Exhibit 2.1
Stock AND ASSET PURCHASE AGREEMENT
by and between
EASTMAN KODAK COMPANY
and
ITT INDUSTRIES, INC.
Dated February 8, 2004
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TABLE OF CONTENTS
Page
Article 1 Definitions and
Usage..............................................1
1.1
Definitions......................................................1
1.2
Usage...........................................................18
Article 2 Sale and Transfer of Assets,
LIABILITIES AND STOCK;
Closing.........................................................19
2.1
Assets to Be
Sold...............................................19
2.2
Excluded
Assets.................................................20
2.3
Liabilities.....................................................22
2.4
RSI
Stock.......................................................24
2.5
Purchase Price;
Closing.........................................24
2.6
Allocation......................................................25
2.7
Transfer
Taxes..................................................25
Article 3 Representations and Warranties of
Seller..........................26
3.1
Organization and
Good Standing..................................26
3.2
Authority;
Enforceability; No Conflict..........................26
3.3
Capitalization
and Ownership of Research Systems,
Inc. and its
Subsidiaries.......................................27
3.4
Financial
Statements............................................28
3.5
Sufficiency of
Assets...........................................28
3.6
Description of
Owned Real Property..............................28
3.7
Description of
Leased Real Property; Leases.....................29
3.8
Title to Assets;
Encumbrances...................................29
3.9
Condition of
Real Property......................................30
3.10
Condition of Personal
Property..................................31
3.11
No Undisclosed
Liabilities......................................31
3.12
Taxes...........................................................31
3.13
Employee
Benefits...............................................33
3.14
Compliance with Legal
Requirements; Governmental
Authorizations..................................................34
3.15
Legal Proceedings;
Orders.......................................34
3.16
Absence of Certain
Changes or Events............................34
3.17
Contracts; No
Defaults; Bids....................................35
3.18
Environmental
Matters...........................................37
3.19
Employees.......................................................39
3.20
Labor;
Compliance...............................................39
3.21
Brokers or
Finders..............................................40
3.22
Governmental
Authorizations and Consents........................40
3.23
Government
Contracts............................................41
3.24
Certain
Payments................................................42
3.25
Government Furnished
Equipment..................................43
3.26
Material
Suppliers..............................................43
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3.27
Classified
Information..........................................43
3.28
Export Control and
Compliance...................................43
3.29
Business........................................................43
3.30
Absence of Seller
Marks.........................................43
Article 4 Representations and Warranties of
Buyer...........................43
4.1
Organization and
Good Standing..................................43
4.2
Authority;
Enforceability; No Conflict..........................44
4.3
Certain
Proceedings.............................................44
4.4
Brokers or
Finders..............................................44
4.5
Sufficient
Funds................................................45
4.6
Security
Clearance..............................................45
4.7
Governmental
Authorizations and Consents........................45
4.8
Buyer's
Acknowledgment..........................................45
Article 5 Covenants of
Seller...............................................46
5.1
Confidential
Information........................................46
5.2
Operation of the
Business of Seller.............................47
5.3
Noncompetition..................................................49
5.4
Nonsolicitation.................................................50
5.5
Real Estate
Matters.............................................51
5.6
Access..........................................................53
5.7
Tax Sharing
Agreements..........................................53
5.8
Intercompany
Arrangements.......................................53
5.9
Assistance with
Environmental Permits...........................54
5.10
Transition
Services.............................................54
Article 6 Covenants of
Buyer................................................54
6.1
Confidentiality.................................................54
6.2
Use of the
Seller Marks.........................................54
Article 7 Conditions Precedent to Buyer's
Obligation to Close...............55
7.1
Accuracy of
Representations.....................................55
7.2
Seller's
Performance............................................56
7.3
Additional
Documents............................................56
7.4
No
Proceedings..................................................57
7.5
Authorizations
and Consents.....................................57
7.6
Real
Property...................................................57
7.7
No Material
Adverse Change......................................58
Article 8 Conditions Precedent to Seller's
Obligation to Close..............59
8.1
Accuracy of
Representations.....................................59
8.2
Buyer's
Performance.............................................59
8.3
Additional
Documents............................................59
8.4
No
Proceedings..................................................60
8.5
Authorizations
and Consents.....................................60
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Article 9
Termination.......................................................60
9.1
Termination
Events..............................................60
9.2
Effect of
Termination...........................................61
Article 10 EMPLOYEES AND EMPLOYEE
BENEFITS..................................61
10.1
Employment......................................................61
10.2
Employee Benefit
Plans..........................................62
10.3
Defined Benefit
Plans...........................................65
10.4
Forms
W-2.......................................................69
Article 11 Indemnification;
Remedies........................................69
11.1
Survival........................................................69
11.2
Indemnification and
Reimbursement by Seller.....................70
11.3
Indemnification and
Reimbursement by Buyer......................71
11.4
Consequential or
Punitive Damages...............................72
11.5
Limitations on Amount
-- Seller.................................73
11.6
Indemnification
Procedures......................................73
11.7
Indemnification with
Respect to Retained
Environmental
Liabilities.......................................75
11.8
Indemnity Claims
Requiring Environmental Remediation............76
11.9
Sole
Remedy.....................................................77
Article 12 MUTUAL
COVENANTS.................................................78
12.1
Antitrust and
Competition Filings...............................78
12.2
Novations and
Consents..........................................78
12.3
Tax
Matters.....................................................80
12.4
Bulk
Sales......................................................82
12.5
Update to Disclosure
Schedules..................................82
12.6
Cooperation in
Litigation and Audits............................82
12.7
Retention of and
Access to Records; Cooperation.................83
12.8
FOS
Agreement...................................................84
12.9
Reasonable Efforts;
Further Assurances..........................84
12.10
Ancillary
Agreements............................................84
Article 13 General
Provisions...............................................84
13.1
Expenses........................................................84
13.2
Public
Announcements............................................85
13.3
Notices.........................................................85
13.4
Disputes........................................................86
13.5
Jurisdiction; Service
of Process................................86
13.6
Jury Trial
Waiver...............................................86
13.7 Specific
Performance............................................87
13.8
Waiver..........................................................87
13.9
Entire Agreement and
Modification...............................87
13.10
Disclosure
Schedules............................................87
13.11
Assignments, Successors and No Third-Party
Rights...............87
13.12
Severability....................................................88
13.13
Construction....................................................88
13.14 Time
of Essence.................................................88
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13.15
Governing
Law...................................................88
13.16
Execution of
Agreement..........................................88
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Exhibits
Exhibit 1.1(n)
Assignment and Assumption Agreement
Exhibit 1.1(s)
Bill of Sale
Exhibit 1.1(u)
Building 13 Land Lease Agreement: Summary of Significant
Lease Terms
Exhibit 1.1(x
Building 326 Lease Agreement
Exhibit 1.1(y)-1
Building 601 Interim Lease Agreement: Summary of
Significant Lease Terms
Exhibit 1.1(z)
Building 601 Leaseback Agreement: Summary of Significant
Lease Terms
Exhibit 1.1(bb)
Building 602 Land Lease Agreement: Summary of
Significant Lease
Terms
Exhibit 1.1(aaaa)
Hawkeye Lease and Facility Services Agreement
Exhibit 1.1(iiii)
Intellectual Property Agreement
Exhibit 1.1(tttt) Term
Sheet for Mathematical Foundations for Watermarking
Subcontract
Exhibit 1.1(uuuu)-1 Term Sheet for
Optical Services Agreement
Exhibit 1.1(ooooo) Rochester
Airport Facility Sublease Agreement: Summary
of Significant Lease Terms
Exhibit 1.1(ppppp) Rochester
Technology Park Sublease Agreement: Summary of
Significant Lease Terms
Exhibit 1.1(uuuuu) RSS/AIM
Services and Supply Agreement
Exhibit 1.1(kkkkkk) Sensor Supply
Agreement
Exhibit 1.1(llllll)-1 Storage Space Agreement:
Summary of Significant License
Terms
Exhibit 2.6
Allocation of Purchase Price
Exhibit 5.5(b)(ii) Utility
Services Agreement: Summary of Significant Terms
Exhibit 5.5(b)(iii) Sanitary Sewer
Agreement
Exhibit 7.3(g)
Assignment and Assumption of Lease
Schedules
Schedule 1.1(f)
Employee Benefit Plans (Health and Dental)
Schedule 1.1(gg)(i) Shared
Employees
Schedule 1.1(gg)(iii) Job Requisitions
Schedule 1.1(ttt)
Former Business Employees
Schedule 1.1(llll) Seller's
Knowledge Persons
Schedule 1.1(mmmm) Buyer's
Knowledge Persons
Schedule 2.1(i)
Governmental Authorizations to be Transferred
Schedule 2.2(j)
Excluded Governmental Authorizations
Schedule 2.2(n)
Other Excluded Assets
Schedule 2.3(a)(iv) Employment
Liabilities
Schedule 2.3(a)(ix) Other Assumed
Liabilities
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Schedule 3.1
States in which Research Systems, Inc. is qualified to
do business
Schedule 3.2(b)
Seller's Conflicts
Schedule 3.3(d)
Capitalization of RSI Subsidiaries
Schedule 3.4-A
Financial Statements
Schedule 3.4-B
Accounting Principles
Schedule 3.6
Description of Owned Real Property
Schedule 3.7
Description of Leased Real Property
Schedule 3.8(a)
Real Property Encumbrances
Schedule 3.8(b)
Other Property Encumbrances
Schedule 3.9(a)
Proceedings Affecting Transferred Real Property
Schedule 3.10(a)
Tangible Personal Property not in Seller's Possession
Schedule 3.11
Other Liabilities
Schedule 3.12
RSI Tax Encumbrances
Schedule 3.13(a)
Material Employee Benefit Plans
Schedule 3.13(f)
Contemplated Transaction Payments
Schedule 3.14(a)
Compliance with Legal Requirements
Schedule 3.15
Legal Proceedings
Schedule 3.16(a)
Material Adverse Effects
Schedule 3.16(b)
Actions Outside the Ordinary Course of Business
Schedule 3.17(a)
Material Business Contracts
Schedule 3.17(b)
Compliance with Business Contracts
Schedule 3.17(c)
Bids
Schedule 3.18
Environmental Matters
Schedule 3.19(a)
Business Employees' Compensation
Schedule 3.19(b)
Former Business Employees and Dependents who receive or
are entitled to receive Post-Employment
Welfare Benefits
Schedule 3.22(f)
Seller's Required Consents
Schedule 3.23(a)
Government/Business Contracts Exceptions
Schedule 3.23(b)
Government/Business Contracts Investigation, Indictments
and Audits
Schedule 3.23(c)
Suspension or Debarment
Schedule 3.25
Government Furnished Equipment
Schedule 3.26
Material Suppliers
Schedule 4.2(b)
Buyer's Conflicts
Schedule 4.7(f)
Buyer's Required Consents
Schedule 5.2(g)
Exceptions to Transfer of Property
Schedule 5.2(j)
Exceptions to Modifications of Material Business
Contracts
Schedule 5.2(o)
Exception to Research Systems, Inc. Tax Elections
Schedule 7.5(b)
Consents Required as Conditions to Buyer's Obligations
Schedule 8.5(b)
Consents Required as Conditions to Seller's Obligations
ii
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EXECUTION COPY
STOCK AND ASSET PURCHASE AGREEMENT
This Stock and
Asset Purchase Agreement ("Agreement") is dated February 8,
2004, by and between Eastman Kodak Company,
a New Jersey corporation ("Seller")
and ITT Industries, Inc., an Indiana
corporation ("Buyer") (Seller and Buyer are
referred to herein each individually as a
"Party" and collectively as the
"Parties").
RECITALS
WHEREAS, Seller
is engaged in the Business (as defined below); and
WHEREAS, Seller
desires to sell and convey, and Buyer desires to purchase
and acquire, certain of the assets,
properties and rights of Seller used in the
Business, and all of the stock of Research
Systems, Inc., a Colorado corporation
and a wholly-owned subsidiary of Seller,
for the consideration and on the terms
set forth in this Agreement, including the
assumption by Buyer of certain of the
liabilities and obligations of Seller
relating to the Business.
NOW, THEREFORE,
in consideration of the foregoing and the respective
representations, warranties, covenants and
agreements set forth herein, the
Parties, intending to be legally bound,
agree as follows:
Article 1
Definitions and Usage
1.1 Definitions. For
purposes of this Agreement, the following terms and
variations thereof have the meanings
specified or referred to in this Section
1.1:
(a) "2002 Balance Sheet" shall have the meaning set forth in
Section
3.4(a).
(b) "2003 Balance Sheet" shall have the meaning set forth in
Section
3.4(a).
(c)
"Accounts Receivable" shall mean (i) all accounts receivable
and
other rights to payment of Seller (but only
to the extent arising in connection
with the operation of the Business) or RSI,
and the full benefit of all security
for such accounts or rights to payment,
including all trade accounts receivable
representing amounts receivable in respect
of goods shipped or products sold or
services rendered to customers, including
unbilled amounts for contract work in
progress, and (ii) any claim, remedy or
other right related to any of the
foregoing.
