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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
NORTHROP GRUMMAN CORPORATION
AND
CALIFORNIA MICROWAVE, INC.
MARCH 10, 1999
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
March 10, 1999 by and between NORTHROP GRUMMAN CORPORATION, a Delaware
corporation ("Buyer"), and CALIFORNIA MICROWAVE, INC., a Delaware corporation
("Seller").
RECITALS
A. Seller, through an unincorporated division (the "Information Systems
Division"), is in the business of designing and integrating information
collection, communications, reconnaissance and surveillance systems, including
principally airborne reconnaissance and surveillance systems, ground-based
mobile electronic systems, mission-planning systems and specialized
communication equipment, including satellite communication systems, for various
departments and agencies of the U.S. Government, principally with the United
States Department of Defense (the "Business").
B. Buyer wishes to purchase or acquire from Seller, and Seller wishes to
sell, assign and transfer to Buyer, substantially all the assets of the
Business, and Buyer has agreed to assume specified liabilities of the Business,
all for the purchase price, and upon the terms and subject to the conditions
herein set forth.
C. Capitalized terms used herein without separate definitions have the
meanings given to such terms in Section 12.1.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and covenants hereinafter set forth, the parties
hereby agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE ASSETS
1.1 ASSETS. Subject to and upon the terms and conditions set forth in
this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Buyer, and Buyer shall purchase and acquire from Seller, all right,
title and interest of Seller in and to the name and xxxx "California Microwave,"
the goodwill related thereto, and any name or xxxx derived from or including the
foregoing, including without limitation, all corporate symbols or logos
(collectively, "Logos") incorporating "California Microwave" (the "California
Microwave Name") and the properties, assets, contracts and rights of every
nature, kind and description, tangible and intangible (including goodwill),
whether real, personal or mixed, whether accrued, contingent or otherwise and
whether now existing or hereinafter acquired (other than the Excluded Assets)
that relate primarily to the Business (collectively, the "Assets"), including,
without limitation,
(a) all of the Fixed Assets, Intellectual Property and Contracts;
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(b) all notes and accounts receivable of the Business, including
notes and accounts receivable from other divisions of Seller but excluding
corporate-level notes and accounts receivable from Seller;
(c) all inventories of raw material, work in process, finished
products, goods, spare parts, replacement and component parts and office and
other supplies of the Business (the "Inventories");
(d) all of the other assets that are reflected on the June Balance
Sheet, including prepaid expenses, deferred charges, advance payments, security
deposits and prepaid items, as adjusted through the Closing Date in the ordinary
course of business;
(e) all of the Books and Records;
(f) all rights under express or implied warranties from Seller's
suppliers with respect to the Assets;
(g) to the extent their transfer is permitted by law, all
Governmental Approvals, including all applications therefor;
(h) all rights to causes of action, lawsuits, claims and demands of
any nature available to or being pursued by Seller in connection with the Assets
or the Assumed Liabilities;
(i) all guarantees, warranties, indemnities and similar rights in
favor of Seller in connection with the Assets; and
(j) all computer hardware and software used primarily in the
Business, including all rights under licenses and other instruments or
agreements relating thereto.
1.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section 1.1
hereof to the contrary, the Assets do not include any of the following (herein
referred to collectively as the "Excluded Assets"):
(a) all cash and cash equivalents and similar type investments, such
as certificates of deposit, treasury bills and other marketable securities;
(b) all books and records relating to or used in the business of
Seller and not primarily relating to or used in the Business;
(c) all insurance policies maintained by Seller and all rights of
action, lawsuits, claims and demands, rights of recovery and set-off, and
proceeds, under or with respect to such insurance policies, except to the extent
the coverage thereof remains available after the Closing for claims relating to
the Assets or Assumed Liabilities;
(d) all corporate-level accounts and notes receivable from Seller;
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(e) all rights to causes of action, lawsuits, claims and demands of
any nature available to or being pursued by Seller with respect to the Excluded
Assets or Excluded Liabilities;
(f) all rights, title and interest of Seller in and to prepaid
(determining "prepayment" based on whether or not as of the Closing liability
for such taxes has accrued) income taxes and franchise taxes of the Business,
and any claims for any refund, credit, rebate or abatement with respect to
income taxes and franchise taxes of the Business for any period or portion
thereof through the Closing Date, and any interest with respect thereto; and
(g) the assets listed on Schedule 1.2.
ARTICLE 2
THE CLOSING
2.1 PLACE AND DATE. The closing of the sale and purchase of the Assets
(the "Closing") and the assumption of the Assumed Liabilities shall take place
at 10:00 a.m. local time on April 16, 1999 at the offices of Xxxxxx Godward LLP,
One Maritime Plaza, 20th Floor, San Francisco, California, or such other time
and place upon which the parties may agree. The day on which the Closing
actually occurs is herein sometimes referred to as the "Closing Date."
2.2 PURCHASE PRICE.
(a) On the terms and subject to the conditions set forth in this
Agreement, Buyer agrees to pay Seller the following: (i) the Purchase Price of
$93 million at the Closing and subject to adjustment as provided in (b) below;
and (ii) an additional amount (the "Additional Amount") if any, on September 1,
2000, such Additional Amount not to exceed $5 million and to be computed as a
function of the revenues of the Airborne Systems Business Element, such that the
Additional Amount shall equal on a pro rata basis $1.67 for each $1.00 of
Airborne Systems Business Element revenues for the twelve month period ending
June 30, 2000 in excess of $66 million, and for the purposes of this
calculation, "Airborne Systems Business Element" refers to the business element
appearing on page IV-8 of the Confidential Descriptive Memorandum, which page is
attached to this Agreement as Exhibit 2.2(a). Seller recognizes and agrees that
Buyer shall have the complete and unrestricted right to operate, combine and/or
realign the Airborne Systems Business Element as it in its sole discretion may
deem appropriate, provided that if Buyer's operation, combination or realignment
of the Airborne Systems Business Element renders impossible the ability of
Buyer, in the opinion of Buyer's independent certified public accountants, to
report the revenues of the Airborne Systems Business Element on the basis and
make the calculations contemplated by this Section 2.2(a)(ii), then Buyer shall
pay Seller no later than September 1, 2000, an aggregate $5 million as the full
Additional Amount. Seller shall have the right, through Seller's independent
certified public accountants, subject to national security regulations, to
inspect all accounting records relating to the matters contemplated by this
Section 2.2(a)(ii). Buyer shall also assume the Assumed Liabilities as provided
in Section 2.4. The Purchase Price shall be paid by wire transfer of immediately
available funds to such bank account or accounts as are specified by Seller in
written instructions given to Buyer at least three days prior to the Closing.
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(b) The Purchase Price shall be subject to adjustment as follows:
(i) Promptly, and in any event no later than 60 days following
the Closing Date, Seller shall prepare and deliver to Buyer a balance sheet of
the Business as of the Closing Date (the "Closing Date Balance Sheet"). The
Closing Date Balance Sheet shall be prepared in accordance with GAAP, as applied
consistent with the preparation of the June Balance Sheet using the same
classifications as included on the June Balance Sheet, except for the procedure
set forth in Section 2.2(b)(iv) and acknowledging that the June Balance Sheet
does not, and the Closing Date Balance Sheet shall not include any liabilities
with respect to (A) corporate-level notes and accounts payable to Seller, or (B)
federal, state and local income and franchise taxes, including penalties and
interest with respect thereto, for any periods including or ending prior to the
Closing Date and acknowledging that the June Balance Sheet does not, and the
Closing Date Balance Sheet shall not include any liabilities with respect to (A)
corporate-level notes and accounts payable to Seller, (B) federal, state and
local income and franchise taxes, including penalties and interest with respect
thereto, for any periods including or ending prior to the Closing Date, or (C)
obligations to Employees of the Business under the Retention Incentive
Agreements identified in Schedule 2.4(d), other than obligations (i) for
retention incentive payments due upon sale of the Business pursuant to
Paragraphs 2 and 4 of such agreements, and (ii) pursuant to the Severance
Agreement between Seller and the Seller's Information Systems Division's
President and General Manager. Buyer shall provide Seller such cooperation and
such access to the Books and Records as may reasonably be required for the
preparation of the Closing Date Balance Sheet. Buyer shall have 30 days
following delivery of the Closing Date Balance Sheet to notify Seller in writing
of any objections to the Closing Date Balance Sheet. Buyer's failure to so
object during such 30-day period shall constitute approval of the Closing Date
Balance Sheet. If Buyer so objects, Seller and Buyer shall use their best
efforts to resolve any differences with respect to the Closing Date Balance
Sheet. In the event the parties are unable to resolve such dispute, the parties
hereby designate KPMG Peat Marwick, unless they decline or become the principal
independent public accountants for either party, in which case the parties shall
designate a firm of independent public accountants of national reputation
mutually acceptable to them to resolve such dispute. In the event the parties
are unable to agree to such firm of independent accountants of national
reputation, they shall each designate a firm of independent public accountants
of national reputation, which firms shall designate a third firm of independent
public accountants of national reputation for resolving any disputes under this
Section 2.2(b). The parties agree that with respect to disputes arising under
this Section 2.2(b), the sole issue to be determined by the independent public
accountants shall be the accuracy of the Closing Date Balance Sheet. The
independent public accountants shall have no power and no authority to make any
provision or award for any punitive, exemplary or consequential damages. The
independent public accountants shall render their decision within 30 days
following the date that the parties shall have concluded their cases. Allocation
of the fees and expenses charged by the independent public accountants shall be
determined by such independent public accountants in proportion to the
adjustments to the Closing Date Balance Sheet, if any, allocated by such
independent public accountants.
(ii) In the event the amount of Divisional Equity of the
Information Systems Division (the "Divisional Equity") as reflected on the
Closing Date Balance Sheet exceeds the amount of Divisional Equity reflected on
the June Balance Sheet (as set forth on Schedule 3.6), Buyer shall pay such
amount as an addition to the Purchase Price. In the event
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the amount of Divisional Equity reflected on the Closing Date Balance Sheet is
less than the amount of Divisional Equity reflected on the June Balance Sheet
(as set forth on Schedule 3.6), Seller shall pay such amount as a reduction to
the Purchase Price. Any such payment by Buyer or Seller shall be accompanied by
interest at the rate of 8% per annum commencing on the 31st day after delivery
to Seller of the Closing Date Balance Sheet. Any amount payable hereunder shall
be paid by wire transfer of immediately available funds to the designated
account of the receiving party within 10 days after the Closing Date Balance
Sheet is agreed to by Seller and Buyer or is determined by the independent
public accountants.
(iii) Any adjustments to the Purchase Price as provided in
this Section 2.2(b) shall be the exclusive remedy under this Agreement with
respect to the specific items forming the basis of such adjustments, such that
if the Purchase Price has been adjusted because of a specific item from an
accounting standpoint, the party benefiting from such adjustment shall not make
a claim for indemnification under this Agreement for such specific item with
respect to the amount of the accounting adjustment.
