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EXHIBIT 4.2
EXECUTION COPY
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PURCHASE AGREEMENT
Between
ABB HANDELS- UND VERWALTUNGS AG,
as Seller
and
BRITISH NUCLEAR FUELS plc,
as Purchaser
Dated as of December 21, 1999
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PURCHASE AGREEMENT
This Purchase Agreement is entered into as of this 21st day of
December 1999 by and between the following parties:
ABB HANDELS- UND VERWALTUNGS AG, a company organized and existing
under the laws of Switzerland with its principal office at CH-8050 Zurich
("ABB"); and
BRITISH NUCLEAR FUELS plc, a company organized and existing under the
laws of England with its principal office at Risley, Warrington, Cheshire WA3
6AS, England ("PURCHASER").
WITNESSETH:
WHEREAS, ABB is engaged, through its Affiliates, in nuclear plant and
nuclear fuel supply, nuclear plant and nuclear fuel service and maintenance, and
nuclear instrumentation and control; and
WHEREAS, ABB desires to sell, transfer and assign, or otherwise cause
the sale, transfer and assignment, to Purchaser, and Purchaser desires to
purchase from ABB and/or its Affiliates, (i) all of the issued and outstanding
shares of the NB Group; and (ii) such other assets related to the activities to
be divested by ABB pursuant hereto and not otherwise held by the NB Group;
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, and subject to and on the terms
and conditions herein set forth, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION AND RELATED MATTERS
1.1. DEFINITIONS
Unless the context of this Agreement provides otherwise, the entities
defined in the heading and preamble of this Agreement shall retain such
definitions and the following additional terms shall have the meanings set out
below:
"ABB ACCOUNTING PRINCIPLES" means the accounting principles of the ABB
Group.
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"ABB GROUP" means ABB Ltd., an Affiliate of ABB and a company
organized and existing under the laws of Switzerland with its principal
office at Affolternstrasse 44, PO Box 8131, CH-8050 Zurich, Switzerland,
and each of its Affiliates.
"ABB RETIREMENT PLANS" shall have the meaning set out in Section
7.6(d).
"ABB SAVINGS PLANS" shall have the meaning set out in Section 7.6(m).
"ACTUAL DEFICIENCY AMOUNT" means the greater of (i) the amount, if
any, by which Actual Equity is less than the Guaranteed Equity and (ii) the
amount, if any, by which Actual Working Capital is less than Guaranteed
Working Capital, in each case as determined on the basis of the Final Audit
Report.
"ACTUAL EQUITY" means the amount of Equity as of the Closing Date.
"ACTUAL EXCESS AMOUNT" means the lesser of (i) the amount, if any, by
which Actual Equity exceeds the Guaranteed Equity, and (ii) the amount, if
any, by which Actual Working Capital exceeds Guaranteed Working Capital, in
each case as determined on the basis of the Final Audit Report.
"ACTUAL OKG LOSS" means the excess, if any, of the full costs actually
incurred by the NB Group in the performance of the OKG Contract (including
but not limited to liquidated and other damages payable to the customer in
accordance with the terms thereof) over the revenues (including the net
sales price actually received from the customer plus interest on customer
advances), all calculated for the period after the Closing in accordance
with the ABB Accounting Principles and, to the extent applicable, IAS, as
in effect on the date hereof, and the principles set forth on SCHEDULE
1.1(1).
"ACTUAL WORKING CAPITAL" means the amount of Working Capital as of the
Closing Date.
"ADDITIONAL BUSINESS ASSETS" means the properties, assets, goodwill
and rights of ABB and/or its Affiliates in Belgium, France and, Korea which
are set forth on SCHEDULE 1.1(2) hereto.
"ADDITIONAL BUSINESS EMPLOYEES" means the employees of ABB and/or its
Affiliates in Belgium, France, Italy, Korea and the People's Republic of
China which are set forth on SCHEDULE 1.1(3) hereto.
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"ADDITIONAL BUSINESS LIABILITIES" means those liabilities of ABB or
any of its Affiliates arising out of the Additional Business Assets or
relating to the Additional Business Employees.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such Person (where "control",
including with correlative meanings, the terms "controlled by" and "under
common control with", means, as used with respect to any Person, the
ownership of more than fifty percent (50%) of the voting rights attaching
to shares or other equity interests issued by such Person, the power to
appoint a majority of the members of such Person's management board or
similar body, or the possession, directly or indirectly, by contract or
otherwise, of the power to direct or cause the direction of the management
and policies of such Person).
"AGENCY ACTION" means any investigation, request for information,
notice of violation, complaint, order, directive, court order, injunction,
judgment or decree, consent order, consent agreement, administrative
judgment, decree or injunction or other enforcement inquiry or action
brought by a Governmental Authority having the requisite authority and
jurisdiction to bring such action.
"AGGREGATE LIABILITIES" shall have the meaning set out in Section
7.6(n).
"AGREEMENT STATE" means each state of the United States which is
authorized to regulate nuclear related materials based on authority
delegated by the NRC pursuant to Section 274 of the Atomic Energy Act of
1954, 42 U.S.C. Section 2022, as amended.
"ANCILLARY AGREEMENTS" shall mean the Non-Competition Agreement, the
Transitional Services Agreement and the Supply and Licensing Agreement.
"APPLICABLE LAW" means, as to any Person, any and all statutes,
regulations, ordinances, judgments, orders, decrees and similar acts,
including Environmental Law, of any governmental, judicial or similar body
or authority in any jurisdiction applicable from time to time to such
Person and to its businesses and assets.
"BUSINESS" shall have the meaning set out in ANNEX 1 hereto.
"BUSINESS AUDITORS" means Ernst & Young, Zurich office, auditors to
the Business.
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"BUSINESS EMPLOYEE" means each Closing Business Employee and each
Former Business Employee.
"BUSINESS-RELATED ENVIRONMENTAL LIABILITY" means any Environmental
Liability, or any Liability under any Permit issued pursuant to any
Environmental Law, in each case in connection with the Business, to the
extent arising from (i) any condition at any site arising from its use
prior to the Closing Date in the Business; or (ii) any act or omission of
ABB or its Affiliates or of any Person for whom they are liable under
Environmental Law in relation to the Business (including any prior owner,
occupant or user of any site used in the Business), including any such
Person engaged in the removal, transportation or disposition of Hazardous
Substances that originated or at any time were located at any site used in
the Business, at or prior to the Closing Date, but excluding in all cases
any liability for a Remedial Action taken for the purpose of using any such
site for a use other than its current use.
"BUSINESS UNITS" means each of NBUS, NBFR, NBSE, the US I&C Unit, the
German Units and the Swedish Unit and their respective Subsidiaries.
"CASH BALANCE PLAN" shall have the meaning set out in Section 7.6(i).
"CLOSING" means the consummation of the Transaction, which shall take
place with effect as of the time and date set out in Section 4.1.
"CLOSING AUDIT REPORT" means an audit report of the Business Auditors
in accordance with Section 2.5(a), in which the Business Auditors certify
the Actual Equity and the Actual Working Capital in accordance with this
Agreement, which certificate shall (i) be substantially in the form of
SCHEDULE 1.1(4)(b) hereto, (ii) be based on the Business Auditors' audit of
the combined balance sheet of the Business as of the Closing Date, and
(iii) include as an attachment the combined balance sheet of the Business
(including related footnotes and disclosures) from which such Actual Equity
and Actual Working Capital have been determined.
"CLOSING BUSINESS EMPLOYEE" means, except as set forth on SCHEDULE
5.13, (i) in the case of an employee whose terms and conditions of
employment with the Business are not subject to a collective bargaining
agreement, each such employee who performs services primarily as an
employee of the Business (a "NON-BARGAINED EMPLOYEE") on the Closing Date,
(ii) in the case of any employee whose terms and conditions of employment
with the Business are subject to a collective bargaining agreement, each
such employee who performs services as an employee of the Business (a
"BARGAINED
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EMPLOYEE") on the Closing Date or, in the case of any such employees
employed in Germany, who performs services primarily as an employee of the
Business or (iii) a Non-Bargained Employee or Bargained Employee who is
treated by the Business as an active employee of the Business for employee
benefit purposes, including all such persons who are (A) absent by reason
of vacation, salary continuation or short-term disability or (B) absent by
reason of leave of absence or workers' compensation-related disability and
are treated by the Business as an active employee. Each individual who is
not treated as an active employee by the Business, was a Non-Bargained
Employee or a Bargained Employee when he or she last performed services as
an active employee of the Business, last performed such services within two
years of the Closing Date and is on an approved leave of absence, workers'
compensation-related disability or long-term disability shall be considered
a Closing Business Employee as of the first date such individual becomes an
active employee of the Purchaser or its Affiliates on or after the Closing
Date.
"CLOSING DATE" means the date on which the Closing occurs in
accordance with this Agreement.
"COBRA" shall have the meaning set out in Section 7.6(1).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMBINED FINANCIAL DATA" means key figures for the periods ended
December 31, 1998 and September 30, 1999 and the unaudited combined balance
sheet for the Business as of June 30, 1999, previously provided to
Purchaser and attached hereto as SCHEDULE 1.1(5).
"CONTRACTS" means all contracts, leases, indentures, and all joint
venture, governmental funding or incentive program, guarantee, indemnity,
license, development, settlement, teaming, divestiture and other
agreements, commitments and all other legally binding arrangements,
including all inter-divisional orders, in each case whether oral or
written, relating primarily to the Business.
"COST EFFECTIVE ALTERNATIVE" means the Remedial Action that (i) is
necessary to achieve compliance with the Environmental Laws that are in
effect either at the Closing Date or at the time of the Remedial Action,
whichever is less expensive, and (ii) uses a cost-effective, commercially
reasonable approach that complies with such Environmental Laws and assumes
the continued use of the property and the assets as an industrial facility
(where such facility is an industrial facility on the Closing Date) secured
from general public access, except to the extent the applicable Nuclear
Regulator requires
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otherwise. In the event ABB and the Purchaser cannot agree as to what
constitutes a Cost Effective Alternative in any given situation, the matter
shall be resolved pursuant to Section 10.11.
"DECONTAMINATION AND DECOMMISSIONING LIABILITIES" means all costs,
Losses, and Liabilities arising from the process of the decommissioning or
demolition of facilities or equipment at any site used in the Business
required by any Nuclear Regulator in connection with the termination of
service of all or any part of such facility, and arising under any
Environmental Law, but excluding any such costs, Losses and Liabilities
which are associated with the ongoing operations or with the interruption
of the operations of the Business.
"DEFERRED COMPENSATION PLAN" and "Deferred Compensation Plan
Employees" shall have the meaning set out in Section 7.6(p).
"DISPUTES AUDITORS" shall have the meaning set out in Section 2.5(c).
"EMPLOYEE BENEFIT PLAN" means each material employee benefit plan (as
defined in Section 3(3) of ERISA), without regard to whether such plan is
not covered by ERISA by reason of Section 4(b)(4) of ERISA (relating to
foreign benefit plans) and all other bonus, deferred compensation,
incentive compensation, severance or termination pay, change in control
compensation, and death benefit plans maintained or contributed to by ABB
and/or its Affiliates and applicable to Business Employees.
"ENCUMBRANCE" means a mortgage, lien, pledge, option, right of first
refusal, right of preemption or other security interest or encumbrance of
any kind.
"ENVIRONMENTAL LAW" means any Applicable Law (including common law) or
any other legally binding requirement that governs or purports to govern
the existence of, relates to or provides a remedy for an actual or
threatened Release of Hazardous Substances, pollution or the protection of
persons, natural resources or the environment (including, without
limitation, the protection of ambient air, surface water, groundwater, land
surface or subsurface strata, endangered species or wetlands), occupational
health and safety (excluding workers' compensation), the manufacture,
processing, distribution, use, generation, handling, treatment, storage,
disposal, transportation, Release or management of solid waste or Hazardous
Substances, or other activities involving Hazardous Substances, including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 ET SEQ., as amended
by the Superfund Amendments and Reauthorization Act, the Hazardous
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Materials Transportation Act, 49 U.S.C. Section 1801 ET SEQ., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., the Clean
Water Act, 33 U.S.C. Section 1251 ET SEQ., the Clean Air Act, 33 U.S.C.
Section 2601 ET SEQ., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 ET SEQ., the Federal Insecticide, Fungicide, and Rodenticide
Act, 7 U.S.C. Section 136 ET SEQ., the Oil Pollution Act of 1990, 33 U.S.C.
Section 2701 ET SEQ., the Nuclear Waste Policy Act of 1982, 42 U.S.C.
Section 10101 ET SEQ., Atomic Energy Act of 1954, 42 U.S.C. Section 2011 ET
SEQ. and the Occupational Safety and Health Act, 29 U.S.C. Section 651 ET
SEQ., as such laws have been amended or supplemented, and/or any other
similar foreign, federal, state, local and/or county laws or regulations,
in each case as in effect on the Closing Date or, with respect to
representations and warranties made as of the date hereof, as of such date.
"ENVIRONMENTAL LIABILITY" means any Liability arising under
Environmental Law, including all direct costs and expenses associated with
Remedial Action, natural resource damages and the costs assessed by any
Governmental Authority, and the reasonable costs of environmental
consultants, but excluding the costs of any Remedial Action that is not a
Cost Effective Alternative, and excluding Decontamination and
Decommissioning Liabilities.
"EQUITY" means, at any time, the combined stockholders' equity of the
Business, calculated in accordance with the ABB Accounting Principles and
IAS applied on a basis consistent with that utilized in the preparation of
the financial statements of the Business as of, and for the period ended
on, December 31, 1998 (except for the effect of the adoption of IAS 19)
forming part of the Financial Statements, except that the principles set
forth on SCHEDULE 1.1(6) shall be applied when calculating Equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXECUTIVE LIFE INSURANCE PLAN" shall have the meaning set out in
Section 7.6(o).
"EXON-FLORIO AMENDMENT" means Section 721 of the Omnibus Trade and
Competitiveness Act of 1988 (amending Title VII of the Defense Production
Act, 50 U.S.C. App. Section 2170 (1997)).
"FINAL AUDIT REPORT" shall have the meaning set out in Section 2.5(i).
"FINANCIAL STATEMENTS" means, with respect to the Business, the
unaudited balance sheets of each of NBUS, NBFR, the Swedish Unit and ABB
Reaktor GmbH as of December 31, 1997 and 1998 and as of June 30, 1999,
respectively, and the related
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income statements and statements of cash flow for the periods then ended,
copies of which are attached as SCHEDULE 1.1(7) hereto.
"FOREIGN EMPLOYEE BENEFIT PLANS" means each Employee Benefit Plan
which would qualify for an exemption from ERISA under Section 4(b)(4)
thereof.
"FORMER BUSINESS EMPLOYEE" means each individual who (i) is not a
Closing Business Employee, (ii) is not currently employed by ABB or its
Affiliates, and (iii) performed services as an employee of the Business
when last employed by ABB or its Affiliates.
"GERMAN UNITS" means, collectively, ABB Reaktor GmbH, a company
organized under the laws of Germany; Hartmann & Braun GmbH & Co KG, a
company organized under the laws of Germany; and ABB Utilities Automation
GmbH, a company organized under the laws of Germany.
"GOVERNMENTAL AUTHORITY" means any agency, board, body, bureau, court,
commission, department, instrumentality, entity established or controlled
by, or administration of any foreign government, the United States
government, any state government or any local or other governmental body in
a state, territory or possession of any country, or any political
subdivision of any of the foregoing, including any legislative, judicial or
administrative body.
"GUARANTEED EQUITY" means Seventy-Six Million United States Dollars
(US$76,000,000).
"GUARANTEED WORKING CAPITAL" means Eighty-Nine Million Five Hundred
Thousand United States Dollars (US$89,500,000).
"HAZARDOUS SUBSTANCE" means (i) any petroleum or petroleum products
(to the extent regulated under Environmental Law), flammable, explosive or
radioactive material, asbestos or polychlorinated biphenyls (PCBs); and
(ii) any substance, material or waste, the manufacture, use or disposal of
which is regulated under any Environmental Law and is defined as, or
included in the definition of, or deemed by any Environmental Law or
Governmental Authority to be "hazardous," "toxic," a "contaminant,"
"waste," "pollutant," "hazardous substance," "hazardous waste," "restricted
hazardous waste," "hazardous material," "extremely hazardous waste," "toxic
substance," "toxic pollutant" or words with similar meaning.
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"HEMATITE LEGACY LIABILITIES" means all Environmental Liabilities to
the extent arising from or related to any condition which exists at the
Hematite Site on the Closing Date that is not directly related to the
Hematite Site's current nuclear fuel fabrication business, including,
without limitation, all such Environmental Liabilities arising from or
relating to (i) areas at the Hematite Site used for the disposal of
materials or waste, some or all of which are referred to as the "burial
pits"; (ii) groundwater contamination caused by the release of any
Hazardous Substance prior to the Closing Date; (iii) areas at the Hematite
Site previously used as "evaporation ponds"; (iv) all limestone and soil
piles at the Hematite Site; and (v) the release, removal, transportation or
disposition of Hazardous Substances prior to the Closing Date that
originated, were used, generated or at any time were stored or otherwise
held at the Hematite Site.
"HEMATITE SITE" means the property, in its entirety, known as the
ABB-Combustion Engineering Nuclear Power, Inc. Hematite facility, 3300
State Road P, Festus, Missouri.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IAS" means International Accounting Standards.
"INTELLECTUAL PROPERTY" means all domestic and foreign patents,
registered utility models, trademarks, trademark registrations, service
marks, service mark registrations, trade names, trade name registrations,
trade dress, trade dress registrations, domain name registrations, slogans,
registered copyrights and applications for registration of any of the
foregoing, owned by ABB and/or its Affiliates and used or held for use in
the Business, or which are licensed to ABB and/or its Affiliates for use in
the Business, but excluding Intellectual Property which is subject to the
Supply and Licensing Agreement, and the trademarks "CE", "C-E" and
"Combustion Engineering", which are subject to Section 7.10(d).
"INVENTORY" means all raw materials, work-in-process, finished goods,
merchandise, office and other supplies, parts, packaging materials and
other accessories related thereto which are held at, or are in transit from
or to, any location at which the Business is conducted, or located at any
suppliers' premises, in each case, which are used or held for use by ABB
and/or its Affiliates in the conduct of the Business, including any of the
foregoing which are purchased subject to any conditional sales or title
retention agreement in favor of any other Person, together with all rights
of ABB and/or its
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Affiliates against any supplier of such inventories, all as determined in
accordance with ABB Accounting Principles.
"LIABILITIES" means, as to any Person, all debts, adverse claims,
fines, liabilities and obligations of any kind, direct or indirect,
absolute or contingent, known or unknown, of such Person, whether accrued,
vested or otherwise, whether in contract, tort, strict liability or
otherwise and whether or not actually reflected, or required by IAS to be
reflected, in such Person's financial statements (including the notes
thereto) or other books and records.
"LOANS" means all loans extended by any member of the ABB Group to any
member of the NB Group in accordance with Section 3.3.
"LOCAL AGREEMENTS" means, collectively, each of the asset purchase
agreements, each substantially in the form of ANNEX 3 hereto, pursuant to
which Purchaser and/or its Affiliates shall acquire the Additional Business
Assets from certain Affiliates of ABB and assume the Additional Business
Liabilities from such Affiliates.
"LOSSES" means any and all assessments, losses, damages, liabilities,
obligations (including those arising out of any action, such as any
settlement or compromise thereof or judgment or award therein) and any
reasonable costs and expenses, including attorney's and other advisors'
fees and disbursements.
"MATERIAL ADVERSE EFFECT" means, in relation to any Person (or the
Business, where applicable), any condition, change or effect that is
materially adverse to the results of operations or financial condition of
such Person and its Subsidiaries (or the Business where applicable) taken
as a whole, but excluding conditions, changes or effects resulting from (i)
changes in general economic conditions or, in the case of the NB Group, in
conditions affecting the nuclear power industry generally; (ii) the
announcement of this Agreement and the Transaction and compliance with the
covenants set forth herein (including without limitation Section 7.4(d));
and (iii) with respect to the NB Group, Purchaser's consent or refusal to
consent to the taking of actions set forth in Section 7.1.
"NB GROUP" means NBUS, NBSE, NBDE, NBFR and, where applicable, each
newly formed company referred to in Section 3.1(a)(ii), and their
respective Subsidiaries. Each company in the NB Group shall be deemed an
Affiliate of Purchaser after the Closing.
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"NBDE" means a company organized under the laws of Germany to which
all activities within the scope of the Business conducted by the German
Units have been or will be transferred prior to the Closing in accordance
with this Agreement.
"NBFR" means ABB Barras Provence SA, a company organized under the
laws of France.
"NBSE" means ABB Cynthere 62 AB, a company organized under the laws of
Sweden.
"NBUS" means ABB C-E Nuclear Power Inc., a corporation organized under
the laws of the State of Delaware, U.S.A.
"NON-ABB EMPLOYEE BENEFIT PLANS" means each Employee Benefit Plan
which is not sponsored by ABB or its Affiliates.
"NON-BUSINESS LIABILITIES" means any (i) Liabilities which were
transferred to NBDE or any of its Subsidiaries pursuant to the Pre-Closing
Reorganization which do not primarily relate to or primarily arise out of
the conduct of the Business; (ii) Liabilities which were transferred to the
NB Group pursuant to the Local Agreements which do not primarily relate to
or primarily arise out of the conduct of the Business; (iii) Liabilities
which were transferred to NBUS or any of its Subsidiaries pursuant to the
Pre-Closing Reorganization or pursuant to any other corporate
reorganization consummated after December 31, 1998, in each case which do
not primarily relate to or primarily arise out of the conduct of the
Business; (iv) Liabilities which were transferred to any newly formed
company referred to in Section 3.1(a)(ii) pursuant to the Pre-Closing
Reorganization which do not primarily relate to or primarily arise out of
the conduct of the Business; and (v) Liabilities referred to in clause (i)
of SCHEDULE 3.1(b)(ii).
"NON-COMPETITION AGREEMENT" means the Non-Competition Agreement
between ABB Ltd and Purchaser substantially in the form of ANNEX 4 hereto.
"NRC" means the United States Nuclear Regulatory Commission or any
successor agency or other Governmental Authority to whom jurisdiction over
radiological materials has been transferred or delegated and, for purposes
of this Agreement, shall include any Agreement State.
"NUCLEAR REGULATOR" means the NRC or any successor agency or other
U.S. or foreign Governmental Authority to whom jurisdiction over
radiological materials has
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been transferred or delegated and, for purposes of this Agreement, shall
include any Agreement State.
"OKG CONTRACT" means the project contract dated April 17, 1997,
between OKG Aktiebolag and ABB Atom AB, as amended by agreement between
them on November 29 and 30, 1999, together with any other amendment
thereto.
"PARENT GUARANTEE" means the guarantee of ABB Ltd., to be given in
favor of Purchaser in accordance with this Agreement and substantially in
the form of ANNEX 5 hereto.
"PERMITS" means all permits, licenses, registrations, filings,
variances, certificates, exemptions, franchises and authorizations by or of
any Governmental Authority, or other indicia of authority necessary for the
conduct of the Business that are owned or held by or otherwise have been
granted to or for the benefit of any Business Unit or the Additional
Business Assets.
"PERMITTED ENCUMBRANCES" means (i) Encumbrances disclosed in any
Schedule to this Agreement; (ii) Encumbrances specifically described in the
Financial Statements or that secure indebtedness of any entity in the NB
Group; (iii) mechanics', carriers', workmen's, repairmen's and other like
Encumbrances arising or incurred in the ordinary course of business that
are not yet due and payable or that may thereafter be paid without penalty
or that are being contested in good faith by appropriate proceedings; (iv)
Encumbrances for Taxes, assessments and other governmental charges not yet
due and payable or that may thereafter be paid without penalty or that are
being contested in good faith by appropriate proceedings; and (v)
imperfections of title and other Encumbrances that do not materially affect
the value of the encumbered asset or the continued use and operation of the
encumbered asset in the Business for its intended purpose.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other
form of business or other entity of any kind (whether having separate legal
personality) or Governmental Authority.
"PRE-CLOSING REORGANIZATION" means any and all transactions to be
carried out pursuant to Section 3.1.
"PRELIMINARY REVIEW REPORT" means a report of the Business Auditors,
in which the Business Auditors review the Equity and Working Capital as of
the date of the balance sheets covered by such report in accordance with
this Agreement, which
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certificate shall (i) be substantially in the form of SCHEDULE 1.1(4)(a)
hereto; (ii) be based on the Business Auditors' review of the combined
balance sheet of the Business (including related footnotes and disclosures)
as of the end of a calendar month no earlier than ninety (90) days before
the Closing Date; and (iii) include as an attachment such combined balance
sheet.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
"PURCHASER SAVINGS PLANS" shall have the meaning set out in Section
7.6(m)
"RELEASE" means any releasing, spilling, leaking, discharging,
disposing of, pumping, pouring, emitting, emptying, injecting, leaching,
dumping or allowing to escape into the environment (air, surface water,
groundwater, land surface, soil, substrata, sediment or rock) and includes
any "release" as defined pursuant to the provisions of CERCLA.
"REMEDIAL ACTION" means any action to investigate, clean up, monitor,
abate, transport, remove, treat or in any way address any Hazardous
Substance that is required by any Environmental Law, whether or not such
action is taken pursuant or in response to any Agency Action or third party
claim.
"REPRESENTED ABB RETIREMENT PLANS" shall have the meaning set out in
Section 7.6(n).
"RESTORATION PLAN" shall have the meaning set out in Section 7.6(d).
"RESTRUCTURING PLANS" means ABB's restructuring plans described in
SCHEDULE 1.1(8) hereto.
"SELLER" means each Affiliate of ABB which will convey any Shares,
Loans or other assets to Purchaser or any member of the NB Group pursuant
to this Agreement.
"SHARES" means, collectively, all issued and outstanding shares of
common stock of each of NBUS, NBSE, NBDE, NBFR and, where applicable, all
issued and outstanding shares of each newly formed company referred to in
Section 3.1(a)(ii) which are not owned by NBUS, NBSE, NBDE or NBFR or any
of their respective Subsidiaries.
"SUBSIDIARY" means, as to any Person, any other Person, directly or
indirectly, through one or more intermediaries, controlled by such first
Person (where "controlled by" means, as used with respect to any Person,
the ownership of more than fifty percent (50%) of the voting rights
attaching to shares or other equity interests issued by such Person, the
power to appoint a majority of the members of such Person's management
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board or similar body, or the possession, directly or indirectly, by
contract or otherwise, of the power to direct or cause the direction of the
management and policies of such Person).
"SUPPLY AND LICENSING AGREEMENT" means the agreement substantially in
the form of ANNEX 2 hereto.
"SURPLUS ENTITLEMENT" shall have the meaning set out in Section
7.6(q).
"SWEDISH UNIT" means ABB Atom AB, a company organized under the laws
of Sweden.
"TAX RETURN" means any return, report, form, declaration, claim for
refund, information report or return, statement, supplementary or
supporting schedules or other information filed with any taxing authority
with respect to Taxes.
"TAXES" means any and all United States federal, state, provincial,
local, foreign and other taxes, levies, fees, import duties and similar
government charges (including any interest, fines, assessments, penalties
or additions to tax imposed in connection therewith or with respect
thereto) of any taxing authority, including, without limitation, taxes
imposed on, or measured by, income, franchise, profits or gross receipts,
AD VALOREM, value added, capital gains, sales, goods and services, use,
real or personal property, capital stock, license, branch, payroll,
estimated withholding, employment, social security (or similar),
unemployment, compensation, utility, severance, production, excise, stamp,
occupation, premium, windfall profits, transfer and gains taxes, and
customs duties.
"TECHNOLOGY" means all trade secrets, inventions, invention
disclosures under evaluation, know-how, show-how, know-why, formulae,
processes, procedures, research records, records of inventions, test
information, market surveys and marketing know-how, unregistered copyrights
and software, including source and object code, and related documentation,
supporting database information and modifications and enhancements thereof,
owned by ABB and/or its Affiliates and used or held for use in the
Business, or which are licensed to ABB and/or its Affiliates for use in the
Business, but excluding Technology which is subject to the Supply and
Licensing Agreement.
"TRANSACTION" means the Pre-Closing Reorganization, the sale and
purchase of the Shares and the Loans, and the sale and purchase of the
Additional Business Assets and the assumption of the Additional Business
Liabilities, in each case in accordance with
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this Agreement and the Local Agreements, and all other transactions
contemplated hereby.
"TRANSITIONAL SERVICES AGREEMENT" shall mean an agreement between ABB
or its Affiliate and Purchaser, substantially in the form of ANNEX 6
hereto.
"TREASURY REGULATIONS" means temporary or final regulations
promulgated under the Code.
"U.S. EMPLOYEE BENEFIT PLANS" means each Employee Benefit Plan other
than a Foreign Employee Benefit Plan.
"US I&C NEWCO" means any newly formed Subsidiary of ABB or any of its
Affiliates into which certain assets of the US I&C Unit are transferred
pursuant to Section 3.1(a).
"US I&C UNIT" means ABB Automation Inc., a company organized under the
laws of the State of Ohio, U.S.A.
"WINDSOR SITE" means the property, in its entirety, known as the
ABB-Combustion Engineering Windsor Site, 2000 Day Hill Road, Windsor,
Connecticut.
