EXHIBIT 10.27
STOCK PURCHASE AGREEMENT
BETWEEN
RAYTHEON ENGINEERS & CONSTRUCTORS
INTERNATIONAL, INC.
AND
TEREX CORPORATION
DATED AS OF JULY 19, 1999
TABLE OF CONTENTS
SECTION PAGE
ARTICLE 1 Purchase and Sale.................................................1
ARTICLE 2 Purchase Price....................................................2
2.1. Purchase Price................................................2
2.2. Purchase Price Adjustments....................................2
ARTICLE 3 Closing...........................................................4
3.1. Time and Place................................................4
3.2. Transactions at Closing.......................................4
ARTICLE 4 Representations and Warranties of Seller..........................5
4.1. Incorporation; Authority......................................5
4.2. Foreign Qualifications........................................5
4.3. Rights to Sell Cedarapids Shares; Approvals;
Binding Effect.............................................5
4.4. No Defaults...................................................5
4.5. Subsidiaries..................................................6
4.6. Capitalization................................................7
4.7. Title to Stock, Liens, etc....................................7
4.8. Consents.....................................................7
4.9. Financial Statements..........................................7
4.10. Absence of Certain Changes....................................8
4.11. Litigation, Etc...............................................10
4.12. Title to and Sufficiency of Assets............................10
4.13. Intellectual Property.........................................11
4.14. Tangible Assets...............................................12
4.15. Real Estate Matters...........................................12
4.16. No Undisclosed Liabilities....................................13
4.17. Employees.....................................................14
4.18. Labor Relations...............................................14
4.19. Contracts.....................................................15
4.20. Pensions and Benefits.........................................16
4.21. Compliance with Laws, Etc.....................................18
4.22. Environmental Matters........................................18
4.23. Indebtedness..................................................19
4.24. Insurance.....................................................19
4.25. Bank Accounts, Signing Authority,
Powers of Attorney..........................................20
4.26. Minute Books..................................................20
4.27. Brokers.......................................................20
ii
4.28. Affiliates' Relationships to the Cedarapids Companies.........20
4.29. Conflicts of Interest.........................................20
4.30. Products Liability............................................21
4.31. Year 2000 Compliance..........................................21
4.32. Misleading Statements.........................................21
Article 5 Representations and Warranties of the Buyer.......................21
5.1. Organization and Standing of the Buyer........................22
5.2. Corporate Approval; Binding Effect............................22
5.3. Non-Contravention.............................................22
5.4. Consents, Etc.................................................22
5.5. Brokers.......................................................22
5.6. Due Diligence Review..........................................22
5.7. Purchase Entirely for Own Account.............................23
Article 6 Certain Regulatory Approvals......................................23
6.1. Hart-Scott-Rodino Act.........................................23
Article 7 Conduct of Business Pending Closing...............................23
7.1. Full Access...................................................23
7.2. Carry on in Regular Course; Certain Contracts.................24
7.3. No General Increases..........................................24
7.4. Sale of Capital Assets........................................24
7.5. Insurance.....................................................24
7.6. Preservation of Organization..................................24
7.7. Advice of Change..............................................25
7.8. No Shopping...................................................25
7.9. Maintenance of Assets and Supplier Relationships..............25
7.10. No Amendment of Organizational Documents......................25
7.11. Incurrence of Liabilities; Factoring of Receivables;
Auction of Assets........................................25
7.12. Declaration of Dividends......................................25
Article 8 Conditions Precedent to Buyer's Obligations.......................26
8.1. Representations and Warranties................................26
8.2. Compliance with Agreement.....................................26
8.3. No Litigation.................................................26
8.4. HSR Act.......................................................26
8.5. Tax Agreement.................................................26
8.6. Mutual Release................................................27
8.7. Receivables Facility..........................................27
8.8. No Prohibition................................................27
8.9 FIRPTA.........................................................27
8.10 Delivery of Financial Statements...............................27
8.11. Resignation of Officers and Directors.........................27
8.12. Certain Encumbrances..........................................27
iii
8.13. Books and Records.............................................27
Article 9 Conditions Precedent to Seller's Obligations......................28
9.1. Representations and Warranties................................28
9.2. Compliance with Agreement.....................................28
9.3. No Litigation.................................................28
9.4. HSR Act.......................................................28
9.5. Tax Agreement.................................................28
9.6. Receivables Facility..........................................29
Article 10 Employees and Employee Benefits..................................29
10.1. Employees....................................................29
10.2. Benefit Plans................................................29
10.3. Defined Contribution Plan....................................31
10.4. Pension Plans; Transfer of Master Trust Assets...............31
10.5. Stock Options................................................32
10.6 Retention Agreements..........................................32
Article 11 Certain Covenants................................................33
11.1. Access to Books and Records..................................33
11.2. Use of Names.................................................34
11.3. Non-Competition..............................................34
11.4. Internet Protocol............................................35
11.5. General Transitional Assistance..............................36
11.6. CMI Litigation...............................................36
11.7. Further Assurances...........................................36
11.8. Receivables Sale Agreement...................................37
Article 12 Indemnity........................................................38
12.1. Indemnification by the Seller................................38
12.2. Indemnification by the Buyer.................................39
12.3. Indemnification Procedures...................................39
12.4. Scope of Indemnity...........................................40
12.5. Waiver of Statutory Claims...................................40
Article 13 Tax Matters......................................................41
Article 14 Termination......................................................41
Article 15 Confidentiality..................................................41
Article 16 Definitions......................................................42
iv
Article 17 General..........................................................45
17.1. Survival of Representations and Warranties...................45
17.2. Expenses.....................................................46
17.3. Assigns......................................................46
17.4. Entire Agreement, Etc........................................46
17.5. Waiver of Certain Damages....................................46
17.6. Construction.................................................46
17.7. Governing Law................................................47
17.8. Notices......................................................47
17.9. Counterparts.................................................47
17.10. Section Headings.............................................47
17.11. Public Statements or Releases................................48
17.12. No Third Party Beneficiaries.................................48
17.13. Disclosure in Schedules......................................48
17.14. Waiver of Jury Trial.........................................48
v
Exhibits:
Exhibit A Disaffiliation Tax Sharing Agreement
Exhibit B Mutual Release
Exhibit C Receivables Termination Agreement
Schedules:
Schedule 2.2(b) Model Balance Sheet
Schedule 4.4 No Defaults
Schedule 4.5 Subsidiaries
Schedule 4.8 Consents
Schedule 4.9(a) December Balance Sheet
Schedule 4.9(b) GAAP Exceptions
Schedule 4.9(c) Interim Balance Sheet and Income Statement
Schedule 4.9(d) GAAP Exceptions
Schedule 4.10 Certain Changes
Schedule 4.11 Litigation, Etc.
Schedule 4.12(a) Title to Assets
Schedule 4.12(b) Sufficiency of Assets
Schedule 4.13(a) Patents, Trademarks and Service Marks
Schedule 4.13(b) License and Other Agreements
Schedule 4.13(c) Infringement Claims
Schedule 4.13(d) Unauthorized Use Claims
Schedule 4.14(a) Tangible Assets
Schedule 4.14(b) Material Defects, Etc.
Schedule 4.15 Real Estate Matters
Schedule 4.16(a) Undisclosed Liabilities
Schedule 4.16(b) Guarantees
Schedule 4.17 Employees
Schedule 4.18 Labor Relations
Schedule 4.19 Contracts
Schedule 4.20(a) ERISA Plans
Schedule 4.20(b) Compliance with ERISA
Schedule 4.20(f) Retiree Benefits
Schedule 4.21 Compliance with Law
Schedule 4.22 Environmental Matters
Schedule 4.23 Indebtedness
Schedule 4.24 Insurance
Schedule 4.25 Bank Accounts, Signing Authority, Powers of Attorney
Schedule 4.28 Agreements with Affiliates
Schedule 4.29(a) Conflicts of Interest
Schedule 4.29(b) Arrangements with Directors and Officers
Schedule 4.30 Product Liability Litigation
Schedule 7.2 Carry on in Regular Course; Certain Contracts
VI
Schedule 7.5 Insurance
Schedule 8.12 Certain Encumbrances
Schedule 10.6(a) Retention Agreements
Schedule 10.6(b) Key Employees and Retention Bonuses
Schedule 11.5(a) General Transitional Assistance
Schedule 11.5(b) Substitute Software
Schedule 11.6 CMI Litigation
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of the
19th day of July, 1999, by and between RAYTHEON ENGINEERS & CONSTRUCTORS
INTERNATIONAL, INC., a Delaware corporation (the "Seller"), and TEREX
CORPORATION, a Delaware corporation (the "Buyer").
The Seller is the owner of all of the issued and outstanding capital
stock of Cedarapids, Inc., an Iowa corporation ("Cedarapids"). Cedarapids and
its Subsidiaries (the "Cedarapids Subsidiaries" and, together with Cedarapids,
the "Cedarapids Companies") are in the business of designing, manufacturing and
marketing equipment and repair parts used in road building and related
construction activities (the "Cedarapids Business"). The Buyer wishes to
acquire, and the Seller wishes to divest, the Cedarapids Business. Accordingly,
the Buyer and Seller wish to enter into this Agreement in order to provide for
the purchase and sale of all the outstanding capital stock of Cedarapids.
In connection with the negotiation and preparation of this Agreement,
the Seller and the Cedarapids Companies have prepared, and the Buyer has
reviewed, a set of disclosure schedules, dated the date hereof and delivered
separately as one or more volumes (the "Disclosure Schedule", with any reference
in this Agreement to a Schedule being a reference to the Disclosure Schedule).
Certain defined terms used in this Agreement have the meanings given
them in Article 16.
In consideration of the mutual agreements and covenants herein
contained, the parties hereto agree as follows:
Article 1
Purchase And Sale
Subject to the terms and conditions set forth in this Agreement, at the
Closing referred to in Article 3 hereof, the Seller shall sell, assign, transfer
and deliver to the Buyer, and the Buyer shall purchase, acquire and take
assignment and delivery of, all of the issued and outstanding capital stock of
Cedarapids (the "Cedarapids Shares").
Article 2
Purchase Price
2.1. Purchase Price. At the Closing, the Buyer shall pay $170,000,000 to
the Seller, as the aggregate purchase price for the Cedarapids Shares (the
"Initial Purchase Price"), by wire transfer of same day funds to an account
designated by the Seller in writing to the Buyer at least two (2) business days
prior to Closing. The Initial Purchase Price is subject to adjustment as
provided in Section 2.2.
2.2 Purchase Price Adjustments.
(a) Within sixty (60) days after the Closing Date, the Seller
shall prepare and deliver to the Buyer an unaudited consolidated
balance sheet of the Cedarapids Companies as of the close of business
on the Closing Date (the "Closing Balance Sheet"). The Closing Balance
Sheet shall be prepared (i) in accordance with GAAP (as defined in
Article 16), except as may otherwise be provided in clauses (iii), (iv)
and (v) below, (ii) to the extent that such basis would be in
accordance with GAAP, applied on a basis consistent with the December
Balance Sheet (as defined in Section 4.9), after giving effect to the
adjustments of the type described in the footnotes to the December
Balance Sheet, (iii) whether or not in accordance with GAAP, containing
an accrual in the amount of $721,000 to reflect a portion of the
obligations under the Retention Agreements (as defined in Section 10.6)
that will be the responsibility of Cedarapids and the Buyer pursuant to
Section 10.6, (iv) whether or not in accordance with GAAP, containing
an accrual in the amount of $2,000,000 for the litigation pending
against the Cedarapids Companies and listed on Schedule 4.11 (the
"Scheduled Litigation"), and (v) containing no accrual for the 12th
Avenue Tank Liability (as defined in Section 12.1). The procedures
required to prepare the Closing Balance Sheet pursuant to clauses
(i)-(v) of the preceding sentence are referred to collectively as the
"Closing Balance Sheet Procedures". The Buyer agrees to cause each
Cedarapids Company to give the Seller reasonable access to its books
and records and reasonable cooperation from its personnel in order to
permit the Seller to prepare the Closing Balance Sheet.
(b) When the Seller delivers the Closing Balance Sheet, the
Seller shall also deliver a certificate (i) certifying that the Closing
Balance Sheet was prepared in accordance with the Closing Balance Sheet
Procedures, and (ii) containing the Seller's calculations, based on the
Closing Balance Sheet and calculated in a manner consistent with the
Closing Balance Sheet Procedures (the "Seller's Proposed
Calculations"), of the Net Assets as of the close of business on the
Closing Date. As used in this Agreement "Net Assets" means the
difference of (x) the total assets of the Cedarapids Companies less (y)
the total liabilities of the Cedarapids Companies, excluding any
liabilities for which the Seller has agreed to be responsible pursuant
to this Agreement or one of the other agreements referred to in Section
3.2, fixing for purposes of the Closing Balance Sheet the accrual for
the Retention Agreements at $721,000, notwithstanding that the amount
to be paid by the Buyer and Cedarapids pursuant to Section 10.6 may be
greater, fixing the accrual for the Scheduled Litigation at $2,000,000
and providing no accrual for the 12th Avenue Tank Liability. Attached
hereto as Schedule 2.2(b) under the heading "Adjusted" is a preliminary
statement of Net Assets as of December 31, 1998, based upon the
December Balance Sheet and calculated in accordance with the Closing
Balance Sheet Procedures, but excluding the Closing Balance Sheet
Procedures set forth in clauses (iii)-(v) of paragraph (a) above (the
"Model Balance Sheet").
