Exhibit 99.6
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STOCK PURCHASE AGREEMENT
BETWEEN
ALCOA INC.
AND
ALLIANT TECHSYSTEMS INC.
Dated as of January 30, 2001
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TABLE OF CONTENTS
Page
ARTICLE I
SALE OF STOCK AND TERMS OF PAYMENT
Section 1.1 The Sale.................................................................1
Section 1.2 Purchase Price...........................................................1
Section 1.3 Manner of Payment........................................................1
Section 1.4 Purchase Price Adjustment................................................2
ARTICLE II
THE CLOSING
Section 2.1 Time and Place of Closing................................................3
Section 2.2 Deliveries by the Seller.................................................4
Section 2.3 Deliveries by the Buyer..................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 3.1 Organization, Standing and Qualification of the
Company and the Company Subsidiary.......................................5
Section 3.2 Capitalization...........................................................6
Section 3.3 Authority Relative to this Agreement.....................................6
Section 3.4 Consents and Approvals; No Violation.....................................7
Section 3.5 Financial Statements.....................................................7
Section 3.6 Undisclosed Liabilities..................................................8
Section 3.7 Absence of Certain Changes or Events.....................................8
Section 3.8 Legal Proceedings, etc...................................................8
Section 3.9 Employee Benefit Plans; ERISA............................................8
Section 3.10 Taxes...................................................................11
Section 3.11 Intellectual Property...................................................12
Section 3.12 Environmental Matters...................................................13
Section 3.13 Compliance with Laws....................................................15
Section 3.14 Employment-Related Matters..............................................15
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Section 3.15 Insurance...............................................................16
Section 3.16 Real Property...........................................................16
Section 3.17 Contracts...............................................................17
Section 3.18 Warranty and Product Liability Claims...................................17
Section 3.19 Relationships with Customers and Suppliers..............................17
Section 3.20 Government Contracts and Subcontracts...................................17
Section 3.21 Licenses and Permits....................................................18
Section 3.22 Condition of Tangible Assets............................................18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 4.1 Organization............................................................19
Section 4.2 Authority Relative to this Agreement....................................19
Section 4.3 Consents and Approvals; No Violation....................................19
Section 4.4 Acquisition of Stock for Investment.....................................20
Section 4.5 Financing...............................................................20
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1 Conduct of the Thor Business............................................20
Section 5.2 Name Changes............................................................23
Section 5.3 Access to Information...................................................23
Section 5.4 Reasonable Best Efforts; Further Assurances.............................24
Section 5.5 Disclosure Supplements..................................................25
Section 5.6 Public Announcements....................................................25
Section 5.7 Sales and Transfer Taxes and Fees.......................................26
Section 5.8 Intercompany Accounts...................................................26
Section 5.9 Non-Competition; Non-Solicitation.......................................26
Section 5.10 Export Matters..........................................................27
Section 5.11 Nonassignable Contracts, Leases and Permits.............................27
Section 5.12 Distribution of Property................................................28
Section 5.13 Audited 2000 Year End Balance Sheet.....................................28
Section 5.14 Transitional Services Agreement.........................................29
Section 5.15 Certain Litigation Following the Closing................................29
Section 5.16 Cooperation for Insurance Recovery......................................29
Section 5.17 No Solicitation.........................................................29
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ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFITS
Section 6.1 Continued Employment....................................................30
Section 6.2 Employee Plans..........................................................30
Section 6.3 Retained Employees and Retained Company Plans...........................30
ARTICLE VII
CLOSING CONDITIONS
Section 7.1 Conditions to Each Party's Obligations to Effect
the Transactions Contemplated Hereby....................................31
Section 7.2 Conditions to the Obligations of the Seller to Effect
the Transactions Contemplated Hereby....................................31
Section 7.3 Conditions to the Obligations of the Buyer to Effect
the Transactions Contemplated Hereby....................................32
Section 7.4 Certificates............................................................32
ARTICLE VIII
TERMINATION AND ABANDONMENT
Section 8.1 Termination.............................................................33
Section 8.2 Procedure and Effect of Termination.....................................33
ARTICLE IX
CERTAIN TAX MATTERS
Section 9.1 Tax Matters.............................................................34
Section 9.2 Indemnity for Taxes.....................................................37
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ARTICLE X
INDEMNIFICATION
Section 10.1 Survival of Representations and Warranties..............................39
Section 10.2 Indemnification.........................................................40
Section 10.3 Limitations on Liability................................................40
Section 10.4 Defense of Claims.......................................................41
Section 10.5 Exclusive Remedy........................................................42
Section 10.6 Seller Environmental Indemnity..........................................42
Section 10.7 Termination of Section 3.10.............................................46
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Expenses................................................................46
Section 11.2 Counterparts; Effectiveness.............................................46
Section 11.3 Governing Law...........................................................46
Section 11.4 Notices.................................................................46
Section 11.5 Assignment; Binding Effect..............................................47
Section 11.6 Severability............................................................47
Section 11.7 Enforcement of Agreement................................................48
Section 11.8 Entire Agreement; No Third-Party Beneficiaries..........................48
Section 11.9 Headings................................................................48
Section 11.10 Definitions.............................................................48
Section 11.11 Finders or Brokers......................................................48
Section 11.12 Amendment or Supplement.................................................49
Section 11.13 Extension of Time, Waiver, Etc..........................................49
Section 11.14 Jurisdiction............................................................49
Section 11.15 WAIVER OF JURY TRIAL....................................................49
Exhibit A-- Net Working Capital Calculation..............................................A-1
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
Affiliated Group..............................................................................3.10(a)
affiliates......................................................................................11.10
After-Tax Amount...............................................................................9.1(k)
Agreement.......................................................................................Intro
Audited 2000 Year End Balance Sheet..............................................................5.13
Audited 2000 Year End Balance Sheet Accounting Principles........................................5.13
Balance Sheet Footnotes...........................................................................3.5
Base Claim....................................................................................10.3(a)
best knowledge of the Seller....................................................................11.10
Buyer...........................................................................................Intro
Buyer Disclosure Schedule.........................................................................5.5
Buyer Reimbursable Claim......................................................................10.6(f)
Buyer Returns..................................................................................9.1(a)
Buyer Indemnified Parties.....................................................................10.6(a)
Cap Ex Plan....................................................................................5.1(n)
CERCLA........................................................................................3.12(d)
Closing...........................................................................................2.1
Code...........................................................................................3.9(b)
Confidentiality Agreement......................................................................5.3(b)
Company.........................................................................................Intro
Company Common Stock............................................................................Intro
Company Environmental Condition...............................................................10.6(f)
Company Environmental Liability...............................................................10.6(f)
Company Facility...............................................................................5.3(a)
Company Plans..................................................................................3.9(a)
Company Subsidiary................................................................................3.1
Company Subsidiary Common Stock................................................................3.2(b)
Company Subsidiary Distribution...............................................................5.12(b)
Company Title IV Plan..........................................................................3.9(f)
Computer Software.............................................................................3.11(c)
Consolidated Income Tax Return.................................................................9.1(k)
Contracts.........................................................................................2.2
control.........................................................................................11.10
Copyrights....................................................................................3.11(c)
Cordant Holding.................................................................................Intro
Covenant Period...................................................................................5.9
Direct Claim..................................................................................10.4(c)
Distributed Property..........................................................................5.12(a)
Distribution..................................................................................5.12(a)
Effective Date....................................................................................2.1
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Effective Date Balance Sheet...................................................................1.4(c)
Effective Date Net Working Capital Amount......................................................1.4(f)
Environmental Action..........................................................................10.6(f)
Environmental Claim........................................................................3.12(h)(i)
Environmental Law.........................................................................3.12(h)(ii)
Environmental Permits.........................................................................3.12(a)
ERISA..........................................................................................3.9(a)
ERISA Affiliate................................................................................3.9(a)
Foreign Plans..................................................................................3.9(a)
GAAP..............................................................................................3.6
Governmental Entity...............................................................................3.4
Government Contract...........................................................................3.20(a)
Government Contract Law......................................................................10.16(f)
Government Subcontract........................................................................3.20(a)
Hazardous Materials......................................................................3.12(h)(iii)
Howmet..........................................................................................Intro
HSR Act...........................................................................................2.1
Huck............................................................................................Intro
including.......................................................................................11.10
Indemnifiable Losses..........................................................................10.1(c)
Indemnifying Party............................................................................10.1(c)
Indemnitee....................................................................................10.1(c)
Indemnity Payment.............................................................................10.1(c)
Independent Accountants........................................................................1.4(c)
Intellectual Property.........................................................................3.11(c)
IRS............................................................................................3.9(b)
Law..............................................................................................3.13
Leased Real Property..........................................................................3.16(a)
Liens..........................................................................................3.2(a)
Material Adverse Effect...........................................................................3.1
Material Contracts...............................................................................3.17
▇▇▇▇▇▇.......................................................................................10.16(f)
▇▇▇▇▇▇ Distribution Agreement................................................................10.16(f)
▇▇▇▇▇...........................................................................................Intro
Owned Real Property...........................................................................3.16(a)
Patents.......................................................................................3.11(c)
Permitted Liens...............................................................................3.16(a)
person..........................................................................................11.10
Post-Closing Taxes.............................................................................9.1(d)
Pre-Closing Taxes..............................................................................9.1(d)
Preliminary Effective Date Balance Sheet.......................................................1.4(a)
Preliminary Effective Date Net Working Capital Calculation.....................................1.4(a)
Purchase Price....................................................................................1.2
Representative................................................................................10.6(d)
Release.......................................................................................10.6(f)
Remidial Action..............................................................................10.16(f)
Remediation Standards.........................................................................10.6(f)
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Response to a Company Environmental Condition.................................................10.6(f)
Retained Employees................................................................................6.4
Sale of the Company..............................................................................5.17
Seller..........................................................................................Intro
Seller Disclosure Schedule................................................................Article III
Seller Responsible Amount.....................................................................10.6(f)
Seller Returns.................................................................................9.1(b)
Shares..........................................................................................Intro
Straddle Tax Period............................................................................9.1(a)
subsidiaries....................................................................................11.10
Tax Benefit....................................................................................9.2(c)
Tax Indemnified Party..........................................................................9.2(e)
Tax Indemnifying Party.........................................................................9.2(e)
Tax Return....................................................................................3.10(c)
Tax Third Party Claim..........................................................................9.2(e)
Taxes.........................................................................................3.10(c)
Termination Date..................................................................................5.1
Third Party Claim.............................................................................10.1(c)
Thor Business.....................................................................................3.7
Trademarks....................................................................................3.11(c)
Unaudited Interim Balance Sheet...................................................................3.5
1999 Year End Balance Sheet.......................................................................3.5
1999 Year End Financial Statements................................................................3.5
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STOCK PURCHASE AGREEMENT, dated as of January 30, 2001 (the "Agreement"),
between Alcoa Inc., a Pennsylvania corporation (the "Seller"), and Alliant
Techsystems Inc., a Delaware corporation (the "Buyer").
WHEREAS, the Buyer desires to purchase, and the Seller desires to sell,
all of the issued and outstanding shares of common stock, par value $1.00 per
share (the "Company Common Stock" or the "Shares"), of Cordant Technologies
Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Seller
(the "Company");
WHEREAS, at or prior to the Closing, the Company shall distribute all of
the capital stock of Cordant Holding Company ("Cordant Holding"), Huck
International, Inc. ("Huck"), Howmet International Inc. ("Howmet") and ▇▇▇▇▇
Foreign Sales Corporation ("▇▇▇▇▇") and certain other assets and liabilities to
the Seller or one of its wholly owned subsidiaries; and
WHEREAS, this Agreement and the transactions contemplated hereby have been
approved by all necessary action on the part of the Seller and the Buyer.
NOW THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements hereinafter set forth, and intending to be legally
bound hereby, the Buyer and the Seller agree as follows:
ARTICLE I
SALE OF STOCK AND TERMS OF PAYMENT
Section 1.1 THE SALE. Upon the terms and subject to the conditions of this
Agreement, on the Effective Date the Seller will sell, assign, transfer and
deliver to the Buyer, and the Buyer will accept and purchase from the Seller,
100 shares of Company Common Stock, constituting all of the issued and
outstanding shares of Company Common Stock.
Section 1.2 PURCHASE PRICE. Upon the terms and subject to the conditions
contained in this Agreement, in reliance upon the representations, warranties
and agreements of the Seller contained herein, and in consideration of the
aforesaid sale, assignment, transfer and delivery of the Shares, on the
Effective Date the Buyer will pay or cause to be paid to the Seller a total of
$685,000,000 in cash (the "Purchase Price"). The Purchase Price shall be subject
to adjustment as provided in Section 1.4 hereof.
Section 1.3 MANNER OF PAYMENT. At the Closing the Buyer shall pay the
Purchase Price to the Seller by wire transfer of immediately available funds to
a bank account designated by the Seller in writing at least 3 business days
prior to the date of the Closing.
Section 1.4 PURCHASE PRICE ADJUSTMENT.
(a) Within 30 days following the Effective Date, the Seller shall,
at its expense, cause a condensed consolidated balance sheet of the Company and
the Company Subsidiary as of the Effective Date (the "Preliminary Effective Date
Balance Sheet") to be prepared and delivered to the Buyer. The Preliminary
Effective Date Balance Sheet will present fairly the consolidated financial
position of the Company and the Company Subsidiary as of the Effective Date and
will be prepared in conformity with the Audited 2000 Year End Balance Sheet
Accounting Principles, consistently applied.
The Preliminary Effective Date Balance Sheet shall be accompanied by a
calculation (the "Preliminary Effective Date Net Working Capital Calculation")
of the Effective Date Net Working Capital Amount in conformity with Exhibit A
attached hereto.
(b) Upon receipt of the Preliminary Effective Date Balance Sheet and
the Preliminary Effective Date Net Working Capital Calculation, the Buyer and
its independent public accountants shall have the right during the succeeding
30-day period to review, at the Buyer's expense, the Preliminary Effective Date
Balance Sheet and to examine and review all records and work papers and other
supporting documents used to prepare the Preliminary Effective Date Balance
Sheet. The Buyer shall notify the Seller in writing on or before the last day of
such 30-day period of any good faith objections only to those items included in
the Preliminary Effective Date Balance Sheet that affect the Preliminary
Effective Date Net Working Capital Calculation and only to the extent that they
are not prepared in conformity with the Audited 2000 Year End Balance Sheet
Accounting Principles, consistently applied, setting forth a reasonably specific
description of the Buyer's objections and the amount of each objection. If the
Buyer does not deliver such notice within such 30-day period, the Preliminary
Closing Date Balance Sheet and the Preliminary Effective Date Net Working
Capital Calculation shall be deemed to have been accepted by the Buyer.
