EXHIBIT 99.2
________________________________________________________________________________
ASSET PURCHASE AGREEMENT
by and between
NORTHROP GRUMMAN CORPORATION
and
VAC ACQUISITION CORP. II
________________________
Date as of June 9, 2000
________________________
________________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................................ 1
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1.1 Certain Defined Terms............................................................. 1
1.2 Other Definitional Provisions..................................................... 1
ARTICLE II CLOSING; PURCHASE PRICE AND ADJUSTMENT.................................................... 7
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2.1 Sale and Transfer of the Assets................................................... 7
2.2 Assets Not Transferred............................................................ 9
2.3 Assumed and Excluded Liabilities.................................................. 10
2.4 Closing; Purchase Price........................................................... 12
2.5 Purchase Price Adjustment......................................................... 13
2.6 Tax Allocation.................................................................... 15
2.7 Transfer Taxes.................................................................... 15
ARTICLE III CONDITIONS TO CLOSING.................................................................... 16
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3.1. Buyer's Obligation................................................................ 16
3.2. Sellers' Obligation............................................................... 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.................................................. 17
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4.1 Authority; No Conflicts; Governmental Consents; Corporate Matters................. 17
4.2 Financial Statements; Absence of Changes.......................................... 18
4.3 Taxes............................................................................. 21
4.4 Assets Other than Real Property Interests......................................... 22
4.5 Real Property Interests........................................................... 23
4.6 Intellectual Property............................................................. 24
4.7 Contracts......................................................................... 25
4.8 Litigation; Decrees............................................................... 26
4.9 Employee Benefits................................................................. 27
4.10 Environmental Matters............................................................. 29
4.11 Employee and Labor Relations...................................................... 30
4.12 Compliance With Law; Permits...................................................... 30
4.13 Assets of the Business............................................................ 31
4.14 Government Contracts.............................................................. 31
4.15 Product Warranty.................................................................. 32
4.16 Government Furnished Property or Equipment........................................ 32
4.17 Customers, Distributors and Suppliers............................................. 32
4.18 Insurance......................................................................... 32
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER.................................................... 33
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5.1 Authority; No Conflicts; Governmental Consents.................................... 33
5.2 Actions and Proceedings, Etc...................................................... 33
5.3 Buyer's Acknowledgment............................................................ 34
5.4 Solvency.......................................................................... 34
5.5 Financing......................................................................... 34
5.6 No Knowledge of Seller's Breach................................................... 34
ARTICLE VI COVENANTS OF SELLER....................................................................... 34
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6.1 Access............................................................................ 34
6.2 Ordinary Conduct.................................................................. 35
6.3 Insurance; Administration of Insurance............................................ 36
6.4 Accounts Receivable............................................................... 36
6.5 Confidential Information.......................................................... 37
6.6 No Solicitation................................................................... 37
6.7 Covenant Not To Compete........................................................... 38
ARTICLE VII COVENANTS OF BUYER....................................................................... 38
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7.1 Confidentiality................................................................... 38
7.2 Waiver of Bulk Sales Law Compliance............................................... 39
7.3 Excluded Assets................................................................... 39
7.4 Change of Company Names........................................................... 39
7.5 Government-owned and Government Furnished Property................................ 39
7.6 Title Insurance................................................................... 39
ARTICLE VIII MUTUAL COVENANTS........................................................................ 40
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8.1 HSR Filings; Permits; Novations and Consents...................................... 40
8.2 Reasonable Efforts................................................................ 41
8.3 Publicity......................................................................... 42
8.4 Cooperation After Closing......................................................... 42
8.5 Records........................................................................... 42
8.6 Use of Trademark and Trade Names.................................................. 43
8.7 Intercompany Work Orders.......................................................... 43
8.8 Non-Interference.................................................................. 43
8.9 Notification of Certain Matters................................................... 43
8.10 Tax Returns of Sold Subsidiaries.................................................. 43
8.11 Section 338(h)(10) Election....................................................... 44
8.12 Leaseback Arrangements and Certain Post-Closing Support........................... 44
8.13 Information Technology Services................................................... 45
ARTICLE IX INDEMNIFICATION........................................................................... 45
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9.1 Indemnification by Seller......................................................... 45
9.2 Indemnification by Buyer.......................................................... 45
9.3 Losses Net of Insurance, Etc...................................................... 46
9.4 Termination of Indemnification.................................................... 46
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9.5 Procedures Relating to Indemnification (Other than for Tax Claims)................ 46
9.6 Procedures Relating to Indemnification of Tax Claims.............................. 47
9.7 Survival of Representations....................................................... 48
9.8. Environmental Liability........................................................... 48
9.9 Pre-Closing Environmental Liabilities Procedures.................................. 52
9.10 Treatment of Indemnity Payments................................................... 54
ARTICLE X GENERAL PROVISIONS......................................................................... 54
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10.1 Assignment........................................................................ 54
10.2 No Third-Party Beneficiaries...................................................... 54
10.3 Termination....................................................................... 54
10.4 Expenses.......................................................................... 55
10.5 Equitable Relief.................................................................. 55
10.6 Amendments........................................................................ 55
10.7 Notices........................................................................... 55
10.8 Interpretation; Exhibits and Schedules............................................ 56
10.9 Counterparts...................................................................... 57
10.10 Entire Agreement.................................................................. 57
10.11 Fees.............................................................................. 57
10.12 Severability...................................................................... 57
10.13 Governing Law..................................................................... 58
EXHIBITS
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Terms of Subordinated Note.......................................................................Exhibit A
Intellectual Property Agreement..................................................................Exhibit B
Transitional Services Agreement..................................................................Exhibit C
Employee Matters Agreement.......................................................................Exhibit D
Opinion of Special Counsel to Seller.............................................................Exhibit E
Opinion of Special Counsel to Buyer..............................................................Exhibit F
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List of Schedules
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Schedule 1.1 Knowledge of Seller
Schedule 2.1(a) Owned Property
Schedule 2.1(b) Leased Property
Schedule 2.1(h) Sold Subsidiaries
Schedule 2.2(d) Excluded Claims or Rights Against Third Persons
Schedule 2.2(f) Excluded Trademarks and Trade Names
Schedule 2.2(g) Excluded Intellectual Property
Schedule 2.3(h) Liabilities and Obligations Relating to Litigation Matters
Schedule 2.5(b) Purchase Price Adjustment
Schedule 3.1(d) Required Consents
Schedule 4.1(b) Seller Consents
Schedule 4.1(c) Governmental Approvals and Consents
Schedule 4.1(e) Capitalization of the Sold Subsidiaries
Schedule 4.1(g) Activities of Sold Subsidiaries
Schedule 4.2(a) Financial Statements
Schedule 4.2(b) Supplemental Statement
Schedule 4.2(c) Absence of Changes
Schedule 4.3 Taxes
Schedule 4.4 Liens
Schedule 4.5 Encumbrances
Schedule 4.6 Intellectual Property Matters
Schedule 4.7 Contracts
Schedule 4.8 Litigation
Schedule 4.9 Employee Benefits
Schedule 4.9(j) Continuation Coverage Requirements
Schedule 4.10 Environmental Matters
Schedule 4.10(e) Environmental Audits or Assessments
Schedule 4.11 Employee and Labor Relations
Schedule 4.12(a) Compliance with Law
Schedule 4.12(b) Permits
Schedule 4.14 Government Contract Matters
Schedule 4.14(i) Seller Facility Security Clearances
Schedule 4.15 Product Warranty
Schedule 4.16 Government-Furnished Property or Equipment
Schedule 4.17 Customers, Distributors and Suppliers
Schedule 4.18 Insurance
Schedule 6.2 Ordinary Conduct of Business
Schedule 7.5 Excluded Government-Owned and Government-Furnished Property
Schedule 8.7 Intercompany Work Orders
Schedule 8.12 Leaseback Property
Schedule 8.13 Information Technology Services
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of June 9, 2000, among Northrop
Grumman Corporation, a Delaware corporation ("Seller"), and VAC Acquisition
Corp. II, a Delaware corporation ("Buyer").
Seller, through the Aerostructures Business Area of its Integrated
Systems and Aerostructures Sector (the "Sector"), is engaged in the business of
the manufacture and assembly of metal and composite components and structures
for commercial and military aircraft, and certain machining and fabrication
activities, substantially all of which business is conducted at its Hawthorne,
California; Dallas and Grand Prairie, Texas; Perry and Milledgeville, Georgia;
and Stuart, Florida sites (collectively, the "Business"). The parties hereto
desire that Seller sell, transfer, convey and assign to Buyer substantially all
of the assets, properties, interests in properties and rights used primarily in
the Business, and that Buyer purchase and acquire the same, subject to the
assumption by Buyer of the liabilities and obligations of Seller relating to the
Business, upon the terms and subject to the conditions hereinafter set forth.
The parties also intend to enter into certain agreements governing
their relationship and certain matters after the Closing Date as contemplated
hereby.
AGREEMENT
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NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Certain Defined Terms. As used in this Agreement, the following
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terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Accounting Arbitrator" has the meaning set forth in Section
2.5(e).
"Affiliate" means, with respect to any entity, any other entity
which directly or indirectly controls, is controlled by, or is under common
control with, such entity, where the term "control" means the ownership,
directly or indirectly, of more than fifty percent (50%) of the equity capital
or power in fact to direct the management of such entity.
"Ancillary Agreements" has the meaning set forth in Section
2.4(c).
"Assets" has the meaning set forth in Section 2.1.
"Assigned Contracts" has the meaning set forth in Section
2.1(e).
"Assignment and Assumption Agreement" means an assignment and
assumption agreement executed by Buyer and Seller in a form reasonably
acceptable to Buyer and Seller.
"Assumed Liabilities" has the meaning set forth in Section
2.3.
"Base Net Working Capital" shall mean Net Working Capital as
reflected on the Statement ($572,149,000).
"▇▇▇▇ of Sale" means a ▇▇▇▇ of sale in a form reasonably
acceptable to Buyer and Seller.
"Business" has the meaning set forth in the preamble.
"Business Day" means a day other than a Saturday or a Sunday
or other day on which commercial banks in New York are authorized or required by
law to close.
"Business Employee" means any individual who, at the Closing
Date, is (i) employed by Seller or a Sold Subsidiary and assigned by Seller or a
Sold Subsidiary pursuant to Seller's or such Sold Subsidiary's ongoing payroll
practice to the Business, including any individual so employed who is on
disability (but still on the payroll), and any individual so employed who is on
an approved leave of absence or lay-off with recall rights and (ii) any Shared
Service Employee.
"Business Property" has the meaning set forth in Section 4.5
hereto.
"Closing Date" means the day on which the Closing occurs
pursuant to Section 2.4.
"Closing Date Net Working Capital" has the meaning set forth
in Section 2.5(b).
"Closing Statement" has the meaning set forth in Section
2.5(a).
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Competitive Activities" has the meaning set forth in Section
6.8.
"Confidential Information" has the meaning set forth in
Section 6.7.
"Contract" means any contract, agreement, license, lease,
sales or purchase order or other legally binding commitment, whether written or
oral.
"Contractual Obligation" means, as to any Person, any provision
of any note, bond or security issued by such Person or of any mortgage,
indenture, deed of trust, lease, license, franchise, contract, agreement,
instrument or undertaking to which such Person is a party or to which it or any
of its property or assets is subject.
"Cost Accounting Standards" means regulations promulgated by the
Cost Accounting Standards Board set forth at 48 C.F.R. (S) 9901.301 et. seq. and
any guidance, interpretations, or preambles to those regulations published by
the Cost Accounting Standards Board in the Federal Register.
"Effective Time" has the meaning set forth in Section 2.4.
"Employee Benefit Arrangements" means each and all benefit
plans and arrangements which are not Employee Benefit Plans, including, without
limitation, each and all pension, supplemental pension, deferred compensation,
option or other equity-based program, accidental death and dismemberment, life
and health insurance and benefits (including medical, dental, vision and
hospitalization), fringe benefit, flexible spending account programs and other
employee benefit arrangements, plans, contracts, policies or practices providing
employee or executive compensation or benefits.
"Employee Benefit Plans" means each and all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained, sponsored or
contributed to by Seller or any of its ERISA Affiliates or in which Seller or
any of its ERISA Affiliates participates or participated or with respect to
which Seller or any of its ERISA Affiliates has any obligation to contribute.
"Employee Matters Agreement" means an agreement substantially
in the form of Exhibit D.
"Encumbrance" shall mean any claim, lien, pledge, option,
charge, easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, covenant, condition, restriction, conditional sales agreement,
encumbrance or other right of third parties, and includes, without limitation,
any agreement to give any of the foregoing in the future, and any contingent or
other title retention agreement or lease.
"Environmental Law" means collectively all applicable federal,
state or local laws, statutes, regulations, rules, ordinances, codes or common
law relating (i) to the protection of human health or the environment, or (ii)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Material as in effect on the date hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" of any Person means any other Person that,
together with such Person as of the relevant measuring date under ERISA, is or
was required to be treated as a single employer under Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC promulgated
from time to time thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section
2.3.
"Excluded Other Intellectual Property" has the meaning set
forth in Section 2.2(g).
"Excluded Trademarks and Trade Names" has the meaning set
forth in Section 2.2(f).
"GAAP" means generally accepted accounting principles in the
United States of America.
"Government Contract" means any Contract or other commitment
listed on Schedule 4.7 that relates to the Business with i) the United States
Government, ii) any prime contractor to the United States Government, or any
subcontractor with respect to any contract described in clauses (i) or (ii).
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Government-Furnished Property" has the meaning set forth in
Section 4.16.
"Hazardous Material" means any substance which is defined as a
hazardous waste, hazardous substance, pollutant or contaminant under any
Environmental Law, including but not limited to, polychlorinated biphenyls
("PCBs"), petroleum or petroleum fractions, and asbestos.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Income Statements" has the meaning set forth in Section 4.2(a).
"Indemnified Person" means, with respect to any Loss, the Person
seeking indemnification hereunder.
"Indemnifying Person" means, with respect to any Loss, the
Person from whom indemnification is being sought hereunder.
"Intellectual Property" means know-how, trade secrets,
processes, inventions, formulae, procedures, research records and test
information, and all trademarks, trade names, patents, service marks, copyrights
(whether registered or unregistered) and pending applications for the foregoing.
"Intellectual Property Agreement" means an agreement
substantially in the form of Exhibit B.
"Interest Rate" has the meaning set forth in Section 2.5(g).
"Knowledge of Seller" with reference to any of the
representations and warranties of Seller and except as specified in Section 4.10
means the actual knowledge of the Persons listed on Schedule 1.1, and does not
refer to the knowledge of any other Person.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any kind
or nature whatsoever.
"Loss" means any loss, liability, cost, deficiency, damage or
expense (including reasonable attorneys' fees and disbursements and the costs of
investigation) whether or not arising out of claims or lawsuits by third parties
or otherwise and including the defense or settlement of any of the foregoing.
Loss recoverable hereunder is subject to the limitations set forth in Section
9.4.
"Material Adverse Effect" means any circumstance, change or
effect that is materially adverse to the business, assets, financial condition
or results of operations of the Business taken as a whole, but excluding the
effects of changes that are generally applicable to the industries and markets
in which the Business operates unless such change relates solely to a material
customer or supplier of the Business.
"Net Working Capital" has the meaning set forth in Section
2.5(b).
"Owned Property" has the meaning set forth in Section 2.1(a).
"PDC Plume" means the Hazardous Material in ground water, and
only that Hazardous Material, present on and under the Hawthorne facility that
emanated from the Product Development Center located at ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and which has migrated to the Hawthorne facility.
"Permits" has the meaning set forth in Section 4.12.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Pre-Closing Environmental Condition" means: (1) the presence,
disposal or release as of the Closing Date of Hazardous Material in, on, under
or emanating from any facility (to the extent of the amounts of such Hazardous
Material then present) regardless of how the Hazardous Material came to rest at,
on, under or emanating from the facility, and (ii) any other act, omission or
condition prior to the Closing Date which may give rise to liability under any
Environmental Laws (to the extent of such act, omission or condition as of the
Closing Date).
"Purchase Price Adjustment" has the meaning set forth in Section
2.5(b).
"Purchase Price Adjustment Schedule" has the meaning set forth
in Section 2.5(b).
"Records" has the meaning set forth in Section 2.1(j).
"Remedial Action" means any response action, removal action,
remedial action, corrective action, monitoring program, sampling program,
investigation or other cleanup activity required by any Environmental Law to
clean up, remove, remediate, treat or ▇▇▇▇▇ any Hazardous Material in the
Environment and shall include: (i) obtaining any permits, consents, approvals,
or authorizations of any Governmental Authority necessary to conduct any such
work, (ii) preparing and implementing any plans or studies for such work, (iii)
obtaining a written notice from a Governmental Authority with jurisdiction over
the site in question or any portion thereof under Environmental Laws that
material additional work is required by such Governmental Authority; and (iv)
any other activities required under Environmental Laws to address the presence
of Hazardous Material at the site in question or any portion thereof.
"Required Consents" has the meaning set forth in Section 3.1(d).
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, statute, treaty, rule, regulation, ordinance, order,
decree, consent decree or similar instrument or determination or award of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"SEC" means the Securities and Exchange Commission.
"Sector" has the meaning set forth in the preamble hereto.
"Seller" has the meaning set forth in the preamble hereto.
"Seller Plans" means each and all Employee Benefit Plans and
Employee Benefit Arrangements sponsored, maintained or contributed to by Seller,
any of its ERISA Affiliates or any of the Sold Subsidiaries or to which any of
such Persons has (or has had) any obligation to contribute and which covers (or
has covered) Business Employees or former employees of Seller in the Business,
in each case only while employed in the Business.
"Selling Subsidiary" has the meaning set forth in Section 2.1.
"Shared Service Employee" means any individual who is employed
by Seller at the Closing Date but is not assigned to the Business, who provides
support services to the Business principally in the areas of finance, human
resources or procurement, and is listed on Schedule 1(a) to the Employee Matters
Agreement.