(c) Within forty-five (45) days after receipt of the Closing
Balance Sheet and the accompanying certificate, the Buyer shall notify
the Seller of its agreement or disagreement with the Closing Balance
Sheet and the accuracy of any of the Seller's Proposed Calculations;
provided, that the Buyer may only dispute the Closing Balance Sheet and
the Seller's Proposed Calculations to the extent that the Buyer (i)
believes in good faith that the figures reflected therein are not
mathematically accurate based on use of the Closing Balance Sheet
Procedures, and (ii) believes in good faith that the Closing Balance
Sheet and/or the Seller's Proposed Calculations were prepared in a way
that does not comply with the Closing Balance Sheet Procedures. If the
Buyer disputes any such aspect of the Closing Balance Sheet or the
amount of any of the Seller's Proposed Calculations, then the Buyer
shall have the right to direct its independent accountants, at the
Buyer's expense, to review and test the Closing Balance Sheet. The
Buyer's accountants shall complete their review and test within
forty-five (45) days after the date the Buyer disputes the Seller's
Proposed Calculations. If the Buyer and its independent accountants,
after such review and test, still disagree with the Seller's Proposed
Calculations, and the Seller does not accept the Buyer's proposed
alternative calculations (the "Buyer's Proposed Calculations"), then
the Seller and the Buyer shall select a nationally recognized
independent accounting firm, other than PricewaterhouseCoopers LLP (the
"Independent Accounting Firm"), to resolve the remaining items in
dispute between the Buyer and the Seller (the "Remaining Disputed
Items") by conducting its own review and test of the Closing Balance
Sheet and thereafter selecting either the Buyer's Proposed Calculation
of the Remaining Disputed Items or the Seller's Proposed Calculation of
the Remaining Disputed Items or an amount in between the two. If the
Remaining Disputed Items are submitted to the Independent Accounting
Firm as provided above, the Independent Accounting Firm shall be
instructed (i) that the scope of its review shall be limited solely to
the Remaining Disputed Items, (ii) that it shall accept the Closing
Balance Sheet and the Seller's Proposed Calculations except to the
extent that (A) the figures reflected therein are not mathematically
accurate based on use of the Closing Balance Sheet Procedures, or (B)
they were prepared in a way that does not comply with the Closing
Balance Sheet Procedures, and (iii) that it is to use every reasonable
effort to complete such assignment and deliver copies of such opinion
and, if required, a revised Closing Balance Sheet to the Buyer and the
Seller within thirty (30) days following the date such Remaining
Disputed Items are referred to it. The Buyer and the Seller agree that
they shall be bound by the determination of the Remaining Disputed
Items by the Independent Accounting Firm. The fees and expenses of the
Independent Accounting Firm shall be paid equally by the Buyer and the
Seller.
(d) Upon the determination pursuant to paragraph (c) of this
Section 2.2 of the definitive Closing Balance Sheet and the Net Assets,
the Initial Purchase Price shall be either (i) increased by the amount,
if any, by which the amount of Net Assets are greater than $112,528,000
or (ii) decreased by the amount, if any, by which the amount of Net
Assets are less than $112,328,000 (the "Adjustment") or (iii) not
adjusted if the Net Assets are between $112,528,000 and $112,328,000.
If the Initial Purchase Price is increased, the Buyer shall pay such
amount to the Seller, and if the Initial Purchase Price is decreased,
the Seller shall pay such amount to the Buyer. Any such payment shall
be made in cash or same day funds within ten (10) days after the
determination of the Adjustment pursuant to paragraph (c). Any such
payment shall bear interest at a rate equal to the "Prime Rate" as set
forth from time to time in The Wall Street Journal "Money Rates" column
from the Closing Date to the date preceding payment. The Initial
Purchase Price, as adjusted pursuant to this Section 2.2, is referred
to in this Agreement as the "Purchase Price."
Article 3
Closing
3.1 Time and Place. Subject to Articles 8 and 9 hereof, the closing of the
transfer and delivery of all documents and instruments necessary to consummate
the transactions contemplated by this Agreement (the "Closing") shall be held at
the offices of Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts, on
the later of (i) the second (2nd) business day following completion of the
regulatory approval referred to in Section 6.1 or (ii) September 2, 1999, or at
such other time or such other place as the Buyer and the Seller may agree. The
date on which the Closing is actually held hereunder is sometimes referred to
herein as the "Closing Date". The Closing will be deemed to be effective for
purposes of this Agreement as of the close of business on the Closing Date.
3.2 Transactions at Closing. At the Closing:
(a) The Seller shall deliver to the Buyer, free and clear of any and
all Encumbrances (as defined in Article 16) other than restrictions on
transfer arising under federal or state securities laws, certificates
representing the Cedarapids Shares, duly endorsed in blank or with duly
executed stock powers in favor of the Buyer attached.
(b) The Buyer shall deliver the Initial Purchase Price by wire
transfer to the Seller.
(c) Raytheon Company, a Delaware corporation ("Raytheon"), and the
Buyer shall each duly execute and deliver the Tax Agreement (as defined in
Article 8 hereof).
(d) The Seller and the Cedarapids Companies shall deliver the Mutual
Release (as defined in Article 8 hereof).
Article 4
Representations And Warranties Of Seller
The Seller represents and warrants to the Buyer as follows:
4.1 Incorporation; Authority. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
Cedarapids is a corporation duly organized, validly existing and in good
standing under the laws of the State of Iowa; the Seller has all requisite
corporate power and authority to enter into this Agreement, the Mutual Release
and the Tax Agreement and the transactions contemplated hereby and thereby, and
perform its obligations hereunder and thereunder; and Cedarapids has all
requisite corporate power and authority to carry on the Cedarapids Business as
now conducted by it. Complete and accurate copies of the charter and by-laws of
Cedarapids have previously been delivered to the Buyer for review.
4.2 Foreign Qualifications. Cedarapids is qualified to do business as a
foreign corporation in each state where the nature of the properties owned or
leased by it or its operations requires such a qualification except where the
failure to so qualify individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect (as defined in Article 16).
4.3 Rights to Sell Cedarapids Shares; Approvals; Binding Effect. The Seller
has all requisite corporate power and authority to enter into this Agreement, to
perform all of its agreements and obligations hereunder in accordance with its
terms, and to sell and transfer to the Buyer all of the Cedarapids Shares. This
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms.
4.4 No Defaults. Except as set forth on Schedule 4.4, the execution,
delivery, performance and compliance by the Seller with the terms hereof, and
the consummation of all the transactions contemplated hereby, will not either
currently, or after notice or lapse of time or both:
(a) result in a violation of any provision of the charter,
by-laws or other organizational documents of the Seller or any
Cedarapids Company; or
(b) result in a violation by the Seller or any Cedarapids Company
of any statute, regulation, order, law or ordinance applicable to the
Seller or such Cedarapids Company, other than any violation which
individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect; or
(c) result in a violation by the Seller or any Cedarapids Company
of any judgment, order or decree of any court or judicial or
quasi-judicial tribunal applicable to the Seller or such Cedarapids
Company, other than any violation which individually or in the
aggregate could not reasonably be expected to have a Material Adverse
Effect; or
(d) result in a violation or default by the Seller or any
Cedarapids Company of any contract or agreement to which the Seller or
such Cedarapids Company is a party, other than any violation or
default which individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
4.5 Subsidiaries. Except as set forth on Schedule 4.5, Cedarapids does not
have any Subsidiaries (as defined in Article 16) and does not own or hold, of
record and/or beneficially, any shares of any class of the capital stock of any
corporation or any legal and/or beneficial interests in any partnerships,
limited liability companies, business trusts or joint ventures or in any
unincorporated trade or business enterprises. Each Cedarapids Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is qualified to do business as a
foreign corporation in each state where the nature of the properties owned or
leased by it or its operations requires such a qualification except where the
failure to so qualify individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect, and has all requisite corporate
power and authority to carry on the Cedarapids Business as now conducted by it.
All of the outstanding shares of the capital stock of each Cedarapids Subsidiary
are validly issued and outstanding, fully paid and nonassessable. There are no
outstanding options, warrants or other rights to subscribe for or purchase any
securities of any Cedarapids Subsidiary. There are outstanding no securities
convertible into, exchangeable for, or carrying the right to acquire, equity
securities of any Cedarapids Subsidiary, or subscriptions, warrants, options,
calls, rights or other arrangements or commitments obligating any Cedarapids
Subsidiary to issue or dispose of any of its equity securities or any ownership
interest therein. Cedarapids (either directly or through its ownership of
another Cedarapids Subsidiary, as set forth in Schedule 4.5) has record and
beneficial ownership of all of the issued and outstanding capital stock of the
Cedarapids Subsidiaries free and clear of any and all Encumbrances other than
any restrictions on transfers arising under federal or state securities laws.
True and complete copies of the charter and by-laws of each Cedarapids
Subsidiary have previously been delivered to the Buyer for review.
4.6. Capitalization. The authorized capital stock of Cedarapids consists of
1,200,000 shares of Common Stock, par value $25.00 per share, 786,614 shares of
which are issued and outstanding on the date hereof. All of such shares are
validly issued and outstanding, fully paid and nonassessable. There are no
outstanding options, warrants or other rights to subscribe for or purchase any
securities of Cedarapids. There are outstanding no securities convertible into,
exchangeable for, or carrying the right to acquire, equity securities of
Cedarapids, or subscriptions, warrants, options, calls, rights or other
arrangements or commitments obligating Cedarapids to issue or dispose of any of
its equity securities or any ownership interest therein.
4.7. Title to Stock, Liens, Etc. The Seller has, and as of the consummation
of the Closing the Buyer will have, record and beneficial ownership of the
Cedarapids Shares, free and clear of any and all Encumbrances other than any
restrictions on transfers arising under federal or state securities laws. At the
Closing, the sale and delivery of the Cedarapids Shares to the Buyer pursuant to
this Agreement will vest in the Buyer good and valid title to the Cedarapids
Shares, free and clear of any and all Encumbrances (other than restrictions on
transfers arising under federal or state securities laws and any Encumbrances
created or suffered to exist by the Buyer).
4.8. Consents. Except as set forth on Schedule 4.8 or in Section 6.1, no
consent, approval or authorization of, or registration, qualification or filing
with, any governmental agency or authority or any other third party is required
by the Seller or any Cedarapids Company for the execution and delivery of this
Agreement by the Seller or for the performance or consummation by the Seller of
the transactions contemplated hereby.
4.9. Financial Statements.
(a) The Seller has furnished to the Buyer, and attached as
Schedule 4.9(a) under the headings "Unadjusted" are, copies of the
unaudited consolidated balance sheet of Cedarapids as of December 31,
1998 (the "December Balance Sheet"), and the unaudited consolidated
income statement of Cedarapids for the year then ended (the "1998
Income Statement"). Except for the adjustments set forth on Schedule
4.9(a) under the headings "Adjustments" and "Other Adjustments" and as
noted on Schedule 4.9(b), each of such financial statements has been
prepared in accordance with GAAP (as defined in Article 16), the
December Balance Sheet fairly presents in all material respects the
consolidated financial condition of Cedarapids as of December 31, 1998,
and the 1998 Income Statement fairly presents in all material respects
the consolidated results of operations of Cedarapids for the period
covered thereby.
(b) The Seller has furnished to the Buyer, and attached as
Schedule 4.9(c) under the headings "Unadjusted" are, copies of the
unaudited consolidated balance sheet of Cedarapids as of March 31, 1999
(the "Interim Balance Sheet") and the unaudited consolidated income
statement of Cedarapids for the three-month period then ended (the
"Interim Income Statement"). Except for the adjustments set forth on
Schedule 4.9(c) under the headings "Adjustments" and as set forth on
Schedule 4.9(d), each of such financial statements has been prepared in
accordance with GAAP and fairly presents in all material respects the
consolidated financial condition and results of operations,
respectively, of Cedarapids as of the date and for the period covered
thereby.
4.10. Absence of Certain Changes. Except as set forth on Schedule 4.10,
from December 31, 1998 to the date of this Agreement the Cedarapids Companies
have operated only in the ordinary course and there has not been:
(a) any change in the financial condition, results of
operations, assets, liabilities or business of any Cedarapids Company
other than changes arising in the ordinary course of business, none of
which, individually or in the aggregate, either has had a Material
Adverse Effect or, to the knowledge of the Seller, could reasonably be
expected to have a Material Adverse Effect, but excluding any changes
relating to: (i) the economy in general; or (ii) the industry of the
Cedarapids Business in general that are not specifically related to the
Cedarapids Companies;
(b) any acquisition or disposition by any Cedarapids Company
outside the ordinary course of business of any asset or property used
by such Cedarapids Company;
(c) any damage, destruction or casualty loss to any asset of
any Cedarapids Company, whether or not covered by insurance, either (i)
in excess of $200,000 or (ii) which has had or could reasonably be
expected to have a Material Adverse Effect;
(d) any increase in (or commitment to increase) the
compensation, pension or other benefits payable or to become payable to
any of the officers or employees of any Cedarapids Company or any bonus
payments or arrangements made to or with any of them, other than (i)
increases amounting to less than $25,000 individually and $900,000 in
the aggregate and effected on a basis consistent with the past practice
of such Cedarapids Company and (ii) any increase required under the
terms of any of the benefit plans listed on Schedule 4.20(a) hereto;
(e) except with respect to the Seller and its Affiliates and
except for compromises of accounts receivable in the ordinary course of
business consistent with past practice, any voluntary forgiveness or
cancellation of any debt or claim of any Cedarapids Company in excess
of $10,000 or any voluntary waiver of any right of value in excess of
$10,000, none of which, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect;
(f) the imposition of any Encumbrance on any of the assets of
any Cedarapids Company except for Permitted Encumbrances (as defined in
Article 16);
(g) any lapse, termination or expiration of any contract or
agreement, including any joint venture agreement, teaming agreement,
distribution agreement, supply agreement, license agreement, or
personal property lease, to which any Cedarapids Company had been a
party, the lapse, termination or expiration of which individually or in
the aggregate could reasonably be expected to have a Material Adverse
Effect;
(h) any intercompany transactions with the Seller or any
Affiliate of the Seller (other than another Cedarapids Company), except
(i) in the ordinary course of business consistent with past practice or
(ii) involving consideration or transfers of not more than $25,000
individually and not more than $50,000 in the aggregate;
(i) any obligation or liability incurred or discharged or any
other transaction entered into, except for any obligation or liability
incurred or discharged or transaction entered into in the ordinary
course of business, consistent with past practice, none of which,
individually or in the aggregate, has had a Material Adverse Effect and
none of which, individually or in the aggregate, any of Cedarapids'
Senior Management (as defined in Article 16) actually believes as of
the date of this Agreement is more likely than not to have a Material
Adverse Effect;
(j) any commitment or transaction entered into (including,
without limitation, any borrowing or capital expenditure) other than in
the ordinary course of business consistent with past practice, none of
which, individually or in the aggregate, has had a Material Adverse
Effect and none of which, individually or in the aggregate, any of
Cedarapids' Senior Management actually believes as of the date of this
Agreement is more likely than not to have a Material Adverse Effect;
(k) any Indebtedness incurred, assumed or guaranteed in
excess of $200,000 in the aggregate;
(l) any contract entered into, amended or terminated, or any
material rights waived thereunder, except in the ordinary course of
business consistent with past practice, none of which, individually or
in the aggregate, has had a Material Adverse Effect and none of which,
individually or in the aggregate, any of Cedarapids' Senior Management
actually believes as of the date of this Agreement is more likely than
not to have a Material Adverse Effect;
(m) any grant of credit to any customer or distributor on
terms or in amounts materially more favorable than those that have been
extended to such customer or distributor in the past, except in the
ordinary course of business, consistent with past practice, none of
which, individually or in the aggregate, has had a Material Adverse
Effect and none of which, individually or in the aggregate, any of
Cedarapids' Senior Management actually believes as of the date of this
Agreement is more likely than not to have a Material Adverse Effect; or
(n) any amendment to the articles or certificates of
incorporation or by-laws of any Cedarapids Company.