(c) If the Buyer in good faith objects to the Preliminary Closing
Date Balance Sheet and the Preliminary Effective Date Net Working Capital
Calculation, the Seller and the Buyer shall attempt to resolve any such
objections within 10 business days following the Seller's receipt of the Buyer's
objections. If the Seller and the Buyer are unable to resolve all of their
differences within such 10-business day period, they shall jointly appoint an
impartial nationally recognized independent certified public accounting firm
(the "Independent Accountants") mutually acceptable to the Buyer and the Seller
(or, if they cannot agree on a mutually acceptable firm, they shall cause their
respective accounting firms to select such a firm) within 5 business days
following such 10 business day period to resolve only such issues that remain
disputed between the parties with respect to the calculation of the Effective
Date Net Working Capital Amount. The Seller and the Buyer shall provide to the
Independent Accountants full cooperation. The Independent Accountants shall be
instructed to reach their conclusion regarding the remaining disputed items and
the calculation of the Effective Date Net Working Capital Amount within 15
business days. Any such resolution shall be made applying the principles set
forth in this Section 1.4 and shall be conclusive and binding on the Buyer and
the Seller. The Preliminary Effective Date Balance Sheet and Preliminary
Effective Date Net Working Capital Calculation after the acceptance thereof by
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the Buyer or the resolution of all disputes in connection therewith are referred
to herein as the "Effective Date Balance Sheet" and the "Effective Date Net
Working Capital Amount," respectively.
(d) If the Effective Date Net Working Capital Amount is an amount
less than $73,000,000, then the Purchase Price shall be reduced by the amount of
such deficit. Any such adjustment in the Purchase Price pursuant to this Section
1.4(d) shall be paid by the Seller to the Buyer by wire transfer of immediately
available funds to an account designated in writing by the Buyer. Any payment
required to be paid pursuant to this Section 1.4(d) shall be made within two
business days after the Preliminary Effective Date Balance Sheet and Preliminary
Effective Date Net Working Capital Calculation become final and binding on the
parties.
(e) If the Effective Date Net Working Capital Amount is an amount
greater than $79,000,000, then the Purchase Price shall be increased by the
amount of such excess. Any such adjustment in the Purchase Price pursuant to
this Section 1.4(e) shall be paid by the Buyer to the Seller by wire transfer of
immediately available funds to an account designated in writing by the Seller.
Any payment required to be paid pursuant to this Section 1.4(e) shall be made
within two business days after the Preliminary Effective Date Balance Sheet and
Preliminary Effective Date Net Working Capital Calculation become final and
binding on the parties.
(f) For purposes of this Section 1.4, "Effective Date Net Working
Capital Amount" shall mean (x) the sum of the amounts of the line items under
the caption "Current Assets" reflected on Exhibit A minus (y) the sum of the
amounts of the line items under the caption "Current Liabilities" reflected on
Exhibit A.
(g) The fees and expenses of the Independent Accountants shall be
borne equally by the Buyer and the Seller.
ARTICLE II
THE CLOSING
Section 2.1 TIME AND PLACE OF CLOSING. Upon the terms and subject to the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") will take place at Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, New York, New York on the first
business day following the later to occur of (i) the date of expiration or
termination of all waiting periods, including any extensions thereof, which are
applicable to the transactions contemplated by this Agreement pursuant to Title
II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the rules and regulations thereunder, and (ii) the date on which
all of the conditions to each party's obligations hereunder have been satisfied
or waived; or at such other place or time or both as the parties may agree. The
date and time on which the Closing actually occurs
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and the transactions contemplated hereby become effective is referred to herein
as the "Effective Date."
Section 2.2 DELIVERIES BY THE SELLER. At the Closing the Seller will
deliver the following to the Buyer:
(i) Stock certificates representing the Shares accompanied by
stock powers duly endorsed in blank or accompanied by duly executed
instruments of transfer, with all necessary transfer tax and other
revenue stamps affixed thereto.
(ii) The resignations of all members of the Board of Directors
of the Company and the Company Subsidiary.
(iii) The stock books, stock ledgers, minute books and
corporate seals of the Company and the Company Subsidiary (such
books, ledgers and seals located at the Company or the Company
Subsidiary shall be deemed to have been delivered to the Buyer at
the Closing by virtue of the delivery of the stock certificates
referred to in Section 2.2(i)).
(iv) The certificates and other documents contemplated by
Sections 7.3 and 7.4.
(v) All other documents, instruments and writings required to
be delivered by the Seller at or prior to the Effective Date
pursuant to this Agreement or otherwise required in connection
herewith.
(vi) Copies of all leases, agreements or other contracts
("Contracts") to which the Company or the Company Subsidiary is a
party; all Company Plan documents; employee records for each of the
employees to be hired by the Buyer; all customer correspondence
relating to the operation of the Thor Business; all non-
confidential correspondence with any Governmental Entity relating to
the Thor Business; and all other records or documents (including
from Governmental Entities) that relate to the Company or the
Company Subsidiary, in each case that are not located at one of the
facilities of the Company or the Company Subsidiary at the Effective
Date.
Section 2.3 DELIVERIES BY THE BUYER. At the Closing, the Buyer will
deliver the following to the Seller:
(i) The Purchase Price due the Seller in accordance with
Section 1.3.
(ii) The certificates and other documents contemplated by
Sections 7.2 and 7.4.
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(iii) All other documents, instruments and writings required
to be delivered by the Buyer at or prior to the Effective Date
pursuant to this Agreement or otherwise required in connection
herewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth on the applicable schedule delivered by the Seller to
the Buyer prior to the execution and delivery of this Agreement (the "Seller
Disclosure Schedule"), the Seller represents and warrants to the Buyer as
follows; PROVIDED, HOWEVER, the Seller makes no representation or warranty with
respect to the Distributed Property:
Section 3.1 ORGANIZATION, STANDING AND QUALIFICATION OF THE COMPANY AND
THE COMPANY SUBSIDIARY. Each of the Company and Thor Technologies Interna
tional, Inc., a Delaware corporation (the "Company Subsidiary"), is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation, and each has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and the Company Subsidiary
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary. Section 3.1
of the Seller Disclosure Schedule sets forth a complete and correct list of all
jurisdictions in which the Company and the Company Subsidiary is qualified or
licensed to do business. As used in this Agreement, any reference to any state
of facts, event, change or effect having a "Material Adverse Effect" on or with
respect to the Company or the Buyer as the case may be, means such state of
facts, event, change or effect that has had, or could reasonably be expected to
have, a material adverse effect on the business, results of operations, assets
or financial condition of the Company and the Company Subsidiary, taken as a
whole, or the Buyer and its subsidiaries, taken as a whole as the case may be.
The Seller has delivered or made available to the Buyer copies of the
certificate of incorporation and by-laws (or other similar charter documents) of
the Company and the Company Subsidiary. Such certificates of incorporation and
by-laws (or other similar charter documents) are complete and correct and in
full force and effect, and neither the Company nor the Company Subsidiary is in
violation of any of the provisions of its certificate of incorporation or
by-laws (or other similar charter documents).
Section 3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 100
shares of Company Common Stock, all of which are issued and outstanding. All of
the Shares are owned beneficially and of record by the Seller and are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except for the transactions contemplated by this Agreement, there is no
subscription, option, warrant, call, right, agreement or commitment relating to
the issuance, sale, delivery, transfer, voting or redemption by the Company or
the Seller (including any right of conversion or exchange under
5
any outstanding security or other instrument) of the Company Common Stock or any
other shares of capital stock of the Company. The Seller has, and upon
consummation of the transactions contemplated hereby the Buyer will acquire,
good title to the Shares, free and clear of all pledges, security interests,
liens, charges, encumbrances, equities, claims and options of whatever nature
("Liens"), except for those created by the Buyer.
(b) The authorized, issued and outstanding shares of capital stock
of the Company Subsidiary is set forth in Section 3.2(b) of the Seller
Disclosure Schedule. All of the issued and outstanding shares of capital stock
of the Company Subsidiary (the "Company Subsidiary Common Stock") will be owned
beneficially and of record, as of the Effective Date, by the Company. All of the
issued and outstanding shares of Company Subsidiary Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. There is no subscription, option, warrant, call, right, agreement or
commitment relating to the issuance, sale, delivery, transfer, voting or
redemption by the Company, the Company Subsidiary or the Seller (including any
right of conversion or exchange under any outstanding security or other
instrument) of the shares of Company Subsidiary Common Stock or any other shares
of capital stock of the Company Subsidiary. The Company has indirectly, and upon
consummation of the transactions contemplated hereby the Buyer will indirectly
acquire, good title to the shares of Company Subsidiary Common Stock, free and
clear of all Liens, except for those created by the Buyer.
(c) Other than the Company Subsidiary Common Stock and except as set
forth in Section 3.2(c) of the Seller Disclosure Schedule, neither the Company
nor the Company Subsidiary has any equity or debt investment or interest,
directly or indirectly, in any person.
Section 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Seller has the
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Seller and the consummation by the Seller of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action on the part of the Seller. This Agreement has been duly and validly
executed and delivered by the Seller and, assuming the due authorization,
execution and delivery by the Buyer, constitutes a valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its terms.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in
Section 3.4 of the Seller Disclosure Schedule and except for applicable
requirements of the HSR Act and the anti-competition Laws of the European Union
or any foreign jurisdiction in which the Seller, the Company, the Company
Subsidiary, the Buyer or any of its subsidiaries has material assets or conducts
material operations, neither the execution and delivery of this Agreement by the
Seller nor the consummation by the Seller of the transactions contemplated
hereby nor compliance by the Seller with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws (or other similar charter documents) of the Company or
the Company Subsidiary, (ii) require any filing by the Seller or any of its
subsidiaries with, or permit, authorization, consent or approval of, any
federal, regional, state or local court, arbitrator, tribunal, administrative
agency or commission or other governmental or regulatory authority or agency,
whether U.S. or foreign
6
(a "Governmental Entity"), (iii) result in a breach of or default (or give rise
to any right of payment, termination, cancellation or acceleration) (whether
after the giving of notice or lapse of time or both) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other similar instrument or obligation to which the Seller,
the Company or the Company Subsidiary is a party or by which any of their
respective properties or assets may be bound, or (iv) violate any order,
judgment, writ, injunction, decree, judgment, permit, license, ordinance or Law
applicable to the Seller, the Company, the Company Subsidiary or any of their
respective properties or assets, excluding from the foregoing clauses (ii),
(iii) and (iv) such filings, breaches, defaults and violations which, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Company or prevent or substantially delay the consummation of the
transactions contemplated hereby.
Section 3.5 FINANCIAL STATEMENTS. The Seller has previously furnished to
the Buyer (i) the unaudited condensed consolidated pro forma balance sheet of
the Company as of December 31, 1999 (the "1999 Year End Balance Sheet"); and
(ii) the unaudited condensed consolidated pro forma balance sheet of the Company
and the Company Subsidiary as of September 30, 2000 (the "Unaudited Interim
Balance Sheet"). The Unaudited Interim Balance Sheet (a) was prepared in
accordance with the "Basis of Financial Statement Presentation" footnote (draft
12-14-00 pro forma, subject to revision) previously furnished to the Buyer (the
"Balance Sheet Footnotes") and (b) presents fairly in all material respects the
consolidated financial position of the Company and the Company Subsidiary as of
its date (subject to the absence of footnotes and normal year-end, audit
adjustments consistent with prior periods). The Seller has previously furnished
to the Buyer the Thor divisional income statements, balance sheets and
statements of cash flows dated November 20, 2000 included in Section 3.5 of the
Seller Disclosure Schedule which were prepared from the books and records of the
Thor Business.
Section 3.6 UNDISCLOSED LIABILITIES. Neither the Company nor the Company
Subsidiary has any liability or obligation of any nature required by generally
accepted accounting principles in the United States ("GAAP") to be reflected in
a consolidated balance sheet of the Company and the Company Subsidiary whether
or not accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances which could be expected to result in such a
liability or obligation, except liabilities or obligations (a) reflected in the
Unaudited Interim Balance Sheet or the Balance Sheet Footnotes, or (b) which,
individually or in the aggregate, could not have a Material Adverse Effect on
the Company.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.7 of the Seller Disclosure Schedule and except as otherwise
contemplated by this Agreement, since the date of the Unaudited Interim Balance
Sheet: (a) the propulsion business and operations of the Company and the Company
Subsidiary (the "Thor Business") has been conducted in all material respects in
the ordinary course, and (b) there has not been any Material Adverse Effect on
the Company.
Section 3.8 LEGAL PROCEEDINGS, ETC. Except as set forth in Section 3.8 of
the Seller Disclosure Schedule (which, with respect to each action disclosed
therein, sets forth
7
the parties, nature of the proceeding and date and method commenced), there are
no civil, criminal or administrative claims, actions, suits, proceedings,
arbitrations or investigations pending or judgments, decrees or orders
outstanding or, to the best knowledge of the Seller, threatened by or before any
Governmental Entity against or affecting the Company or the Company Subsidiary
or any of their respective properties or assets at law or in equity which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company or would prevent or substantially delay
consummation of the transactions contemplated hereby. Except as set forth in
Section 3.8 of the Seller Disclosure Schedule, as of the date hereof, neither
the Company nor the Company Subsidiary is presently engaged in any legal action
to recover money due to it or damages sustained by it. Section 3.8 of the Seller
Disclosure Schedule sets forth all material civil, criminal or administrative
claims, actions, suits, proceedings, arbitrations or investigations by or before
any Governmental Entity against or affecting the Company or the Company
Subsidiary pending as of the date of this Agreement.
Section 3.9 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 3.9 of the Seller Disclosure Schedule contains a true
and complete list of each material deferred compensation, incentive compensation
or equity compensation plan; "welfare" plan, fund or program (within the meaning
of section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each material employment, consulting, termination or
severance agreement; and each other material employee benefit plan, fund,
program, agreement or arrange ment, in each case, that is sponsored, maintained
or contributed to or required to be contributed to by the Company or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), that
together with the Company would be deemed a "single employer" within the meaning
of section 4001(b) of ERISA, or to which the Company or an ERISA Affiliate is
party, for the benefit of any employee or former employee of the Company or the
Company Subsidiary, or pursuant to which the Company or an ERISA Affiliate has
any obligation to any employee or former employee of the Company or the Company
Subsidiary (the "Company Plans"), including without limitation with respect to
the foregoing Company Plans that are maintained outside the United States
primarily for the benefit of persons who are not citizens or residents of the
United States ("Foreign Plans"). The Company and the Company Subsidiary do not
have any material liabilities or obligations with respect to Foreign Plans
(whether or not accrued, contingent or otherwise) which are not reflected in the
Unaudited Interim Balance Sheet or the Balance Sheet Footnotes to the extent
required to be so reflected.
(b) With respect to each Company Plan, the Seller has made available
to the Buyer true and complete copies thereof and any amendments thereto, any
related trust or other funding vehicle, any reports or summaries required under
ERISA or the Code and the most recent determination letter received from the
Internal Revenue Service (the "IRS") with respect to each Company Plan intended
to qualify under Section 401 of the Code.
(c) No liability under Title IV or section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of
8
incurring any material liability, other than liability for premiums due to the
Pension Benefit Guaranty Corporation (which premiums have been paid when due).
(d) With respect to each Company Plan that is a "pension" plan, fund
or program (within the meaning of section 3(1) of ERISA), the present value of
accrued benefits under such plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such plan's
actuary with respect to such plan did not exceed, as of its latest valuation
date, the then current value of the assets of such plan allocable to such
accrued benefits.
