CONFIDENTIAL
EXHIBIT 10.13
DRAFT -- 1/19/99
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AMENDED AND RESTATED
CONSORTIUM AGREEMENT
THIS AMENDED AND RESTATED CONSORTIUM AGREEMENT (this "Agreement"), dated
as of January __ 1999, by and between the following parties:
*XXXXXXXX XXXXXXX CORPORATION, an Ohio corporation ("MK"), and
*BNFL USA GROUP INC., a Delaware corporation ("BNFL-USA").
WITNESSETH
WHEREAS:
1. MK and BNFL-USA entered into a Consortium Agreement, dated as of June
24, 1998 (the "ORIGINAL AGREEMENT"), pursuant to which they formed a
consortium for the purpose of acquiring the Energy Systems business
(the "ESBU BUSINESS") and the Government Operations business (the
"GESCO BUSINESS") of CBS Corporation ("CBS").
2. The Original Agreement set forth the agreement of MK and BNFL-USA
concerning the basis on which the ESBU and GESCO Businesses would be
owned, and the basis on which ownership, control and risk would be
shared after the acquisition.
3. On June 24, 1998 MK and BNFL-USA organized WGNH Acquisition, LLC, a
Delaware limited liability company ("WGNH"), for the purpose of
entering into asset purchase agreements with CBS for the acquisition
of the ESBU and GESCO Businesses and acting as a holding company for
MK and BNFL-USA's interests in the ESBU and GESCO Businesses. WGNH is
the entity referred to as "Wesco" in the Original Agreement and the
ownership, governance and management of WGNH are currently set forth
in the Original Agreement.
CONFIDENTIAL
4. WGNH entered into (i) an Asset Purchase Agreement, dated as of June
25, 1998 (as it may be amended from time to time, the "ESBU PURCHASE
AGREEMENT"), with CBS covering the acquisition by WGNH of the ESBU
Business, and (ii) an Asset Purchase Agreement, dated as of June 25,
1998 (as it may be amended from time to time, the ("GESCO PURCHASE
AGREEMENT"), with CBS covering the acquisition by WGNH of the GESCO
Business. The ESBU Purchase Agreement and the GESCO Purchase
Agreement are sometimes referred to individually as an "ASSET PURCHASE
AGREEMENT" or collectively as the "ASSET PURCHASE AGREEMENTS".
5. Since the date of the Original Agreement (i) certain changes have
occurred with respect to the scope of the GESCO Business, and (ii) MK
and BNFL-USA have had further discussions with each other and with
representatives of the United States government and CBS concerning
certain issues relating to the ownership and control of certain
aspects of the ESBU and GESCO Businesses. As a result of these
changes and discussions WGNH will no longer act as a holding company
for MK's and BNFL-USA's interests in the ESBU and GESCO Businesses and
either by novation or assignment will transfer its rights and
obligations under the Asset Purchase Agreements to other entities
organized by the parties.
6. MK and BNFL-USA wish to amend and restate the Original Agreement in
its entirety as set forth in this Agreement so as to set forth their
revised agreement concerning the basis on which the ESBU and GESCO
Businesses will be owned, and the basis on which ownership, control
and risk will be shared after the acquisition.
7. MK and BNFL-USA intend to take certain actions and enter into certain
other agreements as contemplated by this Agreement.
8. BNFL-USA has organized a new wholly-owned subsidiary, BNFL Nuclear
Services, Inc., a Delaware corporation ("BNSI"), for the purpose of
holding BNFL-USA's interests in the GESCO and ESBU Businesses.
9. Xxxxxxxx Xxxxxxx Corporation, a Delaware corporation ("MK-Delaware")
which is the parent company of MK, and British Nuclear Fuels plc, a
public limited company organized under the laws of England ("BNFL")
which is the parent company of BNFL-USA, entered into guarantees of
the obligations of MK and BNFL-USA, respectively, under the Original
Agreement (the "ORIGINAL GUARANTEES") and wish to replace the Original
Guarantees with guarantees of the obligations of MK and BNFL-USA and
BNSI, respectively, under this Agreement in the form attached
following the signature pages to this Agreement.
CONFIDENTIAL
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement, the Original Agreement,
including the Exhibits thereto, is hereby amended and restated to read in
its entirety as follows:
1. FORMATION OF ADDITIONAL COMPANIES.
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1.1 Interim Companies. MK and BNSI have organized the following limited
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liability companies (sometimes referred to individually as an "INTERIM
COMPANY" and collectively as the "INTERIM COMPANIES"):
(a) MK/BNFL GESCO LLC, a Delaware limited liability company ("INTERIM
GESCO"), the membership interests in which are owned on a 60/40
basis by MK and BNSI, respectively, as set forth in greater
detail in a limited liability company agreement dated as of
October 10, 1998.
(b) MK/BNFL Commercial Nuclear Services LLC, a Delaware limited
liability company ("INTERIM CNS"), the membership interests in
which are owned on a 60/40 basis by MK and BNSI, respectively, as
set forth in greater detail in a limited liability company
agreement dated as of October 10, 1998.
1.2 Organization. Promptly after the date of this Agreement the parties
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will organize the following corporations or limited liability
companies (sometimes referred to individually as a "COMPANY" and
collectively as the ("COMPANIES") under the names, to take effect from
the closing of the Asset Purchase Agreements, set forth below and,
prior to closing, under such other interim names as the parties may
agree:
(a) Westinghouse Government Services Company LLC, a Delaware limited
liability company ("WGS")
(b) Westinghouse Government Environmental Services Company LLC, a
Delaware limited liability company ("WGES")
(c) Westinghouse Electric Company LLC, a Delaware limited liability
company ("WELCO")
(d) Such other entities as the parties deem necessary or desirable to
carry out the intent of this Agreement but not otherwise in
contradiction of the terms of this Agreement.
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CONFIDENTIAL
If appropriate, the parties may reorganize Interim GESCO as WGES and
Interim CNS as WELCO, in which case they will transfer their
membership interests and make such other changes in the organizational
documents of such companies as may be necessary to conform to the
terms of this Agreement.
1.3 Operating Agreements. The ownership, management, operation, financing
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and other attributes of the Companies will be set forth in the
respective articles of incorporation, by-laws, limited liability
company agreements and related documents to be entered into with
respect to each of the Companies and other necessary documents which
will be consistent with the provisions of this Agreement.