(d) "Accrued Bonus Payments" shall mean the aggregate amount of
all
annual bonus payments accrued as of the
Closing on the books and records of the
Business, which amount represents a
pro-rated portion (as described in the
following sentence) of the annual incentive
payment that would otherwise be
payable to each Acquired Employee under the
Kodak Executive Compensation for
Excellence and Leadership Plan, as amended
and restated effective January 1,
2002 and/or the Kodak United States
Employee Recognition Plan, as revised
<PAGE>
on October 14, 2002, and Kodak Wage
Dividend Plan, as applicable, in respect of
the year in which the Closing Date occurs.
Such accrued amount shall be
determined based on Seller's reasonable,
good faith determination, consistent
with past practice, as to the relative
achievement, as of the Closing Date, of
the performance goals to be achieved under
such plans upon the completion of
such year, pro rated based on a fraction,
the numerator of which will be equal
to the number of days between January 1,
2004 and the Closing Date, and the
denominator of which will equal to 365.
(e) "Acquired Employees" shall mean Business Employees who accept
an
offer of employment from Buyer as provided
in Section 10.1(a).
(f) "Active Welfare Benefits" shall mean any health or dental
benefits
to be provided to any Acquired Employee or
RSI Current Employee or any
respective Dependent thereof under any
Employee Benefit Plan identified on
Schedule 1.1(f).
(g) "Affiliate" shall mean, as to any specified Person at any
time,
any other Person that directly or
indirectly through one or more intermediaries
controls, or is controlled by, or is under
common control with, such specified
Person. For purposes of this definition,
"control" (including "controlling,"
"controlled by," and "under common control
with") means the possession, direct
or indirect, of the power to direct or
cause the direction of the management and
policies of a Person, whether through the
ownership of voting securities or
general partnership or managing member
interests, by contract or otherwise
including, ownership, directly or
indirectly, of securities having the power to
elect a majority of the board of directors
or similar body governing the affairs
of such Person, and shall be construed as
such term is used in the rules
promulgated under the Securities Act.
Without limiting the generality of the
foregoing, a Person shall be deemed to
control any other Person in which it
owns, directly or indirectly, a majority of
the voting interests.
(h) "Affiliate Plan" shall mean each Employee Benefit Plan that
is
sponsored, maintained, or contributed to by
RSI and that covers employees and
former employees of RSI.
(i) "Allocation" shall have the meaning set forth in Section
2.6.
(j) "Ancillary Agreements" shall mean (i) the Assignment and
Assumption Agreement, (ii) the Bill of
Sale, (iii) the Building 13 Land Lease
Agreement, (iv) the Building 326 Lease
Agreement, (v) the Building 601 Leaseback
Agreement, (vi) the Building 602 Land Lease
Agreement, (vii) the Hawkeye Lease
and Facility Services Agreement, (viii) the
Intellectual Property Agreement,
(ix) the Mathematical Foundations for
Watermarking Subcontract, (x) the
Rochester Airport Facility Sublease
Agreement, (xi) the Rochester Technology
Park Sublease Agreement, (xii) the RSS/AIM
Services and Supply Agreement, (xiii)
the Sanitary Sewer Agreement, (xiv) the
Sensor Supply Agreement, (xv) the
Utility Services Agreement, (xvi) the
Building 601 Interim Lease Agreement,
(xvii) the Storage Space License Agreement,
(xviii) the Optical Services
Agreement, (xix) the Transition Services
Agreement, and (xx) the Employee
Services Agreement (if requested by Buyer
pursuant to Section 12.7(b)).
(k) "Assets" shall have the meaning set forth in Section 2.1.
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(l) "Assigned Intellectual Property" shall have the meaning set
forth
in the Intellectual Property Agreement.
(m) "Assigned Marks" shall have the meaning set forth in the
Intellectual Property Agreement.
(n) "Assignment and Assumption Agreement" shall mean the
assignment
and assumption agreement substantially in
the form of Exhibit 1.1(n).
(o) "Assumed Pre-Closing Taxes" shall have the meaning set forth
in
Section 2.3(a)(iii).
(p) "Assumed Liabilities" shall have the meaning set forth in
Section
2.3(a).
(q) "Balance Sheets" shall have the meaning set forth in
Section
3.4(a).
(q)-1 "Baseline Environmental Assessment" shall mean:
(i) for the Building 101 Facility, and the Building 601
Facility,
an investigation by an independent
environmental consultant mutually
satisfactory to Buyer and Seller, the scope
of which shall be proposed by Buyer
in a written work plan developed in
consultation with, and subject to the
approval (not to be unreasonably withheld
or delayed) of Seller, and the purpose
of which is to develop a reasonable
understanding of environmental conditions,
including soil and groundwater, as they
exist approximately as of the Closing
Date, by sampling and analysis. Seller
shall assist Buyer as necessary with
information and access to properties and
personnel so that Buyer or Buyer's
representative may develop work plans for
the baseline environmental assessments
for the Building 101 Facility and the
Building 601 Facility, and Seller shall
cooperate in reviewing and reasonably
approving such work plans, so that these
Baseline Environmental Assessments may be
undertaken approximately as of the
Closing, subject to reasonable timing
adjustments in light of climate
conditions. Buyer will promptly provide to
Seller a copy of the final reports.
Buyer is responsible for all costs
associated with the performance of these
baseline environmental assessments, and
Buyer shall indemnify, defend, save and
hold harmless the Seller Indemnified
Persons from any Damages arising from the
conduct of Buyer's contractor in
performance of the work plans; and
(ii) for the Hawkeye Plant, an investigation by an independent
environmental consultant mutually
satisfactory to Buyer and Seller, the scope of
which shall be proposed by Seller in a
written work plan developed in
consultation with, and subject to the
approval (not to be unreasonably withheld
or delayed) of the Buyer, and the purpose
of which is to develop a reasonable
understanding of environmental conditions,
including soil and groundwater, as
they exist approximately as of the Closing
Date, by sampling and analysis. Buyer
shall cooperate in reviewing and reasonably
approving such work plans, so that
the Baseline Environmental Assessment for
the Hawkeye Plant may be undertaken
approximately as of the Closing, subject to
reasonable timing adjustments in
light of climate conditions. Seller will
promptly provide to Buyer a copy of the
final report. Costs associated with the
baseline
3
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environmental assessment of the Hawkeye
Plant will be split 50/50 between the
Seller and Buyer. Seller shall indemnify,
defend, save, and hold harmless the
Buyer Indemnified Parties from any Damages
arising from the conduct of Seller's
contractor in the performance of the work
plan.
The scope of work, including sampling, will
be an effort to document existing
environmental conditions of site media
including soil, surface water, sediment,
ground water, and soil vapor at or about
the time of the Closing. In selecting
sample locations, the location of potential
current and historic sources of
contamination identified in the course of
developing a sampling plan, and the
locations of existing groundwater
monitoring wells (if any), will be considered,
as well as mutually acceptable
up-gradient/background and down-gradient
locations. Such sampling is intended to
reasonably document environmental
conditions in site media (such as geologic
units, groundwater zones, and surface
water bodies) that have been impacted by
historic or current operations on or
off the site, although it is recognized
that sampling will not be comprehensive
and cannot definitively describe site
conditions. All sampling will be completed
promptly, weather permitting, using methods
that are acceptable to the New York
State Department of Environmental
Conservation. Should environmental impacts be
identified, Buyer and Seller will mutually
agree on the need for further site
investigations, including additional
sampling, to further document the source,
nature, and extent of contamination. The
site investigations will also attempt
to document contaminant migration pathways
and potential receptors. Site
investigations will be completed using
methods that are acceptable to the New
York State Department of Environmental
Conservation.
(r) "Bids" shall mean all proposals, offers, bids and quotations
made
by Seller, primarily in connection with the
Business, or by RSI, in each case to
the extent legally binding on Seller or
RSI, as applicable.
(s) "Bill of Sale" shall mean a bill of sale substantially in the
form
of Exhibit 1.1(s).
(s)-1 "Building 12" shall mean the building known as Building 12
in
Seller's manufacturing complex known as
Kodak Park, located in Rochester, New
York.
(t) "Building 13" shall mean the building known as Building 13,
which
is located entirely within the subdivided
boundaries of the land pertaining to
the property known as the Building 101
Facility, which Building 13 is being
retained by Seller together with the
fixtures and other equipment affixed to
such building, but shall not include the
land upon which such building is
located.
(u) "Building 13 Land Lease Agreement" shall mean the leaseback
agreement between Seller, as tenant, and
Buyer, as landlord, to be negotiated in
good faith by Seller and Buyer between the
date of this Agreement and Closing in
accordance with the material terms set
forth on Exhibit 1.1(u), with respect to
(i) that portion of the land included in
the Building 101 Facility on which
Building 13 is located and (ii) the land
reasonably necessary to access Building
13.
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<PAGE>
(v) "Building 101 Facility" shall mean the real property and
improvements located in the Town of Gates,
New York as more particularly
described in Schedule 3.6, but specifically
excluding Building 13 therefrom.
(w) "Building 326" shall mean the building known as Building 326
in
Seller's manufacturing complex known as
Kodak Park, located in Rochester, New
York, as more particularly described in
Schedule 3.6.
(x) "Building 326 Lease Agreement" shall mean the lease
agreement
between Buyer, as tenant, and Seller, as
landlord, substantially in the form of
Exhibit 1.1(x), with respect to a portion
of the space in Building 326.
(x)-1 "Building 508" shall mean the building known as Building 508
in
Seller's manufacturing complex known as
Kodak Park, located in Rochester, New
York.
(y) "Building 601 Facility" shall mean the building known as
Building
601 in Seller's manufacturing complex known
as Kodak Park in Rochester, New York
and certain land on which such building is
located, as more particularly
described in Schedule 3.6, the exact
dimensions of which land shall be
determined as contemplated in Section
5.5(b).
(y)-1 "Building 601 Interim Lease Agreement" shall mean the
lease
agreement between Seller, as landlord, and
Buyer, as tenant, to be negotiated in
good faith by Seller and Buyer between the
date of this Agreement and Closing in
accordance with the material terms set
forth on Exhibit 1.1(y)-1, with respect
to a portion of the space in the Building
601 facility.
(z) "Building 601 Leaseback Agreement" shall mean the leaseback
agreement between Seller, as tenant, and
Buyer, as landlord, pertaining to three
separate leased premises in the Building
601 Facility, to be negotiated in good
faith by Seller and Buyer between the date
of this Agreement and Closing in
accordance with the material terms set
forth on Exhibit 1.1(z), with respect to
a portion of the space in the Building 601
Facility.
(aa) "Building 602" shall mean the building known as Building
602,
which is located entirely within the
boundaries of the land pertaining to the
Building 601 Facility, which Building 602
is being retained by Seller, together
with the fixtures and other equipment
affixed to such building, but shall not
include the land upon which such building
is located.
(bb) "Building 602 Land Lease Agreement" shall mean the
leaseback
agreement between Seller, as tenant, and
Buyer, as landlord, to be negotiated in
good faith by Seller and Buyer between the
date of this Agreement and Closing in
accordance with the material terms set
forth on Exhibit 1.1(bb), with respect to
(i) that portion of the land included in
the Building 601 Facility on which
Building 602 is located and (ii) the land
reasonably necessary to access
Building 602.
(bb)-1 "Building 642" shall mean the building known as Building 642
in
Seller's manufacturing complex known as
Kodak Park, located in Rochester, New
York.
5
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(cc) "Business" shall mean (i) the business of Seller's Remote
Sensing
Systems SPG, which designs, manufacturers,
sells, and supports High Resolution
Electro-Optical End-to-End Systems for (A)
space-based, airborne, and
terrestrial applications supporting United
States Government intelligence,
military and scientific applications and
(B) for commercial remote sensing
businesses; and (ii) all current operations
of RSI. For the avoidance of doubt,
the term "Business" excludes Seller's
Aerial and Industrial Materials SPG,
Seller's Optics SPG, Seller's Imaging
Sensor Solutions SPG, and Seller's Imaging
Services SPG.
(dd) "Business Confidential Information" shall have the meaning
set
forth in Section 5.1(a).
(ee) "Business Contracts" shall mean all Contracts, including
Government Contracts, (i) to which RSI is a
party or (ii) to which Seller is a
party that are required for or relate
primarily to the Business, Assets,
Business Employees or Former Business
Employees; provided, however, that the
term "Business Contracts" shall not include
Employee Benefit Plans,
Confidentiality Letters or Bids.
(ff) "Business
Day" shall mean any day other than (i) Saturday or
Sunday or (ii) any other day on which
commercial banks located in the State of
New York are authorized or required to be
closed or are otherwise generally
closed.