"WINDSOR SITE ENVIRONMENTAL LIABILITIES" means (i) all Environmental
Liabilities, including but not limited to Business-Related Environmental
Liabilities and any Liability under any Permit issued pursuant to any
Environmental Law, to the extent arising from or related to any condition
which exists at the Windsor Site; (ii) all Environmental Liabilities
arising from or related to the Release, transportation or disposition, by
any Person of Hazardous Substances that were used, generated or stored or
otherwise held at the Windsor Site; and (iii) Decontamination and
Decommissioning Liabilities related to the Windsor Site.
"WORKING CAPITAL" means, at any time, the EXCESS of (i) the sum of (A)
cash, (B) cash equivalents, (C) trade receivables (net of provisions for
doubtful accounts) and financing receivables, and (D) Inventory OVER (ii)
the sum of (A) trade payables and (B) customer advances, on a combined
basis for the Business, all calculated in accordance with the ABB
Accounting Principles and IAS applied on a basis consistent with that
utilized in the preparation of the financial statements of the Business as
of, and for the period ended on, December 31, 1998 (except for the effect
of the adoption of IAS 19), forming part of the Financial Statements,
except that the principles set forth on SCHEDULE 1.1(6) shall be applied
when calculating Working Capital.
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1.2. OTHER TERMS
Other terms may be defined elsewhere in this Agreement (including in
any Annex or Schedule hereto) and, unless otherwise indicated, shall have the
respective meanings there ascribed to such terms.
1.3. INTERPRETATION
The following provisions shall apply in connection with the
interpretation of this Agreement:
(a) Any reference to the singular includes the plural and vice versa,
any reference to natural persons includes legal persons and vice versa, and
any reference to a gender includes the other genders.
(b) Any reference to Articles, Sections, Paragraphs, Clauses, Annexes
and Schedules are, unless otherwise stated, references to Articles,
Sections, Paragraphs, Clauses, Annexes and Schedules of or to this
Agreement. The headings in this Agreement have been inserted for
convenience only and shall not be taken into account in its interpretation.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(d) All Annexes and Schedules form an integral part of this Agreement
and are equally binding therewith. Any reference to "this Agreement" shall
include such Annexes and Schedules.
(e) A document in the "agreed terms" or in the "agreed form" is a
reference to a document in a form approved by or on behalf of each party
hereto, as amended by agreement in writing between the parties from time to
time.
(f) Any reference to a statutory provision shall include a reference
to the provision as modified or re-enacted, or both, from time to time and
any subordinate legislation made under such statutory provision.
(g) References to a party shall include any permitted assignee or
successor to such party in accordance with this Agreement.
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(h) If any period is referred to in this Agreement by way of reference
to a number of days, the days shall be reckoned exclusively of the first
and inclusively of the last day unless the last day falls on a Saturday,
Sunday or public holiday in the location of performance, in which case the
last day shall be the next succeeding day which is not a Saturday, Sunday
or public holiday in such location.
(i) The terms "dollars" or "$" shall mean United States dollars.
(j) Whenever any reference is made in this Agreement to ABB's
knowledge, information, belief or awareness, it shall be deemed to mean the
actual (and not constructive or imputed) knowledge, information, belief or
awareness of the individuals set out in Schedule 1.3(j) without being
required to undertake any investigation concerning any matter in question.
ARTICLE 2
ACQUISITION OF SHARES, LOANS, ADDITIONAL BUSINESS ASSETS
AND ADDITIONAL BUSINESS LIABILITIES
2.1. SALE AND PURCHASE
(a) Upon the terms and subject to the conditions contained herein, at
the Closing ABB shall sell, assign, transfer and deliver (or cause to be sold,
assigned, transferred and delivered) to Purchaser, and Purchaser agrees to
purchase from ABB and/or its Affiliates, the Shares and the Loans, free and
clear of all Encumbrances.
(b) Upon the terms and subject to the conditions contained herein and
the Local Agreements, at the Closing or as soon as reasonably practicable
thereafter, ABB shall cause its relevant Affiliates to sell, transfer, convey,
assign and deliver to Purchaser (or its designated Affiliates, such Affiliates
to be reasonably satisfactory to ABB) good title to the Additional Business
Assets free and clear of all Encumbrances other than Permitted Encumbrances
(and, in the case of real property, other Encumbrances referred to in Section
5.9(b)) and Purchaser (or such designated Affiliates of Purchaser) shall accept
the Additional Business Assets, assume, pay and thereafter duly perform and
discharge the Additional Liabilities and offer employment to each Additional
Business Employee on terms, including but not limited to position and level of
compensation, no less favorable to each such Additional Business Employee than
those applicable immediately prior to the Closing, all pursuant to the relevant
Local Agreement.
2.2. PURCHASE PRICE; PRELIMINARY REVIEW REPORT
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(a) The purchase price for the Shares, the Loans and the Additional
Business Assets (the "PURCHASE PRICE") shall equal Four Hundred Eighty Five
Million United States dollars (US$ 485,000,000). Subject to the terms and
conditions of Sections 2.5 and 2.6, the Purchase Price shall be adjusted as
provided therein.
(b) ABB shall deliver the Preliminary Review Report to Purchaser no
later than five (5) days prior to the Closing
2.3. ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated firstly to payment for the Loans
at their face value and the balance of the Purchase Price shall be allocated to
payment for the Shares and the Additional Business Assets in accordance with
SCHEDULE 2.3, which allocation shall be appropriately restated to account for
any adjustment pursuant to Sections 2.5 and 2.6. The parties will, and will make
all reasonable efforts to ensure that their respective Affiliates will, adopt
and utilize the agreed allocation for all purposes (including for Tax purposes).
Neither ABB nor Purchaser, nor any of their respective Affiliates, shall file
any Tax Return or other document or otherwise take any position which is
inconsistent with the allocation determined pursuant to this Section 2.3.
2.4. PAYMENT
Purchaser shall, or shall cause, the Purchase Price to be paid in full
at the Closing, by wire transfer in immediately available funds, without set-off
or counterclaim and to the account or accounts designated by ABB.
2.5. CLOSING AUDIT REPORT; DISPUTES
(a) As soon as reasonably practicable after the Closing, ABB shall
cause the Business Auditors to prepare the combined balance sheet of the
Business as of the Closing Date, together with the audit reports of the Business
Auditors to the effect that such balance sheet has been prepared and audited in
accordance with the requirements of this Section 2.5 and the definition of
Closing Audit Report and setting forth the calculations of Actual Equity and
Actual Working Capital in accordance with the terms of this Agreement. Such
balance sheet shall be prepared in accordance with the ABB Accounting Principles
applied on a basis consistent with that utilized in the preparation of the
financial statements of the Business as of, and for the period ended on,
December 31, 1998 (except for the effect of the adoption of IAS 19) forming a
part of the Financial Statements, and in accordance with the principles set
forth on SCHEDULE 1.1(6). Purchaser shall, and shall cause its Affiliates to,
provide full access to the Business Auditors to the premises, properties, books,
accounting records and other documents (including supporting
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contractual documentation) and personnel of the Business reasonably requested by
the Business Auditors. The Business Auditors shall deliver the Closing Audit
Report to each of ABB and Purchaser no later than ninety (90) days after the
Closing.
(b) The Closing Audit Report shall be binding and conclusive upon
Purchaser and ABB unless Purchaser or ABB shall have notified the other party in
writing within sixty (60) days after the date of the Closing Audit Report (which
Closing Audit Report shall be dated no earlier than five (5) days before it is
dispatched) of any objections thereto (an "OBJECTION NOTICE"). A notice under
this Section 2.5(b) shall specify in reasonable detail the items in the Closing
Audit Report which are being disputed and a description in reasonable detail of
the reasons for such dispute.
(c) During the entire 60-day period following Purchaser's receipt of
the Closing Audit Report, Purchaser and its independent auditors shall be
permitted to review and make copies of the working papers of the Business and
the Business Auditors relating to the Closing Audit Report (subject to such
reasonable indemnities and other protection as may be required by the Business
Auditors) and shall have reasonable access to representatives of the Business
and to the Business Auditors.
(d) At the request of either party, any dispute between the parties
relating to objections made to the Closing Audit Report which cannot be resolved
by them within sixty (60) days after the other party's receipt of an Objection
Notice shall be referred to such international accounting firm agreed between
the parties or, failing such agreement within seven (7) days of written notice
by either party hereto to the other party requiring such agreement, nominated by
the Chairman of the Board of the International Accounting Standards Committee
(or his designee) on the application of either party (the "DISPUTES AUDITORS")
for decision in accordance with this Section 2.5.
(e) Before referring a matter to the Disputes Auditors, the parties
shall agree on procedures to be followed by the Disputes Auditors (including
procedures for presentation of evidence). If the parties are unable to agree
upon procedures before the end of sixty (60) days after receipt of an Objection
Notice, the Disputes Auditors shall establish the procedures giving due regard
to the provisions of this Agreement and the intention of the parties to resolve
disputes as quickly, efficiently and inexpensively as reasonably possible;
PROVIDED that such procedures shall (i) give the parties a reasonable
opportunity to submit written representations and make oral submissions; (ii)
require that copies of all written submissions by either party are supplied to
the other party; and (iii) permit each party to be present while any oral
submissions are made by the other party.
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(f) The parties shall, as promptly as practicable, submit evidence in
accordance with the procedures agreed upon or established by the Disputes
Auditors, and the Disputes Auditors shall decide the dispute in accordance
therewith as promptly as practicable. At all times pending resolution of any
matter submitted to the Disputes Auditors pursuant to this Section 2.5,
Purchaser shall cause the employees of the Business to afford to ABB and its
accountants, counsel, financial advisers and other representatives on-site
access reasonably required at all reasonable times to all personnel, properties,
books, contracts, records, schedules, analyses and working papers of the
Business.
(g) The Disputes Auditors shall review only the specific objections to
the Closing Audit Report as to which the parties are in dispute and shall make
its determination based upon the terms, conditions and principles set forth in
this Agreement and within the range of outcomes proposed by the parties. The
parties agree that they will require the Disputes Auditors to render its
decision within thirty (30) days after referral of the dispute to the Disputes
Auditors for decision pursuant hereto. In the absence of calculation and other
similar manifest errors, the decision of the Disputes Auditors shall be final
and binding on both parties. Judgment may be entered upon the determination of
the Disputes Auditors in any court having jurisdiction over the party against
which such determination is to be enforced.
(h) All fees and expenses of the Disputes Auditors shall be borne by
the parties equally, unless the dispute is expressly resolved by the Disputes
Auditors in favor of one party exclusively (in which event such fees and
expenses shall be borne entirely by the other party).
(i) The Closing Audit Report shall become final and binding on both
parties upon the earliest to occur of (i) if no Objection Notice has been given,
the expiration of the period within which either party may notify the other
party of any objections thereto pursuant to Section 2.5(b); (ii) the agreement
by ABB and Purchaser that such Closing Audit Report, together with any
modifications thereto agreed by them, shall be final and binding; and (iii) if a
matter has been submitted to the Disputes Auditors in accordance with this
Section 2.5, the date on which the Disputes Auditors shall issue its decision
with respect thereto. The Closing Audit Report, as adjusted, where applicable,
pursuant to any agreement between the parties or pursuant to the decision of the
Disputes Auditors, when final and binding on both parties in accordance with the
immediately preceding sentence, is herein referred to as the "FINAL AUDIT
REPORT".
2.6. ADJUSTMENT
(a) Within ten (10) business days after the Closing Audit Report has
become final and binding on ABB and Purchaser pursuant to Section 2.5:
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(i) If there is an Actual Excess Amount, Purchaser shall pay to ABB,
by wire transfer in immediately available funds, without set-off or
counterclaim and to the account designated by ABB in writing, an amount
equal to the Actual Excess Amount; or
(ii) If there is an Actual Deficiency Amount, ABB shall pay to
Purchaser, by wire transfer in immediately available funds, without set-off
or counterclaim and to the account designated by Purchaser in writing, an
amount equal to the Actual Deficiency Amount.
(b) Any amount payable by either party pursuant to Section 2.6(a)
shall be paid with interest thereon at the three-month treasury bill rate (as
reported by THE WALL STREET JOURNAL or, if not reported thereby, by another
authoritative source) in effect on the Closing Date plus 1.0%, calculated on the
basis of the actual number of days elapsed over 365, from the Closing Date to
the date of actual payment, compounded annually.
(c) Notwithstanding the foregoing provisions of this Section 2.6, if
the Closing Audit Report delivered by the Business Auditors pursuant to Section
2.5(a) and any Objection Notice delivered by either Purchaser or ABB or both
pursuant to Section 2.5(b) all reflect a calculation of Actual Equity and Actual
Working Capital that, if correct, would require a payment by the same party,
then within 10 days after delivery of the later of the two Objection Notices (or
if only one Objection Notice is delivered, within 10 days after the expiration
of the period within which the parties may deliver Objection Notices pursuant to
Section 2.5(b)), that party shall make a payment to the other, in the manner and
with interest as provided elsewhere in this Section 2.6, in an amount equal to
the lesser of (i) the amount payable by that party pursuant to the calculation
reflected in the Closing Audit Report, and (ii) the amount payable by that party
pursuant to the calculation reflected in such party's Objection Notice (if any).
Any amount paid pursuant to the preceding sentence shall be applied against, and
correspondingly reduce, the amount otherwise payable under this Section 2.6.
ARTICLE 3
CERTAIN PRE-CLOSING REORGANIZATION
3.1. CERTAIN TRANSFERS
(a) ABB will take, or cause to be taken, such actions as may be
necessary or appropriate to ensure that, subject to Section 4.4, at the Closing
(i) all activities within the scope of Business conducted by the German Units
have been transferred to NBDE; and (ii) all activities within the scope of
Business conducted by the US I&C Unit have been transferred to one or more newly
formed companies wholly-owned by ABB and/or its Affiliates or to other companies
in the NB Group.
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(b) For purposes of this Agreement, activities within the scope of
the Business to be transferred pursuant to Paragraph (a) above shall be deemed
to have been so transferred when (i) subject to Section 4.4, all properties,
assets, goodwill and rights of whatever kind or nature (including but not
limited to rights under Contracts and rights in respect of Intellectual Property
and Technology), other than properties, assets, goodwill and rights described in
SCHEDULE 3.1(b)(i) hereto, owned by any transferor set out in such Paragraph (a)
and primarily used or held for use in, or primarily relating to or arising out
of the conduct of, the Business shall have been sold, assigned, transferred and
delivered to, and purchased by, the transferees set out in such Paragraph (a);
(ii) all Liabilities, other than Liabilities described in SCHEDULE 3.1(b)(ii)
hereto, owing by any transferor set out in such Paragraph (a) and primarily
relating to or arising out of the conduct of the Business shall have been
assumed by the transferees set out in such Paragraph (a); and (iii) each
individual who, on the date on which the activities referred to in Paragraph (a)
above are transferred, performs services primarily as an employee for such
activities (including such persons who are on an approved leave of absence,
vacation, salary continuation, short-term disability, long-term disability,
workers' compensation-related disability or otherwise treated as an active
employee of such activities) shall have been offered employment with the
transferees on terms, including but not limited to position and level of
compensation, no less favorable to such individual than those applicable
immediately prior to such date, or otherwise shall have been transferred to the
transferees in accordance with Applicable Law.
(c) The sale and purchase of properties, assets, goodwill and
rights, and the assumption of Liabilities, in each case pursuant to Paragraph
(b) above, shall be effected pursuant to a purchase agreement between the
relevant transferor and transferee, which agreement shall include a warranty by
the transferor to the transferee that it has taken all corporate action required
to authorize the transaction and that it is the owner of the properties, assets,
goodwill and rights subject to such agreement, in each case free and clear of
all Encumbrances other than Permitted Encumbrances (and, in the case of real
property, other Encumbrances referred to in Section 5.9(b)). No other warranties
shall be given by the transferor and it shall not, once the relevant properties,
assets, goodwill and rights have been duly transferred as per the terms of such
purchase agreement, create any obligation to indemnify the transferee or any
other Person. Nothing in this Paragraph (c) shall operate to limit any liability
that ABB may have in relation to the Business by virtue of any representation or
warranty made by it in Article 5.
(d) ABB will take, or cause to be taken, such actions as may be
necessary or appropriate to ensure that, at the Closing, all outstanding shares
of the Swedish Unit are owned of record and beneficially by NBSE.
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3.2. ABB TRADEMARKS AND TRADE NAMES
It is understood and agreed that, except to the extent provided in
Section 7.10, no rights to the trademarks, servicemarks, trade names or
corporate or business names or other indicia of origin including the initialisms
or words "ABB", "BBC", "Asea", "Brown", or "Boveri" in whole or in part shall be
acquired by Purchaser or the NB Group under this Agreement.
3.3. THE LOANS
ABB and/or other companies in the ABB Group may extend loans to
companies in the NB Group to help them finance with debt any or all of the
transactions contemplated by Section 3.1. Prior to making any final decision on
the capitalization of NBDE, NBSE and, where applicable, US I&C Newco, ABB will
provide Purchaser with a reasonable opportunity to submit a proposal in this
regard and, if so submitted, will consider such proposal in good faith.
ARTICLE 4
THE CLOSING
4.1. CLOSING DATE
The Closing shall take place at the offices of White & Case LLP, 1155
Avenue of the Americas, New York, New York 10036, U.S.A., at 10:00 a.m. on a
date specified by ABB that is not earlier than two (2) days and not later than
ten (10) days following the satisfaction or waiver of the conditions to the
Closing set forth in Section 8.1(b), or, if the other conditions to the Closing
set forth in Article 8 have not been satisfied or waived by such date, as soon
as practicable after such conditions have been satisfied or waived, and the
Closing shall be deemed to take place at 10:00 a.m. on such date.
4.2. DELIVERIES BY ABB
ABB shall deliver (or shall cause its Affiliates to deliver) to
Purchaser at the Closing: (i) all certificates or other instruments representing
the Shares and the Loans, in each case duly endorsed and/or accompanied by other
documents required under Applicable Law in order to transfer title to the Shares
and the Loans; (ii) if executed on the Closing Date, duly executed counterparts
of the applicable Local Agreements in respect of the Additional Business Assets
and Additional Business Liabilities; and (iii) unless otherwise requested by
Purchaser at least ten (10) days prior to the Closing, resignations as director,
effective as of the Closing, of each member of the board of directors of each
company in the NB Group.
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4.3. DELIVERIES BY PURCHASER
Purchaser shall deliver to ABB (or, at ABB's direction, one or more of
its Affiliates) at the Closing (i) the Purchase Price; and (ii) all other
amounts, if any, required to be paid by Purchaser to ABB prior to or at the
Closing pursuant to this Agreement, in each case by wire transfer in immediately
available funds, without set-off or counterclaim and to the account or accounts
designated by ABB.
4.4. LIMITATION ON ASSIGNMENTS
To the extent that the Transaction would constitute the assignment of
any Contract of ABB or any of its Affiliates requiring the consent of another
party thereto, this Agreement and, to the extent applicable, the relevant Local
Agreement, shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof. It is understood and agreed that
the failure to obtain such consents shall not reduce the Purchase Price or
relieve either party from its obligation to consummate the Transaction at the
Closing, but shall be subject to the rights and obligations of the parties under
Section 7.5.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ABB
ABB represents and warrants to Purchaser that the following statements
are true and correct:
5.1. ORGANIZATION
(a) ABB is a company duly organized and validly existing under the
laws of Switzerland and has the requisite corporate power and authority to own
its properties and to carry on its business as presently being conducted.
(b) Each of NBUS, NBFR and NBSE and their respective Subsidiaries, and
each Seller, is a corporation or company duly organized, validly existing and,
where applicable, in good standing under the laws of its jurisdiction of
incorporation or organization and each of them has the requisite corporate power
and authority to own its assets and to conduct its business as presently being
conducted.
(c) At the Closing, NBDE and, where applicable, each newly formed
company referred to in Section 3.1(a)(ii) will be a company duly organized,
validly existing and, where applicable, in good standing under the laws of its
jurisdiction of incorporation or organization and will have the requisite
corporate power and authority to own their respective properties and
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to conduct the respective businesses transferred to them in accordance with this
Agreement. Except as set forth on SCHEDULE 5.1(c), at the Closing, neither NBDE
nor any newly-formed company referred to in Section 3.1(a)(ii) will have any
Subsidiaries.
5.2. AUTHORITY
(a) ABB has the requisite corporate power and authority to execute,
deliver and perform this Agreement. The execution and delivery of this Agreement
by ABB and the consummation of the Transaction have been duly authorized by all
necessary corporate action on the part of ABB and do not require the approval of
the stockholders of ABB or of any Affiliate of ABB other than approvals already
obtained. Each Seller has the requisite corporate power and authority to
consummate the Transaction to the extent it is applicable to such Seller. At the
time of Closing, the consummation of the Transaction shall have been duly
authorized by all necessary corporate action on the part of each Seller to the
extent it is applicable to such Seller. This Agreement has been duly executed
and delivered by ABB and, assuming the due authorization, execution and delivery
of this Agreement by Purchaser, this Agreement constitutes a legal, valid and
binding obligation of ABB enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors' rights generally from time to time in effect and
to general principles of equity.
(b) No consent, approval, license, permit, order or authorization of,
or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to ABB or any of its
Affiliates in connection with the execution and delivery of this Agreement or
the consummation of the Transaction, except for (i) compliance with and filings
under the HSR Act and under applicable competition laws and regulations in
Sweden, Germany and Spain; (ii) voluntary notification under the Exon-Florio
Amendment; (iii) consents or novations which may be required for the assignment
of any Contract or Intellectual Property; (iv) compliance with, and notices and
filings under, Environmental Law or under Permits issued pursuant to
Environmental Law; (v) compliance with, and notices, filings and approvals
under, the regulations of the NRC or any Agreement State, or of any other
Nuclear Regulator, including any applications for licenses or license transfers;
(vi) approval of the Ministry of Finance and Economy in France and the filing
with the Nuclear Power Inspectorate in Sweden and (vii) those the failure of
which to obtain or make, individually or in the aggregate, would not materially
impair the ability of ABB or any of its Affiliates to perform its obligations
under this Agreement or the Ancillary Agreements to which it is a party.
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5.3. NO CONFLICTS
Neither the execution and delivery of this Agreement by ABB, nor the
consummation of the Transaction, nor compliance by ABB with any of the
provisions hereof applicable to it, will (i) violate, conflict with or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under (A) the
memorandum, articles of association or other organizational documents of ABB or
any Seller; or (B) any material agreement to which ABB or any Seller is a party
or by which any such Person or any of its material assets may be bound; or (ii)
violate any Applicable Law or any order, judgment or decree of any court or
other Governmental Authority applicable to ABB or any Seller.
5.4. SHARES AND LOANS
At the Closing: (i) the authorized and outstanding capital stock of
NBUS, NBSE, NBFR and NBDE, and, where applicable, each newly formed company
referred to in Section 3.1(a)(ii) will be as set forth on Schedule 5.4 hereto;
(ii) the Shares will have been duly authorized, validly issued, will be fully
paid up and non-assessable, and will be owned of record and beneficially by ABB
and/or its Affiliates as set forth on Schedule 5.4, in each case free and clear
of any and all Encumbrances; (iii) there will be no outstanding options,
warrants or other rights of any kind entitling any Person to acquire any
additional shares of capital stock of NBUS, NBSE, NBFR, NBDE or, where
applicable, any newly formed company referred to in Section 3.1(a)(ii) which is
not owned by NBUS, NBSE, NBDE, or NBFR or any of their respective Subsidiaries,
or securities convertible into or exchangeable for any such additional shares
and none of NBUS, NBSE, NBFR, NBDE or, where applicable, any such newly-formed
company will have committed to issue any such option, warrant, right or
security; and (iv) all Loans will be owned of record and beneficially by a
company in the ABB Group, free and clear of any and all Encumbrances.
5.5. SUBSIDIARIES
At the Closing, the authorized and outstanding capital stock of each
direct and indirect Subsidiary of NBUS, NBSE, NBFR and NBDE, and, where
applicable, each newly formed company referred to in Section 3.1(a)(ii), as
applicable, will be as set forth on SCHEDULE 5.5, and except as set forth on
SCHEDULE 5.5, all of such issued and outstanding shares of capital stock will be
(i) owned, directly or indirectly, beneficially and of record by NBUS, NBSE,
NBFR and NBDE, and, where applicable, each newly formed company referred to in
Section 3.1(a)(ii), as applicable, as set forth on SCHEDULE 5.5, free and clear
of any and all Encumbrances; and (ii) duly authorized, validly issued, fully
paid up and non-assessable. Except as set forth on
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SCHEDULE 5.5, there will not, at the Closing, be any outstanding options,
warrants or other rights of any kind entitling any Person to acquire any
additional shares of capital stock of any such Subsidiary or securities
convertible into or exchangeable for any such additional shares and none of such
Subsidiaries have committed to issue any such option, warrant, right or
security.
5.6. FINANCIAL INFORMATION
(a) ABB has previously delivered the Financial Statements and the
Combined Financial Data to Purchaser. The Financial Statements have been
prepared from the books and records of ABB and/or its Affiliates relating to the
Business and have been prepared in accordance with the ABB Accounting Principles
applied on a basis consistent with that of the unaudited financial statements of
the Business for the immediately preceding fiscal year of the ABB Group, except
for changes in IAS or as otherwise provided in SCHEDULE 5.6(a). The ABB
Accounting Principles comply in all respects with IAS.
(b) The order backlog information set forth in SCHEDULE 5.6(b) was
true and correct in all material respects as of September 30, 1999.
(c) With respect to the information in relation to the Business set
out in SCHEDULE 5.6(c), the information for fiscal year 2000 is based on the
budget for such year, and the information for fiscal years 2001 and 2002 is
based on the strategic plan for such years, which budget and strategic plan were
prepared by ABB and/or its Affiliates in the ordinary course of planning for the
future conduct of the Business, and not for purposes of the Transaction, and
were reviewed and approved in the normal budget and strategic planning processes
applicable within the ABB Group.
(d) The information on restructuring charges and on corporate charges
and allocations set out in SCHEDULE 5.6(d) is true and accurate in all material
respects.
5.7. COMPLIANCE WITH LAW
(a) The Business is being and, at all times since December 31, 1996,
has been conducted in compliance with Applicable Law, except for violations, if
any, which in the aggregate have not had, and would not reasonably be expected
to have, a Material Adverse Effect on the Business. All governmental approvals,
permits and licenses required in connection with the conduct of the Business
have been obtained and are in full force and effect and are being complied with
except for such approvals, permits and licenses, the failure of which to obtain
or the violation of which individually or in the aggregate have not had, and
would not reasonably be expected to have, a Material Adverse Effect on the
Business. None of the Business Units has at any time since December 31, 1996 (i)
made any illegal payments for political contributions or
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any bribes, illegal kickback payments or other illegal payments; or (ii) been
disqualified from bidding on any public or private contract or project as a
result of having violated Applicable Law. This Section 5.7 does not relate to
labor and employment matters (to which Section 5.12 is applicable), employee
benefits matters (to which Section 5.13 is applicable), Tax matters (to which
Section 5.14 is applicable), litigation matters (to which Section 5.15 is
applicable), or environmental matters (to which Section 5.16 is applicable).
(b) Each member of the NB Group has at least the minimum amount of
capital required by Applicable Law.
5.8. SUFFICIENCY OF ASSETS
(a) The Business Units have, and, subject to Section 4.4, at the
Closing the NB Group will have, good and valid title to, or subsisting leasehold
interests in, all material tangible personal property primarily used or held for
use in the Business, free and clear of any and all Encumbrances other than
Permitted Encumbrances.
(b) Without limiting Section 5.8(a), and except as set forth on
SCHEDULE 5.8(b), to ABB's knowledge, the Business Units have, and subject to
Section 4.4, at the Closing the NB Group will have, good and valid title to, or
subsisting leasehold interests in or licenses to, all material assets (including
without limitation Contracts and Intellectual Property) primarily used or held
for use in the Business, free and clear of any and all Encumbrances other than
Permitted Encumbrances (and, in the case of real property, other Encumbrances
referred to in Section 5.9(b)).
5.9. REAL PROPERTY
(a) SCHEDULE 5.9 is in all material respects an accurate and complete
list as of the date hereof of the street addresses of all real property owned or
leased by ABB and/or any of its Affiliates and primarily used or held for use in
the Business, and indicating whether such real property is owned or leased.
(b) The Business Units have, and at the Closing the NB Group will
have, fee title to all real property owned by ABB and/or its Affiliates and
primarily used or held for use in the Business ("OWNED REAL PROPERTY"), free and
clear of any and all Encumbrances other than (i) Permitted Encumbrances; (ii)
recorded or unrecorded easements, covenants, rights-of-way and similar
restrictions; and (iii) zoning, building and other similar restrictions; none of
which items set forth in clauses (ii) and (iii) above, individually or in the
aggregate, materially impairs the ability of any Business Unit, or will at the
Closing Date materially impair the ability of any member of the NB Group, to use
any Owned Real Property for the purposes for which it is
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currently being used or planned to be used in connection with the Business.
Except as set forth in SCHEDULE 5.9, no material portion of any Owned Real
Property is leased by ABB and/or its Affiliates to any Person. Neither ABB nor
any of its Affiliates has received, since December 31, 1996, any notice of any
condemnation or expropriation proceeding relating to any Owned Real Property and
no such proceedings are pending which, if adversely determined, would materially
preclude or impair the use of any Owned Real Property.