"Sold Subsidiary" has the meaning set forth in Section 2.1(h).
"Statement" means the audited statement of assets and
liabilities of the Business as of March 31, 2000, attached hereto as part of
Schedule 4.2.
"Subsidiary" means any Person of which a majority of the
outstanding equity interests or voting securities are owned, directly or
indirectly by another person.
"Tax" or "Taxes" means, with respect to any Person, any federal,
state, local or foreign net income, gross income, gross receipts, sales, use, ad
valorem, value-added, capital, unitary, intangible, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, transfer,
occupation, premium, property or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any jurisdiction or other taxing authority, on such Person.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Transaction Documents" means (i) this Agreement, (ii) the ▇▇▇▇
of Sale, (iii) the Assignment and Assumption Agreement, (iv) the deeds of
conveyance of Owned Property and (v) the Ancillary Agreements.
"Transitional Services Agreement" means an agreement
substantially in the form of Exhibit C.
"Transactions" means the transactions contemplated by the
Transaction Documents.
1.2 Other Definitional Provisions.
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(a) Terms defined in this Agreement in Sections other than
Section 1.1 shall have the meanings as so defined when used in this Agreement.
(b) As used herein, accounting terms not defined or to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) Unless express reference is made to Business Days,
references to days shall be to calendar days.
ARTICLE II
CLOSING; PURCHASE PRICE AND ADJUSTMENT
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2.1 Sale and Transfer of the Assets. Subject to the terms and
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conditions of this Agreement, except as otherwise specifically provided herein,
on the Closing Date Seller will sell, convey, transfer, assign and deliver to
Buyer all of Seller's right, title and interest in and to the following assets
(collectively, the "Assets"): (i) the Intellectual Property of Seller assigned
to Buyer under the Intellectual Property Agreement; and (ii) all of the
properties, rights, claims and assets other than Intellectual Property (except
the Excluded Assets), to the extent that they are used or held for use primarily
in the operations of the Business and will cause any Subsidiary of Seller having
any right, title or interest in or to any properties, rights, claims or assets
primarily used or held for use in the Business (each such Subsidiary, a "Selling
Subsidiary") to sell,
convey, transfer, assign and deliver to Buyer all of such Selling Subsidiary's
right, title and interest in and to the Assets. Subject to the terms and
conditions of this Agreement, on the Closing Date, Buyer will purchase, acquire
and accept from Seller and each Selling Subsidiary (collectively, "Sellers") all
of Sellers' right, title and interest in and to the Assets. The Assets include,
but are not limited to, the following assets or rights of Sellers (in addition
to the Intellectual Property of Seller assigned to Buyer under the Intellectual
Property Agreement):
(a) the real property (including all buildings, improvements and
structures located thereon and all rights, privileges, easements and
appurtenances thereto) described on Schedule 2.1(a) hereto (the "Owned
Property");
(b) the leasehold interests listed on Schedule 2.1(b) (the
"Leased Property");
(c) tangible personal property, including, without limitation,
the fixtures, furnishings, furniture, office supplies, vehicles, rolling stock,
tools, machinery, equipment and computer equipment, located upon or affixed to
or normally located in, at or upon, even if temporarily removed from, any of the
Business Properties (collectively, the "Equipment");
(d) inventory, including without limitation, raw materials
work-in-process, finished goods, spare parts and supplies;
(e) Contracts, including but not limited to all Contracts of
Sellers listed on Schedule 4.7, and Contracts entered into by Sellers through
the Closing Date (the "Assigned Contracts");
(f) transferable licenses, permits, approvals and authorizations
by any Governmental Authority used primarily in or relating primarily to the
Business or the Assets (the "Permits");
(g) bids, quotations and proposals for Contracts, whether oral
or written;
(h) all capital stock, partnership interests and other equity
interests in any Person listed in Schedule 2.1(h) (each, a "Sold Subsidiary");
(i) books and records (other than Tax records), or portions
thereof, including plans and specifications, surveys and title policies relating
to the Owned Property, sales literature, product information, employment records
and files and other information and/or data located at the Business Properties
(the "Records");
(j) insurance proceeds paid or payable by any insurance
provider, other than Seller or any Affiliate of Seller, for any Asset that is
destroyed or damaged after the date hereof and prior to the Closing;
(k) notes, drafts and accounts receivable, or portions thereof,
arising exclusively out of the Business;
(l) all prepaid expenses, advances and deposits (including
utility deposits), or portions thereof, arising exclusively out of the Business;
(m) causes of action, claims, demands, rights and privileges
against third parties, including, without limitation, warranties and guaranties
received from vendors, suppliers or manufacturers with respect to the Assets or
the Business and, subject to Section 6.3, causes of action, claims and rights
under insurance policies relating to the Assets or the Business;
(n) other intangible rights and assets of Seller (other than
Intellectual Property of Seller) and goodwill; and
(o) assets reflected on the Statement (other than Assets
disposed of since March 31, 2000 in accordance with Section 6.2).
2.2 Assets Not Transferred. Notwithstanding anything herein to the
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contrary, the following assets are not included in the Assets and shall be
retained by Seller (the "Excluded Assets"):
(a) all cash and cash equivalent items (except as described in
Section 2.1(m)) including, without limitation, checking accounts, bank accounts,
lock box numbers, certificates of deposit, time deposits, securities, and the
proceeds of accounts receivable, including uncashed checks in payment thereof,
received by Seller on or prior to the Closing Date;
(b) all rights, properties, and assets which have been used or
held for use in connection with the Business and which shall have been
transferred (including transfers by way of sale) or otherwise disposed of in the
ordinary course of business prior to the Closing;
(c) prepaid Taxes and rights to or claims for refunds or rebates
of Taxes and other governmental charges for periods ending on or prior to the
Closing Date and the benefit of net operating loss carryforwards or carrybacks,
or any other credits of Seller, whether or not attributable to the Business;
(d) claims or rights against third parties set forth on Schedule
2.2(d);
(e) proprietary or confidential business or technical
information, records and policies that relate generally to Seller and are not
used primarily in the Business, including, without limitation, organization
manuals, strategic plans and Tax records and related information;
(f) subject to the limited rights granted to Buyer pursuant to
the Intellectual Property Agreement, trademarks, trade names and service marks
listed on Schedule 2.2(f) (the "Excluded Trademarks and Trade Names");
(g) subject to the rights granted to Buyer pursuant to the
Intellectual Property Agreement, the know-how, trade secrets, processes,
inventions, formulae, procedures, research records, test information, patents,
copyrights, pending applications for patents and copyrights
and proprietary computer programs or other software and databases set forth on
Schedule 2.2(g) (the "Excluded Intellectual Property");
(h) all notes, drafts and accounts receivable or other
obligations for the payment of money made or owed by any Affiliate of Sellers;
(i) all Seller's rights in, to and under any commodity options,
puts, calls, forwards or similar agreements with respect to commodities used by
the Business;
(j) all causes of action, claims, demands, rights and privileges
against third parties that relate to any of the Excluded Assets or Excluded
Liabilities, including causes of actions, claims and rights under insurance
policies relating thereto;
(k) Equipment used by administrative employees of Seller who are
not assigned to the Business but who provide services to the Business;
(l) all other assets used primarily in connection with Seller's
corporate functions (including but not limited to the corporate charter,
taxpayer and other identification numbers, seals, minute books and stock
transfer books), whether or not used for the benefit of the Business;
(m) all rights and assets which are used or held for use in
connection with the B-2 program, the S-3 program (provided, however, that the
current S-3 contract with Lockheed ▇▇▇▇▇▇ at Closing will be converted to an
intercompany contract on substantially the same terms), the A-7 program and
classified programs, if any, not related to the C-17 or V-22 programs;
(n) the equipment, tooling and fixtures used or held for use in
the premises to be leased back by the Seller from the Buyer which premises are
identified on Schedule 8.12 as "Containing Excluded Assets" (none of which
assets are reflected on the Statement);
(o) equipment or tooling to which the United States Government
has contractual right to assert title as identified on Schedule 4.16 to the
extent the Government's right to assert title does not arise out of the C-17 or
V-22 programs;
(p) the reconfigureable tool developed under Cooperative
Agreement N00014-95-2-0003 between The Office of Naval Research and Grumman
Aerospace Corporation which was novated to Northrop Grumman Corporation; and
(q) any assets in any Seller rabbi trust or voluntary employee's
beneficiaries association.
2.3 Assumed and Excluded Liabilities. On the Closing Date, Buyer
--------------------------------
shall execute and deliver to Seller the Assignment and Assumption Agreement
pursuant to which from and after the Closing Buyer shall assume and agree to
pay, perform and discharge when due, and shall indemnify Seller and its
Affiliates (including the Selling Subsidiaries) against and hold them harmless
from, all the liabilities and obligations of Sellers relating primarily to the
Business or
the Assets, of any kind or nature, whether absolute, contingent, accrued or
otherwise, and whether arising before or after the Closing (collectively, the
"Assumed Liabilities"); provided, however, that the Assumed Liabilities shall in
no event include the following liabilities (the "Excluded Liabilities"):
(a) any liability, responsibility or obligation under any Seller Plan
(including, without limitation, any liability, responsibility or obligation to
any Governmental Authority with respect to the transfer of assets under Seller
Plans), except as provided in the Employee Matters Agreement;
(b) any liability for Taxes of Seller, Taxes of the Sold Subsidiaries
and Taxes arising out of and relating to the ownership of the Assets and the
operation of the Business, in each case for any period or portion thereof ending
on or prior to the Closing Date, excluding the Taxes that are the responsibility
of Buyer pursuant to Section 2.7 or those reflected on the Closing Statement
(other than any reserves for deferred Taxes established to reflect timing
differences between book and Tax income);
(c) any obligation of Seller under and pursuant to any commodity
options, puts, calls, forwards or similar agreements with respect to commodities
used by the Business;
(d) any liability arising from or related to the Excluded Assets;
(e) all notes, drafts and accounts payable or other obligations for
the payment of money made or owed to any Affiliate of Seller;
(f) all liabilities and obligations associated with (i) the pre-
Closing offsite transportation and disposal of Hazardous Material, (ii) the
presence or release of Hazardous Material either in, on, under or from any
former facility, (iii) Remedial Action related solely to the PDC Plume and (iv)
the regulatory closure of the two remaining solid waste management units at the
Hawthorne facility;
(g) all (i) indebtedness of Sellers for borrowed money, (ii)
obligations of Sellers evidenced by bonds, notes, debentures or similar
instruments, (iii) obligations under conditional sale, title retention or
similar agreements or arrangements creating an obligation of Sellers with
respect to the deferred purchase price of property (other than customary trade
credit), and (iv) all obligations of Sellers to guarantee any of the foregoing
types of obligations on behalf of others, except any liabilities or obligations
under any personal property leases or under any letters of credit outstanding as
of the Closing and relating to any Contract being assumed under this Agreement
(each a "Financing Obligation");
(h) all liabilities and obligations relating to the litigation and
other matters disclosed on Schedule 2.3(h) (including all current and future
claims relating to the subject matter of such litigation);
(i) claims covered under Seller's policies for workmen's
compensation, except as provided in the Employee Matters Agreement;
(j) all liabilities related to any failure to obtain the required
consents from Gulfstream or Alcoa or arising out of the alternative arrangements
implemented in lieu thereof; and
(k) liabilities incurred prior to the Closing Date for employee
payroll, payroll tax and payroll withholding liabilities.
2.4 Closing; Purchase Price.
-----------------------
(a) The closing (the "Closing") of the purchase and sale of the
Assets and the assumption of the Assumed Liabilities shall be held at the
offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, at 9:00 a.m. on June 30, 2000, or if the conditions to Closing set
forth in Article III shall not have been satisfied or waived by such date,
subject to Section 10.3, as soon as practicable after such conditions shall have
been satisfied or waived. The date on which the Closing shall occur is
hereinafter referred to as the "Closing Date." The Closing will be deemed
effective at 12:01 a.m. on the Closing Date (the "Effective Time").
(b) The aggregate purchase price for the Assets shall be
$842,700,000, payable on the Closing Date (i) by wire transfer in immediately
available funds to an account designated by Seller of $667,700,000 and (ii)
delivery of a subordinated note, in form and substance satisfactory to Buyer and
Seller, having the terms and conditions set forth on Exhibit A, in the principal
amount of $175,000,000 (the "Seller Note"), subject to adjustment pursuant to
Section 2.5 together with the assumption of the Assumed Liabilities as provided
in Section 2.3 (the "Purchase Price").
(c) At the Closing, Seller shall deliver or cause to be delivered to
Buyer (i) the ▇▇▇▇ of Sale, (ii) certificates representing shares of capital
stock of the Sold Subsidiaries accompanied by stock powers, duly executed in
blank, (iii) limited warranty deeds (or the equivalent thereof in any
jurisdiction in which limited warranty deeds may not be used) in recordable form
for the Owned Property being conveyed, and (iv) such other instruments of
transfer and documents (including assignments of the Intellectual Property) as
Buyer may reasonably request, and Buyer shall deliver to Seller (i) the
Assignment and Assumption Agreement (ii) such other instruments of assumption
and documents as Seller may reasonably request and (iii) an affidavit in form
and substance reasonably satisfactory to Buyer, duly executed and acknowledged,
certifying that Seller is not a foreign person within the meaning of Section
1445(f)(3) of the Code. Not later than the Closing, the parties hereto shall
also enter into agreements embodying certain relationships between Buyer and the
Business, on the one hand, and Seller and its remaining businesses, on the other
hand, after the Closing Date. These agreements will have terms as set forth in
Exhibit A with respect to the Seller Note, and be in the forms set forth in
Exhibit B with respect to Intellectual Property, Exhibit C with respect to the
provision of certain transitional services and Exhibit D with respect to
employee matters (Exhibits A through D, collectively, the "Ancillary
Agreements"). Buyer and Seller have entered into the Employee Matters Agreement
concurrently with the execution and delivery of this Agreement.
2.5 Purchase Price Adjustment.
-------------------------
(a) Within sixty (60) days after the Closing Date, Seller shall
prepare and deliver to Buyer an audited statement of assets and liabilities of
the Business as of the Effective Time. This statement will be in a format
comparable to the Statement (such statement, the "Closing Statement"). The
Closing Statement will be prepared using the same accounting methods, policies,
practices and procedures, with consistent classifications, judgments and
estimation methodology, as was used in the preparation of the Statement and as
described in the notes to the Statement and Schedule 4.2(a), and will not
include any changes in assets or liabilities as a result of purchase accounting
adjustments arising from or resulting as a consequence of the transactions
contemplated hereby. Buyer shall cause the employees of the Business to assist
Seller in the preparation of the Closing Statement.
(b) The Closing Statement shall be accompanied by an additional
schedule of information (the "Purchase Price Adjustment Schedule") which will
identify the Purchase Price Adjustment. For purposes of this Section 2.5 the
following definitions apply:
"Purchase Price Adjustment" shall mean (i) Closing Date Net Working
Capital less (ii) Base Net Working Capital.
"Closing Date Net Working Capital" shall mean Net Working Capital as
of the Effective Time.
"Net Working Capital" as of any date shall mean (i) total current
assets of the Business as of such date, minus (ii) total current liabilities of
the Business as of such date.
The Purchase Price will be increased on a dollar-for-dollar basis if the
Purchase Price Adjustment is positive and decreased on a dollar-for-dollar basis
if the Purchase Price Adjustment is negative. Schedule 2.5(b) shall set forth an
example of the operation of the Purchase Price Adjustment.
(c) Buyer and Seller agree that the sole purpose of the Purchase
Price Adjustment contemplated by this Section 2.5 is to measure the effect of
operating activity and transactions that have occurred between March 31, 2000
and the Effective Time. The Purchase Price Adjustment is not intended to permit
the introduction of different judgments, accounting methods, policies,
practices, procedures, classifications or estimation methodology for purposes of
determining the asset and liability balances from those used in the preparation
of the Statement. Each party shall provide the other party and its
representatives with reasonable access to books and records and relevant
personnel during the preparation of the Purchase Price Adjustment Schedule
referred to in paragraph (b) above and the resolution of any disputes that may
arise under this Section 2.5.
(d) If Buyer disagrees with the determination of the Purchase Price
Adjustment and the amount of such disagreement exceeds $5,000,000, Buyer shall
notify Seller in writing of such disagreement within thirty (30) days after
delivery of the Purchase Price Adjustment Schedule, which notice shall describe
the nature of any such disagreement in
reasonable detail, identify the specific items involved and the dollar amount of
each such disagreement and provide reasonable supporting documentation for each
such disagreement. If the total amount of all disagreements with the
determination of the Purchase Price Adjustment is less than $5,000,000, the
Purchase Price Adjustment delivered by Seller shall be final for purposes of
this Section 2.5. After the end of such 30-day period, Buyer may not introduce
additional disagreements with respect to any item in the Purchase Price
Adjustment Schedule or increase the amount of any disagreement, and any item not
so identified shall be deemed to be agreed to by Buyer and will be final and
binding upon the parties. Similarly, a disagreement by Buyer does not provide
any right to Seller to introduce any changes to Purchase Price Adjustment
Schedule not directly related to the disputed item. To the extent that a Buyer
disagreement relates to an error in the Closing Statement and a similar error
also exists in the Statement, then, to the extent that such disagreement is
determined to be error, the error in the Closing Statement and the error in the
Statement shall both be corrected in determining the Purchase Price Adjustment
under this Section 2.5. Resolution of suspense amounts described in Note 1.F of
Schedule 4.2(a)(iii) will be considered the correction of an error for the
purposes of the foregoing sentence and reflected both in the Statement and in
the Closing Statement and shall not result in a purchase price adjustment.
During the 30-day period of its review, Buyer shall have reasonable access to
any documents, schedules or workpapers used in the preparation of the Purchase
Price Adjustment Schedule.
