{"id":43137,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-merger-united-defense-industries-inc-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-united-defense-industries-inc-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-united-defense-industries-inc-and.html","title":{"rendered":"Agreement and Plan of Merger – United Defense Industries Inc. and United States Marine Repair Inc."},"content":{"rendered":"
Agreement and Plan of Merger\n\n<\/p>
Dated as of May 27, 2002\n\n<\/p>
By and Among\n\n<\/p>
United Defense Industries, Inc.,\n\n<\/p>
UDII Torch Acquisition Corporation,\n\n<\/p>
United States Marine Repair, Inc.,\n\n<\/p>
and\n\n<\/p>
TC Group, L.L.C., as Representative\n\n<\/p>
 \n\n<\/p>
\n\n\n
<\/p>
\n<\/p>
 <\/h5>
\n<\/p>
TABLE OF CONTENTS<\/b>\n\n\n<\/p>
\n\n\n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        
 <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n
ARTICLE I DEFINITIONS<\/div><\/td>\n        
 <\/td>\n        1<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        1.01.<\/td>\n         <\/td>\n         <\/td>\n        Definitions<\/td>\n         <\/td>\n         <\/td>\n        1<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE II THE MERGER<\/div><\/td>\n        
 <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.01.<\/td>\n         <\/td>\n         <\/td>\n        The Merger<\/td>\n         <\/td>\n         <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.02.<\/td>\n         <\/td>\n         <\/td>\n        Closing of the Merger<\/td>\n         <\/td>\n         <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.03.<\/td>\n         <\/td>\n         <\/td>\n        Actions at the Closing<\/td>\n         <\/td>\n         <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.04.<\/td>\n         <\/td>\n         <\/td>\n        Additional Action<\/td>\n         <\/td>\n         <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.05.<\/td>\n         <\/td>\n         <\/td>\n        Effects of the Merger<\/td>\n         <\/td>\n         <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.06.<\/td>\n         <\/td>\n         <\/td>\n        Certificate of Incorporation and By-laws<\/td>\n         <\/td>\n         <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.07.<\/td>\n         <\/td>\n         <\/td>\n        Directors<\/td>\n         <\/td>\n         <\/td>\n        9<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        2.08.<\/td>\n         <\/td>\n         <\/td>\n        Officers<\/td>\n         <\/td>\n         <\/td>\n        10<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE III CONSIDERATION;\nPAYMENT; EFFECT ON SHARES\nIN THE MERGER<\/div><\/td>\n        
 <\/td>\n        10<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.01.<\/td>\n         <\/td>\n         <\/td>\n        Maximum Merger Consideration<\/td>\n         <\/td>\n         <\/td>\n        10<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.02.<\/td>\n         <\/td>\n         <\/td>\n        Conversion of Shares<\/td>\n         <\/td>\n         <\/td>\n        10<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.03.<\/td>\n         <\/td>\n         <\/td>\n        Dissenters' Rights<\/td>\n         <\/td>\n         <\/td>\n        10<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.04.<\/td>\n         <\/td>\n         <\/td>\n        Options<\/td>\n         <\/td>\n         <\/td>\n        11<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.05.<\/td>\n         <\/td>\n         <\/td>\n        Payment for Shares and Options; Escrow Consideration<\/td>\n         <\/td>\n         <\/td>\n        12<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.06.<\/td>\n         <\/td>\n         <\/td>\n        Closing Net Debt<\/td>\n         <\/td>\n         <\/td>\n        12<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.07.<\/td>\n         <\/td>\n         <\/td>\n        Adjustment<\/td>\n         <\/td>\n         <\/td>\n        13<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        3.08.<\/td>\n         <\/td>\n         <\/td>\n        Appointment of Representative<\/td>\n         <\/td>\n         <\/td>\n        14<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE IV REPRESENTATIONS\nAND WARRANTIES OF THE COMPANY<\/div><\/td>\n        
 <\/td>\n        14<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.01.<\/td>\n         <\/td>\n         <\/td>\n        Corporate Existence and Power<\/td>\n         <\/td>\n         <\/td>\n        14<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.02.<\/td>\n         <\/td>\n         <\/td>\n        Corporate Authorization<\/td>\n         <\/td>\n         <\/td>\n        14<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.03.<\/td>\n         <\/td>\n         <\/td>\n        Capital Stock<\/td>\n         <\/td>\n         <\/td>\n        15<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.04.<\/td>\n         <\/td>\n         <\/td>\n        Subsidiaries<\/td>\n         <\/td>\n         <\/td>\n        16<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.05.<\/td>\n         <\/td>\n         <\/td>\n        Governmental Authorization<\/td>\n         <\/td>\n         <\/td>\n        16<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.06.<\/td>\n         <\/td>\n         <\/td>\n        No Conflicts<\/td>\n         <\/td>\n         <\/td>\n        16<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.07.<\/td>\n         <\/td>\n         <\/td>\n        No Default<\/td>\n         <\/td>\n         <\/td>\n        17<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.08.<\/td>\n         <\/td>\n         <\/td>\n        Required and Other Consents<\/td>\n         <\/td>\n         <\/td>\n        17<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.09.<\/td>\n         <\/td>\n         <\/td>\n        Financial Statements<\/td>\n         <\/td>\n         <\/td>\n        17<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.10.<\/td>\n         <\/td>\n         <\/td>\n        Absence of Certain Changes<\/td>\n         <\/td>\n         <\/td>\n        18<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.11.<\/td>\n         <\/td>\n         <\/td>\n        No Undisclosed Material Liabilities<\/td>\n         <\/td>\n         <\/td>\n        18<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.12.<\/td>\n         <\/td>\n         <\/td>\n        Properties<\/td>\n         <\/td>\n         <\/td>\n        19<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.13.<\/td>\n         <\/td>\n         <\/td>\n        Sufficiency of Assets<\/td>\n         <\/td>\n         <\/td>\n        20<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.14.<\/td>\n         <\/td>\n         <\/td>\n        Litigation<\/td>\n         <\/td>\n         <\/td>\n        20<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.15.<\/td>\n         <\/td>\n         <\/td>\n        Material Contracts<\/td>\n         <\/td>\n         <\/td>\n        21<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.16.<\/td>\n         <\/td>\n         <\/td>\n        Government Contracts<\/td>\n         <\/td>\n         <\/td>\n        22<\/td>\n         <\/td>\n<\/tr>\n<\/table>\n<\/center>\n
 \n\n<\/p>
<\/p>
\n<\/p>
 <\/h5>
\n\n<\/p>
\n\n\n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        
 <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.17.<\/td>\n         <\/td>\n         <\/td>\n        Licenses and Permits<\/td>\n         <\/td>\n         <\/td>\n        24<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.18.<\/td>\n         <\/td>\n         <\/td>\n        Insurance Coverage<\/td>\n         <\/td>\n         <\/td>\n        25<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.19.<\/td>\n         <\/td>\n         <\/td>\n        Compliance with Laws<\/td>\n         <\/td>\n         <\/td>\n        25<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.20.<\/td>\n         <\/td>\n         <\/td>\n        Intellectual Property<\/td>\n         <\/td>\n         <\/td>\n        25<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.21.<\/td>\n         <\/td>\n         <\/td>\n        Employees<\/td>\n         <\/td>\n         <\/td>\n        26<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.22.<\/td>\n         <\/td>\n         <\/td>\n        Receivables<\/td>\n         <\/td>\n         <\/td>\n        29<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.23.<\/td>\n         <\/td>\n         <\/td>\n        Accounts Payable<\/td>\n         <\/td>\n         <\/td>\n        29<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.24.<\/td>\n         <\/td>\n         <\/td>\n        No Third Party Options<\/td>\n         <\/td>\n         <\/td>\n        29<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.25.<\/td>\n         <\/td>\n         <\/td>\n        Anti-Competitive Arrangements<\/td>\n         <\/td>\n         <\/td>\n        29<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.26.<\/td>\n         <\/td>\n         <\/td>\n        Major Suppliers, Customers and Distributors<\/td>\n         <\/td>\n         <\/td>\n        30<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.27.<\/td>\n         <\/td>\n         <\/td>\n        Ethical Practices.<\/td>\n         <\/td>\n         <\/td>\n        30<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.28.<\/td>\n         <\/td>\n         <\/td>\n        Finders' Fees<\/td>\n         <\/td>\n         <\/td>\n        30<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.29.<\/td>\n         <\/td>\n         <\/td>\n        Nuclear Services<\/td>\n         <\/td>\n         <\/td>\n        30<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.30.<\/td>\n         <\/td>\n         <\/td>\n        Environmental Compliance<\/td>\n         <\/td>\n         <\/td>\n        31<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.31.<\/td>\n         <\/td>\n         <\/td>\n        Preservation of Indemnification Claims<\/td>\n         <\/td>\n         <\/td>\n        32<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        4.32.<\/td>\n         <\/td>\n         <\/td>\n        Books and Records; Other Information<\/td>\n         <\/td>\n         <\/td>\n        32<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE V REPRESENTATIONS\nAND WARRANTIES OF PARENT<\/div><\/td>\n        
 <\/td>\n        33<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.01.<\/td>\n         <\/td>\n         <\/td>\n        Organization and Existence<\/td>\n         <\/td>\n         <\/td>\n        33<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.02.<\/td>\n         <\/td>\n         <\/td>\n        Corporate Authorization<\/td>\n         <\/td>\n         <\/td>\n        33<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.03.<\/td>\n         <\/td>\n         <\/td>\n        Governmental Authorization<\/td>\n         <\/td>\n         <\/td>\n        33<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.04.<\/td>\n         <\/td>\n         <\/td>\n        No Conflicts<\/td>\n         <\/td>\n         <\/td>\n        33<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.05.<\/td>\n         <\/td>\n         <\/td>\n        Parent Financing<\/td>\n         <\/td>\n         <\/td>\n        34<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.06.<\/td>\n         <\/td>\n         <\/td>\n        Fairness Opinion<\/td>\n         <\/td>\n         <\/td>\n        34<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.07.<\/td>\n         <\/td>\n         <\/td>\n        Finders' Fees<\/td>\n         <\/td>\n         <\/td>\n        34<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        5.08.<\/td>\n         <\/td>\n         <\/td>\n        Litigation<\/td>\n         <\/td>\n         <\/td>\n        34<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE VI COVENANTS\nOF THE COMPANY<\/div><\/td>\n        
 <\/td>\n        34<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.01.<\/td>\n         <\/td>\n         <\/td>\n        Conduct of the Business<\/td>\n         <\/td>\n         <\/td>\n        34<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.02.<\/td>\n         <\/td>\n         <\/td>\n        Access to Information<\/td>\n         <\/td>\n         <\/td>\n        37<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.03.<\/td>\n         <\/td>\n         <\/td>\n        Notices of Certain Events<\/td>\n         <\/td>\n         <\/td>\n        37<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.04.<\/td>\n         <\/td>\n         <\/td>\n        Insurance<\/td>\n         <\/td>\n         <\/td>\n        38<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.05.<\/td>\n         <\/td>\n         <\/td>\n        Supplements to Disclosure Schedule<\/td>\n         <\/td>\n         <\/td>\n        38<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.06.<\/td>\n         <\/td>\n         <\/td>\n        No Solicitation<\/td>\n         <\/td>\n         <\/td>\n        39<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.07.<\/td>\n         <\/td>\n         <\/td>\n        Customer Visits<\/td>\n         <\/td>\n         <\/td>\n        39<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.08.<\/td>\n         <\/td>\n         <\/td>\n        Supplemental Information<\/td>\n         <\/td>\n         <\/td>\n        39<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.09.<\/td>\n         <\/td>\n         <\/td>\n        Access to Company Employees<\/td>\n         <\/td>\n         <\/td>\n        40<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.10.<\/td>\n         <\/td>\n         <\/td>\n        Capital Air<\/td>\n         <\/td>\n         <\/td>\n        40<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.11.<\/td>\n         <\/td>\n         <\/td>\n        Termination of Certain Agreements<\/td>\n         <\/td>\n         <\/td>\n        40<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.12.<\/td>\n         <\/td>\n         <\/td>\n        Significant Employees<\/td>\n         <\/td>\n         <\/td>\n        40<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.13.<\/td>\n         <\/td>\n         <\/td>\n        Cancellation of Options<\/td>\n         <\/td>\n         <\/td>\n        40<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        6.14.<\/td>\n         <\/td>\n         <\/td>\n        Meeting of Stockholders<\/td>\n         <\/td>\n         <\/td>\n        40<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE VII COVENANTS\nOF THE PARTIES<\/div><\/td>\n        
 <\/td>\n        41<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        7.01.<\/td>\n         <\/td>\n         <\/td>\n        Further Assurances<\/td>\n         <\/td>\n         <\/td>\n        41<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        7.02.<\/td>\n         <\/td>\n         <\/td>\n        Public Announcements; Confidentiality<\/td>\n         <\/td>\n         <\/td>\n        42<\/td>\n         <\/td>\n<\/tr>\n<\/table>\n<\/center>\n
iii\n\n<\/p>
<\/p>
\n<\/p>
 <\/h5>
\n\n<\/p>
\n\n\n\n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        \n        
 <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        7.03.<\/td>\n         <\/td>\n         <\/td>\n        Parent Financing<\/td>\n         <\/td>\n         <\/td>\n        42<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        7.04.<\/td>\n         <\/td>\n         <\/td>\n        Letters of Credit<\/td>\n         <\/td>\n         <\/td>\n        42<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE VIII\nTAX MATTERS<\/div><\/td>\n        
 <\/td>\n        43<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        8.01<\/td>\n         <\/td>\n         <\/td>\n        Tax Matters<\/td>\n         <\/td>\n         <\/td>\n        43<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE IX EMPLOYMENT\nMATTERS<\/div><\/td>\n        
 <\/td>\n        43<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        9.01<\/td>\n         <\/td>\n         <\/td>\n        Employment Matters<\/td>\n         <\/td>\n         <\/td>\n        43<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE X\nCONDITIONS TO CLOSING<\/div><\/td>\n        
 <\/td>\n        43<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        10.01.<\/td>\n         <\/td>\n         <\/td>\n        Conditions to the Obligations of Each Party<\/td>\n         <\/td>\n         <\/td>\n        43<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        10.02.<\/td>\n         <\/td>\n         <\/td>\n        Conditions to Obligations of Parent and Acquisition<\/td>\n         <\/td>\n         <\/td>\n        43<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        10.03.<\/td>\n         <\/td>\n         <\/td>\n        Conditions to Obligation of the Company<\/td>\n         <\/td>\n         <\/td>\n        45<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE XI\nSURVIVAL;\nINDEMNIFICATION<\/div><\/td>\n        
 <\/td>\n        45<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        11.01.<\/td>\n         <\/td>\n         <\/td>\n        Survival<\/td>\n         <\/td>\n         <\/td>\n        45<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        11.02.<\/td>\n         <\/td>\n         <\/td>\n        Indemnification by the Escrowed Stockholders<\/td>\n         <\/td>\n         <\/td>\n        46<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        11.03.<\/td>\n         <\/td>\n         <\/td>\n        Procedures for Third Party Claims<\/td>\n         <\/td>\n         <\/td>\n        48<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        11.04.<\/td>\n         <\/td>\n         <\/td>\n        Procedures for Direct Claims<\/td>\n         <\/td>\n         <\/td>\n        49<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        11.05.<\/td>\n         <\/td>\n         <\/td>\n        Release of Escrow Fund<\/td>\n         <\/td>\n         <\/td>\n        50<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE XII TERMINATION<\/div><\/td>\n        
 <\/td>\n        50<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        12.01.<\/td>\n         <\/td>\n         <\/td>\n        Termination<\/td>\n         <\/td>\n         <\/td>\n        50<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        12.02.<\/td>\n         <\/td>\n         <\/td>\n        Effect of Termination<\/td>\n         <\/td>\n         <\/td>\n        51<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/td>\n<\/tr>\n
ARTICLE XIII MISCELLANEOUS<\/div><\/td>\n        
 <\/td>\n        52<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.01.<\/td>\n         <\/td>\n         <\/td>\n        Notices<\/td>\n         <\/td>\n         <\/td>\n        52<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.02.<\/td>\n         <\/td>\n         <\/td>\n        Amendments; No Waivers<\/td>\n         <\/td>\n         <\/td>\n        53<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.03.<\/td>\n         <\/td>\n         <\/td>\n        Expenses<\/td>\n         <\/td>\n         <\/td>\n        53<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.04.<\/td>\n         <\/td>\n         <\/td>\n        Successors and Assigns<\/td>\n         <\/td>\n         <\/td>\n        53<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.05.<\/td>\n         <\/td>\n         <\/td>\n        Governing Law<\/td>\n         <\/td>\n         <\/td>\n        53<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.06.<\/td>\n         <\/td>\n         <\/td>\n        Counterparts; Effectiveness<\/td>\n         <\/td>\n         <\/td>\n        53<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.07.<\/td>\n         <\/td>\n         <\/td>\n        Entire Agreement<\/td>\n         <\/td>\n         <\/td>\n        54<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.08.<\/td>\n         <\/td>\n         <\/td>\n        Dispute Resolution<\/td>\n         <\/td>\n         <\/td>\n        54<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.09.<\/td>\n         <\/td>\n         <\/td>\n        Captions<\/td>\n         <\/td>\n         <\/td>\n        55<\/td>\n         <\/td>\n<\/tr>\n\n
 <\/div><\/td>\n        
 <\/td>\n         <\/td>\n        13.10.<\/td>\n         <\/td>\n         <\/td>\n        Knowledge<\/td>\n         <\/td>\n         <\/td>\n        55<\/td>\n         <\/td>\n<\/tr>\n<\/table>\n<\/center>\n
EXHIBITS<\/b>\n\n\n<\/p>
\n\n\n        \n        \n        \n        \n        
 <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
Exhibit I<\/td>\n         <\/td>\n        \nTax Matters\n<\/td>\n         <\/td>\n        I-1<\/td>\n<\/tr>\n\n
Exhibit II<\/td>\n         <\/td>\n        \nEmployee Benefits\n<\/td>\n         <\/td>\n        II-1<\/td>\n<\/tr>\n\n
 <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n
Exhibit 1.01-A<\/td>\n         <\/td>\n        \nCertificate of Merger<\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n<\/table>\n<\/center>\n
iv\n\n<\/p>
<\/p>
\n<\/p>
 <\/h5>
\n\n<\/p>
\n\n\n        \n        \n        \n        \n        \n        
 <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
Exhibit 1.01-B<\/td>\n         <\/td>\n        \nForm of Irrevocable Proxy, Waiver and Voting Agreement<\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
Exhibit 3.05<\/td>\n         <\/td>\n        \nEscrow Agreement<\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
Exhibit 10.02(d)<\/td>\n         <\/td>\n        \nForm of Non-Competition and Non-Solicitation Agreement<\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
Exhibit 10.02(h)<\/td>\n         <\/td>\n        \nCompany Legal Opinion Matters<\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n\n
Exhibit 10.03(e)<\/td>\n         <\/td>\n        \nParent Legal Opinion Matters<\/td>\n         <\/td>\n         <\/td>\n<\/tr>\n<\/table>\n<\/center>\n
\n<\/p><\/pre>\n\n\n
*<\/td>\n <\/td>\nThe Table of Contents is not a part of this Agreement.<\/td>\n<\/tr>\n<\/table>\n
v<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/b><\/p>\n
     THIS AGREEMENT AND
\nPLAN OF MERGER, dated as of May 27, 2002 (this \u0093Agreement\u0094<\/b>), is by and among United States Marine Repair, Inc., a Delaware
\ncorporation (the \u0093Company\u0094<\/b>), United Defense Industries, Inc., a Delaware
\ncorporation (\u0093Parent\u0094<\/b>), UDII Torch Acquisition Corporation, a Delaware
\ncorporation and a wholly owned subsidiary of Parent (\u0093Acquisition\u0094<\/b>), and TC
\nGroup, L.L.C., a Delaware limited liability company, solely in its capacity as
\nthe Representative. Capitalized terms not otherwise defined herein have the
\nmeanings ascribed to such terms in Article I of this Agreement.<\/p>\n
BACKGROUND<\/b><\/p>\n
     A.     The Boards of Directors of the Company, Parent and Acquisition have
\neach (i) determined that the Merger is advisable, fair and in the best
\ninterests of its respective stockholders and (ii) approved the Merger upon the
\nterms and subject to the conditions set forth in this Agreement.<\/p>\n
     B.     Certain stockholders of the Company have agreed to vote their shares in
\nfavor of the adoption of this Agreement and the approval of the transactions
\ncontemplated hereby pursuant to the Voting Agreement.<\/p>\n
     C.     As an essential inducement for Parent and Acquisition to enter into
\nthis Agreement, certain employees of the Company have agreed to enter into
\nemployment agreements with Parent and the Company, and a separate holder of the
\nCompany\u0092s securities will enter into a non-competition and non-solicitation
\nagreement.<\/p>\n
     D.     It is a condition to Parent\u0092s and Acquisition\u0092s obligations under this
\nAgreement that certain stockholders of the Company agree to the creation of an
\nindemnification fund and to the execution and delivery of the Escrow Agreement;<\/p>\n
     NOW, THEREFORE, in consideration of the foregoing premises and the
\nrepresentations, warranties, covenants and agreements herein contained, and
\nintending to be legally bound hereby, the Company, Parent and Acquisition
\nhereby agree as follows:<\/p>\n
ARTICLE I
\nDEFINITIONS<\/b><\/p>\n
     1.01. Definitions<\/b>.<\/p>\n
             (a) Defined terms used in this Agreement shall have the meanings specified
\nin this Section 1.01, or elsewhere in this Agreement.<\/p>\n
             \u0093Affiliate\u0094<\/b> means, with respect to any Person, any other Person directly
\nor indirectly controlling, controlled by, or under common control with the
\nfirst Person.<\/p>\n
             \u0093Applicable Law\u0094<\/b> means any domestic or foreign, federal, state or local
\nstatute, law, ordinance, rule, administrative interpretation, regulation,
\norder, writ, injunction, directive,<\/p>\n
\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
judgment, award, decree or other requirement having the force of law, of
\nany Governmental Entity (including any Environmental Law).<\/p>\n
             \u0093Bid\u0094<\/b> means any written quotation, bid, tender or proposal made by the
\nCompany or any Subsidiary that if accepted or awarded would lead to a Contract.<\/p>\n
             \u0093Certificate of Merger\u0094<\/b> means a certificate of merger prepared and
\nexecuted in accordance with the relevant provisions of the DGCL substantially
\nin the form attached as Exhibit 1.01-A.<\/p>\n
             \u0093Closing Net Debt\u0094<\/b> means the total interest-bearing borrowings or debt
\nobligations of the Company and the Subsidiaries plus all accrued and unpaid
\ninterest on such borrowings and debt obligations less total cash and cash
\nequivalents of the Company and the Subsidiaries, as reflected on the bank
\nledger cash balances of the Company, as of the close of business on the day
\nbefore the Closing Date.<\/p>\n
             \u0093Company Option Plan\u0094<\/b> means the Company\u0092s 1998 Stock Option Plan, as
\namended.<\/p>\n
             \u0093Contracts\u0094<\/b> means all contracts, sub-contracts, agreements, consortium
\narrangements, leases, licenses, commitments, sales and purchase orders, and
\nother instruments, arrangements or understandings of any kind to which the
\nCompany or any Subsidiary is a party.<\/p>\n
             \u0093Damages\u0094<\/b> means all costs, damages, losses, judgments, awards,
\nLiabilities, fines, penalties, costs of Remediation, sanctions and expenses
\n(including, without limitation, settlement costs, reasonable attorneys\u0092 fees
\nand other standard reasonable expenses incurred in connection with the
\ninvestigation or defense of any action, suit or proceeding).<\/p>\n
             \u0093DGCL\u0094<\/b> means the Delaware General Corporation Law.<\/p>\n
             \u0093Effective Time\u0094<\/b> means the later of (i) the time at which the Company and
\nAcquisition file the Certificate of Merger with the Secretary of State of the
\nState of Delaware or (ii) at such other time as is provided in the Certificate
\nof Merger.<\/p>\n
             \u0093Environment\u0094<\/b> means any ambient air; workplace or indoor air; surface
\nwater; drinking water; groundwater; aquifer; land surface; subsurface strata;
\nsoil; subsoil; river sediment; plant or animal life; natural resources; real
\nproperty and the physical buildings, structures, improvements and fixtures
\nthereon; or other media whatsoever.<\/p>\n
             \u0093Environmental Law\u0094<\/b> shall mean any and all Applicable Laws: (1) regulating
\nprotection of the Environment, (2) regulating the Management, Release or
\nRemediation of Hazardous Substances, (3) regulating the exposure of Persons to
\nHazardous Substances, or (4) regulating occupational health and safety,
\nincluding without limitation the Comprehensive Environmental Response
\nCompensation and Liability Act (42 U.S.C. 9601 et seq<\/i>.), the Clean Air Act (42
\nU.S.C. \u00a7\u00a7 7401 et seq<\/i>.), the Resource Conservation and Recovery Act (42 U.S.C.