2. WGNH.
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2.1 Purpose. WGNH's purpose will be to assign its rights and obligations
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under the Asset Purchase Agreements as contemplated by Sections 6.2
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and 6.3 and to execute and deliver any appropriate amendments to the
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Asset Purchase Agreements that may be necessary prior to the date of
such assignment. Promptly after the assignment has been achieved the
parties will cause WGNH to be dissolved.
2.2 General. The parties will cooperate with each other and take all
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necessary action to implement this Section 2.
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3. WGS.
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3.1 Purpose. The purpose of WGS will be to pursue business opportunities
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related to the Defense Program missions of the U.S. Department of
Energy (the "DOE") and the U.S. Department of Defense (the "DOD").
With effect from the GESCO Closing Date (as defined in Section 6.3(a))
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WGS will
(a) own and operate those portions of the GESCO Business that are
included in the WGS Operations (as defined in Section 6.1(a)),
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(b) submit bids to the DOE and the DOD for new classified defense
programs to be awarded by the DOE or the DOD that are consistent
with the objectives of the WGS Operations, and
(c) own 60% of the outstanding membership interests in WGES.
3.2 Organization. MK will organize WGS as a Delaware limited liability
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company and will hold 100% of the membership interests of WGS.
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CONFIDENTIAL
3.3 BNFL Passive Economic Right and Obligations. BNSI will have
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(a) a passive economic right to receive a portion of the gains,
profits and losses of WGS and the WGS Operations, and
(b) an obligation to make additional contributions to WGS's funding
requirements, and to provide financial assurances with respect to
WGS,
in each case as set forth in an agreement (the "WGS AGREEMENT") in the
form attached as Exhibit B.
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3.4 Management.
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(a) Management by Managers. WGS will be managed by a board of
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directors or managers (the "BOARD") and by officers appointed by
the Board.
(b) Board. With effect from the GESCO Closing Date, WGS will have a
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Board of seven directors appointed by MK, one of whom will be
nominated by BNSI (the "BNFL DIRECTOR"). One of the MK appointed
directors will serve as Chairman of the Board. With effect from
the GESCO Closing Date, Xxxxxx X. Xxxxxxxx, the chief executive
of MK, will be appointed as Chairman. The parties will develop a
mutually acceptable policy on dividends and distributions to be
adopted by the WGS Board.
(c) Officers. The Board will appoint a President and other officers
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as desired from time to time. With effect from the GESCO Closing
Date, Xxxxx Xxxxxxxxx will be appointed as President. The
officers will have the authority, responsibilities and duties as
are customary for officers holding similar positions with respect
to businesses conducted in corporate form and such additional
authority, responsibilities and duties as the Board may delegate
from time to time. The BNFL Director will have no vote with
respect to the election, appointment or tenure of any officers.
(d) FOCI and National Security Issues. FOCI shall be addressed
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through a FOCI Negation Plan consisting of Board resolutions, as
reviewed and approved by the DOE (and the DOD as appropriate),
copies of which are attached as Exhibit C (the "WGS FOCI NEGATION
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PLAN").
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CONFIDENTIAL
(e) Approval. All actions of the Board will be taken by majority
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vote except that, subject to the provisions of the WGS FOCI
Negation Plan, the following actions will require the concurrence
of the BNFL Director (except, in the case of clauses (i), (iii),
(iv), and (v), to the extent such actions relate to the WGES
Operations or to the proceeds of WGS's investment in WGES):
(i) disposition or financial encumbrance of all or
substantially all of WGS's property and assets;
(ii) dissolution, merger or consolidation of WGS;
(iii) major financing, which for the purposes of this Agreement
shall mean the incurrence of indebtedness for borrowed
money of more than $_______ in any single transaction or
$_________ in the aggregate; provided that the concurrence
of the BNFL Director shall not be required for the
approval of any refinancing of any financing previously
approved under this clause (iii) so long as the amount of
the indebtedness is not increased and the terms of the
refinancing are no less favorable to WGS than the original
financing;
(iv) commencement or settlement of major litigation, which for
the purposes of this Agreement means any action or
proceeding, whether involving a court action, arbitration,
mediation or other dispute resolution process, (A) in
which the amount in damages payable by any party may
reasonably be expected to exceed $2,000,000 or (B) may
reasonably be expected to result in any order or other
binding decision that would prevent WGS from carrying on
any material part of WGS's business;
(v) material changes to the dividend and distribution policy
of WGS;
(vi) assumption of material additional liabilities or purchase
of material additional assets through the submission of
bids for new contracts or the amendment of existing
contracts;
(vii) material changes to the lines of business conducted by
WGS; or
(viii) such other matters as may be specified in the WGS
Agreement.
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CONFIDENTIAL
Appropriate protections will be provided to ensure that funds are
not distributed to MK or its affiliates via contract or any other
mechanism that would frustrate or avoid BNSI's participation in
the gains, profits and losses of WGS and the WGS Operations as
contemplated by the WGS Agreement.
4. WGES.
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4.1 Purpose. The purpose of WGES will be to pursue business opportunities
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related to environmental remediation and waste management activities,
including those of the DOE and the DOD. With effect from the GESCO
Closing Date, WGES will own and operate those portions of the GESCO
Business that are included in the WGES Operations (as defined in
Section 6.1(b)).
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4.2 Members. WGES will have a single series of membership interests. The
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members and their membership interests in WGES will be:
WGS -- 60%
BNSI -- 40%
4.3 Management.
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(a) Management by Managers. WGES will be managed by a board of
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directors or managers (the "BOARD") selected by the members, and
by officers appointed by the Board.
