SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securitites Exchange Act of 1934
Date of Report
(Date of earliest event reported): December 30, 1993
SEQUA CORPORATION
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
1-804 13-1885030
(Commission File Number) (IRS Employer Identification No.)
200 Park Avenue, New York, New York 10166
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 986-5500
Page 1 of 115 pages
Exhibit Index appears on Page 11
<PAGE>
Item 2. Acquisitions and Dispositions of Assets.
On December 30, 1993, Sequa Corporation and certain of its
subsidiaries and affiliates (collectively "Sequa") entered into a
Stock Purchase Agreement ("Stock Purchase Agreement") pursuant to
which Sequa sold all of the issued and outstanding capital stock
of ARC Professional Services Group, Inc., Atlantic Research
Corporation UK Limited, Atlantic Research Canada Inc. and ARC
Interoperability Systems International, S.A. (collectively "ARC
PSG") to Computer Sciences Corporation and certain of its
subsidiaries and affiliates (collectively "CSC"). In this
transaction, Sequa received $59.9 million in cash (subject to
final cash settlement adjustments) and CSC assumed $4.6 million
of ARC PSG's debt. Proceeds from the sale, together with cash on
hand, were used to repay debt and to purchase the 7% minority
interest in Atlantic Research Corporation ("ARC").
ARC PSG employed approximately 2,000 employees in the United
States, Canada, United Kingdom and Greece. Engaged in
information technology and technical services for both the
governmental and civil sectors, ARC PSG had in excess of 240
government contracts and generated revenues in excess of $160
million during 1993.
Page 2<PAGE>
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(b) Unaudited pro forma financial information of Sequa
Corporation reflecting the sale of ARC PSG
The unaudited Pro Forma Consolidated Balance Sheet at September
30, 1993 and unaudited Pro Forma Statements of Consolidated
Income for the nine months ended September 30, 1993 and the year
ended December 31, 1992 give effect to the sale of ARC PSG and
other directly related transactions, based upon the assumptions
set forth below and in the notes to such statements. The pro
forma financial information assumes that the transactions for
which pro forma effects are shown were completed September 30,
1993 for the Pro Forma Consolidated Balance Sheet, and January 1
of each period presented for the Pro Forma Statements of
Consolidated Income. The Pro Forma Consolidated Balance Sheet at
September 30, 1993 includes a $10.2 million after-tax gain on the
sale of ARC PSG and a $2.1 million after-tax extraordinary loss
on the extinguishment of debt which was repaid with the proceeds
from the sale. These two pro forma adjustments have not been
made to the Pro Forma Statements of Consolidated Income as they
will not have a continuing impact on Sequa's results of
operations.
The pro forma adjustments are based on presently available
information. Sequa's final accounting for the disposition of ARC
PSG is still under review by management and will be finalized
prior to the filing of Sequa's Annual Report on Form 10-K for the
year ended December 31, 1993. The pro forma adjustments relating
to the disposition of ARC PSG are based on a preliminary purchase
price which is subject to final cash settlement adjustments
within 30 days of the December 30, 1993 closing date.
Accordingly, Sequa's actual recording of the disposition of ARC
PSG may differ from the pro forma financial information. The
unaudited pro forma financial information has been included as
required by the rules of the Securities and Exchange Commission
and is provided for comparative purposes only. The pro forma
information presented does not purport to be indicative of the
results that may be obtained in the future.
Page 3<PAGE>
<PAGE>
<TABLE>
SEQUA CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
(Amounts in thousands)
(Unaudited)
<CAPTION>
Pro Forma Adjustments Sequa
Sequa Sale of Other Pro
Historical ARC PSG Adjustments Forma
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 17,629 $ 59,926 (A) $ (52,773) (F) $ 8,399
(16,383) (G)
Accounts and notes receivable 204,940 (23,225) (B) - 181,715
Unbilled receivables 78,108 (24,134) (B) - 53,974
Inventories 297,725 - - 297,725
Other current assets 51,320 (1,073) (B) - 50,247
Total current assets 649,722 11,494 (69,156) 592,060
INVESTMENTS
Net assets of discontinued
operations 190,317 - - 190,317
Non-current receivables and
other investments 45,081 (413) (B) - 44,668
235,398 (413) - 234,985
PROPERTY, PLANT AND EQUIPMENT 591,386 (14,094) (B) - 577,292
OTHER ASSETS
Goodwill 354,377 (2,818) (B) (13,008) (G) 338,551
Deferred charges 18,018 - (483) (F) 17,535
372,395 (2,818) (13,491) 356,086
TOTAL ASSETS $1,848,901 $ (5,831) $ (82,647) $1,760,423
CURRENT LIABILITIES
Current maturities of debt 128,886 (175) (B) - 128,711
Accounts payable 123,101 (4,155) (B) - 118,946
Taxes on income 23,844 - - 23,844
Accrued expenses 217,188 (11,841) (B) - 207,847
2,500 (D)
Total current liabilities 493,019 (13,671) - 479,348
LONG-TERM DEBT 540,875 (4,423) (B) (50,000) (F) 486,452
OTHER LONG-TERM LIABILITIES
Deferred taxes on income 21,224 2,979 (E) (1,140) (F) 23,063
Other long term liabilities 195,493 (965) (B) (29,391) (G) 165,137
216,717 2,014 (30,531) 188,200
SHAREHOLDERS' EQUITY
Preferred and common stock 11,712 - - 11,712
Capital in excess of par value 295,806 - - 295,806
Cumulative translation adjustment (13,785) - - (13,785)
Retained Earnings 403,172 10,249 (C) (2,116) (F) 411,305
696,905 10,249 (2,116) 705,038
Less: Cost of treasury stock (98,615) - - (98,615)
TOTAL SHAREHOLDERS' EQUITY 598,290 10,249 (2,116) 606,423
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,848,901 $ (5,831) $(82,647) $1,760,423
</TABLE>
Page 4
<PAGE>
<TABLE>
SEQUA CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1993
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Pro Forma Adjustments
Sequa
Sequa Sale of Other Pro
Historical ARC PSG Adjustments Forma
<S> <C> <C> <C> <C> <C> <C>
SALES AND REVENUES $1,246,834 $(122,733) $ - $1,124,101
COSTS AND EXPENSES
Cost of sales and revenues 1,021,112 (106,818) - 914,294
Selling, general and
administrative 190,009 (8,251) (285) (H) 181,473
Restructuring charges 26,640 - - 26,640
1,237,761 (115,069) (285) 1,122,407
OPERATING INCOME 9,073 (7,664) 285 1,694
OTHER INCOME (EXPENSE)
Interest expense (50,555) 444 3,938 (I) (46,173)
Interest income 1,781 (292) (207) (J) 1,282
Other, net (14,119) - 1,278 (K) (12,841)
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (53,820) (7,512) 5,294 (56,038)
Income tax benefit 8,600 2,907 (1,308) (L) 10,199
NET LOSS FROM CONTINUING
OPERATIONS (45,220) $ (4,605) $ 3,986 (45,839)
Preferred dividend requirement (2,373) (2,373)
NET LOSS FROM CONTINUING
OPERATIONS APPLICABLE TO
COMMON STOCK $ (47,593) $(48,212)
Weighted average common shares
outstanding 9,655 9,655
LOSS PER SHARE FROM CONTINUING
OPERATIONS:
Historical $ (4.93)
Pro forma $ (4.99)
</TABLE>
Page 5<PAGE>
<PAGE>
<TABLE>
SEQUA CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1992
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Pro Forma Adjustments
Sequa
Sequa Sale of Other Pro
Historical ARC PSG Adjustments Forma
<S> <C> <C> <C> <C> <C> <C>
SALES AND REVENUES $1,868,341 $(157,979) $ - $1,710,362
COSTS AND EXPENSES
Cost of sales and revenues 1,480,412 (136,709) - 1,343,703
Selling, general and
administrative 263,325 (11,992) (380) (H) 250,953
1,743,737 (148,701) (380) 1,594,656
OPERATING INCOME 124,604 (9,278) 380 115,706
OTHER INCOME (EXPENSE)
Interest expense (73,125) 619 5,250 (I) (67,256)
Interest income 4,137 (360) (277) (J) 3,500
Other, net (11,816) (21) 1,704 (K) (10,133)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 43,800 (9,040) 7,057 41,817
Income tax provision (25,900) 3,100 (1,691) (L) (24,491)
NET INCOME FROM CONTINUING
OPERATIONS 17,900 $ (5,940) $ 5,366 17,326
Preferred dividend requirement (3,168) (3,168)
NET INCOME FROM CONTINUING
OPERATIONS APPLICABLE TO
COMMON SHARES $ 14,732 $ 14,158
Weighted Average common shares
outstanding 9,620 9,620
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Historical $ 1.53
Pro forma $ 1.47
</TABLE>
Page 6<PAGE>
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
Pro Forma Balance Sheet Adjustments:
(A) Preliminary cash proceeds from the sale of ARC PSG. The
purchase price is subject to final cash settlement
adjustments within 30 days of the December 30, 1993 closing
date.
(B) ARC PSG net assets sold.
(C) Preliminary after-tax gain on sale of ARC PSG calculated as
follows:
<TABLE>
<S> <C>
Preliminary cash proceeds $ 59,926
Book value of net assets sold (44,198)
Estimated transaction costs (2,500)
Estimated pre-tax gain on sale 13,228
Tax provision (2,979)
Estimated after-tax gain on sale $ 10,249
</TABLE>
(D) Estimated accrued transaction costs related to the sale of
ARC PSG.
(E) The tax effect of the sale of ARC PSG which will reduce the
deferred tax asset related to the net operating loss
carryforward.
(F) In-substance defeasance of $50,000 principal amount of
senior subordinated notes and related extraordinary loss on
extinguishment of debt:
<TABLE>
<S> <C>
Principal amount defeased $ 50,000
Call premium of 4.667% 2,334
Interest during 30-day call period 439
Cash deposited in trust for defeasance $ 52,773
Extraordinary loss on redemption:
Call premium of 4.667% 2,334
Interest during 30-day call period 439
Unamortized debt issuance cost 483
Pre-tax extraordinary loss 3,256
Tax benefit @ 35% (1,140)
After-tax extraordinary loss $ 2,116
</TABLE>
(G) As a result of the sale of ARC PSG, Sequa was given an
"Adverse Event Offer Notice" by ARC's minority interest
shareholder and Sequa was contractually required to
purchase the 7% minority interest in January 1994.
Book value of 7% minority interest in ARC $ 29,391
Purchase Price (16,383)
Reduction of ARC goodwill $ 13,008
<PAGE>
Pro Forma Income Statement Adjustments
(H) Reduction of goodwill amortization resulting from the
purchase of ARC's minority interest. See pro forma
adjustment (G).
(I) Reduction of interest expense at 10.5% on $50,000 principal
amount of senior subordinated debt which was repaid with
the ARC PSG sale proceeds. See adjustment pro forma (F).
(J) Reduction in interest income at 3% for the net use of cash
resulting from pro forma adjustments (A), (F) and (G).
(K) Reversal of minority interest in ARC. See pro forma
adjustment (G).
(L) Tax effect on pro forma adjustments (I) and (J). No taxes
have been provided for pro forma adjustments (H) and (K)
due to the non-deductibility of goodwill amortization and
minority interest charges.
Page 8
<PAGE>
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(C) Exhibits
10.1 Stock Purchase Agreement, dated December 30, 1993,
pursuant to which Sequa sold ARC PSG to CSC.
Page 9<PAGE>
<PAGE>
SIGNATURES
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.
SEQUA CORPORATION
By:/s/ William P. Ksiazek
William P. Ksiazek
Vice President and Controller
Dated: January 14, 1994
Page 10
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit Page
10.1 Stock Purchase Agreement, dated
December 30, 1993, pursuant to
which Sequa sold ARC PSG to CSC.
Page 11
/TEXT
<PAGE>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<PAGE>
STOCK PURCHASE AGREEMENT
BY AND AMONG
COMPUTER SCIENCES CORPORATION
CSC DOMESTIC ENTERPRISES, INC.
CSC CONSULTING LTD
SEQUA CORPORATION
ATLANTIC RESEARCH CORPORATION
ARC PROFESSIONAL SERVICES GROUP, INC.
ATLANTIC RESEARCH CORPORATION UK LIMITED
ATLANTIC RESEARCH CANADA INC.
ARC INTEROPERABILITY SYSTEMS INTERNATIONAL S.A.
SEQUA LIMITED
CHROMALLOY GAS TURBINE CORPORATION
WARWICK INTERNATIONAL GROUP LIMITED
AND
LADLEBASE LIMITED
December 30, 1993
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Other Definitions and Meanings; Interpretation . . . . . . . . . . .2
1.3 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.3 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . .5
2.4 Determination of Cash Settlement Adjustment. . . . . . . . . . . . .6
2.5 Payment of Estimated Purchase Price. . . . . . . . . . . . . . . . .7
ARTICLE III
Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . .8
3.1 General Representations and Warranties . . . . . . . . . . . . . . .8
(a) Organization and Existence . . . . . . . . . . . . . . . . . .8
(b) Power and Authority. . . . . . . . . . . . . . . . . . . . . .8
(c) Authorization. . . . . . . . . . . . . . . . . . . . . . . . .8
(d) Binding Effect . . . . . . . . . . . . . . . . . . . . . . . .9
(e) No Default . . . . . . . . . . . . . . . . . . . . . . . . . .9
(f) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(g) Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(h) Corporate Books and Records. . . . . . . . . . . . . . . . . 10
(i) Capitalization . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Title to Shares. . . . . . . . . . . . . . . . . . . . . . . 11
(k) Securities Laws. . . . . . . . . . . . . . . . . . . . . . . 11
(l) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Representations and Warranties Concerning
the Disclosure Package and Other
Disclosure Matters . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Receivables. . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Owned Real Estate. . . . . . . . . . . . . . . . . . . . . . 13
(d) Leased Real Estate . . . . . . . . . . . . . . . . . . . . . 13
(e) Personal Property. . . . . . . . . . . . . . . . . . . . . . 13
(f) Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Employee Benefits. . . . . . . . . . . . . . . . . . . . . . 15
(j) Permits and Approvals. . . . . . . . . . . . . . . . . . . . 17
(k) Compliance with Laws . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
(l) Filing of Tax Returns; Payment of Taxes;
Tax Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 18
(m) Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . 18
(n) Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . 19
(o) Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(p) Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . 19
(q) Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(r) Financial Statements . . . . . . . . . . . . . . . . . . . . 20
(s) Federal, State and Foreign Government
Contracts; Commercial Contracts. . . . . . . . . . . . . . . 21
(t) Intercompany Transactions and Transactions
with Certain Persons . . . . . . . . . . . . . . . . . . . . 25
(u) Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . 25
(v) Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . 26
(w) Absence of Undisclosed Liabilities . . . . . . . . . . . . . 26
(x) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 26
(y) Powers of Attorney and Suretyships . . . . . . . . . . . . . 27
(z) Environmental Matters. . . . . . . . . . . . . . . . . . . . 27
3.3 Accuracy of Representations and Warranties . . . . . . . . . . . . 28
3.4 Purchasers' Representations and Warranties . . . . . . . . . . . . 28
(a) Organization and Existence . . . . . . . . . . . . . . . . . 28
(b) Power and Authority. . . . . . . . . . . . . . . . . . . . . 28
(c) Authorization. . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 28
(e) No Default . . . . . . . . . . . . . . . . . . . . . . . . . 29
(f) Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(g) No Knowledge of Sellers' Default . . . . . . . . . . . . . . 29
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i) Investment Representation. . . . . . . . . . . . . . . . . . 29
(j) Regulatory Approvals . . . . . . . . . . . . . . . . . . . . 30
(k) Financing. . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.6 General Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
Actions Prior to Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.1 Corporate Examinations and Investigations. . . . . . . . . . . . . 31
4.2 Cooperation; Consents. . . . . . . . . . . . . . . . . . . . . . . 32
4.3 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 32
4.4 Preservation of Business . . . . . . . . . . . . . . . . . . . . . 33
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.6 Hart-Scott-Rodino Act. . . . . . . . . . . . . . . . . . . . . . . 33
4.7 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . 34
4.8 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.9 Return of Information. . . . . . . . . . . . . . . . . . . . . . . 35
4.10 No Shop. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.11 Pre-Closing Transfer of Assets and Assumption
of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.12 Transfer of ARC/ISI Share Not Owned by ARC . . . . . . . . . . . . 36
4.13 Appraisal of Real Estate . . . . . . . . . . . . . . . . . . . . . 36
<PAGE>
ARTICLE V
The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.2 Time, Date and Place of Closing . . . . . . . . . . . . . . . . 36
5.3A Deliveries at First Closing . . . . . . . . . . . . . . . . . . 37
5.3B Deliveries at Second Closing. . . . . . . . . . . . . . . . . . 39
5.4 Purchasers' Insurance Obligation. . . . . . . . . . . . . . . . 40
5.5 Letters of Credit and Guarantees. . . . . . . . . . . . . . . . 40
ARTICLE VI
Actions After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.1 Further Conveyances and Assurances. . . . . . . . . . . . . . . 41
6.2 Further Consents to Assignment. . . . . . . . . . . . . . . . . 41
6.3 Access to Former Business Records . . . . . . . . . . . . . . . 42
6.4 Change of PSG's Name; Notification. . . . . . . . . . . . . . . 42
6.5 Non-Compete . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.6 Use of Trademark and Trade Names. . . . . . . . . . . . . . . . 43
6.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.8 Post-Closing Cash Receipts. . . . . . . . . . . . . . . . . . . 46
ARTICLE VII
Employees and Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . 46
7.1 Severance Arrangements. . . . . . . . . . . . . . . . . . . . . 46
7.2 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.3 Medical Benefits. . . . . . . . . . . . . . . . . . . . . . . . 47
7.4 Life Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 47
7.5 Accrued Vacation. . . . . . . . . . . . . . . . . . . . . . . . 47
7.6 Workers' Compensation . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1 Conditions to Purchasers' Obligations . . . . . . . . . . . . . 48
8.2 Condition to Sellers' Obligations . . . . . . . . . . . . . . . 49
8.3 Condition Subsequent. . . . . . . . . . . . . . . . . . . . . . 50
8.4 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.5 Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.1 Indemnification of Sellers. . . . . . . . . . . . . . . . . . . 52
9.2 Indemnification of Purchasers . . . . . . . . . . . . . . . . . 53
9.3 Procedure for Claims. . . . . . . . . . . . . . . . . . . . . . 55
9.4 Certain Indemnification Limitations . . . . . . . . . . . . . . 56
9.5 Customer Contracts/Receivables
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 57
<PAGE>
9.6 Indemnification Limitation on Real Estate . . . . . . . . . . . 58
9.7 Indemnification Based Upon Net Damage . . . . . . . . . . . . . 59
9.8 Manner of Indemnification . . . . . . . . . . . . . . . . . . . 59
9.9 Limitation Period . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE X
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.2 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.4 Transfer and Property Taxes . . . . . . . . . . . . . . . . . . 60
10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.6 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.7 No Third Parties. . . . . . . . . . . . . . . . . . . . . . . . 62
10.8 Incorporation by Reference. . . . . . . . . . . . . . . . . . . 62
10.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.10 Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . 63
10.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.12 Complete Agreement. . . . . . . . . . . . . . . . . . . . . . . 64
10.13 Release of News Information . . . . . . . . . . . . . . . . . . 65
10.14 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
APPENDIX A, ANNEXES, EXHIBITS AND SCHEDULES
Appendix A
Annex 1
Annex 2
Exhibit 1.3A
Exhibit 1.3B
Exhibit 2.4
Exhibit 4.12
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is entered into
this 30th day of December, 1993 by and among Computer Sciences
Corporation, a Nevada corporation ("CSC"), CSC Domestic
Enterprises, Inc., a Nevada corporation ("Enterprises") and CSC
Consulting Ltd, a corporation incorporated in the United Kingdom
("Consulting") (CSC, Enterprises and Consulting are sometimes
collectively referred to as "Purchasers"), Sequa Corporation, a
Delaware corporation ("Sequa"), Chromalloy Gas Turbine
Corporation, a Delaware corporation ("Chromalloy") and Atlantic
Research Corporation, a Delaware corporation ("ARC") (Sequa,
Chromalloy and ARC are sometimes collectively referred to herein
as "Sellers"), Sequa Limited, a corporation incorporated in the
United Kingdom ("Sequa Ltd."), Warwick International Group
Limited, a corporation incorporated in the United Kingdom
("Warwick"), Ladlebase Limited, a corporation incorporated in the
United Kingdom ("Ladlebase"), ARC Professional Services Group,
Inc., a Maryland corporation ("PSG"), Atlantic Research
Corporation UK Limited, a corporation incorporated in the United
Kingdom ("ARC/UK"), Atlantic Research Canada Inc., a corporation
incorporated in Canada ("ARC/Canada") and ARC Interoperability
Systems International S.A., a corporation incorporated in Greece
("ARC/ISI") (ARC/Canada, ARC/ISI and ARC/UK are hereinafter
collectively referred to as the "Foreign Subsidiaries").
WITNESSETH:
WHEREAS, Sequa and Chromalloy indirectly own in excess of
ninety percent of ARC's common stock and control ARC; and
WHEREAS, ARC is the owner of all of the Seven Hundred (700)
outstanding shares (the "PSG Shares") of the common stock of PSG,
par value Ten Cents ($.10) per share; and
WHEREAS, Ladlebase and Warwick, subsidiaries of Sequa Ltd.
and Affiliates of Sellers, are the legal and beneficial owners of
all of the One Hundred (100) outstanding shares ("ARC/UK Shares")
of the common stock of ARC/UK, par value One (1) Pound Sterling
per share; and
WHEREAS, PSG is the owner of all of the Twenty-One Million
Eight Hundred Fifty Thousand Eight Hundred and Sixty (21,850,860)
outstanding shares ("ARC/Canada Shares") of the common stock of
ARC/Canada, no par value per share; and
WHEREAS, PSG is the owner of or has control with respect to
all of the Ten Thousand (10,000) outstanding shares (the "ARC/ISI
Shares") of the common stock of ARC/ISI, par value One (1)
Drachma per share; and
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WHEREAS, Sequa desires to cause ARC to sell, and ARC desires
to sell, the PSG Shares to Enterprises and Sequa desires to cause
its subsidiaries to sell the ARC/UK Shares to Consulting, the
ARC/Canada Shares and the ARC/ISI Shares to CSC, and Purchasers
desire to purchase the PSG Shares, the ARC/UK Shares, the
ARC/Canada Shares and the ARC/ISI Shares; and
WHEREAS, Chromalloy has agreed to become a party to and be
bound by this Agreement in order to induce Purchasers to purchase
such shares.
Terms and Conditions
NOW, THEREFORE, in consideration of the promises and of
the mutual covenants hereinafter set forth, and intending to be
legally bound, the parties hereby agree as follows:
ARTICLE I
General Provisions
1.1 Definitions: Appendix A to this Agreement sets forth
the definitions of certain terms used in this Agreement. Those
terms shall have the meanings set forth in Appendix A where used
herein and identified with initial capital letters.
1.2 Other Definitions and Meanings: Interpretation: For
purposes of this Agreement, the term "parties" means (except
where the context otherwise requires) Purchasers and Sellers,
Sequa Ltd., Warwick, Ladlebase, PSG, and the Foreign
Subsidiaries; the term "person" includes any natural person,
firm, association, partnership, corporation, or other entity
other than the parties; and the words "hereof", "herein",
"hereby" and other words of similar import refer to this
Agreement as a whole, including all Appendices, Annexes, Exhibits
and Schedules hereto. Other terms defined herein shall have the
meanings set forth herein. The table of contents and the
headings of the Articles and Sections of this Agreement have been
included herein for convenience of reference only and shall not
be deemed to affect the meaning of the operative provisions of
this Agreement. All dollar amounts referred to herein are in
United States Dollars unless otherwise noted.
1.3 Knowledge: Where Sellers' representation contained in
this Agreement is qualified to Sellers' "knowledge" (or words of
similar import), such expression shall include any actual
knowledge of: (a) the directors, officers, and key employees of
Sellers and Sequa Ltd.; (b) in any context other than Section
3.2(s) hereof, those persons employed by PSG or the Foreign
Subsidiaries who are listed on Exhibit l.3A hereto; and (c) in
the context of Section 3.2(s) hereof, those persons employed by
PSG or the Foreign Subsidiaries who are listed on Exhibit l.3B
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hereto. Sellers shall not be deemed to have actual knowledge
solely by reason of the actual knowledge of those persons
employed by PSG or the Foreign Subsidiaries who are not listed on
Exhibit l.3A hereto or, in the context of Section 3.2(s) hereof,
who are not listed on Exhibit l.3B hereto.
ARTICLE II
Purchase and Sale
2.1 Transactions:
(a) On and subject to the terms and conditions of this
Agreement, at the Closing:
(1) Consulting will purchase and CSC will cause
Consulting to purchase from Warwick and Ladlebase, and Warwick
and Ladlebase will, and Sequa and Sequa Ltd. will cause Warwick
and Ladlebase to, sell, convey, transfer, assign and deliver to
Consulting, all of the ARC/UK Shares, free and clear of any
Encumbrance and in consideration therefor CSC will pay to an
account designated by Warwick and Ladlebase, the amount of Three
Hundred Fifty Thousand United States Dollars ($350,000) (the "UK
Price");
(2) CSC will purchase from PSG, and Sellers shall
cause PSG to, and PSG shall, sell, convey, transfer, assign and
deliver to CSC all of the ARC/Canada Shares and all of the
ARC/ISI Shares not held by Mr. Edward T. Jones pursuant to
Section 4.12 hereof, free and clear of any Encumbrance and in
consideration therefor CSC will pay, to an account designated by
ARC, the amount of One Million United States Dollars ($1,000,000)
less the principal amount of indebtedness as of September 24,
1993 referred to in Section 2.1(e) hereof (the "Canada Price")
and Thirty Thousand United States Dollars ($30,000) (the "ISI
Price") respectively; and
(3) Enterprises will purchase and CSC will cause
Enterprise to purchase from ARC, and Sequa and Chromalloy shall
cause ARC to, and ARC shall, sell, convey, transfer, assign and
deliver to Enterprises all of the PSG Shares, free and clear of
any Encumbrance and in consideration therefor Enterprises will
pay to an account designated by ARC, the amount of Sixty-Four
Million, Six Hundred and Twenty Thousand United States Dollars
($64,620,000) (the "Estimated PSG Price"), as adjusted pursuant
to Section 2.5 hereof.