4.11. Litigation, Etc. No proceeding, arbitration, action or suit is
pending or, to the knowledge of the Seller, threatened in writing against any
Cedarapids Company, except as set forth on Schedule 4.11 hereto and except for
any such proceeding, arbitration, action, or suit that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 4.11, no Cedarapids Company has received any
written notice from any Governmental Entity (as defined in Article 16) of any
pending or threatened governmental investigation relating to such Cedarapids
Company which, if concluded with a determination adverse to such Cedarapids
Company, individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 4.11, none of the
Cedarapids Companies is subject to any outstanding orders, rulings, judgments or
decrees of any court or governmental authority, except for any such outstanding
orders, rulings, judgments or decrees that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
4.12. Title to and Sufficiency of Assets.
(a) Except as set forth in Schedule 4.12(a), each Cedarapids
Company has good and marketable title to all of its properties and
assets owned or purported to be owned by it, including, without
limitation, all those reflected in the December Balance Sheet (except
for properties or assets sold or otherwise disposed of in the ordinary
course of business since the date of the December Balance Sheet), all
free and clear of all Encumbrances except for Permitted Encumbrances.
(b) Except as set forth on Schedule 4.12(b), the tangible
assets owned or leased by the Cedarapids Companies, when utilized by a
labor force substantially similar to that utilized by the Cedarapids
Companies for the Cedarapids Business as of the date of this Agreement,
and taken together with the services to be provided by the Seller
pursuant to Section 11.5, are sufficient to conduct the Cedarapids
Business after the Closing Date in the same manner in all material
respects as such business is conducted immediately prior to the Closing
Date.
4.13. Intellectual Property.
(a) Schedule 4.13(a) sets forth a true and complete list as of
the date of this Agreement of all patents and registered trademarks and
service marks owned by the Cedarapids Companies. However, the parties
acknowledge the possibility of inadvertent error or omission with
respect to the items listed in Schedule 4.13(a) which are not
individually or in the aggregate material and, upon discovery of any
such immaterial error or omission, the parties agree to amend said
Schedule to correct the error or omission. Promptly after the execution
and delivery of this Agreement, a list of patent applications will be
provided to the Buyer pursuant to Section 7.1 below. Such list will be
subject to the same conditions with respect to inadvertent error or
omission as set forth above.
(b) Except for agreements or licenses related to commercially
available software, the agreements listed in Schedule 4.13(b)
constitute a true and complete listing as of the date of this Agreement
of all agreements whereby the Cedarapids Companies have been licensed
or otherwise granted rights in or to any intellectual property rights
owned by a third party which are used in or are material to the
operation of the Cedarapids Companies; provided, however, the parties
acknowledge the possibility of inadvertent error or omission with
respect to the agreements listed in said Schedule 4.13(b) which are not
individually or in the aggregate material and, upon discovery of any
such immaterial error or omission, the parties agree to amend said
Schedule to correct the error or omission.
(c) To Seller's knowledge, neither Seller nor any of the
Cedarapids Companies have received any claims alleging that the conduct
of the Cedarapids Business infringes any third party intellectual
property rights except for such claims identified in Schedule 4.13(c)
and except for any such claims that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
(d) To the Seller's knowledge, the Cedarapids Companies are
not making unauthorized use of any confidential information or trade
secrets of any Person, except for any unauthorized use that
individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect. To the Seller's knowledge, except as
set forth on Schedule 4.13(d) and except for any such claims that
individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect, neither the Seller nor any of the
Cedarapids Companies have received any claim alleging any such
unauthorized use by any of the Cedarapids Companies of any confidential
information or trade secrets of any third party.
(e) Except as disclosed on Schedule 4.13(c), no patent or
trademark rights owned by the Cedarapids Companies is subject to any
outstanding order, judgment, decree, stipulation restricting the use
thereof by the Cedarapids Companies or restricting the licensing
thereof by the Cedarapids Companies to any Person, except for any of
the foregoing that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(f) Seller has obtained the necessary right from Raytheon to
authorize the Cedarapids Companies to continue the use of the Raytheon
name solely for the purposes and in the manner set forth below in
Section 11.2.
4.14. Tangible Assets. Attached as Schedule 4.14(a) is a true and
complete copy of Cedarapids' fixed asset listing (sorted by year entered into
service) as of December 31, 1998. This listing includes all tangible personal
property owned by the Cedarapids Companies as of such date, other than any
tangible personal property with a net book value at such date under $1,000.
Except as set forth on Schedule 4.14(b) and except for any repairs required in
the ordinary course of business, all material tangible assets owned or utilized
by the Cedarapids Companies are in working condition and repair (except for
ordinary wear and tear), free from any material defects, and have been
maintained consistent in all material respects with the standards generally
followed in the industry.
4.15. Real Estate Matters.
(a) Schedule 4.15 sets forth a true and complete list of all
the real property owned or leased by the Cedarapids Companies as of the
date of this Agreement (the "Real Property").
(b) All material improvements located on the Real Property
(the "Improvements") were constructed and installed in compliance in
all material respects with then applicable laws, statutes, ordinances
and codes affecting the Real Property at the time of construction.
Except as set forth on Schedule 4.15 there are no material structural
or latent defects in any of the Improvements known to Seller. Except as
set forth on Schedule 4.15, the heating, electrical, plumbing, and
other building equipment on the Real Property are in working order
sufficient in all material respects for the operation of the Cedarapids
Business consistent with current practice.
(c) Except as set forth on Schedule 4.15, no Cedarapids
Company has received any written notice from an insurance company which
has issued a policy or has been requested to issue a policy with
respect to any portion of the Improvements located on the Real Property
or any board of fire underwriters or any other body exercising similar
functions requesting the performance of any repair, alterations or
other work which has not been complied with in all material respects,
except for any of the foregoing that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
(d) Except as described on Schedule 4.11 or Schedule 4.15,
there is no existing, pending or, to the Seller's knowledge, threatened
litigation or condemnation or sale in lieu thereof, with respect to any
portion of the Real Property and relating to or arising out of the
ownership of the Real Property, by any federal, state, county or
municipal department, commission, board, bureau or agency or other
governmental instrumentality, except for any of the foregoing that
individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 4.15,
there is no proceeding pending for the reduction or increase of the
assessed valuation or taxes or other impositions or assessments payable
in respect of any portion of the Real Property, except for any such
proceeding that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. No Cedarapids Company
has received any written notice of a proposed increase in the assessed
valuation of any portion of the Real Property or any special
assessment, except for any such increase or special assessment that,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. No public improvements have been
commenced and to the Seller's knowledge none are planned which in
either case may result in special assessments against or otherwise
adversely affecting any of the Real Property, except for any such
public improvements that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. The Seller
has no knowledge of any (i) order from a Governmental Entity requiring
repair, alteration or correction of any existing condition affecting
any Real Property or the systems or improvements thereat or (ii)
condition or defect which could reasonably be expected to give rise to
an order of the sort referred to in clause (i) above, except for any of
the foregoing that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(e) No Person has any right or option to acquire the Real
Property or any portion thereof.
(f) The Seller has no knowledge of any fact or condition
existing which is reasonably likely to result in the termination or
reduction in any respect of the current access from the Real Property
to existing highways and roads, except for any of the foregoing that,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
4.16. No Undisclosed Liabilities. No Cedarapids Company has any
liability or obligation (absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected on a consolidated balance sheet of Cedarapids
prepared as of the date of this Agreement or disclosed in the notes thereto,
except liabilities set forth in the December Balance Sheet or the notes thereto,
except as set forth on Schedule 4.16(a) and except for liabilities incurred
after the date of the December Balance Sheet in the ordinary course of business
which are not material to the Cedarapids Companies taken as a whole and any
liabilities incurred after the date of this Agreement in accordance with Article
7. Schedule 4.16(b) is a true and complete listing as of the date of this
Agreement of all guarantees of obligations of any third parties other than the
Cedarapids Companies and suretyship arrangements (other than liabilities arising
from the endorsement of checks in the ordinary course of business) affecting any
of the Cedarapids Companies identifying the particular Cedarapids Company which
has the liability, the estimated amount of liability and the beneficiary.
4.17. Employees. Schedule 4.17 sets forth a true and complete list as
of the date of this Agreement of (a) all directors of the Cedarapids Companies,
(b) all officers of the Cedarapids Companies, (c) all consultants and
independent contractors retained by any Cedarapids Company currently or during
the last eighteen (18) months and (d) all employees of the Cedarapids Companies,
including each such officer's or employee's job title, remuneration currently
and during 1998 and duration of employment. Except as disclosed in Schedule
4.17, no Cedarapids Company is a party to any written or oral employment,
consulting service, severance or termination agreement.
4.18. Labor Relations. Except as set forth on Schedule 4.18, there is
no charge pending or, to the knowledge of the Seller, threatened against any
Cedarapids Company alleging, with respect to any employee or employees of any
Cedarapids Company, any violation of any statute or regulation relating to
employment and employment practices, or any violation of any collective
bargaining agreement, any unlawful discrimination in employment practices or any
unfair labor practices before any court, agency, or other judicial or arbitral
body, except for any such violations that individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect. As of the date of
this Agreement, there is no labor strike, dispute, slow-down or work stoppage
actually pending or, to the Seller's knowledge, threatened against any
Cedarapids Company. Except as set forth on Schedule 4.18, no employees of any
Cedarapids Company are covered by any collective bargaining agreement, and no
collective bargaining agreement or other labor union agreement or agreement with
organized labor for employees of any Cedarapids Company is currently being
negotiated or pending negotiation. Except as set forth on Schedule 4.18 hereto,
there has been no concerted work stoppage with respect to the Cedarapids
Business during the last three years. Except as set forth on Schedule 4.18,
there is no complaint against any Cedarapids Company issued by or pending before
the National Labor Relations Board, except for any such complaint that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
4.19. Contracts. Except for contracts, commitments, plans, agreements and
licenses listed on Schedules 4.13, 4.15, 4.19 or Schedule 4.20(a) (collectively,
"Commitments"), as of the date of this Agreement no Cedarapids Company is a
party to or otherwise bound by:
(a) any contract or purchase order to sell or lease equipment
or provide services to any customer (i) providing for payments in
excess of $100,000 or (ii) having a term greater than one calendar
year;
(b) except for any contract or agreement that will be
terminated prior to the Closing, any contract or agreement with any
director, officer or employee of such Cedarapids Company (i) providing
for total annual compensation in excess of $50,000 or (ii) having a
term greater than one calendar year;
(c) any contract for the lease or sublease as lessee, lessor,
sublessee or sublessor of real or personal property of such Cedarapids
Company, or any license of computer software, requiring payments in
excess of $25,000 per year;
(d) except for purchase orders issued in the ordinary course
of business, any contract requiring payments by a Cedarapids Company in
excess of $25,000 for the purchase or sale of any personal property;
(e) any contract or agreement containing non-competition
covenants limiting the freedom of such Cedarapids Company to operate
the Cedarapids Business or any other business;
(f) any contract with any distributor or any independent
representative of the Cedarapids Companies;
(g) except for the endorsement of checks in the ordinary
course of business, any contract or agreement for guaranty, indemnity
or suretyship with respect to Indebtedness (as defined in Article 16)
of a third party in excess of $25,000 or any guaranty by a Cedarapids
Company of any performance obligations of a third party;
(h) any collective bargaining agreements with any unions,
guilds, shop committees or other collective bargaining groups;
(i) any loan agreement, promissory note, letter of credit or
other evidence of Indebtedness as a signatory, guarantor or otherwise;
(j) any contract with any Governmental Entity; or
(k) any agreement requiring any Cedarapids Company to assign
any interest in any trade secret or proprietary information or any
agreement pursuant to which a Cedarapids Company has granted to a third
party a license to use any intellectual property.