(b) Board. With effect from the GESCO Closing Date, WGES will have a
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Board of five directors consisting of two individuals selected by
MK (the "MK DIRECTORS"), two individuals selected by BNSI (the
"BNFL DIRECTORS") and one individual appointed by MK (the
"OUTSIDE REPRESENTATIVE") who, absent DOE approval will have had
no prior involvement with WGES, MK, BNSI or their respective
parent, subsidiary or affiliated companies. The Outside
Representative will be appointed by MK, with the written approval
of the DOE. Each director will serve for a one-year term, and
will be eligible for re-appointment in accordance with this
subsection (b), provided that MK and BNSI shall have the right to
replace their respective appointees at any time subject to the
provisions of the Security Control Agreement referred to in
subsection (d) below. One of the MK Directors will serve as
Chairman of the Board and, with effect from the GESCO Closing
Date, Xxxxxx X. Xxxxxxxx will be selected as Chairman. The
parties will develop a mutually acceptable policy on dividends
and distributions to be adopted by the WGES Board.
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CONFIDENTIAL
(c) Officers. The Board will appoint a President and other officers
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as desired from time to time. With effect from the GESCO Closing
Date, the Board will appoint Xxxxx Xxxxxxxxx as President. The
officers will have the authority, responsibilities and duties as
are customary for officers holding similar positions with respect
to businesses conducted in corporate form and such additional
authority, responsibilities and duties as the Board may delegate
from time to time. The BNFL Directors will have no vote with
respect to the election, appointment or tenure of any officers.
(d) FOCI and National Security Issues. FOCI shall be addressed
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through a FOCI Negation Plan consisting of a Security Control
Agreement, as reviewed and approved by the DOE (and the DOD as
appropriate), a copy of which is attached as Exhibit D (the "WGES
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SECURITY CONTROL AGREEMENT").
(e) Approval. All actions of the Board will be taken by majority
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vote except that, subject to the provisions of the WGS Security
Control Agreement, the following actions will require the
concurrence of the MK Directors and the BNFL Directors:
(i) disposition or financial encumbrance of all or
substantially all of WGES's property and assets;
(ii) dissolution, merger or consolidation of WGES;
(iii) major financing, which for the purposes of this Agreement
shall mean the incurrence of indebtedness of more than
$_______ in any single transaction or $_________ in the
aggregate; provided that the concurrence of the BNFL
Directors shall not be required for the approval of any
refinancing of any financing previously approved under this
clause (iii) so long as the amount of the indebtedness is
not increased and the terms of the refinancing are no less
favorable to WGES than the original financing;
(iv) commencement or settlement of major litigation, which for
the purposes of this Agreement means any action or
proceeding, whether involving a court action, arbitration,
mediation or other dispute resolution process, (A) in which
the amount in damages payable by any party may reasonably
be expected to exceed $2,000,000 or (B) may reasonably be
expected to result in any order or other
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CONFIDENTIAL
binding decision that would prevent WGES from carrying on
any material part of the WGES Operations;
(v) capital stock transactions, which for the purposes of this
Agreement means transactions involving the issuance or
transfer of any membership interests or other equity
interests in WGES;
(vi) material changes to the dividend and distribution policy
of WGES;
(vii) material increases in WGES=s liabilities through the
submission of bids for new contracts or the amendment of
existing contracts; or
(viii) material changes to the lines of business included in the
WGES Operations.
Appropriate protections will be provided to ensure that funds are
not distributed to MK or its affiliates via contract or any other
mechanism that would frustrate or avoid BNSI's participation in
the gains, profits and losses of WGES and the WGES Operations as
contemplated by this Agreement.
5. WELCO.
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5.1 Purpose. The purpose of WELCO will be to acquire and operate the ESBU
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Business and to pursue business opportunities related to commercial
nuclear businesses and related matters. With effect from the ESBU
Closing Date (as defined in Section 6.3(b)) WELCO will
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(a) own and operate all properties and assets that constitute the
ESBU Business and are acquired by it under the ESBU Purchase
Agreement, and
(b) lease and operate those portions of the Science and Technology
Center that are related to the ESBU Business (the "STC"), as
contemplated by Section 5.22 of the ESBU Purchase Agreement.
5.2 Members. BNSI will be the sole member of WELCO. If Interim ESBU is
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reorganized as WELCO, MK will transfer to BNSI any membership interest
held by it in Interim ESBU for nominal consideration.
5.3 Management.
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CONFIDENTIAL
(a) Management by Managers. WELCO will be managed by a board of
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directors or managers (the "BOARD") elected by BNSI and by
officers appointed by the Board.
(b) Board. The size and composition of the Board will be determined
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by BNSI. The initial Chairman of the Board will be Xxxx Xxxxxx,
the Chief Executive of BNFL.
(c) Officers. The Board will appoint a President and other officers
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as required from time to time. With effect from the ESBU Closing
Date Xxxxxxx X. Xxxxx will be appointed as the President. The
officers will have the authority, responsibilities and duties as
are customary for officers holding similar positions with respect
to businesses conducted in corporate form and such additional
authority, responsibilities and duties as the Board may delegate
from time to time.
(d) FOCI and National Security Issues. The following provisions will
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apply in order to address issues relating to national security.
(i) WELCO will take appropriate steps to mitigate any FOCI
issues that arise from existing activities included in the
ESBU Operations, including activities at the STC. If
necessary, these steps will include the novation of any
classified contracts to WGS or WGES, as appropriate.
(ii) WELCO will honor all existing commitments to the DOE with
respect to AP600 technology, including payment
commitments.
(iii) WELCO will comply with applicable U.S. Government export
regulations and will honor all commitments to the Nuclear
Regulatory Commission with respect to the nuclear
materials and other licenses currently held as part of the
ESBU Business.
(iv) There will be no common officers between WELCO and WGS.
6. ACQUISITION OF ESBU AND GESCO BUSINESSES.
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6.1 Division of GESCO Operations. The parties acknowledge that effective
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as of the GESCO Closing Date the GESCO Business is to be divided into
two components as follows:
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(a) WGS. All assets, properties, rights, obligations and liabilities
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included in the GESCO Business (including the outstanding shares
of, or other equity interests in, any corporation or other legal
entity in which any of such assets, properties, rights,
obligations and liabilities are held) that arise from, relate to,
or are used in connection with
(i) the Savannah River Management and Operations contract (the
"SAVANNAH RIVER M&O CONTRACT"), including the outstanding
shares of, or other equity interests in, Westinghouse
Savannah River Company, Inc. or any successor entity,
(ii) the Electro-Mechanical Division, and
(iii) the Safety Management Solutions contracts and operations,
including the outstanding shares of, or other equity
interests in, Westinghouse Safety Management Solutions,
Inc. or any successor entity,
(iv) any other part of the GESCO Business described in Section
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6.1(b)(ii) below that would otherwise be a part of the
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WGES Operations (as defined in Section 6.1(b)) but only to
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the extent that it involves classified defense activities
(collectively the "WGS OPERATIONS")
(b) WGES. All assets, properties, rights, obligations and
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liabilities included in the GESCO Business (including the
outstanding shares of, or other equity interests in, any
corporation or other legal entity in which any of such assets,
properties, rights, obligations and liabilities are held) that
arise from, relate to, or are used in connection with
(i) the Safe Sites, WIPP, Anniston, Government Technical
Services Division and West Valley contracts and
operations, or
(ii) any other part of the GESCO Business that is not
specifically identified as part of the WGS Operations and
is not described in clause (i) above but only to the
extent that it does not involve classified defense
activities
(collectively the "WGES OPERATIONS").
