PARTICIPATION AGREEMENT
AMONG
FMC CORPORATION,
HARSCO CORPORATION,
HARSCO DEFENSE HOLDING, INC.
AND
UNITED DEFENSE, L.P.
DATED AS OF JANUARY 1, 1994
This PARTICIPATION AGREEMENT (this "Agreement") is made as of January 1,
1994, by and among FMC CORPORATION, a Delaware corporation ("FMC"),
HARSCO CORPORATION, a Delaware corporation ("Harsco"), HARSCO DEFENSE
HOLDING, INC., a Delaware corporation ("Harsco L.P.") and UNITED
DEFENSE, L.P., a Delaware limited partnership ("Partnership").
WHEREAS, FMC and Harsco each possess distinctive competencies relating
to the manufacturing, marketing, selling, and servicing of defense
products and systems; and
WHEREAS, FMC and Harsco desire to create a limited partnership for the
manufacture and sale of defense-related products as generally provided
for in this enabling agreement and as further described in the Operative
Documents (as defined herein).
NOW, THEREFORE, in consideration of the mutual covenants, and subject to
the terms and conditions, contained herein, the parties hereby agree
that:
ARTICLE I
SECTION 1.1 DEFINITIONS. Except as otherwise defined herein, terms
used herein in capitalized form shall have the meanings attributed to
them in Annex A to this Agreement.
ARTICLE II
SECTION 2.0 CLOSING.
2.1 Actions at Closing. At or prior to the Closing, in reliance upon
the representations and warranties set forth herein and subject to the
satisfaction (or waiver by the applicable party) of the conditions set
forth herein, FMC and Harsco shall (or shall cause their respective
Affiliates to) accomplish the following actions and consummate the
following transactions:
2.1.1 A Certificate of Good Standing shall have issued by the Delaware
Secretary of State with respect to FMC. An appropriate Certificate of
Incorporation for Harsco L.P. shall have been filed with the Secretary
of State of the State of Delaware. A Certificate of Good Standing shall
have issued by the Delaware Secretary of State with respect to Harsco
L.P. and appropriate By-Laws shall have been adopted. FMC and Harsco
L.P. shall have executed and filed in the Office of the Secretary of
State of Delaware a Certificate of Limited Partnership, thereby forming
a Delaware limited partnership to be known as United Defense, L.P.; and
2.1.2 Except for the Novation Agreement, the Operative Documents not
theretofore executed and delivered shall be executed and delivered.
Those agreements which have been attached hereto as Exhibits at the
Signing Date shall be executed and delivered substantially in the
respective forms attached to this Agreement, and those agreements which
have not been attached hereto as Exhibits at the Signing Date shall be
in form and substance satisfactory to the parties when executed; and
2.1.3 Except as otherwise agreed by the parties in writing, FMC shall
transfer, or cause to be transferred, to the Partnership the FMC Assets
and the FMC Liabilities (provided, that FMC may elect not to transfer
accounts receivable equal to its estimate of the excess, if any, of the
Net Book Value of the FMC Assets and FMC Liabilities (with such accounts
receivable included) over FMC's Target Net Asset Value); and
2.1.4 Except as otherwise agreed by the parties in writing, Harsco
shall transfer, or cause to be transferred, to the Partnership the
Harsco Assets and the Harsco Liabilities (provided, that Harsco may
elect not to transfer accounts receivable equal to its estimate of the
excess, if any, of the Net Book Value of the Harsco Assets and Harsco
Liabilities (with such accounts receivable included) over Harsco L.P.'s
Target Net Asset Value); and
2.1.5 If the estimated Net Book Value of the transfer under 2.1.3 or
2.1.4 above is less than the Target Net Asset Value for the affected
party, such party shall transfer or cause to be transferred to the
Partnership an amount of additional cash or a demand note in the form of
Exhibit A equal to the difference between such estimated Net Book Value
and such Target Net Asset Value. The aggregate transfers by or on
behalf of each of FMC and Harsco L.P. pursuant to Sections 2.1.3, 2.1.4
and 2.1.5 shall constitute each party's Initial Capital Contribution
subject to adjustment pursuant to Section 2.3.3; and
2.1.6 The Partnership shall execute the Assumption Agreement (or
Agreements), substantially in the form of Exhibit B hereto, necessary to
assume the Liabilities.
2.2 Time and Place of Closing. The Closing shall take place at the
offices of FMC, 200 East Randolph Drive, Chicago, Illinois. The parties
intend to Close effective as of 12:01 A.M. Chicago time on January 1,
1994. The parties agree that if the Closing has not occurred by
February 1, 1994 or such later date as the parties mutually agree,
either Parent may by written notice to the other Parent, advise the
other Parent of its intention not to proceed with the transactions
contemplated herein and in the other Operative Documents, without any
penalty or any obligation of any sort owed to any other party other than
any ongoing obligations of confidentiality contained in the
Confidentiality Agreement, attached hereto as Exhibit C, other than any
liability for prior breach of this Agreement and other than any
liability under Section 5.17 or Section 7.11.
In order to effectuate the foregoing intent to Close effective as of
12:01 A.M. Chicago time on January 1, 1994 if all conditions to Closing
(other than those set forth in Sections 3.2, 3.5, 3.7 and 3.14 to 3.18)
have not been met or waived by such date, each Parent agrees (i) to
close the financial books of its Defense Business as of December 31,
1993 and (ii) to calculate, within fifteen Business Days following the
actual date of Closing, the amount of cash flow of its Defense Business
from January 1, 1994 to the actual date of Closing and to remit such
amount to the Partnership by such fifteenth Business Day; provided,
however, that if either Parent's Defense Business has negative cash flow
during such period, the Target Net Asset Value of such Parent's Partner
shall be reduced by the amount of such negative cash flow. It is the
parties' intention (i) to close on January 28, 1994, (ii) that the
Partnership will assume all Liabilities and the Parents will transfer
all Assets on the actual date of Closing and (iii) that the Preliminary
Closing Balance Sheets will be audited as of January 1, 1994 based on
the Assets and Liabilities that would have been contributed or
transferred to the Partnership if the actual date of Closing had been
January 1, 1994. The Accountants shall review the Partners' respective
cash flow calculations to determine whether such calculations are
consistent with the cash flow that the Partnership would have received
had the Closing occurred on January 1, 1994. In the event that the
Accountants determine that there is an inconsistency in any Partner's
calculation, such Partner shall make an adjustment to the amount of cash
flow remitted by it in accordance with the Accountants' determination.
2.3 Post-Closing Adjustments.
2.3.1 Preliminary Closing Balance Sheets. As soon as practicable, but
in no event more than 45 days, after the actual date of Closing, each
Parent will prepare (and the Partnership will assist and cooperate in
such preparation at no cost to the Parents) a balance sheet as of
January 1, 1994 for its Defense Business which reflects the Assets and
Liabilities which would have been contributed or transferred to the
Partnership at the Closing had the Closing occurred on January 1, 1994
(the "Preliminary Closing Balance Sheet"). Each of the Preliminary
Closing Balance Sheets (i) will be audited and reported on by such
Parent's certified public accountants as being in accordance with GAAP
and the Principal Accounting Procedures, prepared on a basis consistent
with the appropriate Pro Forma Balance Sheet, except as set forth on
Schedule 2.3.1 and (ii) will reflect the types of Assets and Liabilities
reflected on the Pro Forma Balance Sheet and the cash and any demand
note contributed or transferred to the Partnership by such Parent and
its Affiliates (and no other assets or liabilities). Each Parent and
its representatives will be entitled to review such Preliminary Closing
Balance Sheet and all relevant books, records and workpapers of the
other Parent and its accountants.
2.3.2 Final Closing Balance Sheets. Within 30 days after its receipt
of the other Parent's Preliminary Closing Balance Sheet, each Parent
shall notify the other whether it accepts or disputes the accuracy of
the Preliminary Closing Balance Sheet. If such reviewing Parent accepts
the preparing Parent's Preliminary Closing Balance Sheet, such
Preliminary Closing Balance Sheet shall be deemed to be the final
balance sheet as of the end of business on the Closing Date ("Final
Closing Balance Sheet"). If the reviewing Parent disputes the accuracy
of the Preliminary Closing Balance Sheet, it will in the notice of such
dispute set forth in reasonable detail those items that it believes are
not fairly presented and the reasons for its opinion. The parties shall
then meet and in good faith use all reasonable efforts to resolve their
disagreements over the disputed items on such Preliminary Closing
Balance Sheet. If the parties resolve their disagreements in accordance
with the foregoing sentence, the Preliminary Closing Balance Sheets with
those modifications to which the parties will have agreed shall be
deemed to be the Final Closing Balance Sheets. If the parties have not
resolved their disagreements over the disputed items on the Preliminary
Closing Balance Sheets within 20 days after notice of the dispute was
given, the parties shall jointly select an independent accounting firm
of national reputation, and such firm will make, within 30 days after
its engagement, a binding determination of those disputed items in
accordance with the terms of this Participation Agreement. The
Preliminary Closing Balance Sheets with such modifications as determined
by such independent accounting firm to be appropriate will be deemed to
be the Final Closing Balance Sheets. The fees and expenses of each
Parent in connection with the preparation of its Preliminary and Final
Closing Balance Sheets will be paid by such Parent, and the fees and
expenses of any independent accounting firm will be shared equally by
the Parents.
2.3.3 Post-Closing Payment If either Partner's estimated Initial
Capital Contribution pursuant to Sections 2.1.3, 2.1.4 and 2.1.5 as
shown on its Final Closing Balance Sheet is less than such Partner's
Target Net Asset Value, then FMC or Harsco L.P., or both, as the case
may be, will, within three Business Days of the final determination of
such Final Closing Balance Sheet, pay to the Partnership cash or assign
to the Partnership accounts receivable of its Defense Business equal to
such difference. Any such payment or assignment required to be made to
the Partnership by FMC or Harsco L.P. shall bear interest at the rate of
three month LIBOR at the actual date of Closing, plus 100 basis points,
from the actual date of Closing through the date such payment is made.
If accounts receivable are assigned in lieu of cash, the assigning
Partner shall pay interest, at the rate of three month LIBOR at the
actual date of Closing, plus 100 basis points, on such receivables from
the actual date of Closing to the earlier of the date on which such
account receivable is collected in full or the date on which such
account receivable is repurchased in its entirety by the assigning
Partner pursuant to Section 5.14. If either Partner's estimated Initial
Capital Contribution pursuant to Sections 2.1.3, 2.1.4 and 2.1.5 as
shown on its Final Closing Balance Sheet is greater than such Partner's
Target Net Asset Value, then the Partnership will within three Business
Days of the final determination of such Final Closing Balance Sheets
transfer to FMC or Harsco L.P., as the case may be, an amount in
accounts receivable or demand notes contributed by such Partner equal to
such excess. If there are insufficient accounts receivable and demand
notes for this purpose, the Partnership shall issue a one-year
promissory note to such Partner for the remainder of such excess
estimated Initial Capital Contribution. Such Promissory Note shall be
in the form attached hereto as Exhibit D and shall be repaid in full
prior to making any distributions to any Partner other than
distributions pursuant to Sections 6.1, 6.2 and 6.3 of the Partnership
Agreement. Any such payment in accounts receivable or demand notes
required to be made by the Partnership to FMC or Harsco L.P. shall bear
interest at the rate of one year LIBOR at the actual date of Closing,
plus 100 basis points, from the actual date of Closing through the date
such payment is made. Any one-year promissory note delivered by the
Partnership to either FMC or Harsco L.P. shall bear interest from the
actual date of Closing at the rate of one year LIBOR at the actual date
of Closing, plus 100 basis points.
ARTICLE III
SECTION 3.0 CONDITIONS PRECEDENT TO CLOSING. The obligation of a party
hereto (a "Closing Party") to complete the transactions contemplated
hereunder ("Close") is subject to the fulfillment or waiver at or before
the Closing of the conditions set forth in this Article III. The
Closing of the transactions contemplated hereby constitutes a waiver by
each party hereto of any nonfulfillment of a condition set forth below
solely for purposes of its obligation to Close.
3.1 Performance. Each other Closing Party and each other party to any
other Operative Documents which is not an Affiliate of such other
Closing Party (the "Condition Party") shall have performed and complied
with each agreement and condition in each Operative Document required to
be performed or complied with by such Condition Party at or before the
Closing, except for the Novation Agreement which will be entered into
following the Closing and except to the extent that such noncompliance
by any other Condition Party would not have a Material Adverse Effect on
the Partnership.
3.2 Authorization, Execution and Delivery of Operative Documents.
Except for the Novation Agreement, each Operative Document shall have
been duly authorized, executed and delivered by each Condition Party
which is a party thereto and executed and delivered by the Partnership
and an executed counterpart shall have been delivered to such Closing
Party. The Partnership Agreement shall have been duly authorized,
executed and delivered by the Partners, a Certificate of Limited
Partnership shall have been filed with the Secretary of State of
Delaware and the Registration Rights Agreement shall have been duly
authorized, executed and delivered by the respective parties thereto.
3.3 Governmental and Private Actions; Burdensome Governmental
Conditions. There shall be no pending or threatened Burdensome
Governmental Condition with respect to the transactions contemplated
hereby and no known DOJ or FTC antitrust investigation pending or in
progress with respect to such transactions. Except for execution and
delivery of the Novation Agreement, all Governmental Actions (other than
routine qualifications and permits to do business intended to be
obtained as needed and other than employee pension and thrift plan
approvals) and all Private Actions (except for third-party Consents to
Restricted Contracts, which are governed by Section 5.11 hereof)
required to be taken, given or obtained that are necessary in connection
with the transactions contemplated by any Operative Document shall (i)
have been taken, given or obtained on terms reasonably satisfactory to
each Parent, (ii) be in full force and effect as of the Closing and
(iii) not be subject to any Burdensome Governmental Condition.
3.4 Governmental Rules. No Governmental Rule shall have been
instituted or issued to set aside, restrain, enjoin or prevent the
consummation of the transactions contemplated by any Operative Document.
No change shall have occurred since the Signing Date in any Governmental
Rule that, in such Closing Party's reasonable opinion, would make it
illegal for such Closing Party, any Affiliate of such Closing Party or
the Partnership to consummate the transactions contemplated by the
Operative Documents or subject such Closing Party, any Affiliate of such
Closing Party or the Partnership to any substantial penalty or other
substantial liability under or pursuant to any existing Governmental
Rule.
3.5 Standard Closing Documents. Such Closing Party shall have
received, with respect to each other Closing Party:
3.5.1 a certificate or certificates dated the Closing Date of a senior
corporate officer, secretary or other appropriate authorized signatory
of such Closing Party certifying as to:
3.5.1.1 the corporate charter and bylaws, recently certified, in the
case of the charter, by the secretary of state or similar Governmental
Authority of the jurisdiction in which such Closing Party is
incorporated, or the equivalent for a partnership, to the extent that
such certification legally exists;
3.5.1.2 the absence of amendments since the date of the last amendment
shown on the official evidence as to such charter furnished pursuant to
this Section 3.5.1;
3.5.1.3 resolutions, delegations or other written evidence of corporate
or other action of the appropriate authority within such Closing Party
and, if applicable, the stockholders or partners of such Closing Party
duly authorizing or ratifying its execution, delivery and performance of
each Operative Document to which it is or is to be party and the absence
of other resolutions, delegations or such other corporate action
relating thereto;
3.5.1.4 the absence of proceedings for the merger, consolidation, sale
of all or substantially all assets, dissolution, liquidation or similar
proceedings with respect to such Closing Party; and
3.5.1.5 the incumbency and signatures of the individuals authorized to
execute and deliver documents on such Closing Party's behalf;
3.5.2 recent official evidence from appropriate Governmental
Authorities as to (A) charter documents on file and good standing in
such Closing Party's jurisdiction of organization and (B) in the case of
the Partners, qualification to do business in each jurisdiction in which
its Defense Business is required to be qualified, which shall be at
least one jurisdiction; and
3.5.3 an opinion of counsel to such Closing Party with respect to the
matters set forth in Exhibit E hereto, dated as of the actual date of
Closing.
3.6 Representations and Warranties. The representations and warranties
of each Closing Party in Article IV shall be true and correct at and as
of the Signing Date and the actual date of Closing, in each case in all
material respects, except as otherwise contemplated by this Agreement.
3.7 Officer's Certificates.
3.7.1 Each Closing Party shall have received an officer's certificate
(or a similar certificate) from the Secretary (or more senior officer)
of each of the other Closing Parties (other than the Partnership) dated
the Closing Date certifying that the conditions set forth in Sections
3.1, 3.2, 3.3, 3.4, 3.6 and 3.8 have been satisfied as to such Closing
Party.
3.7.2 FMC shall have received a Secretary's Certificate from the
Corporate Secretary of Harsco certifying to the fact that as of both the
Signing Date and the actual date of Closing, Harsco L.P. was and is a
wholly-owned Subsidiary of Harsco.
3.8 No Material Adverse Change. Since the Signing Date, there shall
not have occurred any material adverse change in (i) the assets,
liabilities, operations, financial condition or prospects of either
Defense Business or (ii) the financial condition of either Parent, on a
consolidated basis together with its Affiliates.
3.9 Insurance. All insurance policies and programs reflected on
Exhibit A to the Partnership Agreement shall be in full force and effect
on the actual date of Closing and all premiums, commissions and fees
then due thereon shall have been paid (or arrangements, reasonably
satisfactory to Harsco, shall have been made for such payment).
3.10 Due Diligence. The results of any due diligence investigation by
each Closing Party shall not have revealed any event or condition not
disclosed to such Closing Party prior to the Signing Date that would
have a Material Adverse Effect on the Partnership.
3.11 Proceedings, Opinions and Documents. All opinions, certificates
and other documents to be delivered to such Closing Party pursuant to
Section 2.0 and this Article III and all proceedings in connection with
the transactions contemplated by Section 2.0 and this Article III shall
be reasonably satisfactory to such Closing Party. Such Closing Party
shall have received (i) evidence reasonably satisfactory to it that each
condition set forth in this Article III has been satisfied and (ii)
copies of all other documents and other evidence as it may reasonably
request, in form and substance reasonably satisfactory to it, with
respect to such transactions and the taking of all necessary corporate
or other proceedings in connection therewith.
3.12 Partnership Capitalization. The Parents shall have paid or caused
to be paid their respective portions of initial cash contributions
required to be made by the Closing Date pursuant to Sections 2.1.3,
2.1.4 and 2.1.5 of this Agreement as of the actual date of Closing.
3.13 Novation Agreement. There shall have been no written statements
from DOD that it will only novate the Contracts to which it is a party
on terms that would have an adverse effect on the Partnership or any
Parent or that it will not approve novation of such Contracts.
3.14 Intellectual Property Agreements. FMC and Harsco shall have each
entered into Intellectual Property Agreements with the Partnership,
substantially in the forms of Exhibits F-1 and F-2 hereto, and Limited
Non-Exclusive Licenses with the Partnership.
