EXHIBIT 10.11
EXECUTION COPY
GESCO
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ASSET PURCHASE AGREEMENT
BETWEEN
CBS CORPORATION
AND
WGNH ACQUISITION, LLC
DATED AS OF JUNE 25, 1998
TABLE OF CONTENTS
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Page
ARTICLE 1
DEFINITIONS............................... 4
SECTION 1.1. Specified Definitions........................................ 4
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SECTION 1.2. Other Terms.................................................. 16
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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.......... 17
SECTION 2.1. Purchase and Sale............................................ 17
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SECTION 2.2. Acquired Assets and Excluded Assets.......................... 17
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(a) Acquired Assets............................................. 17
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(b) Excluded Assets............................................. 20
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(c) Nonassignable Rights........................................ 22
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(d) Termination of Rights of Sold Subsidiaries.................. 23
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SECTION 2.3. Assumption of Liabilities.................................... 23
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(a) Assumed Liabilities......................................... 23
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(b) Excluded Liabilities........................................ 25
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SECTION 2.4. Purchase Price............................................... 27
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SECTION 2.5. Purchase Price Adjustment.................................... 28
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ARTICLE 3
THE CLOSING.............................. 32
SECTION 3.1. Closing Date................................................. 32
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SECTION 3.2. Transactions to be Effected at the Closing................... 32
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(a) Deliveries by Sellers....................................... 32
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(b) Deliveries by Purchaser..................................... 33
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES...................... 33
SECTION 4.1. Representations and Warranties of CBS........................ 33
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(a) Organization, Standing and Power............................ 33
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(b) Authority................................................... 33
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(c) Financial Statements; Undisclosed Liabilities............... 35
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(d) Compliance with Applicable Laws.............................. 36
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(e) Litigation; Decrees.......................................... 37
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(f) Title to Acquired Assets; Leasehold Interests................ 37
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(g) Real Property................................................ 38
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(h) Intellectual Property and Technology......................... 40
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(i) Insurance.................................................... 41
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(j) Contracts.................................................... 42
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(k) Sufficiency of Acquired Assets............................... 45
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(l) Absence of Certain Changes or Events......................... 45
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(m) Employee Benefits............................................ 46
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(n) Environmental Matters........................................ 49
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(o) Taxes........................................................ 51
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(p) Sold Subsidiaries............................................ 53
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(q) Labor Matters................................................ 54
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(r) Outstanding Bids............................................. 54
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(s) Major Suppliers.............................................. 54
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(t) Year 2000.................................................... 55
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(u) Tangible Property............................................ 55
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SECTION 4.2. Representations and Warranties of Purchaser................... 56
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(a) Organization, Standing and Power............................. 56
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(b) Authority.................................................... 56
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(c) U.S.-Controlled Entity....................................... 57
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(d) U.K. Governmental Authority Approvals........................ 57
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ARTICLE 5
COVENANTS................................. 58
SECTION 5.1. (a) Covenants of CBS Relating to Conduct of Business......... 58
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(b) Advice of Changes............................................ 60
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SECTION 5.2. Access to Information; Consultation........................... 61
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SECTION 5.3. Governmental Approvals, Etc................................... 62
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SECTION 5.4. Novations of Government Contracts and Third Party Consents.... 64
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SECTION 5.5. Employee Matters.............................................. 66
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(a) Employee Matters............................................. 66
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(b) Accrued Vacation............................................. 68
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(c) Pension Plan................................................. 68
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(d) Savings Plan................................................. 68
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(e) Union Representation......................................... 70
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(f) Medical and Disability Benefits; Life Insurance.............. 70
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(g) Severance Obligations........................................ 74
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(h) Executive Compensation....................................... 74
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ii
(i) Retiree Welfare Benefits..................................... 75
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(j) Retained Liabilities......................................... 75
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(k) Cooperation.................................................. 75
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(l) WARN Act..................................................... 75
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(m) Workers Compensation......................................... 75
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(n) Free-Standing Plans.......................................... 76
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(o) Actuarial Determinations and Payments........................ 77
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(p) No Right to Employment....................................... 78
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(q) Post-Closing Hiring of Employees............................. 78
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(r) Alternative Procedure........................................ 78
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(s) COBRA........................................................ 79
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SECTION 5.6. Collection of Receivables..................................... 79
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SECTION 5.7. Expenses...................................................... 79
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SECTION 5.8. Brokers or Finders............................................ 79
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SECTION 5.9. Shared Technology and Trademark License Agreements............ 80