(c) With respect to all real property leased by ABB and/or any of its
Affiliates and primarily used or held for use in the Business ("LEASED REAL
PROPERTY"), ABB has heretofore delivered or made available to Purchaser true and
complete copies of all related leases, including all amendments and
modifications thereto (other than the leases referred to in Section 7.21(c) and
(d), which Purchaser acknowledges are not formally documented). With respect to
each Leased Real Property: (i) each lease is valid and subsisting and in full
force and effect; (ii) no notice of a material default has been sent or received
by ABB or any Affiliate of ABB under the applicable lease which remains uncured;
and (iii) the tenant is in occupancy of the space demised under the applicable
lease.
5.10. INTELLECTUAL PROPERTY AND TECHNOLOGY
(a) SCHEDULE 5.10(a) is in all material respects an accurate and
complete list, as of the date hereof, of all material Intellectual Property
(other than trade dress and slogans) primarily used or held for use in the
Business and owned by ABB and/or its Affiliates (the "OWNED INTELLECTUAL
PROPERTY"), and, to the extent indicated on such SCHEDULE 5.10(a), the Owned
Intellectual Property has been duly registered in, filed in or issued by the
United States Copyright Office or the United States Patent and Trademark Office
or Network Solutions, Inc., the appropriate offices in the various states of the
United States and the appropriate offices of other jurisdictions.
(b) SCHEDULE 5.10(b) is in all material respects an accurate and
complete list, as of the date hereof, of all material Intellectual Property
which is used under express license primarily in the Business by ABB and/or its
Affiliates (the "LICENSED INTELLECTUAL PROPERTY"), and except to the extent
indicated on such Schedule, ABB has delivered or made available to Purchaser
true and complete copies of all related licenses, including all amendments and
modifications thereto. Since December 31, 1996, no notice of a material default
has been sent or received by ABB and/or its Affiliates under any such license
which remains uncured.
(c) Except as set forth on SCHEDULE 5.10(c), at the Closing, the NB
Group will be the sole and exclusive owner of all Owned Intellectual Property,
subject to Sections 3.2 and 7.10 and to the recording by the applicable
Governmental Authorities of any transfer of Owned
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Intellectual Property in connection with the Pre-Closing Reorganization, free
and clear of any and all Encumbrances other than Permitted Encumbrances, and
will be the successor-in-interest to the license for any Licensed Intellectual
Property that is used under license by a Business Unit (subject to Section 4.4).
No Owned Intellectual Property material to the conduct of the Business has been
cancelled, abandoned or otherwise terminated and all renewal fees in respect
thereof have been duly paid. Except as set forth in SCHEDULE 5.10(c), no
Business Unit has granted any license or other rights with respect to Owned
Intellectual Property to any other Person.
(d) Except as set forth in SCHEDULE 5.10(d), at the Closing, subject
to Sections 3.2 and 7.10, the NB Group will be the sole and exclusive owner of
all Technology primarily used or held for use in the Business and owned by ABB
and/or its Affiliates, free and clear of any and all Encumbrances other than
Permitted Encumbrances, and will be the successor-in-interest to the license for
any Technology which is used under express license primarily in the Business by
ABB and/or its Affiliates (subject to Section 4.4). Except as set forth in
SCHEDULE 5.10(d), no Business Unit has granted any license or other rights with
respect to Technology material to the conduct of the Business to any other
Person.
(e) Except as set forth in SCHEDULE 5.10(e), since December 31, 1996,
no Business Unit has received any written notice from any other Person
challenging in any material respect the right of a Business Unit to use any of
the Owned Intellectual Property, Licensed Intellectual Property or Technology
material to the conduct of the Business.
(f) Except as set forth in SCHEDULE 5.10(f), since December 31, 1996,
no Business Unit has made any claim in writing of a violation, infringement,
misuse or misappropriation by others of its rights to or in connection with any
Owned Intellectual Property or Technology material to the conduct of the
Business, which claim is still pending.
(g) Except as set forth in SCHEDULE 5.10(g), since December 31,1996,
no Business Unit has received any claim in writing from any third Person of a
violation, infringement, misuse or misappropriation by any Business Unit of any
intellectual property or technology owned by any third Person, or of the
invalidity of any patent or registration of a copyright, trademark, service
mark, domain name or trade name included in the Owned Intellectual Property,
which claim is still pending.
(h) Except as set forth in SCHEDULE 5.10(h), since December 31, 1996,
there have been no interferences or other contested proceedings, either pending
or, to the knowledge of ABB, threatened in writing in the United States
Copyright Office, the United States Patent and Trademark Office or any
Governmental Authority relating to any pending application with respect to any
Owned Intellectual Property.
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5.11. MATERIAL CONTRACTS
(a) Except for Contracts listed in SCHEDULE 5.11, as of the date
hereof, no Business Unit is bound by any Material Contract (as defined below).
Except for Contracts listed in SCHEDULE 5.11 and Material Contracts entered into
in accordance with this Agreement after the date hereof but before the Closing,
as of the date of Closing, no member of the NB Group will be bound by any
Material Contract, regardless of whether such Material Contract relates to the
Business. Except as indicated in SCHEDULE 5.11, ABB has heretofore delivered or
made available to Purchaser true and complete copies of all Material Contracts
outstanding as of the date of this Agreement, including all amendments and
modifications thereto.
(b) Each outstanding Material Contract constitutes a valid and binding
agreement, enforceable against ABB or the relevant Affiliate of ABB in
accordance with its terms, and, to the knowledge of ABB, each other party
thereto, subject in each case to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity. No notice of a
default has been sent or received by ABB and/or its Affiliates under any such
Material Contract which remains uncured, except for defaults which in the
aggregate have not had, and would not reasonably be expected to have, a Material
Adverse Effect on the Business.
(c) For purposes of this Agreement, "MATERIAL CONTRACT" means a
Contract which:
(i) involves future payment or receipt of funds in excess of Five
Million United States dollars (US$ 5,000,000) or future performance or
receipt of services or delivery or receipt of goods and materials, in each
case with an aggregate value in excess of Five Million United States
dollars (US $5,000,000);
(ii) is a guarantee in respect of indebtedness of any Person (other than
any Business Unit in relation to the Business) or is a mortgage, security
agreement or other collateral arrangement securing such indebtedness;
(iii) is a lease relating to real property providing for annual rental
payments in excess of Five Hundred Thousand United States dollars (US$
500,000) or a lease relating to any machinery, equipment, vehicle or other
tangible personal property providing for annual rental payments in excess
of Two Hundred Fifty Thousand United States dollars (US $250,000);
(iv) is an employment or consulting agreement for any Person with an
annual base compensation in excess of Two Hundred Thousand United States
dollars (US $200,000) or a collective bargaining agreement relating to the
employees of the Business;
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(v) is a Technology license agreement material to the Business;
(vi) is a partnership, joint venture, shareholders' or other similar
agreement with any Person;
(vii) is a Contract relating to (A) the future disposition or
acquisition of any assets and properties valued in excess of Five Hundred
Thousand United States dollars (US $500,000), other than dispositions or
acquisitions in the ordinary course of business consistent with past
practice; and (B) any business combination;
(viii) other than Contracts entered into in the ordinary course of
business consistent with past practice for the purchase or sale of products
or services from or to the Business and that do not involve expenditures or
receipts in excess of One Hundred Thousand United States dollars (US
$100,000) in any fiscal year, is a Contract with (A) ABB or any of its
Affiliates, or (B) any director, officer or employee of ABB or any of its
Affiliates, that will not be terminated at or prior to the Closing;
(ix) other than letters of credit, foreign exchange contracts, bonds and
similar instruments obtained in the ordinary course of business consistent
with past practices, is a Contract which is an indenture, note, loan or
credit agreement or other Contract relating to the borrowing of money in an
amount in excess of One Million United States dollars (US $1,000,000);
(x) is a Contract containing a covenant not to compete, other than
those contained in project-related teaming, consortium or similar
agreements with respect to the project that is the subject of such
agreement, customary covenants contained in distributor agreements and
those of which the Business is the beneficiary in employee-related
agreements;
(xi) is any take-or-pay or requirements Contract or other Contract
requiring any member of the NB Group to pay regardless of whether products
or services are received;
(xii) is a Contract relating to the acquisition by any member of the
NB Group of any operating business or the capital stock of any other
Person;
(xiii) is a Contract made outside the ordinary course of business
consistent with past practices relating to Business and involving an amount
in excess of One Million United States dollars (US $1,000,000);
(xiv) is a Contract which is a license or development agreement and
involving annual payments or receipts in excess of Two Hundred and Fifty
Thousand United States
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dollars (US$ 250,000) or the termination of which would have, or would
reasonably be expected to have, a Material Adverse Effect on the Business;
or
(xv) is a Contract which is a tolling agreement with respect to
potential claims against ABB or any of its Affiliates.
5.12. LABOR MATTERS
SCHEDULE 5.12 is in all material respects an accurate and complete
list of all currently effective labor and collective bargaining agreements
applicable to employees of each Business Unit, copies of which have been made
available to Purchaser. Except as set forth in SCHEDULE 5.12, there is no
pending (i) labor strike, work stoppage or lockout against any Business Unit in
connection with the Business; (ii) unfair labor practice charge or complaint
against any Business Unit in connection with the Business before the National
Labor Relations Board or any similar body; or (iii) union grievance against any
Business Unit in connection with the Business, which, in the case of Clauses
(i), (ii) and (iii), in the aggregate have had, or would reasonably be expected
to have, a Material Adverse Effect on the Business.
5.13. EMPLOYEE BENEFITS
(a) SCHEDULE 5.13 is in all material respects an accurate and complete
list, as of the date hereof, of all Employee Benefit Plans. Except as set forth
in SCHEDULE 5.13, ABB has made available to Purchaser an accurate and complete
list, as of the date hereof, of all anticipated Closing Business Employees which
is identified as such list. With respect to each U.S. Employee Benefit Plan, ABB
has made available to Purchaser, and with respect to each Foreign Employee
Benefit Plan (other than a Non-ABB Employee Benefit Plan) as to which there is
any material (i) unfunded liability, or (ii) liability that could arise as a
result of the Transaction, ABB has made available to Purchaser, and with respect
to each other Foreign Employee Benefit Plan (other than a Non-ABB Employee
Benefit Plan), ABB will make available to Purchaser within 45 (forty-five) days
of the date of this Agreement, where applicable, true and complete copies of (i)
the plan document and amendments thereto, and (ii) the actuarial valuation
report. With respect to each U.S. Employee Benefit Plan, ABB has made available
to Purchaser, and, with respect to each Foreign Employee Benefit Plan, ABB will
make available to Purchaser, within 45 (forty-five) days of the date of this
Agreement, where applicable, true, complete and correct copies of (i) the most
recent annual report on Form 5500 filed with the Internal Revenue Service or
similar periodic filing with regulatory authorities having jurisdiction over the
plans of non-U.S. Business Units; (ii) the most recent summary plan description
and summary of material modifications, where such description or modification
has been prepared by ABB and/or its Affiliates; (iii) any trust agreement or
annuity contract in effect on the date hereof; and (iv) the
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most recent audited financial statement. No Employee Benefit Plan is a
multiemployer plan as defined in Section 4001(a)(3) or Section 3(37) of ERISA.
Except as set forth in SCHEDULE 5.13, no collectively bargained employees of any
Business Unit are entitled to post-retirement medical or other benefits.
(b) Each Employee Benefit Plan which by its terms is intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service, and, except as
set forth in SCHEDULE 5.13 or as would not adversely affect the qualification of
such plan, such determination letter approves all amendments for which the
remedial amendment period provided in the Code and applicable Internal Revenue
Service rulings and regulations has expired.
(c) Except as set forth in SCHEDULE 5.13, and except where failures to
do so have not had, and would not reasonably be expected to have, in the
aggregate a Material Adverse Effect on the Business:
(i) except with respect to any Non-ABB Employee Benefit Plan, all
Employee Benefit Plans have been established and administered in accordance
with their respective terms and in compliance with Applicable Law,
including without limitation ERISA, COBRA, the Health Insurance Portability
and Accountability Act of 1996, and all applicable tax-qualification
requirements, and all reports, returns, or similar documents with respect
to the Employee Benefit Plans required to be filed with any Governmental
Authority or distributed to participants have been timely filed or
distributed;
(ii) except with respect to any Non-ABB Employee Benefit Plan, there
are no pending claims in respect of any Employee Benefit Plans by any
Person or Persons covered thereby which allege violations of Applicable
Law, and there are no pending or ongoing investigations of any Employee
Benefit Plans by any Governmental Authority; and
(iii) (A) no "reportable event" within the meaning of Section 4043(c)
of ERISA or the regulations thereunder has occurred with respect to any
Represented ABB Retirement Plan (other than such "reportable event", if
any, occurring by reason of the Pre-Closing Reorganization or the
Transaction); (B) no Employee Benefit Plan has incurred any accumulated
funding deficiency; (C) within the six years prior to the date hereof, no
Employee Benefit Plan sponsored by ABB or its Affiliates (whether or not
applicable to Business Employees) covered by Title IV of ERISA has been
terminated in a distress termination described in Section 4041(c) of ERISA
or in an involuntary termination described in Section 4042 of ERISA and, to
the knowledge of ABB, no
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proceedings have been instituted to terminate or appoint a trustee to
administer any such Employee Benefit Plan; (D) no Business Unit, nor to the
knowledge of ABB, any other "disqualified person" or "party in interest"
(as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) employed by or affiliated with any Business Unit has engaged
in any transactions in connection with any Employee Benefit Plan that would
reasonably be expected to result in the imposition of a penalty pursuant to
Section 502 of ERISA, damages pursuant to Section 409 of ERISA or a Tax
pursuant to Section 4975 of the Code for which a Business Unit could be
liable; (E) all contributions to, and payments from, the Employee Benefit
Plans that have been required of ABB or its Affiliates under the terms of
such Employee Benefit Plans, Applicable Law, or collective bargaining or
labor agreements have been timely and properly made; and (F) no Employee
Benefit Plan sponsored by ABB or its Affiliates has incurred any liability
to the Pension Benefit Guaranty Corporation, other than premiums that have
been paid when due.
(d) Except as set forth in SCHEDULE 5.13, no Closing Business Employee
will become entitled to any bonus, retirement, severance, job security, or
similar benefit or the acceleration of payment of any such benefit solely as a
result of the Transaction. No company in the NB Group is obligated to make any
payments, or is party to any agreement that could require it to make payments,
not deductible for purposes of Section 162(m) or Section 280G of the Code or
similar provisions of state, local, or foreign law or regulation. Except as set
forth in SCHEDULE 5.13, there are no written severance agreements or
arrangements with respect to any Closing Business Employees other than the
Involuntary Separation Pay Plan and severance benefits described in the
collective bargaining agreements shown in SCHEDULE 5.12 and there are no oral
severance agreements other than oral severance agreements which in the aggregate
would not result in liability exceeding $500,000.
5.14. TAXES
Except as set forth on SCHEDULE 5.14:
(i) all material Tax Returns which are required to be filed on or prior
to the date of this Agreement with respect to the assets, income or
operations of the Business have been filed when due, including any period
of extension, and have been true, correct and complete in all material
respects;
(ii) all Taxes shown on such Tax Returns have been paid when due and
payable, after giving effect to any applicable extensions;
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(iii) all material Taxes relating to the income, properties or operations
of the Business or the NB Group which ABB and/or its Affiliates or the NB
Group is required by Applicable Law to withhold or collect have been duly
withheld or collected and have been timely paid over to the proper
authorities to the extent due and payable;
(iv) no taxing authority has asserted any material Tax deficiency that
has not been paid or properly reserved for with respect to the NB Group or
the Business;
(v) except in connection with any consolidated, affiliated, or combined
United States federal, state, or local Tax Return: (A) no Person has
requested any extension of time within which to file any Tax Return with
respect to the NB Group or the Business, which Tax Return has not since
been filed, and (B) no Person has executed any waivers or comparable
consents regarding the application of statutes of limitation with respect
to Taxes or Tax Returns for or relating to the NB Group or the Business;
(vi) no company in the NB Group is required to include in income any
adjustment pursuant to Section 481(a) of the Code or any comparable
provision of state, local or foreign law or regulations, and no taxing
authority has proposed any such adjustment or any change in Tax accounting
method;
(vii) no material audits or administrative proceedings or court
proceedings are presently pending with regard to Taxes or Tax Returns of
the NB Group or the Business;
(viii) there is no pending claim by any taxing authority of a jurisdiction
where any member of the NB Group or any Seller (or any of their Affiliates)
has not filed Tax Returns with respect to the Business that such member or
such Seller is subject to taxation by the jurisdiction with respect to the
Business;
(ix) no power of attorney currently in force has been granted by ABB or
any of its Affiliates with respect to the NB Group or the Business that
would be binding on Purchaser with respect to Tax matters for taxable
periods including, or beginning after, the Closing Date;
(x) no Seller or member of the NB Group has received a Tax ruling or
entered into a closing or similar agreement with any taxing authority with
respect to the Business that would likely affect the Tax liabilities of the
NB Group or the Business in a material manner after the Closing Date;
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(xi) each member of the NB Group has timely paid (or there has been
timely paid on its behalf) all required current estimated Tax payments in
amounts sufficient to avoid interest charges or underpayment penalties;
(xii) none of the members of the NB Group is or has been a member of any
U.S. partnership (or Person treated as a partnership for U.S. Tax purposes)
or the holder of any beneficial interest in any trust, in each case for any
period for which all applicable statutes of limitation for any Tax has not
yet expired; and
(xiii) assuming the designated Affiliate of Purchaser is a qualified
purchaser of the stock of NBUS and US I&C Newco and joins Seller or Sellers
in making the proper elections, the Seller or Sellers of NBUS and US I&C
Newco have or will have the requisite ownership and are otherwise entitled
to make valid elections under Section 338(h)(10) of the Code with respect
to the acquisitions by Purchaser of NBUS and US I&C Newco.
5.15. LITIGATION
Except as set forth on SCHEDULE 5.15, there is no action, suit,
proceeding or investigation pending or, to the knowledge of ABB, presently
threatened in writing which remains unresolved, against ABB or any of its
Affiliates in connection with the Business before or by any court or other
Governmental Authority, except such actions, suits, proceedings and
investigations which in the aggregate, if adversely determined, have not had,
and would not reasonably be expected to have, a Material Adverse Effect on the
Business.
5.16 ENVIRONMENTAL MATTERS
Except as disclosed by ABB or its Affiliates to Purchaser either in
documents (which documents are listed on SCHEDULE 5.16) or orally in interviews
of employees of ABB or its Affiliates (which interviews are listed on such
SCHEDULE 5.16), and except for such other Business-Related Environmental
Liabilities as in the aggregate have not, since September 30, 1999, had, and
would not reasonably be expected to have, a Material Adverse Effect on the
Business:
(i) the Business is in compliance with all applicable Environmental
Laws, and has obtained, and is in compliance with, all Permits required
under such Environmental Laws; and
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(ii) there are no proceedings or actions by any Governmental Authority
or by any other Person relating to the Business pending against ABB or any
of its Affiliates under any Environmental Law; and
(iii) there are no facts, circumstances or conditions relating to the
Business that would reasonably be expected to give rise to Business-Related
Environmental Liabilities.
5.17. ABSENCE OF CERTAIN CHANGES
Except as set forth in the Schedules hereto, including SCHEDULE 5.17,
or as contemplated by this Agreement, (i) from September 30, 1999 until the date
of this Agreement, ABB and its Affiliates have conducted the Business in all
material respects only in the ordinary course of business consistent with past
practices (but excluding this Transaction); and (ii) since September 30, 1999,
there has not been any event that has had, or would reasonably be expected to
have, a Material Adverse Effect on the Business.
5.18. BROKERS AND INTERMEDIARIES
ABB has not employed any agent, broker, investment banker, finder,
advisor or intermediary in connection with the Transaction or this Agreement
which would be entitled to a broker's, finder's or similar fee or commission in
connection therewith or upon the consummation thereof.
5.19 INSURANCE
SCHEDULE 5.19 sets forth a list and brief description (specifying the
insurer, the policy number or covering note number with respect to binders, the
amount of any deductible, and the aggregate limit, if any, of the insurer's
liability thereunder) of all policies or binders of fire, liability, errors and
omissions, workers' compensation, vehicular and other insurance (other than (i)
directors' and officers' liability insurance, (ii) political risk insurance and
(iii) kidnap and ransom insurance, each as maintained by the ABB Group) held by
or on behalf of ABB or any of its Affiliates with respect to the Business. Such
policies and binders are valid and enforceable in accordance with their
respective terms in all material respects (subject to applicable insolvency laws
and principles of equity of general application), and, as of the date hereof,
are in full force and effect. No notice of a default has been received by ABB
and/or its Affiliates under any such policies or binders which remains uncured,
except for defaults which in the aggregate have not had, and would not
reasonably be expected to have, a Material Adverse Effect on the Business. As of
the date hereof, neither ABB nor any of its Affiliates has received any notice
of cancellation or non-renewal of any such policy or binder.
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5.20 YEAR 2000
ABB has provided to Purchaser copies of all material reports and plans
prepared by ABB and its Affiliates in connection with the Business relating to
compliance or readiness in connection with year 2000. Except as provided in this
Section 5.20, ABB makes no representations or warranties with respect to the
capability of any of the equipment, systems, software, data or databases
relating to the Business to adapt, accommodate or respond to the year 2000 and
thereafter, or with respect to the absence of Liabilities, contingent or
otherwise, arising therefrom or related thereto (but without limiting the
representations and warranties set forth in Sections 5.6 and 5.17).
5.21. DISCLAIMER OF OTHER WARRANTIES
(a) ABB does not make, and has not made, any representations or
warranties of any kind whatsoever in connection with this Agreement or the
Transaction other than those expressly set out in this Article 5. Without
limiting the generality of the foregoing, ABB has not made, and shall not be
deemed to have made, any representations or warranties in any communication or
document relating to the Business or the Transaction, including, without
limitation, in any information memorandum supplied to Purchaser and/or its
representatives or advisors by or on behalf of ABB or the NB Group prior to the
Closing or in any presentation of the Business in connection with the
Transaction. It is understood that any cost estimates, projections or other
predictions, or, except as expressly provided herein, any other financial
information or data, provided by ABB in relation to the Business or in
connection with the Transaction are not, and shall not be deemed to be or to
include, representations or warranties of ABB.
(b) No Person has been authorized by ABB to make any representation or
warranty relating to ABB, the NB Group or the Business or otherwise in
connection with the Transaction and, if made, such representation or warranty
must not be relied upon as having been authorized by ABB. Purchaser acknowledges
that it has not relied on any representations or warranties in connection with
this Agreement or the Transaction other than those expressly set out in this
Article 5 (as qualified by any disclosure contained in any Schedule hereto and
in the Ancillary Agreements).
5.22. DISCLOSURE
Notwithstanding anything to the contrary contained in this Agreement
or in any of the Schedules, any information disclosed in one Schedule shall be
deemed to be disclosed in all Schedules. Certain information set forth in the
Schedules is included solely for informational
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purposes and may not be required to be disclosed pursuant to this Agreement. The
disclosure of any information shall not be deemed to constitute an
acknowledgement that such information is required to be disclosed in connection
with the representations and warranties made by ABB in this Agreement or that it
is material, nor shall such information be deemed to establish a standard of
materiality.
5.23. TIMING OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in Sections 5.1 through 5.5 and
Section 5.18 shall be deemed to be given upon the execution of this Agreement as
well as at the Closing, and, without limiting the effect of Section 8.2, all
other representations and warranties shall be deemed to be given as of the date
of this Agreement only.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to ABB that the following statements
are true and correct:
6.1. ORGANIZATION
Purchaser is a corporation duly organized and validly existing under
the laws of England and has the requisite corporate power and authority to own
its properties and to carry on its business as presently being conducted.
6.2. AUTHORITY
(a) Purchaser has the requisite corporate power and authority to
execute, deliver and perform this Agreement. The execution and delivery of this
Agreement by Purchaser and the consummation of the Transaction have been duly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser and, assuming the
due authorization, execution and delivery of this Agreement by ABB, this
Agreement constitutes a legal, valid and binding obligation of Purchaser
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity.
(b) No consent, approval, license, permit, order or authorization of,
or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to Purchaser or any of its
Affiliates in connection with the execution and
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delivery of this Agreement or the consummation of the Transaction, except for
(i) compliance with and filings under the HSR Act and under applicable
competition laws and regulations in Sweden, Germany and Spain; (ii) voluntary
notification under the Exon-Florio Amendment; (iii) approval of the Ministry of
Finance and Economy in France and the filing with the Nuclear Power Inspectorate
in Sweden; (iv) compliance with, and notices and filings under, Environmental
Law or under Permits issued pursuant to Environmental Law; (v) compliance with,
and notices, filings and approvals under, the regulations of the NRC or any
Agreement State, or of any Nuclear Regulator, including any applications for
licenses or license transfers; and (vi) those the failure of which to obtain or
make, individually or in the aggregate, would not materially impair the ability
of Purchaser or any of its Affiliates to perform its obligations under this
Agreement or the Ancillary Agreements to which it is a party.
6.3. NO CONFLICTS
Neither the execution and delivery of this Agreement by Purchaser, nor
the consummation of the Transaction, nor compliance by Purchaser with any of the
provisions hereof applicable to it, will (i) violate, conflict with or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under (A) the
memorandum, articles of association or other organizational documents of
Purchaser; or (B) any material agreement to which Purchaser is a party or by
which Purchaser or any of its material assets may be bound; or (ii) violate any
Applicable Law or any order, judgment or decree of any court or other
Governmental Authority applicable to Purchaser.
6.4. FINANCING
Purchaser has sufficient funds and/or has obtained firm commitments
for the financing of the payment in full of the Purchase Price and all other
amounts payable by Purchaser hereunder at the Closing and such funds and
financing will be available at the Closing for such purposes.
6.5. BROKERS AND INTERMEDIARIES
Except for N.M. Rothschild & Sons Ltd. and its Affiliates, the fees
and expenses of which will be paid by Purchaser, Purchaser has not employed any
agent, broker, investment banker, finder, advisor or intermediary in connection
with the Transaction or this Agreement which would be entitled to a broker's,
finder's or similar fee or commission in connection therewith or upon the
consummation thereof.
6.6. SHAREHOLDER APPROVAL
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Purchaser and its Affiliates have been duly authorized by its
principal shareholder, the Department of Trade and Industry, to execute and
deliver this Agreement and to consummate the Transaction.
6.7. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES
Purchaser does not make, and has not made, any representations or
warranties of any kind whatsoever in connection with this Agreement or the
Transaction other than those expressly set out in this Article 6. ABB
acknowledges that it has not relied on any representations or warranties in
connection with this Agreement or the Transaction other than those expressly set
out in this Article 6.
6.8. TIMING OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in Sections 6.1 through 6.6 shall
be deemed to be given upon the signature of this Agreement as well as at the
Closing.
ARTICLE 7
COVENANTS
7.1. CONDUCT OF BUSINESS
(a) From the date hereof until the Closing, except as provided in or
contemplated by this Agreement, including but not limited to Article 3, or to
the extent that Purchaser shall otherwise consent (which consent shall not be
unreasonably withheld or delayed), ABB shall, and shall use all reasonable
efforts to ensure that its Affiliates will, carry on the Business in the
ordinary course consistent with past practices and use all reasonable efforts
consistent with past practices to keep available the services of the Business'
present officers and employees and preserve the Business' relationships with
customers, suppliers and others having business dealings with the Business.