3.15 Lease Agreement. FMC and the Partnership shall have entered into
the Lease Agreement, substantially in the form of Exhibit G hereto.
3.16 Management Services Agreement. FMC shall have entered into a
Management Services Agreement with the Partnership, substantially in the
form of Exhibit H hereto.
3.17 Partnership Agreement. FMC and Harsco L.P. shall have entered
into the Partnership Agreement, substantially in the form of Exhibit I.
3.18 Registration Rights Agreement. FMC, Harsco and the Partnership
shall have entered into the Registration Rights Agreement, substantially
in the form of Exhibit J hereto.
3.19 Effects Bargaining. To the best of each Closing Party's
Knowledge, any "effects bargaining" by Harsco and FMC with their
respective Defense Business collective bargaining representatives shall
not have resulted in claims or demands by either collective bargaining
representative which would have a reasonable likelihood of resulting in
a Material Adverse Effect on the Partnership.
3.20 Title Insurance. Each of FMC and Harsco shall have delivered to
the Partnership (i) at least ten Business Days prior to the actual date
of Closing, a commitment, issued by a title insurance company reasonably
acceptable to the other Parent, to insure the Owned Property contributed
by it to the Partnership, showing title to such property in such
contributing Parent, (ii) an ALTA owner's title insurance policy (4-6-90
version or the most recent version in use in the state where any
particular parcel of Owned Property is located) in the amount of
$7,821,000 in the case of FMC's Owned Property and $12,700,000 in the
case of Harsco's Owned Property, containing no exceptions other than
those listed (or not required to be listed) on Schedule 4.8.2A or 4.8.2B
and insuring fee simple title to all Owned Property contributed by it to
the Partnership (the cost of which policy shall be paid for or
reimbursed by the Partnership after the Closing) and (iii) limited
warranty deeds in recordable form conveying to the Partnership such
Owned Property.
ARTICLE IV
SECTION 4.0 REPRESENTATIONS AND WARRANTIES. Each of the Parents
represents and warrants to the other Parent and the Partnership, and,
with respect to Sections 4.1 through 4.4, the Partnership represents and
warrants to both Parents, at and as of the Signing Date and the actual
date of Closing that:
4.1 Organization; Ownership; Interest, Etc. It and each of its Defense
Affiliates is, or will be by the actual date of Closing, in the case of
its Defense Affiliates, duly organized or established, validly existing
and in good standing under the laws of its jurisdiction of organization
or establishment and it and each of its Defense Affiliates has, or will
have by the actual date of Closing, in the case of its Defense
Affiliates, the power and authority to carry on its business as then
conducted, to own or hold under lease its properties and to enter into
and perform its obligations under each Operative Document to which it is
or is to be a party.
It and each of its Defense Affiliates is or, in the case of its Defense
Affiliates, will be in timely fashion duly organized, qualified to own
or lease its properties and generally to conduct business as currently
or proposed to be conducted in each jurisdiction necessary for purposes
of the transactions contemplated by the Operative Documents. All of the
ownership interest in Harsco L.P. will be held by Harsco free from any
Liens on the actual date of Closing.
4.2 Authorization; No Conflict. It and each of its Defense Affiliates
has or, in the case of its Defense Affiliates, will have by the actual
date of Closing, duly authorized by all necessary action the execution,
delivery and performance of each Operative Document to which it is or is
to be a party, and, except as set forth on Schedule 4.2, neither its
execution and delivery thereof nor its consummation of the transactions
contemplated thereby nor its compliance therewith does or will (i)
require any approval of its stockholders not theretofore obtained or any
approval or consent of any trustee or holders of any of its Debt or
obligations, (ii) contravene any Governmental Rule applicable to or
binding on it or any of its properties, (iii) contravene or result in
any breach of or constitute any default under, or result in the creation
of any Lien (other than Permitted Liens) upon any of its property under,
any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, loan or credit agreement, charter, bylaw or other
agreement or document to which it is a party or by which it or any of
its properties is bound or affected or (iv) require the taking of any
Governmental Action or any Private Action, in each case except such as
have been, or by the actual date of Closing will be, duly obtained,
made, taken or waived (except, in the cases of clauses (ii), (iii) and
(iv), as would not have a Material Adverse Effect on such Parent, its
Defense Business or the Partnership).
4.3 Enforceability. It and each of its Affiliates, as applicable, have
duly executed and delivered this Agreement, and this Agreement
constitutes, and each other Operative Document to which it and each of
its Defense Affiliates, as applicable, are or are to be parties upon
execution and delivery thereof by it or the applicable Defense Affiliate
will constitute, its or the applicable Defense Affiliate's legal, valid
and binding obligation, enforceable against it or the applicable Defense
Affiliate in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting
creditors generally and by the availability of equitable remedies.
4.4 Proceedings. Except as set forth on Schedule 4.4, there are no
actions or proceedings pending or, to its Knowledge, threatened, before
any Governmental Authority that, if adversely determined against it,
would have a Material Adverse Effect on such Parent, its Defense
Business or the Partnership.
4.5 Special Purpose Representation as to Partners. In the case of any
Affiliate that will become a Partner in the Partnership, such Partner on
the actual date of Closing: (i) will be duly incorporated and
sufficiently capitalized to meet its then current obligations to make
contributions to the Partnership; (ii) will not have conducted any
business other than to enter into and perform its obligations under the
Operative Documents; (iii) will have no outstanding Debt or other
obligations other than Debt owed to its Parent or pursuant to the
Operative Documents and Contracts to which it is a party; and (iv) will
not be a party to or be bound by any contract or other document other
than such Operative Documents to which it is a party, its organizational
documents, and such other documents, agreements and contracts between
it, its Parents and Affiliates of its Parents necessary and desirable to
enable it fully to perform the functions and activities contemplated by
this Agreement and the other Operative Documents.
4.6 No Defaults; Operative Documents and Contracts. It has not
received any notification to the effect that any material Contract is
not in full force and effect or will not be immediately after the
Closing, and it has not received any notification of default,
repudiation or disaffirmance from any other party thereto and has no
reason to believe that any material Contract will not be in full force
and effect immediately after the Closing, except to the extent that such
event or condition as would not have a Material Adverse Effect on such
Parent, its Defense Business or the Partnership.
4.7 No Outstanding Rights. There are no outstanding rights, options,
agreements or other commitments and on the actual date of Closing,
except as provided in the Operative Documents or the Schedules attached
thereto, there will be no outstanding rights, options, agreements or
other commitments, giving any Person any current or future right to
require such Partner, its Parent or any of their Affiliates (or,
following the actual date of Closing, the Partnership) to transfer to
any Person any ownership or possessory interests in any Assets,
Contracts and Liabilities of such Partner, its Parent or any of their
Affiliates.
4.8 Title and Liens.
4.8.1 Title to Assets Other Than Real Property. Such Partner or one of
its Affiliates has, and at the Closing, the Partnership shall receive,
good title to all tangible Assets other than Real Property that are
purportedly owned, free and clear of all Liens, other than Permitted
Liens.
4.8.2 Title to Real Property. Schedules 4.8.2A and 4.8.2B set forth a
complete list of all real property and interests in real property owned
in fee by the FMC Defense Business and the Harsco Defense Business,
respectively, that will be transferred to the Partnership at Closing
(individually, an "Owned Property"). Schedules 4.8.2A and 4.8.2B also
set forth a complete list of all real property and interests in real
property owned or leased by the FMC Defense Business and the Harsco
Defense Business, respectively, that will be leased by the Partnership
as the tenant or lessee thereof after the Closing (individually, a
"Leased Property") and identify any material leases relating thereto.
Except as set forth on Schedule 4.8.2A or 4.8.2B, each Parent has (i)
good and marketable fee title to all Owned Property and (ii) good and
valid title to the leasehold estates in all Leased Property, including
subleases, in each case free and clear of all mortgages, liens, leases,
security interests, easements, covenants, rights-of-way and other
similar restrictions or encumbrances of any nature whatsoever, except
(a) Permitted Liens, (b) easements, covenants, rights-of-way and other
similar restrictions or encumbrances of record and (c) (i) zoning,
building and other similar restrictions, (ii) mortgages, liens, leases,
security interests or encumbrances that have been placed by any
developer, landlord or other third party on property over which either
Defense Business has easement rights appurtenant to or used in
connection with any Owned Property or on any Leased Property and
subordination or similar agreements relating thereto and (iii)
unrecorded easements and rights-of-way, encroachments and discrepancies
in area or boundary lines, none of which items set forth in clauses (b)
and (c) above, individually or in the aggregate, materially impair the
continued use and operation in either Defense Business, as presently
conducted, of the property to which they relate and the improvements
located on such property.
4.9 Assets in Good Condition and Working Order. To its Knowledge, all
property, plant, equipment and inventories included in each Parent's
Assets are in normal working order, except for ordinary wear and tear,
retirements in the ordinary course of business, normal maintenance and
repair and breakdowns that do not significantly affect normal
operations. All inventories included in each Parent's Assets are
accurately valued and carried on an average cost basis and, except for
such inventories that constitute Slow-Moving Inventory (i) are usable or
saleable in the normal course of the Parent's Defense Business; (ii) at
the actual date of Closing, will not be excessive in kind or amount in
light of prior inventory levels at comparable periods and anticipated
sales; and (iii) are reasonably adequate and sufficient in kind and
amount with respect to actual sales commitments as of the date hereof
and anticipated sales commitments, in light of historic rates of
inventory turnover. Except as shown on Schedules 4.9A and 4.9B, there
is not, with respect to such Partner's accounts receivable, any known
existing default or any receivable that such Partner does not reasonably
expect to collect within six months of the actual date of Closing,
except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Partnership. Attached hereto as Schedules 4.9A
and 4.9B are schedules of aged accounts receivable of the FMC Defense
Business and the Harsco Defense Business, respectively. On the actual
date of Closing, each Parent will submit to the Partnership an updated
list of aged receivables being transferred to the Partnership.
4.10 Contracts, Etc. Set forth on Schedule 4.10 are lists of all
contracts, agreements, licenses and commitments relating to its Defense
Business which: (a) provide for the sale or other disposition of
products or services to customers of, or for the purchase of raw
materials, products or services from suppliers to, such Defense Business
(excluding consulting contracts, sales representative agreements,
marketing agreements and lobbying agreements), other than contracts,
agreements, licenses and commitments which individually (i) do not
involve future payments or receipts of more than $1,000,000 or (ii)
permit cancellation by either Parent or any Defense Affiliate thereof
upon 90 or fewer days' notice without any liability, penalty or premium
in excess of $100,000; (b) provide the terms and conditions pursuant to
which distributors, distributor branches, service dealers and direct
dealers (foreign and domestic) provide Defense Business products,
service and parts to end user customers or relating to the compensation
of or termination of arrangements with such persons or entities by
either Defense Business; (c) set forth the terms of any material
subcontracts, joint ventures, teaming arrangements, collective
bargaining agreements, leases, employment, confidentiality or
non-competition agreements, related party transactions or arrangements,
guarantees, debt instruments, off-sets with foreign governments or
intellectual property agreements; (d) are otherwise material to the
business, operations, financial condition or prospects of the
Partnership; or (e) provide for the procurement by either Parent of
consulting, sales representative, marketing or lobbying services,
regardless of the amount involved in each such contract. The list of
Contracts set forth on Schedule 4.10 shall indicate those Contracts for
which a novation agreement or consent to assignment of contract may be
required and shall be separated into the following categories: (i)
government contracts; (ii) consulting contracts; (iii) sales
representative contracts; (iv) lobbying contracts; (v) supply, services,
and vendor contracts; and (vi) other contracts. True and complete
copies (or originals, if available) of all Contracts that are listed on
Schedule 4.10 shall be made available, as requested, to the other Parent
for review as soon as practically possible. There are no known
liabilities in excess of $100,000 in the aggregate with regard to all
classified U.S. Government contracts to which such Partner is a party.
Each contract providing for the provision of products and services to
customers by either Parent shall be designated as either an Active
Contract or an Inactive Contract on Schedule 4.10. Except as set forth
in Schedule 4.10, to its Knowledge, there is not, with respect to the
Contracts, any existing default, or an event of default, or event which
with due notice or lapse of time or both would constitute a default or
an event of default, on the part of FMC or Harsco, as the case may be,
or the other party thereto, except such defaults, events of default and
other events which would not, individually or in the aggregate, have a
Material Adverse Effect on the Partnership. Except as disclosed in
Schedule 4.10 (or as not required to be disclosed), no other contract
exists which would bind the Partnership or which would restrict the
ability of the Partnership to consummate the transactions contemplated
hereby or engage in any business within its Scope of Activity.
4.11 Legal Matters. Except as set forth on Schedule 4.11 and except
for provisions in any contract with the U.S. Government that permit the
U.S. Government to terminate such contract for its convenience, neither
Parent nor any Subsidiary thereof is subject to any Governmental Rule,
Private Action or contract or agreement that may have a Material Adverse
Effect on the Partnership. There are no material legal impediments to
the operation of such business activity within the Scope of Activity in
the ordinary course. Except as set forth in Schedule 4.11, there is no
governmental or private litigation, arbitration or other proceeding or
investigation by any Governmental Authority pending or, to the Knowledge
of such Parent, threatened against such Parent or any Subsidiary thereof
that would materially and adversely affect the Assets or Contracts
(including their transfer to or use by the Partnership), the Liabilities
or the continued operation of such Assets or Contracts by the
Partnership in the manner in which they have been operated by each of
the Parents to date or have a Material Adverse Effect on the
Partnership. Further, except as set forth on Schedule 4.11, there
currently exist no judgments unsatisfied against either Parent or any of
its Affiliates in connection with its Defense Business, nor any consent
decree or injunction to which it is subject. Except as set forth in
Schedule 4.11, neither FMC nor Harsco is aware of any unfair labor
practice on its part or any acts or omissions on its part which are
reasonably expected to constitute an unfair labor practice under the
National Labor Relations Act.
4.12 Liabilities. Except for liabilities of the types and in the
amounts set forth on the Pro Forma Balance Sheet or the Final Closing
Balance Sheet and liabilities otherwise disclosed on Schedule 4.12 or on
any other Schedule to this Agreement, there are no liabilities or
obligations of any kind (absolute, accrued, contingent or otherwise),
including, but not limited to, liabilities or obligations relating to or
arising out of the operation of either Defense Business, that are
reasonably expected, individually or in the aggregate, to have a
Material Adverse Effect on such Parent's Defense Business or the
Partnership.
4.13 No Broker's or Finder's Fees. Neither Parent nor any Subsidiary
has incurred any liability for any broker's or finder's fees or
commissions or similar payments in connection with any of the
transactions contemplated hereby which will, directly or indirectly,
become the responsibility of, or be borne by, the Partnership or the
other Parent or any Affiliate thereof.
4.14 Financial Information. Attached hereto as Schedule 4.14A or
4.14B, as the case may be, is such Partner's good faith estimate at the
time of preparation thereof, based on reasonable assumptions, of the
projected September 30, 1993 balance sheets (each a "Pro Forma Balance
Sheet") of its Defense Business, except as noted therein. Each Pro
Forma Balance Sheet has been prepared in accordance with GAAP and such
Parent's historical accounting procedures with respect to its Defense
Business, except as noted therein.
4.15 Events Subsequent to December 31, 1992. Except as indicated in
Schedule 4.15 with respect to it, from and after December 31, 1992,
neither Parent, with respect to its Defense Business, has: (i) suffered
or experienced any material adverse change in its financial condition,
Assets, Liabilities, business, results of operations, net worth or
prospects, other than changes in the ordinary course of business, none
of which (individually or in the aggregate) has been materially adverse
to its financial condition, Assets, Liabilities, business, results of
operation, net worth or prospects; (ii) suffered any damage, destruction
or loss, whether or not covered by insurance, which adversely affects
its properties, Assets or business in any material respect; (iii) made
or granted any increase in the compensation payable or to become payable
to any employees, or any increase in any bonus, insurance, pension or
other employee benefit arrangement to, for or with any such employees,
other than in the ordinary course of business or terminated, given
notice of termination to or received notice of the resignation of any
key employee; (iv) mortgaged, pledged, hypothecated or otherwise
encumbered any of its material assets; (v) sold, licensed or
transferred, or agreed to sell, license or transfer, any of its assets,
other than in the ordinary course of business; (vi) sold or transferred,
or agreed to sell or transfer, any material patents, trademarks, trade
names, copyrights, licenses, rights to special processes or other
intangible assets previously used in its operations; (vii) agreed to any
material amendment to or termination of a Contract, or entered into,
accelerated, terminated or modified any Contract, lease, sublease,
rental agreement or license, in any such case involving more than
$1,000,000; (viii) incurred any new commitment (through negotiations or
otherwise) or liability to any labor organization; (ix) entered or
agreed to enter into any agreement or arrangement granting preemptive
rights, preferential rights or rights of first refusal with respect to
its Assets; (x) delayed or postponed beyond its normal and usual
practice the payment of any accounts payable and other liabilities; (xi)
canceled, compromised, waived, settled or released outside of the
ordinary course of business any right or claim (or series of related
rights and claims) involving more than $1,000,000; or (xii) entered into
any other material transaction other than in the ordinary course of
business as theretofore conducted.
4.16 Consents. No consent, authorization, order or approval of, or
filing or registration with, any Governmental Authority is required for
or in connection with the consummation by each Parent of the
transactions contemplated hereby, except for: (i) those that have been
obtained, (ii) the Novation Agreement, (iii) circumstances where the
failure to obtain such consent, authorization, order or approval would
not have a Material Adverse Effect on such Parent's Defense Business or
the Partnership and (iv) those set forth in Schedule 4.16.
4.17 Notice of Governmental Authorization and Compliance With Laws.
Since January 1, 1988, except as set forth on Schedule 4.17, with
respect to its Assets and its Defense Business, it has not received any
written notification of any asserted present or past failure to comply
in any material respect with any applicable laws, regulations or other
requirements of any Governmental Authority having jurisdiction over it,
except for such noncompliance as would reasonably be expected not to
have a Material Adverse Effect on such Parent's Defense Business or the
Partnership. With respect to its Assets and its Defense Business, it
has obtained all material permits, certificates, licenses, approvals and
other authorizations (other than pursuant to the Novation Agreement)
required in connection with its present operations, none of which will
lapse, expire, terminate, be revoked or rescinded or otherwise become
lost or unavailable to the Partnership by reason of the transactions
contemplated by this Agreement. To the best of its Knowledge, the
Assets and the Defense Business have been operated in compliance in all
material respects with all terms and conditions of any and all material
permits, licenses and authorizations. Since January 1, 1988, except as
set forth on Schedule 4.17, there has been no (a) criminal proceeding
(whether regarding a felony or misdemeanor offense) threatened in
writing or commenced with respect to its Defense Business, however
resolved, (b) suspension or debarment proceeding threatened in writing
or commenced by any Governmental Authority, (c) civil proceeding under
the False Claims Act, as amended, commenced with respect to its Defense
Business, however resolved, or (d) claim made or threatened in writing
by any Governmental Authority under the Truth in Negotiations Act or
under the Foreign Corrupt Practices Act of 1977, each as amended.
