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[PROJECT PHLOX]
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PURCHASE AGREEMENT
among
FMC CORPORATION,
HARSCO CORPORATION,
HARSCO UDLP CORPORATION
and
IRON HORSE ACQUISITION CORP.
___________________________________
Dated as of August 25, 1997
___________________________________
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<PAGE>
TABLE OF CONTENTS
Page
----
1. Certain Definitions; Purchase and Sale of Interests . . . . . . . . . . . 1
(a) Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Purchase and Sale of Interests; Final Purchase Price . . . . . . . . 3
(c) Estimated Final Purchase Price . . . . . . . . . . . . . . . . . . . 4
2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Net Worth Adjustment . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Limited Partnership Form of UDLP . . . . . . . . . . . . . . . . . . 7
(d) Transfer to FMC Affiliate. . . . . . . . . . . . . . . . . . . . . . 8
3. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Buyer's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Each Seller's Obligation . . . . . . . . . . . . . . . . . . . . . . 9
4. Representations and Warranties of Sellers . . . . . . . . . . . . . . . .10
4A. Representations and Warranties of FMC . . . . . . . . . . . . . . . . . .10
(a) Authority; No Conflicts. . . . . . . . . . . . . . . . . . . . . . .10
(b) Ownership of the Interests . . . . . . . . . . . . . . . . . . . . .11
4B. Representations and Warranties of Harsco. . . . . . . . . . . . . . . . .11
(a) Authority; No Conflicts. . . . . . . . . . . . . . . . . . . . . . .11
(b) Ownership of the Interests . . . . . . . . . . . . . . . . . . . . .12
4C. Representations and Warranties of Sellers . . . . . . . . . . . . . . . .12
(a) Authority; No Conflicts. . . . . . . . . . . . . . . . . . . . . . .12
(b) Ownership of the Interests . . . . . . . . . . . . . . . . . . . . .12
(c) Subsidiaries and Foreign Affiliates. . . . . . . . . . . . . . . . .13
(d) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .13
(e) Title to Tangible Assets Other than Real Property Interests. . . . .14
(f) Title to Real Property . . . . . . . . . . . . . . . . . . . . . . .14
(g) Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . .15
(h) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . .15
(i) Litigation; Decrees. . . . . . . . . . . . . . . . . . . . . . . . .17
(j) Compliance with Applicable Laws. . . . . . . . . . . . . . . . . . .18
(k) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .18
(l) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
-i-
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(m) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(n) Environmental Compliance . . . . . . . . . . . . . . . . . . . . . .23
(o) Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . .24
(p) Absence of Certain Changes or Events . . . . . . . . . . . . . . . .24
(q) Government Contracts . . . . . . . . . . . . . . . . . . . . . . . .24
(r) Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . .25
(s) Licenses, Permits and Authorizations . . . . . . . . . . . . . . . .26
(t) Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
(u) Loss Contracts; Backlog. . . . . . . . . . . . . . . . . . . . . . .26
(v) Customers, Distributors and Suppliers. . . . . . . . . . . . . . . .26
(w) Dividends by Foreign Affiliates. . . . . . . . . . . . . . . . . . .27
5. Covenants of Sellers. . . . . . . . . . . . . . . . . . . . . . . . . . .27
(a) Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
(b) Ordinary Conduct . . . . . . . . . . . . . . . . . . . . . . . . . .27
(c) Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .29
(d) Preservation of Business . . . . . . . . . . . . . . . . . . . . . .30
(e) Covenant Not to Compete. . . . . . . . . . . . . . . . . . . . . . .30
(f) Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
(g) FMC Resource Transfer. . . . . . . . . . . . . . . . . . . . . . . .31
(h) Intercompany Obligations . . . . . . . . . . . . . . . . . . . . . .31
(i) Financing Obligations. . . . . . . . . . . . . . . . . . . . . . . .31
(j) Notification of Certain Matters. . . . . . . . . . . . . . . . . . .31
(k) FMC Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
6. Representations and Warranties of Buyer . . . . . . . . . . . . . . . . .32
(a) Authority; No Conflicts. . . . . . . . . . . . . . . . . . . . . . .32
(b) Actions and Proceedings, etc.. . . . . . . . . . . . . . . . . . . .32
(c) Availability of Funds. . . . . . . . . . . . . . . . . . . . . . . .33
(d) Acquisition of Interests for Investment. . . . . . . . . . . . . . .33
(e) Fulfillment of Condition . . . . . . . . . . . . . . . . . . . . . .33
7. Covenants of Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . .33
(a) Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .33
(b) Performance of Obligations by Buyer After Closing Date . . . . . . .34
(c) No Additional Representations; Disclaimer Regarding Estimates and
Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
(d) Intentionally omitted. . . . . . . . . . . . . . . . . . . . . . . .35
(e) Certain Guaranties . . . . . . . . . . . . . . . . . . . . . . . . .35
(f) Retained Assets and Liabilities. . . . . . . . . . . . . . . . . . .35
(g) 1997 Audited Financial Statements. . . . . . . . . . . . . . . . . .36
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----
8. Mutual Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
(a) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
(b) Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
(c) Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
(d) HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . .38
(e) Cooperation with Financings. . . . . . . . . . . . . . . . . . . . .38
(f) Environmental Indemnification. . . . . . . . . . . . . . . . . . . .39
(g) Written Materials and Records. . . . . . . . . . . . . . . . . . . .43
(h) Transferred Employees and Employee Benefits. . . . . . . . . . . . .44
(i) Mutual Release . . . . . . . . . . . . . . . . . . . . . . . . . . .50
(j) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
(k) Transition Services Agreement. . . . . . . . . . . . . . . . . . . .51
(l) Technology and Environmental Services Agreement. . . . . . . . . . .51
(m) Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
(n) Intellectual Property Agreements . . . . . . . . . . . . . . . . . .52
(o) Intellectual Property Recordations . . . . . . . . . . . . . . . . .52
(p) Cash Balance as of the Closing . . . . . . . . . . . . . . . . . . .52
(q) FNSS Royalty Dispute. . . . . . . . . . . . . . . . . . . . . . . .52
9. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . .52
10. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
(a) Indemnification by Sellers . . . . . . . . . . . . . . . . . . . . .58
(b) Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . .58
(c) Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . .59
(d) Losses Net of Insurance and Tax Benefits . . . . . . . . . . . . . .59
(e) Termination of Indemnification . . . . . . . . . . . . . . . . . . .60
(f) Procedures Relating to Indemnification . . . . . . . . . . . . . . .60
12. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
13. No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . .62
14. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
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----
15. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . .63
16. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
17. Amendment and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . .63
18. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
19. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
20. No Strict Construction. . . . . . . . . . . . . . . . . . . . . . . . . .65
21. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
22. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
23. Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
24. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
25. Representation by Counsel; Interpretation . . . . . . . . . . . . . . . .66
26. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
27. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
28. Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . .67
29. Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . .67
(a) Negotiation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
(b) Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
LIST OF SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
-iv-
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INDEX OF DEFINED TERMS
Page
----
Accounting Firm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Adjusted Net Worth Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Adjustment Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Adjustment Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Applicable Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . 1
Backlog. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
BPI Award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . .58
Buyer Released Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
CAS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COBRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Continuing Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Continuing LC Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . .31
Defense Segment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Diligence Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . .33
E&Y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Environmental Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Environmental Requirements . . . . . . . . . . . . . . . . . . . . . . . . . .23
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Estimated Final Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 4
Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
File Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Final Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Financing Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FMC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-v-
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----
FMC Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
FMC Arabia Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
FMC Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . .18
FMC Insurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
FMC Intellectual Property Agreement. . . . . . . . . . . . . . . . . . . . . .52
FMC Master Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
FMC Salaried Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
FMC Thrift Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Foreign Affiliate Closing Balance Sheet. . . . . . . . . . . . . . . . . . . .56
Foreign Affiliate Tax Basket . . . . . . . . . . . . . . . . . . . . . . . . .53
Foreign Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
FRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Government Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Harsco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Harsco Intellectual Property Agreement . . . . . . . . . . . . . . . . . . . .52
Harsco Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
HUC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Inactive Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Income Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
indemnified party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Initial Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
June 30 Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Latest Financials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Leased Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Leased Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
MIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Non-Allowable Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Notice of Disagreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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Other Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Owned Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Owned Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Post-Closing Environmental Losses. . . . . . . . . . . . . . . . . . . . . . .41
Post-Closing Partial Period. . . . . . . . . . . . . . . . . . . . . . . . . .53
Pre-Closing Partial Period . . . . . . . . . . . . . . . . . . . . . . . . . .53
Principal Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Pro Rata Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Public Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Remediation Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Remediation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Representatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
Required Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Retained Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
San Jose Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Scope of Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Seller Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Seller Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . .59
Seller Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Seller Released Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Sellers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Settlement and Advance Agreement . . . . . . . . . . . . . . . . . . . . . . .39
Sites. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Substitute Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . .35
Target Adjusted Net Worth Amount . . . . . . . . . . . . . . . . . . . . . . . 3
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Tax Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Taxing Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Technology and Environmental Services Agreement. . . . . . . . . . . . . . . .51
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Page
----
Third Party Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Timely Non-Allowable Costs . . . . . . . . . . . . . . . . . . . . . . . . . .40
Transfer Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Transferred Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Transition Services Agreement. . . . . . . . . . . . . . . . . . . . . . . . .51
UDLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
UDLP Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . .18
UDLP Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
UDLP Thrift Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
UDLP's Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
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<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August 25,
1997, is entered into by and among FMC Corporation, a Delaware corporation
("FMC"), Harsco Corporation, a Delaware corporation, Harsco UDLP Corporation, a
Pennsylvania business corporation ("HUC" and, together with Harsco Corporation,
"HARSCO"), and Iron Horse Acquisition Corp., a Delaware corporation ("BUYER").
FMC and Harsco are collectively referred to herein as "SELLERS."
W I T N E S S E T H:
WHEREAS, FMC is the sole owner and holder of 100% of the outstanding
general partnership interests of United Defense, L.P., a Delaware limited
partnership ("UDLP"), and HUC is the sole owner and holder of 100% of the
outstanding limited partnership interests of UDLP; and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, 100% of the outstanding general partnership and limited
partnership interests of UDLP (the "INTERESTS") (the sale and purchase of the
Interests being referred to herein as the "PURCHASE").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS; PURCHASE AND SALE OF INTERESTS.
(a) CERTAIN DEFINITIONS. As used in this Agreement (including the
Schedules and Exhibits hereto), the following definitions shall apply:
(i) "AFFILIATE" shall mean any natural person, and any corporation,
partnership or other entity, that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common
control with the party specified.
(ii) "ANCILLARY AGREEMENTS" shall mean the Transition Services
Agreement, the Technology and Environmental Services Agreement, the Lease,
the FMC Intellectual Property Agreement and the Harsco Intellectual
Property Agreement.
(iii) "APPLICABLE ACCOUNTING PRINCIPLES" shall mean United States
generally accepted accounting principles as consistently applied in the
preparation of the Financial Statements, subject to any exceptions
therefrom disclosed in the notes to the Financial Statements.
(iv) "BUSINESS" shall mean the entire business and operations of UDLP
and its Subsidiaries and Foreign Affiliates as conducted on the date
hereof, including the business to be transferred to UDLP pursuant to
Section 5(g).
