EXHIBIT 99(b)
EXCHANGE AGREEMENT
dated
October 31, 1997
among
GENERAL ELECTRIC COMPANY,
GE INVESTMENTS, INC.,
GE GOVERNMENT SERVICES, INC.,
CLIENT BUSINESS SERVICES, INC.,
LOCKHEED XXXXXX CORPORATION
and
LMT SUB INC.
TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
Section 1.01. Definitions.............................................2
ARTICLE 2
Transactions at Closing
Section 2.01. Contemplated Transactions...............................3
Section 2.02. Exchange................................................4
Section 2.03. Closing.................................................4
ARTICLE 3
Representations and Warranties of LM
Section 3.01. Representations and Warranties of LM....................5
ARTICLE 4
Representations and Warranties of GE
Section 4.01. Representations and Warranties of GE....................5
ARTICLE 5
Covenants of LM
Section 5.01. Conduct of the Businesses Until the Closing.............5
Section 5.02. Access to Information...................................6
Section 5.03. Notices of Certain Events...............................7
Section 5.04. Access After Closing....................................8
Section 5.05. Retention of Assets.....................................8
Section 5.06. Tax Qualification.......................................8
Section 5.07. Customer Introductions..................................9
Section 5.08. LM Board Resolution.....................................9
Section 5.09. Company Preferred Stock.................................9
Section 5.10. Certain Information.....................................9
ARTICLE 6
Covenants of the GE Entities
Section 6.01. Confidentiality........................................10
Section 6.02. Access after Closing...................................10
Section 6.03. Tax Qualification......................................10
Section 6.04. Company Compliance.....................................11
Section 6.05. Conversion.............................................11
ARTICLE 7
Covenants of the Parties
Section 7.01. Further Assurances.....................................11
Section 7.02. Certain Filings and Consents...........................12
Section 7.03. Public Announcements...................................12
Section 7.04. Trademarks; Trade Names................................13
Section 7.05. HSR Act................................................13
Section 7.06. LM Preferred Stock....................................13
Section 7.07. Agreement of Fair Market Value.........................14
Section 7.08. Inventory Audit........................................14
ARTICLE 8
Conditions to Closing
Section 8.01. Conditions to the Obligations of Each Party............14
Section 8.02. Conditions to Obligations of the GE Entities...........15
Section 8.03. Conditions to Obligations of LM........................16
ARTICLE 9
Survival; Indemnification
Section 9.01. Survival...............................................17
Section 9.02. Indemnification........................................17
Section 9.03. Indemnification of GE Entities by LM for
Certain Assumed Liabilities............................20
Section 9.04. Procedures for Third Party Claims......................21
Section 9.05. Procedures for Direct Claims...........................24
Section 9.06. Indemnification of GE Entities by LM for
Certain Product Matters................................25
ARTICLE 10
Termination
Section 10.01. Grounds for Termination...............................26
Section 10.02. Effect of Termination.................................27
Section 10.03. Force Majeure.........................................28
Section 10.04. Opportunity to Provide Reasonable Cure................28
ARTICLE 11
Miscellaneous
Section 11.01. Notices...............................................29
Section 11.02. Amendments; No Waivers................................30
Section 11.03. Expenses..............................................30
Section 11.04. Successors and Assigns................................31
Section 11.05. Governing Law.........................................31
Section 11.06. Counterparts; Effectiveness...........................31
Section 11.07. Entire Agreement......................................31
Section 11.08. Jurisdiction..........................................32
Section 11.09. Captions..............................................32
EXHIBITS
Exhibit I -- Representations and Warranties of LM
Exhibit II -- Representations and Warranties of GE
ATTACHMENT
Attachment A -- Balance Sheets
EXCHANGE DISCLOSURE SCHEDULE
Section 2.02 -- Securities to be Exchanged
Section 7.04 -- Trademarks; Trade Names
Section I.03 -- Government Authorization
Section I.04 -- Noncontravention
Section I.05 -- Ownership of Company Common Stock, Company
Preferred Stock and the Equity Securities
Section I.06 -- Consents
Section I.08 -- Absence of Certain Changes
Section I.09 -- No Undisclosed Material Liabilities
Section I.10 -- Litigation; Contract-Related Matters
Section I.11 -- Compliance with Laws
EXCHANGE AGREEMENT
This Agreement is made this 31st day of October, 1997, among
General Electric Company, a New York corporation ("GE"), GE Investments,
Inc., a Nevada corporation ("GEII"), GE Government Services, Inc., a
Delaware corporation ("GEGS"), Client Business Services, Inc., a Delaware
corporation ("CBSI" and together with GE, GEII and GEGS, the "GE
Entities"), Lockheed Xxxxxx Corporation, a Maryland corporation ("LM"), and
LMT Sub Inc., a Delaware corporation and a wholly-owned subsidiary of LM
(the "Company"), with reference to the following background.
A. LM, among other things, directly and through the Transferor
Subsidiaries, conducts the Thrust Reverser Business and the Access Graphics
Business (each, a "Business" and collectively, the "Businesses").
B. Simultaneously with the execution of this Agreement, LM and
the Company are entering into a Contribution and Assumption Agreement dated
October 31, 1997 (the "Contribution Agreement") pursuant to which LM will,
or will cause the Transferor Subsidiaries to, contribute all of the assets
used or held for use primarily in the conduct of the Businesses (other than
the Excluded Assets), the Equity Securities and an amount in cash to the
Company, and the Company will assume certain liabilities associated with
the Businesses.
C. Upon the terms and subject to the conditions of this
Agreement, following consummation of the Contribution and Assumption as
contemplated by the Contribution Agreement, LM desires to exchange with the
GE Entities, and the GE Entities desire to exchange with LM, all of the
issued and outstanding capital stock of the Company for all of the LM
Preferred Stock (or LM Common Stock into which such LM Preferred Stock may
have been converted or a combination of such Preferred Stock and Common
Stock) owned by the GE Entities.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions. (a) The following terms, as
used herein, have the following meanings:
"Exchange Disclosure Schedule" means the Disclosure Schedule
relating to this Agreement and attached hereto.
"Globalstar" means Globalstar Telecommunications Limited, a
Bermuda corporation.
"Standstill Agreement" means the Standstill Agreement dated
April 2, 1993 between Parent Corporation, a Maryland corporation, and GE,
as amended.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
Term Section
---- -------
Access Graphics Balance Sheet I.07(a)
Balance Sheets I.07(a)
Business preamble
Businesses preamble
Cash Contribution 2.01(a)
CBSI preamble
Closing 2.03
Company preamble
Contribution Agreement preamble
Contribution and Assumption 2.01(a)
Divestiture Value 7.05
End Date 10.01(b)
Excess Amount 9.03(a)
Exchange 2.02
force majeure 10.03
frustrated party 10.03
GE preamble
GE Entities preamble
GEGS preamble
GEII preamble
Indemnified Parties 9.04(a)
Indemnifying Parties 9.04(a)
LM preamble
LM Trademarks and Trade Names 7.04
Product Matter 9.06(b)
Product Matter Excess Amount 9.06(a)
Product Matter Indemnity Notice 9.06(c)
Required Consents I.06
Surviving Representation or Covenant 9.01
Third Party Claims 9.04(a)
Third Party Referee 9.04(b)
Thrust Reverser Balance Sheet I.07(a)
(c) Capitalized or other terms used and not defined in this
Agreement shall have the meanings specified in the Contribution Agreement
(including all Exhibits to the Contribution Agreement).
ARTICLE 2
Transactions at Closing
Section 2.01. Contemplated Transactions. Upon the terms
and subject to the conditions set forth in this Agreement, the parties
agree as follows:
(a) Prior to the Closing, in accordance with the terms of
the Contribution Agreement, (i) LM will, or will cause the Transferor
Subsidiaries to, (A) transfer, assign and deliver to the Company all of the
right, title and interest of LM and the Transferor Subsidiaries in, to and
under the Transferred Assets, and the Company will assume and pay, perform
and discharge promptly and in full when due all of the Assumed Liabilities
(together with the Cash Contribution, the "Contribution and Assumption"),
and (B) contribute an amount in cash (the "Cash Contribution") equal to the
XX Xxxx Contribution Amount to the Company and (ii) pursuant to the
Intellectual Property License, LM will, or will cause the Transferor
Subsidiaries or their Affiliates to, grant to the Company (with the right
of the Company to extend such license to its Affiliates for so long as they
remain Affiliates), effective as of the Closing Date, a fully paid-up,
worldwide, non-exclusive license in respect of all Intellectual Property
Rights owned by LM, any Transferor Subsidiary or any of their Affiliates
(other than the LM Trademarks and Tradenames) that are available to, and
used or currently planned for use by, the Businesses (but not constituting
Transferred Assets) on or prior to the Closing Date, to continue such use
or currently planned use in the Businesses with respect to substantially
similar products, services or activities of the Businesses.
(b) LM will cause the Company to have as of the Closing
such number of issued and outstanding shares of Company Preferred Stock,
and in such denominations, as directed by GE not less than two Business
Days prior to the Closing Date; provided, that such number shall be equal
to or less than 5,000,000.
(c) On the Closing Date, in accordance with the terms of
this Agreement, LM will exchange all of the issued and outstanding Company
Capital Stock with the GE Entities for the 20,000,000 shares of the LM
Preferred Stock (or LM Common Stock into which such LM Preferred Stock has
been converted or a combination of such Preferred Stock and Common Stock)
owned in aggregate by the GE Entities.
Section 2.02. Exchange. Upon the terms and subject to the
conditions of this Agreement, LM agrees to exchange with each of the GE
Entities, and each of the GE Entities agrees to exchange with LM, the
securities set forth opposite such GE Entity's name in Section 2.02 of the
Exchange Disclosure Schedule (the "Exchange").
Section 2.03. Closing. The closing of the Exchange (the
"Closing") shall take place at the offices of Xxxxx Xxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as soon as possible, but in no event
later than three Business Days, after satisfaction or waiver of the
conditions set forth in Article 8, or at such other time or place as GE and
LM may agree. The parties agree that at the Closing:
(a) The GE Entities shall deliver to LM certificates for
the shares of LM Preferred Stock or LM Common Stock to be delivered by the
GE Entities under this Agreement, free and clear of all Liens, preemptive
or similar rights or any other limitation or restriction (other than the
Standstill Agreement), duly endorsed or accompanied by stock powers duly
endorsed in blank, with any required transfer stamps affixed thereto.
(b) LM shall deliver to each of the GE Entities
certificates for the number of shares of the Company Common Stock or the
Company Preferred Stock, as the case may be, set forth opposite such GE
Entity's name in Section 2.02 of the Exchange Disclosure Schedule, free and
clear of all Liens, preemptive or similar rights or any other limitation or
restriction, duly endorsed or accompanied by stock powers duly endorsed in
blank, with any required transfer stamps affixed thereto.
(c) LM or the applicable Subsidiary of LM and the Company
shall enter into (i) the Intellectual Property License, (ii) the
Transitional Services Agreement, (iii) the Technical Consulting Agreement,
(iv) the Baltimore Facility Lease and (v) the Tax Assurance Agreement, in
each case, having terms and conditions consistent with those referred to in
the Contribution Agreement and such other terms and conditions as otherwise
may have been mutually agreed by LM, the Company and GE.
(d) The Standstill Agreement shall be terminated, and
without any further action being required by any party thereto, shall be of
no further force or effect.
(e) LM shall deliver to GE the resignations, effective as
of the Closing, of all of the directors and officers of the Company.
