Exhibit 10.1
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STOCK PURCHASE AND SALE AGREEMENT
dated as of March 16, 1998
among
COMSAT CORPORATION,
a District of Columbia corporation,
TBG INDUSTRIES, INC.
a Delaware corporation,
and
PRODELIN HOLDING CORPORATION,
a Delaware corporation,
as Buyer
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS..................................................................................1
1.1 DEFINITIONS..................................................................................1
ARTICLE II PURCHASE AND SALE OF SHARES; CLOSING........................................................11
2.1 CERTAIN ASSETS AND LIABILITIES..............................................................11
2.2 PURCHASE AND SALE...........................................................................12
2.3 CLOSING.....................................................................................12
2.4 PURCHASE PRICE..............................................................................12
2.4.1 JUNE STATEMENTS..................................................................12
2.4.2 PRE-CLOSING STATEMENT............................................................13
2.5 CLOSING DELIVERIES..........................................................................14
2.5.1 PURCHASE PRICE...................................................................14
2.5.2 SHARE CERTIFICATES...............................................................14
2.5.3 CORPORATE RECORDS................................................................14
2.5.4 ANCILLARY AGREEMENTS.............................................................14
2.5.5 CLOSING DOCUMENTS TO BE DELIVERED BY SELLER......................................15
2.5.6 CLOSING DOCUMENTS TO BE DELIVERED BY BUYER.......................................15
2.6 PURCHASE PRICE ADJUSTMENT...................................................................15
2.6.1 CLOSING STATEMENT................................................................15
2.6.2 OBJECTIONS; RESOLUTIONS..........................................................15
2.6.3 WORKPAPERS.......................................................................16
2.6.4 FINAL ADJUSTMENTS................................................................16
2.6.5 FEES AND EXPENSES................................................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER....................................................19
3.1 CORPORATE STATUS AND AUTHORITY OF SELLER....................................................19
3.2 NO CONFLICTS, ETC...........................................................................20
3.2.1 NO CONFLICTS.....................................................................20
3.2.2 CONSENTS AND APPROVALS...........................................................20
3.3 CORPORATE STATUS AND AUTHORITY OF CRSI AND THE SUBSIDIARIES.................................20
3.4 OWNERSHIP OF CRSI AND THE SUBSIDIARIES......................................................21
3.5 TRANSFER OF SHARES..........................................................................22
3.6 FINANCIAL STATEMENTS, ETC...................................................................22
3.6.1 SCHEDULES........................................................................22
3.6.2 ACCURACY.........................................................................23
3.6.3 NO UNDISCLOSED LIABILITIES.......................................................23
3.6.4 ABSENCE OF CHANGES...............................................................23
3.7 PROPERTIES; LEASES; TANGIBLE ASSETS.........................................................25
3.7.1 TITLE............................................................................25
3.7.2 LEASES...........................................................................26
3.7.3 DOCUMENTS........................................................................26
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3.8 ACCOUNTS RECEIVABLE.........................................................................26
3.9 INVENTORY...................................................................................27
3.10 INTELLECTUAL PROPERTY.......................................................................27
3.10.1 PATENTS AND KNOW-HOW.............................................................27
3.10.2 TRADEMARKS AND COPYRIGHTS........................................................28
3.10.3 COMPUTER SOFTWARE................................................................29
3.11 MATERIAL CONTRACTS..........................................................................30
3.11.1 IDENTIFICATION...................................................................30
3.11.2 FULL FORCE AND EFFECT............................................................31
3.12 LITIGATION AND INVESTIGATION................................................................31
3.13 TAXES.......................................................................................32
3.14 EMPLOYEES; COMPENSATION; LABOR..............................................................34
3.14.1 EMPLOYEES AND COMPENSATION.......................................................34
3.14.2 CERTAIN LABOR MATTERS............................................................34
3.14.3 EMPLOYEE BENEFIT PLANS; ERISA....................................................35
3.15 ENVIRONMENTAL MATTERS.......................................................................36
3.15.1 ENVIRONMENTAL PERMITS............................................................36
3.15.2 NO VIOLATION.....................................................................36
3.15.3 NO NOTICE........................................................................36
3.15.4 NO BASIS FOR LIABILITY...........................................................36
3.15.5 UNDERGROUND IMPROVEMENTS.........................................................37
3.15.6 RECORDS..........................................................................37
3.15.7 LIENS............................................................................37
3.16 GOVERNMENT CONTRACTS........................................................................37
3.16.1 COMPLIANCE.......................................................................37
3.16.2 INVESTIGATIONS...................................................................38
3.16.3 ABSENCE OF CLAIMS................................................................39
3.16.4 ELIGIBILITY......................................................................39
3.17 COMPLIANCE WITH LAWS........................................................................39
3.17.1 GENERAL..........................................................................39
3.17.2 EXPORT CONTROL...................................................................39
3.17.3 SECURITY CLEARANCES..............................................................40
3.18 INSURANCE...................................................................................40
3.19 BROKERS.....................................................................................40
3.20 DISCLOSURE..................................................................................40
3.21 RELATED PARTY TRANSACTIONS..................................................................41
3.22 BANK ACCOUNTS...............................................................................41
3.23 CONFLICTS OF INTEREST.......................................................................41
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TBG AND BUYER......................................41
4.1 CORPORATE STATUS AND AUTHORITY OF TBG AND BUYER.............................................41
4.2 NO CONFLICTS, ETC...........................................................................42
4.2.1 NO CONFLICTS.....................................................................42
4.2.2 CONSENTS AND APPROVALS...........................................................42
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4.3 SUFFICIENT FUNDS............................................................................43
4.4 BROKERS.....................................................................................43
4.5 PURCHASE FOR INVESTMENT.....................................................................43
ARTICLE V COVENANTS...................................................................................43
5.1 CONDUCT OF THE BUSINESS.....................................................................43
5.1.1 ORDINARY COURSE..................................................................43
5.1.2 CASH MANAGEMENT..................................................................45
5.2 ACCESS TO INFORMATION.......................................................................46
5.2.1 ACCESS...........................................................................46
5.2.2 CONFIDENTIALITY..................................................................46
5.2.3 NOTICE TO SELLER.................................................................46
5.3 FILINGS AND AUTHORIZATIONS..................................................................47
5.4 TAX MATTERS.................................................................................47
5.4.1 TAX RETURNS......................................................................47
5.4.2 INDEMNITY........................................................................48
5.4.3 TAX LIABILITY....................................................................49
5.4.4 TAX CONTESTS.....................................................................49
5.4.5 COOPERATION......................................................................51
5.5 PURCHASE SUPPORT AGREEMENT..................................................................51
5.6 NAME AND MARKS..............................................................................52
5.6.1 BUYER'S OBLIGATIONS..............................................................52
5.6.2 SELLER'S OBLIGATIONS.............................................................52
5.7 NOTICE TO BUYER.............................................................................52
5.8 FURTHER ASSURANCES..........................................................................52
5.9 PUBLIC ANNOUNCEMENTS........................................................................52
5.10 COMPANY RECORDS.............................................................................53
5.10.1 RETENTION........................................................................53
5.10.2 COOPERATION WITH RESPECT TO EXAMINATIONS AND
CONTROVERSIES....................................................................53
5.10.3 REMEDY FOR FAILURE TO COMPLY.....................................................53
5.11 ACCESS TO REAL PROPERTIES...................................................................53
5.12 COOPERATION OF BUYER........................................................................54
5.13 DISCLOSURE SCHEDULES........................................................................54
5.13.1 DELIVERY. .......................................................................54
5.13.2 INTERPRETATION...................................................................54
5.14 EMPLOYEE BENEFIT MATTERS....................................................................54
5.14.1 EMPLOYEE BENEFIT DEFINITIONS.....................................................54
5.14.2 WELFARE PLANS FOLLOWING THE CLOSING..............................................55
5.14.3 RETENTION AGREEMENTS.............................................................56
5.14.4 SAVINGS PROGRAM..................................................................56
5.14.5 VACATION AND HOLIDAYS............................................................57
5.14.6 WARN ACT COMPLIANCE..............................................................57
5.14.7 EXCLUDED EMPLOYEES...............................................................57
5.15 ADMINISTRATION OF ACCOUNTS..................................................................57
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5.15.1 IN TRUST FOR BUYER...............................................................57
5.15.2 IN TRUST FOR SELLER..............................................................57
5.16 NEGOTIATIONS WITH OTHERS....................................................................58
5.17 EXCHANGE PROCEEDS...........................................................................58
5.18 NONCOMPETITION AND NONSOLICITATION..........................................................58
5.18.1 NONCOMPETITION...................................................................58
5.18.2 NONSOLICITATION..................................................................59
5.18.3 VALIDITY.........................................................................60
5.19 EXCLUDED CONTRACTS..........................................................................60
5.20 FINANCIAL REPORTS...........................................................................60
5.21 GREENBANK SURETY BOND.......................................................................60
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER................................................61
6.1 CONDITIONS..................................................................................61
6.1.1 REPRESENTATIONS AND WARRANTIES ACCURATE..........................................61
6.1.2 PERFORMANCE BY SELLER............................................................61
6.1.3 GOVERNMENT AUTHORIZATIONS........................................................61
6.1.4 OPINION OF COUNSEL...............................................................62
6.1.5 SURVEYS..........................................................................62
6.1.6 ENVIRONMENTAL....................................................................62
6.1.7 ABSENCE OF ADVERSE CHANGE........................................................62
6.1.8 SECURITY CLEARANCE...............................................................63
6.1.9 COMPLIANCE WITH ISRA.............................................................63
6.1.10 GREENBANK NOVATION...............................................................63
6.1.11 EXPORT LICENSES..................................................................63
6.1.12 ANCILLARY AGREEMENTS.............................................................64
6.2 WAIVER......................................................................................64
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...............................................64
7.1 CONDITIONS..................................................................................64
7.1.1 REPRESENTATIONS AND WARRANTIES ACCURATE..........................................64
7.1.2 PERFORMANCE BY BUYER.............................................................64
7.1.3 GOVERNMENT AUTHORIZATIONS........................................................64
7.1.4 OPINION OF COUNSEL...............................................................64
7.1.5 CHANGE OF NAME...................................................................65
7.2 WAIVER......................................................................................65
ARTICLE VIII INDEMNIFICATION.............................................................................65
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................................................65
8.1.1 OF THE SELLER....................................................................65
8.1.2 OF THE BUYER.....................................................................65
8.2 GENERAL INDEMNITY...........................................................................65
8.2.1 INDEMNIFICATION BY SELLER........................................................65
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8.2.2 INDEMNIFICATION BY BUYER.........................................................66
8.2.3 LIMITATIONS......................................................................67
8.2.4 IVORY COAST......................................................................68
8.3 DEFENSE OF THIRD PARTY CLAIMS...............................................................69
8.3.1 NOTICE...........................................................................69
8.3.2 DEFENSE OF CLAIMS................................................................69
8.3.3 SETTLEMENT.......................................................................70
8.3.4 COOPERATION......................................................................70
8.4 SPECIAL INDEMNITY...........................................................................70
8.5 NO CONTRIBUTION FROM COMPANY................................................................70
ARTICLE IX TERMINATION.................................................................................71
9.1 TERMINATION EVENTS..........................................................................71
9.2 EFFECT OF TERMINATION.......................................................................71
ARTICLE X MISCELLANEOUS...............................................................................72
10.1 REMEDIES; EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES;
RELATIONSHIP BETWEEN THE PARTIES............................................................72
10.1.1 REMEDIES............................................................................72
10.1.2 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES; RELATIONSHIP
BETWEEN THE PARTIES..................................................................72
10.2 EXPENSES....................................................................................73
10.3 AMENDMENT...................................................................................73
10.4 ENTIRE AGREEMENT............................................................................73
10.5 NOTICES.....................................................................................73
10.6 SEVERABILITY................................................................................75
10.7 WAIVER......................................................................................75
10.8 BINDING EFFECT; ASSIGNMENT..................................................................75
10.9 NO THIRD PARTY BENEFICIARIES................................................................75
10.10 COUNTERPARTS................................................................................76
10.11 GOVERNING LAW...............................................................................76
10.12 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...............................................76
10.12.1 CONSENT TO JURISDICTION..........................................................76
10.12.2 WAIVER OF JURY TRIAL.............................................................77
10.13 CONSTRUCTION................................................................................77
10.13.1 WORDS............................................................................77
10.13.2 CROSS REFERENCES.................................................................77
10.13.3 NO PRESUMPTION...................................................................77
10.13.4 EXHIBITS AND SCHEDULES...........................................................77
10.14 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND
WARRANTIES..................................................................................77
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EXHIBITS
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Exhibit A-1 Form of Asset Distribution and Assumption Agreement
Exhibit A-2 Form of Assignment and Assumption Agreement
Exhibit B Form of Promissory Note
Exhibit C Form of Technology License Agreement
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Sublease Agreement
Exhibit F Form of Guarantee Assumption Agreement
Exhibit G Form of Post Closing Note
Exhibit H Form of Greenbank Novation Agreement
Exhibit I Form of Greenbank Subcontract
DISCLOSURE SCHEDULES
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I Knowledge of Seller
II Distributed Assets and Liabilities
III Excluded Contracts
2.4.1 June Statements
2.6.1 Intercompany Loans and Advances Principles and
Methods
3.2.1 Conflicts as to Material Contracts
3.2.2 Consents and Approvals
3.3 Subsidiaries of CRSI; Stockholders and Capital Stock;
Jurisdictions Where CRSI and the Subsidiaries are
Qualified
3.4 Existing Options, Warrants, Calls, Rights, Arrangements,
etc. Unissued Capital Stock of CRSI and the Subsidiaries
3.6.1 Financial Statements
3.6.4 Absence of Changes
3.7.1 Real Property
3.7.2 Leases of Real Property and Certain Equipment
3.7.3(b) Pending Condemnation Proceedings or Proceedings in
Relation to Real Property
3.7.3(c) Agreements Granting Right of Use of Occupancy of Real
Properties
3.8 Delinquent Accounts Receivable
3.10.1 Patents and Licenses
3.10.2 Trademarks, Copyrights and Licenses
3.10.3 Computer Software
3.11.1 Material Contracts
3.11.2 Material Contract Exceptions
3.12 Litigation and Investigation
3.13 Taxes
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3.14.1 Employees; Benefit Plans; Employment Policies
3.14.2 Certain Labor Matters
3.14.3 Employee Benefit Plans; ERISA
3.15.1 Environment Permits
3.15.2 Violation of Environmental Laws
3.15.3 Notice of Violation of Environmental Laws
3.15.4 Basis for Liability
3.15.5 Underground Improvements, Dumps and Land Fills
Subject to Environmental Laws
3.16.1 Noncompliance with Government Contracts
3.16.2 Investigations with respect to Government Contracts
3.16.3 Outstanding Claims with respect to Government
Contracts
3.16.4 Non-Eligibility with respect to Government Contracts
3.17.2 Noncompliance with Export Control
3.17.3 Facility Security Clearances
3.18 Insurance Policies
4.2.2 Consents and Approvals
4.2.2(ii) Filings Required by the Department of Defense Industrial
Security Regulation or Department of Defense Industrial
Security Manual
5.1(m) 1997 or 1998 Fiscal Year Capital Expenditures
5.5 Goods and Services to be Supplied by CRSI and
Subsidiaries subject to the "Purchase Support Agreement"
5.14.1 Excluded Employees
5.14.3 Employee Retention Agreements
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STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AND SALE AGREEMENT, dated as of March 16, 1998, is
made by and between COMSAT Corporation, a District of Columbia corporation
("Seller"), TBG Industries, Inc., a Delaware corporation ("TBG"), and
Prodelin Holding Corporation, a Delaware corporation and a wholly owned
subsidiary of TBG ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock of COMSAT RSI, Inc., a Delaware corporation ("CRSI");
WHEREAS, CRSI and the Subsidiaries (as defined herein) design,
manufacture, install and support systems and products for satellite,
terrestrial and wireless communications, as well as antennas and products
for air traffic control, radar and specialized applications (the "Business"
(PROVIDED THAT, for all purposes of this Agreement, Business shall not be
deemed to include any of the Excluded Assets and Liabilities));
WHEREAS, upon the terms and subject to the conditions contained
herein, Seller desires to sell, and Buyer desires to purchase, all of the
issued and outstanding capital stock of CRSI consisting of 1,000 shares of
common stock, par value $1.00 per share (the "Shares"); and
WHEREAS, immediately prior to the Closing, and upon the terms and
subject to the conditions contained herein, Seller shall cause certain of
CRSI's assets and liabilities to be distributed to Seller or a wholly owned
subsidiary thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this
Agreement and shall be equally applicable to both the singular and the
plural forms of the terms herein defined:
"ADJUSTED DECEMBER STATEMENTS" shall have the meaning specified
in Section 3.6.1(d) hereof.
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"ADJUSTED JUNE BALANCE SHEET" shall have the meaning specified in
Section 2.4.1 hereof.
"ADJUSTED JUNE STATEMENTS" shall have the meaning specified in
Section 3.6.1(b) hereof.
"AFFILIATE" means, with respect to any specified Person, any
Person which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such specified Person.
"AGREEMENT", "THIS AGREEMENT", "HEREIN", "HEREUNDER", "HEREOF",
"HEREBY" or other like words mean this Stock Purchase Agreement as
originally executed or as modified or amended pursuant to the
applicable provisions hereof.
"ANCILLARY AGREEMENTS" means, collectively, the Distribution
Agreement, the Technology License Agreement, the Transition Services
Agreement, the Guarantee Assumption Agreement, the Sublease Agreement
and the Assignment and Assumption Agreements.
"ARBITER" shall have the meaning specified in Section 2.6.2
hereof.
"ASSIGNMENT AND ASSUMPTION AGREEMENT(S)" shall have the meaning
specified in Section 2.1(b) hereof.
"BUSINESS" shall have the meaning specified in the second Whereas
clause hereof.
"BUYER" shall have the meaning specified in the preamble hereof.
"BUYER INDEMNITEE" shall have the meaning specified in Section
8.2.1 hereof.
"CLAIM" shall have the meaning specified in Section 8.3.1 hereof.
"CLAIM NOTICE" shall have the meaning specified in Section 8.3.1
hereof.
"CLOSING" shall have the meaning specified in Section 2.3 hereof.
"CLOSING DATE" shall have the meaning specified in Section 2.3
hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPETING BUSINESS" shall have the meaning specified in Section
5.18 hereof.
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"COMPUTER SOFTWARE" shall have the meaning specified in Section
3.10.3 hereof.
"COMSAT" shall have the meaning specified in the preamble hereof.
"CONFIDENTIALITY AGREEMENT" shall have the meaning specified in
Section 5.2.2 hereof.
"CONSENTS" shall have the meaning specified in Section 6.1.3(b)
hereof.
"CRSI" shall have the meaning specified in the first Whereas
clause hereof, except that CRSI shall not refer to any of the Excluded
Assets and Liabilities.
"CRSI ACQUISITION DATE" means June 3, 1994.
"CRSI TECHNOLOGY" shall have the meaning specified in Section
3.10.1 hereof.
"DECREASED ADJUSTED NOTE" shall have the meaning specified in
Section 2.6.4(a)(iv).
"DECREASED ADJUSTED PRINCIPAL" shall have the meaning specified
in Section 2.6.4(a)(iv).
"DISTRIBUTED ASSETS" shall have the meaning specified in Section
2.1 hereof.
"DISTRIBUTED ASSETS AND LIABILITIES" shall have the meaning
specified in Section 2.1 hereof.
"DISTRIBUTED LIABILITIES" shall have the meaning specified in
Section 2.1 hereof.
"DISTRIBUTION AGREEMENT" shall have the meaning specified in
Section 2.1 hereof.
"EMPLOYEES" shall have the meaning specified in Section 3.14.1
hereof.
"EMPLOYEE PLANS" shall have the meaning specified in Section
5.14.1 hereof.
"ENVIRONMENTAL LAWS" means any Laws (including without limitation
the Comprehensive Environmental Response, Compensation and Liability
Act), including any plan, judgment, injunction, notice or demand
letter issued,
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entered, promulgated or approved by any Governmental Authority, now or
hereafter in effect relating to the generation, production,
installation, use, storage, treatment, transportation, release,
threatened release or disposal of Hazardous Materials, noise control,
or the protection of natural resources or the environment.
"ERISA" shall have the meaning specified in Section 3.14.3
hereof.
"ERISA PLAN" shall have the meaning specified in Section 3.14.3
hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED ASSETS" shall mean, collectively, the Distributed
Assets and Excluded Contracts.
"EXCLUDED ASSETS AND LIABILITIES" shall mean, collectively, the
Excluded Assets and the Excluded Liabilities.
"EXCLUDED CONTRACTS LIABILITIES" shall have the meaning specified
in Section 2.1(b) hereof.
"EXCLUDED CONTRACTS AND LIABILITIES" shall have the meaning
specified in Section 2.1(b) hereof.
"EXCLUDED EMPLOYEES" shall have the meaning specified in Section
5.14.1 hereof.
"EXCLUDED GOVERNMENT CONTRACT" shall have the meaning specified
in Section 5.20 hereof.
"EXCLUDED LIABILITIES" shall mean, collectively, the Distributed
Liabilities and the Excluded Contracts Liabilities.
"EXCLUDED SUBSIDIARIES" means CRSI Acquisition Inc., a Delaware
corporation, Plexsys International Corp., a Delaware corporation,
Plexsys International FSC Corp., a U.S. Virgin Islands corporation,
and Radiation Systems Electromechanical Systems, Incorporated, a
Florida corporation.
"EXON-▇▇▇▇▇▇ AMENDMENT" means Section 721(a) of the Defense
Production Act of 1950, as amended.
"FINAL CLOSING NET INTERCOMPANY LOAN AMOUNT" shall have the
meaning specified in Section 2.6.2 hereof.
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"FINANCIAL STATEMENTS" shall have the meaning specified in
Section 3.6.1 hereof.
"GAAP" shall have the meaning specified in Section 3.6.2 hereof.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or
foreign court, tribunal, legislative, administrative or regulatory
authority or agency.
"GOVERNMENT BID" means any bid or proposal made by CRSI or any
Subsidiary which, if accepted, would result in a Government Contract,
but excluding, for all purposes of this definition of Government Bid,
any such bid or proposal included among or relating to the Excluded
Assets and Liabilities.
"GOVERNMENT CONTRACT" means any contract, subcontract and
agreement and other arrangement between CRSI or any Subsidiary and (i)
the United States government, (ii) any prime contractor of the United
States government or other Person acting on its behalf, but solely to
the extent that the contract, subcontract, agreement or other
arrangement between CRSI or such Subsidiary and such prime contractor
or Person relates to a contract, subcontract, agreement or other
arrangement between such prime contractor or Person and the United
States government, and (iii) any subcontractor with respect to any
contract, subcontract, agreement or other arrangement described in
clause (i) or (ii) hereof, but excluding, for all purposes of this
definition of Government Contract, any such contract, subcontract,
agreement or other arrangement included among the Excluded Assets and
Liabilities.
"GREENBANK CONTRACT" shall mean that certain contract, bearing
number AUI-1059, between CRSI and Associated Universities, Inc., as
amended.
"GREENBANK SUBCONTRACT" shall mean that certain subcontract
between Seller and CRSI entered into at or prior to closing and
relating to the completion of the Greenbank Contract, substantially in
the form of Exhibit I attached hereto.
"GUARANTEE ASSUMPTION AGREEMENT" shall have the meaning specified
in Section 2.5.4(d) hereof.
"HAZARDOUS MATERIALS" mean any wastes, substances, radiation or
materials (whether solids, liquids or gases) (i) which are hazardous,
toxic, infectious, explosive, radioactive, carcinogenic or mutagenic;
(ii) which are or become defined as a "pollutants", "contaminants",
"hazardous materials", "hazardous wastes", "hazardous substances",
"toxic substances", "radioactive materials", "solid wastes" or other
similar designations in, or otherwise subject to regulation under, any
Environmental Laws; (iii) the presence of which on the Real Property
cause or threaten to cause a nuisance pursuant to applicable
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statutory or common law upon the Real Property or to adjacent
properties; (iv) without limitation, which contain polychlorinated
biphenyls (PCBs), asbestos and asbestos-containing materials,
lead-based paints, urea-formaldehyde foam insulation, and petroleum or
petroleum products (including, without limitation, crude oil or any
fraction thereof) or (v) which pose a hazard to natural resources,
industrial hygiene or the environment.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976 (including the regulations promulgated thereunder), as
amended.
"INCREASED ADJUSTED NOTE" shall have the meaning specified in
Section 2.6.4(a)(ii).
"INDEMNIFIED PARTY" shall have the meaning specified in Section
8.3.1 hereof.