(b) Without limiting the generality of Paragraph (a) above, except as
contemplated by SCHEDULE 7.1 or as otherwise provided in or contemplated by this
Agreement, including but not limited to Article 3, ABB shall not, and shall
ensure that its Affiliates will not, with respect to the Business, do any of the
following from the date hereof until the Closing without the consent of
Purchaser (which consent shall not be unreasonably withheld or delayed):
(i) adopt or amend in any material respect any Employee Benefit Plan,
except as required by Applicable Law or pursuant to the terms of any
collective bargaining agreement or any existing Contract;
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(ii) grant to any executive officer of the Business any increase in
compensation, benefits or loans or severance benefits, except in the
ordinary course of business consistent with past practices or as may be
required under any existing Contract;
(iii) acquire by merging or consolidating with, or by purchasing a
material portion of the assets of, or by any other manner, any Person or
division thereof;
(iv) sell, lease, mortgage, pledge or otherwise dispose of, or grant
preferential rights to, any of its assets that are, individually or in the
aggregate, material to the Business as a whole, except for the sale of
inventory in the ordinary course of business consistent with past
practices;
(v) enter into any lease of real property for an annual rent in excess
of Five Hundred Thousand United States dollars (US$ 500,000), except for
any renewals of existing leases in the ordinary course of business
consistent with past practices and except for the leases referred to in
Section 7.21(c);
(vi) knowingly waive any right in respect of the Business, including
in the context of a settlement or compromise of any claim against or in
favor of the Business, with a value in excess of One Million United States
dollars (US$ 1,000,000);
(vii) enter into any material transactions with officers, directors,
employees, consultants, agents or other representatives of the Business
(other than employment and similar arrangements made in the ordinary course
of business);
(viii) except in the ordinary course of business, amend in any
material respect or enter into any Contract of a type required to be
disclosed pursuant to Section 5.11;
(ix) declare or pay any non-cash dividend, other than dividends of
property not relating to the Business, or declare any cash dividend that is
not paid before the Closing Date;
(x) amend the certificate of incorporation or by-laws or similar
organizational documents of any member of the NB Group, except as required
in connection with the Pre-Closing Reorganization;
(xi) adopt or amend in any material respect any collective bargaining
agreement, except as required by Applicable Law or pursuant to the terms of
any existing collective bargaining agreement or other existing Contract;
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(xii) incur or assume any indebtedness for borrowed money in excess of
Two Million United States dollars (US $2,000,000) in the aggregate which
would constitute a liability of the NB Group, or guarantee any such
indebtedness;
(xiii) acquire any assets which are material, individually or in the
aggregate, to the Business, taken as a whole, except in the ordinary course
of business consistent with past practices;
(xiv) enter into any equity joint venture, partnership or any similar
arrangement;
(xv) enter into, amend or terminate any employment agreement, except in
the ordinary course of business and, in the case of new employment
agreements, consistent with past practices;
(xvi) make any wage or salary increase or other compensation payable or
to become payable or bonus, or increase in any other direct or indirect
compensation, for or to any of its officers, employees, consultants, agents
or other representatives employed in the Business, or any accrual for or
commitment or agreement to make or pay the same, in each case other than in
the ordinary course of business consistent with past practices, or as may
be required under existing Contracts;
(xvii) enter into any transactions with ABB or its Affiliates or any of
their officers, directors, employees, consultants, agents or other
representatives (other than in the ordinary course of business consistent
with past practices) to the extent the obligations arising from any such
transaction constitute a Liability of the NB Group or an Additional
Business Liability;
(xviii) make any payment of, or commitment (which would constitute a
Liability of the NB Group after the Closing Date) to pay, any severance or
termination payment to any Person or any of its officers, directors,
employees, consultants, agents or other representatives employed in the
Business, other than payments pursuant to existing Contracts or Employee
Benefit Plans;
(xix) reassign or transfer any employees of ABB or its Affiliates who are
not involved in the Business as of the date hereof to the Business or to
duties primarily engaged in the Business, except in the ordinary course of
business consistent with past practices; or
(xx) agree, whether in writing or otherwise, to do any of the foregoing.
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(c) ABB and its Affiliates shall submit for review by an accounting
firm of international standing mutually acceptable to ABB and Purchaser (the
"REVIEWING FIRM") each bid for a Contract made by ABB or any of its Affiliates
after the date of this Agreement which, if such Contract had been entered into
prior to the date hereof, would have been required to have been disclosed on
Schedule 5.11, together with such information relating to such bid as the
Reviewing Firm shall reasonably request for purposes of making the determination
provided for in this Section 7.1(c). The Reviewing Firm shall be authorized and
directed by the parties to advise Purchaser, immediately prior to the Closing,
whether, in the judgment of the Reviewing Firm, such bid, individually or when
aggregated with all other bids submitted to the Reviewing Firm pursuant to this
Section 7.1(c), if awarded, would have, or would reasonably be expected to have,
a Material Adverse Effect on the Business. It is understood and agreed that the
Reviewing Firm should not, under any circumstances, at any time prior to the
Closing, disclose to or otherwise provide Purchaser and/or its Affiliates access
to any bid or any other information made available to the Reviewing Firm
pursuant to this Section 7.1(c) and, if this Agreement is terminated and the
Transaction is abandoned pursuant to Article 9, the Reviewing Firm shall be
required to return all written information (including any copies thereof) to
ABB.
7.2. NOTICE OF CHANGES
ABB shall promptly notify Purchaser of (i) any actions, suits, claims
or proceedings or, to the knowledge of ABB, investigations commenced against any
Business Unit that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Sections 5.15 or 5.16; and (ii) the
damage or destruction by fire or other casualty of any material asset (or part
thereof) of the Business or in the event that any such material asset (or part
thereof) becomes the subject of any proceeding for the taking thereof or any
part thereof or of any right relating thereto by condemnation, eminent domain or
other similar governmental action.
7.3. ACCESS TO INFORMATION
ABB shall, and shall cause its Affiliates to, afford to Purchaser and
its accountants, counsel and other representatives reasonable access during the
period prior to the Closing to all the properties, books, contracts,
commitments, information regarding decisions to maintain or abandon Intellectual
Property, Tax Returns (excluding the U.S. consolidated federal income Tax
Returns that include any ABB Affiliates other than the NB Group and any U.S.
state or local combined, unitary or stand alone Tax Returns of or including any
ABB Affiliate other than the NB Group, PROVIDED, HOWEVER, that ABB shall provide
to Purchaser pro forma separate company Tax Returns of any member of the NB
Group that is included in a consolidated, combined or unitary Tax Return of ABB
or any ABB Affiliate) and records of the Business, and
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during such period shall furnish promptly to Purchaser any information
concerning the Business as Purchaser may reasonably request; and shall use all
reasonable efforts to cause their officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with Purchaser's representatives in
connection with such review and examination; PROVIDED, HOWEVER, that ABB is
under no obligation to disclose to Purchaser (i) any information the disclosure
of which, in ABB's reasonable opinion, is restricted by Contract or Applicable
Law except in strict compliance with the applicable Contract or Applicable Law
(it being understood that ABB shall use reasonable commercial efforts to obtain
any necessary consent for disclosure under such Contract); (ii) any information
as to which the attorney client privilege, the attorney work product doctrine or
the self evaluative privilege may be available, until a mutually satisfactory
joint defense agreement has been executed by Purchaser and ABB; (iii) the
medical records pertaining to any employee or former employee of the Business
until after the Closing; or (iv) any "Classified Information" other than in
compliance with NRC and any other applicable government security regulations.
All requests for information, to visit facilities or to meet with ABB's or its
Affiliates' representatives shall be made in writing and directed to and
coordinated with the person(s) designated to Purchaser from time to time by ABB
or its Affiliates as the "NB Coordinators". Purchaser acknowledges that any
information being provided to it or its representatives by ABB or its
Affiliates, or by the Business Units or the NB Group, is subject to the terms of
the confidentiality undertaking dated May 20, 1999, made by Purchaser in favor
of ABB and its Affiliates, which terms are incorporated herein by reference;
provided that any information made available to Purchaser or its Affiliates or
representatives by ABB or its Affiliates, or by the Business Units or the NB
Group, may be provided to Purchaser's principal shareholder, the Department of
Trade and Industry, and its advisers or representatives, who, by the time the
information is provided, will have agreed in writing (a copy of which agreement
shall be provided to ABB) to keep such material confidential. Nothing contained
herein is intended to limit or restrict Purchaser's use or disclosure of
information concerning the Business following the Closing.
7.4. GOVERNMENTAL APPROVALS
(a) Each of ABB and Purchaser shall as promptly as practicable (i)
file with the United States Federal Trade Commission and the United States
Department of Justice the notification and report form, and any supplemental
information requested in connection therewith, under the HSR Act required for
the Transaction; (ii) file with the Committee on Foreign Investment in the
United States the voluntary notification under the Exon-Florio Amendment for the
Transaction; (iii) file with the NRC or applicable Governmental Authority in the
relevant Agreement States such applications for licenses or license transfers as
necessary in connection with the Transaction; and (iv) comply with Applicable
Law pursuant to which any other consent,
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approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority in connection with the Transaction is
necessary. Each of ABB and Purchaser shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any filing, registration or declaration which is
necessary under Applicable Law. ABB and Purchaser shall keep each other
appraised of the status of any communications with, and any inquiries or
requests (formal or informal) for additional information or documentary material
from, any Governmental Authority, and shall comply promptly with any such
inquiry or request. ABB and Purchaser shall each use all reasonable efforts to
obtain any consent, approval, order or authorization of any Governmental
Authority, necessary in connection with the Transaction or to resolve any
objections which may be asserted by any Governmental Authority with respect to
the Transaction.
(b) Subject to the terms and conditions of this Agreement, each party
shall use all reasonable efforts to cause the Closing to occur as promptly as
practicable. Without limiting the generality of the foregoing, each party shall
use all reasonable efforts to (i) defend against any lawsuits, actions or
proceedings, judicial or administrative, challenging this Agreement or the
consummation of the Transaction; (ii) seek to prevent the entry or imposition of
any preliminary injunction, temporary restraining order, stay or other legal
restraint or prohibition by any court or other Governmental Authority; and (iii)
appeal and seek to have vacated or reversed as promptly as possible any such
injunction, order, stay or other restraint or prohibition that is not yet final
and nonappealable.
(c) Purchaser shall use all reasonable efforts to obtain as promptly
as practicable all permits, licenses, approvals, consents and authorizations by
or of Governmental Authorities required by Applicable Law or contract to which
Purchaser is a party for Purchaser and/or its Affiliates to own and control the
NB Group or for the NB Group to conduct the Business following the Closing and
to own the properties of the Business (each, a "PURCHASER PERMIT"), and ABB
shall, and shall ensure that the Business Units will, cooperate with Purchaser
in connection therewith. Notwithstanding the foregoing, Purchaser shall not be
obligated to obtain any Purchaser Permit which Applicable Law requires be
obtained by ABB rather than the Purchaser.
(d) Notwithstanding anything to the contrary which may be contained
herein, Purchaser undertakes, at its sole cost, to comply in good faith with all
restrictions or conditions, if any, imposed by any Governmental Authority with
respect to antitrust laws as a requirement for granting any necessary clearance
or terminating any applicable waiting period, unless compliance with such
restrictions or conditions would require Purchaser to divest or restrict
operations to an extent which would materially and adversely affect British
Nuclear Fuels plc, Westinghouse Electric Company LLC or the NB Group after the
Closing.
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(e) Pursuant to Connecticut's Transfer of Hazardous Waste
Establishment Act ("TRANSFER ACT"), the relevant Affiliate of ABB shall, on or
before the Closing Date, certify to the Connecticut Governmental Authorities
that, to the extent necessary to minimize or mitigate a threat to human health
or the environment, such Affiliate shall contain, remove or otherwise mitigate
the effects of any Release of Hazardous Substance (including those defined
pursuant to Section 22a-134 of the Transfer Act) on the sites currently owned by
ABB and/or its Affiliate in the State of Connecticut included in the Business,
in accordance with such procedures and time schedule approved by the applicable
Connecticut Governmental Authorities pursuant to an order, stipulated judgment,
or consent agreement. Unless otherwise agreed in Section 10.2, ABB shall
perform, at its sole cost and expense, all actions necessary to implement the
procedures required by the Connecticut Governmental Authorities pursuant to the
Transfer Act. Purchaser is entitled, during the term that it retains any
possessory or ownership interest in any facilities or establishments subject to
the Transfer Act, to participate in any actions at those facilities that are
subject and give rise to the obligations of ABB and/or its Affiliates under the
Transfer Act.
7.5. THIRD-PARTY CONSENTS
(a) ABB and Purchaser will cooperate and use all their respective
reasonable efforts to obtain as promptly as reasonably practicable all consents,
approvals and waivers required by third Persons in connection with the
Pre-Closing Reorganization and the Transaction (including, to the extent
required, agreement to novation of Contracts with Governmental Authorities in
the United States and elsewhere).
(b) If any and all consents, approvals or waivers necessary for the
assignment or transfer of any Contract or Intellectual Property, or any right
arising thereunder or resulting therefrom, shall not have been obtained prior to
the Closing Date (other than with respect to consents, approvals or waivers
relating to a Local Agreement which has not been executed as of the Closing
Date), then the parties shall use all reasonable efforts (without expenditure,
in the aggregate, of any material sum) to the extent permitted by Applicable Law
to provide Purchaser with the benefits, if any, of such Contracts and
Intellectual Property, and, in the case of such Contracts and Intellectual
Property, to relieve ABB and its Affiliates of the performance and other
obligations and liabilities, if any, relating to or arising thereunder.
Purchaser shall, and shall cause its Affiliates to, pay, perform and discharge
and indemnify ABB and its Affiliates against, and hold them harmless from, all
obligations and liabilities of ABB and/or its Affiliates relating to such
performance or failure to perform under such Contracts or Intellectual Property,
including any related guarantees, in each case if Purchaser or its Affiliates
have received the benefit, if any, thereof pursuant to this Section 7.5
(provided that, if Purchaser or its Affiliates have only received from ABB and
its Affiliates a proportion of such benefit, if any, then Purchaser or its
Affiliates shall only have the obligation to indemnify ABB and its Affiliates in
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the same proportion as the proportion of the benefit received bears to the total
benefit), and, in the event of a failure of such indemnity, ABB shall cease to
be obligated under this Agreement in respect of the Contract or Intellectual
Property which is the subject of such failure.
7.6. EMPLOYEE MATTERS
(a) Purchaser and its Affiliates shall be solely responsible for all
compensation accruing for service on and after the Closing Date with respect to
the Closing Business Employees. Except as provided in Section 7.6(h), Purchaser
shall also assume and be solely responsible for all compensation accrued but
unpaid as of the Closing Date with respect to the Business Employees, and the
liability for such compensation shall be treated as a liability of the Business
for purposes of calculating the Actual Equity.
(b) Subject to Section 7.6(c), Purchaser shall, and shall cause its
Affiliates to, for a period beginning on the Closing Date and ending no earlier
than December 31, 2000, provide for the Closing Business Employees, compensation
and employee benefit plans and arrangements which in the aggregate are
comparable to the compensation and employee benefit plans and arrangements
provided to Closing Business Employees immediately prior to the Closing Date.
(c) With respect to any collective bargaining agreement that relates
to Closing Business Employees, Purchaser shall, and shall cause its Affiliates
to: (i) recognize each union which at the Closing Date represents any group of
Closing Business Employees as the collective bargaining representative of such
group of Closing Business Employees as of the Closing Date; and (ii) assume the
obligations for Closing Business Employees under any such collective bargaining
agreement and any obligations under any such collective bargaining agreement for
retiree welfare benefits referred to in SCHEDULE 5.13. Effective as of the
Closing Date, Purchaser shall, and shall cause its Affiliates to, establish and
qualify or register with applicable authorities, and become the plan
administrator of, such employee benefit plans which are required for the Closing
Business Employees under the terms of any collective bargaining agreement.
(d) From and after the Closing Date, Purchaser shall, and shall cause
its Affiliates to, credit to the Closing Business Employees, under all employee
benefit plans, employee benefit arrangements and employee compensation policies
and practices of Purchaser and its Affiliates, all prior service recognized by
ABB or any of its Affiliates with respect to such Closing Business Employees
prior to the Closing Date, provided that such service shall be credited for
purposes of eligibility to participate in, vesting, eligibility for early
retirement (including any subsidized benefit provided upon retirement), optional
forms of distribution, but not, except as otherwise provided in this Section
7.6, for purposes of determining the amount of
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any benefit under any "employee pension benefit plan" (as defined in Section
3(2) of ERISA) maintained by the Purchaser or any of its Affiliates. From and
after the Closing Date, ABB shall, and shall cause its Affiliates to, credit to
the Closing Business Employees, under the Asea Brown Boveri Inc. Cash Balance
Pension Plan, the Pension Plan for Employees of Asea Brown Boveri Inc. and the
defined benefit portion of the ABB Retirement Income Plan Restoration Plan (the
"RESTORATION PLAN") (the "ABB RETIREMENT PLANS") all post-Closing service
recognized by Purchaser or any of its Affiliates with respect to such Closing
Business Employees, provided that such service shall be credited for purposes of
vesting and eligibility for early retirement (including any subsidized benefit
provided upon retirement) and optional forms of distribution, but not for
purposes of determining the amount of any benefit under such plans. For purposes
of computing deductible amounts (or like adjustments or limitations on coverage)
under any "welfare plan" (as defined in Section 3(1) of ERISA), expenses and
claims previously recognized for similar purposes under the applicable welfare
plan of ABB or any of its Affiliates shall be credited or recognized under the
welfare plan of the Purchaser and its Affiliates. Notwithstanding anything in
this Section 7.6 to the contrary, Purchaser shall, and shall cause its
Affiliates to, give the Closing Business Employees full credit for all prior
service recognized by ABB with respect to such Closing Business Employees
immediately prior to the Closing Date under the vacation pay plan or policy and
severance pay plan or policy of Purchaser and its Affiliates. Purchaser shall
make available to all Closing Business Employees who are participating in the
group health plan of ABB or any of its Affiliates (including medical and dental
benefits) immediately prior to the Closing Date a group health plan (including
medical and dental benefits) which has no waiting period for such Closing
Business Employees with respect to eligibility to enroll and participate and no
exclusions or limitations based on pre-existing conditions for such Closing
Business Employees.
(e) Purchaser agrees that as of and immediately after the Closing
Date, Purchaser or its Affiliates shall offer continued employment to all
Closing Business Employees so that such Closing Business Employees shall be
afforded the opportunity for uninterrupted employment before and immediately
after the Closing Date. ABB and Purchaser agree that the Transaction shall not
constitute a severance of employment of any Closing Business Employee, and that
such Closing Business Employees will be deemed for all purposes to have
continuous and uninterrupted employment before and immediately after the
Closing. Purchaser shall indemnify and hold ABB and its Affiliates harmless from
and be responsible for any claims made by any Closing Business Employee for
severance or other benefits based on separation, for any claims based on breach
of contract and for any other claims arising out of or in connection with the
employment, or the suspension or termination of employment of, any Closing
Business Employees; provided that Purchaser's obligation to indemnify ABB and
its Affiliates with respect to any claim by a Closing Business Employee that the
Transaction constitutes a
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termination, or constructive termination, of employment shall be limited to
claims arising from the actions of Purchaser, including, but not limited to,
Purchaser's termination of a Closing Business Employee's employment, or reducing
the compensation of, or changing the position or terms and conditions of
employment of, a Closing Business Employee, on or after the Closing Date.
Purchaser shall not be responsible for, and shall be under no obligation to
indemnify ABB or its Affiliates with respect to, any claims made by Closing
Business Employees for severance or other benefits or claims based solely on the
Transaction and ABB shall indemnify and hold Purchaser harmless from, and be
responsible for, any claims made by Closing Business Employees for severance or
other benefits or claims based solely on the Transaction.
(f) Effective as of the Closing Date, Purchaser shall assume and be
solely responsible for all liability of ABB and its Affiliates for
post-retirement and post-termination health benefits and/or coverage (including
medical and dental benefits) and post-retirement and post-termination life
insurance benefits and/or coverage for Closing Business Employees and their
respective dependents and those Former Business Employees and their respective
dependents who are entitled to such benefits by virtue of being covered under a
collective bargaining agreement referred to in SCHEDULE 5.13. On and after the
Closing Date, Purchaser shall indemnify and hold harmless ABB for any and all
Losses including reasonable legal fees and disbursements) relating to
post-retirement and post-termination health benefits and/or coverage (including
medical and dental benefits) and post-retirement and post-termination life
insurance benefits and/or coverage for Closing Business Employees and for Former
Business Employees and their dependents referred to in the immediately preceding
sentence. For purposes of determining Actual Equity under Article 2 hereof,
post-retirement welfare benefits shall be valued based on the actuarial
assumptions and methodology used by ABB and its Affiliates in developing the
OPEB liability component of the "Pension Liabilities" for September 30, 1999
shown under column "Actual 9909" in the balance sheet for NBUS in the Financial
Statements provided to Purchaser, provided that the interest rate shall be
discount rate in effect as of December 31, 1999 for purposes of Statement of
Financial Accounting Standards 132 (one hundred thirty-two) disclosure.
(g) Except as otherwise provided in this Section 7.6, effective as of
the Closing Date, Purchaser shall assume, and the NB Group shall retain,
liability for employee benefit plans and bonus, incentive compensation,
severance or termination pay, death benefit, welfare benefit, incentive,
profit-sharing, pension, retirement, deferred compensation, medical, life,
disability, accident, salary continuation, accrued leave, vacation, sick pay,
sick leave, supplemental retirement, unemployment benefit, and fringe benefit
plans, programs and arrangements and employment, consulting, termination and
severance contracts or agreements,
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in each case covering Business Employees, and ABB and its Affiliates shall have
no further liability with respect to such plans, programs, arrangements,
contracts or agreements.
(h) ABB and/or its Affiliates shall, with respect to Business
Employees, continue to be responsible after the Closing Date for welfare
benefits or claims (whether submitted before or after the Closing Date) which
will, by reason of events which took place prior to the Closing Date, become
payable under any group life insurance policy, accidental death and
dismemberment policy, group health program (including medical and dental
benefits) or any flexible spending account plan maintained by ABB and/or its
Affiliates in the United States with respect to such Business Employees. In the
case of health benefits, the event referred to in the immediately preceding
sentence is the provision of the service for which the reimbursement or payment
is sought by the employee. ABB and/or its Affiliates shall also continue to be
responsible after the Closing Date for: (1) the benefits accrued by Business
Employees as of the Closing Date under the ABB Retirement Plans, including any
benefits to which such employees become entitled as a result of service with
Purchaser or its Affiliates that is credited for certain purposes under such
plans pursuant to Section 7.6(d); (2) benefits payable to Business Employees
under the Personal Retirement Investment and Savings Management Plan for
Employees of Asea Brown Boveri Inc. and the Personal Retirement Investment and
Savings Management Plan for Certain Represented Employees of the Asea Brown
Boveri Inc. (the "ABB SAVINGS PLANS"); (3) except as otherwise specified in this
Section 7.6, liability for post-retirement and post-termination health benefits
and/or coverage (including medical and dental benefits) and post-retirement and
post-termination life insurance benefits and/or coverage for Former Business
Employees and their dependents; and (4) provision of coverage required under
COBRA for Business Employees becoming entitled to such coverage before the
Closing Date. At the discretion of Purchaser, stay bonuses may be paid to the
individuals listed on Schedule 7.6(h) in the amounts of six months of each such
individual's base salary at the Closing Date, which bonuses, if any, shall be
paid on a date which occurs no later than twelve months following the Closing
Date. Purchaser shall bill ABB for, and ABB shall promptly reimburse Purchaser
for the amount of, 50% of such stay bonuses actually paid. ABB or its Affiliates
shall be responsible after the Closing Date for any incentive, bonus or similar
payment (other than the stay bonuses described in Schedule 7.6(h)) committed to
by ABB or its Affiliates to a Closing Business Employee on account of the
Transaction. Purchaser shall provide to ABB within twenty days of the date of
this Agreement, and subject to ABB's approval prior to the distribution of such
letter to any individual listed in Schedule 7.6(h), a form of letter to each
such individual describing the terms and conditions of the stay bonus referred
to in this Section 7.6(h).
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(i) Purchaser shall indemnify ABB for any Actuarial Losses (as defined
below) with respect to the Asea Brown Boveri Inc. Cash Balance Pension Plan (the
"CASH BALANCE PLAN") and the defined benefit portion of the Restoration Plan
resulting from any Closing Business Employee terminating employment and
commencing the receipt of benefits prior to age 65 during the Relevant Period
(as defined below). Such indemnification shall occur within 30 days after the
Actuarial Losses for each Plan year of the Cash Balance Plan and the Restoration
Plan or portion thereof within the Relevant Period are determined by ABB's
Actuary and communicated to Purchaser and Purchaser's actuary, or, if Section
7.6(s) hereof applies, within 30 days following a determination by the impartial
actuary under Section 7.6(s). The "Relevant Period" is the period from the
Closing Date through December 31, 2004. Purchaser shall cooperate with ABB in
providing data to enable ABB to determine any Actuarial Losses. Actuarial Losses
shall be determined by ABB's actuary and shall be equal to the amount by which
(i) the aggregate actual benefits to the Closing Business Employees to which the
Closing Business Employees are entitled under the terms of the Cash Balance Plan
and the defined benefit portion of the Restoration Plan for each Plan year or
portion of a Plan year of the Cash Balance Plan and the Restoration Plan falling
within the Relevant Period exceeds (ii) 105% (one hundred five percent) of the
aggregate accumulated benefit obligation with respect to the Closing Business
Employees receiving a distribution under the Cash Balance Plan and the defined
benefit portion of the Restoration Plan for the Relevant Plan year, but in no
event shall Actuarial Losses be indemnified for any Plan year for which
Actuarial Losses do not exceed $150,000 (one hundred fifty thousand dollars) or
a pro rata portion of $150,000 (one hundred fifty thousand dollars) or for a
partial Plan year based on the ratio of the number of days in such partial Plan
year to 365. The determination of the accumulated benefit obligation with
respect to the applicable employees for each Plan year shall be based upon the
actuarial assumptions and methodology used for purposes of Statement of
Financial Accounting Standards Number 87 (eighty-seven), uniformly applied for
all participants in the Cash Balance Plan and the Restoration Plan, as contained
in the actuarial valuation for the Cash Balance Plan prepared by ABB's actuary
as of the first day of each such Plan year.
(j) Effective as of the Closing Date, Purchaser shall be responsible
for any claims (whether made before or after the Closing Date) and related
losses and expenses under any workmen's compensation or employer liability law,
self-insured plan or employee benefit plan or otherwise, in each case resulting
from a work-related accident or event which results in bodily injury or disease
or from continuous or repeated exposure while on the job to conditions which
result in bodily injury or disease or from any other occurrence which is
otherwise covered under applicable workmen's compensation law with respect to
the Business Employees.
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(k) Effective as of the Closing Date, Purchaser shall be responsible
for all short-term disability benefits and long-term disability benefits for the
Business Employees (including, for the avoidance of doubt and without
limitation, Closing Business Employees and Former Business Employees and their
respective dependents) and, except as otherwise provided in Section 7.6(h), any
rights to medical, dental, health, life or welfare benefits arising before or
after the Closing Date and any pension benefits accrued on or after the Closing
Date for persons on short-term or long-term disability.
(l) Effective as of the Closing Date, Purchaser shall be responsible
for all obligations under Section 4980B of the Code and Part 6 of Subtitle B of
Title I of ERISA ("COBRA") with respect to all Closing Business Employees.
(m) As soon as practicable following December 31, 2000, Purchaser
shall take all actions necessary to cause one or more defined contribution plans
designated by Purchaser (the "PURCHASER SAVINGS PLANS") to permit each Closing
Business Employee who is a participant in the Personal Retirement Investment and
Savings Management Plan for Employees of Asea Brown Boveri Inc. or the Personal
Retirement Investment and Savings Management Plan for Certain Represented
Employees of Asea Brown Boveri Inc. (the "ABB SAVINGS PLANS") as of the Closing
Date to effect a direct rollover of the taxable portion of such participant's
accrued benefits under the respective ABB Savings Plan to a Purchaser Savings
Plan. In connection with any such direct rollover elected by any such employee,
Purchaser shall allow any such employee's outstanding loan and related
promissory note under the ABB Savings Plan to be directly rolled-over into a
Purchaser Savings Plan. Effective as of the Closing Date, ABB shall take all
actions necessary to vest the Closing Business Employees in their respective
account balances under the ABB Savings Plans as of the Closing Date.
(n) As soon as practicable following the Closing Date, ABB and
Purchaser shall cause to be transferred from the Asea Brown Boveri Inc. Master
Trust (the "MASTER TRUST") to one or more trusts or insurance contracts
established by Purchaser as of the Closing Date the assets of such Master Trust
which are as of the date of transfer attributable to the following Employee
Benefit Plans: (i) Pension Plan for Employees of ABB Combustion Engineering
Nuclear Power, Inc. Represented by the Teamsters Local Union No. 688, Affiliated
with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America (Hematite)/Combustion Engineering, Inc.; (ii) Pension Plan
for Employees of ABB Combustion Engineering Nuclear Power, Inc. Represented by
the International Guards Union of America Local No. 45 (Hematite)/Combustion
Engineering, Inc.; (iii) Pension Plan for Employees of ABB Combustion
Engineering Nuclear Power, Inc., Represented by the International Brotherhood of
Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers, Subordinate
Lodge No. 558(AFL-CIO) (Windsor)/Combustion Engineering, Inc.; (iv) Pension Plan
for
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Employees of ABB Combustion Engineering Nuclear Power, Inc., Represented by the
International Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths,
Forgers and Helpers, Subordinate Lodge No. 651 (AFL-CIO) (Newington)/ Combustion
Engineering, Inc.; and (v) Pension Plan for Employees of ABB Combustion
Engineering Nuclear Power, Inc., Represented by District No. 9 of the
International Association of Machinists and Aerospace Workers
(Hematite)/Combustion Engineering, Inc. (collectively "REPRESENTED ABB
RETIREMENT PLANS"). Pending such transfer, ABB shall cause the Trustee of the
Master Trust to pay all benefits under the Represented ABB Retirement Plans.
Such transfer of assets shall take place within 90 days after the Closing Date;
provided, however, in no event shall such transfer of assets take place until at
least five (5) days after Purchaser has provided ABB with the form of such
transferee trust or insurance contract and ABB has approved the form thereof,
which approval will not be unreasonably withheld. This Section 7.6(n) assumes
that the aggregate amount of the assets as of the Closing under each of the
Represented ABB Retirement Plans ("AGGREGATE ASSETS") are equal to the aggregate
amount of the liabilities as of the Closing Date under each Represented ABB
Retirement Plan where the amount of such liabilities for each Represented ABB
Plan is determined based on the actuarial assumptions and methodology as
specified in Schedule 7.6(n) ("AGGREGATE LIABILITIES"). If the amount of the
Aggregate Assets as of the Closing Date is not equal to the amount of the
Aggregate Liabilities as of the Closing Date, then the Actual Equity will be
adjusted as follows: (a) if the amount of the Aggregate Assets as of the Closing
Date exceeds the amount of the Aggregate Liabilities as of the Closing Date, the
Actual Equity shall be increased by the amount of such difference; and (b) if
the amount of the Aggregate Liabilities as of the Closing Date exceeds the
amount of the Aggregate Assets as of the Closing Date, the Actual Equity shall
be decreased by the amount of such difference. Prior to the Closing Date,
Purchaser shall prepare amendments to the Represented ABB Retirement Plans,
effective as of the Closing Date, pursuant to which such plans shall be amended
to delete Asea Brown Boveri Inc. as plan administrator and named fiduciary of
each such plan and to provide that all powers, duties and liabilities of Asea
Brown Boveri Inc. or its Affiliates under each such plan shall become powers,
duties, authority and liabilities of the Purchaser and its Affiliates, effective
as of the Closing Date. Purchaser shall share such amendments with ABB at least
five (5) days in advance of the Closing Date and shall obtain ABB's approval to
the form of such amendments, which approval shall not be unreasonably withheld.