4.18 Government Contracts. Except as set forth in Schedule 4.18, it
has not received, with respect to its Assets, notice of any default
under or notice of any violation of the terms of any government contract
which relates to its Defense Business, either directly or as a
subcontractor, consultant or otherwise. Except for routine audits in
the ordinary course of business and as set forth in Schedule 4.18, it is
not participating in any investigation by any Governmental Authority
relating to its government contracts, billings, claims or business
practices that could lead to criminal or civil penalties, and, to its
Knowledge, it is not the subject of any such investigation relating to
its Defense Business. Except as set forth in Schedule 4.18, since
January 1, 1983 it has not been and is not debarred or suspended by any
Governmental Authority from bidding for or obtaining any government
contract (including as a result of any listing proceeding under 40
C.F.R. Part 15), and no such proceeding is pending, or to its Knowledge,
threatened, which could result in the debarment or suspension of it or
any part of its Defense Business.
4.19 Capital Stock and Equity Interests of Defense Affiliates and
Defense Subsidiaries. Schedule 4.19 sets forth for each Defense
Affiliate and Defense Subsidiary, as applicable, the amount of its
authorized capital stock, the amount of its outstanding capital stock,
the record owners of its outstanding capital stock, or the record owners
of its partnership interests and such record owners' percentage
ownership. All the outstanding shares of capital stock of each Defense
Affiliate and Defense Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth on
Schedule 4.19, the shares of capital stock or partnership interests of
any Defense Affiliate or Defense Subsidiary have not been issued in
violation of, and none of such shares of capital stock or partnership
interests is subject to, any preemptive or subscription rights. Except
as set forth on Schedule 4.19, there are no shares of capital stock or
other equity securities or partnership interests of any Defense
Affiliate or Defense Subsidiary outstanding. Except as set forth on
Schedule 4.19, there are no outstanding warrants, options, "phantom"
stock rights, agreements, convertible or exchangeable securities or
other commitments (other than this Agreement or any other Operative
Document) pursuant to which the Partnership is or may become obligated
to issue, sell, purchase, return or redeem any shares of capital stock
or other securities of any Defense Affiliate or Defense Subsidiary, and
there are not any equity securities of any Defense Affiliate or Defense
Subsidiary reserved for issuance for any purpose. Except as set forth
on Schedule 4.19, each Parent directly or through one or more
wholly-owned subsidiaries has good and valid title to all the
outstanding shares of capital stock or partnership interests of each
Defense Subsidiary, free and clear of any liens, claims, encumbrances,
security interests, options, charges and restrictions whatsoever, and
all outstanding shares of capital stock are duly authorized and validly
issued and outstanding, fully paid and nonassessable. Except as set
forth on Schedule 4.19, neither Defense Business directly or indirectly
owns any capital stock of or other equity interests in any corporation,
partnership or other entity.
4.20 Intellectual Property Rights.
4.20.1 The Transferred Intellectual Property Rights, Licensed
Intellectual Property and Licensed Third Party Rights comprise all of
the intellectual property rights necessary for the operation of its
Defense Business as currently conducted or proposed to be conducted; it
owns, possesses with the right to use or has a valid and enforceable
license with respect thereto free and clear of all liens, security
interests, encumbrances and other restrictions and no claim by any third
party contesting the validity, enforceability, use, possession or
ownership of any of the Transferred Intellectual Property Rights or
Licensed Intellectual Property is currently outstanding or known to be
threatened.
4.20.2 Schedule 4.20 sets forth a complete and correct list of its
Statutory Rights and Marks constituting Transferred Intellectual
Property Rights and Licensed Intellectual Property and all licenses or
other agreements (including teaming agreements) to which it is a party
relating to Licensed Third Party Rights and/or Transferred Intellectual
Property Rights or Licensed Intellectual Property. The Transferred
Intellectual Property Rights will be transferred and/or assigned to the
Partnership at the Closing.
4.20.3 The loss or expiration of any Statutory Right or Mark or related
group of Statutory Rights or Marks would not have a Material Adverse
Effect and no such loss or expiration is threatened, pending or
reasonably foreseeable; neither Parent (or any of its Defense
Affiliates) has received any notice of, nor is aware of any facts which
indicate a likelihood of, any infringement or misappropriation by, or
conflict with, any third party with respect to any of its Data Rights,
Statutory Rights, Marks or Licensed Third Party Rights (including,
without limitation, any demand or request that such Parent or its
Defense Affiliates license any rights from a third party).
4.20.4 The transactions contemplated by this Agreement will have no
material adverse impact on the right, title and interest in the
Transferred Intellectual Property Rights or Licensed Intellectual
Property or the licenses and other agreements relating to the Licensed
Third Party Rights. It has taken the necessary action to maintain and
protect the Statutory Rights and Marks prior to Closing.
4.21 Employee Benefits and Contracts. With respect to employee benefit
programs and contracts applicable to Plan Participants or other persons:
4.21.1 Except as set forth on Schedule 4.21.1, neither Parent, with
respect to its Defense Business, maintains, contributes to or is a party
to any (i) nonqualified deferred compensation, bonus or retirement plans
or arrangements, (ii) qualified defined contribution or defined benefit
plans or arrangements which are employee pension benefit plans (as
defined in Section 3(2) of ERISA), (iii) employee welfare benefit plans
(as defined in Section 3(1) of ERISA) or fringe benefit plans or
programs, (iv) invention and disclosure agreements and secrecy
agreements, or (v) employment contracts, letters of employment,
competition agreements, compensation, commission, bonus, fee or profit
sharing agreements or stock purchase agreements. Unless stated
otherwise, when used in this Section 4.21, the terms "Pension Plan" and
"Welfare Plan" refer to such respective pension and welfare plans of
Harsco and FMC as listed on Schedule 4.21.1.
4.21.2 Neither Parent, with respect to its Defense Business, within the
last five years, has contributed to any multiemployer pension plan (as
defined in Section 3(37) of ERISA). Neither Parent, with respect to its
Defense Business, is aware of any circumstances which would or could
subject it or any successor to withdrawal liability pursuant to the
Multiemployer Pension Plan Amendments Act.
4.21.3 Neither Parent, with respect to its Defense Business, maintains
or contributes to any plan which provides health, accident or death
benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code or as disclosed on Schedule
4.21.1.
4.21.4 To each Parent's Knowledge, each Pension Plan and Welfare Plan
(and related trust and insurance contract) complies in form and in
operation in all material respects with the applicable requirements of
ERISA, the Code and Federal securities laws; and, with the exception of
the Nonqualified Plans listed on Schedule 4.21.1 and identified as such,
the Pension Plans meet the requirements of "qualified plans" under
Section 401(a) of the Code, each trust related thereto has been
determined to be exempt from tax pursuant to section 501(a) of the Code,
each such Pension Plan has received a favorable determination letter
from the Internal Revenue Service, and neither FMC nor Harsco is aware
of any event that has occurred since the date of such determination,
including changes in laws or regulations or modifications to such
Pension Plans, that would adversely affect such qualification or tax
exempt status with respect to their respective Pension Plans.
4.21.5 To each Parent's Knowledge, all required reports and
descriptions (including, but not limited to, Form 5500 Annual Reports,
Summary Annual Reports, PBGC-1s and Summary Plan Descriptions) with
respect to each Pension Plan and Welfare Plan have been properly filed
with the appropriate Governmental Authority and/or distributed to
participants or other interested parties, and each of FMC and Harsco has
complied with the requirements of Section 4980B of the Code.
4.21.6 With respect to each Pension Plan, all contributions which are
due (including all employer contributions and employee salary reduction
contributions) have been paid to such Pension Plan and benefits which
are payable from such Pension Plan have been paid or adequate provision
therefore has been made. With respect to each Welfare Plan, all
premiums, contributions or other payments and all benefits which are due
have been paid.
4.21.7 No Pension Plan has been completely or partially terminated nor
has it been the subject of a "reportable event" as that term is defined
in Section 4043 of ERISA as to which notices would be required to be
filed with the PBGC; and no proceeding by the PBGC to terminate any such
Pension Plan has been instituted or threatened. To its Knowledge,
neither FMC nor Harsco has incurred any liability to the PBGC, the IRS,
the Department of Labor, any multiemployer plan or otherwise with
respect to any Pension Plan or Welfare Plan currently or previously
maintained by members of their respective controlled group or their
affiliated service group of companies (as defined in Sections 414(b) and
(c) and (m) of the Code, the "Controlled Group")that has not been
satisfied in full, and no condition exists under any Pension Plan or
Welfare Plan that presents a material risk to either FMC or Harsco or
any member of FMC's or Harsco's respective Controlled Group of incurring
such a liability, other than liability for premiums due the PBGC.
4.21.8 The Accumulated Benefit Obligation (as defined in Statement of
Financial Accounting Standards No. 87 as to (i), (ii), (iii) and (iv)
below) and the Accumulated Postretirement Benefit Obligation (as defined
in Statement of Accounting Standards No. 106 as to (v) and (vi) below)
as of December 31, 1993 associated with Plan Participants under the (i)
Qualified Pension Plans maintained by FMC is estimated to be
$154,472,000 using FMC's actuarial assumptions shown on Schedule 4.21.8,
and the corresponding Fair Market Value of assets (determined in
accordance with Section 5.9.5.2 is estimated to be $216,118,000; (ii)
Qualified Pension Plans maintained by Harsco is estimated to be
$34,700,000 using Harsco's actuarial assumptions shown on Schedule
4.21.8, and the corresponding Fair Market Value of assets (determined in
accordance with Section 5.9.5.2 is estimated to be $44,783,000;
(iii) Nonqualified Plans maintained by FMC is estimated to be $1,375,000
using FMC's actuarial assumptions shown on Schedule 4.21.8, and the
corresponding Fair Market Value of assets (determined in accordance with
Section 5.9.8) is estimated to be $0; (iv) Postretirement Benefit Plans
maintained by FMC is estimated to be $60,858,000 using FMC's actuarial
assumptions shown on Schedule 4.21.8, and the corresponding Fair Market
Value of assets (determined in accordance with Section 5.9.7) is
estimated to be $20,795,000; and (v) Postretirement Benefit Plans
maintained by Harsco is estimated to be $4,330,000, using Harsco's
actuarial assumptions shown on Schedule 4.21.8, and the corresponding
Fair Market Value of assets (determined in accordance with Section
5.9.7) is estimated to be $0. The assets of each Pension Plan described
in clauses (i) and (ii) above will on the actual date of Closing exceed
the respective Accumulated Benefit Obligation (as defined in Statement
of Financial Accounting Standards No. 87) under such plan.
4.21.9 With respect to each Pension Plan and each Welfare Plan, (i)
there have been no known prohibited transactions as defined in Section
406 of ERISA or Section 4975 of the Code, (ii) there has not been
asserted against any fiduciary (as defined in Section 3(21) of ERISA) or
any disqualified person (as defined in Section 4975 of the Code) any
claim for liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration of the plan or the
investment of the assets of such plan, and (iii) no actions,
investigations, suits, claims or any similar matters (other than routine
claims for benefits) are pending or threatened against such plan or its
respective sponsor, and neither FMC nor Harsco has Knowledge of any
facts which would give rise to or could reasonably be expected to give
rise to any such actions, suits or claims.
4.21.10 With respect to each Pension Plan and each Welfare Plan, each
of FMC and Harsco has furnished to the other true and complete copies of
(i) the most recent plan documents, summary plan descriptions and
summaries of material modifications, (ii) the most recent determination
letter received from the Internal Revenue Service, where applicable,
(iii) the most recent Form 5500 Annual Report, actuarial valuation
report, and accountant's opinion where applicable, (iv) any related
trust agreements, insurance contracts or other funding agreements which
implement such plans and (v) Part VII of the most recent CASB Disclosure
Statement.
4.21.11 Except as set forth on Schedule 4.21.11 or otherwise disclosed
in writing on January 24, 1994, (i) there are no employee benefit cost
disallowances pending or threatened by any agency of the U.S. Government
and neither FMC nor Harsco has Knowledge of any facts which would give
rise to or could reasonably be expected to give rise to any such actions
and (ii) all employee benefit costs have been properly determined and,
with respect to Qualified Pension Plans, funded in a timely manner in
accordance with any applicable CAS or FAR and any such determination is
consistent with the CASB Disclosure Statement and established practices
of FMC or Harsco.
4.22 Bargaining Agents. Schedule 4.22 lists each bargaining agent
representing or purporting to represent any Transferred Employees
(whether or not recognized by such Parent as the recognized collective
bargaining agent) and each collective bargaining agreement currently
applicable to any Transferred Employee to which such Parent is a party,
and such Parent has furnished to the other Parent and to the Partnership
true and complete copies of each such agreement.
4.23 Impact of Transaction. To its Knowledge, except as contemplated
by this Agreement, no Transferred Employee of such Parent will become
entitled to any compensation, bonus, retirement, severance, job security
or similar benefit or enhanced benefit solely as a result of the
transactions contemplated by this Agreement, including the transfer of
Transferred Employees hereunder.
4.24 Employment Contracts and Benefits. Except as set forth on
Schedule 4.24, neither such Parent nor its directors, officers,
shareholders or employees has made any binding commitments, promises or
representations, including in connection with any "effects bargaining"
required by Section 8(a)(5) of the National Labor Relations Act, to the
employees of its Defense Business with respect to any change in the
terms and conditions of employment, either before or after the Closing.
4.25 Labor Controversies; Affirmative Action. There are no
controversies, pending or threatened, between such Parent and any
employees or any employee benefit plan which may have a Material Adverse
Effect on such Parent's Defense Business and, to such Parent's
Knowledge, no action has been taken, or has failed to have been taken,
which would provide a reasonable basis for such a controversy. To its
Knowledge, such Parent has complied in all material respects with all
laws relating to the employment of labor, including any provisions
relating to wages, hours, collective bargaining, occupational safety and
health, affirmative action and the payment of vacations, retirement,
social security and similar taxes or benefits with respect to their
respective Defense Businesses. Such Parent has no Knowledge of any
activities or proceedings of any labor union (or representatives of
labor unions) to organize any unorganized employees of its Defense
Business, or of any work stoppages, or threats thereof, by or with
respect to those employees. During the twelve month period preceding
the date of this Agreement, there has not been any significant labor
dispute involving employees of its Defense Business except as listed in
Schedule 4.25. Such Parent does not have has any affirmative action
plans and is not operating under any compliance commitments with any
equal employment opportunity governmental agency or bureau with respect
to its Defense Business, except those listed on Schedule 4.25.
4.26 Disclosure. The representations and warranties contained in this
Article IV, and all written information given by it or any of its
Affiliates to another party pursuant to the terms of this Agreement, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made, in the light of the
circumstances under which they were made, not misleading.
4.27 Operation of Schedule Disclosures. To the extent that an item is
disclosed on one of the Schedules hereto, and the applicability of such
item to another Schedule is reasonably apparent by reference to the
provisions of this Agreement and/or such other Schedule, such item shall
be deemed to be incorporated into such other Schedule and disclosed
thereon.
4.28 Postemployment Benefits. Harsco's obligations with respect to its
Defense Business for postemployment benefits, as defined in SFAS 112 but
as modified below, on the actual date of Closing will not exceed $2
million in the aggregate and FMC's obligations with respect to its
Defense Business for postemployment benefits, as defined in SFAS 112 but
as modified below, will not exceed $3 million. For purposes of this
Section 4.28, obligations for postemployment benefits as defined in SFAS
112 exclude severance and salary continuation benefits and exclude
workers' compensation benefits and obligations; provided, however, that,
as to FMC, such severance and salary continuation benefits satisfy the
following conditions: (i) FMC has currently on reserve approximately
$525,000 for severance and salary continuation benefits with respect to
its Armament Systems Division and such reserve will be reflected in
FMC's Final Closing Balance Sheet and (ii) substantially all severance
and salary continuation benefits that do not constitute Consolidation
Costs with respect to the Ground Systems Division's Bradley contract
are, to FMC's knowledge, reimbursable by the U.S. Government.
ARTICLE V
SECTION 5.0 COVENANTS.
5.1 Covenants of Parents. Each Parent covenants to the other Parent,
on behalf of itself and its Defense Affiliates, that:
5.1.1 Conduct of Businesses. Until the Closing:
5.1.1.1 Ordinary Course. It shall carry on, or cause to be carried on,
its normal and usual activities and business in connection with the
design, development, manufacture, marketing, sale, maintenance and
support of FMC Assets or Harsco Assets, as the case may be, in the
usual, regular and ordinary course and, except in connection with any
reversal of reserves which will not be reflected on the Final Closing
Balance Sheets, shall refrain from taking any action to accelerate the
receipt of revenues or the recognition of income beyond its usual,
regular and ordinary practices as engaged in prior to September 30,
1993; use, or cause to be used, efforts no less diligent than heretofore
conducted to preserve intact the activities of its Defense Business; use
all reasonable efforts to keep available the services of present
officers and key employees employed in its Defense Business; and use all
reasonable efforts to preserve relationships with customers, suppliers
and others having business dealings with such Business consistent with
its obligations hereunder. It shall not engage in (i) any activities
outside the ordinary course of the its Defense Business, including, but
not limited to, the acquisition of, merger with or into or consolidation
with another business operating in the defense industry and (ii) any
activity described in Section 4.15 above.
5.1.1.2 Access to Information. It shall provide the other Parent, as
reasonably requested, financial information relating to its Assets and
Liabilities and will provide the other Parent with reasonable
opportunities to physically inspect its books and records and principal
properties and facilities, to review permits and licenses,
correspondence and other documents issued by or submitted to any
Governmental Authority, including any agency with jurisdiction relative
to Environmental Requirements, and to interview and obtain information
from current employees, provided that such inspection and information
relate primarily to its Defense Business.
5.1.1.3 Advice of Changes. It shall promptly notify the other Parent
of any change or event having, or which, insofar as can reasonably be
foreseen, would have, a Material Adverse Effect on the Partnership, or
which would result in any material inaccuracy in any representation or
warranty at Closing.
5.1.1.4 Revisions to Contracts. In the event that it or its
Subsidiaries enters into contracts in the ordinary course of business
after the Signing Date and prior to Closing and such contracts are of
the type which would have constituted Contracts if held by such Parent
(or any Defense Affiliate or Defense Subsidiary) on the Signing Date,
Schedule 4.10 will be amended on or prior to the actual date of Closing
to include such contracts as Contracts. In addition, such Schedules
shall be amended to delete Contracts completed or terminated after the
Signing Date in the ordinary course of business in connection with the
business. If there are any contracts which are to be added to Schedule
4.10 pursuant to this Section, it shall use reasonable efforts to cause
such additional contracts to be freely transferable to its appropriate
Defense Affiliate and then to the Partnership.
