Exhibit 10
STOCK PURCHASE AGREEMENT
By and Between
EG&G Holdings, Inc.
and
Ametek, Inc.
Dated December 26, 1997
TABLE OF CONTENTS
PAGE
Article I DEFINITIONS........................................ 2
"Affiliates"....................................... 2
"Balance Sheet".................................... 2
"Buyer"............................................ 2
"Closing".......................................... 2
"Closing Date"..................................... 2
"Company".......................................... 2
"Contemplated Transactions"........................ 2
"Contracts"........................................ 2
"Intellectual Property............................. 2
"HSR Act".......................................... 3
"Legal Requirement"................................ 3
"Liabilities"...................................... 3
"Losses"........................................... 3
"Ordinary Course of Business"...................... 3
"Person"........................................... 4
"Representative"................................... 4
"Securities Act"................................... 4
"Seller"........................................... 4
"Shares"........................................... 4
Article II SALE AND TRANSFER OF SHARES; CLOSING............... 5
Section 2.1 Shares............................................. 5
Section 2.2 Purchase Price..................................... 5
Section 2.3 Closing............................................ 5
Section 2.4 Post-Closing Adjustments to Purchase Price; Closing
Balance Sheet...................................... 6
Section 2.5 Pre-Closing Adjustments to Purchase Price.......... 8
Article III REPRESENTATIONS AND WARRANTIES OF SELLER........... 10
Section 3.1 Title to Shares.................................... 10
Section 3.2 Capitalization of the Company...................... 10
Section 3.3 Subsidiaries and Investments....................... 11
Section 3.4 Organization....................................... 11
Section 3.5 Due Authorization of Seller; Binding Obligation.... 11
Section 3.6 Non-Contravention.................................. 12
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Section 3.7 Financial Statements............................... 12
Section 3.8 Books and Records.................................. 13
Section 3.9 Title to Properties................................ 13
Section 3.10 Contracts.......................................... 17
Section 3.11 Patents, Trademarks, Copyrights and Trade Secrets.. 18
Section 3.12 Litigation......................................... 19
Section 3.13 Compliance with Law; Governmental Approvals........ 19
Section 3.14 Employee Benefit Plans............................. 20
Section 3.15 Environmental Matters.............................. 24
Section 3.16 Insurance.......................................... 25
Section 3.17 Brokers or Finders................................. 26
Section 3.18 Disclosure......................................... 26
Section 3.19 No Material Adverse Change......................... 27
Section 3.20 Absence of Certain Changes and Events.............. 27
Section 3.21 Labor Relations; Compliance........................ 29
Section 3.22 Customers.......................................... 30
Section 3.23 Vacation Time, Bonuses, Etc........................ 30
Section 3.24 Compensation....................................... 30
Section 3.25 Accounts Receivable................................ 31
Section 3.26 Warranties......................................... 31
Section 3.27 Inventory.......................................... 32
Section 3.28 Liabilities........................................ 33
Section 3.29 Governmental Approvals............................. 33
Section 3.30 Certain Transactions............................... 33
Section 3.31 Backlog............................................ 34
Section 3.32 Certain Payments................................... 34
Section 3.33 Employee Secrecy Agreements........................ 34
Article IV REPRESENTATIONS AND WARRANTIES OF BUYER............ 35
Section 4.1 Organization and Good Standing..................... 35
Section 4.2 Authority; No Conflict............................. 35
Section 4.3 Investment Intent.................................. 36
Section 4.4 Certain Proceedings................................ 36
Section 4.5 Brokers or Finders................................. 36
Section 4.6 Disclosure......................................... 37
Section 4.7 Funding............................................ 37
Article V COVENANTS OF SELLER PRIOR TO CLOSING DATE.......... 37
Section 5.1 Access and Investigation........................... 37
Section 5.2 Operation of the Business.......................... 38
Section 5.3 Negative Covenant.................................. 38
Section 5.4 Required Approvals................................. 38
Section 5.5 Notification....................................... 39
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Section 5.6 No Negotiation..................................... 39
Section 5.7 Best Efforts....................................... 39
Section 5.8 Settlement of Intercompany Accounts................ 40
Section 5.9 Facility Repairs................................... 40
Section 5.10 Contributions to Employee Benefit Plans............ 41
Section 5.11 Trademark Registration............................. 41
Article VI COVENANTS OF BUYER PRIOR TO CLOSING DATE........... 41
Section 6.1 Required Approvals................................. 41
Section 6.2 Best Efforts....................................... 42
Section 6.3 Insurance.......................................... 42
Section 6.4 Commitment to Employees............................ 42
Article VII CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE............................... 48
Section 7.1 Accuracy of Representations and Warranties......... 48
Section 7.2 Performance of Covenants........................... 48
Section 7.3 No Legal Proceedings............................... 48
Section 7.4 Stock Certificates................................. 49
Section 7.5 No Claim Regarding Stock Ownership or Sale Proceeds 49
Section 7.6 No Prohibition..................................... 49
Section 7.7 Trademark License.................................. 49
Section 7.8 Resignations....................................... 49
Section 7.9 Opinion of Counsel................................. 50
Section 7.10 Transfer of Confidentiality Agreements............. 52
Section 7.11 Transfer of Past Service Contracts................. 52
Section 7.12 Real Property Transfers............................ 52
Article VIII CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE............................... 52
Section 8.1 Accuracy of Representations and Warranties......... 53
Section 8.2 Performance of Covenants........................... 53
Section 8.3 No Legal Proceedings............................... 53
Section 8.4 Payment of Purchase Price.......................... 53
Section 8.5 No Claim Regarding Stock Ownership or Sale Proceeds 54
Section 8.6 Trademark License.................................. 54
Section 8.7 No Prohibition..................................... 54
Section 8.8 Opinion of Counsel................................. 54
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Article IX TERMINATION........................................ 56
Section 9.1 Termination Events................................. 56
Section 9.2 Effect of Termination.............................. 57
Article X SURVIVAL; INDEMNIFICATION.......................... 58
Section 10.1 Survival........................................... 58
Section 10.2 Indemnification by Seller.......................... 58
Section 10.3 Indemnification by Buyer........................... 60
Section 10.4 Environmental Indemnification...................... 61
Section 10.5 Employee Benefits Indemnification.................. 66
Section 10.6 Limitations on Remedy.............................. 67
Section 10.7 Procedure for Indemnification - Third Party Claims. 68
Section 10.8 Procedure for Indemnification - Other Claims....... 69
Article XI CONFIDENTIALITY AND NON-COMPETITION................ 69
Section 11.1 Confidentiality.................................... 69
Section 11.2 Non-Competition.................................... 69
Article XII TAX MATTERS........................................ 71
Section 12.1 Certain Definitions................................ 71
Section 12.2 Allocation of Purchase Price....................... 73
Section 12.3 Representation and Warranties of Seller............ 73
Section 12.4 Tax Indemnification................................ 79
Section 12.5 Tax Returns: Miscellaneous......................... 81
Article XIII ADDITIONAL COVENANTS............................... 87
Section 13.1 Hi-Rel Warranty.................................... 87
Section 13.2 Audited Financial Statements....................... 89
Section 13.3 Tax Election....................................... 90
Section 13.4 NOVA Product Line.................................. 90
Article XIV GENERAL PROVISIONS................................. 91
Section 14.1 Expenses........................................... 91
Section 14.2 Public Announcements............................... 91
Section 14.3 Confidentiality.................................... 92
Section 14.4 Notices............................................ 92
Section 14.5 Jurisdiction; Service of Process................... 93
Section 14.6 Further Assurances................................. 93
Section 14.7 Waiver............................................. 94
v
Section 14.8 Entire Agreement and Modification.................. 94
Section 14.9 Assignment, Successors, and No Third-Party Rights.. 95
Section 14.10 Severability....................................... 95
Section 14.11 Article and Section Headings, Construction......... 95
Section 14.12 Time of Essence.................................... 96
Section 14.13 Knowledge.......................................... 96
Section 14.14 Governing Law...................................... 96
Section 14.15 Counterparts....................................... 96
Section 14.16 Broker Indemnity................................... 96
Section 14.17 Cooperation in Litigation.......................... 97
Section 14.18 Transfer Taxes..................................... 97
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SCHEDULES
Schedule 3.2 Capitalization of the Company
Schedule 3.3 Subsidiaries and Investments
Schedule 3.6 Non-Contravention
Schedule 3.7 Financial Statements
Schedule 3.9 Real Property
Schedule 3.10 Contracts
Schedule 3.11 Patents, Trademarks, Copyrights and Trade Secrets
Schedule 3.12 Litigation
Schedule 3.13 Compliance with Law; Governmental Approvals
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Environmental Matters
Schedule 3.16 Insurance
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STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement ("Agreement") is made as of December 26,
1997, by and among:
EG&G Holdings, Inc., a corporation organized and existing under
the laws of the Commonwealth of Massachusetts with its principal
place of business in Wellesley, Massachusetts (the "Seller");
and
Ametek, Inc., a corporation organized and existing under the laws
of the State of Delaware with its principal place of business in
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ (the "Buyer")
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding shares of common
stock (the "Shares") of Rotron Incorporated, a corporation organized and
existing under the laws of the State of New York with its principal place of
business in Woodstock, New York (the "Company"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Shares upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter contained, the parties hereto do hereby agree as follows:
ARTICLE I - DEFINITIONS
-----------------------
The following terms shall have the meaning set forth below for the purposes
of this Agreement:
"Affiliates" has the meaning set forth in Rule 405 of the Securities Act of
1933, as amended, and is intended to include the officers, directors, employees,
representatives and agents of any Person.
"Balance Sheet" - as defined in Section 3.7.
"Buyer" - as defined in the first paragraph of this Agreement.
"Closing" - as defined in Section 2.3.
"Closing Date" - the date and time as of which the Closing actually takes
place.
"Company" - as defined in the Recitals of this Agreement.
"Contemplated Transactions" - all of the transactions contemplated by this
Agreement including: the sale of the Shares by Seller to Buyer in consideration
of the Purchase Price; the execution, delivery, and performance of any related
documents as described in this Agreement; the performance by Buyer and Seller of
their respective covenants and obligations under this Agreement; and Buyer's
acquisition and ownership of the Shares and exercise of control over the
Company.
"Contracts" - all contracts, agreements, indentures, licenses, leases,
commitments, plans, arrangements, sales orders and purchase orders of every
kind.
"Intellectual Property" - patents, patent applications, patent disclosures
and inventions (whether or not patentable and whether or not reduced to
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practice); all registered and unregistered statutory and common law copyrights;
all registered and unregistered trademarks, service marks, licenses, logos,
sales materials and trade names; all registrations, applications and renewals
for any of the foregoing; all trade secrets, confidential information, know-how,
customer lists, formulae, manufacturing and production processes and techniques,
research and development information, product designations, quality standards,
investigations, drawings, specifications, designs, plans, improvements,
proposals, technical and computer data; all license agreements and sublicense
agreements to and from third parties relating to any of the foregoing; all other
proprietary rights (including, without limitation, all computer software and
documentation); and all copies and tangible embodiments of the foregoing (in
whatever form or medium).
"HSR Act" - the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 as
amended or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Legal Requirement" - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Liabilities" - debts, liabilities, obligations, duties and
responsibilities of any kind and description, whether absolute or contingent,
monetary or non-monetary, direct or indirect, known or unknown or matured or
unmatured, or of any other nature.
"Losses" - as defined in Section 10.2.
"Ordinary Course of Business" - an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
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(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Person" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or governmental agency.
"Representative" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" - the Securities Act of 1933 as amended or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"Seller" - as defined in the first paragraph of this Agreement.
"Shares" - as defined in the Recitals of this Agreement.
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ARTICLE II - SALE AND TRANSFER OF SHARES; CLOSING
-------------------------------------------------
2.1 Shares
------
Subject to the terms and conditions of this Agreement, at the Closing,
Seller will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Seller.
2.2 Purchase Price
--------------
The purchase price (the "Purchase Price") for the Shares will be One
Hundred Four Million ($104,000,000) Dollars subject to adjustment pursuant to
Sections 2.4 and 2.5 hereof. At the Closing, the Purchase Price will be paid by
Buyer to the order of Seller via wire transfer in immediately available funds to
such bank and account as has been specified by Seller. Seller shall deliver to
Buyer at the Closing certificates for the Shares duly endorsed in blank or with
duly executed stock powers attached in proper form for transfer.
2.3 Closing
-------
The purchase and sale (the "Closing") provided for in this Agreement
will take place at the offices of Stroock & Stroock & ▇▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m. (local time) January 9, 1998 or at such
other time and place as the parties may agree. Subject to the provisions of
Article IX, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
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2.4 Post-Closing Adjustments to Purchase Price;
Closing Balance Sheet
-------------------------------------------
(a) Promptly after the Closing Date, Seller will prepare, with the
full cooperation of Buyer, a balance sheet of the Company as of the Closing Date
(the "Preliminary Balance Sheet") in accordance with generally accepted
accounting principles ("GAAP") (except that such Preliminary Balance Sheet need
not contain the footnotes required by GAAP) and in a manner consistent with the
principles used in the preparation of the Financial Statements (as defined in
Section 3.7), provided that (i) all accruals, reserves, provisions and
adjustments customarily made in the year-end financial statements shall be made
in the Preliminary Balance Sheet, (ii) accounts receivable reflected in the
Preliminary Balance Sheet shall be valued in accordance with principles set
forth in Section 3.25, (iii) inventory reflected in the Preliminary Balance
Sheet shall be valued in accordance with the principles set forth in Section
3.27, and (iv) Liabilities shall be reflected therein in accordance with the
principles set forth in Section 3.28. The Preliminary Balance Sheet will give
effect to the elimination of the intercompany accounts pursuant to Section 5.8
and shall include explanatory footnotes describing the methodologies and
assumptions used in the preparation thereof. The Stockholders' Equity of the
Company for purposes of Section 2.4(c) shall be the Stockholders' Equity shown
on the Closing Balance Sheet (as defined below) less any deferred tax asset
shown thereon.
(b) The Preliminary Balance Sheet shall be delivered to Buyer within
60 days after the Closing Date. Unless Buyer notifies Seller in writing that
Buyer disagrees with the Preliminary Balance Sheet within 30 days after receipt
thereof, the Preliminary Balance Sheet shall become the "Closing Balance Sheet"
hereunder. If Buyer, within such 30-day period, notifies Seller in writing that
Buyer disagrees with any balance sheet line item or items (each, a "Line Item")
on the Preliminary Balance Sheet then Buyer and Seller shall negotiate in good
faith to resolve such disagreements (each such disagreement with respect
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to a Line Item may consist of one or more proposed adjustments);provided that
(i) no notice of disagreement may be given with respect to any Line Item unless
the amount of the disagreement with respect to such Line Item equals at least
$25,000 (provided, however, that the limitation in this clause (i) shall not
apply if the sum of all such disagreements that are less than $25,000 per Line
Item is greater than $100,000); and (ii) any notice of disagreement by Buyer
shall specify in reasonable detail the nature of any disagreement so asserted.
If all such disagreements are resolved by the parties within 15 days after the
end of such 30-day period, the Preliminary Balance Sheet, modified to reflect
such resolution, shall become the "Closing Balance Sheet" hereunder. In the
event Buyer and Seller are unable to resolve such disagreements within 15 days
after the end of such 30-day period, the parties shall refer such disagreements
to an independent certified public accountant of national reputation independent
of Buyer and Seller mutually agreed upon by Buyer and Seller (the "Arbitrating
Accountants"). Promptly following such referral, Seller and Buyer shall mutually
agree upon the procedures to be followed by the Arbitrating Accountants in
resolving such disagreements. No further disagreements may be raised with the
Arbitrating Accountants. Within 60 days of such presentation, the arbitrating
accountants shall resolve all such disagreements and shall then render their
report thereon, and the preliminary balance sheet, modified to reflect the
resolution by the arbitrating accountants, shall become the "closing balance
sheet" hereunder. The Closing Balance Sheet shall be conclusive and binding on
Buyer and Seller for purposes of determining the increase or reduction (if any)
of the Purchase Price provided for in Section 2.2. Buyer and Seller shall be
responsible for payment of the fees and expenses of their respective accounting
firms in acting under this Agreement. The fees and expenses of the Arbitrating
Accountants in acting under this Agreement shall be shared by Buyer and Seller
in proportion to the adjustment (as against the reported adjustment), if any,
decided upon by such accounting firm. This provision for arbitration shall be
specifically enforceable by the parties and the decision of the Arbitrating
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Accountants in accordance with the provisions shall be final and binding with
respect to the matters so arbitrated and there shall be no right of appeal
therefrom.
(c) The Purchase Price shall be adjusted by the amount (if any) by
which "stockholders' Equity", as shown on the Closing Balance Sheet, differs
from $13,127,585, which is the "Stockholders' Equity" (defined as Net Equity
reduced by Intercompany Accounts; and exclusive of any deferred tax asset as
indicated in Section 2.4(a)) as shown on the interim Balance Sheet (as defined
in Section 3.7 below and as set forth in Schedule 3.7); provided, that no such
adjustment shall be made unless such difference exceeds $100,000. Any increase
in the Purchase Price resulting from an increase in Stockholders' Equity
pursuant to this Section 2.4, shall be paid by Buyer to Seller, and any decrease
in the Purchase Price resulting from a decrease in Stockholders' Equity pursuant
to this Section 2.4 shall be paid by Seller to Buyer, in each case, within five
business days after the Closing Balance Sheet becomes final hereunder, together
with interest accrued thereon from the Closing Date to the date of payment at
the rate of interest announced by Bankboston, N.A., in Boston, Massachusetts as
its "prime" rate on the Closing Date (such calculation to be based on a 360-day
year). Payments must be made in immediately available funds, and in the event
an adjustment is required it will be made on a "dollar for dollar" basis without
regard to the $100,000 threshold.
