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Exhibit 2.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
EG&G, INC.
AND
ETS ACQUISITION CORPORATION
(the "Buyer")
July 19, 1999
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TABLE OF CONTENTS
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ARTICLE I.........................................................................................................2
1.1 Purchase and Sale of Assets; Assumption of Liabilities.....................................................2
1.2 Purchase Price and Related Matters.........................................................................6
1.3 The Closing................................................................................................7
1.4 Post-Closing Adjustment....................................................................................8
1.5 Consents to Assignment....................................................................................10
1.6 Novation of Government Contracts..........................................................................11
1.7 Further Assurances........................................................................................13
ARTICLE II.......................................................................................................13
2.1 Organization, Qualification and Corporate Power...........................................................13
2.2 Title to Property.........................................................................................14
2.3 Authority.................................................................................................15
2.4 Noncontravention..........................................................................................15
2.5 Investments in Other Entities.............................................................................16
2.6 Financial Statements......................................................................................16
2.7 Absence of Certain Changes................................................................................16
2.8 Undisclosed Liabilities...................................................................................18
2.9 Tax Matters...............................................................................................18
2.10 Tangible Personal Property...............................................................................18
2.11 Owned and Leased Real Property...........................................................................19
2.12 Intellectual Property....................................................................................19
2.13 Contracts................................................................................................20
2.14 Litigation...............................................................................................22
2.15 Labor Matters............................................................................................22
2.16 Employee Benefits........................................................................................22
2.17 Environmental Matters....................................................................................25
2.18 Legal Compliance.........................................................................................27
2.19 Permits..................................................................................................27
2.20 Entire Business..........................................................................................27
2.21 Government Contracts.....................................................................................27
2.22 Brokers' Fees............................................................................................30
2.23 Insurance................................................................................................30
2.24 Business Relationships with Affiliates...................................................................30
ARTICLE III......................................................................................................30
3.1 Organization..............................................................................................30
3.2 Authority.................................................................................................31
3.3 Noncontravention..........................................................................................31
3.4 Broker's Fees.............................................................................................31
3.5 Litigation................................................................................................31
3.6 Financing.................................................................................................32
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3.7 Solvency..................................................................................................32
3.8 Government Contracts and Security Clearance...............................................................32
3.9 Transfer of Environmental Permits.........................................................................32
3.10 Financing................................................................................................32
3.11 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Matters................................................................................33
ARTICLE IV.......................................................................................................33
4.1 Efforts...................................................................................................33
4.2 [Intentionally Omitted.]..................................................................................33
4.3 Release from Liability....................................................................................33
4.4 Operation of Business.....................................................................................34
4.5 Access....................................................................................................34
4.6 Exclusivity...............................................................................................35
4.7 Novation Agreement........................................................................................35
4.8 Cooperation with Financing................................................................................35
4.9 Repayment of Indebtedness; Elimination of Intercompany Items..............................................36
4.10 Transition of Systems....................................................................................36
ARTICLE V........................................................................................................36
5.1 Conditions to Obligations of the Buyer....................................................................36
5.2 Conditions to Obligations of the Seller...................................................................37
ARTICLE VI.......................................................................................................38
6.1 Indemnification by the Seller.............................................................................38
6.2 Indemnification by the Buyer..............................................................................39
6.3 Claims for Indemnification................................................................................40
6.4 Survival..................................................................................................42
6.5 Limitations...............................................................................................42
6.6 Treatment of Indemnification Payments.....................................................................44
6.7 Treatment of Certain Claims...............................................................................44
ARTICLE VII......................................................................................................45
7.1 Termination of Agreement..................................................................................45
7.2 Effect of Termination.....................................................................................46
7.3 ASA Termination Provisions................................................................................46
ARTICLE VIII.....................................................................................................47
8.1 Definitions...............................................................................................47
8.2 Environmental Indemnification by the Seller...............................................................48
8.3 General Limitations.......................................................................................50
8.4 Environmental Indemnification by the Buyer................................................................50
ARTICLE IX.......................................................................................................51
9.1 Payment of Taxes..........................................................................................51
ARTICLE X........................................................................................................51
10.1 Access to Information; Record Retention; Cooperation.....................................................52
10.2 Covenant Not to Compete..................................................................................54
10.3 Disclosure Generally.....................................................................................55
10.4 Acknowledgements by the Buyer............................................................................56
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10.5 Certain Insurance Matters................................................................................56
10.6 Certain Employee Benefits Matters........................................................................57
10.7 Certain Government Contract Matters......................................................................65
10.8 Cooperation in Litigation................................................................................66
10.9 Use of EG&G Name.........................................................................................66
10.10 Repayment of EC III Loan................................................................................67
ARTICLE XI.......................................................................................................68
11.1 Press Releases and Announcements.........................................................................68
11.2 No Third Party Beneficiaries.............................................................................68
11.3 Action to be Taken by Affiliates.........................................................................68
11.4 Entire Agreement.........................................................................................68
11.5 Succession and Assignment................................................................................68
11.6 Counterparts.............................................................................................69
11.7 Headings.................................................................................................69
11.8 Notices..................................................................................................69
11.9 Governing Law............................................................................................70
11.10 Amendments and Waivers..................................................................................70
11.11 Severability............................................................................................70
11.12 Expenses................................................................................................70
11.13 Specific Performance....................................................................................71
11.14 Dispute Resolution......................................................................................71
11.15 Construction............................................................................................72
11.16 Incorporation of Exhibits and Schedules.................................................................72
11.17 Facsimile Signature.....................................................................................72
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Disclosure Schedule
Schedules Sheet
Schedule 1.1(a)(v) - Certain Excluded Contracts
Schedule 1.1(b)(xi) - Mixed Use Assets
Schedule 1.4(a) - Definition of Working Capital
Schedule 3.10(a) - Debt Financing Commitment Letters
Schedule 3.10(b) - Equity Financing Commitment Letter
Schedule 4.4 - Operation of Business
Schedule 5.1(a)(i) - Required Consents
Schedule 5.1(a)(ii) - Immaterial Consents
Schedule 6.1(c) - SJ Litigation
Schedule 6.7 - Identified Claims
Schedule 10.3(a) - Knowledge Individuals
Exhibits
Exhibit A - Subsidiaries
Exhibit B - Form of ▇▇▇▇ of Sale
Exhibit C - Form of Trademark Assignment
Exhibit D - Form of Assumption Agreement
Exhibit E - Form of Opinion of General Counsel of the Seller
Exhibit F - Form of Opinion of Counsel to the Buyer
Exhibit G - Form of Escrow Agreement
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TABLE OF DEFINED TERMS
Defined Term Section
1060 Forms 1.2(b)
Acquisition Transaction 4.6
Adjusted Purchase Price 1.4(h)
Affiliates 2.12(d)
Agreed Amount 6.3(c)
Agreement Preliminary Statement
Ancillary Agreements 2.3
Anti-Assignment Laws Introduction
Arbitrator 10.6(f)(i)
ASA 7.3
ASA Denial 7.3
Asset Allocation Schedule 1.20(b)
Assets 1.1(a)
Asset Sellers Introduction
Assumed Liabilities 1.1(d)
Assumption Agreement 1.1(d)
▇▇▇▇ of Sale 1.1(c)(i)
Bonds 4.3(b)
Business Day 1.4(g)
Buyer Preliminary Statement
Buyer Material Adverse Effect 3.1
Buyer Pension Plan 10.6(d)(i)
Buyer Plans 10.6(g)
Buyer Responsible G&A Expenses 10.7(a)(i)
Buyer's 401(k) Plan 10.6(c)
Carlyle 3.11
CAS 10.6(d)(ii)
CAS 413 Amount 10.6(d)(ii)
CAS 416 Amount 10.6(e)(ii)
CERCLA 2.17(a)(i)
Claimed Amount 6.3(c)
Claim Notice 6.3(c)
Closing 1.3(a)
Closing Working Capital Amount 1.4(a)
Closing Working Capital Statement 1.4(a)
Closing Date 1.3(a)
COBRA 10.6(l)
Code 1.2(b)
Competitive Business 10.2
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Confidentiality Agreement 4.5
Consents 5.1(a)(i)
Contracts 1.1(a)(v)
Contract Term 2.21(a)(ii)
Corporate Name 10.9(a)
▇▇▇▇▇▇ 10.10
Customer-Furnished Items 2.21(k)
Damages 6.1
DCAA 1997 Audit 6.1(e)
Debt Financing Commitments 3.10(a)
Deferred Consent 1.5
Designated Contracts 2.13(b)
Disclosure Schedule Article II
Dispute Notice 1.4(b)
EC III 10.10
EC III Loan 1.1(b)(viii)
EG&G Florida Introduction
Employee Benefit Plan 2.16(a)
Environment 2.17(a)(iii)
Environmental Law 2.17(a)(v)
Environmental Matters 2.17(a)(vi)
Equipment 1.1(a)(ii)
Equity Financing Commitment 3.10(b)
ERISA 2.16(a)
ERISA Affiliate 2.16(a)
ERP 10.6(d)(i)
Excluded Assets 1.1(b)
Excluded Liabilities 1.1(e)
Existing 401(k) Plan 10.6(c)
Facilities 1.1(a)(i)
FAR Introduction
Final Closing Working Capital Amount 1.4(b)
Final Closing Working Capital Statement 1.4(b)
Financial Statements 2.6
Governmental Entity 2.4(b)
Government Bid 1.6(a)(i)
Government Contracts Introduction
Handling 2.17(a)(ix)
Identified Claims 6.7(a)
Income Taxes 2.9(b)
Indebtedness 1.1(e)(iv)
Indemnified Party 6.3(a)
Indemnifying Party 6.3(a)
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Indirect Rates 10.7(a)
Information 10.1(a)
Intellectual Property 1.1(a)(vi)
Inventory 1.1(a)(iii)
▇▇▇▇▇▇▇ Business Introduction
L Street Office 1.1(a)(xii)
Leases 2.11
Material Intellectual Property 2.12(a)
Materials of Environmental Concern 2.17(a)(iv)
Most Recent Balance Sheet 2.8
Multiemployer Plan 10.6(h)
Neutral Accountants 1.4(c)
Noncompetition Party 10.2
Noncompetition Period 10.2
Novation 1.6(a)(i)
Novation Agreement 1.6(a)(i)
Novation Assets 1.6(b)
Novation Period 1.6(b)
Off-Site Liabilities 2.17(a)(vii)
Ordinary Course of Business 2.2
Participants 10.6(d)(i)
Party Preliminary Statement
Parties Preliminary Statement
Pay-Off Amount 10.10
PBGC 2.16(d)
Permits 2.19
Plan Year 10.6(h)(ii)
Pre-Closing Income Taxes 2.9(c)
Prepaid Assets 1.1(a)(ix)
PSV Policies 10.6(j)
Purchase Price 1.2(a)
Release 2.17(a)(ii)
Rules 2.17(a)(v)
SBU 10.7(a)(i)
Security Interest 2.2
Seller Preliminary Statement
Seller Responsible G&A Expenses 10.7(a)(ii)
SJ Litigation 6.1(c)
Subcontract Introduction
Subsidiaries Introduction
Taxes 2.9(a)
Tax Returns 2.9(d)
Technical Services Introduction
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Technical Services Business Introduction
Technical Services Employee 10.6(a)
Technical Services Properties 2.17(a)(viii)
Termination Date 7.1(d)
Third Party Government Contract Introduction
Trademark Assignment 1.1(c)(ii)
Transferred Employees 10.6(b)(i)
Tribunal 6.3(b)
TSB Material Adverse Effect 2.1(c)
TSB Plans 2.16(a)
TSB Policies 2.23
TSG 10.7(a)(ii)
U.S. GAAP 1.4(a)
United States Government Introduction
WARN 10.6(k)
Working Capital 1.4(a)
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of July
19, 1999, by and between EG&G, Inc., a Massachusetts corporation (the "Seller"),
and ETS Acquisition Corporation, a Delaware corporation (the "Buyer"). The
Seller and the Buyer are sometimes referred to herein individually as a "Party"
and together as the "Parties."
INTRODUCTION
1. The Seller and the Seller's direct and indirect subsidiaries listed
on Exhibit A (the "Subsidiaries" and, together with the Seller, the "Asset
Sellers") are engaged in the business of providing services to the United States
Government (as defined below) and other customers for projects in the areas of
base and range operations, sciences and engineering, logistics, asset management
and chemical demilitarization, which operations are reflected in the audited
Financial Statements referred to in Section 2.6 of this Agreement (the
"Technical Services") (such business, as conducted by the Asset Sellers, being
hereinafter referred to as the "Technical Services Business"); provided,
however, that the Technical Services Business shall not include the business
conducted by EG&G Florida, Inc. ("EG&G Florida") of providing services to the
National Aeronautics and Space Administration as to operations administered from
the ▇▇▇▇▇▇▇ Space Center (the "▇▇▇▇▇▇▇ Business").
2. The Buyer desires to purchase from the Asset Sellers and the Asset
Sellers desire to sell to the Buyer the assets of the Technical Services
Business (other than the assets excluded pursuant hereto), subject to the
assumption of related liabilities, upon the terms and subject to the conditions
set forth herein.
3. The Buyer desires the Asset Sellers' co-operation in the novation of
the Government Contracts. As used in this Agreement, "Government Contracts"
means any prime contract, basic ordering agreement, letter contract, purchase
order, joint venture or delivery order (including without limitation all
amendments, modifications and options thereunder) between any of the Asset
Sellers as prime contractors and the United States Government (as defined
below), which (a) relates to the Technical Services Business and (b) with
respect to assignment, is subject to 41 U.S.C. ss. 15, 31 U.S.C. ss. 3727 or
Federal Acquisition Regulation ("FAR") Subpart 42.12 and any similar statutes,
laws, rules and regulations (the "Anti-Assignment Laws"). As used in this
Agreement, "United States Government" means the United States Government and any
agency, authority, commission, department, division, branch or office thereof.
4. The Buyer desires the Asset Sellers' co-operation in obtaining any
Consent (as defined in Section 5.1(a)(i)) required in order for the Buyer to
replace any Asset Seller as a subcontractor, at any tier, under a contract
relating to the Technical Services Business between a third party prime
contractor or higher-tier subcontractor and the United States Government (a
"Third Party Government Contract"). As used in this Agreement, "Subcontract"
means any subcontract, basic ordering agreement, letter contract, purchase
order, joint venture or delivery
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order (including without limitation all amendments, modifications and options
thereunder) between any of the Asset Sellers and any third party prime
contractor or higher-tier subcontractor under any Third Party Government
Contract which relates to the Technical Services Business.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties agree as
follows:
ARTICLE I
ASSET PURCHASE
1.1 Purchase and Sale of Assets; Assumption of Liabilities.
(a) Transfer of Assets. Subject to the provisions of Section
1.1(b), on the basis of the representations, warranties, covenants and
agreements and subject to the satisfaction or waiver of the conditions set forth
in this Agreement, on the Closing Date the Asset Sellers shall sell, convey,
assign, transfer and deliver to the Buyer, and the Buyer shall purchase and
acquire from the Asset Sellers, all of the Asset Sellers' right, title and
interest in and to the assets, rights, properties, claims, contracts and
business of the Asset Sellers at the Closing Date of every kind, nature,
character and description, tangible and intangible, real, personal or mixed,
wherever located, which are utilized in the Technical Services Business (the
"Assets"), including without limitation the following, in each case (other than
in the case of subsections (i) and (ii) below) to the extent utilized in the
Technical Services Business:
(i) the leasehold interests of the Asset Sellers in the real
property described in Section 2.11 of the Disclosure Schedule (as defined
below) (the locations of such real property being referred to herein as the
"Facilities");
(ii) all equipment, furniture, furnishings, fixtures,
machinery, vehicles, tools and other tangible personal property pertaining to
the operation of and located at the Facilities (collectively, the "Equipment")
and all warranties and guarantees, if any, express or implied, existing for the
benefit of the Asset Sellers in connection with the Equipment;
(iii) all inventory of raw materials, work in process,
finished goods, office supplies, maintenance supplies and packaging materials
on hand at the Facilities, in transit or in the distribution system of the
Asset Sellers on the Closing Date, together with related spare parts, supplies
and promotional materials and inventory (the "Inventory");
(iv) all customer lists, vendor lists, catalogs, research
material, technical information, trade secrets, technology, know-how,
specifications, designs, drawings, processes and quality control data, if any;
(v) all contracts, maintenance and service agreements, joint
venture agreements, purchase commitments for materials and other services,
advertising and promotional
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agreements, leases (other than real property leases which are the subject of
Section 1.1(a)(i)), collective bargaining agreements and other agreements
(including without limitation any agreements of the Asset Sellers with
customers, suppliers, sales representatives, agents, personal property lessors,
personal property lessees, licensors, licensees, consignors and consignees
specified therein) (collectively, "Contracts"), whether or not entered into in
the ordinary course of the Technical Services Business, except for those
Contracts set forth on Schedule 1.1(a)(v);
(vi) all patents, patent registrations and patent
applications, trademarks, trademark registrations and trademark applications,
trade names, including without limitation the trade name "EG&G," together with
the goodwill associated therewith, copyrights, copyright applications and
copyright registrations (the "Intellectual Property"), including without
limitation all rights to ▇▇▇ for past infringement with respect thereto;
(vii) all licenses, permits or franchises issued by
any federal, state, municipal or foreign authority relating to the development,
use, maintenance or occupation of the Facilities or the operations of the
Technical Services Business, to the extent that such licenses, permits or
franchises are transferable;
(viii) all accounts receivable and other receivables
(whether or not billed);
(ix) except as set forth in Sections 1.1(b)(vii) and
1.1(b)(x), all rights to goods and services and all other economic benefits to
be received subsequent to the Closing Date arising out of prepayments and
payments by any of the Asset Sellers prior to the Closing Date, including
without limitation all claims, security deposits, prepayments, refunds, causes
of action, choses in action, rights of recovery, rights of setoff and rights of
recoupment and all rights under representations, guarantees and warranties made
by suppliers (collectively, the "Prepaid Assets");
(x) all books (other than stock record books), records,
accounts, ledgers, files, documents, correspondence, employment records,
studies, reports and other printed or written materials;
(xi) all goodwill; and
(xii) all assets of every kind, nature, character and
description (including without limitation all leasehold interests in real and
personal property located at or in the L Street Office (as defined below))
located at, or contained in, the Seller's offices located at ▇▇▇▇ ▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Columbia (the "L Street Office");
provided, however, that the transfer of each Government Contract, Government Bid
(as defined in Section 1.6(a)) and contract resulting from a Government Bid, and
any right, title and interest in or to any other Asset that is provided to an
Asset Seller by the United States Government, shall be transferred to the Buyer
subject to the procedures set forth in Section 1.6 and not
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pursuant to this Section 1.1(a). The Buyer hereby acknowledges and agrees that
the Assets do not include any Customer-Furnished Items (as defined in
Section 2.21(k)).
(b) Excluded Assets. It is expressly understood and agreed
that, notwithstanding anything to the contrary set forth herein, the Assets
shall not include the following (each, an "Excluded Asset"):
(i) all assets of the Asset Sellers (including without
limitation all rights, properties, claims, contracts, business, real property,
leasehold interests in real property, equipment, machinery, vehicles, tools
and other tangible personal property) that are not utilized in the Technical
Services Business;
(ii) the capital stock of (A) all Subsidiaries, (B) any other
subsidiaries of the Seller, and (C) any subsidiaries of the Subsidiaries or any
such other subsidiaries;
(iii) cash and cash equivalents or similar type investments,
bank accounts, certificates of deposit, Treasury bills and other marketable
securities (including without limitation money market investments and other
similar short-term investments) of the Asset Sellers;
(iv) each Asset Seller's right, title and interest in and to
the Contracts listed on Schedule 1.1(a)(v);
(v) subject to the provisions of Section 10.5(e), all rights
of any of the Asset Sellers to insurance policies, insurance claims, related
refunds and proceeds other than those relating exclusively to the Technical
Services Business;
(vi) the rights which accrue or will accrue to the Asset
Sellers under this Agreement;
(vii) all refunds of Pre-Closing Income Taxes (as defined in
Section 2.9) payable to any Asset Seller;
(viii) all assets of the Asset Sellers of every kind, nature,
character and description located at, or contained in, the Seller's offices
located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇;
(ix) all assets of EG&G Florida of every kind, nature,
character and description utilized in connection with EG&G Florida's operation
of the ▇▇▇▇▇▇▇ Business;
(x) all actions, claims, causes of action, rights of recovery,
choses in action and rights of setoff of any kind arising before, on or after
the Closing Date relating to the items set forth above in this Section 1.1(b)
or to any Excluded Liabilities (as defined in Section 1.1(e));
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(xi) subject to the provisions of Section 4.10, all
right, title and interest of each Asset Seller in the software and related
license and service agreements associated with the Asset Seller's electronic
mail, payroll and human resource/management information systems described in
Schedule 1.1(b)(xi);
(xii) all right, title and interest of each Asset Seller in
any corporate memberships not specifically related to the Technical Services
Business; and
(xiii) all right, title and interest of the Seller in the
amounts advanced by the Seller to EC III, Inc. (the "EC III Loan").
(c) Instruments of Conveyance and Transfer. On the Closing Date,
the Seller shall deliver or cause to be delivered to the Buyer:
(i) a ▇▇▇▇ of Sale in the form attached hereto as Exhibit B
(the "▇▇▇▇ of Sale");
(ii) a Trademark Assignment in the form attached hereto as
Exhibit C (the "Trademark Assignment"); and
(iii) such other deeds, bills of sale, endorsements,
consents, assignments and other good and sufficient instruments of conveyance
and assignment as the Parties and their respective counsel shall deem necessary
or appropriate or as may be required by the jurisdiction of organization of
each Asset Seller to vest in the Buyer all right, title and interest of the
Asset Sellers in and to the Assets.
