the satisfaction of the issuing Governmental
Authority and which are material;
(vi) Except as set forth on Schedule 4.1(n)(vi), no Seller or Sold
Subsidiary has entered into, agreed to or is subject to any Agency Action
relating to compliance with any Environmental Law or to Remedial Action
under any Environmental Law that would be material or would materially
restrict Purchaser's operations of the Business; and Seller and Sold
Subsidiaries are not in any material respect in noncompliance with, breach
of or default under any such Agency Action;
(vii) To the knowledge of CBS, neither Sellers, in respect of the
operations of the Business and the Acquired Assets, nor any of the Sold
Subsidiaries, nor to the knowledge of CBS any predecessors in interest,
have Released, transported, or disposed of any Hazardous Substance on, to,
under or at any of the Premises, or any other property other than in a
manner that would not cause a material Loss; and none of the Sellers or
Sold Subsidiaries, nor to the knowledge of CBS, their predecessors in
52
interest, have received any written notice prior to the date of this
Agreement of the institution or pendency of any lawsuit, action, proceeding
or investigation by any Person arising under any Environmental Law at any
of the Premises, or any other property which is reasonably likely to be
adversely determined and which if adversely determined would cause a
material Loss, or which would require Remedial Action at any of the
Premises, the costs of which would be material;
(viii) Except as disclosed in Schedule 4.1(n)(viii), in respect of the
operations of the Business or the Acquired Assets, no Seller or Sold
Subsidiary has received any notice and CBS has no knowledge of and has no
reason to expect any enforcement order or notice of violation issued or
given by any Governmental Authority or private party in which order or
notice Sellers, Sold Subsidiaries or any of their predecessors in interest
have been named as potentially responsible parties pursuant to CERCLA;
(ix) In respect of the operations of the Business or the Acquired
Assets, Purchaser has been provided with an opportunity to review true,
correct and complete copies of all relevant environmental investigations,
studies, audits, tests, reports, reviews or other analyses conducted by or
on behalf of, and that are in the possession of, any Seller or Sold
Subsidiary in relation to any site or facility now or, in the case of any
Sold Subsidiary, previously owned, operated or leased by any of them or any
other property at which any Seller or Sold Subsidiary has or is alleged to
have Environmental Liabilities; and
(x) None of Sellers or any Sold Subsidiary, in respect of the
operation of the Business or the Acquired Assets, has agreed with any
Governmental Authority pursuant to any Environmental Law to the imposition
of any lien or limitation on the future use of any property that is an
Acquired Asset.
53
(O) TAXES. Except as set forth in Schedule 4.1(o):
-----
(i) Each of the Sellers and the Sold Subsidiaries has timely filed
or has had filed on its behalf, after giving effect to any applicable
extensions, all material Tax Returns required to be filed under applicable
law with respect to the Acquired Assets or the income or operations of the
Business, and all such Tax Returns were true, correct, and complete in all
material respects. Each of the Sellers and the Sold Subsidiaries has timely
paid or has had paid on its behalf, after giving effect to any applicable
extensions, all Taxes shown as due on such Tax Returns.
(ii) No taxing authority has asserted in writing any material Tax
deficiency that has not been paid or reserved for in accordance with GAAP
with respect to the Acquired Assets, the Subsidiary Assets or the income or
operations of the Business.
(iii) Except in connection with any consolidated, affiliated, or
combined United States federal, state, or local Income Tax Return, none of
the Sellers and none of the Sold Subsidiaries has requested any extension
of time within which to file any Tax Return with respect to the Acquired
Assets or the income or operation of the Business, which Tax Return has not
since been filed.
(iv) Except in connection with any consolidated, affiliated, or
combined United States federal, state, or local Income Tax Return, no
Seller or Sold Subsidiary has executed any outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any Taxes or Tax Returns with respect to the Acquired
Assets or the income or operation of the Business.
(v) None of the Acquired Assets or the Subsidiary Assets is property
that any party to this transaction is or will be required to treat as being
owned by another person pursuant to the provisions of Code Section
168(f)(8) (as in effect prior to its amendment by the Tax Reform Act of
1986) or is "tax-exempt use property" within the meaning of Code Section
168(h).
(vi) No Sold Subsidiary is required to include in income any
adjustment pursuant to Code Section 481(a) by reason of a voluntary change
in accounting method initiated by such Sold Subsidiary, and the Internal
Revenue Service has not proposed in writing any such adjustment or change
in accounting method.
54
(vii) No material audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax Returns
of any Seller (with respect to the Acquired Assets or the income or
operation of the Business) or Sold Subsidiary. There is no pending claim
by any authority of a jurisdiction where any of the Sellers (with respect
to the Acquired Assets or the income or operation of the Business or the
Sold Subsidiaries) has not filed Tax Returns that such Seller or Sold
Subsidiary is or may have been subject to taxation by that jurisdiction.
(viii) No power of attorney currently in force has been granted by
any Seller (with respect to the Acquired Assets or the income or operation
of the Business) or Sold Subsidiary that would be binding on Purchaser with
respect to taxable periods including, or commencing on or after, the
Closing Date.
(ix) No Seller (with respect to the Acquired Assets or the income or
operation of the Business) or Sold Subsidiary has received a tax ruling or
entered into a closing agreement with any taxing authority that would have
a continuing adverse effect upon a Sold Subsidiary, the Acquired Assets or
the Business, after the Closing Date.
(x) Each of the Sellers (with respect to the Acquired Assets or the
income and operation of the Business) and Sold Subsidiaries has complied in
all material respects with the provisions of the Code relating to the
payment and withholding of Taxes, including, without limitation, the
withholding and reporting requirements under Code Sections 1441 through
1464, 3401 through 3606, and 6041 and 6049, as well as similar provisions
under any other Laws, and within the time and in the manner prescribed by
Law, withheld and paid over to the proper governmental authorities all
material amounts required in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(xi) No Sold Subsidiary (A) has filed a consent under Code Section
341(f), (B) is obligated to make any payments, or is party to any agreement
that could obligate it to make payments, not deductible under Code Section
280G, or (C) has been a U.S. real property holding company within the
meaning of Code Section 897.
(P) SOLD SUBSIDIARIES. Except as set forth in Schedule 1.1(g) (and
-----------------
except for Nominee Shares), all of the issued and outstanding shares of capital
stock of each Sold Subsidiary are owned, directly or indirectly, beneficially
and of record by one of the Sellers as set forth in Schedule 1.1(g), free and
clear of all Liens, except as set forth in Schedule 1.1(g). For purposes of this
Section 4.1(p), "beneficial ownership" of any shares of capital stock shall
55
mean having or sharing the power to direct or control the voting or disposition
of such shares of capital stock. All of such outstanding shares of capital stock
have been duly and validly authorized and issued and are fully paid and non-
assessable. Except (i) for any Nominee Shares and (ii) as set forth in Schedule
1.1(g), there are no shares of capital stock of or other equity interests in any
Sold Subsidiary outstanding. Except as set forth in Schedule 1.1(g), none of the
shares of capital stock of or other equity interests in any Sold Subsidiary has
been issued in violation of, or are subject to, any purchase option, call, right
of first refusal or preemptive, subscription or similar rights under any
provision of applicable law, the certificate of incorporation or by-laws (or
comparable organizational documents) of any Sold Subsidiary or any Contracts.
Except as set forth in Schedule 1.1(g), there are no outstanding warrants,
options, rights, "phantom" stock rights, convertible or exchangeable securities
or other agreements to or instruments (other than this Agreement) pursuant to
which any Seller or any Sold Subsidiary is or may become obligated to issue,
sell, purchase, return or redeem any shares of capital stock of or other equity
interests in any Sold Subsidiary.
(Q) LABOR MATTERS. Except as set forth in Schedule 4.1(q), (i) there
-------------
is no pending, and since December 31, 1997 through the date hereof there has not
been any, labor strike, work stoppage or lockout against any Seller in
connection with the Business, or any Sold Subsidiary, nor, to the knowledge of
CBS, is any such action threatened as of the date hereof, (ii) there is no
pending, and since December 31, 1997 through the date hereof there has not been
any, unfair labor practice charge or complaint against any Seller in connection
with the Business, or against any Sold Subsidiary, before the National Labor
Relations Board or any similar body in any material foreign jurisdiction nor, to
the knowledge of CBS, is any such charge or complaint threatened as of the date
hereof, and (iii) as of the date hereof, there are no pending or, to the
knowledge of CBS, threatened union grievances against any Seller in connection
with the Business, or any Sold Subsidiary, which, in the case of clauses (i),
(ii) and (iii), would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Except as disclosed in Schedule 4.1(q)(iv),
each of the Sellers and the Sold Subsidiaries has complied in all material
respects with its obligations related to, and is not in breach in any material
respect of or in default in any material respect under, any collective
bargaining or similar agreements to which any Seller (in connection with the
Business) or any Sold Subsidiary is a party. Except as set forth in Schedule
4.1(q)(v), to the knowledge of CBS, there are no attempts presently being made
to organize any employees employed by any of the Sellers in connection with the
Business or any Sold Subsidiary.
(R) OUTSTANDING BIDS. Set forth in Schedule 4.1(r) is a complete and
----------------
correct list of all bids outstanding as of the date hereof for Contracts by the
Sellers or any Sold Subsidiaries in connection with the Business, which
Contracts, if awarded to the bidding Seller
56
or Sold Subsidiary, would involve aggregate expenditures or receipts in excess
of $5,000,000. Other than with respect to Steam Generator Settlement Agreements,
no such bid reflects a material deviation from the past bidding practices and
procedures, including profit objectives, of the Sellers and the Sold
Subsidiaries, nor would any such bid (determined solely on the basis of the
projections of the applicable Seller or Sold Subsidiary as of the time such bid
was made) result in a loss to the applicable Seller or Sold Subsidiary.
(S) MAJOR SUPPLIERS AND CUSTOMERS.
-----------------------------
(i) Schedule 4.1(s) sets forth:
(A) the name of, and a brief description of the goods or services supplied
by, the twenty largest suppliers of goods or services to the Business
(based upon amounts paid by the Sellers and the Sold Subsidiaries
during the twelve-month period ending December 31, 1997); and
(B) the name of, and a brief description of the goods and services
supplied to, the twenty largest customers of the Business (based upon
the net sales of the Business during such period).
(ii) Except to the extent set forth in Schedule 4.1(s),
(A) since December 31, 1997 through the date hereof, no change has
occurred in the business relationship of the Sellers or the Sold
Subsidiaries with any customer or supplier listed in Schedule 4.1(s),
the result of which would reasonably be expected to have a Material
Adverse Effect;
(B) none of the Sellers of the Sold Subsidiaries has received prior to the
date hereof notice from any customer or supplier listed in Schedule
4.1(s), to the effect that any such customer or supplier intends to
cease, or make a material reduction in, its purchases of goods or
services from, or its supply or goods or services to, the Business;
and
(C) without limiting the generality of the foregoing, none of the Sellers
or the Sold Subsidiaries has received prior to the date hereof written
notice in respect of any Government Contract that such Government
Contract is proposed to be rebid or that the Sellers or Sold
Subsidiaries will not be considered for any follow-on work relating to
such Government Contract.
57
(T) YEAR 2000.
---------
(i) The Sellers and the Sold Subsidiaries have developed and are
executing a plan with respect to Year 2000 readiness (the "Year 2000
---------
Plan"). The Sellers have provided Purchaser with a copy of the Year 2000
----
Plan and have provided a report on the status of the Year 2000 Plan through
June 13, 1998 that is accurate in all material respects.
(ii) The Year 2000 Plan address the Year 2000 issues which to the
knowledge of CBS are material to the Sellers and the Sold Subsidiaries,
including internal information systems risks, embedded circuitry risks and
third party risks. Except as provided above and in Section 5.29, CBS makes
no representations or warranties with respect to the capability of any of
the equipment, systems, software, data or databases relating to the
Business to adapt, accommodate or respond to the year 2000 and thereafter
("Year 2000 Compliance"), or with respect to the absence of Liabilities,
--------------------
contingent or otherwise, arising from or related to Year 2000 Compliance.
(U) TANGIBLE PROPERTY. All tangible personal property (other than
-----------------
Inventory), including, without limitation, equipment, furniture, leasehold
improvements, fixtures, vehicles, structures, any related capitalized items and
other similar tangible property, in each case owned or leased by any of the
Sellers or Sold Subsidiaries and material to its business is in good operating
condition (normal wear and tear excepted), subject to continued repair and
replacement in accordance with past practice.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
-------------------------------------------
hereby represents and warrants to CBS as follows:
(A) ORGANIZATION, STANDING AND POWER. Purchaser is a limited
--------------------------------
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
limited liability company power and authority to carry on its business as now
being conducted.
(B) AUTHORITY. Purchaser has the requisite limited liability company
---------
power and authority to execute, deliver and perform this Agreement and the
agreements to be entered into by it at the Closing pursuant hereto (the
"Purchaser Ancillary Documents") and to consummate the transactions contemplated
------------------------------
hereby and thereby. The execution and delivery of this Agreement and the
Purchaser Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
58
limited liability company action on the part of Purchaser, and, in the case of
the Purchaser Ancillary Documents, will be authorized by all necessary limited
liability company action on the part of Purchaser prior to the Closing, and do
not and will not require the approval of the members of Purchaser. This
Agreement has been duly executed and delivered by Purchaser and constitutes, and
each Purchaser Ancillary Document will be duly executed and delivered by
Purchaser at or prior to the Closing and when so executed and delivered will
constitute, a legal, valid and binding obligation of Purchaser enforceable
against it in accordance with its terms, subject to the Bankruptcy Exception.
The execution and delivery of this Agreement by Purchaser do not, and the
execution and delivery by Purchaser of the Purchaser Ancillary Documents, the
consummation by Purchaser of the transactions contemplated hereby and thereby
and the compliance by Purchaser with the terms hereof and thereof will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation of any Lien upon any of Purchaser's
assets under, any provision of (i) the laws of the State of Delaware, (ii) the
certificate of incorporation or by-laws (or comparable organizational documents)
of Purchaser, (iii) any contract, lease, indenture or other agreement of
Purchaser or (iv) subject to the filings and other matters referred to in the
following sentence, any Law applicable to Purchaser, other than, in the case of
clause (iii) above, any such conflicts, violations, defaults, rights or Liens
that, individually or in the aggregate, would not materially impair the ability
of Purchaser to perform its obligations under this Agreement. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by or with respect to Purchaser in connection with the
execution and delivery of this Agreement or the Purchaser Ancillary Documents or
the consummation of the transactions contemplated hereby or thereby, except for
(i) compliance with and filings under the HSR Act, (ii) voluntary notification
under the Exon-Xxxxxx Amendment, (iii) [intentionally omitted], (iv) filings and
approvals under foreign laws, (v) consents or novations which may be required
for the assignment of any Intellectual Property, Technology or Contract as
contemplated in Section 5.4, (vi) compliance with, and notices and filings
under, environmental permits, statutes and regulations, and (vii) compliance
with, and notices, filings and approvals under, the regulations of the NRC or
any Agreement State, including any applications for licenses or license
transfers, and (viii) those the failure of which to obtain or make, individually
or in the aggregate, would not materially impair the ability of Purchaser to
perform its obligations under this Agreement.
(C) U.S.-CONTROLLED ENTITY. Purchaser is an entity the majority
----------------------
ownership of which is, and the control of which is, by citizens of the United
States or corporations or other organizations incorporated or organized under
the laws of a State of the United States
59
whose business is administered principally in the United States and which is
capable of holding any licenses issued by the NRC that are contemplated to be
transferred to Purchaser under this Agreement (a "U.S.-Controlled Entity"). All
----------------------
of the equity interests in Purchaser are owned of record and beneficially by
BNFL USA Group, Inc. (or, as of the Closing, a wholly-owned Subsidiary of BNFL
USA Group, Inc.), and MK.
(D) U.K. SHAREHOLDER APPROVAL. Purchaser and its Affiliates have been
-------------------------
duly authorized by its principal shareholder, the Department of Trade and
Industry, to take the necessary actions to execute and deliver this Agreement
and the Purchaser Ancillary Documents and to consummate the transactions
contemplated herein.
ARTICLE 5
COVENANTS
SECTION 5.1. (A) COVENANTS OF CBS RELATING TO CONDUCT OF BUSINESS.
------------------------------------------------
During the period from the date of this Agreement and continuing until
the Closing, except as expressly provided in this Agreement, including the
Schedules hereto, or to the extent that Purchaser shall otherwise consent (which
consent shall not be unreasonably withheld or delayed), CBS shall, and shall
cause the other Sellers and the Sold Subsidiaries to, carry on the Business in
the Ordinary Course of Business and use all reasonable efforts consistent with
past practices to keep available the services of the Business's present officers
and employees and preserve the Business's relationships with customers,
suppliers and others having business dealings with the Business. In addition,
except as contemplated by Schedule 5.1 or as otherwise provided by this
Agreement, CBS shall not, and shall not permit any other Seller (in connection
with the Business) or any Sold Subsidiary to, do any of the following without
the consent of Purchaser (which consent shall not be unreasonably withheld or
delayed):
(i) amend the certificate of incorporation or by-laws (or comparable
organizational documents) of any Sold Subsidiary in any material respect;
(ii) adopt or amend in any material respect any Benefit Plan or
collective bargaining agreement, except as required by Law or pursuant to
the terms of any existing collective bargaining agreement or other existing
Contract and except for
60
changes made by CBS to any Benefit Plan which do not increase costs by more
than 5%;
(iii) grant to any executive officer of any Sold Subsidiary any
increase in compensation, benefits or loans or severance benefits, except
in the Ordinary Course of Business or as may be required under existing
contracts or agreements (as set forth in Schedule 5.1(a)(iii)) and except
for any increases or loans the liability for which a Seller shall be solely
obligated both before and after Closing;
(iv) incur or assume any liabilities, obligations, or indebtedness
for borrowed money which would constitute an Assumed Liability, or
guarantee any such liabilities, obligations or indebtedness, in each case
other than in the Ordinary Course of Business;
(v) acquire by merging or consolidating with, or by purchasing a
material portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint stock company, limited liability
company, association or other business organization or division thereof;
(vi) acquire any assets which are material, individually or in the
aggregate, to the Business, taken as a whole, except in the Ordinary Course
of Business;
(vii) sell, lease or mortgage, pledge or otherwise dispose of, or
grant preferential rights to, any of its assets that are material,
individually, or in the aggregate, to the Business as a whole, except for
the sale of Inventory in the Ordinary Course of Business and except for the
sale or factoring of accounts receivable;
(viii) enter into any lease of real property for an annual rent in
excess of $150,000, except any renewals of existing leases in the Ordinary
Course of Business;
(ix) enter into any joint venture or partnership or, other than in
the Ordinary Course of Business, teaming agreement or arrangement; or
(x) enter into, amend or terminate any employment agreement;
(xi) except as set forth in Schedule 5.1(a)(xi), knowingly waive any
right of material value to the Business or settle or compromise any claim
in excess of $2,500,000;
61
(xii) make any wage or salary increase or other compensation payable
or to become payable or bonus, or increase in any other direct or indirect
compensation, for or to any of its officers, employees, consultants, agents
or other representatives employed in the Business, or any accrual for or
commitment or agreement to make or pay the same, in each case other than in
the Ordinary Course of Business or as may be required under existing
contracts;
(xiii) except as described in Schedule 4.1(j)(A)(iii) or as otherwise
contemplated by this Agreement, enter into any transactions with any of its
Affiliates, officers, directors, employees, consultants, agents or other
representatives (other than employment arrangements made in the Ordinary
Course of Business), or any Affiliate, of any officer, director,
consultant, employee, agent or other representative, to the extent the
obligations arising from any such transaction would be an Assumed
Liability;
(xiv) except as set forth in Schedule 5.1(a)(xiv), make any payment
or commitment (which would in the case of any Seller constitute an Assumed
Liability) to pay any severance or termination payment to any Person or any
of its officers, directors, employees, consultants, agents or other
representatives employed in the Business, other than payments pursuant to
contractual obligations in effect on the date of this Agreement;
(xv) except in the Ordinary Course of Business, amend in any
material respect or enter into any Contract or other agreement of a type
required to be disclosed pursuant to Section 4.1(j)(A)(v), (vii), (viii),
(xi), (xiii), (xiv) and (xv);
(xvi) declare or pay any non-cash dividend other than, in the case
of CBS, dividends of property not relating to the Business;
(xvii) in the case of a Sold Subsidiary, declare any dividend that is
not paid before the Closing Date;
(xviii) agree to settle any Tax audit or dispute that will have a
binding effect on Purchaser, the Business or any Sold Subsidiary for any
Post-Closing Tax Period or Purchaser's Straddle Period;
(xix) with respect to bids made after the date hereof which would,
if outstanding on the date hereof, be required to be set forth on Schedule
4.1(r), make
62
any such bid if the representation set forth in Section 4.1(r) could not be
made with respect to such bid at the time such bid is made; or
(xx) agree, whether in writing or otherwise, to do any of the
foregoing.
