Asset Purchase Agreement - Westinghouse Electric Corp. and Siemens Power Generation Corp.
ASSET PURCHASE AGREEMENT
between
WESTINGHOUSE ELECTRIC CORPORATION
and
SIEMENS POWER GENERATION CORPORATION
Dated November 14, 1997
RELATING TO THE POWER GENERATION BUSINESS
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS........................... 2
Section 1.1 Specified Definitions................................ 2
Section 1.2 Other Terms.......................................... 15
Section 1.3 Other Definitional Provisions........................ 15
ARTICLE 2
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES..................... 16
SECTION 2.1 Purchase and Sale.................................... 16
SECTION 2.2 Acquired Assets and Excluded Assets.................. 16
(a) Acquired Assets........................................... 16
(b) Excluded Assets........................................... 18
(c) Nonassignable Rights...................................... 20
(d) Termination of Rights of Sold
Subsidiaries.............................................. 20
SECTION 2.3 Assumption of Liabilities............................ 20
(a) Assumed Liabilities....................................... 20
(b) Excluded Liabilities...................................... 22
SECTION 2.4 Purchase Price....................................... 23
SECTION 2.5 Purchase Price Adjustment............................ 23
ARTICLE 3
THE CLOSING............................... 27
SECTION 3.1 Closing Date......................................... 27
SECTION 3.2 Transactions To Be Effected at the
Closing.............................................. 27
(a) Deliveries by Sellers..................................... 27
(b) Deliveries by Purchaser................................... 27
(c) Nominee Shares............................................ 28
ARTICLE 4
REPRESENTATIONS AND WARRANTIES.................... 28
SECTION 4.1 Representations and Warranties of
WEC.................................................. 28
(a) Organization, Standing and Power.......................... 28
(b) Authority................................................. 28
(c) Financial Statements; Undisclosed
Liabilities............................................. 30
(d) Compliance with Applicable Laws........................... 31
(e) Litigation; Decrees....................................... 31
(f) Title to Acquired Assets.................................. 31
(g) Real Property............................................. 32
(h) Intellectual Property and Technology...................... 34
(i) Insurance................................................. 35
(j) Contracts................................................. 35
(k) Sufficiency of Acquired Assets............................ 38
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(l) Absence of Certain Changes or Events...................... 38
(m) Employee Benefits......................................... 38
(n) Environmental Matters..................................... 41
(o) Taxes..................................................... 42
(p) Sold Subsidiaries......................................... 44
(q) Labor Matters............................................. 44
(r) Tangible Property......................................... 45
SECTION 4.2 Representations and Warranties of
Purchaser............................................ 45
(a) Organization. Standing and Power.......................... 45
(b) Authority................................................. 45
(c) Financing................................................. 46
ARTICLE 5
COVENANTS............................ 47
SECTION 5.1 Covenants of WEC Relating to Conduct
of Business.......................................... 47
(a) Ordinary Course........................................... 47
(b) Advice of Changes......................................... 49
SECTION 5.2 Access to Information................................ 49
SECTION 5.3 Governmental Approvals, Etc.......................... 50
SECTION 5.4 Third Party Consents................................. 52
(a) Employee Matters.......................................... 53
(b) Accrued Vacation.......................................... 54
(c) Union Representation...................................... 55
(d) Pension Plan.............................................. 55
(g) Severance Obligations..................................... 62
(h) Executive Compensation.................................... 62
(i) Cooperation............................................... 63
(j) WARN Act.................................................. 63
(k) COBRA..................................................... 64
(l) Workers Compensation...................................... 64
(m) Multiemployer Plans....................................... 64
(n) Internal Revenue Service Forms............................ 64
SECTION 5.6 Collection of Receivables............................ 68
SECTION 5.7 Expenses............................................. 68
SECTION 5.8 Brokers or Finders................................... 68
SECTION 5.9 License Agreement.................................... 69
SECTION 5.10 Certain Information.................................. 69
SECTION 5.11 Bulk Transfer Laws................................... 70
SECTION 5.12 Additional Agreements................................ 70
SECTION 5.13 Certain Understandings............................... 70
SECTION 5.14 Allocation; Tax Matters.............................. 71
SECTION 5.15 Supplies............................................. 76
SECTION 5.16 Transfer of Assets of Sold
Subsidiaries......................................... 76
SECTION 5.17 Credit Support....................................... 76
SECTION 5.18 Non-Competition...................................... 77
(a) Covenants Against Competition............................. 77
(b) Rights and Remedies Upon Breach........................... 79
(c) Severability of Covenants................................. 79
(d) Blue-Pencilling........................................... 79
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SECTION 5.19 Post-Closing Agreements.............................. 79
(a) Transitional Services..................................... 80
(b) Facilities................................................ 80
(c) Field Sales Offices....................................... 80
SECTION 5.20 Removal of Excluded Assets and
Liabilities from Sold Subsidiaries................... 80
SECTION 5.21 Guarantee Agreement.................................. 80
SECTION 5.22 Steam Generator Agreement............................ 80
SECTION 5.23 Post Closing Hiring of Employees..................... 80
[Section 5.24 Instrumentation and Control
Matters.............................................. 81
ARTICLE 6
CONDITIONS PRECEDENT....................... 82
SECTION 6.1 Conditions to Each Party's
Obligation........................................... 82
(a) Certain Waiting Periods................................... 82
(b) No Injunctions or Restraints.............................. 82
(c) Governmental Action....................................... 83
SECTION 6.2 Conditions to Obligation of
Purchaser............................................ 83
(a) Representations and Warranties............................ 83
(b) Performance of Obligations of WEC......................... 83
(c) Material Permits.......................................... 83
(d) Opinion of WEC's Counsel.................................. 84
(e) Conveyancing Documents.................................... 84
SECTION 6.3 Conditions to Obligation of
WEC.................................................. 84
(a) Representations and Warranties............................ 84
(b) Performance of Obligations of
Purchaser................................................. 84
(c) Opinion of Purchaser's Counsel............................ 84
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER................ 85
SECTION 7.1 Termination.......................................... 85
SECTION 7.2 Amendments and Waivers............................... 86
ARTICLE 8
INDEMNIFICATION......................... 86
SECTION 8.1 Indemnification by WEC............................... 86
SECTION 8.2 Indemnification by Purchaser......................... 89
SECTION 8.3 Characterization of Indemnification
Payments............................................. 89
SECTION 8.4 Losses Net of Insurance; Tax Loss
and Benefits; No Consequential Damages............... 89
SECTION 8.5 Termination of Indemnification....................... 90
SECTION 8.6 Procedures Relating to Third Party
Claims (Other than Tax Controversies)................ 90
SECTION 8.7 Procedures Relating to Non-Third
Party Claims. ....................................... 92
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SECTION 8.8 Joint Defense Agreement.............................. 92
SECTION 8.9 Arbitration of Environmental
Liabilities.......................................... 92
ARTICLE 9
GENERAL PROVISIONS........................ 93
SECTION 9.1 Notices.............................................. 93
SECTION 9.2 Interpretation....................................... 95
SECTION 9.3 Survival of Representations.......................... 95
SECTION 9.4 Severability......................................... 96
SECTION 9.5 Counterparts......................................... 96
SECTION 9.6 Entire Agreement; No Third Party
Beneficiaries........................................ 96
SECTION 9.7 Governing Law........................................ 96
SECTION 9.8 Mediation; Consent to Jurisdiction................... 96
SECTION 9.9 Publicity............................................ 97
SECTION 9.10 Assignment........................................... 98
SECTION 9.11 Release of Siemens
Aktiengesellschaft................................... 98
SECTION 9.12 Waiver of July Trial; Trial Costs.................... 98
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LIST OF EXHIBITS
Exhibit A Transitional Services Agreement
Exhibit B Opinion of Weil, Gotshal & Manges LLP, special
counsel to WEC
Exhibit C Opinion of Louis J. Briskman, Esq., General
Counsel of WEC
Exhibit D Opinion of Purchaser's Counsel
Exhibit E Shared Technology Agreement
Exhibit F Joint Defense Agreement
Exhibit G Guarantee Agreement
Exhibit H Steam Generator Agreement
Exhibit I Trademark and Trade Name License Agreement
LIST OF SCHEDULES
Schedule 1.1(a) [INTENTIONALLY OMITTED]
Schedule 1.1(b) Investments
Schedule 1.1(c) Leased Real Property
Schedule 1.1(d) Matters Not Constituting a Material
Adverse Effect
Schedule 1.1(e) Owned Real Property
Schedule 1.1(f) Permitted Liens
Schedule 1.1(g) Settlement Agreements
Schedule 1.1(h) Sold Subsidiaries
Schedule 2.2(a) Acquired Assets
Schedule 2.2(b) Excluded Assets
Schedule 2.2(b)(ix)(A) Surplus Property
Schedule 2.2(b)(ix)(B) Additional Acquired Assets
Schedule 2.3(a) Assumed Liabilities
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Schedule 2.5(c) Target Amount
Schedule 4.1(b) Intellectual Property,
Technology and Contracts
Schedule 4.1(c)(ii) Undisclosed Liabilities
4.1(c)(iii) Material Obligors
Schedule 4.1(d) Actions of Governmental Authorities
Schedule 4.1(e) Certain Lawsuits, Actions and Proceedings
Schedule 4.1(h) Material Intellectual Property and Technology
Schedule 4.1(i) Insurance
Schedule 4.1(j) Contracts
Schedule 4.1(j)(i) Employment Contracts
Schedule 4.1(j)(ii) Collective Bargaining Agreements
Schedule 4.1(j)(iii) Transactions with Affiliates
Schedule 4.1(j)(iv) Indebtedness
Schedule 4.1(j)(v) Covenants Not to Compete
Schedule 4.1(j)(vi) Real Property Leases
Schedule 4.1(j)(vii) Personal Property Leases
Schedule 4.1(j)(viii) Purchase Contracts
Schedule 4.1(j)(ix) Joint Ventures; Partnerships
Schedule 4.1(j)(x) Asset Sales; Preferential Rights
Schedule 4.1(j)(xi) Take-or-Pay/Requirements Contracts
Schedule 4.1(j)(xii) Acquisition Contracts
Schedule 4.1(j)(xiii) Material License or Development
Agreements
Schedule 4.1(j)(xiv) Sales Contracts
Schedule 4.1(j)(xv) Business Unit Settlements
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Schedule 4.1(l) Certain Changes or Events
Schedule 4.1(m)(i) Plans and Benefit Arrangements
4.1(m)(ii)(A) Actions of Governmental Authorities
Regarding Plans
4.1(m)(ii)(B) Business Pension Plans
4.1(m)(ii)(C) Plan Noncompliance
4.1(m)(ii)(D) Events Resulting in Material
Liability to Plans
4.1(m)(ii)(E) Group Health Plan Noncompliance
4.1(m)(ii)(F) Material Plan Amendments
Schedule 4.1(n) Environmental Matters
Schedule 4.1(o) Tax Matters
Schedule 4.1(q) Labor Matters
Schedule 5.1 Ordinary Course
Schedule 5.5(f)(iv) Payment Schedule Under WEC's FAS 106
Plans
Schedule 5.5(l) Multiemployer Plans
Schedule 5.5(o)(i) Foreign Employment Contracts
Schedule 5.5(o)(iii) Delayed Foreign Employees
Schedule 5.9(a)(ii) Licensed Intellectual Property
Schedule 5.14(a) Allocation of Purchase Price
Schedule 5.14(c) Sold Subsidiaries Subject to Section
338(h)(10) Election
Schedule 5.15(b) Licensed Entities
Schedule 5.17 Credit Support Arrangements
Schedule 5.25 STC Programs
Schedule 6.2(c) Third Party Consents
Schedule 9.2 Persons with Knowledge
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THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made November 14,
1997, among WESTINGHOUSE ELECTRIC CORPORATION, a Pennsylvania corporation
("WEC"), and SIEMENS POWER GENERATION CORPORATION, a Delaware corporation
("PURCHASER").
W I T N E S S E T H:
WHEREAS, WEC is engaged, through its Power Generation Business Unit, in
a business, which, among other things, (i) designs, manufactures, sells,
installs and services steam and combustion turbine generators and components for
the generation, transmission, distribution and control of electric power, (ii)
constructs turn-key fossil fuel power plants worldwide, (iii) supplies, services
and operates power plants for independent power producers and utilities and
supplies power generation equipment and services to other non-utility customers,
(iv) provides field service and factory service on electrical apparatus and
maintains repair facilities which perform machine work on electrical apparatus
(through its Electrical Systems Services Division), and (v) sells replacement
parts and components related to the generators and components described in
clause (i) above (including the Acquired Assets and the Assumed Liabilities, but
excluding the Excluded Assets and the Excluded Liabilities (each as hereinafter
defined), the "BUSINESS"), certain assets of which are owned by Subsidiaries of
WEC; and
WHEREAS, WEC desires to (and to cause its appropriate Subsidiaries to)
sell, transfer and assign to Purchaser, and Purchaser desires to purchase and
assume from WEC and its appropriate Subsidiaries, substantially all of the
assets and liabilities of the Business, together with the shares of capital
stock of certain Subsidiaries of WEC, all as more specifically provided herein;
and
WHEREAS, WEC also is engaged in an energy systems business, (the
"ENERGY SYSTEMS BUSINESS") which serves the domestic and international electric
power industry, among other things, by supplying nuclear power plants, advanced
nuclear plant design technology, nuclear fuel and associated materials and
components and fuel technology and technical services, including, field and
factory equipment refurbishment, total plant outage and maintenance services, as
well as operating plant services including parts and equipment, instrumentation
and control systems (through its Process Control Division), reactor coolant
pumps, motors and controlled mechanisms and distributed control, communicators,
data acquisition systems and information systems and project management,
decontamination and decommissioning; and
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WHEREAS, Subsidiaries of WEC, the capital stock of which will be
transferred to Purchaser hereunder, hold assets utilized in both the Business
and the Energy Systems Business, and certain assets relating to the Energy
Systems Business will be transferred by such Subsidiaries prior to the Closing
to WEC or other subsidiaries of WEC pursuant to the terms hereof; and
WHEREAS, certain facilities, assets and services of WEC and its
subsidiaries are utilized both in the Business and the Energy Systems Business
or the other businesses of WEC and certain of such facilities, assets and
services will be shared by the owners of the Business and WEC pursuant to the
terms of certain agreements contemplated hereby.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, and subject to and on the terms
and conditions herein set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 SPECIFIED DEFINITIONS. As used in this Agreement, the
following capitalized terms have the meanings specified below:
"ACCOUNTING FIRM" means such nationally recognized independent public
accounting firm as shall be agreed upon by the parties hereto in writing.
"ACCOUNTS RECEIVABLE" shall have the meaning specified in
Section 2.2(a).
"ACQUIRED ASSETS" shall have the meaning specified in
Section 2.2(a).
"ACTION OR PROCEEDING" shall mean any action, proceeding or suit,
including any by a Governmental Authority.
"ADJUSTED PURCHASE PRICE" shall have the meaning specified
in Section 2.5(b).
"AFFILIATE" of a Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person.
"ALLOCATION STATEMENT" shall have the meaning specified in
Section 5.14(a).
"ASSUMED LIABILITIES" shall have the meaning specified in
Section 2.3(a).
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"BALANCE SHEET" shall have the meaning specified in Section
4.1(c)(i).
"BANKRUPTCY EXCEPTION" shall have the meaning specified in
Section 4.1(j).
"BENEFIT ARRANGEMENT" means a benefit program or practice for bonuses,
incentive compensation, vacation pay, severance pay, insurance, restricted
stock, stock options, performance awards, employee discounts, company cars,
tuition reimbursement, holidays, leaves of absence or any other perquisite or
benefit (including, without limitation, any fringe benefit under Section 132 of
the Code) to employees, officers or independent contractors that is not a Plan.
"BENEFITS" shall have the meaning specified in Section
5.18(b)(ii).
"BENEFITS MAINTENANCE PERIOD" shall have the meaning
specified in Section 5.5(a).
"BOOKS AND RECORDS" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
conditions of (financial or other), results of operations and assets and
properties of such Person, including, without limitation, financial statements,
Tax Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, title policies, minute books, stock
certificates and books, stock transfer ledgers, customer lists, computer files
and programs, retrieval programs, operating data and plans and environmental
studies and plans.
"BUSINESS" shall have the meaning specified in the first
recital to this Agreement.
"BUSINESS DAY" means any day other than Saturday, a Sunday or a day
when commercial banks in New York City are authorized or required by law to be
closed.
"BUSINESS EMPLOYEE" shall have the meaning specified in
Section 5.5(a).
"BUSINESS PENSION PLANS" shall have the meaning specified in
Section 4.1(m)(ii)(B).
"CLOSING" means the closing of the purchase, assignment and sale of the
Acquired Assets and the assumption of the Assumed Liabilities contemplated
hereunder.
"CLOSING BALANCE SHEET" has the meaning specified in Section
2.5(a).
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"CLOSING DATE" means the time and date on which the Closing takes
place, as established by Section 3.1.
"CLOSING NET ASSETS" shall have the meaning specified in
Section 2.5(a).
"CODE" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.
"CONFIDENTIAL INFORMATION" shall have the meaning specified
in Section 5.18(a)(ii).
"CONFIDENTIALITY AGREEMENT" shall have the meaning specified
in Section 5.2.
"CONTRACTS" means all contracts; leases; indentures; joint venture,
governmental funding or incentive program, environmental indemnity, license
(including any sublicense), development and other agreements; commitments; and
all other legally binding arrangements, including all interworks orders and
interdivisional orders between the Business and other businesses of WEC,
including the Energy Systems Business, in each case whether oral or written,
relating primarily to the Business, to which any of Sellers or a Sold Subsidiary
is a party or bound, except for Plans and Benefit Arrangements.
"CREDIT SUPPORT ARRANGEMENTS" shall have the meaning
specified in Section 5.17.
"DELAYED FOREIGN EMPLOYEES" shall have the meaning specified
in Section 5.5(o).
"DELAYED TRANSFER DATE" shall have the meaning specified in
Section 5.5(o).
"ENCUMBRANCES" means any mortgages, pledges, liens, security interests,
restrictions, defects in title, easements or encumbrances.
"ENERGY SYSTEMS BUSINESS" shall have the meaning specified in the
recitals to this Agreement.
"ENVIRONMENTAL LAW" means any foreign or United States local, county,
state or federal law (including common law), regulation, order, decree or other
legally binding requirement that governs the existence of or provides a remedy
for release resources or the environment (including the protection of endangered
species or wetlands) or the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transportation, Release or management
of, or other activities of Hazardous Substances, the protection of persons,
natural resources or the environment (including the protection of endangered
species or wetlands) or the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transportation, Release or management
of, or other activities
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with respect to, Hazardous Substances including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et SEQ., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 ET SEQ., the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq., the Clean Water Act,
33 U.S.C. Section 1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601 et
SEQ., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et
seq., the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et SEQ. and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 ET SEQ., as such laws
have been amended or supplemented, and any other similar federal, state, local
or county laws or regulations, in each case as in effect on or prior to the
Closing Date or, with respect to representations and warranties made on the date
hereof, on or prior to the date hereof.
"ENVIRONMENTAL LIABILITY" means any Liability arising under
Environmental Laws or under any Permit issued pursuant to any Environmental Law,
and including all direct costs and expenses associated with Remedial Action, in
connection with the Acquired Assets, the Sold Subsidiaries or the Business, to
the extent arising from any condition existing or any act or omission of
Sellers, any Sold Subsidiary or any other Person (including without limitation
any prior owner, occupant or user of any Premises and any Person engaged in the
removal, transportation or disposition of Hazardous Substances that were
originated or at any time stored or otherwise held at any site associated with
the Sold Subsidiaries or the Business, whether or not included in whole or in
part in the Acquired Assets) at or prior to the Closing Date, including claims,
demands, penalties, fines, liens, fees and costs of environmental consultants,
personal injuries and property damages, administrative proceedings, assessments,
judgments, orders, causes of action (including toxic tort suits), notices of
actual or alleged violations or liability (including such notices regarding the
disposal, transportation or Release (or threatened Release) of Hazardous
Substances on the Premises or elsewhere), proceedings and any associated Losses.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"EVENT" shall have the meaning specified in Section
5.5(f)(iv).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED ASBESTOS LIABILITIES" means all Liabilities in respect of
death or personal injury actually or allegedly caused directly or indirectly by
asbestos or asbestos compounds or products.
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"EXCLUDED ASSETS" shall have the meaning specified in
Section 2.2(b).
"EXCLUDED LIABILITIES" shall have the meaning specified in
Section 2.3(b).
"EXISTING SCHEDULE" shall have the meaning specified in
Section 5.5(f)(iv).
"EXON-FLORIO AMENDMENT" means Section 721 of the Omnibus
Trade and Competitiveness Act of 1988 (amending Title VII of the
Defense Production Act, 50 U.S.C. App. Section 2170 (1997)).
"FAS 106 LIABILITY" shall have the meaning specified in
Section 5.5(f)(iv).
"FINANCIAL STATEMENTS" shall have the meaning specified in
Section 4.1(c)(i).
"FIRST-TIER ENVIRONMENTAL LOSSES" shall have the meaning
specified in Section 8.1(a).
"FIXTURES AND EQUIPMENT" means all furniture, fixtures, furnishings,
machinery, vehicles, equipment and other tangible personal property owned or
leased by Sellers or any Sold Subsidiary and used or held for use primarily in
connection with the Business.
"FOREIGN BUSINESS EMPLOYEES" shall have the meaning
specified in Section 5.5(o).
"FOREIGN PLAN PARTICIPANT" shall have the meaning specified
in Section 5.5(o).
"FOREIGN PLANS" shall have the meaning specified in Section
4.1(m).
"FOREIGN RETIREMENT PLAN" shall have the meaning specified
in Section 5.5(o).
"FREE-STANDING PLAN" shall have the meaning specified in
Section 4.1(m).
"GAAP" means United States generally accepted accounting
principles.
"GOVERNMENT CONTRACT" means any Contract entered into with
any Governmental Authority.
"GOVERNMENT OPERATIONS BUSINESS" means the operations conducted by the
Government Operations business unit of WEC, including the provision of
management services for certain
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government-owned facilities under Contracts with the United States Department of
Energy and the United States Department of Defense, management of nuclear
reactor programs for the United States Navy and management of a chemical agent
destruction program for the Department of Defense.
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau, court,
commission, department, instrumentality or administration of any foreign
government, the United States government, any state government or any local or
other governmental body in a state, territory or possession of the United States
or the District of Columbia or any political subdivision of any of the
foregoing.
"GUARANTEE AGREEMENTS" shall have the meaning specified in
Section 5.21.
"GUARANTORS" means each of (i) Siemens Corporation, a Delaware
corporation and the parent of Purchaser, (ii) Siemens Aktiengesellschaft, a
company organized under the laws of the Federal Republic of Germany and an the
parent of Siemens Corporation ("Siemens Parent") and (iii) Siemens
Finanzierungsgesellschaft Fur Informationstechnik mbH, a company organized under
the laws of the Federal Republic of Germany and a wholly-owned Subsidiary of
Siemens Parent.
"HAZARDOUS SUBSTANCE" means (i) any petroleum or petroleum products (to
the extent regulated under Environmental Law), flammable explosives, radioactive
materials, asbestos or asbestos-containing products or materials, urea
formaldehyde foam insulation and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls (PCBs); and (ii) any
substance, material or waste that is regulated under any Environmental Law or is
defined as, or included in the definition of, or deemed by any Environmental Law
or Governmental Authority to be "hazardous," "toxic," a "contaminant," "waste,"
a "pollutant," "hazardous substance," "hazardous waste," "restricted hazardous
waste," "hazardous material," "extremely hazardous waste," a "toxic substance,"
a "toxic pollutant" or words with similar meaning.
"INACTIVE EMPLOYEE" shall have the meaning specified in
Section 5.5(a).
"INCOME TAX" means any Tax on or determined by reference to
net income.
"INDEBTEDNESS" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued
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or assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and other accrued
current liabilities arising in the Ordinary Course of Business); (iii) all
obligations of such Person under leases required to be capitalized in accordance
with GAAP; (iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction; (v) all obligations of the type referred to in clauses (i) through
(iv) of any Persons for the payment of which such Person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise, including
guarantees of such obligations; and (vi) all obligations of the type referred to
in clauses (i) through (v) of other Persons secured by any Lien on any property
or asset of such Person (whether or not such obligation is assumed by such
Person).
"INDEMNIFIED PARTY" shall have the meaning specified in
Section 8.6(a).
"INTELLECTUAL PROPERTY" means all domestic and foreign patents, utility
models, patent applications, trademarks, trademark registrations, servicemarks,
tradenames, tradename registrations, registered copyrights, applications for any
of the foregoing, and licenses with respect to the foregoing owned by Sellers or
any Sold Subsidiary that relate primarily to the Business (except as otherwise
provided by Section 5.16).
"INVENTORY" means all raw materials, work-in-process, finished goods,
merchandise, office and other supplies, parts, packaging materials and other
accessories related thereto which are held at, or are in transit from or to, the
Premises or located at other locations at which the Business is conducted, or
located at suppliers' premises, in each case, which are used or held for use by
any Seller or Sold Subsidiary in the conduct of the Business, including any of
the foregoing purchased subject to any conditional sales or title retention
agreement in favor of any other Person, together with all rights of any Seller
or Sold Subsidiary against suppliers of such inventories.
"INVESTMENTS" means all capital stock, partnership interests and other
equity interests owned by any Seller in any Person which is held primarily in
connection with the Business, including the capital stock, partnership interests
and other equity interests owned by any Seller in the Sold Subsidiaries, and all
capital stock, partnership interests and other equity interests owned by any
Sold Subsidiary in any Person (except as otherwise provided by Section 5.16).
Schedule 1.1(b) sets forth a list of all Investments.
"LABOR CONTRACT" shall have the meaning specified in Section
4.1(j)(ii).
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"LAW" means, as to any Person, any foreign or United States federal,
state or local law, statute, code, ordinance, regulation, order, writ,
injunction, judgment or decree applicable to such Person and to the businesses
and assets thereof.
"LEASED REAL PROPERTY" means all real property leased by any Seller as
lessee and by any Sold Subsidiary as lessee and listed in Schedule 1.1(c).
"LESSEE LEASES" means all oral and written agreements (including all
amendments and supplements thereto) with or binding upon any Seller with respect
to the Business or any Sold Subsidiary with respect to the Leased Real Property.
"LESSOR LEASE SUBLEASE" shall have the meaning specified in
Section 4.1(c).
"LIABILITIES" means, as to any Person, all debts, adverse claims,
liabilities and obligations, direct indirect, absolute or contingent, known or
unknown, of such Person, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by GAAP to be reflected, in such Person's balance sheets
or other books and records.
"LIENS" means mortgages, liens, security interests, pledges, or
encumbrances, of any nature whatsoever.
"LOSSES" means any and all demands, claims, complaints, actions or
causes of action, suits, proceedings, investigations, arbitrations, assessments,
losses (including, except as provided in Section 8.4, loss of value), damages,
liabilities, obligations (including those arising out of any action, such as any
settlement or compromise thereof or judgment or award therein) and all costs and
expenses, including, without limitation, reasonable attorneys' and other
advisors' fees and disbursements reduced by recoveries under insurance policies
and Government Contracts and net Tax benefits as provided in Section 8.4.
"MATERIAL ADVERSE EFFECT" means an effect or change that is materially
adverse to the business, assets, financial condition or results of operations of
the Business taken as a whole.
"MATERIAL CONTRACT" shall have the meaning specified in
Section 4.1(j).
"MATERIAL LESSEE LEASE" shall have the meaning specified in
Section 4.1(g)(ii).
"MATERIAL SUBLEASE" shall have the meaning specified in
Section 4.1(c).