ARTICLE 3
Representations and Warranties of LM
Section 3.01. Representations and Warranties of LM. LM
represents and warrants to each of the GE Entities as set forth in Exhibit I.
ARTICLE 4
Representations and Warranties of GE
Section 4.01. Representations and Warranties of GE. GE, on
behalf of itself and the other GE Entities, represents and warrants to LM as
set forth in Exhibit II.
ARTICLE 5
Covenants of LM
Section 5.01. Conduct of the Businesses Until the Closing.
(a) From the date of this Agreement until the Closing, LM hereby agrees
not to, and to cause each Transferor Subsidiary not to, take any actions
with respect to the Company or any of the Businesses other than actions
expressly permitted by this Agreement or the Contribution Agreement
(including, without limitation, Section 4.01 of the Contribution
Agreement).
(b) LM hereby agrees to cause the Company not to take any
actions other than actions necessary or appropriate in furtherance of the
Contemplated Transactions. Notwithstanding anything in this Section 5.01 to
the contrary, LM agrees that prior to the Closing no consent of or waiver
or other affirmative action to be taken by the Company under the
Contribution Agreement shall be valid and effective without the express
prior approval of GE, provided, that to the extent any such consent of or
waiver or other affirmative action by the Company under the Contribution
Agreement is subject to a reasonableness standard, the prior approval of GE
under this Section 5.01(b) shall be subject to the same reasonableness
standard.
Section 5.02. Access to Information. Except as may be
deemed appropriate to ensure compliance with any Applicable Laws
(including, without limitation, any requirements with respect to security
clearances) and subject to any applicable privileges (including, without
limitation, the attorney-client privilege), from the date of this Agreement
until the Closing Date, LM will, and will cause each Subsidiary of LM to:
(a) give GE and its Representatives reasonable access to the
offices, properties, books and records of LM and such Subsidiary relating
to the Company, the Businesses, the Transferred Assets or the Assumed
Liabilities during normal business hours and upon reasonable prior notice;
(b) furnish to GE and its Representatives such financial and
operating data and other information relating to the Company and the
Businesses, as GE may reasonably request;
(c) instruct its employees and Representatives to cooperate
with GE in its investigation of the Company, the Businesses, the
Transferred Assets and the Assumed Liabilities (including, in each case,
any investigation of the accuracy and completeness of the representations
made in the Officers' Certificates referred to in Section 8.02(d)(i) and of
other matters reasonably related to the Tax consequences of the
Contemplated Transactions); and
(d) assist GE and its Representatives in conducting an
investigation of the materials and designs utilized for or the workmanship
related to any product or spare part (other than a CF6 Product or a Nacelle
Major Component) manufactured, assembled, sold, distributed, overhauled,
repaired or retrofitted by the Thrust Reverser Business.
Without limiting the generality of the foregoing, subject to
the limitations set forth in the first sentence of this Section 5.02, (i)
LM shall use its best efforts (which best efforts undertaking, if requested
by the Company, shall continue after the Closing Date) to enable GE and its
Representatives to conduct at GE's own expense business and financial
reviews, investigations, and studies as to the integration of the Business
and the GE businesses, including any Tax, operating or other efficiencies
which may be achieved through the segregation or consolidation of various
components of such businesses and (ii) subject to the limitations set forth
in the first sentence of this Section 5.02, from the date of this Agreement
to the Closing Date, LM shall give GE and its Representatives access to
information relating to the Businesses of the type, and with the same level
of detail, as in the ordinary course of business is made available to the
general managers of the Businesses. Notwithstanding the foregoing, GE will
not have access to personnel records of LM or any Subsidiary of LM relating
to individual performance or evaluation records, medical histories or other
information which in LM's good faith opinion is sensitive or the disclosure
of which could subject LM or any of the Transferor Subsidiaries to risk of
liability.
Section 5.03. Notices of Certain Events. As promptly as
practicable after the date of this Agreement, but in no event later than
ten days after the date of this Agreement, LM shall in writing notify the
individuals listed in Section I.01 of the Contribution Disclosure Schedule
of LM's obligations under this Section 5.03 and request that such Persons
promptly notify Xxxx X. Xxxxxxxx of any of the matters referred to in this
Section 5.03. LM shall, to the extent that any of Messrs. Coffman,
Bennett, Xxxxxxx or Xxxxxxxx has knowledge or becomes or is made aware of
any of the following matters, promptly notify the GE Entities of, and
provide copies of relevant materials associated with, any such matters:
(a) any changes or events which, individually or in the
aggregate, have had or could reasonably be expected to have a Material
Adverse Effect on the Company or the Businesses or to result in a material
decrease in the fair market value of the Businesses;
(b) any notice or other communication from any Person
alleging that the consent of such Person (which consent is material) is or
may be required in connection with the Contemplated Transactions;
(c) any notice or other communication that is material in
connection with the Contemplated Transactions from any Governmental
Authority; and
(d) any actions, suits, claims, investigations or
proceedings commenced, or to the best of the knowledge of LM, threatened,
against, relating to or involving or otherwise affecting the Company, the
Businesses or the Transferred Assets or the Assumed Liabilities that, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Exhibit I.10 or that relates to the consummation
of the Contemplated Transactions.
Section 5.04. Access After Closing. On and after the
Closing Date, except as may be deemed appropriate to ensure compliance with
any Applicable Laws (including, without limitation any requirements with
respect to security clearance), and subject to any applicable privileges
(including, without limitation, the attorney-client privilege), LM will
afford (and will cause its Subsidiaries to afford) to GE and its
Representatives reasonable access to the books and records of LM and its
Subsidiaries relating to any of the Businesses or the Equity Securities
(including, without limitation, LM's or any Subsidiary's employees and
auditors with knowledge of any of the Businesses or the Equity Securities)
during normal business hours and upon reasonable prior notice to permit GE
to determine any matter relating to its rights and obligations under any
Transaction Document or otherwise reasonably required by GE.
Section 5.05. Retention of Assets. From and after the date
of this Agreement, LM shall ensure that no assets of the Businesses are
distributed or otherwise transferred (by dividend, intercompany or
intracompany loan or otherwise, other than by intercompany or intracompany
loan that is consistent with past cash management practices) to LM or any
Affiliate of LM (other than in the ordinary course consistent with past
practices for payments to or allocated to LM or any Affiliate of LM
relating to (i) materials or services used in the Businesses, (ii) costs
advanced to or on behalf of the Businesses or (iii) allocations of
corporate overhead costs). For purposes of the foregoing, LM shall treat
each Business as if it were a separate, incorporated Subsidiary of LM. To
the extent that, from and after the day after the Balance Sheet Date but
prior to the Closing Date, more than a de minimis amount of assets
(including, without limitation, cash) of any Business has been so
distributed or otherwise transferred (by dividend or otherwise) to LM or
any Affiliate of LM, LM shall, and shall cause any such Affiliate of LM to,
prior to the Contribution Closing, cause such assets (or an equivalent
amount in cash) to be contributed or otherwise transferred to such
Business. Any intercompany or intracompany loans made from and after the
date of this Agreement to or from any of the Businesses consistent with
past cash management practices shall be repaid at or prior to the Closing.
Section 5.06. Tax Qualification. From and after the date
of this Agreement, LM shall, and shall cause each of its Affiliates to, use
its best efforts to avoid any action or omission that may reasonably be
expected to prevent the Contribution and Assumption and Exchange from
qualifying as a reorganization described in Section 368(a)(1)(D) of the
Code and a distribution described in Section 355(a) of the Code to which
Sections 355(d) and (e) of the Code do not apply. For purposes of Section
9.02(b), an action or omission will be considered a knowing breach of
Section 5.06 only if LM actually knows that such action or omission may
reasonably be expected to prevent the Contribution and Assumption and
Exchange from qualifying as a reorganization described in Section
368(a)(1)(D) of the Code and a distribution described in Section 355(a) of
the Code. For purposes of Section 9.02(b), an action or omission will be
considered an intentional breach of Section 5.06 only if LM intends that
such action or omission will prevent the Contribution and Assumption and
Exchange from qualifying as a reorganization described in Section
368(a)(1)(D) of the Code and a distribution described in Section 355(a) of
the Code.
Section 5.07. Customer Introductions. LM shall, and shall
cause each Transferor Subsidiary to, upon the request of GE at any time
from the date of this Agreement until the Closing Date, to the extent
reasonably practicable, introduce GE, or arrange for a personal
introduction of the Representatives of GE, to customers and significant
vendors to the Businesses for the purpose of ensuring good customer and
vendor relationships following the Closing.
Section 5.08. LM Board Resolution. LM shall not take any
action to alter or repeal the resolution of LM's Board of Directors
currently in effect exempting any business combination with GE or LM or any
of their Affiliates from the provisions of Section 3-602 of the Maryland
General Corporation Law if such action would make such Section 3-602
applicable to the Contemplated Transactions.
Section 5.09. Company Preferred Stock. As soon as
practicable after the date of this Agreement, but in any event not later
than 10 Business Days prior to the Closing Date, LM shall cause the Company
to amend its charter to provide for not less than 5,000,000 shares of blank
check preferred stock.
Section 5.10. Certain Information. (a) From and after the
date of this Agreement, subject to Section 5.02, LM and its Affiliates shall
make reasonably available to GE and its Representatives such actuarial,
financial, personnel and related information as may be requested by GE or
such Representative with respect to any Employee Plan, Benefit Arrangement
or Transferred Employee, including, but not limited to, benefit records,
compensation and employment histories, policies, interpretations and other
records relating to Employee Plans and Benefit Arrangements.
(b) The parties acknowledge that, pursuant to Exhibits III
and IV of the Contribution Agreement, LM has represented or covenanted that
certain documents and information either have been provided or will be
delivered, furnished or made reasonably available or identified to the
Company. LM hereby agrees that any such documents or information have been
provided or will be delivered, furnished or made reasonably available or
identified to GE on the same basis and at the same time.
ARTICLE 6
Covenants of the GE Entities
Section 6.01. Confidentiality. Each of the GE Entities
agrees that all information provided to such GE Entity or any of its
Representatives as contemplated by this Agreement will be treated as if
provided under the Confidentiality Agreement (whether or not the
Confidentiality Agreement is in effect); provided, that the GE Entities'
obligation to keep confidential information relating to the Company, the
Businesses, the Transferred Assets and the Assumed Liabilities hereunder
and under the Confidentiality Agreement shall terminate as of the Closing.
Notwithstanding the foregoing, no provision of this Section 6.01 shall
relieve any of the GE Entities from its obligations under Section 7.03.
Section 6.02. Access after Closing. Except as may be
deemed appropriate to ensure compliance with any Applicable Laws
(including, without limitation, any requirements with respect to security
clearances), on and after the Closing Date and subject to any applicable
privileges (including, without limitation, the attorney-client privilege),
the GE Entities will cause the Company to provide LM and its
Representatives reasonable access to the books and records of the Company
relating to any of the Businesses (including, without limitation, the
Company's employees and auditors with knowledge of any of the Businesses)
during normal business hours and upon reasonable prior notice to permit LM
to determine any matter relating to its rights and obligations under any
Transaction Document or Contracts or to permit LM to prepare and file any
and all tax reports or returns required to be filed by LM or any of its
Affiliates or otherwise reasonably required by LM. LM agrees that all
information provided to LM and its Representatives pursuant to this Section
6.02 will be treated in accordance with Section 4.02 of the Contribution
Agreement.