(e) There has been no "reportable event" (within the meaning of
section 4043 of ERISA and regulations and interpretations thereunder) for which
the thirty day notice period is not waived pursuant to section 4043 of ERISA or
the regulations promulgated thereunder, which has not been fully and accurately
reported in a timely fashion, as required, or which, whether or not reported or
reportable, would constitute grounds for the Pension Benefit Guaranty
Corporation to institute termination proceedings with respect to any Company
Plan, and the consummation of the transactions contemplated hereby will not
constitute such a "reportable event" or otherwise require notification to or
approval from the Pension Benefit Guaranty Corporation.
(f) No Company Plan that is subject to Title IV (a "Company Title IV
Plan") is a "multiemployer pension plan," as defined in section 3(37) of ERISA,
nor is any Company Title IV Plan a plan described in section 4063(a) of ERISA.
(g) Each Company Plan has been operated and administered
substantially in accordance with its terms and in substantial compliance with
applicable Law, including but not limited to ERISA and the Code, and each
Company Plan intended to be "qualified" within the meaning of section 401(a) of
the Code is so qualified and the trusts maintained thereunder are exempt from
taxation under section 501(a) of the Code.
(h) There has been no "prohibited transactions" (within the meaning
of section 406 of ERISA and section 4975 of the Code) or breaches of any of the
duties imposed on "fiduciaries" (within the meaning of section 3(21) of ERISA)
by ERISA with respect to the Company Plans that could result in any material
liability or material excise Tax under ERISA or the Code being imposed on the
Company or an ERISA Affiliate.
(i) Section 3.9 of the Seller Disclosure Schedule sets forth each
Company Plan which provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or the Company Subsidiary for periods extending beyond their retirement
or other termination of service, other than (i) coverage mandated by applicable
Law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary).
(j) No payments made under any Company Plan constitute "excess
parachute payments" within the meaning of Section 280G of the Code.
9
(k) The disallowance of a deduction under section 162(m) of the Code
for employee remuneration will not apply to any amount paid or payable to the
Company under any contract, Company Plan, program, arrangement or understanding
currently in effect.
(l) With respect to each group health plan benefiting any current or
former employee of the Company or an ERISA Affiliate that is subject to section
4980B of the Code, the Seller has substantially complied with (i) the continua
tion coverage requirements of section 4980B of the Code and Part 6 of Subtitle B
of Title I of ERISA and (ii) the Health Insurance Portability and Accountability
Act of 1996.
(m) Section 3.9 of the Seller Disclosure Schedule sets forth each
Company Plan which was funded through a "welfare benefit fund" (as defined in
section 419(e) of the Code) and, except as scheduled, no benefits under any
Company Plan are or at any time have been provided through a voluntary
employees' beneficiary association (within the meaning of section 501(c)(9) of
the Code) or a supplemental unemployment benefit plan (within the meaning of
section 501(e)(17) of the Code).
(n) Section 3.9 of the Seller Disclosure Schedule sets forth each
Company Plan under which, as a result of the consummation of the transactions
contemplated hereby, either alone or in combination with another event, (i) any
current or former employee or officer of the Company or any ERISA Affiliate may
become entitled to severance pay or any other payment, except as expressly
provided in this Agreement, or (ii) compensation due any such employee or
officer may become vested, increased or the time of payment thereof may become
accelerated.
(o) Except as set forth on Section 3.8 of the Seller Disclosure
Schedule, there are no pending or, to the best knowledge of the Seller,
threatened claims by or on behalf of any Company Plan, by any employee or
beneficiary covered under any such Company Plan, or otherwise involving any such
Company Plan (other than routine claims for benefits).
(p) There are no pending or scheduled audits of any Company Plan by
any Governmental Entity or any pending nor, to the best knowledge of the Seller,
threatened claims or penalties resulting from any such audit.
(q) With respect to any insurance policy providing funding for
benefits under any Company Plan, there is no material liability of the Company
or any ERISA Affiliate in the nature of a retroactive rate adjustment, loss
sharing agreement or other actual or contingent liability, nor would there be
any such material liability if such insurance policy was terminated on the date
hereof.
Section 3.10 TAXES. Except as set forth in Section 3.10 of the Seller
Disclosure Schedule:
(a) All material federal, state, local and foreign Tax Returns
relating to the business and operations of the Thor Business required to be
filed by or on
10
behalf of the Company and the Company Subsidiary and each affiliated, combined,
consolidated or unitary group of which the Company or the Company Subsidiary is
a member (an "Affiliated Group") have been timely filed or requests for
extensions have been timely filed and any such extension has been granted and
has not expired, and all such filed Tax Returns are complete and accurate in all
material respects. All material Taxes relating to the Thor Business due and
owing by the Company, the Company Subsidiary or any Affiliated Group have been
paid, or adequate reserves therefor have been established. There is no audit,
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy relating to the Thor Business with respect to any Taxes due and
owing by the Company, the Company Subsidiary or any Affiliated Group. All
assessments for Taxes relating to the Thor Business and due and owing by the
Company, the Company Subsidiary or any Affiliated Group with respect to
completed and settled examinations or concluded litigation have been paid. The
federal income Tax Returns of the Affiliated Group have been examined, and such
examina tions have been resolved, or the statute of limitations has expired, for
all taxable years through June 30, 1997. Neither the Company nor the Company
Subsidiary has any liability under Treasury Regulation Section 1.1502-6 or by
Contract or otherwise for Taxes of a material amount of any person other than
the Company and the Company Subsidiary. The Company and the Company Subsidiary
have complied in all material respects with all rules and regulations relating
to the payment and withholding of Taxes with respect to the Thor Business.
(b) Neither the Company nor the Company Subsidiary has (i) entered
into a closing agreement or other similar agreement with a taxing authority
relating to Taxes of the Thor Business with respect to a taxable period for
which the statute of limitations is still open, or (ii) granted any waiver of
any statute of limitations with respect to, or any extension of a period for the
assessment of, any U.S. federal income Tax relating to the Thor Business, in
either case, that is still outstanding. There are no Liens relating to Taxes
upon the assets of the Company or the Company Subsidiary other than Liens
relating to Taxes not yet due and payable. Neither the Company nor the Company
Subsidiary is a party to or is bound by any Tax sharing agreement, Tax indemnity
obligation or similar agreement in respect of Taxes.
(c) For purposes of this Agreement: (i) "Taxes" shall include any
and all U.S. federal, state, local and foreign taxes, including income,
alternative or add-on minimum, gross receipts, profits, lease, service, service
use, wage, employment, workers compensation, business occupation, environmental,
estimated, excise, sales, use, transfer, license, payroll, franchise, severance,
stamp, occupation, windfall profits, withholding, social security, unemployment,
disability, ad valorem, capital stock, paid in capital, recording, registration,
property, real property gains, value added, business license, custom duties and
other taxes, charges, fees, levies, imposts, duties or assessments of any kind
whatsoever, imposed or required to be withheld by any Tax authority, including
any interest, additions to Tax or penalties applicable or related thereto, and
(ii) "Tax Return" includes any return, report or similar statement (including
the attached schedules) required to be filed with respect to any Tax, including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
Section 3.11 INTELLECTUAL PROPERTY.
11
(a) The Company and the Company Subsidiary own or have valid rights
to use all items of Intellectual Property utilized in the conduct of the Thor
Business as presently conducted free and clear of all Liens with such exceptions
as could not have, individually or in the aggregate, a Material Adverse Effect
on the Company.
(b) Except as could not individually or in the aggregate have a
Material Adverse Effect on the Company, (i) neither the Company nor the Company
Subsidiary is in default (or with the giving of notice or lapse of time or both,
would be in default) under any license or other grant to use such Intellectual
Property, (ii) such Intellectual Property is not being infringed by any third
party, (iii) neither the Company nor the Company Subsidiary is infringing any
Intellectual Property of any third party, and (iv) in the last three years
neither the Company nor the Company Subsidiary has received any written claim or
notice of infringement from any third party. Except as set forth in Section
3.11(b)(i) of the Seller Disclosure Schedule, none of the Seller, the Company or
the Company Subsidiary has granted any license or other right to any other
person with respect to the Intellectual Property owned by the Company. Each
person presently or previously employed by the Company (including independent
contractors, if any) in a research and development position has executed a
confidentiality and non- disclosure agreement in substantially the same form as
the form previously provided by the Seller to the Buyer.
(c) As used in this Agreement, "Intellectual Property" means all of
the following: (i) U.S. and foreign registered and unregistered trademarks and
pending trademark applications, trade dress, service marks, logos, trade names,
brand names, corporate names, assumed names and business names and all
registrations and applications to register the same (the "Trademarks"); (ii)
issued U.S. and foreign patents and pending patent applications, invention
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, continuing patent applications, reexaminations, and extensions
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention, certificates of
registration and like statutory rights (the "Patents"); (iii) U.S. and foreign
copyrights (including, but not limited to, those in computer software and
databases), rights of publicity, and all registrations and applications to
register the same (the "Copyrights"), (iv) all categories of trade secrets as
defined in the Uniform Trade Secrets Act and under corresponding foreign
statutory and common law, including, but not limited to, business, technical and
know-how information; (v) all licenses and agreements pursuant to which the
Company or the Company Subsidiary has acquired rights in or to any Trademarks,
Patents, trade secrets, technology, know-how, Computer Software, rights of
publicity or Copyrights, or licenses and agreements pursuant to which the
Company has licensed or transferred the right to use any of the foregoing; and
(vi) all computer software, data files, source and object codes, user
interfaces, manuals and other specifications and documentation and all know-how
relating thereto (collectively, "Computer Software").
Section 3.12 ENVIRONMENTAL MATTERS.
(a) Each of the Company and the Company Subsidiary has obtained all
licenses, permits, authorizations, approvals and consents from Governmen tal
Entities which are required under any applicable Environmental Law and necessary
for it to
12
carry on its business or operations as now conducted ("Environmental Permits"),
except for such failures to have Environmental Permits which, individually or in
the aggregate, could not have a Material Adverse Effect on the Company. Each of
such Environmental Permits is in full force and effect, and each of the Company
and the Company Subsidiary is in compliance with the terms and conditions of all
such Environmental Permits and with all applicable Environmental Laws, except
for such failures to be in full force and effect or in compliance which,
individually or in the aggregate, could not have a Material Adverse Effect on
the Company.
(b) There are no Environmental Claims pending or, to the best
knowledge of the Seller, threatened against the Company or the Company
Subsidiary, or, to the best knowledge of the Seller, for which the Company or
the Company Subsidiary is liable, that, individually or in the aggregate, could
have a Material Adverse Effect on the Company.
(c) To the best knowledge of the Seller, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, threatened release or presence of
any Hazardous Material on-site or at off-site, non-owned or non-leased
locations, that could form the basis of any Environmental Claim against the
Company or the Company Subsidiary, or for which the Company or the Company
Subsidiary is liable, except for such Environmental Claims which, individually
or in the aggregate, could not have a Material Adverse Effect on the Company.
(d) To the best knowledge of the Seller, except as disclosed in the
materials previously made available to the Buyer, no site or facility now or
previously owned, operated or leased by the Company or the Company Subsidiary is
listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA") or
equivalent state statutes.
(e) No Liens have arisen under or pursuant to any Environ mental Law
on any site or facility owned, operated or leased by the Company or the Company
Subsidiary, except for such Liens which could not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and no action of any
Governmental Entity has been taken or, to the best knowledge of the Seller, is
in process which could subject any of such properties to such Liens, except for
any such action which, individually or in the aggregate, could not have a
Material Adverse Effect on the Company.
(f) To the best knowledge of the Seller, the Seller has made
available to the Buyer copies of all material environmental site assessment
reports and environmental audits prepared by or on behalf of the Company or the
Company Subsidiary and that are in the Company's, the Company Subsidiary's or
the Seller's possession relating to environmental matters of the Thor Business
or the Owned Real Property or the Leased Real Property.
(g) Except for administrative or consent orders or decrees with
Governmental Entities entered into prior to the date hereof, none of the Seller,
the Company or the Company Subsidiary is a party to any Contract with any
Governmental Entity that
13
expressly limits the right of the Seller, the Company or the Company Subsidiary
to seek reimbursement or indemnity from any Governmental Entity for all or any
portion of the cost of any Environmental Claim.
(h) As used in this Agreement:
(i)"Environmental Claim" means any written notice of any
violation of any Environmental Law or any written claim, citation,
summons or any investigation, action, lawsuit or proceeding by any
person pursuant to any Environmental Law or which seeks to impose
liability (including, without limitation, liability for investigatory
costs, cleanup costs, governmental response costs, natural resources
damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (1) the presence, or release or
threatened release, of any Hazardous Materials at any location, whether
or not owned or operated by the Company or the Company Subsidiary, or
(2) circumstances which would give rise to any violation, or alleged
violation, of any Environmental Law.
(ii) "Environmental Law" means any Law of any Governmental Entity
relating to (1) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of Hazardous Materials
or (2) the environment or to emissions, discharges, releases or threatened
releases of Hazardous Material into the environment.
(iii) "Hazardous Materials" means (1) any petroleum or petroleum
products, radioactive materials or friable asbestos; (2) any chemicals or
other materials or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," "pollutants," contaminants,"
"infectious wastes," "hazardous chemicals" or "hazardous pollutants,"
under any Environmental Law (for the avoidance of doubt, "Hazardous
Materials" includes perchlorates); and (3) pesticides.
Section 3.13 COMPLIANCE WITH LAWS. The Thor Business has not been and is
not being conducted in violation of any order, writ, injunction, decree,
judgment, permit, license, ordinance, law, statute, rule or regulation of any
Governmental Entity ("Law") (PROVIDED that no representation or warranty is made
in this Section 3.13 with respect to Environmental Laws), except (a) as
described in the Unaudited Interim Balance Sheet or the Balance Sheet Footnotes,
and (b) for violations or possible violations which could not, individually or
in the aggregate, have a Material Adverse Effect on the Company. Except as set
forth in Section 3.13 of the Seller Disclosure Schedule, the Company and the
Company Subsidiary facilities are in material compliance with OSHA Laws,
including but not limited to Process Safety Management.
Section 3.14 EMPLOYMENT-RELATED MATTERS. Neither the Company nor the
Company Subsidiary has experienced any work stoppages, strikes, collective labor
14
grievances, other collective bargaining disputes or claims of unfair labor
practices since January 1, 2000 which could, individually or in the aggregate,
have a Material Adverse Effect on the Company. There is no organizational effort
presently being made or, to the best knowledge of the Seller, threatened by or
on behalf of any labor union with respect to employees of the Company or the
Company Subsidiary, except as could not have a Material Adverse Effect on the
Company.
Section 3.15 INSURANCE. The Thor Business is covered under the Seller's
insurance policies. Coverage thereunder will terminate on the Effective Date.
There is no material claim in respect of the Thor Business by the Seller, the
Company or the Company Subsidiary under any such insurance policies as to which
coverage has been denied by the insurer or for which the Seller, the Company or
the Company Subsidiary has failed to give any notice of claim in a due and
timely fashion or as to which, after reviewing the information provided with
respect to such claim, the insurer has advised it intends to deny such claim.
