STOCK PURCHASE AGREEMENT
BY AND BETWEEN
KAMAN CORPORATION
AND
ITT INDUSTRIES, INC.
Dated as of November 14, 1997
TABLE OF CONTENTS
PAGE
I. PURCHASE AND SALE OF THE SHARES . . . . . . . . . . . . . 1
1.1 Purchase and Sale of the Shares . . . . 1
1.2 Consideration . . . . . . . . . . . . . 1
1.3 Closing . . . . . . . . . . . . . . . . 1
1.4 Deliveries by Seller. . . . . . . . . . 2
1.5 Deliveries by Buyer . . . . . . . . . . 2
1.6 Purchase Price Adjustment . . . . . . . 2
II. RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . 3
2.1 Intercompany Accounts . . . . . . . . . 3
2.2 Resignations. . . . . . . . . . . . . . 3
2.3 Use of Kaman Name . . . . . . . . . . . 4
III. REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . 4
3.1 Organization of Seller; Authority . . . 4
3.2 Title to Shares . . . . . . . . . . . . 5
3.3 Organization and Qualification of the
Company . . . . . . . . . . . . . . . 5
3.4 Capitalization. . . . . . . . . . . . . 5
3.5 No Violation; Consents and Approvals. . 6
3.6 Financial Statements. . . . . . . . . . 6
3.7 Absence of Certain Changes or Events. . 7
3.8 Absence of Undisclosed Liabilities. . . 7
3.9 Title to Personal Property. . . . . . . 7
3.10 Title to Real Property. . . . . . . . . 8
3.11 Intellectual Property . . . . . . . . . 10
3.12 Litigation. . . . . . . . . . . . . . . 10
3.13 Employee Benefit Plans. . . . . . . . . 10
3.14 Taxes . . . . . . . . . . . . . . . . . 12
3.15 Contracts and Commitments . . . . . . . 14
3.16 Compliance with Laws. . . . . . . . . . 16
3.17 Insurance . . . . . . . . . . . . . . . 17
3.18 Labor Matters . . . . . . . . . . . . . 17
3.19 Environmental Matters . . . . . . . . . 17
3.20 Transactions with Affiliates. . . . . 19
3.21 Material Suppliers. . . . . . . . . . 19
3.22 Absence of Certain Payments . . . . . 19
3.23 Classified Information. . . . . . . . . 20
3.24 Brokers . . . . . . . . . . . . . . . . 20
IV. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . 19
4.1 Organization; Authority . . . . . . . . 20
4.2 No Violation; Consents and Approvals. . 20
4.3 Litigation. . . . . . . . . . . . . . . 20
4.4 Financing . . . . . . . . . . . . . . . 21
4.5 Acquisition of the Shares for Invest-
ment; Securities Act. . . . . . . . . 21
4.6 Brokers . . . . . . . . . . . . . . . . 21
V. COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . 21
5.1 Conduct of the Company's Business . . . 21
5.2 Cash Dividends. . . . . . . . . . . . . 22
5.3 Access to Information Prior to the
Closing; Confidentiality. . . . . . . 22
5.4 Reasonable Efforts. . . . . . . . . . . 23
5.5 Consents. . . . . . . . . . . . . . . . 23
5.6 Antitrust Notification. . . . . . . . . 24
5.7 Public Announcements. . . . . . . . . . 24
5.8 Supplemental Disclosure . . . . . . . . 24
5.9 Access to Books and Records Following
the Closing . . . . . . . . . . . . . 24
5.10 Certain Contracts . . . . . . . . . . . 25
5.11 Release of Liens and Guarantees . . . . 25
VI. TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . 26
6.1 Certain Definitions . . . . . . . . . . 26
6.2 Transfer and Similar Taxes. . . . . . . 26
6.3 Real Property and Personal Property
Taxes . . . . . . . . . . . . . . . . 26
6.4 Return Filings, Refunds and Credits . . 26
6.5 Tax Elections . . . . . . . . . . . . . 29
6.6 Timing Adjustments. . . . . . . . . . . 30
6.7 Tax Indemnification . . . . . . . . . . 31
6.8 Section 338(h)(10) Election . . . . . . 33
VII. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . 34
7.1 Company Employees; Employee Contracts
and Benefits. . . . . . . . . . . . . 34
7.2 Allocation of Cash. . . . . . . . . . . 39
7.3 No Solicitation . . . . . . . . . . . . 40
7.4 Termination of Intercompany Commitments 40
7.5 Dispute Resolution. . . . . . . . . . . 40
7.6 Non-Competition; Nondisclosure. . . . . 41
VIII. CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . 42
8.1 Conditions to Both Parties' Obligations 42
8.2 Conditions to Seller's Obligations. . . 43
8.3 Conditions to Buyer's Obligations . . . 43
IX. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 44
9.1 Termination . . . . . . . . . . . . . . 44
9.2 Procedure and Effect of Termination . . 44
X. SURVIVAL OF REPRESENTATIONS AND COVENANTS; INDEMNI-
FICATION . . . . . . . . . . . . . . . . . . . . . . 45
10.1 Survival of Representations and Cove-
nants . . . . . . . . . . . . . . . . 45
10.2 Seller's Agreement to Indemnify . . . . 45
10.3 Seller's Limitation of Liability. . . . 46
10.4 Buyer's Agreement to Indemnify. . . . . 46
10.5 Buyer's Limitation of Liability . . . . 47
10.6 Conditions of Indemnification With Re-
spect to Third-Party Claims . . . . . 47
10.7 Net Payments. . . . . . . . . . . . . . 48
10.8 Sole Remedy for Certain Claims. . . . . 48
10.9 Adjustment to Purchase Price. . . . . . 49
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 49
11.1 Further Assurances. . . . . . . . . . . 49
11.2 Notices . . . . . . . . . . . . . . . . 49
11.3 Amendment, Modification and Waiver. . . 50
11.4 Entire Agreement. . . . . . . . . . . . 50
11.5 Severability. . . . . . . . . . . . . . 50
11.6 Binding Effect; Assignment. . . . . . . 50
11.7 No Third-Party Beneficiaries. . . . . . 50
11.8 Fees and Expenses . . . . . . . . . . . 51
11.9 Counterparts. . . . . . . . . . . . . . 51
11.10 Interpretation. . . . . . . . . . . . . 51
11.11 Forum; Service of Process . . . . . . . 51
11.12 Governing Law . . . . . . . . . . . . . 51
11.13 WAIVER OF JURY TRIAL. . . . . . . . . . 51
11.14 Certain Defined Terms . . . . . . . . . 52
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of November 14, 1997
(the "Agreement"), by and between KAMAN CORPORATION, a Connecticut
corporation ("Seller"), and ITT Industries, Inc., an Indiana
corporation ("Buyer").
WHEREAS, Buyer desires to acquire from Seller, and Seller
desires to dispose of, the business, properties and assets of Kaman
Sciences Corporation, a Delaware corporation and an indirect wholly
owned subsidiary of Seller (the "Company"); and
WHEREAS, to effect such transaction, Buyer desires to
purchase from Seller, and Seller desires to sell to Buyer, all of
the issued and outstanding shares of capital stock (the "Shares")
of the Company, upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of
the representations, warranties, covenants and agreements
hereinafter set forth, and intending to be legally bound hereby,
the parties hereto agree as follows:
I. PURCHASE AND SALE OF THE SHARES.
1 Purchase and Sale of the Shares. Upon the terms and
subject to the conditions of this Agreement, at the closing
provided for in Section 1.3 hereof (the "Closing"), Seller shall
cause its wholly owned subsidiary, Kaman Diversified Technologies
Corporation, a Connecticut corporation ("Kaman Diversified"), to
sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase, acquire and accept from Kaman Diversified, all of
Kaman Diversified's right, title and interest in and to the Shares,
free and clear of all Liens (other than those, if any, created by
Buyer).
2 Consideration. Upon the terms and subject to the
conditions of this Agreement, in consideration of the aforesaid
sale, conveyance, assignment, transfer and delivery of the Shares,
at the Closing, Buyer shall pay to Seller the sum of $135,000,000
in cash (the "Purchase Price").
3 Closing. The Closing of the transactions contemplated
by this Agreement shall take place at the offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at 10:00 a.m., local time, on December 30, 1997, or if the
conditions to Closing set forth in Article VIII hereof shall not
have been satisfied or waived by such date, as soon as practicable
after such conditions shall have been satisfied or waived, or at
such other place, date and time as shall be mutually agreed upon by
the parties hereto; provided, however, that except for the purposes
of Section 1.6, the parties hereto intend that such Closing shall
Page 1
be deemed to be effective, and the transactions contemplated by
this Agreement shall be deemed to occur, at 11:59 p.m. on the date
on which the Closing actually occurs (the "Closing Date").
4 Deliveries by Seller. Prior to or at the Closing,
Seller shall deliver or cause to be delivered to Buyer the
following:
(a) a stock certificate or stock certificates
representing the Shares, duly endorsed or accompanied by stock
powers duly executed in blank;
(b) the minute books, stock books, stock ledgers and
corporate seal of the Company;
(c) the resignations of directors referred to in Section
2.2 hereof;
(d) the officer's certificate referred to in Section
8.3(c) hereof; and
(e) all other documents, certificates, instruments or
writings required to be delivered by Seller prior to or at the
Closing pursuant to this Agreement or otherwise required in
connection herewith.
5 Deliveries by Buyer. Prior to or at the Closing,
Buyer shall deliver or cause to be delivered to Seller the
following:
(a) cash in an amount equal to the Purchase Price, by
wire transfer of immediately available funds to a bank account
designated by Seller prior to the Closing;
(b) the officer's certificate referred to in Section
8.2(c) hereof; and
(c) all other documents, certificates, instruments or
writings required to be delivered by Buyer prior to or at the
Closing pursuant to this Agreement or otherwise required in
connection herewith.
6 Purchase Price Adjustment. (a) As soon as
practicable, but in no event later than 60 days following the
Closing Date, Buyer shall prepare and deliver to Seller an audited
statement of stockholders equity of the Company as of the close of
business on the Closing Date (including the notes thereto, the
"Closing Date Statement") together with the workpapers used in the
preparation thereof. The Closing Date Statement shall be prepared
as if the Closing Date was the Company's normal year end, in
accordance with GAAP applied on a basis consistent with the
December 31, 1996 balance sheet referred to in Section 3.6.
Page 2
(b) Seller shall have 30 days to review the Closing Date
Statement after receipt thereof. If Seller notifies Buyer of its
objection to the Closing Date Statement, Buyer and Seller shall,
within 30 days following such notice (the "Resolution Period"),
attempt to resolve their differences and any resolution by them as
to any disputed amounts shall be final, binding and conclusive.
If, at the conclusion of the Resolution Period, any amounts remain
in dispute, then each of Buyer and Seller shall submit all items
remaining in dispute to a nationally recognized firm of independent
accountants mutually agreeable to Buyer and Seller ("Neutral
Accounting Firm") for resolution by delivering to the Neutral
Accounting Firm its calculation of such items. All fees and
expenses relating to the work, if any, to be performed by the
Neutral Accounting Firm shall be borne equally between Seller and
Buyer. The Neutral Accounting Firm shall determine, based solely
on the submissions by Seller and Buyer, and not by independent
review, only those issues still in dispute. The Neutral Accounting
Firm's determination shall be made within 30 days of submission as
provided above and shall be set forth in a written statement
delivered to Seller and Buyer and shall be final, binding and
conclusive. The term "Final Closing Date Statement," as
hereinafter used, shall mean the definitive Closing Date Statement
agreed to by Buyer and Seller or the definitive Closing Date
Statement resulting from the determinations made by the Neutral
Accounting Firm (in addition to those items theretofore agreed to
by Seller and Buyer).
(c) Within five business days after the Final Closing
Date Statement is agreed to or any remaining disputed items are
ultimately resolved pursuant to Section 1.6(b): (x) if the
stockholders equity set forth in the Final Closing Date Statement
exceeds $28,600,000, Buyer shall pay Seller the amount of such
excess (plus interest thereon accrued from the Closing Date to the
payment date at a rate of 7% per annum) by wire transfer in
immediately available funds to an account specified by Seller and
(y) if $28,600,000 exceeds the stockholders equity set forth in the
Final Closing Date Statement, Seller shall pay Buyer the amount of
such excess (plus interest thereon accrued from the Closing Date to
the payment date at a rate of 7% per annum) by wire transfer in
immediately available funds to an account specified by Buyer.
II. RELATED MATTERS.
1 Intercompany Accounts. Seller shall, and shall cause
its subsidiaries (including the Company) to, take all actions
necessary to settle as of the Closing all cash overdrafts or
balances, intercompany payables or receivables, indebtedness and
other accounts between the Company, on the one hand, and Seller and
its other subsidiaries, on the other hand (other than trade
accounts arising in the ordinary course of business).
2 Resignations. At the Closing, Seller shall cause each
director of the Company to resign as a director of the Company,
each such resignation to be effective as of the Closing.
Page 3
3 Use of Kaman Name.
(a) At the Closing, Buyer shall (i) cause a Certificate
of Amendment to the Certificate of Incorporation of the Company to
be filed with the Secretary of State of the State of Delaware
changing the name of the Company to a name other than "Kaman
Sciences Corporation" and not including any derivative or variant
of "Kaman" and (ii) deliver to Seller a duplicate original of such
Certificate, duly executed and suitable for filing. Other than as
set forth below, Buyer shall not use or permit any of its
subsidiaries to use the name "Kaman Sciences Corporation" or
"Kaman" or any derivative or variant thereof.
(b) Seller hereby grants to Buyer a non-exclusive right
to continue to use the name "Kaman Sciences Corporation" (the
"License") from and after the Closing Date to the extent reasonably
required for legal or regulatory or permit purposes relating to its
ownership of the Company; provided, however, that Buyer shall use
reasonable efforts to minimize or eliminate all such usage as
expeditiously as possible; it being understood that, in any event,
the License shall terminate six months after the Closing Date.
(c) If and to the extent necessary, Seller hereby grants
to the Company a non-exclusive license (i) for a period of one year
from and after the Closing Date to use tools, mask sets, dies and
molds retained by the Company hereunder which cause the name "Kaman
Sciences Corporation" or "Kaman" to be formed in or on products
currently being produced by the Company and (ii) for a period of
one year after the Closing Date to sell products manufactured with
the use of such tools, mask sets, dies or molds. Buyer shall (and
shall cause the Company to) phase out such use of such name as soon
as is reasonably practicable, and, in particular, shall remove the
cast for such name from each such tool, mask set, die and mold on
the first occasion after the Closing Date when such tool, mask set,
die or mold is refurbished.
III. REPRESENTATIONS AND WARRANTIES OF SELLER.
Except as set forth with respect to a specifically
identified representation and warranty on the disclosure schedule
delivered by Seller to Buyer prior to the execution of this
Agreement (the "Disclosure Schedule"), Seller represents and
warrants to Buyer as follows:
1 Organization of Seller; Authority. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Connecticut, and has all requisite
corporate power and corporate authority to enter into this
Agreement, and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Seller of this Agree-
ment, and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the
part of Seller. This Agreement has been duly executed and
delivered by Seller and, assuming that this Agreement constitutes a
valid and binding obligation of Buyer, constitutes a valid and
Page 4
binding obligation of Seller, enforceable against Seller in
accordance with its terms, except that (a) such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (ii)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and (b) rights to
indemnity may be limited by applicable law or the public policies
underlying such laws.
2 Title to Shares. Kaman Diversified is the record and
beneficial owner of the Shares, free and clear of all liens,
claims, encumbrances, options, pledges and security interests
("Liens"), and upon consummation of the transactions contemplated
hereby, Seller will cause Kaman Diversified to transfer good and
valid title to the Shares to Buyer, free and clear of all Liens
other than those, if any, created by Buyer.
3 Organization and Qualification of the Company. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite corporate power and corporate authority to own, lease and
operate its properties and to conduct its business as conducted on
the date hereof. The Company is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the property owned, leased or operated by it
or the nature of the business conducted by it makes such
qualification necessary. Seller has heretofore made available to
Buyer complete and correct copies of the Certificate of
Incorporation and Bylaws of the Company, the minute books and stock
transfer records of the Company, as in effect as of the date of
this Agreement. The Company does not own or have any option or
right to acquire, directly or indirectly, any capital stock or
other equity
securities of, or have any direct or indirect equity or ownership
interest or debt investment in, any corporation, association,
partnership, joint venture or other business.