(iv) The parties acknowledge and agree that the Business
recognizes revenue each month according to the percentage of completion method
for certain contracts being performed by the Business ("Percentage of Completion
Method"). For the purpose of the Closing Date Balance Sheet, the Percentage of
Completion Method shall be utilized to determine revenue during the period from
the Closing Date through the end of the accounting month in which the Closing
Date occurred. Such revenue recognition is to be done on a basis consistent with
prior practice and in the same manner as if there had not been a Closing Date
during the month. All revenue recognized during the period subsequent to the
Closing Date through the normal month end accounting, together with the cost of
sales related to those revenues, is to be recorded on the Closing Date Balance
Sheet in the same proportion as the number of days from the beginning of such
month to and including the Closing Date bears to the total number of days in
such month.
2.3 ALLOCATION OF PURCHASE PRICE. The parties agree to allocate the
aggregate of the Purchase Price, any adjustment of the Purchase Price pursuant
to Section 2.2(b) and the Assumed Liabilities (collectively, the "Aggregate
Purchase Price") among the Assets in accordance with section 1060 of the Code as
mutually agreed to by the parties within 180 days following the Closing. All
such mutually agreed to allocations shall be used by each party in preparing any
filings required pursuant to Section 1060 of the Code or any similar provisions
of state or local law and all relevant income and franchise tax returns. Neither
Buyer nor Seller will take any position before any taxing authority or in any
judicial proceeding that is inconsistent with such mutually agreed to
allocations without the prior consent of the other party. The parties shall in
good faith exercise reasonable efforts to support such reported allocations in
any audit proceedings initiated by any taxing authority. If the parties are
unable to agree, each will prepare its tax filings based on its good faith
determinations of fair market value and the allocation thereof.
2.4 ASSUMED LIABILITIES. Subject to the terms and conditions set forth
herein, at the Closing, Buyer shall assume and agree to pay, honor, perform and
discharge when due the following liabilities and obligations of Seller relating
to the Assets and the Business (collectively, the "Assumed Liabilities"): (a)
all notes and accounts payable (including notes and
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accounts payable to other divisions of Seller but excluding corporate-level
notes and accounts payable to Seller) and other liabilities reflected on the
Closing Date Balance Sheet (to the extent reflected thereon) prepared in
accordance with Section 2.2(b)(i); (b) all liabilities and obligations of Seller
relating to or arising out of cost overruns or adjustments to rates and factors
used in pricing work performed or services provided to customers of the Business
prior to the Closing Date, if reflected (but not limited to the amount
reflected) on the Closing Date Balance Sheet; (c) all product warranty
obligations of Seller relating to the Business, if reflected (but not limited to
the amount reflected) on the Closing Date Balance Sheet; (d) all payment
obligations of Seller under the severance and retention agreements identified in
Schedule 2.4(d); (e) all liabilities and obligations of Seller to be paid or
performed from and after the Closing Date under or relating to the Contracts
included among the Assets (excluding amounts resulting from pre-Closing breaches
of such Contracts); and (f) all liabilities and obligations of Seller relating
to the Business and arising out of the matters identified in Schedule 2.4(f).
2.5 EXCLUDED LIABILITIES. Buyer shall not assume or in any way be
responsible for any debts, claims, commitments, liabilities and obligations of
Seller and the Business other than the Assumed Liabilities. The debts, claims,
commitments, liabilities and obligations of Seller and the Business which Buyer
shall not assume and for which Buyer shall not be responsible (the "Excluded
Liabilities") include, without limitation, the following:
(a) federal, state and local income and franchise tax liabilities,
including penalties and interest, for all periods including or ending prior to
the Closing Date, or any other Taxes for which Seller is liable or to which any
Assets are subject and which accrued on or before the Closing Date (except for
Transfer Taxes to the extent provided in Section 7.6);
(b) all corporate-level accounts and notes payable to Seller;
(c) liabilities arising directly out of the Excluded Assets; and
(d) the liabilities listed on Schedule 2.5.
2.6 DELIVERIES. At the Closing, Seller shall deliver to Buyer such
assignments and other good and sufficient instruments of transfer as shall be
satisfactory in form and substance to Buyer, and shall be effective to vest in
Buyer good and marketable title, free and clear of any liens and encumbrances or
rights and claims of others, other than Permitted Liens, to all of the Assets,
and Buyer shall deliver to Seller such instruments of assumption as shall be
satisfactory in form and substance to Seller to ensure that Buyer has assumed
all of the Assumed Liabilities.
2.7 CONSENT OF THIRD PARTIES. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if any assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of Buyer or Seller
thereunder; and any transfer or assignment to Buyer by Seller of any interest
under any such Governmental Approval, instrument, contract, lease, permit or
other agreement or arrangement that requires the consent of a third party shall
be made subject to such consent or approval being
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obtained. In the event any such consent or approval is not obtained on or prior
to the Closing Date, Seller shall (a) continue to use all reasonable efforts to
obtain any such approval or consent after the Closing Date until such time as
such consent or approval has been obtained without any third-party cost to
Buyer, (b) hold such Governmental Approval, instrument, contract, lease, permit
or other agreement or arrangement on behalf of Buyer, (c) cooperate with Buyer
in any lawful arrangement to provide that Buyer shall receive the benefits under
any such Governmental Approval, instrument, contract, lease or permit or other
agreement or arrangement, including performance by Seller, as agent, and (d)
enforce and perform for the account of Buyer any rights of Seller arising from
such Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement, provided that Buyer shall undertake to pay, perform,
discharge or satisfy the corresponding liabilities and obligations for the
enjoyment of such benefit to the extent Buyer would have been responsible
therefor if such consent or approval had been obtained.
2.8 BOOKS AND RECORDS. From and after the Closing and until the sixth
anniversary thereof, (a) Seller agrees to grant to Buyer, upon reasonable notice
and during normal business hours, reasonable access to any books and records
that pertain to the Business, but which are not Books and Records, and (b) Buyer
agrees to grant to Seller, upon reasonable notice and during normal business
hours, reasonable access to any Books and Records included in the Assets that
pertain to the operations of the Business on or prior to the Closing Date, for
any reasonable business purpose of Seller.
2.9 FURTHER ASSURANCES. Each party agrees, at any time and from time to
time after the Closing Date, upon reasonable request from the other party, to
do, execute, acknowledge and deliver, as appropriate, such further acts, deeds,
assignments, transfers, conveyances and powers of attorney as may reasonably be
required for the better assigning, transferring, granting, conveying, assuring
and confirming to such other party, or its successors and assigns, of any of the
assets, properties or liabilities to be assigned to it or retained by such party
as provided herein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedule delivered to Buyer
contemporaneously herewith, consisting of the Schedules referred to below (the
"Disclosure Schedule"), and in the documents and other materials identified in
the Disclosure Schedule (it being agreed that any matter disclosed in the
Disclosure Schedule with respect to any section of this Agreement shall be
deemed to have been disclosed with respect to all sections of this Agreement if
the nature and description of such disclosure makes it sufficiently clear that
such disclosure would necessarily be applicable to such section), and subject to
the limitations contained in Article 11, Seller represents and warrants to Buyer
that the following statements are true as of the date of this Agreement or, in
the case of any Schedule which shows a date prior to the date of this Agreement,
such Schedule is true as of the date shown on such Schedule:
3.1 ORGANIZATION, STANDING, ETC. OF SELLER; CORPORATE AUTHORIZATION;
ENFORCEABILITY.
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(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on the Business as currently conducted
and to own or lease and to operate the properties of the Business. Seller is
qualified to do business and is in good standing in each state of the United
States in which the Business is conducted that requires such qualification and
where the failure to so qualify would have a material adverse effect on the
financial condition or results of operations of the Business (a "Material
Adverse Effect on the Business").
(b) The execution and delivery of this Agreement and all other
documents and instruments executed or to be executed by Seller pursuant to this
Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate and other action
on the part of Seller. This Agreement and all other documents and instruments
executed or to be executed by Seller pursuant to this Agreement have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of Seller.
(c) This Agreement constitutes the valid and legally binding
obligation of Seller, enforceable in accordance with its terms, except as such
enforceability may be limited by equitable principles and by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws
relating to or affecting the rights of creditors generally.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Copies of the certificate of
incorporation and bylaws or other organizational documents of Seller have been
made available to Buyer, and each such copy is true, correct and complete.
3.3 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and delivery
of this Agreement and all other documents and instruments executed or to be
executed by Seller pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby, does not and will not (a) conflict
with or result in any violation of or default under any provision (i) of the
charter or bylaws of Seller, or (ii) of any mortgage, indenture, trust, lease,
partnership or other agreement or other instrument, permit, concession, grant,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Seller or the Business, which conflict would have a
Material Adverse Effect on the Business; (b) cause Buyer or any of the Assets to
become subject to, or to become liable for the payment of, any Tax other than
Transfer Taxes; (c) give any Person the right to accelerate the maturity or
performance of, or to cancel, terminate or modify, any of the Material
Contracts; or (d) result in the imposition or creation of any encumbrance upon
or with respect to any of the Assets.
3.4 GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. Except for consents of
parties to Contracts that are not Material Contracts or as set forth on Schedule
3.4, no consents, licenses, approvals or authorizations of, or registrations or
declarations with, any Governmental Authority, agency, bureau or commission, or
any third party, are required to be obtained or made by Seller in connection
with the execution, delivery, performance, validity and enforceability of this
Agreement, other than a filing with the Federal Trade Commission and the
Department of Justice under the HSR Act.
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3.5 NO VIOLATIONS. Seller is not and has not been in violation of any
material term of its certificate of incorporation or bylaws or other charter
documents or, to its knowledge, any material mortgage, indenture, instrument or
agreement applicable to the Business relating to indebtedness for borrowed money
or of any judgment, decree or order applicable to the Business which names
Seller, or of any material term of any other Material Contract which is among
the Assets. To its knowledge, Seller is not and has not been in violation, of
any law, ordinance, rule or governmental regulation applicable to the Business
or any of the Assets.
3.6 FINANCIAL STATEMENTS. Seller has delivered to Buyer (a) the audited
balance sheet (the "June Balance Sheet") of the Business as of June 30, 1998
("the Balance Sheet Date") and the related audited statement of operations of
the Business for the year then ended and (b) the unaudited balance sheet (the
"December Balance Sheet") of the Business as of December 31, 1998 and the
related unaudited statement of operations of the Business for the six-month
period then ended (such financial statements, including the notes thereto,
hereinafter being referred to as the "Financial Statements"). The Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") and present fairly in all material
respects the financial position of the Business as of the dates thereof and the
results of its operations for the periods then ended, except that the December
Financial Statements were prepared on an interim basis, are subject to normal
year-end adjustments and do not contain all the footnote disclosures required by
GAAP. Except as set forth on Schedule 3.6, the June Balance Sheet and the
December Balance Sheet (a) include all notes and accounts receivable from and
payable to other divisions of Seller and (b) identifies specifically all
corporate-level notes and accounts receivable from and payable to Seller.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Between the Balance Sheet Date and the date of this Agreement,
Seller has not, with respect to the Business, entered into any transaction that
(i) is not in the usual and ordinary course of business or (ii) has had a
Material Adverse Effect on the Business.