\n\u00a7\u00a7 6901 et seq<\/i>.), the Clean Water Act (33 U.S.C. \u00a7\u00a7 1251 et seq<\/i>.), the
\nOccupational Safety and Health Act (29 U.S.C. \u00a7\u00a7 651 et seq<\/i>.), the Toxic
\nSubstance Control Act (15 U.S.C. \u00a7\u00a7 2601 et<\/i><\/p>\n
2<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
 seq<\/i>.), the Safe Drinking Water Act (42 U.S.C. \u00a7\u00a7 300f et seq<\/i>.) and any
\nrequirements promulgated pursuant to these Applicable Laws.<\/p>\n
             \u0093Environmental Liabilities\u0094<\/b> means, regardless of whether any of the
\nfollowing are contained in any disclosure schedule to this Agreement or
\notherwise disclosed to Parent prior to the Closing, any and all Damages
\n(including Damages incurred by the Surviving Corporation for such reasonable
\ntime after the Closing as it takes the Surviving Corporation to come into
\ncompliance with Environmental Law with respect to conditions in existence on or
\nprior to the Closing Date) and including without limitation reasonable
\nattorneys\u0092 fees and other defense costs, as well as costs of Remediation known
\nor unknown, foreseen or unforeseen, whether contingent or otherwise, fixed or
\nabsolute, present or arising in the future, asserted against or reasonably
\nincurred by Parent, Acquisition or, after the Closing, the Surviving
\nCorporation, arising out of or related to: (1) the presence, Release, threat
\nof Release, Management of or exposure of Persons to Hazardous Substances at,
\non, in, under or from any property now or previously owned, operated or leased
\nby the Company, any Subsidiary or any of their respective predecessors in
\ninterest, whether into the Environment on-site or off-site that occurred prior
\nto the Closing Date and to the extent that any such pre-existing presence,
\nRelease or exposure migrates or continues after the Closing Date; or (2) the
\noff-site transportation, Release, processing or Management of Hazardous
\nSubstances, prior to the Closing Date, by or on behalf of the Company, any
\nSubsidiary or any of their respective predecessors in interest; or (3) any
\nviolation of any Environmental Law by the Company, any Subsidiary or any of
\ntheir respective predecessors in interest to the extent that such violation
\noccurred prior to the Closing Date.<\/p>\n
             \u0093Government Contract\u0094<\/b> means any contract, basic ordering agreement,
\nblanket purchase agreement, letter agreement, purchase order, delivery order,
\ntask order, grant, cooperative agreement, Bid, change order or other commitment
\nor funding vehicle between the Company or any Subsidiary and (1) any
\nGovernmental Entity, (2) any prime contractor to any Governmental Entity or (3)
\nany subcontractor with respect to any Contract described in clause (1) or (2).<\/p>\n
             \u0093Governmental Entity\u0094<\/b> means any United States federal, state or local or
\nany non-United States government, political subdivision, governmental,
\nregulatory or administrative authority, instrumentality, agency, body or
\ncommission, or any court, tribunal or judicial or arbitral body.<\/p>\n
             \u0093Hazardous Substance\u0094<\/b> means any waste, substance or any other material:
\n(1) the Release or presence of which requires investigation or Remediation
\nunder any Environmental Law; (2) that is defined as a \u0093pollutant,\u0094
\n\u0093contaminant,\u0094 \u0093solid waste,\u0094 \u0093hazardous waste,\u0094 \u0093hazardous material\u0094 or
\n\u0093hazardous substance\u0094 under any Environmental Law; (3) that is toxic,
\nexplosive, corrosive, flammable, infectious, radioactive, carcinogenic or
\nmutagenic or otherwise hazardous; (4) without limitation, that contains
\ngasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated
\nbiphenyls (PCBs) or asbestos.<\/p>\n
             \u0093HSR Act\u0094<\/b> means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
\nas amended.<\/p>\n
3<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
             \u0093Indebtedness\u0094<\/b> means, with respect to a specified Person, all of such
\nPerson\u0092s obligations for borrowed money, including (1) any obligation owed for
\nall or any part of the purchase price of property or other assets or for
\nservices or for the cost of property or other assets constructed or of
\nimprovements to such property or other assets, other than current trade
\naccounts payable included in current liabilities and incurred in respect of
\nproperty or services purchased in the ordinary course of business, (2) any
\ncapital lease obligation, (3) any obligation (whether fixed or contingent) to
\nreimburse any bank or other Person in respect of amounts paid or payable under
\na standby letter of credit (other than obligations under standby letters of
\ncredit securing performance under Contracts or Bids), (4) any guarantee with
\nrespect to indebtedness for borrowed money (of the kind otherwise described in
\nthis definition) of another Person, (5) accounts payable unpaid and outstanding
\nover ninety days past due, and (6) any factored or sold receivables.<\/p>\n
             \u0093Liability\u0094 <\/b>means, with respect to any Person, any liability or obligation
\nof such Person of any kind, character or description, whether known or unknown,
\nabsolute or contingent, accrued or unaccrued, liquidated or unliquidated,
\nsecured or unsecured, joint or several, due or to become due, vested or
\nunvested, executory, determined, determinable or otherwise and whether or not
\nthe same is required to be accrued on the financial statements of such Person.<\/p>\n
             \u0093Lien\u0094<\/b> means any mortgage, lien, pledge, charge, security interest,
\nrestriction or encumbrance of any kind.<\/p>\n
             \u0093Loss Contract\u0094<\/b> means a Contract or Bid in which, in the Company\u0092s best
\nestimate, the direct labor cost, direct material costs and applied overhead
\n(calculated on a basis consistent with past practice) incurred and to be
\nincurred in connection therewith (but excluding selling, general and
\nadministrative expenses), exceed the revenues derived or to be derived
\ntherefrom.<\/p>\n
             \u0093Management\u0094<\/b> means with respect to any substance or material, the
\ngeneration, treatment, storage, recycling, transportation or disposal of that
\nsubstance or material.<\/p>\n
             \u0093Material Adverse Effect\u0094<\/b> means any change or effect (or aggregation of
\nchanges and effects) that is, or is reasonably likely in the future to be,
\nmaterially adverse to the operations, financial condition, earnings or results
\nof operations, or the business (financial or otherwise) of the (1) Company, (2)
\nNorshipco, (3) Southwest Marine, Inc., or (4) the Company and all of the
\nSubsidiaries, as a group; provided<\/i>, however<\/i>, that, in each case, no Material
\nAdverse Effect shall be deemed to exist in the event that such change or effect
\n(or aggregation of changes and effects) arise from conditions affecting the
\nmarine repair industry as a whole or the U.S. economy as a whole.<\/p>\n
             \u0093Norshipco\u0094<\/b> means Norfolk Shipbuilding & Drydock Corporation, a wholly
\nowned subsidiary of the Company.<\/p>\n
             \u0093Nuclear Damage\u0094<\/b> means any Damages, whether arising before or after the
\ndate of this Agreement, that in whole or in part, directly or indirectly, are
\ncaused by, arise out of or result from (1) the hazardous properties of source,
\nspecial nuclear or byproduct material (as those materials are defined in the
\nAtomic Energy Act of 1954, as amended, and applicable regulations<\/p>\n
4<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
thereunder), nuclear fuel and any other radioactive material; or (2) the
\ntransportation, treatment, storage, handling or disposal of radioactive
\nmaterial or waste.<\/p>\n
             \u0093Nuclear Services\u0094<\/b> means (1) any repair, maintenance or modernization
\nservices performed on those parts of a ship that contain nuclear fuel,
\nradioactive material or any other material with hazard properties of source,
\nspecial nuclear or byproduct material (as those materials are defined in the
\nAtomic Energy Act of 1954, as amended, and applicable regulations thereunder);
\nor (2) the transportation, treatment, storage, handling or disposal of
\nradioactive waste.<\/p>\n
             \u0093Optionholder\u0094<\/b> means each holder of an Option.<\/p>\n
             \u0093Options\u0094<\/b> means all of the options to purchase shares of Common Stock
\nunder the Company Option Plan granted to eligible Persons pursuant to the terms
\nof the Company Option Plan that are outstanding immediately prior to the
\nEffective Time (not including any option that terminates as a result of the
\nMerger).<\/p>\n
             \u0093Person\u0094<\/b> means any individual, corporation, partnership, association,
\ntrust or other entity or organization, including a Governmental Entity.<\/p>\n
             \u0093Reference Balance Sheet\u0094<\/b> means the unaudited consolidated balance sheet
\nof the Company and the Subsidiaries as at the close of business on the
\nReference Date.<\/p>\n
             \u0093Reference Date\u0094<\/b> means March 31, 2002.<\/p>\n
             \u0093Release\u0094<\/b> when used in connection with Hazardous Substance, shall have the
\nmeaning ascribed to that term in 42 U.S.C. 9601(22), but not including the
\nexceptions in Subsection (A) and (D) of 42 U.S.C. 9601(22).<\/p>\n
             \u0093Remediation\u0094<\/b> means (1) any remedial action, response or removal as those
\nterms are defined in 42 U.S.C. \u00a7 9601; or (2) any \u0093corrective action\u0094 as that
\nterm has been construed by Governmental Entities pursuant to 42 U.S.C. \u00a7 6924.<\/p>\n
             \u0093Representative\u0094<\/b> means TC Group, L.L.C., acting solely in its capacity as
\nRepresentative.<\/p>\n
             \u0093Seller Expenses\u0094<\/b> means the fees and expenses incurred by the Company or
\nany Subsidiary, or for which any of them is or becomes liable, in connection
\nwith the Merger or the Company\u0092s proposed public offering of its securities,
\nincluding without limitation (1) all fees payable to financial, legal,
\naccounting and other advisers retained by the Company in connection with the
\nMerger or such proposed public offering or who are otherwise entitled to such
\nfees; (2) all fees payable to the Representative (whether in its capacity as
\nsuch or otherwise) and its affiliates; (3) all out-of-pocket expenses incurred
\nby the Company in connection with the foregoing; and (4) bonuses or other cash
\ncompensation issued to management and other employees of the Company or a
\nSubsidiary in connection with the Merger.<\/p>\n
             \u0093Significant Employees\u0094<\/b> means Richard Camacho, Frank Collins, Daniel
\nCotter, Monty Dickinson and Alexander Krekich.<\/p>\n
5<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
             \u0093Stockholders\u0094<\/b> means the holders of the issued and outstanding capital
\nstock of the Company.<\/p>\n
             \u0093Time of Formation\u0094<\/b> means (1) with respect to matters relating to the
\nCompany and each of the Subsidiaries other than Norshipco, the date of the
\nformation of the Company; and (2) with respect to matters relating to
\nNorshipco, September 30, 1998.<\/p>\n
             \u0093Voting Agreement\u0094<\/b> means the Irrevocable Proxy, Waiver and Voting
\nAgreement, of even date herewith, by and among Parent, Acquisition, the
\nCompany, the Escrowed Stockholders and B. Edward Ewing, in substantially the
\nform attached hereto as Exhibit 1.01-B.<\/p>\n
             (b) In addition, each of the following terms is defined in the Section set
\nforth opposite such term:<\/p>\n
<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\nCross Reference<\/b><\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Term<\/u><\/b><\/td>\n <\/td>\n  in Agreement<\/u><\/b><\/td>\n <\/td>\nPage<\/u><\/b><\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Accounting Referee<\/td>\n <\/td>\n\nSection 3.06(b)\n<\/td>\n <\/td>\n <\/td>\n13<\/td>\n <\/td>\n<\/tr>\n
Acquisition<\/td>\n <\/td>\n\nPreamble\n<\/td>\n <\/td>\n <\/td>\n1<\/td>\n <\/td>\n<\/tr>\n
Addition<\/td>\n <\/td>\n\nSection 6.05\n<\/td>\n <\/td>\n <\/td>\n38<\/td>\n <\/td>\n<\/tr>\n
Adjustment<\/td>\n <\/td>\n\nSection 3.07\n<\/td>\n <\/td>\n <\/td>\n13<\/td>\n <\/td>\n<\/tr>\n
Agreement<\/td>\n <\/td>\n\nPreamble\n<\/td>\n <\/td>\n <\/td>\n1<\/td>\n <\/td>\n<\/tr>\n
Capital Air<\/td>\n <\/td>\n\nSection 6.10\n<\/td>\n <\/td>\n <\/td>\n40<\/td>\n <\/td>\n<\/tr>\n
Closing Date<\/td>\n <\/td>\n\nSection 2.02\n<\/td>\n <\/td>\n <\/td>\n9<\/td>\n <\/td>\n<\/tr>\n
Closing<\/td>\n <\/td>\n\nSection 2.02\n<\/td>\n <\/td>\n <\/td>\n9<\/td>\n <\/td>\n<\/tr>\n
CMG<\/td>\n <\/td>\n\nSection 6.01(m)\n<\/td>\n <\/td>\n <\/td>\n35<\/td>\n <\/td>\n<\/tr>\n
Code<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Common Stock<\/td>\n <\/td>\n\nSection 3.02(a)\n<\/td>\n <\/td>\n <\/td>\n10<\/td>\n <\/td>\n<\/tr>\n
Company Disclosure Schedule<\/td>\n <\/td>\n\nArticle IV\n<\/td>\n <\/td>\n <\/td>\n14<\/td>\n <\/td>\n<\/tr>\n
Company<\/td>\n <\/td>\n\nPreamble\n<\/td>\n <\/td>\n <\/td>\n1<\/td>\n <\/td>\n<\/tr>\n
Confidential Information<\/td>\n <\/td>\n\nSection 7.02(b)\n<\/td>\n <\/td>\n <\/td>\n42<\/td>\n <\/td>\n<\/tr>\n
Confidentiality Agreement<\/td>\n <\/td>\n\nSection 13.07\n<\/td>\n <\/td>\n <\/td>\n54<\/td>\n <\/td>\n<\/tr>\n
Deductible<\/td>\n <\/td>\n\nSection 11.02(b)\n<\/td>\n <\/td>\n <\/td>\n46<\/td>\n <\/td>\n<\/tr>\n
Dispute<\/td>\n <\/td>\n\nSection 13.08(a)\n<\/td>\n <\/td>\n <\/td>\n54<\/td>\n <\/td>\n<\/tr>\n
Dissenting Shares<\/td>\n <\/td>\n\nSection 3.03\n<\/td>\n <\/td>\n <\/td>\n11<\/td>\n <\/td>\n<\/tr>\n
Dissenting Stockholder<\/td>\n <\/td>\n\nSection 3.03\n<\/td>\n <\/td>\n <\/td>\n11<\/td>\n <\/td>\n<\/tr>\n
Employee Benefit Plan<\/td>\n <\/td>\n\nSection II.01\n<\/td>\n <\/td>\n <\/td>\nII-1<\/td>\n <\/td>\n<\/tr>\n
Employee Retirement Plan<\/td>\n <\/td>\n\nSection II.01\n<\/td>\n <\/td>\n <\/td>\nII-1<\/td>\n <\/td>\n<\/tr>\n
End Date<\/td>\n <\/td>\n\nSection 12.01(b)\n<\/td>\n <\/td>\n <\/td>\n50<\/td>\n <\/td>\n<\/tr>\n
ERISA Affiliate<\/td>\n <\/td>\n\nSection II.01\n<\/td>\n <\/td>\n <\/td>\nII-1<\/td>\n <\/td>\n<\/tr>\n
Escrow Agent<\/td>\n <\/td>\n\nSection 3.05(d)\n<\/td>\n <\/td>\n <\/td>\n12<\/td>\n <\/td>\n<\/tr>\n
Escrow Agreement<\/td>\n <\/td>\n\nSection 3.05(d)\n<\/td>\n <\/td>\n <\/td>\n12<\/td>\n <\/td>\n<\/tr>\n
Escrow Amount<\/td>\n <\/td>\n\nSection 3.05(d)\n<\/td>\n <\/td>\n <\/td>\n12<\/td>\n <\/td>\n<\/tr>\n
Escrow Fund<\/td>\n <\/td>\n\nSection 3.05(d)\n<\/td>\n <\/td>\n <\/td>\n12<\/td>\n <\/td>\n<\/tr>\n
Escrow Period<\/td>\n <\/td>\n\nSection 11.05\n<\/td>\n <\/td>\n <\/td>\n50<\/td>\n <\/td>\n<\/tr>\n
Escrowed Stockholders<\/td>\n <\/td>\n\nSection 3.02(d)\n<\/td>\n <\/td>\n <\/td>\n10<\/td>\n <\/td>\n<\/tr>\n<\/table>\n
<\/center><\/p>\n
6<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\nCross Reference<\/b><\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Term<\/u><\/b><\/td>\n <\/td>\n  in Agreement<\/u><\/b><\/td>\n <\/td>\nPage<\/u><\/b><\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Financial Statements<\/td>\n <\/td>\n\nSection 4.09\n<\/td>\n <\/td>\n <\/td>\n17<\/td>\n <\/td>\n<\/tr>\n
Financing Termination<\/td>\n <\/td>\n\nSection 13.03(b)\n<\/td>\n <\/td>\n <\/td>\n53<\/td>\n <\/td>\n<\/tr>\n
First Payout Date<\/td>\n <\/td>\n\nSection 11.05\n<\/td>\n <\/td>\n <\/td>\n50<\/td>\n <\/td>\n<\/tr>\n
Indemnified Parties<\/td>\n <\/td>\n\nSection 11.03\n<\/td>\n <\/td>\n <\/td>\n48<\/td>\n <\/td>\n<\/tr>\n
Indemnified Tax Claim<\/td>\n <\/td>\n\nSection I.03(g)(ii)\n<\/td>\n <\/td>\n <\/td>\nI-5<\/td>\n <\/td>\n<\/tr>\n
Indemnifying Parties<\/td>\n <\/td>\n\nSection 11.03\n<\/td>\n <\/td>\n <\/td>\n48<\/td>\n <\/td>\n<\/tr>\n
Intellectual Property Rights<\/td>\n <\/td>\n\nSection 4.20(a)\n<\/td>\n <\/td>\n <\/td>\n25<\/td>\n <\/td>\n<\/tr>\n
IRS<\/td>\n <\/td>\n\nSection II.02(c)\n<\/td>\n <\/td>\n <\/td>\nII-2<\/td>\n <\/td>\n<\/tr>\n
License Rights<\/td>\n <\/td>\n\nSection 4.20(a)\n<\/td>\n <\/td>\n <\/td>\n25<\/td>\n <\/td>\n<\/tr>\n
Maximum Merger Consideration<\/td>\n <\/td>\n\nSection 3.01\n<\/td>\n <\/td>\n <\/td>\n10<\/td>\n <\/td>\n<\/tr>\n
Meeting<\/td>\n <\/td>\n\nSection 6.14\n<\/td>\n <\/td>\n <\/td>\n40<\/td>\n <\/td>\n<\/tr>\n
Merger<\/td>\n <\/td>\n\nSection 2.01\n<\/td>\n <\/td>\n <\/td>\n9<\/td>\n <\/td>\n<\/tr>\n
Metro Teaming Agreement<\/td>\n <\/td>\n\nSection 6.01(v)\n<\/td>\n <\/td>\n <\/td>\n37<\/td>\n <\/td>\n<\/tr>\n
Non-Competition and Non-Solicitation Agreement<\/td>\n <\/td>\n\nSection 10.02(e)\n<\/td>\n <\/td>\n <\/td>\n44<\/td>\n <\/td>\n<\/tr>\n
Norshipco Acquisition Agreements<\/td>\n <\/td>\n\nSection 4.31\n<\/td>\n <\/td>\n <\/td>\n32<\/td>\n <\/td>\n<\/tr>\n
Option Amount<\/td>\n <\/td>\n\nSection 3.04(b)\n<\/td>\n <\/td>\n <\/td>\n11<\/td>\n <\/td>\n<\/tr>\n
Option Obligation<\/td>\n <\/td>\n\nSection I.03(e)\n<\/td>\n <\/td>\n <\/td>\nI-4<\/td>\n <\/td>\n<\/tr>\n
Other Consents<\/td>\n <\/td>\n\nSection 4.08(b)\n<\/td>\n <\/td>\n <\/td>\n17<\/td>\n <\/td>\n<\/tr>\n
Parent<\/td>\n <\/td>\n\nPreamble\n<\/td>\n <\/td>\n <\/td>\n1<\/td>\n <\/td>\n<\/tr>\n
PBGC<\/td>\n <\/td>\n\nSection II.02(d)(vii)\n<\/td>\n <\/td>\n <\/td>\nII-3<\/td>\n <\/td>\n<\/tr>\n
Per Share Amount<\/td>\n <\/td>\n\nSection 3.02(a)\n<\/td>\n <\/td>\n <\/td>\n10<\/td>\n <\/td>\n<\/tr>\n
Per Share Escrow Amount<\/td>\n <\/td>\n\nSection 3.02(d)\n<\/td>\n <\/td>\n <\/td>\n10<\/td>\n <\/td>\n<\/tr>\n
Permits<\/td>\n <\/td>\n\nSection 4.17\n<\/td>\n <\/td>\n <\/td>\n24<\/td>\n <\/td>\n<\/tr>\n
Permitted Liens<\/td>\n <\/td>\n\nSection 4.12(h)\n<\/td>\n <\/td>\n <\/td>\n20<\/td>\n <\/td>\n<\/tr>\n
Personal Property<\/td>\n <\/td>\n\nSection 4.12(a)\n<\/td>\n <\/td>\n <\/td>\n19<\/td>\n <\/td>\n<\/tr>\n
Post-Closing Tax Period<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Pre-Closing Tax Liabilities<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Pre-Closing Tax Period<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Preliminary Adjustment Per Share<\/td>\n <\/td>\n\nSection 3.07\n<\/td>\n <\/td>\n <\/td>\n14<\/td>\n <\/td>\n<\/tr>\n
Proceeding<\/td>\n <\/td>\n\nSection I.03(f)\n<\/td>\n <\/td>\n <\/td>\nI-5<\/td>\n <\/td>\n<\/tr>\n
prohibited transaction<\/td>\n <\/td>\n\nSection II.02(d)(vi)\n<\/td>\n <\/td>\n <\/td>\nII-2<\/td>\n <\/td>\n<\/tr>\n
Real Property<\/td>\n <\/td>\n\nSection 4.12(b)\n<\/td>\n <\/td>\n <\/td>\n19<\/td>\n <\/td>\n<\/tr>\n
Required Consents<\/td>\n <\/td>\n\nSection 4.08(a)\n<\/td>\n <\/td>\n <\/td>\n17<\/td>\n <\/td>\n<\/tr>\n
San Diego Indemnification Claim<\/td>\n <\/td>\n\nSection 4.31\n<\/td>\n <\/td>\n <\/td>\n32<\/td>\n <\/td>\n<\/tr>\n
Share<\/td>\n <\/td>\n\nSection 3.02(a)\n<\/td>\n <\/td>\n <\/td>\n10<\/td>\n <\/td>\n<\/tr>\n
Straddle Period<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Subsidiary<\/td>\n <\/td>\n\nSection 4.04(a)\n<\/td>\n <\/td>\n <\/td>\n15<\/td>\n <\/td>\n<\/tr>\n
Surviving Corporation<\/td>\n <\/td>\n\nSection 2.01\n<\/td>\n <\/td>\n <\/td>\n9<\/td>\n <\/td>\n<\/tr>\n
SWM Acquisition Agreements<\/td>\n <\/td>\n\nSection 4.31\n<\/td>\n <\/td>\n <\/td>\n32<\/td>\n <\/td>\n<\/tr>\n
Tax Authority<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Tax Indemnified Party<\/td>\n <\/td>\n\nSection I.03(g)(ii)\n<\/td>\n <\/td>\n <\/td>\nI-5<\/td>\n <\/td>\n<\/tr>\n
Tax Indemnifying Party<\/td>\n <\/td>\n\nSection I.03(g)(ii)\n<\/td>\n <\/td>\n <\/td>\nI-5<\/td>\n <\/td>\n<\/tr>\n
Tax Return<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Tax<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Third Party Claims<\/td>\n <\/td>\n\nSection 11.03\n<\/td>\n <\/td>\n <\/td>\n48<\/td>\n <\/td>\n<\/tr>\n<\/table>\n
<\/center><\/p>\n
7<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
<\/p>\n\n\n\n\n\n\n\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\nCross Reference<\/b><\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Term<\/u><\/b><\/td>\n <\/td>\n  in Agreement<\/u><\/b><\/td>\n <\/td>\nPage<\/u><\/b><\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Transfer Taxes<\/td>\n <\/td>\n\nSection I.01\n<\/td>\n <\/td>\n <\/td>\nI-1<\/td>\n <\/td>\n<\/tr>\n
Transferring Employees<\/td>\n <\/td>\n\nSection II.03(a)\n<\/td>\n <\/td>\n <\/td>\nII-4<\/td>\n <\/td>\n<\/tr>\n<\/table>\n
<\/center><\/p>\n
8<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
ARTICLE II
\nTHE MERGER<\/b><\/p>\n
     2.01. The Merger. <\/b>Upon and subject to the terms and conditions of this
\nAgreement, Acquisition shall merge with and into the Company (the \u0093Merger\u0094<\/b>) at
\nthe Effective Time. From and after the Effective Time, the separate corporate
\nexistence of Acquisition shall cease, and the Company shall continue as the
\nsurviving corporation in the Merger (the \u0093Surviving Corporation\u0094<\/b>). The Merger
\nshall have the effects set forth in the DGCL. <\/p>\n
     2.02. Closing of the Merger. <\/b>Subject to Section 3.06 (which governs the
\ntiming with respect to the condition set forth in Section 10.02(j)), the
\nclosing of the Merger (the \u0093Closing\u0094<\/b>) will take place at 10:00 a.m. Eastern
\nStandard Time on the third business day after satisfaction (or waiver) of the
\nconditions set forth in Article X (the \u0093Closing Date\u0094<\/b>), at the offices of
\nGibson, Dunn & Crutcher LLP, 1050 Connecticut Avenue, N.W., Washington, D.C.
\n20036, unless another time, date or place is agreed to by the parties hereto.<\/p>\n
     2.03. Actions at the Closing<\/b>. At the Closing: (i) the Company shall
\ndeliver to Parent and Acquisition the various certificates, instruments and
\ndocuments referred to in Section 10.02; (ii) Parent and Acquisition shall
\ndeliver to the Company the various certificates, instruments and documents
\nreferred to in Section 10.03; (iii) the Company shall file the Certificate of
\nMerger with the Secretary of State of the State of Delaware; (iv) Parent, the
\nRepresentative, and the Escrowed Stockholders shall execute and deliver the
\nEscrow Agreement or otherwise become bound thereby to the reasonable
\nsatisfaction of Parent; and (vi) Parent shall deposit an amount equal to the
\nEscrow Amount with the Escrow Agent in accordance with Section 3.05(d).<\/p>\n
     2.04. Additional Action<\/b>. The Surviving Corporation may, at any time after
\nthe Effective Time, take any action, including executing and delivering any
\ndocument, in the name and on behalf of either the Company or Acquisition, in
\norder to consummate the transactions contemplated by this Agreement.<\/p>\n
     2.05. Effects of the Merger<\/b>. The Merger shall have the effects set forth
\nin the DGCL. Without limiting the generality of the foregoing and subject
\nthereto, at the Effective Time, all the properties, rights, privileges, powers
\nand franchises of the Company and Acquisition shall vest in the Surviving
\nCorporation, and all debts, liabilities and duties of the Company and
\nAcquisition shall become the debts, liabilities and duties of the Surviving
\nCorporation.<\/p>\n
     2.06. Certificate of Incorporation and By-laws<\/b>. The certificate of
\nincorporation of the Surviving Corporation shall be in the form attached to the
\nCertificate of Merger until amended in accordance with Applicable Law. The
\nby-laws of the Surviving Corporation shall be amended and restated at the
\nEffective Time to read the same as the by-laws of Acquisition until amended in
\naccordance with Applicable Law.<\/p>\n
     2.07. Directors<\/b>. The directors of Acquisition at the Effective Time shall
\nbe the initial directors of the Surviving Corporation, each to hold office in
\naccordance with the certificate of incorporation and by-laws of the Surviving
\nCorporation until such director\u0092s successor is duly elected or appointed and
\nqualified.<\/p>\n
9<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     2.08. Officers<\/b>. The officers of Acquisition at the Effective Time shall
\nbe the initial officers of the Surviving Corporation, each to hold office in
\naccordance with the certificate of incorporation and by-laws of the Surviving
\nCorporation until such officer\u0092s successor is duly elected or appointed and
\nqualified. <\/p>\n
ARTICLE III
\nCONSIDERATION; PAYMENT; EFFECT ON SHARES IN THE MERGER<\/b><\/p>\n
     3.01. Maximum Merger Consideration<\/b>. The maximum aggregate merger
\nconsideration to be paid by Parent and Acquisition pursuant to this Agreement
\nis U.S. $209 million less the Seller Expenses (the \u0093Maximum Merger
\nConsideration\u0094<\/b>), subject to adjustment as set forth in this Article III. In
\naddition, at the Effective Time, Parent shall satisfy the Company\u0092s
\ninterest-bearing borrowings and debt obligations (other than the Company\u0092s
\noutstanding letters of credit) pursuant to payoff letters delivered to Parent
\nby the Company at least two days prior to the Closing Date.<\/p>\n
     3.02. Conversion of Shares<\/b>. At the Effective Time, by virtue of the
\nMerger and without any action on the part of any Stockholder or other Person:<\/p>\n
             (a) Each share (a \u0093Share\u0094<\/b>) of common stock of the Company (\u0093Common Stock\u0094<\/b>)
\nissued and outstanding as of the Effective Time, but excluding Dissenting
\nShares and shares described in Section 3.02(b), shall be canceled and converted
\ninto the right to receive cash in an amount (the \u0093Per Share Amount\u0094<\/b>) equal to
\n(i) the Maximum Merger Consideration plus an amount equal to the amount the
\nCompany would receive if all of the Options were exercised in full at the
\nexercise price set forth therein, divided by (ii) the total number of Shares,
\nincluding Shares issuable upon the exercise of Options, with the result of such
\ncalculation subject to adjustment and payable as provided in this Article III.<\/p>\n
             (b) Each Share, if any, held in the Company\u0092s treasury immediately prior
\nto the Effective Time shall automatically be canceled, retired and cease to
\nexist at the Effective Time, and no consideration will be delivered in exchange
\ntherefor.<\/p>\n
             (c) At the Effective Time, each outstanding share of common stock of
\nAcquisition shall be converted into one (1) fully paid and non-assessable share
\nof common stock of the Surviving Corporation and shall constitute the only
\nshares of capital stock of the Surviving Corporation outstanding immediately
\nafter the Effective Time.<\/p>\n
             (d) The merger consideration payable upon the Closing with respect to each
\nShare, excluding Dissenting Shares and any Shares with respect to which
\ndissenters\u0092 rights have not terminated, shall be the Per Share Amount;
\nprovided<\/i>, however<\/i>, that the initial merger consideration payable to the
\nstockholders listed on Schedule 3.02(d) (the \u0093Escrowed Stockholders\u0094<\/b>) shall be
\nthe Per Share Amount less the Per Share Escrow Amount. For purposes of this
\nAgreement, the term \u0093Per Share Escrow Amount\u0094<\/b> means the quotient determined by
\ndividing the Escrow Amount by the number of Shares held by the Escrowed
\nStockholders as of the Effective Time.<\/p>\n
     3.03. Dissenters\u0092 Rights<\/b>. Shares that have not been voted for approval of
\nthis Agreement and the Merger (or which have not consented to each of them) and
\nwith respect to<\/p>\n
10<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
which a demand for payment and appraisal have been properly made in
\naccordance with Section 262 of the DGCL (\u0093Dissenting Shares\u0094<\/b>) will not be
\nconverted into the right to receive the Per Share Amount (if and as adjusted
\npursuant to this Article III) otherwise payable with respect to such Shares at
\nor after the Effective Time, but instead will be converted into the right to
\nreceive such consideration as may be determined to be due with respect to such
\nDissenting Shares pursuant to the laws of the State of Delaware. If a holder
\nof Dissenting Shares (a \u0093Dissenting Stockholder\u0094<\/b>) withdraws his or her demand
\nfor such payment and appraisal or becomes ineligible for such payment and
\nappraisal, then, as of the Effective Time or the occurrence of such event of
\nwithdrawal or ineligibility, whichever last occurs, such holder\u0092s Dissenting
\nShares will cease to be Dissenting Shares and will be converted into the right
\nto receive, and will be exchangeable for, the Per Share Amount (if and as so
\nadjusted) in accordance with this Agreement. The Company will give Parent and
\nAcquisition prompt notice of any demand received by the Company from a holder
\nof Dissenting Shares for appraisal of Shares, and Parent shall have the right
\nto participate in all negotiations and proceedings with respect to such demand.
