Asset Purchase Agreement [Energy Systems Business Unit] - CBS Corp. and WGNH Acquisition LLC
EXECUTION COPY
ESBU
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ASSET PURCHASE AGREEMENT
BETWEEN
CBS CORPORATION
AND
WGNH ACQUISITION, LLC
DATED AS OF JUNE 25, 1998
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS............................................. 4
SECTION 1.1. Specified Definitions................................................................... 4
SECTION 1.2. Other Terms............................................................................. 17
SECTION 1.3. Other Definitional Provisions........................................................... 17
ARTICLE 2
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES........................ 18
SECTION 2.1. Purchase and Sale....................................................................... 18
SECTION 2.2. Acquired Assets and Excluded Assets..................................................... 18
(a) Acquired Assets................................................................ 18
(b) Excluded Assets................................................................ 21
(c) Nonassignable Rights........................................................... 24
(d) Termination of Rights of Sold Subsidiaries..................................... 24
SECTION 2.3. Assumption of Liabilities............................................................... 25
(a) Assumed Liabilities............................................................ 25
(b) Excluded Liabilities........................................................... 27
SECTION 2.4. Purchase Price.......................................................................... 29
SECTION 2.5. Purchase Price Adjustment............................................................... 29
ARTICLE 3
THE CLOSING............................................. 34
SECTION 3.1. Closing Date............................................................................ 34
SECTION 3.2. Transactions to be Effected at the Closing.............................................. 34
(a) Deliveries by Sellers.......................................................... 34
(b) Deliveries by Purchaser........................................................ 34
(c) Nominee Shares................................................................. 35
ARTICLE 4
REPRESENTATIONS AND WARRANTIES.................................... 35
SECTION 4.1. Representations and Warranties of CBS................................................... 35
(a) Organization, Standing and Power............................................... 35
(b) Authority...................................................................... 35
(c) Financial Statements; Undisclosed Liabilities.................................. 37
(d) Compliance with Applicable Laws................................................ 38
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(e) Litigation; Decrees............................................................ 39
(f) Title to Acquired Assets; Leasehold Interests.................................. 39
(g) Real Property.................................................................. 40
(h) Intellectual Property and Technology........................................... 42
(i) Insurance...................................................................... 43
(j) Contracts...................................................................... 44
(k) Sufficiency of Acquired Assets................................................. 47
(l) Absence of Certain Changes or Events........................................... 47
(m) Employee Benefits.............................................................. 48
(n) Environmental Matters.......................................................... 51
(o) Taxes.......................................................................... 53
(p) Sold Subsidiaries.............................................................. 55
(q) Labor Matters.................................................................. 55
(r) Outstanding Bids............................................................... 56
(s) Major Suppliers and Customers.................................................. 56
(t) Year 2000...................................................................... 57
(u) Tangible Property.............................................................. 57
SECTION 4.2. Representations and Warranties of Purchaser............................................. 57
(a) Organization, Standing and Power............................................... 57
(b) Authority...................................................................... 58
(c) U.S.-Controlled Entity......................................................... 59
(d) U.K. Shareholder Approval...................................................... 59
ARTICLE 5
COVENANTS.............................................. 59
SECTION 5.1. (a) Covenants of CBS Relating to Conduct of Business................................... 59
(b) Advice of Changes.................................................................. 62
SECTION 5.2. Access to Information; Consultation..................................................... 62
SECTION 5.3. Governmental Approvals, Etc............................................................. 64
SECTION 5.4. Novations of Contracts and Third Party Consents......................................... 66
SECTION 5.5. Employee Matters........................................................................ 68
(a) Employee Matters............................................................... 68
(b) Accrued Vacation............................................................... 69
(c) Union Representation........................................................... 70
(d) Pension Plan................................................................... 70
(e) Savings Plan................................................................... 72
(f) Welfare Benefits............................................................... 74
(g) Severance Obligations.......................................................... 77
(h) Executive Compensation........................................................ 78
(i) Cooperation.................................................................... 79
(j) WARN Act....................................................................... 79
(k) COBRA.......................................................................... 79
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(l) Workers Compensation........................................................... 79
(m) Retained Liabilities........................................................... 80
(n) Actuarial Determinations and Payments.......................................... 80
(o) Post-Closing Hiring of Employees............................................... 81
(p) Free-Standing Plans............................................................ 81
(q) Foreign Employment Matters..................................................... 82
(r) No Right to Employment......................................................... 84
(s) Alternative Procedure.......................................................... 84
SECTION 5.6. Collection of Receivables............................................................... 84
SECTION 5.7. Expenses................................................................................ 84
SECTION 5.8. Brokers or Finders...................................................................... 84
SECTION 5.9. Shared Technology and Trademark License Agreements...................................... 85
SECTION 5.10. Certain Information.................................................................... 86
SECTION 5.11. Bulk Transfer Laws..................................................................... 87
SECTION 5.12. Additional Agreements.................................................................. 87
SECTION 5.13. Certain Understandings................................................................. 88
SECTION 5.14. Allocation; Tax Matters................................................................ 88
SECTION 5.15. Supplies............................................................................... 93
SECTION 5.16. Transfer of Assets of Sold Subsidiaries................................................ 94
SECTION 5.17. Removal of Excluded Assets and Liabilities from Sold Subsidiaries...................... 94
SECTION 5.18. Credit Support......................................................................... 94
SECTION 5.19. Non-Competition and Confidentiality.................................................... 95
SECTION 5.20. Related Agreements..................................................................... 97
(a) Transitional Services.......................................................... 97
(b) Business Supply Agreement...................................................... 97
(c) Facilities..................................................................... 97
(d) Field Sales Offices............................................................ 97
SECTION 5.21. Business Relationships with Sellers.................................................... 98
SECTION 5.22. Science and Technology Center.......................................................... 98
SECTION 5.23. U.S.-Controlled Entity................................................................. 99
SECTION 5.24. Insurance Matters...................................................................... 99
SECTION 5.25. Guarantee Agreement.................................................................... 99
SECTION 5.26. Waivers................................................................................100
SECTION 5.27. Third Party Agreements.................................................................100
SECTION 5.28. [Intentionally omitted.................................................................100
SECTION 5.29. Year 2000 Matters......................................................................100
SECTION 5.30. Joint Defense Agreement................................................................101
SECTION 5.31. Waltz Mill Service Center..............................................................101
SECTION 5.32. Guarantee Agreement....................................................................101
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ARTICLE 6
CONDITIONS PRECEDENT.........................................101
SECTION 6.1. Conditions to Each Party's Obligation...................................................101
(a) Certain Waiting Periods........................................................101
(b) No Injunctions or Restraints...................................................101
(c) Governmental Action............................................................102
(d) Governmental Consents..........................................................102
(e) Consummation of the GESCO Asset Purchase Agreement.............................102
SECTION 6.2. Conditions to Obligation of Purchaser...................................................102
(a) Representations and Warranties.................................................102
(b) Performance of Obligations of CBS..............................................102
(c) Material Permits...............................................................102
(d) Conveyancing Documents.........................................................103
(e) Opinion of CBS's Counsel.......................................................103
SECTION 6.3. Conditions to Obligation of CBS.........................................................103
(a) Representations and Warranties.................................................103
(b) Performance of Obligations of Purchaser........................................103
(c) Guarantee Agreement............................................................103
(d) Opinion of Purchaser's Counsel.................................................104
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER..................................104
SECTION 7.1. Termination.............................................................................104
SECTION 7.2. Amendments and Waivers..................................................................105
ARTICLE 8
INDEMNIFICATION...........................................106
SECTION 8.1. Indemnification By CBS..................................................................106
SECTION 8.2. Indemnification by Purchaser............................................................111
SECTION 8.3. Characterization of Indemnification Payments............................................112
SECTION 8.4. Losses Net of Insurance; Tax Loss and Benefits; No Consequential Damages................112
SECTION 8.5. Termination of Indemnification..........................................................113
SECTION 8.6. Procedures Relating to Third Party Claims (Other than Tax Controversies and
Environmental Liabilities)..............................................................114
SECTION 8.7. Procedures Relating to Non-Third Party Claims...........................................115
SECTION 8.8. Arbitration of Certain Environmental Liabilities........................................115
SECTION 8.9. Procedures Relating to Claims Constituting an Environmental Liability...................116
SECTION 8.10. Steam Generator Matters.................................................................117
SECTION 8.11. Subrogation.............................................................................117
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ARTICLE 9
GENERAL PROVISIONS..........................................118
SECTION 9.1. Notices.................................................................................118
SECTION 9.2. Interpretation..........................................................................120
SECTION 9.3. Survival of Representations, Warranties and Covenants...................................120
SECTION 9.4. Severability............................................................................120
SECTION 9.5. Counterparts............................................................................121
SECTION 9.6. Entire Agreement; No Third Party Beneficiaries..........................................121
SECTION 9.7. Governing Law...........................................................................121
SECTION 9.8. Mediation; Consent to Jurisdiction......................................................121
SECTION 9.9. Publicity...............................................................................122
SECTION 9.10. Assignment.............................................................................123
SECTION 9.11. Waiver of Jury Trial; Trial Costs......................................................123
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Exhibit A Terms of ESBU/PCD Business Supply Agreement
Exhibit B Shared Technology Agreement
Exhibit C Trademark and Trade Name License Agreement
Exhibit D Terms of Transitional Services Agreement
Exhibit E Guarantee Agreement
Exhibit F Joint Defense Agreement
List of Annexes
Annex S Steam Generator Matters
List of Schedules
Schedule 1.1(b) Leased Real Property
Schedule 1.1(c) Owned Real Property
Schedule 1.1(d) Permitted Liens
Schedule 1.1(e) Selling Subsidiaries
Schedule 1.1(f) Steam Generator Settlement Agreements
Schedule 1.1(g) Sold Subsidiaries
Schedule 2.2(a) Acquired Assets
Schedule 2.2(b) Excluded Assets
Schedule 2.3(a)(i) Contractual Liabilities
Schedule 2.3(a)(xviii) Other Assumed Liabilities
Schedule 2.3(b) Non-excluded Liabilities
Schedule 2.5(a) Target Amount
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Schedule 4.1(b)(i) Consents under Intellectual Property, Technology
and Other Contracts
Schedule 4.1(b)(ii) Governmental Consents, Approvals, and Filings
Schedule 4.1(c)(i)(A) Financial Statements: Differences between the
Business and Assets and Liabilities in Financial
Statements
Schedule 4.1(c)(i)(B) Financial Statements: Reconciliation
Schedule 4.1(c)(ii) Undisclosed Liabilities
Schedule 4.1(c)(iii) Accounts Receivable
Schedule 4.1(c)(v) Order Backlog Information
Schedule 4.1(d)(i) Compliance with Applicable Laws
Schedule 4.1(d)(ii) Non-Compliance with Cost Accounting Standards.
Schedule 4.1(e) Certain Lawsuits, Actions and Proceedings
Schedule 4.1(g)(i) Leases of Owned Real Property
Schedule 4.1(g)(iv) Subleases Affecting Leased Real Property.
Schedule 4.1(h)(i) Intellectual Property and Technology
Schedule 4.1(h)(ii) Intellectual Property Subject to Security Interest
Schedule 4.1(h)(iii) Non-Sole Ownership - Intellectual Property
Schedule 4.1(h)(iv) Written Challenges to Intellectual Property Rights
Schedule 4.1(h)(v) CBS Infringement Claims
Schedule 4.1(h)(vi) Third Party Infringement Claims
Schedule 4.1(h)(vii) Copyright or Patent Proceedings
Schedule 4.1(i) Insurance
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Schedule 4.1(j)(A)(i) Employment Contracts
Schedule 4.1(j)(A)(ii) Collective Bargaining Agreements
Schedule 4.1(j)(A)(iii) Affiliated Contracts
Schedule 4.1(j)(A)(iv) Credit Agreements
Schedule 4.1(j)(A)(v) Non-Compete Covenants
Schedule 4.1(j)(A)(vi) Real Property Leases
Schedule 4.1(j)(A)(vii) Personal Property Leases
Schedule 4.1(j)(A)(viii) Purchase Contracts
Schedule 4.1(j)(A)(ix) Products or Services Contracts
Schedule 4.1(j)(A)(x) Joint Ventures, Long-Term Alliances, Partnerships
or Teaming Agreements
Schedule 4.1(j)(A)(xi) Options or Franchise Agreements
Schedule 4.1(j)(A)(xii) Take-or-Pay or Requirements Contracts
Schedule 4.1(j)(A)(xiii) Sale or Disposition of Assets
Schedule 4.1(j)(A)(xiv) Contracts Outside the Ordinary Course of Business
Schedule 4.1(j)(A)(xv) License or Development Agreements
Schedule 4.1(j)(A)(xvi) Material Contracts
Schedule 4.1(j)(C) Allegations of Fraud by Federal Agencies
Schedule 4.1(k) Sufficiency of Acquired Assets
Schedule 4.1(l) Non-Ordinary Course; Certain Changes or Events
Schedule 4.1(m)(i) Employee Benefit Plans
Schedule 4.1(m)(ii) Governmental Filings; Litigation and Termination
Proceedings
Schedule 4.1(m)(iii) Compliance with ERISA
Schedule 4.1(m)(iv) Determination Letters; Qualified Plans
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Schedule 4.1(m)(v) Prohibited Transactions; Reportable Events
Schedule 4.1(m)(vii) Unfunded Benefit Liabilities
Schedule 4.1(m)(viii) Multiemployee Plans
Withdrawal Liabilities
Schedule 4.1(m)(ix) Bonus and Severance Payments
Schedule 4.1(m)(xi) Amendments to Benefit Plans
Schedule 4.1(m)(xii) COBRA Compliance
Schedule 4.1(m)(xiii) Underfunding of Foreign Benefit Plans
Schedule 4.1(n)(iii)(a) Environmental Permits
Schedule 4.1(n)(iii)(b) Material Legal or Administrational Proceedings
for Permits
Schedule 4.1(n)(iv) Governmental Consent to Transfer
Schedule 4.1(n)(v) Outstanding or Threatened Government Authority
Non-Compliance Order or Notice of Violation
Schedule 4.1(n)(vi) Agency Action Relating to Environmental Compliance
Schedule 4.1(n)(viii) CERCLA Potentially Responsible Party (PRP) Sites
Schedule 4.1(o)(i) Taxes: Filings
Schedule 4.1(o)(ii) Taxes: Deficiency Claims
Schedule 4.1(o)(iii) Taxes: Extensions
Schedule 4.1(o)(iv) Taxes: Statute of Limitation Waivers
Schedule 4.1(o)(v) Taxes: Assets Owned by Others and Tax-Exempt Use
Property
Schedule 4.1(o)(vi) Taxes: Adjustments due to Change in Accounting
Method
Schedule 4.1(o)(vii) Taxes: Pending Audits or Proceedings
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Schedule 4.1(o)(viii) Taxes: Powers of Attorney
Schedule 4.1(o)(ix) Taxes: Adverse Ruling Against Sold Subsidiary or
Acquired Assets
Schedule 4.1(o)(x) Taxes: Compliance with the Code
Schedule 4.1(o)(xi) Taxes: Covenants; Non-deductible Payments
Schedule 4.1(q)(i) Labor Matters: Labor Strikes
Schedule 4.1(q)(ii) Labor Matters: Unfair Labor Practice Charges
Schedule 4.1(q)(iii) Labor Matters: Union Grievances
Schedule 4.1(q)(iv) Labor Matters:
Collective Bargaining
Schedule 4.1(q)(v) Labor Matters:
Organization Attempts
Schedule 4.1(r) Outstanding Bids
Schedule 4.1(s) Major Suppliers and Customers
Schedule 5.1(a)(ii) Ordinary Course of Business: Collective
Bargaining Agreement
Schedule 5.1(a)(iii) Ordinary Course of Business: Executive
Compensation Increases
Schedule 5.1(a)(xi) Claims in Excess of 2.5 million
Schedule 5.1(a)(xiv) Severance or Termination Payments
Schedule 5.5(d) Pension Plan (Assumptions)
Schedule 5.5(f)(iv) OPEB Schedule
Schedule 5.14 Allocation to Foreign Sold Subsidiaries
Schedule 5.16 Transfer of Assets of Sold Subsidiaries
Schedule 5.18 Credit Support Arrangements
Schedule 5.22 STC Programs
Schedule 6.1(d) Governmental Consents
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Schedule 6.2(c) Material Permits
Schedule 6.2(e) Opinion of CBS' Counsel
Schedule 6.3(d) Opinion of Purchaser's Counsel
Schedule 8.1(a)(vi) Warranty Obligations
Schedule 8.1(b) Certain Assumed Liabilities
Schedule 9.2 Persons with Knowledge
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of
June 25, 1998, between CBS CORPORATION, a Pennsylvania corporation ("CBS"), and
WGNH ACQUISITION, LLC, a Delaware limited liability company ("Purchaser").
WITNESSETH:
WHEREAS, CBS is engaged,
(A) through its Energy Systems Business, in a worldwide
business which, among other things, primarily serves the electric power industry
by, among other things, (A) supplying (i) Nuclear Installation design
technology, equipment, technology licensing, construction and start-up services,
(ii) nuclear fuel, UF 6 conversion, associated materials, components, fuel
technology, zirconium and hafnium products, and engineering services, (iii)
technical services (including field and factory equipment refurbishment),
technical information, service tools, training services and equipment, including
simulators, total plant outage and maintenance services (including outage
management, refueling services and other operating plant services, including
renewal/spare parts and equipment and component repair/replacement services),
(iv) engineering, NRC and governmental licensing, start-up and operational
support services, (v) Nuclear Installation instrumentation and control systems,
engineered safeguard and primary plant protection systems, safety monitoring
systems, plant computer, display systems, distributed control, communicators,
data acquisition systems and information systems, monitoring and diagnostics
systems, diverse actuation systems, nuclear instrumentation systems, rod control
and position indication systems, traversing incore probe systems, flux mapping
systems and control room design, (vi) nuclear steam supply systems (including
the over 100 nuclear steam supply systems sold or licensed by the Energy Systems
Business operating worldwide), reactor coolant pumps, seals, motors, valves,
control rod drive mechanisms and other controlled mechanisms (other than for
military applications), steam generators, pressurizers, reactor vessels and
internals, other nuclear primary and secondary loop components, and auxiliary
motor/generator sets, (vii) project management for Nuclear Installation
construction and upgrades, (viii) decontamination and decommissioning equipment
and services, and (ix) spent nuclear fuel management and engineering products,
including canisters and transportation systems, and (B) maintaining and
operating certain research and development facilities and laboratories of the
Science and Technology Center (the "Energy Systems Business"), certain assets of
which are owned by Subsidiaries of CBS; and
(B) through its Government and Environmental Services Company
("GESCO"), in businesses which serve the United States government by (i)
managing and
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operating facilities, or providing services, for the United States Department of
Energy pursuant to contracts or subcontracts, (ii) constructing, systemizing,
operating and closing facilities for the United States Government, pursuant to
contracts or subcontracts, (iii) developing, designing, manufacturing and
processing United States Navy nuclear propulsion equipment and providing
training and operations and maintenance services, (iv) developing and
manufacturing low level radioactive waste containers, (v) providing safety
management consulting services to U.S. government facilities and (vi) (through
the Electro-Mechanical Division ("EMD") (which, effective January 1, 1998, was
transferred to GESCO from the Energy Systems Business)) manufacturing pumps,
motors, generators and propulsion units for military applications; control rod
drive mechanisms, pumps, seals, spent fuel handling products, motors and motor
refurbishment services for Nuclear Installations, exclusively in connection with
or through, and employing intellectual property and technology owned by or
licensed to, the Energy Systems Business (the Energy Systems Business being the
exclusive owner of all such CBS-owned intellectual property and technology
relating to Nuclear Installations); and in businesses which serve other
governments (through U.S. government contracts), or commercial entities by (x)
providing advanced design deep ocean pumping systems to the oil industry, (y)
designing and manufacturing low level radioactive waste containers, and (z)
miscellaneous machining and fabrication services, which do not compete with the
Energy Systems Business (the "GESCO Businesses"), certain assets of which are
owned by Subsidiaries of CBS; and
WHEREAS, CBS desires to (and to cause its appropriate
Subsidiaries to) sell, transfer and assign to Purchaser, and Purchaser desires
to purchase and assume from CBS and its appropriate Subsidiaries, substantially
all of the assets and liabilities of the Energy Systems Business together with
the shares of capital stock of certain Subsidiaries of CBS (including the
Acquired Assets and the Assumed Liabilities, but excluding the Excluded Assets
and the Excluded Liabilities (each as hereinafter defined), the "Business"), all
as more specifically provided herein; and
WHEREAS, on the date hereof, concurrently with the execution
of this Agreement, the parties hereto are entering into an asset purchase
agreement (the "GESCO Asset Purchase Agreement") pursuant to which CBS, subject
to the terms and conditions set forth therein, has agreed to (and to cause its
appropriate Subsidiaries to) sell, transfer and assign to Purchaser, and
Purchaser has agreed to purchase and assume from CBS and its appropriate
Subsidiaries, substantially all of the assets and liabilities of the GESCO
Businesses; and
WHEREAS, CBS also is engaged, through its Power Generation
Business Unit, in a fossil fuel power generation 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,
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(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 (the "Power Generation Business"), certain assets
of which are owned by Subsidiaries of CBS; and
WHEREAS, on November 14, 1997, CBS entered into an asset
purchase agreement (the "PGBU Asset Purchase Agreement") pursuant to which CBS,
subject to the terms and conditions set forth therein, agreed to (and to cause
its appropriate Subsidiaries to) sell, transfer and assign to Siemens Power
Generation Corporation ("Siemens") substantially all of the assets and
liabilities of the Power Generation Business; and
WHEREAS, CBS also is engaged, through its Process Control
Division, in a worldwide process control business that designs, manufactures,
sells, installs, services and supplies advanced industrial control and
information systems and systems components, software, training, servicing,
support spares, upgrade services and parts for power generation and conversion,
water and wastewater treatment, metals, mining, chemical and other process
industry applications (excluding products and services provided by the Energy
Systems Business specifically for nuclear applications) (the "Process Control
Business"), certain assets of which are owned by Subsidiaries of CBS; and
WHEREAS, CBS and Emerson Electric Co. ("Emerson") have entered
into an asset purchase agreement, dated as of May 22, 1998 (the "PCD Asset
Purchase Agreement"), pursuant to which CBS, subject to the terms and conditions
set forth therein, agreed to (and to cause its appropriate Subsidiaries to),
sell, transfer and assign to Emerson substantially all of the assets and
liabilities of the Process Control Business and, among other things, enter into
a business supply agreement pursuant to which Emerson will provide certain goods
and services to the Energy Systems Business substantially on the terms set forth
on Exhibit A hereto; and
WHEREAS, certain Subsidiaries of CBS, the capital stock of
which will be transferred to Purchaser hereunder, may hold assets utilized both
in the Business, on the one hand, and in the Power Generation Business, the
Process Control Business, the GESCO Businesses and/or other current and former
businesses of CBS, on the other hand, and certain assets relating to the Power
Generation Business, the Process Control Business, the GESCO Businesses and/or
such other businesses will be transferred by such Subsidiaries prior to the
Closing to CBS or other Subsidiaries of CBS or to the purchaser of the Power
Generation Business, the Process Control Business and/or the GESCO Businesses
pursuant to or in accordance with the terms hereof; and
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WHEREAS, certain facilities, assets and services of CBS and
its Subsidiaries are utilized both in the Business, on the one hand, and in the
Power Generation Business, the Process Control Business, the GESCO Businesses
and/or other current and former businesses of CBS, on the other hand, and
certain of such facilities, assets and services will be shared by the owners of
the Business and the Power Generation Business, the Process Control Business,
the GESCO Businesses and/or such other businesses 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:
"Accounts Receivable" means all trade accounts receivable and
all notes, bonds and other evidences of indebtedness and rights to receive
payments arising out of sales of goods, provision of services or other
transactions occurring in the conduct of the Business.
"Acquired Assets" shall have the meaning specified in
Section 2.2(a).
"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. Following the Closing, references to
Purchaser's Affiliates shall include the Sold Subsidiaries.
"Agency Action" means any investigation, request for
information, notice of violation, complaint, order, directive, court order,
injunction, judgment or decree, consent order, consent agreement, administrative
judgment, decree or injunction or other enforcement inquiry or action brought by
a Governmental Authority having the requisite authority and jurisdiction to
bring such action.
"Agreement State" means each state authorized to regulate
nuclear related materials based on authority delegated by the NRC pursuant to
Section 274 of the Atomic Energy Act.
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"Assumed Liabilities" shall have the meaning specified in
Section 2.3(a).