(d) Assumed Liabilities. On the Closing Date, the Buyer shall
deliver to the Asset Sellers an undertaking (the "Assumption Agreement") in the
form attached hereto as Exhibit D, pursuant to which the Buyer, on and as of the
Closing Date, shall assume and agree to pay, perform and discharge when due,
upon the terms and subject to the conditions of this Agreement, all debts,
liabilities and obligations of the Asset Sellers whatsoever, other than Excluded
Liabilities (as defined in Section 1.1(e)), relating to the Technical Services
Business or the Assets, whether arising before or after the Closing Date,
including without limitation the following liabilities:
(i) all debts, liabilities and obligations relating to the
Technical Services Business or the Assets under the contracts, agreements,
commitments and leases transferred pursuant to Section 1.1(a)(v);
(ii) all debts, liabilities and obligations under the
licenses, permits and franchises transferred pursuant to 1.1(a)(vii); and
(iii) all debts, liabilities and obligations with
respect to all actions, suits, proceedings, disputes, claims or investigations
arising out of or related to the Technical Services Business or that otherwise
arise out of or are related to the Assets.
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The debts, liabilities and obligations assumed by the Buyer in accordance with
this Section 1.1(d) are sometimes hereinafter referred to collectively as the
"Assumed Liabilities."
(e) Excluded Liabilities. It is expressly understood and agreed
that, notwithstanding anything to the contrary in this Agreement, Assumed
Liabilities shall not include the following (collectively, the "Excluded
Liabilities"):
(i) all debts, liabilities and obligations of the Asset
Sellers arising out of or relating to the Excluded Assets, including without
limitation debts, liabilities and obligations under the Contracts set forth on
Schedule 1.1(a)(v);
(ii) all debts, liabilities and obligations of the Asset
Sellers that do not arise out of or are not related to the Technical Services
Business or that do not otherwise arise out of or are not otherwise related to
the Assets, including without limitation those arising out of or relating to
(A) the operation by the Seller's subsidiary of its former Department of
Energy operating unit and (B) the operation by EG&G Florida of the ▇▇▇▇▇▇▇
Business;
(iii) all debts, liabilities and obligations of the Asset
Sellers for costs and expenses incurred in connection with this Agreement or
the consummation of the transactions contemplated by this Agreement;
(iv) all debts, liabilities and obligations of the Asset
Sellers for Indebtedness (as defined below). For purposes of this Agreement,
"Indebtedness" means, as to an Asset Seller, (a) all recourse, nonrecourse,
secured or unsecured indebtedness, obligations or other liabilities of such
Asset Seller for borrowed money, (b) all indebtedness, obligations or other
liabilities of such Asset Seller for the payment of money evidenced by debt
securities or other similar instruments, (c) all reimbursement obligations and
other liabilities of such Asset Seller with respect to letters of credit or
banker's acceptances issued for such Asset Seller's account, (d) all
indebtedness, obligations or other liabilities of such Asset Seller or others
for the payment of money secured by a Security Interest on any asset of
such Asset Seller, whether or not such indebtedness, obligations or liabilities
are assumed by, or are a personal liability of, such Asset Seller, (e) all
obligations or exposure of such Asset Seller under any interest rate protection
and/or other derivative products and take-out commitments, (f) all capitalized
lease obligations of such Asset Seller, (g) all obligations of such Asset Seller
for deferred purchase prices of property, and (h) all guaranties of the
foregoing;
(v) all debts, liabilities and obligations which accrue or
will accrue to the Asset Sellers under this Agreement; and
(vi) all debts, liabilities and obligations of the Asset
Sellers to Technical Service Employees for workers compensation claims with
respect to events occurring on or prior to the Closing Date.
1.2 Purchase Price and Related Matters.
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(a) Purchase Price. Subject to the terms and conditions of
this Agreement, including without limitation the provisions of Sections 1.5 and
1.6, the Buyer shall on the Closing Date assume the Assumed Liabilities as
provided in Section 1.1(d) hereof and shall pay to the Seller in immediately
available funds U.S. $247,100,000 (the "Purchase Price"), of which (a)
$245,000,000 shall be paid on the Closing Date and (b) $2,100,000 shall be paid
on the seventh anniversary of the Closing Date. The Parties acknowledge and
agree that $8,000,000 of the Purchase Price represents a non-accountable
reimbursement evidencing an estimate of the costs to be incurred by the Asset
Sellers in replacing the Corporate Name (as such term is defined in Section
10.9).
(b) Allocation. As soon as practicable following the
determination of the Adjusted Purchase Price (as defined in Section 1.4(h)), the
Seller and the Buyer shall jointly prepare an allocation schedule (the "Asset
Allocation Schedule") allocating the Adjusted Purchase Price in accordance with
the fair market value of the Assets, as determined mutually by the Seller and
the Buyer, which shall allocate the Adjusted Purchase Price among the Assets of
the Asset Sellers and the covenant not to compete set forth in Section 10.2 as
of the Closing Date. The Asset Allocation Schedule will be prepared in
accordance with the rules under Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code"), and the Treasury Regulations promulgated
thereunder. If the Seller and the Buyer disagree as to the calculation of the
Asset Allocation Schedule, or as to the application or interpretation of any
provision under this Section 1.2(b), the Seller and the Buyer shall cooperate in
good faith to resolve any such dispute. If the Seller and the Buyer are unable
to resolve any such dispute within fifteen Business Days (as defined in Section
1.4(g)) thereafter, such dispute shall be resolved by arbitration in accordance
with the procedures set forth in Section 11.14 of this Agreement. The parties
recognize that the Purchase Price and the Adjusted Purchase Price do not include
the Buyer's acquisition expenses and that the Buyer will allocate such expenses
appropriately. The Seller and the Buyer agree to act in accordance with the
computations and allocations contained in the Asset Allocation Schedule in any
relevant Tax Returns or filings (including without limitation any forms or
reports required to be filed pursuant to Section 1060 of the Code, the Treasury
Regulations promulgated thereunder or any provisions of local, state and foreign
law ("1060 Forms")), and to cooperate in the preparation of any 1060 Forms and
to file such 1060 Forms in the manner required by applicable law.
1.3 The Closing.
(a) Time and Location. The closing of the transactions
contemplated by this Agreement ("Closing") shall take place at the offices of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ in New York, New York, commencing at 10:00 a.m., local time, on
August 9, 1999, or, if all of the conditions to the obligations of the Parties
to consummate the transactions contemplated hereby (other than conditions
relating to the delivery of certificates, instruments and documents at Closing)
have not been satisfied in full or waived by such date, on such mutually
agreeable later date as soon as practicable (but in no event more than three
Business Days) after the date on which all such conditions to the obligations of
the Parties to consummate the transactions contemplated have first been
satisfied or waived (the "Closing Date").
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(b) Actions at the Closing.
At the Closing:
(i) the Seller shall deliver (or cause to be delivered) to the
Buyer the various certificates, instruments and documents required to be
delivered under Section 5.1;
(ii) the Buyer shall deliver (or cause to be delivered) to
the Seller the various certificates, instruments and documents required to be
delivered under Section 5.2;
(iii) the Seller shall deliver (or cause to be delivered) to
the Buyer an executed ▇▇▇▇ of Sale, an executed Trademark Assignment and such
other deeds, bills of sale, endorsements, consents, assignments and other good
and sufficient instruments of conveyance and assignment as the Parties and their
respective counsel shall deem necessary or appropriate or as may be required by
the jurisdiction of organization of each Asset Seller to vest in the Buyer all
right, title and interest of the Asset Sellers in and to the Assets;
(iv) the Buyer shall deliver to the Seller an executed
Assumption Agreement;
(v) the Buyer shall deliver to the Seller the Purchase Price
by wire transfer of immediately available funds into an account or accounts
designated by the Seller;
(vi) the Asset Sellers shall deliver to the Buyer, or
otherwise put the Buyer in possession and control of, all of the Assets of a
tangible nature; and
(vii) the Buyer and the Seller shall execute and deliver to
each other a cross-receipt evidencing the transactions referred to above.
1.4 Post-Closing Adjustment. The Purchase Price shall be subject to
adjustment after the Closing Date as follows:
(a) Within 45 days after the Closing Date, the Seller shall
prepare and deliver to the Buyer a statement (the "Closing Working Capital
Statement") calculating the Working Capital (as defined below) of the Technical
Services Business as of the Closing Date (the "Closing Working Capital Amount").
The Closing Working Capital Statement shall be audited by the Boston,
Massachusetts office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent accountants for the
Seller. The cost of such audit shall be shared equally by the Buyer and the
Seller. For purposes of this Agreement, "Working Capital" is defined in Schedule
1.4(a) and shall be calculated in accordance with United States generally
accepted accounting principles ("U.S. GAAP") and on a basis consistent with the
accounting methods, treatments, principles and procedures used in the
preparation of the Financial Statements referred to in Section 2.6 of this
Agreement for the fiscal year ended January 3, 1999.
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(b) If the Buyer in good faith disputes the Closing Working
Capital Amount as shown on the Closing Working Capital Statement prepared by the
Seller, the Buyer shall deliver to the Seller within 30 days after receiving the
Closing Working Capital Statement a statement (the "Dispute Notice") setting
forth what the Buyer believes is the correct Closing Working Capital Amount and
describing the basis for the determination of such different Closing Working
Capital Amount. The Parties shall use reasonable efforts to resolve such
differences regarding the determination of the Closing Working Capital Amount
for a period of 30 days after the Buyer has given the Dispute Notice. If the
Parties resolve such differences, the Closing Working Capital Amount agreed to
by the Parties shall be deemed to be the "Final Closing Working Capital Amount"
and the Closing Working Capital Statement agreed to by the Parties shall be
deemed to be the "Final Closing Working Capital Statement."
(c) If the Parties do not reach a final resolution within 30
days after the Buyer has given the Dispute Notice, unless the Parties mutually
agree to continue their efforts to resolve such differences, KPMG Peat Marwick
LLP (the "Neutral Accountants") shall resolve such differences in the manner
provided below. The Parties shall each be entitled to make a presentation to the
Neutral Accountants, pursuant to procedures to be agreed to among the Seller,
the Buyer and the Neutral Accountants, advocating the merits of the Closing
Working Capital Amount espoused by such Party; and the Neutral Accountants shall
be required to resolve the differences between the Parties and determine the
Closing Working Capital Amount within ten Business Days thereafter. The Closing
Working Capital Amount determined by the Neutral Accountants shall be deemed to
be the Final Closing Working Capital Amount and the Closing Working Capital
Statement, as adjusted to reflect such determination, shall be deemed to be the
Final Closing Working Capital Statement. Such determination by the Neutral
Accountants shall be conclusive and binding upon the Parties, absent fraud or
manifest error.
(d) Nothing herein shall be construed to authorize or permit
the Neutral Accountants to:
(i) determine any questions or matters whatsoever under or in
connection with this Agreement except for the resolution of differences between
the Parties regarding the determination of the Closing Working Capital Amount;
(ii) resolve any such differences by making an adjustment to
the Closing Working Capital Statement that is outside of the range defined by
amounts as finally proposed by the Parties; or
(iii) apply any accounting methods, treatments, principles or
procedures other than as described in Section 1.4(a).
(e) The Seller, on the one hand, and the Buyer, on the other
hand, shall share equally the fees and expenses of the Neutral Accountants;
provided that if the Neutral Accountants determine that one Party has adopted a
position or positions with respect to the Closing Working Capital Statement that
is frivolous or clearly without merit, the Neutral
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Accountants may, in their discretion, assign a greater portion of any such fees
and expenses to such Party.
(f) Failure of the Buyer to deliver a Dispute Notice within 30
days after receiving the Closing Working Capital Statement shall constitute
acceptance of the Closing Working Capital Amount set forth on the Closing
Working Capital Statement, whereupon such Closing Working Capital Amount shall
be deemed to be the Final Closing Working Capital Amount and the Closing Working
Capital Statement shall be deemed to be the Final Closing Working Capital
Statement. Delivery by the Buyer of a Dispute Notice shall constitute final and
binding acceptance by the Buyer of all portions of the Closing Working Capital
Statement other than those specifically identified in the Dispute Notice as
being subject to a good faith dispute.
(g) If the Final Closing Working Capital Amount is less than
the Reference Working Capital Amount (as such term is defined in Schedule
1.4(a)), then the Seller shall pay to the Buyer an amount equal to the
difference between the Reference Working Capital Amount and the Final Closing
Working Capital Amount, plus interest on such difference from the Closing Date
at the rate of 8% per annum. If the Final Closing Working Capital Amount is more
than the Reference Working Capital Amount, then the Buyer shall pay to the
Seller an amount equal to the difference between the Final Closing Working
Capital Amount and the Reference Working Capital Amount, plus interest on such
difference from the Closing Date at the rate of 8% per annum. Any payment
pursuant to this Section 1.4(g) shall be made by wire transfer or other delivery
of immediately available funds, within five Business Days after the date on
which the Final Closing Working Capital Amount is determined pursuant to this
Section 1.4, to an account or accounts designated by the receiving Party. For
purposes of this Agreement, "Business Day" shall mean any day other than a
Saturday or Sunday or a day on which banking institutions located in New York,
New York are permitted or required by law, executive order or governmental
decree to remain closed.
(h) For purposes of this Agreement, "Adjusted Purchase Price"
means the Purchase Price plus, if applicable, the amount of the payment required
to be made by the Buyer to the Seller pursuant to the second sentence of Section
1.4(g) or minus, if applicable, the amount of the payment required to be made by
the Seller to the Buyer pursuant to the first sentence of Section 1.4(g).
1.5 Consents to Assignment. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign or
transfer any Contract, Lease (as defined in Section 2.11), authorization,
license or permit, or any claim, right or benefit arising thereunder or
resulting therefrom, if an attempted assignment or transfer thereof, without the
consent of a third party thereto or of the issuing Governmental Entity, as the
case may be, would constitute a breach thereof or in any way adversely affect
the rights of the Buyer thereunder. If such consent (a "Deferred Consent") is
not obtained, or if an attempted assignment or transfer thereof would be
ineffective or would affect the rights thereunder so that the Buyer would not
receive all such rights, then (i) the Seller and the Buyer will cooperate, in
all reasonable respects, to obtain such Deferred Consent as soon as practicable,
provided that no
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Asset Seller shall be required to make any payments (other than payments of de
minimis amounts) or agree to any material undertakings in connection therewith,
and (ii) until such Deferred Consent is obtained, the Seller and the Buyer will
cooperate, in all reasonable respects, to provide to the Buyer the benefits
under the Contract, Lease, authorization, license or permit to which such
Deferred Consent relates (with the Buyer responsible for all the liabilities
and obligations thereunder). In particular, in the event that any such Deferred
Consent is not obtained prior to Closing, then the Buyer and the Seller shall
enter into such arrangements (including subleasing or subcontracting if
permitted) to provide to the Parties the economic and operational equivalent of
obtaining such Deferred Consent and assigning or transfering such Contract,
Lease, authorization, license or permit, including enforcement for the benefit
of the Buyer of all claims or rights arising thereunder, and the performance by
the Buyer of the obligations thereunder on a prompt and punctual basis.
1.6 Novation of Government Contracts.
(a) (i) Notwithstanding anything to the contrary in this
Agreement, and subject to the terms of this Section 1.6, this Agreement shall
not constitute an agreement to assign any (A) Government Contract, (B) any bid
or offer made by an Asset Seller in respect of, or in connection with, entering
into any Government Contract, which bid or offer is outstanding or pending
approval on the Closing Date (a "Government Bid") or (C) any contract resulting
from a Government Bid, or any rights thereunder, to the extent prohibited by the
Anti-Assignment Laws. Prior to the Closing, the Seller shall prepare and
complete (with the Buyer's assistance) a written request (including, among other
things, a novation agreement in form and substance reasonably satisfactory to
each of the Buyer and the Seller (the "Novation Agreement")) for the novation of
each such Government Contract, Government Bid and contract resulting from a
Government Bid meeting the requirements of FAR Part 42 (the "Novation"). Such
request shall be submitted by the Asset Sellers, immediately after the Closing,
to the cognizant authority representing the United States Government.
(ii) To the extent it is not possible for all Government
Contracts, Government Bids, contracts resulting from Government Bids and other
Assets referred to in clause (i) above to be novated to the Buyer pursuant to a
single Novation Agreement as contemplated by clause (i) the Buyer and the Seller
agree:
(A) to continue to comply with all of the terms and
conditions of this Section 1.6 with respect to such
non-novated Government Contracts, Government Bids and
contracts resulting from Government Bids or other
Assets, including without limitation the preparation,
completion, execution and submission to the United
States Government of one or more additional Novation
Agreements in respect of such Assets; and
(B) that for all purposes of this Agreement, the term (I)
"Novation Agreement" as used herein shall include any
and all additional Novation Agreements, (II) "Novation
Asset" as used herein shall include any and all
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Government Contracts, Government Bids, contracts resulting
from Government Bids and other Assets which are the
subject of, and are novated to the Buyer pursuant to, any
additional Novation Agreements, (III) "Novation" as used
herein shall include the novation to the Buyer of any
Novation Assets pursuant to any additional Novation
Agreements and (IV) "Novation Period" as used herein shall
include the Novation Periods for all Novation Assets which
are the subject of any additional Novation Agreements, in
each case, as the context requires.
(iii) The Parties shall reasonably cooperate with each other
and with the cognizant authority representing the United States Government in
connection with the obtaining of the Novation, the prosecution of any Government
Bids and the performance during the Novation Period of the Government Contracts;
provided that no Asset Seller shall be required to make any payments (other than
payments of de minimis amounts) or agree to any material undertakings in
connection therewith. In connection therewith, the Parties agree to seek to (A)
include in the Novation Agreement a provision releasing each Asset Seller from
any obligation relating to work performed pursuant to any modifications or
amendments to the Government Contracts, Government Bids and contracts resulting
from Government Bids that are the subject of the Novation Agreement and (B)
obtain a waiver of any requirement that all or any of the Asset Sellers
guarantee the Buyer's payment obligations under, or performance on, any
Government Contract, Government Bid or contract resulting from a Government Bid
from and after the effective date of the Novation Agreement; provided, however,
that the Parties will proceed to obtain the Novation whether or not such
provisions can be included.
(b) During the period from the Closing to the date on which
all Assets and each Government Contract, Government Bid and Government Contract
resulting from a Government Bid subject to the Novation Agreement ("Novation
Assets") are novated in accordance with the terms and conditions of Section 1.6
hereof (the "Novation Period") and except as otherwise required by the
Anti-Assignment Laws: (i) the applicable Asset Seller shall remain the prime
contractor to the United States Government with respect to such Novation Assets
and (ii) all gains, income, losses, Taxes or other benefits and liabilities
arising out of such Novation Assets shall be for the Buyer's account.
(c) During the Novation Period, the Buyer shall make
available, at its expense, the services of any employees of the Buyer, including
appropriate Transferred Employees (as defined in Section 10.6(b)), and all
Assets reasonably required to enable performance under the Novation Assets.
(d) During the Novation Period, the Asset Sellers will
reasonably cooperate with the Buyer to implement any modification of any
Government Contract, Government Bid or contract resulting from a Government Bid
included in the Assets which the Buyer and the United States Government desire
to implement. In the event that the final Novation Agreement approved by the
United States Government does not include the provisions described in clause (A)
of Section 1.6(a)(iii), then the Buyer shall provide the Seller with prompt
notice of (and prior
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notice to the extent reasonably practicable), and copies of all relevant
documents relating to, any proposals for equitable adjustments to the price or
schedule and any modifications or amendments of any Government Contract,
Government Bid or contract resulting from a Government Bid included in the
Assets which, in either case, would result in a material increase in the
liability or potential liability of any Asset Seller thereunder to the extent
such disclosure is not prohibited under applicable law and the terms of the
applicable Government Contracts and Government Bids (it being agreed that the
Buyer will not seek to impose any such prohibitions unless requested to do so by
the United States Government).
(e) The Asset Sellers and the Buyer shall cooperate in
accomplishing any certification obligations that may be required under the
Contract Disputes Act, 41 U.S.C. ss. 601, et seq., the Truth in Negotiations
Act, 10 U.S.C. ss. 2306a and 41 U.S.C. ss. 254b, and any other statutory
provisions or implementing regulations applicable to proposals, contract
modifications, equitable adjustments, or claims on any Government Contract,
Government Bid or contract resulting from a Government Bid included in the
Assets and involving matters predating the effective date of the Novation
Agreement contemplated by this Section 1.6.
1.7 Further Assurances. At any time and from time to time after the
Closing Date, as and when requested by any Party hereto and at such Party's
expense, the other Party shall (and, in the case of the Seller, shall cause the
appropriate Subsidiary or Subsidiaries to) promptly execute and deliver, or
cause to be executed and delivered, all such documents, instruments and
certificates and shall take, or cause to be taken, all such further or other
actions as are necessary to evidence and effectuate the transactions
contemplated by this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in the disclosure schedule attached hereto (the
"Disclosure Schedule"), the Seller represents and warrants to the Buyer as of
the date hereof as follows. The Disclosure Schedule shall be arranged in
sections corresponding to the sections contained in this Article II, and the
disclosures in any section of the Disclosure Schedule shall qualify only (a) the
corresponding section of this Article II and (b) other sections of this Article
II to the extent it is clear (notwithstanding the absence of a specific cross
reference) from a reading of the disclosure that such disclosure is applicable
to such other sections.
2.1 Organization, Qualification and Corporate Power.
(a) Seller. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and is duly qualified to conduct business under the laws of each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification necessary, except
for any such failures to be qualified that would not reasonably be expected to
have a TSB Material Adverse Effect (as defined below). The Seller has all
requisite corporate power and authority to
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carry on the business in which it is now engaged and to own and use the
properties now owned and used by it. The Disclosure Schedule sets forth a list
of each jurisdiction where the Seller is qualified to conduct business as a
foreign corporation in connection with the Technical Services Business. The
Seller has previously provided or made available to the Buyer a true and
correct copy of the Articles of Organization and By-Laws of the Seller, each as
amended or restated as of the date of this Agreement.
(b) Subsidiaries. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization and is duly qualified to conduct
business under the laws of each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification necessary, except for any such failures to be qualified that
would not reasonably be expected to have a TSB Material Adverse Effect. Each
Subsidiary has all requisite corporate power and authority to carry on the
business in which it is now engaged and to own and use the properties now owned
and used by it.
