UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) January 9, 1998
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EG&G, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 1-5075 04-2052042
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
45 William Street, Wellesley, Massachusetts 02181
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(Address of principal executive offices) (Zip Code)
(781) 237-5100
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition and Disposition of Assets
Pursuant to a Master Purchase Agreement, dated February 6, 1998, the Company
sold, on April 1, 1998, its Sealol Industrial Seals Division, which manufactures
mechanical seals, to the TI Group plc. All of the outstanding shares of capital
stock of EG&G Sealol Ltd.; EG&G E.C.; EG&G International, Ltd.; Sealol S.A.; and
a societe anonyme wholly owned by Sealol France were sold to TI Group plc and TI
S.A. The properties, assets and rights of EG&G Sealol, Inc.; EG&G Canada
Limited; EG&G S.A.; EG&G GmbH; EG&G SpA; EG&G Benelux B.V.; EG&G Ltd.; and EG&G
do Brasil Ltda., primarily related to, primarily used in, dedicated to, or
otherwise necessary to the conduct of the business of the Sealol Industrial
Seals Division, were sold to TI Group plc. The purchase price consisted of $100
million paid in cash. The purchase price and all negotiations relating to the
transaction were on an arm's length basis. The foregoing description of the
disposition is qualified in its entirety by reference to the complete text of
the Master Purchase Agreement which is filed as an exhibit to this Report.
On April 1, 1998 the Company also completed its purchase of the Belfab Division
of John Crane, Inc., the Daytona Beach unit of the TI Group. Belfab, which had
sales of $30 million in 1997, manufactures metal bellows used by the
semiconductor, aerospace and biomedical industries. The Company intends to
continue the same use of the acquired Belfab assets, which were purchased for
$45 million in cash. A portion of the proceeds from the sale of the Sealol
Industrial Seals Division was the source of funds for the purchase price. The
purchase price and all negotiations relating to the transaction were on an arm's
length basis.
Pursuant to a Stock Purchase Agreement, dated December 26, 1997, by and between
EG&G Holdings, Inc. and Ametek, Inc. ("Ametek"), the Company also sold, on
January 9, 1998, all of the outstanding shares of capital stock of Rotron
Incorporated ("Rotron") to Ametek. This disposition was previously discussed in
Current Reports on Form 8-K, filed January 5, 1998 and February 3, 1998, and in
the 1997 Annual Report on Form 10-K, filed March 24, 1998. Rotron manufactures
fans, blowers and motors. The purchase price paid by Ametek consisted of $103
million in cash. The purchase price and all negotiations relating to the
transaction were on an arm's length basis. The foregoing description of the
disposition is qualified in its entirety by reference to the complete text of
the Stock Purchase Agreement which is filed as an exhibit to this report.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Not Applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed financial statements are
filed with this report:
Pro Forma Condensed Consolidated Balance Sheet as of December 28, 1997
Pro Forma Condensed Consolidated Statement of Operations for the Year
ended December 28, 1997
<PAGE>
The Pro Forma Condensed Consolidated Balance Sheet as of December 28,
1997 reflects the financial position of the Company after giving effect
to the Sealol Industrial Seals and Rotron dispositions discussed in
Item 2 and assumes the dispositions took place on December 28, 1997.
The Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 28, 1997 assumes that the dispositions occurred on
December 30, 1996 and is based on the operations of the Company for the
year ended December 28, 1997. The Pro Forma Condensed Consolidated
Statement of Operations for the year ended December 28, 1997 does not
include the gains on the divestitures. The Company has realized a gain
of $44 million after tax on the divestiture of the Rotron division
during the first quarter of 1998 and expects to report a gain of $30-35
million on the divestiture of the Sealol Industrial Seals division
during the second quarter of 1998.
The unaudited pro forma condensed consolidated financial statements
have been prepared by the Company based upon assumptions deemed proper
by it. The unaudited pro forma condensed consolidated financial
statements presented herein are shown for illustrative purposes only
and are not necessarily indicative of the future financial position or
future results of operations of the Company, or of the financial
position or results of operations of the Company that would have
actually occurred had the transaction been in effect as of the date or
for the periods presented. In addition, it should be noted that the
Company's financial statements will reflect the dispositions only from
January 9, 1998 and April 1, 1998, the closing dates for Rotron and
Sealol Industrial Seals, respectively.
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the historical financial statements
and related notes of the Company.
(c) Exhibits
No. Description
--- -----------
2.1 Master Purchase Agreement, dated February 6, 1998, among EG&G,
Inc.; EG&G Benelux B.V.; EG&G Canada Limited; EG&G do Brasil
Ltda.; EG&G GmbH; EG&G Holdings, Inc.; EG&G Ltd.; EG&G Sealol,
Inc.; EG&G S.A.; EG&G SpA; Wellesley International C.V. and TI
Group plc; TI S.A.
2.2 Stock Purchase Agreement, dated December 26, 1997, by and
between EG&G Holdings, Inc. and Ametek, Inc.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EG&G, Inc.
By /s/ John F. Alexander, II
----------------------------
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: April 16, 1998
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<PAGE>
<TABLE>
Pro Forma Financial Information
EG&G, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet as of December 28, 1997
(Unaudited)
<CAPTION>
Sealol
Industrial
Rotron Seals
Pro Forma Pro Forma
(In thousands) Historical Adjustments Pro Forma(f) Adjustments Pro Forma(k)
---------- ----------- --------- ----------- ---------
Current Assets:
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents ................. $ 57,934 $101,830(a) $159,764 $ 99,318(g) $259,082
Accounts receivable ....................... 243,963 (11,412)(b) 232,551 (13,622)(h) 218,929
Inventories ............................... 112,875 (6,131)(b) 106,744 (10,583)(h) 96,161
Other current assets ...................... 73,414 (171)(b) 73,243 (2,028)(h) 71,215
-------- -------- -------- -------- --------
Total Current Assets ...................... 488,186 84,116 572,302 73,085 645,387
Net Property, Plant and Equipment ......... 181,143 (5,357)(b) 175,786 (7,784)(h) 168,002
Investments ............................... 16,730 -- 16,730 -- 16,730
Intangible Assets ......................... 79,257 -- 79,257 -- 79,257
Other Assets .............................. 66,787 (1,602)(b) 65,185 (65)(h) 65,120
-------- -------- -------- -------- --------
Total Assets .............................. $832,103 $ 77,157 $909,260 $ 65,236 $974,496
======== ======== ======== ======== ========
Current Liabilities:
Short-term debt ........................... $ 46,167 $ -- $ 46,167 $ -- $ 46,167
Accounts payable .......................... 73,360 (3,100)(b) 70,260 (4,708)(h) 65,552
Accrued expenses .......................... 166,088 32,557(c) 199,028 30,546(i) 229,574
-------- -------- -------- -------- --------
Total Current Liabilities ................. 285,615 29,457 315,455 25,838 341,293
Long-Term Debt ............................ 114,863 -- 114,863 -- 114,863
Long-Term Liabilities ..................... 103,237 3,391(d) 106,628 (281)(h) 106,347
Total Stockholders' Equity ................ 328,388 44,309(e) 372,314 39,679(j) 411,993
-------- -------- -------- -------- --------
Total Liabilities and Equity .............. $832,103 $ 77,157 $909,260 $ 65,236 $974,496
======== ======== ======== ======== ========
</TABLE>
(a) To record the net cash proceeds from the Rotron transaction.
(b) To eliminate the assets and liabilities of the Rotron division.
(c) To record the accrued income taxes due to the Rotron transaction and
liabilities assumed as part of this transaction, net of liabilities
transferred to buyer.
(d) To record deferred income resulting from the Rotron transaction, net of
liabilities transferred to buyer.
(e) Represents after tax gain realized on the Rotron transaction.
(f) Pro Forma balance sheet excluding the Rotron division.
(g) To record the net cash proceeds from the Sealol Industrial Seals
transaction.
(h) To eliminate the assets and liabilities of the Sealol Industrial Seals
division.
(i) To record the accrued income taxes due to the Sealol Industrial Seals
transaction and liabilities assumed as part of this transaction, net of
liabilities transferred to buyer.
(j) Represents estimated after tax gain of $33 million and effects of
translation on the Sealol Industrial Seals transaction.
(k) Pro Forma balance sheet excluding the Rotron and Sealol Industrial Seals
divisions.
<PAGE>
<TABLE>
Pro Forma Financial Information
EG&G, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 28, 1997
(Unaudited)
<CAPTION>
Sealol
Industrial
Rotron Seals
Pro Forma Pro Forma
(In thousands except per share data) Historical Adjustments(a) Pro Forma(b) Adjustments(c) Pro Forma(d)
---------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Sales ...................................... $1,460,805 $(70,208) $1,390,597 $(88,029) $1,302,568
---------- -------- ---------- -------- ----------
Costs and Expenses:
Cost of sales .............................. 1,084,691 (44,669) 1,040,022 (51,086) 988,936
Research and development
expenses ............................... 44,907 (1,330) 43,577 (1,329) 42,248
Selling, general and administrative
expenses ............................... 243,409 (12,284) 231,125 (24,255) 206,870
Asset impairment charge .................... 28,200 -- 28,200 -- 28,200
---------- -------- ---------- -------- ----------
Total Costs and Expenses ................... 1,401,207 (58,283) 1,342,924 (76,670) 1,266,254
---------- -------- ---------- -------- ----------
Operating Income From Continuing
Operations .............................. 59,598 (11,925) 47,673 (11,359) 36,314
Other Income (Expense), Net ................. (5,572) -- (5,572) 85 (5,487)
---------- -------- ---------- -------- ----------
Income From Continuing Operations
Before Income Taxes ..................... 54,026 (11,925) 42,101 (11,274) 30,827
Provision for Income Taxes .................. 23,381 (4,770) 18,611 (1,721) 16,890
---------- -------- ---------- -------- ----------
Income From Continuing Operations ........... $ 30,645 $ (7,155) $ 23,490 $ 9,553 $ 13,937
========= ======== ========== ======== =========
Basic and Diluted Earnings
Per Share - Continuing Operations ....... $ .67(e) $ (.16) $ .51 $ (.21) $ .30(e)
========= ======== ========== ======== =========
Weighted Average Shares of
Common Stock Outstanding:
Basic .............................. 45,757 45,757 45,757 45,757 45,757
Diluted ............................ 45,898 45,898 45,898 45,898 45,898
</TABLE>
(a) To eliminate the results of operations of the Rotron division.
(b) Pro Forma results of operations excluding the Rotron division.
(c) To eliminate the results of operations of the Sealol Industrial Seals
division.
(d) Pro Forma results of operations excluding the Rotron and Sealol Industrial
Seals divisions.
(e) Before the $28.2 million asset impairment charge, historical basic and
diluted earnings from continuing operations were $1.18 per share. On a pro
forma basis, the comparable earnings would be $.81 per share.
<PAGE>
Exhibit 2.1
MASTER PURCHASE AGREEMENT
among
EG&G, INC.
EG&G BENELUX B.V.
EG&G CANADA LIMITED
EG&G DO BRASIL LTDA.
EG&G GMBH
EG&G HOLDINGS, INC.
EG&G LTD.
EG&G SEALOL, INC.
EG&G S.A.
EG&G SPA
WELLESLEY INTERNATIONAL C.V.
and
TI GROUP PLC
TI S.A.
Dated as of February 6, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I Purchase, Sale and Lease of Assets Page
Section 1.1 Pre-Closing Restructuring........................................3
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Section 1.2 Share Transactions...............................................3
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Section 1.3 Asset Transaction................................................4
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Section 1.4 Excluded Assets..................................................4
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Section 1.5 Assumed Liabilities..............................................5
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Section 1.6 Alternative Arrangements.........................................7
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Section 1.7 Purchaser's Designees............................................9
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Section 1.8 Purchase Price...................................................9
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Section 1.9 Closing..........................................................9
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Section 1.10 Purchase Price Allocation.......................................11
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Section 1.11 Post-Closing Adjustment.........................................11
-----------------------
Section 1.12 Audit and Other Expenses........................................13
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<PAGE>
ARTICLE II Representations and Warranties Page
Section 2.1 Certain Representations and Warranties of EG&G Relating to the
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Business........................................................13
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(a) Organization and Qualification of EG&G,
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Affiliates and Acquired Companies......................13
---------------------------------
(b) Authorization of Agreement.............................14
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(c) Non-Contravention......................................14
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(d) Title to and Condition of Assets.......................14
--------------------------------
(e) Title to Shares........................................15
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(f) Authorized Capital.....................................15
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(g) Certain Financial Information..........................16
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(h) Absence of Certain Changes in Business.................16
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(i) Committed Capital Expenditures.........................19
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(j) Certain Tax Matters....................................19
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(k) Contracts..............................................20
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(l) Compliance with Laws; Permits..........................21
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(m) Regulatory Approvals...................................21
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(n) Litigation.............................................22
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(o) Environmental Matters..................................22
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(p) Product Liability......................................23
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(q) Insurance..............................................23
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(r) Absence of Undisclosed Liabilities and Agreements......24
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(s) Prepayments............................................24
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(t) Suppliers..............................................24
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(u) Employee Matters.......................................25
----------------
(v) OSHA and Similar Matters...............................29
------------------------
(w) Intellectual Property..................................29
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(x) Entire Interest; All Assets............................32
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(y) Insider Interests......................................33
-----------------
(z) Administration.........................................33
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(aa) Brokers, Finders, Etc..................................33
----------------------
(bb) Inventory..............................................33
---------
(cc) Accounts Receivable....................................33
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(dd) Disclaimer of Other Representations and
---------------------------------------
Warranties; Knowledge; Disclosure......................34
---------------------------------
<PAGE>
Section 2.2 Representations and Warranties of Purchaser.....................35
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(a) Organization and Qualification of Purchaser............35
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(b) Authorization of Agreement.............................35
--------------------------
(c) Non-Contravention......................................35
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(d) Litigation.............................................36
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(e) Filings, Consents......................................36
-----------------
(f) Brokers, Finders, Etc..................................36
----------------------
(g) Investment.............................................36
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(h) Disclaimer of Other Representations and
---------------------------------------
Warranties; Knowledge; Disclosure......................36
---------------------------------
ARTICLE III Additional Agreements
Section 3.1 Conduct of Business.............................................37
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Section 3.2 Access and Information..........................................40
----------------------
Section 3.3 No Solicitation.................................................41
---------------
Section 3.4 Cooperation, Further Actions....................................43
----------------------------
Section 3.5 Governmental Approvals..........................................43
----------------------
Section 3.6 Taxes...........................................................44
-----
Section 3.7 Bulk Transfer Laws..............................................46
------------------
Section 3.8 Resale Certificates.............................................46
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Section 3.9 Record Retention and Access.....................................47
---------------------------
Section 3.10 Public Disclosure...............................................47
-----------------
Section 3.11 Other Offers....................................................47
------------
Section 3.12 Confidentiality.................................................48
---------------
Section 3.13 Cooperation in Litigation.......................................49
-------------------------
Section 3.14 Insurance Matters...............................................49
-----------------
Section 3.15 Licensing of Certain Intellectual Property......................49
------------------------------------------
Section 3.16 Noncompete......................................................50
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<PAGE>
ARTICLE IV Conditions Page
Section 4.1 Conditions to the Obligations of Purchaser and Sellers.,,.......51
------------------------------------------------------
Section 4.2 Conditions to Obligations of Purchaser..........................53
--------------------------------------
Section 4.3 Conditions to Obligations of Sellers............................54
------------------------------------
Section 4.4 Receipt of Consents.............................................55
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ARTICLE V Employee Benefits and Personnel Matters Page
Section 5.1 United States...................................................55
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Section 5.2 England.........................................................57
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Section 5.3 Canada..........................................................59
------
Section 5.4 Ireland.........................................................60
-------
Section 5.5 Other Countries and Jurisdictions...............................64
---------------------------------
<PAGE>
ARTICLE VI Survival; Indemnification
Section 6.1 Survival; Certain Definitions...................................66
-----------------------------
Section 6.2 Indemnification Obligations of Sellers..........................66
--------------------------------------
Section 6.3 Indemnification Obligations of Purchaser........................68
----------------------------------------
Section 6.4 Matters Involving Third Parties.................................68
-------------------------------
Section 6.5 Certain Limitations on Losses...................................71
-----------------------------
Section 6.6 Enforcement of Insurance Claims.................................72
-------------------------------
Section 6.7 Indemnity Payments..............................................72
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Section 6.8 Indemnification Exclusive Remedy................................73
--------------------------------
<PAGE>
ARTICLE VII Termination Page
Section 7.1 Termination Rights..............................................74
------------------
Section 7.2 Exercise of Termination Rights..................................75
------------------------------
Section 7.3 Effect of Termination...........................................75
---------------------
Section 7.4 Notice of Developments..........................................75
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ARTICLE VIII General Provisions Page
Section 8.1 Expenses........................................................75
--------
Section 8.2 Modifications; Waiver...........................................76
---------------------
Section 8.3 Entire Agreement................................................76
----------------
Section 8.4 No Third Party Beneficiaries; Assignment........................76
----------------------------------------
Section 8.5 Governing Law...................................................77
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Section 8.6 Consent to Jurisdiction; Service of Process.....................77
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Section 8.7 Certain Names...................................................79
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Section 8.8 Severability....................................................80
------------
Section 8.9 Notices.........................................................80
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Section 8.10 Counterparts....................................................81
------------
Section 8.11 EG&G and Purchaser to Guarantee Performance.....................82
-------------------------------------------
Section 8.12 Suspensory Clause...............................................82
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ARTICLE IX Definitions and Interpretation Page
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Section 9.1 Certain Definitions.............................................82
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Section 9.2 Interpretation..................................................88
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<PAGE>
Annexes
- - -------
Annex A-1 Sale of Acquired Companies
Annex A-2 Sale of Sealol Assets
Annex B Form of Assumption Agreement
Annex C Purchase Price Allocation
Annex D Terms of Facilities Sharing Agreements and Leases
Annex E Form of Lease
Annex F Terms of R&D Agreement
Annex G Terms of MDC Bellows Supply Agreement
<PAGE>
This MASTER PURCHASE AGREEMENT, dated as of February 6, 1998,
is entered into among EG&G, Inc., a Massachusetts corporation ("EG&G"), EG&G
Benelux B.V., a corporation organized under the laws of the Netherlands ("Sealol
Netherlands"), EG&G Canada Limited, a corporation organized under the laws of
Canada ("Sealol Canada"), EG&G do Brasil Ltda., a corporation organized under
the laws of Brazil ("Sealol Brazil"), EG&G GmbH, a corporation organized under
the laws of Germany ("Sealol Germany"), EG&G Holdings, Inc., a Massachusetts
corporation ("EG&G Holdings"), EG&G Ltd., a corporation organized under the laws
of England and Wales ("Sealol U.K."), EG&G Sealol, Inc., a Delaware corporation
("Sealol U.S."), EG&G S.A., a corporation organized under the laws of France
("Sealol France"), EG&G SpA, a corporation organized under the laws of Italy
("Sealol Italy"), Wellesley International C.V., a Netherlands limited
partnership with EG&G as the managing partner ("Wellesley") (all of the
foregoing being collectively the "Sellers", and each are individually, a
"Seller"), on the one hand, and TI Group plc, a public limited company organized
under the laws of England ("Purchaser"), and TI S.A., a societe anonyme
organized under the laws of France ("TISA"), on the other hand. Certain
capitalized terms used herein are defined in Section 9.1.
WHEREAS, EG&G's Sealol Industrial Seals Division, as its
business is conducted currently through certain direct and indirect subsidiaries
of EG&G, is engaged in the business of developing, manufacturing, purchasing for
resale, marketing, selling, and servicing mechanical seals and a variety of
mechanical components primarily for petrochemical, chemical refining,
refrigeration compression, gas transmission, and oil and gas exploration
applications, but not for applications primarily used in the aerospace or
semiconductor fields (such business, as so conducted being referred to herein as
the "Business");
<PAGE>
WHEREAS, EG&G Holdings and EG&G International, Ltd., a
corporation organized under the laws of the Cayman Islands ("EG&G
International"), together own all of the outstanding share capital of EG&G
Sealol Ltd. ("Sealol Egypt"), EG&G Holdings owns all of the outstanding share
capital of EG&G E.C. ("Sealol Bahrain"), Wellesley owns all of the outstanding
share capital of EG&G International, Sealol U.S. owns all of the outstanding
share capital of Sealol S.A. ("Sealol Venezuela"),(Sealol Egypt, Sealol Bahrain,
EG&G International, Sealol Venezuela and French Newco (as defined below) being
collectively referred to herein as the "Acquired Companies" and EG&G Holdings,
Wellesley, EG&G International, Sealol U.S. and Sealol France, being collectively
referred to herein as the "Sealol Stockholders");
<PAGE>
WHEREAS, Sealol U.S., Sealol Canada, Sealol France, Salol
Germany, Sealol Italy, Sealol Netherlands, Sealol U.K. and Sealol Brazil
(collectively the "Sealol Asset Group") collectively own or lease all of the
Purchased Assets;
WHEREAS, Sealol France shall form under the laws of France a
societe anonyme or a societe a responsibilite limitee wholly owned by Sealol
France ("French Newco") and shall, prior to the Closing Date, transfer all of
Sealol France's assets which are Purchased Assets and all of Sealol France's
liabilities which are Assumed Liabilities to French Newco;
WHEREAS, Purchaser and TISA desire to purchase and acquire
from the Sealol Stockholders all of the outstanding shares of capital stock of
the Acquired Companies (the "Shares"), and EG&G desires to sell to Purchaser and
TISA all such Shares, on the terms and subject to the conditions set forth
herein;
WHEREAS, Purchaser desires to purchase and acquire from the
Sealol Asset Group all of their respective right, interest and title in and to
all properties, assets and rights primarily related to, primarily used in,
dedicated to, or otherwise necessary to the conduct of the Business as presently
conducted by the Sealol Asset Group, and the Sealol Asset Group desires to sell
and assign such properties, assets and rights to Purchaser;
WHEREAS, Purchaser desires to purchase any and all of the
rights, interest and title in and to properties, assets and rights primarily
related to, primarily used in, dedicated to, or otherwise necessary to the
conduct of the Business by EG&G and its direct or indirect subsidiaries, whether
or not owned or leased by any Acquired Company or any member of the Sealol Asset
Group, and EG&G desires to sell and assign such properties, assets and rights to
Purchaser; and
WHEREAS, EG&G and Purchaser desire to enter into certain
ongoing service, supply, facilities sharing, license and other agreements that
will continue after the consummation of the transactions described above.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual agreements set forth herein, the parties agree as follows:
<PAGE>
ARTICLE I
Purchase, Sale and Lease of Assets
----------------------------------
1.1 Pre-Closing Restructuring.
(a) Prior to Closing, Sealol France shall form French Newco
under the laws of France. Sealol France shall thereafter (i) sell, transfer,
convey and assign to French Newco all of the assets of Sealol France that are
Purchased Assets and (ii) transfer, convey and assign to French Newco all
liabilities of Sealol France that are Assumed Liabilities. French Newco shall
assume, and indemnify and hold Sealol France harmless from, any Losses with
respect to such Assumed Liabilities.
(b) Prior to Closing, EG&G shall cause one or more of its
Affiliates to either transfer, convey or assign or distribute, to EG&G Holdings
or to one or more Affiliates of EG&G, out of EG&G International all assets that
are not primarily related to, primarily used in or dedicated to, or otherwise
necessary to the conduct of, the Business and any liabilities that are not
Assumed Liabilities. EG&G and its Affiliates shall assume, and indemnify and
hold EG&G International and the Purchaser harmless, from any Losses with respect
to such liabilities of EG&G International that are not Assumed Liabilities.
(c) Prior to Closing, Sellers shall take all actions required
to ensure that at Closing none of the Acquired Companies will hold, or in any
way be liable or responsible for (whether as obligor, guarantor, surety or
otherwise), any Indebtedness.
All of the transactions contemplated by this Section 1.1 shall
be in form and substance reasonably satisfactory to EG&G and Purchaser.
<PAGE>
1.2 Share Transactions. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Sealol Stockholders
shall sell, transfer, convey and assign to Purchaser and Purchaser's Affiliates
(as designated pursuant to Section 1.7), and Purchaser and Purchaser's
Affiliates shall purchase and accept from the Sealol Stockholders, all of the
Sealol Stockholders' respective right, title and interest in and to the Shares
(other than the Shares of French Newco) and TISA shall purchase and accept from
Sealol France all of its right, title and interest in and to the Shares of
French Newco, in each such case free and clear of any and all Encumbrances,
except for Encumbrances that are disclosed in the Sellers' Disclosure Schedule,
all as described more fully on Annex A-1 to this Agreement. On the terms and
subject to the conditions set forth in this Agreement, at the Closing, the
Sealol Stockholders shall assign to Purchaser or to Purchaser's Affiliates, as
the case may be, all Contracts relating to the ownership of the Shares, free and
clear of any and all Encumbrances, except for Encumbrances that are disclosed in
the Sellers' Disclosure Schedule.
1.3 Asset Transaction.
(a) On the terms and subject to the conditions set forth in
this Agreement, at the Closing, (i) the Sealol Asset Group (other than Sealol
France) shall each sell, transfer, convey and assign to Purchaser and its
Affiliates (as designated pursuant to Section 1.7) and (ii) Purchaser and
Purchaser's Affiliates shall purchase and accept from the Sealol Asset Group
(other than Sealol France), all as described more fully on Annex A-2 to this
Agreement, all of the Sealol Asset Group's (other than Sealol France's)
respective right, title and interest in and to the Purchased Assets, as the same
shall exist on the Closing Date, free and clear of any and all Encumbrances,
except for (x) Encumbrances that are disclosed in the Sellers' Disclosure
Schedule and (y) mechanics', carriers', workers', repairers', suppliers' and
other similar liens relating to the Business arising or incurred by the Sealol
Asset Group (other than Sealol France) in the ordinary course of business
consistent with past practice, and that are not and cannot reasonably be
expected, individually and in the aggregate, to be material with respect to the
Business.
(b) At the Closing, EG&G shall, and shall cause its Affiliates
to, sell transfer, convey and assign to Purchaser and its Affiliates (as
designated pursuant to Section 1.7) and Purchaser and Purchaser's Affiliates
shall purchase and accept from EG&G and its Affiliates all right, title and
interest of EG&G and its Affiliates in all Sealol Assets (if any) that are not
owned, held, leased or licensed by the Sealol Asset Group.
1.4 Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, Purchaser and Sellers agree that the following
properties, assets and rights (the "Excluded Assets") are expressly excluded
from the purchase and sale contemplated under this Agreement and, as such, are
not included in the Purchased Assets:
(i) the rights of Sellers under this Agreement;
(ii) the Tax attributes of the Sealol Asset Group (including,
but not limited to, any Tax refund, other than a Tax refund with
respect to Operating Taxes that are reflected in the Final Balance
Sheet);
<PAGE>
(iii) except as disclosed in Schedule 1.4(iii) to this
Agreement or as contemplated by the Transitional Leases (as defined in
Section 4.1(e)) or Facilities Sharing Agreement (as defined in Section
4.1(c)), all agreements, arrangements and understandings relating to
any central office or other administrative services provided to the
Business by or on behalf of EG&G or any of its Affiliates that is not
an Acquired Company, and all related office equipment and furniture
used to provide such services;
(iv) all other properties, assets and rights owned on the
Closing Date by EG&G or its Affiliates (other than the Acquired
Companies) that are not Purchased Assets, including, without
limitation, those patents listed in Schedule 1.4(iv) to this Agreement
(the "Retained Patents");
(v) the real property owned or leased by the Sealol Asset
Group that is not included within the Purchased Assets;
(vi) all cash, short-term investments, bank accounts and
traded securities held by or for the Business;
(vii) all rights under the contracts, agreements and
instruments identified in Schedule 1.4(vii) to this Agreement; and
(viii) the equipment and personal property of the Sealol Asset
Group identified in Schedule 1.4(viii) to this Agreement.
Section 1.5.
On the terms and subject to the conditions set forth in this Agreement and
subject to the exclusions set forth below in this Section 1.5, at the Closing
Purchaser shall assume and agree to pay, discharge and perform as and when due
all Liabilities of EG&G and its Affiliates:
(i) arising under all executory Contracts that are included
in the Purchased Assets (excluding (a) any liability or obligation in
respect of any breach of any such executory Contract occurring or
arising prior to the Closing and (b) any pension or benefit plan
liability unless specifically assumed by Purchaser pursuant to Article
V);
(ii) relating to the Business and reflected on the Balance
Sheet (as defined in Section 2.1(g)), to the extent they have not been
paid or discharged prior to the Closing;
<PAGE>
(iii) incurred in connection with the conduct of the Business
since September 28, 1997 in the ordinary course of business consistent
with past practice, in accordance with the terms of this Agreement, and
which are of the same type as those reflected on the Balance Sheet, to
the extent such Liabilities have not been paid or discharged prior to
Closing; provided that for the avoidance of doubt this clause (iii)
shall not include any Liabilities which relate to any breach of
contract, breach of warranty (except as provided in the immediately
succeeding clause (iv)), tort, infringement or violation of law or
regulation, or which arise out of any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand;
(iv) for product warranty claims for products manufactured or
sold by the Business prior to the Closing, in each case, however, only
to the extent such claims are not subject to indemnification of
Purchaser pursuant to Section 6.2(a) hereof as a result of the
inaccuracy, breach or violation of any of the representations or
warranties made by Sellers pursuant to this Agreement;
(v) that are related to employee benefits and personnel
matters and are specifically assumed by Purchaser pursuant to Article V
of this Agreement; and
(vi) relating to the Business and incurred or arising from
acts occurring on or after the Closing Date, except as otherwise
provided in Section 3.6 relating to Taxes and related fees.
<PAGE>
The foregoing, for purposes of this Agreement, are hereinafter collectively
referred to as "Assumed Liabilities". Subject to the preceding sentences,
Purchaser shall not assume any Liabilities (the "Excluded Liabilities") (a)
related to the Purchased Assets existing at Closing, including, without
limitation, those enumerated in Section 3.6 or those that relate to any of the
Compensation and Benefit Plans or Employee Benefits of EG&G or its Affiliates
(in the case of such Compensation and Benefit Plans or Employee Benefits whether
arising from acts occurring prior to or after the Closing), other than in the
case of any of the preceding, to the extent such liabilities and obligations are
reflected on the Balance Sheet or are otherwise identified as Assumed
Liabilities above, (b) that arise from or relate to any Excluded Asset, (c)
relating to Indebtedness of the Sealol Asset Group, (d) for product liability
claims arising from or relating to any product manufactured, sold, supplied or
delivered by the Business that are outstanding or threatened prior to or at the
time of the Closing, (e) for Taxes (other than Taxes reflected in the Final
Balance Sheet) attributable to any period (or portion thereof) prior to Closing,
(f) except for those Liabilities that are expressly identified as Assumed
Liabilities under clauses (i) through (vi) above, that otherwise arise from or
relate to any circumstance, action, omission, event or condition existing prior
to, or at the time of, the Closing or (g) related to the Termination Agreement
(as defined below).
Section 1.6. Alternative Arrangements
(a) Notwithstanding anything contained herein to the contrary,
to the extent any executory Contract, including but not limited to any Contract
with or from a Governmental Entity, included in the Business is not assignable
to Purchaser without the consent of or a waiver by another party or a
Governmental Entity, Sellers and Purchaser will use their reasonable best
efforts to obtain such consent or waiver; but nothing in this Agreement shall
constitute an assignment or attempted assignment of any such executory Contract
if such assignment or attempted assignment would adversely affect the rights of
Purchaser or any Seller thereunder or would constitute a breach or violation of
such Contract. If any such consent or waiver is not obtained, Sellers shall
cooperate with Purchaser in arrangements that provide for Purchaser all of the
benefits of such Contract (subject to the liabilities and obligations associated
therewith), including, where appropriate, enforcement for the benefit of
Purchaser of rights of EG&G or its Affiliates against the other party thereto
arising out of the cancellation by such other party or otherwise, or appointing
Purchaser and its Affiliates as the true and lawful attorneys-in-fact of EG&G
and its Affiliates for purposes of performing under or enforcing rights with
respect to such Contracts. None of the Sellers or Purchaser shall have any
obligation hereunder to pay any consent or waiver fee to any third party to
obtain such third party's consent or waiver to effect the assignment of any such
Contract.
(b) Purchaser and Sellers agree that transfer, sale and
purchase of the Shares and Purchased Assets shall be made pursuant to this
Agreement, provided that Sellers and Purchaser may agree prior to Closing that
EG&G shall, or cause one or more of its Affiliates, to sell and transfer, to
Purchaser, and Purchaser shall, or cause one of its Affiliates to, purchase from
EG&G or one of its Affiliates, any of the Purchased Assets and/or Shares
pursuant to the terms of a separate agreement or instrument, or separate
agreements or instruments between the Purchaser and EG&G, or any of their
respective Affiliates, relating only to such Purchased Assets and/or Shares.
<PAGE>
(c) Sellers shall pay to Purchaser, by wire transfer of
immediately available funds, the $900,000 to be received by Sealol U.S. for the
sale of its interest in 20% of the outstanding share capital (the "SHL shares")
of Sealol Hindustan Limited, a corporation organized under the laws of India
("Sealol India"), pursuant to the Termination Agreement, dated January 19, 1998
(the "Termination Agreement"), between Sealol U.S. and Sealol India. Such
payment shall be made by Sellers within five (5) Business Days of its receipt by
Sellers; provided, that if Sellers receive less than $900,000 in respect of
Sealol India, Sellers shall pay all such lesser amounts to Purchaser within five
(5) Business Days of receipt and, provided further, that if within six (6)
months of the Closing Date Sellers shall have not received the full $900,000
owing under the Termination Agreement, Sellers and Purchaser shall negotiate in
good-faith to assign to Purchaser or one of its Affiliates the SHL Shares and to
provide Purchaser the ability to recover any remaining unpaid portion of such
$900,000. In the event that prior to Closing Purchaser shall enter into an
agreement with the shareholders of Sealol India, other than the Sellers,
permitting it to purchase the SHL Shares, Sellers shall agree to terminate the
Termination Agreement and Sellers and Purchaser shall negotiate in good-faith to
agree upon the purchase price of the SHL Shares, taking into account any other
amounts required to be paid by Purchaser or its Affiliates to Sealol India or
its shareholders (other than Sellers). Without the prior written consent of
Purchaser, prior to the Closing none of the Sellers or any of their Affiliates
shall (i) amend, modify or supplement, enter into any further settlement or
grant any waiver, forgiveness or extension in respect of, the Termination
Agreement or any other agreement, arrangement or understanding with Sealol India
or any shareholder, other than Sealol U.S., of Sealol India (or any Affiliate of
any such shareholder) in respect of Sealol India or the Business or (ii) enter
into any new agreement, arrangement or understanding with Sealol India or any
shareholder, other than Sealol U.S., of Sealol India (or any Affiliate of any
such shareholder) in respect of Sealol India or the Business, other than in
either case with respect to the supply arrangements contemplated under Section 4
of the Termination Agreement, which supply arrangements shall be subject to the
terms and conditions of such Section 4 of the Termination Agreement and the
other provisions of this Agreement. For the avoidance of doubt, it is hereby
acknowledged and agreed that the Termination Agreement is included within the
Purchased Assets and will be assigned by Sellers to Purchaser at Closing.
<PAGE>
(d) If EG&G, directly or indirectly through one of its
subsidiaries, sells all or any portion of its interest in EG&G Sealol Eagle,
Inc. ("Sealol Eagle"), within six months of the Closing Date, EG&G shall
transfer to Purchaser or one of its designees, within two Business Days of its
receipt by EG&G or any of its Affiliates, by wire transfer of immediately
available funds the greater of (x) all of the consideration received by EG&G or
any of its Affiliates for such interest in Sealol Eagle and (y) $100,000. In the
event that six months after the Closing Date EG&G or one of its Affiliates
retain an interest in Sealol Eagle, EG&G shall within five (5) Business Days
thereafter pay to Purchaser the amount of $100,000 by wire transfer of
immediately available funds.
Section 1.7. Purchaser's Designees
Upon written notice to EG&G at any time prior to the Closing
Date, Purchaser may designate one or more of its Affiliates to purchase from the
Sellers or to assume liabilities, as provided by the terms and conditions of
this Agreement, any of the Shares or any portion of the Purchased Assets.
Purchaser agrees to cause such Affiliate or Affiliates to perform its
obligations to purchase such Purchased Assets or Shares, and Purchaser agrees
absolutely, unconditionally and irrevocably to guarantee the obligations of such
Affiliate or Affiliates hereunder. Any such Affiliate designated by Purchaser
pursuant to this Section will be duly incorporated and validly existing under
its jurisdiction of incorporation and will have the requisite corporate power
and authority necessary to enter into and consummate the transactions
contemplated by this Agreement which Purchaser has designated such Affiliate to
enter into and consummate.
Section 1.8 Purchase Price
The "Purchase Price" shall be one hundred million Dollars,
($100,000,000) subject to adjustment as provided herein.
Section 1.9 Closing.
(a) The Closing shall take place on the Closing Date at the
offices of Sullivan & Cromwell, 125 Broad Street, New York, N.Y. 10004, at 10:00
a.m., local time, ten (10) Business Days after the first day on which all
conditions set forth in Sections 4.1(a), 4.1(d), 4.2(c), 4.2(d), 4.2(e) and
4.3(c) have been satisfied or waived and/or at such other time(s) and place(s)
as the parties may agree. The actual date on which the Closing shall occur is
referred to herein as the Closing Date. In carrying out the terms of this
Agreement, the parties will cooperate with each other in good faith to determine
the proper disposition of assets and liabilities at Closing and will exchange
appropriate information in this regard.
(b) At the Closing the following events shall occur, each
event being deemed to have occurred simultaneously with the other events:
<PAGE>
(i) Sellers shall deliver, or cause to be delivered, to
Purchaser such deeds, bills of sale, assignments, affidavits,
instruments of conveyance, and other instruments and certificates, and
all books and records, as are necessary and reasonably requested by
Purchaser to consummate the transfer of all of the Purchased Assets to
Purchaser as contemplated by this Agreement. All Purchased Assets shall
be deemed delivered at the locations where they are used in the
Business immediately prior to the Closing Date;
(ii) Sellers shall deliver, or cause to be delivered, to
Purchaser or to its Affiliates (as designated pursuant to Section 1.7)
and to TISA, in the case of French Newco, certificates, and/or other
applicable instruments, representing all of the Shares, duly endorsed
for transfer to Purchaser;
(iii) Purchaser shall deliver, or cause to be delivered, to
EG&G, for the account of all of the Sellers, by one or more wire
transfers made by Purchaser of immediately available funds in United
States dollars to such account or accounts as shall have been specified
by EG&G for such purpose not later than two (2) Business Days before
the Closing Date, the Purchase Price (it being understood that the
portion of the Purchase Price attributable to the Shares of French
Newco shall be so delivered by TISA), reduced by the amount of any
withholding tax required to be withheld by Purchaser and subject to any
other adjustments that the parties agree to make taking into account
the cash position, indebtedness or tax position of the Business at
Closing;
(iv) Purchaser shall deliver to EG&G such instruments of
assumption in the form attached hereto as Annex B (with appropriate
changes thereto resulting from the nature of the liabilities to be
assumed and the particular jurisdictions involved) as are necessary and
reasonably requested by EG&G to effectuate the assumption by Purchaser
of the Assumed Liabilities;
(v) the Sellers shall execute and deliver to Purchaser one or
more assignments in a form or forms reasonably requested by Purchaser
to effect the sale, transfer, conveyance and assignment of the patents
and patent applications included within the Purchased Assets;
<PAGE>
(vi) the Sellers shall execute and deliver to Purchaser one or more
assignments in a form or forms reasonably requested by Purchaser to
effect the sale, transfer, conveyance and assignment of the trademarks,
registrations and applications therefor included within the Purchased
Assets; and
(vii) the Sellers shall execute and deliver to Purchaser one or more
assignments in a form or forms reasonably requested by Purchaser to
effect the sale, transfer, conveyance and assignment of the registered
copyrights included within the Purchased Assets.
Section 1.10. Purchase Price Allocation
It is agreed that for purposes of the Closing,and for purposes
of the deliveries contemplated pursuant to this Agreement, the Purchase Price
shall be allocated among, and paid in respect of, the parts of the Business
including among Shares and Purchased Assets to be sold, assigned, transferred
and conveyed pursuant to this Agreement and to any agreement or agreements
between Purchaser and EG&G pursuant to Sections 1.6(b), 1.6(c) and 1.6(d), in
each case as provided in Annex C to this Agreement, subject to any adjustments
pursuant to the terms of this Agreement or the mutual consent of EG&G and
Purchaser. Any adjustment pursuant to the terms of this Agreement shall be
allocated on a pro rata basis among the Purchased Assets and the assets of the
Acquired Companies relating to the Business, unless the parties agree otherwise.
Purchaser, TISA and Sellers shall utilize the allocation provided in Annex C in
the preparation of IRS Form 8594 and any equivalent foreign tax forms, and shall
timely file with the appropriate Taxing authority copies of such forms.
Section 1.11 Post-Closing Adjustment
EG&G has prior to the date hereof delivered to Purchaser
the Balance Sheet.
<PAGE>
From the Closing and until sixty (60) days after the Closing
Date, Purchaser shall prepare a balance sheet relating to the Business as of the
Closing Date in accordance with U.S. generally accepted accounting standards
("GAAP"), applied on a basis consistent with that used to prepare the Balance
Sheet. The cost of preparing such balance sheet shall be borne by Purchaser.