(e) Buyer and Seller agree to negotiate in good faith to resolve any
such disagreement and any resolution agreed to in writing by Buyer and Seller
shall be final and binding upon the parties. If Buyer and Seller are unable to
resolve all disagreements properly identified by Buyer pursuant to Section
2.5(d) within thirty (30) days after delivery to Seller of written notice of
such disagreement, then the disputed matters shall be referred to the Chief
Financial Officers of the respective businesses for resolution. If the Chief
Financial Officers are unable to resolve all disagreements within fifteen (15)
days, then, within fifteen (15) days thereafter, the matter shall be referred
for final determination to Pricewaterhouse Coopers LLP. If such firm is unable
to serve, Buyer and Seller shall jointly select an arbiter from one of the "Big
5" accounting firms that is not the independent auditor of either Buyer or
Seller or their respective Affiliates; if Buyer and Seller are unable to select
such an arbiter within such time period, the American Arbitration Association
shall make such selection (Pricewaterhouse Coopers LLP or any other person so
selected shall be referred to herein as the "Accounting Arbitrator"). The
Accounting Arbitrator so selected will only consider those items and amounts set
forth in the Purchase Price Adjustment Schedule as to which Buyer and Seller
have disagreed within the time periods and on the terms specified above and must
resolve the matter in accordance with the terms and provisions of this
Agreement. The Accounting Arbitrator shall deliver to Buyer and Seller, as
promptly as practicable and in any event within one hundred and twenty (120)
days after its appointment, a written report setting forth the resolution of any
such disagreement determined in accordance with the terms of this Agreement. The
Accounting Arbitrator shall select as a resolution the position of either Buyer
or Seller for each item of disagreement (based solely on presentations and
supporting material provided by the parties an not pursuant to any independent
review) and may not impose an alternative resolution. Such report shall be final
and binding upon Buyer and Seller. The fees, expenses and costs of the
Accounting Arbitrator shall be borne one-half by Buyer and one-half by Seller.
(f) If the Purchase Price Adjustment results in a reduction in the
Purchase Price, Seller shall pay to Buyer the amount of such reduction (whether
or not such reduction exceeds the $5,000,000 threshold referred to in (d)
above), and if any such adjustment results in an increase in the Purchase Price,
Buyer shall pay to Seller the amount of such increase, in each case, by wire
transfer of immediately available funds to an account designated by the party
receiving payment within five (5) Business Days after the final determination of
the amount of such reduction or increase in Purchase Price, plus interest on the
amount of such reduction or increase from the Closing Date to the date of such
payment thereof at the per annum rate equal to London Interbank Offer Rate
(LIBOR) on the Closing Date as published in the Wall Street Journal (the
"Interest Rate").
(g) For purposes of Section 2.3(b) and the Closing Statement, Taxes
shall be allocated between the Buyer and Seller as follows: (i) real and
personal property Taxes with respect to the Assets for the taxable period which
includes the Closing Date shall be prorated between Seller and Buyer, with such
Taxes being borne by Seller based on the ratio of the number of days in the
relevant period prior to the Effective Time to the total number of days in the
actual taxable period with respect to which such Taxes are assessed,
irrespective of when such Taxes are due, become a lien or are assessed, and such
Taxes being borne by the Buyer based on the ratio of the number of days in the
relevant period after the Effective Time to the total number of days in the
actual taxable period with respect to which such Taxes are assessed,
irrespective of when such Taxes are due, become a lien or are assessed; (ii)
sales and use Taxes shall be deemed to accrue as property is purchased, sold,
used, or transferred; (iii) all other Taxes shall accrue in accordance with
GAAP, except for income Taxes, which shall accrue in accordance with income Tax
principles. The parties agree that income Taxes imposed on or with respect to
the operation of the Business shall not be accrued as a liability or an asset on
the Closing Statement. In no event shall Buyer have any liability for Taxes
imposed upon or measured by the income of Seller, and in no event shall Seller
have any liability for Taxes imposed upon or measured by the income of Buyer.
2.6 Tax Allocation. Buyer and Seller agree that the aggregate fair market
--------------
value of the Assets will be appraised at Buyer's expense by an appraisal firm of
its choice (and reasonably acceptable to Seller) (the "Appraisal") within 90
days after the Closing Date. Buyer shall thereafter prepare a draft of IRS Form
8594 reflecting the allocation of the Purchase Price among the Assets based upon
the Appraisal and such other information as required by the form, and shall
forward it within 120 days after the Closing Date to Seller for its approval,
which approval will not be withheld or delayed unreasonably. If Buyer and Seller
are unable to agree on such allocation, then the Accounting Arbitrator will be
retained to determine such allocation (the cost of which shall be borne equally
by Buyer and Seller). Buyer and Seller shall report the purchase and sale of the
Assets in accordance with such allocation (as finally determined) for all tax
purposes (including the filing of the forms prescribed under Section 1060 of the
Code and the Treasury Regulations promulgated thereunder ).
2.7 Transfer Taxes. Buyer and Seller shall cooperate in preparing,
--------------
executing and filing use, sales, real estate, transfer and similar Tax returns
relating to the purchase and sale of the Assets. Buyer shall bear, and to the
extent permitted by law shall pay, all such transfer Taxes, including any
penalties, interest and additives to tax, incurred in connection with the
purchase and sale of the Assets, and Buyer shall reimburse Seller for any
transfer Taxes paid by Seller, plus interest thereon at the Interest Rate,
within five (5) days of Seller's written request. Under no circumstances shall
Buyer's obligation hereunder or the Taxes giving rise thereto be reflected as a
liability on the Closing Statement. Such Tax returns shall be prepared in a
manner that is consistent with the allocation of the Purchase Price and Assumed
Liabilities contemplated by Section 2.6.
ARTICLE III
CONDITIONS TO CLOSING
---------------------
3.1 Buyer's Obligation. The obligations of Buyer to purchase and pay for
------------------
the Assets are subject to the satisfaction (or waiver by Buyer) as of the
Closing of the following conditions:
(a) The representations and warranties of Seller made in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except for those made as of a specific date or as otherwise
specifically contemplated by this Agreement, on and as of the Closing, as though
made on and as of the Closing Date, and Seller shall have performed or complied
in all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Seller by the time of the Closing;
and Seller shall have delivered to Buyer a certificate dated the Closing Date
and signed by an authorized officer of Seller confirming the foregoing.
(b) No injunction or order shall have been granted by any court or
administrative agency or instrumentality of competent jurisdiction that would
restrain or prohibit any of the Transactions.
(c) The waiting period under the HSR Act shall have expired or been
terminated.
(d) The consents set forth on Schedule 3.1(d) shall have been
obtained (the "Required Consents") or alternative arrangements for the
Gulfstream and/or Alcoa contracts pursuant to Sections 8.1(d) or (e) shall be in
effect.
(e) Buyer shall have received an opinion dated the Closing Date of
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLC, special counsel to Seller, substantially in the
form set forth in Exhibit E.
3.2 Seller's Obligation. The obligation of Seller to sell and deliver the
-------------------
Assets to Buyer is subject to the satisfaction (or waiver by Seller) as of the
Closing of the following conditions:
(a) The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except for those made as of a specific date or as otherwise
specifically contemplated by this Agreement on and as of the Closing, as though
made on and as of the Closing Date, and Buyer shall have performed or complied
in all material respects with all obligations and covenants required by this
Agreement
to be performed or complied with by Buyer by the time of the Closing; and Buyer
shall have delivered to Seller a certificate dated the Closing Date and signed
by an authorized officer of Buyer confirming the foregoing.
(b) No injunction or order shall have been granted by any court or
administrative agency or instrumentality of competent jurisdiction that would
restrain or prohibit the Transactions.
(c) The waiting period under the HSR Act shall have expired or been
terminated.
(d) The Required Consents shall have been obtained or alternative
arrangements pursuant to Section 8.1(d) or (e) shall be in effect for the
Gulfstream and Alcoa contracts.
(e) Seller shall have received an opinion dated the Closing Date of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel to Buyer, substantially in the form set forth
in Exhibit F.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
4.1 Authority; No Conflicts; Governmental Consents; Corporate Matters.
-----------------------------------------------------------------
(a) Seller is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. Seller has all
requisite corporate power and authority to enter into the Transaction Documents
and to consummate the Transactions. All corporate acts and other proceedings
required to be taken by Seller to authorize the execution, delivery and
performance of the Transaction Documents and the consummation of the
Transactions have been duly and properly taken, including, without limitation,
any shareholder approvals. This Agreement has been, and each of the Transaction
Documents, when executed, will be, duly executed and delivered by Seller and
constitute a valid and binding obligation of Seller, enforceable against Seller
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(b) The execution and delivery of this Agreement does not, the
execution and delivery of the other Transaction Documents will not, and the
consummation of the Transactions and compliance with the terms of the
Transaction Documents will not conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a benefit under, or result in the creation of any material Lien upon any
of the properties or assets of Seller or the Sold Subsidiaries under, any
provision of (i) the Certificate of Incorporation or By-Laws or other
organizational or governing documents of Seller or the Sold Subsidiaries, (ii)
subject to the matters disclosed in Schedule 4.1(b), any material Contractual
Obligation of Seller or the Sold Subsidiaries or (iii) any material judgment,
order or decree or, subject to the matters described in clause (c) below,
Requirement of Law applicable to Seller or the Sold Subsidiaries or their
respective property or assets.
(c) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to Seller in
connection with the execution and delivery of the Transaction Documents or the
consummation of the Transactions contemplated hereby, other than (A) compliance
with and filings under the Exchange Act, (B) compliance with and filings and
notifications under applicable Environmental Laws, (C) compliance with and
filings under the HSR Act and (D) those set forth on Schedule 4.1(c).
(d) Each of the Sold Subsidiaries is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized, and has all requisite corporate power and authority to own, lease and
operate its properties and to conduct its business as it is now being conducted.
Each of the Sold Subsidiaries is duly licensed or qualified and in good standing
as a foreign corporation in each jurisdiction in which the ownership of its
property or the nature of the business conducted by it is such as to require it
to be so licensed or qualified, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on the Business.
(e) The authorized outstanding shares of each of the Sold
Subsidiaries consists of the shares listed on Schedule 4.1(e), all of which are
duly authorized, validly issued and fully paid, nonassessable and free of
preemptive rights, except as provided by applicable law.
(f) None of the Sold Subsidiaries has granted any outstanding
options, warrants, rights or other securities convertible into or exchangeable
or exercisable for its shares or any other commitments or agreements providing
for the issuance of additional shares, the sale of treasury shares, or for the
repurchase or redemption of such company's shares. There are no agreements of
any kind which obligate any of the Sold Subsidiaries to issue, purchase, redeem
or otherwise acquire any of its shares.
(g) The activities of each of the Sold Subsidiaries since their
formation have been limited to the activities described on Schedule 4.1(g)
4.2 Financial Statements; Absence of Changes.
----------------------------------------
(a) Schedule 4.2(a) contains a true and complete copy of the
following:
(i) the description of accounting methods, policies, practices
and procedures used in preparation of the audited statement of assets and
liabilities of the Business at March 31, 2000;
(ii) the audited statement of assets and liabilities of the
Business (titled as "Statement of Net Assets Subject to Section 4.2 of the
Asset Purchase Agreement March 31, 2000"), excluding all cash accounts,
pension plan assets and liabilities, other post-retirement liabilities,
income and franchise related tax accounts, workers' compensation assets and
liabilities and employee payroll, payroll tax and payroll withholding
liabilities, at March 31, 2000 and the notes thereto (the "Statement"); and
(iii) the unaudited statements of revenues, costs and expenses of
the Business for each of the three fiscal years ended December 31, 1999 and
for the three months ended March 31, 2000 and the notes thereto (the
"Income Statements").
The financial statements described in the foregoing clauses (i), (ii) and (iii)
are collectively referred to herein as the "Financial Statements." The Financial
Statements: (A) were prepared from the books and records of Seller and in
accordance with the numbered notes to such Financial Statements and the
accounting policies, practices and procedures set forth on Schedule 4.2(a), (B)
are complete and accurate in all material respects except as reflected in the
numbered notes thereto, on Schedule 4.2(a)(i) or for the exclusions described in
Section 4.2(a)(ii), (C) in the case of the Statement, fairly presents the assets
and liabilities of the Business (exclusive of pension assets and liabilities and
other post-retirement employee liabilities) that would have been transferred to
Buyer as if the Closing Date had been March 31, 2000, and (D) in the case of the
Income Statements and except as described in the numbered notes thereto, are
consistent with the internal financial statements of Seller used by management
to manage the Business during the periods covered by such Income Statements and
fairly present the results of operations for the periods reflected therein. The
amounts set forth on the Statement were prepared in accordance with GAAP, except
as otherwise referred to in the numbered notes thereto, in Schedule 4.2(a)(i)
and in the exclusions described in Section 4.2(a)(ii) above, and except that
certain disclosure requirements of GAAP were not met, which noncompliance would
not materially impact the accuracy of any of the amounts shown on the Statement.
The amounts set forth on the Income Statements for the fiscal year ended
December 31, 1999 and for the three months ended March 31, 2000, except as
otherwise referred to in the numbered notes thereto set forth on Schedule
4.2(a)(iii), were prepared in accordance with GAAP, except that certain
disclosure requirements of GAAP were not met, which noncompliance with GAAP
would not materially impact the accuracy of any of the amounts shown on such
Income Statements except as otherwise disclosed on the such statements or in the
numbered notes thereto. Notwithstanding all of the foregoing, with respect to
any matters in the Financial Statements that are based on estimates and
judgments (e.g., estimates at completion) Section 4.2(a) shall be deemed to be
only a representation and warranty that such estimates and judgments were made
in good faith and are permissible under GAAP.
(b) Schedule 4.2(b) sets forth an unaudited statement of all pension
plan assets and liabilities and other post-retirement liabilities to be
transferred to or assumed by Buyer pursuant to this Agreement or the Employee
Matters Agreement, estimated as of July 31, 2000 and the notes thereto (the
"Supplemental Statement"). The Supplemental Statement (A) was prepared from the
books and records of Seller and in accordance with the notes thereto, (B) is
complete and accurate in all material respects, (C) was prepared in accordance
with GAAP and applicable Cost Accounting Standards except as otherwise referred
to in the notes thereto,
(D) with respect to the Seller Pension Plan (as defined in the Employee Matters
Agreement), was prepared in accordance with the principles of Section 4.2(b) of
the Employee Matters Agreement (including, without limitation, the assumptions
set forth or referenced therein), and (E) with respect to retiree health and
life insurance benefits, was prepared in accordance with the principles and
assumptions set forth on Schedule 4.2(b) hereof. The assets and liabilities
conveyed as of the Closing Date may differ from those shown in Schedule 4.2(b)
based on the actual results of plan performance, actual payments and changes in
employees during the period from January 1, 2000 to the Closing Date.
(c) Absence of Changes. Except as expressly contemplated by this
------------------
Agreement or as set forth on Schedule 4.2(c), since March 31, 2000, the Business
has been operated in the ordinary course and consistent with past practice, and
with respect to the Business there have not been any:
(i) changes in the assets, liabilities, earnings or financial
condition of the Business that have had or are reasonably likely to result
in a Material Adverse Effect;
(ii) occurrences resulting in the damage, destruction or loss
(whether or not covered by insurance) affecting any tangible asset or
property of the Business in excess of $500,000 for any single loss or
$2,000,000 for all such losses;
(iii) (a) increases in the benefits payable or potentially
payable under any Seller Plans, (b) increases in salary, bonus or other
compensation or benefits payable or potentially payable to any Business
Employee other than in the ordinary course of the business of the Business
and consistent with past practice; (c) grants of severance, continuation or
termination pay to any Business Employee,(d) new employment, deferred
compensation or other similar agreements (or any amendment to any such
existing agreement) with any Business Employee, (e) changes in the terms of
any bonus, pension, insurance, health or other Seller Plan, or (f)
representations to any employee or former employee of Seller that Buyer
would assume or continue to maintain any Seller Plan after the Closing
Date.
(iv) changes in the accounting methods or practices followed by
or with respect to the Business, or any changes in depreciation or
amortization policies or rates theretofore adopted;
(v) agreements or commitments to merge or consolidate with or
otherwise acquire any other Person, or any part or division thereof;
(vi) other material transactions relating to the Business, other
than in the ordinary course of the Business and consistent with past
practice;
(vii) agreements or understandings, whether in writing or
otherwise, for Seller to take any of the actions specified in items (i)
through (vi) above;
(viii) cancellation or termination by Seller of any material
Contract or entry by Seller into any material Contract which is not in
the ordinary course of the business of Seller; or
(ix) sale, assignment or transfer of any material portion of
the Assets, other than in the ordinary course of business.
(d) Absence of Undisclosed Liabilities. Except as and to the
----------------------------------
extent reflected on the Statement or the Supplemental Statement, Seller does not
have any liabilities relating to the Business required to be reflected on a
balance sheet prepared in accordance with GAAP other than liabilities and
obligations incurred since the date of the Statement or the Supplemental
Statement in the ordinary course of business and consistent with past practice
which have not had or will not have a Material Adverse Effect.
4.3 Taxes. Except as otherwise provided in Schedule 4.3:
-----
(a) (i) Seller has filed or caused to be filed all material Tax
returns of Seller which have become due (taking into account valid extensions of
time to file) prior to the date hereof, such returns are accurate and complete
in all material respects and Seller has paid or caused to be paid all Taxes due,
in each case to the extent Buyer or any Affiliate of Buyer would incur liability
for Seller's failure to file such returns or pay such Taxes, (ii) there are no
outstanding Tax Liens that have been filed by any Tax authority against any
property or assets of the Business or of any Sold Subsidiary (other than for
Taxes not yet due and payable) and (iii) no claims are being asserted in writing
with respect to any Taxes relating to the Business for which Buyer reasonably
could be held liable and Seller knows of no basis for the assertion of any such
claim.