2.5 Pre-Closing Adjustments to Purchase Price
-----------------------------------------
(a) Buyer has delivered to Seller a copy of a report on the
structural condition of the Real Property of the Company prepared by Highland
Associates, Ltd. dated November 19, 1997 which recommends certain repair actions
be undertaken. To resolve any potential disputes relating to the condition of
the Real Property as discussed in that report, including the need for the
demolition, repair, removal, or replacement (including the construction of any
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new or remodeled structures) of the (i) Quonset huts at the Woodstock facility
and (ii) the model shop at the Woodstock facility, Buyer and Seller have agreed
to reduce the Purchase Price by $260,000.
(b) Buyer and Seller agree that the land, buildings, improvements,
structures, fixtures, utilities and appurtenances that constitute the "Olive
Property" will be excluded from the Contemplated Transactions, and in
recognition of that exclusion the parties have agreed to reduce the Purchase
Price by $300,000. Buyer will be entitled to utilize the Olive Property in a
manner consistent with the current usage of that facility by the Company for a
period commencing on the Closing Date and ending on June 30, 1998 on a rent free
basis. By or before that date, Buyer will have relocated its personnel,
equipment, inventory and operations from the Olive Property in an orderly
manner, and Seller will be able to show the Olive Property to prospective
tenants and purchasers during Buyer's period of usage. If Buyer has not vacated
the Olive Property on or before June 30, 1998, it will be deemed a breach of
Buyer's contractual obligation hereunder and Buyer will pay Seller a usage fee
for the Olive Property of $25,000 per future month.
(c) Buyer and Seller agree that the unimproved land owned by Company
in Saugerties, New York, which consists of roughly 17 acres (the "Saugerties
Land"), will be excluded from the Contemplated Transactions. No adjustment will
be made to the Purchase Price as a result of that exclusion.
(d) The net effect of the items set forth above will be to decrease
the Purchase Price payable at Closing to $103,440,000 Post-Closing adjustments
to the Purchase Price are as set forth in Section 2.4.
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
------------------------------------------------------
Seller hereby represents and warrants to Buyer as follows:
3.1 Title to Shares
---------------
Seller (a) is the owner, free and clear of any liens, pledges,
mortgages, encumbrances, options, restrictions, charges, agreements, defects of
title or claims (collectively "Liens"), of the Shares, and (b) will sell,
transfer, assign and deliver good and valid title to the Shares at the Closing
as provided in this Agreement and Buyer will acquire good and valid title to the
Shares, free and clear of any Liens other than those resulting from Buyer's
actions.
3.2 Capitalization of the Company
-----------------------------
The authorized capital stock and issued and outstanding Shares of the
Company are set forth on Schedule 3.2. Seller is the record and beneficial
owner of all issued and outstanding Shares of the Company. Such issued and
outstanding Shares are duly authorized, validly issued, fully paid and
nonassessable. Except for rights granted to Buyer under this Agreement there
are no outstanding "phantom" stock rights, options, warrants or rights of first
refusal, preemptive, subordination or similar rights or other rights to
purchase, obtain or acquire, or any outstanding securities or obligations
convertible into or exchangeable for, or any voting or other agreements with
respect to, any shares of capital stock of the Company, or any other securities
of the Company and the Company is not obligated, now or in the future,
contingently or otherwise, to issue, purchase or redeem capital stock or any
other securities to or from any person or entity. There are no Shares of the
capital stock of the Company held in the Company's treasury. Copies of the
charter documents and by-laws and corporate minute books of the Company have
been made available to Buyer and are true, correct and complete in all material
respects as of the date hereof. There are no outstanding bonds, debentures,
notes or other indebtedness
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having the right to vote on any matters on which stockholders of the Company may
vote.
3.3 Subsidiaries and Investments
----------------------------
The Company is a wholly-owned subsidiary of Seller. Except for its
ownership interests in Affiliates of Seller as set forth in Schedule 3.3., which
will be transferred to another Affiliate of Seller prior to the Closing Date,
the Company does not own, directly or indirectly, any capital stock of or other
equity interests in any Person. The Company has not made any advances of money
to, or guaranteed the obligations of, any Person which remain outstanding.
3.4 Organization
------------
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York with full corporate power
and authority to carry on its business as presently conducted by it and to own,
lease and operate its properties in the places where it maintains offices and
where its properties are owned, leased or operated and is duly qualified or
licensed to do business in good standing as a foreign corporation in each
jurisdiction where the properties owned or leased or the activities conducted by
the Company make such qualification or license necessary, except where the
failure to be so qualified or licensed would not have a material adverse effect
on the business, properties, assets, liabilities, operations, prospects or
financial condition of the Company (a "Material Adverse Effect").
3.5 Due Authorization of Seller; Binding Obligation
-----------------------------------------------
Seller has full corporate power and authority to execute and deliver
this Agreement and the other agreements to be executed and delivered by Seller
at the Closing and to perform its obligations hereunder and thereunder, and the
execution, delivery and performance of this Agreement and such other agreements
by Seller have been duly authorized by all necessary corporate and
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stockholder actions on the part of Seller. This Agreement is the valid and
binding obligation of Seller, enforceable in accordance with its terms, subject
to the qualification, however, that enforcement of the rights and remedies
created hereby is subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights in general, or by general principles of equity.
3.6 Non-Contravention
-----------------
Except as set forth on Schedule 3.6, the execution, delivery and
performance of this Agreement by Seller and the consummation of the Contemplated
Transactions do not and will not, with or without the giving of written notice
or the lapse of time, or both, violate, conflict with, result in the breach of,
require a consent under, or accelerate the performance required by any of the
terms, conditions or provisions of (i) the charter documents or by-laws or other
governing documents of the Company or Seller, (ii) any covenant, agreement or
understanding to which the Company or Seller is a party or by which either of
them or any of their respective assets are bound, or (iii) any order, ruling,
decree, judgment, arbitration award, law, rule, regulation or stipulation to
which the Company or Seller is subject or constitute a default thereunder or
result in the creation of any Lien upon any of the material properties or assets
of the Company or upon the Shares.
3.7 Financial Statements
--------------------
Seller has heretofore furnished to Buyer unaudited financial
statements of the Company consisting of (i) balance sheets at December 29, 1996
(the "1996 Balance Sheet") and September 28, 1997 (the "Interim Balance Sheet")
and (ii) statements of operations for the interim periods ended March 30, 1997,
June 29, 1997 and September 28, 1997 (the "Interim Statements of Operations")
and the years ended December 31, 1995 and December 29, 1996 (the foregoing
financial statements are hereinafter collectively referred to as the
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"Financial Statements" and the Interim Balance Sheet and the corresponding
Statement of Operations are set forth on Schedule 3.7). Such Financial
Statements and notes fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as at
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of the March 30
and June 29, 1997 Interim Statements of Operations, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate,
constitute a Material Adverse Effect) and, subject in the case of the Interim
Balance Sheet and the Interim Statements of Operations, to the absence of notes
(that, if presented, would not differ materially from those included in the
Balance Sheet); the financial statements referred to in this Section 3.7 reflect
the consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements.
3.8 Books and Records
-----------------
The books of account, minute books, stock record books, and other
records of the Company, all of which have been made available to Buyer, are
current, complete and correct in all material respects and have been maintained
in accordance with sound business practices. The minute books of the Company
contain accurate and complete records of all meetings held of, and corporate
action taken by, the stockholders, the Board of Directors of the Company and any
committee of said Board, and no meeting of any such stockholders, Board of
Directors or any committee has been held for which minutes have not been
prepared and are not contained in such minute books. At Closing, all of such
books and records will be in possession of the Company.
3.9 Title to Properties
-------------------
(a) The Company has good and marketable title to all the real and
personal property and assets owned or purported to be owned by it, free and
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clear of all Liens, except (a) as set forth in Schedule 3.9(a); (b) mechanics',
carriers', workers' and other similar liens arising in the Ordinary Course of
Business and consistent with past practice which would not have a Material
Adverse Effect; (c) liens of taxes not yet due and payable or being contested in
good faith by appropriate proceedings and in compliance with applicable law; (d)
with respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, impairs the operations of the Company
or, to the best of Seller's knowledge and without benefit of any title search,
survey or similar investigation, renders the title to any such real property to
be unmarketable, and (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto
(collectively, the "Permitted Liens"); and (e) those non-consensual Liens which
do not affect any material assets and do not impair the current use or diminish
the value of the property affected to any material extent; provided that the
Liens referred to in clauses (a) through (e) above in the aggregate, are not
substantial in amount, do not detract from the value of the property or asset
subject thereto and do not interfere with the current or anticipated use
thereof.
(b) The Company owns all of the property and assets used by it in the
operation and conduct of its business, except for those material assets leased
by the Company under leases specifically identified on Schedule 3.9(b). The
assets and property owned or leased by the Company constitute all of the assets
used in, related to or required by the Company for the normal conduct of its
business.
(c) Schedule 3.9(c) sets forth a true and complete (except for fixed
assets acquired by the Company prior to January 1, 1977) list as at November 23,
1997 of all tools, dies, equipment, machinery, motor vehicles, fixtures and
other fixed assets purchased or acquired by the Company since
-14-
January 1, 1977, indicating the owner and location thereof, the cost of the
assets acquired annually and the cumulative total. The fixed assets owned or
used by the Company are sufficient for the operation of the business of the
Company as it is currently conducted and in a reasonable state of repair taking
into account the age thereof. The dollar amount of the fixed assets owned by the
Company as shown on the Interim Balance Sheet does not in any case exceed the
cost of the same, less any previous write-downs and less depreciation determined
in accordance with GAAP consistently applied, and the Company has not written up
the value of any such fixed assets.
(d) Schedule 3.9(d) hereto sets forth a true and complete list and
description of all real property, land, buildings, improvements and structures
(collectively, "Real Property") now owned or used by the Company. To the best of
Seller's knowledge, the buildings, driveways and all other structures and
improvements upon the Real Property are within the boundary lines thereof and do
not encroach upon the property of any other persons. To the extent they are in
the possession of Company, the Company has heretofore delivered or made
available to Buyer copies of all title insurance policies obtained by the
Company, abstracts of title and other evidence of title with respect to the Real
Property. Each party will use their best efforts to keep the other informed as
to the status of their negotiations with the landlord of the facility in El
Cajon, California referenced on Schedule 3.9(d).
(e) Schedule 3.9(e) sets forth a true and complete list of each lease
of premises executed by or binding upon Seller as lessee, sub-lessee, tenant or
assignee (the "Leased Premises") setting forth in each case a brief description
of the premises covered thereby, the rental payable thereunder and the term
(including any extensions available) thereunder. Except as set forth on
Schedule 3.9(e), each such lease is in full force and effect on the date hereof
without any default or breach thereof by the Company or, to Seller's knowledge,
-15-
any other party thereto. To the extent they are in the possession of Company,
true and complete copies of all leases required to be listed on Schedule 3.9
have heretofore been delivered or made available to Buyer. There are no leasing
commissions or brokerage fees of any kind due or to become due in respect of
such leases.
(f) Except as set forth on Schedule 3.9(f), during the past two years
neither Seller nor the Company has received any notice of or writing referring
to any requirements or recommendations by any insurance company which has issued
a policy covering any part of any Real Property or Leased Premises or by any
board of fire underwriters or other body exercising similar functions, requiring
or recommending any repairs or work to be done on any part of any Real Property
or Leased Premises. All of the public utilities required for the operation of
the Real Property or Leased Premises in the manner currently operated are
installed and operating, and all installation and connection charges have been
paid in full or provided for the plumbing, electrical, heating, air
conditioning, ventilating and all other structural or material mechanical
systems in the buildings upon the Real Property and Leased Premises are in, and
will be in on the Closing Date, satisfactory working condition. Buyer has had
the opportunity to inspect the roof, basement and foundation walls of the
buildings of the Real Property and Leased Premises and Seller makes no
representation or warranty as to their condition, provided that this sentence
does not limit Seller's obligations pursuant to Section 5.9 hereof. All water,
utility and other charges, sewer rent and assessments affecting the Real
Property or Leased Premises or any part thereof, and all Taxes imposed against
or affecting the Real Property or Leased Premises (to the extent payable by the
Company) or any part thereof, have been paid in full, accrued or reflected on
the Interim Balance Sheet or, since the Interim Balance Sheet Date, incurred in
the Ordinary Course of Business. Neither Seller nor the Company has received
notice of any assessments, and has no knowledge of any pending assessments,
affecting the
-16-
Real Property and the Leased Premises and to the best of Seller's knowledge, the
use thereof conform in all respects with all covenants and restrictions and all
applicable building, zoning, and land use laws.
3.10 Contracts
---------
Schedule 3.10 contains a complete list as of the date(s) listed
therein of the following: (i) Contracts to which Company is a party or under
which Company is obligated or bound or to which any of the assets may be
subject, which provide for a period of performance which extends beyond January
1, 2000 or involves a payment or receipt after the date of this Agreement of
more than $25,000 and (ii) Contracts, commitments and agreements not referred to
in clause (i) above or in other Schedules that are material to the operations of
the Company. To Seller's knowledge, each such Contract or commitment will be
enforceable by Buyer in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general, or by general principles of equity. As of the date hereof, the
Company is not in default under any of the Contracts listed on Schedule 3.10
and, to Seller's knowledge, no other party is in default thereunder, except, in
any such case, for defaults that, individually or in the aggregate, would not be
materially adverse to the operation of the Company. The Company has not, since
the date of the Interim Balance Sheet entered into any purchase or sales
commitment or order except in the Ordinary Course of Business. The Company has
not, except as set forth on Schedule 3.10 entered into any: (A) royalty
agreement, or except in the Ordinary Course of Business, any distribution,
agency or license agreement; (B) Contract (for employment or otherwise) with any
officer, employee, director or shareholder (or any Affiliate of any such
officer, employee, director or shareholder) or except in the Ordinary Course of
Business, any professional person or firm, consultant, independent contractor or
advertising firm or agency; (C) Contract guaranteeing the payment or performance
of the obligations of
-17-
others; (D) Contract restricting the ability of the Company to engage in any
line of business or to compete with any Person other than those associated with
Items 2 and 6 on Schedule 3.10; or (E) any shareholders' agreement, joint
venture agreement or other Contract with respect to the operation or management
of any entity.
3.11 Patents, Trademarks, Copyrights and Trade Secrets
-------------------------------------------------
(a) Schedule 3.11 contains a complete list of all Intellectual
Property Rights owned by or licensed to Company (i) for which a patent or other
registration exists or has been applied for or (ii) that are material to the
current operations of the Company. Except as set forth on Schedule 3.11, Seller
has no knowledge that any Intellectual Property Rights now or heretofore owned
or used by the Company infringes, misuses or misappropriates any Intellectual
Property Right of any other Person and, to the best of Seller's knowledge, no
Intellectual Property Right of any other Person infringes, misuses or
misappropriates any Intellectual Property Right owned by or licensed to the
Company. Except as set forth on Schedule 3.11, and to the best of Seller's
knowledge, all Intellectual Property Rights which are necessary to, or are being
used in, the manufacturing, processing, fabricating, assembling, advertising or
sale by the Company of the products now being produced by it are as of the date
hereof either owned by the Company, free and clear of any Liens, and, to
Seller's knowledge, adverse claims of ownership by any third party, or are the
subject to an appropriate license or agreement pursuant to which the Company is
granted the right to make such uses thereof. No shareholder, Affiliate, officer,
director or employee of the Company or Seller owns or has any interest in any
Intellectual Property Rights or any trade secret, invention or process, if any,
used by the Company in connection with its business. No claims or allegations of
infringement or misappropriation of any Intellectual Property Rights are pending
or, to Seller's knowledge, threatened against the Company. Except as set forth
in Schedule
-18-
3.11, neither Seller, the Company, nor any of their Affiliates is party to any
licenses or similar agreements with respect to the "Rotron" name.
(b) Except as provided in the Trademark License (as defined below)
no transfer, license or grant of rights to the tradename, service ▇▇▇▇ and/or
trademark "EG&G" or the EG&G logo, either separately or in conjunction with
"EG&G Rotron" is made or is to be implied by any provision of this Agreement.
3.12 Litigation
----------
Schedule 3.12 contains a complete list as of the date hereof of all
claims, actions, suits, labor disputes, investigations and proceedings, pending
or, to Seller's knowledge, threatened, which involve the Company or any of its
material assets. Except as set forth in Schedule 3.12, there are no decrees,
injunctions or orders of any court or governmental department or agency
outstanding against Seller as of the date hereof.
3.13 Compliance with Law; Governmental Approvals
-------------------------------------------
To Seller's knowledge, Company is in compliance, in all material
respects, with all applicable statutes, laws, ordinances, rules, orders and
regulations of any governmental authority or instrumentality, domestic or
foreign. Except as set forth on Schedule 3.13, neither Seller nor the Company
has received as of the date hereof any written communication from a governmental
authority that alleges that the Company is not in compliance, in all material
respects, with any Federal, state, local or foreign statute, law, ordinance,
rule, order or regulation Company holds and will hold on the Closing Date all
licenses, permits and authorizations necessary for the lawful operation of the
Company under and pursuant to all applicable statutes, laws, ordinances, rules
and regulations of all Federal, state, local and foreign governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it or
-19-
over any part of its operations except where any failure to have such licenses,
permits and authorizations or to comply would not, individually or in the
aggregate, have a Material Adverse Effect and the Company may lawfully operate
without such license, permit or authorization. Seller is not aware of any
proposed change in law that would negatively affect the Company's ability to
continue operations in the manner in which they are currently conducted.