Purchaser shall deliver such balance sheet, together with an explanation in
reasonable detail of any significant differences from the Balance Sheet
(collectively, the "Closing Balance Sheet"), to EG&G on or before the close of
business on the sixtieth (60th) day after the Closing Date. EG&G shall have
until the one hundred twentieth (120th) day after the Closing Date to review the
Closing Balance Sheet and Purchaser shall give EG&G reasonable access to the
properties, books and records of the Business for such purpose and to any work
papers of any auditors used by Purchaser in connection with the preparation of
the Closing Balance Sheet. Any disagreement regarding the Closing Balance Sheet
shall be resolved by one of the following accounting firms selected by and
mutually acceptable to Purchaser's and EG&G's independent auditors (the
accounting firm so engaged shall be hereinafter referred to as the "Independent
Accounting Firm"): (i) Deloitte & Touche LLP and (ii) Ernst & Young LLP, or in
default of agreement, the first named. The determination of the Independent
Accounting Firm shall bemade as promptly as practicable and shall be final,
binding upon the parties and nonappealable. The Closing Balance Sheet as agreed
by Sellers and Purchaser or as resolved by the Independent Accounting Firm is
hereafter referred to as the "Final Balance Sheet." Any fees and expenses
relating to the engagement of the Independent Accounting Firm shall be borne
equally by Purchaser and EG&G.
If net assets as reflected in the Final Balance Sheet areless
than $16,685,000, then the deductible set forth in Section 6.5 hereof in respect
of EG&G's indemnification obligations to Purchaser for breaches of
representations and warranties shall be adjusted downward (but not to less than
zero) to the extent net assets reflected in the Final Balance Sheet are less
than $16,685,000; provided, however, that if net assets reflected in the Final
Balance Sheet are less than $15,185,000, then the Purchase Price shall be
adjusted downward by the amount that net assets reflected in the Final Balance
Sheet are less than $15,185,000 and the deductible set forth in Section 6.5(a)
hereof shall be reduced to zero. If net assets as reflected in the Final Balance
Sheet exceed $20,393,000, then the deductible set forth in Section 6.5(a) hereof
shall be increased by the amount of such excess; provided, however, that if net
assets as reflected in the Final Balance Sheet exceed $21,892,000, then the
Purchase Price shall be adjusted upward to the extent the net assets in the
Final Balance Sheet exceed $21,892,000 and the deductible set forth in Section
6.5(a) shall be increased to $3,000,000. For the purpose of the preceding two
sentences, net assets reflected in the Final Balance Sheet shall be computed
without regard to any Taxes (other than Operating Taxes) reflected in the Final
Balance Sheet. Notwithstanding the foregoing, the Purchase Price shall be
reduced by the amount of any Taxes (other than Operating Taxes) reflected in the
Final Balance Sheet. To the extent the Purchase Price shall be adjusted as
provided in the preceding sentences, EG&G or Purchaser, as the case may be,
shall within one hundred twenty (120) days after the Closing Date or, if
applicable, within three (3) Business Days of the determination of the
Independent Accounting Firm, make payment to Purchaser or EG&G, as the case may
be, by wire transfer in immediately available funds of the amount of such
adjustment, together with interest thereon at the Stipulated Rate calculated on
the basis of the actual number of days elapsed between the Closing Date and the
date of such reimbursement.
<PAGE>
Section 1.12 Audit and Other Expenses
Except as to the expenses to be paid by Purchaser, or to be
shared equally by Purchaser and EG&G pursuant to Section 1.11 hereof and as
otherwise expressly provided for in this Agreement, Purchaser and the Sellers
shall each be responsible for the fees and expenses of their respective
accountants, legal and other advisors and experts.
ARTICLE II
Representations and Warranties
------------------------------
Section 2.1 Certain Representations and Warranties of EG&G
Relating to the Business. Sellers represent and warrant to Purchaser (it being
understood, however, that with respect to Sellers other than EG&G such
representations and warranties are made severally only and not jointly) that the
statements contained in this Section 2.1 are true and correct, except as set
forth on the disclosure schedule delivered by EG&G to the Purchaser prior to
execution of this Agreement (the "Sellers' Disclosure Schedule"). The Sellers'
Disclosure Schedule shall be arranged in sections corresponding to the numbered
and lettered sections and subparagraphs contained in this Section 2.1, and the
disclosures in any section of the Sellers' Disclosure Schedule shall qualify any
other section in this Article II to the extent that the section of the Sellers'
Disclosure Schedule corresponding to such other section clearly cross-references
such qualifying section of the Sellers' Disclosure Schedule.
(a)Organization and Qualification of EG&G, Affiliates and
Acquired Companies and Qualification of EG&G, Affiliates and Acquired Companies.
Each Seller and each of the Acquired Companies has been duly organized, and is
validly existing and in good standing (in such jurisdictions where such concept
is applicable) under the laws of the jurisdiction of its organization and has
full power and authority to conduct that portion of the Business it presently
conducts and to own or lease and operate that portion of the Sealol Assets it
now owns or leases and operates. Each Seller and each of the Acquired Companies
is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions where the activities conducted by it or the nature
of the assets or properties owned or leased by it make such qualification
necessary and the absence of such qualification could reasonably be expected to
result in, individually or in the aggregate, a Material Adverse Effect. The
parties agree that, with respect to French Newco, this representation shall be
given by Sellers only as of the Closing Date and not as of the execution of this
Agreement.
<PAGE>
(b) Authorization of Agreement of Agreement
Each Seller has all requisite corporate or partnership, as the
case may be, power and authority needed to execute, deliver and perform this
Agreement and to consummate the transactions contemplated on its part hereby.
The execution, delivery and performance by each Seller of this Agreement and the
consummation by each Seller of the transactions contemplated on its part hereby
have been duly authorized by all necessary corporate proceedings. This Agreement
has been duly and validly executed and delivered by each Seller and constitutes
a valid and binding agreement of each Seller, enforceable against such Seller in
accordance with its terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and, as to enforcement, to general equity principles.
(c). Non-Contravention-Contravention
Except as disclosed on Schedule 2.1(c) of the Sellers'
Disclosure Schedule, neither the execution, delivery and performance by any
Seller of this Agreement nor the performance or consummation on the part of any
such Seller will, with or without the giving of notice or the lapse of time, or
both, (i) conflict with, result in a breach, violation or default under or the
termination of, or require the consent of any party to, or create in any party
the right to accelerate, terminate, modify or cancel, any Material Contract
relating to the Business or any Contract relating to the Real Property; (ii)
result in the creation or imposition of any material Encumbrance upon any of the
Purchased Assets or any of the Shares pursuant to any provision of any
indenture, mortgage, lease, agreement, license or other instrument to which EG&G
or any of its Affiliates is a party or by which any of them may be bound; (iii)
violate any provision of the Certificate of Incorporation or By-laws (or similar
organizational documents) of any Seller or any Acquired Company; (iv) violate
any Law, Order or Permit other than such violations that, individually or in the
aggregate, have not resulted in and could not be considered reasonably likely to
result in, individually or in the aggregate, a Material Adverse Effect; or (v)
violate or conflict with any other material restriction to which any Seller or
any Acquired Company is subject, except for such violations or conflicts which
have not resulted in and would not be considered reasonably likely to result in,
individually or in the aggregate, a Material Adverse Effect.
<PAGE>
(d) Title to and Condition of Assets to and Condition of Assets
Except as disclosed on Schedule 2.1(d)of the Sellers' Disclosure Schedule and as
reflected in the Balance Sheet, the Sellers and the Acquired Companies are the
true and lawful owners of, and hold good and marketable title to, all of the
Sealol Assets free and clear of any and all Encumbrances, except for
Encumbrances that are not and cannot reasonably be expected to be material
either individually or in the aggregate and except for liens for Taxes not yet
due and payable. Upon the execution and delivery by the Sealol Asset Group of
the instruments of conveyance referred to in Section 1.9, the Purchaser will
become the true and lawful owner of, and will receive good and marketable title
to the Purchased Assets (other than Purchased Assets which prior to Closing have
been transferred to French Newco), free and clear of any Encumbrances. The
Sealol Assets constitute all of the tangible and intangible property primarily
related to, primarily used in, dedicated to, or otherwise necessary to the
conduct of the Business as presently conducted. The sale and assignment of the
Shares and the Purchased Assets will effectively convey to the Purchaser all of
the assets, properties and rights that are primarily related to, primarily used
in, dedicated to, or otherwise necessary to the conduct of the Business as
presently conducted. The tangible Sealol Assets have been maintained in
accordance with normal industry practice, and are in good operating condition
and repair (subject to normal wear and tear) and are suitable for the purposes
for which they presently are used. Schedule 2.1(d) contains a list of all fee
and leasehold real property interests constituting part of the Sealol Assets
(the "Real Property").
(e) Title to Shares
All of the Shares have been duly authorized and validly issued and are fully
paid and non-assessable. Except as disclosed on Schedule 2.1(e) of the Sellers'
Disclosure Schedule, Sellers own all of the Shares free and clear of any
Encumbrance or any restriction on transfer and no person (other than Purchaser
pursuant to this Agreement) has any option or other right, whether presently
exercisable or not, to acquire any of the Shares, and valid title to the Shares,
free and clear of any Encumbrance or any restriction on transfer or right of any
person by option or otherwise to acquire any of the Shares, whether presently
exercisable or not, will pass to Purchaser at the Closing. The parties agree
that with respect to the shares of capital stock of French Newco, this
representation and warranty shall be given as of the Closing only and not as of
the date of execution of this Agreement.
<PAGE>
(f) Authorized Capital
Schedule 2.1(f) of the Sellers' Disclosure Schedule hereto sets forth a true and
complete list of all of the Acquired Companies, all record and, to the knowledge
of the EG&G, beneficial owners of all outstanding capital stock of, and other
ownership interests in, each Acquired Company. Other than as disclosed on such
Schedule 2.1(f), there are no shares of capital stock of any Acquired Company
authorized, issued or outstanding. Except (i) as disclosed on such Schedule
2.1(f) or (ii) pursuant to this Agreement, there are no preemptive rights nor
any outstanding subscriptions, options, warrants, rights, convertible securities
or other agreements or commitments of any character relating to the issued or
unissued capital stock, other ownership interest or other securities of any of
the Acquired Companies. Other than as disclosed on Schedule 2.1(f) of the
Sellers' Disclosure Schedule, there are no outstanding contractual obligations
of any Seller or any Affiliate of any Seller to repurchase, redeem or otherwise
acquire at present or at any time any outstanding shares of capital stock of any
other company, corporation partnership or other entity. The parties agree that
with respect to the shares of capital stock of French Newco, this representation
and warranty shall be given as of the Closing Date only, and not as of the date
of execution of this Agreement.
(g) Certain Financial Information
Schedule 2.1(g) of the Sellers' Disclosure Schedule sets forth an unaudited
balance sheet relating to the Business as of September 28, 1997 (the "Balance
Sheet") and the unaudited statement of operating income relating to the Business
for the nine month period ended September 28, 1997 (the "Income Statement" and,
together with the Balance Sheet, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP, consistently applied
(except for the absence of footnotes, statements of changes in financial
position and net asset value, and normal year-end adjustments which could not
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect), fully and accurately set forth in all material
respects the financial condition and results of operations of the Business as of
the respective date thereof and for the period referred to therein and have been
properly derived from the books and records of the Business. The Financial
Statements reflect interdivisional accounts within the Business, and all such
interdivisional accounts net out to zero.
(h) Absence of Certain Changes in Business
Except as disclosed on Schedule 2.1(h) of the Sellers' Disclosure Schedule,
since September 28, 1997 the operations of the Business have been conducted in
the ordinary course of business consistent with past practice and no Seller or
Acquired Company has:
<PAGE>
(i) experienced or suffered any changes that have resulted
in, or could reasonably be expected to result in, individually or in
the aggregate, a Material Adverse Effect;
(ii) incurred any obligation or liability or entered into any
other transaction relating to the Business which is outside the
ordinary course of business and exceeds $100,000;
(iii) created, incurred or assumed any Liability relating to the Business
that would fall within the definition of Assumed Liabilities or that
would be a Liability of an Acquired Company which is outside the
ordinary course of business and exceeds $100,000;
(iv) made any loans or advances to, or any investment in
excess of $100,000 in, any other individual, firm or corporation that
would fall within the definition of Sealol Assets, other than in the
ordinary course of business consistent with past practice;
(v) waived or released, or experienced any lapse of, any
rights of value exceeding $100,000 relating to the Business, or
canceled, compromised, released or assigned any indebtedness owed to it
or any claims held by it that would fall within the definition of
Sealol Assets, other than in the ordinary course of business consistent
with past practice;
(vi) transferred, sold or otherwise conveyed any assets of
any type that would fall within the definition of Sealol Assets
exceeding $100,000 in the aggregate, other than in the ordinary course
of business on an arm's length basis consistent with past practice;
(vii) transferred, sold or otherwise conveyed any assets of
the Acquired Companies or any subsidiary of an Acquired Company
exceeding $100,000 in the aggregate, other than in the ordinary course
of business on an arm's length basis consistent with past practice;
(viii) mortgaged, pledged or subjected to any material
Encumbrance any Sealol Assets, or in any way created or consented to
the creation of any title condition affecting any such assets, other
than in the ordinary course of business consistent with past practice;
<PAGE>
(ix) (A) increased the rate or terms of compensation payable
or to become payable to its officers, consultants or employees who are
expected to continue to be engaged in the conduct of the Business after
the Closing Date, other than in the ordinary course of business
consistent with past practice, (B) except as required by applicable law
or in the ordinary course of business consistent with past practice,
paid or agreed to pay any pension, retirement allowance or other
employee benefit not required or permitted by any existing plan,
agreement or arrangement as the same may be amended with respect to all
participants therein to any of such officers, consultants or employees,
(C) except as required by applicable law or in the ordinary course of
business consistent with past practice, committed itself to any
additional pension, profit sharing, bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit
plan, agreement or arrangement relating to the Business or agreed to
increase the rate or terms of any such existing plan, agreement or
arrangement, which commitment or increase would bind or impose any cost
in excess of $250,000 for any such plan, agreement or arrangement, or
$1,000,000 in the aggregate, on Purchaser or any of its Affiliates
beyond the Closing Date or (D) entered into any employment or
consulting agreement with or for the benefit of any person referred to
in clause (A) above;
(x) purchased any real property relating to the Business or,
other than in the ordinary course of business on an arm's length basis
consistent with past practice, entered into any lease or terminated or
made any change in any existing lease relating to the Business;
(xi) received any notice of, or to the best of its knowledge,
become aware of any loss of any customer representing $500,000 or more
of the annual sales of any material product segment as of September 28,
1997;
(xii) made any material alteration in the manner of keeping
the books, accounts or records of the Business, or in the accounting
practices or principles therein reflected, except as required by law or
generally accepted accounting principles;
<PAGE>
(xiii) entered into or engaged in any transaction in respect of
the Business other than on commercially reasonable terms determined on
the basis of the facts existing at the time such transaction was
entered into or engaged in; or
(xiv) agreed to take or allow any of the foregoing actions.
(i) Committed Capital Expenditures
Schedule 2.1(i) of the Sellers' Disclosure Schedule sets forth the levels of
actual capital expenditures for the Business during calendar years 1996 and
1997.
(j) Certain Tax Matters
(i) No tax is required to be withheld pursuant to Section 1445
of the Code as a result of the transfer contemplated by this Agreement.
(ii) There are no liens for Taxes on any of the Sealol Assets
other than the Excluded Assets and to the knowledge of the Sellers
there is no basis for the assertion of any liens.
(iii) Except as set forth in Schedule 2.1(j), (A) all Tax
Returns that are required to be filed by or with respect to the
Acquired Companies have been duly filed and were correct and complete
in all material respects, (B) all Taxes owed or required to be withheld
and paid over by the Acquired Companies have been paid in full, (C) the
Tax Returns referred to in clause (A) have been examined by the
appropriate taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has
expired, (D) all deficiencies asserted or assessments made as a result
of such examinations have been paid in full, (E) no material issues
that have been raised by the relevant taxing authority in connection
with the examination of any of the Tax Returns referred to in clause
(A) are currently pending, (F) the Acquired Companies have made all
estimated tax payments for the current year at a sufficient level to
avoid any penalties for underpayment of estimated taxes and (G) no
waivers of statutes of limitation have been given by or requested with
respect to any Taxes of the Acquired Companies.
(iv) No election has been made by Sealol U.K. or a relevant
associate in accordance with the provisions of paragraph 2 of Schedule
10 to the Value Added Tax Act 1994 to waive the exemption from value
added tax in respect of any property comprised in the assets of Sealol
U.K. which are Purchased Assets.
<PAGE>
(v) EG&G Canada Limited is not a non-resident of Canada for
the purposes of the Income Tax Act (Canada); and
(vi) EG&G Canada Limited has not prior to the date of this
Agreement made any election or designation for the purposes of the
Income Tax Act (Canada) or any relevant Canadian provincial taxation
statute that would affect any of the Purchased Assets or the Canadian
tax elections contemplated by this Agreement.
<PAGE>
(k) Contracts
Schedule 2.1(k) of the Sellers' Disclosure Schedule contains a true and complete
list as of January 16, 1998 of (i) each Contract relating to the ownership of
the Shares and (ii) each of the following Contracts relating to the Business:
(A) each Contract for the lease of Purchased Assets or assets of the Acquired
Companies relating to the Business from or to third parties providing for
payments in excess of the equivalent of $100,000 per annum and that cannot be
terminated by EG&G or one of its Affiliates without material penalty, premium or
any further obligation within 30 days from the date of notice of intent to
cancel; (B) each Contract relating to the Business for the purchase, sale, or
distribution of raw materials, commodities, supplies, products or other personal
property or for the furnishing or receipt of services that involves aggregate
payments by any party thereto of more than the equivalent of $100,000 and that
cannot be terminated by EG&G or one of its Affiliates without material penalty,
premium or any further obligation within 30 days from the date of notice of
intent to cancel; (C) other than distributorship and representative agreements
of Sellers and the Acquired Companies, the forms of which have been previously
provided by Sellers to Purchaser, each Contract that limits the freedom of any
Seller to engage in any line of business or compete in any geographical area in
respect of the Business; (D) each Contract concerning any employee, officer or
director of any Seller or Acquired Company relating to the Business that (x) is
not terminable upon 90 days' notice without material penalty, premium or any
further obligation or (y) provides for any payments or vesting or acceleration
of benefits upon a change of control of the Business; (E) each Contract that
licenses or sublicenses, or otherwise provides access to, any of the
Intellectual Property (other than commercially available software generally
available to the public); and (F) each other Contract relating to the Business
that involves aggregate payments by any party thereto of more than the
equivalent of $100,000 and cannot be terminated by EG&G or one of its Affiliates
without material penalty, premium or any further obligation within 30 days from
the date of notice of intent to cancel. The foregoing Contracts are hereinafter
referred to as the "Material Contracts." Except as disclosed on such Schedule
2.1(k) hereto, no Seller or Acquired Company, or to the best knowledge of the
Sellers, any other party to any Material Contract is in default under any of the
Material Contracts and no condition exists with respect to any Material Contract
that, with the giving of notice or lapse of time, or both, would constitute a
default thereunder which has resulted in, or could reasonably be expected to
result in, individually or in the aggregate, a Material Adverse Effect. There
are no Contracts to which EG&G or any of its Affiliates is a party that are not
included in the Purchased Assets or that are not held by an Acquired Company
that provide benefits that are both material to the Business and, in the
reasonable judgment of the Sellers, not otherwise obtainable by the Business on
substantially similar terms and conditions as are provided therein. Except as
set forth on such Schedule 2.1(k), each Seller has the right to assign and
transfer to Purchaser all of its respective right, title and interest in the
Material Contracts without the consent of the other parties to such Contracts,
and no Material Contracts are or will be terminable, or will otherwise result in
a change of rights thereunder, by reason of the transactions contemplated
hereby. There has been no material adverse change since January 16, 1998 in
respect of the representations and warranties set forth in this Section 2.1(k).
(l) Compliance with Laws; Permits
Except as disclosed on Schedule 2.1(l) of the Sellers' Disclosure Schedule each
Seller and Acquired Company is in compliance with all Laws or Orders applicable
to the Business, except for incidents of noncompliance which have not resulted
in, and could not be expected reasonably to result in, individually or in the
aggregate, a Material Adverse Effect. Sellers and the Acquired Companies hold,
maintain in valid condition and comply with all Permits, including all Permits
issued pursuant to Environmental Laws, that relate to the Business and the
Purchased Assets and that are required in connection with the conduct, use,
operation or ownership thereof, except for those Permits the failure of which to
hold, maintain or comply with have not resulted in, and could not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect. Except as disclosed on such Schedule 2.1(l), no governmental proceeding
is pending or, to the knowledge of the Sellers or the Acquired Companies,
threatened, to cancel, amend, modify or fail to renew any such Permit.
<PAGE>
(m) Regulatory Approvals
Other than as disclosed on Schedule 2.1(m) of the Sellers' Disclosure Schedule,
no notices, reports or other filings are required to be made by any Seller or
Acquired Company with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by any Seller or Acquired Company
from, any governmental or regulatory authorities, U.S. or foreign, in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, the failure of which to make or obtain any or
all of which (i) is reasonably likely to be material to any part of the
Business, (ii) could prevent, delay or burden the transactions contemplated by
this Agreement or (iii) would subject any Seller, Purchaser or any of their
respective Affiliates to any material liability.
(n) Litigation
Except as disclosed on Schedule 2.1(n) of the Sellers' Disclosure Schedule,
there is no legal, administrative or other action, claim, proceeding or
governmental investigation, U.S. or foreign ("Litigation") pending or, to the
best knowledge of the Sellers, threatened (i) against any Seller, any Acquired
Company affecting the Business that, if adversely determined, could reasonably
be expected to result in, individually or in the aggregate, a Material Adverse
Effect or (ii) that challenges or reviews the execution, delivery or performance
of this Agreement by the Sellers or of the consummation of the transactions
contemplated hereby, or that seeks to enjoin or obtain damages in respect of the
consummation of any of the transactions contemplated hereby. Neither any Seller
nor any Acquired Company is a party to or is bound by any Order or any ruling or
award of any other person that has resulted in or could reasonably be expected
to result in, individually or in the aggregate, a Material Adverse Effect or
materially adversely affect the consummation of the transactions contemplated
hereby.
<PAGE>
(o) Environmental Matters
Except as disclosed in Schedule 2.1(o) of the Sellers' Disclosure Schedule: (i)
Sellers and the Acquired Companies have complied, and are now complying, in all
material respects at all times with all applicable Environmental Laws relating
to the Business and the Sealol Assets; (ii) no property currently owned or
operated by the Acquired Companies or the Sealol Asset Group (including soils,
groundwater, surface water, buildings or other structures) has been contaminated
with any Hazardous Substance; (iii) no property formerly owned or operated by
the Acquired Companies was contaminated with any Hazardous Substance on or prior
to such period of ownership or operation; (iv) neither the Acquired Companies
nor the Sealol Asset Group is subject to any liability for Hazardous Substance
disposal or contamination on any third party property; (v) neither the Acquired
Companies nor the Sealol Asset Group is subject to liability for any release or
threat of release of any Hazardous Substance; (vi) none of the Acquired
Companies, the Sealol Asset Group or EG&G with respect to the properties or
activities of the Acquired Companies or the Sealol Asset Group has received any
notice, demand, letter, claim or request for information indicating that it, the
Business or the Purchased Assets may be in violation of or subject to liability
under any Environmental Law; (vii) none of the Acquired Companies, the Sealol
Asset Group, the Purchased Assets or EG&G with respect to the properties or
activities of the Acquired Companies or the Sealol Asset Group is or has been
subject to any order, notice, investigation, decree, injunction or other
arrangement with any Governmental Entity or any indemnity or other agreement
with any third party relating to liability under any Environmental Law; (viii)
none of the properties of the Acquired Companies or the Sealol Asset Group
contain any underground storage tanks, asbestos-containing material, lead
products, radioactive materials, or polychlorinated biphenyls; (ix) there are no
other circumstances or conditions involving the Acquired Companies, the Sealol
Asset Group, the Business or the Sealol Assets that could reasonably be expected
to result in any claims, liability, investigations, criminal proceedings, costs
or restrictions on the ownership, use, or transfer of any property in connection
with any Environmental Law; and (x) EG&G has delivered to Purchaser copies of
all environmental reports, studies, assessments, sampling data and other
environmental information in its possession relating to the Acquired Companies
or the Sealol Asset Group or any of their current or former properties or
operations.
(p) Product Liability
Except as disclosed on Schedule 2.1(p) of the Sellers' Disclosure Schedule,
there is no Litigation pending or, to the knowledge of Sellers or the Acquired
Companies, threatened relating to claims of product liability to which EG&G or
any of its Affiliates has been a party in connection with the Business which, if
determined adversely, could be considered reasonably likely to result in,
individually or in the aggregate, a Material Adverse Effect. Such Schedule
2.1(p) sets forth the Sellers' and the Acquired Companies' standard terms and
conditions of sale or lease for products manufactured, sold, leased or delivered
in connection with the Business. Such Schedule 2.1(p) sets forth the aggregate
expenses incurred by the Sellers and the Acquired Companies in fulfilling their
respective obligations under guaranty, warranty, right of return, credit and
indemnity provisions in connection with the Business during the nine-month
period covered by the Income Statement; and no Seller or Acquired Company knows
of any reason why such expenses should materially increase as a percentage of
sales in the future.
<PAGE>
(q) Insurance
All material policies of fire, casualty, liability, burglary, fidelity, worker's
compensation, life and other forms of insurance owned or held by any Seller or
Acquired Company related to the Business are disclosed on Schedule 2.1(q) of the
Sellers' Disclosure Schedule, with an indication of the period during which each
such policy has been in full force and effect; and such policies or extensions,
renewals or replacements (on comparable terms to the extent available) thereof
in such amounts will be outstanding and in full force and effect without
interruption until the Closing Date. In respect of all insurance programs set
forth in such Schedule 2.1(q), (a) all premiums have been duly paid when due to
date and (b) to Sellers' and the Acquired Companies' knowledge, none are
avoidable on account of any act, omission or non-disclosure on the part of the
insured party. Such Schedule 2.1(q) hereof also sets forth all asbestos coverage
insurance policies maintained by Sellers and the Acquired Companies in relation
to the Business.
(r) Absence of Undisclosed Liabilities and Agreements
On the date hereof, the Business has no Liabilities, whether due or to become
due, except for such Liabilities which (i) are reflected or reserved against in
the Balance Sheet, (ii) are disclosed in Schedule 2.1(r) of the Sellers'
Disclosure Schedule, (iii)(x) have arisen after September 28, 1997 in the
ordinary course of business, in accordance with the terms of this Agreement, (y)
are similar in nature and amount to the liabilities and obligations which arose
during comparable times during the immediately preceding financial reporting
period of the Sellers and the Acquired Companies and, if required by GAAP to be
reflected as liabilities on a balance sheet relating to the Business, are of the
same type as those liabilities and obligations reflected on the Balance Sheet,
and (z) have not been subsequently discharged or paid and (iv) liabilities and
obligations under contracts included within the Sealol Assets that are not
required by GAAP to be reflected on the Balance Sheet as liabilities.
(s) Prepayments
Schedule 2.1(s) of the Sellers' Disclosure Schedule sets forth all contractual
prepayments or advance payments, made or received, in either case in excess of
$250,000, relating to executory contracts of the Business.
(t) Suppliers
The conduct of the Business is not, and EG&G does not reasonably expect that it
will during the next year be, dependent for raw materials, components or
services upon any suppliers that cannot be replaced by Purchaser, upon
consummation of the transactions contemplated hereby, without materially
affecting any material part of the Business. EG&G has no knowledge regarding the
loss or possible loss in the future of any such suppliers to the Business.
<PAGE>
(u) Employee Matters
(i) Schedule 2.1(u) of the Sellers' Disclosure Schedule sets
forth a list of all natural persons employed in the Business by Sellers
and all independent contractors, consultants and agents employed or
retained by EG&G or its Affiliates in connection with the Business and
their date of hire by EG&G or any of its Affiliates, and identifies any
such persons who receive annual compensation in excess of $100,000 as
of the date of this Agreement; and all contracts concerning any
employee, officer, director or consultant of any Seller relating to the
Business (whether or not a "Material Contract" as defined in Section
2.1(k)) (which schedule shall be updated from time to time after the
date of this Agreement and prior to the Closing Date by deleting those
individuals no longer employed in the Business and adding any
individuals who have become employed or any such contracts entered into
since the schedule was first prepared or the last revision thereto, as
the case may be). No such contract listed or referenced on Schedule
2.1(u) with any employee, officer, director or consultant of any Seller
provides for or permits any change of rights thereunder or any
severance or other payment thereunder that would or could result from
the execution and delivery of this Agreement or any of the transactions
contemplated pursuant to this Agreement.
<PAGE>
(ii) Schedule 2.1(u) of the Sellers' Disclosure Schedule
accurately describes all bonus, deferred compensation, pension,
retirement, profit-sharing, deferred profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, all employment or severance contracts, other
material employee benefit plans and any applicable "change of control"
or similar provisions in any plan, contract or arrangement which cover
employees or former employees of the Business (the "Compensation and
Benefit Plans"). The Compensation and Benefit Plans and all other
benefit plans, contracts or arrangements (regardless of whether they
are funded or unfunded, foreign or domestic or registered or
unregistered) covering employees or former employees of the Business
(the "Employees"), including, but not limited to, "employee benefit
plans" within the meaning of Section 3(3) of ERISA are disclosed on
Schedule 2.1(u) of the Sellers' Disclosure Schedule. True and complete
copies of all Compensation and Benefit Plans and such other benefit
plans, contracts or arrangements, including, but not limited to, any
trust instruments and/or insurance contracts, if any, forming a part of
any such plans and agreements, and all amendments thereto, all funding
or actuarial reports or valuations and all announcements, notices and
booklets concerning the Compensation and Benefit Plans which affect the
Employees or their dependents, have been made available to Purchaser.
The Purchaser has been given a statement of the employer and employee
contribution rates to all the Compensation and Benefit Plans. The
documents relating to the Compensation and Benefit Plans which have
been disclosed to the Purchaser contain full particulars of all the
benefits provided by, and the terms of, the Plans.
(iii) Sub-paragraphs (iv) to (vi) below relate to all
Compensation and Benefit Plans in the United States. Subparagraphs
(vii) to (xii) below relate to all other Compensation and Benefit
Plans.
(iv) All employee benefit plans, other than "multi-employer
plans" within the meaning of Sections 3(37) or 4001(a)(3) of ERISA,
covering Employees (the "Plans"), to the extent subject to ERISA, are
in substantial compliance with ERISA. There is no material pending or,
to the knowledge of the Sellers, threatened litigation relating to the
Plans. No Seller has engaged in a transaction with respect to any Plan
that, assuming the taxable period of such transaction expired as of the
date hereof, could subject any Seller to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an amount
which would be material.
(v) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by EG&G or any of its Affiliates
with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any
entity which is considered one employer with EG&G under Section 4001 of
ERISA or Section 414 of the Code (an "ERISA Affiliate"). EG&G and its
Affiliates have not incurred and do not expect to incur any withdrawal
liability with respect to a multi-employer plan under Subtitle E of
Title IV of ERISA (regardless of whether based on contributions of an
ERISA Affiliate). No notice of a "reportable event", within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof or
will be required to be filed in connection with the transactions
contemplated by this Agreement.
<PAGE>
(vi) All contributions required to be made under the terms of
any Compensation and Benefit Plan have been timely made or have been
reflected on the Balance Sheet. Neither any Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. No Seller has provided, or is required to
provide, security to any Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(vii) Except pursuant to the Compensation and Benefit Plans
disclosed on Schedule 2.1(u) of the Sellers' Disclosure Schedule, no
Seller or Acquired Company has in the two years prior to the date of
this Agreement paid, provided or contributed towards, and no Seller or
Acquired Company is under any obligation or commitment (whether or not
legally enforceable) to pay, provide or contribute towards, any
Employment Benefit for or in respect of any person now or previously
employed in the Business (or any spouse, child or dependent of any of
them). "Employment Benefit" means any pension, lump sum, gratuity or
other like benefit given or to be given on retirement, death, or
cessation of employment or change of control of employment, or in
anticipation of retirement, or, in connection with past employment,
after retirement or death, or to be given on or in anticipation of or
in connection with any change in the nature of the employment of the
employee in question or given or to be given in connection with the
illness, injury or disability of or suffering of any accident by, an
employee.
(viii) No proposal or assurance (oral or written) has been
announced or given to any person regarding the continuance,
introduction, increase or improvement of any Employment Benefit
(whether or not in connection with a Compensation and Benefit Plan)
except for increases which are payable as of right under the terms of a
Compensation and Benefit Plan which have been disclosed to the
Purchaser.
(ix) The Compensation and Benefit Plans are fully approved by
the appropriate revenue, tax or other local authorities or agencies and
their terms comply with all applicable local laws and requirements.
<PAGE>
(x) All due contributions and expenses in respect of the
Compensation and Benefit Plans have been paid or accrued in the Balance
Sheet and, since September 28, 1997, on the books and records of the
Business in the ordinary course of business consistent with past
practice and in accordance with the terms of this Agreement. All
contracts of insurance relating to the Plans are enforceable and there
is no ground on which the insurers might avoid liability under them.
All premiums payable under such contracts of insurance have been paid.
Without limitation to the foregoing, all Employment Benefits which are
not fully funded or for which there is not a full reserve in the
Balance Sheet (in each case measuring liabilities in the way referred
to in paragraph xii below) are fully insured, and all Employment
Benefits which are in payment and which are paid up (payment not having
commenced) and all contingent benefits are fully secured, with a
reputable insurance company. There has been no material revision to any
premium rates in the last 12 months prior to the date of this Agreement
and no Seller is aware of any pending increase.
(xi) No claim concerning the Employees or the Business has
been made or threatened against any Seller or the trustees of any Plan
in respect of any act, event, omission or other matter arising out of
or in connection with the Compensation and Benefit Plans (other than
routine claims for benefits) or any other Employment Benefit and no
Seller or Acquired Company is aware of any circumstances which could
reasonably be expected to give rise to any such claim.
(xii) The Liabilities of each Compensation and Benefit Plan,
or of providing Employment Benefits are fully covered by the assets of
the Compensation and Benefit Plans or assets in respect of the
Liabilities are held by Sellers and the Acquired Companies.
(xiii) All benefit plans and arrangements, regardless of
whether they are Compensation and Benefit Plans, covering foreign
Employees comply in all material respects with applicable local law. No
Seller or Acquired Company has any material unfunded liabilities with
respect to any pension plan which covers foreign Employees. Seller has
complied in all material respects with applicable law relating to
foreign Employees.
<PAGE>
(xiv) Schedule 2.1(u) of Sellers' Disclosure Schedule sets
forth a list of all collective bargaining or similar agreements
currently covering any persons employed in the Business and all such
agreements currently being negotiated that would potentially cover
persons employed in the Business. Except as disclosed on such Schedule
2.1(u), since January 1, 1996 (i) to the best of Sellers' knowledge, no
attempt to organize any group or all of the persons employed in the
Business who are not currently covered by a collective bargaining
agreement has been made; (ii) there currently is no and there has not
been any labor strike, dispute, lockout, slowdown or stoppage against
the Business, and none of the foregoing in the past was, or to the best
of Sellers' knowledge is, threatened; (iii) each Seller is in
compliance in all material respects with all Laws respecting employment
and employment practices, terms and conditions of employment and wages
and hours pertaining to persons employed in the Business, including
applicable requirements of the Immigration and Nationality Act of 1952,
as amended by the Immigration Reform and Control Act of 1986 and
regulations promulgated thereunder; (iv) no unfair labor practice
charge or complaint involving the Business or persons employed in the
Business is pending, or to the best knowledge of the Sellers,
threatened to be filed; (v) no charge or grievance relating to persons
employed in the Business is pending before the U.S. Equal Employment
Opportunity Commission; and (vi) no agreement would restrict Purchaser
from relocating, closing, or terminating any operations or facilities
of the Business.
(v) OSHA and Similar Matters
Since January 1, 1996 there have been no citations or complaints received from
any Governmental Entity by EG&G or any of its Affiliates relating to the
Business, or any Litigation commenced or, to the best knowledge of EG&G,
threatened against EG&G or any of its Affiliates relating to the Business, with
respect to any material violation or alleged material violation of any Laws
governing occupational health and safety matters.
<PAGE>
(w) Intellectual Property
(i) The Sellers own or have the enforceable right to use all
Intellectual Property primarily related to, primarily used in,
dedicated to, or otherwise necessary to the conduct of the Business as
presently conducted by the Sellers. Subject to Section 3.15 below, upon
execution and delivery of the instruments of conveyance referred to in
Section 1.9, each such item of Intellectual Property owned by the
Sellers will be owned by the Purchaser immediately following the
Closing, and each such item of Intellectual Property available for use
by the Sellers or the Acquired Companies will be available for use by
the Purchaser on substantially similar terms and conditions immediately
following the Closing. Each Seller has taken reasonable measures to
protect the proprietary and confidential nature of each item of
Intellectual Property that it owns or uses in connection with the
Business. No other person or entity has any rights to any of the
Intellectual Property (except pursuant to agreements or licenses
disclosed on Schedule 2.1(w) of the Sellers' Disclosure Schedule), and,
to the Sellers' and the Acquired Companies' knowledge, no other person
or entity is infringing, violating or misappropriating any of the
Intellectual Property.
(ii) Except as disclosed in such Schedule 2.1(w), to the
knowledge of the Sellers and the Acquired Companies, the business,
operations and activities of the Business as presently conducted or as
conducted at any time within the two years prior to the date of this
Agreement have not infringed or violated, or constituted a
misappropriation of, and do not now infringe or violate, or constitute
a misappropriation of, any intellectual property rights of any other
person or entity (including, without limitation, any Seller or any
Affiliate of any Seller). Except as disclosed in such Schedule 2.1(w),
no Seller or Acquired Company has received since January 1, 1996 any
complaint, claim or notice alleging any such infringement, violation or
misappropriation.
(iii) Schedule 2.1(w) of the Sellers' Disclosure Schedule
identifies each patent, patent application and patent disclosure, and
each trademark, trademark registration and application therefor which
has been issued to or is owned by EG&G or any of its Affiliates with
respect to any Intellectual Property, and each pending patent or
trademark application or application for registration which EG&G or any
of its Affiliates has filed or which EG&G or any of its Affiliates owns
with respect to any Intellectual Property, and, with respect to each
such patent, patent application, patent disclosure, trademark,
trademark registration, and trademark or registration application, the
jurisdiction or jurisdictions where such filings have been made, and
identifies each license, sublicense or other agreement pursuant to
which any Seller or Acquired Company has granted any rights to any
third party with respect to any such Intellectual Property. The Sellers
have delivered to the Purchaser true and complete copies of all such
licenses, sublicenses and agreements (each as amended to date) and have
made available to the Purchaser true and complete copies of all other
written documentation evidencing ownership of, and any claims or
disputes relating to, each such item, as well as all patents, patent
applications, patent disclosures, trademarks, trademark registrations
and applications therefor. With respect to each item of Intellectual
Property that any Seller or Acquired Company owns:
<PAGE>
(A) such Seller or Acquired Company possesses all
right, title and interest in and to such item;
(B) such item is not subject to any outstanding
judgment, order, decree, stipulation or injunction; and
(C) except for indemnity provisions in the standard
terms and conditions or supply contracts of such Seller or
Acquired Company, neither such Seller nor such Acquired
Company has agreed to indemnify any person or entity for or
against any infringement, misappropriation or other conflict
with respect to such item.
(iv) Schedule 2.1(w) of the Sellers' Disclosure Schedule
identifies each item of Intellectual Property (other than commercially
available software generally available to the public, which is not
disclosed on such Schedule 2.1(w), but with respect to which the
representations set forth below in this Section 2.1(w) are true) used
by any Seller or Acquired Company in the operation of the Business that
is owned by a party other than the party using it. The Sellers have
supplied the Purchaser with true and complete copies of all licenses,
sublicenses or other agreements (as amended to date) pursuant to which
any Seller or Acquired Company uses such Intellectual Property, all of
which are listed on such Schedule 2.1(w). With respect to each such
item of Intellectual Property:
(A) to the knowledge of the Sellers and the Acquired
Companies the license, sublicense or other agreement covering
such item of Intellectual Property is legal, valid, binding,
enforceable and in full force and effect, subject to the
effect of bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally
and except as the availability of equitable remedies may be
limited by general principles of equity;
<PAGE>
(B) except as disclosed on such Schedule 2.1(w), such
license, sublicense or other agreement is assignable by the
applicable Seller to the Purchaser without the consent or
approval of, or any payment to, any party, and such license,
sublicense or other agreement will continue to be legal,
valid, binding, enforceable and in full force and effect
without acceleration and without any change in the rights of
the parties thereunder as a result of the transactions
contemplated by this Agreement, immediately following the
Closing, in each case in accordance with the terms thereof as
in effect prior to the Closing;
(C) neither any Seller or Acquired Company nor, to
the Sellers' or the Acquired Companies' knowledge, any other
party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or
default which would result, or could reasonably be expected to
result, individually or in the aggregate, in a Material
Adverse Effect, or which would permit termination,
modification or acceleration thereunder;
(D) to the Sellers' and the Acquired Companies'
knowledge, the underlying item of Intellectual Property is not
subject to any outstanding judgment, order, decree,
stipulation or injunction; and
(E) no Seller or Acquired Company has agreed to
indemnify any person or entity for or against any
interference, infringement, misappropriation or other conflict
with respect to such item.
(v) Except as disclosed on such Schedule 2.1(w), all of the
software primarily related to, primarily used in, dedicated to, or
otherwise necessary to the conduct of the Business as presently
conducted by Sellers is Year 2000 compliant.
(vi) The Sellers have full right, title and interest to the
Retained Patents, and have the right to license the Retained Patents to
Purchaser pursuant to the EG&G License as contemplated under Section
3.15 hereof.
(x) Entire Interest; All Assets
The Shares represent EG&G's entire equity interest in the Acquired Companies
(other than, as of the date of this Agreement only, French Newco). Except for
the Excluded Assets, the Purchased Assets, together with the Shares, include all
property, assets and rights (including, without limitation, all Intellectual
Property) primarily related to, primarily used in, dedicated to, or otherwise
necessary to the conduct of the Business as currently conducted by Sellers. The
Sealol Assets are, when utilized by a labor force substantially similar to that
employed by the Sellers on the date hereof, adequate to conduct the business and
operations of the Business as currently conducted.
<PAGE>
(y) Insider Interests
No officer or director of EG&G or any Affiliate of EG&G, and no Affiliate or
Associate of such officer or director or organization, entity or group
controlled by such officer or director or Affiliate or Associate has any
material agreement with any Seller or Acquired Company or any material interest
in any material property, real, personal or mixed, tangible or intangible, used
in or pertaining to the Business, except as an employee or director thereof.