"Assumed Off-Site Disposal Liabilities" shall mean the first
$10,000,000 of the aggregate amount of any Losses incurred in connection with
the conduct of the Business in respect of a Remedial Action required for any
Release of Hazardous Substances at a treatment, storage or disposal facility
other than (i) at the Premises or (ii) at the treatment, storage or disposal
facilities set forth in Schedule 4.1(n)(viii).
"Atomic Energy Act" means the Atomic Energy Act of 1954, as
amended, 42 U.S.C. Section 2022.
"Balance Sheet" shall have the meaning specified in
Section 4.1(c)(i).
"Benefit Plans" means "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA), Pension Plans, bonus, stock option, stock
purchase, severance, employment, change-in-control, fringe benefit, incentive or
deferred compensation plans and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA,
currently maintained or contributed to by CBS or any of its Subsidiaries for the
benefit of (i) any officers or employees or Former Employees of the Business
employed in the United States ("U.S. Benefit Plans") and (ii) any Former
Employees or officers or employees of the Business employed in foreign
jurisdictions ("Foreign Benefit Plans").
"BNFL" means British Nuclear Fuels plc, an English company.
"Business" shall have the meaning specified in the recitals of
this Agreement.
"Business Employees" shall have the meaning specified in
Section 5.5.
"Business-Related Environmental Liability" means any
Environmental Liabilities arising under Environmental Laws and any Liability
under any Permit issued pursuant to any Environmental Law 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 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 or
the Subsidiary Assets) at or prior to the Closing Date, but excluding in all
cases (i) any liability for fines or penalties that arise as a result of any
actual criminal violation of any Environmental Law and (ii) any Decontamination
and Decommissioning Liabilities.
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"Business Supply Agreement" shall have the meaning specified
in Section 5.20.
"CERCLA" shall have the meaning specified in the definition of
"Environmental Law."
"Closing" means the closing of the purchase, assignment and
sale of the Acquired Assets and the assumption of the Assumed Liabilities
contemplated hereunder.
"Closing Date" means the time and date on which the Closing
takes place, as established by Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection therewith.
"Contracts" means all contracts (including any subcontracts),
leases (including any subleases), indentures, joint venture, governmental
funding or incentive program, guarantee, indemnity (including environmental
indemnity), license (including any sublicense or any license of third-party
software), development, settlement, teaming, divestiture and other agreements,
commitments and all other legally binding arrangements, including all interworks
orders and inter-divisional orders between the Business and other businesses of
CBS, 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 (including
Government Contracts, the Settlement Support Agreements, the Settlement
Agreements and the Business Supply Agreement), except for Benefit Plans.
"Decontamination and Decommissioning Liabilities" means all
costs, Losses, Liabilities and Environmental Liabilities, to the extent inherent
in or incident to the termination of service, decommissioning or demolition of
facilities or equipment on the Premises required by the NRC or any foreign
Governmental Authority, but excluding any such costs, Losses, Liabilities and
Environmental Liabilities which are associated with the ongoing operations of
the Business or Acquired Assets and not inherent in or incurred incident to such
termination of service, decommissioning or demolition of facilities; provided,
however, that all costs, Losses, Liabilities and Environmental Liabilities
inherent in or incurred in any Remedial Action at or relating to any active or
inactive evaporation pond located on the property of the Western Zirconium
facility in Ogden, Utah shall be considered a Decontamination and
Decommissioning Liability regardless of whether such costs, Losses, Liabilities
or Environmental Liabilities are inherent in or are incurred incident to
termination of service, decommissioning or demolition of such ponds.
"Emerson" shall have the meaning specified in the recitals.
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"Environmental Law" means any Law (including common law),
policy or any other legally binding requirement that governs or purports to
govern the existence of, relates to or provides a remedy for an actual or
threatened Release of Hazardous Substances, pollution or the protection of
persons, natural resources or the environment (including, without limitation,
the protection of ambient air, surface water, groundwater, land surface or
subsurface strata, endangered species or wetlands), occupational health and
safety (excluding workers' compensation), the manufacture, processing,
distribution, use, generation, handling, treatment, storage, disposal,
transportation, Release or management of solid waste or Hazardous Substances, or
other activities involving Hazardous Substances, including the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization
Act, the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.,
the Resource Conservation and Recovery Act, 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., the Nuclear Waste Policy Act of 1982, 42 U.S.C. Section 10101 et seq.,
Atomic Energy Act of 1954, 42 U.S.C. Section 2011 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/or any other similar foreign, federal, state, local
and/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 of Sellers or
the Sold Subsidiaries (other than any Liability of the type described in Section
2.3(a)(iii)) arising under the Environmental Laws, including all direct costs
and expenses associated with Remedial Action, and including claims, demands,
penalties, fines, liens, fees, reasonable costs of environmental consultants,
personal injuries, property damages, natural resource damages, response costs of
any Governmental Authority, administrative proceedings, assessments, judgments,
orders, causes of action (including toxic tort suits), contribution actions,
written notices of actual or alleged violations or liability (including such
notices, claims or any actions arising from or regarding the disposal,
transportation or Release or threatened Release of Hazardous Substances from or
upon any property), proceedings and any associated Losses; provided, however,
that except as expressly used in the definition of Decontamination and
Decommissioning Liabilities, "Environmental Liability" shall not include any
Decontamination and Decommissioning Liability.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"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 Steam Generator Liabilities" shall have the meaning
specified in Annex S.
"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)).
"Financial Statements" shall have the meaning specified in
Section 4.1(c)(i).
"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 Benefit Plans" shall have the meaning specified under
the definition of "Benefit Plans."
"Foreign Business Employees" shall have the meaning specified
in Section 5.5(q).
"Foreign Plan Participant" shall have the meaning specified in
Section 5.5(q).
"Foreign Sold Subsidiary" means any Sold Subsidiary other than
a U.S. Sold Subsidiary.
"Former Employee" shall mean any former employee or Inactive
Employee of the Business whose employment with the Business was terminated for
any reason (including retirement) prior to the Closing Date and who, as of the
Closing Date, is not employed by CBS or any of its Affiliates.
"Free Standing Plan" shall have the meaning specified in
Section 4.1(m)(i).
"GAAP" means United States generally accepted accounting
principles.
"GESCO" shall have the meaning specified in the recitals of
this Agreement.
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"GESCO Asset Purchase Agreement" shall have the meaning
specified in the recitals of this Agreement.
"GESCO Businesses" shall have the meaning specified in the
recitals of this Agreement.
"Government Contract" means any Contract entered into with any
Governmental Authority and any subcontract relating to obligations to be
performed pursuant to a Contract entered into with any Governmental Authority.
"Governmental Authority" means any agency, board, body,
bureau, court, commission, department, instrumentality, entity established or
controlled by, 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, including any legislative,
judicial or administrative body.
"Guarantee Agreement" shall have the meaning specified in
Section 5.25.
"Guarantors" means the signatories to the Guarantee Agreement.
"Hazardous Substance" means (i) any petroleum or petroleum
products (to the extent regulated under Environmental Law), flammable
explosives, radioactive materials, asbestos or polychlorinated biphenyls (PCBs);
and (ii) any substance, material or waste that is regulated under any
Environmental Law and 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.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Inactive Employees" shall have the meaning specified in
Section 5.5(a)(i).
"Income Tax" means any Tax on or determined by reference to
net income and all interest, fines and penalties imposed with respect to any
such Tax.
"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
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payment of which such Person is responsible or liable; (ii) all obligations of
such Person issued 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).
"Intellectual Property" means all domestic and foreign
patents, utility models, patent applications, trademarks, trademark
registrations, service marks, service mark registrations, tradenames, tradename
registrations, slogans, corporate names, corporate nicknames or initialisms,
registered copyrights, applications for registration of any of the foregoing,
and trade secret rights, owned by Sellers or any Sold Subsidiary that relate
primarily to the Business.
"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 primarily 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 are 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 issued and outstanding capital stock, partnership
interests and other equity interests owned by any Sold Subsidiary in any Person
(except as otherwise provided by Section 5.16).
"Law" means, as to any Person, any foreign or United States
federal, state or local law, statute, code, ordinance, regulation, order, writ,
injunction, decision, directive, judgment or decree (or judicial or
administrative interpretations thereof having the force of law which are not
subject to appeal or challenge) applicable to such Person and to the businesses
and assets thereof.
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"Leased Real Property" means all real property leased by any
Seller as lessee or by any Sold Subsidiary as lessee and listed in Schedule
1.1(b).
"Liabilities" means, as to any Person, all debts, adverse
claims, fines, 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
financial statements (including the notes thereto) or other books and records.
"Liens" means mortgages, liens, security interests, easements,
rights of way, pledges, restrictions or encumbrances of any nature whatsoever.
"Losses" means, subject to Section 8.4, any and all demands,
claims, complaints, actions or causes of action, suits, proceedings,
investigations, arbitrations, assessments, losses, damages, liabilities,
obligations (including those arising out of any action, such as any settlement
or compromise thereof or judgment or award therein) and any reasonable costs and
expenses, including attorney's and other advisors' fees and disbursements.
"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.
"MK" means Morrison Knudsen Corporation, a Delaware
corporation.
"Novation Agreements" shall have the meaning specified in
Section 5.4(a).
"NRC" means the United States Nuclear Regulatory Commission or
any successor agency or other Governmental Authority to whom jurisdiction over
radiological materials has been transferred or delegated and, for purposes of
this Agreement, shall include any Agreement State.
"Nuclear Installation" means a nuclear powered electric
generating facility and associated support facilities, nuclear processing
facility, military nuclear instrumentation and control systems and nuclear test
facilities.
"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.
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"Owned Real Property" means all real property owned by any
Seller or by any Sold Subsidiary and listed in Schedule 1.1(c).
"Parent Companies" means MK and BNFL.
"PCD Asset Purchase Agreement" shall have the meaning
specified in the recitals.
"Pension Plan" means an "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA) including multiemployer plans
within the meaning of Section 3(37) of ERISA, currently maintained or
contributed to by CBS or any of its Subsidiaries for the benefit of (i) any
officers or employees or Former Employees of the Business employed in the United
States and (ii) any Former Employees or officers or employees of the Business
employed in foreign jurisdictions.
"Permits" means all permits, licenses, registrations, filings,
variances, exemptions, franchises and authorizations by or of any Governmental
Authority, or other indicia of authority necessary for the conduct of the
Business 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; provided, however,
that in no event shall a Government Contract constitute a Permit.
"Permitted Liens" means (i) Liens disclosed in Schedule
1.1(d), specifically described in the notes to 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 the 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 that are not yet due and payable or that may thereafter be paid
without penalty 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 that may thereafter be paid without penalty or that are
being contested in good faith by appropriate proceedings and (C) imperfections
of title and other Liens that do not materially affect the value of the
encumbered asset or the continued use and operation of the encumbered asset in
the Business for its intended purpose.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or Governmental Authority.
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"PGBU Asset Purchase Agreement" shall have the meaning
specified in the recitals.
"Post-Closing Tax Period" means any taxable period commencing
after the Closing Date.
"Power Generation Business" shall have the meaning specified
in the recitals to this Agreement.
"Pre-Closing Tax Period" means any taxable period ending on or
before the Closing Date.
"Premises" means, collectively, the Owned Real Property and
the Leased Real Property, in each case to the extent included in the Acquired
Assets, and the portion of STC to be leased by Purchaser pursuant to Section
5.22 and the leasehold interest in Waltz Mill Service Center contemplated by
Section 5.31.
"Process Control Business" shall have the meaning specified in
the recitals of this Agreement.
"Purchase Price" shall have the meaning specified in
Section 2.4.
"Purchaser Affiliate" shall mean any Person that is
wholly-owned directly or indirectly by Purchaser or directly or indirectly by
either or both of the Parent Companies.
"Purchaser Ancillary Documents" shall have the meaning
specified in Section 4.2(b).
"Purchaser Permit" shall have the meaning specified in
Section 5.3(c).
"Purchaser's Straddle Period" means any portion of a Straddle
Period beginning after the Closing Date.
"Release" means any releasing, spilling, leaking, discharging,
disposing of, pumping, pouring, emitting, emptying, injecting, leaching, dumping
or allowing to escape into the environment (air, surface water, groundwater,
land surface, soil, substrata, sediment or rock) and includes any "release" as
defined in CERCLA.
"Remedial Action" means any action to investigate, clean up,
monitor, abate, transport, remove, treat or in any way address any Hazardous
Substance that is required by
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any Environmental Law, whether or not such action is taken pursuant or in
response to any Agency Action or third party claim.
"Schedules" means the disclosure schedules delivered by CBS to
Purchaser in connection herewith.
"Seller Ancillary Documents" shall have the meaning specified
in Section 4.1(b).
"Sellers" means, collectively, CBS and the Selling
Subsidiaries.
"Sellers' Straddle Period" means any portion of a Straddle
Period ending on the Closing Date.
"Selling Subsidiary" means each of the Subsidiaries of CBS
listed in Schedule 1.1(e) and each other Subsidiary of CBS that has 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
(unless retained by Sellers pursuant to Section 5.17).
"Settlement Agreements" means all Steam Generator Settlement
Agreements and all settlement agreements existing on the date hereof or entered
into prior to the Closing Date with respect to steam generators, uranium or the
matters specified in Schedule 1.1(f).
"Settlement Support Agreements" shall have the meaning
specified in Annex S.
"Shared Technology Agreement" shall have the meaning specified
in Section 5.9.
"Siemens" shall have the meaning specified in the recitals.
"Significant Real Property" means (i) any Owned Real Property
having improvements thereon in excess of 75,000 square feet, (ii) any Leased
Real Property of more than 25,000 square feet and (iii) any Owned or Leased Real
Property that is 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.
"Sold Subsidiary" means any Subsidiary of CBS listed in
Schedule 1.1(g) under the caption "Sold Subsidiary."
"Specified Steam Generator Liabilities" shall have the meaning
specified in Annex S.
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"Statement of Net Assets" shall have the meaning specified in
Section 2.5.
"Statement of Working Capital" shall have the meaning
specified in Section 2.5(a).
"STC" shall have the meaning specified in Section 5.22.
"STC Employee" shall have the meaning specified in
Section 5.22.
"Steam Generator Liabilities" shall have the meaning specified
in Annex S.
"Steam Generator Settlement Agreements" shall have the meaning
specified in Annex S.
"Straddle Period" means any taxable period including, but not
ending on, the Closing Date.
"Subsidiary" means, as to any Person another Person of which
an amount of the voting securities, other voting ownership or voting partnership
interests 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) is owned directly or indirectly by such Person.
"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.
"Surplus Property" means all real property owned, leased or
occupied by any Seller or Sold Subsidiary that is not listed in Schedule 1.1(b)
or 1.1(c) or that is entirely or substantially vacant, "mothballed" or held
principally for remediation or other risk management purposes; provided, that
the property located at Pensacola, Florida shall not be deemed a Surplus
Property.
"Tax Return" means any return, report, form, supplementary or
supporting schedules or other information filed with any taxing authority with
respect to Taxes.
"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,
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franchise, capital gains, transfer, excise, property, use, intangibles, sales,
value added, payroll, employment, social security, withholding, capital and
other taxes, all capital duties and all stamp duties, and including all
interest, fines and penalties imposed with respect to such amounts, and "Tax"
and "Taxation" shall have correlative meanings.
"Technology" means all trade secrets, inventions, invention
disclosures under evaluation, know-how, formulae, processes, procedures,
research records, records of inventions, test information, market surveys and
marketing know-how, unregistered copyrights and software including source and
object code, and related documentation, supporting database information and
modification and enhancements thereof owned by any Seller or any Sold Subsidiary
that relate primarily to the Business.
"Transfer Taxes" shall have the meaning specified in
Section 5.14.
"Transitional Services Agreement" shall have the meaning
specified in Section 5.20(a).
"U.S.-Controlled Entity" shall have the meaning specified in
Section 4.2(d).
"U.S. Sold Subsidiary" means any Sold Subsidiary incorporated
in the United States.
"WARN Act" means the Worker Adjustment and Retraining
Notification Act, as amended.
"WELCO" means the Westinghouse Electric Company Division of
CBS, which comprises certain businesses of CBS, including the GESCO Businesses,
the Energy Systems Business and the Process Control Business.
"Year 2000 Compliance" shall have the meaning specified in
Section 4.1(t)(ii).
"Year 2000 Plan" shall have the meaning specified in
Section 4.1(t)(i).
SECTION 1.2. OTHER TERMS. Other terms may be defined elsewhere
in the text of this Agreement or Annex S hereto 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.
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(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.
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, CBS agrees to sell, assign,
transfer, convey and deliver to Purchaser all of CBS'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 held
by it, 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; provided, that the
transfer of the stock of each U.S. Sold Subsidiary shall be effected pursuant to
a forward taxable merger of each U.S. Sold Subsidiary with and into a Purchaser
Affiliate.
SECTION 2.2. ACQUIRED ASSETS AND EXCLUDED ASSETS.
(a) ACQUIRED ASSETS. The term "Acquired Assets" means all the
business, properties, assets, goodwill and rights of Sellers of whatever kind
and nature, real or personal, tangible or intangible, and wherever located,
other than the Excluded Assets, primarily used or held for use in, or primarily
relating to or arising out of the conduct of, the Energy Systems Business and
the operation of the Premises, including all Intellectual Property and
Technology of the Energy Systems Business, whether or not reflected on the books
and records of the Sellers or the Schedules hereto, 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 parcels of Owned Real Property listed in Schedule
1.1(c) (and all easements and rights of way appurtenant thereto) owned
by any of the Sellers, all rights of the Sellers as lessee to the
parcels of Leased Real Property listed in Schedule 1.1(b) and the
leasehold interest in the Waltz Mill Service Center as provided in
Section 5.31;
(ii) all Inventory that is located on the Premises and all
other Inventory, including Inventory in transit;
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(iii) all Fixtures and Equipment;
(iv) all Accounts Receivable of the Sellers 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;
(v) [intentionally omitted];
(vi) subject to Section 2.2(c) and to the licenses to be
granted pursuant to Section 5.9(a), all Intellectual Property and
Technology;
(vii) subject to Section 2.2(c), all Permits;
(viii) subject to Section 2.2(c), all Contracts, including all
Government Contracts;
(ix) subject to Section 2.2(c), all bids, quotations and
proposals for Contracts, including all Government 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 and including
historical proposals, historical records of indirect costs, Cost
Accounting Standards submissions and current and historical forward
pricing policies;
(x) all Investments;
(xi) all books of account, general, financial, accounting and
personnel records, policies and procedures, files, invoices, customers'
and suppliers' lists and other data, both current and historical, owned
by Sellers on the Closing Date and used or held for use primarily by,
in or for the Business, including those which are located in Sellers'
storage facilities, 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 of the Sellers to the extent relating to the Business or any
of the Assumed Liabilities or the Acquired Assets;
(xiii) all prepaid expenses of the Sellers, to the extent
relating to the Business;
(xiv) all motor vehicles owned by the Sellers and all rights
of the Sellers as
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lessee to any leased motor vehicles, in each case that are 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, audits
and assessments and other plans and studies of any kind if existing and
in the possession or subject to the control of or used by any Seller
relating to the Business;
(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
Acquired Assets, the Assumed Liabilities or the property, machinery or
equipment owned by Sellers or any Sold Subsidiary and used in the
conduct of the Business;
(xviii) subject to Section 5.24, (A) all rights to insurance
proceeds receivable after the Closing in respect of any Assumed
Liabilities (x) that reduced both the Target Amount and the Closing
Date Working Capital or (y) that did not reduce Closing Date Working
Capital, in each case insured on a "claims made" basis, or, in the case
of workers' compensation losses, on an "occurrence" basis, and (B) all
insurance proceeds received subsequent to December 31, 1997 and prior
to the Closing, and all rights to insurance proceeds receivable after
the Closing, in each case in respect of any loss or casualty occurring
subsequent to December 31, 1997 and prior to the Closing 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 (except to the
extent any such proceeds have been used to repair or replace fixed
assets);
(xix) all proceeds, net of any cost of disposition (including
Taxes), 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 (except to
the extent any such proceeds have been used to repair or replace fixed
assets);
(xx) all transferable telephone exchange numbers used by the
Sellers in the Business;
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(xxi) the Settlement Support Agreements and all Settlement
Agreements and the rights of Sellers thereunder;
(xxii) the assets of and the leasehold interest in STC, in
each case as described in Section 5.22, but only to the extent provided
in or contemplated by the arrangements described in Section 5.22;
(xxiii) all assets described in Schedule 2.2(a), whether or
not related to the Business; and
(xxiv) all (A) Tax Returns, Tax records, and Tax work papers
of the Foreign Sold Subsidiaries, (B) copies of Tax Returns, Tax
records and Tax work papers of the U.S. Sold Subsidiaries (other than
Income Tax Returns and the records and work papers relative thereto and
other than Tax Returns that include businesses other than the
Business), and (C) copies of separate company Income Tax Returns,
Income Tax records, and Income Tax work papers of the U.S. Sold
Subsidiaries, provided that, in the case of the U.S. Sold Subsidiaries,
such Tax Returns, Tax records, Tax work papers, Income Tax Returns,
Income Tax records, and Income Tax work papers shall be for the six
calendar years preceding the Closing Date or, if longer, the taxable
periods for which the applicable statute of limitations has not yet
run.
(b) EXCLUDED ASSETS. The term "Excluded Assets" means:
(i) all cash on hand or in banks and all cash equivalents, on
the books of the Business immediately prior to the Closing, except any
cash or cash equivalents (A) described in Section 2.2(a)(xv)(B),
(xviii) or (xix), (B) constituting security deposits deposited with or
paid to any Sold Subsidiary pursuant to any Contract or (C) required to
be held on hand or in banks pursuant to Contracts, including joint
venture Contracts;
(ii) all rights of Sellers under this Agreement and the
agreements, instruments and certificates executed 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, to the
extent related to the Business, included in Acquired Assets);
(iv) except as provided in Section 2.2(a)(xviii), all rights
of Sellers under insurance policies;
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(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 Contracts and insurance policies
relating thereto;
(vi) all rights to claims, available to or being pursued by
Sellers or any Sold Subsidiary, for refunds of or credits against Taxes
(including all investment tax credits, research credits and credits for
prepayments of Income Taxes) attributable to the Business for
Pre-Closing Tax Periods and Sellers' Straddle Periods, but only to the
extent of Taxes that are Excluded Liabilities; provided that Purchaser
shall have no obligation for, and shall be indemnified by CBS against
(without regard to Article 8 hereof), any expenses or Taxes incurred in
connection therewith and that Purchaser shall have the right, solely
for its own account and the accounts of its Affiliates, to make claims
for refunds of or credits against Income Taxes of the Foreign Sold
Subsidiaries attributable to carry backs of items of income, credit,
loss, or deduction from any taxable period beginning after the Closing
Date to any taxable period including or ending prior to the Closing
Date to the extent Taxes remain payable after all CBS tax benefits have
been taken into account;
(vii) any consolidated, combined or unitary 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 (other than the Intellectual Property and
Technology of the Business relating to Nuclear Installations) used
primarily in the Power Generation Business, the Process Control
Business or the GESCO Businesses and any other retained business of CBS
(including the business of CBS itself);
(ix) subject to the license to be granted pursuant to Section
5.9(b), all right, title or interest in or to (i) the names and marks
"Westinghouse Electric Corporation," "Westinghouse Electric Company,"
"WESTINGHOUSE," "WELCO," "CIRCLE W" (in logo type design or any other
style or design), and (ii) "129.228.x.x Class B internet address range"
and the westinghouse.com, wec.com and westinghouseelectric.com domain
names, and any name or mark derived from or including any of the
foregoing;
(x) all Surplus Property owned by any of the Sellers or the
Sold Subsidiaries;
(xi) 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
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Subsidiaries to CBS, to other Subsidiaries of CBS or to third parties
designated by CBS, including the purchaser of the Power Generation
Business, the Process Control Business or the GESCO Businesses, in the
manner provided by Section 5.16;
(xii) all insurance policies of Sellers, including those
described in Schedule 4.1(i), and all insurance proceeds received prior
to the Closing, or rights to insurance proceeds receivable after the
Closing, in each case in respect of any Assumed Liability recognized on
the Statement of Working Capital (except to the extent the right to
receive such proceeds is reflected on the Statement of Working
Capital);
(xiii) all assets, including facilities, equipment,
intellectual property and technology, that are subject to the
provisions of (A) the Transitional Services Agreement and other
arrangements described in Section 5.20 or (B) the licenses described in
Sections 5.9(a)(ii) or 5.9(b);
(xiv) CBS's Gateway Center corporate headquarters located in
Pittsburgh, Pennsylvania, the Shared Service Center located in
Churchill, Pennsylvania, the Information Technology shared service
operations located in Monroeville, Pennsylvania and, subject to the
Transitional Services Agreement and the arrangements contemplated by
Section 5.20(b), all assets used in connection with or relating to
CBS'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;
(xv) except to the extent provided in or contemplated by the
arrangements described in Section 5.22, the assets of STC; and
(xvi) 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 Section 5.4),
this Agreement shall not operate to assign, and there shall not be included in
the Acquired Assets, 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 (except for
consents already received), would constitute a breach, default or other
contravention thereof or a violation of Law (it being understood that the
failure to obtain such consents shall not reduce the Purchase Price or, except
as provided in Section 6.1(d), relieve either party from its obligation to
consummate at the Closing the transactions contemplated by this Agreement). To
the extent that this Section 2.2(c) operates to exclude from the Acquired Assets
any such Intellectual Property, Technology, Permit or Contract or any claim,
right or benefit arising thereunder or resulting therefrom, the definition of
"Business" in the recitals hereto shall be modified to exclude such assets and
the business, goodwill and rights related thereto until such consents are
received, and provided that such assets shall be included in the definition of
"Business" to the extent that the benefits thereof inure to Purchaser pursuant
to Section 5.4.
