Asset Purchase Agreement [Government and Environmental Services Company] - CBS Corp. and WGNH Acquisition LLC
EXECUTION COPY
GESCO
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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
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DEFINITIONS................................................ 4
SECTION 1.1. Specified Definitions.......................................................................... 4
SECTION 1.2. Other Terms.................................................................................... 16
SECTION 1.3. Other Definitional Provisions.................................................................. 17
ARTICLE 2
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES........................... 17
SECTION 2.1. Purchase and Sale.............................................................................. 17
SECTION 2.2. Acquired Assets and Excluded Assets............................................................ 17
(a) Acquired Assets....................................................................... 17
(b) Excluded Assets....................................................................... 20
(c) Nonassignable Rights.................................................................. 22
(d) Termination of Rights of Sold Subsidiaries............................................ 23
SECTION 2.3. Assumption of Liabilities...................................................................... 23
(a) Assumed Liabilities................................................................... 23
(b) Excluded Liabilities.................................................................. 25
SECTION 2.4. Purchase Price................................................................................. 27
SECTION 2.5. Purchase Price Adjustment...................................................................... 28
ARTICLE 3
THE CLOSING................................................ 32
SECTION 3.1. Closing Date................................................................................... 32
SECTION 3.2. Transactions to be Effected at the Closing..................................................... 32
(a) Deliveries by Sellers................................................................. 32
(b) Deliveries by Purchaser............................................................... 33
ARTICLE 4
REPRESENTATIONS AND WARRANTIES....................................... 33
SECTION 4.1. Representations and Warranties of CBS.......................................................... 33
(a) Organization, Standing and Power...................................................... 33
(b) Authority............................................................................. 33
(c) Financial Statements; Undisclosed Liabilities......................................... 35
(d) Compliance with Applicable Laws....................................................... 36
(e) Litigation; Decrees................................................................... 37
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(f) Title to Acquired Assets; Leasehold Interests......................................... 37
(g) Real Property......................................................................... 38
(h) Intellectual Property and Technology.................................................. 40
(i) Insurance............................................................................. 41
(j) Contracts............................................................................. 42
(k) Sufficiency of Acquired Assets........................................................ 45
(l) Absence of Certain Changes or Events.................................................. 45
(m) Employee Benefits..................................................................... 46
(n) Environmental Matters................................................................. 49
(o) Taxes................................................................................. 51
(p) Sold Subsidiaries..................................................................... 53
(q) Labor Matters......................................................................... 54
(r) Outstanding Bids...................................................................... 54
(s) Major Suppliers....................................................................... 54
(t) Year 2000............................................................................. 55
(u) Tangible Property..................................................................... 55
SECTION 4.2. Representations and Warranties of Purchaser.................................................... 56
(a) Organization, Standing and Power...................................................... 56
(b) Authority............................................................................. 56
(c) U.S.-Controlled Entity................................................................ 57
(d) U.K. Governmental Authority Approvals................................................. 57
ARTICLE 5
COVENANTS................................................. 58
SECTION 5.1. (a) Covenants of CBS Relating to Conduct of Business.......................................... 58
(b) Advice of Changes..................................................................... 60
SECTION 5.2. Access to Information; Consultation............................................................ 61
SECTION 5.3. Governmental Approvals, Etc.................................................................... 62
SECTION 5.4. Novations of Government Contracts and Third Party Consents..................................... 64
SECTION 5.5. Employee Matters............................................................................... 66
(a) Employee Matters...................................................................... 66
(b) Accrued Vacation...................................................................... 68
(c) Pension Plan.......................................................................... 68
(d) Savings Plan.......................................................................... 68
(e) Union Representation.................................................................. 70
(f) Medical and Disability Benefits; Life Insurance....................................... 70
(g) Severance Obligations................................................................. 74
(h) Executive Compensation................................................................ 74
(i) Retiree Welfare Benefits.............................................................. 75
(j) Retained Liabilities.................................................................. 75
(k) Cooperation........................................................................... 75
(l) WARN Act.............................................................................. 75
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(m) Workers Compensation.................................................................. 75
(n) Free-Standing Plans................................................................... 76
(o) Actuarial Determinations and Payments................................................. 77
(p) No Right to Employment................................................................ 78
(q) Post-Closing Hiring of Employees...................................................... 78
(r) Alternative Procedure................................................................. 78
(s) COBRA................................................................................. 79
SECTION 5.6. Collection of Receivables...................................................................... 79
SECTION 5.7. Expenses....................................................................................... 79
SECTION 5.8. Brokers or Finders............................................................................. 79
SECTION 5.9. Shared Technology and Trademark License Agreements............................................. 80
SECTION 5.10. Certain Information........................................................................... 81
SECTION 5.11. Bulk Transfer Laws............................................................................ 82
SECTION 5.12. Additional Agreements......................................................................... 82
SECTION 5.13. Certain Understandings........................................................................ 82
SECTION 5.14. Allocation; Tax Matters....................................................................... 83
SECTION 5.15. Supplies...................................................................................... 87
SECTION 5.16. Transfer of Assets of Sold Subsidiaries....................................................... 88
SECTION 5.17. Removal of Excluded Assets and Liabilities from Sold Subsidiaries............................. 88
SECTION 5.18. Credit Support................................................................................ 88
SECTION 5.19. Non-Competition and Confidentiality........................................................... 89
SECTION 5.20. Related Agreements............................................................................ 91
(a) Transitional Services................................................................... 91
(b) Facilities.............................................................................. 91
SECTION 5.21. Business Relationships with Sellers........................................................... 92
SECTION 5.22. U.S.-Controlled Entity........................................................................ 92