<PAGE>
(v) "FINANCING OBLIGATIONS" shall mean (i) indebtedness of UDLP or
its Subsidiaries for borrowed money, (ii) obligations of UDLP or any of its
Subsidiaries evidenced by bonds, notes, debentures, letters of credit or
similar instruments, (iii) obligations of UDLP or any of its Subsidiaries
under conditional sale, title retention or similar agreements or
arrangements creating an obligation of UDLP or any of its Subsidiaries with
respect to the deferred purchase price of property (other than customary
trade credit), (iv) breakage and other costs relating to interest rate and
currency obligation swaps, hedges or similar arrangements to which UDLP or
any of its Subsidiaries is a party and (v) all obligations of UDLP or any
of its Subsidiaries to guarantee any of the foregoing types of obligations
on behalf of others.
(vi) "INACTIVE CONTRACTS" shall mean all contracts or other legally
binding arrangements, whether oral or written, which have been entered into
or assumed by UDLP which provide for the delivery of products or the
rendering of contract-defined deliverable services by a Seller or UDLP and
with respect to which the final product has been delivered and the final
service has been rendered.
(vii) "INTELLECTUAL PROPERTY" shall mean all (i) domestic and foreign
registrations of trademarks, service marks, logos, corporate names,
protected models, designs, created works, trade names or other trade
rights, (ii) pending applications for any such registrations, (iii) patents
and registered copyrights and pending applications therefor, (iv) rights to
other trademarks, service marks, copyrights, logos, corporate names,
protected models, designs, created works, trade names and other trade
rights and all other trade secrets, designs, plans, specifications,
technology, know-how, methods, designs, concepts and other proprietary
rights, whether or not registered and (v) rights under any licenses to use
any copyrights, marks, trade names, trade rights, patents, registered
models and designs, created works or other proprietary rights.
(viii) The term "KNOWLEDGE," when used in the phrase "TO THE
KNOWLEDGE OF SELLERS," shall mean, and shall be limited to, the actual
knowledge after reasonable inquiry of the following individuals: Larry D.
Brady, Robert N. Burt, Michael J. Callahan, Randall S. Ellis, Ronald D.
Mambu, J. Paul McGrath, Thomas W. Rabaut, Francis Raborn, David A. Kolovat,
Peter C. Woglom (as to the operations of the Ground Systems Division of the
Business), Frederick M. Strader (as to the operations of the Armament
Systems Division of the Business), David Keller, Andy Eross and each
current member of the Advisory Committee (as defined in that certain
Partnership Agreement by and among Sellers and UDLP dated January 1, 1994).
(ix) "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
upon the Business or the assets, liabilities or financial condition of
UDLP, its Subsidiaries and Foreign Affiliates taken as a whole.
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<PAGE>
(x) "PRO RATA BASIS" shall mean 60% with respect to FMC and 40% with
respect to Harsco.
(xi) "RETAINED LIABILITIES" shall mean any and all liabilities of
Sellers, UDLP or any of its Subsidiaries arising out of, relating to, or in
respect of the matters described on SCHEDULE 7(f) hereto.
(xii) "SCHEDULES" shall mean the disclosure schedules attached
hereto and incorporated by reference herein.
(xiii) "SUBSIDIARIES" shall mean, with respect to any person, any
corporation or other entity of which 50% or more of the voting power of the
equity securities or equity interests is owned, directly or indirectly, by
such person, and shall include (without limitation) in the case of UDLP,
UDLP International, Inc., a Delaware corporation, UD United Defense
International Sales Corporation, a Barbados corporation and UDLP
Components, Limited, a Bermuda corporation, but shall specifically exclude
the Foreign Affiliates. Notwithstanding anything herein or on Schedule
4C(c)-1, G&F Company, a California general partnership, shall not be deemed
a "Subsidiary" for purposes of this Agreement.
All other capitalized terms used herein (or in the Schedules or Exhibits hereto)
and not defined above are defined elsewhere in this Agreement. See "Index of
Defined Terms" above for references to the page numbers on which such terms are
defined.
(b) PURCHASE AND SALE OF INTERESTS; FINAL PURCHASE PRICE. On the
terms and subject to the conditions of this Agreement, at the Closing Sellers
shall sell, transfer and deliver to Buyer, and Buyer shall purchase from
Sellers, the Interests, free and clear of all Liens, and the covenants contained
in Section 5(e) for an aggregate cash purchase price of $510,000,000.00 in
respect of the general partnership interests held by FMC and the covenants made
by FMC in Section 5(e) and $340,000,000.00 in respect of the limited partnership
interests held by HUC and the covenants made by HUC in Section 5(e)
(collectively, the "INITIAL PURCHASE PRICE"). The final purchase price for the
Interests and the covenants contained in Section 5(e) (the "FINAL PURCHASE
PRICE") shall be equal to:
(i) the Initial Purchase Price; PLUS
(ii) the amount, if any, by which the Adjusted Net Worth Amount
reflected on the Closing Statement in its final and binding form
exceeds $160,889,000 (the "TARGET ADJUSTED NET WORTH AMOUNT"); MINUS
(iii) the amount, if any, by which the Target Adjusted Net
Worth Amount exceeds the Adjusted Net Worth Amount reflected on the
Closing Statement in its final and binding form.
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<PAGE>
(c) ESTIMATED FINAL PURCHASE PRICE. At the Closing, pursuant to the
provisions of Section 2(a)(i) below, Buyer shall pay Sellers an amount (the
"ESTIMATED FINAL PURCHASE PRICE") equal to the Final Purchase Price as estimated
in good faith by FMC based on information provided by UDLP management and set
forth in a statement delivered to Buyer not less than two business days prior to
the Closing Date. Such notice shall set forth FMC's and UDLP's good faith
estimate of the Adjusted Net Worth Amount. For purposes of this Agreement, the
difference, positive or negative, between the Estimated Final Purchase Price and
the Initial Purchase Price is referred to herein as the "ADJUSTMENT AMOUNT."
2. CLOSING.
(a) CLOSING. The closing (the "CLOSING") of the transactions
contemplated hereby shall be held at the offices of Kirkland & Ellis, 200 East
Randolph Drive, Chicago, Illinois at 10:00 a.m., local time, on October 31, 1997
or, if the conditions to Closing set forth in Sections 3(a)(iii) and 3(b)(iii)
shall not have been satisfied or waived by such date, on the third business day
following satisfaction of such conditions. Notwithstanding the scheduled
Closing Date of October 31, 1997, as set forth above, the parties agree to use
their commercially reasonable efforts to cause the Closing to occur earlier on
September 30, 1997, or other mutually agreeable date as soon after September 30,
1997 as practicable. The date on which the Closing shall occur is hereinafter
referred to as the "CLOSING DATE," and the Closing shall be deemed effective as
of 12:01 a.m. on the Closing Date. On the business day immediately preceding
the Closing Date, Buyer and Sellers shall conduct a pre-Closing at the same
location as the Closing, commencing at 10:00 a.m., local time, at which each
party shall present for review by the other party copies in execution form of
all documents required to be delivered by such party at the Closing.
(i) At the Closing, subject to and on the terms and conditions set
forth in this Agreement, Buyer shall deliver to Sellers (A) the Estimated
Final Purchase Price as follows: (1) by wire transfer to a bank account
designated in writing by FMC, immediately available funds in an amount
equal to $510,000,000.00 plus 60% of the Adjustment Amount (whether
positive or negative), and (2) by wire transfer to a bank account
designated in writing by Harsco, immediately available funds in an amount
equal to $340,000,000.00 plus 40% of the Adjustment Amount (whether
positive or negative), (b) an instrument of assumption reasonably
satisfactory to each Seller and Buyer assuming, subject to the other terms
and conditions of this Agreement, all of the obligations and liabilities of
whatever kind of such Seller in its capacity as a partner or predecessor of
UDLP to be assumed pursuant to the terms of this Agreement, (C) such other
documents as are specifically required by this Agreement, (D) certified
copies of resolutions duly adopted by Buyer's board of directors
authorizing the execution, delivery and performance of this Agreement and
the Ancillary Agreements to which Buyer is a party, (E) a certificate of
the Secretary or an Assistant Secretary of Buyer as to the incumbency of
the officer(s) of Buyer (who shall not be such Secretary or Assistant
Secretary) executing this Agreement or any Ancillary Agreement, (F) a legal
opinion of Buyer's special counsel, addressed to each Seller and dated the
Closing Date, substantially in the form attached hereto as EXHIBIT 2(a)(i)
and (G) appropriate releases
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<PAGE>
by UDLP of each Seller as a partner or predecessor of UDLP, in form and
substance reasonably satisfactory to such Seller and Buyer, and consistent
with the provisions of Section 8(i) below.
(ii) At the Closing, subject to and on the terms and conditions set
forth in this Agreement, Sellers shall deliver or cause to be delivered to
Buyer (A) such appropriately executed instruments of sale, assignment,
transfer and conveyance in form and substance reasonably satisfactory to
Buyer and Seller and its counsel evidencing and effecting the sale and
transfer to Buyer of the Interests (it being understood that such
instruments shall not require Sellers or their Affiliates to make any
additional representations, warranties or covenants, expressed or implied,
not contained in this Agreement), (b) such other documents as are
specifically required by this Agreement, (C) certified copies of
resolutions duly adopted by the board of directors of each Seller
authorizing the execution, delivery and performance of this Agreement and
the Ancillary Agreements, to the extent each is a party hereto or thereto,
(D) a certificate of the Secretary or an Assistant Secretary of each
Seller, and of UDLP, as to the incumbency of the officer(s) of each (who
shall not be such Secretary or Assistant Secretary) executing this
Agreement or any Ancillary Agreement and (E) legal opinions of each
Seller's special counsel, addressed to Buyer and dated the Closing Date,
substantially in the form attached hereto as EXHIBIT 2(a)(ii).
(b) NET WORTH ADJUSTMENT.
(i) Within 60 days after the Closing Date, UDLP shall, with the
assistance of FMC consistent with past practice, prepare and deliver to
Buyer a balance sheet of UDLP as of the Closing Date (the "CLOSING BALANCE
SHEET"). The Closing Balance Sheet shall be prepared in a manner
consistent with the June 30 Balance Sheet and in accordance with the
Applicable Accounting Principles (without regard to any purchase accounting
adjustments arising out of the consummation of the transactions
contemplated hereby). The Closing Balance Sheet shall be audited by Ernst
& Young L.L.P. ("E&Y"). E&Y shall also provide audited financial statements
through the Closing Date to Sellers so that each may comply with its
respective reporting obligations. In connection with the foregoing, UDLP
shall provide the Closing Date financial reporting system ("FRS") package
to FMC five days prior to the commencement of the E&Y audit, and UDLP shall
provide Buyer and Sellers a complete list of all adjustments to accruals in
excess of $250,000 made subsequent to June 30, 1997. E&Y may begin field
work for procedural tests prior to delivery of the Closing Date FRS
package.