Section 6.03. Tax Qualification. From and after the date
of this Agreement, GE shall, and shall cause each of its Affiliates to, use
its best efforts to avoid any action or omission that may reasonably be
expected to prevent the Contribution and Assumption and Exchange from
qualifying as a reorganization described in Section 368(a)(1)(D) of the
Code and a distribution described in Section 355(a) of the Code to which
Sections 355(d) and (e) do not apply. For purposes of Section 9.02(d), an
action or omission will be considered a knowing breach of Section 6.03 only
if GE actually knows that such action or omission may reasonably be
expected to prevent the Contribution and Assumption and Exchange from
qualifying as a reorganization described in Section 368(a)(1)(D) of the
Code and a distribution described in Section 355(a) of the Code. For
purposes of Section 9.02(d), an action or omission will be considered an
intentional breach of Section 6.03 only if GE intends that such action or
omission will prevent the Contribution and Assumption and Exchange from
qualifying as a reorganization described in Section 368(a)(1)(D) of the
Code and a distribution described in Section 355(a) of the Code.
Section 6.04. Company Compliance. From and after the
Closing, GE will cause the Company to perform all of its obligations under
the Contribution Agreement, and GE and its Affiliates will use best efforts
to take all actions consistent with or avoid all actions inconsistent with
this undertaking.
Section 6.05. Conversion. Each of the GE Entities agrees
that, prior to November 28, 1997, it shall not deliver a conversion notice
pursuant to Section 4 of the charter provisions of the LM Preferred Stock.
In the event that on or after November 28, 1997 the GE Entities deliver
such a conversion notice, LM shall use best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Laws to permit the conversion of the LM
Preferred Stock into LM Common Stock as expeditiously as possible.
ARTICLE 7
Covenants of the Parties
Section 7.01. Further Assurances. Subject to the terms and
conditions of this Agreement and the Contribution Agreement, each party
shall use best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary or desirable under Applicable
Laws to consummate the Contemplated Transactions as expeditiously as
possible. Subject to the terms and conditions of this Agreement and the
Contribution Agreement, each party shall execute and deliver, or cause to
be executed and delivered, such other documents, certificates, agreements
and other writings and to take, or cause to be taken, such other actions as
may be necessary or desirable in order to consummate or implement
expeditiously the Contemplated Transactions. LM will use best efforts to
extinguish, or cause to be extinguished, all liens on real property
constituting part of the Transferred Assets. To the extent reasonably
requested by LM, GE will use best efforts to assist LM in connection with
LM's obligations under Section 4.08 of the Contribution Agreement.
Section 7.02. Certain Filings and Consents. The parties
shall cooperate with one another (a) in determining whether any action by
or in respect of, or filing with, any Governmental Authority is required,
or any actions, consents, approvals or waivers are required to be obtained
from parties to any material Contracts, in either case, in connection with
consummation of the Contemplated Transactions and (b) subject to the terms
and conditions of this Agreement and the Contribution Agreement, in taking
such actions or making any such filings, furnishing information required in
connection with taking such actions or making such filings and seeking
timely to obtain any such actions, consents, approvals or waivers.
Section 7.03. Public Announcements. The public disclosure
to be made by any of the parties accompanying the announcement of the
Contemplated Transactions, including, among other things, the initial press
release to be issued with respect to the Contemplated Transactions, the
description of the Contemplated Transactions for purposes of the
notification and report form to be filed pursuant to the HSR Act, the
description of the Contemplated Transactions for purposes of any filings to
be made with the Securities and Exchange Commission (including, without
limitation, an amendment to GE's Schedule 13D relating to the LM Common
Stock, a Form 8-K relating to the Contemplated Transactions to be filed by
LM, together with the initial press release, and the initial joint proxy
statement and registration statement on Form S-4 to be filed by LM in
connection with its acquisition of Northrop Grumman) and certain public
statements to be made regarding the Contemplated Transactions, will be made
only as agreed by LM and GE, except as required by Applicable Law. Each of
GE and LM agrees that, except as required by Applicable Law, neither it nor
any of its Affiliates will issue any other press release or make any public
statement with respect to the Transaction Documents or the Contemplated
Transactions without the prior consent of the other, which consent will not
be unreasonably withheld or delayed, except that no such consent shall be
required to the extent that such press release or public statement is
consistent with the public disclosure heretofore agreed. To the extent
that LM receives comments relating to the Contemplated Transactions from
the Securities and Exchange Commission on its joint proxy statement and
registration statement on Form S-4 to be filed by LM in connection with its
acquisition of Northrop Grumman, GE agrees to respond to any written
request from LM for GE's consent to additional or modified disclosure to be
made concerning the Contemplated Transactions within one Business Day
following GE's receipt of LM's written request, which shall include a copy
of the relevant comments and the proposed disclosure. Notwithstanding the
foregoing, no provision of this Section 7.03 shall relieve any party from
its obligations under Section 4.02 of the Contribution Agreement or Section
6.01 of this Agreement, as the case may be.
Section 7.04. Trademarks; Trade Names. From and after the
Closing, the Company shall have the right, royalty-free, to sell inventory
and to use packaging, labeling, containers, supplies, advertising
materials, technical data sheets and any similar materials bearing any of
the marks or names set forth in Section 7.04 of the Exchange Disclosure
Schedule (collectively or individually as the context requires, the "LM
Trademarks and Trade Names") to the extent bearing any such xxxx or name as
of the Closing Date. The Company shall comply with Applicable Laws in any
use of packaging or labeling containing the LM Trademarks and Trade Names.
Section 7.05. HSR Act. Subject to the following sentence,
the parties shall take all reasonable actions necessary or appropriate to
cause the prompt expiration or termination of any applicable waiting period
under the HSR Act in respect of the Contemplated Transactions, including,
without limitation, complying as promptly as practicable with any requests
for additional information. Without limiting the generality of the
foregoing, if it is necessary in order to terminate the waiting period
under the HSR Act or otherwise to permit the Closing to take place, GE
agrees to divest assets, to hold assets separate pending such divestiture,
or to enter into a consent decree requiring it to divest assets, and to
take such further action in connection therewith as may be necessary to
enable the Closing to take place on or prior to December 31, 1997;
provided, that GE shall not be required to take any action pursuant to this
Section 7.05 if the taking of such action would have a Material Adverse
Effect on GE and the Businesses taken as a whole. In the event that GE
divests any Transferred Assets pursuant to this Section 7.05, the
difference (whether positive or negative) between the net (after taxes and
expenses) proceeds from such divestiture and the Divestiture Value of the
asset so divested shall be divided equally by GE and LM. For purposes of
this Section 7.05, the "Divestiture Value" of an asset shall be equal to
the product of (i) 20.0, in the case of assets of the Access Graphics
Business, and 14.0, in the case of assets of the Thrust Reversers Business,
and (ii) the average of the projected annual net earnings of the assets
divested (determined in the reasonable good faith judgment of GE and LM)
for the 1998, 1999 and 2000 fiscal years.
Section 7.06. LM Preferred Stock. Notwithstanding anything
in the charter provisions of the LM Preferred Stock to the contrary, LM and
the GE Entities agree that, until the earlier of (i) the Closing and (ii)
the termination of this Agreement in accordance with Section 10.01, (x) as
of the date of this Agreement, the 20,000,000 shares of LM Preferred Stock
owned in aggregate by the GE Entities are convertible into 29,123,284
shares of LM Common Stock and (y) there shall be no further adjustment to
the conversion price of the LM Preferred Stock in the case of any of the
following: (A) LM shall issue shares of LM Common Stock or rights or
warrants or other securities convertible or exchangeable or exercisable for
shares of LM Common Stock in the ordinary course of business to any
employee of LM or any of its Subsidiaries pursuant to either the exercise
of stock options granted with the approval of LM's Board of Directors or a
restricted stock, stock option or other stock incentive plan approved by
LM's Board of Directors; and (B) at any time LM or any Subsidiary thereof
shall repurchase in open market transactions any shares of LM Common Stock
in the ordinary course of business with the approval of LM's Board of
Directors.
Section 7.07. Agreement of Fair Market Value. LM and the
GE Entities agree that the aggregate fair market value of the Businesses is
not less than $771,300,000 (before giving effect to the adjustments
contemplated by Section 2.06 of the Contribution Agreement).
Section 7.08. Inventory Audit. The parties hereby agree
that LM shall conduct an inventory audit, as of October 31, 1997, of the
Access Graphics Business. GE and its Representatives shall have the
opportunity to observe the inventory audit. Any adjustments resulting from
the inventory audit shall be taken into account in connection with the
preparation of the Access Graphics Closing Balance Sheet, but shall not be
taken into account in respect of the Access Graphics Balance Sheet (June
30, 1997).
ARTICLE 8
Conditions to Closing
Section 8.01. Conditions to the Obligations of Each Party.
The obligations of the parties to consummate the Closing are subject to the
satisfaction (or waiver in writing by both LM and GE) of the following
conditions:
(a) Any applicable waiting period under the HSR Act
relating to the Contemplated Transactions shall have expired or been
terminated.
(b) No provision of any Applicable Law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of
the Closing, and no action or proceeding shall be pending before any court,
arbitrator or Governmental Authority with respect to which counsel
reasonably satisfactory to LM and GE shall have rendered a written opinion
that there is a substantial likelihood of a determination that would
prohibit the Closing.
(c) All actions by or in respect of or filings with any
U.S. Governmental Authority required to permit the consummation of the
Closing shall have been obtained.
Section 8.02. Conditions to the Obligations of the GE
Entities. The obligations of the GE Entities to consummate the Closing
are subject to the satisfaction (or waiver by GE) of the following further
conditions:
(a) (i) LM shall have performed in all material respects
all of its material obligations under this Agreement and the Contribution
Agreement required to be performed by it on or prior to the Closing Date,
(ii) the representations and warranties of LM contained in this Agreement
and the Contribution Agreement shall be accurate in all respects at and as
of the Closing Date, as if made at and as of such date, except for any
inaccuracies which, individually or in the aggregate, have not had and may
not reasonably be expected to have, a Material Adverse Effect on the
Company or the Businesses and (iii) the GE Entities shall have received a
certificate signed by an executive officer of LM to the foregoing effect.
(b) The Contribution and Assumption shall have been
consummated and the Intellectual Property License, the Transitional
Services Agreement, the Technical Consulting Agreement, the Baltimore
Facility Lease and the Tax Assurance Agreement shall have been entered into
and delivered by LM and the Company, in each case in accordance with the
terms of this Agreement or the Contribution Agreement, as the case may be.
(c) LM shall have received the Required Consents referred
to in Section 8.02(c) of the Exchange Disclosure Schedule in form and
substance reasonably satisfactory to GE, and no such consent, authorization
or approval shall have been revoked.
(d) GE shall have received an opinion of its tax counsel,
Xxxxxx Xxxxxx & Xxxxxxx, substantially identical in all material respects
to the form of opinion provided to GE and LM on or prior to the date of
this Agreement, dated the Closing Date, which opinion shall be based on
appropriate representations of LM and GE that are in form and substance
reasonably satisfactory to such counsel, as to the qualification of the
Exchange under Section 355 of the Code; provided, that such condition shall
not be applicable if (i) the Officers' Certificates delivered by LM at
Closing for purposes of the tax opinion are substantially identical in all
material respects to the form of Officers'Certificates delivered by LM on
or prior to the date of this Agreement and the statements and
representations contained therein are accurate and complete in all material
respects, (ii) there has been no significant event (including, without
limitation, any identification of significant undisclosed liabilities or
inability to transfer significant assets of the Businesses) subsequent to
the date of this Agreement resulting in or otherwise corresponding to a
decrease in the aggregate fair market value of the Businesses to an amount
that is less than $771,300,000; and (iii) GE shall have received an
opinion of King & Spalding, tax counsel to LM, substantially identical in
all material respects to the form of opinion of King & Spalding provided to
GE on or prior to the date of this Agreement, which opinion shall be based
on the Officers' Certificates referred to in clause (i) and the Officer's
Certificate referred to in Section 8.03(b)(i) (and not on any other
representations or assumptions). Clause (ii) of this Section 8.02(d) shall
be deemed satisfied if the mid-point of the range of fair market values
determined by an investment banking firm selected by LM and reasonably
satisfactory to GE for the aggregate fair market value of the Businesses as
of the Closing Date is not less than $771,300,000.