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"MULTIEMPLOYER PLAN" shall have the meaning specified in
Section 5.5(m).
"NET ASSETS" shall have the meaning specified in Section
2.5(c).
"NEW FOREIGN RETIREMENT PLAN" shall have the meaning specified in
Section 5.5(o).
"NOMINEE SHARES" shall have the meaning specified in Section
3.2(c).
"NOTICE OF DISAGREEMENT" shall have the meaning specified in
Section 2.5(a).
"ORDINARY COURSE OF BUSINESS" means, with respect to any Seller or Sold
Subsidiary, actions taken in the ordinary course of business consistent with
past practices of such Seller or Sold Subsidiary in relation to the Business
since January 1, 1997.
"OWNED REAL PROPERTY" means all real property owned in fee by any
Seller or Sold Subsidiary and listed on Schedule 1.1(e).
"PENSION PLAN" means an "employee pension benefit plan" as such term is
defined in Section 3(2) of ERISA.
"PERMITS" means all permits, licenses, franchises, approvals, consents
and authorizations by or of any Governmental Authority that (i) are owned or
held by or otherwise have been granted to or for the benefit of any Seller and
that relate to the Business or any part thereof or to any of the Acquired Assets
or (ii) are owned or held by or otherwise have been granted to or for the
benefit of any Sold Subsidiary (except as otherwise provided by Section 5.16).
"PERMITTED LIENS" means (i) Liens expressly disclosed in Schedule
1.1(f) or in the Financial Statements or that secure Indebtedness that is
included in Assumed Liabilities and reflected as a liability on the Balance
Sheet, (ii) any progress payment Liens arising in the ordinary course of
business from progress payments made by the United States Government or any
agency thereof or any other Governmental Authority on Government Contracts that
are included in Assumed Liabilities and (iii) (A) mechanics', carriers',
workmen's, repairmen's and other like Liens arising or incurred in the Ordinary
Course of Business that are included in the Assumed Liabilities and are for
amounts not yet overdue or that are being contested in good faith by appropriate
proceedings, (B) Liens for Taxes, assessments and other governmental charges not
yet due and payable or Liens for Taxes, assessments and governmental charges
other than Income Taxes that may thereafter be paid without penalty or that are
being contested in good faith by appropriate proceedings and (C)
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imperfections of title and other Liens that, individually or in the
aggregate, do not materially affect the value of the encumbered asset or the
continued use and operation of the encumbered asset in the Business.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other form
of business or legal entity or Governmental Authority.
"PLAN" means any plan, program, agreement or arrangement, whether or
not written, that is or was an "employee benefit plan" as such term is defined
in Section 3(3) of ERISA, whether or not subject to ERISA and whether or not
maintained in the U.S., and (a) which is maintained by Sellers or the Sold
Subsidiaries, (b) to which Sellers or the Sold Subsidiaries contribute or fund
or provide benefits; or (c) which provides or promises benefits to any person
who performs or who has performed services for Sellers or the Sold Subsidiaries
and because of those services is or has been (i) a participant therein or (ii)
entitled to benefits thereunder.
"POST-CLOSING TAX RETURNS" shall have the meaning specified
in Section 5.14(j).
"PRE-CLOSING TAX PERIOD" means any period ending on or before the
Closing Date in respect of which any Tax is payable and the portion ending on
the Closing Date of any such period that includes but does not end on the
Closing Date.
"PRE-CLOSING INCOME TAX RETURNS" shall have the meaning specified in
Section 5.14(i).
"PREMISES" means, collectively, the Owned Real Property and
the Leased Real Property.
"PROCESS CONTROL DIVISION" means the business unit of WEC that is
engaged in the business of supplying advanced industrial control and information
systems for nuclear and fossil-fueled power generation, water and wastewater
treatment, metals, mining, chemical and other process industry applications
worldwide.
"PROPERTY PLANS" shall have the meaning specified in Section
2.2(a)(xvi).
"PURCHASE PRICE ADJUSTMENT" shall have the meaning specified
in Section 2.5(b).
"PURCHASE PRICE" shall have the meaning specified in Section
2.4.
"PURCHASER ANCILLARY DOCUMENTS" shall have the meaning
specified in Section 4.2(b).
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"PURCHASER EXECUTIVE PLAN" shall have the meaning specified
in Section 5.5(h).
"PURCHASER FAS 106 PLANS" shall have the meaning specified in Section
5.5(f)(iii).
"PURCHASER PENSION PLAN" shall have the meaning specified in
Section 5.5(d)(i).
"PURCHASER TAX CONTROVERSIES" shall have the meaning
specified in Section 5.14(l).
"PURCHASER'S 401(K) PLAN" shall have the meaning specified
in Section 5.5(e).
"PURCHASER'S WORKERS COMPENSATION PROGRAM" shall have the meaning
specified in Section 5.5(l).
"RATE" shall have the meaning specified in Section 2.5(b).
"RELEASE" means any releasing, spilling, leaking, discharging,
disposing of, pumping, pouring, emitting, emptying, injecting, leaching, dumping
or allowing to escape and includes any "release" as defined in CERCLA or in
violation of any other Environmental Law.
"REMEDIAL ACTION" means any action to clean up, monitor, abate,
transport, remove, treat or in any other way address any Hazardous Substances
that is (i) required by any Environmental Law or (ii) reasonably required to
avoid or reduce actual or potential liability under any Environmental Law.
"RESTRICTED PERIOD" shall have the meaning specified in
Section 5.18(a)(i).
"RESTRICTIVE COVENANTS" shall have the meaning specified in
Section 5.18(b).
"REVISED SCHEDULE" shall have the meaning specified in
Section 5.5(f)(iv).
"SCHEDULES" means the disclosure schedules delivered by WEC
to Purchaser in connection herewith.
"SECOND-TIER ENVIRONMENTAL LOSSES" shall have the meaning
specified in Section 8.1(a).
"SECTION 338 ELECTIONS" shall have the meaning specified in
Section 5.14(c).
"SELLER ANCILLARY DOCUMENTS" shall have the meaning
specified in Section 4.1(b).
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"SELLER'S STRADDLE PERIOD TAXES" shall have the meaning specified in
Section 5.14(j)(ii).
"SELLERS" means, collectively, WEC and the Selling
Subsidiaries.
"SELLING SUBSIDIARY" means any Subsidiary of WEC having any right,
title or interest in, to, or under the Acquired Assets or any Liabilities
included in the Assumed Liabilities, but shall not include any Sold Subsidiary.
"SETTLEMENT AGREEMENTS" means those agreements described in
Schedule 1.1(g).
"SIEMENS PARENT" shall have the meaning provided in the
definition of Guarantors.
"SIGNIFICANT OWNED REAL PROPERTY" means any Owned Real Property (i)
having improvements thereon in excess of 75,000 square feet and/or (ii) being
the site of any manufacturing, design, management, warehouse, assembly,
distribution, research, marketing or other operation that, in any case, is
material to the operation of the Business as presently conducted.
"SOFC" shall have the meaning specified in Section 5.25.
"SOLD SUBSIDIARY" means any Subsidiary of WEC listed in Schedule 1.1(h)
under the caption "Sold Subsidiary".
"SPECIAL ENVIRONMENTAL LIABILITY" shall have the meaning
specified in Section 2.3(a)(v).
"STATEMENT" shall have the meaning specified in Section
2.5(a).
"STC" shall have the meaning specified in Section 5.25.
"STC PROGRAMS" shall have the meaning specified in Section
5.25.
"STEAM GENERATOR AGREEMENT" shall have the meaning specified
in Section 5.22.
"STRADDLE PERIOD TAX RETURNS" shall have the meaning specified in
Section 5.14(j).
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"SUBSIDIARY ASSETS" means all assets, properties, goodwill and rights
of the Sold Subsidiaries of whatever kind or nature, real or personal, tangible
or intangible, other than as contemplated by Section 5.16.
"SUBSIDIARY" means, as to any Person, another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such Person.
"SUPPLIES" shall have the meaning specified in Section
5.15(a).
"SURPLUS PROPERTY" shall have the meaning specified in
Section 2.2(b).
"TANGIBLE PROPERTY" shall have the meaning specified in
Section 4.1(r).
"TARGET AMOUNT" shall have the meaning specified in Section
2.5(b).
"TAXES" means all federal, state, local, foreign or other governmental
taxes, assessments, duties, fees, levies or similar charges of any kind,
including all income, profit, franchise, excise, property, use, intangibles,
sales, payroll, employment, withholding and other taxes, and including all
interest and penalties imposed with respect to such amounts.
"TAX CONTROVERSIES" shall have the meaning specified in
Section 5.14(l).
"TAX RETURN" means any return, report, form or other information filed
with any taxing authority with respect to Taxes.
"TECHNOLOGY" means all trade secrets, inventions, know-how, formulae,
processes, procedures, research records, records of inventions, test
information, market surveys and marketing know-how and unregistered copyrights
owned by any Seller or any Sold Subsidiary that relate primarily to the Business
except as otherwise provided by Section 5.16.
"THIRD PARTY CLAIM" shall have the meaning specified in
Section 8.6(a).
"THIRD-TIER ENVIRONMENTAL LOSSES" shall have the meaning
specified in Section 8.1(a).
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"TRANSFER TAXES" shall have the meaning specified in Section
5.14(d).
"TRANSITIONAL SERVICES AGREEMENT" shall have the meaning
specified in Section 5.19(a).
"WARN ACT" shall have the meaning specified in Section
5.5(d)(v).
"WEC EXECUTIVE PLAN" shall have the meaning specified in
Section 5.5(h).
"WEC FAS 106 PLANS" shall have the meaning specified in Section
5.5(f)(iii).
"WEC PENSION PLAN" shall have the meaning specified in
Section 5.5(d)(i).
"WEC TAX CONTROVERSIES" shall have the meaning specified in
Section 5.14(l).
"WEC SAVINGS PROGRAM" shall have the meaning specified in
Section 5.5(e).
"WELCO" means Westinghouse Electric Company as such term is used in the
Form 10 filed with the Securities and Exchange Commission on August 13, 1997.
SECTION 1.2 OTHER TERMS. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
SECTION 1.3 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
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ARTICLE 2
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
SECTION 2.1 PURCHASE AND SALE. Upon the terms and subject to the
conditions of this Agreement, at the Closing, WEC agrees to sell, assign,
transfer, convey and deliver to Purchaser all of WEC's right, title and interest
in, to and under the Acquired Assets and to cause each Selling Subsidiary to
sell, assign, transfer, convey and deliver to Purchaser all of such Selling
Subsidiary's right, title and interest in, to and under the Acquired Assets, in
each case free and clear of any Liens other than Permitted Liens, and Purchaser
agrees to purchase, acquire and accept from Sellers, all such right, title and
interest in, to and under the Acquired Assets.
SECTION 2.2 ACQUIRED ASSETS AND EXCLUDED ASSETS.
(A) ACQUIRED ASSETS. The term "ACQUIRED ASSETS" means the
business, properties, assets, goodwill and rights of Sellers of whatever kind
and nature, real or personal, tangible or intangible, other than the Excluded
Assets, primarily used or held for use in the Business, wherever located and
whether or not reflected on the Books and Records of the Sellers, as they exist
on the date hereof, with such changes, deletions or additions thereto as may
occur from the date hereof to the Closing Date consistent with the terms and
conditions of this Agreement, including, subject to Section 2.2(b):
(i) all Owned Real Property (and all easements and
rights-of-way appurtenant thereto) and all Leased Real Property;
(ii) all Inventory;
(iii) all Fixtures and Equipment, including the Fixtures and
Equipment referred to in Section 5.25;
(iv) all trade accounts receivable and all notes, bonds and
other evidences of indebtedness of and rights to receive payments
arising out of sales occurring in the conduct of the Business and the
security agreements related thereto, including any rights of any of the
Sellers with respect to any third party collection proceedings or any
other Actions or Proceedings which have been commenced in connection
therewith (the "ACCOUNTS RECEIVABLE");
(v) subject to the license to be granted pursuant to Section
5.9(a), all Intellectual Property;
(vi) subject to the license to be granted pursuant to Section
5.9(a), all Technology;
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(vii) subject to Section 2.2(c), all Permits;
(viii) subject to Sections 2.2(c) and 5.19(c), all Contracts;
(ix) subject to Section 2.2(c), all bids, quotations and
proposals for Contracts, whether oral or written, to which any of
Sellers is a party or by which any of Sellers is bound that relate
primarily to the Business;
(x) all Investments;
(xi) all Books and Records with respect to the Business,
except (A) to the extent relating to the Excluded Assets or the
Excluded Liabilities and (B) the materials described in Section
2.2(b)(vii);
(xii) subject to Section 2.2(c), all rights, claims and causes
of action to the extent relating to the Business or any of the Assumed
Liabilities or the Acquired Assets;
(xiii) all prepaid expenses, to the extent relating to the
Business;
(xiv) all motor vehicles owned or leased by the Sellers and
used or held for use primarily in the conduct of the Business;
(xv) all security deposits (A) deposited by or on behalf of
any Seller as lessee or sublessee under any of the Contracts or (B)
deposited with or paid to any Seller pursuant to any Contract;
(xvi) all site plans, surveys, soil and substratus studies,
architectural drawings, plans and specifications, engineering,
electrical and mechanical plans and studies, floor plans, landscape
plans, appraisals, feasibility studies, environmental studies and other
plans and studies of any kind if existing and in the possession or
subject to the control of any Seller relating to the Owned Real
Property or the Leased Real Property (collectively, "PROPERTY PLANS");
(xvii) all rights of any Seller under or pursuant to all
warranties, representations and guarantees made by suppliers,
manufacturers and contractors in connection with products sold to or
services provided to any Seller for the Business, or affecting the
property, machinery or equipment owned by Sellers or any Sold
Subsidiary and used in the conduct of the Business, or relating to the
Premises;
(xviii) (A) all insurance proceeds, and all rights to
insurance proceeds receivable in respect of any Assumed
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Liability insured on a "claims made" basis and (B) all insurance
proceeds, and all rights to insurance proceeds received or receivable
in respect of any loss or casualty with respect to any asset that will
be or would, if held by a Seller or a Sold Subsidiary on the Closing
Date, be an Acquired Asset;
(xix) all proceeds, net of any cost of disposition, from the
sale or other disposition after the date of this Agreement and prior to
the Closing Date of any asset that (A) is of a type permitted or
required by GAAP to be treated as a fixed asset on the books of the
Business and (B) but for such sale or other disposition prior to the
Closing would be an Acquired Asset;
(xx) all transferable telephone exchange numbers used in the
Business;
(xxi) the assets of the STC described in Section 5.25; and
(xxii) all assets described on Schedule 2.2(a), whether or not
related to the Business.
(B) EXCLUDED ASSETS. The term "EXCLUDED ASSETS" means:
(i) all cash on hand or in banks and all cash equivalents,
except any cash or cash equivalents (A) reflected on the Statement or
(B) described in Section 2.2(a)(xv)(B), (xviii) and (xix) or (C)
constituting security deposits deposited with or paid to any Sold
Subsidiary pursuant to any Contract;
(ii) all rights of Sellers under this Agreement and the
agreements, instruments and certificates delivered in connection with
this Agreement;
(iii) all records prepared in connection with the sale of the
Business, including bids received from third persons and analyses
relating to the Business (but not the Sellers' rights under any
confidentiality agreements with such bidders, which shall be included
in Acquired Assets);
(iv) except as provided in Section 2.3(a)(xviii), all rights
of Sellers under insurance policies;
(v) all rights, claims and causes of action relating to any of
the Excluded Liabilities or the Excluded Assets, including rights,
claims and causes of action under insurance policies relating thereto;
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(vi) all rights to claims, available to or being pursued by
Sellers or any Sold Subsidiary, for refunds of or credits against
Income Taxes (including all investment tax credits, research credits
and credits for prepayments of Income Taxes) attributable to the
Business for Pre-Closing Tax Periods;
(vii) any consolidated, combined, unitary or separate company
Tax Return relating to Income Taxes that includes any of Sellers or any
Sold Subsidiary, and records and work papers used in preparation
thereof;
(viii) all assets used primarily in the Government Operations
Business, the Energy Systems Business or the
Process Control Division;
(ix) all real property ("SURPLUS PROPERTY") owned, leased or
occupied by any Seller or Sold Subsidiary that is not listed on
Schedule 1.1(c) or 1.1(e) and all real property that is entirely or
substantially vacant, "mothballed" or held principally for remediation
or other risk management purposes including, without limitation, the
properties listed on Schedule 2.2(b)(ix);
(x) the stock of Westinghouse Electric S.A.;
(xi) subject to the license to be granted pursuant to Section
5.9(b), the names and marks "Westinghouse Electric Corporation",
"Westinghouse" and "Circle W" (in logotype design or any other style or
design), and any name or mark derived from or including any of the
foregoing);
(xii) all assets of the Sold Subsidiaries not used or held for
use primarily in the Business or which pursuant to Section 5.16 will be
transferred by the Sold Subsidiaries to other Subsidiaries of WEC in
the manner provided by Section 5.16;
(xiii) subject to the provisions of the Steam Generator
Agreement, all Settlement Agreements and rights of Sellers thereunder;
(xiv) subject to the Transitional Services Agreement and the
arrangements contemplated by Section 5.19(b), all assets used in
connection with or relating to WEC's corporate headquarters or
corporate activities that are provided to or managed for the benefit of
any of the Sellers or any of the Sold Subsidiaries; and
(xv) all assets identified in Schedule 2.2(b).
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(C) NONASSIGNABLE RIGHTS. Notwithstanding anything to the
contrary contained herein, but without limiting the rights and obligations of
the parties under the other provisions of this Agreement (including, without
limitation, Section 5.4), this Agreement shall not operate to assign any
Intellectual Property, Technology, Permit or Contract or any claim, right or
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of any Person, would constitute a breach, default
or other contravention thereof or a violation of Law (it being understood that,
except as otherwise provided in Section 6.2(c), the failure to obtain such
consents shall not relieve either party from its obligation to consummate at the
Closing the transactions contemplated by this Agreement).
(D) TERMINATION OF RIGHTS OF SOLD SUBSIDIARIES.
Notwithstanding anything to the contrary in any agreement or otherwise, any
rights, express or implied, of any Sold Subsidiary to use any and all domestic
and foreign patents, patent applications, trademarks, trademark registrations,
servicemarks, trade names, registered copyrights and licenses with respect to
the foregoing and all trade secrets, inventions, know-how, formulae, processes,
procedures, research records, records of inventions, test information, market
surveys and marketing know-how and unregistered copyrights owned by Sellers
shall terminate at the Closing, except to the extent included in the
Intellectual Property or Technology and except as otherwise contemplated by
Section 5.9.
SECTION 2.3 ASSUMPTION OF LIABILITIES.
(A) ASSUMED LIABILITIES. Upon the terms and subject to the
conditions of this Agreement (including the indemnity provisions hereof),
Purchaser hereby agrees to assume, effective as of the Closing, and agrees to
pay, perform and discharge when due all of the following Liabilities of Sellers
(except Excluded Liabilities) arising out of, relating to or otherwise in
respect of the Acquired Assets, the Business or the operations of the Business
before, on or after the Closing Date (collectively, the "ASSUMED LIABILITIES"):
(i) all Liabilities of Sellers under the Contracts;
(ii) all accounts payable owed by Sellers arising out of
operations of the Business or otherwise in respect of the Business;
(iii) all Liabilities in respect of any and all products sold
by the Business (wherever the same may have been manufactured or
serviced by Sellers), including Liabilities for refunds, adjustments,
allowances, repairs, exchanges, returns and warranty, merchantability
and other claims;
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(iv) all Liabilities (other than Environmental Liabilities or
Liabilities otherwise arising by reason of any Release of Hazardous
Substances) arising as a result of being the owner or occupant of, or
the operator of the activities conducted at, (A) the Premises and (B)
any other real property owned, leased or operated at any time by the
Sellers and used in the Business, including all Liabilities relating to
personal injury and property damage;
(v) all Environmental Liabilities but only to the extent that
(A) they arise as a result of being the owner or occupant of, or the
operator of the activities conducted at, the Premises; (B) they relate
to the treatment, storage, transportation or disposal of Hazardous
Substances on, to or at a waste site, treatment site, disposal site or
other location after they were produced, generated, used or stored at
the Premises or (C) they relate to a Release of a Hazardous Substance
that occurred on property other than property of WEC or an Affiliate of
WEC, in connection with the conduct of the Business but not in
connection with the treatment, storage, transportation for treatment,
storage or disposal or disposal of the Hazardous Substance (an
Environmental Liability described in clause (C) of this paragraph (v)
is sometimes hereinafter referred to as a "Special Environmental
Liability");
(vi) all Liabilities relating to the employment or termination
of employment of any employee or former employee of the Business;
(vii) all Liabilities arising under or in connection with any
Plan or Benefit Arrangement;
(viii) all Liabilities for Taxes (other than Income Taxes for
Pre-Closing Tax Periods) attributable to the Business for all taxable
periods;
(ix) all Liabilities in respect of lawsuits, actions and
proceedings, pending or threatened, and claims, whether or not
presently asserted, arising out of, relating to or otherwise in any way
in respect of the Business, including, without limitation, those set
forth on Schedule 4.1(e);
(x) all Liabilities in respect of the STC, but only to the
extent provided in or contemplated by the arrangements described in
Section 5.25;
(xi) all Liabilities of Sellers arising out of, relating to or
otherwise in respect of the Acquired Assets, the Business or the
operations of the Business as of the Closing Date of the type reflected
on the Balance Sheet, including the notes thereto; and
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(xii) all Liabilities described on Schedule 2.3(a), whether or
not related to the Business.
(B) EXCLUDED LIABILITIES. Any provision of this Agreement to
the contrary notwithstanding (and without implication that Purchaser is assuming
any liability not expressly excluded and, where applicable, without implication
that any of the following have been included in the Assumed Liabilities), the
following liabilities (the "EXCLUDED LIABILITIES") of the Sellers and the Sold
Subsidiaries are excluded and shall not be assumed or discharged by Purchaser:
(i) any Liability of any Seller or any Sold Subsidiary (I) for
Income Taxes or for Pre-Closing Tax Periods that are attributable to
the Business or the Sold Subsidiaries or (II) for Taxes, other than
Income Taxes, payable by the Sold Subsidiaries (to the extent the Taxes
described in this clause (II) are not related to the Business) for
Pre-Closing Tax Periods, including (A) any Liability for Income Taxes
of any of the Sellers or any Sold Subsidiary pursuant to Treasury
Regulation Section 1.1502-6(a) or any comparable provision of state,
local or foreign law and (B) Taxes resulting from the sale and transfer
from WEC to Purchaser of the Acquired Assets (including Income Taxes
resulting from the Section 338 Elections), but Excluded Liabilities
shall not include (X) any Transfer Taxes for which Purchaser is liable
pursuant to Section 5.14(d) or (Y) any Taxes resulting from actions
with respect to the Sold Subsidiaries or the Acquired Assets taken by
Purchaser or its Affiliates after the Closing;
(ii) any Environmental Liabilities relating to real property
owned, leased or occupied at any time by any Seller or Sold Subsidiary
and not included in the Premises;
(iii) any Liabilities in respect of any claim, lawsuit, action
or proceeding before or after the Closing to the extent the same
directly pertain to any Excluded Asset or Excluded Liability;
(iv) any Excluded Asbestos Liabilities;
(v) any Liabilities relating to the capital stock of any
Seller or any shareholders' agreements to which any Seller is party;
(vi) any Liabilities relating to amounts required to be paid
by WEC pursuant to Section 2.4 or Section 2.5;
(vii) except for any Liabilities reflected on the Statement
and Liabilities contemplated by the agreements and arrangements
referred to in Sections 5.25 and 5.26, any Liabilities owed to any
Seller or any Affiliate of any Seller;
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(viii) any Liabilities in respect of any claim, lawsuit,
action or proceeding that is asserted or brought by any Governmental
Authority (in any criminal proceeding), before or after the Closing,
based on any actual or alleged criminal violation of Law occurring
prior to the Closing;
(ix) except as provided in Section 2.3(a)(v) (as limited by
Section 2.3(b)(iii)), any Liabilities arising out of or in respect of
(A) any Subsidiary sold or otherwise divested prior to the Closing, or
the business conducted by any such Subsidiary or (B) any divested
business or business unit;
(x) any Liabilities with respect to Plans and Benefit
Arrangements retained by WEC under Section 5.5; and
(xi) any other Liabilities not assumed by Purchaser pursuant
to the provisions of Section 2.3(a).
SECTION 2.4 PURCHASE PRICE. Subject to adjustment pursuant to Section
2.5, the purchase price for the Acquired Assets shall be $1,525,000,000 (the
"Purchase Price"), payable as set forth in Section 3.2(b), together with the
assumption of the Assumed Liabilities.
SECTION 2.5 PURCHASE PRICE ADJUSTMENT. (a) As promptly as practicable
and in any event within 90 days after the Closing Date, WEC shall at its expense
prepare and deliver to Purchaser (i) an audited balance sheet of the Business
(excluding the assets and liabilities of STC contemplated by Section 5.25) (the
"Closing Balance Sheet") as of the close of business on the Closing Date in
accordance with GAAP applied on a consistent basis with the Financial Statements
and (ii) an audited statement of Net Assets acquired (the "Statement of Net
Assets Acquired") setting forth the Closing Balance Sheet with adjustments to
eliminate assets not acquired and liabilities not assumed by Purchaser pursuant
to the Agreement to arrive at Net Assets Acquired. In addition, a statement (the
"Statement") will be prepared and audited setting forth the Net Assets Acquired
with adjustments to eliminate all noncurrent assets and all environmental
liabilities to arrive at Net Assets (as defined below) as of the close of
business on the Closing Date ("Closing Net Assets"), together with special
purpose reports of WEC's independent auditors to the effect that the Statement
of Net Assets Acquired and the Statement have been prepared and audited in
compliance with the requirements of this Section 2.5.
Purchaser shall cause the employees of the Business to assist
WEC in the preparation of the Closing Balance Sheet, the Statement of Net Assets
Acquired and the Statement and shall
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provide WEC and its independent auditors on-site access at all reasonable times
to the personnel, properties, books and records of the Business for such
purposes. Purchaser acknowledges that WEC shall have the primary responsibility
and authority for preparing the Closing Balance Sheet, the Statement of Net
Assets Acquired and the Statement.
During the 60-day period following Purchaser's receipt of the
Statement, Purchaser and its independent auditors shall be permitted to review
the working papers of WEC and its independent auditors relating to the
Statement. The Statement shall become final and binding upon the parties on the
60th day following delivery thereof, unless Purchaser gives written notice of
its disagreement with the Statement ("Notice of Disagreement") to WEC prior to
such date. Any Notice of Disagreement shall specify in reasonable detail the
nature of any disagreement so asserted, and only include disagreements based on
mathematical errors or based on Closing Net Assets not being calculated in
accordance with this Section 2.5. If a Notice of Disagreement complying with the
preceding sentence is received by WEC in the period specified, then the Closing
Net Assets set forth in the Statement shall be deemed adjusted as provided in
the Notice of Disagreement and that adjusted calculation shall become final and
binding upon the parties at 5:00 p.m., New York City time on the tenth (10th)
day following the date of receipt of the Notice of Disagreement, unless prior to
that time WEC shall have notified Purchaser in writing of its objection to the
Notice of Disagreement. In the event that WEC notifies Purchaser prior to 5:00
p.m., New York City time on the tenth (10th) day following the date of receipt
of the Notice of Disagreement of its objection to the Notice of Disagreement,
then the Statement as revised in accordance with the resolutions that result
from clause (I) or (II) below and the following paragraph shall become final and
binding upon the earlier of (I) the date WEC and Purchaser resolve in writing
any differences they have with respect to the matters specified in the Notice of
Disagreement or (II) the date any disputed matters are finally resolved in
writing by the Accounting Firm in accordance with the following paragraph.