5.1.2 Other Agreements. Prior to or at the Closing, it will enter
into, or cause its Defense Subsidiaries that will be parties to any
Operative Document to enter into, the other Operative Documents.
5.1.3 Planning Information. Subject to any restrictions set forth in
this Agreement or in the Partnership Agreement, it recognizes the need
for on-going communication with the Partnership. Therefore, from time
to time in its sole discretion, it intends to disclose to the
Partnership planning and product trend information which may be relevant
and reasonably necessary to the Scope of Activity of the Partnership.
5.1.4 Taxes; Charges; Laws. It shall, and shall cause its Defense
Subsidiaries that are parties to Operative Documents to (i) unless being
contested by appropriate proceedings, promptly pay all applicable Taxes
and other governmental charges allocable and taxable to it or them under
applicable federal, foreign, state and local tax laws, which relate to
the business of the Partnership; (ii) report, subject to any obligations
of notification and consultation set forth in the Partnership Agreement,
its allocable share of income, loss or other Partnership items
consistent with the manner in which such items are reported by the
Partnership to such Partner on Federal Form 1065, Schedule K-1, or
disclose any inconsistency in the treatment of such items on its Federal
income Tax returns; (iii) use all reasonable efforts to comply with all
Governmental Rules; (iv) preserve and keep, free of charge, all books,
papers and records, which relate to the Assets and Liabilities
contributed by such Parent or its Partner to the Partnership (which
Parent or Partner shall provide access to the Partnership to such books
and records as reasonably requested by the Partnership); and
(v) cooperate with and provide such information to the Partnership, as
reasonably requested by the Partnership.
5.1.5 Liens. Prior to the Closing, it shall not create or otherwise
allow any Lien to attach to or otherwise to affect any of its Assets or
Contracts to be transferred by it or its Subsidiaries, except Permitted
Liens and those otherwise permitted or required pursuant to the
Operative Documents.
5.1.6 No Solicitation. Except as permitted under Section 5.1.1.1,
prior to the Closing or the earlier termination of this Agreement, none
of the Parents and their Affiliates will, directly or indirectly,
through any officer, director, employee, agent or otherwise, solicit,
initiate or encourage submission of proposals, offers or other
indications of interest from any Person relating to any acquisition,
purchase, new joint venture or other extraordinary transaction involving
the disposition of either Defense Business or participate in any
negotiations or other discussions regarding, or furnish to any other
Person any information with respect to, or otherwise cooperate in any
way with, or assist, participate in, facilitate or encourage, any effort
or attempt by any other Person to do or seek any of the foregoing.
5.1.7 Environmental Permits, Licenses and Other Authorizations. Prior
to or after Closing, each Parent shall, at its own cost, use all
reasonable efforts to arrange transfer or reissuance, as necessary and
appropriate, of any permits, licenses and other authorizations issued
pursuant to Environmental Requirements with respect to the Real Property
and other Assets transferred to the Partnership by such Parent. Such
Parent shall use all reasonable efforts to complete such transfer or
reissuance in a manner which maximizes the operational flexibility of
the Partnership and minimizes ongoing capital and operating costs and
other burdens. In the event such transfer or reissuance could, in the
judgment of such Parent, result in material impediments to ongoing
operations, in material capital or operating costs to the Partnership or
in the existence of any Burdensome Governmental Condition, such Parent
shall so notify the other Parent promptly.
5.2 Transfer and Deliveries at Closing; Deferrals of Transfer and
Assumption.
5.2.1 Transfer and Deliveries. At or before the Closing, FMC shall
transfer or cause to be transferred to the Partnership and Harsco shall
transfer or cause to be transferred to the Partnership, their respective
Assets, Liabilities, Active Contracts and, subject to Sections 5.3.2 and
6.1(c), Inactive Contracts. Such transfers shall be pursuant to the
applicable Operative Documents and other duly executed deeds,
assignments of leases, bills of sale and other documents of transfer, in
form and substance reasonably satisfactory to the other Parent. Without
limiting the foregoing, deeds conveying Owned Property shall, pursuant
to Section 3.20 above, be limited warranty deeds containing covenants of
warranty of title against the claims of all persons claiming by, through
or under the grantor but not claiming otherwise.
5.2.2 Deferrals. Notwithstanding any other provision in any Operative
Document, the transfer of any Assets and Contracts and the assumption of
related Liabilities for which a Consent is required shall be deferred
until such Consent is legally obtained pursuant to the procedures set
forth in Section 5.11.
5.3 Further Assurances.
5.3.1 Pre-Closing. Prior to Closing, each party shall take all
reasonable actions necessary to obtain (and shall cooperate with the
others in obtaining) any Governmental Action (including preliminary
arrangements to obtain the Novation Agreement) or Private Action
(including Consents, but subject to Section 5.11) required to be
obtained or made by it in connection with any of the transactions
contemplated by this Agreement, except that it shall not be required to
accept any Burdensome Governmental Condition.
5.3.2 Post-Closing. From and after Closing, except as otherwise
provided herein or in the other Operative Documents, each party shall,
at its own cost, do, execute and perform all such other acts, deeds and
documents as the other parties or the Partnership may from time to time
reasonably require in order to consummate the transactions contemplated
by this Agreement, including using its best efforts to enter into the
Novation Agreement as soon as practicable following the Closing
(provided, that no party shall be required to novate any Inactive
Contract if the conditions of such novation would, in the judgment of
such party, impose an unacceptable financial burden on such party).
5.4 Parent Undertaking as to Partner Obligations. Each Parent agrees
with the other Parent that it shall take no action which would interfere
with the full and faithful performance or observance by such Parent's
Affiliates of all covenants, conditions, representations, warranties and
agreements under the Operative Documents to which such Parent's
Affiliates are parties. Each Parent will exercise, and will cause its
affiliate Partner to exercise, good faith, fairness and integrity either
in connection with, or in the conduct of, the business and affairs of
the Partnership.
5.5 Transfer of or Liens on Ownership Interests of Partners.
5.5.1 General Rule. For so long as the Partnership Agreement (or any
successor agreement or agreements) is in effect, a Parent may not
transfer or subject to any Liens (other than Permitted Liens), or suffer
to exist any such Liens on, all or any part of its ownership interest in
any of its Affiliates which is a Partner or all or any part of the
partnership interest held by such Parent or its Partner, as applicable,
except with the consent of the other Parent (which may be withheld in
its sole discretion) or as otherwise permitted by this Agreement, the
Partnership Agreement or the Registration Rights Agreement, and any
attempt to do so shall be void.
5.5.2 Intra-Parent Exception. Without being deemed to have violated
Section 5.5.1, a Parent may, upon 30 days' prior written notice to the
other Parent, transfer all, but not less than all, of its ownership
interest in the Partnership held by the Partner or by it, as applicable,
or in any Affiliate which is a Partner to another corporation (i)
incorporated in a domestic jurisdiction and (ii) 100% directly or
indirectly owned by such Parent, provided that such transfer does not
have a Material Adverse Effect on the Partnership, and provided further
that such Parent shall not thereafter transfer or permit to be
transferred the stock of such transferee corporation to a third party,
except as otherwise permitted under this Agreement, the Partnership
Agreement or the Registration Rights Agreement. In no event shall the
transferring Parent or Partner be relieved of any obligations for which
such transferring Parent or Partner would otherwise be liable hereunder
in the absence of such a transfer.
5.6 Public Announcements. No party shall, without the consent of the
other Parent prior to the actual date of Closing, issue any press
release or make any written public announcement with respect to this
Agreement and the transactions contemplated hereby, except as may be
required by Governmental Rule (and, if so required, such party shall
give such Parent a reasonable opportunity to comment thereon). For
purposes of the foregoing, no periodic report filed with the U.S.
Securities and Exchange Commission shall be deemed to be a public
announcement. After the actual date of Closing, each Parent shall use
reasonable endeavors to coordinate the dissemination of material public
information concerning the Partnership and its business.
5.7 Certain Taxes. The Partnership will pay up to $400,000 per Parent
in any Transfer Taxes payable in connection with the formation of the
Partnership with respect to the Assets and Liabilities transferred by
either Parent to its Partner and by either Parent or its Partner to the
Partnership. The Partnership will not assume or pay any other Taxes of
a Parent or its Partner except to the extent such Taxes are accrued on
such Parent's Final Closing Balance Sheet or otherwise provided for in
the Partnership Agreement.
5.8 Confidential Information. No employee of the Partnership or
employee made available to the Partnership while remaining an employee
of a Parent or an Affiliate shall be obligated to reveal confidential or
proprietary information belonging to either Parent (or either Parent's
Affiliates) without the consent of such Parent. All secrecy agreements
between Harsco and employees of Harsco who, as of the Closing Date, will
become Transferred Employees and all secrecy agreements between FMC and
employees of FMC who, as of the Closing Date, will become Transferred
Employees will, if necessary and to the extent feasible, be amended by
the actual date of Closing so as to protect the confidentiality of
information relating to the businesses of Harsco, FMC and the
Partnership. Each Parent will use all reasonable efforts to cause any
such agreement necessary to be entered into in order to protect such
information to be entered into by the actual date of Closing.
Subject to the Intellectual Property Agreements, Harsco shall, and shall
cause its Affiliates, directors, officers, employees, advisors and
agents to, keep all proprietary or confidential information in its
possession from and after the Closing which in any way relates to the
business or properties of the Partnership confidential and not use any
such information which is proprietary in nature for any commercial
purpose other than as is required to monitor its investment in the
Partnership, to familiarize any prospective purchaser of all or any
portion of Harsco L.P.'s partnership interest in the Partnership upon
such prospective purchaser's signing a form of confidentiality agreement
reasonably acceptable to the Partnership, in connection with the
preparation of Harsco's periodic reports filed with the SEC or in the
defense or prosecution of litigation (so long as Harsco uses reasonable
efforts to obtain a protective court order relating to such
information); provided, however, that (i) this covenant shall not apply
to any information which (A) is or shall come into the public domain
other than by reason of a breach of this Section 5.8, (B) becomes
available on a non-confidential basis from a source that, to the
Knowledge of Harsco, is not bound by a confidentiality agreement
protecting such information, (C) is or was independently developed by
Harsco without violating this Section 5.8 or other confidentiality
agreement which, to the Knowledge of Harsco, protects such information,
(D) is required to be disclosed to a Governmental Authority under any
applicable Governmental Rule or (E) is disseminated to the public in the
manner contemplated by Section 5.6; and (ii) the right of any
prospective purchaser of all or any portion of Harsco L.P.'s partnership
interest in the Partnership which competes with the Partnership or any
of its Subsidiaries in any material way within the Scope of Activity to
receive (and the right of Harsco to provide), upon, after or prior to
such purchase of such interest, any proprietary or confidential
information required to be provided or made available pursuant to the
terms of this Agreement or the Partnership Agreement shall be subject to
such prospective purchaser's signing of a separate form of
confidentiality agreement, which shall be reasonably satisfactory to the
Partnership and which shall contain appropriate restrictions on
disclosure of competitively sensitive information to such prospective
purchaser (which will permit disclosure of such information to an
independent third party agent of such prospective purchaser in lieu of
such prospective purchaser to permit such agent to evaluate and monitor
the investment characteristics of the Partnership).
5.9 Employee and Employee Benefits Matters.
5.9.1 Offers of Employment. Upon consummation of the Closing and
effective as of the Closing Date, the Partnership will make employment
available to all people listed on Schedule 5.9.1 (which Schedule shall
be updated by each Parent on the first day of every month between the
Signing Date and the actual date of Closing and delivered to the other
Parent promptly thereafter). Schedule 5.9.1 shall include those people
employed by FMC in the FMC Defense Business and those people employed by
Harsco in the Harsco Defense Business, but shall exclude any employee of
either Parent with the consent of the other Parent. FMC or Harsco may
with the consent of the other list additional people on Schedule 5.9.1.
All people listed on Schedule 5.9.1 who accept employment with the
Partnership will be deemed the "Transferred Employees." The Transferred
Employees shall include all employees on approved leaves of absence,
including those on long-term or short-term disability or on lay-off, and
Schedule 5.9.1 shall identify those employees on leave of absence,
disability or lay-off. Unless otherwise provided in this Agreement or
otherwise agreed by the Parents prior to the Closing, the Partnership
will make employment available to the Transferred Employees at the
salaries and other compensation, with the benefits (excluding the stock
option and long term incentive plans described in Sections 5.9.14 and
5.9.15), and subject to the terms of all contracts (including collective
bargaining agreements) applicable to them, and under the employment
practices and policies applicable to them, agreed to or provided or
adopted by the respective Parent immediately prior to the Closing Date;
provided, however, that this provision is not intended to create any
contractual right to employment or to any term of employment for any
Transferred Employee, except as otherwise expressly provided in
applicable collective bargaining agreements. Notwithstanding the
foregoing, the unwillingness of any collective bargaining representative
to concur in the applicability of the terms of any collective bargaining
agreement to any Transferred Employees after the Closing shall not be
construed as a failure by either Parent to fulfill its obligations under
this Section 5.9.1. After the Closing Date, the Partnership shall have
the same rights as the respective Parent would have had, should
employment of Transferred Employees have continued with the Parent, to
change or terminate such salaries and compensation, benefits, contracts
and employment practices and policies and all employees of the
Partnership, whether employed pursuant to this provision or otherwise,
will be employed at will by the Partnership.
5.9.2 Transition Benefit Plans. The Partnership shall establish and
administer certain benefit plans for the Transferred Employees and other
Plan Participants. The Partnership intends to adopt competitive
compensation plans for its executive and senior management personnel to
replace the stock option plans and long term incentive plans (described
in Sections 5.9.14 and 5.9.15) which shall not form a part of the
Transition Plans described herein. Subject to the preceding sentence
and Section 5.9.1 hereof, as of the Closing Date, the Partnership shall,
to the extent permitted by applicable law, establish or adopt, and
assume obligations under, the same benefit plans for the Transferred
Employees and other Plan Participants which their respective Parent
maintained for and applied to them immediately prior to the Closing Date
("Transition Benefit Plans"), each of such plans to be identified on
Schedule 4.21.1. Such obligations shall include, without limitation,
obligations which a Parent may have relating or attributable to periods
of service prior to the Closing Date (but excluding severance
obligations for employees who terminated prior to the Closing Date), but
only if such obligations are reflected on the Final Closing Balance
Sheet of the Parent or are not so reflected and would be considered
obligations for postemployment benefits (other than pre-closing workers'
compensation obligations described in Section 5.15) of the type
described in SFAS 112. For purposes of this entire Section 5.9 and
Section 6.3, where any such reflected item represents the Parent's
estimate of its obligation, such Parent shall have no further liability
with respect to such obligation once it is assumed by the Partnership;
provided, however, that the estimate was based upon reasonable actuarial
assumptions consistent where applicable with those set forth on Schedule
4.21.8 and calculated in recognition of all material facts. Harsco and
FMC shall each transfer to the Transition Benefit Plans, as hereinafter
described, assets to fund certain obligations assumed by the Partnership
under the Transition Benefit Plans. Unless otherwise indicated herein,
the Transition Benefit Plans shall, to the extent permitted by
applicable law, credit Transferred Employees and other Plan Participants
with years of service with FMC or Harsco, as the case may be, and with
predecessor employers to the extent recognized by FMC or Harsco, as the
case may be, for the purpose of vesting, accrual of benefits and meeting
eligibility or other service requirements. All employees, other than
the Transferred Employees, hired by the Partnership following the
Closing Date and prior to the Partnership's establishment of the
Partnership Benefit Plans described in Section 5.9.3 will be eligible
for coverage under the Transition Benefit Plans applicable to employees
at the location of the employment of such new hires.
5.9.3 Partnership Benefit Plans. The Partnership shall use its
reasonable best efforts to adopt, on or before July 1, 1994, benefit
plans ("Partnership Benefit Plans") which shall be effective as of the
Closing Date or as soon as practicable thereafter in the discretion of
the Partnership. Subject to the Partnership's right to change or
terminate the Transition Benefit Plans, as described in Section 5.9.1
hereof, the Partnership Benefit Plans shall replace the Transition
Benefit Plans in any reasonable manner deemed appropriate by the
Partnership; provided, however, that the Partnership, in establishing
the Partnership Benefit Plans, shall not cause any Plan Participant to
lose or be denied any vested benefit, right or feature with respect to
benefits accrued under any Transition Benefit Plan which is the
successor to a Pension Plan (as defined in Section 4.21.1). The
Partnership shall establish one or more Qualified Pension Plans for all
employees not covered under a collective bargaining agreement
("Partnership Nonunion Pension Plans") and such Partnership Nonunion
Pension Plans shall provide comparable levels of future benefit accruals
for all covered employees, making no distinction with respect to any
such employee on the basis of his or her former employment, except as
otherwise required by applicable law. The preceding sentence shall be
interpreted in a manner consistent with any applicable example in
Schedule 5.9.3 which provides for future benefit accruals based on past
and future benefit service. The Partnership shall fund all of the
Partnership Nonunion Pension Plans in accordance with reasonably similar
funding policies and fund earnings assumptions, except to the extent
different policies or assumptions may be necessitated by government
contract cost reimbursement considerations; provided, however, that such
plans shall be merged into one Partnership Nonunion Pension Plan at such
time as the Partnership decides that such a merger will not result in a
material disadvantage to the Partnership or its Parents.
5.9.4 Development of Partnership Benefit Plans and Policies. As soon
as practicable after the Closing Date, the Parents shall use reasonable
efforts to provide the Partnership with such information as may
reasonably be required in connection with the Partnership's development
or implementation of the Partnership Benefit Plans, employment practices
and policies. The Parents shall make available to the Partnership their
human resources staffs and other employees, agents and representatives
to assist in such planning, development and implementation. The
Partnership shall take into consideration the differences in benefit
structures and policies of each of the Parents and shall endeavor to
reconcile those differences, wherever possible, including the offering
of Harsco stock as an ongoing investment option under 401(k) plans;
provided, however, that no additional purchases of Harsco stock shall be
made under the Transition Benefit Plans or the Partnership Benefit Plans
unless a favorable interpretive letter ruling is obtained from the
Department of Labor to the effect that Harsco stock is not an employer
security or is a qualifying employer security with respect to such plans
or unless an opinion is received from legal counsel selected by the
Partnership indicating that such purchases would not be a prohibited
transaction. Where appropriate or required to fulfill the terms of this
Agreement, FMC, Harsco and the Partnership shall each make such filings
and submissions in connection with the Partnership Benefit Plans to the
appropriate governmental agencies.
5.9.5 Qualified Pension Plans. As described herein, each of FMC and
Harsco shall transfer all Qualified Pension Plan assets and obligations
associated with its Defense Business to the appropriate Transition
Benefit Plans designated by the Partnership, which assets shall be
invested in the FMC Master Trust. The Partnership shall take all
necessary action to ensure that each such Transition Benefit Plan
satisfies the applicable provisions of the Code. Assets segregated
pursuant to Section 401(h) of the Code are not considered as Qualified
Pension Plan assets for purposes of this Section 5.9.5.