\nThe Company agrees that, except with the prior written consent of Parent, or
\nas required under the DGCL, it will not voluntarily make any payment with
\nrespect to, or settle or offer or agree to settle, any such demand for
\nappraisal. Each Dissenting Stockholder who, pursuant to Section 262 of the
\nDGCL, becomes entitled to payment of the value of the Dissenting Shares will
\nreceive payment therefor but only after the value therefor has been agreed upon
\nor finally determined pursuant to such provisions. Any portion of the Per
\nShare Amount (if and as so adjusted) that would otherwise have been payable
\nwith respect to Dissenting Shares if such Shares were not Dissenting Shares
\nwill be retained by Parent.<\/p>\n
     3.04. Options<\/b>.<\/p>\n
             (a) Prior to the Effective Time, the board of directors of the Company
\n(or, with respect to the Options, the applicable committee thereof with the
\nauthority to administer the Company Option Plan) shall take all action
\nnecessary to cause (i) all Options that have not been exercised prior to the
\nEffective Time to be cancelled or terminated immediately after the Effective
\nTime and replaced with the right to receive the applicable Option Amount in
\naccordance with the terms of this Agreement and the Company Option Plan; and
\n(ii) all warrants or other convertible securities to purchase shares of
\nCompany\u0092s capital stock that have not been exercised prior to the Effective
\nTime to be cancelled or terminated as of the Effective Time.<\/p>\n
             (b) Immediately after the Effective Time, each Option outstanding at the
\ndate of this Agreement that has not been exercised prior to the Effective Time
\nshall be cancelled and the holder thereof shall have the right to be paid in
\ncash in an amount (if positive) (the \u0093Option Amount\u0094<\/b>) equal to (i) the
\ndifference obtained by subtracting the exercise price of such Option from the
\nPer Share Amount, multiplied by (ii) the number of shares of Common Stock
\npurchasable upon exercise of the Option in question.<\/p>\n
             (c) The merger consideration payable upon the Closing with respect to each
\nOption shall be the applicable Option Amount.<\/p>\n
11<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     3.05. Payment for Shares and Options; Escrow Consideration<\/b>.<\/p>\n
             (a) Prior to the Effective Time, the Company shall deliver to Parent wire
\ninstructions or other delivery instructions for use in connection with the
\npayment of the merger consideration to the Stockholders and Optionholders
\nhereunder. As soon as practicable after the Effective Time, upon surrender to
\nParent of such certificates or agreements (or affidavit of loss or destruction
\nin lieu thereof, including any suitable bond or indemnity that may be required
\nby Parent in its sole discretion), duly executed and completed to Parent\u0092s
\nsatisfaction, Parent shall make payment to the persons entitled thereto by
\ncheck or wire transfer, as set forth in the delivery instructions delivered by
\nthe Company, in the amount equal to the price to which such Person is entitled
\npursuant to Section 3.02(d) or Section 3.04(c), as the case may be, less any
\nrequired tax withholdings and less any amounts due from such Person to the
\nCompany. No interest will be paid or will accrue on the amount payable upon
\nthe surrender of any such certificate or agreements. If payment is to be made
\nto a Person other than the registered holder of the certificate or agreement
\nsurrendered, it shall be a condition of such payment that the certificate or
\nagreement so surrendered shall be properly endorsed or otherwise in proper form
\nfor transfer and that the Person requesting such payment shall pay any transfer
\nor other taxes required by reason of the payment to a Person other than the
\nregistered holder of the certificate or agreement surrendered or establish to
\nthe reasonable satisfaction of the Surviving Corporation or Parent that such
\ntax has been paid or is not applicable.<\/p>\n
             (b) After the Effective Time, there shall be no transfers on the stock
\ntransfer books of the Surviving Corporation of shares of capital stock of the
\nCompany that were outstanding immediately prior to the Effective Time.<\/p>\n
             (c) Notwithstanding the foregoing, neither Parent nor any party hereto
\nshall be liable to any holder of certificates or agreements formerly
\nrepresenting securities of the Company for any amount paid to a public official
\npursuant to any applicable abandoned property, escheat or similar law. The
\nSurviving Corporation shall pay all charges and expenses, including those of
\nParent, in connection with the exchange of cash for securities of the Company.<\/p>\n
             (d) At the Closing, Parent shall deposit an amount equal to U.S. $15
\nmillion (the \u0093Escrow Amount\u0094<\/b>) with an Affiliate of Deutsche Bank or another
\nthird person mutually satisfactory to Parent and the Representative, as escrow
\nagent (the \u0093Escrow Agent\u0094<\/b>). The Escrow Amount, together with any interest,
\ndividends or other income earned thereon, net of any transaction costs
\nassociated with the investment thereof (collectively, the \u0093Escrow Fund\u0094<\/b>) shall
\nbe applied for the payment of any indemnification obligations pursuant to this
\nAgreement and an escrow agreement in substantially the form attached hereto as
\nExhibit 3.05 (the \u0093Escrow Agreement\u0094<\/b>).<\/p>\n
     3.06. Closing Net Debt.<\/b><\/p>\n
             (a) Three days prior to the Closing Date, the Company shall deliver to
\nParent:<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n        (i)        payoff letters from each of the Company\u0092s lenders and material
\ncreditors (other than with respect to the Company\u0092s outstanding letters
\nof credit), along with written releases of any and all Liens on the
\nassets of the Company that will become<\/td>\n<\/tr>\n<\/table>\n
12<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n\n\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\neffective upon the payment of such amounts to such lenders and
\nmaterial creditors and, where applicable, executed termination statements
\nwith respect to any security interest filed by such lenders and material
\ncreditors pursuant to the Uniform Commercial Code; and<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n        (ii)        a certificate setting forth (A) the Company\u0092s best estimate of
\nClosing Net Debt (calculated as though the date the certificate is
\ndelivered is the Closing Date), along with such documentation as Parent
\nmay reasonably request to show the basis upon which the Company estimated
\nClosing Net Debt, as well as such documentation as Parent may reasonably
\nrequest to evidence that the Company has paid all its obligations in the
\nordinary course, consistent with past practices, including without
\nlimitation the payment of any estimated tax payments that have become due
\nand payable on or prior to the date such certificate is delivered to
\nParent, and (B) an itemized list of Seller Expenses, which list shall
\ninclude final payoff amounts as of the Effective Time. The certificate
\ndelivered by the Company pursuant to this Section 3.06(a)(ii) shall be
\nprepared in accordance with generally accepted accounting principles.<\/td>\n<\/tr>\n<\/table>\n
             (b) On the proposed Closing Date, the Company shall deliver a bring-down
\ncertificate in the same form as the certificate delivered pursuant to Section
\n3.06(a)(ii), setting forth the Company\u0092s calculation of Closing Net Debt, along
\nwith such documentation as Parent may reasonably request concerning the matters
\nset forth in Section 3.06(a)(ii). If Parent disagrees with the Company\u0092s
\ndetermination of Closing Net Debt, the parties shall retain Ernst & Young, LLP,
\nor such other nationally recognized accounting firm as is mutually agreeable to
\nParent and the Company (the \u0093Accounting Referee\u0094<\/b>), to promptly review this
\nAgreement and the disputed items or amounts for the purpose of calculating
\nClosing Net Debt, for a period not to exceed two business days. At the end of
\nsuch period, the Accounting Referee shall deliver to Parent and the Company a
\nreport setting forth each such calculation. Such report and the Accounting
\nReferee\u0092s determination of Closing Net Debt shall be final and binding upon
\nParent and the Company. In no event shall Closing Net Debt as determined by
\nthe Accounting Referee be lower than Closing Net Debt as calculated by the
\nCompany or higher than Closing Net Debt as calculated by Parent. Subject to
\nthe satisfaction of the closing conditions set forth in Article X, the Closing
\nshall occur on the day that the Accounting Referee\u0092s determination is
\ndelivered; provided<\/i>, however<\/i>, that for accounting purposes, the transfer of the
\nbusiness operated by the Company and the Subsidiaries shall be deemed to have
\noccurred at the opening of business on the date following the date used to
\ncalculate Closing Net Debt, and Parent shall be entitled to all the benefits of
\nownership, and responsible for all the liabilities, with respect to such
\nbusiness from such date.<\/p>\n
             (c) Parent and the Company agree that they will, and agree to cause their
\nrespective independent accountants to, cooperate and assist in the calculation
\nof Closing Net Debt and in the conduct of the audits and reviews referred to in
\nthis Section 3.06, including, without limitation, making available to the
\nextent reasonably required books, records, work papers (subject to appropriate
\nindemnifications) and personnel.<\/p>\n
     3.07. Adjustment. <\/b>If Closing Net Debt, as determined in accordance with
\nSection 3.06, is greater than U.S. $107 million, the amount to be paid by
\nParent to the Stockholders and Optionholders at the Closing under Section 3.05
\nshall be reduced by the<\/p>\n
13<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
amount of this excess (the \u0093Adjustment\u0094<\/b>); and the Per Share Amount shall
\nbe reduced by an amount equal to the quotient of the Adjustment divided by the
\nsum of the number of Shares then outstanding, including the number of Shares
\nissuable upon exercise of Options then outstanding (the \u0093Adjustment Per
\nShare\u0094<\/b>).<\/p>\n
     3.08. Appointment of Representative<\/b>. Pursuant to the Escrow Agreement,
\nthe Representative will be irrevocably appointed by each of the Escrowed
\nStockholders as its attorney-in-fact to contest, settle, compromise or
\notherwise dispose of any claim made by Parent or the Surviving Corporation in
\naccordance with the Escrow Agreement. Such power of attorney shall be coupled
\nwith an interest, thereby confirming such appointment as irrevocable.<\/p>\n
ARTICLE IV
\nREPRESENTATIONS AND WARRANTIES OF
\nTHE COMPANY<\/b><\/p>\n
     The Company hereby represents and warrants to each of Parent and
\nAcquisition, subject to the exceptions set forth in the Disclosure Schedule
\n(the \u0093Company Disclosure Schedule\u0094<\/b>) delivered by the Company to Parent in
\naccordance with Section 6.05 (which exceptions shall specifically identify a
\nSection or Subsection, as applicable, to which such exception relates) that:<\/p>\n
     4.01. Corporate Existence and Power. <\/b>The Company is a corporation duly
\nincorporated, validly existing and in good standing under the laws of its
\ngoverning jurisdiction, and has all corporate powers required to carry on its
\nbusiness as now conducted. The Company is duly qualified to do business as a
\nforeign corporation and is in good standing in each jurisdiction where the
\ncharacter of the property owned or leased by it or the nature of its activities
\nrequires such qualification, except in any such jurisdiction where the failure
\nto be so qualified or in good standing would not result in a Material Adverse
\nEffect. The Company has heretofore delivered to Parent true and complete
\ncopies of its certificate of incorporation and by-laws as currently in effect.<\/p>\n
     4.02. Authorization.<\/b><\/p>\n
             (a) The execution, delivery and performance by the Company of this
\nAgreement and the consummation by the Company of the transactions contemplated
\nhereby are within the Company\u0092s corporate powers and have been duly authorized
\nby all necessary corporate action on the part of the Company. No other
\ncorporate proceedings on the part of the Company are necessary to authorize
\nthis Agreement, or to consummate the transactions contemplated hereby, except
\n(i) the approval of this Agreement by the holders of a majority of the
\noutstanding Shares, and (ii) the filing of the Certificate of Merger with the
\nSecretary of State of the State of Delaware. This Agreement has been duly
\nexecuted and delivered by the Company and constitutes a valid and binding
\nagreement of the Company, enforceable in accordance with its terms.<\/p>\n
             (b) Without limiting the generality of the foregoing, the Company\u0092s board
\nof directors has: (i) approved this Agreement, the Merger and the other
\ntransactions contemplated hereby, (ii) resolved to recommend approval and
\nadoption of this Agreement, the Merger and the<\/p>\n
14<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
other transactions contemplated hereby by the Stockholders and (iii) has
\nnot withdrawn or modified such approval or resolution to recommend.<\/p>\n
     4.03. Capital Stock.<\/b><\/p>\n
             (a) The authorized capital stock of the Company consists solely of (i)
\nFive Million shares of authorized Common Stock, of which One Million, One
\nHundred Eighty-Two Thousand, Seven Hundred and Sixty-Seven shares are issued
\nand outstanding on the date hereof. On the date hereof, the outstanding Common
\nStock is held of record and beneficially by the persons with the addresses of
\nrecord and in the amounts set forth in Schedule 4.03(a). The outstanding
\nCommon Stock is, and any Common Stock issued upon the exercise of any Option
\nwill be, duly authorized, validly issued, fully paid and non-assessable, and
\nexcept as set forth in Schedule 4.03(a), not subject to preemptive rights
\ncreated by statute, the certificate of incorporation or by-laws of the Company,
\nor any agreement to which the Company is a party or by which it is bound or
\notherwise. The Shares were not issued in violation of the preemptive rights of
\nany person or any agreement or laws, statutes, orders, decrees, rules,
\nregulations and judgments of any governmental authority by which the Company at
\nthe time of issuance was bound, including without limitation federal and state
\nsecurities laws.<\/p>\n
             (b) Except as set forth in Schedule 4.03(b), there are not outstanding or
\nauthorized (i) any options, warrants, rights, calls, commitments, conversion
\nrights, rights of exchange, subscriptions, claims of any character, agreements,
\nobligations, convertible or exchangeable securities or other plans or
\ncommitments, contingent or otherwise, relating to shares of capital stock of
\nthe Company; (ii) contracts or other agreements of the Company or any other
\nPerson to purchase, redeem or otherwise acquire any of the Shares, or
\nsecurities or obligations of any kind convertible into any shares of the
\ncapital stock of the Company; (iii) dividends which have accrued or been
\ndeclared but are unpaid on the capital stock of the Company; and (iv) any stock
\nappreciation, phantom stock, stock plans or similar rights with respect to the
\nCompany. Schedule 4.03(b) sets forth a correct and complete list of each of
\nthe foregoing as of the date hereof, including the record and beneficial holder
\nthereof, a description of the nature of such security, the amount of securities
\nheld, the exercise, conversion or exchange rights relating thereto, including a
\nschedule of vesting, the exercise price per share, the term of each such
\nsecurity, whether such security is intended to qualify as an incentive stock
\noption or not, any restrictions on exercise or sale of such option or
\nunderlying shares and the type and amount of securities into which such
\nsecurities are exercisable, convertible or exchangeable. With the exception
\nthe Option issued to B. Edward Ewing, dated as of August 29,1998, and with the
\nexception of exercise price and the number of Options subject to each grant,
\nnone of the Options deviate from the terms and conditions set forth in the
\nCompany\u0092s standard form of Option, a true and correct copy of which has been
\nprovided to Parent.<\/p>\n
             (c) Except as set forth in Schedule 4.03(c), as of the date hereof, there
\nare no outstanding rights or obligations of the Company to repurchase, redeem
\nor otherwise acquire any securities of the Company or other securities referred
\nto in Section 4.03(b) above. Except as set forth in Schedule 4.03(c), there
\nare no stockholder agreements, voting trusts or other agreements or
\nunderstandings to which the Company is a party or by which it is bound relating
\nto the voting or registration of any shares of capital stock of the Company.<\/p>\n
15<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     4.04. Subsidiaries. <\/b>Schedule 4.04 sets forth (a) every entity in which
\nthe Company owns 50 percent or more of the outstanding equity, directly or
\nindirectly (the \u0093Subsidiaries\u0094<\/b> and each a \u0093Subsidiary\u0094<\/b>) and the jurisdiction of
\nits incorporation or formation, and (b) every other ownership interest of the
\nCompany and the Subsidiaries in any other corporation, partnership, joint
\nventure, limited liability company, association or other organization or
\nentity. Each of the Subsidiaries is a corporation duly organized, validly
\nexisting and in good standing under the laws of its respective jurisdiction of
\nincorporation or formation and has all requisite power and authority, corporate
\nor otherwise, to carry on and conduct its business as and where it is now being
\nconducted and as and where proposed to be conducted, and to own, operate and
\nlease its properties and assets, and is duly qualified and in good standing in
\neach jurisdiction in which the conduct of the business of such Subsidiary or
\nthe ownership of such properties and assets requires it to be so qualified or
\nin good standing, except in any such jurisdiction where the failure to be so
\nqualified or in good standing would not result in a Material Adverse Effect.
\nExcept as set forth on Schedule 4.04, all outstanding shares of capital stock
\nof the Subsidiaries are owned by the Company, directly or indirectly, free and
\nclear of all Liens. Except as set forth on Schedule 4.04, there are no
\noutstanding options, warrants, subscriptions, rights or other arrangements or
\ncommitments obligating any Subsidiary to issue or dispose of any shares of
\ncapital stock or other ownership interest therein. Except as set forth on
\nSchedule 4.04, the Company, directly or indirectly through the ownership of
\nstock, has the sole interest in each Subsidiary. The Company has full and
\nexclusive power, right and authority to vote all of the outstanding shares of
\ncapital stock of each Subsidiary. Except as set forth on Schedule 4.04, the
\nCompany is not party to or bound by any agreement affecting or relating to its
\nright to transfer or vote the outstanding shares of capital stock of any
\nSubsidiary. The Company has heretofore delivered to Parent true and complete
\ncopies of the certificate of incorporation and by-laws or equivalent
\norganizational documents of each Subsidiary as currently in effect.<\/p>\n
     4.05. Governmental Authorization. <\/b>Except for the applicable requirements
\nof the HSR Act and except as set forth on Schedule 4.05, the execution,
\ndelivery and performance of this Agreement by the Company require no action by
\nor in respect of, or filing with, any Governmental Entity.<\/p>\n
     4.06. No Conflicts. <\/b>The execution, delivery and performance of this
\nAgreement by the Company do not and will not (i) contravene or conflict with
\nthe certificate of incorporation and by-laws or equivalent organizational
\ndocuments of the Company or any Subsidiary; (ii) contravene or conflict with or
\nconstitute a violation of any provision of any law, regulation, judgment,
\ninjunction, order or decree binding upon or applicable to the Company or any
\nSubsidiary, or by which any of their respective properties or assets may be
\nbound; (iii) constitute a default under (with or without due notice, lapse of
\ntime or both) or give rise to any right of termination, cancellation or
\nacceleration of any right or obligation of any Person or to a loss of any
\nbenefit to which the Company or any Subsidiary is entitled under any Permit or
\nunder any provision of any Contract or other instrument binding upon the
\nCompany or any Subsidiary or by which any of the properties and assets of the
\nCompany or any Subsidiary are or may be bound; or (iv) result in the creation
\nor imposition of any Lien on any properties or assets of the Company or any
\nSubsidiary, other than Permitted Liens, excluding from the foregoing clauses
\n(ii), (iii) and (iv) such contraventions, conflicts, violations, defaults or
\nrights that would not result in a Material Adverse Effect, or that become
\napplicable as a result of the business or activities in<\/p>\n
16<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
which Parent is engaged or proposes to be engaged or as a result of any
\nacts or omissions by, or the status of, Parent.<\/p>\n
     4.07. No Default<\/b>. Except as set forth in Schedule 4.07, neither the
\nCompany nor any Subsidiary is in material breach, default or violation (and no
\nevent has occurred that with due notice or the lapse of time or both would
\nconstitute a breach, default or violation) of any term, condition or provision
\nof (i) its respective certificate of incorporation and by-laws or equivalent
\norganizational documents, (ii) any law, regulation, judgment, injunction, order
\nor decree binding upon or applicable to the Company or any Subsidiary, or by
\nwhich any of their respective properties assets may be bound, that would (or
\ncould reasonably be expected to) result in a Material Adverse Effect, or (iii)
\nany material Permit or any provision of any material Contract or other
\ninstrument binding upon the Company or any Subsidiary or by which any of the
\nproperties and assets of the Company or any Subsidiary are or may be bound.<\/p>\n
     4.08. Required and Other Consents<\/b>.<\/p>\n
             (a) Schedule 4.08(a) sets forth each Contract or other instrument binding
\nupon the Company or any Subsidiary and each Permit, in each case, requiring a
\nconsent as a result of the execution, delivery and performance of this
\nAgreement or the consummation of the transactions contemplated hereby, where
\nthe failure to obtain such consent would have a Material Adverse Effect, or
\nwould prevent, interfere with or delay the consummation of the transactions
\ncontemplated by this Agreement (each such consent, a \u0093Required Consent\u0094<\/b> and
\ntogether the \u0093Required Consents\u0094<\/b>).<\/p>\n
             (b) Schedule 4.08(b) sets forth every other consent (each such Consent, an
\n\u0093Other Consent\u0094<\/b> and together the \u0093Other Consents\u0094<\/b>) under such Contracts or
\nother instruments or such Permits that is necessary with respect to the
\nexecution, delivery and performance of this Agreement and the consummation of
\nthe transactions contemplated hereby in order to avoid a breach or violation
\nof, or acceleration of any right or liability arising under, or giving rise to
\nany right to terminate, any such Contract, instrument or Permit.<\/p>\n
     4.09. Financial Statements. <\/b>Schedule 4.09 contains copies of the
\nconsolidated financial statements (hereinafter collectively called the
\n\u0093Financial Statements\u0094<\/b>), which have been prepared in accordance with generally
\naccepted accounting principles consistently applied and maintained throughout
\nthe periods indicated, as follows: audited balance sheets of the Company at
\nDecember 31, 2001, 2000 and 1999, and the related statements of operations and
\ncash flows for the fiscal years then ended; and the Reference Balance Sheet and
\nthe related statements of operations and cash flows for the three months ended
\non the Reference Date. The Financial Statements are correct and complete in
\nall material respects, and fairly present the financial condition of the
\nCompany as at their respective dates and the results of its operations for the
\nperiods covered thereby (subject to normal year-end adjustments and except that
\nany unaudited financial statements do not contain all required footnotes, which
\nwill not be material, individually or in the aggregate), and correctly reflect
\nand disclose all extraordinary items. Subject to the foregoing, and except (i)
\nas set forth in Schedule 4.09, or (ii) as is necessary and required by new
\ngenerally accepted accounting principles, there have been no material changes
\nin accounting policies, practices or procedures of the Company or the
\nSubsidiaries since December 31, 2001.<\/p>\n
17<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     4.10. Absence of Certain Changes. <\/b>Except as set forth on Schedule 4.10,
\nsince December 31, 2001, the Company has, and has caused each Subsidiary to,
\n(i) conduct its business in the ordinary course consistent with past practice,
\n(ii) use its best efforts to preserve its business and customers, (iii)
\nmaintain supplies and inventory at levels that are in the ordinary course of
\nbusiness consistent with past practice, (iv) extend credit to customers,
\ncollect accounts receivable and pay accounts payable and similar obligations in
\nthe ordinary course of business consistent with past practice and (v) not
\nengage in any new line of business or entered into any agreement, transaction
\nor activity or made any commitment except those in the ordinary course of
\nbusiness. Since December 31, 2001, except for routine annual salary increases
\nfor non-executive employees approved by the compensation committee of the
\nCompany\u0092s board of directors in the ordinary course of business and costs and
\nexpenses incurred by the Company prior to the date of this Agreement in
\nconnection with the initial public offering of the Company\u0092s securities,
\nneither the Company nor any of the Subsidiaries has taken any of the actions
\nset forth in Section 6.01(a) through (x), and there has not been:<\/p>\n
           (a) any events, changes or effects which individually or in the aggregate
\nhave had or could reasonably be expected to have a Material Adverse Effect;<\/p>\n
           (b) any damage, destruction or other casualty loss (whether or not covered
\nby insurance) to property or assets of the Company or any Subsidiary with a
\nvalue in excess of U.S. $100,000;<\/p>\n
           (c) any transaction, Contract or other instrument entered into, or
\ncommitment made, by the Company or any Subsidiary (including the acquisition or
\ndisposition of any assets) or any relinquishment by the Company or any
\nSubsidiary of any Contract or other right, in either case, material to the
\nCompany and the Subsidiaries, taken as a whole, other than transactions and
\ncommitments in the ordinary course of business consistent with past practice
\nand those contemplated by this Agreement; or<\/p>\n
           (d) any labor dispute, other than routine individual grievances, or any
\nactivity or proceeding by a labor union or representative thereof to organize
\nany employees of the Company or any Subsidiary (other than employees for whom
\nthere is already a collective bargaining agreement in place, as set forth in
\nSchedule 4.21), or any lockouts, strikes, slow-downs, work stoppages or, to the
\nknowledge of the Company, threats thereof by or with respect to such employees.<\/p>\n
     4.11. No Undisclosed Material Liabilities. <\/b>There are no material
\nliabilities of the Company or any Subsidiary of any kind whatsoever, whether
\naccrued, contingent, absolute, determined, determinable or otherwise, other
\nthan:<\/p>\n
           (a) liabilities fully reflected or provided for in the Reference Balance
\nSheet;<\/p>\n
           (b) current liabilities incurred in the ordinary course of business
\nconsistent with past practice since the Reference Date and of a type shown on
\nthe Reference Balance Sheet, which in the aggregate would not be expected to
\nhave a Material Adverse Effect;\n<\/p>\n
18<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (c) liabilities under Contracts and Bids incurred in the ordinary course
\nof business which are not required by United States generally accepted
\naccounting principles to be reflected on a balance sheet;<\/p>\n
           (d) liabilities disclosed in Schedule 4.11(d); and<\/p>\n
           (e) Seller Expenses<\/p>\n
     4.12. Properties<\/b>.<\/p>\n
           (a) Schedule 4.12(a) sets forth: (i) a true and complete list of the fixed
\nassets owned by the Company and the Subsidiaries as of April 30, 2002, and (ii)
\na list of the leases for personal property used in the business of the Company
\nand the Subsidiaries with an initial or remaining term of one year or more or
\nwhich is otherwise material to the Company or such Subsidiary, specifying in
\nthe case of each lease or sublease, the name of the lessor or sublessor, the
\npersonal property subject to such lease. In addition, Schedule 4.12(a) sets
\nforth, with respect to each such lease or sublease, the rent amount paid or
\nrequired to be paid by the Company or the applicable Subsidiary during the last
\ncomplete rental payment period prior to the date hereof. The personal property
\nowned or leased by the Company or any Subsidiary, as set forth in Schedule
\n4.12(a) shall be referred to herein as the \u0093Personal Property\u0094<\/b>.<\/p>\n
           (b) Schedule 4.12(b) sets forth a true and correct legal description or
\nsurvey of all real property used in the business of the Company and the
\nSubsidiaries (the \u0093Real Property\u0094<\/b>) which the Company or a Subsidiary owns,
\nleases or subleases, any title insurance policies and surveys with respect
\nthereto, specifying in the case of leases or subleases, the name of the lessor
\nor sublessor. In addition, Schedule 4.12(b) sets forth, with respect to each
\nsuch lease or sublease, the rent amount paid or required to be paid by the
\nCompany or the applicable Subsidiary during the last complete rental payment
\nperiod prior to the date hereof.<\/p>\n
           (c) The Real Property includes all real property as is used or held for
\nuse in connection with the conduct of the operations of the business of the
\nCompany and the Subsidiaries as heretofore conducted, including any Real
\nProperty that is located under water.<\/p>\n
           (d) Except for the San Pedro Port Lease, which has a stated term of July
\n1, 1986 through June 30, 1996, all leases of Real Property or Personal Property
\nare valid, binding and enforceable against the Company or the Subsidiary, as
\nthe case may be, and, to the knowledge of the Company, each other Person who is
\na party thereto in accordance with their respective terms. Neither the Company
\nnor, to the knowledge of the Company, any other party to such leases is in
\ndefault thereunder.<\/p>\n
           (e) The plants, buildings and structures included in the Real Property
\ncurrently have access to (i) public roads or valid easements over private
\nstreets or private property for such ingress to and egress from all such
\nplants, buildings and structures; and (ii) water supply, storm and sanitary
\nsewer facilities, telephone, gas and electrical connections, fire protection,
\ndrainage and other public utilities, as is necessary for the conduct of the
\nbusiness of the Company and the Subsidiaries as it is presently conducted.<\/p>\n
19<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (f) The Real Property, whether by virtue of riparian rights, valid
\neasements across private navigable waterways or otherwise, has access to public
\nwaterways, tidelands, water areas and deep water channels for ships to access
\nthe Company\u0092s Real Property and as otherwise necessary for the conduct of the
\nbusiness of the Company and the Subsidiaries as it is presently conducted. No
\ndredging is currently required (or is reasonably anticipated to be required) to
\nensure adequate depth for the passage of ships to and from the Real Property,
\nincluding without limitation the piers and drydocks located on such Real
\nProperty, or in order for the continued conduct of the business of the Company
\nand the Subsidiaries as it is presently conducted other than dredging required
\nin connection with the San Francisco drydock.<\/p>\n
           (g) To the knowledge of the Company, none of the structures on the Real
\nProperty, whether land-based or water-based, including without limitation the
\npiers, floating dry docks, and shipyard buildings, encroaches upon real
\nproperty of another person, and no structure of any other person encroaches
\nupon any Real Property.<\/p>\n
           (h) The Company or a Subsidiary has good and marketable, fee simple title
\nto, or, in the case of leased Real Property, has valid leasehold interests in,
\nthe Real Property. In addition, the Company or a Subsidiary has good title to
\nall assets other than the Real Property (whether personal, tangible or
\nintangible) reflected on the Reference Balance Sheet or acquired after the
\nReference Date, except for properties and assets sold since the Reference Date
\nin the ordinary course of business consistent with past practice and not in
\nviolation of the terms of this Agreement. No asset of the Company or any
\nSubsidiary is subject to any Lien, except for (i) statutory Liens for Taxes
\nthat are not yet due and payable or Taxes being contested in good faith for
\nwhich adequate reserves have been established on the Reference Balance Sheet;
\n(ii) statutory or common law liens to secure obligations to landlords, lessors
\nor renters under leases or rental agreements confined to the premises rented;
\n(iii) statutory or common law Liens in favor of carriers, warehouseman,
\nmechanics and materialmen, to secure claims for labor, materials or supplies
\nand other like Liens; and (iv) any other Lien disclosed on Schedule 4.12(h)
\n(collectively, \u0093Permitted Liens\u0094<\/b>).<\/p>\n
           (i) Except as set forth on Schedule 4.12(i), the plant and equipment owned
\nor leased by the Company or any Subsidiary that is material to the conduct of
\nthe business of the Company or such Subsidiary have no material defects, are in
\ngood operating condition and repair and have been reasonably maintained
\nconsistent with standards generally followed in the industry (giving due
\naccount to the age and length of use of same, ordinary wear and tear excepted),
\nare substantially suitable for their present uses and, in the case of plants,
\nbuildings and other structures (including without limitation, the roofs
\nthereof), are structurally sound.<\/p>\n
     4.13. Sufficiency of Assets. <\/b>The Real Property and the Personal Property,
\nalong with the intellectual property described in Schedule 4.20, constitute all
\nof the assets or property necessary to permit the Company and the Subsidiaries
\nto conduct their business as presently conducted.<\/p>\n
     4.14. Litigation. <\/b>Except as set forth by Schedule 4.14, there is no
\naction, claim, suit, investigation or proceeding pending against, or to the
\nknowledge of the Company, threatened against or affecting the Company or any
\nSubsidiary which could reasonably be expected to result in a liability of the
\nCompany or any Subsidiary in excess of U.S. $100,000, or that seeks to\n<\/p>\n
20<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
prevent, enjoin alter or delay any of the transactions contemplated by
\nthis Agreement, before any Governmental Entity. Neither the Company nor any
\nSubsidiary is subject to any judgment, decree, injunction, rule or order of any
\nGovernmental Entity that in any way restricts the operation of the business of
\nthe Company or any Subsidiary or that seeks to prevent, enjoin, alter or delay
\nany of the transactions contemplated by this Agreement.<\/p>\n
     4.15. Material Contracts.<\/b><\/p>\n
           (a) Except for the Contracts disclosed in Schedule 4.15(a), which Schedule
\nshall identify each category set forth in paragraphs (i) through (xvi) that
\napplies, neither the Company nor any Subsidiary is a party to or subject to:<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (i)      any Contract providing for the lease of real property by the
\nCompany or any Subsidiary, whether the Company or such Subsidiary is the
\nlessor, sublessor, lessee or sublessee, and any other lease providing for
\nannual rentals of U.S. $100,000 or more;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ii)      any Contract providing for aggregate payments by the Company or
\nany Subsidiary of U.S. $1,000,000 or more over the life of such Contract,
\nand any Contract for financial, information technology, management or
\naccounting services providing for aggregate payments by the Company of
\nU.S. $200,000 or more over the life of such Contract (unless such
\nContract is terminable on no more than thirty days notice);<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iii)      any sole source or exclusive supplier Contracts;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iv)      any sales, distribution or other similar agreement providing
\nfor the sale by the Company or any Subsidiary of materials, supplies,
\ngoods, services, equipment or other assets that provides for a single
\npayment or annual payments to the Company and the Subsidiaries of U.S.