Within 60 days after the Closing Date, UDLP shall, with the assistance
of FMC, prepare and deliver to Buyer a statement of the Adjusted Net Worth
Amount as of the Closing Date (the "CLOSING STATEMENT"). The Closing
Statement shall be prepared based solely upon the Closing Balance Sheet,
adjusted in accordance with the principles set forth on SCHEDULE 2(b)
hereto (the "ADJUSTMENT PRINCIPLES") which, in the event of a conflict with
the Applicable Accounting Principles, shall control. The parties agree
that the determination
-5-
<PAGE>
contemplated by this Section 2(b) is solely intended to show changes
between the Adjusted Net Worth Amount on the Closing Date and the Target
Adjusted Net Worth Amount as calculated in accordance with Schedule 2(b).
Subject to the Adjustment Principles, the Target Adjusted Net Worth Amount
is based upon methodologies, practices and principles used in connection
with the preparation of the June 30 Balance Sheet and the adjustment
contemplated by this Section 2(b) can only be properly measured if the
Closing Statement is prepared using such methodologies, practices and
principles. During the preparation of the Closing Statement and the period
of any dispute with respect thereto, Buyer shall and shall cause UDLP to
(A) provide FMC and FMC's representatives with full access during normal
business hours to the books, records (including work papers, schedules,
memoranda and other documents), facilities and employees of UDLP, (b)
provide FMC as promptly as practicable following the Closing Date (but in
no event later than 30 days after the Closing Date) with normal year-end
closing financial information for UDLP for the period ending as of the
opening of business on the Closing Date and (C) cooperate fully with FMC
and FMC's representatives, including the provision on a timely basis of
full access to employees and all other information necessary or useful in
connection with the preparation of the Closing Statement. The Closing
Statement shall be reviewed by E&Y and accompanied by an appropriate report
confirming that the Closing Statement has been prepared in accordance with
this Section 2(b). During the 30 days immediately following receipt by
Buyer and FMC of the Closing Statement, Buyer and FMC shall be permitted to
review E&Y's working papers relating to the audit of the Closing Balance
Sheet and review of the Closing Statement and Buyer shall be permitted to
review the financial and accounting papers provided by FMC for use in
preparing the Closing Statement.
The Closing Statement shall become final and binding upon the parties
hereto on the thirtieth day following receipt thereof by Buyer and FMC
unless Buyer or FMC gives written notice of its disagreement (a "NOTICE OF
DISAGREEMENT") to UDLP and the other parties hereto prior to such date.
Any Notice of Disagreement shall (A) specify in reasonable detail the
nature and amount of any disagreement so asserted and (b) only include
disagreements based on mathematical errors or based on the Closing
Statement not being prepared in accordance with this Section 2(b). If a
timely Notice of Disagreement is delivered, then the Closing Statement (as
revised in accordance with clause (x) or (y) below) shall become final and
binding upon the parties on the earlier of (x) the date the parties hereto
resolve in writing any differences they have with respect to any matter
specified in the Notice of Disagreement or (y) the date any matters
properly in dispute are finally resolved in writing by the Accounting Firm.
During the 30 days immediately following the delivery of a Notice of
Disagreement, FMC and Buyer shall seek in good faith to resolve in writing
any differences which they may have with respect to any matter specified in
the Notice of Disagreement. During such period, Buyer or FMC, as
applicable, shall have full access to the working papers of the other
prepared in connection with Buyer's review of the Closing Statement and
preparation of such other party's Notice of Disagreement. At the end of
such 30-day period, FMC and Buyer shall submit to a "Big-Six" accounting
firm (the "ACCOUNTING FIRM") for review and resolution of any and all
matters which remain in dispute and which were properly included
-6-
<PAGE>
in the Notice of Disagreement, and the Accounting Firm shall make a final
determination of the Closing Statement which shall be binding on the
parties (it being understood, however, that the Accounting Firm shall act
as an arbitrator to determine, based solely on presentations by Buyer and
FMC (and not by independent review), only those matters which remain in
dispute and which were properly included in the Notice of Disagreement).
The Closing Statement shall become final and binding on Buyer and Sellers
on the date the Accounting Firm delivers its final resolution to the
parties (which final resolution shall be delivered as soon as practicable
following the selection of the Accounting Firm and in any event within 30
days thereafter). The Accounting Firm shall be selected by FMC and Buyer
or, if such parties are unable to agree, by FMC's and Buyer's independent
accountants. The fees and expenses of E&Y and the Accounting Firm pursuant
to this Section 2(b) shall be borne 50% by Buyer and 50% by Sellers on a
Pro Rata Basis.
(ii) If the Estimated Final Purchase Price is less than the Final
Purchase Price, Buyer shall, and if the Estimated Final Price is greater
than the Final Purchase Price, Sellers shall, within five business days
after the Closing Statement becomes final and binding on the parties, make
payment to the other party or parties by wire transfer in immediately
available funds of the amount of such difference, together with interest
thereon at the average one-month London Interbank Offered Rate as quoted by
the Bloomberg Financial Markets Commodities and News Service calculated on
the basis of the number of days elapsed from the Closing Date to the date
of payment. Any payments to or by Sellers pursuant to this clause (ii)
shall be made on a Pro Rata Basis to or by, as the case may be, FMC and
Harsco.
(iii) For purposes of this Agreement, the term "ADJUSTED NET WORTH
AMOUNT" means the total assets of UDLP and its consolidated Subsidiaries as
of the Closing Date, LESS the total liabilities of UDLP and its
consolidated Subsidiaries as of the Closing Date, as reflected on the
Closing Balance Sheet, after giving effect to the Adjustment Principles
described on SCHEDULE 2(b).
(iv) Each party agrees that it will not take any actions with respect
to the accounting books, records, policies and procedures of UDLP that
would obstruct or hinder the preparation of the Closing Statement as
provided in this Section 2(b). Buyer will cooperate in the preparation of
the Closing Statement, including providing customary certifications to
Sellers or, if requested, to Sellers' auditors, Ernst & Young L.L.P. or the
Accounting Firm. Harsco acknowledges and agrees that FMC has sole
authority to act on behalf of Sellers with respect to all matters relating
to this Section 2(b).
(c) LIMITED PARTNERSHIP FORM OF UDLP. Buyer hereby agrees that it
will take all necessary action, including assigning portions of its rights to
purchase the Interests to one or more of its Affiliates, in order to maintain
UDLP as a validly existing Delaware limited partnership for a period of at least
thirty (30) days following the Closing Date, and for at least such 30-day period
Buyer shall take no actions which would have the effect of dissolving, winding
up or liquidating UDLP under the Code or the Delaware Revised Uniform Limited
Partnership Act, each as in effect
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<PAGE>
at such time. Notwithstanding any provision of this Agreement to the contrary,
no representation, warranty or covenant shall be deemed to be breached and no
condition to Closing shall be deemed to be unsatisfied as a result of any actual
or prospective impediment to any dissolution, liquidation or winding up of UDLP,
it being understood that Sellers have made and are making no representations or
warranties concerning Buyer's ability to liquidate or otherwise restructure
UDLP.
(d) TRANSFER TO FMC AFFILIATE. Notwithstanding anything to the
contrary in this Agreement, the parties hereto agree that, prior to the Closing,
FMC may transfer all of the Interests owned by it to an Affiliate of FMC that is
(i) incorporated in a domestic jurisdiction and (ii) 100% directly or indirectly
owned by FMC, provided that such transfer does not adversely affect UDLP or
Buyer and provided that such Affiliate agrees to be bound by the terms hereof.
Upon such a transfer, the defined term "FMC" as used herein or in the Ancillary
Agreements shall be deemed to include such Affiliate. In no event shall FMC be
relieved of any obligation for which it would otherwise be liable hereunder in
the absence of such a transfer.
3. CONDITIONS TO CLOSING.
(a) BUYER'S OBLIGATION. The obligation of Buyer to purchase and pay
for the Interests is subject to the satisfaction (or waiver by Buyer) as of the
Closing of the following conditions:
(i) The representations and warranties of Sellers made in this
Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing Date, as though made on and as of the
Closing Date, except to the extent of changes or developments contemplated
by the terms of this Agreement and except for representations and
warranties that speak as of a specific date or time (which need only be
true and correct as of such date or time), and each Seller shall have
performed or complied with all obligations and covenants required by this
Agreement to be performed or complied with by such Seller by the time of
the Closing, except for breaches of such representations and warranties and
covenants that, in the aggregate, together with all information disclosed
in any supplements, modifications and updates to the Schedules by Sellers
prior to the Closing as permitted by this Agreement, would not have a
Material Adverse Effect; and each Seller shall have delivered to Buyer a
certificate dated the Closing Date and signed by a Vice President of it
confirming the foregoing;
(ii) No injunction or order of any court or administrative agency of
competent jurisdiction shall be in effect as of the Closing which restrains
or prohibits the consummation of the Purchase;
(iii) Any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), shall have
expired or been terminated;
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<PAGE>
(iv) Each of FMC, Harsco and UDLP (as appropriate) shall have executed
and delivered each of the Ancillary Agreements to which it is a party;
(v) Since the date of the Latest Financials, and except as set forth
on SCHEDULE 3(a)(v) hereto or the other Schedules hereto, there shall have
been no change in the Business, or the assets, liabilities or financial
condition of UDLP, its Subsidiaries and Foreign Affiliates, taken as a
whole, which would result in a Material Adverse Effect (it being understood
that the failure to be awarded, or the failure to receive government
funding for, any contract currently under proposal before or after the date
hereof does not and shall not constitute a failure of the condition set
forth in this Section 3(a)(v));
(vi) All Financing Obligations (other than the Continuing LC
Obligations) shall have been finally repaid in full, terminated or
reflected in the computation of the Adjusted Net Worth Amount on the
Closing Statement and Buyer shall have been provided evidence reasonably
acceptable to Buyer that any and all Liens securing such Financing
Obligations as have been repaid or terminated shall have been released and
terminated;
(vii) Each Seller shall have delivered to Buyer an affidavit,
dated not more than thirty (30) days prior to the Closing Date, in
accordance with Code Section 1445(b)(2) and Treasury Regulation section
1.1445-2(b)(2), which affidavit certifies that such Seller is not a foreign
person; and
(viii) The form and substance of all instruments and documents
required to consummate the transactions contemplated by this Agreement
shall have been reasonably satisfactory to Buyer and its counsel.
(b) EACH SELLER'S OBLIGATION. The obligation of each Seller to sell
and deliver or cause to be sold and delivered the Interests to Buyer is subject
to the satisfaction (or waiver by such Seller) as of the Closing of the
following conditions:
(i) The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing Date, as though made on and as of the
Closing Date, except to the extent of changes or developments contemplated
by the terms of this Agreement and except for representations and
warranties that speak as of a specific date or time (which need only be
true and correct as of such date or time), and Buyer shall have performed
or complied with all obligations and covenants required by this Agreement
to be performed or complied with by Buyer by the time of the Closing,
except for breaches of such representations and warranties and covenants
that, in the aggregate, would not have a material adverse effect on the
ability of Buyer to perform its obligations under this Agreement, the
Ancillary Agreements and the other agreements contemplated hereby and
thereby at and after the Closing; and Buyer shall have delivered to each
Seller a certificate dated the Closing Date and signed by a Vice President
of it confirming the foregoing;
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(ii) No injunction or order of any court or administrative agency of
competent jurisdiction shall be in effect as of the Closing which restrains
or prohibits the consummation of the Purchase;
(iii) Any waiting period under the HSR Act shall have expired or
been terminated;
(iv) Buyer shall have executed and delivered each of the Ancillary
Agreements to which it is a party; and
(v) Buyer shall have obtained the Substitute Letters of Credit in
accordance with the provisions of Section 7(e) below.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS.