(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,
service marks, service mark registrations, trade names, trade name
registrations, slogans, corporate names, corporate nicknames or initialisms,
registered copyrights, domain names, domain name registrations, trade secrets,
inventions, know-how, formulae, processes, procedures, research records, records
of inventions, test information, market surveys and marketing know-how,
unregistered copyrights and software, including source and object code and
related documentation, supporting database information and modifications and
enhancements thereof owned by Sellers shall terminate at the Closing, except to
the extent included in the Acquired Assets, Intellectual Property, Technology or
Contracts and except as otherwise contemplated by Sections 5.9(a) and 5.9(b).
SECTION 2.3. ASSUMPTION OF LIABILITIES.
(a) ASSUMED LIABILITIES. Upon the terms and subject to the
conditions of this Agreement and notwithstanding anything to the contrary in any
Novation Agreement, Purchaser hereby agrees to assume, effective as of the
Closing, and agrees to pay, perform and discharge when due all Liabilities of
Sellers (except Excluded Liabilities) only to the extent arising out of,
relating to or otherwise incurred 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"), including (except Excluded
Liabilities):
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(i) all Liabilities of Sellers under Contracts, including all
Government Contracts and any related guarantees and Novation Agreements
and the Contracts set forth in Schedule 2.3(a)(i) or any other Schedule
hereto;
(ii) all accounts payable owed by Sellers arising out of
operations of the Business or otherwise incurred in respect of the
Business;
(iii) all Liabilities in respect of any and all products sold
or licensed, services rendered or technology or intellectual property
provided or licensed by the Business, including Liabilities for
refunds, adjustments, allowances, repairs, exchanges, returns and
warranty, merchantability and product liability and other claims;
(iv) all Liabilities (other than Environmental Liabilities and
Decontamination and Decommissioning Liabilities) arising as a result of
being the owner or occupant of, or the operator of the activities
conducted at, (A) the Premises or (B) any other real property owned,
leased or operated at any time by any of Sellers and used or held for
use primarily in the Business, including (in the case of clause (A)
only) all Liabilities relating to personal injury and property damage;
(v) all Business-Related 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 or (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;
(vi) all Decontamination and Decommissioning Liabilities,
except for such Liabilities incurred with respect to STC;
(vii) all Assumed Off-Site Disposal Liabilities;
(viii) all Liabilities relating to the employment or
termination of employment of any employee or Former Employee of the
Business or an STC Employee, other than as described in Section
2.3(a)(ix);
(ix) all Liabilities, with respect to an STC Employee or
employees or Former Employees of the Business, arising under or in
connection with any Benefit Plan, other than those Liabilities retained
by CBS pursuant to Section 5.5;
(x) all Liabilities for Taxes (other than Taxes described in
Sections 2.3(b)(ii) and (iii)) attributable to the Business for all
taxable periods;
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(xi) 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 those that are set forth in
Schedules 4.1(e), 4.1(m)(ii) and 4.1(q), except as specifically
excluded in Sections 2.3(b)(v) and 2.3(b)(ix), but, in the case of
employment-related matters involving employees of the other businesses
of CBS, only to the extent they relate to employees or Former Employees
of the Business or to STC Employees;
(xii) all Liabilities of Sellers or any Sold Subsidiary with
respect to any guarantees (including guarantees of performance
(including of performance by Purchaser or its Affiliates) under
Contracts), assumption of obligations, letters of credit or other
similar arrangements established in connection with and in support of
the purposes of the Business, including surety and performance bonds,
and foreign exchange contracts;
(xiii) all Steam Generator Liabilities;
(xiv) all Liabilities arising out of, relating to or otherwise
incurred in respect of the Settlement Agreements (other than the Steam
Generator Settlement Agreements) and any Liabilities, arising out of,
relating to or otherwise in any way in respect of uranium or the
matters set forth in Schedule 1.1(f);
(xv) all Liabilities relating to or associated with STC, but
only to the extent provided in or contemplated by the arrangements
described in Section 5.22;
(xvi) all Liabilities of Sellers or any Sold Subsidiary with
respect to the abatement of asbestos or asbestos-containing products
present at the Premises or claims with respect to exposure after the
Closing Date to asbestos or asbestos-containing products at the
Premises;
(xvii) all Indebtedness reflected on the Statement of Net
Assets; and
(xviii) all Liabilities described in Schedule 2.3(a)(xviii),
whether or not related to the Business.
(b) EXCLUDED LIABILITIES. The term "Excluded Liabilities"
means:
(i) except as set forth in Schedule 2.3(b), any Liability of
Sellers to the extent related to the Excluded Assets;
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(ii) any Liability of Sellers or any Sold Subsidiary for
Income Taxes attributable to the Business or the Sold Subsidiaries or
for Taxes other than Income Taxes of the Sold Subsidiaries to the
extent not related to the Business for Pre-Closing Tax Periods or
Sellers' Straddle 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) Income Taxes resulting from the sale and
transfer from any Seller to Purchaser of the Acquired Assets, but
Excluded Liabilities shall not include any Taxes for Post-Closing Tax
Periods or for Purchaser's Straddle Periods;
(iii) any Liability attributable to the Business for
Pre-Closing Tax Periods or Sellers' Straddle Periods for (A)
Monroeville, Pennsylvania business privilege Taxes, (B) any Taxes
attributable to the reclassification for federal Tax purposes of any
individual from independent contractor status to employee status, and
(C) any Taxes (other than Income Taxes) attributable to the
organization, operations, business or activities of Foreign Sold
Subsidiaries in excess of the sum of (i) $1,500,000, (ii) the aggregate
amount reflected on the Statement of Working Capital for such Foreign
Taxes (other than Income Taxes), and (iii) the lesser of (x) the
aggregate non-current liability reflected on the Balance Sheet for such
Foreign Taxes (other than Income Taxes), or (y) the aggregate
non-current liability reflected on the Statement of Net Assets for such
Foreign Taxes (other than Income Taxes);
(iv) any Environmental Liabilities of Sellers or any Sold
Subsidiary (other than those Business-Related Environmental Liabilities
designated as Assumed Liabilities pursuant to Section 2.3(a)(v)),
including any that relate to Surplus Property or any other real
property owned, leased or occupied at any time by any Seller or Sold
Subsidiary and not included in the Premises; any Environmental
Liabilities of Sellers or any Sold Subsidiary relating to PCB
contamination other than at the Premises; and any Environmental
Liabilities of Sellers or any Sold Subsidiary relating to any
generation, handling, transportation, treatment, storage or disposal of
any Hazardous Substance at any location other than the Premises, other
than the Assumed Off-Site Disposal Liabilities;
(v) 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;
(vi) any Liabilities relating to the capital stock of any
Seller or any shareholders' agreements to which any Seller is party
(except for agreements relating to the equity interests of any of the
Sold Subsidiaries);
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(vii) any Liabilities relating to amounts required to be paid
by CBS pursuant to Section 2.5;
(viii) except for any Liabilities reflected on the Statement
of Working Capital and Liabilities contemplated by the agreements and
arrangements referred to in Sections 5.20 and 5.21, any Liabilities
owed to any Seller or any Affiliate of any Seller;
(ix) 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 criminal violation of Law occurring prior to the Closing;
(x) any Liabilities arising out of or in respect of (A) any
Subsidiary of CBS sold or otherwise divested prior to the Closing, or
(B) any business or business unit of CBS or any of its Subsidiaries
sold or otherwise divested prior to Closing;
(xi) any Liabilities with respect to Benefit Plans to be
retained by CBS pursuant to Section 5.5;
(xii) all Liabilities of Sellers or any Sold Subsidiary with
respect to death or personal injury actually or allegedly caused
directly or indirectly by asbestos or asbestos compounds or products or
any Liabilities relating to asbestos or asbestos compounds or products
which are not Assumed Liabilities covered by Section 2.3(a)(xvi);
(xiii) except to the extent provided in Section 5.5 or 5.22,
all Liabilities relating to or associated with STC;
(xiv) subject to Section 5.10(a), any Liability of Sellers or
any Sold Subsidiaries for patent infringement claims asserted in the
name of Jerome H. Lemelson alone or as co-inventor or the Lemelson
Medical, Education and Research Foundation Limited Partnership or its
successors or assigns with respect to any of Sellers' businesses,
including the Business, and for trademark or trade name infringement
claims asserted in any way, including by way of declaratory judgment
action, opposition proceeding, or infringement suit involving White
Consolidated Industries, Inc.;
(xv) Sellers' and Sold Subsidiaries' liabilities for
outstanding checks issued on or before the Closing Date which (x) are
drawn on bank accounts that are Excluded Assets and (y) have reduced
Assumed Liabilities as of the Closing; and
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(xvi) any other Liabilities not assumed by Purchaser pursuant
to the provisions of Section 2.3(a).
Except for Assumed Liabilities, neither Purchaser nor any of
its Affiliates is assuming, or in any other way becoming responsible for the
payment or performance of, any Liabilities of any of the Sellers, whether known
or unknown, accrued, absolute, contingent, changing, determinable,
indeterminable, liquidated, unliquidated or otherwise and whether due or to
become due or relating to any existing or prior act, omission, condition or
state of facts.
SECTION 2.4. PURCHASE PRICE. Subject to Section 2.5 and
Section 3(a)(iii)(B)(1) of Annex S, the purchase price for the Acquired Assets
(the "Purchase Price") shall consist of the assumption by Purchaser and its
Affiliates of the Assumed Liabilities.
SECTION 2.5. PURCHASE PRICE ADJUSTMENT.
(a) Within 90 days after the Closing Date, CBS shall at its
expense prepare and deliver to Purchaser a statement of Working Capital (the
"Statement of Working Capital") and a statement of Net Assets (the "Statement of
Net Assets") as of the close of business on the Closing Date setting forth
Working Capital (as defined below), and Net Assets (as defined below),
respectively, together with separate special-purpose reports of CBS's
independent auditors to the effect that the Statement of Working Capital and the
Statement of Net Assets have been prepared and audited in compliance with the
requirements of this Section 2.5. The Statement of Working Capital and Statement
of Net Assets are collectively the "Statements."
During the 60-day period following Purchaser's receipt of the
Statements, Purchaser and its independent auditors shall be permitted to review
and make copies reasonably required of the working papers of CBS and its
independent auditors relating to the Statements and shall have reasonable access
to CBS representatives and its independent auditors. The Statement of Working
Capital 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 of Working Capital ("Notice of Disagreement") to
CBS prior to such date. Any Notice of Disagreement shall (A) specify in
reasonable detail the nature of any disagreement so asserted, (B) only include
disagreements based on mathematical errors or based on Working Capital not being
calculated in accordance with this Section 2.5, (C) only include disagreements
based on the Statement of Working Capital, (D) be accompanied by a signed
written confirmation by Purchaser that it has complied with the covenants set
forth in Section 2.5(e), and (E) if Purchaser's independent auditors are engaged
by Purchaser in connection with the preparation of the Notice of Disagreement,
be accompanied by a written confirmation of Purchaser's independent auditors
that they concur with each of the positions taken by
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Purchaser in the Notice of Disagreement. If a Notice of Disagreement complying
with the preceding sentence is received by CBS in the period specified, then the
Statement of Working Capital (as revised in accordance with clause (I) and (II)
below) shall become final and binding upon the parties on the earlier of (I) the
date CBS 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 (as
defined below).
During the 60-day period following the delivery of a Notice of
Disagreement that complies with the preceding paragraph, CBS 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, CBS and its independent auditors shall be permitted to review and make
copies reasonably required of the working papers of Purchaser and shall have
reasonable access to its representatives and its independent auditors, including
their working papers and make copies reasonably required relating to the
preparation of the Notice of Disagreement. If, at the end of such 60-day period,
CBS and Purchaser have not so resolved such differences, CBS and Purchaser shall
submit to an independent accounting firm (the "Accounting Firm") mutually
acceptable to the parties for review and resolution any and all matters which
remain in dispute and which were properly included in the Notice of
Disagreement. CBS 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. CBS 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 CBS 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 CBS's
independent auditors incurred in connection with the issuance of their
special-purpose reportS relating to the Statements and review of any Notice of
Disagreement shall be borne by CBS, and the fees and expenses of Purchaser's
independent auditors incurred in connection with their review of the Statements
shall be borne by Purchaser.
(b) The Purchase Price shall be increased by the amount by
which Working Capital exceeds the Target Amount (as defined below), and the
Purchase Price shall be decreased by the amount by which Working Capital is less
than the Target Amount (the Purchase Price as so increased or decreased shall
hereinafter be referred to as the "Adjusted Purchase Price"). The Target Amount
shall be $14,600,000. If the Purchase Price is less than the Adjusted Purchase
Price, Purchaser shall, and if the Purchase Price is greater than the
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Adjusted Purchase Price, CBS shall, within 10 business days after the Statement
of Working Capital 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
of Working Capital delivered by CBS 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 Working Capital 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 to the lesser of
(i) the amount payable by that party pursuant to the calculation reflected in
the Statement of Working Capital 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 "Working Capital" shall mean Total Current Assets
minus Total Current liabilities (in each case as defined below). The Target
Amount equals Working Capital at December 31, 1997, including a proforma
adjustment for certain restructuring actions. The terms "Total Current Assets"
and "Total Current liabilities" shall mean the total current assets and total
current liabilities, respectively, of the Business (including amounts related to
the nuclear instrumentation and control business), determined in accordance with
GAAP (it being understood that (i) all Excluded Assets, (ii) all Excluded
Liabilities, (iii) all pension, postretirement, and postemployment (excluding
restructuring actions) benefit liabilities, (iv) all warranty liabilities for
(x) RCCA (control rods), (y) fuel element structural corrosion or (z) rod
internal pressure, (v) deferred Income Taxes, (vi) all Steam Generator
Liabilities, (vii) insurance proceeds receivable classified as a current asset
as of the Closing Date related to the loss of any asset for which as of such
date a replacement has not been placed in service and (x) is of a type permitted
or required by GAAP to be recognized as a fixed asset on the books of the
business as of the Balance Sheet date and (y) but for the loss prior to the
Closing would be an Acquired Asset, and (viii) any current assets and current
liabilities of STC, shall be excluded in determining Total Current Assets and
Total Current liabilities), using the same methodologies, practices (including
GAAP as in effect as of December 31, 1997), accounting applications and
assumptions (including discount rates and actuarial assumptions), policies,
valuations and estimation methodologies and judgments (including those relating
to balance sheet classification) as used in determining the Target Amount as set
forth in Schedule 2.5(a).
In calculating Working Capital or Net Assets, as the case may
be, no changes will be made in any valuation allowances, including but not
limited to contract estimates at
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completion, any inventory or accounts receivable valuation allowances, any
product warranty liabilities, environmental liabilities, including
decommissioning and decontamination liabilities, workers compensation
liabilities, government rate and cost disallowance liabilities, or Steam
Generator Liabilities 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) occurring
between December 31, 1997 and the Closing Date. The parties agree that the
adjustment contemplated by this Section 2.5 is intended to show the change in
Working Capital from the Target Amount and that such change may only be measured
if the calculation is done in accordance with the preceding sentence and using
the same methodologies, practices (including GAAP as in effect as of December
31, 1997), accounting applications and assumptions (including discount rates and
actuarial assumptions), policies, valuations and estimation methodologies and
judgments (including those relating to balance sheet classification) as used in
determining the Target Amount. The scope of the disputes to be resolved by the
Accounting Firm is limited to whether the Statement of Working Capital
calculations were done in accordance with the foregoing provisions of this
Section 2.5 and whether there were mathematical errors in the Statement of
Working Capital.
(d) The term "Net Assets" shall mean Total Assets minus Total
liabilities (in each case as defined below). The terms "Total Assets" and "Total
liabilities" shall mean the total assets and total liabilities, respectively, of
the Business (including amounts related to the nuclear instrumentation and
control business), determined in accordance with GAAP (it being understood that
(i) all Excluded Assets, (ii) all Excluded Liabilities, (iii) all pension,
postretirement, and postemployment (excluding restructuring actions) benefit
liabilities, and (iv) deferred Income Taxes shall be excluded in determining
Total Assets and Total liabilities), using the same methodologies, practices
(including GAAP as in effect as of December 31, 1997), accounting applications
and assumptions (including discount rates and actuarial assumptions), policies,
valuations and estimation methodologies and judgments (including those relating
to balance sheet classification) as used in determining the Balance Sheet.
(e) Without limiting anything contained in this Section 2.5,
no decision announced or event initiated by Purchaser prior to Closing with
respect to matters to take effect on or after the Closing Date shall be taken
into account in determining Closing Working Capital or Closing Net Assets.
Purchaser further agrees that following the Closing, it shall not take any
actions which would affect preparation and audit of the Statements with respect
to the accounting books and records of the Business on which the Statements 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 Statements,
including providing customary certifications, including management
representation letters, to CBS's independent auditors.
(f) During the period of time from and after the Closing Date through
the
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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 CBS and
any accountants, counsel or financial advisers retained by CBS in connection
with any adjustment to the Purchase Price contemplated by this Section 2.5
on-site access reasonably required at all reasonable times to all personnel,
properties, books, contracts, records, schedules, analyses and working papers of
the Business.
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 CBS that is not earlier than two (2)
days and not later than ten (10) days following the satisfaction or waiver of
the conditions to the Closing set forth in Sections 6.1(a) and 6.1(d), 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, and the Closing shall be deemed to take
place at 10:00 a.m. on such date.
SECTION 3.2. TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At
the Closing:
(a) DELIVERIES BY SELLERS. CBS shall deliver (and cause any
Selling Subsidiaries to deliver) to Purchaser such appropriately executed deeds,
bills of sale, assignments, certificates or agreements of merger (with respect
to the U.S. Sold Subsidiaries) and other instruments of transfer providing for
the sale, assignment, transfer, conveyance and delivery of the Acquired Assets
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 (together with, to the extent
obtained pursuant to Section 5.26, waivers of any claim such director may have
against the Purchaser or the Sold Subsidiaries) if requested by Purchaser at
least 10 days prior to Closing; and
(b) DELIVERIES BY PURCHASER. Purchaser shall deliver to CBS
(or, at CBS's direction, one or more Selling Subsidiaries) (i) by wire transfer
at the Closing, to an account or accounts designated in writing by CBS prior to
the Closing, of immediately available funds in an amount equal to the aggregate
of all amounts, if any, required to be paid by Purchaser to CBS pursuant to
Section 3(a)(iii)(B) of Annex S, (ii) certificates or agreements of merger (with
respect to the U.S. Sold Subsidiaries) and (iii) such appropriately executed
assumption agreements and other instruments of assumption providing for the
assumption of the Assumed
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Liabilities in form and substance reasonably satisfactory to CBS and its counsel
(it being understood that any such instrument in clause (ii) or (iii) 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 Foreign Sold Subsidiaries as to which directors
or other nominees of CBS 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"), CBS 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 CBS. CBS hereby
represents and warrants to Purchaser as follows:
(a) ORGANIZATION, STANDING AND POWER. CBS 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, has the requisite corporate power and authority to own its assets
and to carry on its business as now being conducted and is duly qualified to do
business in each jurisdiction in which the nature of its business or properties
requires such qualification, except for failures to qualify that, individually
or in the aggregate, would not have a Material Adverse Effect.
(b) AUTHORITY. CBS 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 Seller
Ancillary Documents to which CBS is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of CBS, 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
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the Closing, and do not and will not require the approval of the stockholders of
CBS. This Agreement has been duly executed and delivered by CBS and constitutes,
and each Seller Ancillary Document to be entered into by any of Sellers will be
duly executed and delivered at the Closing and when so executed and delivered
will constitute, a legal, valid and binding obligation of each of the Sellers
party thereto enforceable against it in accordance with its terms, subject to
the Bankruptcy Exception (as defined below). The execution and delivery of this
Agreement by CBS 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 the 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
in Schedule 4.1(b)(i), any Intellectual Property, Technology, contract, lease,
indenture or other agreement of any Seller or Sold Subsidiary 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 have a Material Adverse
Effect or (B) materially impair the ability of CBS 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 Seller Ancillary
Documents or the consummation of the transactions contemplated hereby or
thereby, except as disclosed in Schedule 4.1(b)(ii) 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, (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) compliance with,
and notices and filings under, the regulations of the NRC, including any
application for licenses or license transfers, (viii) 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 (ix) those the failure of which to
obtain or make, individually or in the aggregate, would not (A) reasonably be
expected to have a Material Adverse Effect or (B) materially impair the ability
of CBS to perform its obligations under this Agreement.
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(c) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(i) CBS has previously delivered to Purchaser the audited
combined balance sheet (the "Balance Sheet") and related statements of
income and cash flows of the Business (except as set forth in Schedule
4.1(c)(i)(A)) as of and for the fiscal year ended December 31, 1997,
together with the notes to such financial statements (collectively, the
"Financial Statements"). The Financial Statements have been prepared
from the books and records of CBS and its Subsidiaries relating to the
Business and, except as described in the notes thereto or the
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 the
Business (except as set forth in Schedule 4.1(c)(i)(A)) as at the dates
and for the periods indicated. Schedule 4.1(c)(i)(B) sets forth a
complete and correct reconciliation of the Financial Statements to the
1997 balance sheet and income statement contained in the information
memorandum dated March 1998 provided by CBS to potential purchasers
(the "Memorandum").
(ii) Except (A) as disclosed, reflected or reserved against in
the Balance Sheet and the notes thereto, (B) for items set forth in
Schedules 4.1(c)(ii) and 4.1(e) or any other Schedule hereto, (C) for
Liabilities incurred in the Ordinary Course of Business since the date
of the Balance Sheet that would not reasonably be expected to have a
Material Adverse Effect, (D) for Liabilities incurred in connection
with this Agreement and the transactions contemplated hereby, (E) for
Excluded Liabilities, (F) for Liabilities pursuant to any lawsuit,
action or proceeding and (G) for Income Taxes, as of the date hereof
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 for the Business
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, and
immediately following the Closing will be, 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 May 31, 1998, amounts billed and uncollected by Sellers and
the Sold Subsidiaries in an aggregate amount of $5,000,000 or more.
Schedule 4.1(c)(iii) also sets forth a complete and correct list in all
material respects of all set-offs or claims in respect of accounts
receivable as of such date in an
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amount billed and uncollected with an invoice amount in excess of
$500,000.
(iv) All the Inventory held for use or sale by any Seller or
Sold Subsidiary consists of items that are of a quality and quantity
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.
(v) The order backlog information of the Business at the date
of the Balance Sheet set forth in Schedule 4.1(c)(v) 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.
(vi) The financial projections contained in the Memorandum
were prepared in good faith utilizing assumptions which management of
CBS believed to be reasonable as of the time of such preparation (it
being acknowledged by Purchaser that actual results may vary from such
projections, and that such variances may be material).
(d) COMPLIANCE WITH APPLICABLE LAWS. (i) Except as set forth
in Schedule 4.1(d)(i), Sellers and the Sold Subsidiaries have complied with all
Laws which relate to the Business and the Acquired Assets, except where the
failure to so comply would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in Schedule
4.1(d)(i), since December 31, 1997, neither Sellers nor the Sold Subsidiaries
have (i) received any written notice alleging any non-compliance with any such
Laws which would reasonably be expected to have a Material Adverse Effect or
(ii) received any written notice of any administrative, civil or criminal
investigation or audit by any Governmental Authority relating to the Business
which if adversely determined would reasonably be expected to have a Material
Adverse Effect. None of the Sellers or the Sold Subsidiaries has at any time
since December 31, 1994, (a) made any illegal payments for political
contributions or any bribes, illegal kickback payments or other illegal payments
except for those that are not material or (b) been disqualified, for any reason,
from bidding on any public or private contract or project. This Section 4.1(d)
does not relate to litigation matters (to which Section 4.1(e) is applicable),
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 Sections 4.1(j)(B) and 4.1(n) are applicable) or Tax matters (to which
Section 4.1(o) is applicable).