(gg) "Business Employee" shall mean (i) individuals who
constitute
shared employees of the Seller and who are
listed on Schedule 1.1(gg)(i) as of
the Closing Date, (ii) any individual who,
as of the Closing Date, is actively
employed by Seller and who works primarily
for the Business, (iii) individuals
who, as of the Closing Date, are employed
in the positions listed on Schedule
1.1(gg)(iii), and (iv) any individual who,
as of the Closing Date, is employed
by the Seller and who works primarily for
the Business, but who is not actively
at work as of the Closing Date, including
any employee who is on temporary leave
of absence, including family medical leave,
military leave, short-term
disability or sick leave as of the Closing
Date.
(hh) "Buyer" shall have the meaning set forth in the first
paragraph
of this Agreement.
(ii) "Buyer's DCAP" shall have the meaning set forth in Section
10.2(d)(i).
(jj) "Buyer's FSA" shall have the meaning set forth in Section
10.2(c)(i).
(kk) "Buyer Indemnified Persons" shall have the meaning set forth
in
Section 11.2.
(ll) "Buyer Pension Plan" shall have the meaning set forth in
Section
10.3.
(mm) "Buyer's Title Company" shall have the meaning set forth
in
Section 7.6(a).
6
<PAGE>
(nn) "Capital Stock Equivalents" shall have the meaning set forth
in
Section 3.3(a).
(oo) "Claim Notice" shall have the meaning set forth in Section
11.6(a).
(pp) "Claims Incurred" shall mean a claim for benefits made by
an
Acquired Employee or their respective
Dependents under the applicable Employee
Benefit Plan, which claim shall be
considered incurred when the services
(medical or dental) are rendered or
supplies (medical, dental, pharmaceutical)
are provided, and not when the condition to
which the claim may relate first
arose; provided, however, that in the event
of an Acquired Employee's or
Dependents' death or disability, any claim
for benefits shall be deemed to be
incurred as of the date of the Acquired
Employee's or Dependents' death or
disability, as applicable.
(qq) "Closing" shall have the meaning set forth in Section
2.5(b).
(rr) "Closing Date" shall mean the date on which the Closing
actually
takes place.
(ss) "COBRA" shall have the meaning set forth in Section
3.13(e).
(tt) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(uu) "Competing Business" shall have the meaning set forth in
Section
5.3(a).
(vv) "Confidentiality Agreement" shall have the meaning set forth
in
Section 6.1.
(ww) "Confidentiality Letters" shall mean any confidentiality
agreements between Seller, on the one hand,
and Persons other than Buyer, on the
other hand, that were entered into in
connection with or relating to a possible
sale of all or substantially all of the
Business.
(xx) "Consent" shall mean any approval, consent, ratification,
waiver
or other authorization.
(yy) "Contemplated Transactions" shall mean all of the
transactions
contemplated by the Transaction
Agreements.
(zz) "Contract" shall mean any agreement, contract, lease,
license,
sublicenses, indenture, letter contract,
ordering agreement, delivery order,
task order, teaming agreement or consensual
obligation, promise, undertaking or
other legally binding commitment or
arrangement (whether written or oral,
express or implied), including purchase
orders and commitments and sales orders
and commitments.
7
<PAGE>
(aaa) "Cost Accounting Standards" shall mean the policies,
procedures,
standards and regulations promulgated by
the Cost Accounting Standards Board
pursuant to Public Law 100-679, as set
forth in 48 CFR, Chapter 99.
(bbb) "Damages" shall have the meaning set forth in Section
11.2.
(ccc) "Dependent" shall mean any Acquired Employee's, Former
Business
Employee's, RSI Current Employee's or RSI
Former Employee's, as applicable, (i)
current, former or surviving domestic
partner (as defined in the applicable
Employee Benefit Plan) or spouse, and (ii)
children (including the children of a
domestic partner).
(ddd) "DIS" shall have the meaning set forth in Section
3.22(b).
(eee) "Disclosure Schedules" shall mean the disclosure
schedules
referenced in this Agreement and in the
Intellectual Property Agreement, dated
as of the date hereof, and delivered by
Seller to Buyer concurrently with the
execution and delivery of this Agreement,
as the same may be amended in
accordance with this Agreement.
(fff) "Effective Time" shall mean 12:01 a.m. Eastern Time on
the
Closing Date.
(ggg) "Employees" shall mean, as of the Closing Date, all
Acquired
Employees, Former Business Employees, RSI
Current Employees, RSI Former
Employees and their respective Dependents,
collectively.
(hhh) "Employee Benefit Plans" shall mean any pension, profit
sharing,
retirement, deferred compensation, stock
purchase, stock option, stock
appreciation, phantom stock or other equity
based arrangement, compensation,
incentive, bonus, performance, vacation,
termination, retention, change of
control, severance, golden parachute,
disability, hospitalization, medical,
dental, vision, disability, life insurance,
cafeteria, flexible spending
account, or other employee benefit plan,
program, policy, agreement or
arrangement, including any "employee
benefit plan" (as defined under Section
3(3) of ERISA), which (i) is sponsored,
maintained or contributed to by Seller
or an ERISA Affiliate of Seller and (ii)
under which Seller or an ERISA
Affiliate of Seller has any current or
future liability with respect to,
provides benefits to, or describes policies
or procedures applicable to, any
Employees, regardless of how (or whether)
liabilities for the provision of
benefits are accrued or assets are acquired
or dedicated with respect to the
funding thereof.
(hhh)-1 "Employee Confidentiality Agreement" shall mean any
agreement
between Seller and any Business Employee
(or provision of any such agreement),
or legally enforceable obligation of a
Business Employee to Seller, requiring
the Business Employee not to disclose or
use, or to restrict the disclosure or
use of, proprietary or confidential
information of Seller.
(hhh)-2 "Employee Services Agreement" shall have the meaning set
forth
in Section 12.7(b).
8
<PAGE>
(iii) "Encumbrance" shall mean any lease, title retention
agreement,
equitable interest, license pertaining to
real property, lien, option, pledge,
security interest, mortgage, right of way,
easement, encroachment, servitude,
right of first option, right of first
refusal or similar restriction, including
any restriction on use, voting (in the case
of any security or equity interest),
transfer, receipt of income or exercise of
any other attribute of ownership.
(jjj) "Environment" shall mean soil, land surface or subsurface
strata; surface waters (including navigable
waters, ocean waters, streams,
ponds, drainage basins and wetlands, and
associated sediments); groundwaters;
drinking water supply; ambient air
(including indoor air); plant and animal
life; and any other environmental medium or
natural resource.
(kkk) "Environmental
Claim" shall mean any Proceeding or other claim
based on any actual or alleged violation of
or liability under Environmental
Law.
(lll) "Environmental Law" shall mean any and all Legal
Requirements
relating to (i) the protection of the
Environment, (ii) the contamination of the
Environment, or (iii) the release,
generation, production, transport, treatment,
processing, use, disposal, or storage of
Hazardous Materials.
(mmm) "Environmental Permit" shall mean any Governmental
Authorization
under or pursuant to any Environmental
Law.
(nnn) "ERISA" shall mean the Employee Retirement Income Security
Act
of 1974.
(ooo) "ERISA Affiliate" shall mean any other corporation or trade
or
business controlled by, controlling or
under common control with Seller (within
the meaning of Section 414 of the Code or
Section 4001(a)(14) or 4001(b) of
ERISA).
(ppp) "Exchange Act" shall mean the Securities Exchange Act of
1934.
(qqq) "Excluded Assets" shall have the meaning set forth in
Section
2.2.
(rrr) "Existing FOS Agreement" shall have the meaning set forth
in
Section 12.8.
(sss) "Financial Statements" shall have the meaning set forth
in
Section 3.4(a).
(ttt) "Former Business Employee" shall mean (i) any individual
listed
on Schedule 1.1(ttt), who was, on his or
her last day of active work for the
Seller prior to the Closing Date, employed
by the Seller working primarily for
the Business but who is not employed by
Seller as of the Closing Date or (ii)
any Inactive Employee who does not become
employed by Buyer immediately after
his or her employment with Seller
terminates in accordance with Section 10.1(a).
9
<PAGE>
(uuu)
"GAAP" shall mean generally accepted accounting principles for
financial reporting in the United
States.
(vvv) "Governing Documents" shall mean with respect to any
particular
entity, (i) if a corporation, the articles
or certificate of incorporation and
the bylaws; (ii) if a general partnership,
the partnership agreement and any
statement of partnership; (iii) if a
limited partnership, the limited
partnership agreement and the certificate
of limited partnership; (iv) if a
limited liability company, the articles of
organization and operating agreement;
(v) if another type of Person, any other
charter or similar document adopted or
filed in connection with the creation,
formation or organization of the Person;
(vi) all equityholders' agreements, voting
agreements, voting trust agreements,
joint venture agreements, registration
rights agreements or other agreements or
documents relating to the organization,
management or operation of any Person or
relating to the rights, duties and
obligations of the equityholders of any
Person; and (vii) any amendment or
supplement to any of the foregoing.
(www) "Government Contract" shall mean (i) any Contract between
Seller, on the one hand, and (A) the United
States Government or any agency
thereof, (B) any prime contractor of the
United States Government or any agency
thereof or (C) any subcontractor with
respect to any Contract described in
clause (A) or (B), on the other hand, in
each case that relates primarily to the
Business; or (ii) any Contract between RSI,
on the one hand, and (X) the United
States Government or any agency thereof,
(Y) any prime contractor of the United
States Government or any agency thereof or
(Z) any subcontractor with respect to
any Contract described in clauses (X) or
(Y), on the other hand.
(xxx) "Governmental Authorization" shall mean any Consent,
license,
franchise, registration, permit,
certification, decree, registration,
qualification, or security clearance
issued, granted, given or otherwise made
available by or under the authority of any
Governmental Body or pursuant to any
Legal Requirement.
(yyy) "Governmental Body" shall mean any: (i) nation, state,
county,
city, town, borough, village, district or
other jurisdiction; (ii) federal,
state, local, municipal, foreign or other
government; (iii) governmental or
quasi-governmental authority of any nature
(including any agency, branch,
department, board, commission, court,
tribunal or other entity exercising
governmental or quasi-governmental powers);
(iv) multinational organization or
body; (v) body exercising, or entitled or
purporting to exercise, any
administrative, executive, judicial,
legislative, police, regulatory or taxing
authority or power; or (vi) official of any
of the foregoing.
(zzz) "Hawkeye Plant" shall mean the facility located at 1447 St.
Paul
Street in Rochester, New York.
(aaaa) "Hawkeye Lease and Facility Services Agreement" shall mean
a
lease and facilities service agreement
between Seller, as landlord, and Buyer,
as tenant, substantially in the form of
Exhibit 1.1(aaaa), with respect to the
Hawkeye Plant.
(bbbb) "Hazardous Material" shall mean any hazardous, toxic,
chemical,
or dangerous substance, pollutant,
contaminant, waste or material, that is
regulated by any
10
<PAGE>
Governmental Body or pursuant to any
Environmental Law, including: (A) any
material, substance or waste that is
defined as "hazardous waste," "hazardous
material," "hazardous substance,"
"extremely hazardous waste," "restricted
hazardous waste," "contaminant," "toxic
waste," "regulated waste" or "toxic
substance" under any Environmental Law; (B)
petroleum, petroleum products, waste
oil, and their constituents and fractions;
(C) asbestos and asbestos-containing
materials; (D) radon, thorium, and
radioactive materials; and (E) physical
agents such as radiofrequency radiation,
microwave radiation, ionizing
radiation, laser radiation and noise.
(cccc) "High Resolution Electro-Optical End-to-End Systems"
shall
mean: (i) collection payloads, systems and
components for ground-based
telescopes, airborne cameras, remote
sensing satellites, and orbiting
astronomical platforms; (ii) payload
systems integration and testing; (iii)
digital image data processing from sensor
to end user in connection with the
items described in clauses (i) and (ii);
and (iv) engineering support services
for imagery users including analogue silver
halide (AgX) systems support and
maintenance in connection with the items
described in clauses (i) and (ii).
(dddd) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
(eeee) "Indemnified Person" shall have the meaning set forth in
Section 11.6(a).
(ffff) "Indemnifying Person" shall have the meaning set forth
in
Section 11.6(a)
(gggg) "Intellectual Property" shall have the meaning set forth in
the
Intellectual Property Agreement.
(hhhh) "Indemnity Claim" shall have the meaning set forth in
Section
11.6(a).
(iiii) "Intellectual Property Agreement" shall mean an
agreement
between Buyer and Seller substantially in
the form of Exhibit 1.1(iiii).
(jjjj) "Inventory" shall mean all inventories, including all
finished
goods, work in process, raw materials,
spare parts and all other materials and
supplies to be used or consumed in the
production of finished goods (i) owned by
RSI, or (ii) owned by Seller and primarily
relating to the Business, provided,
that in the case of Seller's inventories of
imaging sensors and the raw
materials with respect thereto, only those
sensors and corresponding raw
materials that are reflected on the 2003
Balance Sheet, as adjusted for changes
to such inventories in the ordinary course
of business consistent with past
practice through the Closing Date, will be
included within the term "Inventory."
(kkkk) "IRS" shall mean the United States Internal Revenue
Service
and, to the extent relevant, the United
States Department of the Treasury.