Purchaser shall take such action as is necessary to adopt such amendments
effective as of the Closing Date.
(o) Effective as of the Closing Date, Purchaser shall adopt the ABB
Executive Life Insurance Plan (the "EXECUTIVE LIFE INSURANCE PLAN") for the
benefit of the Closing Business Employees covered by such plan on the Closing
Date, and the parties hereto shall take all steps necessary so that Purchaser
(i) shall be substituted for ABB or its Affiliates as the owner of those
portions of the split dollar life insurance policy maintained pursuant to the
Executive Life
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Insurance Plan which were formerly owned by ABB or its Affiliates; and (ii)
shall succeed to all rights of ABB and its Affiliates under such policy. The
cash value of such split dollar life insurance policy shall be treated as an
asset of the Business for purposes of calculating the Actual Equity.
(p) Effective as of the Closing Date, Purchaser shall establish an
employee benefit plan for the benefit of the Business Employees (and their
beneficiaries) who participate in the ABB Deferred Compensation Plan (the
"DEFERRED COMPENSATION PLAN") as of the Closing Date (such Business Employees
shall be referred to as the "DEFERRED COMPENSATION PLAN EMPLOYEES") pursuant to
which Purchaser shall assume all liabilities and obligations of ABB and its
Affiliates under the Deferred Compensation Plan with respect to the Deferred
Compensation Plan Employees, which obligations shall be treated as a liability
of the Business for purposes of calculating the Actual Equity.
(q) It is understood that Forsakringsbolaget SPP and/or its Affiliates
may in the future allocate, credit, refund or pay client company funds
(FORETAGSANKNUTNA MEDEL) to affiliated employers. If at any time NBSE or the
Swedish Unit, or any other company in the NB Group, receives any allocation,
credit, refund, payment or other benefit from SPP and/or its Affiliates
attributable to funds paid by NBSE or the Swedish Unit prior to the Closing (the
"SURPLUS ENTITLEMENT"), Purchaser shall, or shall cause its Affiliates to,
promptly transfer such Surplus Entitlement to ABB or its designated Affiliate(s)
at no cost to them and without further consideration; PROVIDED that if any or
all of such Surplus Entitlement is not transferable under Applicable Law to ABB
or its designated Affiliate(s), Purchaser shall, or shall cause its Affiliates
to, promptly pay to ABB or its designated Affiliate(s), in cash by wire transfer
in immediately available funds to the account or accounts designated by ABB, an
amount equal to such portion of the Surplus Entitlement which cannot be so
transferred but which Purchaser and its Affiliates can immediately obtain and
utilize (it being understood and agreed that, if only a portion of the Surplus
Entitlement can be immediately obtained and utilized by Purchaser and its
Affiliates, Purchaser shall make one or more further such payments as and when
additional portions of the Surplus Entitlement can be so obtained and utilized).
Purchaser agrees that it shall, and shall cause its Affiliates to, take such
action, and cooperate with ABB and its Affiliates, as is reasonably required
(without Purchaser and its Affiliates incurring any material costs) to obtain
the Surplus Entitlement. Any transfer or payment to ABB with respect to any
portion of such Surplus Entitlement shall be reduced to the extent necessary to
hold Purchaser and its Affiliates harmless from any Taxes imposed on them with
respect to such portion of the Surplus Entitlement.
(r) For purposes of determining the adjustment and the amounts payable
under Sections 2.5 and 2.6 of this Agreement, all costs and liabilities under
the Foreign Employee
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Benefit Plans shall be determined under IAS 19 (paragraphs 64 and 65) and, in
the case of Foreign Employee Benefit Plans promising a defined benefit, based on
the actuarial assumptions and methodology set forth in Schedule 7.6(r). ABB and
its Affiliates shall provide Purchaser's actuaries and accountants with the data
necessary to review such determination and any disagreement as to the proper
amount shall be resolved in the manner set forth in Section 7.6(s).
(s) Any actuarial determinations by ABB's or Purchaser's actuary shall
be based on the assumptions and methodologies provided in each instance provided
in this Section 7.6 for the applicable actuarial determination and shall be
subject to review by the other party's actuary. If there is any dispute as to an
actuarial determination that cannot in good faith be resolved within 30 days of
the date the determination and supporting data are provided to the applicable
party, ABB and Purchaser shall jointly select a third-party, impartial actuary
to resolve the dispute. If the parties cannot jointly select a third-party,
impartial actuary within 15 days of the end of the 30-day period, the President
of the Conference of Consulting Actuaries shall select an impartial actuary. The
cost of the impartial actuary shall be shared equally by ABB and Purchaser.
7.7. SHARED ASSETS
(a) In the event any properties, assets or rights of the Business are
also used or held for use by ABB and/or its Affiliates in, or otherwise also
relate to, activities which do not form part of the Business, then:
(i) in the case of any real property, or lease in respect thereof, the
relevant company in the ABB Group shall have the right to lease or
sublease, as the case may be, from the NB Group, on an arms-length basis,
the portion of such real property used or held for use by it as of the
Closing Date for purposes similar to the purposes for which such portion is
used or held for use as of the Closing Date;
(ii) in the case of any Intellectual Property, or license in respect
thereof, the ABB Group shall have the right to license or sublicense to
use, practice and/or sublicense, as the case may be, on an arm's-length
basis from the NB Group, any Intellectual Property used, practiced or held
for use by any entity in the ABB Group as of the Closing Date, in a manner
similar to the manner in which such Intellectual Property is used,
practiced or held for use as of the Closing Date; and
(iii) in the case of any Contract, the relevant company in the ABB Group
shall have the right to enter into a subcontract or similar arrangement, on
a back-to-back basis, with the NB Group in respect of the relevant portion
of such Contract.
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(b) The parties shall use all reasonable efforts to ensure that their
respective Affiliates enter into agreements in form and substance reasonably
satisfactory to each of them formalizing the arrangements referred to in this
Section 7.7.
(c) Paragraphs (a) and (b) above shall apply MUTATIS MUTANDIS in the
event any properties, assets or rights of activities of ABB and/or its
Affiliates which do not form part of the Business are also used or held for use
in, or otherwise relate to, the Business.
7.8. CERTAIN INFORMATION
(a) After the Closing, upon reasonable written notice, ABB and
Purchaser shall furnish or cause to be furnished to each other and their
respective accountants, counsel and other representatives access, during normal
business hours, to such information, personnel and assistance relating to the
Business as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any returns, reports or forms or the
defense or prosecution of, or response required under or pursuant to, any
lawsuit, action or proceeding or in order to enable the parties to comply with
this Agreement.
(b) ABB and Purchaser shall, and shall use all reasonable efforts to
ensure that their respective Affiliates will, retain for a period of five (5)
years after the Closing Date all such records pertinent to the Business which
are owned by such Person immediately after the Closing. After the expiration of
such period, and before disposing of any such records, the applicable party
shall give notice to such effect to the other, and shall give the other, at the
other's cost and expense, a reasonable opportunity to remove and retain all or
any part of such records as the other may select. This Section 7.8 does not
relate to cooperation with respect to Tax matters (to which Section 7.9 is
applicable).
7.9. TAX MATTERS
(a) ABB shall timely prepare and file (or cause to be timely prepared
and filed) all Tax Returns with respect to the assets, income or operations of
the Business required by Applicable Law to be filed by the NB Group for all
taxable years or other taxable periods ending on or prior to the Closing Date.
All such Tax Returns shall be prepared in accordance with Applicable Law. ABB
shall pay or cause to be paid all Taxes (i) shown on any such Tax Returns to the
extent due on or prior to the Closing Date and (ii) shown on any such Tax
Returns due after the Closing Date with respect to taxable years or periods
ending on or prior to the Closing Date (including the portion of the Straddle
Period (as defined below) that ends on the Closing Date) to the extent such
Taxes exceed the accrual for Taxes (not including any net accrual for book/tax
timing differences) on the books and records of the NB Group on the Closing
Date, as
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confirmed in the calculation of Actual Equity in the Final Audit Report (as such
accrual may have been reduced to reflect prior charges against such accrual).
With respect to all separate company Tax Returns of the NB Group (or, with
respect to any member of the NB Group that is included in a consolidated,
combined or unitary Tax Return of ABB or any ABB Affiliate, pro forma separate
company Tax Returns of such member) due after the Closing Date, ABB shall
provide Purchaser with a copy of such Tax Returns, along with a notice setting
forth in reasonable detail the calculations regarding the Taxes shown as due on
such Tax Returns at least thirty (30) days prior to the due date for filing such
Tax Returns, and after Purchaser's review and approval of such Tax Returns
(which approval shall not be unreasonably withheld or delayed), Purchaser shall
remit to ABB or its designated Affiliate within five (5) business days after
Purchaser's approval of such Tax Returns the lesser of (i) the Taxes shown as
due on such Tax Returns and (ii) in the case of a member of the NB Group that is
included in a consolidated, combined or unitary Tax Return of ABB or any ABB
Affiliate, the amount of the Tax liability such member would have paid ABB or
such ABB Affiliate under a Tax sharing agreement or similar agreement, or
consistent with past practices if such member had not been sold to Purchaser,
but in an amount not in excess of the accrual for Taxes (not including any net
accrual for book/tax timing differences) on the books and records of the NB
Group on the Closing Date, as confirmed in the calculation of Actual Equity in
the Final Audit Report (as such accrual may have been reduced to reflect prior
charges against that accrual); PROVIDED, HOWEVER, ABB shall not be obligated to
submit any such Tax Returns to Purchaser for its review and approval to the
extent that ABB does not request a remittance of any amount for Taxes shown to
be due on such Tax Returns. Except to the extent of any refund of Taxes for
which a receivable was reflected in the calculation of Actual Equity in the
Final Audit Report, ABB shall be entitled to all refunds (including, without
limitation, to interest with respect thereto) of Taxes received by or on behalf
of the NB Group relating to any periods ending on or prior to the Closing Date
and, with respect to the Straddle Period, the portion of such period that ends
on and includes the Closing Date. Purchaser shall pay, or cause to be paid, to
ABB any and all such refunds promptly after receipt thereof by Purchaser or its
Affiliates. At the request of ABB, Purchaser shall file, or cause to be filed,
any claims for such refunds.
(b) Purchaser shall timely prepare and file (or cause to be timely
prepared and filed) all Tax Returns with respect to the assets, income or
operations of the Business required by Applicable Law to be filed by the NB
Group for any taxable period beginning prior to, and ending after, the Closing
Date (the "STRADDLE PERIOD"). Purchaser shall provide ABB with a copy of such
Tax Returns, along with a notice setting forth in reasonable detail the
calculations regarding ABB's share of Taxes shown as due on such Tax Returns, at
least thirty (30) days prior to the due date for filing such Tax Returns, and
after ABB's review and approval of such Tax Returns (which approval shall not be
unreasonably withheld or delayed), ABB shall remit to
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Purchaser ABB's allocable share of Taxes for the Straddle Period in accordance
with the terms of Section 7.9(g) and Purchaser shall file or cause such Tax
Returns to be filed. Any Taxes with respect to assets, income or operations of
the NB Group that relate to a Straddle Period shall be apportioned between ABB
and Purchaser as determined from the books and records of the NB Group during
the portion of such period ending on the Closing Date and the portion of such
period beginning on the day following the Closing Date, and based on accounting
methods, elections and conventions that do not have the effect of distorting
income or expenses, as follows: (i) in the case of Taxes other than income,
sales and use and withholding Taxes, on a per diem basis; and (ii) in the case
of income, sales and use and withholding Taxes, as determined from the books and
records of the NB Group as though the taxable year of the NB Group terminated at
the close of business on the Closing Date.
(c) Purchaser shall timely prepare and file (or cause to be timely
prepared and filed) all Tax Returns with respect to the assets, income or
operations of the Business required by Applicable Law to be filed by the NB
Group for all taxable periods commencing after the Closing Date and shall duly
pay or cause to be paid all Taxes payable for such periods with respect to the
assets, income or operations of the Business.
(d) ABB and Purchaser shall each provide the other with such
assistance as may be reasonably requested (including making employees reasonably
available to provide information or testimony) in connection with the
preparation or filing of any Tax Return, any Tax Controversy (as defined in
paragraph (e) below), or the determination of liability for Taxes with respect
to the assets, income or operations of the Business. Such assistance shall
include the retention and (upon the other party's reasonable request), the
provision of records and information that are relevant to any Tax, Tax Return,
or Tax Controversy. ABB and Purchaser each shall, and shall ensure that its
Affiliates will, retain until seven (7) years after the Closing Date or, if the
applicable statute of limitation has been extended by virtue of any Tax
Controversy, the later of (i) sixty (60) days after the expiration of the
statute of limitation applicable to the taxable year or period to which such Tax
Controversy relates; (ii) the date on which any decision with respect to a Tax
Controversy becomes final and nonappealable; and (iii) the execution of a
closing agreement with the relevant taxing authority that provides a final and
irrevocable termination of the Tax liability to which such Tax Controversy
relates, all Tax Returns, books and records, schedules, work papers and material
documents of the Business relating to Tax matters that are owned by such Person
immediately after the Closing and that relate to the Business or its assets. ABB
and Purchaser further agree, upon the reasonable request of the other party, to
use reasonable efforts to provide, obtain or execute any certificate or other
document from any governmental authority or other Person as may be necessary to
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mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the Transaction).
(e) In the event Purchaser or any of its Affiliates receives notice,
whether orally or in writing, of any examination, claim, proposed settlement,
proposed adjustment or related matter with respect to any Taxes for which
Purchaser may be indemnified hereunder ("TAX CONTROVERSIES"), Purchaser shall
promptly notify ABB thereof; PROVIDED that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent ABB
shall have been actually prejudiced as a result of such failure (except that ABB
shall not be liable for any interest or other expenses incurred during the
period in which Purchaser failed to give such notice). ABB shall be entitled at
its sole discretion and expense to handle, control and compromise or settle the
Tax Controversies, and shall reasonably inform Purchaser of the progress of the
Tax Controversies; PROVIDED that in the event Purchaser waives its rights to
indemnification with respect to any Tax Controversy, Purchaser may assume at its
expense, and have the sole discretion to handle, control, compromise, or settle
such Tax Controversy. ABB shall not settle any Tax Controversies in a manner
that would likely affect the Tax liabilities of Purchaser or any member of the
NB Group in a material manner for any taxable year or period ending after the
Closing Date without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld or delayed.
(f) Purchaser shall not amend any Tax Return relating to any taxable
year or period ending on or prior to the Closing Date without the written
consent of ABB, which consent shall not be unreasonably withheld or delayed. ABB
shall not, with respect to the NB Group or US I&C Newco, from the date hereof
through the Closing Date, (A) settle any Tax audit or dispute with any taxing
authority; (B) make or terminate any Tax election of the NB Group; or (C) unless
required by Applicable Law, change any Tax accounting method of the NB Group, in
each case that will likely affect the Tax liabilities of Purchaser or any member
of the NB Group in a material manner for any taxable year or period ending after
the Closing Date without the prior written consent of the Purchaser, which
consent shall not be unreasonably withheld or delayed.
(g) Except as limited by the remainder of this Paragraph (g) and
subject to the limitations imposed in Article 10, ABB agrees to indemnify and
hold harmless Purchaser and the NB Group against all Taxes of the NB Group or
with respect to the Business for all periods ended on or prior to the Closing
Date and, with respect to the Straddle Period, the portion of such period ending
on and including the Closing Date. Notwithstanding the preceding sentence, ABB
shall not indemnify and hold harmless Purchaser or the NB Group for any such
Taxes to the extent of any accrual for Taxes (not including any net accrual for
book/tax timing differences) on the books and records of the NB Group on the
Closing Date, as confirmed in the calculation of
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Actual Equity in the Final Audit Report (as such accrual may have been reduced
to reflect prior charges against that accrual). To the extent that a payment is
due by ABB to Purchaser pursuant to this Section 7.9(g) with respect to Taxes
shown on a Tax Return for the portion of the Straddle Period that ends on the
Closing Date, ABB shall pay such Taxes to Purchaser within five (5) business
days after ABB's approval of the Tax Return that generated such indemnification
payment. Except as set forth in this Section 7.9, the procedures for
indemnification set forth in Article 10 shall govern any indemnification for
Taxes.
(h) All Tax sharing agreements or similar agreements with respect to
or involving the NB Group shall be terminated as of the Closing Date and, after
the Closing Date, neither ABB and its Affiliates nor Purchaser or the NB Group
shall be bound thereby or have liability thereunder.
(i) With respect to NBUS and US I&C Newco, if formed, ABB shall cause
the proper Seller to furnish to Purchaser on or before the Closing Date a
certification of such Seller's non-foreign status as set forth in Section 1445
of the Code and the Treasury Regulations promulgated thereunder.
(j) Sellers and Purchaser shall join to make a timely and irrevocable
election under Section 338(h)(10) of the Code and similar elections under any
applicable state, local or foreign Tax laws (a "SECTION 338(h)(10) ELECTION")
for NBUS and each of its Subsidiaries and US I&C Newco, if formed (the "TARGET
COMPANIES"). Each Seller, Purchaser, and the Target Companies shall report the
purchase of the shares of stock of the Target Companies consistent with the
Section 338(h)(10) Elections made with respect to those companies and shall take
no position contrary thereto. Notwithstanding any other provision of this
Agreement, the obligation of Asea Brown Boveri Inc. or any of its Affiliates to
make a Section 338(h)(10) Election pursuant to this Section 7.9(j) is contingent
upon receipt by Asea Brown Boveri Inc. of a payment from Purchaser in the amount
of Fourteen Million United States dollars (US $14,000,000) on or prior to the
date the Section 338 Forms are filed with the United States Internal Revenue
Service.
(k) Each Seller, Purchaser, and the Target Companies shall execute any
and all documents, statements, and other forms that are required to be submitted
to any taxing authority in connection with a Section 338(h)(10) Election (the
"SECTION 338 FORMs") no later than 15 days prior to the date such Section 338
Forms are required to be filed. Each Seller, Purchaser, and the Target Companies
shall cause the Section 338 Forms to be duly executed by an authorized person
for such Seller, Purchaser, and the Target Companies, and shall duly and timely
file the Section 338 Forms in accordance with applicable Tax laws and the terms
of this Agreement.
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(l) Each Seller, ABB and Purchaser shall use its best efforts, as soon
as practicable after the Closing Date, to enter into an agreement, as may be
amended from time to time (the "ALLOCATION AGREEMENT"), to allocate the Purchase
Price (with subsequent adjustment for any amounts that are treated as
adjustments to the Purchase Price for tax purposes including any adjustments
pursuant to Sections 2.5, 2.6 or 10.6) allocable to the shares of the Target
Companies and the liabilities of such Target Companies to the assets of the
Target Companies for all applicable Tax purposes, including the computation of
the Modified Aggregate Deemed Sale Price (as defined under applicable Treasury
Regulations and similar state, local or foreign tax provisions) ("MADSP") for
the assets of the Target Companies. Purchaser shall initially prepare a
statement setting forth a proposed computation and allocation of MADSP (the
"COMPUTATION") consistent with the provisions of Article 2 hereof. Purchaser
shall submit the Computation to ABB along with copies of all workpapers,
reports, opinions and other similar documents used to prepare the Computation
("WORKPAPERS"), no later than ninety (90) days after the Closing Date. If,
within sixty (60) days of ABB's receipt of the Computation and the Workpapers,
ABB shall not have objected in writing to such Computation, the Computation
shall become the Allocation Agreement. If ABB objects in writing to the
Computation within such sixty (60) days, Purchaser and ABB shall negotiate in
good faith to resolve the Computation. If Purchaser and ABB shall not have
agreed to the Computation and adopted an Allocation Agreement within thirty (30)
days after ABB's objection, any disputed aspects of the Allocation Agreement
shall be resolved by an accounting or law firm mutually acceptable to Purchaser
or ABB (the "338 AUDITORS") as soon as practicable but in no event later than
thirty (30) days prior to the earlier of (i) the last date on which the Section
338 Forms may be filed or (ii) the last date on which either Purchaser or ABB
(whichever is earlier) must file a Tax Return relating to the transactions
contemplated hereby. The decision of the 338 Auditors shall be final, and the
costs, expenses and fees of the 338 Auditors shall be borne equally by Purchaser
and ABB. Purchaser and ABB shall not take a position before any taxing authority
or otherwise (including in any Tax Return) inconsistent with the Allocation
Agreement. For purposes of this Paragraph (l), references to ABB shall include
ABB or any of its designated Affiliates.
(m) For purposes of Paragraphs (j), (k), and (l) of this Section 7.9,
if the Seller of the Target Companies is other than ABB, ABB shall cause such
Seller to take any action required in those paragraphs or refrain from taking
any action prohibited under those paragraphs.
7.10. NO USE OF TRADEMARKS
(a) As from the Closing, neither the Purchaser nor any of its
Affiliates shall have any right to use in any way any trademarks, servicemarks,
trade names or corporate or business names or other indicia of origin including
the words "ABB", "BBC", "Asea" "Brown", or "Boveri" in whole or in part, except
as otherwise provided in this Section 7.10. In furtherance
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hereof, Purchaser shall, and shall cause its Affiliates to, within six (6)
months after the Closing Date, remove from all signs and stationery, purchase
order forms, packaging and other similar supplies, advertising and promotional
materials, product, training and service literature and materials, and computer
programs and like materials (collectively, "SUPPLIES"), any reference to "ABB",
"BBC", "Asea", "Brown" or "Boveri"; PROVIDED that to the extent any Supplies
included in the assets of the Business so indicate, Purchaser may, for a period
of six (6) months after the Closing Date, use such Supplies after first crossing
out, marking over or otherwise covering and redacting such reference and
otherwise clearly indicating on such Supplies that the Business is no longer a
division or unit of ABB or any of its Affiliates. Purchaser shall not reorder or
produce any Supplies which state or otherwise indicate thereon that the Business
is a division or unit of ABB or any of its Affiliates or contain any reference
to "ABB", "BBC", "Asea", "Brown" or "Boveri".
(b) Except as set forth on Schedule 7.10, at the Closing, ABB shall
turn over to Purchaser all confidential documents (and any copies thereof within
the possession or control of ABB or any of its Affiliates) relating to the
Intellectual Property and Technology, and shall not retain any copies thereof.
(c) ABB agrees that it shall not, and shall use all reasonable efforts
to ensure that its Affiliates will not, object to Purchaser or its Affiliates
using the designations "Reaktor" or "Atom" in a corporate name, trade name or
trademark in connection with the operation of the Business.
(d) ABB shall (i) cause a grant to be made to Purchaser and its
Affiliates of a non-exclusive, perpetual, worldwide, royalty free license,
effective from the Closing Date, to use the trademarks "CE," "C-E" and
"COMBUSTION ENGINEERING", alone or, subject to the terms and conditions of the
license agreement to be entered into, in combination with other marks used by
Purchaser, solely in connection with (A) the design, manufacture, sale and
service of nuclear reactors; and (B) the design, manufacture and sale of nuclear
fuels, and (ii) not grant to any other Person, for a period of seven (7) years
from the Closing Date, any such rights to use said trademarks in the activities
referred to in this Paragraph (d). This license shall be assignable only to a
successor-in-interest to the business of the NB Group.
(e) From the date hereof until Closing, if ABB should determine in the
ordinary course that a patent or trademark registration of the Business should
not be maintained, Purchaser, at its option, shall have the right to pay for the
continued maintenance of such patent or trademark registration on ABB's behalf.
In the event that Purchaser elects to continue the maintenance of any such
patent or trademark registration, Purchaser shall pay all costs, expenses
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and fees (including reasonable attorneys' fees) incurred in connection with, and
ABB agrees to execute any documentation reasonably required to effect, such
continued maintenance.
7.11. REPAYMENT OF LOANS
(a) Each company in the NB Group shall repay, prior to the Closing,
the unpaid principal amount of each and every outstanding loan or other
indebtedness (other than the Loans) of any kind, together with all accrued
interest thereon, made to it by any company in the ABB Group. This Paragraph (a)
shall not apply to trade payables owing by any company in the NB Group arising
in the ordinary course of business.
(b) ABB shall, or shall cause each company in the ABB Group to, repay,
prior to the Closing, the unpaid principal amount of each and every outstanding
loan or other indebtedness of any kind, together with all accrued interest
thereon, made to any of them by any company in the NB Group. This Paragraph (b)
shall not apply to trade payables owing by any company in the ABB Group arising
in the ordinary course of business (but shall apply to amounts recorded on the
books of any company in the NB Group as financing receivables).
7.12. RELEASE OF COMMITMENTS
(a) Purchaser acknowledges that in the course of the conduct of the
Business, ABB and/or its Affiliates (other than the Business Units) have entered
into, and may continue to enter into, various arrangements in which guarantees,
letters of credit, indemnities or other similar arrangements, including surety
and performance bonds, were issued by or for the account of ABB and/or its
Affiliates (other than the Business Units) in relation to the Business. Such
arrangements by such parties are hereinafter referred to as the "ABB
COMMITMENTS".
(b) Not later than the Closing, Purchaser shall use its best efforts
to obtain substitute guarantees, letters of credit, indemnities or other similar
arrangements in replacement for the ABB Commitments, which arrangements will be
in effect at the Closing, and shall procure that ABB and every other company in
the ABB Group and, where applicable, its sureties be irrevocably released in
full from their respective obligations under the ABB Commitments (it being
understood and agreed that each such release shall be in form and substance
reasonably satisfactory to ABB and/or the relevant company in the ABB Group).
(c) Failing any release required pursuant to Paragraph (b) above,
Purchaser shall, after the Closing Date, promptly indemnify ABB and each other
company in the ABB Group and, where applicable, its sureties against any
liability any of them may incur under any ABB Commitment.
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7.13. CONFIDENTIALITY
ABB shall not, and shall use all reasonable efforts to ensure that
none of its Affiliates will, for a period of seven (7) years from the Closing
Date, disclose any confidential technical, financial or other business
information of any kind or form relating solely to the Business ("CONFIDENTIAL
INFORMATION") to any third Person, except (i) in the event ABB or any of its
Affiliates is required to disclose any of such information pursuant to
Applicable Law or by applicable legal process; (ii) to the extent such
information becomes generally available to the public other than as a result of
a disclosure by ABB or its Affiliates in violation of this Agreement; or (iii)
to the extent such information becomes available to ABB or its Affiliates on a
non-confidential basis from a source other than ABB or its Affiliates; PROVIDED
that such source is not, to the knowledge of ABB and/or its Affiliates,
prohibited from disclosing such information by a contractual, legal or fiduciary
obligation. In addition, this undertaking shall not prohibit ABB or any of its
Affiliates from disclosing Confidential Information to its legal or other
advisors, who are bound by an obligation of confidentiality, in connection with
any dispute between ABB or such Affiliate of ABB on the one hand and Purchaser
or any Affiliate of the Purchaser on the other hand in relation to this
Agreement or the Transaction.
7.14. RELATED AGREEMENTS
ABB and Purchaser agree to enter into, or use all reasonable efforts
to ensure that their respective Affiliates will enter into, the following
agreements or arrangements:
(a) At the Closing, ABB Ltd. and Purchaser shall enter into the
Non-Competition Agreement.
(b) At the Closing, Purchaser and the applicable Affiliate(s) of ABB
shall enter into the Transitional Services Agreement.
(c) During the period from the Closing through December 2001, ABB and
its Affiliates shall lease or sublease to the NB Group (other than to NBUS,
which is separately covered by Paragraph (b) above and Section 7.21) those
properties that are currently leased to the NB Group (other than NBUS) by ABB or
its Affiliates, and shall provide to the NB Group (other than NBUS) all
necessary corporate support and administration services (including payroll,
information technology, accounting, and other corporate services) that are
currently provided by ABB and/or its Affiliates to the Business (other than
NBUS), upon the following terms and conditions:
(i) If any such lease is governed by, or any such services are
provided under, a contract or arrangement in existence on the date of this
Agreement (an "EXISTING
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CONTRACT") the Existing Contract will remain in effect, and the parties
will comply, or cause their Affiliates to comply, with the terms of the
Existing Contract, except that if any Existing Contract will expire before
December 31, 2001, or is terminable by ABB or its Affiliates because the
recipient of the services is no longer a member of the ABB Group, ABB will
procure that the Existing Contract is renewed or continued through December
31, 2001.
(ii) Subject to clause (i) above with respect to leases and services
that are covered by Existing Contracts, the terms of any such lease shall
be substantially the same as the existing terms, and such services shall be
provided in, substantially the same form, to substantially the same extent
at substantially the same quality standard and timeliness and on
substantially the same arm's length terms and conditions (including pricing
and escalation terms) as they are currently provided to the Business.