All premiums due and payable under such policies have been paid and the Seller,
the Company and the Company Subsidiary have complied in all material respects
with the terms and conditions of all such insurance policies. Such insurance
policies are in full force and effect and neither the Seller nor the Company has
received any notice or threat by any insurer to revoke or rescind any such
insurance policy.
Section 3.16 REAL PROPERTY.
(a) Section 3.16 of the Seller Disclosure Schedule lists all real
property owned by the Company or the Company Subsidiary (the "Owned Real
Property") and all material real property leased by the Company or the Company
Subsidiary (the "Leased Real Property"). The Company and the Company Subsidiary
have good and marketable title to the Owned Real Property and subsisting
leasehold interests in the Leased Real Property (subject in each case to the
terms of the applicable leases, subleases and related instruments governing the
Company's interests or the Company Subsidiary's interest therein), free and
clear of all Liens other than (i) Liens listed or described in the title reports
relating to the Owned Real Property and in the leases relating to the Leased
Real Property that, in each case, have been made available to the Buyer, (ii)
mechanics', carriers', workers', repairmens' or other Liens arising or incurred
in the ordinary course of the Thor Business, (iii) Liens for Taxes, assessments
and other similar governmental charges which are not due and payable or which
may thereafter be paid without penalty, and (iv) easements, covenants, zoning,
land use, rights-of-way and other encumbrances or other restrictions and other
imperfections of title which do not materially impair the marketability or the
continued use of the property subject thereto in the Thor Business as presently
conducted. The items referred to in clauses (i) through (iv) of the immediately
preceding sentence are referred to as "Permitted Liens."
(b) The leases and subleases related to the Leased Real Property are
valid and subsisting leases or subleases which are in full force and effect. The
Seller, the Company or the Company Subsidiary is the tenant or possessor in
good- standing under the applicable leases, subleases and related instruments
governing the Company's interests or the Company Subsidiary's interests in the
Leased Real Property. To the best knowledge of the Seller, there is no event,
occurrence, condition or act which, with the giving of notice or the
15
passage of time or both, or the happening of any other event or condition, could
reasonably be expected to become a material default or event of default under
any such existing leases or subleases. The Seller is in peaceful and undisturbed
possession of the space and/or estate under each lease or sublease of which it
is a tenant. The Seller has not received any written notice of any
appropriation, condemnation or like proceeding or of any violation of any
applicable zoning Law relating to or affecting the Owned Real Property or the
Leased Real Property, and to the best knowledge of the Seller, no such
proceeding has been threatened or commenced.
Section 3.17 CONTRACTS. The Seller has made available to the Buyer true,
correct and complete copies of all Contracts that are material to the Thor
Business (the "Material Contracts"). To the best knowledge of the Seller,
neither the Company, the Company Subsidiary nor any other party to any Material
Contract is in material breach or default under any Material Contract (with or
without the lapse of time or the giving of notice, or both).
Section 3.18 WARRANTY AND PRODUCT LIABILITY CLAIMS. Section 3.18 of the
Seller Disclosure Schedule contains, as of the date hereof, a true, correct and
complete list of all warranty and liability claims made against the Company and
the Company Subsidiary since January 1, 1998 in excess of $250,000, the current
status of all such claims and the costs of all actions taken in satisfaction of
such claims.
Section 3.19 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS.
(a) None of Seller, the Company or the Company Subsidiary has
received any notice since January 1, 2000 from any customer to the effect that
such customer intends to materially reduce or cease doing business with the
Company or the Company Subsidiary.
(b) Since January 1, 2000, there have been no material cancellations
of purchase orders or Contracts by customers of the Thor Business, or shipments
of products of the Thor Business which have been returned by such customers, or
which have been authorized to be so returned, or the acceptance of which has
been rejected by such customers for any reason whatsoever except for such
returns, cancellations and rejections of items occurring in the ordinary course
of the Thor Business.
Section 3.20 GOVERNMENT CONTRACTS AND SUBCONTRACTS.
(a) With respect to each Contract, bid or proposal between the
Company or the Company Subsidiary and any Governmental Entity (a "Government
Contract"), and each Contract, bid or proposal that is a subcontract between the
Company or the Company Subsidiary and a third party relating to a Contract
between such third party and any domestic or foreign Governmental Entity (a
"Government Subcontract"), (i) the Company and the Company Subsidiary have
complied in all material respects with all terms and conditions of such
Government Contract or Government Subcontract, including all clauses, provisions
and requirements incorpo rated expressly, by reference or by operation of Law
therein, (ii) all representations and certifications executed, acknowledged or
set forth in
16
or pertaining to such Government Contract or Government Subcontract made by the
Company or the Company Subsidiary were complete and correct when made, (iii) no
Governmental Entity or prime contractor, subcontractor or other person has
notified the Company or the Company Subsidiary, in writing or, to the best
knowledge of the Seller, orally, that the Company or the Company Subsidiary has
breached or violated any Law, certification, representation, clause, provision
or requirement pertaining to such Government Contract or Government Subcontract,
(iv) neither the Company nor the Company Subsidiary has received any written
notice of termination for convenience, notice of termination for default, cure
notice or show cause notice pertaining to such Government Contract or Government
Subcontract, (v) other than in the ordinary course of the Thor Business, no cost
incurred by the Company or the Company Subsidiary pertaining to such Government
Contract or Government Subcontract has been questioned or challenged in writing,
is the subject of any audit or investigation or has been disallowed by any
Governmental Entity, and (vii) no payments due to the Company or the Company
Subsidiary pertaining to such Government Contract or Government Subcontract have
been withheld or set off, nor has any written claim been made to withhold or set
off money, and the Company and the Company Subsidiary are entitled to all
progress payments received to date with respect thereto.
(b) To the best knowledge of the Seller, neither the Company nor the
Company Subsidiary, nor any of the respective directors, officers, employees,
consultants or agents of the Company or the Company Subsidiary is or since
January 1, 1998 has been under administrative, civil or criminal investigation,
indictment or information by any Governmental Entity or any audit or
investigation by the Company or the Company Subsidiary with respect to any
alleged act or omission arising under or relating to any Government Contract or
Government Subcontract.
(c) Neither the Company nor the Company Subsidiary has been debarred
or suspended from participation in the award of contracts with any Governmental
Entity (excluding for this purpose ineligibility to bid on certain contracts due
to generally applicable bidding requirements). To the best knowledge of the
Seller, there exist no facts or circumstances that would warrant the institution
of suspension or debarment proceedings or the finding of nonresponsibility or
ineligibility on the part of the Company, the Company Subsidiary or any of their
respective directors, officers or employees. No payment has been made by or on
behalf of the Company or the Company Subsidiary in connection with any
Government Contract or Government Subcontract in violation of applicable
procurement Laws or in violation of, or requiring disclosure pursuant to, the
Foreign Corrupt Practices Act, as amended.
Section 3.21 LICENSES AND PERMITS. The Thor Business has all material
qualifications, registrations, filings, privileges, franchises, immunities,
licenses, permits, authorizations and approvals of any and all Governmental
Entities or other authorities which are used or required in order for the
Company and the Company Subsidiary to own and operate the Thor Business as
presently conducted.
17
Section 3.22 CONDITION OF TANGIBLE ASSETS. The tangible personal property
owned by the Company and the Company Subsidiary is, in the aggregate, in a
condition which is adequate to conduct the Thor Business as currently conducted.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
Section 4.1 ORGANIZATION. The Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
The Buyer has heretofore delivered to the Seller complete and correct copies of
the certificate of incorporation and by-laws (or other similar charter
documents) of the Buyer, as currently in effect.
Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The Buyer has the
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Buyer and the consummation by the Buyer of the transactions contemplated
hereby have been duly and validly authorized by all necessary action on the part
of the Buyer. This Agreement has been duly and validly executed and delivered by
the Buyer and, assuming the due authorization, execution and delivery by the
Seller, constitutes a valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms.
Section 4.3 CONSENTS AND APPROVALS; NO VIOLATION. Except for applicable
requirements of the HSR Act and the anti-competition Laws of the European Union
or any foreign jurisdiction in which the Buyer, the Seller, or the Company or
the Company Subsidiary or any of its subsidiaries has material assets or
conducts material operations, neither the execution and delivery of this
Agreement by the Buyer nor the consummation by the Buyer of the transactions
contemplated hereby nor compliance by the Buyer with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws (or other similar charter documents) of
the Buyer, (ii) require any filing by the Buyer or any of its subsidiaries with,
or permit, authorization, consent or approval of, any Governmental Entity, (iii)
result in a breach of or default (or give rise to any right of payment,
termination, cancellation or acceleration) (whether after the giving of notice
or lapse of time or both) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, agreement, lease or other similar
instrument or obligation to which the Buyer or any of its subsidiaries is a
party or by which any of their respective properties or assets may be bound, or
(iv) violate any order, judgment, writ, injunction, decree, judgment, permit,
license or Law applicable to the Buyer or any of its subsidiaries or any of
their respective properties or assets, excluding from the foregoing clauses
(ii), (iii) and (iv) such filings, breaches, defaults and violations which, in
the aggregate, could not reasonably be expected
18
to have a Material Adverse Effect on the Buyer or prevent or substantially delay
the consummation of the transactions contemplated hereby.
Section 4.4 ACQUISITION OF STOCK FOR INVESTMENT. The Buyer is acquiring
the Shares for investment and not with a view toward or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling such Shares.
Section 4.5 FINANCING. The Buyer has sufficient funds available to it to
purchase the Shares pursuant to this Agreement and to otherwise satisfy its
obligations under this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1 CONDUCT OF THE THOR BUSINESS. Except as expressly permitted by
this Agreement, during the period from the date of this Agreement to the
Effective Date or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 8.1 (the "Termination Date"), the Seller:
(a) shall cause the Company and the Company Subsidiary to conduct
its operations in all material respects according to their ordinary course of
business in substantially the same manner as heretofore conducted (including the
maintenance of capital expenditures pursuant to the Cap Ex Plan);
(b) shall cause the Company and the Company Subsidiary to use its
reasonable best efforts, to preserve intact its business organization and
goodwill, keep available the services of its current officers and other key
employees and preserve its current relationships with those persons having
significant business dealings with the Company and the Company Subsidiary;
(c) shall notify the Buyer of any emergency or other substantial
change in the normal course of the Company's or the Company Subsidiary's
businesses or operations or their respective properties and of any complaints of
or hearings (or written communications indicating that the same are threatened)
of which the Seller has knowledge before any Governmental Entity;
(d) shall not permit the Company or the Company Subsidiary to
authorize or pay any dividends on or make any distribution with respect to its
outstanding shares of capital stock, other than dividends or distributions by
the Company Subsidiary to the Company, and other than the Distribution;
(e) shall not permit the Company or the Company Subsidiary to
establish, enter into or amend any severance plan, agreement or arrangement or
any Company
19
Plan or increase the compensation payable or to become payable or the benefits
provided to its officers or employees, except (i) as may be required by
applicable Law or a Contract in existence on the date hereof, (ii) for increases
in the normal course of business consistent with past practice which shall not
be in excess of 4% or (iii) increases to non-officers in the normal course of
business consistent with past practice;
(f) shall not permit the Company or the Company Subsidiary to
authorize or announce an intention to authorize, or enter into an agreement with
respect to, any merger, consolidation or business combination (other than the
transactions contemplated by this Agreement), any acquisition of any assets or
securities, or any disposition of any assets or securities, except any such
acquisitions or dispositions of assets in the ordinary course of business
consistent with past practice that are not material in amount;
(g) shall not permit the Company or the Company Subsidiary to
propose or adopt any amendments to its certificate of incorporation or by-laws
(or other similar organizational documents);
(h) shall not permit the Company or the Company Subsidiary to issue
or authorize the issuance of, or agree to issue or sell any shares of capital
stock of any class (whether through the issuance or granting of options,
warrants, commit ments, convertible securities, subscriptions, rights to
purchase or otherwise);
(i) shall not permit the Company or the Company Subsidiary to
reclassify, combine, split, purchase or redeem any shares of its capital stock
or purchase or redeem any rights, warrants or options to acquire any such
shares;
(j) shall not permit the Company or the Company Subsidiary to (1)
incur, assume or prepay any indebtedness or any other material liabilities for
borrowed money or issue any debt securities other than incurrences and
repayments of indebtedness under the Company's credit facilities in existence on
the date of this Agreement in the ordinary course of business consistent with
past practice or (2) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person (other than in the case of the Company, the Company
Subsidiary);
(k) shall not permit the Company or the Company Subsidiary to (or
consent to any proposal by any person in which the Company has an investment to)
make or forgive any loans, advances or capital contributions to, or investments
in, any other person (including any intercompany loans, advances or capital
contributions to, or investments in, any affiliate) other than in the case of
the Company, the Company Subsidiary and other than advances to employees of the
Company or the Company Subsidiary in the ordinary course of business in
accordance with the Company's or the Company Subsidiary's established policies;
(l) shall not permit the Company or the Company Subsidiary to (1)
enter into any material lease or license or otherwise subject to any material
Lien any of its properties or assets (including securitizations), other than in
the ordinary course of business
20
consistent with past practice; (2) modify or amend in any material respect, or
terminate, any of its material Contracts (except (x) with respect to
"classified" Contracts or (y) in the ordinary course of business); (3) waive,
release or assign any rights that are material to the Company and the Company
Subsidiary, taken as a whole; or (4) permit any insurance policy naming it as a
beneficiary or a loss payable payee to lapse, be cancelled or expire unless a
new policy with substantially identical coverage is in effect as of the date of
lapse, cancellation or expiration;
(m) shall not permit the Company or the Company Subsidiary to change
any of the financial accounting methods used by it unless required by generally
accepted accounting principles of the applicable country or change in applicable
Law;
(n) shall not permit the Company or the Company Subsidiary to
approve, make or commit to make any capital expenditure which will require
future payments aggregating in excess of $1,000,000, other than the capital
expenditures contemplated in the financial presentation presented to the Seller
in the "Thiokol Propulsion Management Presentation" on December 5, 2000 (the
"Cap Ex Plan"), and, in all cases, the Seller shall consult with the Buyer prior
to making or committing in excess of $1,000,000 for any capital expenditure;
(o) shall not permit the Company or the Company Subsidiary to enter
into any transaction or Contract that requires or would result in the receipt of
monies in excess of $25,000,000, and, in all cases the Seller shall notify the
Buyer prior to entering into any transaction or Contract or modify, amend or
extend any existing Contract, in each case that requires or would result in the
receipt of monies in excess of $2,000,000;
(p) shall not abandon or otherwise fail to pursue in all reasonable
respects any currently open or non-accepted bid involving the payment or receipt
of monies in excess of $1,000,000; and
(q) shall not permit the Company or the Company Subsidiary to agree,
in writing or otherwise, to take any of the foregoing actions or take any action
which would (1) make any representation or warranty in Article III hereof untrue
or incorrect in any material respect, or (2) result in any of the conditions to
the transactions contemplated by this Agreement which are set forth in Article
VII hereof not being satisfied.