During the 60-day period following the delivery of a Notice of
Disagreement that complies with the preceding paragraph, WEC and Purchaser shall
seek in good faith to resolve in writing any differences which they may have
with respect to the matters specified in the Notice of Disagreement. During such
period WEC and its independent auditors shall have reasonable on-site access
during normal business hours to the personnel, properties, books, records,
schedules, analyses and working papers of the Business and shall be permitted to
review and make copies reasonably required of the working papers of Purchaser or
its representatives and its independent auditors (if any) relating to the
preparation of the Notice of Disagreement. If, at the end of such 60-day period,
WEC and Purchaser have not so resolved such differences, WEC and Purchaser shall
submit to the
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Accounting Firm for review and resolution any and all matters which remain in
dispute and which were properly included in the Notice of Disagreement. WEC and
Purchaser shall use reasonable efforts to cause the Accounting Firm to render a
decision resolving the matters in dispute within 30 days following the
submission of such matters to the Accounting Firm. WEC and Purchaser agree that
judgment may be entered upon the determination of the Accounting Firm in any
court having jurisdiction over the party against which such determination is to
be enforced. Except as specified in the following sentence, the cost of any
arbitration (including the fees and expenses of the Accounting Firm) pursuant to
this Section 2.5 shall be borne by WEC and Purchaser in inverse proportion as
they may prevail on matters resolved by the Accounting Firm, which proportionate
allocations shall also be determined by the Accounting Firm at the time the
determination of the Accounting Firm is rendered on the merits of the matters
submitted. The fees and expenses of WEC's independent auditors incurred in
connection with the issuance of their special purpose report relating to the
Statement and review of any Notice of Disagreement shall be borne by WEC, and
the fees and expenses of Purchaser's independent auditors incurred in connection
with their review of the Statement shall be borne by Purchaser.
(b) The Purchase Price shall be increased by the amount by
which Closing Net Assets, as adjusted in accordance with Section 2.5(a), exceeds
the sum of the Target Amount (as defined below) plus $25,000,000, and the
Purchase Price shall be decreased by the amount by which Closing Net Assets (as
so adjusted) is less than the sum of the Target Amount plus $25,000,000 (the
Purchase Price as so increased or decreased shall hereinafter be referred to as
the "Adjusted Purchase Price"). The Target Amount shall be $490,000,000. If the
Purchase Price is less than the Adjusted Purchase Price, Purchaser shall, and if
the Purchase Price is greater than the Adjusted Purchase Price, WEC shall,
within 10 business days after the Statement becomes final and binding upon the
parties, make payment to the other party by wire transfer in immediately
available funds of the amount of such difference, together with interest thereon
at the three-month treasury bill rate (as reported by The Wall Street Journal
or, if not reported thereby, by another authoritative source) in effect on the
Closing Date plus .25% (the "RATE"), calculated on the basis of the actual
number of days elapsed over 365, from the Closing Date to the date of actual
payment, compounded annually. Notwithstanding the foregoing provisions of this
Section 2.5, if the Statement delivered by WEC pursuant to Section 2.5(a) and
any Notice of Disagreement delivered by Purchaser pursuant to Section 2.5(a)
both reflect a calculation of Closing Net Assets that if correct would require a
payment by the same party, then within 10 days after delivery of the Notice of
Disagreement that party shall make a payment to the other, in the manner and
with interest as provided elsewhere in this Section 2.5(b), in an amount equal
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to the lesser of (i) the amount payable by that party pursuant to the
calculation reflected in the Statement and (ii) the amount payable by that party
pursuant to the calculation reflected in the Notice of Disagreement. Any amount
paid pursuant to the preceding sentence shall be applied against, and
correspondingly reduce, the amount otherwise payable under this Section 2.5(b).
(c) The term "Net Assets" shall mean all current assets
(except that amounts received by Purchaser at the Closing pursuant to Section
2.2(a)(xviii) and (xix) will be excluded) minus all liabilities of the Business
other than environmental liabilities. All assets and liabilities included in the
Closing Balance Sheet, the Statement of Net Assets Acquired and the Statement
shall be in accordance with GAAP and determined in the same way, using the same
accounts, accounting methods, accounting practices, assumptions (including
discount rates and actuarial assumptions), policies, valuations and estimation
methodologies and judgments as used in determining the Target Amount as set
forth in Schedule 2.5(c). In calculating the Closing Net Assets, no changes will
be made in any account except to reflect specific identifiable events, facts and
circumstances (other than any such events relating to or arising as a result of
the announcement of the transactions contemplated by this Agreement or events
already taken into account in establishing the Target Amount) occurring between
June 30, 1997 and the Closing Date.
In calculating Closing Net Assets, no changes will be made in
any contract estimate at completion except to reflect specific identifiable
events, facts and circumstances (other than any such events relating to or
arising as a result of the announcement of the transactions contemplated by this
Agreement or events already taken into account in establishing the Target
Amount) occurring between June 30, 1997 and the Closing Date. The parties agree
that the adjustment contemplated by this Section 2.5 is intended to show the
change in Net Assets from the Target Amount, and that such change may only be
measured if the calculation is done in accordance with the preceding sentence.
The scope of the disputes to be resolved by the Accounting Firm is limited to
whether such calculations were done in accordance with the foregoing provisions
of this Section 2.5 and whether there were mathematical errors in the Statement.
(d) Purchaser agrees that following the Closing it shall not
take any actions which would affect preparation and audit of the Closing Balance
Sheet, the Statement of Net Assets Acquired and the Statement with respect to
the accounting books and records of the Business on which the Closing Balance
Sheet, the Statement of Net Assets Acquired and the Statement are to be based
that are not consistent with past practices. Purchaser shall cause the employees
of the Business to cooperate in the preparation of the Statement, including
providing customary certifications, including management representation letters,
to WEC's independent auditors.
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(e) During the period of time from and after the Closing Date
through the resolution of any adjustment to the Purchase Price contemplated by
this Section 2.5, Purchaser shall cause the employees of the Business to afford
to WEC and any accountants, counsel or financial advisers retained by WEC in
connection with any adjustment to the Purchase Price contemplated by this
Section 2.5 on-site access at all reasonable times to all Business personnel,
properties, books, contracts, records, schedules, analyses and working papers.
ARTICLE 3
THE CLOSING
SECTION 3.1 CLOSING DATE. The Closing shall take place at the offices
of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, at
10:00 a.m. on a date specified by WEC that is not earlier than five (5) and not
later than ten (10) days following the satisfaction or waiver of the condition
to the Closing set forth in Section 6.1(a), or, if the other conditions to the
Closing set forth in Article 6 shall not have been satisfied or waived by such
date, as soon as practicable after such conditions shall have been satisfied or
waived.
SECTION 3.2 TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At the Closing:
(A) DELIVERIES BY SELLERS. WEC shall deliver (and cause any
Selling Subsidiaries to deliver) to Purchaser such appropriately executed deeds,
bills of sale, assignments, declarations, memoranda of assignment, certificates,
affidavits and other instruments of transfer providing for the sale, assignment,
transfer, conveyance and delivery of the Acquired Assets and the consummation of
the transactions contemplated by this Agreement, in form and substance
reasonably satisfactory to Purchaser and its counsel (it being understood that
any such instrument shall not provide for any representations or warranties or
any Liabilities that are not otherwise expressly provided for in this
Agreement), together with resignations as director of each director of each Sold
Subsidiary if requested by Purchaser.
(B) DELIVERIES BY PURCHASER. Purchaser shall deliver to WEC
(or, at WEC's direction, one or more Selling Subsidiaries) (i) by wire transfer
at the Closing to an account designated in writing (at least three Business Days
prior to the Closing by WEC) of immediately available funds in an amount equal
to the Purchase Price and (ii) such appropriately executed assumption agreements
and other instruments of assumption providing for the assumption of, and
indemnification against, the Assumed
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Liabilities in form and substance reasonably satisfactory to WEC and its counsel
(it being understood that any such instrument shall not provide for any
representations or warranties or any Liabilities that are not otherwise
expressly provided for in this Agreement).
(C) NOMINEE SHARES. At the Closing, or as promptly thereafter
as possible, with respect to any Sold Subsidiaries as to which directors or
other nominees of WEC or any of its Subsidiaries (other than one of the Sold
Subsidiaries) own shares of capital stock for the purpose of satisfying
requirements of Law (such shares, "Nominee Shares") , WEC shall cause the
applicable Selling Subsidiary to take all necessary or appropriate steps to
effect the transfer of the Nominee Shares to new directors or other nominees
designated by Purchaser as, when and to the extent permitted by Law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF WEC. WEC hereby
represents and warrants to Purchaser as follows:
(A) ORGANIZATION, STANDING AND POWER. WEC is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the requisite corporate power and authority
to own the Acquired Assets owned by it and to carry on the Business as now being
conducted. Each Sold Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has the requisite corporate power and authority to own its assets and to
carry on its business as now being conducted.
(B) AUTHORITY. WEC has the requisite corporate power and
authority to execute, deliver and perform this Agreement. Sellers have the
requisite corporate power and authority to execute, deliver and perform the
agreements to be entered into by them at the Closing pursuant hereto (the
"SELLER ANCILLARY DOCUMENTS") and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of WEC, and, in the case of the
Seller Ancillary Documents, will be authorized by all necessary corporate action
on the part of the Selling Subsidiaries prior to the Closing, and do not and
will not require the approval of the stockholders of WEC. This Agreement has
been duly executed and delivered by WEC and constitutes, and each Seller
Ancillary Document to be entered into by any of Sellers will be duly executed
and delivered at the
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Closing and when so executed and delivered will constitute, its legal, valid and
binding obligation enforceable against it in accordance with its terms. The
execution and delivery of this Agreement by WEC do not, and the execution and
delivery by Sellers of the Seller Ancillary Documents, the consummation by
Sellers of the transactions contemplated hereby and thereby and the compliance
by Sellers with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation (except, to the extent provided in any such
program or plan, any acceleration of vesting under the Westinghouse Savings
Program or under any Pension Plan or long-term incentive plan) or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
Acquired Assets under, any provision of (i) the Business Corporation Law of the
Commonwealth of Pennsylvania, (ii) the certificate of incorporation or by-laws
(or comparable organizational documents) of any of Sellers or the Sold
Subsidiaries, (iii) except as disclosed on Schedule 4.1(b), any Intellectual
Property, Technology or Contract or (iv) subject to the filings and other
matters referred to in the following sentence, any Law applicable to Sellers,
the Sold Subsidiaries, the Acquired Assets or the Subsidiary Assets, other than,
in the case of clauses (iii) and (iv) above, any such conflicts, violations,
defaults, rights or Liens that, individually or in the aggregate, would not (A)
reasonably be expected to materially reduce the benefits to Purchaser of the
transactions contemplated by this Agreement or (B) materially impair the ability
of WEC to perform its obligations under this Agreement. No consent, approval,
license, permit, order or authorization of, or registration, declaration or
filing with, any Governmental Authority is required to be obtained or made by or
with respect to Sellers, the Sold Subsidiaries, the Acquired Assets or the
Subsidiary Assets in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except as
disclosed on Schedule 4.1(b) and for (i) compliance with and filings under the
HSR Act, (ii) voluntary notification under the Exon-Florio Amendment, (iii)
filings and approvals under foreign laws, including, without limitation, Canada
and Germany, (iv) compliance with and filings under the Exchange Act, (v)
consents or novations which may be required for the assignment of any
Intellectual Property, Technology or Contract as contemplated in Section 5.4,
(vi) compliance with, and notices and filings under, environmental permits,
statutes and regulations, (vii) those that may be required solely by reason of
Purchaser's (as opposed to any other Person's) participation in the transactions
contemplated hereby and (viii) those the failure of which to obtain or make,
individually or in the aggregate, would not (A) reasonably be expected to
materially reduce the benefits to Purchaser of the transactions contemplated by
this Agreement or (B) materially impair the ability of WEC to perform its
obligations under this Agreement.
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(C) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. (i) WEC has
previously delivered to Purchaser (A) the audited combined balance sheet and
related statements of income and cash flows of "Welco" as of and for the fiscal
year ended December 31, 1996, together with the notes to such financial
statements; (B) the condensed unaudited balance sheet (the "Balance Sheet") and
related statement of loss of the Business as of and for the six months ended
June 30, 1997, together with notes to such financial statements and (C) the
audited balance sheet and related statement of income as of and for the fiscal
year ended December 31, 1996 of the Business and included in the combining
balance sheet and combining statement of income which comprise "Welco" at such
date (the financial statements described in clauses (A), (B) and (C) are
collectively, the "FINANCIAL STATEMENTS"). Copies of the Financial Statements
are attached hereto as Schedule 4.1(c)(i). The Financial Statements have been
prepared from the books and records of WEC and its Subsidiaries relating to
"Welco" and the Business and, except as described in the notes thereto or
independent auditors' report thereon, or otherwise indicated in the Financial
Statements, have been prepared in accordance with GAAP consistently applied and
present fairly, in all material respects, the financial position, results of
operations and cash flows of "Welco" and the Business as at the applicable dates
and for the periods indicated, subject, in the case of the interim financial
statements, to normal year-end adjustments (the principal elements of such
annual year-end adjustments include revised pension and OPEB market valuations
of assets and obligations and actuarial studies and deferred income tax
true-ups).
(ii) Except (A) as disclosed, recorded or reserved
against in the Balance Sheet and the notes thereto, (B) for items set forth in
Schedule 4.1(c)(ii), (C) for Liabilities incurred in the Ordinary Course of
Business since the date of the Balance Sheet, (D) for Liabilities required to be
incurred pursuant to this Agreement and the transactions contemplated hereby and
(E) for Income Taxes, there is no material liability related to the Business and
none of the Sold Subsidiaries has any material liabilities, in each case of a
nature required to be reflected on a balance sheet prepared in accordance with
GAAP.
(iii) All Accounts Receivable reflected on the
Balance Sheet and all Accounts Receivable that have arisen since the date of the
Balance Sheet, (A) have arisen from bona fide sales transactions in the Ordinary
Course of Business, and (B) represent valid and binding obligations due to the
Sellers or Sold Subsidiaries, and are enforceable in accordance with their terms
(subject to the Bankruptcy Exception). Schedule 4.1(c)(iii) lists any obligor
which together with all of its Affiliates owed, as of June 30, 1997, amounts
billed and uncollected by Sellers and the Sold Subsidiaries in an aggregate
amount of $5,000,000 or more. All the Inventory consists of a quality and
quantity
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usable and salable in the Ordinary Course of Business consistent with
past practice, subject to normal and customary allowances in the industry for
damage and outdated items.
(iv) The order backlog information of the Business at
the date of the Balance Sheet set forth on Schedule 4.1(c)(iv) is true and
correct in all material respects. The orders comprising the backlog of the
Business reflect bona fide transactions entered into in the Ordinary Course of
Business.
(D) COMPLIANCE WITH APPLICABLE LAWS. Except as set forth on
Schedule 4.1(d), Sellers and the Sold Subsidiaries are in compliance and have
complied, in each case in all material respects, with all Laws which relate to
the Business and the Acquired Assets. Except as set forth in Schedule 4.1(d),
since January 1, 1996, neither Sellers nor the Sold Subsidiaries have (i)
received any written notice alleging any non-compliance in any material respect
with any such Laws or (ii) received any written notice of any criminal or
material administrative or civil investigation or audit by any Governmental
Authority relating to the Business. This Section 4.1(d) does not relate to labor
and employment matters (to which Section 4.1(q) is applicable), employee
benefits matters (to which Section 4.1(m) is applicable), Environmental Laws (to
which Section 4.1(n) is applicable) or Tax matters (to which Section 4.1(o) is
applicable).
(E) LITIGATION; DECREES. Schedule 4.1(e) sets forth a list as
of the date of this Agreement of all pending lawsuits, actions and proceedings
that, if pending on the Closing Date, would be included in Assumed Liabilities.
Except as set forth in Schedule 4.1(e), and without regard to actions or claims
brought as a result of implementing the Announcement (defined in Section
5.5(d)(v), there is no lawsuit, action or proceeding pending, or, to WEC's
knowledge, threatened, against any of Sellers or the Sold Subsidiaries relating
to the Business which if adversely determined would reasonably be expected to
materially reduce the benefits to Purchaser of the transactions contemplated by
this Agreement. None of Sellers or any Sold Subsidiary is in default in any
material respect under any judgment, order, injunction or decree of any
Governmental Authority or arbitrator entered against any of Sellers or the Sold
Subsidiaries and relating to the Business.
(F) TITLE TO ACQUIRED ASSETS. Sellers have, and will transfer
to Purchaser at the Closing, good and valid title to the Acquired Assets, and
the Sold Subsidiaries have, and will continue at the Closing to have, good and
valid title to the Subsidiary Assets, in each case free and clear of all Liens,
except Permitted Liens. This Section 4.1(f) does not relate to Intellectual
Property or Technology (to which Section 4.1(h) is applicable) or the Owned Real
Property (to which Section 4.1(g) is applicable).
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(G) REAL PROPERTY.
(i) OWNED REAL PROPERTY. Schedule 1.1(e) is in all
material respects a true, complete and correct list, as of the date hereof, of
the street addresses and square footage of improvements on each Owned Real
Property. The Owned Real Property constitutes all real property or interests in
real property owned in fee by Sellers or the Sold Subsidiaries (other than any
Excluded Assets) and primarily used in the operation of the Business as
presently conducted. None of the Owned Real Property is Surplus Property. Each
Seller and Sold Subsidiary has, and will continue at the Closing to have, good
and insurable fee title to all Owned Real Property owned by it free and clear of
all Liens and other encumbrances or limitations on title other than (A)
Permitted Liens, (B) easements, covenants, rights-of-way and other restrictions
of record, (C) any conditions that a current, accurate survey or physical
inspection of any Owned Real Property may show, (D) zoning, building and other
similar restrictions, (E) unrecorded easements or rights-of-way and (F) Liens
that have been placed by any developer, landlord or other Person (other than
Sellers or the Sold Subsidiaries) on Property (other than Owned Real Property)
over which any of Sellers or the Sold Subsidiaries has easement rights, none of
which items set forth in clauses (B), (C), (D), (E) or (F) above, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect and, with respect to any Significant Owned Real Property (which for
purposes of this representation and warranty shall also include any Leased Real
Property that (x) is the subject of a sale/leaseback or similar arrangement in
which any Seller or Sold Subsidiary is the primary occupant of the property
demised thereunder and (y) would constitute, were it an Owned Real Property, a
Significant Owned Real Property), none of which items set forth in clauses (B),
(C), (D), (E) or (F) would materially impair the continued use and operation
thereof for the same uses and operations as those conducted at the present time
or grant to any party any option or right to acquire or lease a material portion
thereof. Except as set forth in Section 5.8, no brokerage or finders commissions
shall be payable by Purchaser in connection with the conveyance of the Owned
Real Property to Purchaser. No material portion of any of the Owned Real
Property is leased by Sellers or the Sold Subsidiaries to any Person.
(ii) LEASED REAL PROPERTY. Schedule 1.1(c) is in all
material respects a true, complete and correct list of all Leased Real Property.
WEC shall provide Purchaser a list of all Lessee Leases not later than 20
Business Days following the date of this Agreement. The Leased Real Property
constitutes all real property leased by any Seller or Sold Subsidiary as Lessee
(other than the Excluded Asset) and primarily used in the operation of the
Business as presently conducted. None of the Leased Real Property is Surplus
Property. With respect to each
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Lessee Lease for premises larger than 25,000 square feet of rentable space (each
a "MATERIAL LESSEE LEASE"): (A) each such lease is valid and subsisting and in
full force and effect as against the Seller or the Sold Subsidiary therein
designated and, to the best of Sellers' knowledge, as against the landlord, and
has not been amended, modified or supplemented except as set forth in Schedule
1.1(c) or in a manner which would not reasonably be expected to materially
reduce the benefits to Purchaser of the transactions contemplated by this
Agreement; (B) no notice of a material default has been sent or received by any
Seller or Sold Subsidiary under any Material Lessee Lease which remains uncured
and, to the best of Sellers' knowledge, no event has occurred and is continuing
which, with notice or lapse of time or both, would constitute a material default
by any Seller or Sold Subsidiary under any Material Lessee Lease; and (C) the
tenant is in occupancy of the space demised thereunder.
(iii) SIGNIFICANT OWNED REAL PROPERTY. With respect
to each Significant Owned Real Property (which for purposes of this
representation and warranty shall also include any Leased Real Property that is
the subject of a sale/leaseback or similar arrangement in which any Seller or
Sold Subsidiary is the primary occupant of the property demised thereunder):
(A) WEC has no knowledge that any condemnation or
eminent domain proceedings are pending with respect to any Significant Owned
Real Property; (B) each Significant Owned Real Property is an independent unit
that does not rely in any material respect on any facilities located on any
property not included in such Significant Owned Real Property to fulfill any
municipal or governmental requirement or for the furnishing to such Significant
Owned Real Property or any essential building systems or utilities, other than
facilities provided to the Significant Owned Real Property pursuant to one or
more valid easements; and (C) each Significant Owned Real Property has access to
a dedicated, public street, either by reason of such Significant Owned Real
Property abutting a dedicated,public street or by way of good and insurable
appurtenant easement(s), and such access is adequate for the present use and
operation thereof. No real estate tax certiorari proceedings are currently
pending with respect to any Significant Owned Real Property.
(iv) SUBLEASES AFFECTING LEASED REAL PROPERTY.
Schedule 4.1(g)(iv) sets forth in all material respects a true, complete and
correct list of all oral or written subleases (including all amendments and
supplements thereto) demising space leased under a Lessee Lease (each a "Lessee
Lease Sublease"). with respect to each Lessee Lease Sublease for premises larger
than 15,000 square feet of rentable space (each a "Material Sublease"): (A) each
such sublease is valid and subsisting and in full force and effect as against
the Seller or the Sold Subsidiary therein designated and, to the best of
Sellers' knowledge, as against the subtenant, and has not been
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amended, modified or supplemented expect as set forth in Schedule 4.1(g)(iv);
and (B) no notice of a material default has been sent or received by any Seller
or Sold Subsidiary under any Material Sublease which remains uncured and, to the
best of Seller's knowledge, no event has occurred and is continuing which, with
notice or lapse of time or both, would constitute a material default by any
Seller or Sold Subsidiary under any Material Sublease.
(H) INTELLECTUAL PROPERTY AND TECHNOLOGY. Schedule 4.1(h)(i)
sets forth a list, as of the date of this Agreement, of all material patents,
patent applications, registered trademarks, trademark applications, registered
servicemarks, servicemark applications, registered copyrights and copyright
applications owned by the Sellers that relate primarily to the Business or owned
by a Sold Subsidiary (except as otherwise provided by Section 5.16) and included
in the Acquired Assets and the Subsidiary Assets and, to the extent indicated on
such Schedule, such Intellectual Property has been duly registered in, filed in
or issued by the United States Copyright Office or the United States Patent and
Trademark Office, the appropriate offices in the various states of the United
States and all appropriate offices of all other jurisdictions. Except as set
forth on Schedule 4.1(h)(ii), a Seller or a Sold Subsidiary is the sole and
exclusive owner of all material Intellectual Property (other than licenses) and
material Technology, free and clear of all Encumbrances or Liens (other than
Permitted Liens). Except as set forth on Schedule 4.1(h)(iii), since January 1,
1994, no Seller or Sold Subsidiary has received any written notice from any
other Person challenging the right of Sellers or the Sold Subsidiaries to use
any of the material Intellectual Property or material Technology or any rights
thereunder. Sellers have taken measures, consistent with Sellers' corporate
practice, to protect the secrecy, confidentiality and value of the Technology
and to avoid infringement and misappropriation of the Intellectual Property. To
Seller's knowledge and except as set forth on Schedules 4.1(h) (iii); (iv); (v)
and (vi), the Intellectual Property and the Technology included in the Acquired
Assets together with Purchaser's rights under the Shared Technology Agreement
are all the intellectual property rights and rights in technology required for
Purchaser to run the Business after Closing in the manner in which it presently
is operated. Except as set forth on Schedule 4.1(h)(iv), since January 1, 1994,
no Seller or Sold Subsidiary has made any claim in writing of a violation,
infringement, misuse or misappropriation by others of their rights to or in
connection with any material Intellectual Property or material Technology, which
claim is still pending. Except as set forth on Schedule 4.1(h)(v), to WEC's
knowledge, as of the date of this Agreement, there is no pending or threatened
claim by any third Person of a material violation, infringement, misuse or
misappropriation by any Seller or Sold Subsidiary of any material Intellectual
Property or Technology owned by any third Person, or of the invalidity of any
patent which is part of
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Intellectual Property, reasonably likely to be adversely determined, and which
if adversely determined would reasonably be expected to result (individually or
in the aggregate) in a material reduction in the benefits to Purchaser of the
transactions contemplated by this Agreement. Except as set forth on Schedule
4.1(h)(vi), there are no interferences or other contested proceedings, either
pending or, to the knowledge of WEC, threatened, in the United States Copyright
Office, the United States Patent and Trademark Office or any Governmental
Authority relating to any pending application with respect to any Intellectual
Property.
(I) INSURANCE. Schedule 4.1(i) sets forth a list and brief
description (specifying the insurer, the policy number or covering note number
with respect to binders and the amount of any deductible, and the aggregate
limit, if any, of the insurer's liability thereunder) of all policies or binders
of fire, liability, errors and omissions, workers' compensation, vehicular,
unemployment and other insurance held by or on behalf of Sellers with respect to
the Acquired Assets and the Business. Such policies and binders are valid and
enforceable in accordance with their terms in all material respects (subject to
the Bankruptcy Exception), and, as of the date hereof, are in full force and
effect. None of the Sellers is in default with respect to any material provision
contained in any such policy or binder or has failed to give any material notice
or present any material claim under any such policy or binder. As of the date
hereof, none of Sellers has received any notice of cancellation or non-renewal
of any such policy or binder.