4 Capitalization. The authorized capital stock of the
Company consists of 2,000,000 shares of common stock, par value
$1.00 per share, and 1,000,000 shares of preferred stock, par value
$1.00 per share, of which 1,000,000 shares of common stock,
constituting the Shares, are validly issued and outstanding, fully
paid and nonassessable, and no other shares of any other class or
series of capital stock of the Company or securities exercisable or
convertible into or exchangeable for capital stock of the Company
("Capital Stock Equivalents") are authorized, issued or
outstanding. The Shares were not issued in violation of, and are
not subject to, any preemptive, subscription or similar rights.
There are no outstanding warrants, options, subscriptions, calls,
rights, agreements, convertible or exchangeable securities or other
commitments or arrangements relating to the issuance, sale,
purchase, return or redemption, voting or transfer of any shares,
whether issued or unissued, of capital stock, Capital Stock
Equivalents or other securities of the Company.
Page 5
5 No Violation; Consents and Approvals. Except as set
forth in Section 3.5 of the Disclosure Schedule, the execution and
delivery by Seller of this Agreement do not, and the consummation
of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation of
or default under, (a) any provision of the Certificate of
Incorporation or Bylaws of Seller or the Company, (b) any judgment,
order, injunction or decree (an "Order"), or statute, law,
ordinance, rule or regulation ("Applicable Law"), applicable to
Seller or the Company or the property or assets of the Company, or
(c) constitute a default by the Seller or the Company (or an event
which, with notice or lapse of time or both, would constitute a
default) or give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any Lien upon any
of the properties of the Company or the Shares under, any note,
bond, mortgage, indenture, license, agreement, lease or other
instrument or obligation ("Contracts") to which Seller or the
Company is a party or by which Seller or the Company or any of the
Company's assets may be bound, except in the case of clause (c),
for such conflicts, violations or defaults as to which requisite
waivers or consents will have been obtained prior to the Closing or
which, individually or in the aggregate, would not have a Company
Material Adverse Effect. Except as set forth in Section 3.5 of the
Disclosure Schedule, no consent, approval, order or authorization
of, or registration, declaration or filing with ("Governmental
Approval"), any court, administrative agency or commission or other
governmental entity, authority or instrumentality, domestic or
foreign ("Governmental Authority"), is required to be obtained or
made by or with respect to Seller, its subsidiaries or the Company
in connection with the execution and delivery of this Agreement or
the consummation by Seller of the transactions contemplated hereby,
other than, in each case, (i) compliance with and filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (ii) compliance with and filings under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(iii) compliance with and filings under state environmental
statutes, (iv) compliance with and filings under applicable
governmental and defense industrial security clearances, (v)
immaterial routine notice filings, and (vi) those which may be
required by reason of Buyer's (as opposed to any other third
party's) participation in the transactions contemplated hereby.
6 Financial Statements. Seller has heretofore delivered
to Buyer true and correct copies of the unaudited balance sheets of
the Company as of December 31, 1996 and September 30, 1997 and the
related income and cash flow statements for the year ended December
31, 1996 and the nine months ended September 30, 1997
(collectively, the "Financial Statements"). The balance sheet of
the Company as of September 30, 1997 is hereinafter referred to as
the "Balance Sheet". Except as set forth in Section 3.6 of the
Disclosure Schedule, the Financial Statements (a) fairly present in
all material respects, the financial condition and the results of
operations and cash flows of the Company as of the dates and for
the periods indicated and (b) have been prepared in accordance with
Page 6
generally accepted accounting principles ("GAAP") applied
consistently throughout the periods involved, except as disclosed
therein and, in the case of interim financial statements, for the
absence of footnotes and for normal year-end adjustments.
7 Absence of Certain Changes or Events. Except as set
forth in Section 3.7 of the Disclosure Schedule or as otherwise
contemplated by this Agreement, during the period from the date of
the Balance Sheet to the date of this Agreement, (i) the Company
has operated its business solely in the ordinary course of business
consistent with past practices, (ii) the Company has not engaged in
any of the activities prohibited to be taken by the Company during
the period from the date of this Agreement to the Closing Date by
Section 5.1(a) through (l), and (iii) there have occurred no
changes or events which, individually or in the aggregate, would
have a Company Material Adverse Effect. As used in this Agreement,
any reference to any event, change or effect having a "Company
Material Adverse Effect" means such event, change or effect,
individually or in the aggregate, is materially adverse to (a) the
business, properties, financial condition or results of operations
of the Company or (b) the ability of Seller to consummate the
transactions contemplated hereby.
8 Absence of Undisclosed Liabilities. Except as set
forth in Section 3.8 of the Disclosure Schedule and for liabilities
or obligations which are accrued or reserved against on the Balance
Sheet, the Company does not have any liabilities or obligations,
whether accrued, absolute, contingent, mature or unmature, other
than liabilities or obligations incurred in the ordinary course of
business and consistent with past practice since the date of the
Balance Sheet which in the aggregate would not have a Company
Material Adverse Effect.
9 Title to Personal Property.
(a) Except as set forth in Section 3.9(a) of the
Disclosure Schedule, the Company has good and valid title to all
personal property, whether tangible or intangible, owned by the
Company, and a valid and enforceable right to use all personal
property leased by or licensed to the Company, which is used in and
necessary for the conduct of the business of the Company as
conducted on the date hereof (the "Personal Property") (except such
as have been subsequently sold or otherwise disposed of in the
ordinary course of business, or for which any lease or license
shall have terminated in accordance with its terms, and accounts,
bills and notes receivables subsequently collected), in each case,
free and clear of all Liens, imperfections of title or encumbrances
of any nature whatsoever, other than (i) Liens relating to personal
property leases which are not required to be listed in Section 3.15
of the Disclosure Schedule, (ii) mechanics', carriers', workmen's,
repairmen's or similar Liens arising or incurred in the ordinary
course of business, (iii) Liens for taxes, assessments and other
governmental charges which are not due and payable or which may
hereafter be paid without penalty or which are being contested in
good faith and (iv) other imperfections of title or encumbrances,
Page 7
if any, which imperfections of title or other encumbrances,
individually or in the aggregate, do not materially impair the use
or value of the property to which they relate (the Liens,
imperfections of title and encumbrances described in clauses (ii),
(iii) and (iv) above are hereinafter referred to collectively as
the "Permitted Liens").
(b) Except as set forth in Section 3.9(b) of the
Disclosure Schedule, all material tangible items of Personal
Property necessary for the operation or conduct of the Company's
business as currently conducted are in reasonably good maintenance,
operating condition and repair, normal wear and tear excepted,
other than machinery and equipment under repair or out of service
in the ordinary course of the Company's business.
(c) Except as set forth in Section 3.9(c) of the
Disclosure Schedule, all inventory of the Company is in good and
merchantable condition and is usable or saleable in the ordinary
course of business.
10 Title to Real Property.
(a) As used in this Agreement, the term "Real Property"
shall mean all real property and interests in real property owned
in fee or leased by the Company. Section 3.10(a) of the Disclosure
Schedule lists all Real Property. Except as set forth in Section
3.10(a) of the Disclosure Schedule, the Real Property constitutes
all real property and interests in real property used in the
conduct of the business of the Company as conducted on the date
hereof.
(b) As used in this Agreement, the term "Real Estate
Permitted Liens" shall mean:
(i) All building codes and zoning ordinances and
other laws, ordinances, regulations, rules, orders or
determinations of any federal, state, county, municipal or other
governmental authority heretofore, now or hereafter enacted, made
or issued by any such governmental authority affecting the Real
Property;
(ii) All easements, rights-of-way, covenants,
conditions, restrictions, reservations, licenses, agreements and
other similar matters which do not impair the use of the Real
Property to which they relate;
(iii) All electric power, telephone, gas, sanitary
sewer, storm sewer, water, steam, compressed air and other utility
lines, pipelines, service lines and similar facilities now located
on, over or under the Real Property, and all licenses, easements,
flowage rights, rights-of-way and other similar agreements relating
thereto granted in the ordinary course of business; and
(iv) All existing public and private roads and
streets (whether dedicated or undedicated), and all railroad lines
and rights-of-way affecting the Real Property.
Page 8
(c) Except as set forth in Section 3.10(c) of the
Disclosure Schedule, the Company has (i) such title to all Real
Property owned by it as required for the conduct of its business as
conducted on the date hereof, and (ii) valid leasehold interests in
all Real Property leased by it, in each case, free and clear of all
mortgages, liens, security interests, easements, covenants,
rights-of-way and other encumbrances or restrictions of any nature
whatsoever, except for Permitted Liens and Real Estate Permitted
Liens which individually or in the aggregate would not have a
Company Material Adverse Effect.
(d) There are no condemnation proceedings or eminent
domain proceedings of any kind pending or, to the knowledge of
Seller or the Company, threatened against the Real Property.
(e) All of the Real Property is occupied under a valid
and current certificate of occupancy or similar permit, the
transactions contemplated by this Agreement will not require the
issuance of any new or amended certificate of occupancy and there
are no facts which would prevent the Real Property from being
occupied after the Closing Date in the same manner as before.
(f) All improvements on the Real Property were
constructed in compliance with all applicable federal, state, local
or foreign statutes, laws, ordinances, regulations, rules, codes,
orders or requirements (including, but not limited to, any
building, zoning or environmental laws or codes) affecting such
property, except where the failure to be in compliance would not,
individually or in the aggregate, impair the value or interfere
with the present use of such Real Property or otherwise impair
business operations.
(g) All improvements on the Real Property and the
present use and conditions thereof do not violate any applicable
deed restrictions or other applicable covenants, restrictions,
agreements, existing site plan approvals, zoning or subdivision
regulations or urban redevelopment plans as modified by any duly
issued variances, and no permits, licenses or certificates
pertaining to the ownership or operation of all improvements on the
Real Property, other than those which are transferable with the
Real Property, are required by any governmental agency having
jurisdiction over the Real Property.
(h) All improvements on any Real Property do not
encroach on any adjoining premises in any material respect and
there are no encroachments on any Real Property by any improvements
located on any adjoining premises in any material respect.
(i) Except as set forth in Section 3.10(i) of the
Disclosure Schedule, all improvements on the Real Property are
structurally sound in all material respects and in reasonably good
maintenance and repair, normal wear and tear excepted.
Page 9
(j) Notwithstanding anything to the contrary in this
Agreement, the representations and warranties set forth in Sections
3.10(e), (f), (g), (h) and (i) with respect to Real Property which
is leased by the Company are made only to the extent of Seller's
and the Company's knowledge.
11 Intellectual Property.
(a) Section 3.11(a) of the Disclosure Schedule sets
forth a complete list of all material registered patents,
trademarks, trade names, service marks, assumed names, copyrights
and all applications therefor (collectively, the "Industrial
Property") owned, filed or licensed by the Company and used in and
necessary for the conduct of the business of the Company as
conducted on the date hereof and, with respect to registered trade-
marks, all jurisdictions in which such trademarks are registered.
(b) As used in this Section 3.11(b), "Intellectual
Property" shall mean Industrial Property and inventions, invention
studies (whether patentable or unpatentable), designs, copyrights,
mask works, trademarks, service marks, trade dress, trade names,
secret formulae, trade secrets, secret processes, computer
programs, confidential information and know-how. Except as set
forth in Section 3.11(b) of the Disclosure Schedule, (i) the
consummation of the transactions contemplated by this Agreement
will not materially impair any right to use Intellectual Property,
(ii) all Intellectual Property owned by the Company is owned by the
Company free and clear of all Liens, (iii) the Company owns or has
the right to use all of the Intellectual Property used in the con-
duct of its business as conducted on the date hereof, and (iv) no
claims have been asserted of which the Company has been given
notice by any person with respect to the ownership or use by the
Company of the Intellectual Property.
12 Litigation. Except as set forth in Section 3.12 of
the Disclosure Schedule, there are no claims, actions, suits,
investigations or proceedings pending, or, to the knowledge of
Seller and the Company, threatened against or affecting the Company
or its assets, at law or in equity, by or before any Governmental
Authority, or by or on behalf of any third party, except those
(other than those pending on or prior to the date hereof) which, if
adversely determined, would not have a significant adverse impact
on the financial condition of the Company. Except as set forth in
Section 3.12 of the Disclosure Schedule, neither Seller nor the
Company have received any notice that the Company or any of its
assets is subject to any material decree, order or judgment.
13 Employee Benefit Plans.
(a) Section 3.13(a) of the Disclosure Schedule sets
forth a complete list of all plans, contracts, agreements,
practices, policies or arrangements, oral or written, providing for
employment or for any bonuses, deferred compensation, excess
benefits, pensions, retirement benefits, profit sharing, stock
bonuses, stock options, stock purchases, foreign benefits, life,
Page 10
accident and health insurance, hospitalization, savings, holiday,
vacation, severance pay, change of control payments or benefits,
sick pay, leave, disability, tuition refund, service awards or any
other employee or executive benefits, including, without
limitation, any such plan, contract, agreement, practice, policy or
arrangement which is an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder
(collectively, "ERISA"), including any "employee welfare benefit
plan" as defined in Section 3(1) of ERISA ("Welfare Plan") and any
employee pension benefit plan as defined in Section 3(2) of ERISA
("Pension Plan") providing employee benefits or compensation to
current or former employees of the Company maintained or
contributed to by Seller or the Company or to which Seller or the
Company is a party (each of the preceding hereinafter is referred
to individually as a "Plan" and collectively as the "Plans"). True
and complete copies of each written Plan and any written summaries
thereof and a written summary of the material terms of each oral
Plan have been made available to the Buyer by the Seller.
(b) Neither Seller nor the Company is contributing, or
has in the past contributed to, any multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA in which employees of the
Company participate and no withdrawal liability has been incurred
by or asserted against Seller or the Company with respect to a
multiemployer plan.
(c) Except as set forth in Section 3.13(c) of the
Disclosure Schedule, (i) for each Plan that is a "pension plan"
within the meaning of Section 3(2) of ERISA that is intended to
satisfy the provisions of Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), Seller or the Company has
obtained a favorable determination letter from the Internal Revenue
Service (the "IRS") to such effect, (ii) to the knowledge of Seller
or the Company, none of the determination letters has been revoked
by the IRS nor has the IRS given any written notice to Seller that
it intends to revoke any such determination letter, (iii) no Plan
that is a funded pension plan and no trust established thereunder
has any accumulated funding deficiency within the meaning of
Section 302(a) of ERISA and Section 412 of the Code, (iv) no
material reportable event within the meaning of Section 4043 of
ERISA or material "prohibited transaction" within the meaning of
Section 406 of ERISA has occurred with respect to any Plan and no
material tax has been imposed pursuant to Section 4975 or Section
4976 of the Code in respect thereof, and (v) neither Seller nor the
Company has incurred any material liability to the Pension Benefit
Guaranty Corporation with respect to any Plan which is a pension
plan subject to Title IV of ERISA other than liability for routine
premiums for which adequate provision has been made in accordance
with accepted accounting standards.
Page 11
(d) Except as set forth in Section 3.13(d) of the
Disclosure Schedule, there are no material claims pending by or on
behalf of any of the Plans, by any employee or beneficiary covered
under any such Plan, or otherwise involving any such Plan (other
than routine claims for benefits).
(e) Each Pension Plan listed on Section 3.13(a) of the
Disclosure Schedule is in material compliance with the provisions
of ERISA, with its governing documents, applicable provisions of
the Code and all other Applicable Law.
(f) Each Welfare Plan listed on Section 3.13(a) of the
Disclosure Schedule is in material compliance with the provisions
of ERISA, with its governing documents and all other Applicable
Law, including, without limitation, all notice and other
requirements of the Health Insurance Portability and Accountability
Act of 1996 ("HIPAA").
(g) The Company and Seller, with respect to the Company,
are in compliance with the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), and all other
Applicable Laws which require the continuation of benefit coverage
upon the happening of certain events, such as the termination of
employment or change in beneficiary or dependent status.