SECTION 5.23. Insurance Matters............................................................................. 92
SECTION 5.24. Guarantee Agreement........................................................................... 93
SECTION 5.25. Waivers....................................................................................... 93
SECTION 5.26. Third Party Agreements........................................................................ 93
SECTION 5.27. Year 2000 Matters............................................................................. 93
SECTION 5.28. Joint Defense Agreement....................................................................... 94
SECTION 5.29. OCI Compliance................................................................................ 94
SECTION 5.30. Guarantee Agreement........................................................................... 94
ARTICLE 6
CONDITIONS PRECEDENT............................................ 94
SECTION 6.1. Conditions to Each Party's Obligation.......................................................... 94
(a) Certain Waiting Periods............................................................... 94
(b) No Injunctions or Restraints.......................................................... 95
(c) Governmental Action................................................................... 95
(d) Consummation of the ESBU Asset Purchase Agreement..................................... 95
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SECTION 6.2. Conditions to Obligation of Purchaser.......................................................... 95
(a) Representations and Warranties........................................................ 95
(b) Performance of Obligations of CBS..................................................... 95
(c) Conveyancing Documents................................................................ 95
(d) Opinion of CBS's Counsel.............................................................. 96
SECTION 6.3. Conditions to Obligation of CBS................................................................ 96
(a) Representations and Warranties........................................................ 96
(b) Performance of Obligations of Purchaser............................................... 96
(c) Guarantee Agreement................................................................... 96
(d) Opinion of Purchaser's Counsel........................................................ 96
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER..................................... 97
SECTION 7.1. Termination.................................................................................... 97
SECTION 7.2. Amendments and Waivers......................................................................... 98
ARTICLE 8
INDEMNIFICATION.............................................. 98
SECTION 8.1. Indemnification By CBS......................................................................... 98
SECTION 8.2. Indemnification by Purchaser...................................................................102
SECTION 8.3. Characterization of Indemnification Payments...................................................103
SECTION 8.4. Losses Net of Insurance; Tax Loss and Benefits; No Consequential Damages.......................103
SECTION 8.5. Termination of Indemnification.................................................................104
SECTION 8.6. Procedures Relating to Third Party Claims (Other than Tax
Controversies and Environmental Liabilities)...................................................105
SECTION 8.7. Procedures Relating to Non-Third Party Claims..................................................106
SECTION 8.8. Arbitration of Certain Environmental Liabilities...............................................106
SECTION 8.9. Procedures Relating to Claims Constituting an Environmental Liability..........................107
SECTION 8.10. Subrogation...................................................................................108
ARTICLE 9
GENERAL PROVISIONS.............................................109
SECTION 9.1. Notices........................................................................................109
SECTION 9.2. Interpretation.................................................................................110
SECTION 9.3. Survival of Representations, Warranties and Covenants..........................................111
SECTION 9.4. Severability...................................................................................111
SECTION 9.5. Counterparts...................................................................................111
SECTION 9.6. Entire Agreement; No Third Party Beneficiaries.................................................112
SECTION 9.7. Governing Law..................................................................................112
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SECTION 9.8. Mediation; Consent to Jurisdiction.............................................................112
SECTION 9.9. Publicity......................................................................................113
SECTION 9.10. Assignment....................................................................................113
SECTION 9.11. Waiver of Jury Trial; Trial Costs.............................................................114
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List of Exhibits
Exhibit A Shared Technology Agreement
Exhibit B Trademark and Trade Name License Agreement
Exhibit C Terms of Transitional Services Agreement
Exhibit D Guarantee Agreement
Exhibit E Joint Defense Agreement
List of Schedules
Schedule 1.1(a) Leased Real Property
Schedule 1.1(b) Owned Real Property
Schedule 1.1(c) Permitted Liens
Schedule 1.1(d) Selling Subsidiaries
Schedule 1.1(e) 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)(xiv) Other Assumed Liabilities
Schedule 2.3(b) Non-excluded Liabilities
Schedule 2.5(a) Target Amount
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 and Reconciliation
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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)(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
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 and Material Teaming Agreements
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Schedule 4.1(j)(A)(xi) Options or Franchise Agreements
Schedule 4.1(j)(A)(xii) Take-or-Pay or Requirements Agreements
Schedule 4.1(j)(A)(xiii) Sale or Disposition of Assets
Schedule 4.1(j)(A)(xiv) Contracts Outside the Ordinary Course or
Business
Schedule 4.1(j)(A)(xv) License or Development Agreements
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
Schedule 4.1(m)(v) Prohibited Transactions; Reportable Events
Schedule 4.1(m)(vii) Unfunded Benefit Liabilities
Schedule 4.1(m)(viii) Multiemployee Plan 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(n)(iii)(a) Environmental Permits
Schedule 4.1(n)(iii)(b) Material Legal or Administrative Proceedings for
Permits
Schedule 4.1(n)(iv) Governmental Consent to Transfer
Schedule 4.1(n)(v) Outstanding or Threatened Governmental Authority
Non-Compliance Order or Notice of Violations
Schedule 4.1(n)(vi) Agency Action Related to Environmental
Compliance
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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(n)(v) Taxes: Assets Owned by Others and Tax Exempt Use
Property
Schedule 4.1(n)(vi) Taxes: Adjustments due to Change in Accounting
Method
Schedule 4.1(n)(vii) Taxes: Pending Audits or Proceedings
Schedule 4.1(n)(viii) Taxes: Powers of Attorney
Schedule 4.1(n)(ix) Taxes: Adverse Rulings Against Sold Subsidiary
or Acquired Assets
Schedule 4.1(n)(x) Taxes: Compliance with the Code
Schedule 4.1(n)(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
Schedule 5.1(a)(ii) Ordinary Course of Business: Collective
Bargaining Agreements
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
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Schedule 5.5(f)(iv) OPEB Schedule
Schedule 5.16 Subsidiary Assets not Relating Primarily to
Business
Schedule 5.18 Credit Support Arrangements
Schedule 6.2(d) Opinion of CBS Counsel
Schedule 6.3(d) Opinion of Purchaser's Counsel
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 Government and Environmental Services Company
("GESCO"), in businesses which serve the United States government by (i)
managing and 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
(B) 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
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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
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 GESCO Businesses 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 "ESBU 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 Energy
Systems Business; 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, (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
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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
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 Energy Systems Business 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 Energy Systems
Business 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 Energy
Systems Business pursuant to or in accordance with the terms hereof; and
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 ESBU Businesses
and/or other current and former businesses of
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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 ESBU 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.