(J) CONTRACTS. Except for the Contracts listed on Schedule
4.1(j), none of Sellers or the Sold Subsidiaries is a party to or bound by any
Contract (each, a "Material Contract") relating to the Business that is:
(i) a Contract for the employment of any Person with
an annual base salary in excess of $100,000;
(ii) any collective bargaining agreement relating to
Business Employees and any other Contract with any labor union (each, a
"Labor Contract");
(iii) other than Contracts in the Ordinary Course of
Business for the purchase or sale of products or services from or to
the Business, a Contract with (A) WEC or any of its Subsidiaries, other
than a Sold Subsidiary or (B) with any current or former director or
officer of WEC or any of its Subsidiaries, or any Affiliate of any such
Person, that will not be terminated at or prior to the Closing;
(iv) other than letters of credit, bonds and similar
instruments obtained in the Ordinary Course of Business, and
intercompany Indebtedness that will not
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constitute Assumed Liabilities, an indenture, note, loan or credit
agreement or other Contract relating to (A) the borrowing of money in
an amount in excess of $1,000,000 by any of Sellers or the Sold
Subsidiaries or (B) the direct or indirect guarantee or assumption by
any of Sellers or the Sold Subsidiaries of the obligations of any other
Person (other than one of Sellers or the Sold Subsidiaries) for
borrowed money in an amount in excess of $1,000,000;
(v) a covenant not to compete (other than those
contained in project-related teaming, consortium or similar agreements
with respect to the project that is the subject of such agreement,
customary covenants contained in distributor agreements and those
covenants of which the Business is the beneficiary in employee-related
agreements)
(vi) a lease or similar agreement under which (A) any
of Sellers or a Sold Subsidiary is a lessee of, or holds or operates,
any real property owned by any third Person for an annual rent in
excess of $100,000 or (B) any of Sellers or a Sold Subsidiary is a
lessor of, or makes available for use by any third Person, any real
property owned or held as lessee by Sellers or a Sold Subsidiary for an
annual rent in excess of $250,000;
(vii) a lease or similar agreement under which (A)
any of Sellers or a Sold Subsidiary is lessee of, or holds or uses, any
machinery, equipment, vehicle or other tangible personal property owned
by any third Person for an annual rent in excess of $50,000 or (B) any
of Sellers or a Sold Subsidiary is a lessor of, or makes available for
use by any third Person, any tangible personal property owned
(including ownership for Tax purposes) by Sellers or a Sold Subsidiary
having a fair market value in excess of $50,000;
(viii) a Contract (including purchase orders),
involving the obligation of Sellers or a Sold Subsidiary to purchase
products or services for payment by Sellers or a Sold Subsidiary of
more than $1,000,000 (unless terminable by one of Sellers or a Sold
Subsidiary without payment or penalty of not more than $250,000 upon no
more than 60 days' notice);
(ix) a Contract providing for the formation of a
joint venture, long-term alliance or partnership;
(x) a Contract for the sale of any of their assets or
properties (other than sales orders) or for the grant to any Person of
any preferential rights to purchase any of its assets or properties, in
each case in an amount exceeding $250,000;
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(xi) any take-or-pay or requirements Contract or any
other Contract requiring any Seller or Sold Subsidiary to pay
regardless of whether products or services are received;
(xii) a Contract relating to the acquisition by any
Seller or Sold Subsidiary of any operating business or the capital
stock of any other Person;
(xiii) a Contract made outside the Ordinary Course of
Business relating to any Seller or Sold Subsidiary and involving an
amount in excess of $1,000,000;
(xiv) a material license or development agreement;
(xv) a Contract (not included in the backlog
described in Section 4.1(c)(iv)) with a customer for the granting of
material discounts or other material concessions (other than volume
discounts).
The term "Material Contracts" also includes the twenty (20)
largest (measured by unfilled order balance as of June 30, 1997) Contracts
(including sales orders) involving the obligation of Sellers or a Sold
Subsidiary to deliver products or services. Such Contracts are listed on
Schedule 4.1(j)(xvi). All of the Material Contracts are (or in the case of the
Material Contracts referred to in Schedule 4.1(j)(xvi), were as of June 30,
1997) valid, subsisting, in full force and effect and binding upon the Sellers
or Sold Subsidiaries that are named as parties thereto and, to the best
knowledge of WEC, the other parties thereto in accordance with their terms,
subject to the qualifications that enforcement of the rights and remedies
created thereby is subject to: (A) bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and (B) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law)
(clauses (A) and (B) being referred to herein collectively as the "BANKRUPTCY
EXCEPTION") and each of the respective Sellers or Sold Subsidiaries has
satisfied in full or provided for all of its liabilities and obligations
thereunder requiring performance prior to the date hereof in all material
respects, is not in default in any material respect under any of them, nor does
any condition exist that with notice or lapse of time or both would constitute
such a material default. To the best knowledge of WEC, no other party to
any such Material Contract is in default in any material respect thereunder, nor
does any condition exist that with notice or lapse of time or both would
constitute such a material default. This paragraph does not relate to real
estate matters (to which Section 4.1(g) is applicable).
(K) SUFFICIENCY OF ACQUIRED ASSETS. The Acquired Assets
comprise all the assets owned by Sellers that, together
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with the Subsidiary Assets, and the rights of Purchaser under the Purchaser
Ancillary Documents are (i) necessary for or (ii) presently used to a material
extent in the conduct of the Business in all material respects as presently
conducted.
(L) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Schedules hereto or as contemplated by this Agreement, from the date of
the Balance Sheet Sellers have conducted the Business in all material respects
only in the Ordinary Course of Business. Except as set forth in Schedule 4.1(1),
and except for changes (A) relating to or resulting from seasonal changes or
that generally affect to the same extent all participants in the industries in
which the Business operates, (B) relating to or resulting from the public
announcement of the transactions contemplated by this Agreement, or (C) relating
to the identity of the Purchaser or relating to or resulting from actions taken
by Purchaser following the date of this Agreement, since the date of the Balance
Sheet there has been no event or change that has had, or would reasonably be
expected to have, Material Adverse Effect.
(M) EMPLOYEE BENEFITS. (i) Schedule 4.1(m)(i) contains a list
of each Plan and each material Benefit Arrangement in each case currently
maintained or contributed to by Sellers or their Affiliates on behalf of
Business Employees who are or were employed in the United States and, to the
knowledge of WEC, each material Plan and Benefit Arrangement maintained or
contributed to by Sellers or their Affiliates outside the United States on
behalf of Business Employees who are employed outside the United States
("FOREIGN PLANS"). Each Plan, Benefit Arrangement and Foreign Plan which is
currently maintained or contributed to by Sellers or their Affiliates solely on
behalf of the Business (each, a "FREE-STANDING PLAN") is so indicated on
Schedule 4.1(m)(i).
(ii) With respect to the Westinghouse Savings
Program, the Free-Standing Plans and any other Plan or Benefit Arrangement for
which Purchaser is assuming liability (the "Business Plans") (but only to the
extent such liability is being assumed):
(A) To the "Knowledge" (as defined below) of Sellers,
except as disclosed in Schedule 4.1(m)(ii)(A), there is no investigation by any
Governmental Authority, termination proceeding or other claim, action or
arbitration (except claims for benefits payable in the normal operation of the
Plans), or suit or proceeding against or involving any Business Plan (for the
purpose of this paragraph Business Plan does not include any actions under plans
or otherwise to implement the Announcement as defined in Section 5.5(d)(v)) or
asserting any right or claim to benefits under any Business Plan or Labor
Contract which is reasonably likely to be adversely determined and which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect.
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(B) Except as disclosed in Schedule 4.1(m)(ii)(B), (x) all
contributions to Business Plans maintained in the United States that are
intended to be qualified under Section 401(a) of the Code and are Pension Plans
(hereinafter "BUSINESS PENSION PLANS"), which were required to be made in
accordance with Section 302 of ERISA or Section 412 of the Code, have been
timely made, (y) no Business Pension Plan has applied for or received a waiver
of the minimum funding standards imposed by Section 412 of the Code, and (z) no
Business Pension Plan subject to Section 412 has an "accumulated funding
deficiency" within the meaning of Section 412(a) of the Code as of its most
recent plan year.
(C) Each Business Pension Plan is the subject of a favorable
unrevoked determination letter issued by the IRS as to its qualified status
under the Code, and, to the Knowledge of WEC, except as disclosed in Schedule
4.1(m)(ii)(C), and to Knowledge of Sellers no circumstances have occurred that
would adversely affect the tax qualified status of any such Business Pension
Plan and none of the Sellers and any "party in interest" (as defined in Section
3(14) of ERISA) and any "disqualified person" (as defined in Section 4975 of the
Code) with respect to any Business Plan has engaged in a non-exempt "prohibited
transaction" within the meaning of Section 4975 of the Code and Section 406 of
ERISA.
(D) Except as disclosed in Schedule 4.1(m)(ii)(D), to
Knowledge of Sellers all contributions required by law or pursuant to the terms
of any Business Plan have been timely made, except as would not result in a
Material Adverse Effect.
(E) Except as disclosed in Schedule 4.1(m)(ii)(E), to
Knowledge of Sellers all Business Plans, as adopted or as they may have been
amended, comply and have been operated in all material respects in accordance
with applicable plan provisions and with currently applicable provisions of the
Code and ERISA and other applicable Laws, except as would not result in a
Material Adverse Effect.
(F) Except as disclosed in Schedule 4.1(m)(ii)(F), with
respect to any Business Pension Plan subject to Title IV of ERISA, to the
Knowledge of Sellers, no event has occurred, or is reasonably expected to occur
as a result of the transactions contemplated by this Agreement, which will
result in any material liability to any such plan or to the Pension Benefit
Guaranty Corporation, other than for the payment of contributions or premiums,
all of which have been paid when due.
(G) Except as disclosed in Schedule 4.1(m)(ii)(G), to the
Knowledge of Sellers, Sellers comply in all material respects
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with the applicable requirements of Section 4980B(f) of the Code with respect
to each Business Plan that is a "group health plan" (as such term is defined in
Section 5000(b)(1) of the Code).
(H) Except as disclosed in Schedule 4.1(m)(ii)(H), neither the
Westinghouse Pension Plan nor any Benefit Plan disclosed in Schedule 4.1(m)(i)
which is a welfare plan (as such term is defined in Section 3(1) of ERISA) that
provides for post-retirement medical or dental benefits has been amended in any
material respect since September 30, 1995, that has increased the benefits
provided to individual participants or beneficiaries thereunder.
(I) Except as disclosed in Schedule 4.1(m)(ii)(I) or as
otherwise in Section 5.5, (x) no Business Plan exists which could result in the
payment of money or any other property or rights, or accelerate or provide any
other rights or benefits, to any Business Employees that would not have been
required but for the transactions provided herein, and (y) no Business Employee
is covered by any plan, program, arrangement or understanding that would result,
separately or in the aggregate, in the payment (whether in connection with the
termination of employment or otherwise) of any "excess parachute payment" within
the meaning of Section 280G of the Code as a result of the transactions provided
herein.
(J) With respect to each Business Plan, true, correct and
complete copies of the applicable following documents have been delivered or
made available to Purchaser: (x) all current Business Plan documents and related
trust documents, and any amendment thereto; (y) Forms 5500, financial statements
and actuarial reports for the most recent year (except for the last three years
in the case of the Westinghouse Savings Program); (z) the most recently issued
IRS determination letter; and (xx) summary plan descriptions.
(K) Schedule 4.1(m)(ii)(K) sets forth the funding status of
the plans described therein as of the dates set forth on such Schedule.
(iii) "Knowledge" for purposes of Section 4.1(m) shall mean
the knowledge of the senior management at the "major facilities" (described
below) and the human resource employees at the Orlando headquarters. "Major
facilities" are (i) Orlando, Florida, (ii) Charlotte, North Carolina, (iii)
Hamilton, Ontario, (iv) Melbourne, Australia, and (v) Winston-Salem, North
Carolina.
(iv) To the Knowledge of Sellers, except as disclosed in
Schedule 4.1(m)(iv), the Westinghouse Pension Plan and the Westinghouse
Executive Pension Plan have been maintained and operated in accordance with
their terms in all material respects.
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(v) As of OCTOBER 31, 1997, Sellers and the Sold Subsidiaries
employed in the Business approximately 5,460, 1,425 and 930 active business
employees in the United States, Canada and all other countries, respectively.
(N) ENVIRONMENTAL MATTERS. Except as disclosed on Schedule
4.1(n):
(i) Sellers, in respect of the operations of the
Business and the Acquired Assets, and the Sold Subsidiaries, are in
compliance with all Environmental Laws, except for violations of
Environmental Laws that would not, individually or in the aggregate,
reasonably be expected to materially reduce the benefits to Purchaser
of the transactions contemplated by this Agreement;
(ii) Sellers and the Sold Subsidiaries severally
hold, and are in compliance with, all Permits required under
Environmental Laws for Sellers and the Sold Subsidiaries to conduct the
Business, except for the absence of, or noncompliance with, such
Permits that would not, individually or in the aggregate, reasonably be
expected to materially reduce the benefits to Purchaser of the
transactions contemplated by this Agreement;
(iii) No Seller or Sold Subsidiary has entered into
or agreed to any court order or decree or other administrative order or
decree or is subject to any judgment, order or decree relating to
compliance with any Environmental Law or to investigation or cleanup of
Hazardous Substances under any Environmental Law that, individually or
in the aggregate, would reasonably be expected to materially reduce the
benefits to Purchaser of the transactions contemplated by this
Agreement;
(iv) Neither Sellers, in respect of the operations of
the Business and the Acquired Assets, nor any of the Sold Subsidiaries
have (A) Released, transported or disposed of any Hazardous Substance
or any petroleum or petroleum product on, to, under or at any of the
Premises, other than in a manner that would not, in all such cases
taken individually or in the aggregate, reasonably be expected to
materially reduce the benefits to Purchaser of the transactions
contemplated by this Agreement; or (B) received any written notice
prior to the date of this Agreement, (x) of the institution or pendency
or any lawsuit, action, proceeding or investigation by any Person
arising under any Environmental Law at any of the Premises which is
reasonably likely to be adversely determined and which if adversely
determined would reasonably be expected to materially reduce the
benefits to Purchaser of the transactions contemplated by this
Agreement; or (y) requiring the removal of Hazardous Substance from any
of the Premises, that would reasonably be
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expected to materially reduce the benefits to Purchaser of the
transactions contemplated by this Agreement;
(v) Purchaser has been provided with an opportunity
to review true, correct and complete copies of all material
environmental investigations, studies, audits, tests, reports, reviews
or other analyses conducted by or on behalf of, or that are in the
possession of, any Seller or Sold Subsidiary in relation to any site or
facility now or, in the case of any Sold Subsidiary, previously owned,
operated or leased by any of them; and
(vi) None of Sellers or any Sold Subsidiary, in
respect of the operations of the Business or the Acquired Assets, has
agreed with any Governmental Authority pursuant to any Environmental
Law to the imposition of any lien or limitation on the future use of
any property that is an Acquired Asset.
(O) TAXES. Except as set forth on Schedule 4.1(o):
(i) Each of the Sellers and the Sold Subsidiaries has
timely filed or has had filed on its behalf, after giving effect to any
applicable extensions, all material Tax Returns required to be filed by
applicable Law and all such Tax Returns are true, correct and complete
in all material respects. Each of the Sellers and the Sold Subsidiaries
has timely paid or has had paid on its behalf, after giving effect to
any applicable extensions, all Taxes shown due on the Tax Returns
referred to in the preceding sentence.
(ii) No taxing authority has asserted in writing any
material Tax deficiency that has not been paid or reserved for in
accordance with GAAP with respect to the Acquired Assets, the
Subsidiary Assets or the income or operations of the Business.
(iii) None of the Sellers and none of the Sold
Subsidiaries has requested any extension of time within which to file
any non-Income Tax Return with respect to the Acquired Assets or the
income or operation of the Business, which Tax Return has not since
been filed.
(iv) No Seller or Sold Subsidiary has executed any
outstanding waivers or comparable consents regarding the application of
the statute of limitations with respect to any non-Income Taxes or
non-Income Tax Returns with respect to the Acquired Assets or the
income or operation of the Business.
(v) No material audits or other administrative
proceedings or court proceedings are presently pending with regard to
any Taxes or Tax Returns of any Seller (with
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respect to the Acquired Assets and the income or operation of the
Business) or Sold Subsidiary. There is no pending claim in writing by
any authority of a jurisdiction where any of the Sellers with respect
to the Acquired Assets and the income or operation of the Business or
the Sold Subsidiaries has filed Tax Returns that such Seller or Sold
Subsidiary is or may have been subject to taxation by that
jurisdiction.
(vi) No power of attorney currently in force has been
granted by any Seller (with respect to the Acquired Assets or the
income or operation of the Business) or Sold Subsidiary that would be
binding on Purchaser with respect to taxable periods commencing on or
after the Closing Date.
(vii) No Seller (with respect to the Acquired Assets
and the income or Operation of the Business) or Sold Subsidiary has
received a tax ruling or entered into a closing agreement with any
taxing authority that would have a continuing material adverse effect
upon a Sold Subsidiary, the Acquired Assets or the Business, after the
Closing Date.
(viii) Each of the Sellers (with respect to the
Acquired Assets and the income and operation of the Business) and Sold
Subsidiaries has complied in all material respects with the provisions
of the Code relating to the payment and withholding of Taxes,
including, without limitation, the withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3606,
and 6041 and 6049, as well as similar provisions under any other Laws,
and have, within the time and in the manner prescribed by Law, withheld
and paid over to the proper governmental authorities all material
amounts required in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(ix) None of the Acquired Assets or the Subsidiary
Assets is property that any party to this transaction is or will be
required to treat as being owned by another person pursuant to the
provisions of Code Section 168 (f)(8) (as in effect prior to its
amendment by the Tax Reform Act of 1986) or is "tax-exempt use
property" within the meaning of Code Section 168(h).
(x) No Sold Subsidiary is required to include in
income any adjustment pursuant to Code Section 481 (a) by reason of a
voluntary change in accounting method initiated by such Sold
Subsidiary, and to the best of the knowledge of Sellers and the Sold
Subsidiaries, the IRS has not proposed any such adjustment or change in
accounting method.
(P) SOLD SUBSIDIARIES. The authorized and outstanding capital
stock of each Sold Subsidiary is as set forth on Schedule 1.1(h),
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and, except as set forth on such Schedule (and except for Nominee Shares), all
of such issued and outstanding shares of capital stock are owned, directly or
indirectly, beneficially and of record by one of the Sellers as set forth on
Schedule 1.1(h), free and clear of all Liens, except as set forth on Schedule
1.1(h). For purposes of this Section 4.1(p), "beneficial ownership" of any
shares of capital stock shall mean having or sharing the power to direct or
control the voting or disposition of such shares of capital stock. Except (i)
for any Nominee Shares and (ii) as set forth in Schedule 1.1(h), there are no
shares of capital stock of or other equity interests in any Sold Subsidiary
outstanding. Except as set forth in Schedule 1.1(h), none of the shares of
capital stock of or other equity interests in any Sold Subsidiary has been
issued in violation of, or are subject to, any purchase option, call, right of
first refusal or preemptive, subscription or similar rights under any provision
of applicable law, the certificate of incorporation or by-laws (or comparable
organizational documents) of any Sold Subsidiary or any Contracts. There are no
outstanding warrants, options, rights, "phantom" stock rights, convertible or
exchangeable securities or other agreements to or instruments (other than this
Agreement) pursuant to which any Seller or any Sold Subsidiary is or may become
obligated to issue, sell, purchase, return or redeem any shares of capital stock
of or other equity interests in any Sold Subsidiary.
(Q) LABOR MATTERS. Except as set forth in Schedule 4.1(q), (i)
there is not, and since January 1, 1995, there has not been, any labor strike,
work stoppage or lockout pending against any Seller in relation to the Business
or against any Sold Subsidiary, (ii) there is no material unfair labor practice
charge or complaint against any Seller relating to the Business or any Sold
Subsidiary pending or, to the knowledge of WEC, threatened before the National
Labor Relations Board or any similar body in any material foreign jurisdiction
and (iii) there are no material pending or, to the knowledge of WEC, threatened
union grievances against any Seller in relation to the Business or against any
Sold Subsidiary. Except as disclosed on Schedule 4.1(q), each of the Sellers and
the Sold Subsidiaries has complied in all material respects with its obligations
related to, and is not in breach in any material respect of or in default in any
material respect under, any Labor Contracts. Except as set forth in Schedule
4.1(q), to the knowledge of WEC, there are no attempts presently being made to
organize any employees employed by any of the Sellers or any Sold Subsidiary.
(R) TANGIBLE PROPERTY. All tangible personal property (other
than Inventory), including, without limitation, equipment, furniture, leasehold
improvements, fixtures, vehicles, structures, any related capitalized items and
other similar tangible property, in each case owned or leased by any of the
Sellers and material to its business (collectively, the "Tangible Property") is
in good operating condition, subject to continued
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repair and replacement in accordance with past practice. During the three years
prior to the date hereof there has not been any material interruption of the
operations of any of the Sellers due to inadequate maintenance of the Tangible
Property.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
hereby represents and warrants to Seller as follows:
(A) ORGANIZATION. STANDING AND POWER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority to carry on its business as now being conducted.
(B) AUTHORITY. Purchaser has the requisite corporate power and
authority to execute this Agreement and the agreements to be entered into by it
at the Closing pursuant hereto (the "PURCHASER ANCILLARY DOCUMENTS") and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Purchaser Ancillary Documents and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser, the Closing, and
will not require the approval of the stockholders of Purchaser. This Agreement
has been duly executed and delivered by Purchaser and constitutes, and each
Purchaser Ancillary Document will be duly executed and delivered by Purchaser at
or prior to the Closing and when so executed and delivered will constitute, a
legal, valid and binding obligation of Purchaser enforceable against it in
accordance with its terms. The execution and delivery of this Agreement by
Purchaser do not, and the execution and delivery by Purchaser of the Purchaser
Ancillary Documents, the consummation by Purchaser of the transactions
contemplated hereby and thereby and the compliance by Purchaser with the terms
hereof and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of Purchaser's assets under, any provision of (i) the State of Delaware, (ii)
the certificate of incorporation or by-laws (or comparable organizational
documents) of Purchaser or (iii) subject to the filings and other matters
referred to in the following sentence, any law, judgment, order, decree,
statute, ordinance, rule or regulation applicable to Purchaser, other than, in
the case of clause (iii) above, any such conflicts, violations, defaults, rights
or Liens that, individually or in the aggregate, would not materially impair the
ability of Purchaser to perform its obligations under this Agreement. No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by or with respect to Purchaser in connection with the
execution and delivery of this Agreement or the consummation of the
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transactions contemplated hereby, except for (i) compliance with and filings
under the HSR Act, (ii) voluntary notification under the Exon-Florio Amendment,
(iii) compliance with and filings under the Exchange Act, (iii) filings and
approvals under foreign laws, including, without limitation, Canada and Germany,
(iv) consents or novations which may be required for the assignment of any
Intellectual Property, Technology or Contract as contemplated in Section 5.4,
(v) compliance with, and notices and filings under, environmental permits,
statutes and regulations, and (vi) those the failure of which to obtain or make,
individually or in the aggregate, would not materially impair the ability of
Purchaser to perform its obligations under this Agreement.
(C) FINANCING. Purchaser has available cash or has existing
borrowing facilities or firm commitments which, together with its available
cash, are sufficient to enable it to consummate the transactions contemplated
hereby. True and complete copies of any such facilities and commitments have
been provided to WEC prior to the date of this Agreement. The Guarantors'
financial statements provided to WEC fairly present, in all material respects,
the financial position, results of operations and cash flows of each Guarantor
as at the applicable dates and for the periods covered thereby.
ARTICLE 5
COVENANTS
SECTION 5.1 COVENANTS OF WEC RELATING TO CONDUCT OF BUSINESS.
(A) ORDINARY COURSE. During the period from the date of this
Agreement and continuing until the Closing, except as expressly provided in this
Agreement, including the Schedules hereto, or to the extent that Purchaser shall
otherwise consent, WEC shall, and shall cause the other Sellers and the Sold
Subsidiaries to carry on the Business in the Ordinary Course of Business and use
all reasonable efforts consistent with past practices to keep available the
services of the Business's present officers and employees and preserve the
Business's relationships with customers, suppliers and others having business
dealings with the Business. In addition, except as contemplated by Schedule 5.1
or as otherwise provided by this Agreement, WEC shall not, and shall not permit
any other Seller or Sold Subsidiary to, do any of the following with respect to
the Business without the consent of Purchaser (which consent shall not be, in
the case of clause (xi) below, unreasonably withheld or delayed):
(i) amend the certificates of incorporation or
by-laws (or comparable organizational documents) of any Sold
Subsidiary;
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(ii) adopt or amend any Benefit Plan or Labor
Contract so as to materially increase the costs thereunder, except as
required by Law or pursuant to the terms of any existing Labor Contract
or other existing Contract;
(iii) grant to any executive officer of any Sold
Subsidiary any increase in compensation, benefits or loans or severance
benefits, except in the Ordinary Course of Business or as may be
required under existing contracts or agreements and except for any
increases or loans the liability for which a Seller shall be solely
obligated;
(iv) incur or assume any liabilities, obligations, or
indebtedness for borrowed money which would constitute an Assumed
Liability or guarantee any such liabilities, obligations or
indebtedness, in each case other than in the Ordinary Course of
Business;
(v) acquire by merging or consolidating with, or by
purchasing a material portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint stock company,
limited liability company, association or other business organization
or division thereof;
(vi) acquire any assets which are material,
individually or in the aggregate, to the Business, taken as a whole,
except in the Ordinary Course of Business;
(vii) sell, lease or mortgage, pledge or otherwise
dispose of, or grant preferential rights to, any of its assets which
are material, individually or in the aggregate, to the Business taken
as a whole, except for the sale of Inventory in the Ordinary Course of
Business and except for the sale or factoring of Accounts Receivable;
(viii) enter into any lease of real property for an
annual rent in excess of $150,000 except, following good faith
consultation with Purchaser, any renewals of existing leases in the
Ordinary Course of Business;
(ix) enter into any joint venture, partnership or
other similar arrangement;
(x) enter into, amend or terminate any employment
agreement;
(xi) knowingly waive any right of material value to
the Business or settle or compromise any claim in excess of $5,000,000;
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(xii) make any wage or salary increase or other
compensation payable or to become payable or bonus, or increase in any
other direct or indirect compensation, for or to any of its officers,
employees, consultants, agents or other representatives employed in the
Business, or any accrual for or commitment or agreement to make or pay
the same, in each case other than in the Ordinary Course of Business or
as may be required under existing contracts;
(xiii) except as described in Schedule 4.1(j)(iii) or
as otherwise contemplated by this Agreement, enter into any
transactions with any of its Affiliates, officers, directors,
employees, consultants, agents or other representatives (other than
employment arrangements made in the Ordinary Course of Business), or
any Affiliate, of any officer, director, consultant, employee, agent or
other representative, to the extent the obligations arising from any
such transaction would be an Assumed Liability;
(xiv) make any payment or commitment which would
constitute an Assumed Liability to pay any severance or termination
payment to any Person or any of its officers, directors, employees,
consultants, agents or other representatives employed in the Business,
other than payments pursuant to contractual obligations in effect on
the date of this Agreement;
(xv) except in the Ordinary Course of Business, amend
in any material respect or enter into any Contract or other agreement
of a type required to be disclosed pursuant to Section 4.1(j)(v),
(vii), (viii), (xi), (xiii), (xiv) and (xv); or
(xvi) agree, whether in writing or otherwise, to do
any of the foregoing.
(B) ADVICE OF CHANGES. WEC shall promptly advise Purchaser in
writing of (i) any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a material violation or
material breach of this Agreement, (ii) any event, occurrence, material
transaction or other item which would have been required to have been disclosed
on any Schedule delivered hereunder had such event, occurrence, transaction or
item existed on the date hereof, other than items arising in the Ordinary Course
of Business which would not render the representation and warranties of WEC
materially misleading and (iii) any event or change that reasonably would be
expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that WEC shall
have no Liability for breach of this Section 5.1(b) except to the extent
Purchaser has actually been prejudiced by such breach.
(c) Purchaser acknowledges and agrees that WEC shall not be
deemed to be in breach of its representation and warranty
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contained in the first sentence of Section 4.1(l) or its obligations under the
first sentence of Section 5.1(a) as a result of its determination not to take
the actions described in Schedule 5.1(c). If Purchaser requests that WEC take
such (or similar) actions prior to the Closing and WEC agrees to take such
actions, Purchaser shall bear all costs incurred by WEC and its Affiliates as a
result of such actions (other than as set forth in Section 5.5(d)(vi)) by
reimbursing WEC not later than 30 days following receipt of reasonably detailed
evidence of the incurrence of such costs. Any such costs incurred by WEC prior
to the Closing (but not reimbursed prior to the Closing) shall be reimbursed by
Purchaser at the Closing. WEC agrees not to take any such action without the
prior written consent of Purchaser.