Except as set forth on Schedule 4.19, the execution, delivery and performance of
this Agreement by the Seller will not conflict with, or result in the breach of,
termination of, give rise to any lien or constitute a default under, or require
the consent of any other party to, any of the Commitments, except for any of the
foregoing that would not individually or in the aggregate have a Material
Adverse Effect. Except as set forth on Schedule 4.19, the Seller has delivered
or made available to the Buyer for review complete and accurate copies of each
of the agreements evidencing the Commitments, in each case as amended to date.
No Cedarapids Company nor, to the knowledge of the Seller, any other
party to any contract, agreement, lease or instrument listed on Schedule 4.19
(collectively, the "Contracts") is in default in complying with any provisions
thereof, except for any such defaults that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. To the
Seller's knowledge, there is no pending written claim or request for equitable
adjustment under any Government Contract (as defined in Article 16), except for
any such claims or requests that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. Except where the same
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, no Cedarapids Company has received any written notice
of the intention of any party to terminate any Contract, whether as a
termination for convenience or for default of the applicable Cedarapids Company
thereunder.
4.20. Pensions and Benefits.
(a) Except as set forth on Schedule 4.20(a) hereto, as of the
date of this Agreement, neither the Seller nor any Cedarapids Company
maintains or has any obligation to make contributions to or for the
benefit of any officers, employees or consultants of the Cedarapids
Business, any employee benefit plan (an "ERISA Plan") within the
meaning of Section 3(3) of the United States Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any other retirement,
profit sharing, stock option, stock bonus or other benefit program (a
"Non-ERISA Plan"). Except as noted on Schedule 4.20(a), the Seller has
heretofore delivered or made available to the Buyer true and complete
copies of each ERISA Plan and Non-ERISA Plan (and all agreements
relating to the administration thereof) and, with respect to any ERISA
Plan, the most recently completed annual report (with any required
attachments), the most recent IRS determination letter, and any other
advisory opinions or rulings applicable to such Plan.
(b) Except as set forth on Schedule 4.20(b), (i) all of the
ERISA Plans and Non-ERISA Plans have been maintained and operated in
all material respects in accordance with all federal, state and local
laws applicable to such plans, and the terms and conditions of the
respective plan documents, (ii) each ERISA Plan intended to qualify
under Section 401(a) of the Code (as defined in Article 16) has been
determined to so qualify by the Internal Revenue Service, (iii) there
is no pending legal action, proceeding or investigation, other than
routine claims for benefits, concerning any ERISA Plan or Non-ERISA
Plan, (iv) no ERISA Plan or Non-ERISA Plan subject to the requirements
of Section 302 of ERISA or Section 412 has an outstanding accumulated
funding deficiency under Section 302 of ERISA or Section 412 of the
Code or has been granted an extension of amortization periods which
remains in effect, (v) as to any ERISA Plan subject to the provisions
of Title IV of ERISA, there has not occurred any reportable event under
Section 4043 of ERISA, or other event or condition, which presents a
risk of termination of such Plan by the Pension Benefit Guaranty
Corporation ("PBGC"), (vi) there have been no prohibited transactions
(within the meaning of Section 406 of ERISA or Section 4975 of the
Code) for which no exemption exists under Section 408 of ERISA or
Section 4975 of the Code and for which there is any material liability
or civil penalty assessed pursuant to Section 502(i) of ERISA or
material taxes imposed by Section 4975 of the Code, and (vii) with the
exception of the Cedarapids, Inc. Pension Plan for Employees in a
Collective Bargaining Unit and the Cedarapids, Inc. Retirement Income
Plan (collectively, the "Pension Plans"), none of the ERISA Plans and
Non-ERISA Plans are subject to the "minimum funding standards" of
Section 412 of the Code or the provisions of Title IV of ERISA.
(c) None of the Seller and the Cedarapids Companies has
incurred any liability to the PBGC which remains outstanding (other
than required insurance premiums in respect of on-going plans).
(d) No ERISA Plan or Non-ERISA Plan is a "multiemployer
plan" within the meaning of Section 3 of ERISA.
(e) With respect to any ERISA Plans or Non-ERISA Plans which
are "group health plans" under Section 4980B of the Code and Section
607(i) of ERISA and related regulations (relating to the benefit
continuation rights imposed by the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA"), as amended), there has been
timely compliance in all material respects with all requirements
imposed by COBRA, as and when applicable to such plans, so that the
Seller and the Cedarapids Companies have no (or will not incur any)
material loss, assessment, penalty, loss of federal income tax
deduction or other sanction arising out of or in respect of any failure
to comply with any COBRA benefit continuation requirement, which is
capable of being assessed or asserted directly or indirectly against
the Seller or the Cedarapids Companies or other member of their
corporate control group, with respect to any such plan.
(f) Except as described in Schedule 4.20(f), neither the ERISA
Plans nor the Non-ERISA Plans provide for any benefits to or on behalf
of persons who have retired or may in the future retire from employment
with any Cedarapids Company, or their dependents and beneficiaries.
(g) No liabilities of the Cedarapids Companies will result
with respect to the ERISA Plans or the Non-ERISA Plans solely as a
result of the transactions contemplated in this Agreement.
4.21. Compliance with Laws, Etc. Except as set forth on Schedule 4.21
hereto, each Cedarapids Company is in compliance in all material respects with
all laws, statutes, governmental regulations and all judicial or administrative
tribunal orders, judgments, writs and injunctions applicable to it. Except as
set forth on Schedule 4.21, the Cedarapids Companies have all governmental
permits, licenses and authorizations necessary for the conduct of their
businesses as presently conducted, except for any of the foregoing which,
individually or in the aggregate, if not obtained would not cause a material
disruption of the Cedarapids Business or could not reasonably be expected to
have a Material Adverse Effect.
4.22. Environmental Matters.
(a) Except as referenced on Schedule 4.22:
(i) Each Cedarapids Company is in compliance with all
applicable Environmental Laws.
(ii) Each Cedarapids Company has all licenses, permits,
concessions, orders, authorizations, approvals or registrations
from, of or with any Governmental Entity required under
Environmental Laws for the operation of the Cedarapids Business
as presently conducted (the "Environmental Permits"), each
Cedarapids Company is in compliance with the Environmental
Permits and there are no proceedings pending or, to the knowledge
of the Seller, threatened, nor are any investigations pending or
threatened, with respect to the Environmental Permits.
(iii) No written notice, notification, demand, request for
information, citation, summons, complaint or order has been
received by any Cedarapids Company or, to the knowledge of the
Seller, is pending or threatened by any Person against, any part
of the Cedarapids Business nor has any material penalty been
assessed against any part of the Cedarapids Business with respect
to any alleged violation of any Environmental Law or liability
thereunder, other than where such notice, notification, demand,
request for information, citation, summons, complaint or order
has been fully resolved, or where resolution, individually or in
the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(iv) No Hazardous Substance has been discharged, generated,
treated, manufactured, handled, stored, transported, emitted,
released or is present at any property now or previously owned,
leased or operated by any part of the Cedarapids Business in
violation of any Environmental Law, which circumstance,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(v) As of the date of this Agreement, none of the Real
Property has been placed or, to the Seller's knowledge, is
proposed to be placed, on the National Priorities List ("NPL"),
the Comprehensive Environmental Response Compensation and
Liability System ("CERCLIS") or, to the Seller's knowledge, any
state or foreign equivalents of such lists.
(vi) None of the Real Property has above or underground
storage tanks which are in violation of any Environmental Laws,
nor has there been any release of Hazardous Substances from any
such tanks.
(b) Included as part of Schedule 4.22 is a list of
environmental investigations and reports conducted on behalf of the
Seller with respect to certain real property currently or formerly
owned or leased by the Cedarapids Companies. Complete copies of the
related reports prepared by the Seller's environmental consultants have
been provided or made available (as indicated on Schedule 4.22) to the
Buyer to review as part of its due diligence investigation.
4.23. Indebtedness. Except for Indebtedness (as defined in Article 16)
reflected in the December Balance Sheet and as set forth in Schedule 4.23, the
Cedarapids Companies have no Indebtedness outstanding at the date hereof. The
Cedarapids Companies are not in default (and no event has occurred which with
notice or the lapse of time, or both, would constitute a default) with respect
to any outstanding Indebtedness or any instrument relating thereto and except as
set forth in Schedule 4.23 no such Indebtedness or any instrument or agreement
relating thereto purports to limit the operation of the business of the
Cedarapids Companies. Complete and correct copies of all instruments (including
all amendments, supplements, waivers and consents) relating to any Indebtedness
of the Cedarapids Companies have been furnished to Buyer.
4.24. Insurance. Schedule 4.24 sets forth a true and complete list of
all insurance policies (including without limitation policies providing theft,
fire, liability (including products liability) workers' compensation, life,
property and casualty, directors' and officers', benefits or coverage for any
Plan described in Section 4.20(a), and bond and surety arrangements) currently
in effect for any Cedarapids Company and specifies the insurer, the amount of
coverage, type of insurance and the expiration date. All such insurance is in
full force and effect, and as of the date of this Agreement no notice of
cancellation or termination, or reduction of coverage or intention to cancel,
terminate or reduce coverage, has been received with respect to any policy for
such insurance. Except as set forth on Schedule 4.24, the insurance coverage
provided by such policies of insurance will not terminate or lapse by reason of
the transactions contemplated by this Agreement and, following the Closing, the
Cedarapids Companies will continue to be covered under such policies for events
occurring prior to the Closing. Except as set forth on Schedule 4.24 and except
for any deductible amounts or self-insured retentions, no such policy provides
for or is subject to any currently enforceable retroactive rate or premium
adjustment, loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events arising prior to the date hereof.
4.25. Bank Accounts, Signing Authority, Powers of Attorney. Except as
set forth in Schedule 4.25, no Cedarapids Company has an account or a safe
deposit box in any bank and no person has any power, whether singly or jointly,
to sign any checks on behalf of such Cedarapids Company, to withdraw any money
or other property from any bank, brokerage or other account of such Cedarapids
Company or to act under any power of attorney granted by such Cedarapids Company
at any time for any purpose. Schedule 4.25 also sets forth the names of all
persons authorized to borrow money or sign notes on behalf of each Cedarapids
Company.
4.26. Minute Books. The minute books of each Cedarapids Company made
available to the Buyer for inspection accurately record therein, in all material
respects, all actions taken by such Cedarapids Company's Board of Directors and
stockholders prior to the date of this Agreement.
4.27. Brokers. Except for Salomon Smith Barney, whose fees and expenses
will be paid by the Seller, no finder, broker, agent or other intermediary has
worked for or on behalf of the Seller in connection with the negotiation or
consummation of the transactions contemplated hereby.
4.28. Affiliates' Relationships to the Cedarapids Companies. Except as
set forth in Schedule 4.28, the Cedarapids Companies do not have any outstanding
contract, agreement or other arrangement with the Seller or any of its
Affiliates (other than another Cedarapids Company) which will continue after the
Closing.
4.29. Conflicts of Interest.
(a) No officer or director of the Seller or any Cedarapids
Company has, or to the knowledge of the Seller claims to have, (i) any
interest in the property, real or personal, tangible or intangible,
including, without limitation, intangibles, licenses, inventions,
technology, processes, designs, computer programs, know-how and
formulae used in the business of any Cedarapids Company, or (ii) any
contract or commitment with the Seller or any Cedarapids Company,
except as set forth in Schedule 4.29(a).
(b) Except as set forth on Schedule 4.29(b), to the knowledge
of the Seller, no officer or director of the Seller or any Cedarapids
Company has any ownership or stock interest in any other enterprise,
firm, corporation, trust or any other entity which is engaged in any
line or lines of business which are the same as, or competitive with,
the line or lines of business of any Cedarapids Company. For purposes
of this representation, ownership of not more than 10% of the voting
stock of any publicly held company whose stock is listed on any
recognized securities exchange or traded over the counter shall be
disregarded.
4.30. Products Liability. Schedule 4.30 contains a list, as of July 16,
1999, of all pending product liability litigation against any of the Cedarapids
Companies and, to the knowledge of the Seller, all pending product liability
claims received in writing by any Cedarapids Company since June 1, 1998. To the
Seller's knowledge, no punitive damages have been assessed against the
Cedarapids Companies in any product liability litigation during the five year
period prior to the date of this Agreement.
4.31. Year 2000 Compliance. The Cedarapids Companies have adopted and
implemented a commercially reasonable plan to investigate and correct any year
2000 problems associated with (i) the use and operation of the Cedarapids
Companies' computer systems; and (ii) the products manufactured and distributed
through the use and operation of the computer systems. Seller, however, does not
represent and warrant that this plan will find and correct all year 2000
problems which may arise in connection with the use and operation of the
Cedarapids Companies' computer systems or the products manufactured in
conjunction with the use and operation of the Cedarapids Companies' computer
systems.
4.32. Misleading Statements. To the knowledge of the Seller, no
representation or warranty by the Seller contained in this Agreement, and no
statement contained in the Disclosure Schedule, contains any untrue statement of
a material fact or, as of the date of this Agreement, omits to state a fact
necessary to make any representation or warranty of the Seller or any statement
contained in the Disclosure Schedule not misleading in any material respect;
provided that to the extent any representation or warranty of the Seller in this
Agreement only addresses matters as of a particular date or period, this Section
4.32 shall only be construed as of the same date or period.
Article 5
Representations and Warranties of the Buyer
The Buyer represents and warrants to the Seller as follows:
5.1. Organization and Standing of the Buyer. The Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. The Buyer has all required corporate power and authority to
enter into this Agreement and the Tax Agreement, to perform all of its
agreements and obligations hereunder and thereunder in accordance herewith and
therewith and to purchase the Cedarapids Shares.