5.9.5.1 Transfer of Obligations. Obligations associated with the
accrued benefits of each Plan Participant in any Qualified Pension Plan
maintained by FMC or Harsco in connection with its respective Defense
Business shall be assumed by a Transition Benefit Plan designated by the
Partnership, and assets with respect to such obligations shall be
transferred in accordance with the provisions hereunder.
5.9.5.2 Amount of Pension Assets to be Transferred. Qualified Pension
Plan assets associated with the accrued benefit obligations transferred
to a Transition Benefit Plan pursuant to Section 5.9.5.1 shall be
transferred to the FMC Master Trust, which shall form a part of such
Transition Benefit Plan. If an entire Qualified Pension Plan of FMC or
Harsco is adopted by the Partnership as a Transition Benefit Plan, then
all assets associated with such Qualified Pension Plan shall likewise be
transferred to the FMC Master Trust with respect to such Transition
Benefit Plan. If a portion of a Qualified Pension Plan of FMC or Harsco
is adopted by the Partnership as a Transition Benefit Plan, the amount
of assets to be transferred shall be determined in accordance with, and
shall equal the minimum amount necessary to satisfy, the applicable
provisions of CAS 413 and any other CAS and FAR provisions which the
government may deem applicable; provided, however, that if the
requirements of Code section 414(l) require that a greater amount of
assets be transferred, then such greater amount shall be transferred.
With regard to the Harsco Employees Pension Plan, FMC and Harsco agree
that based on the information provided to both parties prior to the
Closing, the amount of assets allocated to the Harsco Defense Business
under the applicable provisions of CAS 413 is estimated to be
approximately $22,000,000 and such amount of assets, when transferred,
will be in excess of the amount required under Code section 414(l);
provided, however, that such agreement shall not alter the
responsibility of the Harsco Employees Pension Plan to transfer any
additional amount which, pursuant to a final non-appealable decision,
may be required under Code section 414(l).
5.9.5.3 Investment of Pension Assets. FMC and Harsco intend that
assets transferred with respect to the Transition Benefit Plans
designated by the Partnership in accordance with Section 5.9.5.2 shall
be commingled for investment purposes in the FMC Master Trust; however,
separate accounting shall be maintained within the FMC Master Trust for
all such Transition Benefit Plans. Such separate accounting shall also
apply to any Partnership Benefit Plan which replaces a Transition
Benefit Plan.
5.9.5.4 Initial Asset Transfers. As of the Closing Date, FMC and
Harsco shall cause the trustees of their respective Qualified Pension
Plans to take the following steps:
(i) All assets associated with the following plans shall continue to be
held under the FMC Master Trust, and the sponsorship of such plans shall
be transferred from FMC to the Partnership: Retirement Plan for Hourly
Employees of FMC Corporation, San Jose, California; Retirement Plan for
Hourly Employees of FMC Corporation, Steel Products Divisions, Anniston,
Alabama; FMC Corporation Northern Ordnance Division Pension Plan for
Hourly Employees; and FMC Corporation Northern Ordnance Division Pension
Plan for Certain Employees.
(ii) In conjunction with the change of sponsorship of the portion of
the plan allocable to the obligations to FMC Transferred Employees under
the FMC Corporation Salaried Employees' Retirement Plan, FMC shall cause
the trustee of the FMC Corporation Salaried Employees' Retirement Plan
to continue to hold in cash or in securities with a readily determinable
market value an amount equal to $74,851,000 in the FMC Master Trust with
respect to such portion of such plan. An additional amount, if
necessary, shall be allocated to such portion at a later time as
described below.
(iii) All assets associated with the Bowen-McLaughlin-York Hourly
Employees Pension Plan shall be transferred to the FMC Master Trust, and
sponsorship of such Plan shall be transferred from Harsco to the
Partnership. Such assets shall be in the form of cash or securities
with a readily determinable market value.
(iv) In conjunction with the transfer of pension obligations from the
Harsco Employees Pension Plan to a Transition Benefit Plan designated by
the Partnership, Harsco shall cause the trustee of such Plan to transfer
to the FMC Master Trust in cash or in securities with a readily
determinable market value an amount equal to $21,889,000 with respect to
the Harsco Employees Pension Plan. An additional amount, if necessary,
shall be transferred at a later time as described below.
5.9.5.5 Follow-up Asset Transfers. As soon as practical after the
Closing Date, but in no event later than six months after said Closing
Date, FMC and Harsco shall complete the asset transfers described in
Sections 5.9.5.4(ii) and 5.9.5.4(iv) above with regard to the FMC
Corporation Salaried Employees' Retirement Plan and the Harsco Employees
Pension Plan. The parties shall determine the difference, if any,
between (A) the assets which should have been Transferred as of the
Closing Date pursuant to Section 5.9.5.2 and (B) the amounts that were
transferred on the Closing Date pursuant to Sections 5.9.5.4(ii) and
5.9.5.4(iv). FMC and Harsco will cause such difference to be
transferred in the same manner described in Section 5.9.5.4 or, if the
amount transferred exceeded the amount which should have been
transferred, FMC and Harsco shall cause such difference to be returned
to the transferror that transferred an excess amount; provided that the
amount so transferred shall reflect an adjustment for any interim
benefit payments as appropriate and shall include interest from the
Closing Date to the date of the final transfer at the 90-day Treasury
Bill rate on the auction date immediately preceding the Closing Date.
5.9.5.6 Verification. FMC and Harsco each agrees to provide an actuary
designated by the other party with all information necessary to verify
the calculations required by this Section 5.9.
5.9.6 401(k) Plans. The Partnership shall establish, as one of its
Partnership Benefit Plans, a 401(k) Plan which shall be a qualified plan
under Section 401(a) of the Code ("Partnership 401(k) Plan"). As soon
as practicable after the establishment of the Partnership 401(k) Plan,
subject to the receipt of all appropriate Governmental Actions, FMC and
Harsco respectively shall cause the trustee of its 401(k) Plan(s) to
transfer to a Partnership Master Trust established in connection with
the Partnership 401(k) Plan (i) the number of shares of FMC or Harsco
stock held under its 401(k) Plan for Plan Participants and (ii) cash,
cash equivalents or other securities with a readily determinable market
value such that the total of (i) and (ii) shall equal the Fair Market
Value of the assets of the respective FMC and Harsco 401(k) Plans
representing the account balances of Plan Participants as of the date
such assets are transferred. The Partnership 401(k) Plan shall provide
or arrange for the proper procedures to continue the status of
"securities of the employer corporation" of the FMC and Harsco stock
transferred hereunder so as to preserve certain tax advantages to Plan
Participants when such stock is distributed to them. Subject to Section
5.9.4, the Partnership 401(k) Plan shall also allow Plan Participants
the right to invest their before- and after-tax contributions in any
investment option offered under the plan (including FMC or Harsco
stock), and to have their Partnership matching contributions (which
shall be made in cash) invested in FMC or Harsco stock, to the extent
such rights are in accordance with applicable law.
5.9.7 Postretirement Benefit and Other Plans. As described herein, FMC
and Harsco shall transfer all Postretirement Benefit Plan assets and
obligations associated with Plan Participants to the Partnership. FMC
and Harsco plan assets segregated pursuant to Section 401(h) of the Code
are considered Postretirement Benefit Plan assets for purposes of this
Section 5.9.7.
5.9.7.1 Transfer of Obligations. Obligations associated with each Plan
Participant in any Postretirement Benefit Plan maintained by FMC or
Harsco in connection with its respective Defense Business shall be
assumed by the Partnership, but only to the extent such obligations are
reflected on FMC's or Harsco's Final Closing Balance Sheet, as
applicable.
5.9.7.2 Postretirement Benefit Plan Assets Segregated under Code
Section 401(h). All assets accumulated pursuant to Section 401(h) of
the Code under Postretirement Benefit Plans sponsored by FMC or Harsco
that are attributable to Plan Participants shall be transferred to the
FMC Master Trust; provided that such amounts shall be accounted for
separately. If the amount of such assets attributable to Plan
Participants has not been separately accounted for historically, FMC and
Harsco will agree on a reasonable allocation basis.
5.9.7.3 Postretirement Benefit Plan and Other Trusts Described in Code
Section 501(c)(9) to be Transferred in their Entirety. All trusts
described in Section 501(c)(9) of the Code under Postretirement Benefit
Plans or other plans sponsored by FMC or Harsco maintained solely for
the benefit of Plan Participants shall be transferred to a trustee
designated by the Partnership on the Closing Date.
5.9.7.4 Postretirement Benefit Plan and Other Trusts Described in Code
Section 501(c)(9) not to be Transferred in their Entirety. The portion
of the assets held in trusts described in Section 501(c)(9) of the Code
that are attributable to Plan Participants under Postretirement Benefit
Plans or other plans sponsored by FMC or Harsco that also cover
individuals other than Plan Participants shall be transferred to a
trustee designated by the Partnership on the Closing Date. If the
amount of such assets attributable to Plan Participants has not been
separately accounted for historically, FMC and Harsco will agree on a
reasonable allocation basis.
5.9.8 Nonqualified Plans. FMC and Harsco shall transfer to the
Partnership all obligations with respect to Plan Participants under
Nonqualified Plans maintained by FMC or Harsco in connection with its
respective Defense Business, but only to the extent such obligations are
reflected on FMC's or Harsco's Final Closing Balance Sheet, as
applicable. FMC and Harsco shall transfer to the Partnership any assets
associated with such Nonqualified Plans.
5.9.9 Other Benefit Plans. FMC and Harsco shall transfer to the
Partnership all obligations with respect to Plan Participants under all
other benefit plans not described in Sections 5.9.5 - 5.9.8 hereof
maintained by FMC or Harsco in connection with its respective Defense
Business, but only to the extent such obligations are reflected on FMC's
or Harsco's Final Closing Balance Sheet, as applicable, or are not so
reflected and would be considered obligations for post employment
benefits (other than pre-closing workers' compensation obligations
described in Section 5.15) of the type described in SFAS 112. FMC and
Harsco shall transfer to the Partnership any assets associated with such
other benefit plans.
5.9.10 Collective Bargaining Agreements. The Partnership shall
expressly recognize any collective bargaining representative recognized
by FMC or Harsco as of the Closing Date for those units that include
Transferred Employees and shall expressly assume any and all of FMC's
and Harsco's obligations under any collective bargaining agreements
existing on the Closing Date with respect to the Transferred Employees;
provided, however, that neither FMC nor Harsco shall have any liability
after the actual date of Closing for any claims by any such collective
bargaining representative arising as a result of the consummation of the
transactions contemplated hereby.
5.9.11 No Rights. Except with respect to any assumed collective
bargaining agreements, nothing herein expressed or implied shall confer
upon any of the employees of the Partners or their Affiliates or legal
representatives thereof, any rights or remedies, including, without
limitation, any right to employment or continued employment for any
specified period of any nature or kind whatsoever or to any specific
kind or level of compensation or benefit under or by reason of this
Agreement.
5.9.12 FICA. The standard procedure established in Section 4 of
Revenue Procedure 84-77, 1984-2 C.B. 753, relating to employment tax
returns and statements shall be adopted by FMC, Harsco and the
Partnership for Transferred Employees. In timely fashion, FMC and
Harsco will furnish the Partnership with information they have which the
Partnership needs to comply with this procedure. The Partnership, as to
each Parent, will be the "successor employer" for FICA/FUTA purposes.
5.9.13 NSD Decree. The Partnership shall be bound by the terms of the
Settlement Agreement and Consent Decree entered into by FMC with respect
to its Naval Systems Division in the so-called Smith/Cappellupo
litigation, Civil Action Nos. 4-85-1239, 4-86-945, and 4-89-1044 in the
United States District Court for the District of Minnesota.
5.9.14 Stock Option Plans. The Partnership shall not assume any
responsibility or obligation to any former employee of either Parent
with respect to stock options held by any such employees, including,
without limitation, options which may terminate or expire as a
consequence of leaving the employment of such Parent and becoming an
employee of the Partnership.
5.9.15 Long-term Incentive Compensation. The Partnership shall not
assume any responsibility or obligation to any former employee of either
Parent with respect to any long-term incentive compensation or
multi-year cash bonus.
5.10 Lack of Consents. To the extent that it is either legally or
factually impossible or impracticable for one party to assign or
otherwise transfer either a Contract or any Asset to the Partnership,
such transferring party hereby undertakes to otherwise provide the
Partnership with a substantially similar economic benefit, which, in the
case of Assets, shall require the transferring party to contribute in
lieu of the Asset additional cash in an amount equal to the net Book
Value of such Asset and, in the case of Contracts, shall require the
transferring party to comply with the provisions of Section 5.11.
5.11 Third Party Consent Procedures. To the extent that any rights
under any Contract (other than a Contract with the U.S. Government to be
novated pursuant to the terms of the Novation Agreement) to be assigned
under the Operative Documents may not be assigned without the consent of
another Person which such Person will not provide, this Agreement shall
not constitute an agreement to assign such Contract if such assignment
would constitute a breach thereof or be unlawful or impracticable. Such
Contracts are referred to herein as the "Restricted Contracts." The
Partner with an obligation to transfer a Restricted Contract (the
"Transferring Partner") shall take the following actions with respect
thereto:
5.11.1 At the Partnership's request, such Partner shall, with the
cooperation of the Partnership, take the actions described in Schedule
5.11 to obtain all required Consents to all Restricted Contracts as soon
as practical after the execution and delivery hereof and shall promptly
notify the Partnership as such consents are received. Upon receipt of
such Consents, such Restricted Contracts shall be deemed assigned to the
Partnership on the Closing Date, regardless of whether any
subcontracting arrangement has been entered into pursuant to Section
5.11.2 below. If a subcontracting arrangement has been entered into
with respect to a Restricted Contract for which a Consent to assignment
is received, such subcontracting arrangement shall, unless otherwise
agreed between the Partners, terminate automatically without further
action by the Partner or the Partnership.
5.11.2 As soon as practical after the Closing, a Transferring Partner
shall enter into a subcontracting relationship with the Partnership with
respect to each of such Partner's Restricted Contracts for which the
required Consent to assignment has not been received and which do not,
by their terms, require consent to subcontracting. Such subcontracting
arrangements shall provide for terms which will reasonably achieve for
the Partnership the economic benefit which it would have achieved
through an assignment of such Restricted Contract. As between the
Transferring Partner and the Partnership, the Restricted Contract shall
be treated to the maximum extent possible as if it had been assigned to
the Partnership, i.e., all terms and conditions, including price, of
such Restricted Contracts shall be binding on the Partnership, and the
Partnership shall bear any liabilities arising from events occurring
after the Closing Date thereunder, and with respect to such Restricted
Contracts, all revenues invoiceable for work performed after the Closing
Date shall be for the account of the Partnership and the risk of
uncollectibility shall be borne solely by the Partnership. The
Partnership and the Transferring Partner shall cooperate and use all
reasonable efforts to achieve the above-described results. In addition,
the Partnership agrees that if, as a condition to securing the Consent
to the assignment of any Contract, a Parent is required to guarantee the
performance by the Partnership of any obligation under that Contract,
the Partnership shall indemnify and defend such Parent against, and hold
such Parent harmless from, any liability with respect to the failure by
the Partnership, for whatever reason, to perform any such obligation.
At the Closing, each Partner shall advise the Partnership in writing as
to such Partner's Restricted Contracts and the steps which each Partner
proposes to take with respect thereto. Notwithstanding the foregoing
provisions of this Section 5.11.2 relating to subcontracting
arrangements, unless objected to by the other Partner, a Partner may
propose to become subject to the terms of this Section 5.11.2 with
respect to any or all of such Restricted Contracts and to dispense with
any further subcontracting arrangements with respect to each such
designated Restricted Contracts, so long as such Partner fully complies
with the obligations on its part set forth herein with respect to such
Restricted Contracts.
5.11.3 If any Restricted Contract also requires a Consent of a third
party to the valid subcontracting of all rights and obligations of the
Transferring Partner thereunder and if a Consent to assignment has been
refused by such third party, then after the Closing, the Transferring
Partner shall, with the cooperation of the Partnership, take the actions
described on Schedule 5.11 to obtain all such Consents to subcontracting
as soon as practical after the Closing and shall promptly notify the
Partnership upon receipt of such Consent. If such Consent is so
received, the Restricted Contract shall be subcontracted by the
Transferring Partner to the Partnership as contemplated by Section
5.11.2 above.
5.11.4 In the event that a Transferring Partner is unable to secure any
required Consent to assignment or subcontracting with respect to a
Restricted Contract, the Parent of the Transferring Partner and the
Partnership shall negotiate and enter into such agreements as are
necessary so that as closely as possible the result will be to
reasonably provide the equivalent economic benefit which the Partnership
would have enjoyed had such Restricted Contract been assigned to the
Partnership. In order to effect this, such agreements may call for the
Transferring Partner to contract with the Partnership for the provision
of personnel and/or services of the Partnership. It is expected that
all benefits and obligations under such Restricted Contract which would
have been transferred to the Partnership (including, without limitation,
the obligation to perform all work and services required under such
Restricted Contract and to provide all materials, equipment and products
required pursuant to such contracts), shall be assumed and performed by
the Partnership. The Partnership shall provide the personnel to perform
the work and services under such Restricted Contract to the Transferring
Partner, and the Partnership shall receive all revenues paid to the
Transferring Partner by such customers as consideration for the
provision of the Partnership's personnel.
5.12 Non-Dissolution. Neither Parent shall, or shall allow its
Subsidiaries to, petition any court for the involuntary dissolution of
the Partnership in the event that any party to the Operative Documents
defaults on its obligations under an Operative Document, and the
remedies for any such default shall be solely those set forth in the
Partnership Agreement, or other Operative Document, as the case may be.
5.13 Santa Clara Properties. Notwithstanding that FMC is expressly not
transferring to the Partnership its title to and ownership interest in
the Santa Clara Properties, FMC shall lease the Santa Clara Properties
to the Partnership for the Partnership's exclusive use, on the terms set
forth in the Lease Agreement, attached hereto as Exhibit G. To the
extent that the Fair Market Value (excluding any costs relating to the
remediation of any FMC Environmental Liability Event) of the Santa Clara
Properties to FMC at the termination of the Lease Agreement shall have
increased from the Fair Market Value (excluding any costs relating to
the remediation of any FMC Environmental Liability Event) of such
properties to FMC as of the Closing Date as a result of capital
improvements made thereon by the Partnership, FMC shall, upon the
termination of the Lease Agreement, reimburse the Partnership for the
unamortized, unrecovered and unrecoverable cost to the Partnership of
such capital improvements (to the extent such costs have not been
otherwise recovered by the Partnership through insurance proceeds).