SECTION 5.2 ACCESS TO INFORMATION. WEC shall afford to Purchaser and
its accountants, counsel and other representatives reasonable access during
normal business hours during the period prior to the Closing to all the
properties, books, Contracts, commitments, Tax Returns and records of the
Business (other than those related solely to the Excluded Assets or Excluded
Liabilities), and during such period shall furnish promptly to Purchaser any
information concerning the Business (other than the Excluded Assets or Excluded
Liabilities) as Purchaser may reasonably request; and shall cause its and the
other Sellers' officers, employees, consultants, agents, accountants and
attorneys to cooperate fully with Purchaser's representatives in connection with
such review and examination and to make full disclosure to Purchaser of all
material facts affecting the financial condition and business operations of the
Business; PROVIDED, HOWEVER, that WEC is under no obligation to disclose to
Purchaser, (i) any information the disclosure of which is restricted by Contract
or applicable Law except in strict compliance with the applicable Contract or
Law (it being understood that WEC shall use reasonable commercial efforts to
obtain any necessary consent for disclosure under such Contract), (ii) any
information as to which the attorney-client privilege, the attorney work-product
doctrine or the self-evaluative privilege may be available, until a mutually
satisfactory joint defense agreement has been executed by Purchaser and WEC,
(iii) the medical records pertaining to any employee or former employee of the
Business until after the Closing or (iv) the terms of any bid or proposal by any
of the Sellers in connection with any proposed sales order. All requests for
information to visit facilities or to meet with Sellers' representatives shall
be directed to and coordinated with the person(s) designated to Purchaser from
time to time by WEC as the PGBU Coordinator(s). Purchaser acknowledges that any
information being provided to it or its representatives by Sellers pursuant to
or in connection with this Agreement is subject to the terms of a
confidentiality agreement between Siemens Corporation and WEC dated June 17,
1996, as amended (the "CONFIDENTIALITY AGREEMENT") (by which Siemens Parent has
agreed to be bound), which terms are incorporated herein by reference.
Notwithstanding anything to
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the contrary contained paragraph 8 thereof, the Confidentiality Agreement, and
the obligations not to use or disclose and to return on request or destroy,
Confidential Information (as defined in the Confidentiality Agreement) already
provided at the time of termination, shall terminate, subject to the limitations
in Section 3 thereof, on the later of June 17, 1998 and the date that this
Agreement terminates in accordance with its terms; PROVIDED, that, if the
Closing occurs, the Confidentiality Agreement and such obligations shall
terminate at the end of the Restricted Period. Nothing contained herein is
intended to limit or restrict Purchaser's use or disclosure of Confidential
Information concerning the Business following the Closing. No investigation by
Purchaser shall diminish or obviate any other representations, warranties,
covenants or agreements of WEC under this Agreement.
SECTION 5.3 GOVERNMENTAL APPROVALS, ETC.
(a) Each of Purchaser and WEC shall as promptly as practicable
(i) but in no event later than ten (10) days following the execution and
delivery of this Agreement, file with the United States Federal Trade Commission
and the United States Department of Justice, the notification and report form
under the HSR Act required for the transactions contemplated hereby and,
thereafter, any supplemental information requested in connection therewith
pursuant to the HSR Act and (ii) but in no event later than thirty (30) days
following the execution and delivery of this Agreement, file with the Committee
on Foreign Investment in the United States the voluntary notification under the
Exon- Florio Amendment for the transactions contemplated hereby. Each of
Purchaser and WEC shall as promptly as practicable comply with any other Laws of
any country and the European Union which are applicable to any of the
transactions contemplated hereby and pursuant to which any consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority or any other Person in connection with such transactions
is necessary. Each of Purchaser and WEC shall furnish to the other such
necessary information and reasonable assistance as the other may request in
connection with its preparation of any filing, registration or declaration which
is necessary under the HSR Act, the Exon-Florio Amendment or any other such
Laws. Purchaser and WEC shall keep each other apprised of the status of any
communications with, and any inquiries or requests for additional information
from, any Governmental Authority, and shall comply promptly with any such
inquiry or request. Purchaser shall use its best efforts and take all necessary
action to obtain any clearance under the HSR Act or any other consent, approval,
order or authorization of any Governmental Authority under United States or
foreign antitrust or competition laws, necessary in connection with the
transactions contemplated hereby or to resolve any objections
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which may be asserted by any Governmental Authority with respect to the
transactions contemplated hereby.
(B) Subject to the terms and conditions of this Agreement,
each party shall use its best efforts to cause the Closing to occur as promptly
as practicable, including (i) as contemplated by Section 5.3(a) or 5.4, (ii)
defending against any lawsuits, actions or proceedings, judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any preliminary
injunction, temporary restraining order, stay or other legal restraint or
prohibition entered or imposed by any court or other Governmental Authority that
is not yet final and nonappealable vacated or reversed; provided, however, that
none of Sellers or their Affiliates shall be required to make any material
monetary expenditure, commence or be a plaintiff in any litigation or offer or
grant any material accommodation (financial or otherwise) to any third Person.
(C) Purchaser and WEC each shall use its commercially
reasonable efforts to obtain as promptly as practicable all permits, licenses,
franchises, approvals, consents and authorizations by or of Governmental
Authorities required by Law for Purchaser to conduct the Business following the
Closing and to own the Acquired Assets (each, a "Purchaser Permit").
Notwithstanding the foregoing, neither Purchaser nor WEC shall be required to
expend any material sum or agree to a material concession to any Governmental
Authority to obtain any such Purchaser Permit.
SECTION 5.4 THIRD PARTY CONSENTS.
(A) WEC and Purchaser will cooperate and use their respective
commercially reasonable efforts to obtain as promptly as practicable all
consents, approvals and waivers required by third Persons to transfer the
Contracts, Intellectual Property, Technology, Permits and the capital stock of
the Sold Subsidiaries to Purchaser in a manner that will avoid any default,
conflict, or termination of rights under the Contracts, Intellectual Property,
Technology and Permits. Notwithstanding anything to the contrary in this
Agreement, nothing in this Section 5.4 shall (i) require Sellers or Purchaser to
expend any material sum, make a material financial commitment or grant or agree
to any material concession to any third Person to obtain any such covenant,
approval or waiver or (ii) alter, diminish or otherwise affect Purchaser's
rights under Section 6.2(c).
(B) In the event that any and all consents, approvals or
waivers necessary for the assignment, transfer or novation of any Contract,
Intellectual Property, Technology or Permit, or any claim, right or benefit
arising thereunder or resulting
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therefrom, or consents relating to a change in control of any Sold Subsidiary,
shall not have been obtained prior to the Closing Date, then as of the Closing,
this Agreement, to the extent permitted by Law, shall constitute full and
equitable assignment by Sellers to Purchaser of all of Sellers' right, title and
interest in and to, and all of Sellers' obligations and liabilities under, such
Contract, Intellectual Property, Technology and Permits, and, in the case of
Contracts, Purchaser shall be deemed Sellers' agent for purpose of completing,
fulfilling and discharging all of Sellers' liabilities under any such Contract.
The parties shall take all necessary steps and actions to provide Purchaser with
the benefits of such Contracts, Intellectual Property, Technology and Permits,
and, in the case of Contracts, to relieve Sellers of the performance and other
obligations thereunder, including entry into subcontracts for the performance
thereof. Purchaser agrees to pay, perform and discharge, and indemnify Sellers
against and hold Sellers harmless from, all obligations and liabilities of
Sellers relating to such performance or failure to perform under such Contracts.
(C) In the event Sellers shall be unable to make the equitable
assignment described in Section 5.4(b), or if such attempted assignment would
give rise to any right of termination, or would otherwise adversely affect the
rights of Sellers or Purchaser under such Contract, Intellectual Property or
Technology, or would not assign all Sellers' rights thereunder at the Closing,
Sellers and Purchaser shall continue to cooperate and use all reasonable efforts
to provide Purchaser with all such rights. To the extent that any such consents
and waivers are not obtained, or until the impediments to such assignment are
resolved, Sellers shall use all reasonable efforts (without the expenditure, in
the aggregate, of any material sum) to (i) provide to Purchaser, at the request
of Purchaser, the benefits of any such Contract, to the extent related to the
Business, or of any such Intellectual Property or Technology, (ii) cooperate in
any lawful arrangement designed to provide such benefits to Purchaser and (iii)
enforce, at the request of and for the account of Purchaser, any rights of
Sellers arising from any such Contract, Intellectual Property or Technology
against any third Person including the right to elect to terminate in accordance
with the terms thereof upon the advice of Purchaser. To the extent that
Purchaser is provided the benefits of any Contract, Intellectual Property or
Technology referred to herein (whether from Sellers or otherwise), Purchaser
shall perform at the direction of Seller and for the benefit of any third Person
the obligations of Sellers thereunder or in connection therewith, and Purchaser
agrees to pay, perform and discharge, and indemnify Sellers against and hold
Sellers harmless from, all obligations and liabilities of Sellers relating to
such performance or failure to perform (but only to the extent such obligations
or liabilities arise solely from acts of Purchaser after the Closing Date) and
in the event of a failure of such indemnity, Sellers
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shall cease to be obligated under this Agreement in respect of the Contract,
Intellectual Property or Technology which is the subject of such failure.
SECTION 5.5
(A) EMPLOYEE MATTERS.
(i) CONTINUATION OF EMPLOYMENT. Purchaser shall offer
employment to each employee of the Business (including any individual whose
principal place of employment is on the Premises, who primarily renders services
on behalf of the Business and whose compensation cost is borne primarily by the
Business) and each employee of STC as described in Section 5.25 who is actively
at work, on vacation or on short-term disability leave on the Closing Date (a
"BUSINESS EMPLOYEE"). Each employee or former employee who primarily rendered
services on behalf of the Business (or to STC as described in Section 5.25), is
not a Business Employee and who is not actively at work on the Closing Date due
to leave of absence, long-term disability leave, military leave or layoff, and
who in the case of an employee on long-term disability was last actively
employed within two years of the Closing Date, and in the case of an employee on
a leave of absence or layoff was last employed within five years of the Closing
Date and in each case has recall rights ("RECALL RIGHTS") under the work rules
of the Business, a collective bargaining agreement or applicable law
(collectively, "INACTIVE EMPLOYEES"), shall be offered active employment by
Purchaser pursuant to the Recall Rights and shall be deemed an employee of
Purchaser as of the Closing Date. Upon such offer and acceptance and
commencement of active employment, each such Inactive Employee shall be
considered a Business Employee effective as of the first date of return to work.
WEC shall deliver a schedule to Purchaser of anticipated Business Employees and
Inactive Employees with their designated status as of the Closing Date, 30 days
before the Closing Date. Such schedule shall be updated by WEC as soon as
practical after the Closing Date. Any employee of Sellers or their Affiliates
who is not otherwise a Business Employee but who is offered and accepts
employment by Purchaser, pursuant to mutual agreement with the Sellers, during
the six months following the Closing Date shall be deemed to be a Business
Employee as of the date of actual employment with the Purchaser.
(ii) CONTINUATION OF COMPENSATION AND BENEFITS.
Notwithstanding the more specific provisions set forth in this Section 5.5,
Purchaser shall provide compensation and benefit plans and arrangements which in
the aggregate are comparable (but in no event taking into account any
equity-based compensation and opportunity to invest in securities of WEC under
the Westinghouse Stock Plan or the Westinghouse Savings Program, provided that
with respect to Business Employees, the match formula under the
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Westinghouse Savings Program shall be considered when determining comparability)
to the compensation, Plans and Benefit Arrangements in effect for Business
Employees on the date of this Agreement for a period of not less than two years
following the Closing Date (the "BENEFITS MAINTENANCE PERIOD") (or, in the case
of Business Employees who are subject to a collective bargaining agreement, the
period required therein). Notwithstanding the above, with respect to Business
Employees who are executives, long-term incentives shall be comparable to such
plans offered to similarly situated executives of Purchaser in the United
States. Purchaser shall deliver to WEC no later than 15 days prior to the
Closing Date a letter from an independent consulting firm reasonably acceptable
to WEC stating that the compensation, benefits and benefit arrangements offered
by Purchaser to the Business Employees pursuant to this Section are comparable
in the aggregate to the compensation, Plans and Benefit Arrangements currently
provided by the Sellers to the Business Employees.
(B) ACCRUED VACATION. Purchaser shall credit each Business
Employee with the unused vacation days and any personal and sickness days
accrued in accordance with the vacation and personnel policies and Labor
Contracts of Sellers or their Affiliates in effect as of the Closing Date.
(C) UNION REPRESENTATION. Purchaser agrees to (i) with respect
to any collective bargaining agreement that does not relate solely to Business
Employees, recognize each union which at the Closing Date represents any of the
Business Employees as the collective bargaining representatives of such
employees as of the Closing Date, and provide such employees with comparable
wages and benefits as those in effect on the date of this Agreement, and (ii)
with respect to any collective bargaining agreement that relates solely to
Business Employees and former employees of the Business, assume the collective
bargaining agreements.
(D) PENSION PLAN. (i) Effective as of the Closing Date,
Purchaser shall establish a defined benefit pension plan intended to qualify
under Section 401(a) of the Code for the benefit of Business Employees (the
"PURCHASER PENSION PLAN") that contains terms and conditions that are
substantially identical with respect to all substantive provisions to those of
the Westinghouse Pension Plan as in effect as of the Closing Date (the "WEC
PENSION PLAN") and that credits compensation (with respect to the calendar year
which includes the Closing Date) and service for purposes of eligibility
(including early retirement eligibility and any early retirement supplemental
benefit), and vesting which was credited under the WEC Pension Plan, provided,
however, that the Purchaser Pension Plan will include provisions which are
consistent with (ii) through (iv) below and will be administered during the
Benefits Maintenance Period so that the aggregate of the benefits under the WEC
Pension Plan and the
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Purchaser Pension Plan are the same with respect to Business Employees as if
the Business Employees continued employment with Sellers.
(ii) Purchaser shall continue the Purchaser Pension
Plan without adverse effect to the Business Employees for a period not less than
the Benefits Maintenance Period.
(iii) The WEC Pension Plan shall retain liability
with respect to Business Employees for their accrued benefit calculated as of
the Closing Date, subject to adjustment as follows. WEC shall take appropriate
action to cause the WEC Pension Plan to provide (x) credit for employment of
Business Employees with the Purchaser or its Affiliates solely for purposes of
calculating vesting credit and eligibility for early retirement benefits
("Eligibility Service," as defined in the WEC Pension Plan), and (y) except as
provided in (d)(iv) below, the early retirement supplement under Section 5 for
Business Employees under the terms of the WEC Pension Plan shall be equal to the
lesser of -
(A) the early retirement supplement calculated under the terms of the
WEC Pension Plan, or as it may be reduced by WEC after the Benefits
Maintenance Period, but only to the extent such a change applies to all
WEC employees with the same benefit, as multiplied by a fraction, the
numerator of which is the participant's years of Credited Service (as
defined in the WEC Pension Plan) under the WEC Pension Plan as of the
Closing Date, and the denominator of which is the sum of the numerator
and the participant's years of employment with the Purchaser and its
Affiliates from the Closing Date until the participant's retirement or
termination of employment with the Purchaser and its Affiliates, or
(B) the comparable early retirement supplement calculated under the
terms of the Purchaser Pension Plan as in effect on the participant's
retirement or termination of employment from the Purchaser and its
Affiliates (prior to reduction for the portion of the supplement to be
paid from the WEC Pension Plan) (if the Purchaser Pension Plan has no
such supplement after the Benefits Maintenance Period the amount
calculated under this subparagraph (B) shall be zero (0)) multiplied by
a fraction, the numerator of which is the employee's years of Credited
Service under the WEC Pension Plan as of the Closing Date, and the
denominator of which is the sum of the numerator and the participant's
years of employment with the Purchaser and its Affiliates from the
Closing Date until the participant's termination of employment with the
Purchaser and its Affiliates.
Notwithstanding the foregoing, the WEC Pension Plan shall not recognize
employment with the Business after the Purchaser and
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its Affiliates have sold or divested the Business, or a portion thereof (whether
by asset or stock sale, merger or spin-off (each a "Disposition")), with respect
to the Business Employees who are transferred or terminated in connection with
such a sale or divestiture.
(iv) The Purchaser Pension Plan shall be solely
responsible for (and the WEC Pension Plan shall not provide for) (A) any early
retirement supplement that becomes payable with respect to a Business Employee
retiring after the Closing Date that is the result of a "Pension Event" as
defined in subsection (v) below, (B) any benefits pursuant to Section 19 of the
WEC Pension Plan and the corresponding provision of the Purchaser Pension Plan,
in excess of the benefits that would otherwise be payable if those sections did
not apply, with respect to a Business Employee who retires or terminates
employment with the Purchaser and its Affiliates after the Closing Date, and (C)
any other early retirement subsidy or supplement with respect to Business
Employees that is not described in (iii) above.
(v) Purchaser shall indemnify WEC for any actuarial
losses (as defined below) with respect to the WEC Pension Plan resulting from
any Business Employee commencing the receipt of benefits prior to their Normal
Retirement Date (as defined in the WEC Pension Plan) and that is attributable to
(A) a Disposition, (B) a closing of a plant or plants by Purchaser or a
reduction in the number of Business Employees employed by the Purchaser and its
Affiliates as a result of action requiring the filing of a notice under the
Worker Adjustment and Retraining Notification Act, as in effect on the Closing
Date (the "WARN ACT") (or which would require the filing of a WARN Act notice if
any actions taken within a 6-month period occurred on the same date (a "WARN
Event")), or (C) any action of the Purchaser or its Affiliates that provides an
incentive to Business Employees to terminate or retire prior to their Normal
Retirement Date including, but not limited to, an early retirement window
program or a change in plan design which reduces prospective benefits for
Business Employees who are eligible to retire under the WEC Pension Plan.
Purchaser shall notify WEC of the occurrence of any of the events described in
(A) through (C) above (each of which is a "PENSION EVENT") within 30 days after
such event, and shall cooperate with WEC in providing data to WEC to enable the
determination of actuarial losses. Actuarial losses shall be determined by the
enrolled actuary for the WEC Pension Plan (the "WEC Actuary") with respect to
each Pension Event and is measured by the difference (positive or negative)
between the accumulated benefit obligation for all of the Business Employees
affected by the Pension Event using (1) immediate commencement of benefits under
actual forms of benefit payment elected and (2) projected commencement of
benefits, both based on the assumptions described in Schedule 5.5(d), other than
lump sums elected under (1) above, which shall be valued at the actual value
distributed. Notwithstanding any other provision in this Agreement to the
contrary, this indemnity shall survive the Closing Date without limitation.
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(vi) WEC shall indemnify Purchaser, with such payment
treated as a purchase price adjustment, for the actuarial cost to Purchaser
(valued using the assumptions in Schedule 5.5(d)) under the Purchaser Pension
Plan and Purchaser Executive Plan (as defined below) attributable to the
termination of Business Employees prior to the later of December 31, 1998 or one
year following the Closing Date (the "Termination Date") pursuant to the
formulation provided in the October 10, 1997 announcement (the "Announcement")
by WEC ("ANNOUNCEMENT TERMINATIONS") under the provision of the Purchaser
Pension Plan comparable to Section 19 of the WEC Pension Plan and under a
special provision to be included in the Purchaser Pension Plan containing the
same benefit provisions of the draft amendment described in Schedule 5.5(d)(vi)
and which provision shall be included in the Purchaser Pension Plan through the
Termination Date; provided, however, in no event shall such indemnified amount
exceed $12,784,000, as reduced by any actuarial losses relating to the WEC
Pension Plan arising from Announcement Terminations prior to the Closing Date.
(E) SAVINGS PLAN. (i) Effective as of the Closing Date,
Purchaser shall adopt or have in effect a defined contribution plan that
includes a qualified cash or deferred arrangement within the meaning of Section
401(k) of the Code ("PURCHASER'S 401(K) PLAN") which provides benefits to
Business Employees participating in the Westinghouse Savings Program (the "WEC
SAVINGS PROGRAM") as of the Closing Date and contains provisions similar to the
provisions of the WEC Savings Program to the extent required by Section
411(d)(6) of the Code for account balances to be transferred from the WEC
Savings Program. Each Business Employee who was participating in the WEC Savings
Program as of the Closing Date shall become a participant in Purchaser's 401(k)
Plan as of the Closing Date. Business Employees shall receive credit for all
service with Sellers and their Affiliates for purposes of eligibility and
vesting under Purchaser's 401(k) Plan to the extent credited under the WEC
Savings Program. Effective as of the Closing Date, WEC shall fully vest the
account balances of Business Employees under the WEC Savings Program and make
all applicable contributions under the WEC Savings Program otherwise provided
for in the plan year in which the Closing occurs with respect to compensation
earned by Business Employees prior to the Closing Date, without regard to any
provision of the WEC Savings Program requiring a minimum number of hours of
service, or employment on any particular date, if the applicable Business
Employees would have qualified for a contribution if they had remained employed
with Sellers.
(ii) On the Closing Date, Purchaser shall provide
WEC with (A) either a copy of a favorable IRS determination letter to the effect
that Purchaser's 401(k) Plan is qualified under Section 401(a) of the Code or an
opinion of Purchaser's
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counsel, reasonably satisfactory to WEC, to such effect and (B) an opinion of
Purchaser's counsel, reasonably satisfactory to WEC, that the Purchaser's 401(k)
Plan will satisfy Section 411(d)(6) of the Code with respect to account balances
to be transferred to the Purchaser's 401(k) Plan from the WEC Savings Program
pursuant to (iii) below.
(iii) As soon as reasonably practicable after the
Closing Date and receipt of the documentation described in (ii) above, WEC shall
cause to be transferred from the WEC Savings Program to Purchaser's 401(k) Plan
assets having a fair market value equal to the aggregate value of the account
balances in the WEC Savings Program as of the date of transfer (such transfer to
be in (x) shares of common stock of Seller to the extent of shares in the WEC
Common Stock Fund applicable to Business Employees, (y) in notes evidencing
loans to Business Employees from their account balances, (3) in cash, and (xx)
to the extent of the account balances of the Business Employees in the WEC
Savings Program allocable to the Fixed Income Fund, in investment instruments
which approximate from a quality and interest rate perspective assets held by
the fund, but subject to the applicable fiduciary requirements of the
Purchaser's 401(k) Plan relating to quality and interest rate considerations)
and all qualified domestic relations orders (within the meaning of Section
414(p) of the Code) with respect to Business Employees, and Purchaser shall
cause the Purchaser's 401(k) Plan to accept the receipt of such transfers and
the liabilities relating thereto.
(iv) Sellers represent, warrant and covenant that
after the Closing and at the time of the transfer of assets to the Purchaser's
401(k) Plan, the WEC Savings Program will be qualified under Section 401(a) and
(k) of the Code and, to the extent pertinent to the qualified status of the
Purchaser's 401(k) Plan as relevant to asset transfers as provided herein, for
all prior periods, and will not be disqualified retroactively to any such time
or for any such period. Sellers and Purchaser shall cooperate in making, and
shall make, all appropriate filings required under the Code and ERISA, and the
regulations thereunder, and shall further cooperate to ensure that the transfers
described in this Section 5.5(e) satisfy the applicable requirements of Sections
401(k), 414(l) 411(d)(6) and 401(a)(12) of the Code and the regulations
thereunder.
(v) Purchaser's 401(k) Plan shall maintain a WEC
common stock fund, in accordance with applicable law, for Business Employees who
so elect, for a period of not less than two years following the Closing. No new
investments in WEC common stock shall be required to be permitted after the
Closing Date.
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(F) WELFARE BENEFITS.
(i) Effective as of the Closing Date, Purchaser shall
establish employee welfare benefit plans, including but not limited to medical
and dental, disability, group life, travel and accident, and accidental death
and dismemberment insurance plans, which (x) provide continuous coverage to
Business Employees and their eligible spouses and dependents, (y) credit service
with Sellers or their Affiliates for purposes of eligibility and benefit levels,
and (z) for medical and dental benefits, waive any pre-existing condition
limitations and credit the amount of any copayments and deductibles incurred
during the calendar year of the Closing.
(ii) Purchaser shall be responsible for all
employee welfare benefit plan claims (whether for insurance, benefits or
otherwise) with respect to Business Employees and Inactive Employees and their
eligible spouses and dependents, whether incurred prior to or after the Closing
Date. Sellers shall pay or cause to be paid medical, dental and other welfare
benefit claims incurred but not paid in the ordinary course, prior to the
Closing Date with respect to Business Employees and Inactive Employees and
Purchaser shall reimburse and indemnify the Sellers for the amount of such
Payments.
(iii) As of the Closing Date Purchaser shall
adopt a plan or plans providing retiree medical and other retiree welfare
benefits for Business Employees and their eligible spouses and dependents (such
plans and their successors the "PURCHASER FAS 106 PLANS") that is substantially
similar to such plan or plans maintained by WEC in the U.S. immediately prior to
the Closing Date for its domestic Business Employees, their eligible spouses and
dependents (the "WEC FAS 106 PLANS") so that during the Benefits Maintenance
Period the combination of the Purchaser FAS 106 Plans and the WEC FAS 106 Plans
provide the same benefit and the same cost sharing as if such Business Employees
continued under the WEC FAS 106 Plans as in effect on the Closing Date. The
Purchaser FAS 106 Plans will provide that the benefits payable under such plans
will be offset by the benefits provided under the WEC FAS 106 Plans, as to be
amended as described in subsection (iv) below. During the Benefits Maintenance
Period, Purchaser shall continue without adverse change the Purchaser FAS 106
Plans.
(iv) WEC shall establish a new plan to provide FAS
106 coverage or amend the WEC FAS 106 Plans effective as of the Closing Date to
provide that WEC obligations under such plans with respect to Business Employees
shall be limited in each calendar year, commencing with the Closing Date, to the
amounts set forth on Schedule 5.5(f)(iv) of the Disclosure Schedule (the "OPEB
Schedule"), as described below. WEC may amend the WEC FAS 106 Plans after the
Benefits Maintenance Period to conform to the provisions of the Purchaser FAS
106 Plans after the Benefits Maintenance Period. Such payment obligations shall
be cumulative so that if a scheduled payment is not made in full in any year
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because the aggregate benefit payment required is less than the scheduled
payment, the balance not paid out shall be carried forward to the next year.