11
<PAGE>
(llll) "Knowledge of Seller," "Seller's Knowledge" and words of
similar meaning, refers to facts which are
actually known (after due inquiry and
investigation) by the individuals listed on
Schedule 1.1(llll).
(mmmm) "Knowledge of Buyer," "Buyer's Knowledge" and words of
similar
meaning, refers to facts which are actually
known (after due inquiry and
investigation) by the individuals listed on
Schedule 1.1(mmmm).
(nnnn) "Leased Real Property" shall have the meaning set forth
in
Section 3.7.
(oooo) "Legal Requirement" shall mean any constitution, law
(including
common law), ordinance, code, regulation,
statute or treaty of any federal,
state, local, municipal, foreign,
international, multinational or other
Governmental Body.
(pppp) "Liability" shall mean, with respect to any Person, any
liability or obligation of such Person of
any kind, character or description,
whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed
or undisputed, liquidated or unliquidated,
secured or unsecured, joint or
several, due or to become due, vested or
unvested, executory, determined,
determinable or otherwise, and whether or
not the same is required to be accrued
on the financial statements of such
Person.
(qqqq) "Marks" shall have the meaning set forth in the
Intellectual
Property Agreement.
(rrrr) "Material Adverse Effect" shall mean any circumstance,
change
or effect that would reasonably be expected
to cause, result in or have any
material adverse effect on the business,
operations, assets, liabilities,
results of operations or condition
(financial or other) of the Business, taken
as a whole, but excluding (i) the effects
of changes that are generally
applicable to the industries and markets in
which the Business operates
(including general reductions in United
States military, intelligence and
homeland security planning and spending),
(ii) the effects of changes in general
economic conditions, or (iii) the effects
resulting from the announcement or
pendency of any of the Contemplated
Transactions, or (iv) any effects resulting
from compliance by Seller with the terms
of, or the taking of any action
required by, this Agreement.
(ssss) "Material Business Contracts" shall have the meaning set
forth
in Section 3.17(a).
(tttt) "Mathematical Foundations for Watermarking Subcontract"
shall
mean an agreement to be negotiated in good
faith by Seller and Buyer between the
date of this Agreement and Closing in
accordance with the material terms set
forth on Exhibit 1.1(tttt), pursuant to
which Seller shall provide Buyer with
research and development services as a
subcontractor under the F30602-03-C-0072,
Mathematical Foundations for Watermarking
Agreement.
(uuuu) "New FOS Agreements" shall have the meaning set forth in
Section 12.8.
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<PAGE>
(uuuu)-1 "Optical Services Agreement" shall mean an agreement to
be
negotiated in good faith by Seller and
Buyer between the date of this Agreement
and Closing in accordance with the material
terms set forth on Exhibit
1.1(uuuu)-1.
(vvvv) "Order" shall mean any order, decision, injunction,
judgment,
decree, ruling, settlement, assessment or
arbitration award of any Governmental
Body or arbitrator.
(wwww) "Owned Real Property" shall have the meaning set forth
in
Section 3.6.
(xxxx) "OSHA" shall mean Legal Requirements relating to worker
safety
and health under the Occupational, Safety
and Health Act of 1970 and state law
equivalents.
(yyyy) "Party" or "Parties" shall have the meaning set forth in
the
first paragraph of this Agreement.
(zzzz) "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
(aaaaa) "Pension Settlement Liability" shall mean any Liability
of
Seller to the United States Government
pursuant to that certain Settlement
Agreement between the U.S. Government and
Seller regarding the settlement of
Proceedings related to Seller's compliance
with certain Cost Accounting
Standards with respect to the Seller
Pension Plan.
(bbbbb) "Permitted Encumbrances" shall have the meaning set forth
in
Section 3.8(b)(v).
(ccccc) "Person" shall mean an individual, partnership,
corporation,
business trust, limited liability company,
limited liability partnership, joint
stock company, trust, unincorporated
association, joint venture or other entity
or a Governmental Body.
(ddddd) "Post-Employment Settlement Costs" shall mean any Liability
of
Seller arising out of the final resolution
and settlement of the DCAA audit
matters entitled "CAS 416 and 403
Non-Compliance" (retiree post-employment
costs), dated July 2, 2003.
(eeeee) "Post-Employment Welfare Benefits" shall mean benefits
under
any Employee Benefit Plan (other than the
Seller Pension Plan, the Seller
Savings Plans and the Seller Stock Plans),
including long-term disability,
survivor income, severance, COBRA, unfunded
pension and retiree health, dental
and life insurance benefits, which any
Former Business Employee, RSI Former
Employee or their respective Dependents are
entitled to receive on and after the
Closing Date.
(fffff) "Proceeding" shall mean any action, arbitration, audit,
hearing, investigation, litigation or suit
(whether civil, criminal,
administrative, judicial or investigative,
whether formal or informal, whether
public or private) commenced, brought,
conducted or heard by or before, or
otherwise involving, any Governmental Body
or arbitrator.
(ggggg) "Purchase Price" shall have the meaning set forth in
Section
2.5(a).
13
<PAGE>
(hhhhh) "Real Property Lease" shall have the meaning set forth
in
Section 3.7.
(iiiii) "Record" shall mean information that is inscribed on a
tangible medium or that is stored in an
electronic or other medium and is
retrievable in perceivable form.
(jjjjj) "Related Person" shall mean, as to any specified Person,
(i)
any Affiliate of such specified Person or
(ii) any Person that serves as a
director, officer, partner, executor or
trustee (or in a similar capacity) of
such specified Person.
(kkkkk) "Release" shall mean any spill, leak, pumping, pouring,
emission, emptying, discharge, injection,
escape, leaching, dumping, or
disposal, whether intentional or
unintentional; and any verb forms of the term
shall have the corresponding meanings.
(lllll) "Representative" shall mean, with respect to a
particular
Person, any director, officer, manager,
employee, agent, consultant, advisor,
accountant, financial advisor or legal
counsel of that Person.
(mmmmm) "Retained Environmental Liabilities" shall have the
meaning
set forth in Section 2.3(b)(iii).
(nnnnn) "Retained Liabilities" shall have the meaning set forth
in
Section 2.3(b).
(ooooo) "Rochester Airport Facility Sublease Agreement" shall mean
a
sublease agreement between Buyer, as
subtenant, and Seller, as sublandlord, to
be negotiated in good faith by Seller and
Buyer between the date of this
Agreement and Closing in accordance with
the material terms set forth on Exhibit
1.1(ooooo), with respect to a portion of
the land and a portion of the building
located at the Greater Rochester
International Airport, located in Gates, New
York, and leased by Seller from the County
of Monroe, New York pursuant to that
certain Lease dated as of June 30, 1987, as
amended.
(ppppp) "Rochester Technology Park Sublease Agreement" shall mean
the
sublease agreement between Buyer, as
subtenant, and Seller, as sublandlord, to
be negotiated in good faith by Seller and
Buyer between the date of this
Agreement and Closing in accordance with
the material terms set forth on Exhibit
1.1(ppppp), with respect to a portion of
the leased premises located in Building
6 of the Rochester Technology Park, located
on Elmgrove Road in the Town of
Gates, New York, and leased by Seller from
Continental Industrial Capital LLC
pursuant to the terms of that certain Lease
Agreement dated as of June 1, 2002,
as amended.
(qqqqq) "RSI" shall mean Research Systems, Inc. and each of the
RSI
Subsidiaries.
(rrrrr) "RSI Current Employee" shall mean (i) any individual who,
as
of the Closing Date, is actively employed
by RSI and (ii) any individual who, as
of the Closing Date, is employed by RSI but
who is not actively at work as of
the Closing Date, including any employee
who is on temporary leave of absence,
including family medical leave, military
leave, short-term disability or sick
leave as of the Closing Date.
14
<PAGE>
(sssss) "RSI Former Employee" shall mean any individual who was,
at
any time prior to the Closing Date,
employed by RSI, but who is not employed by
RSI as of the Closing Date.
(ttttt) "RSI Subsidiaries" shall mean Research Systems France
SARL,
Research Systems International UK Limited,
and Research Systems Italia SRL, each
of which is a wholly-owned subsidiary of
Research Systems, Inc.
(uuuuu) "RSS/AIM Services and Supply Agreement" shall mean (i)
the
agreement, substantially in the form of
Exhibit 1.1(uuuuu), pursuant to which
Buyer and Seller shall cooperate and assist
one another in performing their
respective obligations under the New FOS
Agreements, or (ii) in the event the
Existing FOS Agreement cannot be divided
into the New FOS Agreements as of the
Closing, an agreement in a form to be
negotiated in good faith by Buyer and
Seller prior to Closing, pursuant to which
Seller shall provide Buyer with
aerial and industrial materials products
and services as a subcontractor under
the Existing FOS Agreement.
(vvvvv) "Sanitary Sewer Agreement" shall have the meaning set forth
in
Section 5.5(b)(iii).
(wwwww) "Schedule" shall mean a part or section of the
Disclosure
Schedules.
(xxxxx) "Section 338(h)(10) Election" shall have the meaning set
forth
in Section 12.3(d).
(yyyyy) "Securities Act" shall mean the Securities Act of 1933.
(zzzzz) "Seller" shall have the meaning set forth in the first
paragraph of this Agreement.
(zzzzz)-1 "Seller Bonus Plans" shall mean the Kodak Executive
Compensation for Excellence and Leadership
Plan, as amended and restated
effective January 1, 2002, the Kodak United
States Employee Recognition Plan, as
revised on October 14, 2002, and the Kodak
Wage Dividend Plan.
(zzzzz)-2 "Seller Bonus Plan Payments" shall mean the bonus
amounts
payable under the Seller Bonus Plans in
respect of the 2003 year to eligible
Employees, to the extent accrued on the
2003 Balance Sheet.
(aaaaaa) "Seller DCAP" shall have the meaning set forth in
Section
10.2(d).
(bbbbbb) "Seller Deferred Compensation Plans" shall mean those
Employee Benefit Plans that are deferred
compensation plans, identified as such
on Schedule 3.13(a).
(cccccc) "Seller FSA Plan" shall have the meaning set forth in
Section
10.2(c).
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<PAGE>
(dddddd) "Seller Indemnified Person" shall have the meaning set
forth
in Section 11.3.
(eeeeee) "Seller Marks" shall mean all Marks owned by Seller and
its
Affiliates other than the Assigned
Marks.
(ffffff)
"Seller Nonqualified Pension Plan" shall mean the Kodak
Unfunded Retirement Income Plan and the
Kodak Excess Retirement Income Plan.
(gggggg) "Seller Pension Plan" shall mean the Kodak Retirement
Income
Plan.
(hhhhhh) "Seller Savings Plan" shall mean the Eastman Kodak
Employees'
Savings and Investment Plan.
(iiiiii) "Seller Severance Plan" shall mean the Kodak
Termination
Allowance Plan.
(jjjjjj) "Seller Stock Plans" shall mean the Kodak 2000 Omnibus
Long-Term Incentive Plan, the Kodak Global
Long-Term Incentive Program for
Executives and the Kodak Employee Stock
Ownership Plan.
(kkkkkk) "Sensor Supply Agreement" shall mean the agreement,
substantially in the form of Exhibit
1.1(kkkkkk), pursuant to which (i) Seller
will continue to supply imaging sensors to
Buyer and (ii) Buyer will permit
Seller to use all equipment that is
currently used by Seller to manufacture such
imaging sensors, to the extent that such
equipment constitutes an Asset
hereunder that would otherwise be in
Buyer's possession as of the Closing.
(kkkkkk)-1 "Single Trigger Severance Liability" shall mean any
Liability to provide severance benefits to
any Acquired Employees or RSI Current
Employees that arises solely as a result of
the occurrence of the Closing.
(llllll) "SPG" shall mean a Strategic Product Group within
Seller's
corporate organization.
(llllll)-1 "Storage Space Agreement" shall mean the storage
space
agreement between Seller, as licensor, and
Buyer, as licensee, to be negotiated
in good faith by Seller and Buyer between
the date of this Agreement and Closing
in accordance with the material terms set
forth on Exhibit 1.1(llllll)-1, with
respect to portions of space located at
Buildings 12, 508 and 642, and any other
space presently used exclusively by the
Business for storage.
(mmmmmm) "Straddle Period" shall have the meaning set forth in
Section
12.3(f).
(nnnnnn) [intentionally omitted]
16
<PAGE>
(oooooo) "Tangible Personal Property" shall mean all machinery,
equipment, tools, dies, molds, jigs,
patterns, furniture, office equipment,
computer hardware, supplies, materials,
vehicles and other items of tangible
personal property (other than Inventory),
owned or leased by RSI or by Seller
primarily in connection with the
Business.