Upon termination of the Lease Agreement, the Partnership shall indemnify
FMC and hold FMC harmless from and against any unpaid taxes relating to
such properties which the Partnership is obligated to pay under the
Lease Agreement and which accrued during the lease term. As used in
this Section 5.13, "capital improvements" shall not include any
expenditure, however characterized elsewhere, regarding environmental
matters, it being the parties' intention that their respective rights
and obligations regarding environmental expenditures be governed solely
by Sections 5.22 and 6.2 below.
5.14 Buyback of Accounts Receivable. In the event that any account
receivable (including all VLS Receivables, the due dates of which are
set forth on Schedule 5.14) assigned to the Partnership by either Parent
is not fully paid within ninety (90) days after its due date, the Parent
that assigned such account receivable covenants and agrees promptly to
repurchase such account receivable for cash, and the Partnership shall,
upon the request of the repurchasing Parent, act as the Parent's agent
for collection of the repurchased receivable. Neither Parent will
contribute at Closing any receivable that is more than 90 days past due.
5.15 Pre-Closing Workers' Compensation. Except as provided in the
following paragraph, it is agreed that subsequent to the Closing each
Parent will be responsible for, and will reimburse the Partnership with
respect to, all payments made by the Partnership to any of such Parent's
former employees for workers' compensation relating to pre-closing
occurrences. These obligations on the part of FMC and Harsco to make
such payments shall continue for as long as any such payments become due
to any former employee of either Parent. With respect to any workers'
compensation claim based upon conditions arising out of facts and
circumstances occurring both before and after the Closing, the
obligations of FMC or Harsco, as the case may be, shall be determined in
accordance with applicable Governmental Rules governing the
apportionment of responsibility for workers' compensation between
predecessor and successor employers.
5.16 Slow-Moving Inventory. The Partnership shall use reasonable
efforts to use all Assets contributed at the Closing which are
Slow-Moving Inventory (as identified on Schedule 5.16 hereto) in the
ordinary course of the Partnership's business. All such Slow-Moving
Inventory that is held by the Partnership on the second anniversary of
the Closing Date shall as soon thereafter as practicable be disposed of
by the Partnership. At such time, the Parent that contributed such
Slow-Moving Inventory will make a payment to the Partnership equal to
the excess, if any, of the book value of such Slow-Moving Inventory, as
reflected on the applicable Final Closing Balance Sheet, over the sum of
any reserve on such Final Closing Balance Sheet which was applicable to
such Slow-Moving Inventory and any amounts realized upon disposition of
such Slow-Moving Inventory.
5.17 Consultant and Audit Costs. Whether or not the transaction
contemplated hereby shall be consummated, FMC shall bear 60% and Harsco
shall bear 40% of (i) the costs, not to exceed $1,700,000, of the study
performed prior to December 31, 1993 in connection with the combination
of the FMC Defense Business and the Harsco Defense Business by Booz,
Allen & Hamilton and (ii) the costs for the audits referred to in the
last sentence of Section 5.3 of the Partnership Agreement, not to exceed
$400,000 in the case of the FMC audit and $70,000 in the case of the
Harsco audit. If either party's audit costs exceed the amount above
stated, such party shall be responsible for such excess.
5.18 Post-Closing Cash Advances. After the Closing Date and prior to
the second anniversary of the Closing Date, FMC and Harsco agree to make
to the Partnership at any time and from time to time, upon 3 Business
Days' notice, such cash advances, pro rata in accordance with their
respective Share Percentages, as the Managing General Partner deems
necessary or advisable to meet the Partnership's short-term cash
requirements; provided, however, that (i) such cash advances be in the
aggregate amount of not less than $1,000,000, (ii) in no event shall the
aggregate amount of such advances outstanding at any time from any
Parent exceed $12,000,000 in the case of FMC and $8,000,000 in the case
of Harsco, (iii) in no event shall such cash advances be used to finance
business activities outside the Scope of Activity and (iv) in no event
shall such cash advances be available to the Partnership until the
credit facility described in the following sentence is exhausted or
otherwise unavailable in accordance with its terms. In addition, from
and after the Closing Date, FMC agrees to make to the Partnership at any
time and from time to time, upon 3 Business Days' notice, such cash
advances as the Managing General Partner deems necessary or advisable to
meet the Partnership's short-term cash requirements; provided, however,
that such cash advances shall not at any one time exceed an amount equal
to the difference between (i) the aggregate amount of VLS Receivables
and (ii) the aggregate amount, if any, of such VLS Receivables that have
at such time been collected by the Partnership or repurchased by FMC in
accordance with the terms of this Agreement. As such accounts
receivable are collected or repurchased, the Partnership shall promptly
repay to FMC the portion, if any, of such cash advances which exceeds
the aggregate amount of such accounts receivable that have at such time
not been collected or repurchased in accordance with the terms of this
Agreement, and such amounts repaid shall not be subject to reborrowing.
Such advances will be evidenced by a senior promissory note maturing on
the second anniversary of the Closing Date (or, in the case of advances
pursuant to the immediately preceding sentence, as and when the VLS
Receivables are repurchased or collected) and bearing interest at a
floating rate (to be recalculated monthly) equal to the one year LIBOR
in effect on the first Business Day of such month plus 100 basis points
and may be repaid (pro rata in the case of advances pursuant to the
first sentence of this Section) at any time (subject to reborrowing)
without penalty or premium. The Parents acknowledge that these
facilities are intended to be available to provide for short-term
working capital and are not intended to provide a two-year financing
source. The Partnership shall repay any cash advance made pursuant to
this Section 5.18 before it makes any voluntary or optional prepayment
on any other debt outstanding.
5.19 Responsibility for Inactive Contracts. Upon the final close-out
or other settlement and any interim settlements with the U.S. Government
of any Partner's Inactive Contract (which settlement shall be subject to
the approval of such Partner), (i) if such settlement requires a payment
by the Partnership to the U.S. Government, the Parent which contributed
such Inactive Contract to the Partnership shall promptly deliver to the
Partnership an amount in cash equal to the amount of such payment or
(ii) if such settlement results in a payment from the U.S. Government to
the Partnership, the Partnership shall promptly deliver to the Parent
which contributed such Inactive Contract an amount in cash equal to such
payment. The Partnership shall be responsible for the administration of
the settlement of such Inactive Contracts.
5.20 Accounts Receivable. Except in respect of accounts receivable (i)
withheld from the Partnership pursuant to Section 2.1.3 or Section 2.1.4
(and not subsequently assigned to the Partnership pursuant to Section
2.3.3), (ii) transferred to a Parent pursuant to Section 2.3.3 and
(iii) withheld or repurchased from the Partnership by a Parent pursuant
to Section 5.14, each Parent shall promptly forward or cause to be
forwarded to the Partnership any and all proceeds from accounts
receivable relating to its Defense Business that are received by such
Parent after the Closing Date and that were outstanding as of the
Closing Date. With respect to accounts receivable (i) withheld from the
Partnership pursuant to Section 2.1.3 or 2.1.4 (and not subsequently
assigned to the Partnership pursuant to Section 2.3.3), (ii) transferred
to a Parent pursuant to Section 2.3.3 and (iii) withheld or repurchased
from the Partnership by a Parent pursuant to Section 5.14, the
Partnership shall promptly forward to the appropriate Parent any and all
proceeds relating to such accounts receivable received by the
Partnership after the Closing Date.
5.21 Responsibility for Pre-Closing Letters of Credit, Etc. The
parties hereto agree that any letter of credit, performance bond or bid
bond relating to any Active Contract that is issued by either Parent
prior to the Closing Date shall be the responsibility of the Partnership
after the Closing Date and shall be assumed by the Partnership on the
Closing Date. The Partnership agrees to reimburse the appropriate
Parent in cash within three Business Days for any draw or claim against
any such letter of credit, performance bond or bid bond made on or after
the Closing Date.
5.22 Environmental Matters.
5.22.1 Payments by Parents to Account for Losses Resulting from
Remedial Expenditures. The parties believe that each of them, with
respect to its Defense Business as conducted prior to the Closing, and
the Partnership, with respect to its business conducted after the
Closing, is legally entitled to include all Remedial Expenditures in its
pricing under customer contracts arising in such business. However, in
the event that circumstances result in an inability on the part of the
Partnership to obtain inclusion of such Remedial Expenditures in the
ordinary course of business in conjunction with the incurrence of such
Remedial Expenditures, the parties agree that a mechanism should exist
to limit the degree to which returns otherwise payable to either Parent
from the operations of the Partnership would be impaired as a result of
the Partnership's inability at any point in time to obtain such
inclusion with respect to the other Parent's prior conduct of its
Defense Business. In furtherance of the foregoing, each Parent agrees
that:
(i) in the event that an Environmental Realization Status Report
delivered pursuant to Section 5.22.3.1 shows that, during the relevant
Fiscal Quarter, the Partnership has incurred any FMC Unrealized Remedial
Expenditures or Harsco Unrealized Remedial Expenditures (including as a
result of any FRA determination during such Fiscal Quarter), then a
special allocation (an "Environmental Special Allocation") of such
incurrences shall be made in accordance with Section 4.3(c)(vi) of the
Partnership Agreement to the Partner of the Parent to which such
Unrealized Remedial Expenditures relate in an amount equal to 100% of
such Unrealized Remedial Expenditures;
(ii) in the event that an Environmental Realization Status Report
delivered pursuant to 5.22.3.1 shows that, during the relevant Fiscal
Quarter, the Partnership has Realized (including as a result of any FRA
determination during such Fiscal Quarter) FMC Qualifying Realized
Remedial Expenditures or Harsco Qualifying Realized Remedial
Expenditures which were previously reported under Section 5.22.3.1 as
Unrealized Remedial Expenditures, then an Environmental Special
Allocation of such Realization shall be made in accordance with Section
4.3(c)(iv) and (v) of the Partnership Agreement to the Partner of the
Parent to which such Realized Remedial Expenditure relates in an amount
equal to 100% of such Realized Remedial Expenditure.
5.22.2 Presumptions Regarding Environmental Liability Events.
5.22.2.1 It shall be conclusively presumed for purposes of this Section
5.22 that all environmental matters set forth on Schedule 5.22.2 are FMC
Environmental Liability Events or Harsco Environmental Liability Events
as indicated on such Schedule.
5.22.2.2 There shall be a rebuttable presumption, for purposes of this
Section 5.22, that any Environmental Liability Event not set forth on
Schedule 5.22.2 and pertaining either to the past conduct by FMC of its
Defense Business or to the ownership, operation or use of any facility
or property now or previously owned, operated or used in FMC's Defense
Business is an FMC Environmental Liability Event.
5.22.2.3 There shall be a rebuttable presumption, for purposes of this
Section 5.22, that any Environmental Liability Event (i) not set forth
on Schedule 5.22.2, (ii) pertaining either to the past conduct by Harsco
of its Defense Business or the ownership, operation or use of any
facility or property now or previously owned, operated or used in
Harsco's Defense Business and (iii) discovered and reported in writing
to the Advisory Committee on or before the first to occur of the fifth
anniversary of the Closing Date or the date on which FMC purchases
Harsco's ownership interest in the Partnership under its call option
pursuant to Section 7.2(a) of the Partnership Agreement is a Harsco
Environmental Liability Event. Any Environmental Liability Event
pertaining to the ownership, operation or use of any facility or
property now or previously owned, operated or used in Harsco's Defense
Business which is not subject to the conclusive presumption established
by Section 5.22.2.1 or the rebuttable presumption established by the
preceding sentence of this Section 5.22.2.3 (including any Environmental
Liability Event discovered and reported in writing to the Advisory
Committee after the date on which FMC purchases Harsco's ownership
interest in the Partnership under its call option pursuant to Section
7.2(a) of the Partnership Agreement) shall not be presumed to be a
Harsco Environmental Liability Event.
5.22.2.4 If the Partnership believes any environmental matter, which is
not subject either to a conclusive or a rebuttable presumption, to be a
Harsco Environmental Liability Event, the Partnership shall provide
Harsco with a reasonably detailed written notice setting forth the facts
and circumstances pertaining to such matter, the reasons leading the
Partnership to conclude that such environmental matter constitutes a
Harsco Environmental Liability Event and the data relied upon by the
Partnership in reaching such conclusion. The Partnership shall promptly
provide any additional information related to such environmental matter
as Harsco may reasonably request. Within sixty (60) days after receipt
of such notification and information, Harsco shall notify the
Partnership in writing whether Harsco agrees with the Partnership's
conclusion or disagrees in whole or in part with such conclusion. If
Harsco disagrees in whole or in part with the Partnership's conclusion,
Harsco shall set forth in its notification the reasons for its
conclusion and any data relied upon by Harsco in reaching such
conclusion.
5.22.2.5 Any rebuttable presumption under Section 5.22.2.2 or 5.22.2.3
can be rebutted on the basis of clear and convincing evidence to the
contrary in a judicial proceeding culminating in a final, non-appealable
order (unless otherwise resolved by the parties). Until any such
rebuttable presumption has been so rebutted, the Environmental Liability
Event that is subject to such presumption shall be treated, for purposes
of this Section 5.22, as an FMC Environmental Liability Event or a
Harsco Environmental Liability Event, as appropriate.
5.22.3 Quarterly Status Reports.
5.22.3.1 On or before the 30th day after the end of each Fiscal
Quarter, the Partnership shall send to each Parent an "Environmental
Realization Status Report." The Environmental Realization Status Report
shall set forth, in reasonable detail, all Remedial Expenditures (i)
planned, (ii) accrued as a liability or (iii) expended, in each case
during such Fiscal Quarter. Such Environmental Realization Status
Report shall also set forth in reasonable detail all Realizations of
Remedial Expenditures during such Fiscal Quarter. For purposes of such
Environmental Realization Status Reports, a planned Remedial Expenditure
shall be any such expenditure included in the forward pricing with
respect to any contract with a vendee.
5.22.3.2 The Partnership shall diligently pursue its right to cost
inclusion under customer contracts and to reimbursement from all other
Persons (except the Parents, the Partners and the directors, officers
and employees of each of them) having liability under applicable law
(whether pursuant to CERCLA or otherwise) with respect to all Qualifying
Remedial Expenditures, in each case together with any legally available
interest thereon. The Partnership shall have sole control and
management authority over any claim, litigation or other proceeding or
matter covered by the preceding sentence or the Partnership
indemnification set forth in Section 6.2, including the right to
negotiate and enter into settlements with interested Persons with
respect thereto and to defend or prosecute with counsel of its selection
any claim, litigation or other proceeding with respect thereto;
provided, however, that the Partnership shall not enter into any such
settlement which would give rise to Qualifying Remedial Expenditures
without the prior consent of the Parent to which such Qualifying
Remedial Expenditures relate (which will not be unreasonably withheld or
delayed).
5.22.4 Recordkeeping; Resolution of Amount of Realization.
5.22.4.1 The Partnership shall maintain, and make available to each
Parent for inspection as reasonably requested, books and records which
present in reasonable detail (i) information pertaining to the past
conduct by each Parent of its Defense Business (including forward
pricing rates) and the ownership, operation or use by each such Parent
of any facility or property now or previously owned, operated or used in
its Defense Business, as such information would bear on any
determination of whether a Remedial Expenditure is a Qualifying Remedial
Expenditure, a Realized Remedial Expenditure or an Unrealized Remedial
Expenditure; (ii) all relevant supporting data in connection with
contract-based claims or requests for reimbursement of Remedial
Expenditures; and (iii) all U.S. Government and other customer reports,
letters, requests for information or other pertinent information
submitted to the Partnership by the U.S. Government and other customers
regarding the Partnership's inclusion of Remedial Expenditures in its
contract pricing. In addition, the Partnership shall establish not less
frequently than annually and periodically submit to the DOD forward
pricing rates with respect to its costs, including Remedial Expenditures
to be incurred by the Partnership, which costs shall be identified in
sufficient detail to permit the Partnership to calculate FMC Qualifying
Remedial Expenditures, Harsco Qualifying Remedial Expenditures and other
Remedial Expenditures. Subject to applicable Governmental Rules, such
forward pricing rates, as they relate to Remedial Expenditures, will be
determined on the basis of the Partnership's best judgment as to the
Remedial Expenditures the Partnership will incur and the volume of
business the Partnership will transact during the relevant period.
These forward pricing rates will also be used (and appropriate records
shall be maintained by the Partnership) to identify Realized Remedial
Expenditures attributable to contracts with commercial customers
(including Major SPD Contracts) which are not subject to government
accounting and auditing procedures.
5.22.4.2 The Partnership shall maintain, and make available quarterly
to each Parent for inspection, a memo account (and sub-accounts for each
of FMC, Harsco and the Partnership) reflecting all Remedial Expenditure
costs and Realizations (the "Remedial Costs Account") to which shall be
charged or credited, as applicable, the following: (i) all
environmental reserves for Remedial Expenditures reflected on the Final
Closing Balance Sheets of FMC and Harsco, which reserves shall be
allocated as a credit to the Parent that contributed the reserve; (ii)
all receipts from vendees of either Parent or the Partnership (including
commercial customers as contemplated by Section 5.22.4.1 above)
attributable to the Realization of Remedial Expenditures pursuant to
Existing Contracts, which receipts shall be allocated as a credit to the
Parent that contributed the Existing Contracts; (iii) all receipts from
vendees of either Parent or the Partnership (including commercial
customers as contemplated by Section 5.22.4.1 above) attributable to the
Realization of Remedial Expenditures pursuant to New Contracts, which
receipts shall be allocated as a credit among FMC, Harsco and the
Partnership sub-accounts in accordance with Section 5.22.4.3 below; (iv)
receipts, if any, from such vendees attributable to the Realization by
the Partnership of FMC Qualifying Remedial Expenditures or Harsco
Qualifying Remedial Expenditures by means other than the Realization
thereof under procurement contracts between the Partnership and its
vendees, and all receipts from sources other than vendees, which
receipts shall be allocated as a credit to the sub-account of FMC or
Harsco, as the case may be, and all such receipts attributable to
post-Closing Environmental Liability Events, which receipts shall be
allocated as a credit to the Partnership; (v) all FMC Qualifying
Remedial Expenditures or Harsco Qualifying Remedial Expenditures
incurred by the Partnership (including, for this purpose, Remedial
Expenditures that are reflected in reserves assumed by the Partnership),
which Qualifying Remedial Expenditures shall be allocated as a charge to
the sub-account of FMC or Harsco, as the case may be, and all other
Remedial Expenditures attributable to post-Closing Environmental
Liability Events, which Remedial Expenditures shall be allocated as a
charge to the sub-account of the Partnership; (vi) all Environmental
Special Allocations under Section 4.3(c)(vi) of the Partnership
Agreement to each Parent's Partner of Unrealized Remedial Expenditures,
which Environmental Special Allocations shall be reflected as a charge
to the sub-account of the Parent to which such allocations were made;
(vii) all Environmental Special Allocations under Section 4.3(c)(iv) and
(v) of the Partnership Agreement to each Parent's Partner of
Realizations of Remedial Expenditures previously reported under Section
5.22.3.1 as Unrealized Remedial Expenditures, which Environmental
Special Allocations shall be reflected as a credit in the sub-account of
the Parent to which such allocations were made; (viii) any special
capital contributions made by a Parent to the Partnership pursuant to
Section 5.22.5, which capital contribution shall be reflected as a
credit in the sub-account of such Parent; (ix) any adjustment calculated
as a result of a rebuttal of a presumption with respect to a presumed
Qualifying Remedial Expenditure, which adjustment shall be reflected as
a credit to the sub-account of the Parent that rebutted the presumption;
(x) any special distribution made by the Partnership to a Parent's
Partner pursuant to Section 6.4 of the Partnership Agreement, which
distribution shall be reflected as a charge in the sub-account of such
Parent; (xi) any payment under Section 6.2 in respect of Qualifying
Remedial Expenditures shall be reflected as a charge to the sub-account
of the Parent with respect to which such payment is made; (xii) Major
Contract FRAs, which shall be allocated as a credit or a charge to the
sub-account of the Partnership, FMC and Harsco in accordance with
Section 5.22.4.4 below; (xiii) any Environmental Cash Flow Loan made by
a Parent to the Partnership pursuant to Annex B, which loan shall be
reflected as a credit in the sub-account of such Parent; and (xiv) any
repayment of an Environmental Cash Flow Loan to a Partner pursuant to
Annex B, which repayment shall be reflected as a charge in the
sub-account of such Parent.