(z) Administration
Schedule 2.1(z) of the Sellers' Disclosure Schedule sets forth a detailed list
of administrative and central office services that as of the date hereof, any
Seller or its Affiliates perform for the Business or that the Business performs
for any Seller or its Affiliates that are not included within the Business.
(aa) Brokers, Finders, Etc.
No Seller, Acquired Company or any of their Affiliates has retained or dealt
with any broker, finder, consultant or intermediary or incurred any Liability
for any brokerage, finder's, consultant's or intermediary's fees or commissions
in connection with the transactions contemplated by this Agreement.
(bb) Inventory
All inventory of the Business, whether or not reflected on the Balance Sheet
(net of reserves reflected (i) on the Balance Sheet or (ii) on the books and
records relating to the Business and accrued in the ordinary course of business
consistent with past practice since September 28, 1997), is of a quality and
quantity usable and saleable in the ordinary course of business, except for
scrap, obsolete or excess items (which, for purposes hereof, shall mean
inventory not saleable in the ordinary course of business within one year) and
items of below-standard quality, all of which have been written-off or
written-down to net realizable value on the Balance Sheet or the books and
records relating to the Business, in the latter case in the ordinary course of
business consistent with past practice since September 28, 1997. All inventories
not written-off have been priced at the lower of cost or market on a last in,
first out basis in the United States and on a first in, first out basis outside
of the United States.
<PAGE>
(cc) Accounts Receivable
All Accounts Receivable reflected on the Balance Sheet (net of reserves
reflected (i) on the Balance Sheet or (ii) on the books and records relating to
the Business and accrued in the ordinary course of business consistent with past
practice since September 28, 1997) are valid receivables, and none of the
Sellers or Acquired Companies has been notified that any person intends to claim
a material setoff or counterclaim with respect thereto. All such Accounts
Receivable arose in the ordinary course of business and, to the extent not
collected prior to the Closing Date, are current and collectible within 90 days
after the due date of the invoice therefor. All Accounts Receivable reflected in
the financial or accounting records of the Business that have arisen since
September 28, 1997 are valid receivables, and none of the Sellers or Acquired
Companies has been notified that any person intends to claim a setoff or
counterclaim with respect thereto. All such Accounts Receivable arose in the
ordinary course of business and, to the extent not collected prior to the
Closing Date, are collectible within 90 days after the due date of the invoice
therefor. The due date for each Account Receivable existing as of the date of
this Agreement was, and the due date for each Account Receivable existing as of
the Closing Date will be, established in the ordinary course of business of the
Sellers and the Acquired Companies.
(dd) Disclaimer of Other Representations and Warranties; Knowledge;
Disclosure (i) NO SELLER MAKES, HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, ANY
REPRESENTATIONS OR WARRANTIES RELATING TO SUCH SELLER OR THE BUSINESS, THE
PURCHASED ASSETS, THE ACQUIRED COMPANIES OR OTHERWISE IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY OTHER THAN THOSE EXPRESSLY PROVIDED FOR IN THIS
AGREEMENT WHICH ARE MADE BY THE SELLERS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, NO SELLER HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, ANY
REPRESENTATIONS OR WARRANTIES AS TO THE INFORMATION CONTAINED IN ANY
PRESENTATION RELATING TO THE BUSINESS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, AND NO STATEMENT MADE IN ANY SUCH PRESENTATION SHALL BE
DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE. IT IS UNDERSTOOD
THAT ANY COST ESTIMATES, PROJECTIONS OR OTHER PREDICTIONS, ANY DATA, ANY
FINANCIAL INFORMATION OR PRESENTATIONS, ARE NOT AND SHALL NOT BE DEEMED TO BE OR
TO INCLUDE REPRESENTATIONS OR WARRANTIES OF ANY SELLER (IT BEING UNDERSTOOD THAT
THIS SECTION 2.1(dd) SHALL NOT BE DEEMED TO LIMIT THE REPRESENTATIONS AND
WARRANTIES PROVIDED FOR IN THIS AGREEMENT INCLUDING, BUT NOT LIMITED, TO THOSE
WITH RESPECT TO THE FINANCIAL STATEMENTS). NO PERSON HAS BEEN AUTHORIZED BY ANY
SELLER TO MAKE ANY REPRESENTATION OR WARRANTY RELATING TO SUCH SELLER OR THE
BUSINESS OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY
AND, IF MADE, SUCH REPRESENTATION OR WARRANTY MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY ANY SELLER.
<PAGE>
(ii) Whenever a representation or warranty made by the Sellers
herein refers to the knowledge of EG&G, the Sellers or the Acquired
Companies, such knowledge shall be deemed to consist only of the actual
knowledge, after reasonable inquiry, of any of those persons listed on
Schedule 2.1(dd) of Sellers' Disclosure Schedule.
(iii) Certain information set forth in Sellers' Disclosure
Schedule may not be required to be disclosed pursuant to this
Agreement. The disclosure of any information shall not be deemed to
constitute an acknowledgment that such information is required to be
disclosed in connection with the representations and warranties made by
the Sellers in this Agreement or that it is material, nor shall such
information be deemed to establish a standard of materiality.
Section 2.2 Representations and Warranties of Purchaser
Purchaser and TISA hereby represent and warrant to EG&G as follows:
(a) Purchaser is a public limited company duly organized and
validly existing under the laws of England and TISA is a societe anonyme
organized under the laws of France.
(b) Authorization of Agreement
Each of Purchaser and TISA has full corporate power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated on its part hereby. The execution, delivery and performance by each
of Purchaser and TISA of this Agreement and the consummation by Purchaser and
TISA of the transactions contemplated on its part hereby has been duly
authorized by all necessary corporate proceedings. This Agreement has been duly
and validly executed and delivered by Purchaser and TISA and constitutes a valid
and binding agreement of each of Purchaser and TISA, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and, as to enforcement, to general equity principles.
<PAGE>
(c) Non-Contravention
Neither the execution, delivery and performance by Purchaser or TISA of this
Agreement nor the consummation on the part of Purchaser or TISA of the
transactions contemplated by this Agreement will, with or without the giving of
notice or the lapse of time, or both, (i) conflict with, result in a breach,
violation or default under or the termination of, or require the consent of any
party to, or create in any party the right to accelerate, terminate, modify or
cancel, any material Contract of Purchaser or TISA, (ii) violate any provision
of the Memorandum of Association (or similar organization document) of Purchaser
or TISA, or (iii) violate any material Law, Order or Permit to which Purchaser
or any of its Affiliates is subject, that in any of the foregoing instances
could reasonably be expected to materially adversely affect the consummation of
the transactions contemplated hereby.
(d) Litigation
There is no Litigation pending or, to the knowledge of Purchaser, threatened
that challenges or reviews the execution, delivery or performance of this
Agreement by Purchaser or TISA, or that seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated hereby. Neither
Purchaser nor any of its Affiliates is a party to or is bound by any Order or
any ruling or award of any other person that could reasonably be expected to
materially adversely affect the consummation of the transactions contemplated
hereby.
(e) Filings, Consents
Other than as disclosed on Schedule 2.2(e) to this Agreement, no notices,
reports or other filings are required to be made by Purchaser or its Affiliates
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Purchaser or its Affiliates from, any governmental or
regulatory authorities, U.S. or foreign, in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, the failure of which to make or obtain any or all of which (i) is
reasonably likely to have a material adverse effect on the business and
operations of the Purchaser and its subsidiaries taken as a whole, (ii) could
prevent, delay or burden the transactions contemplated by this Agreement or
(iii) would subject any Seller, Acquired Company, Purchaser or any of their
respective Affiliates to any material liability.
(f) Brokers, Finders, Etc.
Neither Purchaser nor any of its Affiliates has retained or dealt with any
broker, finder, consultant or intermediary or incurred any liability for any
brokerage, finder's, consultant's or intermediary's fees or commissions in
connection with the transactions contemplated by this Agreement other than SBC
Warburg Dillon Read, whose fees and expenses are the sole responsibility of the
Purchaser.
(g) Investment.
and TISA are acquiring the Shares for their own account,
without a view to the distribution thereof in violation of any applicable
securities laws.
<PAGE>
Disclaimer of Other Representations and Warranties; Knowledge; Disclosure
(i) NEITHER PURCHASER NOR TISA MAKES, HAS MADE, OR SHALL BE DEEMED TO HAVE MADE,
ANY REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY OTHER THAN THOSE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT
WHICH ARE MADE BY THE PURCHASER. NO PERSON HAS BEEN AUTHORIZED BY PURCHASER TO
MAKE ANY REPRESENTATION OR WARRANTY IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY AND, IF MADE, SUCH REPRESENTATION OR WARRANTY MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY PURCHASER. (ii) Whenever a
representation or warranty made by Purchaser herein refers to the knowledge of
the Purchaser, such knowledge shall be deemed to consist only of the actual
knowledge, after reasonable inquiry, of any of those persons listed on Schedule
2.2(h) to this Agreement.
(iii) Certain information set forth in the Schedules to this
Agreement provided by Purchaser and TISA may not be required to be
disclosed pursuant to this Agreement. The disclosure of any information
shall not be deemed to constitute an acknowledgment that such
information is required to be disclosed in connection with the
representations and warranties made by Purchaser and TISA in this
Agreement or that it is material, nor shall such information be deemed
to establish a standard of materiality.
ARTICLE III
Additional Agreements
---------------------
Section 3.1 Conduct of Business
Except as may be otherwise contemplated by this Agreement,
during the period from the date of this Agreement until the Closing Date,
Sellers will conduct the operations of the Business, or cause the operations of
the Business to be conducted, in the ordinary course consistent with past
practice (including paying accounts payable and Operating Taxes) and will use
their respective best efforts to preserve and maintain the assets of the
Acquired Companies relating to the Business, the Purchased Assets and its
business organization and that of its Affiliates as it relates to the Business
and relationships with employees, customers, suppliers, agents and others having
business dealings with Sellers relating to the Business. Without limiting the
generality of the foregoing, without the prior written consent of Purchaser,
which shall not be unreasonably withheld or delayed during the period from the
date of this Agreement to the Closing Date EG&G shall not, and shall not permit
any Affiliate to:
<PAGE>
(i) take or agree or commit to take any action that would
make any representation and warranty of the Sellers hereunder
inaccurate in any material respect at, or as of any time prior to, the
Closing Date;
(ii) omit or agree to commit to omit to take any action
necessary to prevent any such representation or warranty from being
inaccurate in any material respect at any such time;
(iii) sell or pledge or agree to sell or pledge any Shares;
(iv) amend the Certificate of Incorporation or By-laws (or
comparable governing instruments) of any Acquired Company or amend any
Material Contract, other than any Contract with a customer of the
Business for the supply of products or the servicing of such products,
provided such amendment is entered into in the ordinary course of
business, is on commercially reasonable terms, and after giving effect
to such amendment such Contract shall reasonably be expected by Sellers
to be as profitable as the Business generally, taking into account the
specific nature of any such Contract and the terms generally available
to such customers by the Business and its competitors;
(v) split, combine or reclassify or otherwise change the
outstanding capital stock or other ownership interest in any Acquired
Company or any subsidiary thereof;
(vi) issue, sell, pledge, dispose of or encumber any
additional shares of capital stock of any class of or other ownership
interests in, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire,
any shares of the capital stock of any class of or other ownership
interests in, the Acquired Companies or any subsidiary thereof;
(vii) transfer, lease, license, sell, mortgage, pledge,
dispose of or encumber any properties and/or assets relating to the
Business with an individual value of more than $100,000 or a value
aggregating more than $250,000 or incur or modify any liability in
connection with the Business other than to an Acquired Company, other
than the sale of products by the Business in the ordinary course of
business consistent with past practice;
<PAGE>
(viii) redeem, purchase or otherwise acquire directly or
indirectly any shares of the capital stock of any class of or other
ownership interest in any of the Acquired Companies, except for any
successor shares or ownership interests owned by other Acquired
Companies;
(ix) incur any Indebtedness for borrowed money (other than
Indebtedness which is fully discharged prior to the Closing), assume,
guarantee, endorse or otherwise become responsible for, in each such
instance in a manner which will survive the Closing, the obligations of
any other individual, entity, firm or corporation; or make any loans or
advances to any individual, entity, firm or company;
(x) authorize capital expenditures in respect of the
Business in excess of $100,000 for any single project or $250,000 in
the aggregate, other than capital expenditures approved in respect of
the Business prior to the date of this Agreement;
(xi) make any acquisition of, or investment in, assets or
stock of any other person in respect of the Business;
(xii) grant any severance or termination pay to, or enter into
any employment or severance agreement with, any director, officer or
other employee of EG&G or any of its Affiliates primarily employed in
connection with the Business, or hire any officer or employee in
respect of the Business with an annual base salary exceeding $75,000;
(xiii) establish, adopt, enter into or amend (except as
required by law), any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees of any of the Sellers
or Acquired Companies primarily employed in connection with the
Business or terminate in whole or in part or curtail or permanently
discontinue contributions to any Compensation and Benefits Plan;
(xiv) settle or compromise any claims or litigation or, except
in the ordinary and usual course of business, enter into, modify or
amend any Contract or waive, release or assign any material rights or
claims that Purchaser is acquiring in connection with the Business and
the Sealol Assets;
<PAGE>
(xv) without notice to Purchaser, make any tax election or
permit any insurance policy naming an Acquired Company as a beneficiary
or a loss payable payee, or otherwise relating to the Business to be
canceled or terminated;
(xvi) enter into, assume or otherwise remain or be liable for
any contract, agreement, commitment, guarantee, lease or other
obligation which shall survive the Closing which would constitute a
Material Contract, other than Contracts with customers of the Business
for the supply of products or the servicing of such products, provided
such Contracts are entered into in the ordinary course of business, are
on commercially reasonable terms, and are reasonably expected by the
Sellers to be as profitable as the Business generally, taking into
account the specific nature of any such Contract and the terms
generally available to such customers by the Business and its
competitors;
(xvii) transfer to or permit to be transferred to or hired by
any Seller any employees primarily employed in connection with the
Business;
(xviii) collect accounts receivable or pay accounts payable or
Operating Taxes other than in ordinary course consistent with past
practice; or
(xix) enter into an agreement to do any of the things
prohibited by subsections (i) through (xviii) above.
<PAGE>
Section 3.2 Access and Information
(a) From the date hereof to the Closing Date, upon reasonable
notice, Sellers shall afford Purchaser's directors, officers, employees,
counsel, accountants and other authorized representatives access (including,
without limitation, access for the purposes of conducting environmental
surveys), during normal business hours throughout the period prior to the
Closing Date, to the employees, properties, books, Contracts and records of the
Business and, during such period, Sellers shall furnish promptly to Purchaser
all information concerning the Business as Purchaser may reasonably request for
purposes of the foregoing; provided, however, that the Sellers may withhold,
until the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
(the "HSR Act") applicable to the transactions contemplated under this Agreement
has expired or been terminated, the disclosure of proprietary information
relating to the Business, the disclosure of which to Purchaser, the Sellers
reasonably believe would materially adversely affect the Business in the event
that the transactions contemplated under this Agreement were not consummated. At
the time of the expiration or termination of the waiting period under the HSR
Act applicable to the transactions contemplated under this Agreement, the
Sellers' right to withhold such proprietary information will terminate.
(b) No investigation pursuant to Section 3.2(a) shall affect
or be deemed to modify any representation or warranty made by any Seller.
(c) In the event of termination of this Agreement, Purchaser
shall promptly deliver to EG&G or, at EG&G's election, destroy, all documents,
work papers and other material obtained by Purchaser or on its behalf from
Sellers or their agents, employees or representatives as a result hereof or in
connection herewith and shall not use any such materials for any purpose.
Purchaser and its Affiliates shall at all times prior to the Closing Date, and
in the event of termination of this Agreement, cause any information so
obtained, except in any case to the extent that such information was (a)
previously known by Purchaser, (b) in the public domain through no fault of
Purchaser and its Affiliates or (c) later lawfully obtained from other sources
by Purchaser, to be kept confidential and shall not use, or permit the use of,
such documents, work papers and other materials in its business or in any other
manner or for any other purpose except that such information may be disclosed
and used by Purchaser as may be required by law or the rules or regulations of
The International Stock Exchange of the United Kingdom and Republic of Ireland
Limited.
(d) Prior to Closing, Purchaser will inform Sellers of any
information it has received or developed in the course of its due diligence
investigation under subsection (a) above that Purchaser has knowledge that would
form the basis of a claim against Sellers for indemnification under Section
6.2(a) of this Agreement; it being understood, however, that the foregoing shall
not preclude Purchaser from making any such claim under Section 6.2(a) hereof.
<PAGE>
Section 3.3 No Solicitation
(a) For a period of three (3) years after the Closing Date
outside of Ireland and for a period of two (2) years after the Closing Date in
Ireland, without the consent of Purchaser, no Seller or any Affiliate of a
Seller will solicit for employment any employee of the Business or any employee
of the John Crane Division of the Purchaser who was formerly an employee of the
Business a "Sealol Employee"; provided, however, that the foregoing shall not
prohibit any Seller or its Affiliates from (i) making any general solicitation
or advertisement for employment that is not targeted at such employees, (ii)
making any solicitation or advertisement for employment to a person that is not
a Sealol Employee at the time such solicitation or advertisement is made or
(iii) soliciting any employee who has given notice to Purchaser or any of its
Affiliates of his intention to terminate his employment. If during such three
year period a Sealol Employee that meets the foregoing criteria approaches any
Seller or its Affiliates for employment and such Seller or its Affiliates wishes
to hire such Sealol Employee, then EG&G shall give Purchaser written notice of
such situation and a reasonable period of time under the circumstances, not to
exceed twenty (20) days, to allow Purchaser and its Affiliates, if they so wish,
to attempt to retain such Sealol Employee. If following completion of such
reasonable period, not exceeding twenty (20) days, such Sealol Employee does not
wish to remain a Sealol Employee, such Seller or its Affiliates shall be free to
employ such Sealol Employee. For a period of three (3) years after the Closing
Date outside of Ireland and for a period of two (2) years after the Closing Date
in Ireland, without the consent of EG&G, neither Purchaser nor any Affiliate of
Purchaser will solicit for employment any employee of the Engineered Products
Division of Sealol U.S. or any employee of any Seller in a Shared Facility (an
"EG&G Employee"); provided, however, that the foregoing shall not prohibit
Purchaser or any of its Affiliates from (i) making any general solicitation or
advertisement for employment that is not targeted at such employees, (ii) making
any solicitation or advertisement for employment to a person that is not an EG&G
Employee at the time such solicitation or advertisement is made or (iii)
soliciting any employee who has given notice to EG&G or any of its Affiliates of
his intention to terminate his employment. If during such three year period an
EG&G Employee that meets the foregoing criteria approaches Purchaser or any of
its Affiliates for employment and Purchaser or any of its Affiliates wishes to
hire such EG&G Employee, then Purchaser shall give EG&G written notice of such
situation and a reasonable period of time under the circumstances, not to exceed
twenty (20) days, to allow EG&G and its Affiliates, if they so wish, to attempt
to retain such EG&G Employee. If following completion of such reasonable period,
not exceeding twenty (20) days, such EG&G Employee does not wish to remain an
EG&G Employee, Purchaser or any of its Affiliates shall be free to employ such
EG&G Employee.
(b) In the event of a breach of any provision of this Section
3.3, the aggrieved party may, in addition to other rights and remedies existing
in its favor, apply to any court of competent jurisdiction for specific
performance and injunctive or other relief in order to enforce or prevent any
violation of such provisions and the defendant in any such action will not
contest such relief on the grounds that the aggrieved party has an adequate
remedy at law.
<PAGE>
(c) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 3.3 is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of such term or provision to the extent necessary to make it
valid and enforceable and this Section 3.3 shall be enforceable as so modified.
(d) The provisions of Section 3.3(a) shall not be deemed in
any manner to restrict the ability of the Sellers or the Purchaser to hire any
of the persons they are contemplated to retain or hire, as the case may be,
pursuant to the R&D Agreement.
. Purchaser and Sellers shall give all notices to third
parties and shall use their reasonable best efforts to obtain all consents,
waivers, agreements and approvals necessary or desirable in order to consummate
the sale of the Purchased Assets, the Shares and the Business and otherwise to
cause the Closing to occur. Purchaser and Sellers shall cooperate in obtaining
such consents, waivers, agreements and approvals and in connection with the
preparation, execution, filing and delivery of such certificates, applications,
agreements, conveyance and other documents as may be necessary or desirable in
order to consummate the transactions contemplated by this Agreement, and shall
also cooperate to resolve all technical and logistical issues relating to the
consummation of the transactions contemplated by this Agreement, such as those
resulting from currency transfer restrictions or restrictions on payments by
wire transfers. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, a party
shall take all commercially reasonable action (including the execution and
delivery of such further instruments, documents and powers-of-attorney) as the
other party may reasonably request for such purposes. Any payments received by
Purchaser after the Closing with respect to the Excluded Assets shall be for the
account of the applicable Seller, and Purchaser shall transfer such payments to
such Seller in immediately available funds within five (5) Business Days of
receipt thereof. Any payments received by EG&G after the Closing with respect to
the Sealol Assets shall be for the account of Purchaser, and Sellers shall
transfer such payments to Purchaser in immediately available funds within five
(5) Business Days of receipt thereof.
<PAGE>
. The parties recognize the importance of obtaining certain
authorizations, consents, approvals and forbearance from Governmental Entities
in order to accomplish the sale of the Purchased Assets and the Shares and, in
this regard, agree to consult and cooperate fully with one another, consider in
good faith the views of one another and prosecute diligently all applications
for, and to use their reasonable best efforts promptly to obtain, such
authorizations, consents, approvals and forbearance (including, without
limitation, under the HSR Act) from all applicable Governmental Entities as will
be required to permit the sale of the Purchased Assets and the Shares. The
foregoing shall include, without limitation, the parties using their reasonable
best efforts to respond as promptly as reasonably practicable to requests for
additional filings, for information and document submissions, or to make
employees available for interview, as proper or advisable, but shall not require
any party to agree to divest or hold separate any portion of its business or
otherwise take action that could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect, a material adverse
effect on other operations or businesses of the Sellers and their Affiliates or
a material adverse effect on the business and operations of the Purchaser and
its Affiliates. Sellers and Purchaser further agree to use reasonable best
efforts to effect an orderly transition of the Business with respect to any
contract with, any goods and services being provided to, or any work being
performed for any Governmental Entity, to effect the recordation of title to the
Purchased Assets including, without limitation, the Intellectual Property, and
to secure such clearances, agreements and other permits which may be required to
effect such transition. Sellers agree that this obligation shall survive the
Closing for a period of six months from the Closing, and that any services
rendered by any Seller following the Closing shall be compensated by Purchaser
at a per diem rate or other commercially reasonable basis as the parties may
agree.
<PAGE>
Section 3.6 Taxes Section 3.6 Taxes
(a) EG&G and Purchaser shall each bear one-half of all sales,
notary fees, GST, conveyance, stamp, duty, transfer, registration, fonds de
commerce, recording and other similar fees and taxes ("Transfer Taxes") imposed
as a result of the purchase of the Purchased Assets and the Shares contemplated
herein (but excluding any Transfer Taxes imposed as a result of any transfers,
reorganizations or recapitalizations by Sellers or any of the Acquired Companies
before Closing, other than those transfer taxes relating to the formation of
French Newco pursuant to Section 1.1(a)). For the avoidance of doubt, Transfer
Taxes exclude gains taxes attributable to the Sellers. EG&G and Purchaser shall
cooperate and use all commercially reasonable efforts to avoid or minimize such
Transfer Taxes. If either EG&G or Purchaser shall have paid the full amount of
any Transfer Tax, the other party shall pay one half of the amount of such
Transfer Tax to such party within 10 days of the receipt of notice of such
payment of Transfer Tax.
(b) Liability for real and personal property taxes imposed
with respect to the Sealol Assets for any taxable period beginning before and
ending after the Closing Date shall be prorated between the applicable Seller
and Purchaser, with the applicable Seller bearing a portion of such taxes based
on the number of days in the taxable period prior to and including the Closing
Date (except to the extent of related accruals on the Balance Sheet and related
accruals on the books and records of the Business after the date of the Balance
Sheet consistent with the generally accepted accounting principles used in
formulating the related accruals on the Balance Sheet) and Purchaser bearing a
portion of such taxes based on the number of days in the taxable period after
the Closing Date.
(c) Taxes described in paragraphs (a) and (b) shall be
remitted as provided by applicable law, and where the paying party is entitled
to reimbursement, such reimbursement will be made by the non-paying party in
immediately available funds in United States dollars or other applicable
currency not later than five business days after the payment of such taxes.
(d) At or before the Closing, each Seller transferring
Purchased Assets located in the United States shall provide Purchaser with the
certification of non-foreign status described in United States Treas. Reg.
Section 1.1445-2(b)(2).
(e) Purchaser and Sellers will report the federal, state,
local and other tax consequences of the purchase and sale hereunder in a manner
consistent with the allocation of the Purchase Price and the Assumed Liabilities
contained in Annex C and will not take any position inconsistent therewith in
connection with all reports and returns with respect to Taxes.
(f) The obligations of the parties set forth in this Section
3.6 shall be unconditional and absolute and shall remain in effect until the
expiration of the applicable statutes of limitation (including waivers and
extensions thereof) for the taxable year or period at issue.
(g) Any payment by Purchaser or Sellers under this Section 3.6
(other than Section 3.6(a)) will be an adjustment to the Purchase Price.
<PAGE>
(h) Purchaser and Sellers will treat the purchase and sale of
the shares of EG&G International as a purchase and sale of the assets of EG&G
International for United States federal, state and local income tax purposes and
will not take any position inconsistent therewith in connection with all reports
and returns with respect to Taxes.
(i) Purchaser shall on a timely basis file any required
documentation and pay to the appropriate tax authority any withholding tax
withheld pursuant to Section 1.9(b)(iii) of this Agreement and shall provide
Seller with tax receipts from the appropriate tax authority to whom such
withholding taxes are paid. Such receipts shall be provided within thirty (30)
days of Closing.
. tion 3.7 Bulk Transfer Laws Section
(a) Purchaser hereby waives compliance by Sellers with the
provisions of any "bulk transfer", "bulk sales" or equivalent laws of any
jurisdiction in connection with the sale of the Purchased Assets to Purchaser.
However, Sellers agree to indemnify Purchaser and its Affiliates, in accordance
with the terms of Article VI, for any Losses occurring out of Sellers'
violations of any such laws.
(b) Purchaser shall procure that one or more of its Affiliates
which are registered in the Corresponding Territory for value added tax purposes
shall purchase from Sealol the assets of Sealol which are Purchased Assets (the
"Corresponding Assets"). If any amount by way of value added tax is required to
be paid in respect of that part of the Purchase Price which is allocated to the
Corresponding Assets as set out in Annex C, such value added tax which is paid
and not recovered by the party paying such tax will be reimbursed in the amount
of one-half of such tax by the other party to this Agreement within 10 days. In
Canada, the Seller and the Purchaser shall jointly elect under subsection 167(1)
of Part IX of the Excise Tax Act (Canada) and any provincial legislation
imposing a similar value added or multi-staged tax, that no tax be payable in
respect of the sale and purchase of the Purchased Assets pursuant to this
Agreement. The Seller and the Purchaser shall make such election in the
prescribed form containing prescribed information pursuant to the Excise Tax Act
(Canada) and any provincial legislation imposing a similar value added or
multi-staged tax.
For the Purpose of this Section 3.7(b), "value added tax"
means the tax imposed by the Sixth Council Directive of the European Communities
and any national legislation implementing that directive together with
legislation supplemental therefore.
<PAGE>
. Purchaser shall provide Sellers with such resale
certificates and the like relating to inventory included in the Purchased Assets
as may be requested by Sellers in connection with the transactions contemplated
by this Agreement.
. Purchaser shall maintain possession of all books and records
transferred to it as Sealol Assets at least as long as required by applicable
law or regulation; provided that thereafter Purchaser shall give EG&G not less
than sixty (60) days' prior written notice of its intention to dispose of any
such books and records. During such notice period any Seller may direct
Purchaser, at such Seller's expense, to ship such books and records to such
Seller or to a location designated by such Seller and Purchaser shall comply
with such direction. So long as any books and records transferred to it remain
in its possession, Purchaser shall, upon reasonable notice, make such books and
records available to Sellers and their designees, representatives and agents for
inspection and copying (at such Seller's expense) insofar as is necessary for
the preparation of tax returns and similar matters. Without limiting the
foregoing, the Sellers shall have the right for a period of five (5) years
following the Closing Date to have reasonable access to such books,
correspondence, production records and other records (and for a period of ten
(10) years following the Closing Date with respect to the tax records of the
Business) that are transferred to the Purchaser pursuant to the terms of this
Agreement for the limited purposes of concluding its involvement in the business
and operations of the Sellers relating to the Business as conducted by the
Sellers prior to the Closing Date and for complying with their respective
obligations pursuant to this Agreement and under applicable securities, tax,
environmental, employment or other laws and regulations.
. From the date hereof until the Closing Date, neither Sellers
nor Purchaser shall make, or permit its Affiliates to make, any public statement
with respect to the transactions contemplated hereby without the prior consent
of the other; provided that such consent will not be unreasonably withheld or
delayed in any case and that nothing herein shall prevent any party from making
any such disclosures or statements as may be required by law, regulation or rule
of any Governmental Entity or of any stock exchange; provided further, that any
party required by law, regulation or rule of any Governmental Entity or of any
stock exchange to make any such disclosure or statement shall make a good faith
effort to inform the other party of such requirement as soon as is practicable
(whether such time is before or after such disclosure or statement).
<PAGE>
. From the date hereof until the termination of this Agreement
or the Closing, whichever first occurs, EG&G will not, and will cause its
Affiliates and will cause its officers, directors, employees or other agents of
its Affiliates not to, directly or indirectly, (i) take any action to solicit,
initiate or accept any offer or indication of interest from any person with
respect to any Acquisition Proposal (as hereinafter defined) or (ii) engage in
negotiations with, or disclose any nonpublic information relating to the
Business or afford access to the properties, books or records of the Business
to, any person that may be considering making, or has made, an offer with
respect to an Acquisition Proposal. For purposes hereof, "Acquisition Proposal"
means any proposal for a business combination involving the Business or the
acquisition of Purchased Assets or the Shares, other than the transactions
contemplated by this Agreement. EG&G will, and will cause its Affiliates to,
terminate any existing discussions or negotiations with any person (other than
Purchaser) relating to any Acquisition Proposal.
. Confidentiality
(a) From the date hereof, the Sellers shall maintain, and
shall cause their respective Affiliates to maintain, the confidentiality of all
proprietary information relating to the Business, including but not limited to
information relating to the Intellectual Property of the Business, except to the
extent that such information is in the public domain through no fault of EG&G or
its Affiliates or such information is required by law to be disclosed; provided
that in the event any such disclosure is required under applicable law, Sellers
shall immediately notify Purchaser thereof and shall cooperate with Purchaser to
minimize the scope of such disclosure and to put in place appropriate measures
to guard against the further disclosure, misuse or misappropriation of such
information. The obligations under this Section 3.12 will terminate upon
termination of this Agreement.
(b) The obligations of the Sellers set forth in Section
3.12(a) shall be unconditional and absolute and shall remain in effect without
limitation as to time subject to the proviso contained in Section 3.12(a).
(c) In the event of a breach of any provision of this Section
3.12 by any Seller, Purchaser may, in addition to other rights and remedies
existing in its favor, apply to any court of competent jurisdiction for specific
performance and injunctive or other relief in order to enforce or prevent any
violation of such provisions and the defendant in any such action will not
contest such relief on the grounds that Purchaser has an adequate remedy at law.
<PAGE>
. From and after the Closing Date, each party shall fully
cooperate with the others in defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or by
such other party relating in whole or in part to, or arising out of the conduct
of, the Business prior to or after the Closing Date (other than litigation among
the Sellers, the Purchaser and/or their respective subsidiaries or Affiliates
arising out of the transactions contemplated by this Agreement). The party
requesting such cooperation shall pay the reasonable out-of-pocket expenses
incurred in providing such cooperation (including legal fees and disbursements)
by the party providing such cooperation and by its officers, directors,
employees and agents, but shall not be responsible for reimbursing such party or
its officers, directors, employees and agent for their time spent in such
cooperation.
. The parties shall negotiate in good faith equitable
arrangements to enable the operation of the Business for periods prior to the
Closing to continue to be insured after the Closing and to deal with various
insurance administrative details. Sellers and Purchaser agree that Sellers'
responsibility to provide insurance coverage for the Business shall terminate at
the Closing and that all liabilities and obligations relating to personal and
bodily injury and property damage arising from acts or omissions occurring prior
to the Closing shall be borne by Sellers and all liabilities and obligations
relating to personal and bodily injury and property damage arising from acts or
omissions occurring after the Closing shall be borne by Purchaser.
<PAGE>
Section 3.15 Licensing of Certain Intellectual Property. At
the Closing, Sellers shall grant to Purchaser and its Affiliates one or more
perpetual, royalty-free licenses, in form and substance reasonably satisfactory
to Sellers and Purchaser (the "EG&G License"), with respect to the Retained
Patents for all petrochemical, chemical, refining, gas transmission and
exploration, pharmaceutical, pulp and paper, and power industry applications and
uses, which licenses shall be on an exclusive basis until the fifth (5th)
anniversary of the Closing Date and on a non-exclusive basis thereafter. At the
Closing, Purchaser shall grant to Sellers and their Affiliates one or more
perpetual, royalty-free licenses, in form and substance reasonably satisfactory
to Sellers and Purchaser (the "TI Group License"), with respect to the Licensed
Patents for all aerospace engine, main shaft, gas path and gearbox applications
and uses, except applications in the power industry, which licenses shall be on
an exclusive basis until the fifth (5th) anniversary of the Closing Date and on
a non-exclusive basis thereafter. In addition, at the Closing, Purchaser shall
grant to Sellers and their Affiliates one or more non-exclusive, perpetual,
royalty-free licenses, in form and substance reasonably satisfactory to Sellers
and Purchaser, with respect to any automation methods and processes used as of
the Closing Date at Shannon, Ireland in respect of bellows manufacturing by the
Business.
Section 3.16 Noncompete.
(a) EG&G agrees that, for a period of five (5) years after the
Closing Date, neither it nor any of its subsidiaries or affiliates (whether or
not presently existing) (each a "Restricted Party") shall engage anywhere in the
world, directly or indirectly, in the design, development, manufacture, testing,
repairing, servicing, marketing or sale of (a) rotating mechanical seal products
(or any material component thereof) used for petrochemical applications,
chemical applications, refrigeration compression applications (other than
insofar as they are used for aerospace applications) refining applications, or
gas transmission and exploration applications; or (b) metal bellows seals, split
seals and non-contacting mechanical seals (or any material component thereof)
used for pharmaceutical applications, pulp and paper applications or power
generation pump applications (collectively referred to as the "Restricted
Business"). In addition, EG&G agrees that during such five (5) year period none
of the Restricted Parties shall, directly or indirectly, supply components or
parts for the Restricted Business or to any person or entity that uses or
proposes to use such components or parts in the Restricted Business. The
foregoing covenant shall not apply to the acquisition by a Restricted Party of a
business entity which engages in the Restricted Business, provided, that the
Restricted Business does not constitute more than 20% of the total revenues of
such business entity. Notwithstanding the foregoing, a Restricted Party may
acquire a business entity with respect to which the Restricted Business
constitutes more than 20% of the total revenues of such business entity,
provided, that within 12 months of the consummation of such acquisition, the
Restricted Party has divested itself of all or substantially all of such
Restricted Business.
(b) In the event of a breach by any Restricted Party of any
provision of this Section 3.16, Purchaser may, in addition to other rights and
remedies existing in its favor, apply to any court of competent jurisdiction for
specific performance and injunctive or other relief in order to enforce or
prevent any violation of such provisions and the defendant in any such action
will not contest such relief on the grounds that the aggrieved party has an
adequate remedy at law.
<PAGE>
(c) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 3.16 is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of such term or provision to the extent necessary to make it
valid and enforceable and this Section 3.16 shall be enforceable as so modified.
ARTICLE IV
Conditions
----------
. The obligations of Purchaser and Sellers to consummate the
transactions contemplated by this Agreement shall be subject to the following
conditions:
(a) No Order or Law shall have been issued, promulgated,
enforced, entered, or threatened by any Governmental Entity, or be in effect,
that does or would restrain or prohibit the Closing or the closing under the
Belfab Purchase Agreement (as defined below) or that has resulted in, or could
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect or that would subject either Sellers or Purchaser, or
their respective Affiliates to material penalty or sanction as a result of the
Closing or the closing under the Belfab Purchase Agreement;
(b) Purchaser and EG&G shall simultaneously consummate the
transactions contemplated by the Purchase Agreement dated as of the date hereof
between John Crane Inc., a wholly-owned subsidiary of Purchaser ("Crane"),and
EG&G relating to the sale by Crane to EG&G of the assets of the Belfab Division
of Crane (the "Belfab Purchase Agreement");
<PAGE>
(c) Purchaser and Sellers shall have duly authorized, executed
and delivered one or more services and facilities sharing agreements in respect
of Seller's facilities in France, Italy and the United Kingdom that currently
house the Business in those countries and Sellers' facilities in Cranston, Rhode
Island and Shannon, Ireland that will be owned directly or indirectly by
Purchaser as a result of the Closing pursuant to which support will be provided
on the basis of normal custom and practice through the date of this Agreement,
and reasonable assistance will be provided in transferring out of the
appropriate facility at the end of the relevant lease term substantially on the
terms contained in Annex D and otherwise in form and substance reasonably
satisfactory to Sellers and Purchasers (the "Facilities Sharing Agreement");
(d) Purchaser and Sellers shall have received the consent of
the Shannon Free Airport Development Company Limited (the "Development Company")
on terms reasonably satisfactory to Sellers and Purchaser to (x) the transfer of
the Shares of EG&G International to Purchaser pursuant to this Agreement, as
provided for under the terms of EG&G International's grant agreements with the
Development Company and (y) the lease of space by Purchaser to Sellers at the
Shannon, Ireland facility referenced in subparagraph (e) below;
(e) Purchaser and the relevant Sellers shall have duly
authorized, executed and delivered lease agreements, substantially in the form
of Annex E with such changes thereto as may be necessary or reasonably
appropriate to conform to local law, custom and practice and otherwise on the
terms set forth in Annex D, relating to that portion of the facilities owned
directly or indirectly by EG&G located at Coronation Road, Bucks, England, 2 rue
des Lavoisier, Coignieres, France and Via Rucellai, 23, Milan, Italy, used by
the Business whereby the appropriate portion of such facilities shall be leased
by EG&G or its Affiliates to Purchaser for a period of twelve (12) months, in
each case commencing on the Closing Date (such leases collectively, the
"Transitional Leases"); and Purchaser and relevant Sellers shall have duly
authorized, executed and delivered lease agreements, substantially in the form
of Annex E with such changes thereto as may be necessary or reasonably
appropriate to conform to local law, custom and practice and otherwise on the
terms set forth in Annex D, relating to that portion of the facilities in
Cranston, Rhode Island and Shannon, Ireland that will be owned directly or
indirectly by Purchaser as a result of the Closing, whereby the appropriate
portion of such facilities shall be leased by Purchaser or its Affiliates to
Sellers for a period of five (5) years and twelve (12) months, respectively,
after the Closing Date, in each case commencing on the Closing Date;
(f) Purchaser and EG&G shall each have duly authorized,
executed and delivered a research and development agreement on substantially the
terms contained in Annex F and otherwise in form and substance reasonably
satisfactory to Purchaser and EG&G (the "R&D Agreement");
(g) Sellers shall have executed and delivered to Purchaser the
EG&G License, and Purchaser shall have executed and delivered to Sellers the TI
Group License;
<PAGE>
(h) Purchaser and EG&G shall have duly authorized, executed
and delivered to each other an MDC Semi-Conductor Bellows Supply Agreement in
form and substance reasonably satisfactory to each of them on substantially the
terms contained in Annex G (the "MDC Bellows Supply Agreement"); and
(i) The trustee of any funded retirement benefit schemes or
arrangements maintained or contributed to by EG&G International in Ireland shall
have consented to, and executed such documents as are necessary to give effect
to, the transfer of sponsorship of such schemes or arrangements to EG&G or one
of its Affiliates other than an Acquired Company such that Purchaser and its
Affiliates or any Acquired Company shall not assume or continue sponsorship of
such schemes or arrangements and EG&G=s actuary and Purchaser's actuary shall
have agreed to the letter contemplated by Section 5.4(b) hereof.
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to each of the following
conditions unless such condition is waived by Purchaser:
(a) The representations and warranties of Sellers made herein
shall be true and correct in all material respects at and as of the Closing Date
as if made at and as of the Closing Date, except for those representations and
warranties made as of a specific date other than the date of this Agreement,
which shall be true and correct as of such date;
(b) Sellers shall, in all material respects, have performed
all covenants and complied with all agreements required by this Agreement to be
performed or complied with by them prior to the Closing Date;
(c) All authorizations, consents, approvals and forbearance of
Governmental Entities and all waiting or review periods required for the
consummation of the transactions contemplated by this Agreement which are
disclosed on Schedules 2.l(m) of the Sellers' Disclosure Schedule and 2.2(e) to
this Agreement shall have been obtained or shall have expired or been
terminated, as the case may be;
<PAGE>
(d) All consents and approvals of parties to the Material
Contracts required for the assignment by Sellers of any Contracts to Purchaser
pursuant to this Agreement or required to waive any default or other change in
the rights under such contract that would result because of any change of
control that would occur upon the consummation of the transactions contemplated
under this Agreement which are disclosed on Schedule 4.2(d) to this Agreement;
(e) Purchaser shall have executed a collective bargaining
agreement with the incumbent union ("Sealol Shop Union") which represents
certain employees at Sellers' facility located in Cranston, Rhode Island, on
substantially similar terms to those contained in the currently existing
collective bargaining agreement (other than with respect to any terms thereof
which relate to the Warwick Rhode Island facility of Sealol U.S.) and in form
and substance reasonably satisfactory to Purchaser, and Sellers shall use
reasonable best efforts to assist Purchaser in this process;
(f) There shall be included in the Contracts assigned by
Sellers to Purchaser at Closing, valid and effective distributor and sales
representative agreements for the Business (in respect of which no Seller shall
have received a notice of termination) with distributors and sales
representatives that accounted for at least 75% of the revenues of the Business
attributable to distributors and sales representatives in 1997;
(g) Purchaser shall have received from each Seller an
officers' certificate, signed by its president or any vice president and by its
chief financial officer or treasurer and dated the Closing Date, stating that
the conditions specified in Sections 4.2(a), 4.2(b) and 4.2(f) have been
satisfied; and
(h) Prior to Closing, EG&G International will have made a
valid election, under United States Treasury Regulation Section 301.7701-3 to be
disregarded as an entity separate from its owner for United States federal
income tax purposes, and such election will have become effective prior to
Closing, and will have provided Purchaser with a copy of such election.