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SECTION 5.10. Certain Information.......................................... 81
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SECTION 5.11. Bulk Transfer Laws........................................... 82
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SECTION 5.12. Additional Agreements........................................ 82
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SECTION 5.13. Certain Understandings....................................... 82
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SECTION 5.14. Allocation; Tax Matters...................................... 83
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SECTION 5.15. Supplies..................................................... 87
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SECTION 5.16. Transfer of Assets of Sold Subsidiaries...................... 88
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SECTION 5.17. Removal of Excluded Assets and Liabilities from Sold
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Subsidiaries................................................ 88
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SECTION 5.18. Credit Support............................................... 88
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SECTION 5.19. Non-Competition and Confidentiality.......................... 89
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SECTION 5.20. Related Agreements........................................... 91
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(a) Transitional Services....................................... 91
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(b) Facilities.................................................. 91
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SECTION 5.21. Business Relationships with Sellers.......................... 92
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SECTION 5.22. U.S.-Controlled Entity....................................... 92
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SECTION 5.23. Insurance Matters............................................ 92
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SECTION 5.24. Guarantee Agreement.......................................... 93
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SECTION 5.25. Waivers...................................................... 93
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SECTION 5.26. Third Party Agreements....................................... 93
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SECTION 5.27. Year 2000 Matters............................................ 93
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SECTION 5.28. Joint Defense Agreement...................................... 94
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SECTION 5.29. OCI Compliance............................................... 94
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SECTION 5.30. Guarantee Agreement.......................................... 94
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ARTICLE 6
iii
CONDITIONS PRECEDENT............................ 94
SECTION 6.1. Conditions to Each Party's Obligation......................... 94
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(a) Certain Waiting Periods...................................... 94
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(b) No Injunctions or Restraints................................. 95
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(c) Governmental Action.......................................... 95
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(d) Consummation of the ESBU Asset Purchase Agreement............ 95
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SECTION 6.2. Conditions to Obligation of Purchaser......................... 95
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(a) Representations and Warranties............................... 95
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(b) Performance of Obligations of CBS............................ 95
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(c) Conveyancing Documents....................................... 95
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(d) Opinion of CBS's Counsel..................................... 96
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SECTION 6.3. Conditions to Obligation of CBS............................... 96
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(a) Representations and Warranties............................... 96
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(b) Performance of Obligations of Purchaser...................... 96
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(c) Guarantee Agreement.......................................... 96
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(d) Opinion of Purchaser's Counsel............................... 96
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER..................... 97
SECTION 7.1. Termination................................................... 97
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SECTION 7.2. Amendments and Waivers........................................ 98
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ARTICLE 8
INDEMNIFICATION.............................. 98
SECTION 8.1. Indemnification By CBS........................................ 98
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SECTION 8.2. Indemnification by Purchaser..................................102
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SECTION 8.3. Characterization of Indemnification Payments..................103
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SECTION 8.4. Losses Net of Insurance; Tax Loss and Benefits;
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No Consequential Damages.....................................103
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SECTION 8.5. Termination of Indemnification................................104
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SECTION 8.6. Procedures Relating to Third Party Claims
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(Other than Tax Controversies and Environmental
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Liabilities).................................................105
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SECTION 8.7. Procedures Relating to Non-Third Party Claims.................106
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SECTION 8.8. Arbitration of Certain Environmental Liabilities..............106
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SECTION 8.9. Procedures Relating to Claims Constituting an
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Environmental Liability......................................107
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SECTION 8.10. Subrogation..................................................108
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ARTICLE 9
iv
GENERAL PROVISIONS.............................109
SECTION 9.1. Notices.......................................................109
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SECTION 9.2. Interpretation................................................110
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SECTION 9.3. Survival of Representations, Warranties and Covenants.........111
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SECTION 9.4. Severability..................................................111
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SECTION 9.5. Counterparts..................................................111
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SECTION 9.6. Entire Agreement; No Third Party Beneficiaries................112
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SECTION 9.7. Governing Law.................................................112
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SECTION 9.8. Mediation; Consent to Jurisdiction............................112
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SECTION 9.9. Publicity.....................................................113
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SECTION 9.10. Assignment...................................................113
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SECTION 9.11. Waiver of Jury Trial; Trial Costs............................114
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List of Exhibits
Exhibit A Shared Technology Agreement
Exhibit B Trademark and Trade Name License Agreement
Exhibit C Terms of Transitional Services Agreement
Exhibit D Guarantee Agreement
Exhibit E Joint Defense Agreement
List of Schedules
Schedule 1.1(a) Leased Real Property
Schedule 1.1(b) Owned Real Property
Schedule 1.1(c) Permitted Liens
Schedule 1.1(d) Selling Subsidiaries
Schedule 1.1(e) Sold Subsidiaries
Schedule 2.2(a) Acquired Assets
Schedule 2.2(b) Excluded Assets
Schedule 2.3(a)(i) Contractual Liabilities
Schedule 2.3(a)(xiv) Other Assumed Liabilities
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
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Schedule 4.1(c)(i)(B) Financial Statements
and 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)(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
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 4.1(j)(A)(i) Employment Contracts