3.14 Employee Benefit Plans
----------------------
(a) Schedule 3.14 contains a list and if appropriate a brief
description of all employee benefit plans (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
funds, policies, arrangements, practices, customs and understandings or programs
which cover any employees (or former employees) of the Company (and/or their
beneficiaries or dependents), whether or not they are or are intended to be (i)
covered or qualified under the Internal Revenue Code of 1986, as amended (the
"Code"), ERISA or any other applicable law, (ii) written or oral, (iii) funded
or unfunded, or (iv) generally available to any or all employees (or former
employees) of the Company (and/or their beneficiaries or dependents), which are
established, contributed to or maintained by the Company or any ERISA Affiliate
(as defined below) as of the date hereof, including all welfare, pension, profit
sharing, retirement, stock purchase, stock option, stock bonus, severance or
deferred compensation plans, qualified domestic relations orders and qualified
medical child support orders (the "Employee Benefit Plans"). For purposes of
this Section 3.14, the term "ERISA Affiliate" shall mean Seller and include any
corporation which is a member of a controlled group of corporations (as defined
in Section 414(b) of the Code) which includes Seller, any trade or business
(whether or not incorporated) which is under common control (as defined in
Section 414(c) of the Code) with Seller, any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes Seller and any other entity required
-20-
to be aggregated with Seller pursuant to the regulations issued under Section
414(o) of the Code. Seller has delivered or made available to Buyer true,
accurate and complete copies of all Employee Benefit Plan documents. Except as
set forth on Schedule 3.14, EG&G, Inc. is the sponsor of the Employee Benefit
Plans.
(b) As of the date hereof, each Employee Benefit Plan has been
administered in all material respects in accordance with its terms. All
reports, returns and similar documents with respect to the Employee Benefit
Plans required to be filed as of the date hereof with any governmental authority
or distributed to any Employee Benefit Plan participant have been duly and
timely filed or distributed; or the failure to file will not result in the
imposition of a fine or penalty against the Company or such Plan.
(c) Except as set forth in Schedule 3.14, each Employee Benefit Plan
which is intended to be qualified under Section 401(a) of the Code and exempt
from tax under Section 501(a) of the Code has been determined by the Internal
Revenue Service to be so qualified and such determination remains in effect and
has not been revoked. Nothing has occurred since the date of any such
determination which may adversely affect such qualification or exemption, or
result in the imposition of excise taxes or income tax on unrelated business
income under the Code or ERISA, except for acts or omissions which would not,
either singularly or in the aggregate, have a Material Adverse Effect.
(d) There are (i) no "accumulated funding deficiencies" as defined
in Section 302 of ERISA or Section 412 of the Internal Revenue Code, whether or
not waived, under, and (ii) no "reportable event" as defined in Section 4043(b)
of ERISA has occurred with respect to, any single employer defined benefit plan
maintained or sponsored by Seller, the Company or any ERISA Affiliate.
-21-
(e) Neither Seller nor the Company has any obligation, nor during
the five year period ending on the Closing Date has had any obligation, to
contribute to any multiemployer plan (as defined in Section 3(37) of ERISA).
Neither Seller, the Company nor any ERISA Affiliate is subject to any withdrawal
or partial withdrawal liability within the contemplation of ERISA Section 4201
et seq. and will not become subject thereto as a result of the Contemplated
Transactions.
(f) With respect to any Employee Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (a "Welfare
Plan"), (i) each Welfare Plan for which contributions are claimed as deductions
under any provision of the Code is in material compliance with all applicable
requirements pertaining to such deduction, (ii) with respect to any welfare
benefit fund (within the meaning of Section 419 of the Code) that comprises part
of a Welfare Plan, there is no disqualified benefit (within the meaning of
Section 4976(b) of the Code) that would subject the Buyer to a material tax
under Section 4976(a) of the Code, (iii) any Welfare Plan that is a group health
plan (within the meaning of Section 4980B(g)(2) of the Code) materially
complies, and in each case has materially complied, with all of the requirements
of Section 162(k) of the Code (for tax years beginning before January 1, 1989)
and 4980B of the Code (for tax years beginning after December 31, 1988), (iv)
every employee, former employee, and every dependent of the foregoing entitled
to continuation of benefit coverage under any Welfare Plan has been accorded in
all material respects all of the rights to which such person is entitled as a
matter of law or regulation, and (v) all Welfare Plans sponsored by the Company
may, subject to any other provision of this Agreement, be amended or terminated
by the Buyer at any time on or after the Closing Date.
-22-
(g) There are no liabilities, to the Pension Benefit Guarantee
Corporation ("PBGC") or otherwise, associated with any previously terminated
single employer defined benefit person plan maintained or sponsored by Seller,
the Company or any ERISA Affiliate, whether or not such plan was an Employee
Benefit Plan, and all PBGC premiums under plans, whether or not terminated,
maintained or sponsored by Seller, the Company or any ERISA Affiliate have been
paid on a timely basis.
(h) Each most recent Employee Benefit Plan audit report, actuarial
report and annual report, certified by the Employee Benefit Plan's actuaries and
auditors, as the case may be, fairly presents the actuarial status and the
financial condition of the Employee Benefit Plan as at the date thereof and the
results of operations of the Employee Benefit Plan for the plan year reflected
therein and, subject to changes in amounts attributable to investment
performance and normal employee turnover, there has been no material adverse
change in the condition of the Employee Benefit Plan since the date of the most
recent Form 5500, audited annual financial statement or actuarial valuation
report. All financial statements of EG&G, Inc. reflect, with respect to any
Employee Benefit Plan the employee benefit costs and liabilities in accordance
with FAS 35, 87, 88, 106 and 112, and AICPA SOP 92-6, as applicable.
(i) There is no matter, action, audit, suit or claim pending or, to
the best knowledge of Seller, threatened, relating to any Employee Benefit Plan,
fiduciary of any Employee Benefit Plan or assets of any Employee Benefit Plan,
before any court, tribunal or governmental agency, other than routine claims for
benefits under the Employee Benefit Plans or actions seeking qualified domestic
relations orders or qualified medical child support orders related thereto.
(j) No prohibited transaction has been committed by Seller (as
defined in Section 406 of ERISA or Section 4975 of the Code) has occurred or
-23-
exists with respect to any Employee Benefit Plan which would result in a
Material Adverse Effect.
(k) No Employee Benefit Plan is being terminated and there will be
no Employee Benefit Plan amendments occurring through the date of Closing (or,
with respect to Seller's Pension Plan, through the date of any transfer of
assets from such plan), other than those made to facilitate the Contemplated
Transactions.
3.15 Environmental Matters
---------------------
Except as described in the reports and other documents set forth on
Schedule 3.15, as of the date hereof:
(a) No litigation, suits, claims, proceedings or investigations or
private or governmental enforcement actions or orders are pending, or, to
Seller's knowledge, threatened against Seller with respect to any Hazardous
Material or applicable Environmental Law, as defined below.
(b) Seller has not received any notice from any governmental
authority or other person of any claims or potential violations by Seller of (or
liability under) any Environmental Law; and
(c) To the best of Seller's knowledge there has been no (i) activity
on any of the properties of Seller which has been conducted, or is being
conducted, in violation of any Environmental Law, or (ii) actual or threatened
release (including, without limitation, any spill, discharge, leak, emission,
ejection, escape or dumping) or improper or inadequate storage of, or
contamination caused by any Hazardous Material on or under any of the properties
of Seller, which in any of such cases would have a Material Adverse Effect.
-24-
(d) All products manufactured and services provided by Seller prior
to the date hereof are in compliance with all Environmental Laws applicable
thereto and all such products and services so manufactured or provided prior to
the Closing Date will as of such date be in material compliance with all
applicable Environmental Laws.
(e) Seller is not aware of any material containing friable asbestos
in or on the Real Property of the Company which would have a Material Adverse
Effect on the business, assets or Real Property of the Company. No product
currently manufactured or sold by the Company contains asbestos in any known
form.
(f) Seller has hereto delivered or made available to Buyer true and
complete copies of all environmental studies relating to the business, assets or
Real Property of Company which either (i) have been conducted on behalf of
Seller in the last five years or (ii) are in the possession of EG&G, Inc.,
Seller or the Company.
(g) "Environmental Law" means any governmental law (including
regulations thereunder) relating to environmental matters or Hazardous
Materials; "Hazardous Material" means any material, substance, waste, pollutant
or other matter that is defined as a hazardous material, hazardous substance,
hazardous waste, toxic material, toxic substance or other term having a similar
meaning under applicable law or is otherwise subject to elimination, abatement,
removal, remediation or cleanup under applicable law.
3.16 Insurance
---------
Schedule 3.16 contains a summary of insurance policies or binders of
insurance or programs of self-insurance which have related to Company
-25-
during the past five years. All such policies and binders are (except for the
Directors' and Officers' liability) "occurrence" based, have limits in amounts
customarily deemed to be adequate, and cover all risks customarily insured
against, in the type of business conducted by Company and all premiums due to
the date hereof on such policies have been paid in full. All pending claims, if
any, made against Seller which are covered by insurance are being defended by
the appropriate insurance companies and are described on Schedule 3.16 hereto.
Seller has not failed to give any notice or present any claim under any such
policy in a timely fashion and has not exhausted the underlying policy limits of
such policies or binders. The coverage under each such policy and binder is in
full force and effect, and no notice of cancellation or nonrenewal has been
received by Seller (it being understood, however, that any coverage currently
being provided under policies maintained by Seller for the benefit of Company
will be terminated as of the Closing, and Buyer will be responsible for
providing insurance coverage from the Closing Date forward; however, subject to
the terms and conditions of the applicable policies, coverage for claims based
on pre-Closing "occurrences" will continue. The parties will consult and
cooperate with each other with regard to potential claims against Seller's
insurers for matters relating to occurrences prior to the Closing Date.
3.17 Brokers or Finders
------------------
Neither Company nor Seller, nor their respective officers or agents,
has entered into, and none of them will enter into, any agreement, arrangement
or understanding with any person or firm which will result in the obligation of
Buyer to pay any finder's fee, brokerage commission or similar payment in
connection with the Contemplated Transactions.
3.18 Disclosure
----------
No representation or warranty of Seller in this Agreement contains as
of the date hereof any untrue statement of a material fact or omits to state a
-26-
material fact necessary to make the statements contained herein, in light of the
circumstances in which they were made, not misleading.
3.19 No Material Adverse Change
--------------------------
Since the date of the Interim Balance Sheet there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of the Company, and to the knowledge of Seller no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.20 Absence of Certain Changes and Events
-------------------------------------
Since the date of the Interim Balance Sheet, the Company has
conducted its business only in the Ordinary Course of Business and there have
not been any changes that, individually or in the aggregate, would result in a
material adverse change to the operations of the Company. Except as permitted by
the terms of this Agreement, Seller has not done, or permitted to be done, any
of the following from the date of the Interim Balance Sheet to the date hereof:
(a) change in the Company's authorized or issued capital stock; grant
of any stock option or right to purchase Shares of the Company; issuance of any
security convertible into such Shares; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by the Company of any
Shares; or declaration or payment of any dividend or other distribution or
payment in respect of the Shares;
(b) amendment to charter documents or by-laws of the Company;
-27-
(c) payment or increase of any bonuses, salaries, or other
compensation to any director, officer, or employee, or entry into any
employment, severance, or similar contract with any director, officer, or
employee; except for payment of salary and bonuses and increases in salary in
the Ordinary Course of Business or except for any such payments or increases for
which Seller would be solely obligated;
(d) adopted or amended in any material respect any Employee Benefit
Plan;
(e) incurred or assumed any material liabilities, obligations or
indebtedness for borrowed money or guaranteed any such liabilities, obligations
or indebtedness, other than in the Ordinary Course of Business;
(f) permitted, allowed or suffered any of the Company's assets to be
subject to any Liens, other than Permitted Liens;
(g) the Company's acquisition or agreement to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof or the Company's acquisition
or agreement to acquire any assets which are material, individually or in the
aggregate to the seller of such assets;
(h) sold, leased, or otherwise disposed of, or agreed to sell, lease
or otherwise dispose of, any of the Company's assets which are material,
individually or in the aggregate, to the Company, except for the sale of
inventory, collection of accounts receivable and other activities in the
Ordinary Course of Business;
-28-
(i) instituted a material change in the accounting methods used by
the Company; or
(j) cancellation of any indebtedness or waiver of any rights of
substantial value to the Company, other than write-offs or write-downs in the
Ordinary Course of Business;
(k) amendment, cancellation or termination (other than in accordance
with its terms or otherwise in the Ordinary Course of Business) of any Contract
material to the Company;
(l) failure to pay any obligation of the Company due in the Ordinary
Course of Business, except where contested in good faith and where such failure
would not have a Material Adverse Effect;
(m) made any agreement, whether oral or written, to do any of the
foregoing.
3.21 Labor Relations; Compliance
---------------------------
The Company is not a party to any labor or collective bargaining
agreement, and no employees of the Company are represented in their employment
with the Company by a labor organization. There is, and during the past two
years there has been, no labor strike, dispute, work stoppage or lockout
pending, or, to the knowledge of Seller, threatened, against or affecting the
Company. No labor organization or group of employees of the Company has made a
pending demand for recognition or certification to the Company, and, to the
knowledge of Seller, no union organizational campaign is in progress with
respect to the employees of the Company.
-29-
3.22 Customers
---------
Schedule 3.22 hereto contains a complete and accurate list of the
largest customers of the Company in terms of revenues for 1997 as of December
15, 1997, showing the approximate total revenues earned by the Company from each
such customer during the indicated period. To the best of Seller's knowledge,
since September 28, 1997 there has been no material adverse change in the
business relationship of the Company with any such customer.
3.23 Vacation Time, Bonuses, Etc.
---------------------------
Schedule 3.23 hereto sets forth the method for accruing vacation pay
used by the Company on its books and records.
3.24 Compensation
------------
Schedule 3.24 contains a list of the following information for each
employee of the Company, including each employee on leave of absence or
disability status: name; title or job description; total annual compensation
(including base salary and bonus); and years of service credited for purposes of
vesting and level of participation under any Employee Benefit Plan. Schedule
3.24 also lists (by location) the value of vacation carryover. Except as set
forth in Schedule 3.24, at the date of the Interim Balance Sheet there were no
bonuses, profit sharing, incentives, commissions or other compensation of any
kind with respect to work done prior to the date of such Interim Balance Sheet
owing to present or former employees of the Company not fully paid prior to such
date or, with respect to compensation for work done prior to the date of such
Interim Balance Sheet, not fully accrued or reserved for; except for accruals
relating to the Success Sharing Plan which, in the Ordinary Course of Business,
are not made until the fourth quarter of the fiscal year. In January 1998,
EG&G, Inc. will supply Company with instructions as to appropriate payment
amounts from the accrual under the Economic Value Added Plan.
-30-
3.25 Accounts Receivable
-------------------
All of the accounts receivable of the Company are actual and bona
fide receivables representing obligations for the total dollar amount thereof
shown on its books. Company has not received as of the date hereof written
notice of any contest, claim or right of set-off with respect to the amount or
validity of any such accounts receivable other than accounts receivable which do
not exceed, in the aggregate, the applicable reserve for doubtful accounts. The
accounts receivable of the Company as of the Closing Date will be collectible
net of the reserve shown on the Closing Balance Sheet (which reserve shall be
calculated in a manner consistent with past practice) and, except for such
reserve, without recoupment, offset or counterclaim.
3.26 Warranties
----------
Set forth in Schedule 3.26 are descriptions and copies of the forms
of product warranties of Company that are on the date of this Agreement being
made for products being sold on such date, other than any implied warranties or
other warranties deemed to be imposed as a matter of law. Except as discussed at
Section 13.1, relating to Hi-Rel Products (as defined below) there have been no
breach of warranty or breach of representation claims against the Company during
the past three years which have resulted in any material cost, expenditure or
exposure to the Company. The warranty reserve shown on the Interim Balance Sheet
with respect to all outstanding products of the Company, other than the Hi-Rel
Products, has been, and the warranty reserve to be shown on the Closing Balance
Sheet with respect to such products will have been, established in accordance
with past practices. With respect to the Hi-Rel Products, the Company has
recently increased the warranty reserve for Hi-Rel Products by $200,000 and is
undertaking a review of warranty policy in the fourth quarter of 1997 and it is
expected that the warranty reserve for Hi-Rel Products to be reflected in the
Closing Balance Sheet will be appropriate for warranty claims relating to Hi-Rel
Products sold prior to the Closing Date.
-31-
3.27 Inventory
---------
The inventory of the Company as at the date of the Interim Balance
Sheet was, and the inventory of the Company on the date hereof has been, and on
the Closing Date will have been, manufactured or acquired in the Ordinary Course
of Business, in customary quantities and at prevailing prices. Such inventory
has been valued on the Interim Balance Sheet at the lower of cost or market on a
LIFO (last-in, first-out) basis in accordance with GAAP applied on a consistent
basis and, in the case of all such inventory that is slow-moving (i.e., any item
of inventory in excess of a one year's supply based on sales of inventory during
the prior 12 month period or requirements based on existing backlog, whichever
is higher), has been fully reserved for and, in the case of all such inventory
that is rejected, damaged or obsolete, has been written down to its net
realizable value. Except as indicated in Schedule 3.27 and subject to any
reserve for excess and obsolete inventories, (i) the finished goods contained in
the inventory of the Company have been made in accordance with and in conformity
to the specifications of the corresponding customer orders or, in cases where
there are no customer specifications, are saleable or usable in the Ordinary
Course of Business; (ii) the work in process contained in such inventory has
been made in accordance with and in conformity to the specifications of
corresponding customer orders to the extent consistent with its state of
completion, or is suitable to permit to produce therefrom in the ordinary and
usual course finished goods that will be saleable or useable in the Ordinary
Course of Business and (iii) the raw materials contained in such inventory are
suitable for the purpose of filling specific customer orders, or are otherwise
suitable to permit the Company to produce therefrom in the ordinary and usual
course finished goods that will be saleable or usable in the Ordinary Course of
Business.
-32-
3.28 Liabilities
-----------
The Interim Balance Sheet properly reflects all Liabilities of the
Company as required by GAAP, applied on a basis consistent with the basis on
which Financial Statements referred to in Section 3.7 were prepared. All
Liabilities incurred since the date of the Interim Balance Sheet will have been
incurred in the Ordinary Course of Business and not in violation of or in
conflict with any of the terms, agreements, warranties, representations and
conditions of Seller contained in this Agreement.