(b) Between the Balance Sheet Date and the date of this Agreement,
Seller has conducted its operations related to the Business in the ordinary
course of business, has used commercially reasonable efforts to maintain the
Business, Assets, its relations with employees, suppliers, licenses and
operations related to the Business as an ongoing business in accordance with
past custom and practice. Without limiting the generality of the foregoing,
except as specified in Schedule 3.7, between the Balance Sheet Date and the date
of this Agreement, in each case as related to the Business:
(i) Seller has not sold, leased, transferred, mortgaged or
assigned any of the Assets, tangible or intangible, other than in the ordinary
course of business;
(ii) No party (including Seller) has, other than in the
ordinary course of business, accelerated, terminated, materially modified, or
canceled any contract, lease, sublease, license, or sublicense (or series of
related contracts, leases, subleases, licenses, and sublicenses) involving more
than $100,000, excluding all purchase orders and sales orders, to which Seller
is a party or by which it or the Assets are bound;
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(iii) Seller has not made any capital expenditure (or series
of related capital expenditures) in excess of $100,000;
(iv) Seller has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of any other person which is
included in the Assets;
(v) Seller has not canceled, compromised, knowingly waived or
released any right or claim (or series of related rights and claims), except for
any right or claim (or series of rights or claims) under any purchase order or
sales orders, outside the ordinary course of business;
(vi) Seller has not incurred, assumed, guaranteed or
discharged any obligation or liability, absolute, accrued, contingent or
otherwise, whether due or to become due, or any indebtedness for borrowed money,
except current liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary course of
business consistent with prior practice;
(vii) Seller has not received any notice of termination of any
material contract, lease or other agreement, and Seller has no reason to expect
any such notice;
(viii) Seller has not suffered any damage to or destruction or
loss of any tangible assets (whether or not covered by insurance), in any case
or in the aggregate, in excess of $150,000;
(ix) Seller has not made any change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay, conditionally or
otherwise, any bonus, incentive, retention or other compensation, retirement,
welfare, fringe or severance benefit or vacation pay, to or in respect of any
employee, distributor or agent of the Business, other than increases in the
ordinary course of business consistent with past practice in the compensation
payable to employees of the Business;
(x) Seller has not encountered any labor union organizing
activity or had any actual or overtly threatened employee strikes, work
stoppages, slowdowns or lockouts;
(xi) Seller has not entered into, or committed to, any joint
venture, teaming agreement or similar arrangement; and
(xii) Seller has not entered into any negotiation or agreement
to do any of the things described in this Section 3.7.
3.8 TITLE TO ASSETS. Except as set forth in Schedule 3.8 and except for
personal property subject to valid leases included among the Contracts, Seller
has good title to all tangible personal property of the Business included in the
Assets. Except as set forth in Schedule 3.8 and except for personal property
subject to valid leases and purchase money security interests, all tangible
personal property of the Business included in the Assets are owned free and
clear of all liens, mortgages, pledges, charges, security interests or
encumbrances except for Permitted Liens. The tangible assets are in good
operating condition, subject to normal wear and tear.
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3.9 INTELLECTUAL PROPERTY. Schedule 3.9(a) sets forth a complete and
correct list of all material Intellectual Property that is owned by Seller and
used in connection with the Business (the "Owned Intellectual Property").
Schedule 3.9(b) sets forth a complete and correct list of all material written
or oral license and arrangements, (i) pursuant to which the use by any Person of
Intellectual Property is permitted by Seller and (ii) pursuant to which the use
by Seller of Intellectual Property is permitted by any Person (collectively, the
"Intellectual Property Licenses"). The Owned Intellectual Property and the
Intellectual Property Licenses constitute all Intellectual Property necessary to
operate the Business consistent with past practice. On the date hereof and at
the Closing, all Intellectual Property Licenses are or will be in full force and
effect in accordance with their terms, and are free and clear of any Liens
(other than Permitted Liens). The conduct of the Business does not infringe the
rights of any third party in respect of any Intellectual Property, except as set
forth on Schedule 3.9(c). To the knowledge of Seller, none of the Intellectual
Property is being infringed by third parties. Except as set forth on Schedule
3.9(d), there is no claim or demand of any Person pertaining to, or any
proceeding which is pending or, to the knowledge of Seller, threatened, that
challenges the rights of Seller in respect of any Intellectual Property, or
claims that any default exists under any Intellectual Property License.
3.10 BENEFIT PLANS.
(a) Except as set forth on Schedule 3.10, Seller does not maintain,
is not a party to, does not contribute to and is not obligated to contribute to
any of the following in connection with the Business (whether or not set forth
in a written document):
(1) Any material employee benefit plan, employee pension
benefit plan, employee welfare benefit plan, or multiemployer plan, all as
defined in the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), regardless of whether or not a plan is exempt from some or all of the
otherwise applicable requirements of ERISA; or
(2) Any material bonus, deferred compensation, incentive,
restricted stock, stock purchase, stock option, stock appreciation right,
debenture, supplemental pension, profit sharing, royalty pool, severance or
termination pay, loan guarantee, relocation assistance, employee loan or other
extensions of credit, or other similar plan, program, agreement, policy,
commitment, arrangement or benefit currently in effect which is applicable to
any present or former employee or his or her survivors (whether or not published
or generally known).
(b) As to each material plan, program, agreement, policy,
commitment, arrangement or benefit listed on Schedule 3.10 (a "Benefit Plan"),
Seller has made available to Buyer complete, accurate and current copies of the
text (including amendments) of the Benefit Plan if previously reduced to writing
or has provided in Schedule 3.10 a description of all material elements of the
Benefit Plan if not previously reduced to writing. With respect to each employee
benefit plan (as defined in section 3(3) of ERISA) listed on Schedule 3.10,
Seller has made available to Buyer the following:
(1) Where applicable, the most recent summary plan description,
as described in section 102 of ERISA;
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(2) Any summary of material modifications which has been
distributed to participants or filed with the U.S. Department of Labor but which
has not been incorporated in an updated summary plan description furnished under
paragraph (1) above;
(3) The annual reports, as described in section 103 of ERISA,
for the most recent three plan years for which an annual report has been
prepared (including any schedules);
(4) Where applicable, the actuarial reports for the most recent
three reporting periods for which such a report has been prepared; and
(5) Any trust agreement, investment management agreement,
contract with an insurance company or service provider, administration agreement
or other contract, agreement or insurance policy.
(c) With respect to each Benefit Plan:
(1) All of the currently applicable requirements of ERISA and
regulations thereunder have been fully and timely complied with in all material
respects;
(2) There is no act or omission of Seller, or any other person
or entity, which would constitute a material violation of or material prohibited
act under any applicable section of ERISA or the Code, or regulations under
either, and no amendment to such Benefit Plan is precluded by any waiver,
extension or prior amendment described in Section 412(f)(1) of the Code; and
(3) All contributions, premiums or other payments due from
Seller to (or under) such Benefit Plan for all periods prior to the date of this
Agreement have been fully paid or adequately provided for on the books of Seller
and all accruals have been made in accordance with prior practices.
3.11 LITIGATION. As of the date of this Agreement, except as disclosed in
Schedule 3.11, there are no actions, suits, proceedings or governmental
investigations pending or, to Seller's knowledge, threatened against Seller
involving the Business or the Assets, at law or in equity or before any court,
governmental department, commission, board, agency, authority or
instrumentality, domestic or foreign, or that have been settled, dismissed or
resolved on or since the Balance Sheet Date. As of the date of this Agreement,
Seller is not subject to any judgment, stipulation, order or decree arising from
any action, suit, proceeding or investigation.
3.12 TAXES. Except as set forth in Schedule 3.12, with respect to Taxes:
(a) Seller has filed or will file or cause to be filed (or
extensions of the time for filing have been or will be duly filed), within the
time prescribed by law, all Tax Returns relating to the Business that are or
were required to be filed under Federal, state, local or any foreign laws by
such company either on or prior to the Closing Date for any taxable period
ending on or prior to the Closing Date;
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(b) Seller has, within the time and in the manner prescribed by
law, paid (and until the Closing will, within the time and in the manner
prescribed by law, pay) all Taxes that are shown to be due and payable on Tax
Returns required to be filed prior to the Closing.
3.13 CONTRACTS. Seller has delivered to Buyer a copy or description of any
outstanding written or oral (a) contract or arrangement for the employment of
any person by Seller relating to the Business, (b) collective bargaining
agreement relating to the Business and to which Seller is a party, (c) mortgage,
indenture, note or installment obligation or other instrument or contract
relating to the Business and relating to any borrowing of an amount in excess of
$100,000 by Seller, (d) guaranty of any obligation in excess of $100,000 by
Seller and relating to the Business (excluding any non-recourse guaranties and
any endorsement made in the ordinary course of business for collection), (e)
lease of real or personal property relating to the Business under which Seller
is lessor, except equipment leases entered into in the ordinary course of
business, (f) lease of real property relating to the Business under which Seller
is lessee involving annual rentals in excess of $50,000, (g) lease of personal
property relating to the Business under which Seller is lessee and under which
Seller is obligated to make annual aggregate payments of more than $50,000, (h)
agreement for the purchase by Seller of equipment relating to the Business
involving outstanding commitments in excess of $250,000, (i) open sales contract
providing for future xxxxxxxx in excess of $500,000, (j) agreement materially
limiting the freedom of Seller to compete in the Business, with any person or
other entity or in any geographical area, (k) open purchase orders relating to
the Business and providing for payments in excess of $250,000, (l) joint venture
agreements, teaming agreements or similar arrangements relating to the Business,
(m) contracts or other agreements relating to the Business under which Seller
agrees to indemnify any party, and (n) any other contracts not otherwise
described in items (a) through (m) above relating to the Business requiring
payments in excess of $100,000 in any year. A list or description of each of the
items described in the previous sentence (the "Material Contracts") is set forth
on Schedule 3.13. As of the date of this Agreement, except as disclosed in
Schedule 3.13, all of the Material Contracts are in full force and effect and,
as to each Material Contract, there does not exist thereunder any default on the
part of Seller, and there does not exist any event, occurrence or condition,
including the consummation of the transactions contemplated hereunder, which
(after notice, passage of time, or both) would constitute a default thereunder
on the part of Seller. Schedule 3.13 sets forth Seller's standard product or
service warranty with respect to the Contracts and any material obligation that
exists with respect thereto outside the ordinary course of business. To the
knowledge of Seller, none of the Material Contracts contain "organizational
conflict of interest restrictions" or other commitments which might have a
Material Adverse Effect on the Business except as noted on Schedule 3.13(m).
3.14 INSURANCE. Schedule 3.14 contains a list of all insurance policies
maintained by or on behalf of or covering Seller in connection with the Business
(the "Policies"). Seller has made available to Buyer copies of all current
declaration sheets relating to the Policies. Except as noted on Schedule 3.14,
to Seller's knowledge, as of the date of this Agreement, the Policies are in
full force and effect, no notices of cancellation or nonrenewal have been
received by Seller with respect thereto, and all premiums due thereon have been
paid.