Notwithstanding the provisions of this Section 5.1, nothing in this
Agreement shall be construed or interpreted to prevent the Company and the
Company Subsidiary from (i) engaging in any other transaction incidental to
the normal cash management procedures of the Company and the Company
Subsidiary not involving the incurrence of any liability by the Company or
the Company Subsidiary, including, without limitation, short-term investments
in time deposits, certificates of deposit and banker's acceptances made in
the ordinary course of business consistent with past practice, (ii) engaging
in any transaction involving a capital contribution from the Seller to the
Company and then from the Company to Cordant Holding of cash or any
intercompany account receivables or notes receivable due from Huck or Howmet,
and (iii) terminating any Tax sharing agreement between the Company and the
21
Company Subsidiary on the one hand and the Seller or any subsidiary of the
Seller on the other hand on or prior to the Closing.
Section 5.2 NAME CHANGES. No later than 30 days following the Effective
Date, the Buyer shall cause the Company to amend the certificate of
incorporation of the Company to remove the word "Cordant" or any similar name or
reference thereto. The new corporate name of the Company adopted by the Buyer
shall not contain any word or words confusingly similar to "Alcoa," "Cordant,"
"Huck" or "Howmet." No later than six months following the Effective Date, the
Buyer shall remove the marks and names "Alcoa," "Cordant," "Huck" or "Howmet,"
and any other words, names or symbols proprietary to the Seller from all
tangible and intangible properties, real and personal, acquired by the Buyer
hereunder and shall have no right to use any such names, words or symbols.
Section 5.3 ACCESS TO INFORMATION.
(a) Except for government "classified" information or as limited by
applicable Law (including, without limitation, antitrust Laws) or the terms of
any confidentiality agreement or provision in effect on the date of this
Agreement, the Company shall (and shall cause the Company Subsidiary to) afford
to the officers, employees, accountants, counsel and other authorized
representatives of the Buyer (including the Buyer's lenders and their counsel)
reasonable access during normal business hours upon reasonable notice,
throughout the period prior to the earlier of the Effective Date and the
Termination Date, to its properties, offices, facilities, employees, Contracts,
commitments, books and records and shall (and shall cause the Company Subsidiary
to) furnish to the Buyer such additional financial and operating data and Tax
and other information as to the Thor Business and properties as the Buyer may
from time to time reasonably request. Promptly after the date hereof, the
Company shall afford access during normal business hours to the Company's
facilities located at the Company's Northern Utah Manufacturing Area and Elkton,
Maryland facilities described in Section 3.16 of the Seller Disclosure Schedule
(each, a "Company Facility") to the Buyer's environmental consultants (who shall
be reasonably acceptable to the Seller) for the purpose of performing a Phase I
environmental site assessment; PROVIDED, that the Buyer's environmental
consultants shall not drill, move, remove or sample any soil, groundwater or
other surface or subsurface condition at any Company Facility. The Buyer will
bear the cost of the Phase I activities and will cause its environmental
consultants to perform their activities at each Company Facility in a
workmanlike manner and in accordance with all applicable professional standards.
The Buyer's environmental consultants shall be accompanied by such
representatives of the Seller and the Seller may designate. The Buyer and the
Seller will use their reasonable best efforts to minimize any disruption to the
Thor Business which may result from the requests for data and information
hereunder. No investigation pursuant to this Section 5.3(a) shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(b) The Buyer will hold any information provided under this Section
5.3 that is non-public in confidence to the extent required by, and in
accordance with, the provisions of the letter, dated November 17, 2000 between
the Seller and the Buyer (the "Confidentiality Agreement").
22
Section 5.4 REASONABLE BEST EFFORTS; FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this Agreement and
applicable Law, each of the parties shall act in good faith and use reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable. Without limiting the foregoing, the parties shall, and use
reasonable best efforts to cause their respective subsidiaries, directors,
officers, employees, agents, attorneys, accountants and representatives, to (i)
obtain all consents, approvals, waivers, licenses, permits, authorizations,
registrations, qualifications or other permissions or actions by, and give all
necessary notices to, and make all filings with and applications and submissions
to, any Governmental Entity or other person necessary in connection with the
consummation of the transactions contemplated by this Agreement as soon as
reasonably practicable; (ii) provide all such information concerning such party,
its subsidiaries and its officers, directors, employees, partners and affiliates
as may be necessary or reasonably requested in connection with any of the
foregoing; (iii) avoid the entry of, or have vacated or terminated, any decree,
order, or judgment that would restrain, prevent, or delay the consummation of
the transactions contemplated by this Agreement, including but not limited to
defending through litigation on the merits any claim asserted in any court by
any person; (iv) take any and all reasonable steps necessary to avoid or
eliminate every impediment under any antitrust, competition or trade regulation
law that is asserted by any Governmental Entity with respect to the transactions
contemplated by this Agreement so as to enable the consummation of such
transactions to occur as expeditiously as possible; and (v) divest such plants,
assets or businesses of the Company or the Company Subsidiary (including
entering into customary ancillary agreements on commercially reasonable terms
relating to any such divestiture of such assets or businesses) as may be
required in order to avoid the filing of a lawsuit by any Governmental Entity
seeking to enjoin the consummation of the transactions contemplated by this
Agreement, or the entry of, or to effect the dissolution of, any injunction,
temporary restraining order, or other order in any suit or proceeding, which
would otherwise have the effect of preventing or delaying the consummation of
the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that the
Buyer shall not be required to take any actions in connection with, or agree to,
any hold separate order, sale, divestiture or disposition of plants, assets and
businesses of (x) the Buyer or any of its subsidiaries or (y) of the Company or
the Company Subsidiary that accounted in the aggregate for more than $125
million in revenues in the Company's 2000 fiscal year. At the request of the
Buyer, the Seller shall agree to divest, hold separate or otherwise take or
commit to take any action that limits its freedom of action with respect to, or
its ability to retain, any of the businesses, product lines or assets of the
Company or the Company Subsidiary, PROVIDED that any such action shall be
conditioned upon the consummation of the transactions contem plated hereby.
Prior to making any application to or filing with a Governmental Entity or other
entity in connection with this Agreement (other than filing under the HSR Act),
each party shall provide the other party with drafts thereof and afford the
other party a reasonable opportunity to comment on such drafts.
(b) The Buyer and the Seller shall keep each other reasonably
apprised of the status of matters relating to completion of the transactions
contemplated
23
hereby, including promptly furnishing the other with copies of notices or other
communications received by such party or any of such party's subsidiaries, from
any third party and/or Governmental Entity with respect to the transactions
contemplated by this Agreement.
Section 5.5 DISCLOSURE SUPPLEMENTS. From time to time prior to the
Effective Date, the Seller will promptly supplement or amend the Seller
Disclosure Schedule referred to in Article III with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Seller Disclosure Schedule or which is necessary to correct any information in a
schedule or in any representation and warranty of the Seller which has been
rendered inaccurate thereby. From time to time prior to the Effective Date, the
Buyer will promptly submit to the Seller and, if necessary, supplement or amend
a disclosure schedule relating to the representations and warranties of the
Buyer contained in Article IV (the "Buyer Disclosure Schedule") with respect to
any matter hereafter arising which, if existing or occurring at or prior to the
date of this Agreement, would have been required to be set forth or described in
a Buyer Disclosure Schedule or which is necessary to correct any information in
such schedule or in any representa tion and warranty of the Buyer which has been
rendered inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Seller contained in Article III and the
accuracy of the representations and warranties of the Buyer contained in Article
IV in order to determine the fulfillment of the conditions set forth in Sections
7.3(a) and 7.2(a) or to determine the Buyer's rights to be indemnified as set
forth in Article X below, respectively, the Seller Disclosure Schedule delivered
by the Seller and the Buyer Disclosure Schedule delivered by the Buyer shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude any information contained in any
subsequent supplement or amendment thereto.
Section 5.6 PUBLIC ANNOUNCEMENTS. The Buyer and the Seller agree that
neither one of them will issue any press release or otherwise make any public
statement or respond to any press inquiry with respect to this Agreement or the
transactions contemplated hereby without the prior approval of the other party
(which approval will not be unreasonably withheld or delayed), except as may be
required by applicable Law or the rules of any stock exchange on which such
party's securities are listed.
Section 5.7 SALES AND TRANSFER TAXES AND FEES.
(a) The Buyer and the Seller agree that all sales and transfer Taxes
incurred in connection with this Agreement and the transactions contemplated
hereby will be borne equally by the Buyer and the Seller; the Buyer and the
Seller will, at their own expense, timely file all necessary Tax Returns and
other documentation with respect to all such sales, transfer and recording Taxes
for which it has the responsibility under applicable Law to file.
(b) The Buyer and the Seller shall use their reasonable best efforts
to minimize all transfer Taxes that may be imposed in respect of the
transactions contemplated by or pursuant to this Agreement; PROVIDED, that
neither party shall be required to take any action which it reasonably believes
to be in its detriment.
24
Section 5.8 INTERCOMPANY ACCOUNTS. As of the Effective Date, the Seller
shall have capitalized the balances of all intercompany payables and receivables
between the Company or the Company Subsidiary and the Seller or any of the
Seller's other affiliates as of the Effective Date, and such balances shall be
deemed settled and paid in full.
Section 5.9 NON-COMPETITION; NON-SOLICITATION.
(a) During the three years immediately following the Effective Date
(the "Covenant Period"), the Seller will not, and will cause its subsidiaries
not to, directly or indirectly, anywhere in the world:
(i) engage or have any other interest (whether as owner,
purchaser, stockholder, employee, broker, agent, principal, trustee,
corporate officer, director, consultant, lender or in any other
capacity) in any propulsion business which is competitive with the
Thor Business or the Seller's propulsion business as conducted on or
prior to the Effective Date; PROVIDED, HOWEVER, that the Seller may
directly or indirectly have an ownership interest of less than 5% in
any person which engages in any such competitive business; and
PROVIDED, FURTHER, that the Seller may acquire any person or
business (whether through the acquisition of equity interests,
assets or otherwise) or directly or indirectly have an ownership
interest in any person or business which derives no more than 30% of
its consolidated revenues from such competitive business; or
(ii) employ, solicit or entice away any employee, director,
officer of the Company or the Company Subsidiary or any of their
affiliates, it being understood, however, that the Seller and its
affiliates may engage in general solicitations not specifically
directed at employees of the Company or the Company Subsidiary or
may employ any such person who approaches the Seller or any of its
affiliates without having been solicited or enticed away from the
Company or the Company Subsidiary.
(b) If any provision contained in this Section shall for any reason
be held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Section, but this Section shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable Law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable Law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable Law.
The Seller acknowledges that the Buyer would be irreparably harmed by any breach
of this Section and that there would be no adequate remedy at Law or in damages
to compensate
25
the Buyer for any such breach. The Seller agrees that the Buyer shall be
entitled to injunctive relief requiring specific performance by the Seller of
this Section, and the Seller consents to the entry thereof.
Section 5.10 EXPORT MATTERS.
(a) The parties acknowledge that the products, services and
technical information provided under this Agreement may be subject to U.S.
export Laws and regulations and any use or transfer of such products, services
and technical information must be authorized under those regulations (U.S.
Export Administration Regulations, 15 C.F.R. et seq.). Each party will not use,
distribute, transfer or transmit the products, services and technical
information (even if incorporated into other products) obtained from the other
party pursuant to this Agreement except in compliance with U.S. export
regulations.
(b) Regardless of whether the export or re-export of products,
services and technical information provided hereunder is restricted under
applicable Laws, the parties assure one another that they each will not, without
the other's prior written consent, directly or indirectly, export or re-export
any such products, services and technical information obtained hereunder to any
other country which is in the then current list of prohibited countries
specified in the U.S. export Laws and regulations. For the purposes of this
Section 5.10, "export" and "re-export" mean transferring or releasing to another
country or to a national of another country (wherever that person is located) by
any means, including physical, electronic or otherwise.
Section 5.11 NONASSIGNABLE CONTRACTS, LEASES AND PERMITS. In case of any
Contracts, leases or permits that are not by their terms assignable or that
require consent of a third party in connection with the transaction contemplated
by this Agreement, the Seller will use its reasonable best efforts to obtain or
cause to be obtained in writing prior to the Effective Date any consents
necessary to convey the benefits therewith; PROVIDED that such assistance will
not be deemed to require any expenditure of money on the part of the Buyer,
whether before or after the Effective Date. If the consent of any third party is
not obtained prior to the Effective Date and the Closing occurs notwithstanding
the failure to obtain such consent, the Seller will use its reasonable best
efforts to assist the Buyer to obtain such consent promptly. During the period
in which the applicable Contract, lease or permit is not capable of being
assigned to the Buyer due to the failure to obtain any required consent, the
Seller will use its reasonable best efforts to make such arrangements at the
Buyer's expense as may be necessary to enable the Buyer to receive all the
economic benefits under such Contract, lease or permit accruing on and after the
Effective Date (including through a sub-contracting, sub-licensing,
sub-participation or sub-leasing arrangement, or an arrangement under which the
Seller would enforce such Contract, lease or permit for the benefit of the
Buyer, with the Buyer, to the extent permissible, assuming the Seller's
executory obligation and any and all rights of the Seller against the other
party thereto). If the approval of the other party to such Contract, lease or
permit is obtained, such approval will, as between the Seller and the Buyer,
constitute a confirmation (automati cally and without further action of the
parties) that such Contract, lease or permit is assigned to the Buyer as of the
Effective Date, and (automatically and without further action of the parties)
that the liabilities with respect to the Contract, lease or permit are assumed
as of the Effective Date.
26
Section 5.12 DISTRIBUTION OF PROPERTY.
(a) Prior to the Closing, the Seller will cause the Company and/or
the Company Subsidiary to distribute all of the outstanding capital stock of
Cordant Holding, Huck, Howmet and ▇▇▇▇▇ and the assets and liabilities
identified on Section 5.12 of the Seller Disclosure Schedule to the Seller or
one of the wholly owned subsidiaries of the Seller (other than the Company)
(such capital stock and assets and liabilities are collectively referred to
herein as the "Distributed Property," and such transaction shall be referred to
herein as the "Distribution"). The Distribution will not adversely affect the
ability of the Company to conduct the Thor Business as currently conducted
immediately following the Effective Time.
(b) Prior to the Closing, the Seller will cause Cordant Holding to
distribute all of the outstanding capital stock of the Company Subsidiary to the
Company (the "Company Subsidiary Distribution").
(c) In the event that the Seller requests reasonably in advance of
the Closing that the sale of the Thor Business be restructured to include the
transfer of Cordant Holding to the Buyer, the Buyer will cooperate with the
Seller to accomplish such transaction; PROVIDED that the Buyer and the Seller
agree as to the terms and conditions of such transaction.
Section 5.13 AUDITED 2000 YEAR END BALANCE SHEET. The Seller will at its
expense cause an audited condensed consolidated pro forma balance sheet of the
Company and the Company Subsidiary as of December 31, 2000 to be prepared and
delivered to the Buyer (the "Audited 2000 Year End Balance Sheet"). The Audited
2000 Year End Balance Sheet will, to the extent practicable, be prepared in
accordance with GAAP (such accounting policies and procedures used in preparing
the Audited 2000 Year End Balance Sheet, the "Audited 2000 Year End Balance
Sheet Accounting Principles").