"INDEMNITOR" shall have the meaning specified in Section 8.3.1
hereof.
"INDEMNITY CAP" shall have the meaning specified in Section
8.2.3(a) hereof.
"INDEMNITY THRESHOLD" shall have the meaning specified in Section
8.2.3(a) hereof.
"INTEREST RATE" shall be the per annum rate equal to the rate
announced by Chase Manhattan Bank, N.A. in the City of New York as its
base or prime rate in effect on the close of business on the Closing
Date, plus 250 basis points.
"INVENTORY" shall have the meaning specified in Section 3.9
hereof.
"IVORY COAST COMMISSION LITIGATION" shall have the meaning set
forth in Section 8.2.4(a).
"JUNE NET INTERCOMPANY LOAN AMOUNT" shall have the meaning
specified in Section 2.4.1 hereof.
"JUNE RECONCILIATION STATEMENT" shall have the meaning specified
in Section 2.4.1 hereof.
"KNOWLEDGE OF SELLER" or "SELLER'S KNOWLEDGE" means (i) the
actual knowledge of the persons listed on Schedule I hereto and (ii)
that knowledge which should have been obtained by such person, after
making such due inquiry and exercising the due diligence that a
prudent business person in a
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similar circumstance should have made or exercised, as applicable with
respect thereto.
"LAWS" means any law, statute, treaty, rule, directive or
regulation, decree or order of any Governmental Authority.
"LIABILITY" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become
due, regardless of when asserted.
"LIENS" means all liens, claims, charges, restrictions, pledges
and other security interests, mortgages and encumbrances.
"LOSSES" means all losses, damages, liabilities, claims, demands,
judgments, settlements, actual costs and expenses, penalties and
interest (including reasonable attorneys', accountants' and other
professional fees and expenses but excluding lost profits, exemplary
damages or opportunity costs), and Taxes actually incurred in
connection with the receipt of indemnification payments, whether or
not arising out of third party claims; PROVIDED HOWEVER that Losses
shall be net of any (i) insurance proceeds received by an Indemnified
Party from an insurance company on account of such Losses (net of
deductibles and any costs incurred in obtaining such proceeds and any
increase in insurance premiums as a result of a claim with respect to
such proceeds), and (ii) reductions in Taxes actually realized by an
Indemnified Party as a result of the event or circumstance giving rise
to such Loss.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a
material adverse effect upon the business, assets, financial condition
or results of operations of such Person, except that where reference
is made to Persons taken as a whole, such reference means a material
adverse effect upon the business, assets, financial condition or
results of all such Persons on a consolidated basis.
"MATERIAL LEASES" shall have the meaning specified in Section
3.7.2 hereof.
"NON-COMPETE PERIOD" shall have the meaning specified in Section
5.18 hereof.
"NOTE" shall have the meaning specified in Section 2.4.2(a)
hereof.
"NOTE PRINCIPAL AMOUNT" shall have the meaning specified in
Section 2.4.2(a) hereof.
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"NOTICE PERIOD" with respect to indemnification for any third
party claim described in Section 8.3.1 herein shall mean the period
ending on the earlier of:
(i) 30 days after the time at which such third party claim has
become the subject of proceedings before any court or tribunal, or
such shorter time as would allow the Indemnitor sufficient time to
contest such proceeding prior to any judgment or decision thereon; and
(ii) 30 days after the time at which the Indemnified Party has
either (X) received written notice from the claimant asserting such
third party claim or (Y) commenced an active investigation of
circumstances likely to give rise to such third party claim, or such
longer time as would not prejudice, adversely affect or materially
interfere with the ability of the Indemnitor to investigate and defend
against such third party claim.
"PATENTS AND LICENSES" shall have the meaning specified in
Section 3.10.1 hereof.
"PERMITTED LIENS" shall have the meaning specified in Section
3.7.1 hereof.
"PERSON" means any corporation, partnership (whether general,
limited or otherwise), limited liability company, trust, association,
unincorporated organization, governmental entity, agency or branch or
department thereof, or any other legal entity, or any natural person.
"POSITIVE BALANCE" shall have the meaning specified in Section
2.4.2(a).
"POST CLOSING NOTE" shall have the meaning specified in Section
2.6.4(b)(i).
"PRE-CLOSING NET INTERCOMPANY AMOUNT" shall have the meaning
specified in Section 2.4.2 hereof.
"PRE-CLOSING INTERCOMPANY STATEMENT" shall have the meaning
specified in Section 2.4.2 hereof.
"PRELIMINARY CLOSING NET INTERCOMPANY LOAN AMOUNT" shall have the
meaning specified in Section 2.6.1 hereof.
"PRELIMINARY CLOSING STATEMENT" shall have the meaning specified
in Section 2.6.1 hereof.
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"PROCEEDING" shall mean any action, suit, claim, investigation or
proceeding, whether involving a court of law, administrative body or
arbitrator.
"PURCHASE PRICE" shall have the meaning specified in Section 2.3
hereof.
"PURCHASE SUPPORT AGREEMENT" shall have the meaning specified in
Section 5.5 hereof.
"REAL PROPERTY" means the real property owned, leased or operated
or purported to be owned, leased or operated, by CRSI or the
Subsidiaries as of June 30, 1997, any additional real property owned,
leased or operated or purported to be owned, leased or operated since
that date and, for purposes of Sections 3.15 and 8.2.1(c) hereof, any
real property formerly owned, leased or operated or purported to be
owned, leased or operated by CRSI or the Subsidiaries.
"RELEASE" means any emission, spill, seepage, leak, escape,
leaching, discharge, injection, pumping, pouring, emptying, dumping,
disposal or release of Hazardous Materials from any source (including,
without limitation, the Real Property and property adjacent to the
Real Property) into or upon the environment, including the air, soil,
improvements, surface water, groundwater, the sewer, septic system,
storm drain, publicly owned treatment works, or waste treatment,
storage or disposal systems at, on, from, above or under the Real
Property or any other property at which Hazardous Materials
originating on or from the Real Property or the businesses or assets
of CRSI or any Subsidiary have been stored, treated or disposed.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" shall have the meaning specified in the preamble hereof.
"SELLER CONSOLIDATED GROUP" shall have the meaning specified in
Section 5.4.1 hereof.
"SELLER INDEMNITEE" shall have the meaning specified in Section
8.2.2 hereof.
"SELLER'S FIRM" shall have the meaning specified in Section 2.6.1
hereof.
"SHARES" shall have the meaning specified in the third Whereas
clause hereof.
"SUBLEASE AGREEMENT" shall have the meaning specified in Section
2.5.4(c) hereof.
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"SUBSIDIARIES" means any corporation, business trust,
partnership, limited liability company, joint venture or any other
entity in which CRSI holds a direct, indirect or beneficial equity
interest.
"SUBSIDIARIES" shall have the meaning specified in Section 3.3
hereof.
"TAX CONTEST" shall have the meaning specified in Section
5.4.4(a) hereof.
"TAX INDEMNIFICATION LIABILITY" shall have the meaning specified
in Section 5.4.4(a) hereof.
"TAX INDEMNIFIED PARTY" shall have the meaning specified in
Section 5.4.4(b) hereof.
"TAX INDEMNITOR" shall have the meaning specified in Section
5.4.4(a) hereof.
"TAX RETURNS" means all federal, state, local, provincial and
foreign returns, declarations, statements, reports, schedules, and
information returns (including, without limitation, any related or
supporting information or Schedule attached thereto) required to be
filed with any Taxing authority in connection with any Tax or Taxes.
"TAXES" or "TAX" (and, with correlative meanings, "TAXABLE" or
TAXING") means, with respect to any Person, (A) any federal, state,
local, provincial or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, business, occupation, premium,
windfall profits, environmental, customs, duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales,
use, AD VALOREM, transfer, registration, value added, advance
corporation, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest, penalty, or addition
thereto with respect to which such Person could be held liable and (B)
any liability for the payment of any amount of the type described in
the immediately preceding clause (A) as a result of (i) being a
transferee (within the meaning of section 6901 of the Code) of another
Person, or (ii) being a member of an affiliated or combined group.
"TBG" shall have the meaning specified in the preamble hereof.
"TECHNOLOGY LICENSE AGREEMENT" shall have the meaning specified
in Section 2.5.4(a) hereof.
"TITLE DOCUMENTS" shall have the meaning specified in Section
3.7.3(a) hereof.
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"TRADEMARKS AND LICENSES:" shall have the meaning specified in
Section 3.10.2 hereof.
"TRANSITION SERVICES AGREEMENT" shall have the meaning specified
in Section 2.5.4(b) hereof.
"UNADJUSTED DECEMBER STATEMENTS" shall have the meaning specified
in Section 3.6.1(c) hereof.
"UNADJUSTED JUNE BALANCE SHEET" shall have the meaning specified
in Section 2.4.1 hereof.
"UNADJUSTED JUNE STATEMENTS" shall have the meaning specified in
Section 3.6.1(a) hereof.
"WARN ACT" means the Worker Adjustment and Retraining
Notification Act of 1968, 19 U.S.C. ▇▇.▇▇. 2101 ET SEQ., or any
similar state or local law or regulation.
"WELFARE PLANS" shall have the meaning specified in Section
5.14.1(c) hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
SECTION 2.1 CERTAIN ASSETS AND LIABILITIES. Immediately prior to the
Closing and consummation of the transactions contemplated by this
Agreement, and subject to the terms and conditions of this Agreement, (a)
CRSI shall distribute, and Seller or a wholly owned subsidiary thereof
shall accept and assume, pursuant to an Asset Distribution and Assumption
Agreement substantially in the form of Exhibit A-1 attached hereto (the
"Distribution Agreement"), the assets and liabilities listed on Schedule II
attached hereto (such assets, the "Distributed Assets", and such
liabilities, the "Distributed Liabilities"; and, collectively, the
"Distributed Assets and Liabilities"), and (b) CRSI shall sell, transfer,
set over and assign to Seller or a wholly owned subsidiary of Seller, and
Seller or such wholly owned subsidiary shall purchase, accept and assume,
pursuant to one or more Assignment and Assumption Agreements substantially
in the form of Exhibit A-2 attached hereto (each, an "Assignment and
Assumption Agreement" and, collectively, the "Assignment and Assumption
Agreements"), the Excluded Contracts listed on Schedule III hereto and all
Liabilities relating thereto (such Liabilities, the "Excluded Contracts
Liabilities" and, together with the Excluded Contracts, the "Excluded
Contracts and Liabilities"). For purposes of clarity, and as reflected on
Schedules II and III, the Excluded Assets
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and Liabilities include all of the Excluded Contracts referenced in Section
5.19, and all of the issued and outstanding shares of the Excluded
Subsidiaries, and any Liabilities associated with the Excluded Contracts
and the Excluded Subsidiaries. Seller shall pay and discharge, and
indemnify Buyer and hold Buyer harmless from and against, all transfer or
stamp duty taxes, if any, due and payable in connection with the
distribution or transfer, as the case may be, of the Excluded Assets and
Liabilities.
SECTION 2.2 PURCHASE AND SALE. At the Closing contemplated hereby and
upon the terms and subject to the conditions contained herein, Buyer agrees
to purchase and accept from Seller, and Seller agrees to sell, assign,
transfer and deliver or cause to be delivered to Buyer, all of the Shares,
free and clear of any and all Liens or any restrictions, agreements or
commitments of any kind (other than in respect of this Agreement), other
than restrictions related to transfer or stamp duty taxes, if any, arising
from the transfer of the Shares as contemplated hereby, which Seller agrees
to pay and to release and discharge Buyer from any obligations with respect
thereto, and such other restrictions on any subsequent transfer of the
Shares that may arise under applicable federal or state securities laws.
SECTION 2.3 CLOSING. The Closing (the "Closing") of the sale and
purchase of the Shares shall take place at the offices of Buyer's outside
counsel, ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local time, on the third business day after
satisfaction or waiver of the conditions set forth in Articles VI and VII
herein, or at such other place, date and time as the parties may agree (the
"Closing Date"), but in no event later than June 30, 1998.
SECTION 2.4 PURCHASE PRICE. The aggregate purchase price for the
Shares shall be $116,500,000 (the "Purchase Price"). The Purchase Price
shall be subject to adjustments as provided below and in Section 2.6
herein.
2.4.1 JUNE STATEMENTS. Schedule 2.4.1 delivered hereunder sets
forth (i) the report of Deloitte & Touche LLP, independent auditors of
Seller and CRSI ("Seller's Firm"), which includes a consolidated statement
of net assets held for sale at June 30, 1997 (the "Unadjusted June Balance
Sheet"), (ii) a pro forma balance sheet at June 30, 1997 (the "Adjusted
June Balance Sheet") based upon the Unadjusted June Balance Sheet after
excluding, to the extent reflected on the Unadjusted June Balance Sheet,
all of the Excluded Assets and Liabilities, (iii) a reconciliation
statement (the "June Reconciliation Statement") showing the adjustments
from the Unadjusted June Balance Sheet to the Adjusted June Balance Sheet,
and (iv) a statement based upon the Unadjusted June Balance Sheet after
excluding, to the extent reflected on the Unadjusted June Balance Sheet,
all intercompany loans and advances in respect of the Excluded Assets and
Liabilities, of the net intercompany loans and advances between Seller and
CRSI and the Subsidiaries (the "June Intercompany Statement"). The Adjusted
June Balance
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Sheet, the June Reconciliation Statement and the June Intercompany
Statement have been certified by the Controller of Seller. The net
intercompany loans and advances between Seller and CRSI and the
Subsidiaries as reflected on the June Intercompany Statement is
($53,500,000) (the "June Net Intercompany Loan Amount"). The Unadjusted
June Balance Sheet and the Adjusted June Balance Sheet (a) have been
prepared in all material respects in accordance with GAAP except as set
forth on Schedule 2.4.1 and except that such statements do not include all
requisite financial footnotes or normal year end adjustments, (b) have been
prepared on a basis consistent with the accounting principles, practices,
classifications, estimates, assumptions and methodologies of CRSI, the
Subsidiaries, and where applicable the Excluded Subsidiaries, (c) take into
account all accruals and other adjustments required to present CRSI and the
Subsidiaries, and where applicable the Excluded Subsidiaries, as entities
separate and apart from Seller and (d) fairly presents the financial
condition of CRSI and the Subsidiaries, and where applicable the Excluded
Subsidiaries, as of the date indicated therein.
2.4.2 PRE-CLOSING STATEMENT. At least three business days prior
to the Closing Date, Seller shall prepare and deliver to Buyer a statement
showing the intercompany loans and advances between Seller and CRSI and the
Subsidiaries after excluding all intercompany loans and advances between
Seller and CRSI and the Subsidiaries in respect of the Excluded Assets and
Liabilities, as of the most recent month end for which Seller has closed
its intercompany account balances (the "Pre-Closing Intercompany
Statement"). The Pre-Closing Intercompany Statement shall be prepared on a
basis consistent with the June Intercompany Statement, and shall be
certified by the Controller of Seller. The net intercompany loans and
advances between Seller and CRSI and the Subsidiaries as reflected on the
Pre-Closing Intercompany Statement is hereinafter referred to as the
"Pre-Closing Net Intercompany Loan Amount." Seller's determination of the
Pre-Closing Net Intercompany Loan Amount shall be binding upon the parties
at Closing absent manifest error, PROVIDED THAT the Purchase Price shall be
subject to a post-Closing adjustment as provided in Section 2.6 herein.
(a) If the Pre-Closing Net Intercompany Loan Amount is greater
than the June Net Intercompany Loan Amount, then the absolute
difference between such amounts shall hereinafter be referred to as
the "Positive Balance." At the Closing, in addition to delivery of the
Purchase Price, Buyer shall make, execute and deliver to Seller, and
TBG shall co-make with Buyer, execute and deliver to Seller, an
unconditional promissory note in the form of Exhibit B hereto
containing or subject to intercreditor and subordination provisions
customary for a transaction of the type contemplated hereby and
reasonably acceptable to the parties hereto and the financial
institutions providing financing to Buyer in connection with the
transactions contemplated hereby (the "Note") in the principal amount
of the Positive Balance, PROVIDED THAT if the Positive Balance is
greater than $5,000,000, then the principal amount of the Note shall
be $5,000,000 (in either case, the "Note Principal
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Amount"), AND PROVIDED FURTHER THAT such intercreditor and
subordination provisions shall in no way limit or restrict Seller's
rights of set-off contained in the Note.
(b) If the Pre-Closing Net Intercompany Loan Amount is equal to
or less than the June Net Intercompany Loan Amount, no additions or
subtractions shall be made to the Purchase Price to be delivered at
Closing.
SECTION 2.5 CLOSING DELIVERIES. At the Closing, Seller and Buyer shall
deliver or cause to be delivered the following funds, agreements,
instruments or items:
2.5.1 PURCHASE PRICE. Buyer shall cause to be delivered to
Seller, by wire transfer of immediately available funds, to an account
designated in writing by Seller to Buyer at least two days prior to the
Closing, an amount equal to the Purchase Price, and if required pursuant to
Section 2.4.2(a), Buyer and TBG shall deliver to Seller the Note in the
Note Principal Amount;
2.5.2 SHARE CERTIFICATES. Against delivery of the Purchase Price,
and if applicable the Note, Seller shall sell, deliver and transfer the
Shares to Buyer, together with a certificate evidencing each of the Shares
duly endorsed in blank by an authorized officer of Seller or with a stock
transfer power duly endorsed in blank by an authorized officer of Seller
and affixed thereto;
2.5.3 CORPORATE RECORDS. Seller shall deliver or cause to be
delivered to Buyer all extant corporate minute books, stock transfer
records and the corporate seal of CRSI and of each of the Subsidiaries;
2.5.4 ANCILLARY AGREEMENTS. Seller and Buyer (or, in the case of
the Technology License Agreement, Transition Services Agreement and
Sublease Agreement referenced below, CRSI) shall enter into the following
agreements:
(a) TECHNOLOGY LICENSE AGREEMENT. A Technology License Agreement,
substantially in the form of Exhibit C attached hereto (the
"Technology License Agreement");
(b) TRANSITION SERVICES AGREEMENT. A Transition Services
Agreement, substantially in the form of Exhibit D attached hereto (the
"Transition Services Agreement"), pursuant to which Seller shall
provide to CRSI, and CRSI shall provide to Seller, for a transitional
period following the Closing the services specified therein;
(c) OFFICE SUBLEASE AGREEMENT. An Office Sublease Agreement,
substantially in the form of Exhibit E attached hereto (the "Sublease
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Agreement"), pursuant to which Seller shall lease to CRSI office and
manufacturing space in Seller's facilities located in Clarksburg,
Maryland;
(d) GUARANTEE ASSUMPTION AGREEMENT. A Guarantee Assumption and
Reimbursement Agreement, substantially in the form of Exhibit F
attached hereto (the "Guarantee Assumption Agreement"); and
(e) GREENBANK SUBCONTRACT. The Greenbank Subcontract;
2.5.5 CLOSING DOCUMENTS TO BE DELIVERED BY SELLER. Seller shall
deliver or cause to be delivered to TBG and Buyer the opinions,
certificates and other documents required to be delivered by Seller
pursuant to Article VI herein, and such other documents and instruments as
may be reasonably requested by TBG and Buyer to more fully consummate the
transactions contemplated hereby; and
2.5.6 CLOSING DOCUMENTS TO BE DELIVERED BY BUYER. TBG and Buyer
shall deliver or cause to be delivered to Seller the opinions, certificates
and other documents required to be delivered by TBG and Buyer pursuant to
Article VII herein, and such other documents and instruments as may be
reasonably requested by Seller to more fully consummate the transactions
contemplated hereby.
SECTION 2.6 PURCHASE PRICE ADJUSTMENT.
2.6.1 CLOSING STATEMENT. Within 30 days after the Closing Date,
Seller shall prepare as at the Closing Date and make available to Buyer (i)
a statement (the "Preliminary Closing Statement") using those methods,
principles and procedures set forth on Schedule 2.6.1, and based upon the
June Intercompany Statement, showing the intercompany loans and advances
between Seller and CRSI and the Subsidiaries, but excluding any loans and
advances in respect of the Excluded Assets and Liabilities, together with
the net amount thereof (the "Preliminary Closing Net Intercompany Loan
Amount"), and (ii) a line-item reconciliation spread sheet of the June
Intercompany Statement, the Pre-Closing Intercompany Statement and the
Preliminary Closing Statement, in each case certified by the Controller of
Seller. The Preliminary Closing Statement shall be prepared on a basis
consistent with the June Intercompany Statement and in accordance with the
methods, principles and procedures set forth on Schedule 2.6.1.
2.6.2 OBJECTIONS; RESOLUTIONS. Within 30 days after the receipt
of the Preliminary Closing Statement, Buyer will deliver written notice to
Seller of any objections thereto which objections may relate to loans and
advances reflected on the Pre-Closing Intercompany Statement (as well as on
the Preliminary Closing Statement, if applicable), and will attempt in good
faith (without an obligation to reach an agreement) to reach an agreement
with Seller as to any matters in dispute; PROVIDED HOWEVER that Buyer shall
have no right to object to methods, principles and procedures used by
Seller in determining or recording the intercompany loans and
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advances between Seller and CRSI and the Subsidiaries as reflected on the
Preliminary Closing Statement (or the Pre-Closing Intercompany Statement,
if applicable) so long as such methods, principles and procedures are
consistent with those used to prepare the June Intercompany Statement and
those described on Schedule 2.6.1. If Buyer and Seller, notwithstanding
such good faith effort, fail to resolve all matters in dispute within 20
days after Buyer advises Seller of its objections, then any remaining
disputed matters will be finally and conclusively determined by an
independent auditing firm of recognized national standing (the "Arbiter")
selected in good faith by Buyer and Seller, which firm will not be the
regular auditing firm of Buyer or Seller. Promptly, but not later than 10
days after its acceptance of its engagement by Buyer and Seller, the
Arbiter will determine (based solely on presentations by Seller and Buyer
and not by independent review) only those matters in dispute and will
prepare and deliver to the parties for CRSI and the Subsidiaries on a
consolidated basis (but excluding the Excluded Assets and Liabilities) at
the Closing Date a final statement (the "Final Closing Statement") showing
the intercompany loans and advances between Seller and CRSI and the
Subsidiaries, but excluding any loans and advances in respect of the
Excluded Assets and Liabilities, together with the net amount thereof (the
"Final Closing Net Intercompany Loan Amount"), and a reconciliation of the
disputed matters from the Preliminary Closing Statement (and, if
applicable, the Pre-Closing Intercompany Statement) to the Final Closing
Statement, which Final Closing Statement shall be conclusive and binding
upon the parties. Buyer's failure to timely notify Seller in writing of any
objections pursuant to this Subsection 2.6.2 shall be deemed for all
purposes to constitute Buyer's acceptance of the Preliminary Closing
Statement, and the Preliminary Closing Net Intercompany Loan Amount shall,
in such circumstances, be deemed the Final Closing Net Intercompany Loan
Amount.
2.6.3 WORKPAPERS. For purposes of complying with the terms set
forth herein, each party will cooperate with and make available to the
other party and its auditors and representatives all information, records,
data and auditors' working papers, and will permit access to its facilities
and personnel, as may be reasonably required in connection with the
preparation and analysis of the Preliminary Closing Statement (and the
Pre-Closing Intercompany Statement, if requested), and the resolution of
any disputes thereunder. Without limiting the generality of the foregoing,
Seller will cause Seller's Firm to make available to Buyer and Buyer's
outside accountants within three business days after delivery of the
Preliminary Closing Statement pursuant to Subsection 2.6.2 copies of the
workpapers therefor.