. The obligation of Sellers to consummate the transactions
contemplated by this Agreement shall be subject to each of the following
conditions unless such condition is waived by Sellers:
(a) The representations and warranties of Purchaser and TISA
made herein shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of the Closing Date, except for those
representations and warranties made as of a specific date other than the date of
this Agreement, which shall be true and correct as of such date;
<PAGE>
(b) Purchaser and TISA shall, in all material respects, have
performed all covenants and complied with all agreements required by this
Agreement to be performed or complied with by them prior to the Closing Date;
(c) All authorizations, consents, approvals and forbearance of
Governmental Entities and all waiting or review periods required for the
consummation of the transactions contemplated by this Agreement which are
disclosed on Schedules 2.1(m) of the Sellers' Disclosure Schedule and 2.2(e) to
this Agreement shall have been obtained or shall have expired or been
terminated, as the case may be; and
(d) EG&G shall have received from Purchaser an officers'
certificate, signed by its chief executive officer or any managing director and
by its group financial officer or group treasurer and dated the Closing Date,
stating that the conditions specified in Sections 4.3(a) and 4.3(b) have been
satisfied.
. Purchaser and EG&G shall determine in good faith whether the
conditions set forth in Sections 4.1, 4.2 and 4.3 hereof, respectively, have
been satisfied, and neither Purchaser nor EG&G shall unreasonably seek to delay
the Closing on the sole basis of the non-satisfaction of Section 4.1, 4.2 and
4.3 hereof.
ARTICLE V
Employee Benefits and Personnel Matters
---------------------------------------
. Purchaser agrees that for a period of one year following the
Closing Date, the U.S. Employees employed solely in respect of the Business who
are employed (other than those eligible or who are receiving long-term
disability benefits under any insurance plan) on the Closing Date shall be
provided compensation and employee benefits that are reasonably comparable in
the aggregate to the compensation and benefits provided to such U.S. Employees
immediately prior to the Closing Date by Sellers; provided, however, Purchaser
shall have no obligation to offer U.S. Employees retiree health or life benefits
and shall have no obligation to provide any other benefit to such U.S. Employees
in substitution of their retiree health and life benefits, and after such one
year period, Purchaser shall have no additional obligations under this Agreement
with respect to the Employees. U.S. Employees who continue employment with
Purchaser shall be given credit for all service with Sellers (or service
credited by Sellers for similar plans, programs or policies) under employee
benefit plans (including severance plans and policies) of Purchaser in which
they become participants for purposes of eligibility and vesting but not benefit
accrual; provided, that, for purposes of severance plans and policies of
Purchaser in which such employees become participants, service with Sellers will
be credited under such plans and policies to determine severance benefits, if
any. With respect to any benefits, plans, or arrangements sponsored or provided
by Sellers other than the Acquired Companies such benefits, plans or
arrangements shall remain the responsibility of Sellers, and shall not be
assumed by Purchaser. Notwithstanding the foregoing, if any funded pension plan,
within the meaning of Section 3(2) of ERISA, is maintained by an Acquired
Company, and is not fully funded such that assets as of the Closing Date do not
exceed projected benefit obligations determined as of the Closing Date, both
using the ongoing actuarial assumptions used in such plan's actuarial valuation
and on a termination basis using Pension Benefit Guaranty Corporation
assumptions, sponsorship of such plan shall be transferred prior to the Closing
Date to EG&G or one of its Affiliates other than an Acquired Company so that
Purchaser and its Affiliates shall have no responsibility for funding such plan.
EG&G acknowledges and agrees that all accrued liabilities reflected on the
Balance Sheet and any liabilities accrued thereafter, up and until the Closing
Date, as they relate to Employees (whether foreign or domestic) who have become
employees of Purchaser and who participated in the Seller's economic value added
program or any other incentive compensation plan, agreement, policy, arrangement
or program maintained by the Seller, shall remain the accrued liabilities of the
business units which employed such Employees following the Closing Date.
Purchaser shall make all payments to Employees who become employees of Purchaser
pursuant to such economic value added programs and incentive compensation plans
in accordance with their terms to the extent accrued as of the Closing Date.
Except with respect to any severance benefits that U.S. Employees may be
entitled to pursuant to Purchaser's severance plans or policies, EG&G shall
fully indemnify Purchaser against any and all taxes, assessments, claims or
liabilities for compensation and benefits provided or promised by EG&G and its
Affiliates prior to the Closing Date with respect to any benefit, plan or
arrangement covering the U.S. Employees on the Closing Date. In addition, EG&G
shall at its own expense, take any action necessary to provide elections for
continuation health coverage described in Section 4980B of the Code to employees
and their dependents as a result of any material changes in available health
coverage, and shall fully indemnify Purchaser and its Affiliates, including any
such Affiliate that is an Acquired Company, against any and all taxes,
penalties, and assessments related to EG&G's failure to fulfill any applicable
legal requirements in connection with such elections.
<PAGE>
Section 5.2 England Section
(a) It is the intention of Purchaser that, for a period of one
year following the Closing Date, employees employed in England ("English
Employees") solely in respect of the Business who are employed (other than those
eligible or who are receiving long-term disability benefits under any insurance
plan) on the Closing Date shall be provided compensation and employee benefits
that are reasonably comparable in the aggregate to the compensation and benefits
provided to such English Employees immediately prior to the Closing Date by EG&G
or any of its Affiliates (subject to applicable local law) and Purchaser shall
have no additional obligations under this Agreement with respect to the English
Employees. English Employees who accept the offer of employment with Purchaser
shall be given credit for all service with EG&G and its Affiliates (or service
credited by EG&G and its Affiliates for similar plans, programs or policies)
under employee benefit plans (including severance plans and policies) of
Purchaser in which they become participants for purposes of eligibility and
vesting but not benefit accrual (subject to Section 5.2(b)); provided, that, for
purposes of severance plans and policies of Purchaser in which such employees
become participants, service with Seller will be credited under such plans and
policies to determine severance benefits, if any. Except as required under
applicable local law, any benefits, plans, schemes or arrangements maintained or
contributed to by EG&G or any of its Affiliates for the benefit of English
Employees shall remain the responsibility of EG&G and its Affiliates following
the Closing and shall not be assumed by Purchaser.
<PAGE>
(b) In respect of any funded retirement benefit schemes
maintained or contributed to by EG&G or any of its Affiliates for the benefit of
English Employees who become employees of Purchaser following the Closing Date
("English Transferred Employees"), EG&G and its Affiliates shall arrange to
transfer from such schemes or arrangements to schemes or arrangements nominated
by the Purchaser (and approved under Chapter 1 of Part XIV of the Taxes Act of
1988), cash or other mutually acceptable property, the value of which shall be
equal to the sum of (i) and (ii), subject to a minimum in relation to each
English Transferred Employee of any cash equivalent (as defined under local law)
which any English Transferred Employee would be entitled to on termination of
his membership of the scheme ((i) and (ii), subject to this minimum together
being the AAnticipated Transfer Amount@), where (i) is the present value of the
liabilities with respect to such English Transferred Employees under such
schemes or arrangements as of the Closing Date, provided such schemes or
arrangements are valued on the basis that service is calculated up to and
including the Closing Date and no allowance is made for future projections of
salary increases and (ii) is the return on the FT-Actuaries All-Share Total
Return Index over the period from the Closing Date to the date the transfer
payment is made multiplied by the amount calculated in clause (i) of this
Section 5.2(b). The calculation of such amounts shall be made based on the
assumptions used in the most recent actuarial valuations adjusted as necessary
to take account of any requirements of local law. Such calculation shall be made
by EG&G's actuary; provided, that, EG&G's actuary shall provide Purchaser's
actuary with such information as may be necessary to verify such transfer
amounts prior to transfer. If the transfer amount cannot be mutually agreed to
by the actuaries of EG&G and Purchaser, a third actuary that is mutually
acceptable to the parties shall be retained and its determination of the
transfer amount shall be binding. If the amount actually transferred from EG&G=s
schemes to Purchaser=s schemes is less than the Anticipated Transfer Amount,
EG&G shall pay an amount in cash (by way of an adjustment to the Purchase
Price), reduced by the applicable corporate tax rate of Purchaser in England
with respect to the Business, to the Purchaser equal to the difference between
the Anticipated Transfer Amount and the amount actually transferred. If the
amount actually transferred from EG&G=s schemes to Purchaser=s schemes is more
than the Anticipated Transfer Amount, Purchaser shall pay an amount in cash,
reduced by the applicable corporate tax rate of EG&G in England with respect to
the Business, equal to the difference between the amount actually transferred
(limited to the amount provided in clauses (i) and (ii) of this Section 5.2(b)
if liabilities were calculated with regard to projections of salary increases)
and the Anticipated Transfer Amount; provided, that, EG&G and/or its Affiliates
shall not exercise any power or discretion which would result in the amount to
be transferred under such scheme or arrangements being increased. Subject to
applicable local law, the transfer of assets contemplated hereunder shall take
place within 90 days after the Closing Date.
<PAGE>
(c) Notwithstanding the foregoing, EG&G shall procure that for
however long as is reasonably necessary to complete the arrangements in Section
5.2(b), but in any event not longer than six (6) months after the Closing Date
unless EG&G agrees otherwise, subject to applicable local law, the Purchaser is
permitted to participate in any such schemes or arrangements in respect of the
English Transferred Employees who are participants of such schemes or
arrangements on the Closing Date. During such period, Purchaser shall conform to
the rules of such schemes or arrangements, not exercise any power or discretion
under such schemes or arrangements without the consent of EG&G (which consent
shall not be unreasonably withheld) and pay the same rate of contributions that
are paid by EG&G on behalf of those English Transferred Employees as of the
Closing Date and EG&G shall procure that, subject to applicable local law, the
Purchaser is not required to pay any further sums whatsoever to such schemes or
arrangements at any time. EG&G shall procure that the governing provisions of
such schemes or arrangements are not amended to increase materially the
obligations of the Purchaser as a participating employer nor amend or augment
the interests under such schemes or arrangements of any of those English
Transferred Employees during this period. EG&G and Purchaser mutually undertake
not to do or omit to do anything which may affect the amount to be transferred
or paid under Section 5.2(b). In addition, EG&G and its Affiliates shall use
their best endeavors to transfer from such schemes or arrangements to
corresponding schemes or arrangements nominated by the Purchaser, cash or other
mutually acceptable property the value of which is the amount contributed to
such schemes or arrangements by Purchaser and all of the English Transferred
Employees pursuant to this Section 5.2(c), less any part of such contributions
reasonably attributable to the provision of life cover and administrative costs
and actual investment earnings or losses on such amounts. Payment of any such
amounts shall be ignored for the purposes of any calculations under Section
5.2(b). If, and to the extent that, EG&G and/or its Affiliates are unable to
transfer such amounts to Purchaser, EG&G shall pay an amount in cash to
Purchaser equal to such amount, reduced by the applicable income tax rate of
Purchaser in England with respect to the Business.
(d) Except with respect to any funded retirement benefit
schemes or arrangements for which assets and liabilities have been transferred
pursuant to Sections 5.2(b) and (c) or any severance benefits that Transferred
Employees may be entitled pursuant to Purchaser's severance plan and policies,
EG&G shall fully indemnify Purchaser against any and all liabilities that may
arise with respect to any Transferred Employee's service with EG&G prior to the
Closing Date.
<PAGE>
Section 5.3 Canada. (a) It is the intention of Purchaser that,
for a period of one year following the Closing Date, employees employed in
Canada ("Canadian Employees") solely in respect of the Business who are employed
(other than those eligible or who are receiving long-term disability benefits
under any insurance plan) on the Closing Date shall be provided compensation and
employee benefits that are reasonably comparable in the aggregate to the
compensation and benefits provided to such Canadian Employees immediately prior
to the Closing Date by EG&G or any of its Affiliates (subject to applicable
local law) and Purchaser shall have no additional obligations under this
Agreement with respect to the Canadian Employees. Canadian Employees who
continue employment with Purchaser shall be given credit for all service with
EG&G and its Affiliates (or service credited by EG&G and its Affiliates for
similar plans, programs or policies) under employee benefit plans (including
severance plans and policies) of Purchaser in which they become participants for
purposes of eligibility and vesting but not benefit accrual; provided, that, for
purposes of severance plans and policies of Purchaser in which such employees
become participants, service with Seller will be credited under such plans and
policies to determine severance benefits, if any. Except as required under
applicable local law, any benefits, plans, schemes or arrangements maintained or
contributed to by EG&G or any of its Affiliates for the benefit of Canadian
Employees shall remain the responsibility of EG&G and its Affiliates following
the Closing and shall not be assumed by Purchaser.
(b) In respect of any funded defined contribution pension plan
or similar arrangements maintained or contributed to by EG&G or any of its
Affiliates for the benefit of Canadian Employees who become employees of
Purchaser following the Closing Date ("Transferred Canadian Employees"), EG&G
and its Affiliates shall cause to be transferred from such defined contribution
pension plan or similar arrangement, the liability for the account balances of
such Transferred Canadian Employees, together with cash, cash equivalents or
mutually acceptable property, the fair market value of which on such transfer
date is equal to such liability to a plan designated by the Purchaser. The
transfer of assets shall take place within 90-days after the Closing Date or as
soon as possible after any necessary approvals have been obtained and shall be
subject to applicable local law.
(c) Except with respect to any funded defined contribution
pension plan or similar arrangements for which assets and liabilities have been
transferred pursuant to Section 5.3(b) or any severance benefits to which
Transferred Canadian Employees may be entitled pursuant to Purchaser's severance
plan and policies, EG&G shall fully indemnify Purchaser against any and all
liabilities that may arise with respect to any Transferred Canadian Employee's
service with EG&G prior to the Closing Date.
<PAGE>
Section 5.4 Ireland.
(a) Purchaser agrees that for a period of one year following
the Closing Date, employees of EG&G International employed in Ireland after the
Closing Date ("Irish Employees") shall be provided compensation and employee
benefits that are reasonably comparable in the aggregate to the compensation and
benefits provided to such Irish Employees immediately prior to the Closing Date
by EG&G International (subject to applicable local law and any adjustments in
respect of service after the Closing Date needed to reflect any Irish Employees
who are not Irish Transferred Employees (as defined below)) and Purchaser shall
have no additional obligations under this Agreement with respect to the Irish
Employees. Irish Employees who continue employment with EG&G International
following the Closing Date shall be given credit for all service with EG&G
International (or service credited by EG&G International for similar plans,
programs or policies) under employee benefit plans (including severance plans
and policies) of Purchaser in which they become participants for purposes of
eligibility and vesting but not benefit accrual (subject to Section 5.4(b));
provided, that, for purposes of severance plans and policies of Purchaser or its
Affiliates or any Acquired Company in which such employees become participants,
service with Seller will be credited under such plans and policies to determine
severance benefits, if any. Notwithstanding the generality of the foregoing,
Purchaser shall establish or arrange for the establishment, with effect from the
Closing Date, of funded retirement benefit schemes or similar arrangements for
the Irish Employees ("Purchaser=s Irish Schemes") which, subject to the rights
to amend and terminate any such scheme or arrangement, will provide for each
Irish Employee benefits in respect of service with the Purchaser or its
Affiliates or any Acquired Company after the Closing Date which are as favorable
overall as the benefits which would have been provided under the funded
retirement benefit schemes or similar arrangements maintained or contributed to
by EG&G International ("EG&G Irish Schemes") for such Irish Employee (subject to
any adjustments because any Irish Employee has not become an Irish Transferred
Employee), under the rules in force at the Closing Date, had such employees
continued as an active member of the EG&G Irish Schemes.
<PAGE>
(b) Subject to the consent of the trustees of the EG&G Irish
Schemes, which EG&G shall use all reasonable efforts to obtain, EG&G
International shall prior to the Closing Date transfer sponsorship of the EG&G
Irish Schemes to EG&G or one of its Affiliates other than any Acquired Company,
so that from the Closing Date, EG&G International, Purchaser and its Affiliates
shall not be sponsors of the EG&G Irish Schemes and shall have no responsibility
for funding the EG&G Irish Schemes (except to the extent provided in Section
5.4(c) below). In addition, EG&G and its Affiliates shall arrange to transfer
from the EG&G Irish Schemes to a Purchaser=s Irish Schemes in respect of those
Irish Employees who consent to the transfer (AIrish Transferred Employees@) cash
or other mutually acceptable property, the value of which shall be equal to the
sum of (i) the present value of the liabilities of the EG&G Irish Schemes with
respect to the Irish Transferred Employees as of the Closing Date, calculated
without regard to future projections of salary increases, indexed for cost of
living adjustments to the extent required under applicable local law or set out
in the Actuaries= Letter (as defined below) (the ABenefit Obligation@) and (ii)
interest on the Benefit Obligation for the period from the Closing Date to the
actual date of transfer to the Purchaser=s Irish Schemes calculated using the
annual Dublin Inter Bank Offer Rate from time to time plus 1% (the ATiming
Adjustment@), the sum of the Benefit Obligation and the Timing Adjustment being
hereinafter referred to as the AAgreed Transfer Amount@. The calculation of the
Agreed Transfer Amount shall be made based on the assumptions and methodology
agreed by EG&G=s actuary and Purchaser=s actuary and evidenced by the letter
sent by EG&G=s actuary and Purchaser=s actuary to the parties hereof within 20
days following the signing of this Agreement the (AActuaries= Letter@). The
calculation shall be made in the first instance by EG&G=s actuary and verified
by Purchaser=s actuary and EG&G=s actuary shall provide Purchaser=s actuary with
any information necessary to verify the calculation prior to transfer. If the
transfer amount cannot be agreed by EG&G=s actuary and Purchaser=s actuary, a
third actuary that is mutually acceptable to the parties (or, in default of a
mutual agreement, appointed by the President for the time being of the Society
of Actuaries in Ireland) shall be retained and its calculation of the Agreed
Transfer Amount shall be binding.
<PAGE>
If the amount or sum of the amounts actually transferred from
the EG&G Irish Schemes to the Purchaser=s Irish Schemes (the AActual Transfer
Amount@) is less than the Agreed Transfer Amount, EG&G shall within thirty (30)
days of the transfer pay an amount in cash to Purchaser equal to 90% of the
difference between the Agreed Transfer Amount and the Actual Transfer Amount
(that difference being hereinafter referred to as the AShortfall@). If the
Actual Transfer Amount when aggregated with any shortfall in respect of which
EG&G has made a payment is greater than the Agreed Transfer Amount, Purchaser
shall within thirty (30) days of the transfer pay an amount in cash to EG&G
equal to 90% of the difference between the Agreed Transfer Amount and the lower
of (a) the aggregate of the Actual Transfer Amount and any shortfall in respect
of which EG&G has made a payment and (b) the aggregate of the value which the
Agreed Transfer Amount would have been if the Benefit Obligation was calculated
as of the Closing Date with regard to projections of future salary increases but
not indexed for cost of living adjustments and otherwise calculated as set out
above, the calculation being made based on the assumptions and methodology set
out in the Actuaries Letter and any Shortfall in respect of which EG&G has made
a payment (the ALimit@) (that difference being hereinafter referred to as the
AExcess@). If any further amount is transferred from the EG&G Irish Schemes to
the Purchaser=s Irish Schemes, the Purchaser shall, within thirty (30) days of
the further transfer pay to EG&G an amount equal to 90% of that further transfer
to the extent that, when aggregated with all payments made by the EG&G Irish
Schemes to the Purchaser=s Irish Schemes prior to that further transfer and any
Shortfall in respect of which EG&G has made a payment, it does not exceed the
Limit. Notwithstanding the foregoing, Purchaser shall have no obligations to
make payments hereunder if EG&G and/or its Affiliates shall have exercised any
power or discretion which would result in the amount to be transferred under the
EG&G Irish Schemes being increased. The Purchaser shall procure that the
Purchaser=s Irish Schemes shall accept any amount paid or transferred to them
pursuant to this Section 5.4(b) and, subject to receipt of such amount, that the
Purchaser=s Irish Schemes shall provide benefits for each Irish Transferred
Employee in respect of service treated as pensionable under the EG&G Irish
Schemes which are as favorable overall as the benefits which would have been
provided under the rules and discretionary practices of the EG&G Irish Schemes
as in operation at the Closing Date in respect of that service had the Irish
Transferred Employee continued as an active member after the Closing Date.
Subject to applicable local law, the amount to be transferred being determined
and agreed and the establishment of the Purchaser=s Irish Schemes in accordance
with Section 5.4(a), the transfer of assets contemplated hereunder shall take
place within 90 days after the later of the Closing Date and the date EG&G
International has ceased to participate in the EG&G Irish Schemes as provided in
Section 5.4(c). For the avoidance of doubt, assets of the EG&G Irish Schemes
representing voluntary contributions by Irish Transferred Employees (in respect
of which entitlement under the EG&G Irish Schemes is not related to earnings)
and the benefits deriving therefrom shall be disregarded for all the preceding
provisions of this Section 5.4(b). EG&G shall nevertheless use its reasonable
endeavors to procure that the part of such assets attributable to each Irish
Transferred Employee are transferred to the Purchaser=s Irish Schemes for the
benefit of such Irish Transferred Employee.
<PAGE>
(c) Notwithstanding the foregoing, EG&G shall procure that for
however long as is reasonably necessary to complete the arrangements in Section
5.4(b), but in any event not longer than six (6) months after the Closing Date
unless EG&G agrees otherwise, subject to applicable local law, EG&G
International is permitted to participate in the EG&G Irish Schemes in respect
of the Irish Employees who are participants of such schemes or arrangements on
the Closing Date. During such period, Purchaser shall procure that EG&G
International shall conform to the rules of such schemes or arrangements, not
exercise any power or discretion under such schemes or arrangements without the
consent of EG&G (which consent shall not be unreasonably withheld) and pay the
same rate of contributions that are paid by the Irish Employees and by EG&G
International on behalf of those Irish Employees as of the Closing Date and EG&G
shall procure that EG&G International is not required to pay any further
contributions to such schemes or arrangements at any time. EG&G shall procure
that unless required by applicable law, the governing provisions of such schemes
or arrangements are not amended to increase materially the obligations of the
Purchaser as a participating employer nor amend or augment the interests under
such schemes or arrangements of any of those Irish Employees during this period.
EG&G and Purchaser mutually undertake not to do or omit to do anything which may
affect the amount to be transferred or paid under Section 5.4(b). In addition,
EG&G and its Affiliates shall use their best endeavors to transfer from such
schemes or arrangements to Purchaser's Irish Schemes, cash or other mutually
acceptable property the value of which is the amount contributed to the EG&G
Irish Schemes by EG&G International in respect of the Irish Transferred
Employees or the Irish Transferred Employees pursuant to this Section 5.4(c),
adjusted by actual investment earnings or losses on such amounts. Payment of any
such amounts shall be ignored for the purposes of any calculations under Section
5.4(b). If, and to the extent that, EG&G and/or its Affiliates are unable to
transfer such amounts to the Purchaser's Irish Schemes, EG&G shall pay an amount
in cash to Purchaser equal to 90% of such amount.
(d) EG&G shall fully indemnify Purchaser and EG&G
International against any and all liabilities that may arise with respect to any
claims against Purchaser or EG&G International made by or in respect of any of
the Irish Employees other than the Irish Transferred Employees with respect to
their service with EG&G International prior to the Closing Date.
<PAGE>
Section 5.5 Other Countries and Jurisdictions
(a) It is the intention of EG&G and Purchaser to make whatever
necessary arrangements as are customary with respect to all employee matters as
they relate to Employees of EG&G and its Affiliates in countries and
jurisdictions other than those specified in Sections 5.1, 5.2, 5.3 and 5.4
above, who become employees of Purchaser (collectively, the "Other Employees").
Notwithstanding the foregoing, it is the intention of the Purchaser that, for a
period of one year following the Closing Date, Other Employees shall be provided
compensation and employee benefits that are reasonably comparable in the
aggregate to the compensation and benefits provided to such Other Employees
immediately prior to the Closing Date by EG&G or any of its Affiliates (subject
to applicable local law) and Purchaser shall have no additional obligations
under this Agreement with respect to the Other Employees. Other Employees who
continue employment with Purchaser shall be given credit for all service with
EG&G and its Affiliates (or service credited by EG&G and its Affiliates for
similar plans, programs or policies) under employee benefit plans (including
severance plans and policies) of Purchaser in which they become participants for
purposes of eligibility and vesting but not benefit accrual (subject to Section
5.5(b)); provided, that, for purposes of severance plans and policies of
Purchaser in which such employees become participants, service with Seller will
be credited under such plans and policies to determine severance benefits, if
any. Except as required under applicable local law, any benefits, plans, schemes
or arrangements maintained or contributed to by EG&G for the benefit of Other
Employees shall remain the responsibility of EG&G following the Closing Date and
shall not be assumed by Purchaser. EG&G acknowledges and agrees that it will
comply will all applicable legal requirements with respect to the transfer of
Other Employees, including, but not limited to, prior notice requirements,
termination and release procedures and severance requirements (as they relate to
termination of service prior to the Closing Date), if any.
(b) If such Other Employees participate in any employee
benefit schemes or arrangements (whether or not funded) maintained or
contributed to by EG&G or any benefit scheme or arrangement maintained or
mandated by any governmental authority, all liabilities accrued (whether or not
vested) under such schemes or arrangements prior to the Closing Date with
respect to Other Employees shall remain the liability of EG&G following the
Closing Date and Purchaser shall have no obligation with respect to any
liability accrued (whether or not vested) by such Other Employees under such
schemes or arrangements prior to the Closing Date; provided, that, to the extent
it will be customary to transfer assets and liabilities of any such schemes or
arrangements in the applicable jurisdiction to the Purchaser following the
Closing Date, then such transfer shall be made in the same fashion as provided
in Sections 5.2 or 5.3 as the case may be. Except with respect to any severance
benefits that Other Employees may be entitled pursuant to Purchaser's severance
plans or policies or as otherwise agreed to among the parties, EG&G shall fully
indemnify Purchaser against any and all such liabilities and any other
liabilities that may arise with respect to any Other Employee's service with
EG&G prior to the Closing Date or liabilities that may arise with respect to
employees who do not become employees of Purchaser.
<PAGE>
ARTICLE VI
Survival; Indemnification
-------------------------
. The representations and warranties of the parties contained
in this Agreement shall survive the Closing Date for a period of one year,
except that (i) the representations and warranties contained in Section 2.1(j)
and in Section 3.6 of this Agreement (and any provisions of this Agreement
necessary to make indemnification with respect thereto effective) shall survive
until the expiration of the applicable statutes of limitation (including waivers
and extensions thereof) for the year or period at issue and (ii) the
representations and warranties contained in Section 2.1(o) of this Agreement
shall survive the Closing Date for a period of three years. The party or parties
seeking indemnification pursuant to this Article VI shall be hereinafter
referred to individually as an "Indemnified Party" and collectively as
"Indemnified Parties", and the party or parties from whom such indemnification
is sought shall be hereinafter referred to individually as an "Indemnifying
Party" and collectively as "Indemnifying Parties".
. (a)n 6From and after the Closing, EG&G shall indemnify
Purchaser and its Affiliates and hold Purchaser and its Affiliates harmless from
and against any and all Losses relating to or arising out of the inaccuracy,
breach or violation of any of the representations or warranties made by Sellers
pursuant to this Agreement.
(b) From and after the Closing, EG&G shall indemnify Purchaser
and its Affiliates and hold Purchaser and its Affiliates harmless from and
against any and all Losses relating to or arising out of any Excluded Liability
or any liability of EG&G International that would be deemed to be an Excluded
Liability if Purchaser were acquiring the assets of EG&G International
comprising Purchased Assets as provided in this Agreement instead of the share
capital of EG&G International.
<PAGE>
(c) From and after the Closing, EG&G shall indemnify Purchaser
and its Affiliates and hold Purchaser and its Affiliates harmless from and
against any and all Losses relating to or arising out of any circumstance,
action, omission, event or condition existing prior to, or at the time of, the
Closing including without limitation any product liability claims arising from
or relating to any product manufactured, sold, supplied or delivered by the
Business that are outstanding or threatened prior to or at the time of the
Closing (excluding, for this purpose, any warranty claim made pursuant to any
Contract), any environmental claims arising out of facts or circumstances
existing prior to the Closing, and in respect of any Indebtedness outstanding at
Closing, including in respect of interest thereon and any other amounts payable
with respect thereto, except, in the case of any Loss referred to in this
Section 6.2(c), to the extent of reserves for such liabilities specifically
reserved for on the Balance Sheet or, for the period since September 28, 1997,
on the books and records of the Business in the ordinary course of business
consistent with past practice, in accordance with the terms of this Agreement,
and which are of the same type as those reflected on the Balance Sheet.
(d)(i) From and after the Closing, EG&G shall indemnify
Purchaser and its Affiliates and hold Purchaser and its Affiliates
harmless against all Taxes (other than Transfer Taxes subject to
Section 3.6(a) hereof) with respect to the Acquired Companies for
taxable periods or portions thereof ending before or ending on and
including the Closing Date, other than any Taxes attributable to
actions taken by or at the direction of Purchaser after the Closing and
other than Taxes that are reflected in the Final Balance Sheet. For
purposes of this paragraph, whenever it is necessary to determine the
liability for Taxes of the Acquired Companies for the taxable year or
period that includes the Closing Date, the determination of the Taxes
of the Acquired Companies for the portion of the year or period ending
on, and the portion of the year or period beginning after, the Closing
Date shall be determined by assuming that the Acquired Companies had a
taxable year or period which ended at the close of the Closing Date,
except that exemptions, allowances or deductions that are calculated on
an annual basis, such as the deduction for depreciation, shall be
apportioned on a time basis.
(ii) All other payments required under this Section 6.2(d)
shall be paid directly to the relevant taxing authority or, if
Purchaser shall have already paid such Tax, to Purchaser within 30 days
of the provision of notice of such Tax to Seller by Purchaser.
<PAGE>
(iii) After the Closing Date, Seller shall prepare all Tax
Returns required to be filed by or with respect to the Acquired
Companies with respect to taxable periods ending before the Closing
Date and will provide Purchaser with such Tax Returns at least 30 days
before such Tax Returns are required to be filed. The Seller shall also
cooperate with Purchaser in the preparation of any Tax Returns required
to be filed by the Acquired Companies with respect to taxable periods
beginning before and ending after the Closing Date.
.ection 6.3 Indemnification Obligations of Purchaser
(a) From and after the Closing, Purchaser shall indemnify Sellers and their
respective Affiliates and hold Sellers and their respective Affiliates harmless
from and against any and all Losses relating to or arising out of the
inaccuracy, breach or violation of any of the representations or warranties made
by Purchaser pursuant to this Agreement.
(b) From and after the Closing, Purchaser shall indemnify
Sellers and their respective Affiliates and hold Sellers and their respective
Affiliates harmless from and against any and all Losses relating to or arising
out of any Assumed Liability.
(c) Purchaser shall be liable for and shall indemnify Seller
and shall hold Seller harmless against all Taxes with respect to the Acquired
Companies for taxable periods or portions thereof beginning on or after the
Closing Date; and, with respect to any taxable period beginning before the
Closing Date and ending after the Closing Date, that portion of such taxable
year or period beginning on the Closing Date.
(d) Purchaser shall file all Tax Returns with respect to the
Acquired Companies for taxable periods ending after the Closing Date.
(e) With respect to any Tax Return required to be filed by the
Purchaser for a taxable period of any Acquired Company which includes the
Closing Date, Purchaser shall provide Seller with copies of such completed Tax
Return and a statement certifying the amount of tax shown on such Tax Return
that is payable by the Seller pursuant to this Agreement at least thirty (30)
days prior to the due date (or extended due date, if an extension has been
obtained) for filing such Tax Return. Seller or its representatives shall have
the right to review such Tax Return and statement prior to the filing of such
Tax Return.
<PAGE>
.ection 6.4 Matters Involving Third Parties
(a) If any third party shall notify any Indemnified Party with
respect to any matter that may give rise to a claim for indemnification against
an Indemnifying Party under this Agreement (other than any claim for
indemnification under Sections 6.2(d) or 6.3(c)) (a "Claim"), the Indemnified
Party shall promptly notify the Indemnifying Party thereof if it expects to
receive indemnification under this Agreement, but the failure by the Indemnified
Party to give such notice shall not relieve the Indemnifying Party from any
liability it shall otherwise have pursuant to this Agreement except to the
extent the Indemnifying Party is actually prejudiced by such failure. Such
notice shall set forth in reasonable detail the basis for such potential Claim.
(b) The Indemnifying Party shall be entitled to contest and
defend any Claim with respect to which it is called upon to indemnify any
Indemnified Party hereunder; provided that notice of its intention so to contest
or defend shall be given by the Indemnifying Party within thirty (30) calendar
days after the Indemnified Party has given notice of the matter. The
Indemnifying Party shall defend the Indemnified Party against the Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party (it being
agreed that Hale and Dorr LLP and Sullivan & Cromwell are acceptable to the
parties). The Indemnified Party may retain separate counsel at its sole cost and
expense, provided that such separate counsel shall be at the Indemnifying
Party's expense if the Indemnifying Party shall have agreed to such employment
or if such Indemnified Party shall have reasonably concluded that representation
of the Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to actual or potential differing interests between them in the
conduct of the defense of such action. The Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
matter without the written consent of the Indemnifying Party, which shall not be
unreasonably withheld or delayed, provided that, if the Indemnifying Party fails
to undertake the defense of or to settle or pay any such Claim within thirty
(30) days after the Indemnified Party has given written notice to the
Indemnifying Party advising the Indemnifying Party of such Claim, or if the
Indemnifying Party, after having given notice to the Indemnified Party that it
intends to undertake the defense, fails forthwith to defend, settle or pay such
claim, then the Indemnified Party may take any and all necessary action to
dispose of such claim including, without limitation, the settlement or full
payment thereof upon such terms as it shall deem reasonably appropriate, in its
sole discretion, subject to the following with respect to any proposed
settlement thereof. The Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter which does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party.
<PAGE>
(c) Any claim for indemnification under this Agreement which
does not result from the assertion of a claim by a third party shall be asserted
by written notice given by the Indemnified Party to the Indemnifying Party. Such
Indemnifying Party shall have a period of thirty (30) days within which to
respond thereto. If such Indemnifying Party does not respond within such 30-day
period, such Indemnifying Party shall be deemed to have accepted responsibility
to make payment, and shall have no further right to contest the validity of such
claim. If the Indemnifying Party does respond within such 30-day period and
rejects such claim in whole or in part, such Indemnified Party shall be free to
pursue such remedies as may be available to such party under applicable law.
(d) Purchaser shall notify Seller in writing 30 days after the
receipt by Purchaser of written notice of any pending or threatened federal,
state, local or foreign Tax audits or assessments which may materially affect
the liabilities for Taxes of any one or more of the Acquired Companies for which
Seller would be required to indemnify Purchaser pursuant to Section 6.2(d),
provided that failure to comply with this provision shall not affect Purchaser's
right to indemnification hereunder, except to the extent that Sellers are
actually prejudiced by such failure. Seller shall have the sole right to
represent the Purchaser's interests in any Tax audit or administrative or court
proceeding relating to taxable periods ending on or before the Closing Date, and
to employ counsel of its choice at its expense. Notwithstanding the foregoing,
Seller shall not be entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which would adversely affect the
liability for Taxes of the Purchaser for any period after the Closing Date to
any extent (including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost adjustments, the lengthening
of any amortization or depreciation periods, the denial of amortization or
depreciation deductions, or the reduction of loss or credit carryforwards)
without the prior written consent of Purchaser. Such consent shall not be
unreasonably withheld, and shall not be necessary to the extent that Seller has
indemnified the Purchaser against the effects of any such settlement.
<PAGE>
Seller shall be entitled to participate at its expense in the
defense of any claim for Taxes for a year or period ending after the Closing
Date which may be the subject of indemnification by Seller pursuant to Section
6.2(d) and, with the written consent of Purchaser, and at its sole expense, may
assume the entire defense of such Tax claim. Purchaser may not agree to settle
any Tax claim for the portion of the year or period ending on the Closing Date
which may be the subject of indemnification by Seller under Section 6.2(d)
without the prior written consent of Seller, which consent shall not be
unreasonably withheld.
Section 6.5 Certain Limitations on Losses
(a) Sellers shall not have any obligation to indemnify
Purchaser and its Affiliates from and against any Losses relating to or arising
out of any matter described in Section 6.2(a) hereof unless and until Purchaser
and its Affiliates shall have suffered or incurred Losses relating to or arising
out of any matter described in Section 6.2(a) in excess of the aggregate amount
of one million five hundred thousand Dollars ($1,500,000) (as adjusted pursuant
to Section 1.11 hereof), at which point Sellers will be obligated to indemnify
Purchaser and its Affiliates from and against all such Losses in excess of such
amount up to the Purchase Price. Individual Losses of less than $25,000 shall
not give rise to any liability whatsoever of EG&G under Section 6.2(a) hereof,
unless and until all such individual losses of less than $25,000 aggregate to
$250,000 or more in which case indemnity claims may be made under Section 6.2(a)
hereof, for the full amount of all such Losses, subject to the other limitations
contained in the immediately preceding sentence.
(b) Purchaser shall not have any obligation to indemnify EG&G
and its Affiliates from and against any Losses relating to or arising out of any
matter described in Section 6.3(a) unless and until EG&G and its Affiliates
shall have suffered or incurred Losses relating to or arising out of any matter
described in Section 6.3(a) in excess of the aggregate amount of one million
five hundred thousand Dollars ($1,500,000), at which point Purchaser will be
obligated to indemnify EG&G and its Affiliates from and against all such Losses
in excess of such amount up to the Purchase Price. Individual Losses of less
than $25,000 shall not give rise to any liability whatsoever of Purchaser under
Section 6.3(a) hereof, unless and until all such individual losses of less than
$25,000 aggregate to $250,000 or more in which case indemnity claims may be made
under Section 6.3(a) hereof, for the full amount of all such Losses, subject to
the other limitations contained in the immediately preceding sentence.
<PAGE>
(c) An Indemnified Party shall take all reasonable steps
within its control to mitigate Losses upon becoming aware of any event that
could reasonably be expected to give rise thereto. In addition, the amount of
the indemnification due to the Indemnified Party hereunder in connection with
the Loss suffered or incurred shall be limited by netting from such Loss the
amount of any indemnification actually received by any Indemnified Party from
any unrelated party (other than pursuant to an insurance claim) with respect to
such Loss.
(d) In the event that any Indemnified Party delivers a claim
for indemnification pursuant to Section 6.2(c) relating to environmental claims
arising out of facts or circumstances existing prior to the Closing, Sellers
shall have the right, consistent with any applicable law, regulation, order,
judgment or decree, but not the obligation, to conduct and manage, at its cost
and expense, the remediation required in respect of such claim under applicable
Environmental Law, provided, however, that (i) Sellers first accept all
liability with respect to such claim, (ii) such remediation shall be designed
and performed in a manner reasonably satisfactory to the Purchaser, (iii) the
operations conducted at or in connection with the facilities or properties being
remediated shall not be interrupted or disrupted except to the extent reasonably
necessary to comply with applicable Environmental Laws and (iv) Sellers will
permit the Purchaser to review and comment upon all documents filed with
regulatory authorities, and to participate in all communications with regulatory
authorities, in connection with any such remediation.
. Each Seller hereby assigns to the Purchaser the right to
pursue and enforce, and hereby irrevocably appoints the Purchaser as its true
and lawful attorney-in-fact with full power in the name of and on behalf of such
Seller for the purpose of pursuing and enforcing, any and all rights of the
Seller under any insurance policies of the Seller (other than those assigned to
Purchaser) with respect to any occurrence, claim or loss (including, without
limitation, any product liability claim) which is the subject of an indemnity
obligation by any of the Sellers to the Purchaser under this Article VI;
provided, that the Purchaser may not exercise such right or power unless the
Seller fails to promptly and expeditiously pursue and enforce its rights under
its insurance policies with respect to such occurrence, claim or loss. The power
of attorney conferred upon the Purchaser by each of the Sellers pursuant to this
Section 6.6 is an agency coupled with an interest and all authority conferred
hereby shall be irrevocable, and shall not be terminated by the dissolution or
the liquidation of any Seller or any other act of any Seller.
<PAGE>
Setion 6.7 Indemnity Payments
(a) To the extent permitted by law, indemnification payments
made pursuant to this Agreement shall be treated by Sellers and Purchaser as
adjustments to the Purchase Price apportioned pro rata unless otherwise agreed.
To the extent indemnity payments relate to losses denominated in a currency
other than United States Dollars, such indemnity payments shall be calculated in
United States Dollars at the United States Dollar exchange rate in effect for
such currency on the date of actual payment with respect to the Purchased Assets
or Shares located in the country giving rise to the claim for indemnity.
(b) All sums payable by the Indemnifying Party under this
Agreement shall be paid free and clear of all deductions or withholdings unless
the deduction or withholding is required by law, in which event the Indemnifying
Party shall pay such additional amount as shall be required to ensure that the
net amount received by the Indemnified Party under this Agreement will equal the
full amount which would have been received by it had no such deduction or
withholding been required to be made.