"Assumed Off-Site Disposal Liabilities" shall mean the first
$5,000,000 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
at the Premises or any property owned or controlled by
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any Governmental Authority where the Business performs or has performed
Government Contracts.
"Assumed Liabilities" shall have the meaning specified in
Section 2.3(a).
"Assumed Pension Plans" shall have the meaning specified in
Section 5.5(c).
"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 any officers or employees or Former Employees of the Business.
"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.
"CERCLA" shall have the meaning specified in the definition of
"Environmental Law".
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"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.
"Contract Modifications" shall have the meaning specified in
Section 4.1(m).
"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), 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 or any property owned or controlled by
any Governmental Authority where the Business performs or has performed
Government Contracts required by the NRC, 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.
"DIS" shall have the meaning specified in Section 4.1(b).
"Emerson" shall have the meaning specified in the recitals.
"Energy Systems Business" shall have the meaning specified in
the recitals of this Agreement.
"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
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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 Decontamination and Decommissioning
Liability and 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.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"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).
"Exon-Florio Amendment" means Section 721 of the Omnibus Trade
and
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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.
"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. Former Employee
shall not include any employee who last worked at a location listed in Section
2.2(b)(xv).
"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.
"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,
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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 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).
"Individual Spun-Off Plans" shall have the meaning specified
in Section 4.1(m)(i).
"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, except for that which relate primarily to Nuclear
Installations.
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"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.
"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(a).
"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.
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"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.
"Non-Governmental Allocation Percentage" shall mean, with
respect to each of the Residual Divisions, that percentage of the "Total Cost
Input" not reimbursed by the applicable government agencies for the year ended
December 31, 1997. Such percentage shall be subject to a final determination
upon completion of an audit by the applicable government agency for 1997.
"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.
"Owned Real Property" means all real property owned by any
Seller or by any Sold Subsidiary and listed on Schedule 1.1(b).
"Parent Companies" means MK and BNFL.
"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 any officers
or employees or Former Employees of the Business employed in the United States.
"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
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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(c), 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.
"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.
"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.
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"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 any Environmental Law, whether or not such action
is taken pursuant or in response to any Agency Action or third party claim.
"Residual Division" shall mean the Plant Apparatus Division
(PAD), EMD, Anniston, Engineered Products (Carlsbad), Government Technical
Services Division (GTSD) and GESCO headquarters divisions of the Business.
"Residual Spun-Off Plan" shall have the meaning specified in
Section 4.1(m)(i).
"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.
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"Selling Subsidiary" means each of the Subsidiaries of CBS
listed on Schedule 1.1(d) 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).
"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(e) under the caption "Sold Subsidiary".
"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).
"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 on Schedule 1.1(a)
or 1.1(b) or that is entirely or
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substantially vacant, "mothballed" or held principally for remediation or other
risk management purposes.
"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, 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, except for that which relate primarily to
Nuclear Installations.
"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).
"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 and, unless otherwise indicated, shall have such
meaning throughout this Agreement.