\n$100,000 or more;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (v)      any teaming, partnership, joint venture or other similar
\ncontract arrangement or agreement;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vi)      any contract relating to Indebtedness or the deferred purchase
\nprice of property (whether incurred, assumed, guaranteed or secured by
\nany asset), except contracts relating to Indebtedness incurred in the
\nordinary course of business in an amount not exceeding U.S. $250,000;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vii)      any license agreement (other than those relating to
\ncommercially available off-the-shelf software), franchise agreement or
\nagreement in respect of similar rights granted to or held by the Company
\nor any Subsidiary;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (viii)      any agency, dealer, sales representative or other similar
\nagreement;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ix)      any agreement, contract or commitment that limits the freedom
\nof the Company or any Subsidiary to compete in any line of business or
\nwith any Person or in any area or to own, operate, sell, transfer, pledge
\nor otherwise dispose of or encumber<\/td>\n<\/tr>\n<\/table>\n
21<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\nany asset of the Company or any Subsidiary or which would so limit
\nthe freedom of the Company or any Subsidiary after the Closing Date;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (x)      any agreement, contract or commitment which is or relates to an
\nagreement with or for the benefit of any Affiliate of the Company or any
\nSubsidiary other than inter-company arrangements among the Company and
\nthe Subsidiaries (other than Capital Air);<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xi)      any Loss Contract (measured as of the date of this Agreement);<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xii)      any currency or interest rate swap, collar or hedge agreement;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xiii)      any government Bid or Government Contract providing for
\npayments of $5,000,000 or more;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xiv)      any Contract for the services of Capital Air, whether on
\nbehalf of the Company or any other Subsidiary or otherwise;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xv)      any other agreement, contract or commitment that is material to
\nthe Company or any Subsidiary; or<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xvi)      any Contract in which any party thereto has indicated (whether
\norally or in writing) that it intends to terminate, seek to modify the
\nterms and conditions or otherwise take action that would materially
\nadversely impact the Company with respect to such Contract.<\/td>\n<\/tr>\n<\/table>\n
           (b) The Company has delivered or made available true and complete copies,
\nor accurate summaries, of each of the written Contracts listed on Schedule
\n4.15(a), as amended to date, and a written summary of each of the oral
\nContracts set forth thereon. Except for (i) the Contracts listed on Schedule
\n4.15(b), which lists each Contract under which the Company and the other
\nparties thereto have continued to perform despite the expiration of such
\nContract in accordance with its terms, (ii) Bids; and (iii) Contracts which
\nhave been fully performed but are awaiting close-out, each Contract disclosed
\nin any Schedule to this Agreement or required to be disclosed pursuant to
\nSection 4.15(a) is in full force and effect and is a valid and binding
\nagreement of the Company or a Subsidiary, as the case may, enforceable against
\nthe Company or such Subsidiary, and, to the knowledge of the Company, each
\nother Person who is a party thereto. Neither the Company nor the relevant
\nSubsidiary nor, to the knowledge of the Company, any other party to such
\nContract is in default thereunder in any material respect.<\/p>\n
     4.16. Government Contracts<\/b>.<\/p>\n
           (a) With respect to each and every Government Contract or government Bid
\nto which the Company or any Subsidiary is a party, except as set forth in
\nSchedule 4.16(a): (i) the Company or Subsidiary has complied with all material
\nterms and conditions of such Government Contract or government Bid, including
\nall clauses, provisions and requirements incorporated expressly, by reference
\nor by operation of law therein; (ii) the Company or Subsidiary has complied
\nwith all requirements of Applicable Law in all material respects or agreement
\npertaining to such Government Contract or government Bid; (iii) all
\nrepresentations and\n<\/p>\n
22<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
certifications executed, acknowledged or set forth in or pertaining to
\nsuch Government Contract or government Bid were correct and complete in all
\nmaterial respects as of their effective date, and the Company or Subsidiary has
\ncomplied with all such representations and certifications in all material
\nrespects; (iv) all invoices and claims, including requests for progress
\npayments and provisional cost payments, submitted by the Company or Subsidiary
\nto any Governmental Entity were correct and complete in all material respects
\nas of their submission date; (v) neither any Governmental Entity nor any prime
\ncontractor, subcontractor or other person has notified the Company or
\nSubsidiary, either orally or in writing, that the Company or Subsidiary has
\nbreached or violated any Applicable Law, certification, representation, clause,
\nprovision or requirement in any material respects; (vi) no written or, to the
\nCompany\u0092s knowledge, termination for default, cure notice or show cause notice
\nhas been issued; (vii) no cost incurred or invoice rendered by the Company or
\nany Subsidiary has been disallowed (or for which the Company has reason to
\nbelieve that such cost or invoice will be disallowed), excluding de minimis
\namounts that have already been accounted for as disallowed costs in accordance
\nwith the revenue recognition policies of the Company so long as such de minimis
\namounts have not been the subject of any investigation or claim of defective
\npricing by any individual or Governmental Entity or been subject to penalty
\nassessments; and (viii) no money due to the Company or any Subsidiary has been
\n(or, to the Company\u0092s knowledge, has an attempt been made to be) withheld or
\nset off.<\/p>\n
           (b) Except as set forth in Schedule 4.16(b): (i) to the knowledge of the
\nCompany, neither the Company, nor any Subsidiary, nor any of the Company\u0092s
\nrepresentatives, is (or for the last five years has been) under administrative,
\ncivil or criminal investigation, indictment or information, audit or internal
\ninvestigation with respect to any alleged irregularity, mischarging,
\nmisstatement or improper omission arising under or relating to any Government
\nContract or government Bid; (ii) neither the Company nor any Subsidiary has
\nmade a voluntary disclosure to any Governmental Entity with respect to any
\nalleged irregularity, mischarging, misstatement or improper omission arising
\nunder or relating to any Government Contract or government Bid that has led or
\nwould reasonably be expected to lead, either before or after the Closing Date,
\nto any of the consequences set forth above or any other damage, penalty
\nassessment, recoupment of payment or disallowance of cost. The Company\u0092s and
\nits Subsidiaries\u0092 practices and procedures used in estimating costs and pricing
\nproposals and accumulating, recording, segregating, reporting and invoicing
\ncosts are in compliance in all material respects with provisions applicable to
\nthem set forth in Federal Acquisition Regulation Part 31 and all applicable
\nCost Accounting Standards. The Defense Contract Audit Agency conducts periodic
\naudits of the Company\u0092s and its Subsidiary\u0092s cost practices and cost accounting
\nsystem. No such audits have caused the agency to conclude that the Company or
\nany Subsidiary had failed to comply with Federal Acquisition Regulation Part 31
\nand applicable Cost Accounting Standards in any material respect, or result in
\nany disputes between the Company and such agency regarding compliance.<\/p>\n
           (c) Except as set forth in Schedule 4.16(c), to the knowledge of the
\nCompany, there exist: (i) no financing arrangements prohibited by statute or
\nregulation with respect to performance of any current Government Contract; (ii)
\nno outstanding claims against the Company or any Subsidiary, either by any
\nGovernmental Entity or by any prime contractor, subcontractor, vendor or other
\nthird party, arising under or relating to any Government Contract or government
\nBid; (iii) no facts upon which such a claim may be based in the future; (iv) no
\ndisputes between the Company or any Subsidiary and any Governmental Entity or
\nany prime\n<\/p>\n
23<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
contractor, subcontractor or vendor arising under or relating to any
\nGovernment Contract or government Bid; and (v) no facts that are known by the
\nCompany over which such a dispute may arise in the future. Except as set forth
\nin Schedule 4.16(c), neither the Company nor any Subsidiary has an interest in
\nany pending or, to the knowledge of the Company, potential claim against any
\nGovernmental Entity or any prime contractor, subcontractor or vendor arising
\nunder or relating to any Government Contract or government Bid.<\/p>\n
           (d) Except as set forth in Schedule 4.16(d), neither the Company, nor any
\nSubsidiary, nor, to the knowledge of the Company, any of the Company\u0092s or
\nSubsidiaries\u0092 representatives is (or for the last five years has been)
\nsuspended, proposed for debarment or debarred from doing business with any
\nGovernmental Entity or declared nonresponsible or ineligible for any
\nGovernmental Entity contracting or subcontracting. To the knowledge of the
\nCompany, no circumstances exist that would warrant the institution of
\nsuspension or debarment proceedings or the finding of nonresponsibility or
\nineligibility on the part of the Company or any Subsidiary in the future.<\/p>\n
           (e) Except as set forth in Schedule 4.16(e): (i) to the knowledge of the
\nCompany, no Company employee and no Subsidiary employee involved in bidding for
\nor performing, administering or billing any Government Contract has left the
\nemploy of the Company or any Subsidiary under circumstances of disgruntlement
\nor dissatisfaction with the Company or any Subsidiary on the basis that the
\nCompany or its Subsidiary engaged in illegal conduct in bidding for or
\nperforming, administering or billing any Government Contract; (ii) no current
\nemployee of the Company or any Subsidiary involved in the bidding for or
\nperforming, administering or billing of any Government Contract has indicated
\nto the Company (in writing or orally) disgruntlement or dissatisfaction with
\nthe Company or any Subsidiary on the basis that the Company or its Subsidiary
\nengaged in illegal conduct in bidding for or performing, administering or
\nbilling any Governmental Contract; and (iii) the Company has no knowledge of a
\nbasis upon which any disgruntled or dissatisfied Company employee or Subsidiary
\nemployee or former employee might take retributive action against the Company
\nor any Subsidiary on the basis that the Company or its Subsidiary engaged in
\nillegal conduct in connection with any Government Contract, including filing
\ncomplaints against the Company or any Subsidiary with a Governmental Entity or
\nfiling qui tam<\/i> or \u0093whistleblower\u0094 actions against the Company or any
\nSubsidiary.<\/p>\n
           (f) To the knowledge of the Company, the Company and the Subsidiaries have
\ntaken all reasonable steps to protect the Company\u0092s and the Subsidiaries\u0092
\nrights in and to any software owned by the Company and the Subsidiaries, and
\nhave included the proper restrictive legends on all copies of software
\ndelivered to any Governmental Entity that may be protected under the Federal
\nAcquisition Regulation provisions known as \u0093Restricted Rights\u0094 or \u0093Government
\nPurpose License Rights,\u0094 in performance of the Company\u0092s and the Subsidiaries\u0092
\nGovernment Contracts.<\/p>\n
     4.17. Licenses and Permits<\/b>. The Company and the Subsidiaries have all
\nmaterial authorizations, approvals, licenses, permits, variances, exemptions,
\nfranchises, certificates, approvals and orders of and from all Governmental
\nEntities necessary to carry on the business of the Company and the Subsidiaries
\nas it is currently being conducted, to own or hold under lease the properties
\nand assets they own or hold under lease and to perform all obligations under
\nthe\n<\/p>\n
24<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
agreements to which each is a party (collectively, the \u0093Permits\u0094<\/b>). Such
\nPermits are valid and in full force and effect, and none of the Permits will be
\nterminated or impaired or become terminable as a result of the transactions
\ncontemplated hereby.<\/p>\n
     4.18. Insurance Coverage. <\/b>The Company has furnished to Parent a list of,
\nand accurate summaries of, all insurance policies and fidelity bonds covering
\nthe business and operations of the Company, any Subsidiary or any employee
\nthereof that are currently in effect. Except as set forth in Schedule 4.18,
\nthere are no pending claims by the Company or any Subsidiary under any of such
\npolicies or bonds as to which coverage has been questioned, denied or disputed
\nby the underwriters of such policies or bonds. All premiums payable under all
\nsuch policies and bonds have been paid and the Company and the Subsidiaries are
\notherwise in full compliance with the terms and conditions of all such policies
\nand bonds. Such policies of insurance and bonds (or other policies and bonds
\nproviding substantially similar insurance coverage) have been in effect since
\nthe Time of Formation and remain in full force and effect. Such policies of
\ninsurance and bonds are of the type and in amounts customarily carried by
\nPersons conducting businesses similar to the business conducted by the Company
\nand the Subsidiaries.<\/p>\n
     4.19. Compliance with Laws. <\/b>Except as set forth on Schedule 4.19, neither
\nthe Company nor any Subsidiary is in material violation of or has since the
\nTime of Formation violated in any material respect, and to the Company\u0092s
\nknowledge is not under investigation with respect to or has not been threatened
\nto be charged with or given notice of any material violation of, any law, rule,
\nordinance or regulation, or judgment, order or decree entered by any
\nGovernmental Entity, applicable to the Company or any Subsidiary or the conduct
\nof their respective businesses (other than Environmental Laws, which are
\ngoverned by Section 4.30, or laws relating to Taxes, which are governed by
\nExhibit I).<\/p>\n
     4.20. Intellectual Property.<\/b><\/p>\n
           (a) Schedule 4.20(a) sets forth a true and complete list of all of the
\nfollowing items which the Company or any Subsidiary owns in whole or in part
\n(hereinafter referred to as the \u0093Intellectual Property Rights\u0094<\/b>): (i) patents
\nand applications therefor, (ii) all trademark, trade name, service mark,
\ncollective mark, and certification mark registrations and applications
\ntherefor, (iii) all material trademarks, trade names, service marks, collective
\nmarks, and certification marks which have been used by the Company or any
\nSubsidiary in commerce at any time in the last five years, (iv) all copyright
\nregistrations and applications therefor, (v) all material copyrightable works
\nof authorship which have not been the subject of a copyright registration or
\napplication therefor, and (vi) all material trade secrets, proprietary
\ninformation, databases and data. Schedule 4.20(a) also sets forth a true and
\ncomplete list of all items described in subsections (i) through (vi) of the
\nprevious sentence in which the Company or any Subsidiary owns a license (the
\n\u0093Licensed Rights\u0094<\/b>). Except as expressly stated in Schedule 4.20(a), (i) the
\nIntellectual Property Rights are free and clear of any Liens, are not subject
\nto any license (royalty bearing or royalty free) and are not subject to any
\nother arrangement requiring any payment to any person or the obligation to
\ngrant rights to any person in exchange; (ii) the Licensed Rights are free and
\nclear of any Liens, royalties or other obligations; and (iii) the Intellectual
\nProperty Rights and the Licensed Rights are all those rights necessary to the
\nconduct of the business of the Company and the Subsidiaries as presently\n<\/p>\n
25<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
conducted. The validity of the Intellectual Property Rights and title
\nthereto and validity of the Licensed Rights (i) have not been questioned in any
\nprior action, suit, investigation or proceeding; (ii) are not being questioned
\nin any pending action, suit, investigation or proceeding; and (iii) are not the
\nsubject(s) of any threatened or proposed action, suit, investigation or
\nproceeding. The business of the Company and the Subsidiaries, as presently
\nconducted, does not conflict with and, to the knowledge of the Company, has not
\nbeen alleged to conflict with any patents, trademarks, trade names, service
\nmarks, copyrights or other intellectual property rights of others. The
\nconsummation of the transactions contemplated hereby will not result in the
\nloss or impairment of any of the Intellectual Property Rights or the right to
\nuse any of the Licensed Rights in the business of the Company and the
\nSubsidiaries. There are no third parties using any of the Intellectual
\nProperty Rights that are material to the business of the Company and the
\nSubsidiaries as presently conducted.<\/p>\n
           (b) The Company and each Subsidiary owns, or possess sufficiently broad
\nand valid rights to, all computer software programs that are material to the
\nconduct of the business of the Company and the Subsidiaries.<\/p>\n
     4.21. Employees<\/b>.<\/p>\n
           (a) Schedule 4.21(a) sets forth a true and complete list as of May 15,
\n2002 of the names, job title, hourly rate (if applicable) and EEO
\nclassification of each current employee of the Company or any Subsidiary
\n(including employees who are represented by a collective bargaining agreement)
\nand the name of each current contract employee of the Company. None of the
\nemployees (excluding, for purposes of this representation, the Significant
\nEmployees) of the Company or any Subsidiary has indicated to the Company or
\nsuch Subsidiary that he or she intends to resign or retire as a result of the
\ntransactions contemplated by this Agreement or otherwise within two years after
\nthe Closing Date, other than such resignations and retirements that would not
\nresult in a Material Adverse Effect.<\/p>\n
           (b) Except for routine annual salary increases for non-executive employees
\napproved by the compensation committee of the Company\u0092s board of directors in
\nthe ordinary course of business, and except as otherwise set forth on Schedule
\n4.21(b), since March 31, 2002 there has been no material change in the numbers
\nof employees of the Company and the Subsidiaries or in the terms and conditions
\nof their employment or remuneration. Except as disclosed in Schedule 4.21(b),
\nno current or former directors, officers, employees, or consultants of the
\nCompany or any Subsidiary are entitled to claim against the Company or such
\nSubsidiary for any non-statutory severance payments or similar termination
\ncompensation. Except as set forth in Schedule 4.21(b), as of the date of this
\nAgreement, no events have occurred to cause the Company or any Subsidiary to
\nhave a current obligation to make any payment to any current or former
\ndirector, officer or employee by way of specific performance, damages or
\ncompensation for loss of office or employment or for unfair or wrongful
\ndismissal.<\/p>\n
           (c) Except as set forth on Schedule 4.21(c), the Company and the
\nSubsidiaries have complied since the Time of Formation and are currently
\ncomplying in all material respects, with regard to all employees of the Company
\nand such Subsidiaries, with all Applicable Laws respecting employment and
\nemployment practices and the protection of the health and safety of employees,
\nfrom whatever source such law may be derived, including, without limitation,\n<\/p>\n
26<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
statutes, ordinances, laws, rules, regulations, policies, standards,
\njudicial or administrative precedents, judgments, orders, decrees, awards,
\ncitations, licenses, official interpretations and guidelines. Without limiting
\nthe generality of the foregoing, the Company has complied in all material
\nrespects with its obligations to withhold and report to the applicable
\nGovernmental Entities all amounts required by Applicable Law or by agreement to
\nbe withheld and reported with respect to wages, salaries and other payments to
\nemployees of the Company and the Subsidiaries.<\/p>\n
           (d) Schedule 4.21(d) provides a list of all consulting and employment
\nagreements (and a description of any oral agreements) between the Company or
\nany Subsidiary and any Person (whether or not an employee of the Company or any
\nSubsidiary), including without limitation any agreements that contain any
\nclause or provision related to or triggered by a change of control with respect
\nto the Company or any Subsidiary. Schedule 4.21(d) contains a list of each
\nmember of senior management of the Company and each Subsidiary.<\/p>\n
           (e) There are no suits, arbitrations or similar controversies between the
\nCompany or any Subsidiary and any current or former employee, director,
\nconsultant, officer or trade union pending or, to the knowledge of Company,
\nthreatened other than as disclosed in Schedule 4.21(e).<\/p>\n
           (f) Except as set forth in Schedule 4.21(f) or as otherwise expressly
\nprovided in this Agreement, the execution, delivery of this Agreement and the
\nconsummation of the transactions contemplated hereby will not:<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (i)      entitle any employee of the Company or any Subsidiary to
\nseverance payment, employment compensation or any other form of payment;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ii)      accelerate the time of payment or vesting of, or increase the
\namount of, any Option or other compensation due to any employee of the
\nCompany or any Subsidiary; or<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iii)      entitle any employee of the Company or any Subsidiary to
\nterminate or shorten his employment.<\/td>\n<\/tr>\n<\/table>\n
           (g) Except as set forth in Schedule 4.21(g):<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (i)      Since the Time of Formation, the employees of the Company and
\nthe Subsidiaries have not been, and currently are not, represented by a
\nlabor organization or group that was either certified or voluntarily
\nrecognized by any labor relations board or certified or voluntarily
\nrecognized by any other entity.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ii)      There is no collective bargaining agreement presently in force
\nwith respect to employees of the Company or any Subsidiary, and the
\nCompany and the Subsidiaries are not and, since the Time of Formation,
\nhave never been signatories to a collective bargaining agreement with any
\ntrade union, labor organization or group.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iii)      To the Company\u0092s knowledge, no representation election
\npetition or application for certification has been filed by employees of
\nthe Company or any<\/td>\n<\/tr>\n<\/table>\n
27<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\nSubsidiary or is pending with any entity and no union organizing
\ncampaign or other attempt to organize or establish a labor union,
\nemployee organization or labor organization or group involving employees
\nof the Company or any Subsidiary has occurred, is in progress or is
\nthreatened.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iv)      The Company and the Subsidiaries have not engaged in any unfair
\nlabor practice and there is not pending or, to the knowledge of the
\nCompany, threatened any labor board proceeding of any kind, including any
\nsuch proceedings against the Company or any Subsidiary by any trade
\nunion, labor union, employee organization or labor organization
\nrepresenting employees of the Company or any Subsidiary. No grievance or
\narbitration demand or proceeding, whether or not filed pursuant to a
\ncollective bargaining agreement, has been threatened, filed or is pending
\nagainst the Company or any Subsidiary.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (v)      No labor dispute, walk out, strike, slowdown, hand billing,
\npicketing, work stoppage (sympathetic or otherwise), or other concerted
\naction involving the employees of the Company or any Subsidiary has
\noccurred since the Time of Formation, is in progress or, to the knowledge
\nof the Company, has been threatened.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vi)      No breach of contract or denial of fair representation claim
\nhas been filed or is pending or, to the knowledge of the Company,
\nthreatened against the Company or any Subsidiary or any trade union,
\nlabor union, employee organization or labor organization representing any
\nemployee of the Company or any Subsidiary.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vii)      Since the Time of Formation, the Company and the Subsidiaries
\nhave complied with all material contractual obligations with respect to
\nthe current and past employees of the Company and the Subsidiaries.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (viii)      No citation has been issued against the Company or any
\nSubsidiary and no notice of contest, claim, complaint, charge,
\ninvestigation, or other administrative enforcement proceeding has been
\nfiled or is pending or, to the knowledge of the Company, threatened
\nagainst the Company or any Subsidiary under any other Applicable Law
\nrelating to employment or the employees of the Company and the
\nSubsidiaries.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ix)      Neither the Company nor any Subsidiary has taken any action
\nthat would trigger notice requirements or liability (e.g.<\/i>, the Worker
\nAdjustment Retraining and Notification Act or any similar state law)
\nunder any federal, local, state or foreign plant closing notice,
\ncollective dismissal law or other Applicable Law.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (x)      There are no pending or, to the knowledge of the Company,
\nthreatened claims or actions against the Company or the Subsidiaries
\nunder any worker\u0092s compensation policy or long-term disability policy,
\nwhich could reasonably be expected to result in a Material Adverse
\nEffect.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xi)      There are no outstanding loans or advances from the Company to
\nemployees or stockholders of the Company, including loans or advances
\nmade for the purpose of allowing a stockholder to purchase shares of
\nCommon Stock.<\/td>\n<\/tr>\n<\/table>\n
28<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
     (xii) <\/td>\n <\/td>\nThe Company does not have any liability or other obligation to
\nany current or former employee for any housing<\/td>\n<\/tr>\n
 allowance or other
\nrelocation expenses in excess of U.S. $100,000 in the aggregate with
\nrespect to any such individual.<\/td>\n<\/tr>\n<\/table>\n
<\/center><\/p>\n
           (h) Since the Time of Formation, the Company and the Subsidiaries have at
\nall times maintained and currently maintain adequate insurance as required by
\nApplicable Law with respect to workers\u0092 compensation claims and unemployment
\nbenefits claims.<\/p>\n
           (i) All individuals who are or were performing consulting or other
\nservices for the Company or any Subsidiary are or were correctly classified by
\nthe Company or such Subsidiary as either \u0093independent contractors\u0094 or
\n\u0093employees,\u0094 as the case may be, and, at the Closing, with respect to those
\nindividuals still performing consulting services for the Company or such
\nSubsidiary as of the Closing Date, such individuals will qualify for such
\nclassification, excluding any misclassification which could not reasonably be
\nexpected to result in a Material Adverse Effect.<\/p>\n
           (j) Each of the employees, including without limitation contract
\nemployees, and independent contractors of the Company and the Subsidiaries has
\nbeen issued, granted or approved for the appropriate security clearance by each
\napplicable Governmental Entity that is necessary for such employee or
\nindependent contractor, as the case may be, to perform the functions and duties
\nof his or her position with the Company or any Subsidiary.<\/p>\n
     4.22. Receivables. <\/b>Except as set forth on Schedule 4.22, all accounts,
\nnotes receivable and other receivables reflected on the Reference Balance Sheet
\nand all accounts and notes receivable of the Company or any Subsidiary
\noutstanding are valid, genuine and fully collectible in the aggregate amount
\nthereof, subject to normal and customary trade discounts, less any reserves for
\ndoubtful accounts recorded on the Reference Balance Sheet or on the books of
\nthe Company on a basis consistent with past practice.<\/p>\n
     4.23. Accounts Payable. <\/b>The accounts payable of the Company and the
\nSubsidiaries are properly reflected on the Reference Balance Sheet and arose
\nfrom bona fide transactions with unaffiliated third parties in the ordinary
\ncourse of business consistent with past practice.<\/p>\n
     4.24. No Third Party Options. <\/b>There are no existing agreements, options,
\ncommitments or rights with, of or to any person to acquire any assets,
\nproperties or rights of the Company or any Subsidiary or any interest in such
\nassets, properties or rights.<\/p>\n
     4.25. Anti-Competitive Arrangements. <\/b>To the knowledge of the Company,
\nneither the Company nor any Subsidiary is, nor during the last six years have
\nthey been, party to any agreement, arrangement, concerted practice of conduct
\nthat (a) infringes any local law, legislation or regulation (civil or criminal)
\nrelating to competition, restrictive trade practices, antitrust, monopolies,
\nmerger control, fair trading, restraint of trade, pricing, anti-dumping or free
\nmovement of goods and services in any jurisdiction in which the Company or any
\nSubsidiary conducts business or has assets or sales; or (b) is void or
\nunenforceable (whether in whole or in part) or may render the Company or any
\nSubsidiary liable to proceedings under any such law, legislation or regulation
\nas is referred to in clause (a) above.<\/p>\n
29<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     4.26. Major Suppliers, Customers and Distributors.<\/b><\/p>\n
           (a) Neither the Company nor any Subsidiary has received any written
\nnotice, or to the knowledge of the Company, oral notice, that any significant
\nsupplier, including without limitation any sole supplier, will not sell raw
\nmaterials, supplies, merchandise and other goods to the Company or any
\nSubsidiary at any time after the Closing Date on terms and conditions
\nsubstantially similar to those used in its current sales to the Company or such
\nSubsidiary, subject only to general and customary price increases, unless
\ncomparable supplies, merchandise or other goods are readily available from
\nother sources on comparable terms and conditions.<\/p>\n
           (b) Neither the Company nor any Subsidiary has received any written
\nnotice, or to the knowledge of the Company, oral notice, that any significant
\ncustomer, including without limitation the United States Navy, the United
\nStates Department of Defense, or any other Governmental Entity, intends to
\nterminate or significantly reduce or curtail its business relations with the
\nCompany or such Subsidiary at any time after the Closing Date.<\/p>\n