(B) ADVICE OF CHANGES. CBS shall promptly notify Purchaser of:
-----------------
(i) any actions, suits, claims or proceedings or, to the knowledge of
CBS, investigations commenced or, to its knowledge, threatened against CBS,
its Subsidiaries or the Business that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Section 4.1(e); and
(ii) the damage or destruction by fire or other casualty of any
material Acquired Asset or part thereof or in the event that any material
Acquired Asset or Subsidiary Asset or part thereof becomes the subject of
any proceeding or, to the knowledge of CBS, threatened proceeding for the
taking thereof or any part thereof or of any right relating thereto by
condemnation, eminent domain or other similar governmental action.
provided, however, that CBS shall have no Liability for breach of this Section
-------- -------
5.1(b) except to the extent Purchaser has actually been prejudiced by such
breach.
SECTION 5.2. ACCESS TO INFORMATION; CONSULTATION.
-----------------------------------
(a) CBS shall afford to Purchaser and its accountants, counsel and
other representatives reasonable access at reasonable times during the period
prior to the Closing to all the properties, books, Contracts, commitments, Tax
Returns, pending bids and proposals for contracts the anticipated revenues from
which will exceed $25,000,000 (excluding contracts for which CBS believes
Purchaser or any of its Affiliates is a competing bidder), and records of the
Business (other than to the extent such information relates to the Excluded
Assets or Excluded Liabilities), and during such period shall furnish promptly
to Purchaser any information concerning the Business (other than to the extent
such information relates to the Excluded Assets or Excluded Liabilities) as
Purchaser may reasonably request and shall use reasonable commercial efforts on
a timely basis to obtain any counterparty or third-party consents necessary to
permit Purchaser access to such information; and shall cause its and the other
Sellers' officers, employees, consultants, agents, accountants and attorneys to
cooperate reasonably with Purchaser's representatives in connection with such
review and examination; provided, however, that CBS is under no obligation to
-------- -------
disclose to Purchaser (i) any
63
information the disclosure of which is restricted by applicable Law except in
strict compliance with the applicable Law, (ii) any information as to which the
attorney-client privilege, the attorney work-product doctrine or the self-
evaluative privilege may be available, except to the extent covered by the Joint
Defense Agreement referred to in Section 5.30 or, if not so covered, until a
mutually satisfactory joint defense agreement has been executed by Purchaser and
CBS, (iii) the medical records pertaining to any employee or former employee of
the Business until after the Closing or (iv) any "Classified Information" other
than in compliance with NRC and any other applicable government security
regulations. CBS shall cooperate reasonably with Purchaser in connection with
any request to make available to Purchaser and its representatives, customers
and suppliers of the Business, and to arrange and participate in meetings
between Purchaser and its representatives and such customers and suppliers, for
the purpose, among other things, of verifying the information furnished to
Purchaser, developing transition plans and integrating the operations of the
Business with the operations of Purchaser and its Affiliates; provided that (i)
--------
such cooperation does not unnecessarily interfere with the operation of the
Energy Systems Business or any other business of CBS and (ii) Purchaser shall
reimburse CBS upon request as incurred for any expenses incurred in connection
with such cooperation. All requests for information, to visit facilities or to
meet with Sellers' representatives shall be made in writing and directed to and
coordinated with the person(s) designated to Purchaser from time to time by CBS
as the ESBU Coordinator(s). Purchaser acknowledges that any information being
provided to it or its representatives by Sellers pursuant to or in connection
with this Agreement is subject to the terms of confidentiality agreements
between each of MK and BNFL, and CBS, dated March 19, 1998 and March 13, 1998,
respectively (the "Confidentiality Agreements"), which terms are incorporated
--------------------------
herein by reference. CBS shall use its commercially reasonable efforts to, and
to cause its Affiliates to, enforce the respective terms of the confidentiality
agreements entered into with other prospective purchasers in connection with the
proposed sale of the Energy Systems Business (including requesting that such
other prospective purchasers return or destroy confidential information to the
extent required to do so as provided therein). Notwithstanding anything to the
contrary contained in paragraph 15 thereof, the Confidentiality Agreements and
the obligations not to use or disclose and to return on request or destroy
Confidential Information (as defined in the Confidentiality Agreements) shall
terminate on the fifth anniversary of the Closing Date. Nothing contained herein
is intended to limit or restrict Purchaser's use or disclosure of Confidential
Information concerning the Business following the Closing. No investigation by
Purchaser shall diminish or obviate any other representations, warranties,
covenants or agreements of CBS under this Agreement.
(b) During the period prior to the Closing, at the request of
Purchaser, CBS shall, and shall cause its and the other Sellers' employees to,
cooperate reasonably with
64
Purchaser and its representatives in connection with the preparation of such
financial statements for the Business as may be required in connection with the
preparation by an applicable Affiliate of Purchaser of a Current Report on Form
8-K relating to the transactions contemplated hereby; provided that (i) such
--------
cooperation does not interfere with the operation of the Energy Systems Business
or any other business of CBS and (ii) Purchaser shall reimburse CBS upon request
as incurred for any expenses incurred in connection with such cooperation.
(c) Prior to the Closing, CBS will deliver to Purchaser a complete
and correct list of all bank accounts of each of the Sold Subsidiaries, and all
persons having signing authority with respect thereto.
SECTION 5.3. GOVERNMENTAL APPROVALS, ETC.
---------------------------
(a) Each of Purchaser and CBS shall as promptly as practicable, (i)
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 the notification and report form under the
HSR Act required for the transactions contemplated hereby and, thereafter, any
supplemental information requested in connection therewith pursuant to the HSR
Act, (ii) but in no event later than 20 business days following the execution
and delivery of this Agreement, (A) file with the Committee on Foreign
Investment in the United States the voluntary notification under the Exon-Xxxxxx
Amendment for the transactions contemplated hereby and (B) file with the NRC or
applicable Agreement States such applications for licenses or license transfers
as necessary for the transactions contemplated hereby. Each of Purchaser and
CBS shall as promptly as practicable comply with any other Laws of any country
which are applicable to any of the transactions contemplated hereby and pursuant
to which any consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority or any other Person in
connection with such trans actions is necessary. Each of Purchaser and CBS
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. Purchaser and CBS 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. Purchaser and CBS shall use their best efforts and take
all necessary action to obtain any clearance under the HSR Act, the Exon-Xxxxxx
Amendment or any other consent, approval, order or authorization of any
Governmental Authority, necessary in connection with
65
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 its best 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 preliminary injunction, temporary restraining order, stay or
other legal restraint or prohibition by any court or other Governmental
Authority and to appeal and seek to have vacated or reversed as promptly as
possible any such injunction, order, stay or other restraint or prohibition that
is not yet final and nonappealable; provided, however, that none of Sellers nor
-------- -------
Purchaser nor their Affiliates shall be required to make any material monetary
expenditure, commence or be a plaintiff in any litigation or offer or grant any
material accommodation (financial or otherwise) to any third Person.
(c) Purchaser shall use its commercially reasonable efforts to obtain
as promptly as practicable all permits, licenses, franchises, approvals,
consents and authorizations by or of Governmental Authorities required by Law or
Contract for Purchaser to conduct the Business following the Closing and to own
the Acquired Assets (each, a "Purchaser Permit"), and CBS shall, and shall cause
----------------
the other Sellers and the Sold Subsidiaries to, cooperate with Purchaser in
connection therewith. Notwithstanding the foregoing, neither CBS nor Purchaser
shall be required to expend any material sum or agree to a material concession
to any Govern mental Authority to obtain, or, in the case of CBS, to assist
Purchaser to obtain, as the case may be, any such Purchaser Permit. Purchaser
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 Purchaser 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, CBS
shall not be required to provide access to such facilities or any such related
documents, records or information to any representative or employee of Purchaser
unless such individual presents evidence reasonably satisfactory to CBS of such
individual's security clearance meeting the security clearance level prescribed
for such access.
66
SECTION 5.4. NOVATIONS OF CONTRACTS AND THIRD PARTY CONSENTS.
-----------------------------------------------
(a) As soon as practicable following the execution of this Agreement,
CBS shall prepare (with Purchaser'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 CBS to each
Responsible Contracting Officer, for the United States government (or, in the
case of Government Contracts not subject to the Federal Acquisition Regulations,
Purchaser and CBS shall cooperate in seeking to cause the applicable
Governmental Authority) to (i) recognize Purchaser as CBS's successor in
interest to the Government Contracts and all the Acquired 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 Purchaser and CBS and their respective counsel,
pursuant to which all of CBS's right, title and interest in and to, and all of
CBS's Liabilities under, each such Government Contract shall be validly
conveyed, transferred and assigned and novated to Purchaser by all parties
thereto. Purchaser shall provide to CBS promptly any information regarding
Purchaser required in connection with such request.
(b) CBS and Purchaser will cooperate and use their respective
commercially reasonable efforts to obtain as promptly as practicable (i) all
consents, approvals and waivers (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 the Contracts, Intellectual Property,
Technology and the capital stock of the Sold Subsidiaries to Purchaser in a
manner that will avoid any default, conflict, or termination of rights under the
Contracts, Intellectual Property and Technology and (ii) without limiting the
provisions of clause (B) above, novations of all Contracts other than Government
Contracts. Notwithstanding anything to the contrary in this Agreement, nothing
in this Section 5.4 shall require Sellers or Purchaser 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, approval, waiver or
novation.
(c) If any and all consents, approvals or waivers necessary for the
assignment, transfer or novation of any Contract, Intellectual Property or
Technology, or any claim, right or benefit arising thereunder or resulting
therefrom, or consents relating to a
67
change in control of any Sold Subsidiary, shall not have been obtained prior to
the Closing Date, then as of the Closing, this Agreement, if permitted by Law,
shall constitute full and equitable assignment by Sellers to Purchaser of all of
Sellers' right, title and interest in and to, and all of Sellers' obligations
and liabilities under, such Contracts, Intellectual Property and Technology,
and, in the case of such Contracts, Purchaser shall be deemed Sellers' agent for
purpose of completing, fulfilling and discharging all of Sellers' obligations
and liabilities under any such Contract. The parties shall take all necessary
steps and actions to provide Purchaser with the benefits of such Contracts,
Intellectual Property and Technology, and, in the case of such Contracts, to
relieve Sellers of the performance and other obligations and liabilities
thereunder, including entry into subcontracts for the performance thereof.
Purchaser agrees to pay, perform and discharge, and, pursuant to Section 8.2,
indemnify Sellers against and hold Sellers harmless from, all obligations and
liabilities of Sellers relating to such performance or failure to perform under
such Contracts, including any related guarantees.
(d) If Sellers shall be unable to make the equitable assignment
described in Section 5.4(b), or if such attempted assignment would adversely
affect the rights of Sellers or Purchaser under such Contract, Intellectual
Property or Technology, or would not assign all of Sellers' rights thereunder at
the Closing, Sellers and Purchaser shall continue to cooperate and use all
reasonable efforts to provide Purchaser with all such rights. To the extent
that any such consents and waivers are not obtained, or until the impediments to
such assignment are resolved, Sellers shall use all reasonable efforts (without
the expenditure, in the aggregate, of any material sum) to the extent permitted
by Law to (i) provide to Purchaser, at the request of Purchaser, the benefits of
any such Contract or of any such Intellectual Property or Technology, to the
extent related to the Business, (ii) cooperate in any lawful arrangement
designed to provide such benefits to Purchaser and (iii) enforce, at the request
of and for the account of Purchaser, any rights of Sellers arising from any such
Contract, Intellectual Property or Technology against any third Person including
the right to elect to terminate in accordance with the terms thereof upon the
advice of Purchaser. To the extent that Purchaser is provided the benefits
(including payment rights) of any Contract, Intellectual Property or Technology
referred to herein (whether from Sellers or otherwise), (i) Purchaser shall
perform for the benefit of any third Person the obligations of Sellers
thereunder or in connection therewith, and (ii) Purchaser agrees to pay, perform
and discharge, and, pursuant to Section 8.2, indemnify Sellers against and hold
Sellers harmless from, all obligations and liabilities of Sellers relating to
such performance or failure to perform, and in the event of a failure of such
indemnity, Sellers shall cease to be obligated under this Agreement in respect
of the Contract, Intellectual Property or Technology which is the subject of
such failure.
68
(e) Without limiting the generality of Section 5.10, 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, Purchaser agrees to provide CBS and its accountants, counsel and other
representatives access, during normal business hours, to such information,
personnel and assistance relating to the performance by Purchaser of the
Government Contracts and its respective obligations under the Novation
Agreements as CBS shall reasonably request from time to time.
SECTION 5.5. EMPLOYEE MATTERS.
----------------
(A) EMPLOYEE MATTERS.
----------------
(i) Continuation of Employment. Purchaser shall offer employment to (or
--------------------------
cause a Sold Subsidiary to continue to employ) each employee of the
Business (including any individual whose principal place of employment is
on the Premises, who primarily renders services on behalf of the Business
and whose compensation cost is borne primarily by the Business) and each
STC Employee who is actively at work, on vacation or on short-term
disability (including salary continuation and extension) leave on the
Closing Date (each a "Business Employee"). Each employee or former
-----------------
employee who primarily rendered services on behalf of the Business or STC
Employee and who is not actively at work on the Closing Date due to leave
of absence, long-term disability leave, military leave or layoff, and who
in the case of an employee on long-term disability was last actively
employed within two years of the Closing Date, and in the case of an
employee on a leave of absence or layoff was last employed within five
years of the Closing Date and in each case has recall rights ("Recall
------
Rights") under the work rules of the Business, a collective bargaining
------
agreement or applicable law (collectively, "Inactive Employees"), shall be
------------------
offered active employment by Purchaser pursuant to the Recall Rights. Upon
such offer and acceptance and commencement of active employment, each such
Inactive Employee shall be considered a Business Employee effective as of
the first date of return to work. CBS shall deliver a schedule to
Purchaser of anticipated Business Employees and Inactive Employees and with
respect to the latter their designated status as of the Closing Date and
their entitlements, 15 days before the Closing Date. Such schedule shall
be updated by CBS as soon as practical after the Closing Date. Any
employee of Sellers or their Affiliates who is not otherwise a Business
Employee but who is offered and accepts employment by Purchaser, pursuant
to mutual agreement with the Sellers, during the six months following the
Closing Date shall be deemed to be a Business Employee as of the date of
actual employment with the Purchaser. Purchaser shall not offer employment
to any
69
employee of any Seller during such six-month period without the consent of
such Seller (other than as provided herein).
(ii) Continuation of Compensation and Benefits. Notwithstanding the
-----------------------------------------
more specific provisions set forth in this Section 5.5, Purchaser shall
provide or shall cause a Subsidiary to provide compensation and written
benefit plans and arrangements which in the aggregate are comparable (but
in no event taking into account any equity-based compensation (including
options) and opportunity to invest in securities of CBS under the CBS Stock
Plan or the Westinghouse Savings Program, provided that with respect to
Business Employees, the match formula under the Westinghouse Savings
Program shall be considered when determining comparability) to the
compensation and written Benefit Plans (See Schedule 4.1(m)(i)) in effect
for Business Employees on the date of this Agreement ("Comparable
----------
Benefits") for a period of not less than one year following the Closing
--------
Date (or, in the case of Business Employees who are subject to a collective
bargaining agreement, the period required therein) (the "Benefits
--------
Maintenance Period"). Comparability for the purpose of determining
------------------
Comparable Benefits shall be assessed in terms of total dollar value (or
such other measurement utilized by the consultant) to Business Employees in
the aggregate. Notwithstanding the above, with respect to Business
Employees who are executives, the Purchaser shall provide long-term
incentives which provide benefits generally comparable in value to long-
term incentive plans of Sellers. No later than 15 days prior to the
Closing Date Purchaser shall either (1) commit to CBS in writing to provide
for Business Employees for the Benefit Maintenance Period substantially
identical compensation and benefits to that provided by CBS and Affiliates
to Business Employees (without regard to the equity-based compensation and
the form of long-term incentive benefits) with CBS to consent to the
determination of substantially identical benefits, which consent shall not
be unreasonably withheld or (2) deliver to CBS a letter from an independent
consulting firm reasonably acceptable to CBS stating that the compensation,
benefits and benefit arrangements offered by Purchaser to the Business
Employees pursuant to this Section are Comparable Benefits.
(B) ACCRUED VACATION. Purchaser shall credit each Business Employee
----------------
with the unused vacation days and any personal and sickness days earned in
accordance with the vacation and personnel policies and collective bargaining
agreements of CBS and the Sold Subsidiaries in effect as of the Closing Date,
provided that an appropriate adjustment shall be made in the event of any cash
payment required to be made by either Purchaser or Sellers as a result of the
transaction contemplated by this Agreement. CBS shall provide to Purchaser at
70
the Closing Date such schedules as CBS maintains and such other information as
reasonably necessary to calculate such benefits.
(C) UNION REPRESENTATION. Purchaser agrees with respect to any
--------------------
collective bargaining agreement that relates to Business Employees, to (i)
recognize each union which at the Closing Date represents any group of Business
Employees as the collective bargaining representatives of such employees as of
the Closing Date, (ii) provide such employees with comparable wages and benefits
as those in effect on the date of this Agreement in accordance with such
collective bargaining agreements, and (iii) assume the obligations for Business
Employees and Former Employees under any such collective bargaining agreement
that by its terms requires such assumption.
(D) PENSION PLAN. (i) Purchaser shall or shall cause its Affiliates
------------
to credit Business Employees with service with Sellers and Sold Subsidiaries for
purposes of eligibility, vesting and retirement eligibility under all pension
plans within the meaning of Section 3(2) of ERISA in which such Business
Employees participate.