4A. REPRESENTATIONS AND WARRANTIES OF FMC. FMC represents and
warrants to Buyer as follows:
(a) AUTHORITY; NO CONFLICTS. FMC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
FMC has all requisite corporate power and authority to enter into this Agreement
and such Ancillary Agreements, to the extent it is a party thereto, as are
contemplated hereby to be executed and delivered by it and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by FMC to authorize the execution, delivery and
performance of this Agreement and such Ancillary Agreements, to the extent it is
a party thereto, and the consummation of the transactions contemplated hereby
and thereby, have been or will have been at or prior to the Closing duly and
properly taken. This Agreement has been duly executed and delivered by FMC, and
such Ancillary Agreements as are contemplated hereby to be executed and
delivered by FMC will, to the extent it is a party thereto, be duly and validly
executed and delivered by FMC, as applicable. This Agreement and such Ancillary
Agreements constitute, or will constitute, as the case may be, valid and binding
obligations of FMC, to the extent it is a party thereto, enforceable against FMC
in accordance with their respective terms. Except as set forth on SCHEDULE
4C(a)(ii) and except for any consents, authorizations or approvals that are
required under the HSR Act or that may be required solely by reason of Buyer's
status, the execution and delivery of this Agreement and such Ancillary
Agreements as are contemplated hereby to be executed and delivered by FMC do not
or will not, as the case may be, and the consummation by FMC of the transactions
contemplated hereby and thereby and compliance by it with the terms thereof will
not, conflict with, or result in any violation of or default under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a benefit under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
any of the assets of UDLP or any of its Subsidiaries under, or require any
consent, authorization or approval under any provision of (A) the certificate of
limited partnership or other organizational documents of UDLP or any of its
Subsidiaries or Foreign Affiliates, (B) any Material Contract to which UDLP or
any Subsidiary or Foreign Affiliate is a party or (C) any material judgment,
order
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or decree or any material statute, law, ordinance, rule or regulation applicable
to UDLP or any of its Subsidiaries or their respective assets.
(b) OWNERSHIP OF THE INTERESTS. FMC is the sole general partner of
UDLP and holds 100% of the outstanding general partnership interests of UDLP.
The sale and transfer of the Interests owned by FMC to Buyer pursuant to this
Agreement will vest in Buyer all right, title and interest in such Interests,
free and clear of all adverse claims or other Lien, other than adverse claims
created by or through or suffered by Buyer.
4B. REPRESENTATIONS AND WARRANTIES OF HARSCO. Harsco represents and
warrants to Buyer as follows:
(a) AUTHORITY; NO CONFLICTS. Each of HUC and Harsco Corporation
(each, a "HARSCO PARTY") is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation. Each
Harsco Party has all requisite corporate power and authority to enter into this
Agreement and such Ancillary Agreements, to the extent it is a party thereto, as
are contemplated hereby to be executed and delivered by it and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by each Harsco Party to authorize the
execution, delivery and performance of this Agreement and such Ancillary
Agreements, to the extent it is a party thereto, and the consummation of the
transactions contemplated hereby and thereby, have been or will have been at or
prior to the Closing duly and properly taken. This Agreement has been duly
executed and delivered by each Harsco Party, and such Ancillary Agreements as
are contemplated hereby to be executed and delivered by each Harsco Party will,
to the extent it is a party thereto, be duly and validly executed and delivered
by such Harsco Party, as applicable. This Agreement and such Ancillary
Agreements constitute, or will constitute, as the case may be, valid and binding
obligations of each Harsco Party, to the extent it is a party thereto,
enforceable against each Harsco Party, as applicable, in accordance with their
respective terms. Except as set forth on SCHEDULE 4C(a)(ii) and except for any
consents, authorizations or approvals that are required under the HSR Act or
that may be required solely by reason of Buyer's status, the execution and
delivery of this Agreement and such Ancillary Agreements as are contemplated
hereby to be executed and delivered by each Harsco Party do not or will not, as
the case may be, and the consummation by each Harsco Party of the transactions
contemplated hereby and thereby and compliance by it with the terms thereof will
not, conflict with, or result in any violation of or default under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a benefit under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
any of the assets of UDLP or any of its Subsidiaries under, or require any
consent, authorization or approval under any provision of (A) the certificate of
limited partnership or other organizational documents of UDLP or any of its
Subsidiaries or Foreign Affiliates, (B) any Material Contract to which UDLP or
any Subsidiary or Foreign Affiliate is a party or (C) any material judgment,
order or decree or any material statute, law, ordinance, rule or regulation
applicable to UDLP or any of its Subsidiaries or their respective assets.
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(b) OWNERSHIP OF THE INTERESTS. HUC is the sole limited partner of
UDLP and holds 100% of the outstanding limited partnership interests of UDLP.
The sale and transfer of the Interests owned by HUC to Buyer pursuant to this
Agreement will vest in Buyer all right, title and interest in such Interests,
free and clear of all adverse claims or other Lien, other than adverse claims
created by or through or suffered by Buyer.
4C. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers hereby
jointly and severally represent and warrant to Buyer as follows:
(a) AUTHORITY; NO CONFLICTS.
(i) UDLP is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware. UDLP has all
requisite partnership power and authority to enter into the Ancillary
Agreements, to the extent it is a party thereto, as are contemplated hereby
to be executed and delivered by it and to consummate the transactions
contemplated thereby. All partnership acts and other proceedings required
to be taken by UDLP to authorize the execution, delivery and performance of
such Ancillary Agreements, and the consummation of the transactions
contemplated thereby, have been or will have been at or prior to the
Closing duly and properly taken. Such Ancillary Agreements as are
contemplated hereby to be executed and delivered by UDLP will, to the
extent it is a party thereto, be duly and validly executed and delivered by
UDLP. Such Ancillary Agreements will constitute valid and binding
obligations of UDLP, to the extent it is a party thereto, enforceable
against UDLP in accordance with their respective terms.
(ii) Except as set forth on SCHEDULE 4C(a)(ii) and except for any
consents, authorizations or approvals that are required under the HSR Act
or that may be required solely by reason of Buyer's status, the execution
and delivery of such Ancillary Agreements as are contemplated hereby to be
executed and delivered by UDLP do not or will not, as the case may be, and
the consummation by UDLP of the transactions contemplated thereby and
compliance by it with the terms thereof will not, conflict with, or result
in any violation of or default under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, or result in the creation of any lien, claim, encumbrance,
security interest, option, charge or restriction of any kind upon any of
the assets of UDLP or any of its Subsidiaries or Foreign Affiliates under,
or require any consent, authorization or approval under any provision of
(A) the certificate of limited partnership or other organizational
documents of UDLP or any of its Subsidiaries or Foreign Affiliates, (B) any
Material Contract relating to the Business to which UDLP or any Subsidiary
or Foreign Affiliate is a party or (C) any material judgment, order or
decree or any material statute, law, ordinance, rule or regulation
applicable to UDLP or any of its Subsidiaries or Foreign Affiliates or
their assets.
(b) OWNERSHIP OF THE INTERESTS. Except for the Interests owned by
FMC and HUC to be purchased by Buyer pursuant to the terms hereof, UDLP has no
outstanding partnership
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interests or other equity securities or any outstanding options, warrants or
other rights exercisable for, or any securities convertible into or exchangeable
for, any such partnership interest or equity securities. Except as set forth on
SCHEDULE 4C(b), there are no outstanding agreements, securities or other
commitments (other than this Agreement) pursuant to which any of Sellers and
UDLP is or may become obligated to issue, sell, purchase, return or redeem any
Interests or other securities of UDLP.
(c) SUBSIDIARIES AND FOREIGN AFFILIATES. SCHEDULE 4C(c)-1 attached
hereto sets forth the name and jurisdiction of incorporation of each Subsidiary
of UDLP and the persons owning its outstanding capital stock. Each Subsidiary
and each Foreign Affiliate is duly organized, validly existing and, to the
extent applicable, in good standing under the laws of the jurisdiction of its
incorporation. All of the outstanding shares of capital stock of each
Subsidiary are validly issued, fully paid and non-assessable. SCHEDULE 4C(c)-2
sets forth the name and nature of certain foreign entities in which UDLP has a
direct or indirect ownership interest (the "FOREIGN AFFILIATES") and the
ownership of the equity interests in such entities. Except as set forth on
SCHEDULE 4C(c)-1, SCHEDULE 4C(c)-2 or the other Schedules hereto, neither UDLP
nor any Subsidiary owns or holds the right to acquire any shares of stock or any
other investment or equity interest in any other corporation, partnership, joint
venture or other entity and all such shares and other interests reflected on
such Schedules are owned by UDLP or another Subsidiary free and clear of any
Lien or other material encumbrance and are not subject to any option or right to
purchase any such shares and each Foreign Affiliate has no Subsidiaries.
SCHEDULE 4C(c)-1 or SCHEDULE 4C(c)-2 sets forth the number, type and class of
the outstanding shares of capital stock or other ownership interests or
securities of each Subsidiary and Foreign Affiliate of UDLP and the name of the
record and beneficial owner of each share of capital stock or other equity
interests or securities of each Subsidiary and Foreign Affiliate of UDLP.
Except as set forth on SCHEDULE 4C(c)-1, SCHEDULE 4C(c)-2 or the other Schedules
hereto, there are no outstanding options, warrants or other rights exercisable
for, or securities convertible into or exchangeable for, any capital stock or
other ownership interests or securities of any Subsidiary or Foreign Affiliate
of UDLP, any other commitments or agreements providing for the issuance of
additional shares, the sale of treasury shares, or for the repurchase or
redemption of shares of any Subsidiary's or Foreign Affiliate's capital stock,
or any agreements of any kind which may obligate any Subsidiary or Foreign
Affiliate to issue, purchase, register for sale, redeem or otherwise acquire any
of its securities or interests.
(d) FINANCIAL STATEMENTS. SCHEDULE 4C(d) sets forth (i) the audited
consolidated balance sheets of UDLP as of December 31, 1995 and December 31,
1996, and the related consolidated statements of operations and cash flows for
UDLP for the fiscal years ended December 31, 1994, December 31, 1995 and
December 31, 1996, together with the auditors' report thereon and (ii) the
unaudited consolidated balance sheet of UDLP as of June 30, 1997 and related
consolidated statements of operations and cash flows for UDLP for the six-month
period then ended (the "LATEST FINANCIALS"), in each case together with the
notes thereto (collectively, the "FINANCIAL STATEMENTS"). The consolidated
balance sheet of UDLP as of the fiscal period ended June 30, 1997 is referred to
herein as the "JUNE 30 BALANCE SHEET." The Financial Statements have been
derived from the accounting books and records of UDLP, were prepared in the
ordinary course of business
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and present fairly in all material respects the financial condition of UDLP as
of the dates of such Financial Statements and the results of operations and cash
flows of UDLP and its consolidated Subsidiaries for the periods indicated in
accordance with the Applicable Accounting Principles.