2.6.4 FINAL ADJUSTMENTS.
(a) If the Pre-Closing Net Intercompany Loan Amount was greater
than the June Net Intercompany Loan Amount, and:
(i) The Final Closing Net Intercompany Loan Amount is
greater than the Pre-Closing Net Intercompany Loan Amount, and
the
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Principal Amount on the Note is $5,000,000, no further
adjustments shall be made in respect of the Purchase Price or the
Note;
(ii) The Final Closing Net Intercompany Loan Amount is
greater than the Pre-Closing Net Intercompany Loan Amount, and
the Principal Amount on the Note is less than $5,000,000, then
Seller shall return the Note to Buyer and TBG against delivery by
Buyer and TBG of a new unconditional promissory note (the
"Increased Adjusted Note") in form and substance identical to the
Note except that the principal amount on the Increased Adjusted
Note shall be the absolute difference between the Final Closing
Net Intercompany Loan Amount and the June Net Intercompany Loan
Amount, PROVIDED THAT if such absolute difference is greater than
$5,000,000, the principal amount on the Increased Adjusted Note
shall be $5,000,000;
(iii) The Final Closing Net Intercompany Loan Amount is
equal to the Pre-Closing Net Intercompany Loan Amount, no further
adjustment will be made in respect of the Purchase Price or the
Note;
(iv) The Final Closing Net Intercompany Loan Amount is less
than the Pre-Closing Net Intercompany Loan Amount, but is greater
than the June Net Intercompany Loan Amount, and the absolute
difference between the Final Closing Net Intercompany Loan Amount
and the June Net Intercompany Loan Amount is less than
$5,000,000, then Seller shall return the Note to Buyer and TBG
against delivery by Buyer and TBG of a new unconditional
promissory note (the "Decreased Adjusted Note") in form and
substance identical to the Note except that the principal amount
on the Decreased Adjusted Note shall be the absolute difference
between the Final Closing Net Intercompany Loan Amount and the
June Net Intercompany Loan Amount (the "Decreased Adjusted
Principal");
(v) The Final Closing Net Intercompany Loan Amount is less
than the Pre-Closing Net Intercompany Loan Amount and is equal to
the June Net Intercompany Loan Amount, then Seller shall return
the Note to Buyer and TBG; or
(vi) The Final Closing Net Intercompany Loan Amount is less
than the June Net Intercompany Loan Amount, then Seller shall
return the Note to Buyer and TBG, and Seller shall pay to Buyer
by wire transfer of immediately available funds, to an account
designated in writing by Buyer to Seller, an amount equal to the
absolute difference between the June Net Intercompany Loan Amount
and the Final Closing Net Intercompany Loan Amount, PROVIDED THAT
if such absolute difference is greater than $10,000,000, Seller
shall pay to Buyer only
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$10,000,000 and no greater amount. Any amount paid by Seller to
Buyer pursuant to this Subsection 2.6.4(a)(vi) shall include
simple interest at the Interest Rate on such amount from and
including the Closing Date to but not including the date of
payment (computed on a per annum basis, 365 or 366 day year, as
the case may be).
(b) If the Pre-Closing Net Intercompany Loan Amount was less than
or equal to the June Net Intercompany Loan Amount, and:
(i) The Final Closing Net Intercompany Loan Amount is
greater than the June Net Intercompany Loan Amount, then Buyer
shall make, execute and deliver to Seller, and TBG shall co-make
with Buyer, execute and deliver to Seller, an unconditional
promissory note in the form of Exhibit G hereto containing or
subject to intercreditor and subordination provisions customary
for a transaction of the type contemplated hereby and reasonably
acceptable to the parties hereto and the financial institutions
providing financing to Buyer in connection with the transactions
contemplated hereby (the "Post-Closing Note") in the principal
amount of the absolute difference between the Final Closing Net
Intercompany Loan Amount and the June Net Intercompany Loan
Amount, PROVIDED THAT if such absolute difference is greater than
$5,000,000, the principal amount on the Post-Closing Note shall
be $5,000,000, AND PROVIDED FURTHER THAT such intercreditor and
subordination provisions shall in no way limit or restrict
Seller's rights of set-off contained in the Post-Closing Note;
(ii) The Final Closing Net Intercompany Loan Amount is equal
to the June Net Intercompany Loan Amount, no further adjustment
shall be made in respect of the Purchase Price; or
(iii) The Final Closing Net Intercompany Loan Amount is less
than the June Net Intercompany Loan Amount, then Seller shall pay
to Buyer by wire transfer of immediately available funds, to an
account designated in writing by Buyer to Seller, an amount equal
to the absolute difference between the Final Closing Net
Intercompany Loan Amount and the June Net Intercompany Loan
Amount, PROVIDED THAT if such absolute difference is greater than
$10,000,000, Seller shall pay to Buyer only $10,000,000 and no
greater amount. Any amount paid by Seller to Buyer pursuant to
this Subsection 2.6.4(b)(iii) shall include simple interest at
the Interest Rate on such amount from and including the Closing
Date to but not including the date of payment (computed on a per
annum basis, 365 or 366 day year, as the case may be).
(c) Any exchange or delivery of any promissory notes, and any
payments of funds pursuant to this Section 2.6.4, shall be made within
five
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business days following the final determination of the Final Closing
Net Intercompany Loan Amount pursuant to Section 2.6.2.
(d) The parties hereto agree that if the principal amount of the
Post-Closing Note is equal to $5,000,000, and the Final Closing Net
Intercompany Loan Amount exceeds the June Net Intercompany Loan Amount
by more than $5,000,000, then the amount of such excess shall be
extinguished and Seller shall forgo the right to collect from CRSI and
the Subsidiaries the amount of such excess.
2.6.5 FEES AND EXPENSES. All fees and expenses of the Arbiter (if
any), shall be borne equally between Buyer and Seller. If Buyer or TBG
engages any outside auditing firm or consultant to assist in its review and
analysis of the Preliminary Closing Statement or the Pre-Closing
Intercompany Statement, or to certify any financial statements of CRSI and
the Subsidiaries at the Closing Date in connection with any filing required
under the Securities Act or the Exchange Act and the regulations and Forms
adopted pursuant to either Act, the fees and expenses of such firm or
consultant shall be borne by Buyer and TBG at their sole expense.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to TBG and to Buyer, as of the
date hereof and as of the Closing Date, as follows:
SECTION 3.1 CORPORATE STATUS AND AUTHORITY OF SELLER. Seller is a
corporation duly incorporated, validly existing and in good standing under
the laws of the District of Columbia, and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as currently conducted in all material respects and to enter into
and perform this Agreement and the Ancillary Agreements and to consummate
the transactions contemplated hereby and thereby. The execution, delivery
and performance by Seller of this Agreement and the Ancillary Agreements
have been duly authorized by all requisite corporate action on the part of
Seller. This Agreement is and, when executed at the Closing, each Ancillary
Agreement will be a valid and binding obligation of Seller, enforceable
against Seller in accordance with its respective terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application referring to or affecting the enforcement of
creditors' rights, or by general equitable principles.
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SECTION 3.2 NO CONFLICTS, ETC.
3.2.1 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by Seller and CRSI and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a breach of any provision of the
Articles of Incorporation or by-laws of Seller or the Certificates of
Incorporation or by-laws of CRSI or any Subsidiary;
(b) except as set forth on Schedule 3.2.1, result in a default
(or give rise to any right to termination, cancellation or
acceleration after lapse of time or the giving of notice or both) or
result in the creation of any Liens under any of the terms, conditions
or provisions of any (i) loan agreement, note, bond, mortgage, deed of
trust or indenture to which Seller, CRSI or any Subsidiary is a party,
(ii) Material Lease or (iii) any contract listed on Schedule 3.11.1;
and
(c) violate any Laws applicable to or binding upon Seller, CRSI
or any Subsidiary or their respective properties or assets.
3.2.2 CONSENTS AND APPROVALS. Except as set forth on Schedule
3.2.2 delivered hereunder, no material consent, approval or authorization
of or filing with any Governmental Authority or other Person is required on
the part of Seller, CRSI or any of the Subsidiaries in connection with the
execution and delivery of this Agreement and the Ancillary Agreements by
Seller and CRSI or the consummation by Seller and CRSI of the transactions
contemplated hereby or thereby, except for:
(a) the pre-merger notification filings required to be made by
Seller and Buyer under the HSR Act; and
(b) the joint notification required pursuant to the Exon-▇▇▇▇▇▇
Amendment.
SECTION 3.3 CORPORATE STATUS AND AUTHORITY OF CRSI AND THE
SUBSIDIARIES. Each of CRSI and each of the Subsidiaries (i) is a
corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (ii) has the requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as currently conducted and (iii) is duly qualified
to transact business in each jurisdiction in which the nature of its
business or the location of its assets requires it to be so qualified,
other than those jurisdictions in which the failure to be so qualified is
not, individually or in the aggregate, reasonably expected to have a
Material Adverse Effect on CRSI or any of the Subsidiaries. Schedule 3.3
delivered hereunder contains a list of each subsidiary, its stockholders
and the capital stock owned by them and such subsidiary's
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jurisdiction of incorporation, whether direct or indirect or wholly or
partially owned, of CRSI (other than such subsidiaries that are included
among the Excluded Assets) (collectively, the "Subsidiaries"). None of CRSI
or any Subsidiary has any equity interest or investment in any corporation,
partnership, joint venture, limited liability company, association or other
business organization other than as set forth on Schedule 3.3 delivered
hereunder. Schedule 3.3 contains a list of each jurisdiction in which CRSI
and the Subsidiaries are qualified to transact business. The Seller has
made available to Buyer true, complete and correct copies of the
Certificate or Articles of Incorporation and all amendments thereto of CRSI
and each Subsidiary and the by-laws of CRSI and each Subsidiary as in
effect on the date hereof. The minute and stock transfer books of CRSI and
each Subsidiary have been made available to Buyer and TBG.
SECTION 3.4 OWNERSHIP OF CRSI AND THE SUBSIDIARIES. The Shares consist
of all of the issued and outstanding shares of capital stock of CRSI.
Seller owns beneficially and of record all of the Shares free and clear of
any Lien other than Liens for taxes and assessments and other governmental
charges not yet due or which are being contested in good faith and by
appropriate proceedings. CRSI or a Subsidiary owns beneficially and of
record all of the issued and outstanding shares of capital stock of each of
the Subsidiaries listed as being owned by CRSI or such Subsidiary on
Schedule 3.3 free and clear of any Lien other than Liens for taxes and
assessments and other governmental charges not yet due or which are being
contested in good faith and by appropriate proceedings. All of the Shares
and the shares of capital stock of the Subsidiaries have been duly
authorized, validly issued and are fully paid and nonassessable, and (ii)
except as contemplated by this Agreement or as otherwise set forth on
Schedule 3.4, there are no existing options, warrants, calls, rights,
arrangements or commitments of any character relating to the authorized and
unissued capital stock of CRSI and the Subsidiaries or to any securities or
obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire from Seller, CRSI or the Subsidiaries,
any shares of capital stock of CRSI or any Subsidiary, and no such
convertible or exchangeable securities or obligations are outstanding.
There are no voting trusts or other agreements or understandings to which
the Seller or CRSI or any of the Subsidiaries is bound with respect to the
voting of the capital stock of CRSI or any of the Subsidiaries. There are
no stock appreciation rights, phantom stock rights or similar rights or
arrangements outstanding. With respect to the period existing prior to the
CRSI Acquisition Date, all securities issued by CRSI or the Subsidiaries
were, to the Knowledge of Seller, acquired in transactions complying with
the Securities Act and all applicable laws. With respect to the period
existing from and after the CRSI Acquisition Date, all securities issued by
CRSI or the Subsidiaries were acquired in transactions complying with the
Securities Act and all applicable laws.
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SECTION 3.5 TRANSFER OF SHARES. Upon delivery of the Shares and the
payment of the Purchase Price therefor as contemplated by this Agreement,
Buyer will receive at the Closing good and valid title to the Shares
purchased by it, free and clear of any Lien except for any Lien that may
arise from acts or omissions of Buyer and except for restrictions on
transfer under the Securities Act, any state "Blue Sky" law and any
applicable foreign law or regulation.
SECTION 3.6 FINANCIAL STATEMENTS, ETC.
3.6.1 SCHEDULES. Schedule 3.6.1 delivered hereunder contains
true, correct and complete copies of:
(a) the Unadjusted June Balance Sheet certified by Seller's Firm,
and the related statement of income for CRSI and its subsidiaries for
the period January 1, 1997 through June 30, 1997, certified by the
Controller of Seller (collectively, the "Unadjusted June Statements");
(b) the Adjusted June Balance Sheet and the related statement of
income for CRSI and the Subsidiaries for the period January 1, 1997
through June 30, 1997 (excluding, for purposes of clarity, the
Excluded Assets and Liabilities), each certified by the Controller of
Seller (collectively, the "Adjusted June Statements"), and a
reconciliation statement showing the adjustments from the Unadjusted
June Statements to the Adjusted June Statements, certified by the
Controller of Seller;
(c) the consolidated balance sheet of CRSI and its subsidiaries
as of December 31, 1997, and the related statement of income for CRSI
and its subsidiaries for the year then ended (collectively, the
"Unadjusted December Statements"), each certified by the Controller of
Seller and each of which have been prepared on a basis consistent with
the accounting principles, practices, classifications, estimates,
assumptions and methodologies used in the preparation of the
Unadjusted June Statements; and
(d) the consolidated balance sheet of CRSI and the Subsidiaries
as of December 31, 1997 and the related statements of income and cash
flows for CRSI and the Subsidiaries for the year then ended
(collectively the "Adjusted December Statements") (excluding, for
purposes of clarity, the Excluded Assets and Liabilities), each
certified by the Controller of Seller and each of which have been
prepared on a basis consistent with the accounting principles,
practices, classifications, estimates, assumptions and methodologies
used in the preparation of the Adjusted June Statements, and a
reconciliation statement showing the adjustments from the Unadjusted
December Statements to the Adjusted December Statements, certified by
the Controller of Seller.
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The Unadjusted June Statements, the Adjusted June Statements, the
Unadjusted December Statements, the Adjusted December Statements and the
related reconciliation statements referenced above are hereinafter
collectively referred to as the "Financial Statements."
3.6.2 ACCURACY. The data set forth in Schedule 3.6.1 are in
accordance with the books and records of CRSI and the Subsidiaries, and
when applicable the Excluded Subsidiaries, and fairly present the financial
condition, the results of the operations, retained earnings and cash flows
for CRSI and the Subsidiaries, and when applicable the Excluded
Subsidiaries, for the dates or periods therein indicated. The Financial
Statements were prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP") with such deviations as may be
referred to in the notes thereto or in Schedule 3.6.1, and subject, with
respect to the Unadjusted June Statements and the Adjusted June Statements,
to normal year-end adjustments.
3.6.3 NO UNDISCLOSED LIABILITIES. Except as set forth on Schedule
3.6.1, neither CRSI or any of the Subsidiaries has any material
Liabilities, except for (i) Liabilities reflected or reserved against in
the Financial Statements, (ii) Liabilities under contracts, agreements and
arrangements to which they are a party or bound, including without
limitation those that are set forth in Schedule 3.11.1, which Liabilities
have arisen in the ordinary course of business, and (iii) Liabilities that
have arisen since the date of the Financial Statements in the ordinary
course of business, (none of which relates to breach of contract, breach of
warranty, tort, infringement, violation of Law or any action, suit or
Proceeding (including any Liability under any Environmental Laws)). There
were no material loss contingencies (as such term is used in the Statement
of Financial Accounting Standards No. 5 issued by the Financial Accounting
Standards Board in March 1975) that were not adequately provided for in the
Financial Statements as of the dates therein indicated.
3.6.4 ABSENCE OF CHANGES. Other than as set forth in Schedule
3.6.4 delivered hereunder, since June 30, 1997, the Business has been
operated in the ordinary course and consistent with past practice and there
has not been:
(a) Any increase in the rate or terms of compensation payable to
any of the directors, officers or employees of CRSI or the
Subsidiaries, except increases occurring in the ordinary course of
business in accordance with their customary practices (which shall
include normal periodic performance reviews and related compensation
and benefit increases);
(b) Any material increase in the rate or terms of any bonus,
insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any of the officers or employees of
CRSI or the Subsidiaries, except increases occurring in the ordinary
course of business in
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accordance with their customary practices (which shall include normal
periodic performance reviews and related compensation and benefit
increases);
(c) Any loan to, or guarantee or assumption of any loan or
obligation by Seller, CRSI or the Subsidiaries on behalf of, any
officer or employee of CRSI or the Subsidiaries except advances
occurring in the ordinary course of business in accordance with
customary practices;
(d) Any entry into any agreement, commitment, or transaction
(including without limitation any borrowing, capital expenditure or
capital financing) by Seller, CRSI or the Subsidiaries in respect of
CRSI or the Subsidiaries except agreements, commitments or
transactions contemplated by this Agreement or entered into in the
ordinary course of business;
(e) Any material change by CRSI or the Subsidiaries in their
accounting methods, practices, or principles not otherwise required by
GAAP;
(f) Except as otherwise provided by the Distribution Agreement,
any declaration or payment of any dividend or other distribution on or
with respect to the shares of capital stock of CRSI or any Subsidiary
or securities exercisable or exchangeable for, or convertible into,
capital stock of CRSI or any Subsidiary, or any direct or indirect
redemption, purchase or other acquisition of any shares of capital
stock or other securities of CRSI or any Subsidiary;
(g) Any waiver or release of any material rights of CRSI or any
of the Subsidiaries, except in the ordinary course of business and for
fair value, or any lapse or other loss of a material right of CRSI or
any of the Subsidiaries to use its assets or conduct the Business
(except as otherwise contemplated by the Distribution Agreement and
the Assignment and Assumption Agreements);
(h) Any sale, assignment, transfer or lease of any assets of CRSI
or any Subsidiary, tangible or intangible, except (i) in the ordinary
course of business, (ii) in an amount not in excess of $100,000, or
(iii) as effected pursuant to the Distribution Agreement and the
Assignment and Assumption Agreements;
(i) Any subjection of any assets of CRSI or any Subsidiary,
tangible or intangible, to any Lien, other than Permitted Liens or
Liens not in excess of $100,000;
(j) Any acceleration, termination, modification or cancellation
of any contract, agreement or instrument listed on Schedule 3.11.1, or
any contract, agreement or instrument related thereto to which CRSI or
any Subsidiary is a party and to the Seller's Knowledge no party
intends to take such action;
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(k) Any change in the Business, financial condition, assets or
liabilities of CRSI and the Subsidiaries which has had a Material
Adverse Effect upon CRSI and the Subsidiaries, taken as a whole; or
(l) Any material change in the policies of CRSI or any of the
Subsidiaries with respect to the payment of accounts payable or other
current Liabilities or the posting and collection of accounts
receivable, including any deferral of the payment or posting and
collection thereof, as applicable, PROVIDED THAT the foregoing shall
not preclude CRSI and the Subsidiaries from attempting to and
collecting all outstanding receivables prior to Closing, or from
adopting and following other cash management actions permitted by
Section 5.1.2.
SECTION 3.7 PROPERTIES; LEASES; TANGIBLE ASSETS.
3.7.1 TITLE. Schedule 3.7.1 delivered hereunder sets forth a
complete list of all Real Property. The Real Property listed on Schedule
3.7.1 hereof and owned, operated or used by CRSI or the Subsidiaries as of
the date hereof constitute all real property necessary for CRSI and the
Subsidiaries to carry on the Business as presently conducted by CRSI and
the Subsidiaries. CRSI and the Subsidiaries have good and marketable title
to all Real Properties and tangible assets which they purport to own,
including all Real Properties and tangible assets reflected in the Adjusted
December Statements, except those real properties and tangible assets
disposed of in the ordinary course of business since December 31, 1997.
Except as set forth on Schedule 3.7.1, neither CRSI nor any of the
Subsidiaries has received notice of any increase in the assessed valuation
of the Real Property and no notice of any contemplated special assessment
of the Real Property has been received by CRSI or any of the Subsidiaries,
and, to the Seller's Knowledge, there is no threatened increase in assessed
valuation or threatened special assessment pertaining to any of the Real
Property. The title to each such Real Property and tangible asset is free
and clear of all Liens, except as follows (such permitted liens,
collectively, the "Permitted Liens"):
(a) The Lien of current Taxes not yet due and payable, or of
Taxes the validity of which is being contested in good faith by
appropriate proceedings;
(b) Any Lien reflected on the Financial Statements, with such
changes in the amount thereof as may have occurred in the ordinary
course of business prior to the Closing Date;
(c) Such other imperfections of title or Liens which, as of the
Closing Date, will not diminish in any material way the value or
diminish in any way the current use of the specific property affected
thereby; and
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(d) Any Lien identified on Schedule 3.7.1 delivered hereunder.
3.7.2 LEASES. Schedule 3.7.2 delivered hereunder identifies all
leases by which CRSI and the Subsidiaries lease (a) Real Property as a
lessee and (b) equipment, wherein, with respect to such equipment leases,
CRSI or any Subsidiary is obligated to make payments of One Hundred
Thousand Dollars ($100,000) or more per year (clauses (a) and (b),
collectively, the "Material Leases" and, individually, a "Material Lease").
With respect to such Material Leases, there exist no defaults by CRSI and
the Subsidiaries, as the case may be, or to the Knowledge of Seller,
defaults by any third party, that adversely affect the rights and
privileges under such lease of CRSI and the Subsidiaries in any material
respects.
3.7.3 DOCUMENTS.
(a) True, complete and correct copies of (i) all Material Leases
and (ii) all deeds, title insurance policies, surveys, mortgages,
agreements and other documents, instruments, agreements or
understandings granting to CRSI or any of the Subsidiaries title to,
or an interest in, or otherwise affecting or evidencing the state of
title to any Real Property owned or purported to be owned by CRSI or
any Subsidiary, together with all amendments, modifications and
supplements thereto (collectively, the "Title Documents"), have been
delivered or made available to the Buyer.
(b) Except as set forth on Schedule 3.7.3(b), with respect to any
Real Property owned or purported to be owned by CRSI or any
Subsidiary, no portion thereof is subject to any pending condemnation
proceeding or proceeding by any public or quasi-public authority of
which CRSI or any of the Subsidiaries has received written notice and,
to Seller's Knowledge, there is no threatened condemnation or
proceeding with respect thereto. The physical condition of the Real
Property, to Seller's Knowledge, is sufficient for the conduct of the
Business as presently conducted subject to the provision of usual and
customary maintenance and repair performed in the ordinary course with
respect to similar properties of like age and construction.
(c) Except as set forth on Schedule 3.7.3(c), there are no
contracts, written or oral, to which CRSI or any of the Subsidiaries
is a party, granting to any party or parties (other than CRSI or any
Subsidiary) the right of use or occupancy of any portion of any of the
Real Properties.
SECTION 3.8 ACCOUNTS RECEIVABLE. The billed and unbilled accounts
receivable of CRSI and the Subsidiaries as of December 31, 1997, statements
of which have been separately furnished or made available to Buyer,
accurately reflect, in accordance with GAAP, the accounts receivable of
CRSI and the Subsidiaries as of such date, and such billed and unbilled
accounts receivable arose from bona fide transactions which occurred in the
ordinary course of business, except as disclosed
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in Schedule 3.6.1. Except as set forth on Schedule 3.8 delivered hereunder,
as of the month ended December 31, 1997 with respect to CRSI and the
Subsidiaries, there is (i) no account debtor or note debtor delinquent in
its payment by more than 90 days, (ii) no account debtor or note debtor
that has refused or overtly threatened to refuse to pay its obligations for
any reason, (iii) to the Knowledge of Seller, no account debtor or note
debtor that is insolvent or bankrupt and (iv) no account receivable or note
receivable is pledged to any third party by CRSI or any Subsidiary.
SECTION 3.9 INVENTORY. The inventory, work in process and spare parts
of CRSI and the Subsidiaries (the "Inventory") at December 31, 1997 have
been acquired or manufactured in the ordinary course of business and in
accordance with CRSI's and the Subsidiaries' normal inventory practices.
Since December 31, 1997, CRSI and the Subsidiaries have continued to
replenish their Inventory in a normal and customary manner consistent with
past practices.
SECTION 3.10 INTELLECTUAL PROPERTY.
3.10.1 PATENTS AND KNOW-HOW. Schedule 3.10.1 delivered hereunder
sets forth a complete and accurate list of each patent, patent application
and docketed invention, by date and germane case or docket number and
country of origin, and each license or licensing agreement, by date, term
and the parties thereto, for each patent, patent application or docketed
invention, held or used by CRSI or any of the Subsidiaries and relevant to
the Business (each such patent, patent application, license or licensing
agreement listed thereon hereinafter termed the "Patents and Licenses").
With respect to the Patents and Licenses, and with respect to all other
technology held or used by CRSI or any of the Subsidiaries, including but
not limited to research and development results, computer programs,
processes, trade secrets, know-how, formulae, chip designs, mask works,
inventions and manufacturing, engineering, quality control, testing,
operational, logistical, maintenance and other technical information and
technology held or employed by CRSI and the Subsidiaries ("CRSI
Technology"), and except as set forth on Schedule 3.10.1 delivered
hereunder:
(a) Each of CRSI and the Subsidiaries has all right, title and
interest in, or a valid license to use, the Patents and Licenses and
the CRSI Technology owned or licensed by it, free and clear of all
Liens (other than Permitted Liens and, in the case of the Patents and
Licenses and the CRSI Technology licensed to CRSI or any Subsidiary,
the rights of any licensor) with all rights to make, use, and sell the
property embodied in or described in the Patents and Licenses and in
the CRSI Technology. The use of the Patents and Licenses or the CRSI
Technology does not conflict with, infringe upon or violate any
patent, patent license, patent application, trademark, trade name,
trademark or trade name registration, copyright, copyright
registration, service ▇▇▇▇, brand ▇▇▇▇ or brand name or any pending
application relating thereto, or any trade secret, know-how, programs
or processes of any third Person;
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(b) There are no outstanding or, to the Knowledge of Seller,
threatened governmental, judicial or adversary proceedings, hearings,
arbitrations, disputes or other disagreements and no notice or other
written assertion of infringement has been served upon CRSI or the
Subsidiaries or otherwise come to the Knowledge of Seller with respect
to, any of the Patents and Licenses or the CRSI Technology; and
(c) Neither the Seller nor CRSI or any of the Subsidiaries has
communicated to any Person any notice or assertion of infringement or
misappropriation by any Person of, or has any Knowledge of threatened
infringement or misappropriation by any Person of, the Patents and
Licenses or CRSI Technology.