Section 8.03. Conditions to Obligations of LM. The
obligation of LM to consummate the Closing is subject to the satisfaction
(or waiver by LM) of the following further conditions:
(a) (i) The GE Entities shall have performed in all
material respects all of their respective material obligations under this
Agreement required to be performed by such entity on or prior to the
Closing Date, (ii) the representations and warranties of GE contained in
this Agreement shall be accurate at and as of the Closing Date, as if made
at and as of such date, except for inaccuracies which, individually or in
the aggregate, have not had and may not reasonably be expected to have, a
Material Adverse Effect on GE or the GE Entities and (iii) LM shall have
received a certificate signed by an executive officer of GE to the
foregoing effect.
(b) LM shall have received an opinion of its tax counsel,
King & Spalding, substantially identical in all material respects to the
form of opinion provided to LM and GE on or prior to the date of this
Agreement, dated the Closing Date, which opinion shall be based on
appropriate representations of LM and GE that are in form and substance
reasonably satisfactory to such counsel, as to the qualification of the
Exchange under Section 355 of the Code and the inapplicability of Sections
355(d) and (e) of the Code; provided, that such condition shall not be
applicable if (i) the Officer's Certificate delivered by GE at Closing for
purposes of the tax opinion is substantially identical in all material
respects to the form of Officer's Certificate delivered by GE on or prior
to the date of this Agreement and the statements and representations
contained therein are accurate and complete in all material respects and
(ii) LM shall have received an opinion of Xxxxxx Xxxxxx & Xxxxxxx, tax
counsel to GE, substantially identical in all material respects to the form
of opinion of King & Spalding provided to LM on or prior to the date of
this Agreement, which opinion shall be based on the Officer's Certificate
referred to in clause (i) and the Officers' Certificates referred to in
Section 8.02(d)(i) (and not on any other representations or assumptions).
ARTICLE 9
Survival; Indemnification
Section 9.01. Survival. None of the covenants, agreements,
representations and warranties of the parties contained in this Agreement
or the certificates to be delivered pursuant to Sections 8.02(a)(iii) and
8.03(a)(iii) shall survive the Closing except for those contained in
Articles 2, 5 (other than Sections 5.01, 5.02, 5.03, 5.05 and 5.07), 6, 7
(other than Sections 7.02 and 7.05), 9 and 11, Sections I.01 (other than
with respect to the qualification to do business in any state other than
Maryland), I.02, I.03(a), I.04 (with respect to clauses (i) and (ii)
thereof), I.05, I.14 (including the Officers' Certificates referred to in
Section 8.02(d)(i)), II.01 (other than with respect to the qualification to
do business in any state other than New York), II.02, II.03, II.04 (with
respect to clauses (i) and (ii) thereof), II.05 and II.08 (including the
Officer's Certificate referred to in Section 8.03(b)(i)), and those
covenants and agreements which, by their terms, are to have effect after
the Closing Date (each, a "Surviving Representation or Covenant"). It is
understood and agreed that, except as explicitly provided in this
Agreement, after the Closing there shall be no liability or obligation
under this Agreement in respect of a breach or alleged breach of any
representation, warranty, covenant or agreement contained in this Agreement
or such certificates. It is further understood and agreed that none of the
representations and warranties that have been made by any of the parties in
any other Transaction Document shall survive the Closing, except to the
extent the survival thereof is expressly provided for in any Transaction
Document.
Section 9.02. Indemnification. (a) Effective as of the
Closing, except as provided in Section 9.02(b), LM hereby indemnifies the
GE Entities and their Affiliates, and to the extent actually indemnified by
the GE Entities or any such Affiliate from time to time, their respective
Representatives, against and agrees to hold each of them harmless on an
after-Tax basis from any and all Damages incurred or suffered by any of
them arising out of or related in any way to:
(i) any misrepresentation or breach of any Surviving
Representation or Covenant made or to be performed by LM or any Transferor
Subsidiary pursuant to any of the Transaction Documents; or
(ii) any Excluded Liability (including, without
limitation, LM's or any Transferor Subsidiary's failure to perform or in
due course pay and discharge any Excluded Liability).
(b) Except in the case of fraud, the aggregate liability of
LM for Damages (determined without regard to Section 9.02(e)(ii)) resulting
from misrepresentation or breach of warranty under Section 7.07 or I.14
(including the Officers' Certificates referred to in Section 8.02(d)(i)),
breach of covenant under Section 5.06, or misrepresentation or breach of
warranty or obligation to provide indemnification under the Tax Assurance
Agreement will be limited as follows:
(i) if such misrepresentation or breach is knowing or
intentional, LM will be liable to the extent of (A) 33 1/3% of the excess
of such Damages (determined by applying Section 9.02(e)(ii)) over
$250,000,000, plus (B) interest on the amount determined under clause (A)
from March 15, 1998 at the rate designated from time to time under Section
6621(a)(2) of the Code, compounded on a daily basis;
(ii) if such misrepresentation or breach results from
failure of due inquiry or due care (and is not described in clause
9.02(b)(i)(A) above), LM will be liable to the extent such Damages
(determined by applying Section 9.02(e)(ii)) exceed $250,000,000, but only
to the extent of the lesser of (A) 33 1/3% of such excess, and (B)
$25,000,000; or
(iii) in all other cases, zero.
(c) Effective as of the Closing, except as provided in
Section 9.02(d), GE hereby indemnifies LM and its Affiliates, and to the
extent actually indemnified by LM or any such Affiliate from time to time,
their respective Representatives, against and agrees to hold each of them
harmless on an after-Tax basis from any and all Damages incurred or
suffered by any of them arising out of or related in any way to:
(i) any misrepresentation or breach of Surviving
Representation or Covenant made or to be performed by any of the GE
Entities pursuant to the Transaction Documents; or
(ii) subject to Sections 9.03 and 9.06, any Assumed
Liability (including, without limitation, the Company's failure to perform
or in due course pay and discharge any Assumed Liability);
provided, that GE's indemnification obligation under clause (ii) above
shall not become effective unless LM shall have provided the Company with
written notice of its breach in respect of an Assumed Liability and the
Company shall not have cured such breach within 20 Business Days following
receipt of such notice.
(d) Except in the case of fraud, the aggregate liability of
GE and the Company for Damages (determined without regard to Section
9.02(e)(ii)) resulting from misrepresentation or breach of warranty under
Section II.08 (including the Officer's Certificate referred to in Section
8.03(b)(i)), breach of covenant under Section 6.03, or misrepresentation or
breach of warranty or obligation to provide indemnification under the Tax
Assurance Agreement will be limited as follows:
(i) if such misrepresentation or breach is knowing or
intentional, GE will be liable to the extent of (A) 33 1/3% of the
excess of such Damages (determined by applying Section 9.02(e)(ii)) over
$15,000,000, plus (B) interest on the amount determined under clause (A)
from March 15, 1998 at the rate designated from time to time under Section
6621(a)(2) of the Code, compounded on a daily basis; or
(ii) if such misrepresentation or breach results from
failure of due inquiry or due care (and is not described in clause
9.02(d)(i) above), GE will be liable to the extent such Damages (determined
by applying Section 9.02(e)(ii)) exceed $15,000,000, but only to the extent
of the lesser of (A) 33 1/3% of such excess, and (B) $1,500,000; or
(iii) in all other cases, zero.
(e) (i) For purposes of Section 9.02(b) and 9.02(d), LM or
GE (as the case may be) will be deemed to have conducted due inquiry with
respect to the Officers' Certificates and Officer's Certificate referred to
in Section 8.02(d)(i) and 8.03(b)(i), respectively, and other written
information described in Section I.14 or II.08 if (A) each officer who
executes one of such certificates has received affirmative verification of
the accuracy and completeness of each material representation made in such
certificate from, in the case of LM, officers or executives of LM (or of
the relevant Business) responsible therefor, or, in the case of GE, an
officer or an executive of GE responsible therefor, and (B) no facts have
come to the attention of the officer or officers executing such certificate
to create any material doubt that any such representation is accurate,
complete, and consistent with such other written information.
(ii) For purposes of Section 9.02(b) and 9.02(d)
(except as explicitly provided therein), the amount of any Damages will be
determined without regard to any interest payable to any Tax authority.
(f) Any payment due from LM under this Section 9.02 or
Section 9.03 or 9.06 shall be made solely to the Company, except to the
extent that GE determines, in its reasonable judgment, that payment to any
Affiliate of the Company is necessary to carry out the intent of this
Section 9.02 or Section 9.03 or 9.06 and GE so notifies LM in writing, in
which case payment shall be made to such Affiliate. Any payment due from
LM under this Section 9.02 or Section 9.03 or 9.06 shall be made without
duplication of any payment made by LM under Section 7.02, 7.03 or 7.06 of
the Contribution Agreement in respect of the same claim.
Section 9.03. Indemnification of GE Entities by LM for
Certain Assumed Liabilities. (a) LM hereby indemnifies the GE Entities
and their Affiliates and, to the extent actually indemnified by the GE
Entities or any such Affiliate from time to time, each of their respective
Representatives against and agrees to hold them harmless on an after-tax
basis from:
(i) in the case of any Matter described in clause
7.03(b)(ii) of the Contribution Agreement, Actual Net Expenditures; and
(ii) in the case of any Matter described in clause
7.03(b)(i) of the Contribution Agreement, Actual Net Expenditures and
Economic Harm (without duplication),
in each case only to the extent such Actual Net Expenditures were made by
or such Economic Harm was actually realized by any of them before the tenth
anniversary of the Closing Date; provided, that LM shall not have any
obligation to indemnify with respect to any such Matter until the amount of
such Actual Net Expenditures made or Actual Net Expenditures made and
Economic Harm realized, as the case may be, exceeds $15,000,000 (each, an
"Excess Amount"); and further, provided, that LM shall have received (A)
notice from the Company specifying such Excess Amount and (B) evidence
reasonably satisfactory to LM that any GE Entity has made such Actual Net
Expenditures or suffered such Economic Harm. Promptly after receipt of
such notice and evidence, LM shall pay any Excess Amount in cash or by wire
transfer of immediately available funds to such account of such GE Entity
as such GE Entity shall specify in a written notice. Any notice made
pursuant to this Section 9.03(a) may not be delivered later than sixty days
after the tenth anniversary of the Closing Date.
(b) No Person shall be entitled to payment of any Excess
Amount if, without LM's prior written consent, any GE Entity (i) other than
in good faith, rejected a settlement proposal in respect of such Matter or
failed to settle such Matter for an amount that would have resulted in
Actual Net Expenditures of less than $15,000,000 in respect of such Matter;
(ii) settled any such Matter, or consented to the entry of judgment in
respect of such Matter, where such settlement or judgment resulted in an
Excess Amount; or (iii) did not allow LM to participate in a substantial
manner with such GE Entity in the defense of such Matter (substantially in
the manner contemplated by Section 9.04(b)(ii)).