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SECTION 1.3. OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
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 Sold Subsidiary shall be effected pursuant to a
forward taxable merger of each 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 GESCO Businesses and the
operation of the Premises, including all Intellectual Property and Technology of
the GESCO Businesses, 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):
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(i) all parcels of Owned Real Property listed on Schedule
1.1(b) (and all easements and rights of way appurtenant thereto) owned
by any of the Sellers and all rights of the Sellers as lessee to the
parcels of Leased Real Property listed on Schedule 1.1(a);
(ii) all Inventory that is located on the Premises and all
other Inventory, including Inventory in transit;
(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) all cash of the Sellers held in escrow or trust for
environmental response actions;
(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) subject to Section 5.3(c), 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);
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(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 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
or 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 5.23, (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);
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(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;
(xxi) all assets described on Schedule 2.2(a), whether or not
related to the Business; and
(xxii) all (A) copies of Tax Returns, Tax records and Tax work
papers of the 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 or the Energy Systems
Business) and (B) copies of separate company Income Tax Returns, Income
Tax records, and Income Tax work papers of the Sold Subsidiaries,
provided that, in the case of the 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)(v), (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);
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(iv) except as provided in Section 2.2(a)(xviii), all rights
of Sellers under insurance policies;
(v) all rights, claims and causes of action relating to any of
the Excluded Liabilities or the Excluded Assets, including rights,
claims and causes of action under 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;
(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 (including 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 Energy System Business 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 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
Energy Systems Business, in the manner provided by Section 5.16;
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(xii) all insurance policies of Sellers, including those
described on 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, the Science and
Technology Center located in Churchill, Pennsylvania ("STC") 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) the Contracts (and the related Fixtures and Equipment) to
which any Seller or Sold Subsidiary is a party relating to the
performance of services at Hanford, Idaho Falls and Fernald, or
relating to the Machinery Technology Division;
(xvi) the stock of Westinghouse Hanford Company; and
(xvii) all assets identified in Schedule 2.2(b).
(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 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,
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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):
(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,
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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 any other property owned or controlled by a Governmental
Authority where the Business performs or has performed Government
Contracts 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 or any other
property owned by a Governmental Authority where the Business performs
or has performed Government Contracts;
(vi) (A) all Decontamination and Decommissioning Liabilities
and (B) all Assumed Off-Site Disposal Liabilities;
(vii) all Liabilities relating to the employment or
termination of employment of any employee or Former Employee of the
Business, other than as described in Section 2.3(a)(viii);
(viii) all Liabilities with respect to 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;
(ix) all Liabilities for Taxes (other than Taxes described in
Sections 2.3(b)(ii) and (iii)) attributable to the Business for all
taxable periods;
(x) 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 other businesses of
CBS, only to the extent they relate to employees or Former Employees of
the Business;
(xi) 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,
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including surety and performance bonds, and foreign exchange contracts;
(xii) 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;
(xiii) all Indebtedness reflected on the Statement of Net
Assets; and
(xiv) all Liabilities described on Schedule 2.3(a)(xiv),
whether or not related to the Business.
(b) EXCLUDED LIABILITIES. The term "Excluded Liabilities"
means:
(i) except as set forth on Schedule 2.3(b), any Liability of
Sellers to the extent related to the Excluded Assets (including the
Excluded Assets referred to in Section 2.2(b)(xv));
(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 Taxes attributable to the Business for Pre-Closing
Tax Periods or Sellers' Straddle Periods relating to the
reclassification for federal Tax purposes of any individual from
independent contractor status to employee status;
(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; 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 or any
Property owned or controlled by any Governmental Authority where the
Business performs or has performed Government Contracts, other than the
Assumed
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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);
(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)(xii);
(xiii) 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
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infringement claims asserted in any way, including by way of
declaratory judgment action, opposition proceeding, or infringement
suit involving White Consolidated Industries, Inc.;
(xiv) 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
(xv) 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, the
purchase price for the Acquired Assets (the "Purchase Price") shall consist of
(a) the payment by Purchaser of $237,500,000 (the "Cash
Portion"), payable as set forth in Section 3.2(b); and
(b) 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.
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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 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
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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 $(16,263,000). If the Purchase Price is less than the Adjusted Purchase
Price, Purchaser shall, and if the Purchase Price is greater than the Adjusted
Purchase Price, 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. The terms "Total Current
Assets" and "Total Current liabilities" shall mean the total current assets and
total current liabilities, respectively, of the Business (excluding amounts
related to the performance of services at Hanford, Idaho Falls, Fernald, and
Machinery Technology Division), 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) deferred Income Taxes, and, (v) 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 had 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 such loss
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prior to the Closing would be an Acquired Asset 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 completion, any inventory or accounts
receivable valuation allowances, any product warranty liabilities, environmental
liabilities, including decommissioning and decontamination liabilities, workers
compensation liabilities, or government rate and cost disallowance 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 (excluding amounts related to the performance of services at
Hanford, Idaho Falls, Fernald, and Machinery Technology Division), 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
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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 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 condition to the Closing set forth in Section 6.1(a), or, if the other
conditions to the Closing set forth in Article 6 shall not have been satisfied
or waived by such date, as soon as practicable after such conditions shall have
been satisfied or waived, 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 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
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(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
Cash Portion, (ii) certificates or agreements of merger (with respect to the
Sold Subsidiaries) and (iii) such appropriately executed assumption agreements
and other instruments of assumption providing for the assumption of the Assumed
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).
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 or limited liability company,
as applicable, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, has the requisite corporate or limited
liability company 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 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
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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 on 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 the facilities clearance
requirements of (a) the Defense Investigative Service of the United States
Department of Defense ("DIS"), as set forth in the DIS Industrial Security
Regulation and the DIS Industrial Security Manual, as amended from time to time,
and (b) the U.S. Department of Energy (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 on 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 on 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 $1,000,000 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
$100,000.
(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 on 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 on 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
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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.
(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 $1,000,000. 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(b) 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. 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(a) 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(a) 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 on 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 on 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 on 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 on 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 on 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 on 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 on 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 such
names and marks 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 on 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
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than 60 days' notice);
(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.