3.10.2 TRADEMARKS AND COPYRIGHTS. Schedule 3.10.2 delivered
hereunder sets forth a complete and accurate list of each trademark, trade
name, and trademark and trade name registration or application, and
copyright registration and application for copyright registration, by date
and germane case or docket number and country of origin, and each license
or licensing agreement, by date and the parties thereto, for each trademark
and copyright license or license of application, held or employed by CRSI
or any of the Subsidiaries (other than the name "COMSAT") (each such
trademark, trade name, copyright, application, and license or licensing
agreement hereafter termed the "Trademarks and Licenses"). With respect to
the Trademarks and Licenses, and except as set forth on Schedule 3.10.2:
(a) Each of CRSI and the Subsidiaries has all right, title and
interest in, or a valid license to use, the Trademarks and Licenses
owned or licensed by it, free and clear of all Liens (other than
Permitted Liens and, in the case of the Trademarks and Licenses
licensed to CRSI or any Subsidiary, the rights of any licensor). The
use by CRSI and the Subsidiaries of the Trademarks and Licenses does
not conflict with, infringe upon or violate any patent, patent
license, patent application, trademark, trade name, registration or
application, copyright, copyright registration or application relating
thereto, of any third Person;
(b) There are no outstanding or, to the Knowledge of Seller,
threatened governmental, judicial or adversary proceedings, hearings,
arbitrations, disputes or other disagreements, and no notice or other
assertion of infringement has been served upon CRSI or any of the
Subsidiaries or otherwise come to the Knowledge of Seller, with
respect to any of the Trademarks and Licenses; and
(c) Neither the Seller nor CRSI or any of the Subsidiaries has
communicated to any Person any notice or assertion of infringement or
misappropriation by any Person of, or has any Knowledge of threatened
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infringement or misappropriation by any Person of, the Trademarks and
Licenses.
3.10.3 COMPUTER SOFTWARE. Schedule 3.10.3 delivered hereunder
contains a list of all computer software programs, computer data base
programs and related documentation and materials which are used by CRSI and
the Subsidiaries other than any computer software programs, computer data
base programs and related documentation and materials subject to
"shrink-wrap" licenses (such software, data bases, and related materials,
the "Computer Software"). With respect to such Computer Software, and
except as set forth in Schedule 3.10.3:
(a) Each of CRSI and the Subsidiaries has all right, title and
interest in or a license to use the Computer Software (and any
materials subject to a shrink-wrap license) owned by or licensed to
it, free and clear of all Liens (other than Permitted Liens and, in
the case of Computer Software (and any materials subject to a
shrink-wrap license) licensed to it, the rights of any licensor) or
otherwise has all rights necessary to license customers of CRSI and
the Subsidiaries to use the Computer Software. The use of the Computer
Software by CRSI and the Subsidiaries does not conflict with, infringe
upon or violate any patent, patent license, patent application,
copyright, copyright registration or application, of any third Person;
(b) There are no pending or, to the Knowledge of Seller,
threatened governmental, judicial or adversary proceedings, hearings,
arbitrations, disputes or other disagreements and no notice or other
assertion of infringement has been served upon CRSI or any of the
Subsidiaries or otherwise come to the Knowledge of Seller, with
respect to any of the Computer Software; and
(c) Neither the Seller nor CRSI or any of the Subsidiaries has
communicated to any Person any notice or assertion of infringement or
misappropriation by any Person of, or has any Knowledge of threatened
infringement or misappropriation by any Person of, the Computer
Software.
SECTION 3.11 MATERIAL CONTRACTS.
3.11.1 IDENTIFICATION. Schedule 3.11.1 delivered hereunder sets
forth a list, as of the date hereof, of the following matters pertaining to
certain contracts and obligations to which CRSI and any of the Subsidiaries
are a party (other than such contracts and obligations relating exclusively
to the Excluded Assets and Liabilities):
(a) All contracts, subcontracts, agreements (including teaming
agreements) and other arrangements having a total value of $1,000,000
or greater (but without duplication of any contract, subcontract,
agreement
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(including any teaming agreement) or other arrangement of the type
described in clauses (b) through (i) of this Subsection 3.11.1);
(b) All loan, bond, surety or debt agreements (including notes
and reimbursement agreements relating to letters of credit and
guarantees);
(c) All agreements providing for the guarantee by Seller of the
obligations of CRSI or any of the Subsidiaries, including all
reimbursement agreements relating to letters of credit issued on
behalf of CRSI or any Subsidiary;
(d) All distributorship, commission agent or consulting
agreements providing for the marketing and/or sale of the products or
services of CRSI or any Subsidiary;
(e) All partnership, limited liability company, strategic
partnership and joint venture agreements;
(f) All individualized employment or consulting contracts or
similar arrangements obligating CRSI or any of the Subsidiaries to pay
more than $100,000 per year;
(g) All contracts or licenses pursuant to which CRSI or any of
the Subsidiaries has acquired a license in, or has licensed to others,
intellectual property material to the Business or which requires the
payment by CRSI or such Subsidiary of a fee of $100,000 or more per
year;
(h) All contracts, agreements, instruments or arrangements that
prohibit CRSI or any Subsidiary from freely engaging in business
anywhere in the world; and
(i) All contracts, agreements, instruments or arrangements
pursuant to which CRSI or any of the Subsidiaries purchases equipment,
parts, raw materials or other items from a Person who is the sole
supplier thereof in the United States to the extent such equipment,
parts, raw materials or other items would, if unavailable, have a
Material Adverse Effect on the Business or CRSI or any of the
Subsidiaries.
3.11.2 FULL FORCE AND EFFECT. Except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application referring to or affecting enforcement of creditors'
rights, and by general equitable principles and except as set forth on
Schedule 3.11.2 delivered hereunder, all agreements, contracts and
obligations identified on Schedule 3.11.1 are valid and binding against
CRSI or the Subsidiary a party thereto and, to the Knowledge of Seller, any
other party thereto except to the extent that enforceability
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of a Government Contract may be limited by (i) the unfunded support of such
Government Contract or program to which such Government Contract relates,
and (ii) the right of the customer to terminate any Government Contract for
convenience. Except as set forth on Schedule 3.11.2, each of CRSI and each
of the Subsidiaries have in all material respects performed all the
obligations required to be performed by it to date, and is not in default
or alleged to be in default in any material respect, under any agreement,
contract or obligation specified on Schedule 3.11.1, and there exists no
event, condition or occurrence which, after notice or lapse of time, or
both, would constitute such a default by CRSI or any of the Subsidiaries of
any such agreement, contract or obligation. To the Knowledge of Seller, and
except as set forth on Schedule 3.11.2, the parties (other than CRSI or any
Subsidiary) to the agreements, contracts or obligations specified on
Schedule 3.11.1 are not in default in any material respect of their
respective obligations under such agreements, contracts or obligations.
CRSI has furnished or made available to Buyer true and complete copies of
all documents listed on Schedule 3.11.1 or complete descriptions of all
material terms of any oral contract or arrangement listed on Schedule
3.11.1.
SECTION 3.12 LITIGATION AND INVESTIGATION. Except as set forth on
Schedule 3.12 delivered hereunder, neither CRSI nor any of the Subsidiaries
have been served as a party in, or have become or been made a party to, any
pending suits, actions or proceedings, or to the Knowledge of Seller any
investigations by a Governmental Authority, which, if adversely determined,
would result in liability in excess of $25,000, and neither CRSI nor any of
the Subsidiaries have, to the Knowledge of Seller, received notice of any
threatened suits, actions or proceedings, or any threatened investigations
which, if adversely determined, would result in liability in excess of
$25,000, nor any which seek to enjoin this Agreement. Except as set forth
on Schedule 3.12, neither Seller, CRSI nor any of the Subsidiaries has
received any written opinion or memorandum or other written legal advice
from legal counsel to the effect that CRSI or any Subsidiary is exposed,
from a legal standpoint, to any liability or disadvantage which may be
material to the Business or to CRSI's or any of the Subsidiaries' financial
condition, operations, property or affairs.
SECTION 3.13 TAXES. Except as set forth on Schedule 3.13 delivered
hereunder:
(a) CRSI and the Subsidiaries have to the date hereof timely
filed and shall prior to the Closing Date timely file all material Tax
Returns which have been or shall be required to have been filed by
them on or before the Closing Date, including, without limitation, the
Tax Returns of any consolidated, combined or unitary group of which
CRSI or the Subsidiaries is or has been a member and with respect to
which CRSI or any of the Subsidiaries is required to file a material
Tax Return, and have paid all material Taxes due to any authority
required to have been paid by them on or prior to the date hereof. The
Tax Returns filed and to be filed on or before the Closing Date with
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respect to CRSI and the Subsidiaries are and shall be true, correct
and complete in all material respects;
(b) None of Seller, CRSI or the Subsidiaries has received notice
that any Taxing authority has asserted against CRSI or any Subsidiary
any deficiency or claim for Taxes and no issue has been raised in any
audit by any Taxing authority which, by application of similar
principles, reasonably could be expected to result in a proposed
deficiency for any period not so examined;
(c) All Tax deficiencies asserted or assessments against CRSI or
any of the Subsidiaries have been paid or finally settled with no
remaining amounts owed (including interest and penalties);
(d) There is no pending or, to the Knowledge of Seller,
threatened action, audit, proceeding or investigation with respect to
CRSI or any of the Subsidiaries involving (i) the assessment or
collection of Taxes or (ii) a claim for refund made by any of them
with respect to Taxes previously paid;
(e) All material amounts that are required to be collected or
withheld by CRSI and the Subsidiaries, or with respect to Taxes of
CRSI and the Subsidiaries, have been duly collected or withheld, and
all such material amounts that are required to be remitted to any
Taxing authority have been duly remitted;
(f) There are no outstanding waivers of any statute of
limitations with respect to the assessment of any Tax against CRSI or
any Subsidiary;
(g) Neither CRSI nor any Subsidiary has taken action that would
have the effect of deferring any material Tax liability from any
period ending on or before the Closing Date to any period ending after
such date, including any change in the method of accounting, but
excluding any election or method of accounting that it would not be
unusual for a taxpayer in the business of CRSI or any Subsidiary, as
the case may be, to make or employ in the ordinary course of business;
(h) Neither CRSI nor any Subsidiary has taken any action the
income with respect to which will be taken into account under the
installment method in a taxable period ending after the Closing Date;
(i) There are no material Liens for Taxes due and payable upon
the assets of CRSI or any Subsidiary, and no action to the Knowledge
of the Seller has been instituted against CRSI or any Subsidiary that
would reasonably result in any such Lien;
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(j) Neither CRSI nor any of the Subsidiaries (i) has made an
election to be treated as a "consenting corporation" under Section
341(f) of the Code or (ii) is a "personal holding company" within the
meaning of Section 542 of the Code. Neither CRSI nor any of the
Subsidiaries has agreed, nor is required, to make any adjustment under
Section 481(a) of the Code by reason of a change in accounting method
or otherwise. Neither CRSI nor any of the Subsidiaries will incur a
Tax Liability resulting from ceasing to be a member of a consolidated
or combined group that had previously filed consolidated, combined or
unitary Tax returns;
(k) Neither CRSI nor any of the Subsidiaries is party to a
tax-sharing agreement, allocation agreement or other contractual
obligation to pay the tax obligations of, or indemnify, any other
Person with respect to any Tax;
(l) There is no Contract covering any Person that individually or
collectively could, as a result of the transactions contemplated
hereby, or otherwise, give rise to the payment of an amount by CRSI or
any of the Subsidiaries which would be nondeductible by reason of
Section 280G of the Code;
(m) No power of attorney has been executed by CRSI or any of the
Subsidiaries with respect to any matter relating to Taxes which will
remain in force after the Closing Date;
(n) There are no outstanding requests for rulings or
determinations in respect of any Tax pending (i) between CRSI or any
of the Subsidiaries and any Taxing authority or (ii) between Seller or
any member of Seller's consolidated, combined or unitary group and any
Taxing authority that would affect CRSI or any of the Subsidiaries;
(o) CRSI and the Subsidiaries are registered to do business in
the states and localities set forth in Schedule 3.3 and CRSI and the
Subsidiaries file Tax Returns in the states and localities set forth
in Schedule 3.3; and
(p) Seller has delivered or made available to Buyer complete
copies of all CRSI and Subsidiary Tax Returns (or relevant extracts
thereof in the case of consolidated, combined or unitary Tax Returns)
for all Tax periods ending on or after December 31, 1994.
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SECTION 3.14 EMPLOYEES; COMPENSATION; LABOR.
3.14.1 EMPLOYEES AND COMPENSATION. Seller has delivered or made
available to Buyer prior to the date of this Agreement complete and correct
copies of all written employment agreements of individuals employed in the
Business which call for annual compensation (together with bonuses) of
$100,000 or greater. Schedule 3.14.1(a) delivered hereunder lists (i) all
executive compensation plans, bonus plans, incentive compensation plans,
deferred compensation agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase plans, group
life insurance, hospitalization insurance or other plans providing for
benefits for the employees of the Business (the "Employees"); (ii) all
individuals employed in the Business (other than the Excluded Employees)
who receive annual compensation (together with bonuses) of $100,000 or
greater, and such individual's current salary; and (iii) all material
employment policies, procedures, manuals, and other similar rules,
regulations and by-laws regarding the general conduct, compensation, labor
relations and employment of the Employees.
3.14.2 CERTAIN LABOR MATTERS. Except as set forth on Schedule
3.14.2 delivered hereunder:
(a) There is no union representing the interests of any of the
Employees, and to the Knowledge of Seller there are no such Employees
seeking or attempting to organize other union representation;
(b) There are neither pending nor, to the Knowledge of Seller,
threatened any strikes, work stoppages, work disruptions or employment
disruptions by any of the Employees;
(c) There are neither pending nor, to the Knowledge of Seller,
threatened any suits, actions, administrative proceedings, hearings,
arbitrations or other proceedings between Seller or CRSI or any
Subsidiary and any of the Employees or former Employees;
(d) Neither CRSI nor any of the Subsidiaries is delinquent in
payments to any of its Employees for any wages, salaries, commissions,
bonuses or other direct compensation for any services performed by
them to date or amounts required to be reimbursed to such Employees;
(e) To the Knowledge of Seller, no employee of CRSI or any
Subsidiary listed on Schedule I intends to terminate his or her
employment or engagement with CRSI or any Subsidiary as a result of
the transaction contemplated by this Agreement, and no regional
manager or facility manager or officer of CRSI or any Subsidiary has
terminated such employment or engagement during the six month period
prior to the date hereof; and
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(f) Each welfare benefit plan covering present or former
Employees of CRSI and the Subsidiaries which is a "group health plan,"
within the meaning of Section 5000 of the Code, has been maintained in
compliance with Section 4980B of the Code and Title I, Subtitle B,
part 6 of ERISA and no Tax payable on account of Section 4980B of the
Code has been or is expected to be incurred.
3.14.3 EMPLOYEE BENEFIT PLANS; ERISA. Schedule 3.14.3 delivered
hereunder lists each employee benefit plan or arrangement maintained or
contributed to by CRSI or any Subsidiary that is either an "employee
pension benefit plan," or "employee welfare benefit plan" as such terms are
defined in Section 3 of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA"), which covers any current or former employee of CRSI and the
Subsidiaries (each such plan is hereinafter referred to as an "ERISA
Plan"). Buyer has been provided with copies of each bonus, deferred
compensation, incentive compensation, stock purchase or stock option plan
maintained or contributed to by CRSI or any Subsidiary. Except as set forth
on Schedule 3.14.3:
(a) Neither CRSI nor any Subsidiary has ever contributed to a
multi-employer plan, as defined in Section 3(37) of ERISA, which could
result in any liability after Closing to the Buyer;
(b) To the Knowledge of Seller, no fiduciary of any retirement
plan covering present or former employees of CRSI and the Subsidiaries
has engaged in a "prohibited transaction" (as that term is defined in
Section 4975 of the Code and Section 406 of ERISA) which could subject
CRSI or any Subsidiary to a penalty tax imposed by Section 4975 of the
Code or Section 402(i) of ERISA;
(c) All contributions to the retirement plans covering present or
former employees of CRSI and the Subsidiaries have been timely made,
and no retirement plan has an "accumulated funding deficiency" within
the meaning of Section 412 of the Code;
(d) No retirement plan covering present or former employees of
CRSI and the Subsidiaries subject to Title IV of ERISA has incurred
any liability under such title other than for the payment of premiums
to the Pension Benefit Guaranty Corporation ("PBGC"), all of which
have been paid when due; and
(e) No retirement plan covering present or former employees of
CRSI and the Subsidiaries has been terminated within the last 5 years,
nor have there been any "reportable events" (as that term is defined
in Section 4043 of
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ERISA and the regulations thereunder) within the last 5 years which
would present a risk that any such retirement plan would be
terminated.
SECTION 3.15 ENVIRONMENTAL MATTERS.
3.15.1 ENVIRONMENTAL PERMITS. Except as set forth in Schedule
3.15.1 delivered hereunder, each of CRSI and the Subsidiaries has obtained
all permits, licenses and other authorizations relating to its business and
operations and which are required under the Environmental Laws. Schedule
3.15.1 sets forth (i) all such permits, licenses and other authorizations
issued under the Environmental Laws obtained by CRSI and the Subsidiaries,
and (ii) a description and good faith estimate by Seller of the cost of
capital expenditures (if any) that may be necessary to maintain or qualify
for each such permit, license or other authorization.
3.15.2 NO VIOLATION. Except as set forth in Schedule 3.15.2
delivered hereunder, and with respect to their business and operations,
CRSI and the Subsidiaries are in compliance with all terms and conditions
of the required permits, licenses and authorizations (except to the extent
any such failure to be in compliance would not lead to a Liability or Loss
in excess of $10,000), and CRSI and the Subsidiaries are also in compliance
with all Environmental Laws and all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables contained
therein (except to the extent any such failure to be in compliance would
not lead to a Liability or Loss in excess of $10,000).
3.15.3 NO NOTICE. Except as set forth in Schedule 3.15.3
delivered hereunder, there is no pending or overtly threatened civil or
criminal litigation, notice of violation or of potential liability or
administrative action or other Proceeding against CRSI or any Subsidiary or
involving any Real Property that relates in any way to the Environmental
Laws that, if determined adversely against CRSI or any Subsidiary, would
lead to a liability or Loss in excess of $10,000.
3.15.4 NO BASIS FOR LIABILITY. Except as set forth in Schedule
3.15.4 delivered hereunder, with respect to the current or past business or
operations of CRSI, the Subsidiaries or the Real Property, there are no
events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent continued compliance
with the Environmental Laws, or which may give rise to any common law or
other liability under the Environmental Laws, or otherwise form the basis
of any material claim, action, demand, suit, proceeding, hearing, study, or
investigation by a Governmental Authority or other Person which may be
brought under the Environmental Laws or which is based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened
release into the environment, of any Hazardous Materials.
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3.15.5 UNDERGROUND IMPROVEMENTS. Except as set forth in Schedule
3.15.5 delivered hereunder:
(a) no Real Property contains any underground improvements,
including underground storage tanks or underground piping attached to
such storage tanks, used currently or in the past for the management
of Hazardous Materials, and no portion of such Real Property is or has
been used as a dump or landfill or consists of or contains filled in
land; and
(b) no Real Property sold or otherwise transferred by CRSI or
such Subsidiary prior to the CRSI Acquisition Date contained prior to
the CRSI Acquisition Date any underground improvements, including
underground storage tanks or underground piping attached to such
storage tanks, used in the past for the management of Hazardous
Materials, and no portion of such Real Property was, on or prior to
the CRSI Acquisition Date, used as a dump or landfill or consisted of
or contained filled in land.
3.15.6 RECORDS. Seller has furnished to Buyer accurate and
complete information pertaining to the environmental history of the Real
Property to the extent such Real Property is or was related to the
operation of CRSI and the Subsidiaries. To the extent such Real Property is
not or was not so related, Seller has furnished Buyer with accurate and
complete information pertaining to the environmental history of the Real
Property to the best of the Seller's Knowledge.
3.15.7 LIENS. No Lien in favor of any Person relating to or in
connection with any claim under any Environmental Law has been filed or
attached to the Real Property currently owned, operated or leased or
purported to be owned, operated or leased by CRSI or any of the
Subsidiaries.
SECTION 3.16 GOVERNMENT CONTRACTS.
3.16.1 COMPLIANCE. Except as set forth in Schedule 3.16.1
delivered hereunder, with respect to each and every Government Contract or
Government Bid: (i) Seller, CRSI and the Subsidiaries have complied with
all material terms and conditions of such Government Contract or Government
Bid; (ii) CRSI and the Subsidiaries have complied in all material respects
with all requirements of all Laws or agreements pertaining to such
Government Contract or Government Bid; (iii) all representations and
certifications executed, acknowledged or set forth in or pertaining to such
Government Contract or Government Bid were complete and correct in all
material respects as of their effective date, and CRSI and the Subsidiaries
have complied in all material respects with all such representations and
certifications; (iv) neither the United States government nor any prime
contractor, subcontractor or other Person has notified CRSI or any
Subsidiary, either in writing or, to the Knowledge of Seller, orally, that
CRSI or any Subsidiary has breached or violated any statute, regulation,
certification, representation, clause,
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provision or requirement pertaining to such Government Contract or
Government Bid; (v) no termination for convenience, termination for
default, cure notice or show cause notice is currently in effect pertaining
to such Government Contract or Government Bid; (vi) no material cost
incurred by CRSI or the Subsidiaries pertaining to such Government Contract
or Government Bid has been formally questioned or challenged or, to the
Knowledge of Seller, is the subject of any investigation or has been
disallowed by the United States government; (vii) no money due to CRSI or
the Subsidiaries pertaining to such Government Contract or Government Bid
has been withheld or set off nor has any claim been made to withhold or set
off money and CRSI and the Subsidiaries are entitled to all progress
payments received with respect thereto; and (viii) each Government Contract
is valid and subsisting (except to the extent such validity or subsistence
may be limited by (i) the unfunded support of such Government Contract or
program to which such Government Contract relates, and (ii) the right of
the customer to terminate any Government Contract for convenience). To the
extent that any clause in the previous sentence is qualified by the word
"material," the representation contained in such clause is deemed qualified
only to the extent that if the representation were subsequently determined
to be inaccurate or false, that such inaccuracy or misstatement would not
lead to a liability or Loss in excess of $10,000.
3.16.2 INVESTIGATIONS. Except as set forth in Schedule 3.16.2
delivered hereunder: (i) neither Seller in respect of the Business nor CRSI
or any Subsidiary or any of their respective directors, officers or
employees are subject to any indictment by any United States government
entity or under investigation by Seller, CRSI or any Subsidiary, nor are
any of them, to the Knowledge of Seller, under any administrative, civil or
criminal investigation, and none of CRSI or any Subsidiary nor, to the
Knowledge of Seller, any of their respective directors, officers or
employees has received notice of any administrative, civil or criminal
investigation, in each case in respect of any alleged irregularity,
misstatement or omission arising under or relating to any Government
Contract or Government Bid; and (ii) during the last three years, neither
Seller nor CRSI or any Subsidiary have conducted or initiated any internal
investigation or made a voluntary disclosure to the United States
government, with respect to any alleged irregularity, misstatement or
omission arising under or relating to a Government Contract or Government
Bid. Except as set forth in Schedule 3.16.2, there exists no irregularity,
misstatement or omission arising under or relating to any Government
Contract or Government Bid that has led to any of the consequences set
forth in clause (i) or (ii) of the immediately preceding sentence or any
other damage, penalty assessment, recoupment of payment or disallowance of
cost that would lead to a liability or Loss in excess of $10,000.