Schedule 4.1(j)(A)(ii) Collective Bargaining Agreements
Schedule 4.1(j)(A)(iii) Affiliated Contracts
Schedule 4.1(j)(A)(iv) Credit Agreements
Schedule 4.1(j)(A)(v) Non-Compete Covenants
Schedule 4.1(j)(A)(vi) Real Property Leases
Schedule 4.1(j)(A)(vii) Personal Property Leases
Schedule 4.1(j)(A)(viii)Purchase Contracts
Schedule Purchase Contracts
4.1(j)(A)(viii)
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Schedule 4.1(j)(A)(ix) Products or Services Contracts
Schedule 4.1(j)(A)(x) Joint Ventures, Long-Term Alliances,
Partnerships and Material Teaming Agreements
Schedule 4.1(j)(A)(xi) Options or Franchise Agreements
Schedule 4.1(j)(A)(xii) Take-or-Pay or Requirements Agreements
Schedule 4.1(j)(A)(xiii)Sale or Disposition of Assets
Schedule 4.1(j)(A)(xiv) Contracts Outside the Ordinary Course or
Business
Schedule 4.1(j)(A)(xv) License or Development Agreements
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 4.1(m)(vii) Unfunded Benefit Liabilities
Schedule 4.1(m)(viii) Multiemployee Plan Withdrawal Liabilities
Schedule 4.1(m)(ix) Bonus and Severance Payments
Schedule 4.1(m)(xi) Amendments to Benefit Plans
Schedule 4.1(m)(xii) COBRA Compliance
Schedule 4.1(n)(iii)(a) Environmental Permits
Schedule 4.1(n)(iii)(b) Material Legal or Administrative Proceedings
for Permits
Schedule 4.1(n)(iv) Governmental Consent to Transfer
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Schedule 4.1(n)(v) Outstanding or Threatened Governmental
Authority Non-Compliance Order or Notice of
Violations
Schedule 4.1(n)(vi) Agency Action Related to Environmental
Compliance
Schedule 4.1(n)(viii) CERCLA Potentially Responsible 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(n)(v) Taxes: Assets Owned by Others and Tax
Exempt Use Property
Schedule 4.1(n)(vi) Taxes: Adjustments due to Change in
Accounting Method
Schedule 4.1(n)(vii) Taxes: Pending Audits or Proceedings
Schedule 4.1(n)(viii) Taxes: Powers of Attorney
Schedule 4.1(n)(ix) Taxes: Adverse Rulings Against Sold
Subsidiary or Acquired Assets
Schedule 4.1(n)(x) Taxes: Compliance with the Code
Schedule 4.1(n)(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
Schedule 5.1(a)(ii) Ordinary Course of Business: Collective
Bargaining Agreements
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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(f)(iv) OPEB Schedule
Schedule 5.16 Subsidiary Assets not Relating Primarily to
Business
Schedule 5.18 Credit Support Arrangements
Schedule 6.2(d) Opinion of CBS Counsel
Schedule 6.3(d) Opinion of Purchaser's Counsel
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 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
(B) 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,
1
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
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Business"), certain assets of which are owned by Subsidiaries of CBS; and
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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 GESCO Businesses 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
"ESBU Asset Purchase Agreement") pursuant to which CBS, subject to the terms and
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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 appropriate Subsidiaries,
substantially all of the assets and liabilities of the Energy Systems Business;
and
2
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
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
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 Energy Systems Business and/or other current and former
businesses of CBS, on the other hand, and
3
certain assets relating to the Power Generation Business, the Process Control
Business, the Energy Systems Business 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 Energy Systems Business 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 ESBU 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 ESBU 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 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
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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 Off-Site Disposal Liabilities" shall mean the first
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$5,000,000 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
at the Premises or any property owned or controlled by any Governmental
Authority where the Business performs or has performed Government Contracts.
"Assumed Liabilities" shall have the meaning specified in Section
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2.3(a).
"Assumed Pension Plans" shall have the meaning specified in Section
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5.5(c).
"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 any officers or employees or Former Employees of the Business.
"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.
"Business Employees" shall have the meaning specified in Section 5.5.
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"Business-Related Environmental Liability" means any Environmental
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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.
"CERCLA" shall have the meaning specified in the definition of
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"Environmental Law".
"Closing" means the closing of the purchase, assignment and sale of
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the Acquired Assets and the assumption of the Assumed Liabilities contemplated
hereunder.
"Closing Date" means the time and date on which the Closing takes
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place, as established by Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended, and all
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Laws promulgated pursuant thereto or in connection therewith.
"Contract Modifications" shall have the meaning specified in Section
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4.1(m).
"Contracts" means all contracts (including any subcontracts), leases
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(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), except for Benefit Plans.
6
"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 or any property owned or controlled by
any Governmental Authority where the Business performs or has performed
Government Contracts required by the NRC, 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.
"DIS" shall have the meaning specified in Section 4.1(b).
---
"Emerson" shall have the meaning specified in the recitals.
-------
"Energy Systems Business" shall have the meaning specified in the
-----------------------
recitals of this Agreement.
"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, 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.
7
"Environmental Liability" means any Liability of Sellers or the Sold
-----------------------
Subsidiaries (other than any Decontamination and Decommissioning Liability and
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.
"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).
"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).
"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.
"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. Former Employee shall
not include any employee who last worked at a location listed in Section
2.2(b)(xv).
"Free Standing Plan" shall have the meaning specified in Section
------------------
4.1(m)(i).
8
"GAAP" means United States generally accepted accounting principles.
----
"GESCO" 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 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.
9
"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 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).
"Individual Spun-Off Plans" shall have the meaning specified in
-------------------------
Section 4.1(m)(i).
"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, except for that which relate primarily to Nuclear Installations.
"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
10
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(a).
"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, 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.
--
"Non-Governmental Allocation Percentage" shall mean, with respect to
--------------------------------------
each of the Residual Divisions, that percentage of the "Total Cost Input" not
reimbursed by the applicable government agencies for the year ended December 31,
1997. Such percentage shall
11
be subject to a final determination upon completion of an audit by the
applicable government agency for 1997.
"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 on Schedule 1.1(b).
"Parent Companies" means MK and BNFL.
----------------
"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 any officers or employees or
Former Employees of the Business employed in the United States.
"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.
12
"Permitted Liens" means (i) Liens disclosed in Schedule 1.1(c),
---------------
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.
"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.
"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.
13
"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.
"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.
"Residual Division" shall mean the Plant Apparatus Division (PAD),
-----------------
EMD, Anniston, Engineered Products (Carlsbad), Government Technical Services
Division (GTSD) and GESCO headquarters divisions of the Business.