14 Taxes.
(a) Except as set forth in Section 3.14 of the
Disclosure Schedule:
(i) Seller or one of Seller's affiliates has timely
filed with the appropriate taxing authorities all material Tax
Returns (as hereinafter defined) required to be filed by or with
respect to the Company and such Tax Returns are true, correct and
complete in all material respects;
(ii) Seller or one of Seller's affiliates has paid
or made adequate provision in accordance with generally accepted
accounting standards for the payment of all Taxes (as hereinafter
defined) of the Company shown to be due on such filed Tax Returns
either directly, as part of the consolidated tax return of another
taxpayer, or otherwise;
(iii) no waivers of statutes of limitation have
been given or requested with respect to the Company in connection
with any Tax Returns covering the Company with respect to any Taxes
payable by it;
(iv) the Company has or has caused to be duly and
timely withheld from employee salaries, wages and other
compensation and has paid over to the appropriate taxing
authorities all material amounts required to be so withheld and
paid over for all periods under all Applicable Laws;
Page 12
(v) the Company is not a party to any tax sharing
or similar agreement or arrangement pursuant to which it will have
any obligation to make any payments after the Closing;
(vi) there are no liens with respect to Taxes
(except for liens for Taxes which are not yet delinquent) upon any
of the Company assets;
(vii) all material Tax Returns filed by or on
behalf of the Company have been examined by the relevant taxing
authorities or the statute of limitations with respect to such
returns has expired and all deficiencies asserted or assessments
made as a result of any examination by the IRS or any other taxing
authority of the Tax Returns of or covering the Company have been
fully paid, and there are no unpaid deficiencies asserted or
assessments made by any taxing authority for which the Company may
be liable;
(viii) neither Seller nor the Company has received
any written notice of deficiency or assessment or has any actual
knowledge of any proposed deficiency or assessment from any
federal, state, local or other taxing authority with respect to
liabilities for which the Company may be liable;
(ix) neither the Company nor any person on its
behalf has (A) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any predecessor provision
thereof or any similar provision of state, local or foreign law, or
(B) agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code or any similar provision of state, local
or foreign law by reason of a change in accounting method initiated
by the Company or has any actual knowledge that the IRS has
proposed any such adjustment or change in accounting method, or has
an application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to the
subject business or operations of the Company;
(x) Seller is not a foreign person within the
meaning of Section 1445 of the Code; and
(xi) no claim has been made by a taxing
jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction.
(b) As used in this Agreement:
(i) "Taxes" means all taxes, levies or other like
assessments, charges or fees (including estimated taxes, charges
and fees), including, without limitation, net income, gross income,
corporation, advance corporation, gross receipts, premium,
estimated, customs, duties, transfer, excise, property, sales, use,
value-added, license, payroll, pay as you earn, withholding, social
security and franchise or other governmental taxes or charges,
Page 13
imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof; and such term shall
include any interest, penalties or additions to tax attributable to
such taxes.
(ii) "Tax Return" means any report, return, state-
ment, estimate, informational return, declaration or other written
information required to be supplied to a taxing authority in
connection with Taxes.
15 Contracts and Commitments. Section 3.15 of the
Disclosure Schedule sets forth a list of all material agreements,
contracts and commitments to which the Company is a party or by
which the Company or its assets are bound (each, a "Material
Contract"), including, without limitation:
(a) employment agreements or severance agreements or
employee termination arrangements that are not terminable at will
by the Company without penalty;
(b) any change of control agreements with employees of
the Company;
(c) agreements, contracts, commitments or arrangements
containing any covenant limiting the ability of the Company to
engage in any line of business or to compete with any business or
person;
(d) agreements or contracts with Seller or any of its
affiliates (other than the Company) or any officer, director or
employee of the Company or Seller or any of such affiliates (other
than employment, severance and change of control agreements covered
by clause (a) or (b) above);
(e) agreements or contracts under which the Company has
borrowed or loaned money, or any note, bond, indenture, mortgage,
installment obligation or other evidence of indebtedness for
borrowed or loaned money or any guarantee of such indebtedness, in
each case, relating to amounts in excess of $100,000;
(f) joint venture agreements or other agreements
involving the sharing of profits;
(g) leases pursuant to which personal or real property
is leased to or from the Company;
(h) powers of attorney from the Company;
(i) guaranties, suretyships or other contingent
agreements of the Company;
(j) any agreement, contract, commitment or arrangement
relating to capital expenditures with respect to the Company and
involving future payments which exceed $100,000 in any 12-month
period;
Page 14
(k) any agreement, contract, commitment or arrangement
relating to the acquisition of assets (other than in the ordinary
course of business consistent with past practice) or any capital
stock of any business enterprise;
(l) contracts pursuant to which the Company will receive
or pay in excess of $1,000,000 over the life of the contract;
(m) any U.S. Government Contract which contains an
"organizational conflicts of interest" clause or which limits or
caps the ability of the Company to recover general administrative
and overhead costs; and
(n) any other material agreements, contracts and commit-
ments not entered into in the ordinary course of business.
Except as set forth in Section 3.15 of the Disclosure Schedule,
neither the Company nor, to the knowledge of Seller and the
Company, any other party thereto, is in material breach of or in
material default under any agreement, contract or commitment to
which the Company is a party whether or not set forth in Section
3.15 of the Disclosure Schedule. Each such agreement, contract and
commitment is in full force and effect, and is a legal, valid and
binding obligation of the Company and, to the knowledge of Seller
and the Company, each of the other parties thereto, enforceable in
accordance with its terms. Without limiting the generality of the
foregoing, with respect to U.S. Government Contracts:
(i) Seller's and the Company's cost
accounting and procurement systems with respect to U.S. Government
Contracts are in compliance in all material respects with all
applicable governmental regulations;
(ii) except as set forth in Section 3.15 of
the Disclosure Schedule, (1) Seller and the Company have complied
with all material terms and conditions of such U.S. Government
Contract, including all clauses, provisions and requirements
incorporated expressly, by reference or by operation of law
therein; (2) Seller and the Company have complied with all material
requirements of applicable laws pertaining to such U.S. Government
Contract; (3) to Seller's and the Company's knowledge, all
representations and certifications executed, acknowledged or set
forth in or pertaining to such U.S. Government Contract were
complete and correct in all material respects as of their effective
date, and Seller and the Company have complied in all material
respects with all such representations and certifications; (4)
neither the United States government nor any prime contractor,
subcontractor or other person has notified Seller or the Company,
either orally or in writing, that Seller or the Company has
breached or violated any Applicable Law, or any material
certification, representation, clause, provision or requirement
pertaining to such U.S. Government Contract; and (5) no termination
for convenience, termination for default, cure notice or show cause
notice is in effect as of the date hereof pertaining to any U.S.
Government Contract listed in Section 3.15 of the Disclosure
Schedule;
Page 15
(iii) to Seller's and the Company's knowledge,
except as set forth in Section 3.15 of the Disclosure Schedule:
(1) neither Seller nor the Company nor any of their respective
directors, officers or employees is (or during the last three (3)
years has been) under administrative, civil or criminal
investigation, or indictment or audit by any governmental authority
with respect to any alleged irregularity, misstatement or omission
arising under or relating to any U.S. Government Contract (other
than routine DCAA audits, in which no such irregularities,
misstatements or omissions were expressly identified); and (2)
during the last three (3) years, neither Seller nor the Company has
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 U.S. Government Contract;
(iv) to Seller's and the Company's knowledge,
except as set forth in Section 3.15 of the Disclosure Schedule,
there exist (1) no outstanding material claims against Seller or
the Company, either by the United States government or by any prime
contractor, subcontractor, vendor or other third party, arising
under or relating to any U.S. Government Contract; and (2) no
material disputes between Seller or the Company and the United
States government under the Contract Disputes Act or any other
Federal statute or between Seller or the Company and any prime
contractor, subcontractor or vendor arising under or relating to
any U.S. Government Contract; and
(v) neither Seller nor the Company nor, to
Seller's or the Company's knowledge, any of its or the Company's
directors, officers or employees is (or during the last three (3)
years has been) suspended or debarred from doing business with the
United States government or is (or during such period was) the
subject of a finding of nonresponsibility or ineligibility for
United States government contracting.
16 Compliance with Laws. Except as set forth in Section
3.16 of the Disclosure Schedule, the Company is in compliance with
all Applicable Laws and all Orders of any Governmental Authority
applicable to the Company or any of its assets, except for (a)
ERISA and other laws applicable to the Plans, which are addressed
in Section 3.13 hereof; (b) laws regarding the payment of Taxes,
which are addressed in Section 3.14 hereof; (c) laws regarding
labor matters, which are addressed in Section 3.18 hereof; (d)
environmental laws, which are addressed in Section 3.19 hereof; and
(e) laws the violation of which, individually or in the aggregate,
would not have a Company Material Adverse Effect. Except as set
forth in Section 3.16 of the Disclosure Schedule, the Company has
all material permits, certificates, licenses, approvals and other
authorizations required in connection with the conduct of its
business as conducted on the date hereof under Applicable Laws
(other than those referred to in clauses (a) - (d) above).
Page 16
17 Insurance. Seller and the Company maintain policies
of fire and casualty, liability and other forms of insurance in
such amounts, with such deductibles and retained amounts, and
against such risks and losses, as are, in the judgment of the
Company, reasonable for the conduct of the business as conducted on
the date hereof and assets of the Company. Section 3.17 of the
Disclosure Schedule sets forth a list of such insurance policies as
are in full force and effect as of the date of this Agreement,
which policies Seller shall, or shall cause the Company to,
maintain in full force and effect during the period from the date
of this Agreement through the Closing Date.
18 Labor Matters. Except as set forth in Section 3.18
of the Disclosure Schedule, (a) the Company is in substantial com-
pliance with all Applicable Laws regarding employment and em-
ployment practices, (b) there is no unfair labor practice charge or
complaint against the Company pending before the National Labor
Relations Board nor is there any material grievance nor any
material arbitration proceeding arising out of or under collective
bargaining agreements pending with respect to the business of the
Company, (c) there is no labor strike, slowdown, work stoppage or
lockout in effect, or, to the knowledge of Seller and the Company,
threatened against or otherwise affecting the Company, and the
Company has not experienced any such labor controversy within the
past three years, (d) there is no material charge or complaint
pending against the Company before the Equal Employment Opportunity
Commission, the Office of Federal Contract Compliance Programs or
any similar state, local or foreign agency responsible for the
prevention of unlawful employment practices, (e) the Company is not
a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or
employment practices; (f) the Company will not have any material
liability under any benefit or severance policy, practice, agree-
ment, plan, or program which exists or arises, or may be deemed to
exist or arise, under any Applicable Law or otherwise, as a result
of the transactions contemplated hereunder; (g) the Company is not
a party to any collective bargaining agreement; and (h) the Company
is in compliance with its obligations pursuant to the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN Act"),
and all other notification and bargaining obligations arising under
any collective bargaining agreement, statute or otherwise. To the
knowledge of Seller and the Company, the Company has not received
written notice of the intent of any federal, state, local or
foreign agency responsible for the enforcement of employment laws
to conduct an investigation of or relating to the Company, and no
such investigation is in progress.
19 Environmental Matters. Except as set forth in
Section 3.19 of the Disclosure Schedule, (i) the Company has not,
as of the date hereof, received any notice alleging the material
violation of, or any material actual or potential liability
relating to, any applicable Federal, state or local statutes, laws,
regulations, rules, decrees, orders, judgments, ordinances, or
common law related to the protection of human health or the
Page 17
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, the
Emergency Planning and Community Right-To-Know Act, the Solid Waste
Disposal Act, the Resource Conservation and Recovery Act, the Clean
Air Act, the Water Pollution Control Act, the Toxic Substances
Control Act, the Hazardous Materials Transportation Act, and the
Occupational Safety and Health Act, each as amended and
supplemented, and any regulations promulgated pursuant to such
laws, and any similar state or local statutes or regulations
("Environmental Laws"), which violation has not been resolved and,
to the knowledge of Seller and the Company, no such notice is
threatened or otherwise expected, (ii) the Company is and has been
in material compliance with all applicable Environmental Laws and,
to the knowledge of Seller and the Company, there is no condition
that could prevent or materially interfere with such compliance in
the future, (iii) the Company has obtained and is and has been in
material compliance with all required governmental environmental
permits, registrations and authorizations with respect to the
business of the Company as currently conducted, (iv) no hazardous
waste, substance, material, or chemical, including, without
limitation, petroleum and petroleum products, asbestos and any
other material regulated under, or that can result in liability
under, applicable Environmental Laws ("Hazardous Substances"), has
been transported, stored, treated or disposed of by the Company on
the real estate owned, operated or otherwise used by the Company or
at any other location, except as would not result in material
liability under any applicable Environmental Laws, (v) the Company
has not assumed, contractually or by operation of law, any
liabilities, potential liabilities or obligations of any other
person or entity under any applicable Environmental Laws, (vi) the
Company has not entered into, agreed to, or is subject to any
judgment, decree, order or other similar requirement of any
governmental authority under any Environmental Laws, (vii) there
are no (w) underground or aboveground storage tanks, (x) surface
impoundments, (y) landfills or (z) sewer or septic systems
currently or formerly present at or about any of the properties or
facilities currently or, to the knowledge of Seller and the
Company, formerly owned, operated or otherwise used by the Company
that would be reasonably likely to result in material liability to
the Company under any applicable Environmental Laws, and (viii)
there are no actions, activities, events, conditions or
circumstances occurring or, to the knowledge of Seller and the
Company, existing during the time of the Company's operations and
ownership of its properties or, to the knowledge of Seller and the
Company, prior to such time, including without limitation the
release, threatened release, emission, discharge, generation,
treatment, storage or disposal of Hazardous Substances, that would
be reasonably likely to result in any material liability or
obligation of the Company under or relating to any Environmental
Laws.
Page 18
20 Transactions with Affiliates. Except as disclosed
in Section 3.20 of the Disclosure Schedule, there are no Contracts,
agreements or arrangements between the Company and Seller (or any
affiliate of Seller).
21 Material Suppliers. Section 3.21 of the Disclosure
Schedule sets forth the names of the ten suppliers of the Company
whom the Company paid the greatest sum of money in respect of
services, products or materials provided to the Company between
January 1, 1996 and September 30, 1997.
22 Absence of Certain Payments. During the five year
period prior to the date of this Agreement, the Company has not
(nor has Seller, any director, officer, agent, or employee of the
Company or of Seller nor any other person, acting on behalf of the
Company) directly or indirectly: used any of the Company's funds
for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; made any unlawful payment
to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from the
Company's funds; violated any provision of the Foreign Corrupt
Practices Act of 1977; established or maintained any unlawful or
unrecorded fund of the Company's monies or other assets; made any
false or fictitious entry on the books or records of the Company;
or made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment, to any person or entity, private or public,
regardless of form, whether in money, property, or services, to
obtain favorable treatment in securing business or to obtain
special concessions for the Company, or to pay for favorable
treatment for business secured or for special concessions already
obtained for the Company.
23 Classified Information. To Seller's and the
Company's knowledge, no director, officer, employee or agent of
Seller or the Company has violated, breached or failed to comply
with the provisions and requirements of the DOD Industrial Security
Manual for the Safeguarding of Classified Information.
24 Brokers. No broker, finder or financial advisor or
other person is entitled to any brokerage fees, commissions,
finders' fees or financial advisory fees in connection with the
transactions contemplated hereby by reason of any action taken by
Seller or the Company or any of their respective directors,
officers, employees, representatives or agents, except for Lazard
Freres & Co. LLC, the fees and expenses of which shall be borne by
Seller.
IV. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as
follows:
Page 19
1 Organization; Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Indiana, and has all requisite corporate power and
corporate authority to enter into this Agreement, and to consummate
the transactions contemplated hereby. The execution, delivery and
performance by Buyer of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement
has been duly executed and delivered by Buyer and, assuming that
this Agreement constitutes a valid and binding obligation of
Seller, constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except that
(a) such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now
or hereafter in effect, relating to or limiting creditors' rights
generally, and (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law) and (b) rights to indemnity may be limited by applicable laws
or the public policies underlying such laws.