Section 5.14 TRANSITIONAL SERVICES AGREEMENT. To the extent the Seller or
the Buyer determines that it is reasonably desirable or necessary for one to
provide, among other things, payroll and employee benefit administrative
services to the other following the Closing with respect to any of the employees
of the Company or any of its subsidiaries prior to the Closing, the Buyer and
the Seller agree to negotiate in good faith the terms and conditions of such a
transitional services agreement.
Section 5.15 CERTAIN LITIGATION FOLLOWING THE CLOSING. At or prior to the
Closing, the Company shall take all action necessary and appropriate to convey
and assign any and all of its rights and obligations in respect of the
litigation identified in Section 5.15 of the Seller Disclosure Schedule and the
Seller shall take all action necessary and appropriate to accept and assume all
such rights and obligations. In furtherance and not in limitation of any other
provision of this Agreement, from and after the Effective Date, the Seller and
its representatives shall have reasonable access to the books and records of the
Company and the Company Subsidiary (including the right to make extracts
thereof) and to employees of the Company and the Company Subsidiary (including
for purposes of providing depositions and testimony) in connection with the
litigation set forth on Section 5.15 of the Seller
27
Disclosure Schedule; PROVIDED, HOWEVER, that the Seller shall reimburse the
Buyer for its reasonable out-of-pocket expenses incurred in connection with the
provision of access in accordance with this Section 5.15.
Section 5.16 COOPERATION FOR INSURANCE RECOVERY. The Seller agrees to
cooperate with and to assist the Buyer, the Company or the Company Subsidiary,
as the case may be, in recovering on behalf of the Buyer, the Company or the
Company Subsidiary the proceeds under any insurance policies of the Seller under
which the Buyer, the Company or the Company Subsidiary are insured.
Section 5.17 NO SOLICITATION. From the date hereof until the earlier of
the Closing and the Termination Date, except with respect to the transactions
contemplated by this Agreement, the Seller will not and will not permit any of
its subsidiaries to, and will use its reasonable best efforts to cause any of
their respective officers, directors, employees and advisors not to, directly or
indirectly, solicit or participate in any discussions or negotiations with
respect to the sale of the Company or the Company Subsidiary, whether by merger,
purchase of assets or stock or any combination thereof (a "Sale of the
Company"). The Seller will immediately cease all discussions and negotiations
with respect to a Sale of the Company, and will promptly request the return or
destruction of all confidential information previously distributed to all
parties interested in a Sale of the Company (other than the Buyer) pursuant to
the terms of any confidentiality agreement or otherwise.
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFITS
Section 6.1 CONTINUED EMPLOYMENT. The Buyer will cause the Company to, and
the Company shall, maintain and continue the employment of the current officers
and employees of the Company and the Company Subsidiary on and after the
Closing, on substantially the same terms and conditions maintained prior to the
Closing.
Section 6.2 EMPLOYEE PLANS
(a) The Buyer agrees that the Company will continue to be the plan
sponsor of all Company Plans set forth in Section 3.9 of the Seller Disclosure
Schedule on and after the Closing, including any such plan covering former or
retired employees of the Company and the Company Subsidiary, whether funded or
unfunded; and shall retain all liabilities and obligations arising under or
relating to such plans.
(b) From the Effective Date to December 31, 2002, the Company shall
provide employees of the Company and the Company Subsidiary with employee
benefits which are, in the aggregate, no less favorable than the employee
benefits
28
provided under the plans and arrangements maintained for such employees by the
Company and the Company Subsidiary in effect on the date hereof.
(c) Without limiting the generality of the foregoing, for the period
through and including December 31, 2002, the Company shall provide to employees
whose employment is terminated following the Closing with severance benefits on
terms and conditions which are not less favorable than those provided under the
severance plan of the Company in effect on the date hereof.
Section 6.3 RETAINED EMPLOYEES AND RETAINED COMPANY PLANS. Notwithstanding
anything to the contrary contained in this Agreement, the employment of certain
employees of the Company (the "Retained Employees") set forth in Section 6.3(a)
of the Seller Disclosure Schedule shall be transferred to the Seller and the
Seller shall offer positions to the Retained Employees prior to the Closing.
Coincident with the Retained Employees transferring employment to the Seller,
certain assets and liabilities of the Company Plans and the Company with respect
to the Retained Employees shall be transferred to the Seller or to specified
employee benefit plans of the Seller in accordance with Section 6.3(b) of the
Seller Disclosure Schedule. In the event the Seller elects option (a), as set
forth in the section entitled "Rabbi Trust" in Section 6.3(b) of the Seller
Disclosure Schedule, prior to the Effective Date the Seller shall assume the
Covered Liabilities (as defined in Section 6.3(b) of the Seller Disclosure
Schedule) under, and hereby indemnifies Buyer from and against any and all
claims, losses or liabilities with respect to, such Covered Liabilities.
ARTICLE VII
CLOSING CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The respective obligations of each party to
effect the transactions contemplated hereby shall be subject to the fulfillment
on or prior to the Effective Date of the following conditions:
(a) No statute, rule, regulation, executive order, decree, ruling or
injunction (temporary, preliminary or permanent) shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which is in effect
on the Effective Date and which prohibits the consummation of the transactions
contemplated hereby substantially on the terms contemplated hereby or has the
effect of making the acquisition of the Shares by the Buyer illegal.
(b) Each of the Seller and the Buyer and any other person (as
defined in the HSR Act) required in connection with the transactions
contemplated hereby to file a Notification and Report Form for Certain Mergers
and Acquisitions with the Department of Justice and the Federal Trade Commission
pursuant to the HSR Act shall have made such
29
filing and all applicable waiting periods with respect to each such filing
(including any extensions thereof) shall have expired or been terminated.
Section 7.2 CONDITIONS TO THE OBLIGATIONS OF THE SELLER TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The obligations of the Seller to effect the
transactions contemplated hereby shall be further subject to the fulfillment at
or prior to the Effective Date of the following conditions, any one or more of
which may be waived by the Seller:
(a) The representations and warranties of the Buyer set forth in
this Agreement that are qualified by materiality or Material Adverse Effect
shall be true and correct, and the representations and warranties of the Buyer
set forth in this Agreement that are not so qualified shall be true and correct
in all material respects, in each case, as if such representations and
warranties were made as of such time on or after the date of this Agreement and
as of the Effective Date (except to the extent such representations and
warranties speak as of a specific date or as of the date hereof, in which case
such representations and warranties shall be so true and correct or true and
correct in all material respects, as the case may be, as of such specific date
or as of the date hereof, respectively).
(b) The Buyer shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Effective Date.
(c) The Buyer shall have furnished a certificate of an executive
officer of the Buyer to evidence compliance with the conditions set forth in
Sections 7.2(a) and (b) of this Agreement.
Section 7.3 CONDITIONS TO THE OBLIGATIONS OF THE BUYER TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The obligations of the Buyer to effect the
transactions contemplated hereby shall be further subject to the fulfillment at
or prior to the Effective Date of the following conditions, any one or more of
which may be waived by the Buyer:
(a) The representations and warranties of the Seller set forth in
this Agreement that are qualified by materiality or Material Adverse Effect
shall be true and correct, and the representations and warranties of the Seller
set forth in this Agreement that are not so qualified shall be true and correct
in all material respects, in each case, as if such representations and
warranties were made as of such time on or after the date of this Agreement and
as of the Effective Date (except to the extent such representations and
warranties speak as of a specific date or as of the date hereof, in which case
such representations and warranties shall be so true and correct or true and
correct in all material respects, as the case may be, as of such specific date
or as of the date hereof, respectively).
(b) The Seller shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Effective Date.
30
(c) The Seller shall have furnished a certificate of an executive
officer of the Seller to evidence compliance with the conditions set forth in
Sections 7.3(a) and (b) of this Agreement.
(d) The Distribution and the Company Subsidiary Distribu tion shall
have been consummated.
(e) The Seller shall have delivered to the Buyer the Audited 2000
Year End Balance Sheet at least five business days prior to the Effective Date.
Section 7.4 CERTIFICATES. Each of the parties hereto will furnish to the
other party such certificates of such party's officers or others and such other
documents to evidence fulfillment of the conditions set forth in this Article
VII as the other party may reasonably request.
ARTICLE VIII
TERMINATION AND ABANDONMENT
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Date:
(a) by mutual consent of the Seller and the Buyer;
(b) by the Seller or the Buyer at any time after September 30, 2001,
if, through no fault of the party seeking termination, the Closing shall not
have occurred;
(c) by the Buyer, if there has been a material violation or breach
by the Seller of any covenant, representation or warranty contained in this
Agreement which would give rise to the failure of any condition to the
obligations of the Buyer and cannot be cured or has not been cured within 30
days after the giving of notice by the other party and such violation or breach
has not been waived by the Buyer;
(d) by the Seller, if there has been a material violation or breach
by the Buyer of any agreement, representation or warranty contained in this
Agreement which would give rise to the failure of any condition to the
obligations of the Seller and cannot be cured or has not been cured within 30
days after the giving of notice by the other party and such violation or breach
has not been waived by the Seller; or
(e) by either the Seller or the Buyer, if a statute, rule,
regulation, executive order, decree, ruling or injunction (temporary,
preliminary or permanent) shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits the consummation of the
transactions contem plated hereby substantially on the terms
31
contemplated hereby or has the effect of making the acquisition of the Shares by
the Buyer illegal.
Section 8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement pursuant to Section 8.1, written notice thereof
shall forthwith be given to the other party hereto specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
terminate and be of no further force and effect (except for the provisions of
Sections 5.3(b) and 11.2 and this Section 8.2), and there shall be no other
liability on the part of either of the parties hereto or their respective
officers or directors except liability arising out of a willful breach of this
Agreement prior to such termination.
ARTICLE IX
CERTAIN TAX MATTERS
Section 9.1 TAX MATTERS.
(a) The Buyer shall timely prepare and file (or cause such
preparation and filing) with the appropriate Tax authorities all Tax Returns
(other than any Tax Returns for which the Seller has filing responsibility under
Section 9.1(b) of this Agreement) with respect to the Thor Business, the Company
and the Company Subsidiary for all taxable periods that end after the Effective
Date (the "Buyer Returns"), and will pay (or cause to be paid) all Taxes due
with respect to the Buyer Returns. The Buyer shall make available to the Seller
any Buyer Returns and related workpapers with respect to any taxable period that
begins on or before and ends after, the Effective Date (each a "Straddle Tax
Period") for the Seller's review and comment at least 25 business days prior to
the respective due dates of such Buyer Returns, and the Seller shall provide the
Buyer with the Seller's comments no later than 10 business days before the
respective due dates of such Buyer Returns. Such Buyer Returns shall be subject
to the Seller's approval, such approval not to be unreasonably withheld, before
the applicable Buyer Return is filed with the appropriate Tax authority.
(b) The Seller shall timely prepare and file (or cause such
preparation and filing) with the appropriate Tax authorities all Tax Returns
(including any Consolidated Income Tax Returns) with respect to the Thor
Business, the Company and the Company Subsidiary for taxable periods that end on
or before the Effective Date (the "Seller Returns"), and will pay (or cause to
be paid) all Taxes due with respect to the Seller Returns.
(c) From and after the Effective Date, the Buyer and its affiliates
(including the Company and the Company Subsidiary) will not file any amended Tax
Return, carryback claim, or other adjustment request with respect to the Thor
Business, the Company or the Company Subsidiary for any Tax period that includes
or ends on or before the Effective Date unless the Seller consents in writing;
PROVIDED, HOWEVER, that with respect to any Straddle Period, such consent shall
not be unreasonably withheld, provided the Buyer has
32
made arrangements to the reasonable satisfaction of the Seller to make the
Seller whole for any detriment or cost incurred (or to be incurred) by the
Seller as a result of such amended Tax Return, carryback claim or other
adjustment request.
(d) Not later than 5 days after the due date of any Buyer Return
that is required to be filed with respect to a Straddle Period, the Seller shall
pay (or cause to be paid) to the Buyer cash in an amount equal to the amount of
Pre-Closing Taxes shown as due on such Buyer Return as determined pursuant to
this Section 9.1(d). From and after the Effective Date, no later than 5 days
after receiving written notice, the Buyer or the Seller shall reimburse the
other party for Taxes for which the Buyer or the Seller is liable to the other
party pursuant to Sections 9.2(b) and 9.2(a), respectively. For purposes of this
Agreement, in the case of any Taxes of the Company or the Company Subsidiary
that are payable with respect to any Straddle Period, the portion of any such
Taxes that constitutes "Pre-Closing Taxes" shall: (i) in the case of Taxes that
are either (x) based upon or related to income or receipts or (y) imposed in
connection with any sale, transfer or assignment or any deemed sale, transfer or
assignment of property (real or personal, tangible or intangible) be deemed
equal to the amount that would be payable if the Tax year ended on the Effective
Date and (ii) in the case of Taxes (other than those described in clause (i))
imposed on a periodic basis with respect to the business or assets of the
Company or the Company Subsidiary or otherwise measured by the level of any
item, be deemed to be the amount of such Taxes for the entire Straddle Period
(or, in the case of such Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding Tax period) multiplied by a fraction
the numerator of which is the number of calendar days in the portion of the
Straddle Period ending on the Effective Date and the denominator of which is the
number of calendar days in the entire Straddle Period. For purposes of clause
(i) of the preceding sentence, any exemption, deduction, credit or other item
that is calculated on an annual basis shall be allocated to the portion of the
Straddle Period ending on the Effective Date on a pro rata basis determined by
multiplying the total amount of such item allocated to the Straddle Period times
a fraction, the numerator of which is the number of calendar days in the portion
of the Straddle Period ending on the Effective Date and the denominator of which
is the number of calendar days in the entire Straddle Period. In the case of any
Tax based upon or measured by capital (including net worth or long-term debt) or
intangibles, any amount thereof required to be allocated under this Section
9.1(d) shall be computed by reference to the level of such items on the
Effective Date. The parties hereto will, to the extent permitted by applicable
Law, elect with the relevant Tax authority to treat a portion of any Straddle
Period as a short taxable period ending as of the close of business on the
Effective Date. For purposes of this Agreement, "Post-Closing Taxes" shall
include any Taxes of the Company or the Company Subsidiary that are payable with
respect to a Straddle Period, except for the portion of any such Taxes that
constitutes Pre-Closing Taxes.
(e) The Seller and the Buyer shall reasonably cooperate in preparing
and filing all Tax Returns with respect to the Thor Business, the Company or the
Company Subsidiary, including maintaining and making available to each other all
records reasonably necessary in connection with Taxes of the Thor Business, the
Company or the Company Subsidiary and in resolving all disputes and audits with
respect to all taxable periods relating to Taxes of the Thor Business, the
Company and the Company Subsidiary. The Buyer shall prepare (or cause such
preparation) within 45 days after the Effective Date, usual
33
and customary Consolidated Income Tax Return reporting packages with respect to
the Company and the Company Subsidiary for the taxable period beginning January
1, 2000 and ending as of December 31, 2000 and the taxable period beginning
January 1, 2001 and ending as of the Effective Date. The Seller shall use its
reasonable efforts to cause such reporting package for the taxable period
beginning January 1, 2000 and ending as of December 31, 2000, to be completed on
or before the Effective Date.