(c) If any tax authority brings into charge to tax any sum
paid to the Indemnified Party, under this Agreement, then the Indemnifying Party
shall pay such additional amount as shall be required to ensure that the total
amount paid, less the tax chargeable on such amount is equal to the amount that
would otherwise be payable under this Agreement.
(d) Notwithstanding anything in this Agreement to the
contrary, to the extent any Loss which is subject to indemnification hereunder
gives rise to a reduction in the tax liability of the Indemnified Party (a "Tax
Benefit"), the total amount paid by the Indemnifying Party pursuant to this
Agreement shall be reduced by the amount of the Tax Benefit. For the purposes of
this Section 6.7(d), the Tax Benefit shall be that amount determined by mutual
agreement of the Purchaser and EG&G, acting in good faith. The Purchaser and
EG&G shall cooperate in providing each other with the information necessary to
calculate the Tax Benefit in each case.
Section 6.8 Indemnification Exclusive Remedy
(a) Provided that the indemnification provisions contained in
this Agreement shall not have been rendered unavailable for any reason outside
of the terms thereof, such indemnification provisions shall constitute the
exclusive remedies that the parties may have for misrepresentation, inaccuracy
or breach of a representation or warranty made pursuant to this Agreement,
except in the case of claims based on fraud.
<PAGE>
(b) None of the Acquired Companies shall be liable to any of
the Sellers, whether jointly, severally, pursuant to contribution or otherwise,
in respect of any breaches by any of the Sellers of representations, warranties,
covenants or agreements under this Agreement, any indemnity claims against any
of the Sellers under this Agreement, or any other liability of any of the
Sellers in respect of this Agreement.
<PAGE>
ARTICLE VII
Termination
Section 7.1 Termination Rights
This Agreement may be terminated at any time prior to Closing:
(a) by mutual consent of EG&G, on the one hand, and Purchaser, on the other
hand, evidenced in writing;
(b) by either Purchaser or Sellers, if the transactions contemplated hereby
are not consummated on or before April 30, 1998 (the "Final Termination Date").
Notwithstanding the foregoing, the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement by reason of a breach of this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur on or before
the Final Termination Date;
(c) by either Purchaser or Sellers, if the Belfab Purchase Agreement has
been terminated;
(d) by either Purchaser or Sellers, if a court of competent
jurisdiction shall have issued an order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and non-appealable;
(e) by Purchaser, if the Sellers shall breach in any material
respect any of their representations, warranties or obligations hereunder and
such breach shall not have been cured in all material respects or waived and the
Sellers shall not have provided reasonable assurances that such breach will be
cured promptly in all material respects on or before the scheduled Closing Date,
but only if such breach, singly or together with all other such breaches,
constitutes a failure of the conditions contained in Section 4.1 or 4.2 as of
the date of such termination (it being understood that if the Sellers shall
provide such reasonable assurances, Sellers shall use all reasonable efforts to
so cure such breach promptly); or
<PAGE>
(f) by the Sellers, if Purchaser shall breach in any material
respect any of its representations or warranties or obligations hereunder and
such breach shall not have been cured in all material respects or waived and
Purchaser shall not have provided reasonable assurances that such breach will be
cured promptly in all material respects on or before the scheduled Closing Date,
but only if such breach, singly or together with all other such breaches,
constitutes a failure of the conditions contained in Sections 4.1 or 4.3 as of
the date of such termination (it being understood that if Purchaser shall
provide such reasonable assurances, it shall use all reasonable efforts to so
cure such breach promptly).
. The rights to terminate this Agreement pursuant to Section
7.1 hereof will be effective only after written notice thereof, signed by a duly
authorized officer on behalf of the party for which it is given, has been
delivered to the other party.
. If terminated as provided in Section 7.1 hereof, this
Agreement shall thereupon become void and there shall be no liability or further
obligation on the part of any party or any shareholder, director, officer,
employee, agent or representative of such party, except that Sections 1.12,
3.2(c), 3.6 and 8.1 shall survive such termination and except that nothing
herein will relieve either party from liability for any breach of this Agreement
prior to such termination.
. From the date hereof to the Closing Date each of Sellers and
Purchaser shall give prompt notice to the other of any material development
affecting the ability or intention of EG&G, on the one hand, or Purchaser, on
the other hand, to consummate the transactions contemplated by this Agreement,
and Sellers shall give prompt notice to Purchaser of any development that has,
or could reasonably be expected to have, a Material Adverse Effect, or any
development of which EG&G becomes aware that has had a Material Adverse Effect.
<PAGE>
ARTICLE VIII
General Provisions
------------------
. Whether or not the transactions contemplated herein shall be
consummated, each party shall pay its own expenses incident to the preparation
and performance of and compliance with this Agreement, except as otherwise
specifically provided herein and except that all expenses incurred under any
Contract described in Section 2.1(k)(ii)(D) or under any other employment
severance arrangement or provision relating to officers, consultants or
Employees as a direct result of the consummation of the transactions
contemplated hereby will be borne by EG&G.
. This Agreement may be modified, amended or supplemented in
any manner at any time and from time to time but only by an instrument executed
by all the parties hereto. Failure of any party to enforce or insist upon
compliance with any of the terms and conditions of this Agreement shall not
constitute a general waiver or relinquishment of any such terms or conditions,
but the same shall be and remain at all times in full force and effect. No
waiver by any party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
. This Agreement (including the Schedules and Exhibits
attached hereto, all of which are a part hereof), the Confidentiality Agreement
between TI Group Inc., a Delaware corporation and wholly-owned subsidiary of
Purchaser, and EG&G dated October 23, 1997 (the "Confidentiality Agreement")
providing for the terms upon which EG&G is to provide certain proprietary
information to TI Group Inc., the Assumption Agreement, the R&D Agreement, the
Facilities Sharing Agreement, the lease agreements referred to in Section
4.1(e), the MDC Bellows Supply Agreement, and the other agreements and
instruments to be executed and delivered in connection with this Agreement
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein, supersede and cancel all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting such subject. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions under this Agreement other than those set forth or
made hereunder the agreements, schedules and exhibits referenced above.
Effective upon the Closing, the Confidentiality Agreement shall be terminated
and neither party thereto shall have any further right, responsibility or
liability thereunder, except with respect to breaches of the Confidentiality
Agreement which shall survive the Closing and to the rights and remedies with
respect thereto by the non-breaching party.
<PAGE>
. This Agreement shall inure solely to the benefit of and be
binding upon Sellers and Purchaser and their respective successors and assigns
and no other person shall have any right, remedy or claim under or by reason of
this Agreement. Except as provided in Section 1.7 hereof, neither this Agreement
nor any rights or obligations hereunder may be assigned by any party without the
prior written consent of the other party.
. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware, without regard to
the conflicts of law provisions thereof.
. tion 8.6 Consent to Jurisdiction; Service of Process
(a) The parties hereto agree that any action, suit or
proceeding (a "Proceeding") arising out of the transactions contemplated by this
Agreement (including, without limitation, in respect of or under any other
agreement or instrument executed and delivered in connection with such
transactions) shall be commenced and litigated exclusively in the United States
District Court for the District of Delaware or in a state court of the State of
Delaware.
(b) Each of the parties hereto hereby irrevocably and
unconditionally (i) consents to submit to the exclusive jurisdiction of the
federal and state courts in the State of Delaware for any Proceeding (and each
such party agrees not to commence any Proceeding, except in such courts), (ii)
waives any objection to the laying of venue of any Proceeding in the courts of
the State of Delaware, and (iii) waives, and agrees not to plead or to make, any
claim that any Proceeding brought in any court of the State of Delaware has been
brought in an inconvenient or otherwise improper forum.
<PAGE>
(c) Purchaser and each Seller hereby irrevocably and
unconditionally appoint RL&F Service Corp., with offices on the date hereof at
One Rodney Square, Wilmington, Delaware 19801 (the "Agent"), as its
attorney-in-fact to receive service of process in such Proceedings, it being
agreed that service upon such attorney-in-fact shall constitute valid service
upon the parties hereto or their respective successors or assigns. Purchaser and
each Seller agree that (i) the sole responsibilities of the Agent shall be (x)
to receive such process, (y) to send a copy of any such process so received to
the appropriate parties hereto, by registered mail, return receipt requested, at
the address set forth Section 8.9 of this Agreement, or at the last address
filed in writing by such party with the Agent and (z) to give prompt telecopy
notice of receipt thereof to the appropriate party hereto at such address and
(ii) the Agent shall have no responsibility for the receipt or non-receipt by
any such party of such process, nor for any performance or non-performance by
such party or any other party to this Agreement or their successors or assigns.
Purchaser and each Seller hereby agree to pay to the Agent such compensation as
shall be agreed upon from time to time for services of the Agent hereunder.
Purchaser and each Seller hereby agree that their submission to jurisdiction and
its designation of the Agent set forth above is made for the express benefit of
each of the parties hereto. Purchaser and each Seller further agree that a final
judgment against any party hereto in any such action or proceeding shall be
conclusive, and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law, a certified or true copy of which final
judgment shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of the appropriate parties hereto therein described;
provided that nothing in this Section 8.6(c) shall affect the right of any party
or its successors or assigns to serve legal process in any other manner
permitted by law. Purchaser and each Seller further covenant and agree that so
long as this Agreement shall be in effect, each shall maintain a duly appointed
agent for the service of summonses and other legal processes in Wilmington,
Delaware and will notify the other parties hereto of the name and address of
such agent if it is no longer the Agent.
(d) Each of the parties hereto agrees that it shall not seek a
jury trial in any Proceeding based upon or arising out of or otherwise related
to this Agreement or any of the other documents and instruments contemplated
hereby and each of the parties hereto hereby waives any and all right to any
such jury trial.
(e) In the event that any Seller or Purchaser has a dispute or
disagreement with the other relating to this Agreement which it believes may
constitute a breach by such other party of a provision of this Agreement, such
Seller or Purchaser shall provide written notice to the other of the foregoing
and requesting a meeting to discuss such dispute or disagreement. Such Seller
and Purchaser shall thereafter meet and discuss such dispute or disagreement in
good faith with the objective of seeking an amicable resolution satisfactory to
such Seller and Purchaser. No party to this Agreement shall initiate any legal
proceeding or any suit in respect of such dispute or disagreement (but only with
respect to such dispute or disagreement) until thirty (30) days have passed from
the date that such written notice is first given unless such party believes, in
good faith, that any delay in initiating such legal proceeding or suit may cause
it irreparable harm.
<PAGE>
Section 8.7 Certain Names
(a) Notwithstanding anything herein to the contrary, no
interest in or right to use the name "EG&G" or any derivation thereof or any
logo, trademark or trade name in which any Seller has any interest and which is
not used in the Business (collectively, the "Retained Names and Marks") is being
transferred to Purchaser pursuant to the transactions contemplated hereby.
Purchaser will, as promptly as practicable following the Closing Date, cause to
be removed or obliterated all the Retained Names and Marks from its signs,
purchase orders, invoices, sales orders, labels, letterheads, shipping documents
and other materials, and Purchaser shall not put into use after the Closing Date
any such materials not in existence on the Closing Date that bear any Retained
Name or Mark or any name, mark or logo similar thereto. Notwithstanding the
foregoing, Purchaser shall be entitled for a period of one hundred twenty (120)
calendar days following the Closing Date to use any signs, purchase orders,
invoices, sales orders, labels, letterheads or shipping documents existing on
the Closing Date that bear any Retained Name or Mark or any name, mark or logo
similar thereto, in each case where the removal of any Retained Name or Mark or
any such similar name, mark or logo would be impractical. Purchaser agrees that
Sellers shall have no responsibility for claims by third parties arising out of,
or relating to, the use by Purchaser of any Retained Name or Mark after the
Closing Date, and Purchaser agrees to defend, indemnify and hold harmless
Sellers from any and all claims that may arise out of the use thereof by
Purchaser whether or not in accordance with this Agreement, except as otherwise
provided in this Agreement.
<PAGE>
(b) Notwithstanding anything herein to the contrary, no
interest in or right to use the name "Sealol" or any derivation thereof or any
logo, trademark or trade name which is used in the Business (collectively, the
"Transferred Names and Marks") is being retained by Sellers. Sellers will, as
promptly as practicable following the Closing Date, cause to be removed or
obliterated all the Transferred Names and Marks from their and their Affiliates'
signs, purchase orders, invoices, sales orders, labels, letterheads, shipping
documents, web sites and other materials (collectively, "Materials"), and from
the Materials of their and their Affiliates' representatives and distributors
and Sellers shall not put into use, or permit their Affiliates, representatives
or distributors to put into use, after the Closing Date any Materials not in
existence on the Closing Date that bear any Transferred Name or Mark or any
name, mark or logo similar thereto. Notwithstanding the foregoing, Sellers and
their Affiliates shall be entitled for a period of one hundred twenty (120)
calendar days following the Closing Date to use any Materials existing on the
Closing Date that bear any Transferred Name or Mark or any name, mark or logo
similar thereto, in each case where the removal of any Transferred Name or Mark
or any such similar name, mark or logo would be impractical. In addition, for a
period of two (2) years following the Closing Date, Sellers and their Affiliates
may continue to use the name Sealol, in conjunction with a distinguishing logo
acceptable to Purchaser, as a reference to a former affiliation with Sellers
(such as, for example, "EG&G Sealol Aerospace" or "EG&G Engineered Products
(formerly a division of Sealol)"). Sellers agree that Purchaser shall have no
responsibility for claims by third parties arising out of, or relating to, the
use by Sellers of any Transferred Name or Mark after the Closing Date, and
Sellers agree to defend, indemnify and hold harmless Purchaser from any and all
claims that may arise out of the use thereof by Sellers whether or not in
accordance with this Agreement, except as otherwise provided in this Agreement.
(c) Notwithstanding Section 8.7(b), from and after the Closing
Sellers agree to use their reasonable best efforts (including, without
limitation, sending all notices provided for or permitted under any agreements
between Sellers and such companies or the other shareholders of such companies)
to cause EG&G Sealol Eagle, Inc. and Xian Sealol Mechanical Seals Co., Ltd. as
promptly as practicable after the Closing to remove the Sealol name and the
other Transferred Names and Marks from, and thereafter to discontinue using the
Sealol name and such other Transferred Names and Marks in conducting, their
respective businesses. At Purchaser's request and expense, Sellers shall take
all such other actions (including commencing any litigation or arbitration
proceeding) and execute all such other documents and instruments (including
powers-of-attorney permitting Purchaser and its designees to proceed in the name
and under the rights of Sellers) reasonably requested by Purchaser to cause any
of the foregoing companies to discontinue using the Sealol name and the other
Transferred Names and Marks.
. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
<PAGE>
. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or, if
given by telecopy or telex, when sent, or if mailed, five days after the date
when sent by registered or certified mail, postage prepaid. Notices, requests,
demands and other communications to Purchaser and Sellers will, unless another
address is specified in writing, be sent to the address indicated below:
(a) if to EG&G or any Seller:
EG&G, Inc.
45 William Street
Wellesley, Massachusetts 02181-4076
Attention: General Counsel
Telephone: (617) 237-5100
Telecopy: (617) 431-4115
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: David E. Redlick, Esq.
Telecopy: (617) 526-5000
(b) if to Purchaser:
TI Group plc
50 Curzon Street
London W1Y 7PN, England
Attention: Company Secretary
Telephone: 011.44.171.499-9131
Telecopy: 011.44.171.493-6533
with a copy to each of:
TI Group Inc.
375 Park Avenue
New York, New York 10152-0222
Attention: Vice President, Legal Affairs
Telephone: (212) 319-3101
Telecopy: (212) 319-3199
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Attention: John Evangelakos, Esq.
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
<PAGE>
. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed an
original; but such counterparts together constitute but one and the same
agreement.
. EG&G absolutely, unconditionally and irrevocably guarantees
performance of all of the obligations of the Sellers hereunder, as principal
obligor and not merely as surety and without need for presentment or demand by
Purchaser or TISA. Purchaser absolutely, unconditionally and irrevocably
guarantees performance of all of the obligations of TISA and French Newco
hereunder, as principal obligor and not merely as surety and without need for
presentment or demand by any Seller.
. Notwithstanding any other provisions of this Agreement (or
any other agreement which, together with this Agreement (collectively, the "RTPA
Agreement"), may form part of an agreement for the purposes of the Restrictive
Trade Practices Act 1976 (the "Act")) each party hereto declares that it will
not give effect, and will procure that none of its subsidiaries shall give
effect, to any restriction or restrictions contained in the RTPA Agreement which
cause the RTPA Agreement to be registrable under the Act until one day after
particulars of the RTPA Agreement shall have been furnished to the Director
General of Fair Trading in England.
ARTICLE IX
Definitions and Interpretation
------------------------------
. For purposes of this Agreement, unless the context otherwise
requires, the following terms shall have the meanings given to them below:
(a) "Affiliate" means, with reference to any entity, any other
entity that, through ownership of a majority of voting stock (or other
equity ownership interests), directly or indirectly controls or is
controlled by, or is under common control with, the entity to which
reference is made.
(b) "Agreement" means this Purchase Agreement, including the
attached Annexes and Schedules, the Sellers' Disclosure Schedule, and
the various agreements and instruments to be entered into prior to or
at Closing as contemplated in this Agreement as amended by any
instrument executed by both parties hereto at the time of reference.
<PAGE>
(c) "Associate" of any person means (i) any corporation or
organization of which such person is an officer or general partner or
is, directly or indirectly, the beneficial owner of 10 percent or more
of any class of equity securities, (ii) any trust or other estate in
which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity, and
(iii) any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person.
(d) "Business Day" means any day on which banking institutions
are not required or authorized to close in the City of New York, United
States of America or the City of London, England.
(e) "Closing" means the consummation of the purchase and sale
contemplated by this Agreement or any agreement or agreements between
Purchaser and Sellers pursuant to Section 1.3(a) and Annexes A-1 and
A-2 to this Agreement hereof on the Closing Date.
(f) "Code" means the Internal Revenue Code of 1986, as
amended.
(g) "Contracts" includes all contracts, agreements,
arrangements, understandings, leases, subleases, licenses, sublicenses,
indentures, mortgages, instruments of indebtedness and commitments,
written or oral, to which the person to whom reference is made is a
party or by which such person is bound or by which such person or any
of its properties may be bound or affected.
(h) "Corresponding Territory" means, with respect to each of
Sealol Netherlands, Sealol Canada, Sealol Germany, Sealol U.K., and
Sealol Italy, the Netherlands, Canada, Germany, the United Kingdom, and
Italy, respectively.
(i) "Dollars", "$", or "U.S. $" shall mean United States
Dollars or such currency that is as of the relevant date legal tender
for the discharge of legal obligations in the United States.
(j) "Encumbrance" means any mortgage, security interest,
pledge, lease, sublease, judgment, notice of violation, notice of
potential responsibility, lien, option, claim, assessment, charge or
other encumbrance, or liability of any kind whatsoever.
<PAGE>
(k) "Environmental Law" means any European Community,
national, provincial, state or local law, regulation, order, decree,
guideline, policy, permit, directive, treaty, authorization, common law
or agency requirement relating to: (A) the protection, investigation or
restoration of the environment, health, safety, or natural resources,
(B) the handling, storage, operation, transport, treatment, use,
presence, disposal, release or threatened release of any Hazardous
Substance or (C) noise, odor, indoor air, employee exposure, wetlands,
pollution, contamination or any injury or threat of injury to persons
or property relating to any Hazardous Substance.
(l) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(m) "Governmental Entity" means any court or any governmental
or other administrative or regulatory authority, department, ministry,
agency or commission, domestic or foreign.
(n) "Hazardous Substance" means any substance that is: (A)
listed, classified or regulated pursuant to any Environmental Law; (B)
any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which may be
the subject of regulatory action by any Governmental Authority in
connection with any Environmental Law.
(o) "Indebtedness" means all indebtedness other than
indebtedness for trade payables incurred in the ordinary course of
business consistent with past practice, and otherwise in accordance
with the terms of this Agreement.
<PAGE>
(p) "Intellectual Property" means all intellectual property,
including, without limitation, any of the following, to the extent they
are primarily related to, primarily used in, dedicated to, or otherwise
necessary to the Business as presently conducted by Sellers: (a)
patents, patent applications, patent disclosures and the ideas,
inventions and improvements related thereto including research in
progress, and all reissues, continuations, continuations-in-part,
divisions and reexaminations of such patents and patent applications,
including the Licensed Patents; (b) trademarks, service marks, trade
dress, logos, domain names, design rights and trade names and
registrations and applications for registration thereof, and all
renewals and extensions thereof, together with the goodwill associated
therewith; (c) copyrights and registrations and applications for
registration thereof; (d) mask works and registrations and applications
for registration thereof; (e) software, computer codes and databases;
(f) trade secrets, confidential or proprietary business information and
know-how including research in progress and manufacturing methods or
processes; and (g) ideas, inventions and improvements related to any of
the foregoing to which EG&G or any of its Affiliates is entitled to
pursuant to any employee invention assignment agreement.
(q) "Law" includes any federal, state, local or other law or
governmental requirement of any kind, domestic or foreign, whether
legislatively, judicially or administratively promulgated, and any
rules, regulations and interpretations promulgated thereunder.
(r) "Liabilities" includes all liabilities and obligations of
any nature or kind (including pursuant to guarantees or suretyships),
whether primary, secondary, contingent or otherwise.
(s) "Licensed Patents" means the following patents currently
owned by Sellers and used in the Business and the following pending
patent application: U.S. Patent 4,365,816 (and its foreign
counterparts), U.S. Patent 4,415,164, U.S. Patent 5,344,161 (and its
foreign counterparts), U.S. Patent 5,253,876 (and its foreign
counterparts), U.S. Patent 5,538,257 (and its foreign counterparts),
and pending U.S. Patent Application Serial No. 08/921,038 and all U.S.
patents (and their foreign counterparts) to issue thereon.
(t) "Loss" or "Losses" include any and all losses, damages,
expenses, liabilities, liens, fines, costs and obligations (including,
without limitation, reasonable expenses of responses to Governmental
Entities, reasonable expenses of investigation and reasonable legal
fees and expenses).
<PAGE>
(u) "Material Adverse Effect" means, when used in connection
with the Business, any change, effect, event, occurrence or state of
facts that is or could be materially adverse to the Business or to the
properties (including intangible assets), financial condition or
results of operations of the Business or on the ability of the Sellers
to consummate the transactions contemplated by, or to perform their
respective obligations under, this Agreement. For purposes of this
Agreement, the term "Material Adverse Effect" shall include any change,
effect, event, occurrence or state of facts that would or could result
in a change of $100,000 or more in the value of the assets of the
Business or in the annual operating income of the Business before
interest, taxes and amortization.
(v) "Operating Taxes" means Taxes such as payroll taxes, VAT,
sales, use, and GST arising in the ordinary course of business and of
the type that are reflected in the Balance Sheet (and excluding,
without limitation, Taxes based on gross or net income, or gross or net
receipts, and license, excise, franchise, employment, withholding or
similar Taxes) relating to the businesses to be acquired pursuant to
this Agreement.
(w) "Order" includes any judgment, order, direction, decree,
stipulation, injunction, charge or other restriction of any
Governmental Entity.
(x) "Permit" includes any approval, authorization, certificate
of convenience and necessity, qualification, consent, franchise,
license, security clearance, easement, order or other permit issued or
granted by any Governmental Entity.
(y) "Purchased Assets" means all of the following properties,
assets and rights of EG&G and its Affiliates, in each of clauses
(i)-(xi) below but only to the extent such properties, assets and
rights are primarily related to, primarily used in or dedicated to, or
otherwise necessary to the conduct of, the Business and are not
Excluded Assets or owned by any of the Acquired Companies (other than
Sealol France):
(i) EG&G's and its Affiliates' respective interests
(freehold and leasehold) in all Real Property together with
all related certificates of occupancy, permits, plans,
specifications, surveys, inspection reports, site inspections
and related books and records, as set forth in Schedule 9.1(y)
to this Agreement;
(ii) EG&G's and its Affiliates' raw materials,
work-in-process, finished goods, packaging and other
inventories and all tools, spare parts and supplies of EG&G
and its Affiliates;
(iii) EG&G's and its Affiliates' respective interests
(leasehold and otherwise) in fixed machinery and equipment,
other fixtures and fittings, moveable plant, machinery and
equipment, furniture and fixtures and other items of personal
property;
<PAGE>
(iv) EG&G's and its Affiliates' respective interests
(leasehold and otherwise) in automobiles, trucks, tractors,
trailers, rail cars and other vehicles;
(v) EG&G's and its Affiliates' respective rights, title and interests in
and to the Intellectual Property;
(vi) EG&G's and its Affiliates' respective rights
existing under executory Contracts;
(vii) all rights, but none of the obligations or
liabilities, of the Sellers' under the Termination Agreement;
(viii) all accounts receivable and cash proceeds therefrom
related to the Purchased Assets or that are part of the
Business;
(ix) all books and records relating to the Business;
(x) all goodwill and going concern value of the Business; and
(xi) all other assets, tangible and intangible, real,
personal and mixed, whether currently in use or idle,
wheresoever situated and whether or not specifically referred
to herein or in any instrument of conveyance delivered
pursuant hereto, that are primarily related to, primarily used
in or dedicated to the Business as the same shall exist on the
Closing Date and that are not within the definition of
Excluded Assets.
(z) "Sealol Assets" means all of the Purchased Assets and all
properties, assets and rights of the Acquired Companies.
(aa) "Shared Facilities" shall mean the facilities currently used by the
Business in High Wycombe, England; Coignieres, France; Shannon, Ireland; Milan,
Italy; and Cranston, Rhode Island that will be covered by the Facilities Sharing
Agreement.
<PAGE>
(bb) "Shares" means all of the capital stock, partnership
interests and other equity interests held of record or beneficially
owned by EG&G or its Affiliates in the Acquired Companies at any time,
beginning the date hereof through and including the Closing.
(cc) "Stipulated Rate" means the prime commercial lending rate
publicly announced by Citibank, N.A., as its "Base Rate" in effect on
the Closing Date (calculated on the basis of the actual number of days
elapsed in a year of 365 days).
(dd) "Tax Returns" means all reports and returns required to
be filed on or before the Closing Date with respect to the Taxes of any
Acquired Company, whether filed on a separate, consolidated, or
combined basis.
(ee) "Taxes" means all federal, state, local or foreign gross
or net income, gross or net receipts, windfall profits, severance,
property, ad valorem, real estate, capital, property (tangible or
intangible), production, sales, use, value added, stamp, duty,
business, transfer, wealth, license, excise, franchise, employment,
withholding or similar taxes imposed on the income, properties or
operations of any Acquired Company or EG&G's Group, together with any
interest, additions or penalties with respect thereto and any interest
in respect of such additions or penalties.
. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. References to Sections and Articles refer to sections and
articles of this Agreement unless the context otherwise requires. Words such as
"herein", "hereinafter", "hereof", "hereto", "hereby", and "hereunder", and
words of like import shall, unless the context otherwise requires, refer to this
Agreement. The masculine shall include the feminine and the neuter and vice
versa. References to matters as "included" are not intended and shall not be
construed to be exhaustive or as covering all items. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction shall be applied against
any party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on and as of the date first above written.
EG&G, INC.
By: ____________________
Name:
Title:
EG&G BENELUX B.V.
By: ____________________
Name:
Title:
EG&G CANADA LIMITED
By: ____________________
Name:
Title:
EG&G DO BRASIL LTDA.
By: ____________________
Name:
Title:
EG&G GMBH
By: ____________________
Name:
Title:
EG&G HOLDINGS, INC.
By: ____________________
Name:
Title:
<PAGE>
EG&G LTD.
By: ____________________
Name:
Title:
EG&G SEALOL, INC.
By: ____________________
Name:
Title:
EG&G S.A.
By: ____________________
Name:
Title:
EG&G SPA
By: ____________________
Name:
Title:
WELLESLEY INTERNATIONAL C.V.
By EG&G, Inc., as Managing
Partner
By: ____________________
Name:
Title:
TI GROUP PLC
By: ____________________
Name:
Title:
TI S.A.
By: ____________________
Name:
Title:
<PAGE>
Exhibit 2.2
STOCK PURCHASE AGREEMENT
By and Between
EG&G Holdings, Inc.
and
Ametek, Inc.
Dated December 26, 1997
<PAGE>
TABLE OF CONTENTS
Page
Article I DEFINITIONS......................................................2
"Affiliates".....................................................2
"Balance Sheet"..................................................2
"Buyer"..........................................................2
"Closing"........................................................2
"Closing Date"...................................................2
"Company"........................................................2
"Contemplated Transactions"......................................2
"Contracts"......................................................2
"Intellectual Property...........................................2
"HSR Act"........................................................3
"Legal Requirement"..............................................3
"Liabilities"....................................................3
"Losses".........................................................3
"Ordinary Course of Business"....................................3
"Person".........................................................4
"Representative".................................................4
"Securities Act".................................................4
"Seller".........................................................4
"Shares".........................................................4
Article II SALE AND TRANSFER OF SHARES; CLOSING.............................5
Section 2.1 Shares...........................................................5
Section 2.2 Purchase Price...................................................5
Section 2.3 Closing..........................................................5
Section 2.4 Post-Closing Adjustments to Purchase Price; Closing
Balance Sheet....................................................6
Section 2.5 Pre-Closing Adjustments to Purchase Price........................8
Article III REPRESENTATIONS AND WARRANTIES OF SELLER........................10
Section 3.1 Title to Shares.................................................10
Section 3.2 Capitalization of the Company...................................10
Section 3.3 Subsidiaries and Investments....................................11
Section 3.4 Organization....................................................11
Section 3.5 Due Authorization of Seller; Binding Obligation.................11
Section 3.6 Non-Contravention...............................................12
Section 3.7 Financial Statements............................................12
Section 3.8 Books and Records...............................................13
Section 3.9 Title to Properties.............................................13
Section 3.10 Contracts.....................................................17
Section 3.11 Patents, Trademarks, Copyrights and Trade Secrets. ...........18
Section 3.12 Litigation....................................................19
Section 3.13 Compliance with Law; Governmental Approvals...................19
Section 3.14 Employee Benefit Plans........................................20
Section 3.15 Environmental Matters.........................................24
Section 3.16 Insurance.....................................................25
Section 3.17 Brokers or Finders............................................26
Section 3.18 Disclosure....................................................26
Section 3.19 No Material Adverse Change....................................27
Section 3.20 Absence of Certain Changes and Events.........................27
Section 3.21 Labor Relations; Compliance...................................29
Section 3.22 Customers.....................................................30
Section 3.23 Vacation Time, Bonuses, Etc...................................30
Section 3.24 Compensation..................................................30
Section 3.25 Accounts Receivable...........................................31
Section 3.26 Warranties....................................................31
Section 3.27 Inventory.....................................................32
Section 3.28 Liabilities...................................................33
Section 3.29 Governmental Approvals........................................33
Section 3.30 Certain Transactions..........................................33
Section 3.31 Backlog.......................................................34
Section 3.32 Certain Payments..............................................34
Section 3.33 Employee Secrecy Agreements...................................34
Article IV REPRESENTATIONS AND WARRANTIES OF BUYER.................35
Section 4.1 Organization and Good Standing..........................35
Section 4.2 Authority; No Conflict..................................35
Section 4.3 Investment Intent.......................................36
Section 4.4 Certain Proceedings.....................................36
Section 4.5 Brokers or Finders......................................36
Section 4.6 Disclosure..............................................37
Section 4.7 Funding.................................................37
Article V COVENANTS OF SELLER PRIOR TO CLOSING DATE...............37
Section 5.1 Access and Investigation................................37
Section 5.2 Operation of the Business...............................38
Section 5.3 Negative Covenant.......................................38
Section 5.4 Required Approvals......................................38
Section 5.5 Notification............................................39
Section 5.6 No Negotiation..........................................39
Section 5.7 Best Efforts............................................39
Section 5.8 Settlement of Intercompany Accounts.....................40
Section 5.9 Facility Repairs........................................40
Section 5.10 Contributions to Employee Benefit Plans.................41
Section 5.11 Trademark Registration..................................41
Article VI COVENANTS OF BUYER PRIOR TO CLOSING DATE................41
Section 6.1 Required Approvals......................................41
Section 6.2 Best Efforts............................................42
Section 6.3 Insurance...............................................42
Section 6.4 Commitment to Employees.................................42
Article VII CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE.....................................48
Section 7.1 Accuracy of Representations and Warranties..............48
Section 7.2 Performance of Covenants................................48
Section 7.3 No Legal Proceedings....................................48
Section 7.4 Stock Certificates......................................49
Section 7.5 No Claim Regarding Stock Ownership or Sale Proceeds.....49
Section 7.6 No Prohibition..........................................49
Section 7.7 Trademark License.......................................49
Section 7.8 Resignations............................................49
Section 7.9 Opinion of Counsel......................................50
Section 7.10 Transfer of Confidentiality Agreements..................52
Section 7.11 Transfer of Past Service Contracts......................52
Section 7.12 Real Property Transfers.................................52
Article VIII CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE.....................................52
Section 8.1 Accuracy of Representations and Warranties..............53
Section 8.2 Performance of Covenants................................53
Section 8.3 No Legal Proceedings....................................53
Section 8.4 Payment of Purchase Price...............................53
Section 8.5 No Claim Regarding Stock Ownership or Sale Proceeds.....54
Section 8.6 Trademark License.......................................54
Section 8.7 No Prohibition..........................................54
Section 8.8 Opinion of Counsel......................................54
<PAGE>
Article IX TERMINATION.............................................56
Section 9.1 Termination Events......................................56
Section 9.2 Effect of Termination...................................57
Article X SURVIVAL; INDEMNIFICATION...............................58
Section 10.1 Survival................................................58
Section 10.2 Indemnification by Seller...............................58
Section 10.3 Indemnification by Buyer................................60
Section 10.4 Environmental Indemnification ..........................61
Section 10.5 Employee Benefits Indemnification.......................66
Section 10.6 Limitations on Remedy...................................67
Section 10.7 Procedure for Indemnification - Third Party Claims......68
Section 10.8 Procedure for Indemnification - Other Claims............69
Article XI CONFIDENTIALITY AND NON-COMPETITION.....................69
Section 11.1 Confidentiality.........................................69
Section 11.2 Non-Competition.........................................69
Article XII TAX MATTERS.............................................71
Section 12.1 Certain Definitions.....................................71
Section 12.2 Allocation of Purchase Price............................73
Section 12.3 Representation and Warranties of Seller.................73
Section 12.4 Tax Indemnification.....................................79
Section 12.5 Tax Returns: Miscellaneous..............................81
Article XIII ADDITIONAL COVENANTS....................................87
Section 13.1 Hi-Rel Warranty...............................................87
Section 13.2 Audited Financial Statements..................................89
Section 13.3 Tax Election..................................................90
Section 13.4 NOVA Product Line.............................................90
Article XIV GENERAL PROVISIONS......................................91
Section 14.1 Expenses......................................................91
Section 14.2 Public Announcements..........................................91
Section 14.3 Confidentiality...............................................92
Section 14.4 Notices.......................................................92
Section 14.5 Jurisdiction; Service of Process..............................93
Section 14.6 Further Assurances............................................93
Section 14.7 Waiver94
Section 14.8 Entire Agreement and Modification.............................94
Section 14.9 Assignment, Successors, and No Third-Party Rights.............95
Section 14.10 Severability..................................................95
Section 14.11 Article and Section Headings, Construction....................95
Section 14.12 Time of Essence...............................................96
Section 14.13 Knowledge.....................................................96
Section 14.14 Governing Law.................................................96
Section 14.15 Counterparts..................................................96
Section 14.16 Broker Indemnity..............................................96
Section 14.17 Cooperation in Litigation.....................................97
Section 14.18 Transfer Taxes................................................97
<PAGE>
SCHEDULES
Schedule 3.2 Capitalization of the Company
Schedule 3.3 Subsidiaries and Investments
Schedule 3.6 Non-Contravention
Schedule 3.7 Financial Statements
Schedule 3.9 Real Property
Schedule 3.10 Contracts
Schedule 3.11 Patents, Trademarks, Copyrights and Trade Secrets
Schedule 3.12 Litigation
Schedule 3.13 Compliance with Law; Governmental Approvals
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Environmental Matters
Schedule 3.16 Insurance
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of December 26,
1997, by and among:
EG&G Holdings, Inc., a corporation organized and existing under the
laws of the Commonwealth of Massachusetts with its principal place of
business in Wellesley, Massachusetts (the "Seller");
and
Ametek, Inc., a corporation organized and existing under the laws of
the State of Delaware with its principal place of business in Station
Square, Paoli, Pennsylvania (the "Buyer")
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding shares of common
stock (the "Shares") of Rotron Incorporated, a corporation organized and
existing under the laws of the State of New York with its principal place of
business in Woodstock, New York (the "Company"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Shares upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises
and of the mutual agreements hereinafter
contained, the parties hereto do hereby
agree as follows:
ARTICLE I - DEFINITIONS
The following terms shall have the meaning set forth below for the
purposes of this Agreement:
"Affiliates" has the meaning set forth in Rule 405 of the Securities
Act of 1933, as amended, and is intended to include the officers, directors,
employees, representatives and agents of any Person.
"Balance Sheet" - as defined in Section 3.7.
"Buyer" - as defined in the first paragraph of this Agreement.
"Closing" - as defined in Section 2.3.
"Closing Date" - the date and time as of which the Closing actually
takes place.
"Company" - as defined in the Recitals of this Agreement.
"Contemplated Transactions" - all of the transactions contemplated by
this Agreement including: the sale of the Shares by Seller to Buyer in
consideration of the Purchase Price; the execution, delivery, and performance
of any related documents as described in this Agreement; the performance by
Buyer and Seller of their respective covenants and obligations under this
Agreement; and Buyer's acquisition and ownership of the Shares and exercise of
control over the Company.
"Contracts" - all contracts, agreements, indentures, licenses, leases,
commitments, plans, arrangements, sales orders and purchase orders of every
kind.
"Intellectual Property" - patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not
reduced to practice); all registered and unregistered statutory and common law
copyrights; all registered and unregistered trademarks, service marks,
licenses, logos, sales materials and trade names; all registrations,
applications and renewals for any of the foregoing; all trade secrets,
confidential information, know-how, customer lists, formulae, manufacturing
and production processes and techniques, research and development information,
product designations, quality standards, investigations, drawings,
specifications, designs, plans, improvements, proposals, technical and
computer data; all license agreements and sublicense agreements to and from
third parties relating to any of the foregoing; all other proprietary rights
(including, without limitation, all computer software and documentation); and
all copies and tangible embodiments of the foregoing (in whatever form or
medium).
"HSR Act" - the Hart-Scott-Rodino Antitrust Improvements Act of 1976
as amended or any successor law, and regulations and rules issued pursuant to
that Act or any successor law.
"Legal Requirement" - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Liabilities" - debts, liabilities, obligations, duties and
responsibilities of any kind and description, whether absolute or contingent,
monetary or non-monetary, direct or indirect, known or unknown or matured or
unmatured, or of any other nature.
"Losses" - as defined in Section 10.2.
"Ordinary Course of Business" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority); and
(c) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any person or
group of Persons exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in the same line of
business as such Person.
"Person" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or governmental agency.
"Representative" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" - the Securities Act of 1933 as amended or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Seller" - as defined in the first paragraph of this Agreement.
"Shares" - as defined in the Recitals of this Agreement.
ARTICLE II - SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares
Subject to the terms and conditions of this Agreement, at
the Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller.
2.2 Purchase Price
The purchase price (the "Purchase Price") for the Shares
will be One Hundred Four Million ($104,000,000) Dollars subject to adjustment
pursuant to Sections 2.4 and 2.5 hereof. At the Closing, the Purchase Price will
be paid by Buyer to the order of Seller via wire transfer in immediately
available funds to such bank and account as has been specified by Seller. Seller
shall deliver to Buyer at the Closing certificates for the Shares duly endorsed
in blank or with duly executed stock powers attached in proper form for
transfer.
2.3 Closing
The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Stroock & Stroock & Lavan LLP at 180
Maiden Lane, New York, NY 10038 at 10:00 a.m. (local time) January 9, 1998 or at
such other time and place as the parties may agree. Subject to the provisions of
Article IX, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
<PAGE>
2.4 Post-Closing Adjustments to Purchase Price;
Closing Balance Sheet
(a) Promptly after the Closing Date, Seller will prepare, with
the full cooperation of Buyer, a balance sheet of the Company as of the Closing
Date (the "Preliminary Balance Sheet") in accordance with generally accepted
accounting principles ("GAAP") (except that such Preliminary Balance Sheet need
not contain the footnotes required by GAAP) and in a manner consistent with the
principles used in the preparation of the Financial Statements (as defined in
Section 3.7), provided that (i) all accruals, reserves, provisions and
adjustments customarily made in the year-end financial statements shall be made
in the Preliminary Balance Sheet, (ii) accounts receivable reflected in the
Preliminary Balance Sheet shall be valued in accordance with principles set
forth in Section 3.25, (iii) inventory reflected in the Preliminary Balance
Sheet shall be valued in accordance with the principles set forth in Section
3.27, and (iv) Liabilities shall be reflected therein in accordance with the
principles set forth in Section 3.28. The Preliminary Balance Sheet will give
effect to the elimination of the intercompany accounts pursuant to Section 5.8
and shall include explanatory footnotes describing the methodologies and
assumptions used in the preparation thereof. The Stockholders' Equity of the
Company for purposes of Section 2.4(c) shall be the Stockholders' Equity shown
on the Closing Balance Sheet (as defined below) less any deferred tax asset
shown thereon.