5.2. Corporate Approval; Binding Effect. The Buyer has obtained all
necessary authorizations and approvals from its Board of Directors and
shareholders required for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Buyer and constitutes, and the Tax Agreement
upon execution and delivery by the Buyer will constitute, the legal, valid and
binding obligation of the Buyer enforceable against the Buyer in accordance
herewith and therewith, except as such validity, binding effect or enforcement
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally or by equitable principles relating to the availability of
remedies.
5.3. Non-Contravention. The execution, delivery and performance by the
Buyer of this Agreement and the Tax Agreement will not result in any violation
of or be in conflict with its Certificate of Incorporation or By-Laws, or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to it, or be in conflict with or constitute a default
under any of the foregoing, other than any violation or default which could not
reasonably be expected to have a Material Adverse Effect.
5.4. Consents, Etc. Except for the approvals referred to in Section
6.1, no consent, approval or authorization of or registration, designation,
declaration or filing with any Governmental Entity, federal or other, or any
third party on the part of the Buyer is required in connection with the purchase
of the Cedarapids Shares pursuant to this Agreement or the consummation of any
other transaction contemplated hereby.
5.5. Brokers. No finder, broker, agent or other intermediary has
worked for or on behalf of the Buyer in connection with the negotiation or
consummation of the transactions contemplated hereby.
5.6. Due Diligence Review. The Buyer acknowledges that it has conducted
to its satisfaction its own due diligence investigation with respect to the
Cedarapids Companies. The Buyer acknowledges and agrees that, except for the
representations and warranties of the Seller contained in Article 4 hereof, the
Seller makes no representation or warranty. The Buyer further acknowledges and
agrees that upon consummation of the transactions contemplated hereby, the Buyer
will not have any further recourse against the Seller with respect to the
Cedarapids Shares or Cedarapids Business except for claims for indemnification
made pursuant to Article 12 hereof and claims made pursuant to the Tax
Agreement. No investigation by the Buyer or on the Buyer's behalf heretofore or
hereafter conducted shall affect the representations, warranties or covenants of
the Seller set forth in this Agreement.
5.7. Purchase Entirely for Own Account. The Cedarapids Shares to be
acquired by the Buyer will be acquired for investment for the Buyer's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof and the Buyer has no present intention of
selling, granting any participation in, or otherwise distributing the same in
violation of federal or state securities laws.
Article 6
Certain Regulatory Approvals
6.1. Hart-Scott-Rodino Act. As promptly as practicable, and in any
event within five (5) business days following the execution and delivery of this
Agreement by the parties, the Seller and the Buyer shall each prepare and file
any required notification and report form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), in connection with the
transactions contemplated hereby; the Seller and the Buyer shall request early
termination of the waiting period thereunder; and the Seller and the Buyer shall
respond with reasonable diligence and dispatch to any request for additional
information made in response to such filings.
Article 7
Conduct Of Business Pending Closing
The Seller covenants and agrees that, from and after the date of this
Agreement and until the Closing, except as otherwise specifically consented to
or approved by the Buyer in writing, it shall comply and shall cause the
Cedarapids Companies to comply with the following covenants:
7.1. Full Access. Each Cedarapids Company shall afford to the Buyer and
its authorized representatives such access during normal business hours to all
properties, books, records, contracts and documents of such Cedarapids Company
as the Buyer shall reasonably request in connection with its review of the
Cedarapids Business, and each Cedarapids Company shall furnish or cause to be
furnished to the Buyer and its authorized representatives all such information
with respect to the Cedarapids Business as the Buyer may reasonably request.
This access will include access as reasonably requested by the Buyer to past (to
the extent available) and present insurance policies for the Cedarapids Business
and the independent actuaries for the Cedarapids Companies and any title
searches for the Real Property. To the extent any of the foregoing information
is in the possession of the Seller or its other Affiliates, the Seller will
provide access on the same basis as described above. Any such investigation
shall be on reasonable prior notice and shall be carried out in such a manner as
to minimize any disruption of the Cedarapids Business or business operations of
the Seller or any of its other Affiliates. Any disclosure whatsoever during such
investigation by the Buyer shall not constitute an enlargement of, modification
or update of or additions to the representations or warranties of the Seller
beyond those specifically set forth in this Agreement.
7.2. Carry on in Regular Course; Certain Contracts. Except as may be
otherwise contemplated by this Agreement or required by any of the documents
listed in any Schedule to this Agreement and except as set forth on Schedule
7.2, the Seller shall cause the Cedarapids Companies to carry on the Cedarapids
Business in the ordinary course substantially in the same manner as heretofore.
In addition, the Cedarapids Companies will not, without the prior written
consent of the Buyer, enter into any contract or agreement which, if in
existence on the date of this Agreement, would have been required to be
disclosed on Schedule 4.19, other than pursuant to the requirements of Section
4.19(a) or Section 4.19(f). In addition, the Cedarapids Companies will not enter
into any lease, nor any service, maintenance or management agreement with
respect to all or any portion of the Real Property, except as contemplated by
this Agreement.
7.3. No General Increases. Except for any increase required under the
terms of any employment agreement or benefit plan referred to in Section 4.20,
no Cedarapids Company shall (i) grant any general or uniform increase in the
rates of pay of employees of such Cedarapids Company, except for increases in
salary or wages in the ordinary course operation of the Cedarapids Business
consistent with past practice, or (ii) grant any general, uniform or individual
increase in the benefits under any bonus or pension plan or other contract or
commitment for the benefit of any employee of such Cedarapids Company, or to
increase the compensation payable or to become payable to officers, key salaried
employees or representatives of such Cedarapids Company, or (iii) increase any
bonus, insurance, pension or other benefit plan, payment or arrangement made to,
for or with any such officers, key salaried employees or representatives.
7.4. Sale of Capital Assets. Except as may be otherwise contemplated by
this Agreement, no Cedarapids Company shall sell or otherwise dispose of any of
its capital assets with an aggregate gross sales price in excess of $50,000.
7.5. Insurance. Except as set forth on Schedule 7.5, each Cedarapids
Company shall maintain insurance coverage comparable to the insurance coverage
currently in effect.
7.6. Preservation of Organization. Except as may be otherwise
contemplated by this Agreement, each Cedarapids Company shall use commercially
reasonable efforts under the applicable circumstances to keep its organization
and material business relationships intact in all material respects.
7.7. Advice of Change. The Seller shall advise the Buyer in writing,
promptly after becoming aware thereof, of any material adverse change in the
condition, operations or assets of the Cedarapids Business.
7.8. No Shopping. Prior to any termination of this Agreement pursuant
to Article 14 hereof, the Seller shall not solicit, discuss or enter into any
agreement with respect to the sale of any Cedarapids Shares or any portion of
the Cedarapids Business, except for sales of inventory in the ordinary course of
business, or any merger or other business combination of any Cedarapids Company,
to or with any Person other than the Buyer.
7.9. Maintenance of Assets and Supplier Relationships. The Seller shall
cause the Cedarapids Companies to (i) maintain their properties, machinery and
equipment in sufficient operating condition and repair to enable them to operate
their businesses in all material respects in the manner in which the businesses
are currently operated and (ii) use their reasonable efforts to preserve their
relationship with their material suppliers, customers, licensors and licensees
and others having material business dealings with the Cedarapids Companies.
7.10. No Amendment of Organizational Documents. The Seller shall not
amend the charter or by-laws of any Cedarapids Company, except as required by
law.
7.11. Incurrence of Liabilities; Factoring of Receivables; Auction of
Assets. The Seller shall not permit any Cedarapids Company to encumber or grant
any security interest in any of the assets of any Cedarapids Company, or incur
any liabilities (including, without limitation, liabilities with respect to
capital leases or guarantees thereof), except for Permitted Encumbrances and for
liabilities incurred, including the creation of purchase money security
interests, in the ordinary course of business which individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
The Seller shall not permit any of the Cedarapids Companies to (i) discount or
factor receivables, except consistent with past practice at levels not in excess
of historical levels, or (ii) auction or sell assets below customary prices
offered to the Cedarapids Companies' or its distributors or representatives.
7.12. Declaration of Dividends. The Seller shall not permit any of the
Cedarapids Companies to declare, set aside or pay any dividends or other
distributions in respect of its capital stock or redeem, purchase or otherwise
acquire any of its capital stock; provided, however, the foregoing shall not be
deemed to prohibit the payment of intercompany account balances of the Seller
and the Cedarapids Companies in the ordinary course of business consistent with
past practice or the reduction to zero of any intercompany account balance as of
the Closing Date.
Article 8
Conditions Precedent To Buyer's Obligations
The obligation of the Buyer to consummate the Closing is subject to the
satisfaction prior to or at the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Buyer):
8.1. Representations and Warranties. The representations and warranties
made by the Seller in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing with the same effect as though made on or as of the Closing (in each
case without giving duplicative effect to any materiality qualification
contained in such representation or warranty), except to the extent that such
representations and warranties are no longer correct due to the consummation
prior to the Closing of transactions not prohibited hereby. The Buyer shall have
received a certificate of the Seller, dated the Closing Date and signed by an
authorized officer of the Seller, certifying as to the accuracy of the
representations and warranties of the Seller contained herein as of the Closing
Date. The Buyer's acceptance of this certificate shall not constitute a waiver
by the Buyer of any of its rights under this Agreement.
8.2. Compliance with Agreement. The Seller shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing (in
each case without giving duplicative effect to any materiality qualification
contained in such obligation). The Buyer shall have received a certificate of
the Seller, dated the Closing Date and signed by an authorized officer of the
Seller, certifying as to the performance of all agreements and covenants of the
Seller contained herein as of the Closing Date. The Buyer's acceptance of this
Seller's certificate shall not constitute a waiver by the Buyer of any of its
rights under this Agreement.
8.3. No Litigation. No restraining order or injunction shall prevent
the transactions contemplated by this Agreement and no action, suit or
proceeding shall be pending before any court or administrative body in which it
will be or is sought to restrain or prohibit or obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
8.4. HSR Act. Any applicable waiting period under the HSR Act,
including any extension thereof, shall have expired, or shall have been earlier
terminated.
8.5. Tax Agreement. Raytheon shall have entered into the Disaffiliation
Tax Sharing Agreement substantially in the form of Exhibit A attached hereto
(the "Tax Agreement"), and the Tax Agreement shall be in full force and effect.
8.6. Mutual Release. The Seller and the Cedarapids Companies shall have
entered into a Mutual Release substantially in the form of Exhibit B attached
hereto (the "Mutual Release"), and the Mutual Release shall be in full force and
effect.
8.7. Receivables Facility. Either the Buyer and Cedarapids shall have
entered into the Substitute Receivables Facility (as defined in Section 11.8) or
Raytheon, RE&C Receivables Corporation ("RE&C Receivables") and Cedarapids shall
have entered into the Receivables Termination Agreement (as defined in Section
11.8) and Raytheon, RE&C Receivables and Cedarapids shall have received any
required consents from Canadian Imperial Bank of Commerce ("CIBC") and Asset
Securitization Cooperative Corporation ("ASCC").
8.8. No Prohibition. No statute, rule or regulation or injunction or
order of any court or administrative agency of competent jurisdiction shall be
in effect as of the Closing which prohibits the Buyer from consummating the
transactions contemplated hereby.
8.9. FIRPTA. The Seller shall have delivered to the Buyer a valid
certification of non-foreign status pursuant to Section 1445(b)(2) of the Code
and Treasury Regulation Section 1.1445-2(b)(2). Such certification shall conform
to the model certification provided in Treasury Regulation Section
1.1445-2(b)(2)(iii)(B), or shall be in form and substance otherwise satisfactory
to the Buyer.
8.10. Delivery of Financial Statements. The Seller shall have delivered
to the Buyer promptly after becoming available audited consolidated financial
statements for the Cedarapids Companies as of December 31, 1998, 1997 and 1996
and for the three (3) years ended on such dates, including the audit opinion
thereon of PricewaterhouseCoopers LLP (the "Audited Financials"). The Seller
shall have also delivered to the Buyer promptly after becoming available
unaudited consolidated financial statements of the Cedarapids Companies as of
June 30, 1999 and for the six (6) months ended on such date, which will include
a SAS 71 review report thereon of PricewaterhouseCoopers LLP.
8.11. Resignation of Officers and Directors. The Buyer shall have
received the resignations, effective as of the Closing, of (i) as a director,
each director of each of the Cedarapids Companies and (ii) as an officer, those
officers of the Cedarapids Companies that are set forth in a written notice
provided by the Buyer to the Seller at least two (2) weeks before the Closing.
8.12. Certain Encumbrances. With respect to the Encumbrances described
on Schedule 8.12, the Seller shall have either discharged such Encumbrances or
entered into other arrangements, reasonably satisfactory to the Buyer, for their
discharge promptly after the Closing, as indicated on Schedule 8.12.
8.13. Books and Records. The Seller shall have delivered to the Buyer,
to the extent not already in the possession of the Cedarapids Companies, the
minute books and stock records of the Cedarapids Companies, and to the extent
available originals of all agreements to which the Cedarapids Companies are
parties and identified in any Schedule hereto.
Article 9
Conditions Precedent To Seller's Obligations
The obligation of the Seller to consummate the Closing is subject to the
satisfaction at or prior to the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Seller):
9.1. Representations and Warranties. The representations and warranties
made by the Buyer in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty). The Seller shall
have received a certificate of the Buyer, dated the Closing Date and signed by
an authorized officer of the Buyer, certifying as to the accuracy of the
representations and warranties of the Buyer contained herein as of the Closing
Date. The Seller's acceptance of this certificate shall not constitute a waiver
by the Seller of any of its rights under this Agreement.
9.2. Compliance with Agreement. The Buyer shall have performed and complied
in all material respects with all of its obligations under this Agreement to be
performed or complied with by it prior to or at the Closing (in each case
without giving duplicative effect to any materiality qualification contained in
such obligation). The Seller shall have received a certificate of the Buyer,
dated the Closing Date and signed by an authorized officer of the Buyer,
certifying as to the performance of all agreements and covenants of the Buyer
contained herein as of the Closing Date. The Seller's acceptance of this Buyer's
certificate shall not constitute a waiver by the Seller of any of its rights
under this Agreement.