(f) For a period of six years after the Effective Date, the Seller
and its representatives shall have reasonable access to the Company's and the
Company Subsidiary's books and records (including, without limitation, the right
to make extracts thereof) to the extent that such books and records relate to
Taxes and to the extent that such access may reasonably be required by the
Seller in connection with matters relating to or affected by the operation of
the Thor Business (including the Company Subsidiary) prior to the Effective
Date. Such access shall be afforded by the Buyer upon receipt of reasonable
advance notice and during normal business hours. If the Buyer shall desire to
dispose of any of such books and records prior to the expiration of such
six-year period, the Buyer shall, prior to such disposition, give the Seller a
reasonable opportunity, at the Seller's expense, to segregate and remove such
books and records as the Seller may select. In addition to the foregoing, the
parties agree to cooperate with each other with respect to the defense of any
claims or litigation relating to Taxes pertaining to the Thor Business, the
Company or the Company Subsidiary, PROVIDED that the party requesting such
cooperation shall reimburse the other party for the other party's reasonable
out-of-pocket costs and expenses of furnishing such cooperation.
(g) If requested in writing by the Seller, the Buyer shall join with
the Seller in filing an election under Section 338(h)(10) of the Code and under
similar local, state, and foreign law with respect to the purchase of the Shares
as contemplated by this Agreement.
(h) The Buyer agrees that (i) it will not take (nor permit the
Company or the Company Subsidiary to take) any action outside of the ordinary
course of business on the Effective Date, including making an election under
Section 338(g) of the Code with respect to the Company or the Company
Subsidiary, and (ii) it will treat (and cause the Company and the Company
Subsidiary to treat) any transaction occurring after the Closing and on the
Effective Date as occurring on the day following the Effective Date pursuant to
Treasury Regulation Section 1.1502-76(b)(1)(ii)(B).
(i) The Buyer agrees that it will (and will cause the Company and
the Company Subsidiary to), upon the request of the Seller, make a timely
election under Treasury Regulation Section 1.1502-21(b)(3)(ii)(B) to relinquish,
with respect to all consolidated net operating losses attributable to the
Company or the Company Subsidiary, the portion of the carryback period for which
the Company or the Company Subsidiary was a member of an affiliated group of
corporations (within the meaning of Section 1504(a) of the Code) filing
consolidated Tax Returns, other than an affiliated group of which Buyer is the
common parent.
34
(j) The Buyer agrees that it will (and will cause the Company and
the Company Subsidiary to), upon the request of the Seller, (i) cooperate with
the Seller in making a timely election under Treasury Regulation Section
1.1502-20(g) to reattribute to the Seller any loss carryovers attributable to
the Company and the Company Subsidiary and a timely election under Treasury
Regulation Section 1.1502-96(d)(5) to reattribute to Seller any Section 382
limitation to which the reattributed losses are subject immediately before the
reattribution or (ii) make a timely election under Treasury Regulation Section
1.1502-32(b)(4)(i) with respect to all or any portion of any loss carryforwards
attributable to the Company and the Company Subsidiary.
(k) For purposes of this Agreement, (i) a "Consolidated Income Tax
Return" is any income Tax Return filed with respect to any consolidated,
combined, affiliated or unified group provided for under Section 1501 of the
Code and the Treasury regulations under Section 1502 of the Code, or any
comparable provisions of foreign, state or local law, other than any income Tax
Return that includes only the Company and the Company Subsidiary and (ii) an
"After-Tax Amount" is an additional amount necessary to reflect the Tax
consequences (without taking into account any loss, credit or other offset
against Tax) of the receipt or accrual of any payment required to be made under
this Agreement (including payment of an additional amount or amounts hereunder),
calculated by using a Tax rate equal to the sum of the highest marginal U.S.
federal corporate income Tax rate or rates applicable to ordinary income or
capital gain, as the case may be, in effect for the taxable period in issue,
plus five percent.
Section 9.2 INDEMNITY FOR TAXES.
(a) The Seller hereby agrees to indemnify the Buyer and its
affiliates and subsidiaries against and hold them harmless from all liability
for (i) all Taxes imposed on the Thor Business, the Company and the Company
Subsidiary with respect to taxable periods (or portions thereof including the
pre-closing portion of any Straddle Period) ending on or before the Effective
Date (whether imposed by Law or Tax sharing agreement, Tax indemnity obligation
or similar agreement in respect of Taxes that was entered into prior to the
Effective Date), (ii) Pre-Closing Taxes determined pursuant to Section 9.1(d)
with respect to any Straddle Period and (iii) all Taxes that are attributable to
Seller or any member (other than the Company or the Company Subsidiary) of an
affiliated, consolidated, combined or unitary Tax group of which at least one of
the Company or the Company Subsidiary is or was a member prior to the Effective
Date that is imposed under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Tax law) by reason of the Company or the
Company Subsidiary being included in any such Tax group. Pursuant to this
Section 9.2(a), the Seller shall be liable for, and hereby agrees to indemnify
the Buyer and its affiliates and subsidiaries and hold them harmless from all
liability for, any Taxes due as a result of any of the transactions pursuant to
Section 5.12.
(b) The Buyer, the Company and the Company Subsidiary hereby agree
to indemnify the Seller and its affiliates and subsidiaries against and hold
them harmless from all liability for (i) all Taxes of the Thor Business, the
Company and the Company Subsidiary with respect to taxable periods (or portions
thereof including the post-closing portion of any Straddle Period) beginning
after the Effective Date (whether imposed by Law
35
or Tax sharing agreement, Tax indemnity obligation or similar agreement in
respect of Taxes) and (ii) Post-Closing Taxes as determined pursuant to Section
9.1(d) with respect to any Straddle Period.
(c) The Buyer and the Seller agree to treat (and cause their
affiliates to treat) any indemnification payment under this Agreement as an
adjustment to the Purchase Price. Any indemnification obligation under this
Agreement with respect to Taxes shall be net of any Tax Benefit realized by the
indemnified party or its affiliates, and increased by the relevant After-Tax
Amount. For purposes of this Agreement, "Tax Benefit" shall mean the Tax savings
attributable to any deduction, expense, loss, credit or refund to the
indemnified party or its affiliates, when incurred or received; PROVIDED,
HOWEVER, that if such benefit is reasonably expected to arise or be utilized
after the year in which indemnification occurs pursuant to this Agreement, then
it means the present value of such Tax savings (calculated using the one year
LIBOR (as published in THE WALL STREET JOURNAL) and a Tax rate equal to the sum
of the highest marginal U.S. federal corporate income Tax rate or rates
applicable to ordinary income or capital gain, as the case may be, in effect for
the taxable period in issue, plus five percent.)
(d) The obligation of the Seller to indemnify and hold harmless the
Buyer, on the one hand, and any of the obligations of the Buyer, the Company and
the Company Subsidiary to indemnify and hold harmless the Seller, on the other
hand, pursuant to this Section 9.2, shall terminate upon the expiration of the
applicable statutes of limitations with respect to the Tax liabilities in
question (giving effect to any waiver, mitigation or extension thereof).
(e) A party seeking indemnification provided for under this
Agreement (a "Tax Indemnified Party") in respect of Taxes arising out of or
involving a claim or demand made by any person, including without limitation a
Governmental Entity, against such party (a "Tax Third Party Claim") must notify
the party from whom such indemnification is sought (the "Tax Indemnifying
Party") in writing of the Tax Third Party Claim as promptly as possible but in
no event later than 30 days after receipt by the Tax Indemnified Party of
written notice of the Tax Third Party Claim; PROVIDED, HOWEVER, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the Tax Indemnifying Party shall have been actually
prejudiced as a result of such failure (except that the Tax Indemnifying Party
shall not be liable for any expenses incurred during the period in which the Tax
Indemnified Party failed to give such notice). Thereafter, the Tax Indemnified
Party shall deliver to the Tax Indemnifying Party, as promptly as possible but
in no event later than 30 days after the Tax Indemnified Party's receipt
thereof, copies of all notices and documents (including court papers) received
by the Tax Indemnified Party, relating to the Tax Third Party Claim.
If a Tax Third Party Claim is made against the Tax Indemnified Party, the
Tax Indemnifying Party will be entitled to participate in the defense thereof
and to assume the defense thereof with counsel or other Tax advisors selected by
the Tax Indemnifying Party and satisfactory to the Tax Indemnified Party,
provided, however, that the Tax Indemnifying Party shall not be entitled to
assume the defense of any such contest unless the Tax Indemnifying Party at its
option has either provided bond or other security for its obligations under this
36
Section 9.2 satisfactory to the Tax Indemnified Party or paid the Tax Third
Party Claim. If the Tax Indemnifying Party assumes such defense, the Tax
Indemnifying Party will not be liable to the Tax Indemnified Party for legal or
other expenses subsequently incurred by the Tax Indemnified Party in connection
with the defense thereof. If the Tax Indemnifying Party assumes such defense,
the Tax Indemnified Party shall have the right to participate in the defense
thereof and to employ counsel or other Tax advisors, at its own expense separate
from the counsel or other Tax advisors employed by the Tax Indemnifying Party.
The Tax Indemnifying Party shall be liable for all reasonable fees and expenses
of counsel or other Tax advisors employed by the Tax Indemnified Party for any
period subsequent to the date the Tax Indemnified Party notifies the Tax
Indemnifying Party pursuant to this Section 9.2(e) and during which the Tax
Indemnifying Party has not assumed the defense thereof. Whether or not the Tax
Indemnifying Party chooses to defend or prosecute any Tax Third Party Claim, all
of the parties hereto shall reasonably cooperate in the defense or prosecution
thereof. Such cooperation shall include the provision to the Tax Indemnifying
Party of records and information which are reasonably relevant to such Tax Third
Party Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Whether or not the Tax Indemnifying Party shall have assumed the
defense of a Tax Third Party Claim, the Tax Indemnified Party shall not admit
any liability with respect to, or settle, compromise or discharge, such Tax
Third Party Claim without the Tax Indemnifying Party's prior written consent,
which consent shall not be unreasonably withheld.
(f) If a Tax Indemnified Party receives a refund or credit or other
reimbursement with respect to Taxes for which it would be indemnified under this
Agreement, the Tax Indemnified Party shall pay over such refund or credit or
other reimbursement to the Tax Indemnifying Party; PROVIDED, HOWEVER, that the
amount of such refund or credit or other reimbursement which the Tax Indemnified
Party is required to pay over to the Tax Indemnifying Party shall be increased
by the After-Tax Amount.
ARTICLE X
INDEMNIFICATION
Section 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Subject to Section 10.6 hereof, each of the representations and
warranties contained in Articles III and IV will survive the Closing and remain
in full force and effect for 12 months following the Effective Date, except that
the representations and warranties set forth in Sections 3.1, 3.2, 4.1 and 4.2
will survive the Closing and remain in full force and effect until the
expiration of the applicable statute of limitations.
(b) For purposes of this Agreement, (i) "Indemnity Payment" means
Indemnifiable Losses required to be paid pursuant to this Agreement, (ii)
"Indemnitee" means any person entitled to indemnification under this
Agreement, (iii) "Indemnifying Party" means any person required to provide
indemnification under this Agreement, (iv) "Indemnifiable Losses" means any
and all losses, damages, charges, deficiencies, penalties, claims, demands,
actions, suits or proceedings, settlements and compromises relating thereto
37
and reasonable attorneys' fees and expenses in connection therewith, reduced by
the amount of insurance proceeds recoverable from any person or entity that is
not an affiliate of the Indemnitee, and (v) "Third Party Claim" means any claim,
demand, action, suit or proceeding made or brought by any person or entity who
or which is not a party to this Agreement or an affiliate of a party to this
Agreement.
Section 10.2 INDEMNIFICATION.
(a) Subject to Sections 10.1, 10.3 and 10.4, the Seller will
indemnify, defend and hold harmless the Buyer and its directors, officers,
employees, agents and representatives (including, without limitation, any
predecessor or successor to any of the foregoing) from and against any and all
Indemnifiable Losses relating to, resulting from or arising out of:
(i) Any breach by the Seller of any of the representations or
warranties of the Seller contained in this Agreement; and
(ii) The Distribution and any claims, liabilities or
obligations with respect to any of the Distributed Property
(irrespective of whether such liabilities or obligations arise
before, on or after the Effective Date).
(b) Subject to Sections 10.1, 10.3 and 10.4, the Buyer will
indemnify, defend and hold harmless the Seller and its directors, officers,
employees, agents and representatives (including, without limitation, any
predecessor or successor to any of the foregoing) from and against any and all
Indemnifiable Losses relating to, resulting from or arising out of any breach by
the Buyer of any of the representations or warranties of the Buyer contained in
this Agreement.
Section 10.3 LIMITATIONS ON LIABILITY.
(a) Notwithstanding any other provision in this Agreement or of any
applicable Law, no Indemnitee will be entitled to make a claim against an
Indemnifying Party under Sections 10.2(a)(i) or 10.2(b) unless and until the
aggregate amount of Indemnifiable Losses incurred by the Indemnitee with respect
to an event or occurrence and all other events or occurrences caused by the same
circumstances exceeds $100,000 (a "Base Claim"), in which event (subject to the
following provisions of this Section 10.3), such Indemnitee may assert its right
to indemnification hereunder to the full extent of its Indemnifiable Losses in
respect thereof.
(b) No Indemnitee will be entitled to make a claim against an
Indemnifying Party under Sections 10.2(a)(i) or 10.2(b) unless and until the
aggregate amount of all of its Base Claims which may be asserted for
Indemnifiable Losses under Section 10.2(a)(i) or 10.2(b), as applicable, exceeds
$5,000,000, in which event (subject to the following provisions of Section
10.3), such Indemnitee may assert its right to indemnification hereunder to the
full extent of all such Indemnifiable Losses.
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(c) Notwithstanding any other provision of this Agreement, the
indemnification obligations of the Seller, under Section 10.2(a)(i), on the one
hand, and of the Buyer, under Section 10.2(b), on the other hand, will not
exceed $5,000,000.
Section 10.4 DEFENSE OF CLAIMS.
(a) If any Indemnitee receives notice of the assertion or
commencement of any Third Party Claim against such Indemnitee with respect to
which an Indemnifying Party is obligated to provide indemnification under this
Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 30 calendar days after
receipt of such notice of such Third Party Claim. Such notice by the Indemnitee
will describe the Third Party Claim in reasonable detail, will include copies of
all material written evidence thereof and will indicate the estimated amount, if
reasonably practicable, of the Indemnifiable Loss that has been or may be
sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in, or, by giving written notice to the Indemnitee, to assume, the
defense of any Third Party Claim at such Indemnifying Party' s own expense and
by such Indemnifying Party's own counsel (reasonably satisfactory to the
Indemnitee), and the Indemnitee will cooperate in good faith in such defense.