"Residual Spun-Off Plan" shall have the meaning specified in Section
----------------------
4.1(m)(i).
"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.
14
"Selling Subsidiary" means each of the Subsidiaries of CBS listed on
------------------
Schedule 1.1(d) 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).
"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.
"Sold Subsidiary" means any Subsidiary of CBS listed in Schedule
---------------
1.1(e) under the caption "Sold Subsidiary".
"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).
"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.
15
"Surplus Property" means all real property owned, leased or occupied
----------------
by any Seller or Sold Subsidiary that is not listed on Schedule 1.1(a) or 1.1(b)
or that is entirely or substantially vacant, "mothballed" or held principally
for remediation or other risk management purposes.
"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, except for that which relate primarily to
Nuclear Installations.
"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).
"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).
16
"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 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 Sold Subsidiary shall be effected pursuant to a
forward taxable merger of each 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
17
held for use in, or primarily relating to or arising out of the conduct of, the
GESCO Businesses and the operation of the Premises, including all Intellectual
Property and Technology of the GESCO Businesses, 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 on Schedule 1.1(b)
(and all easements and rights of way appurtenant thereto) owned by any of
the Sellers and all rights of the Sellers as lessee to the parcels of
Leased Real Property listed on Schedule 1.1(a);
(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) all cash of the Sellers held in escrow or trust for
environmental response actions;
(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;
18
(x) all Investments;
(xi) subject to Section 5.3(c), 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;
(xi) 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 or 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;
19
(xviii) subject to Section 5.23, (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) all assets described on Schedule 2.2(a), whether or not
related to the Business; and
(xxii) all (A) copies of Tax Returns, Tax records and Tax work papers
of the 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 or the Energy Systems Business) and (B)
copies of separate company Income Tax Returns, Income Tax records, and
Income Tax work papers of the Sold Subsidiaries, provided that, in the case
--------
of the 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:
--------------- ---------------
20
(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)(v), (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;
(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 (including 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 Energy System Business and any other retained business of CBS
(including the business of CBS itself);
21
(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 Energy Systems
Business, in the manner provided by Section 5.16;
(xii) all insurance policies of Sellers, including those described
on 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 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, the Science and Technology Center located in
Churchill, Pennsylvania ("STC") 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;
22
(xv) the Contracts (and the related Fixtures and Equipment) to
which any Seller or Sold Subsidiary is a party relating to the performance
of services at Hanford, Idaho Falls and Xxxxxxx, or relating to the
Machinery Technology Division;
(xvi) the stock of Westinghouse Hanford Company; and
(xvii) 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 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 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).
23
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;
(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 any
other property owned or controlled by a Governmental Authority where the
Business performs or has performed Government Contracts 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 or any other property owned by a Governmental Authority where the
Business performs or has performed Government Contracts;
24
(vi) (A) all Decontamination and Decommissioning Liabilities and
(B) all Assumed Off-Site Disposal Liabilities;
(vii) all Liabilities relating to the employment or termination of
employment of any employee or Former Employee of the Business, other than
as described in Section 2.3(a)(viii);
(viii) all Liabilities with respect to 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;
(ix) all Liabilities for Taxes (other than Taxes described in
Sections 2.3(b)(ii) and (iii)) attributable to the Business for all taxable
periods;
(x) 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 other businesses of CBS, only to the extent they
relate to employees or Former Employees of the Business;
(xi) 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;
(xii) 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;
(xiii) all Indebtedness reflected on the Statement of Net Assets;
and
(xiv) all Liabilities described on Schedule 2.3(a)(xiv), whether or
not related to the Business.
25
(B) EXCLUDED LIABILITIES. The term "Excluded Liabilities" means:
-------------------- --------------------
(i) except as set forth on Schedule 2.3(b), any Liability of
Sellers to the extent related to the Excluded Assets (including the
Excluded Assets referred to in Section 2.2(b)(xv));
(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 Taxes attributable to the Business for Pre-Closing Tax
Periods or Sellers' Straddle Periods relating to the reclassification for
federal Tax purposes of any individual from independent contractor status
to employee status;
(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; 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 or any Property owned or controlled by any Governmental
Authority where the Business performs or has performed Government
Contracts, 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);
26
(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), 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)(xii);
(xiii) 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.;
(xiv) 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
27
(xv) 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, 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, the purchase
--------------
price for the Acquired Assets (the "Purchase Price") shall consist of
--------------
(a) the payment by Purchaser of $237,500,000 (the "Cash Portion"),
------------
payable as set forth in Section 3.2(b); and
(b) 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
28
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 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
29
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
-----------------------
$(16,263,000). 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 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. The terms "Total Current Assets"
--------------------
and "Total Current liabilities" shall mean the total current assets and total
-------------------------
current liabilities, respectively, of the Business (excluding amounts related to
the performance of services at Hanford, Idaho Falls, Xxxxxxx, and Machinery
Technology Division), 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) deferred Income Taxes, and, (v) 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 had not been placed in service and
(x) is of a type permitted or required by GAAP to be
30
recognized as a fixed asset on the books of the Business as of the Balance Sheet
date and (y) but for such loss prior to the Closing would be an Acquired Asset
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).
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, or government rate and cost disallowance 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 (excluding amounts related to the performance of
services at Hanford, Idaho Falls, Xxxxxxx, and Machinery Technology Division),
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.
31
(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 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 condition to the Closing set forth in Section 6.1(a), 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
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
32
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
(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 Cash Portion,
(ii) certificates or agreements of merger (with respect to the 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).