(e) TITLE TO TANGIBLE ASSETS OTHER THAN REAL PROPERTY INTERESTS.
UDLP and its Subsidiaries have good and valid title to all material tangible
assets reflected in the Latest Financials, except those sold or otherwise
disposed of since the date of the Latest Financials in the ordinary course of
business, free and clear of all mortgages, liens, security interests or
encumbrances of any nature whatsoever (collectively, "LIENS"), except (i) such
as are disclosed on SCHEDULE 4C(e) or the other Schedules hereto,
(ii) mechanics', carriers', workmen's, repairmen's or other like liens arising
or incurred in the ordinary course of business for which reserves have been
established in accordance with generally accepted accounting principles,
equipment leases with third parties entered into in the ordinary course of
business, liens for taxes, and other governmental charges which are not due and
payable or which may thereafter be paid without penalty for which reserves have
been established in accordance with generally accepted accounting principles and
(iii) other imperfections of title, restrictions or encumbrances, if any, which
would not, individually or in the aggregate, materially impair the use or value
of any such asset (the items in clauses (i)-(iii) being referred to herein
collectively as "PERMITTED LIENS"). The material tangible assets used in the
operation of the Business, taken as a whole, are in normal operating condition
and repair (subject to normal wear and tear). This Section 4C(e) does not
relate to real property or interests in real property, it being the intent of
the parties that such items are the subject of Section 4C(f).
(f) TITLE TO REAL PROPERTY. The term "OWNED PROPERTIES" as used
herein means all real property and interests in real property owned in fee by
UDLP or a Subsidiary as set forth on SCHEDULE 4C(f)-1 (each of such properties
being referred to individually as an "OWNED PROPERTY"). SCHEDULE 4C(f)-2 sets
forth a list of real properties leased by UDLP or a Subsidiary pursuant to
leases under which UDLP or a Subsidiary has an annual base rental obligation in
excess of $250,000 (individually, a "LEASED PROPERTY"). An Owned Property or
Leased Property shall be sometimes referred to herein individually as a
"PROPERTY" and collectively as the "PROPERTIES". UDLP or a Subsidiary has fee
simple title to the Owned Properties, and has a valid leasehold interest in each
of the Leased Properties, in each case free and clear of all mortgages, liens,
security interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (i) Permitted Liens (as defined in
Section 4C(e) above), (ii) easements, covenants, conditions, rights-of-way and
other restrictions of record that are disclosed in any commitment for title
insurance or other title report previously delivered or made available to Buyer,
(iii) any conditions that may be shown by a current, accurate survey or physical
inspection of the relevant Property made prior to the Closing which do not
materially and adversely affect the use as currently conducted of the Owned
Properties, (iv) existing leases, licenses and possession or occupancy
agreements, if any, (v) (A) zoning, building, fire, health, entitlement and
other land use laws, ordinances, rules and safety regulations and other similar
restrictions, (B) mortgages, liens, security interests or encumbrances that have
been placed by any developer, landlord or other third party on property over
which UDLP or a Subsidiary has easement rights or on any Leased Property and
subordination or similar agreements relating thereto and (C) unrecorded
easements, covenants, rights-of-way, liens or other
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restrictions which do not materially and adversely affect the use as currently
conducted of the Owned Properties, (vi) acts done or suffered to be done by, and
judgments against, Buyer and those claiming by, through or under Buyer,
(vii) any and all orders, decrees, awards or judgments related to any eminent
domain or condemnation proceedings which do not materially and adversely affect
the use as currently conducted of the Owned Properties, (viii) other liens,
security interests, easements, covenants and restrictions of any nature
whatsoever which individually or in the aggregate do not materially and
adversely affect the value or use as currently conducted of the Owned Properties
and (ix) with respect to the lease for the property in Aiken, South Carolina
listed on SCHEDULE 4C(f)-2, an "industrial revenue bond", a copy of which has
been made available to Buyer. Except as set forth on Schedule 4C(f)-1, (i) all
improvements located on the Property are, in the aggregate, in normal operating
condition and repair (normal wear and tear excepted) and, to the knowledge of
Sellers, are free from material structural defect and (ii) there is not now
pending any condemnation or eminent domain proceeding affecting the Property or
any portion thereof, nor, to the knowledge of Sellers, is any such proceeding
threatened by any governmental authority.
(g) INTELLECTUAL PROPERTY. The Intellectual Property of UDLP that is
described in clauses (i), (ii) and (iii) of Section 1(a)(vii) is listed on
SCHEDULE 4C(g). Except as disclosed on SCHEDULE 4C(g) or the other Schedules
hereto, UDLP or a Subsidiary or Foreign Affiliate owns or has the right to use,
without payment to any other party, all material Intellectual Property used in
its business. Except as set forth on SCHEDULE 4C(g) or the other Schedules
hereto, no material claims are pending in writing or, to the knowledge of
Sellers, threatened in writing against UDLP or a Subsidiary or Foreign Affiliate
as of the date of this Agreement by any person with respect to the ownership or
use of any of the Intellectual Property owned by UDLP and used in the Business.
Except as set forth on SCHEDULE 4C(g) or the other Schedules hereto, no material
licenses, sublicenses or agreements pertaining to any of the Intellectual
Property owned by UDLP and used in the Business have been granted or entered
into by UDLP or a Subsidiary or Foreign Affiliate. None of Sellers and UDLP
has received any notices of any infringement by any third party with respect to
any of the Intellectual Property owned by UDLP and used in the Business. Except
as set forth on SCHEDULE 4C(g) or the other Schedules hereto, to the knowledge
of Sellers, the operation of the Business does not infringe upon any proprietary
right or other Intellectual Property right of any person in any material
respect. All rights pertaining to Intellectual Property licensed to UDLP by FMC
pursuant to the FMC Intellectual Property Agreement are duly and validly held by
FMC, free and clear of all material Liens. All rights pertaining to
Intellectual Property to be licensed to UDLP by Harsco pursuant to the Harsco
Intellectual Property Agreement are duly and validly held by Harsco, free and
clear of all material Liens.
(h) MATERIAL CONTRACTS. SCHEDULE 4C(h) and the other Schedules
hereto set forth as of the date of this Agreement each of the following types of
written contracts to which UDLP or any Subsidiary or Foreign Affiliate is a
party:
(i) any employment agreement or employment contract with any officer
or director of UDLP (excluding any independent contractor) that has future
liability for cash
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compensation in excess of $200,000 per annum and is not terminable by
notice of not more than 60 calendar days for a cost of less than $200,000;
(ii) any employee collective bargaining agreement;
(iii) any covenant not to compete that materially impairs the
Business;
(iv) any lease or similar agreement under which UDLP or any Subsidiary
or Foreign Affiliate is a lessor or sublessor of, or makes available for
use by any third party, any real property owned or leased by UDLP or any
Subsidiary or Foreign Affiliate or any portion of premises otherwise
occupied by UDLP or any Subsidiary, in each case which has future liability
in excess of $250,000 per annum and is not terminable by notice of not more
than 60 calendar days for a cost of less than $250,000;
(v) any lease or similar agreement under which (A) UDLP or any
Subsidiary or Foreign Affiliate is lessee of, or holds or uses, any
machinery, equipment, vehicle or other tangible personal property owned by
a third party or (B) UDLP or any Subsidiary or Foreign Affiliate is a
lessor or sublessor of, or makes available for use by any third party, any
tangible personal property owned or leased by UDLP or any Subsidiary or
Foreign Affiliate, in each case which has future liability in excess of
$500,000 per annum and is not terminable by notice of not more than 60
calendar days for a cost of less than $500,000;
(vi) any agreement or contract under which UDLP has borrowed or loaned
any money, any note, bond, indenture or other evidence of indebtedness or
any direct or indirect guarantee of such indebtedness of others (other than
endorsements for the purpose of collection, loans made to employees for
relocation, travel or other employment-related purposes, or purchases of
equipment or materials made under conditional or instalment sales
contracts, in each case in the ordinary course of business) which,
individually or in the aggregate, has an outstanding principal amount in
excess of $500,000;
(vii) any agreement or contract under which either Seller or any other
person has directly or indirectly guaranteed indebtedness, liabilities or
obligations of UDLP or any Subsidiary or Foreign Affiliate (other than
endorsements for the purpose of collection in the ordinary course of
business and all Guaranties), in each case having an outstanding principal
amount or aggregate future liability in excess of $1,000,000;
(viii) any contract or agreement for the purchase of supplies, goods,
products or other personal property or for the receipt of services which
involves an unfulfilled obligation of UDLP or any Subsidiary or Foreign
Affiliate in excess of $5,000,000;
(ix) any contract or agreement (including the U.S. Department of
Defense and any other U.S. military purchasing authority), other than any
Inactive Contracts, for the sale
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of supplies, goods, products or other personal property or for the
furnishing of services which involves an unfulfilled obligation of UDLP or
any Subsidiary in excess of $25,000,000;
(x) any contract or agreement which provides for the procurement by
UDLP of consulting, sales representative, marketing or lobbying services
and which involves an unfulfilled obligation of UDLP in excess of $500,000;
(xi) any joint venture, teaming, co-production or partnership contract
or agreement involving an unfulfilled obligation of UDLP in excess of
$5,000,000;
(xii) any agreement committing UDLP or any of its Subsidiaries to
purchase or sell any property or asset outside the ordinary course of
business for consideration in excess of $1,000,000; and
(xiii) any agreement between UDLP or one or more of its
Subsidiaries or Foreign Affiliates and any Seller or any Affiliate of any
Seller (other than UDLP or any of its Subsidiaries or Foreign Affiliates)
which involves an unfulfilled obligation, individually or in the aggregate,
in excess of $1,000,000.
Sellers have delivered to, or made available for inspection by, Buyer
a copy of each contract, lease, license, instrument or other agreement listed on
SCHEDULE 4C(h) as amended to date, other than modifications or amendments to
U.S. government contracts since June 30, 1997 as would not materially and
adversely affect the value of such contracts. Except as disclosed on SCHEDULE
4C(h) or the other Schedules hereto, UDLP or a Subsidiary or Foreign Affiliate
has performed all material obligations required to be performed by it to date
under each contract, lease, license, commitment, instrument or other agreement
of UDLP or such Subsidiary described on SCHEDULE 4C(h) (collectively, the
"MATERIAL CONTRACTS") and is not (with or without the lapse of time or the
giving of notice, or both) in material breach or material default thereunder
and, to the knowledge of Sellers, no other party thereto is (with or without
lapse of time or the giving of notice, or both) in material default under any
Material Contract. Except as set forth on SCHEDULE 4C(h), all of the Material
Contracts are (i) in full force and effect and (ii) to the knowledge of Sellers,
represent the legal, valid and binding obligations of the other parties thereto
and are enforceable against such parties in accordance with their terms.