(c) For purposes of this Agreement, "TSB Material Adverse Effect"
means any change, effect or circumstance that:
(i) is materially adverse to the assets, business, financial
condition or results of operations of the Technical Services Business (other
than changes that are the result of economic factors affecting the economy as a
whole or changes that are the result of factors generally affecting the industry
or specific markets in which the Technical Services Business competes); or
(ii) materially impairs the ability of the Seller to
consummate any of the transactions contemplated by this Agreement;
provided, however, that a "TSB Material Adverse Effect" shall not include any
adverse change, effect or circumstance:
(A) arising out of or resulting from the failure to obtain
the Novation of any Government Contract, Government Bid
or contract resulting from a Government Bid; or
(B) that is primarily attributable to the identity of the
Buyer as the acquiror of the Technical Services Business
in connection with the transactions contemplated by this
Agreement.
2.2 Title to Property. The Asset Sellers have good title to, or a valid
and binding leasehold interest in, the property included in the Assets, free and
clear of any Security Interests. Upon execution and delivery by the Asset
Sellers to the Buyer of the instruments of conveyance referred to in Section
1.1(c), the Buyer will become the true and lawful owner of, and will receive
good title to, the Assets, free and clear of all Security Interests (other than
Security Interests imposed by or as a result of actions of the Buyer). For
purposes of this Agreement,
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"Security Interest" means any mortgage, pledge, security interest, encumbrance,
charge or other lien (whether arising by contract or by operation of law),
other than (a) mechanic's, materialmen's and similar liens for amounts incurred
in the ordinary course of business consistent with past custom and practice of
the Technical Services Business ("Ordinary Course of Business") which are not
past due or which are being contested by appropriate proceedings, (b) liens
arising under worker's compensation, unemployment insurance, social security,
retirement and similar legislation for amounts incurred in the Ordinary Course
of Business which are not past due or which are being contested by appropriate
proceedings, (c) liens on goods in transit incurred pursuant to documentary
letters of credit, in each case arising, in the Ordinary Course of Business or
(d) any liens arising under any Government Contract.
2.3 Authority. Each Asset Seller has all requisite corporate power and
authority to perform its obligations hereunder and under the ▇▇▇▇ of Sale, the
Trademark Assignment and the Assumption Agreement (the "Ancillary Agreements").
The Seller has the requisite corporate power and authority to execute and
deliver this Agreement and each of the Ancillary Agreements and each Asset
Seller has the requisite corporate power and authority to execute and deliver
the Ancillary Agreements to which it is a party. The execution and delivery by
the Seller of this Agreement and the execution and delivery by each of the Asset
Sellers of each such Ancillary Agreement and the performance of this Agreement
and each such Ancillary Agreement by each Asset Seller, and the consummation by
each Asset Seller of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary corporate action on the part of
each Asset Seller. This Agreement has been duly and validly executed and
delivered by the Seller and, assuming this Agreement constitutes the valid and
binding agreement of the Buyer, constitutes a valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms (except
as the foregoing may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally and by equitable principles, including without
limitation those limiting the availability of specific performance, injunctive
relief and other equitable remedies and those providing for equitable defenses).
2.4 Noncontravention. Subject to compliance with the applicable
requirements of the Anti-Assignment Laws, and assuming the accuracy of the
representations and warranties of the Buyer set forth in Section 3.11, neither
the execution and delivery of this Agreement by the Seller, nor the consummation
by the Asset Sellers of the transactions contemplated hereby, will:
(a) conflict with or violate any provision of the charter or
bylaws of any Asset Seller;
(b) require on the part of any Asset Seller any material filing
with, or any material permit, authorization, consent or approval of, any court,
arbitration tribunal, administrative agency or commission or other governmental
or regulatory authority or agency (a "Governmental Entity");
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(c) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any material
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other material arrangement to which any Asset Seller is a party or
by which any Asset Seller is bound or to which any of their respective assets is
subject;
(d) result in the imposition of any Security Interest upon the
Assets; or
(e) violate any order, writ, injunction or decree, or any
material statute, rule or regulation, applicable to any Asset Seller or any of
their respective properties or assets.
2.5 Investments in Other Entities. The Disclosure Schedule lists all
direct and indirect ownership interests and equity participations of any Asset
Seller in any corporation, limited liability company, partnership, joint
venture, trust or other business association (other than in a Subsidiary, or
money market or other similar short-term investments) relating to the Technical
Services Business.
2.6 Financial Statements. The Seller has provided to the Buyer copies
of (a) the audited combined balance sheet and combined statements of operations
and cash flows of the Technical Services Business as of and for each of the two
fiscal years in the period ended January 3, 1999 and (b) the unaudited combined
balance sheet and combined statements of operations and cash flows of the
Technical Services Business as of and for the six-month period ended July 4,
1999 (collectively, the "Financial Statements"). Except as disclosed in the
notes thereto, such Financial Statements have been prepared in accordance with
the books and records of the Asset Sellers and U.S. GAAP consistently applied
throughout the periods covered thereby and fairly present, in all material
respects, the combined financial condition and combined results of operations
and cash flows of the Technical Services Business as of the dates thereof and
for the periods referred to therein; provided, however, that the Financial
Statements referred to in clause (b) above are subject to year-end adjustments,
do not include footnotes and do not include allocations of corporate expenses
that are made on a periodic basis.
2.7 Absence of Certain Changes. Except in connection with or as a
result of the transactions contemplated by this Agreement, since January 3,
1999, there have not been any adverse changes in the financial condition or
results of operations of the Technical Services Business reasonably expected to
have a TSB Material Adverse Effect. Except as contemplated by this Agreement
(including without limitation those matters contemplated by Section 4.4 of this
Agreement), since January 3, 1999, the Technical Services Business, taken as a
whole, has not taken any of the following actions (or permitted any of the
following events to occur):
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(a) subjected to any Security Interest any Asset, except liens
for current Taxes (as defined in Section 2.9) not yet due and payable and liens
for Taxes that are being contested in good faith;
(b) sold, assigned or transferred any portion of the assets of
the Technical Services Business in a single transaction or series of related
transactions in an amount in excess of $100,000;
(c) suffered any extraordinary losses (whether or not covered
by insurance) material to the Technical Services Business, or waived any rights
of material value to the Technical Services Business;
(d) waived any material rights under, amended in any material
respect, terminated prior to scheduled expiration or canceled any material
Government Contract or relinquished any material rights thereunder;
(e) granted any rights to severance benefits, "stay pay" or
termination pay to any officer or other employee of the Technical Services
Business or increased benefits payable or potentially payable to any such
officer or other employee of the Technical Services Business under any
previously existing severance benefits, "stay-pay" or termination pay
arrangements (in each case, other than grants or increases that are
substantially consistent with the past practice of the Technical Services
Business);
(f) made any capital expenditures or commitments therefor in an
amount in excess of $1,000,000 in the aggregate;
(g) acquired any entity or business (whether by the acquisition
of stock, the acquisition of assets, merger or otherwise);
(h) entered into any written employment agreement (other than
agreements providing for employment at will), or any amendment to any such
existing agreement, with, or materially increased the compensation of, any
officer or other employee of the Technical Services Business whose annual cash
compensation exceeds $100,000;
(i) materially amended the terms of any existing TSB Plan (as
defined in Section 2.16) except as may be required by applicable law;
(j) materially changed its accounting principles, methods or
practices or the manner it keeps its books and records, except in each case to
conform to changes in U.S. GAAP; or
(k) entered into any agreement with respect to any of the matters
referred to in paragraphs (a) through (i) of this Section 2.7.
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2.8 Undisclosed Liabilities. The Technical Services Business does not
have any liability of a nature which is material to the Technical Services
Business and required by U.S. GAAP to be shown on a balance sheet (whether
absolute or contingent, liquidated or unliquidated or due or to become due),
except for (a) liabilities reflected or reserved for on the balance sheet dated
as of January 3, 1999 referred to in Section 2.6 (the "Most Recent Balance
Sheet") and (b) liabilities which have arisen since January 3, 1999 in the
Ordinary Course of Business which, in the aggregate, would not have a TSB
Material Adverse Effect.
2.9 Tax Matters. Each Asset Seller has filed all material Tax Returns
(as defined below) that it was required to file and all such Tax Returns were
correct and complete, except for any error or omission that would not reasonably
be expected to have a TSB Material Adverse Effect. Each Asset Seller has paid
all Taxes (as defined below) that are shown to be due on any such Tax Returns.
All material Taxes that any of the Asset Sellers is or was required by law to
withhold or collect relating to the Technical Services Business have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Entity. None of the Asset Sellers is a "foreign person" within the
meaning of Section 1445 of the Code. For purposes of this Agreement:
(a) "Taxes" means all taxes, including without limitation
income, gross receipts, ad valorem, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment and franchise taxes and
duties or other taxes, fee assessments or charges of any kind whatsoever imposed
by the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or any
such government, and any interest, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof;
(b) "Income Taxes" means all Taxes that are imposed on or
measured by income;
(c) "Pre-Closing Income Taxes" means all Income Taxes for Tax
periods (or portions thereof) ending on or before the Closing Date; and
(d) "Tax Returns" means all reports, returns, declarations,
statements, forms or other information required to be supplied to a taxing
authority in connection with Taxes.
2.10 Tangible Personal Property. The Asset Sellers have good title to
all of the material tangible personal property reflected on the Most Recent
Balance Sheet (other than property sold, consumed or otherwise disposed of in
the Ordinary Course of Business since the date of the Most Recent Balance
Sheet), free and clear of all Security Interests, except for liens for Taxes not
yet due and payable or due but not delinquent or being contested in good faith
by appropriate proceedings. Such items of tangible personal property, taken as a
whole, (a) are in good operating condition and repair (normal wear and tear
excepted) and (b) are suitable for the purposes for which they are presently
used.
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2.11 Owned and Leased Real Property. The Assets do not include any real
property. The Disclosure Schedule lists all real property leased or subleased to
each Asset Seller which is utilized in the Technical Services Business. The
Seller has made available to the Buyer correct and complete copies of the leases
and subleases (as amended to date) listed therein (the "Leases"). With respect
to each such Lease, except as would not reasonably be expected to have a TSB
Material Adverse Effect or materially impair the Technical Services Business'
ability to occupy or use the property subject to such Lease in a manner
consistent with current usage:
(a) the Lease is a legal, valid, binding and enforceable
obligation of the Asset Seller which is a party to such Lease and, to the
Seller's knowledge, of each other party to such Lease, except as the foregoing
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and by equitable principles, including without limitation
those limiting the availability of specific performance, injunctive relief and
other equitable remedies and those providing for equitable defenses;
(b) neither an Asset Seller nor, to the Seller's knowledge,
any other party to the Lease is in breach or default, and, to the Seller's
knowledge, no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or
acceleration thereunder;
(c) to the Seller's knowledge, there are no disputes, oral
agreements or forbearance programs in effect as to the Lease;
(d) no Asset Seller has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in a leasehold or
subleasehold subject to the Lease;
(e) to the Seller's knowledge, there are no pending or overtly
threatened condemnation proceedings, lawsuits or administrative actions with
respect to the property subject to the Lease; and
(f) the applicable Asset Seller has quiet enjoyment of the
Facility which is the subject of the Lease.
2.12 Intellectual Property.
(a) The Disclosure Schedule lists all Intellectual Property
that is material to the Technical Services Business (the "Material Intellectual
Property"). To the Seller's knowledge, an Asset Seller owns, or is licensed or
otherwise possesses valid rights to use, the Material Intellectual Property.
(b) No Asset Seller has been named in any suit, action or
proceeding which involves a claim of infringement of any patents, trademarks,
trade names, service marks or copyrights of any third party. To the Seller's
knowledge, the Technical Services Business as
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presently conducted does not infringe any valid patents, trademarks, trade
names, service marks or copyrights of any third party.
(c) Each Asset Seller has performed in all material respects
the obligations required to be performed by it under the terms of any agreement
pursuant to which such Asset Seller has rights in any Material Intellectual
Property, and no Asset Seller or, to the knowledge of the Seller, any third
party is in default in any material respect under any such agreement.
(d) None of the Asset Sellers or any of their respective
affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934
("Affiliates")) has granted to any third party any license or right to the
commercial use of any of the Material Intellectual Property.
(e) The Asset Sellers have conducted a review of the material
software used in the Technical Services Business for purposes of identifying
"year 2000" issues. The Disclosure Schedule sets forth a summary of the results
of such review.
2.13 Contracts.
(a) Except for Government Contracts, no Asset Seller is, with
respect to the Technical Services Business, a party to, and the Assets do not
include, any:
(i) agreement (or group of related agreements with the same
person or such person's Affiliates) for the lease of personal property from or
to third parties providing for lease payments the remaining unpaid balance of
which, as of the date of this Agreement, is in excess of $250,000;
(ii) agreement (or group of related agreements with the same
person or such person's Affiliates) for the purchase or sale of products or
services (including without limitation consulting and advisory services but
excluding the services of attorneys and accountants), under which the
undelivered balance for such products and services, as of the date of this
Agreement, is in excess of $250,000, other than purchase orders relating to the
supply of goods and services to the Technical Services Business in the
Ordinary Course of Business;
(iii) agreement establishing a partnership or joint venture;
(iv) agreement (or group of related agreements with the same
person or such person's Affiliates) under which it has created, incurred,
assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness
(including without limitation capitalized lease obligations) the outstanding
amount of which is more than $100,000 or under which it has imposed (or may
impose) a Security Interest on any Asset;
(v) agreement that prohibits the Technical Services Business
from freely engaging in business anywhere in the world;
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(vi) agreement under which the consequences of a default or
termination would reasonably be expected to have a TSB Material Adverse Effect;
(vii) written agreement for the employment of any
individual on a full-time or part-time basis;
(viii) severance, "stay pay" or termination agreement
with any officer or other employee of the Technical
Services Business;
(ix) agreement for the sale of any assets or
properties of an Asset Seller, other than goods and
services in the Ordinary Course of Business;
(x) agreement for the acquisition by any Asset Seller of any
operating business or the capital stock of any other person;
(xi) agreement relating to any obligation, covenant or
indemnity of any Asset Seller with respect to which such Asset Seller is a
guarantor or surety or has provided any letter of comfort, letter of credit,
surety bond or other similar assurance to any third party;
(xii) agreement involving the licensing of, or assignment or
transfer of, any rights in Material Intellectual Property; and
(xiii) other agreement (or group of related agreements with
the same person or such person's Affiliates) involving payments to be made or
received after the date of this Agreement in excess of $250,000;
provided, however, that Leases are not required to be disclosed in response to
any provision of this Section 2.13 and shall not constitute Designated Contracts
(as defined below).
(b) The Seller has made available to the Buyer a correct and
complete copy of each agreement (as amended to date) listed in Section 2.13 of
the Disclosure Schedule (the "Designated Contracts"). Each material Designated
Contract is a legal, valid, binding and enforceable obligation of the Asset
Seller which is a party thereto, and, to the Seller's knowledge, of each other
party thereto (except as the foregoing may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws relating
to or affecting the rights of creditors generally and by equitable principles,
including without limitation those limiting the availability of specific
performance, injunctive relief and other equitable remedies and those providing
for equitable defenses), and there exists no material defaults of any Asset
Seller or, to the Seller's knowledge, any other party thereto under any such
Designated Contract. As of the date of this Agreement, no Asset Seller has
received written notice that any party to a Designated Contract intends to
terminate the Designated Contract to which it is a party.
2.14 Litigation. The Disclosure Schedule lists, as of the date of this
Agreement, each (a) judgment, order, decree, stipulation or injunction binding
upon any Asset Seller or its
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property or business and relating to the Technical Services Business, and (b)
claim, complaint, action, suit, proceeding, hearing or investigation relating
to the Technical Services Business of or in any Governmental Entity or before
any arbitrator to which any Asset Seller is a party or, to the Seller's
knowledge, which has been overtly threatened against any Asset Seller that (i)
involves a claimed amount equal to or greater than $250,000, (ii) would
reasonably be expected to result in the payment of Damages in an amount equal
to or greater than $250,000, or (iii) seeks injunctive relief. No litigation
listed on the Disclosure Schedule pursuant to this Section 2.14 would
reasonably be expected to result in a TSB Material Adverse Effect.
2.15 Labor Matters. The Disclosure Schedule sets forth a list of all
collective bargaining agreements to which any of the Asset Sellers is a party or
by which any of the Asset Sellers is bound with respect to the Technical
Services Business. No Asset Seller has, since January 1, 1996, experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes with respect to the Technical Services Business, except for
any grievances, claims of unfair labor practices or other collective bargaining
disputes that would not reasonably be expected to have a TSB Material Adverse
Effect, and to the knowledge of the Seller, there are no such strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes currently threatened against any Asset Seller with respect to the
Technical Services Business. The Seller has no knowledge of any organizational
effort being made or threatened since January 1, 1996 by or on behalf of any
labor union with respect to non-unionized employees of the Technical Services
Business, except for any such organizational effort that would not reasonably be
expected to have a TSB Material Adverse Effect.
2.16 Employee Benefits.
(a) The Disclosure Schedule contains a complete and accurate
list of all Employee Benefit Plans (as defined below) maintained, or contributed
to, by any Asset Seller or any ERISA Affiliate (as defined below) for the
benefit of current or former employees, officers, directors and consultants of
the Technical Services Business (and their beneficiaries) (the "TSB Plans"). For
purposes of this Agreement, "Employee Benefit Plan" means any "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) other than a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) or a plan maintained by a labor
union, any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and, to the extent applicable to more than one employee, any other
written or oral plan, agreement or arrangement involving direct or indirect
compensation, including without limitation insurance coverage, severance
benefits, disability benefits, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation, deferred stock or other forms
of incentive compensation or post-retirement compensation. For purposes of this
Agreement, "ERISA Affiliate" means any entity which is a member of:
(i) a controlled group of corporations (as defined in
Section 414(b) of the Code);
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(ii) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code); or
(iii) an affiliated service group (as defined under Section
414(m) of the Code or the regulations under Section 414(o) of the Code), any of
which includes an Asset Seller.
Complete and accurate copies of all TSB Plans and all related trust agreements,
insurance contracts, summary plan descriptions, Forms 5500 filed for the past
three plan years, the most recent actuarial report, if any, for the past three
plan years with respect to such TSB Plans, nondiscrimination test results
performed under the Code and the most recent determination letter, if any, with
respect to such TSB Plans have been made available to the Buyer. Each TSB Plan
has been administered and operated in all respects in accordance with its terms
and the applicable Asset Seller has made all required contributions and provided
for all appropriate and material accruals with respect to each such TSB Plan,
except for any failure to so administer and operate or so meet its obligations
that would not reasonably be expected to give rise to a material liability of
the Technical Services Business. The Asset Sellers and the TSB Plans are in
compliance with the currently applicable provisions of ERISA, the Code and any
other applicable laws and the regulations thereunder, except for any failure to
so comply that would not reasonably be expected to give rise to a material
liability of the Technical Services Business. Each TSB Plan, other than TSB
Plans required to be maintained pursuant to collective bargaining agreements,
may by its terms be amended or terminated at any time after the giving of such
notice as may be required by applicable law without incurring any material
liability other than for benefits accrued through the date of amendment or
termination and costs of termination or amendment.
(b) There are no termination proceedings or written claims
(except written claims for benefits payable in the normal operation of the
Employee Benefit Plans and proceedings with respect to qualified domestic
relations orders), suits or proceedings against or involving any TSB Plan or
asserting any rights or claims to benefits under any TSB Plan, or, to the
Seller's knowledge, investigations by any Governmental Entity involving any TSB
Plan, except for any such termination proceedings or other claims, suits,
proceedings or investigations that would not reasonably be expected to involve a
material liability to the Technical Services Business.
(c) The TSB Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such TSB Plans are qualified and the plans
and the trusts related thereto are exempt from federal income Taxes under
Sections 401(a) and 501(a), respectively, of the Code. The Seller has no
knowledge of any set of facts that would reasonably be expected to result in a
revocation of any such determination letter.
(d) No TSB Plan contributed to, or maintained by, any Asset
Seller or any ERISA Affiliate which is subject to Title IV of ERISA has accrued
benefits, calculated based on
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the assumptions set forth in the Disclosure Schedule, which exceed the assets of
such plan. No "accumulated funding deficiency" (as defined in Section 412 of
the Code) has occurred with respect to any TSB Plan contributed to, or
maintained by, any Asset Seller or any ERISA Affiliate which is subject to
Section 412 of the Code or Title IV of ERISA. No additional security has been
required under Section 401(a)(29) of the Code with respect to any TSB Plan and
all required installments and contributions have been timely paid. All premiums
due to the Pension Benefit Guaranty Corporation ("PBGC") with respect to any
TSB Plan have been timely paid, no action has been brought by the PBGC to
terminate any TSB Plan and no reportable event for which reporting has not been
waived has occurred as to any TSB Plan. The funding method used in connection
with each TSB Plan that is subject to Title IV of ERISA is acceptable and the
actuarial assumptions used in connection with each such plan are reasonable,
except where the failure to be so acceptable or reasonable would not result in
a material liability to the Technical Services Business.
(e) The Disclosure Schedule lists each Multiemployer Plan (as
defined in Section 10.6(h)) and each plan maintained by a labor union providing
benefits for a Technical Services Employee to which any Asset Seller or any
ERISA Affiliate contributes or is obligated to contribute. No Asset Seller or
any ERISA Affiliate has withdrawn from any Multiemployer Plan in a complete or
partial withdrawal which has resulted in any withdrawal liability which has not
been satisfied in full. All required contributions to any such Multiemployer
Plan have been made in full. To the knowledge of the Seller, no mass withdrawal
has occurred with respect to any such Multiemployer Plan. Except as provided in
the Disclosure Schedule, to the best knowledge of the Seller after due inquiry,
if, immediately prior to the Closing Date, the Asset Sellers and their ERISA
Affiliates were to withdraw from all Multiemployer Plans, the liability under
Title IV of ERISA pursuant to such withdrawal would not exceed $1,000,000.
(f) There are no unfunded obligations under any TSB Plan,
other than an Employee Benefit Plan intended to be qualified under Section
401(a) of the Code, providing benefits after termination of employment to any
employee of the Technical Services Business (or to any beneficiary of any such
employee), including without limitation retiree health coverage and deferred
compensation, but excluding continuation of health coverage required to be
continued under Section 4980B of the Code or other applicable laws.