5.22.4.3 With respect to each Fiscal Quarter of the Partnership in
which receipts from vendees under New Contracts attributable to
Realization of Remedial Expenditures are received, such receipts shall
be allocated among the Parents and the Partnership in proportion to the
actual expenditures by the Partnership for Remedial Expenditures
attributable to FMC, Harsco or the Partnership since the inception of
the Partnership on a cumulative basis. By way of example, if 50% of the
Remedial Expenditures of the Partnership in its first Fiscal Quarter
were expended with respect to FMC Environmental Liability Events, 25%
with respect to Harsco Environmental Liability Events and 25% with
respect to post-Closing Environmental Liability Events, all receipts
representing Realizations from vendees under New Contracts of Remedial
Expenditures in that Fiscal Quarter would be allocated 50% to the FMC
sub-account, 25% to the Harsco sub-account and 25% to the Partnership
sub-account. In each subsequent Fiscal Quarter of the Partnership,
these percentages will be recomputed on a cumulative basis of actual
expenditures since the Closing Date, and all Realizations from vendees
of Remedial Expenditures during such Fiscal Quarter will be allocated to
the three sub-accounts in accordance with the then applicable cumulative
percentage factors.
5.22.4.4 The amount of Realization of Remedial Expenditures from
purchasers of goods and services from the Partnership shall be
determined as follows: (i) with respect to each production contract
other than a Major Contract, and each other contract other than a Major
Contract, regardless of amount, the amount of Realization of Remedial
Expenditures shall be the amount provided for Remedial Expenditures in
the contract price based upon the Parent's or Partnership's forward
pricing rate used in such bid or proposal as determined in accordance
with Section 5.22.4.1 and shall be allocated to the appropriate
sub-account of the Remedial Costs Account proportionately as each unit
of production or other deliverable is paid for by the vendee as provided
in Section 5.22.4.3 above, and no further adjustment shall be made with
respect to any such contract, irrespective of any payments made to or by
the vendee in connection with contract close-out; (ii) with respect to
each Major Contract, the Tentative Remedial Expenditure Realization
shall be the Remedial Expenditure amount included in the data used by
the Partnership in its forward pricing rate to establish the contract
price as determined in accordance with Section 5.22.4.1 and the
Tentative Remedial Expenditure Realization shall be allocated to the
appropriate sub-account of the Remedial Costs Account proportionately as
each unit of production or other deliverable is paid for by the vendee
as provided in Section 5.22.4.3 above. The Tentative Remedial
Expenditure Realizations with respect to each Major Contract shall be
adjusted to reconcile any previously recorded Realization with a revised
Realization calculated in accordance with the following methodology:
A "Normative Fee" is hereby established for each category of Major
Contracts as follows:
Normative Fee
Major Contract Category GSD/CSD ASD SPD
Competitive Contract
(U.S., FMS and direct foreign) 8% 7% 7%
Sole source negotiated contract
(U.S. and FMS) 12% 10% 10%
Direct foreign sole source contract 15% 15% 15%
The Actual Fee (determined in the manner provided below) shall be
compared to the Normative Fee. If the Actual Fee exceeds or is less
than the Normative Fee applicable to the Major Contract, then the
Tentative Remedial Expenditure Realization shall be adjusted as follows
(such adjustment being referred to hereinafter as the Final Remedial
Adjustment or "FRA"):
ARER = AF x TRER
NF
where ARER = Adjusted Remedial Expenditure Realization;
AF = Actual Fee;
TRER = Tentative Remedial Expenditure Realization; and
NF = Normative Fee;
provided, that no such adjustment shall cause the final adjusted
Remedial Expenditure Realization to be less than zero or more than 200%
of the tentative Remedial Expenditure Realization.
For purposes of the foregoing calculations, the "Contract Price" shall
be the total revenues payable to the Partnership under the Major
Contract, the "Actual Cost" of performing the Major Contract shall be
the total costs incurred by the Partnership in the performance of the
Major Contract, including all direct costs and a fully allocated portion
of the Partnership's general and administrative and other indirect
costs, in each case determined in accordance with government contract
accounting policies and procedures applicable to the Partnership and the
"Actual Fee" shall be determined as follows:
Actual Fee = Contract Price - 1
Actual Cost
The following examples are intended to be illustrative:
Assume the Contract Price is $108, the Normative Fee is 8% and the
tentative Remedial Expenditure recognition is $4.
(1) If the Actual Cost of performing the Major Contract is $102, TRER
shall be
adjusted to $2.94.
(i.e., ARER = (((108/102) - 1)/.08) x 4 = $2.94.)
(2) If the Actual Cost of performing the Major Contract is $98, TRER
shall be
increased to $5.10.
(i.e., ARER = (((108/98) - 1)/.08) x 4 = $5.10.)
(3) If the Actual Cost of performing the Major Contract is $100, there
is no
adjustment.
(i.e., ARER = (((108/100) - 1)/.08) x 4 = $4.00.)
The Partnership shall make a FRA determination with respect to a Major
Contract within ninety days after the end of the Fiscal Year in which
the last deliverable under such contract has been received by the
customer or the billing has been sent to the customer with respect to
such last deliverable, whichever is later, and shall include the results
of such determination in the next Environmental Realization Status
Report delivered to the Parents pursuant to Section 5.22.3.1.
5.22.5 Contributions to Capital. The provisions hereof and of the
Partnership Agreement providing for Environmental Special Allocations
are based upon the Partnership's anticipated levels of Qualifying
Remedial Expenditures and Realizations. In order to protect the
Partnership against extraordinary cash flow disruptions, the Parents
agree that, in the event that the Cumulative Remedial Balance of FMC at
any time exceeds $10,000,000 or the Cumulative Remedial Balance of
Harsco at any time exceeds $6,666,667, then such Parent shall promptly
contribute or cause its Partner to contribute to the capital of the
Partnership an amount in cash equal to such excess; provided, however,
that during any period in which there shall be outstanding any cash
advances to the Partnership pursuant to the first sentence of Section
5.18, then FMC shall make such contribution to the capital of the
Partnership at any time that its Cumulative Remedial Balance exceeds
$5,000,000 and Harsco shall make such contribution to the capital of the
Partnership at any time that its Cumulative Remedial Balance exceeds
$3,333,333.
The parties intend that the obligation to make contributions to capital
pursuant to this Section 5.22.5 shall be recognized as a contractual
obligation treated as an account receivable included as an asset
(matched as to the current or long term status of the related liability)
in the financial statements prepared by the Partnership and reported on
by the Accountants to the extent that the Partnership determines that it
is required by GAAP to accrue for Remedial Expenditures. Each Parent
agrees that it shall take such steps as may be reasonably required by
the Accountants, including as to the Managing General Partner obtaining
a standby letter of credit with rights of enforcement vested in the
Limited Partner (as long as the Limited Partner has a 20% or greater
Share Percentage) and as to the Limited Partner obtaining a standby
letter of credit with rights of enforcement vested in the Managing
General Partner (provided that all such rights of enforcement are
available only to the extent required to make contributions to capital
under this Section 5.22.5), to support the contractual obligation set
forth in this Section 5.22.5 and to permit the recognition by the
Partnership of this contractual obligation as set forth above.
For GAAP purposes, accrued Qualifying Remedial Expenditures will be
specially allocated to the earnings share of the responsible Partner.
5.22.6 Monitoring by Harsco. Harsco shall have the right to inspect,
sample and monitor at the premises formerly utilized by the Harsco
Defense Business at all reasonable times and without unreasonable
interference with the Partnership's operations for a period of five
years following the Closing Date or the date on which FMC purchases
Harsco's ownership interest in the Partnership under its call option
pursuant to Section 7.2(a) of the Partnership Agreement, whichever is
the first to occur. The Partnership shall promptly undertake and
diligently pursue to conclusion such further environmental studies with
respect to the premises formerly utilized by the Harsco Defense Business
as Harsco may specify; provided, however that (i) except as required by
law or by any Governmental Authority, the Partnership shall not be
obligated to proceed with any aspect of such further studies at a time
and place which would unreasonably interfere with the Partnership's
conduct of its business and (ii) such obligation shall not limit the
Partnership's right to undertake such environmental studies of such
premises as the Partnership shall determine.
5.22.7 Examples. Attached hereto as Schedule 5.22.7 are examples
intended to illustrate the manner in which the foregoing provisions of
this Section 5.22 would operate in practice. In the event of any
discrepancy, or conflict in interpretation, between Schedule 5.22.7 and
the provisions of this Agreement and the Partnership Agreement, the
provisions of Schedule 5.22.7 shall control.
In the event of any of (i) the incorporation of the Partnership pursuant
to the Registration Rights Agreement, (ii) the acquisition by FMC of
the entire interest of Harsco L.P. in the Partnership as a result of the
exercise by FMC of its right of first refusal pursuant to Section 7.1(a)
of the Partnership Agreement, (iii) the closing pursuant to the exercise
by FMC of the call option pursuant to Section 7.2(a) of the Partnership
Agreement, (iv) the closing pursuant to the exercise by Harsco L.P. of
the put option pursuant to Section 7.2(b) of the Partnership Agreement,
(v) the sale by Harsco L.P. of its entire interest in the Partnership as
a result of and in conjunction with the sale by FMC of its entire
interest in the Partnership pursuant to Section 7.1(a) of the
Partnership Agreement or (vi) the sale by Harsco L.P. of its entire
interest in the Partnership in a private sale pursuant to Section 7.1(a)
of the Partnership Agreement, the parties hereto shall be subject to the
terms of Annex B hereto.
5.23 Goodyear Litigation.
5.23.1 The Partnership agrees to perform after the Closing under the
terms of the contract that is the subject of the Goodyear Litigation.
FMC shall continue to prosecute the Goodyear Litigation, at its own
expense, with counsel of its choice, and shall, on a quarterly basis,
reimburse the Partnership for any and all legal and other expenses
incurred by the Partnership in connection with such litigation. FMC
shall indemnify the Partnership against, and shall hold it harmless
from, any Loss as incurred (payable promptly upon request), for or on
account of or arising from or in connection with or otherwise with
respect to the Goodyear Litigation. The Partnership will provide
assistance to FMC in connection with the Goodyear Litigation in the
manner, and subject to the terms and conditions, set forth in Section
5.8 of the Partnership Agreement.
5.23.2 In the event that a resolution of the Goodyear Litigation
(whether by settlement agreement or judicial determination) determines
that the price to be paid to The Goodyear Tire & Rubber Company
("Goodyear") under such contract is lower than the price set forth in
the provisional agreement under which Goodyear and FMC are currently
operating, the parties hereto agree that the amount to be repaid by
Goodyear under such contract shall be remitted to FMC and not to the
Partnership. In the event that such resolution determines that the
price to be paid to Goodyear under such contract is higher than the
price set forth in such provisional agreement, FMC, and not the
Partnership, shall be responsible for remitting to Goodyear an amount
equal to such excess. The parties agree that, to the extent that
notwithstanding the above any remittances referred to in the preceding
two sentences are made by or to the Partnership, such remittances shall
be deemed to have been made to or by the Partnership as agent for FMC,
and the benefits and burdens of such remittances shall at all times
remain with FMC.
ARTICLE VI
SECTION 6.0 INDEMNITIES.
6.1 General. Subject to this Article, each Parent shall indemnify the
other Parent, such other Parent's Partner, the Partnership and their
officers, directors and employees (collectively the "Indemnified
Parties") against, and shall hold them harmless from, any Loss as
incurred (payable promptly upon request), for or on account of or
arising from or in connection with or otherwise with respect to any (a)
breach on the part of the indemnifying party or any of its Affiliates of
any surviving representation or warranty contained in any Operative
Document, (b) breach on the part of the indemnifying party or any of its
Affiliates of any covenant contained in this Agreement requiring
performance after the Closing Date, (c) Excluded Liability or any other
liability of such Parent or any of its Affiliates other than its Defense
Affiliates not expressly assumed by the Partnership under any of the
Operative Documents, (d) liability of any Defense Affiliate of such
indemnifying party listed on Schedule B to Annex A hereto that is not
taken into account in determining the amount by which such indemnifying
party's investment in such Defense Affiliate is recorded on such
indemnifying party's Final Closing Balance Sheet or (e) accrued
pre-Closing Liabilities of the types set forth for such Parent on its
Final Closing Balance Sheet (excluding those Liabilities of the types
set forth on Schedule 6.1) in excess of the amount reflected for such
Liabilities on such Parent's Final Closing Balance Sheet, provided no
Parent or its Partner shall recover any amount for any diminution in
value of its interest in the Partnership to the extent that the
Partnership is entitled to be indemnified and obtains full
indemnification for the underlying Loss.
Indemnification under clauses (a) and (e) of this Section 6.1 shall be
unavailable to any Indemnified Party until all amounts to which such
Indemnified Party is entitled exceed $1 million in the aggregate,
whereupon only the amount of such excess shall be available.
Indemnification shall be unavailable with respect to any claim for a
breach of a representation or warranty made in any applicable agreement
between the parties hereto and their Affiliates, as of a date on or
prior to Closing, if the claim is made or notice of possible claim of
reasonable specificity is received after the survival period for such
representation or warranty set forth in Section 7.12.
6.2 Liability for Environmental Matters.
Pursuant to the Assumption Agreement referred to in Section 2.1.6, the
Partnership shall assume all liabilities and obligations relating to
Environmental Liability Events. Subject to Section 6.1, the Partnership
shall be solely responsible for post-Closing compliance with
Environmental and Safety Requirements applicable to its operations and
facilities. Subject to the procedures, limitations and qualifications
set forth in Sections 6.5, 6.6, 6.7 and 6.8, the Partnership shall
indemnify and defend each Parent, such Parent's Partner, and their
officers, directors and employees against, and hold them harmless from,
any Loss as incurred (payable promptly upon request) for or on account
of or arising from or in connection with or otherwise with respect to
any Environmental Liability Event, whenever arising or caused, but only
to the extent that such Loss, or any portion thereof, is not paid by
such Parent's insurers under general liability insurance policies (or
any other applicable insurance policy). Notwithstanding anything to the
contrary in this Section 6.2, each Parent shall be obligated to seek
payment under its general liability policies only for all such Losses
and shall retain any liability or obligation relating to Environmental
Liability Events to the extent necessary to maintain its right to pursue
and obtain payment under its general liability policies. The
Partnership shall be entitled to receive all sums reimbursed to,
Realized by or otherwise paid to each Parent under its general liability
policies (or any other applicable insurance policy) for costs incurred
by the Partnership in connection with Environmental Liability Events
pursuant to this Section 6.2, less the cost of collection (including
attorneys' and consultants' fees). It is acknowledged by the parties
that the inclusion of costs incurred in connection with Environmental
Liability Events in pricing customer contracts are (i) in advance of
potential Realization from a Parent's general liability insurers, (ii)
not in lieu of such Realization and (iii) not designed to permit double
payment for costs to the Partnership or either Parent. This Section 6.2
is not intended to limit, reduce, define or otherwise restrict either
Parent's rights to recovery under its general liability policies in
connection with Environmental Liability Events.
6.3 Indemnification for Pension, Retiree Medical and Other Employee
Benefits Subject to the procedures and limitations set forth in
Sections 6.5, 6.6, 6.7 and 6.8, each Parent agrees to indemnify and
defend the Indemnified Parties against, and hold them harmless from, any
Loss for or on account of or arising from or in connection with or
otherwise with respect to any liability relating to a pension benefit
plan, retiree medical benefit plan or any other employee benefit plan
caused by or attributable to employment service with or the funding of
such plans by the Parent prior to the Closing Date, and not as part of
this transaction, either (i) funded through the transfer of assets or
(ii) assumed by the Partnership as an unfunded liability either (A)
reflected on the Parent's Final Closing Balance Sheet or (B) not so
reflected if such liability is an obligation for post employment
benefits (other than pre-closing workers' compensation) of the type
described in SFAS 112; provided, however, that no such indemnity shall
apply to any pension, retiree medical or other employee benefit provided
for in a Partnership benefit plan to the extent that such plan confers
different or greater benefits than the predecessor plans of either
Parent (it being understood that neither Parent assumes any
responsibility for any Partnership benefit attributable to pre-Closing
employment service in an amount greater than such Parent would have been
responsible for under the terms of its pre-Closing benefit plans); and
provided further that (i) FMC shall indemnify the Indemnified Parties to
the extent that the proviso in Section 4.28 above is inaccurate and (ii)
Harsco shall indemnify the Indemnified Parties to the extent that the
representation in Section 4.21.11 is inaccurate with respect to Harsco,
disregarding the information disclosed pursuant to the exception to such
Section 4.21.11. Each such Parent further agrees to indemnify and
defend the Indemnified Parties against, and hold them harmless from, any
Loss on account of any final non-appealable decision that the transfer
(or failure to transfer) of pension assets from such Parent's Qualified
Pension Plan to the Qualified Pension Plan of the Partnership as
described in Section 5.9.5 does not comply with applicable Governmental
Rules. In such event, the legally-required amount of additional assets
shall be transferred to the appropriate Qualified Pension Plan of the
Partnership, increased by the actuarial rate of earnings from the period
since the Closing Date. In addition, and subject to the foregoing
procedures and limitations, FMC agrees to indemnify and defend Harsco or
the Partnership, as applicable, and to hold it harmless, for any Loss
for or on account of or arising from or in connection with or otherwise
with respect to any liability relating to (a) benefit reductions
continued through the Partnership's adoption and implementation of a
retiree medical benefit plan which continues certain benefit reductions,
with respect to former FMC employees, initiated by FMC in 1993
(including, without limitation, an employer cost limitation scheduled to
take effect in 1996) and (b) the Partnership's being part of the
"controlled group" which includes FMC or under "common control" with FMC
as those terms are defined or used in ERISA and/or the Code.