(ii) Except as set forth in Schedule 4.1(d)(ii), with respect
to the Acquired Assets, all Sellers and Sold Subsidiaries are
currently, and will on the Closing Date be, in material compliance with
the requirements of the Cost Accounting Standards, the Federal
Acquisition Regulations and agency supplements, as applicable.
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(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
to which any of the Sold Subsidiaries is a party or to which any of the Sellers
is a party and which, if still pending on the Closing Date, would be an Assumed
Liability, provided that this Section 4.1(e) shall not require disclosure of any
lawsuit, action or proceeding (i) in which one of the Sellers or the Sold
Subsidiaries is the plaintiff and no counterclaim or cross-claim has been, or is
likely, to be made against any of the Sellers or the Sold Subsidiaries, or (ii)
in which the amount at issue is less than $5,000,000. Except for matters set
forth in Schedule 4.1(e), as of the date hereof, there is no lawsuit, action or
proceeding pending, or, to the knowledge of CBS, threatened, against any of
Sellers or the Sold Subsidiaries seeking to delay or prevent, or otherwise
challenging, the transactions contemplated hereby. Neither Sellers nor the Sold
Subsidiaries are in default in any material respect under any judgment, order,
injunction or decree of any Governmental Authority entered against any of
Sellers or the Sold Subsidiaries and relating to the Business.
(f) TITLE TO ACQUIRED ASSETS; LEASEHOLD INTERESTS.
(i) Sellers have, and will convey and transfer (subject to
Sections 2.2(c) and 5.4) to Purchaser at Closing, good and valid title
to the Acquired Assets, and the Sold Subsidiaries have good and valid
title to all the Subsidiary Assets, in each case free and clear of all
Liens, except Permitted Liens.
(ii) Sellers have and will convey and transfer to Purchaser at
Closing the right to possess and use all the properties held by them
under any lease, and the Sold Subsidiaries have the right to possess
and use all the properties held by them under any lease, in each case
(i) free and clear of all Liens, except Permitted Liens, and (ii)
during the term, and subject to the provisions, of the leases as being
applicable to such properties.
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 and Leased Real
Property (to which Section 4.1(g) is applicable).
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(g) REAL PROPERTY.
(i) Owned Real Property. Schedule 1.1(c) 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 parcel
of 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 good and insurable fee title to all Owned Real Property
owned by it free and clear of all Liens other than (A) Permitted Liens,
(B) easements, covenants, rights-of-way and other encumbrances or
restrictions of record, (C) zoning, building and other similar
restrictions, (D) unrecorded easements, covenants, rights- of-way or
other restrictions, (E) 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) or (E) above, individually or in the
aggregate, materially impair the ability of the Sellers or the Sold
Subsidiaries to use the property for the purposes for which it is
currently being used in connection with the Business and, with respect
to any Significant Real Property, none of which items set forth in
clauses (B), (C), (D) or (E) 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. Except as set forth in Schedule 4.1(g)(i), 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(b) is in all material
respects a true, complete and correct list of all Leased Real Property.
CBS shall provide Purchaser a list of all leases of Leased Real
Property 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 Assets) 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 lease for Significant Real Property: (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(b) or in a manner which would not reasonably be expected to
materially reduce the benefits to Purchaser of the
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transactions contemplated by this Agreement; (B) no notice of a
material default has been sent or received by any Seller or Sold
Subsidiary under such 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 such lease; and (C) the
tenant is in occupancy of the space demised thereunder.
(iii) Significant Real Property. With respect to each
Significant 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) CBS has no knowledge that any condemnation or eminent
domain proceedings are pending with respect to any Significant Real
Property; (B) each Significant 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 Real Property to fulfill
any municipal or governmental requirement or for the furnishing to such
Significant Real Property or any essential building systems or
utilities, other than facilities provided to the Significant Real
Property pursuant to one or more valid easements; and (C) each
Significant Real Property has access to a dedicated, public street,
either by reason of such Significant 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 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 on the Leased Real Property
leased by any of the Sellers or the Sold Subsidiaries under a lease
(each, a "Sublease"). With respect to each 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 the knowledge of CBS, as against the
subtenant, and has not been 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
the knowledge of CBS, 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.
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(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 service marks, service
mark applications, registered copyrights and copyright applications
owned by Sellers that relate primarily to the Business or owned by a
Sold Subsidiary (except as otherwise provided by Section 5.16 and
subject (i) to rights under development contracts under which the
Intellectual Property and Technology may have been generated, (ii) to
the rights of the United States government and (iii) to licenses
granted to third parties) and included in the Acquired Assets or the
Subsidiary Assets and, to the extent indicated on such Schedule, the
Intellectual Property listed in Schedule 4.1(h)(i) 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 the appropriate
offices of other jurisdictions. Except as set forth in Schedule
4.1(h)(ii) and subject (i) to rights under development contracts under
which the Intellectual Property and Technology may have been generated,
(ii) to the rights of the United States government and (iii) to
licenses granted to third parties, a Seller or a Sold Subsidiary is the
sole and exclusive owner of all material Intellectual Property and
material Technology (other than licenses) included in the Acquired
Assets or the Subsidiary Assets, free and clear of any security
interests. Except as set forth in Schedule 4.1(h)(iii), and subject (i)
to rights under development contracts under which the Intellectual
Property and Technology may have been generated, (ii) to the rights of
the United States government and (iii) to licenses granted to third
parties, a Seller or a Sold Subsidiary is the sole and exclusive owner
of all right to sue and keep any damage awards for any past
infringements by third parties of any material Intellectual Property or
Technology (other than licenses). Except as set forth in Schedule
4.1(h)(iv), since January 1, 1997, no Seller or Sold Subsidiary has
received any written notice from any other Person challenging in any
material respect the right of Sellers or the Sold Subsidiaries to use
any of the material Intellectual Property or material Technology
included in the Acquired Assets or the Subsidiary Assets or any rights
thereunder. Sellers have taken measures, consistent with Sellers'
corporate practice, to protect the secrecy, confidentiality and value
of the material Technology included in the Acquired Assets. Except for
the Excluded Assets (other than those described in clause (viii) of the
definition of Excluded Assets) and subject to Section 2.2(c), Seller
does not own any material intellectual property rights that it is not
transferring to Purchaser that are required for Purchaser (together
with the rights of Purchaser under the Purchaser Ancillary Documents,
the Novation Agreements and the Purchaser Permits) to operate the
Business after Closing in the manner in which it presently is operated.
Except as set forth in Schedule 4.1(h)(v), since January 1, 1997, 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 included in the Acquired Assets or the Subsidiary Assets,
which
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claim is still pending. Except as set forth in Schedule 4.1(h)(vi), to
the knowledge of CBS, as of the date of this Agreement, there is no
pending or threatened claim by any third Person of a violation,
infringement, misuse or misappropriation by any Seller or Sold
Subsidiary of any intellectual property or technology owned by any
third Person, or of the invalidity of any patent or registration of a
copyright, trademark, servicemark or trade name included in the
Acquired Assets or the Subsidiary Assets, which if adversely
determined would reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 4.1(h)(vii), there are no
interferences or other contested proceedings, either pending or, to
the knowledge of CBS, 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 material Intellectual Property. The use by Purchaser
and its Affiliates of the names and marks of CBS as permitted under
the licenses described in Section 5.9(b) will not infringe on the
rights of third parties. Except as provided in the immediately
preceding sentence, nothing in this Agreement shall imply an indemnity
for the infringement of third party intellectual property rights not
within the knowledge of CBS.
(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 property and
liability policies or binders, including fire, liability, errors and omissions,
workers' compensation, vehicular and other property and liability insurance held
by or on behalf of Sellers or the Sold Subsidiaries with respect to the Acquired
Assets, the Subsidiary 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 or the Sold Subsidiaries 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 or the Sold
Subsidiaries has received any notice of cancellation or non-renewal of any such
policy or binder.
(j) CONTRACTS. (A) Except for Contracts listed in Schedule
4.1(j)(A), none of Sellers or any of the Sold Subsidiaries is a party to or
bound by any Contract that is (all such Contracts being referred to as "Material
Contracts"):
(i) a Contract for the employment of any Person with an annual
base salary in excess of $100,000;
(ii) a collective bargaining agreement relating to the
Business or other Contract with a labor union;
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(iii) a Contract with (A) CBS or any of its Subsidiaries
(except for any Sold Subsidiaries), other than Contracts in the
Ordinary Course of Business for the purchase or sale of products or
services from or to the Business, or (B) any director or officer of CBS
or any of its Subsidiaries that will not be terminated at or prior to
the Closing that involves expenditures or receipts in excess of $60,000
in any fiscal year;
(iv) other than letters of credit, foreign exchange contracts,
bonds and similar instruments obtained in the Ordinary Course of
Business and intercompany indebtedness owed by any Seller that will not
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 Contract containing 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 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);
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(ix) a Contract (including sales orders) involving the
obligation of Sellers or a Sold Subsidiary to deliver products or
services with an unfilled order balance of more than $2,000,000 (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);
or
(x) a Contract providing for the formation of any joint
venture, long-term alliance, partnership or material teaming agreement
or arrangement;
(xi) a Contract for the sale of any of the assets or
properties of any of the Sellers or the Sold Subsidiaries (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;
(xii) 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;
(xiii) a Contract relating to the acquisition by any Seller or
Sold Subsidiary of any operating business or the capital stock of any
other Person;
(xiv) a Contract made outside the Ordinary Course of Business
relating to any Seller or Sold Subsidiary and involving executory
obligations of any Seller or Sold Subsidiary in an amount in excess of
$1,000,000; and
(xv) a material license or development agreement.
The term "Material Contracts" also includes the 20 largest (measured by unfilled
order balance as of May 31, 1998 and prior to reduction for obligations under
Settlement Agreements) Contracts (including sales orders) involving the
obligation of Sellers or a Sold Subsidiary to deliver products or services. Such
Contracts are listed in Schedule 4.1(j)(A)(xvi). All of the Material Contracts
are (or in the case of the Material Contracts referred to in Schedule
4.1(j)(A)(xvi), were as of May 31, 1998) 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 CBS, 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"). Each of the
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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 CBS, as of the date hereof, no other party to any such Material
Contract is in default in any material respect thereunder, nor does any
condition exist as of the date hereof 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).
(B) With respect to all Government Contracts, none of the
managerial personnel (as such term is defined in the relevant Government
Contract) of the Sellers or any of the Sold Subsidiaries have engaged in any act
of willful misconduct or lack of good faith and none have failed to exercise
prudent business judgment so as to deprive any Seller or Sold Subsidiary of the
right to government reimbursement for Environmental Liabilities to third persons
or to any Governmental Authority either under the Department of Energy
Acquisition Regulations ((A) 48 C.F.R. Section 970.5204-31 (1997), (B) 48 C.F.R.
Section 970.5204-61 (1997), or (C) 48 C.F.R. Section 970.3101-3 (1997)) or under
the insurance, litigation and claims or similar clauses in any Government
Contract. None of such managerial personnel have engaged in any negligent,
unreasonable or other behavior so as to create any Environmental Liability in
connection with the performance of the Government Contracts so as to deprive any
Seller or Sold Subsidiary of the right to government reimbursement for
liabilities to third persons or to any Governmental Authority. For purposes of
this Section 4.1(j)(B), the terms "lack of good faith," "willful misconduct,"
and "prudent business judgment" shall have the meanings provided in 48 C.F.R.
Section 970.5204-31 (1997).
(C) With respect to each of the Government Contracts included
in the Acquired Assets, the Sellers and the Sold Subsidiaries have submitted to
the appropriate Administrative Contracting Officer ("ACO") forward pricing,
provisional indirect cost rate proposals and indirect cost claims on a timely
basis. Final negotiated indirect cost rate agreements closing indirect costs
years have been settled with the ACO through 1992. To the knowledge of CBS,
government audits of open years do not contain questioned costs that would
reasonably be expected to have a Material Adverse Effect. Set forth in Schedule
4.1(j)(C) is a true and correct description of all allegations, presently known
to CBS and made during the period from January 1, 1998 through the date hereof
by Federal agencies, of willful misconduct or fraud as it relates to Federal
contracting activity.
(k) SUFFICIENCY OF ACQUIRED ASSETS. Except as disclosed in
Schedule 4.1(k) and except for the Excluded Assets (other than those described
in clause (viii) of the definition of Excluded Assets), and subject to Section
2.2(c), the Acquired Assets and the Subsidiary Assets on the Closing Date will
comprise all the assets owned by Sellers or the Sold Subsidiaries that, together
with the rights of Purchaser under the Purchaser Ancillary
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Documents, the Novation Agreements and the Purchaser Permits, are necessary for
(i) the conduct of the Business in all material respects as presently conducted
and (ii) the discharge in all material respects of the Assumed Liabilities in
the ordinary course of business consistent with past practice in relation to the
Business.
(l) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Schedules hereto, including Schedule 4.1(l), or as contemplated by this
Agreement, from the date of the Balance Sheet and until the date hereof Sellers
have conducted the Business in all material respects only in the Ordinary Course
of Business. Except as set forth in the Schedules hereto, including Schedule
4.1(l), or as contemplated by this Agreement, 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, from the date of the Balance Sheet there has not been any
Material Adverse Effect.
(m) EMPLOYEE BENEFITS.
(i) Schedule 4.1(m)(i) contains a list of all written Benefit
Plans. Except as noted on Schedule 4.1(m)(i), CBS has made available to
Purchaser true, complete and correct copies of (A) each Benefit Plan,
(B) the most recent annual report on Form 5500 and attached schedules
filed with the Internal Revenue Service with respect to each U.S.
Benefit Plan (if any such report was required), (C) the most recent
summary plan description for each U.S. Benefit Plan for which such a
summary plan description is required, (D) each trust agreement and
group annuity contract or other funding mechanism (other than insurance
contracts) relating to any U.S. Benefit Plan, (E) the most recent
audited financial statements and actuarial valuation reports with
respect to each U.S. Benefit Plan, to the extent available, and (F) the
most recent determination letter with respect to each U.S. Benefit Plan
intended to qualify under Section 401(a) of the Code. Schedule
4.1(m)(i) also separately identifies each Benefit Plan covering only
employees or Former Employees of the Business ("Free Standing Plans").
(ii) Each Benefit Plan has been administered in all material
respects in accordance with its terms and is in compliance in all
material respects with the applicable provisions of ERISA, the Code and
other applicable laws, rules and regulations (including, without
limitation, all applicable foreign laws). Except as set forth in
Schedule 4.1(m)(ii), all material reports, returns and similar
documents with respect to the Benefit Plans required to be filed with
any Governmental Authority or distributed to any Benefit Plan
participant have been duly and timely filed or distributed. Except as
set forth in Schedule 4.1(m)(ii), there are no suits, actions,
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termination proceedings or other proceedings pending, or, to the
knowledge of CBS, threatened against any Benefit Plan that relate to
any Former Employees or employees of the Business who will become
Business Employees and, to the knowledge of CBS and with respect to
such employees, there are no investigations by any Governmental
Authority or other claims (except claims for benefits payable in the
normal operation of the Benefit Plans) pending or threatened against
any Benefit Plan or asserting any rights to benefits under any Benefit
Plan, which in each case is reasonably likely to be adversely
determined and which, if adversely determined, would reasonably be
expected to have an adverse effect on the Business.
(iii) Except as set forth in Schedule 4.1(m)(iii), (A) all
contributions to, and payments from, the Benefit Plans that may have
been required to be made in accordance with the Benefit Plans,
collective bargaining agreements and, when applicable, Section 302 of
ERISA, Section 412 of the Code or applicable foreign laws, have been
timely made, (B) there has been no application for or waiver of the
minimum funding standards imposed by Section 412 of the Code with
respect to any Pension Plan for the benefit of any officers or
employees of the Business employed in the United States ("U.S. Pension
Plans"), and (C) no U.S. Pension Plan has an "accumulated funding
deficiency" within the meaning of Section 412(a) of the Code as of the
most recent plan year, except in each instance as would not reasonably
be expected to have an adverse effect on the Business.
(iv) Except as set forth in Schedule 4.1(m)(iv), all U.S.
Pension Plans have been the subject of determination letters from the
Internal Revenue Service to the effect that such U.S. Pension Plans are
qualified and exempt from Income Taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has
been revoked nor, to the knowledge of CBS, has revocation been
threatened. Except as set forth in Schedule 4.1(m)(iv), to the
knowledge of CBS, (A) each such U.S. Pension Plan which is intended to
be so qualified is so qualified, and (B) nothing has occurred, whether
by action or failure to act, which would cause the loss of such
qualification, except in each instance as would not reasonably be
expected to have an adverse effect on the Business.
(v) Except as set forth in Schedule 4.1(m)(v), no "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA) has occurred that involves the assets of any Benefit Plan and
that is reasonably likely to subject any Sold Subsidiary or any
employees of the Business to the tax or penalty on prohibited
transactions imposed by Section 4975 of ERISA or the sanctions imposed
under Title I of ERISA. Except as set forth in Schedule 4.1(m)(v), none
of the U.S. Pension Plans has been terminated nor have there been any
"reportable events" (as defined in Section 4043 of ERISA and the
regulations thereunder) with respect thereto and no event or
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condition exists (other than reportable events triggered solely by
pending sales, dispositions and spin-offs by CBS of Subsidiaries,
divisions and businesses, including the sale contemplated by this
Agreement) which is likely to be deemed such a reportable event.
(vi) With respect to any U.S. Pension Plan subject to Title IV
of ERISA, CBS and its Affiliates have not incurred any Liability to the
Pension Benefit Guaranty Corporation, other than for payment of
premiums, all of which have been paid when due, and other than any
Liabilities that, individually or in the aggregate, would not be
reasonably expected to have an adverse effect on the Business.
(vii) Except as set forth in Schedule 4.1(m)(vii), as of the
most recent valuation date for each U.S. Pension Plan that is a defined
benefit pension plan, there was not any amount of "unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) under such
U.S. Pension Plan.
(viii) Except as set forth in Schedule 4.1(m)(viii), at no
time within the five years preceding the Closing Date has CBS or any of
its Affiliates (including any of the Sold Subsidiaries) had any
liability (including, without limitation, any withdrawal liability)
with respect to, or been required to contribute to, any "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) for the benefit of
any officers or employees of the Sold Subsidiaries or incurred any
withdrawal liability, within the meaning of Section 4201 of ERISA, with
respect to any such multiemployer plan, which liability has not been
fully paid as of the date hereof, or announced an intention to
withdraw, but not yet completed such withdrawal, from any such
multiemployer plan.
(ix) Except as set forth in Schedule 4.1(m)(ix), no Former
Employee or employee of the Business will become entitled to any
material bonus, retirement, severance, job security or similar benefit
or any materially enhanced benefit or the acceleration of payment of
any material benefit contingent on the transactions contemplated hereby
that, following the consummation of the transactions contemplated
hereby, will be an obligation of (i) Purchaser or its Subsidiaries
(including the Sold Subsidiaries) or (ii) CBS or its Affiliates.
(x) No amount payable to any Business Employee in connection
with the transactions contemplated by this Agreement will fail to be
deductible by a Sold Subsidiary by reason of Code Section 280G.
(xi) Except as disclosed in Schedule 4.1(m)(xi), since
December 31, 1996, there have been no Benefit Plan amendments which
have resulted in a material increase in liabilities of the Business.
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(xii) Except as identified in Schedule 4.1(m)(xii), CBS and
its Affiliates and the Benefit Plans are in material compliance with
the requirements of Sections 4980B and 9801 et seq. of the Code and
Sections 601 et seq. and 701 et seq. of ERISA.
(xiii) Except as identified in Schedule 4.1(m)(xiii) or as
otherwise set forth on the statutory accounts of Sellers or Sold
Subsidiaries, and except for statutory benefits with respect to which
the Sold Subsidiaries are, and have been, in material compliance, there
is no significant underfunding of Foreign Benefit Plans.
(n) ENVIRONMENTAL MATTERS. Except as disclosed in
Schedule 4.1(n):
(i) For the purposes of this Section 4.1(n), "material" means
any Loss which individually or in the aggregate with respect to the
same set of facts, exceeds $5,000,000 and is not reimbursable by a
Governmental Authority, and "Sellers" and "Sold Subsidiaries" include
their directors, officers, agents, employees, representatives,
consultants and shareholders;
(ii) Sellers and Sold Subsidiaries are in compliance in all
material respects with all Environmental Laws governing the operations
of the Business and the Acquired Assets, except where such failure to
comply has not resulted and will not result in an Agency Action in
respect of which the failure to comply would be material; and Sellers
and Sold Subsidiaries are not currently liable for any penalties, fines
or forfeitures for failure to comply with any of the foregoing, for
which a failure to comply would be material;
(iii) Sellers and the Sold Subsidiaries severally hold, and
are in material compliance with, all Permits required under the
Environmental Laws for Sellers and the Sold Subsidiaries to conduct the
Business, except where such failure to comply has not resulted and will
not result in an Agency Action, a list of which Permits is identified
in Schedule 4.1(n)(iii)(a); all such Permits are in full force and
effect and all charges and fees relating thereto have been paid and, to
the knowledge of CBS, there is no condition nor has any event occurred
which constitutes, or with the giving of notice would constitute, a
material violation of the terms of any such Permit; except as set forth
in Schedule 4.1(n)(iii)(b), there are no material legal or
administrative proceedings pending or, to the knowledge of CBS,
threatened, which involve the validity, modification or breach of any
such Permit or the entitlement of Seller or Sold Subsidiaries for any
such Permit; and all applications for renewal of such Permits have been
timely filed;
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(iv) Except as set forth in Schedule 4.1(n)(iv), no
Governmental Authority has indicated any unwillingness to grant any
such consent required for the transfer or reissuance of any Permit to
Purchaser;
(v) Except as set forth in Schedule 4.1(n)(v), none of the
Sellers or Sold Subsidiaries have received, nor, to the knowledge of
CBS, is there any notice of any outstanding or threatened noncompliance
order or notice of violation issued by any Governmental Authority
administering the Environmental Laws in connection with the operation
of the Business, the Premises or the Acquired Assets by any of the
Sellers or Sold Subsidiaries, or, to the knowledge of CBS, issued to
their predecessors in interest, which has not been resolved to the
satisfaction of the issuing Governmental Authority and which are
material;
(vi) Except as set forth on Schedule 4.1(n)(vi), no Seller or
Sold Subsidiary has entered into, agreed to or is subject to any Agency
Action relating to compliance with any Environmental Law or to Remedial
Action under any Environmental Law that would be material or would
materially restrict Purchaser's operations of the Business; and Seller
and Sold Subsidiaries are not in any material respect in noncompliance
with, breach of or default under any such Agency Action;
(vii) To the knowledge of CBS, neither Sellers, in respect of
the operations of the Business and the Acquired Assets, nor any of the
Sold Subsidiaries, nor to the knowledge of CBS any predecessors in
interest, have Released, transported, or disposed of any Hazardous
Substance on, to, under or at any of the Premises, or any other
property other than in a manner that would not cause a material Loss;
and none of the Sellers or Sold Subsidiaries, nor to the knowledge of
CBS, their predecessors in interest, have received any written notice
prior to the date of this Agreement of the institution or pendency of
any lawsuit, action, proceeding or investigation by any Person arising
under any Environmental Law at any of the Premises, or any other
property which is reasonably likely to be adversely determined and
which if adversely determined would cause a material Loss, or which
would require Remedial Action at any of the Premises, the costs of
which would be material;
(viii) Except as disclosed in Schedule 4.1(n)(viii), in
respect of the operations of the Business or the Acquired Assets, no
Seller or Sold Subsidiary has received any notice and CBS has no
knowledge of and has no reason to expect any enforcement order or
notice of violation issued or given by any Governmental Authority or
private party in which order or notice Sellers, Sold Subsidiaries or
any of their predecessors in interest have been named as potentially
responsible parties pursuant to CERCLA;
(ix) In respect of the operations of the Business or the
Acquired Assets,
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Purchaser has been provided with an opportunity to review true,
correct and complete copies of all relevant environmental
investigations, studies, audits, tests, reports, reviews or other
analyses conducted by or on behalf of, and 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 or any other property at which any Seller or
Sold Subsidiary has or is alleged to have Environmental Liabilities;
and
(x) None of Sellers or any Sold Subsidiary, in respect of the
operation 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 in 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
under applicable law with respect to the Acquired Assets or the income
or operations of the Business, and all such Tax Returns were 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 as
due on such Tax Returns.