(g) No act or omission has occurred and no condition exists
with respect to any TSB Plan maintained by any Asset Seller, any of its
Affiliates or any ERISA Affiliate that would subject any Asset Seller or any
ERISA Affiliate (directly or indirectly, including by way of indemnification) to
any material fine, penalty, Tax or liability of any kind imposed under ERISA or
the Code (other than liabilities for benefits accrued under TSB Plans for
employees of Asset Sellers and their beneficiaries).
(h) Every entity maintained in connection with a TSB Plan that
is intended to qualify under Section 501(c)(9) of the Code has received a letter
from the Internal Revenue Service stating that it so qualifies.
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(i) The Disclosure Schedule lists each TSB Plan under which
benefits will become increased or vesting will be accelerated as a result of the
consummation of the transactions contemplated by this Agreement. No excess
parachute payment as defined in Section 280G of the Code will occur as a result
of the consummation of the transactions contemplated by this Agreement.
(j) Neither the Asset Sellers nor any ERISA Affiliate have any
announced plan or legally binding commitment to create any additional Employee
Benefit Plans which are intended to cover employees or former employees,
directors, officers or consultants of the Technical Services Business or to
amend or modify any existing TSB Plan.
2.17 Environmental Matters.
(a) When used in this Agreement, the following terms have the
meanings provided below.
(i) "CERCLA" shall mean the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
and in effect on the Closing Date.
(ii) "Release" shall have the meaning assigned to that term
in CERCLA.
(iii) "Environment" shall have the meaning assigned to that
term under CERCLA.
(iv) "Materials of Environmental Concern" means any hazardous
substance, pollutant or contaminant, as those terms are defined under CERCLA;
solid waste and hazardous waste, as those terms are defined in the Federal
Resource Conservation and Recovery Act (as in effect on the Closing Date); oil,
petroleum and petroleum products; and any other substance, constituent or waste
subject to an Environmental Law.
(v) "Environmental Law" means any foreign, federal, state or
municipal statute, rule or regulation (including all orders, consent orders,
judgments, notices or permits issued, promulgated or entered pursuant thereto
that are applicable to an Asset Seller) as in effect on the Closing Date
relating to the Environment or occupational health and safety (collectively,
"Rules"), including without limitation any Rules pertaining to (A) treatment,
storage, disposal, transportation or generation of Materials of Environmental
Concern; (B) air, water or noise pollution; (C) groundwater or soil
contamination; or (D) the Release or threatened Release of Materials of
Environmental Concern.
(vi) "Environmental Matters" means any liability arising
under Environmental Law.
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(vii) "Off-Site Liabilities" means Environmental
Matters and/or liability arising under common law
resulting from any transportation, treatment, storage, disposal or Release, or
the arrangement therefor, of any Materials of Environmental Concern by the
Technical Services Business or any of its respective Affiliates, agents,
contractors or predecessors in interest, to or at any property, location, site
or facility other than a Technical Services Property.
(viii) "Technical Services Properties" means the real
properties subject to the Leases.
(ix) "Handling" means the production, use,
generation, storage, treatment, disposal or other handling
of Materials of Environmental Concern.
(b) Except as described or identified in a document listed in
the Disclosure Schedule:
(i) the Technical Services Business' operations are and for
the last five years have been in compliance with applicable Environmental Laws,
except for any failures to comply with Environmental Laws that, individually or
in the aggregate, would not reasonably be expected to have a TSB Material
Adverse Effect;
(ii) there is no pending material civil or criminal
litigation, written notice of violation or administrative proceeding,
investigation or information request relating to any Environmental Law
involving any of the Technical Services Properties or activity conducted by the
Technical Services Business or, to the Seller's knowledge, any property
formerly owned or operated by the Technical Services Business, and, to the
Seller's knowledge, none of the foregoing is threatened; and
(iii) each Asset Seller has those material permits,
licenses and approvals required under Environmental Law to operate the Technical
Services Properties as currently operated by such Asset Seller.
(c) Except as described or identified in a document listed in
the Disclosure Schedule:
(i) with respect to the Technical Services Properties and any
property formerly owned or operated by any Asset Seller with respect to the
Technical Services Business, no Asset Seller has received written notice of an
existing order or claim, and to the Seller's knowledge, there is no threatened
order or claim, requiring the investigation or remediation of a Release of
Materials of Environmental Concern; and
(ii) with respect to any Asset Seller, no Asset Seller has
received written notice of an existing claim, and to the Seller's knowledge,
there is no threatened claim, for Off-Site Liabilities relating to the
Technical Services Business that would reasonably be expected to have a TSB
Material Adverse Effect.
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(d) The Parties agree that the only representations and
warranties of the Seller herein as to any Environmental Matters are those
contained in this Section 2.17. Without limiting the generality of the
foregoing, the Buyer specifically acknowledges that the representations and
warranties contained in Sections 2.14, 2.18 and 2.19 do not relate to
Environmental Matters.
2.18 Legal Compliance. As to the Technical Services Business, each
Asset Seller is and has been in the last three years in compliance in all
material respects with all material applicable laws (including without
limitation rules and regulations thereunder) of any federal, state or foreign
government, or any Governmental Entity. No Asset Seller has received written
notice of any pending action, suit, proceeding, hearing, investigation, claim,
demand or notice relating to the Technical Services Business alleging any
failure to so comply.
2.19 Permits. The Disclosure Schedule lists each permit, license,
franchise or authorization from any Governmental Authority used in the Technical
Services Business as presently conducted and material to the business or
operations of the Technical Services Business (collectively, the "Permits"). No
Asset Seller is in material violation of or material default under any Permit
and, to the Seller's knowledge, subject to compliance with Section 1.6, no
Permit will be revoked, terminated prior to its normal expiration date or not
renewed as a result of the consummation of the transactions contemplated by this
Agreement.
2.20 Entire Business. Except for the Excluded Assets and
Customer-Furnished Items, the Assets (assuming the receipt of all Deferred
Consents and the novation of all Government Contracts, Government Bids and other
Assets subject to Section 1.6) collectively are, when utilized by a labor force
substantially similar to that employed by the Asset Sellers in connection with
the Technical Services Business on the date hereof, adequate to conduct the
Technical Services Business in all material respects as currently conducted.
2.21 Government Contracts.
(a) The Disclosure Schedule sets forth a complete and accurate
list of:
(i) each Government Contract to which any Asset Seller is a
party and as to which the applicable Asset Seller has not, as of the date of
this Agreement, fulfilled all of its obligations, including without limitation
obligations to render services; and
(ii) each Government Contract to which any Asset Seller is a
party, as to which the applicable Asset Seller has, as of the date of this
Agreement, fulfilled all of its obligations (including without limitation its
obligations to render services), but in connection with which final contract
rates or any other outstanding reimbursement have not been determined by the
United States Government, and which involved aggregate consideration over the
period beginning on the effective date of the Government Contract and ending on
the expiration date thereof (including option periods) (the "Contract Term") in
excess of $10,000,000.
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(b) In connection with the Technical Services Business, no
Asset Seller is, or since January 1, 1996 has been, suspended or debarred from
or determined to be ineligible for bidding or submitting offers on contracts or
subcontracts with or involving the United States Government; no such suspension,
debarment or ineligibility has been initiated or determined or, to the knowledge
of the Seller, threatened or noticed in writing; and the consummation of the
transactions contemplated by this Agreement will not result in any such
suspension, debarment or ineligibility (assuming that no such suspension,
debarment or ineligibility will result solely from the identity of the Buyer).
(c) In connection with the Technical Services Business, to the
Seller's knowledge, no Asset Seller or employee, officer or director of any
Asset Seller has, since January 1, 1996, been audited or investigated or is now
being audited or has been threatened in writing with an investigation or been
notified in writing of a material breach or violation of the material terms of
any Government Contract or regulation pertaining thereto by the United States
Government Accounting Office, the United States Department of Defense or any of
its agencies, the Defense Contract Audit Agency, the United States Department of
Justice, the Inspector General of any United States Governmental Authority, any
similar agencies or instrumentalities of any foreign Governmental Authority, or
any Government Contractor with a Governmental Authority, except, in any such
case, for routine Defense Contract Audit Agency audits and investigations.
(d) In connection with the Technical Services Business, no
Asset Seller has, since January 1, 1996, conducted any material internal
investigation in connection with which the Asset Seller has engaged outside
legal counsel or independent accountants, or made any voluntary disclosure to
the United States Government as a result of any material suspected irregularity
with respect to any Government Contract.
(e) No termination for default, termination for convenience,
cure notice or show cause notice is, or since January 1, 1996 has been, in
effect pertaining to any Government Contract, except for cure or show cause
notices that individually or in the aggregate would not reasonably be expected
to result in a TSB Material Adverse Effect.
(f) The cost accounting and procurement systems maintained by
the Asset Sellers in connection with the conduct of the Technical Services
Business with respect to Government Contracts are in compliance in all material
respects with all applicable material United States government laws and
regulations (including without limitation all applicable CASs (as defined in
Section 10.6(d)).
(g) With respect to each material Government Contract listed
on the Disclosure Schedule:
(i) the applicable Asset Seller has complied with the material
terms and conditions of such Government Contract, except where such
non-compliance has been waived or cured; and
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(ii) all representations and certifications executed,
acknowledged or set forth in such Government Contract were complete and correct
in all material respects as of their effective date.
(h) To the Seller's knowledge, all cost or pricing data
submitted by an Asset Seller in connection with the material Government
Contracts were current, accurate and complete in all material respects at the
time of submission, and at the time of price agreement, and have been updated in
all material respects as and when required by applicable law, regulation or the
terms of the Government Contract in question.
(i) Since January 1, 1996, no amount in excess of $250,000
otherwise currently due to an Asset Seller under any material Government
Contract has been (or has been attempted to be) withheld or set off, except for
amounts withheld under contracts in the Ordinary Course of Business.
(j) The Disclosure Schedule lists each outstanding bid
submitted by any of the Asset Sellers on or prior to the date of this Agreement
(other than proposals for additional work under, or modifications to, existing
Government Contracts) which, if accepted, would result in a Government Contract
involving aggregate consideration to such Asset Seller during the Contract Term
of not less than $5,000,000.
(k) All material personal property, equipment and fixtures
loaned, bailed or otherwise furnished to any Asset Seller by or on behalf of the
United States Government in connection with the Technical Services Business that
are or should be in the possession of such Asset Seller ("Customer-Furnished
Items"), in the aggregate, are in a good state of maintenance and repair
(ordinary wear and tear excepted), have been regularly and appropriately
maintained and repaired in all material respects in accordance with all
contractual, legal and regulatory requirements and, unless returned to the
United States Government, shall be in the possession of such Asset Seller on the
Closing Date. Each Asset Seller has complied in all material respects with its
obligations relating to the Customer-Furnished Items, and upon the return
thereof, would have no material liability to the United States Government with
respect thereto.
(l) No Asset Seller and, to the Seller's knowledge, no
employee or representative of an Asset Seller has, with respect to the Technical
Services Business: (i) made any illegal political contributions, (ii) made any
material payments from corporate funds that are not recorded (or are falsely
recorded) on the corporate books and records, (iii) directly or indirectly made
any payments or gifts (or promises thereof) to any government official or
candidate for political office in order to obtain, retain or direct business or
obtain special treatment in material violation of applicable law, or (iv) taken
other action that would constitute a material violation of the Foreign Corrupt
Practices Act or similar treaties or statutes.
2.22 Brokers' Fees. None of the Asset Sellers has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement (other than fees and
commissions payable by the Seller to ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
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Co. in connection with the consummation of the transactions contemplated by this
Agreement, which will be the sole responsibility of the Seller).
2.23 Insurance. The Disclosure Schedule lists each material insurance
policy maintained by an Asset Seller that relates or provides coverage with
respect to any Assets or the Technical Services Business (the "TSB Policies").
All of such TSB Policies are in full force and effect and, to the Seller's
knowledge, no Asset Seller is in material default with respect to its
obligations under any of such TSB Policies. The Technical Services Business is
covered by insurance in scope and amount customary and reasonable for the
business in which it is engaged. The Seller has no knowledge of any threatened
termination of any of the TSB Policies.
Complete and accurate copies of the TSB Policies have been made available to the
Buyer.
2.24 Business Relationships with Affiliates. The Disclosure Schedule
lists any agreements with respect to the Technical Services Business whereby any
Asset Seller or Affiliate of an Asset Seller directly or indirectly (a) owns any
material property or right, tangible or intangible, which is used in the
Technical Services Business and not included in the Assets, or (b) is owed any
money from the Technical Services Business or owes any money to the Technical
Services Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
3.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and is duly qualified to conduct business under the laws of each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification necessary, except for any such
failures to be qualified that would not reasonably be expected to have a
material adverse effect on the assets, business, financial condition or results
of operations of the Buyer or on the ability of the Buyer to consummate the
transactions contemplated by this Agreement (a "Buyer Material Adverse Effect").
The Buyer has previously provided or made available to the Seller a true and
correct copy of its charter and By-Laws, each as amended or restated as of the
date of this Agreement.
3.2 Authority. The Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and under each of the Ancillary Agreements. The execution and delivery
by the Buyer of this Agreement and each of the Ancillary Agreements and the
performance of this Agreement and each of the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby by the Buyer
have been duly and validly authorized by all necessary corporate action on the
part of the Buyer. This Agreement has been duly and validly executed and
delivered by the Buyer and, assuming this Agreement constitutes the valid and
binding obligation of the Seller, constitutes a
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valid and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms (except as the foregoing may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally and by equitable
principles, including without limitation those limiting the availability of
specific performance, injunctive relief and other equitable remedies and those
providing for equitable defenses).
3.3 Noncontravention. Subject to compliance with the applicable
requirements of the Anti-Assignment Laws, neither the execution and delivery of
this Agreement by the Buyer, nor the consummation by the Buyer of the
transactions contemplated hereby, will:
(a) conflict with or violate any provision of the charter or
by-laws of the Buyer;
(b) require on the part of the Buyer any material filing with,
or material permit, authorization, consent or approval of, any Governmental
Entity;
(c) conflict with, result in breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party any right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any material
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other material arrangement to which the Buyer is a party or by which
the Buyer is bound or to which any of its assets are subject; or
(d) violate any order, writ, injunction or decree, or any
material statute, rule or regulation, applicable to the Buyer or any of its
properties or assets.
3.4 Broker's Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement (other than any such fees and
commissions which will be the sole responsibility of the Buyer).
3.5 Litigation. There are no actions, suits, claims or legal,
administrative or arbitration proceedings pending against, or, to the Buyer's
knowledge, threatened against, the Buyer which would adversely affect the
Buyer's performance under this Agreement or the consummation of the transactions
contemplated by this Agreement.
3.6 Financing. At the Closing, the Buyer will have sufficient sources
of financing in order to consummate the transactions contemplated by this
Agreement and to fulfill its obligations hereunder, including without limitation
payment to the Seller of the Purchase Price at the Closing.
3.7 Solvency. Immediately after giving effect to the transactions
contemplated by this Agreement and the closing of any financing to be obtained
by the Buyer or any of its
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Affiliates in order to effect the transactions contemplated by this Agreement,
the Buyer shall be able to pay its debts as they become due and shall own
property having a fair saleable value greater than the amounts required to pay
its debts (including without limitation a reasonable estimate of the amount of
all contingent liabilities). Immediately after giving effect to the transactions
contemplated by this Agreement and the closing of any financing to be obtained
by the Buyer or any of its Affiliates in order to effect the transactions
contemplated by this Agreement, the Buyer shall have adequate capital to carry
on its business. No transfer of property is being made and no obligation is
being incurred in connection with the transactions contemplated by this
Agreement and the closing of any financing to be obtained by the Buyer or any
of its Affiliates in order to effect the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud either present or future
creditors of the Buyer.
3.8 Government Contracts and Security Clearance. The Buyer does not
know of any reason why it would not be able to obtain the requisite security
clearances and Novations in connection with transactions contemplated by this
Agreement, including without limitation the acquisition by the Buyer of the
Assets and the assumption by the Buyer of the Assumed Liabilities.
3.9 Transfer of Environmental Permits. Neither the Buyer nor any of its
Affiliates is aware of any conduct, event, condition or proceeding that will or
could reasonably be expected to cause any Governmental Entity to refuse to
transfer from any Asset Seller to the Buyer any permits, licenses or approvals
issued under any Environmental Law which are held by such Asset Seller in
connection with the Technical Services Business to operate the Technical Service
Properties.
3.10 Financing.
(a) Schedule 3.10(a) to the Agreement sets forth correct and
complete copies of the commitment letters obtained by the Buyer from Bankers
Trust Company, Salomon Brothers Holding Company Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. to provide all of the required debt financing for the consummation of the
transactions contemplated by this Agreement and the payment of all fees and
expenses incurred by the Buyer in connection therewith (the "Debt Financing
Commitments"). The Debt Financing Commitments are in full force and effect.
(b) Schedule 3.10(b) to the Agreement sets forth a correct and
complete copy of a commitment letter obtained by the Buyer from the entities
signatory thereto to provide all of the required equity financing for the
consummation of the transactions contemplated by this Agreement and the payment
of all fees and expenses incurred by the Buyer in connection therewith (the
"Equity Financing Commitment"). The Equity Financing Commitment is in full force
and effect.
(c) The Debt Financing Commitments, together with the Equity
Financing Commitment, constitute all of the required financing for the
consummation of the transactions
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contemplated by this Agreement and the payment of all fees and expenses
incurred by the Buyer in connection therewith.
3.11 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Matters. For the purposes of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, the ultimate
parent entity (as such term is defined in 16 C.F.R. ss.801.1(a)(3)) of the Buyer
is Carlyle - ETS L.L.C. ("Carlyle"). Carlyle is not controlled by any other
entity (as such terms are defined in 16 C.F.R. ss.801.1(b) and ss.801.1(a)(2))
and is therefore its own ultimate parent entity. Carlyle did not have, and will
not on the Closing Date have, total assets of $10,000,000 or more on its most
recently prepared balance sheet, nor annual net sales in its most recent fiscal
year of $10,000,000 or more (as such terms are defined in 16 C.F.R. ss.801.11).
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Efforts. Each of the Parties shall use commercially reasonable
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, the Parties shall use commercially reasonable
efforts (taking into account the relative importance of the underlying Contracts
and Leases) to obtain all Consents required in connection with the consummation
of the transactions contemplated hereby, including without limitation Consents
necessary to assign the Contracts and Leases; provided, however, that neither
Party shall be required to make any payment (other than payments of de minimis
amounts) or agree to any material undertaking in connection therewith. Each
Asset Seller agrees to use commercially reasonable efforts to cause each
contract (other than any Government Contract, Government Bid and contract
resulting from a Government Bid) entered into by such Asset Seller in connection
with the Technical Services Business between the date of this Agreement and the
Closing Date to include a provision permitting the assignment of such contract
by the applicable Asset Seller to the Buyer at the Closing.
4.2 [Intentionally Omitted.]
4.3 Release from Liability.
(a) Unless otherwise agreed to in writing by the Seller and
subject to the terms of any final Novation Agreement under Section 1.6, the
Buyer and the Seller shall cooperate to seek to obtain, prior to the Closing (or
if not obtained prior to Closing, as promptly as possible thereafter), the
release of all Asset Sellers from any liabilities, obligations and guarantees
(other than guarantees that will only be released as part of the Closing)
relating to the Technical Services Business or the Assets which are outstanding
or in effect as of the Closing Date.
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(b) Prior to Closing, the Buyer shall use commercially
reasonable efforts to arrange for the return to the applicable Asset Seller of
each of the bonds listed in paragraphs (b) through (f) of Item 2 of Section 2.23
of the Disclosure Schedule (the "Bonds").
4.4 Operation of Business. Except as contemplated by this Agreement,
including without limitation Section 10.6, or as set forth in Schedule 4.4
attached hereto, during the period from the date of this Agreement until the
Closing Date, the Seller shall, and shall cause the Subsidiaries to:
(a) use commercially reasonable efforts to conduct the
operations of the Technical Service Business in the Ordinary Course of Business;
provided, however, that none of (i) a submission of a bid for a Government
Contract (other than a bid referred to in paragraph (b) below), (ii) the
execution of a new Government Contract (other than a Government Contract
referred to in paragraph (b) below) or (iii) an election to extend or modify any
existing Government Contract (other than an extension or modification to an
existing Government Contract which, after giving effect to such extension or
modification, would as to the balance of the Contract Term represent a
Government Contract referred to in paragraph (b) below) shall be considered to
be outside the Ordinary Course of Business;
(b) refrain from (i) submitting any bid for a fixed price
Government Contract or executing any new fixed price Government Contract
involving aggregate consideration over the Contract Term in excess of
$10,000,000 and (ii) submitting any bid for a cost reimbursable Government
Contract or executing any new cost reimbursable Government Contract involving
aggregate consideration over the Contract Term in excess of $40,000,000, in each
case without the prior consent of the Buyer (such consent not to be unreasonably
withheld, conditioned or delayed); and
(c) refrain from taking any of the actions listed in ▇▇▇▇▇▇▇
▇.▇(▇), (▇) (▇), (▇), (▇), (▇), (▇), (▇), (▇) and (k) hereof without the prior
consent of the Buyer (such consent not to be unreasonably withheld, conditioned
or delayed).
4.5 Access. Subject to compliance with applicable laws and regulations,
and contractual obligations of the Asset Sellers regarding classified
information, security clearance, proprietary information of third parties and
procurement sensitive information, the Seller shall cause the Asset Sellers to
permit representatives of the Buyer to have reasonable access (at reasonable
times, on reasonable prior written notice and in a manner so as not to interfere
with the normal business operations of the Technical Services Business) to the
premises, properties, financial and accounting records, contracts, other records
and documents, and personnel, of or pertaining to the Technical Services
Business for reasonable business purposes (it being acknowledged by the Buyer
that the Buyer has completed its due diligence investigation and that the
purpose of this provision is not to permit further due diligence). The Buyer
acknowledges and agrees that it is bound by the Confidentiality Agreement, dated
April 16, 1999, previously entered into between Carlyle Group LP and the Seller
(the "Confidentiality Agreement"). Prior to the Closing, the Buyer and its
representatives shall not contact or communicate with the
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employees, customers and suppliers of any of the Asset Sellers in connection
with the transactions contemplated by this Agreement except with the prior
written consent of the Seller, which shall not be unreasonably withheld,
conditioned or delayed.