3.29 Governmental Approvals
----------------------
No governmental authorization, approval, order, license, permit,
franchise, or consent and no registration, declaration or filing by the Company,
Seller or any shareholder of Seller with any governmental authority (including,
without limitation, any filing or registration pursuant to the Securities Act or
the securities or blue sky laws of any state or territory) is required in
connection with the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions except for HSR Act approval and
notification to the New York State Department of Environmental Conservation
regarding the facilities listed as Class 2 sites on the Registry of Inactive
Hazardous Waste Sites.
3.30 Certain Transactions
--------------------
Except as disclosed in Schedule 3.30, no officer or director of the
Company (or the immediate family of any of them), has any interest in property,
real, personal or mixed, tangible or intangible, used in or pertaining to the
business of Company, or in any creditor, debtor, supplier, customer, agent,
sales representative, or distributor of Company. Any transactions between the
Company and Seller (including Affiliates of Seller) are related either to the
intercompany accounts described at Section 5.8 or have been and will be
conducted in the Ordinary Course of Business.
-33-
3.31 Backlog
--------
As of October 31, 1997 the total backlog of orders of the Company was
approximately $32,600,000. As at the Closing Date, the total backlog of orders
of the Company will not be less than $30,000,000. Such backlog consists, and
will on the Closing Date consist, of orders for products or services which are
typical of the types of products and services heretofore manufactured, sold or
rendered by the Company and which do not require the development or application
of any new or more advanced technology than that utilized by the Company in the
past.
3.32 Certain Payments
----------------
Since January 1, 1995, neither the Company, any director, officer,
agent, or employee of Company nor any other Person associated with or acting for
or on behalf of the Company has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company, or (iv) in violation of any Legal Requirement, (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company.
3.33 Employee Secrecy Agreements.
---------------------------
The Company has entered into secrecy agreements with substantially
all of its current employees, the forms of which have been previously provided
to Buyer and Buyer has been provided with the opportunity to review such
agreements.
-34-
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
----------------------------------------------------
Buyer hereby represents and warrants to Seller as follows:
4.1 Organization and Good Standing
------------------------------
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to carry on the business which it is now conducting.
4.2 Authority; No Conflict
----------------------
(a) The execution and delivery by Buyer of this Agreement and the
consummation of the Contemplated Transactions have been duly and validly
authorized by Buyer's Board of Directors; no other corporate action or
proceeding on the part of Buyer is necessary to authorize this Agreement or the
Contemplated Transactions. This Agreement constitutes valid and legally binding
obligations of Buyer, enforceable against Buyer in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting the enforcement of creditors' rights in general, or by general
principles of equity.
(b) Neither the execution and delivery by Buyer of this Agreement nor
the consummation of the Contemplated Transactions nor compliance by Buyer with
any of the provisions hereof will violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or any event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in the
creation of any Lien, upon any of the assets of Buyer or any of its subsidiaries
under any of the terms, conditions or provisions of the Articles of
Incorporation or By-Laws of Buyer (or equivalent corporate documentation) or
any note, bond, mortgage, indenture, deed of trust, license, agreement or other
-35-
instrument or obligation to which Buyer or any of its subsidiaries or any of the
property or assets of Buyer or any of its subsidiaries may be bound or affected,
or violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer or any of its subsidiaries or any of the properties or
assets or Buyer or any of its subsidiaries, except for such conflict, breach,
default or violation which is not material to Buyer and its subsidiaries, taken
as a single enterprise, or as to which requisite waivers or consents either
shall have been obtained by the date hereof or the Closing Date, as appropriate,
or shall have been waived by Seller in writing. No consent or approval by,
notice to or registration with any governmental authority or any other person or
entity, other than compliance with the HSR Act, is required on the part of Buyer
prior to the Closing Date in connection with the execution and delivery by Buyer
of this Agreement or the consummation by Buyer of the Contemplated Transactions.
4.3 Investment Intent
-----------------
Buyer is acquiring the Shares for its own account and not with a view
to their distribution within the meaning of Section 2(11) of the Securities Act
of 1933.
4.4 Certain Proceedings
-------------------
There is no pending proceeding that has been commenced against Buyer
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
knowledge, no such proceeding has been threatened.
4.5 Brokers or Finders
------------------
Buyer and its officers and agents have incurred no obligation or
liability, and will not incur any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement and will indemnify and hold
Seller harmless from
-36-
any such payment alleged to be due by or through Buyer as a result of the action
of Buyer or its officers or agents.
4.6 Disclosure
----------
No representation or warranty of Buyer in this Agreement contains as
of the date hereof any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein, in light of the
circumstances in which they were made, not misleading.
4.7 Funding
-------
Buyer has cash available or has existing borrowing facilities or firm
commitments which, together with its available cash, are sufficient to enable it
to consummate the Contemplated Transactions.
ARTICLE V - COVENANTS OF SELLER PRIOR TO CLOSING DATE
-----------------------------------------------------
5.1 Access and Investigation
------------------------
Between the date of this Agreement and the Closing Date, Seller will,
and will cause its Representatives to, (a) afford Buyer and its Representatives
and prospective lenders and their Representatives (collectively, "Buyer's
Advisors") full access during normal business hours to the Company's personnel,
properties, Contracts, books and records, and other documents and data, (b)
furnish, or permit Buyer's Advisors to make copies of all such Contracts, books
and records and other existing documents and data as Buyer may reasonably
request and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request; provided, that such investigation will not interfere unnecessarily with
normal business operations.
-37-
5.2 Operation of the Businesses
----------------------------
Between the date of this Agreement and the Closing Date, Seller will,
and will cause the Company to:
(a) conduct the business of the Company in the Ordinary Course of
Business;
(b) use its best efforts to preserve intact the current business
organization of the Company, and maintain the relations and goodwill with
suppliers, customers, landlords, employees, agents, and others having business
relationships with the Company;
(c) confer with Buyer concerning operational matters of a material
nature; and
(d) otherwise keep Buyer reasonably informed regarding the status of
the business, operations, and finances of the Company.
5.3 Negative Covenant
-----------------
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, Seller will not, and will not
cause or permit the Company to, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within its control
which would or is likely to result in the occurrence of any of the changes or
events listed in Section 3.20.
5.4 Required Approvals
------------------
As promptly as practicable after the date of this Agreement, Seller
will, and will cause the Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
-38-
Transactions (including all filings under the HSR Act). Between the date of
this Agreement and the Closing Date, Seller will, and will cause the Company to,
(i) cooperate with Buyer with respect to all filings that Buyer elects to make
or is required by Legal Requirements to make in connection with the Contemplated
Transactions, and (ii) cooperate with Buyer in obtaining all consents required
to consummate the Contemplated Transactions.
5.5 Notification
------------
Between the date of this Agreement and the Closing Date, Seller will
promptly notify Buyer in writing if Seller or the Company becomes aware of any
fact or condition that causes or constitutes a material breach of any of
Seller's representations and warranties as of the date of this Agreement.
5.6 No Negotiation
--------------
Until such time, if any, as this Agreement is terminated pursuant to
Article IX, Seller will not, and will cause the Company and each of their
Representatives not to, directly or indirectly, solicit or encourage any
inquiries or proposals from, discuss or negotiate with, provide any non-public
information to, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of the Company, or the Shares, or any merger, consolidation,
business combination, or similar transaction involving the Company.
5.7 Best Efforts
------------
Between the date of this Agreement and the Closing Date, Seller will
use its best efforts to cause the conditions in Articles VII and VIII to be
satisfied.
-39-
5.8 Settlement of Intercompany Accounts
-----------------------------------
(a) Except as set forth in Section 5.8(b), effective immediately
prior to the Closing, all amounts then payable (i) by the Company to Seller or
any of its Affiliates or (ii) by Seller or any of its Affiliates to the Company
shall, on a net basis, either be added to or charged against the Stockholders'
Equity of the Company and, accordingly, the Company shall have no further
obligation to make any payments in respect thereof to Seller or any of its
Affiliates, nor will the Company have any claim for payment in respect thereof
from Seller or any of its Affiliates.
(b) The intercompany receivables that the Company has with,
respectively, EG&G GmbH, EG&G Ltd. and EG&G S.A., will be considered trade
receivables as of the Closing Date and included on the Closing Balance Sheet as
such. The parties understand that EG&G GmbH, EG&G Ltd. and EG&G S.A. have
corresponding receivables with their respective end-user customers, and those
receivables will not be transferred to Buyer (or Company) as part of the
Contemplated Transactions. Seller will utilize its best efforts to keep Buyer
informed as to the status of any disputes between Seller's Affiliates listed
above and the end-user customer, and will provide Buyer with a reasonable
opportunity to assist in the resolution of any such disputes.
5.9 Facility Repairs
----------------
With respect to the Company's Woodstock, New York and Saugerties, New
York facilities, Buyer has provided Seller with a list of items, attached hereto
as Schedule 5.9, which it believes require correction and/or repair in order to
satisfy or comply with legal and regulatory requirements or good management
practices, which were discovered in the course of the Environmental Site
Assessment Reports prepared by ERM-Midstates, Inc. in November 1997 with respect
to such facilities. As soon as practicable after the date hereof, and if
practicable before the Closing Date, Seller shall have
-40-
corrected and repaired, as appropriate, to Buyer's reasonable satisfaction, all
of the items on such list. After the Closing Date, Seller will remain
responsible for completing any items not repaired or corrected prior to the
Closing Date. Seller's failure to complete any such items prior to the Closing
Date will not allow Buyer to elect not to proceed with the Closing. No item on
such list shall be deemed to constitute environmental compliance activities
within the meaning of Section 10.4(a) hereof.
5.10 Contributions to Employee Benefit Plans
---------------------------------------
Seller has made, or will make, all contributions to the Employee
Benefit Plans for all periods up to the Closing Date as required by the terms of
the Employee Benefit Plans, the Code and ERISA.
5.11 Trademark Registration
----------------------
Seller will use its best efforts to modify the Co-Existence Agreement
between the Company and Rotronic AG dated October 21, 1997 to include a
provision similar to the following:
Rotronic agrees that it will provide further consents consistent with
the provisions included in [this Agreement/the Co-Existence Agreement executed
by and between ROTRON and Rotronic dated October 21, 1997] including signing
additional Consent Agreements, and to otherwise aid EG&G, ROTRON or their
designee, as reasonably requested by either of them in obtaining registrations
in the United States of America for the ROTRON ▇▇▇▇ for ROTRON's goods.
ARTICLE VI - COVENANTS OF BUYER PRIOR TO CLOSING DATE
-----------------------------------------------------
6.1 Required Approvals
------------------
As promptly as practicable after the date of this Agreement, Buyer
will, and if necessary will cause its Affiliates to, make all filings required
by Legal
-41-
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Closing Date, Buyer will, and will cause such Affiliates to, (i)
cooperate with Seller with respect to all filings that Seller elects to make or
is required by Legal Requirements to make in connection with the Contemplated
Transactions, and (ii) cooperate with Seller in obtaining all consents required
to consummate the Contemplated Transactions; provided that this Agreement will
not require Buyer to dispose of or make any change in any portion of its
business to obtain any such consents.
6.2 Best Efforts
------------
Between the date of this Agreement and the Closing Date, Buyer will
use its best efforts to cause the conditions in Articles VII and VIII to be
satisfied.
6.3 Insurance
---------
Buyer shall be responsible for obtaining and maintaining all of the
insurance coverages relating to the Company from and after the Closing Date.
6.4 Commitment to Employees
-----------------------
(a) On or prior to the Closing Date, Buyer shall offer continuing
employment with the Company, as an employee-at-will, at the same location as the
individual's place of employment immediately prior to the Closing Date, to each
individual who is employed by the Company as of the Closing Date (such employees
who accept employment to be known as "Employees"), with initial terms and
conditions of employment, including job responsibilities and base compensation
levels no less favorable than the terms and conditions in effect for each such
Employee immediately prior to the Closing Date. The definition of Employees
shall not include individuals who are on disability status; who are not actively
at work and are receiving workmen's compensation benefits; and those
-42-
who are on a paid or unpaid leave of absence. The individuals included in the
preceding sentence will be offered employment, on the terms set forth above, at
such time as they are able to return to work, provided they return to work
within six (6) months after the Closing Date. Except as may be set forth
herein, Seller will have no further responsibility with regard to the Employees
as of the close of business on the Closing Date, including, without limitation,
any responsibility with respect to benefits or notices required pursuant to
Section 4980B of the Code or Section 606 of ERISA. Buyer will have no
responsibility with respect to those individuals who do not accept their offer
of employment, including without limitation, any responsibility with respect to
benefits or notices required pursuant to Section 4980B of the Code or Section
606 of ERISA. Seller will retain COBRA continuation coverage responsibility for
Employees or former employees (including those on disability status prior to the
Closing Date) of Company who have had a COBRA qualifying event occur on or
before the Closing Date; Buyer will assume liability for COBRA continuation
coverage relating to COBRA qualifying events occurring after the Closing Date.
The Employees will be eligible to participate in Buyer's "Additional
Compensation Plan" pursuant to the terms thereof and those Employees who are
participants in the Company's "EVA Program" will be eligible to participate in
Buyer's "Stock Incentive Plan".
(b) Buyer shall cause the Company to establish and maintain, or shall
establish and maintain, for a period of not less than one year after the Closing
Date, a termination policy for Employees with terms no less favorable than the
Seller's Termination Policy, as in effect immediately prior to the Closing Date
(the "Termination Policy"). Buyer shall indemnify Seller for any liabilities
Seller incurs as a result of a failure by the Company to fulfill its obligations
under the Termination Policy during such one-year period.
(c) Except as expressly set forth in this Article VI or elsewhere in
this Agreement, Buyer shall not assume any liabilities or obligations with
respect
-43-
to, and shall not receive any right or interest in, any Employee Benefit Plans
as such Employee Benefit Plans may apply to the Employees. After the Closing
Date, Buyer will provide Seller with such information as is required concerning
Employees in order to enable Seller to determine whether, and, if so, when, an
Employee will be entitled to a pension benefit or other benefits under the
Seller's Employee Benefit Plans. Except as provided herein, at the close of
business on the Closing Date, all Employees shall cease participation in any and
all of Seller's Employee Benefit Plans, except with respect to benefits accrued
as of, or claims incurred on or before the Closing Date pursuant to the terms of
those Plans. Notwithstanding the foregoing, the Seller shall cooperate with
Buyer in its provision of medical and dental benefits to Employees, at the
coverage levels in effect at the Closing Date for a period from the Closing Date
through March 31,1998 (the "Temporary Benefits"). Buyer agrees to reimburse
Seller for all costs incurred by Seller in providing the Temporary Benefits,
including, without limitation, administrative fees, claims costs for self-
insured medical and dental benefits, insurance premiums for insured plans and
any other out-of-pocket costs reasonably incurred by Seller in providing the
Temporary Benefits. Further details relating to the Temporary Benefits are set
forth in Schedule 6.4(c), but the terms of this Agreement will control in the
event of any conflict with the terms of Schedule 6.4(c). Buyer will be
responsible for collecting all employee contributions associated with the
Temporary Benefits. Buyer will pay Seller for Seller's costs of providing the
Temporary Benefits within ten days of receipt by Buyer of Seller's invoice. In
addition, Seller shall continue to provide post-retirement medical and life
benefits pursuant to the terms of Seller's Employment Benefit Plans then in
effect to those employees who (i) have retired on or before the Closing Date and
qualified for such benefits, and (ii) who retire after the Closing Date, but
who have reached age 55 and have earned at least ten years of service with the
Company prior to the Closing Date. Employees shall commence participation in
Buyer's employee benefit plans effective as of the close of business on the
Closing Date (except that the Temporary Benefits will
-44-
be administered as discussed above) provided that Seller shall have cooperated
with Buyer during the period preceding the Closing Date to the extent required
in order to effect a transition of employee benefits as of that date.
(d) At the Closing, the Employees shall become eligible to
participate in all then existing Welfare Plans (including, without limitation,
vacation and sick day accruals) available to similarly situated employees of
Buyer; provided, however, that Buyer may, but shall not be required to,
establish any Welfare Plans or provisions within such existing Welfare Plans for
the benefit of Employees that it does not currently provide to similarly
situated employees. By way of example, but not limitation, Buyer may, but shall
not be required to, provide to the Employees any post-retirement medical or life
insurance nor any continued medical coverage during periods of short or long
term disability. Buyer shall grant all Employees credit under all of Buyer's
existing (or established as a result of this transaction) Welfare Plans
(including, without limitation, vacation and sick day accruals) for all service
with the Company and the Company's Affiliates (and their respective
predecessors) prior to the Closing Date for all purposes for which such service
was recognized by the Company and the Company's Affiliates. All service time
recognized by the Company shall also be considered service time for all purposes
under all Welfare Plans of Buyer, including, without limitation, eligibility
for, participation in, and vesting under such plans. Buyer shall grant to
Employees credit under Buyer's Welfare Plans for all deductible and out-of-
pocket payments made by Employees prior to the Closing Date under Company's
Welfare Plans during the 1998 plan year for such plans, and such payments made
by Employees plus payments made by Employees on or after the Closing Date
through March 31, 1998 shall apply toward any deductible and out-of-pocket
maximum amounts that apply under any of Buyer's Welfare Plans in which such
Employees may participate subsequent to March 31, 1998. Employees participating
under Buyer's existing Welfare Plans at the Closing Date shall not be subject to
any waiting periods for participation or
-45-
pre-existing condition limitations in Buyer's corresponding employee benefit
plans.
(e) Seller shall, as of the Closing Date, take such action as shall
be necessary to permit Employees to (i) be 100% vested in their account balances
under Seller's 401(k) Plan and (ii) allow such Employees to elect a distribution
of their individual account balances or to make a direct rollover of their
individual account balances (excluding any after-tax contributions, which shall
be distributed to the Employees) to Buyer's 401(k) Plan. Buyer shall cause the
trustee of the Buyer's 401(k) Plan to accept on behalf of the Plan a rollover
contribution from any Employee or a direct rollover from the trustee of Seller's
401(k) Plan representing such Employee's account balance (excluding after-tax
contributions but including outstanding loans) under such Plan, all subject to
and in accordance with the provisions of the Buyer's 401(k) Plan and applicable
laws. Buyer shall be responsible for collecting amounts due from Employees who
have taken loans from their 401(k) Plan accounts prior to the Closing Date.