(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) Except in connection with any consolidated, affiliated,
or combined United States federal, state, or local Income Tax Return,
none of the Sellers and none of the Sold Subsidiaries has requested any
extension of time within which to file any 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) Except in connection with any consolidated, affiliated,
or combined United States federal, state, or local Income Tax Return,
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 Taxes or Tax Returns with respect to
the Acquired Assets or the income or operation of the Business.
(v) 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
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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).
(vi) 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 the
Internal Revenue Service has not proposed in writing any such
adjustment or change in accounting method.
(vii) 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 respect to the Acquired Assets or the
income or operation of the Business) or Sold Subsidiary. There is no
pending claim by any authority of a jurisdiction where any of the
Sellers (with respect to the Acquired Assets or the income or operation
of the Business or the Sold Subsidiaries) has not filed Tax Returns
that such Seller or Sold Subsidiary is or may have been subject to
taxation by that jurisdiction.
(viii) 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 including, or
commencing on or after, the Closing Date.
(ix) No Seller (with respect to the Acquired Assets or 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 adverse effect upon a Sold
Subsidiary, the Acquired Assets or the Business, after the Closing
Date.
(x) Each of the Sellers (with respect to the Acquired Assets
or 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 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.
(xi) No Sold Subsidiary (A) has filed a consent under Code
Section 341(f), (B) is obligated to make any payments, or is party to
any agreement that could obligate it to make payments, not deductible
under Code Section 280G, or (C) has been a U.S. real property holding
company within the meaning of Code Section 897.
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(p) SOLD SUBSIDIARIES. Except as set forth in Schedule 1.1(g)
(and except for Nominee Shares), all of the issued and outstanding shares of
capital stock of each Sold Subsidiary are owned, directly or indirectly,
beneficially and of record by one of the Sellers as set forth in Schedule
1.1(g), free and clear of all Liens, except as set forth in Schedule 1.1(g). 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. All of such outstanding shares of
capital stock have been duly and validly authorized and issued and are fully
paid and non-assessable. Except (i) for any Nominee Shares and (ii) as set forth
in Schedule 1.1(g), 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(g), 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. Except as set forth in Schedule 1.1(g), 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 no pending, and since December 31, 1997 through the date hereof there
has not been any, labor strike, work stoppage or lockout against any Seller in
connection with the Business, or any Sold Subsidiary, nor, to the knowledge of
CBS, is any such action threatened as of the date hereof, (ii) there is no
pending, and since December 31, 1997 through the date hereof there has not been
any, unfair labor practice charge or complaint against any Seller in connection
with the Business, or against any Sold Subsidiary, before the National Labor
Relations Board or any similar body in any material foreign jurisdiction nor, to
the knowledge of CBS, is any such charge or complaint threatened as of the date
hereof, and (iii) as of the date hereof, there are no pending or, to the
knowledge of CBS, threatened union grievances against any Seller in connection
with the Business, or any Sold Subsidiary, which, in the case of clauses (i),
(ii) and (iii), would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Except as disclosed in Schedule 4.1(q)(iv),
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 collective
bargaining or similar agreements to which any Seller (in connection with the
Business) or any Sold Subsidiary is a party. Except as set forth in Schedule
4.1(q)(v), to the knowledge of CBS, there are no attempts presently being made
to organize any employees employed by any of the Sellers in connection with the
Business or any Sold Subsidiary.
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(r) OUTSTANDING BIDS. Set forth in Schedule 4.1(r) is a
complete and correct list of all bids outstanding as of the date hereof for
Contracts by the Sellers or any Sold Subsidiaries in connection with the
Business, which Contracts, if awarded to the bidding Seller or Sold Subsidiary,
would involve aggregate expenditures or receipts in excess of $5,000,000. Other
than with respect to Steam Generator Settlement Agreements, no such bid reflects
a material deviation from the past bidding practices and procedures, including
profit objectives, of the Sellers and the Sold Subsidiaries, nor would any such
bid (determined solely on the basis of the projections of the applicable Seller
or Sold Subsidiary as of the time such bid was made) result in a loss to the
applicable Seller or Sold Subsidiary.
(s) MAJOR SUPPLIERS AND CUSTOMERS.
(i) Schedule 4.1(s) sets forth:
(A) the name of, and a brief description of the goods or services
supplied by, the twenty largest suppliers of goods or services
to the Business (based upon amounts paid by the Sellers and
the Sold Subsidiaries during the twelve-month period ending
December 31, 1997); and
(B) the name of, and a brief description of the goods and services
supplied to, the twenty largest customers of the Business
(based upon the net sales of the Business during such period).
(ii) Except to the extent set forth in Schedule 4.1(s),
(A) since December 31, 1997 through the date hereof, no change has
occurred in the business relationship of the Sellers or the
Sold Subsidiaries with any customer or supplier listed in
Schedule 4.1(s), the result of which would reasonably be
expected to have a Material Adverse Effect;
(B) none of the Sellers of the Sold Subsidiaries has received
prior to the date hereof notice from any customer or supplier
listed in Schedule 4.1(s), to the effect that any such
customer or supplier intends to cease, or make a material
reduction in, its purchases of goods or services from, or its
supply or goods or services to, the Business; and
(C) without limiting the generality of the foregoing, none of the
Sellers or the Sold Subsidiaries has received prior to the
date hereof written notice in respect of any Government
Contract that such Government Contract is proposed to be rebid
or that the Sellers or Sold Subsidiaries will not be
considered for any follow-on work relating to such Government
Contract.
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(t) YEAR 2000.
(i) The Sellers and the Sold Subsidiaries have developed and
are executing a plan with respect to Year 2000 readiness (the "Year
2000 Plan"). The Sellers have provided Purchaser with a copy of the
Year 2000 Plan and have provided a report on the status of the Year
2000 Plan through June 13, 1998 that is accurate in all material
respects.
(ii) The Year 2000 Plan address the Year 2000 issues which to
the knowledge of CBS are material to the Sellers and the Sold
Subsidiaries, including internal information systems risks, embedded
circuitry risks and third party risks. Except as provided above and in
Section 5.29, CBS makes no representations or warranties with respect
to the capability of any of the equipment, systems, software, data or
databases relating to the Business to adapt, accommodate or respond to
the year 2000 and thereafter ("Year 2000 Compliance"), or with respect
to the absence of Liabilities, contingent or otherwise, arising from or
related to Year 2000 Compliance.
(u) 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 or Sold Subsidiaries and material to its business is in good operating
condition (normal wear and tear excepted), subject to continued repair and
replacement in accordance with past practice.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to CBS as follows:
(a) ORGANIZATION, STANDING AND POWER. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
limited liability company power and authority to carry on its business as now
being conducted.
(b) AUTHORITY. Purchaser has the requisite limited liability
company power and authority to execute, deliver and perform 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 and thereby have been duly authorized by all necessary
limited liability company action on the part of Purchaser, and, in the case of
the Purchaser Ancillary Documents, will be authorized by all necessary limited
liability company action on
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the part of Purchaser prior to the Closing, and do not and will not require the
approval of the members 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,
subject to the Bankruptcy Exception. 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 the 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 laws of the State of Delaware, (ii) the certificate of incorporation or
by-laws (or comparable organizational documents) of Purchaser, (iii) any
contract, lease, indenture or other agreement of Purchaser or (iv) subject to
the filings and other matters referred to in the following sentence, any Law
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
Purchaser Ancillary Documents or the consummation of the transactions
contemplated hereby or thereby, except for (i) compliance with and filings under
the HSR Act, (ii) voluntary notification under the Exon-Florio Amendment, (iii)
[intentionally omitted], (iv) filings and approvals under foreign laws, (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, and (vii) compliance with, and notices, filings and
approvals under, the regulations of the NRC or any Agreement State, including
any applications for licenses or license transfers, and (viii) 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) U.S.-CONTROLLED ENTITY. Purchaser is an entity the
majority ownership of which is, and the control of which is, by citizens of the
United States or corporations or other organizations incorporated or organized
under the laws of a State of the United States whose business is administered
principally in the United States and which is capable of holding any licenses
issued by the NRC that are contemplated to be transferred to Purchaser under
this Agreement (a "U.S.-Controlled Entity"). All of the equity interests in
Purchaser are owned of record and beneficially by BNFL USA Group, Inc. (or, as
of the Closing, a wholly-owned Subsidiary of BNFL USA Group, Inc.), and MK.
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(d) U.K. SHAREHOLDER APPROVAL. Purchaser and its Affiliates
have been duly authorized by its principal shareholder, the Department of Trade
and Industry, to take the necessary actions to execute and deliver this
Agreement and the Purchaser Ancillary Documents and to consummate the
transactions contemplated herein.
ARTICLE 5
COVENANTS
SECTION 5.1. (a) COVENANTS OF CBS RELATING TO CONDUCT OF
BUSINESS.
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 (which consent shall not be unreasonably withheld or delayed), CBS
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, CBS shall not, and shall not permit any other Seller (in
connection with the Business) or any Sold Subsidiary to, do any of the following
without the consent of Purchaser (which consent shall not be unreasonably
withheld or delayed):
(i) amend the certificate of incorporation or by-laws (or
comparable organizational documents) of any Sold Subsidiary in any
material respect;
(ii) adopt or amend in any material respect any Benefit Plan
or collective bargaining agreement, except as required by Law or
pursuant to the terms of any existing collective bargaining agreement
or other existing Contract and except for changes made by CBS to any
Benefit Plan which do not increase costs by more than 5%;
(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 (as set forth in Schedule 5.1(a)(iii))
and except for any increases or loans the liability for which a Seller
shall be solely obligated both before and after Closing;
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(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 that are material,
individually, or in the aggregate, to the Business 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 any renewals of existing leases in
the Ordinary Course of Business;
(ix) enter into any joint venture or partnership or, other
than in the Ordinary Course of Business, teaming agreement or
arrangement; or
(x) enter into, amend or terminate any employment agreement;
(xi) except as set forth in Schedule 5.1(a)(xi), knowingly
waive any right of material value to the Business or settle or
compromise any claim in excess of $2,500,000;
(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)(A)(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,
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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) except as set forth in Schedule 5.1(a)(xiv), make any
payment or commitment (which would in the case of any Seller 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)(A)(v), (vii),
(viii), (xi), (xiii), (xiv) and (xv);
(xvi) declare or pay any non-cash dividend other than, in the
case of CBS, dividends of property not relating to the Business;
(xvii) in the case of a Sold Subsidiary, declare any dividend
that is not paid before the Closing Date;
(xviii) agree to settle any Tax audit or dispute that will
have a binding effect on Purchaser, the Business or any Sold Subsidiary
for any Post-Closing Tax Period or Purchaser's Straddle Period;
(xix) with respect to bids made after the date hereof which
would, if outstanding on the date hereof, be required to be set forth
on Schedule 4.1(r), make any such bid if the representation set forth
in Section 4.1(r) could not be made with respect to such bid at the
time such bid is made; or
(xx) agree, whether in writing or otherwise, to do any of the
foregoing.
(b) ADVICE OF CHANGES. CBS shall promptly notify Purchaser of:
(i) any actions, suits, claims or proceedings or, to the
knowledge of CBS, investigations commenced or, to its knowledge,
threatened against CBS, its Subsidiaries or the Business that, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 4.1(e); and
(ii) the damage or destruction by fire or other casualty of
any material Acquired Asset or part thereof or in the event that any
material Acquired Asset or
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Subsidiary Asset or part thereof becomes the subject of any proceeding
or, to the knowledge of CBS, threatened proceeding for the taking
thereof or any part thereof or of any right relating thereto by
condemnation, eminent domain or other similar governmental action.
provided, however, that CBS shall have no Liability for breach of this Section
5.1(b) except to the extent Purchaser has actually been prejudiced by such
breach.
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SECTION 5.2. ACCESS TO INFORMATION; CONSULTATION.
(a) CBS shall afford to Purchaser and its accountants, counsel
and other representatives reasonable access at reasonable times during the
period prior to the Closing to all the properties, books, Contracts,
commitments, Tax Returns, pending bids and proposals for contracts the
anticipated revenues from which will exceed $25,000,000 (excluding contracts for
which CBS believes Purchaser or any of its Affiliates is a competing bidder),
and records of the Business (other than to the extent such information relates
to the Excluded Assets or Excluded Liabilities), and during such period shall
furnish promptly to Purchaser any information concerning the Business (other
than to the extent such information relates to the Excluded Assets or Excluded
Liabilities) as Purchaser may reasonably request and shall use reasonable
commercial efforts on a timely basis to obtain any counterparty or third-party
consents necessary to permit Purchaser access to such information; and shall
cause its and the other Sellers' officers, employees, consultants, agents,
accountants and attorneys to cooperate reasonably with Purchaser's
representatives in connection with such review and examination; provided,
however, that CBS is under no obligation to disclose to Purchaser (i) any
information the disclosure of which is restricted by applicable Law except in
strict compliance with the applicable Law, (ii) any information as to which the
attorney-client privilege, the attorney work-product doctrine or the
self-evaluative privilege may be available, except to the extent covered by the
Joint Defense Agreement referred to in Section 5.30 or, if not so covered, until
a mutually satisfactory joint defense agreement has been executed by Purchaser
and CBS, (iii) the medical records pertaining to any employee or former employee
of the Business until after the Closing or (iv) any "Classified Information"
other than in compliance with NRC and any other applicable government security
regulations. CBS shall cooperate reasonably with Purchaser in connection with
any request to make available to Purchaser and its representatives, customers
and suppliers of the Business, and to arrange and participate in meetings
between Purchaser and its representatives and such customers and suppliers, for
the purpose, among other things, of verifying the information furnished to
Purchaser, developing transition plans and integrating the operations of the
Business with the operations of Purchaser and its Affiliates; provided that (i)
such cooperation does not unnecessarily interfere with the operation of the
Energy Systems Business or any other business of CBS and (ii) Purchaser shall
reimburse CBS upon request as incurred for any expenses incurred in connection
with such cooperation. All requests for information, to visit facilities or to
meet with Sellers' representatives shall be made in writing and directed to and
coordinated with the person(s) designated to Purchaser from time to time by CBS
as the ESBU 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 confidentiality agreements
between each of MK and BNFL, and CBS, dated March 19, 1998 and March 13, 1998,
respectively (the "Confidentiality Agreements"), which terms are incorporated
herein by reference. CBS shall use its commercially reasonable efforts to, and
to cause its Affiliates to, enforce the respective terms of the confidentiality
agreements entered into with other prospective purchasers in connection with the
proposed sale of the Energy Systems Business (including requesting that such
other prospective purchasers return or destroy confidential
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information to the extent required to do so as provided therein).
Notwithstanding anything to the contrary contained in paragraph 15 thereof, the
Confidentiality Agreements and the obligations not to use or disclose and to
return on request or destroy Confidential Information (as defined in the
Confidentiality Agreements) shall terminate on the fifth anniversary of the
Closing Date. 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 CBS
under this Agreement.
(b) During the period prior to the Closing, at the request of
Purchaser, CBS shall, and shall cause its and the other Sellers' employees to,
cooperate reasonably with Purchaser and its representatives in connection with
the preparation of such financial statements for the Business as may be required
in connection with the preparation by an applicable Affiliate of Purchaser of a
Current Report on Form 8-K relating to the transactions contemplated hereby;
provided that (i) such cooperation does not interfere with the operation of the
Energy Systems Business or any other business of CBS and (ii) Purchaser shall
reimburse CBS upon request as incurred for any expenses incurred in connection
with such cooperation.
(c) Prior to the Closing, CBS will deliver to Purchaser a
complete and correct list of all bank accounts of each of the Sold Subsidiaries,
and all persons having signing authority with respect thereto.
SECTION 5.3. GOVERNMENTAL APPROVALS, ETC.
(a) Each of Purchaser and CBS shall as promptly as
practicable, (i) but in no event later than 10 business 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, (ii) but in no event later than 20 business
days following the execution and delivery of this Agreement, (A) file with the
Committee on Foreign Investment in the United States the voluntary notification
under the Exon-Florio Amendment for the transactions contemplated hereby and (B)
file with the NRC or applicable Agreement States such applications for licenses
or license transfers as necessary for the transactions contemplated hereby. Each
of Purchaser and CBS shall as promptly as practicable comply with any other Laws
of any country 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 CBS shall furnish to the other such necessary information and
reasonable assistance as the other may request in
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connection with its preparation of any filing, registration or declaration which
is necessary under the HSR Act or any other such Laws. Purchaser and CBS 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
and CBS shall use their best efforts and take all necessary action to obtain any
clearance under the HSR Act, the Exon-Florio Amendment or any other consent,
approval, order or authorization of any Governmental Authority, necessary in
connection with the transactions contemplated hereby or to resolve any
objections 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 prevent the entry or
imposition of any preliminary injunction, temporary restraining order, stay or
other legal restraint or prohibition by any court or other Governmental
Authority and to appeal and seek to have vacated or reversed as promptly as
possible any such injunction, order, stay or other restraint or prohibition that
is not yet final and nonappealable; provided, however, that none of Sellers nor
Purchaser nor 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 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 or
Contract for Purchaser to conduct the Business following the Closing and to own
the Acquired Assets (each, a "Purchaser Permit"), and CBS shall, and shall cause
the other Sellers and the Sold Subsidiaries to, cooperate with Purchaser in
connection therewith. Notwithstanding the foregoing, neither CBS nor Purchaser
shall be required to expend any material sum or agree to a material concession
to any Governmental Authority to obtain, or, in the case of CBS, to assist
Purchaser to obtain, as the case may be, any such Purchaser Permit. Purchaser
acknowledges that certain facilities owned or serviced by the Business and
certain related documents, records and information are classified for United
States government security purposes as high as the level of "Top Secret," which
may require, in addition to any Purchaser Permits required under applicable Law
to conduct the Business at such facilities, the employment of individuals
holding United States government security clearances as high as the level of
"Top Secret." Notwithstanding anything to the contrary in this Agreement, CBS
shall not be required to provide access to such facilities or any such related
documents, records or information to any representative or employee of Purchaser
unless such individual presents evidence reasonably satisfactory to CBS of such
individual's security clearance meeting the security clearance level prescribed
for such access.
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SECTION 5.4. NOVATIONS OF CONTRACTS AND THIRD PARTY CONSENTS.
(a) As soon as practicable following the execution of this
Agreement, CBS shall prepare (with Purchaser's assistance, as necessary), in
accordance with Federal Acquisition Regulations Part 42, Paragraph 42.12 and any
applicable agency regulations or policies, a written request for the novation of
the Government Contracts meeting the requirements of the Federal Acquisition
Regulations Part 42, as reasonably interpreted by the Responsible Contracting
Officer (as such term is defined in Federal Acquisition Regulations Part 42,
Paragraph 42.1202(a)). The request for novation shall be submitted by CBS to
each Responsible Contracting Officer, for the United States government (or, in
the case of Government Contracts not subject to the Federal Acquisition
Regulations, Purchaser and CBS shall cooperate in seeking to cause the
applicable Governmental Authority) to (i) recognize Purchaser as CBS's successor
in interest to the Government Contracts and all the Acquired Assets used in the
performance of the Government Contracts and (ii) enter into one or more novation
agreements (collectively, "Novation Agreements") in form and substance
reasonably satisfactory to Purchaser and CBS and their respective counsel,
pursuant to which all of CBS's right, title and interest in and to, and all of
CBS's Liabilities under, each such Government Contract shall be validly
conveyed, transferred and assigned and novated to Purchaser by all parties
thereto. Purchaser shall provide to CBS promptly any information regarding
Purchaser required in connection with such request.
(b) CBS and Purchaser will cooperate and use their respective
commercially reasonable efforts to obtain as promptly as practicable (i) all
consents, approvals and waivers (A) required for the purpose of processing,
entering into and completing the Novation Agreements with regard to any of the
Government Contracts, including responding to any requests for information from
the United States government with regard to such Novation Agreements, or (B)
required by third Persons to transfer the Contracts, Intellectual Property,
Technology 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 and Technology and (ii) without limiting the
provisions of clause (B) above, novations of all Contracts other than Government
Contracts. Notwithstanding anything to the contrary in this Agreement, nothing
in this Section 5.4 shall 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 consent, approval, waiver or
novation.
(c) If any and all consents, approvals or waivers necessary
for the assignment, transfer or novation of any Contract, Intellectual Property
or Technology, or any claim, right or benefit arising thereunder or resulting
therefrom, or consents relating to a change in control of any Sold Subsidiary,
shall not have been obtained prior to the Closing
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Date, then as of the Closing, this Agreement, if 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 Contracts, Intellectual Property and Technology,
and, in the case of such Contracts, Purchaser shall be deemed Sellers' agent for
purpose of completing, fulfilling and discharging all of Sellers' obligations
and 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 and Technology, and, in the case of such Contracts, to
relieve Sellers of the performance and other obligations and liabilities
thereunder, including entry into subcontracts for the performance thereof.
Purchaser agrees to pay, perform and discharge, and, pursuant to Section 8.2,
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, including any related guarantees.
(d) If Sellers shall be unable to make the equitable
assignment described in Section 5.4(b), or if such attempted assignment would
adversely affect the rights of Sellers or Purchaser under such Contract,
Intellectual Property or Technology, or would not assign all of 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 the
extent permitted by Law to (i) provide to Purchaser, at the request of
Purchaser, the benefits of any such Contract or of any such Intellectual
Property or Technology, to the extent related to the Business, (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 (including payment rights) of any Contract,
Intellectual Property or Technology referred to herein (whether from Sellers or
otherwise), (i) Purchaser shall perform for the benefit of any third Person the
obligations of Sellers thereunder or in connection therewith, and (ii) Purchaser
agrees to pay, perform and discharge, and, pursuant to Section 8.2, indemnify
Sellers against and hold Sellers harmless from, all obligations and liabilities
of Sellers relating to such performance or failure to perform, and in the event
of a failure of such indemnity, Sellers shall cease to be obligated under this
Agreement in respect of the Contract, Intellectual Property or Technology which
is the subject of such failure.
(e) Without limiting the generality of Section 5.10, from the
Closing Date until, with respect to each Government Contract, the sixth year
following the earlier of the release date or notice of final payment for such
Government Contract, Purchaser agrees to provide CBS and its accountants,
counsel and other representatives access, during normal business hours, to such
information, personnel and assistance relating to the performance by
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Purchaser of the Government Contracts and its respective obligations under the
Novation Agreements as CBS shall reasonably request from time to time.
SECTION 5.5. EMPLOYEE MATTERS.
(a) EMPLOYEE MATTERS.
(i) Continuation of Employment. Purchaser shall offer employment to (or
cause a Sold Subsidiary to continue to employ) 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 STC Employee who is actively at work, on vacation or
on short-term disability (including salary continuation and extension)
leave on the Closing Date (each a "Business Employee"). Each employee
or former employee who primarily rendered services on behalf of the
Business or STC 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. 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. CBS shall deliver a schedule to
Purchaser of anticipated Business Employees and Inactive Employees and
with respect to the latter their designated status as of the Closing
Date and their entitlements, 15 days before the Closing Date. Such
schedule shall be updated by CBS 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.
Purchaser shall not offer employment to any employee of any Seller
during such six-month period without the consent of such Seller (other
than as provided herein).
(ii) Continuation of Compensation and Benefits.
Notwithstanding the more specific provisions set forth in this Section
5.5, Purchaser shall provide or shall cause a Subsidiary to provide
compensation and written benefit plans and arrangements which in the
aggregate are comparable (but in no event taking into account any
equity-based compensation (including options) and opportunity to invest
in securities of CBS under
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the CBS Stock Plan or the Westinghouse Savings Program, provided that
with respect to Business Employees, the match formula under the
Westinghouse Savings Program shall be considered when determining
comparability) to the compensation and written Benefit Plans (See
Schedule 4.1(m)(i)) in effect for Business Employees on the date of
this Agreement ("Comparable Benefits") for a period of not less than
one year following the Closing Date (or, in the case of Business
Employees who are subject to a collective bargaining agreement, the
period required therein) (the "Benefits Maintenance Period").
Comparability for the purpose of determining Comparable Benefits shall
be assessed in terms of total dollar value (or such other measurement
utilized by the consultant) to Business Employees in the aggregate.
Notwithstanding the above, with respect to Business Employees who are
executives, the Purchaser shall provide long-term incentives which
provide benefits generally comparable in value to long-term incentive
plans of Sellers. No later than 15 days prior to the Closing Date
Purchaser shall either (1) commit to CBS in writing to provide for
Business Employees for the Benefit Maintenance Period substantially
identical compensation and benefits to that provided by CBS and
Affiliates to Business Employees (without regard to the equity-based
compensation and the form of long-term incentive benefits) with CBS to
consent to the determination of substantially identical benefits,
which consent shall not be unreasonably withheld or (2) deliver to CBS
a letter from an independent consulting firm reasonably acceptable to
CBS stating that the compensation, benefits and benefit arrangements
offered by Purchaser to the Business Employees pursuant to this
Section are Comparable Benefits.