All of the Material Contracts are 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 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
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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 on 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.
(D) In connection with the pending governmental audit of the
1995 corporate general and administrative allocation by the Energy Systems
Business to EMD for Government Contracts, there are as of the date hereof no
findings that would reasonably be expected to materially change to the Energy
Systems Business indirect cost rate. There are adequate voluntary decrements
available to offset any audit findings sustained by the contracting officer in
connection with such audit or, if the voluntary decrements are inadequate to
offset any audit findings, any offsets in excess of such voluntary decrements
will not be material to the Business.
(k) SUFFICIENCY OF ACQUIRED ASSETS. Except as disclosed on
Schedule 4.1(k)
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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 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.
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(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 Benefit
Plan (if any such report was required), (C) the most recent summary
plan description for each 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 Benefit Plan, (E) the most recent audited financial
statements and actuarial valuation reports with respect to each Benefit
Plan, to the extent available, and (F) the most recent determination
letter with respect to each Benefit Plan intended to qualify under
Section 401(a) of the Code. Schedule 4.1(m)(i) separately identifies
each Benefit Plan covering only employees or Former Employees of the
Business and four defined benefit plans that will be spun-off from the
Westinghouse Pension Plan covering (x) Bettis, West Valley and Waste
Isolation Divisions of the Business (the "Individual Spun-Off Plans"),
and (y) the Residual Divisions, (the "Residual Spun-Off Plan") which
plans will cover Business Employees and Former Employees of such
divisions (each a "Free Standing Plan"). At Purchaser's request,
subject to CBS consent, not to be unreasonably withheld, CBS shall
cause the Residual Spun-off Plan to take the form of two or more
separate plans, as requested by Purchaser. In such event, whenever
Residual Spun-off Plan is described in this Agreement, it shall refer
to each of such plans, unless the context clearly contemplates
otherwise. CBS will enter into contract modifications ("Contract
Modifications") with the DOE or DOD, which modifications will be
substantially in the form annexed to Schedule 4.1(m)(i) with respect to
the Individual Spun-off Plans, the Westinghouse Executive Pension Plan
and the CBS FAS 106 Plans, and will be in all material respects at
least as protective to Purchaser as the form of agreement annexed to
Schedule 4.1(m)(i).
(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. 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,
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
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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 or Section 412 of the Code, 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,
and (C) no 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 Pension
Plans have been the subject of determination letters from the Internal
Revenue Service to the effect that such 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 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 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 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.
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(vi) With respect to any 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 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
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 on 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) With respect to the year ended December 31, 1997, the
applicable Sold Subsidiary employing Business Employees employed at
Safe Sites of Colorado was or will be reimbursed by the applicable
governmental agency for 100% of cash outlays for benefits paid to
Former Employees (and to the extent applicable Business Employees)
under nonqualified pension plans.
(n) ENVIRONMENTAL MATTERS. Except as disclosed on 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 $2,500,000 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 on 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 on 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 the 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 Sellers or the 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
operations of the Business or the Acquired Assets, has agreed with any
Governmental Authority pursuant to any Environmental Law to the
imposition of any lien or limitation on the future use of any property
that is an Acquired Asset.
(o) TAXES. Except as set forth on Schedule 4.1(o):
(i) Each of the Sellers and the Sold Subsidiaries has timely
filed or has had filed on its behalf, after giving effect to any
applicable extensions, all material Tax Returns required to be filed
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 on Schedule 1.1(d)
(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 on Schedule
1.1(d), free and clear of all Liens, except as set forth on Schedule 1.1(d). 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(d), 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(d), 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(d), 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 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 on
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. Except
as set forth on Schedule 4.1(1), 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.
(i) Schedule 4.1(s) sets forth 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
(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
supplier listed on 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
supplier listed on Schedule 4.1(s), to the effect
that any such supplier intends to cease, or make a
material reduction in 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.
(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
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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 5.27, 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 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
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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 the facilities clearance requirements of the DIS, as set forth in the DIS
Industrial Security Regulation and the DIS Industrial Security Manual, as
amended from time to time, 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.
(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.
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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;
(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
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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, 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
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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 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
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the extent Purchaser has actually been prejudiced by such breach.
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 (including the GESCO
government-owned sites), books, Contracts, commitments, Tax Returns, pending
bids and proposals for contracts (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 5.28 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 the DIS Industrial Security
Regulations, the DIS Industrial Security Manual 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 GESCO Businesses 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 GESCO 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
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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 GESCO Businesses (including requesting that such other prospective
purchasers return or destroy confidential 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
GESCO Businesses 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 and (ii) but in no event later than 20
business days following the execution and delivery of this Agreement file with
the Committee on Foreign Investment in the United States the voluntary
notification under the Exon-Florio Amendment for the transactions contemplated
hereby. Each of Purchaser and 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
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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 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."
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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.
SECTION 5.4. NOVATIONS OF GOVERNMENT 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.
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(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 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.
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(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 Purchaser
of the Government Contracts and its respective obligations under the Novation
Agreements as CBS shall reasonably request from time to time.