(f) Any service time that the Employees spend with the Company after
the Closing Date shall not be considered by Seller in calculating any benefits
due to the Employees under any of the Seller's Employee Benefit Plans, for
"crediting" or "vesting" purposes, or for any other purpose.
(g) Seller will be responsible for fulfilling its obligations to the
employees of Company pursuant to the defined benefit pension plan which exists
immediately prior to the Closing Date based on credited service which accrues up
to Closing Date.
(h) Seller agrees to provide to Buyer such Plan information as Buyer
may reasonably request to effect the transactions contemplated by this Section
6.4. Seller agrees to prepare all Plan amendments and to make all
-46-
governmental filings, including filings with the Pension Benefit Guaranty
Corporation, that are required to effect the provisions of this Section 6.4.
(i) Within thirty (30) days after the Closing Date, Buyer or an
Affiliate of Buyer will enter into Employment Agreements with the following
individuals: ▇▇▇▇▇ ▇▇▇▇▇▇▇ of EG&G GmbH, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of EG&G S.A. and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of EG&G Ltd. (the "Foreign Employees"). The Employment
Agreements will include the same salary, benefit levels and positions that the
Foreign Employees hold as of the Closing Date. Any severance or notice payments
due to the Foreign Employees as a result of the transition will be the
responsibility of Buyer. Buyer will promptly reimburse Seller or an Affiliate
of Seller for all costs associated with supporting the Foreign Employees in the
period from the Closing Date until the Foreign Employees are no longer employed
by an Affiliate of Seller. Such costs shall include, without limitation, salary,
sales commissions, benefits, social insurance and pension payments, and
administrative support.
(j) Fourteen employees of Company (as listed on Schedule 6.4(j)) who
are currently utilizing vehicles provided to them through a lease arrangement
between EG&G, Inc. and Wheels, Inc. will be required to turn the vehicles in on
or prior to the Closing Date as directed by Company, unless (i) Buyer, or its
automotive leasing company, has agreed to purchase the listed vehicles from
Wheels, Inc. for use by these employees and (ii) Buyer has previously supplied
Seller with an appropriate Certificate of Insurance listing EG&G, Inc. and
Wheels, Inc. as additional insureds with coverage (liability and physical
damage) of not less than $10 million. Buyer will finalize all arrangements for
transfer of title to the vehicles no later than thirty (30) days after the
Closing Date. In addition, Buyer will promptly reimburse Seller for all leasing
costs associated with these vehicles until the transfer of title is complete.
Four employees of Company have reached an alternative arrangement with
-47-
EG&G, Inc. regarding their leased vehicles, and these employees are marked with
an asterisk on Schedule 6.4(j).
ARTICLE VII - CONDITIONS PRECEDENT TO BUYER'S
---------------------------------------------
OBLIGATION TO CLOSE
-------------------
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations and Warranties
------------------------------------------
The representations and warranties of Seller set forth in Article III
hereof or elsewhere in this Agreement shall be true and correct in all material
respects on the date hereof and on the Closing Date with the same effect as
though such representations and warranties had been made on and as of each such
date, and Seller shall have delivered to Buyer a certificate to that effect,
dated the Closing Date, and signed by a duly authorized officer of Seller.
7.2 Performance of Covenants
------------------------
Each and all of the covenants and agreements of Seller to be performed
or complied with prior to or on the Closing Date shall have been duly performed
or complied with by Seller, and Seller shall have delivered to Buyer a
certificate to that effect, dated the Closing Date, and signed by a duly
authorized officer of Seller.
7.3 No Legal Proceedings
--------------------
On the Closing Date, no litigation, arbitration, investigation or
other proceeding, or injunction or final judgment relating thereto, shall be in
force, pending or threatened (in circumstances Buyer reasonably believes to be
-48-
credible), before any court or governmental or regulatory official, body or
authority relating to the Company or that could have a material impact on the
ability of Buyer or Seller to consummate the Contemplated Transactions.
7.4 Stock Certificates
------------------
Seller shall have delivered to Buyer certificates representing the
Shares duly endorsed in blank, or accompanied by appropriate stock powers in
proper form for transfer.
7.5 No Claim Regarding Ownership of Shares or Sale Proceeds
-------------------------------------------------------
There must not have been made or threatened by any Person any claim
asserting that such Person (i) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of the Company or (ii) is
entitled to all or any portion of the Purchase Price payable for the Shares.
7.6 No Prohibition
--------------
Neither the consummation nor the performance of any of the
Contemplated Transactions will materially contravene, or result in a material
violation of, any applicable Legal Requirement.
7.7 Trademark License
-----------------
EG&G, Inc. shall have entered into a trademark license agreement with
the Company in the form of Schedule 7.7 hereto (the "Trademark License") to
provide the right to use the "EG&G" name for a transitional period.
7.8 Resignations
------------
Buyer shall have received resignations of all officers and directors
of the Company, unless otherwise directed by Buyer.
-49-
7.9 Opinion of Counsel
------------------
Buyer shall have been furnished with an opinion of counsel to Seller,
dated the Closing Date, in form and substance reasonably satisfactory to Buyer,
to the effect that, except as set forth on the Schedules hereto (and except for
changes subsequent to the date hereof which are disclosed in such opinion but
which do not constitute a breach of this Agreement):
1. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts, and has full
corporate power and authority to carry on the business which it is now
conducting. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York, is qualified as a
foreign corporation in the State of California and has full corporate power and
authority to carry on the business it is now conducting;
2. Seller has full corporate power to enter into this Agreement and
to perform its obligations hereunder; all corporate (and, if applicable,
shareholder) action or proceedings required to be taken by, or on the part of,
Seller to authorize it to execute and deliver this Agreement and to consummate
the Contemplated Transactions hereby and thereby have been duly and validly
taken; this Agreement has been duly and validly authorized, executed and
delivered by Seller and constitutes the valid, legal and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as its
enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights in general, or by general principles of equity;
3. Except as set forth on a schedule attached to the opinion,
neither the execution and delivery of this Agreement nor the consummation of
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the Contemplated Transactions hereby or thereby nor compliance by Seller with
any of the provisions hereof or thereof will:
(a) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of any
Lien on the Company under any of the terms, conditions or provisions of the
Articles of Organization or By-Laws of Seller or the Company, or of any note,
bond, mortgage, indenture, deed of trust, license, agreement or other instrument
or obligation known to such counsel to which Seller or the Company is a party,
or by which it may be bound or affected, or as to which requisite waivers or
consents either shall have been obtained by Seller by the Closing Date or shall
have been waived by Buyer in writing; or
(b) violate any federal, New York State or Massachusetts
statute, rule or regulation or, to the knowledge of such counsel, any order,
writ, injunction or decree applicable to Seller or to the Company.
4. No consent or approval by, notice to or registration with any
governmental authority, other than the filing in conjunction with the HSR Act
and the notification to the New York State Department of Environmental
Conservation, is required on the part of Seller or the Company in connection
with the Contemplated Transactions.
Any of such opinions may be given by the General Counsel of EG&G, Inc, or
by other counsel reasonably satisfactory to Buyer as Seller may determine. As
to any matter which involves the laws of a jurisdiction in which the counsel
rendering the opinion is not expert, such counsel may rely upon opinions of
local counsel of established reputation reasonably satisfactory to Buyer. Any
opinion
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may expressly rely as to matters of fact upon certificates furnished by
appropriate officers of Seller or appropriate government officials.
7.10 Transfer of Confidentiality Agreements
--------------------------------------
Seller shall have delivered or caused to be delivered to the Company
instruments of transfer, in form and substance reasonably satisfactory to Buyer,
transferring and assigning to the Company any rights of Seller and its
Affiliates under the confidentiality agreements entered into by Seller and its
Affiliates with all prospective purchasers of the Company, except for the
confidentiality agreement with Buyer and the confidentiality agreements with
those companies that requested their interest in the Company be kept
confidential.
7.11 Transfer of Past Service Contracts
----------------------------------
Company shall have delivered or caused to be delivered to the Seller
or one of its Affiliates instruments of transfer, in form and substance
reasonably satisfactory to Buyer, transferring and assigning to Seller or one of
its Affiliates all rights and obligations of Seller under the past service
contracts.
7.12 Real Property Transfers
-----------------------
Seller shall have taken the necessary actions to transfer title in
and to the Olive Property and the Saugerties Land from Company to Seller or one
of its Affiliates.
ARTICLE VIII - CONDITIONS PRECEDENT TO SELLER'S
-----------------------------------------------
OBLIGATION TO CLOSE
-------------------
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the
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Closing, of each of the following conditions (any of which may be waived by
Seller, in whole or in part):
8.1 Accuracy of Representations and Warranties
------------------------------------------
The representations and warranties of Buyer set forth in Article IV
hereof or elsewhere in this Agreement shall be true and correct in all material
respects on the date hereof and on the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date,
and Buyer shall have delivered to Seller a certificate to that effect, dated the
Closing Date, and signed by a duly authorized officer of Buyer.
8.2 Performance of Covenants
------------------------
Each and all of the covenants and agreements of Buyer to be performed
or complied with prior to or on the Closing Date shall have been duly performed
or complied with by Buyer, and Buyer shall have delivered to Seller a
certificate to that effect, dated the Closing Date, and signed by a duly
authorized officer of Buyer.
8.3 No Legal Proceedings
--------------------
On the Closing Date, no litigation, arbitration, investigation or
other proceeding or injunction or final judgment relating thereto, shall be in
force, pending or threatened (in circumstances Seller reasonably believes to be
credible), before any court or governmental or regulatory official, body or
authority relating to the Company or that could have a material impact on the
ability of Buyer or Seller to consummate the Contemplated Transactions.
8.4 Payment of Purchase Price
-------------------------
Buyer shall have delivered to Seller, and Seller shall have received,
the Purchase Price pursuant to Section 2.3 above.
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8.5 No Claim Regarding Stock Ownership or Sale Proceeds
---------------------------------------------------
There must not have been made or threatened by any Person any claim
asserting that such Person (i) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of the Company or (ii) is
entitled to all or any portion of the Purchase Price payable for the Shares.
8.6 Trademark License
-----------------
The Company shall have entered into the Trademark License with EG&G,
Inc.
8.7 No Prohibition
--------------
Neither the consummation nor the performance of any of the
Contemplated Transactions will materially contravene, or result in a material
violation of any applicable Legal Requirement.
8.8 Opinion of Counsel
------------------
Seller shall have been furnished with an opinion of counsel to Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to Seller,
to the effect that:
1. Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is duly qualified as a
foreign corporation in the States of New York and California and has full
corporate power and authority to carry on the business which it is now
conducting;
2. Buyer has full corporate power to enter into this Agreement and
to perform its obligations hereunder; all corporate (and, if applicable,
shareholder) action or proceedings required to be taken by, or on the part of,
Buyer to authorize it to execute and deliver this Agreement and to consummate
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the Contemplated Transactions hereby and thereby have been duly and validly
taken; this Agreement has been duly and validly authorized, executed and
delivered by Buyer and constitutes the valid, legal and binding obligations of
Buyer, enforceable against Buyer in accordance with its terms, except as their
enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights in general, or by general provisions of equity;.
3. Except as set forth on a schedule attached to the opinion,
neither the execution and delivery of this Agreement nor the consummation of the
Contemplated Transactions hereby or thereby nor compliance by Buyer with any of
the provisions hereof or thereof will:
(a) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of any
Lien on the Buyer under any of the terms, conditions or provisions of the
Articles of Incorporation or the By-Laws (or equivalent corporate documentation)
of Buyer, or any note, bond, mortgage, indenture, deed of trust, license,
agreement or other instrument or obligation known to such other counsel to which
Buyer is a party, or by which Buyer may be bound or affected or as to which
requisite waivers or consents shall have been obtained by Buyer by the Closing
Date or shall have been waived by Seller in writing, or
(b) violate any federal or New York State statute, rule or
regulation or, to the knowledge of such counsel, any order, writ, injunction or
decree applicable to Buyer; and
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4. No consent or approval by notice to or registration with any
governmental authority, other than the filing in conjunction with the HSR Act is
required on the part of Buyer in connection with the Contemplated Transactions.
Any of such opinions may be given by Stroock & Stroock & ▇▇▇▇▇ or such
other counsel reasonably satisfactory to Seller as Buyer may determine. As to
any matter which involves the laws of a jurisdiction in which the counsel
rendering the opinion is not expert, such counsel may rely upon the opinion of
local counsel of established reputation reasonably satisfactory to Seller. Any
opinion may expressly rely as to matters of fact upon certificates furnished by
appropriate officers of Buyer or appropriate government officials.
ARTICLE IX - TERMINATION
------------------------
9.1 Termination Events
------------------
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Seller if a material breach of any provision
of this Agreement has been committed by the other party and such breach has not
been either waived or, after written notice and a ten day cure period, resolved
to the reasonable satisfaction of the non-breaching party;
(b) (i) by Buyer if any of the conditions in Article VII has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Seller, if any of the conditions in
Article VIII has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Seller to comply with
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its obligations under this Agreement) and Seller have not waived such condition
on or before the Closing Date;
(c) by either Buyer or Seller if any court or governmental agency
shall have issued an order, judgment or decree or taken any other action
materially challenging, prohibiting or invalidating the consummation of any of
the Contemplated Transactions;
(d) by mutual consent of Buyer and Seller; or
(e) by either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before January 31,
1998, or such later date as the parties may agree upon.
9.2 Effect of Termination
---------------------
If this Agreement is terminated pursuant to Section 9.1, then this
Agreement shall be null and void and except as expressly provided herein, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section 11.1, 11.3, and 11.5 will survive; provided,
however, if this Agreement is terminated by a party because of the breach of
this Agreement by the other party or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all remedies available to it
at law or equity, including the right to seek specific performance, will survive
such termination unimpaired.
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ARTICLE X - SURVIVAL; INDEMNIFICATION
-------------------------------------
10.1 Survival
--------
All representations, warranties, covenants and obligations in this
Agreement or in any agreement, instrument or other document delivered in
connection herewith shall survive the execution and delivery hereof, the
consummation of the Contemplated Transactions and any investigation or audit
conducted by any party hereto. Notwithstanding the preceding sentence, neither
party may make or assert any claim under any representation or warranty
contained herein later than eighteen months after the Closing Date, except that
(i) the representations contained in Section 3.1 and 13.1(e) shall survive
indefinitely and (ii) the representations in Sections 3.14, 3.15 and 12.3 and
shall survive until 30 days after the applicable statute of limitations with
respect to the matters addressed therein has expired (including all waivers or
extensions thereof); and provided that any claims made or asserted by a party
within the applicable time period prescribed above shall survive such expiration
until such claim is finally resolved and all obligations with respect thereto
are fully satisfied. All statements contained in any officer's certificate
delivered by or on behalf of any party hereto pursuant to this Agreement shall
constitute and have the same force and effect as the representations and
warranties of such party set forth herein.
10.2 Indemnification by Seller
-------------------------
Seller will indemnify, defend, save and hold harmless Buyer, the
Company and their Affiliates from and against any and all damages, liabilities,
losses, penalties, expenses, assessments, judgments or deficiencies of any
nature whatsoever including, without limitation, reasonable attorneys' fees and
expenses, consultants' and investigators' fees and expenses, and other costs and
expenses incident to any suit, action or proceeding (together, "Losses")
incurred or sustained by Buyer or its Affiliates which arise out of or result
from (i)
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any breach of any representation or warranty given or made by Seller herein or
in any certificate delivered hereunder; (ii) the noncompliance with or
nonperformance of any agreement, obligation, undertaking or covenant of Seller
under this Agreement; (iii) any claim against the Company or Buyer relating to
death or personal injury, business tort, other tort, malicious or intentional
conduct, property damage or worker's compensation based on transactions, events
or occurrences prior to the Closing Date; (iv) any claim against the Company
relating to product liability or similar claims and/or any claim of product
defect or claim that product does not meet published or quoted specifications
(after any applicable warranty reserve reflected on the Closing Balance Sheet
has been exhausted) in each case based on products manufactured or sold prior to
the Closing Date, provided that the incident or action giving rise to the claim
was not the result of service or repair provided by Buyer after the Closing
Date; (v) any claim and/or litigation involving personnel or former personnel of
the Company based on transactions, events or occurrences prior to the Closing
Date; (vi) any actual or alleged violation of any law, rule or regulation of any
governmental entity by the Company or any of its employees, agents or affiliates
occurring prior to the Closing Date, including without limitation any fines or
penalties, whether criminal or civil; or (vii) any Liability or claim relating
to product warranty obligations assumed by AGC Systems and Technologies pursuant
to the Purchase and Sale Agreement dated June 20, 1996 and the First Amendment
to the Purchase and Sale Agreement dated October 7, 1997 between the Company and
AGC Systems and Technologies regarding the Nova Product Line. The aggregate
amount for which Seller may be liable under this Section 10.1 shall in no event
exceed $25,000,000 and Seller shall not be obligated to indemnify the Buyer, the
Company or Buyer's Affiliates against, or to hold harmless the Buyer or Buyer's
Affiliates from, damages for Losses incurred by the Buyer, the Company or
Buyer's Affiliates as a consequence of or in connection with matters specified
in this Article X unless and until such damages exceed an aggregate basket of
$500,000 (the "Basket"), at which point Seller
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shall be obligated to indemnify Buyer or Buyer's Affiliates against, and to hold
harmless Buyer or Buyer's Affiliates from, only damages in excess of such
amount, and not relating back to the first such damages so incurred.