3.15 ENVIRONMENTAL QUALITY.
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(a) The conduct of the Business complies in all material respects
with all applicable Federal, state and local laws, ordinances and regulations
pertaining to air and water quality, Hazardous Materials, waste, disposal or
other environmental matters, including the Clean Water Act, the Clean Air Act,
the Federal Water Pollution Control Act, the Solid Waste Disposal Act, the
Resource Conservation Recovery Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, and the rules, regulations and ordinances of
the cities and counties in which the Business is located, the Environmental
Protection Agency and all other applicable Federal, state, regional and local
agencies and bureaus.
(b) The Information Systems Division (1) has never sent a Hazardous
Material to a business site that, pursuant to any applicable Federal, state or
local law, ordinance and regulation pertaining to environmental matters, (A) has
been placed on the "National Priorities List" of hazardous waste sites, the
"CERCLIS" list, or any similar state list, or (B) is subject to a claim, an
administrative order or other request to take "removal" or "remedial" action, as
defined in any applicable Federal, state or local law, ordinance and regulation
pertaining to environmental matters, or to pay for the costs of cleaning up the
site, (2) is in compliance in all material respects with all applicable Federal,
state or local laws, ordinances and regulations pertaining to environmental
matters in its conduct of the Business, (3) is not involved in any suit or
proceeding or has received any notice or request for information from any
governmental agency or authority or other third party with respect to a release
or threatened release of any Hazardous Material in connection with its conduct
of the Business or a violation or alleged violation of any applicable Federal,
state or local law, ordinance and regulation pertaining to environmental matters
in connection with its conduct of the Business, or has received notice of any
claims from any person or entity relating to property damage or to personal
injuries from exposure to any Hazardous Material in connection with its conduct
of the Business, or (4) has failed to timely file any report required to be
filed, failed to acquire all necessary certificates, approvals and permits or
failed to generate and maintain all required data, documentation and records
under all applicable Federal, state or local laws, ordinances and regulations
pertaining to environmental matter.
3.16 BROKERS. With the exception of fees and expenses payable to CIBC
Xxxxxxxxxxx Corp. and certain employees of Seller and its Affiliates which shall
be paid by Seller, all negotiations relating to this Agreement, and the
transactions contemplated hereby, have been carried on without the participation
of any Person acting on behalf of Seller or its Affiliates in such manner as to
give rise to any valid claim against Buyer for any brokerage or finder's
commission, fee or similar compensation, or for any bonus payable to any
officer, director, employee, agent or sales representative of or consultant to
Seller or its Affiliates upon consummation of the transactions contemplated
hereby or thereby, and Buyer shall have no liability or responsibility arising
therefrom, including without limitation, the cost of defending against any such
claims.
3.17 PRICING CHANGES. Except as set forth in Schedule 3.17, there are no
liabilities or obligations of Seller relating to or arising out of cost overruns
or adjustments to rates and factors used in pricing work performed by the
Business or services provided to customers of the Business prior to the date of
this Agreement, other than those liabilities and obligations for which Seller
has established reserves in the December Balance Sheet or for which Seller will
establish reserves on the Closing Date Balance Sheet.
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3.18 ASSETS AND INTELLECTUAL PROPERTY. Except as set forth in Schedule
3.18, all Assets and all rights to use Intellectual Property which are required
to operate the Business in all respects except for immaterial differences as
reflected in (i) the California Microwave Information Systems Division
Confidential Descriptive Memorandum, (ii) the Information Systems Division, a
Division of California Microwave, Inc., Management Presentation, in each case as
updated by the disclosures set forth in Schedule 3.18, will be transferred by
Seller to Buyer on the Closing Date.
3.19 YEAR 2000 COMPLIANCE. All of the computer hardware and software
systems included in the Assets that are material to the operation of the
Business have the ability to provide the following functions: (a) consistently
handle date information for all dates before, on, and after January 1, 2000,
including accepting date input, providing date output, and performing
calculations on dates; (b) function accurately and without interruption before,
during, and after January 1, 2000, without any change in operations associated
with the advent of the new century; (c) respond to two-digit date input in a way
that resolves any ambiguity as to century in a disclosed, defined, and
predetermined manner; and (d) store and provide output of date information in
ways that are unambiguous as to century. Except as set forth on Schedule 3.19,
Seller has conducted a comprehensive review and assessment of all areas of the
Business that would reasonably be expected to be materially adversely affected
by the "year 2000 problem," including its key suppliers, vendors, and customers,
and based on that inquiry believes that each of them is year 2000 compliant in
all material respects.
3.20 NO UNDISCLOSED LIABILITIES. Seller has no liabilities, obligations or
commitments of any nature relating to the Business (whether known or unknown,
and whether absolute, accrued, contingent or otherwise, and whether matured or
unmatured), except for liabilities, obligations or commitments: (a) disclosed or
reserved against on the December Balance Sheet or referred to in the notes
thereto; (b) incurred in the ordinary course of business and consistent with
past practice since June 30, 1998; (c) of a type not required to be disclosed or
reserved against in a balance sheet prepared in accordance with GAAP; (d)
constituting Excluded Liabilities; or (e) reflected and identified as such in
the Disclosure Schedule.
3.21 ACCURACY OF REPRESENTATIONS. The representations and warranties of
Seller in this Agreement (including the Disclosure Schedule), together with the
disclosure in the California Microwave Information Systems Division Confidential
Descriptive Memorandum, all taken in the aggregate, does not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
3.22 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Seller nor any
officer, employee or agent of Seller acting on its behalf has, directly or
indirectly, within the past five years given any gift or similar benefit to any
customer, supplier, competitor or governmental employee or official which (a)
would subject the Business to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (b) if not given in the past, would
reasonably be expected to have had a Material Adverse Effect on the Business, or
(c) if not continued in the future, would reasonably be expected to have a
Material Adverse Effect on the Business.
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3.23 PROBLEMS WITH SUPPLIERS AND CUSTOMERS. Seller reasonably believes
that its relationships with the suppliers and customers that are material to the
Business are satisfactory. Except as set forth on Schedule 3.23, since the
Balance Sheet Date: (a) no such supplier or customer has canceled or otherwise
terminated its relationship with Seller with respect to the Business; (b) to the
knowledge of Seller, no such supplier or customer has overtly threatened to
cancel or otherwise terminate its relationship with Seller with respect to the
Business or to decrease its services to Seller or its usage of the services of
Seller with respect to the Business in a manner that would reasonably be
expected to have a Material Adverse Effect on the Business; (c) Seller has no
direct or indirect ownership interest in any such supplier or customer; and (d)
to the knowledge of Seller, none of such suppliers is unable to continue to
supply the products or services supplied to the Business by such supplier as of
the Balance Sheet Date.
3.24 CLEARANCES. Except as may be prohibited by the Industrial Security
Manual, Schedule 3.24 sets forth all facility and personnel security clearances
held by Seller relating to the Business and all personnel security clearances
held by any officer, director, employee, consultant or agent thereof relating to
the Business. Such security clearances, if transferred to Buyer, are sufficient
to allow Buyer to conduct the Business as conducted by Seller as of the date of
this Agreement. Seller has no knowledge of any proposed or overtly threatened
termination of any such security clearances.
3.25 NO TRANSFER OF EMPLOYEES. Since June 30, 1998, no person who has been
employed by Seller in the Business within 12 months prior to the date of this
Agreement has been transferred from the Business to another division of Seller
or to any Affiliate of Seller.
3.26 REAL PROPERTY LEASES. Schedule 3.26 contains a complete and accurate
list of all locations at which the Business is conducted (the "Facilities").
Seller has the right under valid and existing leases or other agreements to
occupy and use the Facilities. Since the Balance Sheet Date, neither the whole
nor any portion of the Facilities has been, or to Seller's knowledge will be,
condemned, requisitioned or otherwise taken by any Governmental Authority. All
Facilities have received all required approvals of Governmental Authorities
(including, without limitation, permits and a certificate of occupancy or other
similar certificate permitting lawful occupancy of the Facilities) required in
connection with the operation thereof and, to Seller's knowledge, have been
operated and maintained by Seller in accordance with applicable laws, rules and
regulations. All Facilities are supplied with utilities (including, without
limitation, water, sewage disposal, electricity, gas and telephone) and other
services necessary for the operation of such Facilities as operated by Seller as
of the date of this Agreement. The improvements constructed on the Facilities
and the fixtures and equipment and other tangible assets owned, leased or used
by Seller in connection with the Business at the Facilities are (a) insured to
the extent and in a manner customary in the industry, (b) structurally sound
with no known material defects, (c) in good operating condition and repair,
subject to ordinary wear and tear, (d) not in need of maintenance or repair
except for ordinary routine maintenance and repair, the cost of which would not
be material, (e) sufficient for the operation of the Business as conducted by
Seller as of the date of this Agreement, and (f) to Seller's knowledge, in
conformity with all applicable laws, ordinances, orders, regulations and other
requirements of any Governmental Authority relating thereto currently in effect.
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3.27 BACKLOG. Schedule 3.27 sets forth, with respect to each Contract
having unfilled backlog as of February 19, 1999, the backlog of Seller
thereunder as of such date. With respect to each such Contract, Seller has
disclosed in writing to Buyer the name of each customer (except where precluded
for security reasons), the dollar amount of backlog and any unexercised valid
and existing options giving a brief description of the option and the Contract
to which they relate. To Seller's knowledge, no customer has given any
indication that such orders will be canceled or materially altered.
3.28 PRODUCT WARRANTIES. Except as set forth in Schedule 3.28 and for
warranties under Applicable Law, (a) there are no warranties express or implied,
written or oral, with respect to the products of the Business and (b) except as
reflected in the Financial Statements or as incurred in the ordinary course of
business thereafter there are no pending or threatened claims with respect to
any such warranty. To Seller's knowledge, there are no facts that indicate that
the reserves for product warranties reflected in the Financial Statements are
materially understated. Schedule 3.28 sets forth a list of all pending or, to
the knowledge of Seller, threatened product warranty claims in excess of
$50,000.
3.29 EMPLOYEES, LABOR MATTERS, ETC. Seller is not a party to or bound by
any collective bargaining agreement and there are no labor unions or other
organizations representing, purporting to represent or attempting to represent
any employees employed in the operation of the Business. Since June 30, 1998,
there has not occurred or, to the knowledge of Seller, been threatened any
material strike, slowdown, picketing, work stoppage, concerted refusal to work
overtime or other similar labor activity with respect to any employees employed
in the operation of the Business. There are no labor disputes currently subject
to any grievance procedure, arbitration or litigation and there is no
representation petition pending or, to the knowledge of Seller, threatened with
respect to any employee employed in the operation of the Business.
3.30 PERMITS. Schedule 3.30 contains a list of all material permits issued
to Seller by a Governmental Authority primarily related to the Business. Except
as noted on Schedule 3.30, to Seller's knowledge, as of the date of this
Agreement such permits are in full force and effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND STANDING OF BUYER; CERTIFICATE OF INCORPORATION AND
BYLAWS. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into this Agreement, to carry out the transactions
contemplated hereby and to perform its obligations hereunder. Copies of the
certificate of incorporation and bylaws or other organizational documents of
Buyer have been made available to Seller, and each such copy is true, correct
and complete.