4.6 Exclusivity. During the period from the date of this Agreement
until the Closing or the earlier termination of this Agreement, the Seller shall
not and shall use its best efforts to cause its Affiliates and each of their
respective officers, directors, employees, representatives and agents not to,
directly or indirectly, encourage, solicit, initiate, engage or participate in
discussions or negotiations with any person or entity (other than the Buyer)
concerning any merger, consolidation, stock sale or exchange or other business
combination involving any material portion of the Technical Services Business or
any sale of material assets by the Technical Services Business not in the
Ordinary Course of Business (an "Acquisition Transaction"). The Seller shall
notify the Buyer promptly of its receipt of any written proposal from a third
party regarding any proposed Acquisition Transaction.
4.7 Novation Agreement. During the period beginning on the date of this
Agreement and ending on the Closing Date, the Seller shall use commercially
reasonable efforts to fully prepare, complete and execute, and the Buyer shall
use commercially reasonable efforts to fully (a) assist the Seller with the
preparation and completion of, and (b) execute, the Novation Agreement in
accordance with the terms and conditions of Section 1.6 hereof.
4.8 Cooperation with Financing. The Seller consents to the delivery by
the Buyer to the Buyer's financing sources and their respective representatives,
subject to the terms and conditions of the Confidentiality Agreement, of copies
of the Financial Statements and other information relating to the Technical
Services Business provided by the Seller to the Buyer. The Seller shall provide
reasonable cooperation to the Buyer and its financial advisors, accountants and
legal counsel in connection with the Buyer's efforts to consummate the
financings contemplated by the Financing Commitments. Such cooperation shall
include (a) granting the Buyer's financing sources and their respective
representatives access to facilities, records and personnel of the Technical
Services Business as "representatives of the Buyer", as set forth in, and
subject to the terms and conditions of, Section 4.5, and (b) using the Seller's
best efforts to provide such persons access to the work papers and personnel of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP relating to the audit of the Financial Statements, subject
to such persons' executing and delivering such agreements, waivers and
indemnification arrangements as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP may request as a condition
to such access.
4.9 Repayment of Indebtedness; Elimination of Intercompany Items.
Effective as of the Closing (a) the Assets will not be subject to or encumbered
by any Indebtedness of any Asset Seller and (b) all payables, receivables,
liabilities and other obligations between the Technical Service Business, on the
one hand, and each Asset Seller and its Affiliates, on the other hand, shall be
eliminated except to the extent expressly provided for herein.
4.10 Transition of Systems. During the period commencing on the date of
this Agreement and ending on the Closing Date, the Seller agrees to cooperate
and provide
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reasonable assistance to the Buyer in connection with the Buyer's efforts to
secure replacements for the various systems described in Schedule 1.1(b)(xi).
In addition, for a period of up to 90 days after the Closing, the Seller shall
provide the Buyer with reasonable access to and use of such systems, to the
extent permitted by the terms of the applicable license or other agreements
relating thereto, on such terms as the Buyer and the Seller shall reasonably
agree.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions to Obligations of the Buyer. The obligation of the Buyer
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by the Buyer) of the following conditions:
(a) the Seller shall have obtained (or caused to be obtained):
(i) all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices (the
"Consents"), which are listed on Schedule 5.1(a)(i) hereto; and
(ii) all other Consents which are necessary in order to
consummate the transactions contemplated by this Agreement, except for those
Consents which if not obtained or effected, and after giving effect to Section
1.5, would not in the aggregate reasonably be expected to have a TSB Material
Adverse Effect (it being understood and agreed that the failure to obtain or
effect the Consents listed on Schedule 5.1(a)(ii) hereto will not reasonably be
expected to result in a TSB Material Adverse Effect);
except, in either case, for Novations contemplated or required by Section 1.6;
(b) the representations and warranties of the Seller set forth
in Article II shall be true and correct at and as of the Closing Date as if made
as of the Closing Date, except (i) for changes contemplated or permitted by this
Agreement, (ii) for those representations and warranties that address matters
only as of a particular date (which shall be true and correct as of such date,
subject to clause (iii)), and (iii) where the failure of the representations and
warranties in the aggregate to be true and correct would not reasonably be
expected to have a TSB Material Adverse Effect (it being agreed that this clause
(iii) shall be inapplicable to any portion of a representation and warranty
which already contains a TSB Material Adverse Effect qualification);
(c) the Seller shall have performed or complied in all
material respects with the agreements and covenants required to be performed or
complied with by it under this Agreement as of or prior to the Closing;
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(d) the Seller shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified in clauses (a) through (c)
of this Section 5.1 is satisfied in all respects;
(e) no action, suit or proceeding shall be pending by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would reasonably be expected to (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
(f) the Buyer shall have received all of the items required to
be delivered to it pursuant to Section 1.3(b);
(g) the Buyer shall have received from ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq., General Counsel of the Seller, a legal opinion with respect to the matters
set forth in Exhibit E attached hereto, addressed to the Buyer and dated as of
the Closing Date; and
(h) the Buyer shall not have reasonable grounds to believe
that the applicable Government Entity or Entities will not approve the transfer
of the Permits identified in paragraphs (a) through (e) of Item 1 of Section
2.19 of the Disclosure Schedule to the Buyer following the Closing.
5.2 Conditions to Obligations of the Seller. The obligation of the
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or waiver by the Seller) of the following conditions:
(a) the representations and warranties of the Buyer set forth
in Article III shall be true and correct at and as of the Closing Date as if
made as of the Closing Date, except (i) for changes contemplated or permitted by
this Agreement, (ii) for those representations and warranties that address
matters only as of a particular date (which shall be true and correct as of such
date, subject to clause (iii)), and (iii) where the failure of the
representations and warranties in the aggregate to be true and correct would not
reasonably be expected to have a Buyer Material Adverse Effect (it being agreed
that this clause (iii) shall be inapplicable to any portion of a representation
and warranty that already contains a Buyer Material Adverse Effect
qualification);
(b) the Buyer shall have performed or complied in all material
respects with its agreements and covenants required to be performed or complied
with by it under this Agreement as of or prior to the Closing;
(c) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified in clause (a) of this
Section 5.2 is satisfied in all respects;
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(d) no action, suit or proceeding shall be pending by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would reasonably be expected to (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
(e) the Seller shall have received all of the items required
to be delivered to it pursuant to Section 1.3(b);
(f) the Seller shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel to the Buyer, a legal opinion with respect to the matters set forth in
Exhibit F attached hereto, addressed to the Seller and dated as of the Closing
Date; and
(g) the Seller shall have received copies of any solvency
opinions of appraisal firms or investment banks obtained at the request of the
Buyer's financing sources or otherwise delivered in connection with the
transactions contemplated by this Agreement, addressed to the Seller (or stating
that the Seller may rely thereon as if addressed to the Seller) and dated as of
the Closing Date.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Seller. Subject to the terms and conditions
of this Article VI, from and after the Closing, the Seller shall indemnify the
Buyer in respect of, and hold the Buyer harmless against, any and all debts,
obligations and other liabilities, monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses, costs and expenses (including
without limitation reasonable attorneys' fees and expenses) (collectively,
"Damages") incurred or suffered by the Buyer or any Affiliate thereof:
(a) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of the Seller contained in this
Agreement or the certificate of the Seller delivered at the Closing pursuant to
Section 5.1(d) or (ii) failure to perform any covenant or agreement of the
Seller contained in this Agreement;
(b) resulting from, relating to or constituting Excluded
Liabilities;
(c) resulting from, relating to or arising out of the subject
matter of, or the suits, proceedings and actions set forth in, Schedule 6.1(c)
(the "SJ Litigation") (other than those Damages incurred or suffered by the
Buyer or any Affiliate thereof resulting from, relating to or arising out of the
obligations and duties imposed on the Buyer pursuant to Section 6.3(b));
(d) resulting from, relating to or constituting any debts,
liabilities or obligations of the Seller and its Affiliates that are not related
to the Technical Services Business,
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including without limitation any debts, liabilities or obligations relating to
(i) the Seller's subsidiaries' former Department of Energy operations at Rocky
Flats, Colorado and other locations and (ii) EG&G Florida's NASA Business;
(e) resulting from costs that are not allocable to and
collectible from the Government Contract base of EG&G Services for Fiscal Year
1997 pursuant to Defense Contract Audit Agency Audit Report No.
6221-99L10150001-1 dated July 9, 1999 (the "DCAA 1997 Audit"); or
(f) resulting from, relating to or arising from the fatal
injury on June 24, 1999 of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, an employee of EC III (it being
understood that, to the extent that any Damages for which the Buyer is entitled
to indemnification pursuant to this paragraph (f) constitute Damages suffered or
incurred by EC III, the Seller's indemnification obligations to the Buyer shall
be limited to 50% of such Damages).
6.2 Indemnification by the Buyer. Subject to the terms and conditions
of this Article VI, from and after the Closing, the Buyer shall indemnify each
of the Asset Sellers in respect of, and hold each of the Asset Sellers harmless
against, any and all Damages incurred or suffered by an Asset Seller or any
Affiliate thereof:
(a) resulting from, relating to or constituting any (i)
misrepresentation, breach of warranty of the Buyer contained in this Agreement
or the certificate of the Buyer delivered at the Closing pursuant to Section
5.2(c) or (ii) failure to perform any covenant or agreement of the Buyer
contained in this Agreement;
(b) resulting from, relating to or arising out of the conduct
of the business or operations of the Technical Services Business, the Assets,
and/or the performance of any services by the Buyer on and after the Closing
Date, including without limitation any Damages arising out of or relating to (i)
any Government Contract, Government Bid or contract resulting from a Government
Bid, including without limitation all modifications, amendments and changes
thereto, except to the extent that the Seller is expressly obligated to
indemnify or reimburse the Buyer in respect of such Damages pursuant to Article
VI or Article VIII of this Agreement, (ii) Contracts, Leases, authorizations,
licenses or permits that are the subject of Deferred Consents, except to the
extent that the Seller is expressly obligated to indemnify or reimburse the
Buyer in respect of such Damages pursuant to Article VI or Article VIII of this
Agreement, and (iii) a breach of contract resulting from the failure to have
obtained any Deferred Consent at the Closing (including as to any breach
resulting from such failure);
(c) resulting from, relating to or constituting any obligations
or liabilities of the Asset Sellers assumed by the Buyer pursuant to this
Agreement or the Assumption Agreement; or
(d) resulting from, relating to or constituting the obligations
and duties imposed on the Buyer pursuant to Section 6.3(b).
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6.3 Claims for Indemnification.
(a) Third-Party Claims. All claims for indemnification made
under this Agreement resulting from, related to or arising out of a third-party
claim against an Indemnified Party (as defined below) shall be made in
accordance with the following procedures. A person entitled to indemnification
under this Article VI (an "Indemnified Party") shall give prompt written
notification to the person from whom indemnification is sought (the
"Indemnifying Party") of the commencement of any action, suit or proceeding
relating to a third-party claim for which indemnification may be sought or, if
earlier, upon the assertion of any such claim by a third party; provided,
however, that no delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder except to the extent the Indemnifying Party is prejudiced thereby.
Within 30 days after delivery of such notification, the Indemnifying Party may,
upon written notice thereof to the Indemnified Party, assume control of the
defense of such action, suit, proceeding or claim with counsel reasonably
satisfactory to the Indemnified Party. Prior to any assumption of the control of
the defense of any such action, suit, proceeding or claim by the Indemnifying
Party within such 30-day period, the Indemnified Party may take such action, if
any, in respect of a third party claim as may be reasonably necessary to avoid a
loss of its rights with respect to such third party claim; provided, however,
that the Indemnified Party shall not have the right to settle such third party
claim during such 30-day period. If the Indemnifying Party does not assume
control of such defense, the Indemnified Party shall control such defense. The
Party not controlling such defense may participate therein at its own expense;
provided that if the Indemnifying Party assumes control of such defense and the
Indemnified Party reasonably concludes, based on advice from counsel, that the
Indemnifying Party and the Indemnified Party have conflicting interests with
respect to such action, suit, proceeding or claim, the reasonable fees and
expenses of counsel to the Indemnified Party shall be considered "Damages" for
purposes of this Agreement; provided, however, that in no event shall the
Indemnifying Party be responsible for the fees and expenses of more than one
counsel per jurisdiction for all Indemnified Parties. The Party controlling such
defense shall keep the other Party advised of the status of such action, suit,
proceeding or claim and the defense thereof and shall consider recommendations
made by the other Party with respect thereto. The Indemnified Party shall not
agree to any settlement of such action, suit, proceeding or claim without the
prior written consent of the Indemnifying Party. The Indemnifying Party shall
not agree to any settlement of such action, suit, proceeding or claim that does
not include a complete release of the Indemnified Party from all liability with
respect thereto or that imposes any liability or obligation on the Indemnified
Party without the prior written consent of the Indemnified Party.
(b) SJ Litigation Claims. Notwithstanding the provisions of
Section 6.3(a), the Parties agree that the provisions of this Section 6.3(b)
shall govern and control the rights and obligations of the Parties in connection
with the SJ Litigation. From and after the Closing, the Seller shall continue to
control and defend the SJ Litigation (at its own expense) with counsel selected
by the Seller. The Seller shall keep the Buyer periodically advised of the
status of the SJ Litigation. The Seller shall have the right (in its sole
discretion) to settle all or any portion of the SJ Litigation without the prior
consent of the Buyer, so long as, other than the continued
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employment of ▇▇▇▇▇▇ ▇▇▇▇▇, such settlement does not adversely affect or impose
any obligations on the Buyer. The Seller shall be responsible for the payment of
any and all monetary damages, costs and expenses awarded by any court,
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction, or arbitration or mediation panel or board (a "Tribunal") in
connection with the SJ Litigation (other than payments required to be made in
connection with the employment of ▇▇▇▇▇▇ ▇▇▇▇▇ by the Technical Services
Business or the rendering of consulting, advisory or other similar services by
▇▇▇▇▇▇ ▇▇▇▇▇ to the Technical Services Business after the Closing). The Buyer
shall comply (at its own expense) with the terms of any injunction, award,
decree, ruling or charge of a Tribunal relating to the continued or ongoing
employment of ▇▇▇▇▇▇ ▇▇▇▇▇ by the Technical Services Business or rendering of
consulting, advisory or other similar services by ▇▇▇▇▇▇ ▇▇▇▇▇ to the Technical
Services Business after the Closing (other than liability imposed as a result of
an inability to comply with an injunction, award, decree, ruling or charge due
to failure to obtain required clearances or approvals of any Governmental
Entity). Notwithstanding the foregoing, the Buyer may, at any time, elect to
assume control and defense of the SJ Litigation by (A) releasing the Seller
from any further indemnification obligations under Section 6.1(c) and (B)
assuming the Seller's further obligations under this Section 6.3(b) (other than
payment of amounts incurred prior to such time by or on behalf of the Seller in
investigating or defending such matter). Unless the Buyer assumes the control
and defense of the SJ Litigation as provided in the preceding sentence, the
Buyer may not settle all or any portion of the SJ Litigation without the prior
written consent of the Seller.
(c) Procedure for Other Claims. An Indemnified Party wishing
to assert a claim for indemnification under this Article VI which is not subject
to Section 6.3(a) or 6.3(b) shall deliver to the Indemnifying Party a written
notice (a "Claim Notice") which contains (i) a description and the amount (the
"Claimed Amount") of any Damages incurred by the Indemnified Party, (ii) a
statement that the Indemnified Party is entitled to indemnification under this
Article VI and a reasonable explanation of the basis therefor, and (iii) a
demand for payment in the amount of such Damages. Within 30 days after delivery
of a Claim Notice, the Indemnifying Party shall deliver to the Indemnified Party
a written response in which the Indemnifying Party shall: (A) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in which
case such response shall be accompanied by a payment by the Indemnifying Party
to the Indemnified Party of the Claimed Amount, by check or by wire transfer),
(B) agree that the Indemnified Party is entitled to receive part, but not all,
of the Claimed Amount (the "Agreed Amount") (in which case such response shall
be accompanied by a payment by the Indemnifying Party to the Indemnified Party
of the Agreed Amount, by check or by wire transfer) or (C) contest that the
Indemnified Party is entitled to receive any of the Claimed Amount. If the
Indemnifying Party in such response contests the payment of all or part of the
Claimed Amount, the Indemnifying Party and the Indemnified Party shall use good
faith efforts to resolve such dispute. If such dispute is not resolved within 60
days following the delivery by the Indemnifying Party of such response, the
Indemnifying Party and the Indemnified Party shall each have the right to submit
such dispute to arbitration in accordance with the provisions of Section 11.14.
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6.4 Survival.
(a) The representations and warranties of the Seller and the
Buyer set forth in this Agreement shall survive the Closing and the consummation
of the transactions contemplated hereby and continue until the date that is 18
months after the Closing Date, at which time they shall expire. Notwithstanding
the foregoing, (i) the representations and warranties contained in Sections 2.1,
2.2 and 2.3 shall survive the Closing and the consummation of the transactions
contemplated thereby without limitation, (ii) the representations and warranties
contained in Section 2.17 shall expire upon the occurrence of the Closing and
(iii) the representation and warranties contained in Sections 2.9 and (to the
extent relating to matters governed by ERISA) 2.16 shall survive the Closing and
the consummation of the transactions contemplated hereby and shall continue
until the date 60 days following the expiration of the applicable statute of
limitations.
(b) Any valid claim that is properly asserted in writing
pursuant to Section 6.3 prior to the expiration as provided in Section 6.4(a) of
the representation or warranty that is the basis for such claim shall survive
until such claim is finally resolved and satisfied.
6.5 Limitations.
(a) From and after the Closing, except with respect to claims
(i) based on actual fraud, (ii) for specific performance or (iii) made pursuant
to Article VIII, the rights of the Indemnified Parties under this Article VI
shall be the sole and exclusive remedies of the Indemnified Parties and their
respective Affiliates with respect to claims resulting from or relating to any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement contained in this Agreement or otherwise relating to the transactions
that are the subject of this Agreement. The rights of the Parties under Article
VIII shall be the sole and exclusive remedy of the Parties with respect to the
subject matter of Article VIII. Without limiting the generality of the foregoing
two sentences, in no event shall the Buyer, its successors or permitted assigns
be entitled to claim or seek rescission of the transactions consummated under
this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, each of the following five limitations shall apply:
(i) the aggregate liability of the Seller for the sum of all
Damages under Section 6.1(a)(i) and Article VIII shall not exceed an amount
equal to 25% of the Adjusted Purchase Price;
(ii) except in the case of Damages arising under Section
6.1(d), the aggregate liability of the Seller for the sum of all Damages under
this Article VI and Article VIII shall not exceed the Adjusted Purchase Price;
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(iii) no individual claim or series of related claims
for indemnification under Sections 6.1(a)(i), 6.2(a)(i) or 8.2(a) shall be
valid and assertable unless it is (or they are) for
an amount in excess of $50,000;
(iv) the Seller shall be liable under Article VIII for only
that portion of the aggregate Damages under Article VIII which exceeds
$1,500,000 (it being understood that the Seller shall not be liable, in any
event, for the first $1,500,000 of said Damages); and
(v) the Seller shall be liable under clause (a)(i) of Section
6.1 for only that portion of the aggregate Damages under clause (a)(i) of
Section 6.1 and Article VIII which exceeds $3,000,000 (it being understood that
the Seller shall not be liable, in any event, for the first $3,000,000 of said
Damages);
provided, however, that the foregoing limitations shall not apply to a claim
described in Section 6.1(c) or 6.1(d).
(c) In no event shall any Indemnifying Party be responsible or
liable to any Indemnified Party for any Damages or other amounts under this
Article VI or under Article VIII that constitute punitive or other damages that
are not compensatory in nature (other than any such damages suffered by the
Indemnified Party as a result of an obligation to pay such damages to a third
party). The Buyer shall (and shall cause the Technical Services Business to) use
commercially reasonable efforts to pursue all legal rights and remedies
available in order to minimize the Damages for which indemnification is provided
to the Buyer by the Seller under Articles VI or VIII (including without
limitation seeking indemnification by, contribution from, or reimbursement from
the United States Government under all Government Contracts and applicable laws
and regulations where available under the terms of the applicable Government
Contract or applicable laws and regulations), and Damages shall not include any
amounts for which indemnification, contribution or reimbursement is actually
received. The Seller shall use commercially reasonable efforts to pursue all
legal rights and remedies available in order to minimize the Damages for which
indemnification is provided to the Seller by the Buyer under Articles VI or
VIII.
(d) The amount of any Damages for which indemnification is
provided under this Article VI or under Article VIII shall be reduced by (i) any
related recoveries actually received by the Indemnified Party under insurance
policies or other related payments received from third parties, (ii) any
reimbursements or indemnification payments actually received by the Indemnified
Party under any Government Contracts or contracts resulting from Government Bids
and (iii) any Tax benefits actually received by the Indemnified Party or any of
its Affiliates on account of the matter resulting in such Damages or the payment
of such Damages. In the event that the Indemnified Party receives any such
recoveries, reimbursements, indemnification payments or Tax benefits on account
of Damages that have previously been paid by the Indemnifying Party to the
Indemnified Party, the Indemnified Party shall, after receipt thereof, promptly
pay over to the Indemnifying Party the full amount of such recoveries,
reimbursements, indemnification payments or Tax benefits received.
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(e) Notwithstanding anything to the contrary contained in this
Agreement, the Buyer shall not be entitled to make any claim for indemnification
with respect to any matter to the extent the Purchase Price has been adjusted to
reflect such matter pursuant to Section 1.4 and the amount of any Damages for
which indemnification is provided under this Article VI or under Article VIII
shall be calculated net of any accruals, reserves or provisions reflected in the
Final Closing Working Capital Statement relating thereto.
6.6 Treatment of Indemnification Payments. All indemnification payments
made under this Agreement shall be treated by the Parties as an adjustment to
the Adjusted Purchase Price.