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6.2 Novation. MK and BNFL-USA will use commercially reasonable efforts to
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obtain the consent of CBS to a novation of the Asset Purchase
Agreements as follows:
(a) ESBU Purchase Agreement. The parties will implement a novation
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of the ESBU Purchase Agreement so that (i) WELCO is substituted
as a party in lieu of WGNH and succeeds to all WGNH's rights and
obligations, (ii) WGNH is released from its obligations, and
(iii) the existing guarantees issued by MK-Delaware, MK, BNFL and
BNFL-USA remain in effect in support of WELCO's obligations.
(b) GESCO Purchase Agreement. The parties will implement a novation
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of the GESCO Purchase Agreement so that (i) WGS and WGES are
substituted as parties in lieu of WGNH and succeed to all WGNH's
rights and obligations in a manner that is consistent with the
division of the GESCO Business as outlined in Section 6.1, (ii)
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WGNH is released from its obligations, and (iii) the existing
guarantees issued by MK-Delaware, MK, BNFL and BNFL-USA remain in
effect in support of WGS's and WGES's obligations.
6.3 Assignment. If the parties are unable to obtain the consent of CBS to
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a novation of the Asset Purchase Agreements as described in Section
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6.2 then they will cause WGNH to assign its rights and obligations
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under the Asset Purchase Agreements as follows:
(a) GESCO Purchase Agreement. No later than the closing date under
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the GESCO Purchase Agreement (the "GESCO CLOSING DATE")
(i) WGS Operations. WGNH will assign to WGS all WGNH's rights
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and obligations under the GESCO Purchase Agreement that
relate to the WGS Operations and (to the extent permitted
under the GESCO Purchase Agreement) the parties will cause
WGS to assume all such rights and obligations, including the
obligation to pay an appropriate portion of the Purchase
Price, to accept the assignment and transfer to it of all
the Acquired Assets, and to assume the Assumed Liabilities
(each as defined in GESCO Purchase Agreement ) that
constitute part of the WGS Operations.
(ii) WGES Operations. WGNH will assign to WGES all WGNH's rights
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and obligations under the GESCO Purchase Agreement that
relate to the WGES Operations and (to the extent permitted
under the GESCO
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Purchase Agreement) the parties will cause WGES to assume
all such rights and obligations, including the obligation to
pay an appropriate portion of the Purchase Price, to accept
the assignment and transfer to it of all the Acquired
Assets, and to assume the Assumed Liabilities (each as
defined in GESCO Purchase Agreement) that constitute part of
the WGES Operations.
(b) ESBU Purchase Agreement. No later than the closing date under the
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ESBU Asset Purchase Agreement (the "ESBU CLOSING DATE") WGNH will
assign to WELCO all WGNH's rights and obligations under the ESBU
Purchase Agreement, and all personnel being taken and all
technology being acquired from the STC and (to the extent
permitted under the ESBU Purchase Agreement and the GESCO
Purchase Agreement) the parties will cause WELCO to assume all
such rights and obligations, including the obligation to pay the
Purchase Price and to accept the assignment and transfer to it of
all the Acquired Assets, and to assume the Assumed Liabilities
(each as defined in ESBU Purchase Agreement); provided that, if
necessary, the parties will enter into appropriate arrangements
in order to address FOCI and national security concerns with
respect to any classified defense contracts included in the STC
operations that form part of the Acquired Assets or the Assumed
Liabilities, which arrangements may involve the novation of those
contracts to WGS or WGES and corresponding financial arrangements
to preserve WELCO's economic interests in such contracts.
(c) Certain Rights. All of the rights, duties and obligations of
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WGNH under the ESBU Purchase Agreement and the GESCO Purchase
Agreement that are not specifically addressed in this Agreement
will be shared equitably among the Companies in a manner that is
consistent with this Agreement.
(d) Closing Dates. MK and BNFL-USA anticipate that the closing under
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the ESBU Purchase Agreement and the GESCO Purchase Agreement will
occur simultaneously. However, the parties may by mutual
agreement permit the closings to occur at different times.
6.4 Contribution of Purchase Price to WGS, WGES and WELCO.
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(a) Subject to the provisions of paragraph (b), no later than the day
before the GESCO Closing Date and the ESBU Closing Date,
respectively, MK and
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BNSI will provide funds to WGS, WGES and WELCO to enable them to
pay the purchase price under the GESCO Purchase Agreement and the
ESBU Purchase Agreement, as described in Exhibit A.
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(b) All of the contributions contemplated by paragraph (a), and all
other contributions to be made to the Companies under Section 7
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or otherwise, are expressly conditioned on the expiration of any
and all applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act relating to the formation of the
Companies and to the acquisition of the ESBU Business or the
GESCO Business.
6.5 Other Actions. The parties will take all such other actions and will
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cause their respective affiliates to take such other actions to cause
WGNH, WGS, WGES and WELCO to perform all obligations to be performed
by them under the GESCO Purchase Agreement or the ESBU Purchase
Agreement, as the case may be.
7. ADDITIONAL CONTRIBUTIONS. The obligations of the parties to make
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additional contributions to any of the Companies to meet the needs of the
Companies for funding are as follows:
7.1 WGS. MK and BNSI shall be responsible for the cash and other funding
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requirements of WGS in accordance with the terms of the WGS Agreement.