(ii) The WELCO Pension Plan shall retain liability with respect to
Business Employees and Former Employees for their accrued benefit
calculated as of the Closing Date, subject to adjustment as follows. CBS
shall take appropriate action to cause the WELCO Pension Plan to provide
(x) credit for employment of Business Employees with the Purchaser or its
Affiliates solely for purposes of calculating vesting credit and
eligibility for early retirement benefits ("Eligibility Service," as
-------------------
defined in the WELCO Pension Plan), and (y) except as provided in (d)(iv)
below, the early retirement supplement under Section 5 for Business
Employees under the terms of the WELCO Pension Plan shall be equal to the
lesser of -
(A) the early retirement supplement calculated under the terms of the WELCO
Pension Plan, or as it may be reduced by CBS after the Benefits Maintenance
Period, but only to the extent such a change applies to all CBS employees
with the same benefit, as multiplied by a fraction, the numerator of which
is the participant's years of Credited Service (as defined in the WELCO
Pension Plan) under the WELCO Pension Plan as of the Closing Date, and the
denominator of which is the sum of the numerator and the participant's
years of employment with the Purchaser and its Affiliates from the Closing
Date until the participant's retirement or termination of employment with
the Purchaser and its Affiliates, or
71
(B) the comparable early retirement supplement calculated under the terms
of the Purchaser defined benefit plan covering Business Employees
("Purchaser Pension Plan") as in effect on the participant's retirement or
termination of employment from the Purchaser and its Affiliates (prior to
reduction for the portion of the supplement to be paid from the WELCO
Pension Plan) (if the Purchaser Pension Plan has no such supplement or if
there is no Purchaser Pension Plan the amount calculated under this
subparagraph (B) shall be zero (0)) multiplied by a fraction, the numerator
of which is the employee's years of Credited Service under the WELCO
Pension Plan as of the Closing Date, and the denominator of which is the
sum of the numerator and the participant's years of employment with the
Purchaser and its Affiliates from the Closing Date until the participant's
termination of employment with the Purchaser and its Affiliates.
Notwithstanding the foregoing, the WELCO Pension Plan shall not recognize
employment with the Business after the Purchaser and its Affiliates have sold or
divested the Business, or a portion thereof (whether by asset or stock sale,
merger or spin-off (each a "Disposition")), with respect to the Business
-----------
Employees who are transferred or terminated in connection with such a sale or
divestiture.
(iii) The WELCO Pension Plan shall not provide for (A) any early
retirement supplement that becomes payable with respect to a Business
Employee retiring after the Closing Date that is the result of a "Pension
Event" as defined in subsection (iv) below, (B) any benefits pursuant to
Section 19 of the WELCO Pension Plan and the corresponding provision of the
Purchaser Pension Plan, if any, in excess of the benefits that would
otherwise be payable if those sections did not apply, with respect to a
Business Employee who retires or terminates employment with the Purchaser
and its Affiliates after the Closing Date, and (C) any other early
retirement subsidy or supplement with respect to Business Employees that is
not described in (ii) above.
(iv) Purchaser shall indemnify CBS for any actuarial losses (as
defined below) with respect to the WELCO Pension Plan resulting from any
Business Employee commencing the receipt of benefits prior to their Normal
Retirement Date (as defined in the WELCO Pension Plan) and that is
attributable to (A) a Disposition, (B) a closing of a plant or plants by
Purchaser or a reduction in the number of Business Employees employed by
the Purchaser and its Affiliates as a result of action requiring the filing
of a notice under the Worker Adjustment and Retraining Notification Act, as
in effect on the Closing Date (the "WARN Act"), other than termination at
--------
the Pensacola Plant arising from the announced shut down of the plant or
terminations
72
announced by CBS prior to the Closing Date (or which would require the
filing of a WARN Act notice if any actions taken within a 6-month period
occurred on the same date (a "WARN Event")), or (C) any action of the
----------
Purchaser or its Affiliates that provides a financial incentive to
Business Employees to terminate or retire prior to their Normal Retirement
Date including, but not limited to, an early retirement window program or a
change in plan design which reduces prospective benefits for Business
Employees who are eligible to retire under the WELCO Pension Plan (other
than a change in plan design during the three (3) year period following the
Closing Date, provided that Purchaser has Comparable Benefits (after one
year from the Closing Date the value of the supplemental retirement
benefits under the WELCO Pension Plan shall not be considered for
comparability) after such change in plan design). Purchaser shall notify
CBS of the occurrence of any of the events described in (A) through (C)
above (each of which is a "Pension Event") within 30 days after such event,
-------------
and shall cooperate with CBS in providing data to CBS to enable the
determination of actuarial losses. Actuarial losses shall be determined by
the enrolled actuary for the WELCO Pension Plan (the "CBS Actuary") with
-----------
respect to each Pension Event and is measured by the difference (positive
or negative) between the accumulated benefit obligation for all of the
Business Employees affected by the Pension Event using (1) immediate
commencement of benefits under actual forms of benefit payment elected and
(2) projected commencement of benefits, both based on the assumptions
described in Schedule 5.5(d), other than lump sums elected under (1) above,
which shall be valued at the actual value distributed. Notwithstanding any
other provision in this Agreement to the contrary, this indemnity shall
survive the Closing Date without limitation.
(E) SAVINGS PLAN. (i) Effective as of the Closing Date, Purchaser
------------
shall adopt or have in effect a defined contribution plan that includes a
qualified cash or deferred arrangement within the meaning of Section 401(k) of
the Code ("Purchaser's 401(k) Plan") which offers benefits to Business Employees
-----------------------
eligible to participate in the Westinghouse Savings Program (the "WELCO Savings
-------------
Program") as of the Closing Date and contains provisions similar to the
-------
provisions of the WELCO Savings Program to the extent required by Section
411(d)(6) of the Code for account balances to be transferred from the CBS
Savings Program. Each Business Employee eligible to participate in the WELCO
Savings Program as of the Closing Date shall become eligible to participate in
Purchaser's 401(k) Plan as of the Closing Date. Business Employees shall
receive credit for all service with Sellers and their Affiliates for purposes of
eligibility and vesting under Purchaser's 401(k) Plan to the extent credited
under the WELCO Savings Program. Effective as of the date of transfer described
in (iii) below, CBS shall fully vest the account balances of Business Employees
under the WELCO Savings Program and make all applicable contributions under the
WELCO Savings
73
Program otherwise provided for in the plan year in which the Closing occurs with
respect to compensation earned by Business Employees prior to the Closing Date,
without regard to any provision of the WELCO Savings Program requiring a minimum
number of hours of service, or employment on any particular date, if the
applicable Business Employees would have qualified for a contribution if they
had remained employed with Sellers.
(ii) As soon as reasonably practicable after the Closing Date,
Purchaser shall provide CBS with (A) either a copy of a favorable IRS
determination letter to the effect that Purchaser's 401(k) Plan is
qualified under Section 401(a) of the Code or an opinion of Purchaser's
counsel, reasonably satisfactory to CBS, to such effect and (B) an opinion
of Purchaser's counsel, reasonably satisfactory to CBS, that the
Purchaser's 401(k) Plan will satisfy Section 411(d)(6) of the Code with
respect to account balances to be transferred to the Purchaser's 401(k)
Plan from the WELCO Savings Program pursuant to (iii) below.
(iii) As soon as reasonably practicable after the Closing Date and
receipt of the documentation described in (ii) above, CBS shall cause to be
transferred from the WELCO Savings Program to Purchaser's 401(k) Plan
assets having a fair market value equal to the aggregate value of the
account balances in the WELCO Savings Program as of the date of transfer
(such transfer to be in (x) shares of common stock of Seller to the extent
of shares in the CBS Common Stock Fund applicable to Business Employees,
(y) in notes evidencing loans to Business Employees from their account
balances, (z) in cash, (xx) to the extent of the account balances of the
Business Employees in the CBS Savings Program allocable to the Fixed Income
Fund, in investment instruments which approximate from a quality and
interest rate perspective assets held by the fund, but subject to the
applicable fiduciary requirements of the Purchaser's 401(k) Plan relating
to quality and interest rate considerations), (yy) all qualified domestic
relations orders (within the meaning of Section 414(p) of the Code) with
respect to Business Employees and (zz) such other assets as Purchaser and
CBS mutually agree upon and Purchaser shall cause the Purchaser's 401(k)
Plan to accept the receipt of such transfers and the liabilities relating
thereto.
(iv) Sellers represent, warrant and covenant that after the Closing
and at the time of the transfer of assets to the Purchaser's 401(k) Plan,
the WELCO Savings Program will be qualified under Section 401(a) and (k) of
the Code and, to the extent pertinent to the qualified status of the
Purchaser's 401(k) Plan as relevant to asset transfers as provided herein,
for all prior periods, and will not be disqualified retroactively to any
such time or for any such period. Sellers and Purchaser shall
74
cooperate in making, and shall make, all appropriate filings required under
the Code and ERISA, and the regulations thereunder, and shall further
cooperate to ensure that the transfers described in this Section 5.5(e)
satisfy the applicable requirements of Sections 401(k), 414(l), 411(d)(6)
and 401(a)(12) of the Code and the regulations thereunder.
(v) Purchaser's 401(k) Plan shall maintain a CBS common stock fund,
in accordance with applicable law, for Business Employees who so elect, for
such period as Purchaser determines is necessary for an orderly transition.
No new investments in CBS common stock shall be required to be permitted
after the Closing Date.
(F) WELFARE BENEFITS.
----------------
(i) Effective as of the Closing Date, Purchaser shall establish
employee welfare benefit plans, including but not limited to medical and
dental, disability, group life, travel and accident, and accidental death
and dismemberment insurance plans, which (x) provide continuous coverage to
Business Employees and their eligible spouses and dependents, (y) credit
service with Sellers or their Affiliates for purposes of eligibility and
benefit levels, and (z) for medical and dental benefits, waive any pre-
existing condition limitations and credit the amount of any copayments and
deductibles incurred during the calendar year of the Closing.
(ii) Effective as of the Closing Date, Purchaser shall be responsible
for all employee welfare benefit plan claims (whether for insurance,
benefits or otherwise) with respect to Business Employees and Inactive
Employees and their eligible spouses and dependents, whether incurred prior
to or after the Closing Date. Sellers shall cooperate with Purchaser in
transferring to Purchaser applicable insurance company reserves associated
with claims covering Business Employees and Inactive Employees currently
receiving benefits from the Westinghouse Long Term Disability Plan or
Management Disability Benefit Plans. Sellers shall pay or cause to be paid
medical, dental and other welfare benefit claims incurred but not paid in
the ordinary course, prior to the Closing Date with respect to Business
Employees and Inactive Employees and Purchaser shall reimburse and
indemnify the Sellers for the amount of such Payments.
(iii) As of the Closing Date Purchaser shall adopt a plan or plans
providing retiree medical and other retiree welfare benefits for Business
Employees and their eligible spouses and dependents (such plans and their
successors the "Purchaser FAS
-------------
75
106 Plans") that is substantially similar to such plan or plans maintained
---------
by CBS or its Affiliates in the U.S. immediately prior to the Closing Date
for its domestic Business Employees, their eligible spouses and dependents
(the "WELCO FAS 106 Plans") so that during the Benefits Maintenance Period
-------------------
the combination of the Purchaser FAS 106 Plans and the WELCO FAS 106 Plans
(as modified as described in clause (iv) below) provide the same benefit
and the same cost sharing (with retirees) as if such Business Employees
continued under the WELCO FAS 106 Plans as in effect on the Closing Date
without change. The Purchaser FAS 106 Plans will provide that the benefits
payable under such plans will be offset by the benefits provided under the
WELCO FAS 106 Plans, as to be amended as described in subsection (iv)
below. During the Benefits Maintenance Period, Purchaser shall continue
without adverse change the Purchaser FAS 106 Plans.
(iv) CBS shall establish a new plan to provide FAS 106 coverage or
amend the WELCO FAS 106 Plans effective as of the Closing Date to provide
that CBS obligations under such plans with respect to Business Employees
shall be limited in each calendar year, commencing with the Closing Date,
to the amounts set forth in Schedule 5.5(f)(iv) of the Disclosure Schedule
(the "OPEB Schedule"), as described below. The OPEB Schedule shall be
-------------
updated by CBS after the Closing Date to reflect Business Employees as of
the Closing Date. CBS may amend the WELCO FAS 106 Plans after the Benefits
Maintenance Period to conform to the provisions of the Purchaser FAS 106
Plans after the Benefits Maintenance Period. Such payment obligations
shall be cumulative so that if a scheduled payment is not made in full in
any year because the aggregate benefit payment required is less than the
scheduled payment, the balance not paid out shall be carried forward to the
next year. Such payments represent the accrued obligations of CBS as
calculated under FAS 106, for post-retirement benefit obligations other
than pensions as of the Closing Date with respect to Business Employees,
their eligible spouses and dependents under the WELCO FAS 106 Plans (the
"FAS 106 Obligation"). Such payments under the WELCO FAS 106 Plans, as
------------------
adjusted as described below, shall be the only obligation of CBS to
Business Employees their eligible spouses and dependents (or to the
Purchaser) with respect to post-retirement welfare benefits. Purchaser
shall indemnify CBS for any liability to Business Employees, their eligible
spouses and dependents for all post-retirement welfare benefits (including
retiree medical and retiree life) (other than amounts paid by CBS or a Sold
Subsidiary prior to the Closing Date) other than obligations of CBS under
the WELCO FAS 106 Plans as described in this subsection (iv) and subsection
(v). The payment obligations of CBS under the OPEB Schedule shall be
actuarially adjusted downwards in the event of an "actuarial gain" (as
defined
76
below) arising from any of the following events (a "FAS 106 Event")
-------------
(whether applicable to some or all of the Business Employees): (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 the Purchaser of the Purchaser FAS 106 Plans
applicable to Business Employees, their eligible spouses and dependents
(e.g. in the event of a termination of the Purchaser FAS 106 Plans, the
OPEB Schedule shall be reduced to zero (0)), (B) an increase in the
contribution rate paid (other than an increase proportionate to an increase
in overall plan costs or an increase provided by plan provisions) by
Business Employees, their eligible spouses and dependents instituted by the
Purchaser under the Purchaser FAS 106 Plans, (C) the enactment of
legislation which reduces or eliminates the requirement of the Purchaser to
provide retiree benefits under the Purchaser FAS 106 Plans, (D) a
Disposition, (E) a closing of a plant or plants by Purchaser (other than
the Pensacola Plant), or (F) a WARN Event. 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 5.5(f)(iv), shall be
determined by the CBS Actuary as of the Closing Date, for the purpose of
calculating the FAS 106 Obligation. Such gain shall be determined with
respect to the WELCO FAS 106 Plans as if the FAS 106 Event applied to the
WELCO FAS 106 Plans to the same extent and as of the same date they apply
to the Purchaser FAS 106 Plans and shall be measured by the difference
between the OPEB Schedule (or as subsequently modified pursuant to this
Section 5.5(f)(iv)) (the "Existing Schedule") and the OPEB Schedule that
-----------------
would have been determined as of the Closing Date to reflect the FAS 106
Liability, if the FAS 106 Event were known as of the Closing Date (the
"Revised Schedule"). To determine whether the change from the Existing
----------------
Schedule to the Revised Schedule would result in an actuarial gain, the
scheduled payments under each schedule (whether resulting in a gain or a
loss) shall be discounted back to the first day of the calendar year in
which the FAS 106 Event occurred, utilizing the discount rate utilized by
CBS as of December 31, 1997 to determine its APBO for FAS 106 purposes (the
"Discount Rate"). In no event shall any actuarial losses in connection
-------------
with the Purchaser FAS 106 Plans (other than arising as a result of a FAS
106 Event which results in a net actuarial gain) offset any actuarial gains
as calculated under this Section 5.5(f)(iv). If the result of discounting
the scheduled payments would result in the Revised Schedule having a lower
present value obligation than the Existing Schedule, the Revised Schedule
shall be substituted for the Existing Schedule as the OPEB Schedule. In no
event shall the OPEB 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 OPEB Schedule shall not be increased
above the amount as in effect immediately prior to the change that
triggered
77
the reduction in question. Any payment made by CBS 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.
(v) The Purchaser and CBS shall cooperate with each other so that, to
the maximum extent practicable, benefits shall be paid and administered
under the WELCO FAS 106 Plans and the Purchaser FAS 106 Plans as applicable
to Business Employees, through the third-party service provider to be
selected by Purchaser, subject to consent of CBS, not to be unreasonably
withheld. Any expenses allocable to CBS under such arrangement shall
reduce CBS's payment obligation under the CBS FAS 106 Plans as reflected by
the OPEB Schedule on a dollar-for-dollar basis. Purchaser shall notify CBS
within thirty days after any FAS 106 Event and shall cooperate with CBS in
providing data to determine any adjustments in the OPEB Schedule.
(vi) Subject to the requirements of applicable law, CBS shall use all
reasonable efforts to cash out Business Employees and Former Employees from
a trust qualified under Section 501(c)(9) of the Code maintained by CBS
(the Retiree Health Care Security Fund). To the extent such trust does not
make such distributions prior to the Closing Date, CBS shall cause the
transfer to a trust established by Purchaser satisfying the requirements of
Section 501(c)(9) of the Code of the funds in such trust allocable to such
Business Employees and Former Employees. The trust to be established by
the Purchaser shall have terms substantially similar to the terms of the
CBS Trust.
(G) SEVERANCE OBLIGATIONS. CBS and Purchaser agree that the
---------------------
transactions contemplated hereby shall not constitute a severance of employment
of any Business Employee prior to the consummation of the transactions
contemplated hereby, and that such employees will be deemed for all purposes to
have continuous and uninterrupted employment before and immediately after the
Closing. Except as required by Law or an applicable collective bargaining
agreement or as otherwise agreed in writing by CBS and Purchaser, Purchaser
shall provide severance and other separation benefits to each Business Employee
terminated by Purchaser during the Benefits Maintenance Period and with respect
to the Pensacola Plant in connection with the planned termination of Business
Employees whether before or after the Benefits Maintenance Period upon terms and
conditions that are comparable to the severance and other separation benefits
provided under the Involuntary Separation Program, the Employee Security and
Protection Plan and any applicable Free Standing Plan, which arrangements shall
credit service with the Sellers or their Affiliates prior to the Closing Date
for purposes of determining the amount of such severance and other separation
benefits.
78
Purchaser shall indemnify and hold Sellers and their Affiliates harmless from
and be responsible for any claims made by any Business Employee or Former
Employee for severance or other benefits based on separation, for any claims
based on breach of contract and for any other claims arising out of or in
connection with the employment or the failure to offer employment to, or the
termination of employment of, any Business Employee or Former Employee, other
than claims arising as a direct result of the transactions contemplated hereby.
CBS shall be responsible and indemnify Purchaser for any claims made by any
Business Employee or Former Employee for severance or other benefits based on
separation (other than severance benefits based on separation arising from acts
of Purchaser on or after the Closing Date), for any claims based on breach of
contract and for any other claims, in each case arising as a direct result of
the transactions contemplated hereby; provided, however, that CBS shall not be
-------- -------
responsible (and Purchaser shall be responsible) for any such claim if the
principal basis of such claim is due to Purchaser's breach of any provision of
this Section 5.5.
(H) EXECUTIVE COMPENSATION. (i) Effective as of the Closing Date,
----------------------
Purchaser shall adopt and establish a plan for the benefit of Business Employees
that contains terms and conditions (including but not limited to eligibility
requirements) that are substantially similar to those of the Westinghouse
Executive Pension Plan in effect as of the Closing Date (the "WELCO Executive
---------------
Plan") and which provides credit for prior service and compensation under the
----
WELCO Executive Plan for purposes of eligibility and benefit accrual (the
"Purchaser Executive Plan"), provided, however, that the Purchaser Executive
------------------------
Plan will include provisions which are consistent with (ii) through (iv) below
and will have its benefits offset by the benefits provided under the WELCO
Executive Plan, the WELCO Pension Plan and the Purchaser Pension Plan. The
Purchaser Executive Plan shall be administered so that the aggregate of the
benefits under the WELCO Executive Plan and the Purchaser Executive Plan are the
same with respect to Business Employees as if the Business Employees were
covered under the WELCO Executive Plan and continued employment with Sellers.