     4.27. Ethical Practices.<\/b><\/p>\n
           (a) None of the Company, any Subsidiary or any of their respective
\ndirectors, officers, employees or representatives has, directly or indirectly,
\n(i) used funds or other assets of the Company or any Subsidiary, or made any
\npromise or undertaking in such regard, for any illegal payments, contributions,
\ngifts, entertainment or other unlawful expenses to or for the benefit of any
\nPerson or the establishment or maintenance of a secret or unrecorded fund; (ii)
\nmade any unlawful payment to foreign or domestic government officials or
\nemployees or to foreign or domestic political parties or campaigns or violated
\nany provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
\n(iii) made any other unlawful payment. There have been no false or fictitious
\nentries made in the books or records of the Company or any Subsidiary relating
\nto any such illegal payment or secret or unrecorded fund.<\/p>\n
           (b) The Company has not entered into any transaction with any of its
\nAffiliates that has provided to the Company revenues, earnings or assets that
\nwould not have been available to it in an arm\u0092s length transaction with an
\nunaffiliated Person, or that is pursuant to terms that are less favorable to
\nthe Company than would have been available in an arm\u0092s length transaction other
\nthan transactions with CMG or its Affiliates that are expressly set forth in
\nthis Agreement or the Schedules, which are scheduled to terminate at the
\nClosing.<\/p>\n
     4.28. Finders\u0092 Fees. <\/b>Other than those advisers whose fees are included in
\nthe definition of Seller Expenses, there is no investment banker, broker,
\nfinder or other intermediary which has been retained by or is authorized to act
\non behalf of the Company or any Subsidiary who might be entitled to any fee or
\ncommission from Parent, Acquisition, the Surviving Corporation or any of their
\nrespective Affiliates upon consummation of the transactions contemplated by
\nthis Agreement.<\/p>\n
     4.29. Nuclear Services. <\/b>Neither the Company nor any Subsidiary provides
\nnor has any of them in the past provided any Nuclear Services. Neither the
\nCompany nor any Subsidiary is party to any Contract or Bid pursuant to which
\nthe Company or such Subsidiary would be obligated to provide Nuclear Services.<\/p>\n
30<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     4.30. Environmental Compliance<\/b>.<\/p>\n
           (a) Except as disclosed in Schedule 4.30(a), the Company, all Subsidiaries
\nand any of their respective predecessors in interest have obtained all material
\nPermits of all Governmental Entities that are required under any Environmental
\nLaw. Schedule 4.30(a) sets forth all material Permits issued under any
\nEnvironmental Law relating to the Company, any Subsidiary or any of their
\nrespective predecessors in interest.<\/p>\n
           (b) Except as set forth in Schedule 4.30(b), (i) the Company, all
\nSubsidiaries and any of their respective predecessors in interest are in
\nmaterial compliance with all terms and conditions of all Permits required under
\nany Environmental Law for the operation of the business of or that relate to
\nthe Company, any Subsidiary or any of their respective predecessors in
\ninterest; and (ii) the Company, all Subsidiaries and any of their respective
\npredecessors in interest are also in material compliance with and have not
\nviolated any other limitations, restrictions, conditions, standards,
\nrequirements, schedules and timetables required or imposed under any
\nEnvironmental Law.<\/p>\n
           (c) Except as set forth in Schedule 4.30(c), there are no Management or
\nReleases of any Hazardous Substance at, on, about or under any property owned
\nor operated by the Company or any Subsidiary or, to the knowledge of the
\nCompany, any past or present conditions or circumstances associated with the
\noperation of the Company or the Subsidiaries, that violate or that would
\nreasonably be expected to violate any Environmental Law after the Closing or
\nthat would reasonably be expected to give rise to any material Environmental
\nLiability or any claim, action, demand, suit or notice by any Governmental
\nEntity under any Environmental Law.<\/p>\n
           (d) No lien has been placed or threatened to be placed upon any Real
\nProperty under any Environmental Law.<\/p>\n
           (e) There has been no environmental investigation, study or audit
\n(including without limitation, Phase I and Phase II investigation reports)
\nrelating to any facilities or real property ever owned, operated or leased by
\nthe Company, any Subsidiary or any of their respective predecessors in
\ninterest, any facility to which the Company or any Subsidiary have sent any
\nHazardous Substance, or any material Environmental Liability of the Company,
\nany Subsidiary or any of their respective predecessors in interest, in the
\npossession of the Company, any Subsidiary or, to the knowledge of the Company,
\nany agent or contractor of the Company, which has not been (i) provided to or
\nmade available for review by the Parent at least 10 days prior to the date
\nhereof or (ii) listed on Schedule 4.30(e) hereto.<\/p>\n
           (f) Except as set forth on Schedule 4.30(f), no Environmental Law imposes
\nany obligation upon the Company or any Subsidiary arising out of or as a
\ncondition to any transaction contemplated by this Agreement, including, but not
\nlimited to, any requirement to modify or transfer any Permit, any requirement
\nto file any notice or other submission with a government, the placement of any
\nnotice, acknowledgment or covenant in any land records, or the modification of
\nor provision of notice under any agreement, consent order or consent decree.<\/p>\n
           (g) Except as set forth in Schedule 4.30(g), there are no underground
\nstorage tanks, active or abandoned, at any Real Property now or previously
\nowned, operated or leased by\n<\/p>\n
31<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
the Company, any Subsidiary or any of their respective predecessors in
\ninterest which the Company or any Subsidiary is required to investigate,
\nretrofit, abate, remediate or remove under any Environmental Law.<\/p>\n
           (h) To the knowledge of the Company, except as set forth in Schedule
\n4.30(h), which identifies the location at which such materials are located,
\nthere are no material amounts of any damaged asbestos containing materials or
\npolychlorinated biphenyls present on the Real Property, which the Company or
\nany Subsidiary is required to investigate, abate, Remediate or remove under any
\nEnvironmental Law.<\/p>\n
           (i) Except as set forth on Schedule 4.30(i), neither the Company nor any
\nSubsidiary has received any written notice or, to the knowledge of the Company,
\nany oral notice alleging any Environmental Liability.<\/p>\n
     4.31. Preservation of Indemnification Claims. <\/b>To the extent such rights
\nexist or are available to the Company or any Subsidiary, the Company has taken
\nall necessary and appropriate actions to preserve its and the Subsidiaries\u0092
\nright to indemnification or other relief under the Stock Purchase Agreement,
\ndated as of October 3, 1997, by and among SWM Holdings, Inc., and Certain
\nSelling Stockholders of Southwest Marine, Inc. and San Francisco Drydock, Inc.,
\nthe Claims Escrow Agreement, dated as of November 25, 1997, or any of the other
\nagreements entered into in connection therewith (collectively, as amended from
\ntime to time, the \u0093SWM Acquisition Agreements\u0094<\/b>), the Acquisition Agreement,
\ndated as of September 4, 1998, by and among SWM Holdings, Inc., Norshipco
\nAcquisition Corporation and Norshipco, or any of the other agreements entered
\ninto in connection therewith (collectively, as amended from time to time, the
\n\u0093Norshipco Acquisition Agreements\u0094<\/b>) or otherwise, including without limitation,
\nthe right to indemnification for Damages arising out of, related to, or
\nincurred by the Company or any Subsidiary in connection with any Environmental
\nLiability related to sedimentary contamination in San Diego Bay (the \u0093San Diego
\nIndemnification Claim\u0094<\/b>). As of the date of this Agreement, an amount in excess
\nof U.S. $8.8 million is being held in an escrow account (No. 13607600) at Wells
\nFargo Bank Minnesota, NA, for the satisfaction of indemnification claims under,
\nand in accordance with, the SWM Acquisition Agreements. The execution and
\ndelivery of this Agreement, and the consummation of the transactions
\ncontemplated hereby, will not adversely affect the Company\u0092s (or, after the
\nClosing, the Surviving Corporation\u0092s) entitlement to receive indemnification
\nunder the SWM Acquisition Agreements, the Norshipco Acquisition Agreements or
\notherwise.<\/p>\n
     4.32. Books and Records; Other Information.<\/b><\/p>\n
           (a) The minute books and other similar records of the Company contain true
\nand complete records of all actions taken at any meetings of the Company\u0092s
\nstockholders, the Company\u0092s Board of Directors or any committee thereof and all
\nwritten consents executed in lieu of the holding of any such meetings. A
\ncomplete copy of such minute books and other similar records for the previous
\nfive years has been provided to Parent. The Company\u0092s share register and share
\ntransfer records are true, accurate and complete, and complete and accurate
\ncopies thereof have been delivered by the Company to Parent.<\/p>\n
32<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (b) The financial projections relating to the Company and the Subsidiaries
\ndelivered to Parent are based on reasonable assumptions and management believes
\nthat, as of the date they were prepared, constitute a reasonable estimate of
\nthe information purported to be shown therein; provided<\/i>, however<\/i>, that such
\nprojections do not constitute a guaranty of future performance.<\/p>\n
ARTICLE V
\nREPRESENTATIONS AND WARRANTIES OF PARENT<\/b><\/p>\n
     Parent and Acquisition hereby jointly and severally represent and warrant
\nto the Company as follows:<\/p>\n
     5.01. Organization and Existence. <\/b>Each of Parent and Acquisition is a
\ncorporation duly incorporated, validly existing and in good standing under the
\nlaws of the State of Delaware and has all corporate powers and all material
\ngovernmental licenses, authorizations, consents and approvals required to carry
\non its business as now conducted. Parent has heretofore made available to the
\nCompany accurate and complete copies of its and Acquisition\u0092s certificate of
\nincorporation and by-laws, as currently in full force and effect.<\/p>\n
     5.02. Corporate Authorization.<\/b><\/p>\n
           (a) The execution, delivery and performance by Parent and Acquisition of
\nthis Agreement and the consummation by Parent and Acquisition of the
\ntransactions contemplated hereby are within the corporate powers of each of
\nParent and Acquisition and have been duly authorized by all necessary corporate
\naction on the part of Parent and Acquisition. This Agreement has been duly
\nexecuted and delivered by each of Parent and Acquisition and constitutes a
\nvalid and binding agreement of the Company, enforceable in accordance with its
\nterms.<\/p>\n
           (b) Without limiting the generality of the foregoing, the board of
\ndirectors for each of Parent and Acquisition: (i) approved this Agreement, the
\nMerger and the other transactions contemplated hereby, and (ii) has not
\nwithdrawn or modified such approval or resolution to recommend.<\/p>\n
     5.03. Governmental Authorization. <\/b>Except for the applicable requirements
\nof the HSR Act, the execution, delivery and performance by Parent of this
\nAgreement require no action by or in respect of, or filing with, any
\nGovernmental Entity.<\/p>\n
     5.04. No Conflicts. <\/b>The execution, delivery and performance by Parent and
\nAcquisition of this Agreement, and the consummation of the transactions
\ncontemplated herein, do not and will not (i) contravene or conflict with the
\ncertificate of incorporation or by-laws of Parent or Acquisition, or (ii)
\ncontravene or conflict with any provision of any law, regulation, judgment,
\ninjunction, order or decree binding upon Parent or Acquisition in such a manner
\nas to materially impair Parent\u0092s or Acquisition\u0092s ability to consummate the
\ntransactions contemplated by this Agreement. Neither Parent nor Acquisition is
\nparty to, or bound by, any Contract, Permit or other instrument which would
\nrequire a consent as a result of the execution, delivery and performance of
\nthis Agreement or the consummation of the transactions contemplated hereby.<\/p>\n
33<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     5.05. Parent Financing<\/b>. Parent has provided the Company with a copy of
\nthe commitment letter from Parent\u0092s lenders in connection with the financing of
\nParent\u0092s obligations under this Agreement. Upon satisfaction of the closing
\nconditions set forth in Sections 10.01 and 10.02, Parent shall have sufficient
\nfunds to satisfy all of its obligations under this Agreement.<\/p>\n
     5.06. Fairness Opinion<\/b>. Parent has received an opinion letter from its
\nfinancial advisor stating that the cash consideration to be paid by Parent and
\nAcquisition is fair to Parent from a financial point of view, subject to
\ncustomary qualifications and limitations set forth therein.<\/p>\n
     5.07. Finders\u0092 Fees. <\/b>There is no investment banker, broker, finder or
\nother intermediary which has been retained by or is authorized to act on behalf
\nof Parent or Acquisition who might be entitled to any fee or commission from
\nthe Company, any of its Affiliates or any Stockholder upon consummation of the
\ntransactions contemplated by this Agreement.<\/p>\n
     5.08. Litigation. <\/b>There is no action, suit, investigation or proceeding
\npending against or, to the knowledge of Parent, threatened against or affecting
\nParent or Acquisition before any Governmental Entity which in any manner
\nchallenges or seeks to prevent, enjoin, alter or materially delay the
\ntransactions contemplated by this Agreement.<\/p>\n
ARTICLE VI
\nCOVENANTS OF THE COMPANY<\/b><\/p>\n
     The Company agrees that:<\/p>\n
     6.01. Conduct of the Business. <\/b>From the date of this Agreement until the
\nClosing Date, except as otherwise expressly contemplated by this Article VI,
\nthe Company shall, and shall cause each of the Subsidiaries, to conduct its
\nbusiness in the ordinary course consistent with past practice, use its best
\nefforts to preserve intact the business organization and relationships with
\nthird parties and keep available the services of its present employees.
\nWithout limiting the generality of the foregoing, except as otherwise expressly
\ncontemplated by this Article VI, or except with the prior written consent from
\nParent, which consent shall not be unreasonably withheld, from the date of this
\nAgreement until the Closing Date, the Company will not, and will cause each of
\nthe Subsidiaries not to:<\/p>\n
           (a) acquire a material amount of assets from any other Person other than
\nfor proposed capital expenditures contained in the Company\u0092s projections and
\nbudget under U.S. $500,000;<\/p>\n
           (b) except as set forth on Schedule 6.01(b), sell, lease, license or
\notherwise dispose of any assets reflected on the Reference Balance Sheet in
\nexcess of $100,000;<\/p>\n
           (c) sell or factor any accounts receivable, with or without recourse;<\/p>\n
           (d) fail to maintain in good repair, subject to ordinary wear and tear,
\nthe premises, fixtures, machinery, furniture and equipment of the Company or
\nsuch Subsidiary in a manner consistent with past practices and in conformance
\nwith industry standards;<\/p>\n
34<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (e) submit any Bid (other than fixed-price Bids valued at less than $5
\nmillion) which, if accepted or awarded, would result in a Loss Contract
\n(measured as of the date as of which the Contract or Bid is made or entered
\ninto), or amend or modify any Contract such that it would result, or could be
\nreasonably expected to result, in a Loss Contract (measured as of the date as
\nof which the Contract or Bid is made or entered into);<\/p>\n
           (f) (i) take or permit any action that would result in the failure of any
\nrepresentation or warranty of the Company under this Agreement to be true and
\ncorrect in any material respect at, or as of any time prior to, the Closing
\nDate or (ii) omit or commit to omit to take any action necessary to prevent any
\nsuch representation or warranty from failing to be true and correct in any
\nmaterial respect at any such time;<\/p>\n
           (g) fail to duly and timely file or cause to be filed all reports and
\nreturns required to be filed with any Governmental Entity and promptly pay or
\ncause to be paid when due all Taxes (unless an extension is filed in accordance
\nwith Applicable Law), assessments and governmental charges, including interest
\nand penalties levied or assessed, unless diligently contested in good faith by
\nappropriate proceedings; provided<\/i>, however<\/i>, that notwithstanding the filing of
\nany such extension, such Tax shall continue to be attributed to the Pre-Closing
\nTax Period;<\/p>\n
           (h) make any material Tax election or settle or compromise any material
\nincome Tax liability or permit any material insurance policy naming it as a
\nbeneficiary or loss-payable to expire or to be canceled or terminated, unless a
\ncomparable insurance policy reasonably acceptable to Parent is obtained and in
\neffect;<\/p>\n
           (i) increase its authorized share capital or authorized shares, as
\napplicable, issue and deliver any additional shares of its capital stock
\n(excluding the issuance of Common Stock upon the exercise of Options) or
\nsecurities convertible into or exchangeable for shares of its capital stock, or
\nissue or grant any right, option (including any Option under the Company Option
\nPlan) or other commitment for the issuance of shares of its capital stock or of
\nsuch securities, or split, combine or reclassify any shares of its capital
\nstock;<\/p>\n
           (j) exercise its discretion or otherwise voluntarily accelerate the
\nvesting of, or waive any condition of exercise of, any Option as a result of
\nthe Merger, any other change of control of the Company or otherwise;<\/p>\n
           (k) amend or modify its charter documents;<\/p>\n
           (l) declare, set aside or pay any dividend or other distribution (whether
\nin cash, stock or property or any combination thereof) in respect of its Common
\nStock, make any other actual, constructive or deemed distribution in respect of
\nits Common Stock or otherwise make any payments to stockholders in their
\ncapacity as such, or redeem or otherwise acquire any of its securities, any
\nOption or any other agreement;<\/p>\n
           (m) make any cash payment or distribution of any assets or property of the
\nCompany or any Subsidiary to the Carlyle Management Group (\u0093CMG<\/b>\u0094), any
\nAffiliate thereof, any Affiliate of the Company or a Subsidiary or any other
\nrelated parties other than (i) the payment of salaries in the ordinary course
\nof business consistent with past practice; and<\/p>\n
35<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
(ii)  payments of amounts up to U.S. $250,000 per month due and owing to
\nCMG for management and financial advisory services and travel costs;<\/p>\n
           (n) create any subsidiary, acquire any capital stock or other equity
\nsecurities of any corporation or acquire any equity or ownership interest in
\nany business or entity;<\/p>\n
           (o) adopt a plan of complete or partial liquidation, dissolution, merger,
\nconsolidation, restructuring, recapitalization or other reorganization of the
\nCompany (other than the Merger);<\/p>\n
           (p) except as may be required by Applicable Law or the Plans, enter into,
\nadopt or amend or terminate any Employee Benefit Plan or Employee Retirement
\nPlan, or increase in any manner the compensation of any director, officer or
\nemployee or pay any benefit not required by an Employee Benefit Plan or
\nEmployee Agreement as in effect as of the date hereof (including the granting
\nof stock appreciation rights or performance units);<\/p>\n
           (q) (i) create, incur or assume any Indebtedness secured by any of the
\nReal or Personal Property, (ii) grant, create, incur or suffer to exist any
\nLiens on the Real or Personal Property that did not exist on the date hereof,
\n(iii) incur any liability or obligation (absolute, accrued or contingent)
\nexcept in the ordinary course of business consistent with past practice, (iv)
\nwrite-off any guaranteed checks, notes or accounts receivable, (v) revalue any
\nasset or investment on the books or records of the Company or any Subsidiary,
\nincluding without limitation the write-down of the value of any such asset or
\ninvestment, except for depreciation and amortization in the ordinary course of
\nbusiness consistent with past practice, (vi) cancel any debt or waive any
\nclaims or rights, (vii) make any commitment for any capital expenditure to be
\nmade on or after the Closing Date in excess of U.S. $500,000 in the case of any
\nsingle expenditure or U.S. $1,000,000 in the case of all capital expenditures,
\nor (viii) incur any liability or obligation for costs and fees related to or in
\nconnection with the initial public offering of the Company\u0092s securities, except
\nas disclosed in Schedule 6.01(q); (ix) incur any liability or obligation for
\ncosts and fees related to or in connection with the Merger in excess of the
\nSeller Expenses;<\/p>\n
           (r) make any change in any method of accounting or accounting practice by
\nthe Company except for any such change after the date hereof required by reason
\nof a concurrent change in generally accepted accounting principles;<\/p>\n
           (s) enter into any employment, deferred compensation or other similar
\nagreement (or any amendment to any such existing agreement) with any employee
\nof the Company or any Subsidiary;<\/p>\n
           (t) make or approve any (i) grant of any severance or termination pay to
\nany employee of the Company or any Subsidiary, (ii) increase in benefits
\npayable under an existing severance or termination pay policy or employment
\nagreement or (iii) increase in, or early payment of, compensation, bonus or
\nother benefits payable to any employee of the Company or any Subsidiary;<\/p>\n
           (u) settle or compromise any pending or threatened suit, action or claim
\nthat (i) relates to the transactions contemplated hereby or (ii) the settlement
\nor compromise of which<\/p>\n
36<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
would involve more than U.S. $250,000 or that would otherwise be material
\nto the Company;provided<\/i>, however<\/i>, that the Company may settle any pending or
\nthreatened suit, action or claim without regard to the threshold amounts set
\nforth in this Section 6.01(u) to the extent that (A) such settlement relates to
\nthe resolution of workers\u0092 compensation claims in the ordinary course of
\nbusiness consistent with past practices; or (B) any sums due from the Company
\nin connection with such settlement will be paid in full by an insurance
\nprovider of the Company and such settlement will not otherwise have a Material
\nAdverse Effect;<\/p>\n
           (v) take any action, including without limitation the delivery of any
\ncorrespondence with respect to the teaming agreement between Norshipco and
\nMetro Machine Corporation (the \u0093Metro Teaming Agreement\u0094<\/b>), or any amendment,
\nmodification, revision or termination to the terms and conditions of such
\nteaming agreement, excluding in all cases performance under such teaming
\nagreement in accordance with its terms;<\/p>\n
           (w) to the extent such rights exist or are available to the Company or any
\nSubsidiary, take any action that would adversely affect in any material fashion
\nthe Company\u0092s or any Subsidiary\u0092s right to indemnification for the San Diego
\nIndemnification Claim or any other claim for indemnification or other relief in
\nfavor of the Company or any Subsidiary that may exist under the SWM Acquisition
\nAgreements, the Norshipco Acquisition Agreements or any other Contract to which
\nthe Company is a party; or<\/p>\n
           (x) enter into any contract, agreement or commitment with respect to any
\nof the foregoing.<\/p>\n
     6.02. Access to Information. <\/b>From the date hereof until the Closing Date,
\nthe Company will (a) give Parent, its counsel, financial advisors, auditors and
\nother authorized representatives full access to the offices, properties, books
\nand records of the Company and the Subsidiaries, (b) furnish to Parent, its
\ncounsel, financial advisors, auditors and other authorized representatives such
\nfinancial and operating data (including without limitation data regarding
\nenvironmental matters) and other information relating to the business of the
\nCompany and the Subsidiaries as such Persons may reasonably request, including
\nwithout limitation monthly financial statements as and when they are prepared
\nin the ordinary course of business, and (c) instruct the employees, counsel and
\nfinancial advisors of the Company and the Subsidiaries to cooperate with Parent
\nin its investigation of the Company and the Subsidiaries; provided<\/i> that no
\ninvestigation pursuant to this Section shall affect any representation or
\nwarranty given by the Company hereunder; and provided<\/i>, further<\/i>, that any
\ninvestigation pursuant to this section shall be conducted in such manner as not
\nto interfere unreasonably with the conduct of the business of the Company and
\nthe Subsidiaries.<\/p>\n
     6.03. Notices of Certain Events. <\/b>From the date hereof until the Closing
\nDate, the Company shall promptly notify Parent of:<\/p>\n
           (a) any changes or events which, individually or in the aggregate, have
\nhad or could reasonably be expected to have a Material Adverse Effect;\n<\/p>\n
37<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (b) any notice or other communication from any Person alleging that the
\nconsent of such Person is or may be required in connection with the
\ntransactions contemplated by this Agreement;<\/p>\n
           (c) any notice or other communication from any Governmental Entity in
\nconnection with the transactions contemplated by this Agreement;<\/p>\n
           (d) the acceptance or rejection of any government Bid, the entering into
\nof any Government Contract, or any notice or other communication from the
\nUnited States Navy, the United States Department of Defense or any other
\nGovernmental Entity regarding plans to discontinue or curtail use of the
\nCompany\u0092s facilities or any other anticipated material change with respect to
\nits expected use of the Company\u0092s facilities or services, or requirements to be
\nmet in connection with rendering services on behalf of such Governmental
\nEntity;<\/p>\n
           (e) any actions, suits, claims, investigations or proceedings commenced
\nor, to the best of the Company\u0092s knowledge, threatened against, relating to or
\ninvolving or otherwise affecting the business of the Company and the
\nSubsidiaries that, if pending on the date of this Agreement, would have been
\nrequired to have been disclosed pursuant to Sections 4.14, 4.16 or 4.21 or that
\nrelates to the consummation of the transactions contemplated by this Agreement;<\/p>\n
           (f) any damage, destruction or other casualty loss (whether or not covered
\nby insurance) affecting the Company or any of the Subsidiaries in any material
\nrespect; and<\/p>\n
           (g) the receipt of any correspondence from Metro Machine Corporation with
\nrespect to the Metro Teaming Agreement.<\/p>\n
     6.04. Insurance. <\/b>From and after the date of this Agreement through the
\nClosing Date, the Company shall not, and shall cause the Subsidiaries not to,
\ntake or fail to take any action if such action or inaction, as the case may be,
\nwould adversely affect the applicability of any insurance in effect on the date
\nof this Agreement that covers the business or operations of the Company, any
\nSubsidiary or any employee thereof with respect to events occurring prior to
\nthe Closing.<\/p>\n
     6.05. Supplements to Disclosure Schedule<\/b>. Concurrent with the execution
\nand delivery of this Agreement, the Company has delivered the Company
\nDisclosure Schedule, which includes all of the information required by the
\nrelevant provisions of this Agreement. From time to time up to the Closing
\nDate (or the earlier termination of this Agreement in accordance with its
\nterms), the Company shall supplement or amend the Schedules to this Agreement
\nwith respect to any matter first existing or occurring after the date hereof
\nwhich, if existing or occurring at or prior to the date hereof, would have been
\nrequired to be set forth in any of the Schedules to this Agreement, or that is
\nnecessary to correct any information in such Schedules that has been rendered
\ninaccurate thereby (each such supplement or amendment, an \u0093Addition\u0094<\/b>). The
\nCompany shall deliver such Additions to Parent as soon as practicable after
\nsuch information is available to the Company. If Parent is entitled to
\nterminate this Agreement pursuant to Section 12.01(f) but elects not to do so,
\nany such disclosure shall be deemed to constitute an exception to the
\nrepresentations and warranties solely for purposes of satisfying the closing
\nconditions set forth in Article X; provided<\/i>, however<\/i>, that notwithstanding the
\nelection by\n<\/p>\n
38<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
Parent to continue with the Closing despite the Addition, Parent shall
\ncontinue to be entitled to seek indemnification for misrepresentation or breach
\nof warranty, covenant or agreement by the Company under Article XI hereof, and
\nfor purposes of Article XI, the Schedules delivered by the Company shall be
\ndeemed to include only the information contained therein on the date of this
\nAgreement.<\/p>\n
     6.06. No Solicitation. <\/b>From the date hereof until the Closing Date, the
\nCompany will not, and the Company will cause the Subsidiaries not to, directly
\nor indirectly, through any officer, director or agent of any of them or
\notherwise, initiate, solicit or encourage, or enter into negotiations of any
\ntype, directly or indirectly, or enter into a confidentiality agreement, letter
\nof intent, or purchase agreement or other similar agreement with any Person
\nother than Parent and Acquisition, with respect to the acquisition of some or
\nall of the Shares or Options, or a merger, consolidation, business combination,
\nsale of all or any substantial portion of the assets of the Company or any
\nSubsidiary, or any similar extraordinary transaction with respect to the
\nCompany or any Subsidiary. The Company agrees to notify Parent orally (within
\nthree business days) and in writing (as promptly as practicable) of all
\nrelevant terms of any proposals by a third party to do any of the foregoing
\nwhich the Company, any Subsidiary or any of their respective officers,
\ndirectors or agents may receive relating to any of such matters and, if such
\nproposal is in writing, the Company will deliver to the Parent a copy of such
\ninquiry or proposal.<\/p>\n
     6.07. Customer Visits. <\/b>Between the date hereof and the Closing Date, and
\nsubject to such reasonable limitations as the Company shall deem necessary, the
\nCompany shall permit, and shall cause the Subsidiaries to permit, Parent to
\ndiscuss and meet, and the Company shall cooperate in such discussions and
\nmeetings, with any significant customer, agent, or business partner of the
\nCompany or any Subsidiary that Parent reasonably requests. Upon the request of
\neither Parent or the Company, a senior executive of the Company, reasonably
\nsatisfactory to Parent, shall accompany Parent\u0092s representative to such meeting
\nand shall participate with Parent\u0092s representative in any such discussions.