7.2 WGES. Any contributions required to be made to WGES must be approved
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by the representatives of both MK and BNSI on the WGES Board and will
be made in proportion to the respective membership interests of WGS
and BNSI, as set forth in Section 4.2.
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7.3 WELCO. BNSI shall be solely responsible for the cash and other
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funding requirements of WELCO.
8. FINANCIAL ARRANGEMENTS.
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8.1 Replacement of Letters of Credit etc. The parties acknowledge that
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CBS and certain of its affiliates are presently obligated under
certain letters of credit, performance bonds and similar obligations
issued in connection with the ESBU Business and the GESCO Business
(the "OUTSTANDING LETTERS OF CREDIT AND BONDS"), and that WGNH is
obligated under the ESBU Purchase Agreement and the GESCO Purchase
Agreement to replace the Outstanding Letters of Credit and Bonds with
substitute financial arrangements at closing. The responsibility of
the parties to accomplish this will be allocated as follows:
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(a) WGS. MK and BNSI will jointly replace each of the Outstanding
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Letters of Credit and Bonds that secure or support obligations
that arise from the WGS Operations with substitute financial
arrangements on or before the GESCO Closing Date and will provide
such credit support, including guarantees from MK and BNSI or
their respective affiliates, as may be necessary to put such
substitute financial arrangements into effect, in accordance with
the terms of the WGS Agreement.
(b) WGES. MK and BNSI will jointly replace each of the Outstanding
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Letters of Credit and Bonds that secure or support obligations
that arise from the WGES Operations with substitute financial
arrangements on or before the GESCO Closing Date and will provide
such credit support, including guarantees from MK and BNSI or
their respective affiliates, as may be necessary to put such
substitute financial arrangements into effect; provided that the
costs and liabilities of such actions and arrangements shall be
shared between MK and BNSI on a 60/40 basis.
(c) WELCO. BNSI will replace each of the Outstanding Letters of
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Credit and Bonds that secure or support obligations that arise
from the ESBU Operations with substitute financial arrangements
on or before the ESBU Closing Date and will provide such credit
support, including guarantees from BNSI or its affiliates, as may
be necessary to put such substitute financial arrangements into
effect.
8.2 Support for Additional Financing. If any of WGS, WGES or WELCO wishes
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to incur any indebtedness from any third party and in order to obtain
such financing a guarantee or other form of credit support is required
then the responsibilities of the parties to provide such guarantees or
other support are as follows.
(a) WGS. MK and BNSI shall be responsible for providing guarantees or
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other credit support for WGS, and for the costs and liabilities
of such actions and arrangements, in accordance with the terms of
the WGS Agreement.
(b) WGES. MK and BNSI shall be jointly responsible for providing
----
guarantees or other credit support for WGES, and any costs and
liabilities of such actions and arrangements shall be shared
between MK and BNSI on a 60/40 basis.
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(c) WELCO. BNSI shall be responsible for providing guarantees or
-----
other credit support for WELCO.
9. TEAMING.
-------
9.1 General. The parties recognize that each of them and their affiliates
-------
as well as the Companies have complementary strengths with respect to
the performance of services for the DOE and the DOD and that is in
their mutual interest to cooperate in order to enhance the position of
the Companies in bidding on DOE and DOD contracts.
9.2 Cooperation. Subject to national security requirements, export
-----------
controls, FOCI mitigation plans and contracting requirements (the
"GOVERNMENTAL REQUIREMENTS"), the parties will cause the Companies to
cooperate in order to ensure their ability to draw upon the full
portfolio of current resources in commercial, DOE, DOD, scientific and
technical consulting and laboratory services. In recognition of the
fact that WELCO may possess personnel and technology resources which
could benefit the implementation of existing and future WGS and WGES
contracts, such cooperation will include WELCO's commercially
reasonable efforts, in accordance with this Section 9 and with Section
--------- -------
10, to make available such personnel and technology resources to
--
support WGS and WGES and their subsidiaries and divisions in the
conduct of government business. It is the intention of the parties to
share lessons learned in operational know-how and technology
applications through personnel transfers, case studies and status
seminars in a manner that is consistent with the provisions of this
Agreement.
9.3 Certain Defense and Other Programs. WGS, WGES and WELCO will
----------------------------------
cooperate, subject to Governmental Requirements and pursuant to
appropriate commercial arrangements to be negotiated in good faith, to
support WELCO's participation in Defense Program initiatives.
9.4 Bidding. Subject to Governmental Requirements and other applicable
-------
law, WGS and WGES in the areas of business respectively assigned to
them will be the preferred vehicle for bidding primary Management and
Operations and Management and Integration contracts on DOE and DOD
sites with the objective of growing the value and enhancing the
competitiveness of WGS and WGES consistent with the interests of MK
and BNFL-USA. If MK and BNFL-USA agree that it would not be
advantageous or consistent with their interests to bid a specific
contract through WGS or WGES, as the case may be, they shall agree on
the appropriate vehicle for jointly bidding such contract, subject to
the following sentence. If either MK or
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BNFL-USA believes that jointly bidding a specific contract (using any
vehicle) would potentially have a material adverse impact on MK or
BNFL-USA, then and only after MK and BNFL have attempted to resolve
and have been unable to resolve any differences of opinion regarding
the potential for material adverse impact, will MK or BNFL-USA (or
their respective affiliates) be free to bid that contract directly or
in concert with a different partner or partners, and WGS and WGES will
not bid. Any disputes with respect to this Section 9.4 will be
resolved pursuant to the procedures set forth in Section 12.
9.5 MK Preferred Provider of EPCM and Facilities O&M Services. Subject to
---------------------------------------------------------
Governmental Requirements and other applicable law, MK shall be the
preferred supplier to WELCO (and to WELCO's customers where WELCO has
the right to choose its customer=s suppliers) for planning,
constructing, demonstrating, operating, maintaining, repairing, and
upgrading nuclear power generation facilities and facilities of any
kind in connection with WELCO's commercial nuclear and/or steam
operations to the extent WELCO intends to contract with any party for
such services (hereinafter referred to as "EPCM/O&M Services").