(b) In each case, the payments to be made under
paragraphs (a)(1) through (a)(3) above, totaling Sixty-Five
Million Six Hundred Seventy-Eight Thousand Seven Hundred Sixty-
Six United States Dollars ($65,678,766) (the "Aggregate Purchase
Price") as adjusted pursuant to Section 2.5 hereof, shall be made
as provided in Section 5.3A(g)(1) and Section 5.3B(d)(1) hereof.
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(c) Notwithstanding the consummation of the
transactions set forth in paragraphs (a)(1) through (a)(3) above,
the Sellers will retain all rights, title and interest in and to
the Excluded Assets and will continue to be and will remain
solely responsible for the payment, performance or discharge, as
the case may be, of the Excluded Liabilities.
(d) Notwithstanding consummation of the transactions
set forth in paragraphs (a)(1) through (a)(3) above, PSG shall
have assumed and agreed to pay, perform and discharge all of the
debts, obligations and liabilities relating to the real estate
mortgage for the Sterling Real Estate, the principal amount of
which mortgage on the date hereof is Three Million Nine Hundred
Ninety-One Thousand Nine Hundred Seventy-Four United States
Dollars and Fifty-Seven Cents ($3,991,974.57) and is more
particularly described in Schedule 4.11 hereto, which obligation
of PSG shall survive the Closing.
(e) Notwithstanding consummation of the transactions
set forth in paragraphs (a)(1) through (a)(3) above, ARC/Canada
shall, after the Closing Date, continue to be responsible for
payment, performance and discharge, in accordance with its terms
and conditions, of that certain indebtedness due to the
Government of Alberta, Canada in the principal amount of Three
Hundred Twenty-One Thousand Two Hundred Thirty-Four United States
Dollars ($321,234) as of September 24, 1993.
2.2 Excluded Assets: For purposes of this Agreement, the
term "Excluded Assets" means the following properties, rights,
interests and assets, which will be transferred from PSG and the
Foreign Subsidiaries, as the case may be, to ARC or Sequa
immediately prior to Closing:
(a) all cash and cash equivalent items held by or on
behalf of PSG as of the Closing Date, other than petty cash of
PSG and those cash and cash equivalent items held by or on behalf
of the Foreign Subsidiaries, including, without limitation,
checking accounts, bank accounts (other than Bank of Boston
Account No. 55080200), certificates of deposit, time deposits,
securities (other than the ARC/Canada Shares and the ARC/ISI
Shares), and the proceeds of accounts receivable including
uncashed checks in payment thereof received by or on behalf of
PSG on the Closing Date or prior thereto;
(b) except as provided under Section 6.6 hereof, the
names and trademarks "ARC", "Atlantic Research", "Sequa" and
related trademarks, corporate names, and trade names
incorporating "Atlantic Research" or "Sequa" or the stylized
"ARC" or "Sequa" logos, which are used by Sequa, ARC or the
Foreign Subsidiaries as part of any trademark or trade name;
(c) those assets, if any, whether or not used or held
for use in connection with the conduct of the business of PSG and
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the Foreign Subsidiaries, as agreed upon by Purchasers and the
Sellers, specifically identified on Schedule 2.2(c) hereto;
(d) all documents and records relating to pending
lawsuits, to which Sequa, Chromalloy and/or ARC is a party and
relating to PSG or any of the Foreign Subsidiaries and to which
either PSG or any of the Foreign Subsidiaries is a party as of
the Closing Date;
(e) all rights incident, directly or indirectly, to
insurance policies, proceeds, loss funds claims, litigation and
insurance accounts relating to the operations and business prior
to the Closing Date of PSG, the Foreign Subsidiaries, ARC and
their parent corporations, subsidiaries and Affiliates, other
than those relating to medical claims and life insurance for
which PSG and the Foreign Subsidiaries are responsible under
Sections 7.3 and 7.4 hereof, and those reflected as an asset, or
as the reduction of a liability, on the balance sheet of PSG and
the Foreign Subsidiaries referred to in Section 3.2(r) hereof,
(f) all rights with respect to corporate and other
services provided to PSG or the Foreign Subsidiaries by or on
behalf of ARC and/or Sequa before the Closing including credits
due under the Sequa long distance telephone program and other
master Sequa programs all as more particularly described in
Schedule 2.2(f) hereto, other than those reflected as an asset,
or as the reduction of a liability on the balance sheet of PSG
and the Foreign Subsidiaries referred to in Section 3.2(r)
hereof;
(g) the leasehold interests, including subleases,
sublease receivables, notes receivable and guarantees relating to
the land, building, fixtures and improvements located at 1577
Spring Hill Road, Vienna, Virginia 22182;
(h) the note receivable from Gainesville Associates;
and
(i) subject to Purchasers' right of access pursuant to
Section 6.3 hereof, all books, documents and records of whatever
kind and nature and in whatever form, relating to Excluded Assets
and Excluded Liabilities.
2.3 Excluded Liabilities: For the purposes hereof,
"Excluded Liabilities" means the following debts, liabilities and
obligations as the same shall exist as of the Closing Date:
(a) all liabilities and obligations incurred in
connection with the conduct of the business of PSG and the
Foreign Subsidiaries to and including the Closing Date which have
been fully discharged or satisfied at or prior to the Closing
Date;
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(b) all foreign and federal income taxes relating to
all periods of time ending on or before the Closing Date;
(c) except to the extent paid by insurance or third
party recoveries, all liabilities and obligations arising out of,
or resulting from, or relating to claims, whether founded upon
negligence, breach of warranty, strict liability in tort, or
other legal theory, seeking compensation or recovery for or
relating to injury to person or damage to real or personal
property which occurs prior to the Closing, but only to the
extent that the foregoing occurs prior to the Closing; and
(d) lease obligations from and after the Closing Date
with respect to the land, building, fixtures and improvements
located at 1577 Spring Hill Road, Vienna, Virginia 22812.
2.4 Determination of Cash Settlement Adjustment: The Cash
Settlement Adjustment shall equal the amount (which may be either
a negative or positive number) of the net cash flow received by
and expended by Sellers in the course of PSG's and the Foreign
Subsidiaries' operations between September 24, 1993 and the
Closing, determined as follows:
(a) Cash Settlement Statement: Not more than thirty
(30) days after the Closing Date, Sellers will prepare and
deliver to Purchasers a proposed Cash Settlement Statement
reflecting the net change from September 24, 1993 through the
Closing Date in the accounts carried on PSG's internal
consolidating balance sheet as "Cash," "Intercompany Account -
Sequa Corporation," "Intercompany Account - ARC & Aerospace," and
"Intercompany Account - Janus". In determining the net change in
the foregoing accounts (1) non-cash transactions, such as any
allocation of Sequa general and administrative expense and costs
of funds, shall be ignored, (2) cash and cash equivalents held in
bank accounts outside of the United States of America on the
Closing Date shall be excluded from the calculation, (3) Sellers
shall be credited with the amount of petty cash held by PSG that
is retained by PSG at the Closing, (4) the funds received on
behalf of PSG as a result of the payments made under Sections
2.1(a)(1) and (a)(2) hereof shall be excluded and (5) the change
in the account balances shall be presented by major transaction
type in the format shown in Exhibit 2.4 hereto. A negative Cash
Settlement Adjustment shall result in a reduction from the
Aggregate Purchase Price by such amount. Conversely, a positive
Cash Settlement Adjustment shall result in an addition to the
Aggregate Purchase Price by such amount.
(b) Review by Enterprises: Following receipt of the
proposed Cash Settlement Statement, Enterprises shall have a
period of thirty (30) days to review the proposed Cash Settlement
Statement. During such period, Sellers shall make available
their accounting staff and their internal auditors to respond to
any questions of Enterprises relating to the proposed Cash
Settlement 6
<PAGE>
Statement and the entries thereon. At or before the end of such
thirty (30) day period, Enterprises will either: (i) accept the
proposed Cash Settlement Statement in its entirety, in which case
the final Cash Settlement Adjustment will equal the balance set
forth on the proposed Cash Settlement Statement; or (ii) deliver
to ARC notice and a detailed explanation of those items in the
proposed Cash Settlement Statement which Enterprises disputes, in
which case the aggregate amounts not affected by the disputed
items will be deemed to be as set forth on the proposed Cash
Settlement Statement. If Enterprises delivers the notice
referred to in (ii) above, then within a period of thirty (30)
days from the date of such delivery, the parties will attempt to
resolve in good faith any disputed items, and the Cash Settlement
Adjustment will equal the balance set forth on the Cash
Settlement Statement produced through such resolution. Failing
such resolution, the unresolved disputed items will be referred
to final binding resolution to a nationally recognized firm of
certified public accountants other than Deloitte & Touche and
Arthur Andersen & Co., selected by lot by Sellers and
Enterprises, and the Cash Settlement Adjustment will equal the
balance set forth on the Cash Settlement Statement produced
through such resolution.
(c) Payment of and Interest on Amount of Cash
Settlement Adjustment: If the Aggregate Purchase Price plus or
minus the Cash Settlement Adjustment, as the case may be, is
greater than the payment made at Closing (as described in Section
2.l(b) hereof), then Enterprises will pay ARC by means of wire
transfer of immediately available funds to an account designated
by ARC the amount of such difference plus interest to date on the
amount of the difference within five (5) business days after
final agreement by the parties as to the Cash Settlement
Statement. If the Aggregate Purchase Price plus or minus the
Cash Settlement Adjustment, as the case may be, is less than the
payment made at Closing (as described in Section 2.1(b) hereof),
then Sellers will pay to Enterprises the amount of such
difference plus interest on the amount of the difference within
five (5) business days after final agreement by the parties as to
the Cash Settlement Statement. In either case, the rate of
interest shall be equal to the Applicable Rate. Interest shall
accrue for the period from the Closing Date to the day before the
date on which the payment provided for under this Section 2.4(c)
is paid.
2.5 Payment of Estimated Purchase Price: Not later than the
Closing Date, Purchasers and Sellers shall agree upon a
preliminary estimate of the amount of the Cash Settlement
Adjustment, based upon information supplied by Sellers as of the
most recent date practicable. If such preliminary estimate
indicates that Sellers have received more cash flow than they
have expended for PSG's and the Foreign Subsidiaries' operations
since September 24, 1993, such that the preliminary estimate
indicates that the Cash Settlement Adjustment will be a negative
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number, then the term "Preliminary Cash Settlement Adjustment"
shall equal such negative number and onthe Closing Date,
Enterprises will pay, by means of a wire transfer of immediately
available funds to an account designated by ARC, an amount equal
to the Estimated PSG Price less the amount of the Preliminary
Cash Settlement Adjustment. Otherwise, the Preliminary Cash
Settlement Adjustment shall be deemed to equal zero and on the
Closing Date, Enterprises will pay by means of a wire transfer of
immediately available funds to an account designated by ARC the
Estimated PSG Price.
ARTICLE III
Representations and Warranties
3.1 General Representations and Warranties: Sequa,
Chromalloy and ARC each, jointly and severally, represent and
warrant to Purchasers as follows:
(a) Organization and Existence: Sequa is a corporation
duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Chromalloy is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Delaware. ARC is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Delaware. PSG is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland. ARC/UK is a corporation duly organized, validly
existing and in good standing under the laws of the United
Kingdom. PSG and each Foreign Subsidiary is qualified to do
business in each jurisdiction in which either PSG or any Foreign
Subsidiary owns or leases any property or maintains a place of
employment.
(b) Power and Authority: Sequa, Chromalloy, ARC,
Warwick, Ladlebase, PSG and each Foreign Subsidiary have full
corporate power and authority to execute, deliver, and perform
this Agreement and all other agreements, certificates or
documents to be delivered in connection herewith, including,
without limitation, the other agreements, certificates and
documents contemplated hereby (collectively "Other Agreements").
PSG and each Foreign Subsidiary have full corporate power and
authority to own, lease and operate their respective assets, and
to conduct their respective businesses, as the same are currently
being conducted.
(c) Authorization: The execution, delivery and
performance of this Agreement and all Other Agreements, by Sequa,
Chromalloy, ARC, Warwick, Ladlebase, PSG and each Foreign
Subsidiary have been duly authorized by all requisite shareholder
and corporate action.
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(d) Binding Effect: Upon execution and delivery by
Sequa, Chromalloy, ARC, Warwick, Ladlebase, PSG and each Foreign
Subsidiary, this Agreement and the Other Agreements will be and
constitute the valid, binding and legal obligations of Sequa,
Chromalloy, ARC, Warwick, Ladlebase, PSG and each Foreign
Subsidiary, enforceable against each of them in accordance with
the terms hereof and thereof, except as the enforceability hereof
or thereof may be subject to the effect of: (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally; and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(e) No Default: Neither the execution and delivery of
this Agreement or the Other Agreements nor the performance by
Sequa, Chromalloy, ARC, Warwick, Ladlebase, PSG or any Foreign
Subsidiary of any or all of their respective obligations
hereunder or thereunder: (i) violate or breach, or, with the
giving of notice or the passage of time or both, will violate or
breach, or otherwise constitute or give rise to a default under,
the terms or provisions of their respective organizational or
corporate governance documents or, subject to obtaining any and
all consents disclosed in Schedule 3.1(f) of the Disclosure
Package, of any contract, commitment or other obligation to which
any of Sequa, Chromalloy, ARC, Warwick, Ladlebase, PSG or any of
the Foreign Subsidiaries is a party or by which any of them or
their property is bound or necessary for the operation of the
business of Sequa, Chromalloy, ARC, PSG or any of the Foreign
Subsidiaries following the Closing; (ii) create or result in the
creation of any Encumbrance on any of their assets; or (iii)
violate any laws, orders, injunctions or decrees to which Sequa,
Chromalloy, ARC, Warwick, Ladlebase, PSG or any Foreign
Subsidiary or their property is subject.
(f) Consents: To the best of Sellers' knowledge, Schedule
3.1(f) of the Disclosure Package sets forth all consents,
approvals, authorizations and other requirements prescribed by
any law, rule or regulation which must be obtained or satisfied
by Warwick, Ladlebase, PSG, any of the Foreign Subsidiaries or
any of the Sellers, including without limitation all consents and
approvals of customers or clients under existing contracts or
proposals for work or receivables for past work, in connection
with the execution, consummation or performance of this Agreement
and the transactions contemplated by this Agreement.
(g) Finders: Except for The Chase Manhattan Bank, N.A.
and Chase Securities, Inc., whose fees will be the sole
responsibility of Sellers, none of Sequa, Chromalloy, ARC,
Warwick, Ladlebase, PSG or any of the Foreign Subsidiaries have
engaged or is directly or indirectly obligated to anyone acting
as a broker, finder, or in any other similar capacity in
connection with this Agreement or the transactions contemplated
hereby. 9
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(h) Corporate Books and Records: Sellers have furnished
or made available or caused to be furnished or made available to
Purchasers for their examination the following, each of which is,
and will be maintained until the Closing Date, accurate and
complete:
(1) Copies of the organizational and corporate
governance documents of PSG and each Foreign Subsidiary;
(2) The minute books of PSG and each Foreign
Subsidiary (in the case of ARC/ISI and ARC/Canada, copies of such
minute books) containing all proceedings, consents, actions and
meetings of their respective shareholders and Board of Directors;
(3) Copies of all permits, orders and consents
with respect to PSG and each Foreign Subsidiary and its
securities issued by any administrative agency or governmental
body regulating the issuance or transfer of such securities and
all applications for such permits, orders and consents;
(4) The stock transfer books of PSG and each
Foreign Subsidiary setting forth all transfers of its securities;
and
(5) Copies of all outstanding stock certificates.
(i) Capitalization: The authorized capital stock of PSG
and ARC/UK is as set forth in Schedule 3.1(i) of the Disclosure
Package. All such outstanding shares are duly authorized,
validly issued and outstanding, fully paid and nonassessable and,
except for such outstanding shares, there are no shares of
capital stock or other equity securities or other equity interest
of PSG or ARC/UK outstanding;
(1) There are no outstanding or authorized
subscriptions, warrants, options, calls or commitments of any
character relating to or entitling any person or entity to
purchase or otherwise acquire any capital stock (including the
PSG Shares and ARC/UK Shares) or other equity securities or other
equity interest of PSG or ARC/UK;
(2) There are no outstanding obligations or
securities convertible into or exchangeable for shares of any
capital stock (including the PSG Shares and ARC/UK Shares) or
other equity securities or other equity interests of PSG or
ARC/UK or any commitments of any character relating to or
entitling any person to purchase or otherwise acquire any such
obligation or securities;
(3) There are no preemptive or similar rights to
subscribe for or to purchase any capital stock (including the PSG
Shares and ARC/UK Shares) or other equity securities or other
equity interests of PSG or ARC/UK;
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(4) There are no other commitments of any kind or
type for the issuance of any capital stock (including the PSG
Shares and ARC/UK Shares) or other equity securities or other
equity interests of PSG or any of the Foreign Subsidiaries; and
(5) PSG has not entered into any agreement to
register any outstanding capital stock (including the PSG Shares
and ARC/UK Shares) or other equity securities or other equity
interests of PSG under the Act.
(j) Title to Shares: ARC has good and valid title
to the PSG Shares and Warwick and Ladlebase have good and valid
title to the ARC/UK Shares. Upon consummation of the purchase
and sale contemplated herein, CSC will acquire from PSG good and
valid title to the ARC/Canada Shares and the ARC/ISI Shares other
than the one (1) ARC/ISI Share held by Mr. Edward T. Jones
pursuant to Section 4.12 hereof, Consulting will acquire from
Warwick and Ladlebase good and valid title to the ARC/UK Shares,
and Enterprises will acquire from ARC good and valid title to
such PSG Shares, in each instance free and clear of all liens and
other Encumbrances excepting only such restrictions upon
transfer, if any, as may be imposed by foreign, federal and state
securities laws.
(k) Securities Laws: The PSG Shares were issued
in full compliance with all applicable federal and state
securities laws. The ARC/UK Shares were issued in full
compliance with all applicable securities laws and rules. The
Sellers have obtained all necessary permits and other
authorizations or orders of exemption as may be necessary or
appropriate under any and all applicable federal, state or
foreign securities laws with respect to the transactions
contemplated herein.
(l) Subsidiaries: Except for ARC/Canada and
ARC/ISI, PSG does not currently hold and has not in the past two
years held a majority ownership interest in any subsidiary.
Schedule 3.1(1) of the Disclosure Package sets forth all
corporations, partnerships and other businesses (including
without limitation joint ventures) (collectively, the "Joint
Ventures") in which PSG or any of the Foreign Subsidiaries
currently holds, or in the past two years has held, directly or
indirectly, an equity, partnership, profit, joint venture or
similar interest, together with the date that such interest was
sold or terminated. ARC/Canada and ARC/ISI are direct wholly-
owned subsidiaries of PSG except for the one ARC/ISI Share held
by Antonio A. Savoca on the date hereof, which will be held by
Mr. Edward T. Jones on the Closing Date. Schedule 3.1(1) of the
Disclosure Package sets forth the jurisdiction of incorporation
of each of ARC/Canada and ARC/ISI, each jurisdiction in which
such subsidiary is qualified to do business and the number of
shares of such subsidiary
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outstanding. All outstanding shares of such subsidiaries have
been duly and validly authorized and issued, are fully paid and
non-assessable, and, except as set forth on Schedule 3.1(1) of
the Disclosure Package, the outstanding shares of each of
ARC/Canada and ARC/ISI are owned by PSG free and clear of any
Encumbrances. There are no subscriptions, options, warrants,
calls, commitments or other rights of any kind outstanding for
the purchase of, nor any securities convertible or exchangeable
for, any equity securities of either ARC/Canada or ARC/ISI. Each
of ARC/Canada and ARC/ISI is a corporation duly incorporated,
validly existing and in good standing under the jurisdiction of
its incorporation, with all requisite corporate power to conduct
its business as it is presently being conducted and to own and
lease its properties and assets. Each of ARC/Canada and ARC/ISI
is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction set forth in Schedule
3.1(1) of the Disclosure Package.
3.2 Representations and Warranties Concerning the
Disclosure Package and Other Disclosure Matters: ARC has
delivered to Purchasers simultaneously with the execution and
delivery of this Agreement, a document entitled the "ARC
Professional Services Group, Inc. and Foreign Subsidiaries
Disclosure Package" (the "Disclosure Package"). Sequa,
Chromalloy and ARC each represent and warrant to Purchasers, both
jointly and severally, with respect to the Disclosure Package and
the matters contained herein and therein as follows:
(a) Receivables: Each of PSG and the Foreign Subsidiaries
has good title to all of its notes receivable, accounts
receivable and trade acceptances receivable, whether billed or
unbilled (collectively "Receivables"), and such Receivables have
arisen in the ordinary course of business of PSG and each of the
Foreign Subsidiaries and arose out of the sale of goods and/or
rendering of services by PSG and each of the Foreign
Subsidiaries. Except as otherwise disclosed in Schedule 3.2(s)
of the Disclosure Package, to the best of Sellers' knowledge, the
Receivables are not subject to any pending counterclaims or
pending offsets, other than normal allowances consistent with
past practices. To the best of Sellers' knowledge: (i) the
reserves reflected on the Balance Sheet are adequate; and (ii)
the Receivables recorded on the Balance Sheet and the reserves
related thereto have been recorded in accordance with PSG's and
the Foreign Subsidiaries' accounting principles, policies and
practices and in accordance with generally accepted accounting
principles. Likewise, PSG and each of the Foreign Subsidiaries
has good and valid title to all employee advances and loans.
(b) Inventories: PSG and each of the Foreign Subsidiaries
has good title to all of its inventories of every type and
description, except for items which, because of progress
payments, are the property of the United States Government or
other governments.
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(c) Owned Real Estate: Schedule 3.2(c) of the Disclosure
Package identifies each parcel of real property currently owned
by PSG or that will be owned by PSG immediately prior to the
Closing (collectively, the "Owned Real Estate"). Except as
otherwise disclosed on Schedule 3.2(c) of the Disclosure Package
and Schedule 4. 11 hereto, PSG will, as of the Closing, have good
and marketable title to all of the Owned Real Estate, including
the Sterling Real Estate, free and clear of all Encumbrances.
Neither PSG nor any Foreign Subsidiary has received any currently
existing and effective notice that it is in violation of any
applicable building code, zoning ordinance or other law or
regulation relating to the Owned Real Estate.
(d) Leased Real Estate: ARC has furnished to Purchasers
true and complete copies of all outstanding leases relating to
real property (the "Leased Real Property") to which PSG or any of
the Foreign Subsidiaries is a party, and a list of such leases is
included in Schedule 3.2(d) of the Disclosure Package. The
Leased Real Property constitutes all of the real property
occupied or utilized by PSG or any Foreign Subsidiary for which
rent is paid. All such leases are valid and in full force and
effect in all respects, and there does not exist any monetary
default or, to Sellers' knowledge, any other default or event
that, with notice or lapse of time or both, would constitute a
default by any party or that would cause the acceleration of any
obligation of a party under any of such leases or that would
cause the creation of an Encumbrance.
(e) Personal Property: Schedule 3.2(e) of the Disclosure
Package lists all of the tangible personal property carried on
PSG's or any of the Foreign Subsidiaries' books, all of which is
owned by PSG or the Foreign Subsidiaries. Schedule 3.2(e) of the
Disclosure Package also lists all of the tangible personal
property leased by PSG or any of the Foreign Subsidiaries.
Except as disclosed on Schedule 3.2(e) of the Disclosure Package,
with respect to all of the tangible personal property owned by
PSG or any of the Foreign Subsidiaries (the "Personal Property"),
all of the tangible personal property leased by PSG or any of the
Foreign Subsidiaries (the "Leased Property"), and all of the
vehicles leased from United States Fleet Leasing utilized by
employees of PSG or the Foreign Subsidiaries (the "Leased
Vehicles"): (1) PSG and each of the Foreign Subsidiaries has good
and marketable title to all of the Personal Property free and
clear of any Encumbrance; (2) PSG and the Foreign Subsidiaries
each has the right under valid and existing leases to possess and
control as lessee all of the Leased Property subject to the terms
of such leases; (3) PSG and the Foreign Subsidiaries are not, to
the best of Sellers' knowledge, in default under any material
nonmonetary provision of any lease relating to the Leased
Property or to the Leased Vehicles, and, to Sellers' knowledge,
no existing condition exists which, with the giving of notice or
the passage of time, or both, would constitute such a material
13
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default; (4) PSG and the Foreign Subsidiaries are not in default
under any monetary provision of anyleases relating to the Leased
Property or to the Leased Vehicles; and (5) the Personal
Property, the Leased Property and the Leased Vehicles constitute
all of the material tangible property other than Owned Real
Estate, Leased Real Estate, inventories and customer furnished
facilities and equipment used in the operation of PSG's or any of
the Foreign Subsidiaries business.
(f) Liabilities: Except as otherwise disclosed on
Schedule 3.2(f) of the Disclosure Package, none of PSG and the
Foreign Subsidiaries are in default under any note, bond,
debenture, mortgage, indenture, security agreement, guaranty, or
other instrument of indebtedness, and to the best of Sellers'
knowledge no existing condition exists which, with the giving of
notice or the passage of time, or both, would constitute such a
default.
(g) Litigation: Except as otherwise disclosed on Schedule
3.2(g) of the Disclosure Package: (1) there presently exists no
litigation, proceeding, action, material claim or investigation
pending in law or in equity against, or to the best of Seller's
knowledge which could have a material adverse impact on, PSG or
any of the Foreign Subsidiaries, or any of their assets,
properties or business nor, to Sellers' knowledge, is there any
of the foregoing threatened; and (2) PSG, the Foreign
Subsidiaries and their assets, properties or business are not
subject to any currently existing and effective notice, writ,
injunction, order, or decree of any court, agency, or other
governmental authority. PSG and the Foreign Subsidiaries are not
in default with respect to any currently existing and effective
notice, writ, injunction, order or decree known to or served upon
PSG or any of the Foreign Subsidiaries by any court or by any
arbitrator or any Federal, state, local or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
(h) Contracts: Except for the contracts listed on
Schedule 3.2(s) of the Disclosure Package, Schedule 3.2(h) of the
Disclosure Package sets forth a true and correct list of each
contract, agreement, purchase order, lease, license, indenture or
written commitment for goods, materials, supplies or services, to
which PSG or any Foreign Subsidiary is a party or by which any of
their assets are bound, except that such Schedule 3.2(h) of the
Disclosure Package is not required to set forth agreements for
the purchase by PSG or any Foreign Subsidiary of goods,
materials, supplies or services in the ordinary course of
business involving less than $50,000 per annum in consideration
in each such case. The contracts, agreements, purchase orders,
leases, licenses, indentures or commitments which are required to
be identified in Schedule 3.2(h) of the Disclosure Package are
hereinafter referred to as the "Contracts". True and complete
copies of each of the Contracts, and all written amendments,
14
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modifications or other alterations thereof, have been made
available to the Purchasers by the Sellers for review.