9.3. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending before any court or administrative body in which it will be or
is sought to restrain or prohibit or obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby.
9.4. HSR Act. Any applicable waiting period under the HSR Act, including
any extension thereof, shall have expired, or shall have been earlier
terminated.
9.5. Tax Agreement. The Buyer shall have entered into the Tax Agreement,
and the Tax Agreement shall be in full force and effect.
9.6. Receivables Facility. Either the Buyer and Cedarapids shall have
entered into the Substitute Receivables Facility or Cedarapids and the Buyer
shall have entered into the Receivables Termination Agreement, and Raytheon and
RE&C Receivables shall have received any required consents from CIBC and ASCC.
Article 10
Employees and Employee Benefits
10.1. Employees. The Buyer agrees that, for a period of 60 days after the
Closing Date, it will not cause any of the employees of the Cedarapids Companies
(including employees on leave, disability or workers compensation) (the "Assumed
Employees") to suffer "employment loss" for purposes of the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. ss.ss.2101-2109, and related
regulations (the "WARN Act") if such employment loss could create any liability
for the Seller, unless either (i) the Buyer delivers notices under the WARN Act
in such a manner and at such a time that the Seller bears no liability with
respect thereto or (ii) the Buyer indemnifies and holds harmless the Seller for
any liability which may be created as a result thereof.
10.2. Benefit Plans.
(a) Except as expressly provided otherwise in this Agreement
or this Article 10, the Buyer shall cause the Cedarapids Companies to
retain exclusive liability and responsibility for any and all benefits
due and payable to or in respect of Assumed Employees and retired
employees, terminated employees with nonforfeitable rights to benefits
and beneficiaries under any ERISA Plan or Non-ERISA Plan in accordance
with the terms of such plans and applicable law.
(b) On and after the Closing Date, the Buyer shall cause the
Cedarapids Companies to continue to provide benefits to employees in
units represented for collective bargaining purposes ("Represented
Employees") in compliance with the applicable collective bargaining
agreement and the requirements of the National Labor Relations Act (the
"NLRA"), except that the Represented Employees shall be given the
opportunity to participate in the Terex Corporation and Affiliates
401(k) Retirement Plan instead of the Seller's defined contribution
plan qualified under Section 4.01(a) of the Code (the "Seller's Defined
Contribution Plan"). Any changes in the benefits for Represented
Employees will be made only after notice to and consultation with the
recognized collective bargaining representative, as and to the extent
required by the NLRA and any other applicable labor law.
(c) Commencing as of the Closing Date and for a period of one
(1) year thereafter (the "Benefits Maintenance Period"), with respect
to the Assumed Employees, other than Represented Employees, and
dependents and beneficiaries thereof, the Buyer shall provide or cause
the Cedarapids Companies to provide compensation substantially
comparable to that in effect on the Closing Date, and benefits (i) as
described in the Buyer's Benefits Summary (Rev. 1/1/99) or
substantially comparable in the aggregate thereto and (ii) as described
in the balance of this Article 10. During the Benefit Maintenance
Period, the Buyer shall offer Assumed Employees with 25 or more years
of service as of the Closing Date who are not Represented Employees
five (5) weeks of paid vacation and, as to all Assumed Employees who
are not Represented Employees, continued accruals under the Cedarapids,
Inc. Retirement Plan as in effect on the Closing Date. During the
Benefits Maintenance Period, the Buyer shall maintain severance,
reduction-in-force and pay-in-lieu-of-notice benefits for the Assumed
Employees, other than Represented Employees, no less favorable than the
severance, reduction-in-force and pay-in-lieu-of-notice benefits
provided to such Assumed Employees by the Cedarapids Companies
immediately prior to the Closing Date and disclosed on Schedule
4.20(a).
(d) Assumed Employees shall receive credit for all service
prior to the Closing Date recognized under the ERISA Plans and
Non-ERISA Plans for all purposes for which such service is recognized
under the Buyer's employee benefit plans of the same type, provided,
that, in the event the Buyer shall establish a new employee benefit
plan, Assumed Employees shall not receive credit under such plan for
service for periods prior to the earliest date such service is
recognized for similarly situated employees of the Buyer and its
Subsidiaries.
(e) Through the Benefits Maintenance Period, the Buyer shall
cause the Cedarapids Companies to continue to make available their
medical insurance coverages to (i) those persons (and their eligible
dependents) who qualified for such coverages as retirees as of the
Closing Date and (ii) to those Assumed Employees (and their eligible
dependents) who qualify for such coverages as retirees during the
Benefits Maintenance Period under the standards for qualification as of
the Closing Date. In the event that consistent with the requirements of
Section 10.2(c) the Cedarapids Companies should discontinue at any time
in the Benefit Maintenance Period the health and dental coverages they
had maintained as of the Closing Date (the "Existing Medical
Coverages"), all Assumed Employees and former employees, and their
respective eligible dependents, who immediately prior to such
discontinuation were covered as participants or beneficiaries under the
Existing Medical Coverages shall immediately become eligible for such
medical and dental coverages as are provided by Buyer or its
Subsidiaries under the applicable plans identified in the Buyer's
Benefits Summary (Rev. 1/1/99) and under the terms and conditions
applicable to similarly situated employees of the Buyer and its
Subsidiaries; provided, however, that no pre-existing condition
exclusion shall apply except as to conditions for which coverage would
have been excluded under the Existing Medical Coverages had they
continued in force and credit shall be given against any otherwise
applicable deductible, co-payment or out-of-pocket maximum for any
otherwise qualifying expense incurred in the portion of the relevant
fiscal period preceding the discontinuation of the Existing Medical
Coverages.
10.3. Defined Contribution Plan. The Cedarapids Companies shall cease
to participate in and maintain the Seller's Defined Contribution Plan, and the
active participation thereunder of the Assumed Employees and their otherwise
eligible dependents and beneficiaries shall end, effective as of the Closing
Date. Instead, as of the Closing Date each of the Assumed Employees shall become
eligible to participate in the Terex Corporation and Affiliates 401(k)
Retirement Plan. The Seller will retain all liability and responsibility for the
Seller's Defined Contribution Plan, including but not limited to the disposition
of interests thereunder, with respect to those employees (or their
beneficiaries) of the Cedarapids Companies who, as of the Closing Date, are
participants in the Seller's Defined Contribution Plan. The Seller agrees that
it will cause the accounts in the Seller's Defined Contribution Plan of all such
participants to be fully vested as of the Closing Date. Following the Closing
Date the Assumed Employees shall be permitted to elect to take distributions
(subject to applicable law) of their accounts thereunder and, if such Assumed
Employees so elect, to roll them over, directly or otherwise, in accordance with
applicable law and regulations, to an individual retirement account or to one or
more defined contribution retirement plans qualified under Section 401(a) of the
Code (the "Buyer Defined Contribution Plans") and maintained by Buyer or one of
its Subsidiaries, the Seller shall reasonably cooperate in good faith in
effecting such distributions and rollovers, and the Buyer Defined Contribution
Plans shall accept such rollovers (including to the extent practicable any plan
loans).
10.4. Pension Plans; Transfer of Master Trust Assets.
(a) All of the assets of each of the Pension Plans are held in
the Raytheon Master Pension Trust (the "Master Trust"). Within ninety
(90) days after the Closing Date, Buyer shall or shall cause the
Cedarapids Companies to establish and identify to Seller one or more
trusts (the "Successor Trusts") to form a part of the Pension Plans and
the trustee or trustees thereof. Promptly thereafter (but in no event
longer than sixty (60) days), Seller shall cause the trustee of the
Master Trust to transfer to the trustee or trustees of the Successor
Trusts the respective interests of the Pension Plans in the Master
Trust.
(b) The amount so transferred shall be adjusted for all
income, gain or loss creditable to or chargeable against the interests
of the Pension Plans in the Master Trust through a date selected by the
trustee of the Master Trust, which date is not more than ten (10)
business days prior to the date of transfer, and for all expenses,
including benefit distributions, chargeable against the interests of
the Pension Plans in the Master Trust through the date of transfer. All
determinations of charges and credits shall be made by the trustee of
the Master Trust in good faith and in accordance with the terms of the
Master Trust and consistent with past practices. Unless the trustee of
the Master Trust shall agree otherwise at the request of the Buyer, the
Master Trust shall not make any distributions of benefits from the
interests of the Pension Plans subsequent to the Closing Date except to
the extent of distributions properly elected and begun prior to the
Closing Date.
(c) If the trustee of the Master Trust reasonably determines
that any expense chargeable against the interests of the Pension Plans
has been incurred by the date of transfer for which payment has not
then been made, such trustee may reserve against the amount otherwise
to be transferred, and continue to hold under the Master Trust, such
reasonable estimate of such expense as it deems appropriate. Any
balance reserved, to the extent not required to pay any liabilities of
the Pension Plans under the Master Trust shall be remitted to the
Successor Trusts not later than one (1) year following the date of
transfer. Failure of the trustee of the Master Trust to reserve
sufficient amounts to pay all expenses, including benefit
distributions, chargeable against the interests of the Pension Plans
shall not relieve the Pension Plans of liability for such items.
(d) At the Seller's election, any amount to be transferred
shall be transferred in cash or in marketable securities (valued at
market value) selected in the discretion of the trustee of the Master
Trust with the reasonable approval of the Buyer, provided that in
selecting any securities the trustee shall not materially advantage or
disadvantage the Pension Plans relative to other holders of interests
in the Master Trust.
10.5. Stock Options. Seller shall retain responsibility for satisfying
any outstanding obligations of Seller or any of its Affiliates under any
outstanding stock option issued to any of the Assumed Employees, in accordance
with the respective terms of such options.
10.6. Retention Agreements.
(a) The Seller has entered into letter agreements in the form
of Schedule 10.6(a) ("Retention Agreements") with the employees of the
Cedarapids Companies listed on Schedule 10.6(b) (the "Key Employees").
Schedule 10.6(b) also lists the total "Retention Bonus" payable to each
Key Employee pursuant to the applicable Retention Agreement.
(b) Except as set forth below in paragraph (c), with respect
to "Portion 1" and "Portion 2" of the Retention Bonus payable to any
Key Employee pursuant to the applicable Retention Agreement, the Buyer
agrees to pay or cause the applicable Cedarapids Company to pay such
portion of the Retention Bonus as and when due in accordance with the
terms of the applicable Retention Agreement.
(c) The Seller or Raytheon will remain responsible for
"Portion 1" and "Portion 2" of the Retention Bonus payable to Joseph
Mazza pursuant to Joseph Mazza's Retention Agreement, and shall pay the
same when due in accordance with such Retention Agreement.
Article 11
Certain Covenants
11.1. Access to Books and Records.
(a) (i) The Buyer agrees to cooperate with and to
cause the Cedarapids Companies to make available to the Seller
and its other Subsidiaries such documents, books, records or
information relating to the Cedarapids Business as the Seller
or its other Subsidiaries may reasonably require after the
Closing.
(ii) The Buyer agrees to cause the Cedarapids
Companies to preserve and protect all books, records, files
and data referred to in clause (i) above for a period of two
(2) years after the Closing Date.
(iii) The Buyer agrees to cause the Cedarapids
Companies to not destroy any files or records which are
subject to this paragraph (a) (A) for the period described in
clause (ii) of this paragraph (a), and (B) thereafter, without
giving at least thirty (30) days' notice to the Seller. Upon
receipt of such notice, the Seller may (x) cause to be
delivered to it or its Subsidiaries the files or records
intended to be destroyed, at the Seller's expense, or (z)
notify the Buyer that the Seller will pay the cost of storing
and maintaining such files or records (including any necessary
costs of moving such files or records to a location under
control of the Seller).
(b) (i) The Seller agrees to make available to the
Buyer and Cedarapids such documents, books, records or
information relating to the Cedarapids Business as the Buyer
or Cedarapids may reasonably require after the Closing.
(ii) The Seller agrees to preserve and protect all
books, records, files and data referred to in clause (i) above
for a period of two (2) years after the Closing Date.
(iii) The Seller agrees not to destroy any files or
records which are subject to this paragraph (b) (A) for the
period described in clause (ii) of this paragraph (b), and (B)
thereafter, without giving at least thirty (30) days' notice
to the Buyer. Upon receipt of such notice, the Buyer may (x)
cause to be delivered to it or its Subsidiaries the files or
records intended to be destroyed, at the Buyer's expense, or
(z) notify the Seller that the Buyer will pay the cost of
storing and maintaining such files or records (including any
necessary costs of moving such files or records to a location
under control of the Buyer).
11.2. Use of Names.
(a) The Buyer agrees that immediately after the Closing Date
it will cause the Cedarapids Companies to cease using any references to
the Seller or Raytheon or any of their respective Affiliates, including
any such use in connection with the use of existing supplies of labels,
signs, letterhead and other printed materials, except that the Buyer
may use up existing stocks of catalogs and other promotional materials
so long as they are stickered to the extent reasonably possible so as
to indicate that the Cedarapids Companies are no longer affiliated with
the Seller or Raytheon or any of their Affiliates.
(b) The Buyer agrees that except as provided in paragraph (a)
above, any implied license the Cedarapids Companies may have been
granted with respect to the use of the Raytheon name is hereby
terminated effective as of the Closing and that Raytheon is an intended
third-party beneficiary of such termination.
11.3. Non-Competition.
(a) The Seller agrees that for a period of five (5) years
after the Closing Date (the "Restricted Period"), the Seller will not,
and the Seller will not permit any Subsidiary to, engage directly or
indirectly in competition with the Cedarapids Companies, whether
individually or as a consultant, partner, owner or stockholder owning
more than five percent (5%) of a corporation, in the business of
designing, manufacturing or marketing equipment and repair parts
currently manufactured by any Cedarapids Company or used in screening
or crushing rock or road building (the "Restricted Business").