Accordingly, WELCO will negotiate with MK in good faith (and will
recommend MK and seek to encourage its customers to so negotiate with
MK) to provide EPCM/O&M Services that MK is qualified to perform. If
WELCO desires to competitively bid EPCM/O&M Services and MK is
qualified to perform such EPCM/O&M Services, MK shall have the right
to perform such EPCM/O&M Services at the same price and subject to the
same terms and conditions as the terms and conditions of a bona fide
bid by a competitive bidder that WELCO would otherwise contract with
to perform such services. If WELCO does not believe MK is qualified
to perform such EPCM/O&M Services then the matter will be resolved
pursuant to the procedures set forth in Section 12. The foregoing
provisions of this Section 9.5 do not apply to the extent such
EPCM/O&M Services are subject to statutory and/or regulatory
requirements mandating competitive bidding and prohibiting the
exercise by MK of such right. In addition, the arrangements between
MK and BNFL-USA provided for in this Section 9.5 are subject to
arrangements, existing on the Closing Date, of WELCO or its
predecessors or affiliates.
9.6 General and Administrative Services. It is the intention of the
-----------------------------------
parties that, subject to Governmental Requirements and pursuant to
appropriate commercial arrangements to be negotiated in good faith,
WGS, WGES and WELCO should share certain general and administrative
services in order to provide such services in the most efficient and
cost-effective manner.
9.7 Employees.
---------
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(a) The parties acknowledge that they have committed to the DOE not
to make any changes to the management teams of WGS or WGES except
as provided in a Transition Agreement to be entered into between
the Companies and the DOE (the "TRANSITION AGREEMENT").
(b) In order to support the performance of all DOD and DOE contracts,
MK and BNSI will promote the free transferability of employees
between the Companies, subject in all cases to applicable
Governmental Requirements and the reasonable commercial
requirements of the Companies and after consultation with the DOD
or the DOE, as the case may be.
(c) Subject to the provisions of the Transition Agreement, if
applicable, MK and BNSI will endeavor to keep the benefit
arrangements for employees of the Companies similar to each
other, portable and competitive.
(d) Subject at all times to the Governmental Requirements, WGS, WGES
and WELCO shall establish an advisory committee made up of
representatives chosen by each of the three Companies (the "HUMAN
RESOURCES COMMITTEE") to discuss and provide non-binding
recommendations to their respective presidents concerning the
availability of WELCO personnel to assist WGS and WGES, taking
into account the Governmental Requirements and the needs of the
Companies. The Human Resources Committee shall
(i) meet at least once each quarter, and at such other times
as they may mutually agree, for the purpose of discussing
anticipated personnel requirements and the availability of
such personnel for the ensuing 12 months, or for such
other periods as they may mutually agree,
(ii) make recommendations, if any, to their respective
presidents concerning the transfer or secondment of WELCO
personnel, subject to the Governmental Requirements, and
(iii) provide reports to the presidents of the Companies on such
personnel matters on at least a quarterly basis.
The Companies shall cooperate in carrying out such
recommendations of the Human Resources Committee as may be agreed
to by each respective affected Company, subject to such changes
as the Companies may agree upon and subject to the Governmental
Requirements. Notwithstanding the
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foregoing provisions of this Section 9.7(d) the recommendations
--------------
of the Human Resources Committee shall not be binding on the
Companies, and none of the Companies shall be required to
implement the recommended actions of the Human Resources
Committee if they are on terms that are commercially unreasonable
for that Company.
(e) Any personnel seconded to WGS or WGES pursuant to this Section 9
---------
shall be seconded on a cost pass-through basis, including a
reasonable allocation of overhead.
10. TECHNOLOGY SHARING ARRANGEMENTS.
-------------------------------
10.1 General. The parties recognize that the Companies and their
-------
subsidiaries have technology (including intellectual property) that
may be useful to, or complementary of, the technology of each other.
It is the intention of the parties that the full range of such
technology be reasonably available to the Companies in providing
services to their customers, particularly the DOE and the DOD, in
accordance with this Section 10 and the Governmental Requirements,
----------
including, without limitation, consistent with the technology
transfer mission of DOE and other restrictions and conditions on
licensing and technology transfer contained in the Covered Contracts
specified in the Transition Agreement.
10.2 Cooperation. Subject to the Governmental Requirements and pursuant
-----------
to appropriate commercial arrangements to be negotiated in good
faith, the parties will cause the Companies to cooperate to share
relevant technology to best serve their client interests and goals;
provided, however, that such sharing does not result in the
disclosure of protected technology or intellectual property rights to
third parties or the disclosure of classified information, special
nuclear material, Unclassified Controlled Nuclear Information,
Official Use Only, and/or export controlled data entrusted to or held
by any Company except as permissible pursuant to the Governmental
Requirements, including but not limited to the NISD and applicable
U.S. government laws and regulations. Specific limitations on such
interactions will be addressed in a Technology Control Plan and
Security Control Agreement to be mutually agreed by the affected
Companies and approved by the DOE and (as appropriate) the DOD. To
ensure that relevant technology residing in WELCO is available to
WGES and WGS in the performance of their business and contractual
obligations, WELCO technology will be made available in accordance
with the procedures set forth in Section 10.5.
------------
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10.3. CBS Shared Technology Agreements. Subject to the Governmental
--------------------------------
Requirements, the parties and their affiliates will enter into one or
more technology sharing arrangements with CBS and certain of its
affiliates, and certain third parties in connection with the
transactions contemplated by the Asset Purchase Agreements (the "CBS
SHARED TECHNOLOGY AGREEMENTS"). In order for WGS, WGES, and WELCO to
obtain the benefit of the technology that is to be licensed
thereunder, it will be necessary for them to enter into appropriate
arrangements for the further sharing or licensing of such technology
through sublicense arrangements which may require the prior approval
of CBS (which may not be unreasonably withheld).
10.4 WELCO Technology. Recognizing that WELCO will possess technology and
----------------
related resources that could benefit the delivery of goods and
services under existing and future WGS and WGES contracts, BNSI will,
and will cause WELCO to, make reasonable efforts to make available
such technology (in compliance with the Governmental Requirements,
confidentiality restrictions, and pre-existing contractual
requirements) to support WGS and WGES, their subsidiaries, divisions
and controlled affiliates, in the performance of U.S. government
business. WELCO will own the AP600 technology (to the extent such
technology is currently owned by CBS) and will abide by all
requirements of the existing contracts regarding such technology that
are assumed by WELCO pursuant to the ESBU Asset Purchase Agreement .