(ii) Purchaser shall continue the Purchaser Executive Plan without
adverse effect, including provisions therein relating to early retirement and
compensation increases, for a period not less than the Benefits Maintenance
Period.
(iii) The WELCO Executive Plan shall retain liability, if any, for
benefits earned to the Closing Date with respect to Business Employees, to be
calculated pursuant to appropriate action to be taken by CBS with respect to the
WELCO Executive Plan to cause the WELCO Executive Plan to take into
consideration (i) credit for employment of Business Employees with the Purchaser
and its Affiliates solely for purposes of calculating eligibility for the
payment of benefits, (ii) that the Average Annual Compensation and Executive
Benefit
79
Service (both as defined in the WELCO Executive Plan) will be determined
and frozen as of the Closing Date, and (iii) that the Purchaser and its
Affiliates will be considered a Designated Entity (as defined in the WELCO
Executive Plan) solely for purposes of determining eligibility for the payment
(including suspension of payment) of benefits. Notwithstanding the foregoing,
the WELCO Executive Plan shall not recognize employment with the Business after
the Purchaser and its Affiliates have sold or divested the Business, or a
portion thereof as a result of a Disposition with respect to the Business
Employees who are transferred or terminated in connection with such a sale or
divesture.
(iv) The Purchaser Executive Plan (or, if none, Purchaser) shall be
solely responsible for (and the WELCO Executive Plan shall not provide for) (x)
any benefit that becomes payable with respect to Business Employees retiring
after the Closing Date that is the result of a Pension Event (i.e. the benefit
would not be payable absent such an event) or (y) any other early retirement
subsidy or supplement that is not described in (iii) above.
(v) Purchaser shall indemnify CBS for any actuarial losses (based on
the same actuarial assumptions and methods used for purposes of determining
actuarial losses under Section 5.5(d)(iv)) with respect to the CBS Executive
Plan resulting from any Business Employee commencing the receipt of benefits
prior to their Normal Retirement Date (as defined in the WELCO Pension Plan) and
that is attributable to a Pension Event. Purchaser shall cooperate with WELCO
in providing data to CBS to enable the determination of actuarial losses.
Notwithstanding any other provision in this Agreement to the contrary, this
indemnity shall survive the Closing Date without limitation.
(I) COOPERATION. The parties agree to furnish each other with such
-----------
information concerning employees and employee benefit plans, and to take all
such other action, as is necessary and appropriate to effect the transactions
contemplated by this Agreement.
(J) WARN ACT. Purchaser agrees to provide any required notice under
--------
the WARN Act and any similar statute, and otherwise to comply with any such
statute with respect to any "plant closing" or "mass layoff" (as defined in the
WARN Act) or similar event affecting Business Employees and occurring on or
after the Closing. CBS agrees to provide any notice required under such statute
prior to or arising as a result of the Closing.
(K) COBRA. Effective as of the Closing Date, Purchaser shall assume
-----
all responsibility for COBRA notices and coverage for Business Employees and
Former Employees (and their eligible dependents).
80
(L) WORKERS COMPENSATION. Effective as of the Closing Date,
--------------------
Purchaser shall take all necessary and appropriate action to adopt a workers
compensation program providing such workers compensation benefits as are
provided under CBS's Workers Compensation Program for the Business Employees and
Inactive Employees covered by such program ("Purchaser's Workers Compensation
--------------------------------
Program"). Purchaser's Workers Compensation Program shall be responsible for
-------
all claims for benefits which are payable from and after the Closing Date with
respect to employees and Former Employees of the Business and that are payable
under the terms and conditions of Purchaser's Workers Compensation Program or
the CBS's Workers Compensation Program.
(M) RETAINED LIABILITIES. CBS shall retain liability and
--------------------
responsibility for all benefits payable under (x) the WELCO Pension Plan (but,
with respect to Business Employees, as limited under Section 5.5(d)), (y) the
WELCO Executive Pension Plan (but, with respect to Business Employees, as
limited under Section 5.5(h)), (z) the WELCO FAS 106 Plans with respect to
employees and former employees of the Business other than Business Employees
and, with respect to Business Employees, only to the extent provided in Section
5.5(f), (xx) the WELCO Savings Program (other than with respect to assets and
liabilities to be transferred to the Purchaser's 401(k) Plan under Section
5.5(e)), (yy) the CBS Long-Term Incentive Plan, (zz) deferred compensation
obligations under the Westinghouse Annual Incentive Plan and any other employee
deferral arrangements, except to the extent attributable to Free Standing Plans
and (xxx) retention bonuses for executives relating to this transaction (but not
severance obligations arising from acts of Purchaser).
(N) ACTUARIAL DETERMINATIONS AND PAYMENTS. (i) The calculations of
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actuarial losses under subsections (d)(iv) and (h)(v) and actuarial gains under
subsection (f)(iv) shall be performed by the CBS Actuary as soon as practicable
after CBS receives notice from Purchaser or CBS otherwise becomes aware of a
Pension Event or a FAS 106 Event. Purchaser shall provide CBS with sufficient
data to enable the determination of any actuarial losses and/or actuarial gains
within the 30 days following a Pension Event or a FAS 106 Event.
(ii) No later than 60 days after the receipt by CBS of both the notice
from Purchaser that a Pension Event or a FAS 106 Event has occurred and
sufficient data to make a determination has been delivered, CBS will deliver to
Purchaser the results of the determination of the actuarial loss or actuarial
gain (each a "Determination"), respectively, and all reasonably necessary
-------------
supporting information in order to permit Purchaser's actuary to verify the
accuracy of the Determination. Each Determination will be conclusive and
binding on the parties unless Purchaser, within the 30-day period after the
delivery of such results and
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supporting information, notifies CBS in writing that it disputes the accuracy of
the calculation, specifying the nature of the dispute and the basis therefor
(the "Notice").
------
(iii) Actuaries retained by CBS and Purchaser shall attempt in good
faith to reach agreement to resolve all of the disputes set forth in the Notice
within 30 days after the Notice is given by Purchaser to CBS. If actuaries
retained by CBS and Purchaser cannot resolve all disputes with respect to a
Determination within such 30-day period, CBS and Purchaser shall jointly select
a third, impartial actuary from a nationally recognized actuarial firm to
resolve the dispute (the same such actuary shall resolve all concurrent
Determinations). If the parties cannot jointly select a third, impartial actuary
within 15 days after the end of such 30-day period, the President of the
Conference of Consulting Actuaries shall select an impartial actuary. The cost
of the impartial actuary shall be shared equally by CBS and Purchaser.
(iv) Promptly, but no later than 60 days after his or her selection,
an impartial actuary selected under (iii) above shall review the results of the
Determination calculation, the supporting information with respect to the
Determination and the Notice, and shall reach his or her own decision as to the
issues in dispute and the determination of the actuarial gain or actuarial loss
or actuarial cost, as the case may be (which determination shall be equal to or
between the respective amounts asserted by CBS and Purchaser). Such
determination shall be final and conclusive for all purposes.
(v) Within 30 days after a final determination of any actuarial loss
under Sections 5.5(d)(iv) or 5.5(h)(v), Purchaser shall make any applicable
indemnification payments under such Sections.
(vi) All indemnification payments under (v) above shall be treated as
purchase price adjustments for tax purposes.
(vii) Within 30 days after a final determination of any actuarial
gain under Section 5.5(f)(iv) CBS shall substitute a Revised Schedule in place
of the Existing Schedule.
(O) POST-CLOSING HIRING OF EMPLOYEES. If within the period ending
--------------------------------
one (1) year after the Closing Date, Purchaser or any of its Affiliates hires
any employee of STC (other than Business Employees), Purchaser shall reimburse
CBS for any severance and other related termination costs paid by CBS or its
Subsidiaries to or on account of such employment with CBS or any of its
Subsidiaries during such one (1) year period.
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(P) FREE-STANDING PLANS. Notwithstanding the foregoing provisions of
-------------------
this Section 5.5, effective as of the Closing, Purchaser shall assume and be
responsible for all liabilities and obligations under the Free-Standing Plans.
CBS and Purchaser shall take all action necessary and appropriate (including, in
the case of Purchaser, establishing legal entities to serve as plan sponsor) to
establish Purchaser or Purchaser Affiliates as successor to CBS or its
Affiliates to all rights, assets, duties, liabilities and obligations under or
with respect to the Free-Standing Plans.
(Q) FOREIGN EMPLOYMENT MATTERS.
--------------------------
(i) Employment. Without limiting the generality of Sections 5.5(a)
----------
and 5.5(b), Purchaser shall, or shall cause a Sold Subsidiary to, assume or
retain and be responsible for the employment (including any employment
contracts) of the Business Employees who are employed outside the United States
("Foreign Business Employees") and Purchaser shall take any and all actions
--------------------------
necessary or appropriate (if any) to continue the employment of such Foreign
Business Employees and to have Purchaser or any Sold Subsidiary assume or retain
all obligations and liabilities relating to their employment (including, but not
but not limited to, any employment contracts listed in Schedule 4.1(j)(A)(i))
under local laws and practices without CBS or any of its affiliates having any
liability to any such employees for severance, redundancy, termination, payment
in lieu of notice, indemnity or other payments to any of such employees by
reason of, or as a result of, the actions contemplated by this Section 5.5(q).
(ii) Employee Benefit Plans for Foreign Business Employees.
-----------------------------------------------------
(A) Effective as of the Closing Date, and as soon as necessary or
practicable thereafter, Purchaser or a Sold Subsidiary shall establish and
qualify or register with applicable regulatory authorities employee benefit
plans for, or shall extend existing Purchaser or Sold Subsidiary employee
benefit plans, programs, policies and arrangements to, the Foreign Business
Employees which are in accordance with local law and which provide benefits, for
not less than one year following the Closing Date, to the Foreign Business
Employees on terms and conditions which are substantially similar in the
aggregate to those provided to Foreign Business Employees by CBS or its
subsidiaries immediately prior to the Closing Date.
(B) As of the Closing Date, Purchaser or a Sold Subsidiary shall (i)
establish and adopt one or more foreign pension plans or shall extend one or
more existing Purchaser or Sold Subsidiary pension plans (each, a "New Foreign
-----------
Retirement Plan") which shall provide retirement benefits for each of the
---------------
Foreign Business Employees and, to the extent applicable,
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Former Employees who were employed in the Business or by a Sold Subsidiary in a
foreign jurisdiction and who, as of the Closing Date, are not employed by CBS or
any of its affiliates (the Foreign Business Employees and such former foreign
employees, collectively, the "Foreign Plan Participants") on substantially
-------------------------
similar terms and conditions to those provided to Foreign Plan Participants by
CBS or its affiliates (other than a Sold Subsidiary) under each Foreign
Retirement Plan listed in Schedule 4.1(m) as in effect immediately prior to the
Closing Date, and (ii) establish and adopt any necessary trust funds or other
funding vehicles to hold assets or reserves of New Foreign Retirement Plans
which are attributable to the Foreign Plan Participants. Purchaser or a Sold
Subsidiary shall take all action necessary to qualify or register each New
Foreign Retirement Plan and any related trusts with all applicable regulatory
authorities. Subject to Section 5.5(q)(iii), effective as of the Closing Date,
Purchaser or a Sold Subsidiary shall extend coverage under the applicable New
Foreign Retirement Plan to each such Foreign Plan Participant to the extent that
each such Foreign Plan Participant shall then, or at some later date, satisfy
the eligibility and participation requirements of such New Foreign Retirement
Plan.
(C) Except as otherwise specifically provided in this Section 5.5(q),
effective as of the Closing Date, each Foreign Plan Participant who is an active
participant in any Foreign Retirement Plan shall cease to be an active
participant thereunder, and all Foreign Plan Participants shall become eligible
to participate in an applicable New Foreign Retirement Plan in accordance with
the applicable provisions of this Section 5.5(q) and the terms and conditions of
such plan.
(iii) Delayed Foreign Employees. Notwithstanding the foregoing
-------------------------
provisions of this Section 5.5(q), Foreign Employees whose employment by
Purchaser or any Sold Subsidiary will be delayed beyond the Closing Date due to
applicable foreign law (including, without limitation, due to the requirement
that Purchaser establish separate legal entities as employer) ("Delayed Foreign
---------------
Employees") will continue on the payroll of CBS or its affiliates and will
---------
continue to participate in each of CBS's or its affiliate's employee benefit
plans in which they are participating immediately prior to the Closing Date
until the applicable date on which they first become eligible to become employed
by Purchaser or any Sold Subsidiary (the "Delayed Transfer Date"). Purchaser
---------------------
will offer, or cause a Sold Subsidiary to offer, employment on the applicable
Delayed Transfer Date to each such Delayed Foreign Employee then in employment,
and on and as of the applicable Delayed Transfer Date, each such Delayed Foreign
Employee will become a Business Employee for all purposes of the Agreement.
Purchaser will promptly reimburse CBS for 100% of the payroll, benefits
(including statutory benefits, severance and other termination benefits) and
other costs and expenses directly or indirectly relating to Delayed Foreign
Employees within 15 days
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following receipt of each written notification (including reasonable
substantiation of costs and expenses) from CBS or any of its affiliates of such
payroll, benefits and other costs and expenses.
(R) NO RIGHT TO EMPLOYMENT. Nothing herein expressed or implied shall
----------------------
confer upon any of the employees of CBS or Purchaser, or any of their respective
Affiliates, any additional rights or remedies, including, without limitation,
any additional right to employment, or continued employment, for any specified
period, of any nature or kind whatsoever under or by reason of this Agreement.
(S) ALTERNATIVE PROCEDURE. CBS and Sellers and Purchaser agree that,
---------------------
pursuant to the "Alternative Procedure" provided in section 5 of Revenue
Procedure 96-60, 1996-2 C.B. 399, (i) Purchaser will report on a
predecessor/successor basis as set forth therein, (ii) CBS and its Affiliates
will be relieved from filing a Form W-2 with respect to any Business Employee
who accepts employment with Purchaser or its Affiliates, and (iii) Purchaser
will undertake to file (or cause to be filed) a Form W-2 for each such employee
for the year that includes the Closing Date, including the portion of such year
that such employee was employed by CBS or its Affiliates (provided, however,
that any agreement between CBS and Purchaser that CBS or its Affiliates shall
furnish to Purchaser payroll and related services under the Transitional
Services Agreement provided for in Section 5.20(a) and any actions by either
party in connection with such agreement shall not alter or otherwise affect the
agreement set forth in this Section 5.5(s)). CBS agrees to provide Purchaser
with all payroll and employment-related information with respect to each
Business Employee who accepts employment with Purchaser (or an Affiliate) and to
otherwise cooperate in following the "Alternative Procedure."
SECTION 5.6. COLLECTION OF RECEIVABLES. From and after the Closing,
-------------------------
Purchaser shall have the right and authority to collect for its own account all
Accounts Receivable and other items that are included in the Acquired Assets and
to endorse with the name of any of Sellers, any checks or drafts received with
respect to any such Accounts Receivable or other items and CBS agrees promptly
to deliver or cause to be delivered to Purchaser any cash or other property
received directly or indirectly by any of Sellers with respect to such
receivables and other items, including any amounts payable as interest.
SECTION 5.7. EXPENSES. Whether or not the Closing takes place, and
--------
except as otherwise specifically provided in this Agreement (including with
respect to Transfer Taxes), all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses.
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SECTION 5.8. BROKERS OR FINDERS. Each of Purchaser and CBS
------------------
represents, as to itself and its Affiliates, that no agent, broker, investment
banker or other Person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except, as to Purchaser and its Affiliates,
Xxxxxxxxxx & Partners, Inc. and Rothschild Inc., whose fees and expenses will be
paid by Purchaser, and each of Purchaser and CBS respectively agrees to
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions or
expenses asserted by any Person on the basis of any act or statement alleged to
have been made by such party or its affiliate.
SECTION 5.9. SHARED TECHNOLOGY AND TRADEMARK LICENSE AGREEMENTS.
--------------------------------------------------
(a) On the Closing Date, CBS and Purchaser shall enter into a Shared
Technology Agreement in the form of Exhibit B hereto (the "Shared Technology
-----------------
Agreement"), wherein, to the extent CBS and Purchaser have rights on the Closing
---------
Date:
(i) Purchaser shall grant to CBS a world-wide, royalty-free,
nonexclusive, perpetual license to use Intellectual Property and Technology
to satisfy its existing obligations, and support its current businesses
that do not compete with the Business;
(ii) CBS shall grant to Purchaser a nonexclusive, world-wide,
royalty-free, perpetual license to use intellectual property and technology
retained by CBS, that are pertinent to the Business; and
(iii) It shall be agreed that each licensed party shall have
appropriate access to the corresponding technology reasonably required for
the licensed purpose. Such right of access to technology shall be
appurtenant to the license and assignable to the same extent as the
license. The owner of the Business, upon Closing, shall have access to all
such technology that is primarily applicable to a Nuclear Installation, in
the possession of the owner of the GESCO Businesses and, at the sole
discretion of the owner of the Business have such technology delivered to
it.
(b) On the Closing Date, CBS and Purchaser shall enter into a
Trademark and Trade Name License Agreement in the form of Exhibit C hereto,
granting certain licenses to Purchaser and its Affiliates to use the names and
marks "WESTINGHOUSE," "CIRCLE W" and "You can be sure . . . if it's
Westinghouse."
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(c) The parties acknowledge and agree that, as between the Energy
Systems Business and the GESCO Businesses, the Energy Systems Business is the
owner of all CBS intellectual property and technology, including Intellectual
Property and Technology, that is primarily applicable to a Nuclear Installation.
SECTION 5.10. CERTAIN INFORMATION. (a) After the Closing, upon
-------------------
reasonable written notice, Purchaser and CBS shall furnish or cause to be
furnished to each other and their respective accountants, counsel and other
representatives access, during normal business hours, to such information
(including records pertinent to the Business), personnel and assistance relating
to the Energy Systems Business as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any returns,
reports or forms or the defense of, prosecution of, or response required under,
or pursuant to, any lawsuit, action or proceeding (including any proceeding
involving CBS and any Excluded Assets, any Excluded Liabilities, any
environmental matters related to the Acquired Assets and the matters referred to
in Section 2.3(b)(xiv)) or in order to enable the parties to comply or monitor
compliance (including with respect to Purchaser's obligations in respect of the
Assumed Liabilities) with their respective obligations under this Agreement.
Purchaser and CBS shall also furnish or cause to be furnished to each other and
their respective accountants, counsel and other representative's access, during
normal business hours, to such information for any other reasonable business
purpose. Purchaser and CBS shall, and shall cause their Affiliates to, retain
until five years after the Closing Date all such records pertinent to the
Business which are owned by such Person immediately after the Closing (excluding
any Excluded Assets); after the end of such period, before disposing of any such
records, the applicable party shall give notice to such effect to the other, and
shall give the other, at the other's cost and expense, a reasonable opportunity
to remove and retain all or any part of such records as the other may select.
Cooperation with respect to Tax matters shall be governed by Section 5.14(j).
Cooperation with respect to Intellectual Property and Technology matters shall
be governed by Section 5.10(c).
(b) After the Closing, Purchaser shall furnish or cause to be
furnished to CBS and its respective accountants, counsel and other
representatives access, during normal business hours, to such information
(including records pertinent to the Business), personnel and assistance,
including audit rights, relating to Purchaser's compliance with, and discharge
of its obligations under, the Settlement Agreements.
