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EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and among
BAE SYSTEMS AEROSPACE ELECTRONICS INC.,
as Seller,
IDT ACQUISITION CO.
as Buyer
and
INTEGRATED DEFENSE TECHNOLOGIES, INC.,
as Guarantor
Dated as of September 12, 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1. Certain Definitions 1
1.2. Accounting Terms 9
1.3. Monetary Terms 9
ARTICLE II PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES 9
2.1. Sale and Transfer of Assets 9
2.2. Excluded Assets 10
2.3. Assumed Liabilities 12
2.4. Liabilities Not Assumed 13
2.5. Further Assurances 14
ARTICLE III CLOSING 14
3.1. Closing 14
3.2. Payment of Purchase Price; Instruments of Conveyance
and Transfer 14
ARTICLE IV PURCHASE PRICE 15
4.1. Purchase Price 15
4.2. Purchase Price Adjustment 15
4.3. Allocations; Taxes 17
4.4. Allocation of Expenses 18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER 19
5.1. Organization, Power, Standing 19
5.2. Due Authorization 19
5.3. No Conflict; Third Party Consents 19
5.4. Government Authorizations 20
5.5. Financial Information 20
5.6. Events Subsequent to Date of Balance Sheet 21
5.7. Inventory 22
5.8. Accounts Receivable 22
5.9. Material Contracts 22
5.10. Real Property and Tangible Personal Property 23
5.11. Intellectual Property 24
5.12. Tax Matters 24
5.13. Litigation 24
5.14. Employees 25
5.15. Employee and Labor Relations 25
5.16. Employee Plans 25
5.17. Environmental Matters 26
5.18. Entire Business 27
5.19. Compliance with Law 27
5.20. Brokers 27
5.21. Governmental Contracts 27
5.22. Disclaimer of Seller 28
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER 28
6.1. Organization, Power, Standing 29
6.2. Due Authorization 29
6.3. No Conflict; Third Party Consents 29
6.4. Government Authorizations 30
6.5. Litigation 30
6.6. Brokers 30
6.7. Buyer's Acknowledgment 30
6.8. Operations of Business 31
6.9. Buyer's Due Diligence 31
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING 31
7.1. Conditions Precedent to the Obligations of Buyer 31
7.2. Conditions Precedent to the Obligations of Seller 33
ARTICLE VIII COVENANTS 34
8.1. Examinations and Investigations 34
8.2. Conduct of Business 34
8.3. Reasonable Best Efforts 36
8.4. Employees 36
8.5. Employee Benefit Matters 38
8.6. Workers' Compensation 38
8.7. Tax Matters 38
8.8. Regulatory and Other Approvals; HSR Filings;
Novations and Consents 39
8.9. Record Retention 41
8.10. Use of Names 41
8.11. Bulk Sales 41
8.12. Publicity 42
8.13. Confidentiality 42
8.14. Non-Competition 42
8.15. Further Information 43
8.16. Guarantee 43
8.17. Notice of Certain Events 43
8.18. Transaction Proposals 44
8.19. Nondisclosure of Proprietory Data 44
ARTICLE IX INDEMNIFICATION; SURVIVAL 44
9.1. Indemnification by Seller 44
9.2. Indemnification by Buyer 45
9.3. Indemnification for Environmental Matters 45
9.4. Losses Net of Insurance, Etc 46
9.5. Termination of Indemnification 47
9.6. Procedures Relating to Indemnification 47
9.7. Survival of Representations and Warranties 48
ARTICLE X TERMINATION OF AGREEMENT 49
10.1. This Agreement may be terminated prior to the
Closing as follows 49
10.2. Effect of Termination 49
ARTICLE XI MISCELLANEOUS 49
11.1. Expenses 49
11.2. Governing Law 50
11.3. Jurisdiction; Service of Process 50
11.4. Waiver of Jury Trial 50
11.5. Attorneys' Fees 50
11.6. Waiver; Remedies Cumulative 51
11.7. Notices 51
11.8. Assignment 52
11.9. No Third-Party Beneficiaries 53
11.10. Amendments 53
11.11. Interpretation; Exhibits and Schedules 53
11.12. Entire Agreement 53
11.13. Severability 53
11.14. Mutual Drafting 53
11.15. Counterparts 53
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of September 12, 2002 by and among BAE SYSTEMS AEROSPACE ELECTRONICS INC.,
a Pennsylvania corporation ("Seller"), IDT ACQUISITION CO., a Delaware
corporation ("Buyer"), and INTEGRATED DEFENSE TECHNOLOGIES, INC., a Delaware
corporation ("Guarantor").
RECITALS
A. Seller is engaged at its Gaithersburg, Maryland
facility in the business of designing and manufacturing high-
performance radio frequency surveillance equipment used in
communications intelligence and signals intelligence applications
(the "Business").
B. The parties hereto desire that Seller sell, transfer,
assign, convey and deliver to Buyer substantially all of the
assets and properties of, and rights of Seller used primarily or
exclusively in, the Business, and that Buyer purchase, acquire
and accept the same, subject to the assumption by Buyer of the
liabilities and obligations as set forth herein, upon the terms
and subject to the conditions set forth in this Agreement.
C. It is a condition precedent to the consummation of the
transactions evidenced and contemplated hereby that Guarantor
execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context
otherwise requires (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"Accounting Arbitrator" has the meaning set forth in
Section 4.2(e).
"Accounts Receivable" means (a) all trade accounts
receivable and other rights to payment from customers of Seller
and the full benefit of all security for such accounts or rights
to payment, including, but not limited to, all trade accounts
receivable representing accounts receivable in respect of goods
shipped or products sold or services rendered to customers of
Seller, (b) all other accounts or notes receivable of Seller and
the full benefit of all security for such accounts or notes, and
(c) any claim, remedy or other right related to any of the
foregoing.
"Action or Proceeding" means any action, suit,
proceeding or arbitration by any Person, or any investigation or
audit by any Governmental or Regulatory Body.
"Activities" has the meaning set forth in Section 8.14(a).
"Affiliate" means with respect to any Person, any other
Person controlling, controlled by or under common control with
such first Person. The term "control" (including, with
correlative meaning, the terms "controlled by" and "under common
control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
"Ancillary Agreements" means the Assignment and
Assumption Agreement and Bill of Sale, the Assignment of Patents,
the Maryland Landlord's Estoppel Certificate, the Texas
Landlord's Consent to Assignment and Estoppel Certificate and the
Deed of Conveyance.
"Assets" has the meaning set forth in Section 2.1.
"Assignment and Assumption Agreement and Bill of Sale"
means an assignment and assumption agreement and bill of sale in
substantially the form of Exhibit A hereto.
"Assignment of Patents" means an assignment of patents
and/or patent applications in substantially the form of Exhibit B
hereto.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Balance Sheet" has the meaning set forth in Section 5.5(a).
"Benefit Plans" has the meaning set forth in Section 8.5(a).
"Business" has the meaning set forth in the Recitals.
"Business Accounts Receivable" has the meaning set forth in
Section 2.1(c).
"Business Contracts" has the meaning set forth in Section 2.1(e).
"Business Day" means a day other than a Saturday or a Sunday or
other day on which commercial banks in New York are authorized or required
by law to close.
"Business Employee" means each individual who works
primarily or exclusively for the Business and who, on the Closing
Date, is actively employed by Seller, including any employee who
is on vacation leave or jury duty, or on other authorized leave
of absence (other than long-term disability), family or workers'
compensation leave, or military leave as of the Closing Date,
whether paid or unpaid; provided, however, that the term Business
Employee shall exclude any other inactive or former employee,
including any individual who (a) is on long-term disability leave
or unauthorized leave of absence, layoff with or without recall
rights at the Closing Date or (b) has been terminated or has
terminated his or her employment or retired before the Closing
Date.
"Business Governmental Authorizations" has the meaning
set forth in Section 2.1(f).
"Business Intellectual Property" has the meaning set
forth in Section 2.1(g).
"Business Inventory" has the meaning set forth in
Section 2.1(b).
"Business Material Adverse Effect" means any
circumstance, change or effect that, either individually or in
the aggregate with all other circumstances, changes or effects,
(a) has a material adverse effect on the business, assets,
financial condition or results of operations of the Business
taken as a whole, but excluding (i) effects or changes that are
generally applicable to the industries and markets in which the
Business operates, (ii) changes in the United States or world
financial markets or general economic conditions, or (iii)
effects directly or primarily arising out of the execution or
delivery of this Agreement or the transactions contemplated
hereby or the public announcement thereof, or (b) would have a
material adverse effect on the ability of Seller to perform its
obligations under this Agreement and the Ancillary Agreements or
on the ability of Seller to consummate the Transactions.
"Business Real Property" has the meaning set forth in
Section 2.1(d).
"Business Tangible Property" has the meaning set forth
in Section 2.1(a).
"Buyer" has the meaning set forth in the preamble.
"Buyer Material Adverse Effect" means a material
adverse effect on the ability of Buyer to perform its obligations
under this Agreement and the Ancillary Agreements or on the
ability of Buyer to consummate the Transactions.
"CERCLA" has the meaning set forth in the definition of
"Environmental Law".
"Claim Notice" has the meaning set forth in Section 9.5.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Net Assets" means the net difference between
the book value of the Assets and the Assumed Liabilities, in each
case as of the Closing Date, included in the Closing Statement of
Assets and Liabilities.
"Closing Statement of Assets and Liabilities" has the
meaning set forth in Section 4.2(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means that certain
Confidentiality Agreement dated June 12, 2002 among Veritas
Capital Management, L.L.C., BAE SYSTEMS North America Inc. and
First Union Securities, Inc. (d/b/a Wachovia Securities).
"Contracts" means all executory contracts, agreements,
subcontracts, indentures, notes, bonds, loans, instruments,
leases, mortgages, franchises, licenses, purchase orders, sale
orders, proposals, bids, understandings or commitments, whether
written or oral, which are legally binding, including all
amendments, modifications or restatements thereof.
"Deed of Conveyance" means a deed of conveyance of the
Maryland Real Property in substantially the form of Exhibit D
hereto.
"DOJ" has the meaning set forth in Section 8.8(a).
"DSS" has the meaning set forth in Section 5.4(iii).
"Employee Benefit Arrangements" means each and all
pension, supplemental pension, deferred compensation, option or
other equity-based program, accidental death and dismemberment,
life and health insurance and benefits (including medical,
dental, vision and hospitalization), short- and long-term
disability, fringe benefit, cafeteria plan, flexible spending
account programs, severance and other employee benefit
arrangements, plans, contracts, policies or practices providing
employee or executive compensation or benefits to any Business
Employee, other than the Employee Plans.
"Employee Plans" means each and all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained or
contributed to by Seller or in which Seller participates or
participated and which provides benefits to Business Employees.
"Environment" means ambient air, surface water, ground
water, land surface or subsurface strata.
"Environmental Claim" means, with respect to any
Person, any written notice or claim by any other Person alleging
or asserting liability for investigatory costs, cleanup costs,
Governmental or Regulatory Body response costs, damages to
natural resources or other property, personal injuries, fines or
penalties arising out of, based on or resulting from (a) the
presence or Release into the Environment, of any Hazardous
Material, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Law" means collectively the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Resource Conservation and
Recovery Act of 1976, as amended, and any other applicable Laws
which relate to protection of the Environment, human health or
safety or to Releases or threatened Releases of Hazardous
Materials in the Environment, or otherwise relating to the
treatment, storage, disposal, transport or handling of any
Hazardous Material.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Contracts" has the meaning set forth in Section 2.2(c).