(iii) ABB and/or its Affiliates shall perform all such services in
accordance with the terms of any Existing Contract and otherwise in
accordance with normal prudent business standards. In the event of any
failure by ABB or its Affiliates to perform any service in accordance with
the terms of this Section 7.14, which results in a material error or defect
in such service, then at the reasonable request of the NB Group entity that
is receiving such service, ABB or the Affiliate performing such service
shall correct such error or defect or reperform such service in a timely
manner. Such re-performance shall be at the expense of ABB and its
Affiliates where the error is due to the fault of ABB or its Affiliates and
shall be at the expense of Purchaser and its Affiliates where the error is
due to the fault of Purchaser. Subject to the foregoing provisions of this
clause (iii) and to the terms of any Existing Contract, neither ABB nor its
Affiliates shall have any liability to Purchaser or any of its Affiliates
for any failure to perform a service covered by this Section 7.14 except to
the extent such failure results from the gross negligence or willful
misconduct of ABB or its Affiliates.
(d) At the Closing, ABB and/or its Affiliates shall enter into the
Supply and Licensing Agreement.
(e) ABB shall ensure that its relevant Affiliates execute and deliver
the Parent Guarantee as soon as reasonably possible.
7.15. INSURANCE
(a) Subject to Section 7.15(b), as from the Closing Date, the NB Group
will cease to be covered by property, liability and other insurance programs, if
any, maintained by ABB
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and/or its Affiliates (other than companies in the NB Group); PROVIDED that,
with respect to any such program which relates solely to the Business, the
parties shall make all reasonable efforts to obtain as soon as reasonably
possible from the relevant insurance carrier its consent to the assignment of
such program to Purchaser and, subject to such consent having been obtained,
shall assign such program in accordance with its terms and such consent with
effect as from the Closing. Purchaser shall ensure that, following such
assignment, ABB and/or its Affiliates will remain as insureds under each such
program in respect of occurrences in the Business occurring prior to the Closing
Date ("PRE-CLOSING OCCURRENCES") and shall not cancel such program or allow
coverage thereunder to lapse without first affording ABB and/or its Affiliates a
reasonable opportunity to obtain separate cover. Notwithstanding anything to the
contrary contained herein, but subject to Paragraph (b), ABB and/or its
Affiliates shall not be obliged to maintain any insurance program in relation to
the Business after the Closing; PROVIDED that with respect to "occurrence based"
insurance programs providing coverage for Pre-Closing Occurrences, ABB and/or
its Affiliates shall not cancel any such program or allow coverage thereunder to
lapse without first affording Purchaser and/or its Affiliates a reasonable
opportunity to obtain separate cover.
(b) To the extent that (i) the "occurrence-based" insurance programs
of ABB and/or its Affiliates cover Pre-Closing Occurrences and (ii) the terms
and conditions of such "occurrence-based" programs designate members of the NB
Group as insureds, or additional insureds, with respect to Pre-Closing
Occurrences, the relevant member of the NB Group shall have access after the
Closing Date to such "occurrence based" insurance programs in respect of
Pre-Closing Occurrences in accordance with, and subject to, the terms and
conditions of such programs. With respect to Pre-Closing Occurrences (other than
Pre-Closing Occurrences the Program Costs (as defined below) of which have been
finally and fully paid or reimbursed to ABB and/or its Affiliates prior to the
Closing Date with respect to claims closed prior to the Closing Date), Purchaser
shall pay or reimburse ABB and/or its Affiliates for any retrospective insurance
premiums, self-insured retentions, deductibles, retentions, and related
insurance program expenses, including without limitation, claims handling fees,
taxes, residual market loadings and state surcharges (collectively, "PROGRAM
COSTS"), in accordance with the terms and conditions of such programs or the
internal distribution protocols or methods of ABB and/or its Affiliates.
7.16. APPROVAL OF DIVIDENDS
It is understood that the Swedish Unit and/or NBSE may declare and
pay, prior to the Closing Date, interim dividends to be determined. Purchaser
undertakes to ensure that such dividends are approved and ratified by the first
ordinary shareholders' meeting(s) of the Swedish Unit and/or NBSE, as the case
may be, held after the Closing.
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7.17. PERFORMANCE OF OBLIGATIONS
Without prejudice to any other provision contained herein, after the
Closing, Purchaser shall, and shall cause its Affiliates to, perform and comply
with in all respects the obligations of the NB Group arising under or relating
to any Contract or under Applicable Law relating to the Business to the extent
that ABB and/or its Affiliates could have any liability in respect thereof by
any non-performance thereof, and Purchaser agrees to indemnify ABB and its
Affiliates against and hold them harmless from, all obligations and liabilities
of ABB and/or its Affiliates arising out of or relating to the Business (other
than Liabilities described on Schedule 3.1(b)(ii) hereto and Liabilities not
included in the NB Group and not transferred to Purchaser pursuant to this
Agreement, the Local Agreements or any other documents executed by the parties
in connection herewith or therewith).
7.18 OMITTED ASSETS
If within twenty-four (24) months after the Closing Date, either party
or any of its Affiliates discovers that any properties, assets, goodwill or
rights of ABB and/or its Affiliates primarily used or held for use in, or
primarily relating to or arising out of the conduct of, the Business (other than
the properties, assets, goodwill and rights described in Schedule 3.1(b)(i)
hereto) ("OMITTED ASSETS") were not included in the NB Group and not
subsequently transferred to Purchaser and/or its Affiliates, then such party
shall so notify the other party, and at Purchaser's option, each party shall use
all reasonable efforts to effect the transfer of such Omitted Assets from ABB
and/or its Affiliates to the Purchaser and/or its Affiliates, and the assumption
by Purchaser and/or its Affiliates of all Liabilities directly related to such
Omitted Assets, in each case as soon as possible, without further consideration.
The transfer shall be effected pursuant to an agreement between the relevant
transferor and transferee, to which agreement Section 3.1(c) shall apply MUTATIS
MUTANDIS.
7.19 RESTRUCTURING PLANS
Until the Closing, ABB shall, and shall cause its Affiliates to,
diligently implement (but does not guarantee the completion of) the
Restructuring Plans.
7.20 ABB AUTOMATION STAFF AUGMENTATION
ABB shall cause its Affiliates to continue, to the extent reasonably
requested by Purchaser, to make available personnel currently assigned to the
OKG Contract in support of the performance of the OKG Contract for the term
thereof at the rates (subject to commercially reasonable escalation) and in all
other respects on substantially the same terms and conditions as are applicable
on the date of this Agreement.
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7.21 JV SERVICES AND LEASES
(a) ABB agrees to use all reasonable efforts to cause Combustion
Engineering, Inc. or its Affiliates to provide to NBUS, for the period of twelve
months after the Closing, those services listed in the "Products and Services
Proposal 2000 for Support Services" prepared by Combustion Engineering Inc. that
are currently provided by Combustion Engineering, Inc. or its Affiliates to
NBUS; provided that such services are to be provided in substantially the same
form, to substantially the same extent, at substantially the same quality
standard and timeliness and on substantially the same arm's length terms and
conditions (including pricing and escalation terms) as such services are
currently provided to NBUS. ABB agrees that, to the extent ABB is not able to
procure such services as contemplated by the preceding sentence, ABB shall,
subject to the limitations in Section 10.3(f), indemnify Purchaser and/or its
Affiliates for any additional costs or expenses incurred by NBUS arising from
the procurement of such services during the remainder of such twelve-month
period from a third party vendor; PROVIDED that Purchaser shall cause NBUS to
use all reasonable efforts to procure reasonably comparable services on
commercially reasonable terms.
(b) ABB agrees to use all reasonable efforts to cause Combustion
Engineering, Inc. or its Affiliates to enter into written lease agreements with
NBUS prior to the Closing covering the use by NBUS of the real property located
at (i) 1201 River Front Parkway, Chattanooga, Tennessee, U.S.A. (the
"CHATTANOOGA LEASE") and (ii) that portion of 2000 Day Hill Road, Windsor,
Connecticut, U.S.A. that is not subject to the Existing Windsor Pro Forma Lease
(as defined below) (the "WINDSOR LEASE" and together with the Chattanooga Lease,
the "JV LEASES"), which JV Leases shall be on terms and conditions substantially
similar to the terms and conditions under which NBUS currently leases or
occupies such property and otherwise on such terms and conditions as are
customary for the rental of similarly situated property (including, without
limitation, the provision of reasonable credit support if required by Combustion
Engineering, Inc. or its Affiliates) and shall contain the following material
terms: (A) with respect to the Chattanooga Lease, a term of no less than two (2)
years and no more than four (4) years and, with respect to the Windsor Lease, a
term of twelve (12) months from the Closing Date; and (B) an aggregate rental
charge (subject to commercially reasonable escalation amounts) substantially
identical to the amount being paid by NBUS as of the date of this Agreement
(increased by any commercially reasonable escalation in rental charge as may
have been imposed by Combustion Engineering, Inc. or its Affiliates between the
date of this Agreement and the execution of the JV Leases) (the "APPLICABLE
RATE"). If any JV Lease shall not comply in any material respect with the
preceding sentence, or such JV Lease should not be executed, then to the extent
the use of such property, or the use of any substitute property, by NBUS after
the Closing results in any costs or expenses in excess of the Applicable Rate
(but
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excluding any escalation in rental charges over the term of NBUS's use of such
property that are not customary and commercially reasonable), ABB shall, during
the one-year period (with respect to the Windsor Lease) or the two-year period
(with respect to the Chattanooga Lease) immediately following the Closing and
subject to Section 10.3(f), indemnify Purchaser and/or its Affiliates for all
such costs and expenses reasonably incurred. Such costs and expenses may also
include any reasonable out-of-pocket expenses associated with NBUS's move from
such property to a substitute property if (1) such move is required due to
action taken by Combustion Engineering, Inc. or its Affiliates to evict NBUS
during such two-year period (with respect to the Chattanooga Lease) or
twelve-month period (with respect to the Windsor Lease) (other than because of
the gross negligence or willful misconduct of Purchaser and/or its Affiliates)
and (2) Purchaser and/or its Affiliates have sent to ABB in writing at least
sixty (60) days prior notice of such move (or, if later, within 14 days after
receipt by Purchaser of notice of eviction) and ABB is unable during such notice
period to enable NBUS to remain on such property on commercially reasonable
terms (provided that Purchaser and its Affiliates shall cooperate with ABB and
its Affiliates, at ABB's expense, to all reasonable extents to enable ABB to
secure NBUS's continued use of such property on such terms).
(c) ABB shall use its commercially reasonable efforts, with the
cooperation of Purchaser, to procure (i) as soon as reasonably practicable after
the Closing Date and with effect as from the first anniversary thereof, the
assignment of the lease agreement concerning the Windsor Site, dated June 28,
1999, between Combustion Engineering, Inc. and NBUS (the "EXISTING WINDSOR
PRO-FORMA LEASE") by NBUS to an Affiliate of ABB in the United States, or the
termination of the Existing Windsor Pro-Forma Lease and the execution of a new
lease in substitution thereof by such Affiliate; and (ii) as soon as reasonably
practicable after the Closing Date (taking into account such operations of the
Business that NBUS may continue to conduct at the Windsor Site during its
one-year tenancy), but in no event later than the first anniversary thereof, NRC
approval to transfer all existing NRC licenses held by NBUS with respect to the
Windsor Site to an appropriate Affiliate of ABB.
7.22 FOREIGN CURRENCY HEDGES
During the period prior to the Closing Date, ABB and its Affiliates
shall hedge the currency exposure of the Business in accordance with the hedging
policies of the ABB Group.
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ARTICLE 8
CONDITIONS TO CLOSING
8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS
The obligation of each of ABB and Purchaser to consummate the
Transaction is subject to the fulfilment of each of the following conditions
prior to or at the Closing:
(a) No injunction, restraining order or other order issued by any
court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the transactions contemplated by
this Agreement shall be in effect.
(b) The consents and authorizations by or of, and filings with and
notifications to, Governmental Authorities set forth in SCHEDULE 8.1(b)
shall have been obtained or effected, or any applicable waiting periods
shall have expired or been terminated and, in the case of such consents and
authorizations, shall be in full force and effect.
8.2. CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the Transaction is subject
to the fulfilment of each of the following conditions prior to or at the Closing
(any or all of which may be waived by Purchaser in its sole discretion):
(a) The representations and warranties of ABB set forth in this
Agreement shall (i) in the case of representations and warranties not
qualified by reference to materiality or "Material Adverse Effect" be true
and correct in all material respects, and (ii) in the case of
representations that are so qualified, shall be true in all respects, in
each case as of the date of this Agreement and, except for those made as of
a particular date, as of the Closing as though made at and as of the
Closing, except in each case for (i) changes permitted or contemplated by
this Agreement, and (ii) such failures of representations and warranties to
be true and correct that, individually or in the aggregate, have not had,
and would not reasonably be expected to have, a Material Adverse Effect on
the Business. Purchaser shall have received a certificate signed by an
authorized officer of ABB, dated as of the Closing Date, to the effect that
the conditions set out in this Paragraph (a) are satisfied.
(b) ABB shall have performed and complied in all respects with all of
its respective undertakings and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing; PROVIDED that
the non-compliance of an
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undertaking or agreement at any time shall not constitute a failure of the
condition contained in this Section 8.2(b) if all such non-compliances, in
the aggregate, have not had, and would not reasonably be expected to have,
a Material Adverse Effect on the Business.
(c) The relevant companies in the ABB Group shall have executed the
Ancillary Agreements to which they are a party.
(d) The Parent Guarantee shall have been duly executed and delivered
by ABB Ltd.
(e) Purchaser shall have received an opinion of the General Counsel of
ABB Ltd, dated the Closing Date, addressed to Purchaser and substantially
in the form of ANNEX 7 hereto.
8.3. CONDITIONS TO OBLIGATIONS OF ABB
The obligation of ABB to consummate the Transaction is subject to the
fulfilment of each of the following conditions prior to or at the Closing (any
or all of which may be waived by ABB in its sole discretion):
(a) The representations and warranties of Purchaser set forth in this
Agreement shall be true and correct in all material respects on and as of
the date of this Agreement and as of the Closing as though made at and as
of the Closing, except for (i) changes permitted or contemplated by this
Agreement, and (ii) such failures of representations and warranties to be
true and correct that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on ABB. ABB shall
have received a certificate signed by an authorized officer of Purchaser,
dated as of the Closing Date, to the effect that the conditions set out in
this Paragraph (a) are satisfied.
(b) Purchaser shall have performed and complied in all respects with
all of its respective undertakings and agreements required by this
Agreement to be performed or complied with by it prior to or at the
Closing; PROVIDED that the non-compliance of an undertaking or agreement at
any time shall not constitute a failure of the condition contained in this
Section 8.3(b) if all such non-compliances, in the aggregate, have not had,
and would not reasonably be expected to have, a Material Adverse Effect on
ABB.
(c) Purchaser and/or its Affiliates shall have executed the Ancillary
Agreements to which they are a party.
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(d) ABB shall have received an opinion of the General Counsel of
British Nuclear Fuels plc, dated the Closing Date, addressed to ABB and
substantially in the form of ANNEX 8 hereto.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1. TERMINATION
(a) Notwithstanding anything to the contrary in this Agreement, this
Agreement may be terminated and the Transaction abandoned at any time prior to
the Closing by action taken or authorized by the terminating party or parties:
(i) by mutual written consent of ABB and Purchaser;
(ii) by either ABB or Purchaser, if the Transaction shall not have been
consummated by December 31, 2000; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 9.1(a)(ii) shall not be
available to a party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Transaction to occur on or before such date; and
(iii) by either ABB or Purchaser, if any Governmental Authority shall
have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties shall have used their
reasonable efforts to resist, resolve or lift, as applicable, subject to
the provisions of Section 7.4) permanently restraining, enjoining or
otherwise prohibiting the Transaction, and such order, decree, ruling or
other action shall have become final and non-appealable; PROVIDED, HOWEVER,
that the provisions of this Section 9.1(a)(iii) shall not be available to a
party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, such order or injunction.
(b) In the event of termination by either party pursuant to this
Section 9.1, written notice thereof shall forthwith be given to the other party.
(c) If this Agreement is terminated and the Transaction is abandoned
as described in this Section 9.1, this Agreement shall become null and void and
of no further force and effect, except for the provisions of this Agreement
relating to expenses (including but not limited to Section 12.9), this Section
9.1, and Articles 11 and 12. Nothing in this Section 9.1 shall be deemed to
release either party from any liability for any breach by such party of the
terms and provisions of this Agreement.
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(d) If this Agreement is terminated and the Transaction is abandoned
as described in this Section 9.1, Purchaser shall promptly return to ABB (i) all
documents and other material received from ABB and/or its Affiliates relating to
the Transaction, whether so obtained before or after the execution hereof; and
(ii) all written information received by Purchaser with respect to the Business
and the other operations of ABB and/or its Affiliates (in each case together
with all copies thereof).
9.2. AMENDMENTS AND WAIVERS
(a) This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto by their duly authorized
representatives.
(b) Each party may, by an instrument in writing, waive compliance by
the other party with any term or provision of this Agreement that such other
party was or is obligated to comply with or perform. The waiver by either party
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any other provision of this Agreement or of any further breach of
the provision so waived. No extension of time for the performance of any
obligation or act thereunder shall be deemed to be an extension of time for the
performance of any other obligation or act.
ARTICLE 10
INDEMNIFICATION
10.1. INDEMNIFICATION
Subject to the limitations set forth in this Article 10, each party
hereto (the "INDEMNIFYING PARTY") hereby agrees to indemnify the other party
hereto (the "INDEMNIFIED PARTY") and its Affiliates, and their respective
officers, directors, employees, agents and representatives, against, and agrees
to hold them harmless from, any and all Losses (including reasonable legal fees
and disbursements), payable quarterly upon request, to the extent caused by or
resulting from:
(i) any breach by the Indemnifying Party of any of its representations
or warranties set out in Article 5 or Article 6, as the case may be; or
(ii) any failure by the Indemnifying Party duly to perform any
undertakings and agreements required by this Agreement to be performed by
the Indemnifying Party.
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10.2 ADDITIONAL INDEMNIFICATION BY ABB.
Subject to the limitations imposed by this Article 10, ABB, as the
Indemnifying Party, hereby agrees to indemnify Purchaser, as the Indemnified
Party, and its Affiliates, and their respective officers, directors, employees,
agents and representatives, against, and agrees to hold them harmless from, any
and all Losses (including reasonable legal fees and disbursements), payable
quarterly upon request, to the extent consisting of, caused by or arising from:
(i) any Non-Business Liabilities;
(ii) the portion of Liabilities in excess of Five Million United
States Dollars (US$ 5,000,000) arising from the matter described in
Schedule 10.2(ii);
(iii) subject to Section 10.13, any Actual OKG Losses; PROVIDED,
HOWEVER, that ABB shall not have any Liability under this clause (iii)
except to the extent the aggregate of any Actual OKG Losses for which ABB,
but for this proviso, would be liable exceeds the provision established in
the Final Audit Report in respect of the OKG Contract ("PROVIDED OKG
AMOUNT"), in which case (x) for aggregate Actual OKG Losses of more than
the Provided OKG Amount, but less than $10,000,000 in excess of the
Provided OKG Amount, ABB shall pay 50% of such Actual OKG Losses, and (y)
for aggregate Actual OKG Losses of more than $10,000,000 in excess of the
Provided OKG Amount, ABB shall pay 100% of all such Actual OKG Losses;
(iv) any Liability under the Existing Windsor Pro Forma Lease
attributable to the period after the first anniversary of the Closing Date
and any Windsor Site Environmental Liabilities; PROVIDED, HOWEVER, that ABB
shall not have any Liability for Losses caused as a consequence of
Purchaser's operation of any facilities at the Windsor Site during its
short-term tenancy in accordance with Section 7.21(b) and (c);
(v) any Hematite Legacy Liabilities, PROVIDED, HOWEVER, that ABB shall
not have any Liability under this clause (v) except to the extent the
aggregate of all such Losses for which ABB, but for this proviso, would be
liable exceeds $30,000,000, in which case, (x) for aggregate Losses of more
than $30,000,000, but less than $75,000,000, ABB shall pay 75% of such
Losses, and (y) for aggregate Losses of $75,000,000 or more, ABB shall pay
100% of all such Losses and further provided that the Losses for which ABB
is liable under this clause (v) are incurred by the Indemnified Party
within fifteen (15) years of the Closing Date;
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(vi) all Business-Related Environmental Liabilities and Decontamination
and Decommissioning Liabilities, but excluding Windsor Site Environmental
Liabilities and Hematite Legacy Liabilities; PROVIDED, HOWEVER, that ABB
shall not have any Liability in respect of Losses under this clause (vi)
except to the extent the aggregate of all such Losses for which ABB, but
for this proviso, would be liable exceeds $50,000,000, in which case (x)
for aggregate Losses of more than $50,000,000, but less than $80,000,000,
ABB shall pay 50% of such Losses, (y) for aggregate Losses of $80,000,000
or more but less than $120,000,000, ABB shall pay 75% of such Losses, and
(z) for aggregate Losses of $120,000,000 or more, ABB shall pay 100% of all
such Losses; and FURTHER PROVIDED, HOWEVER, that ABB shall have no
liability for Decontamination and Decommissioning Liabilities caused by the
operation, after the Closing Date, of any facility associated with the
Business (it being understood that such Decontamination and Decommissioning
Liabilities shall not be deemed to be "caused by" such operation after the
Closing Date solely by reason of the passage of time); and FURTHER
PROVIDED, HOWEVER, that the Losses for which ABB is liable under this
clause (vi) with respect to any facility are incurred by the Indemnified
Party within ten (10) years after any date on which such facility is taken
out of service, decommissioned, or operated for a purpose that is
materially different from its current purpose, or within thirty (30) years
of the Closing Date, whichever is earliest;
(vii) any Taxes of any member of an affiliated, consolidated, combined,
unitary, or similar group of which any of the companies in the NB Group is
or was a member on or prior to the Closing Date (other than Taxes of the
members of the NB Group, which shall be covered by Section 7.9(g)) by
reason of the liability of such companies for such Taxes pursuant to
Treasury Regulations Section 1.1502-6 or any similar provision under state,
local, or foreign law or regulation, or any contractual liability for Taxes
of any Person (other than members of the NB Group, which shall be covered
by Section 7.9(g));
(viii) any Taxes related to the transactions described in Section 3.1 of
this Agreement or to the formation (or any restructuring or dividending of
the assets) of NBUS, NBDE, NBSE, the portion of the assets of the US I&C
Unit that are transferred pursuant to Section 3.1, US I&C Newco, the
Swedish Unit, or the German Unit; and
(ix) any Taxes resulting from the Section 338(h)(10) Election.
10.3. CERTAIN LIMITATIONS
(a) No claim, or recovery in respect thereof, for breach of any
representation or warranty (except representations and warranties contained in
Section 5.14) shall be allowed (i)
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unless the amount recoverable in respect of each claim or group of related
claims exceeds Forty Thousand United States dollars (US $40,000) (or the foreign
currency equivalent thereof) and the amount recoverable in respect of all such
qualifying claims exceeds Twenty Million United States dollars (US $20,000,000)
in the aggregate (or the foreign currency equivalent thereof), in which case the
liability of the Indemnifying Party shall not be restricted to merely the excess
over the threshold amounts referred to above; and (ii) with respect to an
obligation which is contingent, unless and until the obligation becomes actual.
(b) The amounts which, but for this Paragraph (b), would be
recoverable under this Article 10, shall be reduced to the extent of any
insurance proceeds recoverable in respect thereof by the Indemnified Party or
any of its Affiliates under any policy of insurance carried by any of them.
(c) The Indemnifying Party shall have no liability hereunder for a
breach of any representation or warranty to the extent that:
(i) in the case of ABB, a specific provision or reserve in respect of
the relevant Losses was made in the Financial Statements or such Losses
were deducted in the calculation of the Actual Equity;
(ii) in the case of ABB, any specific provision or reserve made as
aforesaid proves insufficient only by reason of any reduction of Tax
allowances or reliefs after the Closing Date;
(iii) such Losses would not have arisen but for any alteration or repeal
or enactment of any Applicable Law after the Closing Date;
(iv) such Losses would not have arisen but for any change in the
accounting policies, practices or procedures adopted by the Indemnified
Party and/or its Affiliates or for any other act or omission by any of them
after the Closing Date; or
(v) such Losses would not have arisen but for a failure by the
Indemnified Party or any of its Affiliates to take reasonable steps to
mitigate the effect of the circumstances giving rise to the claim.
(d) Without limiting either party's rights under Article 8, the
Indemnifying Party shall have no liability hereunder for a breach of any
representation or warranty if the matter in question is subject to any indemnity
(other than the indemnity referred to in clause (i) of Section 10.1) given by
the Indemnifying Party in this Agreement, whether or not, under such indemnity,
a portion of the Losses is to be absorbed by the Indemnified Party.
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(e) Except with respect to claims relating to Taxes, the aggregate
liability of the Indemnifying Party for all claims pursuant to clause (i) of
Section 10.1 shall be limited to an aggregate amount equal to seventy percent
(70%) of the Purchase Price.
(f) No special, indirect, consequential or punitive damages or losses
of any kind (including but not limited to loss of profits, loss of revenue, loss
of use, loss of production, costs of capital or costs connected with the
interruption of operation), regardless of the legal theory on which the claim is
based, shall be recoverable hereunder.
(g) If a failure by the Indemnifying Party duly to perform its
obligations under this Agreement is capable of being remedied, the Indemnified
Party shall not be entitled to compensation for any breach unless the
Indemnifying Party is given written notice of such failure and either (i) fails
to commence remedial action within thirty (30) days of such notice, (ii) fails
to pursue such action diligently at all times thereafter until the original
failure has been remedied, or (iii) fails to remedy the original failure within
one hundred eighty (180) days after such notice.
(h) The Indemnified Party shall use all reasonable efforts to pursue
any and all rights to reimbursement, recovery or indemnification with respect to
all Losses for which it is entitled to indemnification under this Article 10
pursuant to any Contract, insurance policy or arrangement with any Person (other
than Affiliates of the Indemnified Party) prior to bringing any claim against
the Indemnifying Party under this Article 10. The Indemnified Party shall not be
required to expend any material sum or commence any litigation or arbitration
proceeding unless the Indemnifying Party expressly agrees to indemnify the
Indemnified Party for such expenditure and any Losses incurred by the
Indemnified Party in such litigation or arbitration.
(i) Nothing in Section 10.3(a)(ii), (g) or (h) shall preclude the
Indemnified Party from giving the Indemnifying Party notice of any claim in
accordance with Section 10.7, in which case such claim, if such notice is given
within the applicable time period provided for in Section 10.7, shall not be
time-barred under that Section; PROVIDED that, with respect to Section
10.3(a)(ii), any claim pursuant thereto shall be time-barred ninety (90) days
after the date that the relevant obligation becomes actual, unless prior to the
expiration of such ninety (90) day period the Indemnified Party shall have
notified the Indemnifying Party of such fact and shall have demanded payment of
such claims; and PROVIDED FURTHER that with respect to Sections 10.3(g) and (h),
such tolling period shall terminate (i) in the case of Section 10.3(g), when the
Indemnifying Party shall have notified the Indemnified Party that it has ceased
pursuit of a remedy of the alleged breach in question or, if earlier, the
expiration of the 180-day period provided for in such Section and (ii) in the
case of Section 10.3(h), when the Indemnified Party shall have ceased
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pursuing rights to reimbursement, recovery or alternative indemnification
pursuant to such Section.
10.4. DOUBLE RECOVERY
(a) If the Indemnifying Party pays an amount in discharge of any claim
under this Agreement and the Indemnified Party, or its Affiliates, or any of
their respective officers, directors, employees, agents and representatives,
subsequently recovers from a third Person a sum which is attributable to the
subject matter of the claim, the Indemnified Party shall promptly pay to the
Indemnifying Party an amount equal to all amounts recovered up to the aggregate
amount thus paid by the Indemnifying Party hereunder.
(b) For purposes of Section 10.3(b) and this Section 10.4, the amount
of any recovery on a claim under any insurance shall be the gross amount
received in such recovery less any retrospective insurance premiums directly
attributable to such claim.
10.5. THIRD PARTY CLAIMS
(a) If any claim is made or proceeding is instituted by any third
Person in respect of which the Indemnified Party may seek recovery hereunder
(other than a Tax Controversy, procedures for which are set out in Section 7.9
or a claim under clause (iv), (v) or (vi) of Section 10.2, procedures for which
are set out in Section 10.12) ("THIRD-PARTY CLAIM"), the Indemnified Party shall
give written notice thereof to the Indemnifying Party, describing in reasonable
detail the nature of the Third-Party Claim, within fifteen (15) days after
receipt by the Indemnified Party of notice of the Third-Party Claim; PROVIDED,
HOWEVER, that the failure to give timely notice shall not affect the rights to
indemnification hereunder to the extent the Indemnified Party demonstrates that
the Indemnifying Party suffered no actual damage as a result of such failure;
PROVIDED FURTHER, that, in the event of such failure to give timely notice, the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnified Party failed to give such notice. Thereafter,
the Indemnified Party shall deliver to the Indemnifying Party, promptly after
the Indemnified Party's receipt thereof, copies of all notices and documents,
including citations, summons and similar court papers, received by the
Indemnified Party in respect of the Third-Party Claim.