Section 9.04. Procedures for Third Party Claims.
(a) Notice. The party or parties seeking indemnification
under Section 9.02 or the GE Entities under Section 9.06 (the "Indemnified
Parties") agree to give prompt notice to the parties against whom indemnity
is sought (the "Indemnifying Parties") of the assertion of any third-party
claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under Section 9.02 or 9.06 (the "Third Party
Claims"). The failure by any Indemnified Party so to notify the
Indemnifying Parties shall not constitute a waiver of any Indemnified
Party's claims to indemnification in the absence of material prejudice to
the Indemnifying Parties. Any such notice shall be accompanied by a copy
of any papers theretofore served on the Indemnified Party in connection
with the applicable Third Party Claim.
(b) Defense and Settlement of Claims.
(i) Assumption of Defense by LM. Except as provided in
Sections 9.04(b)(ii) and 9.04(b)(v), upon receipt of notice from any
Indemnified Party with respect to any Third Party Claim as to which
indemnity is available pursuant to Section 9.02(a) or as to which indemnity
may be available to the GE Entities pursuant to Section 9.06(a), LM will,
subject to the provisions of Sections 9.04(b)(ii), (iii), (iv), (vi) and
(vii), assume the defense and control of such Third Party Claim but shall
allow the Indemnified Parties a reasonable opportunity to participate in
the defense thereof with their own counsel and at their own expense. LM
shall select counsel, contractors and consultants of recognized standing
and competence after consultation with GE, shall take all steps necessary
in the defense or settlement thereof, and shall at all times diligently and
promptly pursue the resolution thereof. In conducting the defense thereof,
LM shall at all times act as if all Damages or Product Damages, as the case
may be, relating to such Third Party Claim were for its own account and
shall act in good faith and with reasonable prudence to minimize Damages or
Product Damages, as the case may be, therefrom. GE shall, and shall cause
each of its Affiliates, directors, officers, employees, and agents to,
cooperate fully with LM in the defense of any Third Party Claim defended by
LM.
(ii) Assumption of Defense by GE. Except as provided in
Section 9.04(b)(i) or 9.04(b)(v), upon receipt of notice from any
Indemnified Party with respect to any Third Party Claim as to which
indemnity is available pursuant to Section 9.02(c), GE will, subject to the
provisions of Sections 9.04(b)(iii), (iv), (vi) and (vii), assume the
defense and control of such Third Party Claim, but shall allow the
Indemnified Parties a reasonable opportunity to participate in the defense
thereof with their own counsel and at their own expense. Notwithstanding
Section 9.04(b)(i), GE may retain the defense and control of any Third
Party Claim to the extent it relates to a Product Matter; provided that (A)
the amount of potential Product Damages in respect of such claim is less
than $5,000,000, and (B) GE, in good faith, expects that the resolution of
the Product Matter to which such claim relates will not result in Product
Damages in excess of $15,000,000; and provided further that GE shall allow
LM a reasonable opportunity to participate in the defense thereof with its
own counsel and at its own expense. GE shall select counsel, contractors
and consultants of recognized standing and competence after consultation
with LM, shall take all steps necessary in the defense or settlement
thereof, and shall at all times act as if all Damages or Product Damages,
as the case may be, relating to such Third Party Claim were for its own
account and shall act in good faith and with reasonable prudence to
minimize Damages or Product Damages, as the case may be, therefrom. LM
shall, and shall cause each of its Affiliates, directors, officers,
employees, and agents to, cooperate fully with GE in the defense of any
Third Party Claim defended by GE.
(iii) Continuing Notice of Certain Claims. Each
Indemnifying Party conducting a defense pursuant to Section 9.04(b)(i) or
9.04(b)(ii) shall give prompt and continuing notice to the Indemnified
Parties in respect of such Third Party Claim that the Indemnifying Party
reasonably believes may: (A) result in the assertion of criminal liability
on the part of the Indemnified Party or any of its Affiliates, directors,
officers, employees or agents; (B) adversely affect the ability of the
Indemnified Party to do business in any jurisdiction or with any customer;
or (C) materially affect the reputation of the Indemnified Party or any of
its Affiliates, directors, officers, employees or agents.
(iv) Settlement of Claims. Except as provided in
Section 9.04(b)(v), the Indemnifying Party shall be authorized to consent
to a settlement of, or the entry of any judgment arising from any Third
Party Claim, without the consent of any Indemnified Party; provided, that
the Indemnifying Party shall (A) pay or cause to be paid all amounts
arising out of such settlement or judgment concurrently with the
effectiveness thereof; (B) shall not encumber any of the assets of any
Indemnified Party or agree to any restriction or condition that would apply
to such Indemnified Party or to the conduct of that party's business; and
(C) shall obtain, as a condition of any settlement or other resolution, a
complete release of each Indemnified Party.
(v) Tax Claims. Sections 9.04(b)(i) through
9.04(b)(iv), 9.04(b)(vi) and 9.04(b)(vii) shall not be applicable to any
Third Party Claim relating to income or franchise taxes. Each of LM and GE
shall keep the other fully advised with respect to, and shall grant the
other full rights of consultation in connection with, any such Third Party
Claim and the defense or other handling of any audit, litigation or other
proceeding involving the tax treatment of the Contemplated Transactions.
(vi) Shared Defense. Each party may elect to share the
defense of a Third Party Claim the defense of which has been assumed or
retained by the other party pursuant to Section 9.04(b)(i) or 9.04(b)(ii).
In that event, the Indemnified Party will so notify the other party in
writing. Thereafter, GE and LM shall participate on an equal basis in the
defense, management and control of any such claim. LM and GE shall select
mutually satisfactory counsel, contractors and consultants to conduct the
defense or settlement thereof, and shall at all times diligently and
promptly pursue the resolution thereof. LM and GE shall each be
responsible for one-half of all Damages or Product Damages, as the case may
be, incurred after the Indemnified Party has provided notice as specified
herein, including costs of defense and investigation, with respect to such
claim, provided, that (A) GE's Actual Net Expenditures and Economic Harm
with respect to any Matter governed by this Section 9.04 shall in no event
exceed $15,000,000, (B) GE's liability pursuant to Section 9.06(a) shall
in no event exceed the amount set forth therein and (C) the election by GE
to share in the defense of a Third Party Claim as to which indemnity is
available pursuant to Section 9.06(a) shall not increase LM's liability
under such Section 9.06(a). Notwithstanding the foregoing, GE shall manage
all Remedial Actions conducted with respect to facilities which constitute
Transferred Assets; provided, that LM and its Representatives shall have
the right, consistent with GE's right to manage such Remedial Actions as
aforesaid, to participate fully in all decisions regarding any Remedial
Action, including reasonable access to sites where any Remedial Action is
being conducted, reasonable access to all documents, data, reports or
information regarding the Remedial Action, reasonable access to employees
and consultants of GE with knowledge of relevant facts about the Remedial
Action and the right to attend all meetings with any government agency or
third party regarding the Remedial Action.
(vii) Dispute Resolution. If LM and GE are unable to
agree with respect to a procedural matter arising under Section
9.04(b)(vi), LM and GE shall, within ten days after notice of disagreement
given by either party, agree upon a third-party referee ("Third Party
Referee"), who shall be an attorney and who shall have the authority to
review and resolve the disputed matter. The parties shall present their
differences in writing (each party simultaneously providing to the other a
copy of all documents submitted) to the Third Party Referee and shall cause
the Third Party Referee promptly to review any facts, law or arguments
either LM or GE may present. The Third Party Referee shall be retained to
resolve specific differences between the parties within the range of such
differences. Either party may request that all oral arguments presented to
the Third Party Referee by either party be in each other's presence. The
decision of the Third Party Referee shall be final and binding unless both
LM and GE agree otherwise. The parties shall share equally all costs and
fees of the Third Party Referee.
Section 9.05. Procedures for Direct Claims. In the event
any Indemnified Party should have a claim for indemnity against any
Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver notice of such claim with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party
so to notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability that it may have to such Indemnified Party with
respect to any claim made pursuant to this Section 9.05 in the absence of
material prejudice to the Indemnifying Party. The Indemnifying Party shall
use best efforts to notify the Indemnified Party within 30 calendar days
following its receipt of such notice whether the Indemnifying Party
disputes or accepts its liability to the Indemnified Party under this
Article 9; provided, that the failure by the Indemnifying Party to so
notify the Indemnified Party shall not create any presumption that the
Indemnifying Party has accepted its liability to the Indemnified Party
under this Article 9. If the Indemnifying Party accepts its liability to
the Indemnified Party under this Article 9, the Indemnifying Party shall
pay the amount of such liability to the Indemnified Party on demand or, in
the case of any notice in which the amount of the claim (or any portion of
the claim) is estimated, on such later date when the amount of such claim
(or such portion of such claim) becomes finally determined. If the
Indemnifying Party has timely disputed its liability with respect to such
claim as provided above, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such dispute and,
if not resolved through negotiations, such dispute shall be resolved by
litigation in accordance with Section 11.08.
Section 9.06. Indemnification of GE Entities by LM for
Certain Product Matters. (a) Effective as of the Closing, LM hereby
indemnifies the GE Entities and their Affiliates and, to the extent
actually indemnified by the GE Entities or any such Affiliate from time to
time, each of their respective Representatives against and agree to hold
them harmless on an after-Tax basis from any and all Product Damages
arising out of or related in any way to a Product Matter (as defined
below), but only if the event (other than the common root cause, including,
by way of example, an accident involving a commercial aircraft while in
service but not including design of a product incorporated in the aircraft)
giving rise to such Product Matter occurs before the tenth anniversary of
the Closing Date; provided, that LM shall not have any obligation to
indemnify the GE Entities or their Affiliates with respect to any Product
Matter unless the aggregate amount of Product Damages arising out of or
related in any way to such Product Matter exceeds $15,000,000 (such amount
exceeding $15,000,000, the "Product Matter Excess Amount") and in that
event such obligation to indemnify with respect to such Product Matter
shall equal 75% of the Product Matter Excess Amount. Product Damages shall
not be increased as a result of (i) action by the Company after the Closing
to amend, modify or waive any provision of a contract or agreement relating
to a Product or (ii) any work performed after the Closing by the Company as
a concession to a customer granted after the Closing. With respect to each
such Product Matter, the GE Entities shall be obligated to pay (or cause to
be paid) the first $15,000,000 of all Product Damages and 25% of the
Product Matter Excess Amount.
(b) For purposes of this Agreement a Product Matter shall
consist of:
(i) Personal and Property Claims which arise out of a
common root cause; or
(ii) Product Liability Claims which arise out of a
common root cause;
provided, that if a particular common root cause gives rise to liabilities
or claims under both clauses (i) and (ii) above, all such liabilities or
claims arising out of such common root cause shall be deemed to constitute
a single Product Matter for purposes of determining whether Product Damages
exceed $15,000,000.
(c) GE shall provide written notice (a "Product Matter
Indemnity Notice") to LM promptly after any GE Entity becomes aware of any
Product Matter, together with GE's good faith assessment of whether the
Product Matter will likely result in more than $15,000,000 in Product
Damages. In the event that either the GE Entities or LM becomes aware of
any third party claim, or the commencement of any suit, action or
proceeding, in respect of a Product Matter, GE or LM, as the case may be,
shall promptly notify the other party of such claim, which shall be treated
as a Third Party Claim for purposes of Section 9.04(a).