"Excluded Intellectual Property" has the meaning set forth in
Section 2.2(g).
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Facilities" means the Maryland Real Property, the
Maryland Leasehold and the Texas Leasehold.
"Financial Statements" has the meaning set forth in Section 5.5(a).
"FIRPTA Certificate" has the meaning set forth in Section 8.7(a).
"FTC" has the meaning set forth in Section 8.8(a).
"GAAP" means United States generally accepted accounting principles.
"Government Contract" means any Business Contract
entered into between Seller and (i) the United States government,
(ii) any prime contractor to the United States government (in its
capacity as such), or (iii) any subcontractor with respect to any
contract described in clauses (i) or (ii).
"Governmental Authorization" means any consent,
license, registration, authorization or permit issued, granted,
given or otherwise made available by or under the authority of
any Governmental or Regulatory Body or pursuant to any Law.
"Governmental or Regulatory Body" means any court,
tribunal, arbitrator or any government or political subdivision
thereof, whether federal, state, county, local or foreign, or any
agency, authority, official or instrumentality of any such
government or political subdivision.
"Guarantor" has the meaning set forth in the preamble.
"Hazardous Material" means (i) any petroleum, crude
oil, natural gas, or any fraction, product or derivative thereof,
radioactive materials, asbestos in any form that is or could
become friable; (ii) any chemicals, materials, substances or
wastes which are regulated as, defined as or included in the
definition of hazardous substances, hazardous wastes, hazardous
materials, extremely hazardous substances, toxic substances,
pollutants, contaminant or words of similar import under any
Environmental Law; and (iii) any other chemical, material,
substance or waste, exposure to which, or the management or use
thereof, is limited or regulated by any Governmental or
Regulatory Body.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Indemnified Person" means any Person claiming
indemnification under any provision of Article IX.
"Indemnifying Person" means any Person(s) against whom
a claim for indemnification is being asserted under any provision
of Article IX.
"Intellectual Property" means (i) all copyrightable
works, all copyrights, and all applications, registrations and
renewals thereof, (ii) all Marks and all applications,
registrations and renewals thereof, (iii) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, divisions, continuations, continuations-in-part,
substitutes, extensions, and reexaminations thereof, (iv) all
proprietary formulations, know-how, show-how, confidential
business information, trade secrets, research and development
results, compositions, techniques, processes, technical data,
designs, drawings, diagrams, specifications, catalogs, customer
and supplier lists and contact information, pricing and cost
information, business and marketing plans and proposals, and
manufacturing, engineering, quality control, testing, operations,
logistical, maintenance and other technical information and
technology, (v) all mask works and all applications,
registrations and renewals in connection therewith, (vi) all
computer software (including data and related documentation),
whether purchased, licensed or internally developed, and (vii)
all copies and tangible embodiments thereof in whatever form or
medium.
"Inventory" means all raw materials, work-in-process,
finished goods and merchandise, spare parts, packaging materials
and other supplies related thereto.
"Knowledge of Buyer and/or Guarantor" means and shall
be limited to the knowledge, after due inquiry, of Robert B.
McKeon, Thomas J. Campbell, Ramzi Musallam, Thomas J. Keenan and
John Wilhoite.
"Knowledge of Seller" means and shall be limited to the
knowledge, after due inquiry, of Jill S. Kale, Charles A. Kick
III, Barth R. Pitchford, Russell Stephen Smith and Susan L.
Finkel.
"Law" means any law, statute, rule, regulation,
ordinance and other pronouncement having the effect of law of the
United States of America, any foreign country or any domestic or
foreign state, county, city or other political subdivision or of
any Governmental or Regulatory Body.
"Lease Agreements" means the real property lease
agreements listed on Schedule 1.1(b).
"Liabilities" means any direct or indirect liability,
indebtedness, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated
or unliquidated, secured or unsecured, accrued, absolute, known
or unknown, contingent or otherwise.
"Lien" means any mortgage, lien, pledge, charge,
security interest, claim, contractual restriction, easement,
right-of-way, option, conditional sale or installment contract or
encumbrance of any kind.
"Loss" or "Losses" means any direct or indirect
liability, indebtedness, claim, loss, damage, Lien, deficiency,
obligation, judgment, penalty, responsibility, costs or expenses
(including reasonable attorneys' fees and disbursements and the
costs of litigation) of any nature.
"Marks" means trade names, fictional business names,
trade dress rights, registered and unregistered trademarks and
service marks and logos, including any Internet domain names, and
applications therefor, together with all translations,
adaptations, derivations and combinations and like intellectual
property rights.
"Maryland Landlord's Estoppel Certificate" means a
landlord's estoppel certificate in substantially the form of
Exhibit C-1 hereto.
"Maryland Leasehold" means the leased real property
located on the "Sugarland" Sod Farm situated on the north side of
Route 107, Poolsville, Maryland, as more specifically described
on Schedule 1.1(a).
"Maryland Real Property" means the real property and
improvements thereon located at 700 Quince Orchard Road,
Gaithersburg, Maryland 20878, as more specifically described on
Schedule 1.1(a).
"Material Contracts" has the meaning set forth in
Section 5.9.
"Multiemployer Plan" has the meaning set forth in
Section 5.16(d).
"Neutral Accounting Firm" means an independent
accounting firm of internationally recognized standing that has
not rendered services to either Buyer or Seller, or any Affiliate
of either, within 12 months prior to the date hereof.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Body, in each
case whether preliminary or final.
"OSHA" has the meaning set forth in Section 2.3(l).
"Permitted Lien" means (i) any Lien for Taxes not yet
due or delinquent or being contested in good faith by appropriate
proceedings, (ii) any statutory Lien arising in the ordinary
course of business by operation of Law and Liens for Taxes with
respect to an obligation or liability that is not yet due or
delinquent or that may thereafter be paid without penalty, (iii)
any minor imperfection of title or similar Lien or encumbrance
which could not reasonably be expected to have a Business
Material Adverse Effect, (iv) any Lien created pursuant to any
lease of property, real or personal, the obligations under which
are capitalized on the Financial Statements, (v) any Lien created
pursuant to any other such lease to the extent that the then
present value of the minimum rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of the
lessee, and (vi) any Lien created to secure purchase money
indebtedness that is an Assumed Liability.
"Person" means any individual, corporation,
partnership, limited liability company, firm, joint venture,
association, joint-stock company, trust, unincorporated
organization, Governmental or Regulatory Body or other entity.
"Property Taxes" has the meaning set forth in Section 4.4(a).
"PTO" has the meaning set forth in Section 8.5(b).
"Purchase Price" has the meaning set forth in Section 4.1.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, dumping, discharge,
dispersal, leaching, escaping, emanation or migration of any
Hazardous Material in, into or onto the Environment.
"Seller" has the meaning set forth in the preamble.
"Tangible Property" means all furniture, fixtures,
equipment (including motor vehicles), computers, office equipment
and apparatus, tools, machinery and supplies.
"Tax" or "Taxes" (and, with correlative meanings
"Taxable" or "Taxing") means, with respect to any Person, all
U.S. federal, state, local, provincial, foreign or other taxes,
customs, tariffs, imposts, levies, duties, government fees or
other like assessments or charges of any kind, including all
income, franchise, sales, use, ad valorem, transfer, license,
recording, employment (including federal and state income tax
withholding, backup withholding, FICA, FUTA or other payroll
taxes), environmental, excise, severance, stamp, occupation,
premium, prohibited transaction, property, value-added, net
worth, or any other taxes and any interest, penalties and
additions imposed with respect to such amounts.
"Tax Return" means all U.S. federal, state, local,
provincial and foreign returns, declarations, claims for refunds,
forms, statements, reports, schedules, information returns or
similar statements or documents, and any amendments thereof
(including, without limitation, any related or supporting
information or schedule attached thereto) required to be filed
with any Taxing Authority in connection with the determination,
assessment or collection of any Tax or Taxes.
"Taxing Authority" means any government or subdivision,
agency, commission or authority thereof, or any quasi-
governmental or private body having jurisdiction over the
assessment, determination, collection or other imposition of
Taxes.
"Texas Landlord's Consent to Assignment and Estoppel
Certificate" means a consent to assignment and estoppel
certificate in substantially the form of Exhibit C-2 hereto.
"Texas Leasehold" means the leased real property
located at 1219 Abrams Road, Richardson, Texas, as more
specifically described on Schedule 1.1(a).
"Third Party Claim" has the meaning set forth in Section 9.6.
"Title Company" has the meaning set forth in Section 7.1(i).
"Title Policy" has the meaning set forth in Section 7.1(i).
"Transaction Documents" means (i) this Agreement, (ii)
the Ancillary Agreements and (iii) all other agreements and
instruments to be executed by Buyer and/or Seller at or prior to
the Closing pursuant to this Agreement or any of the Ancillary
Agreements.
"Transaction Proposal" has the meaning set forth in
Section 8.18.
"Transactions" means the transactions contemplated by
the Transaction Documents.
"Transfer Taxes" has the meaning set forth in Section 4.3(c).
"Transferred Employees" means those Business Employees
who accept an offer of employment from Buyer as provided in
Section 8.4.
"WARN" has the meaning set forth in Section 8.4(d).
1.2. Accounting Terms. All accounting terms shall have the meaning
specified by GAAP unless otherwise specified.
1.3. Monetary Terms. All references to "Dollars" or "$" shall
mean U.S. Dollars unless otherwise specified.
ARTICLE II
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1. Sale and Transfer of Assets. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, Seller
shall sell, transfer, assign, convey and deliver to Buyer, and Buyer
shall purchase, acquire and accept from Seller, all of Seller's right,
title and interest in and to the following properties, rights and
assets (but in all cases excluding the Excluded Assets) of
Seller, as and to the extent existing on the Closing Date (such
properties, rights and assets are hereinafter collectively
referred to as the "Assets"), free and clear of all Liens other
than the Permitted Liens:
(a) all Tangible Property located in, at or upon the
Facilities and used by Seller primarily or exclusively with
respect to the operation of the Business, including, but not
limited to, the Tangible Property set forth on Schedule 2.1(a)
(the "Business Tangible Property");
(b) all Inventory located in, at or upon, or in transit to,
the Facilities and used by Seller primarily or exclusively with
respect to the operation of the Business (the "Business
Inventory");
(c) all Accounts Receivable of Seller arising exclusively
out of Seller's operation of the Business (the "Business Accounts
Receivable");
(d) all real property (including buildings, structures and
improvements located thereon, fixtures contained therein and
appurtenances thereto) owned or leased by Seller and used
primarily or exclusively in the conduct of the Business,
including, but not limited to, the real property set forth on
Schedule 2.1(d) (the "Business Real Property");
(e) subject to Sections 8.8(c) and (d), all Contracts
(other than the Excluded Contracts), including the Lease
Agreements, to which Seller is a party and which relate primarily
or exclusively to Seller's operation of the Business or the
Facilities, including, but not limited to, those set forth on
Schedule 2.1(e) (the "Business Contracts");
(f) to the extent transferable, all Governmental
Authorizations of Seller relating primarily or exclusively to
Seller's operation of the Business or necessary to Seller's use,
ownership or operation of the Business or the Assets and all
pending applications therefor or renewals thereof, including, but
not limited to, those (to the extent transferable) set forth on
Schedule 2.1(f) (the "Business Governmental Authorizations");
(g) the Intellectual Property used by Seller primarily or
exclusively with respect to Seller's operation of the Business
set forth on Schedule 2.1(g) (the "Business Intellectual
Property");
(h) all of Seller's claims, demands, deposits (including
security deposits made under the Lease Agreements), refunds,
rebates, causes of action, choses in action, rights of recovery,
rights of set-off and rights of recoupment (other than those
excluded pursuant to Section 2.2(d)) relating primarily or
exclusively to Seller's operation of the Business, including, but
not limited to, rights to or claims for refunds or rebates of
Taxes and other governmental charges and the benefit of net
operating loss carryforwards, carrybacks or other credits of
Seller other than those excluded pursuant to Section 2.2(d), in
each case relating primarily or exclusively to Seller's operation
of the Business;
(i) all prepaid charges, expenses, sums and fees of Seller
relating primarily or exclusively to Seller's operation of the
Business (other than those excluded pursuant to Section 2.2(e)),
including all deposits/progress payments received by Seller
relating to the Business Contracts to be assigned to Buyer which
Seller, as of the Closing Date, shall not have expended for work
under the Business Contracts to which such deposits/progress
payments relate;
(j) all general, financial and personnel records, ledgers,
sales invoices, accounts and payable records, files, books and
documents, correspondence and other files and records, including
customer lists and sales records, of Seller pertaining primarily
or exclusively to Seller's operation of the Business; and
(k) all other assets and property of Seller of whatever
kind and nature, real or personal, tangible or intangible, that
are owned, leased or licensed by Seller on the Closing Date and
which are used by Seller primarily or exclusively in Seller's
operation of the Business or the Facilities.