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 or limited liability company,
as applicable, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, has the requisite corporate or limited
liability company 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.
(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
33
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 on 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 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
34
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 the facilities clearance requirements of (a) the Defense Investigative
Service of the United States Department of Defense ("DIS"), as set forth in the
DIS Industrial Security Regulation and the DIS Industrial Security Manual, as
amended from time to time, and (b) the U.S. Department of Energy (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 on 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 on 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 Taxes, as of the date hereof there is no material liability related
to the Business and
35
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 $1,000,000 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 $100,000.
(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 on 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 on 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
36
forth in Schedule 4.1(d)(i), since December 31, 1997, neither Sellers nor
the 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 $1,000,000. 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.
37
(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 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(b) 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
38
(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 with the conveyance
of the Owned Real Property to Purchaser. 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(a) 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(a) 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
39
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 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 on 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 on
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
40
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 of any security
interests. Except as set forth on 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 on 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 on 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 on 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 on 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 such names
41
and marks 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 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 on 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
42
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 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
43
(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.
All of the Material Contracts are 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 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).
44
(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 on 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.
(D) In connection with the pending governmental audit of the 1995
corporate general and administrative allocation by the Energy Systems Business
to EMD for Government Contracts, there are as of the date hereof no findings
that would reasonably be expected to materially change to the Energy Systems
Business indirect cost rate. There are adequate voluntary decrements available
to offset any audit findings sustained by the contracting officer in connection
with such audit or, if the voluntary decrements are inadequate to offset any
audit findings, any offsets in excess of such voluntary decrements will not be
material to the Business.
(K) SUFFICIENCY OF ACQUIRED ASSETS. Except as disclosed on Schedule
------------------------------
4.1(k) and except for the Excluded Assets (other than those described in clause
(viii) of the definition
45
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 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 Benefit Plan (if any such
report was required), (C) the most recent summary plan description for each
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 Benefit Plan, (E) the most
recent audited financial statements and actuarial valuation reports with
respect to each Benefit Plan, to the extent available, and (F) the most
recent determination letter with respect to each Benefit Plan intended to
qualify under Section 401(a) of the Code. Schedule 4.1(m)(i) separately
identifies each Benefit Plan covering only employees or Former Employees of
the Business and four defined benefit plans that will be spun-off from the
Westinghouse Pension Plan covering (x) Xxxxxx, West Valley and Waste
Isolation Divisions of the Business (the "Individual Spun-Off Plans"), and
-------------------------
(y) the Residual Divisions, (the "Residual Spun-Off Plan") which plans will
cover Business
46
Employees and Former Employees of such divisions (each a "Free Standing
Plan"). At Purchaser's request, subject to CBS consent, not to be
unreasonably withheld, CBS shall cause the Residual Spun-off Plan to take
the form of two or more separate plans, as requested by Purchaser. In such
event, whenever Residual Spun-off Plan is described in this Agreement, it
shall refer to each of such plans, unless the context clearly contemplates
otherwise. CBS will enter into contract modifications ("Contract
--------
Modifications") with the DOE or DOD, which modifications will be
-------------
substantially in the form annexed to Schedule 4.1(m)(i) with respect to the
Individual Spun-off Plans, the Westinghouse Executive Pension Plan and the
CBS FAS 106 Plans, and will be in all material respects at least as
protective to Purchaser as the form of agreement annexed to Schedule
4.1(m)(i).
(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. 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
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 or Section
412 of the Code, 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, and (C) no 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.
47
(iv) Except as set forth in Schedule 4.1(m)(iv), all Pension Plans
have been the subject of determination letters from the Internal Revenue
Service to the effect that such 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 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 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 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 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 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 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
48
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 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 on 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) With respect to the year ended December 31, 1997, the
applicable Sold Subsidiary employing Business Employees employed at Safe Sites
of Colorado was or will be reimbursed by the applicable governmental agency for
100% of cash outlays for benefits paid to Former Employees (and to the extent
applicable Business Employees) under nonqualified pension plans.
49
(N) ENVIRONMENTAL MATTERS. Except as disclosed on 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 $2,500,000 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 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 on 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 on 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
50
operation of the Business, the Premises or the Acquired Assets by any of
the Sellers or the 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 Sellers or the
Sold Subsidiaries, nor to the knowledge of CBS, their predecessors in
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
51
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
operations 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.
(O) TAXES. Except as set forth on 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
52
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.
(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
53
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 on Schedule 1.1(d) (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 on Schedule 1.1(d), free and
clear of all Liens, except as set forth on Schedule 1.1(d). For purposes of this
Section 4.1(p), "beneficial ownership" of any shares of capital stock shall 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(d), 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(d), 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(d), 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 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 on
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
54
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 or Sold Subsidiary, would involve
aggregate expenditures or receipts in excess of $5,000,000. Except as set forth
on Schedule 4.1(1), 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.
----------------
(i) Schedule 4.1(s) sets forth 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
(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 supplier listed on 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 supplier listed on Schedule 4.1(s), to
the effect that any such supplier intends to cease, or make a material
reduction in 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
55
considered for any follow-on work relating to such Government
Contract.
(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 5.27, 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
------------------------------
56
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 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 the facilities clearance requirements of the DIS, as set forth in the DIS
Industrial Security Regulation and the DIS Industrial Security Manual, as
amended from time to time, 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.