10.3 Indemnification by Buyer
------------------------
Buyer will indemnify, defend, save and hold harmless the Company,
Seller and any of their respective Affiliates from and against any and all
Losses incurred or sustained by the Company, Seller or any of their respective
Affiliates which arise out of or result from (i) any breach of any
representation or warranty given or made by Buyer herein or in any certificate
delivered hereunder (ii) the noncompliance with or nonperformance of any
agreement, obligation, undertaking or covenant of Buyer under this Agreement;
(iii) any claim against the Company or Seller relating to death or personal
injury, business tort, other tort, malicious or intentional conduct, property
damage or worker's compensation based on transactions, events or occurrences
after the Closing Date; (iv) any claim against the Company relating to product
liability or similar claims and/or any claim of product defect or claim that
product does not meet published or quoted specifications in each case based on
products manufactured or sold after the Closing Date; (v) any claim and/or
litigation involving personnel or former personnel of the Company based on
transactions, events or occurrences after the Closing Date; (vi) any actual or
alleged violation of any law, rule or regulation of any governmental entity by
the Company or any of its employees, agents or affiliates occurring after the
Closing Date, including without limitation any fines or penalties, whether
criminal or civil; (vii) any Liability of or claim against the Company or Seller
arising from illness, disease or death, (or fear of illness, disease or death)
alleged to be related, directly or indirectly to exposure to asbestos: (a) in
the workplace of Company after the Closing Date (but only to the extent
attributable to asbestos that was not present on or before the Closing Date) or
(b) in products manufactured or sold by Seller after the Closing Date; (viii)
any Liabilities of or claims made against EG&G, Inc. under the Guaranty
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provided to One Woodstock Associates dated as of December 13, 1979 regarding the
Saugerties Lease after the Closing Date (provided that the Buyer's obligation to
provide indemnity under this clause (viii) shall not diminish or release Seller
from any of the Seller's indemnification obligations hereunder); or (ix) any
Liabilities of or claims made against the Seller or its Affiliates arising from
Buyer's usage of the Olive Property after the Closing Date.
10.4 Environmental Indemnification
------------------------------
(a) As discussed in the reports referenced on Schedule 3.15,
environmental remediation work is in progress at the Company's facility in
Woodstock, New York, which is currently listed as a Class 2 site on the New York
State Registry of Inactive Hazardous Waste Sites. Seller will continue its
efforts to remediate this site as described in Schedule 3.15, and it is the
intent of the parties that Seller remain responsible for ongoing remediation
work regarding existing environmental conditions at such facility as well as any
further investigation or remedial activity required under any Environmental Law
as a result of such existing environmental conditions (the "Remediation Work").
After the Closing Date, Buyer will provide Seller with reasonable cooperation in
Seller's efforts to perform the Remediation Work, including making available
employees of Company to perform those activities (including installation,
repair, maintenance and monitoring of environmental remediation systems,
community liaison and oversight of Remediation Work) that they have performed in
the past in connection with the Remediation Work. These employees will be
provided at no cost to Seller to perform these activities, which Seller will
request on a reasonable basis. In the event that these employees are unable to
perform their other functions because of Seller's requests, Seller and Buyer
will negotiate a mutually satisfactory arrangement. Seller will be entitled to
control the Remediation Work, and will keep Buyer reasonably well informed on
the status and progress of those efforts. In the event that Seller shall fail
to perform its obligations under Section 10.4(a), Buyer, after providing Seller
with thirty days
-61-
written notice of its intent to act, shall have the right to take over the
control of that portion of the Remediation Work that Seller has failed to
perform, and Seller agrees that it will indemnify Buyer for all costs and
expenses reasonably incurred in connection with Buyer's performance of that
portion of the Remediation Work in accordance with Section 10.4(b), including
without limitation the cost of employees (including prorated salary and
benefits) engaged in such activities. Seller's obligation to perform the
Remediation Work at the Woodstock facility shall continue with respect to such
facility until such time as that facility is delisted from the New York State
Registry of Inactive Hazardous Waste Sites, or designated as a Class 5 site.
Notwithstanding the foregoing, the delisting of the site shall not relieve
Seller of any other indemnification obligations hereunder. The parties
acknowledge that the Remediation Work will require access to Company's real
property and facilities and use of on-site utilities. Seller shall make
reasonable efforts to obtain separate electrical meters for all pumps and other
electrical devices required in connection with the Remediation Work. If this
shall not be feasible, Seller agrees to reimburse Buyer for the cost of
electricity used in connection with the Remediation Work. Buyer shall provide
Seller with reasonable access and use privileges, and Seller will attempt to
minimize any disruption to the business operations of the Company. Except to
the extent that Seller's obligations continue under Section 5.9 after the
Closing Date, Seller's obligations to perform the Remediation Work hereunder
shall not include any responsibility to carry out routine environmental
compliance activities of the Company after the Closing Date, including without
limitation monitoring for NPDES and SPDES permits, Resource Conservation and
Recovery Act record-keeping and compliance, and other environmental
responsibilities that business organizations such as the Company must perform.
Buyer will have no claim hereunder against Seller for any diminution in value or
stigma damages as they may apply to the real property or facilities of the
Company.
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(b) Seller will indemnify, defend, save and hold harmless Buyer and
its Affiliates from and against any and all Losses (including for the purposes
of Section 10.4 any costs of assessment, containment, removal, remedial work,
monitoring or closure, required by a governmental agency or unrelated third
party or any expenses incurred on account of the right of any governmental or
private entity or person) which may be suffered or incurred by any of them (i)
relating to, arising out of or resulting from a breach of the warranty contained
in Section 3.15, (ii) by reason of any and all present or future liabilities or
obligations under any current or future Environmental Law (A) arising out of or
relating to the ownership, operation or condition at any time on or prior to the
Closing Date of any real property or facilities now or previously owned, leased
or used by the Company, (B) arising out of or relating to any Hazardous
Materials that were present on any such real property or facilities of the
Company at any time on or prior to the Closing Date, or (C) arising out of or
relating to any Hazardous Materials that were handled, used, recycled,
generated, transported, stored, treated, disposed of or released on or from any
such real property or facilities of the Company at any time on or prior to the
Closing Date; (iii) arising from any Liability of or claim against the Company
or Buyer arising from illness, disease or death, (or fear of illness, disease or
death) alleged to be related, directly or indirectly to exposure to asbestos:
(AA) in the workplace of Company prior to the Closing Date, or (BB) in products
manufactured or sold by the Company prior to the Closing Date; (iv) arising from
any Remediation Work or compliance activities conducted after the Closing Date
by Seller that results in damages to premises occupied by the Company or
materially interferes with the operations of the Company; or (v) as a result of
any modification, relocation, reconstruction or other improvement to the
existing septic system at the Woodstock facility that is required because of any
environmental condition (including soil or groundwater contamination) existing
on or before the Closing Date. A statement or other evidence in the reports
referenced on Schedule 3.15 that a Hazardous Material is or was present on,
under, or has emanated from the
-63-
real property or facilities of the Company shall be prima facie evidence that
such Hazardous Material was present on the real property or facilities of the
Company at any time on or prior to the Closing Date, and Seller would then have
the burden of proof to establish that it is not responsible for the remediation
of such Hazardous Material hereunder. The allocation of the burden of proof
regarding Hazardous Materials in the preceding sentence is contingent upon
Buyer's agreement to cause the Company, at all times after the Closing Date not
to handle, use, recycle, generate, transport, store, treat, dispose of or
release on or from any such real property or facilities of the Company the
following solvents: trichloroethylene, 1,1,1-trichloroethane and freon. In
addition, Buyer shall have the right to attempt to establish that a Hazardous
Material not documented in such reports was present on the real property or
facilities of the Company on or prior to the Closing Date. Seller's
indemnification shall not apply to any Losses to the extent such Losses were
knowingly increased by the actions of Buyer after the Closing Date other than
through the normal continued operation of the Company's business. Seller's
indemnification obligations under this Section 10.4 shall not be subject to the
maximum or the Basket set forth in Section 10.2.
(c) Buyer will indemnify, defend, save and hold harmless Seller and
its Affiliates from and against any and all Losses (including for the purposes
of Section 10.3 any costs of assessment, containment, removal, remedial work,
monitoring or closure, required by a governmental agency or unrelated third
party or any expenses incurred on account of the right of any governmental or
private entity or person) which may be suffered or incurred by any of them
relating to, arising out of or resulting from any and all present or future
liabilities or obligations under any Environmental Law existing on or after the
Closing Date: (i) arising out of or relating to the ownership, operation or
condition at any time after the Closing Date of the real property or facilities
of the Company (unless such Losses are the result of the condition of the real
property or facilities of the Company on or prior to the Closing Date); (ii)
arising out of or
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relating to any Hazardous Materials that were bought on to the real property or
facilities of the Company at any time after the Closing Date; or (iii)arising
out of or relating to any Hazardous Materials that were generated, transported,
stored, treated or released by Buyer at any time after the Closing Date (except
to the extent that such release constitutes the migration of Hazardous Materials
which had been released on or before the Closing Date). Buyer's indemnification
shall not apply to any Losses to the extent such Losses were knowingly increased
by the actions of Seller after the Closing Date.
(d) Seller will indemnify Buyer and the Company from and against all
Losses they incur directly as a result of any increase in the Company's
groundwater monitoring requirements under its NPDES or SPDES permits or
otherwise from those currently in effect which is attributable to the
information obtained in the course of the investigation and remediation or
correction of Company's discharges into floor and sink drains, dry ▇▇▇▇▇ and/or
the septic system at the Woodstock facility which is to be conducted pursuant to
Section 5.9 hereof.
(e) Seller expressly acknowledges that its obligation to indemnify,
defend, save and hold harmless Buyer and its Affiliates against any and all
Losses pursuant to Section 10.4(b) shall extend to those Losses which may be
suffered or incurred by any of them relating to, arising out of or resulting in
any manner from the Olive Property or the Saugerties Land, and any remediation
obligations with respect thereto, provided that the Seller's obligations to
provide indemnity under this clause shall not diminish or release Buyer from any
of Buyer's obligations under Section 10.3(ix) and shall not be applicable with
respect to any Losses arising from or relating to the acts or omissions of
Buyer.
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10.5 Employee Benefits Indemnification
----------------------------------
Seller agrees to indemnify and hold harmless Buyer, Company and any
trade or business which is under common control with Buyer, as determined
pursuant to either Section 4001(b)(1) of ERISA, or Section 4971(e)(2)(B) of the
Code, from and against any losses on account of (A) any liability for post-
retirement medical, pension or other benefits under any plan or arrangement
sponsored by the Seller or EG&G, Inc. or (B) any liability (including joint and
several liability) incurred by the Company (except for those liabilities assumed
by Buyer pursuant to Section 6.4(g)) as a result of any of the following events
with respect to an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) of which the Seller (or any trade or business which is
under common control with Seller as determined pursuant to either Section
4001(b)(1) of ERISA or Section 4971(e)(2)(B) of the Code) is the contributory
sponsor or a contributing employer:
(i) the termination of any such plan which is a defined benefit pension
plan subject to the provisions of Title IV of ERISA; and
(ii) a complete or partial withdrawal (within the meaning of Sections 4203
and 4205 of ERISA) from any such plan which is a multiemployer plan (within the
meaning of Section 3(37) of ERISA);
(iii) a failure to satisfy the minimum funding requirements, if any,
applicable to such plan under Section 412 of the Code and Section 302 of ERISA,
including for this purpose quarterly contributions required by Section 412(m) of
the Code and Section 302(e) of ERISA; and
(iv) (A) the loss by any such plan of its qualified status; (B) the
imposition of any taxes or penalties; or (C) the occurrence of any prohibited
transaction.
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Seller's indemnification obligations under this Section 10.5 shall not be
subject to the maximum or the basket set forth in Section 10.2, and shall
survive until thirty (30) days after the applicable statute of limitations with
respect to the matters addressed therein has expired (including all waivers or
extensions thereof).
10.6 Limitations on Remedy
---------------------
The amount of any Losses for which indemnification is provided to a
party under this Article X shall be reduced to take account of any net tax
benefit and shall be increased to take account of any net tax detriment realized
by such party which arises from the incurrence or payment of any such Losses or
from the receipt of any such indemnification payment and shall be reduced by the
insurance proceeds received and any other amount recovered, if any, by the
Indemnified Party (or its Affiliates) with respect to any Losses. If any
Indemnified Party (or its Affiliates) shall have received any payment pursuant
to this Article X with respect to any Loss and shall subsequently have received
insurance proceeds or other amounts with respect to such Loss, then such
Indemnified Party (or its Affiliates) shall promptly pay over to the
Indemnifying Party the amount so recovered (after deducting the amount of the
expenses incurred by it in procuring such recovery), but not in excess of the
amount previously so paid by the Indemnifying Party. The sole and exclusive
remedies of any party to this Agreement for any claim hereunder against any
other party hereto shall be the indemnification provided in this Article X or
elsewhere in this Agreement, and each party agrees that it will not pursue any
other remedy with respect thereto, except with respect to claims arising
pursuant to Section 9.2 or except for any remedies contemplated under Article XI
hereof. All indemnification payments made under this Article X shall be treated
for tax purposes as adjustments to the Purchase Price. In the event that one
party shall be obligated to indemnify an Indemnified Person pursuant to this
Article X, the Indemnifying Party shall, upon
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payment of such indemnity in full, be subrogated to all rights of the
Indemnified Person with respect to such loss.
10.7 Procedure for Indemnification - Third Party Claims
---------------------------------------------------
Promptly after service of notice of any claim or of process by any
third person in any matter in respect of which indemnity may be sought from the
other party pursuant to this Agreement, the party in receipt of the claim (the
"Indemnified Party") shall notify the other party (the "Indemnifying Party") of
the receipt thereof. Unless the Indemnifying Party shall notify the Indemnified
Party that it elects to assume the defense of any such claim or process or
settlement thereof (such notice to be given as promptly as reasonably possible
in view of the necessity to arrange for such defense and in no event later than
10 business days following receipt of said notice), the Indemnified Party shall
assume the defense of any such claim or process or settlement thereof. The
Indemnified Party shall not be liable for any legal or other expense in
connection with the defense of any claim or process unless the Indemnifying
Party is successful in contesting its obligation to indemnify the Indemnified
Party in respect of such claim or process. The defense of the Indemnified Party
shall be conducted expeditiously (but with due regard for obtaining the most
favorable outcome reasonably likely under the circumstances, taking into account
costs and expenditures) and the Indemnifying Party or Indemnified Party, as the
case may be, shall be advised promptly of all developments. If the Indemnifying
Party assumes the defense, the Indemnified Party will have the right to retain
its own counsel, and in any event, will provide assistance to the Indemnifying
Party in connection with the defenses of any such claim, but the fees and
expenses of such counsel will be at its own expense unless (i) the Indemnifying
Party shall have agreed to the retention of such counsel for both the
Indemnifying Party and the Indemnified Party or (ii) the named parties to any
such suit, action or proceeding (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same
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counsel would be inappropriate due to actual or potential differing interests
between them. No settlement of a claim by either party shall be made without
the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
10.8 Procedure for Indemnification - Other Claims
--------------------------------------------
A claim for indemnification for any matter not involving a third-
party claim may be asserted by notice to the party from whom indemnification is
sought.
ARTICLE XI - CONFIDENTIALITY AND NON-COMPETITION
------------------------------------------------
11.1 Confidentiality
---------------
Seller agrees not to, directly or indirectly, without the prior
written consent of Buyer, use or disclose to any Person any proprietary
information, trade secrets, confidential customer information, technical data or
know-how relating to the products, processes, methods, equipment or business
practices of the Company, except where such use or disclosure is needed to
comply with an order of a governmental agency, legislative body or court of
competent jurisdiction, or to comply with its obligations under this Agreement.
11.2 Non-Competition
---------------
(a) Seller agrees that, for a period of five years after the Closing
Date, Seller and its Affiliates will not, directly or indirectly, in the
Territory, (i) engage in any business the same as or substantially similar to,
or engage in competition with, the business presently engaged in by the Company,
(ii) render services to or have any interest, as a shareholder, owner, agent,
consultant, lender or guarantor or any other interest, in any other Person
engaged in the manufacture or sale of products, or the rendering of services,
which are currently being manufactured or sold or rendered by the Company, or
substantially similar
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products or services, or (iii) engage in competition with, or manufacture or
sell, such products or services as are referred to in clause (ii) of this
Section 11.2.
(b) For purposes of this Section 11.2, (i) ownership of 5% or less of
any class of outstanding securities of a company the securities of which are
listed on a recognized securities exchange (either domestic or foreign shall not
be deemed to constitute ownership or participation in the ownership of the
business of such company and (ii) ownership of 10% or less of any company other
than those referred to in clause (i) of this sentence shall not be deemed to
constitute ownership or participation in the ownership of the business of such
company; provided that in no event shall Seller or any Affiliate of Seller,
during the five year period referred to in Section 11.2(a), acquire any
securities of the following companies (or their respective successors): COMAIR
Rotron and Labinal, Inc.
(c) Neither Seller nor any Affiliate of Seller, for a period of three
years from and after the Closing Date, shall, directly or indirectly, (i)
solicit for employment or hire any Employee of Company who was employed by the
Company as of the Closing Date, or (ii) divert or attempt to divert from the
Company any business of the type in which the Company was engaged as of the
Closing Date by influencing or attempting to influence any customer or supplier
of the Company. Neither Seller nor any Affiliate of Seller shall be precluded
from hiring any such Employee (i) who has been terminated by Company prior to
commencement of employment discussions between Seller or any Affiliate of Seller
and such Employee, or (ii) if, as a result of existing understandings with five
current employees of Company, Seller or any of its Affiliates is obligated to
offer such individuals employment pursuant to those understandings.
(d) Seller acknowledges and agrees that any breach of this Article XI
may result in irreparable injury to Buyer and the Company, that
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monetary damages may be an inadequate remedy of such breach and that,
accordingly, in addition to any other remedy that Buyer or the Company may have,
Buyer shall be entitled to seek to enforce the specific performance of this
Article XI and to seek both permanent and temporary relief in the event of any
breach hereof.