Notwithstanding the foregoing provisions of Section 6.3, no Parent or
its Partner shall recover any amount for any diminution in value of its
interest in the Partnership to the extent that the Partnership is
entitled to be indemnified and obtains full indemnification for the
underlying Loss.
6.4 Indemnification for Demolition Costs. FMC shall indemnify the
Partnership against, hold it harmless from, and promptly reimburse it
with respect to any and all liability for costs and expenses relating
to, arising out of or incurred in connection with the demolition of any
buildings located on the Santa Clara Properties ("Demolition Costs"),
but only to the extent that such Demolition Costs were not incurred in
furtherance of a valid business purpose of the Partnership.
6.5 Procedures. With respect to any indemnification under this Article
VI in respect of, arising out of or involving a claim made by any Person
against an Indemnified Party (the "Third Party Claim"), such Indemnified
Party must notify the indemnifying party of the Third Party Claim within
a reasonable time after receipt by such Indemnified Party of written
notice of the Third Party Claim; provided, however, that the failure of
any Indemnified Party to give such notice shall not relieve the
indemnifying party of its obligations under this Article VI except to
the extent that the indemnifying party is actually prejudiced by such
failure to give notice. Thereafter, the Indemnified Party shall deliver
to the indemnifying party, within ten (10) Business Days after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to
the Third Party Claim.
6.6 Defense of Third Party Claims. If a Third Party Claim is made
against an Indemnified Party, the indemnifying party shall be entitled
to participate in the defense thereof and, if it so chooses, to assume
the defense thereof with counsel selected by the indemnifying party, if
(a) such counsel is not reasonably objected to by the Indemnified Party
within five days of the Indemnified Party's having knowledge of such
counsel's identity and (b) the indemnifying party first admits in
writing that the claim is of the kind that is covered by this Article.
Should the indemnifying party so elect to assume the defense of a Third
Party Claim, the indemnifying party shall not be liable to the
Indemnified Party for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. If the
indemnifying party elects to assume the defense of a Third Party Claim,
the Indemnified Party shall (a) cooperate in all reasonable respects
with the indemnifying party in connection with such defense and (b) not
admit any liability with respect to, or settle, compromise or discharge
("Settle"), such Third Party Claim without the indemnifying party's
prior written consent. If the indemnifying party assumes the defense of
any Third Party Claim, the Indemnified Party shall be entitled to
observe such defense with its own counsel at its own expense. If the
indemnifying party does not assume the defense of any such Third Party
Claim, the Indemnified Party may defend the same in such manner as it
may deem appropriate, including Settling such claim or litigation after
giving reasonable notice to the indemnifying party of the terms of such
settlement, and the indemnifying party shall promptly, upon request of
the Indemnified Party, advance funds to the Indemnified Party in the
amount of any legal and other expenses reasonably incurred by the
Indemnified Party in connection with investigating, defending or
settling any such Third Party Claim unless there is a bona fide question
of whether the claim in question is one requiring the indemnifying party
in fact to indemnify the other. However, the indemnifying party shall
not be entitled to assume the defense of any Third Party Claim if the
Third Party Claim seeks an order, injunction or other specific equitable
relief or specific relief for other than money damages against the
Indemnified Party; but in its defense of such Third Party Claim, the
Indemnified Party shall neither Settle any portion thereof that seeks
money damages without the indemnifying party's prior written consent,
which shall not be unreasonably withheld, nor Settle any other portion
thereof that seeks a remedy against the Indemnified Party without such
prior written consent.
6.7 Indemnification Payments.
(a) Indemnification payments under this Article VI shall be reduced by
(i) any insurance payments or judgments against or settlements with
third parties that have been recovered by the Indemnified Party and (ii)
any Tax Benefits. For purposes of this Section 6.7, "Tax Benefits"
shall mean the present value of any tax benefits available to the
Indemnified Party (or any consolidated, combined or unitary group of
which it is a member) under federal, state, local or foreign Tax law
attributable to any indemnified loss, liability, claim, damage, or
expense. For purposes of determining Tax Benefits (i) present value
shall be determined using a discount rate equal to the appropriate
Applicable Federal Rate under Section 1274 of the Code in effect for the
month in which the indemnification payment is made, (ii) all deductions
and losses shall be determined on the assumption that all such items are
useable at the maximum Federal marginal income Tax rate applicable to a
corporation under Section 11 of the Code in effect for the taxable year
in which such deduction or loss may be claimed, plus 5 percentage
points, and (iii) no benefit shall be taken into account for any item
that increases the basis of property not subject to depreciation or
amortization. If the Indemnified Party is the Partnership, no Tax
Benefit shall be taken into account to the extent that any Tax loss or
deduction attributable to any indemnified loss, liability, claim,
damage, or expense is allocated to the indemnifying Parent or its
Partner under Sections 4.3(c)(iii) and 4.4 of the Partnership Agreement.
(b) The indemnifying party shall indemnify the Indemnified Party (and
the other Parent if the Indemnified Party is the Partnership) against
any Taxes imposed on any payment under this Article VI (including any
payment pursuant to this sentence).
(c) The Indemnified Party shall make repayments to the indemnifying
party with respect to indemnification payments received by the
Indemnified Party pursuant to this Article VI hereof but only to the
extent that the Indemnified Party has received (A) any insurance
payments or the proceeds of judgments against or settlements with third
parties ("Recovery Items") or (B) Tax Benefits not taken into account
pursuant to Section 6.7(a). The repayments hereunder shall not exceed
the excess, if any, of the sum of the indemnification payments, the
Recovery Items received by the Indemnified Party and such Tax Benefits,
over the liability imposed on the Indemnified Party. For purposes of
such calculation, Recovery Items shall not be taken into account to the
extent that Recovery Items have been allocated or distributed to the
indemnifying party or its affiliate pursuant to Article IV or Article VI
of the Partnership Agreement, or otherwise. Tax Benefits shall be
calculated by taking into account any tax liability associated with the
receipt of any indemnification payments or Recovery Items. Tax Benefits
shall not include any item that increases the basis of property not
subject to depreciation or amortization. Repayments, if any, under this
Section 6.7(c) shall be made promptly after the Indemnified Party's
receipt of a Recovery Item and, in the case of Tax Benefits, promptly
after the closing of the period of limitations on assessments with
respect to the Indemnified Party's taxable year to which the Tax
Benefits pertain. Such repayment with respect to Tax Benefits shall
bear interest at the rate of twelve month LIBOR prevailing on the
repayment date, plus 100 basis points, for the period between the filing
date of the Indemnified Party's federal income tax return on which such
Tax Benefits are claimed and the date of the repayment.
6.8 Limitations and Exclusions. All losses, damages, claims and
expenses subject to indemnification under this Article VI shall be
limited to actual, direct damages, losses, expense, or costs. ALL
CONSEQUENTIAL AND PUNITIVE DAMAGES ARE HEREBY EXCLUDED.
Third party claims subject to indemnification shall not be deemed to be
consequential or punitive damages but shall be considered actual damages
once liquidated and the subject of a court enforced judgment, provided
that the indemnifying party has been offered a reasonable opportunity to
defend such third party claim.
6.9 Liability of Partnership. Any liability of the Partnership under
any Operative Document to any party hereto shall be the sole obligation
of the Partnership and shall be explicitly nonrecourse to FMC, Harsco,
Harsco L.P. and the Affiliates (other than the Partnership) of each of
them.
ARTICLE VII
SECTION 7.0 MISCELLANEOUS.
7.1 Notices. All notices, demands and other communications required or
permitted by the terms of this Agreement to be given to any Person shall
be in writing, and shall be given by personal delivery, by mail or
overnight courier or by electronic means of communication. Any such
item shall deemed effective (i) five Business Days after being deposited
in the mails, certified or registered, with appropriate postage prepaid
and return receipt requested, (ii) when received, if delivered by hand
or courier or overnight service that provides for a signed receipt upon
delivery or (iii) when received, in the form of a telex, telegram or
telecopy. Such item shall be directed to the address, telex number or
telecopy number of such Person set forth in Schedule 7.1 to this
Agreement, or at such other address, telex number or telecopy number as
such Person shall designate by like notice to the other parties.
7.2 Severability. In case any one or more of the provisions contained
in this Agreement or any Annex or Exhibit hereto shall, for any reason,
be held to be invalid, illegal, or unenforceable in any respect, all
other provisions of this Agreement or any Annex or Exhibit hereto shall
nevertheless remain in full force and effect, but if the economic or
legal substance of the transactions contemplated hereby is affected in a
manner materially adverse to either party as a result of the
determination that a provision is invalid, illegal or unenforceable, the
parties hereto agree to negotiate in good faith to modify this Agreement
and, if appropriate the Annexes and Exhibits hereto, so as to effect the
original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
7.3 Entire Agreement; Amendment and Waiver; Remedies. This Agreement,
together with the other Operative Documents and other documents referred
to herein, constitutes the entire agreement of the parties hereto or
thereto with respect to the subject matter hereof or thereof and
supersedes all prior written and oral agreements (including the parties'
letter of understanding dated November 23, 1992) and understandings with
respect to such subject matter. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by a document in writing signed by the party
against which the enforcement of the termination, amendment, supplement,
waiver or modification is sought. No failure or delay of any party
hereto in exercising any power or right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps
to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. Except as
otherwise provided herein, neither party hereto may assign this
Agreement without the prior written consent of the other party.
7.4 Limitations. IN ANY ACTION FOR DAMAGES OR ENFORCEMENT RELATING TO
THIS AGREEMENT, NO PARTY HERETO SHALL BE ENTITLED TO CONSEQUENTIAL OR
PUNITIVE DAMAGES, BUT THE PREVAILING PARTY IN ANY SUCH PROCEEDING SHALL
BE ENTITLED TO RECEIVE ALL OF ITS COSTS AND EXPENSES (INCLUDING
REASONABLE COUNSEL FEES). THIS PROVISION IS INTENDED EXCLUSIVELY FOR
THE BENEFIT OF THE PARTIES HERETO AND SHALL NOT BE CONSTRUED TO GIVE
RISE TO ANY THIRD PARTY BENEFICIARY RIGHTS.
Third party claims subject to indemnification shall not be deemed to be
consequential or punitive damages but shall be considered actual damages
once liquidated and the subject of a court enforced judgment, provided
that the indemnifying party has been offered a reasonable opportunity to
defend such third party claim.
7.5 Table of Contents; Headings. The table of contents and headings of
the articles, sections and other subdivisions of this Agreement are for
convenience of reference only and shall not modify, define or limit any
of the terms or provisions of this Agreement.
7.6 Parties in Interest; Limitation on Rights of Others. The terms of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. Nothing in
this Agreement, whether express or implied, shall be construed to give
any Person (other than the parties hereto and their successors and
assigns and as expressly provided herein) any legal or equitable right,
remedy or claim under or in respect of this Agreement or any covenants,
conditions or provisions contained herein. No assignment or transfer of
this Agreement or a party's interest in the Partnership or its Partner
shall relieve such party from its obligations hereunder or under any
other Operative Document.
7.7 Binding Effect. Although the parties intend that each of the
Partnership and Harsco L.P. shall duly authorize, execute and deliver
this Agreement upon its formation on or before the Closing Date, this
Agreement shall be binding upon the Parents when executed and delivered
by each Parent.
7.8 Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
State of Delaware. In furtherance of the foregoing, the internal law of
the State of Delaware shall control the interpretation and construction
of this Agreement, even though under that jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
7.9 Jurisdiction; Court Proceedings. Any suit, action or proceeding
against any party hereto arising out of or relating to this Agreement or
under any other Operative Document, any transaction contemplated hereby
or any judgment entered by any court in respect of any such suit, action
or proceeding may be brought in any Federal or State court located in
the state of the principal place of business of the Partnership or such
other district as may contain the Partnership's principal place of
business, and each party hereto hereby submits to the jurisdiction of
such courts for the purpose of any such suit, action or proceeding. To
the extent that service of process by mail is permitted by applicable
law, each such party irrevocably consents to the service of process in
any such suit, action or proceeding in such courts by the delivery of
such process by mail, at its address for process provided for in
Schedule 8.1 to this Agreement, and no such service shall be effective
until such delivery is made. Each such party irrevocably agrees not to
assert any objection which it may ever have to the laying of venue of
any such suit, action or proceeding in any Federal or State court
located in any state which contains the Partnership's principal place of
business, and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.
7.10 Termination. This Agreement may be terminated at any time before
Closing:
(a) by consent of both Parents;
(b) by either Parent if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the other
Parent or its Affiliates set forth in this Agreement and material to the
transactions contemplated hereby and, if it is susceptible of cure, it
is not cured within 10 days after written notice to such Parent; or
(c) by either Parent if the Closing has not occurred by February 1,
1994, subject to Section 2.2 hereof.
7.11 Expenses. Except as otherwise stated herein, each party shall
bear its own expenses incurred prior to Closing in connection herewith.
7.12 Survival. All of the representations and warranties of the
parties contained in this Agreement shall survive until the close of
business on March 31, 1996, regardless of whether such party continues
to hold an ownership interest in the Partnership or any corporate
successor (other than Section 4.8, which shall survive indefinitely).
All of the indemnities and covenants of the parties contained in this
Agreement shall, unless otherwise provided herein, survive indefinitely
or for the period set forth in any applicable statute of limitations;
provided, however, that upon the purchase of Harsco's interest in the
Partnership under the call provided for in Section 7.2 of the
Partnership Agreement, the indemnity set forth in Section 6.1(a) and, in
the event of a Change in Control of FMC, the covenants set forth in
Sections 5.6 and 5.12 on the part of Harsco shall be extinguished.
7.13 Advice of Legal Counsel. Each party hereto acknowledges and
represents that, in executing this Agreement, it has had the opportunity
to seek advice as to its legal rights from legal counsel and that the
person signing on its behalf has read and understood all of the terms
and provisions of this Agreement. This Agreement shall not be construed
against any party hereto by reason of the drafting or preparation
thereof.
7.14 Noncompetition. Each Parent agrees that, until such time as the
Share Percentage of such Parent's Partner (or equivalent common equity
interest in any corporate successor to the Partnership) falls below 20%
and for an additional period of three (3) years thereafter, it will not
engage, directly or indirectly, anywhere in the world in any line of
business within the Scope of Activity; provided, however, that (i)
Harsco shall be entitled to continue to engage in the development,
manufacture, retrofit, installation, repair, overhaul, engineer, design,
service, sale and marketing of wheeled trucks (whether armed or
unarmed), trailers, busses, armor and armor kits for sale to the
military and other customers and (ii) either Parent shall be entitled to
continue to engage in the development, manufacture, retrofit,
installation, repair, overhaul, engineer, design, service, sale and
marketing of any component part or subsystem of military vehicle systems
or weapon stations which are similar to classes of products or services
that primarily are commercially sold by such Parent for non-military
uses. If any court of competent jurisdiction shall finally hold that
the time, territory or any other provision set forth in this Section
7.14 constitutes an unreasonable restriction, such provision shall not
be rendered void, but shall apply as to such time, territory or to such
other extent as such court may determine constitutes a reasonable
restriction under the circumstances involved. Each Parent acknowledges
that the restrictions contained in this Section 7.14 are reasonable and
necessary to protect the legitimate interests of the Parents and the
Partnership and that any breach by either Parent of any provision hereof
will result in irreparable injury to the Partnership. Each Parent
acknowledges that, in addition to all remedies available at law, the
Partnership or a Parent shall be entitled to equitable relief, including
injunctive relief, and an equitable accounting of all losses and
damages, including consequential damages, arising from such breach. Any
Parent and any of its Affiliates may engage in other business ventures
and dealings within or without the Partnership's Scope of Activity,
except to the extent that such ventures and dealings are prohibited by
this Section 7.14.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first above written.
FMC CORPORATION
By: /S/ Robert N. Burt
Its: Chairman & CEO
HARSCO CORPORATION
By: /S/ Derek C. Hathaway
Its: President & Chief Executive Officer
HARSCO DEFENSE HOLDING, INC.
By: /S/ Leonard A. Campanaro_
Its: Treasurer
With respect only to the obligations of it
expressly set forth herein:
UNITED DEFENSE, L.P.
By: FMC CORPORATION
its general partner
By: /S/ Robert N. Burt
Its: Chairman & CEO
List of Omitted Exhibits and Schedules to Participation Agreement
Annex B Terms of Contingent Rights and Obligations of FMC
and Harsco
Schedule 2.3.1 Adjustments
Schedule 4.2 Authorization; No Conflict
Schedule 4.4 Proceedings
Schedule 4.8.2A Real Property Transferred or Leased by FMC
Schedule 4.8.2B Real Property Transferred or Leased by Harsco
Schedule 4.9A FMC Aged Receivables
Schedule 4.9B Harsco Aged Receivables
Schedule 4.10 Certain Existing Contracts and Defaults
Schedule 4.11 Litigation, Investigations and/or Other Proceedings
Schedule 4.12 Liabilities
Schedule 4.14A FMC Pro Forma Balance Sheet
Schedule 4.14B Harsco Pro Forma Balance Sheet
Schedule 4.15 Events Subsequent to December 31, 1992
Schedule 4.16 Consents
Schedule 4.17 Notice of Governmental Authorizations and
Compliance
with Laws
Schedule 4.18 Government Contracts
Schedule 4.19 Capital Stock and Equity Interests of Defense
Affiliates and Defense Subsidiaries
Schedule 4.20 Intellectual Property
Schedule 4.21.1 Employee Benefits and Contracts
Schedule 4.21.8 Actuarial Assumptions
Schedule 4.21.11 Employee Benefit Cost Disallowances
Schedule 4.22 Bargaining Agents
Schedule 4.24 Binding Commitments, Promises and Representations
to Employees
Schedule 4.25 Labor Controversies; Affirmative Action
Schedule 5.9.1 Transferred Employees
Schedule 5.9.3 Partnership Nonunion Pension Plans
Schedule 5.11 Procedure for Obtaining Consents
Schedule 5.14 VLS Receivables
Schedule 5.16 Slow-Moving Inventory
Schedule 5.22.2 Environmental Liability Events
Schedule 5.22.7 Examples
Schedule 6.1 Accrued Liabilities
Schedule 7.1 Notices, Addresses, Fax Numbers, Etc.
Exhibit A Demand Note
Exhibit B Assumption Agreement
Exhibit C Confidentiality Agreement
Exhibit D Promissory Note
Exhibit E Opinions of Counsel
Exhibit F Intellectual Property Agreements
Exhibit G Lease Agreement
Exhibit H Management Services Agreement
Harsco Corporation will furnish supplementally a copy of any omitted
exhibit or schedule to the Commission upon request.