3.16.3 ABSENCE OF CLAIMS. Except as set forth in Schedule 3.16.3
delivered hereunder, there exist no outstanding claims asserted against
CRSI or any Subsidiary, either by the United States government or by any
prime contractor, subcontractor, vendor or other Person, arising under or
relating to any Government Contract or Government Bid. Except as set forth
in Schedule 3.16.3, CRSI and the
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Subsidiaries have no interest in any pending or, to Seller's Knowledge,
potential claim against the United States government or any prime
contractor, subcontractor or vendor arising under or relating to any
Government Contract or Government Bid. Schedule 3.16.3 lists each
Government Contract which to Seller's Knowledge is currently under audit
(other than routine audits conducted in the ordinary course of business) by
the United States government or any other Person that is a party to such
Government Contract.
3.16.4 ELIGIBILITY. Except as set forth in Schedule 3.16.4
delivered hereunder, (i) neither CRSI nor any Subsidiary has been debarred
or suspended from participation in the award of contracts with the United
States Department of Defense or any other United States government entity
(excluding for this purpose ineligibility to bid on certain contracts due
to generally applicable bidding requirements), (ii) there exist no facts or
circumstances that would warrant the institution of suspension or debarment
proceedings or the finding of nonresponsibility or ineligibility on the
part of CRSI or any Subsidiary or any director or officer of any thereof,
(iii) no payment has been made by CRSI or any Subsidiary, or by any person
on behalf of CRSI or any Subsidiary, in violation of, or requiring
disclosure pursuant to, the Foreign Corrupt Practices Act, and (iv) CRSI's
and the Subsidiaries' cost accounting and procurement systems and the
associated entries reflected in their financial statements with respect to
the Government Contracts are in compliance in all material respects with
all Laws.
SECTION 3.17 COMPLIANCE WITH LAWS.
3.17.1 GENERAL. CRSI and the Subsidiaries are in compliance in
all material respects with all applicable Laws relating to the operation of
the Business, except in respect of those Laws pertaining to contracting
with and procurement by the U.S. Government or any prime contractor thereof
or other Person acting on behalf of the U.S. Government, which are
addressed specifically in Section 3.16 herein.
3.17.2 EXPORT CONTROL. Except as set forth on Schedule 3.17.2,
each of CRSI and the Subsidiaries has in respect of the Business (a) all
licenses for any pending export transactions in connection with past or
current contracts to which CRSI or any Subsidiary is a party, (b) all
licenses and clearances for the disclosure of information to foreign
persons and (c) all registrations with United States governmental entities
with authority to implement applicable export control Laws. Neither Seller,
CRSI nor any Subsidiary has participated directly or indirectly in any
boycotts or other similar practices in violation of the regulations of the
United States Department of Commerce or Section 999 of the Code or any
export control Laws.
3.17.3 SECURITY CLEARANCES. Except to the extent prohibited by
the National Industrial Security Program Operating Manual of the U.S.
Department of
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Defense, Schedule 3.17.3 sets forth all facility clearances held by CRSI or
any Subsidiary, or by Seller in connection with the Business.
SECTION 3.18 INSURANCE. Schedule 3.18 sets forth a correct and
complete list of all policies of insurance (other than any surety or
performance bond policy, which are specifically listed on Schedule 3.11.1
pursuant to Section 3.11.1(b)) maintained by CRSI or any Subsidiary and
applicable to the Business other than workers' compensation policies. Each
of CRSI and each Subsidiary is in compliance with the terms of all policies
and instruments listed on Schedule 3.18. No insurance company or other
Person has mandated in an agreement binding on CRSI or any Subsidiary a
requirement of continued insurance coverage that has not been complied
with. Also included on Schedule 3.18 is a list of all claims in excess of
$50,000 currently pending under any of the policies set forth on Schedule
3.18. Neither CRSI nor any Subsidiary has received any notification of
cancellation of any of such insurance policies and has no claim outstanding
which could be expected to cause a material increase in the insurance
rates. To Seller's Knowledge, no facts or circumstances exist that would
relieve any insurer under any such policies of their obligations to satisfy
in full any claim of CRSI or any Subsidiary thereunder. Neither CRSI nor
any Subsidiary has received any notice that (i) any of such policies has
been or will be cancelled or terminated or will not be renewed on
substantially the same terms as are now in effect or (ii) the premium on
any of such policies will be materially increased on the renewal thereof.
SECTION 3.19 BROKERS. Seller has not paid or become obligated to pay
any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this
Agreement, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
SECTION 3.20 DISCLOSURE. To the Knowledge of Seller, no representation
or warranty of Seller contained in this Agreement and no Schedule or
Exhibit delivered hereunder contains any untrue statement of material fact
or omits to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading. To the Knowledge of Seller, there is no fact,
circumstance or condition which has had or could reasonably be expected to
have a Material Adverse Effect on CRSI and the Subsidiaries taken as a
whole, which has not been set forth in this Agreement, the Schedules or the
Exhibits.
SECTION 3.21 RELATED PARTY TRANSACTIONS. Except as set forth on
Schedule 3.21, and except for compensation to employees of CRSI or any
Subsidiary for services rendered in the ordinary course of business, no
current or former Affiliate of CRSI or any "Associate" (as defined in the
rules and regulations promulgated under the Exchange Act) thereof, is
presently, or during the last three fiscal years has been (i) a party to
any agreement or transaction with CRSI or any of the Subsidiaries
(including, but not limited to, any contract or agreement providing for
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the furnishing of services by, or rental of real or personal property from,
or otherwise requiring payments to, any such Affiliate or Associate); or
(ii) the direct or indirect owner of an interest in any Person which is a
present or potential competitor, supplier or customer of CRSI or any of the
Subsidiaries (other than non-affiliated holdings in publicly held
companies), nor does any such Person receive income from any source other
than CRSI or any Subsidiary which relates to the business of, or should
properly accrue to, CRSI or any Subsidiary. Except as set forth on Schedule
3.21, neither CRSI nor any of the Subsidiaries has provided a Guaranty of
any of its Affiliates' obligations.
SECTION 3.22 BANK ACCOUNTS. Schedule 3.22 contains a correct and
complete list of the names of each bank or other financial institution in
which CRSI or any of the Subsidiaries has an account or safe deposit box,
and the names of all Persons authorized to draw thereon or to have access
thereto.
SECTION 3.23 CONFLICTS OF INTEREST. Neither CRSI, the Seller, the
Subsidiaries nor any officer, employee, agent or other Person acting on
behalf of CRSI, the Seller, or any of the Subsidiaries has, directly or
indirectly, given or agreed to give any money, gift or similar benefit to
be paid or conferred by CRSI or any Subsidiary (other than legal price
concessions and lawful business entertainment to customers and vendors in
the ordinary course of business) to any customer, supplier, employee or
agent of a customer or supplier, or official or employee of any
Governmental Authority or other Person who was, is, or may be in a position
to help or hinder the business of CRSI or any of the Subsidiaries (or
assist in connection with any actual or proposed transaction) that (i)
might subject CRSI or any of the Subsidiaries to any damage or penalty in
any Proceeding, (ii) if not given in the past, would have resulted in a
Material Adverse Effect on CRSI or any of the Subsidiaries, or (iii) if not
continued in the future, could reasonably be expected to have a Material
Adverse Effect on CRSI or any of the Affiliates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TBG AND BUYER
Each of TBG and Buyer hereby jointly and severally represents and
warrants to Seller, as of the date hereof and as of the Closing Date, as
follows:
SECTION 4.1 CORPORATE STATUS AND AUTHORITY OF TBG AND BUYER. Each of
TBG and Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as currently conducted and to enter
into and perform this Agreement and the Ancillary Agreements to which it is
a party and to consummate the
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transactions contemplated hereby and thereby. The execution, delivery and
performance by each of TBG and Buyer of this Agreement and the Ancillary
Agreements to which it is a party have been duly authorized by all
requisite corporate action on the part of TBG and Buyer. This Agreement is
and, when executed at the Closing, each Ancillary Agreement to which it is
a party will be a valid and binding obligation of each of TBG and Buyer,
enforceable against each of them in accordance with its respective terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application referring to or affecting
the enforcement of creditors' rights, or by general equitable principles.
SECTION 4.2 NO CONFLICTS, ETC.
4.2.1 NO CONFLICTS. The execution, delivery and performance by
each of TBG and Buyer of this Agreement and the Ancillary Agreements to
which each is a party and the consummation of the transactions contemplated
hereby and thereby will not:
(a) conflict with or result in a breach of any provision of their
respective charter documents or by-laws;
(b) result in a default (or give rise to any right to
termination, cancellation or acceleration after lapse of time or the
giving of notice or both) under any of the terms, conditions or
provisions of any loan agreement, note, bond, mortgage, deed of trust
or indenture to which each of them is a party; and
(c) violate any Laws applicable to or binding upon TBG or Buyer
or their respective properties or assets.
4.2.2 CONSENTS AND APPROVALS. Except as set forth on Schedule
4.2.2 delivered hereunder, no consent, approval, determination or
authorization of or filing with any Governmental Authority is required on
the part of TBG or Buyer in connection with the execution and delivery by
TBG or Buyer of this Agreement and the Ancillary Agreements to which each
of them is a party or the consummation by each of them of the transactions
contemplated hereby or thereby, except for:
(a) the pre-merger notification filings required to be made by
Seller and Buyer under the HSR Act;
(b) the filing by Buyer required by the Department of Defense
Industrial Security Regulation (DOD 5220.22-R) or the Department of
Defense Industrial Security Manual (DOD 5220.22-M); and
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(c) the joint notification required pursuant to the Exon-▇▇▇▇▇▇
Amendment.
SECTION 4.3 SUFFICIENT FUNDS. Buyer has, or TBG will cause Buyer to
have, sufficient funds to deliver the Purchase Price to Seller at the
Closing and to pay off the Note in accordance with its terms.
SECTION 4.4 BROKERS. None of TBG or Buyer has paid or become obligated
to pay any fee or commission to any broker, finder, investment banker or
other intermediary in connection with the transactions contemplated by this
Agreement.
SECTION 4.5 PURCHASE FOR INVESTMENT. Buyer is acquiring the Shares for
its own account for purposes of investment and not with a view or intent to
any distribution thereof. Buyer understands and acknowledges that the offer
and sale of the Shares as contemplated hereby have not been registered
under the Securities Act, any state "Blue Sky" law, or any applicable
foreign law or regulation, and that any subsequent transfer or offer to
transfer by Buyer or any representative thereof of the Shares are subject
to registration requirements or other restrictions arising under such laws
and regulations in the absence of an available exemption therefrom. The
stock certificates representing the Shares to be delivered at Closing as
contemplated by Section 2.5.2 will carry a legend to such effect.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF THE BUSINESS.
5.1.1 ORDINARY COURSE. Except as permitted or contemplated by
this Agreement or as otherwise consented to by Buyer in writing, such
consent not to be unreasonably withheld or delayed, during the period from
the date of this Agreement to the Closing, Seller will cause CRSI and the
Subsidiaries to conduct the Business and their operations in the ordinary
course consistent with past practices and shall not permit CRSI or the
Subsidiaries to:
(a) make or permit to be made any change in their Certificates of
Incorporation or by-laws or issue any stock, bonds, other corporate
securities or rights to acquire any securities;
(b) classify, combine, split, subdivide or redeem or otherwise
repurchase any of their capital stock or issue, deliver, pledge or
encumber any capital stock or other securities equivalent to or
exchangeable for capital stock
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or, except as contemplated by the Distribution Agreement, declare or
make any dividend or other distribution with respect to capital stock
to Seller or any other of their shareholders or Affiliates of the
Seller;
(c) mortgage, pledge or subject to any other Lien any of their
assets, tangible or intangible, except for Permitted Liens;
(d) sell, assign or transfer any material assets of the Business,
except in the ordinary course of business;
(e) sell, assign or transfer any material proprietary rights,
except in the ordinary course of business;
(f) enter into any contract or commitment or submit any proposal
for a contract or commitment, or engage in any transaction, involving
an amount in excess of $500,000 other than in the ordinary course of
business consistent with past practices; PROVIDED HOWEVER, that the
Seller shall provide the Buyer with two days prior written notice of
all contracts or commitments or proposals for contracts, commitments
or potential transactions involving an amount in excess of $1,000,000
unless the giving of such notice shall materially and adversely affect
the ability of CRSI or the Subsidiary to secure or submit such
contract or commitment or proposal for contract, commitment or
potential transaction (in which case Seller shall give Buyer oral
notice thereof as promptly as practicable but in no event later than
one day prior to securing or submitting such contract or commitment or
proposal for contract, commitment or potential transaction);
(g) increase compensation for employees except upon normal review
consistent with past practices;
(h) make any material changes in personnel, except that CRSI or
any Subsidiary may discharge any officer or employee notwithstanding
that such discharge may result in a material change in personnel;
(i) fail to maintain existing insurance relating to their
property and assets;
(j) acquire or agree to acquire by merger, consolidation or
purchase of capital stock or a material portion of assets or by any
other manner, any business or any entity;
(k) amend in any material respect Welfare Plans or Employee
Plans;
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(l) enter into transactions with Affiliates having a total value
in excess of $100,000, except in conjunction with the procurement or
provision of routine administrative, accounting, payroll, cash
management and legal services in the ordinary course of business
consistent with past custom and practice;
(m) incur capital expenditures in excess of amounts set forth in
the 1998 fiscal year capital expenditures budget, a copy of which is
attached as Schedule 5.1(m);
(n) delay or postpone the payment of accounts payable or other
obligations and liabilities or change the current policy and
principles followed in the posting of accounts receivable, other than
in the ordinary course of business consistent with past custom and
practice; or
(o) incur any new indebtedness for borrowed money (other than
loans and advances from Seller in the ordinary course and consistent
with past custom and practice).
5.1.2 CASH MANAGEMENT. Notwithstanding any other provision of
this Agreement, during the period from the date hereof through the Closing
Date, Seller shall be permitted to manage the intercompany loans and
advances between Seller and CRSI and the Subsidiaries, including taking the
following steps, all of which shall be done in a commercially reasonable
manner:
(a) minimize cash balances held by CRSI and the Subsidiaries;
(b) collect any and all outstanding receivables on the books of
CRSI and the Subsidiaries, including accelerating the billing, posting
and collecting of such receivables, and accelerating the completion
and shipment to customers of work-in-progress;
(c) offer incentives to CRSI and the Subsidiaries management
(which shall be at the expense of Seller) consistent with the
objectives of clause (b) of this Section 5.1.2;
(d) defer capital expenditures which are not contractually
required;
(e) prevent pre-payment or acceleration of payment of trade
payables; and
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(f) take other commercially reasonable cash management actions,
so long as such actions do not have a Material Adverse Effect on CRSI
or any Subsidiary; PROVIDED THAT in no event shall this Section 5.1.2
permit Seller to draw any Exchange Proceeds from the Business in a
manner that would be inconsistent with the provisions of Section 5.17.
SECTION 5.2 ACCESS TO INFORMATION.
5.2.1 ACCESS. Between the date of this Agreement and the Closing
Date, Seller shall, during mutually agreeable hours (I) give Buyer and its
authorized representatives upon prior notice reasonable access, during
normal business hours, to personnel, books, records, offices and other
facilities and properties of CRSI or any Subsidiary, as the case may be,
(II) permit Buyer to make such inspections thereof as Buyer may reasonably
request, and (III) furnish Buyer with such financial and operating data and
other information with respect to the Business, results of operations and
properties of CRSI and the Subsidiaries as Buyer may from time to time
reasonably request; PROVIDED HOWEVER, that any such inquiry shall be
conducted in such a manner as not to interfere unreasonably with the
business operations of CRSI or any Subsidiary; and, PROVIDED FURTHER, that
Seller is under no obligation to disclose to Buyer any (a) "Classified
Information" not in compliance with the DIS Industrial Security Regulation,
the DIS Industrial Security Manual and any other applicable government
security regulations, (b) information the disclosure of which is restricted
by contract except in strict compliance with the applicable contract, (c)
any information regarding contracts, proposals or bids for which Seller or
CRSI or any Subsidiary and Buyer are competitors or potential competitors,
or (d) any information that is subject to the attorney client privilege or
work product doctrine.
5.2.2 CONFIDENTIALITY. Any information provided or obtained
pursuant to this Section 5.2 herein shall be held by TBG and Buyer and its
representatives in accordance with and shall be subject to the terms of the
Confidentiality Agreement between TBG and Seller dated May 1997 (the
"Confidentiality Agreement"), except (X) all obligations of TBG and Buyer
in this regard will terminate upon completion of the Closing, (Y) with
respect to financial or other information relating solely to Seller, in
which case such Confidentiality Agreement shall continue with respect
thereto, and (Z) that Buyer's covenant to refrain from purchasing any
security issued by Seller as provided therein shall continue for the period
stated therein.
5.2.3 NOTICE TO SELLER. TBG and Buyer agree to notify Seller in
writing, promptly upon TBG's or Buyer's or their authorized
representatives' discovery, of any information received by TBG or Buyer
prior to the Closing Date relating to the operations of CRSI or any
Subsidiary, as the case may be, which to the belief of TBG or Buyer
constitutes (or would constitute) or indicates (or would indicate) a breach
of any representation, warranty or covenant made by Seller herein.
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SECTION 5.3 FILINGS AND AUTHORIZATIONS. Seller and Buyer (or where
applicable TBG) shall, as promptly as practicable after the date hereof,
file or supply, or cause to be filed or supplied, or will make or take, or
cause to be made or taken, the following:
(a) All notifications and information required to be filed or
supplied pursuant to the HSR Act (including any request for additional
information and documents or production of personnel for
administrative interviews made pursuant to the HSR Act) and all
information, documents or interviews reasonably requested by state or
local officials in connection with the transactions contemplated
hereby;
(b) All such other filings and submissions under Laws applicable
to them, or to their subsidiaries and affiliates, as may be required
for it to consummate the transactions contemplated by this Agreement,
including all Laws relating to the Federal Communications Commission
and the filings and notifications to be supplied pursuant to the
Exon-▇▇▇▇▇▇ Amendment; and
(c) All other actions necessary, proper and reasonable for them
to fulfill their obligations hereunder and to consummate the
transactions contemplated by this Agreement.
SECTION 5.4 TAX MATTERS.
5.4.1 TAX RETURNS.
(a) Seller shall be the sole and exclusive agent of CRSI and the
Subsidiaries in any and all matters relating to the U.S. Federal
income tax liability of the consolidated group of which Seller is the
common parent (the "Seller Consolidated Group") for all consolidated
return years. Seller shall, INTER ALIA, have the right with respect to
any Federal consolidated returns which it files (I) to determine (X)
the manner in which such returns shall be prepared and filed,
including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported, (Y) whether any
extensions of the due dates for filing of such returns or of the
applicable statutes of limitations may be requested and (Z) the
elections that will be made by any member of the Seller Consolidated
Group, (II) to file and prosecute any claim for refund, and (III) to
determine whether any refunds, to which the Seller Consolidated Group
may be entitled, shall be paid by way of refund or credited against
the tax liability of the Seller Consolidated Group. CRSI and the
Subsidiaries hereby irrevocably appoint Seller as agent and
attorney-in-fact to take such action (including the execution of
documents) as Seller may deem appropriate to effect the foregoing.
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(b) Subject to Section 5.4.4(d) hereof, Seller shall have the
sole right, at its sole expense and for its sole benefit, to prepare
and file any Tax Return, amended Tax Return, or claim for refund, and
to prosecute any claim for refund, with respect to any Taxes paid or
payable by CRSI and any of the Subsidiaries with respect to periods
ending on or prior to the Closing Date.
(c) Buyer shall file or cause to be filed when due all returns in
respect of Taxes of CRSI and the Subsidiaries for taxable years or
periods ending after the Closing Date and shall pay or cause to be
paid the Taxes shown to be due on any such return. Upon notification
and satisfactory documentation from Buyer at least fifteen days prior
to the due date of such return, Seller shall pay to Buyer the Taxes
paid with such return that Seller is liable for pursuant to Section
5.4.2(b) of this Agreement; PROVIDED, HOWEVER, that the Buyer's
failure to satisfy the procedure described in this sentence shall not
in any way limit its right to indemnification under this Agreement.
(d) Subject to Section 5.4.4(d) hereof, Buyer shall have the sole
right, at its sole expense and for its sole benefit (except as
provided in Section 5.4.2(b) hereof), to prepare and file any Tax
Return, amended Tax Return, or claim for refund, and to prosecute any
claim for refund, with respect to any Taxes paid or payable by CRSI
and any of the Subsidiaries with respect to periods ending after the
Closing Date.
(e) In the event Buyer causes or permits CRSI and the
Subsidiaries to sell assets on the Closing Date or take any other
actions not in the ordinary course of business that would result in
the reporting of income on Seller's consolidated return pursuant to
Treas. Reg. ss. 1.1502-76(b)(1)(ii), Buyer agrees that such income
should be reported on Buyer's consolidated return pursuant to the
"next day" rule of Treas. Reg. ss. 1.1502-76(b)(1)(ii)(B). If Seller
incurs any liability for Taxes because of such actions, Buyer agrees
to indemnify Seller for such liability.
5.4.2 INDEMNITY.
(a) Seller hereby agrees to indemnify and hold CRSI and the
Subsidiaries harmless with respect to any Tax Liability of the Seller
Consolidated Group where such Liability arises solely by reason of any
of CRSI and the Subsidiaries being severally liable for any Taxes of
the Seller Consolidated Group pursuant to Treas. Reg. ss. 1.1502-6 or
any similar provision of foreign, state or local law.
(b) Seller shall indemnify and hold Buyer harmless from and
against, and pay and reimburse Buyer for, any and all Taxes of the
Seller Consolidated Group or any member thereof (other than non-income
Taxes of CRSI or any Subsidiary reserved against on the Adjusted
December Statements or accrued
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or incurred consistent with past practices from December 31, 1997 to
the Closing Date which were not due and payable prior to the Closing
Date and reflected in the books and records of CRSI or any Subsidiary
as of the Closing Date) for any taxable year or period ending on or
before the Closing Date and the portion of any such Taxes for any
taxable year or period ending thereafter that is attributable to the
portion of such year or period prior to the Closing Date, and Seller
shall be entitled to all refunds of such Taxes.
(c) Buyer shall indemnify and hold the Seller harmless from and
against, and pay and reimburse Seller for, any and all Taxes due by
CRSI and the Subsidiaries or any affiliated group of which CRSI or the
Subsidiaries become members after the Closing Date for any Taxable
year or period beginning on or after the Closing Date and the portion
of any such Taxes for any period beginning before and ending after the
Closing Date that is attributable to the portion of such year or
period beginning on or after the Closing Date, and Buyer shall be
entitled to all refunds of such Taxes.
(d) Notwithstanding anything in this Agreement to the contrary,
the Seller's indemnity under this Agreement shall not include any
liability for Taxes resulting from Buyer's election, if any, pursuant
to Code Section 338.
5.4.3 TAX LIABILITY. Whenever it is necessary for purposes of
this Section 5.4 to determine the Tax Liability of CRSI or any of the
Subsidiaries for a taxable year or period that begins before and ends after
the Closing Date, the determination shall be made by assuming that the
entity had a Taxable year that ended at the close of the Closing Date,
except that exemptions, allowances or deductions that are calculated on an
annual basis, such as the deduction for depreciation, shall be apportioned
on a time basis.
5.4.4 TAX CONTESTS.
(a) The party obliged to provide indemnification under this
Section 5.4 (the "Tax Indemnitor") shall assume and direct the defense
or settlement of any hearing, arbitration, suit or other proceeding
(each a "Tax Contest") commenced, filed or otherwise initiated or
convened to investigate or resolve the existence and extent of a
liability with respect to which the Tax Indemnitor would have an
indemnification obligation under this Section 5.4 ("Tax
Indemnification Liability"). The Tax Indemnified Party shall have the
right to participate, at its own cost and expense, in the defense of
such Tax Contest, it being understood that the Tax Indemnitor shall
control such Tax Contest.
(b) The Tax Indemnitor shall pay all out-of-pocket expenses and
other costs related to the Tax Indemnified Liability, including but
not limited to fees for attorneys, accountants, expert witnesses or
other consultants retained by the Tax Indemnitor and/or the party
entitled to be indemnified under this
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Section 5.4 (the "Tax Indemnified Party") (other than fees for
attorneys, accountants, expert witnesses or other consultants retained
solely by the Tax Indemnified Party), and incurred at any time during
which the Tax Indemnitor is controlling and directing the Tax Contest
in respect of which such fees are incurred. To the extent that any
such expenses and other costs have been or are paid by a Tax
Indemnified Party, the Tax Indemnitor shall promptly reimburse the Tax
Indemnified Party therefor.
(c) Any Tax Indemnified Party shall give written notice to the
Tax Indemnitor of any settlement proposed by the Taxing authority. The
Tax Indemnitor shall have the right, in its sole discretion, to settle
any claim for which indemnification has been sought under this Section
5.4, subject to Section 5.4.4(d) below.