Notwithstanding the foregoing, nothing herein shall prohibit the Seller
or any Subsidiary from:
(i) owning, directly or indirectly, less than five
percent (5%) of any class of securities listed on a national
securities exchange or traded publicly in the over-the-counter
market;
(ii) directly or indirectly acquiring a business
which engages in the Restricted Business if such business is
25% or less (measured by net revenues for the most recent
fiscal year) of a larger business so acquired by the Seller or
such Subsidiary and the net revenues of that portion of the
business so acquired that is engaged in the Restricted
Business (measured for the most recent fiscal year) is less
than $50,000,000;
(iii) acquiring a business which engages in the
Restricted Business if such business is more than 25%
(measured by net revenues for the most recent fiscal year) of
a larger business so acquired by the Seller or such Subsidiary
or less than 25% (measured by net revenues for the most recent
fiscal year) of a larger business so acquired by the Seller or
such Subsidiary but the portion of the business so acquired
that is engaged in the Restricted Business (measured for the
most recent fiscal year) is more than $50,000,000, provided
that the Seller or such Subsidiary places such competitive
business for sale promptly after its acquisition and uses
reasonable commercial efforts to complete such sale within the
Restricted Period; or
(iv) selling products or services that do not
themselves constitute a Restricted Business and are not
uniquely and inherently related to the Restricted Business to
any Person engaged in a Restricted Business.
(b) In addition to the foregoing, at no time after the Closing
will the Seller or any Subsidiary represent to any Person that the
Seller still owns or operates the Cedarapids Business or is the
successor in interest of or otherwise operating the Cedarapids
Business.
(c) It is recognized by the parties hereto that damages for
breaches of covenants of the nature contained in this Section 11.3 are
difficult if not impossible precisely to prove; therefore, it is agreed
that this agreement not to compete shall be enforceable by mandatory
injunction, in addition to any other remedy available to the Buyer
under this Agreement or at law or equity. If any of the restrictions
contained in this Section 11.3 shall be deemed to be unenforceable by
reason of the extent, duration or geographical scope or other
provisions hereof, then the parties hereto contemplate that the court
shall reduce such extent, duration, geographical scope or other
provision hereof and enforce this Section 11.3 in its reduced form for
all purposes in the manner contemplated hereby.
11.4. Internet Protocol.
(a) The Seller and the Buyer will cooperate and work
diligently so that, as of the Closing Date or as soon thereafter as is
practicable: (i) all references to the Cedarapids Companies and the
Cedarapids Business are removed from any internet pages operated by the
Seller or Raytheon or their other Subsidiaries, except to the extent
included in historical financial statements and other references to
periods prior to the Closing, subject to the provisions of Section
11.3(b) hereof, (ii) use of domain names related solely to the
Cedarapids Companies and the Cedarapids Business (including without
limitation www.Cedarapids.com) (the "Domain Names") will not lead to
any internet pages operated by the Seller, Raytheon or their
Subsidiaries but will instead, if desired by the Buyer, lead to
internet pages operated by the Buyer, Cedarapids or their Subsidiaries
or Affiliates; and (iii) the Buyer is transferred all right, title and
interest (if any) of the Seller, Raytheon and their Subsidiaries to the
Domain Names.
(b) To the extent the Cedarapids Companies utilize any
internet protocol address space allocated to the Seller or Raytheon or
their other Subsidiaries, such internet protocol address space shall
remain the property of the Seller or Raytheon or such other Subsidiary
as applicable, and no rights or license are granted to the Buyer with
respect thereto.
11.5. General Transitional Assistance. The Seller agrees to provide
general transition assistance to Cedarapids after the Closing in the areas
described on Schedule 11.5(a). The Seller will not be required to provide any
assistance to the extent not permitted by applicable law or the Seller's other
contractual arrangements. Any such transitional assistance will be at the
request of Cedarapids. The Buyer will cause Cedarapids to reimburse the Seller
for any out-of-pocket costs and an allocable portion of wages or salaries and
related costs and overhead of any Seller employees providing this assistance;
provided, that, so long as the level of any particular service requested does
not exceed the level of support previously provided to the Cedarapids Business
by the Seller or its Affiliates, then the costs and expenses charged will not
exceed the costs and expenses (or corporate allocation) charged in the past to
the Cedarapids Companies for such service. Unless it otherwise agrees and except
as noted on Schedule 11.5(a), the Seller will not be required to provide this
assistance after 180 days after Closing. With respect to the software listed on
Schedule 11.5(b) the Buyer agrees that it will either provide substitute
software for the Cedarapids Companies on the Closing Date or cause the
Cedarapids Companies to completely terminate any use of such software, as
necessary to ensure that the terms of the related license agreements are not
breached.
11.6. CMI Litigation. With respect to the litigation with CMI
Corporation under the case name CMI Corporation v. Cedarapids, Inc., Standard
Havens, Inc. and Standard Havens Products, Inc. pending in the United States
District Court for the Western District of Oklahoma and Cedarapids, Inc. v. CMI
Corporation pending in the United States District Court for the Northern
District of Iowa, Cedar Rapids Division (collectively, the "CMI Litigation"),
the Buyer and the Seller agree that they will pursue the CMI Litigation pursuant
to the procedures set forth in Schedule 11.6.
11.7. Further Assurances. At any time or from time to time after the
Closing, the Seller shall, at the request of the Buyer and at the Buyer's
expense, (i) execute and deliver any further instruments or documents and take
all such further action as the Buyer may reasonably request in order to
effectuate the consummation of the transactions contemplated hereby and (ii)
cooperate with the Buyer in order to afford the Buyer the benefit of all
insurance policies covering the Cedarapids Companies for periods prior to the
Closing Date, subject to any deductible amounts, loss retention and other terms
of the applicable policies. The Buyer will reimburse the Seller or its other
Affiliates (including Raytheon) for any reasonable out-of-pocket costs incurred
in providing the foregoing.
11.8. Receivables Sale Agreement.
(a) Cedarapids and RE&C Receivables are parties to a
receivables sale agreement pursuant to which Cedarapids sells
receivables to RE&C Receivables, which in turn sells these receivables
to ASCC, an affiliate of CIBC, pursuant to another receivables sale
agreement. These existing receivables sale facilities are referred to
collectively as the "Existing Facilities". The Buyer agrees to use
commercially reasonable efforts to cause CIBC to enter into a
substitute receivables facility directly between the Buyer and/or
Cedarapids, on the one hand, and ASCC and CIBC, on the other hand,
which supersedes the Existing Receivables Facilities insofar as they
relate to Cedarapids (the "Substitute Receivables Facility"). The
Seller agrees to cooperate fully with the Buyer in connection with the
foregoing. The parties intend that the Substitute Receivables Facility
will include both receivables sold into the Existing Facilities and
receivables generated after the Closing Date and Raytheon and RE&C
Receivables will have no further obligation to CIBC and ASCC with
respect to any receivable of Cedarapids.
(b) In the event that the Seller and the Buyer are unable to
implement the Substitute Receivables Facility on terms reasonably
satisfactory to both of them prior to the Closing, including the
treatment of the excess receivables sold into the Existing Receivables
as a reserve, then RE&C Receivables, the Buyer, the Seller and
Cedarapids will enter into a Receivables Termination Agreement
substantially in the form of Exhibit C hereto, with any changes
required to obtain CIBC's and ASCC's consent (in such form the
"Receivables Termination Agreement") and will use commercially
reasonable efforts to obtain the consent of CIBC and ASCC. In the event
that the parties enter into the Receivables Termination Agreement at or
prior to the Closing, after the Closing they will continue to use
commercially reasonable efforts to substitute the Substitute
Receivables Facility as described above.
Article 12
Indemnity
12.1. Indemnification by the Seller.
(a) The Seller agrees to indemnify and hold the Buyer and the
Cedarapids Companies (and their directors, officers and employees)
harmless from and with respect to any and all claims, liabilities,
losses, damages, costs and expenses (including without limitation the
reasonable fees and disbursements of counsel), net of insurance
proceeds and tax benefits received (collectively, "Losses"), arising
out of:
(i) any breach by the Seller of any representation or
warranty made by the Seller in this Agreement;
(ii) any breach by the Seller of any covenant, obligation or
undertaking made by the Seller in this Agreement;
(iii) the Release of any Hazardous Substance at, onto or
from any real property formerly owned, leased or operated by any
Cedarapids Companies, but specifically excluding any of the Real
Property (the "Former Real Property"), or the violation of any
Environmental Law at any of the Former Real Property;
(iv) the litigation identified on Schedule 4.11 as Meade v.
Cedarapids, Inc.; or
(v) the two abandoned fuel tanks located at Cedarapids' 12th
Avenue facility in Cedarapids, Iowa, as described in greater
detail in Schedule 4.22, but excluding the first $100,000 in
Losses incurred after the Closing Date (the "12th Avenue Tank
Liability").
(b) Except as provided below, no action or claim for Losses
pursuant to Section 12.1(a)(i) above may be brought or made unless such
action or claim (a "Claim") has been specified in reasonable detail in
a written notice from the Buyer to the Seller on or before December 31,
2000 in the case of all representations and warranties of the Seller
other than those arising under Sections 4.3, 4.5, 4.6 or 4.22, and the
second anniversary of the Closing Date in the case of the Seller's
representations and warranties in Section 4.22, in each case, except to
the extent a written notice asserting a claim for breach of any such
representation or warranty, describing the nature of the breach in
reasonable detail, shall have been given prior to such date to the
Seller, in which case such representation and warranty shall survive,
to the extent of such claim only, until such claim is resolved, whether
or not the amount of the damages or expenses resulting from such breach
has been finally determined at the time the notice is given.
Indemnification with respect to the representations and warranties
contained in Sections 4.3, 4.5 and 4.6 (and in the Seller's certificate
delivered pursuant to Sections 8.1 and 8.2 insofar as they pertain to
Sections 4.3, 4.5 and 4.6) shall survive the Closing until the
expiration of the applicable statute of limitations (as extended by the
application of any tolling principles).
(c) The Buyer shall not be entitled to indemnification under
Section 12.1(a)(i) above or Section 12.1(a)(v) above (i) for any Claim
under Section 12.1(a)(i) if the aggregate Losses incurred with respect
to such Claim do not exceed $25,000 (a "Minor Claim") and (ii) except
to the extent that the cumulative amount of Losses arising from Claims
asserted under Section 12.1(a)(i), including Losses arising from Minor
Claims, together with the cumulative amount of Losses arising from any
claims for indemnification under Section 12.1(a)(v), exceeds
$2,000,000, and then only to the extent of such excess. In addition, in
no event shall the aggregate liability of the Seller for Losses under
Section 12.1(a)(i) and Section 12.1(a)(v) exceed twenty percent (20%)
of the Purchase Price (as finally adjusted pursuant to Section 2.2).
12.2. Indemnification by the Buyer. The Buyer agrees to indemnify and
hold the Seller (and its directors, officers and employees) harmless from and
with respect to any and all Losses arising out of (a) any breach by the Buyer of
any representation or warranty, covenant, obligation or undertaking made by the
Buyer in this Agreement, or (b) the operation of the Cedarapids Business after
the Closing Date.
12.3. Indemnification Procedures.
(a) In the event that any party hereto (an "Indemnified
Party") desires to make a claim against another party hereto (the
"Indemnifying Party", which term shall include all Indemnifying Parties
if there be more than one) in connection with any action, suit,
proceeding or demand at any time instituted against or made upon it for
which it may seek indemnification hereunder (a "Third-Party Claim"),
the Indemnified Party shall promptly notify the Indemnifying Party of
such Third-Party Claim and of its claims of indemnification with
respect thereto; provided, however, that the failure to provide such
notice shall not release the Indemnifying Party from any obligation
under this Article 12 except to the extent such Indemnifying Party is
materially prejudiced by such failure. Upon receipt of such notice from
the Indemnified Party, the Indemnifying Party shall be entitled to
participate in the defense of such Third-Party Claim, and assume the
defense of such Third-Party Claim, and in the case of such an
assumption the Indemnifying Party shall have the authority to
negotiate, compromise and settle such Third-Party Claim; provided, that
(i) the Indemnifying Party shall not be entitled to settle any such
Third-Party Claim without the consent of the Indemnified Party unless
as part of such settlement the Indemnified Party is released from all
liability with respect to such Third-Party Claim and (ii) the
Indemnified Party shall cooperate with the Indemnifying Party in
connection with the defense of such Third Party Claim, and provide all
information possessed by the Indemnified Party relevant to the defense
or settlement of such Third Party Claim.
(b) The Indemnified Party shall retain the right to employ its
own counsel and to participate in the defense of any Third-Party Claim,
the defense of which has been assumed by an Indemnifying Party pursuant
hereto, but the claimant shall bear and shall be solely responsible for
its own costs and expenses in connection with such participation.
(c) With respect to any remediation or containment required in
connection with the 12th Avenue Tank Liability or any matter subject to
an indemnification claim pursuant to Section 12.1(a)(i) arising out of
Section 4.22, at the request of the Seller the Buyer will update the
Seller as to the scope and status of any such remediation and
containment, so as to permit the Seller to confirm that the Buyer or
Cedarapids is not effecting a remediation or containment beyond what is
required under all applicable Environmental Laws and is otherwise
incurring costs only as reasonably required.
12.4 Scope of Indemnity. Except as provided in Article 13, each of the
Seller and the Buyer acknowledges that, except for equitable relief, including
specific performance, its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions of this Article 12 and the provisions of the Tax
Agreement.