Notwithstanding the foregoing, Seller may retain and use in
appropriate circumstances copies of any Contracts or records:
(i) which relate to properties or activities of Seller other than
the Business, or (ii) which are required to be retained pursuant
to any legal requirement, for financial reporting purposes, for
tax purposes, or otherwise in connection with the Excluded
Liabilities.
2.2. Excluded Assets. Notwithstanding anything to the contrary
contained in Section 2.1 or elsewhere in this Agreement, the following
assets of Seller (collectively, the "Excluded Assets") are not
part of the sale and purchase contemplated hereunder, are
excluded from the Assets and shall remain the property of Seller
after the Closing:
(a) all cash and cash equivalents, including, without
limitation, checking accounts, bank accounts, lock box numbers,
marketable securities, commercial paper, certificates of deposit
and other bank deposits, and treasury bills (other than cash or
cash equivalents relating to deposits/progress payments
transferred to Buyer pursuant to Section 2.1(i));
(b) all insurance policies and all rights of every nature
(including proceeds) under or arising out of such policies;
(c) all Contracts to which Seller is a party and which (i)
do not relate primarily or exclusively to the Business, or (ii)
are set forth on Schedule 2.2(c) (collectively, the "Excluded
Contracts");
(d) all claims, demands, deposits, refunds, rebates, causes
of action, choses in action, rights of recovery, rights of set-
off and rights of recoupment to the extent relating to any of the
Excluded Assets or Excluded Liabilities, including, but not
limited to, rights to or claims for refunds or rebates of Taxes
and other governmental charges and the benefit of net operating
loss carryforwards, carrybacks or other credits of Seller and
those set forth on Schedule 2.2(d);
(e) all prepaid charges, expenses, sums and fees set forth
on Schedule 2.2(e);
(f) the corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered
agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock transfer
books, shares of capital stock, blank stock certificates, and
other documents relating to the organization, maintenance and
existence of Seller as a corporation;
(g) the Intellectual Property set forth on Schedule 2.2(g)
and all other Intellectual Property of Seller other than the
Business Intellectual Property (collectively, the "Excluded
Intellectual Property");
(h) all proprietary or confidential business or technical
information, records and policies that relate generally to Seller
and are not used primarily or exclusively in Seller's operation
of the Business, including, without limitation, organization
manuals, strategic plans and Tax records and related information;
(i) all personnel records and other records that Seller is
required by Law to retain in its possession or is not permitted
under Law to provide to Buyer;
(j) all rights in connection with, and assets of, any
Employee Plan, except to the extent otherwise provided in Section 8.5;
(k) all properties, rights and assets of Seller set forth
on Schedule 2.2(k);
(l) all rights of Seller under this Agreement, any other
Transaction Document or the Transactions;
(m) all records prepared in connection with the sale of the
Business to Buyer; and
(n) all other properties, rights and assets of Seller which
are not used by Seller primarily or exclusively in Seller's
operation of the Business.
2.3. Assumed Liabilities. Subject to the terms and conditions
set forth in this Agreement, at the Closing, Buyer shall assume and
thereafter pay, perform and discharge when due, the following Liabilities
(the "Assumed Liabilities"):
(a) all Liabilities of Seller which are (i) reflected on
the Closing Statement of Assets and Liabilities as finally
determined in accordance with Section 4.2 or (ii) expressly
assumed by Buyer under the terms of this Agreement;
(b) all Liabilities of Seller under the Business Contracts,
Business Governmental Authorizations and Business Intellectual
Property;
(c) all Liabilities arising from claims relating to
warranty obligations or services, or claims of manufacturing or
design defects (but excluding product liability claims), with
respect to any product or service produced, sold or provided by
Seller or Buyer in connection with the operation of the Business;
provided, however, that the aggregate Liabilities arising from
products or services produced, sold or provided by Seller that
are assumed by Buyer pursuant to this Section 2.3(c) shall not
exceed 150% of the Liabilities reserved for claims relating to
warranty obligations or services, or claims of manufacturing or
design defects, in each case, on the Closing Statement of Assets
and Liabilities;
(d) all Liabilities for product liability claims arising
from any product or service produced, imported, sold or provided
by Buyer after the Closing;
(e) all Liabilities for infringement claims arising from
any product or service produced, imported, offered for sale, sold
or provided by Buyer after the Closing;
(f) all Liabilities for rebates, price adjustments,
adjustments to accounts payable, future delivery obligations,
discounts or promotions to the extent relating primarily or
exclusively to Seller's operation of the Business; provided,
however, that the aggregate Liabilities arising from rebates,
price adjustments, adjustments to accounts payable, discounts or
promotions as a result of commitments made by Seller prior to the
Closing that are assumed by Buyer pursuant to this Section 2.3(f)
shall not exceed 100% of the Liabilities reserved for such items
on the Closing Statement of Assets and Liabilities;
(g) subject to the provisions of Section 9.3, all
Liabilities arising out of (i) any Environmental Claim, or (ii)
any Release of any Hazardous Materials, or (iii) any
Environmental Law, in each case only to the extent arising out of
or relating to the operation of the Business or Seller's or
Buyer's leasing, ownership or operation of the Assets or the
Facilities;
(h) all Liabilities under any employment, severance,
retention, or termination agreement existing at the Closing and
specified on Schedule 2.3(h) with any Business Employee, to the
extent accruing after the Closing or arising out of or in
connection with the termination of any such Business Employee
after the Closing;
(i) all Liabilities arising out of or relating to any
employment-related claim of any Transferred Employee filed after
the Closing;
(j) all Liabilities accruing on or before the Closing that
are reflected and reserved for on the Closing Statement of Assets
and Liabilities and all Liabilities accruing after the Closing,
in each case relating to payroll, vacation and sick pay for the
Transferred Employees;
(k) all Liabilities for or in respect of Taxes in
connection with the operation of the Business or in respect of
the Assets (i) that are the responsibility of Buyer pursuant to
Section 4.3(c) or Section 4.4(a) or (ii) arising after the
Closing with respect to periods after the Closing;
(l) all Liabilities relating to any claim filed after the
Closing relating to the Business and arising out of or relating
to the Occupational, Safety and Health Act of 1970 and any
regulations, decisions or orders promulgated thereunder ("OSHA"),
including, without limitation, any state or local law, regulation
or ordinance pertaining to worker, employee or occupational
safety or health in effect as of the Closing Date or as
thereinafter may be amended or superseded; and
(m) all Liabilities relating to Buyer's ownership or use of
the Assets or the conduct of the Business after the Closing.
2.4. Liabilities Not Assumed. Other than the Assumed Liabilities,
Buyer shall not assume or otherwise be responsible for any other Liabilities
of Seller (the "Excluded Liabilities"). Without limiting the foregoing,
Excluded Liabilities shall include:
(a) any Liability with respect to any Employee Plan, except
to the extent otherwise provided in Section 8.5;
(b) any Liability of Seller for Taxes, including, but not
limited to, all Liabilities for or in respect of any Taxes for
all periods ending on or prior to the Closing Date, excluding
those Taxes that are the responsibility of Buyer pursuant to
Section 4.3(c) or Section 4.4(a);
(c) any Liability for product liability claims arising from
any product or service produced, imported, sold or provided by
Seller prior to the Closing;
(d) any Liability for infringement claims arising from any
product or service sold or provided by Seller prior to the
Closing;
(e) any Liability of Seller under this Agreement or any
other Transaction Document;
(f) any Liability for legal, accounting and audit fees and
any other expenses incurred by Seller in connection with this
Agreement or any other Transaction Document;
(g) any Liability of Seller relating primarily or
exclusively to the Excluded Assets (unless specifically included
as an Assumed Liability in Section 2.3);
(h) any Liability for workers' compensation claims made by
any Business Employee or former employee of Seller arising solely
from any injury, illness or other event occurring on or before
the Closing; and
(i) except as otherwise set forth in Section 2.3, all
Liabilities relating to the ownership or use of the Assets or the
Facilities or the conduct of the Business at or before the
Closing.
2.5. Further Assurances. From time to time after the Closing,
Seller shall execute and deliver such other instruments of transfer and
documents related thereto and take such other action as Buyer may
reasonably request in order to more effectively transfer to
Buyer, and to place Buyer in possession and control of, the
Assets, or to enable Buyer to exercise and enjoy all rights and
benefits of Seller with respect thereto (including, without
limitation, a trademark assignment agreement in a form reasonably
acceptable to Buyer and Seller). Buyer shall take such actions
as Seller may reasonably request in order to assure Buyer's
assumption of the Assumed Liabilities.
ARTICLE III
CLOSING
3.1. Closing. The Closing hereunder (the "Closing") shall take
place at 10:00 a.m., local time, at the offices of Cravath,
Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New
York 10019 on the third Business Day after satisfaction or waiver
of all of the conditions set forth in Article VII (other than
those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those
conditions), or at such other date or at such other place or time
as the parties may mutually agree upon, but in any event not
later than October 18, 2002 (if this Agreement is terminated in
accordance with Section 10.1(d)) (such date of the Closing is
hereinafter referred to as the "Closing Date"). The Closing will
be deemed effective at 5:00 p.m. in New York, New York on the
Closing Date.
3.2. Payment of Purchase Price; Instruments of Conveyance
and Transfer.
(a) At the Closing, Buyer shall (i) deliver to Seller the
Purchase Price, and (ii) execute and deliver to Seller the
Assignment and Assumption Agreement and Bill of Sale, the
Assignment of Patents, the Maryland Landlord's Estoppel
Certificate, the Texas Landlord's Consent to Assignment and
Estoppel Certificate and the Deed of Conveyance.
(b) At the Closing, Seller shall execute and deliver to
Buyer, the Assignment and Assumption Agreement and Bill of Sale,
the Assignment of Patents, the Maryland Landlord's Estoppel
Certificate, the Texas Landlord's Consent to Assignment and
Estoppel Certificate and the Deed of Conveyance.