(b) The Preliminary Balance Sheet shall be delivered to Buyer
within 60 days after the Closing Date. Unless Buyer notifies Seller in writing
that Buyer disagrees with the Preliminary Balance Sheet within 30 days after
receipt thereof, the Preliminary Balance Sheet shall become the "Closing Balance
Sheet" hereunder. If Buyer, within such 30-day period, notifies Seller in
writing that Buyer disagrees with any balance sheet line item or items (each, a
"Line Item") on the Preliminary Balance Sheet then Buyer and Seller shall
negotiate in good faith to resolve such disagreements (each such disagreement
with respect to a Line Item may consist of one or more proposed
adjustments);provided that (i) no notice of disagreement may be given with
respect to any Line Item unless the amount of the disagreement with respect to
such Line Item equals at least $25,000 (provided, however, that the limitation
in this clause (i) shall not apply if the sum of all such disagreements that are
less than $25,000 per Line Item is greater than $100,000); and (ii) any notice
of disagreement by Buyer shall specify in reasonable detail the nature of any
disagreement so asserted. If all such disagreements are resolved by the parties
within 15 days after the end of such 30-day period, the Preliminary Balance
Sheet, modified to reflect such resolution, shall become the "Closing Balance
Sheet" hereunder. In the event Buyer and Seller are unable to resolve such
disagreements within 15 days after the end of such 30-day period, the parties
shall refer such disagreements to an independent certified public accountant of
national reputation independent of Buyer and Seller mutually agreed upon by
Buyer and Seller (the "Arbitrating Accountants"). Promptly following such
referral, Seller and Buyer shall mutually agree upon the procedures to be
followed by the Arbitrating Accountants in resolving such disagreements. No
further disagreements may be raised with the Arbitrating Accountants. Within 60
days of such presentation, the Arbitrating Accountants shall resolve all such
disagreements and shall then render their report thereon, and the Preliminary
Balance Sheet, modified to reflect the resolution by the Arbitrating
Accountants, shall become the "Closing Balance Sheet" hereunder. The Closing
Balance Sheet shall be conclusive and binding on Buyer and Seller for purposes
of determining the increase or reduction (if any) of the Purchase Price provided
for in Section 2.2. Buyer and Seller shall be responsible for payment of the
fees and expenses of their respective accounting firms in acting under this
Agreement. The fees and expenses of the Arbitrating Accountants in acting under
this Agreement shall be shared by Buyer and Seller in proportion to the
adjustment (as against the reported adjustment), if any, decided upon by such
accounting firm. This provision for arbitration shall be specifically
enforceable by the parties and the decision of the Arbitrating Accountants in
accordance with the provisions shall be final and binding with respect to the
matters so arbitrated and there shall be no right of appeal therefrom.
(c) The Purchase Price shall be adjusted by the amount (if any)
by which "Stockholders' Equity", as shown on the Closing Balance Sheet, differs
from $13,127,585, which is the "Stockholders' Equity" (defined as Net Equity
reduced by Intercompany Accounts; and exclusive of any deferred tax asset as
indicated in Section 2.4(a)) as shown on the Interim Balance Sheet (as defined
in Section 3.7 below and as set forth in Schedule 3.7); provided, that no such
adjustment shall be made unless such difference exceeds $100,000. Any increase
in the Purchase Price resulting from an increase in Stockholders' Equity
pursuant to this Section 2.4, shall be paid by Buyer to Seller, and any decrease
in the Purchase Price resulting from a decrease in Stockholders' Equity pursuant
to this Section 2.4 shall be paid by Seller to Buyer, in each case, within five
business days after the Closing Balance Sheet becomes final hereunder, together
with interest accrued thereon from the Closing Date to the date of payment at
the rate of interest announced by BankBoston, N.A., in Boston, Massachusetts as
its "prime" rate on the Closing Date (such calculation to be based on a 360-day
year). Payments must be made in immediately available funds, and in the event an
adjustment is required it will be made on a "dollar for dollar" basis without
regard to the $100,000 threshold.
2.5 Pre-Closing Adjustments to Purchase Price
(a) Buyer has delivered to Seller a copy of a report on the
structural condition of the Real Property of the Company prepared by Highland
Associates, Ltd. dated November 19, 1997 which recommends certain repair actions
be undertaken. To resolve any potential disputes relating to the condition of
the Real Property as discussed in that report, including the need for the
demolition, repair, removal, or replacement (including the construction of any
new or remodeled structures) of the (i) Quonset huts at the Woodstock facility
and (ii) the model shop at the Woodstock facility, Buyer and Seller have agreed
to reduce the Purchase Price by $260,000.
(b) Buyer and Seller agree that the land, buildings,
improvements, structures, fixtures, utilities and appurtenances that constitute
the "Olive Property" will be excluded from the Contemplated Transactions, and in
recognition of that exclusion the parties have agreed to reduce the Purchase
Price by $300,000. Buyer will be entitled to utilize the Olive Property in a
manner consistent with the current usage of that facility by the Company for a
period commencing on the Closing Date and ending on June 30, 1998 on a rent free
basis. By or before that date, Buyer will have relocated its personnel,
equipment, inventory and operations from the Olive Property in an orderly
manner, and Seller will be able to show the Olive Property to prospective
tenants and purchasers during Buyer's period of usage. If Buyer has not vacated
the Olive Property on or before June 30, 1998, it will be deemed a breach of
Buyer's contractual obligation hereunder and Buyer will pay Seller a usage fee
for the Olive Property of $25,000 per future month.
(c) Buyer and Seller agree that the unimproved land owned by
Company in Saugerties, New York, which consists of roughly 17 acres (the
"Saugerties Land"), will be excluded from the Contemplated Transactions. No
adjustment will be made to the Purchase Price as a result of that exclusion.
(d) The net effect of the items set forth above will be to
decrease the Purchase Price payable at Closing to $103,440,000 Post-Closing
adjustments to the Purchase Price are as set forth in Section 2.4.
<PAGE>
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 Title to Shares
Seller (a) is the owner, free and clear of any liens, pledges,
mortgages, encumbrances, options, restrictions, charges, agreements, defects of
title or claims (collectively "Liens"), of the Shares, and (b) will sell,
transfer, assign and deliver good and valid title to the Shares at the Closing
as provided in this Agreement and Buyer will acquire good and valid title to the
Shares, free and clear of any Liens other than those resulting from Buyer's
actions.
3.2 Capitalization of the Company
The authorized capital stock and issued and outstanding Shares
of the Company are set forth on Schedule 3.2. Seller is the record and
beneficial owner of all issued and outstanding Shares of the Company. Such
issued and outstanding Shares are duly authorized, validly issued, fully paid
and nonassessable. Except for rights granted to Buyer under this Agreement there
are no outstanding "phantom" stock rights, options, warrants or rights of first
refusal, preemptive, subordination or similar rights or other rights to
purchase, obtain or acquire, or any outstanding securities or obligations
convertible into or exchangeable for, or any voting or other agreements with
respect to, any shares of capital stock of the Company, or any other securities
of the Company and the Company is not obligated, now or in the future,
contingently or otherwise, to issue, purchase or redeem capital stock or any
other securities to or from any person or entity. There are no Shares of the
capital stock of the Company held in the Company's treasury. Copies of the
charter documents and by-laws and corporate minute books of the Company have
been made available to Buyer and are true, correct and complete in all material
respects as of the date hereof. There are no outstanding bonds, debentures,
notes or other indebtedness having the right to vote on any matters on which
stockholders of the Company may vote.
3.3 Subsidiaries and Investments
The Company is a wholly-owned subsidiary of Seller. Except for
its ownership interests in Affiliates of Seller as set forth in Schedule 3.3.,
which will be transferred to another Affiliate of Seller prior to the Closing
Date, the Company does not own, directly or indirectly, any capital stock of or
other equity interests in any Person. The Company has not made any advances of
money to, or guaranteed the obligations of, any Person which remain outstanding.
3.4 Organization
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York with full corporate
power and authority to carry on its business as presently conducted by it and to
own, lease and operate its properties in the places where it maintains offices
and where its properties are owned, leased or operated and is duly qualified or
licensed to do business in good standing as a foreign corporation in each
jurisdiction where the properties owned or leased or the activities conducted by
the Company make such qualification or license necessary, except where the
failure to be so qualified or licensed would not have a material adverse effect
on the business, properties, assets, liabilities, operations, prospects or
financial condition of the Company (a "Material Adverse Effect").
3.5 Due Authorization of Seller; Binding Obligation
Seller has full corporate power and authority to execute and
deliver this Agreement and the other agreements to be executed and delivered by
Seller at the Closing and to perform its obligations hereunder and thereunder,
and the execution, delivery and performance of this Agreement and such other
agreements by Seller have been duly authorized by all necessary corporate and
stockholder actions on the part of Seller. This Agreement is the valid and
binding obligation of Seller, enforceable in accordance with its terms, subject
to the qualification, however, that enforcement of the rights and remedies
created hereby is subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights in general, or by general principles of equity.
3.6 Non-Contravention
Except as set forth on Schedule 3.6, the execution, delivery
and performance of this Agreement by Seller and the consummation of the
Contemplated Transactions do not and will not, with or without the giving of
written notice or the lapse of time, or both, violate, conflict with, result in
the breach of, require a consent under, or accelerate the performance required
by any of the terms, conditions or provisions of (i) the charter documents or
by-laws or other governing documents of the Company or Seller, (ii) any
covenant, agreement or understanding to which the Company or Seller is a party
or by which either of them or any of their respective assets are bound, or (iii)
any order, ruling, decree, judgment, arbitration award, law, rule, regulation or
stipulation to which the Company or Seller is subject or constitute a default
thereunder or result in the creation of any Lien upon any of the material
properties or assets of the Company or upon the Shares.
3.7 Financial Statements
Seller has heretofore furnished to Buyer unaudited financial
statements of the Company consisting of (i) balance sheets at December 29, 1996
(the "1996 Balance Sheet") and September 28, 1997 (the "Interim Balance Sheet")
and (ii) statements of operations for the interim periods ended March 30, 1997,
June 29, 1997 and September 28, 1997 (the "Interim Statements of Operations")
and the years ended December 31, 1995 and December 29, 1996 (the foregoing
financial statements are hereinafter collectively referred to as the "Financial
Statements" and the Interim Balance Sheet and the corresponding Statement of
Operations are set forth on Schedule 3.7). Such Financial Statements and notes
fairly present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP, subject, in the case of the March 30 and June 29, 1997 Interim
Statements of Operations, to normal recurring year-end adjustments (the effect
of which will not, individually or in the aggregate, constitute a Material
Adverse Effect) and, subject in the case of the Interim Balance Sheet and the
Interim Statements of Operations, to the absence of notes (that, if presented,
would not differ materially from those included in the Balance Sheet); the
financial statements referred to in this Section 3.7 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements.
3.8 Books and Records
The books of account, minute books, stock record books, and
other records of the Company, all of which have been made available to Buyer,
are current, complete and correct in all material respects and have been
maintained in accordance with sound business practices. The minute books of the
Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Board of Directors of the
Company and any committee of said Board, and no meeting of any such
stockholders, Board of Directors or any committee has been held for which
minutes have not been prepared and are not contained in such minute books.
At Closing, all of such books and records will be in possession of the Company.
3.9 Title to Properties
(a) The Company has good and marketable title to all the real
and personal property and assets owned or purported to be owned by it, free and
clear of all Liens, except (a) as set forth in Schedule 3.9(a); (b) mechanics',
carriers', workers' and other similar liens arising in the Ordinary Course of
Business and consistent with past practice which would not have a Material
Adverse Effect; (c) liens of taxes not yet due and payable or being contested in
good faith by appropriate proceedings and in compliance with applicable law; (d)
with respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, impairs the operations of the Company
or, to the best of Seller's knowledge and without benefit of any title search,
survey or similar investigation, renders the title to any such real property to
be unmarketable, and (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto
(collectively, the "Permitted Liens"); and (e) those non-consensual Liens which
do not affect any material assets and do not impair the current use or diminish
the value of the property affected to any material extent; provided that the
Liens referred to in clauses (a) through (e) above in the aggregate, are not
substantial in amount, do not detract from the value of the property or asset
subject thereto and do not interfere with the current or anticipated use
thereof.
(b) The Company owns all of the property and assets used by it
in the operation and conduct of its business, except for those material assets
leased by the Company under leases specifically identified on Schedule 3.9(b).
The assets and property owned or leased by the Company constitute all of the
assets used in, related to or required by the Company for the normal conduct of
its business.
(c) Schedule 3.9(c) sets forth a true and complete (except for
fixed assets acquired by the Company prior to January 1, 1977) list as at
November 23, 1997 of all tools, dies, equipment, machinery, motor vehicles,
fixtures and other fixed assets purchased or acquired by the Company since
January 1, 1977, indicating the owner and location thereof, the cost of the
assets acquired annually and the cumulative total. The fixed assets owned or
used by the Company are sufficient for the operation of the business of the
Company as it is currently conducted and in a reasonable state of repair taking
into account the age thereof. The dollar amount of the fixed assets owned by the
Company as shown on the Interim Balance Sheet does not in any case exceed the
cost of the same, less any previous write-downs and less depreciation determined
in accordance with GAAP consistently applied, and the Company has not written up
the value of any such fixed assets.
(d) Schedule 3.9(d) hereto sets forth a true and complete list
and description of all real property, land, buildings, improvements and
structures (collectively, "Real Property") now owned or used by the Company. To
the best of Seller's knowledge, the buildings, driveways and all other
structures and improvements upon the Real Property are within the boundary lines
thereof and do not encroach upon the property of any other persons. To the
extent they are in the possession of Company, the Company has heretofore
delivered or made available to Buyer copies of all title insurance policies
obtained by the Company, abstracts of title and other evidence of title with
respect to the Real Property. Each party will use their best efforts to keep the
other informed as to the status of their negotiations with the landlord of the
facility in El Cajon, California referenced on Schedule 3.9(d).
(e) Schedule 3.9(e) sets forth a true and complete list of each
lease of premises executed by or binding upon Seller as lessee, sub-lessee,
tenant or assignee (the "Leased Premises") setting forth in each case a brief
description of the premises covered thereby, the rental payable thereunder and
the term (including any extensions available) thereunder. Except as set forth on
Schedule 3.9(e), each such lease is in full force and effect on the date hereof
without any default or breach thereof by the Company or, to Seller's knowledge,
any other party thereto. To the extent they are in the possession of Company,
true and complete copies of all leases required to be listed on Schedule 3.9
have heretofore been delivered or made available to Buyer. There are no leasing
commissions or brokerage fees of any kind due or to become due in respect of
such leases.
(f) Except as set forth on Schedule 3.9(f), during the past two
years neither Seller nor the Company has received any notice of or writing
referring to any requirements or recommendations by any insurance company which
has issued a policy covering any part of any Real Property or Leased Premises or
by any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any part of any Real
Property or Leased Premises. All of the public utilities required for the
operation of the Real Property or Leased Premises in the manner currently
operated are installed and operating, and all installation and connection
charges have been paid in full or provided for the plumbing, electrical,
heating, air conditioning, ventilating and all other structural or material
mechanical systems in the buildings upon the Real Property and Leased Premises
are in, and will be in on the Closing Date, satisfactory working condition.
Buyer has had the opportunity to inspect the roof, basement and foundation walls
of the buildings of the Real Property and Leased Premises and Seller makes no
representation or warranty as to their condition, provided that this sentence
does not limit Seller's obligations pursuant to Section 5.9 hereof. All water,
utility and other charges, sewer rent and assessments affecting the Real
Property or Leased Premises or any part thereof, and all Taxes imposed against
or affecting the Real Property or Leased Premises (to the extent payable by the
Company) or any part thereof, have been paid in full, accrued or reflected on
the Interim Balance Sheet or, since the Interim Balance Sheet Date, incurred in
the Ordinary Course of Business. Neither Seller nor the Company has received
notice of any assessments, and has no knowledge of any pending assessments,
affecting the Real Property and the Leased Premises and to the best of Seller's
knowledge, the use thereof conform in all respects with all covenants and
restrictions and all applicable building, zoning, and land use laws.
3.10 Contracts
Schedule 3.10 contains a complete list as of the date(s) listed
therein of the following: (i) Contracts to which Company is a party or under
which Company is obligated or bound or to which any of the assets may be
subject, which provide for a period of performance which extends beyond January
1, 2000 or involves a payment or receipt after the date of this Agreement of
more than $25,000 and (ii) Contracts, commitments and agreements not referred to
in clause (i) above or in other Schedules that are material to the operations of
the Company. To Seller's knowledge, each such Contract or commitment will be
enforceable by Buyer in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general, or by general principles of equity. As of the date hereof, the
Company is not in default under any of the Contracts listed on Schedule 3.10
and, to Seller's knowledge, no other party is in default thereunder, except, in
any such case, for defaults that, individually or in the aggregate, would not be
materially adverse to the operation of the Company. The Company has not, since
the date of the Interim Balance Sheet entered into any purchase or sales
commitment or order except in the Ordinary Course of Business. The Company has
not, except as set forth on Schedule 3.10 entered into any: (A) royalty
agreement, or except in the Ordinary Course of Business, any distribution,
agency or license agreement; (B) Contract (for employment or otherwise) with any
officer, employee, director or shareholder (or any Affiliate of any such
officer, employee, director or shareholder) or except in the Ordinary Course of
Business, any professional person or firm, consultant, independent contractor or
advertising firm or agency; (C) Contract guaranteeing the payment or performance
of the obligations of others; (D) Contract restricting the ability of the
Company to engage in any line of business or to compete with any Person other
than those associated with Items 2 and 6 on Schedule 3.10; or (E) any
shareholders' agreement, joint venture agreement or other Contract with respect
to the operation or management of any entity.
3.11 Patents, Trademarks, Copyrights and Trade Secrets
(a) Schedule 3.11 contains a complete list of all Intellectual
Property Rights owned by or licensed to Company (i) for which a patent or other
registration exists or has been applied for or (ii) that are material to the
current operations of the Company. Except as set forth on Schedule 3.11, Seller
has no knowledge that any Intellectual Property Rights now or heretofore owned
or used by the Company infringes, misuses or misappropriates any Intellectual
Property Right of any other Person and, to the best of Seller's knowledge, no
Intellectual Property Right of any other Person infringes, misuses or
misappropriates any Intellectual Property Right owned by or licensed to the
Company. Except as set forth on Schedule 3.11, and to the best of Seller's
knowledge, all Intellectual Property Rights which are necessary to, or are being
used in, the manufacturing, processing, fabricating, assembling, advertising or
sale by the Company of the products now being produced by it are as of the date
hereof either owned by the Company, free and clear of any Liens, and, to
Seller's knowledge, adverse claims of ownership by any third party, or are the
subject to an appropriate license or agreement pursuant to which the Company is
granted the right to make such uses thereof. No shareholder, Affiliate, officer,
director or employee of the Company or Seller owns or has any interest in any
Intellectual Property Rights or any trade secret, invention or process, if any,
used by the Company in connection with its business. No claims or allegations of
infringement or misappropriation of any Intellectual Property Rights are pending
or, to Seller's knowledge, threatened against the Company. Except as set forth
in Schedule 3.11, neither Seller, the Company, nor any of their Affiliates is
party to any licenses or similar agreements with respect to the "Rotron" name.
(b) Except as provided in the Trademark License (as defined
below) no transfer, license or grant of rights to the tradename, service mark
and/or trademark "EG&G" or the EG&G logo, either separately or in conjunction
with "EG&G Rotron" is made or is to be implied by any provision of this
Agreement.
3.12 Litigation
Schedule 3.12 contains a complete list as of the date hereof of
all claims, actions, suits, labor disputes, investigations and proceedings,
pending or, to Seller's knowledge, threatened, which involve the Company or any
of its material assets. Except as set forth in Schedule 3.12, there are no
decrees, injunctions or orders of any court or governmental department or agency
outstanding against Seller as of the date hereof.
3.13 Compliance with Law; Governmental Approvals
To Seller's knowledge, Company is in compliance, in all
material respects, with all applicable statutes, laws, ordinances, rules, orders
and regulations of any governmental authority or instrumentality, domestic or
foreign. Except as set forth on Schedule 3.13, neither Seller nor the Company
has received as of the date hereof any written communication from a governmental
authority that alleges that the Company is not in compliance, in all material
respects, with any Federal, state, local or foreign statute, law, ordinance,
rule, order or regulation Company holds and will hold on the Closing Date all
licenses, permits and authorizations necessary for the lawful operation of the
Company under and pursuant to all applicable statutes, laws, ordinances, rules
and regulations of all Federal, state, local and foreign governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it or
over any part of its operations except where any failure to have such licenses,
permits and authorizations or to comply would not, individually or in the
aggregate, have a Material Adverse Effect and the Company may lawfully operate
without such license, permit or authorization. Seller is not aware of any
proposed change in law that would negatively affect the Company's ability to
continue operations in the manner in which they are currently conducted.
3.14 Employee Benefit Plans
(a) Schedule 3.14 contains a list and if appropriate a brief
description of all employee benefit plans (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
funds, policies, arrangements, practices, customs and understandings or programs
which cover any employees (or former employees) of the Company (and/or their
beneficiaries or dependents), whether or not they are or are intended to be (i)
covered or qualified under the Internal Revenue Code of 1986, as amended (the
"Code"), ERISA or any other applicable law, (ii) written or oral, (iii) funded
or unfunded, or (iv) generally available to any or all employees (or former
employees) of the Company (and/or their beneficiaries or dependents), which are
established, contributed to or maintained by the Company or any ERISA Affiliate
(as defined below) as of the date hereof, including all welfare, pension, profit
sharing, retirement, stock purchase, stock option, stock bonus, severance or
deferred compensation plans, qualified domestic relations orders and qualified
medical child support orders (the "Employee Benefit Plans"). For purposes of
this Section 3.14, the term "ERISA Affiliate" shall mean Seller and include any
corporation which is a member of a controlled group of corporations (as defined
in Section 414(b) of the Code) which includes Seller, any trade or business
(whether or not incorporated) which is under common control (as defined in
Section 414(c) of the Code) with Seller, any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes Seller and any other entity required
to be aggregated with Seller pursuant to the regulations issued under Section
414(o) of the Code. Seller has delivered or made available to Buyer true,
accurate and complete copies of all Employee Benefit Plan documents. Except as
set forth on Schedule 3.14, EG&G, Inc. is the sponsor of the Employee Benefit
Plans.
(b) As of the date hereof, each Employee Benefit Plan has been
administered in all material respects in accordance with its terms. All reports,
returns and similar documents with respect to the Employee Benefit Plans
required to be filed as of the date hereof with any governmental authority or
distributed to any Employee Benefit Plan participant have been duly and timely
filed or distributed; or the failure to file will not result in the imposition
of a fine or penalty against the Company or such Plan.
(c) Except as set forth in Schedule 3.14, each Employee Benefit
Plan which is intended to be qualified under Section 401(a) of the Code and
exempt from tax under Section 501(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and such determination remains in
effect and has not been revoked. Nothing has occurred since the date of any such
determination which may adversely affect such qualification or exemption, or
result in the imposition of excise taxes or income tax on unrelated business
income under the Code or ERISA, except for acts or omissions which would not,
either singularly or in the aggregate, have a Material Adverse Effect.
(d) There are (i) no "accumulated funding deficiencies" as
defined in Section 302 of ERISA or Section 412 of the Internal Revenue Code,
whether or not waived, under, and (ii) no "reportable event" as defined in
Section 4043(b) of ERISA has occurred with respect to, any single employer
defined benefit plan maintained or sponsored by Seller, the Company or any ERISA
Affiliate.
(e) Neither Seller nor the Company has any obligation, nor
during the five year period ending on the Closing Date has had any obligation,
to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA).
Neither Seller, the Company nor any ERISA Affiliate is subject to any withdrawal
or partial withdrawal liability within the contemplation of ERISA Section 4201
et seq. and will not become subject thereto as a result of the Contemplated
Transactions.
(f) With respect to any Employee Benefit Plan that is an
employee welfare benefit plan (within the meaning of Section 3(1) of ERISA) (a
"Welfare Plan"), (i) each Welfare Plan for which contributions are claimed as
deductions under any provision of the Code is in material compliance with all
applicable requirements pertaining to such deduction, (ii) with respect to any
welfare benefit fund (within the meaning of Section 419 of the Code) that
comprises part of a Welfare Plan, there is no disqualified benefit (within the
meaning of Section 4976(b) of the Code) that would subject the Buyer to a
material tax under Section 4976(a) of the Code, (iii) any Welfare Plan that is a
group health plan (within the meaning of Section 4980B(g)(2) of the Code)
materially complies, and in each case has materially complied, with all of the
requirements of Section 162(k) of the Code (for tax years beginning before
January 1, 1989) and 4980B of the Code (for tax years beginning after December
31, 1988), (iv) every employee, former employee, and every dependent of the
foregoing entitled to continuation of benefit coverage under any Welfare Plan
has been accorded in all material respects all of the rights to which such
person is entitled as a matter of law or regulation, and (v) all Welfare Plans
sponsored by the Company may, subject to any other provision of this Agreement,
be amended or terminated by the Buyer at any time on or after the Closing Date.
(g) There are no liabilities, to the Pension Benefit Guarantee
Corporation ("PBGC") or otherwise, associated with any previously terminated
single employer defined benefit person plan maintained or sponsored by Seller,
the Company or any ERISA Affiliate, whether or not such plan was an Employee
Benefit Plan, and all PBGC premiums under plans, whether or not terminated,
maintained or sponsored by Seller, the Company or any ERISA Affiliate have been
paid on a timely basis.
(h) Each most recent Employee Benefit Plan audit report,
actuarial report and annual report, certified by the Employee Benefit Plan's
actuaries and auditors, as the case may be, fairly presents the actuarial status
and the financial condition of the Employee Benefit Plan as at the date thereof
and the results of operations of the Employee Benefit Plan for the plan year
reflected therein and, subject to changes in amounts attributable to investment
performance and normal employee turnover, there has been no material adverse
change in the condition of the Employee Benefit Plan since the date of the most
recent Form 5500, audited annual financial statement or actuarial valuation
report. All financial statements of EG&G, Inc. reflect, with respect to any
Employee Benefit Plan the employee benefit costs and liabilities in accordance
with FAS 35, 87, 88, 106 and 112, and AICPA SOP 92-6, as applicable.
(i) There is no matter, action, audit, suit or claim pending
or, to the best knowledge of Seller, threatened, relating to any Employee
Benefit Plan, fiduciary of any Employee Benefit Plan or assets of any Employee
Benefit Plan, before any court, tribunal or governmental agency, other than
routine claims for benefits under the Employee Benefit Plans or actions seeking
qualified domestic relations orders or qualified medical child support orders
related thereto.
(j) No prohibited transaction has been committed by Seller (as
defined in Section 406 of ERISA or Section 4975 of the Code) has occurred or
exists with respect to any Employee Benefit Plan which would result in a
Material Adverse Effect.
(k) No Employee Benefit Plan is being terminated and there will
be no Employee Benefit Plan amendments occurring through the date of Closing
(or, with respect to Seller's Pension Plan, through the date of any transfer of
assets from such plan), other than those made to facilitate the Contemplated
Transactions.
3.15 Environmental Matters
Except as described in the reports and other documents set
forth on Schedule 3.15, as of the date hereof:
(a) No litigation, suits, claims, proceedings or investigations
or private or governmental enforcement actions or orders are pending, or, to
Seller's knowledge, threatened against Seller with respect to any Hazardous
Material or applicable Environmental Law, as defined below.
(b) Seller has not received any notice from any governmental
authority or other person of any claims or potential violations by Seller of (or
liability under) any Environmental Law; and
(c) To the best of Seller's knowledge there has been no (i)
activity on any of the properties of Seller which has been conducted, or is
being conducted, in violation of any Environmental Law, or (ii) actual or
threatened release (including, without limitation, any spill, discharge, leak,
emission, ejection, escape or dumping) or improper or inadequate storage of, or
contamination caused by any Hazardous Material on or under any of the properties
of Seller, which in any of such cases would have a Material Adverse Effect.
(d) All products manufactured and services provided by Seller
prior to the date hereof are in compliance with all Environmental Laws
applicable thereto and all such products and services so manufactured or
provided prior to the Closing Date will as of such date be in material
compliance with all applicable Environmental Laws.
(e) Seller is not aware of any material containing friable
asbestos in or on the Real Property of the Company which would have a Material
Adverse Effect on the business, assets or Real Property of the Company. No
product currently manufactured or sold by the Company contains asbestos in any
known form.
(f) Seller has hereto delivered or made available to Buyer true
and complete copies of all environmental studies relating to the business,
assets or Real Property of Company which either (i) have been conducted on
behalf of Seller in the last five years or (ii) are in the possession of EG&G,
Inc., Seller or the Company.
(g) "Environmental Law" means any governmental law (including
regulations thereunder) relating to environmental matters or Hazardous
Materials; "Hazardous Material" means any material, substance, waste, pollutant
or other matter that is defined as a hazardous material, hazardous substance,
hazardous waste, toxic material, toxic substance or other term having a similar
meaning under applicable law or is otherwise subject to elimination, abatement,
removal, remediation or cleanup under applicable law.
3.16 Insurance
Schedule 3.16 contains a summary of insurance policies or
binders of insurance or programs of self-insurance which have related to Company
during the past five years. All such policies and binders are (except for the
Directors' and Officers' liability) "occurrence" based, have limits in amounts
customarily deemed to be adequate, and cover all risks customarily insured
against, in the type of business conducted by Company and all premiums due to
the date hereof on such policies have been paid in full. All pending claims, if
any, made against Seller which are covered by insurance are being defended by
the appropriate insurance companies and are described on Schedule 3.16 hereto.
Seller has not failed to give any notice or present any claim under any such
policy in a timely fashion and has not exhausted the underlying policy limits of
such policies or binders. The coverage under each such policy and binder is in
full force and effect, and no notice of cancellation or nonrenewal has been
received by Seller (it being understood, however, that any coverage currently
being provided under policies maintained by Seller for the benefit of Company
will be terminated as of the Closing, and Buyer will be responsible for
providing insurance coverage from the Closing Date forward; however, subject to
the terms and conditions of the applicable policies, coverage for claims based
on pre-Closing "occurrences" will continue. The parties will consult and
cooperate with each other with regard to potential claims against Seller's
insurers for matters relating to occurrences prior to the Closing Date.
3.17 Brokers or Finders
Neither Company nor Seller, nor their respective officers or
agents, has entered into, and none of them will enter into, any agreement,
arrangement or understanding with any person or firm which will result in the
obligation of Buyer to pay any finder's fee, brokerage commission or similar
payment in connection with the Contemplated Transactions.
3.18 Disclosure
No representation or warranty of Seller in this Agreement
contains as of the date hereof any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained herein, in
light of the circumstances in which they were made, not misleading.
3.19 No Material Adverse Change
Since the date of the Interim Balance Sheet there has not been
any material adverse change in the business, operations, properties, prospects,
assets, or condition of the Company, and to the knowledge of Seller no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.20 Absence of Certain Changes and Events
Since the date of the Interim Balance Sheet, the Company has
conducted its business only in the Ordinary Course of Business and there have
not been any changes that, individually or in the aggregate, would result in a
material adverse change to the operations of the Company. Except as permitted by
the terms of this Agreement, Seller has not done, or permitted to be done, any
of the following from the date of the Interim Balance Sheet to the date hereof:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase Shares of the Company; issuance
of any security convertible into such Shares; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by the Company of any
Shares; or declaration or payment of any dividend or other distribution or
payment in respect of the Shares;
(b) amendment to charter documents or by-laws of the Company;
(c) payment or increase of any bonuses, salaries, or other
compensation to any director, officer, or employee, or entry into any
employment, severance, or similar contract with any director, officer, or
employee; except for payment of salary and bonuses and increases in salary in
the Ordinary Course of Business or except for any such payments or increases for
which Seller would be solely obligated;
(d) adopted or amended in any material respect any Employee
Benefit Plan;
(e) incurred or assumed any material liabilities, obligations
or indebtedness for borrowed money or guaranteed any such liabilities,
obligations or indebtedness, other than in the Ordinary Course of Business;
(f) permitted, allowed or suffered any of the Company's assets
to be subject to any Liens, other than Permitted Liens;
(g) the Company's acquisition or agreement to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or the Company's
acquisition or agreement to acquire any assets which are material, individually
or in the aggregate to the seller of such assets;
(h) sold, leased, or otherwise disposed of, or agreed to sell,
lease or otherwise dispose of, any of the Company's assets which are material,
individually or in the aggregate, to the Company, except for the sale of
inventory, collection of accounts receivable and other activities in the
Ordinary Course of Business;
(i) instituted a material change in the accounting methods used
by the Company; or
(j) cancellation of any indebtedness or waiver of any rights of
substantial value to the Company, other than write-offs or write-downs in the
Ordinary Course of Business;
(k) amendment, cancellation or termination (other than in
accordance with its terms or otherwise in the Ordinary Course of Business) of
any Contract material to the Company;
(l) failure to pay any obligation of the Company due in the
Ordinary Course of Business, except where contested in good faith and where such
failure would not have a Material Adverse Effect;
(m) made any agreement, whether oral or written, to do any of
the foregoing.
3.21 Labor Relations; Compliance
The Company is not a party to any labor or collective
bargaining agreement, and no employees of the Company are represented in their
employment with the Company by a labor organization. There is, and during the
past two years there has been, no labor strike, dispute, work stoppage or
lockout pending, or, to the knowledge of Seller, threatened, against or
affecting the Company. No labor organization or group of employees of the
Company has made a pending demand for recognition or certification to the
Company, and, to the knowledge of Seller, no union organizational campaign is in
progress with respect to the employees of the Company.
<PAGE>
3.22 Customers
Schedule 3.22 hereto contains a complete and accurate list of
the largest customers of the Company in terms of revenues for 1997 as of
December 15, 1997, showing the approximate total revenues earned by the Company
from each such customer during the indicated period. To the best of Seller's
knowledge, since September 28, 1997 there has been no material adverse change in
the business relationship of the Company with any such customer.
3.23 Vacation Time, Bonuses, Etc.
Schedule 3.23 hereto sets forth the method for accruing
vacation pay used by the Company on its books and records.
3.24 Compensation
Schedule 3.24 contains a list of the following information for
each employee of the Company, including each employee on leave of absence or
disability status: name; title or job description; total annual compensation
(including base salary and bonus); and years of service credited for purposes of
vesting and level of participation under any Employee Benefit Plan. Schedule
3.24 also lists (by location) the value of vacation carryover. Except as set
forth in Schedule 3.24, at the date of the Interim Balance Sheet there were no
bonuses, profit sharing, incentives, commissions or other compensation of any
kind with respect to work done prior to the date of such Interim Balance Sheet
owing to present or former employees of the Company not fully paid prior to such
date or, with respect to compensation for work done prior to the date of such
Interim Balance Sheet, not fully accrued or reserved for; except for accruals
relating to the Success Sharing Plan which, in the Ordinary Course of Business,
are not made until the fourth quarter of the fiscal year. In January 1998, EG&G,
Inc. will supply Company with instructions as to appropriate payment amounts
from the accrual under the Economic Value Added Plan.
3.25 Accounts Receivable
All of the accounts receivable of the Company are actual and
bona fide receivables representing obligations for the total dollar amount
thereof shown on its books. Company has not received as of the date hereof
written notice of any contest, claim or right of set-off with respect to the
amount or validity of any such accounts receivable other than accounts
receivable which do not exceed, in the aggregate, the applicable reserve for
doubtful accounts. The accounts receivable of the Company as of the Closing Date
will be collectible net of the reserve shown on the Closing Balance Sheet (which
reserve shall be calculated in a manner consistent with past practice) and,
except for such reserve, without recoupment, offset or counterclaim.
3.26 Warranties
Set forth in Schedule 3.26 are descriptions and copies of the
forms of product warranties of Company that are on the date of this Agreement
being made for products being sold on such date, other than any implied
warranties or other warranties deemed to be imposed as a matter of law. Except
as discussed at Section 13.1, relating to Hi-Rel Products (as defined below)
there have been no breach of warranty or breach of representation claims against
the Company during the past three years which have resulted in any material
cost, expenditure or exposure to the Company. The warranty reserve shown on the
Interim Balance Sheet with respect to all outstanding products of the Company,
other than the Hi-Rel Products, has been, and the warranty reserve to be shown
on the Closing Balance Sheet with respect to such products will have been,
established in accordance with past practices. With respect to the Hi-Rel
Products, the Company has recently increased the warranty reserve for Hi-Rel
Products by $200,000 and is undertaking a review of warranty policy in the
fourth quarter of 1997 and it is expected that the warranty reserve for Hi-Rel
Products to be reflected in the Closing Balance Sheet will be appropriate for
warranty claims relating to Hi-Rel Products sold prior to the Closing Date.
3.27 Inventory
The inventory of the Company as at the date of the Interim
Balance Sheet was, and the inventory of the Company on the date hereof has been,
and on the Closing Date will have been, manufactured or acquired in the Ordinary
Course of Business, in customary quantities and at prevailing prices. Such
inventory has been valued on the Interim Balance Sheet at the lower of cost or
market on a LIFO (last-in, first-out) basis in accordance with GAAP applied on a
consistent basis and, in the case of all such inventory that is slow-moving
(i.e., any item of inventory in excess of a one year's supply based on sales of
inventory during the prior 12 month period or requirements based on existing
backlog, whichever is higher), has been fully reserved for and, in the case of
all such inventory that is rejected, damaged or obsolete, has been written down
to its net realizable value. Except as indicated in Schedule 3.27 and subject to
any reserve for excess and obsolete inventories, (i) the finished goods
contained in the inventory of the Company have been made in accordance with and
in conformity to the specifications of the corresponding customer orders or, in
cases where there are no customer specifications, are saleable or usable in the
Ordinary Course of Business; (ii) the work in process contained in such
inventory has been made in accordance with and in conformity to the
specifications of corresponding customer orders to the extent consistent with
its state of completion, or is suitable to permit to produce therefrom in the
ordinary and usual course finished goods that will be saleable or useable in the
Ordinary Course of Business and (iii) the raw materials contained in such
inventory are suitable for the purpose of filling specific customer orders, or
are otherwise suitable to permit the Company to produce therefrom in the
ordinary and usual course finished goods that will be saleable or usable in the
Ordinary Course of Business.
<PAGE>
3.28 Liabilities
The Interim Balance Sheet properly reflects all Liabilities of
the Company as required by GAAP, applied on a basis consistent with the basis on
which Financial Statements referred to in Section 3.7 were prepared. All
Liabilities incurred since the date of the Interim Balance Sheet will have been
incurred in the Ordinary Course of Business and not in violation of or in
conflict with any of the terms, agreements, warranties, representations and
conditions of Seller contained in this Agreement.
3.29 Governmental Approvals
No governmental authorization, approval, order, license,
permit, franchise, or consent and no registration, declaration or filing by the
Company, Seller or any shareholder of Seller with any governmental authority
(including, without limitation, any filing or registration pursuant to the
Securities Act or the securities or blue sky laws of any state or territory) is
required in connection with the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions except for HSR Act approval and
notification to the New York State Department of Environmental Conservation
regarding the facilities listed as Class 2 sites on the Registry of Inactive
Hazardous Waste Sites.
3.30 Certain Transactions
Except as disclosed in Schedule 3.30, no officer or director of
the Company (or the immediate family of any of them), has any interest in
property, real, personal or mixed, tangible or intangible, used in or pertaining
to the business of Company, or in any creditor, debtor, supplier, customer,
agent, sales representative, or distributor of Company. Any transactions between
the Company and Seller (including Affiliates of Seller) are related either to
the intercompany accounts described at Section 5.8 or have been and will be
conducted in the Ordinary Course of Business.
3.31 Backlog
As of October 31, 1997 the total backlog of orders of the
Company was approximately $32,600,000. As at the Closing Date, the total backlog
of orders of the Company will not be less than $30,000,000. Such backlog
consists, and will on the Closing Date consist, of orders for products or
services which are typical of the types of products and services heretofore
manufactured, sold or rendered by the Company and which do not require the
development or application of any new or more advanced technology than that
utilized by the Company in the past.
3.32 Certain Payments
Since January 1, 1995, neither the Company, any director,
officer, agent, or employee of Company nor any other Person associated with or
acting for or on behalf of the Company has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company, or (iv) in violation of any Legal Requirement, (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company.
3.33 Employee Secrecy Agreements.
The Company has entered into secrecy agreements with
substantially all of its current employees, the forms of which have been
previously provided to Buyer and Buyer has been provided with the opportunity to
review such agreements.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
4.1 Organization and Good Standing
Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, with full corporate power
and authority to carry on the business which it is now conducting.
4.2 Authority; No Conflict
(a) The execution and delivery by Buyer of this Agreement and
the consummation of the Contemplated Transactions have been duly and validly
authorized by Buyer's Board of Directors; no other corporate action or
proceeding on the part of Buyer is necessary to authorize this Agreement or the
Contemplated Transactions. This Agreement constitutes valid and legally binding
obligations of Buyer, enforceable against Buyer in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting the enforcement of creditors' rights in general, or by general
principles of equity.
(b) Neither the execution and delivery by Buyer of this
Agreement nor the consummation of the Contemplated Transactions nor compliance
by Buyer with any of the provisions hereof will violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or any event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien, upon any of the assets of Buyer or any of
its subsidiaries under any of the terms, conditions or provisions of the
Articles of Incorporation or By-Laws of Buyer (or equivalent corporate
documentation) or any note, bond, mortgage, indenture, deed of trust, license,
agreement or other instrument or obligation to which Buyer or any of its
subsidiaries or any of the property or assets of Buyer or any of its
subsidiaries may be bound or affected, or violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Buyer or any of its
subsidiaries or any of the properties or assets or Buyer or any of its
subsidiaries, except for such conflict, breach, default or violation which is
not material to Buyer and its subsidiaries, taken as a single enterprise, or as
to which requisite waivers or consents either shall have been obtained by the
date hereof or the Closing Date, as appropriate, or shall have been waived by
Seller in writing. No consent or approval by, notice to or registration with any
governmental authority or any other person or entity, other than compliance with
the HSR Act, is required on the part of Buyer prior to the Closing Date in
connection with the execution and delivery by Buyer of this Agreement or the
consummation by Buyer of the Contemplated Transactions.
4.3 Investment Intent
Buyer is acquiring the Shares for its own account and not with
a view to their distribution within the meaning of Section 2(11) of the
Securities Act of 1933.
4.4 Certain Proceedings
There is no pending proceeding that has been commenced against
Buyer that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions. To
Buyer's knowledge, no such proceeding has been threatened.
4.5 Brokers or Finders
Buyer and its officers and agents have incurred no obligation
or liability, and will not incur any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement and will indemnify and hold
Seller harmless from any such payment alleged to be due by or through Buyer as a
result of the action of Buyer or its officers or agents.