Such payments represent the accrued obligations of WEC as calculated under FAS
106, for post-retirement benefit obligations other than pensions as of the
Closing Date with respect to Business Employees, their eligible spouses and
dependents under the WEC FAS 106 Plans (the "FAS 106 OBLIGATION"). Such payments
under the WEC FAS 106 Plans, as adjusted as described below, shall be the only
obligation of WEC to Business Employees their eligible spouses and dependents
(or to the Purchaser) with respect to post-retirement benefits other than
pensions. Purchaser shall indemnify WEC for any liability to Business Employees,
their eligible spouses and dependents for all post-retirement benefits other
than pension (including retiree medical and retiree life) other than obligations
of WEC under the WEC FAS 106 Plans as described in this subsection (iv) and
subsection (v). The payment obligations of WEC under the OPEB Schedule shall be
actuarially adjusted downwards in the event of an "actuarial gain" (as defined
below) arising from any of the following events (a "FAS 106 EVENT") (whether
applicable to some or all of the Business Employees): (A) a change in the
benefit design (including but not limited to any reduction of benefit levels or
reduction or freezing of the employer portion of benefit costs) or plan
termination by the Purchaser of the Purchaser FAS 106 Plans applicable to
Business Employees, their eligible spouses and dependents (e.g. in the event of
a termination of the Purchaser FAS 106 Plans, the OPEB Schedule shall be reduced
to zero (0)), (B) an increase in the contribution rate paid (other than an
increase proportionate to an increase in overall plan costs or an increase
provided by plan provisions) by Business Employees, their eligible spouses and
dependents instituted by the Purchaser under the Purchaser FAS 106 Plans, (C)
the enactment of legislation which reduces or eliminates the requirement of the
Purchaser to provide retiree benefits under the Purchaser FAS 106 Plans, (D) a
Disposition, (E) a closing of a plant or plants by Purchaser, or (F) a WARN
Event. Such adjustment shall be made as of the January 1 following the calendar
year in which the FAS 106 Event occurs. Actuarial gain, for purposes of this
Section 5.5(f)(iv), shall be determined by the WEC Actuary as of the Closing
Date, for the purpose of calculating the FAS 106 Obligation. Such gain shall be
determined with respect to the WEC FAS 106 Plans as if the FAS 106 Event applied
to the WEC FAS 106 Plans to the same extent and as of the same date they apply
to the Purchaser FAS 106 Plans and shall be measured by the difference between
the OPEB Schedule (or as subsequently modified pursuant to this Section
5.5(f)(iv)) (the "EXISTING SCHEDULE") and the OPEB Schedule that would have been
determined as of the Closing Date to reflect the FAS 106 Liability, if the FAS
106 Event were known as of the Closing Date (the "REVISED SCHEDULE"). To
determine whether the change from the Existing Schedule to the Revised Schedule
would result in an actuarial gain, the scheduled payments under each schedule
(whether resulting in a gain or a loss) shall be discounted back
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to the first day of the calendar year in which the FAS 106 Event occurred,
utilizing the discount rate utilized by WEC as of December 31, 1997 to determine
its APBO for FAS 106 purposes (the "Discount Rate") In no event shall any
actuarial losses in connection with the Purchaser FAS 106 Plans (other than
arising as a result of a FAS 106 Event which results in a net actuarial gain)
offset any actuarial gains as calculated under this Section 5.5(f)(iv). If the
result of discounting the scheduled payments would result in the Revised
Schedule having a lower present value obligation than the Existing Schedule, the
Revised Schedule shall be substituted for the Existing Schedule as the OPEB
Schedule. In no event shall the OPEB Schedule ever be increased. Any payment
made by WEC hereunder that exceeds a payment obligation for any year based on a
Revised Schedule, shall be utilized to reduce a future payment obligation under
the Revised Schedule.
(v) The Purchaser and WEC shall cooperate with each
other so that, to the maximum extent practicable, benefits shall be paid and
administered under the WEC FAS 106 Plans and the Purchaser FAS 106 Plans as
applicable to Business Employees, through the third-party service provider to be
selected by Purchaser, subject to consent of WEC, not to be unreasonably
withheld. Any expenses allocable to WEC under such arrangement (other than
actuarial fees) shall reduce WEC's payment obligation under the WEC FAS 106
Plans as reflected by the OPEB Schedule on a dollar-for-dollar basis. Purchaser
shall notify WEC within thirty days after any Event and shall cooperate with WEC
in providing data to determine any adjustments in the OPEB Schedule.
(vi) Subject to the requirements of applicable law
and any contractual restrictions, WEC shall cause the transfer to a trust
established by Purchaser satisfying the requirements of Section 501(C)(9) of the
Code of the funds allocable to Business Employees in a trust qualified under
Section 501(C)(9) of the Code maintained by WEC (the Retiree Health Care
Security Fund) for the purpose of funding retiree medical obligations for
Business Employees. The trust to be established by the Purchaser shall have
terms substantially similar to the terms of the WEC Trust.
(G) SEVERANCE OBLIGATIONS. Purchaser shall provide severance
and separation benefits to Business Employees and Inactive Employees during the
Benefits Maintenance Period (or, in the case of Business Employees who are
subject to a collective bargaining agreement, the period required therein) that
are comparable to benefits provided under the Involuntary Separation Program of
WEC as set forth in Schedule 5.5(g), which arrangement shall credit service with
the Sellers or their Affiliates for purposes of determining the amount of
severance or other separation benefits. Purchaser shall indemnify and hold
Sellers and their Affiliates harmless from any claims made by any Business
Employee or Inactive Employee for severance or other separation benefits arising
on or after the Closing Date, including any such claim arising on account of the
transactions contemplated hereby.
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(H) EXECUTIVE COMPENSATION. (i) Effective as of the Closing
Date, Purchaser shall adopt and establish a plan for the benefit of Business
Employees that contains terms and conditions (including but not limited to
eligibility requirements) that are substantially similar to those of the
Westinghouse Executive Pension Plan in effect as of the Closing Date (the "WEC
EXECUTIVE PLAN") and which provides credit for prior service and compensation
under the WEC Executive Plan for purposes of eligibility and benefit accrual
(the "PURCHASER EXECUTIVE PLAN"), provided, however, that the Purchaser
Executive Plan will include provisions which are consistent with (ii) through
(iv) below and will have its benefits offset by the benefits provided under the
WEC Executive Plan, the WEC Pension Plan and the Purchaser Pension Plan. The
Purchaser Executive Plan shall be administered so that the aggregate of the
benefits under the WEC Executive Plan and the Purchaser Executive Plan are the
same with respect to Business Employees as if the Business Employees were
covered under the WEC Executive Plan and continued employment with Sellers.
(ii) Purchaser shall continue the Purchaser
Executive Plan without adverse effect, including provisions therein relating to
early retirement and compensation increases, for a period not less than the
Benefits Maintenance Period.
(iii) The WEC Executive Plan shall retain liability,
if any, for benefits earned to the Closing Date with respect to Business
Employees, to be calculated pursuant to appropriate action to be taken by WEC
with respect to the WEC Executive Plan to cause the WEC Executive Plan to take
into consideration (i) credit for employment of Business Employees with the
Purchaser and its Affiliates solely for purposes of calculating eligibility for
the payment of benefits, (ii) that the Average Annual Compensation and Executive
Benefit Service (both as defined in the WEC Executive Plan) will be determined
and frozen as of the Closing Date, and (iii) that the Purchaser and its
Affiliates will be considered a Designated Entity (as defined in the WEC
Executive Plan) solely for purposes of determining eligibility for the payment
(including suspension of payment) of benefits. Notwithstanding the foregoing,
the WEC Executive Plan shall not recognize employment with the Business after
the Purchaser and its Affiliates have sold or divested the Business, or a
portion thereof as a result of a Disposition with respect to the Business
Employees who are transferred or terminated in connection with such a sale or
divesture.
(iv) The Purchaser Executive Plan shall be solely
responsible for (and the WEC Executive Plan shall not provide for) (x) any
benefit that becomes payable with respect to Business Employees retiring after
the Closing Date that is the
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result of any reduction in force, mass layoff or plant closing by the Purchaser
or its Affiliates (i.e. the benefit would not be payable absent such an event)
or (y) any other early retirement subsidy or supplement that is not described in
(iii) above.
(v) Purchaser shall indemnify WEC for any
actuarial losses (based on the same actuarial assumptions and methods used for
purposes of determining actuarial losses under Section 5.5(d)(v)) with respect
to the WEC Executive Plan resulting from any Business Employee commencing the
receipt of benefits prior to their Normal Retirement Date (as defined in the WEC
Pension Plan) and that is attributable to a Pension Event. Purchaser shall
cooperate with WEC in providing data to WEC to enable the determination of
actuarial losses. Notwithstanding any other provision in this Agreement to the
contrary, this indemnity shall survive the Closing Date without limitation.
(I) COOPERATION. The parties agree to furnish each other with
such information concerning employees and employee benefit plans, and to take
all such other action, as is necessary and appropriate to effect the
transactions contemplated by this Agreement and to cooperate with each other in
addressing inquiries and mitigating any MEPPA withdrawal liability to the extent
of any available information.
(J) WARN ACT. Purchaser agrees to provide any required notice
under the WARN Act and any similar statute, and otherwise to comply with any
such statute with respect to any "plant closing" or "mass layoff" (as defined in
the WARN Act) or similar event affecting Business Employees and occurring on or
after the Closing.
(K) COBRA. Purchaser shall assume all responsibility for COBRA
notices and coverage for employees and former employees (and their eligible
dependents) of the Business.
(L) WORKERS COMPENSATION. Effective as of the Closing Date,
Purchaser shall take all necessary and appropriate action to adopt a workers
compensation program providing such workers compensation benefits as are
provided under Sellers' Workers Compensation Program for the Business Employees
and Inactive Employees covered by such program ("PURCHASER'S WORKERS
COMPENSATION PROGRAM"). Purchaser's Workers Compensation Program shall be
responsible for all claims for benefits which are payable from and after the
Closing Date with respect to employees and former employees of the Business and
that are payable under the terms and conditions of Purchaser's Workers
Compensation Program or the Seller's Workers Compensation Program.
(M) MULTIEMPLOYER PLANS. (i) Sellers shall indemnify Purchaser
for any liability or expense attributable to a withdrawal by Sellers or their
Affiliates from a multiemployer plan under Section 4001(a)(3) of ERISA (a
"Multiemployer Plan") that occurred prior to the Closing date.
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(ii) Purchaser shall indemnify Sellers for any liability or
expense attributable to any withdrawal by Purchaser or its affiliates from a
Multiemployer Plan occurring during the five year period following the Closing
Date.
(N) INTERNAL REVENUE SERVICE FORMS. WEC and Purchaser agree
that pursuant to the "Alternative Procedure" provided in Section 5 of Revenue
Procedure 96-60, 1996-53, I.R.B. 24, with respect to preparing, filing and
furnishing the Internal Revenue Service Forms W-2, W-3, 941 and W-5, (i) WEC and
Purchaser shall report, on a "predecessor-successor" basis as set forth therein,
(ii) WEC shall be relieved from furnishing Forms W-2 to the Business Employees
and (iii) Purchaser shall assume the obligations of WEC to furnish such forms to
the Business Employees for the full calendar year in which the Closing occurs.
(O) FOREIGN EMPLOYMENT MATTERS.
(i) EMPLOYMENT. Without limiting the generality of
Section 5.5(a), Purchaser shall, or shall cause a Sold Subsidiary to, assume or
retain and be responsible for the employment (including any employment
contracts) of the Business Employees who are employed outside the United States
(the "FOREIGN BUSINESS EMPLOYEES"), and Purchaser shall take any and all actions
necessary or appropriate to continue the employment of the Foreign Business
Employees and to have Purchaser or any Sold Subsidiary assume or retain all
Liabilities relating to their employment (including, but not limited to, any
employment Contracts listed in Schedule 4.1(j)(i)) under local laws and
practices without Sellers or any of their Affiliates having any liability to any
such employees for severance, redundancy, termination, payment in lieu of
notice, indemnity or other payments to any of such employees by reason of, or as
a result of, the actions contemplated by this Section 5.5.
(ii) CANADIAN PLANS. Prior to the Closing Date, the
Canadian Consolidated Salaried Pension Plan and Hourly Pension Plan (the
"Canadian Plans"), shall be transferred to a Sellers Affiliate other than a Sold
Subsidiary. Unless the Purchaser and Sellers mutually agree to do otherwise
prior to the Closing Date, the accrued pension benefits of the Canadian Plans
attributable to (x) the Sellers' active employees who are Business Employees,
and (y) the deferred vested and retired employees of the Business (which (x) and
(y) together are "Canadian Business Participants") and a pro-rata portion of the
assets of the Canadian Plans attributable to Canadian Business Participants,
shall be transferred, in accordance with applicable law, to a pension plan (or
plans) maintained by the Purchaser that has been established and qualified or
registered with applicable federal and provincial authorities. The amount of
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liabilities and assets transferred shall be calculated by the Sellers using the
actuarial assumptions utilized in the last actuarial valuations for the Canadian
Plans, and the actuarial calculation of such amounts (but not the assumptions
therein) shall be subject to the review for accuracy by the Purchaser's actuary.
It is understood that there will be no purchase price adjustment (up or down),
pursuant to Section 2.5, relating to assets and liabilities of the Canadian
Plans for which the Seller will retain.
(iii) FREE-STANDING PLANS. Notwithstanding the
foregoing provisions of this Section 5.5 effective as of the Closing Date,
Purchaser shall assume and be responsible for all liabilities and obligations
under the Free-Standing Plans. Sellers shall take all action necessary and
appropriate to establish Purchaser as successor to Sellers as to all rights,
assets, duties, liabilities and obligations under or with respect to such
Free-Standing Plans.
(iv) FOREIGN PLANS. Except for the Free-Standing
Plans and the Canadian Plans:
(A) Effective as of the Closing Date, and as soon as necessary
or practicable thereafter, Purchaser or a Sold Subsidiary shall
establish and qualify or register with applicable regulatory
authorities employee benefit plans for, or shall extend existing
Purchaser or Sold Subsidiary employee benefit plans, programs, policies
and arrangements to, the Foreign Business Employees which are in
accordance with local Law and which provide benefits, for not less than
the Benefits Maintenance Period, to the Foreign Business Employees on
terms and conditions which are substantially similar in the aggregate
to those provided to Foreign Business Employees by Sellers or their
Affiliates immediately prior to the Closing Date.
(B) As of the Closing Date, Purchaser or a Sold Subsidiary
shall (i) establish and adopt one or more foreign pension plans or
shall extend one or more existing Purchaser or Sold Subsidiary pension
plans (each, a "NEW FOREIGN RETIREMENT PLAN") which shall provide
retirement benefits for each of the Foreign Business Employees and, to
the extent applicable, former employees who were employed by a Sold
Subsidiary in a foreign jurisdiction and who, as of the Closing Date,
are not employed by the Sellers or any of their Affiliates (the Foreign
Business Employees and such former foreign employees, collectively, the
"FOREIGN PLAN PARTICIPANTS") on substantially similar terms and
conditions to those provided to Foreign Plan Participants by the
Sellers or their Affiliates (other than a Sold Subsidiary) under each
applicable Foreign Plan that is a retirement plan (a "FOREIGN
RETIREMENT PLAN") as in effect immediately prior to the Closing Date,
and (ii) establish and adopt any
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necessary trust funds or other funding vehicles to hold assets or
reserves of New Foreign Retirement Plans which are attributable to the
Foreign Plan Participants. Purchaser or a Sold Subsidiary shall take
all action necessary to qualify or register each New Foreign Retirement
Plan and any related trusts with all applicable regulatory authorities.
Subject to Section 5.5(o)(v), effective as of the Closing Date,
Purchaser or a Sold Subsidiary shall extend coverage under the
applicable New Foreign Retirement Plan to each such Foreign Plan
Participant to the extent that each such Foreign Plan Participant shall
then, or at some later date, satisfy the eligibility and participation
requirements of such New Foreign Retirement Plan.
(C) Effective as of the Closing Date, Purchaser shall assume
the obligation of Sellers under the Belgium retiree medical program
with respect to former employees of the Business and active employees
of the Business.
(D) Except as otherwise specifically provided in this Section
5.5(o), effective as of the Closing Date, each Foreign Plan Participant
who is an active participant in any Foreign Retirement Plan shall cease
to be an active participant thereunder, and all Foreign Plan
Participants shall become eligible to participate in an applicable New
Foreign Retirement Plan in accordance with the applicable provisions of
this Section 5.5(o) and the terms and conditions of such plan.
(v) DELAYED FOREIGN EMPLOYEES. Notwithstanding the
foregoing provisions of this Section 5.5(o), Foreign Employees whose names are
listed in Schedule 5.5(o)(v) and whose employment by Purchaser or any Sold
Subsidiary will be delayed beyond the Closing Date due to applicable foreign law
(including, without limitation, due to the requirement that Purchaser establish
separate legal entities as employer) ("DELAYED FOREIGN EMPLOYEES") will continue
on a payroll of the Sellers or their Affiliates and will continue to participate
in each of Sellers or their Affiliates' employee benefit plans in which they are
participating immediately prior to the Closing Date until the applicable date on
which they first become eligible to become employed by Purchaser or any Sold
Subsidiary (the "DELAYED TRANSFER DATE"). Purchaser will offer, or cause a Sold
Subsidiary to offer, employment on the applicable Delayed Transfer Date to each
such Delayed Foreign Employee then in employment, and on and as of the
applicable Delayed Transfer Date, each such Delayed Foreign Employee then in
employment will become a Business Employee for all purposes of the Agreement.
Purchaser will promptly reimburse WEC for 100% of the payroll, benefits
(including statutory benefits, severance and other termination benefits) and
other costs and expenses directly or indirectly relating to Delayed Foreign
Employees consistent with past practice within 15 days following receipt of each
written
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notification (including reasonable substantiation of costs and expenses)
from WEC or any of its Affiliates of such payroll, benefits and other costs and
expenses.
(P) RETAINED LIABILITIES. WEC shall retain liability and
responsibility for all benefits payable under (x) the WEC Pension Plan (but,
with respect to Business Employees, as limited under Section 5.5(d)), (y) the
WEC Executive Pension Plan (but, with respect to Business Employees, as limited
under Section 5.5(h)), (3) the WEC FAS 106 Plans with respect to employees and
former employees of the Business other than Business Employees and, with respect
to Business Employees, only to the extent provided in Section 5.5(f), (xx) the
WEC Savings Program (other than with respect to assets and liabilities to be
transferred to the Purchaser's 401(k) Plan under Section 5.5(e)) and (yy) the
WEC Long-Term Incentive Plan.
(Q) ACTUARIAL DETERMINATIONS AND PAYMENTS. (i) The
calculations of actuarial losses under subsections (d)(v) and (h)(v), actuarial
gains under subsection (f)(iv) and the indemnification amount under subsection
(d)(vi) shall be performed by the WEC Actuary as soon as practicable after WEC
receives notice from Purchaser or WEC otherwise becomes aware of a Pension
Event, a FAS 106 Event or Announcement Terminations. Purchaser shall provide WEC
with sufficient data to enable the determination of any actuarial losses and/or
actuarial gains or Announcement Terminations within the 30 days following a
Pension Event, a FAS 106 Event or Announcement Terminations.
(ii) No later than 60 days after the receipt by WEC of both
the notice from Purchaser that a Pension Event, a FAS 106 Event or Announcement
Terminations has occurred and sufficient data to make a determination has been
delivered, WEC will deliver to Purchaser the results of the determination of the
actuarial loss or actuarial gain or actuarial liability in the case of a
calculation under Section 5.5(d)(vi) (each a "Determination"), respectively, and
all reasonably necessary supporting information in order to permit Purchaser's
actuary to verify the Determination. Each Determination will be conclusive and
binding on the parties unless Purchaser, within the 30-day period after the
delivery of such results and supporting information, notifies WEC in writing
that it disputes the calculation, specifying the nature of the dispute and the
basis therefor (the "Notice").
(iii) Actuaries retained by WEC and Purchaser shall attempt in
good faith to reach agreement to resolve all of the disputes set forth in the
Notice within 30 days after the Notice is given by Purchaser to WEC. If
actuaries retained by WEC and Purchaser cannot resolve all disputes with respect
to a Determination within such 30-day period, WEC and Purchaser shall jointly
select a third, impartial actuary from a nationally recognized actuarial firm to
resolve the dispute (the same such actuary shall resolve all concurrent
Determinations). If the
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parties cannot jointly select a third, impartial actuary within 15 days after
the end of such 30-day period, the President of the Conference of Consulting
Actuaries shall select an impartial actuary. The cost of the impartial actuary
shall be shared equally by WEC and Purchaser.
(iv) Promptly, but no later than 60 days after his or her
selection, an impartial actuary selected under (iii) above shall review the
results of the Determination calculation, the supporting information with
respect to the Determination and the Notice, and shall reach his or her own
decision as to the issues in dispute and the determination of the actuarial gain
or actuarial loss or actuarial cost, as the case may be (which determination
shall be equal to or between the respective amounts asserted by WEC and
Purchaser). Such determination shall be final and conclusive for all purposes.
(v) Within 30 days after a final determination of any
actuarial loss under Sections 5.5(d)(v) or 5.5(h)(v), Purchaser shall make any
applicable indemnification payments under such Sections.
(vi) Within 30 days after a final determination of any
actuarial cost under Section 5.5(d)(vi) WEC shall make any applicable
indemnification payments under such Sections.
(vii) All indemnification payments under (v) and (vi) above
shall be treated as purchase price adjustments for tax purposes.
(viii) Within 30 days after a final determination of any
actuarial gain under Section 5.5(f)(v) WEC shall substitute a Revised Schedule
in place of the Existing Schedule.
(ix) The Purchaser and Sellers shall pay the costs of their
own actuaries.
SECTION 5.6 COLLECTION OF RECEIVABLES. From and after the Closing,
Purchaser shall have the right and authority to collect for its own account, and
WEC shall not, and shall cause each of its Subsidiaries not to, directly or
indirectly, interfere with or affect any of Purchaser's efforts to collect, all
accounts receivable and other items that are included in the Acquired Assets and
to endorse with the name of any of Sellers, any checks or drafts received with
respect to any such accounts receivable or other items and WEC agrees promptly
to deliver or cause to be delivered to Purchaser any cash or other property
received directly or indirectly by any of Sellers with respect to such
receivables and other items, including any amounts payable as interest.
SECTION 5.7 EXPENSES. Whether or not the Closing takes place, and
except as otherwise specifically provided in this
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Agreement, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs or expenses.
SECTION 5.8 BROKERS OR FINDERS. Each of Purchaser and WEC represents,
as to itself and its Affiliates, that no agent, broker, investment banker or
other Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except, as to WEC and its Affiliates, Evercore
Partners Inc. and J.P. Morgan Securities Inc. whose fees and expenses will be
paid by WEC and, as to Purchaser and its Affiliates, Goldman, Sachs & Co. whose
fees and expenses will be paid by Purchaser, and each of Purchaser and WEC
respectively agrees to indemnify and hold the other harmless from and against
any and all claims, liabilities or obligations with respect to any other fees,
commissions or expenses asserted by any Person on the basis of any act or
statement alleged to have been made by such party or its affiliate.
SECTION 5.9 LICENSE AGREEMENT. (a) On the Closing Date, WEC and
Purchaser shall enter into a Shared Technology Agreement in the form of Exhibit
E hereto, wherein (i) WEC shall retain a nonexclusive, world-wide, royalty-free,
perpetual license in order to use to satisfy WEC's obligations to divested
businesses, and in the continuing businesses of WEC and the successors or
assigns of such business, the Intellectual Property and Technology included in
the Acquired Assets or the Subsidiary Assets, with the right to grant
sublicenses of the same or lesser scope to licensees of Westinghouse's own
corresponding and/or complementary intellectual property and technology and (ii)
WEC shall grant to Purchaser nonexclusive, worldwide, paid-up, royalty-free,
perpetual license to use any intellectual property and technology of Sellers
pertinent to the Business as conducted by WEC as of the Closing Date and any
natural extensions or evolution thereof with the right to grant sublicenses of
the same or lesser scope to licensees of Purchaser's own corresponding and/or
complementary intellectual property and technology.
(b) On the Closing Date, WEC shall grant to Purchaser and its
Affiliates, pursuant to a Trademark and Trade Name License Agreement
substantially in the form of Exhibit I hereto, certain licenses to the names and
marks "Westinghouse" and "Circle W".
SECTION 5.10 CERTAIN INFORMATION. After the Closing, upon reasonable
written notice, Purchaser and WEC shall furnish or cause to be furnished to each
other and their respective accountants, counsel and other representatives
access, during normal business hours, to such information (including records
pertinent to the Business), personnel and assistance relating to the Business as
is reasonably necessary for financial reporting
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and accounting matters, the preparation and filing of any returns, reports or
forms, the defense of, prosecution of, or response required under, or pursuant
to, any lawsuit, action or proceeding (including any proceeding involving WEC
and any environmental matters related to the Acquired Assets) or in order to
enable the parties to comply with their respective obligations under this
Agreement. Purchaser and WEC shall also furnish or cause to be furnished to each
other and their respective accountants, counsel and other representative's
access, during normal business hours, to such information for any other
reasonable business purpose. Purchaser and WEC shall, and shall cause their
Affiliates to, retain until ten (10) years after the Closing Date all such
records pertinent to the Business which are owned by such Person immediately
after the Closing (excluding any Excluded Assets); after the end of such period,
before disposing of any such records, the applicable party shall give notice to
such effect to the other, and shall give the other, at the other's cost and
expense, a reasonable opportunity to remove and retain all or any part of such
records as the other may select. Cooperation with respect to Tax matters shall
be governed by Section 5.14(k).
SECTION 5.11 BULK TRANSFER LAWS. Purchaser hereby waives compliance by
Sellers with the provisions of any so-called "bulk transfer law" of any
jurisdiction in connection with the sale of the Acquired Assets to Purchaser.
SECTION 5.12 ADDITIONAL AGREEMENTS. Subject to the provisions of
Section 5.4, each of Purchaser and WEC will use all reasonable efforts to
facilitate and effect the implementation of the transfer of the Acquired Assets
to Purchaser and the assumption of the Assumed Liabilities by Purchaser and, for
such purpose but without limitation, each of Purchaser and WEC promptly will at
and after the Closing execute and deliver or cause to be executed and delivered
to the other party such assignments, deeds, bills of sale, assumption
agreements, consents and other instruments of transfer or assumption as
Purchaser or its counsel or WEC or its counsel may reasonably request as
necessary or desirable for such purpose (it being understood that any such
assignment, deed, bill of sale, assumption agreement, consent or other
instrument of transfer or assumption shall not provide for any representations
or warranties or any obligations or liabilities that are not otherwise expressly
provided for in this Agreement). At any time and from time to time after the
Closing Date at the request of Purchaser, and without further consideration, WEC
will, and will cause the other Sellers to, execute and deliver such other
instruments of sale, transfer, conveyance, assignment and confirmation and take
such other action as Purchaser may reasonably deem necessary or desirable in
order to transfer, convey and assign more effectively to Purchaser, the Acquired
Assets, to put Purchaser in actual possession and operating control of the
Business and to assist Purchaser in exercising all rights with respect thereto.
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SECTION 5.13 CERTAIN UNDERSTANDINGS. Purchaser acknowledges that none
of Sellers or any other Person has made any representation or warranty, express
or implied, as to the accuracy or completeness of any information regarding the
Business, the Acquired Assets or other matters not included in this Agreement or
the Schedules hereto and none of Sellers or any other Person will be subject to
any liability to Purchaser or any other person resulting from the distribution
to Purchaser, or Purchaser's use of, any such information, including any
information, documents or material made available to Purchaser in certain "data
rooms" or in any other form in expectation of the transactions contemplated
hereby. Purchaser acknowledges that, should the Closing occur, Purchaser will
acquire the Acquired Assets without any representation or warranty as to
merchantability or fitness for any particular purpose, in an "as is" condition
and on a "where is" basis, except as otherwise expressly represented or
warranted herein.
SECTION 5.14 ALLOCATION; TAX MATTERS.
(A) Schedule 5.14(a) sets forth the allocation of the
consideration hereunder for Tax purposes. Prior to the Closing, Purchaser and
WEC shall agree upon the allocation of the consideration hereunder for Tax
purposes among the Acquired Assets and the assets held by any Sold Subsidiary
with respect to which a Section 338 Election is made, in accordance with
Schedule 5.14(a), and shall set forth such allocation on a statement (the
"ALLOCATION STATEMENT"). After the Closing, from time to time, Purchaser and WEC
shall agree upon revisions to the Allocation Statement to reflect any
adjustments to the consideration. Purchaser and WEC shall report the Tax
consequences of the transactions contemplated by this Agreement in a manner
consistent with the Allocation Statement, as it may be revised from time to time
and shall not take any position inconsistent therewith in any examination of any
Tax Return, in any refund claim or in any litigation or investigation, except as
required by Law.
(B) Purchaser and WEC shall file and cause to be filed all Tax
Returns and execute such other documents as may be required by any taxing
authority, in a manner consistent with the Allocation Statement, as it may be
revised from time to time. WEC shall prepare an initial draft of Internal
Revenue Service Form 8594 pursuant to Section 1060 of the Code relating to the
transactions contemplated by this Agreement based on the Allocation Statement,
as it may be revised from time to time, and deliver such form to Purchaser.
Purchaser and WEC shall attempt in good faith to agree on a final version of
such form and shall file, or cause the filing of, such form with each relevant
taxing authority.