ARTICLE IV
PURCHASE PRICE
4.1. Purchase Price. The purchase price for the Assets (the
"Purchase Price") is One Hundred Forty-Six Million Dollars ($146,000,000),
subject to adjustment as provided in Section 4.2, payable in cash
by wire transfer of immediately available funds at the Closing to
a bank account designated by Seller.
4.2. Purchase Price Adjustment.
(a) Within sixty (60) Business Days after the Closing Date,
Buyer shall prepare and deliver to Seller a statement of the
Assets and the Assumed Liabilities as of the close of business on
the Closing Date (such statement, the "Closing Statement of
Assets and Liabilities"). Seller shall cooperate with Buyer in
connection with, and shall furnish to Buyer all such information
as Buyer may reasonably require, in the preparation of the
Closing Statement of Assets and Liabilities; provided, however,
that Seller acknowledges that Buyer shall have the primary
responsibility and authority for preparing the Closing Statement
of Assets and Liabilities. The Closing Statement of Assets and
Liabilities will be prepared (i) using the same accounting
methods, standards, policies, practices, classifications,
estimation methodologies, assumptions, procedures and level of
prudence as were used to prepare the Financial Statements, and
(ii) on the basis of facts existing and events occurring on or
before the Closing Date only; provided, however, that the Closing
Statement of Assets and Liabilities shall exclude Taxes. In the
event that the Closing Date does not occur at a financial week or
month end for accounting purposes, the parties shall agree on
mutually acceptable roll forward or roll back procedures.
(b) The parties hereto agree that the procedure set forth
herein with respect to the Closing Statement of Assets and
Liabilities, and the purchase price adjustment provided herein,
are not intended to permit the introduction of different
accounting methods, standards, policies, practices,
classifications, estimation methodologies, assumptions,
procedures or a different level of prudence for purposes of
determining the asset and liability balances from those used to
prepare the Financial Statements. The adjustment contemplated by
this Section 4.2 is intended to show the change in Closing Net
Assets from the date of the Balance Sheet to the Closing Date,
and such change can only be measured if the calculation is done
the same way, using the same methods, for both dates.
Accordingly, and without limiting the generality of the
foregoing, the calculation of Closing Net Assets shall not
include any change in the net difference between the value of the
Assets and the Assumed Liabilities that arises because of a re-
assessment of the value of Assets or Assumed Liabilities at June
28, 2002, or any change in the net difference between the value
of the Assets and the Assumed Liabilities that does not arise as
a result of an event occurring after June 28, 2002. Following
the Closing, Buyer shall not take any actions with respect to the
accounting books and records of the Business on which the Closing
Statement of Assets and Liabilities is to be based that are not
consistent with the Business's past practices. Without limiting
the generality of the foregoing, no changes shall be made in any
reserve or other account existing as of the date of the Balance
Sheet except as a result of events occurring after the date of
the Balance Sheet and, in such event, only in a manner consistent
with past practices.
(c) Each party shall provide the other party and its
representatives with reasonable access to books and records and
relevant personnel during the preparation of the Closing
Statement of Assets and Liabilities and the resolution of any
disputes that may arise under this Section 4.2.
(d) If Seller disagrees with the determination of the
Closing Net Assets as shown on the Closing Statement of Assets
and Liabilities, Seller shall notify Buyer in writing of such
disagreement within forty-five (45) days after delivery of the
Closing Statement of Assets and Liabilities, which notice shall
describe the nature of any such disagreement in reasonable
detail, identify the specific items involved and the dollar
amount of each such disagreement and provide reasonable
supporting documentation for each such disagreement. Subject to
compliance by Buyer with the next sentence, after the end of such
forty-five (45) day period, Seller may not introduce additional
disagreements with respect to any item in the Closing Statement
of Assets and Liabilities or increase the amount of any
disagreement, and any item not so identified shall be deemed to
be agreed to by Seller and will be final and binding upon the
parties. During the forty-five (45) day period of its review,
Seller shall have reasonable access to any documents, schedules
or workpapers, including those of independent auditors or other
agents, used in the preparation of the Closing Statement of
Assets and Liabilities, to the personnel who prepared the Closing
Statement of Assets and Liabilities and to other employees of or
advisors to Buyer or the Business to the extent access is
reasonably required for Seller to assess the acceptability of the
Closing Statement of Assets and Liabilities.
(e) Buyer and Seller agree to negotiate in good faith to
resolve any disagreement with respect to the Closing Statement of
Assets and Liabilities. If Buyer and Seller are unable to
resolve all disagreements properly identified by Seller pursuant
to Section 4.2(d) within thirty (30) Business Days after delivery
to Buyer of written notice of such disagreement, then such
disagreements shall be submitted for final and binding resolution
to a Neutral Accounting Firm to resolve such disagreements (the
"Accounting Arbitrator"). The Accounting Arbitrator shall be a
Neutral Accounting Firm selected by mutual agreement of Buyer and
Seller; provided that (i) if the parties are unable to agree on a
Neutral Accounting Firm to act as Accounting Arbitrator, each
party shall select a Neutral Accounting Firm and such firms
together shall select the Neutral Accounting Firm to act as the
Accounting Arbitrator, and (ii) if any party does not select a
Neutral Accounting Firm within ten (10) days of written demand
therefor by the other party, the Neutral Accounting Firm selected
by the other party shall act as the Accounting Arbitrator. The
Accounting Arbitrator will only consider those items and amounts
set forth in the Closing Statement of Assets and Liabilities as
to which Buyer and Seller have disagreed within the time periods
and on the terms specified above and must resolve the matter in
accordance with the terms and provisions of the Agreement and
shall deliver to Buyer and Seller, as promptly as practicable and
in any event within 60 Business Days after its appointment, a
written report setting forth the resolution of any such
disagreement determined in accordance with the terms of this
Agreement. The scope of the disputes to be resolved by the
Accounting Arbitrator shall be limited to whether such
calculation was done in accordance with the accounting methods,
standards, policies, practices, classifications, estimation
methodologies, assumptions, procedures or level of prudence used
to prepare the Financial Statements, and whether there were
mathematical errors in the calculation of the Closing Net Assets,
and the Accounting Arbitrator is not to make any other
determination, including any determination as to whether GAAP was
followed for the Balance Sheet or the Closing Statement of Assets
and Liabilities or as to whether the Closing Net Assets is
correct. The Accounting Arbitrator shall make its determination
based solely on presentations and supporting material provided by
the parties and not pursuant to any independent review. The
determination of the Accounting Arbitrator shall be final and
binding upon Buyer and Seller. Judgment may be entered upon the
determination of the Accounting Arbitrator in any court having
jurisdiction over the party against which such determination is
to be enforced. The fees, expenses and costs of the Accounting
Arbitrator shall be borne one-half by Buyer and one-half by
Seller.
(f) If the Closing Net Assets as finally determined in
accordance with this Section 4.2 are less than $24,957,762, the
Purchase Price shall be decreased on a dollar-for-dollar basis by
the amount of such shortfall, and if the Closing Net Assets are
greater than $24,957,762, the Purchase Price shall be increased
on a dollar-for-dollar basis by the amount of such excess.
(g) If any adjustment under this Section 4.2 results in a
reduction in the Purchase Price, Seller shall pay to Buyer the
amount of such reduction, and if any adjustment results in an
increase in the Purchase Price, Buyer shall pay to Seller the
amount of such increase, in each case, by wire transfer of
immediately available funds to an account designated by the party
receiving payment within five (5) Business Days after the final
determination of the amount of such reduction or increase in
Purchase Price, plus interest on the amount of such reduction or
increase from the Closing Date to the date of such payment
thereof at the per annum rate equal to the rate announced by
Citibank, N.A. in the City of New York as its base rate in effect
on the Closing Date.
4.3. Allocations; Taxes.
(a) The consideration (within the meaning of Section 1060
of the Code) paid by Buyer hereunder shall be allocated among the
Assets in accordance with a schedule to be prepared by Buyer.
Buyer shall deliver to Seller a draft schedule not later than
thirty (30) days after the final determination of the Closing Net
Assets pursuant to Section 4.2. Seller shall have thirty (30)
Business Days to provide Buyer with any objections to such draft
schedule. If Seller shall object to the computation or
allocation by Buyer of such amounts and Buyer and Seller shall
not reach agreement on the computation or allocation within
thirty (30) Business Days after notification by Seller of its
objection, then such disagreements shall be submitted for final
and binding resolution to an Accounting Arbitrator chosen in
accordance with the terms of Section 4.2(e).
(b) Such consideration allocation shall be made consistent
with Section 1060 of the Code. Each of the parties hereto shall
not, and shall not permit any of its Affiliates to, take a
position (except as required pursuant to any Order) on any Tax
Return, or before any Taxing Authority or in any judicial
proceeding to the extent Tax issues are raised, that is in any
way inconsistent with the allocation of the consideration among
the assets determined in accordance with Section 4.3(a).
(c) Buyer and Seller shall cooperate in preparing,
executing and filing use, sales, real estate, transfer and
similar Tax Returns relating to the purchase and sale of the
Assets. Such Tax Returns shall be prepared in a manner that is
consistent with the determination of the aggregate fair market
values of the Assets as contemplated by Section 4.3(a). Each of
Buyer and Seller shall bear, and to the extent permitted by law
shall pay, 50% of all sales, transfer, documentary, stamp,
recording and similar Taxes incurred in connection with the
purchase and sale of the Assets ("Transfer Taxes"), and Buyer and
Seller shall reimburse each other for 50% of any Transfer Taxes
paid by the other party within fourteen (14) days of such other
party's written request. Notwithstanding anything to the
contrary contained herein, Buyer shall be responsible for 100% of
any Transfer Taxes incurred in connection with the purchase and
sale of the Assets if such Transfer Taxes would be payable by
Seller as a result of Buyer's failure to (i) obtain the necessary
sales and use tax permits in the states of Maryland and Texas or
(ii) timely deliver any necessary resale certificates.
4.4. Allocation of Expenses. The following expenses
attributable to the Business shall be allocated between and are hereby
assumed by Buyer and Seller as follows:
(a) All state, county and local ad valorem Taxes on real or
personal property ("Property Taxes") shall be prorated between
Buyer and Seller as of the Closing Date, computed by multiplying
the amount of Property Taxes for the fiscal year for which the
same are levied by a fraction, the numerator of which is the
number of days in such fiscal year up to and including the
Closing Date and the denominator of which is the number of days
in such fiscal year. In connection with such proration of
Property Taxes, in the event that actual Property Tax figures are
not available at the Closing Date, proration of Property Taxes
shall be based upon the actual Property Taxes for the preceding
fiscal year for which actual Property Tax figures are available,
and re-prorated when actual Property Tax figures become
available. All utility charges, gas charges, electric charges,
water charges, water rents and sewer rents, if any, shall be
apportioned between Buyer and Seller as of the Closing Date,
computed on the basis of the most recent meter charges or, in the
case of annual charges, on the basis of the established fiscal
year. All prepaid expenses (including any lease payment but
excluding Taxes) paid by Seller prior to the Closing Date and all
other expenses paid by the Seller in respect of the Business
shall be apportioned between Buyer and Seller as of the Closing
Date computed on the basis of the applicable time period to which
the expenses apply.