(b) The Indemnifying Party shall be entitled to participate in the
defence of any Third-Party Claim and, if it so chooses, to assume the defence
thereof with counsel of its own choice. If the Indemnifying Party so elects to
assume the defence of a Third-Party Claim, the Indemnifying Party shall not be
liable to the Indemnified Party for any legal expenses subsequently incurred by
the Indemnified Party in connection with the defence thereof (but the
Indemnifying Party shall be so liable for such legal expenses incurred from the
date the
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Indemnifying Party receives notice of the Third-Party Claim pursuant to
Paragraph (a) above to the date the Indemnifying Party assumes the defence
thereof pursuant to this Paragraph (b)).
(c) The Indemnified Party shall be entitled to participate in the
defence of any Third-Party Claim, the defence of which has been assumed by the
Indemnifying Party, and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party. Notwithstanding the foregoing, the
Indemnifying Party shall at all times control the defence of any such
Third-Party Claim.
(d) If the Indemnifying Party chooses to defend or prosecute a
Third-Party Claim, the Indemnified Party shall, at its own cost, cooperate in
all reasonable respects in the investigation, trial and defence thereof and in
connection with any appeal arising therefrom. Without limiting the generality of
the foregoing, the Indemnified Party shall retain and, upon the Indemnifying
Party's request, provide to the Indemnifying Party copies of all records and
information which are reasonably relevant to such Third-Party Claim, and make
employees available on a mutually convenient basis to provide additional
information and explanation of any material furnished hereunder.
(e) If the Indemnifying Party chooses to defend or prosecute any
Third-Party Claim, the Indemnified Party will agree to any settlement,
compromise or discharge of such Third-Party Claim which the Indemnifying Party
may recommend and which by its terms obligates the Indemnifying Party to pay to
the Indemnified Party the full amount of the liability in connection with such
Third Party Claim. If the proposed settlement, compromise or discharge does not
require full payment of such liability to the Indemnified Party, the Indemnified
Party shall have the right to consent to such settlement, compromise or
discharge (which consent shall not be unreasonably withheld or delayed).
(f) Whether or not the Indemnifying Party shall have assumed the
defence of a Third-Party Claim, the Indemnified Party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third-Party
Claim without the Indemnifying Party's prior written consent (which consent
shall not be unreasonably withheld or delayed).
10.6. CHARACTERIZATION OF PAYMENTS
All amounts paid by ABB or Purchaser, as the case may be, under this
Article 10 and Article 7.9 shall, to the extent permitted by Applicable Law, be
treated as adjustments to the Purchase Price for all purposes (including but not
limited to Tax purposes).
10.7. TERMINATION OF CERTAIN INDEMNIFICATION
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(a) No action or claim may be brought for indemnity in respect of any
breach by ABB of any of its representations or warranties set out in Article 5,
unless the claim, describing in reasonable detail the nature of the claim and
the calculation of the amount claimed, is made in writing to ABB within
twenty-four (24) months of the Closing Date; PROVIDED that claims for
misrepresentation or breach of warranty under Section 5.14 shall become
time-barred ninety (90) days after the earlier of (i) the date the relevant Tax
assessment has become final and non-appealable or the case has been settled with
the relevant taxing authorities and (ii) the expiration of the statute of
limitations period applicable to the claim underlying the claim for indemnity;
PROVIDED FURTHER that claims for misrepresentation or breach of warranty under
Sections 5.1 through 5.5 and Section 5.18 shall not be time-barred, but rather
shall survive the Closing without limitation. Actions or claims for indemnity
for any breach by Purchaser of any of its representations or warranties set out
in Article 6 shall not be time-barred, but rather shall survive the Closing
without limitation.
(b) No action or claim may be brought for indemnity under Section
10.1(ii), unless the claim, describing in reasonable detail the nature of the
claim and the calculation of the amount claimed, is made in writing to and
received by the Indemnifying Party within ninety (90) days after the Indemnified
Party becomes aware of the breach.
(c) All claims duly made within the applicable period in accordance
with Paragraphs (a) and (b) above shall become time-barred six (6) months after
the expiration of said period, unless proceedings to enforce such claim have
been commenced in accordance with Article 11 prior to such date.
(d) All claims by Purchaser for Losses with respect to Taxes (other
than those addressed in Paragraph (a) above) including, without limitation, for
Taxes referred to in Section 10.2, shall become time-barred ninety (90) days
after the earlier of (i) the relevant Tax assessment has become final and
non-appealable or the case has been settled with the relevant taxing authorities
and (ii) the expiration of the statute of limitations period applicable to the
claim underlying the claim for indemnity; PROVIDED, HOWEVER, that, in the case
of any claim attributable to a contractual claim for Taxes against any member of
the NB Group, such claim shall be time-barred no earlier than ninety (90) days
after the date on which Purchaser or the NB Group, as the case may be, received
such contractual claim.
10.8. EXCLUSIVE REMEDIES
Each party hereto acknowledges and agrees that 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 set forth in this
Article 10 (other than the equitable
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remedy of specific performance in connection with the breach of any covenant
contained in this Agreement). In furtherance hereof, and except as otherwise set
forth in this Article 10, each party hereby waives, to the fullest extent
permitted under Applicable Law, any and all rights, claims and causes of action
it may have against the other party, its Affiliates and their respective
officers, directors, employees, stockholders, agents and representatives,
arising under or based upon Applicable Law. Nothing in this Section 10.8 shall
limit either party's remedies under the Ancillary Agreements.
10.9. SUBROGATION
Without limiting Purchaser's indemnification obligations pursuant to
this Article 10, ABB and its Affiliates shall be subrogated to the rights of
Purchaser and its Affiliates under any Contracts of the Business (including any
rights to indemnification and reimbursement) in connection with any defense in
respect of, arising out of or involving a claim by any Person against ABB or any
of its Affiliates in relation to the Business.
10.10. CURRENCY TRANSLATION
All recoverable Losses expressed in any currency other than United
States dollars shall be translated into United States dollars on the basis of
(i) in the case of currencies published at 4 p.m. (London time) by Reuters 2000
Service, page FXFX, the applicable closing mid-point rate for such currencies
fixed by the Foreign Exchange Market in London on the date of the claim for
recovery hereunder or, if such date is not a business day, on the last business
day immediately preceding such claim; and (ii) in the case of currencies not so
published by Reuters, the applicable mid-point rate calculated on the basis of
the relevant rates published in The Financial Times in regard to such date or,
if not available in The Financial Times, on the basis of the relevant rates of
Citibank N.A. published by Reuters simultaneously with the ones published on
page FXFX.
10.11 ARBITRATION OF CERTAIN ENVIRONMENTAL LIABILITIES
Notwithstanding the provisions of Sections 11.2 and 11.3 of this
Agreement, any dispute concerning the obligations of any party under subsections
(iv), (v) and (vi) of Section 10.2 shall be settled by arbitration in accordance
with the Commercial Rules of the American Arbitration Association. Any party may
commence arbitration hereunder by delivering notice to the other party or
parties to the dispute, claim or controversy. The arbitration panel shall
consist of three arbitrators. Within ten (10) days after delivery of the notice
of commencement of arbitration referred to above, the Purchaser and ABB shall
each appoint one arbitrator, and the two arbitrators so appointed shall
designate a third arbitrator within ten (10) days of their appointment. If the
arbitrators designated by the parties to the arbitration are unable or fail to
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agree upon the third arbitrator, the third arbitrator shall be designated by the
American Arbitration Association under its rules. The arbitrators will be bound
by the substantive law of the State of New York, but will not be bound by the
laws of evidence and procedure customary in courts of law. The arbitrators shall
be required to submit a written statement of their findings and conclusions
within sixty (60) days of the evidentiary hearing. The award of the arbitrators
shall be final, binding and conclusive on the parties; PROVIDED that, where a
remedy for breach is prescribed hereunder or limitations on remedies are
prescribed, the arbitrators shall be bound by such restrictions. Judgment upon
the award may be entered in any court having jurisdiction thereof. The
arbitration proceedings shall be conducted in New York, New York. Unless
otherwise determined by the arbitrator (which determination shall be final and
binding on Purchaser and ABB), each party shall pay its own expenses of
arbitration and the expenses of the arbitrators shall be shared equally by
Purchaser and ABB.
10.12 PROCEDURES RELATING TO THIRD PARTY ENVIRONMENTAL CLAIMS.
(a) After the Closing, each of Purchaser and ABB shall notify (the
"NOTIFYING PARTY") the other in writing, and in reasonable detail, of any claim
in respect of, arising out of or involving a claim made by any third party
against the Notifying Party constituting an Environmental Liability or a
Decontamination and Decommissioning Liability indemnified under Sections
10.2(iv), (v) or (vi) hereof (in each case a "SHARED CLAIM"), within ten (10)
business days after receipt by the Notifying Party of written notice of the
Shared Claim; PROVIDED, HOWEVER, that failure to give such notification shall
not affect the indemnification provided hereunder except to the extent the other
party shall have been actually prejudiced as a result of such failure (except
that the other party shall not be liable for any expenses incurred during the
period in which the Notifying Party failed to give such notice). Thereafter,
each party shall deliver to the other party, promptly after such party's receipt
thereof, copies of all notices and documents (including court papers) received
by such party relating to the Shared Claim.
(b) Purchaser and ABB shall negotiate in good faith to allocate
responsibility for the defense of Shared Claims, it being agreed that:
(i) Purchaser and ABB will each be entitled to participate in the
defense of any Shared Claim and will each cooperate in the defense of any
Shared Claim, including the retention and (upon request) the provision to
the requesting party of records and information which are reasonably
relevant to such Shared Claim, and making employees (including any Business
Employees familiar with such Shared Claim) available on a mutually
convenient basis to provide additional information and explanation of any
such records and information;
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(ii) Purchaser and ABB will consult with each other and shall mutually
agree on any significant strategic decisions in respect of any Shared
Claim, and shall make appropriate and mutually agreeable arrangements with
respect to day-to-day administration of any Shared Claim;
(iii) Purchaser and ABB will consult with each other and shall mutually
agree on any settlement, compromise or discharge of any Shared Claim;
(iv) neither Purchaser nor ABB shall admit any liability with respect to
or settle, compromise or discharge, any Shared Claim without the other
party's prior written consent (which consent shall not be unreasonably
withheld or delayed); and
(v) with respect to any decisions under Paragraphs (ii) and (iii)
above, if ABB and Purchaser cannot agree, the party with the greater share
of the potential liability with respect to such Shared Claim shall make
such decision.
10.13 OKG CONTRACT
(a) Any payment of indemnity under Section 10.2(iii) shall be made
within sixty (60) days after approval by ABB of Purchaser's final statement on
the OKG Contract provided pursuant to Paragraph (c)(ii) below.
(b) Purchaser shall, and shall cause its Affiliates to, use all
reasonable efforts to meet the contractual terms and conditions of the OKG
Contract.
(c) Purchaser shall deliver to ABB (i) periodic statements, on a
quarterly basis no later than the 15th of the first calendar month in each
quarter after the Closing, setting out in reasonable detail such information on
the technical, financial, commercial and factual progress and status of the OKG
Contract as ABB may reasonably request (including but not limited to information
on costs incurred or expected to be incurred, realized or expected revenues and
any technical problems) and (ii) a final statement to be delivered promptly
after full performance (or termination) of the OKG Contract by the Purchaser
and/or its Affiliates as evidenced by the customer's final acceptance thereunder
(or appropriate evidence of termination thereof), setting out in reasonable
detail the calculation of the Actual OKG Loss incurred under the OKG Contract.
In addition, ABB and its accountants, counsel and other representatives (whose
costs shall be paid by ABB), once monthly at such times and in such manner as
may be agreed with Purchaser, shall have the right to meet with the project
manager and other key personnel involved in the execution of the OKG Contract
for purposes of receiving an in-depth status report and discussing efforts taken
by the Purchaser and/or its Affiliates with a view to securing
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cost-effective performance and, where applicable, suitable remedial action under
the OKG Contract.
(d) ABB and its counsel, and other representatives (whose costs shall
be paid by ABB) shall have access to the premises, properties, books, accounting
records and other documentation (including supporting contractual documentation)
and personnel of Purchaser and/or its Affiliates for the purpose of verifying
the statements submitted by Purchaser pursuant to Paragraph (c) above or
Purchaser's compliance with this Section 10.13.
(e) Each party shall nominate one person, who shall be the main
contact person of such party for purposes of implementing the provisions of this
Section 10.13, and shall keep each other informed of the identity and address of
such person (including any replacements).
(f) Whenever, pursuant to the last available report on the OKG
Contract, the project is in a projected loss position, ABB shall have the right
to offer consultancy support from the Automation Segment in the ABB Group in
addition to the support required to be provided to Purchaser pursuant to Section
7.20. Any such additional consulting support shall be provided at ABB's expense.
Purchaser shall procure that the NB Group gives due consideration to the advice
provided pursuant to such consulting support.
(g) The provisions of this Section 10.13 shall apply from the Closing
until ABB has given its consent to the final report of Purchaser submitted
pursuant to Paragraph (c) above or the Actual OKG Loss has been determined
pursuant to the provisions of Article 11, as the case may be.
ARTICLE 11
DISPUTE RESOLUTION
11.1. AMICABLE RESOLUTION
The parties will use their best efforts to resolve amicably any
dispute, controversy or claim arising out of or relating to this agreement, or
the breach, termination or invalidity thereof.
11.2. ARBITRATION
Except as otherwise provided for in Sections 2.5 and 10.11, any such
dispute, controversy or claim which cannot be settled amicably within thirty
(30) days of written notice by either party describing in reasonable detail the
dispute, controversy or claim, shall be settled
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by arbitration in accordance with the then applicable arbitration rules of the
International Chamber of Commerce.
11.3. PROCEDURE
The arbitration provided for in Section 11.2 shall be held in London,
England and shall be conducted by three (3) arbitrators, of which each party
shall appoint one (1) arbitrator and the two (2) arbitrators thus appointed
shall appoint the presiding arbitrator. The language to be used in the
arbitration proceedings shall be English, unless otherwise agreed in writing by
the parties. The arbitrators shall give reasonably detailed justifications for
their award in any proceeding and the award shall be final and binding upon the
parties. The parties agree that the award of the arbitrators may be enforced by
any court having jurisdiction over the party against which the award has been
rendered or the assets of such party, wherever the same may be located.
11.4. ONGOING OBLIGATIONS
Upon and after the submission of any dispute to arbitration, the
parties shall continue to exercise their remaining respective rights, and fulfil
their remaining respective obligations, under this Agreement, except insofar as
the same may be related directly to the matters in dispute.
ARTICLE 12
GENERAL PROVISIONS
12.1. ANNOUNCEMENTS
Unless disclosure is required by Applicable Law or stock exchange
regulations to be made by either party hereto, each party agrees to keep the
existence and content of this Agreement confidential and will make no public
announcement with respect thereto without the prior written approval of the
other party (such approval not to be unreasonably withheld or delayed). In the
event of any required disclosure, the relevant party shall provide advance
notice to and, to the extent practicable, shall coordinate the content, form and
manner of publication with the other party.
12.2. COOPERATION
Unless otherwise expressly provided in this Agreement, whenever the
parties are required to cooperate for any particular purpose hereunder, neither
party, nor their respective Affiliates, shall be required to make any material
monetary expenditure, commence or be a plaintiff
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in any litigation or offer or grant any material accommodation or concession
(financial or otherwise) to any Person.
12.3. ENTIRE AGREEMENT
This Agreement, the Local Agreements, the Ancillary Agreements and the
confidentiality undertaking dated May 20, 1999 made by Purchaser in favor of ABB
and its Affiliates contain the entire understanding of the parties hereto with
respect to the subject matter contained herein and supersede and cancel all
prior agreements, negotiations, correspondence, undertakings and communications
of the parties, oral or written, respecting such subject matter, including
without limitation, the Letter Agreement, dated October 15, 1999, between ABB
Ltd. and British Nuclear Fuels plc. There are no restrictions, promises,
agreements or undertakings of any party hereto with respect to the Transaction
other than those set forth herein or made hereunder and in or under the Local
Agreements and the Ancillary Agreements.
12.4. SEVERABILITY
If at any time any provision of this Agreement is or becomes invalid,
illegal or unenforceable under Applicable Law of any jurisdiction, the validity,
legality and enforceability of the remainder of this Agreement in that
jurisdiction shall not be affected, and the validity, legality and
enforceability of the whole Agreement in any other jurisdiction shall not be
affected. In the event any provision is held in any proceeding pursuant to
Article 11 to be invalid, illegal or unenforceable, the parties shall replace
that provision with a new provision permitted by law and having an economic
effect as close as possible to the deficient provision.
12.5. NO THIRD PARTY BENEFICIARIES
This Agreement shall be directed and interpreted to the advantage of
the parties only and their permitted assignees, and no third Person shall obtain
any rights by virtue hereof.
12.6. ASSIGNMENT
Neither party may assign its rights or obligations under this
Agreement to any third Person without the prior written consent of the other
party, except that Purchaser may without the further consent of ABB assign to
one or more of Purchaser's Subsidiaries the right to acquire part or all of the
business and assets of the Business hereunder, together with the other rights of
Purchaser hereunder with respect thereto; PROVIDED that no such assignment shall
relieve Purchaser of any liability hereunder (including any liability under
Article 10) or affect any limitations on ABB's liability under Article 10;
PROVIDED FURTHER that, notwithstanding any such assignment (i) any claims by
Purchaser or its Subsidiaries for, or relating to, any indemnity under
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this Agreement shall be brought by Purchaser, and not its Subsidiaries, and ABB
shall only be obligated to deal with Purchaser in connection with any such
claims; and (ii) ABB may seek any indemnity it may be entitled to under this
Agreement solely from Purchaser and without having first to seek indemnity from
any such Subsidiaries of Purchaser. If such assignment is made to more than one
Subsidiary of Purchaser, such Subsidiaries shall be deemed a single entity for
purposes of calculating the limitations on liability of ABB under Article 10.
12.7. NOTICES
All notices and other communications that are required or permitted to
be given under this Agreement shall be in writing and hand delivered or sent by
registered mail (return receipt requested) or confirmed facsimile to the
following addresses (which may be changed in writing by notice to the
appropriate address):
If to ABB:
ABB Handels- und Verwaltungs AG
c/o ABB Ltd.
PO Box 8131
CH-8050 Zurich
Switzerland
Fax No.: +41 1 317 7992
Attention: Dept. CS-LE
with a copy to:
White & Case
7-11 Moorgate
London EC2R 6HH
England
Fax No.: +44 20 7600 7030
Attention: Mats Sacklen, Esq.
If to Purchaser:
British Nuclear Fuels plc
Hinton House
Risley, Warrington
Cheshire WA3 6AS
England
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Fax: 011-441-925-832058
Attn: Alvin J. Shuttleworth
with a copy to:
Westinghouse Electric Company
4350 Northern Pike
Energy Center
Monroeville, PA 15146-2886
Fax No.: (412) 374-6122
Attn: Ramsey Coates
and
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Ave., N.W.
Washington, D.C. 20004
Fax No.: (202) 637-3593
Attn: Mark D. Herlach
Unless the contrary is proved, a notice to a party shall be deemed to
have been received (i) on the date of delivery, when the notice is delivered by
hand at that address to a responsible person during normal business hours; (ii)
within five (5) days from the date it was mailed, postage prepaid, when the
notice is sent by first class registered mail in a correctly addressed envelope
to the address specified above; and (iii) within four hours of transmission (if
the transmission occurs during the hours of 9:00 a.m. to 5:30 p.m. in the
location of the recipient) or within twelve (12) hours of transmission (if the
transmission occurs outside those hours), if the notice is transmitted by
facsimile at the facsimile number specified above; PROVIDED, in the case of
notices via facsimile, that the notice is also left or sent by pre-paid recorded
delivery or registered mail in accordance with item (i) or (ii) above no later
than three (3) days thereafter, or receipt is confirmed in writing at any time
by the recipient. Any notice or communication received on a day which is not a
business day shall be deemed to have been received on the immediately following
business day.
12.8. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts made and to be
performed entirely within the
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State of New York (without regard to the laws that might otherwise govern under
applicable principles of conflict of laws).
12.9. COSTS AND EXPENSES
(a) All costs and expenses incurred in connection with the
preparation, negotiation and implementation of this Agreement and the
Transaction shall be borne by the party incurring such costs and expenses.
(b) All stamp, transfer, documentary, sales and use, value added,
registration and other such Taxes and fees (including any penalties and
interest) and all notarial, registration and filing fees incurred in connection
with the Transaction shall be borne by Purchaser, and Purchaser shall, at its
own expense, procure any share transfer stamps required by Applicable Law, and
properly file on a timely basis all necessary Tax Returns and other
documentation with respect to such Tax and provide ABB with evidence of payment
of all such Taxes.
12.10. FURTHER ASSURANCES
Each party undertakes to take all steps to implement this Agreement
and to sign, or to have signed, from time to time all other documents necessary
or appropriate in order to fulfill the object of this Agreement and give full
effect to all of the provisions contained herein.
12.11. COUNTERPARTS
This Agreement may be executed (which execution may be via facsimile)
in two (2) or more counterparts, each of which shall be deemed to be an
original, but all the counterparts shall together constitute one (1) and the
same agreement. Unless otherwise provided herein, this Agreement shall be dated
and become effective, and each counterpart shall be dated, on the date on which
the last of the parties executes this Agreement or a counterpart of this
Agreement, as the case may be.
12.12. PAYMENT OF INDEMNITIES
ABB shall cause the relevant Seller(s) of Shares or Loans, or of
Additional Business Assets or Additional Business Liabilities, to make all
payments, if any, pursuant to any indemnity given by ABB in this Agreement
(including but not limited to the indemnities given by ABB in Section 7.9(g) and
Article 10).
[signature page immediately follows]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representatives on the date
first set forth above.
ABB HANDELS- UND VERWALTUNGS AG BRITISH NUCLEAR FUELS plc
By: /s/ Eric Lint By: /s/ John Taylor
Name: Name: John Taylor
Title: Title: Chief Executive
By: /s/ Hans Enhorning By: /s/ Alvin Shuttleworth
Name: Name: Alvin Shuttleworth
Title: Title: Company Secretary
and Group Legal Director
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EXECUTION COPY
FIRST AMENDMENT
TO THE
PURCHASE AGREEMENT
THIS FIRST AMENDMENT (this "FIRST AMENDMENT") is dated as of April
28, 2000 between:
ABB HANDELS-UND VERWALTUNGS AG, a company organized and existing
under the laws of Switzerland with its principal office at CH-8050 Zurich
("ABB"), and
BRITISH NUCLEAR FUELS plc, a company organized and existing under
the laws of England with its principal office at Risley, Warrington,
Cheshire WA3 6AS, England ("Purchaser").
Capitalized terms used herein and not otherwise defined herein shall
have the meaning as set forth in the Purchase Agreement (as defined below),
unless the context otherwise requires.
WITNESSETH:
WHEREAS, ABB and Purchaser are parties to a Purchase Agreement dated
December 21, 1999 (the "PURCHASE AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Purchase
Agreement as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed as follows:
<Page>
ARTICLE 1
AMENDMENTS
1.1. SECTION 1.1 (DEFINITIONS)
(a) The defined term "NBSE" in Section 1.1 (Definitions) of the
Purchase Agreement is hereby amended by substituting "AB Cythere 62" for "ABB
Cynthere 62 AB".
(b) The defined term "Non-Business Liabilities" in Section 1.1
(Definitions) of the Purchase Agreement is hereby amended by adding "; and (vi)
Liabilities arising in connection with ABB Monolit, Kharkov-664".
1.2. SECTION 1.3 (INTERPRETATION)
(a) Section 1.3 (Interpretation) of the Purchase Agreement is hereby
amended by inserting the following text at the end of paragraph (d):
"and any amendments to this Agreement or such Annexes or
Schedules"
(b) Section 1.3 (Interpretation) of the Purchase Agreement is hereby
amended by adding a new paragraph (k) as follows:
"(k) Whenever any reference is made in this Agreement to assets or
properties consisting of real estate, such reference, for purposes of
determining whether such real estate is primarily used, or held for use,
in the Business, shall be deemed a reference to the entire legal unit of
such real estate, including all land and all buildings, structures and
other improvements located thereon forming part of such legal unit."
1.3. SECTION 2.1 (SALE AND PURCHASE)
Section 2.1(b) (Sale and Purchase) of the Purchase Agreement is
hereby amended by inserting the following text at the end of such paragraph (b):
"; PROVIDED, HOWEVER, that (i) each of Erick Anckaert and Giorgio
Cravato (each a "Temporary ABB Employee") shall continue as an employee of
the relevant Affiliate of ABB after the Closing until (A) in the case of
Erick Anckaert, June 30, 2000 or, at Purchaser's option exercised by
written notice to ABB within sixty (60) days of the Closing, August 30,
2000; or (B) in the case of Giorgio Cravato, December 31, 2000; (ii) ABB
shall use all reasonable efforts to ensure that the services of each
Temporary ABB Employee are made available to Purchaser and/or its
Affiliates on a full-time basis
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throughout the relevant period; (iii) Purchaser shall promptly, and from
time to time, reimburse the relevant Affiliate of ABB for any and all
amounts paid or costs incurred by such Affiliate in providing
compensation, social insurance, benefits and perquisites to any Temporary
ABB Employee during such period at the levels prevailing at the Closing,
with such increases as ABB and Purchaser may subsequently implement by
mutual agreement; (iv) at or prior to the expiration of the relevant
period referred to herein, Purchaser shall offer each Temporary ABB
Employee employment with Purchaser and/or its Affiliates on terms,
including but not limited to position and level of compensation, no less
favorable to such Temporary ABB Employee than those then applicable and
Purchaser shall assume all then existing employment-related obligations
with respect to such Temporary ABB Employee; and (v) if Purchaser fails to
offer employment to any Temporary ABB Employee as provided herein, then
Purchaser shall, as and when paid by the relevant Affiliate of ABB,
promptly indemnify such Affiliate against any and all costs and
liabilities with respect to severance, separation or other compensation
and benefits to which such Temporary ABB Employee is entitled upon
termination of his employment with such Affiliate.
1.4. SECTION 3.1 (CERTAIN TRANSFERS)
(a) Section 3.1(b) (Certain Transfers) of the Purchase Agreement is
hereby amended by inserting the following text at the end of such paragraph (b):
"; PROVIDED, HOWEVER, that, with respect to the transfer of the
activities within the scope of the Business conducted by the US I&C Unit
referred to in Paragraph (a) above, the transfer of all properties, assets
goodwill and rights to be transferred and all Liabilities to be assumed
may be effected by way of a dividend thereof from the US I&C Unit to Asea
Brown Boveri Inc. and a subsequent contribution thereof by Asea Brown
Boveri Inc to, and assumption thereof by, NBUS; PROVIDED FURTHER that no
employees of ABB Utilities Automation GmbH dedicated to performing
services at the Super Phenix nuclear power plant in France or at the
Muelheim-Kaerlich nuclear power plant in Germany shall be offered
employment with or transferred to NBDE."
(b) Section 3.1(c) (Certain Transfers) of the Purchase Agreement is
hereby amended by inserting the following text after the word "purchase
agreement" in the third line of such paragraph (c):
", contribution agreement or other appropriate agreement"
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1.5. NEW SECTION 3.4 (TRANSFER OF CERTAIN PERSONNEL)
A new Section 3.4 is hereby added to the Purchase Agreement as
follows:
"3.4 TRANSFER OF CERTAIN PERSONNEL
(a) ABB shall use all reasonable efforts to ensure that, prior to
the Closing, all employees listed on SCHEDULE 3.4(a) hereto are
transferred to the Swedish Unit and all Liabilities in relation to such
employees are assumed by the Swedish Unit. If, within twenty-four (24)
months of the Closing, the Purchaser, acting reasonably, determines that,
in view of the order intake and backlog situation of the Swedish Unit at
the time, it is probable that, in the short to medium term, it will not be
able to keep one or more of such employees gainfully employed within the
Swedish Unit in a position commensurate with their experience, credentials
and compensation level and provides written notice to such effect to ABB,
then ABB shall, at its option, exercised by written notice to Purchaser
within thirty (30) days of receipt of Purchaser's notice, either (i) cause
one of its Affiliates to offer employment to and, upon acceptance of such
offer, employ each such employee; or (ii) reimburse Purchaser for fifty
(50) percent of all severance payments actually made by the Swedish Unit
to such employees in connection with the termination of their employment
with the Swedish Unit; PROVIDED that such employees are given written
notice of termination (with a copy to ABB) within sixty (60) days of the
expiration of said 30-day period; PROVIDED FURTHER that such severance
payments are no greater than the severance payments that would have been
payable to such employees by ABB or its Affiliates had such employees been
terminated from their present positions instead of transferred to the
Swedish Unit (subject to reasonable additional payments based solely on
customary and reasonable salary increases and additional service in the
ordinary course for such employees prior to their termination by the
Swedish Unit). If ABB fails to provide timely notice of its election to
offer employment or reimburse severance payments pursuant to the
immediately preceding sentence or if one or more employees of the Swedish
Units are offered employment by an Affiliate of ABB in Sweden as provided
in the previous sentence, but reject such offer, ABB shall be deemed, on
the conditions of such sentence, to have chosen to reimburse Purchaser for
severance payments incurred by the Swedish Unit.