(b) If, within ten calendar days after giving notice of a Third
Party Claim to an Indemnifying Party pursuant to Section 10.4(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 10.4(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; PROVIDED, HOWEVER, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within ten calendar days after receiving written notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense, and the Indemnifying Party will be
liable for all reasonable costs or expenses paid or incurred in connection
therewith. Without the prior written consent of the Indemnitee, the Indemnifying
Party will not enter into any settlement of any Third Party Claim which would
lead to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim without leading
to liability or the creation of a financial or other obligation on the part of
the Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to such offer,
the Indemnifying Party will give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within ten
calendar days after its receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will not exceed
the amount of such settlement offer.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than 30 calendar days after the Indemnitee
becomes aware of such Direct Claim. Such
39
notice by the Indemnitee will describe the Direct Claim in reasonable detail,
will include copies of all material written evidence thereof and will indicate
the estimated amount, if reasonably practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party will have
a period of 30 calendar days within which to respond in writing to such Direct
Claim. If the Indemnifying Party does not so respond within such 30 calendar day
period, the Indemnifying Party will be deemed to have rejected such claim, in
which event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of this
Agreement.
(d) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 10.4(a), 10.4(b) or 10.4(c)
will not affect the rights or obligations of any party hereunder except and only
to the extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise prejudiced as a result of such
failure.
Section 10.5 EXCLUSIVE REMEDY. If the Closing occurs, the Buyer's rights
to indemnification set forth in this agreement shall constitute the Buyer's
exclusive remedy for claims made with respect to matters covered thereunder, and
the Buyer expressly waives and relinquishes, on behalf of itself, its successors
and any assigns, any and all rights, claims, or remedies such person may have
under any applicable Laws (including Environmental Laws), as presently in force
or hereafter enacted, promulgated, or amended (including under CERCLA, or any
similar state or local Law) or at common law.
Section 10.6 SELLER ENVIRONMENTAL INDEMNITY.
(a) Subject to the remaining provisions of this Section 10.6, from
and after the Effective Date, the Seller will indemnify, defend and hold
harmless the Buyer, the Company, the Company Subsidiary and their respective
officers, directors and affiliates (including, without limitation, any
predecessor or successor to any of the foregoing) (collectively, the "Buyer
Indemnified Parties") from and against any and all Company Environmental
Liabilities that are not the subject of a Buyer Reimbursable Claim; PROVIDED,
HOWEVER, that the aggregate amount of all Company Environmental Liabilities for
which the Seller shall be responsible from time to time pursuant to this Section
10.6 shall not exceed the Seller Responsible Amount.
(b) Following the Closing, the Buyer will, or will cause the Company
or the Company Subsidiary to, initiate and administer all Buyer Reimbursable
Claims that the Buyer, the Company or the Company Subsidiary has legal standing
to enforce and will use diligent efforts to secure reimbursement from the
responsible person for all Company Environmental Liabilities that would be a
Governmental Environmental Responsibility or a ▇▇▇▇▇▇ Environmental
Responsibility.
(c) Notwithstanding any other provision of this Agreement, the
indemnification obligations of the Seller under this Section 10.6 shall
terminate on the third anniversary of the Effective Date, except with respect to
any Company Environ mental Liability for which the Buyer has provided written
notice to the Seller prior to the third anniversary of
40
the Effective Date of the facts underlying such Company Environmental Liability
with reasonable specificity.
(d) Prior to the Closing, the Seller and the Buyer will each
designate a representative (each, a "Representative") to receive information and
consult with the other with respect to Company Environmental Liabilities. From
and after the Closing, the Buyer will control all Remedial Action and
negotiations with any Governmental Entity in respect of all Company
Environmental Conditions. The Buyer will make its environmental personnel and
consultants reasonably available to the Seller and the Seller's Representative
to discuss Company Environmental Conditions. The Buyer will provide the Seller's
Representative and the Seller's environmental consultants with reasonable access
to the properties of the Company and the Company Subsidiary and copies of all
non-privileged information with respect to the Remedial Actions to be taken in
respect of such Environmental Actions. The Buyer will select consultants and
contractors to implement such Remedial Actions (who shall be reasonably
acceptable to the Seller) and will also provide the Seller's Representative and
its environmental consultants with copies of all reports, analytical data,
correspondence, directives, orders and documents submitted to or received by the
Buyer from any Governmental Entity or ▇▇▇▇▇▇ in connection with the Remedial
Action and other non-privileged documents created or received by or on behalf of
the Buyer in connection with the Remedial Action. The Buyer shall afford the
Seller a reasonable opportunity to comment on the Buyer's proposed Response to a
Company Environmental Condition, and the Buyer shall not unreasonably refuse to
incorporate the Seller's comments.
(e) The Buyer shall inform the Seller promptly in writing of any
Company Environmental Condition or Environmental Action in respect of which the
Seller may have an indemnification obligation under this Section 10.6, PROVIDED,
that the failure of the Buyer to so promptly inform the Seller shall not affect
the rights of the Buyer except to the extent that such failure to give prompt
notice adversely affects the rights and obligations of the Seller under this
Section 10.6. Notwithstanding any other provision herein, the Seller shall only
be required to defend, indemnify and hold harmless the Buyer under this Section
10.6 to the extent that any Remedial Action is required by a Governmental Entity
under applicable Environmental Laws and the Buyer's Response to a Company
Environmental Condition is conducted using the lowest reasonable cost effective
methods in Response to a Company Environmental Condition consistent with the
requirements of the Governmental Entity. The indemnification provided for in
this Section 10.6 shall be the exclusive remedy between the Buyer and the Seller
with respect to any Company Environmental Liability.
(f) For purposes of this Section 10.6, the following terms will have
the following meanings:
"Buyer Reimbursable Claim" means any Environmental Action for which
there is a reasonable legal basis to assert that the Company Environmental
Liability is a Governmental Environmental Responsibility or a ▇▇▇▇▇▇
Environmental Responsibility. An Environmental Action shall no longer be a
"Buyer Reimbursable Claim" if either of the following shall have occurred: (i)
all reasonable measures, including reasonable appeal, if appropriate, have been
finally exhausted to seek reimbursement from a Governmental Entity or ▇▇▇▇▇▇, as
the case may be, each of which has notified the Buyer in writing that the
41
Environmental Action is not a Governmental Environmental Responsibility or a
▇▇▇▇▇▇ Environmental Responsibility, as the case may be, or (ii) the actual
amount paid by the Governmental Entity or ▇▇▇▇▇▇ in respect of the Governmental
Environmental Responsibility or the ▇▇▇▇▇▇ Environ mental Responsibility, as the
case may be, is less than the amount of the Company Environmental Liability, in
which event the difference shall no longer be a Buyer Reimbursable Claim.
"Company Environmental Condition" means any (i) environmen tal
contamination or pollution or threatened contamination or pollution arising out
of any Release or threatened Release of Hazardous Materials arising out of the
Thor Business (which includes the real property listed on Schedule 1.01(d)(1) to
the ▇▇▇▇▇▇ Distribution Agreement), on-site (owned or leased) or at off-site,
non-owned or non- leased locations that occurred on or prior to the Effective
Date that would form the basis for any Environmental Action against the Company
or the Company Subsidiary (or any of their respective predecessors or
successors) or (ii) any other circumstance or condition that would give rise to
any violation, or alleged violation, of any Environmen tal Law or any liability
or alleged liability under any Environmental Law that occurred on or prior to
the Effective Date that would form the basis for any Environmental Action
against the Company or the Company Subsidiary (or any of their respective
predeces sors or successors).
"Company Environmental Liability" means all losses, damages,
charges, liabilities, costs, expenses, deficiencies, fines, penalties, claims,
demands, actions, suits or proceedings, remediation and project costs,
settlements and compro mises relating thereto and reasonable attorneys' and
consultants' fees and expenses in connection therewith, and expenses of
investigation incurred by a Buyer Indemnified Party after the Effective Date in
respect of any Company Environmental Condition.
"Environmental Action" as used in this Section 10.6, means any
notice of any violation of any Environmental Law or any claim, citation, summons
or any investigation, action, lawsuit or proceeding by any person pursuant to
any Environmental Law which seeks to impose liability (including, without
limitation, liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or penalties).
"Government Contract Law" means all statutes, regulations, cost
principles, orders, memoranda of decision, memoranda of understanding, or other
legally enforceable criterion relating to the responsibility of the United
States to pay, reimburse or indemnify government contractors for Environmental
Actions, including but not limited to, the Federal Acquisition Regulation,
Defense Federal Acquisition Regulation Supplements, agency and departmental
regulations, Public Law 85-804 and any related memoranda of decision of the
United States.
"Governmental Environmental Responsibility" means that portion of
any Environmental Action that is the ultimate responsibility of any Governmental
Entity pursuant to any Government Contract, any Government Subcontract or any
Government Contract Law.
42
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ International, Inc., an Indiana corporation
(including its successors and assigns).
"▇▇▇▇▇▇ Environmental Responsibility" means that portion of any
Environmental Action that is the ultimate responsibility of ▇▇▇▇▇▇ pursuant to
the Distribution Agreement, dated as of May 16, 1989, by and between ▇▇▇▇▇▇
Thiokol, Inc. and ▇▇▇▇▇▇ International, Inc. (the " ▇▇▇▇▇▇ Distribution
Agreement").
"Release" means any releasing, spilling, seeping, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing of any Hazardous Materials into the environment (including the
abandonment or discarding of barrels, containers, tanks or other receptacles
containing Hazardous Materials).
"Remedial Action" means (a) 'remedial action' as such term is
defined in CERCLA and its analogous state Laws, and (b) all other actions
required by any Governmental Entity: (i) to clean up, remove, treat, ▇▇▇▇▇ or in
any other way address any Hazardous Materials in the environment; (ii) to
prevent the Release or threat of Release or minimize the further Release of any
Hazardous Materials so that it does not migrate or endanger or threaten to
endanger public health, welfare or the environ ment, and (iii) to perform
studies and investigations in connection with, or as a precondition to, clause
(i) or (ii) above.
"Remediation Standards" means either numeric or narrative standards
to which Hazardous Materials in, on or around land must be remediated as
established pursuant to Environmental Laws by the Governmental Entity or
Entities with jurisdiction over such land.
"Response to a Company Environmental Condition" means any response
to a Company Environmental Condition, including, but not limited to, any
Remedial Action, or no action, to address the Hazardous Materials present in the
area of environmental concern that, if implemented, would satisfy the
commercial/industrial Remediation Standards applicable to the land in question.
"Seller Responsible Amount" means and shall be determined as
follows: on any date of determination, with respect to all Company Environmental
Liabilities that are not the subject of a Buyer Reimbursable Claim, the Seller
shall have no obligation to reimburse the Buyer until all such Company
Environmental Liabilities that are not the subject of a Buyer Reimbursable Claim
exceed $14 million following which the Buyer and the Seller shall each bear 50%
of the next $20 million of such Company Environmental Liabilities that are not
the subject of a Buyer Reimbursable Claim such that the Buyer's obligations
under this Section 10.6 shall under no circumstances exceed $10 million.
Section 10.7 TERMINATION OF SECTION 3.10. Section 3.10 of this Agreement
shall terminate at the Closing and thereafter have no force and effect. Section
9.2 shall be the sole provision governing any indemnification for Taxes under
this Agreement.
43
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 EXPENSES. Except as otherwise expressly contemplated by this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby (including any broker fees and commissions)
shall be paid by the party incurring such costs and expenses; PROVIDED that the
Seller shall be responsible for all costs and expenses of financial, legal and
other advisors (including any brokers fees and commissions) incurred by the
Company or the Company Subsidiary prior to the Closing in connection with the
transactions contemplated by this Agreement.
Section 11.2 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed
in two or more separate counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by each of the other parties hereto.
Section 11.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
Section 11.4 NOTICES. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 11.4 and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section 11.4:
To the Seller:
Alcoa Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
44
To the Buyer:
Alliant Techsystems Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.5 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that the Buyer may assign, in its
sole discretion, all or any of its rights and interests hereunder to any direct
or indirect wholly owned subsidiary of the Buyer, PROVIDED that no such
assignment shall relieve the Buyer of its obligations hereunder if such assignee
does not perform such obligations. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any assignment not
permitted under this Section 11.5 shall be null and void.
Section 11.6 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 11.7 ENFORCEMENT OF AGREEMENT. The parties hereto agree that money
damages or other remedy at law would not be a sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that
in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default and
to any other equitable relief, including, without limitation, specific
performance, without bond or other security being required.
Section 11.8 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement together with the Seller Disclosure Schedule, the Buyer Disclosure
Schedule and the Exhibit hereto, the Confidentiality Agreement and the letter
agreement dated the date hereof between the parties constitute the entire
agreement, and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the
45
subject matter hereof and thereof and is not intended to and shall not confer
upon any person other than the parties hereto any rights or remedies hereunder.
Section 11.9 HEADINGS. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 11.10 DEFINITIONS. References in this Agreement to (a)
"subsidiaries" of the Buyer or the Seller shall mean any corporation or other
form of legal entity of which more than 50% of the outstanding voting securities
are on the date hereof directly or indirectly owned by such company or in which
such company has the right to elect a majority of the members of the board of
directors or other similar governing body; (b) "affiliates" shall mean, as to
any person, any other person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such person; (d) "person" shall
mean an individual, a corporation, a partnership, an association, a trust or any
other entity or organization, including, without limitation, a Governmental
Entity; and (e) "best knowledge of the Seller" (and words of similar import)
means the actual personal knowledge of the officers and directors of the Seller
and the Company identified on Section 11.10(e) of the Seller Disclosure
Schedule. As used in the definition of "affiliates," "control" (including, with
its correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a person, whether through the ownership
of securities or partnership or other ownership interests, by contract or
otherwise. "Including," as used herein, shall mean "including, without
limitation."
Section 11.11 FINDERS OR BROKERS. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
with respect to the Seller, and Chase Securities, Inc. with respect to the
Buyer, neither the Seller nor the Buyer nor any of their respective subsidiaries
has employed any investment banker, broker, finder or intermediary in connection
with the transac tions contemplated hereby who would be entitled to any fee or
any commission in connection with or upon consummation of the transactions
contemplated hereby.
Section 11.12 AMENDMENT OR SUPPLEMENT. At any time prior to the Effective
Date, this Agreement may be amended or supplemented in any and all respects by
written agreement of both the parties hereto.
Section 11.13 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Date, either party may (a) extend the time for the performance of any
of the obligations or acts of any other party hereto; (b) waive any inaccuracies
in the representations and warranties of the other party hereto contained herein
or in any document delivered pursuant hereto; or (c) waive compliance with any
of the agreements or conditions of the other party hereto contained herein.
Notwithstanding the foregoing, no failure or delay by the Buyer or the Seller in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right hereunder. Any agreement on the part
of either party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
46
Section 11.14 JURISDICTION. Except as otherwise expressly provided in this
Agreement, the parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought only in the United States District Court for the Southern District of
New York or any other New York State court sitting in New York City, and each of
the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding of which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in this Section 11.14 shall be
deemed effective service of process on such party.
Section 11.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
47
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed by its duly authorized officer as of the date first above written.
ALCOA INC.
By /s/ Alain ▇. ▇. ▇▇▇▇▇
---------------------------------
Name: Alain ▇. ▇. ▇▇▇▇▇
Title: Chairman & Chief Executive
Officer
ALLIANT TECHSYSTEMS INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