(b) All prorations shall be made, insofar as feasible, on
the Closing Date, and the Purchase Price shall be adjusted in the
same manner as adjustments for indemnification payments as set
forth in Section 9.4(b)(ii). During the three-month period
subsequent to the Closing Date, Seller shall advise Buyer and
Buyer shall advise Seller of any actual changes to such
prorations, and the Purchase Price shall be increased or
decreased, as applicable, at the end of such three-month period.
In the event Buyer or Seller shall receive bills after the
Closing Date for expenses incurred prior to the Closing Date that
were not prorated in accordance with Section 4.4(a) or that were
re-prorated in accordance with Section 4.4(a), then Buyer or
Seller, as the case may be, shall promptly notify the other party
as to the amount of the expense subject to proration and the
responsible party shall pay its portion of such expense (or, in
the event such expense has been paid on behalf of the responsible
party, reimburse the other party for its portion of such
expenses).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
The representations and warranties of Seller contained
in this Article V (other than those contained in Section 5.2,
Section 5.6(a) and Section 5.9(iv)) shall be deemed true, correct
and complete, and Seller shall not be deemed to have breached any
such representation or warranty as a consequence of the existence
of any fact, event or circumstance inconsistent with such
representation or warranty, unless such fact, event or
circumstance, individually or taken together with all other
facts, events or circumstances inconsistent with any
representation or warranty contained in this Article V, has had
or could reasonably be expected to have a Business Material
Adverse Effect, disregarding for these purposes (i) any
qualification or exception for, or reference to, materiality in
any such representation or warranty and (ii) any use of the terms
"material", "materially," "in all material respects" or similar
terms or phrases in any such representation or warranty. The
representations and warranties in Section 5.9(iv) shall be deemed
to be true, correct and complete, and shall not be deemed to have
been breached, unless they are untrue, incorrect or incomplete in
any material respect. The representations and warranties in
Section 5.2 and Section 5.6(a) shall not be qualified by either
of the two preceding sentences.
Except as set forth on the Schedules (it being
understood that an item included on a Schedule referenced in any
Section or subsection of this Article V shall be deemed to relate
to each other Section or subsection of this Article V to the
extent such relationship is reasonably apparent), and subject to
the preceding paragraph, Seller represents and warrants to Buyer
that:
5.1. Organization, Power, Standing. Seller is a corporation
duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Seller has all requisite corporate
power and authority to own, operate or lease the Assets and to conduct
the Business and its other businesses as presently conducted and to
enter into the Transaction Documents and to consummate the Transactions.
Seller is duly authorized to conduct business and is in good
standing in each jurisdiction where such authorization is
required to conduct the Business substantially as conducted
immediately prior to the date of this Agreement.
5.2. Due Authorization. Seller has full power and authority to
execute this Agreement and the Ancillary Agreements to which it is, or is
specified to be, a party. The execution and delivery by Seller
of the Transaction Documents, the performance by it of its
obligations thereunder, and the Transactions have been duly and
validly authorized by all necessary corporate action on the part
of Seller. This Agreement has been, and each of the other
Transaction Documents, when executed, will be, duly executed and
delivered by Seller and constitute legal, valid and binding
obligations of Seller enforceable in accordance with their
respective terms, except as such enforcement may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of
creditors, and (ii) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity
or at law).
5.3. No Conflict; Third Party Consents. Except as set forth
on Schedule 5.3, the execution and delivery of this Agreement do not,
and each of the other Transaction Documents will not, and the
consummation of the Transactions will not (with or without notice or
lapse of time or both) (i) violate or conflict with the provisions of
the Certificate of Incorporation or Bylaws of Seller, (ii) result in
the imposition of any Lien upon any of the Assets, cause the
acceleration or material modification of any obligation under,
create in any party the right to terminate, constitute a default
or breach of, or violate or conflict with the terms, conditions
or provisions of, any Contract to which Seller is a party or by
which it or the Assets are bound, (iii) result in a breach or
violation by Seller of any of the terms, conditions or provisions
of any Law or Order, or (iv) except for the filing requirements
set forth in Section 5.4, require on the part of Seller any
Governmental Authorization or any filing with or notice to any
Governmental or Regulatory Body. Except as set forth on Schedule
5.3 or Schedule 5.4 or as disclosed in Section 5.4, no consent,
approval or authorization of, or registration or filing with, any
Person is required in connection with the execution or delivery
by Seller of this Agreement or any of the other Transaction
Documents to which Seller is or is to become party or the
consummation of the Transactions.
5.4. Government Authorizations. (a) Execution, delivery and
performance of this Agreement and the other Transaction Documents by Seller,
and consummation of the Transactions, will not require on the part of
Seller any Governmental Authorization or any filing with or
notification to any Governmental or Regulatory Body except with
respect to the following:
(i) The pre-merger notification requirements of the HSR Act;
(ii) The novation of the Government Contracts as contemplated
by Section 8.8;
(iii) The facilities clearance requirements of the Defense
Security Service of the United States Department of Defense
("DSS"), as set forth in the relevant Industrial Security
Regulation and the National Industrial Security Program Operating
Manual, as may be amended from time to time; and
(iv) The Governmental Authorizations set forth on Schedule 5.4.
(b) Schedule 2.1(f) and Schedule 2.2(k) set forth all
Governmental Authorizations owned, held or possessed by Seller
that are necessary to own or lease, operate and use the Assets
and to carry on and conduct the Business substantially as
conducted immediately prior to the date of this Agreement other
than such Governmental Authorizations the failure of which to
own, hold or possess would not result in a Loss to the Business
of more than $1,000 individually or $5,000 in the aggregate.
5.5. Financial Information.
(a) Seller has delivered to Buyer and Schedule 5.5(a)
contains true, correct and complete copies of (i) unaudited pro
forma statements of assets and liabilities of the Business as of
June 28, 2002 (the "Balance Sheet"), and (ii) the related
unaudited pro forma statement of revenues, costs and expenses of
the Business for the years ended December 31, 2000, December 31,
2001 and the portion of 2002 ended June 28, 2002 (together with
the Balance Sheet, the "Financial Statements"). Except as set
forth on Schedule 5.5(a), the Financial Statements (i) fairly and
accurately present, subject to normal adjustments, in all
material respects the assets, liabilities and financial condition
and results of operations of the Business at and as of the date
thereof and for the period covered thereby, (ii) were compiled
from and are in accordance with books and records regularly
maintained by management of Seller used to prepare the financial
statements of Seller, and (iii) were prepared in accordance with
the accounting methods, standards, policies, practices,
estimation methodologies, assumptions and procedures described
therein or set forth on Schedule 5.5(a).
(b) Except as and to the extent reflected on the Financial
Statements or on Schedule 5.5(b), Seller does not have any
Liabilities that are within the definition of Assumed Liabilities
of a nature customarily reflected on a balance sheet other than
Liabilities incurred since June 28, 2002 in the ordinary course
of business and consistent with past practice.
5.6. Events Subsequent to Date of Balance Sheet. Except as set
forth on Schedule 5.6 or as consented to in writing by Buyer (and
excluding the Transactions), since June 28, 2002 and until the date of
this Agreement:
(a) there has not been a Business Material Adverse Effect;
(b) Seller has carried on the Business in the ordinary
course of business;
(c) Seller has not, except in the ordinary course of
business, sold, leased, transferred, or assigned any of the
properties, rights or assets of Seller primarily or exclusively
relating to the Business having a value in excess of $500,000;
(d) Seller has not, except in the ordinary course of
business, entered into any Business Contract or agreed to any
material modification, amendment or extension of any Business
Contract requiring or likely to require payments to or from
Seller in any one year of more than $500,000;
(e) Seller has not, except in the ordinary course of
business, entered into any written agreement with any Business
Employee or consultant relating primarily or exclusively to the
Business, including without limitation, any Contract relating to
employment, compensation, benefits, termination, retention, or
severance;
(f) Seller has not, except in the ordinary course of
business, undertaken or committed to undertake capital
expenditures; and
(g) Seller has not committed to do any of the foregoing.
Buyer acknowledges that there may be disruption to the
Business as a result of the announcement by Seller of its
intention to sell the Business (and there may be disruption to
the Business as a result of the execution of this Agreement and
the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby), and Buyer acknowledges that
such disruptions do not and shall not constitute a breach of this
Section 5.6.
5.7. Inventory. All Inventory, including without limitation all
Inventory shown on the Financial Statements and all Inventory
thereafter created or acquired by Seller prior to the Closing
Date, has been created or acquired in the ordinary course of
business and is of a quality usable and saleable in the ordinary
course of business, except to the extent of normal obsolescence
and subject, in the case of raw materials and work-in-progress,
to the completion of the production process.
5.8. Accounts Receivable. All Accounts Receivable of Seller with
respect to the Business, including without limitation all Accounts
Receivable as shown on the Financial Statements, are valid
receivables and resulted from transactions in the ordinary course
of business for bona fide products delivered or services
rendered. As of the date of this Agreement, no written notice
has been received from any account debtor that any amount of such
Accounts Receivable are subject to any pending or threatened set-
off, discount or counterclaim of any kind, other than consistent
with past practices pursuant to reserve methodologies. Schedule
5.8 contains a list of account debtors as of June 28, 2002, the
amount of all Accounts Receivable and the aging thereof, in each
case with respect to the Business.
5.9. Material Contracts. Schedule 5.9 sets forth a list, as of
the date of this Agreement, of each of the following Business Contracts
(other than Excluded Contracts) (collectively, the "Material
Contracts"):
(i) Contracts for the future acquisition or sale of any assets
involving $500,000 individually (or in the aggregate, in the case
of any related series of Contracts), other than acquisitions or
sales of Inventory in the ordinary course of business;
(ii) Contracts relating to joint ventures or partnerships;
(iii) Contracts calling for future aggregate purchase prices
or payments to or from Seller in any one year of more than
$500,000 in any one case (or in the aggregate, in the case of any
related series of Contracts);
(iv) Contracts containing covenants of Seller prohibiting or
materially limiting the right to compete in any line of business
or prohibiting or restricting its ability to conduct business
with any Person or in any geographical area;
(v) Contracts relating to the acquisition by Seller of any
operating business, the capital stock of any other Person or,
except for Inventory and Tangible Property acquired in the
ordinary course of business, any other assets or property (real
or personal) for a purchase price of more than $500,000
individually (or in the aggregate, in the case of any related
series of Contracts);
(vi) Contracts requiring the payment by or to Seller of a
royalty, override or similar commission or fee of more than
$500,000 in any one year or any Contract relating to Intellectual
Property or research and development;
(vii) all collective bargaining agreements and all Contracts
(to the extent in writing) relating to employment, compensation,
benefits, termination, retention, severance (other than standard
employee manuals and the like);
(viii) Contracts relating to the creation of Liens (other than
the Permitted Liens) or the guarantee of the payment of
liabilities or performance of obligations of any other Person by
Seller; and
(ix) Contracts and other agreements pursuant to which any
Person has granted to Seller or has been granted by Seller the right
to use or purchase any Tangible Property or Intellectual Property
and involving the payment of amounts in excess of $500,000 in any
year.
Seller has made available to Buyer true, correct and
complete copies of all of the Material Contracts. With respect
to each Material Contract, as of the date of this Agreement (a)
such Material Contract is legal, valid, binding, enforceable, and
in full force and effect, (b) Seller is not in breach or default
under any Material Contract, and (c) to the Knowledge of Seller,
no other party to any Material Contract is in breach or default
thereof.
5.10. Real Property and Tangible Personal Property. Schedule 2.1(d)
lists and describes briefly all of the Business Real Property owned in fee
or leased by Seller and used primarily or exclusively in the conduct of
the Business and identifies the record title holder of all such real property.