6.7 Treatment of Certain Claims.
(a) Notwithstanding the provisions of Section 6.3 hereof
(other than Section 6.3(b), which shall govern the matters referred to therein),
the Parties agree that the provisions of this Section 6.7 shall govern and
control the rights and obligations of the Parties in connection with the claims,
suits, proceedings and actions described in Schedule 6.7 hereto (collectively,
the "Identified Claims"). The Parties acknowledge that, on the terms and
conditions set forth in this Section 6.7, the Identified Claims and all debts,
liabilities and obligations resulting therefrom shall constitute Assumed
Liabilities for all purposes of this Agreement. From and after the Closing, the
Buyer agrees to (a) control and diligently defend the Identified Claims with
counsel selected by the Buyer and reasonably acceptable to the Seller, (b) keep
the Seller advised of the status of such Identified Claims and the defense
thereof and consider in good faith the recommendations made by the Seller with
respect thereto, and (c) diligently seek to obtain reimbursement from the United
States Government or the appropriate subdivision thereof for all Damages and
related costs, fees and expenses incurred by the Buyer in connection with its
defense of such Identified Claims, including without limitation all Damages and
related costs, fees and expenses resulting from any settlement of or judgment
rendered by any Tribunal in connection therewith. The Buyer shall not agree to
the settlement of any Identified Claim without the prior written consent of the
Seller, such consent not to be unreasonably withheld, conditioned or delayed.
The Seller agrees to reimburse the Buyer for all Damages and related costs, fees
and expenses incurred by the Buyer with respect to the Identified Claims for
which the Buyer is not able to obtain reimbursement from the United States
Government or the appropriate subdivision thereof in accordance with this
Section 6.7.
(b) Notwithstanding the provisions of Section 6.3 hereof, the
Seller and the Buyer shall jointly control the conduct of all activities and
proceedings relating to the DCAA 1997 Audit, including without limitation
keeping the other Party informed as to such matter on a continuous and prompt
basis and working together in a reasonable and good faith manner with the goal
of minimizing costs that are not reimbursable.
ARTICLE VII
TERMINATION
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7.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Closing as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written
notice to the Seller in the event the Seller is in material breach, and the
Seller may terminate this Agreement by giving written notice to the Buyer in the
event the Buyer is in material breach, of any representation, warranty, covenant
or agreement contained in this Agreement, including without limitation an
obligation of a Party to close as provided in Article I, and, if the breach is
other than with respect of an obligation of a Party to close as provided in
Article I, such breach is not remedied within 15 days of delivery of written
notice thereof;
(c) the Buyer may terminate this Agreement by giving written
notice to the Seller if the Closing shall not have occurred on or before 5:00
p.m., Washington, D.C. time, on the Termination Date (as defined below) by
reason of the failure of any condition precedent under Section 5.1 hereof
(unless the failure results primarily from a breach by the Buyer of any
representation, warranty, covenant or agreement contained in this Agreement);
and
(d) the Seller may terminate this Agreement by giving written
notice to the Buyer if the Closing shall not have occurred on or before 5:00
p.m., Washington, D.C. time, on the Termination Date by reason of the failure of
any condition precedent under Section 5.2 hereof (unless the failure results
primarily from a breach by the Seller of any representation, warranty, covenant
or agreement contained in this Agreement).
For purposes of this Agreement, "Termination Date" shall mean August 16, 1999;
provided, however, that (a) in the event that, on or before such date, each of
the conditions to the obligations of the Parties to consummate the transactions
contemplated by this Agreement, other than the conditions set forth in Sections
5.1(a)(i) and 5.1(a)(ii) and other than conditions relating to the delivery of
certificates, instruments and documents at the Closing, shall have been
satisfied, then, at the written election of either Party, the Termination Date
shall be extended to the first to occur of (x) the date three Business Days
following the date on which the conditions set forth in Sections 5.1(a)(i) and
5.1(a)(ii) shall have been satisfied and (y) October 15, 1999, and (b) in the
event of the occurrence of an ASA Denial, the Termination Date shall in any
event be extended to the earliest date sufficient to allow each of the Parties
to fully exercise its rights under the provisions of Section 7.3 of this
Agreement.
7.2 Effect of Termination.
(a) Except as set forth in Section 7.2(b), if any Party
terminates this Agreement pursuant to Section 7.1, all obligations of the
Parties hereunder shall terminate without any liability of any Party to the
other Party.
(b) Termination of this Agreement pursuant to clause (b) of
Section 7.1 by reason of a breach prior to the time of such termination of any
covenant or agreement contained
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in this Agreement (but not by reason of a breach of any representation and
warranty, other than a material breach of a representation or warranty that the
breaching party knew was untrue when made) shall not relieve a defaulting or
breaching Party (whether or not it is the terminating Party) from any liability
to the other Party. Without limiting the foregoing, if the transactions
contemplated by this Agreement are not consummated as a result of a material
breach by the Buyer of a representation or warranty that the Buyer knew was
untrue when made or as a result of a material breach of a covenant or agreement
of the Buyer contained in this Agreement, including without limitation a breach
of the Buyer's obligation to close as provided in Article I of this Agreement,
then the Buyer shall immediately pay $5,000,000 in cash to the Seller through a
release of the escrow deposit described below. Such payment will constitute
liquidated damages for such breach. The Buyer has on the date of this Agreement
delivered to the Allfirst Bank, as escrow agent, $5,000,000 pursuant to the
terms of an Escrow Agreement in the form attached hereto as Exhibit G, to
secure the Buyer's obligations under this Section 7.2(b). In the event that
Buyer is required to pay the Seller $5,000,000 as set forth above, then the
parties will promptly give joint written instructions to the escrow agent to
effect such release of the escrow deposit to the Seller. In the event that this
Agreement is terminated for reasons other than those that provide for the
payment to the Seller described above, or if the Closing occurs, then the
parties will promptly give joint written instructions to the escrow agent to
release the escrow deposit to the Buyer.
(c) Notwithstanding any other provision contained in this
Agreement to the contrary, the Confidentiality Agreement shall survive the
termination of this Agreement for any reason.
7.3 ASA Termination Provisions. The Parties agree that the following
arrangements shall apply in the event that, during the period between the date
of this Agreement and the Closing Date, Antarctica Support Associates ("ASA")
shall receive written notice that it has not been awarded the follow-on contract
from the National Science Foundation for work being performed by ASA in
Antarctica (such an event being hereinafter referred to as an "ASA Denial"):
(a) The Seller shall deliver to the Buyer written notice of an
ASA Denial no later than two Business Days following its receipt thereof.
(b) The Buyer shall have the right, for a period of five
Business Days following its receipt of the notice of ASA Denial described in
paragraph (a) above, to deliver to the Seller an irrevocable written notice of
the Buyer's intention to exercise the Buyer's right to terminate this Agreement
on the grounds that there will be a failure of the condition set forth in
Section 5.1(b) to be satisfied due to the occurrence of the ASA Denial.
(c) In the event that the Buyer fails to deliver to the Seller
the notice described in paragraph (b) above during such five Business Day
period, the Buyer shall have no right to assert the occurrence of the ASA Denial
in connection with any alleged failure of any of the
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conditions to the obligation of the Buyer to consummate the transactions
contemplated by this Agreement.
(d) In the event that the Buyer delivers to the Seller the
notice described in paragraph (b) above during such five Business Day period,
the Seller shall have the right, in its sole discretion, to do any of the
following:
(i) reduce the Purchase Price payable by the Buyer to the
Asset Sellers on the Closing Date by $5,000,000, in which case the Buyer shall
have no right to assert the occurrence of the ASA Denial in connection with any
alleged failure of any of the conditions to the obligation of the Buyer to
consummate the transactions contemplated by this Agreement;
(ii) dispute the fact that the ASA Denial constitutes
grounds for the failure of the condition set forth in Section 5.1(b) to be
satisfied, in which case the Parties shall be entitled to the rights and
remedies available to them pursuant to this Agreement; or
(iii) elect to terminate this Agreement, in which case all
obligations of the Parties hereunder shall terminate without any liability of
any kind of either Party to the other Party, except as otherwise provided in
this Article VII.
The Seller shall provide the Buyer with written notice of its election pursuant
to this paragraph (d) within five Business Days after its receipt of the notice
from the Buyer described in paragraph (b) above.
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 Definitions. As used in this Article VIII, the term "Damages" shall
have the meaning assigned to it under Section 6.1 and shall also include all
"costs of response" within the meaning of CERCLA and all costs recoverable
pursuant to any other Environmental Law.
8.2 Environmental Indemnification by the Seller.
(a) Subject to the terms and conditions of this Article VIII,
with respect to any claim properly asserted in writing by the Buyer prior to the
fifth anniversary of the Closing Date, the Seller shall indemnify the Buyer in
respect of, and hold the Buyer harmless against:
(i) any Damages incurred or suffered by the Buyer or any
subsidiary thereof, or any of their respective directors, officers, employees,
agents and representatives, as a result of any failure by any Asset Seller to
comply with any applicable Environmental Law prior to the Closing Date in
connection with the operation of the Technical Services Business; and
(ii) any Damages incurred or suffered by the Buyer or any
subsidiary thereof, or any of their respective directors, officers, employees,
agents and representatives, as a
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result of any Handling of Materials of Environmental Concern or Release of
Materials of Environmental Concern to the Environment (which for purposes of
this Agreement include the exposure of human beings to Materials of
Environmental Concern) in connection with the operation of the Technical
Services Business that occurred prior to the Closing Date.
(b) The Seller's obligation set forth in Section 8.2(a) to
indemnify and hold harmless the Buyer shall be subject to the following
limitations:
(i) all Damages comprising costs and expenses incurred in
(x) the performance of actions necessary to comply with Environmental Law, (y)
the payment of a fine or penalty pursuant to an Environmental Law or (z) the
investigation and remediation of a Release of Materials of Environmental
Concern to the Environment shall, subject to the other limitations set forth in
this Article VIII, be indemnifiable pursuant to Section 8.2(a) only if such
Damages are incurred (A) in response to an order, notice of violation or other
directive issued by a Governmental Entity and directing the Buyer to
specifically perform such activities or make such payments or (B) due to the
performance of actions necessary to respond to and ▇▇▇▇▇ an imminent risk to
human health or the environment;
(ii) the Buyer shall not be entitled to indemnification under
this Article VIII for Damages that arise as a result of the Buyer's voluntary
disclosure to a third party (other than a subsidiary of the Buyer) of
information or data, except to the extent that the Buyer is required to do so
pursuant to applicable law or the order, notice or other directive of a
Governmental Entity specifically requiring such disclosure;
(iii) the Seller shall not be required to indemnify the Buyer
for Damages that arise from the Buyer's failure to continue to perform properly
all remedial actions and programs in existence and operation at the Technical
Services Properties as of the Closing Date;
(iv) the Seller shall not be required to indemnify the Buyer
for any Damages that are incurred as a result of a material change in the use
of a Technical Services Property following the Closing Date; and
(v) whenever an obligation to investigate or remediate a
Release of Materials of Environmental Concern to the Environment exists pursuant
to an order, notice of violation or other directive issued by a Governmental
Entity, costs and expenses incurred in connection with such activities shall,
subject to the other limitations set forth in this Article VIII, be
indemnifiable pursuant to Section 8.2(a) only to the extent (A) required for
the remediation of Materials of Environmental Concern to industrial usage levels
or risk based cleanup standards based upon industrial usage under applicable
Environmental Law as of the date remediation is completed or (B) necessary to
obtain a "no further action" letter or the equivalent from the Governmental
Entity with primary jurisdiction thereof.
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(c) The Buyer shall give prompt written notification to the
Seller of the commencement of any action, suit or proceeding for which
indemnification under this Section 8.2 may be sought or, if earlier, upon the
assertion of any claim or commencement of any inquiry for which indemnification
under this Section 8.2 may be sought, whereupon the Seller shall assume
exclusive control of the defense and settlement of such action, suit,
proceeding, claim or inquiry; provided, however, that no delay on the part of
the Buyer in notifying the Seller shall relieve the Seller from any obligation
under this Section 8.2 except to the extent that the Seller is prejudiced
thereby. Prior to the Seller's assumption of exclusive control, the Buyer may
take such action, if any, as may be reasonably necessary to avoid a loss of its
rights or to respond to and ▇▇▇▇▇ the existence of an imminent risk to human
health or the environment; provided, however, that the Buyer shall not have the
right to settle any such matter during such period. Without limiting the
generality of the foregoing, if an obligation of the kind specified in Section
8.2(b)(i) exists: (i) the Seller shall determine, control and undertake the
actions to be taken in order to comply with or satisfy such obligation and (ii)
the Buyer shall be provided reasonable notice and opportunity to comment (at its
own cost and expense) upon the Seller's plans for addressing such obligation.
Without the prior written consent of the Buyer, which shall not be unreasonably
withheld, conditioned or delayed, the Seller shall conduct the defense and/or
management of the matters that are the subject of this Section 8.2(c) so as not
to, and shall only agree to terms for any settlement of such matters that will
not, (x) subject the Buyer to new material Damages under an Environmental Law
that are not subject to indemnification by the Seller under this Article VIII or
(y) significantly disrupt the Buyer's business or operations on any affected
property.
(d) In addition to the agreements of the Parties set forth in
Section 10.1, the Buyer shall, and shall cause its subsidiaries to, cooperate
with the Seller (as the Seller may reasonably direct) in connection with the
investigation, defense, settlement or performance of the Seller's agreements in
this Section 8.2. Without limiting the generality of the foregoing, as to all
matters with respect of which the Seller has agreed to indemnify the Buyer and
its subsidiaries, the Buyer shall, and shall cause its subsidiaries to (i)
assign (to the extent allowable by law) to the Seller (or its designee) all
existing contracts with independent consultants, attorneys and other advisors
relating to such matters, (ii) take all reasonable steps necessary to allow any
counsel, consultants or other advisors representing the Technical Services
Business with respect to such matters to represent the Seller (or its designee)
with respect to such matters, and (iii) take all such other actions as the
Seller may reasonably request to assist the Seller in respect of the foregoing.
8.3 General Limitations.
(a) The provisions of Sections 6.5 and 6.6 are applicable to this
Article VIII.
(b) Except for claims based on actual fraud and for claims
under Section 6.1(d), this Article VIII shall be the sole and exclusive remedy
of (i) the Buyer and its subsidiaries against the Seller or any of its
subsidiaries, and their respective present or former officers, directors and
employees, agents, attorneys or contractors, and (ii) the Seller and its
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subsidiaries against the Buyer or any of its subsidiaries, and their respective
present or former officers, directors and employees, agents, attorneys or
contractors, for any and all claims, Damages or other matters related to the
Technical Services Business and arising at any time under Environmental Laws or
under any common law with respect to Materials of Environmental Concern.
(c) The Buyer and the Seller hereby waive (and shall cause
their subsidiaries and the respective successors and assigns of the Buyer, the
Seller, and their respective subsidiaries to waive) any right to seek
contribution or other recovery from each other or their subsidiaries or any
present or former officer, director or employee, agent, attorney or contractor
of the Buyer or any Asset Seller with respect to events related to the Technical
Services Business prior to the Closing that the Buyer and its subsidiaries or
any of them may now or in the future have under any Environmental Law or any
common law providing for any remedy or right of recovery with respect to
Environmental Matters or Materials of Environmental Concern other than as
expressly provided for in this Article VIII. The Buyer and the Seller hereby
release (and shall cause their subsidiaries and the respective successors and
assigns of the Buyer, the Seller, and their respective subsidiaries to release)
each other and their respective subsidiaries and all present or former officers,
directors and employees, agents, attorneys or contractors of the Buyer or any
Asset Seller from any and all such claims, demands and causes of action relating
to the Technical Services Business.
8.4 Environmental Indemnification by the Buyer.
(a) Except as otherwise specifically provided in this Article
VIII and regardless of whether the events giving raise to the Damages occurred
or are alleged to have occurred before or after the Closing, from and after the
Closing, the Buyer shall indemnify the Seller and its subsidiaries, and their
respective directors, officers, agents and representatives, in respect of, and
hold the Seller and its subsidiaries harmless against, any and all Damages
related to the Technical Services Business arising under Environmental Laws or
as a result of any Handling of Materials of Environmental Concern or Release of
Materials of Environmental Concern to the Environment as to which the Seller is
not obligated to indemnify the Buyer pursuant to this Article VIII.
(b) The procedures set forth in Section 6.3 shall apply with
respect to any claim for indemnification made by the Seller or its Affiliates
pursuant to this Section 8.4.
ARTICLE IX
TAX MATTERS
9.1 Payment of Taxes.
(a) The Buyer, on the one hand, and the Asset Sellers, on the
other hand, shall each be responsible for the payment of fifty percent of any
transfer, sales, use, stamp, conveyance, value added, recording, registration,
documentary, filing and other similar non-
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Income Taxes arising in connection with the consummation of the transactions
contemplated by this Agreement. The Asset Sellers shall be responsible for the
payment of all Pre-Closing Income Taxes arising out of or relating to the
Technical Services Business. The Seller shall promptly pay, or cause to be paid,
after Closing any Pre-Closing Taxes that have given rise to, or could give rise
to, any lien or other encumbrance on the Assets in the hands of the Buyer;
provided, however, that the Seller shall not be required to pay such Taxes to
the extent a reserve for the amount of such Taxes is set forth on the Final
Closing Working Capital Statement.
(b) For purposes of this Agreement:
(i) "Pre-Closing Taxes" means all Taxes for Tax periods (or
portions thereof) ending on or before the Closing Date.
(ii) "Income Taxes" shall mean all Taxes that are imposed on
or measured by income; and
(iii) in the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of such Taxes payable for the period (or portion thereof)
ending on the Closing Date shall be (A) in the case of any Income Taxes, and in
the case of sales or use Tax, the amount which would be payable if the taxable
year ended as of the end of the Closing Date and (B) in the case of any other
Tax, such as property Tax, the amount of such Tax for the entire period
multiplied by a fraction, the numerator of which is the number of days in the
period ending on the Closing Date and the denominator of which is the number of
days in the entire period.
ARTICLE X
FURTHER AGREEMENTS
10.1 Access to Information; Record Retention; Cooperation.
(a) Access to Information. Subject to compliance with
applicable laws and regulations regarding classified information and security
clearance, during the ten year period commencing on the Closing Date, each Party
shall afford to the other Party and to the other Party's Affiliates, authorized
accountants, counsel and other designated representatives reasonable access
(including without limitation using reasonable efforts to give access to third
parties possessing information and providing reasonable access to its own
employees who are in possession of relevant information) and duplicating rights
during normal business hours to all non-privileged records, books, contracts,
instruments, documents, correspondence, computer data and other data and
information (collectively, "Information") within the possession or control of
such Party or its Affiliates, relating to the Technical Services Business or
their respective businesses or operations prior to the Closing, insofar as such
access is reasonably required by the other Party. Information may be requested
under this Section 10.1(a) for, without limitation, financial reporting and
accounting matters, preparing financial statements, preparing, reviewing
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and analyzing the Closing Working Capital Statement, resolving any differences
between the Parties with respect to the Closing Working Capital Statement,
preparing and filing of any Tax Returns, prosecuting any claims for refund,
defending any Tax claims or assessment, preparing securities law or exchange
filings, prosecuting, defending or settling any proposals, claims or other
matters in any arbitration, mediation or administrative proceeding or
litigation, Environmental Matter or insurance claim, performing this Agreement
and the transactions contemplated hereby, and all other proper business
purposes.
(b) Access to Personnel. Following the Closing, each Party
shall use reasonable efforts to make available to the other Party, upon written
request, such Party's and its Affiliates' officers, directors, employees and
agents to the extent that such persons may reasonably be required in connection
with any legal, administrative or other proceedings in which the requesting
Party may from time to time be involved relating to the Technical Services
Business or their respective businesses or operations prior to the Closing or
for any other matter referred to in Section 10.1(a).
(c) Reimbursement. A Party providing Information or personnel
to the other Party under Section 10.1(a) or (b) shall be entitled to receive
from the recipient, upon the presentation of invoices therefor, payments for
such amounts, relating to supplies, disbursements and other out-of-pocket
expenses, as may be reasonably incurred in providing such Information; provided,
however, that no such reimbursements shall be required for the salary or cost of
fringe benefits or similar expenses pertaining to employees or directors of the
providing Party or its Affiliates, except to the extent that the total number of
hours of services of such employees and directors made available by the
providing Party and its Affiliates pursuant to this Section 10.1(c), together
with the number of hours of services made available by the providing Party in
providing the cooperation in litigation contemplated by Section 10.8, exceeds
1,000 hours in any calendar year. Any services beyond such 1,000 hours in any
calendar year shall be provided at the providing Party's or its Affiliate's
direct compensation costs as to the relevant employees (including without
limitation costs for salary and benefits).
(d) Retention of Records. Except as otherwise required by law
or agreed to in writing by the Parties, each Party shall (and shall cause its
Affiliates to) use reasonable efforts to preserve all Information in its
possession pertaining to the Technical Services Business and its business and
operations prior to the Closing until December 31, 2005. Notwithstanding the
foregoing, in lieu of retaining any specific Information, any Party may offer in
writing to the other Party to deliver such Information to the other Party and,
if such offer is not accepted within 90 days, the offered Information may be
disposed of at any time.
(e) Preparation of Seller Financial Statements. Following the
Closing, the Buyer shall cause the Technical Services Business to prepare and
provide to the Seller and its Affiliates all information (subject to applicable
laws regarding classified information and security clearance) relating to the
Technical Services Business reasonably required for the Seller and its
Affiliates to prepare the (i) Closing Working Capital Statement and (ii)
financial statements of the Seller and its Affiliates. Without limiting the
generality of the foregoing, the
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Buyer shall cause the Technical Services Business to prepare, in accordance
with past practice prior to the Closing, full accounting packages (which will
be provided to the Seller in paper and electronic formats) using the Seller's
normal accounting policies, principles, bases, methods and procedures and the
Buyer shall cause the Technical Services Business to use its best efforts to act
in full compliance with the reasonable timetable and instructions of the Seller.