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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) 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"). "Business
Employee" shall not include any employee working at the Closing Date at
locations listed in Section 2.2(b)(xv). Each employee or former
employee who primarily rendered services on behalf of the Business 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. Inactive Employee shall not include any employee who last
worked at locations listed in Section 2.2(b)(xv). 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 for 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 or 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) PENSION PLAN. Effective as of the Closing Date, Purchaser
or the applicable Sold Subsidiary shall assume the Individual Spun-Off Plans and
the Residual Spun-Off Plan (subject to the provisions of Sections 5.5(n) (the
"Assumed Pension Plans")). Purchaser shall continue the Assumed Pension Plans
without adverse effect to the Business Employees for the Benefits Maintenance
Period and shall credit service of Business Employees with Sellers and Sold
Subsidiaries for purposes of eligibility, vesting and retirement eligibility in
all pension plans (within the meaning of Section 3(2) of ERISA) in which such
Business Employees participate.
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(d) 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 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
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(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(d) 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.
(e) UNION REPRESENTATION. Purchaser agrees with respect to any
collective bargaining agreement that relates to Business Employees, to (i)
recognize each union with an agreement listed in Schedule 4.1(j) 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.
(f) MEDICAL AND DISABILITY BENEFITS; LIFE INSURANCE. (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 co-payments and deductibles incurred during the calendar year of
the Closing.
(ii) Effective as of the Closing Date, Purchaser shall be
responsible for all
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employee welfare benefit plan claims (whether for insurance, benefits
or otherwise) with respect to Business Employees and Inactive Employees
and their eligible spouses and dependents, whether incurred prior to or
after the Closing Date. Sellers shall 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 Former 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 Business Employees and Former 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 and Former 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 and Former Employees of each of the Residual
Divisions shall be limited in each calendar year, commencing with the
Closing Date, to the Non-Governmental Allocation Percentage of the
amounts set forth in Schedule 5.5(f)(iv) of the Disclosure Schedule
applicable to each Residual Division (the "OPEB Schedule"), as
described below (e.g., if the Non-Governmental Allocation Percentage is
30% and the OPEB Schedule payment for a given year is $100,000, the
payment obligation for such year under the WELCO FAS 106 Plan is
$30,000). The OPEB Schedule shall be updated by CBS after the Closing
Date to reflect Business Employees and Former Employees of the Residual
Divisions (the "OPEB 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
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Purchaser FAS 106 Plans as applicable to the Residual Divisions 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 OPEB
Employees, their eligible spouses and dependents under the 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
and Former 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 Sold Subsidiaries 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 OPEB 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 OPEB 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 terminations announced by
CBS prior to the Closing Date), 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
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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 gains as calculated under this Section 5.5(g)(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 (a) in the event of a final
determination of the Non-Governmental Allocation Percentage applicable
to a Residual Division or (b) to the extent required by a final
non-appealable court order or as otherwise agreed to by the parties,
but in any event under (b) the OPEB Schedule shall not be increased
above the amount as in effect immediately prior to the change which
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. Upon a final determination of Non-Governmental
Allocation Percentage applicable to a Residual Division, the OPEB
Schedule applicable to such Residual Division shall be adjusted upwards
or downwards utilizing the same methodology used to calculate changes
for a FAS 106 Event.
(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 CBS FAS 106 Plans and the Purchaser FAS 106
Plans as applicable to OPEB 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
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allocable to such Business Employees and Former Employees. The trust to
be established by 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 upon terms and
conditions that are comparable to the severance 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 and its 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. Purchaser shall assume all
Liabilities and obligations of CBS and its Affiliates relating to Business
Employees and Former Employees under the Westinghouse Executive Pension Plan
(including, without limitation, Savannah River, notwithstanding that there is no
specific government reimbursement for such expenses), except to the extent the
Novation Agreements provide that such obligations (other than attributable to
the Non-Governmental Allocation Percentage or to Savannah River) will not be
reimbursed to the same extent reimbursed prior to the Novation Agreements.
(i) RETIREE WELFARE BENEFITS. Purchaser shall assume all
Liabilities and Obligations of CBS and its Affiliates relating to Business
Employees and Former Employees under the CBS FAS 106 Plans covering the
Business, except as set forth in Section 5.5(f) and
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except to the extent the Novation Agreements provide that such obligations
(other than the FAS 106 Obligation) will not be reimbursed to the same extent
reimbursed prior to the Novation Agreements.
(j) RETAINED LIABILITIES. CBS shall retain liability and
responsibility for all benefits payable under (x) the WELCO Pension Plan except
to the extent liabilities are transferred with respect to Business Employees and
Former Employees to the Individual Spun-Off Plans and Residual Spun-Off Plan,
(y) the WELCO Executive Pension Plan except to the extent liabilities are
assumed under Section 5.5(h), (z) the WELCO FAS 106 Plans except to the extent
liabilities are assumed under Section 5.5(i), (xx) the WELCO Savings Program
(other than assets and liabilities to be transferred to the Purchaser's 401(k)
Plan under Section 5.5(d)), (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).
(k) 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.
(l) 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.
(m) WORKERS COMPENSATION. CBS or its Affiliates currently
sponsors a program that provides workers compensation benefits for eligible
Business Employees and Former Employees ("CBS's Workers Compensation Program").
Effective as of the Closing Date, Purchaser shall take all necessary and
appropriate action to adopt a workers compensation program providing such
workers compensation benefits for the Business Employees and Former Employees
covered by such program ("Purchaser's Workers Compensation Program").