57
(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 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
58
existing collective bargaining agreement or other existing Contract and
except for 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;
59
(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;
(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;
60
(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 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 (including the GESCO government-owned
sites), books, Contracts, commitments, Tax Returns, pending bids and proposals
for contracts (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
61
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
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Purchaser (i) any 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 5.28 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 the DIS Industrial Security
Regulations, the DIS Industrial Security Manual 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 GESCO Businesses 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 GESCO 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 GESCO Businesses (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)
62
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 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
--------
GESCO Businesses 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 and (ii) but in no event later than 20 business days following the execution
and delivery of this Agreement file with the Committee on Foreign Investment in
the United States the voluntary notification under the Exon-Xxxxxx Amendment 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 transactions 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
63
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 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
64
satisfactory to CBS of such individual's security clearance meeting the security
clearance level prescribed for such access.
SECTION 5.4. NOVATIONS OF GOVERNMENT 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.
65
(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 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
66
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.
(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) 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"). "Business Employee" shall not include any employee working at
--------
the Closing Date at locations listed in Section 2.2(b)(xv). Each employee
or former employee who primarily rendered services on behalf of the
Business 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.
Inactive Employee shall not include any employee who last worked at
locations listed in Section 2.2(b)(xv). 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
67
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
employee of any Seller during such six-month period without the consent of
such Seller (other than as provided for 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
68
vacation and personnel policies and collective bargaining agreements of CBS or
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 the Closing
Date such schedules as CBS maintains and such other information as reasonably
necessary to calculate such benefits.
(C) PENSION PLAN. Effective as of the Closing Date, Purchaser or the
------------
applicable Sold Subsidiary shall assume the Individual Spun-Off Plans and the
Residual Spun-Off Plan (subject to the provisions of Sections 5.5(n) (the
"Assumed Pension Plans")). Purchaser shall continue the Assumed Pension Plans
without adverse effect to the Business Employees for the Benefits Maintenance
Period and shall credit service of Business Employees with Sellers and Sold
Subsidiaries for purposes of eligibility, vesting and retirement eligibility in
all pension plans (within the meaning of Section 3(2) of ERISA) in which such
Business Employees participate.
(D) 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 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
69
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 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(d) 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
70
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.
(E) UNION REPRESENTATION. Purchaser agrees with respect to any
--------------------
collective bargaining agreement that relates to Business Employees, to (i)
recognize each union with an agreement listed in Schedule 4.1(j) 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.
(F) MEDICAL AND DISABILITY BENEFITS; LIFE INSURANCE. (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 co-payments 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 Former Employees and their eligible spouses and dependents
(such plans and their successors the "Purchaser FAS 106 Plans") that is
-----------------------
substantially similar to such plan or plans
71
maintained by CBS or its Affiliates in the U.S. immediately prior to the
Closing Date for its Business Employees and Former 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 and Former 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
and Former Employees of each of the Residual Divisions shall be limited in
each calendar year, commencing with the Closing Date, to the Non-
Governmental Allocation Percentage of the amounts set forth in Schedule
5.5(f)(iv) of the Disclosure Schedule applicable to each Residual Division
(the "OPEB Schedule"), as described below (e.g., if the Non-Governmental
-------------
Allocation Percentage is 30% and the OPEB Schedule payment for a given year
is $100,000, the payment obligation for such year under the WELCO FAS 106
Plan is $30,000). The OPEB Schedule shall be updated by CBS after the
Closing Date to reflect Business Employees and Former Employees of the
Residual Divisions (the "OPEB 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 as applicable to
the Residual Divisions 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 OPEB 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 and Former
Employees, their eligible spouses and dependents for all post-
72
retirement welfare benefits (including retiree medical and retiree life,
other than amounts paid by CBS or Sold Subsidiaries 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 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
OPEB 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 OPEB 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 terminations announced by CBS prior to the
Closing Date), 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(g)(iv). If the result of discounting the
scheduled payments would result in the Revised Schedule
73
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 (a)
in the event of a final determination of the Non-Governmental Allocation
Percentage applicable to a Residual Division or (b) to the extent required
by a final non-appealable court order or as otherwise agreed to by the
parties, but in any event under (b) the OPEB Schedule shall not be
increased above the amount as in effect immediately prior to the change
which triggered the reduction in question. Any payment made by 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. Upon a final determination of Non-Governmental Allocation
Percentage applicable to a Residual Division, the OPEB Schedule applicable
to such Residual Division shall be adjusted upwards or downwards utilizing
the same methodology used to calculate changes for a FAS 106 Event.
(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 CBS FAS 106 Plans and the Purchaser FAS 106 Plans as applicable
to OPEB 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
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
74
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 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 and
its Affiliates prior to the Closing Date for purposes of determining the amount
of such severance and other separation benefits. 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. Purchaser shall assume all Liabilities
----------------------
and obligations of CBS and its Affiliates relating to Business Employees and
Former Employees under the Westinghouse Executive Pension Plan (including,
without limitation, Savannah River, notwithstanding that there is no specific
government reimbursement for such expenses), except to the extent the Novation
Agreements provide that such obligations (other than attributable to the Non-
Governmental Allocation Percentage or to Savannah River) will not be reimbursed
to the same extent reimbursed prior to the Novation Agreements.
(I) RETIREE WELFARE BENEFITS. Purchaser shall assume all Liabilities
------------------------
and Obligations of CBS and its Affiliates relating to Business Employees and
Former Employees under the CBS FAS 106 Plans covering the Business, except as
set forth in Section 5.5(f) and except to the extent the Novation Agreements
provide that such obligations (other than the FAS 106 Obligation) will not be
reimbursed to the same extent reimbursed prior to the Novation Agreements.