Except as otherwise disclosed on Schedule 3.2(h) of
the Disclosure Package: (1) each of the Contracts is a valid and
binding obligation of PSG and/or the respective Foreign
Subsidiary entered into in the ordinary course of business and,
to Sellers' knowledge, of the other party or parties thereto,
except as the same may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting creditors' rights, including
without limitation, the effective statutory or other laws
regarding fraudulent conveyances and preferential transfers, and
(ii) general principles of equity upon specific enforcement,
injunctive relief and other equitable remedies (regardless of
whether enforcement is considered in proceedings at law or in
equity); (2) neither PSG nor any of the Foreign Subsidiaries has
terminated, canceled or substantially modified any of the
Contracts and PSG and the Foreign Subsidiaries have not received
any notice that the other party to any of the Contracts has
terminated or canceled such Contract or to the best of Sellers'
knowledge intends to or has threatened to do so; and (3) neither
PSG, the Foreign Subsidiaries nor, to Sellers' knowledge, any
other party is in default under any provision of any such
Contract.
(i) Employee Benefits:
(1) Except as otherwise disclosed on Schedule
3.2(i) of the Disclosure Package, there are no pension,
retirement, profit sharing, employee stock option or stock
purchase, bonus, deferred compensation, incentive compensation,
life insurance, health insurance, fringe benefits, severance, or
other employee or retiree benefit plans or agreements relating or
applicable to PSG, the Foreign Subsidiaries or to their current
or former employees. No amount payable under any plan or
agreement disclosed on Schedule 3.2(i) of the Disclosure Package
(including but not limited to individual employment and severance
agreements) under current law constitutes a payment that is
contingent upon the transactions provided for under this
Agreement that would be a "parachute payment" for purposes of
Code Section 280G.
(2) Schedule 3.2(i) of the Disclosure Package
identifies each Pension Plan and each Welfare Plan (the Welfare
Plans together with the Pension Plans, collectively referred to
as the "ERISA Plans") established, maintained or contributed to
by PSG or to which any ERISA Affiliate has contributed on behalf
of PSG employees during the five years preceding the date hereof.
(3) Except as indicated on Schedule 3.2(i) of the
Disclosure Package, PSG has delivered to Purchasers true and
correct copies of the following:
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(A) each ERISA Plan listed on Schedule 3.2(i) of
the Disclosure Package and all amendments thereto;
(B) each trust agreement and annuity contract
(or any other funding instrument) pertaining to any of the
ERISA Plans, including all amendments to
such documents;
(C) the most recent determination letter
issued by the Internal Revenue Service (the "IRS") with respect
to each of the Pension Plans;
(D) the three most recent actuarial valuation
reports for each ERISA Plan for which an actuarial valuation
report is required to be prepared; and
(E) the two most recent Annual Reports (IRS Forms
5500 series), including Schedules A and B and plan audits, if
applicable, required to be filed with respect to each ERISA Plan.
(4) Except as indicated on Schedule 3.2(i) of the
Disclosure Package, to the best of Sellers' knowledge, no
reportable event as defined in Section 4043(b) of ERISA, whether
or not the reporting requirement with respect thereto has been
waived by the PBGC, has occurred or is continuing with respect to
any Pension Plan. No prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code has occurred
with respect to any Pension Plan.
(5) Neither PSG nor any ERISA Affiliate is now,
or during the preceding five years has been obligated as, a
sponsor of or contributing employer to either a Multi-Employer
Plan, a defined benefit plan (as defined in Section 3(35) of
ERISA), or a plan subject to Title IV of ERISA.
(6) Except as indicated on Schedule 3.2(i) of the
Disclosure Package, there is no action, suit or claim pending
(other than routine claims for benefits) or, to Sellers'
knowledge, threatened against any ERISA Plan or the assets of any
ERISA Plan. No civil or criminal action brought pursuant to the
provisions of Title I, Subtitle 8, Part 5 of ERISA is pending or,
to Sellers' knowledge, threatened against any fiduciary of any
ERISA Plan. Neither Sellers nor PSG has received any written
notice of or otherwise knows of any direct or indirect pending or
on-going audit, investigation or examination by any governmental
or quasigovernmental agency of the ERISA Plans or any fiduciary
thereof.
(7) All of the ERISA Plans currently comply, and
have complied during the past five years, in all material
respects, both as to form and operation, with the applicable
provisions of ERISA, the Code and other applicable Federal laws
other than for any such failure to comply that would not result
in any material 16
<PAGE>
cost or financial liability to PSG or the ERISA Plan and that
would not adversely affect the tax qualification of the ERISA
Plan. A favorable determination as to the qualification under
Section 401(a) of the Code of each of the Pension Plans as
amended through the dates set forth on Schedule 3.2(i) of the
Disclosure Package was made by the IRS, and a recognition of
exemption from Federal Income Taxation under Section 501(a) of
the Code of each of the funded Welfare Plans, if any, has been
made by the IRS. Schedule 3.2(i) of the Disclosure Package sets
forth each application made by PSG or that PSG currently plans to
make to request a determination as to the qualification of the
Pension Plans, as amended. Schedule 3.2(i) of the Disclosure
Package sets forth, to the best of Sellers' knowledge, any
currently existing accumulated funding deficiency under any of
the Pension Plans of PSG or of any ERISA Affiliate and any
underfunding liability that would exist under Title IV of ERISA
if any of the Pension Plans of PSG or of any ERISA Affiliate were
terminated as of the Closing Date.
(8) There are no health plans or commitments
covering former employees of PSG.
(j) Permits and Approvals: Except as otherwise disclosed
on Schedule 3.2(j) of the Disclosure Package, insofar as PSG and
the Foreign Subsidiaries are concerned to the best of Sellers'
knowledge: (1) PSG and the Foreign Subsidiaries are not in
default under any of their permits, approvals or qualifications,
nor is there any existing condition which, with the giving of
notice or the passage of time, or both, would constitute such a
default; (2) other than those items listed on Schedule 3.2(j) of
the Disclosure Package, no permit, approval or qualification of
any government or governmental unit, agency, board, body or
instrumentality, whether federal, state or local, is necessary
for the conduct of the business of PSG or the Foreign
Subsidiaries as same currently is being conducted; and (3) there
is no lawsuit or proceeding pending or, to Sellers' knowledge,
threatened with respect to any of the foregoing.
(k) Compliance with Laws: Except as otherwise
disclosed on Schedule 3.2(k) of the Disclosure Package, to the
best of Sellers' knowledge: (1) PSG and the Foreign Subsidiaries
are conducting and have conducted their business in material
compliance with all laws, ordinances, codes, restrictions,
regulations and other legal requirements applicable to the
conduct of their respective businesses; and (2) any noncompliance
disclosed on Schedule 3.2(k) of the Disclosure Package has not
had a material adverse effect on PSG's or the Foreign
Subsidiaries' financial condition, operations, assets or
business. There are no lawsuits or proceedings pending or, to
Sellers' knowledge, threatened with respect to the foregoing.
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(l) Filing of Tax Returns: Payment of Taxes: Tax
Liens : Except as otherwise disclosed on Schedule 3.2(1) of the
Disclosure Package, all Tax Returns required to be filed by PSG
and/or the Foreign Subsidiaries, including any federal
consolidated income tax return required to be filed by an
Affiliated Group with respect to any period ending on or prior to
the Closing Date during which any of PSG and the Foreign
Subsidiaries was a member, have been or will be filed on or
before the date on which such Tax Returns are required to be
filed. All such Tax Returns are correct and complete: (i) in all
respects in so far as they relate to PSG and the Foreign
Subsidiaries; and (ii) in all material respects so far as they do
not relate to PSG and the Foreign Subsidiaries. The assets of
PSG and the Foreign Subsidiaries are not and will not be
encumbered by any liens arising out of or relating to unpaid
Taxes. Except as otherwise provided in Section 6.7 hereof, all
Taxes due and payable by PSG and the Foreign Subsidiaries for any
period ending at any time on or prior to the Closing Date have
been or will be paid on or before the dates on which same are
due. All income taxes owed by any Affiliated Group have been
paid for each taxable period during which any of PSG or the
Foreign Subsidiaries was a member of such group. PSG's and the
Foreign Subsidiaries' accruals for Taxes other than foreign and
federal income taxes are adequate and have been determined and
posted consistent with past practice. No consent has been filed
under Code Section 341(f) concerning collapsible corporations
that would affect PSG and the Foreign Subsidiaries.
(m) Ordinary Course: Except as otherwise
expressly set forth in Schedule 3.2(m) of the Disclosure Package,
since September 24, 1993: (i) the businesses of PSG and the
Foreign Subsidiaries have been conducted in the ordinary and
usual course as conducted during the quarter ended September 24,
1993; (ii) each of the Foreign Subsidiaries has not purchased or
otherwise acquired for value, any of their shares; (iii) PSG and
each of the Foreign Subsidiaries have not entered into any
contract, agreement or transaction, or made to or received from
any of the Sellers or any Affiliate of Sellers any transfer or
distribution of funds, property or other assets, and have not
been assessed or charged for any liability, allocation or
expense, except in the ordinary course of business, consistent
with the past practices; (iv) PSG and each of the Foreign
Subsidiaries has not paid or granted, or made any commitment to
pay or grant, any bonus or any increase in the salary, wages or
benefits to the officers or directors of PSG and each of the
Foreign Subsidiaries in excess of the amounts or levels under
agreements or arrangements existing on September 24, 1993; and
(v) PSG and each of the Foreign Subsidiaries has not guaranteed
any debt for borrowed money, or borrowed money or incurred any
debt for borrowed money except borrowings and intercompany
transfers for working capital from the Sellers made in the
ordinary course of business consistent with past practice.
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Schedule 3.2(m) of the Disclosure Package describes, to the best
of Sellers' knowledge, each dispute with any vendor of PSG or the
Foreign Subsidiaries where the amount in dispute is in excess of
$25,000 or where the vendor has threatened to terminate the
relationship. Since September 24, 1993, Sellers, PSG and the
Foreign Subsidiaries have received no written notice that any
vendor pi= to discontinue its relationship with PSG and the
Foreign Subsidiaries.
(n) Labor Matters: Except as otherwise disclosed
in Schedule 3.2(n) of the Disclosure Package, to the best of
Sellers' knowledge PSG and the Foreign Subsidiaries are in
compliance with all applicable laws, rules or regulations
respecting employment and employment practices, terms and
conditions of employment and wages and hours, and to Sellers'
knowledge, PSG and the Foreign Subsidiaries have not engaged in
any unfair or illegal labor practice. Neither PSG nor any
Foreign Subsidiary is a party to any collective bargaining
agreement with any labor organization. No organization or
representation question is pending respecting the employees of
PSG, and no such question has been raised within the preceding
three years. To Sellers' knowledge, there is no valid basis for
any claim, grievance, arbitration, negotiation, suit, action or
charge of or by any employee of PSG which reasonably could have a
material adverse effect on the business, financial condition or
results of operations of PSG if it were resolved in a manner
adverse to PSG. No complaint is pending against PSG before the
National Labor Relations Board or any state or local agency.
Except as set forth on Schedule 3.2(n) of the Disclosure Package,
to Sellers' knowledge, there have been no claims, complaints or
reports concerning PSG or its employees made by or against PSG
that were made more than two years before the date of this
Agreement and have not been finally resolved or that were made
during the past two years, in any such case pursuant to workers
compensation laws, Title VII, OSHA. or NLRA. Except as otherwise
disclosed in Schedule 3.2(n) of the Disclosure Package, there is
no labor strike, dispute, work slowdown, work stoppage or other
job action pending or, to Sellers' knowledge, threatened against
PSG or the Foreign Subsidiaries.
(o) Employees: Except as otherwise disclosed in
Schedule 3.2(o) of the Disclosure Package, neither ARC nor Sequa
has any employment contract, written or otherwise, with any
employee or former employee of PSG or the Foreign Subsidiaries.
Further, except as disclosed on Schedule 3.2(o) of the Disclosure
Package, since September 24, 1993, no officer of either PSG or
any of the Foreign Subsidiaries has given written notice of
intention to discontinue employment.
(p) Trademarks: Schedule 3.2(p) of the Disclosure
Package completely and accurately describes in all material
respects all trade names, trademarks, services marks, and
copyrights and their registrations, owned by PSG and each of the
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Foreign Subsidiaries or in which any of them have any rights or
licenses, together with a brief description of each. To the best
of Sellers' knowledge, PSG and each of the Foreign Subsidiaries
have not infringed and are not now infringing on any trade name,
trademark, service mark or copyright belonging to any other
person, firm or corporation and none of Sellers, PSG or any
Foreign Subsidiary have received any notice or claim of
infringement and Sellers have no knowledge of any infringement by
a third party of the trade names, trademarks, service marks or
copyrights set forth on Schedule 3.2(p) of the Disclosure
Package. Except for software licenses entered into in the
ordinary course of business for which no fees are payable and
except as set forth in Schedule3.2(p) of the Disclosure Package,
PSG and the Foreign Subsidiaries are not a party to any license,
agreement, or arrangement, whether as licensor, licensee or
otherwise, with respect to any trademarks, service marks, trade
names, or applications therefor, or any copyrights.
(q) Patents: Schedule 3.2(q) of the Disclosure
Package accurately and completely identifies all patents, and
applications for patents, owned by PSG and the Foreign
Subsidiaries or in which any of them have any rights or licenses.
Except as set forth in Schedule 3.2(g) of the Disclosure Package,
there have not been any infringement actions or other judicial,
arbitration, or other adversary proceedings concerning the
patents or applications for patents listed in Schedule 3.2(q) of
the Disclosure Package. Each patent application is awaiting
action by its respective patent office, except as otherwise
indicated in Schedule 3.2(q) of the Disclosure Package. None of
Sellers, PSG or the Foreign Subsidiaries have received any
written notice or other written communication and Sellers have no
knowledge of any fact, document or instrument, asserting or
indicating that the manufacture, use, or sale of the inventions
covered by the patents and applications for patents listed in
Schedule 3.2(q) of the Disclosure Package violate or infringe on
any patent or any proprietary or personal right of any person,
firm or corporation. None of Sellers, PSG or the Foreign
Subsidiaries, have received any notice or other written
communication and Sellers have no knowledge of any fact, document
or instrument asserting or indicating that either PSG or any of
the Foreign Subsidiaries has infringed or is now infringing on
any patent or other right listed on Schedule 3.2(q) of the
Disclosure Package. Except as set forth in Schedule 3.2(q) of
the Disclosure Package, neither PSG nor any of the Foreign
Subsidiaries is a party to any license agreement or arrangement,
whether as licensee, licensor, or otherwise, with respect to any
patent, application for patent, invention, design, model,
process, trade secret, or formula.
(r) Financial Statements: Schedule 3.2(r) of the
Disclosure Package sets forth the unaudited consolidated balance
sheet of PSG and the Foreign Subsidiaries as of September 24,
1993 (the "Balance Sheet"), and the related unaudited
20
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consolidated statement of operating income for the nine months
ended September 24, 1993. Except as indicated on Schedule 3.2(r)
of the Disclosure Package, said financial statements:
(1) were derived from the books and records of
PSG and the Foreign Subsidiaries;
(2) were prepared in accordance with accounting
principles, policies and practices of PSG and the Foreign
Subsidiaries consistently applied, except as specifically noted
thereon;
(3) to the best of Sellers' knowledge, fairly
present PSG's and the Foreign Subsidiaries' consolidated
financial condition and the consolidated results of their
operations as at the date thereof and for the period covered
thereby;
(4) to the best of Sellers' knowledge, contain and
reflect all necessary adjustments and accruals for a fair
presentation of their consolidated financial condition and the
consolidated results of their operations for the period covered by
said financial statements; and
(5) contain and reflect adequate provisions for
all reasonably anticipated liabilities for all Taxes with respect
to the nine-month period then ended (except that the balance sheet
as of September 24, 1993 may not reflect adequate provisions for
income tax liabilities which are retained by Sellers)
(s) Federal, State and Foreign Government
Contracts: Commercial Contracts:
(1) Government Contracts: None of the Foreign
Subsidiaries is a party to a Government Contract. A list of each
and every Government Contract to which PSG is a party is set forth
in Schedule 3.2(s) of the Disclosure Package. Schedule 3.2(s) of
the Disclosure Package sets forth a list of each and every
contract, order, arrangement or commitment (a "Foreign Government
Contract") to which any of the Foreign Subsidiaries is a party
pursuant to which such Foreign Subsidiary is to perform services
or deliver products, as either a prime or subcontractor, on behalf
of or to, or for which the Foreign Subsidiary has not received
final payment for such services or product from, a foreign
government, foreign governmental agency or foreign governmental
entity (a "Foreign Government"). Except as set forth in Schedule
3.2(s) of the Disclosure Package:
(A) to the best of Sellers' knowledge, PSG
and the Foreign Subsidiaries have complied in all material
respects with all terms and conditions of each Government Contract
or Foreign Government Contract, including all clauses, provisions
and requirements incorporated expressly, by reference or by
operation of law therein;
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(B) to the best of Sellers' knowledge, PSG
and the Foreign Subsidiaries have complied in all material
respects with all requirements of statute, rule, regulation, order
or agreement pertaining to each Government Contract or Foreign
Government Contract;
(C) to the best of Sellers' knowledge, all
representations and certifications executed, acknowledged or set
forth in or pertaining to each Government Contract or Foreign
Government Contract were current, accurate and complete as of
their effective date, and PSG and the Foreign Subsidiaries have
complied in all material respects with all such representations
and certifications;
(D) neither the U.S. Government, any State
Government, any Foreign Government nor any prime contractor,
subcontractor or other person has notified Sellers or PSG or any
of the Foreign Subsidiaries in writing or, to the best of Sellers'
knowledge, orally, that PSG or any of the Foreign Subsidiaries is
currently in breach of or is currently in violation of any
statute, rule, regulation, certification, representation, clause,
provision or requirement;
(E) no termination for convenience or
termination for default has been issued that has not been finally
resolved and no cure notice or show cause notice has been issued
that is currently pending;
(F) PSG and the Foreign Subsidiaries have not
received a Notice of Intent to Disallow Costs, a Notice of
Contract Costs Suspended and/or Disapproved, or an equivalent
written notice issued by the U.S. Government, any State
Government, any Foreign Government or any prime contractor which
has not been resolved to the mutual satisfaction of PSG and the
U.S. Government, State Government, Foreign Government or prime
contractor issuing such notice; and
(G) within the preceding 12 months no money
due to PSG or any of the Foreign Subsidiaries has been (or has
attempted to be) withheld or set off.
(2) Investigations and Audits: Except as set
forth in Schedule 3.2(s) of the Disclosure Package:
(A) neither PSG, any of the Foreign
Subsidiaries, any of PSG's Contracting Affiliates nor any of PSG's
or any of the Foreign Subsidiaries' directors, officers or
employees, and to the best of Sellers' knowledge, none of their
agents or consultants, is (or within the last three years has
been) under administrative, civil or criminal investigation,
indictment or information, audit or internal investigation with
respect to any
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alleged irregularity, misstatement or omission arising under or
relating to any Government Contract or any Foreign Government
Contract;
(B) within the last three years, neither PSG
nor any of PSG's Contracting Affiliates has made a voluntary
disclosure to the U.S. Government or any State Government with
respect to any alleged irregularity, misstatement or omission
arising under or relating to a Government Contract that could
reasonably be expected to lead to any administrative, civil or
criminal investigation, indictment or information, audit or
internal investigation; and
(C) Sellers have no knowledge of any
irregularity, misstatement or omission arising under or relating
to any Government Contract or any Foreign Government Contract that
has lead or could reasonably be expected to lead, either before or
after the Closing Date, to any of the consequences set forth in
(A) or, with respect to any Government Contract, (B) above or any
other damage, penalty assessment, recoupment of payment or
disallowance of cost.
(3) Financing Arrangements and Claims: Except as
set forth in Schedule 3.2(s) of the Disclosure Package, there
exist:
(A) no receivables financing arrangements
with respect to performance of any Government Contract, any
Foreign Government Contract or any Commercial Contract (as defined
in Section 3.2(s)(5) hereto);
(B) no outstanding claims pending against PSG
or any of the Foreign Subsidiaries in an amount greater than
$10,000, by the U.S. Government, any State Government or Foreign
Government or by any prime contractor, subcontractor, vendor or
other third party, arising under or relating to any Government
Contract or any Foreign Government Contract;
(C) to the best of Sellers' knowledge, no
facts upon which such a claim arising under or relating to any
Government Contract or any Foreign Government Contract may
reasonably be expected to be asserted in the future;
(D) no pending disputes between PSG and the
U.S. Government, any State Government or any prime contractor,
subcontractor or vendor under the "Disputes" clause of any
Government Contract;
(E) to the best of Seller's knowledge, no
facts over which such a dispute may reasonably be expected to be
asserted in the future;
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(F) no financial interest of PSG or any of
the Foreign Subsidiaries in any pending claim or in any potential
claim of which Sellers have knowledge against the U.S. Government,
any State Government or Foreign Government or any prime
contractor, subcontractor or vendor arising under or relating to
any Government Contract or any Foreign Government Contract; and
(G) to the best of Seller's knowledge, no
dispute with any customer under a Foreign Government Contract of
which the customer has given written notice where the amount of
dispute is in excess of $25,000.
(4) No Suspension or Debarment: Except as set
forth in Schedule 3.2(s) of the Disclosure Package, neither PSG,
nor any of its directors, officers, employees or Contracting
Affiliates is (or within the last three years has been) suspended
or debarred from doing business with the U.S. Government or any
State Government, or has been declared non-responsible or
ineligible for U.S. Government or State Government contracting.
To the best of Sellers' knowledge, no facts currently exist that
would call into question that PSG presently is a responsible
contractor within the meaning of FAR 9.104. Except as set forth in
Schedule 3.2(s) of the Disclosure Package, none of the Foreign
Subsidiaries and to the best of Sellers' knowledge, none of their
respective directors, officers or employees is (or within the last
three years has been) prohibited from doing business with, for or
on behalf of any foreign government, foreign governmental agency
or foreign governmental entity.
(5) Commercial Contracts: Schedule 3.2(s) of the
Disclosure Package sets forth a list of each and every contract,
order, arrangement, or commitment that is not a Government
Contract or Foreign Government Contract (a "Commercial Contract")
to which PSG or any of the Foreign Subsidiaries is a party
pursuant to which PSG or the Foreign Subsidiary is to perform
services or deliver products or for which PSG or the Foreign
Subsidiary has not received final payment. True and complete
copies of each of the Commercial Contracts, and all written
amendments, modifications or other alterations thereof, have been
made available to the Purchasers by the Sellers for review.
Except as otherwise disclosed on Schedule 3.2(s) of
the Disclosure Package: (1) each of the Commercial Contracts is a
valid and binding obligation of PSG and/or the respective Foreign
Subsidiary entered into in the ordinary course of business and, to
the best of Sellers' knowledge, of the other party or parties
thereto, except as the same may be limited by: (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application relating to or affecting creditors' rights,
including without limitation, the effective statutory or other
laws regarding fraudulent conveyances and preferential transfers;
and (ii) general principles of equity upon
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specific enforcement, injunctive relief and other equitable
remedies (regardless of whether enforcement is considered in
proceedings at law or in equity); (2) neither PSG nor any of the
Foreign Subsidiaries has terminated, canceled or substantially
modified any of the Commercial Contracts and PSG and the Foreign
Subsidiaries have not received any notice that the other party to
any of the Commercial Contracts has terminated or canceled such
Commercial Contracts or to the best of Seller's knowledge intends
to or has threatened to do so; (3) neither PSG, the Foreign
Subsidiaries nor, to the best of Sellers' knowledge, any other
party is in default under any provision of any Commercial
Contract; and (4) to the best of Seller's knowledge there is no
written dispute with any customer under any Commercial Contract
where the amount in dispute is in excess of $25,000.
(t) Intercompany Transactions and Transactions with
Certain Persons: Schedule 3.2(t) of the Disclosure Package lists or
otherwise describes all material transactions or categories thereof
between Sellers or any of their Affiliates, on the one hand, and PSG
or any Foreign Subsidiary, on the other hand, that remain executory
on the date hereof, and all liabilities or obligations of Sellers or
any of their Affiliates to PSG or any Foreign Subsidiary, and all
liabilities or obligations of PSG or any Foreign Subsidiary to the
Sellers or any of their Affiliates. Except as set forth on Schedule
3.2(t) of the Disclosure Package, no officer, director or employee
of Sellers or any of their Affiliates, or of PSG or any Foreign
Subsidiary, is: (a) a party to any agreement, arrangement or
understanding with PSG or any Foreign Subsidiary, other than ones
relating to compensation for services as an officer, director or
employee of PSG or of any of the Foreign Subsidiaries; (b) to the
best of Sellers' knowledge, a supplier of goods or services to PSG
or any Foreign Subsidiary; or (c) to the best of Sellers' knowledge,
the lessor of any real or personal property to PSG or any Foreign
Subsidiary.
(u) Personnel: Set forth on Schedule 3.2(u) of the
Disclosure Package is a true and complete list of:
(1) the name of each consultant employed by PSG or
one of the Foreign Subsidiaries;
(2) the name and title or job description of each
director and officer of PSG and each of the Foreign Subsidiaries; and
(3) a list of all past employees that were employed
by PSG at any site of employment subject to the Workers Adjustment
and Retraining Act ("WARN") whose employment with PSG terminated
within the ninety (90) days preceding the date of this Agreement, the
site of employment where any such employee was employed, the date of
such termination, and a brief description of the circumstances of
such termination.11
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(v) Bank Accounts: Set forth on Schedule 3.2(v) of
the Disclosure Package is a true and complete list of:
(1) the name of each bank with which PSG or any
Foreign Subsidiary has an account or safe deposit box, the
identifying numbers or symbols thereof and the name of each person
authorized to draw thereon or to have access thereto; and
(2) the name of each person, if any, holding tax or
other powers of attorney from PSG or any Foreign Subsidiary and a
summary of the terms thereof.