(d) Any party seeking reimbursement of Product Damages from the
other party in accordance with Section 9.06(a) shall notify the other party
specifying the amount so claimed, together with evidence reasonably
satisfactory to the notified party that the notifying party has actually
incurred such Product Damages and is entitled to payment in accordance with
the allocation of Product Damages set forth in Section 9.06(a). Promptly
after receipt of such notice and evidence, the notified party shall pay any
amount due in cash or by wire transfer of immediately available funds to
such account of the notifying party as the notifying party shall specify in
a written notice.
(e) If, as a result of the investigation permitted pursuant to
clause (iv) of the first sentence of Section 5.02, GE shall have concluded
prior to the Closing in its good faith reasonable judgment that liabilities
(which would be Assumed Liabilities) exist or are reasonably likely to
arise in the future with respect to materials, workmanship or design for
any product manufactured, assembled, sold, distributed, overhauled,
repaired or retrofitted by the Thrust Reverser Business (other than CF6
Products and Nacelle Major Components), which liabilities could reasonably
be expected to have a material adverse effect on the Thrust Reverser
Business and which may result in Product Damages, then GE shall so notify
LM in writing, specifying in reasonable detail the basis therefor, and such
product (and any associated spare parts) shall be included in the
definition of "Products" for purposes of this Section 9.06 and Section 7.06
of the Contribution Agreement.
ARTICLE 10
Termination
Section 10.01. Grounds for Termination. This Agreement may
be terminated at any time prior to the Closing:
(a) by mutual written agreement of GE and LM;
(b) by either GE or LM if the Closing shall not have been
consummated by December 31, 1997 (the "End Date"); provided, that neither
GE nor LM may terminate this Agreement pursuant to this Section 10.01(b) if
the Closing shall not have been consummated by the End Date by reason of
the failure of such party or any of its Affiliates to perform in all
material respects any of its or their respective covenants or agreements
contained in this Agreement or, in the case of LM, the Contribution
Agreement; provided, further, that either GE or LM shall be entitled to
terminate this Agreement prior to the End Date, if such party shall
reasonably conclude that any condition to such party's obligations
hereunder (as set forth in Section 8.01 with respect to LM and GE, Section
8.02 with respect to GE, and Section 8.03 with respect to LM) cannot
reasonably be expected to be satisfied prior to the End Date; and provided,
further, that as a condition to the right of a party to elect to terminate
this Agreement pursuant to the immediately preceding proviso, the party
shall first provide ten Business Days prior notice to the other party
specifying in reasonable detail the nature of the condition that such party
has concluded will not be satisfied, and the other party shall be entitled
during such ten Business Day period to take any actions it may elect
consistent with the terms of the Transaction Documents such that such
condition could be reasonably expected to be satisfied prior to the
expiration of such time period; and
(c) by either GE or LM if there shall be any law or
regulation that makes consummation of the Contemplated Transactions illegal
or otherwise prohibited or if consummation of the Contemplated Transactions
would violate any nonappealable final order, decree or judgment of any
court or governmental body having competent jurisdiction; provided, that
the party desiring to terminate this Agreement pursuant to this Section
10.01(c) shall give notice of such termination to the other parties.
Section 10.02. Effect of Termination. (a) If this
Agreement is terminated as permitted by Section 10.01, such termination
shall be without liability of any party (or any Affiliate, shareholder or
Representative of such party) to any other party to any Transaction
Document, provided, that if the Contemplated Transactions fail to close as
a result of a breach of any Transaction Document by GE or LM, such party
shall be fully liable for any and all Damages incurred or suffered by any
other party as a result of all such breaches (determined without regard to
Section 9.02) in an amount not to exceed 5.0% of the total fair market
value of the consideration that would have been transferred to such party
(or, if greater, by such party) pursuant to this Agreement if the Closing
had occurred as contemplated. The provisions of Sections 6.01, 7.03,
10.02, 11.01, 11.03, 11.04, 11.05 and 11.08 shall survive any termination
of this Agreement pursuant to Section 10.01.
(b) For the purposes of the provisions of Section 10.02(a),
the parties agree that LM shall be deemed not to have breached any of the
representations and warranties of LM set forth in Exhibit I of this
Agreement or Exhibit II of the Contribution Agreement unless, on the date
of this Agreement one or more of the following individuals: Xxxxxx X.
Xxxxxxx, Xxxx X. Xxxxxxxx, Xxxxxx Xxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx X.
Block, Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxxxx, Xx., had actual knowledge,
or would have known after due inquiry, that such representation and
warranty was untrue in any material respect, provided, that the knowledge
qualifier shall not apply to (A) (i) Section I.01; (ii) Section
I.02(a); (iii) Section I.02(b); (iv) clauses (i) and (ii) of the first
sentence of Section I.04; (v) the first sentence of Section I.05(a); (vi)
the first sentence of Section I.05(b); and (vii) Section I.13 of the
Exchange Agreement or (B) (i) Section II.01; (ii) Section II.02; (iii)
clauses (i) and (ii) of the first sentence of Section II.04; (iv) the
first sentence of Section II.05; and (v) Section II.14 of the Contribution
Agreement.
(c) For the purposes of the provisions of Section 10.02(a),
the parties agree that GE shall be deemed not to have breached any of the
representations and warranties of GE set forth in Exhibit II, unless, on
the date of this Agreement one or more of the following individuals:
Xxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Xxxxxx X.
Xxxxxxxxx, Xxxxx Xxxx, Xxxx Xxxxxxxxx, Xxxxxx Xxxxx, and Xxxxxxx Xxxxxx,
had actual knowledge, or would have known after due inquiry, that such
representation and warranty was untrue in any material respect, provided,
that the knowledge qualifier shall not apply to (i) Section II.01; (ii)
Section II.02; (iii) clauses (i) and (ii) of the first sentence of Section
II.04; (iv) Section II.05; and (v) Section II.07.
Section 10.03. Force Majeure. If, as a result of force
majeure, a party to this Agreement is unable to complete the performance of
any covenant or other obligation under this Agreement within the time
prescribed therefor, then such party (the "frustrated party") will give
prompt written notice of such inability to perform (together with a
reasonably detailed explanation of the reasons therefor) to the other party
to this Agreement. On receipt of such notice, such other party may, at its
election, either (a) terminate this Agreement, or (b) accept such
incomplete or delayed performance of such covenant or other obligation as
the frustrated party, through its best efforts, may be able to achieve. In
neither case, however, will the frustrated party be in breach of this
Agreement or otherwise liable for Damages due to its inability to complete
the performance of such covenant or other obligation as the result of force
majeure. For purposes hereof, "force majeure" means an act of God or other
facts and circumstances which, notwithstanding the best efforts of a party
to this Agreement, the party has been unable to control.
Section 10.04. Opportunity to Provide Reasonable Cure. (a)
A party will be treated as having failed to perform any covenant or other
obligation under this Agreement only if (i) there is an event that (without
regard to this Section 10.04 but taking into account Section 10.03) would
be a failure by such party to perform such a covenant or other obligation;
(ii) the other party notifies such party promptly after determining that
such event has occurred (or such party is not materially prejudiced by the
failure of the other party to so notify such party); and (iii) such party
fails to offer to cure such event in a manner that substantially preserves
the benefits of the Exchange to such other party or, having offered to cure
such event and having such offer accepted by such other party, such party
fails to cure such event in a way that substantially preserves the benefits
of the Exchange to such other party.
(b) To the extent that any representation or warranty of
any party shall have been untrue as of the date of this Agreement such that
the condition set forth in Section 8.02(a) or 8.03(a) would not be
satisfied, such party will not be treated as having been in breach of such
representation or warranty if such party has, as of the Closing, cured such
inaccuracy (including, without limitation, by the payment of money) such
that (i) the condition in Section 8.02(a) or 8.03(a), as the case may be,
is satisfied and (ii) the cure has been made in a way that substantially
preserves the benefits of the Exchange to the other party or parties.
ARTICLE 11
Miscellaneous
Section 11.01. Notices. All notices, requests and other
communications to any party under any Transaction Document shall be in
writing (including telecopy or similar writing) and shall be given,
if to LM or, prior to the Closing, the Company:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy: 000-000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: 000-000-0000
if to any GE Entity or, after the Closing, the Company:
c/o General Electric Company
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Senior Counsel for Transactions
Telecopy: 000-000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 000-000-0000
or to such other address or telecopy number and with such other copies, as
such party may hereafter specify for the purpose by notice to the other
parties. Each such notice, request or other communication shall be effective
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section.
Section 11.02. Amendments; No Waivers. (a) Any provision
of any Transaction Document may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment,
by each party to such Transaction Document, or in the case of a waiver, by
the party against whom the waiver is to be effective. Notwithstanding the
foregoing, any amendment to the Contribution Agreement or any waiver by the
Company of any term or condition of the Contribution Agreement shall, in
either case, require the prior written consent of GE.
(b) No failure or delay by any party in exercising any
right, power or privilege under any Transaction Document shall operate as a
waiver of such right, power or privilege nor shall any single or partial
exercise of any right, power or privilege preclude any other or further
exercise of such right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided under the
Transaction Documents shall be cumulative and not exclusive of any rights
or remedies provided by law.
Section 11.03. Expenses. Except as otherwise provided in
any Transaction Document, all costs and expenses incurred in connection
with the Contemplated Transactions shall be paid by the party incurring
such cost or expense. Notwithstanding the foregoing, LM and the Company
shall equally bear all costs and expenses of the Company incurred prior to
the Closing in connection with the Contemplated Transactions.
Section 11.04. Successors and Assigns. The provisions of
the Transaction Documents shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns;
provided, that no party may assign, delegate or otherwise transfer any of
its rights or obligations under any Transaction Document without the
consent of each other party, except that any GE Entity may transfer or
assign, in whole or from time to time in part, to one or more of its
Affiliates (other than the Company after the Closing), its rights under
this Agreement or under any other Transaction Document, but no such
transfer or assignment will relieve any GE Entity of its obligations under
this Agreement or under any other Transaction Document. No GE Entity may
transfer any shares of LM Preferred Stock or LM Common Stock from and after
the date of this Agreement until the earlier of (i) the consummation of the
Exchange or (ii) the termination of this Agreement in accordance with
Section 10.01; provided, that, for purposes hereof, the conversion of
shares of LM Preferred Stock into shares of LM Common Stock in accordance
with Section 6.05 shall not constitute a "transfer".
Section 11.05. Governing Law. Each Transaction Document
shall be governed by and construed in accordance with the law of the State
of New York (without regard to the conflicts of law rules of such state).
Section 11.06. Counterparts; Effectiveness. Each
Transaction Document may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures were
upon the same instrument. Each Transaction Document shall become effective
when each party to such Transaction Document shall have received a
counterpart of such Transaction Document signed by the other parties to
such Transaction Document.
Section 11.07. Entire Agreement. The Transaction Documents
(and any other agreements contemplated thereby) and the Confidentiality
Agreement (but only to the extent not otherwise limited by this Agreement)
constitute the entire agreement among the parties with respect to the
subject matter of such documents and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties
with respect to the subject matter of such documents. No representation,
inducement, promise, understanding, condition or warranty not set forth in
any Transaction Document has been made or relied upon by any party to such
Transaction Document. No Transaction Document or any provision thereof is
intended to confer upon any Person other than the parties thereto any
rights or remedies thereunder.
Section 11.08. Jurisdiction. Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with any of the Transaction Documents or
the Contemplated Transactions may be brought against either party in the
United States District Court for the Southern District of New York or any
state court sitting in the City of New York, Borough of Manhattan, and each
party hereby consents to the exclusive jurisdiction of such court (and of
the appropriate appellate courts) in any such suit, action or proceeding
and waives any objection to venue laid therein. Process in any such suit,
action or proceeding may be served on any party anywhere in the world,
whether within or without the State of New York. Without limiting the
foregoing, each party agrees that service of process upon such party at the
address referred to in Section 11.01, together with written notice of such
service to such party, shall be deemed effective service of process upon
such party.