Purchaser's Worker Compensation Program shall be responsible for all claims for
workers compensation benefits which are incurred prior to, on or following the
Closing Date by Business Employees and Former Employees, including claims that
are otherwise payable under the terms and conditions of CBS's Workers
Compensation Program.
(n) 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, except as set forth below in this
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Section 5.5(n).
Prior to the assumption of the Individual Spun-Off Plans, CBS
or its Affiliates shall make such payments to the plans as are required pursuant
to Section 4 of the Contractual Modification, the amount of which has been
determined by the applicable government agency after audit. In addition, the
Sellers will contribute to the Individual Spun-Off Plans pursuant to the
Contractual Modifications amounts equal to the "transitional asset" attributable
to prior government reimbursements that the Sellers or the Sold Subsidiaries are
determined to hold (to be determined upon audit by the applicable government
agency pursuant to Contractual Modifications) with respect to the Westinghouse
Executive Pension Plan as applicable to Business Employees and Former Employees
of the Business covered by the Contractual Modification.
CBS shall request an audit of the Residual Spun-Off Plan by
the applicable government agencies. Any assumption of such plan by Purchaser
shall be subject to a certification by such government agency that the assets
and liabilities of the plan conform with government cost accounting standards.
CBS will make up any shortfalls determined by such audit. 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 as successor to CBS or its Affiliates to all rights, assets, duties,
liabilities and obligations under or with respect to the Free-Standing Plans and
will use all reasonable efforts to obtain with respect to the Residual Spun-Off
Plan, an agreement similar to the Contract Modifications. CBS shall contribute
or cause a Sold Subsidiary to contribute to the Residual Spun-Off Plan, prior to
assumption by Purchaser, an amount equal to the Non-Governmental Allocation
Percentage applicable to each Residual Division of the unfunded accrued benefit
obligation (calculated using the FASB 87 assumptions utilized by CBS as of
December 31, 1997) of that portion of the Residual Spun-Off Plan and the
Westinghouse Executive Pension Plan (other than with respect to Savannah River)
allocable to each Residual Division, calculated as of the Closing Date (the
"True-Up Payment").
Subject to the agreement of Purchaser, not to be unreasonably
withheld, Seller may transfer to Purchaser a Free-Standing Plan prior to any
audit referred to above. In such event, the Purchaser and CBS will make
equitable adjustments among themselves to adjust for any changes required by
such audits, with interest to be added to such adjustments at the "LIBOR" rate
at the time of payment.
In the event the Non-Governmental Allocation Percentage
applicable to any Residual Division is changed based on a final determination by
the applicable governmental agency, the Purchaser or CBS, as the case may be,
shall make a payment to the other within ninety (90) days of such final
determination, of the difference between the True-Up Payment and the amount the
True-Up Payment would have been if the final percentage were known at
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the time of the True-Up Payment (the "Differential"). The paying party shall pay
interest on the Differential from the date of the True-Up Payment to the date of
payment of the Differential at the "LIBOR" rate at the time of payment of the
Differential.
(o) ACTUARIAL DETERMINATIONS AND PAYMENTS. (i) The
calculations of 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 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 FAS 106 Event.
(ii) No later than 60 days after the receipt by CBS of both
the notice from Purchaser that 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
gain ( a "Determination"), 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 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, 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 gain under Section 5.5(f)(iv) CBS shall substitute a Revised
Schedule in place of the Existing Schedule.
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(p) 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.
(q) 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.
(r) 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 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(r)). 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."
(s) COBRA. Effective as of Closing Date, Purchaser shall
assume all responsibility for COBRA notices and coverage for Business Employees
and Former Employees (and their eligible dependents).
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.
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Notwithstanding any provisions of the Novation Agreements to the contrary,
Purchaser agrees that CBS is entitled (i) to all cost improvement payments with
respect to the Government Contracts received prior to the Closing Date and (ii)
if the Closing occurs prior to November 30, 1998, to fifty percent (50%) of all
cost improvement payments with respect to the Government Contracts received
between the Closing Date and November 30, 1998, provided that, in the case of
clause (ii) such payments relate to the U.S. government fiscal year ending
September 30, 1998, and Purchaser agrees to remit such portion of any funds
received during such period to CBS within 10 days of receipt.
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.
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 A 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
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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 Business and, at
the sole discretion of the owner of the Energy Systems 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 B 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 GESCO Businesses 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 Excluded Liabilities, any environmental matters related
to the Acquired Assets and the matters referred to in Section 2.3(b)(xiii)) 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(b).
(b) After the Closing, upon reasonable written notice, CBS
will deliver at Purchaser's expense all reasonably available records regarding
the conception, reduction to
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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 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(b) 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
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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 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) 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 Sold Subsidiary for all
applicable Tax purposes, including Code Section 1060. 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.
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(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 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.
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(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) [Intentionally omitted].
(h) CBS shall file any amended consolidated, combined or
unitary Income 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 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 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 all Taxes covering
the Acquired Assets or the Sold Subsidiaries for all Straddle Periods. 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 other
than Income Tax Returns for all Sold Subsidiaries 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
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records as the other may select.
(l) (i) Purchaser shall, in the event that Purchaser receives
notice (whether orally or in writing) of any examination, claim, proposed
settlement, proposed adjustment or related matter with respect to any Taxes for
which Purchaser may be indemnified hereunder (the "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.