Schedule 5.10 sets forth a true, correct and complete list, as of
the date of this Agreement, of all Contracts, including the Lease
Agreements, pursuant to which Seller occupies or uses such real
property. Seller has delivered to Buyer true, correct and
complete copies of all such Contracts.
(a) Schedule 2.1(a) sets forth a list, as of the date of
this Agreement, of each material item of the Business Tangible
Property.
(b) Seller has good and marketable title to, or a valid
leasehold interest in, all of the Assets, free and clear of any
Liens, other than Permitted Liens.
(c) The material items of Business Tangible Property
capitalized on the Closing Statement of Assets and Liabilities
have been maintained in accordance with Seller's normal practice
and are in usable condition for the operation of the Business,
ordinary wear and tear and aging excepted.
(d) All buildings and plants utilized by Seller in the
conduct of the Business immediately prior to the date of this
Agreement are in substantially good operating condition and
repair, subject to continued repair and replacement in accordance
with past practice.
(e) There is not under any of the Lease Agreements any
existing default on the part of Seller or, to the Knowledge of
Seller, any other party thereto, nor any facts which, with the
passage of time or notice of default or both, would constitute
such a default. The rental amount set forth in each Lease
Agreement represents the actual rental amounts being paid, and
there are no separate agreements or understandings amending or
modifying such rental amounts.
(f) As of the date of this Agreement, Seller has not
received notice of any condemnation proceedings or eminent domain
proceedings of any kind pending against the Business Real
Property or any portion thereof.
(g) Seller has not received any extant notice alleging that
the improvements comprising part of the Business Real Property
violate: (i) any applicable deed restrictions or applicable
covenants, restrictions or other similar agreements; (ii) any
existing site plan approvals, zoning or subdivision regulations;
or (iii) any urban redevelopment plans, as modified by any duly
issued variances.
5.11. Intellectual Property.
(a) Schedule 2.1(g) identifies each item of Business
Intellectual Property, including any patents or patent
applications. Seller has delivered to Buyer correct and complete
copies of all such patents and patent applications. To the
Knowledge of Seller, and except to the extent any patents or
patent applications are identified as "Expired" or "Abandoned" on
Schedule 2.1(g), all fees now due to obtain and maintain such
patents and patent applications have been paid, and such patent
and patent applications are not subject to any maintenance fees
or Taxes or actions falling due within ninety (90) days after the
Closing Date.
(b) Except as set forth on Schedule 5.11, to the Knowledge
of Seller, none of the Business Intellectual Property owned by
Seller infringes upon the rights of any other Person. Within the
last three (3) years of the date of this Agreement, Seller has
not received written notice that any Person, other than Seller,
claims any ownership interest in any of the Business Intellectual
Property owned by Seller.
5.12. Tax Matters.
(a) Except as set forth on Schedule 5.12, Seller has or
will have (i) timely filed with the appropriate Taxing Authority
(taking into account all available extensions) all Tax Returns
concerning material Taxes applicable to the Assets or the
Business that are required to be filed by applicable Law in all
jurisdictions in which such Tax Returns are required to be filed
prior to the date hereof or the Closing Date, as the case may be,
and all such Tax Returns were true, accurate and complete in all
material respects, and (ii) timely paid in full all Taxes shown
as due on such Tax Returns.
(b) There are no material Liens with respect to any Taxes
upon any of the Assets, other than (i) Taxes, the payment of
which is not yet due, or (ii) Taxes or charges being contested in
good faith by appropriate proceedings.
(c) None of the Assets is "tax exempt use property" within
the meaning of Section 168(h) of the Code, and none of the Assets
is subject to a safe harbor lease pursuant to the former Section
168(f)(8) of the Internal Revenue Code of 1954.
5.13. Litigation. Except as set forth on Schedule 5.13, as of the
date of this Agreement: (a) there is no Action or Proceeding pending
or, to the Knowledge of Seller, threatened during the last twelve
(12) months which relates to the Assets or the Assumed
Liabilities or primarily or exclusively to the Business; and
(b) there is no Order to which Seller is subject which relates to
the Assets or the Assumed Liabilities or primarily or exclusively
to the Business. This Section 5.13 shall not apply to matters
under Environmental Law which are exclusively the subject of
Section 5.17.
5.14. Employees. Schedule 5.14 sets forth a true, correct and
complete list, as of the date hereof, of the name, department,
title and salary of each Business Employee whose annual salary
exceeds $100,000.
5.15. Employee and Labor Relations. (a) Except as set forth on
Schedule 5.15, to the Knowledge of Seller,
(i) Seller is not a party to or bound by any collective
bargaining agreement and there are no labor unions or other
organizations representing, purporting to represent or attempting
to represent any Business Employees;
(ii) as related to the Business, Seller has complied in all
material respects with all Laws relating to employment practices;
(iii) there has not been pending or existing in the last
twelve (12) months of the date of this Agreement any strike,
slowdown, work stoppage or lockout involving the Business;
(iv) as of the date of this Agreement, there is no unfair labor
practice charge or complaint against Seller pending before the
National Labor Relations Board or similar governmental agency
outside of the United States involving the Business, and no such
charge or complaint has been made against Seller during the last
twelve (12) months of the date of this Agreement;
(v) no application or petition for an election of or for
certification of a collective bargaining agent relating to the
Business is pending as of the date of this Agreement; and
(vi) there has been no charge of discrimination relating to the
Business filed against Seller with the Equal Employment
Opportunity Commission or similar governmental agency during the
last twelve (12) months of the date of this Agreement.
(b) Schedule 2.3(h) contains a list of all employment,
severance, retention or termination agreements relating to the
Business to be assumed by Buyer.
(c) Except as set forth on Schedule 2.3(h), no Business
Employee is a party to any employment, severance, retention,
termination or other agreement that entitles him or her to
compensation or other benefits upon consummation of the
Transactions.
5.16. Employee Plans.
(a) Schedule 5.16(a) identifies each Employee Plan and
Employee Benefit Arrangement. Seller has furnished or made
available to Buyer copies of the Employee Plans and all
amendments thereto together with, where applicable, each Employee
Plan's summary plan description and any summaries of material
modifications thereto, and descriptions of all Employee Benefit
Arrangements.
(b) Neither Seller, nor any other Person or entity that,
together with Seller is treated as a single employer under
Section 414(b) or (c) of the Code or Section 4001 of ERISA, has
incurred (i) any liability under Title IV of ERISA arising in
connection with the termination of any plan covered or previously
covered by Title IV of ERISA, (ii) any liability under
Section 412 of the Code, or (iii) any liability as a result of
the failure to comply with the continuation of coverage
requirements of Section 601 et. seq. of ERISA and Section 4980B
of the Code, that in any such case would become a Liability of
Buyer after the Closing Date.
(c) No Employee Plan or Employee Benefit Arrangement
covering Business Employees provides for medical or death
benefits beyond termination of service or retirement, other than
(i) coverage mandated by law, or (ii) death or retirement
benefits under a benefit plan qualified under Section 401(a) of
the Code.
(d) No Employee Plan covering any Business Employee is a
multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA ("Multiemployer Plan"); and neither Seller, nor any other
Person or entity that, together with Seller is treated as a
single employer under Section 414(b) or (c) of the Code or
Section 4001 of ERISA, has at any time during the six (6) year
period preceding the Closing Date, contributed to or been
obligated to contribute to any Multiemployer Plan on behalf of
Business Employees.
5.17. Environmental Matters. Except as set forth on Schedule 5.17:
(a) as relating to the Business or the Facilities, Seller
has complied and is in compliance in all material respects with
all applicable Environmental Laws;
(b) Seller has not received any Environmental Claim that
relates in any way to a Release, or any Hazardous Materials
stored or disposed on, in, under or from, or generated by or
derived or transported from, the Facilities which is presently
outstanding and unresolved nor to the Knowledge of Seller, is any
such Environmental Claim threatened;
(c) Seller has all Governmental Authorizations required for
the conduct of the Business and operation of the Facilities under
applicable Environmental Laws, all such Governmental
Authorizations were lawfully and validly issued and Seller is in
compliance in all material respects with all such Governmental
Authorizations;
(d) as of the date of this Agreement, Seller is not party
to, or subject to the terms of, any material Order, consent or
settlement agreement under any applicable Environmental Law in
connection with the Business or the Facilities. Seller has not
received any written notice of any facts or circumstances that
are reasonably likely to result in the issuance of a material
Order;
(e) to the Knowledge of Seller, there has been no Release
of Hazardous Materials at, on, under or from the Facilities or
the Business Real Property in amounts requiring investigation or
cleanup, or that are otherwise reasonably likely to result in
liability under Environmental Laws; and
(f) Seller has made available to Buyer copies of all
environmental reports, studies, assessments and data prepared in
the past five (5) years by or for Seller, or which is otherwise
in Seller's possession or control.
5.18. Entire Business. Except as set forth on Schedule 5.18, and
except for any Excluded Assets and Governmental Authorizations and
Contracts that cannot be transferred by Seller, the Assets comprise
all of the properties, assets, rights and facilities material for the
conduct of the Business in the manner in which it is presently
conducted by Seller.
5.19. Compliance with Law.
(a) Except as set forth on Schedule 5.19(a), Seller is not
in violation of any Law or Order to which the Business or the
Assets or the Assumed Liabilities are subject.
(b) With respect to the Business and the Assets, Seller is
not in material violation, breach or default of any term,
condition, regulation or statute governing any Contract between
the United States, or any agency thereof, and Seller existing as
of the date hereof or the Closing Date, except as set forth on
Schedule 5.19(b).
(c) With respect to the Business and the Assets, Seller
possesses all Governmental Authorizations necessary to carry on
the business and operations of Seller as presently conducted.
This Section 5.19 shall not apply to matters under Environmental
Law which are exclusively the subject of Section 5.17.
5.20. Brokers. Except as set forth on Schedule 5.20, all
negotiations relative to the Transaction Documents and the
Transactions have been carried out by Seller directly with Buyer
without the intervention of any Person on behalf of Seller in
such manner as to give rise to any valid claim by any Person
against Buyer for a finder's fee, brokerage commission or similar
payment. Any finder's fee, brokerage commission or similar
payment due to any Person named on Schedule 5.20 shall be the
responsibility of Seller.
5.21. Governmental Contracts.
(a) Except as set forth on Schedule 5.21, with respect to
each Government Contract (i) Seller has complied with all terms
and conditions and all applicable Laws; (ii) no written notice
has been received by Seller alleging that Seller is in breach or
violation of any Law or contractual requirement; (iii) no written
notice of termination, cure notice or show-cause notice has been
received by Seller; (iv) to the Knowledge of Seller all Cost or
Pricing Data (as defined in Federal Acquisition Regulation Section
15.401) and other information submitted by Seller or Seller's
subcontractors in support of the negotiation of such Government
Contract, or modification thereto, or in support of requests for
payments thereunder, was, as of the date of price agreement or
payment submission, current, accurate and complete; (v) no cost
incurred by Seller pertaining to such Government Contract (A) has
been formally questioned or challenged, (B) is to the Knowledge
of Seller the subject of any investigation or (C) has been
disallowed by the United States government; and (vi) no money due
to Seller pertaining to such Government Contract has been
withheld or offset nor has any claim been made to withhold or
offset money, and to the Knowledge of Seller, Seller is entitled
to all progress payments received with respect thereto.