(d) Notwithstanding anything to the contrary contained herein,
the Seller shall consult with Buyer and shall not file any amended Tax
Return or refund claim or enter into any settlement with respect to
any Tax matter without Buyer's prior written consent if the effect of
such action would be to increase directly or indirectly the liability
for Taxes of CRSI, the Subsidiaries or Buyer for any Taxable period
(or portions thereof) beginning after the Closing Date. In the event
that Buyer withholds the prior written consent required by the
preceding sentence within [ten] days after Seller's request therefor,
unless the parties otherwise agree in writing, Buyer shall assume the
defense and settlement of the Tax matter at issue at its own cost and
expense, PROVIDED, HOWEVER, that Seller's indemnification on liability
under this Agreement with respect to such Tax matter shall be limited
to the indemnification liability Seller would have had if Buyer had
given Seller such written consent at the time Buyer assumed the
defense of the Tax matter. If Buyer so assumes the defense and
settlement of a Tax matter, and the Tax Contest in which such Tax
matter arises involves other Tax matters, the parties shall use their
best efforts to cause the Tax matter the defense and settlement of
which Buyer assumed to be the subject of a separate proceeding. If
such severance is not possible, notwithstanding Buyer's assumption of
the defense and settlement of such Tax matter, Seller shall have the
right to choose the forum for the Tax Contest, and Buyer shall not
enter into any settlement with respect to such Tax matter without
Seller's prior written consent if the effect of such action would be
to increase directly or indirectly Seller's indemnification liability
hereunder. Notwithstanding anything to the contrary contained herein,
Buyer shall consult with Seller and shall not file any amended Tax
Return or refund claim or enter into any settlement with respect to
any Tax matter without Seller's prior written consent if the effect of
such action would be to increase directly or indirectly the liability
for Taxes of CRSI, the Subsidiaries or Seller for any Taxable period
(or portions thereof) beginning on or before the Closing Date.
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5.4.5 COOPERATION.
(a) Seller and Buyer shall provide each other with such
assistance and documents, without charge and in a timely fashion, as
may be reasonably requested by either of them in connection with (i)
the preparation of any Tax Return, (ii) the conduct of any Tax
Contest, or (iii) any other matter that is the subject of this
Agreement. Such assistance shall include, without limitation: (i) the
provision on demand of books, records, Tax Returns, documentation or
other information relating to any relevant Tax Return; (ii) the
execution of any document that may be necessary or reasonably helpful
in connection with the filing of any Tax Return, or in connection with
any Tax Contest, including, without limitation, the execution of
powers of attorney and extensions of applicable statutes of
limitations; and (iii) the use of reasonable efforts to obtain any
documentation from any Governmental Authority or other Person that may
be necessary or reasonably helpful in connection with the foregoing.
Each party shall make its employees and facilities available on a
mutually convenient basis to facilitate such cooperation.
(b) Seller and each other member of the Seller Consolidated
Group, and CRSI and the Subsidiaries, shall retain or cause to be
retained all Tax Returns, schedules and workpapers, and all material
records or other documents relating thereto, until the expiration of
the statute of limitations (including any waivers or extensions
thereof) with respect to the Taxable periods to which such Tax Returns
and other documents relate or until the expiration of any additional
period that either Buyer or Seller, as the case may be, may reasonably
request in writing with respect to specifically designated material
records or documents. If Seller or any other member of the Seller
Consolidated Group, or Buyer, CRSI or any of the Subsidiaries, intends
to destroy any material and relevant records or documents, Seller or
Buyer, as the case may be, shall provide the other party with advance
notice and the opportunity to copy or take possession of such records
or documents. The parties hereto will notify each other in writing of
any waivers or extensions of the applicable statute of limitations
that may affect the period for which the foregoing records or
documents must be retained.
SECTION 5.5 PURCHASE SUPPORT AGREEMENT. From and after the execution
hereof but prior to the Closing, CRSI and Seller shall convert their
existing intracompany purchase support orders into a purchase support
agreement (the "Purchase Support Agreement") based upon arms-length
commercial terms and conditions for the provision by CRSI and the
Subsidiaries of the goods and services identified on Schedule 5.5 delivered
hereunder to Seller and its affiliates from and after Closing.
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SECTION 5.6 NAME AND MARKS.
5.6.1 BUYER'S OBLIGATIONS. Buyer acknowledges and agrees that by
this Agreement it is obtaining no rights or licenses with respect to the
names "COMSAT," "COMSAT Corporation" or any derivative thereof or to the
logo belonging to COMSAT, or to any other names, trademarks or logos owned
by or associated with COMSAT or its affiliates other than those which are
specifically identified on Schedule 3.10.2. To that end, as soon as
practicable after Closing but no later than 120 days after the Closing
Date, Buyer shall remove and change signage, change and substitute
promotional and advertising material in whatever medium, change stationery
and packaging and take all such other steps as may be required or
appropriate to eliminate reference to COMSAT or otherwise indicate that
there no longer exists any connection or relationship between Seller and
their affiliates on the one hand, and CRSI and the Subsidiaries on the
other; PROVIDED THAT nothing herein shall obligate Buyer to change or copy
over any engineering drawings, prints or copies of correspondence, invoices
and other documents prepared prior to the expiration of such 120 day period
or any "COMSAT" logo or name affixed to any inventory or product of CRSI or
any Subsidiary acquired or manufactured prior to the expiration of 90 days
following the Closing Date, and PROVIDED FURTHER THAT nothing herein shall
be deemed to preclude Buyer, CRSI or any Subsidiary from using the letter
"C" as the initial letter of a corporate name or a name used for marketing
or communication purposes.
5.6.2 SELLER'S OBLIGATIONS. Seller and the Excluded Subsidiaries
shall cease all commercial use of the names and trademarks identified on
Schedule 3.10.2 from and after the Closing Date.
SECTION 5.7 NOTICE TO BUYER. Throughout the period between the date of
this Agreement and the Closing, Seller shall promptly notify Buyer in
writing of any event or development that comes to Seller's Knowledge which
is reasonably expected to have a Material Adverse Effect upon CRSI or any
of the Subsidiaries.
SECTION 5.8 FURTHER ASSURANCES. From time to time after the Closing,
the parties hereto agree that each shall, at its own expense, execute and
deliver, or cause to be executed and delivered, such documents and
instruments as may be reasonably requested by the other in order more
effectively to consummate the transactions contemplated by this Agreement.
SECTION 5.9 PUBLIC ANNOUNCEMENTS. Seller and Buyer will consult and
agree with each other before issuing any press release or otherwise making
any public statement with respect to this Agreement and the transactions
contemplated hereby, and shall not issue any such press release or make any
such public statement prior to such consultation and agreement, except to
the extent that public disclosure of the transactions contemplated hereby
are mandated by applicable Laws, and prior
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consultation and agreement with respect to such disclosure is not possible
in order to comply therewith.
SECTION 5.10 COMPANY RECORDS.
5.10.1 RETENTION. With respect to the books and records of CRSI
and the Subsidiaries relating to matters prior to the Closing Date, Buyer
shall retain copies of all Tax Returns, related schedules and workpapers,
and all material records and other documents relating thereto existing on
the date hereof or created through or with respect to taxable periods
ending on or before or including the Closing Date, until six months after
the expiration of the statute of limitations (including extensions) of the
taxable years to which such Tax Returns and other documents relate.
5.10.2 COOPERATION WITH RESPECT TO EXAMINATIONS AND
CONTROVERSIES. Buyer shall use all reasonable efforts to cooperate with
Seller and its representatives, in a prompt and timely manner, in
conjunction with any inquiry, audit, examination, investigation, dispute or
litigation involving any Tax Return relating to CRSI or the Subsidiaries
filed or required to be filed by or for Seller for any taxable period
beginning before the Closing Date, and relating to any federal, state or
local Taxes. Such cooperation shall include, but not be limited to, making
available to Seller, during normal business hours, and within ten (10) days
of any reasonable request therefor, all books, records and information, and
the assistance of all officers and employees, necessary or useful in
connection with any Tax inquiry, audit, examination, investigation,
dispute, litigation or any other matter.
5.10.3 REMEDY FOR FAILURE TO COMPLY. If Seller reasonably
determines that Buyer is not fulfilling its obligations in a reasonable
manner under Section 5.10.2, Seller shall have the right to appoint, at the
reasonable expense of Buyer, an independent entity such as a
nationally-recognized public accounting firm to assist Buyer in meeting its
obligations under Section 5.10.2. Such entity shall have complete access to
all books and records and information, and the complete cooperation of all
officers and employees of Buyer as reasonably requested by Seller.
SECTION 5.11 ACCESS TO REAL PROPERTIES. After the Closing, Buyer
hereby agrees, upon reasonable prior written notice and during mutually
agreeable hours, to give Seller and its authorized representatives
reasonable access to all Real Properties of CRSI and the Subsidiaries, and
to permit Seller and its authorized representatives to make such
inspections thereof (including a Phase I or Phase II environmental
inspection) and to carry out such work thereon as Seller may reasonably
request, so as to enable Seller to comply with any notice, order or other
directive of any Governmental Authority made under any Environmental Law in
respect of the ownership by CRSI and the Subsidiaries of such properties
prior to Closing, so long as such access does not interfere materially with
the operations of the Business by the Buyer.
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SECTION 5.12 COOPERATION OF BUYER. Buyer shall cooperate with Seller
in all matters relating to the actual or potential obligations or
liabilities of Seller in connection with any Environmental Law (including,
without limitation, Seller's compliance with any judicial or administrative
notice or order issued under the authority of any Environmental Law) in
respect of the Real Property of CRSI and the Subsidiaries; such cooperation
shall include but not be limited to providing Seller with access to all
locations and facilities reasonably necessary for environmental monitoring,
and providing Seller access to all information reasonably requested by
Seller (including providing Seller with all Phase I and Phase II
environmental reports caused to be prepared by Buyer (or, after the
Closing, by CRSI or any subsidiary thereof) in respect of any Real Property
promptly after receipt thereof) concerning the origin, amounts,
concentrations, chemical contents, and fate and transport of any Hazardous
Materials.
SECTION 5.13 DISCLOSURE SCHEDULES.
5.13.1 DELIVERY. Concurrently with the execution hereof, Seller
is delivering to Buyer the disclosure Schedules required to be delivered by
Seller hereunder. By its execution hereof, Buyer acknowledges that the
Schedules delivered by Seller concurrently with the execution hereof are in
form and substance acceptable to Buyer.
5.13.2 INTERPRETATION. Matters reflected on the Schedules
delivered hereunder are not necessarily limited to matters required by this
Agreement to be reflected in such Schedules. Any such additional matters
are set forth for informational purposes and do not necessarily include
other matters of a similar nature. A disclosure contained in any of the
Schedules delivered hereunder, which pellucidly identifies information that
clearly and on its face is relevant or applicable to one or more Schedules
to this Agreement, constitutes disclosure for such other Schedules to the
extent this Agreement requires such disclosure. The exhibits and
attachments to the Schedules form an integral part of the Schedules and are
incorporated by reference for all purposes as if set forth fully therein.
SECTION 5.14 EMPLOYEE BENEFIT MATTERS.
5.14.1 EMPLOYEE BENEFIT DEFINITIONS. The following terms, as used
herein, shall have the following meanings:
(a) "CRSI Employee" means each person who, on the Closing Date,
is an employee of CRSI or any Subsidiary other than any Excluded Employee.
(b) "Employee Plans" means each "employee benefit plan," as such
term is defined in Section 3(3) of ERISA, which (I) is or has been entered
into, maintained or contributed to by Seller or any of its affiliates and
(II) covers any CRSI Employee.
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(c) "Welfare Plans" means each "employee welfare plan" as such
term is defined in Section 3(l) of ERISA.
(d) "Excluded Employees" means each person who is listed on
Schedule 5.14.1 hereof.
5.14.2 WELFARE PLANS FOLLOWING THE CLOSING. (a) Except to the
extent changes are required by applicable law or collective bargaining,
from the Closing Date to December 31, 1998, Buyer will maintain its own
Welfare Plans for the benefit of the CRSI Employees that provide benefits
that are reasonably similar, taken as a whole, to the medical, disability,
vision, dental, life insurance, flexible spending accounts and severance
benefits offered to CRSI Employees by CRSI and the Subsidiaries as of the
Closing Date (the "CRSI Welfare Plans"). Buyer will give each CRSI Employee
full credit for purposes of eligibility and vesting under any such plans or
arrangements maintained by Buyer, CRSI or any Subsidiary pursuant to this
Subsection 5.14.2 to the extent such CRSI Employee's service is recognized
for such purposes under Seller's plans.
(b) Buyer's Welfare Plans shall not contain a clause excluding
coverage for preexisting conditions (other than pre-existing conditions
excluded by CRSI's Welfare Plans) and shall provide that any expenses
incurred by a CRSI Employee on or before the Closing Date shall be taken
into account for the purposes of satisfying deductible and coinsurance
requirements and satisfaction of maximum out-of-pocket provisions under the
Buyer's Welfare Plans to the extent such expenses are incurred during the
same plan year in which the Closing Date takes place.
(c) For purposes of providing "group health plan" (as that term
is described in ERISA Section 607(1)) continuation coverage pursuant to the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985,
including subsequent statutory amendments ("COBRA"), coverage under the
group health plans offered by Buyer to CRSI Employees pursuant to this
Subsection 5.14.2 will be considered to have commenced on the Closing Date
and all CRSI Employees and their dependents shall be considered as of the
Closing Date to be covered by a "group health plan" which does not contain
any exclusion or limitation with respect to any preexisting condition.
(d) Seller shall be responsible for the payment of all Welfare
Plan claims incurred by CRSI Employees and their covered dependents prior
to the Closing Date whether or not reported by the Closing Date. Buyer
shall be responsible for the payment of all claims incurred under the
Welfare Plans after the Closing Date.
(e) Seller shall be responsible for providing health care
continuation coverage pursuant to the requirements of COBRA, to the extent
required by COBRA, for CRSI Employees and/or their dependents who had a
"qualifying event" under COBRA prior to or on the Closing Date. Buyer shall
be responsible for providing
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health care continuation coverage pursuant to COBRA, for all Employees
and/or their dependents who had a "qualifying event" under COBRA after the
Closing Date.
(f) Notwithstanding any possible inferences to the contrary,
neither Seller nor Buyer intends for this Section 5.14 to create any rights
or obligations except as between Seller and Buyer, and no past or present
Employees of Seller or Buyer shall be treated as third party beneficiaries
of this Section 5.14.
5.14.3 RETENTION AGREEMENTS. Schedule 5.14.3 delivered hereunder
sets forth a list and description (including the amounts payable) of all
written employee retention agreements covering the CRSI Employees.
Effective on the Closing Date, Buyer shall assume and discharge all
obligations and liabilities under such employee retention agreements
arising after the Closing Date, and Buyer agrees to release Seller and
indemnify Seller and hold Seller harmless from, and pay and reimburse
Seller for, all obligations and liabilities arising thereunder after the
Closing Date. Any payments due an Employee under any such retention
agreement on the Closing Date shall be shared equally between Seller and
Buyer (except for any payments due an Excluded Employee, which shall be
paid by Seller). Buyer further agrees to indemnify Seller and hold Seller
harmless from and against, and pay and reimburse Seller for, all
obligations and liabilities and other amounts payable to any CRSI Employee
to the extent such obligation, liability or other amount shall become due
and payable by Seller on account of the termination of such CRSI Employee's
employment with Buyer or any of its affiliates following the Closing.
5.14.4 SAVINGS PROGRAM. On the Closing Date, CRSI Employees
eligible to participate in the COMSAT Corporation Savings & Profit Sharing
Plan (the "Seller's Savings Plan") shall commence participating in a
defined contribution plan or plans sponsored by Buyer. Buyer shall cause
such plans to be amended to waive any waiting period for eligibility to
participate in such plans. To the extent permitted by Seller's Savings Plan
and Section 401(k)(10) of the Code, each CRSI Employee shall be permitted
during the period between the Closing and the end of the second calendar
year following the Closing Date, to receive a distribution from Seller's
Savings Plan, make a direct rollover in accordance with Section 401(a)(31)
of the Code, or leave his or her account balances in Seller's Savings Plan.
Seller shall take such action as may be necessary, if any, to permit each
CRSI Employee to make a direct rollover from Seller's Savings Plan in
accordance with Section 401(a)(31) of the Code. The assets transferred in
the direct rollover shall be in the form of cash. On or prior to the
Closing, Seller shall take all actions necessary to fully vest the CRSI
Employees, who are currently partially vested, in Seller's Savings Plan.
5.14.5 VACATION AND HOLIDAYS. As of the Closing Date, Buyer shall
adopt, at its expense, vacation and holiday plans or policies for the CRSI
Employees to succeed the vacation and holiday plans or policies of Seller,
CRSI or any Subsidiary covering the CRSI Employees, as the case may be.
Until December 31, 1997, such plans shall be substantially equivalent to
the plans Seller, CRSI or any Subsidiary
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would have provided to the CRSI Employees had they remained employed by
Seller, CRSI or such Subsidiary, and Seller shall have no liability or
obligation to pay or provide any vacation or holiday payments claimed on or
after the Closing Date.
5.14.6 WARN ACT COMPLIANCE. Buyer agrees to comply with all
provisions of, and discharge all liabilities arising under, the WARN Act
with respect to the CRSI Employees for a period of not less than 60 days
following the Closing Date.
5.14.7 EXCLUDED EMPLOYEES. On or prior to the Closing, Seller
shall have the right to make offers of employment to the Excluded Employees
to the extent any of them are not employees of Seller or any subsidiary of
Seller (other than CRSI and the Subsidiaries). Buyer shall not, directly or
indirectly through another Person, (i) induce or attempt to induce any
Excluded Employee that has accepted Seller's offer of employment to leave
the employ of Seller or any of its Affiliates, or in any way interfere with
the relationship between Seller and its Affiliates, on the one hand, and
any such Excluded Employee, on the other hand, without the prior written
consent of Seller (it being understood and agreed by the parties hereto
that the solicitation of employees by Buyer, either directly or indirectly,
through advertisements or other means of solicitation that are general in
nature and do not relate specifically to such Excluded Employees shall not
constitute a violation of this clause (i)), or (ii) hire any such Excluded
Employee who was an employee of Seller or any of its Affiliates until six
months after such Excluded Employee's employment relationship with Seller
or its Affiliate has been terminated, without the prior written consent of
Seller.
SECTION 5.15 ADMINISTRATION OF ACCOUNTS.
5.15.1 IN TRUST FOR BUYER. All payments and reimbursements made
by any third party after the Closing Date in the name of or to Seller to
which Buyer, CRSI or any Subsidiary is entitled in accordance with this
Agreement and the transactions contemplated hereby shall be held by Seller
in trust for the benefit of Buyer and, promptly upon receipt by Seller of
any such payment or reimbursement, Seller shall pay over to Buyer the
amount of such payment or reimbursement without right of set off.
5.15.2 IN TRUST FOR SELLER. All payments and reimbursements made
by any third party after the Closing Date in the name of or to Buyer, CRSI
or any Subsidiary to which Seller is entitled in accordance with this
Agreement and the transactions contemplated hereby shall be held by Buyer
in trust for the benefit of Seller and, promptly upon receipt by Buyer of
any such payment or reimbursement, Buyer shall pay over to Seller the
amount of such payment or reimbursement without right of set off.
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SECTION 5.16 NEGOTIATIONS WITH OTHERS. From and after the date hereof,
unless and until this Agreement shall have been terminated in accordance
with its terms, the Seller shall not (i) directly or indirectly solicit or
initiate discussions with any Person other than the Buyer or any of its
Affiliates, involving the possible acquisition of all or part of the
Business or CRSI or any Subsidiary (other than the Excluded Assets and
Liabilities) and (ii) enter into any transaction with any Person, other
than the Buyer or any of its affiliates, involving the possible acquisition
of all or part of the Business or CRSI or any Subsidiary (other than the
Excluded Assets and Liabilities). The Seller shall notify the Buyer of any
unsolicited offer or proposal to enter into discussions or to buy all or
part of the Business of CRSI or any Subsidiary (other than the Excluded
Assets and Liabilities), and shall provide the Buyer with a copy thereof.
SECTION 5.17 EXCHANGE PROCEEDS. If, between the date hereof and the
Closing, CRSI and/or any of the Subsidiaries receives any proceeds in
consideration for the exchange of any of its assets or Real Properties
(other than the Excluded Assets and Liabilities), whether from the sale of
any such assets or Real Properties, from insurance proceeds payable on
account of any loss or casualty to such assets or Real Properties, any
proceeds from the taking of any such assets or Real Properties pursuant to
the power of eminent domain, or any other proceeds from whatever source
(the "Exchange Proceeds"), CRSI shall immediately notify Buyer of CRSI's or
any Subsidiaries' receipt of such Exchange Proceeds and shall consult with
Buyer with respect to the application of such Exchange Proceeds. Any
Exchange Proceeds received by CRSI and/or the Subsidiaries shall either be
used to purchase replacement assets or Real Properties or be retained by
CRSI or such Subsidiary.
SECTION 5.18 NONCOMPETITION AND NONSOLICITATION.
5.18.1 NONCOMPETITION. The Seller acknowledges that it has or
will become familiar with the trade secrets and other confidential
information concerning CRSI and the Subsidiaries. Therefore, Seller agrees
that, during the period beginning on the Closing Date and ending on the
date that is 18 months after the Closing Date (the "Non-Compete Period"),
the Seller shall not directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage
in any business competing with the Business (the "Competing Business").
Notwithstanding the aforesaid, nothing herein shall prohibit the Seller
from: (i) being a passive owner of not more than 10% of the outstanding
equity securities of any class of a corporation or other Person which is
publicly traded, so long as Seller has no active participation in the
business of such Person; (ii) acquiring a Person engaged in a Competing
Business outside of the United States so long as the aggregate value of any
such acquisition (after cumulating the aggregate value of all other such
acquisitions) does not exceed $160 million; (iii) acting as a
sub-contractor to any prime contractor engaged in a project or program that
is a Competing Business, so long as the activity or work to be performed as
a sub-contractor does not compete directly with the activity or work being
performed by CRSI or any of the
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Subsidiaries as of or prior to the Closing Date; (iv) offering services or
products currently offered by, under active development by or contemplated
for active development by (as evidenced by written documentation in
existence on the date hereof evidencing an intent to proceed with active
development in the future), Seller or any of its Affiliates (other than
CRSI and the Subsidiaries); (v) licensing any technology developed by
COMSAT Laboratories, a division of Seller ("COMSAT Labs"); (vi) acquiring a
Person engaged in a Competing Business (a "Competing Target") where such
Competing Business represents less than 10% of the Competing Target's
assets or revenues; (vii) selling, or causing to be sold, any or all of the
capital stock, or any or all of the assets of, Seller or any of Seller's
Affiliates to a Person engaged in a Competing Business; (viii) owning,
directly or indirectly, the Excluded Assets and Liabilities and engaging in
the business represented thereby; (ix) providing services to or through the
INTELSAT and Inmarsat satellite systems; and (x) owning any shares of
capital stock of, and having one or more seats on the Board of Directors
of, Calian Technologies, Inc.; (xi) engaging in a transaction by which the
shareholders of Seller or the then-existing Board of Directors or
management team no longer control the business and affairs of Seller and
its Affiliates; or (xii) engaging in a Competing Business by which Seller
and its Affiliates would derive on an annual basis revenues in excess of
$20 million.
5.18.2 NONSOLICITATION. During the period beginning on the date
hereof and ending on the second anniversary of the Closing Date (the
"Non-Solicit Period"), Seller shall not directly or indirectly through
another Person: (i) induce or attempt to induce any employee of CRSI or any
Subsidiary thereof to leave the employ of CRSI or such Subsidiary, or in
any way interfere with the relationship between CRSI or any such
Subsidiary, on the one hand, and any employee thereof, on the other hand,
without the prior written consent of Buyer (it being understood and agreed
by the parties hereto that the solicitation of employees by Seller, either
directly or indirectly, through advertisements or other means of
solicitation that are general in nature and do not relate specifically to
the employees of CRSI or any Subsidiary shall not constitute a violation of
this clause (i)); or (ii) hire any person who was an employee of CRSI or
such Subsidiary without the prior written consent of Buyer. Similarly,
during the Non-Solicit Period, Buyer and its Affiliates (including CRSI and
the Subsidiaries) shall not directly or indirectly through another Person:
(i) induce or attempt to induce any employee of COMSAT Labs or any of the
Excluded Employees to leave the employ of Seller and its Affiliates or in
any way interfere with the relationship between Seller and any such
employee without the prior written consent of Seller (it being understood
and agreed by the parties hereto that the solicitation of employees by
Buyer, either directly or indirectly, through advertisements or other means
of solicitation that are general in nature and do not relate specifically
to such employees of Seller shall not constitute a violation of this clause
(i)); or (ii) hire any employee of COMSAT Labs until six months after such
individual's employment relationship with Seller or its Affiliates has been
terminated, without the prior written consent of Seller.