2 No Violation; Consents and Approvals. The execution
and delivery by Buyer of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance
with the terms hereof and thereof will not, conflict with, or
result in any violation of or default under, (a) any provision of
the Certificate of Incorporation or Bylaws of Buyer, (b) any Order
or Applicable Laws applicable to Buyer or the property or assets of
Buyer or (c) any Contracts to which Buyer is a party or by which
Buyer or its assets may be bound, except, in the case of clauses
(b) and (c), for such conflicts, violations or defaults as to which
requisite waivers or consents have been obtained or which,
individually or in the aggregate, would not impair Buyer's ability
to consummate the transactions contemplated hereby. No
Governmental Approval is required to be obtained or made by or with
respect to Buyer or its affiliates in connection with the execution
and delivery of this Agreement, or the consummation by Buyer of the
transactions contemplated hereby, other than, in each case, (i)
compliance with and filings under the HSR Act, (ii) compliance with
and filings under the Exchange Act, (iii) compliance with and
filings under state environmental statutes, (iv) compliance with
and filings under applicable governmental and defense industrial
security clearances and (v) those the failure of which to obtain,
individually or in the aggregate, would not impair Buyer's ability
to consummate the transactions contemplated hereby.
3 Litigation. (a) There are no claims, actions, suits,
investigations or proceedings pending or, to the knowledge of
Buyer, threatened against or affecting Buyer or its assets, at law
or in equity, by or before any Governmental Authority, or by or on
behalf of any third party, which, if adversely determined, would
impair Buyer's ability to consummate the transactions contemplated
hereby, and (b) there are no outstanding Orders of any Governmental
Authority, affecting Buyer or its assets, which would impair
Buyer's ability to consummate the transactions contemplated hereby.
Page 20
4 Financing. Buyer has or has available sufficient
funds to enable Buyer to pay the Purchase Price on the Closing Date
and all related fees and expenses.
5 Acquisition of the Shares for Investment; Securities
Act. Buyer is acquiring the Shares for investment purposes only
and not with a view toward, or for sale in connection with, any
distribution thereof, nor with any present intention of
distributing or selling the Shares in violation of federal, state
or other securities laws. Buyer agrees that it will not sell,
transfer, offer for sale, pledge, hypothecate or otherwise dispose
of the Shares in violation of any federal, state or other secu-
rities laws.
6 Brokers. No broker, finder or financial advisor or
other person is entitled to any brokerage fees, commissions,
finders' fees or financial advisory fees in connection with the
transactions contemplated hereby by reason of any action taken by
Buyer or any of its directors, officers, employees, representatives
or agents.
V. COVENANTS OF THE PARTIES.
1 Conduct of the Company's Business. Except as
contemplated by this Agreement, during the period from the date
hereof to the Closing Date, Seller will cause the Company to
conduct its business and operations solely in the ordinary course
of business consistent with past practice and, to the extent
consistent therewith, to use reasonable best efforts to keep
available the services of its officers and employees and preserve
its current relationships with customers, suppliers, licensors,
creditors and others having business dealings with it. Without
limiting the generality of the foregoing, except as contemplated by
this Agreement, during the period from the date of this Agreement
to the Closing Date, without the prior written consent of Buyer,
Seller will not permit the Company to:
(a) create, incur, assume or guarantee any indebtedness
for borrowed money (including, without limitation, obligations in
respect of capital leases), other than in the ordinary course of
business and consistent with past practice;
(b) issue, sell or deliver, redeem or purchase, any
shares of its capital stock or any Capital Stock Equivalents, or
grant or enter into any options, warrants, rights, agreements or
commitments with respect to the issuance of its capital stock or
Capital Stock Equivalents, or amend any terms of any such
securities or agreements;
(c) except as set forth in Section 5.1(c) of the
Disclosure Schedule, increase the rate of compensation or benefits
of, or pay or agree to pay any benefit to, its directors, officers
or employees, except in the ordinary course of business consistent
with past practice or as may be required by any existing plan,
including, without limitation, any Plan, agreement or arrangement;
Page 21
(d) enter into, adopt or amend any Plan, or employment
or severance agreement, except as required by law, and that nothing
contained herein shall prevent the Company from entering into
change of control agreements, all of the material terms of which
have been disclosed to Buyer, with those employees identified in
Section 5.1(d) of the Disclosure Schedule;
(e) except as set forth in Section 5.1(e) of the
Disclosure Schedule, (i) sell, lease, transfer, or otherwise
dispose of any properties or assets, real, personal or mixed, which
have an aggregate book value in excess of $150,000 or (ii) mortgage
or encumber any properties or assets, whether real or personal,
which have an aggregate book value in excess of $150,000;
(f) acquire or agree to acquire by merging or
consolidating with, or by purchasing the stock or a substantial
portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets which are material, individually or in the
aggregate, to the Company;
(g) except as set forth in Section 5.1(g) of the
Disclosure Schedule, enter, modify, amend or terminate any lease of
Real Property (except modifications or amendments in connection
with renewals of leases in the ordinary course of business) or any
other Material Contract;
(h) waive or release any rights of material value, or
cancel, compromise, release or assign any material indebtedness
owed to it or any material claims held by it;
(i) cancel or terminate any insurance policy naming it
as a beneficiary or a loss payable payee without obtaining
comparable substitute insurance coverage;
(j) effectuate a "plant closing" or "mass layoff" (as
those terms are defined under the WARN Act) affecting in whole or
in part any site of employment, facility, operating unit or
employees of the Company;
(k) amend its certificate of incorporation or by-laws;
or
(l) agree, whether in writing or otherwise, to do any of
the foregoing.
2 Cash Dividends. Notwithstanding any provision in this
Agreement to the contrary, the Company shall have the right to
declare, set aside or pay any cash dividends or other cash
distributions in respect of its capital stock.
3 Access to Information Prior to the Closing;
Confidentiality.
Page 22
(a) During the period from the date of this Agreement
through the Closing Date, Seller will cause the Company to give
Buyer and its authorized representatives reasonable access during
regular business hours to all plants, offices, warehouses,
facilities, books and records of the Company as they may reasonably
request; provided, however, (i) that Buyer and its representatives
shall take such action as is deemed necessary in the reasonable
judgment of Seller and the Company to schedule such access and
visits through a designated officer of the Company and in such a
way as to avoid disrupting the normal business of the Company, (ii)
the Company shall not be required to take any action which would
constitute a waiver of the attorney-client or other privilege and
(iii) the Company need not supply Buyer with any information which,
in the reasonable judgment of Seller or the Company, the Company is
under a contractual or legal obligation not to supply, including,
without limitation, as a result of any governmental or defense
industrial security clearance requirement or program requirements
of any Governmental Authority prohibiting certain persons from
sharing information.
(b) Until the Closing, Buyer will hold and will cause
its employees, agents, affiliates, consultants, representatives and
advisors to hold any information which it or they receive in
connection with the activities and transactions contemplated by
this Agreement in strict confidence in accordance with and subject
to the terms of the Confidentiality Agreement dated as of
August 14, 1997 among Buyer, Seller and the Company (the
"Confidentiality Agreement").
4 Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto will use
its reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement at the earliest
practicable date.
5 Consents. Without limiting the generality of
Section 5.4 hereof, each of the parties hereto will use its
reasonable efforts to obtain all licenses, permits, authorizations,
consents and approvals of all third parties and governmental
authorities necessary in connection with the consummation of the
transactions contemplated by this Agreement prior to the Closing;
provided, however, that, any provision hereof to the contrary
notwithstanding, neither Seller nor the Company shall have any
obligation to pay any fee to any third party for the purpose of
obtaining any consent or approval or any costs and expenses of any
third party resulting from the process of obtaining such consent or
approval. Each of the parties hereto will make or cause to be made
all filings and submissions under laws and regulations applicable
to it as may be required for the consummation of the transactions
contemplated by this Agreement. Buyer and Seller will coordinate
and cooperate with each other in exchanging such information and
assistance as any of the parties hereto may reasonably request in
connection with the foregoing.
Page 23
6 Antitrust Notification. Buyer and Seller will use
their respective reasonable efforts to obtain all authorizations or
waivers required under the HSR Act to consummate the transactions
contemplated hereby, including, without limitation, making all
filings with the Antitrust Division of the Department of Justice
("DOJ") and the Federal Trade Commission ("FTC") required in
connection therewith and responding as promptly as practicable to
all inquiries received from the DOJ or FTC for additional
information or documentation.
7 Public Announcements. Seller and Buyer shall not, and
Seller shall cause the Company not to, issue any report, statement
or press release or otherwise make any public statement with
respect to this Agreement and the transactions contemplated hereby
without prior consultation with and approval of the other party,
except as may be required by law or securities exchange regulations
or as may be necessary in order to discharge the disclosure
obligations of any such party, in which case such party shall
advise the other party and discuss the contents of the disclosure
before issuing any such report, statement or press release.
8 Supplemental Disclosure. Seller shall from time to
time prior to the Closing supplement or amend the Disclosure
Schedule with respect to (a) any matter that existed as of the date
of this Agreement and should have been set forth or described in
the Disclosure Schedule and (b) any matter hereafter arising which,
if existing as of the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedule;
provided, however, that no such supplement or amendment shall
affect the representations, warranties, covenants or agreements
(including those relating to indemnification) of the parties or the
conditions to the obligations of the parties under this Agreement.
9 Access to Books and Records Following the Closing.
(a) Following the Closing, Buyer shall permit Seller and its
authorized representatives, during normal business hours and upon
reasonable notice, to have reasonable access to, and examine and
make copies of, all books and records of the Company which relate
to transactions or events occurring prior to the Closing or
transactions or events occurring subsequent to the Closing which
are related to or arise out of transactions or events occurring
prior to the Closing. Buyer agrees that it shall retain all such
books and records for a period of seven years following the
Closing, or for such longer period following the Closing as may be
required by law.
(b) Following the Closing, Seller shall permit Buyer and
its authorized representatives, during normal business hours and
upon reasonable notice, to have reasonable access to, and examine
and make copies of, all books and records of Seller which relate to
the Company and to transactions or events occurring prior to the
Page 24
Closing or transactions or events occurring subsequent to the
Closing which relate to or arise out of transactions or events
occurring prior to the Closing. Seller agrees that it shall retain
all such books and records for a period of seven years following
the Closing, or for such longer period following the Closing as may
be required by law.
10 Certain Contracts.
(a) If any novation of a contract with the United States
Government or with a prime contractor to the United States
Government (a "U.S. Government Contract") is required or requested,
Buyer and Seller will each use its reasonable efforts, and will
cooperate with each other, to obtain all such novations; provided,
however, that in seeking to obtain such novations, Seller shall not
be required to make any additional payment or take any additional
action not otherwise required under the terms of any U.S.
Government Contract. Buyer shall bear, pay, discharge and satisfy
all costs, expenses and considerations required to obtain each
novation of a U.S. Government Contract.
(b) Without limiting the generality of the foregoing, in
connection with the transactions contemplated hereby, (i) Buyer and
Seller will execute novations in such form as may be reasonably
required or requested by the United States Government and/or the
appropriate prime contractor with respect to U.S. Government
Contracts, (ii) subject to the limitations set forth in Section
10.3 hereof, Seller will indemnify Buyer against any liability
(including setoff by the United States Government or other third
party, guarantees, and payments) which Buyer may incur under any
such novation agreement by reason of any prior failure by the
Company to perform its obligations under the novated U.S.
Government Contracts, and (iii) Buyer will indemnify Seller against
any liability (including setoff by the United States Government or
other third party, guarantees, and payments) which Seller may incur
under such novation agreement by reason of any failure by the
Company or Buyer or any assignee thereof to perform its obligations
under the novated U.S. Government Contracts.
(c) Buyer acknowledges that U.S. Government Contracts
are subject to the rules and regulations of the United States
Government, and to certain standard governmental contract clauses,
including, without limitation, with respect to organizational
conflicts of interest and termination for convenience.
11 Release of Liens and Guarantees. At or prior to the
Closing, Seller will obtain the release of all Liens on assets of
the Company securing, and all guarantees by the Company of, any
indebtedness of Seller.
Page 25
VI. TAX MATTERS.
1 Certain Definitions. As used in this Agreement:
(a) "Buyer Group" means Buyer's affiliated group, within
the meaning of Section 1504(a) of the Code, of which Buyer is the
common parent.
(b) "Pre-Closing Period" means any taxable period ending
on or prior to the Closing Date, including that portion of any
Straddle Period (as hereinafter defined) which ends on and
including the Closing Date.
(c) "Seller Group" means Seller's affiliated group,
within the meaning of Section 1504(a) of the Code, of which Seller
is the common parent.
(d) "Straddle Period" means any taxable period that
includes (but does not end on) the Closing Date.
(e) "Tax Benefit" means (A) a loss, deduction or credit
for any Tax purpose or (B) a carry forward or carry back of a loss,
deduction or credit for any Tax purpose.
2 Transfer and Similar Taxes. Notwithstanding any other
provisions of this Agreement to the contrary, all sales, use,
transfer, gains, stamp, duties, recording and similar Taxes
incurred in connection with the transactions contemplated by this
Agreement shall be borne by Buyer, and Buyer shall, at its own
expense, accurately file all necessary Tax Returns and other
documentation with respect to such Taxes and timely pay all such
Taxes. If required by applicable law, Seller will join in the
execution of any such Tax Returns or such other documentation.
3 Real Property and Personal Property Taxes.
(a) Notwithstanding any provision in this Agreement to
the contrary, real property taxes, if any, attributable to the Real
Property acquired by Buyer hereunder shall be allocated between
Buyer and Seller in accordance with Section 164(d) of the Code.
(b) Notwithstanding any provision in this Agreement to
the contrary, personal property taxes, if any, attributable to the
Personal Property acquired by Buyer hereunder shall be allocated
between Buyer and Seller in accordance with the principles of
Section 164(d) of the Code.
4 Return Filings, Refunds and Credits.
(a) For United States federal income tax purposes, the
taxable year of the Company shall end as of the close of the
Closing Date, and, with respect to all other Taxes, Seller and
Page 26
Buyer shall, unless prohibited under applicable law, close or elect
to close, the taxable year or other period of the Company as of the
close of the Closing Date. Neither Seller nor Buyer shall take any
position inconsistent with the preceding sentence on any Tax
Return. Seller shall prepare, or cause to be prepared in a manner
consistent with prior practice, and file, or cause to be filed, on
a timely basis (in each case, at its sole cost and expense) all Tax
Returns with respect to the Company for taxable periods ending on
or prior to the Closing Date (the "Prior Period Returns"). Except
as provided in Section 6.2 hereof, Seller shall pay, or cause to be
paid, all Taxes with respect to the Company shown to be due on the
Prior Period Returns, including but not limited to any liability
due with respect to any Section 338(h)(10) Election. All Tax
Returns prepared by Seller shall be prepared in a manner consistent
with prior practice (which, for purposes of this Agreement, shall
mean the prior practice of any predecessor of the Company and/or
any affiliated group that includes the Company (unless otherwise
required by applicable tax laws).
(b) Buyer shall prepare, or cause to be prepared, and
shall file, or cause to be filed, on a timely basis (in each case,
at its sole cost and expense) all other Tax Returns with respect to
the Company, including Tax Returns, if any, for the Straddle Period
(the "Straddle Period Returns") in a manner consistent with prior
practice as well as all Tax Returns for taxable periods beginning
on or after the Closing Date. Buyer shall pay, or cause to be
paid, all Taxes shown to be due on such Tax Returns.