(w) Absence of Undisclosed Liabilities:
Except as set forth on Schedule 3.2(w) of the Disclosure Package,
neither PSG nor any Foreign Subsidiary has any indebtedness, known
or unknown, or to the best of Sellers' knowledge any liability,
regardless of whether such indebtedness or liability is accrued,
fixed or contingent, other than: (i) liabilities that are reflected
on the Balance Sheet; and (ii) liabilities arising in the ordinary
course of business subsequent to September 24, 1993, consistent with
past practice, none of which liabilities arising after the date of
September 24, 1993, individually or collectively, materially
adversely affect the financial condition, operations, assets, or
business of PSG or any Foreign Subsidiary.
(x) Insurance: Set forth on Schedule 3.2(x) of the
Disclosure Package is a complete list and description of all of PSG's
and the Foreign Subsidiaries' policies of insurance, together with
a description of premiums with respect thereto providing for fire,
property, casualty, business interruption, personal or product
liability, workers' compensation, errors and omissions and other
forms of insurance coverage. All such policies are outstanding and
in full force and effect, and, except for those policies so indicated
on Schedule 3.2(x) of the Disclosure Package, the consummation of the
transactions contemplated hereby will not cause a cancellation or
reduction in the coverage of such policy. There was no material
inaccuracy in any application for any such insurance coverage. Such
insurance is in amounts believed by Sellers and PSG to be reasonable
and consistent with the amounts required by PSG's and the Foreign
Subsidiaries' vendors, lessors and customers. Except for any claim
under such policies that is not being contested by the insurance
carrier, there is no existing claim, action, suit or proceeding based
upon any of such policies of insurance, and Sellers have no knowledge
of the existence of any facts that would constitute a valid basis for
any such claim, action, suit or proceeding. There is no notice of
any pending or threatened termination or premium increase with
respect to any of such policies, and PSG and each of the Foreign
Subsidiaries is in material compliance with all conditions contained
therein. PSG and
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each of the Foreign Subsidiaries has not, during the current or the
prior two fiscal years, been denied or had revoked or rescinded any
policy of insurance. Except as set forth on Schedule 3.2(x) of the
Disclosure Package, no existing policy of PSG or any of the Foreign
Subsidiaries is terminable or cancelable as a result of the
transactions provided for in this Agreement.
(y) Powers of Attorney and Suretyships: Except as
disclosed in Schedule 3.2(y) of the Disclosure Package, neither PSG
nor any Foreign Subsidiary has any general or special powers of
attorney outstanding (whether as grantor or grantee thereof) or has
any material obligation or material liability (whether actual,
accrued, accruing, contingent or otherwise) as guarantor, surety, co-
signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any person, corporation, partnership, joint venture,
association, organization or other entity, except as provided by the
terms and conditions of the Contracts, Government Contracts, Foreign
Government Contracts, Commercial Contracts, leases of Real Property,
leases of Leased Vehicles and leases of Property and as endorser
or maker of checks or letters of credit, respectively, endorsed or
made in the ordinary course of business.
(z) Environmental Matters: Except as set forth on
Schedule 3.2(z) of the Disclosure Package:
(1) To the best of Seller's knowledge, there are no
current Environmental Requirements requiring any removal,
remediation, repair, construction or capital expenditures with
respect to the Owned Real Estate or Real Property (the "Real
Property"), and all operations conducted on the Real Property are and
have been conducted in compliance with all Environmental
Requirements.
(2) To the best of Sellers' knowledge, there are no
Hazardous Materials or containers formerly containing Hazardous
Materials located on, within, or below the Real Property.
(3) No notice of any violation or alleged violation
of the Environmental Requirements by PSG or the Foreign Subsidiaries
or relating to the Real Property or its use has been received by
Sequa, Chromalloy, ARC or PSG, within the past two (2) years or has
been received by Sequa, Chromalloy, ARC or PSG prior to such time and
has not been resolved to the satisfaction of the person issuing such
notice or, to the knowledge of Sellers, has been received by any
prior owner or occupant of the Real Property and there is no notice,
writ, injunction, order, decree, or judgment outstanding, or any
claim, action, suit, proceeding, liability or investigation pending
or, to the knowledge of Sellers, threatened, against PSG or the
Foreign Subsidiaries or relating to the ownership, use, maintenance
and operation of the Real Property,
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or to Hazardous Materials used, stored or generated there, nor, to
the knowledge of Sellers, is there any basis for any such action,
suit, claim, proceeding or investigation being instituted or filed.
3.3 Accuracy of Representations and Warranties: No
representation, warranty or other statement made by Sequa,
Chromalloy, ARC, PSG or any of the Foreign Subsidiaries in this
Agreement, the Other Agreements or the Disclosure Package provided
to Purchasers contains any untrue statement of a material fact, or
omits to state any material fact necessary to make such
representation, warranty or other statement not misleading, in light
of the circumstances in which same was made.
3.4 Purchasers' Representations and Warranties:
Purchasers hereby represent and warrant to Sequa, ARC, PSG and the
Foreign Subsidiaries as follows:
(a) Organization and Existence: CSC is a corporation
duly organized, validly existing, and in good standing under the laws
of the State of Nevada and is duly qualified to do business as a
foreign corporation in all other states necessary for the
consummation of the transactions contemplated by this Agreement.
Enterprises is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada and is duly
qualified to do business as a foreign corporation in all other states
necessary for the consummation of the transactions contemplated by
this Agreement. Consulting is a corporation duly organized, validly
existing, and in good standing under the laws of the United Kingdom
and is duly qualified to do business in each jurisdiction necessary
for the consummation of the transactions contemplated by this
Agreement.
(b) Power and Authority: CSC, Consulting and
Enterprises have full corporate power and authority to execute,
deliver and perform this Agreement and the Other Agreements.
(c) Authorization: The execution, delivery and
performance of this Agreement and the Other Agreements by Purchasers
have been duly authorized by all requisite corporate action.
(d) Binding Effect: Upon execution and delivery by
Purchasers, this Agreement and the Other Agreements will be and
constitute the valid, binding and legal obligations of Purchasers
enforceable against Purchasers in accordance with the terms hereof
and thereof, except as the enforceability hereof and thereof may be
subject to the effect of. (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally; and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
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(e) No Default: Neither the execution and delivery
of this Agreement or the Other Agreements nor the performance by
Purchasers of any or all of their obligations hereunder or
thereunder: (i) violate or breach, or with the giving of notice or
the passage of time or both, will violate or breach, or otherwise
constitute or give rise to a default under, the terms or provisions
of Purchasers' Certificate of Incorporation or By-Laws or of any
material contract, commitment, or other obligation to which any of
the Purchasers is a party or by which any of them or any of their
property is bound; (ii) require the consent of any party to any
material contract or other agreement to which any of the Purchasers
is a party by which any of them or any of their property is bound;
or (iii) violate any laws, orders, injunctions or decrees to which
any of the Purchasers or any of their property is subject.
(f) Finders: Except for Smith Barney Shearson, whose
fee will be paid by Purchasers, Purchasers have not engaged, and are
not directly or indirectly obligated to, anyone acting as a broker,
finder or in any other similar capacity in connection with this
Agreement or the transactions contemplated herein.
(g) No Knowledge of Sellers' Default: Based solely
upon: (i) those documents provided to Purchasers by Sellers as set
forth on Schedule 3.4(g) hereto; (ii) those matters set forth on the
Schedules hereto; and (iii) those matters of which Purchasers are
informed of in writing or for which Purchasers grant a written
waiver, Purchasers have no knowledge that any of Sequa's,
Chromalloy's or ARC's representations and warranties contained in
this Agreement, the Other Agreements or the Disclosure Package are
untrue, inaccurate or incomplete or that Sequa, Chromalloy, ARC,
Sequa Ltd., Warwick and Ladlebase, PSG or the Foreign Subsidiaries
is in default under any term or provision of this Agreement or the
Other Agreements.
(h) Litigation: There are no suits, actions,
arbitrations, or legal, administrative, or other proceedings, or
governmental investigations pending or, to the best knowledge of
Purchasers, threatened against Purchasers that are reasonably likely
to affect their ability to perform their respective obligations under
this Agreement. To the best knowledge of Purchasers, there is no
judgment, order, writ, injunction or decree of any federal, state,
local or foreign court or governmental agency to which Purchasers,
their business, or assets are subject that could affect their ability
to perform their respective obligations under this Agreement.
(i) Investment Representation:
(1) Purchasers understand that none of the PSG
Shares, the ARC/UK Shares, the ARC/Canada Shares or the ARC/ISI
Shares have been registered under the Act, in reliance upon
exemptions contained in the Act, and cannot be offered for sale,
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sold or otherwise transferred unless such shares subsequently are so
registered or qualify for exemption from registration under the Act.
(2) Purchasers are acquiring the PSG Shares, the
ARC/UK Shares, the ARC/Canada Shares, and the ARC/ISI Shares in good
faith solely for their respective accounts, for investment and not
with a view toward resale or other distribution within the meaning
of the Act, and the PSG Shares, the ARC/UK Shares, the ARC/Canada
Shares and the ARC/ISI Shares will not be offered for sale, sold or
otherwise transferred without either a registration or exemption from
registration under the Act.
(j) Regulatory Approvals: All consents, approvals,
authorizations and other requirements prescribed by any law,
regulation or rule which must be obtained or satisfied by Purchasers
and which are necessary for the execution and delivery by Purchasers
of this Agreement and all other documents and the consummation of the
transactions contemplated in this Agreement have been obtained or
satisfied, except as set forth on Schedule 3.4(j) hereto.
(k) Financing: Purchasers have all funds, or binding
commitments to obtain all funds, required to consummate the
transactions contemplated hereby.
3.5 Survival: The representations and warranties made
by the parties to this Agreement (including the Schedules and
Exhibits) or any certificate, instrument or other document delivered
in connection herewith shall, subject to the provisions of
Purchasers' representation provided in Section 3.4(g) hereof, survive
any inspection or investigation by Purchasers and the Closing Date
for a period of two (2) years from the Closing Date, except for the
representations and warranties: (i) set forth in Section 3.1(a)
through Section 3.1(d) hereof, Section 3.1(k) hereof, and Section
3.4(a) through Section 3.4(d) hereof and in any related Schedule and
certificate, which shall survive indefinitely; (ii) set forth in
Section 3.2(a) and Section 3.2(s) hereof, which shall survive for a
period of three (3) years from the Closing Date; and (iii) set forth
in Section 3.2(l), Section 3.2(u)(3) and Section 3.2(z) hereof and
in any Schedule or certificate, which shall survive until thirty (30)
days after the expiration of the applicable statute of limitations
as it may have been or may be extended. Notwithstanding the
foregoing, any such representation or warranty shall survive such
termination date if any party, prior to such termination date, shall
have advised the other party in writing of an alleged breach thereof,
specifying in reasonable detail the representation or warranty
alleged to be inaccurate or alleged to have been breached and the
basis for such allegation. The covenants of Sellers and Purchasers
shall continue after the Closing Date in full force and effect in
accordance with their terms.
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3.6 General Disclaimer: EXCEPT AS PROVIDED ABOVE IN
SECTIONS 3.1, 3.2 AND 3.3 OF THIS AGREEMENT AND EXCEPT FOR ANY
WARRANTIES OF OR CONCERNING TITLE CONTAINED IN ANY DEED OR OTHER
INSTRUMENT OF CONVEYANCE EXECUTED AND DELIVERED, OR TO BE EXECUTED
AND DELIVERED, PURSUANT TO THIS AGREEMENT, PURCHASERS UNDERSTAND AND
AGREE THAT SELLERS, PSG, THE FOREIGN SUBSIDIARIES NOR ANYONE ACTING
ON THEIR BEHALF MAKES ANY EXPRESS OR IMPLIED REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO THE LIABILITIES BUSINESS, ASSETS,
PROPERTIES (CURRENT, FIXED, PERSONAL, REAL, TANGIBLE AND INTANGIBLE)
REFERRED TO HEREIN, INCLUDING BUT NOT LIMITED TO, CAPACITY,
SUITABILITY, UTILITY, SALABILITY, AVAILABILITY, COLLECTABILITY,
OPERATION, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PURPOSE OR
A PARTICULAR PURPOSE. SUBJECT TO SUCH EXCEPTIONS AND TO THE
INDEMNIFICATION PROVIDED HEREIN, PURCHASERS ASSUME THE FULL RISK OF
FUTURE PROSPECTS, CONTINUATION OF RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS AS WELL AS THE BUSINESS AND FINANCIAL RISK, INCLUDING THE
NEED FOR SUBSTANTIAL WORKING CAPITAL, IN CONNECTION WITH OPERATION
OF PSG AND THE FOREIGN SUBSIDIARIES AFTER CLOSING.
EXCEPT AS SET FORTH IN ARTICLE III OF TIES AGREEMENT AND
THE APPENDICES, SCHEDULES AND ANNEXES HERETO, THE DISCLOSURE PACKAGE
AND THE DOCUMENTS AND INSTRUMENTS DEL PURSUANT HERETO, INCLUDING
WITHOUT LIMITATION THOSE DOCUMENTS THAT ARE IDENTIFIED ON SCHEDULE
3.4(g) HERETO AS HAVING BEEN DELIVERED, OR DELIVERED AT THE CLOSING,
PSG AND EACH OF THE FOREIGN SUBSIDIARIES EXPRESSLY DISCLAIM, AND
PURCHASERS ACCEPT SUCH DISCLAIMER, WITH RESPECT TO ANY AND ALL
OBLIGATION FOR ANY REPRESENTATIONS AND WARRANTIES, EXPRESS OR
IMPLIED, CONTAINED IN, OR FOR OMISSIONS FROM, ANY OR ORAL
COMMUNICATIONS HERETOFORE TRANSMITTED TO OR IN ANY MANNER OBTAINED
BY PURCHASERS IN THE COURSE OF ITS INVESTIGATION OF PSG, THE FOREIGN
SUBSIDIARIES, THE ASSETS, THE LIABILITIES, AND THE BUSINESS OF PSG
AND EACH OF THE FOREIGN SUBSIDIARIES.
ARTICLE IV
Actions Prior to Closing
4.1 Corporate Examinations and Investigations: Prior
to the Closing Date, Purchasers shall be entitled, through their
employees and representatives, including, without limitation, Gibson,
Dunn & Crutcher and Deloitte and Touche, to make such investigations
of the property and plant and such examination of the books, records
and financial condition of PSG and each of the Foreign Subsidiaries
as Purchasers may reasonably request. Any such investigation and
examination shall be conducted at reasonable times and under
reasonable circumstances and Sellers, PSG and each of the Foreign
Subsidiaries shall cooperate fully therein. In order that Purchasers
may have the full opportunity to make such business, accounting and
legal review, examination or investigation as they may wish of the
business and affairs of PSG and each of the
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Foreign Subsidiaries, Sellers and PSG shall furnish the
representatives of Purchasers during such period with all such
information concerning the affairs of PSG as such representatives may
reasonably request and cause their respective officers, employees,
consultant, agents, accountants and attorneys to cooperate fully with
such representatives in connection with such review and examination
and to make full disclosure to Purchasers of all facts affecting the
financial condition and business operations of PSG and each of the
Foreign Subsidiaries. Certain of PSG's and the Foreign Subsidiaries'
contracts are classified or secret and may require a "Need to Know"
and a security clearance to enable Purchasers or their agents to
review such contracts and any related documents, facilities and the
products. All information and documentation obtained by Purchasers
as a result of the foregoing investigation and examination shall be
governed by the terms of the Confidentiality Agreement dated August
16, 1993 between CSC and Sequa, as referred to in Section 10.11
hereof, and by Section 4.8 hereof.
4.2 Cooperation; Consents: Prior to the Closing Date,
each party shall cooperate with the other to the end that the parties
shall: (i) in a timely manner make all necessary filings with, and
conduct negotiations with, all governmental and regulatory bodies or
other persons the consent or approval of which, or a license or
permit from which, is required for the consummation of the
transactions contemplated by this Agreement; and (ii) provide to each
other such information as the other party may reasonably request in
order to enable it to prepare such filings and to conduct such
negotiations. The parties shall also use their respective best
efforts to expedite the review process and to obtain all such
necessary consents, approvals, licenses and permits as promptly as
practicable. To the extent permitted by any applicable statute or
ordinance, the parties shall request that each governmental body or
other person whose review, consent or approval is requested treat as
confidential all information which is submitted to it.
4.3 Conduct of Business: From the date hereof through
the Closing Date, unless otherwise agreed in writing by Purchasers,
Sellers shall cause PSG and each of the Foreign Subsidiaries to
conduct their respective businesses in the ordinary course as
conducted at the date hereof. From the date hereof through the
Closing Date, unless otherwise agreed in writing by Purchasers,
Sellers shall ensure that: (i) each of the Foreign Subsidiaries will
not purchase or otherwise acquire for value, any of their shares;
(ii) no change or amendment will be made in the organizational or
corporate governance documents of PSG or any of the Foreign
Subsidiaries; (iii) PSG and each of the Foreign Subsidiaries shall
not enter into any contract, agreement or transaction, or make to or
receive from any of the Sellers or any Affiliate of Sellers any
transfer or distribution of any funds, property or other assets, or
be assessed or charged for any
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liability, allocation or expense, except in the ordinary course of
business, consistent with past practices, or as provided for in this
Agreement; (iv) PSG and each of the Foreign Subsidiaries shall not
pay or grant, or make any commitment to pay or grant, any bonus or-
any increase in the salary, wages or benefits paid to the officers
or directors of PSG and each of the Foreign Subsidiaries in excess
of amounts or levels contemplated under existing agreements or
arrangements; (v) PSG and each of the Foreign Subsidiaries shall not
issue any shares or any rights, options or warrants to purchase or
subscribe for shares, or any securities convertible into shares or
commit to do any of the foregoing; (vi) PSG and each of the Foreign
Subsidiaries shall not guarantee any debt for borrowed money, or
borrow money or incur any debt for borrowed money except borrowings
and intercompany transfers for working capital from the Sellers made
in the ordinary course of business consistent with past practice;
(vii) PSG and each of the Foreign Subsidiaries shall not fail in any
material respect to comply with any material law, ordinance,
regulation or other governmental restriction applicable to PSG or any
Foreign Subsidiary; and (viii) PSG and each of the Foreign
Subsidiaries shall determine and post to their books consistent with
past practice adequate accruals for Taxes other than foreign and
federal income taxes.
4.4 Preservation of Business: From the date hereof
through the Closing Date, Sellers shall cause PSG and each of the
Foreign Subsidiaries to maintain their respective assets, properties
and business in substantially the same manner in which they have been
operated and maintained.
4.5 Litigation: From the date hereof through the
Closing Date, Sellers promptly notify Purchasers of any lawsuits,
claims, proceedings or investigations of which Sequa, Chromalloy,
ARC, PSG or any of the Foreign Subsidiaries have actual knowledge
which after the date hereof are threatened or commenced against PSG
or any of the Foreign Subsidiaries, or any officer or director
thereof.
4.6 Hart-Scott-Rodino Act: The parties have filed
Notification and Report forms under the Hart-Scott-Rodino Antitrust
Improvements Act (the "H.S.R. Act") with the Federal Trade Commission
("FTC") and the Antitrust Division of the Department of Justice
("Justice") with respect to the transactions contemplated herein and
have been granted early termination of the waiting period provided
under the H.S.R. Act. To the extent permitted by law, the parties
shall request such governmental agencies to treat as confidential all
such information submitted to them. Purchasers shall pay any fees
associated with the filing of the Notification and Report forms.
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4.7 Government Contracts: The Sellers will provide
reasonable cooperation, and will cause PSG to provide reasonable
cooperation, in making personal introductions of representatives of
the Purchasers to the contracting officers responsible for the award
and administration of PSG's Government Contracts. All purposes of
such introductions will include allowing the Purchasers to evaluate
PSG's business and its future prospects, discussing the need for
novation or other U.S. Government or prime contractor approvals of
the transactions contemplated by this Agreement and related
agreements, and ensuring good customer relationships following the
Closing. If it appears to the Purchasers that novation of PSG's
Government Prime Contracts may be required pursuant to FAR 42.12, the
Sellers will provide reasonable cooperation, and will cause PSG to
provide reasonable cooperation, in preparing such novation agreements
and the supporting materials required to be submitted to the U.S.
Government pursuant to FAR 42.12.
4.8 Confidentiality: At all times prior to the
Closing (and, if this Agreement is terminated, at all times after
such termination), neither Purchasers, on the one hand, nor Sellers,
PSG or any of the Foreign Subsidiaries, on the other hand, nor any
of its or their agents or Affiliates will disclose or use any
confidential information of or with respect to the other party or
parties to this Agreement or the conduct of its or their business,
except to the extent that any such confidential information was
learned other than in connection with the transactions contemplated
under this Agreement or subsequently becomes public knowledge other
than as a result of a violation of this Section 4.8 by Purchasers,
Sellers, PSG or any of the Foreign Subsidiaries or any of its or
their agents, representatives or Affiliates. For purposes of this
Agreement, "confidential information" with respect to any party shall
include without limitation: (i) plans, programs, documents,
agreements or other material relating to the business, services,
marketing or activities of such party; and (ii) trade secrets, market
reports, customer investigations, customer lists, computer software
and other similar information that is treated as proprietary
information by such party.
Except as otherwise allowed pursuant to this Section
4.8, Purchasers, Sellers and PSG will keep confidential the terms of
this Agreement unless any party's counsel advises such party that it
is required by or advisable under applicable law or regulation
(including the Act, the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder) or stock exchange rules and
procedures to divulge the same, or unless such information is
disclosed in an action between the parties or is otherwise required
by order of competent judicial or administrative authority to be
disclosed, and such party will only divulge such information in
accordance with such law, regulation, rule or procedure, as
applicable.
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4.9 Return of Information: If this Agreement is
terminated, the parties promptly will return all documents,
contracts, property or records of the other parties and will destroy
all copies of such documents, contracts and records.
4.10 No Shop: From the date hereof through the Closing
Date (including any extensions thereof pursuant to the terms hereof),
except with the prior written approval of Purchasers or to the extent
necessary to effect the transactions contemplated by and pursuant to
the terms of this Agreement, Sequa, ARC, PSG and each Foreign
Subsidiary will not, and will not permit their officers, directors,
employees, agents, consultants or other representatives to, directly
or indirectly: (i) initiate, solicit or encourage discussions with
any corporation, partnership, person or other entity or group
concerning any sale of the PSG Shares or the ARC/UK Shares, any
merger with, purchase of or sale of all or any portion of the assets
of PSG or ARC/UK, sale of shares of capital stock of PSG or ARC/UK
(or securities convertible into or exchangeable for or otherwise
evidencing, or any agreement or instrument evidencing, the right to
acquire any such shares), or any similar transaction involving PSG
or ARC/UK; or (ii) furnish any information or assistance to, or
negotiate with, any person other than Purchasers or their Affiliates
with respect to any such transaction.
4.11 Pre-Closing Transfer of Assets and Assumption of
Liabilities:
(a) Prior to the Closing: (1) Sequa shall have
caused ARC to, and ARC shall have transferred, assigned and conveyed
to PSG, by means of warranty deed, bill of sale and other appropriate
instruments of transfer, that certain land and building located at
45154 Underwood Lane, Sterling, Loudoun County, Virginia (the
"Sterling Real Estate") and as more particularly described in
Schedule 3.2(c) of the Disclosure Package; and (2) Sequa and ARC
shall have caused the Vehicle to be transferred and assigned to and
assumed by PSG. All of such transfers and assignments shall be
subject to the representations and warranties contained herein.
(b) Prior to the Closing, ARC shall transfer,
assign and convey and PSG shall assume and agree to pay, perform and
discharge, as the case may be, all of the debts, obligations and
liabilities relating to the real estate mortgage for the Sterling
Real Estate, which debts, obligations and liabilities are more
particularly described in Schedule 4.11 hereto. PSG shall likewise
assume and agree to pay, perform and discharge, as the case may be,
the liabilities and obligations related to the Leased Vehicles.
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(c) Prior to the Closing, PSG and the Foreign
Subsidiaries shall transfer, assign and convey to Sequa and/or ARC,
and Sequa and ARC shall acquire and assume, all of the Excluded
Assets, and PSG shall have assigned to ARC and ARC shall have assumed
the lease obligations from and after the Closing Date with respect
to the land, building, fixtures and improvements located at 1577
Spring Hill Road, Vienna, Virginia 22182.
4.12 Transfer of ARC/ISI Share Not Owned by ARC: Prior
to the Closing, the ARC/ISI Share not owned by ARC shall be
transferred to Mr. Edward T. Jones, and ARC and Mr. Edward T. Jones
shall enter into the Nominee Agreement attached as Exhibit 4.12
hereto with respect to such ARC/ISI Share.
4.13 Appraisal of Real Estate: Prior to the Closing,
Valuation Research Corporation shall prepare an appraisal of the
Owned Real Estate. Purchasers, collectively, and Sellers,
collectively, each shall pay one-half of the cost of such appraisal.
ARTICLE V
The Closing
5.1 The Closing: For purposes hereof, "Closing" means
the time and place at which the transactions contemplated by this
Agreement are consummated and the documents and instruments referred
to in Section 5.3A and Section 5.3B hereof are executed and delivered
by the parties.
5.2 Time, Date and Place of Closing: Unless extended
by the Parties, the Closing will occur on a date agreed upon by the
parties (the "Closing Date") not later than three business days
following satisfaction of all of the conditions referred to in
Article VIII hereof, but in no event whatsoever later than December
31, 1993. On the Closing Date, CSC and Consulting will purchase and
PSG, ARC, Warwick and Ladlebase will sell the ARC/UK Shares (other
than the ARC/UK Share held by Mr. Edward T. Jones pursuant to Section
4.12 hereof), the ARC/Canada Shares and the ARC/ISI Shares (other
than the ARC/ISI Share held by Mr. Edward T. Jones pursuant to
Section 4.12 hereof) (such purchase and sale, the "First Closing")
and as promptly as possible after the First Closing, Enterprises will
purchase and ARC will sell the PSG Shares (such purchase and sale,
the "Second Closing"). The First Closing and the Second Closing
shall be deemed to occur as of 11:00 p.m. and 11:59 p.m.,
respectively, on the Closing Date. The Closing will take place at
the offices of PSG, 1375 Piccard Drive, Rockville, Maryland 20850,
or at such other location as the parties may agree.