(i) LITIGATION; DECREES. SCHEDULE 4C(i) and the other Schedules
hereto set forth, all lawsuits, claims and judicial or administrative
proceedings (excluding lawsuits, claims or proceedings for workers'
compensation) pending or, to the knowledge of Sellers, threatened against UDLP
or a Subsidiary or Foreign Affiliate or involving any of its respective
properties, assets, operations or businesses and which (A) involve a claim
against UDLP or a Subsidiary or Foreign Affiliate of, or which involve an
unspecified amount which could reasonably be expected to result in liability of,
more than $250,000 or (B) seek any material injunctive relief which would affect
Buyer's acquisition or ownership of the Interests or the operation of the
Business. Neither UDLP nor any Subsidiary or Foreign Affiliate is in material
default under any material judgment, order or
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decree applicable to it of any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign. Schedule
7(f) sets forth certain pending lawsuits or claims that will be retained by a
particular Seller (as indicated thereon) from and after the Closing.
(j) COMPLIANCE WITH APPLICABLE LAWS. Except as set forth on
SCHEDULE 4C(j) or the other Schedules hereto, (i) UDLP and its Subsidiaries and
Foreign Affiliates are, and since January 1, 1994 have been, in compliance in
all material respects with all applicable material statutes, laws, ordinances,
rules, orders and regulations of any governmental authority or instrumentality
and (ii) since December 31, 1996, neither UDLP nor any Subsidiary has received
any written communication from a governmental authority that alleges that it is
not in compliance in all material respects with any material federal, state,
foreign or local laws, rules and regulations. This Section 4C(j) does not
relate to environmental matters, Government Contracts and tax matters, it being
the intent of the parties that environmental matters, Government Contract
matters and tax matters are the subject of Sections 4C(n), 4C(q) and 4C(l),
respectively.
(k) EMPLOYEE BENEFIT PLANS. Except as set forth on SCHEDULE 4C(k):
(i) SCHEDULE 4C(k)-1 lists all of the material employee benefit
plans, programs and arrangements (including each severance or other
arrangement or policy and each plan, arrangement, program, agreement or
commitment providing for insurance coverage (including without limitation
any self-insured arrangements), disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, life,
health, accident benefits (including without limitation any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the
Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock appreciation
rights, stock purchases or other forms of incentive compensation or post-
retirement insurance, compensation or benefits) maintained or contributed
to by UDLP with respect to current or former employees of UDLP or any of
its Subsidiaries (including the Defense Segment Plan referred to in Section
8(h)(iii)) (the "UDLP EMPLOYEE BENEFIT PLANS") and SCHEDULE 4C(k)-2 lists
all of such material employee benefits plans, programs and arrangements
maintained or contributed to by FMC in which current or former employees of
UDLP or any of its Subsidiaries participate (the "FMC EMPLOYEE BENEFIT
PLANS"). Sellers have delivered to, or made available for inspection by,
Buyer a copy of each UDLP Employee Benefit Plan and the defined benefit
pension plans of FMC covering employees of UDLP and the Transferred
Employees. Except as provided in clause (vi) of this Section 4C(k),
Sellers make no representations or warranties in this Agreement regarding
or relating to any of the FMC Employee Benefit Plans.
(ii) All UDLP Employee Benefit Plans which are "employee benefit
plans" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) are in compliance in all
material respects with the applicable requirements of ERISA, the Code and
all other applicable law.
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(iii) Each UDLP Employee Benefit Plan or its predecessor plan which
is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter that it is so qualified and that its trust
is exempt from taxation.
(iv) All contributions and payments with respect to each UDLP
Employee Benefit Plan have been timely made when due and there are no
funding deficiencies (including accumulated funding deficiencies) (as
defined in ERISA and the Code).
(v) All ERISA reporting and disclosure obligations have been
satisfied in all material respects with respect to each UDLP Employee
Benefit Plan.
(vi) UDLP and each UDLP Employee Benefit Plan and, with respect to
employees and former employees of UDLP and its Subsidiaries, each FMC
Employee Benefit Plan has complied in all material respects with its
obligations under Section 4980B of the Code and Section 601 et seq. of
ERISA ("COBRA").
(vii) To the knowledge of Sellers, with respect to each UDLP
Employee Benefit Plan: (a) there have not been any prohibited transactions
(as defined in Section 406 of ERISA or Section 4975 of the Code); (b) no
fiduciary has any liability for breach of fiduciary duty; and (c) no
investigations, suits, or material claims are pending.
(viii) Sellers have delivered or made available to Buyer copies of
the following documents in connection with each UDLP Employee Benefit Plan:
(a) plan document and all amendments; (b) current summary plan
descriptions; (c) the most recent Internal Revenue Service favorable
determination letter with respect to each UDLP Employee Benefit Plan
intended to be qualified under the Code; and (d) the most recent IRS Form
5500.
(ix) UDLP does not contribute to any "multiemployer plan," as
defined in Section 3(37) or 4001(a)(3) of ERISA, nor has UDLP at any time
contributed to, or been obligated to contribute to, any such multiemployer
plan.
(x) The funding method used in connection with each UDLP Employee
Benefit Plan that is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (each, a "PENSION PLAN") which is subject to the
minimum funding requirements of ERISA is acceptable under law, and the
actuarial assumptions used in connection with funding each such plan are
reasonable. As of the Closing Date, the "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA of each Pension
Plan (but excluding from the definition of "current value" of "assets" of
such Pension Plan accrued but unpaid contributions) did not exceed zero.
(xi) UDLP and its Subsidiaries have not engaged in, nor are
successors or parent corporations to an entity that has engaged in, a
transaction described in Section 4069 of ERISA. There has been no
"reportable event" (as defined in Section 4043(b) of ERISA and
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the PBGC regulations under such Section) with respect to any Pension Plan
and no analogous event under applicable foreign law. No filing has been
made by UDLP or either Seller with the PBGC, and no proceeding has been
commenced by the PBGC, to terminate any Pension Plan. No condition exists
and no event has occurred that could constitute grounds for the termination
of any Pension Plan by the PBGC. UDLP has not at any time, (1) ceased
operations at a facility so as to become subject to the provisions of
Section 4062(e) of ERISA or analogous foreign law, (2) withdrawn as a
substantial employer so as to become subject to the provisions of Section
4063 of ERISA or analogous foreign law, or (3) ceased making contributions
on or before the Closing Date to any Pension Plan subject to Section
4064(a) of ERISA or analogous foreign law to which UDLP made contributions
during the six years prior to the Closing Date.
(xii) There is no contract, agreement, plan or arrangement covering
any employee or former employee of UDLP that, individually or collectively,
provides for the payment prior to or in connection with this transaction by
UDLP of any amount (i) that is not deductible under Section 162(a)(1) or
404 of the Code or (ii) that is an "excess parachute payment" pursuant to
Section 280G of the Code.
(xiii) Each material trust agreement, annuity contract or other
funding instrument maintained by UDLP and related to a UDLP Employee
Benefit Plan has been maintained in all material respects in accordance
with its terms and applicable law.
(xiv) There is no material action, order, writ, injunction, judgment
or decree outstanding or claim, suit, litigation, proceeding, arbitral
action, governmental audit or investigation relating to or seeking benefits
under any UDLP Employee Benefit Plan that is pending or, to the knowledge
of Sellers, threatened against UDLP or any UDLP Employee Benefit Plan.
(xv) Neither UDLP nor Sellers has any legally binding commitment to
create any additional employee benefit plans which are intended to cover
UDLP employees or to amend or modify any existing UDLP Employee Benefit
Plan which would result in a material increase in the costs to UDLP of such
Plan.
(xvi) No UDLP Employee Benefit Plan holds as an asset any interest
in any annuity contract, guaranteed investment contract or any other
investment or insurance contract issued by an insurance company that, to
the knowledge of Sellers, or UDLP is the subject of bankruptcy,
conservatorship or rehabilitation proceedings.
(xvii) Neither the execution and delivery of this Agreement by
Sellers nor the consummation of the transactions contemplated hereby or the
related transactions will result in the acceleration or creation of any
rights of any person to benefits under any UDLP Employee Benefit Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the
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acceleration of the accrual or vesting of any benefits under any Pension
Plan or the acceleration or creation of any rights under any severance,
parachute or change in control agreement).
(xviii) No event has occurred in connection with which UDLP, any of
its Subsidiaries or any UDLP Employee Benefit Plan, directly or indirectly,
could be subject to any material liability (A) under any statute,
regulation or governmental order relating to any UDLP Employee Benefit Plan
or (B) pursuant to any obligation of UDLP or any of its Subsidiaries to
indemnify any person against liability incurred under any such statute,
regulation or order as it relates to the UDLP Employee Benefit Plans.
(xix) None of the Subsidiaries employs any employees or has any
obligation to contribute to any of the UDLP Employee Benefit Plans.
(l) TAXES. Except as otherwise provided in SCHEDULE 4C(1) and
except as would not result in a liability to UDLP or its Subsidiaries in excess
of amounts accrued on the June 30 Balance Sheet or the Closing Statement:
(i) UDLP and its Subsidiaries have filed, or have been included
in, all material Tax Returns (as defined below) required to be filed by
them on or before the Closing Date. To the knowledge of Sellers, the
Foreign Affiliates have filed, or have been included in, all material Tax
Returns required to be filed by them on or before the Closing Date.
(ii) All material Taxes due and payable by UDLP and its
Subsidiaries (whether or not shown on any Tax Return) have been timely paid
in full. To the knowledge of Sellers, all material Taxes due and payable
by the Foreign Affiliates (whether or not shown on any Tax Return) have
been timely paid in full.
(iii) No claim has ever been made in writing by a taxing authority
in a jurisdiction where UDLP or any of its Subsidiaries do not file Tax
Returns that any of UDLP and its Subsidiaries are or may be subject to
taxation in a material amount by that jurisdiction. To the knowledge of
Sellers, no claim has ever been made in writing by a taxing authority in a
jurisdiction where any of the Foreign Affiliates do not file Tax Returns
that any of the Foreign Affiliates are or may be subject to taxation in any
material amount by that jurisdiction.
(iv) None of UDLP's Subsidiaries or Foreign Affiliates which is a
corporation has filed a consent under Code Section 341(f) concerning
collapsible corporations.
(v) None of UDLP, its Subsidiaries, and its Foreign Affiliates has
been a United States real property holding corporation within the meaning
of Code Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii).
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(vi) None of UDLP, its Subsidiaries and, to the knowledge of
Sellers, the Foreign Affiliates, (A) has been a member of any affiliated
group filing a consolidated federal income Tax Return and (B) has any
liability for material Taxes of any person as defined in Section 7701(a)(1)
of the Code (other than UDLP and its Subsidiaries) under Treas. Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor or by contract of indemnity.
(vii) As of the date hereof, UDLP, its Subsidiaries and, to the
knowledge of Sellers, the Foreign Affiliates, have no material Tax
deficiency or claim assessed or, to the knowledge of Sellers, proposed in
writing against any of them, except to the extent that adequate liabilities
or reserves with respect thereto are accrued on the Financial Statements
in accordance with generally accepted accounting principles (or, with
respect to the Foreign Affiliates, on their financial statements determined
in accordance with United States generally accepted accounting principles)
or (i) such deficiency or claim is being contested in good faith by
appropriate proceedings, (ii) no such accrual is required by generally
accepted accounting principles and (iii) the nature and amount of the
disputed Tax is set forth on SCHEDULE 4C(1).