\nFurthermore, the Company shall cooperate with Parent in the preparation of a
\npresentation to such customers with respect to the transactions contemplated by
\nthis Agreement.<\/p>\n
     6.08. Supplemental Information<\/b>. Prior to the Effective Time, the Company
\nshall deliver to Parent:<\/p>\n
           (a) to the extent not previously provided, a list that is true and
\ncomplete in all material respects of (i) the names, titles, functions, annual
\nsalaries, target bonus and other compensation of each employee of the Company
\nor any Subsidiary who is not represented by a collective bargaining agreement;
\n(ii) the wage rates for each employee of the Company and the Subsidiaries (by
\nclassification) who is represented by a collective bargaining agreement; and
\n(iii) the names, functions and contract labor rates (by classification) for
\neach current contract employee of the Company or any Subsidiary, which list
\nshall designate, where applicable, the provider of each such contract employee.<\/p>\n
           (b) a list that is true and complete in all material respects of each
\nPermit, together with the name of the government agency or entity issuing such
\nPermit.<\/p>\n
39<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     6.09. Access to Company Employees<\/b>. The Company agrees to provide Parent
\nwith reasonable access to its employees during normal working hours following
\nthe date of this Agreement through the Closing Date to, among other things,
\nprovide information to such employees about Parent. All communications by
\nParent with Company employees shall be conducted in a manner that does not
\ndisrupt or interfere with the Company\u0092s efficient and orderly operation of its
\nbusiness.<\/p>\n
     6.10. Capital Air<\/b>. The Company hereby agrees that, prior to the Effective
\nTime, (i) the Company shall transfer all of its right, title and interest in
\nand to the capital stock of Capital Air Services, Inc. (\u0093Capital Air\u0094<\/b>) to Key
\nPlastics, L.L.C., an Affiliate of the Representative, or such other third party
\nas is reasonably acceptable to Parent; (ii) any and all Contracts between the
\nCompany and any Subsidiary, on the one hand, and Capital Air, on the other
\nhand, shall be terminated in connection with such transfer; and (iii) the
\nCompany shall have no liability with respect to Capital Air and, simultaneous
\nwith such transfer, the transferee of the capital stock of Capital Air shall
\nassume any and all obligations, liabilities, rights and duties of the Company
\nwith respect to Capital Air for no additional consideration.<\/p>\n
     6.11. Termination of Certain Agreements<\/b>. Effective at or prior to the
\nEffective Time, the Company shall terminate or cause to be terminated (i) any
\nContracts between CMG and its Affiliates (other than the Company and the
\nSubsidiaries), on the one hand, and the Company or any Subsidiary, on the other
\nhand, including without limitation, any Contract between the Company and B.
\nEdward Ewing (excluding Options held by Mr. Ewing) providing for the payment of
\nany amounts as a result of the effectiveness of the Merger or any other change
\nof control of the Company; and (ii) any agreements among some or all of the
\nStockholders or Optionholders, solely in their capacities as such, containing
\nongoing rights, duties or obligations with respect to the Company or any
\nSubsidiary.<\/p>\n
     6.12. Significant Employees<\/b>. The Company shall use commercially
\nreasonable efforts to cause each of the Significant Employees to remain as an
\nemployee of the Company until the Effective Time.<\/p>\n
     6.13. Cancellation of Options<\/b>. The board of directors of the Company, or
\nthe applicable committee thereof, shall take all action necessary, to Parent\u0092s
\nreasonable satisfaction, to provide that all Options that have not been
\nexercised prior to the Effective Time shall be cancelled or terminated
\nimmediately after the Effective Time and replaced with the right to receive the
\napplicable Option Amount in accordance with the terms of this Agreement and the
\nCompany Option Plan, all as further described in Section 3.04 of this
\nAgreement.<\/p>\n
     6.14. Meeting of Stockholders<\/b>. The Company shall take all actions
\nnecessary in accordance with the DGCL and its certificate of incorporation and
\nby-laws to duly call, give notice of, convene and hold a meeting of its
\nstockholders as promptly as practicable to consider and vote upon the adoption
\nand approval of this Agreement and the transactions contemplated hereby (the
\n\u0093Meeting\u0094<\/b>) or solicit its stockholders\u0092 written consent as promptly as
\npracticable to consider and vote upon or consent to the adoption and approval
\nof this Agreement and the transactions contemplated hereby. The stockholder
\nvote required for the adoption and approval of the transactions contemplated by
\nthis Agreement shall be the vote required by the DGCL and the Company\u0092s
\ncertificate of incorporation and by-laws. Any proxy or information statement\n<\/p>\n
40<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
relating to the meeting of the Company\u0092s stockholders to be held in
\nconnection with the Merger, or action by written consent in lieu of such
\nmeeting, shall include the recommendation of the board of directors of the
\nCompany in favor of the Merger and this Agreement.<\/p>\n
ARTICLE VII
\nCOVENANTS OF THE PARTIES<\/b><\/p>\n
     The parties hereto agree that:<\/p>\n
     7.01. Further Assurances. <\/b>(a) Subject to the terms and conditions of this
\nAgreement, Parent, Acquisition and the Company will each use its reasonable
\nefforts to (i) take, or cause to be taken, all actions and to do, or cause to
\nbe done, all things necessary or desirable under Applicable Laws and
\nregulations to consummate the transactions contemplated by this Agreement as
\npromptly as practicable, including, without limitation, cooperating in the
\npreparation and filing of the Notification and Report forms under the HSR Act,
\nand any filings under similar merger notification laws or regulations of
\ndomestic or foreign Governmental Entities, (ii) obtain expeditiously from any
\nGovernmental Entities any consents, licenses, permits, waivers, approvals,
\nauthorizations or orders required to be obtained or made by Parent,
\nAcquisition, the Company or any of their Affiliates in connection with the
\nauthorization, execution and delivery of this Agreement and the consummation of
\nthe transactions contemplated by this Agreement, including, without limitation,
\ncooperating in the preparation and filing of any forms, notifications, filings
\nor other documents with respect to the Company\u0092s Permits, and (iii) as promptly
\nas practicable, make all necessary filings and thereafter make any other
\nrequired submissions, with respect to this Agreement and the transactions
\ncontemplated hereby required under any other Applicable Law; provided <\/i>that
\nParent, the Company, and the Representative shall cooperate with each other in
\nconnection with the making of all such filings, including providing copies of
\nall such documents (excluding documents prepared in connection with any filing
\npursuant to the HSR Act) to the non-filing parties and their advisors prior to
\nfiling and, if requested, accepting all reasonable additions, deletions or
\nchanges suggested by the other parties in connection therewith. From the date
\nof this Agreement until the Closing Date, each party shall promptly notify the
\nother parties in writing of any pending or, to the knowledge of the first
\nparty, threatened action, proceeding or investigation by any Governmental
\nEntity or any other Person (i) challenging or seeking material damages in
\nconnection with consummation of the transactions contemplated by this Agreement
\nor (ii) seeking to restrain or prohibit the consummation of such transactions
\nor otherwise limit the right of Parent to own or operate all or any portion of
\nthe business of the Company and the Subsidiaries, which in either case would
\nhave a Material Adverse Effect prior to or after the Closing.<\/p>\n
           (b) Parent, Acquisition and the Company shall furnish to one another all
\ninformation required for any application or other filing to be made pursuant to
\nthe rules and regulations of any Applicable Law in connection with consummation
\nof the transactions contemplated by this Agreement.<\/p>\n
           (c) (i) Parent, Acquisition and the Company shall give (or shall cause its
\nrespective Affiliates to give) any required notices to third parties and use,
\nand cause its respective Affiliates to use, their reasonable efforts
\n(including, without limitation, cooperating to the fullest extent reasonably
\npracticable with the efforts of the other parties to this Agreement) to\n<\/p>\n
41<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
obtain any third party consents (A) necessary, proper or advisable to
\nconsummate the transactions contemplated by this Agreement, including without
\nlimitation those consents listed on Schedule 4.08(a) hereto, or (B) required to
\nprevent a Material Adverse Effect from occurring prior to or after the Closing.<\/p>\n
           (ii)      In the event that Parent, Acquisition or the Company shall fail to
\nobtain any third party consent described in subsection (c)(i) above, it shall
\nuse its reasonable efforts, and shall take any such actions reasonably
\nrequested by any other party, to minimize any adverse effect upon Parent, the
\nSurviving Corporation, their respective Affiliates, and their respective
\nbusinesses resulting, or which could reasonably be expected to result after the
\nClosing, from the failure to obtain such consent.<\/p>\n
     7.02. Public Announcements; Confidentiality.<\/b><\/p>\n
           (a) Neither the Company nor the Representative shall issue any press
\nrelease or otherwise make any public statements (including any written
\nstatement circulated to employees, customers or other third parties) with
\nrespect to the transactions contemplated by this Agreement, including the
\nMerger, without the prior written consent of Parent. Parent will provide a
\ncopy of the initial press release proposed to be issued within a reasonable
\ntime prior to such issuance and consult with the Company prior to issuing such
\ninitial press release with respect to the transactions contemplated by this
\nAgreement; provided<\/i>, however<\/i>, that Parent need not obtain the Company\u0092s consent
\nin the event that the issuance of such press release and the content thereof
\nare required by Applicable Law or any listing agreement with any national
\nsecurities exchange, and the timing within which such press release must be
\nissued would not reasonably permit prior review by the Company.<\/p>\n
           (b) Each of the parties hereto will hold, and will cause its consultants
\nand advisers to hold, in confidence the terms of this Agreement and all
\ndocuments and information furnished to it by or on behalf of another party to
\nthis Agreement in connection with the transactions contemplated by this
\nAgreement (collectively, the \u0093Confidential Information\u0094<\/b>). Each of the parties
\nagrees that it will not (except as required by applicable law, regulation or
\nlegal process), without the providing party\u0092s prior written consent, disclose
\nthe Confidential Information, in any manner whatsoever, to any other Person,
\nand (ii) will use the Confidential Information solely for purposes of
\nperforming its obligations under this Agreement, and consummating the
\ntransactions contemplated hereby and will not use the Confidential Information
\nfor any other purpose.<\/p>\n
     7.03. Parent Financing<\/b>. The Company shall cooperate as reasonably
\nrequested by Parent in connection with Parent\u0092s attempt to secure the Parent
\nFinancing, including without limitation providing such documents as Parent
\nshall reasonably request. Parent shall keep the Company reasonably informed
\nconcerning any developments (other than changes in general market conditions)
\nthat would impact Parent\u0092s ability to satisfy the representation set forth in
\nSection 5.05 at the Closing in any material fashion.<\/p>\n
     7.04. Letters of Credit<\/b>. Parent shall make appropriate arrangements for
\nthe assumption or replacement of the Company\u0092s outstanding letters of credit
\nprior to the Effective Time.<\/p>\n
42<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
ARTICLE VIII
\nTAX MATTERS<\/b><\/p>\n
     8.01. Tax Matters. <\/b>The parties agree as to tax matters as set forth in
\nExhibit I.<\/p>\n
ARTICLE IX
\nEMPLOYMENT MATTERS<\/b><\/p>\n
     9.01. Employment Matters<\/b>. The parties agree as to employment and employee
\nbenefit matters as set forth in Exhibit II.<\/p>\n
ARTICLE X
\nCONDITIONS TO CLOSING<\/b><\/p>\n
     10.01. Conditions to the Obligations of Each Party. <\/b>The obligations of
\nParent, Acquisition and the Company to effect the Merger are subject to the
\nsatisfaction of the following conditions:<\/p>\n
           (a) No provision of any Applicable Law or regulation and no judgment,
\ninjunction, order or decree enacted or adopted after the date hereof shall (i)
\nprohibit the consummation of the Merger or (ii) restrain, prohibit or otherwise
\ninterfere with the Company or any Subsidiary conducting its business as it is
\nnow conducted.<\/p>\n
           (b) any waiting period applicable to the transactions contemplated by this
\nAgreement under the HSR Act shall have terminated or expired.<\/p>\n
           (c) All actions by or in respect of or filings with or notices to any
\nGovernmental Entity required to permit the consummation of the Closing shall
\nhave been given, obtained or complied with, as applicable.<\/p>\n
     10.02. Conditions to Obligations of Parent and Acquisition. <\/b>The
\nobligation of Parent and Acquisition to consummate the Closing is subject to
\nthe satisfaction (or waiver by Parent and Acquisition) of the following further
\nconditions:<\/p>\n
           (a) (i) The Company shall have performed in all material respects all of
\nits obligations hereunder required to be performed by it at or prior to the
\nClosing Date, (ii) the representations and warranties of the Company contained
\nin this Agreement and in any other agreement or certificate delivered by the
\nCompany pursuant hereto shall be true and correct at and as of the Closing
\nDate, as if made at and as of such date (except to the extent such
\nrepresentations specifically relate to an earlier date, in which case such
\nrepresentations shall be true and correct as of such earlier date); provided<\/i>,
\nhowever<\/i>, that this condition shall be satisfied with respect to any
\nrepresentation or warranty that does not contain qualifications or limitations
\nrelating to materiality or Material Adverse Effect so long as such
\nrepresentation or warranty is true and correct in all material respects at and
\nas of the Closing Date, as if made at and as of such date (except to the extent
\nsuch representations specifically relate to an earlier date, in which case such
\nrepresentations shall be true and correct as of such earlier date), and (iii)
\nParent and Acquisition shall have received a certificate signed by the Chief
\nExecutive Officer of the Company to the foregoing effect.<\/p>\n
43<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (b) No Governmental Entity shall have issued any order, and there shall
\nnot be any statute, rule or regulation, restraining or prohibiting the
\nconsummation of the Merger, and no proceeding challenging this Agreement or the
\ntransactions contemplated hereby or seeking to prohibit, alter, prevent or
\nmaterially delay the Closing shall have been instituted by any Person before
\nany Governmental Entity and be pending (excluding any such proceeding which has
\nno reasonable basis in fact or which has no reasonable likelihood of success).<\/p>\n
           (c) Each Stockholder and each Optionholder shall have delivered the
\nCompany stock certificates and Option Agreements, as the case may be; and the
\nCompany shall have delivered the stock certificates for each Subsidiary.<\/p>\n
           (d) B. Edward Ewing shall have entered into a non-competition and
\nnon-solicitation agreement in the form attached hereto as Exhibit 10.02(d)
\n(each, a \u0093Non-Competition and Non-Solicitation Agreement\u0094<\/b>).<\/p>\n
           (e) The Company, each Escrowed Stockholder, the Representative and the
\nEscrow Agent shall have executed and delivered to Parent the Escrow Agreement,
\nor otherwise become bound by its terms to Parent\u0092s reasonable satisfaction.<\/p>\n
           (f) Parent shall have received resignations, effective as of the Closing
\nDate, of the directors of the Company and the Subsidiaries, and the officers of
\nthe Company and the Subsidiaries identified on Schedule 10.02(f).<\/p>\n
           (g) The Company shall have received all Required Consents and all
\nconsents, authorizations or approvals from the Governmental Entities referred
\nto in Sections 4.05 and 4.17, in each case in form and substance reasonably
\nsatisfactory to Parent, and no such consent, authorization or approval shall
\nhave been revoked.<\/p>\n
           (h) Parent shall have received an opinion dated as of the Closing Date and
\naddressed to Parent from Vinson & Elkins L.L.P., as special counsel for the
\nCompany, as to the matters set forth in Exhibit 10.02(h).<\/p>\n
           (i) Parent shall have received all documents it may reasonably request
\nrelating to the existence and good standing of the Company and the
\nSubsidiaries, and the authority of the Company to enter into this Agreement,
\nall in form and substance reasonably satisfactory to Parent.<\/p>\n
           (j) The Company shall have delivered the certificate setting forth the
\nClosing Net Debt to Parent, and Closing Net Debt shall have been finally
\ndetermined, each in accordance with Section 3.06.<\/p>\n
           (k) The execution and delivery of this Agreement, and performance
\nhereunder, shall have been approved and adopted by the requisite vote of the
\nstockholders of the Company.<\/p>\n
           (l) The board of directors of the Company, or the appropriate committee
\nthereof, shall have taken all action necessary, to Parent\u0092s reasonable
\nsatisfaction, to provide that the Options are cancelled immediately after the
\nEffective Time replaced with the right to receive the payments described in
\nSection 3.04 of this Agreement.<\/p>\n
44<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (m) Parent shall have received all documents evidencing the consummation
\nof the sale of the Company\u0092s equity interest in Capital Air, and the assumption
\nof the liabilities, obligations, rights and duties of the Company described in
\nSection 6.10 in connection therewith.<\/p>\n
     10.03. Conditions to Obligation of the Company. <\/b>The obligation of the
\nCompany to effect the Merger is subject to the satisfaction (or waiver by the
\nCompany) of the following further conditions:<\/p>\n
           (a) (i) Parent and Acquisition shall have performed in all material
\nrespects all of their respective obligations hereunder required to be performed
\nby them at or prior to the Closing Date, (ii) the representations and
\nwarranties of Parent and Acquisition contained in this Agreement and in any
\ncertificate or other writing delivered by Parent or Acquisition pursuant hereto
\nshall be true in all material respects at and as of the Closing Date, as if
\nmade at and as of such date (except to the extent such representations
\nspecifically relate to an earlier date, in which case such representations
\nshall be true and correct as of such earlier date); and (iii) the Company shall
\nhave received a certificate signed by the Chief Executive Officer of Parent and
\nAcquisition to the foregoing effect.<\/p>\n
           (b) No proceeding challenging this Agreement or the transactions
\ncontemplated hereby or seeking to prohibit, alter, prevent or materially delay
\nthe Closing shall have been instituted by any Person before any Governmental
\nEntity and be pending (excluding any such proceeding which has no reasonable
\nbasis in fact or which has no reasonable likelihood of success).<\/p>\n
           (c) Parent, Acquisition and Escrow Agent shall have executed and delivered
\nthe Escrow Agreement to the Company.<\/p>\n
           (d) The Company shall have received all documents it may reasonably
\nrequest relating to the existence and good standing of Parent and Acquisition
\nand the authority of Parent and Acquisition for this Agreement, all in form and
\nsubstance reasonably satisfactory to the Company.<\/p>\n
           (e) The Company and the Representative shall have received an opinion
\ndated as of the Closing Date and addressed to the Company from Gibson, Dunn &
\nCrutcher LLP, as special counsel for Parent, as to the matters set forth in
\nExhibit 10.03(e).<\/p>\n
ARTICLE XI
\nSURVIVAL; INDEMNIFICATION<\/b><\/p>\n
     11.01. Survival. <\/b>The representations, warranties, covenants and
\nagreements of the parties contained in this Agreement (including the
\nindemnification obligations for Environmental Liabilities) or in any
\ncertificate or other writing delivered pursuant to this Agreement shall survive
\nthe Closing until the third anniversary of the Closing Date; provided<\/i>, however<\/i>,
\nthat the representations and warranties contained in the second sentence of
\nSection 4.03(a) shall survive indefinitely. Notwithstanding the preceding
\nsentence, any representation, warranty, covenant or agreement (including the
\nindemnification obligations for Environmental Liabilities) in respect of which
\nindemnity may be sought under this Agreement shall survive the time at which it
\nwould otherwise terminate pursuant to the preceding sentence with respect to
\nany given claim (but only\n<\/p>\n
45<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
with respect to any such claim), if notice of such claim shall have been
\ngiven to the party against whom such indemnity may be sought prior to such
\ntime. No Indemnified Party shall be entitled to indemnification with respect
\nto any claim under this Article XI unless such Indemnified Party shall have
\ngiven notice of such claim prior to the expiration of the survival period set
\nforth herein, which notice shall be given in accordance with the procedures set
\nforth in this Article XI and the Escrow Agreement.<\/p>\n
     11.02. Indemnification by the Escrowed Stockholders<\/b>.<\/p>\n
           (a) Indemnification Provisions in General. From and after the Effective
\nTime, subject to the other provisions of this Article XI, the Escrowed
\nStockholders shall jointly and severally indemnify Parent, Acquisition and
\ntheir respective Affiliates (including, following the Closing, the Surviving
\nCorporation, the Subsidiaries and their respective Affiliates) against and
\nagree to hold each of them harmless from any and all Damages incurred or
\nsuffered by Parent, Acquisition or any of their respective Affiliates
\n(including, after the Closing, the Surviving Corporation, the Subsidiaries and
\ntheir respective Affiliates) arising out of or related to:<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (i)     any breach of a representation or warranty (disregarding any
\nqualification or exception contained in such representation or warranty
\nrelating to materiality or Material Adverse Effect) made by the Company
\nin this Agreement, the Escrow Agreement, the Voting Agreement, the
\nCertificate of Merger or any of the other certificates contemplated
\nhereby; or<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ii)     any breach of any covenant or agreement made or to be performed
\nby the Company pursuant to this Agreement, other than any breach of a
\ncovenant or agreement which was cured prior to the Effective Time and for
\nwhich the Indemnified Parties suffer no Damages; or<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iii)     any Environmental Liabilities.<\/td>\n<\/tr>\n<\/table>\n
           (b) Floor. Except as set forth in this Section 11.02, the indemnification
\nobligations under Section 11.02(a) (including indemnification for those matters
\naddressed in Exhibits I and II) shall not apply unless the aggregate amount of
\nDamages arising from all claims under such section exceeds U.S. $1 million (the
\n\u0093Deductible<\/b>\u0094), and then for the amount of such Damages in excess of the
\nDeductible, subject to Section 11.02(c). The provisions of this subsection (b)
\nshall not apply to any claims for Damages incurred by Parent on or after the
\nClosing Date with respect to any Seller Expenses (other than those identified
\nby Seller pursuant to Section 3.06(a) which are satisfied at Closing), which
\nshall be indemnified in full without regard to the Deductible.<\/p>\n
           (c) Escrow Fund as Sole Remedy. Notwithstanding any provision in this
\nAgreement to the contrary, the Escrow Fund shall be the sole and exclusive
\nsource of satisfaction of, and sole and exclusive remedy for, any claim for
\nDamages arising out of this Agreement (including Exhibit I and Exhibit II
\nhereto) or the transactions contemplated hereunder by any party, except as
\notherwise set forth in this Section 11.02; provided<\/i>, however<\/i>, that this
\nsubsection (c) shall not be deemed a waiver by Parent or the Surviving
\nCorporation of any right to specific performance or injunctive relief;
\nprovided<\/i>, further<\/i>, however<\/i>, that this subsection (c)\n<\/p>\n
46<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
shall not apply to claims arising out of a breach of the representations
\nand warranties contained in the second sentence of Section 4.03(a) as it
\nrelates to the beneficial or record ownership of Common Stock by each of the
\nEscrowed Stockholders, and each Escrowed Stockholder shall have several
\nliability for any such claim.<\/p>\n
           (d) Acts of Fraud. Notwithstanding the foregoing or anything to the
\ncontrary in this Agreement, the limitations set forth in subsections (b) and
\n(c) above shall not be applicable with respect to any claims for Damages
\nagainst any party resulting from such party\u0092s own fraud or willful
\nmisrepresentation, and any such claim shall survive for the period of the
\nstatute of limitations applicable thereto.<\/p>\n
           (e) Insurance; Governmental Cost Reimbursements. Parent agrees to use
\ncommercially reasonable efforts (and to cause the Surviving Corporation to use
\ncommercially reasonable efforts) to seek appropriate insurance coverage and
\ngovernmental reimbursement for Damages related to any Environmental Liability.
\nIn the event that Parent has filed a claim for indemnification relating to any
\nEnvironmental Liability under this Article XI, Parent shall not be entitled to
\nreceive an indemnification payment in respect of such claim until the earlier
\nof the following: (i) Parent receives notice from the applicable insurance
\ncarrier or Governmental Entity as to the disposition of its request for
\ninsurance coverage or governmental reimbursement, as the case may be; and (ii)
\n90 days from the submission of the request for such insurance coverage or
\ngovernmental reimbursement. To the extent that Parent or the Surviving
\nCorporation receives any amounts from the applicable insurance company or
\nGovernmental Entity, as the case may be, with respect to such Environmental
\nLiability, any payment due from the Escrowed Stockholders pursuant to this
\nArticle XI with respect thereto shall be net of any insurance proceeds or
\ngovernmental cost reimbursements actually realized by the Indemnified Parties
\nin respect of such claim. In addition, to the extent Parent has received
\nindemnification payments from or on behalf of the Escrowed Stockholders in
\naccordance with this Article XI and later receives reimbursement for such
\nDamages from any Governmental Entity, Parent shall deliver an amount equal to
\nthe amount reimbursed to either the Escrowed Stockholders pro rata in
\naccordance with the amounts contributed to the Escrow Fund by each such
\nEscrowed Stockholder (but only if the Escrow Agreement has terminated or
\nexpired in accordance with its terms) or the Escrow Agent, in which case such
\namount shall be deemed to again be part of the Escrow Fund, and shall be
\ndistributed and applied in accordance with the terms of the Escrow Agreement.<\/p>\n
           (f) SWM Acquisition Agreements. Parent agrees to use commercially
\nreasonable efforts (and to cause the Surviving Corporation and the Subsidiaries
\nto use commercially reasonable efforts) to seek indemnification pursuant to the
\nSWM Acquisition Agreements for all claims for which indemnification is
\navailable, including without limitation the San Diego Indemnification Claim.