Section 11.09. Captions. The captions in this Agreement
are included for convenience of reference only and shall be ignored in the
construction or interpretation of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed by their respective authorized officers on the day and
year first above written.
GENERAL ELECTRIC COMPANY
By: /s/Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President --
Finance
GE INVESTMENTS, INC.
By: /s/Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Attorney-in-Fact
GE GOVERNMENT SERVICES, INC.
By: /s/Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Attorney-in-Fact
CLIENT BUSINESS SERVICES, INC.
By: /s/Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Attorney-in-Fact
LOCKHEED XXXXXX CORPORATION
By: /s/Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Financial Strategies
LMT SUB INC.
By: /s/Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
EXHIBIT I
Representations and Warranties of LM
LM hereby represents and warrants to each of the GE Entities
as of the date of this Agreement and as of the Closing Date that:
I.01. Corporate Existence and Power. Each of LM, the
Company and each Transferor Subsidiary is a corporation or other entity
duly incorporated or organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, has all
corporate or other similar powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on the
Businesses as now conducted, except where the failure to have such
licenses, authorizations, consents and approvals has not had, and may not
reasonably be expected to have, a Material Adverse Effect on the Company or
the Businesses. Each of LM, the Company and each Transferor Subsidiary is
duly qualified to do business as a foreign corporation in each jurisdiction
where the character of the property owned or leased by it or the nature of
its activities make such qualification necessary to carry on the Businesses
as now conducted, except where the failure to be so qualified has not had,
and may not reasonably be expected to have, a Material Adverse Effect on
the Company or the Businesses.
I.02. Corporate Authorization. (a) Except as otherwise
disclosed to GE prior to the date of this Agreement, the execution,
delivery and performance by LM, the Company and each Transferor Subsidiary
of the Transaction Documents to which it is a party and the consummation of
the Contemplated Transactions are within its corporate or other similar
powers and have been (or in the case of Transferor Subsidiaries, by the
Closing, will be) duly authorized by all necessary corporate action on the
part of LM, the Company and such Transferor Subsidiary. Each Transaction
Document to which LM, the Company or any Transferor Subsidiary is a party
constitutes a legal, valid and binding agreement of LM, the Company or such
Transferor Subsidiary, enforceable against LM, the Company or such
Transferor Subsidiary, as the case may be, in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights
generally from time to time in effect and to general principles of equity,
including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law). There
is no vote or other approval of any stockholders of LM required to permit
consummation of the Contemplated Transactions.
(b) GE and its Affiliates are exempt from the provisions of
Section 3-602 of the Maryland General Corporation Law. LM's Board of
Directors has not taken any action, or resolved to take any action, to
alter or repeal the resolution of LM's Board of Directors exempting any
business combination with GE or LM or any of their Affiliates from the
provisions of Section 3-602 of the Maryland General Corporation Law. The
execution, delivery and performance by LM, the Company and each Transferor
Subsidiary of the Transaction Documents to which it is a party and the
consummation of the Contemplated Transactions are exempt under or not
subject to, the provisions of a "business combination", "control share
acquisition" or similar statute or regulation enacted under Maryland law,
or any provision of LM's charter and bylaws, that purports to limit or
restriction transactions between a corporation and a shareholder that would
otherwise be applicable to the Contemplated Transactions.
I.03. Governmental Authorization. (a) Except as set forth
in Section I.03 of the Exchange Disclosure Schedule, the execution,
delivery and performance by LM, the Company and each Transferor Subsidiary
of the Transaction Documents to which it is a party and the consummation of
the Contemplated Transactions require no action by or in respect of, or
consent or approval of, or filing with, any Governmental Authority other
than (i) compliance with any applicable requirements of the HSR Act; (ii)
compliance with any applicable foreign antitrust regulatory approvals,
(iii) compliance with any applicable requirements of the Securities
Exchange Act; (iv) compliance with any applicable requirements of any
relevant state environmental laws; (v) any necessary approvals of the U.S.
Government, including, without limitation, the Department of Defense, the
United States Air Force or any agencies, departments or instrumentalities
thereof; and (vi) any actions, consents, approvals or filings otherwise
expressly referred to in this Agreement.
(b) To LM's knowledge, there are no facts relating to the
identity or the circumstances of LM or any of its Affiliates that would
prevent or materially delay obtaining any of the consents referred to above
in Section I.03(a), it being understood that LM has been, and currently is,
involved in a number of disputes with the U.S. Government.
I.04. Noncontravention. Except as set forth in Section
I.04 of the Exchange Disclosure Schedule, the execution, delivery and
performance by LM, the Company and each Transferor Subsidiary of the
Transaction Documents to which it is a party and the consummation of the
Contemplated Transactions do not and will not (vii) violate the certificate
of incorporation or bylaws or other organizational documents of LM, the
Company or such Transferor Subsidiary, (viii) assuming compliance with the
matters referred to in Exhibit I.03, violate any Applicable Law, (ix)
assuming the obtaining of all Required Consents, constitute a default under
or give rise to any right of termination, cancellation or acceleration of
any right or obligation of LM, the Company, such Transferor Subsidiaries or
any Access Graphics Foreign Subsidiary or to a loss of any benefit relating
primarily to the Businesses to which LM, the Company, such Transferor
Subsidiary or any Access Graphics Foreign Subsidiary is entitled under, any
provision of any agreement, contract or other instrument binding upon LM,
the Company, such Transferor Subsidiary or any Access Graphics Foreign
Subsidiary and relating primarily to the Businesses or by which any of the
Transferred Assets is or may be bound or any license, franchise, permit or
similar authorization held by LM, the Company, such Transferor Subsidiary
or any Access Graphics Foreign Subsidiary relating primarily to the
Businesses or (x) result in the creation or imposition of any Lien on any
Transferred Asset, other than Permitted Liens, except for such violation
referred to in clause (ii), default, termination, cancellation,
acceleration or loss referred to in clause (iii) or creation or imposition
of any Lien on any Transferred Asset referred to in clause (iv), that could
not reasonably be expected to have a Material Adverse Effect on the Company
or the Businesses.
I.05. Ownership of Company Common Stock, Company Preferred
Stock and the Equity Securities. (a) Upon consummation of the
Contemplated Transactions, each GE Entity shall be the record and
beneficial owner of the Company Common Stock and Company Preferred Stock,
as the case may be, as set forth opposite such GE Entity's name on Section
2.02 of the Exchange Disclosure Schedule, free and clear of all Liens,
preemptive or similar rights or any other limitation or restriction
(including any restriction on the right to vote, transfer, sell or
otherwise dispose of such Company Common Stock or Company Preferred Stock,
as the case may be, other than limitations on offers and sales under
federal and state securities laws). Such Company Common Stock and Company
Preferred Stock in the aggregate represent all of the issued and
outstanding capital stock of the Company.
(b) LM is the beneficial and record owner of the Equity
Securities and, except as set forth in Section I.05 of the Exchange
Disclosure Schedule, LM owns such securities free and clear of any Lien and
any other limitation or restriction (including any restriction on the right
to vote, transfer, sell or otherwise dispose of such securities, other than
limitations on offers and sales under foreign, federal and state securities
laws). Upon consummation of the Contemplated Transactions, the Company
shall be the owner of the Equity Securities and all of the issued and
outstanding capital stock of each of the Access Graphics Foreign
Subsidiaries, in each case, free and clear of all Liens, preemptive or
similar rights or any other limitation or restriction (other than
limitations on offers and sales under foreign, federal and state securities
laws). LM has registration rights under the Warrant Acceleration and
Registration Rights Agreement with respect to the Equity Securities.
(c) Except as set forth in Section I.05 of the Exchange
Disclosure Schedule, LM represents as follows: (i) as of the date this
Agreement, LM beneficially owns 5,022,380 shares of the outstanding
Globalstar common stock and neither LM nor any of its Affiliates
beneficially own (as such term is defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934) any other securities of Globalstar;
(ii) neither LM nor any of its Affiliates is a party to any agreement or
other understanding, written or oral, direct or indirect, with Globalstar,
any of its directors, officers or employees or any other stockholder of
Globalstar, which provides for the election of directors, the voting of
shares of Globalstar's common stock or with respect to any aspect of the
business, management or policies of Globalstar; (iii) no officer, director
or Affiliate of LM or any of its Affiliates is currently serving or has the
right to serve as a director or officer of Globalstar; (iv) neither LM nor
any of its Affiliates has an active role in the formation of the operating
policies, day-to-day operations, management or long-term strategic planning
of Globalstar; (vi) other than the Warrant and Registration Rights
Agreement, the Fee Agreement dated as of April 19, 1996 by and among
Globalstar L.P., Globalstar, Loral Corporation, DASA Globalstar Limited
Partner, Inc, Qualcomm Limited Partner, Inc. and Space Systems/Loral, Inc.,
the Guarantee dated as of April 23, 1996 for the benefit of the lenders
under Globalstar's credit facility, and the Restructuring, Financing and
Distribution Agreement dated as of January 7, 1996 among LM and certain
subsidiaries of Loral Corporation, neither LM nor any of its Affiliates has
any agreement or other understanding, written or oral, direct or indirect,
with Globalstar, any of its directors, officers or employees or any other
stockholder of Globalstar's common stock with respect to LM's investment in
Globalstar.
I.06. Consents. Section I.06 of the Exchange Disclosure
Schedule sets forth each material agreement, contract or other instrument
binding upon LM, any Transferor Subsidiary or any Access Graphics Foreign
Subsidiary or any Permit requiring a consent or other action by any Person
as a result of the execution, delivery and performance of the Transaction
Documents and the consummation of the Contemplated Transactions (the
"Required Consents"), except for such consents or actions as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company or the Businesses if not received or taken by the Closing.
I.07. Financial Statements. The unaudited pro forma
balance sheets as of June 29, 1997, in the case of the Thrust Reverser
Business, and June 30, 1997, in the case of the Access Graphics Business
(each such date for the relevant Business, the "Balance Sheet Date") for
each of the Thrust Reverser Business (the "Thrust Reverser Balance Sheet")
and the Access Graphics Business (the "Access Graphics Balance Sheet" and,
together with the Thrust Reverser Balance Sheet, the "Balance Sheets"), and
the related statements of income for the six months then ended present
fairly, in all material respects, in conformity with the Transaction
Accounting Principles, the financial position of the Transferred Assets and
Assumed Liabilities of each of the Thrust Reverser Business and the Access
Graphics Business, as the case may be, as of the date thereof and their
respective results of operation for the period then ended (subject to
normal year-end adjustments). True and correct copies of the Balance
Sheets are set forth in Attachment A to this Agreement.