(pppppp) "Tax" shall mean any income, gross receipts, license,
payroll, employment, excise, severance,
stamp, occupation, premium, property,
environmental, windfall profit, customs,
vehicle, airplane, boat, vessel or
other title or registration, capital stock,
capital gains, estimated, franchise,
employees' income withholding, foreign or
domestic withholding, social security,
unemployment, disability, real property,
personal property, intangible property,
sales, use, transfer, value added,
alternative, add-on minimum and other tax,
fee, assessment, levy, tariff, charge or
duty of any kind whatsoever, including
payments-in-lieu-of any of the foregoing,
and any interest, penalty, addition or
additional amount thereon imposed, assessed
or collected by or under the
authority of any Governmental Body or
payable under any tax-sharing agreement.
(qqqqqq) "Tax Return" shall mean any return (including any
information
return), report, statement, schedule,
notice, form, declaration, claim for
refund or other document or information
filed with or submitted to, or required
to be filed with or submitted to, any
Governmental Body in connection with the
determination, assessment, collection or
payment of any Tax or in connection
with the administration, implementation or
enforcement of or compliance with any
Legal Requirement relating to any Tax.
(rrrrrr) "Third Party" shall mean a
Person that (i) is not a Party to this
Agreement or (ii) a Related Person of
either Party to this Agreement.
(ssssss) "Third-Party Claim" shall mean any claim against any
Indemnified Person by a Third Party.
(tttttt) "Third Party Intellectual Property License" shall mean
any
license of Intellectual Property by a Third
Party (i) to RSI or (ii) to Seller
and that relates primarily to the
Business.
(uuuuuu) "Transaction Agreements" shall mean this Agreement and
the
Ancillary Agreements.
(uuuuuu)-1 "Transferred Owned Real Property" shall have the
meaning
set forth in Section 3.8(a).
(vvvvvv) "Transferred Real Property" shall mean the Transferred
Owned
Real Property and the Leased Real Property,
but excluding the real property
subleased to Buyer pursuant to the
Rochester Airport Facility Sublease Agreement
and the Rochester Technology Park Sublease
Agreement.
(wwwwww) "Transition Services Agreement" shall have the meaning
set
forth in Section 5.10.
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(xxxxxx) "Utility Services Agreement" shall have the meaning set
forth
in Section 5.5(b)(ii).
(yyyyyy) "WARN Act" shall have the meaning set forth in Section
3.20(c).
1.2 Usage.
(a) Interpretation. In this Agreement, and in each Ancillary
Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any Person includes such Person's successors
and assigns but, if applicable, only if
such successors and assigns are not
prohibited by the applicable agreement, and
reference to a Person in a
particular capacity excludes such Person in
any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument means
such agreement, document or instrument as
amended or modified and in effect from
time to time in accordance with the terms
thereof;
(v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified,
replaced or reenacted, in whole or
in part, and in effect from time to time,
including rules and regulations
promulgated thereunder, and reference to
any section or other provision of any
Legal Requirement means that provision of
such Legal Requirement from time to
time in effect and constituting the
substantive amendment, modification,
codification, replacement or reenactment of
such section or other provision;
(vi) "hereunder," "hereof," "hereto," and words of similar
import
shall be deemed references to the
applicable agreement as a whole and not to any
particular Article, Section or other
provision hereof;
(vii) "including" (and with correlative meaning "include") is
deemed to be followed by the words "without
limitation" or words of similar
import;
(viii) with respect to the determination of any period of time,
"from" means "from and including" and "to"
means "to and including";
(ix) references to documents, instruments or agreements shall
be
deemed to refer as well to all addenda,
exhibits, schedules or amendments
thereto; and
(x) the terms "Dollars" and "$" shall mean United States
Dollars.
(b) Legal Representation of the Parties. This Agreement was
negotiated
by the Parties with the benefit of legal
representation, and any rule of
construction or interpretation
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otherwise requiring this Agreement to be
construed or interpreted against either
Party shall not apply to any construction
or interpretation hereof.
Article 2
Sale and Transfer of Assets, LIABILITIES AND STOCK; Closing
2.1 Assets to Be
Sold. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing,
but effective as of the Effective Time,
Seller shall sell, convey, assign, transfer
and deliver to Buyer, and Buyer
shall purchase and acquire from Seller,
free and clear of any Encumbrances other
than Permitted Encumbrances, all of
Seller's right (contractual and otherwise),
title and interest in and to all of
Seller's property and assets, real, personal
or mixed, tangible and intangible, of every
kind and description, wherever
located (but excluding the Excluded Assets
and excluding the RSI Stock) that are
used or held for use primarily in the
Business as the same shall exist on the
Closing Date (collectively, the "Assets"),
including the following:
(a) the Transferred Real Property;
(b) all of Seller's Tangible Personal Property;
(c) all of Seller's Inventory;
(d) all of Seller's Accounts Receivable;
(e) the Assigned Intellectual Property and Assigned Marks;
(f) all of Seller's Business Contracts, including Seller's
Government
Contracts;
(g) all Confidentiality Letters;
(h) all of Seller's Bids;
(i) all
Governmental Authorizations and all pending applications
therefor or renewals thereof, issued to
Seller primarily for the operation of
the Business or otherwise relating
primarily to the Assets, including the
Governmental Authorizations listed in
Schedule 2.1(i), in each case to the
extent legally transferable to Buyer;
(j) all of Seller's Records that primarily relate to the
Business
(other than those Records described in
Section 2.2(c)), including sales and
advertising literature, market research,
technical research, business and
strategic plans, product information,
customer and supplier files and lists,
equipment maintenance records and warranty
information, plant plans,
specifications and drawings, environmental
and health and safety records
(including training documents, information
concerning supplies, and applications
for Environmental Permits), customer
specifications and, subject to Legal
Requirements, all employment records
related to the Acquired Employees and, to
the extent reasonably required by Buyer in
order to satisfy its obligations
under this Agreement, the Former Business
Employees. Notwithstanding the
foregoing, Seller may retain copies of any
of the foregoing Records: (i) that
relate to properties
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<PAGE>
or activities of Seller other than the
Business, (ii) that relate to the
Excluded Assets or Retained Liabilities, or
(iii) that Seller is required to
retain in its possession pursuant to
applicable Legal Requirements or that are
required or useful for Seller to retain for
financial reporting purposes or Tax
purposes;
(k) all claims and defenses of Seller against Third Parties to
the
extent relating to the Assets or the
Business, whether choate or inchoate, known
or unknown, contingent or noncontingent,
including all rights of Seller under or
pursuant to all warranties, representations
and guarantees made by suppliers,
manufacturers and contractors in connection
with products or services purchased
by Seller in respect of the Business;
(l) all rights of Seller relating to deposits and prepaid
expenses,
claims for refunds and rights to offset in
respect thereof, in each case that
relate primarily to the Business, except to
the extent excluded under Section
2.2(d);
(m) all rights in connection with, and assets of, any Affiliate
Plan
to the extent held by Seller or any trust
to which Seller contributes or is
required to contribute in respect of any
such Affiliate Plan, if not transferred
by operation of law upon Closing; and
(n) all rights in connection with, and assets relating to
Employee
Benefit Plans and any Liability thereunder
being assumed by Buyer pursuant to
Section 2.3(a), to the extent permitted by
this Agreement and subject to the
Legal Requirements.
2.2 Excluded
Assets. Notwithstanding anything to the contrary contained in
Section 2.1, the following assets of Seller
(collectively, the "Excluded
Assets") are not part of the sale and
purchase contemplated hereunder, are
excluded from the Assets and shall remain
the property of Seller after the
Closing:
(a) all cash, cash equivalents, short-term investments and
intercompany receivables, including
checking accounts, bank accounts,
certificates of deposit, securities, and
the proceeds of Seller Accounts
Receivable, including uncashed checks in
payment thereof, received by Seller
prior to the Closing Date;
(b) all insurance policies and rights thereunder (including the
payment of any proceeds thereunder) other
than those insurance policies and
rights that are Assets related to Employee
Benefit Plans to be sold to the Buyer
as provided in Section 2.1(m) or (n));
(c) (i) all employment Records in respect to employees not related
to
the Business, (ii) all Records that Seller
is required under any Legal
Requirement to retain in its possession or
is not permitted under Legal
Requirements to provide to Buyer, (iii) all
Tax Records relating to the
Business, and (iv) all Records relating
primarily to the Excluded Assets or
Retained Liabilities;
(d) all claims for refund of Taxes relating to the Business for
any
period ending on or prior to the Closing
Date, except as provided in Section
12.3(b) and except to the extent liability
for such Taxes is assumed by Buyer
pursuant to Section 2.3(a)(iii);
(e) all rights of Seller under any Transaction Agreement;
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<PAGE>
(f) all other assets used primarily in connection with Seller's
corporate functions (including the
corporate charter, taxpayer and other
identification numbers, seals, minute books
and stock ledgers), whether or not
used for the benefit of the Business;
(g) all Intellectual Property and Marks that are owned by Seller
other
than Assigned Intellectual Property and
Assigned Marks;
(h) other than the Transferred Real Property, all real property
or
interests in real property owned or leased
by Seller;
(i) all claims of Seller against Third Parties, whether choate
or
inchoate, known or unknown, contingent or
noncontingent, (i) to the extent
relating to any of the Excluded Assets or
Retained Liabilities, including causes
of actions, claims and rights under
insurance policies relating thereto and (ii)
to the extent arising under any Seller
insurance policy and relating to the
Transferred Real Property;
(j) all Governmental Authorizations and all pending
applications
therefor or renewals thereof, issued to
Seller that either (i) are set forth on
Schedule 2.2(j) or (ii) are not used
primarily for the operation of the Business
and do not otherwise relate primarily to
the Assets;
(k) all inventories of imaging sensors and the raw materials
with
respect thereto that are owned by Seller
and that are not reflected on the 2003
Balance Sheet, as adjusted for changes to
such inventories in the ordinary
course of business consistent with past
practice through the Closing Date;
(l) all rights in connection with, and assets relating to
Employee
Benefit Plans and any Liability thereunder
not being assumed by Buyer pursuant
to Section 2.3(a) to the extent permitted
by this Agreement and subject to Legal
Requirements;
(m) all rights in connection with, and assets of (i) the Seller
Savings Plan (to the extent not distributed
to Employees in accordance with
Section 10.2(b)), and (ii) the Seller Stock
Plans;
(n) the property and assets expressly designated in Schedule
2.2(n);
and
(o) all rights under Employee Confidentiality Agreements in
connection
with proprietary or confidential
information of Seller which proprietary or
confidential information is not included in
the Assigned Intellectual Property.
In addition to
the foregoing, the Excluded Assets shall include any
Business Contracts to the extent that such
Business Contract may not be legally
transferred by Seller to Buyer without the
Consent of a Third Party and such
Consent has not been obtained as of the
Closing; provided, however, that if and
to the extent such Consent is obtained
after Closing in accordance with Section
12.2 the foregoing provision shall cease to
apply to the applicable Business
Contract.
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<PAGE>
2.3
Liabilities.