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4.2 ACCESS. Buyer has received and reviewed the Financial Statements and
is acquainted with the Business. Buyer and its Affiliates have been given full
access to the assets, books, records, contracts (other than classified
contracts) and employees of the Business, and have been given the opportunity to
meet with officers and other representatives of Seller and the Business for the
purpose of investigating and obtaining information regarding the Business,
operations and legal affairs (other than classified contracts), but
notwithstanding such access, review and opportunity, Buyer is relying on
Seller's representations and warranties in this Agreement as a substantial
inducement to enter this Agreement.
4.3 AUTHORIZATION. The execution and delivery of this Agreement and all
other documents and instruments executed or to be executed by Buyer pursuant to
this Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate and other action
on the part of Buyer. This Agreement and all other documents and instruments
executed or to be executed by Buyer pursuant to this Agreement have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of Buyer.
4.4 ENFORCEABILITY. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms, except as
such enforceability may be limited by equitable principles and by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws
relating to or affecting the rights of creditors generally.
4.5 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and delivery
of this Agreement and all other documents and instruments executed or to be
executed by Buyer pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default under any provision (a) of the charter or bylaws of
Buyer, or (b) of any material mortgage, indenture, trust, lease, partnership or
other agreement or other instrument, permit, concession, grant, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Buyer or any of its properties or assets, the result of which,
with respect to items identified in clause (b) would (either individually or in
the aggregate) have a material adverse effect on the operations or financial
condition of Buyer and its subsidiaries, taken as a whole or would materially
impair Buyer's ability to consummate the transactions contemplated hereby (a
"Material Adverse Effect on Buyer").
4.6 GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. No material consents,
licenses, approvals or authorizations of, or registrations or declarations with,
any Governmental Authority, bureau, agency or commission, or any third party,
are required to be obtained or made by Buyer in connection with the execution,
delivery, performance, validity and enforceability of this Agreement, other than
(a) a filing with the Federal Trade Commission and the Department of Justice
under the HSR Act and (b) other consents, licenses, approvals, authorizations,
registrations or declarations, where the failure to obtain such would not have a
Material Adverse Effect on Buyer.
4.7 ADEQUATE FUNDS. Buyer has all funds necessary to enable it to perform
this Agreement in accordance with its terms.
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4.8 LITIGATION. To the knowledge of Buyer, as of the date of this
Agreement, no action, suit, proceeding or governmental investigation is pending
against Buyer or its properties, at law or in equity or before any court,
governmental department, commission, board, agency, authority or
instrumentality, domestic or foreign, that seeks to question, delay or prevent
the consummation of the transactions contemplated hereby.
4.9 BROKERS. Seller shall have no liability for any commission or broker's
or finder's fees from any agent, investment banker, broker, person or firm
acting on behalf of Buyer or its stockholders in connection with any of the
transactions contemplated in this Agreement.
4.10 SECTION 203. Buyer is not and, for the three preceding years, has not
been, an "interested stockholder" of Seller within the meaning of Section 203 of
the Delaware General Corporation Law.
ARTICLE 5
COVENANTS OF SELLER
5.1 CONDUCT OF BUSINESS. Between the date of this Agreement and the
Closing Date, except as contemplated by this Agreement or referred to in the
Disclosure Schedule, and except as may be necessary to carry out the
transactions contemplated by this Agreement or any transaction contemplated by
or relating to any of the contracts or other matters referred to in this
Agreement or the Disclosure Schedule, Seller will ensure that Seller shall not,
without Buyer's consent (which consent shall not be unreasonably withheld or
delayed by Buyer):
(a) enter into any material transaction in connection with the
Business outside the ordinary course of business;
(b) conduct the Business in a manner that departs materially from
the manner in which the Business was being conducted prior to the date of this
Agreement;
(c) enter into or commit to any joint venture, teaming arrangement
or similar arrangement relating to the Business; or
(d) agree or commit to do any of the foregoing.
5.2 CONFIDENTIALITY. From and after the Closing, for a period of seven (7)
years Seller will, and will cause its Affiliates to, hold in strict confidence,
and will not use to the detriment of Buyer or any of its Affiliates, all
information with respect to the Business. Notwithstanding the foregoing, Seller
may disclosure such information (i) if compelled to disclose the same by
judicial or administrative process or by other requirements of law, (ii) if the
same hereafter is in the public domain through no fault of Seller, or (iii) if
the same is later acquired by Seller from another source and Seller is not aware
that such source is under an obligation to another Person to keep such
information confidential. If Seller becomes legally compelled (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil or criminal investigative demand, or similar process) or is required by a
regulatory body to make any disclosure with respect to the Business that is
prohibited by this Section 5.2, Seller will provide Buyer with prompt notice of
such requirement so that Buyer may seek an appropriate
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protective order or other appropriate remedy. Subject to the foregoing, Seller
may furnish that portion (and only that portion) of such information that, in
the written opinion of its counsel, Seller is legally compelled or is otherwise
required to disclose or else stand liable for contempt or suffer other material
censure or material penalty; provided, however, that Seller must use reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded any such information with respect to the Business so disclosed.
5.3 TAX COOPERATION AND RETENTION. Seller undertakes the obligations of
Seller as set forth in Section 6.5.
5.4 NO SHOP. Between the date of this Agreement and the earlier of the
Closing Date or the termination of this Agreement, Seller and its legal and
financial advisors will negotiate exclusively with Buyer and will not directly
or indirectly solicit, encourage, initiate, hold discussions or negotiations
with, provide any nonpublic information to or enter into an agreement with any
person other than Buyer and its legal and financial advisors with respect to an
acquisition of the Business.
5.5 NO SOLICITATION OF EMPLOYEES. For a period of one year following the
Closing Date, Seller shall not (and shall not permit or suffer any of its
Affiliates to) directly or indirectly solicit, induce or attempt to influence
any person who is employed by the Business immediately following the Closing
Date to terminate his or her employment with the Business.
5.6 NO TRANSFER OF EMPLOYEES. Between the date of this Agreement and the
earlier of the Closing Date or the termination of this Agreement, Seller will
not transfer (a) Employees of the Business to any other division or Affiliate of
Seller, or (b) employees of any other division or Affiliate of Seller to the
Information Systems Division.
5.7 TERMINATION OF EMPLOYEES. Seller will terminate each Employee of the
Business immediately prior to the Closing Date in conjunction with Buyer's offer
of employment to each such Employee of the Business pursuant to Section 6.4.
ARTICLE 6
COVENANTS OF BUYER
6.1 CONFIDENTIALITY. Buyer shall hold in strict confidence, and shall
cause each of its Affiliates to hold in strict confidence, all documents and
information obtained with respect to Seller. Buyer shall not permit any of such
documents or information to be improperly utilized or to be disclosed or
conveyed to any other person or entity, and Buyer shall comply in all respects
with the provisions of the Confidentiality Agreement between Seller and Buyer
dated December 14, 1998 (the "Confidentiality Agreement"); provided, however,
that after the Closing Buyer shall have no further obligations with respect to
confidentiality. Without limiting the generality of the foregoing, and except as
required by law or pursuant to valid legal process, Buyer shall not contact any
customers or employees of Seller without the prior written consent of an officer
of Seller.
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6.2 INVESTIGATION. In conducting its review of the Business, and at any
time prior to the Closing Date, Buyer shall not interfere in any material manner
with the Business or with the performance of Seller's employees.
6.3 INSURANCE. Buyer shall obtain and continuously maintain, from the
Closing Date until the expiration of the representations, warranties and
covenants pursuant to Section 11.1, insurance policies with respect to the
Business and the Assets on terms and with coverage no less favorable than those
maintained by Seller on the date hereof.
6.4 EMPLOYEES.
(a) Buyer shall offer employment under its standard employment
policies to all Employees of the Business commencing with the Closing Date at
substantially the same rate of salary, in the same general location and for a
position comparable to that each held with Seller immediately prior to the
Closing. Any individual employed in the Business by Seller immediately prior to
the Closing except for the individuals identified on Schedule 6.4(a) (an
"Employee of the Business") who accepts employment with Buyer shall be provided,
for a period of not less than one year following the Closing Date or until his
or her earlier termination, benefits that are in the aggregate comparable in
Buyer's sole judgment to those provided to such Employee of the Business by
Seller immediately prior to the Closing Date. Notwithstanding the foregoing,
nothing in this Section 6.4 shall be construed as conferring on any Employee of
the Business a continuing right to employment with Buyer.
(b) Each Employee of the Business who accepts employment with Buyer
shall receive credit for time served as an employee of Seller (including any
predecessor entity thereto) for purposes of fulfilling the waiting period, if
any, for eligibility to participate in Buyer's applicable plans and for purposes
of vacation accrual. Buyer shall assume all liabilities of Seller to the
Employees of the Business with respect to accrued vacation and sick days or
similar days off by means of a credit to the Employee of the Business of an
equal number of accrued days off under Buyer's benefit plans (except to the
extent Seller does not credit its employees for such number or type of days off
under its benefit plans, in which case Buyer shall pay the Employee of the
Business the value of such accrued days off in cash within 30 days of Closing).
6.5 TAX COOPERATION AND RETENTION.
(a) Buyer and Seller shall each at their own expense cooperate with,
and make available to, each other such tax data and other information as may be
reasonably required in connection with (1) the preparation or filing of any tax
return, election, consent or certification, or any claim for refund or the
preparation of Seller's financial statements, (2) any determinations of
liability for Taxes, or (3) any audit, examination or other proceeding in
respect of Taxes ("Tax Data"). Such cooperation shall include without limitation
making their respective employees and independent auditors reasonably available
on a mutually convenient basis for all reasonable purposes, including without
limitation, to provide explanations and background information and to permit the
copying of books, records, schedules, workpapers, notices, revenue agent
reports, settlement or closing agreements and other documents containing the Tax
Data ("Tax Documentation"). If a third party is retained in connection with any
review hereunder, the party retaining such third party shall be responsible for
any fees and expenses of such third party.
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(b) The Tax Data and the Tax Documentation shall be retained until
one year after the expiration of all applicable statutes of limitations
(including extensions thereof); provided, however, that in the event an audit,
examination, investigation or other proceeding has been instituted prior to the
expiration of an applicable statute of limitations the Tax Data and Tax
Documentation relating thereto shall be retained until there is a final
determination thereof (and the time for any appeal has expired).
ARTICLE 7
COVENANTS OF ALL PARTIES
7.1 BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms and conditions
of this Agreement, each party will use its reasonable 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 and regulations to consummate the
transactions contemplated by this Agreement. Buyer and Seller each will execute
and deliver such other documents, certificates, agreements and other writings
and to take such other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement.
7.2 CERTAIN FILINGS. Buyer and Seller shall cooperate with one another (a)
in determining whether any action by or in respect of, or filing with, any
governmental body, agency, official or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
Contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (b) in taking such actions or making any such filings, in
furnishing such information as may be required in connection therewith,
including without limitation filings under the HSR Act, and in seeking timely to
obtain any such actions, consents, approvals or waivers.