(b) ABB shall use all reasonable efforts to ensure that, prior to
the Closing, all employees listed on SCHEDULE 3.4(b) hereto are
transferred to NBDE and all Liabilities in relation to such employees are
assumed by NBDE.
(c) In the event the employees to be transferred pursuant to
Paragraph (a) or (b) above have not been so transferred by the Closing,
the parties will use all reasonable efforts
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to ensure that they are transferred as provided therein as soon as
reasonably possible thereafter."
1.6. SECTION 7.1(c) (CONDUCT OF BUSINESS)
Section 7.1(c) (Conduct of Business) of the Purchase Agreement is
hereby amended by deleting the second sentence in such Section 7.1(c) and
replacing it with the following:
"The instructions to the Reviewing Firm shall be substantially in
the form as set forth in ANNEX 9 hereto."
1.7. SECTION 7.7 (SHARED ASSETS)
Section 7.7 (Shared Assets) of the Purchase Agreement is hereby
amended by adding a new paragraph (d) as follows:
"(d) For purposes of Section 7.7(c), German patent number 4434284.2,
German patent number 19525907.6, German patent number 19828446.2 and
German trademark for "Unibloc" shall be deemed to be Intellectual Property
of ABB and/or its Affiliates which do not form part of the Business, but
which are also used or held for use in, or otherwise relate to, the
Business."
1.8. SECTION 7.10 (NO USE OF TRADEMARKS)
Section 7.10 (No Use of Trademarks) of the Purchase Agreement is
hereby amended by adding a new paragraph (f) as follows:
"(f) As soon as reasonably possible after the Closing, ABB shall
cause its relevant Affiliate to enter into a license agreement with NBDE
pursuant to which NBDE will be granted a non-exclusive license to use the
trademarks "Hartmann & Braun" and "H&B" solely in connection with (i) the
design, manufacture and sale of products by the instrumentation and
control unit of NBDE currently located in Munich, Germany to customers in
Germany, France, Belgium and Switzerland for use in nuclear powered
electric generating facilities, nuclear processing facilities or nuclear
test facilities (collectively, "Nuclear Installations") in such countries,
to the extent such products are of a kind designed, manufactured and sold
by such unit as of the Closing, and any and all successor products
designed, manufactured and sold by such unit at any time thereafter during
the term of the license to customers in Germany, France, Belgium and
Switzerland for use in Nuclear Installations in such countries; and (ii)
the provision of services by the instrumentation and control unit of NBDE
currently located in Frankfurt, Germany at
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Nuclear Installations in Germany, to the extent such services are of a
kind provided by such unit as of the Closing. Apart from terms and
conditions customarily found in license agreements of the kind
contemplated by this Section 7.10(f), the license agreement to be entered
into pursuant hereto shall (x) have a term of fifteen (15) years, but
shall be terminable by NBDE in whole or in part at any time upon ninety
(90) days' prior written notice; (y) except for the first year of the
license, which shall be royalty-free, provide for a royalty, payable
quarterly, at the rate of two (2) percent of the aggregate net sales of
the instrumentation and control units referred to above under the
tradename "Hartmann & Braun" or "H&B"; (z) require NBDE to apply, in a
prominent fashion, to all licensed products, and all promotional,
packaging, advertising and similar matter relating to licensed products or
services, a notice that the trademark in question is used under license
from the relevant Affiliate of ABB, the word "nuclear" or a similar
designation clearly indicating the business in which such trademark is
used and such other notices and designations as ABB may reasonably
request."
1.9. SECTION 7.15 (INSURANCE)
Section 7.15 (Insurance) of the Purchase Agreement is hereby amended
by adding a new paragraph (c), a new paragraph (d) and a new paragraph (e) as
follows:
"(c) Without limiting the generality of Paragraphs (a) and (b)
above, but subject to Paragraph (e) below, Purchaser agrees that, as from
the Closing, it will maintain the nuclear property insurance coverage
written by Hartford Steam Boiler Inspection & Insurance Co. ("HSB") then
in effect with respect to the Hematite Site and the Windsor Site or
equivalent coverage, provided that Purchaser shall promptly provide ABB
with copies of such policy(s). As from the Closing, ABB and/or its
Affiliates separately designated to Purchaser in writing prior to the
Closing and Combustion Engineering, Inc., ABB Alstom Power Inc. and ABB
Alstom Power NV (but only with respect to their ownership interest in
Combustion Engineering, Inc. and only until Combustion Engineering Inc. is
acquired by ABB and/or its Affiliates) shall be provided with additional
insured status (including, in the case of Combustion Engineering, Inc.,
its rental income exposure in relation to the Windsor Lease (as defined in
Section 7.21(b)) and a waiver of subrogation under the nuclear property
policy with respect to the Windsor Site in accordance with the current
terms and conditions thereof.
(d) Without limiting the generality of Paragraphs (a) and (b) above,
but subject to Paragraph (e) below, ABB agrees that, as from the Closing,
it will maintain the facility form policy and worker certificates then in
effect covering the operations at the Windsor Site and any obligations or
liabilities under the applicable NRC license. As from the
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Closing, a Person separately designated by Purchaser in writing to ABB
prior to the Closing shall be provided with additional insured status
under such insurance coverage until such Person ceases to hold a broad
scope radioactive materials NRC license to conduct operations at the
Windsor Site. ABB shall make all reasonable efforts to assign, or cause
its Affiliates to assign, as from the Closing, the facility form policies
and worker certificates then in effect covering the operations at the
Hematite Site and the site at 1201 River Front Parkway, Chattanooga,
Tennessee, U.S.A., respectively, to one or more Persons designated by
Purchaser in writing to ABB prior to the Closing (it being understood that
the omnibus insured provisions under such policies, as written, will
continue to protect ABB and any other insured entity who may be legally
liable, in accordance with the terms and conditions of such policies and
certificates). It is understood that ABB and/or its Affiliates plan to
maintain their current suppliers and transporters nuclear liability form,
but that neither Purchaser nor any of its Affiliates will be covered in
any way thereunder.
(e) Neither party, nor any of its Affiliates, shall cancel, fail to
renew, reduce or otherwise allow to lapse any insurance coverage afforded
to the other party and/or its Affiliates pursuant to Paragraphs (c) or (d)
above without providing such other party with at least ninety (90) days
prior written notice and will make all reasonable efforts to secure from
the insurer an undertaking to provide such prior notice; PROVIDED that,
with respect to the nuclear property insurance coverage required to be
maintained by Purchaser with respect to the Windsor Site pursuant to
Paragraph (c) above, the policy shall be maintained at least throughout
the short-term tenancy of NBUS pursuant to Section 7.2 1(c). Unless
otherwise agreed between the parties, each party and/or its Affiliates
shall have the right to be reimbursed for any additional premiums due
under the nuclear property and nuclear liability insurances (including but
not limited to facility form policies and worker certificates) maintained
by them pursuant to Paragraphs (c) and (d) above to the extent such
additional premiums arise from the inclusion of the other party and/or its
Affiliates as additional insureds."
1.10. SECTION 7.21 (JV SERVICES AND LEASES)
(a) Section 7.21(b) (IV Services and Leases) of the Purchase
Agreement is hereby amended by inserting the following text at the end of the
first sentence of such paragraph (b):
"; PROVIDED THAT if ABB and/or its Affiliates, directly or
indirectly, acquire ownership to the Windsor Site at any time after the
Closing, the Windsor Lease shall, as from the date of such acquisition, be
substantially in the form of ANNEX 10 hereto."
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(b) Section 7.21(b) (IV Services and Leases) of the Purchase
Agreement is hereby amended by inserting the following text at the end of such
paragraph (b):
"Subject to the provisions of Section 10.3 (b),(f) and (h), which
shall apply mutatis mutandis to indemnification under this sentence,
Purchaser agrees to indemnify ABB and its Affiliates, and their respective
officers, directors, employees, agents and representatives, against, and
agrees to hold them harmless from, (i) any and all Losses arising from
personal injury or property damage to the extent caused by or resulting
from the occupation and use of the Windsor Site by Purchaser and/or its
Affiliates; and (ii) any and all Losses in respect of Windsor Site
Environmental Liabilities if ABB proves that (A) such Windsor Site
Environmental Liabilities were caused by the operation of Purchaser and/or
its Affiliates of any facilities at the Windsor Site during their tenancy
at the Windsor Site in accordance with Section 7.2 1(b) and (c); and (B)
such Windsor Site Environmental Liabilities caused by Purchaser and/or its
Affiliates will increase ABB's cost of Remedial Action or its
Decontamination and Decommissioning Liabilities."
(b) Section 7.21(c) (IV Services and Leases) of the Purchase
Agreement is hereby amended by inserting the following text at the end of
paragraph (c):
"Notwithstanding the foregoing, ABB and Purchaser agree that, if NRC
approval for the actions has then been obtained, at the Closing, Material
License 06-00217-06 and Special Nuclear Materials License SNM-1067
currently held by NBUS with respect to operations at the Windsor Site
shall be transferred to ABB Prospects Inc. and NBUS shall obtain a new
broad scope radioactive materials license, which shall enable NBUS to
conduct operations at the Windsor Site as currently conducted."
1.11. NEW SECTION 7.23 (TRANSFER OF TENDER)
A new Section 7.23 is hereby added to the Purchase Agreement as
follows:
"7.23 TRANSFER OF TENDER
At or prior to the Closing, the relevant Affiliate of ABB shall
assign to a company in the NB Group all rights, and such company in the NB
Group shall assume all obligations, under the tender for the supply of
instrumentation and control equipment for a water treatment plant at
Barsebaeck, Sweden disclosed to Purchaser prior to the Closing and any
contract relating thereto shall be entered into by Purchaser and/or its
Affiliates"
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1.12. NEW SECTION 7.24 (TRANSFER OF AECL COMMITMENTS)
A new Section 7.24 is hereby added to the Purchase Agreement as
follows:
"7.24 TRANSFER OF AECL COMMITMENT
As soon as reasonably possible after the Closing, ABB and Purchaser
will jointly approach Atomic Energy of Canada Limited ("AECL") with a view
to obtaining AECL's consent to transfer all obligations of ABB and/or its
Affiliates under the documents attached as Appendix B to the
Non-Competition Agreement and each of ABB and Purchaser will use all
reasonable efforts (without expenditure, in the aggregate, of any material
sum) to effect such transfer."
1.13. NEW SECTION 7.25 (TRANSFER OF HTR)
A new Section 7.25 is hereby added to the Purchase Agreement as
follows:
"7.25 TRANSFER OF HTR
ABB and Purchaser shall use all reasonable efforts to obtain, as
soon as possible after the Closing, all third-party consents required for
the relevant Affiliate of ABB to sell and transfer its participation in
HTR GmbH to NBDE and, upon receipt of all such consents, promptly cause
the sale and purchase to be completed in accordance with this Section
7.25. If such sale and purchase is completed prior to the delivery of the
Final Audit Report, then the purchase price, payable at completion, shall
be an amount equal to the book value of the shareholders' equity of HTR
GmbH attributable to the participation being sold and purchased and the
transaction shall be accounted for in the Final Audit Report as if it had
been completed prior to the Closing. If such sale and purchase is not
completed prior to the delivery of the Final Audit Report, but is
consummated by December 31, 2001, then the purchase price, payable at
completion, shall be an amount, if any, that would achieve the same
economic result for ABB and Purchaser and their respective Affiliates as
if the transaction had been completed prior to such delivery in accordance
with the previous sentence. If such sale and purchase is not completed
prior to December 31, 2001, then neither party shall have any further
obligation to consummate such transaction. The sale and purchase referred
to in this Section 7.25 shall be effected pursuant to a purchase agreement
between the relevant Affiliate of ABB on the one hand and NBDE on the
other hand, which agreement shall include a warranty by such Affiliate
that it has taken all corporate action required to authorize the
transaction and that it is the owner of the participation being sold and
purchased, free and clear of all Encumbrances. No other warranties shall
be given by such Affiliate of ABB."
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1.14. NEW SECTION 7.26 (TECHNOLOGY CUSTODY)
A new Section 7.26 is hereby added to the Purchase Agreement as
follows:
"7.26 CUSTODY OF TECHNOLOGY
It is understood that ABB and/or its Affiliates have used, or may
need to use, certain pieces of Technology of the NB Group to produce
certain hardware and software products for the NB Group and that ABB
and/or its Affiliates therefore have had, or may need to have, possession
of such Technology. ABB and/or its Affiliates shall maintain, or shall be
given, possession of the relevant Technology of the NB Group that ABB
and/or its Affiliates require solely for the production of products, parts
or services for the NB Group ("NB Group Technology") for as long as they
continue to produce any such products, parts or services and Purchaser
hereby grants, and will cause the NB Group to grant, to ABB and/or its
Affiliates a license to use the NB Group Technology for the limited
purpose of producing products, parts and services for the NB Group as
directed by the NB Group and only for so long as the NB Group deems it
necessary. The NB Group shall at all times have access to the NB Group
Technology and, upon the request in writing by Purchaser, ABB and/or its
Affiliates shall deliver the NB Group Technology to the NB Group or, at
the expense of the NB Group, otherwise dispose of the NB Group Technology
as directed by the NB Group."
1.15. SECTION 1 0.2(iv) (ADDITIONAL INDEMNIFICATION BY ABB)
Section 10.2(iv) (Additional Indemnification by ABB) to the Purchase
Agreement is hereby amended by deleting the clause which begins "PROVIDED,
HOWEVER" and replacing it with the following:
"PROVIDED, HOWEVER, that ABB shall not have any Liability for (A)
any and all Losses arising from personal injury or property damage to the
extent caused by or resulting from the occupation and use of the Windsor
Site by Purchaser and/or its Affiliates, or (B) any and all Losses in
respect of Windsor Site Environmental Liabilities if ABB proves that such
Windsor Site Environmental Liabilities were caused by the operation of
Purchaser and/or its Affiliates of any facilities at the Windsor Site
during their tenancy at the Windsor Site in accordance with Section 7.2
1(b) and (c);"
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1.16. NEW SECTION 12.13 (WAIVER OF IMMUNITY)
A new Section 12.13 is hereby added to the Purchase Agreement as
follows:
"12.13 WAIVER OF IMMUNITY
To the extent that Purchaser or any of its assets has or hereafter
may acquire any right of immunity, whether characterized as sovereign
immunity or otherwise, from any legal proceeding of any kind to enforce or
collect upon any obligation of Purchaser under this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, immunity from service of process, immunity from execution of a
judgment and immunity of any of its property from attachment prior to the
entry of judgment, Purchaser hereby expressly and irrevocably waives all
such immunity."
1.17. NEW ANNEX 9 (REVIEWING FIRM INSTRUCTIONS)
Pursuant to the amendment herein of Section 7.1(c), a new Annex 9,
in the form attached hereto, is hereby added to the Purchase Agreement.
1.18. NEW ANNEX 10 (WINDSOR LEASE)
Pursuant to the amendment herein of Section 7.21(b), a new Annex 10,
in the form attached hereto, is hereby added to the Purchase Agreement.
1.19. SCHEDULE 1.1(3) (ADDITIONAL BUSINESS EMPLOYEES)
(a) Schedule 1.1(3) (Additional Business Employees) to the Purchase
Agreement is hereby amended by adding the following new employee information:
"China Li Zhao Hui ABB China Holding"
(b) Schedule 1.1(3) (Additional Business Employees) to the
Purchase Agreement is hereby amended by deleting the following reference:
"France Gilbert Tomasino FRABB Holding
1.20. SCHEDULE 2.3 (ALLOCATION OF PURCHASE PRICE)
Schedule 2.3 (Allocation of Purchase Price) to the Purchase
Agreement is hereby amended by substituting "US $ 186,900,000" for "US $
187,000,000" as the allocation for NBSE (including the Swedish Unit) and by
adding "Additional Business Assets/Liabilities in Belgium - US $ 100,000" as
the last item of that Schedule.
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1.21. SCHEDULE 3.101(i) (EXCLUDED ASSETS)
(a) Schedule 3.1(b)(i) (Excluded Assets) to the Purchase Agreement
is hereby amended by deleting the word "and" at the end of paragraph (iii)
therein and by replacing the period at the end of paragraph (iv) therein with a
semicolon.
(b) Schedule 3.1(b)(i) (Excluded Assets) to the Purchase Agreement
is hereby amended by inserting new paragraphs (v), (vi) and (vii) as follows:
"(v) except for cash and cash equivalents actually transferred to
the NB Group by ABB and/or its Affiliates, in their discretion, in
connection with the Pre-Closing Reorganization, cash and cash equivalents;
(vi) the loan from ABB Reaktor GmbH to Asea Brown Boveri AG in the
outstanding principal amount of DEM 101.4 million, together with all
interest, if any, accrued thereon; and
(vii) all rights and benefits under all agreements and
contracts referred to in Section 1 .2(b)(v) of the Non-Competition
Agreement."
1.22. NEW SCHEDULE 3.4(a) (TRANSFER OF PERSONNEL TO SWEDISH UNIT)
Pursuant to the addition herein of Section 3.4 (Transfer of Certain
Personnel), a new Schedule 3.4(a) is hereby added to the Purchase Agreement as
follows:
" SCHEDULE 3.4(a)
TRANSFER OF PERSONNEL TO SWEDISH UNIT
EMPLOYEE NUMBER LAST NAME FIRST NAME
637696 ALFVEN MIKAEL
247553 EKLUND STIG
438111 HARVISALO RISTO
100773 HELM ANDERS
371238 HJQRT PIA
623946 HULTMAN KJELL
762431 KJELLBERG INGER
363839 KOPSELL ANN-CHRISTIN
999512 LADVALL ERLAND
637939 LARSSQN NICLAS
242438 PERSSON LARS
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242772 RAGNSATER LEIF
949183 RQGNE HANS
670952 ROSQVIST LARS
621455 SALONPAA PENTTI
101371 SJOBERG MAGNUS
338567 STRIDH BIRGITTA
904937 STAHLBERG JOHANNA
682845 SVANBACK ELIZABET
683329 SVENSSON GORAN
637513 THUDIN MICHAEL
100552 WIECHEL HENRIK G B
252077 WISEN ERIK
236781 AKERBLOM EVA
1.23. NEW SCHEDULE 3.4(b) (TRANSFER OF PERSONNEL TO NBDE)
Pursuant to the addition herein of Section 3.4 (Transfer of Certain
Personnel), a new Schedule 3.4(b) is hereby added to the Purchase Agreement as
follows:
" SCHEDULE 3.4(b)
TRANSFER OF PERSONNEL TO NBDE
France Gilbert Tomasino FRABB Holding
France Cyril Fiaux
France Roland Kuijer
France Claude Bianchi
1.24. SCHEDULE 5.1(c) (SUBSIDIARIES OF NBDE)
Schedule 5.1(c) (Subsidiaries of NBDE) to the Purchase Agreement is
hereby amended by adding the following new entry:
"Kontec Gessellschaft fur Technische Kommunikation GmbH (80%
owned by Hansa Projekt Analgentechnik GmbH)"
1.25. SCHEDULE 5.11 (MATERIAL CONTRACTS)
(a) Schedule 5.11 (Material Contracts) to the Purchase Agreement is
hereby amended by replacing the entry "Contract related to the acquisition of
Hansa Projekt Anlagentechnik, GmbH" with the following:
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"Shareholders Agreement between ABB Reaktor GmbH and Hansa Projekt
Anlagentechnik GmbH, Hamburg, dated January 31, 1996"
(b) Schedule 5.11 (Material Contracts) to the Purchase Agreement is
hereby amended by replacing the entry "Contract for the provision of Technology
Transfer and License Agreement with ESKOM, South Africa" with the following:
"Agreement between HTR-GmbH, ABB Reaktor GmbH and Siemens dated June
30, 1999 regarding the HTR-Technology Transfer and License Agreement,
dated March 12, 1999, between HTR-GmbH and ESKOM, South Africa"
(c) Schedule 5.11 (Material Contracts) to the Purchase Agreement is
hereby amended by adding the following after the entry "Shareholders Agreement
between ABB Reaktor GmbH and Hansa Projekt Anlagentechnik GmbH, Hamburg, dated
January 31, 1996" introduced pursuant to Paragraph (a) above:
"Addendum No. 1 of 17.4.1989 to agreement between ABB
Hochtemperaturreaktorbau GmbH ("DEHRB"), subsequently merged into
ABB Reaktor GmbH, and General Atomic.
Right of the German Government to use and right of the German
Government to be paid by DEHRB in relation to HTR know how subsidized by
the Government.
License of DEHRB to General Atomic for HTR know-how of January 11,
1973 [expired 1993, but with royalty-free right for General Atomic to use
know-how after expiration].
License of General Atomic to DEHRB for HTR know-how of January 11,
1973 [expired 1993, but with royalty-free right for DEHRB to use know-how
after expiration].
License of DEHRB to GHT (Siemens) for HTR know-how of 1976/1979
[expired 1996, but with royalty-free right for GHT to use know-how after
expiration]
Agreement of GHT, DEHRB, KFA (public research institute), Nukem and
Sigri for the establishment of the association for the development of an
HTR of 1979/1980 [expired 1997, but with royalty-free right of each party
to use know-how after expiration].
Consortium Agreement of GHT, DEHRB and KFA regarding the
exploitation of the HTR know-how (KVGH) of 2.9.1980 [expired 1994, but
royalty-free right of each party to use know-how after expiration].
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1.26. SCHEDULE 7.6(h) (STAY BONUSES)
Schedule 7.6(h) (Stay Bonuses) to the Purchase Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:
" SCHEDULE 7.6(h)
STAY BONUSES
The following people shall be the subject of the stay bonuses
contemplated by Section 7.6(h):
1. Mike Barnoski
2. Per Brunzell
3. William Gill
4. Jim McConnell
5. Regis Matzie
6. Peter Wirtz
7. Gil Page
8. Robert Schumacher
9. Sigvard Junkrans
10. P.O. Waessman
11. Arnoud Houllemare
12. Al Spinnell
13. Sverre Haukeland
14. Jim Viers
15. Ken Scarola
16. Robert Bell
17. Lars Eriksson
18. Ernie Kennedy
19. D.H. Chung
20. Gavin Liu
21. Satya Pati
22. Anard Garde
23. Rick Maurer
24. Dave Stepnick
25. Darrell Weber
26. Johan Hallen
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27. Eva Hallden
28. Derek Ebeling-Koning
29. Rolondo Perez
30. Tom Rozek
31. Arno Vogelbacher
32. Franz Poetz"
ARTICLE 2
MISCELLANEOUS
2.1. SCOPE OF AMENDMENTS
This First Amendment is limited as specified and shall not
constitute a modification or waiver of any of the other provisions of the
Purchase Agreement which shall continue in full force and effect except as
provided herein.
2.2. REFERENCES
From and after the date hereof, all references to the Purchase
Agreement shall be deemed to be references to the Purchase Agreement as amended
hereby.
2.3. COUNTERPARTS
This First Amendment may be executed in any number of counterparts,
and this has the same effect as if the signatures on the counterparts were on a
single copy of this First Amendment.
2.4. GOVERNING LAW
This First Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York (without regard to the
laws that might otherwise govern under applicable principles of conflict of
laws).
2.5. INCORPORATION BY REFERENCE
Article 11 (Dispute Resolution) and Sections 12.4 (Severability),
12.6 (Assignment), 12.7 (Notices), 12.9 (Costs and Expenses) and 12.10 (Further
Assurances) of the Purchase Agreement are hereby incorporated, mutatis mutandis,
by reference.
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IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to be executed by its duly authorized representatives on the date
first set forth above.
ABB HANDELS-UND VERWALTUNGS AG BRITISH NUCLEAR FUELS plc
By: /S/ HANS ENHORNING By: /S/ RAMSAY COATES
Name: Hans Enhorning Name: Ramsay Coates
Title: VP Title:
By: /s/ G.K. PRIEST By: /s/ IAN DUNCAN
Name: A.K. Priest Name: Ian Duncan
Title: VP Title:
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EXECUTION COPY
SECOND AMENDMENT
TO THE
PURCHASE AGREEMENT
THIS SECOND AMENDMENT (this `SECOND Amendment") is dated as of
November 10,2000 between:
ABB HANDELS- UND VERWALTUNGS AG, a company organized and existing
under the laws of Switzerland with its principal office at CH-8050 Zurich
("ABB"), and
BRITISH NUCLEAR FUELS plc, a company organized and existing under
the laws of England with its principal office at Risley, Warrington,
Cheshire WA3 6AS, England ("PURCHASER")
Capitalized terms used herein arid not otherwise defined herein
shall have the moaning as set forth in the Purchase Agreement (as defined
below), unless the context otherwise requires.
WITNESSETH:
WHEREAS, ABB and Purchaser are parties to a Purchase Agreement dated
December 21, 1999 (the "PURCHASE AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Purchase
Agreement as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed as follows:
<Page>
ARTICLE 1
AMENDMENT
SECTION 2.5 (CLOSING AUDIT REPORT; DISPUTES)
The period of sixty (60) days referred to in Section 2.5. (d) is
hereby replaced by a period of ninety (90) days.
INCORPORATION BY REFERENCE
Article 11 (Dispute Resolution) and Sections 12.4 (Severability).
12.6 (Assignment), 12.7 (Notices), 12.9 (Costs and Expenses) and 12.10 (Further
Assurances) of the Purchase Agreement are hereby incorporated, mutatis mutandis,
by reference.
IN WITNESS WHEREOF, each of the parties hereto has caused this
SECOND Amendment to be executed by its duly authorized representatives on the
date first set forth above.
ABB HANDELS-UND VERWALTUNGS AG BRITISH NUCLEAR FUELS plc
By: /s/HANS ENHORNING By: /s/RAMSAY COATES
Name: Hans Enhorning Name: Ramsay Coates
Title: Vice President Title: Vice President and
Chief Financial Officer
By: By:
Name: Name:
Title: Title:
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THIRD AMENDMENT
TO THE
PURCHASE AGREEMENT
THIS THIRD AMENDMENT (this "THIRD AMENDMENT') is dated as of
November 29, 2000 between:
ABB HANDELS-UND VERWALTUNGS AG, a company organized and existing
under the laws of Switzerland with its principal office at CH-8050 Zurich
("ABB"), and
BRITISH NUCLEAR FUELS plc, a company organized and existing under
the laws of England with its principal office at Risley, Wanington,
Cheshire WA3 6AS, England ("PURCHASER").
Capitalized terms used herein and not otherwise defined herein shall
have the meaning as set forth in the Purchase Agreement (as defined below),
unless the context otherwise requires.
WITNESSETH:
WHEREAS, ABB and Purchaser are parties to a Purchase Agreement dated
December 21, 1999 (the `Purchase Agreement'); and
WHEREAS, the parties hereto desire to amend the Purchase
Agreement as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants contaihed
herein, It Is hereby agreed as follows:
<Page>
ARTICLE 1
AMENDMENT
SECTION 2.5 (CLOSING AUDIT REPORT; DISPUTES)
Annex 1 hereto Is hereby confirmed by both parties as the final and
binding resolution to the dispute between them over Purchaser's Objection Notice
to the Closing Audit Report. Annex 1 thus constitutes the Final Audit Report in
accordance with Section 2.5 0) of the Purchase Agreement Pursuant to the Final
Audit Report the Actual Deficiency Amount is USD29,330,000.
MINDEN CONTRACTS
It is hereby agreed that the Minden contracts specified in Annex 2
hereto shall be treated in all respects as contracts fisted on, and are hereby
added to, the fist of contracts contained in Appendix A to the Non-Competition
Agreement, and accordingly shall not form part of the assets transferred to
Purchaser under the Purchase Agreement. Any obligations or liabilities under
such Minden contracts shall constitute Non-Business Liabilities for purposes of
the Purchase Agreement It is further agreed that the exclusion of such Minden
contracts shall not affect the Actual Equity and Actual Working Capital, but are
instead the subject of arrangements agreed in Germany by German Affiliates of
the parties. ABB and the Purchaser further agree that the Agreement between them
dated April 28,2000, to enter into a definitive agreement embodying the terms of
the Memorandum of Understanding between ABB Reaktor GmbH and ABB Utility
Automation GmbH is hereby rescinded effective as of April 28,2000.
DISPUTED ITEM IN GERMANY
Purchaser confirms that it has procured that full payment has been
made by NBDE to ABB Utility Automation GmbH in respect of an amount of Euro
4'661'000 in satisfaction of NBDE's non-trade payable to ABB Utility Automation
GmbH.
OTHER ISSUES
This THIRD Amendment shall not be construed as dealing with any
issue or dispute between the parties or their respective Affiliates other than
as explicitly set out herein.
INCORPORATION BY REFERENCE
Article 11 (Dispute Resolution) and Sections 12.4 (Severability),
12.6 (Assignment), 12.7 (Notices), 12.9 (Costs and Expenses) and 12.10 (Further
Assurances) of the Purchase Agreement are hereby incorporated, mutatis mutandis,
by reference.
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<Page>
IN WITNESS WHEREOF, each of the parties hereto has caused this THIRD
Amendment to be executed by its duly authorized representatives on the date
first set forth above.
ABB HANDELS-UND VERWALTUNGS AG BRITISH NUCLEAR FUELS plc
By: /s/ Hans Enhorning By: /s/ Ramsay Coates
Name: Hans Enhorning Name: Ramsay Coates
Title: Title:
By: /s/ Grant Kenneth Priest By:
Name: Grant Kenneth Priest Name:
Title: Title:
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