(viii) As of the date hereof, there are no currently outstanding Tax
examinations or Tax audits of any of UDLP and its Subsidiaries. To the
knowledge of Sellers, as of the date hereof, there are no currently
outstanding Tax examinations or Tax audits of the Foreign Affiliates.
(ix) Neither UD United Defense International Sales Corporation nor
UDLP Components, Limited has any investment in U.S. property within the
meaning of Code Section 956. FMC-Arabia has an investment in U.S. property
within the meaning of Code Section 956 represented by a loan to UDLP. To
the knowledge of Sellers, the Foreign Affiliates have no other investments
in U.S. property.
(x) None of the property of UDLP or any of its Subsidiaries (A) is
subject to a lease under (x) Section 168(f)(8) of the Internal Revenue Code
of 1954, or (y) Code Section 7701(h), (B) secures any debt the interest on
which is tax-exempt under Code Section 103(a), or (C) is tax-exempt use
property within the meaning of Code Section 168(h).
(xi) Neither UD United Defense International Sales Corporation nor
UDLP Components, Limited nor, to the knowledge of Sellers, any of the
Foreign Affiliates, is (i) engaged in a United States trade or business
for federal Income Tax purposes; (ii) a passive foreign investment company
within the meaning of the Code; or (iii) a foreign investment company
within the meaning of the Code.
(xii) To the knowledge of Sellers, none of UDLP, its Subsidiaries
and Foreign Affiliates has participated in or cooperated with an
international boycott within the meaning
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of Code Section 999 or has been requested to do so in connection with any
transaction or proposed transaction.
(xiii) Buyer would not be required to include any amount in gross
income with respect to UD United Defense International Sales Corporation or
UDLP Components, Limited pursuant to Code Section 951 if the taxable year
of any of such entities was deemed to end on the Closing Date after the
Closing.
(xiv) Since their respective formations through the date hereof,
UDLP and Armored Vehicle Technologies Associates have been qualified to be
treated as partnerships for federal Income Tax purposes and neither UDLP
nor any of its partners has taken a position inconsistent with such
treatment with regard to any federal Income Tax.
(xv) This Section 4(C)(1) contains the sole and exclusive
representations and warranties of Sellers with respect to any Taxes or Tax
matters, with the exclusion of those representations and warranties
relating to Taxes to the extent set forth in Section 4C(e), Section 4C(f)
and Section 4C(k).
(m) INSURANCE. Attached hereto as SCHEDULE 4C(m) is a summary of
all material insurance policies issued in favor of UDLP and the Subsidiaries.
Neither UDLP nor any of its Subsidiaries has received (i) any written notice of
cancellation of any policy described on SCHEDULE 4C(m) or refusal of coverage
thereunder, (ii) any written notice that any issuer of such policy has filed for
protection under applicable bankruptcy laws or is otherwise in the process of
liquidating or has been liquidated, or (iii) any other written notice that such
policies are no longer in full force or effect or that the issuer of any such
policy is no longer willing or able to perform its obligations thereunder.
(n) ENVIRONMENTAL COMPLIANCE.
(i) To the knowledge of Sellers, except as set forth on SCHEDULE
4C(n) hereto or the other Schedules hereto, as of the date hereof UDLP and
the Subsidiaries are in compliance with all Environmental Requirements,
except for such noncompliance as would not have a Material Adverse Effect.
"ENVIRONMENTAL REQUIREMENTS" shall mean all federal, state and local
statutes, regulations, ordinances, permits, approvals and licenses
concerning pollution or protection of the environment, including without
limitation all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release,
control or cleanup of any hazardous materials, substances or wastes, as
such requirements are enacted and in effect on or prior to the date hereof.
(ii) Except as set forth on SCHEDULE 4C(n) or the other Schedules
hereto, UDLP has not, since January 1, 1996, received any written notice,
report or other communication regarding any material violation of
Environmental Requirements, or any material liabilities,
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including any material investigatory, remedial or corrective obligations,
relating to UDLP or its facilities arising under Environmental
Requirements, except for any of the foregoing, the subject matter of which
would not have a Material Adverse Effect.
(iii) To the knowledge of Sellers, Sellers have delivered, or
otherwise made available, to Buyer copies of all material written
environmental reports, audits and assessments in Sellers' possession
relating to any material environmental liabilities of UDLP or any of its
Subsidiaries.
(iv) This Section 4C(n) contains the sole and exclusive
representations and warranties of Sellers with respect to any environmental
matters, including without limitation any arising under any Environmental
Requirements.
(o) UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE
4C(o), neither UDLP nor any of its consolidated Subsidiaries has any material
liability or obligation (whether absolute or contingent, liquidated or
unliquidated, or due or to become due) of a type required to be reflected on a
balance sheet prepared in accordance with Applicable Accounting Principles,
except for liabilities and obligations (i) reflected or reserved for on the
balance sheet included in the Latest Financials, (ii) disclosed or referred to
on any of the Schedules or (iii) that have arisen since or arise after the date
of the Latest Financials in the ordinary course of the operation of the Business
(including pursuant to contracts) and consistent with past practice (all of
which are current liabilities similar in type to those reflected on the balance
sheet included in the Latest Financials).
(p) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1997,
UDLP and its Subsidiaries have operated the Business in the ordinary course,
consistent with past practices. Without limiting the foregoing, since June 30,
1997, except as disclosed on SCHEDULE 4C(p), there has not been any (i) material
adverse change in the Business or the assets, liabilities or financial condition
of UDLP and its Subsidiaries, taken as a whole, (ii) except for normal periodic
increases in the ordinary course of business consistent with past practice,
increase in the compensation payable or to become payable by UDLP or its
Subsidiaries to any of their respective officers, employees or agents
(collectively, "PERSONNEL") whose total compensation for services rendered to
UDLP or its Subsidiaries is currently at an annual rate of more than $100,000 or
any material bonus, incentive compensation, service award or other like benefit
granted, made or accrued, contingently or otherwise, for or to the credit of any
of the Personnel, (iii) material addition to or modification of the employee
benefit plans, arrangements or practices affecting Personnel, (iv) sale,
assignment or transfer of any material assets of UDLP or its Subsidiaries, taken
as a whole, other than in the ordinary course, (v) material change in accounting
methods or practices by UDLP or its Subsidiaries or (vi) revaluation by UDLP or
any of its Subsidiaries of any of their respective material assets.
(q) GOVERNMENT CONTRACTS. Except as set forth on SCHEDULE
4(C)(q):
(i) Since January 1, 1994, neither the United States government
(through relevant contracting officers or the U.S. Department of Justice)
nor any prime contractor has notified
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UDLP or either Seller in writing that UDLP has breached or violated in any
material respect any material statute or regulation pertaining to any
Government Contract.
(ii) Neither UDLP nor any of its Subsidiaries has been debarred or
suspended from participation in the award of any Government Contract nor,
to the knowledge of Sellers, has any debarment or suspension proceeding
been initiated against UDLP or any of its Subsidiaries.
(iii) No material termination for default or show cause notice is,
or since January 1, 1994 has been, in effect pertaining to any Government
Contract.
(iv) Since January 1, 1994, there has been no known governmental
investigation (other than routine investigations and audit proceedings) of
UDLP or any of its Subsidiaries regarding an alleged or potential material
violation of law by UDLP or any of its Subsidiaries with respect to any
Government Contract.
(v) Neither UDLP nor any of its Subsidiaries has since January 1,
1994 in connection with the Business, conducted any material internal
investigation in connection with which UDLP has engaged outside legal
counsel or independent accountants, or made any material voluntary
disclosure to the U.S. government pursuant to the Voluntary Disclosure
Program of the U.S. government, outside the ordinary course as a result of
any material suspected irregularity with respect to any Government
Contract.
(vi) To the knowledge of Sellers, the cost accounting and
procurement systems maintained by UDLP and its Subsidiaries in connection
with the conduct of the Business with respect to Government Contracts are
in compliance with all applicable material U.S. government laws and
regulations (including all applicable cost accounting standards) in all
material respects.
(vii) With respect to each Government Contract to which UDLP or any
of its Subsidiaries is a party (A) to the knowledge of Sellers, since
January 1, 1997, UDLP and each of its Subsidiaries have complied with the
material terms and conditions of each Government Contract which is a
Material Contract except for such instances of non-compliance as will not
result in a termination of the Material Contract or material liability and
(B) to the knowledge of Sellers, all material representations and
certifications executed, acknowledged or set forth in each Government
Contract were complete and correct in all material respects as of their
effective date. For the purpose hereof, "GOVERNMENT CONTRACT" means any
contract between the United States government (or a department or agency
thereof) or any prime contractor to the United States Government and UDLP,
any of its Subsidiaries or either Seller.
(r) LABOR RELATIONS. Except as set forth on SCHEDULE 4C(r),
neither UDLP nor any of its Subsidiaries has engaged in any unfair labor
practice that would have a Material Adverse
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Effect and there are no material complaints against UDLP or any of its
Subsidiaries pending or, to the knowledge of Sellers, threatened before the
National Labor Relations Board or any similar state or local labor agency.
Except as disclosed on SCHEDULE 4C(r), there are no representation questions,
labor strikes, slow downs or stoppages, grievances or other labor disputes
pending or, to the knowledge of Sellers, threatened with respect to the
employees of UDLP or any of its Subsidiaries that would have a Material Adverse
Effect, and neither UDLP nor any of its Subsidiaries (nor either Seller in
connection with the conduct of the Business) has since January 1, 1994
experienced any such representation question, labor strike, slow down, stoppage
or other labor dispute.
(s) LICENSES, PERMITS AND AUTHORIZATIONS. To the knowledge of
Sellers, UDLP or a Subsidiary has all of the licenses, approvals, consents,
franchises and permits necessary to permit UDLP and its Subsidiaries to conduct
the Business as currently conducted, except as would not have a Material Adverse
Effect.
(t) ASSETS. The assets reflected on the June 30 Balance Sheet,
together with all rights of UDLP, its Subsidiaries and Foreign Affiliates under
contracts and the assets of the Foreign Affiliates and such assets as are
transferred to UDLP pursuant to Section 5(g) are all of the material assets used
in the Business.
(u) LOSS CONTRACTS; BACKLOG. Set forth on SCHEDULE 4C(u)-1 are
those Material Contracts with respect to which UDLP has accrued a loss on the
June 30 Balance Sheet. Set forth on Schedule 4C(u)-2 are (i) a list of the
Backlog with respect to contracts for the sale of goods or services to
unaffiliated third parties where there is an official award reported for UDLP,
broken out by division on FMC's internal financial reporting systems as of
July 31, 1997, which totals approximately $1.4 billion and (ii) a list of
selected contracts and their respective approximate Backlog (subject to change
based on deliveries and customer-directed contract modification and
authorization changes) for GSD, ASD and DSI. For purposes of this Agreement,
the term "BACKLOG" means as of any given date, (i) the total amount awarded and
funded under the applicable contract as of such date less (ii) the amount of the
shipments made in respect of such contract as of such date.