7.3 PUBLIC ANNOUNCEMENTS. Each party may issue a press release or make a
public statement with respect to this Agreement and the transactions
contemplated hereby, provided that the party proposing to issue any press
release or similar public announcement or communication shall use commercially
reasonable efforts to consult in good faith with the other party before doing
so.
7.4 USE OF THE CALIFORNIA MICROWAVE NAME BY SELLER.
(a) Seller agrees that it will not use the California Microwave Name
or any similar Name or any Logo incorporating such Name or any similar Name in
any manner, including in connection with the sale of any products or services,
except as expressly permitted by subsection (b) of this Section 7.4.
(b) For a period of 12 months from the Closing Date (the "Window
Period"), Buyer shall and hereby irrevocably grants, effective as of the Closing
Date, on a fully-paid, royalty-free basis, to Seller the right to use the
California Microwave Name or any similar name during the Window Period. Subject
to reasonable notice and opportunity to cure, Buyer may terminate the foregoing
license if Seller's use of the California Microwave Name during the Window
Period differs from its use of the California Microwave Name as of the date of
this
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Agreement in a manner that detracts in a material way from the image of
quality heretofore associated with the California Microwave Name. At all times
following the Closing, Buyer shall not indicate that Buyer or the Business is
affiliated with Seller or any of its Affiliates, and Seller shall not indicate
that Seller is affiliated with Buyer or any of its Affiliates.
7.5 CONSENTS; COOPERATION. Seller and Buyer will use their commercially
reasonable efforts:
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all authorizations, consents, orders, permits or
approvals of, or notices to, or filings, registrations or qualifications with,
all governmental authorities or any other person or entity that are required on
their respective parts, for the consummation of the transactions contemplated by
this Agreement;
(b) to defend, consistent with applicable principles and
requirements of law, any lawsuit or other legal proceeding, whether judicial or
administrative, whether brought derivatively or on behalf of third persons
(including governmental authorities) challenging this Agreement or the
transactions contemplated hereby;
(c) to furnish to each other such information and assistance as may
reasonably be requested in connection with the foregoing; and
(d) to (1) take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement (excluding
satisfying the closing conditions in Articles 8 or 9 hereof insofar as they
relate to the truth of representations and warranties but including otherwise
satisfying the closing conditions in Articles 8 or 9) and (2) refrain from
taking any action which reasonably could be expected to render any
representation or warranty contained in this Agreement untrue or incorrect in
any material respect (except to the extent a representation or warranty or
covenant is qualified by materiality in which case Seller will refrain from
taking any action that would render such representation or warranty untrue or
incorrect) as of the Closing.
7.6 LIABILITY FOR TRANSFER TAXES. Buyer and Seller shall each be
responsible for and pay in a timely manner 50% of all sales, use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("Transfer Taxes"), arising
out of or in connection with or attributable to the transactions effected
pursuant to this Agreement. Each party hereto shall prepare and timely file all
Tax Returns required to be filed in respect of Transfer Taxes that are the
primary responsibility of such party under applicable law; provided, however,
that such party's preparation of any such Tax Returns shall be subject to the
other party's approval which approval shall not be withheld or delayed
unreasonably.
7.7 COMMUNICATIONS WITH CUSTOMERS AND SUPPLIERS. Seller and Buyer will
mutually agree upon all communications with suppliers and customers of the
Business relating to this Agreement and the transactions contemplated hereunder
prior to the Closing Date.
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ARTICLE 8
CONDITIONS TO OBLIGATIONS OF BUYER TO CLOSE
The obligations of Buyer to purchase the Business and the Assets and
otherwise consummate the transactions that are to be consummated at the Closing
are subject to the satisfaction, as of the Closing Date, of the following
conditions (any of which may be waived by Buyer in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller set forth in Article 3 shall be accurate in all material
respects as of the Closing, as though made on and as of the Closing Date, except
to the extent that (a) any of such representations and warranties refers
specifically to a date other than the Closing Date, in which case such
representation or warranty shall have been accurate in all material respects as
of such other date, (b) the accuracy of any of such representations and
warranties is affected by any of the transactions contemplated by this
Agreement, or (c) a representation or warranty is modified in an updated
Disclosure Schedule delivered to Buyer at the Closing, which update, when
considered in the aggregate, does not differ materially from the Disclosure
Schedule at the time this Agreement is executed, when considered in the
aggregate.
8.2 PERFORMANCE. Seller shall have materially performed all obligations
required by this Agreement to be performed by Seller on or before the Closing
Date.
8.3 CERTIFICATE. Buyer shall have received from a duly authorized officer
of Seller a certificate dated the Closing Date confirming, to such person's
knowledge, after reasonable inquiry, that the conditions in Sections 8.1 and 8.2
have been met.
8.4 NO INJUNCTION. There shall not be in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over Buyer or Seller that prohibits Buyer's purchase of the
Business and the Assets or Seller's sale of the Business and the Assets.
8.5 HSR ACT. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
8.6 CONSENTS. Except to the extent otherwise provided in Schedule 8.6, all
approvals, consents, waivers and authorizations required to be obtained by
Seller in connection with the transactions contemplated by this Agreement
(identified on Schedule 8.6) shall have been obtained and shall be in full force
and effect, except where the failure to obtain such consents did not and would
not reasonably be expected to result in a Material Adverse Effect on the
Business or a material adverse effect on the transactions contemplated by this
Agreement.
8.7 TRANSFER DOCUMENTS. Seller shall have delivered to Buyer at the
Closing all documents, certificates and agreements necessary to transfer to
Buyer title to the Assets, free and clear of any and all Liens thereon, other
than Permitted Liens, in form and substance reasonably satisfactory to Buyer,
including without limitation:
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(a) a xxxx of sale, assignment and general conveyance, dated the
Closing Date, with respect to the Assets;
(b) assignments of all Contracts, Intellectual Property and any
other agreements and instruments constituting Assets, dated the Closing Date,
assigning to Buyer all Seller's right, title and interest therein and thereto;
(c) an assignment of lease, dated as of the Closing Date, with
respect to each Lease; and
(d) certificates of title to all motor vehicles included in the
Assets to be transferred to Buyer hereunder, duly endorsed for transfer to Buyer
as of the Closing Date.
8.8 OPINION OF COUNSEL TO SELLER. Seller shall have delivered to Buyer at
the Closing the opinion of counsel in a form mutually agreed upon by Buyer and
Seller.
8.9 SUPPLY AGREEMENT. Seller shall have executed and delivered a Supply
Agreement substantially in the form attached hereto as Exhibit 8.9 with changes
as mutually agreed upon by Buyer and Seller.
ARTICLE 9
CONDITIONS TO OBLIGATION OF SELLER TO CLOSE
The obligation of Seller to sell the Business and the Assets and
otherwise consummate the transactions that are to be consummated at the Closing
is subject to the satisfaction, as of the Closing Date, of the following
conditions (any of which may be waived by Seller):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer set forth in Article 4 shall be accurate in all material
respects as of the Closing, as though made on and as of the Closing Date, except
to the extent that (a) any of such representations and warranties refers
specifically to a date other than the Closing Date, in which case such
representation or warranty shall have been accurate in all material respects as
of such other date, or (b) the accuracy of any of such representations and
warranties is affected by any of the transactions contemplated by this
Agreement.
9.2 PERFORMANCE. Buyer shall have performed all obligations required by
this Agreement to be performed by Buyer on or before the Closing Date except
where the failure to perform such obligations did not and would not reasonably
be expected to result in a Material Adverse Effect on the Business or a material
adverse effect on the transactions contemplated by this Agreement.
9.3 CERTIFICATE. Seller shall have received from a duly authorized officer
of Buyer a certificate dated the Closing Date confirming, to such person's
knowledge, after reasonable inquiry, that the conditions in Sections 9.1 and 9.2
have been met.
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9.4 NO INJUNCTION. There shall not be in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over Seller that prohibits the sale of the Business and the Assets.
9.5 HSR ACT. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
9.6 CONSENTS. Except to the extent otherwise provided in Schedule 8.6, all
approvals, consents, waivers and authorizations required to be obtained by
Seller in connection with the transactions contemplated by this Agreement
(identified on Schedule 8.6) shall have been obtained and shall be in full force
and effect, except where the failure to obtain such consents did not and would
not reasonably be expected to result in a Material Adverse Effect on the
Business or a material adverse effect on the transactions contemplated by this
Agreement.
9.7 ASSUMPTION AGREEMENT. Seller shall have received from Buyer an
Assumption Agreement, in substance and form satisfactory to Seller, under which
Buyer shall have assumed the Assumed Liabilities.
9.8 OPINION OF COUNSEL TO BUYER. Buyer shall have delivered to Seller at
the Closing the opinion of counsel in a form mutually agreed upon by Seller and
Buyer.
ARTICLE 10
TERMINATION
10.1 RIGHT TO TERMINATE AGREEMENT. This Agreement may be terminated prior
to the Closing:
(a) by the mutual agreement of Seller and Buyer;
(b) by written notice of Buyer at any time after 90 days after
signing, if the Closing shall not have occurred on or prior to such date;
provided, however, that the right to terminate this Agreement under this Section
10.1(b) shall not be available to Buyer if the action of Buyer or any of its
Affiliates has been a principal cause of or resulted in the failure of the
Closing to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;
(c) by written notice of Seller at any time after 90 days after
signing, if the Closing shall not have occurred on or prior to such date;
provided, however, that the right to terminate this Agreement under this Section
10.1(c) shall not be available to Seller if the action of Seller or any of its
Affiliates has been a principal cause of or resulted in the failure of the
Closing to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;
(d) at the election of Seller, if Buyer has breached any material
representation, warranty, covenant or agreement contained in this Agreement;
provided, however, that Seller shall not have a termination right hereunder if
the other conditions to the obligation of Seller to consummate the transactions
contemplated hereby shall have been satisfied, unless such
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representation, warranty, covenant or agreement shall not have been cured by
Buyer within 30 days after Buyer shall have received written notice from Seller
that it intends to exercise its right to terminate under this paragraph (d); or
(e) at the election of Buyer, if Seller has breached any material
representation, warranty, covenant or agreement contained in this Agreement;
provided, however, that Buyer shall have no termination right hereunder if the
other conditions to the obligation of Buyer to consummate the transactions
contemplated hereby shall have been satisfied, unless such representation,
warranty, covenant or agreement shall not have been cured by Seller within 30
days after Seller shall have received written notice from Buyer that it intends
to exercise its right to terminate under this paragraph (e).
10.2 EFFECT OF TERMINATION. Upon the termination of this Agreement
pursuant to Section 10.1:
(a) Buyer shall promptly cause to be returned to Seller all
documents and information obtained in connection with this Agreement and the
transactions contemplated by this Agreement and all documents and information
obtained in connection with Buyer's investigation of the Business, including any
copies made by or supplied to Buyer or any of Buyer's agents of any such
documents or information; and
(b) No party hereto shall have any obligation or liability to the
other parties hereto, except that the parties hereto shall remain bound by the
provisions of this Section 10.2 and Sections 6.1 and 7.3 and Article 12 and by
the provisions of the Confidentiality Agreement.