4.6 Disclosure
No representation or warranty of Buyer in this Agreement
contains as of the date hereof any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained herein, in
light of the circumstances in which they were made, not misleading.
4.7 Funding
Buyer has cash available or has existing borrowing facilities
or firm commitments which, together with its available cash, are sufficient to
enable it to consummate the Contemplated Transactions.
ARTICLE V - COVENANTS OF SELLER PRIOR TO CLOSING DATE
5.1 Access and Investigation
Between the date of this Agreement and the Closing Date, Seller
will, and will cause its Representatives to, (a) afford Buyer and its
Representatives and prospective lenders and their Representatives (collectively,
"Buyer's Advisors") full access during normal business hours to the Company's
personnel, properties, Contracts, books and records, and other documents and
data, (b) furnish, or permit Buyer's Advisors to make copies of all such
Contracts, books and records and other existing documents and data as Buyer may
reasonably request and (c) furnish Buyer and Buyer's Advisors with such
additional financial, operating, and other data and information as Buyer may
reasonably request; provided, that such investigation will not interfere
unnecessarily with normal business operations.
<PAGE>
5.2 Operation of the Businesses
Between the date of this Agreement and the Closing Date, Seller
will, and will cause the Company to:
(a) conduct the business of the Company in the Ordinary Course
of Business;
(b) use its best efforts to preserve intact the current
business organization of the Company, and maintain the relations and goodwill
with suppliers, customers, landlords, employees, agents, and others having
business relationships with the Company;
(c) confer with Buyer concerning operational matters of a
material nature; and
(d) otherwise keep Buyer reasonably informed regarding the
status of the business, operations, and finances of the Company.
5.3 Negative Covenant
Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing Date, Seller will not, and
will not cause or permit the Company to, without the prior consent of Buyer,
take any affirmative action, or fail to take any reasonable action within its
control which would or is likely to result in the occurrence of any of the
changes or events listed in Section 3.20.
5.4 Required Approvals
As promptly as practicable after the date of this Agreement,
Seller will, and will cause the Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions (including all filings under the HSR Act). Between the date of this
Agreement and the Closing Date, Seller will, and will cause the Company to, (i)
cooperate with Buyer with respect to all filings that Buyer elects to make or is
required by Legal Requirements to make in connection with the Contemplated
Transactions, and (ii) cooperate with Buyer in obtaining all consents required
to consummate the Contemplated Transactions.
5.5 Notification
Between the date of this Agreement and the Closing Date, Seller
will promptly notify Buyer in writing if Seller or the Company becomes aware of
any fact or condition that causes or constitutes a material breach of any of
Seller's representations and warranties as of the date of this Agreement.
5.6 No Negotiation
Until such time, if any, as this Agreement is terminated
pursuant to Article IX, Seller will not, and will cause the Company and each of
their Representatives not to, directly or indirectly, solicit or encourage any
inquiries or proposals from, discuss or negotiate with, provide any non-public
information to, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of the Company, or the Shares, or any merger, consolidation,
business combination, or similar transaction involving the Company.
5.7 Best Efforts
Between the date of this Agreement and the Closing Date, Seller
will use its best efforts to cause the conditions in Articles VII and VIII to be
satisfied.
<PAGE>
5.8 Settlement of Intercompany Accounts
(a) Except as set forth in Section 5.8(b), effective
immediately prior to the Closing, all amounts then payable (i) by the Company to
Seller or any of its Affiliates or (ii) by Seller or any of its Affiliates to
the Company shall, on a net basis, either be added to or charged against the
Stockholders' Equity of the Company and, accordingly, the Company shall have no
further obligation to make any payments in respect thereof to Seller or any of
its Affiliates, nor will the Company have any claim for payment in respect
thereof from Seller or any of its Affiliates.
(b) The intercompany receivables that the Company has with,
respectively, EG&G GmbH, EG&G Ltd. and EG&G S.A., will be considered trade
receivables as of the Closing Date and included on the Closing Balance Sheet as
such. The parties understand that EG&G GmbH, EG&G Ltd. and EG&G S.A. have
corresponding receivables with their respective end-user customers, and those
receivables will not be transferred to Buyer (or Company) as part of the
Contemplated Transactions. Seller will utilize its best efforts to keep Buyer
informed as to the status of any disputes between Seller's Affiliates listed
above and the end-user customer, and will provide Buyer with a reasonable
opportunity to assist in the resolution of any such disputes.
5.9 Facility Repairs
With respect to the Company's Woodstock, New York and
Saugerties, New York facilities, Buyer has provided Seller with a list of items,
attached hereto as Schedule 5.9, which it believes require correction and/or
repair in order to satisfy or comply with legal and regulatory requirements or
good management practices, which were discovered in the course of the
Environmental Site Assessment Reports prepared by ERM-Midstates, Inc. in
November 1997 with respect to such facilities. As soon as practicable after the
date hereof, and if practicable before the Closing Date, Seller shall have
corrected and repaired, as appropriate, to Buyer's reasonable satisfaction, all
of the items on such list. After the Closing Date, Seller will remain
responsible for completing any items not repaired or corrected prior to the
Closing Date. Seller's failure to complete any such items prior to the Closing
Date will not allow Buyer to elect not to proceed with the Closing. No item on
such list shall be deemed to constitute environmental compliance activities
within the meaning of Section 10.4(a) hereof.
5.10 Contributions to Employee Benefit Plans
Seller has made, or will make, all contributions to the
Employee Benefit Plans for all periods up to the Closing Date as required by the
terms of the Employee Benefit Plans, the Code and ERISA.
5.11 Trademark Registration
Seller will use its best efforts to modify the Co-Existence
Agreement between the Company and Rotronic AG dated October 21, 1997 to include
a provision similar to the following:
Rotronic agrees that it will provide further consents
consistent with the provisions included in [this Agreement/the Co-Existence
Agreement executed by and between ROTRON and Rotronic dated October 21, 1997]
including signing additional Consent Agreements, and to otherwise aid EG&G,
ROTRON or their designee, as reasonably requested by either of them in obtaining
registrations in the United States of America for the ROTRON mark for ROTRON's
goods.
ARTICLE VI - COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Required Approvals
As promptly as practicable after the date of this Agreement,
Buyer will, and if necessary will cause its Affiliates to, make all filings
required by Legal Requirements to be made by them to consummate the Contemplated
Transactions (including all filings under the HSR Act). Between the date of this
Agreement and the Closing Date, Buyer will, and will cause such Affiliates to,
(i) cooperate with Seller with respect to all filings that Seller elects to make
or is required by Legal Requirements to make in connection with the Contemplated
Transactions, and (ii) cooperate with Seller in obtaining all consents required
to consummate the Contemplated Transactions; provided that this Agreement will
not require Buyer to dispose of or make any change in any portion of its
business to obtain any such consents.
6.2 Best Efforts
Between the date of this Agreement and the Closing Date, Buyer
will use its best efforts to cause the conditions in Articles VII and VIII to be
satisfied.
6.3 Insurance
Buyer shall be responsible for obtaining and maintaining all of
the insurance coverages relating to the Company from and after the Closing Date.
6.4 Commitment to Employees
(a) On or prior to the Closing Date, Buyer shall offer
continuing employment with the Company, as an employee-at-will, at the same
location as the individual's place of employment immediately prior to the
Closing Date, to each individual who is employed by the Company as of the
Closing Date (such employees who accept employment to be known as "Employees"),
with initial terms and conditions of employment, including job responsibilities
and base compensation levels no less favorable than the terms and conditions in
effect for each such Employee immediately prior to the Closing Date. The
definition of Employees shall not include individuals who are on disability
status; who are not actively at work and are receiving workmen's compensation
benefits; and those who are on a paid or unpaid leave of absence. The
individuals included in the preceding sentence will be offered employment, on
the terms set forth above, at such time as they are able to return to work,
provided they return to work within six (6) months after the Closing Date.
Except as may be set forth herein, Seller will have no further responsibility
with regard to the Employees as of the close of business on the Closing Date,
including, without limitation, any responsibility with respect to benefits or
notices required pursuant to Section 4980B of the Code or Section 606 of ERISA.
Buyer will have no responsibility with respect to those individuals who do not
accept their offer of employment, including without limitation, any
responsibility with respect to benefits or notices required pursuant to Section
4980B of the Code or Section 606 of ERISA. Seller will retain COBRA continuation
coverage responsibility for Employees or former employees (including those on
disability status prior to the Closing Date) of Company who have had a COBRA
qualifying event occur on or before the Closing Date; Buyer will assume
liability for COBRA continuation coverage relating to COBRA qualifying events
occurring after the Closing Date. The Employees will be eligible to participate
in Buyer's "Additional Compensation Plan" pursuant to the terms thereof and
those Employees who are participants in the Company's "EVA Program" will be
eligible to participate in Buyer's "Stock Incentive Plan".
(b) Buyer shall cause the Company to establish and maintain, or
shall establish and maintain, for a period of not less than one year after the
Closing Date, a termination policy for Employees with terms no less favorable
than the Seller's Termination Policy, as in effect immediately prior to the
Closing Date (the "Termination Policy"). Buyer shall indemnify Seller for any
liabilities Seller incurs as a result of a failure by the Company to fulfill its
obligations under the Termination Policy during such one-year period.
(c) Except as expressly set forth in this Article VI or
elsewhere in this Agreement, Buyer shall not assume any liabilities or
obligations with respect to, and shall not receive any right or interest in, any
Employee Benefit Plans as such Employee Benefit Plans may apply to the
Employees. After the Closing Date, Buyer will provide Seller with such
information as is required concerning Employees in order to enable Seller to
determine whether, and, if so, when, an Employee will be entitled to a pension
benefit or other benefits under the Seller's Employee Benefit Plans. Except as
provided herein, at the close of business on the Closing Date, all Employees
shall cease participation in any and all of Seller's Employee Benefit Plans,
except with respect to benefits accrued as of, or claims incurred on or before
the Closing Date pursuant to the terms of those Plans. Notwithstanding the
foregoing, the Seller shall cooperate with Buyer in its provision of medical and
dental benefits to Employees, at the coverage levels in effect at the Closing
Date for a period from the Closing Date through March 31,1998 (the "Temporary
Benefits"). Buyer agrees to reimburse Seller for all costs incurred by Seller in
providing the Temporary Benefits, including, without limitation, administrative
fees, claims costs for self-insured medical and dental benefits, insurance
premiums for insured plans and any other out-of-pocket costs reasonably incurred
by Seller in providing the Temporary Benefits. Further details relating to the
Temporary Benefits are set forth in Schedule 6.4(c), but the terms of this
Agreement will control in the event of any conflict with the terms of Schedule
6.4(c). Buyer will be responsible for collecting all employee contributions
associated with the Temporary Benefits. Buyer will pay Seller for Seller's costs
of providing the Temporary Benefits within ten days of receipt by Buyer of
Seller's invoice. In addition, Seller shall continue to provide post-retirement
medical and life benefits pursuant to the terms of Seller's Employment Benefit
Plans then in effect to those employees who (i) have retired on or before the
Closing Date and qualified for such benefits, and (ii) who retire after the
Closing Date, but who have reached age 55 and have earned at least ten years of
service with the Company prior to the Closing Date. Employees shall commence
participation in Buyer's employee benefit plans effective as of the close of
business on the Closing Date (except that the Temporary Benefits will be
administered as discussed above) provided that Seller shall have cooperated with
Buyer during the period preceding the Closing Date to the extent required in
order to effect a transition of employee benefits as of that date.
(d) At the Closing, the Employees shall become eligible to
participate in all then existing Welfare Plans (including, without limitation,
vacation and sick day accruals) available to similarly situated employees of
Buyer; provided, however, that Buyer may, but shall not be required to,
establish any Welfare Plans or provisions within such existing Welfare Plans for
the benefit of Employees that it does not currently provide to similarly
situated employees. By way of example, but not limitation, Buyer may, but shall
not be required to, provide to the Employees any post-retirement medical or life
insurance nor any continued medical coverage during periods of short or long
term disability. Buyer shall grant all Employees credit under all of Buyer's
existing (or established as a result of this transaction) Welfare Plans
(including, without limitation, vacation and sick day accruals) for all service
with the Company and the Company's Affiliates (and their respective
predecessors) prior to the Closing Date for all purposes for which such service
was recognized by the Company and the Company's Affiliates. All service time
recognized by the Company shall also be considered service time for all purposes
under all Welfare Plans of Buyer, including, without limitation, eligibility
for, participation in, and vesting under such plans. Buyer shall grant to
Employees credit under Buyer's Welfare Plans for all deductible and
out-of-pocket payments made by Employees prior to the Closing Date under
Company's Welfare Plans during the 1998 plan year for such plans, and such
payments made by Employees plus payments made by Employees on or after the
Closing Date through March 31, 1998 shall apply toward any deductible and
out-of-pocket maximum amounts that apply under any of Buyer's Welfare Plans in
which such Employees may participate subsequent to March 31, 1998. Employees
participating under Buyer's existing Welfare Plans at the Closing Date shall not
be subject to any waiting periods for participation or pre-existing condition
limitations in Buyer's corresponding employee benefit plans.
(e) Seller shall, as of the Closing Date, take such action as
shall be necessary to permit Employees to (i) be 100% vested in their account
balances under Seller's 401(k) Plan and (ii) allow such Employees to elect a
distribution of their individual account balances or to make a direct rollover
of their individual account balances (excluding any after-tax contributions,
which shall be distributed to the Employees) to Buyer's 401(k) Plan. Buyer shall
cause the trustee of the Buyer's 401(k) Plan to accept on behalf of the Plan a
rollover contribution from any Employee or a direct rollover from the trustee of
Seller's 401(k) Plan representing such Employee's account balance (excluding
after-tax contributions but including outstanding loans) under such Plan, all
subject to and in accordance with the provisions of the Buyer's 401(k) Plan and
applicable laws. Buyer shall be responsible for collecting amounts due from
Employees who have taken loans from their 401(k) Plan accounts prior to the
Closing Date.
(f) Any service time that the Employees spend with the Company
after the Closing Date shall not be considered by Seller in calculating any
benefits due to the Employees under any of the Seller's Employee Benefit Plans,
for "crediting" or "vesting" purposes, or for any other purpose.
(g) Seller will be responsible for fulfilling its obligations
to the employees of Company pursuant to the defined benefit pension plan which
exists immediately prior to the Closing Date based on credited service which
accrues up to Closing Date.
(h) Seller agrees to provide to Buyer such Plan information as
Buyer may reasonably request to effect the transactions contemplated by this
Section 6.4. Seller agrees to prepare all Plan amendments and to make all
governmental filings, including filings with the Pension Benefit Guaranty
Corporation, that are required to effect the provisions of this Section 6.4.
(i) Within thirty (30) days after the Closing Date, Buyer or an
Affiliate of Buyer will enter into Employment Agreements with the following
individuals: Peter Fritsch of EG&G GmbH, Gilbert Rolland of EG&G S.A. and Andrew
Speechly of EG&G Ltd. (the "Foreign Employees"). The Employment Agreements will
include the same salary, benefit levels and positions that the Foreign Employees
hold as of the Closing Date. Any severance or notice payments due to the Foreign
Employees as a result of the transition will be the responsibility of Buyer.
Buyer will promptly reimburse Seller or an Affiliate of Seller for all costs
associated with supporting the Foreign Employees in the period from the Closing
Date until the Foreign Employees are no longer employed by an Affiliate of
Seller. Such costs shall include, without limitation, salary, sales commissions,
benefits, social insurance and pension payments, and administrative support.
(j) Fourteen employees of Company (as listed on Schedule
6.4(j)) who are currently utilizing vehicles provided to them through a lease
arrangement between EG&G, Inc. and Wheels, Inc. will be required to turn the
vehicles in on or prior to the Closing Date as directed by Company, unless (i)
Buyer, or its automotive leasing company, has agreed to purchase the listed
vehicles from Wheels, Inc. for use by these employees and (ii) Buyer has
previously supplied Seller with an appropriate Certificate of Insurance listing
EG&G, Inc. and Wheels, Inc. as additional insureds with coverage (liability and
physical damage) of not less than $10 million. Buyer will finalize all
arrangements for transfer of title to the vehicles no later than thirty (30)
days after the Closing Date. In addition, Buyer will promptly reimburse Seller
for all leasing costs associated with these vehicles until the transfer of title
is complete. Four employees of Company have reached an alternative arrangement
with EG&G, Inc. regarding their leased vehicles, and these employees are marked
with an asterisk on Schedule 6.4(j).
ARTICLE VII - CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations and Warranties
The representations and warranties of Seller set forth in
Article III hereof or elsewhere in this Agreement shall be true and correct in
all material respects on the date hereof and on the Closing Date with the same
effect as though such representations and warranties had been made on and as of
each such date, and Seller shall have delivered to Buyer a certificate to that
effect, dated the Closing Date, and signed by a duly authorized officer of
Seller.
7.2 Performance of Covenants
Each and all of the covenants and agreements of Seller to be
performed or complied with prior to or on the Closing Date shall have been duly
performed or complied with by Seller, and Seller shall have delivered to Buyer a
certificate to that effect, dated the Closing Date, and signed by a duly
authorized officer of Seller.
7.3 No Legal Proceedings
On the Closing Date, no litigation, arbitration, investigation
or other proceeding, or injunction or final judgment relating thereto, shall be
in force, pending or threatened (in circumstances Buyer reasonably believes to
be credible), before any court or governmental or regulatory official, body or
authority relating to the Company or that could have a material impact on the
ability of Buyer or Seller to consummate the Contemplated Transactions.
7.4 Stock Certificates
Seller shall have delivered to Buyer certificates representing
the Shares duly endorsed in blank, or accompanied by appropriate stock powers in
proper form for transfer.
7.5 No Claim Regarding Ownership of Shares or Sale Proceeds
There must not have been made or threatened by any Person any
claim asserting that such Person (i) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of the Company or
(ii) is entitled to all or any portion of the Purchase Price payable for the
Shares.
7.6 No Prohibition
Neither the consummation nor the performance of any of the
Contemplated Transactions will materially contravene, or result in a material
violation of, any applicable Legal Requirement.
7.7 Trademark License
EG&G, Inc. shall have entered into a trademark license
agreement with the Company in the form of Schedule 7.7 hereto (the "Trademark
License") to provide the right to use the "EG&G" name for a transitional period.
7.8 Resignations
Buyer shall have received resignations of all officers and
directors of the Company, unless otherwise directed by Buyer.
<PAGE>
7.9 Opinion of Counsel
Buyer shall have been furnished with an opinion of counsel to
Seller, dated the Closing Date, in form and substance reasonably satisfactory to
Buyer, to the effect that, except as set forth on the Schedules hereto (and
except for changes subsequent to the date hereof which are disclosed in such
opinion but which do not constitute a breach of this Agreement):
1. Seller is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts, and has
full corporate power and authority to carry on the business which it is now
conducting. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York, is qualified as a foreign
corporation in the State of California and has full corporate power and
authority to carry on the business it is now conducting;
2. Seller has full corporate power to enter into this Agreement
and to perform its obligations hereunder; all corporate (and, if applicable,
shareholder) action or proceedings required to be taken by, or on the part of,
Seller to authorize it to execute and deliver this Agreement and to consummate
the Contemplated Transactions hereby and thereby have been duly and validly
taken; this Agreement has been duly and validly authorized, executed and
delivered by Seller and constitutes the valid, legal and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as its
enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights in general, or by general principles of equity;
3. Except as set forth on a schedule attached to the opinion,
neither the execution and delivery of this Agreement nor the consummation of the
Contemplated Transactions hereby or thereby nor compliance by Seller with any of
the provisions hereof or thereof will:
(a) violate, or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien on
the Company under any of the terms, conditions or provisions of the Articles of
Organization or By-Laws of Seller or the Company, or of any note, bond,
mortgage, indenture, deed of trust, license, agreement or other instrument or
obligation known to such counsel to which Seller or the Company is a party, or
by which it may be bound or affected, or as to which requisite waivers or
consents either shall have been obtained by Seller by the Closing Date or shall
have been waived by Buyer in writing; or
(b) violate any federal, New York Stateor Massachusetts statute, rule or
regulation or, to the knowledge of such counsel, any order, writ, injunction or
decree applicable to Seller or to the Company.
4. No consent or approval by, notice to or registration with
any governmental authority, other than the filing in conjunction with the HSR
Act and the notification to the New York State Department of Environmental
Conservation, is required on the part of Seller or the Company in connection
with the Contemplated Transactions.
Any of such opinions may be given by the General Counsel of EG&G, Inc,
or by other counsel reasonably satisfactory to Buyer as Seller may determine. As
to any matter which involves the laws of a jurisdiction in which the counsel
rendering the opinion is not expert, such counsel may rely upon opinions of
local counsel of established reputation reasonably satisfactory to Buyer. Any
opinion may expressly rely as to matters of fact upon certificates furnished by
appropriate officers of Seller or appropriate government officials.
7.10 Transfer of Confidentiality Agreements
Seller shall have delivered or caused to be delivered to the
Company instruments of transfer, in form and substance reasonably satisfactory
to Buyer, transferring and assigning to the Company any rights of Seller and its
Affiliates under the confidentiality agreements entered into by Seller and its
Affiliates with all prospective purchasers of the Company, except for the
confidentiality agreement with Buyer and the confidentiality agreements with
those companies that requested their interest in the Company be kept
confidential.
7.11 Transfer of Past Service Contracts
Company shall have delivered or caused to be delivered to the
Seller or one of its Affiliates instruments of transfer, in form and substance
reasonably satisfactory to Buyer, transferring and assigning to Seller or one of
its Affiliates all rights and obligations of Seller under the past service
contracts.
7.12 Real Property Transfers
Seller shall have taken the necessary actions to transfer title
in and to the Olive Property and the Saugerties Land from Company to Seller or
one of its Affiliates.
ARTICLE VIII - CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
8.1 Accuracy of Representations and Warranties
The representations and warranties of Buyer set forth in
Article IV hereof or elsewhere in this Agreement shall be true and correct in
all material respects on the date hereof and on the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, and Buyer shall have delivered to Seller a certificate to that
effect, dated the Closing Date, and signed by a duly authorized officer of
Buyer.
8.2 Performance of Covenants
Each and all of the covenants and agreements of Buyer to be
performed or complied with prior to or on the Closing Date shall have been duly
performed or complied with by Buyer, and Buyer shall have delivered to Seller a
certificate to that effect, dated the Closing Date, and signed by a duly
authorized officer of Buyer.
8.3 No Legal Proceedings
On the Closing Date, no litigation, arbitration, investigation
or other proceeding or injunction or final judgment relating thereto, shall be
in force, pending or threatened (in circumstances Seller reasonably believes to
be credible), before any court or governmental or regulatory official, body or
authority relating to the Company or that could have a material impact on the
ability of Buyer or Seller to consummate the Contemplated Transactions.
8.4 Payment of Purchase Price
Buyer shall have delivered to Seller, and Seller shall have
received, the Purchase Price pursuant to Section 2.3 above.
8.5 No Claim Regarding Stock Ownership or Sale Proceeds
There must not have been made or threatened by any Person any
claim asserting that such Person (i) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of the Company or
(ii) is entitled to all or any portion of the Purchase Price payable for the
Shares.
8.6 Trademark License
The Company shall have entered into the Trademark License with
EG&G, Inc.
8.7 No Prohibition
Neither the consummation nor the performance of any of the
Contemplated Transactions will materially contravene, or result in a material
violation of any applicable Legal Requirement.
8.8 Opinion of Counsel
Seller shall have been furnished with an opinion of counsel to
Buyer, dated the Closing Date, in form and substance reasonably satisfactory to
Seller, to the effect that:
1. Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly qualified as a
foreign corporation in the States of New York and California and has full
corporate power and authority to carry on the business which it is now
conducting;
2. Buyer has full corporate power to enter into this Agreement
and to perform its obligations hereunder; all corporate (and, if applicable,
shareholder) action or proceedings required to be taken by, or on the part of,
Buyer to authorize it to execute and deliver this Agreement and to consummate
the Contemplated Transactions hereby and thereby have been duly and validly
taken; this Agreement has been duly and validly authorized, executed and
delivered by Buyer and constitutes the valid, legal and binding obligations of
Buyer, enforceable against Buyer in accordance with its terms, except as their
enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights in general, or by general provisions of equity;.
3. Except as set forth on a schedule attached to the opinion,
neither the execution and delivery of this Agreement nor the consummation of the
Contemplated Transactions hereby or thereby nor compliance by Buyer with any of
the provisions hereof or thereof will:
(a) violate, or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien on
the Buyer under any of the terms, conditions or provisions of the Articles of
Incorporation or the By-Laws (or equivalent corporate documentation) of Buyer,
or any note, bond, mortgage, indenture, deed of trust, license, agreement or
other instrument or obligation known to such other counsel to which Buyer is a
party, or by which Buyer may be bound or affected or as to which requisite
waivers or consents shall have been obtained by Buyer by the Closing Date or
shall have been waived by Seller in writing, or
(b) violate any federal or New York State statute, rule or regulation or,
to the knowledge of such counsel, any order, writ, injunction or decree
applicable to Buyer; and
4. No consent or approval by notice to or registration with any
governmental authority, other than the filing in conjunction with the HSR Act is
required on the part of Buyer in connection with the Contemplated Transactions.
Any of such opinions may be given by Stroock & Stroock & Lavan or such
other counsel reasonably satisfactory to Seller as Buyer may determine. As to
any matter which involves the laws of a jurisdiction in which the counsel
rendering the opinion is not expert, such counsel may rely upon the opinion of
local counsel of established reputation reasonably satisfactory to Seller. Any
opinion may expressly rely as to matters of fact upon certificates furnished by
appropriate officers of Buyer or appropriate government officials.
ARTICLE IX - TERMINATION
9.1 Termination Events
This Agreement may, by notice given prior to or at the Closing,
be terminated:
(a) by either Buyer or Seller if a material breach of any
provision of this Agreement has been committed by the other party and such
breach has not been either waived or, after written notice and a ten day cure
period, resolved to the reasonable satisfaction of the non-breaching party;
(b) (i) by Buyer if any of the conditions in Article VII has
not been satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Seller, if any of the conditions in
Article VIII has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Seller to comply with its obligations under this Agreement) and Seller have not
waived such condition on or before the Closing Date;
(c) by either Buyer or Seller if any court or governmental
agency shall have issued an order, judgment or decree or taken any other action
materially challenging, prohibiting or invalidating the consummation of any of
the Contemplated Transactions;
(d) by mutual consent of Buyer and Seller; or
(e) by either Buyer or Seller if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before January
31, 1998, or such later date as the parties may agree upon.
9.2 Effect of Termination
If this Agreement is terminated pursuant to Section 9.1, then
this Agreement shall be null and void and except as expressly provided herein,
all further obligations of the parties under this Agreement will terminate,
except that the obligations in Section 11.1, 11.3, and 11.5 will survive;
provided, however, if this Agreement is terminated by a party because of the
breach of this Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
remedies available to it at law or equity, including the right to seek specific
performance, will survive such termination unimpaired.
<PAGE>
ARTICLE X - SURVIVAL; INDEMNIFICATION
10.1 Survival
All representations, warranties, covenants and obligations in
this Agreement or in any agreement, instrument or other document delivered in
connection herewith shall survive the execution and delivery hereof, the
consummation of the Contemplated Transactions and any investigation or audit
conducted by any party hereto. Notwithstanding the preceding sentence, neither
party may make or assert any claim under any representation or warranty
contained herein later than eighteen months after the Closing Date, except that
(i) the representations contained in Section 3.1 and 13.1(e) shall survive
indefinitely and (ii) the representations in Sections 3.14, 3.15 and 12.3 and
shall survive until 30 days after the applicable statute of limitations with
respect to the matters addressed therein has expired (including all waivers or
extensions thereof); and provided that any claims made or asserted by a party
within the applicable time period prescribed above shall survive such expiration
until such claim is finally resolved and all obligations with respect thereto
are fully satisfied. All statements contained in any officer's certificate
delivered by or on behalf of any party hereto pursuant to this Agreement shall
constitute and have the same force and effect as the representations and
warranties of such party set forth herein.
10.2 Indemnification by Seller
Seller will indemnify, defend, save and hold harmless Buyer,
the Company and their Affiliates from and against any and all damages,
liabilities, losses, penalties, expenses, assessments, judgments or deficiencies
of any nature whatsoever including, without limitation, reasonable attorneys'
fees and expenses, consultants' and investigators' fees and expenses, and other
costs and expenses incident to any suit, action or proceeding (together,
"Losses") incurred or sustained by Buyer or its Affiliates which arise out of or
result from (i) any breach of any representation or warranty given or made by
Seller herein or in any certificate delivered hereunder; (ii) the noncompliance
with or nonperformance of any agreement, obligation, undertaking or covenant of
Seller under this Agreement; (iii) any claim against the Company or Buyer
relating to death or personal injury, business tort, other tort, malicious or
intentional conduct, property damage or worker's compensation based on
transactions, events or occurrences prior to the Closing Date; (iv) any claim
against the Company relating to product liability or similar claims and/or any
claim of product defect or claim that product does not meet published or quoted
specifications (after any applicable warranty reserve reflected on the Closing
Balance Sheet has been exhausted) in each case based on products manufactured or
sold prior to the Closing Date, provided that the incident or action giving rise
to the claim was not the result of service or repair provided by Buyer after the
Closing Date; (v) any claim and/or litigation involving personnel or former
personnel of the Company based on transactions, events or occurrences prior to
the Closing Date; (vi) any actual or alleged violation of any law, rule or
regulation of any governmental entity by the Company or any of its employees,
agents or affiliates occurring prior to the Closing Date, including without
limitation any fines or penalties, whether criminal or civil; or (vii) any
Liability or claim relating to product warranty obligations assumed by AGC
Systems and Technologies pursuant to the Purchase and Sale Agreement dated June
20, 1996 and the First Amendment to the Purchase and Sale Agreement dated
October 7, 1997 between the Company and AGC Systems and Technologies regarding
the Nova Product Line. The aggregate amount for which Seller may be liable under
this Section 10.1 shall in no event exceed $25,000,000 and Seller shall not be
obligated to indemnify the Buyer, the Company or Buyer's Affiliates against, or
to hold harmless the Buyer or Buyer's Affiliates from, damages for Losses
incurred by the Buyer, the Company or Buyer's Affiliates as a consequence of or
in connection with matters specified in this Article X unless and until such
damages exceed an aggregate basket of $500,000 (the "Basket"), at which point
Seller shall be obligated to indemnify Buyer or Buyer's Affiliates against, and
to hold harmless Buyer or Buyer's Affiliates from, only damages in excess of
such amount, and not relating back to the first such damages so incurred.
10.3 Indemnification by Buyer
Buyer will indemnify, defend, save and hold harmless the
Company, Seller and any of their respective Affiliates from and against any and
all Losses incurred or sustained by the Company, Seller or any of their
respective Affiliates which arise out of or result from (i) any breach of any
representation or warranty given or made by Buyer herein or in any certificate
delivered hereunder (ii) the noncompliance with or nonperformance of any
agreement, obligation, undertaking or covenant of Buyer under this Agreement;
(iii) any claim against the Company or Seller relating to death or personal
injury, business tort, other tort, malicious or intentional conduct, property
damage or worker's compensation based on transactions, events or occurrences
after the Closing Date; (iv) any claim against the Company relating to product
liability or similar claims and/or any claim of product defect or claim that
product does not meet published or quoted specifications in each case based on
products manufactured or sold after the Closing Date; (v) any claim and/or
litigation involving personnel or former personnel of the Company based on
transactions, events or occurrences after the Closing Date; (vi) any actual or
alleged violation of any law, rule or regulation of any governmental entity by
the Company or any of its employees, agents or affiliates occurring after the
Closing Date, including without limitation any fines or penalties, whether
criminal or civil; (vii) any Liability of or claim against the Company or Seller
arising from illness, disease or death, (or fear of illness, disease or death)
alleged to be related, directly or indirectly to exposure to asbestos: (a) in
the workplace of Company after the Closing Date (but only to the extent
attributable to asbestos that was not present on or before the Closing Date) or
(b) in products manufactured or sold by Seller after the Closing Date; (viii)
any Liabilities of or claims made against EG&G, Inc. under the Guaranty provided
to One Woodstock Associates dated as of December 13, 1979 regarding the
Saugerties Lease after the Closing Date (provided that the Buyer's obligation to
provide indemnity under this clause (viii) shall not diminish or release Seller
from any of the Seller's indemnification obligations hereunder); or (ix) any
Liabilities of or claims made against the Seller or its Affiliates arising from
Buyer's usage of the Olive Property after the Closing Date.
10.4 Environmental Indemnification
(a) As discussed in the reports referenced on Schedule 3.15,
environmental remediation work is in progress at the Company's facility in
Woodstock, New York, which is currently listed as a Class 2 site on the New York
State Registry of Inactive Hazardous Waste Sites. Seller will continue its
efforts to remediate this site as described in Schedule 3.15, and it is the
intent of the parties that Seller remain responsible for ongoing remediation
work regarding existing environmental conditions at such facility as well as any
further investigation or remedial activity required under any Environmental Law
as a result of such existing environmental conditions (the "Remediation Work").
After the Closing Date, Buyer will provide Seller with reasonable cooperation in
Seller's efforts to perform the Remediation Work, including making available
employees of Company to perform those activities (including installation,
repair, maintenance and monitoring of environmental remediation systems,
community liaison and oversight of Remediation Work) that they have performed in
the past in connection with the Remediation Work. These employees will be
provided at no cost to Seller to perform these activities, which Seller will
request on a reasonable basis. In the event that these employees are unable to
perform their other functions because of Seller's requests, Seller and Buyer
will negotiate a mutually satisfactory arrangement. Seller will be entitled to
control the Remediation Work, and will keep Buyer reasonably well informed on
the status and progress of those efforts. In the event that Seller shall fail to
perform its obligations under Section 10.4(a), Buyer, after providing Seller
with thirty days written notice of its intent to act, shall have the right to
take over the control of that portion of the Remediation Work that Seller has
failed to perform, and Seller agrees that it will indemnify Buyer for all costs
and expenses reasonably incurred in connection with Buyer's performance of that
portion of the Remediation Work in accordance with Section 10.4(b), including
without limitation the cost of employees (including prorated salary and
benefits) engaged in such activities. Seller's obligation to perform the
Remediation Work at the Woodstock facility shall continue with respect to such
facility until such time as that facility is delisted from the New York State
Registry of Inactive Hazardous Waste Sites, or designated as a Class 5 site.
Notwithstanding the foregoing, the delisting of the site shall not relieve
Seller of any other indemnification obligations hereunder. The parties
acknowledge that the Remediation Work will require access to Company's real
property and facilities and use of on-site utilities. Seller shall make
reasonable efforts to obtain separate electrical meters for all pumps and other
electrical devices required in connection with the Remediation Work. If this
shall not be feasible, Seller agrees to reimburse Buyer for the cost of
electricity used in connection with the Remediation Work. Buyer shall provide
Seller with reasonable access and use privileges, and Seller will attempt to
minimize any disruption to the business operations of the Company. Except to the
extent that Seller's obligations continue under Section 5.9 after the Closing
Date, Seller's obligations to perform the Remediation Work hereunder shall not
include any responsibility to carry out routine environmental compliance
activities of the Company after the Closing Date, including without limitation
monitoring for NPDES and SPDES permits, Resource Conservation and Recovery Act
record-keeping and compliance, and other environmental responsibilities that
business organizations such as the Company must perform. Buyer will have no
claim hereunder against Seller for any diminution in value or stigma damages as
they may apply to the real property or facilities of the Company.
(b) Seller will indemnify, defend, save and hold harmless Buyer
and its Affiliates from and against any and all Losses (including for the
purposes of Section 10.4 any costs of assessment, containment, removal, remedial
work, monitoring or closure, required by a governmental agency or unrelated
third party or any expenses incurred on account of the right of any governmental
or private entity or person) which may be suffered or incurred by any of them
(i) relating to, arising out of or resulting from a breach of the warranty
contained in Section 3.15, (ii) by reason of any and all present or future
liabilities or obligations under any current or future Environmental Law (A)
arising out of or relating to the ownership, operation or condition at any time
on or prior to the Closing Date of any real property or facilities now or
previously owned, leased or used by the Company, (B) arising out of or relating
to any Hazardous Materials that were present on any such real property or
facilities of the Company at any time on or prior to the Closing Date, or (C)
arising out of or relating to any Hazardous Materials that were handled, used,
recycled, generated, transported, stored, treated, disposed of or released on or
from any such real property or facilities of the Company at any time on or prior
to the Closing Date; (iii) arising from any Liability of or claim against the
Company or Buyer arising from illness, disease or death, (or fear of illness,
disease or death) alleged to be related, directly or indirectly to exposure to
asbestos: (AA) in the workplace of Company prior to the Closing Date, or (BB) in
products manufactured or sold by the Company prior to the Closing Date; (iv)
arising from any Remediation Work or compliance activities conducted after the
Closing Date by Seller that results in damages to premises occupied by the
Company or materially interferes with the operations of the Company; or (v) as a
result of any modification, relocation, reconstruction or other improvement to
the existing septic system at the Woodstock facility that is required because of
any environmental condition (including soil or groundwater contamination)
existing on or before the Closing Date. A statement or other evidence in the
reports referenced on Schedule 3.15 that a Hazardous Material is or was present
on, under, or has emanated from the real property or facilities of the Company
shall be prima facie evidence that such Hazardous Material was present on the
real property or facilities of the Company at any time on or prior to the
Closing Date, and Seller would then have the burden of proof to establish that
it is not responsible for the remediation of such Hazardous Material hereunder.
The allocation of the burden of proof regarding Hazardous Materials in the
preceding sentence is contingent upon Buyer's agreement to cause the Company, at
all times after the Closing Date not to handle, use, recycle, generate,
transport, store, treat, dispose of or release on or from any such real property
or facilities of the Company the following solvents: trichloroethylene,
1,1,1-trichloroethane and freon. In addition, Buyer shall have the right to
attempt to establish that a Hazardous Material not documented in such reports
was present on the real property or facilities of the Company on or prior to the
Closing Date. Seller's indemnification shall not apply to any Losses to the
extent such Losses were knowingly increased by the actions of Buyer after the
Closing Date other than through the normal continued operation of the Company's
business. Seller's indemnification obligations under this Section 10.4 shall not
be subject to the maximum or the Basket set forth in Section 10.2.
(c) Buyer will indemnify, defend, save and hold harmless Seller
and its Affiliates from and against any and all Losses (including for the
purposes of Section 10.3 any costs of assessment, containment, removal, remedial
work, monitoring or closure, required by a governmental agency or unrelated
third party or any expenses incurred on account of the right of any governmental
or private entity or person) which may be suffered or incurred by any of them
relating to, arising out of or resulting from any and all present or future
liabilities or obligations under any Environmental Law existing on or after the
Closing Date: (i) arising out of or relating to the ownership, operation or
condition at any time after the Closing Date of the real property or facilities
of the Company (unless such Losses are the result of the condition of the real
property or facilities of the Company on or prior to the Closing Date); (ii)
arising out of or relating to any Hazardous Materials that were bought on to the
real property or facilities of the Company at any time after the Closing Date;
or (iii)arising out of or relating to any Hazardous Materials that were
generated, transported, stored, treated or released by Buyer at any time after
the Closing Date (except to the extent that such release constitutes the
migration of Hazardous Materials which had been released on or before the
Closing Date). Buyer's indemnification shall not apply to any Losses to the
extent such Losses were knowingly increased by the actions of Seller after the
Closing Date.
(d) Seller will indemnify Buyer and the Company from and
against all Losses they incur directly as a result of any increase in the
Company's groundwater monitoring requirements under its NPDES or SPDES permits
or otherwise from those currently in effect which is attributable to the
information obtained in the course of the investigation and remediation or
correction of Company's discharges into floor and sink drains, dry wells and/or
the septic system at the Woodstock facility which is to be conducted pursuant to
Section 5.9 hereof.
(e) Seller expressly acknowledges that its obligation to
indemnify, defend, save and hold harmless Buyer and its Affiliates against any
and all Losses pursuant to Section 10.4(b) shall extend to those Losses which
may be suffered or incurred by any of them relating to, arising out of or
resulting in any manner from the Olive Property or the Saugerties Land, and any
remediation obligations with respect thereto, provided that the Seller's
obligations to provide indemnity under this clause shall not diminish or release
Buyer from any of Buyer's obligations under Section 10.3(ix) and shall not be
applicable with respect to any Losses arising from or relating to the acts or
omissions of Buyer.
<PAGE>
10.5 Employee Benefits Indemnification
Seller agrees to indemnify and hold harmless Buyer, Company and
any trade or business which is under common control with Buyer, as determined
pursuant to either Section 4001(b)(1) of ERISA, or Section 4971(e)(2)(B) of the
Code, from and against any losses on account of (A) any liability for
post-retirement medical, pension or other benefits under any plan or arrangement
sponsored by the Seller or EG&G, Inc. or (B) any liability (including joint and
several liability) incurred by the Company (except for those liabilities assumed
by Buyer pursuant to Section 6.4(g)) as a result of any of the following events
with respect to an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) of which the Seller (or any trade or business which is
under common control with Seller as determined pursuant to either Section
4001(b)(1) of ERISA or Section 4971(e)(2)(B) of the Code) is the contributory
sponsor or a contributing employer:
(i) the termination of any such plan which is a defined benefit pension
plan subject to the provisions of Title IV of ERISA; and
(ii) a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any such plan which is a multiemployer plan (within
the meaning of Section 3(37) of ERISA);
(iii) a failure to satisfy the minimum funding requirements, if any,
applicable to such plan under Section 412 of the Code and Section 302 of ERISA,
including for this purpose quarterly contributions required by Section 412(m) of
the Code and Section 302(e) of ERISA; and
(iv) (A) the loss by any such plan of its qualified status; (B) the
imposition of any taxes or penalties; or (C) the occurrence of any prohibited
transaction.
Seller's indemnification obligations under this Section 10.5 shall not
be subject to the maximum or the basket set forth in Section 10.2, and shall
survive until thirty (30) days after the applicable statute of limitations with
respect to the matters addressed therein has expired (including all waivers or
extensions thereof).