(c) After the Closing, upon reasonable written notice, CBS will
deliver at Purchaser's expense all reasonably available records regarding the
conception, reduction to practice, evaluation, and efforts to patent or
otherwise protect Intellectual Property or
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Technology. CBS will at all reasonable times cooperate with Purchaser's
reasonable efforts to protect any of the Intellectual Property or Technology by
supplying (i) all requested information reasonably available to CBS about any
public use or offer to sell an invention that occurred prior to the filing of a
U.S. application on the invention, (ii) all requested information reasonably
available to CBS about any use of a trademark or service xxxx, or (iii) all
requested information reasonably available to CBS about any software or
copyrighted work. With respect to inventions created by inventors who remain in
the employ of CBS after the Closing, CBS promises to provide its full
cooperation with any efforts by Purchaser to patent said inventions or enforce
patents on said inventions, including instructing the employee promptly to
review any draft patent application submitted by Purchaser and advise Purchaser
as to the revisions necessary to make it a full and accurate disclosure of the
invention and to execute all truthful and lawful oaths of inventorship or
assignment deeds presented by Purchaser for purposes of patenting or protecting
the invention. With respect to inventions created by inventors who are past
employees of CBS or any of its Subsidiaries, CBS will, on request by Purchaser,
use its commercially reasonable efforts to encourage the past employee to give
Purchaser full cooperation in connection with efforts to patent said invention
or enforce a patent on said invention. After a period of two years following the
Closing Date, CBS or any of its Subsidiaries that render services under this
Section 5.10(c) shall be entitled to reasonable reimbursement from Purchaser for
its time, as well as out-of-pocket expenses as provided for above, for such
services rendered after the two-year period.
SECTION 5.11. BULK TRANSFER LAWS. Purchaser hereby waives compliance
------------------
by Sellers with the provisions of any so-called "bulk transfer law" of any
jurisdiction in connection with the sale of the Acquired Assets to Purchaser.
SECTION 5.12. ADDITIONAL AGREEMENTS. Subject to the provisions of
---------------------
Section 5.4, each of Purchaser and CBS will use all reasonable efforts to
facilitate and effect the implementation of the transfer of the Acquired Assets
to Purchaser and the assumption of the Assumed Liabilities by Purchaser and, for
such purpose but without limitation, each of Purchaser and CBS promptly will at
and after the Closing execute and deliver or cause to be executed and delivered
to the other party such assignments, deeds, bills of sale, assumption
agreements, consents and other instruments of transfer or assumption as
Purchaser or its counsel or CBS or its counsel may reasonably request as
necessary or desirable for such purpose (it being understood that any such
assignment, deed, xxxx of sale, assumption agreement, consent or other
instrument of transfer or assumption shall not provide for any representations
or warranties or any obligations or liabilities that are not otherwise expressly
provided for in this Agreement). At any time and from time to time after the
Closing Date at the request of Purchaser, and without further consideration, CBS
will, and will cause the other
88
Sellers to, execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action as Purchaser
may reasonably deem necessary or desirable in order to transfer, convey and
assign more effectively to Purchaser, the Acquired Assets, to put Purchaser in
actual possession and operating control of the Business and to assist Purchaser
in exercising all rights with respect thereto. Purchaser will cooperate with CBS
with respect to the matters set forth in Item (xi) of Schedule 5.1(a), as
provided therein.
SECTION 5.13. CERTAIN UNDERSTANDINGS. Purchaser acknowledges that
----------------------
none of Sellers or any other Person has made any representation or warranty,
express or implied, as to the accuracy or completeness of any information
regarding the Business, the Acquired Assets or other matters not included in
this Agreement or the Schedules hereto (including, without limitation, the
information, estimates, forecasts and projections contained in the Memorandum),
and none of Sellers or any other Person will be subject to any liability to
Purchaser or any other Person resulting from the distribution to Purchaser, or
Purchaser's use of, any such information, including any information, documents
or material made available to Purchaser in certain "data rooms" or in any other
form in expectation of the transactions contemplated hereby. Purchaser
acknowledges that, should the Closing occur, Purchaser will acquire the Acquired
Assets without any representation or warranty as to merchantability or fitness
for any particular purpose, in an "as is" condition and on a "where is" basis,
except as otherwise expressly represented or warranted herein.
SECTION 5.14. ALLOCATION; TAX MATTERS.
-----------------------
(a) Schedule 5.14 sets forth the allocation of the consideration
hereunder for each of the Foreign Sold Subsidiaries for Tax purposes. CBS and
Purchaser agree to use their best efforts to enter into an agreement (the
"Allocation Agreement") as soon as practicable (but in any event no later than
--------------------
150 days after the Closing Date) to allocate the Purchase Price, the Assumed
Liabilities, and all other capitalizable costs among (i) the Acquired Assets and
(ii) the assets held by each U.S. Sold Subsidiary for all applicable Tax
purposes, including Code Section 1060. To the extent permissible under
applicable Tax Laws, all Assumed Liabilities arising out of the Steam Generator
Settlement Agreements shall be treated as expenses of Purchaser, deductible by
it as such Liabilities are paid in taxable periods after the Closing Date; all
other Assumed Liabilities arising out of the Steam Generator Settlement
Agreements shall be included in the costs capitalizable by Purchaser at the
Closing. Purchaser shall initially prepare a statement setting forth a proposed
computation and allocation of the aggregate purchase price (the "Computation"),
-----------
and submit it to CBS no later than 60 days after the Closing Date. If, within
30 days of CBS's receipt of the Computation,
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CBS shall not have objected in writing to such Computation, the Computation
shall become the Allocation Agreement. If 60 days after CBS's receipt of the
Computation, CBS and Purchaser have not adopted an Allocation Agreement, any
disputed aspects of the Allocation Agreement shall be resolved within 90 days of
CBS's receipt of the Computation by a law or accounting firm mutually acceptable
to CBS and Purchaser (the "Neutral Auditors"), which shall resolve such dispute
----------------
pursuant to, first, the terms of this Agreement and, second, the application of
applicable Tax Laws to the relevant facts. The decision of the Neutral Auditors
shall be final, and the costs, expenses and fees of the Neutral Auditors shall
be borne equally by CBS and Purchaser. CBS and Purchaser shall report the Tax
consequences of the transactions contemplated by this Agreement consistent with
the terms of this Agreement and the Allocation Agreement.
(b) After the Closing, from time to time, Purchaser and CBS shall
agree upon revisions to the Allocation Agreement to reflect any adjustments to
the consideration. Purchaser and CBS shall report the Tax consequences of the
transactions contemplated by this Agreement in a manner consistent with the
terms of this Agreement and the Allocation Agreement, as it may be revised from
time to time. Any disputes regarding such revisions shall be resolved by the
Neutral Auditors.
(c) Purchaser and CBS shall file and cause to be filed all Tax Returns
and execute such other documents as may be required by any taxing authority, in
a manner consistent with the Allocation Agreement, as it may be revised from
time to time. CBS shall prepare Internal Revenue Service Form 8594 pursuant to
Section 1060 of the Code relating to the transactions contemplated by this
Agreement based on the Allocation Agreement, as it may be revised from time to
time, and deliver such form to Purchaser. Purchaser and CBS shall file, or
cause the filing of, such form with each relevant taxing authority. Any
disputes under this provision shall be resolved by the Neutral Auditors.
(d) Irrespective of Article 8 or any other provision hereof, Sellers
and Purchaser shall each bear and be liable for 50% of the transfer,
documentary, sales, use, registration, stamp, value-added and other similar
taxes (including all applicable real estate transfer taxes and real property
gains taxes), including any penalties, interest and additions to tax, incurred
in connection with the transactions contemplated hereby ("Transfer Taxes").
--------------
Sellers or Purchaser, as the case may be, shall pay the Transfer Taxes for which
it is liable under applicable Law. Five days before any such payment of Taxes
is due, the nonpaying party shall reimburse the paying party for 50% of such
Taxes. CBS and Purchaser shall cooperate in timely making and filing all Tax
Returns as may be required to comply with the provisions of any Transfer Tax
Laws. To the extent legally able to do so, Purchaser shall
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deliver to CBS exemption certificates satisfactory in form and substance to CBS
with respect to Transfer Taxes if such delivery would reduce the amount of
Transfer Taxes that would otherwise be imposed. Any disputes under this
provision shall be resolved by the Neutral Auditors within 30 days of the
submission of such dispute.
(e) CBS shall terminate and shall cause the termination by the Closing
of any agreement or practice relating to Taxes between CBS or any of its
Affiliates (other than any Investment), on the one hand, and any Investment, on
the other hand. On and after the Closing Date, neither CBS or its Affiliates
(other than any Investment), on the one hand, nor any Investment, on the other
hand, shall have any further rights, obligations, or liabilities under any such
agreement or practice, and no Investment shall have any obligation in respect of
any agreement for practice relating to Taxes for any period prior to or
including the Closing Date.
(f) At the Closing, CBS shall deliver to Purchaser duly executed
certificates certifying that the transactions contemplated hereby are exempt
from withholding under Section 1445 of the Code.
(g) To the extent permitted by Law, Purchaser shall have the right to
cause each Foreign Sold Subsidiary to carry back any item of income, loss,
credit or deduction from any taxable period beginning after the Closing Date to
any taxable period including or ending prior to the Closing Date to the extent
Tax remains payable after all CBS Tax benefits have been taken into account.
(h) CBS shall file any amended consolidated, combined or unitary
Income Tax Returns that include the Business or any Sold Subsidiary for Pre-
Closing Tax Periods which are required as a result of examination adjustments
made by any taxing authority as finally determined. For those jurisdictions in
which separate Income Tax Returns are filed by any Sold Subsidiary, any required
amended returns for Pre-Closing Tax Periods resulting from such examination
adjustments, as finally determined, shall be prepared by CBS and furnished to
such Sold Subsidiary, for signature and filing at least ten days prior to the
due date for filing such returns. Purchaser shall file all other amended Tax
Returns relating to the Business.
(i) (A) CBS shall file or cause to be filed the United States
consolidated federal Income Tax Return of CBS and, where applicable, all other
consolidated, combined or unitary state or local Income Tax Returns for the Pre-
Closing Tax Periods of each Selling Subsidiary and each U.S. Sold Subsidiary and
(B) CBS shall also file and shall cause each
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Selling Subsidiary and each Sold Subsidiary to file all other Tax Returns with
respect to the Acquired Assets or the income or operations of the Business
required to be filed (including any extensions) on or prior to the Closing Date.
CBS shall prepare or shall cause to be prepared all Income Tax Returns required
to be filed by any U.S. Sold Subsidiary on a separate return basis for Pre-
Closing Tax Periods that have not been filed by the Closing Date and (x) CBS
shall provide Purchaser with a copy of all such Tax Returns (or in the case of a
Tax Return that includes assets or businesses not included in the Acquired
Assets, those portions of such Tax Returns that relate to the Business) at least
30 days prior to the due date for filing such Tax Returns (including any
extensions) and (y) after reviewing and approving such Tax Returns (which
approval shall not be unreasonably withheld), Purchaser shall file or shall
cause such Tax Returns to be filed. All such Tax Returns that may affect the
future Tax payable by Purchaser or any Sold Subsidiary shall be prepared on a
basis consistent with law and past practice. CBS shall pay or cause to be paid
all Taxes shown as due on any such Tax Returns.
(j) (i) Purchaser shall timely prepare and file (or cause to be
prepared and filed) all Tax Returns required by Law for (A) all Taxes covering
the Acquired Assets or the Sold Subsidiaries for all Straddle Periods and (B)
all Income Taxes of the Foreign Sold Subsidiaries for all Pre-Closing Tax
Periods, except as provided in Section 5.14(i). Purchaser shall provide CBS
with a copy of such Tax Returns at least 30 days prior to the due date for
filing such Tax Returns (including extensions), and after CBS's review and
approval of such Tax Returns (which approval shall not be unreasonably
withheld), Purchaser shall file or cause such Tax Returns to be filed. Not
later than 5 days before the due date for the payment of Taxes with respect to
such Tax Returns, CBS shall pay to Purchaser an amount equal to Sellers'
Straddle Period Taxes determined in accordance with the method described in
clause (iii) below.
(ii) Purchaser shall prepare and file all Tax Returns for all
Foreign Sold Subsidiaries for all Post-Closing Tax Periods and all Tax Returns
other than Income Tax Returns for all Sold Subsidiaries for Pre-Closing Tax
Periods that have not been filed by the Closing Date.
(iii) For purposes of this Agreement, the Taxes allocable to
Sellers' Straddle Period Tax Returns shall be:
(A) In the case of any real or personal property Tax relating to the
Acquired Assets or the Subsidiary Assets, an amount equal to the
Tax for the entire Straddle Period multiplied by a fraction, the
numerator of which is
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the number of days in the Sellers' Straddle Period and the
denominator of which is the number of days in the entire Straddle
Period; and
(B) In the case of any other Tax, the amount that would be payable if
the taxable year ended on the Closing Date.
(k) CBS and Purchaser shall each provide the other with such
assistance as may be reasonably requested (including making employees reasonably
available to provide information or testimony) in connection with the
preparation of any Tax Return, any Tax Controversy (as defined in Section
5.14(l)(ii)), or the determination of liability for Taxes with respect to the
Acquired Assets or the income or operations of the Business. Purchaser shall
complete CBS's standard tax packages relating to Tax Returns that CBS is
responsible for filing pursuant to Section 5.14(i) and deliver them to CBS
within 90 days of Purchaser's receipt from CBS and shall, and shall cause its
Affiliates to, cooperate with CBS in preparing and pursuing any claims for
refunds or credits of Taxes (including refunds or credits relating to investment
tax credits, research credits and credits for prepayments of Income Taxes). At
Purchaser's request and expense, CBS shall file claims prepared by Purchaser for
refunds of Taxes (other than items described in Section 2.3(b)(ii) and (iii))
and promptly pay over the amount recovered to Purchaser (without any interest,
other than interest paid by the applicable taxing authority with respect to such
refund); provided, however, that Purchaser shall promptly reimburse CBS to the
-------- -------
extent that such refund is reclaimed by a taxing authority (without any
interest, other than interest due to the applicable taxing authority with
respect to such reclamation). CBS and Purchaser each shall, and shall cause
their Affiliates to, retain until seven years after the Closing Date all Tax
Returns, schedules, work papers and other records that are owned by such Person
immediately after the Closing and that relate to the Business or the Acquired
Assets; after the end of such period, before disposing of any such Tax Returns,
schedules, work papers or other records, each shall give notice to such effect
to the other, and shall give the other, at the other's cost and expense, a
reasonable opportunity to remove and retain all or any part of such Tax Returns,
schedules, work papers or other records as the other may select.
(l) (i) Purchaser shall, in the event that Purchaser receives
notice (whether orally or in writing) of any examination, claim, proposed
settlement, proposed adjustment or related matter with respect to any Taxes
for which Purchaser may be indemnified hereunder (the "CBS Tax
-------
Controversies") promptly notify CBS thereof, provided, however, that
------------- -------- -------
failure to give such notification shall not affect the indemnification
provided hereunder except to the extent CBS shall have been actually
prejudiced as a result of such failure (except that CBS shall not be liable
for any
93
interest or other expenses incurred during the period in which the
Purchaser failed to give such notice). CBS shall be entitled at its sole
discretion and expense to handle, control and compromise or settle the CBS
Tax Controversies, and shall reasonably inform Purchaser of the progress of
the CBS Tax Controversies, provided, however, that in the event Purchaser
-------- -------
waives its rights to indemnification with respect to any CBS Tax
Controversy relating to Taxes other than Income Taxes, Purchaser may assume
at its expense, and have the sole discretion to handle, control,
compromise, or settle, such controversy.
(ii) CBS shall, in the event CBS receives notice (whether orally
or in writing) of any examination, claim, proposed settlement, proposed
adjustment or related matter with respect to Taxes attributable to the
Business (other than CBS Tax Controversies) (the "Purchaser Tax
-------------
Controversies," and together with the CBS Tax Controversies, the "Tax
------------- ---
Controversies"), promptly notify Purchaser thereof, provided, however that
------------- -------- -------
failure to give such notification shall not affect the indemnification
provided hereunder except to the extent Purchaser shall have been actually
prejudiced as a result of such failure (except that the Purchaser shall not
be liable for any interest or other expenses incurred during the period in
which CBS failed to give such notice). Purchaser shall be entitled at its
sole discretion and expense to handle, control and compromise or settle the
Purchaser Tax Controversies, and shall reasonably inform CBS of the
progress of the Purchaser Tax Controversies.
(m) Purchaser acknowledges that CBS may, in its sole discretion,
elect under Treasury Regulation (S) 301.7701-3(c) to treat one or more Selling
Subsidiaries or Sold Subsidiaries that are foreign corporations as branches of
the applicable Sellers for United States federal income tax purposes, such
elections, if made, to be effective on or before the Closing Date and, where
necessary, take reasonable actions to enable such elections to be made.
Purchaser will not take or cause to be taken any Tax reporting position with
respect to such Selling Subsidiaries or Sold Subsidiaries that is inconsistent
with such elections.
SECTION 5.15. SUPPLIES. Purchaser shall not use any signs or
--------
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"), that state or otherwise indicate thereon that
--------
the Business is a division or unit of CBS, or, except in compliance with any
license agreement contemplated by Section 5.9(b), contain any trademarks,
servicemarks, trade names or corporate or business names, derived from or
including the words "Westinghouse Electric Corporation," "Westinghouse Electric
Company," "Westinghouse,"
94
"WELCO" or "Circle W" (in logotype design or any other style or design) in whole
or in part; provided, that to the extent any Supplies included in the Acquired
Assets so indicate, Purchaser may, for a period of 90 days after the Closing
Date, use such Supplies after first crossing out or marking over such statement
or indication or trademark, servicemark, trade name or corporate or business
name and otherwise clearly indicating on such Supplies that the Business is no
longer a division or unit of CBS. Purchaser shall not reorder or produce any
Supplies which state or otherwise indicate thereon that the Business is a
division or unit of CBS or contain any such trademarks, servicemarks, trade
names or corporate or business names.
SECTION 5.16. TRANSFER OF ASSETS OF SOLD SUBSIDIARIES. On or prior to
---------------------------------------
the Closing Date, CBS shall cause the Sold Subsidiaries to transfer (and shall
use its reasonable efforts to inform Purchaser of each such transfer prior
thereto), without consideration, any Subsidiary Assets not relating primarily to
the Business (including the assets set forth in Schedule 5.16) to CBS or
Subsidiaries of CBS other than the Sold Subsidiaries or to any third party
designated by CBS. After the Closing, Purchaser will cooperate with CBS to
transfer without consideration at CBS's request any such Subsidiary Assets to
CBS or Subsidiaries of CBS or to any third party designated by CBS and CBS shall
reimburse Purchaser for its reasonable expenses and all Taxes incurred in
connection therewith.
SECTION 5.17. REMOVAL OF EXCLUDED ASSETS AND LIABILITIES FROM SOLD
----------------------------------------------------
SUBSIDIARIES. The parties acknowledge that the Excluded Assets and Excluded
------------
Liabilities are held by, or are obligations of, certain of the Sold
Subsidiaries. Sellers will at the request of Purchaser use their reasonable
best efforts either (i) to transfer the Acquired Assets held by any such
Subsidiary directly to Purchaser (in which event Sellers will retain the Sold
Subsidiary) or (ii) to transfer out of any such Subsidiary, or otherwise
appropriately protect Purchaser from, any such Excluded Assets and Excluded
Liabilities held by any such Subsidiary, and CBS shall reimburse Purchaser for
its reasonable expenses and all Taxes incurred in connection therewith.