(b) Except as set forth on Schedule 5.21, to the Knowledge
of Seller, neither Seller nor any of its directors, officers or
employees is (and for the last three (3) years has been), with
respect to the Business: (i) under administrative, civil or
criminal investigation, indictment or information by the United
States government with respect to any alleged irregularity,
misstatement or omission regarding a Government Contract; or (ii)
suspended or debarred from doing business with the United States
government or declared nonresponsible or ineligible for
government contracting. Within the past three years, Seller has
not made a voluntary disclosure under the Department of Defense
Voluntary Disclosure Program to the United States government with
respect to any alleged irregularity, misstatement or omission
arising under or relating to any Government Contract. To the
Knowledge of Seller, there are no circumstances that would
reasonably warrant Department of Defense suspension or debarment
proceedings or the finding of nonresponsibility or ineligibility
on the part of the Business. To the Knowledge of Seller, within
the last three years, no payment has been made by Seller, or by
any person on behalf of Seller, in connection with any Government
Contract in violation of applicable procurement laws or
regulations or in violation of, or requiring disclosure pursuant
to, the Foreign Corrupt Practices Act, as amended.
(c) Except as set forth on Schedule 5.21, to the Knowledge
of Seller, neither the United States government nor any prime
contractor, subcontractor or vendor has asserted in writing any
claim or initiated any dispute proceeding against Seller relating
to Government Contracts, nor has Seller asserted any claim or
initiated any dispute proceeding directly or indirectly against
any such party concerning any Government Contract.
(d) Each Government Contract contains the provision set
forth in FAR 52.232-23 (Assignment of Claims).
5.22. Disclaimer of Seller. Except as otherwise specifically
provided in this Article V, the Assets to be sold hereunder to Buyer
are being sold AS IS WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR INTENDED USE OR OTHER EXPRESSED OR IMPLIED WARRANTY.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The representations and warranties of Buyer or
Guarantor contained in this Article VI (other than those
contained in Section 6.2) shall be deemed true, correct and
complete, and neither Buyer nor Guarantor shall be deemed to have
breached any such representation or warranty as a consequence of
the existence of any fact, event or circumstance inconsistent
with such representation or warranty, unless such fact, event or
circumstance, individually or taken together with all other
facts, events or circumstances inconsistent with any
representation or warranty contained in this Article VI, has had
or could reasonably be expected to have a Buyer Material Adverse
Effect, disregarding for these purposes (i) any qualification or
exception for, or reference to, materiality in any such
representation or warranty and (ii) any use of the terms
"material", "materially," "in all material respects" or similar
terms or phrases in any such representation or warranty. The
representations and warranties in Section 6.2 shall not be
qualified by either of the two preceding sentences.
Except as set forth on the Schedules (it being
understood that an item included on a Schedule referenced in any
Section or subsection of this Article VI shall be deemed to
relate to each other Section or subsection of this Article VI to
the extent such relationship is reasonably apparent), and subject
to the preceding paragraph, Buyer and Guarantor, jointly and
severally, represent and warrant to Seller that:
6.1. Organization, Power, Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware. Buyer has all requisite corporate power and authority to
conduct its business as it has been and is currently being conducted
and to enter into the Transaction Documents and to consummate the
Transactions. Buyer is duly authorized to conduct business and
is in good standing in each jurisdiction where such authorization
is required to conduct its business as currently conducted by it.
Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of Delaware. Guarantor has all
requisite corporate power and authority to conduct its business
as it has been and is currently being conducted and to enter into
the Transaction Documents and to consummate the Transactions.
Guarantor is duly authorized to conduct business and is in good
standing in each jurisdiction where such authorization is
required to conduct its business as currently conducted by it.
6.2. Due Authorization. Each of Buyer and Guarantor has full power
and authority to execute this Agreement and the Ancillary Agreements
to which it is, or is specified to be, a party. The execution
and delivery by each of Buyer and Guarantor of the Transaction
Documents, the performance by it of its obligations thereunder,
and the Transactions have been duly and validly authorized by all
necessary corporate action on the part of Buyer and Guarantor.
This Agreement has been, and each of the other Transaction
Documents, when executed, will be, duly executed and delivered by
Buyer and constitute valid and binding obligations of Buyer
enforceable in accordance with their respective terms, except as
such enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors, and (ii) general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law). This Agreement
has been, and each of the other Transaction Documents, when
executed, will be, duly executed and delivered by Guarantor and
constitute valid and binding obligations of Guarantor enforceable
in accordance with their respective terms, except as such
enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors, and (ii) general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
6.3. No Conflict; Third Party Consents. Except as set forth on Schedule
6.3, the execution and delivery of this Agreement do not, and each of the
other Transaction Documents will not, and the consummation of the
Transactions will not (with or without notice or lapse of time or
both), (i) violate or conflict with the provisions of the
Certificate of Incorporation or Bylaws of Buyer or Guarantor,
(ii) result in the imposition of any Lien upon any of the
properties or assets of Buyer or Guarantor, cause the
acceleration or material modification of any obligation under,
create in any party the right to terminate, constitute a default
or breach of, or violate or conflict with the terms, conditions
or provisions of any Contract to which Buyer or Guarantor is a
party or by which either of them is bound, (iii) result in a
breach or violation by Buyer or Guarantor of any of the terms,
conditions or provisions of any Law or Order, or (iv) except for
the filing requirements set forth in Section 6.4, require on the
part of Buyer or Guarantor any Governmental Authorization or any
filing with or notice to any Governmental or Regulatory Body.
Except as set forth on Schedule 6.3 or Schedule 6.4 or as
disclosed in Section 6.4, no consent, approval or authorization
of, or registration or filing with, any Person is required in
connection with the execution or delivery by Buyer or Guarantor
of this Agreement or any of the other Transaction Documents to
which Buyer or Guarantor is or is to become party or the
consummation of the Transactions.
6.4. Government Authorizations. Execution, delivery and performance
of this Agreement and the other Transaction Documents by Buyer and
Guarantor, and consummation of the Transactions will not require
on the part of Buyer or Guarantor any Governmental Authorization,
or any filing with or notification to, any Governmental or
Regulatory Body except with respect to the following:
(i) The pre-merger notification requirements of the HSR Act;
(ii) The novation of the Government Contracts as contemplated
by Section 8.8;
(iii) The facilities clearance requirements of the DSS, as
set forth in the relevant Industrial Security Regulation and the
National Industrial Security Program Operating Manual, as may be
amended from time to time; and
(iv) The Governmental Authorizations set forth on Schedule 6.4.
6.5. Litigation. There is no Action or Proceeding pending or, to the
Knowledge of Buyer and/or Guarantor, threatened, against Buyer
which, if adversely determined, would reasonably be expected to
adversely affect or restrict the ability of Buyer to consummate
the Transactions. There is no Order to which Buyer is subject
which would reasonably be expected to adversely affect or
restrict the ability of Buyer to consummate the Transactions.
6.6. Brokers. All negotiations relative to the Transaction
Documents and the Transactions have been carried out by Buyer
directly with Seller without the intervention of any Person on
behalf of Buyer in such manner as to give rise to any valid claim
by any Person against Seller for a finder's fee, brokerage
commission or similar payment.
6.7. Buyer's Acknowledgment. Buyer acknowledges and agrees that some
or all of the services and products of the Business would require licensing
by either the United States Department of State or Department of
Commerce in order to export such services or products to a
foreign buyer. Buyer acknowledges and agrees that some or all of
the equipment and know-how used in the Business are of such a
nature that the export of such equipment or know-how would also
require a license from either the United States Department of
State or Department of Commerce.
6.8. Operations of Business. Buyer recognizes that Seller provides
certain services and support to the Business. Buyer recognizes that such
services and support are necessary for the ongoing operation of
the Business, and that the assets owned by Seller which are
necessary to provide such services and support will not be
purchased by Buyer under this Agreement. Accordingly, Buyer
recognizes that, in order to conduct the Business, Buyer must
provide, or contract with a third party to provide, the services
and support currently being provided by Seller.
6.9. Buyer's Due Diligence. Buyer acknowledges that, except for the
matters that are expressly covered by the provisions of this Agreement,
Buyer is relying on its own investigation and analysis in entering into
the Transaction Documents and the Transactions. Buyer is an
informed and sophisticated participant in the Transactions and
has undertaken such investigation, and has been provided with and
has evaluated such documents and information, as it has deemed
necessary in connection with the execution, delivery and
performance of this Agreement. Buyer acknowledges that it is
acquiring the Business without any representation or warranty,
express or implied, by Seller or any of its Affiliates except as
expressly set forth herein. In furtherance of the foregoing, and
not in limitation thereof, Buyer acknowledges that no
representation or warranty, express or implied, of Seller or any
of its advisors, including, without limitation, Wachovia
Securities Inc., or any of their respective Affiliates or
representatives, with respect to the Business, including, without
limitation, (a) the information set forth in the Confidential
Information Memorandum relating to the Business dated June 2002,
(b) any other information provided to Buyer pursuant to the
Confidentiality Agreement or Section 8.15 or (c) any financial
projection or forecast delivered to Buyer with respect to the
revenues or profitability which may arise from the operation of
the Business either before or after the Closing Date, shall
(except as otherwise expressly represented to in this Agreement)
form the basis of any claim against Seller or any of its advisors
including, without limitation, Wachovia Securities Inc., or any
of their respective Affiliates or representatives with respect
thereto or with respect to any related matter. With respect to
any projection or forecast delivered by or on behalf of Seller to
Buyer, Buyer acknowledges that (x) there are uncertainties
inherent in attempting to make such projections and forecasts,
(y) the accuracy and correctness of such projections and
forecasts may be affected by information which may become
available through discovery or otherwise after the date of such
projections and forecasts and (z) it is familiar with each of the
foregoing. Buyer has no knowledge of any facts and/or
circumstances that would make any of the representations and
warranties of Seller contained in Article V untrue or misleading.
Nothing contained in this Section 6.09 will be construed as a
waiver of a defense to claims for fraud.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1. Conditions Precedent to the Obligations of Buyer. The obligations
of Buyer to purchase and pay for the Assets and assume the Assumed
Liabilities are subject to the fulfillment on or prior to the Closing of
the following conditions, any one or more of which may be waived by Buyer:
(a) The representations and warranties of Seller made in
this Agreement and the other Transaction Documents shall be true,
complete and correct as of the date of this Agreement and as of
the Closing Date, as though made on such date, except for those
representations and warranties which refer to facts existing at a
specific date, which shall be true, complete and correct as of
such date, in each case subject to the standard set forth in the
introductory paragraph in Article V. Seller shall have performed
or complied in all material respects with all obligations and
covenants required by this Agreement and the other Transaction
Documents to be performed or complied with by Seller at or prior
to the Closing. Seller shall have delivered to Buyer a
certificate, dated the Closing Date, and signed by an authorized
officer of Seller confirming the matters set forth in the two
preceding sentences.
(b) Any waiting period (and any extension thereof) under
the HSR Act applicable to the Transactions shall have expired or
shall have been terminated.
(c) No temporary restraining order, preliminary or
permanent injunction, cease and desist order or other order
issued by any Governmental or Regulatory Body prohibiting or
preventing the purchase and sale contemplated by this Agreement
or the consummation of a material portion of the Transactions to
be effected at the Closing shall be in effect. No litigation at
law or in equity, no arbitration proceedings, and no proceeding
before or by any Governmental or Regulatory Body, in each case,
that has a reasonable likelihood of success, shall be pending, or
to the Knowledge of Seller, threatened, to which any of Seller or
Buyer is or may be a party, challenging or seeking to restrain or
prohibit the transactions contemplated by this Agreement.