(b) (i) none of the Assets or the assets of any Sold Subsidiary
comprises "tax exempt use property" within the meaning of Section 168(h) of the
Code, (ii) secures any debt the interest on which is tax exempt under Code
Section 103 and (iii) the Assigned Contracts and the assets of the Sold
Subsidiaries do not include any lease made pursuant to former Section 168(f)(8)
of the Internal Revenue Code of 1954, or Section 7701(h) of the Code.
(c) Seller is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code.
(d) No amount payable to, or for the benefit of, any Business
Employee under any Seller Plan or any other agreement, contract, or arrangement
(including, without limitation, the Assigned Contracts) in effect on or before
the Closing Date will fail to be deductible by Buyer for Federal income tax
purposes by virtue of Section 280G or Section 162(m) of the Code.
(e) The Sold Subsidiaries have filed, or been included in, all
Tax Returns required to be filed through the date hereof and will timely file
any such Tax Returns required to be filed on or prior to the Closing Date, in
each case, subject to any applicable extensions. All such Tax Returns are
complete and accurate in all material respects;
(f) All Taxes of the Sold Subsidiaries that accrue or are payable (i)
in respect of taxable periods that end on or before the Closing Date and (ii)
for any taxable period that begins before the Closing Date and ends thereafter,
to the extent such Taxes are attributable to the portion of such period ending
on the Closing Date under the terms of Section 2.5(h), have or will have been
timely paid on or before the Closing Date unless a reserve for such amount has
been or will be established therefor in the Closing Statement (other than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income);
(g) None of Sold Subsidiaries has a Tax deficiency or claim assessed
or, to the best of the Sold Subsidiaries' knowledge, proposed or threatened
(whether orally or in writing) against any Sold Subsidiary;
(h) None of the Sold Subsidiaries (i) has filed a consent under Code
Section 341(f) concerning collapsible corporations or (ii) has been a United
States real property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii);
(i) None of the Sold Subsidiaries is a party to, or is bound by, or
has any obligation under any Tax allocation or sharing agreement (including
indemnity arrangements), and, after the Closing Date, no Sold Subsidiary shall
be a party to, bound by or have any obligation under any Tax allocation or
sharing agreement or have any liability thereunder for amounts due in respect of
periods prior to the Closing Date;
(j) None of the Sold Subsidiaries (i) has been a member of any
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which is Seller) and (ii) has any liability for the
Taxes of any other person (other than an entity that is a member of the
consolidated group of corporations that has Seller as its common parent) as
defined in Section 7701(a)(1) of the Code under Treas. Reg. ss. 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise; and
(k) None of the Sold Subsidiaries has agreed to or is required to
make any adjustment pursuant to Code Section 481(a) by reason of a change in
accounting method initiated by such Sold Subsidiary and none of the Sold
Subsidiaries have knowledge that the Internal Revenue Service has proposed any
such adjustment or change in accounting method.
4.4 Assets Other than Real Property Interests. Seller has and will
-----------------------------------------
transfer good and marketable title to all assets reflected on the Statement or
thereafter acquired, except those sold or otherwise disposed of since the date
of the Statement in the ordinary course of business consistent with past
practice, in each case free and clear of all Liens except: (a) such as are
disclosed on Schedule 4.4 or in the Financial Statements and (b) (i) mechanics',
carriers', workmen's, repairmen's or other like Liens arising or incurred in the
ordinary course of business for amounts not yet due or which are being contested
in good faith, (ii) Liens arising under original purchase price conditional
sales contracts and equipment leases with third parties entered into in the
ordinary course of business, (iii) Liens for Taxes and other governmental
charges which are not due and payable or which may thereafter be paid without
penalty, (iv)
Liens occurring by operation of law or regulation in connection with progress
payments or performance based payments paid under Government Contracts and (v)
other imperfections of title, restrictions or encumbrances, if any, which Liens,
imperfections of title, restrictions or other encumbrances do not, individually
or in the aggregate, materially impair the value or continued use and operation
of the specific assets to which they relate (the Liens described in the
preceding clause (b) are hereinafter referred to collectively as "Permitted
Liens").
This Section 4.4 does not relate to real property or interests in real
property, such items being the subject of Section 4.5.
4.5 Real Property Interests.
-----------------------
(a) Schedule 2.1(a) sets forth a complete list of all Owned
Properties and Schedule 2.1(b) sets forth a complete list of all Leased
Properties and, as to Leased Property, identifies any leases relating thereto
(an Owned Property or Leased Property being sometimes referred to herein
individually as a "Business Property" and collectively as "Business
Properties"). Seller has and will transfer good and marketable fee simple title
to all Owned Property, free and clear of all Liens, easements, covenants,
rights-of-way and other similar restrictions of any nature whatsoever, except:
(i) mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business for amounts not yet due or which are
being contested in good faith, (ii) Liens for Taxes and other governmental
charges which are not due and payable or which may thereafter be paid without
penalty, (iii) Encumbrances listed on Schedule 4.5 (as supplemented in
accordance with the last sentence of this Section 4.5), and (iv) (1) zoning,
building and other similar government-imposed restrictions, (2) Liens that have
been placed by any developer, landlord or other third party on property over
which Seller has easement rights or on any Leased Property and subordination or
similar agreements relating thereto and (3) unrecorded Encumbrances, none of
which items set forth in clauses (1), (2) and (3) above, individually or in the
aggregate, (A) materially impair the continued use and operation of the property
to which they relate, (B) materially impair the fair market value of the
property to which they relate, (C) secure any Financing Obligation or (D)
constitute a lease, sublease or other occupancy agreement that gives any third
party any right to occupy or use all or any portion of the Owned Property.
Notwithstanding anything in this Section to the contrary, Seller shall have the
right, by written notice to Buyer, to supplement Schedule 4.5 from time to time
with additional Encumbrances after the date of this Agreement (and prior to the
closing) and Buyer shall be deemed to have accepted such Encumbrances, provided
that such additional Encumbrances do not (A) materially impair the continued use
and operation of the property to which they relate, (B) materially impair the
fair market value of the property to which they relate, (C) secure any Financing
Obligation or (D) constitute a lease, sublease or other occupancy agreement that
gives any third party any right to occupy or use all or any portion of the Owned
Property.
(b) Real Property Leases or Other Agreements. Seller is the lessee
----------------------------------------
of each of the Leased Properties and is in possession of the premises purported
to be leased thereunder, and each such lease is a valid obligation of the Seller
without any material default thereunder by Seller or, to the knowledge of
Seller, by the applicable lessor. Except for the Leases listed on Schedule
2.1(b) and the documents listed on Schedule 4.5, there are no material leases,
subleases, licenses, occupancy agreements, options, rights, concessions or other
agreements or arrangements, written or oral, granting to any Person the right to
purchase, use or occupy any Business Property. With respect to each Leased
Property, Seller has and will transfer to Buyer at the Closing a valid leasehold
interest in the leasehold estate, and Seller has in all material respects
performed all the material obligations required to be performed by it through
the date hereof with respect to such Leases, and each Lease is assignable (upon
receipt of necessary landlord consents) in connection with the transactions
contemplated hereby. Seller has not assigned, pledged or placed any Encumbrance
on the Leases or its leasehold estate in and to the Leased Properties (other
than any Encumbrance which would not individually or in the aggregate materially
adversely effect the use or value in respect of its current use of the Leased
Property).
(c) Actions. There are no pending or, to the Knowledge of Seller,
-------
threatened condemnation proceedings with respect to any Business Property, or
material litigation or administrative actions relating to any Business Property.
(d) Certificate of Occupancy. Seller has received all required
------------------------
material approvals of governmental authorities (including, without limitation,
Permits and material certificates of occupancy or other similar certificates
permitting lawful occupancy of the Business Property) required in connection
with the present use of the Real Property and all improvements thereon.
(e) Utilities. All Business Property and the improvements thereon are
---------
supplied with utilities and other services necessary for the operation of such
facilities as currently operated.
(f) No Special Assessment. Seller has not received notice of any
---------------------
special assessment relating to any Business Property or any portion thereof, and
Seller has no knowledge of any pending or threatened special assessment.
(g) Improvements, Fixtures and Equipment. The Leasehold Improvements
------------------------------------
and the fixtures, equipment and other tangible assets owned, leased or used by
Seller on the Business Property are adequate in all material respects for the
operation of the Business as presently conducted by Seller.
4.6 Intellectual Property. Schedule A to the Intellectual Property
---------------------
Agreement sets forth a list of all of Seller's material patents and pending
patent applications that are practiced or utilized in the operations of the
Business as currently conducted. Seller is the owner and will transfer to Buyer,
free and clear of any Liens other than Permitted Liens or third party ownership
interests, of all patents or applications therefor listed on Schedule A to the
Intellectual Property Agreement. Except as disclosed on Schedule 4.6 and except
for licenses of software or firmware used in the Business that are generally
available "off-the-shelf" through commercial software vendors, Seller owns or
has the right to use, without payment to any other party, all material
Intellectual Property practiced or utilized in the operations of the Business as
currently conducted by Seller. Except as set forth on Schedule 4.8, no material
claims are pending or, to the Knowledge of Seller, threatened against Seller by
any person with respect to the ownership, validity, enforceability or use of any
Intellectual Property, challenging or questioning the validity
or effectiveness of any such Intellectual Property or alleging that Seller (in
respect of the Business) is infringing upon the intellectual property rights of
others. To the Knowledge of Seller, except as disclosed on such Schedule, Seller
(in respect of the Business) is not infringing on any third party's intellectual
property in the operation of the Business except for such infringement which,
individually or in the aggregate, would not have a Material Adverse Effect. The
Intellectual Property listed on Schedule A to the Intellectual Property
Agreement together with the other Intellectual Property being assigned (in whole
or as to a one-half ownership interest) to Buyer under the Intellectual Property
Agreement constitutes all of the material Intellectual Property necessary to
conduct the Business in the manner presently conducted, except for any rights in
respect of trade names, trademarks or service marks used by Seller in connection
with the conduct of the Business other than "▇▇▇▇▇▇" and "▇▇▇▇▇▇ Aircraft".
4.7 Contracts. Schedule 4.7 sets forth a list of each of the following
---------
types of Contracts to which any of the Sellers are a party and which relate
primarily to the Business:
(a) any employment or relocation agreement not subject to termination
by Seller without cost or liability in excess of $200,000 and any severance
agreement that provides for severance compensation in excess of $200,000,
including, without limitation, such Contracts (A) to employ or terminate
executive officers or other personnel and with present or former officers,
directors or shareholders of Seller or (B) that will result in the payment by,
or the creation of any commitment or obligation (absolute or contingent) to pay
on behalf of Buyer or Seller any severance, termination, "golden parachute," or
other similar payments to any present or former personnel following termination
of employment or otherwise as a result of the consummation of the transactions
contemplated by this Agreement;
(b) any employee collective bargaining agreement or other contract
with any labor union covering Business Employees;
(c) any Contract (including purchase orders) involving the obligation
of Seller to purchase products or services pursuant to which the aggregate of
payments to become due from Seller or a Sold Subsidiary is equal to or exceeds
$500,000;
(d) any Contract (including sales orders) involving the obligation of
Seller or a Sold Subsidiary to deliver products or services with an unfilled
order balance of more than $500,000;
(e) any distributor, dealer, sales, advertising, agency,
manufacturer's representative, franchise or similar Contract currently in effect
requiring the payment of any commissions in excess of $500,000 per year;
(f) any option or other agreement to purchase or otherwise acquire or
sell or otherwise dispose of any interest in real property;
(g) any agreement under which Seller has agreed to indemnify any
third party with respect to, or to share, the Tax liability of any third party;
(h) any commitment to make a capital expenditure or to purchase a
capital asset, not contemplated by the capital expenditure budget of Seller for
the Business, copies of which have been provided to Buyer by or on behalf of
Seller or the Sold Subsidiaries in connection with the operation of the
Business;
(i) any agreement or commitment with a third party other than an
employee relating to the location of employees or minimum number of employees to
be employed by Seller with respect to the Business;
(j) any power of attorney (other than powers of attorney given in the
ordinary course of Business with respect to routine export, tax or securities
matters);
(k) any indenture, note, loan or credit agreement or other Contract
relating to the borrowing of money or to the direct or indirect guarantee or
assumption of the obligations of any other Person for borrowed money;
(l) any covenant not to compete; or
(m) any lease or similar agreement under which (i) Seller is the
lessee of, or holds or uses, any machinery, equipment, vehicle or other tangible
personal property owned by any third Person for an annual rent in excess of
$250,000 or (ii) Seller is the lessor of, or makes available for use by any
third Person, any tangible personal property owned by Seller for an annual rent
in excess of $250,000.
Except as disclosed on Schedule 4.7, each Contract listed on Schedule 4.7
(and to the extent leases are not listed on Schedule 4.7, each Lease in respect
of Leased Property) is valid, binding and in full force and effect and is
enforceable by Seller or the Sold Subsidiary that is party thereto in accordance
with its terms. Except as disclosed in Schedule 4.7, Seller has performed all
material obligations required to be performed by it to date under the Contracts
and is not in breach or default in any material respect thereunder and, to the
Knowledge of Seller, no other party to any of the Contracts is in breach or
default in any material respect thereunder, or has repudiated any material
provision thereof.
Section 4.7 also sets forth any proposals which, if accepted, would require
capital expenditures in excess of $250,000 not contemplated by the capital
expenditure budget.
4.8 Litigation; Decrees. Schedule 4.8 sets forth, as of the date of this
-------------------
Agreement, a list of all pending and, to the Knowledge of Seller, threatened in
writing, lawsuits, litigations, arbitrations, government audits or
investigations or claims relating to the Business which (a) involves a claim for
damages in excess of $500,000, (b) seeks any injunctive relief or (c) seeks to
prevent the Transactions. Neither Seller nor any Company is in default under any
judgment, order, writ, injunction or decree of any court, administrative agency
or commission or other Governmental Authority applicable to the Business. No
representation and warranty is being made in this Section 4.8 as to the matters
covered by Sections 4.9, 4.10, 4.11, 4.12 and 4.15.
4.9 Employee Benefits.
-----------------
(a) Schedule 4.9 sets forth a complete and correct list of all Seller
Plans.
(b) Each of the Seller Plans intended to qualify under Section 401 of
the Code (the "Qualified Plans") has received a current and valid determination
letter from the Internal Revenue Service that it does so qualify, and to the
Knowledge of Seller, no event has occurred and no condition exists that could
reasonably be expected to result in the revocation of such determination letter
or the loss of such qualification or exemption. Except as disclosed on Schedule
4.9(b), Seller is not aware of any operational defect with respect to any such
plan which would be reasonably likely to cause the loss of such qualification or
exemption and which cannot be corrected without payment of more than $250,000
(including the amount of any additional contributions to such plans) by Buyer
through an Internal Revenue Service Compliance Resolution Program described in
Revenue Procedure 2000-16.
(c) Except as set forth on Schedule 4.9(c),with respect to any Seller
Plan subject to Title IV of ERISA:
(i) The funding method used in connection with each such Seller
Plan which is subject to the minimum funding requirements of ERISA is
acceptable and the actuarial assumptions used in connection with funding
each such plan are reasonable. As of the last day of the last plan year of
each such Seller Plan and as of the Closing Date, the "amount of unfunded
benefit liabilities" as defined in Section 4001(a)(18) of ERISA (but
excluding from the definition of "current value" of "assets" of such Seller
Plan, accrued but unpaid contributions) did not and will not exceed zero.
No "accumulated funding deficiency" (for which an excise tax is due or
would be due in the absence of a waiver) as defined in Section 412 of the
Code or as defined in Section 302(a)(2) of ERISA, whichever may apply, has
been incurred with respect to any such Seller Plan with respect to any plan
year, whether or not waived. Neither Seller nor any ERISA Affiliate has
failed to pay when due any "required installment," within the meaning of
Section 412(m) of the Code and Section 302(e) of ERISA, whichever may
apply, with respect to any such Seller Plan. Neither Seller nor any ERISA
Affiliate is required to provide security to any such Seller Plan under
Section 401(a)(29) of the Code.
(ii) No such Seller Plan has been terminated so as to subject,
directly or indirectly, any assets of Seller or its ERISA Affiliates to any
liability, contingent or otherwise, or the imposition of any liens under
Title IV of ERISA.
(iii) No proceeding has been initiated or threatened by any
person, including the Pension Benefit Guaranty Corporation ("PBGC"), to
terminate any such Seller Plan.
(iv) No condition or event exists or is expected to occur with
respect to any such Seller Plan that could subject, directly or indirectly,
any assets of Seller or its ERISA Affiliates to any liability, contingent
or otherwise, or the imposition of any lien under Title IV of ERISA,
whether to the PBGC or to any other person.
(v) No "reportable event," as defined in Section 4043 of ERISA
(to the extent that the reporting of such event to the PBGC has not been
waived) has occurred and is continuing with respect to any such Seller
Plan.
(d) True, correct and complete copies of the following documents,
with respect to each of the Seller Plans, have been delivered or made available
to Buyer: (i) any plans and related trust documents, and all amendments thereto;
(ii) the most recent Forms 5500 and schedules thereto; (iii) the most recent
financial statements and actuarial valuations; (iv) the most recent Internal
Revenue Service determination letter; and (v) the most recent summary plan
descriptions (including letters or other documents updating such descriptions).
(e) There are no pending legal proceedings which have been asserted
or instituted against any of the Seller Plans, the assets of any such plans or
the Seller, or the plan administrator of the Seller Plans with respect to the
operation of such plans (other than routine benefit claims) which would have a
Material Adverse Effect and, except as disclosed on Schedule 4.9(e), to the
Knowledge of Seller there are no facts or circumstances which could reasonably
be expected to form the basis for any such legal proceeding.