SECTION 5.18. CREDIT SUPPORT. Purchaser acknowledges that in the
--------------
course of the conduct of the Business, CBS and its Subsidiaries have entered
into and expect to continue to enter into various arrangements (i) in which
guarantees (including guarantees of performance under contracts or agreements),
letters of credit or other credit arrangements, including surety and performance
bonds, were issued by or for the account of CBS and its Subsidiaries or (ii) in
which CBS and its Subsidiaries are the primary or secondary obligors on debt
instruments or financing or other contracts or agreements, in any such case to
support or facilitate business transactions of the Sold Subsidiaries. Such
arrangements by such parties are
95
hereinafter referred to as the "Credit Support Arrangements." Schedule 5.18 sets
---------------------------
forth a list of all Credit Support Arrangements existing as of the date hereof.
Not later than the Closing, Purchaser will (i) obtain replacement Credit Support
Arrangements which will be in effect at the Closing or (ii) repay, or cause the
repayment of, all debt and other obligations to which such Credit Support
Arrangements relate (and cause the cancellation of such Credit Support
Arrangements) or arrange for itself or one of its Subsidiaries (including the
Sold Subsidiaries) to be substituted as the obligor thereon as of the Closing
Date. CBS and its Subsidiaries will cooperate with Purchaser in arranging any
such substitution, provided that neither CBS nor its Subsidiaries shall be
required to expend any material sum in connection therewith.
SECTION 5.19. NON-COMPETITION AND CONFIDENTIALITY.
-----------------------------------
(a) For a period of five years from the Closing, CBS shall not, and
shall cause each of the other Sellers and its other Affiliates not to, directly
or indirectly, engage in any business that is in competition with the Business.
Notwithstanding anything to the contrary contained in this Section 5.19,
Purchaser hereby agrees that the foregoing covenant shall not be deemed breached
as a result of (i) the ownership by CBS or any Affiliate of CBS of less than an
aggregate of 5% of any class of capital stock of a person engaged, directly or
indirectly, in a business that is in competition with the Business or less than
10% in value of any instrument of indebtedness of a person engaged, directly or
indirectly, in a business that is in competition with the Business, (ii) the
retention and conduct by CBS of the Process Control Business, the Power
Generation Business and any other business in which it is currently engaged,
(iii) any action taken by CBS or any of its Affiliates pursuant to this
Agreement or a Seller Ancillary Document, (iv) any action taken by CBS or any of
its Affiliates or by any third party at the direction of CBS in connection with
discharging its obligations under any guarantees (including guarantees of
performance under contracts or agreements), assumption of obligations, letters
of credit or other similar arrangements, including surety and performance bonds,
in effect at the Closing Date or (v) the acquisition by CBS or any Affiliate of
CBS of any person (A) which derives less than $10,000,000 in revenues from
businesses in competition with the Business or (B) the predominant business of
which is not in competition with the Business if after such acquisition CBS or
its Affiliates uses reasonable best efforts to divest the business of such
Person that is in competition with the Business within 270 days after the
acquisition of such business.
(b) For a period of ten years after the Closing, CBS agrees to, and to
cause each of the other Sellers and its other Affiliates to, maintain the
confidentiality of all confidential information with respect to the Business and
the Acquired Assets, or learned by CBS or any Seller directly or indirectly
from Purchaser, including information with respect
96
to (A) prospective business activities, (B) sales figures, (C) profit or loss,
gross margin or similar information, and (D) customers, clients, suppliers,
sources of supply and customer lists (the "Confidential Information"), and shall
------------------------
not disclose any Confidential Information, except (i) in the event CBS or any of
its Affiliates is required to disclose any of such information pursuant to
applicable Law or by applicable legal process, (ii) to the extent such
information becomes generally available to the public other than as a result of
a disclosure by CBS or its Affiliates, (iii) to the extent such information was
available to CBS or its Affiliates on a non-confidential basis prior to its
disclosure to CBS or its Affiliates, or (iv) to the extent such information
becomes available to CBS or its Subsidiaries on a non-confidential basis from a
source other than CBS or its Affiliates, provided that such source is not
prohibited from disclosing such information by a contractual, legal or fiduciary
obligation. In the event CBS or any of its Subsidiaries is required to disclose
any of such information pursuant to applicable Law or by applicable legal
process, CBS or its respective Subsidiary shall, to the extent practicable under
the circumstances, inform Purchaser sufficiently in advance of such disclosure
to afford Purchaser the opportunity to resist disclosure and shall use its
reasonable commercial efforts to cooperate with Purchaser in efforts to minimize
the amount of information to be disclosed and to seek to prevent its disclosure
to third parties.
(c) For a period of five years after the Closing, neither CBS nor
Purchaser shall, directly or indirectly, knowingly solicit or encourage to leave
the employment of CBS or Purchaser, any employee of Purchaser or the WELCO
divisions of CBS, as the case may be.
(d) If CBS or any other Seller breaches, or threatens to commit a
breach of, any of the provisions of Section 5.19(a), (b) or (c) (the
"Restrictive Covenants"), Purchaser shall have the following rights and remedies
---------------------
(upon compliance with any necessary prerequisites imposed by law upon the
availability of such remedies), each of which rights and remedies shall be
independent of the other and severally enforceable and shall not be affected by
the provisions of Article VIII, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to
Purchaser under Law or in equity:
(i) The right to have the Restrictive Covenants specifically enforced
(without posting any bond) by any court having equity jurisdiction,
including the right to an entry against CBS of restraining orders and
injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of
such covenants, it being acknowledged and agreed that any such breach or
threatened breach may cause irreparable injury to Purchaser and that money
damages may not provide adequate remedy to Purchaser.
97
(ii) The right and remedy to require CBS to account for and pay over
to Purchaser all compensation, profits, monies, accruals, increments or
other benefits derived or received by such person as a result of any
transactions constituting a breach of any of the Restrictive Covenants,
and such person shall account for and pay over such benefits to Purchaser.
(e) If any court determines that any of the Restrictive Covenants, or
any part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(f) Notwithstanding the foregoing, nothing contained in the Agreement
shall impair, impede, prevent, inhibit, limit or restrict CBS or any of its
Affiliates (or any successor or assign of any of them) in any manner or respect
whatsoever from (i) the continuing operation of (x) the Power Generation
Business, or (y) the Process Control Business, provided the scope of each of
such businesses is primarily related to the goods and services which it has
typically provided under (x) and (y) or (ii) selling or otherwise transferring
the Power Generation Business or the Process Control Business or any portion
thereof to any Person, whether or not such Person or any of its Affiliates is
engaged in a business competitive with the Business.
(g) If any court determines that any of the Restrictive Covenants, or
any part thereof, is unenforceable because of the duration of such provision or
the area covered thereby, such court shall have the power to reduce the duration
or area of such provisions and, in its reduced form, such provision shall then
be enforceable and shall be enforced.
SECTION 5.20. RELATED AGREEMENTS. At or prior to the Closing, CBS and
------------------
Purchaser agree to enter into the following agreements:
(A) TRANSITIONAL SERVICES. CBS and Purchaser shall enter into an
---------------------
agreement in form and substance reasonably satisfactory to each of them (the
"Transitional Services Agreement"), whereby each party will provide to the other
-------------------------------
party certain transitional services which are currently provided to such party
by the other party for a period of twelve (12) to twenty-four (24) months after
the Closing Date. The Transitional Services Agreement shall cover, at a minimum,
the items set forth on Exhibit D.
(B) BUSINESS SUPPLY AGREEMENT. CBS and Purchaser shall enter into a
-------------------------
supply agreement (the "Business Supply Agreement"), substantially on the terms
-------------------------
set forth in Exhibit A hereto (with respect to the Process Control Division).
98
(C) FACILITIES. Sellers and Purchaser shall enter into mutually
----------
acceptable arrangements relating to the use of (i) facilities and equipment by
Business Employees currently located in Sellers' facilities other than the
Premises and (ii) facilities and equipment by employees of CBS currently located
in the Premises and who are not Business Employees.
(D) FIELD SALES OFFICES. Sellers and Purchaser shall enter into
-------------------
mutually acceptable arrangements, including sublease arrangements and
arrangements with respect to the provision and use of personnel and property,
with respect to the conduct of the Process Control Business and Power Generation
Business at the field sales offices included in the Premises.
SECTION 5.21. BUSINESS RELATIONSHIPS WITH SELLERS. CBS and Purchaser
-----------------------------------
acknowledge that the Business has had relationships with other businesses within
Sellers, including performance obligations under Contracts, which have not been
documented by a formal written agreement. In particular, the Business has been
involved with the GESCO Businesses, the Process Control Business and the Power
Generation Business. The parties agree that, except for specific provisions in
this Agreement and the Seller Ancillary Documents which expressly provide for
any different treatment, prior to the Closing, the parties will enter into
arrangements, reasonably satisfactory to the parties, documenting any such pre-
existing relationships, including any subcontract arrangements, which shall be
maintained on such documented basis by Purchaser after the Closing.
SECTION 5.22. SCIENCE AND TECHNOLOGY CENTER. CBS operates a Science
-----------------------------
and Technology Center in Churchill, Pennsylvania ("STC"), which provides
---
research and development support to CBS's industrial businesses, including the
Business, the Power Generation Business and the GESCO Businesses. In addition,
CBS has entered into a sublease arrangement with Northrop Grumman with respect
to a portion of the STC premises and will enter into a sublease arrangement with
Siemens Power Generation Corporation with respect to the portion of the STC
premises utilized for the Power Generation Business. The Acquired Assets shall
include, subject to the provisions of Section 2.2(c), Contracts owned by Sellers
on the Closing Date and used or held for use primarily in the portion of the STC
which primarily provides research and development support to the Business or to
the performance of those programs ("STC Programs") (a) set forth in Schedule
------------
5.22 (which CBS represents reflects a list, that is true and complete in all
material respects, of programs sponsored or being performed by the Energy
Systems Business on behalf of itself or third parties as of the date hereof) or
(b) entered into or undertaken in the Ordinary Course of Business between the
date of this Agreement and the Closing Date which relate primarily to the
Business. The provisions of Section 5.5 shall be applicable to all STC
Employees to the extent provided
99
therein. For purposes of this Agreement, employees who as of the Closing Date
primarily render services that provide research and development support to the
Business or on behalf of any STC Programs (and such other employees located at
STC as Seller and Purchaser may mutually agree) shall constitute the "STC
Employees."
On the Closing Date, CBS shall sublease to Purchaser a portion of the
premises and the Fixtures and Equipment at the STC necessary to the effective
operation of the Business and the STC Programs (which shall include the
facilities (known as the "hot cells") to examine irradiated material from
Nuclear Installations and all related Fixtures and Equipment), and an
appropriate interest in the common areas at such premises pursuant to a mutually
acceptable sublease containing the terms and conditions set forth in Schedule
5.22, as well as customary terms and conditions and such other terms and
conditions as are reasonably acceptable to the parties. Purchaser and CBS agree
that the terms of the sublease with respect to the premises shall not be
materially more restrictive to Purchaser than the terms of the master lease with
respect to the STC are to CBS. CBS agrees to provide Purchaser with a copy of
the master lease with respect to the STC. On the Closing Date, subject to
Section 2.2(c), Purchaser shall assume all Liabilities associated with the STC
Programs.
SECTION 5.23. U.S.-CONTROLLED ENTITY. For at least three (3) years
----------------------
after the Closing, Purchaser (i) shall (for so long as it owns the Business or
any interest therein) at all times be a U.S.-Controlled Entity, shall maintain a
presence in the United States, and shall principally administer the business in
the United States, and (ii) shall not transfer, convey, assign or sell any of
its interest in the Business to a Person which is not a U.S.-Controlled Entity.
Purchaser shall during such period take all actions necessary, as required to
obtain and maintain an acceptable Foreign Ownership Control and Influence
determination with the appropriate Governmental Authorities. Purchaser shall
during such period take all steps reasonably necessary, as required, to comply
with U.S. requirements with respect to the export of U.S. technology, and, upon
request, to provide CBS with reasonable written assurance that such steps have
been taken.
100
SECTION 5.24. INSURANCE MATTERS. CBS shall place its insurers on
-----------------
notice of all liability and workers' compensation claims which are made prior to
the Closing and property losses to the Acquired Assets occurring prior to the
Closing. Purchaser's rights under Section 2.2(a)(xviii) in respect of insurance
shall be subject to any applicable policy deductibles set forth in Schedule
4.1(i) and co-payments provisions or any payment or reimbursement obligations of
CBS or any of its Affiliates in respect thereof; and Purchaser shall be
responsible for and be entitled to the benefit of any retrospective premium,
cost or benefit associated with claims that are subject of the insurance
proceeds referred to in Section 2.2(a)(xviii). Notwithstanding the above or the
provisions of Section 2.2(a)(xviii), subject to the first sentence of Section
5.1, CBS may, in its sole discretion, liquidate, commute, settle, modify or
amend any of its insurance policies in any respect. No later than thirty (30)
days prior to the Closing, Purchaser shall have the right, and be given access
to such workers compensation data, all at its expense, as may be necessary to
conduct an actuarial reserve analysis.
SECTION 5.25. GUARANTEE AGREEMENT. Concurrent with the execution of
-------------------
this Agreement, the Guarantors are executing the Guarantee Agreement in the form
of Exhibit E hereto (the "Guarantee Agreement").
-------------------
SECTION 5.26. WAIVERS. CBS shall use its commercially reasonable
-------
efforts to, and to cause its Sold Subsidiaries to, obtain from each director of
each Sold Subsidiary waivers as of the Closing Date of any claim such director
may have against Purchaser or the Sold Subsidiaries.
SECTION 5.27. THIRD PARTY AGREEMENTS. CBS has provided Purchaser with
----------------------
a true and complete copy of the forms of (or term sheets relating to) shared
technology agreements, business supply agreements and settlement support
agreements to be entered into between CBS and the purchasers of the Power
Generation Business and the Process Control Business (collectively, the "Third
Party Agreements"). It is understood and agreed that if (a) any of the Third
Party Agreements are entered into prior to the Closing substantially in the form
so provided, Purchaser shall acquire CBS' rights and assume CBS' obligations
thereunder (in each case to the extent rights and obligations relate to the
Business and the Intellectual Property and Technology) and (b) if the Closing
occurs prior to the execution of any of the Third Party Agreements, Purchaser
shall enter into any such Third Party Agreement substantially in the form
previously so provided with the purchaser of the applicable business. CBS shall
afford Purchaser a reasonable opportunity to review and comment on the final
form of the business supply agreement to be entered into with the purchaser of
the Process Control Business to confirm that it is substantially on the terms
set forth in Exhibit A hereto.
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SECTION 5.28. [Intentionally omitted].
SECTION 5.29. YEAR 2000 MATTERS. Prior to the Closing Date, the
-----------------
Sellers and the Sold Subsidiaries shall:
(i) use commercially reasonable efforts to implement the Year 2000
Plan in accordance with its terms;
(ii) provide to Purchaser copies of internal management reports on
the status of implementation of the Year 2000 Plan;
(iii) use commercially reasonable efforts to cause the PRISM payroll
system to be operational and in compliance with the Year 2000 Plan; and
(iv) notify all purchasers (not notified prior to the date hereof) of
versions of the WDPF product that are prior to the 6.01 version that
modifications are available to such product to address Year 2000 issues.
SECTION 5.30. JOINT DEFENSE AGREEMENT. Prior to the date hereof, CBS
-----------------------
and Purchaser have executed the Joint Defense Agreement attached as Exhibit F
hereto.
SECTION 5.31. WALTZ MILL SERVICE CENTER. ESBU operates a Waltz Mill
-------------------------
Service Center in Madison, Pennsylvania which provides engineering and technical
nuclear services to a variety of customers. CBS is currently implementing
certain decontamination and decommissioning actions, pursuant to NRC approved
plans, primarily in the test reactor and solid and liquid waste processing areas
at the Center. On the Closing Date, CBS shall lease to Purchaser the Waltz Mill
Service Center pursuant to a mutually acceptable "triple net" lease containing
customary terms and conditions and such other terms and conditions as are
reasonably acceptable to the parties. The Acquired Assets shall include all
Fixtures and Equipment (other than any equipment primarily used in the
decontamination and decommissioning of the test reactor) related to the Waltz
Mill Service Center.
SECTION 5.32. GUARANTEE AGREEMENT. Purchaser shall use its best
-------------------
efforts to cause the condition precedent set forth in Section 6.3(c)(ii) to be
satisfied on or prior to the date when all other conditions precedent to the
Closing set forth in Article 6 have been satisfied or waived, or are capable of
being satisfied. Purchaser shall, or shall cause its Affiliates to, pay all
expenses incident to obtaining or maintaining a letter of credit or other
financial instrument pursuant to Section 6.3(c)(ii).
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ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The obligation
-------------------------------------
of Purchaser to purchase the Acquired Assets and assume the Assumed Liabilities
and the obligation of CBS to (and to cause the Selling Subsidiaries to) sell,
assign, transfer, convey and deliver the Acquired Assets to Purchaser shall be
subject to the satisfaction prior to the Closing of the following conditions:
(A) CERTAIN WAITING PERIODS. Any waiting period under the HSR Act and
-----------------------
the Exon-Xxxxxx Amendment applicable to any of the transactions contemplated
hereby shall have expired or been earlier terminated.
(B) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect.
(C) GOVERNMENTAL ACTION. There shall not be any material pending
-------------------
suit, action or proceeding by any Governmental Authority challenging or seeking
to restrain or prohibit the consummation of the transactions contemplated by
this Agreement in any material respect or seeking to obtain any damages from
Sellers, Purchaser or the Sold Subsidiaries.
(D) GOVERNMENTAL CONSENTS. The consents and authorizations by or of
---------------------
Governmental Authorities set forth in Schedule 6.1(d) shall have been obtained
and shall be in full force and effect.
(E) CONSUMMATION OF THE GESCO ASSET PURCHASE AGREEMENT. The
--------------------------------------------------
transactions contemplated by the GESCO Asset Purchase Agreement shall have been
consummated concurrently with the Closing on the Closing Date.
SECTION 6.2. CONDITIONS TO OBLIGATION OF PURCHASER. The obligation
-------------------------------------
of Purchaser to purchase the Acquired Assets and assume the Assumed Liabilities
is subject to the satisfaction at and as of the Closing of each of the following
conditions, any and all of which may be waived in whole or in part by Purchaser:
103
(A) REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of CBS set forth in this Agreement (determined without regard to any
materiality qualification or exception in any representation or warranty) shall
be true and correct in all respects as of the date of this Agreement and, except
for those made as of a particular date, as of the Closing as though made at and
as of the Closing, except in each case for such failures of representations and
warranties to be true and correct (i) as the result of changes permitted or
contemplated by this Agreement and (ii) that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Purchaser
shall have received a certificate signed by an authorized officer of CBS to such
effect.
(B) PERFORMANCE OF OBLIGATIONS OF CBS. CBS shall have performed or
---------------------------------
complied in all material respects with all obligations, conditions and covenants
required to be performed or complied with by it under this Agreement at or prior
to the Closing, and Purchaser shall have received a certificate signed by an
authorized officer of CBS to such effect.
(C) MATERIAL PERMITS. Purchaser and the Sold Subsidiaries shall have,
----------------
on the Closing Date, all permits, licenses, franchises and authorizations by or
of Governmental Authorities required by Law for Purchaser to conduct the
Business and to acquire and own the Acquired Assets, and such Permits shall be
in full force and effect, except (i) where (assuming compliance by CBS with the
provisions of Sections 5.3(c) and 5.4) the failure to have any such Permits or
of any such Permits to be in full force and effect would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect;
provided, however, that this condition shall be inapplicable to the extent
-------- -------
Purchaser shall have failed to comply with its obligations under Section 5.4 to
use commercially reasonable efforts to obtain the consent of Governmental
Authorities to the assignment of any Seller's or Sold Subsidiary's Permits or
under Section 5.3(c) to secure its own permits, licenses, franchises, approvals,
consents and authorizations by or of Governmental Authorities in lieu of any
Permits held by any Seller or Sold Subsidiary.