(c) Buyer shall provide Seller with copies of any
Straddle Period Returns at least thirty business days prior to the
due date thereof (giving effect to any extensions thereto),
accompanied by a statement calculating in reasonable detail
Seller's indemnification obligation pursuant to 6.7 hereof (the
"Indemnification Statement"). Seller shall have the right to
review such Straddle Period Returns and Indemnification Statement
prior to the filing of such Straddle Period Returns. If Seller
disputes the amount calculated in the Indemnification Statement,
Seller and Buyer shall consult and attempt to resolve in good faith
any issues arising as a result of the review of such Straddle
Period Return and Indemnification Statement. If Seller agrees to
the Indemnification Statement amount, Seller shall pay to Buyer an
amount equal to the Taxes shown on the Indemnification Statement
not later than three business days before the due date (including
any extensions thereof) for payment of Taxes with respect to such
Straddle Period Return. If the parties are unable to resolve any
dispute within fifteen business days after Seller's receipt of such
Straddle Period Return and Indemnification Statement, such dispute
shall be resolved by the Neutral Accounting Firm which shall
resolve any issue in dispute as promptly as practicable. If the
Neutral Accounting Firm is unable to make a determination with
respect to any disputed issue prior to the due date (including any
extensions) for the filing of the Straddle Period Return in
question, (A) Buyer shall file, or shall cause to be filed, such
Page 27
Straddle Period Return without such determination having been made
and (B) Seller shall pay to Buyer, not later than five days before
the due date (including any extensions thereof) for the payment of
Taxes with respect to such Straddle Period Return, an amount
determined by Seller as the proper amount chargeable to Seller
pursuant to this Section 6.4. Upon delivery to Seller and Buyer by
the Neutral Accounting Firm of its determination, appropriate
adjustments shall be made to the amount paid by Seller in
accordance with the immediately preceding sentence in order to
reflect the decision of the Neutral Accounting Firm. The
determination by the Neutral Accounting Firm shall be final,
conclusive and binding on the parties. Any balance owing by the
Seller to the Buyer or by the Buyer to the Seller shall be paid
with interest at the rate of 7% within five business days after
receiving the decision of the Neutral Accounting Firm.
(d) Seller and Buyer shall reasonably cooperate, and
shall cause their respective affiliates, officers, employees,
agents, auditors and representatives reasonably to cooperate, in
preparing and filing all Tax Returns (including amended returns and
claims for refund), including maintaining and making available to
each other all records necessary in connection with Taxes and in
resolving all disputes and audits with respect to all taxable
periods relating to Taxes. Buyer and Seller recognize that Seller
will need access, from time to time, after the Closing Date, to
certain accounting and tax records and information held by the
Company to the extent such records and information pertain to
events occurring prior to the Closing Date; therefore, Buyer agrees
that from and after the Closing Date Buyer shall, and shall cause
the Company to, (A) retain and maintain such records until such
time as Seller determines that such retention and maintenance is no
longer necessary and (B) allow Seller and its agents and
representatives (and agents and representatives of its affiliates)
to inspect, review and make copies of such records as Seller may
deem necessary or appropriate from time to time, such activities to
be conducted during normal business hours and at Seller's cost and
expense. Similarly, Buyer and Seller recognize that Buyer may need
access, from time to time, after the Closing Date, to certain
accounting and tax records and information held by Seller and its
affiliates to the extent such records and information pertain to
events occurring prior to the Closing Date that affect Tax Returns
or Taxes for which the Buyer is responsible; therefore, Seller
agrees that, from and after the Closing Date, Seller shall, and
shall cause its affiliates to, (A) retain and maintain such records
until such time as Buyer determines that such retention and
maintenance is no longer necessary; and (B) allow Buyer and its
agents and representatives (and agents and representatives of its
affiliates) to inspect and make copies of such records as Buyer may
deem necessary or appropriate from time-to-time, such activities to
be conducted during normal business hours and at Buyer's cost and
expense.
Page 28
(e) For a period of the later to occur of (i) seven
years from the Closing Date or (ii) the expiration of the
applicable statute of limitations (taking into account any
applicable extensions or tollings), Buyer shall not, and shall
cause the Company not to, dispose of or destroy any of the business
records and files of the Company relating to Taxes for which the
Seller may have liability or reporting responsibility without first
offering to turn over possession thereof to Seller by written
notice to Seller at least thirty days prior to the proposed date of
such disposition or destruction. For a period of the later to
occur of (i) seven years from the Closing Date or (ii) the
expiration of the applicable statute of limitations (taking into
account any applicable extensions or tollings), Seller shall not,
and shall cause its affiliates not to, dispose or destroy any of
the business records and files in its possession pertaining to the
Company that relate to Taxes for which the Buyer may have liability
or reporting responsibility without first offering to turn over
possession thereof to Buyer by written notice to Buyer at least 30
days prior to the proposed date of such disposition or destruction.
(f) Any refunds and credits of Taxes of the Company with
respect to (A) any taxable period ending on or before the Closing
Date shall be for the account of Seller, and if received or
utilized by Buyer or the Company, shall be paid to Seller within
five business days after Buyer or the Company receives such refund
or utilizes such credit, (B) any taxable period beginning after the
Closing Date shall be for the account of Buyer, and if received or
utilized by Seller or any of its affiliates shall be paid by Seller
to Buyer within five business days after Seller or any of its
affiliates receives such refund or utilizes such credit and (C)
except as provided in the next sentence, any Straddle Period shall
be apportioned between Seller and Buyer on the basis of an "interim
closing of the books." In the case of a refund or credit
attributable to any Taxes that are imposed on a periodic basis and
are attributable to the Straddle Period, other than Taxes based
upon or related to income, the refund or credit of such Taxes of
the Company for the Pre-Closing Period shall be deemed to be the
amount of such refund or credit for the Straddle Period multiplied
by a fraction the numerator of which is the number of days in the
Straddle Period ending on the Closing Date and the denominator of
which is the number of days in the Straddle Period.
5 Tax Elections.
(a) Buyer shall not, and shall cause the Company not to,
make, amend or revoke any Tax election if such action would
adversely affect any member of the Seller Group with respect to any
taxable period ending on or before the Closing Date or for the
Pre-Closing Period or any Tax refund with respect thereto.
(b) Seller agrees that if requested to do so by the
Buyer, Seller and its affiliates will join the Buyer in making a
timely joint election under Section 338(h)(10) of the Code and the
Page 29
applicable Treasury regulations and any corresponding or similar
elections under state, local or foreign tax law (collectively, a
"Section 338(h)(10) Election") with respect to the purchase and
sale of the Shares hereunder.
6 Timing Adjustments. If an audit or other examination
of any Tax Return prepared in connection with income taxes ("Income
Tax Return") of Seller or the Company for taxable periods ending on
or before the Closing Date shall result (by final settlement or
other final disposition) in any adjustment the effect of which is
to increase deductions, losses or tax credits or decrease income,
gains or recapture of tax credits ("Changes") reflected on the
Income Tax Returns of Buyer or the Company for taxable periods
commencing on or after the Closing Date, Seller will notify Buyer
and provide Buyer with all necessary information so that it can
reflect on the Income Tax Returns of Buyer or the Company any
appropriate Changes. If as a result of such Changes, Buyer enjoys
a net Tax Benefit from an increase in deductions, losses or tax
credits and/or a decrease in the income, gains or recapture of tax
credits (after taking into account the deferral of, or decrease in,
deductions, losses or tax credits, or acceleration of, or increase
in, income, gain or recapture of tax credits suffered by Buyer as a
result of such Changes) (collectively, the "Buyer Benefits") with
respect to Income Tax Returns for any taxable period commencing
after the Closing Date, Buyer shall promptly make payments to
Seller as and when Buyer realizes such Buyer Benefits. Buyer shall
cause such Buyer Benefits to be claimed on the appropriate Income
Tax Returns of Buyer or the Company commencing with its next Income
Tax Return actually filed more than forty-five days after Buyer has
received all necessary information from Seller. Buyer shall also
claim Buyer Benefits for taxable years with respect to which Income
Tax Returns have been filed after Buyer receives notice of the
Changes as follows: (A) Buyer shall claim such Buyer Benefits in a
claim for refund, amended return, or other appropriate Tax Return
for any taxable period if such taxable period is being audited or
examined by a taxing authority and (B) if not previously claimed or
filed, Buyer shall in all events file a claim for refund, amended
return, or other appropriate Tax Return claiming Buyer Benefits for
a taxable period in which such Buyer Benefits are available before
the appropriate statute of limitations expires if Buyer receives
notice of the Changes at least forty-five days before the
expiration of such statute of limitations. If Buyer fails to claim
such Buyer Benefits as required in this Section 6.6, Buyer shall
nevertheless pay Seller the amount it would have been required to
pay to Seller under this Section 6.6 if such Buyer Benefits had
been claimed by Buyer. For purposes of this Section 6.6, the
amount of Buyer Benefits paid to Seller shall include the amount of
interest (whether or not actually realized or received by Buyer or
the Company), if any, that would have been payable by an
appropriate taxing authority with respect to such Buyer Benefits
from the first day that interest would have accrued under
applicable law if Buyer had claimed Buyer Benefits no later than
thirty days after Seller notified Buyer of the Changes through the
date on which payment is made to Seller.
Page 30
7 Tax Indemnification.
(a) Notwithstanding anything in this Agreement to the
contrary, Buyer shall indemnify, defend and hold harmless Seller
and its affiliates from and against any liability for Taxes of the
Company for any taxable period ending after the Closing Date
(except as provided in Section 6.3 hereof and to the extent such
taxable period began before the Closing Date, in which case Buyer's
indemnity will cover only that portion of any such Taxes that is
not attributable to the Pre-Closing Period). Notwithstanding the
foregoing, Buyer shall indemnify, defend and hold harmless Seller
and its affiliates from and against any liability for Taxes of the
Company arising on the Closing Date and attributable to activities
of Buyer outside of the ordinary course of business.
(b) Notwithstanding anything in this Agreement to the
contrary, Seller shall indemnify, defend and hold harmless Buyer
and its affiliates from and against any liability for Taxes of the
Company, except as provided in Section 6.3 hereof, for all taxable
periods ending on or before the Closing Date and for the
Pre-Closing Period (including, but not limited to, any liability
with respect to any Section 338(h)(10) Election) but only to the
extent that the amount of such Taxes exceeds the aggregate amount
of Taxes that have been reserved for on the Balance Sheet.
(c) In the case of any Straddle Period, except as
provided in subparagraph (d) below and in Section 6.4 hereof, the
liability for Taxes of the Company for the Pre-Closing Period shall
be computed as if such taxable period ended on and included the
Closing Date.
(d) In the case of any Taxes that are imposed on a
periodic basis and are payable for the Straddle Period, other than
Taxes based upon or related to income or Taxes described in
Section 6.3 hereof, the liability for such Taxes of the Company for
the Pre-Closing Period shall be deemed to be the amount of such
Taxes for the Straddle Period multiplied by a fraction the
numerator of which is the number of days in the Straddle Period
ending on and including the Closing Date and the denominator of
which is the number of days in the Straddle Period.
(e) If a claim for Taxes shall be made by any taxing
authority in writing, which, if successful, might result in an
indemnity payment pursuant to this Section 6.7, the party seeking
indemnification (the "Tax Indemnified Party") shall promptly notify
the other party (the "Tax Indemnifying Party") in writing of such
claim (a "Tax Claim") within a reasonably sufficient period of time
to allow the Tax Indemnifying Party effectively to contest such Tax
Claim, and in reasonable detail to apprise the Tax Indemnifying
Party of the nature of the Tax Claim, and provide copies of all
correspondence and documents received by it from the relevant
taxing authority. Failure to give prompt notice of a Tax Claim
hereunder shall not affect the Tax Indemnifying Party's obligation
under this Section 6.7, except to the extent that the Tax
Indemnifying Party is materially prejudiced by such failure to give
prompt notice.
Page 31
(f) With respect to any Tax Claim which might result in
an indemnity payment to Buyer pursuant to Section 6.7(b) (excepting
Taxes of the Company for a Straddle Period Tax Claims with respect
to which will be controlled jointly by the Buyer and the Seller),
Seller shall control all proceedings taken in connection with such
Tax Claim and, without limiting the foregoing, may in its sole
discretion and at its sole expense pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with
any taxing authority with respect thereto, and may, in its sole
discretion, either pay the Tax claimed and ▇▇▇ for a refund where
applicable law permits such refund suits or contest such Tax Claim.
Buyer shall not under any circumstances settle or otherwise
compromise any Tax Claim referred to in the preceding sentence
without Seller's prior written consent. In connection with any
proceeding taken in connection with such Tax Claim, (i) Seller
shall keep Buyer informed of all material developments and events
relating to such Tax Claim if involving a material liability for
Taxes and (ii) Buyer shall have the right, at its sole expense, to
participate in (but not control) any such proceedings. Buyer shall
cooperate with Seller in contesting such Tax Claim (without charge
to Seller), which cooperation shall include, without limitation,
the retention and the provision to Seller of records and
information which are reasonably relevant to such Tax Claim, and
making employees available to Seller to provide additional
information or explanation of any material provided hereunder or to
testify at proceedings relating to such Tax Claim, provided that no
charges shall be incurred by Seller for the services of such
employees.
(g) With respect to any Tax Claim not described in
Section 6.7(f) which might result in an indemnity payment to Seller
pursuant to Section 6.7(a), Buyer shall control all proceedings in
accordance with provisions that are parallel to those in
Section 6.7(f).
(h) Except as set forth in Section 6.4(c) or 6.4(d), any
indemnity payment payable by Seller to Buyer or by Buyer to Seller
pursuant to this Section 6.7 shall be paid within thirty days after
the Tax Indemnified Party's written request therefor (or, if later,
ten days prior to the date such Tax is required to be paid),
provided that such request shall be accompanied by a copy of the
applicable Tax Return or a final audit determination and, if
necessary, a statement reflecting the calculation of the amount for
which the Tax Indemnifying Party is liable. Within thirty days
following the receipt of a request for any indemnity payment
hereunder, together with a computation by the Tax Indemnified Party
of the indemnity amount payable hereunder, the Tax Indemnifying
Party shall either pay such amount in immediately available funds
in the manner designated by the Tax Indemnified Party to the Tax
Indemnified Party or request in writing the Neutral Accounting Firm
to determine whether such computation and amount are correct.
After each party has had the opportunity to consult with the
Neutral Accounting Firm, upon receipt thereof, the Tax Indemnified
Page 32
Party shall deliver to the Tax Indemnifying Party a statement from
the Neutral Accounting Firm setting forth the determination by the
Neutral Accounting Firm of such computation and the amount payable
hereunder as an indemnity. The determination by the Neutral
Accounting Firm in conformity with the provisions of this Agreement
shall be final, conclusive and binding on the parties hereto.
Within five business days after delivery to the Tax Indemnifying
Party of the statement of determination by the Neutral Accounting
Firm of such amount, the Tax Indemnifying Party shall pay such
amount in immediately available funds to the Tax Indemnified Party
in the manner designated by the Tax Indemnified Party.
(i) Notwithstanding any provision in this Agreement to
the contrary, the liability of any party hereto to indemnify any
other party hereto pursuant to this Section 6.7 in respect of Tax
Claims shall be limited to Tax Claims as to which the Tax
Indemnified Party has given the Tax Indemnifying Party written
notice, setting forth therein in reasonable detail the basis for
such Tax Claim, on or prior to the day and date on which the
applicable statute of limitations relating to the Taxes at issue
expires (after giving effect to valid extensions thereof) and the
costs indemnified hereunder shall include reasonable attorney's
fees and the costs and expenses of enforcing the indemnification
obligation, if any. Unless the Buyer consents, the Seller will not
settle any Tax Claim or file any Tax Return, amended or otherwise,
on which the Company makes an election or takes a position that
would cause Buyer or the Company to pay more Taxes in future years
than Buyer or the Company would have paid has such settlement or
election not been made.
8 Section 338(h)(10) Election.
(a) Application. This Section 6.8 will apply if the
Buyer requests the Seller, pursuant to Section 6.5(b) to join in a
Section 338(h)(10) Election.