(a) Assumed Liabilities. On the Closing Date, but effective as of
the
Effective Time, Buyer shall assume and
agree to pay, perform and discharge when
due, and shall indemnify Seller in
accordance with Article 11 with respect to,
all Liabilities of Seller (but excluding
the Retained Liabilities) to the extent
arising out of or relating primarily to the
operation of the Business or the
Assets (the "Assumed Liabilities"), and
specifically including the following
(but excluding the Retained
Liabilities):
(i) any Liability arising from or relating primarily to the
Business or the Assets that is (A)
disclosed in the 2003 Balance Sheet or for
which identifiable reserves are reflected
in the 2003 Balance Sheet, unless
expressly excluded by Seller pursuant to
any Transaction Agreement; (B) incurred
in the ordinary course of business on or
after the date of the 2003 Balance
Sheet and on or prior to the Closing,
unless expressly excluded by Seller
pursuant to any Transaction Agreement; or
(C) otherwise expressly assumed by
Buyer pursuant to any Transaction
Agreement;
(ii) any Liability arising under the Business Contracts
including
(A) any Liability arising from or relating
to Buyer's performance or
non-performance thereunder and (B) any
Liability arising from or relating to any
claim based upon any warranty contained in
such Business Contracts, or any claim
of manufacturing or design defects with
respect to any product or service sold
or provided pursuant to such Business
Contracts, in any case, whether or not
such Liability or claim was contingent,
liquidated, accrued, known or unknown to
Seller at or prior to Closing and whether
such Liability or claim arises out of
an event or occurrence before, on, or after
the Closing; provided, however, that
under no circumstances shall Buyer be
deemed to have assumed hereunder any
Liability arising out of the presence or
alleged presence of, or exposure or
alleged exposure to asbestos as a result of
any product sold or service provided
prior to the Closing Date;
(iii) any Liability for Taxes, arising out of the operation of
the Business or relating to the Assets (A)
with respect to any period (or
portion thereof) beginning after the
Closing Date, and (B) with respect to any
period (or portion thereof) ending on or
before the Closing Date, to the extent
the amount of such Taxes is recoverable by
Buyer from the United States
Government pursuant to the Government
Contracts assumed by Buyer hereunder, but
only to the extent of such recovery (Taxes
described in clause (B) of this
Section 2.3(a)(iii) are referred to herein
as the "Assumed Pre-Closing Taxes");
(iv) any Liability (A) arising under any employment, severance,
retention or termination plan or agreement
covering or with respect to any
Acquired Employee (including any such plans
or agreements entered into
specifically in anticipation of the
Contemplated Transactions) set forth on
Schedule 2.3(a)(iv); (B) arising out of or
in connection with the termination of
any Acquired Employee on or after Closing
(other than any Single Trigger
Severance Liability); (C) arising out of or
related to any employment-related
claim (other than any Single Trigger
Severance Liability), including workers'
compensation claims, wrongful termination
claims and claims arising under OSHA
or similar laws and regulations of any
Governmental Body, of any Acquired
Employee, or Former Business Employee to
the extent arising out of any event or
occurrence that took place when such
individual was employed by the
22
<PAGE>
Business, whether before, on, on or after
the Closing Date; (D) relating to
payroll, vacation and sick pay for any
Acquired Employee, including all
Liability for the same which has accrued
and has not been paid as of the Closing
Date; (E) relating to Claims Incurred by
Acquired Employees and their respective
Dependents on or after the Closing Date in
respect of Active Welfare Benefits,
including the payment of any premiums and
administrative expenses related
thereto; and (F) for the Seller Bonus Plans
Payments and Accrued Bonus Payments;
(v) any Liability (A) under any Employee Benefit Plans,
(excluding (I) the Seller Stock Plans and
the Seller Savings Plan, and (II) any
Single Trigger Severance Liability) with
respect to Acquired Employees, Former
Business Employees, RSI Current Employees,
RSI Former Employees and Dependents,
as applicable, (B) for Post-Employment
Welfare Benefits, and (C) to the extent
of any Seller Liability thereunder, any
Affiliate Plan not otherwise transferred
by operation of law upon the Closing;
(vi) any Liability arising from or relating to Buyer's conduct
of
the Business or ownership of the Assets
from and after the Closing Date
including any Proceedings in respect
thereof;
(vii) any and all Proceedings arising from or relating to any
of
the Assumed Liabilities, whether or not
such matters were accrued, liquidated,
contingent, matured, unmatured, or known or
unknown to Seller at or prior to the
Closing;
(viii) any Liability arising from or related to any
governmental
audit of any Seller Government Contract
(including any Liability relating to the
Pension Settlement Liability and the
Post-Employment Settlement Costs); and
(ix) any Liability described in Schedule 2.3(a)(ix).
(b) Retained Liabilities. Notwithstanding Section 2.3(a), the
following Liabilities of Seller arising out
of or relating to the operation of
the Business or the Assets shall remain the
sole responsibility of and shall be
retained, paid, performed and discharged
solely by Seller (the "Retained
Liabilities"):
(i) any Liability arising from or related to the Excluded
Assets;
(ii) any Liability for Taxes of any Person within Seller's
affiliated group, whether by reason of
Treasury Regulation Section 1.1502-6, any
tax allocation or tax sharing agreements,
or otherwise, including any Liability
arising out of the operation of the
Business or relating to the Assets with
respect to any period (or portion thereof)
ending on or before the Closing Date,
other than the Assumed Pre-Closing
Taxes;
(iii) any Liability arising from or related to (A) to the
extent
that such Claim or Proceeding is brought
within 10 years of the Closing Date,
the presence or Release of Hazardous
Materials on, under, from or affecting the
Transferred Real Property, to the extent
such presence or Release existed or
occurred prior to the Closing Date (it
being understood that, after title to a
parcel of Transferred Owned Real Property
is transferred to Buyer, ownership of,
and responsibility for maintaining, any
asbestos-containing material present
inside that Transferred Owned Real Property
shall not be a Retained Liability
and shall be assumed by
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<PAGE>
Buyer); (B) the generation, transfer,
storage, treatment, recycling, or
disposal, prior to the Closing Date, of
Hazardous Materials by or on behalf of
Seller, RSI or the Business, or (C) the
presence or Release of Hazardous
Materials on, under, from or affecting any
Excluded Assets (the foregoing (A)
through (C) are collectively referred to
herein as the "Retained Environmental
Liabilities");
(iv) to the extent that such claim is made or such Proceeding
is
brought within eighteen (18) months after
the Closing Date, any Liability
arising from or relating to any claim or
Proceeding based on the actual or
alleged infringement, misappropriation, or
other violation of any Third Party
intellectual property right, where such
infringement, misappropriation, or
violation occurred or allegedly occurred
before the Closing Date, of any Third
Party intellectual property right by (A)
any product or service of the Business
that was made, sold, offered for sale or
provided by Seller in connection with
the Business before the Closing Date or (B)
any process or method to the extent
used by Seller in connection with the
Business before the Closing Date;
(v) any Liability of Seller under this Agreement, any Ancillary
Agreement or any other document executed in
connection with the Contemplated
Transactions;
(vi) any Liability of Seller based upon Seller's acts or
omissions occurring after the Effective
Time;
(vii) any Liability (A) under the Seller Savings Plan and the
Seller Stock Plans, (B) for the Single
Trigger Severance Liability, and (C) for
Claims Incurred by Acquired Employees and
their respective Dependents prior to
Closing with respect to Active Welfare
Benefits;
(viii) any Liability arising from or related to indebtedness
for
borrowed money to Third Parties; and
(ix) any Liability with respect to any intercompany payables.
2.4 RSI
Stock.
Upon the terms
and subject to the conditions set forth in this Agreement,
at the Closing, but effective as of the
Effective Time, Seller shall sell,
convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase and
acquire from Seller, free and clear of any
Encumbrances, certificates
representing all of the issued and
outstanding capital stock of Research
Systems, Inc. (the "RSI Stock"), together
with a stock power attached thereto,
and all minute books, stock ledgers and
corporate seals of Research Systems,
Inc.
2.5 Purchase
Price; Closing.
(a) The consideration for the Assets and RSI Stock (the
"Purchase
Price") will be (i) Seven Hundred Twenty
Five Million Dollars ($725,000,000) and
(ii) the assumption of the Assumed
Liabilities. In accordance with Section
8.3(a), at the Closing, the Purchase Price
shall be delivered by Buyer to Seller
by wire transfer.
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<PAGE>
(b) The purchase and sale provided for in this Agreement (the
"Closing") will take place at the offices
of Seller's counsel at 1899
Pennsylvania Avenue, N.W., Washington,
D.C., commencing at 10:00 a.m. Eastern
Time on the date that is five (5) Business
Days following the satisfaction or
waiver of all conditions precedent to the
obligations of the Parties set forth
in Article 7 and Article 8, or such other
date as may be mutually agreed upon by
the Parties in writing.
2.6 Allocation.
Buyer and Seller agree to allocate the Purchase Price and
the Assumed Liabilities, each to the extent
properly taken into account under
Section 1060 of the Code, among the Assets
and RSI Stock and, in connection with
the Section 338(h)(10) Election, to further
allocate the amount allocated to RSI
Stock among the assets of Research Systems,
Inc., in accordance with the
allocation set forth on Exhibit 2.6 (the
"Allocation"). Any issues with respect
to the Allocation which have not been
finally resolved within sixty (60) days
following the Closing Date shall be
referred to Ernst & Young LLP or to such
other accounting firm of international
recognition mutually acceptable to Buyer
and Seller (the "Independent Accounting
Firm"), whose duties may include an
appraisal of the Assets, the RSI Stock, and
the assets of Research Systems,
Inc., and whose determination shall be
final and binding upon the Parties. The
Independent Accounting Firm shall resolve
any issues referred to it as soon as
practicable, and preferably within thirty
(30) days. Buyer and Seller shall bear
equally the fees, costs, and expenses of
the Independent Accounting Firm. After
the Closing, the Parties shall make
consistent use of the Allocation for all Tax
purposes and in all filings, declarations
and reports with the IRS in respect
thereof, including the reports required to
be filed under Sections 338 and 1060
of the Code. No Party shall take a position
inconsistent with the Allocation on
any Tax Return or with any taxing authority
without the consent of the other
Party except as required by a final
"determination" within the meaning of
Section 1313 of the Code. Seller shall
prepare and deliver IRS Forms 8594, 8023
and 8883 to Buyer within sixty (60) days
after the Closing Date or upon
agreement between the Parties on the
Allocation pursuant to this Section 2.6,
whichever is later; provided, however, that
if agreement on the Allocation is
not complete thirty (30) days prior to the
due date of any of Forms 8594, 8023
and 8883, the Parties shall cooperate in
reaching a tentative agreement that
allows timely filing of such Forms, subject
to subsequent amendment. Within
thirty (30) days after the receipt of such
Form 8594, 8023 and 8883, Buyer shall
propose any changes or shall indicate its
concurrence otherwise, which
concurrence shall not be unreasonably
withheld. In any Proceeding related to the
determination of any Tax, neither Buyer nor
Seller shall contend or represent
that the Allocation is not a correct
allocation.
2.7 Transfer
Taxes. Buyer shall prepare all use, sales, real estate,
transfer and similar Tax Returns relating
to the purchase and sale of the Assets
and RSI Stock. Buyer shall, no later than
thirty (30) days prior to the due date
for the filing of any such Tax Return
(including extensions for filing), provide
Seller with copies of such Tax Returns for
Seller's review, consent and
approval. Buyer will file all necessary Tax
Returns and other documentation with
respect to all such transfer, documentary,
sales, use, stamp, registration and
other Taxes and fees. Seller shall assist
Buyer in preparing, executing and
filing such Tax Returns, and Buyer and
Seller shall cooperate in providing or
obtaining any certification reasonably
necessary to exempt or reduce the amount
of transfer Taxes or other Taxes payable by
either Buyer or Seller relating to
the purchase and sale of the Assets and RSI
Stock. All transfer, documentary,
sales, use, stamp, registration and other
such Taxes and fees (including any
penalties and interest) incurred in
connection with this Agreement, shall be
paid one-half by
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Buyer and one-half by Seller. Seller shall
reimburse Buyer for one-half of all
such transfer Taxes within thirty (30) days
of Buyer's written request. Seller
will reimburse Buyer for one-half of all
reasonable, documented out-of-pocket
costs incurred in connection with filing
any such Tax Returns and any such other
documentation.
Article 3
Representations and Warranties of Seller
Seller
represents and warrants to Buyer as follows:
3.1 Organization
and Good Standing.
(a) Seller is a corporation duly incorporated, validly existing and
in
good standing under the laws of the State
of New Jersey. Seller is duly
qualified or licensed to do business in
each jurisdiction in which the property
relating to the Business is owned, leased
or operated by Seller or the nature of
the Business makes such qualification
necessary, except for those jurisdictions
where the failure to be so qualified or
licensed would not, individually or in
the aggregate, have a Material Adverse
Effect.
(b) Research Systems, Inc. is a corporation duly incorporated,
validly
existing and in good standing under the
laws of the State of Colorado. Research
Systems, Inc. is duly qualified to do
business as a foreign corporation and is
in good standing under the laws of each
state or other jurisdiction in which
either the ownership or use of the
properties owned or used by it, or the nature
of the activities conducted by it, requires
such qualification, except for those
jurisdictions where the failure to be so
qualified or licensed would not,
individually or in the aggregate, have a
Material Adverse Effect. Schedule 3.1
sets forth each state in which Research
Systems, Inc. is qualified to do
business. Seller has made available to
Buyer complete and correct copies of the
Governing Documents, the minute books and
stock transfer records of RSI. Other
than the outstanding shares of the RSI
Subsidiaries, Research Systems, Inc. does
not own or have any option or right to
acquire, directly or indirectly, any
capital stock or other equity securities
of, or have any direct or indirect
equity or ownership interest or debt
investment in, any other Person or other
business.
(c) Each of the RSI Subsidiaries is an entity duly
incorporated,
validly existing and in good standing under
the laws of the jurisdiction of its
organization. Each of the RSI Subsidiaries
is duly qualified to do business as a
foreign corporation and is in good standing
under the laws of each jurisdiction
in which either the ownership or use of the
properties owned or used by it, or
the nature of the activities conducted by
it, requires such qualification,
except for those jurisdictions where the
failure to be so qualified or licensed
would not, individually or in the
aggregate, have a Material Adverse Effect.
3.2 Authority;
Enforceability; No Conflict.
(a) Seller has the requisite corporate power and authority to
enter
into the Transaction Agreements and to
consummate the Contemplated Transactions.
All corporate acts and other proceedings
required to be taken by Seller to
authorize the execution, delivery and
performance of the Transaction Agreements
and the consummation of the
Contemplated
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Transactions have been duly and properly
taken. This Agreement has been, and
each of the Ancillary Agreements, when
executed, will be, duly executed and
delivered by Seller and, assuming that this
Agreement and each Ancillary
Agreement constitutes a valid and binding
obligation of Buyer, constitutes a
valid and binding obligation of Seller,
enforceable against Seller in accordance
with their respective terms, except as
enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium and other similar laws
relating to or affecting creditors' rights
generally or by general equitable
principles (regardless of whether such
enforceability is considered in a
proceeding in equity or at law).