(D) CONVEYANCING DOCUMENTS. Sellers shall have executed and delivered
----------------------
such deeds, bills of sale, assignments and other instruments, each in form and
substance reasonably satisfactory to Purchaser, as shall be necessary or
appropriate to convey the Acquired Assets in accordance with this Agreement.
(E) OPINION OF CBS'S COUNSEL. Purchaser shall have received an
------------------------
opinion or opinions dated the Closing Date of counsel to CBS, in form and
substance reasonably satisfactory to Purchaser, with respect to the matters set
forth in Schedule 6.2(e) hereto.
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SECTION 6.3. CONDITIONS TO OBLIGATION OF CBS. The obligation of CBS
-------------------------------
to (and to cause the Selling Subsidiaries to) sell, assign, transfer, convey,
and deliver the Acquired Assets is subject to the satisfaction at and as of the
Closing of each of the following conditions, any and all of which may be waived
in whole or in part by CBS:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of Purchaser set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing as
though made at and as of the Closing, and CBS shall have received a certificate
signed by an authorized officer of Purchaser to such effect.
(B) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall have
---------------------------------------
performed or complied in all material respects with all obligations, conditions
and covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing, and CBS shall have received a certificate
signed by an authorized officer of Purchaser to such effect.
(C) GUARANTEE AGREEMENT.
-------------------
(i) The Guarantee Agreement shall be in full force and effect, and
the Guarantors shall have complied in all material respects with all of
their obligations thereunder.
(ii) The condition precedent set forth in Section 17 of the Guarantee
Agreement shall have been satisfied.
(D) OPINION OF PURCHASER'S COUNSEL. CBS shall have received an
------------------------------
opinion or opinions dated the Closing Date of counsel to Purchaser and the
Guarantors in form and substance reasonably satisfactory to CBS with respect to
the matters set forth in Schedule 6.3(d) hereto.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. TERMINATION.
-----------
(a) Notwithstanding anything to the contrary in this Agreement, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:
(i) by mutual written consent of CBS and Purchaser;
(ii) by CBS if any of the conditions set forth in Sections 6.1 or 6.3
shall have become incapable of fulfillment, and shall not have been waived
by CBS;
(iii) by Purchaser if any of the conditions set forth in Sections 6.1
or 6.2 shall have become incapable of fulfillment, and shall not have been
waived by Purchaser; or
(iv) by CBS or Purchaser (upon 10 days' written notice) if the
Closing does not occur on or prior to March 31, 1999 (as extended as
hereinafter provided, the "Termination Date");
provided, however, that (x) the party seeking termination pursuant to clause
-------- -------
(ii), (iii) or (iv) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this Agreement
and (y) no termination pursuant to clause (iv) shall be effective if, as of the
Termination Date, all conditions precedent to Closing set forth in Article 6
have been satisfied or waived on or before such date or are capable of being
satisfied on such date, other than the conditions precedent set forth in
Sections 6.1(a) and 6.1(d), and prior to the expiration of the ten-day period
referred to in clause (iv), the non-terminating party notifies the terminating
party in writing that it is extending the Termination Date; provided, that the
--------
Termination Date may not be extended beyond June 30, 1999.
(b) In the event of termination by CBS, on the one hand, or Purchaser,
on the other hand, pursuant to this Section 7.1, written notice thereof shall
forthwith be given to the other party and the transactions contemplated by this
Agreement shall be terminated, without further action by any party. If the
transactions contemplated by this Agreement are terminated as provided herein:
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(c) Purchaser shall return all documents and other material received
from Sellers relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to CBS; and
(d) all confidential information received by Purchaser with respect to
the Business and the other operations of Sellers shall be treated in accordance
with the Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement.
(e) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 7.1, this Agreement shall
become null and void and of no further force and effect, except for the
provisions of (i) Section 5.2 relating to the obligation of Purchaser to keep
confidential certain information and data obtained by it from Sellers, (ii) this
Agreement relating to expenses (including Sections 5.2(b), 5.7 and 5.14(d)),
(iii) Section 5.8 relating to finder's fees and broker's fees, (iv) this Section
7.1 and (v) Article 9. Nothing in this Section 7.1 shall be deemed to release
either party from any Liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of either party to compel
specific performance by the other party of its obligations under this Agreement.
SECTION 7.2. AMENDMENTS AND WAIVERS. This Agreement may not be
----------------------
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Purchaser, on the one hand, or CBS, on the other hand, may, by
an instrument in writing, waive compliance by the other party with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform.
ARTICLE 8
INDEMNIFICATION
SECTION 8.1. INDEMNIFICATION BY CBS.
----------------------
(a) Notwithstanding anything in the Novation Agreements to the
contrary, CBS hereby agrees to indemnify Purchaser and its Affiliates and their
respective officers, directors, employees, stockholders, agents and
representatives against, and agrees to hold them harmless from, any Losses, as
incurred (payable quarterly upon written request), to the extent arising from,
relating to or otherwise in respect of:
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(i) any breach of any representation or warranty of CBS contained in
any Section of this Agreement (other than the representations and
warranties contained in Sections 4.1(j)(B) (to the extent related to
Business-Related Environmental Liabilities) and 4.1(n)) determined (except
in respect of (A) of Sections 4.1(c)(i), 4.1(c)(ii), 4.1(d)(ii),
4.1(j)(A)(xv), 4.1(j)(C), 4.1(l), 4.1(s)(ii)(A) and 4.1(t) and Section 2(a)
of Annex S and (B) representations and warranties relating to the
"material" impairment of the ability of a party to perform its obligations
under this Agreement) without regard to any materiality qualification or
exception in any representation or warranty giving rise to the claim for
indemnity hereunder;
(ii) any breach of any covenant of any of Sellers contained in this
Agreement or in any Seller Ancillary Document;
(iii) any Liability of any Seller which is not an Assumed Liability
and any Liability of any Sold Subsidiary which is an Excluded Liability;
(iv) any Indebtedness that is not included on the Statement of Net
Assets;
(v) (A) any breach of any representation or warranty contained in
Sections 4.1(j)(B) (to the extent related to Business-Related Environmental
Liabilities) or 4.1(n) and (B) any Business-Related Environmental Liability
(other than those Environmental Liabilities assumed by Purchaser pursuant
to Sections 2.3(a)(vii) and 2.3(a)(xvi));
(vi) the matters set forth in the first paragraph of Schedule
8.1(a)(vi); or
(vii) subject to Purchaser's obligations under Section 8.2(x), all
cash expenditures paid by Purchaser to third parties during the period
described in Section 8.5(e) in respect of any Decontamination and
Decommissioning Liabilities with respect to facilities or equipment located
on the Premises on the Closing Date (other than Decontamination and
Decommissioning Liabilities which arise from, relate to or are otherwise in
respect of (v) modifications after the Closing Date to facilities or
equipment, (w) the addition of new facilities or equipment constructed or
installed on the Premises after the Closing Date, (x) operations conducted
at any such facilities after the Closing Date (which were not conducted at
such facilities prior to the Closing Date), (y) any action, omission or
failure to act by Purchaser relating to the termination of service,
decommissioning or demolition of facilities or equipment on the Premises,
which, but for such action, omission or failure to act, would not have
occurred at such time and (z) the acceleration into the applicable period
described in Section 8.5(e) of
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costs, Losses, Liabilities and Environmental Liabilities which, but for
such acceleration, would have been incurred after such period (any such
Decontamination and Decommissioning Liabilities referred to in clauses (v)
through (z) being referred to herein as "Purchaser's D&D")).
provided, however, that
-------- -------
(A) CBS shall not have any Liability under clause (i) above unless the
aggregate of all Losses relating thereto for which CBS would, but
for this clause (A), be liable under clause (i) above exceeds
$40,000,000, and then only to the extent of any such excess;
(B) CBS shall not have any obligation to pay, in respect of Losses
indemnifiable pursuant to clause (i) above, an amount in excess of
$800,000,000 in the aggregate;
(C) for purposes of calculating Losses under clauses (i) and (ii)
above and determining the aggregate of all Losses pursuant to
clause (A) of this proviso, CBS shall not have any Liability for
any Loss in respect of such breaches if the aggregate amount of
such Loss relating to a single claim (or group of claims relating
to the same facts or circumstances, event or transaction) does not
exceed $15,000;
(D) CBS shall not have any Liability under this Section 8.1 and Annex
S to the extent the Liability arises as a result of the operation
of the Business or the Acquired Assets after the Closing or any
action taken or omitted to be taken by Purchaser or any of its
Affiliates;
(E) CBS shall not have any Liability in respect of any Losses under
clause (v) above except to the extent the aggregate of all such
Losses for which CBS, but for this clause (E), would be liable
exceeds $25,000,000, in which case, (w) for aggregate Losses of
more than $25,000,000, but less than $50,000,000, CBS shall pay
50% of such Losses, (x) for aggregate Losses of $50,000,000 or
more but less than $100,000,000, CBS shall pay 75% of such Losses,
(y) for aggregate Losses of $100,000,000 or more but less than
$200,000,000, CBS shall pay 50% of such Losses and (z) for
aggregate Losses of $200,000,000 or more, CBS shall pay 100% of
all other such Losses;
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(F) for purposes of calculating Losses under clause (v) above and
determining the aggregate of all Losses pursuant to clause (E) of
this proviso, CBS shall not have any liability if the aggregate
amount of such Loss relating to a single claim (or group of claims
relating to the same facts or circumstances, event or transaction)
does not exceed $1,000,000;
(G) CBS shall not have any Liability under clause (vi) above except to
the extent the aggregate of all Losses relating thereto for which
CBS would, but for this proviso, be liable under clause (vi) above
exceeds $16,000,000 (subject to reduction as provided in Schedule
8.1(a)(vi)), and then (x) each of CBS and Purchaser shall be
liable for fifty percent (50%) of the first $20,000,000 in
aggregate Losses in excess of such amount and (y) CBS shall be
liable for one hundred percent (100%) of any such Losses in excess
of $36,000,000 (subject to reduction as provided in Schedule
8.1(a)(vi)); and
(H) CBS shall not have any Liability in respect of any Losses under
clause (vii) above except to the extent that the aggregate of all
such Losses for which CBS would, but for this clause (H), be
liable under such clause (vii) exceed $155,000,000.
With respect to Losses for which CBS has Liability pursuant to
Sections 8.1(a)(v) or (vii) and to the extent that such Liability involves the
implementation of a Remedial Action, (i) in no event shall CBS's Liability
extend to Remedial Action that seeks to meet or address cleanup criteria
applicable to real property other than criteria applicable to real property used
for purposes substantially consistent with the purposes for which the Premises
were used by the Business prior to the Closing and (ii) CBS shall have the right
at its sole cost and expense to review and provide Purchaser with written
comments in advance of (A) the Purchaser's selection of consultants and
contractors designated to perform the Remedial Action and (B) the development of
the scope of work for, and type of, the Remedial Action to be implemented.
Purchaser shall review and reasonably and in good faith consider CBS's comments.
Purchaser shall provide all plans, reports and submissions to any Governmental
Authority regarding any such Remedial Action in draft form to CBS a reasonable
time prior to transmission of such items to such Governmental Authority and
Purchaser shall review and in good faith consider any of CBS's comments on such
plans, reports and submissions. CBS and its representatives shall have the
opportunity to be present and participate at any meetings with Governmental
Authorities.
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Notwithstanding any other limitation in this Section 8.1, with respect
to the Waltz Mill Service Center, CBS shall, at its sole cost and expense,
implement all remedial measures, including removal and decontamination
activities, as may be required by and are in accordance with approvals received
or to be received from the NRC (the "Plans") (x) in those areas of the Waltz
Mill Service Center identified in the Plans as "Retired Facilities" and (y)
which are associated with the termination of the TR-2 NRC License, which Plans
are incorporated herein by reference. CBS shall have the responsibility and
sole and exclusive authority to negotiate with and respond to the NRC (and any
other Governmental Authority) with respect to any issues which may arise during
implementation of the Plans, including, but not limited to, dose assessment and
surveying issues. CBS shall continue to be obligor with respect to
responsibility and liability for implementing the Plans and shall so advise the
NRC. Purchaser shall have the right, at its sole cost and expense, to review and
provide CBS with written comments in a reasonable time prior to transmission of
plans, reports and submissions to the NRC or any other Governmental Authority
and CBS shall review and in good faith consider any of Purchaser's comments on
such plans, reports and submissions. Any dispute between CBS and Purchaser with
respect to such plans, reports and submissions shall be addressed in the manner
set forth in Section 8.8 of this Agreement (Arbitration of Certain Environmental
Liabilities). Notwithstanding any leasehold interest Purchaser may have in the
Waltz Mill Services Center Facilities, Purchaser shall afford CBS, its agents,
employees, contractors, subcontractors and other representatives reasonable
access to the Waltz Mill Service Center from and after the Closing, until such
time as the Plans have been completed and NRC has approved completion of the
Plans. Such access shall also include access to electrical, water, and other
utilities as may be required by CBS to implement the Plans. Such access shall
include, but not be limited to, the laboratory, boiler room, health physics
area, engineering and electrical room.
Notwithstanding the foregoing, from and after the time, if any, as
clause (E)(z) or (H) of the third preceding paragraph becomes applicable or
could reasonably be expected to become applicable prior to completion of any
specific Remedial Action, all determinations with respect to Remedial Actions
(including those contemplated by the first sentence of the immediately preceding
paragraph) shall be made jointly by CBS and Purchaser acting reasonably and in
good faith. All such determinations shall be made (1) with a view towards
achieving solutions that involve reasonable and customary Remedial Actions that
can be implemented efficiently and cost-effectively, (2) with due regard to
avoiding undue interference with the ongoing business operations of Purchaser
(or its successor in interest) at the Premises and (3) in accordance with
Environmental Laws. If, in such circumstances, (X) CBS and Purchaser do not
agree as to whether Remedial Action or any significant portion of a Remedial
Action is required by an Environmental Law, the parties shall submit such
dispute to
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arbitration pursuant to Section 8.8 or (Y) CBS and Purchaser do not agree with
respect to the scope of work for, and the type of, the Remedial Action to be
implemented, each of CBS and Purchaser shall submit to the other a written
proposal with respect thereto; if the parties are unable to agree how to
proceed, either party may submit such dispute to arbitration pursuant to Section
8.8.
(b) Notwithstanding anything to the contrary contained in this Article
8 or Annex S, CBS and Purchaser have agreed to allocate responsibility for
certain Assumed Liabilities pursuant to specific provisions of this Agreement.
It is the intent of the parties that such provisions be the sole and exclusive
means for recovery of amounts that otherwise might constitute Losses
indemnifiable by CBS under this Article 8. Accordingly, CBS shall not have any
Liability under clause (i) of Section 8.1(a) for any breach of representation or
warranty by CBS contained in the Agreement (other than those contained in
Section 2 of Annex S) if the claim for breach of representation or warranty
relates to any Assumed Liability (including Business-Related Environmental
Liabilities) for which CBS and Purchaser have expressly allocated responsibility
pursuant to the provisions listed in Schedule 8.1(b); provided that nothing in
--------
this Section shall eliminate, diminish or otherwise affect Purchaser's
obligations under Sections 3 and 4 of Annex S.
(c) Purchaser acknowledges and agrees that its sole and exclusive
remedy with respect to any and all claims relating to the subject matter of this
Agreement (except as provided in Section 5.14 and except as provided in Annex S
with respect to Steam Generator Liabilities) shall be pursuant to the
indemnification provisions set forth in this Section 8.1. In furtherance of the
foregoing, Purchaser hereby waives, to the fullest extent permitted under Law,
any and all rights, claims and causes of action it may have against Sellers,
their Affiliates and their respective officers, directors, employees,
stockholders, agents and representatives arising under or based upon any Law,
Environmental Law or otherwise (except pursuant to the indemnification
provisions set forth in this Article 8).
SECTION 8.2. INDEMNIFICATION BY PURCHASER. Without limiting
----------------------------
Purchaser's rights under Section 8.1 and Annex S, Purchaser hereby agrees to
indemnify Sellers, their Affiliates and their respective officers, directors,
employees, stockholders, agents and representatives against, and agrees to hold
them harmless from, any Losses, as incurred, (payable quarterly upon written
request), to the extent arising from, relating to or otherwise in respect of:
112
(i) any breach of any representation or warranty of Purchaser
contained in this Agreement;
(ii) any breach of any covenant of Purchaser contained in this
Agreement or in any Purchaser Ancillary Document;
(iii) any Assumed Liabilities;
(iv) all Liabilities of the Sold Subsidiaries;
(v) all Indebtedness included in the Statement of Net Assets;
(vi) any Liability under the WARN Act or similar statute to the
extent arising from the actions of Purchaser after the Closing;
(vii) any Liability under any Credit Support Arrangement following
the Closing;
(viii) any Liability relating to the performance or failure to perform
under any Contracts, Intellectual Property or Technology assigned to
Purchaser pursuant to Sections 5.4(b) or 5.4(c) (in the case of Section
5.4(c), to the extent Purchaser is provided the benefits of any Contract,
Intellectual Property or Technology);
(ix) the operation of the Business or the Acquired Assets, or any
actions or omissions of Purchaser, its Affiliates, agents, contractors or
subcontractors in connection therewith, after the Closing, including all
Liabilities which arise from, relate to or are otherwise in respect of
Purchaser's D&D (as defined in Section 8.1(a)(vii)); or
(x) the termination, cessation, or alteration of Purchaser's
activities at the Waltz Mill Service Center site, but only to the extent
that such termination, cessation, or alteration gives rise to incremental
Decontamination and Decommission Liabilities associated with a change in
site use classification by a Governmental Authority from industrial to non-
industrial. Any dispute between CBS and Purchaser with respect to the
Losses described in this clause (x) shall be addressed in the manner set
forth in Section 8.8.
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SECTION 8.3. CHARACTERIZATION OF INDEMNIFICATION PAYMENTS. All amounts
--------------------------------------------
paid by CBS or Purchaser, as the case may be, under this Article 8 shall be
treated as adjustments to the Purchase Price for all Tax purposes.
SECTION 8.4. LOSSES NET OF INSURANCE; TAX LOSS AND BENEFITS; NO
--------------------------------------------------
CONSEQUENTIAL DAMAGES.
---------------------
(a) The amount of any Loss shall be:
(i) net of any amounts recovered or recoverable by the indemnified
party under insurance policies or Government Contracts (it being understood
that if any amount is recovered or recoverable by Purchaser under any
insurance policy or Government Contract, it shall not be subject to
indemnification by CBS under this Article 8) with respect to such Loss;
(ii) (A) increased to take account of any net Tax cost incurred by
the indemnified party by reason of the receipt of any indemnity payment
being treated for Tax purposes as other than an adjustment to the Purchase
Price (grossed-up for such increase) and (B) reduced to take account of any
net Tax benefit realized by the indemnified party in respect of the taxable
year in which such Loss is incurred or paid and, with respect to a Tax
benefit arising in a year subsequent to the year in which the Loss is paid
or incurred, the indemnified party shall pay to the indemnifying party the
amount of such Tax benefit at the time such Tax benefit is actually
realized, arising from the incurrence or payment of any such Loss; and
(iii) to avoid double-counting as to any matter, determined after
giving effect to any reserves on the books of the Business as of the
Closing Date in respect of such matter if and to the extent such reserve
was reflected in the Statement of Working Capital or the Balance Sheet;
provided that this clause (iii) shall not apply in determining the amount
--------
of any Loss for purposes of clause (v), (vi) or (vii) of Section 8.1(a) or
Sections 3 and 4 of Annex S.