(b) ACCRUED VACATION. Purchaser shall credit each Business
Employee with the unused vacation days and any personal and sickness days earned
in accordance with the vacation and personnel policies and collective bargaining
agreements of CBS and the Sold Subsidiaries in effect as of the Closing Date,
provided that an appropriate adjustment shall be made in the event of any cash
payment required to be made by either Purchaser or Sellers as a result of the
transaction contemplated by this Agreement. CBS shall provide to Purchaser at
the Closing Date such schedules as CBS maintains and such other information as
reasonably necessary to calculate such benefits.
(c) UNION REPRESENTATION. Purchaser agrees with respect to any
collective bargaining agreement that relates to Business Employees, to (i)
recognize each union which at the Closing Date represents any group of Business
Employees as the collective bargaining representatives of such employees as of
the Closing Date, (ii) provide such employees with comparable wages and benefits
as those in effect on the date of this Agreement in accordance with such
collective bargaining agreements, and (iii) assume the obligations for Business
Employees and Former Employees under any such collective bargaining agreement
that by its terms requires such assumption.
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(d) PENSION PLAN. (i) Purchaser shall or shall cause its
Affiliates to credit Business Employees with service with Sellers and Sold
Subsidiaries for purposes of eligibility, vesting and retirement eligibility
under all pension plans within the meaning of Section 3(2) of ERISA in which
such Business Employees participate.
(ii) The WELCO Pension Plan shall retain liability with
respect to Business Employees and Former Employees for their accrued
benefit calculated as of the Closing Date, subject to adjustment as
follows. CBS shall take appropriate action to cause the WELCO 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 WELCO 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 WELCO
Pension Plan shall be equal to the lesser of -
(A) the early retirement supplement calculated under the terms of the
WELCO Pension Plan, or as it may be reduced by CBS after the Benefits
Maintenance Period, but only to the extent such a change applies to all
CBS 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 WELCO Pension Plan) under the WELCO 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 defined benefit plan covering Business Employees
("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 WELCO Pension Plan) (if the Purchaser Pension Plan has no such
supplement or if there is no Purchaser Pension Plan 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 WELCO 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 WELCO Pension Plan shall not recognize
employment with the Business after the Purchaser and 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")),
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with respect to the Business Employees who are transferred or terminated in
connection with such a sale or divestiture.
(iii) The WELCO 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 (iv) below, (B) any benefits
pursuant to Section 19 of the WELCO Pension Plan and the corresponding
provision of the Purchaser Pension Plan, if any, 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 (ii) above.
(iv) Purchaser shall indemnify CBS for any actuarial losses
(as defined below) with respect to the WELCO Pension Plan resulting
from any Business Employee commencing the receipt of benefits prior to
their Normal Retirement Date (as defined in the WELCO 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"), other than termination at the Pensacola Plant arising from
the announced shut down of the plant or terminations announced by CBS
prior to the Closing Date (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 a financial 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 WELCO Pension Plan (other than a
change in plan design during the three (3) year period following the
Closing Date, provided that Purchaser has Comparable Benefits (after
one year from the Closing Date the value of the supplemental retirement
benefits under the WELCO Pension Plan shall not be considered for
comparability) after such change in plan design). Purchaser shall
notify CBS 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 CBS in providing data to CBS
to enable the determination of actuarial losses. Actuarial losses shall
be determined by the enrolled actuary for the WELCO Pension Plan (the
"CBS 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)
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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.
(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 offers benefits to Business
Employees eligible to participate in the Westinghouse Savings Program (the
"WELCO Savings Program") as of the Closing Date and contains provisions similar
to the provisions of the WELCO Savings Program to the extent required by Section
411(d)(6) of the Code for account balances to be transferred from the CBS
Savings Program. Each Business Employee eligible to participate in the WELCO
Savings Program as of the Closing Date shall become eligible to participate 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 WELCO Savings Program. Effective as of the date of transfer described
in (iii) below, CBS shall fully vest the account balances of Business Employees
under the WELCO Savings Program and make all applicable contributions under the
WELCO 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 WELCO 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) As soon as reasonably practicable after the Closing Date,
Purchaser shall provide CBS 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
counsel, reasonably satisfactory to CBS, to such effect and (B) an
opinion of Purchaser's counsel, reasonably satisfactory to CBS, 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 WELCO 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, CBS shall
cause to be transferred from the WELCO 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 WELCO 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 CBS Common Stock Fund applicable
to Business Employees, (y) in notes evidencing loans to Business
Employees from their account balances, (z) in
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cash, (xx) to the extent of the account balances of the Business
Employees in the CBS 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), (yy) all
qualified domestic relations orders (within the meaning of Section
414(p) of the Code) with respect to Business Employees and (zz) such
other assets as Purchaser and CBS mutually agree upon 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 WELCO 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 CBS common stock
fund, in accordance with applicable law, for Business Employees who so
elect, for such period as Purchaser determines is necessary for an
orderly transition. No new investments in CBS common stock shall be
required to be permitted after the Closing Date.
(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) Effective as of the Closing Date, 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
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and dependents, whether incurred prior to or after the Closing Date.
Sellers shall cooperate with Purchaser in transferring to Purchaser
applicable insurance company reserves associated with claims covering
Business Employees and Inactive Employees currently receiving benefits
from the Westinghouse Long Term Disability Plan or Management
Disability Benefit Plans. 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 CBS or its
Affiliates in the U.S. immediately prior to the Closing Date for its
domestic Business Employees, their eligible spouses and dependents (the
"WELCO FAS 106 Plans") so that during the Benefits Maintenance Period
the combination of the Purchaser FAS 106 Plans and the WELCO FAS 106
Plans (as modified as described in clause (iv) below) provide the same
benefit and the same cost sharing (with retirees) as if such Business
Employees continued under the WELCO FAS 106 Plans as in effect on the
Closing Date without change. The Purchaser FAS 106 Plans will provide
that the benefits payable under such plans will be offset by the
benefits provided under the WELCO 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) CBS shall establish a new plan to provide FAS 106
coverage or amend the WELCO FAS 106 Plans effective as of the Closing
Date to provide that CBS 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 in Schedule 5.5(f)(iv)
of the Disclosure Schedule (the "OPEB Schedule"), as described below.
The OPEB Schedule shall be updated by CBS after the Closing Date to
reflect Business Employees as of the Closing Date. CBS may amend the
WELCO 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 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 CBS 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
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WELCO FAS 106 Plans (the "FAS 106 Obligation"). Such payments under
the WELCO FAS 106 Plans, as adjusted as described below, shall be the
only obligation of CBS to Business Employees their eligible spouses
and dependents (or to the Purchaser) with respect to post-retirement
welfare benefits. Purchaser shall indemnify CBS for any liability to
Business Employees, their eligible spouses and dependents for all
post-retirement welfare benefits (including retiree medical and
retiree life) (other than amounts paid by CBS or a Sold Subsidiary
prior to the Closing Date) other than obligations of CBS under the
WELCO FAS 106 Plans as described in this subsection (iv) and
subsection (v). The payment obligations of CBS 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 (other than the Pensacola Plant), 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 CBS Actuary as
of the Closing Date, for the purpose of calculating the FAS 106
Obligation. Such gain shall be determined with respect to the WELCO
FAS 106 Plans as if the FAS 106 Event applied to the WELCO 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 to
the first day of the calendar year in which the FAS 106 Event
occurred, utilizing the discount rate utilized by CBS 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
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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, except to the extent required by a final,
non-appealable court order or as otherwise agreed to by the parties,
but in any event the OPEB Schedule shall not be increased above the
amount as in effect immediately prior to the change that triggered the
reduction in question. Any payment made by CBS 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 CBS shall cooperate with each other so
that, to the maximum extent practicable, benefits shall be paid and
administered under the WELCO 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
CBS, not to be unreasonably withheld. Any expenses allocable to CBS
under such arrangement shall reduce CBS's payment obligation under the
CBS FAS 106 Plans as reflected by the OPEB Schedule on a
dollar-for-dollar basis. Purchaser shall notify CBS within thirty days
after any FAS 106 Event and shall cooperate with CBS in providing data
to determine any adjustments in the OPEB Schedule.
(vi) Subject to the requirements of applicable law, CBS shall
use all reasonable efforts to cash out Business Employees and Former
Employees from a trust qualified under Section 501(c)(9) of the Code
maintained by CBS (the Retiree Health Care Security Fund). To the
extent such trust does not make such distributions prior to the Closing
Date, CBS shall cause the transfer to a trust established by Purchaser
satisfying the requirements of Section 501(c)(9) of the Code of the
funds in such trust allocable to such Business Employees and Former
Employees. The trust to be established by the Purchaser shall have
terms substantially similar to the terms of the CBS Trust.
(g) SEVERANCE OBLIGATIONS. CBS and Purchaser agree that the
transactions contemplated hereby shall not constitute a severance of employment
of any Business Employee prior to the consummation of the transactions
contemplated hereby, and that such employees will be deemed for all purposes to
have continuous and uninterrupted employment before and immediately after the
Closing. Except as required by Law or an applicable collective bargaining
agreement or as otherwise agreed in writing by CBS and Purchaser, Purchaser
shall provide severance and other separation benefits to each Business Employee
terminated by Purchaser during the Benefits Maintenance Period and with respect
to the Pensacola Plant in connection with the planned termination of Business
Employees whether before or after the Benefits Maintenance Period upon terms and
conditions that are comparable to the severance
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and other separation benefits provided under the Involuntary Separation Program,
the Employee Security and Protection Plan and any applicable Free Standing Plan,
which arrangements shall credit service with the Sellers or their Affiliates
prior to the Closing Date for purposes of determining the amount of such
severance and other separation benefits. Purchaser shall indemnify and hold
Sellers and their Affiliates harmless from and be responsible for any claims
made by any Business Employee or Former Employee for severance or other benefits
based on separation, for any claims based on breach of contract and for any
other claims arising out of or in connection with the employment or the failure
to offer employment to, or the termination of employment of, any Business
Employee or Former Employee, other than claims arising as a direct result of the
transactions contemplated hereby. CBS shall be responsible and indemnify
Purchaser for any claims made by any Business Employee or Former Employee for
severance or other benefits based on separation (other than severance benefits
based on separation arising from acts of Purchaser on or after the Closing
Date), for any claims based on breach of contract and for any other claims, in
each case arising as a direct result of the transactions contemplated hereby;
provided, however, that CBS shall not be responsible (and Purchaser shall be
responsible) for any such claim if the principal basis of such claim is due to
Purchaser's breach of any provision of this Section 5.5.
(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 "WELCO
Executive Plan") and which provides credit for prior service and compensation
under the WELCO 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
WELCO Executive Plan, the WELCO Pension Plan and the Purchaser Pension Plan. The
Purchaser Executive Plan shall be administered so that the aggregate of the
benefits under the WELCO Executive Plan and the Purchaser Executive Plan are the
same with respect to Business Employees as if the Business Employees were
covered under the WELCO 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 WELCO 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 CBS with respect to
the WELCO Executive Plan to cause the WELCO 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
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for the payment of benefits, (ii) that the Average Annual Compensation and
Executive Benefit Service (both as defined in the WELCO 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 WELCO
Executive Plan) solely for purposes of determining eligibility for the payment
(including suspension of payment) of benefits. Notwithstanding the foregoing,
the WELCO 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 (or, if none, Purchaser)
shall be solely responsible for (and the WELCO 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 result of a Pension Event (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 CBS for any actuarial losses
(based on the same actuarial assumptions and methods used for purposes of
determining actuarial losses under Section 5.5(d)(iv)) with respect to the CBS
Executive Plan resulting from any Business Employee commencing the receipt of
benefits prior to their Normal Retirement Date (as defined in the WELCO Pension
Plan) and that is attributable to a Pension Event. Purchaser shall cooperate
with WELCO in providing data to CBS 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.
(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. CBS agrees to provide any notice required under such statute
prior to or arising as a result of the Closing.
(k) COBRA. Effective as of the Closing Date, Purchaser shall
assume all responsibility for COBRA notices and coverage for Business Employees
and Former Employees (and their eligible dependents).
(l) WORKERS COMPENSATION. Effective as of the Closing Date,
Purchaser
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shall take all necessary and appropriate action to adopt a workers compensation
program providing such workers compensation benefits as are provided under CBS's
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 CBS's
Workers Compensation Program.
(m) RETAINED LIABILITIES. CBS shall retain liability and
responsibility for all benefits payable under (x) the WELCO Pension Plan (but,
with respect to Business Employees, as limited under Section 5.5(d)), (y) the
WELCO Executive Pension Plan (but, with respect to Business Employees, as
limited under Section 5.5(h)), (z) the WELCO 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 WELCO 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)), (yy) the CBS Long-Term Incentive Plan, (zz) deferred compensation
obligations under the Westinghouse Annual Incentive Plan and any other employee
deferral arrangements, except to the extent attributable to Free Standing Plans
and (xxx) retention bonuses for executives relating to this transaction (but not
severance obligations arising from acts of Purchaser).
(n) ACTUARIAL DETERMINATIONS AND PAYMENTS. (i) The
calculations of actuarial losses under subsections (d)(iv) and (h)(v) and
actuarial gains under subsection (f)(iv) shall be performed by the CBS Actuary
as soon as practicable after CBS receives notice from Purchaser or CBS otherwise
becomes aware of a Pension Event or a FAS 106 Event. Purchaser shall provide CBS
with sufficient data to enable the determination of any actuarial losses and/or
actuarial gains within the 30 days following a Pension Event or a FAS 106 Event.
(ii) No later than 60 days after the receipt by CBS of both
the notice from Purchaser that a Pension Event or a FAS 106 Event has occurred
and sufficient data to make a determination has been delivered, CBS will deliver
to Purchaser the results of the determination of the actuarial loss or actuarial
gain (each a "Determination"), respectively, and all reasonably necessary
supporting information in order to permit Purchaser's actuary to verify the
accuracy of 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 CBS in writing that it
disputes the accuracy of the calculation, specifying the nature of the dispute
and the basis therefor (the "Notice").
(iii) Actuaries retained by CBS and Purchaser shall attempt in
good faith to
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reach agreement to resolve all of the disputes set forth in the Notice within 30
days after the Notice is given by Purchaser to CBS. If actuaries retained by CBS
and Purchaser cannot resolve all disputes with respect to a Determination within
such 30-day period, CBS 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 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 CBS 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 CBS 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)(iv) or 5.5(h)(v), Purchaser shall make any
applicable indemnification payments under such Sections.
(vi) All indemnification payments under (v) above shall be
treated as purchase price adjustments for tax purposes.
(vii) Within 30 days after a final determination of any
actuarial gain under Section 5.5(f)(iv) CBS shall substitute a Revised Schedule
in place of the Existing Schedule.
(o) 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 STC (other than Business Employees), Purchaser shall
reimburse CBS for any severance and other related termination costs paid by CBS
or its Subsidiaries to or on account of such employment with CBS or any of its
Subsidiaries during such one (1) year period.
(p) FREE-STANDING PLANS. Notwithstanding the foregoing
provisions of this Section 5.5, effective as of the Closing, Purchaser shall
assume and be responsible for all liabilities and obligations under the
Free-Standing Plans. CBS and Purchaser shall take all action necessary and
appropriate (including, in the case of Purchaser, establishing legal entities to
serve as plan sponsor) to establish Purchaser or Purchaser Affiliates as
successor to CBS or its Affiliates to all rights, assets, duties, liabilities
and obligations under or with respect to the Free-Standing Plans.
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(q) FOREIGN EMPLOYMENT MATTERS.
(i) Employment. Without limiting the generality of Sections
5.5(a) and 5.5(b), 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
("Foreign Business Employees") and Purchaser shall take any and all actions
necessary or appropriate (if any) to continue the employment of such Foreign
Business Employees and to have Purchaser or any Sold Subsidiary assume or retain
all obligations and liabilities relating to their employment (including, but not
but not limited to, any employment contracts listed in Schedule 4.1(j)(A)(i))
under local laws and practices without CBS or any of its 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(q).
(ii) Employee Benefit Plans for Foreign Business Employees.
(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 one year following the Closing Date, to the Foreign Business
Employees on terms and conditions which are substantially similar in the
aggregate to those provided to Foreign Business Employees by CBS or its
subsidiaries 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 in the Business or by a Sold Subsidiary in a foreign
jurisdiction and who, as of the Closing Date, are not employed by CBS or any of
its 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
CBS or its affiliates (other than a Sold Subsidiary) under each Foreign
Retirement Plan listed in Schedule 4.1(m) as in effect immediately prior to the
Closing Date, and (ii) establish and adopt any 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
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regulatory authorities. Subject to Section 5.5(q)(iii), 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) Except as otherwise specifically provided in this Section
5.5(q), 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(q) and the terms and conditions of
such plan.
(iii) Delayed Foreign Employees. Notwithstanding the foregoing
provisions of this Section 5.5(q), Foreign Employees 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 the payroll of CBS or its affiliates and will
continue to participate in each of CBS's or its affiliate's 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 will become a Business Employee for all purposes of the Agreement.
Purchaser will promptly reimburse CBS 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 within 15 days following receipt of each written notification
(including reasonable substantiation of costs and expenses) from CBS or any of
its affiliates of such payroll, benefits and other costs and expenses.
(r) NO RIGHT TO EMPLOYMENT. Nothing herein expressed or
implied shall confer upon any of the employees of CBS or Purchaser, or any of
their respective Affiliates, any additional rights or remedies, including,
without limitation, any additional right to employment, or continued employment,
for any specified period, of any nature or kind whatsoever under or by reason of
this Agreement.
(s) ALTERNATIVE PROCEDURE. CBS and Sellers and Purchaser agree
that, pursuant to the "Alternative Procedure" provided in section 5 of Revenue
Procedure 96-60, 1996-2 C.B. 399, (i) Purchaser will report on a
predecessor/successor basis as set forth
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therein, (ii) CBS and its Affiliates will be relieved from filing a Form W-2
with respect to any Business Employee who accepts employment with Purchaser or
its Affiliates, and (iii) Purchaser will undertake to file (or cause to be
filed) a Form W-2 for each such employee for the year that includes the Closing
Date, including the portion of such year that such employee was employed by CBS
or its Affiliates (provided, however, that any agreement between CBS and
Purchaser that CBS or its Affiliates shall furnish to Purchaser payroll and
related services under the Transitional Services Agreement provided for in
Section 5.20(a) and any actions by either party in connection with such
agreement shall not alter or otherwise affect the agreement set forth in this
Section 5.5(s)). CBS agrees to provide Purchaser with all payroll and
employment-related information with respect to each Business Employee who
accepts employment with Purchaser (or an Affiliate) and to otherwise cooperate
in following the "Alternative Procedure."
SECTION 5.6. COLLECTION OF RECEIVABLES. From and after the
Closing, Purchaser shall have the right and authority to collect for its own
account 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
CBS 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 Agreement (including with
respect to Transfer Taxes), 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 CBS
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 Purchaser and its Affiliates,
Batchelder & Partners, Inc. and Rothschild Inc., whose fees and expenses will be
paid by Purchaser, and each of Purchaser and CBS 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.
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SECTION 5.9. SHARED TECHNOLOGY AND TRADEMARK LICENSE
AGREEMENTS.
(a) On the Closing Date, CBS and Purchaser shall enter into a
Shared Technology Agreement in the form of Exhibit B hereto (the "Shared
Technology Agreement"), wherein, to the extent CBS and Purchaser have rights on
the Closing Date:
(i) Purchaser shall grant to CBS a world-wide, royalty-free,
nonexclusive, perpetual license to use Intellectual Property and
Technology to satisfy its existing obligations, and support its current
businesses that do not compete with the Business;
(ii) CBS shall grant to Purchaser a nonexclusive, world-wide,
royalty-free, perpetual license to use intellectual property and
technology retained by CBS, that are pertinent to the Business; and
(iii) It shall be agreed that each licensed party shall have
appropriate access to the corresponding technology reasonably required
for the licensed purpose. Such right of access to technology shall be
appurtenant to the license and assignable to the same extent as the
license. The owner of the Business, upon Closing, shall have access to
all such technology that is primarily applicable to a Nuclear
Installation, in the possession of the owner of the GESCO Businesses
and, at the sole discretion of the owner of the Business have such
technology delivered to it.
(b) On the Closing Date, CBS and Purchaser shall enter into a
Trademark and Trade Name License Agreement in the form of Exhibit C hereto,
granting certain licenses to Purchaser and its Affiliates to use the names and
marks "WESTINGHOUSE," "CIRCLE W" and "You can be sure . . . if it's
Westinghouse."
(c) The parties acknowledge and agree that, as between the
Energy Systems Business and the GESCO Businesses, the Energy Systems Business is
the owner of all CBS intellectual property and technology, including
Intellectual Property and Technology, that is primarily applicable to a Nuclear
Installation.
SECTION 5.10. CERTAIN INFORMATION. (a) After the Closing, upon
reasonable written notice, Purchaser and CBS 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 Energy Systems Business as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any returns,
reports or forms or the defense of, prosecution of, or response required under,
or pursuant to, any lawsuit, action or proceeding (including any proceeding
involving CBS and any Excluded Assets, any
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Excluded Liabilities, any environmental matters related to the Acquired Assets
and the matters referred to in Section 2.3(b)(xiv)) or in order to enable the
parties to comply or monitor compliance (including with respect to Purchaser's
obligations in respect of the Assumed Liabilities) with their respective
obligations under this Agreement. Purchaser and CBS 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 CBS shall, and shall
cause their Affiliates to, retain until five 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(j). Cooperation with respect to
Intellectual Property and Technology matters shall be governed by Section
5.10(c).
(b) After the Closing, Purchaser shall furnish or cause to be
furnished to CBS and its respective accountants, counsel and other
representatives access, during normal business hours, to such information
(including records pertinent to the Business), personnel and assistance,
including audit rights, relating to Purchaser's compliance with, and discharge
of its obligations under, the Settlement Agreements.
(c) After the Closing, upon reasonable written notice, CBS
will deliver at Purchaser's expense all reasonably available records regarding
the conception, reduction to practice, evaluation, and efforts to patent or
otherwise protect Intellectual Property or Technology. CBS will at all
reasonable times cooperate with Purchaser's reasonable efforts to protect any of
the Intellectual Property or Technology by supplying (i) all requested
information reasonably available to CBS about any public use or offer to sell an
invention that occurred prior to the filing of a U.S. application on the
invention, (ii) all requested information reasonably available to CBS about any
use of a trademark or service mark, or (iii) all requested information
reasonably available to CBS about any software or copyrighted work. With respect
to inventions created by inventors who remain in the employ of CBS after the
Closing, CBS promises to provide its full cooperation with any efforts by
Purchaser to patent said inventions or enforce patents on said inventions,
including instructing the employee promptly to review any draft patent
application submitted by Purchaser and advise Purchaser as to the revisions
necessary to make it a full and accurate disclosure of the invention and to
execute all truthful and lawful oaths of inventorship or assignment deeds
presented by Purchaser for purposes of patenting or protecting the invention.
With respect to inventions created by inventors who are past employees of CBS or
any of its Subsidiaries, CBS will, on request by Purchaser, use its commercially
reasonable efforts to encourage the past employee to give Purchaser full
cooperation in connection with efforts to patent said invention or enforce
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a patent on said invention. After a period of two years following the Closing
Date, CBS or any of its Subsidiaries that render services under this Section
5.10(c) shall be entitled to reasonable reimbursement from Purchaser for its
time, as well as out-of-pocket expenses as provided for above, for such services
rendered after the two-year period.
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 CBS 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 CBS 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 CBS 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, CBS
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.
Purchaser will cooperate with CBS with respect to the matters set forth in Item
(xi) of Schedule 5.1(a), as provided therein.