(b) Allocation of Purchase Price. On or before June 15,
1998, Buyer shall provide to Seller copies of any exhibits required
to be attached to the IRS form on which a Section 338(h)(10)
Election is made (see Form 8023-A which expired on April 30, 1997)
reflecting Buyer's proposed allocation of the Purchase Price
(adjusted as required under the Code and the applicable Treasury
Regulations) based on the Allocated Asset Prices. "Allocated Asset
Price" is defined with respect to any asset, the portion of the
Purchase Price allocated to such asset by Buyer and set forth on
the Pricing Schedule. Within 15 days after the receipt of such
exhibits, Seller shall propose to Buyer any changes to such
exhibits or shall indicate its concurrence therewith, which
concurrence shall not be unreasonably withheld. The failure by
Seller to propose any such change or to indicate its concurrence
within such 15 days shall be deemed to be an indication of its
concurrence with such exhibits. Buyer and Seller shall file, and
shall cause their affiliates to file, all Tax Returns and
Page 33
statements, forms and schedules in connection therewith in a manner
consistent with such allocation of the Purchase Price and shall
take no position contrary thereto unless required to do so by
applicable tax laws. Any disputes with respect to the items on
such exhibits which Buyer and Seller, acting in good faith, are
unable to resolve shall be resolved pursuant to the dispute
resolution procedure provided in Section 6.4(c) for Straddle Period
Returns and related matters.
(c) Section 338(h)(10) Election. (i) Buyer and Seller
shall make a timely Section 338(h)(10) Election.
(ii) Buyer shall be responsible for the
preparation and filing of all forms and documents required in
connection with the Section 338(h)(10) Election. For the purpose
of making the Section 338(h)(10) Election, on or prior to the
Closing Date, Seller shall execute and deliver to Buyer two copies
of IRS Form 8023-A (or successor form). Seller shall execute and
deliver to Buyer such additional documents or forms as are
reasonably requested to complete properly the Section 338(h)(10)
Election at least 60 days prior to the date such Section 338(h)(10)
Election is required to be filed. Seller and Buyer shall cooperate
with each other in executing and delivering such other additional
documents or forms as are reasonably requested by the other in
connection with the Section 338(h)(10) Election.
(iii) Buyer and Seller shall file, and shall
cause their affiliates to file, all Tax Returns and statements,
forms and schedules in connection therewith in a manner consistent
with the Section 338(h)(10) Election and such valuations and shall
take no position contrary thereto unless required to do so by
applicable tax law.
VII. ADDITIONAL AGREEMENTS.
1 Company Employees; Employee Contracts and Benefits.
(a) Employees. Buyer intends that each person employed
by the Company (including such employees who are not actively at
work on account of (i) leave of absence or (ii) any disability,
meaning any illness or injury, of less than six months duration as
of the Closing Date, but excluding such employees who are totally
and permanently disabled as of the Closing Date under the terms of
the Kaman Pension Plan (as hereinafter defined)) as of the Closing
Date (and excluding all persons who were not employees of the
Company on the Closing Date, but who were formerly employed by the
Company or predecessors thereof and whose service with the Company
and its affiliates or predecessors thereof terminated prior to the
Closing Date, including, without limitation, those who are, as of
the Closing Date, retired and those who are, as of the Closing
Date, in receipt of periodic severance pay benefits ("Former Kaman
Employees")) (a "Kaman Employee") shall continue as an employee of
the Company immediately following the Closing Date. Buyer agrees
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to provide severance benefits to Kaman Employees whose employment
with the Company is terminated other than for cause by the Company,
Buyer or any subsidiary thereof within ninety days after the
Closing Date, which severance benefits shall be no less favorable
in the aggregate to such employee than those which would have been
provided by the Company in accordance with the applicable severance
and termination pay policies and practices covering Kaman Employees
on the Closing Date which policies and practices are attached as
Section 7.1(a) of the Disclosure Schedule, had such Kaman
Employee's employment been terminated by the Company immediately
prior to the Closing. Immediately following the Closing Date,
Buyer will (i) permit Kaman Employees to participate immediately in
Buyer's medical and dental benefit plan(s) (or in new medical and
dental plan(s) created by the Company), with a waiver of
preexisting condition restrictions, with respect to expenses
incurred after the Closing Date, and provide such Kaman Employees
and their dependents credit for any deductibles and copayments
incurred under Seller's medical and dental benefit plans during the
current plan year before the Closing Date, provided, that, for a
period of at least one year after the Closing Date, the Kaman
Employees shall be provided with medical, dental and other welfare
benefits no less favorable in the aggregate than those provided by
Buyer for similarly situated employees of Buyer from time to time
during such year period, (ii) recognize for all purposes under
Buyer's severance pay plan or plans the service of Kaman Employees
with Seller or the Company before the Closing Date to the extent
taken into account under the Company's severance pay plan or plans,
and, except as otherwise provided in this Section 7.1, provide to
Kaman Employees the same benefits for such periods of service as it
provides to its own similarly situated employees, and (iii) permit
Kaman Employees to take vacation during 1997 to the extent of any
accrued and unused vacation entitlement under Seller's vacation
plans to the extent such accrued and unused vacation is reflected
on the Final Closing Date Statement, or reimburse such Kaman
Employees for the loss thereof at the rate of pay not less than
that in effect at Closing. In connection with the obligations set
forth in subsection (i) of the preceding sentence, Buyer agrees to
provide all certificates of credible coverage to Kaman Employees to
the extent required under the Health Insurance Portability and
Accountability Act of 1996, as amended. Nothing in this Agreement
shall require Buyer to continue as an employee or to retain any
Kaman Employee for any period after the time immediately following
the Closing Date and, subject to requirements of Applicable Law,
the Buyer reserves the right, at any time after such time, to
terminate such employment and, except as provided in this
Section 7.1, to amend, modify or terminate any term and condition
of employment, including, without limitation, any employee benefit
plan, program, policy, practice or arrangement or the compensation
(including, without limitation, any executive bonus plan or
program) or working conditions, of the Kaman Employees.
Page 35
(b) Assumption of Agreements. Buyer agrees to honor,
and to cause the Company to honor, in accordance with their terms,
any obligations of the Company, but not any obligations of Seller
nor any obligations with respect to the cash out of outstanding
stock options, under each of the severance agreements with those
individuals identified in Section 5.1(d) of the Disclosure
Schedule.
(c) Assumption of Liabilities of, and Transfer of Assets
from, Kaman Pension Plans. As soon as practicable after, and in
any event within ninety days after, and effective as of, the
Closing Date, (i) Buyer shall designate an existing defined benefit
pension plan of Buyer and the trust therefor qualifying under
Section 401(a) and Section 501(a) of the Code or shall have
established, or shall have caused the Company to establish, a
defined benefit pension plan and trust intended to qualify under
Section 401(a) and Section 501(a) of the Code ("Buyer's Pension
Plan") and (ii) upon receipt by Seller of written evidence of the
adoption of Buyer's Pension Plan and the trust thereunder by Buyer
and the receipt by Seller of a copy of a favorable determination
letter issued by the IRS with respect to Buyer's Pension Plan or,
alternatively, in the event Buyer's Pension Plan is other than an
existing pension plan of Buyer, an opinion of Buyer's tax counsel
satisfactory to Seller confirming the qualification of Buyer's
Pension Plan, Seller shall direct the Trustees of The Kaman
Corporation Employees' Pension Plan (the "Kaman Pension Plan") to
transfer from the trusts under the Kaman Pension Plan to the trust
under Buyer's Pension Plan, an amount determined by Hooker &
▇▇▇▇▇▇▇▇ Companies ("Seller's Actuary") and agreed to by Buck
Consultants ("Buyer's Actuary") which shall be equal to the "414(l)
Amount" (as hereinafter defined) calculated without regard to the
amount of assets of the Kaman Pension Plan (the "Minimum Transfer
Amount"), where the 414(l) Amount is the minimum amount of assets
which must be transferred as of the Closing Date solely on account
of benefits for Kaman Employees as determined in accordance with
Section 414(l) of the Code and the regulations promulgated
thereunder based on the actuarial assumptions and procedures that
would be used by the Pension Benefit Guaranty Corporation in
determining whether the applicable plan may terminate as a standard
termination as prescribed by Section 4041 of ERISA. If Seller for
any reason is unable to transfer assets of the Kaman Pension Plan
equal in amount to the Minimum Transfer Amount (where the amount of
assets in fact transferred is the "Actual Transfer Amount"), the
Purchase Price shall be reduced by the amount that the Actual
Transfer Amount is less than the Minimum Transfer Amount, before
adjustment of the Actual Transfer Amount for investment experience
as provided below. In the event that Seller's Actuary and Buyer's
Actuary are unable to agree upon the amount of assets to be
transferred as provided above, then a third-party, independent
actuary shall be selected by agreement of the Seller's Actuary and
the Buyer's Actuary and the determination of such amount by such
third-party actuary shall be final and binding upon the parties to
this Agreement. For purposes of accomplishing the transfer of
Page 36
assets contemplated in this Section 7.1(c), the Seller shall cause
the trustee of the trusts under the Kaman Pension Plan to segregate
in cash within such trusts as of the Closing Date an amount equal
to Seller's Actuary's estimate of the Actual Transfer Amount and to
invest such segregated amount in the short term investment fund
used for such trusts ("STIF") pending transfer to Buyer's Pension
Plan trust. At the time of transfer of assets to the Buyer's
Pension Plan trust, Seller shall cause the transfer of such
segregated assets and STIF earnings thereon and of an additional
amount in cash such that the total amount transferred will equal
the total of (i) the Actual Transfer Amount and (ii) an amount
equal to the investment experience of an amount equal to the Actual
Transfer Amount invested in the STIF from the Closing Date to the
date of transfer, less any benefit payments to Kaman Employees and
an allocable portion of other usual fees and expenses ordinarily
charged to the trust assets in accordance with the terms of the
Kaman Pension Plan and the trusts therefor. The Buyer shall not
assume any of the liabilities and obligations of the Kaman Pension
Plan with respect to Former Kaman Employees and the Seller shall
retain all such liabilities and obligations and related assets
under the Kaman Pension Plan. Between the Closing Date and the
date assets are transferred, Seller shall administer the Kaman
Pension Plan with respect to the Kaman Employees at Seller's
expense, except with respect to the usual fees and expenses
referred to above. At the time of transfer of the amount set forth
in this Section 7.1(c), Buyer and Buyer's Pension Plan shall assume
all liabilities for all accrued benefits, including all ancillary
benefits and all aspects of plan administration, under the Kaman
Pension Plan in respect of Kaman Employees, and the Company shall
cease being a participating company in the Kaman Pension Plan and
employer contributions to the Kaman Pension Plan shall cease at the
Closing Date for all Kaman Employees and each of Seller and the
Kaman Pension Plan shall be relieved of all liabilities for such
benefits. From and after the transfer of assets in accordance with
this Section, Buyer agrees to indemnify and hold harmless Seller,
its officers, directors, employees, agents and affiliates from and
against any and all costs, damages, losses, expenses, or other
liabilities arising out of or related to Buyer's Pension Plan,
including benefits accrued by Kaman Employees prior to the Closing
Date that are provided by Buyer's Pension Plans; provided, however,
that Buyer shall not indemnify or hold harmless such parties with
respect to those costs, damages, losses, expenses, or other
liabilities that result, directly or indirectly, from the acts or
omissions of such parties, which acts or omissions occurred or
should have occurred prior to such transfer. Buyer will, or will
cause the Company to, give Kaman Employees full credit for purposes
of eligibility, vesting, and determination of the level of benefits
under Buyer's Pension Plan for such Kaman Employees' service with
the Company or Seller to the same extent recognized by the Company
under the terms of the Kaman Pension Plan immediately prior to the
Closing Date.
Page 37
Buyer and Seller shall provide each other with such
records and information as may be necessary or appropriate to carry
out their obligations under this Section or for the purposes of
administration of Buyer's Pension Plan, and they shall cooperate in
the filing of documents required by the transfer of assets and
liabilities described herein. Notwithstanding anything contained
herein to the contrary, no such transfer shall take place until the
thirty-first day following the filing of all required Forms 5310-A
in connection therewith.
(d) Defined Contribution Plans. As soon as practicable
after the Closing Date, but in no event later than sixty days after
the Closing Date, Buyer shall designate an existing defined
contribution savings plan of Buyer and Trust qualifying under
Section 401(a) and Section 501(a) of the Code or shall have
established (or shall have caused the Company to establish) one or
more qualified defined contribution savings or thrift plans and a
related trust or trusts thereunder intended to qualify under
Section 401(a) and Section 501(a) of the Code ("Buyer's Thrift
Plan"). The Kaman Corporation Thrift and Retirement Plan
("Seller's Thrift Plan") provides, or Seller shall cause Seller's
Thrift Plan to be amended to provide, (i) for 100% vesting of all
accounts of Kaman Employees under Seller's Thrift Plan and of all
income earned on such accounts and (ii) that a distribution from
Seller's Thrift Plan may be made on account of a bona fide
distribution event as set forth in Code Section 401(k)10, that
Kaman Employees participating in Seller's Thrift Plan shall have
the option to retain their account balance in Seller's Thrift Plan
or to make an elective transfer of their full account balance in
accordance with Treasury Regulation 1.411(d)-4, Q&A3(b) to Buyer's
Thrift Plan and that such elective transfers shall include the
transfer of notes representing plan loans to participants. Buyer's
Thrift Plan provides, or Buyer shall cause Buyer's Thrift Plan to
be amended to provide, (i) for acceptance of elective transfers
from Seller's Thrift Plan under Treasury Regulation 1.411(d)-4,
Q&A3(b), including provision for acceptance of the elective
transfer of notes representing plan loans to participants, (ii) for
100% vesting of all such transferred accounts and all income earned
on such transferred accounts, and (iii) for recognition for all
purposes under Buyer's Thrift Plan all service that was recognized
under Seller's Thrift Plan to the extent such service was
recognized under Seller's Thrift Plan. Seller and Buyer agree that
any elective transfers made pursuant to this Section 7.1(d) are
intended by the parties hereto to qualify as rollover distributions
for income tax purposes. At the Closing, in accordance with the
terms of Seller's Thrift Plan, the Company shall cease being a
participating company in Seller's Thrift Plan and both employer and
employee contributions to such plans shall cease at the Closing
Date for all Kaman Employees. As of the first regular enrollment
date under Buyer's Thrift Plan next following the Closing Date,
Kaman Employees will be eligible to immediately participate in
Buyer's Thrift Plan.
Page 38
Buyer and Seller shall provide each other with such
records and information as may be necessary or appropriate to carry
out their respective obligations under this Section or for the
purposes of administration of Buyer's Thrift Plan, and each shall
cooperate in the filing of documents required by the transfer of
assets and liabilities described herein after the Closing Date.
Notwithstanding anything contained herein to the contrary, between
the Closing Date and the date of transfer, Seller shall administer
the Seller's Thrift Plan with respect to Kaman Employees, at
Seller's expense.
(e) Incentive Bonus Plan. Buyer agrees that for
purposes of the Incentive Plan for Key Employees of Kaman Sciences
Corporation and the Kaman Sciences Corporation Directorate/Cost
Center Incentive Bonus Plan, (i) all Kaman Employees who
participate therein shall be deemed to have achieved all applicable
individual and Company goals for the current performance period and
each such Kaman Employee shall be entitled to the maximum payout
for such period, and (ii) with respect to those individuals listed
in Section 7.1(e) of the Disclosure Schedule, Buyer shall provide a
bonus for 1997 at least equal to the most recent cash bonus award
made to such individual by the Company, which amounts are listed in
Section 7.1(e) of the Disclosure Schedule, provided that the
payment required under items (i) and (ii) above shall be made by
Buyer only to the extent accruals for such payments are reflected
on the Final Closing Date Statement. Buyer agrees to pay all such
amounts within thirty days of the Closing Date.
(f) Other Benefits. From and after the Closing Date and
until December 31, 1998, Buyer agrees to provide Kaman Employees
with the payments and other benefits to which such Kaman Employees
are entitled, immediately prior to the Closing, pursuant to the
Kaman Corporation Flexible Benefits Plan, the Kaman Sciences
Medical Spending Account Plan (but not including the Medical
Expense Reimbursement Program) and the Kaman Corporation Dependent
Care Reimbursement Plan, as if Buyer were the sponsor of each such
plan. Buyer hereby assumes responsibility for, and agrees to
provide Kaman Employees with, any group health benefits required
under Section 4980 of the Code and Part 6 of Title I of ERISA
("COBRA Benefits"). Seller agrees to provide COBRA Benefits for
Former Kaman Employees and any other employee of the Company who
has a "qualifying event" (as defined in Section 603 of ERISA) prior
to or as of the Closing Date.