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5.3A Deliveries at First Closing: At the First
Closing:
(a) Sequa and ARC shall deliver to Purchasers
certificates executed by two executive officers of each such company
with knowledge of the facts to the effect that as of the Closing
Date:
(1) all corporate and other proceedings or
actions required to be taken by Sequa, Chromalloy, ARC, Sequa Ltd.,
Warwick, ladlebase or PSG in connection with the transactions
contemplated by this Agreement have been taken;
(2) those consents or approvals, or
effective waivers thereof, to or of assignment, of those persons
listed in Schedule 5.3A(a)(2) hereto have been obtained;
(3) all requisite governmental approvals
and authorizations necessary for consummation of the transactions
contemplated by this Agreement have been duly issued or granted;
(4) there has not been issued, and there
shall not be in effect, any injunction or similar legal order
prohibiting or restraining consummation of any of the transactions
herein contemplated, and no legal or governmental action, proceeding
or investigation which might reasonably be expected to result in any
such injunction or order is pending;
(b) PSG shall deliver to CSC certificates
representing the ARC/Canada Shares and the ARC/ISI Shares, in each
case fully endorsed to CSC in blank or accompanied by duly executed
blank stock powers and with any necessary transfer stamps attached;
(c) Warwick and ladlebase shall deliver to
Consulting certificates representing the ARC/UK Shares, fully
endorsed to Consulting in blank or accompanied by duly
executed blank stock powers and with any necessary transfer stamps
attached;
(d) Sellers shall deliver to Purchasers:
(1) an executed opinion of Sellers' counsel
in the form set forth as Annex 1 hereto;
(2) Resignations or evidence of removal of
the following persons effective as of the Closing:
Antonio L. Savoca
Alfred P. Principe
Robert S. Hinton
Barbara Biendl
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from all positions held by him/her as an officer, director or member
of any administrative committee of any plan of PSG and the Foreign
Subsidiaries, effective as of the Closing Date;
(3) certified copies of resolutions of the
Board of Directors and shareholders of Chromalloy, ARC, Sequa Ltd.,
Warwick, Ladlebase and the Board of Directors of Sequa, PSG and the
Foreign Subsidiaries, authorizing this Agreement, the transactions
contemplated by this Agreement, and the obligations of Sellers, Sequa
Ltd., Warwick, Ladlebase, PSG and the Foreign Subsidiaries hereunder;
(4) a good standing certificate from the
Secretary of State of Maryland, certifying as of a date not more than
thirty (30) days before the Closing Date, that PSG is a corporation
in good standing under the laws of the State of Maryland and
certificates of good standing (or their equivalent) as to ARC/UK,
ARC/Canada and ARC/ISI from their respective jurisdictions of
incorporation;
(5) custody of or control over the
originals of all books, records, correspondence, databases and papers
of or relating to each Foreign Subsidiary, including without
limitation those items copies of which were previously furnished
under Section 3.1(h) hereof, except that any such document required
by law to remain in Greece or Canada shall remain under the control
of ARC/ISI and ARC/Canada at their respective headquarters;
(6) a cross-receipt acknowledging receipt
of the UK Price, the Canada Price and the ISI Price; and
(7) a list of all Employees of PSG or any
of the Foreign Subsidiaries dated December 22, 1993.
(e) All documents reflecting any actions taken,
received or delivered by Sellers pursuant to Sections 5.3(a), 5.3(b),
5.3(c) and 5.3(d) hereof shall be satisfactory in form and substance
to Purchasers.
(f) Purchasers shall deliver to Sellers a
certificate executed by two executive officers of CSC and Consulting
with knowledge of the facts set forth to the effect that as of the
Closing Date:
(1) all corporate and other proceedings
required to be taken by Purchasers in connection with the
transactions contemplated by this Agreement have been taken;
(2) all requisite governmental approvals
and authorizations necessary for consummation by Purchasers of the
transactions contemplated hereby have been duly issued or granted or
warranted by Purchasers; and
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(3) there has not been issued, and there
is not in effect, any injunction or similar legal order prohibiting
or restraining consummation by Purchasers of any of the transactions
herein contemplated, and no legal or governmental action, proceeding
or investigation which might reasonably be expected to result in any
such injunction or order is pending.
(g) Purchasers shall deliver to Sellers:
(1) the UK Price, the Canada Price and the
ISI Price by means of a wire transfer of immediately available
funds to an account designated by PSG, Warwick and
Ladlebase prior to Closing;
(2) an opinion of Purchasers' counsel in
the form set forth as Annex 2 hereto;
(3) certified copies of a resolution of the
Board of Directors of each of the Purchasers authorizing this
Agreement, the transactions contemplated by this Agreement, and the
obligations of Purchasers hereunder; and
(4) a cross-receipt acknowledging receipt
of the ARC/UK Shares, the ARC/Canada Shares and the ARC/ISI Shares.
(h) All documents reflecting any actions taken,
received or delivered by Purchasers pursuant to Sections 5.3(f) and
5.3(g) hereof shall be satisfactory in form and substance to Sellers.
5.3B Deliveries at Second Closing
(a) ARC shall deliver to Enterprises
certificates representing the PSG Shares, fully endorsed to
Enterprises in blank or accompanied by duly executed blank stock
powers;
(b) Sellers shall deliver to Purchasers custody
of or control over the originals of all books, records,
correspondence, databases and papers of or relating to PSG, including
without limitation those items copies of which were previously
furnished under Section 3.1(h) hereof; and
(c) ARC shall deliver a cross-receipt
acknowledging receipt of the Estimated PSG Price minus the
Preliminary Cash Settlement Adjustment, if any, as determined
pursuant to Section 2.5 hereof.
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(d) Enterprises shall deliver to ARC:
(1) the Estimated PSG Price minus the
Preliminary Cash Settlement Adjustment, if any, as determined
pursuant to Section 2.5 hereof by means of a wire transfer of
immediately available funds to an account designated by ARC prior to
the Closing; and
(2) a cross-receipt acknowledging receipt
of the PSG Shares.
5.4 Purchasers' Insurance Obligation: At the Closing,
Purchasers will deliver to ARC a certificate of insurance on an
occurrence basis in such form reasonably satisfactory to ARC, naming
ARC and its parent and Affiliated corporations as additional
insureds, with waiver of subrogation and contribution in such amounts
and coverages as set forth in Schedule 5.4 hereto. Purchasers shall
continue to maintain such insurance, or insurance providing the same
or similar coverage, for the later of., (i) three years; or (ii) such
date as required by the Government Contracts, the Foreign Government
Contracts, the Commercial
Contracts, Vehicle Leases and leases of Leased Real Property and
leases of Personal Property.
5.5 Letters of Credit and Guarantees: At the Closing,
Purchasers shall deliver substitute or back-up letters of credit,
guarantees, surety and performance bonds and other similar
instruments (or evidence satisfactory to Sellers and their counsel
of the establishment of the same), each in the aggregate principal
amount, and with terms and from banks or other appropriate
responsible financial institutions in each case reasonably
satisfactory to Sellers to replace or collateralize the corresponding
instrument of Sequa, ARC and/or the Foreign Subsidiaries as set forth
in Schedule 5.5. hereto, securing PSG's and/or the Foreign
Subsidiaries' obligations and, in the case of letters of credit,
sufficient so that from and after the Closing such letters of credit
are no longer included by Sequa's and/or ARC's lender banks as
outstanding debt in calculating Sequa's and/or ARC's borrowing
ability.
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ARTICLE VI
Actions After Closing
6.1 Further Conveyances and Assurances: After the
Closing, Sellers will, without further cost or expense to, or
consideration of any nature from Purchasers, execute and deliver, or
cause to be executed and delivered, to Purchasers, such additional
documentation and instruments, and will take such other and further
actions, as Purchasers may reasonably request as more completely to
sell, transfer and assign to and fully vest in Purchasers ownership
of the PSG Shares, the ARC/UK Shares, the ARC/Canada Shares and the
ARC/ISI Shares.
6.2 Further Consents to Assignment: With respect
to those consents or approvals (or effective waivers thereof) to or
of assignment which are not obtained on or prior to Closing:
(a) the parties will make all reasonable efforts
to obtain such consent or approval (or an effective waiver thereof)
at the written request therefor by Purchasers after Closing;
(b) if the parties are unable to obtain such
consent or approval, or an effective waiver thereof, then, with
respect to the contract, lease, license, permit, approval or other
item of which such consent or approval of or to the effective
assignment is requested by Purchasers in writing at or after the
Closing: (1) this Agreement shall not constitute or be deemed to be
an assignment or an agreement to assign such item if an attempted
assignment without such consent or approval, or an effective waiver
thereof, would constitute a breach of or default under such item or
create in any party thereto the right or power to cancel or terminate
such item; and (2) Sellers will cooperate with Purchasers in entering
into or effecting any reasonable arrangement designed to provide
Purchasers with the benefit of PSG's and each of the Foreign
Subsidiaries' rights under or pursuant to such item, including
enforcement (at Purchasers' expense which shall include without
limitation out-of-pocket expenses of Sellers but not any expenses for
the time and effort of Sellers' personnel) of any and all rights of
PSG and each of the Foreign Subsidiaries against any other party as
Purchasers may reasonably request; and
(c) Sellers will not be obligated to pay
consideration in order to obtain any consent or approval, or an
effective waiver thereof, pursuant to Section 6.2(b). Sellers will
cooperate with Purchasers in obtaining any required consent or
approval, or an effective waiver thereof, pursuant to an economic
arrangement satisfactory to Purchasers, provided, that Purchasers
will pay or reimburse Sellers for all third party costs incurred by
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Sellers with Purchasers' prior approval in order to obtain such
consent or approval, or an effective waiver thereof.
6.3 Access to Former Business Records: For a period
of seven (7) years following the Closing, the parties will retain all
business records reflecting the assets and liabilities of or relating
to the business of PSG and each of the Foreign Subsidiaries in
existence as of the Closing, including without limitation those
related to the Excluded Assets and the Excluded Liabilities. During
such period, the parties will afford authorized representatives of
one another free and full access to all of such records at reasonable
times and during normal business hours at the principal business
office of PSG and each of the Foreign Subsidiaries or of the Sellers,
as appropriate, or at such other location or locations at which such
business records may be stored or maintained from time to time, and
will permit such representatives to make abstracts from, or copies
of, any of such records, or to obtain temporary possession of any
thereof as may be reasonably required by the requesting party at such
party's sole cost and expense. During such period, Purchasers will,
at Sellers' expense, cooperate with Sellers in furnishing
information, evidence, testimony, and other reasonable assistance in
connection with any action, proceeding, or investigation relating to
the business of PSG and each of the Foreign Subsidiaries prior to the
Closing.
6.4 Change of PSG's Name: Notification: Enterprises
consents and agrees to cause the legal name of PSG to be changed to
"CSC Professional Services Group, Inc." ("CSC/PSG") as promptly as
practicable following the Closing hereunder, and to cause PSG to make
arrangements to notify PSG's suppliers and customers of the change
in ownership and corporate name as soon as reasonably practicable.
CSC consents and agrees to cause the legal name of ARC/UK to be
changed to "CSC-PSG UK Ltd", the legal name of ARC/Canada to be
changed to "CSC/PSG Canada, Inc." and the legal name of ARC/ISI to
be changed to "CSC/PSG ISI S.A." in each case as promptly as
practicable following the Closing hereunder. CSC consents and agrees
to cause each of the Foreign Subsidiaries to make arrangements to
notify their respective suppliers and customers of the change in
ownership and corporate name as soon as reasonably practicable
following the Closing hereunder.
6.5 Non-Compete:
(a) In order to assure that the Purchasers will
realize the value and goodwill inherent in the acquisition of PSG and
the Foreign Subsidiaries, Sequa, Chromalloy and ARC agree with the
Purchasers that neither Sequa, Chromalloy, ARC, nor any of their
Affiliates shall:
(1) for a period of five (5) years
following the Closing Date, engage anywhere in the United States of
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America or anywhere in other countries in which PSG conducted
business at any time during the two (2) years prior to the Closing,
in the business of providing services of the types presently or in
the past three (3) years provided by PSG or the Foreign Subsidiaries,
provided that Sequa, Chromalloy, ARC, and their Affiliates may
acquire assets or stock of companies collaterally engaged in the
business of providing such services to the extent that the assets
involved in such business or the revenues derived from such business
are not in excess of 30% of the assets or revenues of the acquired
business; and
(2) directly or indirectly for a period of
two (2) years following the Closing with respect to any Employee of
PSG or the Foreign Subsidiaries as of the Closing Date, solicit or
induce such person to terminate his or her employment with PSG or the
Foreign Subsidiary or to accept employment with Sequa, Chromalloy,
ARC or any of their Affiliates unless: (i) six (6) months has elapsed
since the last date of employment of such person with PSG or the
Foreign Subsidiaries; or (ii) such person was not personally
solicited by Sequa, Chromalloy, ARC or any of their Affiliates or any
agent engaged to act for any of them and such person has sought
employment with Sequa, Chromalloy, ARC or any of their Affiliates in
response to a general solicitation which is not directed to specific
individuals or companies and which solicitation is made through
newspaper advertisements or similar general forms of solicitation.
(b) If any provision of paragraph (a) of this
Section, as applied to any party or to any circumstances, is adjudged
by a court to be invalid or unenforceable, the same will in no way
affect any other provision of the said paragraph (a) or any other
part of this Agreement, the application of such provision in any
other circumstances or the validity or enforceability of this
Agreement. If any such provision, or any part thereof, is held to
be unenforceable because of the duration of such provision or the
area covered thereby, the parties agree that the court making such
determination will have the power to reduce the duration and/or
geographic area of such provision, and/or to delete specific words
or phrases, to the extent only that in its reduced form such
provision will then be enforceable and will be enforced. Upon breach
of any provision of paragraph (a) of this Section, the Purchasers
will be entitled to injunctive relief, since the remedy at law would
be inadequate and insufficient. In addition, the Purchasers will be
entitled to such damages as they can show themselves to have
sustained by reason of such breach.
6.6 Use of Trademark and Trade Names: Notwithstanding
anything to the contrary in this Agreement, Purchasers, PSG and the
Foreign Subsidiaries may continue to use the name "ARC Professional
Services Group" and related trademarks, corporate names, and
tradenames incorporating "Atlantic Research", "Sequa", "ARC" and the
stylized "ARC" and "Sequa" logos: (i) in
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displays, signage and postings for two months after the Closing Date
to the extent such displays, signage or postings exist on the Closing
Date; (ii) with respect to all existing Contracts for the term of
such Contracts; (iii) for a period of two years, to state PSG's and
the Foreign Subsidiaries' former affiliation with ARC or Sequa (e.g.,
"formerly ARC Professional Services Group"); and (iv) to the extent
the trade names, trademarks, service marks or logos of any of
Sellers' Affiliates or of Sellers appear on PSG's or any Foreign
Subsidiary's stationary, packaging materials, supplies or inventory
on hand as of the Closing Date or on order at the time of the
Closing, until such is exhausted. Purchasers shall also have the
right to use the trade names and trademarks set forth in Schedule 6.6
hereto without limitation.
6.7 Taxes:
(a) Responsibility for Certain Taxes: Taxes
shall be apportioned as follows: (i) Sellers shall be responsible for
and shall pay, when due, all federal, state, foreign and local income
taxes of Sellers and PSG arising from the sale of PSG and the Foreign
Subsidiaries; (ii) PSG and the Foreign Subsidiaries are responsible
for completing the tax returns for and, except as provided in Section
6.7(a)(i) hereof, for payment of all Taxes of PSG and the Foreign
Subsidiaries, other than federal and foreign income taxes, to the
extent that such Taxes are not due and payable on or before the
Closing Date, provided, however, that the amounts, if any, payable
by Sellers under Section 6.7(a)(i) hereof shall be paid by Sellers
to PSG or the Foreign Subsidiaries immediately prior to Purchasers'
filing of any such tax returns; (iii) Sellers are responsible for
completing the tax returns for, and for payment of, all federal and
foreign income taxes for any taxable period ending on or before the
Closing Date; (iv) notwithstanding anything in paragraph (a)(ii) of
this Section 6.7, Sellers are responsible for completing, on a
consolidated basis, the tax returns for and for payment of the state
income taxes of PSG for the States of California, Florida, Illinois
and Virginia, in which states Sellers file consolidated income tax
returns for all periods ending on or before or including the Closing
Date, provided, however, that the amount of such state income taxes
attributable to the operations of PSG during fiscal year 1993 on a
stand-alone basis, other than the amounts, if any, payable by Sellers
under Section 6.7(a)(i) hereof, shall be paid by PSG to Sellers
immediately prior to Sellers flag of such returns; and (v) Sellers
are responsible for any income taxes attributable to the pre-Closing
period in accordance with Section 6.7(b) hereof in the case of any
Straddle Period relating to the Foreign Subsidiaries. PSG shall
furnish to Sellers calculations as to the amounts, if any, payable
by Sellers pursuant to Section 6.7(a)(i) and Section 6.7(a)(ii)
hereof, together with copies of the returns pursuant to which such
amounts are to be paid. Sellers shall furnish to PSG calculations
as to the amounts, if any, payable by PSG pursuant to Section
6.7(a)(iv) hereof,
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together with copies of the returns pursuant to which such amounts
are to be paid. The party preparing such returns shall promptly
provide such returns and respond to any requests for information or
explanation as to such returns made by the party responsible for
payment of such amounts.
(b) Straddle Period: Apportionment of Taxes: In
the case of any Straddle Period, the income taxes of the Foreign
Subsidiaries for the pre-Closing period shall be computed as if such
period ended as of the close of business on the Closing Date, where
applicable. Any foreign income taxes for a Straddle Period shall be
apportioned between the pre-Closing and the post-Closing period on
the basis of taxable income or taxable loss, as determined from an
interim closing (solely for tax purposes) of the permanent books and
records of the Foreign Subsidiaries, effective as of the close of
business on the Closing Date.
(c) Straddle Period: Filing of Returns: Any
income tax returns of the Foreign Subsidiaries for a Straddle Period
shall be the responsibility of the Purchasers. Prior to the filing
by Purchasers of an income tax return of the Foreign Subsidiaries for
a Straddle Period, Purchasers shall notify Sellers of the portion of
the income taxes due with respect to the portion of that period on
or prior to the Closing Date, computed pursuant to paragraph (b) as
if that period were a separate taxable period, and shall provide
Sellers with its calculations used to arrive at that amount. Sellers
shall remit to Purchasers the amount of such income tax allocable to
Sellers pursuant to Section 6.7(b) hereof for such period for such
income tax return equal to the excess of. (i) the amount of such
income tax allocable to Sellers; over (ii) amounts previously paid
or provided for through estimated income taxes or deposits paid by
or on behalf of the Foreign Subsidiaries with respect to such income
tax for such period. Sellers shall pay such amounts no later than
fifteen (15) business days following its receipt of a notice from
Purchasers.
(d) Section 338(h)(10) Election: Sellers and
Purchasers mutually agree to make an election under Section
338(h)(10) of the Code (and any comparable election under state or
local law) with respect to PSG. Purchasers and Sellers agree that
the purchase price and the liabilities of PSG will be allocated to
the retained assets and the retained liabilities of PSG as follows:
(1) real property at values to be determined by the appraisal
conducted pursuant to Section 4.13 hereof; (2) all other tangible and
intangible assets at net book value at the Closing Date; and (3) any
excess to goodwill. The Purchasers, Sellers and PSG shall file all
Tax Returns in a manner consistent with such values.
(e) Tax Sharing Agreements: Any Tax sharing
agreement between Sellers and any of PSG and the Foreign Subsidiaries
and any similar arrangements shall be and hereby are terminated as
of the Closing Date and will have no further effect
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for any taxable year, whether the current year, a future year, or a
past year.
(f) Further Agreements: Sellers will notify
Purchasers of any settlement reached under any audit of Sellers'
consolidated tax returns to the extent that such directly pertain to
PSG or the Foreign Subsidiaries.
(g) Tax Refunds: All refunds of income taxes
(other than for 1993 state income), relating to taxable periods that
end on or before the Closing Date shall be endorsed over to Sellers
within fifteen (15) business days of receipt by Purchasers or PSG.
Any reduction in current and/or future income taxes as described in
Section 6.7(a)(i) hereof shall be paid to Sellers within fifteen (15)
business days of realization thereof by PSG or Purchasers.
6.8 Post-Closing Cash Receipts: For twelve (12)
months from and after the Closing Date, Sellers shall cause any
amounts credited after the Closing Date to Account No. 130-1139 at
Mellon National Bank N.A. (or to any successor account) to be paid
over as promptly as possible, which generally shall be considered to
be one (1) business day following such account being credited with
such amounts, to an account designated by PSG, provided that if it
is subsequently determined that any amount so paid over was not
payable to PSG or any of the Foreign Subsidiaries, Purchasers shall
cause such amount to be repaid to Sellers as promptly as possible but
in no event longer than five (5) business days after such
determination, together with interest at the Applicable Rate from the
date such amount was credited to the account designated by PSG until
the day before such amount is repaid to Sellers. Sellers shall cause
any amounts otherwise received by them that are payable to PSG or any
of the Foreign Subsidiaries to be paid over to PSG or the Foreign
Subsidiary, as appropriate, within ten (10) business days of receipt,
and Purchasers shall cause any amounts otherwise received by PSG or
any of the Foreign Subsidiaries that are payable to Sellers to be
paid over to Sellers within ten (10) business days of receipt.
ARTICLE VII
Employees and Employee Benefits
7.1 Severance Arrangements: As of the Closing Date,
the severance entitlements are as set forth in Schedule 3.2(i) of the
Disclosure Package. Purchasers shall reimburse ARC for any severance
entitlements set forth in Schedule 3.2(i) of the Disclosure Package
which ARC is required to pay, including medical benefits, with
respect to any Employee whose employment is terminated or ceases
after the Closing Date. For purposes of this Agreement the term
"Employees" shall mean all those employees of PSG and the Foreign
Subsidiaries on the Closing Date, including
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those employees who on the Closing Date are on lay-off, temporary
furlough or leave of absence, whether paid or unpaid.
7.2 401 (k) Plan: PSG currently participates in the
ARC Professional Services Group Tax Deferred Savings and Retirement
Plan (the "401(k) Plan") for eligible employees. PSG will continue
to be the sponsor of the 401(k) Plan subject to any rights under the
terms of the 401(k) Plan or applicable law to amend, suspend,
terminate or merge the 401(k) Plan, and the assets and liabilities
of the 401(k) Plan will be retained by PSG or by any plan or trust
maintained by Purchasers. The rights of Employees shall be governed
by and administered in accordance with the provisions of the 401(k)
Plan, as such may be amended consistent with the terms of the 401(k)
Plan or applicable law.
7.3 Medical Benefits: Purchasers will cause PSG and
each of the Foreign Subsidiaries after Closing to continue to extend
to any Employee, in accordance with PSG's and the Foreign
Subsidiaries' requirement for premium contribution by an employee,
the opportunity to continue medical coverages reasonably comparable
to those afforded to such Employees and their dependents as of the
Closing Date or to those afforded to employees (and their dependents)
of CSC or its Affiliates, as such may from time to time be amended.
If an Employee chooses to participate in such group medical plan, PSG
and the Foreign Subsidiaries will continue to be responsible for any
and all medical claims made at any time either before or after the
Closing by or on behalf of said Employee and any dependents,
including responsibility for services and medicine received by them
prior to the Closing.
7.4 Life Insurance: As of the Closing, PSG and
each of the Foreign Subsidiaries will continue life insurance benefit
coverage for the Employees.
7.5 Accrued Vacation: As of the Closing, PSG and each
of the Foreign Subsidiaries will retain all obligations of PSG to the
Employees for accrued vacation, holiday pay, sick pay and personal
time, and related taxes and benefits. ARC will have no obligation
to make any payment to the Employees with respect to any vacation
pay, holiday pay, sick pay and personal time entitlement.
7.6 Workers' Compensation: PSG and each of the
Foreign Subsidiaries will, except to the extent paid by their
respective insurance recoveries or third party recoveries, bear the
entire cost and expense of all workers' compensation claims arising
out of or resulting from injuries sustained after the Closing Date
by an Employee. Sellers will, except to the extent paid by their
respective insurance recoveries or third party recoveries, bear the
entire cost and expense of all workers' compensation claims arising
out of or resulting from injuries sustained on or before the Closing
Date by an Employee.
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ARTICLE VIII
Conditions
8.1 Conditions to Purchasers' Obligations: The
obligation of Purchasers to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of the following
conditions at or before the Closing and in no event whatsoever later
than December 31, 1993, unless extended in writing by the mutual
consent of the parties hereto in their respective sole and absolute
discretion:
(a) Truth of Representations and Warranties: The
representations and warranties of each of the Sellers contained in
this Agreement and the Disclosure Package shall be true, accurate,
and complete in all material respects as of the Closing as if such
representation and warranties have been made anew as of the Closing,
except with respect to the effect of transactions contemplated or
permitted by this Agreement and with respect to the effect of the
passage of time upon dated material in the Disclosure Package, and
Purchasers shall have been given an officer's certificate from each
of the Sellers to such effect.
(b) Performance of Covenants: Sellers, PSG and
each of the Foreign Subsidiaries shall have performed and complied
with their respective covenants, agreements and conditions required
by this Agreement to be performed or satisfied on or prior to the
Closing Date, and Sellers shall have delivered to Purchasers all
documents, certificates, and instruments required to be delivered by
Sellers under the terms of this Agreement, and Purchasers shall have
been given an officer's certificate from each of the Sellers to such
effect.
(c) Corporate Proceedings: All corporate and
other proceedings or actions to be taken by Sequa, Chromalloy or ARC
in connection with the transactions contemplated by this Agreement,
and all documents incidental thereto, shall be satisfactory in form
and substance to Purchasers.
(d) Consents: All third party consents and
approvals required to effect the sale of the PSG Shares. the ARC/UK
Shares, the ARC/Canada Shares and the ARC/ISI Shares to Purchasers
and to consummate the other transactions contemplated under this
Agreement, including without limitation any consents or approvals
required under Section 5.3A(a)(2) hereof, to secure the benefits of
client and customer contracts, proposals and receivables, shall have
been obtained.
(e) No Restraints: There shall not have been
issued and in effect any injunction or similar legal order
prohibiting or restraining consummation of any of the transactions
herein contemplated and no legal action or governmental
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investigation which might reasonably be expected to result in any
such injunction or order shall be pending.
(f) Permits and Approvals: Any and all permits,
approvals and consents, other than under the H.S.R. Act, which was
obtained on November 29, 1993, from any governmental authority or
other person or entity required for the consummation of the
transactions contemplated hereby shall have been obtained.