75
(J) RETAINED LIABILITIES. CBS shall retain liability and
--------------------
responsibility for all benefits payable under (x) the WELCO Pension Plan except
to the extent liabilities are transferred with respect to Business Employees and
Former Employees to the Individual Spun-Off Plans and Residual Spun-Off Plan,
(y) the WELCO Executive Pension Plan except to the extent liabilities are
assumed under Section 5.5(h), (z) the WELCO FAS 106 Plans except to the extent
liabilities are assumed under Section 5.5(i), (xx) the WELCO Savings Program
(other than assets and liabilities to be transferred to the Purchaser's 401(k)
Plan under Section 5.5(d)), (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).
(K) 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.
(L) 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.
(M) WORKERS COMPENSATION. CBS or its Affiliates currently sponsors a
--------------------
program that provides workers compensation benefits for eligible Business
Employees and Former Employees ("CBS's Workers Compensation Program").
----------------------------------
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 for the Business Employees and Former Employees
covered by such program ("Purchaser's Workers Compensation Program").
----------------------------------------
Purchaser's Worker Compensation Program shall be responsible for all claims for
workers compensation benefits which are incurred prior to, on or following the
Closing Date by Business Employees and Former Employees, including claims that
are otherwise payable under the terms and conditions of CBS's Workers
Compensation Program.
(N) 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,
except as set forth below in this Section 5.5(n).
76
Prior to the assumption of the Individual Spun-Off Plans, CBS or its
Affiliates shall make such payments to the plans as are required pursuant to
Section 4 of the Contractual Modification, the amount of which has been
determined by the applicable government agency after audit. In addition, the
Sellers will contribute to the Individual Spun-Off Plans pursuant to the
Contractual Modifications amounts equal to the "transitional asset" attributable
to prior government reimbursements that the Sellers or the Sold Subsidiaries are
determined to hold (to be determined upon audit by the applicable government
agency pursuant to Contractual Modifications) with respect to the Westinghouse
Executive Pension Plan as applicable to Business Employees and Former Employees
of the Business covered by the Contractual Modification.
CBS shall request an audit of the Residual Spun-Off Plan by the
applicable government agencies. Any assumption of such plan by Purchaser shall
be subject to a certification by such government agency that the assets and
liabilities of the plan conform with government cost accounting standards. CBS
will make up any shortfalls determined by such audit. 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 as
successor to CBS or its Affiliates to all rights, assets, duties, liabilities
and obligations under or with respect to the Free-Standing Plans and will use
all reasonable efforts to obtain with respect to the Residual Spun-Off Plan, an
agreement similar to the Contract Modifications. CBS shall contribute or cause a
Sold Subsidiary to contribute to the Residual Spun-Off Plan, prior to assumption
by Purchaser, an amount equal to the Non-Governmental Allocation Percentage
applicable to each Residual Division of the unfunded accrued benefit obligation
(calculated using the FASB 87 assumptions utilized by CBS as of December 31,
1997) of that portion of the Residual Spun-Off Plan and the Westinghouse
Executive Pension Plan (other than with respect to Savannah River) allocable to
each Residual Division, calculated as of the Closing Date (the "True-Up
-------
Payment").
-------
Subject to the agreement of Purchaser, not to be unreasonably
withheld, Seller may transfer to Purchaser a Free-Standing Plan prior to any
audit referred to above. In such event, the Purchaser and CBS will make
equitable adjustments among themselves to adjust for any changes required by
such audits, with interest to be added to such adjustments at the "LIBOR" rate
at the time of payment.
In the event the Non-Governmental Allocation Percentage applicable to
any Residual Division is changed based on a final determination by the
applicable governmental agency, the Purchaser or CBS, as the case may be, shall
make a payment to the other within ninety (90) days of such final determination,
of the difference between the True-Up Payment
77
and the amount the True-Up Payment would have been if the final percentage were
known at the time of the True-Up Payment (the "Differential"). The paying party
------------
shall pay interest on the Differential from the date of the True-Up Payment to
the date of payment of the Differential at the "LIBOR" rate at the time of
payment of the Differential.
(O) ACTUARIAL DETERMINATIONS AND PAYMENTS. (i) The calculations of
-------------------------------------
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 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 FAS 106 Event.
(ii) No later than 60 days after the receipt by CBS of both the
notice from Purchaser that 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 gain ( a
"Determination"), 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 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, as the case may be (which
78
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 gain
under Section 5.5(f)(iv) CBS shall substitute a Revised Schedule in place
of the Existing Schedule.
(P) 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.
(Q) 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.
(R) 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(r)). 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."
(S) COBRA. Effective as of Closing Date, Purchaser shall assume all
-----
responsibility for COBRA notices and coverage for Business Employees and Former
Employees (and their eligible dependents).
79
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.
Notwithstanding any provisions of the Novation Agreements to the contrary,
Purchaser agrees that CBS is entitled (i) to all cost improvement payments with
respect to the Government Contracts received prior to the Closing Date and (ii)
if the Closing occurs prior to November 30, 1998, to fifty percent (50%) of all
cost improvement payments with respect to the Government Contracts received
between the Closing Date and November 30, 1998, provided that, in the case of
clause (ii) such payments relate to the U.S. government fiscal year ending
September 30, 1998, and Purchaser agrees to remit such portion of any funds
received during such period to CBS within 10 days of receipt.