(f) Except as set forth on Schedule 4.9(f), each of the Seller Plans
has been maintained, in all material respects, in accordance with its terms and
all Requirements of Law. Seller and its ERISA Affiliates have made full and
timely payment of all amounts required to be contributed with respect to
Business Employees and Retired Business Employees (as defined in the Employee
Matters Agreement) under the terms of each Seller Plan, all Requirements of Law
or any collective bargaining or other agreement, or required to be paid as
expenses with respect to Business Employees and Retired Business Employees under
such Seller Plan through the Closing Date. All amendments and actions required
to bring each of the Seller Plans into conformity in all material respects with
all of the applicable provisions of ERISA and other applicable Requirements of
Law have been made or taken except to the extent that such amendments or actions
are not required to be made or taken until a date after the Closing Date.
(g) Except as disclosed on Schedule 4.9(g), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment or benefit (including, without limitation,
any "parachute payment" within the meaning of Section 280G of the Code) becoming
due to any Business Employee or former employee of Seller in the Business and
with respect to which Buyer would be liable or responsible, (ii) materially
increase any benefits otherwise payable under any Seller Plan or (iii) result in
the acceleration of the time of payment or vesting of any compensation or
employee benefits and with respect to which Buyer would be liable or
responsible.
(h) No Seller Plan maintained, sponsored or contributed to at any
time during the five year period ending on the date of this Agreement
constitutes a "multiemployer plan" as defined in Section 3(37) of ERISA.
(i) Neither Seller nor any ERISA Affiliate has any liability for
delinquent or unpaid contributions under Section 515 of ERISA with respect to
any Seller Plan which is subject to regulation under Title IV of ERISA.
(j) Except as set forth on Schedule 4.9(j), neither Seller nor any of
its ERISA Affiliates sponsors or has previously sponsored, maintained,
contributed to or incurred an obligation to contribute to any Seller Plan that
provides or will provide benefits described in Section 3(1) of ERISA to any
former employee or retiree of Seller or any of its ERISA Affiliates, except as
required under Section 4980B of the Code and Part 6 of Title I of ERISA. With
respect to each Seller Plan which constitutes or has constituted a "group health
plan" (within the meaning of Section 5000(b)(1) of the Code), Seller and its
ERISA Affiliates have complied in all material respects with the provisions of
Section 4980B of the Code and Part 6 of Title I of ERISA.
(k) No Seller Plan is sponsored outside the United States. No Sold
Subsidiary maintains any Employee Benefit Plan or Employee Benefit Arrangement
within the United States that is not a Seller Plan. With respect to each
Employee Benefit Plan and Employee Benefit Arrangement maintained by any Sold
Subsidiary outside the United States (collectively, the "Non-U.S. Plans"), each
of the following is true:
(i) each Non-U.S. Plan is in compliance in all material
respects with the laws and regulations applicable to such plan;
(ii) each Non-U.S. Plan and related funding arrangement that is
intended to qualify for tax-favored status has been reviewed and approved
for such status by the appropriate Governmental Authority (or has been
submitted for such review and approval within the applicable time period),
and nothing has occurred and no condition exists that is likely to cause
the loss or denial of such tax-favored status; and
(iii) as of the most recent valuation date, there are no material
unfunded benefit liabilities.
4.10 Enviromental Matters. Except as disclosed on Schedule 4.10:
---------------------
(a) The Business is, and has at all times since June 1, 1997 been in
compliance with all applicable Environmental Laws, except where any instance of
non-compliance would not have a Material Adverse Effect.
(b) Since June 1, 1997, Seller has not received written notice of any
claim, investigation, demand or notice by any Person alleging non-compliance
with or liability under any Environmental Law in respect of the Business which
would individually or in the aggregate have a Material Adverse Effect.
(c) There is no existing contamination by, and there has not been the
release of, any Hazardous Material on, at or under any Business Property that
has or would have a Material Adverse Effect.
(d) Seller is not and has not been required to place any notice or
restriction relating to the presence of any Hazardous Material at any Owned
Property or in any deed to any Owned Property.
(e) Schedule 4.10(e) sets forth a complete and correct list of all
environmental audits or assessments in possession of Seller which have been
conducted at any Business Property within the past three years either by Seller
or any attorney, environmental consultant or engineer engaged for such purpose;
copies of all such audits or assessments have been made available to Buyer.
No representation or warranty is made in this Agreement as to any matters
relating to compliance with Environmental Laws or the presence of Hazardous
Materials except in this Section 4.10.
4.11 Employee and Labor Relations. Except as set forth on Schedule 4.11:
----------------------------
(a) there is no labor strike, dispute, or work stoppage or lockout
pending, or, to the Knowledge of Seller, threatened, involving the Business;
(b) to the Knowledge of Seller, no union organization campaign is in
progress with respect to the Business Employees, and no question concerning
representation exists respecting such employees;
(c) there is no material unfair labor practice charge or complaint
against Seller or any Sold Subsidiaries pending, or, to the Knowledge of Seller,
threatened in writing, before the National Labor Relations Board or similar
governmental agency outside of the United States involving the Business;
(d) there is no pending, or, to the Knowledge of Seller, threatened
in writing, grievance, arbitration or demand letter involving a Business
Employee claiming damages in excess of $500,000; and
(e) there is no material discrimination charges with respect to or
relating to Seller or any Sold Subsidiary in respect of the Business are pending
before the Equal Employment Opportunity Commission or any other similar
Governmental Authority responsible for the prevention of unlawful employment
practices.
4.12 Compliance With Law; Permits.
----------------------------
(a) Except as set forth in Schedule 4.12(a), since January 1, 1998
each of Seller and the Sold Subsidiaries has been in compliance with all
Requirements of Law applicable to the Business, except where failure to be in
compliance has not had, or cannot reasonably be expected to have, a Material
Adverse Effect. No representation and warranty is being made in this Section
4.12 as to the matters covered by Sections 4.3, 4.5(d), 4.9, 4.10, 4.11 and
4.14.
(b) Except as set forth in Schedule 4.12(b), (i) Seller and the Sold
Subsidiaries have all licenses, permits, orders, approvals and other
authorizations of or from all Governmental Authorities which are necessary in
the conduct of the Business as presently being conducted by Seller ("Permits"),
(ii) such Permits are in full force and effect, and (iii) no material violations
or claimed violations are pending before any Governmental Authority with respect
to such Permits.
4.13 Assets of the Business. Except for any Excluded Assets, the Assets,
----------------------
the assets of the Sold Subsidiaries and the rights conferred by the Ancillary
Agreements comprise all of the properties, assets (including, without
limitation, computer software and licenses therefor) and rights of Sellers and
the Sold Subsidiaries material to the conduct of the Business as presently
conducted. EXCEPT AS EXPRESSLY PROVIDED HEREIN, SELLER MAKES NO REPRESENTATION
OR WARRANTY CONCERNING THE ASSETS OR THE BUSINESS, INCLUDING AS TO THE QUALITY,
CONDITION, MERCHANTABILITY, SALABILITY, OBSOLESCENCE, WORKING ORDER OR FITNESS
FOR A PARTICULAR PURPOSE THEREOF. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE
ASSETS ARE SOLD TO BUYER "AS IS AND WHERE IS."
4.14 Government Contracts. Except as set forth on Schedule 4.14:
--------------------
(a) Seller has not received a final decision of a contracting
officer or prime contractor asserting any claim or equitable adjustment against
Seller with respect to any Government Contract; and there are no material
disputes between Seller and the United States Government for any prime contract
under the Contract Dispute Act nor are there any such material disputes as to
which Seller has received notice in writing under any other Federal statute
arising under or relating to any Government Contract.
(b) Seller has not received any written notice of the intention of
any contracting officer or prime contractor to terminate any Government Contract
for either convenience or default. Seller has not received any show cause
notices, cure notices, or negative determinations of responsibility with respect
to any Government Contract.
(c) Seller has not asserted any claim or request for equitable
adjustment requesting money, interpretation of contract terms, or other relief
under any Government Contract.
(d) Seller has not received written notice of any failure to comply
in all material respects with the Truth in Negotiations Act (10 U.S.C.(S) 2306a,
41 U.S.C.(S) 254(d)) or to submit where required cost or pricing data that were
accurate, complete and current.
(e) Seller has not received written notice that either Seller or any
of its directors, officers, employees, agents, or consultants is under
administrative, civil, or criminal investigation, indictment or information,
audit or internal investigation with respect to any irregularity, misstatement,
or omission regarding any Government Contract.
(f) Seller has not received written notice that any suspension or
debarment action has been commenced against the Company with respect to any
Government Contract.
(g) Seller has fully complied with all of its obligations under
applicable Government Contracts relating to any government furnished property or
similar property or equipment owned by the United States, except for such
matters as would not, individually or in the aggregate, have a Material Adverse
Effect.
31
(h) The Business has complied with all Cost Accounting Standards and
has accounted for all Government Contracts in accordance with disclosure
statements furnished to and reviewed by the United States Government, except for
such matters as would not, individually or in the aggregate, have a Material
Adverse Effect.
(i) Seller possesses all necessary facility security clearances and
permits for the execution of its obligations under any Government Contract and
Schedule 4.14(i) sets forth all facility security clearances held by Seller
(except to the extent disclosure thereof is prohibited by the Industrial
Security Manual).
4.15 Product Warranty. Except as set forth on Schedule 4.15, since
----------------
January 1, 1998, Seller has not received any claims for product liability or
breach of warranty (whether or not covered by insurance) nor has Seller given
written notice to any customer of any defect or deficiency with respect to
products designed, manufactured, assembled, repaired, maintained, delivered or
installed or services rendered prior to the Closing.
4.16 Government-Furnished Property or Equipment. Schedule 4.16
------------------------------------------
identifies to the Knowledge of Seller (i) by description or inventory number all
material Government-Furnished Property that is or should be in the possession of
Seller and (ii) each Government Contract to which each such item of
Government-Furnished Property relates. "Government-Furnished Property" shall
mean all machinery, equipment, tools, dies, spare parts and all other personal
property and fixtures loaned, bailed or otherwise furnished by the United States
government to the Seller pursuant to the Government Contracts. Buyer and Seller
shall cooperate after the Closing Date to correct any inaccuracies in Schedule
4.16 and effect any appropriate transfers of property.
4.17 Customers, Distributors and Suppliers. Schedule 4.17 sets
-------------------------------------
forth a complete and accurate list of the names and addresses of Seller's (i)
ten (10) largest customers for the most recent fiscal year, showing the
approximate total sales in dollars by Seller to each such customer during such
fiscal year; and (ii) the ten (10) largest suppliers for the most recent fiscal
year showing the approximate total purchases in dollars by Seller from each such
supplier during such fiscal year. As of the date hereof, Seller has not received
any written notice from any customer or supplier named on Schedule 4.17 of any
intention to terminate or materially reduce purchases from or supplies to
Seller.
4.18 Insurance. Schedule 4.18 contains a complete list of the
---------
current insurance policies held by Seller in respect of the Business, copies of
which have been made available to Buyer. All policies listed on Schedule 4.18
(i) are valid, outstanding and enforceable policies and (ii) will not terminate
or lapse by reason of the transactions contemplated by this Agreement. Seller
has not received (i) any written notice of cancellation of any such policies or
refusal of coverage thereunder, (ii) any written notice that any issuer of any
of such policies has filed for protection under applicable bankruptcy laws or is
otherwise in the process of liquidating or has been liquidated, or (iii) any
other written notice that such policies are no longer in full force and effect
or that the issuer of any of such policies is no longer willing or able to
perform its obligations thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
5.1 Authority; No Conflicts; Governmental Consents.
----------------------------------------------
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer has all
requisite corporate power and authority to enter into the Transaction Documents
and to consummate the Transactions. All corporate acts and other proceedings
required to be taken by Buyer to authorize the execution, delivery and
performance of the Transaction Documents and the Transactions have been duly and
properly taken. This Agreement has been, and the Transaction Documents, when
executed, will be, duly executed and delivered by Buyer and constitute valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or by general principles (regardless of
whether such enforceability is considered in a proceeding in equity or law).
(b) The execution and delivery of this Agreement does not and
of the other Transaction Documents will not, and the consummation of the
Transactions and compliance with the terms of the Transaction Documents will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any material Lien upon any of the properties
or assets of Buyer under, any provision of (i) the Certificate of Incorporation
or By-Laws of Buyer, (ii) any Contractual Obligation of Buyer or (iii) any
material judgment, order or decree or, subject to the matters described in
clause (c) below, statute, law, ordinance, rule or regulation applicable to
Buyer or its property or assets.
(c) No material consent, approval, license, permit order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other Governmental Authority is required
to be obtained or made by or with respect to Buyer or its Affiliates in
connection with the execution and delivery of the Transaction Documents or the
consummation by Buyer of the Transactions, other than (A) compliance with and
filings and notifications under applicable state environmental laws and (B)
compliance with and filings under the HSR Act.
5.2 Actions and Proceedings, Etc. There are no: (a) outstanding
-----------------------------
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer or (b) actions, suits, claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the knowledge of Buyer, threatened against Buyer in either case that are
reasonably likely to materially and adversely affect the ability of Buyer to
enter into and perform its obligations under this Agreement.
5.3 Buyer's Acknowledgment. Buyer acknowledges and agrees that,
-----------------------
(a) other than the representations and warranties of Seller specifically
contained in this Agreement, there are no representations or warranties of
Seller either expressed or implied with respect to Seller, the Business or the
Transactions and (b) it shall have a right to indemnification solely as provided
in Article IX hereof and shall have no claim or right to indemnification with
respect to any information, documents or materials furnished by either Seller or
any of its officers, directors, employees, agents or advisors, or otherwise
available to Buyer.
5.4 Solvency. Immediately after giving effect to the Transactions,
--------
Buyer will be able to pay its debts as they become due and will own property
which has a fair salable value greater than the amounts required to pay its
debts (including a reasonable estimate of the amount of all contingent
liabilities). Immediately after giving effect to the Transactions, Buyer will
have adequate capital to carry on its businesses. No transfer of property is
being made and no obligation is being incurred in connection with the
transactions contemplated by this Agreement with the intent to hinder, delay or
defraud either person or future creditors of Buyer.
5.5 Financing. Buyer has obtained (i) from certain financial
---------
institutions firm commitments pursuant to a commitment letter dated June 5, 2000
to provide debt financing and (ii) from Carlyle Partners III, L.P. and its
affiliates firm commitments pursuant to a commitment letter dated June 5, 2000
to provide equity financing, which together are sufficient to enable it to
consummate the transactions contemplated hereby. A true and complete copy of
such commitment letters has been provided to Seller.
5.6 Limitations on Representations and Warranties. Buyer acknowledges
---------------------------------------------
that neither Seller nor any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding the Business or the Assets or other matters that is not
included in this Agreement or the Schedules hereto. Without limiting the
generality of the foregoing, except as expressly covered by a representation or
warranty set forth in Article IV, neither Seller nor any other Person has made a
representation or warranty to Buyer with respect to (i) any projections,
estimates or budgets for the Business made available to Buyer, (ii) any
material, documents or information relating to the Business made available to
Buyer or its counsel, accountants or advisors in Seller's data room or
otherwise, or (iii) the information contained in the Confidential Management
Presentation made April 20 and 21, 2000.
ARTICLE VI
COVENANTS OF SELLER
-------------------
Seller covenants and agrees as follows:
6.1 Access. Subject to the provisions of Section 7.1 hereof, prior to
------
the Closing, Seller will give Buyer and its representatives, employees, counsel
and accountants reasonable access during normal business hours and upon
reasonable notice, to the personnel, properties, books and records of the
Business for purposes of investigating its assets, operations, prospects,
obligations and liabilities; provided, however, (i) that such access does not
unreasonably disrupt the normal operations of the Business, and (ii) that Seller
is under no obligation to disclose to
Buyer any (A) "Classified Information" other than in compliance with the DIS
Industrial Security Regulations, the DIS Industrial Security Manual and any
other applicable government security regulations, (B) any information, the
disclosure of which is restricted by Contract or the Requirement of Law, except
in strict compliance with the applicable Contract or Requirement of Law and (C)
any information as to which the attorney-client privilege may be available,
until a mutually satisfactory joint defense agreement has been executed by Buyer
and Seller.
6.2 Ordinary Conduct. Except as contemplated by this Agreement or as
-----------------
set forth in Schedule 6.2, from the date hereof to the Closing, Seller agrees to
cause the business of the Business to be conducted in the ordinary course in
substantially the same manner as presently conducted and will make all
reasonable efforts, consistent with past practices, to preserve relationships
with employees, customers, suppliers and others with whom the Business deals.
Except as contemplated by this Agreement or as set forth in Schedule 6.2, Seller
will not, without the prior written consent of Buyer, which consent will not be
unreasonably withheld or delayed, (i) take any action which would cause the
representations and warranties of Seller herein to be untrue in any material
respect or (ii) transfer any employee of the Business to another business of
Seller or transfer any employee of another Seller business to the Business.
Seller will provide Buyer with interim monthly financial statements of the
Business and other management reports as and when they are available. Without
limiting the generality of the foregoing, Seller shall not, except as
specifically contemplated by this Agreement:
(a) enter into, extend, materially modify, terminate or renew
any Contract or Lease, except in the ordinary course of business;
(b) sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any material Assets, or any interests therein,
except in the ordinary course of business;
(c) (i) except as otherwise required by law, take any action
with respect to the grant of any bonus, severance, continuation or
termination pay (otherwise than pursuant to policies or agreements of
Seller in effect on the date hereof) or with respect to any increase of
benefits payable under its severance or termination pay policies or
agreements in effect on the date hereof or increase in any material respect
the compensation or fringe benefits of any employee or pay any benefits not
required by any existing Employee Benefit Plan or Employee Benefit
Arrangement, in each case other than in the ordinary course of business,
consistent with past practice.