(e) The parties acknowledge that the time, scope, geographic area and
other provisions of this Article XI have been specifically negotiated by
sophisticated commercial parties and agree that all such provisions are
reasonable under the circumstances of the Contemplated Transactions. If any
portion of this Article XI shall be determined to be invalid and unenforceable
as written, each such portion shall be enforced to the extent reasonable under
the circumstances and such determination shall not affect the validity or
enforceability of the balance hereof, and such balance shall remain in full
force and effect. It is understood that Seller is entering into this non-
competition agreement in order to induce Buyer to enter into this Agreement.
(f) The "Territory" shall mean worldwide. The parties acknowledge and
agree that the business of the Company is currently conducted throughout the
Territory and that, accordingly, the Territory is reasonable in scope.
ARTICLE XII - TAX MATTERS
-------------------------
12.1 Certain Definitions
-------------------
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"Company Group" shall mean the Company and its Subsidiaries, if any,
or any one or more of such entities, as the context may require.
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"Pre-Closing Tax Period" shall mean all taxable periods ending on or
before the Closing Date and that portion to and including the Closing Date of
any taxable period that includes (but does not end on) the Closing Date.
"Taxes" shall mean (i) all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
and personal property, sales, transfer, license, payroll and franchise taxes,
imposed by the United States, or any state, county, local or foreign government
or subdivision or agency thereof, and such term shall include any interest,
penalties or additions to tax attributable to such taxes, charges, fees, levies
or other assessments and any obligations under any agreement or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity and (ii) all obligations, including joint and
several liability pursuant to the law of any jurisdiction or otherwise, for the
payment of any of the types of taxes referred to in clause (i) of this
definition as a result of being a member of an affiliated, consolidated,
combined or unitary group for any taxable period.
"Tax Return" shall mean any report, return or other information
required to be supplied to any taxing authority in connection with Taxes.
"Treasury Regulations" shall mean the Income Tax Regulations (final,
temporary and, as applicable, proposed) promulgated under the Code, as they may
be in effect from time to time. References to specific sections of the Treasury
Regulations shall be to such sections as amended, supplemented or superseded by
Treasury Regulations currently in effect.
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12.2 Allocation of Purchase Price
------------------------------
Buyer and Seller shall agree upon the allocation of the consideration
paid by Buyer hereunder to the Shares and the non-competition provisions set
forth in Section 11.2 hereof in accordance with Treasury Regulations thereunder;
provided, however, that Buyer and Seller hereby agree that as of the date hereof
the fair market value of the non-competition provisions set forth in Section
11.2 hereof is $5,700,000. Buyer and Seller shall utilize the allocation of
consideration described in the preceding sentence in the preparation of all Tax
Returns or forms and for all other Tax purposes. Any adjustment to the
consideration paid pursuant to this Agreement shall result in an appropriate
adjustment to such allocation. To the extent required under Code Section 1060
and the Treasury Regulations thereunder, Buyer and Seller shall utilize such
allocation in the preparation of IRS Form 8594, and shall timely file with the
appropriate governmental authorities copies of such Form 8594. Neither Buyer
nor Seller shall agree to any adjustment relating to the manner in which the
consideration has been allocated as set forth in this Section 12.2 without the
prior written approval of the other, which approval shall not be unreasonably
withheld.
12.3 Representation and Warranties of Seller
---------------------------------------
Except as set forth in Schedule 12.3 Seller hereby represents and
warrants to Buyer as follows:
(a) Provision for Taxes. The provision for Taxes, including interest
-------------------
and penalties, with respect to the Company Group to be shown on the Closing
Balance Sheet will be sufficient for the payment of all such Taxes, interest and
penalties not theretofore paid, whether or not disputed, for the period ended
December 28, 1997, and for all periods prior thereto.
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(b) Tax Returns and Audits.
----------------------
(i) As of the time of filing, all Tax Returns required to be
filed under federal, state, county, local or any foreign laws by or on behalf of
the Company Group were to the best of Seller's knowledge, in all respects (and,
as to Tax Returns not filed as of the date hereof, will be) true, complete and
correct and filed on a timely basis.
(ii) The Company and any affiliated, combined or unitary group
of which it is or was a member have each, within the time and in the manner
prescribed by law, paid (and until the Closing Date will, within the time and in
the manner prescribed by law, pay) all Taxes that are due and payable.
(iii) The Company Group has established (and through the Closing
Date will establish) on its books and records reserves that are to the best of
Seller's knowledge, adequate for the payment of all Taxes not yet due and
payable for which it may be liable (including Taxes for which it may be liable
as a transferee or on a joint and several basis under the consolidated return
rules or any comparable rules for state and local taxes).
(iv) The Company and each member of any affiliated, combined or
unitary group of which it is or was a member have each complied (and until the
Closing Date will comply) in all material respects with all applicable laws,
rules and regulations relating to the payment and withholding of Taxes or
similar provisions under any federal, state, county, local or foreign laws and
have, within the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws.
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(v) Neither the Company nor any member of any affiliated,
combined or unitary group of which it is or was a member is a party to any
agreement providing for the allocation or sharing of Taxes.
(vi) Neither the Company nor any member of any affiliated,
combined or unitary group of which it is or was a member has requested any
extension of time within which to file any Tax Return, which Tax Return has not
since been filed.
(vii) (1) The statute of limitations for the assessment of
Taxes has expired for all applicable Tax Returns of the Company and any
affiliated, combined or unitary group of which it is or was a member (for such
periods during which the Company is or was a member), or (2) those Tax Returns
have been examined by the appropriate taxing authorities for all periods and no
deficiency for any Taxes has been proposed, asserted or assessed against the
Company or any affiliated, combined or unitary group of which it is or was a
member (for such periods during which the Company is or was a member), which has
not been resolved and paid in full.
(viii) There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns that have been given by or requested from the Company or
any affiliated, combined or unitary group of which it is or was a member.
(ix) No federal, state, county, local or foreign audits or
other administrative proceedings or court proceedings are presently pending or,
to the best of Seller's knowledge, threatened with regard to any Taxes or Tax
Returns of or relating to the Company Group.
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(x) No power of attorney has been granted by the Company or
any affiliated, combined or unitary group of which it is or was a member with
respect to any tax matter of or relating to the Company Group which is currently
in force.
(xi) Neither the Company nor any member of any affiliated,
combined or unitary group of which it is or was a member has participated (nor
will it participate prior to the Closing) in or cooperated with an international
boycott within the meaning of Section 999 of the Code.
(xii) Neither the Company nor any member of any affiliated,
combined or unitary group of which it is or was a member has filed (nor will it
file prior to the Closing) a consent pursuant to Section 341(f) of the Code or
has agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company or any member of any affiliated, combined or unitary group
of which it is or was a member (for such period during which the Company is or
was a member).
(xiii) Neither the Company nor any member of any affiliated,
combined or unitary group of which it is or was a member is required to include
in income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by the Company or any member of
any affiliated, combined or unitary group of which is or was a member and Seller
has no knowledge that the IRS has proposed any such adjustment or chance in
accounting method.
(xiv) The acquisition of the Shares will not be a factor
causing any payments to be made by the Company or any member of any affiliated,
combined or unitary group of which it is or was a member (for such
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period during which the Company is or was a member) not to be deductible (in
whole or in part) pursuant to Sections 280G, 404 or 162(m) of the Code.
(xv) All transactions with respect to the Company Group which
could give rise to an understatement of federal income tax (within the meaning
of Section 6662 of the Code) were adequately disclosed (or, with respect to Tax
Returns filed after the date hereof but before the Closing, will be adequately
disclosed) on the Tax Returns in accordance with Section 6662(b)(2)(B) of the
Code and the Treasury Regulations thereunder.
(xvi) No "ownership change", as defined in Section 382(g) of
the Code, and no change in ownership of the outstanding stock of the Company
described in Section 382(a)(1) of the Internal Revenue Code of 1954 (prior to
amendment by the Tax Reform Act of 1986) have occurred with respect to the
Company.
(xvii) Neither the Company nor any member of any affiliated,
combined or unitary group of which it is or was a member has made, or is subject
to, an election as provided in Section 108(b)(5) of the Code (or any predecessor
provision) for any taxable year.
(xviii) Seller is not a "foreign person" (as that term is defined
in Section 1445 of the Code) and shall furnish to Buyer on or before the closing
date a certification of Seller's non-foreign status, as set forth in Treasury
Regulations (S)1.1445-2(b). No member of the Company Group is a United States
real property holding corporation as defined in Section 897(c)(2) of the Code.
(xix) None of the assets of the Company or any member of any
affiliated, combined or unitary group of which it is or was a member are
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treated as "tax-exempt use property" within the meaning of Section 168(h) of the
Code.
(xx) With respect to the Company Group, Seller has made
available to Buyer copies of all revenue agent's reports and other written
assertions of deficiencies or other liabilities for Taxes of or relating to the
Company Group with respect to all taxable years commencing after January 1,
1988.
(xxi) There are no rulings, requests for rulings or closing
agreements specifically relating to the Company or any member of any affiliated,
combined or unitary group of which it is or was a member which could affect the
Company Group's Taxes for any period after the Closing.
(xxii) For taxable years commencing January 1, 1988 no issue
has arisen in any examination of Taxes of or relating to the Company Group by
any taxing authority except for certain environmental remediation costs with
regard to the Saugerties site that if raised with respect to any other taxable
year (commencing on or after January 1, 1988) not so examined would result in a
material Tax deficiency for any other period (commencing on or after January 1,
1988) not so examined, if upheld.
(xxiii) The Company and each member of any affiliated, combined
or unitary group of which is or was a member have made all payments of estimated
Taxes required to be made under Section 6655 of the Code and any comparable
provision of state, county, local or foreign law.
(xxiv) Neither the Company nor any member of any affiliated,
combined or unitary group of which it is or was a member has disposed
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of property in a transaction being accounted for under the installment method
under Section 453 of the Code.
(xxv) No excess loss account (as defined in Section 1.1502-19
of the Treasury Regulations) exists with respect to the Company or any member of
any affiliated, combined or unitary group of which it is or was a member.
(xxvi) There are no liens for Taxes upon any property or assets
of the Company Group except for liens for Taxes not yet due.
(xxvii) No member of the Company Group was ever a member of any
affiliated, combined or unitary group other than an affiliated, combined or
unitary group of which the Company is or was a member.
12.4 Tax Indemnification
-------------------
(a) From and after the Closing Date, Seller shall pay, or cause to be
paid, and shall indemnify and hold harmless Buyer and the Company Group and any
director, officer, employee, advisor, parent, subsidiary or Affiliate of Buyer
or the Company Group, and any successor thereof, from any liability for or
arising out of any Taxes (x) of Seller and any current or former member of
Seller's group of corporations filing on a combined or consolidated basis, other
than the Company Group, in respect of any taxable period or (y) attributable to
the income, business, property or operations of the Company Group or for which
the Company Group may be liable on any basis (including, but not limited to,
liability as a transferee or on a joint and several basis) (A) in respect of the
Pre-Closing Tax Period, to the extent such Taxes are not reserved on the Closing
Date Balance Sheet, or (B) resulting from the Company Group's ceasing to be
affiliated with the affiliated group of corporations of which Seller is a
member. For purposes of computing the amount reserved with respect to Taxes on
the
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Closing Date Balance Sheet, (a) all amounts reserved with respect to foreign
taxes shall be converted into United States dollars at the exchange rates used
in preparing the Closing Date Balance Sheet and (b) all amounts reserved with
respect to any Taxes shall be considered available for the payment only of any
Taxes.
(b) From and after the Closing Date, Buyer shall pay, or cause to be
paid, and shall indemnify and hold Seller and any director, officer, employee,
advisor, parent, subsidiary or Affiliate of Seller, and any successor thereto,
harmless from any liability for or arising out of any Taxes of the Company Group
in respect of taxable periods of the Company Group ending after the Closing Date
(except to the extent attributable to the Pre-Closing Tax Period).
(c) In the case of any taxable period that includes but does not end
on the Closing Date:
(i) the periodic Taxes of the Company Group that are not based
on income or receipts (e.g., property taxes) attributable to the Pre-Closing Tax
Period shall be equal to the amount of such Taxes attributable to the entire
taxable period multiplied by a fraction, the numerator of which is the number of
days during that period that are in a Pre-Closing Tax Period and the denominator
of which is the number of days in such taxable period, provided, however, that
if the amount of periodic Taxes imposed for such taxable period reflects
different rates of tax imposed for different periods within such taxable period,
the formula described in the preceding clause shall be applied separately with
respect to each such period within the taxable period; and
(ii) the Taxes of the Company Group (other than Taxes described
in clause (i)) attributable to the Pre-Closing Tax Period shall be
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computed as if such taxable period ended as of the close of business on the
Closing Date.
(d) In addition to any other indemnity provided in this Section 12.4,
Seller shall indemnify Buyer for any increase in Taxes of or relating to the
Company Group (net of any tax benefit to the Buyer) for any period beginning on
or after the Closing Date, which is attributable to any adjustment to, or
amendment of, the Taxes or Tax Returns (including any Taxes or Tax Returns of
any affiliated, combined or unitary group of which it is or was a member) of or
relating to the Company Group for any Pre-Closing Period.
(e) Notwithstanding anything in this Article XII to the contrary, no
tax indemnification shall be required of Seller unless the amount of tax
liability claimed to be due pursuant to this Article XII exceeds the amount of
any related tax benefit (net of any tax detriment) to Buyer.
12.5 Tax Returns: Miscellaneous.
--------------------------
(a) Seller shall prepare, or cause to be prepared, in a manner
consistent with prior returns, and shall file, or cause to be filed, any Tax
Returns of or relating to the Company Group (including amendments thereto) for
all taxable periods that end, with respect to the Company Group, on or before
the Closing Date, and which arc due on or before the Closing Date, Seller shall
prepare or cause to be prepared, in a manner consistent, with respect to the
Company Group, with prior Tax Returns and file or cause to be filed, any
consolidated or combined Tax Return of Seller and its affiliates which includes
the Company Group for any taxable period ending, with respect to the Company
Group, on or before the Closing Date. Buyer shall be afforded the opportunity
to review such returns (and any corresponding amended Tax Returns) within a
reasonable time prior to the due date for the filing thereof, and shall be
provided by Seller with copies of such Tax Returns (and any corresponding
amended Tax
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Returns) in the form actually filed. Except as otherwise provided in this
subparagraph, Buyer shall be responsible for filing all Tax Returns required to
be filed after the Closing Date by or on behalf of the Company Group. All Tax
Returns for taxable periods of the Company Group which include the Closing Date
shall be filed on a basis consistent with the manner in which Seller or the
Company Group filed Tax Returns of the Company Group in the past unless a
contrary treatment is required by law.
(b) With respect to any Tax Return required to be filed by Buyer for
a taxable period of the Company Group which includes the Closing Date, Buyer
shall provide Seller and its authorized representatives with copies of such
completed Tax Return and a statement certifying the amount of Tax shown on such
Tax Return that is payable by Seller pursuant hereunder (thc "Statement") at
least thirty (30) business days prior to the due date (or extended due date, if
an extension has been obtained) for the filing of such Tax Return, and Seller
and its authorized representatives shall have the right to review such Tax
Return and Statement prior to the filing of such Tax Return. Buyer and Seller
agree to consult and resolve in good faith any issues arising as a result of the
review of such Tax Return and Statement by Seller or its authorized
representatives and to mutually consent to the filing of such Tax Return, The
amount owed by Seller with respect to a Tax Return shall be paid by Seller at
least three (3) business days prior to the due date for the filing of such Tax
Return.
(c) Seller agrees to cooperate with Buyer prior to the Closing and
thereafter and provide, to the extent in its possession, or if not in its
possession, make reasonable best efforts to obtain and provide, prior to the
Closing Date, access to complete copies of all federal, state, county, local and
foreign Tax Returns, reports and estimates for all periods prior to the Closing
Date for or relating to the Company Group as well as any other Tax Returns
(including compete copies of combined or consolidated returns) on which Taxes
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were reportable for which the Company Group might be liable on any basis,
including, but not limited to, liability as a transferee or liability on a joint
and several basis under the consolidated return rules or comparable state and
local rules. Seller also agrees to furnish to Buyer, to the extent in its
possession, or if not in its possession, make reasonable best efforts to obtain
and furnish, prior to the Closing Date, any material communication related to
the Company Group to or from any governmental agency (including, but not limited
to, audit reports), whether or not Seller was a party to such communication,
which pertains to any of the Taxes or Tax Returns of or relating to the Company
Group for taxable years commencing after January 1, 1990.
(d) In addition to the obligations of the parties pursuant to Sections
12.5(a), (b) and (c) hereof, after the Closing Date, Buyer and Seller shall each
make available to the other and to any taxing authority, as reasonably
requested, all information, records or documents (other than Tax Returns, the
disclosure of which is subject to Sections 12.5(a), (b) (c)) relating to
federal, state, county, local or foreign tax matters of or relating to the
Company Group for all taxable periods prior to or including the Closing Date and
shall preserve all such information, records and documents until the expiration
of any applicable Tax statute of limitations or extensions thereof. If any such
records or documents are, at the date hereof, not within the possession of
Seller or the Company Group, Seller agrees to use its reasonable best efforts to
obtain such records and documents and, if obtained, furnish them to Buyer prior
to the Closing Date. Buyer and Seller will keep confidential the contents of
the information, records and documents made available under this Section 12.5(d)
and not use or disclose them or any information contained therein, except that:
(a) Seller may disclose those portions of such information, records or documents
which disclose information pertaining to Seller; (b) Buyer may disclose those
portions of such information, records or documents which disclose information
pertaining to Buyer; and (c) both Seller and Buyer may disclose any of such
information, records or
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documents where such disclosure is made (1) to a taxing authority, (2) in the
course of any judicial proceeding for the determination of liability for Taxes,
(3) otherwise as required by law, or (4) of any such information, records or
documents which has or have become generally available to the public through no
fault of the party hereunder seeking to make disclosure.