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(C) With respect to the purchase of the capital stock of Sold
Subsidiaries that are U.S. corporations and members of Sellers' "affiliated
group" (within the meaning of the Code Section 1504), (i) Purchaser and WEC
agree to jointly make the election pursuant to Section 338(h)(10) of the Code
and any comparable election under state and local law ("SECTION 338 ELECTIONS")
with respect to each of the Sold Subsidiaries listed on Schedule 5.14(c), (ii)
at Purchaser's request, Purchaser and WEC shall jointly make Section 338
Elections as to any other Sold Subsidiary designated by Purchaser in writing and
delivered to WEC prior to the Closing, (iii) Purchaser and WEC shall cooperate
with each other to take all actions necessary to effect and preserve timely
Section 338 Elections made pursuant to this Section 5.14(c) in accordance with
Treasury Regulation Section 1.338(h)(10) (and any comparable provisions of state
and local law and any successor provisions thereto) and shall not take any
position inconsistent with treating the purchases of the capital stock of such
corporations as Section 338 Elections and (iv) no Section 338 Election shall be
made as to any other such Sold Subsidiary. Unless prohibited by applicable Law,
WEC and Purchaser shall cause the Sold Subsidiaries to end their taxable years
as of the Closing Date in states that do not recognize an election comparable to
the election under Section 338(h)(10) of the Code.
(D) WEC and Purchaser shall allocate between themselves all transfer,
documentary, sales, use, registration, stamp, value-added and other similar
taxes (including all applicable real estate transfer taxes and real property
gains taxes), including any penalties, interest and additions to tax, incurred
in connection with the transactions contemplated hereby ("TRANSFER TAXES") as
follows: (i) with respect to all Transfer Taxes incurred in Florida and North
Carolina, WEC and Purchaser shall equally share all Transfer Taxes, up to an
amount not to exceed $ 7,000,000 (the "Estimated Transfer Tax Amount"), after
which WEC shall be responsible and shall indemnify Purchaser and its Affiliates
for all Transfer Taxes in excess of the Estimated Transfer Tax Amount and (ii)
WEC and Purchaser shall equally share all Transfer Taxes incurred in all other
jurisdictions. Notwithstanding the foregoing, Purchaser shall be responsible and
shall indemnify Seller and its Affiliates for the excess of (i) any Transfer
Taxes imposed by reason of the acquisition by Purchaser of the stock of the
subsidiaries of Westinghouse Electric S.A. over (ii) the Transfer Taxes that
would have been imposed had Purchaser acquired the stock of Westinghouse
Electric S.A.. WEC and Purchaser shall reimburse one another, as the case may
be, for their respective share of the Transfer Taxes paid by the other party
within five (5) days of written request for such payment. WEC and Purchaser
shall cooperate in timely making and filing all Tax Returns as may be required
to comply with the provisions of any Transfer Tax Laws. To the extent legally
able to do so, Purchaser shall deliver to
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WEC exemption certificates satisfactory in form and substance to WEC with
respect to Transfer Taxes if such delivery would reduce the amount of
Transfer Taxes that would otherwise be imposed.
(E) WEC shall terminate and shall cause the termination by the
Closing of any agreements, arrangements or practices relating to Taxes between
WEC or any of its Affiliates (other than any Investment), on the one hand, and
any Investment, on the other hand.
(F) At the Closing, WEC shall deliver to Purchaser duly
executed certificates certifying that the transactions contemplated hereby are
exempt from withholding under Section 1445 of the Code.
(G) With respect to Income Taxes, and to the extent permitted
by Law, Purchaser shall not, and shall cause each Sold Subsidiary not to, carry
back any item of income, loss, credit or deduction from any period beginning
after the Closing Date to any period including or ending prior to the Closing
Date.
(H) WEC shall file any amended consolidated, combined or
unitary Income Tax Returns that include any Sold Subsidiary for taxable years
ending on or prior to the Closing Date which are required as a result of
examination adjustments made by any taxing authority as finally determined. For
those jurisdictions in which separate Income Tax Returns are filed by any Sold
Subsidiary, any required amended Income Tax Returns resulting from such
examination adjustments, as finally determined, shall be prepared by WEC and
furnished to such Sold Subsidiary, for signature and filing at least ten days
prior to the due date for filing such returns.
(I) (i) WEC shall file or cause to be filed the United States
consolidated federal Income Tax Return of WEC and, where applicable, all other
consolidated, combined or unitary state or local Income Tax Returns for the
taxable periods of each Selling Subsidiary and each Sold Subsidiary that is a
U.S. corporation ending on or prior to the Closing Date ("PRE-CLOSING INCOME TAX
RETURNS") and (ii) WEC shall also file and shall cause each Selling Subsidiary
and each Sold Subsidiary to file all other Tax Returns with respect to the
Acquired Assets or the income or operations of the Business required to be filed
(including any extensions) on or prior to the Closing Date. WEC shall prepare or
shall cause to be prepared all state and local Pre-Closing Income Tax Returns
required to be filed by any Sold Subsidiary on a separate return basis and with
respect to those Tax Returns that have not been filed by the Closing Date (A)
WEC shall provide Purchaser with a copy of such Tax Returns at least 30 days
prior to the due date for filing such Tax Returns (including any extensions) and
(B) after reviewing and approving such Tax Returns (which approval shall not be
unreasonably withheld),
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Purchaser shall file or shall cause such Tax Returns to be filed. WEC shall
pay or cause to be paid all Income Taxes relating to the Pre-Closing Income
Tax Returns.
(J) (i) Purchaser shall timely prepare and file (or cause to
be prepared and filed) all Tax Returns required by Law for all Taxes covering
the Acquired Assets or the Sold Subsidiaries for periods ending after the
Closing Date and which include a period prior to the Closing Date ("STRADDLE
PERIOD TAX RETURNS"). Purchaser shall not prepare any Straddle Period Tax
Returns on a basis inconsistent with the methodology used in prior taxable years
(except as otherwise required by Law) if the result would be to increase the
amount of Taxes for which WEC is responsible under this Agreement. To the extent
any Straddle Period Tax Return relates to Income Taxes, (A) Purchaser shall
provide WEC with a copy of such Tax Returns at least 30 days prior to the due
date for filing such Tax Returns (including extensions), (B) after WEC's review
and approval of such Tax Returns (which approval shall not be unreasonably
withheld), Purchaser shall file or cause such Tax Returns to be filed and (C)
not later than 5 days before the due date for the payment of Income Taxes with
respect to such Tax Returns, WEC shall pay to Purchaser an amount equal to WEC's
allocable portion of the Seller's Straddle Period Taxes (as defined below)
determined in accordance with the method described in clause (ii) below.
Purchaser shall timely prepare and file (or cause to be prepared and filed) all
Tax Returns required by Law for all Taxes covering the Acquired Assets or the
Sold Subsidiaries for periods beginning after the Closing Date (the
"POST-CLOSING TAX RETURNS") and Purchaser shall timely pay or cause to be paid
all Taxes relating to Post- Closing Tax Returns
(ii) For purposes of this Agreement, Seller's
allocable portion of Taxes with respect to the Straddle Period Tax Returns
("SELLER'S STRADDLE PERIOD TAXES") shall be:
(A) In the case of any real or personal property Tax relating
to the Acquired Assets or the Subsidiary Assets, an amount equal to the Tax for
the entire taxable period multiplied by a fraction the numerator of which is the
number of days in the period for which such taxes are paid ending on the Closing
Date and the denominator of which is the number of days in the entire taxable
period; and
(B) In the case of any other Tax, the amount that would be
payable if the taxable year ended on the Closing Date.
(K) WEC and Purchaser shall each provide the other with such assistance
as may be reasonably requested (including making employees reasonably available
to provide information or testimony) in connection with the preparation of any
Tax Return, any Tax Controversy (as defined in Section 5.14(l)(ii)), or the
determination of liability for Taxes with respect to the Acquired
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Assets or the income or operations of the Business. Purchaser shall complete
WEC's standard tax packages relating to Tax Returns that WEC is responsible for
filing pursuant to Section 5.14(i) and deliver them to WEC within 90 days of
Purchaser's receipt from WEC and shall, and shall cause its Affiliates to,
cooperate with WEC in preparing and pursuing any claims for refunds or credits
of Income Taxes (including refunds or credits relating to investment tax
credits, research credits and credits for prepayments of Income Taxes). At
Purchaser's request and expense, WEC shall file claims prepared by Purchaser for
refunds of Taxes assumed by Purchaser pursuant to Section 2.3(a)(viii) and
promptly pay over the amount recovered to Purchaser (without any interest, other
than interest paid by the applicable taxing authority with respect to such
refund); PROVIDED, HOWEVER, that Purchaser shall promptly reimburse WEC to the
extent that such refund is reclaimed by a taxing authority (without any
interest, other than interest due to the applicable taxing authority with
respect to such reclamation). WEC and Purchaser each shall, and shall cause
their Affiliates to, retain until seven years after the Closing Date all Tax
Returns, schedules, work papers and other records that are owned by such Person
immediately after the Closing and that relate to the Business or the Acquired
Assets; after the end of such period, before disposing of any such Tax Returns,
schedules, work papers or other records, each shall give notice to such effect
to the other, and shall give the other, at the other's cost and expense, a
reasonable opportunity to remove and retain all or any part of such Tax Returns,
schedules, work papers or other records as the other may select.
(L) (i) Purchaser shall, in the event that Purchaser receives
notice (whether orally or in writing) of any examination, claim, proposed
settlement, proposed adjustment or related matter with respect to any Taxes for
which Purchaser may be indemnified hereunder (the "WEC TAX CONTROVERSIES")
promptly notify WEC thereof, PROVIDED, HOWEVER, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent WEC shall have been actually prejudiced as a result of such failure
(except that WEC shall not be liable for any expenses incurred during the period
in which the Purchaser failed to give such notice). WEC shall be entitled at its
sole discretion and expense to handle, control and compromise or settle the WEC
Tax Controversies, and shall reasonably inform Purchaser of the progress of the
WEC Tax Controversies, provided, however in the event Purchaser waives its right
to indemnification with respect to any WEC Tax controversy relating to Taxes
other than Income Taxes, Purchaser may assume at its expense the sole discretion
to handle, control compromise or settle such controversy.
(ii) WEC shall, in the event WEC receives notice
(whether orally or in writing) of any examination, claim, proposed
settlement, proposed adjustment or related
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matter with respect to Taxes attributable to the Business (other than
WEC Tax Controversies) (the "PURCHASER TAX CONTROVERSIES," and together
with the WEC Tax Controversies, the "TAX CONTROVERSIES"), promptly
notify Purchaser thereof, PROVIDED, HOWEVER, that failure to give such
notification shall not affect the indemnification provided hereunder
except to the extent Purchaser shall have been actually prejudiced as a
result of such failure (except that the Purchaser shall not be liable
for any expenses incurred during the period in which Seller failed to
give such notice). Purchaser shall be entitled at its sole discretion
and expense to handle, control and compromise or settle the Purchaser
Tax Controversies, and shall reasonably inform WEC of the progress of
the Purchaser Tax Controversies.
SECTION 5.15 SUPPLIES. Purchaser shall not use any signs or stationery,
purchase order forms, packaging or other similar paper goods or supplies, or
advertising and promotional materials, product, training and service literature
and materials, or computer programs or like materials (collectively, the
"SUPPLIES"), that state or otherwise indicate thereon that the Business is a
division or unit of WEC or, except in compliance with any license agreement
contemplated by Section 5.9(b), contain any trademarks, servicemarks, trade
names or corporate or business names, derived from or including the words
"Westinghouse Electric Corporation", "Westinghouse" or "Circle W" (in logotype
design or any other style or design) in whole or in part; PROVIDED, that to the
extent any Supplies included in the Acquired Assets so indicate, Purchaser may,
for a period of 180 days after the Closing Date, use such Supplies after first
crossing out or marking over such statement or indication or trademark,
servicemark, trade name or corporate or business name and otherwise clearly
indicating on such Supplies that the Business is no longer a division or unit of
WEC. Purchaser shall not reorder or produce any Supplies which state or
otherwise indicate thereon that the Business is a division or unit of Seller or
contain any such trademarks, servicemarks, trade names or corporate or business
names.
SECTION 5.16 TRANSFER OF ASSETS OF SOLD SUBSIDIARIES. On or prior to
the Closing Date, WEC shall cause the Sold Subsidiaries to transfer, without
consideration, any Subsidiary Assets not relating primarily to the Business to
WEC or Subsidiaries of WEC other than the Sold Subsidiaries or to any third
party designated by WEC. After the Closing, Purchaser will cooperate with WEC to
transfer without consideration any Subsidiary Assets not relating primarily to
the Business to WEC or Subsidiaries of WEC or to any third party designated by
WEC and WEC shall reimburse Purchaser for its reasonable expenses incurred in
connection therewith.
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SECTION 5.17 CREDIT SUPPORT. Purchaser acknowledges that in the course
of the conduct by the Sold Subsidiaries of their business, WEC and its
Subsidiaries (other than the Sold Subsidiaries) have entered into and expect to
continue to enter into various arrangements (i) in which guaranties (including
guaranties of performance under contracts or agreements), letters of credit or
other credit arrangements, including surety and performance bonds, were issued
by or for the account of WEC and its Subsidiaries (other than the Sold
Subsidiaries) or (ii) in which WEC and its Subsidiaries (other than the Sold
Subsidiaries) are the primary or secondary obligors on debt instruments or
financing or other contracts or agreements, in any such case to support or
facilitate business transactions of the Sold Subsidiaries. Such arrangements by
such parties are hereinafter referred to as the "CREDIT SUPPORT ARRANGEMENTS."
Schedule 5.17 sets forth a list of all Credit Support Arrangements existing as
of the date hereof. Purchaser will use commercially reasonable best efforts to
(i) obtain replacement Credit Support Arrangements which will be in effect at
the Closing or (ii) repay, or cause the repayment of, all debt and other
obligations to which such Credit Support Arrangements relate (and cause the
cancellation of such Credit Support Arrangements) or arrange for itself or one
of its Subsidiaries (including the Sold Subsidiaries) to be substituted as the
obligor thereon as of the Closing Date. In the event that notwithstanding the
foregoing sentence Credit Support Arrangements remain outstanding following the
Closing, Purchaser will continue to use commercially reasonable best efforts to
take the actions described in clauses (i) and (ii) of the preceding sentence and
will indemnify WEC and its Subsidiaries (other than the Sold Subsidiaries) for
all losses, liabilities, claims, damages and expenses suffered or incurred by
WEC and its Subsidiaries (other than the Sold Subsidiaries) arising from the
existence of Credit Support Arrangements following the Closing.
SECTION 5.18 NON-COMPETITION.
(A) COVENANTS AGAINST COMPETITION. WEC acknowledges that (i)
WEC is one of a limited number of Persons who have been active in the industry
of the Business; (ii) WEC's Business is international in scope; (iii) WEC's
ownership of the Business has brought it in close contact with certain
confidential information regarding the Business not generally available; and
(iv) Purchaser would not purchase the Acquired Assets but for the agreements and
covenants of WEC contained in this Section 5.18.
Accordingly, WEC covenants and agrees that:
(i) WEC shall not in the United States of America or
elsewhere in the world, directly or indirectly, for a period commencing
on the Closing Date and terminating on the fifth anniversary of the
Closing Date (the "RESTRICTED PERIOD"), nor during the Restricted
Period shall it cause or permit any of its Subsidiaries to (A) engage
in the Business or in any business that competes with any of the
Business
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for WEC's or such Subsidiaries' direct or indirect account; (B)
render any material assistance to any Person (other than Purchaser)
engaged in such business; or (C) become interested in any such Person
(other than Purchaser) as a partner, shareholder, principal, agent,
trustee, consultant or in any other similar relationship or capacity;
PROVIDED, HOWEVER, that notwithstanding the foregoing WEC may own,
directly or indirectly, solely as an investment, securities of any
Person which are traded on any national securities exchange or NASDAQ
if WEC (i) is not a controlling Person or, or a member of a group which
controls such Person and (ii) does not, directly or indirectly, own 2%
or more of any class of securities of such Person.
(ii) During and after the Restricted Period, WEC
shall (and shall cause each of its Subsidiaries to) keep secret and
retain in strictest confidence, and not use for the benefit of itself
or others except in connection with the business and affairs of
Purchaser and its Affiliates, all confidential information with respect
to the Business and the Acquired Assets, or learned by WEC directly or
indirectly from Purchaser, including, without limitation, information
with respect to (A) prospective business activities, (B) sales figures,
(C) profit or loss, gross margin or similar information, and (D)
customers, clients, suppliers, sources of supply and customer lists
(the "CONFIDENTIAL INFORMATION"), and shall not disclose such
Confidential Information to anyone outside of Purchaser and its
Affiliates except with Purchaser's express written consent or as
required by Law or upon written advice of counsel and except for
Confidential Information which (i) is at the time of receipt or
thereafter becomes publicly known through no wrongful act of or (ii) is
received from a third party not under an obligation to keep such
information confidential and without breach of this Agreement.
(iii) During the Restricted Period, neither WEC nor
Purchaser shall, directly or indirectly, knowingly solicit or encourage
to leave the employment of Purchaser or WEC, any employee of Purchaser
or WEC, as the case may be.
Notwithstanding the foregoing, nothing contained in the
Agreement shall impair, impede, prevent, inhibit, limit or restrict WEC or any
of its Affiliates (or any successor or assign of any of them) in any manner or
respect whatsoever from (i) the continuing operation of (x) the Government
Operations Business, (y) the Energy Systems Business or (z) the Process Control
Division, including, without limitation, the business of bidding, selling,
installing and/or servicing of electrical power plants, whether alone or in
partnership, joint venture, combination or other arrangement, with suppliers or
manufacturers of goods or services competitive with the Business, provided WEC's
scope is primarily related to the goods and services which it has
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typically provided under (x), (y) and (z) or (ii) selling or otherwise
transferring the Government Operations Business, the Energy Systems Business or
the Process Control Division or any portion thereof to any Person, whether or
not such Person or any of its Affiliates is engaged in a business competitive
with the Business.
(B) RIGHTS AND REMEDIES UPON BREACH. If WEC breaches, or
threatens to commit a breach of, any of the provisions of Section 5.18(a) (the
"RESTRICTIVE COVENANTS") , Purchaser shall have the following rights and
remedies (upon compliance with any necessary prerequisites imposed by law upon
the availability of such remedies) , each of which rights and remedies shall be
independent of the other and severally enforceable and shall not be affected by
the provisions of Article VIII, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to
Purchaser under Law or in equity:
(i) The right to have the Restrictive Covenants
specifically enforced (without posting any bond) by any court having
equity jurisdiction, including, without limitation, the right to an
entry against WEC of restraining orders and injunctions (preliminary,
mandatory, temporary and permanent) against violations, threatened or
actual, and whether or not then continuing, of such covenants, it being
acknowledged and agreed that any such breach or threatened breach may
cause irreparable injury to Purchaser and that money damages may not
provide adequate remedy to Purchaser.
(ii) The right and remedy to require WEC to account
for and pay over to Purchaser all compensation, profits, monies,
accruals, increments or other benefits (collectively, "BENEFITS")
derived or received by such person as a result of any transactions
constituting a breach of any of the Restrictive Covenants, and such
person shall account for and pay over such Benefits to Purchaser.
(C) SEVERABILITY OF COVENANTS. If any court determines that
any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
(D) BLUE-PENCILLING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provisions and, in its reduced
form, such provision shall then be enforceable and shall be enforced.
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SECTION 5.19 POST-CLOSING AGREEMENTS. During the period prior to the
Closing, WEC and Purchaser agree to negotiate in good faith and enter into the
following agreements:
(A) TRANSITIONAL SERVICES. At the Closing, WEC and Purchaser
shall enter into a mutually acceptable agreement (the "Transitional Services
Agreement"), whereby WEC will provide to Purchaser certain transitional services
which are currently provided to the Business by WEC.
(B) FACILITIES. Sellers and Purchaser shall enter into
mutually acceptable arrangements relating to the use of (i) facilities and
equipment by Business Employees currently located in Sellers' facilities other
than the Premises and (ii) facilities and equipment by employees of WEC
currently located in the Premises and who are not Business Employees.
(C) FIELD SALES OFFICES. Sellers and Purchaser shall enter
into mutually acceptable arrangements, including sublease arrangements and
arrangements with respect to the provision and use of personnel and Tangible
Property, with respect to the conduct of the Energy Systems Business at the
field sales offices included in the Premises.
SECTION 5.20 REMOVAL OF EXCLUDED ASSETS AND LIABILITIES FROM SOLD
SUBSIDIARIES. The parties acknowledge that certain Excluded Assets and Excluded
Liabilities may be held by, or be obligations of, certain of the Sold
Subsidiaries. Sellers will at the request of Purchaser use their best efforts
either (i) to transfer the Acquired Assets held by any such Subsidiary directly
to Purchaser (in which event Seller will retain the Sold Subsidiary) or (ii) to
transfer out of any such Subsidiary, or otherwise appropriately protect
Purchaser from, any Excluded Assets and Excluded Liabilities held by any such
Subsidiary.
SECTION 5.21 GUARANTEE AGREEMENT. Concurrent with the execution of this
Agreement, the Guarantors are executing the Guarantee Agreements in the form of
Exhibits G-1, G-2 and G-3 hereto (the "GUARANTEE AGREEMENT").
SECTION 5.22 STEAM GENERATOR AGREEMENT. On the Closing Date, WEC and
Purchaser shall enter into an agreement substantially on the terms described in
Exhibit H hereto (the "STEAM GENERATOR AGREEMENT") relating to the Settlement
Agreements and related matters.
SECTION 5.23 POST CLOSING HIRING OF EMPLOYEES. If within the period
ending one (1) year after the Closing Date, Purchaser or any of its Affiliates
hires any employee of WEC or its Subsidiaries (other than Business Employees),
Purchaser shall reimburse WEC for any severance and other related termination
costs paid by WEC or its Subsidiaries to or on account of such employment with
WEC or any of its Subsidiaries during such one (1) year period.
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SECTION 5.24 INSTRUMENTATION AND CONTROL MATTERS. At the Closing, WEC
and Purchaser shall enter into supply agreements, substantially on the terms
described in Exhibit B hereto, pursuant to which WEC (or its successors) will
provide to Purchaser goods and services related to the Business.
SECTION 5.25 SCIENCE AND TECHNOLOGY CENTER.
WEC operates a Science and Technology Center in Churchill,
Pennsylvania ("STC"), which provides research and development support to the
Business. The Acquired Assets shall include all Fixtures and Equipment and,
subject to the provisions of Section 2.2(c), Contracts owned by Sellers on the
Closing Date and used or held for use primarily in the portion of the STC which
primarily provides research and development support to the Business or to the
performance of those programs ("STC PROGRAMS") (a) set forth on Schedule 5.25 or
(b) entered into or undertaken in the Ordinary Course of Business between the
date of this Agreement and the Closing Date which relate primarily to the
Business.
The provisions of Section 5.5 shall be applicable to all STC
employees (other than any employee in the Information Technology Group) who
primarily render services on behalf of the Business or on behalf of any of the
STC Programs.
On the Closing Date, WEC shall sublease to Purchaser that portion of
the premises at the STC primarily related to the Business and the STC Programs
pursuant to a mutually acceptable sublease. Purchaser and WEC agree that the
terms of the sublease shall not be materially more restrictive to Purchaser than
the terms of the master lease with respect to the STC are to WEC. WEC agrees to
provide Purchaser with a copy of the master lease with respect to the STC. On
the Closing Date, subject to Section 2.2(c), Purchaser shall assume all
Liabilities associated with the STC Programs.
Seller shall transfer and Buyer shall accept and assume all of Seller's
rights, interests and liabilities in the Solid Oxide Fuel Cell ("SOFC") program,
subject to Department of Energy approval and consent, and unless otherwise
qualified by the Shared Technology Agreement. The following contracts are part
of the rights and liabilities of Sellers with respect to the SOFC programs:
1. DOE Cooperative Agreement;
2. Southern California Edison Agreement of July, 1997;
3. Gas Research Institute Agreement;
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4. Praxair Agreement of December 31, 1996; and
5. Solid Oxide Fuel Cell Commercialization Association
Agreement.
SECTION 5.26. BUSINESS RELATIONSHIPS WITH SELLER. WEC and Purchaser
acknowledge that the Business has had relationships with other businesses within
Sellers which have not been documented by a formal written agreement. In
particular, the Business has been involved with the Energy Systems Business
Unit, Process Control Division, Westcom and the Science and Technology Center.
The parties agree that, except for specific provisions in the Agreement and the
Seller Ancillary Documents which expressly provide for any different treatment,
(a) any such pre-existing relationships will be documented by Sellers prior to
the Closing, and shall be maintained on such documented basis by Purchaser after
the Closing; and (b) all Contracts between Sellers or a Sold Subsidiary and
their customers involving products or services of the Business shall be
completed by Purchaser or its designated Subsidiary after the Closing in
accordance with the Contract terms.
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The obligation of
Purchaser to purchase the Acquired Assets and the obligation of WEC to (and to
cause the Selling Subsidiaries to) sell, assign, transfer, convey and deliver
the Acquired Assets to Purchaser shall be subject to the satisfaction prior to
the Closing of the following conditions:
(A) CERTAIN WAITING PERIODS. Any waiting period under the HSR
Act and the Exon-Florio Amendment applicable to any of the transactions
contemplated hereby shall have expired or been earlier terminated.
(B) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other legal restraint or
prohibition preventing the consummation of the transactions contemplated by this
Agreement shall be in effect; PROVIDED, HOWEVER, that each of Purchaser, and,
subject to the proviso in Section 5.3(b), WEC shall have used its best efforts
to prevent the entry of any such order, injunction or other restraint or
prohibition and to appeal as promptly as possible any such order, injunction or
other restraint or prohibition that may be entered.
(C) GOVERNMENTAL ACTION. There shall not be any pending suit,
action or proceeding by any Governmental Authority
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challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement in any material respect or seeking
to obtain any damages from Sellers, Purchaser or the Sold Subsidiaries which
would reasonably be expected to have a Material Adverse Effect or otherwise be
materially adverse to Sellers or Purchaser.
SECTION 6.2 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of
Purchaser to purchase the Acquired Assets is subject to the satisfaction at and
as of the Closing of each of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of WEC set forth in this Agreement shall be true and correct in all
respects as of the date of this Agreement and, except for those made as of a
particular date, as of the Closing as though made at and as of the Closing,
except for (i) changes permitted or contemplated by this Agreement and (ii) such
failures of representations and warranties to be true and correct that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Purchaser shall have received a certificate signed by an
authorized officer of WEC to such effect.
(B) PERFORMANCE OF OBLIGATIONS OF WEC. WEC shall have
performed or complied in all material respects with all obligations, conditions
and covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing (other than the covenant set forth in
Section 5.1(b)), and Purchaser shall have received a certificate signed by an
authorized officer of WEC to such effect. Notwithstanding the foregoing, WEC
shall be deemed to have performed or complied in all material respects with its
covenants contained in Section 5.1 so long as the failure so to perform or
comply has not had, and would not reasonably be expected to have, a Material
Adverse Effect.
(C) MATERIAL PERMITS. Except as set forth on Schedule 6.2(c),
Purchaser and the Sold Subsidiaries shall have, on the Closing Date, all
permits, licenses, franchises, approvals, consents and authorizations by or of
Governmental Authorities required by Law for Purchaser to conduct the Business
and to acquire and own the Acquired Assets, and such Permits shall be in full
force and effect, except (i) where (assuming compliance by WEC with the
provisions of Sections 5.3(c) and 5.4) the failure to have any such Permits or
of any such Permits to be in full force and effect would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect;
PROVIDED, HOWEVER, that this condition shall be inapplicable to the extent
Purchaser shall have failed to comply with its obligations under Section 5.4 to
use commercially reasonable efforts to obtain the consent of Governmental
Authorities to the
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assignment of any Seller's or Sold Subsidiary's Permits or under Section 5.3(c)
to secure its own permits, licenses, franchises, approvals, consents and
authorizations by or of Governmental Authorities in lieu of any Permits held by
any Seller or Sold Subsidiary.