SECTION 5.15. SUPPLIES. Purchaser shall not use any signs or
stationery, purchase order forms, packaging or other similar paper goods or
supplies, or advertising and promotional materials, product, training and
service literature and materials, or computer programs or like materials
(collectively, the "Supplies"), that state or otherwise indicate thereon that
the Business is a division or unit of 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
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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 on 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 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)
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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 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
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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.
(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
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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 C.
(b) FACILITIES. Sellers and Purchaser shall enter into
mutually acceptable arrangements relating to the use of (i) facilities and
equipment by Business Employees currently located in Sellers' facilities other
than the Premises and (ii) facilities and equipment by employees of CBS
currently located in the Premises and who are not Business Employees.
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 Energy Systems Business, 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. U.S.-CONTROLLED ENTITY. For at least three
(3) years after the
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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 5.23. 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 5.24. GUARANTEE AGREEMENT. Concurrent with the
execution of this Agreement, the Guarantors are executing the Guarantee
Agreement in the form of Exhibit D hereto (the "Guarantee Agreement").
SECTION 5.25. 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 5.26. 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
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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.
SECTION 5.27. YEAR 2000 MATTERS. 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 5.28. JOINT DEFENSE AGREEMENT. Prior to the date
hereof, CBS and Purchaser have executed the Joint Defense Agreement attached as
Exhibit E hereto.
SECTION 5.29. OCI COMPLIANCE. Purchaser shall, and shall cause
its Affiliates to, take such actions between the date hereof and the Closing
such that Purchaser (and, to the extent applicable, its Affiliates) will be,
immediately subsequent to Closing, in compliance with the Laws relating to
Organizational Conflicts of Interest (as such term is defined in Federal
Acquisition Regulation Subpart 9.5 and Department of Energy Acquisition
Regulation Subpart 909.5) with respect to any Government Contracts (or
outstanding bids for Government Contracts) included in the Acquired Assets.
SECTION 5.30. 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).
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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.
(d) CONSUMMATION OF THE ESBU ASSET PURCHASE AGREEMENT. The
transactions contemplated by the ESBU 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
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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) 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.
(d) 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(d) 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.
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(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 substance reasonably satisfactory to CBS with respect to
the matters set forth on 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 Section
6.1(a), 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,
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without further action by any party. If the transactions contemplated by this
Agreement are terminated as provided herein:
(i) Purchaser shall return all documents and other
material received from Sellers relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to CBS; and
(ii) 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.
(c) 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 (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)(vi)(B) and
2.3(a)(xii));
(vi) any Liability (other than any Environmental Liability) of
any Seller arising from any defect or failure in the performance of any
of the Sellers in connection with the In Tank Precipitation Process at
Savannah River;
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 $8,000,000, 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 $200,000,000 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
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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 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 $12,500,000, in which case, (w)
for aggregate Losses of more than $12,500,000 but less
than $25,000,000, CBS shall pay 50% of such Losses, (x)
for aggregate Losses of $25,000,000 or more but less than
$50,000,000, CBS shall pay 75% of such Losses, (y) for
aggregate Losses of $50,000,000 or more but less than
$100,000,000, CBS shall pay 50% of such Losses and (z) for
aggregate Losses of $100,000,000 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; and
(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 $5,000,000.
With respect to Losses for which CBS has Liability pursuant to
Section 8.1(a)(v) 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
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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 the foregoing, from and after the time, if
any, as clause (E)(z) of the second preceding paragraph becomes applicable or
could reasonably be expected to become applicable prior to completion of any
specific Remedial Action, all determinations with respect to Remedial Actions
(including those contemplated by the first sentence of the immediately preceding
paragraph) shall be made jointly by 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, 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 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 this Agreement 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).
(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) 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
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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, 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;
(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); or
(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.
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.
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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 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) or (vi)
of Section 8.1(a).
(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 GESCO Businesses 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.
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(d) Notwithstanding anything to the contrary in this Agreement
and the ESBU 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.
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 clause (a)(vi) of Section 8.1, shall terminate on
the fourth anniversary of the Closing Date; and (e) pursuant to the other
clauses of Sections 8.1 and 8.2 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.
(b) If a Third Party Claim is made against an indemnified
party, the
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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 party does not notify the indemnified party within
30 calendar days following its receipt of
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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 or whether a cost or Loss is a Decontamination and Decommissioning
Liability 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.
SECTION 8.9. PROCEDURES RELATING TO CLAIMS CONSTITUTING AN
ENVIRONMENTAL LIABILITY.
(a) After the Closing, each of Purchaser and CBS shall notify
(the
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"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;
(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-
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day administration of any Shared Claim shall be provided for in such
agreements.
SECTION 8.10. 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 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, Schedule or Exhibit, such reference
shall be to a Section of, or a Schedule or Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. For purposes of any indemnification
provision in this Agreement, the word "expenses" shall mean out-of-pocket
expenses, and shall not include any allocations of internal salaries and other
expenses. Whenever the words "included", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". Whenever the word "material" is used in this Agreement (except when
used with respect to the Purchaser), it shall mean material to the Business or
financial condition of the Business, taken as a whole. Whenever reference is
made to "knowledge" with respect to any Seller, it shall mean the actual
knowledge of the Persons named on 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 third 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.
SECTION 9.4. SEVERABILITY. If any provision of this Agreement
(or any
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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.
(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
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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:_________________________________
Name:
Title:
WGNH ACQUISITION, LLC
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
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