(g) Deferred Compensation Plan. Seller shall retain and
satisfy all liabilities and obligations with respect to deferred
compensation for Kaman Employees, with respect to deferrals through
the Closing Date, under Seller's deferred compensation plan.
2 Allocation of Cash. Notwithstanding any provision in
this Agreement to the contrary, Buyer and Seller hereby agree that
Seller shall be entitled to all cash and cash equivalents of the
Company as of the Closing Date; provided, however, that Seller
Page 39
shall ensure that the Company has sufficient cash to cover any
checks that may have been written by the Company prior to the
Closing but not presented for payment prior to the Closing Date.
3 No Solicitation. During the period from the date
hereof through the earlier to occur of (i) the Closing Date and
(ii) the termination of this Agreement in accordance with Section
9.1, Seller will not, nor will Seller permit its respective
officers, directors, representatives, subsidiaries (including,
without limitation, the Company), affiliates or associates (as such
terms are defined in the Exchange Act) to, directly or indirectly,
(a) initiate contact with, solicit, encourage or respond to any
inquiries or proposals by, (b) enter into any discussions,
negotiations, agreements, arrangements or understandings with, (c)
disclose, directly or indirectly, any non-public information
concerning the Company's business or properties to, except as may
be required by law or securities exchange regulations, or (d)
afford any access to the Company's properties, books and records
to, any person or entity in connection with any possible proposal
for the acquisition of all or any substantial portion of the
Shares, other capital stock of the Company, or the assets or
business of the Company. If the Company or Seller receives any
inquiry, proposal or offer to enter into any transaction of any
type referred to above, Seller agrees to inform Buyer promptly of
the material terms thereof and the identity of the party making
such inquiry, proposal or offer.
4 Termination of Intercompany Commitments. At or prior
to the Closing, Seller shall, or shall cause the Company to,
terminate all of the agreements and commitments that are listed in
Section 7.4 of the Disclosure Schedule; it being understood that
neither Seller nor the Company shall be obligated to make any
additional payments thereunder other than in respect of past
services.
5 Dispute Resolution.
(a) Negotiations. Buyer and Seller shall attempt in
good faith to resolve any dispute arising out of or relating to
this Agreement (a "Dispute") by negotiations between the chief
executive officers (or any other executive officer or officers
reporting directly to, and duly designated by, such chief executive
officer and having the requisite authority to resolve the Dispute)
of such parties. Such negotiations may be commenced by either such
party by written notice to the other party (the "Negotiation
Request"). In the event that such Dispute has not been resolved by
such negotiations within thirty days of the delivery of the
Negotiation Request, and one party hereto requests non-binding
mediation by written notice to the other party given prior to the
end of such thirty-day period, Buyer and Seller shall attempt in
good faith to resolve such Dispute by non-binding mediation before
a mediator mutually agreeable to Buyer and Seller in their
reasonable judgment. Neither party shall be required to continue
Page 40
with such negotiations or with such non-binding mediation for more
than ninety days after the delivery of the Negotiation Request.
All such negotiations and mediation proceedings shall be
confidential, and shall be treated as compromise and settlement
negotiations for all evidentiary purposes, including but not
limited to for purposes of the Federal Rules of Evidence and any
state rules of evidence.
(b) Other Remedies. The parties hereto shall not, and
shall not permit their respective affiliates to, initiate
litigation with respect to the Dispute unless the Dispute has not
been resolved within ninety days of the delivery of the Negotiation
Request, and shall not initiate litigation with respect to such
Dispute except upon five days' prior written notice to the other
party; provided that (i) if one such party has delivered a
Negotiation Request or has so requested non-binding mediation and
the other such party has not responded to any such request within
ten days of its receipt or is failing to participate in good faith
in the procedures specified in Section 7.5(a), the requesting party
may initiate litigation prior to the expiration of such 90-day
period and (ii) either such party may at any time or without notice
file a complaint or seek an injunction or provisional judicial
relief, if in such party's sole judgment such action is necessary
to avoid irreparable damage or to preserve the status quo
(including, but not limited to, for statute of limitations reasons
or to preserve any defense based upon the passage of time).
Despite such action, Buyer and Seller will continue to participate
in the procedures specified in this Section 7.5 for so long and to
the extent so specified.
(c) Matters Not Subject to Mediation. Notwithstanding
any provision hereof to the contrary, any dispute relating to
matters set forth in Article I, Section 3.14, Article VI, or
Section 7.6 of this Agreement, or to any Third-Party Claim, shall
not be subject to the dispute resolution procedures set forth in
this Section, including, without limitation, such as relate to
mediation.
6 Non-Competition; Nondisclosure. (a) Seller agrees on
behalf of itself and its affiliates (other than any individual who
is an affiliate solely by reason of being a director of Seller)
that it will not at any time for five years after the date hereof:
(i) directly or indirectly, engage in any Competitive Business
(meaning, any business engaged in the businesses of the Company as
of the Closing Date), whether such engagement shall be as an owner,
partner, agent, consultant or shareholder (except as the holder of
not more than five percent (5%) of the outstanding shares of a
corporation whose stock is listed on any national or regional
securities exchange or reported by the National Association of
Securities Dealers Automated Quotations System or any successor
thereto); or (ii) directly or indirectly solicit, divert or accept
business from or otherwise take away or interfere with any customer
of the Company, including without limitation any person who was a
customer or whose business was being pursued by the Company prior
to the date hereof. Seller agrees on behalf of itself and its
Page 41
affiliates that it will not at any time for two years after the
date hereof, directly or indirectly, solicit or hire (other than by
means of a general solicitation of employees through the media or
other public communication) any person who has been employed by the
Company at any time during the 12 months immediately preceding such
solicitation or hiring (other than employees who have been
dismissed by the Company and other than employees have voluntarily
resigned from the Company and who have not been solicited by Seller
or any of its affiliates prior thereto).
(b) Seller agrees that, at all times from and after the
date hereof, except as required by law or by the order of any court
or government agency, it shall keep secret and retain in strictest
confidence and shall not, except with the express prior written
consent of Buyer, directly or indirectly disclose, communicate or
divulge to any person, or use for the benefit of any person, any
Proprietary Information (meaning, all information or data with
respect to the conduct or details of the business of the Company
including, without limitation, methods of operation, customers and
customer lists, details of contracts with customers, consultants,
suppliers or employees, products, proposed products, former
products, proposed, pending or completed acquisitions of any
company, division, product line or other business unit, prices and
pricing policies, fees, costs, plans, designs, technology,
inventions, trade secrets, know-how, software, marketing methods,
policies, plans, personnel, suppliers, competitors, markets or
other specialized information or proprietary matters of the
business of the Company). The restriction contained in the
preceding sentence shall not apply to any Proprietary Information
that (i) is or becomes a matter of public knowledge other than
through disclosure by Seller or (ii) is or becomes known to Seller
from another source which is under no known obligation of
confidentiality to Buyer or the Company.
VIII. CONDITIONS TO CLOSING.
1 Conditions to Both Parties' Obligations. The
obligations of the parties to consummate the transactions
contemplated by this Agreement are subject to the fulfillment prior
to or at the Closing of each of the following conditions (any or
all of which may be waived by the parties):
(a) No Injunction. On the Closing Date, there shall not
be in effect any Order issued by a court of competent jurisdiction
restraining or prohibiting consummation of the transactions
contemplated by this Agreement.
(b) Expiration or Termination of HSR Periods. All
waiting periods applicable to the transactions contemplated by this
Agreement under the HSR Act shall have expired or been terminated.
Page 42
(c) Consents and Approvals; Permits. Seller and the
Company shall have obtained the (A) material consents and
approvals, or waivers thereof, of third parties, including, without
limitation, those of governmental regulatory entities and (B)
material permits, in each case, as set forth in Section 8.1(c) of
the Disclosure Schedule.
2 Conditions to Seller's Obligations. The obligations
of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Closing
of each of the following conditions (any or all of which may be
waived in whole or in part by Seller):
(a) Representations and Warranties. The representations
and warranties of Buyer in this Agreement shall be true and correct
in all material respects as of the date when made and at and as of
the Closing Date as though such representations and warranties were
made at and as of the Closing Date, except for changes permitted by
the terms of this Agreement.
(b) Performance. Buyer shall have, in all material
respects, performed and complied with all agreements, obligations,
covenants and conditions required by this Agreement to be so
performed or complied with by Buyer at or prior to the Closing.
(c) Officer's Certificate. Buyer shall have delivered
to Seller a certificate, dated as of the Closing Date, executed by
an officer of Buyer, certifying the fulfillment of the conditions
specified in Sections 8.2(a) and 8.2(b) hereof.
3 Conditions to Buyer's Obligations. The obligations of
Buyer to consummate the transactions contemplated by this Agreement
are subject to the fulfillment at or prior to the Closing of each
of the following conditions (any or all of which may be waived in
whole or in part by Buyer):
(a) Representations and Warranties. The representations
and warranties of Seller in this Agreement which are qualified as
to materiality or "Company Material Adverse Effect" shall be true
and correct in all respects and all other representations and
warranties of Seller in this Agreement shall be true and correct in
all material respects as of the date when made and at and as of the
Closing Date as though such representations and warranties were
made at and as of the Closing Date.
(b) Performance. Seller shall have, in all material
respects, performed and complied with all agreements, obligations,
covenants and conditions required by this Agreement to be so
performed or complied with by Seller at or prior to the Closing.
(c) Officer's Certificate. Seller shall have delivered
to Buyer a certificate, dated as of the Closing Date, executed by
an officer of Seller, certifying the fulfillment of the conditions
specified in Sections 8.3(a) and 8.3(b) hereof.
Page 43
(d) Material Adverse Change. At any time on or after
the date of this Agreement, there shall not have occurred any
material adverse change in the business, properties, financial
condition or results of operations of the Company.
IX. TERMINATION.
1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by mutual written agreement of Seller
and Buyer;
(b) at any time after February 28, 1998, by either
Seller or Buyer upon five business days' prior written notice to
the other party, if the Closing shall not have occurred for any
reason other than a breach of this Agreement by the terminating
party;
(c) by Buyer, if there has been a material violation or
breach by Seller of any agreement, representation or warranty
contained in the Agreement, which has rendered the satisfaction of
any condition to the obligations of Buyer impossible and such
violation or breach has not been waived by Buyer;
(d) by Seller, if there has been a material violation or
breach by Buyer of any agreement, representation or warranty
contained in the Agreement, which has rendered the satisfaction of
any condition to the obligations of Seller impossible and such
violation or breach has not been waived by Seller; or
(e) by either Buyer or Seller if a court of competent
jurisdiction shall have issued an Order permanently restraining or
prohibiting the transactions contemplated by the Agreement, and
such Order shall have become final and nonappealable.
2 Procedure and Effect of Termination. In the event of
the termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to Section 9.1(b) hereof,
this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned without further action by Seller or
Buyer. If this Agreement is terminated pursuant to Section 9.1
hereof:
(a) Buyer shall return all documents, work papers and
other materials (and all copies thereof) obtained from Seller or
the Company relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the
party furnishing the same, and all confidential information
received by Buyer with respect to the Company shall be treated in
accordance with Section 5.3 hereof and the Confidentiality
Agreement referred to in such Section;
Page 44
(b) At the option of Seller, all filings, applications
and other submissions made pursuant to Sections 5.4, 5.5 and 5.6 -
hereof shall, to the extent practicable, be withdrawn from the
agency or other person to which made;
(c) The obligations provided for in this Section 9.2 and
Section 11.8 hereof, the confidentiality provision contained in
Section 5.3 hereof and the Confidentiality Agreement referred to in
such Section shall survive any such termination of this Agreement;
and
(d) Notwithstanding anything in this Agreement to the
contrary, the termination of this Agreement shall not relieve any
party from liability for breach of this Agreement.
X. SURVIVAL OF REPRESENTATIONS AND COVENANTS; INDEMNIFICATION.
1 Survival of Representations and Covenants. The
representations and warranties in this Agreement and in any other
document delivered in connection herewith shall survive the Closing
Date and shall terminate upon the expiration of the period for
which indemnification for breach thereof may be sought pursuant to
this Article X. The covenants contained in this Agreement shall
terminate on the Closing Date, except for those covenants which, by
their terms, are to be performed after the Closing Date, which
covenants shall terminate as provided therein.
2 Seller's Agreement to Indemnify. Upon the terms and
subject to the conditions of this Article X, Seller shall
indemnify, defend and hold harmless Buyer and its officers,
directors, employees, agents and affiliates (including the Company,
from and after the Closing) at any time after the Closing, from and
against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable
attorneys' fees and expenses (collectively, "Damages") asserted
against, resulting to, imposed upon or incurred by Buyer or such
affiliates by reason of or resulting from (i) a breach of any
representation or warranty of Seller contained in or made pursuant
to this Agreement (other than those contained in Section 3.14
hereof); (ii) other than such for which indemnification is provided
in Section 6.7 hereof, non-fulfillment of any agreement or covenant
of Seller contained in or made pursuant to this Agreement or (iii)
(A) any Hazardous Substances or under any Environmental Laws
relating to any Real Property currently owned or leased by the
Company (including, without limitation, Hazardous Substances which
have flowed or leaked from any Real Property) and relating to
events occurring or conditions existing on or prior to the Closing
Date ("On-site Environmental Matters") or (B) any Hazardous
Substances or under any Environmental Laws relating to events
occurring or conditions existing on or prior to the Closing Date
other than On-Site Environmental Matters ("Off-site Environmental
Matters") (collectively, "Buyer Claims").
Page 45
3 Seller's Limitation of Liability. Any provision in
this Agreement to the contrary notwithstanding, the liability of
Seller to indemnify Buyer (a) pursuant to Section 10.2(i) hereof
against any Damages sustained by reason of any Buyer Claim for
breaches of representations and warranties (other than the
representations and warranties set forth in Sections 3.1, 3.2, 3.4,
3.22 and 3.24 and the first sentence of Section 3.3) shall be
limited to such Buyer Claims as to which Buyer has given Seller
written notice, setting forth therein in reasonable detail the
basis for such Buyer Claim, on or prior to the first anniversary of
the Closing Date, (b) pursuant to Section 10.2(iii)(A) hereof
against any Damages by reason of any Buyer Claim in respect of
On-site Environmental Matters shall be limited to such Buyer Claims
as to which Buyer has given Seller written notice, setting forth
therein in reasonable detail the basis for such Buyer Claim, on or
prior to the second anniversary of the Closing Date and (c)
pursuant to Section 10.2(iii)(B) hereof against any Damages by
reason of any Buyer Claim in respect of Off-Site Environmental
Matters shall be limited to such Buyer Claims as to which Buyer has
given Seller written notice, setting forth therein in reasonable
detail the basis for such Buyer Claim, on or prior to the tenth
anniversary of the Closing Date; provided, however, that the
provisions for indemnification contained in Section 10.2(i) hereof
and the provisions for indemnification contained in Section
10.2(iii)(A) and (B) hereof in respect of On-site Environmental
Matters and Off-site Environmental Matters shall be effective only
with respect to any Buyer Claim for Damages only after the
aggregate amount of all Buyer Claims for breaches of
representations and warranties and all Buyer Claims under Section
10.2(iii) for which Seller is liable under this Agreement exceeds
$3,000,000 (the "Basket"), and then only to the extent that such
Buyer Claims exceed the Basket; and provided, further, that in no
event shall the aggregate amount of all Buyer Claims for breaches
of representations and warranties and all Buyer Claims under
Section 10.2(iii)(A) hereof in respect of On-site Environmental
Matters for which Seller is liable pursuant to such Section 10.2
hereof exceed $50,000,000.
4 Buyer's Agreement to Indemnify. Upon the terms and
subject to conditions of this Article X, Buyer shall indemnify,
defend and hold harmless Seller and its officers, directors,
employees, agents and affiliates, at any time after the Closing,
from and against all Damages asserted against, resulting to,
imposed upon or incurred by Seller or such affiliates by reason of
or resulting from (i) a breach of any representation or warranty of
Buyer contained in or made pursuant to this Agreement; or (ii)
other than such for which indemnification is provided in Section
6.7 hereof, non-fulfillment of any agreement or covenant of Buyer
or, after the Closing, the Company contained in or made pursuant to
this Agreement, including, without limitation, those set forth in
Section 7.1 hereof with respect to the assumption by Buyer, Buyer's
Pension Plan, Buyer's Thrift Plan or the Company of pension plan
obligations (collectively, "Seller Claims").