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5.18.3 VALIDITY. The invalidity or unenforceability of any
provision of this Section 5.18, in whole or by virtue of the following
sentence in part, shall not affect the validity or enforceability of any
other provision of this Section 5.18 or of any other provision of this
Agreement, all of which shall to the full extent consistent with applicable
law continue in full force and effect. In addition, if any provision of
Section 5.18 shall be adjudged to be excessively broad as to duration,
geographical scope, activity or subject, the parties hereto intend such
provision shall be deemed modified to the minimum degree necessary to make
such provision valid and enforceable under applicable law and that such
modified provision shall thereafter be enforced to the fullest extent
possible.
SECTION 5.19 EXCLUDED CONTRACTS. With respect to each contract,
subcontract or other agreement or arrangement listed or described in
Schedule III hereto (collectively, the "Excluded Contracts"), Seller will
use all reasonable efforts to obtain the approval or consent to the
transfer or novation of such Excluded Contract to Seller or a wholly owned
subsidiary of Seller (other than CRSI or any Subsidiary), and all rights,
obligations and liabilities in, to and under such Excluded Contracts.
SECTION 5.20 FINANCIAL REPORTS. Prior to the Closing Date, within 25
days after the end of each monthly accounting period, the Seller shall
deliver to the Buyer an unaudited financial report of CRSI and the
Subsidiaries, which report shall be prepared in accordance with GAAP and
which shall include (i) a profit and loss statement for such monthly
accounting period, (ii) a balance sheet as of the last day of such monthly
accounting period and (iii) a statement showing the net intercompany loans
and advances between Seller and CRSI and the Subsidiaries as of the last
day of such monthly accounting period. In addition, within 35 days after
the end of each monthly accounting period, but no later than the Closing
Date, Seller shall deliver to Buyer, prepared in accordance with GAAP, a
statement of cash flows for such monthly accounting period.
SECTION 5.21 GREENBANK SURETY BOND. On or as soon as practicable
following the Closing Date, Seller shall use commercially reasonable
efforts to cause CRSI to be released from all of its liabilities and
obligations in respect of the surety bond, dated September 6, 1991, issued
by Reliance Insurance Company in the amount of $10,000,000.00 for the
benefit of Associated Universities, Inc. (the "Greenbank Bond") by causing
to be issued and delivered to Associated Universities, Inc. a surety bond
in substitution of the Greenbank Bond. The surety bond issued in
replacement of the Greenbank Bond shall be issued substantially in the form
of, and in the full amount then available to be drawn under, the Greenbank
Bond as at the Closing Date. The Seller shall pay and reimburse Buyer
promptly for any and all costs, expenses and liabilities incurred by Buyer
or CRSI in connection with the Greenbank Bond, including without limitation
all amounts drawn under the Greenbank Bond by the beneficiary thereof and
any fees payable to the issuer thereof in connection therewith. In the
event CRSI is not fully released from its obligations under the
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Greenbank Bond on or before the Closing Date, Seller shall cause to be
issued to Buyer on the Closing Date, a letter of credit from a financial
institution reasonably acceptable to Buyer, in the face amount of the
maximum amount then available to be drawn under the Greenbank Bond, as
collateral security for Seller's obligations to indemnify and reimburse
Buyer hereunder for all draws under the Greenbank Bond. Buyer shall return
such letter of credit for cancellation to the issuing bank thereof promptly
upon CRSI being fully discharged from its obligations under the Greenbank
Bond.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
SECTION 6.1 CONDITIONS. The obligations of Buyer under this Agreement
to perform Article II herein shall be subject to the fulfillment on or
prior to the Closing Date of all of the following conditions precedent:
6.1.1 REPRESENTATIONS AND WARRANTIES ACCURATE. The
representations and warranties of Seller contained in this Agreement
or any Ancillary Agreement herein shall be true in all material
respects at and as of the Closing Date as if such representations and
warranties were made at and as of the Closing Date (except (i) that
representations and warranties that are made as of a specific date
need be true in all material respects only as of such date, and (ii)
that any representation and warranty that is qualified by a standard
of materiality shall be true and correct as stated herein).
6.1.2 PERFORMANCE BY SELLER. Seller shall have performed and
complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed and complied
with by it prior to or on the Closing Date.
6.1.3 GOVERNMENT AUTHORIZATIONS.
(a) All applicable waiting periods under the HSR Act shall have
expired or been terminated.
(b) All authorizations, determinations, approvals, consents and
waivers of any Governmental Authority or any other Person necessary
for the lawful consummation of the transactions contemplated by this
Agreement ("Consents") shall have been obtained, other than such
Consents which, if not obtained, are not reasonably expected to have a
Material Adverse Effect on CRSI or any of the Subsidiaries after
giving effect to the Closing hereunder.
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(c) There shall exist no action, suit, investigation or
proceeding pending on the Closing Date or any injunction issued by any
court of competent jurisdiction which (i) would restrain, limit the
ability to consummate, make unlawful or prohibit the consummation of
the transactions contemplated by this Agreement, or (ii) in the good
faith opinion of Buyer could reasonably be expected to have a Material
Adverse Effect on CRSI or the Subsidiaries, taken as a whole.
(d) All authorizations, determinations, consents or waiver of the
Committee on Foreign Investment in the United States pursuant to the
Exon-▇▇▇▇▇▇ Amendment shall have been obtained.
6.1.4 OPINION OF COUNSEL. Buyer shall have received the opinion
of (i) ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel for Seller, in form and
substance reasonably acceptable to Buyer, and (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President, Secretary and General Counsel of Seller, in form and
substance reasonably acceptable to Buyer.
6.1.5 SURVEYS. With respect to each of the Real Properties, Buyer
shall have obtained a survey prepared in accordance with the 1992
ALTA/ACSM standards, which survey shall enable Buyer to obtain at its
option an ALTA title insurance policy insuring valid fee and/or
leasehold ownership (as applicable), subject only to those exceptions
and encumbrances satisfactory to Buyer in its reasonable discretion;
PROVIDED, HOWEVER, that the provisions of this Section 6.1.5 shall
constitute a condition to Buyer's obligation to perform Article II
herein only for a period of 45 days commencing on the date of this
Agreement.
6.1.6 ENVIRONMENTAL. Buyer shall be satisfied in all material
respects with results of its Phase I environmental due diligence
investigation of CRSI and the Subsidiaries which shall be performed by
representatives for Buyer; PROVIDED, HOWEVER, that the provisions of
this Section 6.1.6 shall constitute a condition to Buyer's obligation
to perform Article II herein only for a period of 45 days commencing
on the date of this Agreement.
6.1.7 ABSENCE OF ADVERSE CHANGE. Since December 31, 1997, there
shall have been no change which has or has had a Material Adverse
Effect on CRSI and the Subsidiaries, taken as a whole.
6.1.8 SECURITY CLEARANCE. Buyer shall have received notice from
the Department of Defense that the facility security clearances will
be permitted to continue at the same levels of all facility security
clearances previously issued to CRSI and the Subsidiaries and in
effect on the date of this Agreement to the extent such facility
clearances are necessary for the operation of the Business.
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6.1.9 COMPLIANCE WITH ISRA. Seller shall have complied with all
applicable requirements of ISRA and shall have received evidence of
such compliance from the New Jersey Department of Environmental
Protection ("NJDEP"), with respect to the Real Property located in New
Jersey, in form and substance satisfactory to Buyer. Seller shall be
responsible for making all notifications required by ISRA and shall
provide to Buyer copies of all submissions to NJDEP by Seller and all
correspondence from NJDEP to Seller. Seller shall conduct at its sole
expense any remediation, cleanup investigation, monitoring, sampling
or analysis required under ISRA ("ISRA Remediation"). Any ISRA
Remediation need not be completed prior to Closing so long as Seller
has complied with its obligations under the first sentence of this
paragraph. In the event any ISRA Remediation is not completed prior to
Closing, Buyer shall have the right, but not the obligation, to
conduct any ISRA Remediation or any portion thereof in place of Seller
in the event Seller is not diligently proceeding with such ISRA
Remediation. Seller shall reimburse Buyer for all reasonable costs,
expenses, or other liabilities incurred by Buyer in connection with
such activities, including any costs, expenses or liabilities
associated with the off-site disposal or treatment of any excavated
materials. The reimbursement for all such costs, expenses or other
liabilities shall be made within 30 days of receipt of documentation
of such costs from Buyer.
6.1.10 GREENBANK NOVATION. The Seller shall have obtained the
approval and consent to the transfer or novation of the GreenBank
Contract to the Seller or a wholly-owned subsidiary of Seller (other
than CRSI or any Subsidiary), and a mutual release of claims in a form
attached hereto as Exhibit H, executed by Associated Universities,
Inc. and the other parties thereto. To the extent that Seller shall
not have obtained the executed novation and mutual release of claims
prior to March 31, 1998, the parties hereto, at their option, may
mutually agree to negotiate in good faith the terms of a new agreement
pursuant to which the transactions contemplated by this Agreement will
be effected by a transfer of assets and liabilities of CRSI (including
the capital stock of the Subsidiaries but not including the Excluded
Assets and Excluded Liabilities).
6.1.11 EXPORT LICENSES. Buyer and/or CRSI and the Subsidiaries
shall have obtained any requisite export licenses for the continuation
of the Business from and immediately after the Closing Date.
6.1.12 ANCILLARY AGREEMENTS. Each of the Ancillary Agreements
shall have been executed and delivered by the parties thereto.
SECTION 6.2 WAIVER. Buyer may waive in writing fulfillment of any or
all the conditions set forth in Section 6.1 of this Agreement.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
SECTION 7.1 CONDITIONS. The obligations of Seller under this Agreement
to perform Article II herein shall be subject to the fulfillment on or
prior to the Closing Date, of all of the following conditions precedent:
7.1.1 REPRESENTATIONS AND WARRANTIES ACCURATE. The
representations and warranties of Buyer contained in Article IV herein
shall be true in all material respects (except that any representation
and warranty that is qualified by a standard of materiality shall be
true and correct as stated herein) at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing
Date.
7.1.2 PERFORMANCE BY BUYER. Buyer shall have performed and
complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed and complied
with by it prior to or on the Closing Date.
7.1.3 GOVERNMENT AUTHORIZATIONS.
(a) All applicable waiting periods under the HSR Act shall have
expired or been terminated.
(b) All consents shall have been obtained.
(c) There shall exist no action, suit, investigation or
proceeding pending on the Closing Date or any injunction issued by any
court of competent jurisdiction which would restrain, limit the
ability to consummate, make unlawful or prohibit the consummation of
the transactions contemplated by this Agreement.
7.1.4 OPINION OF COUNSEL. Seller shall have received the opinion
of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP, special counsel to Buyer, in form
and substance reasonably acceptable to Seller.
7.1.5 CHANGE OF NAME. Seller shall have received a certificate of
Amendment to the Certificate of Incorporation of CRSI and any
Subsidiary using the name "COMSAT", in each case in due form for
filing with the appropriate governmental agency, providing for the
deletion of the name "COMSAT" from their respective corporate names.
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SECTION 7.2 WAIVER. Seller may waive in writing fulfillment of any or
all of the conditions set forth in Section 7.1 of this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
8.1.1 OF THE SELLER. The representations and warranties of the
Seller contained in Article III herein shall survive the Closing and shall
remain in full force and effect for the benefit of the Buyer until March
31, 2000, except that (a) the representations and warranties contained in
Section 3.13 relating to Taxes, shall survive for any Taxable year or any
period ending on or prior to the Closing Date until ninety (90) days after
the last date on which the relevant tax authority is entitled to assess or
reassess CRSI and the Subsidiaries with respect to such Taxable period and
(b) the representations and warranties contained in Sections 3.2, 3.3, 3.4,
3.5, 3.19 and 3.21 (the "Fundamental Representations") and the
representations and warranties contained in Section 3.15 shall survive for
a period of ten years following the Closing Date.
8.1.2 OF THE BUYER. The representations and warranties of the
Buyer contained in Article IV herein shall survive the Closing and shall
remain in full force and effect for the benefit of the Seller until March
31, 2000.
SECTION 8.2 GENERAL INDEMNITY.
8.2.1 INDEMNIFICATION BY SELLER. After the Closing Date and
subject to provisions of this Article VIII, Seller shall indemnify and hold
Buyer, CRSI, the Subsidiaries and their respective Affiliates, directors,
officers, employees, agents and representatives (each, a "Buyer
Indemnitee") harmless from and against, and shall pay and reimburse the
Buyer Indemnitees for, any and all Losses resulting from or arising out of:
(a) any breach of any representation or warranty of the Seller
contained in Article III (unless Seller can prove by a preponderance
of the evidence that Buyer or its representatives had actual knowledge
of such breach on or prior to the Closing);
(b) the nonperformance, partial or total, of any covenant or
agreement of Seller contained in this Agreement, in any case to the
extent not waived by Buyer; PROVIDED HOWEVER, to the extent such
nonperformance shall relate to any covenant or agreement of Seller
contained in Section 5.4 hereof,
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indemnification therefor shall be governed by the provisions of
Section 5.4 and not by the provisions of this Section 8.2.1;
(c) (i) any environmental condition existing or event occurring
on or before the Closing Date at any property currently or formerly
owned, leased or used by the Seller, CRSI or any of the Subsidiaries
or any predecessor thereof, or (ii) any generation, storage,
treatment, disposal, transportation, shipment offsite, or other
management of Hazardous Materials by the Seller, CRSI or any of the
Subsidiaries or any predecessor thereof prior to the Closing Date;
PROVIDED THAT this indemnity shall not extend to incremental costs
incurred in remediating environmental conditions existing as of the
Closing Date to the extent that the incurrence of such costs: (X) was
or is not reasonably necessary to resolve or avoid a claim by a
Governmental Authority or other Person or to comply with an order of a
Governmental Authority, and (Y) was or is not reasonably necessary in
light of applicable federal, state or other Governmental Authority
action levels or cleanup standards, where such levels or standards
exist.
(d) any Liability relating to Employee Plans or Welfare Plans
maintained by the Seller, CRSI or any of the Subsidiaries prior to
Closing;
(e) claims or Liabilities (including any claims or Liabilities
relating to any environmental condition or any generation, storage,
treatment, disposal, transportation, shipment offsite or other
management of Hazardous Materials) against, or arising out of or
related to actions or omissions by, any former direct or indirect
subsidiary of the Seller, or any division of any subsidiary of the
Seller, or CRSI or any of the Excluded Subsidiaries, in each case, not
part of the Business being transferred to the Buyer hereunder
including, without limitation, the Excluded Assets and Liabilities;
and
(f) any claims arising out of or related to the Government of
Nicaragua claim and/or litigation identified on Schedule 3.11.2
delivered hereunder and the ▇▇▇▇▇▇ litigation matters identified on
Schedule 3.12 delivered hereunder.
8.2.2 INDEMNIFICATION BY BUYER. After the Closing Date and
subject to the provisions of this Article VIII, Buyer shall indemnify and
hold Seller and its Affiliates and their respective officers, directors,
employees, agents and representatives (each, a "Seller Indemnitee")
harmless from and against, and shall pay and reimburse the Seller
Indemnitees for, any and all Losses resulting from or arising out of:
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(a) any breach of any representation or warranty of Buyer
contained in Article IV (unless Buyer can prove by a preponderance of
the evidence that Seller or its representatives had actual knowledge
of such breach on or prior to the Closing); and
(b) the nonperformance, partial or total, of any covenant or
agreement of Buyer contained in this Agreement, in any case to the
extent not waived by Seller; PROVIDED, HOWEVER, to the extent such
nonperformance shall relate to any covenant or agreement of Buyer
contained in Section 5.4 hereof, indemnification therefor shall be
governed by the provisions of Section 5.4 and not by this Section
8.2.2.
8.2.3 LIMITATIONS. For purposes solely of this Section 8.2 (and
not with respect to any other provision relating to indemnification in this
Agreement):
(a) Except as provided in Section 8.2.3(d), the Buyer Indemnitees
shall not be entitled to indemnification under Sections 8.2.1(a),
8.2.1(c) and 8.2.1(f) with respect to (i) any Losses until the
aggregate of all such Losses exceeds six percent of the sum of the
Purchase Price and the Note Principal Amount (if applicable), as
adjusted pursuant to Section 2.6 hereof (the "Indemnity Threshold"),
in which case the indemnifying party shall be responsible only for
such indemnifiable amount in excess of the Indemnity Threshold, and
(ii) Losses (individually or in the aggregate) hereunder exceeding
twenty-five percent of the sum of the Purchase Price and the Principal
Amount (if applicable), (the "Indemnity Cap") as adjusted pursuant to
Section 2.6 hereof. Any indemnifiable liability with respect to breach
or nonperformance of a representation, warranty, covenant or agreement
shall be limited to the amount of Losses sustained by the indemnified
party by reason of such breach or nonperformance net of any reserves
appearing on the Adjusted December Statements and specifically related
to the situation in question.
(b) Neither any Seller Indemnitee nor any Buyer Indemnitee shall
be entitled to make any claim for indemnification under this Section
8.2 with respect to the breach of any particular representation and
warranty contained herein after the date on which such representation
and warranty ceases to survive pursuant to Section 8.1 herein;
PROVIDED, HOWEVER, that, if prior to the date on which such
representation and warranty ceases to survive, the indemnifying party
shall have received written notification of a claim for indemnity
hereunder specifying in reasonable detail the basis of any such claim,
and such claim shall not have been finally resolved or disposed of at
such date, such claim shall continue as a basis for indemnity until it
is finally resolved or disposed of, subject to applicable statutes of
limitation.
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(c) In the event that an indemnified party shall be entitled to
indemnification pursuant to Section 8.2.1(b), 8.2.2(b) or 5.4 hereof,
as the case may be, and the event giving rise to such claim for
indemnification shall also constitute a breach by the indemnifying
party of one or more of its representations and warranties contained
herein, then (I) the indemnified party shall not be entitled to
indemnification in respect of such event pursuant to Section 8.2.1(a)
or 8.2.2(a) hereof, as the case may be, and (II) the amount of all
Losses for which indemnification shall be sought pursuant to Section
8.2.1(b), 8.2.2(b) or Section 5.4 hereof shall not be taken into
account for the purpose of computing or satisfying the Indemnity
Threshold set forth in Section 8.2.3(a) hereof.
(d) The Seller hereby acknowledges and agrees that any Losses
that are incurred in connection with the breach of (i) any of the
Fundamental Representations or (ii) representations and warranties
contained in Section 3.13, shall not be applied against or subject to
either the Indemnity Threshold or dollar limitations on liability set
forth in Section 8.2.3(a).
8.2.4 IVORY COAST.
(a) Buyer shall cause CRSI and the Subsidiaries to indemnify and
hold harmless all Seller Indemnities (including Seller) from and
against, and to pay and reimburse the Seller Indemnitees for, any and
all Losses resulting from or arising out of the action styled ▇▇▇▇
▇▇▇▇▇▇▇ AND MARALI CORPORATION VS. COMMUNICATIONS SATELLITE
CORPORATION (N.D. Texas) (the "Ivory Coast Commission Litigation"),
but only to the extent such Losses (including, for the avoidance of
doubt, all actual costs and expenses (including reasonable attorneys'
fees and expenses) incurred after the Closing Date in connection with
the defense of the Ivory Coast Commission Litigation) do not exceed an
amount equal to (X) the Indemnity Threshold LESS (Y) any Losses
incurred by all Buyer Indemnitees for which such Buyer Indemnitees
would have been entitled to indemnification from Seller pursuant to
Section 8.2.1, but such indemnification was not available because such
Losses were less than the Indemnity Threshold as provided under
Section 8.2.3(a). Any amounts paid by Buyer or CRSI and the
Subsidiaries pursuant to this Section 8.2.4(a) shall apply to and be
credited against the Indemnity Threshold.
(b) Seller shall indemnify and hold harmless all Buyer
Indemnitees (including Buyer) from and against, and shall pay and
reimburse the Buyer Indemnitees for, any and all Losses resulting from
or arising out of the Ivory Coast Commission Litigation (including,
for the avoidance of doubt, all actual costs and expenses (including
reasonable attorneys' fees and expenses) incurred after the Closing
Date in connection with the defense of the Ivory Coast Commission
Litigation), but only to the extent such Losses exceed the
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indemnification obligations of CRSI and the Subsidiaries pursuant to
Section 8.2.4(a).
SECTION 8.3 DEFENSE OF THIRD PARTY CLAIMS.
8.3.1 NOTICE. No right to indemnification pursuant to this
Article VIII shall be available to any party entitled to be indemnified
hereunder (an "Indemnified Party") with respect to a claim from any Person
not a party to this Agreement (any such claim, a "Claim") unless such
Indemnified Party shall have delivered within the Notice Period to the
party obliged to provide indemnification (an "Indemnitor") a written notice
(a "Claim Notice") describing in reasonable detail the facts giving rise to
the claim for indemnification hereunder and the amount, to the extent
known. Notwithstanding the foregoing, in the event that a Claim Notice is
not given by the Indemnified Party within the Notice Period, the
Indemnified Party shall nevertheless be entitled to be indemnified for
third party claims under this Section 8.3 to the extent that the Indemnitor
has not been prejudiced by such time elapsed.
8.3.2 DEFENSE OF CLAIMS. Upon receipt by an Indemnitor of a Claim
Notice, such Indemnitor may, if it shall have acknowledged its obligation
to indemnify the Indemnified Party, assume and control the administration
and defense of the Claim described therein at the Indemnitor's own expense.
The Indemnified Party shall have the right to approve the Indemnitor's
selection of counsel with respect to any such Claim, such approval not to
be withheld unreasonably; and the Indemnified Party shall have the right to
employ its own counsel in any such case, except that the fees and expenses
of such counsel shall be for the account of and shall be paid by such
Indemnified Party; PROVIDED HOWEVER, that the Indemnitor and the
Indemnified Party shall jointly and in good faith, with the cooperation of
their respective counsel, assume and control the defense of any Claim,
notwithstanding the giving of such written acknowledgement by the
Indemnitor, if (i) the Indemnified Party shall have been advised by counsel
that there are one or more legal or equitable defenses available to it
which are different from or in addition to those available to the
Indemnitor and, in the reasonable opinion of the Indemnified Party, counsel
for the Indemnitor could not adequately represent the interests of the
Indemnified Party because such interests could be in conflict with those of
the Indemnitor, (ii) such matter involved amounts likely to exceed the
Indemnity Threshold or remaining indemnification obligations of the
Indemnitor or (iii) such action or proceeding is reasonably likely to have
a material effect on the then current financial condition, results of
operations or prospects of the Indemnified Party beyond any indemnification
obligations of the Indemnitor. Further, the Indemnified Party shall have
the right to assume and control the defense of any Claim if the Indemnitor
shall not have assumed the defense of such Claim in a timely fashion, not
to exceed 30 days from the date of receipt by the Indemnitor of the Claim
Notice.
8.3.3 SETTLEMENT. If the Indemnitor exercises its right to assume
the defense of a Claim, it shall not make any settlement of any claims
without obtaining
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in connection therewith the consent of the Indemnified Party, which consent
shall not unreasonably be withheld or delayed. If the Indemnitor does not
exercise its right to assume the defense of a Claim by giving the written
acknowledgement referred to in Section 8.3.2, or is otherwise restricted
from so assuming by the proviso to the second sentence of Section 8.3.2,
the Indemnitor nevertheless shall be entitled to participate in such
defense with its own counsel and at its own expense; and in any such case,
the Indemnified Party may assume the defense of the Claim, and shall not
effect any settlement without the consent of the Indemnitor, which consent
shall not unreasonably be withheld or delayed.
8.3.4 COOPERATION. Any Indemnified Party shall make available to
any Indemnitor and its attorneys and accountants all books, records and
documents relating to any Claim for which indemnification shall be sought
hereunder, and access to personnel for assistance in defending such Claim,
including making personnel available for deposition and trial testimony at
no cost to the Indemnitor. The parties shall cooperate in good faith and
render to each other reasonable assistance in the defense of any such
Claim.