ARTICLE 11
CERTAIN REMEDIES AND LIMITATIONS
11.1 EXPIRATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
covenants set forth in Sections 5.1, 5.4, 5.6, 5.7, 6.2 and 7.7 by their terms
contemplate performance prior to the Closing and shall terminate and expire, and
shall cease to be of any force or effect, on the Closing Date, and all liability
of the parties hereto with respect to such covenants shall thereupon be
extinguished. This Section 11.1 shall not limit any covenant or agreement of the
parties that by its terms contemplates performance after the Closing Date, which
covenants shall survive the Closing Date. All of the representations and
warranties of Seller set forth in this Agreement shall terminate and expire, and
shall cease to be of any force or effect, at 5:00 p.m. (California time) on the
later of (i) the first anniversary of the Closing Date, and (ii) 90 days
following the end of the fiscal year of Buyer during which the Closing Date
occurs, and all liability with respect to such representations and warranties
shall thereupon be extinguished, except with respect to claims for breach that
have been made, in the manner provided for in Section 11.4, on or prior to such
termination and expiration date.
11.2 INDEMNITY BY SELLER.
(a) Subject to the provisions of Section 11.1 hereof relating to the
survival of representations and warranties and the other limitations contained
herein, from and after the Closing, Seller agrees to indemnify, defend and hold
harmless Buyer and its Affiliates, officers,
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directors, employees, agents and stockholders (collectively, the "Buyer
Indemnitees") against the net amount of all claims, losses, liabilities,
damages, deficiencies, costs and expenses, including without limitation, losses
resulting from the defense, settlement and/or compromise of a claim and/or
demand and/or assessment, reasonable attorneys', accountants' and expert
witnesses' fees, costs and expenses of investigation, and the costs and expenses
of enforcing the indemnification provided hereunder (hereafter individually a
"Loss" and collectively "Losses") incurred by any of the Buyer Indemnitees
(after deduction of the amount of any insurance proceeds recovered and net of
any tax benefit) and arising out of or relating to: (i) any misrepresentation or
breach of any representation or warranty made by Seller in this Agreement; (ii)
any breach of any covenant, agreement or obligation of Seller contained in this
Agreement; (iii) Excluded Liabilities; (iv) Seller's use of the California
Microwave Name; and (v) broker's fees for which Buyer has no liability or
responsibility.
(b) Except for claims for indemnification relating to Excluded
Liabilities, Seller's use of the California Microwave Name or broker's fees for
which Buyer has no liability or responsibility, Seller shall not be required to
indemnify Buyer Indemnitees with respect to any claim for indemnification
resulting from or arising out of matters described above pursuant to this
Section 11.2, unless and until the aggregate amount of all claims against Buyer
Indemnitees exceeds $1.5 million and then only to the extent such aggregate
amount exceeds $1.5 million. Claims thereafter may be asserted regardless of
amount; provided, however, that Seller's maximum liability to Buyer Indemnitees
under this Section 11.2 shall not exceed $20 million in the aggregate.
11.3 INDEMNITY BY BUYER. Subject to the provisions of Section 11.1 hereof
relating to the survival of representations and warranties and the other
limitations contained herein, from and after the Closing, Buyer agrees to
indemnify, defend and hold harmless the Seller and each of its Affiliates,
officers, directors, employees, agents and stockholders (collectively, the
"Seller Indemnitees") against the net amount of all Losses incurred by any of
the Seller Indemnitees (after deduction of the amount of any insurance proceeds
recovered and net of any tax benefit) and arising out of or relating to: (i) any
Assumed Liabilities; (ii) any misrepresentation or breach of any representation
or warranty made by Buyer in this Agreement; and (iii) any breach of any
covenant, agreement or obligation of Buyer contained in this Agreement.
11.4 DEFENSE OF THIRD-PARTY ACTIONS. If either a Buyer Indemnitee, on the
one hand, or a Seller Indemnitee, on the other hand (the "Indemnitee"), receives
notice or otherwise obtains knowledge of any matter or any threatened matter
that may give rise to an indemnification claim against the other party (the
"Indemnifying Party"), then the Indemnitee shall promptly deliver to the
Indemnifying Party a written notice describing such matter in reasonable detail.
The timely delivery of such written notice by the Indemnitee to the Indemnifying
Party shall be a condition precedent to any liability on the part of the
Indemnifying Party under this Article 11 with respect to such matter only to the
extent of any prejudice resulting from the failure to provide such notice in a
timely manner. The Indemnifying Party shall have the right, at its option to
assume the defense of any such matter with its own counsel (subject to the
condition that, for counsel other than Xxxxxx Godward LLP, such counsel shall be
reasonably satisfactory to Buyer), but only if the Indemnifying Party
simultaneously agrees in writing to indemnify the Indemnitee for such matter. If
the Indemnifying Party elects to assume the defense of and indemnification for
any such matter, then:
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(a) notwithstanding anything to the contrary contained in this
Agreement, the Indemnifying Party shall not be required to pay or otherwise
indemnify the Indemnitee against any attorneys' fees or other expenses incurred
on behalf of the Indemnitee in connection with such matter following the
Indemnifying Party's election to assume the defense of such matter;
(b) the Indemnitee shall make available to the Indemnifying Party
all books, records and other documents and materials that are under the direct
or indirect control of the Indemnitee or any of the Indemnitee's agents and that
the Indemnifying Party considers necessary or desirable for the defense of such
matter;
(c) the Indemnitee shall execute such documents and take such other
actions as the Indemnifying Party may reasonably request for the purpose of
facilitating the defense of, or any settlement, compromise or adjustment
relating to, such matter;
(d) the Indemnitee shall otherwise fully cooperate as reasonably
requested by the Indemnifying Party in the defense of such matter; and
(e) the Indemnitee shall not admit any liability with respect to
such matter.
Notwithstanding any election made by an Indemnifying Party to assume the defense
of any matter as described above, the Indemnitee may (by notifying the
Indemnifying Party) elect to participate in the defense of such matter (at the
Indemnitee's sole expense and with counsel selected by the Indemnitee and
reasonably satisfactory to the Indemnifying Party) if the Indemnifying Party or
any Affiliate of the Indemnifying Party is also a party to such matter and
counsel to the Indemnitee determines in good faith that joint representation
would give rise to a conflict of interest.
11.5 SUBROGATION. To the extent that the Indemnifying Party makes any
indemnification payment to the Indemnitee, the Indemnifying Party shall be
entitled to exercise, and shall be subrogated to, any rights and remedies
(including rights of indemnity, rights of contribution and other rights of
recovery) that the Indemnitee or any of the Indemnitee's affiliates may have
against any other person with respect to any Losses, circumstances or matter to
which such indemnification payment is directly or indirectly related. The
Indemnitee shall permit the Indemnifying Party to use the name of the Indemnitee
and the names of the Indemnitee's Affiliates in any transaction or in any
proceeding or other matter involving any of such rights or remedies; and the
Indemnitee shall take such actions as the Indemnifying Party may reasonably
request for the purpose of enabling the Indemnitee to perfect or exercise the
Indemnifying Party's right of subrogation hereunder.
11.6 EXCLUSIVITY. The right of each party hereto to assert indemnification
claims and receive indemnification payments pursuant to this Article 11 shall be
the sole and exclusive right and remedy exercisable by such party with respect
to any breach by the other party hereto of any representation, warranty or
covenant or failure to pay or perform any Assumed Liability or Excluded
Liability, as applicable.
11.7 RETENTION OF RECORDS. From and after the date of this Agreement,
Buyer and Seller shall preserve all books, records and other documents,
materials and information relevant to the representations, warranties and
covenants set forth in this Agreement for a period of six
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years following the date of this Agreement or for such longer period as the
rights of the parties hereunder may exist.
11.8 NOTICE AS TO REPRESENTATIONS. Without limiting any of the other
obligations of the respective parties hereunder, if at any time after the date
of this Agreement, Buyer shall have any reason to believe that any
representation or warranty made by Seller hereunder may have been untrue, Buyer
shall promptly provide Seller written notice to that effect, indicating the
basis for Buyer's belief that such representation or warranty may have been
untrue.
11.9 NO RESCISSION. Neither Buyer nor Seller shall be entitled to rescind
the purchase of the Business and the Assets by virtue of any failure of any
party's representations and warranties herein to have been true or any breach of
any party's obligations hereunder.
11.10 SET-OFF. If it is established pursuant to this Article 11 that an
indemnification payment is required to be made to an Indemnitee, then such
Indemnitee shall be entitled, in addition to any other right or remedy it may
have, to set-off the amount of the indemnification payment so established
against any amounts due and payable to the Indemnifying Party hereunder at the
time any such indemnification payment is so required to be made.
ARTICLE 12
MISCELLANEOUS
12.1 DEFINITION OF CERTAIN TERMS. As used herein, the terms defined in
this Section 12.1 wherever used in this Agreement shall have the following
respective meanings:
An "AFFILIATE" of a Person or entity shall mean a Person or entity
that is a stockholder, director, officer, employee, agent, attorney, accountant
or representative of that Person or entity, or a Person or entity that directly
or indirectly controls, is controlled by or is under common control with that
Person or entity.
"AGREEMENT" shall mean this Asset Purchase Agreement (including the
Exhibits and the Schedules), as the same from time to time may be amended,
supplemented or waived.
"APPLICABLE LAW" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (ii)
Government Approvals and (iii) orders, decisions, injunctions, judgments, awards
and decrees of or agreements with any Governmental Authority.
"ASSETS" shall have the meaning set forth in Section 1.1 hereof.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.4.
"BALANCE SHEET DATE" has the meaning set forth in Section 3.6.
"BENEFIT PLAN" has the meaning set forth in Section 3.10(b).
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"BOOKS AND RECORDS" shall mean all books and records, including
manuals, price lists, mailing lists, lists of customers, production data, sales
and promotional materials, purchasing materials, personnel records,
manufacturing and quality control records and procedures, research and
development files and accounting records (regardless of the media in which
stored), in each case primarily relating to or used in the Business.
"BUSINESS" shall mean the business currently conducted by Seller
through its Information Systems Division, as described in Recital A at the head
of this Agreement.
"BUYER" has the meaning set forth in the first paragraph of this
Agreement.
"BUYER FINANCIAL STATEMENTS" has the meaning set forth in Section
4.7.
"BUYER INDEMNITEES" has the meaning set forth in Section 11.2(a).
"CALIFORNIA MICROWAVE NAME" has the meaning set forth in Section
1.1.
"CLOSING" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Section 2.1.
"CLOSING DATE" shall mean April 16, 1999, or such later date on
which all of the conditions to Closing set forth in Articles 8 and 9 shall have
been satisfied.
"CLOSING DATE BALANCE SHEET" shall have the meaning set forth in
Section 2.2(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
6.1.
"CONSENT" shall mean any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including but not limited to any Governmental Authority.