Page 46
5 Buyer's Limitation of Liability. Any provision in
this Agreement to the contrary notwithstanding, the liability of
Buyer to indemnify Seller pursuant to Section 10.4(i) hereof
against any Damages sustained by reason of any Seller Claim shall
be limited to Seller Claims as to which Seller has given Buyer
written notice thereof, setting forth therein in reasonable detail
the basis for such Seller Claim, on or prior to the first
anniversary of the Closing Date; provided, however, that,
notwithstanding the foregoing, the liability of Buyer to indemnify
Seller against Damages sustained by reason of any Seller Claim
relating to a breach of the representations and warranties
contained in Section 4.6 hereof shall not be so limited.
6 Conditions of Indemnification With Respect to
Third-Party Claims. The obligations and liabilities of Seller and
Buyer with respect to Buyer Claims and Seller Claims, respectively,
which arise or result from claims for Damages made by third parties
("Third-Party Claims") shall be subject to the following terms and
conditions:
(i) The indemnified party will give the
indemnifying party prompt notice of any such Third-Party Claim,
setting forth therein in reasonable detail the basis for such
Third-Party Claim, and the indemnifying party shall have the right
to undertake the defense thereof by representatives chosen by it,
provided, that failure to provide such prompt notice shall not
affect the indemnifying party's obligations hereunder, except to
the extent that the indemnifying party is materially prejudiced by
such failure; and provided, further, that the indemnified party
will reasonably cooperate with the indemnifying party in defending
such Third-Party Claim.
(ii) If the indemnifying party, within a reasonable
time after notice of any such Third-Party Claim, fails to defend
the indemnified party against which such Third-Party Claim has been
asserted, the indemnified party shall (upon further notice to the
indemnifying party) have the right to undertake the defense,
compromise or settlement of such Third-Party Claim on behalf of and
for the account and risk of the indemnifying party subject to the
right of the indemnifying party to assume the defense of such
Third-Party Claim at any time prior to settlement, compromise or
final determination thereof; and
(iii) Any provision in this Article X to the
contrary notwithstanding, (A) if there is a reasonable probability
that a Third-Party Claim may materially and adversely affect the
indemnified party other than as a result of money damages or other
money payments, the indemnified party shall have the right, at its
own cost and expense, to defend, compromise or settle such
Third-Party Claim; provided, however, that if such Third-Party
Claim is settled without the indemnifying party's consent, the
indemnified party shall be deemed to have waived all rights
Page 47
hereunder against the indemnifying party for money damages arising
out of such Third-Party Claim; and (B) the indemnifying party shall
not, without the written consent of the indemnified party, settle
or compromise any Third-Party Claim or consent to the entry of any
judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the indemnified
party a release from all liability in respect to such Third-Party
Claim.
7 Net Payments.
(a) Any indemnification payable pursuant to this Article
X shall be net of (i) any federal, state, local or foreign tax
benefit actually realized by the indemnified party in connection
with the indemnification payment or the expenditure to which the
indemnification relates and (ii) any amounts actually recovered
(after deducting related costs and expenses) by the indemnified
party for the Damages for which such indemnification payment is
made, under any insurance policy (paid for by the Company prior to
the Closing Date), warranty or indemnity from any third party
existing at the Closing Date, provided that, no indemnified party
shall be obligated to seek or claim any such tax benefit or to seek
any recovery under any such insurance policy, warranty or
indemnity.
(b) If the indemnified party determines not to pursue
any such recovery, the indemnified party shall promptly so notify
the indemnifying party, and the indemnifying party (in its name or
in the name of the indemnified party) shall be entitled to pursue
such recovery directly and the indemnified party shall use
reasonable efforts to cooperate with the indemnifying party in its
pursuit of such recovery, provided that (x) such recovery shall not
unreasonably interfere with the operation of the business of the
indemnifying party and (y) the indemnifying party shall defend,
indemnify and hold harmless the indemnified party from and against,
and shall pay or reimburse the indemnified party for, any Damages
which it may incur or to which it may be subjected, resulting from
or arising out of or otherwise based upon the indemnifying party's
efforts to pursue any such recovery.
8 Sole Remedy for Certain Claims. Unless this Agreement
shall have been terminated, Buyer acknowledges and agrees that its
sole and exclusive remedy with respect to any and all claims,
including, without limitation, Buyer Claims (whether Third-Party
Claims or otherwise), relating to any breaches of representations
and warranties of Seller or relating to any Damages resulting from
Hazardous Substances or under Environmental Laws shall be pursuant
to the provisions set forth in this Article X. Unless this
Agreement shall have been terminated, in furtherance of the forego-
ing, Buyer hereby waives, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action it
may have against Seller for breaches of representations and
warranties or for any Damages resulting from Hazardous Substances
or under Environmental Laws arising under any federal, state, local
or foreign statute, law, ordinance, rule or regulation (including,
without limitation, any such right, claim or cause of action
arising under or based upon common law or otherwise).
Page 48
9 Adjustment to Purchase Price. Any payments made
pursuant to this Article X and Section 6.7 shall be considered as
an adjustment to the Purchase Price.
XI. MISCELLANEOUS.
1 Further Assurances. From time to time after the
Closing Date, at the request of the other party hereto and at the
expense of the party so requesting, Seller and Buyer shall execute
and deliver to such requesting party such documents and take such
other action as such requesting party may reasonably request in
order to consummate the transactions contemplated hereby.
2 Notices. All notices, requests, demands, waivers and
communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly
given if delivered (i) by hand (including by reputable overnight
courier), (ii) by mail (certified or registered mail, return
receipt requested) or (iii) by telecopy facsimile transmission
(receipt of which is confirmed):
(a) If to Buyer, to:
ITT Industries, Inc.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) If to Seller, to:
Kaman Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Page 49
or to such other person or address as any party shall specify by
notice in writing to the other party. All such notices, requests,
demands, waivers and communications shall be deemed to have been
given (i) on the date on which so hand-delivered, (ii) on the third
business day following the date on which so mailed and (iii) on the
date on which telecopied and confirmed, except for a notice of
change of address, which shall be effective only upon receipt
thereof.
3 Amendment, Modification and Waiver. This Agreement
may be amended, modified or supplemented at any time by written
agreement of the parties hereto. Any failure of Seller or Buyer to
comply with any term or provision of this Agreement may be waived
by the other party at any time by an instrument in writing signed
by or on behalf of such other party, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent
or other failure to comply.
4 Entire Agreement. This Agreement, the Disclosure
Schedule and the exhibits, schedules and other documents referred
to herein which form a part hereof (including, without limitation,
the Confidentiality Agreement referred to in Section 5.3(b) hereof)
contain the entire understanding of the parties hereto with respect
to the subject matter hereof. This Agreement supersedes all prior
agreements and understandings, oral and written, with respect to
its subject matter.
5 Severability. Should any provision of this Agreement
for any reason be declared invalid or unenforceable, such decision
shall not affect the validity or enforceability of any of the other
provisions of this Agreement, which other provisions shall remain
in full force and effect and the application of such invalid or
unenforceable provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall be
valid and be enforced to the fullest extent permitted by law.
6 Binding Effect; Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs,
executors, successors and permitted assigns, but except as
contemplated herein, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, directly or
indirectly, by Seller or Buyer without the prior written consent of
the other party hereto, except that Buyer may assign its right to
purchase the Shares to any wholly owned subsidiary of Buyer, but no
such assignment shall relieve Buyer of its obligations hereunder.
7 No Third-Party Beneficiaries. This Agreement is not
intended and shall not be deemed to confer upon or give any person
except the parties hereto and their respective successors and
permitted assigns any remedy, claim, liability, reimbursement,
cause of action or other right under or by reason of this
Agreement.
Page 50
8 Fees and Expenses. Whether or not the transactions
contemplated hereby are consummated pursuant hereto, each of Seller
and Buyer shall pay all fees and expenses incurred by it or on its
behalf in connection with this Agreement, and the consummation of
the transactions contemplated hereby.
9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall
not in any way affect the meaning or interpretation of this
Agreement. As used in this Agreement, the term "person" shall mean
and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a
government or any department or agency thereof. As used in this
Agreement, the term "affiliate" shall have the meaning set forth in
Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
11 Forum; Service of Process. Any legal suit, action or
proceeding brought by Seller or Buyer, or any of their respective
affiliates, arising out of or based upon this Agreement shall be
instituted in any federal or state court in New York County, New
York, and each of Seller and Buyer (on its behalf and on behalf of
its subsidiaries) waives any objection which it may now or
hereafter have to the laying of venue of any such proceeding, and
irrevocably submits to the jurisdiction of such courts in any such
suit, action or proceeding.
12 Governing Law. This Agreement shall be governed by
the laws of the New York, without regard to the principles of
conflicts of law thereof.
13 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT
PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE PARTIES HERETO
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER
WITH ITS OR HIS, AS THE CASE MAY BE, LEGAL COUNSEL, AND THAT EACH
Page 51
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED
HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS
A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14 Certain Defined Terms.
(a) As used in this Agreement, the following terms shall
have the following respective meanings:
"affiliate" shall have the meaning ascribed to such
term in Section 11.10 hereof.
"Agreement" shall have the meaning ascribed to such
term in the Preamble hereof.
"Applicable Law" shall have the meaning ascribed to
such term in Section 3.5 hereof.
"Authorized Agent" shall have the meaning ascribed
to such term in Section 11.11 hereof.
"Balance Sheet" shall have the meaning ascribed to
such term in Section 3.6 hereof.
"Basket" shall have the meaning ascribed to such
term in Section 10.3 hereof.
"Buyer" shall have the meaning ascribed to such term
in the Preamble hereof.
"Buyer Benefits" shall have the meaning ascribed to
such term in Section 6.6 hereof.
"Buyer Claims" shall have the meaning ascribed to
such term in Section 10.2 hereof.
"Buyer Group" shall have the meaning ascribed to
such term in Section 6.1(a) hereof.
"Buyer's Pension Plan" shall have the meaning
ascribed to such term in Section 7.1(c) hereof.
"Buyer's Thrift Plan" shall have the meaning
ascribed to such term in Section 7.1(d) hereof.
"Changes" shall have the meaning ascribed to such
term in Section 6.6 hereof.
page 52
"Closing" shall have the meaning ascribed to such
term in Section 1.1 hereof.
"Closing Date" shall have the meaning ascribed to
such term in Section 1.3 hereof.
"Code" shall have the meaning ascribed to such term
in Section 3.13(c) hereof.
"Company" shall have the meaning ascribed to such
term in the Recitals hereof.
"Company Material Adverse Effect" shall have the
meaning ascribed to such term in Section 3.7 hereof.
"Confidentiality Agreement" shall have the meaning
ascribed to such term in Section 5.3(b) hereof.
"Damages" shall have the meaning ascribed to such
term in Section 10.2 hereof.
"Disclosure Schedule" shall have the meaning
ascribed to such term in Article III hereof.
"DOJ" shall have the meaning ascribed to such term
in Section 5.6 hereof.
"Environmental Laws" shall have the meaning ascribed
to such term in Section 3.19 hereof.
"ERISA" shall have the meaning ascribed to such term
in Section 3.13(a) hereof.
"Exchange Act" shall have the meaning ascribed to
such term in Section 3.5 hereof.
"Financial Statements" shall have the meaning
ascribed to such term in Section 3.6 hereof.
"FTC" shall have the meaning ascribed to such term
in Section 5.6 hereof.
"Governmental Approval" shall have the meaning
ascribed to such term in Section 3.5 hereof.
"Governmental Authority" shall have the meaning
ascribed to such term in Section 3.5 hereof.
"Hazardous Substances" shall have the meaning
ascribed to such term in Section 3.19 hereof.
"HSR Act" shall have the meaning ascribed to such
term in Section 3.5 hereof.
Page 53
"Income Tax Return" shall have the meaning ascribed
to such term in Section 6.6 hereof.
"Indemnification Statement" shall have the meaning
ascribed to such term in Section 6.4(c) hereof.
"Industrial Property" shall have the meaning
ascribed to such term in Section 3.11(a) hereof.
"Intellectual Property" shall have the meaning
ascribed to such term in Section 3.11(b) hereof.
"IRS" shall have the meaning ascribed to such term
in Section 3.13(c) hereof.
"Liens" shall have the meaning ascribed to such term
in Section 3.2 hereof.
"Kaman Diversified" shall have the meaning ascribed
to such term in Section 1.1 hereof.
"Kaman Employee" shall have the meaning ascribed to
such term in Section 7.1(a) hereof.
"Kaman Pension Plan" shall have the meaning ascribed
to such term in Section 7.1(c) hereof.
"Material Contract" shall have the meaning ascribed
to such term in Section 3.15 hereof.
"Neutral Accounting Firm" shall have the meaning as-
cribed to such term in Section 1.6 hereof.
"Order" shall have the meaning ascribed to such term
in Section 3.5 hereof.
"Pension Plan" shall have the meaning ascribed to
such term in Section 3.13(a) hereof.
"Permitted Liens" shall have the meaning ascribed to
such term in Section 3.9 hereof.
"person" shall have the meaning ascribed to such
term in Section 11.10 hereof.
"Personal Property" shall have the meaning ascribed
to such term in Section 3.9 hereof.
"Plan" shall have the meaning ascribed to such term
in Section 3.13(a) hereof.
"Pre-Closing Period" shall have the meaning ascribed
to such term in Section 6.1(b) hereof.
Page 54
"Prior Period Returns" shall have the meaning
ascribed to such term in Section 6.4(a) hereof.
"Purchase Price" shall have the meaning ascribed to
such term in Section 1.2 hereof.
"Real Estate Permitted Liens" shall have the meaning
ascribed to such term in Section 3.10(b) hereof.
"Real Property" shall have the meaning ascribed to
such term in Section 3.10(a) hereof.
"Section 338(h)(10) Election" shall have the meaning
ascribed to such term in Section 6.5(b) hereof.
"Seller" shall have the meaning ascribed to such
term in the Preamble hereof.
"Seller Claims" shall have the meaning ascribed to
such term in Section 10.4 hereof.
"Seller Group" shall have the meaning ascribed to
such term in Section 6.1(c) hereof.
"Seller's Actuary" shall have the meaning ascribed
to such term in Section 7.1(c) hereof.
"Seller's Thrift Plan" shall have the meaning
ascribed to such term in Section 7.1(d) hereof.
"Shares" shall have the meaning ascribed to such
term in the Recitals hereof.
"Straddle Period" shall have the meaning ascribed to
such term in Section 6.1(d) hereof.
"Straddle Period Returns" shall have the meaning as-
cribed to such term in Section 6.4(b) hereof.
"Tax Benefit" shall have the meaning ascribed to
such term in Section 6.1(e) hereof.
"Tax Claim" shall have the meaning ascribed to such
term in Section 6.8(e) hereof.
"Tax Indemnified Party" shall have the meaning
ascribed to such term in Section 6.8(e) hereof.
"Tax Indemnifying Party" shall have the meaning as-
cribed to such term in Section 6.8(e) hereof.
"Tax Return" shall have the meaning ascribed to such
term in Section 3.14(b)(ii) hereof.
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"Taxes" shall have the meaning ascribed to such term
in Section 3.14(b)(i) hereof.
"Third-Party Claims" shall have the meaning ascribed
to such term in Section 10.6 hereof.
"U.S. Government Contract" shall have the meaning
ascribed to such term in Section 5.10(a) hereof.
"WARN Act" shall have the meaning ascribed to such
term in Section 3.18 hereof.
"Welfare Plan" shall have the meaning ascribed to
such term in Section 3.13(a) hereof.
(b) Other terms may be defined elsewhere in this
Agreement and, unless otherwise indicated, shall have such meanings
throughout this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
Stock Purchase Agreement as of the day and year first above
written.
Seller:
KAMAN CORPORATION
By:
Name:
Title:
Buyer:
ITT INDUSTRIES, INC.
By:
Name:
Title:
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