SECTION 8.4 SPECIAL INDEMNITY. Seller shall indemnify and hold the
Buyer Indemnitees harmless from and against, and shall pay and reimburse
the Buyer Indemnitees for, any and all obligations, Liabilities, claims,
investigations, judgments, damages, contingencies and expenses of whatever
nature arising out of, resulting from or in connection with the Excluded
Assets and Liabilities, and the transfer thereof by CRSI and the acceptance
and assumption thereof by Seller or its Affiliates, including without
limitation Seller's or its Affiliate's failure to assume or discharge in
whole or in part any such obligation, Liability, claim, investigation,
judgment, damage, contingency or expense, as the case may be, related to
the Excluded Assets and Liabilities; PROVIDED, HOWEVER, that
notwithstanding anything to the contrary contained in this Section 8.4 or
any other provision hereunder, Seller shall have no obligation to
indemnify, hold harmless or reimburse any Buyer Indemnitee from and against
or for any failure to perform their respective obligations under the
Greenbank Subcontract in accordance with its terms. Notwithstanding any
provision to the contrary contained herein, the parties intend that the
special indemnification provided by Seller contained in this Section 8.4
not be subject to any restriction or limitation, including any dollar
threshold or other limitation.
SECTION 8.5 NO CONTRIBUTION FROM COMPANY. The obligations of the
Seller to indemnify pursuant to Section 8.2 are primary obligations of the
Seller, subject to the limitations set forth herein. Except as specifically
provided by Section 8.2.4(a) hereof, the Seller hereby waives any rights to
seek or obtain indemnification or contribution from CRSI or any Subsidiary
for Losses indemnified by Seller pursuant to Section 8.2 as a result of any
breach by CRSI or such Subsidiary of any representation, warranty or
covenant contained in this Agreement.
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ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION EVENTS. Subject to the provisions of Section
9.2 herein, this Agreement may, by written notice given at or prior to the
Closing in the manner hereinafter provided, be terminated and abandoned:
(a) By Seller or Buyer, if a material default or breach shall be
made by the other with respect to the due and timely performance of
any of its respective covenants and agreements contained herein, or
with respect to the due compliance with any of its respective
representations and warranties contained in Article III or IV, as
applicable, and after Buyer or Seller, as the case may be, shall have
given to the other written notice of such material default or breach
and the defaulting or breaching party shall not have substantially
cured the default or breach prior to the earlier of (I) a reasonable
time following notice of such default or breach (which shall not be
more than 30 days following such notice) and (II) the date set forth
in clause (c) of this Section 9.1 and such default or breach has not
been waived;
(b) By mutual written consent of Seller and Buyer;
(c) By Seller or Buyer, if the Closing shall not have occurred on
or before June 30, 1998 or such later date as may be agreed upon by
the parties; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this paragraph (c) of this Section 9.1 shall not be
available to either of the respective parties whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(d) By Buyer if either condition precedent specified in Section
6.1.5 or 6.1.6 has not been satisfied as of the date which is 45 days
following the date hereof; PROVIDED, HOWEVER, that if Seller shall not
have received written notice from Buyer of its intention to terminate
this Agreement pursuant to this Section 9.1(d) within 1 day following
such 45 day period, then Buyer shall have no further right to
terminate this Agreement pursuant this Section 9.1(d).
SECTION 9.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 9.1, all further rights and obligations of
the parties hereunder shall terminate, except that the obligations set
forth in Subsection 5.2.2 and Section 10.2 herein, and under the
Confidentiality Agreement shall survive and, further, that if a termination
of this Agreement occurs prior to Closing pursuant to Section 9.1(a)
hereof, then the non-breaching party shall have any and all rights or
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causes of action to ▇▇▇ the breaching party for damages and other relief as
may be afforded in law or equity for the breach hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 REMEDIES; EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES;
RELATIONSHIP BETWEEN THE PARTIES.
10.1.1 REMEDIES. The remedies expressly set forth in this
Agreement following the Closing with respect to any breach of this
Agreement are the sole and exclusive remedies for any such breach, and such
remedies are intended to be non-cumulative with respect to, and shall
preclude the assertion by any party of, any other remedies which would
otherwise have been available in common law or by statute, except for any
right that may exist to seek redress for common law fraud.
10.1.2 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES;
RELATIONSHIP BETWEEN THE PARTIES. It is the explicit intent and
understanding of the parties hereto that none of the parties nor any of
their respective affiliates, representatives, advisors or agents is making
any representation or warranty whatsoever, oral or written, express or
implied, other than those set forth in this Agreement and the Ancillary
Agreements and none of the parties is relying on any statement,
representation or warranty, oral or written, express or implied, made by
any other party or such other party's affiliates, representatives, advisors
or agents, except for the representations and warranties expressly set
forth in such Agreements. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN
THIS AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR
REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF
THE ASSETS OR LIABILITIES OF THE BUSINESS AND, EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT BUYER TAKES
THE ASSETS OF THE BUSINESS "AS IS" AND "WHERE IS." Without limiting the
generality of, and in furtherance of, the immediately preceding sentences,
TBG and Buyer acknowledge that Seller makes no representations or
warranties to TBG and Buyer regarding any forecasts, projections,
estimates, business plans or budgets heretofore delivered to or made
available to TBG and Buyer or its affiliates, representatives, advisors or
agents in respect of future revenues, expenses or expenditures, future
results of operations (or any component thereof), future cash flows or
future financial condition (or any component thereof) of CRSI or any
Subsidiary. The parties hereto agree that this is an arm's length
transaction in which the parties' undertakings and obligations are limited
to the performance of their obligations under this Agreement. Buyer
acknowledges that it is a sophisticated investor, that it has undertaken,
and that Seller has given Buyer
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such opportunities as it has requested to undertake, a full investigation
of the Business (including CRSI's and its Subsidiaries' contracts, permits,
licenses, premises, facilities, books and records), and that it has only a
contractual relationship with Seller, based solely on the terms of this
Agreement, and that there is no special relationship of trust or reliance
between Buyer and Seller.
SECTION 10.2 EXPENSES. Except as otherwise provided in this Agreement,
including Sections 8.2 and 8.3 hereof, each of the respective parties to
this Agreement shall pay their own costs and expenses (including all legal,
accounting, broker, finder and investment banker fees) relating to this
Agreement, the negotiations leading up to this Agreement and the
transactions contemplated by this Agreement.
SECTION 10.3 AMENDMENT. This Agreement shall not be amended or
modified except by an agreement in writing duly executed by Seller and
Buyer.
SECTION 10.4 ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules hereto, and the Confidentiality Agreement contain all of the
terms, conditions and representations and warranties agreed upon by the
parties relating to the subject matter of this Agreement and supersede all
prior and contemporaneous agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting
such subject matter.
SECTION 10.5 NOTICES. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing
and shall be deemed to have been duly given (I) on the date of delivery, if
personally delivered to the persons identified below on a business day or,
if not delivered on a business day, on the immediately succeeding business
day after delivery, (II) three (3) days after mailing if mailed by
certified or registered mail, postage prepaid, return receipt requested, or
(III) on the date of receipt, if delivered by facsimile on a business day
or, if not delivered on a business day, on the immediately succeeding
business day after delivery and receipt thereof is confirmed telephonically
and a copy thereof is promptly mailed to the addressee in the manner
described in clause (ii) of this Section 10.5, addressed as follows:
If to Seller:
COMSAT Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Flower, Vice President and
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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COMSAT Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
Vice President, Secretary and General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to TBG or to Buyer:
TBG Industries, Inc. (or, in the case of Buyer,
c/o TBG Industries, Inc.)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
TGB Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section. Notices, requests, demands
and other communications delivered to legal counsel of any party hereto,
whether or not such counsel shall consist of in-house or outside counsel,
shall not constitute duly given notice to any party hereto.
SECTION 10.6 SEVERABILITY. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties to this
Agreement to the extent possible. In any event, all other provisions of
this Agreement shall be deemed valid and enforceable to the full extent
possible. Any provision of this Agreement that is determined by a court of
competent jurisdiction to be invalid or unenforceable as to such
jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 10.7 WAIVER. Waiver of any term or condition of this Agreement
by either of the respective parties shall only be effective if in writing
and shall not be construed as a waiver of any subsequent breach or failure
of the same term or condition, or a waiver of any other term or condition,
of this Agreement.
SECTION 10.8 BINDING EFFECT; ASSIGNMENT. No party to this Agreement
may assign or delegate, by operation of law or otherwise, all or any
portion of its rights, obligations or liabilities under this Agreement
without the prior written consent of the other party to this Agreement,
which it may withhold in its absolute discretion; PROVIDED THAT the Buyer
may assign this Agreement and the obligation to purchase the Shares to a
wholly-owned subsidiary of the Buyer, or, in connection with the
consummation of the transaction contemplated hereby, to any financial
institution from whom the Buyer has received financing for the purchase of
the Shares, in each case upon written notice of such assignment to Seller.
SECTION 10.9 NO THIRD PARTY BENEFICIARIES. Except as may be expressly
provided in this Agreement, there are no intended third party beneficiaries
to this Agreement and nothing herein shall confer any rights upon any
person or entity which is not a party to this Agreement. No employee or
contractor or agent of CRSI or any Subsidiary shall have any rights or
privileges under this Agreement, which is a contract solely between two
business entities.
SECTION 10.10 COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such counterparts shall,
when taken together, be deemed to constitute one separate instrument.
SECTION 10.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
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STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE DOCTRINE OF
CONFLICTS OF LAWS.
SECTION 10.12 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
10.12.1 CONSENT TO JURISDICTION.
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Delaware State court or Federal court sitting in the
State of Delaware and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby or for recognition or enforcement of any
judgment relating thereto, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such Delaware
State court or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment of in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby in any
Delaware State or Federal court. Each of the parties hereto hereby
irrevocably and unconditionally waives, to the fullest extent permitted by
law, the defense of any inconvenient forum to the maintenance of such
action or proceeding in any such court.
(c) Each of the parties hereto irrevocably consents to service of
process in the manner provided for notices in Section 10.5 hereof.
Notwithstanding the foregoing, each of the parties hereto shall have the
right to serve process in any other manner permitted by law.
10.12.2 WAIVER OF JURY TRIAL.
(a) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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(b) EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE WAIVERS SET FORTH IN CLAUSE (a) OF THIS
SECTION 10.12, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS
AND CERTIFICATIONS IN SUCH SECTION.
SECTION 10.13 CONSTRUCTION.
10.13.1 WORDS. All references in this Agreement to the singular
shall include the plural where applicable, and all references to gender
shall include both genders and the neuter.
10.13.2 CROSS REFERENCES. References in this Agreement to any
Article shall include all Sections, Subsections and Paragraphs in such
Article; references in this Agreement to any Section shall include all
Subsections and Paragraphs in such Section; and references in this
Agreement to any Subsection shall include all Paragraphs in such
Subsection.
10.13.3 NO PRESUMPTION. In interpreting any provision of this
Agreement no presumption shall be drawn against the party drafting the
provision.
10.13.4 EXHIBITS AND SCHEDULES. All Exhibits and Schedules
referred to herein are hereby incorporated into and made part of this
Agreement.
SECTION 10.14 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND
WARRANTIES. All covenants hereunder shall be given independent effect so
that if a certain action or condition constitutes a default under a certain
covenant, the fact that such action or condition is permitted by another
covenant shall not affect the occurrence of such default, unless expressly
permitted under an exception to such initial covenant. In addition, all
representations and warranties hereunder shall be given independent effect
so that if a particular representation or warranty proves to be incorrect
or is breached, the fact that another representation or warranty concerning
the same or similar subject matter is correct or is not breached will not
affect the incorrectness of or a breach of such particular representation
and warranty hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement with legal and binding effect as of the date and year first
above written.
COMSAT CORPORATION
By: /s/ ▇▇▇▇▇ ▇. Flower
----------------------------
▇▇▇▇▇ ▇. Flower
Vice President and
Chief Financial Officer
TBG INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
PRODELIN HOLDING CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS....................................................................................... 1
1.1 Definitions................................................................................ 1
ARTICLE II PURCHASE AND SALE OF SHARES; CLOSING.............................................................. 11
2.1 Certain Assets and Liabilities............................................................. 11
2.2 Purchase and Sale.......................................................................... 12
2.3 Closing.................................................................................... 12
2.4 Purchase Price............................................................................. 12
2.4.1 June Statements..................................................................... 12
2.4.2 Pre-Closing Statement............................................................... 13
2.5 Closing Deliveries......................................................................... 14
2.5.1 Purchase Price...................................................................... 14
2.5.2 Share Certificates.................................................................. 14
2.5.3 Corporate Records................................................................... 14
2.5.4 Ancillary Agreements................................................................ 14
2.5.5 Closing Documents to be Delivered by Seller......................................... 15
2.5.6 Closing Documents to be Delivered by Buyer.......................................... 15
2.6 Purchase Price Adjustment.................................................................. 15
2.6.1 Closing Statement................................................................... 15
2.6.2 Objections; Resolutions............................................................. 15
2.6.3 Workpapers.......................................................................... 16
2.6.4 Final Adjustments................................................................... 16
2.6.5 Fees and Expenses................................................................... 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.......................................................... 19
3.1 Corporate Status and Authority of Seller................................................... 19
3.2 No Conflicts, etc.......................................................................... 20
3.2.1 No Conflicts........................................................................ 20
3.2.2 Consents and Approvals.............................................................. 20
3.3 Corporate Status and Authority of CRSI and the
Subsidiaries............................................................................... 20
3.4 Ownership of CRSI and the Subsidiaries..................................................... 21
3.5 Transfer of Shares......................................................................... 22
3.6 Financial Statements, etc.................................................................. 22
3.6.1 Schedules........................................................................... 22
3.6.2 Accuracy............................................................................ 23
3.6.3 No Undisclosed Liabilities.......................................................... 23
3.6.4 Absence of Changes.................................................................. 23
3.7 Properties; Leases; Tangible Assets........................................................ 25
3.7.1 Title............................................................................... 25
3.7.2 Leases.............................................................................. 26
3.7.3 Documents........................................................................... 26
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3.8 Accounts Receivable........................................................................ 26
3.9 Inventory.................................................................................. 27
3.10 Intellectual Property...................................................................... 27
3.10.1 Patents and Know-How................................................................ 27
3.10.2 Trademarks and Copyrights........................................................... 28
3.10.3 Computer Software................................................................... 29
3.11 Material Contracts......................................................................... 29
3.11.1 Identification...................................................................... 29
3.11.2 Full Force and Effect............................................................... 30
3.12 Litigation and Investigation............................................................... 31
3.13 Taxes...................................................................................... 31
3.14 Employees; Compensation; Labor............................................................. 34
3.14.1 Employees and Compensation......................................................... 34
3.14.2 Certain Labor Matters............................................................... 34
3.14.3 Employee Benefit Plans; ERISA....................................................... 35
3.15 Environmental Matters...................................................................... 36
3.15.1 Environmental Permits............................................................... 36
3.15.2 No Violation........................................................................ 36
3.15.3 No Notice........................................................................... 36
3.15.4 No Basis for Liability.............................................................. 36
3.15.5 Underground Improvements............................................................ 37
3.15.6 Records............................................................................. 37
3.15.7 Liens............................................................................... 37
3.16 Government Contracts....................................................................... 37
3.16.1 Compliance.......................................................................... 37
3.16.2 Investigations...................................................................... 38
3.16.3 Absence of Claims................................................................... 38
3.16.4 Eligibility......................................................................... 39
3.17 Compliance With Laws....................................................................... 39
3.17.1 General............................................................................ 39
3.17.2 Export Control..................................................................... 39
3.17.3 Security Clearances................................................................ 39
3.18 Insurance.................................................................................. 40
3.19 Brokers.................................................................................... 40
3.20 Disclosure................................................................................. 40
3.21 Related Party Transactions................................................................. 40
3.22 Bank Accounts.............................................................................. 41
3.23 Conflicts of Interest...................................................................... 41
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TBG
AND BUYER......................................................................................... 41
4.1 Corporate Status and Authority of TBG and Buyer............................................ 41
4.2 No Conflicts, etc.......................................................................... 42
4.2.1 No Conflicts........................................................................ 42
4.2.2 Consents and Approvals.............................................................. 42
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4.3 Sufficient Funds........................................................................... 43
4.4 Brokers.................................................................................... 43
4.5 Purchase for Investment.................................................................... 43
ARTICLE V COVENANTS......................................................................................... 43
5.1 Conduct of the Business.................................................................... 43
5.1.1 Ordinary Course..................................................................... 43
5.1.2 Cash Management..................................................................... 45
5.2 Access to Information...................................................................... 46
5.2.1 Access.............................................................................. 46
5.2.2 Confidentiality..................................................................... 46
5.2.3 Notice to Seller.................................................................... 46
5.3 Filings and Authorizations................................................................. 47
5.4 Tax Matters................................................................................ 47
5.4.1 Tax Returns......................................................................... 47
5.4.2 Indemnity........................................................................... 48
5.4.3 Tax Liability....................................................................... 49
5.4.4 Tax Contests........................................................................ 49
5.4.5 Cooperation......................................................................... 51
5.5 Purchase Support Agreement................................................................. 51
5.6 Name and Marks............................................................................. 52
5.6.1 Buyer's Obligations................................................................. 52
5.6.2 Seller's Obligations................................................................ 52
5.7 Notice to Buyer............................................................................ 52
5.8 Further Assurances......................................................................... 52
5.9 Public Announcements....................................................................... 52
5.10 Company Records............................................................................ 53
5.10.1 Retention........................................................................... 53
5.10.2 Cooperation With Respect to Examinations and
Controversies....................................................................... 53
5.10.3 Remedy for Failure to Comply........................................................ 53
5.11 Access to Real Properties.................................................................. 53
5.12 Cooperation of Buyer....................................................................... 54
5.13 Disclosure Schedules....................................................................... 54
5.13.1 Delivery. .......................................................................... 54
5.13.2 Interpretation...................................................................... 54
5.14 Employee Benefit Matters................................................................... 54
5.14.1 Employee Benefit Definitions........................................................ 54
5.14.2 Welfare Plans Following the Closing................................................. 55
5.14.3 Retention Agreements................................................................ 56
5.14.4 Savings Program..................................................................... 56
5.14.5 Vacation and Holidays............................................................... 56
5.14.6 WARN Act Compliance................................................................. 57
5.14.7 Excluded Employees.................................................................. 57
5.15 Administration of Accounts................................................................. 57
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5.15.1 In Trust For Buyer.................................................................. 57
5.15.2 In Trust For Seller................................................................. 57
5.16 Negotiations with Others................................................................... 58
5.17 Exchange Proceeds.......................................................................... 58
5.18 Noncompetition and Nonsolicitation......................................................... 58
5.18.1 Noncompetition...................................................................... 58
5.18.2 Nonsolicitation..................................................................... 59
5.18.3 Validity............................................................................ 60
5.19 Excluded Contracts......................................................................... 60
5.20 Financial Reports.......................................................................... 60
5.21 Greenbank Surety Bond...................................................................... 60
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF
BUYER............................................................................................. 61
6.1 Conditions................................................................................. 61
6.1.1 Representations and Warranties Accurate............................................. 61
6.1.2 Performance by Seller............................................................... 61
6.1.3 Government Authorizations........................................................... 61
6.1.4 Opinion of Counsel.................................................................. 62
6.1.5 Surveys............................................................................. 62
6.1.6 Environmental....................................................................... 62
6.1.7 Absence of Adverse Change........................................................... 62
6.1.8 Security Clearance.................................................................. 62
6.1.9 Compliance with ISRA................................................................ 63
6.1.10 Greenbank Novation.................................................................. 63
6.1.11 Export Licenses..................................................................... 63
6.1.12 Ancillary Agreements................................................................ 63
6.2 Waiver..................................................................................... 63
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF
SELLER............................................................................................ 64
7.1 Conditions................................................................................. 64
7.1.1 Representations and Warranties Accurate............................................. 64
7.1.2 Performance by Buyer................................................................ 64
7.1.3 Government Authorizations........................................................... 64
7.1.4 Opinion of Counsel.................................................................. 64
7.1.5 Change of Name...................................................................... 64
7.2 Waiver..................................................................................... 65
ARTICLE VIII INDEMNIFICATION................................................................................. 65
8.1 Survival of Representations and Warranties................................................. 65
8.1.1 Of the Seller....................................................................... 65
8.1.2 Of the Buyer........................................................................ 65
8.2 General Indemnity.......................................................................... 65
8.2.1 Indemnification by Seller........................................................... 65
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8.2.2 Indemnification by Buyer............................................................ 66
8.2.3 Limitations......................................................................... 67
8.2.4 Ivory Coast......................................................................... 68
8.3 Defense of Third Party Claims.............................................................. 69
8.3.1 Notice.............................................................................. 69
8.3.2 Defense of Claims................................................................... 69
8.3.3 Settlement.......................................................................... 69
8.3.4 Cooperation......................................................................... 70
8.4 Special Indemnity.......................................................................... 70
8.5 No Contribution From Company............................................................... 70
ARTICLE IX TERMINATION....................................................................................... 71
9.1 Termination Events......................................................................... 71
9.2 Effect of Termination...................................................................... 71
ARTICLE X MISCELLANEOUS..................................................................................... 72
10.1 Remedies; Exclusivity of Representations and Warranties;
Relationship Between the Parties........................................................... 72
10.1.1 Remedies........................................................................... 72
10.1.2 Exclusivity of Representations and Warranties;
Relationship Between the Parties.................................................. 72
10.2 Expenses................................................................................... 73
10.3 Amendment.................................................................................. 73
10.4 Entire Agreement........................................................................... 73
10.5 Notices.................................................................................... 73
10.6 Severability............................................................................... 75
10.7 Waiver..................................................................................... 75
10.8 Binding Effect; Assignment................................................................. 75
10.9 No Third Party Beneficiaries............................................................... 75
10.10 Counterparts............................................................................... 75
10.11 Governing Law.............................................................................. 75
10.12 Consent to Jurisdiction; Waiver of Jury Trial.............................................. 76
10.12.1 Consent to Jurisdiction......................................................... 76
10.12.2 Waiver of Jury Trial............................................................ 76
10.13 Construction............................................................................... 77
10.13.1 Words........................................................................... 77
10.13.2 Cross References................................................................ 77
10.13.3 No Presumption.................................................................. 77
10.13.4 Exhibits and Schedules.......................................................... 77
10.14 Independence of Covenants and Representations and
Warranties................................................................................. 77
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EXHIBITS
Exhibit A-1 Form of Asset Distribution and Assumption Agreement
Exhibit A-2 Form of Assignment and Assumption Agreement
Exhibit B Form of Promissory Note
Exhibit C Form of Technology License Agreement
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Sublease Agreement
Exhibit F Form of Guarantee Assumption Agreement
Exhibit G Form of Post Closing Note
Exhibit H Form of Greenbank Novation Agreement
Exhibit I Form of Greenbank Subcontract
DISCLOSURE SCHEDULES
I Knowledge of Seller
II Distributed Assets and Liabilities
III Excluded Contracts
2.4.1 June Statements
2.6.1 Intercompany Loans and Advances Principles and
Methods
3.2.1 Conflicts as to Material Contracts
3.2.2 Consents and Approvals
3.3 Subsidiaries of CRSI; Stockholders and Capital Stock;
Jurisdictions Where CRSI and the Subsidiaries are
Qualified
3.4 Existing Options, Warrants, Calls, Rights,
Arrangements, etc. Unissued Capital Stock of CRSI and
the Subsidiaries
3.6.1 Financial Statements
3.6.4 Absence of Changes
3.7.1 Real Property
3.7.2 Leases of Real Property and Certain Equipment
3.7.3(b) Pending Condemnation Proceedings or Proceedings in
Relation to Real Property
3.7.3(c) Agreements Granting Right of Use of Occupancy of Real
Properties
3.8 Delinquent Accounts Receivable
3.10.1 Patents and Licenses
3.10.2 Trademarks, Copyrights and Licenses
3.10.3 Computer Software
3.11.1 Material Contracts
3.11.2 Material Contract Exceptions
3.12 Litigation and Investigation
3.13 Taxes
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3.14.1 Employees; Benefit Plans; Employment Policies
3.14.2 Certain Labor Matters
3.14.3 Employee Benefit Plans; ERISA
3.15.1 Environment Permits
3.15.2 Violation of Environmental Laws
3.15.3 Notice of Violation of Environmental Laws
3.15.4 Basis for Liability
3.15.5 Underground Improvements, Dumps and Land Fills
Subject to Environmental Laws
3.16.1 Noncompliance with Government Contracts
3.16.2 Investigations with respect to Government Contracts
3.16.3 Outstanding Claims with respect to Government
Contracts
3.16.4 Non-Eligibility with respect to Government Contracts
3.17.2 Noncompliance with Export Control
3.17.3 Facility Security Clearances
3.18 Insurance Policies
4.2.2 Consents and Approvals
4.2.2(ii) Filings Required by the Department of Defense
Industrial Security Regulation or Department of Defense
Industrial Security Manual
5.1(m) 1997 or 1998 Fiscal Year Capital Expenditures
5.5 Goods and Services to be Supplied by CRSI and
Subsidiaries subject to the "Purchase Support
Agreement"
5.14.1 Excluded Employees
5.14.3 Employee Retention Agreements
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