"CONTRACTS" shall mean all agreements, contracts, commitments,
orders, licenses, leases and other instruments and arrangements (whether written
or oral) to which Seller is, or at the Closing will be, a party, or by which it
or any of its assets is, or at the Closing will be, bound primarily in
connection with the Business, the Assets or the Assumed Liabilities.
"DECEMBER BALANCE SHEET" has the meaning set forth in Section 3.6.
"EMPLOYEE OF THE BUSINESS" has the meaning set forth in Section 6.4.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCLUDED ASSETS" has the meaning set forth in Section 1.2.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.5.
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"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.6.
"FIXED ASSETS" shall mean all machinery, equipment, furniture,
furnishings, vehicles, tools, dies, molds and other tangible personal property
owned by Seller and related primarily to the Business, including, without
limitation, the fixed assets located at Seller's facilities located at Belcamp,
MD, Hagerstown, MD; Baltimore, MD; Xxxxxxxxx Xxxxxxxx, XX, xxx Xxxxxxxx Xxxxx,
XX.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied and consistent with past practices.
"GOVERNMENTAL APPROVAL" shall mean any Consent of, with or to any
Governmental Authority.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any governmental authority,
agency, department, board, commission or instrumentality of the United States,
any State of the United States or any political subdivision thereof, any
tribunal or arbitrator(s) of competent jurisdiction and any self-regulatory
organization.
"HAZARDOUS MATERIALS" shall mean any substance, material or waste
that is regulated by any Governmental Authority, including, without limitation,
any material or substance that is (1) defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" under any provision of any applicable law, (2) petroleum, (3)
asbestos, (4) designated as a "hazardous substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321) or
listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317),
(5) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section
6903), or (6) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq. (42 U.S.C. Section 9601).
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"INDEMNIFYING PARTY" has the meaning set forth in Section 11.4.
"INTELLECTUAL PROPERTY" shall mean all patents, pending patent
applications, registered and unregistered copyrights, copyright applications,
inventions, trade secrets, research and development data, and know-how, computer
software or other intellectual property, the trademarks, service marks, trade
names, logos and any applications, in each case used primarily in the conduct of
the Business.
"INVENTORIES" has the meaning set forth in Section 1.1(c).
"JUNE BALANCE SHEET" has the meaning set forth in Section 3.6.
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"LIEN" shall mean any mortgage, pledge, hypothecation, security
interest, encumbrance, lease, sublease, occupancy agreement, adverse claim or
interest, easement, covenant, encroachment, burden, option, lien, right of first
refusal or other similar restrictions.
"LOGOS" has the meaning set forth in Section 1.1.
"LOSS" has the meaning set forth in Section 11.2.
"MATERIAL ADVERSE EFFECT ON THE BUSINESS" has the meaning set forth
in Section 3.1, as limited by Section 12.2.
"MATERIAL ADVERSE EFFECT ON BUYER" has the meaning set forth in
Section 4.5, as limited by Section 12.2.
"MATERIAL CONTRACTS" has the meaning set forth in Section 3.13
"PERCENTAGE OF COMPLETION METHOD" shall have the meaning set forth
in Section 2.2(b)(iv).
"PERMITTED LIENS" shall mean (i) mechanics', carriers' or
warehouseman's Liens arising in the ordinary course of business which do not in
the aggregate materially adversely affect the value of the Assets or materially
impair their use in the operation of the Business; (ii) minor survey exceptions,
minor encumbrances, easements or reservations of, or rights of others for,
rights of way, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning restrictions as to the use of real properties which
do not materially interfere with the use, occupation and enjoyment of the Assets
taken as a whole; and (iii) Liens listed on Schedule 3.8 hereto.
"PERSON" shall mean any natural person, firm, partnership,
association, corporation, company, limited liability company, trust, business
trust, Governmental Authority or other entity.
"POLICIES" has the meaning set forth in Section 3.14.
"PRE-CLOSING TAX PERIOD" shall mean any period ending with, on or
prior to the Closing Date with respect to which Seller is required to report
and/or pay any Tax relating to the Business.
"PURCHASE PRICE" has the meaning set forth in Section 2.2.
"SELLER" has the meaning set forth in the first paragraph of this
Agreement.
"SELLER INDEMNITEES" has the meaning set forth in Section 11.3.
"TAX DATA" has the meaning set forth in Section 6.5(a).
"TAX DOCUMENTATION" has the meaning set forth in Section 6.5(a).
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"TAXES" in the plural and "Tax" in the singular shall mean all
federal, state, local and foreign taxes of any kind or nature, including, but
not limited to, income, employment (including social security, withholding and
state disability), excise, property, sales, use, franchise, and other taxes,
together with all interest, additions to tax and penalties relating thereto.
"TAX RETURN" shall mean any return, report, declaration, form, claim
for refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TRANSFER TAXES" has the meaning set forth in Section 7.6.
"WINDOW PERIOD" has the meaning set forth in Section 7.4.
12.2 MATERIAL ADVERSE EFFECT. Any adverse change, event or effect that is
proximately caused by conditions affecting the United States economy generally
shall not be taken into account in determining whether there has been or would
be a Material Adverse Effect on the Business or a Material Adverse Effect on
Buyer (unless such conditions adversely affect Seller or Buyer, as the case may
be, in a materially disproportionate manner). Any adverse change, event or
effect that is proximately caused by any industry in which Buyer or Seller
competes shall not be taken into account in determining whether there has been
or would be a Material Adverse Effect on Buyer or Material Adverse Effect on the
Business (unless such conditions adversely affect Seller or Buyer, as the case
may be, in a materially disproportionate manner). Any adverse change, event or
effect that is proximately caused by the announcement or pendency of the sale of
the Business and the Assets shall not be taken into account in determining
whether there has been or would be a Material Adverse Effect on Buyer or a
Material Adverse Effect on the Business. Any adverse change, event or effect
that is proximately caused by any breach by Buyer of any covenant or obligation
set forth in this Agreement shall not be taken into account in determining
whether there has been or would be a Material Adverse Effect on the Business.
12.3 KNOWLEDGE. As used in this Agreement, a corporate party's "knowledge"
means the actual knowledge of any member of the Board of Directors or executive
officer of such party and in the case of Seller, of the Seller's Information
Systems Division's President and General Manager, Vice President of Operations
and Vice President of Finance.
12.4 MEMORANDUM; DISCLAIMER OF PROJECTIONS. Seller makes no representation
or warranty to Buyer except as specifically made in this Agreement. In
particular, Seller makes no representation or warranty to Buyer with respect to
any financial projection or forecast delivered by or on behalf of Seller to
Buyer. Buyer acknowledges that (a) there are uncertainties inherent in
attempting to make such projections and forecasts, (b) it is familiar with such
uncertainties, (c) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it and (d) it shall have no claim against Seller with respect
thereto.
12.5 EXPENSES. If the purchase of the Assets is consummated or if this
Agreement is terminated, Seller and Buyer shall pay their own respective
expenses and costs incidental to the
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preparation of this Agreement, the performance and compliance with all
agreements contained in this Agreement to be performed or complied with by them
and the consummation of the transactions contemplated hereby.
12.6 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
delivery or (d) sent by facsimile transmission or telegram. All such notices,
requests, demands, waivers and other communication shall be deemed to have been
received (w) if by personal delivery on the day after such delivery, (x) if by
certified or registered mail, on the seventh business day after the mailing
thereof, (y) if by next-day or overnight mail or delivery, on the day delivered,
(z) if by facsimile or telegram, on the next day following the day on which such
facsimile or telegram was sent, provided that a copy is also sent by certified
or registered mail.
If to Buyer:
Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Office of the General Counsel
Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Seller, to:
California Microwave, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Company Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
One Maritime Plaza, 20th Floor
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Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or, in each case, to such other address as may be specified in writing to the
other parties.
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery, telecopy
or ordinary mail), but no such notice, instruction or communication shall be
deemed to have been delivered unless and until it is actually received by the
party to whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 12.6.
12.7 ASSIGNMENT. No party may assign or otherwise transfer this Agreement
or any of its rights hereunder to any person or entity, without the prior
written consent of Buyer and Seller which consent shall not be unreasonably
withheld or delayed. Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
assigns.
12.8 ENTIRE AGREEMENT; AMENDMENT; GOVERNING LAW; ETC. This Agreement
(together with the Exhibits and Schedules hereto) and the Confidentiality
Agreement embody the entire agreement and understanding among the parties hereto
with respect to the subject matter hereof. This Agreement may be amended,
modified, waived, discharged or terminated only by (and any consent hereunder
shall be effective only if contained in) an instrument in writing signed by the
party against which enforcement of such amendment, modification, waiver,
discharge, termination or consent is sought. This Agreement shall be construed
in accordance with and governed by the laws of the State of California as it
applies to contracts to be performed entirely within the State of California.
12.9 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which is an original, but all of which shall constitute one instrument.
12.10 VENUE. If any legal proceeding or other action relating to this
Agreement or any of the other agreements being executed and delivered in
connection herewith, or any of the transactions contemplated hereby or thereby,
is brought or otherwise initiated, the venue therefor shall be in San Jose,
California, which shall be deemed to be a convenient forum. Each of the parties
hereto hereby expressly and irrevocably consents and submits to the jurisdiction
of the United States District Court for the Northern District of California and
to the jurisdiction of the Superior Court in and for the County of Santa Xxxxx
of the State of California in connection with any such legal proceeding or other
action.
12.11 ATTORNEY'S FEES. In the event that either party hereto initiates any
legal action arising out of or in connection with this Agreement, the prevailing
party shall be entitled to recover from the other party all reasonable
attorneys' fees, expert witness fees and expenses incurred by the prevailing
party in connection herewith.
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12.12 THIRD-PARTY RIGHTS. The parties do not intend to confer any benefit
hereunder on any person or entity other than the parties hereto and their
respective successors in interest. Without limiting the generality of the
foregoing, no provision in this Agreement shall create any third party
beneficiary or other right in any employee or former employee of Seller
(including any beneficiary or dependent thereof) in respect of continued
employment (or resumed employment) with Buyer or Seller or in respect of any
benefits that may be provided, directly or indirectly, under any Benefit Plan.
12.13 TITLES AND HEADINGS. Titles and headings of sections of this
Agreement and the "Table of Contents," the "Table of Exhibits," the "Table of
Schedules" and the "Index of Schedules" included herewith, are for convenience
of reference only and shall not affect the construction of any provision of this
Agreement.
12.14 EXHIBITS AND SCHEDULES. Each of the Exhibits and Schedules referred
to herein and attached hereto is an integral part of this Agreement and is
incorporated herein by this reference.
12.15 PRONOUNS. All pronouns and any variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as appropriate.
12.16 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction, as to such jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
12.17 TIME OF ESSENCE. Time is of the essence of this Agreement.
12.18 INTERPRETATION. Each party acknowledges that such party, either
directly or through such party's representatives, has participated in the
drafting of this Agreement and any applicable rule of constructions that
ambiguities are to be resolved against the drafting party should not be applied
in connection with the construction or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
BUYER
NORTHROP GRUMMAN CORPORATION
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx,
Corporate Vice President and Treasurer
SELLER
CALIFORNIA MICROWAVE, INC.
a Delaware corporation
By: /s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
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