(b) Except as set forth in Schedule 3.2(b), neither the execution
and
delivery by Seller of this Agreement or the
Ancillary Agreements, nor the
consummation or performance of any of the
Contemplated Transactions will,
directly or indirectly (with or without
notice or lapse of time):
(i) breach any provision of any of the Governing Documents of
Seller or Research Systems, Inc.;
(ii) contravene, conflict with or result in a violation or
breach
of any Legal Requirement applicable to the
Business;
(iii) contravene, conflict with or result in a violation or
breach of any Order to which Seller or RSI
is a party or by which Seller, RSI or
any of the Assets is bound; or
(iv) result in any violation or breach of, or give rise to any
right of termination, cancellation or
acceleration under, or require any consent
under, any Material Business Contract;
except, in the case of clause (iv), for
such conflicts, violations, breaches,
terminations, cancellations, or
accelerations as to which requisite waivers or
consents have been obtained or which,
individually or in the aggregate, would
not have a Material Adverse Effect.
3.3
Capitalization and Ownership of Research Systems, Inc. and its
Subsidiaries.
(a) The authorized equity securities of Research Systems, Inc.
consist
of one thousand (1,000) shares of common
stock, par value $.01 per share, of
which five hundred (500) shares (the "RSI
Shares") are issued and outstanding,
fully paid and nonassessable, all of which
are owned by Seller and are duly
authorized and validly issued, and no other
shares of any other class or series
of capital stock of Research Systems, Inc.
or securities exercisable or
convertible into or exchangeable for
capital stock ("Capital Stock Equivalents")
of Research Systems, Inc. are authorized,
issued or outstanding. The RSI Shares
were not issued in violation of, and are
not subject to, any preemptive,
subscription or similar rights.
(b) Seller is and will be on the Closing Date the record and
beneficial owner and holder of the RSI
Shares, free and clear of all
Encumbrances.
(c) There are no Contracts relating to the issuance, sale or
transfer
of any equity securities or other
securities of Research Systems, Inc.
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(d) Schedule 3.3(d) sets forth a list of the authorized, issued
and
outstanding capital stock of each of the
RSI Subsidiaries. All of the
outstanding shares of each RSI Subsidiary
are duly authorized and validly issued
and outstanding, fully paid and
nonassessable and owned by Research Systems,
Inc. None of the outstanding shares of any
of the RSI Subsidiaries has been
issued in violation of any purchase option,
call, right of first refusal,
preemptive right, subscription or similar
rights under any provision of
applicable law or the Governing Documents
of such RSI Subsidiary, or any
Contract to which such RSI Subsidiary is
bound. There are no outstanding
warrants, options, subscriptions, calls,
rights, agreements, convertible or
exchangeable securities or other
commitments or arrangements relating to the
issuance, sale, purchase, return or
redemption, voting or transfer of any
shares, whether issued or unissued, of
capital stock, Capital Stock Equivalents
or other securities of any of the RSI
Subsidiaries.
3.4 Financial
Statements.
(a) Schedule 3.4-A contains a true and complete copy of the
unaudited
historical statements of assets and
liabilities of the Business as of December
31, 2002 (the "2002 Balance Sheet") and
December 31, 2003 (the "2003 Balance
Sheet" and together with the 2002 Balance
Sheet, the "Balance Sheets") and the
related unaudited historical statements of
revenues, costs and expenses of the
Business for the calendar years ended
December 31, 2002 and December 31, 2003
(together with the Balance Sheets, the
"Financial Statements"). Except as set
forth on Schedule 3.4-B, the Financial
Statements fairly present, in all
material respects, the financial position
of the Business, in each case at and
as of the dates indicated, and the results
of operations of the Business for the
periods indicated. Except as set forth on
Schedule 3.4-B, the Financial
Statements have been prepared in accordance
with GAAP applied consistently
throughout the periods covered thereby.
(b) Seller's backlog (as such term is described in paragraph
C.1.viii
of Item 101 of Regulation S-K of the U.S.
Securities and Exchange Commission),
including government orders that are firm
but not yet funded, with respect to
the Business at December 31, 2003 was
$792,679,000.
3.5 Sufficiency
of Assets. Except for the Excluded Assets, (a) the Assets,
(b) the assets owned by RSI as of the
Closing, and (c) the rights conferred by
the Ancillary Agreements, collectively
constitute all of the properties, assets
and rights necessary to operate the
Business substantially in the manner
presently operated by Seller and are
adequate for Buyer to conduct the Business
in the ordinary course of business
consistent with past practice, in each case
only for so long as all of the Ancillary
Agreements remain in effect.
3.6 Description
of Owned Real Property. Schedule 3.6 contains a true and
complete list of all real property owned in
fee simple by Seller and (a)
necessary for the operation of the Business
as currently operated by Seller or
(b) used primarily in the Business
(together with all land, buildings,
structures, fixtures and improvements
located thereon, the "Owned Real
Property"). Schedule 3.6 sets forth (x) a
description of the principal Business
functions conducted at each parcel of Owned
Real Property and (y) a correct
street address and such other information
as is reasonably necessary to identify
each parcel of Owned Real Property;
provided, however, that where the tax parcel
identification or legal description is
not
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available as of the date of this Agreement,
Seller shall update Schedule 3.6
with such information (to the extent it
becomes available) prior to Closing.
3.7 Description
of Leased Real Property; Leases. Schedule 3.7 contains a
true and complete list of all real property
in which Seller or RSI has a
leasehold or other occupancy interest, that
is (a) necessary for the operation
of the Business as currently operated by
Seller or (b) used primarily in the
Business (the "Leased Real Property").
Schedule 3.7 sets forth (x) the street
address of each leasehold interest within
the Leased Real Property (y) true and
complete description (by location, name of
lessor, date of lease agreement and
term expiry date) of the applicable lease
agreement, including all amendments
and modifications thereto, pertaining to
each such leasehold interest and (z)
the nature of the leasehold interest to be
assigned or subleased, as applicable,
to Buyer pursuant to the terms of this
Agreement (each, a "Real Property
Lease"). True and complete copies of each
material Real Property Lease have been
made available to Buyer. Each such Real
Property Lease is a valid and subsisting
agreement in full force and effect and
constitutes a valid and binding
obligation of, and is legally enforceable
against Seller and, to Seller's
knowledge, the other parties thereto.
Neither Seller nor RSI, as applicable, is
in material default under any Real Property
Lease or has received any notice of
default or termination thereunder. No event
has occurred which, with notice or
the passage of time, or both, would give
rise to such a default. To Seller's
Knowledge, (i) none of the other parties to
the Real Property Leases is in
material default thereunder and, (ii) there
is no event which, with notice or
the passage of time or both, would give
rise to such a default. Except as set
forth on Schedule 3.7, no approval or
consent is required from the other parties
to the Real Property Leases to consummate
the Contemplated Transactions. Except
as set forth on Schedule 3.7, neither
Seller nor RSI, as applicable, has
assigned, sublet, transferred or encumbered
its leasehold interest in any of the
Leased Real Property. Seller or RSI has,
and immediately after the Closing Buyer
will have, good and valid title to the
leasehold estate in the Leased Real
Property (as contemplated on Schedule 3.7),
free and clear of all Encumbrances,
other than Permitted Encumbrances.
3.8 Title to
Assets; Encumbrances.
(a) Seller is (and, subject to the provisions of Section 5.5(b),
at
Closing, Buyer shall be) the sole owner of
good, valid, insurable and marketable
fee simple title to the Building 101
Facility and the Building 601 Facility
(collectively, the "Transferred Owned Real
Property"), in each case free and
clear of any Encumbrances, other than:
(i) those Encumbrances described in Schedule 3.8(a);
(ii) liens for Taxes for the current tax year which are not yet
due and payable;
(iii) easements, covenants, restrictions and similar
Encumbrances
of record or as would be shown on any
survey or subdivision map and that do not
materially adversely affect the use,
operation or occupancy of the Transferred
Owned Real Property subject thereto as
currently used, operated or occupied by
Seller; and
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<PAGE>
(iv) minor encroachments that do not materially adversely
affect
the use, operation or occupancy of the
Transferred Owned Real Property subject
thereto as currently used, operated or
occupied by Seller (clauses (i) through
(iv) collectively, the "Permitted Real
Estate Encumbrances").
(b) Seller has good, valid and transferable title to, or a
valid
leasehold interest in, all of the Assets
(other than the Owned Real Property,
the Assigned Intellectual Property and the
Assigned Marks), and RSI has good,
valid and transferable title to, or a valid
leasehold interest in, all of the
assets, rights and properties owned by it
and used or held for use by it as of
the date of this Agreement, in each case,
free and clear of all Encumbrances
other than:
(i) those Encumbrances described in Schedule 3.8(b);
(ii) Encumbrances for current Taxes or other governmental
charges
not yet due and payable;
(iii) Encumbrances arising under conditional sales contracts
and
equipment leases with Third Parties entered
into in the ordinary course of
business consistent with past practice;
(iv) mechanics', carriers', workmen's, repairmen's or other
like
Encumbrances arising or incurred in the
ordinary course of business consistent
with past practice relating to obligations
as to which there is no default on
the part of Seller or RSI, as the case may
be, or the validity or amount of
which is being contested in good faith by
appropriate proceedings; and
(v) other Encumbrances that do not, individually or in the
aggregate, materially impair the continued
use, operation, value or
marketability of the specific Assets to
which they relate or the operation of
the Business (clauses (i) through (v)
collectively, the "Permitted Non-Real
Estate Encumbrances" and, together with the
Permitted Real Estate Encumbrances,
"Permitted Encumbrances").
3.9 Condition of
Real Property.
(a) Except as set forth on Schedule 3.9(a), there are no
Proceedings
or claims, disputes, condemnations,
specials assessments or conditions,
affecting any of the Transferred Owned Real
Property that would interfere with
Buyer's use of such property after the
Closing Date in any material respect.
There are no material defects in the
physical or structural condition of any
buildings or improvements constituting part
of the Transferred Owned Real
Property which would prevent Buyer from
conducting the Business therein in
substantially the manner in which it has
been conducted by Seller prior to the
Closing Date. All utilities presently
serving the Transferred Owned Real
Property are adequate to service the
existing normal operations of the Business
with respect to such Transferred Owned Real
Property consistent with past
practice.
(b) To the Knowledge of Seller: (i) Seller is not in violation of
any
Legal Requirement which, individually or in
combination with any others, would
materially and adversely affect the ability
of Seller to use any parcel of
Transferred Owned Real Property in the
manner and scope in which it is now being
used or operated or otherwise which would
have a
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<PAGE>
Material Adverse Effect; and (ii) other
than published notice not actually
received, there is no pending or
contemplated rezoning or special designation
proceeding affecting the Transferred Owned
Real Property.
(c) Seller has no Knowledge of, and has not received any
written
notice from, any utility company,
municipality or other entity of the
discontinuation of sewer, water, electric,
gas, telephone or other utilities or
services presently provided to the
Transferred Owned Real Property and Leased
Real Property.
3.10 Condition
of Personal Property.
(a) Each material item of Seller's Tangible Personal Property has
been
maintained in accordance with Seller's
customary practices and is in good
operating condition and repair, normal wear
and tear excepted. Except as
disclosed in Schedule 3.10(a), each item of
Seller's Tangible Personal Property
is in the possession of Seller.
(b) Each material item of RSI's Tangible Personal Property has
been
maintained in accordance with RSI's
customary practices and is in good operating
condition and repair, normal wear and tear
excepted. Each item of RSI's Tangible
Personal Property owned or leased by RSI is
in the possession of RSI.
3.11 No
Undisclosed Liabilities. Except as and to the extent reflected
on
the 2003 Balance Sheet, or on Schedule
3.11, Seller does not have any
Liabilities relating to the Business that
are required to be reflected on a
balance sheet prepared in accordance with
GAAP as modified by the exceptions to
GAAP set forth on Schedule 3.4-B, other
than Liabilities incurred since the date
of the 2003 Balance Sheet in the ordinary
course of business consistent with
past practice which, individually or in the
aggregate, would not have a Material
Adverse Effect.
3.12 Taxes.
Except as set forth on Schedule 3.12:
(a) Neither RSI, nor Seller with respect to the Business, is party
to,
bound by or has any obligation under, any
agreement that provides for the
sharing or allocation of liability for
Taxes or for the making of a payment
computed by reference to the Taxes, taxable
income or taxable losses of any
other Person.
(b) Seller has not received a material adverse ruling from any
taxing
authority or entered into any materially
adverse agreement regarding Taxes with
any taxing authority that could,
individually or in the aggregate, apply to the
Business or the Assets after the Closing
Date. No currently outstanding
assessment of a material Tax has been
proposed in writing against Seller, with
respect to the Business, the Assets or RSI
or any of RSI's assets or properties.