I.08. Absence of Certain Changes. Since the Balance Sheet
Date and except as set forth in Section I.08 of the Exchange Disclosure
Schedule, the Businesses and the business of the Company have been
conducted in all material respects in the ordinary course consistent with
past practices and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts that has had a Material Adverse Effect on the
Company or the Businesses, other than those resulting from changes, whether
actual or prospective, in general conditions applicable to the industries
in which the Businesses are involved or general economic conditions;
(b) (i) any incurrence, assumption or guarantee by the
Company or any of the Access Graphics Foreign Subsidiaries of any
Indebtedness for Borrowed Money or (ii) any incurrence, assumption or
guarantee by LM or any of the Transferor Subsidiaries, in either case that
is an Assumed Liability and that is material to the Businesses taken as a
whole, other than in the ordinary course of business;
(c) any damage, destruction or other casualty loss affecting
the Company, the Businesses or any Transferred Asset that has had a
Material Adverse Effect on the Company or the Businesses;
(d) any transaction or commitment made, or any Contract
entered into, by LM, the Company, any Transferor Subsidiary or any Access
Graphics Foreign Subsidiary relating primarily to the Businesses or any
Transferred Asset by LM, the Company, any Transferor Subsidiary or any
Access Graphics Foreign Subsidiary (including the acquisition or
disposition of any assets) or any relinquishment by LM, the Company, any
Transferor Subsidiary or any Access Graphics Foreign Subsidiary of any
contract or other right relating primarily to the Company or the
Businesses, in either case, material to the Company or the Businesses taken
as a whole, other than transactions and commitments in the ordinary course
of business consistent with past practices and the Contemplated
Transactions; or
(e) except as permitted under Section 5.05, any distribution
of any assets of any Business (by dividend, intercompany or intracompany
loan or otherwise, other than by intercompany or intracompany loan that is
consistent with past cash management practices) to LM or any Affiliate of
LM (other than in the ordinary course consistent with past practices for
payments to or allocated to LM or any Affiliate of LM relating to (i)
materials or services used in the Businesses, (ii) costs advanced to or on
behalf of the Businesses or (iii) allocations of corporate overhead costs).
I.09. No Undisclosed Material Liabilities. There are no
liabilities of the Company or the Businesses that constitute Assumed
Liabilities or liabilities of any Access Graphics Foreign Subsidiary, in
each case, of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than:
(a) liabilities disclosed or provided for in the Balance
Sheets;
(b) liabilities (i) disclosed in Section I.09 of the
Exchange Disclosure Schedule, (ii) related to any Contract disclosed in the
Contribution Disclosure Schedule or (iii) related to any Employee Plan or
Benefit Arrangement disclosed in Section IV.02 of the Contribution
Disclosure Schedule;
(c) Environmental Liabilities;
(d) liabilities incurred in the ordinary course of business
since the Balance Sheet Date consistent with past practices and not in
violation of this Agreement or the Contribution Agreement which in the
aggregate have not had, and may not reasonably be expected to have, a
Material Adverse Effect on the Company or the Businesses; and
(e) liabilities other than those referred to in the
foregoing clauses (a)-(d) that have not had, and may not reasonably be
expected to have, a Material Adverse Effect on the Company or the
Businesses.
I.10. Litigation; Contract-Related Matters. (a) Except
as set forth in Section I.10 of the Exchange Disclosure Schedule or
referred to in the Balance Sheets, there is no action, suit, investigation
or proceeding (except for actions, suits or proceedings referred to in
Section I.10(b)) pending against, or to the best of the knowledge of LM,
threatened against or affecting the Company, the Businesses or any
Transferred Asset before any Governmental Authority as to which there is a
substantial likelihood of a determination or resolution adverse to the
Company, the Businesses or any Transferred Asset and which, if so adversely
determined or resolved, may reasonably be expected to have a Material
Adverse Effect on the Company or the Businesses or which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
Contemplated Transactions.
(b) Except as set forth in Section I.10 of the Exchange
Disclosure Schedule, there is no action, suit, investigation or proceeding
relating to any Government Contract or Bid, or relating to any proposed
suspension or debarment of LM, the Company or any Transferor Subsidiary or
any of their employees pending against, or to the best of the knowledge of
LM, threatened against or affecting the Company, the Businesses or any
Transferred Asset before any Governmental Authority as to which there is a
substantial likelihood of a determination or resolution adverse to the
Company, the Businesses or any Transferred Asset and which, if so adversely
determined or resolved, may reasonably be expected to have a Material
Adverse Effect on the Company or the Businesses.
I.11. Compliance with Laws. Except as set forth in Section
I.11 of the Exchange Disclosure Schedule, except for violations or
infringements of Environmental Laws or Applicable Laws, orders, writs,
injunctions or decrees relating to Contracts or Bids, and except for
violations or infringements as have not had, and may not reasonably be
expected to have, a Material Adverse Effect on the Company or the
Businesses, the operation of the Company and the Businesses and condition
of the Transferred Assets have not violated or infringed, and do not
violate or infringe, in any material respect any material Applicable Law or
any order, writ, injunction or decree of any Governmental Authority.
I.12. Certain Information. Each of the 1998 operating plan
data relating the Thrust Reverser Business and the Access Graphics
Business, true and correct copies of which have been delivered to GE prior
to the date of this Agreement, has been prepared in the ordinary course of
business and represents the reasonable belief of the general managers and
officers of the Businesses as to the prospects of the Businesses during the
periods covered by such data and the general managers and officers of the
Businesses are not aware of any facts or circumstances that would cause
such Persons to believe that any factual statements included in such data
are inaccurate in any material respect.
I.13. Finders' Fees. Other than Xxxxxxx, Xxxxx & Co. and
Bear, Xxxxxxx & Co. Inc., whose fees will be paid by LM, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of LM, the Company or the
Transferor Subsidiaries who might be entitled to any fee or commission from
the Company in connection with the Contemplated Transactions.
I.14. Tax Information. To the best of the knowledge of LM
after due inquiry, the Officers' Certificates and all other supporting
documentation provided by LM to Xxxxxx Xxxxxx & Xxxxxxx in connection with
the tax opinion described in Section 8.02(d)(i) are true, accurate and
complete. Solely for purposes of this Section I.14, "to the best of the
knowledge of LM" means to the best of the knowledge of the Chairman of the
Board of Directors, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, any other officer of LM
having a comparable level of decision-making responsibility, the Vice
President and General Tax Counsel, and the Director of Tax Planning and
International Taxes of LM.
EXHIBIT II
Representations and Warranties of GE
GE, on behalf of itself and the other GE Entities,
represents and warrants to LM as of the date of this Agreement and as of
the Closing Date that:
II.01. Corporate Existence and Power. Each GE Entity is a
corporation duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, has all corporate or other similar powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except where the
failure to have such licenses, authorizations, consents and approvals has
not had, and may not reasonably be expected to have, a Material Adverse
Effect on GE or the GE Entities. Each GE Entity is duly qualified to do
business as a foreign corporation in each jurisdiction where the character
of the property owned or leased by it or the nature of its activities make
such qualification necessary to carry on its business as now conducted,
except for those jurisdictions where failure to be so qualified has not
had, and may not reasonably be expected to have, a Material Adverse Effect
on GE or the GE Entities.
II.02. Corporate Authorization. The execution, delivery
and performance by each GE Entity of the Transaction Documents to which it
is a party and the consummation of the Contemplated Transactions are within
the corporate powers of such GE Entity and have been duly authorized by all
necessary corporate action on the part of such GE Entity. Each Transaction
Document to which each GE Entity is a party constitutes a legal, valid and
binding agreement of such GE Entity, enforceable against such GE Entity in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding at equity or at law).
II.03. Governmental Authorization. The execution, delivery
and performance by each GE Entity of the Transaction Documents to which it
is a party and the consummation of the Contemplated Transactions require no
action by or in respect of, or filing with, any governmental body, agency
or official other than (i) compliance with any applicable requirements of
the HSR Act; and (ii) compliance with any applicable foreign antitrust
regulatory approvals.
II.04. Noncontravention. The execution, delivery and
performance by each GE Entity of the Transaction Documents to which it is a
party and the consummation of the Contemplated Transactions do not and will
not (i) violate the certificate of incorporation or bylaws of such GE
Entity or (ii) assuming compliance with the matters referred to in Exhibit
II.03, violate any Applicable Law, (iii) constitute a default under or give
rise to any right of termination, cancellation or acceleration of any right
or obligation of any GE Entity or to a loss of any benefit to which such GE
Entity is entitled under any provision of any agreement, contract or other
instrument binding upon any GE Entity or any license, franchise, permit or
other similar authorization held by any GE Entity, except in the case of
clauses (ii) and (iii), for any such violation, default, termination,
cancellation, acceleration or loss that would not materially delay or
prevent the consummation of the Contemplated Transactions.
II.05. Ownership of LM Preferred Stock. As of the date
hereof, each of the GE Entities is the beneficial owner of the number of
shares of LM Preferred Stock set forth opposite its name in Section 2.02 of
the Exchange Disclosure Schedule. Upon consummation of the Contemplated
Transactions, LM shall be the record and beneficial owner of 20,000,000
shares of LM Preferred Stock (or the number of shares of LM Common Stock
into which such LM Preferred Stock is convertible, or a combination
thereof), free and clear of all Liens, preemptive or similar rights or any
other limitation or restriction (including any restriction on the right to
vote, transfer, sell or otherwise dispose of such LM Preferred Stock),
other than limitations on offers and sales under federal and state
securities laws and LM's charter.
II.06. Litigation. There is no action, suit, investigation
or proceeding pending against, or to the knowledge of GE, threatened
against or affecting, any GE Entity before any Governmental Authority which
in any manner challenges or seeks to prevent, enjoin, alter or materially
delay consummation of the Contemplated Transactions.
II.07. 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 any GE Entity who might be entitled to any
fee or commission in connection with the Contemplated Transactions.
II.08. Tax Information. To the best of the knowledge of GE
after due inquiry, the Officer's Certificate and all other supporting
documentation provided by GE to King & Spalding in connection with the tax
opinion described in Section 8.03(b)(i) are true, accurate and complete.
Solely for purposes of this Section II.08, "to the best of the knowledge of
GE" means to the best of the knowledge of the Chairman of the Board of
Directors and the Chief Executive Officer, the Chief Financial Officer, any
other officer having a comparable level of decision-making responsibility,
and the Vice President and Senior Counsel, Taxes, of GE and the Consultant
- Federal Taxes in GE's Corporate Taxes organization.
II.09. Company Common and Preferred Stock. For purposes of
compliance with applicable federal and state securities laws, each of the
GE Entities represents that it is transferring the LM Preferred Stock or LM
Common Stock, as the case may be, in exchange for the Company Common Stock
and Company Preferred Stock, as the case may be, for purposes of investment
only and not with a view to distribution or transfer of such Company Common
Stock or Company Preferred Stock, as the case may be, nor with any present
intention of distributing any such Common Stock or Preferred Stock. Each
of the GE Entities has the capacity to protect its own interest in
connection with the exchange of the Company Common Stock or Company
Preferred Stock, as the case may be, for its portion of the LM Preferred
Stock or LM Common Stock, as the case may be, as contemplated by this
Agreement.
II.10. Inspection. Each of the GE Entities is an informed
and sophisticated participant in the transactions contemplated by the
Transaction Documents. The GE Entities have undertaken an investigation
and have been provided with, have evaluated and have relied upon certain
documents and information to assist them in making an informed and
intelligent decision with respect to the execution of the Transaction
Documents. The GE Entities acknowledge that LM has made no representation
or warranty as to the prospects, financial or otherwise of the Businesses,
except as expressly set forth herein. The GE Entities shall accept the
Company Common Stock and the Company Preferred Stock based upon the GE
Entities' inspection, examination and determination with respect thereto as
to all matters, and without reliance upon any express or implied
representations and warranties of any nature, whether in writing, orally or
otherwise, made by or on behalf of or imputed to LM except as expressly set
forth in the Transaction Documents. In connection with the Contemplated
Transactions, GE has acted on behalf of the other GE Entities and makes the
representations set forth in this Section II.10 on behalf of itself and the
other GE Entities.