(e) Buyer shall promptly notify Seller in writing upon receipt by
Buyer of notice of (i) any pending or threatened Tax audits or assessments of or
relating to the Company Group, or (ii) any pending or threatened Tax audits or
assessments of any Affiliate of Seller which may affect the liability of the
Company Group for Taxes, in each case for taxable periods ending on or prior to
the Closing Date. Seller shall have the sole right to represent the Company
Group's interests in any Tax audit or administrative or court proceeding related
to taxable periods ending on or before the Closing Date, and to employ counsel
of its choice at its expense. Buyer agrees that it will cooperate, and cause
the Company Group to cooperate fully with Seller and its counsel in the defense
against any claim in any said proceeding. Buyer shall have the sole right to
represent the Company Group's interests in any Tax audit or administrative or
court proceeding related to taxable periods ending after the Closing Date, and
to employ counsel of its choice at its expense. Seller agrees that it will
cooperate fully with Buyer and its counsel in the defense against any claim in
any said proceeding. Notwithstanding the foregoing, neither Seller nor the
Company Group shall enter into any closing agreement (as defined in Section 7121
of the Code, or any comparable provision of state, county, local or foreign law)
which is binding on Buyer or the Company Group for any taxable period ending
after the Closing Date, without the prior written consent of Buyer, nor shall
Buyer or the Company Group enter into any closing agreement (as so defined)
which is binding on Seller or the Company Group for any taxable period ending on
or before the Closing Date, without the prior written consent of Seller.
Further, notwithstanding the foregoing, neither Seller nor the Company Group
shall agree
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to any settlement concerning Taxes for any taxable period ending on or before
the Closing Date, which settlement may result in an increase in Taxes of the
Company Group for any taxable period ending after the Closing Date, without the
prior written consent of Buyer, nor shall Buyer or the Company Group agree to
any settlement concerning Taxes for any taxable period ending after the Closing
Date which may result in an increase in Taxes of Seller or the Company Group for
any taxable period ending prior to or including the Closing Date, without the
prior written consent of Seller.
(f) After the date hereof, Seller and Buyer shall consult in good
faith during the course of any audits or administrative or judicial proceedings
pertaining to Taxes of or relating to the Company Group, or any other entities
for the Taxes of which the Company Group may be liable on any basis, including
liability as a transferee or on a joint and several basis under consolidated
return rules or comparable state and local rules, for periods ending prior to or
including the Closing Date. Such consultations shall include, but not be
limited to, consultations concerning (1) preparation of a response to a 30-day
letter for a United States federal income tax audit together with any appellate
conferences related thereto, (2) any ongoing or future audits related to any
period ending prior to or including the Closing Date and (3) court proceedings
with respect to any of the above. Buyer or Seller, as the case may be, shall be
made aware of any meetings and conferences related thereto and have the right
(to the extent permissible by law) to have a representative present at those
conferences. Seller shall, within a reasonable time, notify Buyer of any
adjustments to, or amendments of, Taxes or Tax Returns of or relating to the
Company Group for periods ending on or prior to the Closing Date.
(g) In the event that the Company Group, or any successor thereto,
should generate any tax loss or tax credit in a period ending after the Closing
Date that may be carried back to a period ending on, prior to or including
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the Closing Date, Seller agrees to cooperate with the Buyer's filing such claims
for refund and other returns as may be appropriate and to pay to the Company
Group, as the case may be, the proceeds of any such claims or refunds (including
interest thereon) resulting from the utilization of such attributes, whether
utilized by Seller or any other member of an affiliated group of which they were
a member and any predecessors thereto.
(h) The parties hereto acknowledge and agree that any tax loss or tax
credit of the Company Group, or of any predecessor thereto, the economic benefit
of which is realized in a period ending after the Closing Date, shall be for the
account of Buyer, and Buyer shall not be obligated to pay any additional
consideration to Seller therefor. Without limiting the generality of the
foregoing, this Section 12.5(h) applies to any tax loss or credit generated in
any period ending on, prior to or including the Closing Date, which may be
carried forward and utilized on returns for any period ending after the Closing
Date of Buyer or the Company Group or any successors thereto.
(i) Buyer agrees to assign and promptly remit (and to cause the
Company Group to assign and promptly remit) to Seller all refunds (including
interest thereon) received by Buyer or the Company Group or any affiliate of
Buyer or the Company Group (less Taxes modified to include applicable foreign
income taxes at the maximum applicable foreign rate in effect for such taxable
year in respect of such refund and interest to the extent such refund and
interest are includable for applicable income tax purposes and not subject to an
offsetting deduction by virtue of their payment to Seller) of any Taxes paid for
the Pre-Closing Tax Period, except to the extent attributable to the carryback
of tax losses or credits generated in a period which is not a Pre-Closing Tax
Period. Seller may request Buyer to file, or the Company Group to file, at the
reasonable expense of Seller, a claim for refund of any Tax paid for the Pre-
Closing Tax Period.
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(j) There are no agreements or understandings whether labeled "tax-
sharing" agreements or otherwise, whereby the Company Group or any successor
thereto, may be required after the date hereof to make payments of or in respect
of Taxes to Seller or any Affiliate of Seller, or any successor thereto.
(k) On and after the Closing Date, Seller will, and will cause its
affiliates to and will use its reasonable best efforts to cause all former
members of Seller's affiliated group to take such actions reasonably requested
by Buyer or the Company Group to enable the Company Group to enforce and obtain
the maximum protection provided by the obligations of Seller.
(l) At the request of Buyer, Seller shall provide Buyer, prior to the
Closing Date, with a written statement signed by an officer of Seller authorized
to sign Seller's federal income Tax Return, in which Seller elects, on behalf of
the Company Group, to have the Company Group excluded from Seller's affiliated
group, Seller shall file a copy of such statement with its federal income tax
return for its tax period which includes the Closing Date.
ARTICLE XIII - ADDITIONAL COVENANTS
-----------------------------------
13.1 Hi-Rel Warranty
---------------
(a) The "Outstanding Hi-Rel Products" shall mean all Hi-Rel Products
manufactured or sold by the Company on or before the Closing Date. "Hi-Rel
Products" shall mean those product families set forth on Schedule 13.1(a)
hereto, which is a complete list of such products as of the Closing Date.
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(b) Seller agrees that in preparing the Preliminary Balance Sheet a
separate product warranty reserve shall be specified thereon with respect to the
Outstanding Hi-Rel Products (the "Hi-Rel Reserve").
(c) Seller agrees that it shall reimburse Buyer and the Company for,
and indemnify and hold them harmless from and against, all warranty costs
incurred by the Company (including, without limitation, costs of any repairs
made on defective product, returns accepted of defective products or allowances
reasonably granted for defective product; for these purposes, costs incurred by
the Company shall be calculated on a time and materials basis and shall not
include any markup for profit, overhead or general and administrative expense)
from and after the Closing Date until the expiration of the applicable warranty
period in respect of the Outstanding Hi-Rel Products (collectively, the
"Warranty Costs") to the extent such Warranty Costs exceed the Hi-Rel Reserve
(such excess being referred to as the "Excess Warranty Costs").
(d) Buyer shall cause the Company to prepare, within 30 days after the
end of each calendar quarter, a statement setting forth the Warranty Costs
incurred in such quarter, and either the remaining balance in the Hi-Rel Reserve
or the amount constituting Excess Warranty Costs. Seller shall pay to Buyer
the amount of such Excess Warranty Costs within 30 days after receiving each
such statement, which shall be signed by an officer of the Company.
(e) Seller represents and warrants to Buyer that, with respect to the
Hi-Rel Products, the Company has recently completed a redesign of certain
aspects of such Hi-Rel Products and to the best of Seller's knowledge, such
redesign has successfully corrected existing design issues with the Hi-Rel
Products that resulted in an additional warranty reserve being established on
the Interim Balance Sheet with respect to the Hi-Rel Products. Seller makes no
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representation or warranty as to the effectiveness of any changes to the design
or manufacture of the Hi-Rel products which occur after the Closing Date.
13.2 Audited Financial Statements
----------------------------
(a) Seller shall deliver to Buyer, no later than 45 days after the
Closing Date, a balance sheet of the Company as at December 29, 1996, together
with a statement of operations and a cashflow statement of the Company for year
ended December 29, 1996, along with a balance sheet of the Company as at
September 28, 1997, together with a statement of operations and a cashflow
statement of the Company for the nine month period ended September 28, 1997.
The preceding financial statements will each be audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co. LLP ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇") and in a form suitable for filing by Buyer as
exhibits to its Form 8-K as required in accordance with the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (collectively,
the "Audited Financial Statements"). Seller and Buyer shall share equally the
fees charged by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for performing its audit of the Audited
Financial Statements. The earnings before interest and taxes ("EBIT") of the
Company shown on the 1996 statement of operations and the September 1997 Interim
Statement of Operations were determined in accordance with GAAP consistently
applied and in a manner consistent with the preparation of the Financial
Statements as defined in Section 3.7 and were not less than $12,362,000 (the
"1996 EBIT") and $10,234,000 (the "3Q 1997 EBIT"), respectively.
(b) The parties acknowledge and agree that the EBIT figures
determined through the Audited Financial Statements will differ from those
listed in Section 13(a). A "P/L Reconciliation Schedule for the period December
30, 1996- September 28, 1997" is attached as Schedule 13.2(b); and Seller will
deliver a similar reconciliation schedule for the 1996 fiscal year prior to
Closing. The EBIT determinations listed above were based on the EBIT calculation
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prepared by the Company, and then revised to reflect the Hi-Rel warranty
expense, FIFO adjustment, corporate G&A allocation, and all miscellaneous income
(expense) items below operating profit. Also, the EBIT figures determined
through the Audited Financial Statements will be prepared on a "stand alone"
basis for the Company.
(c) The parties agree that Buyer will have no claim or recourse
against Seller or its Affiliates relating to the Audited Financial Statements
as compared to the 1996 EBIT and the 3Q 1997 EBIT to the extent any shortfall in
the EBIT determinations included in the Audited Financial Statements were
caused by liabilities for which Seller is maintaining responsibility hereunder,
including without limitation Hi-Rel warranty expense, environmental liabilities
and NOVA repair costs.
13.3 Tax Election
------------
At any time on or after the Closing Date, Buyer and its Affiliates
agree not to file, cause to be filed, or permit to be filed with respect to the
acquisition of the Company by Buyer any elections pursuant to Section 338 of the
Code.
13.4 NOVA Product Line
------------------
In the event Seller requests assistance from Buyer or Company to
fulfill its obligations relating to product repair of the Nova Product Line
pursuant to Section 10.2, and Company has the ability to perform such repair
work at the time of the request, Buyer will perform and work on a time and
materials basis plus a reasonable markup to be determined at the time repairs
are requested.
ARTICLE XIV - GENERAL PROVISIONS
--------------------------------
14.1 Expenses
--------
Whether or not the Contemplated Transactions shall be consummated,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Seller will pay all amounts payable
to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company in connection with this Agreement and the
Contemplated Transactions. Buyer will pay one-half and Seller will pay one-half
of the HSR Act filing fee. In the event litigation is maintained by any party
to this Agreement against any other party to enforce or interpret any of the
terms of this Agreement, or to seek any remedy for any breach of this Agreement,
the party prevailing in such litigation shall be entitled to recover from the
non-prevailing party reasonable attorney's fees and costs of suit.
14.2 Public Announcements
--------------------
From the date of this Agreement until the Closing Date, neither Seller
nor Buyer shall make, or permit its Affiliates to make, any public statement
with respect to the transactions contemplated hereby without the prior consent
of the other; provided that such consent will not be unreasonably withheld in
any case and that nothing herein shall prevent any party from making any such
disclosures or statements as may, in the opinion of counsel for the disclosing
Person be required by law, regulation or rule of any governmental entity or of
any stock exchange; provided further, that any party required by law, regulation
or rule of any governmental entity or of any stock exchange to make any such
disclosure or statement shall make a good faith effort to inform the other party
of such requirement as soon as is practicable (whether such time is before or
after such disclosure or statement).
14.3 Confidentiality
---------------
From the date of this Agreement until the Closing Date, Buyer and
Seller will maintain in confidence, and will cause their Affiliates to maintain
in confidence and not use to the detriment of another party any oral or written
information obtained from another party in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or such information becomes publicly available through no fault of such
party, (b) the use of such information is necessary or appropriate in making any
filing or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by legal proceedings. If the Contemplated Transactions are not
consummated, each party will return or destroy such written information as
requested by the other party.
14.4 Notices
-------
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent via facsimile
(with written confirmation of receipt), or (c) received by the addressee, if
sent by a nationally recognized overnight delivery in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the other
parties):
Seller: EG&G Holdings, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Company: Rotron Incorporated
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Buyer: Ametek, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
14.5 Jurisdiction; Service of Process
--------------------------------
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the United States District Court for the Northern
District of New York, unless said federal court does not have and is not able to
acquire jurisdiction, in which case jurisdiction will reside with the courts of
the State of New York, County of New York. Each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein. The
parties also waive and release their rights to seek a jury trial with respect to
disputes arising out of this Agreement or the transactions contemplated hereby.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world. Each of the parties agrees that a
judgment in any such proceeding may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law.
14.6 Further Assurances
------------------
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
14.7 Waiver
------
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
14.8 Entire Agreement and Modification
---------------------------------
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. No
amendment, modification, or addition hereto shall have effect or be binding
unless in writing and executed by all of the parties, or their duly authorized
representative.
14.9 Assignment, Successors, and No Third-Party Rights
-------------------------------------------------
Neither party may assign any of its rights under this Agreement
without the prior consent of the other parties which will not be unreasonably
withheld. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement and all of its provisions
and conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
14.10 Severability
------------
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
14.11 Article and Section Headings, Construction
------------------------------------------
The headings of Articles and Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation.
All references to "Article" or "Section" refer to the corresponding Article or
Section of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Information or
documents disclosed pursuant to any Schedule attached hereto will be deemed to
have been disclosed pursuant to any other applicable Schedule, without the need
for cross-referencing.
14.12 Time of Essence
---------------
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
14.13 Knowledge
---------
Any reference in this Agreement to the "knowledge" of the Seller, to
what is "known" to the Seller, to what Seller is "aware" of or any similar
reference shall be deemed to include, in addition to the knowledge of Seller,
the knowledge of the officers. directors and plant or general managers of the
Company.
14.14 Governing Law
-------------
This Agreement will be governed by the laws of the State of New York
without regard to conflicts of laws principles.
14.15 Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
14.16 Broker Indemnity
----------------
In the event of a claim by any broker or finder that such broker or
finder represented or was retained by Seller, on the one hand, or Buyer, on the
other hand, in connection herewith, Seller or Buyer, as the case may be agrees
to indemnify and hold the other harmless from and against any and all loss,
liability, cost, damage, claim and expense, including, without limitation,
attorneys' fees and disbursements, which may be incurred in connection with such
claim.
14.17 Cooperation in Litigation
-------------------------
In the event that, after the Closing Date, Seller or Buyer shall
reasonably require the participation of officers and employees by each other to
aid in the defense or prosecution of litigation or claims, and so long as there
exists no unwaived conflict of interest between the parties, each of Seller and
Buyer shall make such officers and employees reasonably available to participate
in such defense or prosecution provided that, except as required pursuant to the
provisions of Article X, the party requiring the participation of such officers
or employees shall pay all reasonable out-of-pocket costs, charges and expenses
arising from such participation.
14.18 Transfer Taxes
--------------
Buyer and Seller shall each pay one-half of any transfer, purchase,
sales, use or similar tax under the laws of any nation, state or any country,
city, or political subdivision thereof arising out of the Contemplated
Transactions and any filing or recording fees payable in connection with this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement by their duly authorized officers as of the date first written above.
Ametek, Inc. EG&G Holdings, Inc
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------- -------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------- ---------------------
Title: Senior Vice President Title: Vice President
--------------------- --------------
CORPORATE GUARANTY
------------------
In consideration of Buyer entering into the foregoing Stock Purchase
Agreement (the "Agreement") regarding Rotron Incorporated (the "Company"), the
undersigned, EG&G, Inc. (the "Guarantor"), being the ultimate corporate parent
of EG&G Holdings, Inc. ("Seller") hereby guarantees all representations,
warranties, covenants and agreements of Seller as set forth therein. In
addition, the Guarantor hereby agrees as follows:
1. This guaranty constitutes a guaranty of payment and not of
collection. Guarantor hereby waives notice of acceptance of this guaranty and
notice of any liability to which it may apply, and waives presentment, demand
for payment, protest, notice of dishonor or non-payment of any such liability,
notice of any suit or the taking of other action by Buyer against, and any other
notice to, Seller.
2. Buyer may at any time and from time to time without notice to or
consent of Guarantor and without impairing or releasing the absolute and
unconditional obligations of Guarantor under this guaranty: (i) agree with
Seller to any change in the terms of any liability of Seller pursuant to the
terms of the Agreement, (ii) take or fail to take any action of any kind in
respect of any security for any liability of Seller, (iii) exercise or refrain
from exercising any rights against Seller or others, or (iv) compromise or
subordinate any liability of Seller including any security therefor. In
addition, the liability of Guarantor hereunder shall be absolute and
unconditional irrespective of: (A) any lack of validity or enforceability of
any liability guaranteed hereby or any agreement or instrument relating to any
such guaranteed liability, (B) any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of the terms of any such guaranteed
liability or Buyer's rights hereunder or (C) any other circumstances,
not referred to earlier in this guaranty, which might otherwise constitute a
defense available to, or a discharge of, Guarantor in respect of this guaranty.
3. Until all liabilities guaranteed hereunder shall have been
irrevocably paid in full, the Guarantor shall have no right of subrogation.
This guaranty shall continue in full force and effect until all liabilities
guaranteed hereunder have been irrevocably satisfied in full. Guarantor agrees
that this guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time payment or performance (or any part thereof) of any
liability guaranteed hereunder, or interest thereon, is rescinded or must
otherwise be restored or returned by Buyer due to any bankruptcy, insolvency,
reorganization, liquidation or receivership laws or otherwise
EG&G, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------
Title: Vice President
--------------