\nTo the extent that Parent or the Surviving Corporation receives any amounts as
\na result of its claim for indemnification under the SWM Acquisition Agreements,
\nany payment due from the Escrowed Stockholders pursuant to this Article XI with
\nrespect thereto shall be net of any payments actually realized by the
\nIndemnified Parties pursuant to the SWM Acquisition Agreements in respect of
\nsuch claim. In addition, to the extent Parent has received indemnification
\npayments from or on behalf of the Escrowed Stockholders in accordance with this
\nArticle XI and later receives indemnification for such Damages pursuant to the
\nSWM Acquisition Agreements, Parent shall deliver an amount equal to the amount
\nreimbursed to either\n<\/p>\n
47<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
the Escrowed Stockholders pro rata in accordance with the amounts
\ncontributed to the Escrow Fund by each such Escrowed Stockholder (but only if
\nthe Escrow Agreement has terminated or expired in accordance with its terms) or
\nthe Escrow Agent, in which case such amount shall be deemed to again be part of
\nthe Escrow Fund, and shall be distributed and applied in accordance with the
\nterms of the Escrow Agreement.<\/p>\n
           (g) Environmental Liabilities. Notwithstanding any other provision of
\nthis Agreement to the contrary, the indemnification obligations to any
\nIndemnified Party under this Article XI shall not apply to any Damages:<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (i)     arising from any condition that was not an Environmental
\nLiability as of the Closing Date; provided<\/i>, however<\/i>, that the immediately
\npreceding clause shall not bar or otherwise limit such Indemnified
\nParty\u0092s right to indemnification with respect to Damages incurred by such
\nIndemnified Party in connection with the Remediation of the migration
\nafter the Closing Date of Hazardous Substances initially Released prior
\nto the Closing Date; or<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ii)     attributable to the failure of such Indemnified Party to make
\ncommercially reasonable efforts to conduct Remediation in a
\ncost-effective manner.<\/td>\n<\/tr>\n<\/table>\n
     11.03. Procedures for Third Party Claims.<\/b><\/p>\n
           (a) The parties seeking indemnification under Sections 11.02 (the
\n\u0093Indemnified Parties<\/b>\u0094) agree to give prompt notice to the parties from whom
\nindemnity is sought (the \u0093Indemnifying Parties<\/b>\u0094) of the assertion of any claim,
\nor the commencement of any suit, action or proceeding in respect of which
\nindemnity may be sought under Section 11.02 (the \u0093Third Party Claims<\/b>\u0094);
\nprovided<\/i>, however<\/i>, that notice to the Indemnifying Parties shall be provided to
\nthe Representative by the Indemnified Parties. The failure by any Indemnified
\nParty so to notify the Representative in accordance with this Section 11.03(a)
\nshall not relieve any Indemnifying Party from any liability which it may have
\nto such Indemnified Party with respect to any claim made pursuant to this
\nSection 11.03, except to the extent such failure shall actually prejudice an
\nIndemnifying Party.<\/p>\n
           (b) Upon receipt of notice from the Indemnified Parties pursuant to
\nSection 11.03(a), the Representative shall have ten days to notify such
\nIndemnified Parties as to whether it elects to assume the defense and control
\nof such Third Party Claims, which defense and control shall be subject at all
\ntimes to the provisions of Section 11.03(c). In the event that the
\nRepresentative elects to defend a Third Party Claim, the Representative shall
\nallow the Indemnified Parties a reasonable opportunity to participate in the
\ndefense of such Third Party Claims with their own counsel and at their own
\nexpense (except as provided in Section 11.03(d)). The Representative shall
\nselect counsel, contractors and consultants of recognized standing and
\ncompetence after consultation with the Indemnified Parties; shall take all
\nsteps necessary in the defense or settlement of such Third Party Claims; and
\nshall at all times diligently and promptly pursue the resolution of such Third
\nParty Claims.<\/p>\n
           (c) In the event that the Representative elects to defend a Third Party
\nClaim, the Representative shall be authorized to consent to a settlement of, or
\nthe entry of any judgment\n<\/p>\n
48<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
arising from, any Third Party Claim, without the consent of any
\nIndemnified Party; but only if the Indemnifying Parties or the Representative
\nshall (1) pay or cause to be paid all amounts arising out of such settlement or
\njudgment concurrently with the effectiveness of such settlement; (2) not
\nencumber any of the assets of any Indemnified Party or agree to any restriction
\nor condition that would apply to or adversely affect any Indemnified Party or
\nto the conduct of any Indemnified Party\u0092s business; and (3) obtain, as a
\ncondition of any settlement or other resolution, a complete release of any
\nIndemnified Party potentially affected by such Third Party Claim.<\/p>\n
           (d) Subject to Section 11.02(c), the Indemnifying Parties shall also be
\nliable for the reasonable fees and expenses of counsel (which fees and expenses
\nshall be satisfied out of the Escrow Fund) incurred by each Indemnified Party
\nin defending any Third Party Claim if (i) such Third Party Claim, if
\nsuccessful, is likely to result in a judgment, decree or order of injunction or
\nother equitable relief or relief for other than money Damages against such
\nIndemnified Party; or (ii) the Indemnified Party reasonably concludes that the
\nIndemnifying Parties and such Indemnified Party have conflicting interests or
\ndifferent defenses available with respect to such Third Party Claim; provided<\/i>,
\nhowever<\/i>, that the Indemnifying Parties shall not be liable for the fees and
\nexpenses of more than one such additional counsel pursuant to this Section
\n11.03(d)(ii).<\/p>\n
           (e) In the event that the Representative fails to elect to assume the
\ndefense and control of any Third Party Claim (whether explicitly or by failing
\nto notify the Indemnified Parties within the time period set forth in Section
\n11.03(b)), the Indemnified Parties shall have the full right to defend against
\nany such claim and shall be entitled to settle or agree to pay in full such
\nclaim. Notwithstanding the foregoing, under no circumstances shall a Third
\nParty Claim be settled or compromised by any Indemnified Party without the
\nprior written consent of the Representative, which consent shall not be
\nunreasonably withheld or delayed.<\/p>\n
           (f) In all events and circumstances, the Representative and the
\nIndemnified Parties shall, and shall cause each of their Affiliates and
\nrepresentatives to, cooperate fully in the defense of any Third Party Claim
\nsubject to this Article XI.<\/p>\n
     11.04. Procedures for Direct Claims. <\/b>In the event any Indemnified Party
\nshould have a claim for indemnity against any Indemnifying Party that does not
\ninvolve a Third Party Claim, the Indemnified Party shall deliver notice of such
\nclaim with reasonable promptness to the Representative. The failure by any
\nIndemnified Party so to notify the Representative shall not relieve the
\nIndemnifying Parties from any liability that they may have to such Indemnified
\nParty with respect to any claim made pursuant to this Section 11.04, it being
\nunderstood that notices for claims in respect of a breach of a representation
\nor warranty must be delivered prior to the expiration of the survival period
\nfor such representation or warranty under Section 11.01, except to the extent
\nsuch failure shall actually prejudice an Indemnifying Party. If the
\nRepresentative does not notify the Indemnified Party within thirty calendar
\ndays following its receipt of such notice that the Representative disputes the
\nIndemnifying Parties\u0092 liability to the Indemnified Party under this Article, or
\nthe amount thereof, the claim specified by the Indemnified Party in such notice
\nshall be conclusively deemed a liability of the Indemnifying Party under this
\nArticle XI, and the Representative shall pay or cause to be paid the amount of
\nsuch liability (which shall not exceed the total amount of Damages incurred by
\nthe Indemnified Party) to the Indemnified Party on behalf of the Indemnifying
\nParties (by authorizing a release of funds from the Escrow Fund or otherwise)
\non demand or, in the case of any notice in which the amount of\n<\/p>\n
49<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
the claim (or any portion of the claim) is estimated, on such later date
\nwhen the amount of such claim (or such portion of such claim) becomes finally
\ndetermined. If the Representative has timely disputed the liability of the
\nIndemnifying Parties with respect to such claim as provided above, or the
\namount thereof, the Representative and the Indemnified Party shall resolve such
\ndispute in accordance with Section 13.08.<\/p>\n
     11.05. Release of Escrow Fund<\/b>. Subject to the following requirements, the
\nEscrow Fund shall be in existence immediately following the Closing and shall
\nterminate on the third anniversary of the Closing Date (the \u0093Escrow Period<\/b>\u0094);
\nprovided<\/i>, however<\/i>, that on the date which is eighteen months after the Closing
\nDate (the \u0093First Payout Date<\/b>\u0094), the Escrow Agent shall deliver to the Escrowed
\nStockholders in proportion to their contributions to the Escrow Fund an amount
\nequal to the lesser of (a) $10 million plus two-thirds of the interest,
\ndividends or other income earned on the Escrow Amount, less the pro rata
\nportion of any transaction costs associated therewith; and (b) the difference
\nbetween the amount remaining in the Escrow Fund and the amount necessary to
\nsatisfy any unsatisfied claims specified in any Officer\u0092s Certificate (as
\ndefined in the Escrow Agreement) delivered to the Escrow Agent prior to the
\nFirst Payout Date with respect to facts and circumstances existing prior to the
\nFirst Payout Date; and provided<\/i>, further<\/i>, that the Escrow Period shall not
\nterminate with respect to any amount which, in the reasonable judgment of
\nParent, subject to the reasonable objection of the Representative and the
\nsubsequent resolution of the matter as provided in Section 6 of the Escrow
\nAgreement, is necessary to satisfy any unsatisfied claims specified in any
\nOfficer\u0092s Certificate (as defined in the Escrow Agreement) delivered to the
\nEscrow Agent prior to the termination of such Escrow Period with respect to
\nfacts and circumstances existing prior to the termination of such Escrow Period
\n     . Upon the termination of the Escrow Period, the remaining portion of the
\nEscrow Fund not required to satisfy any unsatisfied claims (identified as
\ndescribed above) shall be disbursed to the Escrowed Stockholders ratably in
\nproportion to their respective contributions to the Escrow Fund. As soon as
\nany unsatisfied claim has been resolved and any obligations with respect
\nthereto have been satisfied, the Escrow Agent shall deliver to the Escrowed
\nStockholders in proportion to their contributions to the Escrow Fund all
\nportions of the Escrow Fund not required to satisfy any remaining unsatisfied
\nclaim.<\/p>\n
ARTICLE XII
\nTERMINATION<\/b><\/p>\n
     12.01. Termination. <\/b>This Agreement may be terminated at any time prior to
\nthe Closing:<\/p>\n
           (a) by mutual written agreement of the parties hereto;<\/p>\n
           (b) by either Parent or the Company if the Closing shall not have been
\nconsummated by July 15, 2002, or such later date, on or before September 30,
\n2002, which is one week after all the requirements under the HSR Act have been
\nsatisfied (the \u0093End Date<\/b>\u0094); provided<\/i>, however<\/i>, that in the event that all of
\nthe closing conditions in Article X other than the condition set forth in
\nSection 10.02(j) have been satisfied (or waived by the appropriate party), and
\nthe only remaining condition to closing is the determination of Closing Net
\nDebt by the Accounting Referee, the End Date shall be extended for a period not
\nto exceed two business days pending delivery of the Accounting Referee\u0092s
\ndetermination of Closing Net Debt in accordance<\/p>\n
50<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
with Section 3.06; provided<\/i>, further<\/i>, however<\/i>, that neither Parent nor the
\nCompany may terminate this Agreement pursuant to this Section 12.01(b) if the
\nClosing shall not have been consummated by the End Date by reason of the
\nfailure of such party or any of its Affiliates to perform in all material
\nrespects any of its or their respective covenants or agreements contained in
\nthis Agreement.<\/p>\n
           (c) by Parent, if a breach of any representation, warranty, covenant or
\nagreement on the part of the Company set forth in this Agreement shall have
\noccurred which would cause any of the conditions set forth in Sections 10.01 or
\n10.02 not to be satisfied, and such breach is incapable of being cured or, if
\ncapable of being cured, shall not have been cured within thirty business days
\nfollowing receipt by the Company of notice of such breach from Parent;<\/p>\n
           (d) by the Company, if a breach of any representation, warranty, covenant
\nor agreement on the part of Parent set forth in this Agreement shall have
\noccurred which would cause any of the conditions set forth in Sections 10.01 or
\n10.03 not to be satisfied, and such breach is incapable of being cured or, if
\ncapable of being cured, shall not have been cured within thirty business days
\nfollowing receipt by Parent of notice of such breach from the Company or the
\nRepresentative;<\/p>\n
           (e) by either Parent or the Company if there shall be any law or
\nregulation that makes consummation of the transactions contemplated by this
\nAgreement illegal or otherwise prohibited or if consummation of the
\ntransactions contemplated by this Agreement would violate any non-appealable
\nfinal order, decree or judgment of any court or governmental body having
\ncompetent jurisdiction; or<\/p>\n
           (f) by Parent within ten business days of the complete disclosure by the
\nCompany of any Addition or Additions that, taken individually or in the
\naggregate, would impact the Company\u0092s ability to satisfy any of the conditions
\nset forth in Section 10.02 in any material respect unless such Addition or
\nAdditions relates to a breach of representations, warranties, covenants or
\nagreements that is able to be cured, in which case Parent may only terminate
\nthis Agreement if such breach has not been cured before the earlier to occur of
\nthe End Date and thirty days after such disclosure.<\/p>\n
     12.02. Effect of Termination. <\/b>If this Agreement is terminated as
\npermitted by Section 12.01, such termination shall be without liability of any
\nparty (or any Affiliate or representative of such party) to any other party,
\nexcept that if such termination shall result from the (i) failure of any party
\nto this Agreement to perform a covenant or agreement contained in this
\nAgreement, (ii) breach by any party to this Agreement of any representation or
\nwarranty contained in this Agreement made as of the date of this Agreement or
\n(iii) willful or grossly negligent acts or omissions resulting in a breach by
\nany party to this Agreement of any representation or warranty (other than a
\nbreach of any representation or warranty specified in clause (ii) contained in
\nthis Section), such party shall be fully liable for any and all Damages
\nincurred or suffered by any other party as a result of such failure or breach.
\nThe provisions of Sections 7.02(b), 12.02 and 13.03, along with the
\nConfidentiality Agreement, shall survive any termination of this Agreement
\npursuant to Section 12.01.<\/p>\n
51<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
ARTICLE XIII
\nMISCELLANEOUS<\/b><\/p>\n
     13.01. Notices. <\/b>All notices, requests and other communications to any
\nparty hereunder shall be in writing signed by or on behalf of the party making
\nthe same, will specify the Section under this Agreement pursuant to which it is
\ngiven or made, and will be delivered personally or by telecopy transmission or
\nsent by registered or certified mail (return receipt requested) or by any
\ninternational overnight courier service and shall be given,<\/p>\n
<\/p>\n\n\n\n\n\n\n\n\n\n\n\n
 <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
if to Parent or Acquisition or,
\nafter the Effective Time, to the
\nSurviving Corporation, to:<\/td>\n		 <\/td>\n\nUnited Defense Industries, Inc.
\n1525 Wilson Boulevard, Suite 700
\nArlington, Virginia 22209-6196
\nTelecopier: (703) 312-6196
\nAttention:  David Kolovat<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
with a copy to:
\n(which shall not constitute notice)<\/td>\n		 <\/td>\n\nGibson, Dunn & Crutcher LLP
\n1050 Connecticut Avenue, N.W.
\nWashington, D.C. 20036
\nTelecopier: (202) 467-0539
\nAttention: Stephen I. Glover<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
if prior to the Effective Time, to
\nthe Company, to:<\/td>\n		 <\/td>\n\nUnited States Marine Repair, Inc.
\n750 West Berkley Avenue
\nNorfolk, VA 23523
\nTelecopier: (757) 494 4184
\nAttention:  Alexander Krekich<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
if to the Representative, to:<\/td>\n <\/td>\n\nTC Group, L.L.C.
\n1001 Pennsylvania NW # 220S
\nWashington, DC 20004-2505
\nTelecopier: (202) 347 1818
\nAttention:  Allan Holt<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
in the case of notice to the
\nCompany or the Representative,
\nwith a copy to:
\n(which shall not constitute notice)<\/td>\n		 <\/td>\n\nVinson & Elkins L.L.P.
\n666 Fifth Avenue, 26th Floor
\nNew York, NY 10103-00400
\nTelecopier: (917) 206 8100
\nAttention: Michael Swidler<\/td>\n<\/tr>\n<\/table>\n
<\/center><\/p>\n
or to such other address or telecopy number and with such other copies, as such
\nparty may hereafter specify for the purpose by notice to the other parties.
\nEach such notice, request or other communication shall be effective (i) if
\ngiven by telecopy, when such telecopy is transmitted to the telecopy number
\nspecified in this Section and evidence of receipt is received or (ii) if given
\nby any other means, upon delivery or refusal of delivery at the address
\nspecified in this Section. For the purposes of this Agreement, delivery of
\nnotice to the Representative in accordance with this Section 13.01 constitutes
\nvalid delivery of notice to each Escrowed Stockholder. In addition, delivery
\nof notice by the Representative on behalf of any Escrowed Stockholder in<\/p>\n
52<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
accordance with this Section 13.01 constitutes valid delivery of notice by such
\nEscrowed Stockholder.<\/p>\n
     13.02. Amendments; No Waivers.<\/b><\/p>\n
           (a) Any provision of this Agreement may be amended or waived if, and only
\nif, such amendment or waiver is in writing and signed, in the case of an
\namendment, by Parent, the Company (or, after the Closing, the Surviving
\nCorporation) and the Representative, or in the case of a waiver, by Parent or
\nthe Company if the waiver is to be effective against Parent and Acquisition or
\nthe Company, respectively, or by the Representative if the waiver is to be
\neffective against any Escrowed Stockholder.<\/p>\n
           (b) No failure or delay by any party (or the Representative) in exercising
\nany right, power or privilege hereunder shall operate as a waiver thereof nor
\nshall any single or partial exercise thereof preclude any other or further
\nexercise thereof or the exercise of any other right, power or privilege. The
\nrights and remedies herein provided shall be cumulative and not exclusive of
\nany rights or remedies provided by law.<\/p>\n
     13.03. Expenses.<\/b><\/p>\n
           (a) Subject to the satisfaction of Seller Expenses at the Closing, and
\nexcept as otherwise provided herein, all costs and expenses incurred in
\nconnection with this Agreement shall be paid by the party incurring such cost
\nor expense.<\/p>\n
           (b) In the event that the Company terminates this Agreement pursuant to
\nSection 12.01(d) as a result of a breach by Parent of the representation set
\nforth in Section 5.05 (\u0093Financing Termination<\/b>\u0094), Parent agrees to pay the
\nCompany an amount equal to $5 million; provided<\/i>, however<\/i>, that upon the
\noccurrence of a Financing Termination, Parent shall have no further liability
\nto the Company or any Subsidiary in connection with, or resulting from, this
\nAgreement or the failure to consummate the transactions contemplated hereby.<\/p>\n
     13.04. Successors and Assigns. <\/b>The provisions of this Agreement shall be
\nbinding upon and inure to the benefit of the parties hereto and their
\nrespective successors and assigns; provided that no party may assign, delegate
\nor otherwise transfer any of its rights or obligations under this Agreement
\nwithout the consent of the other parties hereto except that Parent may transfer
\nor assign, in whole or from time to time in part, to one or more of its
\nAffiliates, its rights and obligations under this Agreement, the Escrow
\nAgreement and the agreements, documents and certificates referenced herein and
\ntherein, but no such transfer or assignment will relieve Parent of its
\nobligations hereunder or thereunder.<\/p>\n
     13.05. Governing Law. <\/b>This Agreement shall be governed by and construed
\nin accordance with the laws of the State of New York (without regard to its
\nconflicts of law rules).<\/p>\n
     13.06. Counterparts; Effectiveness. <\/b>This Agreement may be signed in any
\nnumber of counterparts, each of which shall be an original, with the same
\neffect as if the signatures thereto and hereto were upon the same instrument.
\nThis Agreement shall become effective when each party hereto shall have
\nreceived a counterpart hereof signed by the other party hereto, whether by
\nfacsimile or otherwise.<\/p>\n
53<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     13.07. Entire Agreement. <\/b>This Agreement (and any other agreements
\ncontemplated hereby) and the Confidentiality Agreement dated April 18, 2002
\n(the \u0093Confidentiality Agreement<\/b>\u0094) constitute the entire agreement among the
\nparties with respect to the subject matter hereof and supersede all prior
\nagreements, understandings and negotiations, both written and oral, among the
\nparties with respect to the subject matter of this Agreement. No other
\nrepresentation, inducement, promises, understanding, condition or warranty not
\nset forth herein has been made or relied upon by any party hereto. Neither
\nthis Agreement nor any provision hereof is intended to confer upon any Person
\nother than the parties hereto any rights or remedies hereunder.<\/p>\n
     13.08. Dispute Resolution.<\/b><\/p>\n
           (a) Any dispute, controversy or claim arising out of or relating to this
\nAgreement, or the validity, interpretation, breach or termination of this
\nAgreement, including claims seeking redress or asserting rights under
\nApplicable Law (a \u0093Dispute<\/b>\u0094), shall be resolved in accordance with the
\nprocedures set forth in this Section 13.08. Until completion of such
\nprocedures, no party may take any action to force a resolution of a Dispute by
\nany judicial or similar process, except to the limited extent necessary to (i)
\navoid expiration of a claim that might eventually be permitted by this
\nAgreement or (ii) obtain interim relief, including injunctive relief, to
\npreserve the status quo or prevent irreparable harm.<\/p>\n
           (b) Any party seeking resolution of a Dispute shall first submit the
\nDispute for resolution by mediation pursuant to the Center for Public Resources
\nModel Procedure for Mediation of Business Disputes as then in effect.
\nMediation will continue for at least sixty days unless the mediator chooses to
\nwithdraw sooner.<\/p>\n
           (c) All communications among the parties or their representatives in
\nconnection with the attempted resolution of any Dispute shall be deemed to have
\nbeen delivered in furtherance of a Dispute settlement and shall be exempt from
\ndiscovery and production and shall not be admissible in evidence (whether as an
\nadmission or otherwise) in any proceeding for the resolution of the Dispute.<\/p>\n
           (d) If a Dispute is not resolved by mediation undertaken pursuant to
\nparagraph (b), then any party may take action to force resolution of the
\nDispute by judicial process. EACH OF THE PARTIES HERETO CONSENTS TO THE
\nJURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE COMMONWEALTH OF VIRGINIA,
\nUNITED STATES OF AMERICA AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
\nRELATING TO THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT EXECUTED HEREUNDER
\nSHALL BE LITIGATED IN SUCH COURTS, AND EACH OF THE PARTIES WAIVES ANY OBJECTION
\nWHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE
\nCONDUCT OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND WAIVES PERSONAL
\nSERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS TO ALL SUCH SERVICE OF
\nPROCESS MADE IN THE MANNER SET FORTH IN SECTION 13.01. Nothing contained in
\nthis Section 13.08 shall affect the right of any party to serve legal process
\non any other party in any other manner permitted by law.<\/p>\n
54<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     13.09. Captions. <\/b>The captions herein are included for convenience of
\nreference only and shall be ignored in the construction or interpretation
\nhereof.<\/p>\n
     13.10. Knowledge. <\/b>As used herein, any references to \u0093the knowledge of the
\nCompany\u0094 or \u0093known to the Company\u0094 or words of similar import shall mean the
\nactual knowledge of the Significant Employees and Lloyd Schwartz, general
\ncounsel for the Company, together with the knowledge a reasonable business
\nperson would have obtained after making reasonable inquiry and exercising
\nreasonable diligence with respect to the matters at hand.<\/p>\n
[SIGNATURE PAGE FOLLOWS]<\/p>\n
55<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     IN WITNESS HEREOF, the parties have caused this Agreement to be duly
\nexecuted by their respective authorized officers on the day and year first
\nabove written.<\/p>\n
<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
 <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
<\/td>\n <\/td>\n\nPARENT:<\/b><\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nUNITED DEFENSE INDUSTRIES, INC.<\/p>\n
By:          \/s\/  THOMAS W. RABAUT<\/p>\n
\nName:     Thomas W. Rabaut
\nTitle:       President and Chief Executive Officer<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nACQUISITION:<\/b><\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nUDII TORCH ACQUISITION CORPORATION<\/p>\n
By:          \/s\/  FRANCIS RABORN<\/p>\n
\nName:     Francis Raborn
\nTitle:       President<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nTHE COMPANY:<\/b><\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nUNITED STATES MARINE REPAIR, INC.<\/p>\n
By:          \/s\/  B. EDWARD EWING<\/p>\n
\nName:     B. Edward Ewing
\nTitle:       Chairman of the Board<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nTHE REPRESENTATIVE:<\/b><\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nTC GROUP, L.L.C., solely in its capacity as
\nthe Representative<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nBy:          TCG Holdings, L.L.C, its Managing
\n                 Member<\/td>\n<\/tr>\n
 <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n\nBy:          \/s\/  LESLIE L. ARMITAGE<\/p>\n
\nName:     Leslie L. Armitage
\nTitle:       Managing Director<\/td>\n<\/tr>\n<\/table>\n
<\/center><\/p>\n
[Signature Page to United Defense \/ United States Marine Repair Merger Agreement]<\/b><\/p>\n
56<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
EXHIBIT I<\/b><\/p>\n
TAX MATTERS<\/b><\/p>\n
     I.01. Tax Definitions<\/b>. The following terms, as used herein, have the
\nfollowing meanings:<\/p>\n
     “Code<\/b>\u0094 means the United States Internal Revenue Code of 1986, as amended.<\/p>\n
     “Post-Closing Tax Period<\/b>\u0094 means any Tax period (or portion thereof) ending
\nafter the Closing Date.<\/p>\n
     “Pre-Closing Tax Liabilities<\/b>\u0094 means (i) all Taxes of the Company or the
\nSubsidiaries imposed for any Pre-Closing Tax Period, (ii) all Taxes of the
\nCompany or the Subsidiaries imposed for a Straddle Period that are allocable to
\na Pre-Closing Tax Period and (iii) all Transfer Taxes. For purposes of the
\npreceding sentence any income Taxes for a Straddle Period shall be allocated
\nbetween the Pre-Closing Tax Periods and the Post-Closing Tax Periods of the
\nCompany or any Subsidiary based on the actual operations of the Company or any
\nSubsidiary during the portion of such period ending on the Closing Date and the
\nportion of such period beginning on the day following the Closing Date. All
\nTaxes other than income Taxes relating to a Straddle Period shall be allocated
\nbetween the Pre-Closing Tax Periods and the Post-Closing Tax Periods of the
\nCompany or any Subsidiary based on the number of days during the portion of
\nsuch period occurring on and before the Closing Date and the number of days
\nduring such period occurring after the Closing Date.<\/p>\n
     “Pre-Closing Tax Period<\/b>\u0094 means any Tax period (or portion thereof) ending
\non or before the close of business on the Closing Date.<\/p>\n
     “Straddle Period<\/b>\u0094 means any Tax period that begins before and ends after
\nthe Closing Date.<\/p>\n
     “Tax<\/b>\u0094 means any net income, alternative or add-on minimum tax, gross
\nincome, gross receipts, sales, use, ad valorem, franchise, capital, paid-up
\ncapital, profits, license, withholding, payroll, employment, excise, severance,
\nstamp, occupation, premium, property, environmental or windfall profit tax,
\ncustom, duty or other tax, or other like assessment or charge or any kind
\nwhatsoever, together with any interest or any penalty, addition to tax or
\nadditional amount imposed by any governmental authority (domestic or foreign)
\nresponsible for the imposition of any such tax.<\/p>\n
     “Tax Authority<\/b>\u0094 means any governmental authority having jurisdiction over
\nthe assessment, determination, collection or imposition of any Tax.<\/p>\n
     “Tax Return<\/b>\u0094 means any return, declaration, report, statement, information
\nstatement and other document required to be filed with respect to Taxes.<\/p>\n
     “Transfer Taxes<\/b>\u0094 means share transfer taxes assessed by any Tax Authority,
\nif any, in connection with the consummation of the transactions contemplated by
\nthis Agreement.<\/p>\n
I-1<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
     I.02. Tax Matters<\/b>. The Company hereby represents and warrants to Parent
\nand Acquisition that:<\/p>\n
           (a)     The Company and each Subsidiary has filed on a timely basis (taking
\ninto account extensions) with the appropriate Tax Authorities all Tax Returns
\nrequired to be filed by the Applicable Laws of any jurisdiction, all Taxes
\nshown on such Tax Returns have been timely paid in full and all such returns
\nare true, correct and complete in all material respects.<\/p>\n
           (b)     The Company and the Subsidiaries have (i) paid all Taxes (including
\nany estimated Tax payments) due and payable by the Company or any Subsidiary,
\nand all interest and penalties due thereon, and (ii) established reserves in
\nthe Reference Balance Sheet for the payment of Tax liabilities at least equal
\nto the amount of the Pre-Closing Tax Liabilities as of the Reference Date.<\/p>\n
           (c)     Schedule I.02(c) lists all material federal, state, local and foreign
\nincome Tax Returns filed with respect to any of the Company and its
\nSubsidiaries for the six taxable years ending prior to the date hereof,
\nindicates those Tax Returns that have been audited, and indicates those Tax
\nReturns that are currently the subject of audit.<\/p>\n
           (d)     No claim has been made and remains outstanding by any Taxing Authority
\nin any jurisdiction where the Company does not file Tax Returns that it is or
\nmay be subject to Tax by that jurisdiction.<\/p>\n
           (e)     Schedule I.02(e) contains: (i) a complete and accurate description of
\nall Tax-related litigation, proceedings or claims pending or threatened in
\nwriting to be claimed against the Company or any Subsidiary involving Tax
\namounts in excess of $25,000; (ii) the Tax amounts claimed or threatened in
\nwriting to be claimed in connection with all such Tax-related litigation,
\nproceedings, audits, examinations or claims; and (iii) the amounts of the
\nrelated provisions made in the books of account of the Company or any
\nSubsidiary to cover all risks and costs associated with all such Tax-related
\nlitigation, proceedings or claims.<\/p>\n
           (f)     None of the Company or its Subsidiaries has in force any waivers of
\nstatutes of limitations with respect to any Taxes or any extension of time with
\nrespect to a Tax assessment or deficiency.<\/p>\n
           (g)     All assessments made against the Company as a result of any
\nexaminations by any Taxing Authority have been fully paid.<\/p>\n
           (h)     There are no Liens for Taxes (other than for current Taxes not yet due
\nand payable) upon the assets of the Company.<\/p>\n
           (i)     Neither the Company nor any of its Subsidiaries is party to or bound
\nby any tax indemnity, tax sharing or tax allocation agreement that will create
\nan obligation that will survive the Closing.<\/p>\n
           (j)     Neither the Company nor any of its Subsidiaries is a party to or bound
\nby any closing agreement or offer to compromise with any Taxing Authority.<\/p>\n
I-2<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (k)     The Company (i) has not been a member of an affiliated group of
\ncorporations, within the meaning of Section 1504 of the Code, or a member of a
\ncombined, consolidated or unitary group for state, local, or foreign Tax
\npurposes, other than a group of which it is presently a member; (ii) has no
\nliability for Taxes of any person (other than the Company and the Subsidiaries)
\nunder Treasury Regulation 1.1502-6 (or any corresponding provision of state,
\nlocal or foreign income Tax law), as transferee or successor, by contract or
\notherwise; (iii) has not filed a consent pursuant to the collapsible
\ncorporation provisions of Section 341(f) of the Code (or any corresponding
\nprovision of state, local, or foreign income Tax law) or agreed to have Section
\n341(f)(2) of the Code (or any corresponding provision of state, local, or
\nforeign income Tax law) apply to any disposition of any asset owned by it; (iv)
\nhas not made a consent dividend election under Section 565 of the Code; (v) has
\nnot been a personal holding company under Section 542 of the Code; and (vi) has
\nnot participated in an international boycott within the meaning of Section 999
\nof the Code.<\/p>\n
           (l)     None of the assets of the Company is property that the Company is
\nrequired to treat as being owned by any other person pursuant to the so-called
\n\u0093safe harbor lease\u0094 provisions of former Section 168(f)(8) of the Internal
\nRevenue Code of 1954, as amended; none of the assets of the Company directly or
\nindirectly secures any debt the interest on which is tax exempt under Section
\n103(a) of the Code; none of the assets of the Company is \u0093tax exempt use
\nproperty\u0094 within the meaning of Section 168(h) of the Code.<\/p>\n
           (m)     Except as set forth on Schedule I.02(m), the Company has not agreed to
\nmake, nor is it required to make, any adjustment under Sections 481(a) or
\n263(A) of the Code or any comparable provision of state, local or foreign Tax
\nlaws by reason of a change in accounting method or otherwise.<\/p>\n
           (n)     Neither the Company nor any Subsidiary is party to any agreement,
\ncontract, arrangement or plan that has resulted or would result, separately or
\nin the aggregate, in connection with this Agreement or any change of control of
\nthe Company, in the payment of any \u0093excess parachute payments\u0094 within the
\nmeaning of Section 280G of the Code.<\/p>\n
           (o)     Except in connection with teaming arrangements, the Company is not a
\nparty to any joint venture, partnership, or other arrangement or contract that
\ncould be treated as a partnership for federal income tax purposes.<\/p>\n
           (p)     The Company is not, nor has it been, a United States real property
\nholding corporation (as defined in Section 897(c)(2) of the Code) during the
\napplicable period specified in Section 897(c)(1)(a) of the Code.<\/p>\n
     I.03. Tax Procedures and Tax Indemnification<\/b>.<\/p>\n
           (a)     The Parent shall prepare, or cause to be prepared, and shall file, or
\ncause to be filed, all Tax Returns of the Surviving Corporation and the
\nSubsidiaries required to be filed after the Closing Date. With respect to any
\nTax Return of the Company or the Subsidiaries for any period ending on or
\nbefore the Closing Date, or beginning before the Closing Date and ending after
\nthe Closing Date, that is required to be filed after the Closing Date, the
\nParent shall cause to be included in such Tax Return all items of income, gain,
\nloss, deduction, credit or other\n<\/p>\n
I-3<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
items required to be included therein and at least thirty (30) days prior
\nto the due date (including extensions) of such Tax Return shall furnish a copy
\nof such Tax Return to the Representative. The Parent shall permit the
\nRepresentative to review and comment on each such Tax Return and shall make
\nsuch revisions to such Tax Return as reasonably requested by the Representative
\nin order to make such Tax Return consistent with the practice followed in prior
\nyears by the Company or the Subsidiaries with respect to similar Tax Returns,
\nprovided that Parent shall have no obligation to make any such revision which
\nParent believes in good faith violates or is contrary to any Applicable Law.