(b) In computing the amount of any such Tax cost or Tax benefit, the
indemnified party shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
of any indemnity payment hereunder or the incurrence or payment of any
indemnified loss, liability, claim, damage or expense. Notwithstanding anything
to the contrary contained herein, no indemnification shall
114
be provided for under this Article 8 in respect of any indirect, special,
consequential or "business interruption" damages.
(c) Purchaser shall use its commercially reasonable efforts consistent
with past practice in relation to the Energy Systems Business to pursue any and
all rights to reimbursement, recovery or indemnification for Losses pursuant to
any Government Contract prior to bringing any claim against CBS under this
Article 8.
(d) Notwithstanding anything to the contrary in this Agreement and the
GESCO Asset Purchase Agreement, neither CBS nor Purchaser shall have any
Liability for Losses indemnifiable under Article 8 of either agreement to the
extent such party has previously been indemnified with respect to such Losses
pursuant to Article 8 of the other agreement.
SECTION 8.5. TERMINATION OF INDEMNIFICATION.
------------------------------
The obligations to indemnify and hold harmless any party, (a) pursuant
to clause (a)(i) of Section 8.1 and clause (a)(i) of Section 8.2, shall
terminate when the applicable representation or warranty terminates pursuant to
Section 9.3; provided, however, that such obligations to indemnify and hold
-------- -------
harmless shall not terminate with respect to any item as to which the Person to
be indemnified shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice pursuant to Section 5.14(l), 8.6
or 8.7 (stating in reasonable detail the basis of such claim) to the party to be
providing the indemnification; (b) pursuant to clause (a)(v)(B) of Section 8.1,
shall terminate on the eighth anniversary of the Closing Date; (c) pursuant to
clause (a)(vi) of Section 8.1 shall terminate on the fourth anniversary of the
Closing Date; (d) pursuant to Section 3(b) of Annex S, shall terminate on the
fourth anniversary of the Closing Date; (e) pursuant to clause (a)(vii) of
Section 8.1 shall terminate as to any equipment or facility on the earliest of
(i) the tenth anniversary of the Closing Date, (ii) the expiration or voluntary
or involuntary termination of an NRC Permit or Permit issued by a foreign
Governmental Authority after the Closing Date giving rise to Decontamination and
Decommissioning Liabilities, and (iii) the discontinuance or closedown of a
facility after the Closing Date giving rise to Decontamination and
Decommissioning Liabilities; and (f) pursuant to the other clauses of Sections
8.1 and 8.2 and Annex S shall not terminate.
SECTION 8.6. PROCEDURES RELATING TO THIRD PARTY CLAIMS (OTHER THAN
-----------------------------------------------------
TAX CONTROVERSIES AND ENVIRONMENTAL LIABILITIES).
------------------------------------------------
115
(a) In order for a Person (the "indemnified party"), to be entitled to
-----------------
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim made by any Person against the indemnified party (other
than a Tax Controversy or Environmental Liability, procedures for which are
specified in Section 5.14(l) in the case of Tax Controversies and Section 8.9 in
the case of Environmental Liabilities) (a "Third Party Claim"), such indemnified
-----------------
party must notify the indemnifying party in writing, and in reasonable detail,
of the Third Party Claim within 10 business days after receipt by such
indemnified party of notice of the Third Party Claim; provided, however, that
-------- -------
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure, including loss of any rights of
subrogation (except that the indemnifying party shall not be liable for any
expenses incurred during the period in which the indemnified party failed to
give such notice). Thereafter, the indemnified party shall deliver to the
indemnifying party, promptly after the indemnified party's receipt thereof,
copies of all notices and documents (including court papers) received by the
indemnified party relating to the Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
indemnifying party. If the indemnifying party so elects to assume the defense of
a Third Party Claim, the indemnifying party will not be liable to the
indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof (other than during any period in which the
indemnified party shall have failed to give notice of the Third Party Claim as
provided above). If the indemnifying party chooses to defend or prosecute a
Third Party Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon the
indemnifying party's request) the provision to the indemnifying party of records
and information which are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. If the
indemnifying party chooses to defend or prosecute any Third Party Claim, the
indemnified party will agree to any settlement, compromise or discharge of such
Third Party Claim which the indemnifying party may recommend, which involves no
order for non-monetary relief, will not result in the indemnified party being
bound
116
by principles of res judicata or collateral estoppel in defending other
similar claims and which by its terms obligates the indemnifying party to pay
the full amount of the liability in connection with such Third Party Claim or,
if such settlement, compromise or discharge does not require full payment of
such liability, the indemnified party shall have the right to consent to such
settlement, compromise or discharge, which consent may not be unreasonably
withheld. Whether or not the indemnifying party shall have assumed the defense
of a Third Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the indemnifying party's prior written consent (which consent shall not be
unreasonably withheld).
SECTION 8.7. PROCEDURES RELATING TO NON-THIRD PARTY CLAIMS. In order
---------------------------------------------
for an indemnified party to be entitled to any indemnification provided for
under this Agreement in respect of a claim that does not involve a Third Party
Claim, Tax Controversy or Environmental Liability being asserted against or
sought to be collected from such indemnified party, the indemnified party shall
deliver notice of such claim with reasonable promptness to the indemnifying
party. The failure by any indemnified party so to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may have to
such indemnified party under this Agreement, except to the extent that the
indemnifying party shall have been actually prejudiced by such failure. If the
indemnifying party does not notify the indemnified party within 30 calendar days
following its receipt of such notice that the indemnifying party disputes its
liability to the indemnified party under this Agreement, such claim specified by
the indemnified party in such notice shall be conclusively deemed a liability of
the indemnifying party under this Agreement and the indemnifying party shall pay
the amount of such liability to the indemnified party on demand or, in the case
of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, subject to Section 9.8, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction.
SECTION 8.8. ARBITRATION OF CERTAIN ENVIRONMENTAL LIABILITIES.
------------------------------------------------
Any dispute as to the scope of work or the type of Remedial Action,
whether a cost or Loss is a Decontamination and Decommissioning Liability or the
matters concerning the Waltz Mill Service Center described in Sections 8.1(a)
and 8.2(x) shall be settled by arbitration in accordance with the Commercial
Rules of the American Arbitration Association.
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Any party may commence arbitration hereunder by delivering notice to the other
party or parties to the dispute, claim or controversy. The arbitration panel
shall consist of three arbitrators. Within 10 days after delivery of the notice
of commencement of arbitration referred to above, the Purchaser and CBS shall
each appoint one arbitrator, and the two arbitrators so appointed shall within
10 days of their appointment designate a third arbitrator within ten days of
their appointment. If the arbitrators designated by the parties to the
arbitration are unable or fail to agree upon the third arbitrator, the third
arbitrator shall be designated by the American Arbitration Association under its
rules. The arbitrators will be bound by the substantive law of the State of New
York, but will not be bound by the laws of evidence and procedure customary in
courts of law. The arbitrators shall be required to submit a written statement
of their findings and conclusions. The award of the arbitrators shall be final,
binding and conclusive on the parties; provided that, where a remedy for breach
is prescribed hereunder or limitations on remedies are prescribed, the
arbitrators shall be bound by such restrictions. Judgment upon the award may be
entered in any court having jurisdiction thereof. The arbitration proceedings
shall be conducted in New York, New York. Unless otherwise determined by the
arbitrator (which determination shall be final and binding on the Purchaser and
CBS), each party shall pay its own expenses of arbitration and the expenses of
the arbitrators shall be shared equally by the Purchaser, on the one hand, and
CBS involved in such arbitration, on the other hand.
SECTION 8.9. PROCEDURES RELATING TO CLAIMS CONSTITUTING AN
---------------------------------------------
ENVIRONMENTAL LIABILITY.
-----------------------
(a) After the Closing, each of Purchaser and CBS shall notify (the
"Notifying Party") the other in writing, and in reasonable detail, of any claim
---------------
in respect of, arising out of or involving a claim made by any Person against
the Notifying Party constituting an Environmental Liability or a breach of the
representations and warranties contained in Section 4.1(j)(B) (to the extent
related to Business-Related Environmental Liabilities) or Section 4.1(n) (a
"Shared Claim"), within 10 business days after receipt by the Notifying Party of
------------
written notice of the Shared Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the other party shall have been actually prejudiced as a result of
such failure (except that the other party shall not be liable for any expenses
incurred during the period in which the Notifying Party failed to give such
notice). Thereafter, each party shall deliver to the other party, promptly after
such party's receipt thereof, copies of all notices and documents (including
court papers) received by the such party relating to the Shared Claim.
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(b) Subject to the provisions of Sections 8.1(a) with respect to
Remedial Actions, during the period from the date hereof to the Closing Date,
Purchaser and CBS shall negotiate in good faith and enter into one or more
agreements governing defense of Shared Claims, it being agreed that any such
agreement shall provide that:
(i) Purchaser and CBS will each be entitled to participate in the
defense of any Shared Claim; provided, however, that if CBS shall have one
-------- -------
hundred percent of the liability in respect thereof pursuant to Section
8.1(a)(v) such claim shall be treated as a Third Party Claim under Section
8.6;
(ii) Purchaser and CBS will each cooperate in the defense or
prosecution of any Shared Claim, including the retention and (upon request)
the provision to the requesting party of records and information which are
reasonably relevant to such Shared Claim, and making employees (including
any Business Employees familiar with such Shared Claim) available on a
mutually convenient basis to provide additional information and explanation
of any such records and information;
(iii) Purchaser and CBS will consult with each other and shall
mutually agree on any significant strategic decisions in respect of any
Shared Claim;
(iv) Purchaser and CBS will consult with each other and shall
mutually agree on any settlement, compromise or discharge of any Shared
Claim;
(v) neither Purchaser nor CBS shall admit any liability with respect
to, or settle, compromise or discharge, any Shared Claim without the other
party's prior written consent (which consent shall not be unreasonably
withheld); and
(vi) appropriate and mutually agreeable arrangements with respect to
day-to-day administration of any Shared Claim shall be provided for in such
agreements.
SECTION 8.10. STEAM GENERATOR MATTERS. Annex S is incorporated herein
-----------------------
as if fully set forth herein.
SECTION 8.11. SUBROGATION. (a) Without limiting Purchaser's
-----------
indemnification obligations pursuant to Section 8.2, in connection with any
defense in respect of, arising out of or involving a claim by any Person against
Sellers or any of their Affiliates, Sellers and their Affiliates shall be
subrogated to the rights of Purchaser under any Contracts included in the
Acquired Assets (including rights to indemnification and reimbursement).
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(b) To the extent that Purchaser has refrained from, delayed, or
abandoned pursuing any rights to reimbursement, recovery or indemnification for
Losses pursuant to any Contract with respect to any Losses subject to
indemnification by Purchaser pursuant to Section 8.2, Sellers or their
Affiliates shall have the right, at their election, to commence or assume a
claim or course of action in Purchaser's name with respect to any of Purchaser's
rights subrogated hereunder.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1. NOTICES. All notices and other communications hereunder
-------
shall be in writing (including telecopy or similar writing) and shall be sent,
delivered or mailed, addressed or telecopied:
(a) if to Purchaser, to:
WGNH Acquisition, L.L.C.
c/x Xxxxxxxx Xxxxxxx Corporation
Attention: Corporate Secretary
000 Xxxx Xxxxxxxxx
Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
c/o British Nuclear Fuels plc
Xxxxx X. Xxxxxxxxxxxx
Company Secretary and Group Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxx
Xxxxxxxx XX0 0XX
Xxxxxxx
Telecopy No.: 011-441-925-832058
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with a copy to:
Xxxxxxxxxx, Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) if to CBS, to:
Office of General Counsel
CBS Corporation
Westinghouse Building
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
with copies to:
Office of General Counsel
CBS Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Each such notice or other communication shall be given (i) by hand delivery,
(ii) by nationally recognized courier service or (iii) by telecopy, receipt
confirmed. Each such notice or communication shall be effective (i) if
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 9.1 (or in accordance with the latest
unrevoked direction from such party) and (ii) if given by telecopy, when such
telecopy is
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transmitted to the telecopy number specified in this Section 9.1 (or in
accordance with the latest unrevoked direction from such party), and
confirmation is received.
SECTION 9.2. INTERPRETATION. The Exhibits, Annexes and Schedules are
--------------
part of this Agreement as if fully set forth in this Agreement. When a
reference is made in this Agreement to a Section, Exhibit, Annex or Schedule,
such reference shall be to a Section of, or an Exhibit, Annex or Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. For purposes of any
indemnification provision in this Agreement, the word "expenses" shall mean out-
--------
of-pocket expenses, and shall not include any allocations of internal salaries
and other expenses. Whenever the words "included," "includes" or "including" are
-------- -------- ---------
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Whenever the word "material" is used in this Agreement
--------
(except when used with respect to the Purchaser), it shall mean material to the
Business or financial condition of the Business, taken as a whole. Whenever
reference is made to "knowledge" with respect to any Seller, it shall mean the
---------
actual knowledge of the Persons named in Schedule 9.2. Any matter set forth in
any Schedule shall be deemed set forth in all other Schedules to the extent
relevant.
SECTION 9.3. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
-----------------------------------------------------
The representations and warranties contained in this Agreement (including the
representation and warranty contained in the penultimate sentence of Section
4.1(h)) shall survive the Closing solely for purposes of Article 8 and shall
terminate at the close of business 18 months following the Closing Date;
provided, however, that (i) the representations and warranties contained in
-------- -------
Sections 4.1(a), 4.1(b), 4.1(f) and 4.1(g) (but only to the extent Section
4.1(g) relates to matters of title) shall survive indefinitely; (ii) the
representations and warranties contained in Section 4.1(c)(i) shall survive
until the fourth anniversary of the Closing Date; (iii) the representations and
warranties contained in Section 4.1(m) and Section 4.1(j)(B) shall survive until
the close of business 30 months following the Closing Date; and (iv) the
representations and warranties contained in Section 4.1(o), to the extent that
such representations and warranties relate to Income Taxes, shall terminate on
the Closing Date. The covenants contained in this Agreement, except as otherwise
expressly provided, shall survive the Closing indefinitely; provided, however,
-------- -------
that the covenants contained in Sections 5.1, 5.2, 5.3(a) and 5.3(b) shall
terminate on the Closing Date.
SECTION 9.4. SEVERABILITY. If any provision of this Agreement (or
------------
any portion thereof) or the application of any such provision (or any portion
thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of
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competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision hereof (or the remaining portion thereof) or the
application of such provision to any other Persons or circumstances.
SECTION 9.5. COUNTERPARTS. This Agreement may be executed in two or
------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (including by telecopy) to the other party.
SECTION 9.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except
----------------------------------------------
as expressly otherwise agreed in writing by the parties hereto, this Agreement,
the Guarantee Agreement, the Novation Agreements and the Confidentiality
Agreements (a) constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersede all prior agreements and
understandings, negotiations and discussions, whether written and oral, among
the parties with respect to the subject matter hereof, and there are no
warranties, representations or other agreements between the parties hereto in
connection with the subject matter hereof, except as specifically set forth in
this Agreement, the Guarantee Agreements, and the Confidentiality Agreements and
(b) except as provided in Article 8, are not intended to confer upon any Person
other than the parties hereto (and the Selling Subsidiaries) and their
successors and permitted assigns any rights or remedies hereunder.
SECTION 9.7. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely in the State of New York, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws.
SECTION 9.8. MEDIATION; CONSENT TO JURISDICTION.
----------------------------------
(a) Except as provided in Section 8.8, any dispute among the parties
arising out of or in connection with this Agreement or any other agreement,
instrument or other document delivered pursuant to this Agreement, or any
alleged breach hereof or thereof (other than (i) a dispute arising under or with
respect to Section 5.19 or the confidentiality obligations set forth in the
second penultimate sentence of Section 5.2(a) or (ii) a dispute in respect of
which there is a reasonable likelihood of irreparable harm (as to which a party
may seek a temporary restraining order or injunctive relief)) shall be submitted
for discussion and possible resolution by senior officers or designated
spokesperson of each such party.
123
(b) If within a period of 15 days after submission of a matter in
accordance with clause (a) hereof the respective senior officers and designated
spokespersons are unable to agree upon a resolution, any party may within 15
days after the aforesaid 15-day period elect to utilize a non-binding resolution
procedure whereby each party presents its case at a hearing held in New York,
New York before a neutral advisor, who shall be selected from the CPR Institute
For Dispute Resolution. The parties shall bear their respective costs incurred
in connection with this procedure including the fees and expenses of the neutral
advisor. Prior to the hearing, the parties and the neutral advisor shall use
their reasonable best efforts to agree on a set of ground rules for the hearing.
At the closing of the hearing, the senior executive officers of the respective
parties shall meet and attempt to resolve the matter. Only after the foregoing
procedure has been exhausted shall either party resort to litigation as the
final adjudication of the dispute.
(c) Each of Purchaser and CBS irrevocably submits to the non-exclusive
jurisdiction of (i) the Supreme Court of the State of New York, New York County,
and (ii) the United States District Court for the Southern District of New York
located in the Borough of Manhattan in the City of New York, for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the Purchaser and CBS further agrees
that service of any process, summons, notice or document by U.S. registered mail
to such party's respective address set forth in Section 9.1 or, in the case of
Purchaser, to its agent for service of process shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction as set forth above. Each of
Purchaser and CBS irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (x) the Supreme Court of the State of
New York, New York County, or (y) the United States District Court for the
Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
SECTION 9.9. PUBLICITY. From the date of this Agreement through the
---------
Closing, neither CBS, on the one hand, nor Purchaser, on the other hand, shall
issue or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably withheld.
If one party provides a copy of its proposed press release or public
announcement to the other party, and the other party does not object or comment
on the proposal within forty-eight hours of receipt, such failure to comment
will be treated as consent to publication by the recipient. If such release or
announcement is required
124
by Law or the rules or regulations of a national securities exchange in the
United States, the party required to make the release or announcement shall
allow the other party reasonable time to comment on such release or announcement
in advance of its issuance. The parties will agree on an appropriate procedure
to implement the requirements of this Section 9.9.
SECTION 9.10. ASSIGNMENT. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, except that, so long as
any such assignment would not delay or impede the consummation of the
transactions contemplated hereby, Purchaser may assign to one or more Purchaser
Affiliates the right to acquire part or all of the business and assets of the
Business hereunder, together with the other rights of Purchaser hereunder with
respect thereto; provided, however, that any such assignment shall not release
-------- -------
Purchaser from any Liability hereunder (including any Liability under Article 8)
or enlarge or enhance Purchaser's rights or affect any limitations on CBS's
Liability under Article 8. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 9.11. WAIVER OF JURY TRIAL; TRIAL COSTS. Each of Purchaser
---------------------------------
and the Sellers, for themselves and their respective Affiliates, hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to the actions of Purchaser and the Sellers or their respective
Affiliates pursuant to this Agreement in the negotiation, administration,
performance or enforcement thereof. The party in whose favor a final judgment is
rendered shall be entitled to reasonable costs and reasonable attorneys' fees.
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IN WITNESS WHEREOF, CBS and Purchaser have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
CBS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President,
Chief Financial Officer
WGNH ACQUISITION, LLC
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx.
Title:
By: /s/ X. X. Xxxxxx
---------------------------------
Name: X. X. Xxxxxx
Title:
126
EXHIBITS AND SCHEDULES
THE REGISTRANT AGREES TO PROVIDE THE SECURITIES AND EXCHANGE COMMISSION,
UPON REQUEST, WITH COPIES OF THE EXHIBITS AND SCHEDULES HERETO.
127