(g) No Adverse Change: There shall have been
no adverse change (whether or not in the ordinary and usual course
of business) in the financial condition, assets, liabilities,
personnel, business or results of operations or business prospects
of PSG and the Foreign Subsidiaries or any damage, destruction or
loss (whether or not covered by insurance) which may materially and
adversely affect the business, condition (financial or otherwise),
assets, properties, results of operation or business prospects of PSG
and the Foreign Subsidiaries.
(h) Government Contracts: The Purchasers shall
have determined either that no novations, consents, approvals or
waivers from the U.S. Government or from U.S. Government prime
contractors and subcontractors are necessary in connection with the
transactions contemplated by this Agreement and related agreements,
or that all such novations, consents, approvals and waivers can be
reasonably expected to be forthcoming within a reasonable period of
time after the Closing Date without the imposition of any conditions
that the Purchasers in good faith determines would be materially
burdensome.
8.2 Condition to Sellers' Obligations: The
obligation of Sequa, Chromalloy and ARC to consummate the
transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions at or before the Closing and
in no event later than December 31, 1993, unless extended in writing
by the mutual consent of the parties hereto in their respective sole
and absolute discretion:
(a) Truth of Representations Warranties: The
representations and warranties of Purchasers contained in this
Agreement and Purchasers' Schedules shall be true, accurate, and
complete in all material respects as of the date hereof and as of the
Closing as if such representations and warranties have been made anew
as of the Closing, except with respect to the effect of transactions
contemplated or permitted by this Agreement, and Sellers shall have
been given an officer's certificate from Purchasers to such effect.
(b) Performance of Covenants: Purchasers shall
have performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or satisfied
by Purchasers on or prior to the Closing, and Purchasers shall have
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delivered all documents, certificates, and instruments required to
be delivered by Purchasers under the terms of this Agreement, and
Sellers shall have been given an officer's certificate to such
effect.
(c) Corporate Proceedings: Purchasers shall
have taken all corporate and other proceedings to be taken by them
in connection with the transactions contemplated by this Agreement.
(d) No Restraints: There shall not have been
issued and in effect any injunction or similar legal order
prohibiting or restraining consummation of any of the transactions
herein contemplated and no legal action or governmental investigation
which might reasonably be expected to result in any such injunction
or order shall be pending.
(e) Permits and Approvals: Any and all
permits, approvals and consents, other than under the H.S.R. Act,
which was obtained on November 29, 1993, from any governmental
authority or other person or entity required for the consummation of
the transactions contemplated hereby shall have been obtained.
8.3 Condition Subsequent: The consummation of the
purchase and sale of the ARC/UK Shares, the ARC/Canada Shares and the
ARC/ISI Shares (other than the ARC/ISI Share held by Mr. Edward T.
Jones pursuant to Section 4.12 hereof) and the consummation of the
First Closing shall be subject to the consummation of the purchase
and sale of the PSG Shares and the consummation of the Second Closing
occurring within twelve (12) hours after the First Closing.
8.4 Termination:
(a) This Agreement may be terminated as follows:
(1) at any time prior to the Closing Date
by mutual consent of Sellers and Purchasers;
(2) by Purchasers, if there has been a
material breach or failure of or inaccuracy in a representation,
warranty or covenant in this Agreement (including the Schedules and
Exhibits), or any certificate, instrument or other document delivered
pursuant thereto, of Sequa, Chromalloy or ARC;
(3) by Sellers, if there has been a
material breach or failure of or inaccuracy in a representation,
warranty or covenant in this Agreement (including the Schedules and
Exhibits), or any certificate, instrument or other document delivered
pursuant thereto, of Purchasers;
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(4) by the Sellers or by Purchasers if the
Closing Date shall not have occurred as provided in Section 5.2
hereof, for any reason other than the failure of such party to
perform its obligations hereunder, a breach of or inaccuracy in a
representation or warranty by such party or the failure to occur of
a condition due to the act or omission of such party; or
(5) by either Purchasers or Sellers if the
conditions precedent referred to in Section 8.1 or Section 8.2
respectively hereof or if the condition subsequent referred to in
Section 8.3 hereof, have not for whatever reason, or no reason at
all, been completed by December 31, 1993, provided that the rights
specified in Section 8.4(c) hereof shall survive any such
termination.
(b) Any termination of this Agreement pursuant
to the provisions of Section 8.4(a)(2), (3) or (4) hereof shall be
effected by the terminating party providing written notice of such
termination to the other parties to this Agreement in accordance with
the provisions of Section 10.5 hereof.
(c) In the event that this Agreement is
terminated pursuant to the provisions of Section 8.4(a)(1) or Section
8.4(a)(4) hereof, Sellers, PSG and the Foreign Subsidiaries, shall
have no obligation to Purchasers, and Purchasers shall have no
obligation to Sellers, PSG or the Foreign Subsidiaries. If the
Sellers or Purchasers shall terminate this Agreement pursuant to
Section 8.4(a)(2), Section 8.4(a)(3) or Section 8.4(a)(5) hereof the
right of Purchasers or the Sellers, as the case may be, to pursue all
legal remedies for breach of contract, including for breach of
Section 4.2 hereof, and for damages shall survive unimpaired.
Notwithstanding the foregoing, upon any termination, the obligations
of the parties set forth in Sections 4.8 through 4.10 hereof and the
rights and obligations of the parties under the Confidentiality
Agreement between CSC and Sequa dated August 16, 1993 and under any
provision hereof that expressly states that it shall survive
termination of this Agreement, shall survive and be binding upon and
enforceable against the parties hereto, including by injunction or
specific performance.
8.5 Risk of Loss: Risk of loss shall pass at 11:00
p.m. (Eastern Standard Time) on the Closing Date with respect to the
Foreign Subsidiaries and at 11:59 p.m. (Eastern Standard Time) on the
Closing Date with respect to PSG, and in no event whatsoever shall
Purchasers be entitled to any proceeds of insurance in favor of
either ARC, PSG, the Foreign Subsidiaries or Sequa in the event of
any damage or destruction occurring prior to the Closing Date.
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ARTICLE IX
Indemnification
9.1 Indemnification of Sellers: Purchasers hereby
agree that they shall, and from and after the Closing shall cause PSG
and the Foreign Subsidiaries to, jointly and severally indemnify,
defend, and hold Sequa, Chromalloy, ARC, their parent corporations,
subsidiaries and Affiliates and their respective officers, directors
and employees (collectively, "Sellers Indemnitees"), harmless from
and against, any and all claims, losses, actual damages and
liabilities and any expenses paid to third parties, including,
without limitation, amounts paid in settlement, reasonable out-of-
pocket attorneys' fees, out-of-pocket costs of investigation and
remediation, out-of-pocket costs of investigative, judicial or
administrative proceedings or appeals therefrom, and costs of
attachment or similar bonds (collectively "Losses") hereof, arising
out of or resulting from any of the following:
(a) the inaccuracy or falsehood of any
representation, or the breach of any warranty by Purchasers contained
in this Agreement or the Other Agreements;
(b) the breach or failure to perform by
Purchasers, and PSG and the Foreign Subsidiaries after the Closing,
of any covenant contained in this Agreement or the Other
Agreements;
(c) any failure by Purchasers, PSG or the
Foreign Subsidiaries on or after the date of the Closing: (i) to pay
or satisfy, or to cause to be paid or satisfied by PSG or the Foreign
Subsidiaries, any of the debts, obligations and liabilities of PSG
and the Foreign Subsidiaries (other than the Excluded Liabilities)
when due and payable; or (ii) to perform any other obligations
required to be performed by Purchasers, PSG or the Foreign
Subsidiaries pursuant to this Agreement or the Other Agreements;
(d) the breach by Purchasers or failure of
Purchasers to perform their covenants under Section 6.7 hereof;
(e) liability under WARN resulting from any act
or omission of Purchasers, or any act or omission of PSG after the
Closing, regardless of whether such liability relates to employees
who experienced an employment loss before or after the Closing; and
(f) any use, generation, discharge or disposal
at any time after the Closing Date of Hazardous Materials by PSG or
any of the Foreign Subsidiaries.
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9.2 Indemnification of Purchasers: Sequa, Chromalloy
and ARC hereby agree that they shall, jointly and severally,
indemnify, defend and hold CSC, Enterprises, Consulting, Enterprises'
or Consulting's parent corporations, Purchasers' subsidiaries and
Affiliates (including after the Closing, PSG and the Foreign
Subsidiaries) and their respective officers, directors and employees
(collectively, "Purchasers Indemnitees"), harmless from and against
any Losses arising out of or resulting from any of the following:
(a) except as to those matters covered by
Section 3.2(a), Section 3.2(1), or Section 3.2(s) hereof or as to
those matters covered by Section 3.2(r)(3) or (4) hereof that relate
to the collectibility of Receivables reflected on the Balance Sheet,
any of which are addressed elsewhere in this Article IX, the
inaccuracy or falsehood of any representation, or the breach of any
warranty, by ARC, Chromalloy or Sequa contained in this Agreement,
the Other Agreements or the Disclosure Package;
(b) except as to those matters covered by
Section 6.7 hereof which are addressed elsewhere in this Article IX,
the breach or failure to perform by ARC, Chromalloy or Sequa of any
covenant contained in this Agreement or the Other Agreements;
(c) any failure by ARC, Chromalloy or Sequa: (i)
to pay or satisfy, or to cause to be paid or satisfied, any of the
Excluded Liabilities hereunder, when due and payable; or (ii) to
perform any other obligations required to be performed by ARC,
Chromalloy or Sequa pursuant to this Agreement and the Other
Agreements;
(d) any claim related to the Excluded Assets;
(e) any action, suit, litigation or claim,
whether or not disclosed on any Schedule to this Agreement, with
respect to actions by or the operations of PSG or the Foreign
Subsidiaries but only for that period of time occurring on or before
the Closing Date, including without limitation the actual or alleged
failure to comply with any laws, rules, regulations or ordinances or
to qualify to do business in any jurisdiction, the actual or alleged
infringement of any patent, trademark or copyright, or the failure
to hold or to comply with any required permit, approval or
qualification to do business, in each event to the extent that any
amount thereof exceeds any amount that PSG or the Foreign
Subsidiaries have accrued on their books therefor prior to the
Closing Date; except that nothing in this Section 9.2(e) shall
require any indemnification as to: (i) any Losses associated with
those claims for workers compensation or those claims for medical
benefits for which PSG is responsible under Section 7.3 or Section
7.6 hereof, respectively, unless such Losses also are indemnifiable
under Section 9.2(a) hereof as a result of the inaccuracy or
falsehood of any representation or the breach of any
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warranty by Sellers; (ii) any action, suit, litigation or claim with
respect to Sections 3.2(a), 3.2(h), 3.2(1), 3.2(s) to the extent it
affects the collectibility of Closing Date Receivables, 3.2(z) and
9.5 hereof, in which case Sellers' indemnification obligations shall
be as set forth elsewhere in this Agreement; or (iii) any Losses
attributable to any action, suit, litigation or claim, whether or not
disclosed on any schedule to this Agreement, with respect to actions
by or operations of PSG or the Foreign Subsidiaries but only for that
period of time occurring after the Closing Date;
(f) liability under WARN resulting from any act
or omission of Sellers, or any act or omission of PSG prior to the
Closing;
(g) the failure of PSG, the Foreign Subsidiaries
or the Real Property or any activities thereon, to comply on or
before the Closing Date with any then applicable Environmental
Requirements, including by way of illustration and not by way of
limitation: (a) the Clean Air Act (42 U.S.C. section 7401 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. section 1251 et seq.), the
Safe Drinking Water Act (42 U.S.C. section 300f et seq.), the Toxic
Substances Control Act (15 U.S.C. section 2601 et seq.) the Endangered
Species Act (16 U.S.C. section 1531 et seq.), the Emergency Planning and
Community Right-to-Know Act of 1986 (42 U.S.C.. section 11001 et seq.),
the Solid Waste Disposal and Resource Conservation and Recovery Acts
(42 U.S.C. section 6901 et seq.), the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. section 9601 et seq.); (b) any
regulations thereunder; and (c) analogous state and local provisions;
(h) (1) the presence of any Hazardous Material
upon, above or beneath any real property that has been owned or
occupied by any of Sellers, PSG or any of the Foreign Subsidiaries,
or any Affiliate of any of them or any entity to which any of them
is a successor (whether by operation of law, contract or otherwise),
if the Hazardous Material was present at or prior to the Closing,
except that Sellers shall not be responsible for indemnification
under this provision to the extent that such Hazardous Material was
present at the time that any of Sellers, PSG or any of the Foreign
Subsidiaries, or any Affiliate or corporate predecessor of any of
them first acquired or occupied such property; (2) the presence of
any Hazardous Material elsewhere if such material was used, stored
or generated by any of Sellers, PSG or any of the Foreign
Subsidiaries, or any Affiliate or corporate predecessor of any of
them prior to the Closing Date; (3) any use, storage, generation.
discharge or disposal at any time after the Closing Date of Hazardous
Materials by any of the Sellers or any Affiliate of any of the
Sellers; and (4) without limitation, any Losses described in (1)
through (3) of this Section 9.2(h) relating to the operations at 5390
Cherokee Avenue, Fairfax County, Virginia; and
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(i) the inaccuracy, falsehood or breach of those
representations and warranties made under Section 3.2(1) hereof, the
breach by Sellers or failure of Sellers to perform their covenants
under Section 6.7 hereof, including the failure to pay any Taxes for
which they are responsible under Section 6.7(a) hereof, and any
liability of any of PSG and the Foreign Subsidiaries for Taxes of any
of Sellers or any other member of an Affiliated Group other than any
of PSG and the Foreign Subsidiaries: (i) under Treasury Regulation
Section 1.1502-6, or any similar provision of state, local or foreign
law; (ii) as a transferee or successor; (iii) by contract; or (iv)
otherwise.
9.3 Procedure for Claims: If any of Sequa, Chromalloy
or ARC or CSC, Enterprises or Consulting (including, in any case,
parent corporations, subsidiaries and Affiliates) (the "Claimant")
desires to make a claim against any party obligated to provide
indemnification to any of Sellers Indemnitees or Purchasers
Indemnitees under Section 9.1 or 9.2 hereof, respectively (any such
party, the "Indemnitor"), with respect to any matter covered by such
indemnification obligation, the procedures for making such claim
shall be as follows:
(a) Third Party Claims: If the claim is for
indemnification with respect to any action, suit, proceeding or
demand at any time instituted or asserted against, or made upon, the
Claimant by or on behalf of a third party (a "Third Party Claim"),
the Claimant will give prompt written notice to the Indemnitor of the
institution, assertion or making of the Third Party Claim, and the
nature thereof. Upon such notice being given the claim specified
herein shall be deemed to have been made for purposes of this
Agreement. The Indemnitor shall, within ten (10) days after receipt
of such notice, give written notice to the Claimant as to whether or
not the Indemnitor accepts the responsibility to indemnify Claimant
with respect to the Third Party Claim. If the Indemnitor accepts the
responsibility to indemnify the Claimant with respect to the Third
Party Claim, the Claimant will then grant to the Indemnitor
authority, and the Indemnitor will proceed, at its sole expense, to
cure, defend, compromise or settle the Third Party Claim, in the name
of the Claimant or otherwise; provided, however, that any such
defense of the Third Party Claim shall be conducted by counsel
reasonably satisfactory to the Claimant, and that the Indemnitor
shall not enter into any final compromise or settlement of the Third
Party Claim without the prior written consent of Claimant. If the
Indemnitor denies the responsibility to indemnify the Claimant with
respect to the Third Party Claim, or if the Indemnitor fails to
respond in a timely manner to Claimant's notice of the Third Party
Claim or fails to proceed in a diligent and timely manner to cure,
defend, compromise or settle a Third Party Claim for which it has
accepted responsibility pursuant to the foregoing provisions, the
Claimant may then proceed to cure, defend, compromise or settle
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such Third Party Claim as it shall in its sole discretion deem to be
advisable, without prejudice to any right to indemnification Claimant
may have against the Indemnitor with respect thereto, whether
pursuant to this Agreement or otherwise, and in such event the
liability of the Indemnitor to the Claimant for indemnification with
respect to such Third Party Claim shall be determined by a final and
nonappealable judgment entered by a court of competent jurisdiction,
or by written consent of the Indemnitor.
(b) Non-Third Party Claims: If the claim is for
indemnification with respect to a matter other than a Third Party
Claim, the Claimant will give prompt written notice to the Indemnitor
of such claim, setting forth with reasonable particularity the basis,
nature and dollar amount thereof. Upon such notice being given the
claim specified therein shall be deemed to have been made for
purposes of this Agreement. The Indemnitor shall, within thirty (30)
days after receipt of such notice, give written notice to the
Claimant as to whether or not the Indemnitor accepts the
responsibility to indemnify Claimant with respect to such claim. If
the Indemnitor accepts the responsibility to indemnify the Claimant
with respect to such claim, the Indemnitor shall immediately pay to
the Claimant the amount set forth in the notice thereof, with such
payment to be made in immediately available funds, and upon actual
receipt of such payment by the Claimant such claim shall be deemed
to have been satisfied. If the Indemnitor denies the responsibility
to indemnify the Claimant with respect to such claim, or if the
Indemnitor fails to respond in a timely manner to notice of such
claim, the liability of the Indemnitor to the Claimant for
indemnification with respect to such claim shall be determined by
arbitration as provided under Section 10.10 hereof
9.4 Certain Indemnification Limitations:
Notwithstanding the foregoing, neither Purchasers Indemnitees nor
Sellers Indemnitees shall be entitled to indemnification from Sellers
or Purchasers, respectively, pursuant to Sections 9.1 (a) through (e)
hereof or Sections 9.2(a) through (h) hereof for any Losses covered
thereunder until such time as the aggregate of all such Losses
incurred by Purchasers Indemnitees or Sellers Indemnitees,
respectively, exceed $350,000. From and after such time, Purchasers
Indemnitees or Sellers Indemnitees, respectively, shall be entitled
to indemnification pursuant to Sections 9.1 or 9.2 hereof for all
Losses covered thereunder (other than such first $350,000 of Losses).
Notwithstanding the foregoing, Purchasers Indemnitees shall be
entitled to any indemnification from Sellers pursuant to Section
9.2(i) hereof to the extent of any and all Losses covered thereunder
without regard to such threshold. In no event whatsoever shall the
total indemnification obligations hereunder exceed the Aggregate
Purchase Price plus or minus the Cash Settlement Adjustment.
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9.5 Customer Contracts/Receivables Indemnification:
(a) Sequa, Chromalloy and ARC hereby agree that
they shall, jointly and severally, indemnify, protect and make
Purchasers, PSG and the Foreign Subsidiaries whole from and against
the inability to collect Closing Date Receivables as a result of:
(1) the inaccuracy or falsehood of any
representation, or the breach of any warranty, by ARC, Chromalloy or
Sequa contained in Section 3.2(a) hereof or Schedule 3.2(a) of the
Disclosure Package or in Section 3.2(r)(3) or (4) hereof or in
Schedule 3.2(r) of the Disclosure Package that relates to the
collectibility of Receivables reflected on the Balance Sheet (any
such inaccuracy, falsehood or breach, a "Receivables Breach");
(2) the inaccuracy or falsehood of any
representation, or the breach of any warranty, by ARC, Chromalloy or
Sequa contained in Section 3.2(s) hereof or Schedule 3.2(s) of the
Disclosure Package to the extent that the effect of such is upon the
collectability of Closing Date Receivables, (any such inaccuracy,
falsehood or breach, a "Disallowance Event"); or
(3) incurrence by PSG or the Foreign
Subsidiaries prior to the Closing Date of costs after written notice
has been received by PSG or the Foreign Subsidiaries by a U.S.
Government or Foreign Government contracting officer to discontinue
the work, but only to the extent the Uncollectible Receivables relate
to costs incurred after such written notice is received and then,
only prior to the Closing Date (a "Disallowance Event").
(b) Notwithstanding the foregoing, Purchasers,
PSG and the Foreign Subsidiaries shall not be entitled to
indemnification and payment from Sellers pursuant to Section 9.5(a)
hereof for the failure to collect any Closing Date Receivables as a
result of any Receivables Breach or Disallowance Event until the
aggregate amount of all Uncollectible Receivables exceeds $3,417,068
(the "Receivables Allowance"). If the aggregate amount of
Uncollectible Receivables exceeds the Receivables Allowance as a
result of either a Receivables Breach or Disallowance Event, then
Purchasers, PSG and the Foreign Subsidiaries shall be entitled to
indemnification and payment pursuant to Section 9.5(a) hereof for all
Uncollectible Receivables covered thereunder other than such first
$3,417,068 of Uncollectible Receivables.
(c) In the event that any of the Purchasers, PSG
or any of the Foreign Subsidiaries invoke their or its rights to be
indemnified and paid for and recover the amount of any Uncollectible
Receivables by and from Sellers, the following procedures shall be
used:
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(1) Purchasers shall deliver a notice to
Sellers (a "Receivables Notice") not later than thirty (30) days
after each second quarter-end and each year-end after the Closing
Date, which shall: (i) identify the Receivables Breach and/or the
Disallowance Event(s) giving rise to such Uncollectible Receivables;
(ii) state the amount of the Uncollectible Receivables for which
payment is being sought; (iii) identify the accounts receivable to
which the Receivables Breach and/or the Disallowance Event(s) relate;
and (iv) identify whether the Uncollectible Receivables for which
payment is sought is to be paid to Purchasers, PSG or the Foreign
Subsidiaries.
(2) Within thirty (30) days from the date
the Receivables Notice is given, Sellers may deliver to Purchasers
a written notice contesting all or any portion of the Uncollectible
Receivables for which payment is sought and setting forth the grounds
for such objection. If Sellers do not contest all or any portion of
the Uncollectible Receivables, Sellers shall pay to Purchasers, PSG
or the Foreign Subsidiaries, as identified in the Receivables Notice,
in immediately available funds on or prior to the last day of such
thirty (30) day period, the amount of Uncollectible Receivables which
Sellers do not contest, to the extent that the amount of such
Uncollectible Receivables and all Uncollectible Receivables exceeds
or has exceeded the Receivables Allowance.
(3) If Sellers contest all or any portion
of the Uncollectible Receivables identified in any Receivables
Notice, Purchasers may at any time after thirty (30) days from the
date such Receivables Notice was given pursue payment of the
Uncollectible Receivables identified in such Receivables Notice
pursuant to the procedures set forth in Section 10.10 hereof, without
regard to paragraph (a) thereof. Sellers shall within thirty (30)
days following the date that any Uncollectible Receivables are
determined pursuant to such procedures in Section 10.10 hereof to be
payable, pay to Purchasers, PSG or the Foreign Subsidiaries, as
identified in the Receivables Notice, in immediately available funds,
the amount of the Uncollectible Receivables determined to be payable,
together with interest thereon at the Applicable Rate from the date
that the Receivables Notice was given until the day before such
amount is paid.
(d) With respect to any Closing Date Receivables
for which Sellers have made payment to Purchasers, Purchasers shall
within fifteen (15) business days of such payment assign all of their
rights in such Uncollectible Receivable to Sellers.
9.6 Indemnification Limitation on Real Estate:
Notwithstanding anything contained herein to the contrary, if there
is any defect or deficiency in title to the Owned Real Estate or
Sterling Real Estate and such real property is the subject of title
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insurance, Sellers shall have no liability to Purchasers whatsoever
on account of any representation or warranty contained herein with
respect to title to such real property or any deficiency therein
to the extent that such title insurance insures Purchasers or their
assignee against such defect or deficiency in title.
9.7 Indemnification Based Upon Net Damage: The duty
and obligation of either Sellers or Purchasers to provide
indemnification hereunder shall be limited to the net amount of any
Losses actually sustained and/or paid. In determining the net amount
of Losses, the actual amount of Losses shall be reduced by the
aggregate value of any assets, properties and rights,. including
without limitation, proceeds of insurance, claims, cross-claims,
counterclaim and the like which are reasonably available to the
Claimant, and federal or state income or franchise tax benefits or
reasonably expected to be realized by such party as a direct
result of the event giving rise to the claim for indemnification.
In addition, in determining the net amount of such Losses for which
indemnification is required, the amount of indemnification shall be
increased to include any federal or state or franchise tax liability
incurred or reasonably expected to be incurred by a party as a direct
result of such indemnification. If any tax benefit expected to be
is in fact not realized, or any tax liability expected to be incurred
is not in fact incurred, then an adjustment shall be made to
compensate the other party.
9.8 Manner of Indemnification: All indemnification
by the Purchasers and Sellers hereunder shall be effected by payment
of cash or delivery of a certified or official bank check in the
amount of the indemnification liability.
9.9 Limitation Period:
(a) Notwithstanding the foregoing, any claim for
indemnification under Sections 9.1 or 9.2 hereof must be asserted in
writing by the Claimant, stating the nature of the Losses and the
basis for indemnification therefor:
(1) prior to the expiration of the
representation or warranty that gives rise to such claim in the case
of a claim under Section 9.1(a) or 9.2(a) hereof;
(2) within twelve (12) months of the
Claimant learning of the failure of the party to perform the required
action that gives rise to a claim under Section 9.1 (b) or (c) hereof
or under Section 9.2(b), (c) or (d) hereof, and
(3) within thirty (30) days after
expiration of the applicable statute of limitation, as such has been
or may be extended, with respect to the act, omission or condition
that gives rise to such claim in the case of a claim under Section
9.1(d), (e) or (f) hereof or under Section 9.2(e), (f), (g), (h) or
(i) hereof.
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(b) if so asserted in writing prior to the
applicable expiration date, such claims for indemnification shall
survive until resolved by mutual agreement between the Indemnitor and
the Claimant or by the procedures set forth in this Agreement. Any
claim for indemnification not so asserted in writing prior to the
applicable expiration date shall not thereafter be asserted.
ARTICLE X
Miscellaneous
10.1 Cooperation: Purchasers, Sellers, PSG and the
Foreign Subsidiaries will each cooperate with the other, at the
other's request and expense, in furnishing information, testimony,
and other assistance in connection with any actions, proceedings,
arrangements, disputes with other persons or governmental inquiries
or investigations involving Sellers' or Purchasers' conduct of the
businesses or the transactions contemplated hereby and in connection
with the preparation of any Tax Returns. Subsequent to Closing,
Purchasers agree, at no cost or expense to Sellers, to cause PSG's
and the Foreign Subsidiaries' employees to complete all accounting
entries, such as sales, cash application, journals and the like, to
close out all business through the close of business on the Closing
Date as well as preparation of closing entries to record all
adjustments, including physical inventory, to adjust the ledger to
the final statement. Purchasers will also direct PSG's and the
Foreign Subsidiaries' employees to complete year-end tax packets and
the like for Sellers.