(ii) make any change in the key management structure of
Seller, including, without limitation, the hiring of additional officers or
the termination of existing officers other than in the ordinary course of
business;
(iii) except in the ordinary course of business, adopt,
enter into or amend any Employee Benefit Plan or Employee Benefit
Arrangement (including, without limitation, any collective bargaining or
employment agreement), or any trust, fund or other arrangement for the
benefit or welfare of any employee;
(d) acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any corporation, partnership,
association or other business organization or division thereof if the assets or
business so acquired would be included in the Business;
(e) make any capital expenditure or enter into any commitment
for capital expenditures, except in accordance with the capital expenditures
budget heretofore delivered to Buyer;
(f) fail to maintain the Assets in substantially their current
state of repair, excepting normal wear and tear, and replace inoperable,
worn-out or obsolete or destroyed Assets, in each case in accordance with
Seller's past practice;
(g) make any material loans or advances to any partnership,
firm or corporation, or, except for expenses incurred in the ordinary course of
business, any individual;
(h) make any settlement or compromise with tax authorities,
apply to change any material method of accounting for Tax purposes or make any
material Tax elections, to the extent that any of the foregoing affect the
Assets of the Sold Subsidiaries;
(i) intentionally do any other act which would cause any
representation or warranty of Seller in this Agreement to be become untrue in
any material respect;
(j) enter into any agreement, or otherwise become obligated,
to do any action prohibited hereunder.
6.3 Insurance; Administration of Insurance. Seller shall keep, or
---------------------------------------
cause to be kept, all insurance policies presently maintained relating to the
Business and its properties, or replacements therefor, in full force and effect
through the close of business on the Closing Date. At the Closing, Seller and
Buyer agree to enter into an insurance administration agreement, in form
reasonably acceptable to Seller and Buyer, covering any insurance policy
maintained by Seller applicable to the Assets providing that Seller shall
continue to administer all such policies, and submit Claims of Buyer thereunder,
consistent with Seller's corporate practice (including any decision to
terminate, commute or modify any such policy), and shall include appropriate
arrangements for the allocation of deductibles under current coverage and claims
processing. From and after the Closing, Seller agrees to use all reasonable
efforts to cause Buyer to be added as an additional named insured under any such
insurance policy; provided, that, Seller shall notify Buyer of any costs
associated with the foregoing and if Buyer so elects, Seller shall proceed to
have Buyer added as an additional named insured and Buyer shall reimburse Seller
for the costs incurred by Seller in connection therewith.
6.4 Accounts Receivable. For a period of sixty (60) days after the
-------------------
Closing, on the first business day of each week after the Closing Date, and
thereafter, promptly following receipt of proceeds from accounts receivable of
the Business, Seller agrees to promptly forward to Buyer any and all proceeds
from accounts receivable of the Business that are received by Seller after the
Closing Date. If, after the Closing Date, Seller receives any payment from any
Person
who at the time of such payment has outstanding accounts payable to Seller, on
the one hand (for the purposes of this Section, "Seller Accounts Receivable"),
and to Buyer, on the other hand (for the purposes of this Section, "Buyer
Accounts Receivable"), and the payment (a) does not indicate whether it is in
respect of Seller Accounts Receivable or Buyer Accounts Receivable or (b)
indicates that it is in payment of both Seller Accounts Receivable and Buyer
Accounts Receivable without specifying the portion to be allocated to each, then
Seller and Buyer shall consult with one another to determine the proper
allocation of such payment; and, if they are unable to reach agreement on the
proper allocation, such payment shall be applied so as to retire Seller Accounts
Receivable and Buyer Accounts Receivable in chronological order based upon the
period of time such accounts receivable have existed on the books of Seller or
Buyer, as the case may be.
6.5 Confidential Information. On and after the day of the Closing,
------------------------
Seller will hold, and will use its best efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors and agents
("Representatives") to hold, in confidence, unless compelled to disclose by any
Requirement of Law, all confidential documents and information concerning the
Business (including any confidential information or documents provided to it
pursuant to Section 8.6 and any trade secrets or other proprietary information
forming a part of the Intellectual Property) (the "Confidential Information"),
except to the extent that such information is (a) in the public domain through
no fault of Seller or any of its Representatives or (b) later lawfully acquired
by Seller on a non-confidential basis from sources other than Buyer or any of
its Affiliates. The obligation of Seller to hold any such information in
confidence shall be satisfied if it exercises the same care with respect to such
information as Seller would take to preserve the confidentiality of its own
similar information.
6.6 No Solicitation.
---------------
(a) From the date hereof through the Closing or the earlier
termination of this Agreement, Seller shall not, and shall use all reasonable
efforts to cause its representatives (including, without limitation, investment
bankers, attorneys and accountants) not to, directly or indirectly, enter into,
solicit, initiate or continue any discussions or negotiations with, or encourage
or respond to any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any Person, other than Buyer and its representatives, concerning any sale
of all or any substantial portion of the Assets or the Business, or any merger,
consolidation, liquidation, dissolution or similar transaction involving the
Business (each such transaction being referred to herein as a "Proposed
Acquisition Transaction").
(b) Seller will promptly notify Buyer if any discussions or
negotiations are sought to be initiated, any inquiry or proposal is made, or any
information is requested with respect to any Proposed Acquisition Transaction
and notify Buyer of the terms of any proposal which it may receive in respect of
any such Proposed Acquisition Transaction, including, without limitation, the
identity of the prospective purchaser or soliciting party, except to the extent
that any such notification would violate any existing agreement of Seller.
6.7 Covenant Not To Compete. Seller agrees that for a period of six
-----------------------
years from and after the Closing Date, it shall not, directly or indirectly
through any of its Affiliates, engage in any business that competes directly
with the Business in supplying any existing customer of the Business or Airbus
any of the commercial or C-17 products currently manufactured by the Business
directly for third party customers or any natural follow-on products
representing modifications or improvements of such products for existing third
party customers on current or successor programs or any similar products in the
case of Airbus (collectively "Competitive Activities"); provided, however, that
nothing herein shall prohibit:
(i) an investment of less than 20% of the equity
securities (as determined at the time of the investment) in a Person;
(ii) any acquisition by Seller of another Person
which is engaged in a Competitive Activity, if such Competitive Activity
represents (A) during the first three years from and after the Closing
Date, the lesser of (x) less than one-third of such Person's revenues and
less than one-third of such Person's assets or (y) $300,000,000 in revenues
of such Person and (B) thereafter, less than one-third of such Person's
revenue and less than one-third of such Person's assets; or
(iii) any such Competitive Activity by another Person
if such Person has acquired Seller or substantially all of its assets;
provided, however, that the restrictions of this Section 6.7 shall remain
applicable to Seller and its assets after such acquisition whether the
business of Seller is held as a separate legal entity or a division of such
acquiring Person.
The provisions of this Section 6.7 shall be deemed to be a separate
covenant in each country in which the Business is currently engaged in
Competitive Activities. Seller acknowledges and agrees that the time, scope,
geographic area and other provisions of this covenant not to compete have been
specifically negotiated by sophisticated parties and that such provisions are
reasonable under the circumstances. The parties further agree that if, despite
the foregoing acknowledgment, a court or other tribunal of competent
jurisdiction holds that any of the restrictions of this covenant not to compete
are unenforceable, the maximum restrictions of time, scope or geographic area
reasonable under the circumstances, as determined by such court or tribunal,
shall be substituted for any such restrictions held unenforceable.
ARTICLE VII
COVENANTS OF BUYER
------------------
Buyer covenants and agrees as follows:
7.1 Confidentiality. Buyer acknowledges that the information being
---------------
provided to it by Seller is subject to the terms of a confidentiality letter
agreement dated January 31, 2000 between Buyer and Seller (the "Confidentiality
Agreement"), the terms of which are incorporated herein by reference. Effective
upon, and only upon, the Closing, the Confidentiality Agreement will terminate;
provided, however, that Buyer acknowledges that the Confidentiality Agreement
will
terminate only with respect to information relating solely to the Business; and
provided, further, however, that Buyer acknowledges that any and all other
information provided to it by Seller or Seller's representatives concerning
Seller shall remain subject to the terms and conditions of the Confidentiality
Agreement after the date of the Closing.
7.2 Waiver of Bulk Sales Law Compliance. Buyer hereby waives
-----------------------------------
compliance by Seller with the requirements, if any, of Article 6 of the Uniform
Commercial Code as in force in any state in which Assets are located and all
other similar Requirements of Law applicable to bulk sales and transfers, to the
extent applicable to the Transactions.
7.3 Excluded Assets. If, after the Closing Date, and except as
---------------
otherwise provided in Section 7.5, Excluded Assets shall remain on the premises
utilized or controlled by Buyer, then Buyer shall take reasonable steps at the
request and expense of Seller to deliver such Excluded Assets to such Seller,
and so long as such assets remain in Buyer's control, shall exercise reasonable
care with respect thereto, and in no event less care than with respect to its
own properties.
7.4 Change of Company Names. Effective on or promptly after the
-----------------------
Closing Date, Buyer will take such actions as are necessary under local law to
remove the name "Northrop" from that of any of the Sold Subsidiaries it will
operate after the Closing; provided, however, that Buyer may use such name until
the earlier of (i) effectiveness of the name change or (ii) the second
anniversary of the Closing Date.
7.5 Government-owned and Government Furnished Property. Except for
--------------------------------------------------
those items listed on Schedule 7.5, on and after the Closing Date, Buyer shall
assume responsibility for all property or equipment owned or leased by the
United States located at any of the Business Properties, including, but not
limited to, managing, maintaining, storing, tracking, reporting on, accounting
for, protecting, repairing, preserving, and disposing of any such property or
equipment, as well as any loss, destruction, or damage to such property or
equipment. Seller shall retain responsibility for all items of such property or
equipment listed on Schedule 7.5; provided, however, Buyer agrees to store such
items at its facilities without charge to Seller until such time as either
Seller or the United States provides instructions to the Buyer regarding the
disposition of such items.
7.6 Title Insurance. Buyer agrees to use its reasonable best
----------------
efforts to obtain title insurance, at its expense, for Owned Properties, in
amounts equal to Buyer's good faith estimate as to the value thereof.
ARTICLE VIII
MUTUAL COVENANTS
----------------
Each of Seller and Buyer covenant and agree as follows:
8.1 HSR Filings; Permits; Novations and Consents.
--------------------------------------------
(a) Seller and Buyer will as promptly as practicable, but in no
event later than five Business Days following the execution and delivery of this
Agreement, file with the United States Federal Trade Commission (the "FTC") and
the United States Department of Justice (the "DOJ") the notification and report
form, if any, required for the Transactions and any supplemental information
requested in connection therewith pursuant to the HSR Act. Any such notification
and report form and supplemental information will be in substantial compliance
with the requirements of the HSR Act. Seller and Buyer shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. Seller and Buyer shall keep each other apprised of
the status of any communications with, and inquiries or requests for additional
information from, the FTC and the DOJ and shall comply promptly with any such
inquiry or request. Seller and Buyer will use all reasonable efforts to obtain
any clearance required under the HSR Act for the Transactions.
(b) As promptly as practicable after the date hereof, Buyer and
Seller shall make all other filings with governmental bodies and other
regulatory authorities, and use all reasonable efforts to obtain all permits,
approvals, authorizations and consents of all third parties, required to
consummate the Transactions. Buyer and Seller shall furnish promptly to each
other all information that is not otherwise available to the other party and
that such party may reasonably request in connection with any such filing. Buyer
and Seller shall use reasonable efforts to obtain such consents to the
assignment of the Assigned Contracts as may be required; provided, however, that
Seller shall not be required to commence any litigation or offer or grant any
accommodation (financial or otherwise) to any third party.
(c) As soon as practicable following the Closing, Buyer shall
prepare (with Seller's assistance), in accordance with Federal Acquisition
Regulations Part 42, (P) 42.12 and any applicable agency regulations or
policies, a written request meeting the requirements of the Federal Acquisition
Regulations Part 42, as reasonably interpreted by the Responsible Contracting
Officer (as such term is defined in Federal Acquisition Regulations Part 42, (P)
42.1202(a)), which shall be submitted by Seller to each Responsible Contracting
Officer, for the United States Government to (i) recognize Buyer as Seller's
successor in interest to all the Assigned Contracts constituting Government
Contracts, and (ii) to enter into a novation agreement (a "Novation Agreement")
in form and substance reasonably satisfactory to Buyer and Seller and their
respective counsel, pursuant to which, subject to the requirements of the
Federal Acquisition Regulations Part 42, all of Seller's right, title and
interest in and to, and all of Seller's obligations and liabilities under, each
such Government Contract shall be validly conveyed, transferred and assigned and
novated to Buyer by all parties thereto. Buyer shall provide to Seller promptly
any information regarding Buyer required in connection with such request.
Seller and Buyer shall each use reasonable efforts to obtain all consents,
approvals and waivers required for the purpose of processing, entering into and
completing the Novation Agreements with regard to any of the Government
Contracts, including responding to any requests for information by the United
States Government with regard to such Novation Agreements; provided, however,
that Seller shall not be required to commence any litigation or offer or grant
any accommodation (financial or otherwise) to any third party.
(d) In the event that any and all novations, transfer or other
agreements, consents, approvals or waivers necessary for the assignments,
transfer or novation of any Assigned Contract, or any claim, right or benefit
arising thereunder or resulting therefrom, shall not have been obtained prior to
the Closing Date, then as of the Closing, this Agreement, to the extent
permitted by law, shall constitute full and equitable assignment by Seller to
Buyer of all of Seller's right, title and interest in and to, and all of
Seller's obligations and liabilities under, such Assigned Contracts, and Buyer
shall be deemed Seller's agent for purpose of completing, fulfilling and
discharging all of Seller's liabilities under any such Assigned Contract. The
parties shall take all necessary steps and actions to provide Buyer with the
benefits of such Assigned Contracts, and to relieve Seller of the performance
and other obligations thereunder, including entry into subcontracts for the
performance thereof. Buyer agrees to pay, perform and discharge, and indemnify
Seller against and hold Seller harmless from, all obligations and liabilities of
Seller relating to such performance or failure to perform under such Assigned
Contracts subject to the provisions of Section 2.3(j).
(e) In the event Seller shall be unable to make the equitable
assignment described in Section 8.1(d), or if such attempted assignment would
give rise to any right of termination, or would otherwise adversely affect the
rights of Seller or Buyer under such Assigned Contract, or would not assign all
Seller's rights thereunder at the Closing, Seller and Buyer shall continue to
cooperate and use all reasonable efforts to provide Buyer with all such rights.
To the extent that any such consents and waivers are not obtained, or until the
impediments to such assignment are resolved, Seller shall use all reasonable
efforts (without the expenditure, in the aggregate, of any material sum) to (i)
provide to Buyer, at the request of Buyer, the benefits of any such Assigned
Contract to the extent related to the Business, (ii) cooperate in any lawful
arrangement designed to provide such benefits to Buyer and (iii) enforce, at the
request of and for the account of Buyer, any rights of Seller arising from any
such Assigned Contract against any third Person (including any Governmental
Authority) including the right to elect to terminate in accordance with the
terms thereof upon the advice of Buyer. To the extent that Buyer is provided the
benefits of any Assigned Contract referred to herein (whether from Seller or
otherwise), Buyer shall perform at the direction of Seller and for the benefit
of any third Person (including any Governmental Authority) the obligations of
Seller thereunder or in connection therewith, and Buyer agrees to pay, perform
and discharge, and indemnify Seller against and hold Seller harmless from, all
obligations and liabilities of Seller relating to such performance or failure to
perform, and in the event of a failure of such indemnity, Seller shall cease to
be obligated under this Agreement in respect of the Assigned Contract which is
the subject of such failure subject to the provisions of Section 2.3(j).
8.2 Reasonable Efforts. Subject to the terms and conditions of this
------------------
Agreement (including the limitations set forth in Section 8.1), each party will
use all reasonable efforts to
cause the Closing to occur. Each of Seller and Buyer will promptly notify the
other promptly after learning of the occurrence of any event or circumstance
which would reasonably be expected to cause any condition to Closing not to be
satisfied. In connection with the foregoing: (i) neither Buyer nor Seller shall
be required to make any material payments; and (ii) Buyer shall not be required
to agree to any material modifications to the terms of any Contract, Lease or
Permit or to dispose of any material portion of the Assets or any other assets
owned by Buyer.
8.3 Publicity. Seller and Buyer agree that, from the date hereof through
---------
the Closing Date, no public release or announcement concerning the Transactions
shall be issued without the prior consent of each party (which consent shall not
be unreasonably withheld or delayed), except as such release or announcement may
be required by any Requirement of Law, in which case the party required to make
the release or announcement shall allow the other party reasonable time to
comment on such release or announcement in advance of such issuance.
Notwithstanding the foregoing, Seller shall provide Buyer access to, and
facilitate meetings with, the employees of the Business for the purposes of
making announcements concerning, and preparing for the consummation of, the
Transactions.
8.4 Cooperation After Closing. Buyer and Seller shall cooperate with each
-------------------------
other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other after the Closing to ensure the
orderly transition of the Business to Buyer and to minimize any disruption to
the respective businesses of Seller or the Business that might result from the
Transactions. Neither party shall be required by this Section 8.4 to take any
action that would unreasonably interfere with the conduct of its business.