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 (including, without
limitation, the information, estimates, forecasts and projections contained in
the Memorandum), 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
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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 sets forth the allocation of the
consideration hereunder for each of the Foreign Sold Subsidiaries for Tax
purposes. CBS and Purchaser agree to use their best efforts to enter into an
agreement (the "Allocation Agreement") as soon as practicable (but in any event
no later than 150 days after the Closing Date) to allocate the Purchase Price,
the Assumed Liabilities, and all other capitalizable costs among (i) the
Acquired Assets and (ii) the assets held by each U.S. Sold Subsidiary for all
applicable Tax purposes, including Code Section 1060. To the extent permissible
under applicable Tax Laws, all Assumed Liabilities arising out of the Steam
Generator Settlement Agreements shall be treated as expenses of Purchaser,
deductible by it as such Liabilities are paid in taxable periods after the
Closing Date; all other Assumed Liabilities arising out of the Steam Generator
Settlement Agreements shall be included in the costs capitalizable by Purchaser
at the Closing. Purchaser shall initially prepare a statement setting forth a
proposed computation and allocation of the aggregate purchase price (the
"Computation"), and submit it to CBS no later than 60 days after the Closing
Date. If, within 30 days of CBS's receipt of the Computation, CBS shall not have
objected in writing to such Computation, the Computation shall become the
Allocation Agreement. If 60 days after CBS's receipt of the Computation, CBS and
Purchaser have not adopted an Allocation Agreement, any disputed aspects of the
Allocation Agreement shall be resolved within 90 days of CBS's receipt of the
Computation by a law or accounting firm mutually acceptable to CBS and Purchaser
(the "Neutral Auditors"), which shall resolve such dispute pursuant to, first,
the terms of this Agreement and, second, the application of applicable Tax Laws
to the relevant facts. The decision of the Neutral Auditors shall be final, and
the costs, expenses and fees of the Neutral Auditors shall be borne equally by
CBS and Purchaser. CBS and Purchaser shall report the Tax consequences of the
transactions contemplated by this Agreement consistent with the terms of this
Agreement and the Allocation Agreement.
(b) After the Closing, from time to time, Purchaser and CBS
shall agree upon revisions to the Allocation Agreement to reflect any
adjustments to the consideration. Purchaser and CBS shall report the Tax
consequences of the transactions contemplated by this Agreement in a manner
consistent with the terms of this Agreement and the Allocation Agreement, as it
may be revised from time to time. Any disputes regarding such revisions shall be
resolved by the Neutral Auditors.
(c) Purchaser and CBS 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 Agreement, as it may be
revised from time to time. CBS shall
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prepare Internal Revenue Service Form 8594 pursuant to Section 1060 of the Code
relating to the transactions contemplated by this Agreement based on the
Allocation Agreement, as it may be revised from time to time, and deliver such
form to Purchaser. Purchaser and CBS shall file, or cause the filing of, such
form with each relevant taxing authority. Any disputes under this provision
shall be resolved by the Neutral Auditors.
(d) Irrespective of Article 8 or any other provision hereof,
Sellers and Purchaser shall each bear and be liable for 50% of the 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").
Sellers or Purchaser, as the case may be, shall pay the Transfer Taxes for which
it is liable under applicable Law. Five days before any such payment of Taxes is
due, the nonpaying party shall reimburse the paying party for 50% of such Taxes.
CBS 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 CBS exemption
certificates satisfactory in form and substance to CBS with respect to Transfer
Taxes if such delivery would reduce the amount of Transfer Taxes that would
otherwise be imposed. Any disputes under this provision shall be resolved by the
Neutral Auditors within 30 days of the submission of such dispute.
(e) CBS shall terminate and shall cause the termination by the
Closing of any agreement or practice relating to Taxes between CBS or any of its
Affiliates (other than any Investment), on the one hand, and any Investment, on
the other hand. On and after the Closing Date, neither CBS or its Affiliates
(other than any Investment), on the one hand, nor any Investment, on the other
hand, shall have any further rights, obligations, or liabilities under any such
agreement or practice, and no Investment shall have any obligation in respect of
any agreement for practice relating to Taxes for any period prior to or
including the Closing Date.
(f) At the Closing, CBS shall deliver to Purchaser duly
executed certificates certifying that the transactions contemplated hereby are
exempt from withholding under Section 1445 of the Code.
(g) To the extent permitted by Law, Purchaser shall have the
right to cause each Foreign Sold Subsidiary to carry back any item of income,
loss, credit or deduction from any taxable period beginning after the Closing
Date to any taxable period including or ending prior to the Closing Date to the
extent Tax remains payable after all CBS Tax benefits have been taken into
account.
(h) CBS shall file any amended consolidated, combined or
unitary Income
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Tax Returns that include the Business or any Sold Subsidiary for Pre-Closing Tax
Periods 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 returns for Pre-Closing Tax Periods resulting from such examination
adjustments, as finally determined, shall be prepared by CBS and furnished to
such Sold Subsidiary, for signature and filing at least ten days prior to the
due date for filing such returns. Purchaser shall file all other amended Tax
Returns relating to the Business.
(i) (A) CBS shall file or cause to be filed the United States
consolidated federal Income Tax Return of CBS and, where applicable, all other
consolidated, combined or unitary state or local Income Tax Returns for the
Pre-Closing Tax Periods of each Selling Subsidiary and each U.S. Sold Subsidiary
and (B) CBS 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. CBS shall prepare or
shall cause to be prepared all Income Tax Returns required to be filed by any
U.S. Sold Subsidiary on a separate return basis for Pre-Closing Tax Periods that
have not been filed by the Closing Date and (x) CBS shall provide Purchaser with
a copy of all such Tax Returns (or in the case of a Tax Return that includes
assets or businesses not included in the Acquired Assets, those portions of such
Tax Returns that relate to the Business) at least 30 days prior to the due date
for filing such Tax Returns (including any extensions) and (y) after reviewing
and approving such Tax Returns (which approval shall not be unreasonably
withheld), Purchaser shall file or shall cause such Tax Returns to be filed. All
such Tax Returns that may affect the future Tax payable by Purchaser or any Sold
Subsidiary shall be prepared on a basis consistent with law and past practice.
CBS shall pay or cause to be paid all Taxes shown as due on any such Tax
Returns.
(j) (i) Purchaser shall timely prepare and file (or cause to
be prepared and filed) all Tax Returns required by Law for (A) all Taxes
covering the Acquired Assets or the Sold Subsidiaries for all Straddle Periods
and (B) all Income Taxes of the Foreign Sold Subsidiaries for all Pre-Closing
Tax Periods, except as provided in Section 5.14(i). Purchaser shall provide CBS
with a copy of such Tax Returns at least 30 days prior to the due date for
filing such Tax Returns (including extensions), and after CBS'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. Not later
than 5 days before the due date for the payment of Taxes with respect to such
Tax Returns, CBS shall pay to Purchaser an amount equal to Sellers' Straddle
Period Taxes determined in accordance with the method described in clause (iii)
below.
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(ii) Purchaser shall prepare and file all Tax Returns
for all Foreign Sold Subsidiaries for all Post-Closing Tax Periods and all Tax
Returns other than Income Tax Returns for all Sold Subsidiaries for Pre-Closing
Tax Periods that have not been filed by the Closing Date.
(iii) For purposes of this Agreement, the Taxes
allocable to Sellers' Straddle Period Tax Returns 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
Straddle Period multiplied by a fraction, the
numerator of which is the number of days in the
Sellers' Straddle Period and the denominator of which
is the number of days in the entire Straddle 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) CBS 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 Assets or the income or operations of the Business. Purchaser shall
complete CBS's standard tax packages relating to Tax Returns that CBS is
responsible for filing pursuant to Section 5.14(i) and deliver them to CBS
within 90 days of Purchaser's receipt from CBS and shall, and shall cause its
Affiliates to, cooperate with CBS in preparing and pursuing any claims for
refunds or credits of 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, CBS shall file claims prepared by Purchaser for
refunds of Taxes (other than items described in Section 2.3(b)(ii) and (iii))
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 CBS 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). CBS 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.
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(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 "CBS Tax Controversies") promptly notify CBS thereof, provided,
however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent CBS shall have
been actually prejudiced as a result of such failure (except that CBS
shall not be liable for any interest or other expenses incurred during
the period in which the Purchaser failed to give such notice). CBS
shall be entitled at its sole discretion and expense to handle, control
and compromise or settle the CBS Tax Controversies, and shall
reasonably inform Purchaser of the progress of the CBS Tax
Controversies, provided, however, that in the event Purchaser waives
its rights to indemnification with respect to any CBS Tax Controversy
relating to Taxes other than Income Taxes, Purchaser may assume at its
expense, and have the sole discretion to handle, control, compromise,
or settle, such controversy.
(ii) CBS shall, in the event CBS receives notice
(whether orally or in writing) of any examination, claim, proposed
settlement, proposed adjustment or related matter with respect to Taxes
attributable to the Business (other than CBS Tax Controversies) (the
"Purchaser Tax Controversies," and together with the CBS 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 interest
or other expenses incurred during the period in which CBS 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 CBS of the progress of
the Purchaser Tax Controversies.
(m) Purchaser acknowledges that CBS may, in its sole
discretion, elect under Treasury Regulation Section 301.7701-3(c) to treat one
or more Selling Subsidiaries or Sold Subsidiaries that are foreign corporations
as branches of the applicable Sellers for United States federal income tax
purposes, such elections, if made, to be effective on or before the Closing Date
and, where necessary, take reasonable actions to enable such elections to be
made. Purchaser will not take or cause to be taken any Tax reporting position
with respect to such Selling Subsidiaries or Sold Subsidiaries that is
inconsistent with such elections.
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
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thereon that the Business is a division or unit of CBS, 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
Electric Company," "Westinghouse," "WELCO" 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 90 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 CBS.
Purchaser shall not reorder or produce any Supplies which state or otherwise
indicate thereon that the Business is a division or unit of CBS 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, CBS shall cause the Sold Subsidiaries to transfer
(and shall use its reasonable efforts to inform Purchaser of each such transfer
prior thereto), without consideration, any Subsidiary Assets not relating
primarily to the Business (including the assets set forth in Schedule 5.16) to
CBS or Subsidiaries of CBS other than the Sold Subsidiaries or to any third
party designated by CBS. After the Closing, Purchaser will cooperate with CBS to
transfer without consideration at CBS's request any such Subsidiary Assets to
CBS or Subsidiaries of CBS or to any third party designated by CBS and CBS shall
reimburse Purchaser for its reasonable expenses and all Taxes incurred in
connection therewith.
SECTION 5.17. REMOVAL OF EXCLUDED ASSETS AND LIABILITIES FROM
SOLD SUBSIDIARIES. The parties acknowledge that the Excluded Assets and Excluded
Liabilities are held by, or are obligations of, certain of the Sold
Subsidiaries. Sellers will at the request of Purchaser use their reasonable best
efforts either (i) to transfer the Acquired Assets held by any such Subsidiary
directly to Purchaser (in which event Sellers will retain the Sold Subsidiary)
or (ii) to transfer out of any such Subsidiary, or otherwise appropriately
protect Purchaser from, any such Excluded Assets and Excluded Liabilities held
by any such Subsidiary, and CBS shall reimburse Purchaser for its reasonable
expenses and all Taxes incurred in connection therewith.
SECTION 5.18. CREDIT SUPPORT. Purchaser acknowledges that in
the course of the conduct of the Business, CBS and its Subsidiaries have entered
into and expect to continue to enter into various arrangements (i) in which
guarantees (including guarantees 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 CBS and its Subsidiaries or (ii) in
which CBS and its Subsidiaries are the primary or secondary obligors on debt
instruments or financing or other contracts or agreements, in any such case to
support or
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facilitate business transactions of the Sold Subsidiaries. Such arrangements by
such parties are hereinafter referred to as the "Credit Support Arrangements."
Schedule 5.18 sets forth a list of all Credit Support Arrangements existing as
of the date hereof. Not later than the Closing, Purchaser will (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. CBS and its Subsidiaries will cooperate with
Purchaser in arranging any such substitution, provided that neither CBS nor its
Subsidiaries shall be required to expend any material sum in connection
therewith.
SECTION 5.19. NON-COMPETITION AND CONFIDENTIALITY.
(a) For a period of five years from the Closing, CBS shall
not, and shall cause each of the other Sellers and its other Affiliates not to,
directly or indirectly, engage in any business that is in competition with the
Business. Notwithstanding anything to the contrary contained in this Section
5.19, Purchaser hereby agrees that the foregoing covenant shall not be deemed
breached as a result of (i) the ownership by CBS or any Affiliate of CBS of less
than an aggregate of 5% of any class of capital stock of a person engaged,
directly or indirectly, in a business that is in competition with the Business
or less than 10% in value of any instrument of indebtedness of a person engaged,
directly or indirectly, in a business that is in competition with the Business,
(ii) the retention and conduct by CBS of the Process Control Business, the Power
Generation Business and any other business in which it is currently engaged,
(iii) any action taken by CBS or any of its Affiliates pursuant to this
Agreement or a Seller Ancillary Document, (iv) any action taken by CBS or any of
its Affiliates or by any third party at the direction of CBS in connection with
discharging its obligations under any guarantees (including guarantees of
performance under contracts or agreements), assumption of obligations, letters
of credit or other similar arrangements, including surety and performance bonds,
in effect at the Closing Date or (v) the acquisition by CBS or any Affiliate of
CBS of any person (A) which derives less than $10,000,000 in revenues from
businesses in competition with the Business or (B) the predominant business of
which is not in competition with the Business if after such acquisition CBS or
its Affiliates uses reasonable best efforts to divest the business of such
Person that is in competition with the Business within 270 days after the
acquisition of such business.
(b) For a period of ten years after the Closing, CBS agrees
to, and to cause each of the other Sellers and its other Affiliates to, maintain
the confidentiality of all confidential information with respect to the Business
and the Acquired Assets, or learned by CBS or any Seller directly or indirectly
from Purchaser, including 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
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lists (the "Confidential Information"), and shall not disclose any Confidential
Information, except (i) in the event CBS or any of its Affiliates is required to
disclose any of such information pursuant to applicable Law or by applicable
legal process, (ii) to the extent such information becomes generally available
to the public other than as a result of a disclosure by CBS or its Affiliates,
(iii) to the extent such information was available to CBS or its Affiliates on a
non-confidential basis prior to its disclosure to CBS or its Affiliates, or (iv)
to the extent such information becomes available to CBS or its Subsidiaries on a
non-confidential basis from a source other than CBS or its Affiliates, provided
that such source is not prohibited from disclosing such information by a
contractual, legal or fiduciary obligation. In the event CBS or any of its
Subsidiaries is required to disclose any of such information pursuant to
applicable Law or by applicable legal process, CBS or its respective Subsidiary
shall, to the extent practicable under the circumstances, inform Purchaser
sufficiently in advance of such disclosure to afford Purchaser the opportunity
to resist disclosure and shall use its reasonable commercial efforts to
cooperate with Purchaser in efforts to minimize the amount of information to be
disclosed and to seek to prevent its disclosure to third parties.
(c) For a period of five years after the Closing, neither CBS
nor Purchaser shall, directly or indirectly, knowingly solicit or encourage to
leave the employment of CBS or Purchaser, any employee of Purchaser or the WELCO
divisions of CBS, as the case may be.
(d) If CBS or any other Seller breaches, or threatens to
commit a breach of, any of the provisions of Section 5.19(a), (b) or (c) (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 the right to an entry against CBS 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 CBS to account for and
pay over to Purchaser all compensation, profits, monies, accruals,
increments or other 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.
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(e) 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.
(f) Notwithstanding the foregoing, nothing contained in the
Agreement shall impair, impede, prevent, inhibit, limit or restrict CBS 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 Power Generation
Business, or (y) the Process Control Business, provided the scope of each of
such businesses is primarily related to the goods and services which it has
typically provided under (x) and (y) or (ii) selling or otherwise transferring
the Power Generation Business or the Process Control Business 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.
(g) 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.
SECTION 5.20. RELATED AGREEMENTS. At or prior to the Closing,
CBS and Purchaser agree to enter into the following agreements:
(a) TRANSITIONAL SERVICES. CBS and Purchaser shall enter into
an agreement in form and substance reasonably satisfactory to each of them (the
"Transitional Services Agreement"), whereby each party will provide to the other
party certain transitional services which are currently provided to such party
by the other party for a period of twelve (12) to twenty-four (24) months after
the Closing Date. The Transitional Services Agreement shall cover, at a minimum,
the items set forth on Exhibit D.
(b) BUSINESS SUPPLY AGREEMENT. CBS and Purchaser shall enter
into a supply agreement (the "Business Supply Agreement"), substantially on the
terms set forth in Exhibit A hereto (with respect to the Process Control
Division).
(c) 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 CBS
currently located in the Premises and who are not Business Employees.
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(d) 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 property,
with respect to the conduct of the Process Control Business and Power Generation
Business at the field sales offices included in the Premises.
SECTION 5.21. BUSINESS RELATIONSHIPS WITH SELLERS. CBS and
Purchaser acknowledge that the Business has had relationships with other
businesses within Sellers, including performance obligations under Contracts,
which have not been documented by a formal written agreement. In particular, the
Business has been involved with the GESCO Businesses, the Process Control
Business and the Power Generation Business. The parties agree that, except for
specific provisions in this Agreement and the Seller Ancillary Documents which
expressly provide for any different treatment, prior to the Closing, the parties
will enter into arrangements, reasonably satisfactory to the parties,
documenting any such pre-existing relationships, including any subcontract
arrangements, which shall be maintained on such documented basis by Purchaser
after the Closing.
SECTION 5.22. SCIENCE AND TECHNOLOGY CENTER. CBS operates a
Science and Technology Center in Churchill, Pennsylvania ("STC"), which provides
research and development support to CBS's industrial businesses, including the
Business, the Power Generation Business and the GESCO Businesses. In addition,
CBS has entered into a sublease arrangement with Northrop Grumman with respect
to a portion of the STC premises and will enter into a sublease arrangement with
Siemens Power Generation Corporation with respect to the portion of the STC
premises utilized for the Power Generation Business. The Acquired Assets shall
include, 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 in Schedule
5.22 (which CBS represents reflects a list, that is true and complete in all
material respects, of programs sponsored or being performed by the Energy
Systems Business on behalf of itself or third parties as of the date hereof) 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
to the extent provided therein. For purposes of this Agreement, employees who as
of the Closing Date primarily render services that provide research and
development support to the Business or on behalf of any STC Programs (and such
other employees located at STC as Seller and Purchaser may mutually agree) shall
constitute the "STC Employees."
On the Closing Date, CBS shall sublease to Purchaser a portion
of the premises and the Fixtures and Equipment at the STC necessary to the
effective operation of the Business and the STC Programs (which shall include
the facilities (known as the "hot cells") to examine irradiated material from
Nuclear Installations and all related Fixtures and Equipment), and an
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appropriate interest in the common areas at such premises pursuant to a mutually
acceptable sublease containing the terms and conditions set forth in Schedule
5.22, as well as customary terms and conditions and such other terms and
conditions as are reasonably acceptable to the parties. Purchaser and CBS agree
that the terms of the sublease with respect to the premises shall not be
materially more restrictive to Purchaser than the terms of the master lease with
respect to the STC are to CBS. CBS 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.
SECTION 5.23. U.S.-CONTROLLED ENTITY. For at least three (3)
years after the Closing, Purchaser (i) shall (for so long as it owns the
Business or any interest therein) at all times be a U.S.-Controlled Entity,
shall maintain a presence in the United States, and shall principally administer
the business in the United States, and (ii) shall not transfer, convey, assign
or sell any of its interest in the Business to a Person which is not a
U.S.-Controlled Entity. Purchaser shall during such period take all actions
necessary, as required to obtain and maintain an acceptable Foreign Ownership
Control and Influence determination with the appropriate Governmental
Authorities. Purchaser shall during such period take all steps reasonably
necessary, as required, to comply with U.S. requirements with respect to the
export of U.S. technology, and, upon request, to provide CBS with reasonable
written assurance that such steps have been taken.
SECTION 5.24. INSURANCE MATTERS. CBS shall place its insurers
on notice of all liability and workers' compensation claims which are made prior
to the Closing and property losses to the Acquired Assets occurring prior to the
Closing. Purchaser's rights under Section 2.2(a)(xviii) in respect of insurance
shall be subject to any applicable policy deductibles set forth in Schedule
4.1(i) and co-payments provisions or any payment or reimbursement obligations of
CBS or any of its Affiliates in respect thereof; and Purchaser shall be
responsible for and be entitled to the benefit of any retrospective premium,
cost or benefit associated with claims that are subject of the insurance
proceeds referred to in Section 2.2(a)(xviii). Notwithstanding the above or the
provisions of Section 2.2(a)(xviii), subject to the first sentence of Section
5.1, CBS may, in its sole discretion, liquidate, commute, settle, modify or
amend any of its insurance policies in any respect. No later than thirty (30)
days prior to the Closing, Purchaser shall have the right, and be given access
to such workers compensation data, all at its expense, as may be necessary to
conduct an actuarial reserve analysis.
SECTION 5.25. GUARANTEE AGREEMENT. Concurrent with the
execution of this Agreement, the Guarantors are executing the Guarantee
Agreement in the form of Exhibit E hereto (the "Guarantee Agreement").
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SECTION 5.26. WAIVERS. CBS shall use its commercially
reasonable efforts to, and to cause its Sold Subsidiaries to, obtain from each
director of each Sold Subsidiary waivers as of the Closing Date of any claim
such director may have against Purchaser or the Sold Subsidiaries.
SECTION 5.27. THIRD PARTY AGREEMENTS. CBS has provided
Purchaser with a true and complete copy of the forms of (or term sheets relating
to) shared technology agreements, business supply agreements and settlement
support agreements to be entered into between CBS and the purchasers of the
Power Generation Business and the Process Control Business (collectively, the
"Third Party Agreements"). It is understood and agreed that if (a) any of the
Third Party Agreements are entered into prior to the Closing substantially in
the form so provided, Purchaser shall acquire CBS' rights and assume CBS'
obligations thereunder (in each case to the extent rights and obligations relate
to the Business and the Intellectual Property and Technology) and (b) if the
Closing occurs prior to the execution of any of the Third Party Agreements,
Purchaser shall enter into any such Third Party Agreement substantially in the
form previously so provided with the purchaser of the applicable business. CBS
shall afford Purchaser a reasonable opportunity to review and comment on the
final form of the business supply agreement to be entered into with the
purchaser of the Process Control Business to confirm that it is substantially on
the terms set forth in Exhibit A hereto.
SECTION 5.28. [Intentionally omitted].
SECTION 5.29. YEAR 2000 MATTERS. Prior to the Closing Date,
the Sellers and the Sold Subsidiaries shall:
(i) use commercially reasonable efforts to implement the Year
2000 Plan in accordance with its terms;
(ii) provide to Purchaser copies of internal management
reports on the status of implementation of the Year 2000 Plan;
(iii) use commercially reasonable efforts to cause the PRISM
payroll system to be operational and in compliance with the Year 2000
Plan; and
(iv) notify all purchasers (not notified prior to the date
hereof) of versions of the WDPF product that are prior to the 6.01
version that modifications are available to such product to address
Year 2000 issues.
SECTION 5.30. JOINT DEFENSE AGREEMENT. Prior to the date
hereof, CBS and Purchaser have executed the Joint Defense Agreement attached as
Exhibit F hereto.
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SECTION 5.31. WALTZ MILL SERVICE CENTER. ESBU operates a Waltz
Mill Service Center in Madison, Pennsylvania which provides engineering and
technical nuclear services to a variety of customers. CBS is currently
implementing certain decontamination and decommissioning actions, pursuant to
NRC approved plans, primarily in the test reactor and solid and liquid waste
processing areas at the Center. On the Closing Date, CBS shall lease to
Purchaser the Waltz Mill Service Center pursuant to a mutually acceptable
"triple net" lease containing customary terms and conditions and such other
terms and conditions as are reasonably acceptable to the parties. The Acquired
Assets shall include all Fixtures and Equipment (other than any equipment
primarily used in the decontamination and decommissioning of the test reactor)
related to the Waltz Mill Service Center.
SECTION 5.32. GUARANTEE AGREEMENT. Purchaser shall use its
best efforts to cause the condition precedent set forth in Section 6.3(c)(ii) to
be satisfied on or prior to the date when all other conditions precedent to the
Closing set forth in Article 6 have been satisfied or waived, or are capable of
being satisfied. Purchaser shall, or shall cause its Affiliates to, pay all
expenses incident to obtaining or maintaining a letter of credit or other
financial instrument pursuant to Section 6.3(c)(ii).
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The
obligation of Purchaser to purchase the Acquired Assets and assume the Assumed
Liabilities and the obligation of CBS 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.
(c) GOVERNMENTAL ACTION. There shall not be any material
pending suit, action or proceeding by any Governmental Authority 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.
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(d) GOVERNMENTAL CONSENTS. The consents and authorizations by
or of Governmental Authorities set forth in Schedule 6.1(d) shall have been
obtained and shall be in full force and effect.
(e) CONSUMMATION OF THE GESCO ASSET PURCHASE AGREEMENT. The
transactions contemplated by the GESCO Asset Purchase Agreement shall have been
consummated concurrently with the Closing on the Closing Date.