During the periods of preparation of the (i) Closing Working Capital Statement
and (ii) audited financial statements of either Party that include pre-Closing
periods, each Party shall use its best efforts to ensure that the other Party
and its Affiliates (and their auditors) will be provided with full unrestricted
access (subject to applicable laws regarding classified information and security
clearance) to the Technical Services Business, its financial management and any
accountant's work papers (subject to such person's executing and delivering such
agreements, waivers and indemnification arrangements as the applicable
accountants may request as a condition to such access), and their books,
accounts and records and will be able to review the work being carried out in
accordance with this Section.
(f) Confidentiality. The Seller shall hold, and shall use
reasonable efforts to cause its Affiliates, consultants and advisors to hold, in
strict confidence all Information concerning the Technical Services Business
within the possession of the Seller prior to Closing (except to the extent that
such Information (i) is or becomes generally available to the public other than
as a result of a disclosure by the Seller in violation of the terms of this
Section 10.1, (ii) is or becomes available to the Seller following the Closing
from a source other than the Buyer, provided that such source is not, to the
knowledge of the Seller at the time of receipt, bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Buyer or any other party with respect to such
information, or (iii) was or is independently developed by the Seller following
the Closing without utilizing any Information or violating any of the Seller's
obligations under this Agreement), and the Seller shall not release or disclose
such Information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors, unless compelled to
disclose such Information by judicial or administrative process or, as advised
by its counsel, by other requirements of law; provided, however, that in the
case of disclosure compelled by judicial or administrative process, the Seller
shall notify the Buyer promptly of the request or requirement so that the Buyer
may seek an appropriate protective order or waive compliance with the provisions
of this Section 10.1(f). If, in the absence of a protective order or the receipt
of a waiver hereunder, the Seller is, on the advice of counsel, compelled to
disclose any Information by judicial or administrative process, the Seller may
so disclose the Information; provided, however, that, at the written request of
the Buyer, the Seller shall use commercially reasonable efforts to obtain, at
the expense of the Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Information required to be
disclosed.
(g) Performance of DARPA Agreement. From and after the
Closing, the Buyer and Wallac shall cooperate in the performance of the contract
listed in Item 3 of Schedule 1.1(a)(v) in a manner substantially similar to the
manner in which the Seller and Wallac have cooperated in the performance of such
contract prior to the Closing.
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10.2 Covenant Not to Compete.
During the period commencing on the Closing Date and continuing until
the date that is 42 months after the Closing Date (the "Noncompetition Period"),
the Seller shall not and shall cause each Noncompetition Party (as defined
below) not to, directly or indirectly, engage in the business of (A) providing
services to the United States Government (whether directly or indirectly as a
subcontractor at any tier) for projects in the areas of base and range
operations, sciences and engineering, logistics, asset management and chemical
demilitarization or (B) providing privatization services for former military
facilities of the United States Government, including related services to the
tenants of such facilities (each of the businesses referred to in clauses (A)
and (B) of this paragraph being hereinafter referred to as a "Competitive
Business"); provided, however, that the foregoing covenant shall not prohibit,
or be interpreted as prohibiting, any Noncompetition Party from:
(a) continuing anywhere in the world in any type of business
conducted by any Noncompetition Party on the date hereof, which is not part of
the Technical Services Business;
(b) entering into any relationship with a person or entity not
owned, managed, operated or controlled by any Noncompetition Party for purposes
primarily unrelated to a Competitive Business;
(c) making equity investments in publicly owned companies
which conduct a Competitive Business, provided such investments (on the date
made) represent less than 5% of the outstanding capital stock of any such
Competitive Business and do not confer control of such Competitive Business upon
any Noncompetition Party; or
(d) acquiring any person or entity which conducts a
Competitive Business if either:
(i) in the calendar year prior to such acquisition, the
revenues of such person or entity from its Competitive
Business do not constitute more than 20% of the total
revenues of such person or entity; or
(ii) the applicable Noncompetition Party promptly commences
and thereafter pursues for a period of 12 months after
such acquisition the transfer of that portion of the
business of such person or entity as constitutes a
Competitive Business upon terms and conditions and at a
price determined by the applicable Noncompetition Party
in its sole discretion, failing which the applicable
Noncompetition Party shall for a period of three months
following such 12 month period negotiate with the Buyer
in good faith for the sale of such Competitive Business
to the Buyer on terms and conditions and at
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a price mutually agreeable to the applicable
Noncompetition Party and the Buyer.
For purposes of the Agreement, "Noncompetition Party" means each of the Seller
and any direct or indirect majority-owned subsidiaries of the Seller while (but
only while) such entity is a direct or indirect majority-owned subsidiary of the
Seller.
10.3 Disclosure Generally.
(a) The inclusion of any information in the Disclosure
Schedule (or any update thereto) shall not be deemed to be an admission or
acknowledgment, in and of itself, that such information is required by the terms
hereof to be disclosed, is material to the Technical Services Business, has or
would have a TSB Material Adverse Effect, or is outside the Ordinary Course of
Business. For purposes of this Agreement, the terms "to the Seller's knowledge,"
"known by the Seller" or other words of similar meaning shall mean the actual
knowledge of the persons named in Schedule 10.3(a) hereof, and shall not refer
to the knowledge of any other person or entity.
(b) From time to time commencing on the date of this Agreement
and until the Closing Date, the Seller shall deliver to the Buyer written notice
of any event or development that would (i) render any statement, representation
or warranty of the Seller in this Agreement (including the Disclosure Schedule)
inaccurate or incomplete in any material respect or (ii) constitute or result in
a breach by the Seller of, or a failure by the Seller to comply with, any
agreement or covenant in this Agreement applicable to it.
(c) From time to time commencing on the date of this Agreement
and until the Closing Date, the Buyer shall deliver to the Seller written notice
of any event or development that would (i) render any statement, representation
or warranty of the Buyer in this Agreement inaccurate or incomplete in any
material respect or (ii) constitute or result in a breach by the Buyer of, or a
failure by the Buyer to comply with, any agreement or covenant in this Agreement
applicable to it.
10.4 Acknowledgements by the Buyer. THE REPRESENTATIONS AND WARRANTIES
OF THE SELLER SET FORTH IN ARTICLE II OF THIS AGREEMENT CONSTITUTE THE SOLE AND
EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE SELLER TO THE BUYER IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND THE BUYER UNDERSTANDS,
ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY
KIND OR NATURE WHETHER EXPRESS, IMPLIED OR STATUTORY (INCLUDING WITHOUT
LIMITATION ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS
OF OPERATIONS, ASSETS OR LIABILITIES OF THE TECHNICAL SERVICES BUSINESS AND ANY
SET FORTH IN THE DESCRIPTIVE MEMORANDUM PREVIOUSLY DELIVERED TO THE BUYER) ARE
SPECIFICALLY DISCLAIMED BY THE SELLER.
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10.5 Certain Insurance Matters.
(a) Novation Period Insurance Coverage. During the Novation
Period, in accordance with terms and conditions of Section 1.6 hereof, the Buyer
shall maintain the following insurance coverages with the limits set forth below
in respect of the Novation Assets and the business conducted by the Asset
Sellers pursuant to Section 1.6 hereof (subject in each case to the deductibles,
limits and other terms and conditions of such policies):
Type of Insurance Limit
----------------- -----
Workers' Compensation Statutory Limit
Employers' Liability $500,000 per occurrence
General Liability $1,000,000 per occurrence
Automobile Liability $1,000,000 per accident
(covering owned, non-owned and
hired vehicles)
Umbrella Excess Liability $10,000,000 per occurrence
(excess of Employers', General
and Auto Liability)
The Buyer shall be responsible for all costs and expenses incurred in
maintaining the insurance coverages listed above.
(b) Property Insurance. If property insurance coverage is
required by the terms of any Government Contract or contract resulting from a
Government Bid, the Buyer shall, during the Novation Period, maintain the
requisite property insurance policies.
(c) Other Insurance Matters. The Buyer shall provide to the
Seller at the Closing appropriate certificates of insurance evidencing the
coverages described in Sections 10.5(a) and 10.5(b). During the Novation Period,
the Buyer shall provide to the Seller written notice of any cancellation of, or
material change to, the insurance coverages listed in Sections 10.5(a) and
10.5(b) at least 30 days prior to the effective date of any such cancellation or
material change; provided, however, that the provision by the Buyer to the
Seller of any such notice shall not relieve the Buyer from any of its duties and
obligations to maintain the insurance coverages required by Sections 10.5(a) and
10.5(b) hereof.
(d) Post-Novation Period Insurance. After the Novation Period,
the Buyer shall be responsible for maintaining insurance coverages at levels and
on terms customary for an entity of similar size engaged in similar operations,
but in no event less than what is required by the Government Contracts or
subcontracts for which any Asset Seller is or may be liable, whether under the
terms of the Novation Agreement or otherwise. The Buyer shall, from time to time
and at the request of the Seller, provide the Seller with certificates of
insurance evidencing the coverages contemplated by this Section 10.5(d).
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(e) Pre-Closing Insurance Matters. The Buyer shall be entitled
to the benefit and receipt of, and the Seller agrees to use commercially
reasonable efforts to pursue, any claims and/or recoveries under any insurance
policies maintained by any of the Asset Sellers with respect to matters which
constitute Assumed Liabilities (subject in each case to the deductibles, limits
and other terms and conditions of such policies). The Asset Sellers shall use
commercially reasonable efforts to maintain, and shall not take any steps to
prospectively or retrospectively cancel, buy-out or remove the Asset Sellers as
additional insureds from, any and all insurance policies providing coverage for
all periods prior to Closing with respect to any events, occurrences or matters
occurring prior to the Closing which constitute or may constitute Assumed
Liabilities (subject in each case to the deductibles, limits and other terms and
conditions of such policies).
10.6 Certain Employee Benefits Matters.
(a) Pre-Closing Conduct; Other Liabilities. The Buyer shall be
liable for any amounts to which any employee of an Asset Seller engaged in the
Technical Services Business (a "Technical Services Employee") becomes entitled
under any employment arrangements implemented by the Buyer or that exists or
arises (or may be deemed to exist or arise) under any applicable law or
otherwise, as a result of, or in connection with, (i) the employment of any
Technical Services Employee by the Buyer after the Closing Date or (ii) the
termination of employment of any Technical Services Employee by the Buyer after
the Closing Date.
(b) Offer of Employment.
(i) The Parties intend that there shall be continuity of
employment with respect to all Technical Services Employees. The Buyer shall
offer employment as an employee at will (with respect to employees not covered
by collective bargaining agreements) commencing on the Closing Date to all
Technical Services Employees, including without limitation those on vacation,
leave of absence, disability or layoff, on terms (including without limitation
salary, fringe benefits, job responsibility and location but excluding any
benefits provided under any equity or non-qualified deferred compensation plan)
no less favorable in the aggregate than those provided to such employees by the
Seller or its Affiliates immediately prior to the Closing Date. The Buyer will
give credit for past service with the Seller or its Affiliates for purposes of
participation, vesting and eligibility for benefit levels, but not for benefit
accrual purposes. Those persons who accept the Buyer's offer of employment and
who commence working with the Buyer on the Closing Date shall hereafter be
referred to as "Transferred Employees."
(ii) The Asset Sellers shall use reasonable efforts to assist
the Buyer in its efforts to hire the Technical Services Employees and, in
connection therewith, in communicating with the individuals employed by the
Technical Services Business regarding employment of such individuals by the
Buyer following the Closing. For a period of two years from the Closing Date,
the Seller shall not solicit (other than by general advertising) the services of
any employee of the Buyer who was an employee of the Technical Services
Business on the
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Closing Date; provided, however, that nothing herein shall prohibit the Seller
from hiring any such person who initiates, directly or indirectly, discussions
with the Seller regarding potential employment.
(c) 401(k) Plan Transfer. As soon as practicable after the
Closing Date, the Seller shall cause the transfer of (i) the balances of all
accounts (including without limitation after-tax accounts) of the current
Technical Services Employees who participate under the EG&G, Inc. Savings Plan
(the "Existing 401(k) Plan"), including without limitation outstanding loans of
such persons, (ii) assets having a value equal to said account balances to a
profit-sharing plan maintained by the Buyer which is qualified under Section
401(a) of the Code and which includes a cash or deferred arrangement which
qualifies under Section 401(k) of the Code (the "Buyer's 401(k) Plan"), and
(iii) an amount equal to the matching contributions which would be paid to such
employees calculated as if the Closing Date were the last day of the plan year
of the Existing 401(k) Plan. The Buyer shall, prior to the Closing, notify the
Seller in writing of the identity of the Buyer's 401(k) Plan and shall cause the
Buyer's 401(k) Plan to accept the transfers referred to in the prior sentence.
The assets transferred shall consist of the assets allocated under the Existing
401(k) Plan to the accounts of current Technical Services Employees, including
without limitation promissory notes evidencing outstanding loans of such
persons. From and after such asset transfer, the Buyer shall assume all
responsibility with respect to the Existing 401(k) Plan, including without
limitation all responsibility for the management and administration of the
account balances of the current Technical Services Employees under the Existing
401(k) Plan and the Seller shall have no further obligations with respect
thereto.
(d) Defined Benefit Plans.
(i) As of the Closing Date, the Seller shall cause to be
transferred from the EG&G Employees Retirement Plan ("ERP") to either a new
pension plan adopted by the Buyer or an existing pension plan maintained by the
Buyer ("Buyer Pension Plan") obligations for the pension benefits accrued
through the Closing Date under the ERP for employees, former employees,
retirees (and in all cases beneficiaries thereof) of any Asset Seller who are
or were engaged in the Technical Services Business ("Participants"). The Buyer
Pension Plan (A) is intended to be qualified (or to remain qualified) under
Code Section 401(a) and (B) with respect to Participants, shall be identical in
all material respects to the terms of the ERP.
(ii) In conjunction with such transfer of pension liabilities,
the Seller shall cause to be transferred from the trust maintained under the
ERP to a trust maintained under the Buyer Pension Plan assets in the form of
cash and marketable securities with a market value equal to the market value of
the assets maintained under Cost Accounting Standard ("CAS") 413 for the
Technical Services Business pursuant to the Seller's established cost
accounting practices under the ERP ("CAS 413 Amount"); provided, however, that
in no event will the amount to be transferred be greater than the maximum
amount permitted to be transferred, or less than the minimum amount required to
be transferred, under Section 414(l) of the Code and the
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regulations thereunder. As soon as possible following the Closing Date, the
Seller shall cause the pension assets associated with the Participants to be
transferred from the EG&G Master Trust to a pension trust designated by the
Buyer. Notwithstanding the above, if it is not possible by the Closing Date to
finalize the amount of pension assets to be transferred from the ERP to the
Buyer Pension Plan, then, no later than the Closing Date, the Seller shall
cause to be transferred from the ERP to the Buyer Pension Plan a substantial
portion of such pension assets and, as soon as possible after the Closing Date,
but in no event later than 16 weeks, the Seller shall cause to be transferred
from the ERP the amounts necessary to complete the transfer (which shall
include net earnings attributable to such additional amount from the Closing
Date to the date of final transfer).
(iii) To the extent that the amount of assets actually
transferred pursuant to the preceding paragraph is less than the CAS 413 Amount,
the Seller will be solely responsible for the settlement of any related "segment
closing" obligations with the United States Government. To the extent the
amount of assets transferred pursuant to the preceding paragraph is greater
than the CAS 413 Amount, then, at such time or times, if any, as the Buyer
receives governmental reimbursement by reason of, and for the amount of, such
excess (or any part thereof) the Buyer shall promptly pay to the Seller the
amount of such reimbursement. The Buyer shall use commercially reasonable
efforts to obtain, for the Seller's benefit, any such governmental
reimbursements.
(iv) Upon completion of the transfers of assets and
liabilities described in this Section 10.6(d), the Buyer shall become
responsible for, and the Seller shall cease to have any responsibility for,
the pension liabilities which are transferred in accordance with Section 10.6(d)
and are associated with Participants under the ERP and under the EG&G Retiree
Medical Plan.
(e) Retiree Medical Benefits.
(i) As of the Closing Date, the Seller shall cause to be
transferred from the Seller to the Buyer obligations for retiree medical
benefits accrued by the Participants prior to the Closing Date. The Buyer will
establish a funding vehicle for these retiree medical benefits under the Buyer
Pension Plan that (A) is intended to be qualified under Code Section 401(h) and
(B) with respect to Participants, shall be substantially identical to the terms
of the EG&G Retiree Medical Plan and the ERP provisions pertaining to the EG&G
Retiree Medical Plan.
(ii) In conjunction with the transfer of retiree medical
liabilities, the Seller shall cause to be transferred from the trust maintained
under the ERP to a trust maintained under the Buyer Pension Plan assets in cash
and marketable securities with a market value equal to the market value of the
assets maintained under CAS 416 and/FAR Subpart 31.205-6(o) for the Technical
Services Business pursuant to the Seller's established cost accounting practices
under the ERP ("CAS 416 Amount"); provided, however, that in no event will the
amount to be transferred be greater than the maximum amount required to be
transferred, or less than the
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minimum amount permitted to be transferred, under the Code and the regulations
thereunder. As soon as possible following the Closing Date, the Seller shall
cause the retiree medical assets associated with the Participants to be
transferred from the EG&G Master Trust to a pension trust designated by the
Buyer. Notwithstanding the above, if it is not possible by the Closing Date to
finalize the amount of retiree medical assets to be transferred from the ERP to
the Buyer Pension Plan then, no later than the Closing Date, the Seller shall
cause to be transferred from the ERP to the Buyer Pension Plan a substantial
portion of such assets and, as soon as possible after the Closing Date, but in
no event later than 16 weeks, the Seller shall cause to be transferred from the
ERP the amounts necessary to complete the transfer (which shall include
earnings attributable to such additional amount from the Closing Date to the
date of final transfer).
(iii) To the extent that the amount of assets actually
transferred pursuant to the preceding paragraph is less than the CAS 416 Amount,
the Seller will be solely responsible for the settlement of any related
obligations with the United States Government. To the extent the amount of
assets transferred pursuant to the preceding paragraph is greater than the CAS
416 Amount, then, at such time or times, if any, as the Buyer receives
governmental reimbursement by reason of, and for the amount of, such excess (or
any part thereof) the Buyer shall promptly pay to the Seller the amount of such
reimbursement. The Buyer shall use commercially reasonable efforts to obtain,
for the Seller's benefit, any such governmental reimbursements.
(iv) Upon completion of the transfers of assets and
liabilities described in this Section 10.6(e), the Buyer shall become
responsible for, and the Seller shall cease to have any responsibility for, the
retiree medical liabilities which are transferred in accordance with Section
10.6(e) and are associated with Participants under the ERP and under the EG&G
Retiree Medical Plan.
(f) Calculations. The calculations contemplated by Section
10.6(d) and (e) shall be made first by the Seller's actuary. The Seller's
actuary shall provide a copy of such calculations to the Buyer's actuary
promptly upon completion thereof along with such other information as the
Buyer's actuary may reasonably request. The Buyer's actuary shall be provided
with sufficient data to verify such calculations prior to the finalization of
the asset transfer. If the Buyer's actuary concludes that the calculations made
by the Seller's actuary are incorrect or inconsistent with Section 10.6(d) or
(e), the Parties shall seek to reduce the difference among themselves or, if
they are unable to do so, shall resolve such matter in accordance with the
following procedure:
(i) If the Parties do not reach a final resolution within 30
days after the Seller's actuary has provided the calculations to the Buyer's
actuary, unless the Parties mutually agree to continue their efforts to resolve
such differences, an actuary selected jointly by the Buyer's actuary and the
Seller's actuary (or, if such actuaries are unable to jointly agree on such an
actuary, an arbitrator selected by the Washington, D.C. office of the American
Arbitration Association) (the "Arbitrator") shall resolve such differences in
the manner provided below. The Parties shall each be entitled to make a
presentation to the Arbitrator, pursuant to
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procedures to be agreed to among the Seller, the Buyer and the Arbitrator,
advocating the merits of the calculations espoused by such Party; and the
Arbitrator shall be required to resolve the differences between the Parties and
determine the appropriate calculations within ten Business Days thereafter.
Such determination by the Arbitrator shall be conclusive and binding upon the
Parties, absent fraud or manifest error.
(ii) Nothing herein shall be construed to authorize or permit
the Arbitrator to determine any questions or matters whatsoever under or in
connection with this Agreement except for the resolution of differences between
the Parties regarding the calculations referenced in this Section 10.6(f).
(iii) The Seller, on the one hand, and the Buyer, on the other
hand, shall share equally the fees and expenses of the Arbitrator; provided
that if the Arbitrator determines that one Party has adopted a position or
positions with respect to the calculations referenced in this Section 10.6(f)
that is frivolous or clearly without merit, the Arbitrator may, in his
discretion, assign a greater portion of any such fees and expenses to such
Party.
The Seller and the Buyer shall cooperate to file any necessary governmental
forms with respect to the above-described transfer of assets and liabilities.
(g) Compensation; Employee Benefits; Severance Plans. Except
as otherwise provided in this Section 10.6 or as otherwise required by
applicable law, the Technical Services Employees shall cease to participate in
or accrue further benefits under the TSB Plans immediately prior to the Closing
Date. Starting on the Closing Date, the Buyer shall, for a period ending on the
date twelve (12) months after the Closing Date, provide each Transferred
Employee who continues his or her employment after the Closing Date with total
cash compensation (including without limitation base salary and bonus
opportunity at least equal to those in effect on the Closing Date but excluding
any benefit provided under any equity or non-qualified deferred compensation
plan) that is no less favorable in the aggregate to such Transferred Employee's
total cash compensation immediately prior to the Closing Date. Starting on the
Closing Date, the Buyer shall also, for a period ending on the date twelve (12)
months after the Closing Date, maintain (or cause its subsidiaries to maintain)
employee benefit plans, agreements, programs, policies and arrangements for the
benefit of each Transferred Employee that are not materially less favorable in
the aggregate than the Employee Benefit Plans in effect immediately prior to the
Closing Date with respect to such Transferred Employee ("Buyer Plans");
provided, that such comparison shall exclude, and the Buyer shall not be
required to provide to any Transferred Employee, any equity plan or
non-qualified deferred compensation plan. Notwithstanding anything to the
contrary in this Agreement, starting on the Closing Date the Buyer shall, for a
period ending on the date twelve (12) months after the Closing Date, maintain
(or cause its subsidiaries to maintain) a severance pay plan, program or
practice for the benefit of each Transferred Employee that is no less favorable
than the plan, program or practice in effect immediately prior to the Closing
Date with respect to such Transferred Employee and which is disclosed in the
Disclosure Schedule.