(D) OPINION OF WEC'S COUNSEL. Purchaser shall have received an
opinion or opinions dated the Closing Date of counsel to WEC, in form and
substance reasonably satisfactory to Purchaser.
(E) CONVEYANCING DOCUMENTS. Sellers shall have executed and
delivered such deeds, bills of sale, assignments and other instruments, each
satisfactory in form and substance to Purchaser, as shall be necessary or
appropriate to convey the Acquired Assets in accordance with this Agreement.
SECTION 6.3 CONDITIONS TO OBLIGATION OF WEC. The obligation of WEC to
(and to cause the Selling Subsidiaries to) sell, assign, transfer, convey, and
deliver the Acquired Assets is subject to the satisfaction at and as of the
Closing of each of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing as
though made at and as of the Closing, and WEC shall have received a certificate
signed by an authorized officer of Purchaser to such effect.
(B) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall
have performed or complied in all material respects with all obligations,
conditions and covenants required to be performed or complied with by it under
this Agreement at or prior to the Closing, and WEC shall have received a
certificate signed by an authorized officer of Purchaser to such effect.
(C) OPINION OF PURCHASER'S COUNSEL. WEC shall have received an
opinion or opinions dated the Closing Date of counsel to Purchaser and the
Guarantors in form and substance reasonably satisfactory to WEC.
(D) GUARANTEE AGREEMENTS. The Guarantee Agreements shall be in
full force and effect, and the Guarantors shall have complied with all of their
obligations thereunder.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 TERMINATION.
(A) Notwithstanding anything to the contrary in this
Agreement, this Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing:
(i) by mutual written consent of WEC and Purchaser;
(ii) by WEC if any of the conditions set forth in
Section 6.1 or 6.3 shall have become incapable of fulfillment, and
shall not have been waived by WEC;
(iii) by Purchaser if any of the conditions set forth
in Section 6.1 or 6.2 shall have become incapable of fulfillment, and
shall not have been waived by Purchaser; or
(iv) by WEC or Purchaser if the Closing does not
occur on or prior to December 31, 1998;
PROVIDED, HOWEVER, that the party seeking termination pursuant to clause (ii),
(iii) or (iv) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
(B) In the event of termination by WEC, on the one hand, or
Purchaser, on the other hand, pursuant to this Section 7.1, written notice
thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated, without further action by
any party. If the transactions contemplated by this Agreement are terminated as
provided herein:
(i) Purchaser shall return all documents and other
material received from Sellers relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to WEC; and
(ii) all confidential information received by
Purchaser with respect to Business and the other operations of Sellers
shall be treated in accordance with the Confidentiality Agreement,
which shall remain in full force and effect notwithstanding the
termination of this Agreement.
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(C) If this Agreement is terminated and the transactions
contemplated hereby are abandoned pursuant to this Section 7.1 for any reason
other than a termination by Purchaser pursuant to this Section 7.1 as a result
of a failure to satisfy any condition set forth in Section 6.2(a) or (b) (which
failure shall not have been cured within twenty (20) business days following
WEC's receipt of written notice of such failure from Purchaser) , Purchaser
shall pay to WEC on demand a termination fee of $30,000,000, by wire transfer to
an account designated in writing by WEC of immediately available funds.
(D) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 7.1, this
Agreement shall become null and void and of no further force and effect, except
for the provisions of (i) Section 5.2 relating to the obligation of Purchaser to
keep confidential certain information and data obtained by it from Seller, (ii)
this Agreement relating to expenses (including Sections 5.7 and 5.14(d)), (iii)
Section 5.8 relating to finder's fees and broker's fees, (iv) this Section 7.1
and (v) Article 9. Nothing in this Section 7.1 shall be deemed to release either
party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of either party to compel
specific performance by the other party of its obligations under this Agreement.
SECTION 7.2 AMENDMENTS AND WAIVERS. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. By an instrument in writing Purchaser, on the one hand, or WEC, on the
other hand, may waive compliance by the other party with any term or provision
of this Agreement, that such other party was or is obligated to comply with or
perform.
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ARTICLE 8
INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION BY WEC.
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(A) WEC hereby agrees to indemnify Purchaser and its
Affiliates and their respective officers, directors, employees, stockholders,
agents and representatives against, and agrees to hold them harmless from, any
Losses, as incurred, to the extent arising from, relating to or otherwise in
respect of (i) any breach of any representation or warranty of WEC contained in
this Agreement (other than those contained in clauses (i), (ii) and (iv)(A)
Section 4.1(n)), determined (except in respect of (A) of Sections 4.1(c)(i),
4.1(j)(xiv), 4.1(j)(xv) and 4.1(l) and (B) representations and warranties
relating to the "material" impairment of the ability of a party to perform its
obligations under this Agreement) without regard to any materiality
qualification or exception in any representation or warranty giving rise to the
claim for indemnity hereunder), (ii) any breach of any covenant of any of
Sellers contained in this Agreement or in any Seller Ancillary Document, (iii)
any Liability of any Seller which is not an Assumed Liability and any Liability
of any Sold Subsidiary which is an Excluded Liability, (iv) any Indebtedness
that is not included on the Statement or (v) any Environmental Liability which
is not an Excluded Liability; PROVIDED, HOWEVER, that (A) WEC shall not have any
Liability under clause (i) above unless the aggregate of all Losses relating
thereto for which WEC would, but for this proviso, be liable under clause (i)
above exceeds an amount equal to $50,000,000, and then only to the extent of any
such excess, (B) WEC shall not have any Liability under clause (i) above in
excess in the aggregate of the Purchase Price, (C) for purposes of calculating
Losses under clauses (i) and (ii) above, WEC shall not have any Liability for
any Loss in respect of such breaches if the aggregate amount of such Loss
relating to a single claim (or group of claims relating to the same event or
transaction) does not exceed $5,000, (D) WEC shall not have any Liability under
this Section 8.1 to the extent the Liability arises as a result of the operation
of the Business or the Acquired Assets after the Closing or any action taken or
omitted to be taken by Purchaser or any of its Affiliates, and (E) in respect of
any Losses under clause (v) above, (w) for aggregate Losses of less than $100
million ("FIRST-TIER ENVIRONMENTAL LOSSES"), WEC shall pay 25% of such Losses,
(x) for aggregate Losses of $100 million or more but less than $200 million
("SECOND-TIER ENVIRONMENTAL LOSSES"), WEC shall pay 75% of such Losses, (y) for
aggregate Losses of $200 million or more but less than $300 million ("THIRD-TIER
ENVIRONMENTAL LOSSES"), WEC shall pay 50% of such Losses and (z) for aggregate
Losses of $300 million or more ("FOURTH-TIER ENVIRONMENTAL LOSSES"), (1) if such
Losses result from a Remedial Action that is not imposed by an order of a
Governmental Authority pursuant to an Environmental Law, WEC shall pay 50% of
such Losses, and (2) WEC shall pay 100% of all other Losses. Notwithstanding the
foregoing provisions, if and to the extent Purchaser incurs Losses in respect of
Special Environmental Liabilities arising out of or in respect of the conduct of
the Business by any Seller or Sold Subsidiary prior to the Closing, WEC shall
pay the first $5,000,000 of such Losses.
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The balance of all such Losses shall be treated in the same way as all other
Losses in respect of Environmental Liabilities are treated in clause (v) above.
With respect to the Environmental Liabilities for which WEC
has Liability pursuant to this Section 8.1(a) and to the extent that such
Liability involves the implementation of a Remedial Action, (i) in no event
shall WEC's Liability extend to Remedial Action that seeks to meet or address
cleanup criteria applicable to real property other than criteria applicable to
real property used for purposes substantially consistent with the purposes for
which the Premises were used by the Business prior to the Closing and (ii) WEC
shall have the right to review and provide Purchaser with written comments in
advance of (A) the Purchaser's selection of consultants and contractors
designated to perform the Remedial Action and (B) the development of the scope
of work for, and type of, the Remedial Action to be implemented. Purchaser shall
review and reasonably and in good faith consider WEC's comments. Purchaser shall
provide all plans, reports and submissions to any Governmental Authority
regarding any such Remedial Action in draft form to WEC a reasonable time prior
to transmission of such items to such Governmental Authority and Purchaser shall
review and reasonably and in good faith consider any of WEC's comments on such
plans, reports and submissions. WEC and its representatives shall have the
opportunity to be present and participate at any meetings with Governmental
Authorities.
Notwithstanding the foregoing, from and after the time, if
any, as clause (E)(z) of the second preceding paragraph becomes applicable or
could reasonably be expected to become applicable prior to completion of any
specific Remedial Action, all determinations with respect to Remedial Actions
(including those contemplated by the first sentence of the immediately preceding
paragraph) shall be made jointly by WEC and Purchaser acting reasonably and in
good faith. All such determinations shall be made (1) with a view towards
achieving solutions that involve reasonable and customary Remedial Actions that
can be implemented efficiently and cost-effectively, (2) with due regard to
avoiding undue interference with the ongoing business operations of Purchaser
(or its successor in interest) at the Premises and (3) in accordance with
Environmental Laws. If, in such circumstances, (X) WEC and Purchaser do not
agree as to whether Remedial Action or any significant portion of a Remedial
Action is imposed by an order of a Governmental Authority pursuant to an
Environmental Law, the parties shall submit such dispute to arbitration pursuant
to Section 8.9(a) or (Y) WEC and Purchaser do not agree with respect to the
scope of work for, and the type of, the Remedial Action to be implemented, each
of WEC and Purchaser shall submit to the other a written proposal with respect
thereto; if the parties are unable to agree how to proceed, either party may
submit such dispute to arbitration pursuant to Section 8.9(b).
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(B) Purchaser acknowledges and agrees that, following the
Closing, its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement (except as provided in Section
5.14) shall be pursuant to the indemnification provisions set forth in this
Section 8.1. In furtherance of the foregoing, Purchaser hereby waives, to the
fullest extent permitted under Law, any and all rights, claims and causes of
action it may have against Sellers, their Affiliates and their respective
officers, directors, employees, stockholders, agents and representatives arising
under or based upon any Law or otherwise (except pursuant to the indemnification
provisions set forth in this Article 8).
SECTION 8.2 INDEMNIFICATION BY PURCHASER. Purchaser hereby agrees to
indemnify Sellers, their Affiliates and their respective officers, directors,
employees, stockholders, agents and representatives against, and agrees to hold
them harmless from, any Losses, as incurred, to the extent arising from,
relating to or otherwise in connection with (i) any breach of any representation
or warranty of Purchaser contained in this Agreement, (ii) any breach of any
covenant of Purchaser contained in this Agreement or in any Purchaser Ancillary
Document (iii) subject to Section 8.1(a), any Assumed Liabilities, (iv) subject
to Section 8.1(a), all Liabilities of the Sold Subsidiaries, (v) any Liability
under the WARN Act or similar statute arising from the actions of Purchaser on
or after the Closing, (vi) any Liability under any Credit Support Arrangement
following the Closing or (vii) subject to Section 8.1(a), the operation of the
Business or the Acquired Assets, or any actions or omissions of Purchaser, its
Affiliates, agents, contractors or subcontractors in connection therewith, after
the Closing.
SECTION 8.3 CHARACTERIZATION OF INDEMNIFICATION PAYMENTS. All amounts
paid by WEC or Purchaser, as the case may be, under this Article VIII shall be
treated as adjustments to the Purchase Price for all Tax purposes.
SECTION 8.4 LOSSES NET OF INSURANCE; TAX LOSS AND BENEFITS; NO
CONSEQUENTIAL DAMAGES. The amount of any Loss shall be (a) net of any amounts
recovered or recoverable by the indemnified party under insurance policies or
Government Contracts (it being understood that if any amount is recovered or
recoverable by Purchaser under any insurance policy or Government Contract, it
shall not be subject to indemnification by WEC under this Article 8) with
respect to such Loss, (b), (i) increased to take account of any net Tax cost
incurred by the indemnified party by reason of the receipt of any indemnity
payment being treated for Tax purposes as other than an adjustment to the
Purchase Price (grossed-up for such increase) and (ii) reduced to take account
of any net Tax benefit realized by the indemnified party in respect of the
taxable year in which such Loss is
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incurred or paid and, with respect to a Tax benefit arising in a year subsequent
to the year in which the Loss is paid or incurred, the indemnified party shall
pay to the indemnifying party the amount of such Tax benefit at the time such
Tax benefit is actually realized, arising from the incurrence or payment of any
such Loss and (c) to avoid double-counting, determined after giving effect to
any reserves on the books of the Business as of the Closing Date in respect of
any matter if and to the extent such reserve reduced Closing Net Assets. In
computing the amount of any such Tax cost or Tax benefit, the indemnified party
shall be deemed to recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified loss,
liability, claim, damage or expense. Notwithstanding anything to the contrary
contained herein, no indemnification shall be provided for under this Article 8
in respect of any indirect, special, consequential or "business interruption"
damages.
SECTION 8.5 TERMINATION OF INDEMNIFICATION. The obligations to
indemnify and hold harmless any party, (a) pursuant to clause (a)(i) of Section
8.1 and clause (a)(i) of Section 8.2, shall terminate when the applicable
representation or warranty terminates pursuant to Section 9.3 and pursuant to
clause (a)(v) of Section 8.1 shall terminate on the eighth anniversary of the
Closing Date; PROVIDED, HOWEVER, that such obligations to indemnify and hold
harmless shall not terminate with respect to any item as to which the Person to
be indemnified shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice pursuant to Section 8.6 or 8.7
(stating in reasonable detail the basis of such claim) to the party to be
providing the indemnification and (b) pursuant to the other clauses of Sections
8.1 and 8.2 shall not terminate.
Notwithstanding anything to the contrary in this Agreement,
for purposes of Purchaser's entitlement to any indemnification provided for
under Section 8.1(a)(v) of this Agreement, any notice required to be given by
Purchaser to WEC hereunder need only specify in reasonable detail that a state
of facts or condition exists that gives rise to an Environmental Liability.
SECTION 8.6 PROCEDURES RELATING TO THIRD PARTY CLAIMS (OTHER THAN TAX
CONTROVERSIES).
(A) In order for a Person (the "INDEMNIFIED PARTY"), to be
entitled to any indemnification provided for under this Agreement in respect of,
arising out of or involving a claim made by any Person against the indemnified
party (other than a Tax Controversy, procedures for which are specified in
Section 5.14(k)) (a "THIRD PARTY CLAIM"), such indemnified party must notify the
indemnifying party in writing, and in reasonable
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detail, of the Third Party Claim within 20 Business Days after receipt by such
indemnified party of written notice of the Third Party Claim; PROVIDED, HOWEVER,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure. Thereafter, the indemnified
party shall deliver to the indemnifying party, promptly after the indemnified
party's receipt thereof, copies of all notices and documents (including court
papers) received by the indemnified party relating to the Third Party Claim.
(B) If a Third Party Claim is made against an indemnified
party, the indemnifying party will be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the indemnifying party. If the indemnifying party so elects to
assume the defense of a Third Party Claim, the indemnifying party will not be
liable to the indemnified party for any legal expenses subsequently incurred by
the indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof (other than during any period in which the
indemnified party shall have failed to give notice of the Third Party Claim as
provided above). If the indemnifying party chooses to defend or prosecute a
Third Party Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon the
indemnifying party's request) the provision to the indemnifying party of records
and information which are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. If the
indemnifying party chooses to defend or prosecute any Third Party Claim, the
indemnified party will agree to any settlement, compromise or discharge of such
Third Party Claim which the indemnifying party may recommend, which involves no
order for non-monetary relief, will not result in the indemnified party being
bound by principles of RES JUDICATA or collateral estoppel in defending other
similar claims and which by its terms obligates the indemnifying party to pay
the full amount of the liability in connection with such Third Party Claim or,
if such settlement, compromise or discharge does not require full payment of
such liability, the indemnified party shall have the right to consent to such
settlement, compromise or discharge, which consent may not be unreasonably
withheld. Whether or not the indemnifying party shall have assumed the defense
of a Third
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Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the indemnifying party's prior written consent (which consent shall not be
unreasonably withheld)
SECTION 8.7 PROCEDURES RELATING TO NON-THIRD PARTY CLAIMS. In order for
an indemnified party to be entitled to any indemnification provided for under
this Agreement in respect of a claim that does not involve a Third Party Claim
or Tax Controversy being asserted against or sought to be collected from such
indemnified party, the indemnified party shall deliver notice of such claim with
reasonable promptness to the indemnifying party. The failure by any indemnified
party so to notify the indemnifying party shall not relieve the indemnifying
party from any liability which it may have to such indemnified party under this
Agreement, except to the extent that the indemnifying party shall have been
actually prejudiced by such failure.
SECTION 8.8 JOINT DEFENSE AGREEMENT. On the Closing Date, WEC and
Purchaser shall enter into a Joint Defense Agreement substantially in the form
set forth in Exhibit F and on such additional terms as shall be mutually
agreeable.
SECTION 8.9 ARBITRATION OF ENVIRONMENTAL LIABILITIES. (a) Any dispute
arising out of whether a Remedial Action covered by Section 8.1(a)(E)(z) of this
Agreement is imposed by an order of a Governmental Authority pursuant to
Environmental Law shall be settled by arbitration in accordance with the
Commercial Rules of the American Arbitration Association. Any party may commence
arbitration hereunder by delivering notice to the other party or parties to the
dispute, claim or controversy. The arbitration panel shall consist of three
arbitrators. Within ten (10) days after delivery of the notice of commencement
of arbitration referred to above, the Purchaser and WEC shall each appoint one
arbitrator, and the two arbitrators so appointed shall within 10 days of their
appointment designate a third arbitrator within ten days of their appointment.
If the arbitrators designated by the parties to the arbitration are unable or
fail to agree upon the third arbitrator, the third arbitrator shall be
designated by the American Arbitration Association under its rules. The
arbitrators will be bound by the substantive law of the State of New York, but
will not be bound by the laws of evidence and procedure customary in courts of
law. The arbitrators shall be required to submit a written statement of their
findings and conclusions. The award of the arbitrators shall be final, binding
and conclusive on the parties; provided that, where a remedy for breach is
prescribed hereunder or limitations on remedies are prescribed, the arbitrators
shall be bound by such restrictions. Judgment upon the award may be entered in
any court having jurisdiction thereof. The arbitration proceedings shall be
conducted in New York, New York. Unless otherwise
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determined by the arbitrator (which determination shall be final and
binding on the Purchaser and WEC), each party shall pay its own expenses of
arbitration and the expenses of the arbitrators shall be shared equally by the
Purchaser, on the one hand, and WEC involved in such arbitration, on the other
hand.
(b) Any dispute as to the scope of work for or the type of
Remedial Action to be implemented in Section 8.1(a)(E)(z) shall be submitted to
"baseball arbitration" for final resolution without right of appeal as follows:
(i) the arbitrator will be a mutually agreed nationally
recognized environmental consulting firm;
(ii) WEC and the Purchasers shall each submit to the
arbitrator their respective versions of the scope of work for the
Remedial Action and documentation supporting that determination;
(iii) the arbitrator will choose one version in its entirety.
The arbitrator shall not be allowed to compromise between the two
versions or combine parts of the two versions to reach an intermediate
version.
(iv) the party whose version is not selected by the arbitrator
shall pay all expenses of the arbitrator; and
(v) the version selected by the arbitrator shall be the scope
of work for purposes of the Remedial Action to be performed.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1 NOTICES. All notices and other communications hereunder
shall be in writing (including telecopy or similar writing) and shall be sent,
delivered or mailed, addressed or telecopied:
(a) if to Purchaser, to
c/o Siemens Corporation
1301 Avenue of the Americas
New York, New York 10019
Attention: General Counsel
Telecopy No.: (212) 258-4490
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with copies to:
Siemens Aktiengesellschaft
KWU Power Generation Group
Freyeslebenstrasse 1
D-91058 Erlangen
Germany
Attention: Adolf Huttl, President
Telecopy No. : 011-49-9131-18-7173
and to:
Siemens Aktiengesellschaft
Legal Department ZFR3
Werner-von-Siemens-Strasse 50
D-91052 Erlangen
Germany
Attention: Counsel for Power Generation Group
Telecopy No. : 011-49-9131-7-29011
(b) if to Seller, to
Office of General Counsel
Westinghouse Electric Corporation
Westinghouse Building
11 Stanwix Street
Pittsburgh, PA 15222
Telecopy No. : (412) 642-5224
with copies to:
Office of General Counsel
CBS Inc.
51 West 52nd Street
New York, New York 10019
Telecopy No. : (212) 975-3744
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Howard Chatzinoff, Esq.
Telecopy No. : (212) 310-8007
Each such notice or other communication shall be given (i) by hand delivery,
(ii) by nationally recognized courier service or (iii) by telecopy, receipt
confirmed. Each such notice or communication shall be effective (i) if delivered
by hand or by nationally recognized courier service, when delivered at the
address specified in this Section 9.1 (or in accordance with the latest
unrevoked direction from such party) and (ii) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 9.1 (or
in accordance with the latest unrevoked direction from such party), and
confirmation is received.
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SECTION 9.2 INTERPRETATION. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall be to a
Section of, or a Schedule or Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. For purposes of any indemnification provision
in this Agreement, the word "EXPENSES" shall mean out-of-pocket expenses, and
shall not include any allocations of internal salaries and other expenses.
Whenever the words "INCLUDED," "INCLUDES" or "INCLUDING" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." Whenever the word "MATERIAL" is used in this Agreement (except when
used with respect to the Purchaser), it shall mean material to the Business or
financial condition of the Business, taken as a whole. Whenever the phrase
"REASONABLY LIKELY TO BE ADVERSELY DETERMINED" is used in this Agreement, it
shall not require a determination that it is more likely than not. Except as
otherwise provided in Section 4.1(m)(iii), whenever reference is made to
"KNOWLEDGE OF SELLER," it shall mean the actual knowledge of the Persons named
on Schedule 9.2.
SECTION 9.3 SURVIVAL OF REPRESENTATIONS. The representations and
warranties contained in this Agreement shall survive the Closing solely for
purposes of Article 8 and shall terminate at the close of business 18 months
following the Closing Date, PROVIDED, that (i) the representations and
warranties contained in Sections 4.1(a), 4.1(b), 4.1(f) and 4.1(g) (but only to
the extent Section 4.1(g) relates to matters of title) shall survive
indefinitely; (ii) the representations and warranties contained in Section
4.1(o) (to the extent Section 4.1(o) relates to Taxes other than Income Taxes)
shall survive, as to any such Tax, until the 60th day following the expiration
of the statute of limitations applicable to such Tax; and (iii) the
representations and warranties contained in (x) clauses (i), (iii) and (iv)(A)
of Section 4.1(n) and (y) Section 4.1(o), to the extent that such
representations and warranties relate to Income Taxes, shall terminate on the
Closing Date.
SECTION 9.4 SEVERABILITY. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
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SECTION 9.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered (including by telecopy) to the other party.
SECTION 9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, the Guarantee Agreements and the Confidentiality Agreement (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and except as provided in Article 8, are not intended to
confer upon any Person other than the parties hereto (and the Selling
Subsidiaries) and their successors and permitted assigns any rights or remedies
hereunder.
SECTION 9.7 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely in the State of New York, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws.
SECTION 9.8 MEDIATION; CONSENT TO JURISDICTION.
(A) Any dispute among the parties arising out of or in
connection with this Agreement or any other agreement, instrument or other
document delivered pursuant to this Agreement, or any alleged breach hereof or
thereof (other than (i) a dispute arising under or with respect to Section 5.18
or the confidentiality obligations set forth in the third sentence of Section
5.2) or (ii) a dispute in respect of which there is a reasonable likelihood of
irreparable harm (as to which a party may seek a temporary restraining order or
injunctive relief) shall be submitted for discussion and possible resolution by
senior officers or designated spokesperson of each such party.
(B) If within a period of 15 days after submission of a matter
in accordance with clause (a) hereof the respective senior officers and
designated spokespersons are unable to agree upon a resolution, any party may
within 15 days after the aforesaid 15-day period elect to utilize a non-binding
resolution procedure whereby each party presents its case at a hearing held in
New York, New York before a neutral advisor, who shall be selected from the
Center for Public Resources' Judicial Panel. The parties shall bear their
respective costs incurred in connection with this procedure including the fees
and expenses of the neutral advisor. Prior to the hearing, the parties and the
neutral advisor shall use their best efforts to agree on a set of ground rules
for the hearing. At the closing of the hearing, the senior executive officers of
the respective parties shall meet and attempt to resolve the matter. Only after
the foregoing procedure has been exhausted shall either party resort to
litigation as the final adjudication of the dispute.
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(C) Each of Purchaser and WEC irrevocably submits to the
non-exclusive jurisdiction of (i) the Supreme Court of the State of New York,
New York County, and (ii) the United States District Court for the Southern
District of New York located in the Borough of Manhattan in the City of New
York, for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby. Each of the Purchaser and
WEC further agrees that service of any process, summons, notice or document by
U.S. registered mail to such party's respective address set forth in Section 9.1
or, in the case of Purchaser, to its agent for service of process shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction as set forth
above. Each of Purchaser and WEC irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (x) the Supreme
Court of the State of New York, New York County, or (y) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
SECTION 9.9 PUBLICITY. From the date of this Agreement through the
Closing, neither WEC, on the one hand, nor Purchaser, on the other hand, shall
issue or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably withheld,
except as such release or announcement may be required by Law or the rules or
regulations of a national securities exchange in the United States, in which
case the party required to make the release or announcement shall, to the extent
practicable, allow the other party reasonable time to comment on such release or
announcement in advance of its issuance.
SECTION 9.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other party, except that, so long as any such
assignment would not delay or impede the consummation of the transactions
contemplated hereby. Purchaser may so assign to any one or more Affiliates of
Purchaser the right to acquire part or all of the assets or Liabilities of the
Business hereunder; PROVIDED, HOWEVER, that any such assignment shall not
release Purchaser from any obligation or liability hereunder (including any
right or obligation under Article 8). Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
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SECTION 9.11 RELEASE OF CERTAIN GUARANTORS. WEC hereby irrevocably and
unconditionally waives and releases all rights and claims that it or any Seller
may hereafter have that any Guarantor, other than Siemens Corporation, is or has
been at any time subject to the jurisdiction of the Federal, state or local
courts of the United States arising out of any claims or disputes related to
this Agreement or the transactions contemplated hereby.
SECTION 9.12 WAIVER OF JURY TRIAL; TRIAL COSTS. Each of Purchaser and
the Sellers, for themselves and their respective Affiliates, hereby irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to the
actions of Purchaser and the Sellers or their respective Affiliates pursuant to
this Agreement in the negotiation, administration, performance or enforcement
thereof. The party in whose favor a final judgment is rendered shall be entitled
to reasonable costs and reasonable attorneys' fees.
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IN WITNESS WHEREOF, WEC and Purchaser have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
WESTINGHOUSE ELECTRIC CORPORATION
By: /s/ Fredric G. Reynolds
----------------------------------
Name: Fredric G. Reynolds
Title: Chief Financial Officer
SIEMENS POWER GENERATION CORPORATION
By: /s/ Adolf Huttl
----------------------------------
Name: Adolf Huttl
Title: Chairman
By: /s/ Albert Hoser
----------------------------------
Name: Albert Hoser
Title: President and CEO
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