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.
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 A hereto (the "Shared Technology
-----------------
Agreement"), wherein, to the extent CBS and Purchaser have rights on the Closing
---------
Date:
80
(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 Business and, at the sole discretion of the owner of
the Energy Systems 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 B 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."
(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 5.1. 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 GESCO Businesses 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)(xiii)) 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
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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(b).
(b) 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 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(b) 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.
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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 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.
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SECTION 5.14. ALLOCATION; TAX MATTERS.
-----------------------
(a) 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 Sold Subsidiary for all
applicable Tax purposes, including Code Section 1060. 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, 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.
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(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 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) [Intentionally omitted].
(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
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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 Sold Subsidiary and (B)
CBS shall also file and shall cause each 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 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 all Taxes covering the
Acquired Assets or the Sold Subsidiaries for all Straddle Periods. 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 other than
Income Tax Returns for all Sold Subsidiaries 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:
86
(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 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,
--------
87
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 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.
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", "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
88
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 on 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 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)
89
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 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
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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.
(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.
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(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 C.
(B) 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.
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 Energy
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Systems Business, 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. 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.
SECTION 5.23. 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 5.24. GUARANTEE AGREEMENT. Concurrent with the execution of
-------------------
this Agreement, the Guarantors are executing the Guarantee Agreement in the form
of Exhibit D hereto (the "Guarantee Agreement").
-------------------
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SECTION 5.25. 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 5.26. 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.
SECTION 5.27. 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 5.28. JOINT DEFENSE AGREEMENT. Prior to the date hereof, CBS
-----------------------
and Purchaser have executed the Joint Defense Agreement attached as Exhibit E
hereto.
SECTION 5.29. OCI COMPLIANCE. Purchaser shall, and shall cause its
--------------
Affiliates to, take such actions between the date hereof and the Closing such
that Purchaser
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(and, to the extent applicable, its Affiliates) will be, immediately subsequent
to Closing, in compliance with the Laws relating to Organizational Conflicts of
Interest (as such term is defined in Federal Acquisition Regulation Subpart 9.5
and Department of Energy Acquisition Regulation Subpart 909.5) with respect to
any Government Contracts (or outstanding bids for Government Contracts) included
in the Acquired Assets.
SECTION 5.30. 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).
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.
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(D) CONSUMMATION OF THE ESBU ASSET PURCHASE AGREEMENT. The
-------------------------------------------------
transactions contemplated by the ESBU 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:
(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) 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.
(D) 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(d) hereto.
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:
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(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 on Schedule 6.3(d) hereto.
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;
97
(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 Section
6.1(a), 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:
(i) 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
(ii) 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.
(c) 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)),
98
(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:
(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 (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;
99
(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)(vi)(B) and 2.3(a)(xii));
(vi) any Liability (other than any Environmental Liability) of any
Seller arising from any defect or failure in the performance of any of the
Sellers in connection with the In Tank Precipitation Process at Savannah
River;
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
$8,000,000, 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
$200,000,000 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 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;
100
(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 $12,500,000, in which case, (w) for aggregate Losses of
more than $12,500,000 but less than $25,000,000, CBS shall pay 50%
of such Losses, (x) for aggregate Losses of $25,000,000 or more
but less than $50,000,000, CBS shall pay 75% of such Losses, (y)
for aggregate Losses of $50,000,000 or more but less than
$100,000,000, CBS shall pay 50% of such Losses and (z) for
aggregate Losses of $100,000,000 or more, CBS shall pay 100% of
all other such Losses;
(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; and
(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 $5,000,000.
With respect to Losses for which CBS has Liability pursuant to Section
8.1(a)(v) 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
101
its representatives shall have the opportunity to be present and participate at
any meetings with Governmental Authorities.
Notwithstanding the foregoing, from and after the time, if any, as
clause (E)(z) of the second 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
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, 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 this Agreement 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).
(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) 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
102
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, 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:
(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); or
(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.
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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) or (vi) of Section 8.1(a).
(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 be provided for under
this Article 8 in respect of any indirect, special, consequential or "business
interruption" damages.
104
(c) Purchaser shall use its commercially reasonable efforts consistent
with past practice in relation to the GESCO Businesses 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
ESBU 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 clause (a)(vi) of Section 8.1, shall terminate on
the fourth anniversary of the Closing Date; and (e) pursuant to the other
clauses of Sections 8.1 and 8.2 shall not terminate.
SECTION 8.6. PROCEDURES RELATING TO THIRD PARTY CLAIMS (OTHER THAN
-----------------------------------------------------
TAX CONTROVERSIES AND ENVIRONMENTAL LIABILITIES).
------------------------------------------------
(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
105
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 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).
106
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 or
whether a cost or Loss is a Decontamination and Decommissioning Liability shall
be settled by arbitration in accordance with the Commercial Rules of the
American Arbitration Association. 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
107
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.
(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
108
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 8.1. 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).
(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.
109
ARTICLE 9
GENERAL PROVISIONS
110
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
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
111
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 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 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, Schedule or Exhibit, such reference shall
be to a Section of, or a Schedule or Exhibit 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
112
named on 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 third 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 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
113
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.
(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
114
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 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.
115
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.
116
EXHIBITS AND SCHEDULES
The registrant agrees to provide the Securities and Exchange Commission, upon
request, with copies of the Exhibits and Schedules hereto.
117
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:
