-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EZAoVkx3mucpphvcmAV4iYIdJXtOEIydNHXTL6FYDd+Bj3vNZWOSwFwi+HLJO8iE p4aog7UemTSv0bkJF7mnQw== 0000319815-01-000003.txt : 20010410 0000319815-01-000003.hdr.sgml : 20010410 ACCESSION NUMBER: 0000319815-01-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010323 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010405 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAXWELL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000319815 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 952390133 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-15477 FILM NUMBER: 1596120 BUSINESS ADDRESS: STREET 1: 9275 SKYPARK COURT STREET 2: SUITE 400 CITY: SAN DIEGO STATE: CA ZIP: 92123 BUSINESS PHONE: 8582795100 MAIL ADDRESS: STREET 1: 9244 BALBOA AVENUE STREET 2: . CITY: SAN DIEGO STATE: CA ZIP: 92123 FORMER COMPANY: FORMER CONFORMED NAME: MAXWELL LABORATORIES INC /DE/ DATE OF NAME CHANGE: 19920703 8-K 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): March 23, 2001 Commission File Number 0-10964 MAXWELL TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 95-2390133 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9244 Balboa Avenue, San Diego, CA 92123 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (858) 279-5100 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. The Company's majority-owned subsidiary, Maxwell Technologies Systems Division, Inc. ("Systems") has sold substantially all of its assets and business operations and certain of its liabilities to two buyers in two separate transactions. On March 23, 2001, Systems closed the sale of its advanced pulsed power systems and x-ray simulator businesses for an aggregate purchase price of $11,500,000. Of the total purchase price, $9,800,000 was paid in cash within 10 days of the closing and the balance represents a holdback for indemnification claims and other contingencies by the buyer for a period of six months from the closing. The final purchase price is subject to adjustment, either up or down, based on whether the net assets of the businesses sold as of the closing date are more or less than $4,500,000. Systems also agreed to repurchase any accounts receivable as of the closing date that are not paid in full within six months from the closing. The buyer may withhold the amount of such unpaid receivables, as well as any indemnification claims that may arise during the six-month period, out of the portion of the purchase price held back and pay Systems the net amount. The buyer hired substantially all of Systems' employees in the businesses involved in the sale and assumed the accrued liabilities of the acquired businesses and ongoing contractual obligations. On March 30, 2001, Systems completed the sale of its contract research and development, electronics technology and high power microwave and pulsed power business units to for an aggregate purchase price of $10,337,000. Of the total purchase price, $9,537,000 was paid in cash at closing and the balance represents a holdback for indemnification claims and other contingencies by the buyer for a period of six months from the closing. The final purchase price is subject to adjustment, either up or down, based on whether the net assets of the businesses sold as of the closing date are more or less than $6,149,000. The buyer hired substantially all of Systems' employees in the businesses involved in the transaction and assumed certain accrued compensation amounts related to those employees. The buyer assumed no other liabilities of Systems in the transaction except for ongoing contractual obligations. Of the total aggregate proceeds of $19,337,000 received at closing, the Company used $15 million to repay advances under the Bridge Loan portion of its new credit facility with Comerica Bank - California ("Bank Credit Facility"). The remaining proceeds will be used to pay liabilities retained by Systems, expenses related to the transactions and amounts distributable to minority shareholders of Systems. Any remaining net proceeds will be used to repay revolving advances outstanding under the Company's Bank Credit Facility. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS A. Financial Statements of Business Acquired Not applicable. B. Pro Forma Financial Information In accordance with Article 11 of Regulation S-X, the following pro forma financial information is filed with this Report. MAXWELL TECHNOLOGIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 2000 (IN THOUSANDS)
PRO FORMA AS REPORTED ADJUSTMENTS PRO FORMA --------- --------- --------- Note 3 ASSETS Current assets: Cash and cash equivalents $ 2,686 $ 2,337 a $ 5,023 Accounts receivable, net 24,652 2,500 a 27,152 Inventories 24,769 - 24,769 Prepaid expenses and other current assets 1,133 - 1,133 Deferred income taxes 13,031 (1,401)e 11,630 Net assets of discontinued operations 13,963 (15,767)b,c (1,804) --------- --------- --------- Total current assets 80,234 (12,331) 67,903 Property, plant and equipment, net 22,567 - 22,567 Goodwill, other intangibles and other assets 19,308 - 19,308 --------- --------- --------- $ 122,109 $ (12,331) $ 109,778 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 24,536 $ - $ 24,536 Current portion of long-term debt and short-term borrowings 22,754 (17,000)a 5,754 --------- --------- --------- Total current liabilities 47,290 (17,000) 30,290 Minority interest 5,065 - 5,065 Stockholders' equity: Common stock 988 - 988 Additional paid-in capital 81,204 - 81,204 Notes receivable from officers for stock purchases (900) - (900) Deferred compensation (15) - (15) Retained earnings (deficit) (10,942) 4,669 c (6,273) Accumulated other comprehensive loss - foreign currency translation adjustments (581) - (581) --------- --------- --------- Total stockholders' equity 69,754 4,669 74,423 --------- --------- --------- $ 122,109 $ (12,331) $ 109,778 ========= ========= =========
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. MAXWELL TECHNOLOGIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 (IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro Forma As Reported Adjustments Pro Forma --------- --------- --------- (Note 2) Continuing operations: Sales $ 102,347 $ - $ 102,347 Cost of sales 79,472 - 79,472 Gross profit 22,875 - 22,875 Operating expenses: Selling, general and administrative 26,260 - 26,260 Research and development 8,713 - 8,713 Restructuring, acquisition and other charges 9,220 - 9,220 --------- --------- --------- Total operating expenses 44,193 - 44,193 --------- --------- --------- Operating loss (21,318) - (21,318) Interest expense (1,430) 1,030 (400) Interest income and other, net 9 - 9 --------- --------- --------- Loss from continuing operations before income taxes and minority interest (22,739) 1,030 (21,709) Credit for income taxes (6,267) 383 (5,884) Minority interest in net loss of subsidiaries (181) - (181) --------- --------- --------- Loss from continuing operations $ (16,291) $ 647 $ (15,644) ========= ========= ========= Loss per share from continuing operations: Basic and Diluted $ (1.66) $ 0.06 $ (1.60) ========= ========= =========
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The unaudited pro forma condensed consolidated financial statements reflect the sale of substantially all of the assets and certain liabilities of the Company's majority-owned subsidiary, Maxwell Technologies Systems Division, Inc. ("Systems") to two buyers in two separate transactions, for total aggregate consideration of approximately $21.8 million in cash, of which $19.3 million was received on the closing dates and $2.5 million is expected to be received following a six-month holdback period. Of the aggregate proceeds of $19.3 million received at closing, the Company used $15 million to repay advances under the Bridge Loam portion of its new credit facility with Comerica Bank - California ("Bank Credit Facility"). The remaining proceeds will be used to pay liabilities retained by Systems, expesens related to the transactions and amounts distributable to minority shareholders of Systems. Any remaining net proceeds will be used to repay revolving advances outstanding under the Company's Bank Credit Facility. 2. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2000 reflects the Company's results of continuing operations as if the Company had completed the sale transactions described in Note 1 as of January 1, 2000 and had used proceeds of $17.0 million received on January 1 and $2.5 million received following a six-month holdback period on July 1 to reduce short-term borrowings, thereby reducing interest expense for the year by $1.0 million, with a corresponding reduction in the credit for income taxes of $0.4 million. In addition, the higher cash balances would have increased interest income for calendar year 2000 by approximately $0.4 million, less income taxes of approximately $0.1 million. Such adjustment to interest income, and the related adjustment to the credit for income taxes, has not been reflected in the accompanying Unaudited Pro Forma Condensed Consolidated Statement of Operations. 3. The unaudited pro forma condensed consolidated balance sheet includes the adjustments necessary as if the sale transactions described in Note 1 occurred on December 31, 2000 and reflects the receipt of the consideration, removal of the net assets sold from the Company's balance sheets and the accrual of the estimated transaction costs. These adjustments are summarized as follows: a) Receipt of $19.3 million in cash with $2.5 million receivable in six months. Cash received applied as a $17.0 million pay down of debt and a $2.3 million addition to cash pending payment of liabilities. b) Removal of net assets of the Systems Division, totaling $14.8 million, included in net assets of discontinued operations. c) Accrual of $1.0 million representing estimated expenses and certain transaction costs. d) Recognition of an immediate $7.4 million gain on the sale of the assets (net of income taxes of $2.8 million). e) Accrual of estimated income tax provision for gain on sale using the Company's incremental effective tax rate in effect for the year ended December 31, 2000. The provision is comprised of $1.4 million of deferred tax assets of the discontinued operation, reversed as a result of the sale (included in b) above), and $1.4 million of the Company's operating loss carryforwards deemed to be used in the sale. The unaudited pro forma financial statements have been prepared on the basis of preliminary estimates which are subject to adjustment. The unaudited pro forma financial statements may not be indicative of the results that actually would have been achieved if the disposition had been effected on the date indicated above, or the results which may be achieved in the future. The pro forma financial statements should be read in conjunction with the consolidated financial statements of Maxwell Technologies, Inc. included in its December 31, 2000 annual report on Form 10-K. C. Exhibits 2.1 Asset Purchase Agreement Dated as of March 23, 2001, By and Among Maxwell Technologies Systems Division, Inc., Maxwell Technologies Inc. and Titan Systems Corporation. 2.2 Asset Purchase Agreement By and Among Science Applications International Corporation, Maxwell Technologies, Inc. and Maxwell Technologies Systems Division, Inc., dated March 30, 2001. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized. MAXWELL TECHNOLOGIES, INC. April 4, 2001 /s/ Vickie L. Capps - ------------------------ ---------------------------------- Date Vickie L. Capps, Vice President - Finance, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer EX-2 2 0002.txt ASSET PURCHASE AGREEMENT DATED AS OF MARCH 23, 2001, BY AND AMONG MAXWELL TECHNOLOGIES SYSTEMS DIVISION, INC., MAXWELL TECHNOLOGIES INC. AND TITAN SYSTEMS CORPORATION ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of March 23, 2001, by and among Maxwell Technologies, Inc, a California corporation ("Maxwell"), Maxwell Technologies Systems Division Inc., a California corporation ("Seller"), and Titan Systems Corporation, a Delaware corporation ("Buyer"). A. Seller is engaged in the business of development of advanced pulsed power systems and development and operation of x-ray simulators (the "Business"). B. Seller is a majority-owned subsidiary of Maxwell. C. Buyer is a publicly traded company conducting operations worldwide and is engaged in, among other things, a business similar to the Business. D. Seller, Maxwell and Buyer wish to enter into this Agreement covering the sale and assignment by Seller and purchase and assumption by Buyer of substantially all the assets and certain specified liabilities related to the operation of the Business. NOW, THEREFORE, in consideration of the foregoing and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows: I. PURCHASE AND SALE OF ASSETS 1.1 Assets. Subject to and in reliance upon the representations, warranties and agreements set forth herein, and on the terms and conditions contained herein, Seller agrees to sell, assign, transfer and deliver to Buyer on the Closing Date (as defined in Section 1.5 below), and Buyer agrees to purchase, assume and receive, all right, title and interest in those certain assets shown on the Statement of Net Assets as of December 31, 2000, attached as Schedule 1.1(a) hereto, consisting of accounts receivable (billed and unbilled), personal property, inventory, certain leasehold improvements and pre-paid assets of the Business, as well as the intellectual property (including intellectual property that is jointly-owned with a third party(ies)) and goodwill associated with the Business and the rights under contracts, leases and other agreements assumed under section 1.2 below (collectively, the "Assets"), as all such Assets exist on the Closing Date. Notwithstanding anything herein to the contrary, the Assets shall not include those items set forth on Schedule 1.1(b) attached hereto (the "Excluded Assets"). 1.2 Liabilities. (a) The Assets shall be sold and conveyed to Buyer free and clear of all debts, mortgages, liens, deeds of trust, security interests, pledges, restrictions, prior assignments, charges, claims, defects in title and encumbrances of any kind or type whatsoever except for: those obligations of Seller, if any, which Buyer expressly assumes at the Closing as set forth on Schedule 1.1(a) attached hereto, consisting of accounts payable, accrued compensation for those certain employees of Seller hired by Buyer, accrued liabilities related to the Assets, as well as executory obligations under contracts listed or described on Part 2.21 of the Disclosure Schedule attached hereto (the "Assumed Liabilities"). (b) Except as otherwise specifically provided herein, Buyer shall not assume or be liable for any other liability or obligation of Seller. Seller shall retain and shall hereafter pay, satisfy, and fulfill all such obligations and liabilities not expressly assumed by Buyer hereunder as they become due, without any charge or cost to Buyer, and Seller hereby agrees to indemnify and hold Buyer and its successors and assigns harmless from and against any and all such liabilities in accordance with the terms of Article VII below ("Excluded Liabilities"). Excluded Liabilities shall be set forth on Schedule 1.1(b). 1.3 The Purchase Price. The purchase price for the Assets ("Purchase Price") shall consist of the following: (a) a cash payment of $9,800,000.00, plus an Interest Payment, shall be paid on April 2, 2001 by wire transfer to accounts designated by the Seller. The Interest Payment shall be equal to $2,684.98 per day (10% annual interest rate on $9,800,000.00) beginning on the Closing Date through April 1, 2001; (b) a $1,700,000.00 holdback amount ("Holdback") shall be payable to Seller on or before one hundred eighty (180) days after the Closing in accordance with the Net Assets Adjustment described in Section 1.6 below and the Transferring Employee 401(k) Loan Guarantee described in Section 1.12 below. (c) $500,000 of the $1,700,000.00 Holdback shall be subject to additional conditions for release in accordance with Section 1.11 below. 1.4 Allocation of Purchase Price. Not later than thirty days after the Closing Date, the Buyer shall prepare and deliver to the Seller a proposed allocation of the Purchase Price among the Purchased Assets substantially in the form of Schedule 1.4 hereto. Unless Seller objects to such allocation within five (5) days after completion by Arthur Andersen LLP of its audit of Statement of Net Assets, such allocation shall be considered to be final. Should Seller object to Buyer's proposed allocation, the Parties shall negotiate in good faith to reach agreement upon a final allocation. Neither Seller nor Buyer shall take any position on any Tax Return or other filing with a governmental authority that is inconsistent with the final allocation as determined by the Parties (the "Final Allocation"). Buyer and Seller shall duly prepare and timely file such reports and information returns as may be prescribed or appropriate under section 1060 of the Code and any regulations thereunder and any corresponding provisions of applicable state income tax laws to report the allocation of the Purchase Price in accordance with such Final Allocation. Any adjustments to the Purchase Price after the Closing shall be allocated among the Purchased Assets in a manner consistent with the foregoing. 1.5 Closing. The consummation of the transactions contemplated hereby (the "Closing") shall take place at 10:00 a.m on a business day (the "Closing Date") designated by mutual agreement of the parties as soon as practicable following the satisfaction or waiver of all conditions to the Closing. Unless otherwise agreed, the Closing shall take place at 10:00 a.m. at the offices of The Titan Corporation at 3033 Science Park Road, San Diego, CA 92121 on March 23, 2001 or such other date as is agreed upon by the parties. 1.6 Net Assets Adjustment. (a) The purchase price for the Assets has been predicated on $4,500,000 of Net Assets as reflected on the Statement of Net Assets included as Schedule 1.1(a) hereto, updated to the Closing Date. Net Assets are defined as the net book value of the Assets and Assumed Liabilities as determined in accordance with Generally Accepted Accounting Principles (GAAP) and applied on a consistent basis. As of the Closing Date, Seller shall perform a full closing of its books to derive a balance sheet of Seller and a Statement of Net Assets in the form of Schedule 1.1(a). The amount of Net Assets shown on such Closing Date Statement of Net Assets shall be the "Closing Date Net Assets." As soon as practicable but no later than thirty (30) days after the Closing, Seller shall deliver to the Buyer or, at the request of Buyer, to Buyer and Arthur Andersen LLP, such Statement of Net Assets and balance sheet, and Seller shall make available to Buyer and Arthur Andersen LLP such books and records relating to said financial statements as they may request. Arthur Andersen LLP shall audit said balance sheet of Seller as of the Closing Date and the Statement of Net Assets as of the Closing Date. Buyer shall use its best efforts to cause Arthur Andersen LLP to complete such audit and to calculate and provide the Seller with a report, which may be in draft form, on the amount of any adjustments to the Closing Date Net Assets (the "Report") within sixty (60) days following receipt of the Closing Date balance sheet and Statement of Net Assets from Seller. To the extent the Closing Date Net Assets is greater or less than $4,500,000.00, such difference will result in a dollar for dollar increase or decrease, respectively, in the Purchase Price (the "Closing Adjustment"). If the Closing Adjustment is $500,000.00 or less, then it will either be paid in conjunction with the release of the Holdback payment (in the case of a increase in the Purchase Price) or will be deducted from the Holdback (in the case of a decrease in the Purchase Price) one hundred eighty (180) days following the Closing, or such later date on which the parties reach agreement on the Closing Adjustment. If the Closing Adjustment is greater than $500,000.00, then the Closing Adjustment will be paid in cash by the Buyer (in the case of an increase in the Purchase Price) or the Seller (in the case of a decrease in the Purchase Price) within ten (10) days from the date on which the parties reach agreement on the Closing Adjustment. (b) If, by the date which is 180 days after the Closing Date, Buyer has not collected all accounts receivable included in the Closing Date Net Assets determination, despite its commercially reasonable collection efforts, then the Purchase Price will be decreased dollar for dollar to the extent that such receivables are not collected as of that date. Buyer shall be permitted to deduct, in its sole discretion, dollar-for-dollar from the Holdback for such deficiency. Upon such Purchase Price decrease, whether by deduction from the Holdback or cash payment by Seller to Buyer, Buyer shall re-convey to Seller all such unpaid accounts receivable, and all records relating thereto, and Seller shall be responsible for their collection thereafter. (c) If Seller disagrees with the determination of the Closing Adjustment, Seller shall so notify Buyer in writing within twenty days after Seller's acknowledgement of receipt of the Report by Arthur Andersen, specifying in detail the basis of such disagreement; provided, however, that if Seller fails to notify Buyer of any disagreement within such twenty day period, then the determination of the Closing Date Net Assets and the Closing Adjustment as reflected in the Report shall be final, conclusive and binding upon the Parties. (d) Seller and Buyer shall negotiate in good faith to resolve any disagreement related to the Closing Adjustment. If any such disagreement cannot be resolved by the parties within ten days after Buyer's receipt of Seller's notice of disagreement, then the Parties shall jointly select a nationally recognized independent public accounting firm (the "Accounting Firm"), to act as an arbitrator to resolve as expeditiously as possible all points of disagreement with respect to the Closing Adjustment (or, in the event they are unable to agree to the selection, either may request the San Diego, CA office of the American Arbitration Association to make such selection, which shall be final and binding on the Parties). All determinations made by the Accounting Firm with respect to the Closing Adjustment shall be final, conclusive and binding on the Parties hereto. Each Party shall be responsible for its own fees and expenses, as well as one-half of the fees and expenses of the Accounting Firm, incurred in connection with the resolution of the dispute. 1.7 Subleases and Leases. Concurrent with the Closing, Seller and Buyer shall enter into the subleases and leases set forth in Exhibit A attached hereto. 1.8 Employees. Buyer shall identify, at its sole discretion, certain employees of Seller as either Key Employees or Desired Employees and shall extend offers of employment to such individuals prior to the Closing. The terms and conditions of such employment shall be at Buyer's sole discretion, but shall include compensation levels comparable to such employees' current compensation as employees of Seller. Prior to Closing, Buyer must receive written acceptances of employment for all Key Employees and for 80% of Desired Employees. These individuals are set forth in Schedule 1.8 attached hereto. (a) With the sole exception of accrued compensation or other Assumed Liabilities, Buyer is not assuming, under this Agreement or otherwise, and the Seller is and shall remain fully responsible for any obligation, responsibility or liability, whether contractual or statutory, arising out of the termination of employees not hired by Buyer, or, in the case of employees hired by Buyer, as such obligations, responsibilities or liabilities relate to their employment with Seller for the period of time up until the Closing including without limitation, any liability or obligation with respect to wages, salaries, bonuses, health care plans or employee benefit plans or any other compensation arrangement whatsoever which arise from or relate to any such individual's employment by Seller. (b) The service hours accrued by any individual during their employment by Seller will be recognized by Buyer for purposes of eligibility for benefits under any employee benefit plan or program maintained by Buyer. In addition, Buyer will recognize and assume responsibility for accrued vacation hours for hired employees so long as such vacation hours do not exceed the individual maximum accruals permitted under Buyer's policy. Seller will be responsible for payout to each employee of the total number of vacation hours in excess of Buyer's maximum accrual amounts. 1.9 Transition Period. The Transition Period is defined as the period commencing on the Closing Date and ending as set forth in the Transition Services Agreement set forth in Exhibit B attached hereto. During the Transition Period, Buyer and Seller shall work collectively in the manner outlined in the Transition Services. 1.10 Contract Assignment and Novation. Seller and Buyer agree that Buyer shall seek assignment or novation of the contracts which are included as part of the Assets being transferred hereunder ("Contracts"). Seller shall use its best efforts to supply Buyer with all approvals and representations to third parties, as may be required, as well as to provide any other reasonable assistance to Buyer, in obtaining the assignment or novation of the Contracts to Buyer. Buyer and Seller shall work collectively in the manner outlined in the Master Subcontract Agreement set forth in Exhibit C until such time as all of the Contracts have been completely assigned or novated to Buyer. 1.11 Additional Conditions for Release of Holdback. $500,000.00 of the Holdback (the "Reserved Holdback") shall be subject to the following criteria for release. These criteria constitute conditions to payment of a portion of the Holdback which are in addition to the Net Asset criteria described in Section 1.6. Seller has projected the 2001 revenue of the Defense Threat Reduction Agency (DTRA) Facilities Operations and Facilities Maintenance contracts at approximately $5,500,000. Of this current year-revenue, a portion is projected by Seller to result from current funding under existing contracts. The remainder is projected to result from future funding under existing or follow-on contract awards from DTRA (for Facilities Operations and Facilities Maintenance contracts). Buyer's release of the full Reserved Holdback shall be conditioned on Buyer's receipt of additional funding after January 31, 2001 which is at least $1,500,000. To the extent such additional funding is less than $1,500,000, Buyer shall retain from the Reserved Holdback, and not pay to Seller, the lesser of (i) the Reserved Holdback or (ii) one half (1/2) of the amount by which the additional funding is less than $1,500,000. The determination of Reserve Holdback payment reductions shall be made on the earlier of: i) the attainment of the criteria described above (in which case there will be no reduction in Reserve Holdback payment), or ii) October 1, 2001. In the event that October 1, 2001 is the date of determination, payment of the Reserved Holdback shall be made to Seller by October 15, 2001, unless otherwise reduced or eliminated under the terms of the Net Asset determination defined previously. 1.12 Transferring Employee 401(k) Loan Guarantee. (a) Buyer intends to provide short term, interest-free loans (documented in a form approved by Seller) to Seller's transferring personnel who currently hold personal loans against equity in personal balances under Seller's 401(k) program. Buyer intends to require that, as soon as practicable but no later than one hundred twenty (120) days after the Closing Date, borrowers repay these loans after enrolling in Buyer's 401(k) program, rolling over their balances from Seller's program, and obtaining loans against their balances in Buyer's 401(k) plan. Buyer and Seller anticipate the total value of such loans to be approximately $200,000. To the extent that such loans are provided by Buyer to Seller's transferring employees, Seller agrees to guarantee repayment by Seller's transferring employees. The value of defaults on these short-term loans to Sellers transferring employees shall be directly deducted from the payment to Seller of the Holdback. Prior to performing such deduction, Buyer shall make best efforts to obtain repayment from individuals receiving short- term loans, and if repayment is not made, Buyer shall assign its interest in the defaulted loans to Seller. No deduction shall occur which relates to a transferring employee who is denied a loan against Buyer's 401(k) plan unless the original loan to the employee under Seller's 401(k) Plan was issued in noncompliance with IRS Regulations. (b) Notwithstanding Section 1.12(a), Buyer and Seller agree to work together to accomplish direct rollovers of the employee loans described above from Seller's 401(k) Plan to Buyer's 401(k) Plan if such direct rollovers are permissible under both Seller's and Buyer's respective 401(k) Plans and if such direct rollovers offer a mutually agreeable alternative to the loan guarantee procedure outlined above in 1.12 (a). If the parties do proceed with such direct rollovers, then this Section 1.12(b) will supersede Section 1.12(a) in its entirety. II. REPRESENTATIONS AND WARRANTIES OF SELLER AND MAXWELL Except as disclosed in the disclosure schedule which references the specific representations and warranties as to which the exception is made and which is provided to Buyer on or before the date of this Agreement (the "Seller Disclosure Schedule"), Seller and Maxwell jointly and severally represent and warrant to Buyer as follows (any items disclosed in the Seller Disclosure Schedule shall be considered an exception to other representations and warranties not referenced therein if a reasonable business person who was not familiar with Seller or its operations would reasonably expect such item to apply to such other representations or warranties): 2.1 Status and Authority. Seller is a corporation duly organized, validly existing and in good standing under the laws of California. Seller is duly qualified to do business in New Mexico and Virginia. Seller does not do business in any other jurisdiction where the failure to be qualified to do business would have a material adverse effect on the Business or the Assets. Seller has the requisite power and authority to enter into and complete the transactions contemplated by this Agreement and the documents set forth in Section 6.1 hereto (collectively, the "Transaction Documents"). 2.2 No Competing Interests or Options. No person or entity has an interest in, or option to acquire, any of the Assets. No entity that owns or controls, is owned or controlled by, or is under common control with Seller does business of a material nature with the Business. 2.3 Necessary Action. All actions and proceedings to be taken by or on the part of Seller in connection with the transactions contemplated by the Transaction Documents have been duly and validly taken. The Transaction Documents have been duly and validly authorized, executed, and delivered and constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their respective terms except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and other laws affecting creditor's rights and equitable remedies generally. 2.4 No Defaults. Neither the execution, delivery and performance by Seller of the Transaction Documents nor the consummation by Seller of the transactions contemplated thereby is an event that, of itself or with the giving of notice or the passage of time or both, will: (a) conflict with the provisions of the organizational documents of Seller; (b) constitute a violation of, conflict with or result in any breach of or any default under, result in any termination or modification of, or cause any acceleration of any obligation under, any material contract, mortgage, agreement, lease or other instrument to which Seller is a party, or by which any of the Assets may be affected, or result in the creation of any Security Interest upon any of the Assets; (c) violate any judgment, decree, order, law, rule or regulation applicable to Seller, the Business or any of the Assets; or (d) result in the creation or imposition of any lien, charge or encumbrance against the Assets. 2.5 Breach. Seller is not in violation or breach of any of the material terms, conditions or provisions of any mortgage or deed of trust or other contract, lease, instrument, court order, judgment, arbitration award, or decree relating to or affecting the Assets or the Business and Seller has not received any notices of any such violation or breach which have not been cured or otherwise resolved. 2.6 Liabilities. There are no material liabilities or obligations of Seller relating to the Assets or the Business, whether due or not yet due, liquidated or unliquidated, fixed, contingent or otherwise, required to be reflected on the Financial Statements (as hereinafter defined) by GAAP that are not so reflected. 2.7 Taxes and Fees. Seller has filed all applicable federal, state, local and foreign tax returns required to be filed to date, all of which are accurate and complete in all material respects, and has paid all taxes, interest, penalties and assessments (including without limitation income, withholding, excise, unemployment, Social Security, occupation, transfer, franchise, property, sales and use taxes, import duties or charges, regulatory fees and all penalties and interest in respect thereof) required to have been paid to date with respect to or involving the Assets or the Business. Seller has not been advised that any of its tax returns are being audited as of the date hereof. 2.8 Compliance. All reports and filings required to be filed with any governmental regulatory authority, agency or court by Seller with respect to the Assets have been timely filed. All such reports and filings are accurate and complete in all material respects, and from the date hereof will be filed on a timely basis. Seller is not aware of any facts and Seller has not received any communication from any governmental authority indicating that Seller is not in compliance with all requirements of applicable statutes, regulations and ordinances. 2.9 Approvals and Consents. No approvals or consents of persons or entities not a party to this Agreement are legally or contractually required to be obtained by Seller in connection with the consummation of the transactions contemplated by this Agreement. No permit, license, or authorization of, or filing with, any governmental regulatory authority or agency is required by Seller in connection with the execution, delivery and performance of this Agreement, or the consummation of the transactions contemplated hereby. 2.10 Condition of Assets. Seller has good, valid and marketable title to all of the Assets, as of the Closing Date, free and clear of all security interests of every kind or character, other than liens for taxes not yet due or statutory liens arising in the ordinary course of business which will not individually or in the aggregate materially affect the Assets or Business. All of the Assets are in good condition and repair, ordinary wear and tear excepted, and are free from known defects and damage. Seller shall convey to Buyer at Closing good and marketable title to the Assets. Other than the Excluded Assets and other than government furnished property or equipment, the Assets constitute all of the tangible and intangible assets used by Seller in connection with the Business. 2.11 Environmental Matters. (a) Except as set forth on Schedule 2.11, Seller has not been notified that it is a responsible or potentially responsible party for any response cost or natural resource damages under Section 107(a) of CERCLA, or under any other so-called "superfund" or "superlien" law or similar Legal Requirement, at or with respect to any site. (b) Except as set forth in Schedule 2.11, Seller has never received any notice or other written communication from any governmental body or other Person regarding any actual, alleged, possible or potential Liability arising from or relating to the presence, generation, manufacture, production, transportation, importation, use, treatment, refinement, processing, handling, storage, discharge, release, emission or disposal of any Hazardous Material as defined below. No Person has ever commenced or threatened to commence any contribution action or other Proceeding against Seller in connection with any such actual, alleged, possible or potential Liability; and no event has occurred, and no condition or circumstance exists, that may directly or indirectly give rise to, or result in Seller becoming subject to, any such Liability. (c) Except as set forth in Schedule 2.11, Seller has never generated, manufactured, produced, transported, imported, used, treated, refined, processed, handled, stored, discharged, released or disposed of any Hazardous Material in violation of applicable environmental laws or regulations. Except as set forth in the Schedule 2.11, Seller has never permitted any Hazardous Material to be generated, manufactured, produced, used, treated, refined, processed, handled, stored, discharged, released or disposed of in violation of applicable environmental laws or regulations: (i) on or beneath the surface of any real property that is, or that has at any time been, owned by, leased to, controlled by or used by Seller; (ii) in or into any surface water, groundwater, soil or air associated with or adjacent to any such real property; or (iii) in or into any well, pit, pond, lagoon, impoundment, ditch, landfill, building, structure, facility, improvement, installation, equipment, pipe, pipeline, vehicle or storage container that is or was located on or beneath the surface of any such real property or that is or has at any time been owned by, leased to, controlled by or used by Seller. (d) All property that is owned by, leased to, controlled by or used by Seller, and all surface water, groundwater, soil and air associated with or adjacent to such property: (i) is in clean and healthful condition; 1. except as set forth in Schedule 2.11 is free of any Hazardous Material and any harmful chemical or physical conditions; and 2. is free of any environmental contamination of any nature. (ii) Each storage tank or other storage container that is or has been owned by, leased to, controlled by or used by Seller, or that is located on or beneath the surface of any real property owned by, leased to, controlled by or used by Seller: 1. is in sound condition; and has been demonstrated by accepted testing methodologies to be free of any corrosion or leaks. (e) For purposes of this Agreement "Hazardous Material" shall include: (i) any petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated biphenyl; (ii) any waste, gas or other substance or material that is explosive or radioactive; (iii) any "hazardous substance," "pollutant," "contaminant," "hazardous waste," "regulated substance," "hazardous chemical" or "toxic chemical" as designated, listed or defined (whether expressly or by reference) in any statute, regulation or other Legal Requirement (including CERCLA, any other so-called "superfund" or "superlien" law, the Resource Conservation Recovery Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know Act and the respective regulations promulgated thereunder); (iv) any other substance or material (regardless of physical form) or form of energy that is subject to any Legal Requirement which regulates or establishes standards of conduct in connection with, or which otherwise relates to, the protection of human health, plant life, animal life, natural resources, property or the enjoyment of life or property from the presence in the environment of any solid, liquid, gas, odor, noise or form of energy; and (v) any compound, mixture, solution, product or other substance or material that contains any substance or material referred to in clause "(i)," "(ii)", "(iii)" or "(iv)" above. 2.12 Compliance with Law and Regulations. The Seller (with respect to the Assets and Business) is in compliance in all material respects with all requirements of law, and all requirements of all governmental bodies or agencies having jurisdiction over any of them, the operation of the Business and the use of its properties and assets (including the Assets). Without limiting the foregoing, Seller has paid all monies and obtained all licenses, permits, authorizations and inspections needed or required for the operation of the Business, the use of the equipment of the Business and the use of the Premises. Seller has not received any notice, not heretofore complied with, from any federal, state or municipal authority or any insurance or inspection body that any of Seller's properties, facilities, equipment or business procedures or practices fails to comply with any applicable law, ordinance, regulation or requirement of any public authority or body. 2.13 Labor Relations. Seller is not a party to or bound by any collective bargaining agreement. There has not been any labor union organizing activity affecting the Business. There is no unfair labor practice complaint against Seller pending or threatened to the knowledge of Seller. 2.14 Insurance. Seller maintains insurance policies providing general coverage as set forth in Schedule 2.14 attached hereto. All of such policies are in full force and effect and Seller is not in default of any provision thereof. Seller has not received notice from any issuer of any such policies of its intention to cancel, terminate or refuse to renew any policy issued by it. Seller will continue to maintain such insurance coverage in full force and effect through the Closing Date. 2.15 Litigation. There are no suits, judgments, arbitrations, administrative charges or other legal proceedings, claims or governmental investigations pending against, or to Seller's knowledge, threatened against, the Business or Seller relating to or affecting the Assets nor, to Seller's knowledge, is there any basis for any such suit, arbitration, administrative charge or other legal proceeding, claim or governmental investigation. Furthermore, there are no claims or threatened claims, or disputes of any kind between any current or former employee of Seller against Seller or any of Seller's management, and, to Seller's knowledge, there are no disputes between or among any employees of Seller relating to the Business. Seller has not been operating under or subject to, or in default with respect to, any order, writ, injunction or decree of any court or governmental department, commission, board, agency or instrumentality. 2.16 Brokers. There is no broker or finder or other person who would have any valid claim against Buyer or any of the parties to this Agreement for a commission or brokerage fee or payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement of, or action taken by, the Seller. 2.17 Accuracy of Information. No statement made by Seller in this Agreement or in any document to be provided by Seller to Buyer hereunder including those documents described in Article VI hereof, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained therein not misleading. Seller is not aware of any occurrence or event or circumstance that would cause any of the representations and warranties contained herein not to be true and complete in all material respects on the date hereof. 2.18 Insolvency Proceeding. No insolvency proceeding of any kind, including, without limitation, bankruptcy, receivership or reorganization, and no arrangement with creditors, affecting Seller or any of its assets or properties is pending or, to Seller's knowledge, threatened, and Seller has not made any assignment for the benefit of creditors, nor taken any actions with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings, nor will Seller do any such act prior to Closing. 2.19 Intellectual Property. (a) Seller is not a party to any material licenses, sublicenses and other agreements pursuant to which Seller is authorized to use any third party technology, trade secret, know-how, process, patent, trademark or copyright, including software (other than licenses for off-the-shelf software used in the conduct of the Business) or other intellectual property licensed from third parties and used in the Business as currently conducted or currently proposed to be conducted (the "Licensed Intellectual Property"). Seller owns, or has the right to use, all processes, formulas, methods, schematics, technology, know-how, computer software programs, data or applications and tangible or intangible proprietary information or material, patents, trademarks, trade names, service marks, registered copyrights, applications for and registrations of such patents, trademarks, trade names, service marks, copyrights, (collectively, the "Seller Intellectual Property Rights") required for the conduct of the Business as currently conducted. Seller has not entered into any licenses and sublicenses, distribution agreements and other agreements pursuant to which any person is authorized to use any Seller Intellectual Property Rights or has the right to manufacture, reproduce, market or exploit any product of Seller (a "Seller Product") or any adaptation, translation or derivative work based on any Seller Product or any portion thereof. (b) Schedule 2.19(b) sets forth a complete and accurate description of all patents or registered trademarks in Seller's Intellectual Property Rights, including a brief description of the Seller Intellectual Property Rights, and the names of the jurisdictions covered by the applicable registration or application. (c) Seller is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of any material license, sublicense or other agreement relating to the Seller Intellectual Property Rights. (d) To the best knowledge of Seller, after reasonable inquiry, the manufacturing, marketing, licensing or sale of the Seller Products do not infringe any patent, trademark, service mark, copyright, trade secret or other proprietary right of any third party. Seller (i) has not received notice that it has been sued in any suit, action or proceeding which involves a claim of infringement of any patent, trademark, service mark, copyright, trade secret or other proprietary right of any third party and (ii) has no knowledge of any claim challenging or questioning the validity or effectiveness of any license or agreement relating to any Seller Intellectual Property Rights. (e) All designs, drawings, specifications, source code, object code, documentation, flow charts, data and diagrams incorporated, embodied or reflected in any Product at any stage of its development were written, developed and created solely and exclusively by (i) employees of Seller without the assistance of any third party or (ii) third parties who assigned ownership of their rights with respect thereto to Seller by means of valid and enforceable agreements. Seller has at all times used commercially reasonable efforts to protect its trade secrets and has not acted in such a manner as to cause the loss of such trade secrets by their release into the public domain. 2.20 Financial Statements. Buyer has received copies of Seller's statement of net assets dated as of December 31, 2000 and statement of operations for the twelve-month period then ended, each as applicable to the Business (collectively, the "Financial Statements"). (a) The Financial Statements were complete and in accordance with the books and records of Seller and present fairly in all material respects the financial position of Seller as of December 31, 2000. The Financial Statements have been prepared in accordance with generally accepted accounting principles ("GAAP") and applied on a consistent basis. Except and to the extent reflected or reserved against in the Financial Statements, Seller does not have, as of the dates of such Financial Statements, any liabilities or obligations (absolute or contingent) of a nature required by GAAP to be reflected in the Financial Statements. The reserves, if any, reflected on the Financial Statements were adequate in light of the contingencies with respect to which they were made. (b) From the date of the execution of this Agreement by both Parties until the Closing Date: (i) there has not been any damage, destruction or loss of property of Seller, whether or not covered by insurance, in an aggregate amount in excess of Ten Thousand Dollars ($10,000); (ii) no grant or agreement to make any increase in the compensation payable or to become payable by Seller to its officers or employees, has been made except those occurring in the ordinary course of business; (iii) Seller has not issued any additional equity or any warrants, rights, options or entered into any commitment relating to the ownership of Seller except to the extent that such issuance does not materially affect the Assets or the Business; (iv) Seller has not sold, leased, abandoned or otherwise disposed of any real property or any machinery, equipment or other operating property other than in the ordinary course of business; (v) Seller has not sold, assigned, transferred, licensed or otherwise disposed of any Seller Intellectual Property Rights or other intangible assets, except in the ordinary course of its business; (vi) Seller has not been involved in any legal proceeding or received any threat of litigation which may result in a material liability to Seller, or affect the Assets or the Business; (vii) Seller has not engaged in any activity or entered into any material commitment or transaction (including without limitation any borrowing or capital expenditure) other than in the ordinary course of business; (viii) Seller has not permitted or allowed any of its material property or assets to be subjected to any mortgage, deed of trust, pledge, lien, security interest or other encumbrance of any kind, other than any purchase money security interests incurred in the ordinary course of business; (ix) Seller has not made any capital expenditure or commitment for additions to property, plant or equipment individually in excess of Ten Thousand Dollars ($10,000) or in the aggregate, in excess of Fifty Thousand Dollars ($50,000); (x) Seller has not paid, loaned or advanced any amount to, or sold, transferred or leased any properties or assets to, or entered into any agreement or arrangement with any of its officers, directors or members or, to Seller's knowledge, any affiliate or associate of any of the foregoing, except for normal intercompany cash management transactions; (xi) Seller has not agreed to take any action described in this Section 2.20 or outside of its ordinary course of business or which would constitute a breach of any of the representations contained in this Agreement (xii) There has been no material adverse change in the Business or the Assets. 2.21 Contracts. (a) Part 2.21 of the Disclosure Schedule identifies each customer contract and real property lease, without regard to contract amount, as well as those other contracts or agreements of Seller under which Seller is obligated to pay, or entitled to receive, $25,000 or more, all of which are included as a part of the Assets being transferred hereunder ("Contracts"). Seller has made available to the Buyer accurate and complete copies of all Contracts identified in Part 2.21 of the Disclosure Schedule, including all amendments thereto. (b) Each Contract is valid and in full force and effect, and is enforceable by Seller in accordance with its terms. (c) Except as set forth in Part 2.21 of the Disclosure Schedule: (i) To the best knowledge of Seller, after reasonable inquiry, no Person has violated or breached, or declared or committed any default under, any Contract which is continuing and not cured or resolved; (ii) To the best knowledge of Seller, after reasonable inquiry, no event has occurred, and no circumstance or condition exists, that might (with or without notice or lapse of time) (A) result in a violation or breach of any of the provisions of any Contract, (B) give any Person the right to declare a default or exercise any remedy under any Contract, (C) give any Person the right to accelerate the maturity or performance of any Contract, or (D) give any Person the right to cancel, terminate or modify any Contract; (iii) Seller has not received any written notice or communication regarding any actual, alleged, possible or potential violation or breach of, or default under, any Contract; and (iv) Seller has not waived any of its rights under any Contract. (d) To the best knowledge of Seller, each Person against which Seller has any rights under any Contract is solvent and is able to satisfy all of such Person's current and future monetary obligations and other obligations and Liabilities to Seller. (e) Except as set forth in Part 2.21 of the Disclosure Schedule: (i) Seller has never guaranteed or otherwise agreed to cause, insure or become liable for, and Seller has never pledged any of its assets to secure, the performance or payment of any obligation or other Liability of any other Person; (ii) Seller has not had any determination of noncompliance, entered into any consent order or undertaken any internal investigation relating directly or indirectly to any Government contract or Government bid; (iii) Seller has complied in all material respects with all Legal Requirements with respect to all Government contracts and Government bids. "Legal Requirement" shall mean any federal, state, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, ruling, directive, pronouncement, requirement, specification, determination, decision, opinion or interpretation that is currently issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any governmental body. (iv) Seller has not, in obtaining or performing any Government contract, violated (A) the Truth in Negotiations Act of 1962, as amended, (B) the Service Contract Act of 1963, as amended, (C) the Contract Disputes Act of 1978, as amended, (D) the Office of Federal Procurement Policy Act, as amended, (E) the Federal Acquisition Regulations (the "FAR") or any applicable agency supplement thereto, (F) the Cost Accounting Standards, (G) the Defense Industrial Security Manual (DOD 5220.22-M), (H) the Defense Industrial Security Regulation (DOD 5220.22-R) or any related security regulations, or (I) any other applicable procurement law or regulation or other Legal Requirement; (v) all facts set forth in or acknowledged by Seller in any certification, representation or disclosure statement submitted by Seller with respect to any Government Contract or Government Bid were current, accurate and complete in all material respects as of the date of submission; (vi) there are not and have not been any irregularities, misstatements or omissions relating to any Government contract or Government bid that have led to or could reasonably be expected to have a material adverse affect on the Business or the Assets. (vii) no payment has been made by Seller or by any person acting on its behalf to any person (other than to any bona fide employee or agent (as defined in subpart 3.4 of the FAR) of Seller) which is or was contingent upon the award of any Government contract or which would otherwise be in violation of any applicable procurement law or regulation or any other Legal Requirement; (viii) has complied with all applicable regulations and other Legal Requirements and with all applicable contractual requirements relating to the placement of legends or restrictive markings on technical data, computer software and other proprietary assets; (ix) in each case in which Seller has delivered or otherwise provided any technical data, computer software or Seller Intellectual Property Rights to any Governmental body in connection with any Government contract, Seller has marked such technical data, computer software or Seller Intellectual Property Rights with all markings and legends (including any "restricted rights" legend and any "government purpose license rights" legend) necessary (under the FAR or other applicable Legal Requirements) to ensure that no Governmental body or other person or entity is able to acquire any unlimited rights with respect to such technical data, computer software or Seller Intellectual Property Rights; (x) Seller has not made any disclosure to any Governmental body pursuant to any voluntary disclosure agreement; (xi) Neither Seller, nor any director, officer, agent, employee or other person acting on behalf of Seller has used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials or others or established or maintained any unlawful or unrecorded funds. Neither Seller, nor any director, officer, agent, employee or other person acting on behalf of Seller has accepted or received any unlawful contributions, payments, gifts or expenditures. (xii) The performance of the Contracts will not result in any violation of or failure to comply with any Legal Requirement. (xiii) Except for the right of government customers to audit and adjust costs under government contracts, no Person is renegotiating, or has the right to renegotiate, any amount paid or payable to Seller under any Contract or any other term or provision of any Contract. (xiv) The Contracts identified in Part 2.21 of the Disclosure Schedule collectively constitute all of the Contracts necessary to enable Seller to conduct the Business in the manner in which the Business is currently being conducted. 2.22 Government Furnished Equipment and Property. Part 2.22 of the Disclosure Schedule provides an accurate and complete breakdown of all government furnished equipment (GFE) and government furnished property (GFP) being delivered hereunder in connection with the novation of applicable contracts. (a) Buyer shall assume no liability in connection with GFE and GFP which is not being delivered hereunder. (b) All GFE and GFP are in good condition and working order, are fit for their intended use and have been subject only to ordinary wear and tear. III. REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 3.1 Status. Buyer is a corporation which is duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer has the requisite authority to enter into the Agreement and the documents specified in Article VI hereof and to complete the transactions contemplated by such documents. 3.2 No Defaults. Neither the execution, delivery and performance by Buyer of this Agreement or the documents specified in Article VI hereof, nor the consummation by Buyer of the transactions contemplated thereby are events that, themselves or with the giving of notice or the passage of time or both, will: (a) conflict with the provisions of the certificate of incorporation or bylaws of Buyer; (b) constitute a violation of, conflict with or result in any breach of or any default under, result in any termination or modification of, or cause any acceleration of any obligation under, any material contract, mortgage, indenture, agreement, lease or other instrument to which Buyer is a party or by which it is bound, or by which it may be affected; (c) violate any judgment, decree, order, statute, rule or regulation applicable to Buyer; or (d) result in the creation or imposition of any lien, charge or encumbrance against the business or the assets of Buyer. 3.3 Corporate Action. All corporate or other actions and proceedings to be taken by or on the part of Buyer in connection with the transactions contemplated by this Agreement and the documents specified in Article VI hereof have been duly and validly taken. This Agreement and the documents specified in Article VI hereof have been duly and validly authorized, executed and delivered by Buyer and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. 3.4 Brokers. No broker, finder or other person would have any valid claim against any of the parties to this Agreement for a commission or brokerage fee or payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement of or action taken by Buyer. 3.5 Litigation. There are no suits, arbitration proceedings, administrative charges or other legal proceedings, claims or governmental investigations of any nature pending or, to Buyer's knowledge, threatened against or affecting it that would affect Buyer's ability to carry out the transactions contemplated by this Agreement or the documents specified in Article VI hereof. Buyer is not subject to any material legal proceedings, claims or governmental investigations. 3.6 Approvals and Consents. No approvals or consents of persons or entities not a party to this Agreement are legally or contractually required to be obtained by Buyer in connection with the consummation of the transactions contemplated by this Agreement, the failure to obtain which would not have a material effect on Buyer. No permit, license, or authorization of, or filing with, any governmental regulatory authority or agency is required in connection with the execution, delivery and performance of this Agreement, or the consummation of the transactions contemplated hereby. IV CONDITIONS TO THE OBLIGATIONS OF SELLER The obligations of Seller to consummate the transactions contemplated by this Agreement are, unless otherwise waived by Seller, subject to the fulfillment of the following conditions: 4.1 Representations, Warranties and Covenants. (a) Each of the representations and warranties of Buyer contained in Article III of this Agreement shall be, in all material respects, true and correct as of the Closing Date; (b) Buyer shall have performed and complied with each and every covenant and agreement required by this Agreement to be performed or complied with by it prior to or on the Closing Date; and (c) Buyer shall furnish Seller with a certificate, dated the Closing Date and duly executed by an authorized officer of Buyer, to the effect that the conditions set forth in Sections 4.1 (a) and (b) have been satisfied. 4.2 Proceedings. Neither Seller nor Buyer shall be subject to any restraining order or injunction restraining or prohibiting the consummation of the transactions contemplated hereby. 4.3 Deliveries. Buyer shall have delivered the documents and funds specified in Section 6.2. 4.4 Subleases and Leases. Seller and Buyer shall have entered into the Subleases and Leases set forth in Exhibit A attached hereto. 4.5 Transition Services. Seller and Buyer shall have entered into the Transition Services Agreement set forth in Exhibit B. 4.6 Master Subcontract Agreement. Seller and Buyer shall have entered into the Master Subcontract Agreement set forth in Exhibit C. V. CONDITIONS TO THE OBLIGATIONS OF BUYER The obligations of Buyer to consummate the transactions contemplated by this Agreement are, unless otherwise waived by Buyer, subject to the fulfillment of the following conditions: 5.1 Representations, Warranties and Covenants. (a) Each of the representations and warranties of Seller contained in Article II of this Agreement shall be true and correct as of the Closing Date; (b) Seller shall have performed and complied with each and every covenant and agreement required by this Agreement to be performed or complied with by it prior to or on the Closing Date; (c) Seller shall furnish Buyer with a certificate, dated the Closing Date and duly executed by an authorized officer of Seller, to the effect that the conditions set forth in Sections 5.1 (a) and (b) have been satisfied. 5.2 Proceedings. Neither Buyer nor Seller shall be subject to any restraining order or injunction restraining or prohibiting the consummation of the transactions contemplated hereby. 5.3 Deliveries. Seller shall have delivered the documents specified in Section 6.1. 5.4 Employees. Buyer shall have received accepted offers of employment from at least eighty percent (80%) of Seller's employees which have been identified by Buyer, at its sole discretion, as "Desired Employees" and from one hundred percent (100%) of Seller's employees identified by Buyer, at its sole discretion, as "Key Employees." 5.5 Consents. Seller shall have received all required third party consents except those consents that the parties have agreed shall be obtained after the Closing. 5.6 Subleases and Leases. Seller and Buyer shall have entered into the Subleases and Leases set forth in Exhibit A attached hereto. 5.7 Transition Services. Seller and Buyer shall have entered into the Transition Services Agreement set forth in Exhibit B. 5.8 Master Subcontract Agreement. Seller and Buyer shall have entered into the Master Subcontract Agreement set forth in Exhibit C. 5.9 Environmental Indemnity Agreement. Seller and Buyer shall have entered into the Environmental Indemnity Agreement set forth in Exhibit D. VI. CLOSING; ITEMS TO BE DELIVERED AT THE CLOSING 6.1 Deliveries by Seller At the Closing, Seller shall deliver to Buyer duly executed by Seller or such other signatory as may be required by the nature of the document: (a) Bills of sale, certificates of title, endorsements, assignments and other good and sufficient instruments of sale, conveyance and transfer and assignment (the "Transfer Documents"), in form and substance satisfactory to Buyer sufficient to sell, convey, transfer and assign to Buyer all right, title and interest of Seller to the Assets and the Assumed Liabilities; (b) Any consents required to be obtained by Closing; (c) Certified copies of resolutions, duly adopted by the board of directors and/or the shareholders of Seller, which shall be in full force and effect at the time of the Closing, authorizing the execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby; (d) The certificate referred to in Section 5.1(c), together with a certificate demonstrating incumbency; and (c) The Seller Disclosure Schedule. (d) The Subleases and Lease in the forms attached hereto as Exhibit A. (e) The Transition Services Agreement in the form attached hereto as Exhibit B. (g) The Master Subcontract Agreement in the form attached hereto as Exhibit C. (h) The Environmental Indemnity Agreement in the form attached hereto as Exhibit D. A legal opinion of Donald M. Roberts, Esq., dated as of the Closing Date, in the form attached hereto as Exhibit E. 6.2 Deliveries by Buyer. Except as otherwise provided, at the Closing Buyer shall deliver to Seller: (a) Transfer Documents in form and substance satisfactory to Seller sufficient for Buyer to assume all right, title and interest of Seller to the Assets and the Assumed Liabilities; (b) Any consents required to be obtained by Closing; and (d) The certificate referred to in Section 4.1(c), together with a certificate demonstrating incumbency. (e) The Subleases and Lease in the forms attached hereto as Exhibit A (f) The Transition Services Agreement in the form attached hereto as Exhibit B. (g) The Master Subcontract Agreement in the form attached hereto as Exhibit C. (h) On April 2, 2001 Buyer shall deliver to Seller funds in the amount of $9,800,000 plus an Interest Payment, as defined in Section 1.3(a), by wire transfer. VII. SURVIVAL; INDEMNIFICATION 7.1 Survival. All representations, warranties, covenants and agreements contained in this Agreement, or in any Exhibit, Schedule, certificate, agreement, document or statement delivered pursuant hereto, shall survive for eighteen (18) months and shall not be affected in any respect by the Closing, notwithstanding any investigation conducted by any party hereto and any other information which any party may receive; provided, however, that the representations set forth in Section 2.7 (Taxes and Fees) and Section 2.11 (Environmental Matters) shall survive until the expiration of the applicable statute of limitations; and further provided, however, that Seller's and Maxwell's obligations to indemnify Buyer for Environmental Matters after the Closing shall be specifically set forth in the Environmental Indemnity Agreement. 7.2 Basic Provision; Limitations. (a) Seller and Maxwell, jointly and severally, hereby agree to indemnify, defend and hold harmless Buyer, its directors, officers and employees and all persons which directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with Buyer, and their respective successors and assigns (collectively, the "Buyer Indemnities"), jointly and severally, from, against and in respect of, and to reimburse the Buyer Indemnities for, the amount of any and all Seller Deficiencies (as defined in Section 7.3(a)). (b) Buyer hereby agrees to indemnify, defend and hold harmless Seller and its directors, officers, employees and all persons which directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with Seller, and their respective successors and assigns (collectively, the "Seller Indemnities") from, against and in respect of, and to reimburse the Seller Indemnities for, the amount of any and all Buyer Deficiencies (as defined in Section 7.3(b)). 7.3 Definition of Deficiencies. (a) As used in this Article VII, the term "Seller Deficiencies" shall mean any and all losses, damages, liabilities and claims sustained by the Buyer Indemnities and arising out of, based upon or resulting from: (i) Any misrepresentation, breach of warranty, or any non-fulfillment of any representation, warranty, covenant, obligation or agreement on the part of Seller contained in or made pursuant to this Agreement; (ii) Any error contained in any statement, report, certificate or other document or instrument delivered to the Buyer Indemnities by Seller pursuant to this Agreement or contained in any Exhibit or Schedule hereto; (iii) Any failure by Seller to pay or discharge any liability relating to the Business or the Assets that is not expressly assumed by Buyer pursuant to the provisions of this Agreement; (iv) Any litigation, proceeding or claim by any third party to the extent relating to the Assets or the Business as operated prior to the Closing Date regardless of whether or not it is included in the Seller Disclosure Schedule; (v) Any severance pay or other payment required to be paid or any other liability with respect to any independent contractor retained by Seller or employee of Seller that is not expressly being assumed hereunder by Buyer; (vi) Any failure by Seller to discharge any of the indemnification obligations under the specific Environmental Indemnity Agreement. (vii) Any and all acts, suits, proceedings, demands, assessments and judgments, and all fees, costs and expenses of any kind, related or incident to any of the foregoing (including, without limitation, any and all Legal Expenses (as defined in Section 7.6 below)); (viii) Contracts that are completed as of the Closing but are not technically "closed out" for purposes that include, without limitation, final rate determination and the issuance of technical reports; and (ix) Any Excluded Liability or Excluded Assets. (b) As used in this Article VII, the term "Buyer Deficiencies" shall mean any and all losses, damages, liabilities and claims sustained by the Seller Indemnities and arising out of, based upon or resulting from: (i) Any misrepresentation, breach of warranty, or any non-fulfillment of any representation, warranty, covenant, obligation or agreement on the part of Buyer contained in or made pursuant to this Agreement; (ii) Any error contained in any written statement, report, certificate or other document or instrument delivered to the Seller Indemnities by Buyer pursuant to this Agreement or contained in any Exhibit or Schedule hereto; (iii) Any failure by Buyer to pay or discharge any liability relating to the Assets or the Business that is expressly assumed by Buyer pursuant to the provisions of this Agreement; (iv) Any litigation, proceeding or claim by any third party to the extent relating to the Assets or Business after the Closing Date; (v) Any and all acts, suits, proceedings, demands, assessments and judgments, and all fees, costs and expenses of any kind, related or incident to any of the foregoing (including, without limitation, any and all Legal Expenses (as defined below)). 7.4 Procedures for Establishment of Deficiencies. (a) In the event that any claim shall be asserted by any third party against the Buyer Indemnities or Seller Indemnitees (Buyer Indemnitees or Seller Indemnitees, as the case may be, hereinafter, the "Indemnitees"), which, if sustained, would result in a Buyer Deficiency or a Seller Deficiency (collectively with the Buyer Deficiencies, the "Deficiencies"), then the Indemnitees, within a reasonable time after learning of such claim, shall notify the party or parties required to indemnify the Indemnities under the terms of Section 7.2(a) or 7.2(b), as applicable (the "Indemnifying Party") of such claim, and shall extend to the Indemnifying Party a reasonable opportunity to defend against such claim, at the Indemnifying Party's sole expense and through legal counsel acceptable to the Indemnitees, provided that the Indemnifying Party proceeds in good faith, expeditiously and diligently. The Indemnitees shall, at their option and expense, with respect to claims not solely for money damages, have the right to participate in any defense undertaken by the Indemnifying Party with legal counsel of their own selection. No settlement or compromise of any claim which may result in a Deficiency may be made by the Indemnifying Party without the prior written consent of the Indemnitees unless: (A) prior to such settlement or compromise the Indemnifying Party acknowledges in writing its obligation to pay in full the amount of the settlement or compromise and all associated expenses; and (B) the Indemnitees are furnished with security reasonably satisfactory to the Indemnitees that the Indemnifying Party will in fact pay such amount and expenses. No settlement or compromise of any claim that acknowledges any liability for a violation of law, or purports to impose any non-monetary obligation upon a party may be entered into without such party's consent. (b) With respect to claims that are not third party claims, in the event that the Indemnitees assert the existence of any Deficiency against the Indemnifying Party, they shall give written notice to the Indemnifying Party of the nature and amount of the Deficiency asserted. If, within fifteen calendar days after the giving of the written notice by the Indemnitees the Indemnifying Party does not provide written notice to the Indemnitees that the Indemnifying Party intends to contest the assertion by the Indemnitees (such notice by the Indemnifying Party being hereinafter referred to as the "Contest Notice"), such assertion of the Indemnitees shall be deemed accepted and the amount of the Deficiency shall be deemed established. In the event, however, that a Contest Notice is given to the Indemnitees within said fifteen calendar day period, then the contested assertion of a Deficiency shall be settled by arbitration to be held in San Diego, California by an arbitrator chosen through and in accordance with the Commercial Rules of the American Arbitration Association or its successor body. The determination of the arbitrator shall be delivered in writing to the Indemnifying Party and the Indemnitees and shall be final, binding and conclusive upon all of the parties hereto, and the amount of the Deficiency, if any, determined to exist, shall be deemed established. (c) The Indemnitees and the Indemnifying Party may agree in writing, at any time, as to the existence and amount of a Deficiency, and, upon the execution of such agreement such Deficiency shall be deemed established. 7.5 Payment of Deficiencies. The Indemnifying Parties hereby agree to pay the amount of established Deficiencies within fifteen calendar days after the establishment thereof. The amount of established Deficiencies shall be paid in cash. Any amounts not paid by the Indemnifying Party when due under this Section shall bear interest from and after the due date thereof until the date paid at a rate equal to the lesser of: (a) ten percent (10%) per annum; or (b) the highest legal rate permitted by applicable law. At the option of the Indemnitees, the Indemnitees may offset any Deficiency or any portion thereof that has not been paid by the Indemnifying Party to the Indemnitees against any obligation the Indemnitees, or any of them, may have to the Indemnifying Party, including, without limitation, the Holdback. 7.6 Legal Expenses. As used in this Article VII, the term "Legal Expenses" shall mean any and all reasonable fees (whether of attorneys, accountants or other professionals), costs and expenses of any kind reasonably incurred by any person identified herein and its counsel in defending against, or providing evidence, producing documents or taking other action with respect to any asserted claim. 7.7 Limitation. Seller and Maxwell shall have no liability to Buyer under Section 7.2(a) above for Seller's Deficiencies until the aggregate amount for which Seller and Maxwell are liable, jointly and severally, under Section 7.2(a) exceeds $100,000, and then Seller's and Maxwell's liability shall be only for the excess of such Seller Deficiency over said $100,000 sum, and Seller's and Maxwell's aggregate liability under Section 7.2(a) shall be limited to and shall not exceed $11,500,000.00, as adjusted by any Closing Adjustment. The limitations in this Section 7.7 shall not apply to Seller's liability for environmental matters as set forth in the Environmental Indemnity Agreement. VIII. POST-CLOSING COVENANTS OF SELLER 8.1 Consents Nothing contained in this Agreement shall be construed as an assignment or an attempted assignment of any contract which is by law non-assignable without the consent of the other party or parties thereto, unless such consent shall be given. Notwithstanding any other Section of this Agreement, to the extent that any additional consent or approval of any third person is required after Closing (i) in order to assign any of the Assets from Seller to Buyer or (ii) by reason of the transactions provided for in this Agreement, Seller will use its best efforts to obtain such consents and approvals. 8.2 Preservation of Records Seller covenants that it will preserve and make available (including the right to inspect and copy) to Buyer, its attorneys and accountants, for three years after the Closing Date, or longer if required under Federal Acquisition Regulations, and during normal business hours, such of the books, records, files, correspondence, memoranda and other documents with respect to the Assets pursuant to this Agreement as Buyer may reasonably require in connection with a legitimate purpose. 8.3 Further Assurances Seller agrees to remit to Buyer within 10 days of receipt any payments received by Seller after the Closing Date that relate to the Business and belong to Buyer. In addition, from time to time, on and after the Closing Date, Seller hereto will execute all such instruments and take all such actions as any other party shall reasonably request, without payment of further consideration, to carry out and effectuate the intent and purpose hereof and all transactions and things contemplated by this Agreement, including without limitation the execution and delivery of instruments, and any and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. Seller shall, at no material cost to Seller, cooperate fully with Buyer and with its counsel and accountants in connection with any steps required to be taken as part of their respective obligations under this Agreement. IX POST-CLOSING COVENANTS OF BUYER 9.1 Further Assurances. Buyer agrees to remit to Seller within 10 days of receipt any payments received by Buyer after the Closing Date that do not relate to the Business and belong to Seller. In addition, from time to time, on and after the Closing Date, Buyer will execute all such instruments and take all such actions as Seller shall reasonably request, without payment of further consideration, to carry out and effectuate the intent and purpose hereof and all transactions and things contemplated by this Agreement, including without limitation the execution and delivery of instruments, and any and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. The parties shall cooperate fully with each other and with their respective counsel and accountants in connection with any steps required to be taken as part of their respective obligations under this Agreement. 9.2 Preservation of Records. Buyer acknowledges that Seller is in the process of selling its remaining business and assets not sold hereunder to Science Applications International Corporation (SAIC) and that books and records transferred hereunder may contain information required by SAIC or Seller. Likewise, books and records transferred to SAIC may contain information required by Buyer. Buyer covenants to preserve and make available to Seller and SAIC and their respective agents, for three years after the Closing Date, or longer if required under Federal Acquisition Regulations, such of the books and records of Buyer acquired hereunder as relate to the Assets and as Seller or SAIC may reasonable require in connection with a legitimate purpose. Seller shall cause SAIC to assume its covenant in Section 8.2 above with respect to books and records transferred to SAIC. X TERMINATION 10.1 Termination. This Agreement may be terminated at any time prior to the Closing Date as follows: 10.2 (a) By written agreement of Seller and Buyer, in which each party shall bear its own costs with respect to this Agreement and the transactions contemplated thereby. (b) By the Board of Directors of Buyer if (i) at any time Buyer has reasonable grounds to believe, and does believe, that there has been a material misrepresentation, breach of warranty or breach of covenant on the part of Seller in any of the representations, warranties or covenants under this Agreement which breach is not curable, or, if curable, is not cured within 30 days after written notice of such breach is given to Seller; or (ii) any of the conditions set forth in Article V hereof have not been met in all material respects by the Closing Date. (c) By the Board of Directors of Seller if (i) at any time Seller has reasonable grounds to believe, and does believe, that there has been a material misrepresentation, breach of warranty or breach of covenant on the part of Buyer in any of the representations, warranties or covenants under this Agreement which breach is not curable, or, if curable, is not cured within 30 days after written notice of such breach is given to Buyer; or (ii) any of the conditions set forth in Article IV hereof have not been met in all material respects by the Closing Date. (d) By Buyer if Seller has not met the condition set forth in Section 6.1(k) above. (e) In the event that this Agreement shall be terminated pursuant to Section 10.1, all further obligations of the parties hereto under this Agreement shall terminate without further liability or obligation of either party to another; provided, however, the parties shall remain obligated for any breach of this Agreement. XI. MISCELLANEOUS 11.1 Expenses. Each party hereto shall bear all of its expenses incurred in connection with the transactions contemplated by this Agreement, including without limitation, accounting, financial advisory and legal fees incurred in connection herewith; provided, however, that Buyer shall bear any sales, transfer or use taxes arising from the transfer of the Assets to Buyer. 11.2 Remedies Cumulative. The remedies provided in this Agreement shall be cumulative and shall not preclude the assertion by any party hereto of any other rights or the seeking of any other remedies against the other party hereto. 11.3 Public Announcements. No party shall, without the prior written approval of the other party hereto, make any press release or other public announcement concerning the existence of this Agreement or the transactions contemplated by this Agreement, except as and to the extent that such party shall be so obligated by law, in which case such party shall give advance notice to the other party and the parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued. Except as and to the extent that a party is obligated by law, the timing and content of any announcements, press releases or public statements concerning this Agreement shall be by the agreement of Seller and Buyer. 11.4 Risk of Loss. The risk of loss, damage or destruction to any of the Assets to be transferred to Buyer hereunder from fire or other casualty or cause shall be borne by Seller at all times up to the time of the Closing, and it shall be the responsibility of Seller to repair or cause to be repaired and to restore the property to its condition prior to any such loss, damage, or destruction. In the event of any such loss, damage, or destruction, the proceeds of any claim for any loss, payable under any insurance policy with respect thereto, shall be used to repair, replace, or restore any such property to its former condition, subject to the conditions stated below. It is expressly understood and agreed that, in the event of any loss or damage to any of the Assets to be transferred hereunder from fire, casualty or other causes prior to the close of business on the day before the Closing Date, Seller shall notify Buyer of same in writing immediately. Such notice shall specify with particularity the loss or damage incurred, the cause thereof (if known or reasonably ascertainable), and the insurance coverage. In the event that the property is not completely repaired, replaced or restored on or before the Closing Date, Buyer at its sole option may elect to: (a) postpone the Closing until such time as the property has been completely repaired, replaced or restored to the reasonable satisfaction of Buyer (b) consummate the Closing and accept the property in its then condition, in which event Seller shall pay to Buyer all proceeds of insurance and assign to Buyer the right to any unpaid proceeds and effect a dollar-for-dollar adjustment in the consideration provided in Section 1.3 for any uninsured losses; or (c) terminate this Agreement. In the event of loss, damage or destruction of a substantial portion of the Assets, Seller may terminate this Agreement. 11.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective representatives, successors and assigns. Notwithstanding anything contained herein, Buyer may assign any and all rights and obligations hereunder to any entity controlled by Buyer. 11.6 Amendments; Waivers. The terms, covenants, representations, warranties and conditions of this Agreement may be changed, amended, modified, waived, discharged or terminated only by a written instrument executed by the party waiving compliance. The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect the right of such party at a later date to enforce the same. No waiver by any party of any condition or the breach of any provision, term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation or warranty of this Agreement. 11.7 Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing (which shall include notice by telex or facsimile transmission) and shall be deemed to have been duly made and received when personally served, or when delivered by Federal Express or a similar overnight courier service, expenses prepaid, or, if sent by facsimile, addressed as set forth below: If to Seller then to: Maxwell Technologies, Inc. 9244 Balboa Avenue San Diego, CA 92123 Attention: General Counsel Telecopier: (858) 277-6754 If to Buyer, then to: Titan Systems Corporation 3033 Science Park Road San Diego, California 92121-1199 Attn: General Counsel Telecopier: (858) 552-9759 Any party may alter the address to which communications are to be sent by giving notice of such change of address in conformity with the provisions of this Section 12.7 providing for the giving of notice. 11.8 Captions. The captions of Articles and Sections of this Agreement are for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Agreement. 11.9 Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the State of California without giving effect to principles of conflicts of laws. 11.10 Entire Agreement. This Agreement, the Exhibits and Schedules hereto and the other documents delivered hereunder constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and supersede all prior agreements, understandings, inducements or conditions, express or implied, oral or written, relating to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of trade inconsistent with any of the terms hereof. 11.11 Execution; Counterparts. This Agreement may be executed in any number of counterparts and by telecopier, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. 11.12 Construction. The parties acknowledge that each party and its counsel has reviewed and revised this Agreement and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or schedules hereto, or any documents executed in connection herewith. 11.13 Multiple Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.14 No Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties hereto, their respective Affiliates and their successors and assigns permitted under this Agreement, and no provisions of this Agreement (other than the indemnified Parties described in Sections 7.2(a) and (b)) shall be deemed to confer upon any other persons any remedy, claim, liability, reimbursement, cause of action or other right. 11.15 Negotiation of Disputes. Except as provided in Section 1.6 hereof, if a dispute arises between the parties relating to the interpretation or performance of this Agreement or any other agreement or instrument that is an exhibit to this Agreement or the grounds for the termination thereof, and the parties cannot resolve the dispute within thirty days of a written request by either party to the other, such dispute shall be referred to the Chief Executive Officer of Buyer, or his designee, and the Chief Executive Officer of Seller, or his designee. Such persons shall hold a meeting to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies. If within 10 business days after such meeting, the Chief Executive Officer of Buyer and the Chief Executive Officer of Seller, or their respective designees, have not succeeded in negotiating a resolution of the dispute, such dispute shall be submitted to arbitration as set forth in Section 11.16 below. 11.16 Arbitration. Except as provided in Section 1.6 hereof, or Section 8(e) of the Environmental Indemnity, disputes that have not been successfully resolved pursuant to Section 11.15 above shall be submitted to final and binding arbitration under the then current commercial rules and regulations of the American Arbitration Association ("AAA") relating to voluntary arbitration in San Diego, California. The arbitration shall be conducted by three arbitrators, one selected by each party to the arbitration and one selected by arbitrators appointed by the parties. If the arbitrators cannot agree on a third arbitrator, the third arbitrator shall be selected in accordance with the AAA rules. If a party fails to designate an arbitrator within the time limits set by the AAA rules, the arbitrator selected by the other party shall be the sole arbitrator. All arbitrators must be knowledgeable in the subject matter at issue in the dispute. Each party shall initially bear its own costs and legal fees associated with such arbitration and the parties shall split the cost of the arbitrators. The prevailing party in any such arbitration shall be entitled to recover from the other party the reasonable attorneys' fees, costs and expenses incurred by such prevailing party in connection with such arbitration. The decision of the arbitrator(s) shall be final and may be sued on or enforced by the party in whose favor it runs in any court of competent jurisdiction at the option of the successful party. The rights and obligations of the parties to arbitrate any dispute relating to the interpretation or performance of this Agreement or the grounds for the termination thereof, shall survive the expiration or termination of this Agreement for any reason. The arbitrator(s) shall be empowered to award specific performance, injunctive relief and other equitable remedies as well as damages, but shall not be empowered to award punitive or exemplary damages or award any damages in excess of any limitations set forth in this Agreement. [REMAINDER OF PAGE INTENTIONALLY OMITTED] IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their duly authorized signatories, all as of the day and year first above written. BUYER: TITAN SYSTEMS CORPORATION By: /s/ Mark W. Sopp ---------------------------------- SELLER: MAXWELL TECHNOLOGIES SYSTEMS DIVISION, INC. By: /s/ Donald M. Roberts ---------------------------------- MAXWELL: MAXWELL TECHNOLOGIES, INC. By: /s/ Vickie L. Capps ---------------------------------- EX-2 3 0003.txt ASSET PURCHASE AGREEMENT BY AND AMONG SCIENCE APPLICATIONS INTERNATIONAL CORPORATION, MAXWELL TECHNOLOGIES, INC. AND MAXWELL TECHNOLOGIES SYSTEMS DIVISION, INC. MARCH 30, 2001 LIST OF EXHIBITS AND SCHEDULES EXHIBITS Exhibit 2.03 Bill of Sale Exhibit 2.04-B Assignment and Assumption Agreement Exhibit 7.03(h) Novation Agreement Exhibit 7.03(k) Estoppel Certificate Schedules Schedule 2.01 List of Assets Schedule 2.02 Excluded Assets Schedule 2.04-A Assumed Liabilities Schedule 3.03 Allocation of Purchase Price Schedule 5.00 Disclosure Schedule Schedule 5.24 Aged Accounts Receivable List Schedule 7.03(c) Consents and Assignments Schedule 7.03(i) Key Employees ASSET PURCHASE AGREEMENT This Asset Purchase Agreement ("AGREEMENT") is made and entered into as of March 30, 2001, by and among Science Applications International Corporation, a Delaware corporation ("SAIC"), Maxwell Technologies, Inc., a Delaware corporation ("SHAREHOLDER"), and Maxwell Technologies Systems Division, Inc., a California corporation ("MAXWELL"), who agree as follows: RECITALS A. SAIC desires to acquire the business operations, properties, capabilities and experience of the Contract Research and Development, Electronics Technology, High Power Microwave and Pulsed Power business units of Maxwell (collectively, the "BUSINESS UNITS"), by purchasing certain of Maxwell's properties and employing certain of Maxwell's personnel. B. Maxwell is willing to sell to SAIC the Business Units and to permit SAIC to employ certain of its personnel. C. SAIC deems the purchase of the Business Units from Maxwell under the provisions and conditions hereof to be in the best interests of SAIC and its stockholders. Maxwell deems the sale of the Business Units to SAIC under the provisions and conditions hereof to be in the best interests of Maxwell and its shareholder. ARTICLE I DEFINITIONS 1.01 CERTAIN DEFINITIONS. Each of the following terms is defined in the article, section, provision or paragraph of this Agreement set forth opposite such term:
DEFINED TERM SECTION Affiliate 5.09 Agreement Preamble Ancillary Instrument 10.03(a)(ii) Approved Claim 10.03(b) Associate 5.09 Assumed Liabilities 2.04 Assumption Agreement 2.04 Bill of Sale 2.03 Business Units Recital A Buyer Indemnification Event 10.03(a)(iv) Buyer MAE 6.01
DEFINED TERM SECTION Company Policies 5.17 Competitive Activities 8.01(a)(i) Confidential Information 8.03(a) Deductible 10.08(e) Dispute 11.04(a) Dispute Notice 11.04(a) Employee Plans 5.12(a) Environmental Laws 5.16(c) Environmental Permits 5.16(c) ERISA 5.12(a) ERISA Affiliates 5.12(a) Excluded Assets 2.02 Immediate family 5.09 Indemnification Notice 10.06(a) Indemnification Objection Notice 10.06(a) Indemnifying Party(ies) 10.06(a) Indemnitee(s) 10.06(a) Initial Payment 3.02(a) Lien 5.04 Material Adverse Effect 5.01 Maxwell Preamble Maxwell Parties 10.05 Multiemployer plan 5.12(b) Noncompete Period 8.01(a)(ii) Permitted Indemnification Claim 10.06(a) Permits 5.18 Permitted Lien 5.05(b) Purchase Price 3.01 Purchase Price Statement 3.02(b) Purchase Price Statement Objection Notice 3.02(b) Rejected Claim 10.03(b) Related Party 5.09 Related Party Agreements 5.09 Returns 5.31(a)(i) SAIC Preamble SAIC Parties 10.03(a) SAIC Stock 9.11 Services Agreement 7.02(d) Shareholder Preamble Territory 8.01(a)(iii) Transition Services Agreement 7.02(e) Vesting Options 9.11
1.02 ADDITIONAL DEFINITIONS. The following terms, when used in this Agreement, shall have the meanings set forth below: "ASSETS" means all of the assets, properties, contracts and rights, whether tangible or intangible, of every kind and description, (including but not limited to Intellectual Property Rights), whether or not any of the foregoing are located at Maxwell's facilities or premises, that are owned by Maxwell and utilized in conducting the business and operations of the Business Units, other than those assets, properties and rights utilized to conduct business generally (e.g., assets utilized in Maxwell's centralized administrative functions), and except for the Excluded Assets. "BALANCE SHEET" means the unaudited, unadjusted statement of net assets for the Business Units dated as of December 31, 2000. "BALANCE SHEET DATE" means December 31, 2000. "CAS" means the cost accounting standards of the United States government. "CERTIFIED FINANCIAL STATEMENTS" means the Balance Sheet and the related statement of income for the Maxwell fiscal year ending December 31, 2000, in each case with respect to the Business Units, certified by the Chief Financial Officer of Maxwell. "CLAIM" means claims, demands, actions, causes of action, suits, proceedings and administrative proceedings. "CLOSING" means the closing of the transactions contemplated in this Agreement. "CLOSING DATE" means the date of this Agreement. "CODE" means the Internal Revenue Code of 1986, as amended. "DAMAGES" means assessments, losses, damages, liabilities, debts, charges (including judgments and decrees which give rise to any of the foregoing), costs and expenses, including, without limitation, interest, penalties, court costs, attorneys' fees and expenses. "DISCLOSURE SCHEDULE" means and refers to the disclosure schedule set forth on SCHEDULE 5.00, which relates exclusively to the Business Units and identifies exceptions to the warranties and representations set forth in Article V, and which shall be prepared by Maxwell and delivered to SAIC at least three (3) days before the Closing. "GAAP" means U.S. generally accepted accounting principles and procedures. "HOLDBACK AMOUNT" means the amount (if any) by which the Purchase Price (as finally determined pursuant to Section 3.02(b)) exceeds the Initial Payment, reduced by the aggregate amount of Approved Claims and Permitted Indemnification Claims. "INDEPENDENT ACCOUNTANT" means such "Big 5" or regional accounting firm of good reputation as is mutually agreed upon by SAIC and Maxwell. "INTELLECTUAL PROPERTY RIGHTS" means any and all United States and foreign (i) patents and patent applications (including without limitation docketed patent disclosures awaiting filing, reissues, divisions, continuations, continuations-in-part and extensions), patent disclosures awaiting filing determination, inventions and improvements thereto, (ii) trademarks, service marks, certification marks, trade names, trade dress, logos, business and product names, slogans, and registrations and applications for registration thereof, excluding the name "Maxwell" and any version thereof, alone or in combination with other words or symbols, (iii) copyrights and registrations thereof, (iv) inventions, processes, designs, formulae, trade secrets, know-how, industrial models, confidential, technical and business information, manufacturing, engineering and technical drawings, and product specifications, (v) intellectual property rights similar to any of the foregoing, (vi) computer software, and (vii) copies and tangible embodiments thereof (in whatever form or medium, including without limitation electronic media), in each case that are necessary to conduct the Business Units as conducted on the date hereof. "KEY EMPLOYEES" means each of the employees of Maxwell's Business Units identified on SCHEDULE 7.03(K). "LEASE" means any real property lease or sublease and any modification, amendment or notice relating thereto to which Maxwell is a party and with respect to which Maxwell and SAIC will enter into an assignment, sublease or similar arrangement in connection with the transactions contemplated hereby. "MAXWELL'S KNOWLEDGE" means the knowledge of Maxwell's officers and directors and Edward Abate, including matters with respect to which such individuals should have knowledge after a reasonable inquiry. "NON-DISCLOSURE AGREEMENT" means the Non-Disclosure Agreement dated October 10, 2000, by and among Maxwell, Shareholder and SAIC. "PERSON" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or agency or instrumentality thereof. "PRE-CLOSING DATE TAX PERIOD" means any Tax period ending on or before the Closing Date, and, with respect to a Tax period that begins on or before the Closing and ends thereafter, the portion of such Tax period ending on the Closing Date. "SAIC BUSINESS UNIT" means and refers to the operating unit or division within SAIC which, after the Closing, will conduct the Business Units and will employ the Transferred Employees. "SUBSIDIARY" of any Person means any corporation or other entity (and any predecessor thereof) of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are directly or indirectly owned by such Person. "TANGIBLE NET BOOK VALUE" means the book value of the Assets (net of depreciation or amortization) less the Assumed Liabilities as of the Closing Date, determined (i) in accordance with GAAP consistently applied and (ii) adjusted under the following circumstances: (a) as specifically provided in this Agreement or any exhibit or schedule hereto, and (b) to reflect those adjustments mutually agreed to by SAIC and Maxwell or as resolved by the Independent Accountant pursuant to Section 3.02(b) if SAIC and Maxwell are unable to agree. For purposes of the Closing, the Tangible Net Book Value shall be estimated at Six Million One Hundred Forty-Nine Thousand ($6,149,000), subject to future adjustment pursuant to Section 3.02(b). "TAX" or "TAXES" means any tax, levy, charge or fee, including federal, state, local or foreign income, alternative minimum, corporation, gross receipts, value-added, transfer, social security, employment, payroll, license, sales, use, excise, property, accumulated earnings, personal holding company, franchise, withholding, estimated or other similar tax, duty or other governmental charge or assessment or deficiencies thereof, and including any interest, penalties or additions to tax attributable to the foregoing, imposed by any governmental authority (a "GOVERNMENTAL AUTHORITY"). "TAX RETURN" means any return, report, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "TRANSFERRED EMPLOYEE" means any individual employed by Maxwell who, in connection with the transactions contemplated hereby, is offered employment with SAIC and becomes an employee of the SAIC Business Unit. ARTICLE II SALE, TRANSFER AND CONVEYANCE OF ASSETS 2.01 PURCHASE AND SALE OF ASSETS. Subject to the provisions and conditions of this Agreement, and in reliance upon the representations, warranties and covenants herein contained, on the Closing Date, Maxwell shall sell, assign, transfer, convey and deliver to SAIC, and SAIC shall purchase from Maxwell, all of the interest of Maxwell of every kind and description in the Assets, including, but not limited to, the assets, properties, contracts, rights and proposals set forth on SCHEDULE 2.01 attached hereto. 2.02 EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth herein, the Assets shall not include those assets, properties, contracts or rights which are set forth on SCHEDULE 2.02 attached hereto ("EXCLUDED ASSETS"). 2.03 TRANSFER OF TITLE. On the Closing Date, Maxwell shall execute and deliver to SAIC or its assigns a bill of sale, which shall be substantially in the form of EXHIBIT 2.03 ("BILL OF SALE") together with such other endorsements, assignments and other good and sufficient instruments of sale, transfer and conveyance, in form and substance reasonably satisfactory to SAIC and its legal counsel, as shall be effective to vest in SAIC or its assigns all of Maxwell's right and title to, and interest in, the Assets in conformity with the representations and warranties of Maxwell herein. 2.04 LIABILITIES TO BE ASSUMED. SAIC agrees to assume only the liabilities specifically set forth on SCHEDULE 2.04-A ("ASSUMED LIABILITIES"). On the Closing Date, SAIC shall execute and deliver to Maxwell an assignment and assumption agreement, which shall be substantially in the form of EXHIBIT 2.04-B ("ASSUMPTION AGREEMENT") to reflect SAIC's assumption of the Assumed Liabilities. Except as expressly set forth in this Section 2.04, SAIC will not assume or be obligated to perform any liabilities of any nature (whether known, unknown, absolute, accrued, contingent, inchoate or otherwise) relating to the business, operations, property or assets of Maxwell. Except as expressly set forth in this SCHEDULE 2.04-A, SAIC shall not assume and shall not be deemed to assume, without limitation, any of the following liabilities or obligations: (i) any liability or obligation for any Maxwell Taxes or accrued salaries, workers' compensation, medical or sick pay of or relating to any Maxwell employees, (ii) obligations under any contracts with Maxwell employees, (iii) pension or profit sharing liabilities or severance liabilities, or (iv) any liability or obligation arising out of or resulting from Maxwell's breach of any contract or other agreement or from any violation of any federal, state, local or foreign government's laws or regulations. The assumption by SAIC of any contract, lease or other agreement of Maxwell, as set forth on SCHEDULE 2.04-A, shall include only payment and performance obligations thereunder which accrue or arise after the Closing Date; in no event shall SAIC assume or be deemed to assume any liability of any nature (whether known, unknown, absolute, accrued, contingent or otherwise) relating to the performance under any such contract, lease or agreement which accrued prior to the Closing Date, unless such liability is included within the Assumed Liabilities. 2.05 FURTHER ASSURANCES REGARDING TRANSFER. From time to time after the Closing Date, Maxwell, at the reasonable request of SAIC but without further consideration, shall execute and deliver such other and further instruments of sale, assignment, transfer and conveyance and take such other and further action as SAIC reasonably may request in order to vest in SAIC or its assigns and put SAIC or its assigns in possession of the Assets and to transfer to SAIC or its assigns all contracts and rights included in the Assets. ARTICLE III CONSIDERATION AND PAYMENT 3.01 CONSIDERATION. In full consideration for the Assets, SAIC (i) shall pay to Maxwell (a) [Four Million One Hundred Eighty-Eight Thousand] Dollars ($4,188,000) plus (b) the Tangible Net Book Value (collectively, the "PURCHASE PRICE"), (ii) shall assume and become responsible for the Assumed Liabilities, and (iii) shall fulfill and perform all of its other obligations set forth herein. 3.02 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to Maxwell in accordance with the following: (a) INITIAL PAYMENT. On the Closing Date, SAIC shall pay to Maxwell, by wire transfer to such accounts as are designated by Maxwell to SAIC in writing, an aggregate amount equal to Nine Million Five Hundred Thirty-Seven Thousand Dollars ($9,537,000) (the "INITIAL PAYMENT"). (b) DETERMINATION OF PURCHASE PRICE. As soon as practicable after the Closing, but in no event later than thirty (30) days after the Closing Date, Maxwell shall calculate the Tangible Net Book Value as of the Closing Date and prepare and deliver to SAIC a statement setting forth a detailed calculation of the Tangible Net Book Value and the Purchase Price ("PURCHASE PRICE STATEMENT") and all supporting schedules (as previously identified by SAIC to Maxwell). SAIC then shall have sixty (60) days following receipt of the Purchase Price Statement to give Maxwell written notice of its objection to any item or calculation contained in the Purchase Price Statement ("PURCHASE PRICE STATEMENT OBJECTION NOTICE"). If SAIC does not deliver to Maxwell a Purchase Price Statement Objection Notice within such sixty (60)-day period, such Purchase Price Statement shall be deemed final and conclusive with respect to the determination of the Tangible Net Book Value and the Purchase Price and shall be binding on the parties for such purpose. If, however, SAIC delivers to Maxwell a Purchase Price Statement Objection Notice, the parties shall meet and shall attempt in good faith to resolve such objections. If the parties are unable to resolve SAIC's objections within thirty (30) days following such objections, the parties promptly shall refer such objections and Maxwell's responses thereto to the Independent Accountant for review, and the Independent Accountant shall (x) resolve all such objections, (y) make any necessary revisions to the Purchase Price Statement, and (z) deliver the Purchase Price Statement (as so revised, if applicable) to SAIC and Maxwell within fifteen (15) days after receiving written instructions to resolve all objections set forth therein. The parties shall make available to the Independent Accountant such books, records and supporting documentation as the Independent Accountant deems reasonably necessary to make its determination. The Independent Accountant may evaluate only items or matters identified in the Purchase Price Statement Objection Notice, and the Independent Accountant's findings shall not exceed the amount claimed by either party with respect thereto. The Purchase Price Statement as finalized by the Independent Accountant shall be deemed final and conclusive with respect to the Tangible Net Book Value and the Purchase Price and shall be binding on SAIC and Maxwell for such purposes. The fees and expenses of the Independent Accountant in resolving all such objections shall be borne one-half by SAIC, on the one hand, and one-half by Maxwell, on the other hand (which may be satisfied by offset against the Holdback Amount). (c) PAYMENT OF HOLDBACK AMOUNT. If the Purchase Price (as finally determined pursuant to Section 3.02(b) above) exceeds the sum of Initial Payment, subject to SAIC's rights of set-off and indemnification pursuant to Article X hereof, no later than the later of (i) the date which is six (6) months after the Closing Date and (ii) seven (7) days after the final determination of the Purchase Price, SAIC shall pay to Maxwell such excess (the Holdback Amount). Notwithstanding the foregoing, if the Purchase Price (as finally determined pursuant to Section 3.02(b) above) exceeds Ten Million Three Hundred Thirty-Seven Thousand Dollars ($10,337,000), then within five (5) days of the final determination of the Purchase Price, SAIC shall pay to Maxwell ninety percent of the amount by which the Purchase Price exceeds Ten Million Three Hundred Thirty-Seven Thousand Dollars ($10,337,000). For example, if the final Purchase Price is Ten Million Five Hundred Thirty-Seven Thousand Dollars ($10,537,000), then SAIC shall pay to Maxwell One Hundred Thousand Eighty Dollars ($180,000) within five (5) days of final determination of the Purchase Price. SAIC would pay to Maxwell the additional Eight Hundred Twenty Thousand Dollars ($820,000) (the Holdback Amount), subject to SAIC's rights of set-off and indemnification pursuant to Article X hereof, no later than the later of (i) the date which is six (6) months after the Closing Date and (ii) seven (7) days after the final determination of the Purchase Price. (d) REMITTANCE OF OVERPAYMENT. If the Initial Payment exceeds the Purchase Price (as finally determined pursuant to Section 3.02(c) above), no later than seven (7) days after final determination of the Purchase Price, Maxwell shall pay to SAIC in cash the amount of such excess. 3.03 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among the Assets in a manner to be determined by the parties in good faith in conjunction with determination of the Tangible Net Book Value. A preliminary allocation, based upon the parties' mutual best estimate of the Purchase Price, is set forth on SCHEDULE 3.03 attached hereto. Each party hereto shall report this transaction for federal and state tax purposes in accordance with the final allocation of the Purchase Price, which shall be reflected on a revised, final SCHEDULE 3.03 to be attached hereto. ARTICLE IV CLOSING 4.01 CLOSING. The Closing shall be held at 10:00 a.m. Pacific Standard Time on the Closing Date at SAIC at 10260 Campus Point Drive, San Diego, California 92121 or at such other place as shall be mutually agreed by the parties hereto. The Closing shall be effective as of 11:59 p.m. Pacific Standard Time on the Closing Date. On the Closing Date, the documents described in Article VII shall be exchanged by the parties, and all other actions contemplated by this Agreement to be completed at the Closing shall be completed. 4.02 SIMULTANEOUS TRANSACTIONS. All transactions to be effectuated at the Closing shall be deemed to have taken place simultaneously, and no such transaction shall be deemed to have been completed until all transactions are completed and all documents delivered. ARTICLE V REPRESENTATIONS AND WARRANTIES OF MAXWELL Maxwell represents and warrants to SAIC as of the Closing Date (unless otherwise indicated) as follows: 5.01 CORPORATE EXISTENCE AND POWER. Maxwell is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California, and has all corporate powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on the Business Units as now conducted. Maxwell is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction, including foreign countries, where the character of the Assets or the nature of the Business Units makes such qualification necessary, except for those jurisdictions where the failure to be so qualified could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), Assets or the results of operations or prospects of the Business Units (a "MATERIAL ADVERSE EFFECT"). 5.02 CORPORATE AUTHORIZATION. Maxwell has all requisite corporate power and corporate authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation by Maxwell of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Maxwell. This Agreement has been duly executed and delivered by Maxwell and constitutes a valid and binding agreement of Maxwell enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 5.03 AUTHORIZATION AND CONSENTS. The execution, delivery and performance by Maxwell of this Agreement and the consummation of sale of the Assets require no action by or in respect of, or filing with, any governmental body, agency, official or authority. With respect to any written agreements, Section 5.03 of the Disclosure Schedule lists each consent or approval of any Person which is necessary for consummation by Maxwell of the transactions contemplated hereby, including assignment of all contracts and contract rights included within the Assets. 5.04 NON-CONTRAVENTION. The execution, delivery and performance of this Agreement and the consummation by Maxwell of the transactions contemplated hereby do not and will not (i) contravene or conflict with the articles of incorporation or bylaws of Maxwell, (ii) contravene or conflict with any applicable provision of any law, regulation, rule, judgment, injunction, order or decree binding upon or applicable to Maxwell, (iii) assuming compliance with the matters, and receipt of the consents or approvals, referred to in Section 5.03, require notice or constitute a default under, or give rise to a right of termination, cancellation or acceleration of any right or obligation of Maxwell or to a loss of any benefit to which Maxwell is entitled under any provision of any material agreement, contract or other instrument or any license, franchise, permit or other similar authorization held by Maxwell which is included in the Assets, or (iv) result in the creation or imposition of any Lien on any of such Assets. For purposes of this Agreement, "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Asset. 5.05 PROPERTY AND TITLE TO ASSETS. (a) The Assets do not include any ownership interest in any real property. Maxwell has delivered to SAIC true, correct and complete copies of each Lease. Each such Lease is listed in Section 5.05(a) of the Disclosure Schedule. Except as set forth in Section 5.05(a) of the Disclosure Schedule, (i) each Lease is valid, binding and enforceable by Maxwell in accordance with its terms, and is in full force and effect, (ii) in each case, Maxwell has been in peaceable possession since the commencement of the Lease, and there are no material existing defaults by Maxwell or, to Maxwell's Knowledge, the lessors thereunder, (iii) no event or circumstance has occurred which (whether with or without notice, lapse of time or the happening or occurrence of any other event) would constitute a material default under any such Lease or which would give rise to any right of the lessor to terminate the Lease or assert any Claim or seek any Damages thereunder, (iv) neither Maxwell nor, to Maxwell's Knowledge, the lessor with respect to any such Lease has violated any of the terms or conditions of any such Lease in any material respect, (v) no written waiver, indulgence or postponement of Maxwell's obligations under any such Lease has been granted to Maxwell by the lessor under any such Lease, and (vi) Maxwell has paid, satisfied or discharged all material obligations under each Lease due and payable on or before the Closing Date, including the payment of rent and all operating expenses. Each property leased by Maxwell is, in all material respects, in a state of good maintenance and repair and is, in all material respects, adequate and suitable for the purposes for which it presently is being used. The zoning of each parcel of property described in any Lease permits the presently existing improvements and the continuation of the business presently being conducted on such parcel. (b) Maxwell possesses either good and marketable title to or, in the case of leased property and assets, valid leasehold interests in, all personal, tangible and intangible property and assets included in the Assets, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practice. None of the Assets is subject to any Lien, except for (i) Liens disclosed on the Balance Sheet or Section 5.05(b)(i) of the Disclosure Schedule, (ii) Liens for taxes not yet due or being contested in good faith (and for which adequate accruals or reserves have been established on the Balance Sheet), or (iii) Liens which do not materially detract from the value or materially interfere with any present or intended use of such property or assets (collectively, "PERMITTED LIENS"). (c) All leases of material personal property are in good standing and are valid, binding and enforceable in accordance with their respective terms, and there does not exist under any such lease (i) any default by Maxwell or any event involving Maxwell which with notice or lapse of time or both would constitute a default or (ii) to Maxwell's Knowledge, any default by any other Person or any event involving any other Person which with notice or lapse of time or both would constitute such a default. 5.06 FINANCIAL STATEMENTS; RELATED INFORMATION. (a) The Certified Financial Statements (i) fairly present, in all material respects, in conformity with GAAP applied on a consistent basis, the financial position of the Business Units as of the dates thereof and their results of operations for the periods then ended (subject to normal year-end adjustments), and (ii) except as indicated therein, reflect all claims against and all debts and liabilities of the business and operations the Business Units, fixed or contingent, as at the respective dates thereof required to be reflected or disclosed therein in accordance with GAAP, and the related statements of income, fairly present the results of operations for the periods indicated. (b) Based upon all facts and circumstances which are known to Maxwell, or could be known to Maxwell after a diligent inquiry, no reserves for warranty claims or completion or performance reserves are or were required to be included or reflected in the Certified Financial Statements. (c) Except for the Excluded Assets, the Assets constitute all of the material tangible personal property, contracts, subcontracts, assets, Intellectual Property Rights and systems used or held for use or necessary to conduct the business of the Business Units as currently conducted by Maxwell. 5.07 CONTROL OF ESSENTIAL RECORDS. Except as set forth in Section 5.07 of the Disclosure Schedule, none of the records, systems, controls, data or information which are material to the operation of the Business Units are recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether or not computerized) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of Maxwell. 5.08 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, Maxwell has conducted the Business Units in the ordinary course consistent with past practice and, except as disclosed in Section 5.08 of the Disclosure Schedule, there has not been: (a) any event, occurrence or development of a state of circumstances or facts relating to the Business Units which, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect; (b) any sale, lease, license or other disposition of any assets or properties of the Business Units, other than in the ordinary course of business consistent with past practices; (c) any creation or assumption by Maxwell of any Lien (other than Permitted Liens) on any of the Assets; (d) any material condemnation, seizure, damage, destruction or other casualty loss (whether or not covered by insurance) affecting any of the Assets; (e) any contract or agreement entered into, amended or terminated by Maxwell or the other party to the contract or agreement or any relinquishment by Maxwell or the other party to the contract or agreement of any contract or other right, in either case, material to the Business Units; (f) any (i) grant of any contract providing for severance or termination pay to any Transferred Employee, (ii) entering into or renewal of any employment, deferred compensation, retirement or other similar agreement (or any amendment to any such existing agreement) with any Transferred Employee, (iii) increase in benefits payable under any existing severance or termination pay policies or employment agreements to which any Transferred Employee is subject, (iv) any other increase in compensation, bonus or other benefits payable to any Transferred Employee, other than, in the case of clause (vi), any such increases payable to employees other than in the ordinary course of business consistent with past practice; (g) any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any Transferred Employees, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees; or (h) any notice of default or any other claim, allegation or other assertion that Maxwell has been or will be in breach or violation of any provision of any contract, agreement or instrument to which Maxwell is a party and which is included in the Assets or the Assumed Liabilities. 5.09 Related Party Transactions. Section 5.09(a) of the Disclosure Schedule contains a complete list of all contracts, agreements and understandings (oral or written) affecting the Business Units between Maxwell and any Related Party ("RELATED PARTY AGREEMENTS"). Except as disclosed in Section 5.09(a) of the Disclosure Schedule, Maxwell and a Related Party have not been parties to any material transaction affecting the Business Units on other than arm's-length terms. For purposes of this Agreement (i) the term "RELATED PARTY" means any Key Employee or any Maxwell director or officer, or any affiliate (other than the Shareholder or any Subsidiary of the Shareholder), associate or member of the immediate family of the foregoing; and (ii) the terms "AFFILIATE", "ASSOCIATE" and "IMMEDIATE FAMILY" shall have the meanings provided under Rules 12b-2, 12b-2 and 16a-1, respectively, of the Exchange Act. 5.10 MATERIAL CONTRACTS. (a) Section 5.10(a) of the Disclosure Schedule sets forth as of the date of this Agreement all of the following contracts or agreements, whether oral or written, included in the Assets or Assumed Liabilities: (i) any lease (a) for real property or (b) for personal property providing for annual rentals for such personal property lease of $10,000 or more or aggregate payments for such personal property lease of $50,000 or more; (ii) any agreement for the purchase of materials, software, supplies, goods, services, equipment or other assets providing for either individual payments of $10,000 or more or aggregate annual payments of $50,000 or more; (iii) any sales, distribution or other similar agreement providing for the sale of materials, supplies, goods, services, equipment or other assets that provides for either individual payments of $10,000 or more or aggregate annual payments of $25,000 or more; (iv) any partnership, joint venture or other similar agreement or arrangement; (v) any agreement relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise); (vi) any agreement relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset); (vii) any option, license (including any software license other than commercial-off-the-shelf licenses), franchise or similar agreement; (viii) any agency, dealer, sales representative, marketing or other similar agreement; (ix) any agreement that limits the freedom of Maxwell to compete in any line of business or with any Person or in any area after the Closing Date; (x) any agreement containing any right of first refusal or similar right; (xi) any agreement pursuant to which Maxwell has hired or retained a consultant providing for aggregate annual payments of $10,000 or more; (xii) any agreement entered into within the past year between Maxwell and/or the Shareholder and a third party pursuant to which the third party is subject to confidentiality or non-disclosure obligations in connection with the divestiture of the Business Units; (xiii) any agreement under which Maxwell agrees to indemnify any party other than in the ordinary course of business; or (xiv) any other agreement, commitment, arrangement or plan that is material to the Business Units. (b) Each agreement, contract, plan, lease or commitment disclosed in Section 5.10(a) the Disclosure Schedule or required to be disclosed in the Disclosure Schedule is a valid and binding agreement of Maxwell, and is in full force and effect, and neither Maxwell nor, to Maxwell's Knowledge, any other party thereto is in default or breach in any material respect under the terms of any such agreement, contract, plan, lease or commitment, and, to Maxwell's Knowledge, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute any event of default thereunder. (c) Section 5.10(c) of the Disclosure Schedule sets forth a summary of all outstanding proposals of or relating to the Business Units. (d) True and complete copies of each agreement, contract, proposal, plan, lease, arrangement or commitment disclosed in Section 5.10(a) or 5.10(c) of the Disclosure Schedule have been delivered or made available to SAIC. 5.11 LITIGATION. Except as set forth in Section 5.11 of the Disclosure Schedule, there is no action, suit, investigation or proceeding pending against, or to Maxwell's Knowledge threatened against or affecting the Assets or the Business Units, before any court or arbitrator or any governmental body, agency or official, which in any manner challenges or seeks to prevent, enjoin, alter or materially delay any of the transactions contemplated hereby; nor, to Maxwell's Knowledge, is there any valid basis for any such action, suit, investigation or proceeding. Maxwell is not subject to any judgment, order or decree which may have a Material Adverse Effect, and no action, suit, investigation or proceeding pending or threatened against Maxwell (whether or not described in Section 5.11 of the Disclosure Schedule) will have or reasonably should be expected to have a Material Adverse Effect. 5.12 EMPLOYEE BENEFIT PLANS. (a) Section 5.12(a) of the Disclosure Schedule contains a correct and complete list identifying (i) each material "employee benefit plan", as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), (ii) each employment, severance or similar contract, plan, arrangement or policy, and (iii) each other plan or arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self- insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits), in each case which is maintained, administered or contributed to by Maxwell or any ERISA Affiliate and covers any Transferred Employee. Copies of such agreements, plans, policies and arrangements (and, if applicable, related trust agreements) and all amendments thereto and written interpretations thereof have been furnished, or will be made available upon request, to SAIC together with the most recent annual report (Form 5500 including, if applicable, Schedule B thereto) prepared in connection with any such plan. Such plans are referred to collectively herein as the "EMPLOYEE PLANS." For purposes of this Section 5.12, "ERISA AFFILIATE" of any Person means any other Person which, together with such Person, would be treated as a single employer under Section 414 of the Code. (b) Neither Maxwell nor any ERISA Affiliate maintains, or has within the past five years maintained, any plan that constitutes or constituted a "MULTIEMPLOYER PLAN," as defined in Section 3(37) of ERISA, or that is or was subject to Title IV of ERISA. (c) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period from its adoption to date, and each trust forming a part thereof is exempt from tax pursuant to Section 501(a) of the Code. Maxwell has furnished to SAIC copies of the most recent Internal Revenue Service determination letters with respect to each such Employee Plan. Each Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such Plan. (d) Except as set forth in Section 5.12(d) of the Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not (i) entitle any Transferred Employee to severance pay or (ii) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any Employee Plan. There is no contract, agreement, plan or arrangement covering any Transferred Employee, individually or collectively, that could give rise to the payment of any amount that would not be deductible pursuant to the terms of Sections 162m or 280G of the Code. (e) Except for the Assumed Liabilities, all contributions and payments accrued under each Employee Plan relating to the employees of the Business Units, determined in accordance with prior funding and accrual practices, as adjusted to include proportional accruals for the period ending at the Closing Date, have been, or will be, discharged and paid by Maxwell in the normal course of business. 5.13 COMPLIANCE WITH LAWS AND COURT ORDERS. Maxwell (with respect to the Business Units) is not in violation of, nor has it violated, nor is Maxwell (with respect to the Business Units) under investigation with respect to, nor has Maxwell, been threatened to be charged with or given notice of any violation of, any applicable material law, rule, regulation, judgment, injunction, order or decree, which would have a Material Adverse Effect. Maxwell has not received any written notice to the effect that Maxwell (with respect to the Business Units) is not in compliance with any applicable law, statute, ordinance, regulation, judgment, injunction, order or decree. 5.14 FINDERS' FEES. There is no investment banker, broker, finder or other intermediary which has been retained by, or is authorized to act on behalf of, Maxwell or any of its Subsidiaries who might be entitled to any fee or commission upon consummation of the transactions contemplated by this Agreement. 5.15 PATENTS AND OTHER PROPRIETARY RIGHTS. (a) Section 5.15 of the Disclosure Schedule contains a complete and accurate list of all patents, patent applications, trademarks, service marks, trade names, registered copyrights and domain names used or held by Maxwell for use in the Business Units and all registrations and applications for registration of trademarks, service marks, copyrights and domain names or any other registrations or applications for registration for the foregoing Intellectual Property Rights specifying as to each such item, as applicable: (i) the owner of the item, (ii) the jurisdictions in which the item is issued or registered or in which any application for issuance or registration has been filed, and (iii) the respective issuance, registration or application number of the item. Except as explicitly indicated in Section 5.15 of the Disclosure Schedule all of the patents, trademark and service mark registrations, copyright registrations, and domain name registrations indicated in Section 5.15 of the Disclosure Schedule are valid and in full force, are held of record in the name of Maxwell and are not the subject of any cancellation or reexamination proceeding or any other proceeding challenging their extent or validity. Except as further explicitly indicated in Section 5.15 of the Disclosure Schedule, Maxwell is the applicant of record in all patent applications, and applications for trademark, service mark, trade dress, and copyright registration indicated in Section 5.15 of the Disclosure Schedule, and no opposition, extension of time to oppose, interference, rejection, or refusal to register has been received in connection with any such applications. Other than as disclosed in Section 5.15 of the Disclosure Schedule, Maxwell holds all of the patents, patent applications, trademarks, service marks, trade names, registered copyrights, domain names free and clear of all liens, encumbrances and other claims. (b) Maxwell has valid rights to use, whether through ownership, licensing or otherwise, all Intellectual Property Rights necessary to conduct the Business Units as presently conducted. Except as disclosed in Section 5.15 of the Disclosure Schedule, Maxwell has not assigned, hypothecated or otherwise encumbered any such Intellectual Property Rights, and none of the licenses included in the Intellectual Property Rights purport to grant sole or exclusive licenses to another Person, including, without limitation sole or exclusive licenses limited to specific fields of use. The transactions contemplated by this Agreement will not result in any termination, loss or impairment of any Intellectual Property Right utilized in the conduct of the Business Units (other than the loss of the right to use the name "Maxwell" or any variant thereof) nor require payment of any fee to owners of Intellectual Property Rights licensed to Maxwell and utilized in conducting the business and operations of the business. Except as disclosed in Section 5.15 of the Disclosure Schedule, (i) to Maxwell's Knowledge, there are no infringements by any other party of any of the Intellectual Property Rights, and (ii) Maxwell has not entered into any agreement to indemnify any other party against any charge of infringement of any of its Intellectual Property Rights except for any such violations or infringements as do not, individually or in the aggregate, materially affect the Assets. Except as disclosed in Section 5.15 of the Disclosure Schedule, the Business Units have not and do not violate or infringe any Intellectual Property Rights of any other Person, and Maxwell has not received any communication alleging that the Business Units violate or infringe any intellectual property right of any other Person. Maxwell (with respect to the Business Units) has not been sued at any time for infringing any intellectual property right of another Person. Except as disclosed in Section 5.15 of the Disclosure Schedule, to Maxwell's Knowledge, none of the processes, techniques and formulae, research and development results and other know-how relating to the business, the value of which is contingent upon maintenance of the confidentiality thereof, has been disclosed by Maxwell or any of its Affiliates to any Person other than those Persons who are bound to hold such information in confidence pursuant to confidentiality agreements or by operation of law. Except as disclosed in Section 5.15 of the Disclosure Schedule, the information contained in any agreement pursuant to which Maxwell or the other party is subject to confidentiality and disclosure obligations is not necessary in order to conduct the business of the Business Units in all material respects as currently conducted by Maxwell. (c) Except as disclosed in Section 5.15 of the Disclosure Schedule, no security holder or director, officer, employee (including both current and former employees), consultant (including both current and former consultants) or independent contractor (including both current and former contractors) of Maxwell or any affiliate of Maxwell owns, directly or indirectly, in whole or in part, any Intellectual Property Rights utilized by Maxwell in conducting the business and operations of the Business Units, nor has any such person asserted any claim of ownership of, or interest in, the Intellectual Property Rights utilized by Maxwell in conducting the business and operations of the Business Units. No security holder or director, officer, employee (including both current and former employees), consultant (including both current and former consultants) or independent contractor (including both current and former contractors) of Maxwell or any affiliate of Maxwell receives or claims entitlement to compensation of any form for the past or continuing use by Maxwell of any Intellectual Property Rights utilized in conducting the business and operations of the Business Units. Except as indicated in Section 5.15 of the Disclosure Schedule, Maxwell does not pay, and will not subsequently be required to pay, to any other Person any royalties or license transfer fess for the continuing and interrupted use of any Intellectual Property Rights licensed from any other Person and utilized in conducting the business and operations of the Business Units. 5.16 ENVIRONMENTAL MATTERS. (a) With respect to the Business Units, except as identified in Section 5.16 of the Disclosure Schedule: (i) no notice, notification, demand, request for information, citation, summons or order has been received, no complaint has been filed, no penalty has been assessed, and no investigation, action, claim, suit, proceeding or review (or any basis therefor) is pending or, to Maxwell's Knowledge, is threatened by any governmental entity or other Person with respect to any matters relating to Maxwell and relating to or arising out of any Environmental Law; (ii) there are no material liabilities of or relating to Maxwell of any kind whatsoever whether accrued, contingent, absolute, determined, determinable or otherwise, arising under or relating to any violation of any Environmental Law, and to Maxwell's Knowledge, there are no facts, conditions, situations or set of circumstances that could reasonably be expected to result in or be the basis for any such liability; and (iii) Maxwell is and has been in compliance in all material respects with all Environmental Laws and has obtained and is in compliance in all material respects with all Environmental Permits. (b) With respect to the Business Units, to Maxwell's Knowledge, there has been no environmental investigation, study, audit, test, review or other analysis conducted in relation to the current or prior business of Maxwell or any property or facility now or previously owned, leased or operated by Maxwell which has not been made available to SAIC. (c) For purposes of this Section 5.16, the following terms shall have the meanings set forth below: "MAXWELL" shall include any entity that is, in whole or in part, a predecessor of Maxwell; "ENVIRONMENTAL LAWS" means any federal, state, local and foreign law (including, without limitation, common law), treaty, judicial decision, regulation, rule, judgment, order, decree, injunction, permit or governmental restriction or requirement or any agreement or contract with any Governmental Authority or other third party, whether now or hereinafter in effect, relating to human health and safety, the environment or to pollutants, contaminants, wastes or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substances, wastes or materials; and "ENVIRONMENTAL PERMITS" means all permits, licenses, franchises, certificates, approvals and other similar authorizations of governmental authorities relating to or required by Environmental Laws and affecting the business of Maxwell or any of its Subsidiaries as currently conducted. 5.17 INSURANCE COVERAGE. Section 5.17 of the Disclosure Schedule incorporates a list of all insurance policies and fidelity bonds maintained by Maxwell relating to the Assets or the Business Units (the "COMPANY POLICIES"), and Maxwell has provided SAIC with accurate summaries of all such Company Policies. There is no claim by Maxwell pending under any of such Company Policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights. All premiums payable under all such Company Policies have been timely paid and Maxwell otherwise has complied in all material respects with the terms and conditions of all such policies and bonds. Section 5.17 of the Disclosure Schedule also indicates the dates since which such Company Policies (or other policies and bonds providing substantially similar insurance coverage) have been in effect. Such Company Policies are of the type and in amounts customarily carried by Persons conducting businesses similar to the Business Units. To Maxwell's Knowledge, there is no threatened termination of, material premium increase with respect to, or material alteration of coverage under, any of such Company Policies. The Company Policies providing comprehensive general liability and workers' compensation insurance provide coverage with respect to events occurring prior to the Closing Date notwithstanding that Maxwell may terminate coverage for the Business Units under such Company Policies for events occurring after the Closing Date. 5.18 LICENSES AND PERMITS. Maxwell has obtained and maintains all material governmental licenses, authorizations, consents and approvals required to carry on as now conducted the Business Units. Section 5.18 of the Disclosure Schedule correctly lists each material license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the Assets or the Business Units (collectively, the "PERMITS"), and each pending application for any Permit, together with the name of the government agency or entity issuing such Permit or with which such application is pending. Except as set forth on Section 5.18 of the Disclosure Schedule, (i) the Permits are valid and in full force and effect and (ii) Maxwell is not in default under, and no condition exists that with notice or lapse of time or both would constitute a default under, the Permits. 5.19 EMPLOYEES. Section 5.19 of the Disclosure Schedule sets forth a true and complete list of (i) the names, titles, annual salaries and other compensation of all Transferred Employees and the wage rates for all non-salaried Transferred Employees (by classification) and (ii) the names of all independent contractors or consultants and the terms and conditions pursuant to which they are compensated. To Maxwell's Knowledge, none of the Transferred Employees identified on Section 5.19 of the Disclosure Schedule has indicated to Maxwell that he or she intends to resign, retire or discontinue his or her relationship with the Business Units as a result of the transactions contemplated by this Agreement. 5.20 LABOR MATTERS. With respect to the Business Units, Maxwell is in compliance in all material respects with all currently applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours. Maxwell is not engaged in any unfair labor practice, and there exists no basis for the assessment of any unpaid wages with respect to any Transferred Employee. There is no unfair labor practice complaint pending or, to Maxwell's Knowledge, threatened against Maxwell before the National Labor Relations Board or any state or local authority or agency with respect to any Transferred Employee or the Business Units. None of the Transferred Employees are covered in a collective bargaining agreement or are members of any union, and no union representation or organization campaign or effort exists with respect to any of the Transferred Employees. 5.21 BUSINESS RECORDS. Maxwell has maintained adequate business records with respect to the Assets and the Business Units, and Maxwell is not aware of any material deficiencies in such business records. 5.22 CUSTOMERS. Section 5.10 of the Disclosure Schedule lists all material customer contracts included in the Assets. Except as set forth on Section 5.22 of the Disclosure Schedule, to Maxwell's Knowledge, no customer presently intends to materially decrease the amount of business it does under existing contracts with the Business Units, whether as a result of any announcement of the transactions contemplated by this Agreement or otherwise. 5.23 CUSTOMER AND THIRD PARTY APPROVAL. The work substantially completed by Maxwell prior to the Closing Date which will require either customer or third party approval or acceptance but which has not yet received the required customer or third party approval or acceptance will meet all material requirements and specifications of the contract as modified through the Closing Date in all material respects. 5.24 ACCOUNTS RECEIVABLE. Except as set forth on Section 5.24 of the Disclosure Schedule, all accounts receivable, unbilled work in process and other debts due or recorded in the financial statements of the Business Units as being due to Maxwell as of the Closing Date were actually made in the ordinary course of business and will be good and collectible in full in the ordinary course of business, net of reserves and allowances provided in the Balance Sheet. None of such accounts receivable or other debts is, at the Closing Date, subject to any defense, counterclaim or set-off. Maxwell has delivered to SAIC a complete and accurate list of all receivables of the Business Units as of the Balance Sheet Date, a copy of which is attached hereto as SCHEDULE 5.24. 5.25 ABSENCE OF UNLAWFUL PAYMENTS. Neither Maxwell, nor, to Maxwell's Knowledge, (a) any director, officer, agent or employee acting on behalf of Maxwell, or (b) any other Person acting on behalf of Maxwell with respect to the Business Units, has used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials or others or established or maintained any unlawful or unrecorded funds. Neither Maxwell, nor, to Maxwell's Knowledge, (i) any director, officer, agent or employee acting on behalf of Maxwell, or (ii) any other Person acting on behalf of Maxwell, has accepted or received any unlawful contributions, payments, gifts or expenditures with respect to the Business Units. 5.26 SERVICE LIABILITY. There is no action, suit, proceeding, inquiry or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending or, to Maxwell's Knowledge, threatened against or involving Maxwell relating to any services performed by Maxwell and alleged to have been defective or improperly rendered or not in compliance with contractual requirements. 5.27 GOVERNMENT PROCUREMENT RULES. Maxwell has taken reasonable and appropriate steps to assure that its business with the federal government has been conducted in conformance with the Federal Acquisition Regulations and the statutes, laws and regulations referred to therein, and other applicable statutes, regulations or laws and accounting requirements. Maxwell has not obtained and is not performing any federal contract in a manner that is inconsistent with those procurement laws or accounting requirements in any material respect. 5.28 GOVERNMENT REVIEW. Section 5.28 of the Disclosure Schedule lists all material governmental reviews, audits or investigations of a similar nature, whether pending, threatened or completed within the three-year period preceding the Closing Date, relating to the performance or administration by Maxwell of government contracts or subcontracts included in the Assets. 5.29 GOVERNMENT CLAIMS. Except as set forth in Section 5.29 of the Disclosure Schedule, no state of facts exists that would constitute valid grounds for the assertion of a material claim by a Governmental Authority against Maxwell for any of the following: (a) defective pricing or (b) CAS noncompliance, (c) fraud or (d) false claims or false statements. To Maxwell's Knowledge, except as set forth in Section 5.29 of the Disclosure Schedule, no state of facts exists that would constitute valid grounds for the assertion of a material claim by a Governmental Authority against the Company for either (y) unallowable costs as defined in the Federal Acquisition Regulations at Part 31, including those that may be included in indirect cost claims for prior years that have not yet been finally agreed to by the Defense Contract Audit Agency and/or the Administrative Contracting Officer; or (z) any other monetary claims relating to the performance or administration by Maxwell of government contracts or subcontracts. 5.30 GOVERNMENT FURNISHED PROPERTY. Except as set forth in Section 5.30 of the Disclosure Schedules, all property or equipment furnished to the Business Units prior to the Closing Date by the United States government or any other customer that has not been returned to such customer is properly accounted for and in the possession of Maxwell. All such property and equipment is in good operating condition and state of repair, reasonable wear and tear excepted. 5.31 TAXES. As of the Closing Date: (a) except as set forth in Section 5.31 of the Disclosure Schedule: (i) all material Tax Returns, statements, reports and forms (including estimated tax or information returns and reports) required to be filed with any Governmental Authority with respect to any Pre-Closing Date Tax Period by or on behalf of Maxwell relating to the Business Units (collectively, the "RETURNS"), have been or will be, to the extent required to be filed on or before the date hereof, filed when due in accordance with all applicable laws; (ii) all such Returns are, or will be at the time of filing, true, complete, and accurate in all material respects; (iii) all material Taxes shown as due and payable on the Returns that have been filed have been timely paid, or withheld and remitted to the appropriate Governmental Authority; (iv) the charges, accruals and reserves for Taxes with respect to Maxwell for any Pre-Closing Date Tax Period (including any Pre- Closing Date Tax Period for which no Return has yet been filed) reflected on the books of Maxwell (excluding any provision for deferred income taxes) are adequate to cover such Taxes in all material respects; (v) Maxwell is not delinquent in the payment of any material Tax; (vi) Maxwell has not granted any extension or waiver of the statute of limitations period applicable to any Return, which period (after giving effect to such extension or waiver) has not yet expired; (vii) there is no claim, audit, action, suit, proceeding or investigation now pending or, to Maxwell's Knowledge, threatened against or with respect to Maxwell in respect of any Tax or Return; (viii) all information set forth in the Balance Sheet relating to any Tax Asset or any Tax matters is true and complete in all material respects; (ix) Maxwell has not entered into any agreement or arrangement with any Governmental Authority with regard to the Tax liability of Maxwell; (x) Maxwell has not participated in or cooperated with an international boycott within the meaning of Section 999 of the Code nor has been requested to do so in connection with any transaction or proposed transaction; and (xi) Maxwell has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder, or other third party. (b) Section 5.31 of the Disclosure Schedule contains a list of all jurisdictions (whether foreign or domestic) to which any Tax is paid by Maxwell. 5.32 ACCURACY AND COMPLETENESS OF INFORMATION. No statement contained in (i) any representation or warranty made by the Company herein, or in any exhibit or schedule attached hereto or (ii) in the Disclosure Schedule contains any untrue statement of a material fact or omits to state any material fact necessary, in order to make the statements herein or therein not misleading in light of the circumstances in which they are made. The financial projections relating to Maxwell delivered to SAIC are the financial projections Maxwell utilized in connection with its operations. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SAIC SAIC represents and warrants to Maxwell as follows: 6.01 CORPORATE EXISTENCE AND POWER. SAIC is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware, is qualified to do business in the State of California and has all powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which could not, individually or in aggregate, reasonably be expected to have a Buyer MAE. For purposes of this Agreement, the term "BUYER MAE" means a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of SAIC and its Subsidiaries taken as a whole. 6.02 AUTHORIZATION. SAIC has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by SAIC of this Agreement, and the consummation by SAIC of the transactions contemplated hereby have been duly authorized by all necessary action. This Agreement has been duly executed and delivered by SAIC and constitutes a valid and binding agreement of SAIC enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 6.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by SAIC of this Agreement and the consummation by SAIC of the transactions described herein require no action by or in respect of, or filing with, any governmental body, agency, official or authority. 6.04 NON-CONTRAVENTION. The execution, delivery and performance by SAIC of this Agreement and the consummation by SAIC of the transactions contemplated hereby do not and will not (i) contravene or conflict with the certificate of incorporation or bylaws of SAIC, (ii) assuming compliance with the matters referred to in Section 6.03, contravene or conflict with any applicable law, rule, regulation, judgment, order or decree binding upon SAIC or (iii) require notice or constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of SAIC or to a loss of any benefit to which SAIC is entitled under, any agreement, contract or other instrument binding upon SAIC or (iv) result in the creation or imposition of any Lien on any asset SAIC, with such exceptions, in the case of clauses (iii) and (iv), as would not, individually or in the aggregate, have a Buyer MAE or materially adversely affect the transactions contemplated hereby. ARTICLE VII CONDITIONS TO CLOSING 7.01 GENERAL CONDITIONS. The obligations of the parties to effect the Closing and consummate the transactions described herein shall be subject to the following conditions unless waived in writing by all parties: (a) NO ORDERS; LEGAL PROCEEDINGS. No law or order shall have been enacted, entered, issued, promulgated or enforced by any governmental entity, nor shall any action have been instituted and remain pending or have been threatened and remain so by any governmental entity at what otherwise would be the Closing Date, which prohibits or restricts or would (if successful) prohibit or restrict the transactions contemplated by this Agreement or which would not permit the Business Units to continue to be conducted as presently conducted unimpaired following the Closing Date. (b) THIRD PARTY APPROVALS. To the extent required by applicable law, all permits, consents, approvals and waivers required to be obtained from, and notices required to be given to, any governmental entity or a third party (other than those third party consents which the parties agree shall be obtained post-Closing) shall have been received, obtained or given, as the case may be, on or prior to the Closing Date. (c) NO ACTIONS. No action or proceeding shall have been instituted or threatened by any governmental agency or regulatory body, nor any preliminary nor permanent injunction issued by any court or public authority, restraining or prohibiting the transactions contemplated by this Agreement. 7.02 CONDITIONS TO OBLIGATIONS OF MAXWELL AND THE SHAREHOLDER. The obligation of Maxwell and the Shareholder to effect the Closing is subject to the fulfillment, prior to or at the Closing, of each of the following conditions, except to the extent waived in writing by Maxwell or the Shareholder: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of SAIC contained in this Agreement or in any certificate, schedule, exhibit or other document delivered pursuant to the provisions of this Agreement, or in connection herewith, shall be true and correct in all material respects as of the date when made and again at and as of the Closing Date (except that any representation or warranty already qualified as to materiality shall be true in all respects) as though made at that time. (b) COVENANTS. SAIC shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by SAIC prior to or at the Closing Date. (c) CLOSING CERTIFICATE. Maxwell shall have received a certificate, dated the Closing Date, from a Corporate Vice President, the Secretary or Assistant Secretary of SAIC, stating that each of the conditions set forth in Section 7.01(a), (b) and (c) and 7.02(a) and (b) hereof, to the best of his or her knowledge, has been satisfied. (d) SERVICES AGREEMENT. SAIC shall have executed and delivered to Maxwell a Services Agreement, in a form mutually agreeable to the parties, relating to certain services to be provided by SAIC to Maxwell (the "Services Agreement"). (e) Transition Services Agreement. SAIC and the Shareholder shall have executed and delivered to Maxwell a Transition Services Agreement, in a form mutually agreeable to the parties, relating to certain transition services to be provided by Maxwell and the Shareholder to SAIC (the "Transition Services Agreement"). (f) Assumption Agreement. SAIC shall have executed and delivered to Maxwell the Assumption Agreement. (g) Initial Payment. SAIC shall have wired the Initial Payment to an account designated by Maxwell. 7.03 Conditions to Obligations of SAIC. The obligation of SAIC to effect the Closing is subject to the fulfillment, prior to or at the Closing, of each of the following conditions, except to the extent waived in writing by SAIC: (a) Representations. The representations and warranties of Maxwell contained in this Agreement or in any certificate, schedule, exhibit or other document delivered pursuant to the provisions of this Agreement, or in connection herewith, shall be true and correct in all material respects as of the date when made, and again at and as of the Closing Date (except that any representation or warranty already qualified as to materiality shall be true in all respects) as though made at that time. (b) Covenants. Maxwell shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by them prior to or at the Closing Date. (c) Consents and Assignments. Maxwell shall have obtained and provided to SAIC each approval, consent and assignment agreement listed in Schedule 7.03(c), each in form and substance reasonably satisfactory to SAIC. (d) Closing Certificate. SAIC shall have received a certificate dated the Closing Date from the President and Secretary of Maxwell stating that each of the conditions set forth in Section 7.01(a), (b) and (c) and Section 7.03(a), (b) and (c) hereof, to the best of their knowledge, has been satisfied. (e) Due Diligence. SAIC shall have approved, in its sole and absolute discretion, its due diligence review of the Assets and the Business Units. (f) Bill of Sale. Maxwell shall have delivered to SAIC a duly authorized and executed Bill of Sale. (g) Absence of Liens. At or prior to the Closing, Maxwell shall have delivered to SAIC a UCC search report dated as of a recent date issued by the Secretary of State of Delaware and each state in which Maxwell is qualified to do business indicating that there are no filings under the Uniform Commercial Code on file with such Secretary of State which name Maxwell as debtor or otherwise indicating any lien on the Assets, except for (i) the liens which SAIC has approved, in its sole discretion, and (ii) liens with respect to which Maxwell will deliver releases on or before the Closing Date duly executed by the lender or other creditor which is the holder of such lien. (h) Novation Agreement. Maxwell shall have executed and delivered to SAIC a Novation Agreement, which shall be in the form of Exhibit 7.03(h), relating to Maxwell's United States government contracts which are assigned to SAIC pursuant hereto. (i) Key Employees. All of the Key Employees identified on Schedule 7.03(i) shall have indicated his or her agreement to accept employment with SAIC or shall have agreed to become consultants to SAIC after the Closing on terms and conditions acceptable to SAIC in its sole and absolute discretion (contingent upon the Closing and effective on the Closing Date); provided, such Key Employees are offered salaries and benefits reasonably comparable to their current salaries and benefits. (j) Staff. At least eighty-five percent (85%) of the current employees of Maxwell who are offered employment with SAIC shall have accepted employment with SAIC on terms and conditions acceptable to SAIC in its sole and absolute discretion (contingent upon the Closing and effective on the Closing Date); provided, such employees are offered salaries and benefits reasonably comparable to their current salaries and benefits. (k) Assignments; Subleases; Estoppels. Each of the assignment of lease agreements, sublease agreements and related landlord consents and estoppel certificates attached thereto as (or identified on) Exhibit 7.03(k) shall have been executed and delivered by the applicable parties thereto (other than SAIC). (l) Board Resolutions. Maxwell shall have delivered to SAIC certified resolutions of its Board of Directors approving the execution of this Agreement and the consummation of the transactions contemplated hereby. (m) Services Agreement. Maxwell shall have executed and delivered to SAIC the Services Agreement. (n) Transition Services Agreement. Maxwell and the Shareholder shall have executed and delivered to SAIC the Transition Services Agreement. (o) Assumption Agreement. Maxwell shall have executed and delivered to SAIC the Assumption Agreement. ARTICLE VIII COVENANT NOT TO COMPETE; NON-SOLICITATION; CONFIDENTIALITY 8.01 Noncompetition. (a) Definitions. For the purposes of this Section 8.01, the following definitions will apply: (i) "Competitive Activities" means the provision of the following professional services to the United States Government or commercial technology companies: the services of physicists, engineers, and computer scientists in the areas of shock physics, plasma physics, hydrodynamics, counter terrorism, chemical and biological agent defeat, nuclear weapon effects, seismology, geothermal reservoirs, spacecraft environment interactions, electronics and sensor technology, high power microwave and pulse power technology and simulation software to the extent such activities are currently conducted by the Business Units. (ii) "Noncompete Period" means the period beginning on the Closing Date and ending on the third anniversary of the Closing Date. (iii) "Territory" means the North America. (b) Obligations. (i) Maxwell previously has conducted the Competitive Activities throughout the Territory. Maxwell and the Shareholder agree that to protect adequately the interest of SAIC in the Assets and the Business Units, it is essential that any covenant not to compete with respect thereto cover all Competitive Activities and the entire Territory. (ii) Maxwell and the Shareholder shall not, during the Noncompete Period, in any manner, directly or indirectly or by assisting others, engage in any activity or business that conducts, in any manner, any of the Competitive Activities anywhere in the Territory. Notwithstanding the foregoing, in no event shall the Shareholder and its affiliates be prohibited from engaging in business activities associated with the technology, products and lines of business, as described in the Annual Report to Shareholders on Form 10-K for fiscal year ended December 31, 2000. 8.02 Non-solicitation. During the period of two (2) years commencing on the Closing Date, (i) Maxwell and the Shareholder shall not induce or solicit (directly or indirectly) any employee to leave the employ of the SAIC Business Unit (or its successor) or engage (directly or indirectly) the services (as an employee, consultant, independent contractor or otherwise) of any such employee, without the prior express written consent of SAIC and (ii) the SAIC Business Unit shall not induce or solicit (directly or indirectly) any employee to leave the employ of Maxwell (or its successor) or engage (directly or indirectly) the services (as an employee, consultant, independent contractor or otherwise) of any such employee, without the prior express written consent of Maxwell or Shareholder. Notwithstanding the above, neither party shall be precluded from hiring any such employee who (i) initiates discussions regarding such employment without any direct or indirect solicitation by the hiring party, (ii) responds to any public advertisement placed by the hiring party or (iii) has been terminated by the other party or its affiliates prior to commencement of employment discussions between the hiring party and such employee. 8.03 Nondisclosure. (a) Confidential Information. "Confidential Information" shall mean business, technical or financial information of Maxwell included in the Assets or otherwise transferred to SAIC hereunder, to the extent that such information has been maintained by Maxwell and/or the Shareholder in confidence and has commercial value because it is not generally known to others. Confidential Information may include technical data, hardware and software specifications, computer programs, system documentation, user manuals, prototypes, analyses, information related to product planning, pricing, marketing, research and development, financial data, customer lists and data. (b) Restrictions. During the period of three (3) years commencing on the Closing Date, Maxwell and the Shareholder shall (i) not use such Confidential Information for any purpose, (ii) not disclose such Confidential Information to anyone except those of its Affiliates, employees, contractors, consultants or advisors who have a need to know for the permitted purposes, (iii) protect the confidentiality of and take all reasonable steps to prevent disclosure or unauthorized use of such Confidential Information in order to prevent it from falling into the public domain or the possession of persons not legally bound to maintain its confidentiality, (iv) not reverse engineer such Confidential Information nor utilize or disseminate such Confidential Information for the purpose of reverse engineering, and (v) not produce any product nor offer any service of any nature whatsoever based in whole or in part on such Confidential Information nor cause or assist any other Person in doing so. (c) Exclusions. The restrictions on use and disclosure of Confidential Information set forth herein shall not apply to information that (i) is in or enters the public domain through no wrongful act of Maxwell or the Shareholder; (ii) is independently developed by Maxwell or the Shareholder subsequent to the Closing; (iii) is rightfully received by Maxwell or the Shareholder subsequent to Closing from a third party without restriction and without breach of this Agreement; (iv) is approved for release by SAIC's written authorization; or (v) is required to be disclosed by order of a governmental agency, legislative body or a court of competent jurisdiction. 8.04 Severability. If a judicial or arbitral determination is made that any provision of this Article VIII constitutes an unreasonable or otherwise unenforceable restriction against either party, the provisions of this Article VIII shall be rendered void to the extent that such judicial or arbitral determination finds such provision to be unreasonable or otherwise unenforceable. In this regard, Maxwell, the Shareholder and SAIC hereby agree that any judicial authority construing this Agreement shall be empowered to sever any portion of the Territory, and prohibited Competitive Activities or any time period from the coverage of this Article VIII and to apply the provisions of this Article VIII to the remaining portion of the Territory, the remaining business activities and the remaining time period not so severed. Moreover, notwithstanding the fact that any provision of this Article VIII is determined not to be specifically enforceable, the non-breaching party nevertheless shall be entitled to recover monetary damages as a result of the breach of the specific covenants not to engage in any Competitive Activities, not to solicit employees or consultants or not to disclose Confidential Information set forth in Sections 8.01, 8.02 or 8.03 (as the case may be). The time period during which the prohibitions set forth in this Article VIII shall apply shall be tolled and suspended for a period equal to the aggregate time during which the breaching party violates such prohibitions in any respect. 8.05 Injunctive Relief. Maxwell and the Shareholder agree that any remedy at law for any breach of the provisions contained in this Article VIII shall be inadequate and that SAIC shall be entitled to injunctive relief in addition to any other remedy SAIC might have under this Agreement. ARTICLE IX CERTAIN OTHER COVENANTS AND AGREEMENTS 9.01 Consents and Filings. Each party shall (and shall cause its Affiliates to) use all commercially reasonable efforts to obtain or make, as the case may be, as soon as possible, all filings and requests for governmental approvals as may be required to be obtained or made by it (and/or any of its Affiliates) in order to enable such party (and/or any of its Affiliates) to perform its obligations under this Agreement. 9.02 Announcements. No party will issue any press release or otherwise make any public statement with respect to the transactions contemplated hereby without the prior written consent of the other party(ies), except as and to the extent that such party or any of its Affiliates determines in good faith that it is so obligated by law or stock exchange rules, in which case such party shall give notice to the other party in advance of such party's or its Affiliate's intent to make such announcement or issue such press release and the parties hereto shall use all reasonable efforts to cause a mutually agreeable release or announcement to be issued. 9.03 Delivery of Books and Records. At the Closing, Maxwell will deliver to SAIC all original contracts, books and records that are directly and solely related to the Assets and Assumed Liabilities. Upon request by SAIC within three (3) years after the Closing, Maxwell will deliver to SAIC complete copies of any other documents relating to the Business Units in Maxwell's possession. Maxwell will notify SAIC in writing prior to destroying any such documents, and give SAIC an opportunity to obtain such documents for its records. SAIC understands and acknowledges that Maxwell intends to sell to Titan Systems Corporation ("Titan") certain assets and operations not sold to SAIC hereunder and that Titan or Maxwell may require access to these books and records from time to time in the future. Assuming such sale is consummated and Titan agrees to a reciprocal provision, SAIC agrees to make such books and records available to Maxwell or Titan for three years or longer if required by Federal Acquisition Regulations, as reasonably required for a legitimate purpose on a non-interference basis after being provided at least two (2) days advance notice by Titan. 9.04 Closing Audit. In connection with SAIC's closing audit, Maxwell shall afford SAIC (and its attorneys, accountants and other representatives) reasonable access to its properties and personnel and will make available to SAIC all contracts, agreements, books, papers and records relating to the properties, assets, businesses, operations, prospects, obligations and liabilities of and associated with Maxwell as SAIC reasonably may request. In this regard, Deloitte & Touche, LLP, or such other firm of independent public accountants as SAIC may designate, shall be entitled to examine and review the working papers of Maxwell used or produced in connection with the preparation or compilation of its financial statements relating to the operations or financial condition of the Business Units. 9.05 Litigation Support. If and for so long as any party hereto actively is contesting or defending against any third party action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Assets or the Business Units, the other party will cooperate with the contesting or defending party and his or its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as reasonably shall be necessary with respect to the contest or defense, all at the sole cost and expense of the contesting or defending party (unless the contesting or defending party is entitled to indemnification therefor as provided elsewhere in this Agreement). 9.06 Cooperation. After the Closing, the parties shall cooperate in good faith to facilitate the transfer of the Assets and the Business Units in the manner contemplated hereunder with minimum disruption for the parties. Each party shall provide the other such reasonable access to its books, records and employees as may be required to carry out the purposes of this Section 9.06. In addition, Maxwell shall cooperate with SAIC and do all things reasonably necessary to assure that all costs, fees and expenses incurred by Maxwell prior to the Closing Date and by SAIC after the Closing Date which are billable to clients under contracts included within the Assets to be novated or assigned to and assumed by SAIC as a result of the transactions contemplated hereby shall be billed properly, which bill will be prepared and delivered by SAIC. Upon receipt of payments which relate to the contracts included in the Assets to be novated or assigned to and assumed by SAIC, Maxwell shall promptly identify those payments and remit such payments to SAIC within five (5) days after identification by Maxwell. Likewise, SAIC shall pay promptly to Maxwell any sums received after the Closing Date which are not part of the Assets sold hereunder and properly belong to Maxwell. 9.07 Personnel Matters. Maxwell shall use reasonable and commercially practicable efforts to assist SAIC in hiring all Maxwell employees to whom SAIC offers employment (a list of which employees will be provided to Maxwell). Maxwell shall not take any action, directly or indirectly, to prevent or discourage any such Maxwell employee from being employed by SAIC as of the Closing Date and shall not solicit, invite or induce or entice any such employee to remain in the employ of Maxwell or otherwise attempt to retain the services of any such employee, except with the prior written consent of SAIC. At the Closing, Maxwell shall waive, for the benefit of SAIC, any and all restrictions in any oral or written agreement with any of the Key Employees or any other Maxwell employee SAIC hires, relating to (a) noncompetition with Maxwell subsequent to termination of employment therewith and/or (b) the maintenance of confidentiality of any information for the benefit of Maxwell, to the extent such information is related to the Assets, the Business Units and SAIC's unrestricted enjoyment of the benefits thereof. In addition, the parties agree that the Transition Services Agreement will contain terms and conditions under which employees of Maxwell and the Shareholder will be made available for services to SAIC during a transition period. Similarly, the Services Agreement will contain terms and conditions regarding services SAIC will provide to Maxwell. 9.08 Assignment of Contracts. After the Closing Date, SAIC and Maxwell shall cooperate to assign to SAIC all contracts set forth on Exhibit 2.01. SAIC and Maxwell will do all things reasonably necessary and prepare all documents and certifications required for novation or assignment of such contracts in a timely and accurate manner. If any such contract cannot be assigned or novated after a good faith effort by the parties hereto, SAIC and Maxwell shall take all reasonable and commercially practicable action as is necessary to subcontract the work under such contracts to SAIC. 9.09 Transfer Taxes. All sales, use, transfer, stamp, conveyance, or other similar Taxes, duties, excises or governmental charges imposed by any Governmental Authority, domestic or foreign, with respect to the sale of the Assets shall be borne entirely by SAIC. 9.10 Transaction Expenses. Each party shall pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the transactions contemplated hereby, whether or not the Closing occurs. 9.11 SAIC Stock Option Pool. Subject to the approval of the stock option committee of SAIC, SAIC shall make available to the SAIC Business Unit's key employees and other staff members a pool of vesting stock options ("Vesting Options") to acquire shares of SAIC's class A common stock ("SAIC Stock"). The Vesting Options (i) will be issued pursuant to SAIC's 1998 Stock Option Plan, as amended or replaced, as soon as practicable following the Closing, (ii) will vest over a four (4) year period in accordance with SAIC's standard vesting schedule in effect on the date of award, (iii) will be subject to SAIC's standard Non-Qualified Stock Option Agreement and Confirmation, and (iv) will be issued as soon as practicable following Closing. The exercise price with respect to the Vesting Options shall be the formula price for each share of SAIC Stock, as determined by SAIC's Board of Directors, for each share of SAIC Stock which is in effect on the date the Vesting Options are awarded. 9.12 Employee Benefits. Effective as of the Closing Date, Transferred Employees will be provided the opportunity to participate in SAIC's stock ownership program and SAIC's employee benefit plans and programs in the same manner, and to the same extent, as SAIC's similarly situated employees participate in such plans and programs and SAIC shall recognize the years and/or hours of service to Maxwell by the Transferred Employees for purposes of computation of vesting and eligibility determinations under such plans and programs. ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CLAIMS AGAINST HOLDBACK AMOUNT; INDEMNIFICATION 10.01 Survival. All covenants, agreements, representations, and warranties of the parties contained in this Agreement or incorporated herein by reference shall (i) survive the Closing for the periods of time specified in Section 10.08, notwithstanding any investigation made by or on behalf of any party hereto, and (ii) be deemed to be made as of the date hereof and as of the Closing Date, in each case, subject to the limitations set forth in Section 10.08 below. 10.02 Statements as Representations. All statements contained in this Agreement (including the Recitals hereto), the Disclosure Schedule, and each exhibit, agreement, certificate or instrument delivered pursuant to this Agreement shall be deemed covenants or representations and warranties (as appropriate) within the meaning of this Article X. 10.03 SAIC Claims Against Holdback Amount. (a) Right of Set-Off. Subject to the provisions and conditions of this Article X, the portion of the Holdback Amount to be delivered to Maxwell pursuant to Section 3.02(d) shall be reduced for any Damages asserted against, imposed upon or incurred by SAIC or any of its Subsidiaries, directors, officers, employees, agents or representatives (the "SAIC Parties") resulting from, relating to or arising out of: (i) any breach of a representation, warranty, covenant or agreement of Maxwell contained in or made pursuant to this Agreement; (ii) any breach of a representation, warranty, covenant or agreement of Maxwell contained in or made pursuant to any agreement, contract or instrument which is required to be executed by any of them in connection with the Closing or pursuant to this Agreement ("Ancillary Instrument"); (iii) any event, state of facts, circumstances or condition occurring or existing prior to the Closing, or any act or omission of Maxwell or any of its Subsidiaries, affiliates, directors, officers, employees, agents or representatives prior to the Closing which relates to the Assets or the Business Units, excluding in any such case the Assumed Liabilities; or (iv) any liability in respect of any Taxes assessed against or with respect to the Assets or the Business Units attributable to the Pre-Closing Date Tax Period. The matters and events described in clauses (a)(i) through (iv) above are referred to as the "Buyer Indemnification Events." (b) Procedure In Event of Claimed Set-Off. If SAIC asserts a claim for set-off against the Holdback Amount pursuant to Section 10.03(a), it promptly shall provide an Indemnification Notice to Maxwell and the individuals specified in Section 11.06 in accordance with the procedures set forth in Section 10.06(a) hereof. Within thirty (30) days after the date of such Indemnification Notice, Maxwell either shall approve the claim for set- off and the amount thereof (thereafter, an "Approved Claim") or shall disapprove the claim or the amount thereof (thereafter, a "Rejected Claim"), or both. If Maxwell fails to approve or disapprove a claim or the amount of Damages asserted with respect thereto within the requisite period, the claim shall be deemed to be an Approved Claim. SAIC shall be entitled to set-off the amount of any Approved Claim against the Holdback Amount. SAIC and Maxwell shall resolve their disagreements with respect to any Rejected Claim in accordance with the dispute resolution procedures set forth in Section 11.04. SAIC shall be entitled to withhold the stated amount of any Rejected Claim from the Holdback Amount pending resolution of the claim. If, pursuant to the procedures set forth in Section 11.04, it ultimately is determined that any further portion of the Holdback Amount relating to such Rejected Claim is then due to Maxwell, SAIC agrees to pay such additional portion of the Holdback Amount to Maxwell. 10.04 Indemnification by Maxwell. In addition to SAIC's right to deduct the aggregate amount of Damages arising from a Buyer Indemnification Event from the Holdback Amount, subject to the terms, conditions and limitations of this Article X, Maxwell shall indemnify, defend and hold harmless the SAIC Parties from and against all Damages suffered by, imposed upon or incurred by any Indemnitee(s) or, resulting from, relating to or arising out of any Buyer Indemnification Event. 10.05 Indemnification by SAIC. Subject to the provisions and conditions of this Article X, SAIC shall indemnify, defend and hold harmless Maxwell and any of its Subsidiaries, directors, officers, employees, agents or representatives (the "Maxwell Parties") from and against all Damages asserted against, imposed upon or incurred by it, resulting from, relating to or arising out of: (a) any breach of any representation, warranty, covenant or agreement of SAIC contained in or made pursuant to this Agreement or any Ancillary Instrument. (b) any event, state of facts, circumstances or condition occurring or existing after the Closing, or any act or omission of SAIC or its subsidiaries, affiliates, directors, officers, employees, agents or representatives after the Closing which relates to the Assets or the Business Units. 10.06 Notice of Indemnification Claims. (a) Notice of Claims. If (i) a claim is made by a third party against any party that is subject to a right of indemnification hereunder or (ii) any party hereto becomes aware of facts or circumstances establishing that such party has experienced or incurred Damages or will experience or incur Damages subject to set-off or indemnification under this Article X, then such party (hereinafter, an "Indemnitee" or "Indemnitees") shall give to the other party or parties (hereinafter, the "Indemnifying Party" or the "Indemnifying Parties") written notice of such claim ("Indemnification Notice") as soon as reasonably practicable but in no event more than thirty (30) days after the Indemnitee has received notice of or obtains actual knowledge of such claims (provided that failure to give such notice shall not limit the Indemnifying Party's indemnification obligation hereunder except to the extent that the delay in giving, or failure to give, the notice adversely affects the Indemnifying Party's ability to defend against the claim). To the extent practicable, the Indemnification Notice will describe with reasonable specificity (x) the nature of and the basis for the set-off or indemnification claim, including any relevant supporting documentation, and (y) an estimate of all Damages associated therewith. If the Indemnifying Party or Indemnifying Parties do not object within thirty (30) days after receipt of the Indemnification Notice to the propriety of the set-off or indemnification claims described as being subject to set-off or indemnification pursuant to Section 10.03, 10.04 or 10.05 or the amount of Damages asserted in the Indemnification Notice, the set-off or indemnification claims described in the Indemnification Notice shall be deemed final and binding upon the Indemnifying Party(ies) (hereinafter, "Permitted Indemnification Claim"). If the Indemnifying Party contests the propriety of an indemnification claim described on the Indemnification Notice and/or the amount of Damages associated with such claim, then the Indemnifying Party shall deliver to the Indemnitee a written notice detailing with reasonable specificity all specific objections the Indemnitee has with respect to the indemnification claims contained in the Indemnification Notice ("Indemnification Objection Notice"). If the Indemnifying Party and the Indemnitee are unable to resolve the disputed matters described in the Indemnification Objection Notice within fifteen (15) business days after the date the Indemnifying Party received the Indemnification Objection Notice, the disputed matters will be subject to the dispute resolution procedures set forth in Section 11.04 hereof. Any undisputed indemnification claims contained in the Indemnification Notice shall be deemed to be final and binding upon the Indemnifying Party(ies) and shall constitute an Approved Claim and a Permitted Indemnification Claim. If the arbitrator's determination of the disputed matters results in all or any portion of an indemnification claim properly being subject to set-off or indemnification pursuant to Section 10.03, 10.04 or 10.05, such claim or portion thereof shall be final and binding upon the Indemnifying Party(ies) and shall constitute an Approved Claim and/or a Permitted Indemnification Claim. (b) Defense of Third Party Claims. An Indemnitee against whom a third party claim is made shall give the Indemnifying Party an opportunity to defend such claim, at the Indemnifying Party's sole expense and with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnitee, provided that such Indemnitee at all times also shall have the right to participate fully in defense at its sole expense. Failure of an Indemnifying Party to give an Indemnitee written notice of its election to defend such claim within thirty (30) days after receipt of notice thereof shall be deemed a waiver by such Indemnifying Party of its right to defend such claim. If an Indemnifying Party shall elect not to assume the defense of such claim (or if such Indemnifying Party shall be deemed to have waived its right to defend such claim), the Indemnitee against whom such claim is made shall have the right, but not the obligation, to undertake the sole defense of, and to compromise or settle, the claim on behalf, for the account, and at the risk and expense, of the Indemnifying Party (including without limitation the payment by such Indemnifying Party of the Indemnitees' reasonable attorneys' fees); provided, however, that if the Indemnitee undertakes the sole defense of such claim on behalf of the account, and at the risk and expense of the Indemnifying party, it shall defend such claim in good faith and shall apprise the Indemnifying Party from time to time as the Indemnitee deems appropriate of the progress of such defense. If one or more of the Indemnifying Parties assumes the defense of such claim, the obligation of such Indemnifying Party hereunder as to such claim shall include taking all steps necessary in the defense or settlement of such claim. The Indemnifying Party, in the defense of such claim, shall not consent to the entry of any judgment or enter into any settlement (except with the written consent of the Indemnitee) which does not include as an unconditional term thereof the giving by the claimant to the Indemnitee against whom such claim is made of a release from all liability in respect of such claim (which release shall exclude only any obligations incurred in connection with any such settlement). If the claim is one that cannot by its nature be defended solely by the Indemnifying Party, then the Indemnitee shall make available, at the Indemnifying Party's expense, all information and assistance that the Indemnifying Party reasonably may request. 10.07 Determination of Damages. Damages with respect to any Approved Claim or Permitted Indemnification Claim shall be determined without regard to any materiality or knowledge qualification set forth in any representation, warranty or covenant. The Indemnifying Party or Indemnifying Parties shall pay to the Indemnitee the entire amount of all Damages associated with any Permitted Indemnification Claim within thirty (30) days after such claim is determined to be a Permitted Indemnification Claim pursuant to Section 10.06 above. 10.08 Limitations on Indemnity. (a) Termination of Indemnification Rights. The representations and warranties contained in or made pursuant to this Agreement or any Ancillary Instrument and the related indemnity obligations set forth in this Article X shall terminate on, and no claim or action with respect thereto may be brought after, the date that is eighteen (18) months after the Closing Date, except that (i) the representations and warranties contained in Sections 5.01, 5.02, 5.03, 5.04 and 5.05 and in Article VI, shall survive indefinitely, and (ii) the representations and warranties contained in Section 5.16 and 5.31 will survive until the termination of any applicable statute of limitations. Notwithstanding the foregoing, the representations and warranties which terminate or expire as set forth herein, and the liability of any Indemnifying Party hereto with respect thereto pursuant to this Article X, shall not terminate with respect to any claim, whether fixed or not fixed as to liability or liquidated as to amount, with respect to which the Indemnifying Party has been given an Indemnification Notice prior to such termination or expiration pursuant to the preceding sentence. No covenant or agreement of any party hereto shall survive Closing, except that any covenant or agreement that, by its terms or context, is intended to survive the Closing, shall survive the Closing for the period specified therein or contemplated thereby. (b) Continuing Obligations. The obligations of the Indemnifying Parties shall continue with respect to any claims for Damages asserted by any Indemnitee prior to the last date upon which such Indemnitee may assert such claims until resolution thereof. (c) Mitigation and Insurance. SAIC shall undertake commercially reasonable efforts to mitigate all Damages incurred hereunder until such time as any claim for Damages hereunder is finally and fully resolved, including the time during which Maxwell may be pursuing claims with respect to such Damages under and with respect to any policy or policies of insurance maintained by Maxwell prior to the Closing Date. In addition, if and to the extent that such Damages are or may be covered by any such policy or policies of insurance maintained by Maxwell prior to the Closing Date, SAIC shall provide reasonable and commercially practical cooperation and assistance to Maxwell in conjunction with their efforts to make any and all claims under and with respect to such insurance policies, and any proceeds of such insurance policies which actually are paid or become payable to SAIC shall be applied to offset any Damages which otherwise would be paid or become payable by Maxwell hereunder, provided that the prosecution or resolution of any claims under or with respect to such insurance policies shall not abate, impair, or delay SAIC's' ability to pursue its rights under this Article X. (d) Aggregate Indemnity Limitations. (i) Absent a finding of fraud or intentional misrepresentation, Maxwell shall not be obligated to make any indemnification payment pursuant to this Article X, for Damages under Sections 10.03(a)(i) and (ii), to any SAIC Party, on account of any Permitted Indemnification Claim to the extent such indemnification payment, together with all other indemnification payments in respect of Approved Claims and Permitted Indemnification Claims (including amounts subject to set-off pursuant to Section 10.03), would exceed the Purchase Price. (ii) Absent a finding of fraud or intentional misrepresentation, SAIC shall not be obligated to make any indemnification payment pursuant to this Article X, for Damages under Section 10.05(a), to any Maxwell Party on account of any Permitted Indemnification Claim to the extent such indemnification payment, together with all other indemnification payments in respect of Approved Claims and Permitted Indemnification Claims would exceed the Purchase Price. (e) Basket. Notwithstanding anything to the contrary contained in this Agreement, no Indemnitee shall be entitled to set-off or indemnification under this Article X, for Damages under Sections 10.03(a)(i), 10.03(a)(ii) and 10.05(a), unless and until the aggregate amount of Damages that the Indemnifying Party otherwise would be obligated to pay pursuant to the provisions of this Agreement exceeds Fifty Thousand Dollars ($50,000) (the "Deductible"); thereafter, the Indemnitee shall be entitled to indemnification as to all such Damages in excess of the initial Fifty Thousand Dollars ($50,000). ARTICLE XI MISCELLANEOUS PROVISIONS 11.01 Amendment and Modifications. This Agreement may be amended, modified and supplemented only by written agreement between the parties hereto which states that it is intended to be a modification of this Agreement. 11.02 Waiver of Compliance. Any failure of Maxwell or SAIC to comply with any obligation, representation, warranty, covenant, agreement or condition herein may be waived in writing by the other applicable parties, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 11.03 Remedies; Waiver. To the maximum extent permitted by law, all rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available under applicable law. No failure on the part of any party to exercise or delay in exercising any right hereunder shall be deemed a waiver thereof, nor shall any single or partial exercise preclude any further or other exercise of such or any other right. 11.04 Dispute Resolution. (a) Negotiated Resolution. If any dispute arises (i) out of or relating to, this Agreement or any alleged breach thereof, or (ii) with respect to any of the transactions or events contemplated hereby ("Dispute"), the party desiring to resolve such Dispute shall deliver a written notice describing such Dispute with reasonable specificity to the other parties ("Dispute Notice"). If any party delivers a Dispute Notice pursuant to this Section 11.04, or if any Indemnifying Party delivers to any Indemnitee an Indemnification Objection Notice pursuant to Section 10.06, the parties involved in the Dispute shall meet at least twice within the thirty (30) day period commencing with the date of the Dispute Notice or the Indemnification Objection Notice (as the case may be) and in good faith shall attempt to resolve such Dispute or the Rejected Claim (as the case may be). (b) Mediation. If any Dispute or Rejected Claim is not resolved or settled by the parties as a result of negotiation pursuant to Section 11.04(a) above, the parties shall submit the Dispute or Rejected Claim to non-binding mediation before a retired judge of a federal District Court or California Supreme Court, or some similarly qualified, mutually agreeable individual. The parties shall bear the costs of such mediation equally. (c) Arbitration. If the Dispute or Rejected Claim is not resolved by mediation pursuant to Section 11.04(b) above, or if the parties fail to agree upon a mediator, within ninety (90) days after the Dispute Notice or Indemnification Objection Notice (as the case may be), the Dispute or Rejected Claim shall be settled by arbitration conducted in the State of California which shall be in accordance with the rules and procedures of JAMS/Endispute then in effect with respect to commercial disputes. The arbitration of such issues, including the determination of any amount of damages suffered by any party hereto by reason of the acts or omissions of any party, shall be final and binding upon all parties. Notwithstanding the foregoing, the arbitrator shall not be authorized to award punitive damages with respect to any such claim or controversy, nor shall any party seek punitive damages relating to any matter under, arising out of or relating to this Agreement in any other forum. Except as otherwise set forth in the Agreement, the cost of any arbitration hereunder, including the cost of the record or transcripts thereof, if any, administrative fees, and all other fees involved including reasonable attorneys' fees incurred by the party determined by the arbitrator to be the prevailing party, shall be paid by the party determined by the arbitrator not to be the prevailing party, or otherwise allocated in an equitable manner as determined by the arbitrator. 11.05 Notices. All notices, requests, demandsand other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, facsimile, electronic media, overnight courier or mailed, certified or registered mail with postage prepaid: (a) SAIC: James C. Morgan Sector Controller Science Applications International Corporation 1410 SpringHill Road, Suite 400 M/S SH4-1 McLean, Virginia 22101 Tel (703) 288-5303 Fax (703) 288-5401 With a copy to: William A. Hanan Corporate Vice President Science Applications International Corporation 10260 Campus Point Drive, M/S L5-A San Diego, California 92121 Tel (858) 826-6779 Fax (858) 826-6980 And to: Shelley E. Bennett, Esq. Corporate Counsel Science Applications International Corporation 10260 Campus Point Drive, M/S F-3 San Diego, California 92121 Tel (858) 826-9551 Fax (858) 826-4037 or to such other person or address as SAIC shall furnish to Maxwell in writing. (b) Maxwell: Donald M. Roberts General Counsel Maxwell Technologies, Inc. 9244 Balboa Avenue San Diego, CA 92123 Tel (858) 503-5172 Fax (858) 277-6754 or to such other person or address as Maxwell shall furnish to SAIC in writing. 11.06 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other party. 11.07 Governing Law. This Agreement and the legal relationship among the parties hereto shall be governed and construed under the laws of the State of California. 11.08 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signature by telecopy shall be sufficient to evidence a party's intention to be bound hereby, provided that such party forwards his or her original signature to the other parties by first class mail or overnight delivery service. 11.09 Headings. The headings of the Sections and Articles of this Agreement are inserted for convenience only and shall not constitute a part hereof or affect in any way the meaning or interpretation of this Agreement. 11.10 Entire Agreement. This Agreement, including the exhibits and schedules hereto, the Disclosure Schedule and the other documents and certificates delivered pursuant to the terms hereof, and the Non-Disclosure Agreement set forth the final, complete and exclusive agreement and understanding of the parties hereto in respect of the subject matter contained herein, and supersede all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto. 11.11 Third Parties. Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or corporation other than the parties hereto or their successors and assigns any rights or remedies under or by reason of this Agreement. 11.12 Further Assurances. Each of the parties hereto agrees that from time to time, at the request of the other party hereto and without further consideration, it will execute and deliver such other documents and take such other action as such other party may reasonably request in order to consummate more effectively the transactions contemplated hereby. The parties shall cooperate with each other in such actions and in securing requisite approvals. Each party shall execute and deliver both before and after the Closing such further certificates, agreements and other documents and take such other actions as the other party reasonably may request to consummate or implement the transactions contemplated hereby or to evidence such events or matters. 11.13 Representation by Counsel; Interpretation. Maxwell and SAIC each acknowledge that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and any such right is expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of Maxwell and SAIC. 11.14 Calendar Days. All references to days shall be deemed to refer to calendar days unless this Agreement specifically refers to "business days," in which event Saturdays, Sundays and Federal holidays shall be excluded. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. "SAIC" SCIENCE APPLICATIONS INTERNATIONAL CORPORATION a Delaware corporation By: /s/ William A. Hanan --------------------------- Name: William A. Hanan --------------------------- Title: Corporate Vice President --------------------------- Attest: By: /s/ Shelley E. Bennett --------------------------- Name: Shelley E. Bennett --------------------------- Title: Corporate Counsel --------------------------- "MAXWELL" MAXWELL TECHNOLOGIES SYSTEMS DIVISION, INC., a California corporation By: /s/ Vickie L. Capps --------------------------- Name: Vickie L. Capps --------------------------- Title: Chief Financial Officer --------------------------- Attest: By: /s/ Donald M. Roberts --------------------------- Name: Donald M. Roberts --------------------------- Title: Secretary --------------------------- "SHAREHOLDER" MAXWELL TECHNOLOGIES, INC., a Delaware corporation By: /s/ Vickie L. Capps --------------------------- Name: Vickie L. Capps --------------------------- Title: Chief Financial Officer --------------------------- Attest: By: /s/ Donald M. Roberts --------------------------- Name: Donald M. Roberts --------------------------- Title: Secretary --------------------------- TABLE OF CONTENTS ARTICLE I 1 DEFINITIONS 1 1.01 Certain Definitions 1 1.02 Additional Definitions 3 ARTICLE II 5 SALE, TRANSFER AND CONVEYANCE OF ASSETS 5 2.01 Purchase and Sale of Assets 5 2.02 Excluded Assets 5 2.03 Transfer of Title 5 2.04 Liabilities to be Assumed 5 2.05 Further Assurances Regarding Transfer 6 ARTICLE III 6 CONSIDERATION AND PAYMENT 6 3.01 Consideration 6 3.02 Payment of Purchase Price 6 3.03 Allocation of Purchase Price 7 ARTICLE IV 8 CLOSING 8 4.01 Closing 8 4.02 Simultaneous Transactions 8 ARTICLE V 8 REPRESENTATIONS AND WARRANTIES OF MAXWELL 8 5.01 Corporate Existence and Power 8 5.02 Corporate Authorization 8 5.03 Authorization and Consents 9 5.04 Non-contravention 9 5.05 Properties and Title to Assets 9 5.06 Financial Statements; Related Information 10 5.07 Control of Essential Records 10 5.08 Absence of Certain Changes 10 5.09 Related Party Transactions 11 5.10 Material Contracts 12 5.11 Litigation 13 5.12 Employee Benefit Plans 13 5.13 Compliance with Laws and Court Orders 14 5.14 Finders' Fees 14 5.15 Patents and Other Proprietary Rights 14 5.16 Environmental Matters 16 5.17 Insurance Coverage 17 5.18 Licenses and Permits 17 5.19 Employees 18 5.20 Labor Matters 18 5.21 Business Records 18 5.22 Customers 18 5.23 Customer or Third Party Approval 18 5.24 Accounts Receivable 18 5.25 Absence of Unlawful Payments 18 5.26 Service Liability 19 5.27 Government Procurement Rules 19 5.28 Governmental Review 19 5.29 Government Claims 19 5.30 Government Furnished Property 19 5.31 Taxes 19 5.32 Accuracy and Completeness of Information 20 ARTICLE VI 21 REPRESENTATIONS AND WARRANTIES OF SAIC 21 6.01 Corporate Existence and Power 21 6.02 Authorization 21 6.03 Governmental Authorization 21 6.04 Non-contravention 21 ARTICLE VII 22 CONDITIONS TO CLOSING 22 7.01 General Conditions 22 7.02 Conditions to Obligations of Maxwell and the Shareholder 22 7.03 Conditions to Obligations of SAIC 23 ARTICLE VIII 24 COVENANT NOT TO COMPETE; NON-SOLICITATION; CONFIDENTIALITY 24 8.01 Noncompetition 24 8.02 Non-solicitation 25 8.03 Nondisclosure 25 8.04 Severability 26 8.05 Injunctive Relief 26 ARTICLE IX 27 CERTAIN OTHER COVENANTS AND AGREEMENTS 27 9.01 Consents and Filings 27 9.02 Announcements 27 9.03 Delivery of Books and Records 27 9.04 Closing Audit 27 9.05 Litigation Support 27 9.06 Cooperation 28 9.07 Personnel Matters 28 9.08 Assignment of Contracts 28 9.09 Transfer Taxes 28 9.10 Transaction Expenses 29 9.11 SAIC Stock Option Pool 29 9.12 Employee Benefits 29 ARTICLE X 29 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CLAIMS AGAINST HOLDBACK AMOUNT; INDEMNIFICATION 29 10.01 Survival 29 10.02 Statements as Representations 29 10.03 SAIC Claims Against Holdback Amount 29 10.04 Indemnification by Maxwell 30 10.05 Indemnification by SAIC 30 10.06 Notice of Indemnification Claims 31 10.07 Determination of Damages 32 10.08 Limitations on Indemnity 32 ARTICLE XI 34 MISCELLANEOUS PROVISIONS 34 11.01 Amendment and Modifications 34 11.02 Waiver of Compliance 34 11.03 Remedies; Waiver 34 11.04 Dispute Resolution 34 11.05 Notices 35 11.06 Assignment 36 11.07 Governing Law 36 11.08 Counterparts 36 11.09 Headings 36 11.10 Entire Agreement 36 11.11 Third Parties 36 11.12 Further Assurances 36 11.13 Representation by Counsel; Interpretation 37 11.14 Calendar Days 37 -----END PRIVACY-ENHANCED MESSAGE-----