10.5 Procedures for Technology Exchange. Upon specific request and in
----------------------------------
compliance with the Governmental Requirements, WELCO will make
available to WGS and WGES such technology as shall be deemed
reasonably necessary to support WGS or WGES in the performance of
U.S. government business. Likewise, upon specific request and in
compliance with the Governmental Requirements, WGS and WGES will make
available to WELCO such technology as shall be deemed reasonably
necessary to support WELCO's business activities. Such requests shall
be made by the Company's representative on the Technology Exchange
Committee ("TEC"), which shall be comprised of designated
representatives from WGS, WGES, and WELCO. The TEC will meet at least
quarterly, or more frequently if requested by a designated
representative. Technology will be made available among the Companies
in accordance with arms-length commercial terms and the Governmental
Requirements. In the event technology resources requested are not
reasonably available in WELCO or WGES, the members of TEC will work
cooperatively to obtain the desired technology on acceptable
commercial terms from other sources, consistent with the business
goals of the entities represented on TEC. WELCO or WGES will not be
required to provide technology on commercially unreasonable terms or
contrary to their business interests.
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10.6 Agreements. MK and BNFL-USA will cause their affiliates, including
----------
the Companies, to enter into appropriate agreements to carry out the
purpose of this Section 10.
----------
11. INDEMNIFICATION.
---------------
11.1 Background. The parties acknowledge and agree that
----------
(a) It is their intention to segregate the GESCO Business (which is
in turn divided into the WGS Operations and the WGES
Operations), and the ESBU Business by allocating them to the
Companies as outlined in Section 6.
---------
(b) It is their intention that the exposure of MK, MK-Delaware and
their affiliates to liabilities arising from the GESCO Business
or the ESBU Business, and the exposure of BNFL, BNFL-USA , BNSI
and their affiliates to liabilities arising from the GESCO
Business be limited as set forth herein.
(c) In order to preserve the allocation of liabilities reflected by
such actions, the parties agree that each of the parties and the
Companies and their respective affiliates will be entitled to
indemnification as set forth below.
11.2 First and Second Tier Entities. For the purposes of this Section 11
------------------------------ ----------
(a) MK, BNFL-USA, BNSI and, if applicable, their parent companies
are referred to as "FIRST TIER ENTITIES" and
(b) WGNH, WGS, WGES and WELCO, and their respective subsidiaries,
are referred to as "SECOND TIER ENTITIES".
11.3 Indemnification. With respect to any liability or claim that arises
---------------
from the business or operations of any Second Tier Entity (or any
predecessor):
(a) WGS. In the case of any liability of any kind or nature
---
whatsoever (including liabilities existing on the GESCO Closing
Date) that arises from the business or operations of WGS, WGS
will indemnify and defend MK-Delaware, MK, their affiliates,
BNFL, BNFL-USA, BNSI and their affiliates, WGNH and any other
Second Tier Entities and their affiliates and hold them harmless
against any loss or expense arising from such liability or claim
(including reasonable attorneys' fees but excluding
consequential damages) ("LOSSES"); provided that
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(i) there shall be excluded from indemnification any Loss that
is reflected in a reduction in the value of any equity
interest in WGS held by MK or its affiliates or in the
amounts payable to BNSI under the WGS Agreement, and
(ii) the assets of WGS that are to be used to make any such
indemnification payments shall in any event exclude its
membership interest in WGES and any dividends, distributions
or other payments received by WGS, or payable to WGS, with
respect to such interest.
If the assets of WGS are insufficient to perform the required
indemnification and defense BNSI and MK will make appropriate
payments to each other and their respective affiliates such that
MK and its affiliates, on the one hand, and BNSI and its
affiliates, on the other hand, (taking into account their
economic participation in the Second Tier Entities) share any
Losses as provided in the WGS Agreement and otherwise on a 60/40
basis.
(b) WGES. In the case of any liability of any kind or nature
----
whatsoever (including liabilities existing on the GESCO Closing
Date) arising from the business or operations of WGES, WGES will
indemnify and defend MK-Delaware, MK, their affiliates, BNFL,
BNFL-USA, BNSI and their affiliates, WGNH and each of the other
Second Tier Entities and their affiliates and hold them harmless
against any Losses, provided that there shall be excluded from
indemnification any Loss that is reflected in a reduction in the
value of any equity interest in WGES held by MK or BNFL-USA, BNSI
or their affiliates. If the assets of WGES, as the case may be,
are insufficient to perform the required indemnification and
defense, BNFL-USA and MK will make appropriate payments to each
other and their respective affiliates such that MK and its
affiliates, on the one hand, and BNFL-USA and its affiliates, on
the other hand, (taking into account their economic participation
in the Second Tier Entities) share any Losses on a 60/40 basis.
(c) WELCO. In the case of any liability of any kind or nature
-----
whatsoever (including liabilities existing on the ESBU Closing
Date) that arises from the business or operations of WELCO, WELCO
will indemnify and defend MK-Delaware, MK, their affiliates, WGNH
and any other Second Tier Entities and their affiliates and hold
them harmless against any Losses. If the assets of WELCO are
insufficient to perform the required indemnification and defense,
BNFL-USA will indemnify, defend and hold harmless
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MK-Delaware, MK, and their affiliates, and WGNH and any other
Second Tier Entities and their affiliates.
11.4 Limitations. The provisions of this Section 11 shall be perpetual.
----------- ----------
11.5 Notice and Cooperation. Any party that has, or believes that it may
----------------------
have, a claim for indemnification or other right to payment under
this Section 11 will give prompt written notice to the other party
----------
and other relevant parties of the event or circumstances giving rise
to such claim. The parties will cooperate with each other and their
affiliates in the investigation and defense of any liability or claim
that may be the subject of this Section 11. Any disputes will be
----------
resolved as provided in Section 12.
----------
12. DISPUTE RESOLUTION.
------------------
12.1 All disputes with respect to any matters that are the subject of this
Agreement will, In the first instance, be referred to the Chief
Executive Officers ("CEOS") of MK-Delaware and BNFL as
representatives of their respective companies.