10.2 Severability: If any provision of this
Agreement shall be finally determined to be unlawful or
unenforceable, then such provision shall be deemed to be null and
void and to be severed from this Agreement, and every other provision
of this Agreement shall remain in full force and effect.
10.3 Expenses: Except as otherwise provided in
Section 10.4 hereof, each party will bear its own expenses incurred
in connection with this Agreement and the transactions contemplated
hereby, whether or not such transactions shall be consummated.
Purchasers will be solely responsible for payment of any and all fees
and premiums payable in respect of any title insurance policy to be
obtained by Purchasers. The fees charged by the second firm of
certified public accountants if any, retained pursuant to Section
2.6(d)(2) hereof shall be paid by the non-prevailing party.
10.4 Transfer and Property Taxes: ARC shall bear any
and all transfer taxes or recordation fees, if any, which may result
from the transfer of the Sterling Real Estate to PSG pursuant to
Section 4.11(a)(1) hereof.
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10.5 Notices: All notices, requests and other
communications hereunder shall be in writing and shall be deemed to
have been duly given at the time of receipt if delivered by hand or
communicated by electronic transmission, or, if mailed, three (3)
days after deposit in the United States mail, registered or
certified, return receipt requested, with postage prepaid and
addressed to the party to receive same as follows:
If to either of the Purchasers: Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, CA 90245
Attention: Lawrence Parkus
Telephone: (310) 615-1717
Telecopier: (310) 322-9767
With a copy to: Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, CA 90245
Attention: Mr. Hayward D. Fisk, Esq.
Telephone: (310) 615-1770
Telecopier: (310) 322-9767
and with a copy to: Gibson, Dunn & Crutcher
1050 Connecticut Avenue, N.W.
Washington, DC 20549
Attention: John F. Olson
Telephone: (202) 955-8522
Telecopier: (202) 467-0539
If to ARC: Atlantic Research Corporation
1577 Spring Hill Road
Vienna, VA 22182
Attention: Carlyle C. Ring
Telephone: (703) 448-2910
Telecopier: (703) 448-2954
If to Sequa: Sequa Corporation
200 Park Avenue
New York, NY 10166
Attention:
Telecopier: Secretary
(212) 370-1969
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and with a copy to: Sequa Corporation
120 South Central Avenue,
Suite 1507
St. Louis, MO 63105
Attention: John J. Dowling, III
Telephone: (314) 862-7971
Telecopier: (314) 862-6144
provided, however, that if either party shall have designated a
different address by notice to the other given as provided above,
then any subsequent notice shall be addressed to such party at the
last address so designated.
10.6 Assignment: This Agreement shall be binding upon
and inure to the benefit of the successors of each of the parties
hereto, but except as provided in the following sentence shall not
be assignable by either party without the prior written consent of
the other party. CSC may assign its right to purchase the ARC/Canada
and/or the ARC/ISI Shares to a direct or indirect wholly owned
subsidiary of CSC and may assign to an individual employed by it the
right to purchase the ARC/ISI shares currently held by individuals,
but no such assignment shall relieve CSC from its obligations,
representations, warranties, indemnities or covenants under this
Agreement.
10.7 No Third Parties: Except as otherwise expressly
provided herein, this Agreement is not intended to, and shall not,
create any rights in or confer any benefit upon any person other than
the parties hereto. The assumption of any liability or obligation
by Sellers or Purchasers pursuant to this Agreement and the exclusion
of any liability or obligation hereunder shall have effect and shall
create enforceable rights only as between the parties to this
Agreement, and is not intended to and shall not be enforceable by,
create any rights of whatever nature in, or confer any benefit upon
any person other than the parties to this Agreement.
10.8 Incorporation by Reference: The Exhibits,
Appendices and Annexes to this Agreement and the Disclosure Package
and Schedules referred to or included herein and therein constitute
integral parts of this Agreement and are hereby incorporated into
this Agreement by this reference.
10.9 Governing Law: This Agreement will be governed
by and construed in accordance with the internal substantive laws of
the State of New York, applicable to contracts made and to be
performed wholly within such State, and without regard to the
conflicts of laws principles thereof
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10.10 Dispute Resolution:
(a) With respect to any dispute between the
parties relating in any way to this Agreement or the rights and
obligations of the parties hereunder, a party shall first give notice
as provided in Section 10.5 hereof to the other party of the nature
of the dispute setting forth in reasonable detail the facts and
circumstances and the basis for its claim. The promptly endeavor in
good faith to resolve the dispute.
(b) In the event that within twenty (20) business
days after notice of a dispute is given a resolution is not reached
under paragraph (a) above, the dispute shall, at the written request
of any party involved in the dispute, be submitted for consideration
to an executive officer of CSC and an executive officer of Sequa for
resolution (hereinafter, the "Mediators"). Until notice is otherwise
given by CSC, Lawrence Parkus shall serve as the Mediator designated
by CSC for such purpose. Until notice is otherwise given by Sequa,
John J. Dowling, III shall serve as the Mediator designated by Sequa
for such purpose. On a date selected by the Mediators, which date
shall not be later than ten (10) business days after the date from
which they have both received such notice, the Mediators shall meet
at PSG's home office or at such other location agreed upon by the
Mediators, and each interested party shall have up to one hour to
present to the Mediators information relating to the dispute. Within
ten (10) business days after such date, the Mediators shall confer
and propose a resolution of the dispute. If the Mediators are unable
to agree upon a resolution of the dispute, then such dispute shall
be settled by binding arbitration to be held in Washington, D.C., in
accordance with the Expedited Procedures of the Commercial
Arbitration Rules of the American Arbitration Association (the
"Arbitration Rules"). Nothing presented to the designated executive
officers, nor the fact of such presentation, shall preclude the full
review of such dispute, and of any incidental matters, in such
arbitration proceedings. In addition, however, the Arbitrator may
require the parties to produce documents, exhibits, witnesses or
other evidence and the failure of a party to produce such evidence
may be considered adversely to the party so failing to produce the
evidence. Notwithstanding the foregoing, nothing in this Agreement
shall preclude any party from seeking injunctive relief from a court
with regard to any breach of this Agreement.
(c) The arbitration shall be held before a panel
of one arbitrator selected by the parties who need not be on any
panel of the AAA and who is knowledgeable and experienced in the
field that is the subject of the dispute (including without
limitation in the filed of government contract procedures if the
subject involves a government contract) and is mutually agreeable to
the parties. In the event that the parties are unable to agree upon
an arbitrator within thirty (30) days after the request for
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arbitration, such arbitrator shall be designated by the American
Arbitration Association in accordance with the Arbitration Rules upon
the request of any party hereto.
(d) An arbitration may be commenced by any
party to this Agreement by the service of a written Request for
Arbitration upon the other affected parties. Such Request for
Arbitration shall summarize the controversy or claim to be
arbitrated, and shall be referred by the complaining party to the
American Arbitration Association ten (10) days following such service
or thereafter. No Request for Arbitration shall be valid if it
relates to a claim, dispute, disagreement or controversy that would
have been time barred under the applicable statute of limitations had
such claim, dispute, disagreement or controversy been submitted to
the appropriate court in the State of New York.
(e) The arbitrator shall render his award
within thirty (30) days after the date of closing the oral hearings
or, if oral hearings have been waived, within thirty (30) days after
the date the final statements and proofs are transmitted to the
arbitrator. The parties hereby agree to be bound by the decision of
the arbitrator, which shall be final and unappealable. The party or
parties against whom the arbitration decision is made shall bear all
fees and expenses of the arbitrator and of the prevailing party in
such arbitration (including fees and expenses of counsel). Judgment
upon any award of the arbitrator (including an award of equitable
relief) may be entered in any court having jurisdiction or an
application may be made to such court for the judicial acceptance of
the award and an order of enforcement. Should any party hereto fail
to appear or be represented at the arbitration proceedings after due
notice in accordance with the Arbitration Rules, then the arbitrator
may nevertheless render a decision in the absence of that party, such
a decision shall have the same force and effect as if the absent
party had been present.
(f) It is intended that controversies or
claims submitted to arbitration under this Section shall remain
confidential, and to that end it is agreed by the parties that
neither the facts disclosed in the arbitration, the issues
arbitrated, nor the views or opinions of any persons concerning them,
shall be disclosed to third persons at any time, except to the extent
necessary to enforce an award or judgment or as required by law or
in response to legal process or in connection with such arbitration.
10.11 Counterparts: Two counterparts of this
Agreement will be executed by the parties hereto, and each fully
executed counterpart shall be deemed an original without production
of the other.
10.12 Complete Agreement: This Agreement including the
Confidentiality Agreement between CSC and Sequa dated August 16, 1993
sets forth the entire understanding of the parties hereto with
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respect to the subject matter hereof and supersedes all prior letters
of intent, agreements, covenants. arrangements, communications,
representations, or warranties, whether oral or written, by any
officer, employee, or representative of either parry relating
thereto. Without limiting the foregoing, the offer letter of CSC
dated November 4, 1993, as subsequently orally modified as to price,
the term of the exclusive negotiations. and other understandings, is
hereby superceded
10.13 Release of News Information: Except as may be
required by law, neither party shall, without the prior written
consent of the other, make any news release or public announcement
concerning the execution or performance of this Agreement.
10.14 Waiver: Neither the waiver by any of the parties
hereto of a breach of or a default under any of the provisions of
this Agreement, nor the failure of any of the parties, on one or more
occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder shall thereafter be
construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights or
privileges hereunder.
IN WITNESS WHEREOF, the parties have each caused this Agreement
to be executed by their respective authorized officers, as of the
date first above written.
ATTEST: COMPUTER SCIENCES CORPORATION
By: By:
Title: Title:
ATTEST: CSC DOMESTIC ENTERPRISES, INC.
By: By:
Title: Title:
ATTEST: CSC CONSULTING LTD
By: By:
Title: Title:
ATTEST: SEQUA CORPORATION
By:. By:
Title: Title:
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ATTEST: CHROMALLOY GAS TURBINE
CORPORATION
By: By:
Title: Title:
ATTEST: ATLANTIC RESEARCH CORPORATION
By: By:
Title: Title:
ATTEST: ARC PROFESSIONAL SERVICES
GROUP, INC.
By: By:
Title: Title:
ATTEST: ATLANTIC RESEARCH CORPORATION
UK LIMITED
By: By:
Title: Title:
ATTEST: ATLANTIC RESEARCH CANADA INC.
By: BY
Title: Title:
ATTEST: ARC INTEROPERABILITY SYSTEMS
INTERNATIONAL S.A.
By: By:
Title: Title:
ATTEST: SEQUA LIMITED
By: By:
Title: Title:
ATTEST: WARWICK INTERNATIONAL GROUP
LIMITED
By: By:
Title: Title:
ATTEST: LADLEBASE LIMITED
By: By:
Title: Title:
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APPENDIX A
CERTAIN DEFINITIONS
The following terms have the meanings set forth below where
used in the Agreement.
Act: The Securities Act of 1933, as
amended.
Affiliate: With respect to a specified person,
any other person which directly, or
indirectly through one or more
intermediaries, controls or is
controlled by, or is under common
control with, the person specified.
Affiliated Group: Any member of the group consisting of
PSG, the Foreign Subsidiaries, and
any affiliated group within the
meaning of Code Section 1504 (or any
similar group defined under a similar
provision of state, local or foreign
law) or combined or unitary group, of
which any of PSG and the Foreign
Subsidiaries was a member at any
time.
Aggregate Purchase As defined in Section 2.1(b) of the
Price: Agreement.
Agreement: The Stock Purchase Agreement dated on
even date herewith by and among,
Purchasers, Sellers, Sequa Ltd.,
Ladlebase, Warwick, PSG and the
Foreign Subsidiaries.
Applicable Rate: The prime lending rate of interest
announced by The Bank of New York,
New York from time to time during the
period for which interest is required
to be paid pursuant to the Agreement.
ARC: Atlantic Research Corporation, a
Delaware corporation.
ARC/Canada: Atlantic Research Canada Inc.
ARC/ISI: ARC Interoperability Systems
International S.A.
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ARC/UK: Atlantic Research Corporation UK
Limited.
ARC/Canada Shares: As defined in the Recitals of the
Agreement.
ARC/ISI Shares: As defined in the Recitals of the
Agreement.
ARC/UK Shares: As defined in the Recitals of the
Agreement.
Arbitration Rules: As defined in Section 10.10(b) of the
Agreement.
Balance Sheet: As defined in Section 3.2(r) of the
Agreement.
Bid: Any bid, proposal or quotation made
by PSG, or by a contractor team or
joint venture in which PSG is
participating, that, if accepted,
would lead to a Government Prime
Contract or a Government Subcontract.
Canada Price: As defined in Section 2.1(a)(2) of
the Agreement.
Cash Settlement As defined in Section 2.4 of the
Adjustment: Agreement.
Cash Settlement As defined in Section 2.4(a) of the
Statement: Agreement.
Chromalloy: Chromalloy Gas Turbine Corporation, a
Delaware corporation.
Claimant: As defined in Section 9.3 of the
Agreement.
Closing: As defined in Section 5.1 of the
Agreement.
Closing Date: As defined in Section 5.2 of the
Agreement.
Closing Date Any billed or unbilled accounts
Receivables: receivables accrued by PSG or any of
the Foreign Subsidiaries on or prior
to the Closing Date.
Code: The Internal Revenue Code of 1986, as
amended.
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Confidential As defined in Section 4.8 of the
Information: Agreement.
Confidentiality The Confidentiality Agreement
Agreement: between CSC and Sequa, dated August
16, 1993.
Consulting: CSC Consulting Ltd, a corporation
incorporated in the United Kingdom.
Contracting Affiliate: With respect to a specified person,
any subsidiary, joint venture or
partnership controlled by the
specified person and any predecessors
to the foregoing which had a
Government Contract (during the
period when the predecessor was under
the control of the specified person)
which remains subject to possible
government audit.
Contracts: As defined in Section 3.2(h)(2) of
the Agreement.
CSC: Computer Sciences Corporation, a
Nevada corporation.
Default: An occurrence which constitutes a
breach or default or event of default
under a contract, order, or other
commitment, or that would constitute
a breach or default or event of
default after expiration of any grace
period provided without cure.
Disallowance Event: As defined in Section 9.5(a)(2) and
9.5(a)(3) of the Agreement.
Disclosure Package: As defined in Section 3.2 of the
Agreement.
Employees: As defined in Section 7.1 of the
Agreement.
Encumbrance: Any encumbrance or lien, including,
without limitation, any mortgage,
judgment lien, security interest,
encroachment, easement, or other
restriction.
Enterprises: CSC Domestic Enterprises, Inc., a
Nevada corporation.
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Environmental All applicable statutes,
Requirements: regulations, rules, ordinances,
codes, licenses, permits, orders,
authorizations and similar items of
all governmental agencies,
departments, commissions, boards,
bureaus or instrumentalities of any
government, domestic or foreign,
having jurisdiction, all applicable
judicial and administrative and
regulatory notices, writs,
injunctions, orders, decrees, and
judgments, and au covenants running
with the land, that relate to the
protection of health or the
environment.
ERISA: The Employee Retirement Income
Security Act of 1974, as amended.
ERISA Affiliate: A corporation which is a member of a
controlled group of corporations with
the Sellers within the meaning of
Code Section 414(b), a trade or
business (including a sole
proprietorship, partnership, trust,
estate or corporation) which is under
common control with the Sellers
within the meaning of Code Section
414(c), or a member of an affiliated
service group with the Sellers within
the meaning of Code Sections 414(m)
or (o).
ERISA Plans: As defined in Section 3.2(i)(2) of
the Agreement.
Estimated Purchase As defined in Section 2.5 of the
Price: Agreement.
Estimated PSG Price: As defined in Section 2.1(a)(3) of
the Agreement.
Excluded Assets: As defined in Section 2.2 of the
Agreement.
Excluded Liabilities: As defined in Section 2.3 of the
Agreement.
FTC: As defined in Section 4.6 of the
Agreement.
First Closing: As defined in Section 5.2 of the
Agreement.
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Foreign Government: As defined in Section 3.2(s) of the
Agreement.
Foreign Government As defined in Section 3.2(s) of the
Contract: Agreement.
Foreign Subsidiaries: As defined in the Preamble of the
Agreement.
Government Contract: Any Government Prime Contract,
Government Subcontract, Bid or
Teaming Agreement.
Government Prime Any prime contract, basic ordering
Contract: agreement, letter contract, purchase
order, delivery order, change,
arrangement or other commitment of
any kind, on which final payment has
not been made, between PSG and either
the U.S. Government or a State
Government.
Goverment Any subcontract, basic ordering
Subcontract: agreement, letter subcontract,
purchase order, delivery order,
change, arrangement or other
commitment of any kdnd, on which
final payment has not been made,
between PSG and any prime contractor
to either the U.S. Government or a
State Government or any subcontractor
with respect to a Government Prime
Contract.
401(k) Plan: As defined in Section 7.2 of the
Agreement.
H.S.R. Act: As defined in Section 4.6 of the
Agreement.
Hazardous Material: Any substance the presence of which
requires investigation or remediation
under any federal, state or local
statute, regulation, ordinance,
order, formal action or formal
policy, or which is or becomes
defined as a "hazardous waste",
"hazardous substance," pollutant or
contaminant under any federal, state
or local statute, regulation, rule or
ordinance or amendments thereto.
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Indenmitor: As defined in Section 9.3 of the
Agreement.
IRS: As defined in Section 3.2(3)(iii) of
the Agreement.
ISI Price: As defined in Section 2.1 (a)(2) of
the Agreement.
Joint Ventures: As defined in Section 3.1(1) of the
Agreement.
Justice: As defined in Section 4.6 of the
Agreement.
Knowledge: As defined in Section 1.3 of the
Agreement.
Ladlebase: Ladlebase Limited, a corporation
incorporated in the United Kingdom.
Leased Property: As defined in Section 3.2(e) of the
Agreement.
Leased Real Property: As defined in Section 3.2(d) of the
Agreement.
Leased Vehicles: As defined in Section 3.2(e) of the
Agreement.
Losses: As defined in Section 9.1 of the
Agreement.
Mediators: As defined in Section 10.10(b) of the
Agreement.
Multiemployer Plan: A plan as defined in ERISA Section
3(37) to which the Sellers or any
ERISA Affiliate has an obligation
to contribute.
Other Agreements: As defined in Section 3.1(b) of the
Agreement.
Ownership: Such ownership as confers upon the
person having it good and marketable
title to the thing or right owned,
free and clear of any and all
Encumbrances except Permitted
Encumbrances.
Owned Real Estate: As defined in Section 3.2(c) of the
Agreement.
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PBGC: The Pension Benefit Guaranty
Corporation.
Parachute Payment: As defined in Section 3.2(i)(1) of
the Agreement.
Pension Plan: Any employee pension benefit plan as
defined in ERISA Section 3(2) which
is established or maintained by the
Sellers or any ERISA Affililate while
an ERISA Affiliate.
Personal Property: As defined in Section 3.2(e) of the
Agreement.
Plan: Any Pension Plan and any Welfare
Plan.
PSG: As defined in the Preamble of the
Agreement.
PSG Shares: As defined in the Recitals of the
Agreement.
Parties: As defined in Section 1.2 of the
Agreement.
Person: As defined in Section 1.2 of the
Agreement.
Permitted Encumbrances disclosed in any of the
Encumbrances: schedules to the Disclosure Package
or otherwise specified in the
Agreement.
Preliminary Cash As defined in Section 2.5 of the
Settlement Adjustment: Agreement.
Purchasers: As defined in the Preamble of the
Agreement.
Purhasers Indemnitees: As defined in Section 9.2 of the
Agreement.
Real Property: As defined in Section 3.2(z)(1) of
the Agreement.
Receivables: As defined in Section 3.2(a) of the
Agreement.
Receivables Allowance: As defined in Section 9.5(b) of the
Agreement.
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Receivables Breach: As defined in Section 9.5(a)(1) of
the Agreement.
Receivables Notice: As defined in Section 9.5(c)(1) of
the Agreement.
Second Closing: As defined in Section 5.2 of the
Agreement.
Sellers: As defined in the Introductory
Paragraph to the Agreement.
Sellers Indemnitees: As defined in Section 9.1 of the
Agreement.
Sequa: Sequa Corporation, a Delaware
corporation.
Sequa Ltd.: As defined in the Recitals of the
Agreement.
State Government: Any state, territory or possession of
the United States or any department
or agency of any of the above with
statewide jurisdiction and
responsibility.
Sterling Real Estate: As defined in Section 4.1 1 (a) of
the Agreement.
Straddle Period: Any taxable period of any Foreign
Subsidiary relating to income taxes
that includes, but does not end on,
the Closing Date.
Tax or Taxes: Any federal, state, local, or foreign
income, gross receipts, license,
payroll, employment, excise,
severance, stamp, occupation,
premium, windfall profits,
environmental (including tax under
Code Section 59(A), customs duties,
capital stock, franchise, profits,
withholding, social security (or
similar), unemployment, disability,
real property, personal property,
sales, use, transfer, registration,
value added, alternative or add-on
minimum, estimated, or other tax of
any kind whatsoever, including any
interest, penalty, or addition
thereto, whether disputed or not,
<PAGE> payable directly or pursuant to any
tax sharing or tax indemnification
agreement or arrangement.
Tax Return: Any return, declaration, report,
claim for refund, or information
return or statement relating to
Taxes, whether foreign, federal,
state or local, including any
schedule or attachment thereto, and
including any amendment thereof
Teaming Agreement: This has the same meaning as the
term, "Contractor team arrangement,"
as defined in Federal Acquisition
Regulation ("FAR")9.601.
Third Party Claim: As defined in Section 9.3(a) of the
Agreement.
UK Price: As defined in Section 2.1(a)(1) of
the Agreement.
Uncollectible The amount of any Closing Date
Receivables: Receivables that is not collectible
as a result of a Receivables Breach
or a Disallowance Event relating to
such receivables.
U.S. Government: The United States Government or any
department, agency, instrumentality
or corporation thereof.
WARN: As defined in Section 3.2(u)(3) of
the Agreement.
Welfare Plan: Any employee welfare benefit plan as
defined in ERISA Section 3(1) which
is established or maintained by the
Sellers or any ERISA Affiliate while
an ERISA Affiliate.
<PAGE>
Annex 1
Page 1 of 7
30 December 1993
Computer Sciences Corporation
CSC Domestic Enterprises, Inc.
CSC Consulting Ltd
3160 Fairview Park Drive
Falls Church, VA 22042
Re: Purchase of PSG. ARC/UK, ARC/Canada and ARC/ISI
Ladies and Gentlemen:
Carlyle C. Ring, Jr. is Vice President and General Counsel of
Atlantic Research Corporation and John J. Dowling, III is the Senior
Associate General Counsel of Sequa Corporation, a Delaware
corporation. This opinion is being rendered to you in connection
with the purchase, pursuant to the terms of that certain Stock
Purchase Agreement (the "Agreement") dated December 30, 1993 by and
among Computer Sciences Corporation, a Nevada corporation ("CSC"),
CSC Domestic Enterprises, Inc., a Nevada corporation,
("Enterprises"), CSC Consulting Ltd, a corporation incorporated under
the laws of the United Kingdom ("Consulting") (CSC, Enterprises and
Consulting are sometimes collectively referred to herein as
"Purchasers"), Sequa Corporation, a Delaware corporation ("Sequa"),
Chromalloy Gas Turbine Corporation, a Delaware corporation
("Chromalloy"), Atlantic Research Corporation, a Delaware corporation
("ARC") (Sequa, Chromalloy and ARC are sometimes collectively
referred to herein as "Sellers"), Sequa Limited, a corporation
incorporated under the laws of the United Kingdom ("Sequa Ltd."),
Warwick Group International Limited, a corporation incorporated under
the laws of the United Kingdom ("Warwick"), Ladlebase Limited, a
corporation incorporated under the laws of the United Kingdom
("Ladlebase"), ARC Professional Services Group, Inc. ("PSG"),
Atlantic Research Corporation UK Limited ("ARC/UK"), Atlantic
Research Canada Inc. ("ARC/Canada") and ARC Interoperability Systems
International S.A. ("ARC/ISI") ("ARC/Canada, Arc/ISI and ARC/UK are
hereinafter collectively referred to as the Foreign Subsidiaries").
This opinion is being rendered pursuant to Section 5.3A(d)(1)
of the Agreement. All capitalized terms not otherwise defined herein
shall have the meanings provided in the Agreement.
In rendering this opinion, we have examined originals or
copies, certified or otherwise identified to my satisfaction as being
true copies, of the following documents and instruments:
<PAGE>
Annex 1
Page 2 of 7
Computer Sciences Corporation
CSC Domestic Enterprises, Inc.
CSC Consulting Ltd
30 December 1993
Page 2
(a) the Agreement;
(b) certificates of even date herewith of the corporate
secretary of ARC, PSG, ARC/UK, ARC/Canada, ARC/ISI,
Sequa and Chromalloy (collectively referred to as
"Companies") as to corporate resolutions in respect
of the Agreement and the transactions contemplated
thereby, incumbencies of certain officers and a copy
of the Articles and/or Restated Articles of
Incorporation and By Laws of the Companies in effect
on the date hereof;
(c) the corporate records of the Companies;
(d) certificates of recent date of the Secretary of
State of the State of Delaware, Maryland, U.K.
Register of Companies, Canada Controller of Records,
Director of Commerce in Greece, as to the legal
existence and good standing of each of the Companies
under the laws of the jurisdiction of incorporation;
and
(e) letter dated November 29, 1993 from the Federal
Trade Commission to CSC.
We have also made such documentary, factual and legal
examinations as we deemed necessary under the circumstances. As to
factual matters, we have relied with your permission upon statements,
certificates and other assurances of public officials and of officers
and other representatives of the Companies and upon the
representations and warranties contained in the Agreement (other than
those that state a legal conclusion), without independent
verification. We have also assumed, among other things, the
genuineness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to us as
originals, and the conformity to original documents submitted to us
as copies and the authenticity of the originals of such copied
documents.
<PAGE> Annex 1
Page 3 of 7
Computer Sciences Corporation
CSC Domestic Enterprises, Inc.