SECTION 6.2. CONDITIONS TO OBLIGATION OF PURCHASER. The
obligation of Purchaser to purchase the Acquired Assets and assume the Assumed
Liabilities is subject to the satisfaction at and as of the Closing of each of
the following conditions, any and all of which may be waived in whole or in part
by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CBS set forth in this Agreement (determined without regard to any
materiality qualification or exception in any representation or warranty) 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 in each case for such failures of representations and
warranties to be true and correct (i) as the result of changes permitted or
contemplated by this Agreement and (ii) 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 CBS to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF CBS. CBS 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 Purchaser shall have received a
certificate signed by an authorized officer of CBS to such effect.
(c) MATERIAL PERMITS. Purchaser and the Sold Subsidiaries
shall have, on the Closing Date, all permits, licenses, franchises 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 CBS 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 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
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authorizations by or of Governmental Authorities in lieu of any Permits held by
any Seller or Sold Subsidiary.
(d) CONVEYANCING DOCUMENTS. Sellers shall have executed and
delivered such deeds, bills of sale, assignments and other instruments, each in
form and substance reasonably satisfactory to Purchaser, as shall be necessary
or appropriate to convey the Acquired Assets in accordance with this Agreement.
(e) OPINION OF CBS'S COUNSEL. Purchaser shall have received an
opinion or opinions dated the Closing Date of counsel to CBS, in form and
substance reasonably satisfactory to Purchaser, with respect to the matters set
forth in Schedule 6.2(e) hereto.
SECTION 6.3. CONDITIONS TO OBLIGATION OF CBS. The obligation
of CBS 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, any and all of which may be
waived in whole or in part by CBS:
(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 CBS 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 CBS shall have received a
certificate signed by an authorized officer of Purchaser to such effect.
(c) GUARANTEE AGREEMENT.
(i) The Guarantee Agreement shall be in full force and effect,
and the Guarantors shall have complied in all material respects with
all of their obligations thereunder.
(ii) The condition precedent set forth in Section 17 of the
Guarantee Agreement shall have been satisfied.
(d) OPINION OF PURCHASER'S COUNSEL. CBS shall have received an
opinion or opinions dated the Closing Date of counsel to Purchaser and the
Guarantors in form and
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substance reasonably satisfactory to CBS with respect to the matters set forth
in Schedule 6.3(d) hereto.
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 CBS and Purchaser;
(ii) by CBS if any of the conditions set forth in Sections 6.1
or 6.3 shall have become incapable of fulfillment, and shall not have
been waived by CBS;
(iii) by Purchaser if any of the conditions set forth in
Sections 6.1 or 6.2 shall have become incapable of fulfillment, and
shall not have been waived by Purchaser; or
(iv) by CBS or Purchaser (upon 10 days' written notice) if the
Closing does not occur on or prior to March 31, 1999 (as extended as
hereinafter provided, the "Termination Date");
provided, however, that (x) 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
and (y) no termination pursuant to clause (iv) shall be effective if, as of the
Termination Date, all conditions precedent to Closing set forth in Article 6
have been satisfied or waived on or before such date or are capable of being
satisfied on such date, other than the conditions precedent set forth in
Sections 6.1(a) and 6.1(d), and prior to the expiration of the ten-day period
referred to in clause (iv), the non-terminating party notifies the terminating
party in writing that it is extending the Termination Date; provided, that the
Termination Date may not be extended beyond June 30, 1999.
(b) In the event of termination by CBS, 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:
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(c) 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 CBS; and
(d) all confidential information received by Purchaser with
respect to the 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.
(e) 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 Sellers, (ii)
this Agreement relating to expenses (including Sections 5.2(b), 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. Purchaser, on the one hand, or CBS, on the other hand, may, by
an instrument in writing, 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.
ARTICLE 8
INDEMNIFICATION
SECTION 8.1. INDEMNIFICATION BY CBS.
(a) Notwithstanding anything in the Novation Agreements to the
contrary, CBS 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 (payable quarterly upon written request), to the extent arising from,
relating to or otherwise in respect of:
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(i) any breach of any representation or warranty of CBS
contained in any Section of this Agreement (other than the
representations and warranties contained in Sections 4.1(j)(B) (to the
extent related to Business-Related Environmental Liabilities) and
4.1(n)) determined (except in respect of (A) of Sections 4.1(c)(i),
4.1(c)(ii), 4.1(d)(ii), 4.1(j)(A)(xv), 4.1(j)(C), 4.1(l), 4.1(s)(ii)(A)
and 4.1(t) and Section 2(a) of Annex S 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 of
Net Assets;
(v) (A) any breach of any representation or warranty contained
in Sections 4.1(j)(B) (to the extent related to Business-Related
Environmental Liabilities) or 4.1(n) and (B) any Business-Related
Environmental Liability (other than those Environmental Liabilities
assumed by Purchaser pursuant to Sections 2.3(a)(vii) and 2.3(a)(xvi));
(vi) the matters set forth in the first paragraph of Schedule
8.1(a)(vi); or
(vii) subject to Purchaser's obligations under Section 8.2(x),
all cash expenditures paid by Purchaser to third parties during the
period described in Section 8.5(e) in respect of any Decontamination
and Decommissioning Liabilities with respect to facilities or equipment
located on the Premises on the Closing Date (other than Decontamination
and Decommissioning Liabilities which arise from, relate to or are
otherwise in respect of (v) modifications after the Closing Date to
facilities or equipment, (w) the addition of new facilities or
equipment constructed or installed on the Premises after the Closing
Date, (x) operations conducted at any such facilities after the Closing
Date (which were not conducted at such facilities prior to the Closing
Date), (y) any action, omission or failure to act by Purchaser relating
to the termination of service, decommissioning or demolition of
facilities or equipment on the Premises, which, but for such action,
omission or failure to act, would not have occurred at such time and
(z) the acceleration into the applicable period described in Section
8.5(e) of costs, Losses, Liabilities and Environmental Liabilities
which, but for such acceleration, would have been incurred after such
period (any such Decontamination and Decommissioning Liabilities
referred to in clauses (v) through (z) being referred to herein as
"Purchaser's D&D")).
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provided, however, that
(A) CBS shall not have any Liability under clause (i)
above unless the aggregate of all Losses relating
thereto for which CBS would, but for this clause (A),
be liable under clause (i) above exceeds $40,000,000,
and then only to the extent of any such excess;
(B) CBS shall not have any obligation to pay, in respect
of Losses indemnifiable pursuant to clause (i) above,
an amount in excess of $800,000,000 in the aggregate;
(C) for purposes of calculating Losses under clauses (i)
and (ii) above and determining the aggregate of all
Losses pursuant to clause (A) of this proviso, CBS
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 facts or circumstances, event or
transaction) does not exceed $15,000;
(D) CBS shall not have any Liability under this Section
8.1 and Annex S 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;
(E) CBS shall not have any Liability in respect of any
Losses under clause (v) above except to the extent
the aggregate of all such Losses for which CBS, but
for this clause (E), would be liable exceeds
$25,000,000, in which case, (w) for aggregate Losses
of more than $25,000,000, but less than $50,000,000,
CBS shall pay 50% of such Losses, (x) for aggregate
Losses of $50,000,000 or more but less than
$100,000,000, CBS shall pay 75% of such Losses, (y)
for aggregate Losses of $100,000,000 or more but less
than $200,000,000, CBS shall pay 50% of such Losses
and (z) for aggregate Losses of $200,000,000 or more,
CBS shall pay 100% of all other such Losses;
(F) for purposes of calculating Losses under clause (v)
above and determining the aggregate of all Losses
pursuant to clause (E) of this proviso, CBS shall not
have any liability if the aggregate amount of such
Loss relating to a single claim (or group of claims
relating to the same facts or circumstances, event or
transaction) does not exceed $1,000,000;
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(G) CBS shall not have any Liability under clause (vi)
above except to the extent the aggregate of all
Losses relating thereto for which CBS would, but for
this proviso, be liable under clause (vi) above
exceeds $16,000,000 (subject to reduction as provided
in Schedule 8.1(a)(vi)), and then (x) each of CBS and
Purchaser shall be liable for fifty percent (50%) of
the first $20,000,000 in aggregate Losses in excess
of such amount and (y) CBS shall be liable for one
hundred percent (100%) of any such Losses in excess
of $36,000,000 (subject to reduction as provided in
Schedule 8.1(a)(vi)); and
(H) CBS shall not have any Liability in respect of any
Losses under clause (vii) above except to the extent
that the aggregate of all such Losses for which CBS
would, but for this clause (H), be liable under such
clause (vii) exceed $155,000,000.
With respect to Losses for which CBS has Liability pursuant to
Sections 8.1(a)(v) or (vii) and to the extent that such Liability involves the
implementation of a Remedial Action, (i) in no event shall CBS'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) CBS shall have the right
at its sole cost and expense 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 CBS's comments.
Purchaser shall provide all plans, reports and submissions to any Governmental
Authority regarding any such Remedial Action in draft form to CBS a reasonable
time prior to transmission of such items to such Governmental Authority and
Purchaser shall review and in good faith consider any of CBS's comments on such
plans, reports and submissions. CBS and its representatives shall have the
opportunity to be present and participate at any meetings with Governmental
Authorities.
Notwithstanding any other limitation in this Section 8.1, with
respect to the Waltz Mill Service Center, CBS shall, at its sole cost and
expense, implement all remedial measures, including removal and decontamination
activities, as may be required by and are in accordance with approvals received
or to be received from the NRC (the "Plans") (x) in those areas of the Waltz
Mill Service Center identified in the Plans as "Retired Facilities" and (y)
which are associated with the termination of the TR-2 NRC License, which Plans
are incorporated herein by reference. CBS shall have the responsibility and sole
and exclusive
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authority to negotiate with and respond to the NRC (and any other Governmental
Authority) with respect to any issues which may arise during implementation of
the Plans, including, but not limited to, dose assessment and surveying issues.
CBS shall continue to be obligor with respect to responsibility and liability
for implementing the Plans and shall so advise the NRC. Purchaser shall have the
right, at its sole cost and expense, to review and provide CBS with written
comments in a reasonable time prior to transmission of plans, reports and
submissions to the NRC or any other Governmental Authority and CBS shall review
and in good faith consider any of Purchaser's comments on such plans, reports
and submissions. Any dispute between CBS and Purchaser with respect to such
plans, reports and submissions shall be addressed in the manner set forth in
Section 8.8 of this Agreement (Arbitration of Certain Environmental
Liabilities). Notwithstanding any leasehold interest Purchaser may have in the
Waltz Mill Services Center Facilities, Purchaser shall afford CBS, its agents,
employees, contractors, subcontractors and other representatives reasonable
access to the Waltz Mill Service Center from and after the Closing, until such
time as the Plans have been completed and NRC has approved completion of the
Plans. Such access shall also include access to electrical, water, and other
utilities as may be required by CBS to implement the Plans. Such access shall
include, but not be limited to, the laboratory, boiler room, health physics
area, engineering and electrical room.
Notwithstanding the foregoing, from and after the time, if
any, as clause (E)(z) or (H) of the third 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 CBS 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) CBS and Purchaser do not
agree as to whether Remedial Action or any significant portion of a Remedial
Action is required by an Environmental Law, the parties shall submit such
dispute to arbitration pursuant to Section 8.8 or (Y) CBS 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 CBS 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
8.8.
(b) Notwithstanding anything to the contrary contained in this
Article 8 or Annex S, CBS and Purchaser have agreed to allocate responsibility
for certain Assumed Liabilities pursuant to specific provisions of this
Agreement. It is the intent of the parties that such provisions be the sole and
exclusive means for recovery of amounts that otherwise might
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constitute Losses indemnifiable by CBS under this Article 8. Accordingly, CBS
shall not have any Liability under clause (i) of Section 8.1(a) for any breach
of representation or warranty by CBS contained in the Agreement (other than
those contained in Section 2 of Annex S) if the claim for breach of
representation or warranty relates to any Assumed Liability (including
Business-Related Environmental Liabilities) for which CBS and Purchaser have
expressly allocated responsibility pursuant to the provisions listed in Schedule
8.1(b); provided that nothing in this Section shall eliminate, diminish or
otherwise affect Purchaser's obligations under Sections 3 and 4 of Annex S.
(c) Purchaser acknowledges and agrees that 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 and except as
provided in Annex S with respect to Steam Generator Liabilities) 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, Environmental Law or otherwise (except pursuant to the indemnification
provisions set forth in this Article 8).
SECTION 8.2. INDEMNIFICATION BY PURCHASER. Without limiting
Purchaser's rights under Section 8.1 and Annex S, 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, (payable quarterly upon written
request), to the extent arising from, relating to or otherwise in respect of:
(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) any Assumed Liabilities;
(iv) all Liabilities of the Sold Subsidiaries;
(v) all Indebtedness included in the Statement of Net Assets;
(vi) any Liability under the WARN Act or similar statute to
the extent arising from the actions of Purchaser after the Closing;
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(vii) any Liability under any Credit Support Arrangement
following the Closing;
(viii) any Liability relating to the performance or failure to
perform under any Contracts, Intellectual Property or Technology
assigned to Purchaser pursuant to Sections 5.4(b) or 5.4(c) (in the
case of Section 5.4(c), to the extent Purchaser is provided the
benefits of any Contract, Intellectual Property or Technology);
(ix) 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, including all Liabilities which arise from, relate to or are
otherwise in respect of Purchaser's D&D (as defined in Section
8.1(a)(vii)); or
(x) the termination, cessation, or alteration of Purchaser's
activities at the Waltz Mill Service Center site, but only to the
extent that such termination, cessation, or alteration gives rise to
incremental Decontamination and Decommission Liabilities associated
with a change in site use classification by a Governmental Authority
from industrial to non-industrial. Any dispute between CBS and
Purchaser with respect to the Losses described in this clause (x) shall
be addressed in the manner set forth in Section 8.8.
SECTION 8.3. CHARACTERIZATION OF INDEMNIFICATION PAYMENTS. All
amounts paid by CBS or Purchaser, as the case may be, under this Article 8 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.
(a) The amount of any Loss shall be:
(i) 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 CBS under this Article 8) with
respect to such Loss;
(ii) (A) 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
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increase) and (B) 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 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
(iii) to avoid double-counting as to any matter, determined
after giving effect to any reserves on the books of the Business as of
the Closing Date in respect of such matter if and to the extent such
reserve was reflected in the Statement of Working Capital or the
Balance Sheet; provided that this clause (iii) shall not apply in
determining the amount of any Loss for purposes of clause (v), (vi) or
(vii) of Section 8.1(a) or Sections 3 and 4 of Annex S.
(b) 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.
(c) Purchaser shall use its commercially reasonable efforts
consistent with past practice in relation to the Energy Systems Business to
pursue any and all rights to reimbursement, recovery or indemnification for
Losses pursuant to any Government Contract prior to bringing any claim against
CBS under this Article 8.
(d) Notwithstanding anything to the contrary in this Agreement
and the GESCO Asset Purchase Agreement, neither CBS nor Purchaser shall have any
Liability for Losses indemnifiable under Article 8 of either agreement to the
extent such party has previously been indemnified with respect to such Losses
pursuant to Article 8 of the other agreement.
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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; 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 5.14(l), 8.6
or 8.7 (stating in reasonable detail the basis of such claim) to the party to be
providing the indemnification; (b) pursuant to clause (a)(v)(B) of Section 8.1,
shall terminate on the eighth anniversary of the Closing Date; (c) pursuant to
clause (a)(vi) of Section 8.1 shall terminate on the fourth anniversary of the
Closing Date; (d) pursuant to Section 3(b) of Annex S, shall terminate on the
fourth anniversary of the Closing Date; (e) pursuant to clause (a)(vii) of
Section 8.1 shall terminate as to any equipment or facility on the earliest of
(i) the tenth anniversary of the Closing Date, (ii) the expiration or voluntary
or involuntary termination of an NRC Permit or Permit issued by a foreign
Governmental Authority after the Closing Date giving rise to Decontamination and
Decommissioning Liabilities, and (iii) the discontinuance or closedown of a
facility after the Closing Date giving rise to Decontamination and
Decommissioning Liabilities; and (f) pursuant to the other clauses of Sections
8.1 and 8.2 and Annex S shall not terminate.
SECTION 8.6. PROCEDURES RELATING TO THIRD PARTY CLAIMS (OTHER
THAN TAX CONTROVERSIES AND ENVIRONMENTAL LIABILITIES).
(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 or Environmental Liability, procedures for
which are specified in Section 5.14(l) in the case of Tax Controversies and
Section 8.9 in the case of Environmental Liabilities) (a "Third Party Claim"),
such indemnified party must notify the indemnifying party in writing, and in
reasonable detail, of the Third Party Claim within 10 business days after
receipt by such indemnified party of 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, including loss
of any rights of subrogation (except that the indemnifying party shall not be
liable for any expenses incurred during the period in which the indemnified
party failed to give such notice). 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.
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(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 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, Tax Controversy or Environmental Liability 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. If the indemnifying
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party does not notify the indemnified party within 30 calendar days following
its receipt of such notice that the indemnifying party disputes its liability to
the indemnified party under this Agreement, such claim specified by the
indemnified party in such notice shall be conclusively deemed a liability of the
indemnifying party under this Agreement and the indemnifying party shall pay the
amount of such liability to the indemnified party on demand or, in the case of
any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, subject to Section 9.8, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction.
SECTION 8.8. ARBITRATION OF CERTAIN ENVIRONMENTAL LIABILITIES.
Any dispute as to the scope of work or the type of Remedial
Action, whether a cost or Loss is a Decontamination and Decommissioning
Liability or the matters concerning the Waltz Mill Service Center described in
Sections 8.1(a) and 8.2(x) 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 10 days after delivery of the notice of
commencement of arbitration referred to above, the Purchaser and CBS 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 determined by the arbitrator
(which determination shall be final and binding on the Purchaser and CBS), 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 CBS
involved in such arbitration, on the other hand.
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SECTION 8.9. PROCEDURES RELATING TO CLAIMS CONSTITUTING AN
ENVIRONMENTAL LIABILITY.
(a) After the Closing, each of Purchaser and CBS shall notify
(the "Notifying Party") the other in writing, and in reasonable detail, of any
claim in respect of, arising out of or involving a claim made by any Person
against the Notifying Party constituting an Environmental Liability or a breach
of the representations and warranties contained in Section 4.1(j)(B) (to the
extent related to Business-Related Environmental Liabilities) or Section 4.1(n)
(a "Shared Claim"), within 10 business days after receipt by the Notifying Party
of written notice of the Shared Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the other party shall have been actually prejudiced as a result of
such failure (except that the other party shall not be liable for any expenses
incurred during the period in which the Notifying Party failed to give such
notice). Thereafter, each party shall deliver to the other party, promptly after
such party's receipt thereof, copies of all notices and documents (including
court papers) received by the such party relating to the Shared Claim.
(b) Subject to the provisions of Sections 8.1(a) with respect
to Remedial Actions, during the period from the date hereof to the Closing Date,
Purchaser and CBS shall negotiate in good faith and enter into one or more
agreements governing defense of Shared Claims, it being agreed that any such
agreement shall provide that:
(i) Purchaser and CBS will each be entitled to participate in
the defense of any Shared Claim; provided, however, that if CBS shall
have one hundred percent of the liability in respect thereof pursuant
to Section 8.1(a)(v) such claim shall be treated as a Third Party Claim
under Section 8.6;
(ii) Purchaser and CBS will each cooperate in the defense or
prosecution of any Shared Claim, including the retention and (upon
request) the provision to the requesting party of records and
information which are reasonably relevant to such Shared Claim, and
making employees (including any Business Employees familiar with such
Shared Claim) available on a mutually convenient basis to provide
additional information and explanation of any such records and
information;
(iii) Purchaser and CBS will consult with each other and shall
mutually agree on any significant strategic decisions in respect of any
Shared Claim;
(iv) Purchaser and CBS will consult with each other and shall
mutually agree on any settlement, compromise or discharge of any Shared
Claim;
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(v) neither Purchaser nor CBS shall admit any liability with
respect to, or settle, compromise or discharge, any Shared Claim
without the other party's prior written consent (which consent shall
not be unreasonably withheld); and
(vi) appropriate and mutually agreeable arrangements with
respect to day-to-day administration of any Shared Claim shall be
provided for in such agreements.
SECTION 8.10. STEAM GENERATOR MATTERS. Annex S is incorporated
herein as if fully set forth herein.
SECTION 8.11. SUBROGATION. (a) Without limiting Purchaser's
indemnification obligations pursuant to Section 8.2, in connection with any
defense in respect of, arising out of or involving a claim by any Person against
Sellers or any of their Affiliates, Sellers and their Affiliates shall be
subrogated to the rights of Purchaser under any Contracts included in the
Acquired Assets (including rights to indemnification and reimbursement).
(b) To the extent that Purchaser has refrained from, delayed,
or abandoned pursuing any rights to reimbursement, recovery or indemnification
for Losses pursuant to any Contract with respect to any Losses subject to
indemnification by Purchaser pursuant to Section 8.2, Sellers or their
Affiliates shall have the right, at their election, to commence or assume a
claim or course of action in Purchaser's name with respect to any of Purchaser's
rights subrogated hereunder.
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:
WGNH Acquisition, L.L.C.
c/o Morrison Knudsen Corporation
Attention: Corporate Secretary
720 Park Boulevard
Boise, ID 83712
Telecopy No.: (208) 386-5298
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c/o British Nuclear Fuels plc
Alvin J. Shuttleworth
Company Secretary and Group Legal Director
Risley, Warrington
Cheshire WA3 6AS
England
Telecopy No.: 011-441-925-832058
with a copy to:
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Mark D. Herlach, Esq.
Telecopy No.: (202) 637-3593
(b) if to CBS, to:
Office of General Counsel
CBS 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
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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.
SECTION 9.2. INTERPRETATION. The Exhibits, Annexes and
Schedules are part of this Agreement as if fully set forth in this Agreement.
When a reference is made in this Agreement to a Section, Exhibit, Annex or
Schedule, such reference shall be to a Section of, or an Exhibit, Annex or
Schedule 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 reference is made to "knowledge" with respect to any Seller, it
shall mean the actual knowledge of the Persons named in Schedule 9.2. Any matter
set forth in any Schedule shall be deemed set forth in all other Schedules to
the extent relevant.
SECTION 9.3. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations and warranties contained in this Agreement
(including the representation and warranty contained in the penultimate sentence
of Section 4.1(h)) 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, however, 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(c)(i) shall survive
until the fourth anniversary of the Closing Date; (iii) the representations and
warranties contained in Section 4.1(m) and Section 4.1(j)(B) shall survive until
the close of business 30 months following the Closing Date; and (iv) the
representations and warranties contained in Section 4.1(o), to the extent that
such representations and warranties relate to Income Taxes, shall terminate on
the Closing Date. The covenants contained in this Agreement, except as otherwise
expressly provided, shall survive the Closing indefinitely; provided, however,
that the covenants contained in Sections 5.1, 5.2, 5.3(a) and 5.3(b) shall
terminate on the Closing Date.
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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.
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.
Except as expressly otherwise agreed in writing by the parties hereto, this
Agreement, the Guarantee Agreement, the Novation Agreements and the
Confidentiality Agreements (a) constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements and understandings, negotiations and discussions, whether written and
oral, among the parties with respect to the subject matter hereof, and there are
no warranties, representations or other agreements between the parties hereto in
connection with the subject matter hereof, except as specifically set forth in
this Agreement, the Guarantee Agreements, and the Confidentiality Agreements and
(b) 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) Except as provided in Section 8.8, 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 5.19 or the confidentiality obligations set forth in the
second penultimate sentence of Section 5.2(a) 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.
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(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 CPR
Institute For Dispute Resolution. 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 reasonable 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.
(c) Each of Purchaser and CBS 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
CBS 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 CBS 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 CBS, 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. If one party provides a copy of its proposed press release or public
announcement to the other party, and the other party does not object or comment
on the proposal within forty-eight hours of receipt, such failure to comment
will be treated as consent to publication by the recipient. If such release or
announcement is required by Law or the rules or regulations of a national
securities exchange in the United States, the party required to make the release
or announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of its issuance. The parties will agree on an
appropriate procedure to implement the requirements of this Section 9.9.
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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 assign to one or more Purchaser
Affiliates the right to acquire part or all of the business and assets of the
Business hereunder, together with the other rights of Purchaser hereunder with
respect thereto; provided, however, that any such assignment shall not release
Purchaser from any Liability hereunder (including any Liability under Article 8)
or enlarge or enhance Purchaser's rights or affect any limitations on CBS's
Liability 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.
SECTION 9.11. 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, CBS and Purchaser have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CBS CORPORATION
By:
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Name:
Title:
WGNH ACQUISITION, LLC
By:
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Name:
Title:
By:
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Name:
Title:
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