(v) CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. SCHEDULE 4C(v) sets
forth a list of the names of the (i) ten (10) largest customers of each division
of the Business (or such fewer number as provide a substantial majority of the
revenue of such division) for the most recent fiscal year, showing the
approximate total sales in dollars by the Business to each such customer during
such fiscal year; and (ii) the ten (10) largest suppliers of each division of
the Business (or such fewer number as supply a substantial majority of the
purchases by dollar volume of such division) for the most recent fiscal year
showing the approximate total purchases in dollars by the Business from each
such supplier during such fiscal year. Neither UDLP nor any of its Subsidiaries
has received any communication in writing from any customer or supplier named on
SCHEDULE 4(C)(v) of any intention to terminate or materially reduce purchases
from or supplies to the Business, which termination or reduction would have a
Material Adverse Effect.
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(w) DIVIDENDS BY FOREIGN AFFILIATES. SCHEDULE 4C(w) sets forth
the aggregate amount of dividends paid to UDLP or the Sellers by each Foreign
Affiliate in each of the preceding five (5) fiscal years and the aggregate
amount of dividends paid by such Foreign Affiliates to UDLP since December 31,
1996.
5. COVENANTS OF SELLERS. Sellers jointly and severally covenant
and agree as follows:
(a) ACCESS. Prior to the Closing, Sellers shall grant to Buyer or
cause to be granted to Buyer and its representatives, employees, counsel and
accountants reasonable access, during normal business hours and upon reasonable
notice, to the personnel, properties, books and records of UDLP and its
Subsidiaries and Foreign Affiliates, and Sellers shall not object to Buyer's
communicating in a reasonable manner with key customers and suppliers on
matters, relating to the Business; PROVIDED, HOWEVER, that such access does not
unreasonably interfere with the normal operations of UDLP and that Sellers'
approval is required with respect to access to, and communications with
customers and suppliers of, the Foreign Affiliates; PROVIDED FURTHER, that all
requests for access shall be directed to Randall S. Ellis, or such other person
as Sellers may designate from time to time; and PROVIDED FURTHER, that Buyer
shall have obtained any and all necessary governmental or administrative
security clearances and approvals. Buyer shall indemnify and hold Sellers, UDLP
and their respective Affiliates, officers, shareholders, directors and employees
harmless against any and all losses, liabilities, expenses and damages or
actions or claims with respect thereto resulting from claims suffered or
incurred by any of such persons or entities arising out of or with respect to
Buyer's or its representatives', agents' or employees' exercise of Buyer's
rights under this Section 5(a) to the extent arising from the negligence or
willful misconduct of Buyer or its representatives, employees, counsel and
accountants. Notwithstanding any provision in this Agreement to the contrary,
Buyer's obligations under this Section 5(a) shall survive the termination of
this Agreement and the consummation of the transactions contemplated hereby.
(b) ORDINARY CONDUCT. Except as permitted by the terms of this
Agreement or as set forth in SCHEDULE 5(b) or the other Schedules hereto, from
the date hereof to the Closing, Sellers will cause UDLP and its Subsidiaries
and, subject to existing obligations under any applicable agreement with the
minority partners, Foreign Affiliates to conduct the Business in the ordinary
course, consistent with past practices. Except as provided in this Agreement or
SCHEDULE 5(b) or the other Schedules hereto, from the date hereof until the
Closing, Sellers shall not permit UDLP or any of its Subsidiaries or, subject to
existing obligations under any applicable agreement with minority partners,
Foreign Affiliates to do any of the following without the prior written consent
of Buyer:
(i) in the case of UDLP, amend its Certificate of Limited
Partnership or its Agreement of Limited Partnership in any manner which
would be materially adverse to Buyer and, in the case of any Subsidiary or
Foreign Affiliates of UDLP, amend its corporate charter, bylaws or other
organizational documents in any manner which would be materially adverse to
Buyer;
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(ii) make any material change in the conduct of the Business,
except as contemplated or permitted by this Agreement;
(iii) sell, lease, license or otherwise dispose of, or agree to
sell, lease, license or otherwise dispose of, any interest in any material
assets of UDLP or any Subsidiary or Foreign Affiliates, except for sales
in the ordinary course of business;
(iv) permit, allow or subject any of the material assets owned by
UDLP or any Subsidiary or Foreign Affiliates to any mortgage, pledge,
security interest, encumbrance or lien or suffer such to be imposed, except
for Permitted Liens;
(v) except in the ordinary course of business or as required by
law or contractual obligations or other agreements existing on the date
hereof, increase in any manner the compensation of, or enter into any new
bonus or incentive agreement or arrangement with, any officers or other key
personnel;
(vi) assume, incur or guarantee any obligation for borrowed money
(other than intercompany indebtedness) having an outstanding principal
amount in excess of $1,000,000 in the aggregate;
(vii) enter into a material lease of real property other than in the
ordinary course of business, except that Buyer acknowledges and consents
to UDLP entering into any lease the negotiation of which has commenced
prior to the date of this Agreement or any renewal of a lease to which UDLP
is a party;
(viii) directly or indirectly, make any distribution of assets (other
than cash distributions or other cash payments by UDLP or its Subsidiaries
in the ordinary course) to its equity holders, or directly or indirectly,
purchase, redeem, issue, sell or otherwise acquire or dispose of any equity
interest of UDLP or such Subsidiary or Foreign Affiliate or cause any
Foreign Affiliate to accelerate the payment of any dividends;
(ix) issue any equity interests or other securities (other than
debt securities permitted pursuant to the foregoing clause (vi)) or any
options, warrants or other rights exercisable for such equity interests or
other securities or otherwise take (or agree or plan to take) any steps
affecting or changing the capitalization of UDLP or any its Subsidiaries or
Foreign Affiliates,
(x) change its accounting methods, principles or policies in any
material respect;
(xi) make any material Income Tax election that could affect Buyer,
UDLP or its Subsidiaries after the Closing or apply to change any method of
accounting for Tax purposes in any material respect;
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(xii) acquire or agree to acquire by merging or consolidating with,
or acquiring by purchasing a substantial portion of the assets of, or in
any other manner, any business or any corporation, partnership, association
or other business organization or division thereof or acquire or agree to
acquire any material assets or property, except in the ordinary course of
business and in a manner consistent with past practice;
(xiii) amend in any materially adverse respect any Material Contract;
or
(xiv) enter into any legally binding commitment to do any of the
foregoing
PROVIDED, HOWEVER, that nothing in this Section 5(b) shall be construed to
prohibit, prevent or otherwise limit Sellers from settling accounts through, or
otherwise making, regular, tax or other special distributions in cash or
repayments of cash from UDLP to any Seller, to the extent that, unless otherwise
provided in this Agreement (including in Section 2(b)), any such distribution or
repayment is reflected on the Closing Statement; and PROVIDED FURTHER that,
except as set forth in Section 8(p), nothing in this Agreement shall require the
presence of any positive cash balance on the books or in the accounts of UDLP at
the Closing.
(c) CONFIDENTIALITY. Each Seller agrees that, after the Closing
Date, it shall, and shall use its reasonable efforts to cause its respective
directors, officers, employees, advisors and Affiliates to, keep the Information
(as defined below) confidential for a period of five years from the Closing
Date, except that any Information required by law or legal or administrative
process to be disclosed may be disclosed without violating the provisions of
this Section 5(c), and except that any Information may be used and disclosed (i)
in connection with the exercise or performance by Sellers of their respective
rights and obligations under or as permitted by the Ancillary Agreements and
(ii) (subject to reasonable and customary confidentiality protections, and
without jeopardizing the protection of trade secrets) in connection with the
development, manufacture, sale or distribution of any product outside of UDLP's
Scope of Activity, in each case without violating the provisions of this Section
5(c); PROVIDED, HOWEVER, that, with respect to Information that consists of
technical information, trade secrets or know-how, the covenants and obligations
of the Sellers in this Section 5(c) shall not terminate so long as such
technical information, trade secrets or know-how is or remains Information
subject to this Section 5(c). At Buyer's request, each Seller shall use legal
action, including the commencement of litigation, if required, to enforce such
confidentiality obligations, and Buyer shall reimburse each such Seller for
reasonable out-of-pocket expenses (including the fees and expenses of counsel)
incurred in connection with such legal action as is requested by Buyer. For
purposes hereof, the term "INFORMATION" means all information that relates to
UDLP, the Subsidiaries or the Foreign Affiliates or the Business, other than any
such information that is available to the public on the Closing Date, or
thereafter becomes available to the public other than as a result of a breach of
this Section 5(c), or is developed independently by Sellers or their respective
Affiliates after the Closing or is obtained from third parties who have no duty
of confidentiality to Buyer, UDLP or any of its Subsidiaries or Foreign
Affiliates.
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(d) PRESERVATION OF BUSINESS. Prior to the Closing, subject to
the terms and conditions of this Agreement, Sellers shall, and shall cause UDLP
and its Subsidiaries and, subject to applicable agreements with the minority
partners, Foreign Affiliates to, use reasonable best efforts consistent with
past practices to preserve the Business intact, to preserve the goodwill of
customers and suppliers of UDLP and to retain its key employees.
(e) COVENANT NOT TO COMPETE. Each Seller agrees that, for a
period of six years following the Closing Date, it will not, and will cause each
of its Affiliates not to, engage, directly or indirectly, anywhere in the world
in any line of business within the Scope of Activity; PROVIDED, HOWEVER, that
(i) Harsco shall be entitled to continue to engage in the development,
manufacture, retrofit, installation, repair, overhaul, engineer, design,
service, sale and marketing of armor and armor kits for sale to the military and
other customers, (ii) Harsco shall be entitled to engage in activities
reasonably necessary to completing the termination and winding up of its former
truck and bus business and (iii) either Seller shall be entitled to engage in
the development, manufacture, retrofit, installation, repair, overhaul,
engineer, design, service, sale and marketing of any component part or subsystem
of military vehicle systems which are substantially the same as classes of
products or services that primarily are commercially sold by such Seller for
non-military uses. If any court of competent jurisdiction shall finally hold
that the time, territory or any other provision set forth in this Section 5(e)
constitutes an unreasonable restriction, such provision shall not be rendered
void, but shall apply as to such time, territory or to such other extent as such
court may determine constitutes a reasonable restriction under the circumstances
involved. Each Seller acknowledges that the restrictions contained in this
Section 5(e) are reasonable and necessary to protect the legitimate interests of
Sellers, UDLP and Buyer and that any breach by either Seller of any provision
hereof will result in irreparable injury to UDLP and Buyer. Each Seller
acknowledges that, in addition to all remedies available at law, UDLP and Buyer
shall be entitled to equitable relief, including injunctive relief, and an
equitable accounting of all losses and damages. For purposes of this Agreement,
the "SCOPE OF ACTIVITY" of UDLP shall be to engage in the development,
manufacture, retrofit, installation, overhaul, repair, engineering, design,
service, sale and marketing of any military vehicle system or weapon system or
station or component thereof. It shall not be a violation of this provision for
either Seller to purchase or combine with an entity conducting a business that
has products and services that fall within the Scope of Activity but are
incidental to the business of such entity as a whole. Each Seller further
agrees that it will not, for a period commencing on the date hereof and ending
two years following the Closing Date, kn