CSC Consulting Ltd
30 December 1993
Page 3
On the basis of the foregoing examination, and in reliance
thereon, and subject to the assumptions, qualifications, limitations
and exceptions set forth herein, we are of the opinion that:
1. Organization and Existence: Sequa is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware. Chromalloy is a corporation duly organized,
validly existing, and in good standing under the laws of the State
of Delaware. ARC is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware. PSG
is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Maryland. ARC/UK is a
corporation duly organized, validly existing and in good standing
under the laws of the United Kingdom. PSG and each Foreign
Subsidiary is qualified to do business in each jurisdiction in which
either PSG or any Foreign Subsidiary owns or leases any property or
maintains a place of employment.
2. Power and Authority: Sequa, Chromalloy, ARC, Warwick,
Ladlebase, PSG and each Foreign Subsidiary have full corporate power
and authority to execute, deliver, and perform this Agreement and all
other agreements, certificates or documents to be delivered in
connection herewith, including, without limitation, the other
agreements, certificates and documents contemplated hereby
(collectively "Other Agreements"). PSG and each Foreign Subsidiary
have full corporate power and authority to own, lease and operate
their respective assets, and to conduct their respective businesses,
as the same are currently being conducted.
3. Authorization : The execution, delivery and performance
of this Agreement and all Other Agreements, by Sequa, Chromalloy,
ARC, Warwick, Ladlebase, PSG and each Foreign Subsidiary have been
duly authorized by all requisite shareholder and corporate action.
4. Validly Issued: The capitalization of the PSG and ARC/UK
and ARC/Canada and ARC/ISI is accurately set forth in the Agreement
and the stock in each of PSG, ARC/UK, ARC/Canada and ARC/ISI has been
validly issued, fully paid and nonassessable.
5. Binding Effect: Upon execution and delivery by Sequa,
Chromalloy, ARC, Warwick, Ladlebase, PSG and each Foreign Subsidiary,
this Agreement and the Other
<PAGE>
Annex 1
Page 4 of 7
Computer Sciences Corporation
CSC Domestic Enterprises, Inc.
CSC Consulting Ltd
30 December 1993
Page 4
Agreements will be and constitute the valid, binding and legal
obligations of Sequa, Chromalloy, ARC, Warwick, Ladlebase, PSG and
each Foreign Subsidiary, enforceable against each of them in
accordance with the terms hereof and thereof, except as the
enforceability hereof or thereof may be subject to the effect of: (i)
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally;
and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
6. No Default: Neither the execution and delivery of this
Agreement or the Other Agreements nor the performance by Sequa,
Chromalloy, ARC, Warwick, Ladlebase, PSG or any Foreign Subsidiary
of any or all of their respective obligations hereunder or
thereunder: (i) violate or breach, or, with the giving of notice or
the passage of time or both, will violate or breach, or otherwise
constitute or give rise to a default under, the terms or provisions
of their respective organizational or corporate governance documents
or, subject to obtaining any and all consents disclosed in Schedule
3.1(f) of the Disclosure Package, of any contract, commitment or
other obligation to which any of Sequa, Chromalloy, ARC, Warwick,
Ladlebase, PSG or any of the Foreign Subsidiaries is a party or by
which any of them or their property is bound or necessary for the
operation of the business of Sequa, Chromalloy, ARC, PSG or any of
the Foreign Subsidiaries following the Closing; (ii) create or result
in the creation of any Encumbrance on any of their assets; or (iii)
violate any laws, orders, injunctions or decrees to which Sequa,
Chromalloy, ARC, Warwick, Ladlebase, PSG or any Foreign Subsidiary
or their property is subject.
7. HSR Filing: A notification has been filed with the Federal
Trade Commission under the HSR Act, such filings comply as to form
with the HSR Act and the rules and regulations thereunder and, based
upon notice from the Federal Trade Commission to the dated November
29, 1993, the waiting period under the HSR Act has expired and the
Sellers have received no notice from the Federal Trade Commission,
the U.S. Department of Justice, or any other person raising any
objection under the HSR Act to any of the transactions contemplated
hereby.
<PAGE>
Annex 1
Page 5 of 7
Computer Sciences Corporation
CSC Domestic Enterprises, Inc.
CSC Consulting Ltd
30 December 1993
Page 5
8. Consents: To the best of our knowledge, Schedule 3.1(f)
of the Disclosure Package sets forth all consents, approvals,
authorizations and other requirements prescribed by any law, rule or
regulation which must be obtained or satisfied by Warwick, Ladlebase,
PSG, any of the Foreign Subsidiaries or any of the Sellers, including
without limitation all consents and approvals of customers or clients
under existing contracts or proposals for work or receivables for
past work, in connection with the execution, consummation or
performance of this Agreement and the transactions contemplated by
this Agreement.
9. Litigation : To the best of our knowledge, except as
otherwise disclosed on Schedule 3.2(g) of the Disclosure Package: (1)
there presently exists no litigation, proceeding, action,, material
claim or investigation pending in law or in equity against, or to the
best of Seller's knowledge which could have a material adverse impact
on, PSG or any of the Foreign Subsidiaries, or any of their assets,
properties or business nor, to Sellers' knowledge, is them any of the
foregoing threatened; and (2) PSG, the Foreign Subsidiaries and their
assets, properties or business are not subject to any currently
existing and effective notice, writ, injunction, order, or decree of
any court, agency, or other governmental authority. PSG and the
Foreign Subsidiaries are not in default with respect to any currently
existing and effective notice, writ, injunction, order or decree
known to or served upon PSG or any of the Foreign Subsidiaries by any
court or by any arbitrator or any Federal, state, local or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
10. Title to Shares: ARC has good and valid title to the PSG
Shares and Warwick and Ladlebase have good and valid title to the
ARC/UK Shares. Upon consummation of the purchase and sale
contemplated herein, CSC will acquire from PSG good and valid title
to the ARC/Canada Shares and the ARC/ISI Shares other than the one
(1) ARC/ISI Share held by Mr. Edward T. Jones pursuant to Section
4.12 of the Agreement, Consulting will acquire from Warwick and
Ladlebase good and valid title to the ARC/UK Shares, and Enterprises
will acquire from ARC good and valid title to such PSG Shares, in
each instance free and clear of all liens and other Encumbrances
excepting only such restrictions upon transfer, if any, as may be
imposed by foreign, federal and state securities laws.
<PAGE>
Annex 1
Page 6 of 7
Computer Sciences Corporation
CSC Domestic Enterprises, Inc.
CSC Consulting Ltd
30 December 1993
Page 6
11. Securities Laws: The PSG Shares were issued in full
compliance with all applicable federal and state securities laws.
The ARC/UK Shares were issued in full compliance with all applicable
securities laws and rules. The Sellers have obtained all necessary
permits and other authorizations or orders of exemption as may be
necessary or appropriate under any and all applicable federal, state
or foreign securities laws with respect to the transactions
contemplated herein.
12. Subsidiaries: Except for ARC/Canada and ARC/ISI, PSG does
not currently hold and has not in the past two years held a majority
ownership interest in any subsidiary. Schedule 3.1 (1) of the
Disclosure Package sets forth all corporations, partnerships and
other businesses (including without limitation joint ventures)
(collectively, the "Joint Ventures") in which PSG or any of the
Foreign Subsidiaries currently holds, or in the past two years has
held, directly or indirectly, an equity, partnership, profit, joint
venture or similar interest, together with the date that such
interest was sold or terminated. ARC/Canada and ARC/ISI are direct
wholly-owned subsidiaries of PSG except for the one ARC/ISI Share
held by Antonio A. Savoca on the date hereof, which will be held by
Mr. Edward T. Jones on the Closing Date. Schedule 3.1(1) of the
Disclosure Package sets forth the jurisdiction of incorporation of
each of ARC/Canada and ARC/ISI, each jurisdiction in which such
subsidiary is qualified to do business and the number of shares of
such subsidiary outstanding. The outstanding shares of such
subsidiaries have been duly and validly authorized and issued, are
fully paid and non-assessable, and, except as set forth on Schedule
3.1(1) of the Disclosure Package, the outstanding shares of each of
ARC/Canada and ARC/ISI are owned by PSG free and clear of any
Encumbrances. There are no subscriptions, options, warrants, calls,
commitments or other rights of any kind outstanding for the purchase
of, nor any securities convertible or exchangeable for, any equity
securities of either ARC/Canada or ARC/ISI. Each of ARC/Canada and
ARC/ISI is a corporation duly incorporated, validly existing and in
good standing under the jurisdiction of its incorporation, with all
requisite corporate power to conduct its business as it is presently
being conducted and to own and lease its properties and assets. Each
of ARC/Canada and ARC/ISI is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction set
forth in Schedule 3. 1 (1) of the Disclosure Package.
<PAGE>
Annex 1
Page 7 of 7
Computer Sciences Corporation
CSC Domestic Enterprises, Inc.
CSC Consulting Ltd
30 December 1993
Page 7
John J. Dowling, III is admitted to the practice of law before
the State Courts of Missouri. Carlyle C. Ring is admitted to the
practice of law before the State Courts of Virginia. This opinion,
with respect to foreign qualifications contained in numbered
paragraph 1, is based solely upon a review of unofficial compilations
of the provisions of the statutory laws of the relevant
jurisdictions. We expressly disclaim any obligation or undertaking
to update or modify the opinion as a consequence of any future
changes in the applicable laws or in the facts bearing upon the
opinion.
We call to your attention to the fact that we are not admitted
to the practice of law in the state of Delaware, Maryland or the
United Kingdom, Canada or Greece; however, we are familiar with the
General Corporation Law of the State of Delaware and Maryland and
have made inquiries to outside counsel in the United Kingdom, Canada
and Greece for their advice and Counsel upon which we have relied to
render the opinions expressed herein with respect to the Law of The
United Kingdom, Canada and Greece.
This opinion is limited to the effect of the present state of
the General Corporation Law of the State of Delaware and the laws of
the relevant jurisdictions, to the extent set forth in the preceding
two paragraphs. In rendering the opinion, we assume no obligation
to revise or supplement this opinion should the present law, or the
interpretation thereof, be changed.
This opinion is rendered to the Purchasers as of the date
hereof in connection with the Agreement, and may not be relied upon
by any person other than the Purchasers and their permitted
assigness, or by them in any other context, and may not be furnished
to any other person or entity without my prior written consent.
The undersigned are employees of Sequa and ARC, respectively,
and are executing and delivering this opinion only in such
capacities.
By:
John J. Dowling, III
Senior Associate General Counsel of Sequa
Corporation
By:
Carlyle C. Ring, Jr.
Vice-President and General Counsel
Atlantic Research Corporation
<PAGE>
<PAGE>
Computer Sciences Corporation
Annex 2
Page 1 of 5
Hayward D. Fisk
Vice President, General Counsel and Secretary
December 30, 1993
Sequa Corporation
Chromalloy Gas Turbine Corporation
Atlantic Research Corporation
200 Park Avenue
New York, New York 10166
Re: Purchase of PSG. ARC/UK, ARC/Canada and ARC/ISI
Ladies and Gentlemen:
I am the General Counsel of Computer Sciences Corporation, a
Nevada Corporation (the "CSC"). This opinion is being rendered to
you in connection with the purchase, pursuant to the terms of that
certain Stock Purchase Agreement (the "Agreement") dated December 29,
1993 by and among CSC, CSC Domestic Enterprises, Inc., a Nevada
corporation, ("Enterprises"), CSC Consulting Ltd., a corporation
incorporated under the laws of the United Kingdom ("Consulting")
(CSC, Enterprises and Consulting are sometimes collectively referred
to herein as "Purchasers"), Sequa Corporation, a Delaware corporation
("Sequa"), Chromalloy Gas Turbine Corporation, A Delaware corporation
("Chromalloy"), Atlantic Research Corporation, a Delaware corporation
("ARC") (Sequa, Chromalloy and ARC are sometimes collectively
referred to herein as "Sellers"), Sequa Ltd., a corporation
incorporated under the laws of the United Kingdom, Warwick Group
International Limited, a corporation incorporated under the laws of
the United Kingdom, Ladlebase Limited, a corporation incorporated
under the laws of the United Kingdom, ARC Professional Services
Group, Inc. ("PSG"), Atlantic Research Corporation UK Ltd.
("ARC/UK"), Atlantic Research Canada, Inc. ("ARC/Canada") and ARC
Interoperability Systems International S.A. ("ARC/ISI") (ARC/Canada,
ARC/ISI and ARC/UK are hereinafter collectively referred to as the
"Foreign Subsidiaries").
This opinion is being rendered pursuant to Section 5.3A(g)(2)
of the Agreement. Capitalized terms not otherwise defined herein
shall have the meanings provided in the Agreement.
In rendering this opinion, I have examined originals or copies,
certified or otherwise identified to mv satisfaction as being true
copies. of the following documents and instruments:
(a) the Agreement;
<PAGE>
Annex 2
Page 2 of 5
(b) certificates of even date herewith of the corporate
secretary of the Purchasers as to corporate
resolutions in respect of the Agreement and the
transactions contemplated thereby, incumbencies of
certain officers and a copy of the Restated Articles
of Incorporation and By-laws of the Purchasers in
effect on a the date hereof;
(c) certificates of recent date of the Secretary of
State of the State of Nevada and the Companies
House of the United Kingdom as the legal existence
and good standing of the Purchasers under the laws
of the on State of Nevada and the United Kingdom;
and
(d) letter dated November 29, 1993 from the Federal
Trade Commission to CSC.
I have also made such documentary, factual and legal
examinations as I deemed necessary under the circumstances. As to
factual matters, I have relied with your permission upon statements,
certificates and other assurances of public officials and of officers
and other representatives of Purchasers and upon the representations
and warranties of Purchasers contained in the Agreement (other than
those that state a legal conclusion), without independent
verification. I have also assumed, among other things, the
genuineness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents
submitted to us as copies and the authenticity of the originals of
such copied documents.
On the basis of the foregoing examination, and in reliance
thereon, and subject to the assumptions, qualifications, limitations
and exceptions set forth herein, I am of the opinion that:
1. Organization and Existence: CSC is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Nevada and is duly qualified to do business as a foreign
corporation in all other states necessary for the consummation of the
transactions contemplated by the Agreement. Enterprises is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada and is duly qualified to do
business as a foreign corporation in all other states necessary for
the consummation of the transactions contemplated by the Agreement.
Consulting is a corporation duly organized, validly existing, and in
good standing under the laws of the United Kingdom and is duly
qualified to do business in each jurisdiction necessary for the
consumunation of the transactions contemplated by the Agreement.
<PAGE>
Annex 2
Page 3 of 5
Sequa Corporation
Chromalloy Gas Turbine Corporation
Atlantic Research Corporation December 30, 1993
Page 3
2. Power and Authority: CSC, Enterprises and Consulting
have full corporate power and authoritv to execute deliver and
perform the Agreement and the Other Agreements.
3. Authorization: The execution, delivery and
performance of the Agreement and the Other Agreements by
Purchasers have been duly authorized by all requisite corporate
action.
4. Binding Effect: The Agreement and the Other
Agreements constitute the valid, binding and legal obligations of
Purchasers enforceable against Purchasers in accordance with the
terms hereof and thereof, except as the enforceability hereof and
thereof may be subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors rights generally, and (ii)
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5. No Default: Neither the execution and delivery of the
Agreement or the Other Agreements nor the performance by
Purchasers of any or all of their obligations hereunder or
thereunder (i) violate or breach, or with the giving of notice or
the passage of time or both, will violate or breach, or otherwise
constitute or give rise to a default under, the terms or
provisions of Purchasers' Articles of Incorporation or By-Laws or
of any material contract, commitment, or other obligation to which
any of the Purchasers is a parry or by which any of them or any of
their property is bound; (ii) require the consent of any party to
any material contract or other agreement to which any of the
Purchasers is a party by which any of them or any of their
property is bound; or (iii) violate any laws, orders, injunctions
or decreases to which any of the Purchasers or any of their
property is subject.
6. HSR Filing: A notification has been filed with the
Federal Trade Commission under the HSR Act, such filings comply as
to form with the HSR Act and the rules and regulations thereunder
and, based upon notice from the Federal Trade Commission to the
Company dated November 29, 1993, the waiting period under the HSR
Act has expired and the Purchasers have received no notice from
the Federal Trade Commission, the U.S. Department of Justice, or
any other person raising any objection under the HSR Act to any of
the transactions contemplated hereby.
<PAGE>
Annex 2
Page 4 of 5
Sequa Corporation
Chromally Gas Turbine Corporation
Atlantic Research Corporation December 30, 1993
Page 4
7. Regulatory Approvals: All consents, approvals,
authorizations and other requirements prescribed by any law,
regulation or rule which must be obtained or satisfied by
Purchasers and which are necessary for the execution and delivery
by Purchasers of the Agreement and all other documents and the
consummation of the transactions contemplated in the Agreement
have been obtained or satisfied.
8. Litigation: To the best of my knowledge there is no
judgment, order writ, injunction or decree of any federal, state,
local or foreign court or governmental agency to which Purchasers,
their business, or assets are subject that could affect their
ability to perform their respective obligations under the
Agreement.
I am admitted to the practice of law before the United
States Supreme Court and several lower federal courts as well as
the state courts of Kansas, Pennsylvania and the District of
Columbia. My opinion with respect to foreign qualifications
contained in numbered paragraph 1 is based solely upon a review of
unofficial compilations of the provisions of the statutory laws of
the relevant jurisdictions. I expressly disclaim any obligation
or undertaking to update or modify the opinion as a consequence of
any future changes in the applicable laws or in the facts bearing
upon the opinion.
I call to your attention that I am not admitted to the
practice of law in the state of Nevada or in the United Kingdom;
however I am familiar with the General Corporation Law of the
State of Nevada and have made such inquiries as I consider
necessary to render the opinions expressed herein with respect to
the General Corporation Law of the State of Nevada and the United
Kingdom.
This opinion is limited to the effect of the present state
of the General Corporation Law of the State of Nevada and the
United Kingdom and the laws of the relevant jurisdictions, to the
extent set forth in the preceding two paragraphs. In rendering
the opinion, I assume no obligation to revise or supplement this
opinion should the present laws, or the interpretation thereof, be
changed.
<PAGE>
Annex 2
Page 5 of 5
Sequa Corporation
Chromally Gas Turbine Corporation
Atlantic Research Corporation
December 30, 1993
Page 5
This opinion is rendered to the Sellers as of the date
hereof in connection with the Agreement, and may not be relied
upon by any person other than the Sellers and their permitted
assigness, or by them in any other context, and may not be
furnished to any other person or entity without my prior written
consent.
Sincerely,
Hayward D. Fisk
<PAGE>
<PAGE>
Exhibit 1.3A
Page 1 of 6
ARC PROFESSIONAL SERVICES GROUP
Name Title
Edward T. Jones Group President
Craig D. Adler Finance:
Vice President and Chief Financial
Officer
Richard P. Brown Contracts:
Vice President
Joseph L. Cunningham Business Development:
Director
James F. Farrell Human Resources & Administration:
Vice President
Daryl D. Savage Counsel
<PAGE>
<PAGE>
Exhibit 1.3A
Page 2 of 6
C31 ORGANIZATIONAL STRUCTURE
Name Title
Cornelius L. (Neil) Hensel CI Systems Division:
Senior Vice President and General
Manager
Thomas Collins Quality Assurance:
Manager
David H. Adams ARC Interoperability Systems
International S.A.:
Managing Director
Peter Ward Special Programs Operations:
Vice President
Adolph K. Waizecker Communications System Operation
Center:
Director
<PAGE>
Exhibit 1.3A
Page 3 of 6
DSD ORGANIZATIONAL STRUCTURE
Name Title
P. Jennings Scearce, Jr. Defense Systems Division:
Senior Vice President and General
Manager
Larry S. Mechner Financial Planning & Control:
Director
Robert R. Featheringham Tactical Systems Operations:
Vice President
Elliot Needleman Systems Engineering & Logistics
Operations:
Vice President
O. Meyrick Williams Atlantic Research Corporation UK
Limited:
Managing Director
Thornton R. Canning Atlantic Research Canada Inc.:
President
<PAGE>
<PAGE>
Exhibit 1.3A
Page 4 of 6
ISD ORGANIZATIONAL STRUCTURE
Name Title
Jon H. Cowell Information Systems Division:
Sr. Vice President and General
Manager
William F. Farmer Financial Planning & Control:
Director
<PAGE>
<PAGE>
Exhibit 1.3A
Page 5 of 6
FINANCE
Name Title
Richard S. Wilkinson DCAA/Project Control:
Director
Henry R. Folgate Accounting:
Director
<PAGE>
<PAGE>
Exhibit 1.3A
Page 6 of 6
HUMAN RESOURCES AND AMINISTRATION
Name Title
Estela M. DeOliveira Compensation, Benefits and HRIS:
Director
<PAGE>
<PAGE>
Exhibit 1.3B
Page 1 of 2
CONTRACTS
Name Title
Roger L. Furr, Jr. Director, C3I Contracts
Kathy Mann Director, DSD Contracts
James V. Walch Director, ISO Contracts
Edward T. Jones Group President
Craig D. Adler Finance:
Vice President and Chief Financial
Officer
Richard P. Brown Contracts:
Vice President
Joseph L. Cunningham Business Development:
Director
James F. Farrell Human Resources & Administration:
Vice President
Daryl D. Savage Counsel
Adolph K. Waizecker CI Communications Systems Operation
Center.
Director
Thomas Collins C3l Financial Planning & Control
Director
Larry S. Mcchner DSC Financial Planning & Control
Director
Richard S. Wilkinson DCAA/Project Control:
Director
Henry R. Folgate Accounting:
Director
David H. Adams ARC Interoperability Systems
International S.A.:
Managing Director
<PAGE
Exhibit 1.3B
Page 2 of 2
0. Meyrick Williams Atlantic Research Corporation UK
Limited:
Managing Director
Thornton R. Canning Atlantic Research Canada Inc.:
President
Exhibit 2.4
Page 1 of 3
<PAGE>
<TABLE>
Cash Settlement Adjustment
<CAPTION>
October November December Total
<S> <C> <C> <C> <C>
Intercompany Sequa (2,457,324) (2,197,734)
Intercompany ARC & Aerospace (380,021) 301,795
Change in Domestic Cash (211)
Petty Cash at Closing
Net Adjustment:
Current Month (2,837,345) (1,896,150)
Inception to Date (2,837,345) (4,733,495)
</TABLE>
<PAGE>
<TABLE>
Exhibit 2.
Page 2 of
ARC PSG
Cash Settlement Transactions
<CAPTION>
October November December Total
Intercompany Account Sequa Corporation
<S> <C> <C> <C> <C>
+ Reimbursement for Payroll and Related
Tax Withholdings 6,330,919.86 6,419,927.99
+ Funding of General Disbursement Account 4,172,843.65 3,510,791.53
+ Funding of Outstanding Checks at
Closing - (Gen. Disb. Acct) 0.00 0.00
+ Funding of Bank of NY Insurance Account 322,931.47 407,790.21
+ Funding of Outstanding Checks at
Closing - (Insurance Acct.) 0.00 0.00
+ Funding of NationsBank Flex Spending
Account 18,973.49 20,250.41
+ Funding of Outstanding Checks at
Closing - (NB Flex Spending Acct) 0.00 0.00
+ Wire Payments to Vendors Made by Sequa 33,327.22 73,031.29
+ Wire Pavments to ISI Made by Sequa 89,810.86 121,183.17
+ Clearance of Intercompany items with Aerospace 246,752.00 (83,198.19)
- - Other (35,593.69) (256.33)
- - Cash Collections Transferred to Sequa (13,637,288.74) (12,667,254.06)
Total Sequa Intercompany Transactions (2,457,323.88) (2,197,733.98)
Intercompany Account - ARC & Aerospace
+ Payment for ARC Home Office Allocation 128,000.00 128,000.00
+ Payroll Servicing Fee 31,083.00 31,083.00
+ Foley Building Rent 17,660.00 17,660.00
+ Auto Rental Payments 1,212.97 1,212.91
+ Transfer of Cash Collections 35,832.00 34,383.82
- - Services Provided or paid by Group (701.41) (7,993.85)
+ Other Payments (2,000.06) 14,250.82
- - Clearance of Intercompany items to Sequa Account (246,752.00) 83,198.19
- - Reimbursement for Foley Buildout
Move Costs (344,355.00) 0.00
Total ARC & Aerospace Intercompany Transactions (380,020.50) 301,794.89
<FN>
The amounts on this Exhibit 2.4 are preliminary and subject to change in determing the final Cash
Settlement Adjustment.
<PAGE>
</TABLE>
Exhibit 2.4
Page 3 of 3
<TABLE>
ARC PSG
Domestic Cash
<CAPTION>
Sept. 24, Oct. 22,
1993 1993 Difference Nov.19,1993 Difference
<S> <C> <C> <C> <C> <C>
Zero Balance Accts:
Bank of NY 0 0 0 0 0
General Disbursement
Acct.
Mellon Demand Deposit 0 0 0 229 (229)
(Cash Receipts Lock Box)
Bank of New York Hancock 0 0 0 0 0
Insurance Claims Account
NationsBank 0 0 0 0 0
Flex Spending Account
Other 18 18 0 0 18
Subtotal 18 18 0 229 (211)
<FN>
The change in the cash accounts shall be after financial statement reclassification. Disbursement
checks. however, that are outstanding as of the Closing Date shall be treated as an increase to the
Sequa/ARC loan balance since these checks will ultimately be the responsibility of and paid by Sequa.
</TABLE>
<PAGE>
Exhibit 4.12
Page 1 of 1
DECLARATION OF TRUST
To: ARC Professional Services Group, Inc.
I, the undersigned, Edward T. Jones, hereby acknowledge
that I am a nominee and trustee for you in respect of one share
of One (1) Drachma per share par value, fully paid and held by
me, in the capital of ARC Interoperability Systems International
S.A. (hereinafter, 'the Company').
I hand you herewith the Certificate for the said share
together with a stock transfer fully executed by me and I hereby
irrevocably authorize you to complete such transfer by filling in
the date and the name and address of the transferee and the
amount of the consideration (any of which may be retained by you)
for the transfer and to pass the duly completed document to the
Company for registration.
I will pay all dividends, bonuses and other payments
received by me in respect of the said share to you and I will, so
long as I remain as registered proprietor of the said share, vote
in respect thereof as you may from time to time direct and not
otherwise.
This Declaration of Trust shall survive the sale of the
Company to Computer Sciences Corporation and shall inure to the
benefit of Computer Sciences Corporation and to any successor
corporation owning the remaining shares of the Company. This
Declaration of Trust shall survive any change in the name of the
Company.
Dated this day of December, 1993.
Signed, sealed and delivered
by and above named
Edward T. Jones
WITNESS:
Name:
Date: December , 1993