10.6 Limitations on Remedy
The amount of any Losses for which indemnification is provided
to a party under this Article X shall be reduced to take account of any net tax
benefit and shall be increased to take account of any net tax detriment realized
by such party which arises from the incurrence or payment of any such Losses or
from the receipt of any such indemnification payment and shall be reduced by the
insurance proceeds received and any other amount recovered, if any, by the
Indemnified Party (or its Affiliates) with respect to any Losses. If any
Indemnified Party (or its Affiliates) shall have received any payment pursuant
to this Article X with respect to any Loss and shall subsequently have received
insurance proceeds or other amounts with respect to such Loss, then such
Indemnified Party (or its Affiliates) shall promptly pay over to the
Indemnifying Party the amount so recovered (after deducting the amount of the
expenses incurred by it in procuring such recovery), but not in excess of the
amount previously so paid by the Indemnifying Party. The sole and exclusive
remedies of any party to this Agreement for any claim hereunder against any
other party hereto shall be the indemnification provided in this Article X or
elsewhere in this Agreement, and each party agrees that it will not pursue any
other remedy with respect thereto, except with respect to claims arising
pursuant to Section 9.2 or except for any remedies contemplated under Article XI
hereof. All indemnification payments made under this Article X shall be treated
for tax purposes as adjustments to the Purchase Price. In the event that one
party shall be obligated to indemnify an Indemnified Person pursuant to this
Article X, the Indemnifying Party shall, upon payment of such indemnity in full,
be subrogated to all rights of the Indemnified Person with respect to such loss.
10.7 Procedure for Indemnification - Third Party Claims
Promptly after service of notice of any claim or of process by
any third person in any matter in respect of which indemnity may be sought from
the other party pursuant to this Agreement, the party in receipt of the claim
(the "Indemnified Party") shall notify the other party (the "Indemnifying
Party") of the receipt thereof. Unless the Indemnifying Party shall notify the
Indemnified Party that it elects to assume the defense of any such claim or
process or settlement thereof (such notice to be given as promptly as reasonably
possible in view of the necessity to arrange for such defense and in no event
later than 10 business days following receipt of said notice), the Indemnified
Party shall assume the defense of any such claim or process or settlement
thereof. The Indemnified Party shall not be liable for any legal or other
expense in connection with the defense of any claim or process unless the
Indemnifying Party is successful in contesting its obligation to indemnify the
Indemnified Party in respect of such claim or process. The defense of the
Indemnified Party shall be conducted expeditiously (but with due regard for
obtaining the most favorable outcome reasonably likely under the circumstances,
taking into account costs and expenditures) and the Indemnifying Party or
Indemnified Party, as the case may be, shall be advised promptly of all
developments. If the Indemnifying Party assumes the defense, the Indemnified
Party will have the right to retain its own counsel, and in any event, will
provide assistance to the Indemnifying Party in connection with the defenses of
any such claim, but the fees and expenses of such counsel will be at its own
expense unless (i) the Indemnifying Party shall have agreed to the retention of
such counsel for both the Indemnifying Party and the Indemnified Party or (ii)
the named parties to any such suit, action or proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. No settlement of a
claim by either party shall be made without the prior written consent of the
other party, which consent shall not be unreasonably withheld or delayed.
10.8 Procedure for Indemnification - Other Claims
A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.
ARTICLE XI - CONFIDENTIALITY AND NON-COMPETITION
11.1 Confidentiality
Seller agrees not to, directly or indirectly, without the
prior written consent of Buyer, use or disclose to any Person any proprietary
information, trade secrets, confidential customer information, technical data or
know-how relating to the products, processes, methods, equipment or business
practices of the Company, except where such use or disclosure is needed to
comply with an order of a governmental agency, legislative body or court of
competent jurisdiction, or to comply with its obligations under this Agreement.
11.2 Non-Competition
(a) Seller agrees that, for a period of five years after the
Closing Date, Seller and its Affiliates will not, directly or indirectly, in the
Territory, (i) engage in any business the same as or substantially similar to,
or engage in competition with, the business presently engaged in by the Company,
(ii) render services to or have any interest, as a shareholder, owner, agent,
consultant, lender or guarantor or any other interest, in any other Person
engaged in the manufacture or sale of products, or the rendering of services,
which are currently being manufactured or sold or rendered by the Company, or
substantially similar products or services, or (iii) engage in competition with,
or manufacture or sell, such products or services as are referred to in clause
(ii) of this Section 11.2.
(b) For purposes of this Section 11.2, (i) ownership of 5%
or less of any class of outstanding securities of a company the securities of
which are listed on a recognized securities exchange (either domestic or foreign
shall not be deemed to constitute ownership or participation in the ownership of
the business of such company and (ii) ownership of 10% or less of any company
other than those referred to in clause (i) of this sentence shall not be deemed
to constitute ownership or participation in the ownership of the business of
such company; provided that in no event shall Seller or any Affiliate of Seller,
during the five year period referred to in Section 11.2(a), acquire any
securities of the following companies (or their respective successors): COMAIR
Rotron and Labinal, Inc.
(c) Neither Seller nor any Affiliate of Seller, for a period
of three years from and after the Closing Date, shall, directly or indirectly,
(i) solicit for employment or hire any Employee of Company who was employed by
the Company as of the Closing Date, or (ii) divert or attempt to divert from the
Company any business of the type in which the Company was engaged as of the
Closing Date by influencing or attempting to influence any customer or supplier
of the Company. Neither Seller nor any Affiliate of Seller shall be precluded
from hiring any such Employee (i) who has been terminated by Company prior to
commencement of employment discussions between Seller or any Affiliate of Seller
and such Employee, or (ii) if, as a result of existing understandings with five
current employees of Company, Seller or any of its Affiliates is obligated to
offer such individuals employment pursuant to those understandings.
(d) Seller acknowledges and agrees that any breach of this
Article XI may result in irreparable injury to Buyer and the Company, that
monetary damages may be an inadequate remedy of such breach and that,
accordingly, in addition to any other remedy that Buyer or the Company may have,
Buyer shall be entitled to seek to enforce the specific performance of this
Article XI and to seek both permanent and temporary relief in the event of any
breach hereof.
(e) The parties acknowledge that the time, scope, geographic
area and other provisions of this Article XI have been specifically negotiated
by sophisticated commercial parties and agree that all such provisions are
reasonable under the circumstances of the Contemplated Transactions. If any
portion of this Article XI shall be determined to be invalid and unenforceable
as written, each such portion shall be enforced to the extent reasonable under
the circumstances and such determination shall not affect the validity or
enforceability of the balance hereof, and such balance shall remain in full
force and effect. It is understood that Seller is entering into this
non-competition agreement in order to induce Buyer to enter into this Agreement.
(f) The "Territory" shall mean worldwide. The parties
acknowledge and agree that the business of the Company is currently conducted
throughout the Territory and that, accordingly, the Territory is reasonable in
scope.
ARTICLE XII - TAX MATTERS
12.1 Certain Definitions
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Company Group" shall mean the Company and its Subsidiaries,
if any, or any one or more of such entities, as the context may require.
"Pre-Closing Tax Period" shall mean all taxable periods ending
on or before the Closing Date and that portion to and including the Closing Date
of any taxable period that includes (but does not end on) the Closing Date.
"Taxes" shall mean (i) all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real and personal property, sales, transfer, license, payroll and
franchise taxes, imposed by the United States, or any state, county, local or
foreign government or subdivision or agency thereof, and such term shall include
any interest, penalties or additions to tax attributable to such taxes, charges,
fees, levies or other assessments and any obligations under any agreement or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity and (ii) all obligations,
including joint and several liability pursuant to the law of any jurisdiction or
otherwise, for the payment of any of the types of taxes referred to in clause
(i) of this definition as a result of being a member of an affiliated,
consolidated, combined or unitary group for any taxable period.
"Tax Return" shall mean any report, return or other
information required to be supplied to any taxing authority in connection with
Taxes.
"Treasury Regulations" shall mean the Income Tax Regulations
(final, temporary and, as applicable, proposed) promulgated under the Code, as
they may be in effect from time to time. References to specific sections of the
Treasury Regulations shall be to such sections as amended, supplemented or
superseded by Treasury Regulations currently in effect.
<PAGE>
12.2 Allocation of Purchase Price
Buyer and Seller shall agree upon the allocation of the
consideration paid by Buyer hereunder to the Shares and the non-competition
provisions set forth in Section 11.2 hereof in accordance with Treasury
Regulations thereunder; provided, however, that Buyer and Seller hereby agree
that as of the date hereof the fair market value of the non-competition
provisions set forth in Section 11.2 hereof is $5,700,000. Buyer and Seller
shall utilize the allocation of consideration described in the preceding
sentence in the preparation of all Tax Returns or forms and for all other Tax
purposes. Any adjustment to the consideration paid pursuant to this Agreement
shall result in an appropriate adjustment to such allocation. To the extent
required under Code Section 1060 and the Treasury Regulations thereunder, Buyer
and Seller shall utilize such allocation in the preparation of IRS Form 8594,
and shall timely file with the appropriate governmental authorities copies of
such Form 8594. Neither Buyer nor Seller shall agree to any adjustment relating
to the manner in which the consideration has been allocated as set forth in this
Section 12.2 without the prior written approval of the other, which approval
shall not be unreasonably withheld.
12.3 Representation and Warranties of Seller
Except as set forth in Schedule 12.3 Seller hereby represents
and warrants to Buyer as follows:
(a) Provision for Taxes. The provision for Taxes, including
interest and penalties, with respect to the Company Group to be shown on the
Closing Balance Sheet will be sufficient for the payment of all such Taxes,
interest and penalties not theretofore paid, whether or not disputed, for the
period ended December 28, 1997, and for all periods prior thereto.
<PAGE>
(b) Tax Returns and Audits.
(i) As of the time of filing, all Tax Returns required to be filed under
federal, state, county, local or any foreign laws by or on behalf of the Company
Group were to the best of Seller's knowledge, in all respects (and, as to Tax
Returns not filed as of the date hereof, will be) true, complete and correct and
filed on a timely basis.
(ii) The Company and any affiliated, combined or unitary group of which it
is or was a member have each, within the time and in the manner prescribed by
law, paid (and until the Closing Date will, within the time and in the manner
prescribed by law, pay) all Taxes that are due and payable.
(iii) The Company Group has established (and through the Closing Date will
establish) on its books and records reserves that are to the best of Seller's
knowledge, adequate for the payment of all Taxes not yet due and payable for
which it may be liable (including Taxes for which it may be liable as a
transferee or on a joint and several basis under the consolidated return rules
or any comparable rules for state and local taxes).
(iv) The Company and each member of any affiliated, combined or unitary
group of which it is or was a member have each complied (and until the Closing
Date will comply) in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes or similar
provisions under any federal, state, county, local or foreign laws and have,
within the time and in the manner prescribed by law, withheld from employee
wages and paid over to the proper governmental authorities all amounts required
to be so withheld and paid over under all applicable laws.
<PAGE>
(v) Neither the Company nor any member of any affiliated, combined or
unitary group of which it is or was a member is a party to any agreement
providing for the allocation or sharing of Taxes.
(vi) Neither the Company nor any member of any affiliated, combined or
unitary group of which it is or was a member has requested any extension of time
within which to file any Tax Return, which Tax Return has not since been filed.
(vii) (1) The statute of limitations for the assessment of Taxes has
expired for all applicable Tax Returns of the Company and any affiliated,
combined or unitary group of which it is or was a member (for such periods
during which the Company is or was a member), or (2) those Tax Returns have been
examined by the appropriate taxing authorities for all periods and no deficiency
for any Taxes has been proposed, asserted or assessed against the Company or any
affiliated, combined or unitary group of which it is or was a member (for such
periods during which the Company is or was a member), which has not been
resolved and paid in full.
(viii) There are no outstanding waivers or comparable consents regarding
the application of the statute of limitations with respect to any Taxes or Tax
Returns that have been given by or requested from the Company or any affiliated,
combined or unitary group of which it is or was a member.
(ix) No federal, state, county, local or foreign audits or other
administrative proceedings or court proceedings are presently pending or, to the
best of Seller's knowledge, threatened with regard to any Taxes or Tax Returns
of or relating to the Company Group.
<PAGE>
(x) No power of attorney has been granted by the Company or any affiliated,
combined or unitary group of which it is or was a member with respect to any tax
matter of or relating to the Company Group which is currently in force.
(xi) Neither the Company nor any member of any affiliated, combined or
unitary group of which it is or was a member has participated (nor will it
participate prior to the Closing) in or cooperated with an international boycott
within the meaning of Section 999 of the Code.
(xii) Neither the Company nor any member of any
affiliated, combined or unitary
group of which it is or was a member has filed (nor will it file prior to the
Closing) a consent pursuant to Section 341(f) of the Code or has agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any member of any affiliated, combined or unitary group of which it is or was
a member (for such period during which the Company is or was a member).
(xiii) Neither the Company nor any member of any
affiliated, combined or unitary
group of which it is or was a member is required to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a voluntary
change in accounting method initiated by the Company or any member of any
affiliated, combined or unitary group of which is or was a member and Seller has
no knowledge that the IRS has proposed any such adjustment or chance in
accounting method.
(xiv) The acquisition of the Shares will not be a
factor causing any payments to be
made by the Company or any member of any affiliated, combined or unitary group
of which it is or was a member (for such period during which the Company is or
was a member) not to be deductible (in whole or in part) pursuant to Sections
280G, 404 or 162(m) of the Code.
(xv) All transactions with respect to the Company
Group which could give rise to an
understatement of federal income tax (within the meaning of Section 6662 of the
Code) were adequately disclosed (or, with respect to Tax Returns filed after the
date hereof but before the Closing, will be adequately disclosed) on the Tax
Returns in accordance with Section 6662(b)(2)(B) of the Code and the Treasury
Regulations thereunder.
(xvi) No "ownership change", as defined in Section
382(g) of the Code, and no change
in ownership of the outstanding stock of the Company described in Section
382(a)(1) of the Internal Revenue Code of 1954 (prior to amendment by the Tax
Reform Act of 1986) have occurred with respect to the Company.
(xvii) Neither the Company nor any member of any
affiliated, combined or unitary
group of which it is or was a member has made, or is subject to, an election as
provided in Section 108(b)(5) of the Code (or any predecessor provision) for any
taxable year.
(xviii) Seller is not a "foreign person" (as that
term is defined in Section 1445 of
the Code) and shall furnish to Buyer on or before the closing date a
certification of Seller's non-foreign status, as set forth in Treasury
Regulations ss.1.1445-2(b). No member of the Company Group is a United States
real property holding corporation as defined in Section 897(c)(2) of the Code.
<PAGE>
(xix) None of the assets of the Company or any member
of any affiliated, combined or unitary group of which it is or was a member are
treated as "tax-exempt use property" within the meaning of Section 168(h) of the
Code.
(xx) With respect to the Company Group, Seller has
made available to Buyer copies
of all revenue agent's reports and other written assertions of deficiencies or
other liabilities for Taxes of or relating to the Company Group with respect to
all taxable years commencing after January 1, 1988.
(xxi) There are no rulings, requests for rulings or
closing agreements specifically
relating to the Company or any member of any affiliated, combined or unitary
group of which it is or was a member which could affect the Company Group's
Taxes for any period after the Closing.
(xxii) For taxable years commencing January 1, 1988
no issue has arisen in any
examination of Taxes of or relating to the Company Group by any taxing authority
except for certain environmental remediation costs with regard to the Saugerties
site that if raised with respect to any other taxable year (commencing on or
after January 1, 1988) not so examined would result in a material Tax deficiency
for any other period (commencing on or after January 1, 1988) not so examined,
if upheld.
(xxiii) The Company and each member of any
affiliated, combined or unitary group of
which is or was a member have made all payments of estimated Taxes required to
be made under Section 6655 of the Code and any comparable provision of state,
county, local or foreign law.
(xxiv) Neither the Company nor any member of any
affiliated, combined or unitary
group of which it is or was a member has disposed
<PAGE>
of property in a transaction being accounted for under the installment method
under Section 453 of the Code.
(xxv) No excess loss account (as defined in Section
1.1502-19 of the Treasury
Regulations) exists with respect to the Company or any member of any affiliated,
combined or unitary group of which it is or was a member.
(xxvi) There are no liens for Taxes upon any property
or assets of the Company
Group except for liens for Taxes not yet due.
(xxvii) No member of the Company Group was ever a
member of any affiliated, combined
or unitary group other than an affiliated, combined or unitary group of which
the Company is or was a member.
12.4 Tax Indemnification
(a) From and after the Closing Date, Seller shall pay, or
cause to be paid, and shall indemnify and hold harmless Buyer and the Company
Group and any director, officer, employee, advisor, parent, subsidiary or
Affiliate of Buyer or the Company Group, and any successor thereof, from any
liability for or arising out of any Taxes (x) of Seller and any current or
former member of Seller's group of corporations filing on a combined or
consolidated basis, other than the Company Group, in respect of any taxable
period or (y) attributable to the income, business, property or operations of
the Company Group or for which the Company Group may be liable on any basis
(including, but not limited to, liability as a transferee or on a joint and
several basis) (A) in respect of the Pre-Closing Tax Period, to the extent such
Taxes are not reserved on the Closing Date Balance Sheet, or (B) resulting from
the Company Group's ceasing to be affiliated with the affiliated group of
corporations of which Seller is a member. For purposes of computing the amount
reserved with respect to Taxes on the Closing Date Balance Sheet, (a) all
amounts reserved with respect to foreign taxes shall be converted into United
States dollars at the exchange rates used in preparing the Closing Date Balance
Sheet and (b) all amounts reserved with respect to any Taxes shall be considered
available for the payment only of any Taxes.
(b) From and after the Closing Date, Buyer shall pay, or cause
to be paid, and shall indemnify and hold Seller and any director, officer,
employee, advisor, parent, subsidiary or Affiliate of Seller, and any successor
thereto, harmless from any liability for or arising out of any Taxes of the
Company Group in respect of taxable periods of the Company Group ending after
the Closing Date (except to the extent attributable to the Pre-Closing Tax
Period).
(c) In the case of any taxable period that includes but does
not end on the Closing Date:
(i) the periodic Taxes of the Company Group that are
not based on income or
receipts (e.g., property taxes) attributable to the Pre-Closing Tax Period shall
be equal to the amount of such Taxes attributable to the entire taxable period
multiplied by a fraction, the numerator of which is the number of days during
that period that are in a Pre-Closing Tax Period and the denominator of which is
the number of days in such taxable period, provided, however, that if the amount
of periodic Taxes imposed for such taxable period reflects different rates of
tax imposed for different periods within such taxable period, the formula
described in the preceding clause shall be applied separately with respect to
each such period within the taxable period; and
(ii) the Taxes of the Company Group (other than Taxes
described in clause (i))
attributable to the Pre-Closing Tax Period shall be computed as if such taxable
period ended as of the close of business on the Closing Date.
(d) In addition to any other indemnity provided in this
Section 12.4, Seller shall indemnify Buyer for any increase in Taxes of or
relating to the Company Group (net of any tax benefit to the Buyer) for any
period beginning on or after the Closing Date, which is attributable to any
adjustment to, or amendment of, the Taxes or Tax Returns (including any Taxes or
Tax Returns of any affiliated, combined or unitary group of which it is or was a
member) of or relating to the Company Group for any Pre-Closing Period.
(e) Notwithstanding anything in this Article XII to the
contrary, no tax indemnification shall be required of Seller unless the amount
of tax liability claimed to be due pursuant to this Article XII exceeds the
amount of any related tax benefit (net of any tax detriment) to Buyer.
12.5 Tax Returns: Miscellaneous.
(a) Seller shall prepare, or cause to be prepared, in a
manner consistent with prior returns, and shall file, or cause to be filed, any
Tax Returns of or relating to the Company Group (including amendments thereto)
for all taxable periods that end, with respect to the Company Group, on or
before the Closing Date, and which arc due on or before the Closing Date, Seller
shall prepare or cause to be prepared, in a manner consistent, with respect to
the Company Group, with prior Tax Returns and file or cause to be filed, any
consolidated or combined Tax Return of Seller and its affiliates which includes
the Company Group for any taxable period ending, with respect to the Company
Group, on or before the Closing Date. Buyer shall be afforded the opportunity to
review such returns (and any corresponding amended Tax Returns) within a
reasonable time prior to the due date for the filing thereof, and shall be
provided by Seller with copies of such Tax Returns (and any corresponding
amended Tax Returns) in the form actually filed. Except as otherwise provided in
this subparagraph, Buyer shall be responsible for filing all Tax Returns
required to be filed after the Closing Date by or on behalf of the Company
Group. All Tax Returns for taxable periods of the Company Group which include
the Closing Date shall be filed on a basis consistent with the manner in which
Seller or the Company Group filed Tax Returns of the Company Group in the past
unless a contrary treatment is required by law.
(b) With respect to any Tax Return required to be filed
by Buyer for a taxable
period of the Company Group which includes the Closing Date, Buyer shall provide
Seller and its authorized representatives with copies of such completed Tax
Return and a statement certifying the amount of Tax shown on such Tax Return
that is payable by Seller pursuant hereunder (thc "Statement") at least thirty
(30) business days prior to the due date (or extended due date, if an extension
has been obtained) for the filing of such Tax Return, and Seller and its
authorized representatives shall have the right to review such Tax Return and
Statement prior to the filing of such Tax Return. Buyer and Seller agree to
consult and resolve in good faith any issues arising as a result of the review
of such Tax Return and Statement by Seller or its authorized representatives and
to mutually consent to the filing of such Tax Return, The amount owed by Seller
with respect to a Tax Return shall be paid by Seller at least three (3) business
days prior to the due date for the filing of such Tax Return.
(c) Seller agrees to cooperate with Buyer prior to the
Closing and thereafter and
provide, to the extent in its possession, or if not in its possession, make
reasonable best efforts to obtain and provide, prior to the Closing Date, access
to complete copies of all federal, state, county, local and foreign Tax Returns,
reports and estimates for all periods prior to the Closing Date for or relating
to the Company Group as well as any other Tax Returns (including compete copies
of combined or consolidated returns) on which Taxes were reportable for which
the Company Group might be liable on any basis, including, but not limited to,
liability as a transferee or liability on a joint and several basis under the
consolidated return rules or comparable state and local rules. Seller also
agrees to furnish to Buyer, to the extent in its possession, or if not in its
possession, make reasonable best efforts to obtain and furnish, prior to the
Closing Date, any material communication related to the Company Group to or from
any governmental agency (including, but not limited to, audit reports), whether
or not Seller was a party to such communication, which pertains to any of the
Taxes or Tax Returns of or relating to the Company Group for taxable years
commencing after January 1, 1990.
(d) In addition to the obligations of the parties pursuant
to Sections 12.5(a), (b) and (c) hereof, after the Closing Date, Buyer and
Seller shall each make available to the other and to any taxing authority, as
reasonably requested, all information, records or documents (other than Tax
Returns, the disclosure of which is subject to Sections 12.5(a), (b) (c))
relating to federal, state, county, local or foreign tax matters of or relating
to the Company Group for all taxable periods prior to or including the Closing
Date and shall preserve all such information, records and documents until the
expiration of any applicable Tax statute of limitations or extensions thereof.
If any such records or documents are, at the date hereof, not within the
possession of Seller or the Company Group, Seller agrees to use its reasonable
best efforts to obtain such records and documents and, if obtained, furnish them
to Buyer prior to the Closing Date. Buyer and Seller will keep confidential the
contents of the information, records and documents made available under this
Section 12.5(d) and not use or disclose them or any information contained
therein, except that: (a) Seller may disclose those portions of such
information, records or documents which disclose information pertaining to
Seller; (b) Buyer may disclose those portions of such information, records or
documents which disclose information pertaining to Buyer; and (c) both Seller
and Buyer may disclose any of such information, records or documents where such
disclosure is made (1) to a taxing authority, (2) in the course of any judicial
proceeding for the determination of liability for Taxes, (3) otherwise as
required by law, or (4) of any such information, records or documents which has
or have become generally available to the public through no fault of the party
hereunder seeking to make disclosure.
(e) Buyer shall promptly notify Seller in writing upon receipt
by Buyer of notice of (i) any pending or threatened Tax audits or assessments of
or relating to the Company Group, or (ii) any pending or threatened Tax audits
or assessments of any Affiliate of Seller which may affect the liability of the
Company Group for Taxes, in each case for taxable periods ending on or prior to
the Closing Date. Seller shall have the sole right to represent the Company
Group's interests in any Tax audit or administrative or court proceeding related
to taxable periods ending on or before the Closing Date, and to employ counsel
of its choice at its expense. Buyer agrees that it will cooperate, and cause the
Company Group to cooperate fully with Seller and its counsel in the defense
against any claim in any said proceeding. Buyer shall have the sole right to
represent the Company Group's interests in any Tax audit or administrative or
court proceeding related to taxable periods ending after the Closing Date, and
to employ counsel of its choice at its expense. Seller agrees that it will
cooperate fully with Buyer and its counsel in the defense against any claim in
any said proceeding. Notwithstanding the foregoing, neither Seller nor the
Company Group shall enter into any closing agreement (as defined in Section 7121
of the Code, or any comparable provision of state, county, local or foreign law)
which is binding on Buyer or the Company Group for any taxable period ending
after the Closing Date, without the prior written consent of Buyer, nor shall
Buyer or the Company Group enter into any closing agreement (as so defined)
which is binding on Seller or the Company Group for any taxable period ending on
or before the Closing Date, without the prior written consent of Seller.
Further, notwithstanding the foregoing, neither Seller nor the Company Group
shall agree to any settlement concerning Taxes for any taxable period ending on
or before the Closing Date, which settlement may result in an increase in Taxes
of the Company Group for any taxable period ending after the Closing Date,
without the prior written consent of Buyer, nor shall Buyer or the Company Group
agree to any settlement concerning Taxes for any taxable period ending after the
Closing Date which may result in an increase in Taxes of Seller or the Company
Group for any taxable period ending prior to or including the Closing Date,
without the prior written consent of Seller.
(f) After the date hereof, Seller and Buyer shall consult in
good faith during the course of any audits or administrative or judicial
proceedings pertaining to Taxes of or relating to the Company Group, or any
other entities for the Taxes of which the Company Group may be liable on any
basis, including liability as a transferee or on a joint and several basis under
consolidated return rules or comparable state and local rules, for periods
ending prior to or including the Closing Date. Such consultations shall include,
but not be limited to, consultations concerning (1) preparation of a response to
a 30-day letter for a United States federal income tax audit together with any
appellate conferences related thereto, (2) any ongoing or future audits related
to any period ending prior to or including the Closing Date and (3) court
proceedings with respect to any of the above. Buyer or Seller, as the case may
be, shall be made aware of any meetings and conferences related thereto and have
the right (to the extent permissible by law) to have a representative present at
those conferences. Seller shall, within a reasonable time, notify Buyer of any
adjustments to, or amendments of, Taxes or Tax Returns of or relating to the
Company Group for periods ending on or prior to the Closing Date.
(g) In the event that the Company Group, or any successor
thereto, should generate any tax loss or tax credit in a period ending after the
Closing Date that may be carried back to a period ending on, prior to or
including the Closing Date, Seller agrees to cooperate with the Buyer's filing
such claims for refund and other returns as may be appropriate and to pay to the
Company Group, as the case may be, the proceeds of any such claims or refunds
(including interest thereon) resulting from the utilization of such attributes,
whether utilized by Seller or any other member of an affiliated group of which
they were a member and any predecessors thereto.
(h) The parties hereto acknowledge and agree that any tax loss
or tax credit of the Company Group, or of any predecessor thereto, the economic
benefit of which is realized in a period ending after the Closing Date, shall be
for the account of Buyer, and Buyer shall not be obligated to pay any additional
consideration to Seller therefor. Without limiting the generality of the
foregoing, this Section 12.5(h) applies to any tax loss or credit generated in
any period ending on, prior to or including the Closing Date, which may be
carried forward and utilized on returns for any period ending after the Closing
Date of Buyer or the Company Group or any successors thereto.
(i) Buyer agrees to assign and promptly remit (and to cause
the Company Group to assign and promptly remit) to Seller all refunds (including
interest thereon) received by Buyer or the Company Group or any affiliate of
Buyer or the Company Group (less Taxes modified to include applicable foreign
income taxes at the maximum applicable foreign rate in effect for such taxable
year in respect of such refund and interest to the extent such refund and
interest are includable for applicable income tax purposes and not subject to an
offsetting deduction by virtue of their payment to Seller) of any Taxes paid for
the Pre-Closing Tax Period, except to the extent attributable to the carryback
of tax losses or credits generated in a period which is not a Pre-Closing Tax
Period. Seller may request Buyer to file, or the Company Group to file, at the
reasonable expense of Seller, a claim for refund of any Tax paid for the
Pre-Closing Tax Period.
(j) There are no agreements or understandings whether labeled
"tax-sharing" agreements or otherwise, whereby the Company Group or any
successor thereto, may be required after the date hereof to make payments of or
in respect of Taxes to Seller or any Affiliate of Seller, or any successor
thereto.
(k) On and after the Closing Date, Seller will, and will cause
its affiliates to and will use its reasonable best efforts to cause all former
members of Seller's affiliated group to take such actions reasonably requested
by Buyer or the Company Group to enable the Company Group to enforce and obtain
the maximum protection provided by the obligations of Seller.
(l) At the request of Buyer, Seller shall provide Buyer, prior
to the Closing Date, with a written statement signed by an officer of Seller
authorized to sign Seller's federal income Tax Return, in which Seller elects,
on behalf of the Company Group, to have the Company Group excluded from Seller's
affiliated group, Seller shall file a copy of such statement with its federal
income tax return for its tax period which includes the Closing Date.
ARTICLE XIII - ADDITIONAL COVENANTS
13.1 Hi-Rel Warranty
(a) The "Outstanding Hi-Rel Products" shall mean all Hi-Rel
Products manufactured or sold by the Company on or before the Closing Date.
"Hi-Rel Products" shall mean those product families set forth on Schedule
13.1(a) hereto, which is a complete list of such products as of the Closing
Date.
(b) Seller agrees that in preparing the Preliminary Balance
Sheet a separate product warranty reserve shall be specified thereon with
respect to the Outstanding Hi-Rel Products (the "Hi-Rel Reserve").
(c) Seller agrees that it shall reimburse Buyer and the
Company for, and indemnify and hold them harmless from and against, all warranty
costs incurred by the Company (including, without limitation, costs of any
repairs made on defective product, returns accepted of defective products or
allowances reasonably granted for defective product; for these purposes, costs
incurred by the Company shall be calculated on a time and materials basis and
shall not include any markup for profit, overhead or general and administrative
expense) from and after the Closing Date until the expiration of the applicable
warranty period in respect of the Outstanding Hi-Rel Products (collectively, the
"Warranty Costs") to the extent such Warranty Costs exceed the Hi-Rel Reserve
(such excess being referred to as the "Excess Warranty Costs").
(d) Buyer shall cause the Company to prepare, within 30 days
after the end of each calendar quarter, a statement setting forth the Warranty
Costs incurred in such quarter, and either the remaining balance in the Hi-Rel
Reserve or the amount constituting Excess Warranty Costs. Seller shall pay to
Buyer the amount of such Excess Warranty Costs within 30 days after receiving
each such statement, which shall be signed by an officer of the Company.
(e) Seller represents and warrants to Buyer that, with
respect to the Hi-Rel Products, the Company has recently completed a redesign of
certain aspects of such Hi-Rel Products and to the best of Seller's knowledge,
such redesign has successfully corrected existing design issues with the Hi-Rel
Products that resulted in an additional warranty reserve being established on
the Interim Balance Sheet with respect to the Hi-Rel Products. Seller makes no
representation or warranty as to the effectiveness of any changes to the design
or manufacture of the Hi-Rel products which occur after the Closing Date.
13.2 Audited Financial Statements
(a) Seller shall deliver to Buyer, no later than 45 days
after the Closing Date, a balance sheet of the Company as at December 29, 1996,
together with a statement of operations and a cashflow statement of the Company
for year ended December 29, 1996, along with a balance sheet of the Company as
at September 28, 1997, together with a statement of operations and a cashflow
statement of the Company for the nine month period ended September 28, 1997. The
preceding financial statements will each be audited by Arthur Andersen & Co. LLP
("Arthur Andersen") and in a form suitable for filing by Buyer as exhibits to
its Form 8-K as required in accordance with the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (collectively, the "Audited
Financial Statements"). Seller and Buyer shall share equally the fees charged by
Arthur Andersen for performing its audit of the Audited Financial Statements.
The earnings before interest and taxes ("EBIT") of the Company shown on the 1996
statement of operations and the September 1997 Interim Statement of Operations
were determined in accordance with GAAP consistently applied and in a manner
consistent with the preparation of the Financial Statements as defined in
Section 3.7 and were not less than $12,362,000 (the "1996 EBIT") and $10,234,000
(the "3Q 1997 EBIT"), respectively.
(b) The parties acknowledge and agree that the EBIT figures
determined through the Audited Financial Statements will differ from those
listed in Section 13(a). A "P/L Reconciliation Schedule for the period December
30, 1996 - September 28, 1997" is attached as Schedule 13.2(b); and Seller will
deliver a similar reconciliation schedule for the 1996 fiscal year prior to
Closing. The EBIT determinations listed above were based on the EBIT calculation
prepared by the Company, and then revised to reflect the Hi-Rel warranty
expense, FIFO adjustment, corporate G&A allocation, and all miscellaneous income
(expense) items below operating profit. Also, the EBIT figures determined
through the Audited Financial Statements will be prepared on a "stand alone"
basis for the Company.
(c) The parties agree that Buyer will have no claim or
recourse against Seller or its Affiliates relating to the Audited Financial
Statements as compared to the 1996 EBIT and the 3Q 1997 EBIT to the extent any
shortfall in the EBIT determinations included in the Audited Financial
Statements were caused by liabilities for which Seller is maintaining
responsibility hereunder, including without limitation Hi-Rel warranty expense,
environmental liabilities and NOVA repair costs.
13.3 Tax Election
At any time on or after the Closing Date, Buyer and its
Affiliates agree not to file, cause to be filed, or permit to be filed with
respect to the acquisition of the Company by Buyer any elections pursuant to
Section 338 of the Code.
13.4 NOVA Product Line
In the event Seller requests assistance from Buyer or Company
to fulfill its obligations relating to product repair of the Nova Product Line
pursuant to Section 10.2, and Company has the ability to perform such repair
work at the time of the request, Buyer will perform and work on a time and
materials basis plus a reasonable markup to be determined at the time repairs
are requested.
<PAGE>
ARTICLE XIV - GENERAL PROVISIONS
14.1 Expenses
Whether or not the Contemplated Transactions shall be
consummated, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. Seller will pay all amounts
payable to Merrill Lynch & Company in connection with this Agreement and the
Contemplated Transactions. Buyer will pay one-half and Seller will pay one-half
of the HSR Act filing fee. In the event litigation is maintained by any party to
this Agreement against any other party to enforce or interpret any of the terms
of this Agreement, or to seek any remedy for any breach of this Agreement, the
party prevailing in such litigation shall be entitled to recover from the
non-prevailing party reasonable attorney's fees and costs of suit.
14.2 Public Announcements
From the date of this Agreement until the Closing Date,
neither Seller nor Buyer shall make, or permit its Affiliates to make, any
public statement with respect to the transactions contemplated hereby without
the prior consent of the other; provided that such consent will not be
unreasonably withheld in any case and that nothing herein shall prevent any
party from making any such disclosures or statements as may, in the opinion of
counsel for the disclosing Person be required by law, regulation or rule of any
governmental entity or of any stock exchange; provided further, that any party
required by law, regulation or rule of any governmental entity or of any stock
exchange to make any such disclosure or statement shall make a good faith effort
to inform the other party of such requirement as soon as is practicable (whether
such time is before or after such disclosure or statement).
14.3 Confidentiality
From the date of this Agreement until the Closing Date,
Buyer and Seller will maintain in confidence, and will cause their Affiliates to
maintain in confidence and not use to the detriment of another party any oral or
written information obtained from another party in connection with this
Agreement or the Contemplated Transactions, unless (a) such information is
already known to such party or such information becomes publicly available
through no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the Contemplated Transactions, or (c) the furnishing or
use of such information is required by legal proceedings. If the Contemplated
Transactions are not consummated, each party will return or destroy such written
information as requested by the other party.
14.4 Notices
All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent via facsimile (with written confirmation of receipt), or (c) received by
the addressee, if sent by a nationally recognized overnight delivery in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):
Seller: EG&G Holdings, Inc.
45 William Street
Wellesley, MA 02181
Attention: General Counsel
Facsimile No. (617) 431-4115
<PAGE>
Company: Rotron Incorporated
9 Hasbrouck Lane
Woodstock, NY 12498
Attention: President
Facsimile No. (914) 679-1852
Buyer: Ametek, Inc.
Station Square
Paoli, Pennsylvania 19301
Attention: President
Facsimile No: (610) 296-3412
14.5 Jurisdiction; Service of Process
Any action or proceeding seeking to enforce any provision
of, or based on any right arising out of, this Agreement may be brought against
any of the parties in the courts of the United States District Court for the
Northern District of New York, unless said federal court does not have and is
not able to acquire jurisdiction, in which case jurisdiction will reside with
the courts of the State of New York, County of New York. Each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. The parties also waive and release their rights to seek a jury trial
with respect to disputes arising out of this Agreement or the transactions
contemplated hereby. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world. Each of the
parties agrees that a judgment in any such proceeding may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
14.6 Further Assurances
The parties agree (a) to furnish upon request to each other
such further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
14.7 Waiver
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
14.8 Entire Agreement and Modification
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. No amendment, modification, or addition hereto shall have effect or be
binding unless in writing and executed by all of the parties, or their duly
authorized representative.
<PAGE>
14.9 Assignment, Successors, and No Third-Party Rights
Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties which will not be
unreasonably withheld. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
14.10 Severability
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
14.11 Article and Section Headings, Construction
The headings of Articles and Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Article" or "Section" refer to the
corresponding Article or Section of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Information or documents disclosed pursuant to any Schedule attached
hereto will be deemed to have been disclosed pursuant to any other applicable
Schedule, without the need for cross-referencing.
<PAGE>
14.12 Time of Essence
With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
14.13 Knowledge
Any reference in this Agreement to the "knowledge" of the
Seller, to what is "known" to the Seller, to what Seller is "aware" of or any
similar reference shall be deemed to include, in addition to the knowledge of
Seller, the knowledge of the officers. directors and plant or general managers
of the Company.
14.14 Governing Law
This Agreement will be governed by the laws of the State of
New York without regard to conflicts of laws principles.
14.15 Counterparts
This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
14.16 Broker Indemnity
In the event of a claim by any broker or finder that such
broker or finder represented or was retained by Seller, on the one hand, or
Buyer, on the other hand, in connection herewith, Seller or Buyer, as the case
may be agrees to indemnify and hold the other harmless from and against any and
all loss, liability, cost, damage, claim and expense, including, without
limitation, attorneys' fees and disbursements, which may be incurred in
connection with such claim.
<PAGE>
14.17 Cooperation in Litigation
In the event that, after the Closing Date, Seller or Buyer
shall reasonably require the participation of officers and employees by each
other to aid in the defense or prosecution of litigation or claims, and so long
as there exists no unwaived conflict of interest between the parties, each of
Seller and Buyer shall make such officers and employees reasonably available to
participate in such defense or prosecution provided that, except as required
pursuant to the provisions of Article X, the party requiring the participation
of such officers or employees shall pay all reasonable out-of-pocket costs,
charges and expenses arising from such participation.
14.18 Transfer Taxes
Buyer and Seller shall each pay one-half of any transfer,
purchase, sales, use or similar tax under the laws of any nation, state or any
country, city, or political subdivision thereof arising out of the Contemplated
Transactions and any filing or recording fees payable in connection with this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement by their duly authorized officers as of the date first written above.
Ametek, Inc. EG&G Holdings, Inc
By:_________________ By:__________________
Name:______________ Name:_______________
Title:________________ Title:_________________
<PAGE>
CORPORATE GUARANTY
------------------
In consideration of Buyer entering into the foregoing Stock Purchase
Agreement (the "Agreement") regarding Rotron Incorporated (the "Company"), the
undersigned, EG&G, Inc. (the "Guarantor"), being the ultimate corporate parent
of EG&G Holdings, Inc. ("Seller") hereby guarantees all representations,
warranties, covenants and agreements of Seller as set forth therein. In
addition, the Guarantor hereby agrees as follows:
1. This guaranty constitutes a guaranty of payment and not of
collection. Guarantor hereby waives notice of acceptance of this guaranty and
notice of any liability to which it may apply, and waives presentment, demand
for payment, protest, notice of dishonor or non-payment of any such liability,
notice of any suit or the taking of other action by Buyer against, and any other
notice to, Seller.
2. Buyer may at any time and from time to time without notice to or
consent of Guarantor and without impairing or releasing the absolute and
unconditional obligations of Guarantor under this guaranty: (i) agree with
Seller to any change in the terms of any liability of Seller pursuant to the
terms of the Agreement, (ii) take or fail to take any action of any kind in
respect of any security for any liability of Seller, (iii) exercise or refrain
from exercising any rights against Seller or others, or (iv) compromise or
subordinate any liability of Seller including any security therefor. In
addition, the liability of Guarantor hereunder shall be absolute and
unconditional irrespective of: (A) any lack of validity or enforceability of any
liability guaranteed hereby or any agreement or instrument relating to any such
guaranteed liability, (B) any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of the terms of any such guaranteed
liability or Buyer's rights hereunder or (C) any other circumstances, not
referred to earlier in this guaranty, which might otherwise constitute a defense
available to, or a discharge of, Guarantor in respect of this guaranty.
3. Until all liabilities guaranteed hereunder shall have been
irrevocably paid in full, the Guarantor shall have no right of subrogation. This
guaranty shall continue in full force and effect until all liabilities
guaranteed hereunder have been irrevocably satisfied in full. Guarantor agrees
that this guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time payment or performance (or any part thereof) of any
liability guaranteed hereunder, or interest thereon, is rescinded or must
otherwise be restored or returned by Buyer due to any bankruptcy, insolvency,
reorganization, liquidation or receivership laws or otherwise
EG&G, Inc.
By:__________________
Name:________________
Title:__________________
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