(d) All Governmental Authorizations set forth on Schedule
5.4 shall have been obtained; provided, however, that the
Governmental Authorizations listed on Schedule 7.1(d) need not be
obtained prior to the Closing.
(e) The facilities clearance requirements of the Defense
Security Service of the United States Department of Defense
("DSS"), as set forth in the relevant Industrial Security
Regulation and the National Industrial Security Program Operating
Manual, as may be amended from time to time, shall have been
obtained.
(f) All approvals and actions of or by, and all notices to,
all Governmental or Regulatory Bodies, other than those set forth
in Sections 7.1(b), (d) or (e) above, which are necessary to
consummate the Transactions shall have been obtained or taken
place, other than such approvals, actions and notices the failure
to obtain of which, individually or in the aggregate, would not
have a Business Material Adverse Effect.
(g) Any and all consents, waivers, approvals,
authorizations and notices which are necessary to consummate the
Transactions or which, if not obtained or delivered, as
applicable, would render legally impermissible the transfer of
any Material Contract or material portion of the Assets shall
have been obtained or delivered, other than such consents,
waivers, approvals, authorizations and notices the failure to
obtain of which, individually or in the aggregate, would not have
a Business Material Adverse Effect; provided, however, that the
consents, waivers, approvals, authorizations and notices set
forth on Schedule 7.1(g) need not be obtained prior to the
Closing.
(h) Seller shall have executed and delivered this Agreement
and each of the Ancillary Agreements to which it is to be a
party.
(i) At its sole cost and expense, Buyer shall have received
from a reputable title insurance company selected by Buyer (the
"Title Company") a title insurance policy or the marked
commitments or binders thereof (the "Title Policy") issued to
Buyer with respect to the Maryland Real Property, insuring Buyer
and issued as of the Closing Date by the Title Company, insuring
Buyer's title to the Maryland Real Property and improvements
thereon, listing no exceptions affecting the real property other
than Permitted Liens, together with a zoning endorsement in form
reasonably acceptable to Buyer. In conjunction with the receipt
of the foregoing Title Policy, the Title Company shall report (A)
no building code violations materially adverse to the use or
utility of the Maryland Real Property in a manner consistent with
the use thereof immediately prior to the date of this Agreement
and (B) that a certificate of occupancy with respect to the
Maryland Real Property is not required or that, if required, such
certificate has been issued.
(j) Between the date of this Agreement and the Closing
Date, there shall have been no Business Material Adverse Effect.
7.2. Conditions Precedent to the Obligations of Seller. The
obligations of Seller to sell and deliver the Assets to Buyer are subject
to the fulfillment on or prior to the Closing of the following conditions,
any one or more of which may be waived by Seller:
(a) The representations and warranties of Buyer and
Guarantor made in this Agreement and the Ancillary Agreements
shall be true, complete and correct as of the date of this
Agreement on and as of the Closing Date, as though made on such
date, except for those representations and warranties which refer
to facts existing at a specific date, which shall be true,
complete and correct as of such date, in each case subject to the
standard set forth in the introductory paragraph in Article VI.
Buyer and Guarantor shall have performed or complied in all
material respects with all obligations and covenants required by
this Agreement and the Ancillary Agreements to be performed or
complied with by Buyer and Guarantor at or prior to the Closing.
Buyer and Guarantor shall have delivered to Seller certificates
dated the Closing Date and signed by authorized officers of Buyer
and Guarantor, confirming the matters set forth in the two
preceding sentences.
(b) Any waiting period (and any extension thereof) under
the HSR Act applicable to the Transactions shall have expired or
shall have been terminated.
(c) No temporary restraining order, preliminary or
permanent injunction, cease and desist order or other order
issued by any Governmental or Regulatory Body prohibiting or
preventing the purchase and sale contemplated by this Agreement
or the consummation of a material portion of the Transactions to
be effected at the Closing shall be in effect. No litigation at
law or in equity, no arbitration proceedings, and no proceeding
before or by any Governmental or Regulatory Body, in each case,
that has a reasonable likelihood of success, shall be pending, or
to the Knowledge of Buyer or Guarantor, threatened, to which any
of Seller or Buyer is or may be a party, challenging or seeking
to restrain or prohibit the transactions contemplated by this
Agreement.
(d) All Governmental Authorizations set forth on Schedule
6.4 shall have been obtained; provided, however, that the
Governmental Authorizations listed on Schedule 7.2(d) need not be
obtained prior to Closing.
(e) The facilities clearance requirements of the Defense
Security Service of the United States Department of Defense
("DSS"), as set forth in the relevant Industrial Security
Regulation and the National Industrial Security Program Operating
Manual, as may be amended from time to time, shall have been
obtained.
(f) All material approvals and actions of or by, and all
notices to, all Governmental or Regulatory Bodies, other than
those set forth in Sections 7.2(b), (d) or (e) above, which are
necessary to consummate the Transactions shall have been obtained
or taken place, other than such approvals, actions and notices
the failure to obtain of which, individually or in the aggregate,
would not have a material adverse effect on the business, assets,
financial condition or results of operations of Seller.
(g) Any and all consents, waivers, approvals,
authorizations and notices which are necessary to consummate the
Transactions or which, if not obtained or delivered, as
applicable, would render legally impermissible the assumption of
the Assumed Liabilities shall have been obtained or delivered,
other than such consents, waivers, approvals, authorizations and
notices the failure to obtain of which, individually or in the
aggregate, would not have a material adverse effect on the
business, assets, financial condition or results of operations of
Seller; provided, however, that the consents, waivers, approvals,
authorizations and notices listed on Schedule 7.1(g) need not be
obtained prior to the Closing.
(h) Buyer shall have executed and delivered this Agreement
and each of the Ancillary Agreements to which it is to be a
party.
ARTICLE VIII
COVENANTS
8.1. Examinations and Investigations. At any time prior to the Closing
Date, Buyer shall be entitled, through its employees and representatives,
to enter upon and make such reasonable investigation of the assets,
properties, business and operations of Seller to the extent they
relate to the Business, and such examination of the books and
records, financial condition and operations of the Business as
Buyer may reasonably request. Any such investigation and
examination shall be conducted at reasonable times upon
reasonable prior notice to Seller and under reasonable
circumstances; provided, however, that such investigation shall
not unreasonably interfere with the business operations of
Seller.
8.2. Conduct of Business. (a) From the date hereof through the Closing
Date, Seller will use commercially reasonable efforts to:
(i) conduct the Business in the ordinary course consistent with
past practice in all material respects;
(ii) take all reasonable steps to preserve and protect the
Assets;
(iii) cause all transactions between Seller and third parties
to take place on arm's length terms;
(iv) ensure that, except in the ordinary course of business, no
change is made to any written agreement with any Business
Employee or consultant relating primarily or exclusively to the
Business, including without limitation, any Contract relating to
employment, compensation, benefits, termination, retention, or
severance;
(v) comply, in all material respects, with all Laws and Orders
applicable to the Business;
(vi) prevent the lapse of any rights in Business Intellectual
Property;
(vii) maintain such liability, casualty, property, loss, and
other insurance coverage upon the Assets relating to the Business
and with respect to the conduct of the Business, on such terms,
in such amounts, and with such insurance carriers and to such
extent and covering such risks as are maintained on the date of
this Agreement; and
(viii) renew or preserve any Business Governmental
Authorization.
(b) Without limiting the provisions of Section 8.2(a),
except as otherwise contemplated by this Agreement or with the
written approval of Buyer (which Buyer agrees shall not be
unreasonably withheld or delayed), between the date of this
Agreement and the Closing Date, Seller shall not do any of the
following:
(i) make any individual capital expenditure in relation
to the Business or enter into any contract or commitment therefor in
excess of $100,000;
(ii) enter into any contract in relation to the Business
for the purchase or lease (as lessor or lessee) of real property or
exercise any option to extend a Lease Agreement;
(iii) sell, lease (as lessor), transfer or otherwise dispose
of, mortgage or pledge or voluntarily impose any Lien (other than
Permitted Liens) on any of the Assets, other than sales of
inventory in the ordinary course of business and personal
property sold or otherwise disposed of in the ordinary course of
the Business which is obsolete or is not material to the
Business;
(iv) create, incur or assume, or agree to create, incur or
assume, any indebtedness for borrowed money in relation to the
Business (other than money borrowed or advanced from Seller in
the ordinary course of business, or any indebtedness which is an
Excluded Liability);
(v) except in the ordinary course of business or as required
by Law, enter into any Employee Benefit Arrangement or Employee
Plan, change any arrangement with any Business Employee or
consultant relating primarily or exclusively to the Business,
including without limitation, any arrangement relating to
employment, compensation, benefits, termination, retention, or
severance, or increase the compensation or employee benefits of
any Business Employee in any manner;
(vi) settle any suits, actions or proceedings relating to the
Business, if such settlement would have a Business Material
Adverse Effect;
(vii) other than with respect to any Contract which has
already been identified to Buyer or about which Seller has
notified Buyer, enter into any Contract which would be included
in the definition of Business Contracts or make any material
modification to any existing Business Contract, in each case
other than any Contracts or extensions (i) with a term of less
than one year or which can be terminated at no cost to Buyer upon
no greater than 365 days notice, (ii) which involve $100,000 or
less or (iii) are entered into or modified in the ordinary course
of business;
(viii) hire any new employees, agents or consultants for the
Business except to replace existing employees, agents or
consultants at similar compensation levels and except for any new
employees hired in the ordinary course of business;
(ix) pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) primarily or exclusively relating to the
Business in excess of $150,000, other than the payment, discharge
or satisfaction in the ordinary course consistent with past
practices of the Business or in accordance with their terms;
(x) terminate any Business Governmental Authorization other than
such Governmental Authorizations the failure of which to own,
hold or possess would not result in a Loss to the Business of
more than $1,000 individually or $5,000 in the aggregate; or
(xi) with respect to the Business, acquire or purchase any
properties or assets (other than in the ordinary course of
business), merge or consolidate with, or acquire all or
substantially all of the assets of, or otherwise acquire, any
Person, or make any material investment in any Person.
8.3. Reasonable Best Efforts. Subject to the terms and conditions
herein provided, Seller and Buyer agree to use their respective reasonable best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations, to consummate and make effective
the Transactions as promptly as practicable. If, at any time
after the Closing Date, any further action is necessary or
desirable to carry out the purposes of this Agreement, the
parties hereto or their officers, directors or representatives
shall take all such necessary or desirable action.
8.4. Employees.
(a) Buyer shall offer employment to each Business Employee
effective as of the Closing Date. Seller agrees to provide to
Buyer such information as Buyer may reasonably request with
respect to compensation, service, and other information relating
to the employment of the Business Employees. Offers of
employment to Business Employees shall include rates of wages
equivalent to that being paid to such employees as of the Closing
Date and benefits packages that in the aggregate are comparable
economically to the compensation and benefits that such Business
Employees received immediately prior to the Closing Date. Buyer
shall provide not less than equivalent wages and comparable
benefits to all Transferred Employees for a period of at least 12
months immediately subsequent to the Closing Date.
Notwithstanding the foregoing, the Transferred Employees shall be
deemed employees at will of Buyer and nothing express or implied
herein shall obligate Buyer to provide continuing employment to
any Transferred Employee after t