8.5 Records. After the Closing, upon reasonable written notice and at
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Buyer's sole expense, Seller agrees to furnish or cause to be furnished to Buyer
and its representatives (including its auditors), access at reasonable times and
during normal business hours to such information relating to the Business in
Seller's possession as is reasonably necessary for financial reporting and
accounting matters, the preparation and filing of any Tax returns, reports or
forms, the defense of any Tax Claim or assessment, or otherwise and will permit
Buyer or such representatives to make abstracts from, or copies of, any of such
information, or to obtain temporary possession of any thereof as may be
reasonably required by Buyer at Buyer's sole cost and expense; provided,
however, that such access does not unreasonably disrupt the normal operations of
such Seller. After the Closing, upon reasonable written notice and at Seller's
sole expense Buyer will afford authorized representatives of Seller (including
its auditors) access to such Records in Buyer's possession at reasonable times
and during normal business hours at the principal business office of the
Business, or at such other location or locations at which such Records may be
stored or maintained from time to time, and will permit such representatives to
make abstracts from, or copies of, any of such Records, or to obtain temporary
possession of any thereof as may be reasonably required by Seller at such
Seller's sole cost and expense; provided, however, that such access does not
unreasonably disrupt the normal operations of Buyer. After the Closing, Buyer
will, at Seller's expense (limited, however, to Buyer's reasonable out-of-pocket
expenditures without regard to any employee cost or other overhead expenses),
cooperate with Seller in furnishing information, evidence, testimony, and other
reasonable assistance in connection with any action, proceeding, Tax audit, or
investigation to which such Seller or any of its Affiliates is subject relating
to the business of the Business prior to the
Closing. In respect of the Records subject to this Section 8.5, Seller and Buyer
will follow the same retention and disposal procedures as are used by Seller for
similar documents and records in its other businesses.
8.6 Use of Trademark and Trade Names. Notwithstanding anything to the
--------------------------------
contrary in this Agreement, Buyer shall not have the right to use any trademark
or trade name of Seller, except to the extent provided for in the Intellectual
Property Agreement.
8.7 Intercompany Work Orders. Seller and Buyer agree that at the date of
------------------------
this Agreement there are in place certain intercompany work orders ("IWO's") as
set forth on Schedule 8.7 pursuant to which the Business is performing work for
other business units of Seller and/or other business units of Seller are
performing work for the Business. Seller and Buyer agree that prior to the
Closing, the IWO's listed on Schedule 8.7 and any additional such orders which
are entered into after the date hereof will be converted into fixed price
contracts using Seller's standard procurement terms and conditions (including
the establishment of appropriate base line scope of work and procedures for
equitable adjustment) for the relevant program and reflecting that portion of
the budgeted value of the IWO (which budgeted value should represent the fully
burdened, estimated cost of performance) that has not been incurred and
transferred to the benefiting organization. In the case of Buyer, the IWO's as
converted shall become Assigned Contracts as of the Closing Date.
8.8 Non-Interference. Each of Seller and Buyer agrees that for a period
----------------
of two years following the Closing, it will not solicit or attempt to solicit
any salaried employee, officer, representative, consultant, or other agent of
the other (whether such person is presently or may hereinafter be employed by
such person) to leave such person's employ or otherwise interfere with the
employment relationship between any such person and Buyer or Seller (as the case
may be); provided, however, that this Section shall not preclude advertisements
for open jobs.
8.9 Notification of Certain Matters. From the date hereof through the
-------------------------------
Closing, Seller shall give prompt notice to Buyer and Buyer shall give prompt
notice to Seller of (a) the occurrence or failure to occur of an event which
occurrence or failure would be likely to cause any of Seller's or Buyer's
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect and (b) any material failure of
Seller or Buyer to comply with or satisfy any of its covenants, conditions or
agreements to be complied with or satisfied by it under this Agreement;
provided, however, that such disclosure shall not be deemed to cure any breach
of a representation, warranty, covenant or agreement, or to satisfy any
condition.
8.10 Tax Returns of Sold Subsidiaries. Seller shall cause to be prepared
--------------------------------
in a manner consistent with past practices all Tax Returns of each Sold
Subsidiary and all Tax Returns required to include one or more of the Sold
Subsidiaries for taxable years or periods ending on or before the Closing Date
but which are due to be filed after the Closing Date (taking into account any
applicable extensions of time for filing). Seller shall cause such Tax Returns
to be filed in a timely fashion (taking into account any applicable extensions
of time for filing). Seller shall cause to be timely paid all Taxes required to
be paid for the periods covered by such tax Returns. Notwithstanding the
foregoing, Seller shall not be required to pay any Taxes required to be paid
for the period covered by such Tax Returns to the extent reserves for such Taxes
are established on the Closing Statement of Assets and Liabilities (other than
any reserves for deferred Taxes established to reflect timing differences
between book and Tax income). Buyer shall cause to be prepared all federal,
state and local Tax Returns of each Sold Subsidiary for periods that begin
before the Closing Date and end after the Closing Date. Buyer shall cause such
Tax Returns to be filed in a timely fashion (taking into account any applicable
extensions of time for filing).
8.11 Section 338(h)(10) Election.
---------------------------
(a) Buyer may elect to cause Seller, any relevant Selling Subsidiary
and Buyer to jointly make the election provided by Section 338(h)(l0) of the
Code for the acquisition of the stock of the Sold Subsidiaries in accordance
with Treas. Reg. (S) 1.338(h)(l0)-1(d) on IRS Form 8023, and to make a joint
election under any corresponding state, local or foreign tax law (the
"Election") with respect to the purchase and sale of the stock of the Sold
Subsidiaries by notifying Seller in writing (the "Section 338 Election Notice")
at any time on or before the date that is 60 days prior to the deadline for
filing the Election (the "Election Deadline"). Seller and Buyer shall provide to
the other all necessary information to permit the Election to be made. Seller,
any relevant Selling Subsidiary and Buyer shall, as promptly as practicable
following the receipt of a 338 Election Notice, take all actions necessary and
appropriate (including filing IRS From 8023 and other such forms, returns,
elections, schedules, attachments and other documents as may be required (the
"Forms")) to effect and preserve a timely Election.
(b) Buyer, Seller and any relevant Selling Subsidiary agree that the
aggregate fair market value of the assets of each Sold Subsidiary (the
"Aggregate Fair Market Value") will be appraised at Buyer's expense as part of
the Appraisal under Section 2.6 hereof.
(c) In connection with the Election, Buyer and Seller shall mutually
determine (i) the amount of the modified aggregated deemed sales price ("MADSP")
of the Target Shares (within the meaning of Treas. Reg.(S) l.338(h)(l0)-1(f))
and (ii) based on the Aggregate Fair Market Value as determined in the
Appraisal, the proper allocation of the MADSP among the assets of each Sold
Subsidiary for which an Election is made in accordance with Treas. Reg.(S)
1.338(h)(l0)-1(f). The allocations referred to in the preceding sentence are
referred to herein as the "338 Allocations." Buyer, Seller and any relevant
Selling Subsidiary will calculate the gain or loss, if any, in a manner
consistent with the Allocations, and Buyer, Seller and any relevant Selling
Subsidiary will not take any position inconsistent with the 338 Allocations in
any Tax Return (subject to appropriate adjustments pursuant to Treas. Reg.(S)
1.338(h)(l0)-1(f)(4)).
(d) In the event Buyer delivers a Section 338 Election Notice to
Seller, Buyer shall prepare each Form based on the 338 Allocations, and shall,
no later than thirty (30) days prior to the latest date for the filing of each
Form, deliver each Form to Seller for Seller's approval, which approval shall
not be unreasonably withheld.
8.12 Leaseback Arrangements and Certain Post-Closing Support. Prior to the
-------------------------------------------------------
Closing, Seller and Buyer agree to enter into a lease, license or other
occupancy agreement, in form reasonably satisfactory to Seller and Buyer, to
provide for the continued occupancy by Seller after the Closing of certain space
in the Business Property for specified periods as more fully
described in Schedule 8.12. Seller shall occupy the space rent free but shall be
responsible for utilities, operating maintenance, insurance and real property
taxes and other reasonable allocated overhead (including for support services
specified in Schedule 8.12) to the extent such overhead benefits Seller with
respect to the portion of the Business Property occupied by Seller. Upon
vacating the foregoing space, Seller shall return the same in its condition as
of the date hereof, reasonable wear and tear excepted. Seller shall maintain
reasonable and customary insurance covering its occupancy of such space. At no
additional charge to Seller, Buyer shall provide to Seller the additional
support described in Schedule 8.12.
8.13 Information Technology Services. Seller and Buyer shall enter into,
-------------------------------
prior to the Closing, an agreement to provide the information technology
services defined in Schedule 8.13 on terms and conditions substantially the same
as those reflected on Schedule 8.13.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Seller. Subject to the terms and conditions of this
-------------------------
Article IX and except with respect to the matters that are the subject of
Sections 9.8 and 9.9, Seller shall indemnify Buyer and each of its Affiliates,
officers, directors, employees and agents against, and hold them harmless from,
any Loss suffered or incurred by any such Indemnified Person to the extent
arising from (a) if the Closing occurs, any breach of any representation or
warranty of Seller contained in this Agreement or any Ancillary Agreement which
survives the Closing or in any certificate, instrument or other document
delivered pursuant hereto, (b) any material breach of any covenant of Seller
contained in this Agreement or any Ancillary Agreement or (c) if the Closing
occurs, the existence of, or the failure of Seller to pay, perform and discharge
when due, any of the Excluded Liabilities, whether such Excluded Liabilities are
liabilities of Seller or of any of the Sold Subsidiaries (including, without
limitation, any Losses as a result of the failure of Seller to comply with any
Bulk Sales Laws referred to in Section 7.3); provided, however, that Seller
shall have no liability under Section 9.1(a) unless the aggregate of all Losses
relating thereto for which Seller would, but for this proviso, be liable exceeds
$15,000,000 (Fifteen Million Dollars) (and then only to the extent of any such
excess); and provided further, however, that Seller's aggregate liability under
Section 9.1(a) shall in no event exceed $150,000,000 (One Hundred Fifty Million
Dollars).
9.2 Indemnification by Buyer. Subject to the terms and conditions of this
------------------------
Article IX, Buyer shall indemnify Seller and each of its Affiliates, officers,
directors, employees and agents against, and hold them harmless from, any Loss
suffered or incurred by any such Indemnified Person to the extent arising from
(a) if the Closing occurs, any breach of any representation or warranty of Buyer
contained in this Agreement or any Ancillary Agreement which survives the
Closing or in any certificate, instrument or other document delivered pursuant
hereto or in connection herewith, (b) any material breach of any covenant of
Buyer contained in this Agreement or any Ancillary Agreement, (c) if the Closing
occurs, the existence of, or the failure of Buyer to pay, perform and discharge
when due, any of the Assumed Liabilities and (d) if the Closing occurs, any Loss
caused by the ongoing operations of the Business and the Assets after the
Closing Date; provided, however, that Buyer shall have no liability under clause
9.2(a) unless
the aggregate of all Losses relating thereto for which Buyer would, but for this
proviso, be liable exceeds on a cumulative basis $15,000,000 (Fifteen Million
Dollars) (and then only to the extent of any such excess); and provided further,
however, that Buyer's aggregate liability under Section 9.2(a) shall in no event
exceed $150,000,000 (One Hundred Fifty Million Dollars).
9.3 Losses Net of Insurance, Etc.
----------------------------
(a) The amount of any Loss for which indemnification is provided
under this Article IX shall be net of any amounts actually recovered by the
Indemnified Person, or which the Indemnified Party is entitled to recover, under
insurance policies with respect to such Loss and of any related reserve in
respect thereof reflected on the Closing Statement.
(b) Notwithstanding anything to the contrary elsewhere in this
Agreement, no Indemnifying Person shall, in any event, be liable to the other
party for any damages not proximately caused by its breach hereunder, any
damages for loss of business reputation, or any punitive or exemplary damages.
The foregoing shall not be interpreted, however, to limit indemnification for
Losses incurred as a result of the assertion by a claimant (other than the
parties hereto and their successors and assigns) in a Third-Party Claim of
claims for damages of the foregoing type.
(c) The parties hereto agree that any matter that is subject to
resolution by the Accounting Arbitrator pursuant to Section 2.5 shall not be the
basis of an indemnification claim under this Article IX, it being the intent of
the parties that the Purchase Price adjustment provided in Section 2.5 shall be
the sole and exclusive remedy therefor.
(d) Except as expressly set forth in Section 10.5 as to equitable
remedies, the parties hereto agree that the indemnification provisions of this
Article IX are intended to provide the exclusive remedy as to all Losses either
may incur arising from or relating to the Transactions, and each party hereby
waives, to the extent they may do so, any other rights or remedies that may
arise under any applicable statute, rule or regulation.
9.4 Termination of Indemnification. The obligations to indemnify and hold
------------------------------
harmless a party hereto, pursuant to Sections 9.1(a) and 9.2(a), shall terminate
when the applicable representation or warranty terminates pursuant to Section
9.8; provided, however, that such obligations to indemnify and hold harmless
shall not terminate with respect to any item as to which the person to be
indemnified shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice (stating in reasonable detail the
basis of such claim) to the Indemnifying Person.
9.5 Procedures Relating to Indemnification (Other than for Tax Claims). In
------------------------------------------------------------------
order for an Indemnified Person to be entitled to any indemnification provided
for under this Agreement (other than for Tax Claims) in respect of, arising out
of or involving a claim or demand made by any Person against the Indemnified
Person (a "Third-Party Claim"), such Indemnified Person must notify the
Indemnifying Person in writing, and in reasonable detail, of the Third-Party
Claim within 10 Business Days after receipt by such Indemnified Person of
written notice of the Third-Party Claim; provided, however, that failure to give
such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Person
shall have been actually prejudiced as a result of such failure (except that the
Indemnifying Person shall not be liable for any Losses incurred during the
period in which the Indemnified Person failed to give such notice). Thereafter,
the Indemnified Person shall deliver to the Indemnifying Person, within five
Business Days after the Indemnified Person's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified
Person relating to the Third-Party Claim.
If a Third-Party Claim is made against an Indemnified Person, the
Indemnifying Person will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Person and reasonably satisfactory to the Indemnified Person.
Should the Indemnifying Person so elect to assume the defense of a Third-Party
Claim, the Indemnifying Person will not be liable to the Indemnified Person for
legal fees and expenses subsequently incurred by the Indemnified Person in
connection with the defense thereof. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Person, it being understood that the
Indemnifying Person shall control such defense. The Indemnifying Person shall be
liable for the reasonable fees and expenses of counsel employed by the
Indemnified Person for any period during which the Indemnifying Person has not
assumed the defense thereof (other than during any period in which the
Indemnified Person shall have failed to give notice of the Third-Party Claim as
provided above). If the Indemnifying Person chooses to defend or prosecute any
Third-Party Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon the
Indemnifying Person's request) the provision to the Indemnifying Person of
records and information which are reasonably relevant to such Third-Party Claim,
and making employees available on a mutually convenient basis in the manner
specified in Section 8.5 hereof to provide additional information and
explanation of any material provided hereunder. Whether or not the Indemnifying
Person shall have assumed the defense of a Third-Party Claim, the Indemnified
Person shall not admit any liability with respect to, or settle, compromise or
discharge, such Third-Party Claim without the Indemnifying Person's prior
written consent (which consent shall not be unreasonably withheld or delayed).
All Tax Claims (as defined in Section 9.6) shall be governed by Section 9.6.
9.6 Procedures Relating to Indemnification of Tax Claims.
----------------------------------------------------
(a) If notice of an audit, examination or other proceeding is
received from any Tax authority, which, if successful, might result in an
indemnity payment to any Person hereunder (a "Tax Indemnitee"), the Tax
Indemnitee shall promptly notify the party against whom indemnification is
sought (the "Tax Indemnitor") in writing of such potential claim (a "Tax
Claim"). If notice of a Tax Claim is not given to the Tax Indemnitor within a
sufficient period of time to allow the Tax Indemnitor to effectively participate
in such audit, examination or proceeding, or in reasonable detail to apprise the
Tax Indemnitor of the nature of the Tax Claim, in each case taking into account
the facts and circumstances with respect to such Tax Claim, the Tax Indemnitor
shall not be liable to the Tax Indemnitee to the extent that the Tax
Indemnitor's ability to effectively contest such Tax Claim is actually
prejudiced as a result thereof.
(b) With respect to any Tax Claim for which it agrees that any
resulting Tax is covered by the indemnity given in this Article IX, the Tax
Indemnitor shall control that portion of any audit, examination and other
proceeding in connection with such Tax Claim (including, without limitation,
selection of counsel) and, without limiting the foregoing, may in its sole
discretion pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect thereto and may,
in its sole discretion, either pay any Tax claimed and ▇▇▇ for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner; provided, however, that (i) the Tax Indemnitor shall keep
the Tax Indemnitee informed regarding the progress and substantive aspects of
any such Tax Claim and (ii) the Tax Indemnitor shall not settle or compromise a
Tax Claim without giving 15 days' prior notice to the Tax Indemnitee, and
without the Tax Indemnitee's consent, which shall not be unreasonably withheld
or delayed. The Tax Indemnitee, and each of its Affiliates, shall cooperate with
the Tax Indemnitor in contesting any Tax Claim, which cooperation shall include,
without limitation, the retention and (upon the Tax Indemnitor's request) the
provision to Tax Indemnitor of Records and information which are reasonably
relevant to such Tax Claim, and making employees available on a mutually
convenient basis to provide additional information or explanation of any
material provided hereunder or to testify at proceedings relating to such Tax
Claim.
9.7 Survival of Representations. The representations and warranties in
---------------------------
this Agreement and in any other document delivered in connection herewith shall
survive the Closing solely for purposes of this Article IX and, except as set
forth in the next two sentences, shall terminate at the close of business
eighteen (18) months after the Closing Date. The representations and warranties
in Sections 4.1(a), the first sentence of Section 4.4 and the second sentence of
Section 4.5 shall survive indefinitely, the representations and warranties in
Section 4.9 shall survive for seven (7) years after the Closing Date and the
representations and warranties in Section 4.3 shall survive for the applicable
statute of limitations pertaining to the underlying liability plus 60 days.
Survival of the representations and warranties in Section 4.10 is covered by
Section 9.8 dealing with environmental indemnification.