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(h) Multiemployer Plans. If, solely as the result of any
transfer of Assets from an Asset Seller to the Buyer pursuant to the terms and
conditions of this Agreement, an Asset Seller (i) ceases operations covered
under any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to
which such Asset Seller contributes, is required to contribute or has ever been
required to contribute and which covers current Technical Services Employees (a
"Multiemployer Plan") or (ii) ceases to have an obligation to contribute to a
Multiemployer Plan under circumstances that would cause the occurrence of a
complete or partial withdrawal by such Asset Seller from such Multiemployer
Plan, then the following provisions shall apply with respect to such
Multiemployer Plan:
(i) From and immediately after the Closing, the Buyer shall
be obligated to contribute to the Multiemployer Plan with respect to the
operations for substantially the same number of contribution base units for
which the applicable Asset Seller was obligated to contribute to the
Multiemployer Plan with respect to the operations;
(ii) The Buyer shall provide to the Multiemployer Plan for a
period of five plan years of the Multiemployer Plan (individually, a "Plan Year"
and collectively, "Plan Years") commencing with the first Plan Year beginning
after the Closing, a bond issued by a corporate surety company that is an
acceptable surety for purposes of Section 412 of ERISA, an amount held in
escrow by a bank or similar financial institution satisfactory to the
Multiemployer Plan or (if permitted by the Multiemployer Plan) a letter of
credit issued by such a bank or institution, in an amount equal to the greater
of (A) the average annual contribution required to have been made by the Asset
Seller with respect to the operations under the Multiemployer Plan for the
three Plan Years preceding the Plan Year in which the Closing occurs, or (B)
the annual contribution that the Asset Seller was required to have made with
respect to the operations under the Multiemployer Plan for the last Plan Year
before the Plan Year in which the Closing occurs, which bond or escrow shall
be paid to the Multiemployer Plan if the Buyer withdraws from the Multiemployer
Plan or fails to make a contribution to the Multiemployer Plan when due, at any
time during the first five Plan Years beginning after the Closing; and
(iii) If the Buyer withdraws from the Multiemployer Plan in a
complete withdrawal or a partial withdrawal with respect to the operations
during such first five Plan Years and does not pay any withdrawal liability
resulting therefrom, the Asset Seller shall be secondarily liable for any
withdrawal liability it would have had to the Multiemployer Plan with respect
to the operations covered under the Multiemployer Plan (but for Section 4204 of
ERISA) if the liability of the Buyer with respect to such Multiemployee Plan is
not paid.
This Section 10.6(h) is intended to meet the conditions established under
Section 4204(a)(1) of ERISA for relief from liability for a complete or partial
withdrawal and shall be interpreted and applied accordingly. The Buyer and each
Asset Seller agree to cooperate to obtain the benefits of the variance under 29
C.F.R. ss. 4204.11, if available, or, if not, to seek an individual variance or
exemption under 29 C.F.R. ss. 4204.21.
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The Buyer agrees that it is obligated (i) to make all contributions which may be
required to be made to the Multiemployer Plans from and immediately after the
Closing and (ii) to pay any withdrawal liability imposed under the Multiemployer
Plans based on events occurring from and immediately after the Closing, and that
the Asset Sellers shall have no liability therefor.
(i) Welfare Plans. With respect to any Buyer Plan that is a
"welfare benefit plan" (as defined in Section 3(1) of ERISA) or any Buyer Plan
providing health and welfare benefits, the Buyer shall (i) cause to be waived
any pre-existing condition limitations, (ii) give effect, in determining any
deductible and maximum out-of-pocket limitations, to claims incurred and amounts
paid by, and amounts reimbursed to, Transferred Employees with respect to
similar plans maintained by the Asset Sellers immediately prior to the Closing
Date and (iii) recognize all credited service for purposes of eligibility and
vesting and level of benefits to the same extent such service was recognized
under similar plans maintained by the Asset Sellers immediately prior to the
Closing Date. The Buyer shall make appropriate arrangements to allow the use by
Transferred Employees of any accrued benefits under any cafeteria plan or
medical flexible spending account (as defined in Section 125 of the Code and
proposed, temporary and final regulations thereunder) which was maintained by
any Asset Seller for such Transferred Employees. The Asset Sellers shall remain
solely liable for any and all liabilities to or in respect of the Transferred
Employees or their beneficiaries or dependents relating to or arising in
connection with any claims, whether such claims are asserted before, on or after
the Closing Date, for life, disability, accidental death or dismemberment,
supplemental unemployment compensation, medical, dental, hospitalization, or
other health or welfare or fringe benefits or expense reimbursements which
claims relate to or are based on an occurrence on or before the Closing Date
(including claims for continuing treatment in respect of any illness,
disability, condition or confinement which occurs on or before the Closing Date)
but in each case only to the extent such liabilities are not reflected on the
Final Closing Working Capital Statement.
(j) Accrued Personal, Sick and Vacation Time. With respect to
any accrued but unused personal, sick or vacation time to which any Transferred
Employee is entitled pursuant to the personal, sick or vacation policies
applicable to such Transferred Employee immediately prior to the Closing Date
(the "PSV Policies"), the Buyer shall assume the liability for such accrued
personal, sick or vacation time and allow such Transferred Employee to use such
accrued personal, sick or vacation time; provided, however, that if the Buyer
deems it necessary to disallow such Transferred Employee from taking such
accrued personal, sick or vacation time, the Buyer shall be liable for and pay
in cash to each such Transferred Employee an amount equal to such personal, sick
or vacation time in accordance with the terms of the PSV Policies; and provided,
further, that the Buyer shall be liable for and pay in cash an amount equal to
such accrued personal, sick or vacation time to any Transferred Employee whose
employment terminates for any reason subsequent to the Closing Date.
(k) U.S. WARN Act. The Buyer agrees to provide any required
notice under the Worker Adjustment and Retraining Notification Act ("WARN") and
any other applicable law and to otherwise comply with any such statute with
respect to any "plant closing" or "mass layoff' (as defined in WARN) or similar
event affecting employees and occurring on or after the
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Closing Date or arising as a result of the transactions contemplated hereby.
The Buyer shall indemnify and hold harmless the Seller as provided in Article
VI of this Agreement against all Damages relating to, resulting from or
arising out of WARN or any similar state plant closing law arising from the
actions (or inactions) of the Buyer or its Affiliates on or after the Closing
Date.
(l) U.S. COBRA. The Buyer agrees to provide any required
notice under the Consolidated Omnibus Budget Reconciliation Act of 1986
("COBRA") and any other applicable law on or after the Closing Date. The Buyer
shall have no responsibility for COBRA notice obligations arising before the
Closing. The Buyer shall indemnify and hold harmless the Seller and its
Affiliates as provided in Article VI of this Agreement against all Damages
relating to, resulting from or arising out of COBRA or any other applicable law
arising from the actions (or inactions) of the Buyer or its Affiliates on or
after the Closing Date.
(m) Retention Bonuses. The Asset Sellers shall remain solely
liable for payment of any retention bonuses under agreements entered into by the
Asset Sellers, whether or not disclosed in the Disclosure Schedule.
(n) Transition Services. For a period of 90 days after the
Closing, the Seller shall provide the Buyer with reasonable assistance in the
performance of such administrative functions relating to the Transferred
Employees or their benefits and for such reasonable compensation as the Buyer
and the Seller shall agree. To the extent allowed under ERISA, the Seller shall
act as an agent and not a fiduciary in performing such administrative functions.
The Buyer shall provide the Seller with such information possessed by the Buyer
as the Seller may reasonably require to carry out such administrative functions
and the Seller may rely on such information supplied.
(o) Incentive Compensation Reimbursements. The Seller shall,
reasonably promptly following the Closing, pay all amounts due to the Technical
Services Employees under the Asset Sellers' performance incentive plans for the
period of fiscal 1999 up to and including the Closing Date.
10.7 Certain Government Contract Matters.
(a) With respect to provisional indirect rates ("Indirect
Rates") for allocable and allowable overhead and general and administrative
expenses under each Government Contract and contract resulting from a Government
Bid included in the Assets for any fiscal year or partial fiscal year prior to
Closing that has not been audited by, and reached a final close-out agreement
with, the U.S. Government as of the date of the Closing:
(i) Except for Seller Responsible G&A Expenses (as defined
below), the Buyer shall be entitled to any benefits of, and shall be liable for
any adverse adjustments of, the final Indirect Rates with respect to overhead
and general and administrative expenses of the Technical Services Business,
including without limitation overhead and general and
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administrative expenses of the strategic business enterprises of the Technical
Services Business and the strategic business unit ("SBU") expenses for fiscal
1998 and 1999 (the expenses for which the Buyer is responsible pursuant to this
clause (i) being hereinafter referred to as the "Buyer Responsible G&A
Expenses"); and
(ii) the Asset Sellers shall be entitled to any benefits of,
and shall be liable for any adverse adjustments of, the final Indirect Rates
(A) for the Asset Sellers' allocable corporate general and administrative
expenses for all periods as set forth in the Seller's approved Corporate
Disclosure Statement applicable to the relevant period and (B) for the
Technical Services Group ("TSG") general and administrative expenses for
periods prior to fiscal 1998 as set forth in the Sellers' approved Technical
Services Group Disclosure Statement applicable to the relevant period (the
expenses for which the Asset Sellers are responsible pursuant to this clause
(ii) being hereinafter referred to as the "Seller Responsible G&A Expenses").
(b) The Buyer and the Seller shall cooperate and use their
commercially reasonable efforts to cause such expenses to be reimbursed or any
adverse adjustment to be minimized under the applicable Government Contract or
contract resulting from a Government Bid in accordance with the foregoing
agreement. In the event an adverse final adjustment for any fiscal year or
partial fiscal year prior to the Closing includes any amount for Seller
Responsible G&A Expenses, the Seller shall reimburse the Buyer for such amount
within 10 Business Days after receipt of a written request therefor from the
Buyer. Such request shall include, at a minimum, documentation establishing the
adverse final adjustment in the amount that is attributable to the Seller
Responsible G&A Expenses. In the event a favorable final adjustment for any
fiscal year or partial fiscal year prior to Closing includes any amount for
Seller Responsible G&A Expenses, the Buyer shall pay the Seller such amount
within 10 Business Days after the Buyer's receipt thereof. The Buyer agrees to
diligently pursue in good faith the payment of any such favorable final
adjustment.
(c) Any costs, including without limitation legal fees,
incurred to settle or adjudicate a reimbursement or an adjustment resulting from
an audit of any Government Contract or contract resulting from a Government Bid
included in the Assets for any fiscal year or partial year up to the Closing
Date shall be the responsibility of the Buyer to the extent of, and in
proportion to, the Buyer Responsible G&A Expenses for such fiscal year or
partial year, and shall be the responsibility of the Seller to the extent of,
and in proportion to, the Seller Responsible G&A Expenses for such fiscal year
or partial year.
(d) With respect to any adjustments for any fiscal year or
partial fiscal year from and after the Closing, the Buyer shall be solely
responsible for all costs, including without limitation legal fees, that may be
incurred to settle or adjudicate any reimbursement or adjustment resulting from
an audit of a Government Contract or contract resulting from any Government Bid
included in the Assets.
10.8 Cooperation in Litigation. From and after the Closing Date, each
Party shall fully cooperate with the other in the defense or prosecution of any
litigation or proceeding already
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instituted or which may be instituted hereafter against or by such other Party
relating to or arising out of the conduct of the Technical Services Business
prior to or after the Closing Date (other than litigation arising out of the
transactions contemplated by this Agreement). The Party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including without limitation legal fees and
disbursements) by the Party providing such cooperation and by its officers,
directors, employees and agents, but shall not be responsible for reimbursing
such Party or its officers, directors, employees and agents, for their time
spent in such cooperation, unless the total number of hours of services made
available by the providing Party in providing the cooperation in litigation
contemplated by this Section 10.8, together with the number of hours of
services of the employees and directors made available by the providing Party
and its Affiliates in providing the Information and personnel contemplated by
Section 10.1(c), exceeds 1,000 hours in any calendar year. Any services beyond
such 1,000 hours in any calendar year shall be provided at the providing Party's
or its Affiliate's direct compensation costs as to the relevant employees
(including without limitation costs for salary and benefits).
10.9 Use of EG&G Name.
(a) Effective as of the Closing Date, the Buyer grants to the
Asset Sellers and their Affiliates a fully paid, royalty free, non-exclusive,
worldwide license to use the "EG&G" name and any related marks and logos, and
any variations thereof (collectively, the "Corporate Name"), in connection with
the conduct of their respective businesses as follows:
(i) For a period of 24 months after the Closing, the Asset
Sellers and each of their respective Affiliates shall have the right to (A) use
the Corporate Name in any promotional materials, purchase orders, invoices,
sales orders, labels, packaging materials, letterhead, documents, imprints,
stamps, tooling, dies and the like, and (B) sell, market and distribute any
products which bear the Corporate Name.
(ii) For a period of 12 months after the Closing, the Asset
Sellers and their respective Affiliates shall have the right to continue to use
the Corporate Name as part of their respective corporate names and on signage,
invoices and preprinted business forms.
(b) The Seller agrees that the use of the Corporate Name by
the Asset Sellers pursuant to this Section 10.9 shall be consistent with the
Asset Sellers' past use of the Corporate Name in connection with the business of
the Asset Sellers and, with respect to such use, the Asset Sellers shall adhere
to the same quality standards to which the Asset Sellers adhered immediately
prior to the Closing Date.
(c) No later than six months after the Closing, the Seller
shall cause its name and the name of any of its subsidiaries that include the
Corporate Name, to exclude the Corporate Name, except that the Corporate Name
may continue to be used solely for purposes of finalizing the Novation pursuant
to Section 1.6.
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(d) Prior to the date four months after the Closing, the
Seller shall call a meeting of its shareholders for the purpose of approving an
amendment to its Articles of Organization to effect a change in the Seller's
name to a name that excludes the Corporate Name. In the event that the
shareholders of the Seller fail to approve such amendment at such meeting, then,
notwithstanding anything in this Section 10.9 to the contrary, the licenses
granted to the Asset Sellers and their Affiliates pursuant to this Section 10.9
shall constitute perpetual and irrevocable licenses for the purposes set forth
herein.
10.10 Repayment of EC III Loan. The parties acknowledge that, promptly
following the Closing, ▇▇▇▇▇▇ III Services Corporation ("▇▇▇▇▇▇"), the joint
venture partner of the Technical Services Business in EC III, Inc. ("EC III"),
shall seek to obtain financing for ▇▇▇▇▇▇' 50% portion of the working capital of
EC III. Promptly following receipt of such financing by ▇▇▇▇▇▇, each of the
Buyer and ▇▇▇▇▇▇ shall pay to the Seller an amount equal to one-half of the
Pay-Off Amount (as defined below) as of such date, or contribute such amounts to
EC III and cause EC III to pay such amounts to the Seller, in either case in
satisfaction of the obligation of EC III under the EC III Loan. In the event
that the repayment of the EC III Loan contemplated by the proceeding sentence
has not occurred by March 31, 2000, then (a) the Buyer shall promptly pay to the
Seller an amount equal to one-half of the Pay-Off Amount as of such date in
satisfaction of one-half of the EC III Loan and (b) the Buyer shall cause EC III
to deliver to the Seller one-half of all amounts received by EC III from the
United States Government as received, as payment on account of the remaining
balance of the EC III Loan, until such time as the Pay-Off Amount has been
reduced to zero. For purposes of this Agreement, the term "Pay-Off Amount"
means, as of a particular date, the entire outstanding principal amount of the
EC III Loan on such date, together with all unpaid, accrued interest thereon
through and including such date.
ARTICLE XI
MISCELLANEOUS
11.1 Press Releases and Announcements. No Party shall issue (and each
Party shall cause its Affiliates not to issue) any press release or public
disclosure relating to the subject matter of this Agreement without the prior
written approval of the other Party; provided, however, that any Party may make
any public disclosure it believes in good faith is required by law, regulation
or exchange rule (in which case the disclosing Party shall advise the other
Party and the other Party shall have the right to review such press release or
announcement prior to its publication).
11.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person (including without limitation with respect to
any employee or former employee of the Seller, the Buyer or any of their
Affiliates, any Transferred Employees and any Technical Services Employees, any
right to employment or contractual employment for any specified period) other
than the Parties and their respective successors and permitted assigns and, to
the extent specified herein, their respective Affiliates; provided, however,
that the provisions
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of Article VI and Article VIII are intended for the benefit of the entities and
individuals specified therein and their respective legal representatives,
successors and assigns.
11.3 Action to be Taken by Affiliates. The Parties shall cause their
respective Affiliates to comply with all of the obligations specified in this
Agreement to be performed by such Affiliates.
11.4 Entire Agreement. This Agreement (including the documents referred
to herein) and the Confidentiality Agreement (which shall survive the Closing of
the transactions contemplated hereby) constitute the entire agreement between
the Buyer, on the one hand, and the Seller, on the other hand. This Agreement
supersedes any prior understandings, agreements, or representations by or
between the Buyer, on the one hand, and the Seller, on the other hand, whether
written or oral, with respect to the subject matter hereof (other than the
Confidentiality Agreement).
11.5 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party. Notwithstanding the foregoing, (a) the Buyer may
assign any or all of its rights, interests and obligations hereunder to an
Affiliate, provided that (i) such assignment will not materially delay or impair
the process of novating the Government Contracts, Government Bids and contracts
resulting from Government Bids contemplated by Section 1.6 or adversely affect
or delay the ability of the Parties to close the transactions contemplated
hereby and (ii) such assignment will not relieve the Buyer from its obligations
hereunder, and (b) the Buyer may collaterally assign its rights under this
Agreement to parties providing financing to the Buyer.
11.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
11.7 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.8 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered one business day
after it is sent by (a) a reputable courier service guaranteeing delivery within
one business day or (b) telecopy, provided electronic confirmation of successful
transmission is received by the sending Party and a confirmation copy is sent on
the same day as the telecopy transmission by certified mail, return receipt
requested, in each case to the intended recipient as set forth below:
If to the Seller: EG&G, Inc.
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▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: 617-526-5000
If to the Buyer: ETS Acquisition Corporation
c/o The Carlyle Group
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including without limitation personal delivery,
expedited courier, messenger service, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
Party for whom it is intended. Any Party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
11.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the Commonwealth of Massachusetts
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Massachusetts or any other jurisdiction) that
would cause the application of laws of any jurisdiction other than those of the
Commonwealth of Massachusetts.
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11.10 Amendments and Waivers. The Parties may mutually amend or waive
any provision of this Agreement at any time. No amendment or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by both of the Parties. No waiver by either Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.11 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
11.12 Expenses. Except as otherwise specifically provided to the
contrary in this Agreement, each of the Parties shall bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
11.13 Specific Performance. Each Party acknowledges and agrees that the
other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees that the other Party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter.
11.14 Dispute Resolution.
(a) General. In the event that any dispute should arise
between the Parties with respect to any matter covered by this Agreement or the
interpretation of this Agreement (other than the calculation of the Final
Closing Working Capital Statement, which shall be settled exclusively in
accordance with Section 1.4), the Parties shall resolve such dispute in
accordance with the procedures set forth in this Section 11.14
(b) Arbitration.
(i) Subject to first satisfying the requirements of Section
6.3(c), if applicable, any Party may submit any matter referred to in
Section 11.14(a) to arbitration by
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notifying the other Parties, in writing, of such dispute. Within 30 days after
receipt of such notice, the Parties shall designate in writing a single
arbitrator to resolve the dispute; provided, that if the Parties cannot agree
on an arbitrator within such 30-day period, the arbitrator shall be selected by
the Washington, District of Columbia, Office of the American Arbitration
Association. The arbitrator shall be a retired federal or state judge and shall
not be an Affiliate, employee, consultant, officer, director or stockholder of
any Party. If neither the Parties nor the Washington, District of Columbia
Office of the American Arbitration Association is able to identify a retired
federal or state judge to serve as the arbitrator, the Washington, District of
Columbia Office of the American Arbitration Association shall select an
arbitrator from the CPC Panel of Distinguished Neutrals of the CPR Institute for
Dispute Resolution.
(ii) Within 30 days after the designation of the arbitrator,
the arbitrator and the Parties shall meet, at which time the Parties shall be
required to set forth in writing all disputed issues and a proposed ruling on
the merits of each such issue.
(iii) The arbitrator shall set a date for a hearing, which
shall be no later than 45 days after the submission of written proposals
pursuant to Section 11.14(b)(ii), to discuss each of the issues identified by
the Parties. Each Party shall have the right to be represented by counsel. The
arbitration shall be governed by the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that the Federal Rules of
Evidence shall apply with regard to the admissibility of evidence.
(iv) The arbitrator shall use his or her best efforts to rule
on each disputed issue within 30 days after the completion of the hearings
described in Section 11.14(b)(iii). The determination of the arbitrator as to
the resolution of any dispute shall be binding and conclusive upon all Parties.
All rulings of the arbitrator shall be in writing and shall be delivered to
the Parties.
(v) The (A) attorneys' fees of the Parties in any arbitration,
(B) fees of the arbitrator, and (C) costs and expenses of the arbitration shall
be borne by the Parties as determined by the arbitrator.
(vi) Any arbitration pursuant to this Section 11.14 shall be
conducted in Washington, District of Columbia. Any arbitration award may be
entered in and enforced by any court having jurisdiction thereover and shall be
final and binding upon the Parties.
(vii) Notwithstanding the foregoing, nothing in this Section
11.14 shall be construed as limiting in any way the right of a Party to seek
injunctive relief with respect to any actual or threatened breach of this
Agreement from a court of competent jurisdiction.
11.15 Construction. The language used in this Agreement shall be deemed
to be the language chosen by the Parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against either Party. Any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated
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thereunder, unless the context requires otherwise. All references to "$",
"Dollars" or "US$" refer to currency of the United States of America.
11.16 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.17 Facsimile Signature. This Agreement may be executed by facsimile
signature.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
EG&G, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
ETS ACQUISITION CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
[Signature Page to Purchase and Sale Agreement]
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