12.2 If the dispute cannot be resolved by the CEO's within 60 days after
it is referred to them, then either party may initiate mediation of
the dispute in accordance with the Center for Public Resources Model
Procedure for Mediation of Business Disputes.
12.3 If the dispute has not been resolved within 60 days after the
initiation of the mediation procedure, or if either party will not
participate in a mediation, it will then be subject to binding
arbitration under the rules of the International Chamber of Commerce
at a mutually agreeable venue. If MK and BNFL-USA are unable to agree
on a venue, the arbitration will take place at a neutral site other
than the United States or the United Kingdom.
13. TERMINATION. This Agreement will terminate automatically upon the
-----------
termination, for any reason, of the ESBU Purchase Agreement or the GESCO
Purchase Agreement. In addition, this Agreement, except for the provisions
of Sections 11, 12, 14, and 15 hereof, shall terminate on the earliest date
on which either BNFL or MK, directly or through one or more of their
respective Affiliates, (i) no longer holds an interest in WGS and (ii) no
longer holds an interest in WGES.
14. CONFIDENTIAL INFORMATION.
------------------------
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14.1 The parties acknowledge that in order to carry out the purposes of
this Agreement it will be necessary for them to disclose to the other
party, and to its affiliates, confidential and proprietary
information of the disclosing party or its affiliates.
14.2 Each party will take reasonable actions to identify to the other
party any information that is confidential or proprietary, which will
include marking or identifying such information (in whatever form it
may be embodied) as "Confidential". All such information is referred
to as "CONFIDENTIAL INFORMATION".
14.3 Each party will treat the other party's Confidential Information as
confidential, will not disclose it to any other person (other those
of its and its affiliates' officers, directors and representatives
who need to know such information for the purpose of carrying out the
transactions contemplated by this Agreement) or use it for any
purpose other than carrying out the transactions contemplated by this
Agreement.
14.4 The restrictions imposed under this Section 14 shall remain in effect
----------
(a) with respect to any Confidential Information that constitutes a
"trade secret" (as defined under the laws of the State of New
York) of the disclosing party, so long as it remains a trade
secret,
(b) with respect to other Confidential Information, so long as the
parties jointly hold interests in any of the GESCO Business,
whether through their respective investments in any of the
Companies or otherwise and until the third anniversary of the
date on which any such joint ownership is terminated.
14.5 The restrictions imposed under this Section 14 shall not apply to any
----------
Confidential Information that
(a) at the time of disclosure is available in the public domain or
is known to the receiving party without breach of any obligation
of confidentiality,
(b) is subsequently disclosed by a third party to the receiving
party without any obligation of confidentiality, or
(c) is independently developed by the receiving party without breach
of any obligation of confidentiality.
15. MISCELLANEOUS.
-------------
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15.1 Cooperation Prior to Closing. During the period between execution of
----------------------------
this Agreement and the ESBU and GESCO Closing Dates, MK and BNFL-USA
will consult regularly with respect to matters arising under the ESBU
Purchase Agreement and/or the GESCO Purchase Agreement. Initiating
formal disputes, challenges or allegations of breach against CBS
under such agreements will require the agreement of MK and BNFL-USA.
15.2 Integration. This Agreement contains the entire understanding of the
-----------
parties with respect to the subject matter hereof, and supersedes the
Original Agreement and all other prior understandings and agreements
between them or their affiliates with respect to such subject matter.
The parties expect that this Agreement will be superseded in whole or
in part by one or more other written agreements between them (the
"SUBSEQUENT AGREEMENTS"). Each Subsequent Agreement shall make
specific reference to this Agreement and the provisions, if any, of
this Agreement that are to be superseded by such Subsequent
Agreement.
15.3 Governing Law. This Agreement is governed by and shall be construed
-------------
in accordance with the law of the State of New York, without regard
to the principles of conflicts of laws.
15.4 Assignment. No party shall have the right to assign all or any part
----------
of its rights or obligations under this Agreement without the written
consent of the other party. This Agreement shall be binding upon and
enure to the benefit of the parties and their respective permitted
successors and assigns.
15.5 No Third Party Beneficiaries. Except for the Companies, this
----------------------------
Agreement is not intended to create any rights in any person that is
not a party to this Agreement.
15.6 No Partnership. The parties do not intend to create, and this
--------------
Agreement shall not be deemed to create, a partnership or agency
relationship or any fiduciary duties between MK and BNFL-USA or any
of their affiliates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers or agents, all as of
the day and year first above written.
XX XXXXXXXX XXXXXXX CORPORATION
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By: ______________________________
Name:
Title:
BNFL-USA BNFL USA GROUP INC.
By: ______________________________
Name:
Title:
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GUARANTEES
1. BNFL. In consideration of the execution and delivery of this
----
Agreement by MK, British Nuclear Fuels plc, a public limited company
organized under the laws of England ("BNFL"), hereby unconditionally
and irrevocably guarantees to MK-Delaware and MK the due and punctual
payment and performance by BNFL-USA of all of its obligations under
this Agreement (including without limitation its indemnification
obligations under Section 11), the GESCO Purchase Agreement and the
----------
ESBU Purchase Agreement. This guarantee replaces the Original
Guarantee executed by BNFL on June 24, 1998.
Dated: January __, 1999 BRITISH NUCLEAR FUELS plc
By: __________________________
Name:
Title:
2. MK. In consideration of the execution and delivery of this Agreement
--
by BNFL-USA, Xxxxxxxx Xxxxxxx Corporation, a Delaware corporation
("MK-DELAWARE"), hereby unconditionally and irrevocably guarantees to
BNFL and BNFL-USA the due and punctual payment and performance by MK
of all of its obligations under this Agreement (including without
limitation its indemnification obligations under Section 11), the
----------
GESCO Purchase Agreement and the ESBU Purchase Agreement. This
guarantee replaces the Original Guarantee executed by MK-Delaware on
June 24, 1998.
Dated: January __, 1999 XXXXXXXX XXXXXXX CORPORATION
By: __________________________
Name:
Title:
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EXHIBITS
THE REGISTRANT AGREES TO PROVIDE THE SECURITIES AND EXCHANGE
COMMISSION, UPON REQUEST, WITH COPIES OF THE EXHIBITS HERETO.
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