9.8 Environmental Liability.
-----------------------
(a) Subject to the limitations set forth below, Seller shall
indemnify Buyer and each of its Affiliates, officers, directors, employees and
agents against, and hold them harmless from, any Loss suffered or incurred by
any such indemnified Person to the extent arising from (i) any breach of any
representation or warranty of Seller set forth in Section 4.10 of this Agreement
or (ii) any Assumed Liability arising from any Pre-Closing Environmental
Condition (any of the matters described in clauses (i) or (ii) above are
collectively referred to as "Pre-Closing Environmental Liabilities"). Seller
shall not have any financial obligation or liability for Pre-Closing
Environmental Liabilities unless the aggregate of all Pre-Closing Environmental
Liabilities for which Seller, but for this sentence, would be liable exceeds an
amount equal to $7,500,000, in which case Seller's liability shall be for eighty
percent (80%) and Buyer's liability shall be for twenty percent (20%) of any
such excess over $7,500,000 until the amount of such excess reaches a total
amount of $30,000,000, and thereafter Seller shall be liable for 100% of any
such excess over $30,000,000. The provisions of Section 9.3 shall be applicable
to this
Section 9.8. In accordance with the foregoing, Buyer's maximum total liability
for Pre-Closing Environmental Liabilities shall be $12,000,000.
(b) Buyer shall indemnify Seller and each of its Affiliates,
officers, directors, employees and agents against, and hold them harmless from,
any Loss suffered or incurred by any such indemnified Person to the extent
arising from:
(i) The first $7,500,000 in Pre-Closing Environmental
Liabilities, and for 20% of any excess over $7,500,000 until the amount
of such excess over $7,500,000 reaches a total amount of $30,000,000,
Buyer having no liability for any such excess over $30,000,000; and
(ii) All liability and costs incurred to address, investigate,
assess, characterize, monitor, remove, contain and/or remediate any
contamination by Hazardous Material caused by Buyer or its agents,
representatives or consultants after the Closing.
(c) Buyer acknowledges and agrees that its sole and exclusive remedy
with respect to any and all claims against Seller relating to environmental,
health and safety matters shall be pursuant to the indemnification provisions
set forth in this Section 9.8. In furtherance of the foregoing, Buyer hereby
waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it may have against Seller, its officers,
directors, employees and agents arising under or based upon any Environmental
Law.
(d) Seller acknowledges and agrees that its sole and exclusive remedy
with respect to any and all claims against Buyer relating to environmental
health and safety matters shall be pursuant to the indemnification provisions
set forth in this Section 9.8. In furtherance of the foregoing, Seller hereby
waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it may have against Buyer, its officers,
directors, employees and agents arising under or based upon any Environmental
Law.
(e) Notwithstanding any other provision of this Agreement to the
contrary, Seller shall have no liability pursuant to this Section 9.8 for Pre-
Closing Environmental Liabilities: (i) not made known to Seller by Buyer in a
written statement within ten (10) years of the Closing Date setting forth in
reasonable detail the nature and extent of each Pre-Closing Environmental
Liability covered thereby and (ii) as to Remedial Actions, for which any
expenditures are made or costs incurred twenty (20) years or more after the date
of Closing; provided, however, that expenditures for Pre-Closing Environmental
Liabilities that are not Remedial Actions (e.g., a Third Party Claim based on a
common law tort cause of action) are not subject to the 20 year time limit
provided in this Section 9.8(e)(ii).
(f) To the extent that Seller shall have indemnification obligations
for the cost and performance of Remedial Action, such Remedial Action shall be
limited to that required under Environmental Laws by any Governmental Authority.
Seller's obligations to conduct Remedial Action shall cease to the extent that
it has paid the costs of such Remedial Action and has received notice from the
pertinent Governmental Authority that no further Remedial Action is required or,
if such Governmental Authority has not responded within a reasonable time to
Seller's request for such written notice, a certification by Seller's
environmental consultant that no such further Remedial Action is required;
provided, however, that Seller's obligations to conduct Remedial Action shall
revive if the Governmental Authority requires further Remedial Action.
(g) Seller's obligations for the cost and performance of Remedial
Action on an Owned Property shall be limited to the continued industrial use of
the Owned Property. Seller shall not be required to conduct a Remedial Action to
the extent that Remedial Action is related to the use of the Owned Property for
any residential or other non-industrial purpose.
(h) Seller's obligations to conduct a Remedial Action do not include
any obligation to remediate:
(i) Hazardous Material used as construction materials in, on or
otherwise affixed to structures or improvements on any Owned Property,
including asbestos, urea formaldehyde foam insulation, lead-based paint or
coatings;
(ii) Hazardous Material introduced after the Closing into the
soil or groundwater of the Owned Property (other than introductions into
the environment as a result of the migration of Hazardous Materials
actually present in the environment prior to the Closing, such as the
migration through soil or groundwater after the Closing of Hazardous
Material released prior to the Closing);
(iii) Any increase in soils or groundwater contamination or
exacerbation of existing contamination as a result of the acts or omissions
after the Closing of Buyer.
(i) (i) Seller shall remain responsible for and shall direct the
performance of Remedial Action related to any Pre-Closing Environmental
Condition and the costs of such Remedial Action shall be allocated pursuant
to subsection (a) of this Section 9.8. In addition, with the written
approval of the other party, either party may undertake such Remedial
Action as is required under any Environmental Law or otherwise is
appropriate. In the event Seller shall no longer desire to direct the
performance of Remedial Action for Pre-Closing Environmental Conditions at
one or more sites, Seller may request that Buyer direct such performance.
Buyer may, at its sole discretion, agree to direct the performance of the
Remedial Action, and Buyer and Seller may allocate responsibilities for
such direction subject to such terms and conditions as they may determine.
(ii) Buyer shall, for the first $7,500,000 of expenditures, have
the right to review and approve (i) Seller's selection of any consultant or
contractor designated to perform the Remedial Action and (ii) the
development of the scope of work for, and type of, Remedial Action to be
implemented. Thereafter, when $7,500,000 has been expended, Buyer shall,
for any further Remedial Action, have the right to review and provide
Seller with written comments on (i) and (ii) which comments Seller shall
reasonably review and consider.
(iii) Prior to commencing any Remedial Action after the
Closing or presenting after the Closing any plan for Remedial Action to any
Governmental Authority having jurisdiction over such Remedial Action or to
any person making a Third Party Claim for which Seller is in whole or in
part responsible, Seller shall meet and consult with Buyer in good faith
concerning such remedial Action. In connection with the performance of any
Remedial Action by Seller, Seller shall:
(1) Provide the Buyer with reasonable notice of any
meetings with any such Governmental Authority or any such other
Person to afford Buyer or its representatives the right to
participate in such meetings;
(2) Provide the Buyer with a reasonable opportunity
to preview and comment upon any submissions Seller plans to
deliver or submit to any such Governmental Authority or any such
other Person;
(3) Meet and consult with the Buyer in good faith
over the time, manner and conditions for the completion of the
Remedial Action
(4) Avoid unreasonable interference with business
conducted or planned to be conducted at the site in question;
(5) Provide the Buyer with five (5) Business Days'
prior notice (which may be oral) of material actions to be taken
at the site in question in connection with Remedial Action
undertaken by Seller, and permit the Buyer the opportunity to
have its representatives present to observe such Remedial Action;
(6) Properly dispose of all Hazardous Materials
removed from the soil or groundwater of the site in question in
connection with such Remedial Action;
(7) After completion of any Remedial Action, to
restore the surface of the site in question to a condition
substantially similar to its condition prior to the performance
of the Remedial Action, subject to any intervening changes in
surface conditions not caused by such Remedial Action.
(j) With respect to the Seller's rights and obligations in
respect of Remedial Action, Buyer agrees as follows:
(i) It will grant to Seller access (in form and substance
reasonably acceptable to Seller and at no cost to Seller) allowing Seller
and its representatives and agents under reasonable terms and conditions so
as to not interfere with normal business operations, to enter upon the real
property included in the Owned Property and use all facilities or equipment
located thereon and to install equipment for the purpose of performing the
Remedial Action and carrying out its rights and obligations under this
Section;
(ii) Except as necessary for the reasonable
operation or disposition of the business, it will not relocate, disturb
or interfere with such equipment or the performance of such Remedial
Action in compliance with the provisions of this Section;
(iii) It will provide Seller and its representatives
and agents with reasonable access to environmental and other relevant,
non-privileged records respecting the site for the purpose of carrying
out such Remedial Action and will provide Seller with copies of all
material and communications with any Governmental Authority about
existing soils contamination, Remedial Action or other matters
pertaining to Seller's obligations;
(iv) It will not submit, or cause to be submitted,
to any Governmental Authority any information or comments concerning
any Pre-Closing soils contamination or Remedial Action undertaken by
Seller except for information routinely submitted to a Governmental
Authority or as may be otherwise required by Environmental Law; and
(v) It will consult with Seller in good faith prior
to extracting, excavating or removing any soil or groundwater at any
Owned Property or otherwise disturbing or disrupting the same and,
except as provided in Section 9.9(b)(vi) will otherwise make reasonable
efforts to avoid taking any action, and will take reasonable steps to
cause others to avoid taking any action, that will increase or
accelerate any obligation to commence or implement Remedial Action.
(k) The parties shall allocate all costs arising from any
Remedial Action of Pre-Closing Environmental Conditions in accordance with
subsection (a) of this Section 9.8. These costs shall include the out-of-pocket
costs of planning for and conducting Remedial Action and the reasonable
out-of-pocket oversight costs thereof; provided, however, that Seller's and
Buyer's employee and other overhead costs shall not be included in the costs of
any Remedial Action. For the first $7,500,000, Seller shall provide Buyer with
invoices identifying the costs incurred. Seller shall provide Buyer with
invoices identifying the percentage (20%) of such Costs incurred in excess of
$7,500,000 and up to $30,000,000. Buyer shall pay all invoices within thirty
(30) calendar days of their submission.
(l) The parties shall make a good faith effort to resolve
any disputes related to this Section 9.8 through informal negotiation, including
the use of third-party technical consultants where appropriate. If the parties
are unable to resolve the dispute, the matter shall be submitted to binding
arbitration as provided in Section 9.9.
9.9 Pre-Closing Environmental Liabilities Procedures.
------------------------------------------------
(a) After the Closing, each of Buyer and Seller shall
notify the other in writing, and in reasonable detail, of any claim in respect
of, arising out of or involving a claim made by any Person against the notifying
party (the "Notifying Party") constituting a Pre-Closing Environmental
Liability, within 15 business days after receipt by the Notifying Party of
written notice of such claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall
have been actually prejudiced as a result of such failure and except that the
indemnifying party shall not be liable for any expenses incurred during the
period in which the Notifying Party failed to give such notice. Thereafter, each
party shall deliver to the other party, promptly after such party's receipt
thereof, copies of all non-privileged notices and documents (including court
papers) received by such party relating to the Pre-Closing Environmental
Liability claim.
(b) Excepting the provisions of Section 9.8 regarding Seller's
responsibility for and direction of Remedial Action:
(i) Buyer and Seller shall each be entitled to participate in
the defense of any Pre-Closing Environmental Liability claim; provided,
that if either Buyer or Seller shall have one hundred percent of the
liability in respect thereof, the procedures applicable to a Third Party
Claim under Section 9.5 shall apply;
(ii) Buyer and Seller shall each cooperate in the defense or
prosecution of any Pre-Closing Environmental Liability, including the
retention and (upon request) the provision to the requesting party of non-
privileged records and information which are reasonably relevant to such
claim, and making employees (including any Transferred Employees familiar
with such claim), available on a mutually convenient basis to provide
additional information and explanation of any such records and information;
(iii) Buyer and Seller shall consult with each other and shall
mutually agree on any settlement, compromise or discharge of any Pre-
Closing Environmental Liability Claim (which agreement shall not be
unreasonably withheld);
(iv) neither Buyer nor Seller shall admit any liability with
respect to, or settle, compromise or discharge, any Pre-Closing
Environmental Liability Claim without the other party's prior written
consent (which consent shall not be unreasonably withheld); and
(v) If Seller and Buyer, despite reasonable good faith
efforts, cannot agree as to any decision under this Section 9.9, either
party may elect to have the disputed matters presented for binding
arbitration, provided, further, that, unless Seller and Buyer agree
otherwise, any such arbitration shall be completed prior to any deadline
set by the applicable Governmental Authority relating to the matter in
dispute.
(vi) Seller shall permit Buyer, if it shall so elect and for
the purpose of determining the need for Remedial Action, to make tests,
take samples and soil borings and/or conduct groundwater studies and such
other investigations. All plans for such testing must be provided to Seller
a reasonable period of time before their commencement so as to allow Seller
an opportunity to comment and allow Buyer adequate time to incorporate such
comments to the extent they are reasonable and appropriate.
(c) In order to effect the provisions of Section 9.9 and Section
9.8, the parties may, with regard to one or more of the sites, enter into such
agreements and other contractual arrangements as they see fit to implement
Remedial Action.
9.10 Treatment of Indemnity Payments. All indemnity payments made
-------------------------------
under this Agreement shall be treated by the parties for all Tax purposes as
adjustments to the Purchase Price.
ARTICLE X
GENERAL PROVISIONS
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10.1 Assignment. This Agreement and the rights and obligations
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hereunder shall not be assignable or transferable by either party other than by
operation of law or in connection with a merger or sale of substantially all the
assets of such party without the prior written consent of the other, which
consent will not be unreasonably withheld; provided, however, that Buyer may
without the prior written consent of Seller (a) assign its rights hereunder to
any lender providing financing in connection with the Transactions as collateral
security or (b) assign its rights and obligations hereunder to an Affiliate of
Buyer which shall assume Buyers obligations and liabilities hereunder; provided
further, however, that no assignment shall release the assigning party from its
obligations hereunder.
10.2 No Third-Party Beneficiaries. Except as provided in Article IX
----------------------------
as to Indemnified Persons and in the Employee Matters Agreement, this Agreement
is for the sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give to any
person or entity, other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
10.3 Termination.
-----------
(a) Anything contained herein to the contrary notwithstanding,
this Agreement may be terminated (except as set forth in Section 10.3(c)) and
the Transactions abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Seller and Buyer;
(ii) by Seller if any of the conditions set forth in
Section 3.1 shall have become incapable of fulfillment, and shall not have
been waived by Seller;
(iii) by Buyer if any of the conditions set forth in
Section 3.2 shall have become incapable of fulfillment, and shall not have
been waived by Buyer; or
(iv) by either party hereto, if the Closing does not
occur on or prior to August 31, 2000; provided, however, that such date may
be extended by either party for up to 30 days if necessary to satisfy the
condition in Sections 3.1(c) and 3.2(c).
(b) In the event of termination by Seller or Buyer pursuant to
this Section 10.3, written notice thereof shall forthwith be given to the other
party and the Transactions shall be terminated, without further action by either
party. If the Transactions are terminated as provided herein:
(i) Buyer shall return all documents and copies and other
material received from Seller relating to the Transactions, whether so
obtained before or after the execution hereof, to Seller; and
(ii) all confidential information received by Buyer with
respect to the Business and Seller shall be treated in accordance with the
Confidentiality Agreement which shall remain in full force and effect
notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 10.3, this
Agreement shall become void and of no further force and effect, except for the
provisions of (i) Section 7.1 relating to the obligation of Buyer to keep
confidential certain information and data obtained by it, (ii) Section 8.3
relating to publicity, (iii) Section 10.4 relating to certain expenses, (iv)
Section 10.11 relating to finder's fees and broker's fees and (v) this Section
10.3. Nothing in this Section 10.3 shall be deemed to release either party from
any liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of either party to compel specific performance
by the other party of its obligations under this Agreement.
10.4 Expenses. Whether or not the transactions contemplated hereby are
--------
consummated, and except as otherwise provided in this Section 10.4, Section 2.7
or elsewhere in this Agreement, all fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, costs or expenses.
10.5 Equitable Relief. The parties hereto agree that in the event of
----------------
Sellers' breach of its obligations to consummate the Transactions, damages may
prove insufficient and Buyer should be entitled to the remedy of specific
performance.
10.6 Amendments. No amendment to this Agreement shall be effective
----------
unless it shall be in writing and signed by the parties hereto.
10.7 Notices. All notices or other communications required or
-------
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service), as follows:
(i) if to Buyer, to:
---------------
VAC Acquisition Corp. II
c/o The Carlyle Group
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to Seller, to:
Office of General Counsel
Northrop Grumman Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
10.8 Interpretation; Exhibits and Schedules. The headings contained
--------------------------------------
in this Agreement, in any Exhibit or Schedule hereto and in the table of
contents to this Agreement, are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Information set
forth in each Schedule specifically refers to the article and section of this
Agreement to which such information is responsive, and such information shall
not be deemed to have been disclosed with respect to any statement in any
article and section that is not qualified by reference to the pertinent Schedule
or, except with regard to information set forth on the face of any Schedule that
makes reasonably apparent its applicability to any other Schedule,
with respect to any other article or section of this Agreement or for any other
purpose. The Schedules shall not vary, change or alter the language of the
representations and warranties contained in this Agreement. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized
terms used in any Schedule or Exhibit, but not otherwise defined therein, shall
have the meaning as defined in this Agreement.
10.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
10.10 Entire Agreement. This Agreement and the Confidentiality
----------------
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior oral
and written agreements and understandings relating to such subject matter.
10.11 Fees. Each party hereto hereby represents and warrants that (a)
----
the only brokers or finders that have acted for such party in connection with
this Agreement or the transactions contemplated hereby or that may be entitled
to any brokerage fee, finder's fee or commission in respect thereof are ▇▇▇▇▇▇
Brothers Inc. with respect to Buyer and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney with respect to
Seller, and (b) each of Buyer and Seller agrees that it will pay all fees or
commissions which may be payable to such firm(s) as are describe in clause (a)
as relating to it.
10.12 Severability. If any provision of this Agreement or the
------------
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
10.13 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of California applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER:
NORTHROP GRUMMAN CORPORATION
By: /s/
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Title: Corporate Vice President & Treasurer
BUYER:
VAC ACQUISITION CORP. II
By: /s/
-----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
Title: Managing Director