\nThe Parent shall be responsible for the timely payment of all Taxes due with
\nrespect to the period covered by such Tax Return.<\/p>\n
           (b)     The Escrowed Stockholders shall be jointly and severally liable for
\nand shall indemnify and hold harmless Parent, the Surviving Corporation and the
\nSubsidiaries with respect to all Taxes imposed and all related costs and
\nexpenses, including litigation costs and reasonable attorneys\u0092 and accountants\u0092
\nfees and disbursements, incurred (all herein referred to as \u0093Tax Losses\u0094) as a
\nresult of any breach of any representation, warranty, covenant or agreement of
\nthe Company under this Agreement, provided that the Escrowed Stockholders shall
\nnot be required to indemnify or pay Parent, the Surviving Corporation or the
\nSubsidiaries for any Tax Loss to the extent such Tax Loss is attributable to a
\nTax Return position taken by Parent, the Surviving Corporation or the
\nSubsidiaries if (A)(i) Representative requested such position be revised
\npursuant to Section I.03(a); (ii) such position was not consistent with the
\npractice followed in prior years by the Company or the Subsidiaries, as
\napplicable, with respect to similar Tax Returns; (iii) there is substantial
\nauthority (within the meaning of Treasury Regulation section 1.6662-4(d)) for
\nsuch position; and (iv) the Service has not successfully challenged such
\nposition for any prior period of the Company or the Subsidiaries, as
\napplicable, or (B) in the case of any position not addressed by the practice
\nfollowed in prior years with respect to similar Tax Returns, such position is
\ncontrary to Applicable Law. For purposes of determining the amount of Tax
\nLosses for which the Escrowed Shareholders are responsible pursuant to this
\nSection 1.03(b) with respect to any Pre-Closing Tax Period, any Tax benefit or
\ndeduction (including any net operating loss, carry-forward or carry-back) that
\ninures to the benefit of the Company as a result of (x) the exercise of any
\nOption after the date of this Agreement, or (y) any payment in respect of the
\ncancellation of any Option in accordance with Section 3.04, shall be
\ndisregarded and the amount of Tax Losses with respect to any Pre-Closing Tax
\nPeriod shall be calculated as though such Tax benefit or deduction were not
\navailable to the Company.<\/p>\n
           (c)     Except as otherwise provided in Section I.03(b), after the Closing
\nDate, Parent, the Surviving Corporation and the Subsidiaries shall be solely
\nresponsible for all Taxes of the Parent, the Company, Surviving Corporation and
\nthe Subsidiaries and any costs or expenses with respect to such Taxes
\nindemnified hereunder, and Parent shall indemnify, defend and hold the Escrowed
\nStockholders harmless from any and all such Taxes.<\/p>\n
           (d)     Parent and the Company agree that if the Company is permitted under
\nApplicable Law to treat the Closing Date as the last day of a taxable period,
\nit will do so.<\/p>\n
           (e)     Parent and the Company agree that Parent\u0092s obligation to pay any
\nOption Amounts required by Section 3.04(b) of this Agreement (the \u0093Option
\nObligation<\/b>\u0094) is properly allocable to the Post-Closing Tax Period for purposes
\nof Treasury Regulation section 1.1502-76(b)(ii)(B) and any deduction or other
\ntax impact to the Company in respect of the Option\n<\/p>\n
I-4<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
Obligation shall be reflected in the consolidated return of the Parent and
\nnot in any Pre-Closing Tax Period Return of the Company and its Subsidiaries.
\nParent and the Company further agree to report and file all Tax Returns
\nconsistent with the preceding sentence and shall take no position or action
\ncontrary thereto unless required to do so by Applicable Laws pursuant to a
\nfinal determination. For the avoidance of any doubt, the Escrowed Stockholders
\nshall not be obligated to indemnify to any extent Parent, the Surviving
\nCorporation or the Subsidiaries for any failure to obtain any deduction or
\nother Tax benefit associated with the Options unless such failure results from
\nthe breach of a Company representation.<\/p>\n
           (f)     The Representative, the Escrowed Shareholders, Parent, the Surviving
\nCorporation, the Subsidiaries and their respective Affiliates shall cooperate
\nfully, as and to the extent reasonably requested by the other party, in
\nconnection with the preparation, review and filing of Tax Returns pursuant to
\nthe Section I.03 and any audit, litigation or other proceeding (each a
\n\u0093Proceeding<\/b>\u0094) with respect to Taxes covered by this Section I.03. Such
\ncooperation shall include the retention and (upon the other party\u0092s request)
\nthe provision of records and information which are reasonably relevant to any
\nsuch preparation, filing or review of such Tax Returns or Proceedings and
\nmaking employees available on a mutually convenient basis to provide additional
\ninformation and explanation of any material provided hereunder. The
\nRepresentative, the Escrowed Shareholders, Parent, the Surviving Corporation,
\nthe Subsidiaries and their respective Affiliates shall retain all books and
\nrecords with respect to Tax matters pertinent to the Company and its
\nSubsidiaries relating to any taxable period beginning before the Closing Date
\nuntil the expiration of the statute of limitations (and, to the extent notified
\nby a party, any extensions thereof) of the respective taxable periods.<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (g) (i)     If Parent files a Tax Return pursuant to Section I.03(a) and
\nthe Pre-Closing Tax Liabilities based on such Tax Return result in the
\nbreach of Section I.02(b) of this Agreement then (subject to the
\nlimitations on indemnification set forth in Section I.03(b) or otherwise
\nprovided in this Agreement) the Escrowed Stockholders shall indemnify
\nParent for and pay the amount of the associated Tax Loss to Parent within
\nthirty (30) days.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n         (ii)     If a claim (an \u0093Indemnified Tax Claim<\/b>\u0094) shall be made by any
\nTaxing Authority that, if successful, would result in the indemnification
\nof a party or parties (the \u0093Tax Indemnified Party<\/b>\u0094) under this Agreement,
\nthe Tax Indemnified Party shall promptly notify the party or parties (the
\n\u0093Tax Indemnifying Party<\/b>\u0094) obligated under this Agreement to indemnify the
\nTax Indemnified Party in writing of such fact; provided<\/i>, however<\/i>, that
\nthe failure to so notify the Tax Indemnifying Party shall not relieve it
\nfrom any Liability which it may have to the Tax Indemnified Party to the
\nextent that the Tax Indemnifying Party is not prejudiced by such failure;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n         (iii)     The Tax Indemnifying Party shall have the right, at its sole
\nexpense, to control the defense, prosecution, settlement or compromise of
\nthe Indemnified Tax Claim, and the Tax Indemnified Party shall take such
\naction in connection with contesting such claim as the Tax Indemnifying
\nParty shall reasonably request in writing from time to time, including
\nthe selection of counsel and experts and the execution of powers of
\nattorney; provided that (A) within 30 days after the notice required by
\nparagraph (i) of this subsection has been delivered (or such earlier date
\nthat any payment<\/td>\n<\/tr>\n<\/table>\n
I-5<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\nof Taxes is due by the Tax Indemnified Party but in no event sooner
\nthan 15 days after the Tax Indemnifying Party\u0092s receipt of such notice),
\nthe Tax Indemnifying Party requests that such claim be contested, (B) the
\nTax Indemnifying Party shall have agreed to pay to the Tax Indemnified
\nParty all costs and expenses that the Tax Indemnified Party incurs in
\nconnection with contesting such claim (including reasonable attorneys\u0092,
\naccountants\u0092 and experts\u0092 fees and disbursements), and (C) if the Tax
\nIndemnified Party is requested by the Tax Indemnifying Party to pay any
\nTax claimed and sue for a refund, or if the Indemnified Tax Claim is
\notherwise paid, the Tax Indemnifying Party shall have advanced to the Tax
\nIndemnified Party, on an interest-free basis, the amount of such claim.
\nThe Tax Indemnified Party shall not make any payment of such Indemnified
\nTax Claim for at least 30 days (or such shorter period as may be required
\nby Applicable Law) after the giving of the notice required by paragraph
\n(i) of this subsection, shall give to the Tax Indemnifying Party any
\ninformation reasonably requested relating to such claim, and otherwise
\nshall cooperate with the Tax Indemnifying Party in good faith in order to
\ncontest effectively any such claim. The Representative shall consult
\nwith Parent with respect to the resolution of any issue that can
\nreasonably be expected to have an adverse affect on the Surviving
\nCorporation or any of the Subsidiaries for any period ending after the
\nClosing Date, and will not settle any such issue, or file any amended Tax
\nReturn relating to any such issue without the consent of Parent, which
\nconsent shall not be unreasonably withheld.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iv)     Subject to the provisions of the preceding paragraph, the Tax
\nIndemnified Party shall enter into a settlement of such contest with the
\napplicable Taxing Authority or prosecute such contest to a determination
\nin a court or other tribunal of initial or appellate jurisdiction, all as
\nthe Tax Indemnifying Party may reasonably request;<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (v)     Promptly after the extent of the Liability of the Tax
\nIndemnified Party with respect to a claim shall be established by the
\nfinal judgment or decree of a court or a final and binding settlement
\nwith a governmental authority having jurisdiction thereof, the Tax
\nIndemnifying Party shall pay to the Tax Indemnified Party the amount of
\nany Tax Losses to which the Tax Indemnified Party may become entitled by
\nreason of the provisions of this Section 1.03.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vi)     If, after receipt by the Tax Indemnified Party of an amount
\nadvanced by the Tax Indemnifying Party pursuant to paragraph (ii)(C) of
\nthis subsection, the extent of the Liability of the Tax Indemnified Party
\nwith respect to the Indemnified Tax Claim shall be established by the
\nfinal judgment or decree of a court or other tribunal or a final and
\nbinding settlement with a governmental authority having jurisdiction
\nthereof, the Tax Indemnified Party shall promptly repay to the Tax
\nIndemnifying Party the amount advanced to the extent of any refund
\nreceived by the Tax Indemnified Party with respect to such claim together
\nwith any interest received thereon from the applicable Taxing Authority,
\nnet of any Tax Losses suffered by the Tax Indemnified Party with respect
\nto such claim.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vii)     For purposes of the notice and contest control provisions of
\nparagraphs (i), (ii) and (iii) of this subsection, the Representative
\nshall act on behalf of the Escrowed Stockholders in accordance with this
\nAgreement and the Escrow Agreement. All amounts<\/td>\n<\/tr>\n<\/table>\n
I-6<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\nto be paid by the Escrowed Stockholders pursuant to paragraphs (ii)
\nand (iv) of this subsection, and all amounts that the Escrowed
\nStockholders are entitled to receive pursuant to paragraph (v) of this
\nsubsection, shall be paid or received in accordance with this Agreement
\nand the Escrow Agreement.<\/td>\n<\/tr>\n<\/table>\n
           (h)     In the event of a conflict between the provisions of this Exhibit I
\nand any other provisions of this Agreement, the provisions of this Exhibit I
\nshall control; provided<\/i>, however<\/i>, that in all events the liability and
\nindemnification obligations of the Escrowed Shareholders under this Exhibit I
\nshall be subject to the limitations set forth in Article XI.<\/p>\n
I-7<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
EXHIBIT II<\/b><\/p>\n
EMPLOYEE BENEFITS<\/b><\/p>\n
     II.01. Employee Benefits Definitions<\/b>. The following terms, as used
\nherein, have the following meanings:<\/p>\n
     \u0093Employee Benefit Plan<\/b>\u0094 means each plan, fund, program, scheme, agreement,
\nor arrangement (other than an Employee Retirement Plan) that is or has been
\ndirectly or indirectly sponsored, maintained, or provided by the Company or any
\nSubsidiary and that provides or provided a material benefit of value to current
\nor former employees or directors of the Company, any Subsidiary or the
\ndependents of any of them, including, but not limited to, incentive
\ncompensation, equity compensation, medical benefits, vacation, severance or
\ntermination pay, and unemployment benefits. The term Employee Benefit Plan
\nalso includes any \u0093employee welfare benefit plan\u0094 as defined in Section 3(1) of
\nthe Employee Retirement Income Security Act of 1974, as amended (\u0093ERISA<\/b>\u0094), that
\nhas been directly or indirectly sponsored, maintained or provided by the
\nCompany or any Subsidiary.<\/p>\n
     \u0093Employee Retirement Plan<\/b>\u0094 means each plan, fund, program, scheme, or
\nother arrangement providing retirement or retirement-type benefits, including,
\nbut not limited to, any \u0093employee pension benefit plan\u0094 (as defined in Section
\n3(2) of ERISA, under which the Company or any Subsidiary has or had an
\nobligation, whether under Applicable Law, pursuant to a contract, or otherwise.<\/p>\n
     \u0093ERISA Affiliate<\/b>\u0094 means any trade or business, whether or not
\nincorporated, that together with the Company, would be deemed to constitute a
\n\u0093single employer\u0094 within the meaning of Section 4001 of ERISA.<\/p>\n
     II.02. Employee Benefits Representations<\/b>. The Company hereby represents
\nand warrants to Parent that:<\/p>\n
           (a) Each of the Company and its Subsidiaries has performed its obligations
\nunder each Employee Retirement Plan and Employee Benefit Plan, and each
\nEmployee Retirement Plan and Employee Benefit Plan and each trust or other
\nfunding medium, if any, established in connection therewith has at all times
\nbeen established, maintained and operated in compliance with its terms and the
\nrequirements prescribed by Applicable Law, including ERISA and the Code, except
\nfor such failures to perform and such failures to operate in compliance with
\nthe terms thereof and Applicable Law that could not reasonably be expected to
\nresult in a Material Adverse Effect.<\/p>\n
           (b) Except as set forth on Schedule II.02(b), the Company and the
\nSubsidiaries have complied with the minimum funding requirements of ERISA and
\nSection 412 of the Code with respect to each Employee Retirement Plan and,
\nexcept for any failure that could not reasonably be expected to result in a
\nMaterial Adverse Effect, all contributions required to be made under the terms
\nof any Employee Retirement Plan or Employee Benefit Plan as of the date hereof
\nhave been timely made.<\/p>\n
II-1<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n
           (c) The Company has furnished to the Parent a copy of all Employee
\nRetirement Plans and Employee Benefit Plans, a true and complete list of which
\nis set forth on Schedule II.02(c). In respect of each Employee Retirement Plan
\nand Employee Benefit Plan, a complete and correct copy of each of the following
\ndocuments (if applicable) has been made available to Parent: (i) the most
\nrecent plan or written agreement thereof, and all amendments thereto and all
\nrelated trust documents; (ii) the most recent summary plan description, and all
\nrelated summaries of material modifications thereto; (iii) the two most recent
\nForms 5500 (including, schedules and attachments); (iv) the most recent
\nInternal Revenue Service (\u0093IRS<\/b>\u0094) determination letter; (vi) the most recent
\nactuarial report, and (vii) each trust agreement or group annuity contract.<\/p>\n
           (d) Except as set forth in Schedule II.02(d):<\/p>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (i)     The files and records of the Company and the Subsidiaries
\naccurately reflect in all material respects the employment histories of
\nthe employees and former employees of the Company and the Subsidiaries,
\nincluding their hours of service.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ii)     With respect to each Employee Retirement Plan and Employee
\nBenefit Plan, assets of such plan equal or exceed liabilities.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iii)     The Company and the Subsidiaries have not incurred, and to the
\nCompany\u0092s knowledge, no facts exist that reasonably could be expected to
\nresult in any material liability to the Company or any Subsidiary with
\nrespect to any Employee Benefit Plan or any Employee Retirement Plan
\nunder any Applicable Law (other than to pay premiums, contributions or
\nbenefits in the ordinary course). There are no individuals who are
\nclassified as consultants or independent contractors of the Company or
\nthe Subsidiaries who are entitled to receive benefits under any Employee
\nRetirement Plan or Employee Benefit Plan, other than any
\nmisclassifications that would not reasonably be expected to result in a
\nMaterial Adverse Effect.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (iv)     With respect to those Employee Retirement Plans that are
\nintended to be qualified under Section 401(a) of the Code, either (1)
\nsuch Employee Retirement Plans have been the subject of determination
\nletters from the IRS to the effect that such Employee Retirement Plans
\nare qualified and exempt from federal income taxes under Sections 401(a)
\nand 501(a), respectively, of the Code, and no such determination letter
\nhas been revoked nor has any event occurred since the date of its most
\nrecent determination letter or application therefor that would adversely
\naffect its qualification or increase its costs, or (2) timely
\napplications for such determination letters are now pending and the
\nCompany is not aware of any reason why such Employee Retirement Plan is
\nnot so qualified.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (v)     There are no pending or, to the Company\u0092s knowledge, threatened
\nactions, claims, or proceedings against or relating to any Employee
\nRetirement Plan or Employee Benefit Plan (other than routine benefit
\nclaims for benefits thereunder).<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vi)     No \u0093prohibited transaction\u0094 (as such term is used in Section
\n4975 of the Code and\/or Section 406 of ERISA and other than a transaction
\nthat is exempt<\/td>\n<\/tr>\n<\/table>\n
II-2<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\nunder a statutory or administrative exemption) has occurred with
\nrespect to any Employee Retirement Plan or Employee Benefit Plan that
\ncould result in liability to the Company or a Subsidiary.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (vii)     With respect to each Employee Retirement Plan currently or
\nformerly maintained by the Company, a Subsidiary or an ERISA Affiliate,
\nnone of the foregoing has incurred, nor do any of the foregoing
\nreasonably expect to incur, any liability to the Employee Retirement Plan
\nor to the Pension Benefit Guaranty Corporation (\u0093PBGC<\/b>\u0094) in connection
\nwith any Employee Retirement Plan, including, without limitation, any
\nliability under Section 4069 of ERISA or any penalty imposed under
\nSection 4071 of ERISA, or ceased operations at any facility or withdrawn
\nfrom any Employee Retirement Plan in a manner which could subject it to
\nliability under Section 4062, 4063 or 4064 of ERISA, or knows of any
\nfacts or circumstances that might give rise to any liability of the
\nCompany, a Subsidiary or an ERISA Affiliate to the Employee Retirement
\nPlan or to the PBGC under Title IV of ERISA that could reasonably be
\nanticipated to result in any claims being made against the Company, a
\nSubsidiary or an ERISA Affiliate by the PBGC subsequent to the Closing
\nDate.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (viii)     Neither the Company, nor any Subsidiary nor any ERISA
\nAffiliate has or has had any obligation with respect to any
\n\u0093multiemployer plan\u0094 (as defined in Section 3(37) of ERISA).<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (ix)     No Employee Retirement Plan or Employee Benefit Plan or any
\nrelated trust or other funding medium thereunder or any fiduciary thereof
\nis, to the best knowledge of the Company, the subject of an audit,
\ninvestigation or examination by any governmental or quasi-governmental
\nagency.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (x)     Except as otherwise contemplated by this Agreement, the
\nexecution of, and performance of the transaction contemplated by, this
\nAgreement will not (either along with or upon the occurrence of any
\nadditional or subsequent events) constitute an event under any Employee
\nRetirement Plan or Employee Benefit Plan or agreement that will or may
\nreasonably be expected to result in any payment (whether severance pay or
\notherwise), acceleration, vesting or increase in benefits with respect to
\nany employee, former employee or director of the Company or a Subsidiary,
\nwhether or not any such payment would be an \u0093excess parachute payment\u0094
\n(within the meaning of Section 280G of the Code).<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xi)     Neither the Company nor a Subsidiary maintains any Employee
\nBenefit Plan which is a \u0093group health plan\u0094 (as such term is defined in
\nSection 5000(b)(1) of the Code) that has not been administered and
\noperated in all material respects in compliance with the applicable
\nrequirements of Section 601 of ERISA and Section 4980B(b) of the Code,
\nand the Company and its Subsidiaries are not subject to any material
\nliability, including without limitation, additional contributions, fines,
\npenalties or loss of tax deduction as a result of such administration and
\noperation. No Employee Benefit Plan provides health, life insurance or
\ndeath benefit coverage beyond the termination of the employee\u0092s
\nemployment with the Company, except as required by<\/td>\n<\/tr>\n<\/table>\n
II-3<\/p>\n<\/p>\n
\n
 <\/h5>\n<\/p>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\nPart 6 of Subtitle B of Title I of ERISA or section 4980B of the
\nCode or any state laws requiring continuation of benefits coverage
\nfollowing termination of employment.<\/td>\n<\/tr>\n<\/table>\n\n\n\n
<\/td>\n<\/td>\n<\/tr>\n
 <\/td>\n     (xii)     The Company (or, if applicable, a Subsidiary) may terminate
\nany Employee Retirement Plan or Employee Benefit Plan or may cease
\ncontributions to any such Plan without incurring any liability other
\nthan a benefit liability accrued in accordance with the terms of such
\nPlan immediately prior to such termination or ceasing of contributions.<\/td>\n<\/tr>\n<\/table>\n
     II.03. Employees and Employee Benefit Plans.<\/b><\/p>\n
           (a) The Company and the Subsidiaries shall continue to employ each of the
\nemployees of the Company and the Subsidiaries listed on Schedule II.03(a) who
\nare employed as of the Closing Date. All such employees are hereinafter
\nreferred to as the \u0093Transferring Employees<\/b>.\u0094 Parent shall, for the period
\nbeginning on the Closing Date and ending on the first anniversary thereof,
\ncause the Company and the Subsidiaries to provide to the Transferring Employees
\nsalary and employee benefits that in the aggregate are substantially similar to
\nsuch salary and benefits as provided by the Company and its Subsidiaries to
\nsuch Transferring Employees prior to the Closing Date.<\/p>\n
           (b) To the extent that Transferring Employees are covered by any employee
\nbenefit plans or arrangements maintained by Parent, such Transferring Employees
\nshall be credited for their length of service with the Company and any
\nSubsidiary under such plans or arrangements for purposes of eligibility,
\nvesting and any pre-existing condition limitations (but not for purposes of
\nbenefit accrual) under such plans or arrangements.<\/p>\n
           (c) The personnel records of the employees of the Company and the
\nSubsidiaries shall be transferred to Parent on the Closing Date.<\/p>\n
           (d) No Transferring Employee or other current or former employee of the
\nCompany or any Subsidiary, including any beneficiary or dependent thereof, or
\nany other person not a party to this Agreement, shall be entitled to assert any
\nclaim hereunder.<\/p>\n
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