No material issue relating to any material
Taxes of the Business or RSI has been
raised in writing by any taxing authority
in any audit or examination which can
result in a proposed adjustment or
assessment by a taxing authority in a taxable
period (or portion thereof) ending on or
before the Closing Date. There are no
outstanding agreements extending the
statutory period of limitation applicable
to any claim for, or the period for the
collection or assessment of, Taxes with
respect to RSI for any taxable period. No
closing agreement pursuant to Section
7121 of the Code (or any predecessor
provision) or any similar provision of any
state,
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local, or foreign law has been entered into
by or with respect to RSI, and no
rulings have been received from any taxing
authority by RSI.
(c) All material income or franchise Tax Returns required to be
filed
by or on behalf of RSI and by Seller, with
respect to the Business, on or before
the Closing Date have been or will be
timely filed (including extensions) and
are in all material respects true, complete
and correct, and all material Taxes
due and payable (whether or not shown on
such Tax Returns) have been or will be
paid when required by law or adequate
reserves have been or shall have been
taken for such Taxes. There are no
Proceedings now pending or threatened in
writing against or with respect to RSI in
respect of any Tax or Tax asset. None
of the Assets or the assets or properties
of RSI (i) is subject to any
Encumbrance that arose in connection with
any failure (or alleged failure) to
pay any Tax (other than for Taxes not yet
due and payable), (ii) comprises "tax
exempt use property" within the meaning of
Section 168(h) of the Code or (iii)
is property that is required to be treated
as being owned by a Person other than
Seller or RSI pursuant to the provisions of
Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in
effect immediately prior to the
enactment of the Tax Reform Act of
1986.
(d) Seller is not a "foreign person" as defined in Section
1445(f)(3)
of the Code.
(e) RSI and, with respect to the Business, Seller have (i) duly
and
timely withheld from employee salaries,
wages and other compensation and paid
over to the appropriate taxing authority
all amounts required to be so withheld
and paid over for all periods under all
applicable laws and (ii) collected all
material sales and use taxes required to be
collected, and have remitted, or
will remit on a timely basis, such amounts
to the appropriate taxing authority,
or have been furnished properly completed
exemption certificates or have
notified the relevant taxing authority of
any Person's refusal to pay such sales
and use taxes and have maintained all such
material records and material
supporting documents in the manner required
by all applicable sales and use tax
statutes and regulations.
(f) RSI has not been a member of an affiliated group (other than
a
group the common parent of which is Seller)
filing a consolidated federal income
Tax Return.
(g) With respect to any taxable period ending after the Closing
Date,
RSI will not be required to include in
income amounts that accrued in a prior
taxable period but were not recognized in
any prior taxable period as a result
of the installment method of accounting,
the completed contract method of
accounting, the long-term contract method
of accounting, the cash method of
accounting, or Section 481 of the Code (or
any comparable provisions of state,
local or foreign law).
(h) No elections pursuant to Treasury Regulation Section 301.7701
have
been made with respect to RSI.
(i) No "reportable" or "listed" transactions (as are defined
pursuant
to Treasury Regulation Section 1.6011-4
thereunder) have been entered into with
respect to RSI.
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<PAGE>
(j) As a result of the Contemplated Transactions, no payment has
been
or will be made that is non-deductible
pursuant to Code Section 280G or that
will result in an excise tax under Code
Section 4999, without regard to whether
such payment is reasonable compensation for
personal services performed or to be
performed in the future.
3.13 Employee
Benefits.
(a) Set forth in Schedule 3.13(a) is a complete and correct list
of
all material Employee Benefit Plans.
(b) Seller has delivered or made available to Buyer with respect
to
each Employee Benefit Plan: (i) if required
to be prepared under ERISA or the
Code, a copy of the most recent annual
report (including all required
attachments, schedules and financial
statements); (ii) a copy of the Employee
Benefit Plan and any amendments thereto and
a copy of any summary plan
descriptions and summaries of material
modifications to any such plan required
to be prepared under applicable Legal
Requirements; (iii) if the Employee
Benefit Plan is funded through a trust or
any third-party funding vehicle (other
than with respect to any "multiemployer
plan" (within the meaning of Section
3(37) of ERISA)), a copy of the trust or
other funding agreement or document and
the latest statement of assets and/or
financial statements thereof; and (iv) a
copy of the most recent favorable
determination letter issued by the IRS with
respect to each Employee Benefit Plan
intended to be qualified under Section
401(a) of the Code.
(c) (i) Each Employee Benefit Plan has been administered, and
complies
in all material respects with its terms and
applicable Legal Requirements; (ii)
there are no material actions, suits,
claims or other Proceedings with respect
to any Employee Benefit Plan, and except as
would not reasonably be expected to
result in material Liability to Buyer or
RSI, by the IRS, the PBGC, Department
of Labor, any participant or beneficiary,
or any other Person, currently
pending, or, to Seller's Knowledge,
threatened (other than routine claims for
benefits in the ordinary course of business
consistent with past practice) and,
to Seller's Knowledge, no facts or
circumstances exist that would reasonably be
expected to result in any such material
actions, suits, claims or other
Proceedings; (iii) each Employee Benefit
Plan that is intended to be qualified
under Section 401(a) of the Code has
received a favorable determination letter
from the IRS that it is so qualified, and
to the Seller's Knowledge, nothing has
occurred, whether by action or failure to
act, that could reasonably be expected
to cause the loss of such qualification;
(iv) no written communication has been
received from the IRS or PBGC concerning
the transfer of assets and liabilities
from the Seller Pension Plan with respect
to the Contemplated Transactions; and
(v) to the Seller's Knowledge, no
"prohibited transaction" (as such term is
defined in Section 406 of ERISA and Section
4975 of the Code) has occurred with
respect to any Employee Benefit Plan for
which Buyer is assuming any Liability
pursuant to Section 2.3(a) of this
Agreement.
(d) With respect to each of the Employee Benefit Plans, all
required
payments, premiums, contributions or
reimbursements, with respect to the
Employees, for all periods (or partial
periods) ending prior to or as of the
Closing Date have been made or properly
accrued on the books and Records of the
Business. None of the Employee Benefit
Plans has, to Seller's Knowledge, any
risk of incurring material liability under
Title IV or Section 302 of
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ERISA. No Employee Benefit Plan is a
multiemployer plan as defined in Section
3(37) of ERISA.
(e) Seller, with respect to the Business, and the Employee
Benefit
Plans, with respect to the Employees, have
complied in all material respects
with the requirements of Section 4980B of
the Code ("COBRA").
(f) Except as set forth on Schedule 3.13(f), no Employee Benefit
Plan
exists that, as a result of the execution
of this Agreement or the Contemplated
Transactions (whether alone or in
connection with any subsequent event(s)),
could result in the increase, acceleration
or provision of any payments,
benefits or other rights to any Employee,
whether or not any such payment,
benefit or right would constitute a
"parachute payment" within the meaning of
Section 280G of the Code.
3.14 Compliance
with Legal Requirements; Governmental Authorizations.
(a) Except as set forth in Schedule 3.14(a), neither RSI nor
Seller,
with respect to the Business, is in
violation of any applicable Legal
Requirement, except any such violation
which, individually or in the aggregate,
would not have a Material Adverse
Effect.
(b) (i) Seller has all Governmental Authorizations that are
necessary
to conduct the Business as presently being
conducted in all material respects
and RSI has all Governmental Authorizations
that are necessary to conduct its
business as presently conducted in all
material respects, (ii) all such
Governmental Authorizations are in full
force and effect, and (iii) no
violations or claimed violations of such
Governmental Authorizations are pending
before any Governmental Body.
3.15 Legal
Proceedings; Orders. Except as set forth on Schedule 3.15,
there
is no pending nor, to the Knowledge of
Seller, threatened Proceeding against
Seller or any of its properties, assets and
business operations, in each case
relating to the Business, or against RSI or
any of its properties, assets and
business operations. Seller is not in
default under any Order applicable to the
Business and RSI is not in default of any
Order.
3.16 Absence of
Certain Changes or Events.
(a) Since January 1, 2004, there has not occurred a Material
Adverse
Effect or any events, circumstances,
developments, changes or effects that,
individually or in the aggregate, cause,
result in or have a Material Adverse
Effect.
(b) Except as required by or expressly permitted by this
Agreement,
and except for such actions as are
reasonably necessary for Seller to separate
the Business and the Assets from Seller's
retained businesses and assets
(including the actions described in Section
6.2(b)), except as set forth in
Schedule 3.16(b), since January 1, 2004,
Seller and RSI have conducted the
Business only in the ordinary course of
business consistent with past practice,
and:
(i) there has not been any material change by Seller in the
accounting methods or practices followed by
or with respect to the Business
except to the extent required by any
changes in GAAP;
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<PAGE>
(ii) there has not been any occurrence resulting in the damage,
destruction or loss (whether or not covered
by insurance) affecting any tangible
asset or property of the Business in excess
of One Million Dollars ($1,000,000)
for any single loss or Ten Million Dollars
($10,000,000) for all such losses;
(iii) Seller has not waived or released any right or claim (or
series of related rights and claims)
related to the Business outside the
ordinary course of business consistent with
past practice and RSI has not waived
or released any right or claims (or series
of related rights or claims) outside
the ordinary course of business consistent
with past practice;
(iv) there has not been (A) any material increase in the
compensation or benefits of any Employee,
except for such increases as are
granted (1) in the ordinary course of
business consistent with past practice to
Business Employees and RSI Current
Employees pursuant to normal periodic
performance reviews; (2) in accordance with
the terms of any employment
agreement as currently in effect and set
forth on Schedule 3.17(a)(iii) or (3)
pursuant to applicable Legal Requirements;
or (B) any material change with
respect to any Employee Benefit Plan that
has resulted, or is reasonably
expected to result, in a material increase
in any Liability to Buyer or RSI.
(v) there has not been any grant of any severance or
termination
pay to any Employee, except in accordance
with the terms of any Employee Benefit
Plan set forth on Schedule 3.13(a) or with
applicable Legal Requirements;
(vi) neither Seller nor RSI has entered into any Material
Business Contract outside the ordinary
course of business consistent with past
practice and neither Seller nor RSI, nor
any other party to any Material
Business Contract, has terminated or
unilaterally modified any Material Business
Contract outside the ordinary course of
business consistent with past practice;
(vii) Seller has not sold, transferred, or otherwise disposed
of
any of the properties or assets of the
Business (real, personal or mixed,
tangible or intangible) other than in the
ordinary course of business consistent
with past practice and RSI has not sold,
transferred, or otherwise disposed of
any of its properties or assets (real,
personal or mixed, tangible or
intangible), except in the ordinary course
of business consistent with past
practice; and
(viii) neither Seller nor RSI has entered into any Contract to
do
any of the foregoing.
3.17 Contracts;
No Defaults; Bids.
(a) Schedule 3.17(a) contains an accurate and complete list of each
of
the following types of Business Contracts
(the "Material Business Contracts")
(other than those described in clause
(iii), which shall be Material Business
Contracts, but which shall not appear on
Schedule 3.17(a)) and, except where
Seller is prohibited from doing so by the
terms of such Material Business
Contract or where indicated on Schedule
3.17(a), Seller has made available to
Buyer accurate and complete copies of such
Material Business Contracts:
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(i)
any Business Contract involving performance of services or
delivery of goods or materials by Seller of
an amount or value in excess of Five
Hundred Thousand Dollars ($500,000) or any
Business Contract involving
performance of services or delivery of
goods or materials by RSI of an amount or
value in excess of One Hundred Thousand
Dollars ($100,000);
(ii) any Business Contract involving performance of services or
delivery of goods or materials to Seller of
an amount or value in excess of Five
Hundred Thousand Dollars ($500,000) or any
Business Contract involving
performance of services or delivery of
goods or materials to RSI of an amount or
value in excess of One Hundred Thousand
Dollars ($100,000);
(iii) any employment or severance agreement that has an
aggregate
future liability, if fully performed, in
excess of Two Hundred and Fifty
Thousand Dollars ($250,000);
(iv) any Business Contract containing any covenant limiting the
ability of Seller, with respect to the
operation of the Business, or RSI to
engage in any line of business or compete
with any business or person or in any
geographic area;
(v) (A) any Business Contract under which (1) Seller is the
lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible
personal property owned by any third Person
for an annual rent in excess of Five
Hundred Thousand Dollars ($500,000) or (2)
Seller is the lessor of, or makes
available for use by any third Person, any
tangible personal property owned by
it for an annual rent in excess of Five
Hundred Thousand Dollars ($500,000) or
(B) any Business Contract under which (1)
RSI is the lessee of, or holds or
uses, any machinery, equipment, vehicle or
other tangible personal property
owned by any third Person for an annual
rent in excess of One Hundred Thousand
Dollars ($100,000) or (2) RSI is the lessor
of, or makes available for use by
any third Person, any tangible personal
property owned by it for an annual rent
in excess of One Hundred Thousand Dollars
($100,000);
(vi) any indebtedness of Seller, on behalf of the Business, or
RSI for borrowed money;
(vii) any indebtedness for borrowed money of RSI to any Related
Person of Seller;
(viii) any Business Contract with any Related Person o