12.5 Waiver of Statutory Claims. The Buyer hereby waives and releases
the Seller from any and all Losses, known or unknown, it may have under CERCLA
(as defined in Article 16) or any other statutes or regulations relating to
environmental matters now or hereafter in effect or any other statutes or
regulations if the assertion of a right under such statute or regulation would
circumvent the intended effect of Section 12.4. The Seller hereby waives and
releases the Buyer from any and all Losses, known or unknown, it may have under
CERCLA or any other statutes or regulations relating to environmental matters
now or hereafter in effect or any other statutes or regulations if the assertion
of a right under such statute or regulation would circumvent the intended effect
of Section 12.4. The foregoing waivers and releases in this Section 12.5 are not
intended to enlarge or diminish the parties' indemnification obligations under
Sections 12.1 and 12.2.
Article 13
Tax Matters
Notwithstanding the provisions of Article 12, the provisions of the Tax
Agreement (and not Article 12) shall govern the allocation of responsibility
between Raytheon and the Buyer for Taxes of the Cedarapids Companies.
Article 14
Termination
This Agreement may be terminated by either the Buyer or the Seller in
writing, without liability to the terminating party on account of such
termination (provided the terminating party is not otherwise in default or in
breach of this Agreement), if the Closing shall not have occurred on or before
October 29, 1999. This Agreement may also be terminated by either the Buyer or
the Seller if there has been a material breach by the other party of any
representation, warranty, covenant or agreement set forth in this Agreement and
such breach is not cured in all material respects within ten (10) business days
after written notice of such breach has been delivered by the non-breaching
party. This Agreement may also be terminated at any time prior to the Closing by
mutual written consent of the Seller and the Buyer. In the event of the
termination of this Agreement by the Seller or the Buyer, as herein provided,
written notice thereof shall be given to the other party and this Agreement
shall terminate without any further action of the parties hereto. If this
Agreement is terminated as provided herein: (i) each party will redeliver all
documents, work papers and other material of the other party or parties relating
to the transactions contemplated hereby including such memoranda, notes, lists,
records or other documents compiled or derived from such material, whether so
obtained before or after the execution hereof, to the party furnishing the same;
(ii) all information received by any party hereto with respect to the business
of the other parties or their affiliated companies shall remain subject to the
terms of the Confidentiality Agreement (as defined in Article 15); and (iii) no
party shall have any liability or further obligation to any other party to this
Agreement except as provided by this Article 14, and except that any termination
of this Agreement pursuant to the first or second sentence of this Article 14
shall not relieve a defaulting or breaching party from any liability to the
other party hereto. In addition, the provisions of Article 15 and Article 17
shall survive any termination of this Agreement.
Article 15
Confidentiality
Any and all information disclosed by the Seller or the Cedarapids Companies
to the Buyer as a result of the negotiations leading to the execution of this
Agreement, or in furtherance thereof, which information was not already known to
the Buyer shall be subject to the Confidentiality Agreement, dated as of March
22, 1999, between the Buyer and Salomon Smith Barney, on behalf of Raytheon (the
"Confidentiality Agreement"), all of the provisions of which are incorporated
into this Article 15 by this reference. Notwithstanding the foregoing, the
Confidentiality Agreement shall terminate upon the Closing.
Article 16
Definitions
As used herein the following terms not otherwise defined have the
following respective meanings:
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. As used in this definition the term "control" (including the terms
"controlled by" and "under common control with") means, with respect to the
relationship between or among two or more Persons, the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrance" means all liens, security interests, pledges, charges,
mortgages, conditional sales agreements, title retention agreements and other
encumbrances.
"Environmental Law" means any applicable Federal, state, local or
foreign law, treaty, judicial decision, regulation, rule, judgment, decree,
order, injunction, permit, agreement or governmental restriction, relating to
the environment or to any Hazardous Substance, each as in effect on or prior to
the Closing Date, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA") (42 U.S.C. ss.9601
et seq.) and as amended by the Superfund Amendment and Reauthorization Act
("SARA"), the Resource Conservation and Recovery Act ("RCRA") (42 U.S.C. ss.6901
et seq.), the Federal Water Pollution Control Act ("CWA") (33 U.S.C. ss.1251 et
seq.), the Hazardous Materials Transportation Act ("HMTA") (49 U.S.C. ss.1801 et
seq.); the Federal Clean Air Act ("CAA") (42 U.S.C. ss.7401 et seq.), the Toxic
Substances Control Act ("TSCA") (15 U.S.C. ss.2601 et seq.); and all analogous
state laws.
"GAAP" means United States generally accepted accounting principles
which are consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the applicable
fiscal year.
"Government Contract" means (i) any contract, agreement, lease or
instrument between any Cedarapids Company and any Governmental Entity and (ii)
any contract, agreement, lease or instrument entered into by any Cedarapids
Company as subcontractor (at any tier) in connection with a contract between
another Person and any Governmental Entity.
"Governmental Entity" means any government or any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency, Federal, state, local, transnational or foreign.
"Hazardous Substance" means each and every element, compound, chemical
mixture, contaminant, pollutant material, waste or other substance which is
defined, determined or identified as hazardous, flammable, harmful, corrosive or
toxic under any Environmental Law or the Release of which is prohibited or
restricted under any Environmental Law. Without limiting the generality of the
foregoing, the term shall mean and include: "hazardous substances" as defined in
CERCLA or SARA, each as amended, and regulations promulgated thereunder;
"hazardous waste" as defined in RCRA, as amended, and regulations promulgated
thereunder; "hazardous materials" as defined in HMTA, as amended, and
regulations promulgated thereunder; and "chemical substance or mixture" as
defined in TSCA, as amended, and regulations promulgated thereunder.
"Indebtedness" as applied to any Person, means all indebtedness of such
Person to any other Person for borrowed money, whether current or funded, or
secured or unsecured and all such Indebtedness of any other Person which is
directly or indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured against loss, but not including the endorsement
of checks and similar instruments.
"Knowledge of the Seller" or "to the Seller's knowledge" or "known to
Seller" means and is limited to the actual knowledge of one or more of the
following persons:
Name Title/Position
Joseph Mazza President - Cedarapids
Robert Fiola Vice President - Cedarapids
John Irvine Vice President - Cedarapids
Robert Legacy Vice President - Cedarapids
Robert Lloyd Vice President - Cedarapids
Jeff Elliott Vice President - Cedarapids
Mark Hunt Director - Cedarapids
Paul Schulz Vice President - Cedarapids
George Mack Human Resources Manager -
Cedarapids
Paul Bailey Director, New Business Planning -
Raytheon Company
Molly Brown Environmental Attorney- Raytheon
Company
Deborah Verga Intellectual Property Attorney -
Raytheon Company
Ron Sullivan Manager of Benefits Planning -
Raytheon Company
"Material Adverse Effect" means any material adverse effect on the
operations, assets or financial condition of the -------- ------- ------
Cedarapids Companies or the Cedarapids Business, in each case taken as a whole.
"Permitted Encumbrances" means Encumbrances that (i) arise out of Taxes not
in default and payable without penalty or interest or the validity of which is
being contested in good faith by appropriate proceedings and for which
sufficient reserves are established on the books of Cedarapids, (ii) are
mechanics', carriers', workers', repairmen's, or other similar liens that do
not, individually and in the aggregate, have a Material Adverse Effect, (iii) in
connection with any agreement or instrument, relate to restrictions on transfer
embodied in the terms of such agreement or instrument, (iv) represent the rights
of customers, suppliers and subcontractors in the ordinary course of business
under contracts or under general principles of commercial law, (v) are listed in
Schedule 4.12 (other than those noted on Schedule 4.12 as being discharged prior
to Closing) or (vi) in the case of any of the Real Property, do not materially
adversely effect the value of the Real Property and do not restrict in any
material respect the Cedarapids Companies from operating the Cedarapids Business
as presently conducted at such Real Property.
"Person" means any corporation, association, partnership, limited liability
company, organization, business, individual, government or political subdivision
thereof or governmental agency.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, escaping, leaching, dumping,
discarding, burying, abandoning, or disposing into the environment.
"Senior Management" means Joseph Mazza, Robert Fiola, John Irvine, Robert
Legacy, Robert Lloyd, Jeff Elliott, Mark Hunt, Paul Schulz and George Mack.
"Subsidiary" With respect to any Person, any corporation a majority (by
number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by such Person or by a Subsidiary of such Person, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency.
"Tax" Any federal, state, provincial, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing, but excluding maintenance fees, annuities, or the like
which are payable in connection with the maintenance of intellectual property
rights.
Article 17
General
17.1 Survival of Representations and Warranties. Each of the
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing, and shall expire on December 31, 2000 in the case of
all representations and warranties of the Seller other than those arising under
Sections 4.3, 4.5, 4.6 or 4.22, and the second anniversary of the Closing Date
in the case of the Seller's representations and warranties in Section 4.22,
except to the extent a written notice asserting a claim for breach of any such
representation or warranty, describing the nature of the breach in reasonable
detail, shall have been given prior to such date to the party which made such
representation or warranty, in which case such representation and warranty shall
survive, to the extent of such claim only, until such claim is resolved, whether
or not the amount of the damages or expenses resulting from such breach has been
finally determined at the time the notice is given. The representations and
warranties contained in Sections 4.3, 4.5 and 4.6 (and in the Seller's
certificate delivered pursuant to Sections 8.1 and 8.2 insofar as they pertain
to Sections 4.3, 4.5 and 4.6) and the representations and warranties of the
Buyer (and in the Buyer's certificate delivered pursuant to Sections 9.1 and 9.2
insofar as they pertain to such representations and warranties) shall survive
the Closing until the expiration of the applicable statute of limitations (as
extended by the application of any tolling principles). The covenants and
agreements contained herein to be performed or complied with at or after the
Closing, including, without limitation, the indemnification obligations
contained in Article 12 and the Tax Agreement, shall survive the Closing until
the expiration of the applicable statute of limitations (without regard to the
application of any tolling principles), but subject in the case of Article 12 to
the time limitations set forth in Section 12.1(b).
17.2. Expenses. Each party shall pay its own expenses and costs incidental
to the preparation of this Agreement and to the consummation of the transactions
contemplated hereby.
17.3. Assigns. This Agreement and the agreements attached as Exhibits
hereto may not be assigned in whole or in part by either party hereto without
the prior written consent of the other party, except that the Buyer may, at its
election, assign this Agreement and the agreements attached as Exhibits hereto
to (i) any direct or indirect wholly owned Subsidiary of the Buyer or (ii) its
lenders in connection with the financing for the transactions contemplated by
this Agreement, so long as such assignee shall execute a counterpart of this
Agreement agreeing to be bound by the provisions hereof as "Buyer", and agreeing
to be jointly and severally liable with the assignor and any other assignee for
all of the obligations of the assignor hereunder. The Buyer will remain jointly
and severally liable with any such assignee. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
17.4. Entire Agreement, Etc. This Agreement (including the Schedules and
Exhibits and the Confidentiality Agreement) contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto. EXCEPT AS SET FORTH IN ARTICLE
4, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION ANY REPRESENTATION OR WARRANTY WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SALE OF
THE CEDARAPIDS SHARES OR THE CEDARAPIDS BUSINESS.
17.5. Waiver of Certain Damages. EACH OF THE SELLER AND THE BUYER TO THE
FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY
HAVE TO INCIDENTAL, CONSEQUENTIAL OR SPECIAL (INCLUDING PUNITIVE OR MULTIPLE)
DAMAGES BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS OR ACTIONS OF ANY OF THEM RELATING THERETO.
17.6. Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
17.7. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws (excluding any choice-of-law rules
that would require the application of the laws of another jurisdiction) of the
State of New York.
17.8. Notices. All notices, requests, payments, instructions or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
If to the Seller, to:
c/o Raytheon Company
141 Spring Street
Lexington, MA 02421
Attention: General Counsel
with a copy sent contemporaneously to:
John R. Utzschneider, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Facsimile: (617) 951-8736
If to the Buyer, to:
Terex Corporation
500 Post Road East
Westport, CT 06880
Attention: General Counsel
Facsimile: (203) 227-1647
17.9. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
17.10. Section Headings. All enumerated subdivisions of this Agreement are
herein referred to as "section" or "subsection." The headings of sections or
subsections are for reference only and shall not limit or control the meaning
thereof.
17.11. Public Statements or Releases. The parties hereto each agree that no
party to this Agreement shall make, issue or release any public announcement,
statement or acknowledgment of the existence of, or reveal the status of, this
Agreement or the transactions provided for herein, without first obtaining the
consent of the other party hereto, which consent shall not be unreasonably
withheld. Nothing contained in this Section 17.11 shall prevent any party from
making such public announcements as such party may consider necessary or
desirable in order to satisfy such party's legal obligations (including under
any applicable securities laws), provided that such disclosing party shall to
the extent practicable give prior notice to the other party of the contents of,
and requirement for, such disclosure.
17.12. No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer on any Person, other than the parties hereto and
other than as set forth in Section 11.2, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
17.13. Disclosure in Schedules. The Disclosure Schedule is hereby
incorporated into this Agreement and made a part hereof. For purposes of this
Agreement, with respect to any matter that is clearly disclosed in any portion
of the Disclosure Schedule in such a way as to make its relevance to the
information called for by another Section of this Agreement readily apparent,
such matter shall be deemed to have been included in the Disclosure Schedule in
response to such other Section, notwithstanding the omission of any appropriate
cross-reference thereto.
17.14. Waiver of Jury Trial. EACH PARTY HERETO WAIVES ITS RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY AGREEMENT, CONTRACT OR OTHER DOCUMENT OR
INSTRUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as an instrument under seal as of the day and year first above
written.
RAYTHEON ENGINEERS & CONSTRUCTORS INTERNATIONAL, INC.
By:
Name:
Title:
TEREX CORPORATION
By:
Name:
Title: