EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 21, 1998 (the
"Agreement"), by and among Bain/RCL, L.L.C., a Delaware limited liability
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company ("Bain"), RCL Acquisitions, L.L.C., a Delaware limited liability company
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("MergeCo"), RAYTHEON COMMERCIAL LAUNDRY LLC, a Delaware limited liability
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company (the "Company"), and RAYTHEON COMPANY, a Delaware corporation
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("Raytheon").
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RECITALS
WHEREAS, the Board of Managers of MergeCo and the Company; Raytheon, as the
sole Member of the Company; and Bain, as the sole Member of MergeCo, have each
approved this Agreement, including without limitation, the merger of MergeCo
with and into the Company in accordance with the terms of this Agreement and the
Limited Liability Company Act of the State of Delaware (the "Act") and with any
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other applicable law.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
Article 1
Certain Definitions
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Section 1.1 Definitions. As used herein, unless the context otherwise
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requires, the following terms (or any variant in the form thereof) have the
following respective meanings. Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa, and the reference to
any gender shall be deemed to include all genders. Unless otherwise defined or
the context otherwise clearly requires, terms for which meanings are provided
herein shall have such meanings when used in the Disclosure Schedule and each
collateral document and certificate executed or required to be executed pursuant
hereto or thereto or otherwise delivered, from time to time, pursuant hereto or
thereto.
"Action" means any litigation or legal or other actions, arbitrations,
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counterclaims, investigations, proceedings, requests for material information by
or pursuant to the order of any Governmental Authority, or suits, at law or in
arbitration, equity or admiralty commenced by any Person.
"Adverse", "Adversely" when used in conjunction with "Affect," "Change" and
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"Effect" shall mean, with respect to the Company or Bain, whichever is the
obligor in the context to which such term applies, any event which could
reasonably be expected, in a material respect or manner or to a material degree,
to (a) adversely affect the enforceability of this Agreement by the obligee, (b)
adversely affect the business, assets, liabilities, properties, financial
condition or results of operation of the Company and its subsidiaries (taken as
a whole) or Bain, whichever is the obligor in the context to which such term
applies, (c) impair the obligor's ability to fulfill its obligations under the
terms of this Agreement or (d) adversely affect the aggregate rights and
remedies of the obligee under this Agreement.
"Affiliate" means, with respect to any Person, any other Person
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controlling, controlled by or under common control with, such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Balance Sheet" means the audited balance sheet of the Company as of
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December 31, 1997, including the notes thereto.
"Balance Sheet Date" means the date of the Balance Sheet.
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"Cash" means cash, time deposits, certificates of deposit and other cash
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equivalents.
"Cash Merger Consideration" means $339,500,000, representing the aggregate
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cash consideration to be paid to Raytheon pursuant to Section 2.6, before giving
effect to any adjustments pursuant to Section 2.8.
"Closing" means the consummation of the Merger and the other transactions
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contemplated hereby.
"Closing Date" means the date on which the conditions set forth in Articles
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8 and 9 shall be satisfied or duly waived, or if Raytheon and Bain mutually
agree on a different date, the date upon which they have mutually agreed.
"Code" means the Internal Revenue Code of 1986, as amended, and any
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successor thereto.
"Company Intellectual Property" means any Intellectual Property which is
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used in the operation of the business of the Company as it is operated as of the
date hereof or as it is operated as of the Closing Date, including, but not
limited to, the Intellectual Property identified in Schedule 3.5(i), but
excluding the trademark "Raytheon."
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"Company's knowledge" (including the term "to the knowledge of the
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Company") means the actual knowledge of the President, the Vice President of
Business Development, the Vice President of Washer and Dryer Operations, the
Vice President of Washer-Extractor/Tumbler Operations, the Vice President -
Controller of the Company, with respect to Section 3.17 and Article VII hereof,
Xxxxxxx X. Xxxxxxxxxx - Director of Taxes, Raytheon Company, with respect to
Section 3.16 hereof, Xxxxxx Xxxxx of Raytheon Company and with respect to
Section 3.5 hereof, the Associate General Counsel - Intellectual Property and
the Associate General Counsel - Litigation of Raytheon Company.
"Contract" means any written note, bond, mortgage, indenture, lease
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(including, without limitation the Marianna Lease and the Omro Lease), contract,
instrument, license, agreement, sales order, purchase order, open bid or other
obligation or commitment and all rights therein.
"Eligible Notes Receivable" means the notes receivable of the Company that
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would be eligible for sale under the RAYCAF Facility were it not for the
limitation on availability set forth in Section 4.2(b)(iii) of such agreement.
"Entity" means any Person other than a natural Person.
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"Environmental Laws" means all Federal, state, local and foreign Laws,
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including for this purpose all judicial and administrative orders and
determinations and all common law, relating to public health or safety,
pollution or protection of the environment, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
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42 U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.,
the Clean Air Act, 42 U.S.C. 7401 et seq., and the Toxic Substances Control Act,
15 U.S.C. 2601 et seq., and all analogous state Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"Excluded Liabilities" means any and all liabilities associated with or
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arising out of Environmental Law with respect to the Company's formerly owned
facilities in Omro, Wisconsin, Searcy, Arkansas and Wautoma, Wisconsin.
"Final Determination" means (a) with respect to federal Income Taxes, a
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"determination" as defined in Section 1313(a) of the Code, execution of an
Internal Revenue Service Form 870AD or any agreement, compromise or other
similar arrangement entered into (whether written or unwritten) with a
representative of the Internal Revenue Service and, with respect to Taxes other
than federal Income Taxes, any final determination of liability in respect of a
Tax that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds, amended
returns or appeals from adverse determinations) or the Party whose interests are
adverse to the
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finding of the Final Determination determines in its reasonable
judgment that further appeal, review or modification through proceedings or
otherwise would not reduce such party's ultimate liability for Taxes, or (b) the
payment of Tax by Raytheon, Bain or any of their Affiliates, whichever is
responsible for payment of such Tax liability under applicable law, with respect
to any item disallowed or adjusted by a Taxing Authority, provided that such
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responsible party determines that no action should be taken to recoup such
payment and the indemnifying party, if any, agrees.
"Governmental Authorization" mean any approval, concession, consent,
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franchise, license, permit, plan, registration or other authorization of any
Governmental Authority.
"Governmental Authority" means any nation or government, any state or other
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political subdivision thereof, any federal, state, local or foreign Entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission, or instrumentality of the United States,
any State of the United States or political subdivision thereof, and any
tribunal or arbitral authority of competent jurisdiction, and any self-
regulatory organization.
"Hazardous Substance" means (a) any substance that is defined as a
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"hazardous waste," "hazardous material," "hazardous substance" or term of
similar meaning and regulatory effect under any Environmental Law or (b)
petroleum or its derivatives.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
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as amended.
"Income Tax" means any federal, state, local, or foreign tax based upon or
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measured by income, including any interest, penalty, or addition thereto,
whether disputed or not.
"Indebtedness" means, as of any date of determination, without duplication,
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(i) any indebtedness for borrowed money or issued in substitution for or
exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by
any note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a Person
is liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business which are not more than six months past due), (iv) any commitment by
which a Person assures a creditor against loss (including, without limitation,
contingent reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii)
cash or book overdrafts, including without limitation, any held or outstanding
checks as of the Closing Date (except to the extent reflected in Net Working
Capital), (viii) any amounts owed under
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any litigation settlements (except to the extent reflected in Net Working
Capital), (ix) any dividends or distributions to shareholders payable as of the
Closing Date, (x) any indebtedness secured by a Lien on a Person's assets and
(xi) any unsatisfied obligation for "withdrawal liability" to a "multiemployer
plan" as such terms are defined under ERISA; provided, however, in no event will
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Indebtedness include indebtedness, commitments and other obligations in respect
of the Receivables Financing Facilities or Other Receivables Obligations.
"Income Tax Return" means any return, declaration, report, claim for
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refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Intellectual Property" means all of the following (in any jurisdiction
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throughout the world) (i) inventions, patents, patent applications and unfiled
invention disclosures; (ii) trademarks, trademark applications, service marks,
trade dress, trade names, logos, Internet domain names, corporate names and all
registrations of or applications to register the foregoing; (iii) mask works and
mask work applications; (iv) copyrights and copyrightable works and all
registrations of or applications to register the foregoing; (v) trade secrets,
confidential information and proprietary know-how (including, without
limitation, ideas, formulas, compositions, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, financial and
marketing plans, and customer and supplier lists and information); (vi) computer
software (including, without limitation, data, databases and related
documentation); and (vii) all other intellectual property rights.
"Known Environmental Liabilities" shall mean those items designated as
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"Known Environmental Liabilities" on Schedule 3.16.
"Laws" means statutes, regulations, ordinances, rules and other laws
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promulgated by a Governmental Authority.
"Leased Real Property" means all real property used or occupied by the
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Company or any of its subsidiaries pursuant to any leasehold, subleasehold,
license, concession or other similar real property interest held by the Company
or such subsidiaries.
"LIBOR Rate" means a per annum rate equal to the sum of (i) the three-month
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LIBOR rate as published in the Wall Street Journal on the Closing Date plus (ii)
2.375%.
"Licenses" means use rights granted in connection with Intellectual
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Property and/or Company Intellectual Property and permits, franchises, licenses,
certificates, approvals or other authorizations of federal, foreign, state and
local governments.
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"Lien" means an adverse claim, restriction on voting or transfer or pledge,
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lien (including Tax liens), mortgage, hypothecation, collateral assignment,
charge, encumbrance, easement, covenant, restriction, title defect,
encroachment, security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Company or any of
its subsidiaries or any filing or agreement to file a financing statement as
debtor under the Uniform Commercial Code or any similar statute other than to
reflect ownership by a third party of property leased to the Company or any of
its subsidiaries under a lease which is not in the nature of a conditional sale
or title retention agreement.
"Marianna Lease" means the Lease Agreement, dated November 3, 1994 and
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recorded in Official Records in Xxxxxxx County, Florida, in Volume 563, page
160, for certain Leased Real Property located in Marianna, Florida.
"Member" means a member (as defined in Section 18-101(11) of the Act) of
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the Company.
"Net Working Capital" means, as of any date of determination, (x) the sum
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of Cash, accounts receivable, Eligible Notes Receivable, inventory and prepaid
expenses as of such date (except deferred taxes and Income Tax refunds relating
to operation of the Company through the Closing Date, interdivision receivables
and prepaid pension assets) minus (y) the sum of accounts payable, short-term
debt and accrued expenses (except for (a) Taxes relating to operation of the
Company through the Closing Date and interdivision payables, (b) reserves
relating to (i) post-retirement medical benefits, (ii) restructuring and (iii)
receivables sold under the RAYCAF Facility (in an amount equal to approximately
$3,530,000 as of December 31, 1997) and (c) accrued pension liability and
liabilities under the Retention Plans), as of such date.
"Non-Laundry Affiliate" means any Affiliate of Raytheon other than the
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Company and the subsidiaries of the Company.
"Omro Lease" means the lease agreement, dated as of February 20, 1998,
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between Raytheon Holding LLC, as landlord, and the Company, as tenant, for
certain Leased Real Property located in Omro, Wisconsin, as described therein.
"Orders" means judgments, orders, injunctions, decrees, stipulations or
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awards (whether rendered by a court, administrative agency, arbitrator or other
tribunal) and whether imposed or entered by consent.
"Other Receivables Obligations" means the Company's or its subsidiary's
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obligation to repurchase or otherwise guaranty or provide credit support for any
loan or other financing relationship (the aggregate principal amount of which
was approximately $102,400,000 as of December 31, 1997), including, without
limitation, those obligations of the Company in respect of or arising under (i)
that certain Master Agreement, dated on or about February 27, 1992, by and
between Speed Queen Company and Xxxx Atlantic Tricon Leasing Corporation, as
amended and if
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effect on the date hereof, (ii) that certain loan, dated as of December 5, 1994,
in an original principal amount of $50,000,000 from Greyhound Financial
Corporation and American National Bank and Trust Company of Chicago to Xxxxx
Laundry Service Limited Partnership, and (iii) that certain Loan Assignment and
Assumption, dated as of April 26, 1996, by and between Finova Capital
Corporation and Raytheon Appliances Inc. - Commercial Laundry relating to the
loan to Coin Controlled Washers, Inc.
"Other Taxes" means all Taxes which are not Income Taxes.
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"Party" means Raytheon or Bain.
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"PBGC" means the Pension Benefit Guaranty Corporation.
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"Performance Guarantees" means Raytheon's Performance Guarantees executed
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and delivered pursuant to the RAYCAR Facility and the RAYCAF Facility.
"Permitted Liens" means any Liens (i) for Taxes attributable to any taxable
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period beginning on or prior to the Closing Date and not yet due or payable or
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with GAAP and reflected
in the financial statements, (ii) that are not material and constitute
mechanics', carriers', workers' or like liens incurred in the ordinary course of
business, or (iii) that are zoning restrictions, easements, rights of way and
other restrictions and similar charges or encumbrances relating to real property
and would not interfere in a material way with the ordinary conduct of the
Company's business as it is presently conducted.
"Person" means an individual, a corporation, a limited liability company, a
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partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof and, for purposes of this Agreement, the Company.
"RAI" means Raytheon Appliances, Inc.
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"RASA" means Raytheon Appliances, S.A., an Argentine corporation.
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"RAYCAF" means Raytheon Commercial Appliances Financing Corporation, a
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Delaware corporation.
"RAYCAF Facility" means that certain Receivables Purchase Agreement dated
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as of March 26, 1997 among RAYCAF, Falcon Asset Securitization Corporation
("Falcon"), The First National Bank of Chicago and the other parties signatory
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thereto, as amended by that certain Omnibus Amendment, Consent, Assignment and
Assumption Agreement, dated September 9, 1997, by and among RAI, RAYCAF, the
Company, Falcon, The First National Bank of Chicago and Raytheon.
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"RAYCAR" means Raytheon Commercial Appliances Receivables Corporation, a
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Delaware corporation.
"RAYCAR Facility" means that certain Receivables Purchase Agreement dated
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as of December 27, 1996 among RAYCAR, Preferred Receivables Funding Corporation
("PREFCO") and The First National Bank of Chicago, as amended by that certain
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Omnibus Amendment, Consent, Assignment and Assumption Agreement, dated September
9, 1997, by and among RAI, RAYCAR, the Company, PREFCO, The First National Bank
of Chicago and Raytheon, as further amended by that certain Amendment, dated
December 29, 1997, by and among RAYCAR, PREFCO and The First National Bank of
Chicago.
"Receivables Financing Facilities" means the RAYCAF Facility and the RAYCAR
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Facility.
"Release" means any spilling, leaking, pumping, pouring, emitting,
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emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment.
"Returns" means returns, reports and forms required to be filed with any
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U.S. or foreign taxing authority.
"Schedule" means any Schedule hereto.
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"Subordinated Note" means the Junior Subordinated Promissory Note of the
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Surviving Entity in the original principal amount of $9,000,000 in the form
attached hereto as Exhibit 2.6.
"Target Net Working Capital" means Net Working Capital of $27,953,000, less
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the amount, if any, paid under the Retention Plans by the Company as of the
close of business on the day immediately preceding the Closing Date.
"Taxes" means all taxes (whether federal, state, local or foreign) based
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upon or measured by income and any other tax whatsoever, including gross
receipts, profits, sales, use, occupation, value added, ad valorem, transfer,
franchise, withholding, payroll, employment, excise or property taxes, together
with any interest or penalties, or addition thereto, imposed with respect
thereto, whether disputed or not.
"Tax Laws" means the Code, federal, state, county, local or foreign laws
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relating to Taxes and any regulations or official administrative pronouncements
released thereunder.
"Third-Party Claim" means any Action by or before any Governmental
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Authority asserted by a Person other than any party hereto or their respective
Affiliates which gives rise to a right of indemnification hereunder.
"Units" means the units of limited liability company interest in the
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Surviving Entity issued pursuant to Section 2.6.
Sec Other Definitions. The following terms are defined in the Sections
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indicated:
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TERM SECTION
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Act Recitals
Adjusted Closing Balance Sheet 2.8(e)
Advances 5.9(a)
Agreement Recitals
Allocation Agreement 2.9(a)
Apportioned Obligations 7.2(b)
Asset Transfer 2.11
Bain Recitals
Benefit Plans 3.11(a)
Benefits Maintenance Period 6.1(b)
CFSB 3.14
C&L 2.8(c)
Certificate of Merger 2.3
CHI 10.2
Closing Balance Sheet 2.8(c)
Company Recitals
Company Assets 7.1
Company Payment 5.9(a)
Company Transaction 5.8
Commercial Laundry Employees 3.9
Commercial Laundry Retirement 3.11(b)
Plans
Competitive Business 5.11
Consideration 2.9(a)
Continuing Employees 6.1(a)
Covered Breach or Event 10.2
Covered Liabilities 10.2
Xxxxx Escrow 10.2
Deficit 5.9(f)
Delaware Secretary of State 2.3
Disputes 10.8(a)
Dispute Notice 2.8(d)
Disputing Party 10.8(b)
Disputing Party's Arbitrator 10.8(c)
Effective Time 2.3
Environmental Permits 3.16(b)
Estimated Indebtedness 2.8(a)
Estimated Net Working Capital 2.8(a)
Existing Operating Agreement 3.1(b)
Final Award 10.8(e)
Financial Statements 3.2
Financing Commitments 4.5
GAAP 2.8(c)
Goodwill 7.1
Initial Allocation 6.5(b)
Interest 2.6(a)
Investment Plans 6.2
Material Consents 8.2
MergeCo. Recitals
MergeCo. Interest 2.6(b)
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TERM SECTION
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Merger 2.1(a)
Neutral Auditor 2.8(e)
NewCo 2.11
1997 Customers 3.20
1997 Suppliers 3.20
Non-Disputing Party's Arbitrator 10.8(c)
Nonsolicitation Period 5.12
Notice of Arbitration 10.8(b)
Operating Agreement 2.4(b)
Owned Real Property 3.4(c)
Post-Closing Tax Period 7.2(b)
Pre-Closing Tax Period 7.2(b)
Quarterly Report 5.9(f)
RAI Plan 6.5(a)
RAYSIP Plan 6.2(a)
RAYSOP Plan 6.2(a)
Raytheon Recitals
Raytheon Group 5.11
Raytheon Indemnified Parties 10.3
Raytheon Payments 5.9(f)
Raytheon Reimbursements 5.9(f)
RCL Hourly Plan 3.11(b)
RCL Salaried Plan 3.11(b)
Recovery 5.9(f)
Registration Rights Agreement 8.4(b)
Reimbursable Payment 5.9(f)
Resolution Period 2.8(d)
Restricted Business 5.11
Restricted Period 5.11
Retention Bonuses 6.3
Retention Plans 6.3
Securities Act 3.23
Securityholders Agreement 8.4(a)
Separate Counsel 10.4
Spin-Off Date 6.5(a)
Subsequent Loss 7.7(d)
Surplus 5.9(f)
Surviving Entity 2.1(a)
Surviving Entity Indemnified 10.2
Parties
Target Plan 6.2(b)
Third Party Tax Claim 7.9(d)
Tranche 5.9(f)
Transfer Taxes 7.2(a)
WARN Act 6.1(c)
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Article 2
The Merger; Conversion of Interests
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Section 2.1 The Merger; Effect of Merger.
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(a) In accordance with the provisions of this Agreement and the Act, at the
Effective Time, MergeCo shall be merged with and into the Company (the
"Merger"), and the Company shall be the surviving limited liability company
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(hereinafter sometimes called the "Surviving Entity") and shall continue its
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existence under the laws of the Act. At the Effective Time, the separate
existence of MergeCo shall cease.
(b) From and after the Effective Time, all the rights, privileges and
powers and all property, real, personal and mixed of, and all debts due to, the
Company and MergeCo shall be vested in the Surviving Entity, and the Merger
shall otherwise have the effects, all as provided under the Act.
Section 2.2 Time and Place of Closing. The Closing shall take place on the
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Closing Date at 10:00 A.M., New York time, in New York, New York at a location
to be determined by Xxxx. Xxxx covenants and agrees to give written notice of
this location to Raytheon no later than ten (10) days prior to the Closing Date.
Section 2.3 Effective Time. The Merger shall become effective at the time
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of filing of, or at such later time on the Closing Date specified in, a
certificate of merger (the "Certificate of Merger"), in the form required by and
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executed in accordance with the Act, filed with the Secretary of State of the
State of Delaware (the "Delaware Secretary of State") in accordance with the
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provisions of Section 18-209 of the Act. The date and time when the Merger shall
become effective is herein referred to as the "Effective Time."
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Section 2.4 Certificate of Formation and Operating Agreement of Surviving
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Entity.
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(a) From and after the Effective Time, the Certificate of Formation of the
Surviving Entity shall be substantially in the form attached hereto as Exhibit
2.4(a) until thereafter amended as provided by law, and the name of the
Surviving Entity shall be such name as may be selected by Xxxx prior to the
Closing Date.
(b) From and after the Effective Time, the Operating Agreement of the
Surviving Entity shall be substantially in the form of the Amended and Restated
Limited Liability Company Agreement (the "Operating Agreement") attached hereto
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as Exhibit 2.4(b) until thereafter amended as provided by law and the terms of
such Operating Agreement.
Section 2.5 Managers and Officers of Surviving Entity.
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(a) Subject to applicable law, the managers of MergeCo immediately prior to
the Effective Time shall be the managers of the Surviving Entity.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Entity and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
Section 2.6 Effect on the Interests of the Company and MergeCo.
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(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of the Company or MergeCo, the entire limited liability
company interest (as defined in Section 18-101(8) of the Act) in the Company
(the "Interest") shall be converted into the right to receive (a) the Cash
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Merger Consideration, and any adjustments thereto pursuant to Section 2.8
hereof, in immediately available funds by wire transfer to the account specified
by Raytheon, (b) the Subordinated Note, (c) Units of Preferred Membership
Interest in the Surviving Entity with an Unreturned Capital (as defined in the
Operating Agreement) of $6,000,000, (c) Units of the Class A Common Membership
Interest in the Surviving Entity representing 7% of the Class A Common
Membership Interest and (d) Units of the Class L Common Membership Interest in
the Surviving Entity with an Unreturned Capital of $3,150,000 (representing 7%
of the Class L Common Membership Interest). At the Effective Time, the Interest
shall be no longer be outstanding and shall automatically be canceled and
retired and cease to exist.
(b) As of the Effective Time, by virtue of the Merger and without any
action on the part of the Company or MergeCo, the entire limited liability
company interest (as defined in Section 18-101(8) of the Act) in MergeCo (the
"MergeCo Interest") shall be converted into the right to receive the remaining
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Units of the Class A Common Membership Interest and Class L Common Membership
Interest in the Surviving Entity. At the Effective Time, the MergeCo Interest
shall be no longer be outstanding and shall automatically be canceled and
retired and cease to exist.
Section 2.7 Consummation of the Merger. As soon as practicable after the
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satisfaction or waiver of the conditions set forth in Article 8 and Article 9
hereof, the Surviving Entity shall execute in the manner required by the Act and
file with the Delaware Secretary of State the Certificate of Merger, and the
Parties shall take such other and further actions as may be required by law to
make the Merger effective as promptly as is practicable.
Section 2.8 Cash Merger Consideration Adjustment.
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(a) At least three (3) days prior to the Closing, Raytheon shall deliver to
Xxxx its good faith estimate of Net Working Capital as of the close of business
on the day immediately preceding the Closing Date (such estimate, the "Estimated
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Net Working Capital") and its good faith estimate of Indebtedness of the Company
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as of the close of business on the day immediately preceding the Closing Date
(such estimate, the "Estimated Indebtedness"). In preparing the Estimated Net
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Working Capital and Estimated Indebtedness, Raytheon shall, to the extent
practicable, use substantially the same accounting methods, policies, practices
and procedures with consistent
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classifications, judgments, and valuation and estimation methodologies as used
in the calculation of such items on the Balance Sheet.
(b) The Cash Merger Consideration shall be (i)(a) increased dollar for
dollar to the extent Estimated Net Working Capital exceeds Target Net Working
Capital, or (b) decreased dollar for dollar to the extent Estimated Net Working
Capital is less than Target Net Working Capital and (ii) decreased dollar for
dollar in an amount equal to Estimated Indebtedness.
(c) Within 90 days following the Closing, Raytheon shall deliver to Xxxx a
combined balance sheet of the Company and its subsidiaries as of the close of
business on the day immediately preceding the Closing Date, which balance sheet
shall be audited by Coopers & Xxxxxxx LLP ("C&L"), auditors for Raytheon and the
---
Company and will reflect the Net Working Capital and Indebtedness of the Company
as of such date (such balance sheet, including the notes thereto, the "Closing
-------
Balance Sheet"). The Closing Balance Sheet shall fairly present the financial
-------------
position of the Company and shall be prepared in accordance with generally
accepted accounting principles ("GAAP") using substantially the same accounting
----
methods, policies, practices and procedures with consistent classifications,
judgments, and valuation and estimation methodologies as used in the calculation
of such items on the Balance Sheet. During the preparation of the Closing
Balance Sheet and the period of any dispute within the contemplation of this
Section 2.8, the Company shall (i) provide Raytheon and Raytheon's authorized
representatives with full access to the books, records, facilities and employees
of the Company, (ii) provide Raytheon within ten (10) business days after the
Closing Date with normal month-end closing financial information for the period
ending on the Closing Date, and (iii) cooperate fully with Raytheon and
Raytheon's authorized representatives (including, without limitation, C&L),
including the provision on a timely basis of all information necessary or useful
in preparing the Closing Balance Sheet.
(d) Raytheon shall deliver a copy of the Closing Balance Sheet to Xxxx
promptly after it has been prepared. After receipt of the Closing Balance Sheet,
Xxxx shall have thirty (30) days to review the Closing Balance Sheet, together
with the work papers used in the preparation thereof. Xxxx and its authorized
representatives shall have full access to all relevant books and records and
employees of Raytheon to the extent required to complete their review of the
Closing Balance Sheet. Xxxx may dispute only those items reflected on the
Closing Balance Sheet which relate to Net Working Capital and the calculation of
Indebtedness and only on the basis that such amounts were not arrived at in
accordance with GAAP and the application of the Company's policies on financial
reporting consistent with those applied to the Balance Sheet, and using
substantially the same accounting methods, policies, practices and procedures
with consistent classifications, judgments, and valuation and estimation
methodologies as used in the calculation of such items on the Balance Sheet.
Xxxx shall only be entitled to dispute the Closing Balance Sheet if Xxxx'x good
faith estimate of Indebtedness and the Net Working Capital of the Company as of
the close of business on the day immediately preceding the Closing Date differs
from the Indebtedness and Net Working Capital as shown on the Closing Balance
Sheet by an amount exceeding Five Hundred Thousand Dollars ($500,000). Unless
Xxxx delivers written notice to Raytheon on or prior to the 30th day after
Xxxx'x receipt of the Closing Balance Sheet specifying in reasonable detail all
disputed items and the basis therefor (a "Dispute Notice") and the amount in
--------------
dispute exceeds Five Hundred Thousand ($500,000), Xxxx shall be deemed to have
accepted and agreed to the Closing Balance Sheet. If Xxxx
13
so notifies Raytheon of its objection to the Closing Balance Sheet, Xxxx and
Raytheon shall, within thirty (30) days following such Dispute Notice (the
"Resolution Period"), attempt in good faith to resolve their differences and any
-----------------
resolution by them as to any disputed amounts shall be final, binding and
conclusive.
(e) If at the conclusion of the Resolution Period any amounts remain in
dispute, Xxxx and Raytheon shall submit the dispute to Xxxxxx Xxxxxxxx LLP (the
"Neutral Auditor"). Each party agrees to execute, if requested by the Neutral
---------------
Auditor, a reasonable engagement letter. All fees and expenses relating to the
work, if any, to be performed by the Neutral Auditor shall be borne equally by
Raytheon and Xxxx. Using the same accounting policies and procedures used in
the preparation of the Balance Sheet, the Neutral Auditor shall act as an
arbitrator to determine, based solely on presentations by Raytheon and Xxxx, and
not by independent review, only those issues still in dispute. In no event may
the Neutral Auditor consider any issues, amounts or matters not disputed within
the thirty-day period provided in Section 2.8(d) hereof. The Neutral Auditor's
determination shall be made within sixty (60) days of its selection, shall be
set forth in a written statement delivered to Raytheon and Xxxx and shall be
final, binding, conclusive and non-appealable by the Parties. The term "Adjusted
--------
Closing Balance Sheet", as hereinafter used, shall mean the definitive Closing
---------------------
Balance Sheet agreed to by Xxxx and Raytheon in accordance with Section 2.8(d)
(including a deemed acceptance resulting from Xxxx'x failure to provide Raytheon
a Dispute Notice within the thirty-day period) or the definitive Closing Balance
Sheet resulting from the determinations made by the Neutral Auditor in
accordance with this Section 2.8(e) (in addition to those items theretofore
agreed to by Raytheon and Xxxx).
(f) The Cash Merger Consideration shall be (i) (a) increased dollar for
dollar to the extent Net Working Capital reflected in the Adjusted Closing
Balance Sheet exceeds Estimated Net Working Capital, or (b) decreased dollar for
dollar to the extent Net Working Capital reflected in the Adjusted Closing
Balance Sheet is less than Estimated Net Working Capital and (ii) (a) increased
dollar for dollar to the extent Indebtedness calculated based upon the Adjusted
Closing Balance Sheet is less than Estimated Indebtedness and (b) decreased
dollar for dollar to the extent Indebtedness calculated based upon the Adjusted
Closing Balance Sheet exceeds Estimated Indebtedness. Any adjustments to the
Cash Merger Consideration made pursuant to this Section 2.8(f) shall bear
interest from the Closing Date through the date of payment at the LIBOR Rate.
Any adjustments to the Cash Merger Consideration made pursuant to this Section
2.8(f) shall be paid by wire transfer in immediately available funds to the
account specified by the party to whom such payment is owed within five business
days after the Adjusted Closing Balance Sheet is agreed to by Xxxx and Raytheon
or any remaining disputed items are ultimately determined by the Neutral
Auditor. If Xxxx is entitled to such payment, it shall be made by Raytheon and
if Raytheon is entitled to such payment, it shall be made by the Company.
Section 2.9. Allocation of Merger Consideration.
----------------------------------
(a) The merger consideration (including the liabilities of the Company) and
all other capitalizable costs (hereinafter, the "Consideration"), to the extent
-------------
properly taken into account under Section 1060 of the Code, shall be allocated
among each of the assets of the Company in the manner set forth in an Agreement
(the "Allocation Agreement") between Raytheon and Xxxx. Xxxx and
--------------------
14
Raytheon agree that they shall use their best efforts to enter into the
Allocation Agreement prior to the Closing Date (provided that entering into such
Allocation Agreement shall not be a condition to Closing).
(b) Except as required by a Final Determination, Raytheon and Xxxx agree to
(i) be bound by the Allocation, (ii) act in accordance with the Allocation in
the preparation of financial statements and filing of all Returns (including
filing Form 8594 with its Income Tax Return for the taxable year that includes
the Closing Date) and in the course of any Tax audit, Tax review or Tax
litigation relating thereto, and (iii) take no position and cause their
affiliates to take no position inconsistent with the Allocation for federal and
state Income Tax purposes.
(c) If an adjustment is made with respect to the Cash Merger Consideration
pursuant to this Agreement, the Allocation shall be adjusted in accordance with
Code Section 1060 and the regulations promulgated thereunder, and in accordance
with the Allocation Agreement or as otherwise mutually agreed by Raytheon and
Xxxx. In the event that an agreement as to the appropriate adjustment is not
reached within thirty (30) days after the delivery of the Adjusted Closing
Balance Sheet hereto, any disputed items shall be resolved pursuant to Section
2.8(e) hereof. Raytheon and Xxxx agree to file any additional information return
required pursuant to the regulations under Code Section 1060 and to treat the
Allocation as adjusted in the manner described in Section 2.5(b).
(d) Not later than thirty (30) days prior to the filing of their respective
Forms 8594 relating to this transaction, Xxxx and Raytheon shall deliver each to
the other a copy of its Form 8594.
Section 2.10. Intercompany Account; Distributions. As of the close of
-----------------------------------
business on the day immediately preceding the Effective Time, all intercompany
receivables or payables and loans then existing between Raytheon or any Non-
Laundry Affiliate, on the one hand, and the Company and its subsidiaries, on the
other hand, shall be settled by way of capital contribution (with respect to
intercompany payables or loans due to Raytheon or any Non-Laundry Affiliate) or
by way of dividend in kind (with respect to receivables of the Company and its
subsidiaries owed by Raytheon or any Non-Laundry Affiliate). In addition, if
necessary, the Company will dividend to Raytheon sufficient Eligible Notes
Receivables such that the aggregate amount reflected in the Estimated Net
Working Capital does not exceed $12,500,000. No cash shall be distributed to
Raytheon by the Company and its subsidiaries after the close of business on the
day immediately preceding the Closing Date.
Section 2.11. Transfer of Assets. At the request of Xxxx, immediately
------------------
prior to the Effective Time, the Company shall transfer by way of a capital
contribution (the "Asset Transfer") all of its assets and liabilities to a newly
--------------
formed subsidiary Delaware limited liability company ("NewCo"). In such event,
-----
NewCo and the Surviving Entity shall be jointly and severally responsible for
all obligations of the Surviving Entity under this Agreement, and as a condition
to such transfer, NewCo shall enter into an agreement pursuant to which it
agrees to be jointly and severally liable with the Surviving Entity and to be
bound by the terms of this Agreement as if it were a party hereto. The Surviving
Entity shall bear all costs and expenses associated with such transfer.
15
Article 3
Representations and Warranties of Raytheon
------------------------------------------
As a material inducement to Xxxx and MergeCo to enter into this Agreement
and consummate the transactions contemplated hereby, Raytheon hereby represents
and warrants to Xxxx and MergeCo as follows:
Section 3.1. Incorporation; Authorization; Capitalization; Etc.
--------------------------------------------------
(a) Raytheon is a Delaware corporation in good standing under the laws of
the State of Delaware. The Company is a duly organized and validly existing
limited liability company in good standing under the laws of the State of
Delaware and is in good standing and qualified to transact business in each
jurisdiction in which the nature of property owned or leased by the Company or
the conduct of the Company's business requires it to be so qualified, except
where the failure to be in good standing or to be duly qualified to transact
business, would not, individually or in the aggregate, reasonably be expected to
have an Adverse Affect on the Company.
(b) Raytheon has all requisite power and authority (corporate and other) to
own the Interest and both Raytheon and the Company possess all requisite power
and authority (corporate and other) to execute and deliver this Agreement, all
other agreements contemplated hereby to which Raytheon and/or the Company is a
party and to consummate the transactions contemplated hereby and thereby. The
Company has all requisite power to own its properties and assets and to carry on
its business as it is now being conducted. The execution and delivery of this
Agreement, all other agreements contemplated hereby to which Raytheon and/or the
Company is a party and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
proceedings on the part of Raytheon and/or the Company, as the case may be, and
no proceedings on the part of Raytheon's stockholders are required. The
execution, delivery and performance of this Agreement by Raytheon and the
Company, all other agreements contemplated hereby to which Raytheon and/or the
Company is a party and the consummation of the transactions contemplated hereby
and thereby (other than the Asset Transfer) will not (i) violate any provision
of Raytheon's certificate of incorporation or bylaws or the Limited Liability
Company Agreement of the Company dated as of August 21, 1997 (the "Existing
--------
Operating Agreement"), in each case as in effect on the date hereof, (ii) except
-------------------
as disclosed in Schedule 3.1(b), violate, conflict with, result in a breach of
or default under any provision of, or be an event that is (or with the giving of
notice or the passage of time will result in) a violation of, a conflict with,
or a breach of or default under, or result in the acceleration of or entitle any
Person to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, or result in the imposition of any Lien upon any of
the assets or properties of the Company and its subsidiaries, pursuant to any
Contract or Order to which Raytheon, the Company or any of the Company's
subsidiaries is a party or by which it is bound, or (iii) except as listed on
Schedule 3.1(b), violate or conflict with any other material restriction of any
kind or character or any License to which Raytheon, the Company or any of the
Company's subsidiaries is subject, that, in the case of any of clauses (ii) and
(iii), would, individually or in the aggregate, reasonably be expected to
Adversely Affect Raytheon or the Company. This Agreement has been duly executed
and delivered
16
by Raytheon and the Company, and, assuming the due execution hereof by Xxxx and
MergeCo, this Agreement constitutes the legal, valid and binding obligation of
Raytheon and the Company, enforceable against Raytheon and the Company in
accordance with its terms.
(c) The Interest constitutes the entire authorized equity interest in the
Company and is owned free and clear of any Lien by Raytheon. There are no
outstanding options, warrants or other rights of any kind relating to the sale,
issuance or voting of any other equity interests or profit participation in the
Company which have been issued, granted, or entered into by Raytheon or the
Company. The Company did not violate any applicable federal or state securities
laws in connection with the offer, sale or issuance of the Interest to Raytheon.
(d) Except as set forth of Schedule 3.1(d), the Company is not the owner of
the capital stock or other equity interests in any Entity. The capital stock
and other equity interests set forth on Schedule 3.1(d) constitute the entire
authorized equity interests in the subsidiaries (except for the director's
qualifying share as required under the laws of the Republic of Argentina with
respect to Raytheon Appliances S.A.), are validly issued, fully paid and
nonassessable and are owned free and clear of any Lien by the Company. There
are no outstanding options, warrants or other rights of any kind relating to the
sale, issuance or voting of any other equity interests or profit participation
in the subsidiaries of the Company which have been issued, granted, or entered
into by the Company or the subsidiaries of the Company. Each of the
subsidiaries of the Company (i) is duly organized, validly existing and in good
standing, (ii) possesses all requisite power and authority (corporate and other)
necessary to own its properties and to carry on its business as now being
conducted and (iii) is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by the such subsidiary or the
conduct of its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business, would not,
individually or in the aggregate, reasonably be expected to have an Adverse
Affect on said subsidiary.
Section 3.2. Financial Statements. Attached hereto as Schedule 3.2 are
--------------------
true and complete copies of the audited combined balance sheet of the Commercial
Laundry Business of Raytheon, as of December 31, 1996 and 1997 and the audited
combined statements of income and cash flows for each of the three years in the
period ending on December 31, 1997, including the notes thereto (collectively,
the "Financial Statements"). The Financial Statements fairly present in all
---------------------
material respects the combined historical results and financial position of the
Commercial Laundry Business of Raytheon in each case in accordance with GAAP
except as set forth on Schedule 3.2.
Section 3.3. Undisclosed Liabilities. Except as disclosed herein, in
-----------------------
Schedule 3.3 or in the Schedules hereto, to the Company's knowledge, (i) at the
Balance Sheet Date, the Company and its subsidiaries had no obligations or
liabilities, past, present or deferred, accrued or unaccrued, fixed, absolute,
contingent or other, except as disclosed in the Balance Sheet and (ii) since the
Balance Sheet Date, neither the Company nor any subsidiary has incurred any such
obligations or liabilities, other than obligations and liabilities incurred in
the ordinary course of business consistent with past practice of the Company,
which in the case of clause (i) and (ii) above do not and, to the Company's
knowledge, could not reasonably be expected to, in the aggregate, have an
Adverse Effect on the Company.
17
Section 3.4. Properties; Sufficiency of Assets.
---------------------------------
(a) With the exception of properties disposed of since the date of the
Balance Sheet, the Company and its subsidiaries have (or will have prior to the
Closing Date) good title to, or hold by valid and existing lease or License,
free and clear of all Liens, all real and personal property and assets, tangible
or intangible (other than Intellectual Property), used by them, located on their
premises, capitalized on or included in the Balance Sheet and to all real and
personal property and assets, tangible or intangible (other than Intellectual
Property), used by them, located on their premises acquired by the Company or
its subsidiaries since the Balance Sheet Date that would, had it been acquired
prior to such date, be capitalized on or included in the Balance Sheet, except
in any of the foregoing cases for Permitted Liens and such other Liens as are
reflected or reserved against in the Balance Sheet.
(b) The assets of the Company and its subsidiaries will, at the Closing
Date, include all right, title and interest in and to all real and personal
property and assets, tangible or intangible (other than Intellectual Property
and good will attributable to Raytheon and the Non-Laundry Affiliates) used or
held by the Company and its subsidiaries in the operation of the Company and its
subsidiaries as conducted on the date hereof, are in a condition sufficient for
the conduct and business of the Company as conducted on the date hereof and,
with respect to tangible assets, the Company has no knowledge of any latent
defects with respect thereto.
(c) Schedule 3.4 attached hereto contains a complete list of all real
property owned by the Company or any of its subsidiaries (collectively, the
"Owned Real Property"). The Owned Real Property constitutes all of the fee
--------------------
simple interests in real property owned by the Company or any of its
subsidiaries. With respect to each parcel of Owned Real Property: (i) such
parcel is free and clear of all Liens (other than Permitted Liens), and the
Company, or its respective subsidiary, owns good and marketable fee simple title
thereto; (ii) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any Person the right of use or
occupancy of any portion of such parcel; and (iii) there are no outstanding
options or rights of first refusal to purchase such parcel or any portion
thereof or interest therein.
(d) Except for the Leased Real Property held pursuant to the Xxxxxxxx Lease
and the Omro Lease and an undocumented arrangement with respect to storage
facilities in Madisonville, Kentucky, neither the Company nor any of its
subsidiaries hold any Leased Real Property.
(e) There is no pending proceeding in eminent domain or any similar
proceeding affecting the Company's or any of its subsidiaries' interest in any
Owned Real Property or Leased Real Property which, individually or in the
aggregate, could reasonably be expected to have an Adverse Affect on the
Company. There exists no writ, injunction, decree, order or judgment
outstanding, nor any pending litigation, relating to the ownership, lease, use,
occupancy or operation by the Company or any of its subsidiaries of any Owned
Real Property or Leased Real Property except for such matters that would not,
individually or in the aggregate, reasonably be expected to have an Adverse
Affect on the Company.
18
(f) Except as would not, individually or in the aggregate, reasonably be
expected to have an Adverse Affect on the Company, (i) the current use of the
Owned Real Property does not violate in any material respect any instrument of
record or agreement affecting such Owned Real Property; (ii) there is no
violation of any covenant, condition, restriction, easement, agreement or order
of any governmental authority having jurisdiction over any of the Owned Real
Property that affects such real property or the use or occupancy thereof; and
(iii) no damage or destruction has occurred with respect to any of the Owned
Real Property.
Section 3.5. Intellectual Property.
---------------------
(a) Schedule 3.5(i) sets forth a complete and accurate list of all the
following owned by the Company: patents, patent applications, unfiled invention
disclosures, registered and unregistered trademarks, trademark applications,
registered trade names, corporate names, Internet domain names and service
marks. Except for rights under the Company Intellectual Property that the
Company has granted distributors pursuant to a distributorship agreement between
the Company and the distributor, Schedule 3.5(i) also contains a complete and
accurate list of all Licenses and other rights granted by the Company to any
third party with respect to the Company Intellectual Property.
(b) The Company owns or has the right to use all the Company Intellectual
Property which is material to the operation of the Company and its subsidiaries
as of both the date hereof and as of the Closing Date. The Company has used
commercially reasonable efforts to maintain and prosecute the patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications and Internet domain names set forth on Schedule 3.5(i) and has
taken all steps necessary to prevent the same from lapsing or otherwise becoming
abandoned (including, without limitation, paying all required maintenance fees).
The Company has taken all commercially reasonable steps to maintain the secrecy
and confidentiality of those trade secrets which are part of the Company
Intellectual Property.
(c) Schedule 3.5(ii) sets forth a complete and accurate list of all of the
Licenses of third party Intellectual Property to which the Company is a party,
with the exception of Licenses for computer software. All of the Licenses set
forth on Schedule 3.5(ii) are valid and enforceable. To the Company's
knowledge, the owners of any Intellectual Property licensed to the Company or
any of its subsidiaries have maintained and protected the Intellectual Property
that is subject to the Licenses identified in Schedule 3.5(ii) in accordance
with the terms and conditions of the applicable License agreement.
(d) Except as set forth on Schedule 3.5(iii), as of the date hereof, and as
of the Closing Date, (i) there exist no actual or threatened claims of
invalidity, misuse or unenforceability of the Company Intellectual Property or
infringement or misappropriation by the Company or its subsidiaries of any other
Person's Intellectual Property; (ii) to the Company's knowledge the Company
Intellectual Property has not been infringed or misappropriated by any other
Persons; and (iii) the conduct of the business of the Company after the Closing
Date in the manner the business of the Company is currently conducted will not
result in the infringement of any other Person's Intellectual Property. The
transactions contemplated by this Agreement shall have no Adverse
19
Effect on the Company's or any of its subsidiaries' right, title or interest in
and to the Company Intellectual Property listed on the Schedule 3.5(i).
(e) The Company represents and warrants that it has adopted and implemented
a commercially reasonable plan to investigate and correct any "year 2000
problems" associated with (i) the operation of the Company's business; and (ii)
the products manufactured and distributed by the Company. The Company, however,
does not represent and warrant that this plan will find and correct all "year
2000 problems" which may arise in connection with the operation of the Company's
business or the products manufactured by the Company.
(f) With respect to the Licenses identified in Schedules 3.5(i) and
3.5(ii), none of Raytheon, the Company or any of the Company's subsidiaries, and
to the Company's knowledge, no other party to any such License is in material
breach of the License or material default thereunder, and there does not exist
under any provision thereof, as of the date hereof, any event that, with the
giving of notice or lapse of time or both, would constitute such a breach or
default, except for such breaches, defaults and events as to which requisite
waivers or consents have been obtained or which would not, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the Company.
(g) The representations, warranties, and covenants set forth in this
Agreement shall not apply with respect to any patents which issue after the
Closing Date.
(h) To the extent that there is any Intellectual Property or License
omitted from Schedule 3.5(i) or Schedule 3.5(ii) and Raytheon becomes aware of
that omission within two years of the Closing Date, or Xxxx or the Surviving
Entity brings such omission to the attention of Raytheon within two years from
the Closing Date, Raytheon shall, subject to obtaining any necessary consents
(which consents Raytheon will use reasonable effort to obtain), transfer its
rights in and to such Intellectual Property or License to the Company, at
Raytheon's expense.
Section 3.6. Absence of Certain Changes. Except as disclosed on Schedule
--------------------------
3.6, in the other Schedules hereto or as otherwise contemplated by this
Agreement, since the Balance Sheet Date, (a) there has been no Adverse Change in
the financial condition of the Company except for any change resulting from
general economic, financial or market conditions and for any change resulting
from conditions or circumstances generally affecting the businesses in which the
Company operates; (b) there has been no physical damage, destruction or loss
that would reasonably be expected to have an Adverse Effect on the Company; and
(c) neither the Company nor any of its subsidiaries have (i) amended its charter
or bylaws or other organizational documents, (ii) issued (or agreed to issue)
any notes, bonds or other debt securities or any capital stock or other equity
securities or any securities convertible, exchangeable or exercisable into any
capital stock or other equity securities, (iii) discharged or satisfied any
material Lien or paid any obligation or liability, other than any such
obligations or liabilities paid in the ordinary course of business, (iv)
declared or made any payment or distribution any property (other than cash) to
its stockholders or other equity holders with respect to its capital stock or
other equity securities or purchased or redeemed any shares or any of its
limited liability company interests, (v) mortgaged or pledged any of its
properties or assets or subjected them to any material Lien (other than
Permitted Liens), (vi) sold, leased or transferred any
20
of its assets, except in the ordinary course of business and in accordance with
past practice, (vii) entered into, amended or terminated any Contract other than
in the ordinary course of business in accordance with past practice, (viii)
entered into any transaction with any Affiliate, (ix) suffered any extraordinary
losses, (x) made any guarantees for the benefit of, or any investments in, any
Person (other than the Company or a subsidiary) in excess of $500,000 in the
aggregate, or (xi) made any charitable contributions or pledges in excess of
$100,000 in the aggregate.
Section 3.7. Litigation; Orders. Except as disclosed in Schedule 3.7,
-------------------
there are no Actions pending, or to the Company's knowledge, threatened against
or affecting Raytheon, the Company or any of the Company's subsidiaries (or
pending, or to the Company's knowledge, threatened against or affecting any of
the officers of the Company or any of its subsidiaries with respect to their
businesses) that would, individually or in the aggregate, reasonably be expected
to have an Adverse Effect on the Company. Except as disclosed in Schedule 3.7,
as of the date hereof, there are no Orders against the Company or any of its
subsidiaries or their respective properties or business that would, individually
or in the aggregate, reasonably be expected to have an Adverse Effect on the
Company. Except as disclosed in Schedule 3.7, to the Company's knowledge, there
are no events or conditions which would reasonably be expected to result in an
Action against it that would, individually or in the aggregate, reasonably be
expected to have an Adverse Effect on the Company.
Section 3.8. Licenses, Approvals, Other Authorizations, Consents, Reports,
-------------------------------------------------------------
Etc. Except as disclosed on Schedule 3.8, the Company and its subsidiaries own
---
or possess all right, title and interest to all Licenses (except as relates to
Licenses under Environmental Laws) that are required in order to permit the
Company to carry on its business as it is presently conducted, except where the
failure to have such Licenses would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Company. All such
Licenses are in full force and effect, and the Company is in compliance with the
terms of such Licenses, and no loss or expiration of any such License is
pending, other than the expiration in accordance with the terms thereto, except
where the failure of such Licenses to be in full force and effect, or of the
Company to be in compliance with such Licenses, or the loss or expiration of
such Licenses, would not, individually or in the aggregate, reasonably be
expected to have an Adverse Effect on the Company.
Section 3.9. Labor Matters. Schedule 3.9 sets forth, as of the date
-------------
hereof, a list of all agreements with labor unions or associations representing
employees of the Company ("Commercial Laundry Employees"). No material work
----------------------------
stoppage against the Company is pending or, to the Company's knowledge,
threatened. The Company is not involved in or, to the Company's knowledge,
threatened with, any labor dispute, arbitration, lawsuit or administrative
proceeding relating to labor matters involving the Commercial Laundry Employees
(excluding routine workers' compensation claims) that would, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the Company.
Section 3.10. Compliance with Laws. Except as may be indicated in the
--------------------
Schedules hereto, the conduct of business by the Company and its subsidiaries
has complied and is in compliance with and has not violated and is not in
violation of any and all Laws and Orders applicable thereto, except for
violations or failures so to comply, if any, that would not reasonably be
expected to have an
21
Adverse Effect on the Company. This Section 3.10 does not relate to Employee
Benefits matters (for which Section 3.11 is applicable), Tax matters (for which
Section 3.17 is applicable) or Environmental matters (for which Section 3.16 is
applicable).
Section 3.11. Employee Benefits.
-----------------
(a) Schedule 3.11(a) lists all employee benefit plans, as defined in
Section 3(3) of ERISA, and all other deferred compensation, bonus or other
incentive compensation, stock purchase, severance pay, salary continuation for
disability or other leave of absence, supplemental unemployment benefits, layoff
or reduction in force, retention, change in control or educational assistance
plans, arrangements or policies including, but not limited to, any individual
benefit arrangement, policy or practice, in which any current or former
Commercial Laundry Employee (other than the President of the Company)
participates on the date hereof (collectively, the "Benefit Plans").
-------------
(b) The Raytheon Commercial Laundry Retirement Income Plan (the "RCL
---
Salaried Plan") and the Raytheon Commercial Laundry Pension Plan for Hourly
-------------
Employees (the "RCL Hourly Plan" and, together with the RCL Salaried Plan, the
---------------
"Commercial Laundry Retirement Plans") and each other Benefit Plan, to the
-----------------------------------
extent applicable to Commercial Laundry Employees, has been maintained and
operated in all material respects in accordance with all federal, state and
local laws applicable to such plans, and the terms and conditions of the
respective plan documents, if any, except where the failure of the Company to be
in compliance would not, individually or in the aggregate, reasonably be
expected to have an Adverse Effect of the Company.
(c) With respect to any Benefit Plan, there has been no (nor will there be
any as a result of the transactions contemplated by this Agreement) event or
condition which presents a material risk of plan termination or any other event
that may cause the Company or Xxxx to incur liability or have a Lien imposed on
its assets under the Code, ERISA or any other applicable statute.
(d) In connection with the current and former Commercial Laundry Employees
(other than the President of the Company), no party has failed to comply with
the continuation health care coverage requirements of Section 4980B of the Code
and Sections 601 through 607 of ERISA in respect of the Benefit Plans , except
where any such failure would not, individually or in the aggregate, reasonably
be expected to have an Adverse Effect on the Company.
(e) Each Benefit Plan (or its predecessor) that is intended to be qualified
within the meaning of Section 401(a) of the Code and each trust which forms a
part of any such Benefit Plan (i) has received a determination from the Internal
Revenue Service that such Benefit Plan is qualified under Section 401(a) of the
Code and that such related trust is exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of such determination that
could adversely affect the qualification of such Benefit Plan or the exemption
from taxation of such related trust and (ii) is in compliance with the
requirements of Sections 401(a)(4) and 410(b) of the Code for each plan year of
such Benefit Plan commencing on or before the Closing Date. On or before the
Closing Date, Raytheon will cause the Company to file an application for
determination with the
22
Internal Revenue Service with respect to the past 1995 amendment and restatement
of such Benefit Plan.
(f) Except as set forth on Schedule 3.11(a), none of the Benefit Plans
obligates the Company to pay any separation, severance, termination or similar
benefit solely as a result of any transaction contemplated by this Agreement.
(g) Except as set forth on Schedule 3.11(a) hereto, there are no pending or
threatened actions, suits, investigations or claims with respect to any Benefit
Plan (other than routine claims for benefits) which could result in liability to
the Company (whether direct or indirect), and the Company does not have any
knowledge of any facts which could give rise to (or be expected to give rise to)
any such actions, suits, investigations or claims.
(h) As of the Closing Date, the Company will have no liability or
obligation with respect to any "employee benefit plan" (as defined in Section
3(3) of ERISA) solely by reason of being treated as a single employer under
Section 414 of the Code with any trade, business or entity other than the
employee benefit plans that are maintained by the Company. Except as set forth
on Schedule 3.11(a), the Company does not contribute to, maintain or sponsor or
have any liability with respect to any employee benefit plan, agreement or
arrangement applicable to employees located outside the United States.
(i) With respect to each Benefit Plan, Raytheon has provided or will
provide upon request Xxxx with true, complete and correct copies of (to the
extent applicable) (i) all documents pursuant to which the Benefit Plan is
maintained, funded and administered, (ii) the most recent annual report (Form
5500 series) filed with the Internal Revenue Service (with applicable
attachments), (iii) the most recent financial statement, (iv) the most recent
actuarial valuation of benefit obligations, and (v) the most recent
determination letter received from the Internal Revenue Service and the most
recent application to the Internal Revenue Service for such determination
letter.
Section 3.12 Material Contracts.
-------------------
(a) Except as set forth on Schedule 3.12, none of the Company or its
subsidiaries is a party to any (i) management, employment or consulting
agreement requiring payments of base compensation in excess of $100,000 per
year; (ii) distributor or manufacturer's representative contract which is not
terminable on six months' (or less) notice; (iii) joint venture or similar
contract or agreement; (iv) contract that is material to its business which is
terminable by the other party thereto upon a sale of the Company; (v) note,
mortgage, indenture, guaranty, other obligation, agreement or other instrument
for or relating to any lending or borrowing (including assumed debt) of $500,000
or more relating to any properties or assets employed by the Company and its
subsidiaries; (vi) contracts for the purchase by the Company and its
subsidiaries of goods and/or services involving an estimated total future
payment or payments in excess of $1,000,000; (vii) contracts for the sale by the
Company and its subsidiaries of goods and/or services involving an estimated
total future payment or payments in excess of $1,000,000; (viii) Contract under
which the Company or any of its subsidiaries is lessee of or holds or operates
any property, real or personal,
23
owned by any other Person, except for any such Contract under which the annual
rental payments do not exceed $500,000; (ix) Contract under which the Company or
any of its subsidiaries is lessor of or permits any third party to hold or
operate any property, real or personal, owned or controlled by the Company or
any of its subsidiaries, except for any such Contract under which the annual
rental payments do not exceed $50,000; (x) any nondisclosure or confidentiality
agreements (other than those entered into in the ordinary course of business
with customers, suppliers and employees or in connection with Raytheon's sale of
the Company); (xi) power of attorney; (xii) contract or agreement prohibiting it
from freely engaging in any business or competing anywhere in the world; (xiii)
Contract with United States or state thereof Governmental Authority; or (xiv)
other Contracts entered into other than in the ordinary course of business,
involving an estimated total future payment or payments in excess of $500,000.
(b) With respect to all such Contracts, none of Raytheon, the Company or
any of the Company's subsidiaries, and to the Company's knowledge, no other
party to any such contract is in material breach thereof or material default
thereunder, and there does not exist under any provision thereof, as of the date
hereof, any event that, with the giving of notice or the lapse of time or both,
would constitute such a breach or default, except for such breaches, defaults
and events as to which requisite waivers or consents have been or are obtained
or which would not, individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Company.
(c) A true and correct copy of each of the Contracts which are referred to
on Schedule 3.12, together with all amendments, waivers or other changes thereto
or guarantees thereto has been made available to Xxxx'x special counsel.
Section 3.13. Guaranty of Obligations of the Company. Set forth on
---------------------------------------
Schedule 3.13 are all Guarantees for the benefit of the Company and its
subsidiaries under which Raytheon or any Non-Laundry Affiliate has any
obligations.
Section 3.14. Brokers, Finders, Etc. Except for the services of Credit
----------------------
Suisse First Boston Corporation ("CSFB"), neither Raytheon nor any of its
----
Affiliates has employed, nor is any of them subject to any valid claim of, any
broker, finder, consultant or other intermediary in connection with the Merger
who might be entitled to a fee or commission in connection therewith. Raytheon
is solely responsible for any fees, commissions or other payments that may be
due to CSFB by Raytheon, the Company or any subsidiary in connection with the
Merger.
Section 3.15. No Implied Representation. Notwithstanding anything
--------------------------
contained in this Article III or any other provision of this Agreement, it is
the explicit intent of each party hereto that Raytheon is not making any
representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement, including any implied warranty or
representation as to condition, merchantability, or suitability as to any of the
properties or assets employed by the Company and its subsidiaries and it is
understood that Xxxx takes the Company and its business as is and where is. It
is understood that any cost estimates, projections or other predictions
contained or referred to in the Schedules or in the offering materials that have
been provided to Xxxx are not and shall not be deemed to be representations or
warranties of Raytheon.
24
Section 3.16. Environmental Matters. Except as set forth on Schedule
---------------------
3.16:
(a) The Company and its subsidiaries are and have been in compliance with
all applicable Environmental Laws except where the failure to be in compliance
would not, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on the Company.
(b) The Company and its subsidiaries have obtained all Licenses required
under Environmental Laws for the operation of their respective businesses as
presently conducted (the "Environmental Permits") and, since January 1, 1992,
---------------------
there are and have been no violations, and no pending, or, to the knowledge of
the Company, threatened, investigations or proceedings with respect to such
Environmental Permits except where the failure to have such Environmental
Permits or where the violation, investigation or proceeding relating thereto
would not, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on the Company.
(c) Since January 1, 1992, no written notice, notification, demand, request
for information, citation, summons, complaint or Order has been received by, is
pending, or, to the knowledge of the Company, is threatened by any Person
against, the Company or any of its subsidiaries in connection with the past or
current business or facilities of the Company and its subsidiaries nor has any
penalty been assessed against the Company or any of its subsidiaries in either
case for any alleged violation of any Environmental Law or liability thereunder,
other than where such notice, notification, demand, request for information,
citation, summons, complaint or Order has been fully resolved, or where
resolution would not, individually or in the aggregate, reasonably be expected
to have an Adverse Effect on the Company.
(d) To the Company's knowledge, none of the following exists at any
property or facility currently owned or operated by the Company or its
subsidiaries: (i) underground storage tanks; (ii) friable asbestos-containing
material; (iii) materials or equipment containing polychlorinated biphenyls; or
(iv) landfills, surface impoundments, or disposal areas.
(e) None of the Company or any of its subsidiaries has treated, disposed
of, arranged for or permitted the disposal of, transported or released any
Hazardous Substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such Hazardous Substance) in a
manner that has given or gives rise to liabilities, including any liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, or any investigative, corrective or
remedial obligations, pursuant to any Environmental Laws, except for such
liabilities which would not reasonably be expected to have an Adverse Effect on
the Company.
Section 3.17. Tax Matters.
------------
(a) Each of the Company and its subsidiaries has filed all Returns that it
was required to file. All such Returns were correct and complete in all
material respects. All Taxes owed by any of the Company and its subsidiaries
(whether or not shown on any Return) have been paid. Except as provided on
Schedule 3.17(a), none of the Company and its subsidiaries currently is the
beneficiary of any extension of time within which to file any Return. All Taxes
accrued but not yet
25
due are accrued on the Closing Balance Sheet. The charges, accruals and reserves
for Taxes with respect to the Company for any Tax period (or portion thereof)
beginning on or prior to the Closing Date (excluding any provision for deferred
income taxes) reflected on the Closing Balance Sheet of the Company are adequate
to cover such Taxes.
(b) Except as provided on Schedule 3.17(b), there is no material dispute or
claim concerning any Tax liability of any of the Company and its subsidiaries
either (A) claimed or raised by any authority in writing or (B) as to which
Raytheon or the Company or its subsidiaries has knowledge based upon personal
contact with any agent of such authority.
(c) Schedule 3.17(c) (i) lists all federal, state, local, and foreign
Returns filed with respect to any of the Company and its subsidiaries for
taxable periods ended on or after December 31, 1993, (ii) indicates those
Returns that have been audited, and (iii) indicates those Returns that currently
are the subject of audit. Raytheon has delivered to Xxxx correct and complete
copies of all federal Returns, examination reports, and statements of
deficiencies assessed against, or agreed to by any of the Company and its
subsidiaries since December 31, 1993. No claim has been made by a taxing
authority in a jurisdiction where the Company or any of its subsidiaries does
not file returns that the Company or any of its subsidiaries may be subject to
taxes assessed by such jurisdiction. None of the Company and its subsidiaries
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(d) None of the Company and its subsidiaries has filed a consent under Code
(S)341(f) concerning collapsible corporations.
(e) None of the Company and its subsidiaries has made any material
payments, is obligated to make any material payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Code (S)280G.
(f) None of the Company and its subsidiaries has been a United States real
property holding corporation within the meaning of Code (S)897(c)(2) during the
applicable period specified in Code (S)897(c)(1)(A)(ii).
(g) None of the Company and its subsidiaries is a party to any tax
allocation or sharing agreement which will remain in effect after the Closing
Date.
(h) None of the Company and its subsidiaries (i) has been a member of an
Affiliated Group filing a consolidated Income Tax Return (other than a group the
common parent of which was Raytheon) or (ii) has any liability for the taxes of
any Person (other than any of the Company and its subsidiaries) under Reg.
(S)1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
Section 3.18. Insurance. Except as set forth on Schedule 3.18, none of
---------
the Company or any of its subsidiaries have any self-insurance or co-insurance
programs.
26
Section 3.19. Locations. All of the tangible assets and properties (other
---------
than tooling located at suppliers in accordance with ordinary business practice)
of the Company and its subsidiaries are located at the locations set forth on
the attached Schedule 3.19.
Section 3.20. Suppliers and Customers. Schedule 3.20 attached hereto
-----------------------
accurately sets forth a list of the top ten customers and suppliers of the
Company and its subsidiaries by dollar volume of sales and purchases,
respectively, for each of the fiscal years ended December 31, 1997 and December
31, 1996 (the customers and suppliers identified with respect to 1997 are
hereinafter referred to as the "1997 Customers" or "1997 Suppliers," as the case
-------------- --------------
may be). To the Company's knowledge, except as set forth on Schedule 3.20, the
Company has not received any written notice from any 1997 Customer to the effect
that such customer will stop, or materially decrease the rate of, buying
products of the Company or any of its subsidiaries (whether as a result of the
consummation of the transactions contemplated hereby or otherwise). To the
Company's knowledge, except as set forth on Schedule 3.20, the Company has not
received any written notice from any 1997 Supplier to the effect that such
supplier will stop, materially decrease the rate of, or materially change the
terms (whether related to payment, price or otherwise) with respect to,
supplying materials, products or services to the Company or any of its
subsidiaries (whether as a result of the consummation of the transactions
contemplated hereby or otherwise).
Section 3.21. Closing Date. The representations and warranties of Raytheon
------------
contained in this Article 3 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any certificate
delivered by, or on behalf of, Raytheon and the Company to Xxxx pursuant to this
Agreement shall be true and correct in all respects on the Closing Date as
though then made (except those which speak as of a certain date which shall
continue to be true and correct as of such date on the Closing Date), except as
affected by the transactions expressly contemplated by this Agreement and except
as expressly disclosed in writing to Xxxx by the Company prior to the Closing.
Section 3.22. Schedules. The inclusion of any item on any Schedule to this
---------
Agreement shall not be construed as an indication that such item is material in
any respect.
Section 3.23. Investment Representation. Raytheon is an "accredited
-------------------------
investor," as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and has such
--------------
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the Merger.
Article 4
Representations and Warranties of Xxxx and MergeCo
--------------------------------------------------
As a material inducement to Raytheon and the Company to enter into this
Agreement, Xxxx and MergeCo hereby jointly and severally represent and warrant
to Raytheon and the Company as follows:
27
Section 4.1. Incorporation; Authorization; Etc. Each of Xxxx and MergeCo
----------------------------------
is a duly organized and validly existing limited liability company in good
standing under the laws of the State of Delaware. Each of Xxxx and MergeCo has
all requisite power (corporate and other) to execute and deliver this Agreement
and all other agreements contemplated hereby to which Bain and/or MergeCo is a
party, to perform Xxxx'x and/or MergeCo's obligations hereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement, all other agreements contemplated hereby to which
Bain and/or MergeCo is a party, the performance of Xxxx'x and/or MergeCo's
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Managers of Bain and/or MergeCo and by the sole Member of MergeCo and no other
corporate proceedings or actions on the part of Bain and/or MergeCo, their
respective Managers or Members are necessary therefor. The execution, delivery
and performance of this Agreement, all other agreements contemplated hereby to
which Bain and/or MergeCo is a party and the consummation of the transactions
contemplated hereby and thereby will not (i) violate any provision of the
Certificate of Formation or Operating Agreement or similar organizational
documents of Bain and/or MergeCo or any of their respective Affiliates, (ii)
violate, conflict with, result in a breach of or default under any provision of,
or be an event that is (or with the passage of time will result in) a violation
of, a conflict with, or a breach of or default under, or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in the
imposition of any Lien upon or the creation of a security interest in any of
Xxxx'x and/or MergeCo's or any of their respective Affiliates' assets or
properties pursuant to, any Contract or Order to which Bain and/or MergeCo or
any of their respective Affiliates is a party or by which Bain and/or MergeCo or
any of their respective Affiliates is bound, or (iii) violate or conflict with
any other material restriction or License of any kind or character to which Bain
and/or MergeCo or any of their respective Affiliates is subject, that, in the
case of clauses (ii) and (iii), would, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on Bain and/or MergeCo or Bain
and/or MergeCo and their subsidiaries, taken as a whole, or, after giving effect
to the Merger, the Company. This Agreement has been duly executed and delivered
by Bain and MergeCo, and, assuming the due execution hereof by Raytheon and the
Company, this Agreement constitutes the legal, valid and binding obligation of
Bain and of MergeCo, enforceable against each of Bain and MergeCo in accordance
with its terms.
Section 4.2. Brokers, Finders, Etc. Neither Bain nor any of its
----------------------
Affiliates has employed, nor is any of them subject to the valid claim of, any
broker, finder, consultant or other intermediary in connection with the
transactions contemplated by this Agreement who might be entitled to a fee or
commission from Raytheon or the Company in connection with such transactions.
Section 4.3. Licenses, Approvals, Other Authorizations, Consents, Reports,
-------------------------------------------------------------
Etc. Other than the filing of the Certificate of Merger, no filing with, notice
---
to or authorization, consent or approval of, any Governmental Authority is
required to be made, filed, given or obtained by Bain or any of its Affiliates,
in connection with the consummation of the Merger except for (i) those that
become applicable solely as a result of the specific regulatory status of
Raytheon or the Company, or (ii) the failure to make, file, give or obtain which
would not, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on Bain or Bain and its subsidiaries, taken as a whole, or, after
giving effect to the Merger, the Company. Due to the ownership structure of Bain
28
and MergeCo, no filings under the HSR Act are required in connection with the
Merger and the transactions contemplated hereby.
Section 4.4. Investment Representation. Bain is an "accredited investor,"
-------------------------
as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the Merger and
operation of the Company's business. Bain confirms that Raytheon has made
available to Bain and MergeCo the opportunity to ask questions of the officers
of Raytheon and the Company and to acquire additional information about the
Company Business and the financial condition of the Company.
Section 4.5. Financing. Bain has delivered to Raytheon a true and
---------
complete copy of (i) a commitment letter obtained by Xxxx Capital, Inc. from
Xxxxxx Commercial Paper Inc. and Xxxxxx Brothers Inc. relating to debt financing
for the transactions contemplated hereby pursuant to a senior secured credit
facility; and (ii) a commitment and engagement letter obtained by Xxxx Capital,
Inc. from Xxxxxx Brothers Inc. with respect to senior subordinated debt
financing for the transactions contemplated hereby pursuant to the sale of
senior subordinated notes (collectively, the "Financing Commitments"). Executed
---------------------
copies of the Financing Commitments are attached hereto as Exhibit 4.5. Assuming
that the financing contemplated by the Financing Commitments is consummated in
accordance with the terms thereof, the funds to be borrowed and/or provided
thereunder by Bain, together with additional equity available to Bain, will
provide sufficient funds to pay the Cash Merger Consideration, plus any
adjustments to the Cash Merger Consideration and all related fees and expenses,
as well as a revolving credit facility for working capital and other general
corporate purposes. Bain is not aware of any facts or circumstances that create
a reasonable basis for Bain to believe that Bain will not be able to obtain
financing in accordance with the terms of the Financing Commitments. Bain agrees
with Raytheon that it will not waive, release, modify, rescind, terminate or
otherwise amend any of the material terms or conditions in the Financing
Commitments in a manner which could reasonably be expected to adversely affect
the ability of Bain to obtain the financing and consummate the Merger and the
transactions contemplated hereby, without the prior written consent of Raytheon.
Section 4.6. Solvency. Based in part of the representations and
--------
warranties of Raytheon contained in Article III hereof, after giving effect to
the Merger and the consummation of the other transactions contemplated by this
Agreement, the Surviving Entity: (a) will own assets the fair saleable value of
which are (i) greater than the total amount of liabilities (including contingent
liabilities) of the Surviving Entity as of the Effective Time and (ii) greater
than the amount that will be required to pay the probable liabilities of the
Surviving Entity's then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to the Surviving Entity; (b) will not have capital that will be
unreasonably small in relation to its business as presently conducted or any
contemplated; and (c) Bain does not intend to cause the Surviving Entity to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
Section 4.7. Capitalization; Subordinated Note; Prior Activities of Bain.
-----------------------------------------------------------
29
(a) At the Effective Time, Bain and its Affiliates will hold no Units other
than the Units to be issued pursuant to Section 2.6. As of the Effective Time,
all of such Units will have been duly authorized and validly issued, and will be
fully paid and nonassessable.
(b) As of the Effective Time, the Subordinated Note will have been duly
executed and delivered by the Surviving Entity and will constitute the legal,
valid and binding obligation of the Surviving Entity, enforceable against it in
accordance with its terms. The execution, delivery and performance of the
Subordinated Note will not (i) violate any provision of the Certificate of
Formation or Operating Agreement or similar organizational documents of the
Surviving Entity, or (ii) violate, conflict with, result in a breach of or
default under the terms of any financing contemplated by the Financing
Commitments.
(c) Bain has not incurred any liabilities or obligations, except those
incurred in connection with its formation or with the negotiation of this
Agreement or the performance hereof, and the financing of the Merger and the
transactions contemplated hereby. Except as contemplated by the foregoing, Bain
has not engaged in any business activities of any type or kind whatsoever.
Article 5
Covenants of Raytheon, the Company, Bain and MergeCo
----------------------------------------------------
Section 5.1. Investigation of Business; Access to Properties, Records and
------------------------------------------------------------
Employees.
----------
(a) Raytheon shall afford to representatives of Bain full access to the
offices, plants, properties, personnel, contracts, books and records (including
tax records) and other documents of or pertaining to the Company and its
subsidiaries of the Company and its subsidiaries during normal business hours,
in order that Bain may have full opportunity to make such investigations as it
desires of the affairs of the Company and its subsidiaries; provided, however,
--------- --------
that such investigation shall not (i) unreasonably disrupt the personnel and
operations of the Company and its subsidiaries or (ii) include the right to
undertake any investigations (including, without limitation, any so-called Phase
I or Phase II site assessments) into the environmental condition or
environmental compliance of the properties or business of the Company and its
subsidiaries. If, in the course of any investigation pursuant to this Section
5.1, Bain discovers any breach of any representation or warranty contained in
this Agreement or any circumstance or condition that upon Closing would
constitute such a breach, Bain covenants that it will promptly so inform
Raytheon.
(b) Any information provided to Bain or its representatives pursuant to
this Agreement shall be held by Bain and its representatives in accordance with,
and shall be subject to the terms of, the Confidentiality Agreement dated
November 7, 1997 by and between Raytheon and Xxxx Capital, Inc., which is hereby
incorporated in this Agreement as though fully set forth herein.
(c) The Surviving Entity agrees to (i) hold all of the books and records of
the Company and its subsidiaries which are customarily maintained for tax,
accounting and regulatory purposes existing on the Closing Date and not to
destroy or dispose of any thereof for a period of seven (7) years from the
Closing Date or such longer time as may be required by law, and thereafter, if
it
30
desires to destroy or dispose of such books and records, to offer first in
writing at least sixty (60) days prior to such destruction or disposition to
surrender them to Raytheon and (ii) following the Closing Date to afford
Raytheon, its accountants and counsel, during normal business hours, upon
reasonable request, full access to such books, records and other data and to the
employees of the Surviving Entity and its subsidiaries to the extent that such
access may be requested for any legitimate purpose, including without limitation
responding to Governmental Authorities, defending or prosecuting litigation,
preparation of Income Tax Returns and other tax filings, at no cost to Raytheon
(other than for reasonable out-of-pocket expenses); provided, however, that
--------- --------
nothing herein shall limit any of Raytheon's rights of discovery. Bain shall
have the same rights, and Raytheon the same obligations, as are set forth above
in this Section 5.1(c), with respect to any material non-privileged records of
the Surviving Entity and its subsidiaries that are retained by Raytheon, with
the exception of Returns relating to Taxes that are not the responsibility of
Bain.
Section 5.2. Best Efforts; Obtaining Consents.
---------------------------------
(a) Subject to the terms and conditions herein provided, each of Raytheon
and Bain agrees to use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable, the
transactions contemplated by this Agreement and to cooperate with the other in
connection with the foregoing, including using its best efforts (i) to obtain
all necessary waivers, consents and approvals from other parties to material
Contracts, (ii) to obtain all consents, approvals and authorizations that are
required to be obtained under any Law, (iii) to lift or rescind any Order
adversely affecting the ability of the parties hereto to consummate the Merger
and the other transactions contemplated hereby, (iv) to effect all necessary
registrations and filings including filings under the HSR Act and submissions of
information requested by Governmental Authorities, and (v) to fulfill all
conditions to this Agreement (it being understood that such best efforts shall
not include any requirement of Raytheon or Bain to expend material sums of money
or grant any material financial or other accommodation (other than as
contemplated hereby)). Raytheon and Bain further covenant and agree, with
respect to a threatened or pending Order or Law that would adversely affect the
ability of the Parties hereto to consummate the Merger and the other
transactions contemplated hereby, to use their respective best efforts to
prevent the entry, enactment or promulgation thereof, as the case may be (it
being understood that such best efforts shall not include any requirement of
Raytheon or Bain to expend material sums of money or grant any material
financial or other accommodation (other than as contemplated hereby)).
(b) In case at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Section 5.2, the proper officers
and/or directors of the Surviving Entity or any of its Affiliates shall take all
such reasonably necessary action.
(c) Each Party hereto shall promptly inform the other of any material
communication from any Governmental Authority regarding any of the transactions
contemplated hereby. If any Party or any Affiliate thereof receives a request
for additional information or documentary material from any such Governmental
Authority with respect to the transactions contemplated hereby, then such Party
will endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other Party, an appropriate response
in compliance with
31
such request. Bain and MergeCo will advise Raytheon promptly in respect of any
understandings, undertakings or agreements (oral or written) which Bain or
MergeCo proposes to make or enter into with any Governmental Authority in
connection with the transactions contemplated hereby.
Section 5.3. Further Assurances. Raytheon, Bain and the Surviving Entity
------------------
agree that, from time to time, whether before, at or after the Closing Date,
each of them will execute and deliver such further instruments and take such
other action as may be reasonably required or desirable to carry out the
purposes and intent of this Agreement, including, without limitation: (i)
allocating rights and obligations under Contracts and other arrangements, if
any, relating to business of Raytheon and the Non-Laundry Affiliates, on the one
hand, and relating to the Company and its subsidiaries on the other, (ii)
ensuring that all of the Company Intellectual Property is or has been properly
assigned to the Company and that all Licenses of Company Intellectual Property
are or have been properly assigned to the Company and (iii) entering into a
transitional services agreement reasonably satisfactory to Raytheon and Bain for
a period not to exceed three months for no consideration (other than
reimbursement of Raytheon's costs and expenses) providing for the provision of
certain services to be reasonably agreed to by the Parties. In case at any time
after the Closing Date, any further action is reasonably necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of each Party to this Agreement shall take all such reasonably necessary or
desirable action. Without limiting the generality of the foregoing, when
requested by Raytheon or its Affiliates, Bain shall use its reasonable efforts
to cause the Company or one its Affiliates to be substituted in all respects for
Raytheon or any Non-Laundry Affiliate, effective as of the Closing Date, in
respect of all obligations of Raytheon or any Non-Laundry Affiliate under any
Guaranty such that, from and after the Closing Date, Raytheon and the Non-
Laundry Affiliate shall cease to have any obligation whatsoever arising from or
in connection with any such Guaranty (other than in connection with the RAYCAR
Facility and the RAYCAF Facility).
Section 5.4. Conduct of Business. From the date hereof through the
--------------------
Closing, except as disclosed on Schedule 5.4 otherwise provided for in, or
contemplated by, this Agreement, and, except as consented to or approved by Bain
in writing (which consent shall not be unreasonably withheld or delayed),
Raytheon covenants and agrees that:
(a) Raytheon shall cause the Company to (i) operate its business in
the ordinary and usual course in all material respects in accordance with past
practices; (ii) carry on its business in the same manner as presently conducted
and use its reasonable efforts to keep its organization and properties intact,
including its present business operations, physical facilities, working
conditions and employees and its present relationships with lessors, licensors,
suppliers and customers and others having business relations with it; (iii) take
all necessary steps to maintain and prosecute the patents, patent
applications,trademarks, trademark applications, service marks, service xxxx
applications and Internet domain names identified on Schedule 3.5(i) and take
all steps necessary to prevent the same from lapsing or otherwise becoming
abandoned; (iv) maintain the prosecution or defense (as applicable) of claims or
lawsuits identified on Schedule 3.5(iii); and (v) as requested by Bain confer on
a regular and reasonable basis with Bain to report on operational matters and
the general status of ongoing operations.
32
(b) except as required by Law, Contract or the terms of a Benefit Plan
existing on the date hereof, Raytheon shall not permit the Company or any of its
subsidiaries hereafter to (i) increase the base compensation of, or enter into
any new bonus or incentive agreement or arrangement not consistent with the
Company's policies respecting such agreements with, any of the senior management
employees employed by the Company; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit to any such employee, whether
past or present not otherwise required by Contract or under any employee benefit
plan in effect on the date hereof; (iii) enter into any express new employment,
severance, consulting or other compensation agreement with any such employee; or
(iv) commit itself to any pension, profit sharing, deferred compensation, group
insurance, severance pay, retirement or other employee benefit plan, fund or
similar arrangement in addition to those in effect on the date hereof and
intended exclusively for employees of the Company and its subsidiaries, or amend
or commit itself to amend any of such plans, funds or similar arrangements in
existence on the date hereof intended for the benefit of the Company's employees
generally if the effect thereof would exclusively benefit employees of the
Company; provided, however, that bonuses, severance payments or other incentives
--------- --------
committed to in connection with or in contemplation of the Merger or a similar
transaction as set forth on Schedule 5.4(b) may be paid by Raytheon or the
Company at or prior to Closing;
(c) Raytheon shall not permit the Company or any of its subsidiaries
hereafter to (i) assume, incur or guarantee, except in the ordinary course of
business consistent with past practice, any obligation for borrowed money, (ii)
cancel or compromise, except in the ordinary course of business consistent with
past practice, any debts owed to it, (iii) waive or release any rights of
material value (except in the ordinary course of business consistent with past
practice), (iv) close any plants or any other material facilities or (v) except
for purposes of transferring cash and liquidating intercompany accounts, declare
any dividend or make any distribution with respect to its equity interests;
(d) Raytheon shall not permit the Company hereafter to (i) sell,
transfer, distribute as a dividend in kind or otherwise dispose of any material
asset (other than inventory or the sales of receivables, in each case in the
ordinary course of business consistent with past practice), (ii) create or
permit to exist any new material Lien on its assets (other than a Permitted
Lien), (iii) enter into any joint venture, partnership or other similar
arrangement or form any other new material arrangement for the conduct of its
business, (iv) except in the ordinary course of business, purchase any asset,
(v) take any action that would require disclosure under Section 3.6, (vi) except
in the ordinary course of business consistent with past practices, terminate or
modify any Contract required to be disclosed on Schedule 3.12 or any License,
(vii) except in the ordinary course of business consistent with past practices,
enter into any new or amend any existing, material Contracts, or (ix) institute
any material change in the conduct of its business or in its method of purchase,
sale, lease, management, marketing, operation or accounting; and
(e) On or as soon as reasonably practicable after the Closing, the
Surviving Entity shall obtain and utilize with respect to its operation of the
Surviving Entity a new EPA identification number (and to the extent required,
new State and local identification numbers) for the generation of Hazardous
Substances disposed of on or after the Closing Date.
33
Section 5.5. Public Announcements. Raytheon and Bain will consult with
--------------------
each other before issuing, or permitting any agent or Affiliate to issue, any
press releases or otherwise making or permitting any agent or Affiliate to make,
any public statements with respect to this Agreement and the transactions
contemplated hereby, and, except as may be required by applicable law or any
listing agreement with any securities exchange, will not issue any such press
release or make any such public statement, unless the text of such statement
shall have been agreed upon by the parties.
Section 5.6. Use of Raytheon Name. From and after the Closing, except for
--------------------
purposes of announcing the Merger or responding reasonably to inquiries with
respect thereto, the Surviving Entity shall not and shall not permit its
subsidiaries to use or permit the use of the names or marks "Raytheon", "RTN",
any trademark or trade name owned or controlled by Raytheon or an Affiliate of
Raytheon (except for trademarks or trade names owned or controlled by the
Company and its subsidiaries), or any trademarks or trade names confusingly
similar thereto, nor shall the Surviving Entity use or permit the use of such
names and marks in connection with the operation or disposition of the Surviving
Entity and its subsidiaries or the proceeds thereof; provided, however, that (i)
for a period of sixty (60) days, the Surviving Entity may make use of
promotional and sales literature possessed by the Company and its subsidiaries
at Closing, provided that such literature is stickered or otherwise marked to
indicate the change of ownership, and (ii) nothing in this Section 5.6 shall
require the amendment of any Contracts nor limit, where relevant, any accurate
and complete statement of facts concerning ownership of the Company prior to the
Closing in any Action or in any filing with a Government Authority.
Section 5.7. Notice of Material Developments: Each Party will give prompt
-------------------------------
written notice to the other Parties when such Party becomes aware of any (i)
representation or warranty of such Party contained in this agreement which was
true as of the date hereof but which has subsequently become untrue in any
material respect, (ii) breach of any covenant hereunder by any such Party and
(iii) any other material development affecting the ability of any such Party to
consummate the transactions contemplated by this Agreement.
Section 5.8. Exclusivity. Until consummation of the transaction
-----------
contemplated hereby or termination of this Agreement pursuant to Article XI,
none of the Company, Raytheon or any of their respective subsidiaries,
Affiliates, representatives, officers, employees, directors, or agents will,
directly or indirectly, (i) submit, solicit, initiate, encourage or discuss any
proposal or offer from any Person or enter into any agreement or accept any
offer relating to any (a) reorganization, liquidation, dissolution or
refinancing of the Company or any of its subsidiaries, (b) merger or
consolidation involving the Company or any of its subsidiaries, (c) purchase of
sale of any assets or capital stock of the Company or any of its subsidiaries
(other than a purchase or sale of assets in the ordinary course of business
consistent with past practice) or (d) similar transaction or business
combination involving the Company or any of its subsidiaries or the assets of
any of them (each of the foregoing actions described in clauses (a) through (d),
a "Company Transaction") or (ii) furnish any information with respect to, assist
-------------------
or participate in or facilitate in any other manner any effort or attempt by any
Person to do or seek to do any of the foregoing. The Company and Raytheon agree
to notify Bain promptly if any Person makes any proposal, offer, inquiry or
contact with respect to a Company Transaction.
34
Section 5.9. Receivable Financing Facilities and Other Receivables
-----------------------------------------------------
Obligations.
-----------
(a) From and after the Closing Date until such time as a Change of Control
(as defined in the Subordinated Note), Raytheon shall indemnify and hold
harmless the Surviving Entity from and against any amounts paid by the Surviving
Entity in respect of the purchase of loans that are outstanding on the date
hereof relating to Other Receivables Obligations; provided, however, that until
-------- -------
such time as the Surviving Entity has made cash payments after the Closing Date
(a "Company Payment") in excess of $2,000,000 in respect of such Other
---------------
Receivables Obligations (after giving effect to all related Recoveries (as
defined below)), Raytheon shall only be required to indemnify and hold harmless
the Surviving Entity from and against fifty percent (50%) of a Company Payment;
provided, further, however, that to the extent the aggregate Company Payments
-------- ------- -------
(after Recoveries) exceed $500,000 (but are less than $2,000,000), Raytheon
shall transfer to the Surviving Entity the entire Company Payment in cash and
fifty percent (50%) of such payment by Raytheon shall be deemed to be an advance
by Raytheon to the Surviving Entity, which advance shall bear interest at 13%
per annum (which interest shall be payable in kind), compounded annually
(collectively, the "Advances"). The Advances, together with all interest
--------
thereon, shall be paid in full on the earliest to occur of (i) the seventh
anniversary of the Closing Date, or (ii) when the Subordinate Note is paid in
full.
After a Change of Control, Raytheon shall indemnify and hold harmless the
Surviving Entity (if it shall survive such Change of Control) or the Person
formed by or surviving any consolidation or merger, or to which a sale of assets
have been made, from and against any amounts paid by the Surviving Entity in
respect of the purchase of loans that are outstanding on the date hereof
relating to Other Receivables Obligations; provided, however, that until such
-------- -------
time as the Surviving Entity or such Person has made cash payments after the
date of the Change of Control (a "Company Payment") in excess of $2,000,000 in
---------------
respect of such Other Receivables Obligations (after giving effect to all
related Recoveries), Raytheon shall only be required to indemnify and hold
harmless the Surviving Entity or such Person from and against fifty percent
(50%) of a Company Payment. In addition, the references to the Surviving Entity
in the rest of this Section shall be deemed to refer to the Person formed by or
surviving any consolidation or merger, or to which a sale of assets have been
made.
(b) From and after the Closing Date, Raytheon shall indemnify and hold
harmless the Surviving Entity and its subsidiaries from and against any and all
obligations and liabilities under Sections 1.8 and 8.1 of the RAYCAR Facility
(other than any such obligation or liability resulting from RAYCAR's or the
Company's breach after the Closing Date of its representations, warranties,
covenants and agreements under the RAYCAR Facility and the Sale Agreement (as
defined in the RAYCAR Agreement)) in respect of Receivables (as defined in the
RAYCAR Facility) which have been sold to the purchasers under the RAYCAR
Facility on or prior to the Closing Date. The Parties hereto agree that the
Closing Date shall constitute a Termination Date under the RAYCAR Facility and
that the Surviving Entity shall not and shall not permit RAYCAR to sell any
additional Receivables under the RAYCAR Facility or the related Receivable Sales
Agreement. Any Recoveries with respect to any such Receivable transferred as
part of the RAYCAR Facility for which the Surviving Entity has received an
indemnification payment shall be applied in accordance with paragraph (f) below.
35
(c) From and after the Closing Date, Raytheon shall indemnify and hold
harmless the Surviving Entity and its subsidiaries from and against any and all
obligations and liabilities under Sections 1.5 and 8.1 of the RAYCAF Facility
(other than any such obligation or liability resulting from RAYCAF's or the
Company's breach after the Closing Date of its representations, warranties,
covenants and agreements under the RAYCAF Facility or the Sale Agreement (as
defined in the RAYCAF Agreement)) in respect of Receivables (as defined in the
RAYCAF Facility) which have been sold to the purchasers under the RAYCAF
Facility on or prior to the Closing Date. The Parties hereto agree that the
Closing Date shall constitute a Facility Termination Date under the RAYCAF
Facility and that the Surviving Entity shall not, and shall not permit RAYCAF
to, sell any additional receivables under such facility. Any Recoveries with
respect to any such Receivable transferred as part of the RAYCAR Facility for
which the Surviving Entity has received an indemnification payment shall be
applied in accordance with paragraph (f) below.
(d) From and after the Closing Date, the Surviving Entity shall indemnify
and hold harmless Raytheon from and against any and all payments made by
Raytheon under the Performance Guarantees to the extent such payment results
from RAYCAF's or RAYCAR's, as the case may be, or the Company's breach after the
Closing Date of its representations, warranties, covenants and agreements under
the Receivables Financing Facilities or the related Receivable Sales Agreements.
(e) The Surviving Entity shall, and shall cause each of RAYCAR and RAYCAF
to, use its reasonable best efforts to service the loans and receivables in
accordance with past custom and practice (including, without limitation,
foreclosure, repossession and remarketing). In addition, and without intending
to limit the generality of the foregoing, (i) the Surviving Entity agrees that
is shall not, and it shall not permit any subsidiary to, waive, release, modify,
rescind, terminate or otherwise amend any of the terms of the RAYCAR Facility or
the RAYCAF Facility or any Contract entered into in connection with any Other
Receivables Financing or otherwise increase its recourse with respect thereto
without obtaining the prior written consent of Raytheon; and (ii) the Surviving
Entity shall, and shall cause each of RAYCAR and RAYCAF to, comply in all
material respects with its covenants and agreements under, and shall, and shall
cause each of RAYCAR and RAYCAF to, use its reasonable best efforts to maintain
the accuracy of the representations and warranties included in, the Receivables
Financing Facilities and the related Receivables Sales Agreements.
(f) The Parties intend that Raytheon and the Surviving Entity will settle
any amounts owed to each other on a quarterly basis and to calculate amounts
owing under each Receivables Financing Facility and the Other Receivables
Obligations as separate obligations (each a "Tranche"). In this regard, if in
-------
any quarter there is a Surplus (as defined below) under a Tranche and Raytheon
has made payments under this Section 5.9 or a Performance Guarantee in respect
of such Tranche for which it has not been reimbursed, the Surviving Entity shall
pay over to Raytheon such Surplus (provided that such payment shall not exceed
Raytheon's unrecovered payments in respect of such Tranche). If after giving
effect to such payment there continues to be a Surplus, the Surplus shall be
carried forward to future quarters and applied against any payments for which
the Surviving Entity is entitled to indemnification under this Section 5.9 in
respect of such Tranche. If there is a
36
Deficit in any quarter (after giving effect to any Surplus in effect at the
beginning of such quarter), Raytheon shall pay an amount equal to such Deficit
to the Surviving Entity.
In order to implement the indemnification provisions set forth above, for
so long as the Surviving Entity or any of its subsidiaries has obligations and
liabilities outstanding with respect to the Receivables Financing Facilities or
Other Receivables Obligations, the Surviving Entity shall supply to Raytheon on
or before the fifteenth of January, April, July and October (or the next
business day if the fifteenth is not a business day), a report for each Tranche
(the "Quarterly Report") that sets forth in reasonable detail, (i) the payments,
----------------
if any, made by the Company, RAYCAR or RAYCAF during the immediately preceding
quarter for which the Surviving Entity is entitled to indemnification under this
Section 5.9 and, if the Surviving Entity is not entitled to full indemnification
in respect of such payment as a result of the proviso in paragraph (a) above,
the amount Raytheon is required to indemnify the Surviving Entity (after such
adjustment, if any, the "Reimbursable Payments"); (ii) the amount, if any,
---------------------
received by the Surviving Entity or one of its subsidiaries during such quarter
as a result of any recovery (a "Recovery") in respect of any defaulted loan or
--------
receivable or any collateral with respect to such loan or receivable (including,
without limitation, as a result of (1) collecting on any guaranty or other
credit assurance with respect to such loan, (2) a sale or refinancing of such
loan or receivable, (3) a sale of equipment and other property that was secured
by, or was purchased with the proceeds of, a previously defaulted loan or (4) a
remarketing of such equipment or the store at which the equipment and other
property is located); (iii) if during such quarter the aggregate Reimbursable
Payments made during such quarter exceed the sum of (1) the aggregate Recoveries
received during such quarter plus (2) the amount of the Surplus, if any, in
effect at the beginning of such quarter, the net amount payable by Raytheon (the
"Deficit"); (iv) if during such quarter, the aggregate Recoveries exceed the
-------
aggregate Reimbursable Payments (a "Surplus"), and if the aggregate payments
-------
made by Raytheon pursuant to this Section 5.9 or pursuant to the Performance
Guarantees ("Raytheon Payments") exceed the aggregate amounts paid to Raytheon
-----------------
by the Surviving Entity under this Section 5.9 ("Raytheon Reimbursements"), the
-----------------------
net amount payable to Raytheon; (v) the amount of the aggregate Surplus at the
end of such quarter (if any); (vi) the aggregate amount of Raytheon Payments
made with respect to such Tranche and, with respect to the Other Receivables
Obligations, the aggregate outstanding Advances (plus interest accrued through
the end of the quarter); and (vi) such other information as Raytheon may
reasonably request. If Raytheon has made a payment on a Performance Guarantee
it will, on or before the fifth day of January, April, July and October, provide
written notice to the Surviving Entity setting forth the amount of any such
payment and the Receivables Finance Facility to which it relates.
Not later than the last business day of January, April, July and October,
with respect to each Tranche, (i) if there is a Deficit, Raytheon shall make a
cash payment to the Surviving Entity in an amount equal to the Deficit; and (ii)
if (1) there is a Surplus and (2) the Raytheon Payments exceed the Raytheon
Reimbursements, the Surviving Entity shall make a cash payment to Raytheon in an
amount equal to the Surplus (provided that in no event shall such payment be
greater than the unrecovered Raytheon Payments). Notwithstanding the foregoing,
any Surplus with respect to the Other Receivables Financing shall be paid in the
following order of priority: (i) first, to Raytheon until such time as the
-----
Raytheon Payments for which Raytheon has not been repaid is equal to $250,000;
(ii) second, as repayment of principal and interest under the Advances until
------
such time as
37
no amounts remain outstanding in respect of the Advances; (iii) third,
-----
one-half to Raytheon and one-half to the Surviving Entity until Raytheon
has been reimbursed for all Raytheon Payments with respect to Other Receivables
Obligations; and (iv) fourth, to be retained by the Surviving Entity to be
------
applied against any future losses. If on any payment date, Raytheon is
obligated to pay the Surviving Entity in respect of one Tranche and the
Surviving Entity is obligated to pay Raytheon in respect of another Tranche,
then, on such date, the obligations to remit payments shall be automatically
satisfied by the party by whom the larger aggregate amount would have been
payable paying the other party an amount equal to the excess of the larger
aggregate payment over the smaller aggregate payment.
(g) Raytheon and the Surviving Entity shall attempt in good faith to
resolve any differences relating to the calculation of the amounts set forth in
Raytheon's notice or in a Quarterly Report. In order to assist in such process,
the Surviving Entity shall provide Raytheon and Raytheon's authorized
representatives with reasonable access to the books, records and employees of
the Surviving Entity and its subsidiaries to the extent reasonably required to
enable Raytheon to determine the accuracy of a Quarterly Report.
(h) If, as a result of the foregoing provisions, Raytheon has indemnified
the Surviving Entity in respect of a defaulted loan or receivable, and the
Surviving Entity or one of its subsidiaries has not made a Recovery in respect
of such loan or receivable within 270 days of its default, the Surviving Entity
or such subsidiary shall, at Raytheon's option and for no additional
consideration, assign all of its rights and interest in and to such loan to
Raytheon or its designee.
(i) Satisfaction of Raytheon's or the Surviving Entity's obligations set
forth in this Section 5.9 shall be a condition precedent to the other party's
indemnification obligations under this Section 5.9.
(j) The Surviving Entity shall be entitled to assign its rights under this
Section 5.9 to any assignee of all or substantially all of its assets or to
another entity resulting from a merger or consolidation, provided that the
Person formed by or surviving any such consolidation or merger, or to which such
sale shall have been made shall, as a condition to the assignment of this
Section 5.9 shall assume all the obligations of the Surviving Entity under this
Section 5.9 pursuant to an instrument in a form reasonably satisfactory to the
Raytheon.
(k) Raytheon shall use its reasonable best efforts to increase the RAYCAF
Facility prior to the Closing Date.
Section 5.10. Warranty Obligation. The Company covenants and agrees that
-------------------
it will honor fully and perform diligently all of its product warranty, guaranty
and product return obligations express or implied which arise from or are
related to products manufactured or services provided by the Company or any of
its subsidiaries prior to the Closing, including, with respect to products
manufactured for or services provided to any Non-Laundry Affiliate or any
division of Raytheon.
Section 5.11 Noncompetition. As a condition precedent to Xxxx to enter
into and perform its obligations under this Agreement, Raytheon agrees that for
a period of five (5) years after date
38
hereof (the "Restricted Period"), none of Raytheon or any subsidiary of Raytheon
-----------------
(the "Raytheon Group"), will engage directly or indirectly in competition with
--------------
the Surviving Entity, whether individually or as a consultant, partner, owner or
stockholder owning more than five percent (5%) of an Entity, in the business of
manufacturing and selling commercial laundry and dry cleaning equipment and the
operation of commercial laundromats and dry cleaners anywhere in the world (the
"Restricted Business"). Notwithstanding the foregoing, nothing herein shall
-------------------
prohibit any member of the Raytheon Group from (a) owning, directly or
indirectly, less than five percent 5% of any class of securities listed on a
national securities exchange or traded publicly in the over-the-counter market,
(b) directly or indirectly acquiring a business which engages in the Restricted
Business (a "Competitive Business") if such Competitive Business is 10% or less
--------------------
(measured by net revenues) of a larger business so acquired by such member of
the Raytheon Group (so long as such Competitive Business has $30 million or less
in net revenues), or (c) acquiring a Competitive Business if such business is
more than 10% (measured by net revenues) of a larger business so acquired by
such member of the Raytheon Group (or if such Competitive Business has more than
$30 million in net revenues), provided that such member of the Raytheon Group
places such Competitive Business for sale promptly after its acquisition and
uses reasonable commercial efforts to complete such sale within the Restricted
Period. Notwithstanding the foregoing, it is understood that the Raytheon Group
shall be permitted to manufacture and sell to the US Government products
associated with dry cleaning of natural and manmade fabrics, textiles, furs and
leathers. Moreover, nothing in this section is intended to nor shall it preclude
the Raytheon Group from engaging in the business of operating and/or selling
equipment which uses CO\\2\\ dry cleaning technology to clean products other
than natural and manmade fabrics, textiles, furs and leathers, e.g.,
semiconductor devices and machine parts.
Section 5.12. Nonsolicitation. Raytheon agrees that for a period of two
---------------
(2) years after the date hereof (the "Nonsolicitation Period"), Raytheon shall
----------------------
not (i) induce or attempt to induce any employee of the Surviving Entity to
leave the employ of the Surviving Entity, or in any way interfere with the
relationship between the Surviving Entity and any employee thereof, (ii) hire at
any time during the Nonsolicitation Period, directly or through another Entity,
any of the persons listed on Schedule 5.12; provided, however, that the
-------- -------
restrictions on the hiring of these persons shall not apply to those persons
whose employment at the Surviving Entity has been terminated by the Surviving
Entity during the Nonsolicitation Period, or (iii) induce or attempt to induce
any customer, supplier, licensee or other business relation of the Surviving
Entity to cease doing business with the Surviving Entity.
Section 5.13. Regulation S-X. Raytheon shall furnish or shall cause C&L
--------------
to furnish to Xxxx, (i) the Financial Statements (provided that for purposes of
this Section 5.13, such Financial Statements shall be in a form meeting the
requirements of Regulation S-X under the Securities Act), and (ii) reviewed
combined financial statements for the Commercial Laundry Business of Raytheon
for the three-month periods ending March 31, 1998 and 1997 prepared in
accordance with GAAP and in a form meeting the requirements of Item 301 of
Regulation S-K of the Securities Act (and, in each case, use reasonable best
efforts to obtain the consent of C&L to the use of their reports thereon, if
any); provided, however, that, prior to the Closing Date, Xxxx shall reimburse,
-------- -------
and after the Closing Date the Surviving Entity shall reimburse, Raytheon for
its reasonable out-of-pocket expenses incurred in connection with its compliance
with this Section 5.13 (which reimbursement
39
obligation will survive termination of this Agreement pursuant to Section 11.1);
provided further that such reimbursement obligation shall not extend to any
-------- -------
services that would ordinarily be provided by C&L to Raytheon and its
subsidiaries. Raytheon shall provide (or cause C&L to provide) the Financial
Statements referred to in clause (i) above no later than 30 days after the
execution of this Agreement and the financial statements referred to in clause
(ii) above on or prior to the later of (i) May 15, 1998 or (ii) 45 days after
Closing. Xxxx and Raytheon acknowledge and agree that time is of the essence in
the performance of the provisions of this Section 5.13.
Section 5.14. Lines of Business. For so long as Raytheon or any of its
------------------
Affiliates continues to hold an equity interest in the Surviving Entity, the
Surviving Entity shall give Raytheon at least sixty days notice prior to
selling, marketing, advertising, distributing or servicing home laundry products
and related service parts in the home retail distribution market, anywhere in
the United States of America.
Article 6
Employees, Employee Benefits and Other Transitional Matters
-----------------------------------------------------------
Section 6.1 Retention of Employees.
----------------------
(a) The Surviving Entity shall continue in employment as of the Closing
Date (or, in the case of employees within clauses (ii) and (iii), as of the date
of their commencement of or return to active employment) (i) all employees on
the Company's active payroll on the Closing Date, (ii) all persons who are
subject to outstanding employment offers from the Company at the Closing Date
and (iii) any employee not on the Company's active payroll on the Closing Date
on account of an approved leave of absence or short-term disability leave (but
excluding those on long-term disability leave) if such employee returns to
active employment with the Surviving Entity immediately upon the conclusion of
any such leave of absence or within the period required by Law (all employees
continuing such employment being "Continuing Employees"). Such continued
--------------------
employment and the benefits to be provided to the Continuing Employees shall
recognize the date of hire and time of service with the Company and its
Affiliates and predecessors for all purposes unless inconsistent with another
provision of this Article. Nothing contained herein shall confer upon any
Continuing Employee the right to continued employment by the Surviving Entity
for any period of time.
(b) The Surviving Entity agrees that, from the Closing Date until December
31, 1998 (the "Benefits Maintenance Period"), with respect to Continuing
---------------------------
Employees, the Surviving Entity shall (i) maintain the Commercial Laundry
Retirement Plans in effect without any material reduction in the aggregate
benefits thereunder and (ii) provide at least the same pay and comparable
benefits as those in effect on the Closing Date, in the aggregate, to the
compensation paid by the Company and to the benefits provided to such employees
under the Benefit Plans; provided, however, that with respect to any Benefit
-------- -------
Plan that is a severance plan or arrangement, there shall be no change adverse
to any Commercial Laundry Employee during the Benefits Maintenance Period.
40
(c) The Surviving Entity agrees that, for a period of 60 days after the
Closing Date, it will not cause any of the Continuing Employees to suffer
"employment loss" for purposes of the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. (S)(S)2101-2109, and related regulations (the "WARN
----
Act") if such employment loss could create any liability for Raytheon or any
---
Non-Laundry Affiliate, unless the Surviving Entity delivers notices under the
WARN Act in such a manner and at such a time that Raytheon bears no liability
with respect thereto.
Section 6.2. Investment Plans.
----------------
(a) Raytheon will not be obligated to make any contribution with respect to
a participant in the Raytheon Savings and Investment Plan (the "RAYSIP Plan") or
-----------
the Raytheon Stock Ownership Plan (the "RAYSOP Plan" and, together with the
-----------
RAYSIP Plan, the "Investment Plans") with respect to compensation earned by
----------------
Commercial Laundry Employees on or after the Closing Date and no participant
shall be eligible to make any contributions to the RAYSIP Plan on or after the
Closing Date. The Continuing Employees shall be fully vested as of the Closing
Date in their respective account balances under the Investment Plans. Raytheon
shall cause the account balances held under the RAYSOP Plan to be distributed to
the Continuing Employees after the Closing Date in accordance with the terms of
such Plan on the basis that the employment of each such person with Raytheon
terminated as of the Closing Date.
(b) The Surviving Entity agrees to establish a defined contribution plan
that is qualified under Section 401(a) of the Code (the "Target Plan"),
-----------
effective within 90 days after the Closing Date. As soon as practicable after
the establishment of the Target Plan, Raytheon agrees to cause the trustee of
the RAYSIP Plan to transfer to the trustee of the Target Plan an amount equal to
the account balances, including without limitation, outstanding participant
loans, in the RAYSIP Plan attributable to the Continuing Employees, whether or
not such employees remain in employment with the Surviving Entity as of the date
of transfer, valued as of the date of the transfer. Before the expiration of
the remedial amendment period that applies under Section 401(b) of the Code to
the Target Plan for determination of its initial qualification under Section
401(a) of the Code, the Surviving Entity shall apply for a determination by the
Internal Revenue Service to the effect that the Target Plan satisfied the
requirements for qualification under Section 401(a) of the Code, and the
Surviving Entity shall take all reasonable actions to ensure continued
qualification of the Target Plan under Section 401(a) of the Code.
Section 6.3. Retention Plans. Attached as Schedule 6.3 is a description
---------------
of the Company's employee retention plans (the "Retention Plans"). The Surviving
---------------
Entity agrees continue to maintain the Retention Plans for those Commercial
Laundry Employees (and former Commercial Laundry Employees) covered thereby at
the Closing Date and to cause the Surviving Entity to pay all amounts to which
any such individuals may become entitled thereunder after the Closing Date. The
Cash Merger Consideration is intended to reflect an equal division of the
payments due after the date hereof under the Retention Bonus component of the
Retention Plans (the "Retention Bonuses"). If, at such time as the Surviving
-----------------
Entity has no further obligations to pay Retention Bonuses, the aggregate
Retention Bonuses paid by the Surviving Entity (including the amounts, if any,
paid by the Company on or prior to the Effective Time) is less than $3,600,000,
the Surviving Entity shall
41
promptly pay to Raytheon an amount equal to 50% of the difference between
$3,600,000 and the Retention Bonuses paid by the Surviving Entity.
Section 6.4. Access to Books and Records. As soon as practicable after
---------------------------
the Closing Date, Xxxx shall receive from Raytheon (i) such pertinent data or
information as Xxxx may reasonably require to determine the Continuing
Employees' accrued benefits under the Commercial Laundry Retirement Plans, (ii)
such information concerning each Continuing Employee's period of employment with
Raytheon as Xxxx may reasonably require to determine service for eligibility and
benefit accrual purposes, and (iii) such information concerning the terms of the
Benefit Plans and concerning each Continuing Employee's benefit utilization
under welfare benefit plans as Xxxx may reasonably require to comply with
Section 6.1(c) of this Agreement.
Section 6.5. Pension Plans.
-------------
(a) The Company maintains the Commercial Laundry Retirement Plans.
Effective January 1, 1997, the RCL Salaried Plan was merged with and into the
Raytheon Appliances Retirement Income Plan (the "RAI Plan"). Effective as of
--------
September 10, 1997, the Raytheon Appliance business was divested. Effective
September 11, 1997 (the "Spin-Off Date"), the RAI Plan was divided into two
-------------
plans, one covering the former employees of the divested business and the RCL
Salaried Plan which covers the employees and former employees of the Commercial
Laundry business. As part of the divestiture, certain participants in the RCL
Hourly Plan located at the Searcy, Arkansas plant ceased active participation in
the RCL Hourly Plan and Raytheon authorized the transfer of the portion of the
RCL Hourly Plan attributable to the Searcy participants into a separate plan to
be maintained by Raytheon. Notwithstanding the above authorized actions, assets
have not yet been transferred from the RAI Plan or the RCL Hourly Plan.
(b) Raytheon and Buyer agree that the transfer of assets from the RAI Plan
and the RCL Hourly Plan will be done in accordance with the requirements of
Section 414(l) of the Code. In that regard, the assets allocated between each
plan shall be no less than the obligations determined thereunder as of the Spin-
off Date using the safe harbor mortality and interest rate assumptions
prescribed by the PBGC and other assumptions consistent with the actuarial
valuation of the Commercial Laundry Retirement Plans (the "Initial Allocation").
------------------
In the event the assets held in the plans as of the Spin-off Date exceed the
Initial Allocation, such excess shall be allocated among the plans in proportion
to the Initial Allocation for each such plan. In the event the assets held in
the plans as of the Spin-off Date are less than the aggregate sum of the Initial
Allocations, the assets will be allocated among the plans in accordance with the
requirements of Section 4044 of ERISA. The assets allocated to each plan shall
be increased or decreased to reflect the actual earnings of, and the respective
benefit payments made from, the trust with respect to the period commencing on
the Spin-off Date to the date the assets are actually transferred. Prior to the
transfer of assets, Raytheon shall provide information to Xxxx with respect to
the allocation of assets between the plans which is sufficient for Xxxx to
confirm that the allocation has been made in accordance with this Agreement.
Notwithstanding the above allocation, in the event the Commercial Laundry
Retirement Plans are overfunded on a projected benefit obligation basis in
accordance with FAS 87, including assumptions selected by Raytheon thereunder
for December 31, 1997 financial statement purposes, by less than $7,000,000 as
of December 31, 1997, Raytheon shall either transfer additional funds
42
to the Commercial Laundry Retirement Plans or pay cash to the Xxxx in an amount
equal to the difference between $7,000,000 and the amount by which the plans are
overfunded.
Article 7
Tax Matters
-----------
Raytheon covenants for the benefit of Xxxx and the Company, and Xxxx and
the Company covenant for the benefit of Raytheon, as follows:
Section 7.1. Tax Treatment of Purchase and Sale of Interest; Cooperation.
-----------------------------------------------------------
Xxxx, the Company and Raytheon agree that for all federal, state and local
Income Tax purposes, to the maximum extent permitted by applicable law, the
Merger shall be treated as (a) a purchase by the Company from Raytheon of all of
the assets of the Company (including the stock of its subsidiaries) other than
(i) all created goodwill of the Company (the "Goodwill") to the extent that the
----------
total value of the Goodwill does not exceed $18,500,000 and (ii) in the event
that the value of the Goodwill is less than $18,500,000, an undivided interest
in those assets of the Company having the greatest proportionate excess of value
over tax basis which assets have a value equal to the excess of $18,500,000 over
the value of the Goodwill in exchange for the cash portion of the Merger
Consideration, and (b) a contribution of the remaining assets of the Company to
the Surviving Entity in exchange for the Subordinated Note and the Units
received pursuant to Section 2.6. Raytheon, at the option of Xxxx or the
Company, shall cooperate in the preparation and filing of an election under
Section 754 of the Code, and under any other similar state or local Tax Law,
with respect to the Merger. Xxxx, the Company and Raytheon agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information and assistance relating to the assets of the Company (the
"Company Assets ") (including, without limitation, access to books and records)
-----------------
as is reasonably necessary for the filing of all Tax Returns, the making of any
election relating to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any claim, suit or proceeding
relating to any Tax.
Section 7.2. Allocation of Transfer and Property Taxes.
-----------------------------------------
(a) All excise, sales, use, value added, registration stamp, recording,
documentary, conveyancing, franchise, property, transfer, gains and similar
Taxes, levies, charges and fees including any deficiencies, interest, penalties,
additions to tax or additional amounts excluding any Income Taxes (collectively,
"Transfer Taxes") incurred in connection with the transactions contemplated by
--------------
this Agreement shall be borne equally by the Company and Raytheon. Xxxx, the
Company and Raytheon shall use reasonable efforts to minimize the amount of all
Transfer Taxes and shall cooperate in providing each other with any appropriate
resale exemption certifications and other similar documentation. The party that
is required by applicable law to make the filings, reports, or returns and to
handle any audits or controversies with respect to any applicable Transfer Taxes
shall do so, and the other party shall cooperate with respect thereto as
necessary.
(b) All real property taxes, personal property taxes and similar ad valorem
-- -------
obligations levied with respect to the Company Assets for a taxable period which
includes (but does not end on)
43
the Closing Date (collectively, the "Apportioned Obligations") shall be
-----------------------
apportioned between Raytheon and the Company based on the number of days of such
taxable period which fall on or before the Closing Date (this and any other tax
period which includes one or more days falling on or before the Closing Date, a
"Pre-Closing Tax Period") and the number of days of such taxable period after
----------------------
the Closing Date (a "Post-Closing Tax Period"). Raytheon shall be liable for the
-----------------------
proportionate amount of such taxes that is attributable to the Pre-Closing Tax
Period, and the Company shall be liable for the proportionate amount of such
taxes that is attributable to the Post-Closing Tax Period. Upon receipt of any
xxxx for real or personal property taxes relating to the Company Assets, each of
Raytheon and the Company shall present a statement to the other setting forth
the amount of reimbursement to which each is entitled under this Section
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the party owing it
to the other within 30 days after delivery of such statement. In the event that
either Raytheon or the Company shall make any payment for which it is entitled
to reimbursement under this Section, the other party shall make such
reimbursement promptly but in no event later than ten (10) days after the
presentation of a statement setting forth the amount or reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement.
Section 7.3. Refunds. Any refunds or credits of Taxes shall be for the
-------
account of the party responsible for the payment of such Taxes under this
Agreement. If either party becomes aware of any pending or threatened
assessment, official inquiry, examination or proceeding that could result in an
official determination with respect to Taxes due or payable the responsibility
for which rests with the other party hereto, such party shall promptly so notify
the other party in writing.
Section 7.4. [Intentionally Omitted]
-----------------------
Section 7.5. Tax Indemnity by Xxxx and Raytheon.
----------------------------------
(a) The Company shall be liable for, and shall hold Raytheon harmless from
and against, the following Taxes with respect to the Company and its
subsidiaries or affiliates, (i) any and all Income Taxes or Other Taxes for any
taxable period (or portion thereof) beginning on or after the Closing Date, due
or payable by the Company or its subsidiaries or by Raytheon; (ii) all Other
Taxes not incurred in the ordinary course of business attributable to the acts
or omissions of Xxxx, Xxxx'x affiliates, the Company, its subsidiaries or
affiliates after the Closing on the Closing Date; and (iii) any Income or Other
Taxes due and payable by the Company, its subsidiaries or affiliates or Xxxx
resulting from any election made by Xxxx or the Company or imposed on Xxxx or
the Company by the Internal Revenue Service under Section 338 of the Code or by
any other taxing authority under said Section 338 or the state or local
equivalent thereof (provided that for the purposes of this clause (iii) an
additional tax payable by Raytheon solely as a result of the effect on RASA's
earnings and profits of any such election under Section 338 of the Code shall
not be deemed a tax imposed on Raytheon under Section 338 of the Code.)
(b) Raytheon shall be liable for, and shall hold Xxxx and the Company
harmless from and against (i) any and all Taxes for any taxable period (or
portion thereof) ending on or before the Closing Date due and payable by the
Company or its subsidiaries; (ii) any and all liability of the
44
Company or its subsidiaries for Taxes of any Person (other than the Company and
its subsidiaries) under Reg. Section 1.1502-6 (or any similar provision of
state, local or foreign law); and (iii) any Tax reportable in any taxable period
(or portion thereof) beginning on or after the Closing Date under Subpart F of
the Code which is attributable to earnings for any taxable period (or portion
thereof) ending on or before the Closing Date.
Section 7.6. Allocation of Certain Taxes.
---------------------------
(a) Xxxx, the Company and Raytheon agree that if the Company or any of its
subsidiaries is permitted but not required under applicable state or local
Income Tax laws to treat the day before the Closing Date or the Closing Date as
the last day of a taxable period, the Company and Raytheon shall treat such day
as the last day of a taxable period.
(b) Any Taxes for a taxable period beginning before the Closing Date and
ending after the Closing Date with respect to the Company, the subsidiaries or
the Affiliates, the allocation of which is not governed by Section 7.2(b),
shall be apportioned for purposes of Section 7.5 between Raytheon and the
Company based on the actual operations of the Company, its subsidiaries and/or
Affiliates, as the case may be, during the portion of such period ending on the
Closing Date and the portion of such period beginning on the date following the
Closing Date, and for purposes of the provisions of Section 7.5, 7.6 and 7.8,
each portion of such period shall be deemed to be a taxable period (whether or
not it is in fact a taxable period); provided, however, that to the extent
-------- -------
estimated Income Taxes have been paid prior to the Closing Date with respect to
a taxable period beginning before the Closing Date and ending after the Closing
Date, Raytheon's liability with respect thereto shall be reduced by that amount;
provided further, that if such payment of estimated Income Taxes exceeds
-------- -------
Raytheon's liability as calculated pursuant to this Section 7.6, Xxxx shall
promptly pay Raytheon the amount of such excess. Upon timely notice from Xxxx,
Raytheon shall pay to Xxxx at least ten (10) days prior to the date any payment
for Income Taxes as described in this Section 7.6 is due, Raytheon's share of
such Income Taxes as described in this Section 7.6.
Section 7.7. Filing Responsibility.
---------------------
(a) Raytheon shall prepare and file or shall cause the Company and its
subsidiaries to prepare and file all Returns with respect to Taxes for periods
ending on or before the Closing Date.
(b) The Company shall prepare and file, and/or shall cause its
subsidiaries and Affiliates to prepare and file, subject to Raytheon's review
and approval, all Returns for taxable periods beginning before the Closing Date
and ending after the Closing Date, and all other Returns for which Raytheon does
not have filing responsibility pursuant to Section 7.7(a).
(c) Raytheon, Xxxx, the Company and their respective subsidiaries and
Affiliates agree that all Returns to be filed by any party hereto with respect
to the operations of the Company or its subsidiaries shall be prepared in a
manner consistent with the past practice of the Company and its subsidiaries.
45
(d) Xxxx, the Company and their respective subsidiaries and affiliates
agree that, except to the extent contrary to law or applicable regulation, they
will take no position in the Returns referred to in clause (b) above
inconsistent with that taken in a Return for which Raytheon has filing
responsibility pursuant to this Article VII.
(e) Raytheon, Xxxx, the Company and their respective subsidiaries and
Affiliates agree not to make any election or change in accounting method with
respect to the Company or its subsidiaries which would have the effect of
deferring a Tax otherwise payable with respect to a period prior to the Closing
Date into a period after the Closing Date or accelerating a Tax otherwise
payable with respect to a period after the Closing Date into a period prior to
the Closing Date.
Section 7.8. Refunds and Carrybacks.
----------------------
(a) Raytheon shall be entitled to any refunds or credits of Income Taxes or
Other Taxes attributable to or arising in taxable periods ending on or before
the Closing Date.
(b) The Company and its subsidiaries and Affiliates, as the case may be,
shall be entitled to any refunds or credits of Income Taxes attributable to or
arising in taxable periods beginning on or after the Closing Date.
(c) Xxxx agrees that if as the result of any audit adjustment made by any
taxing authority with respect to a taxable period ending on or prior to the
Closing Date for which Raytheon has indemnified Xxxx pursuant to Section 7.5,
Xxxx, the Company or any of its subsidiaries or affiliates receives a Tax
benefit, then Xxxx shall pay to Raytheon the amount of such Tax benefit (on an
after-tax basis) within 15 days of filing the Return in which such Tax benefit
is realized or utilized; provided, however, that if Raytheon owes Xxxx an
-------- -------
indemnity obligation with respect to the adjustment which results in such Tax
benefit, Xxxx shall have no liability under this Section 7.8(c) unless and until
such indemnity obligation shall have been satisfied.
(d) Xxxx, the Company and their respective subsidiaries and affiliates
agree that, with respect to any Income Tax, none of the Company's subsidiaries
shall carry back any item of loss, deduction or credit which arises in any
taxable period ending after the Closing Date ("Subsequent Loss") into any
---------------
taxable period ending on or before the Closing Date. If a Subsequent Loss with
respect to any Income Tax is carried back into any taxable period ending on or
before the Closing Date, Raytheon shall be entitled to any refund or credit of
Taxes realized as a result thereof.
Section 7.9. Cooperation and Exchange of Information.
---------------------------------------
(a) As soon as practicable, but in any event within thirty (30) days after
a party's request, from and after the Closing Date, the requested party shall
provide the requesting party with such cooperation and shall deliver to the
requesting party such information and data concerning the pre-Closing operations
of the Company and its subsidiaries and Affiliates and make available such
knowledgeable employees of the Company and its subsidiaries and Affiliates as
the requesting party may request, including providing the information and data
required by the Company's customary tax and accounting questionnaires, in order
to enable each party to complete and file all Returns
46
which it may be required to file with respect to the operations and business of
the Company and its subsidiaries and Affiliates through the Closing Date or to
respond to audits by any taxing authorities with respect to such operations and
to otherwise enable each party to satisfy its internal accounting, tax and other
legitimate requirements. Such cooperation and information shall include
provision of powers of attorney for the purpose of signing Returns and defending
audits and promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any taxing authority which relate to the
Company and its subsidiaries and affiliates, and providing copies of all
relevant Returns, together with accompanying schedules and related workpapers,
documents relating to rulings or other determinations by any taxing authority
and records concerning the ownership and tax basis of property, which each
respective party may possess. Each of Raytheon, Xxxx and the Company and its
subsidiaries and affiliates shall make its respective employees and facilities
available on a mutually convenient basis to provide explanation of any documents
or information provided hereunder.
(b) For a period of ten (10) years after the Closing Date, Xxxx shall, and
shall cause the Company and its subsidiaries and affiliates to, retain all
Returns, books and records (including computer files) of, or with respect to the
activities of, the Company and its subsidiaries and affiliates for all taxable
periods ending on or prior to the Closing Date. Thereafter, Xxxx shall not
dispose of any such Returns, books or records unless it first offers such
Returns, books and records to Raytheon and Raytheon fails to accept such offer
within sixty (60) days of its being made.
(c) Xxxx and the Company shall cooperate in the preparation of all Returns
relating in whole or in part to taxable periods ending on or before the Closing
Date that are required to be filed after such date; provided, however, that
-------- --------
Raytheon shall have the sole authority to determine the manner in which such
Returns are prepared to the extent such determination affects the amount of
Taxes for which Raytheon is liable.
(d) If any third party notifies Raytheon, Xxxx, the Company or their
respective subsidiaries and Affiliates of any audit, litigation or other
proceeding relating to Taxes of the Company or its subsidiaries for a taxable
period for which the other party may seek indemnification pursuant to this
Agreement (a "Third Party Tax Claim"), the party so notified shall give notice
---------------------
thereof to the other parties hereto within fifteen (15) days of receiving such
notice. The party ultimately responsible for payment of any Third Party Tax
Claim shall have the option to control, at its own expense, any proceeding
relating to such Third Party Tax Claim (or, if any such proceeding involves Tax
liabilities for which both parties are responsible, the option to control shall
rest with the party with the greatest amount at risk).
(e) If Raytheon, Xxxx, the Company or any of its subsidiaries or
Affiliates, as the case may be, fails to provide any information requested by
Raytheon in the time specified herein, or if no time is specified pursuant to
this Section 7.9, within a reasonable period, or otherwise fails to do any act
required of it under this Section 7.9, then such failing party shall be
obligated, notwithstanding any other provision of this Agreement, to indemnify
the harmed party and shall so indemnify the harmed party and hold such party
harmless from and against any and all costs, claims or damages, including all
Taxes or deficiencies thereof, payable as a result of such failure.
47
Section 7.10. Tax Sharing Agreements. Any Tax Sharing Agreement between
----------------------
Raytheon and any of the Company or its subsidiaries is terminated as of the
Closing Date and shall have no further effect for any taxable year (whether a
current year, a future year or a past year).
Article 8
Conditions of Xxxx'x and MergeCo's Obligation to Close
------------------------------------------------------
Xxxx'x and MergeCo's obligation to consummate the Merger shall be subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions:
Section 8.1. Representations, Warranties and Covenants of Raytheon.
------------------------------------------------------
(a) The representations and warranties of Raytheon and the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except for
representations and warranties that speak as of a specific date or time, which
need only be true and correct as of such date or time and except for
representations or warranties that contain a qualification as to "Adverse
Effect," which shall be true and correct in all respects) and without taking
into account any disclosure made by Raytheon pursuant to Section 3.21.
(b) Raytheon shall have performed in all material respects each obligation
and agreement and shall have complied in all material respects with each
covenant to be performed and complied with by them hereunder at or prior to the
Closing .
(c) Xxxx shall receive at or prior to the Closing a certificate as to the
matters set forth in paragraphs (a) and (b), dated the Closing Date, and validly
executed by an authorized officer of Raytheon.
Section 8.2. Filings; Consents; Waiting Periods. All waiting periods, if
-----------------
any, applicable under the HSR Act shall have expired or been terminated and
other than the filing of the Certificate of Merger with the Delaware Secretary
of State, all registrations, filings, applications, notices, consents,
approvals, orders, qualifications and waivers listed in Schedule 8.2 shall have
been made or obtained (the "Material Consents").
-----------------
Section 8.3. No Injunction. At the Closing Date, (i) there shall be no
--------------
Order of any nature of any Governmental Authority, or any pending Action before
any Governmental Authority, that restrains, prohibits or enjoins or seeks to
restrain, prohibit or enjoin, the consummation of the Merger, and (ii) no Law
shall have been enacted by any Governmental Authority which prevents
consummation of the Merger.
Section 8.4. Securityholders Agreement and Other Agreements.
----------------------------------------------
48
(a) The Company, Xxxx and Raytheon shall have entered into a
securityholders agreement (the "Securityholders Agreement") in the form attached
-------------------------
hereto as Exhibit 8.4(a) and the Securityholders Agreement shall be in full
force and effect as of the Closing.
(b) The Company, Xxxx and Raytheon shall have entered into a registration
rights agreement (the "Registration Rights Agreement") in the form attached
-----------------------------
hereto as Exhibit 8.4(b) and the Registration Rights Agreement shall be in full
force and effect as of the Closing.
(c) The Company, Xxxx and Raytheon shall have entered into the Operating
Agreement and the Operating Agreement shall be in full force and effect as of
the Closing.
Section 8.5. Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by Raytheon and the Company in connection with the
transactions contemplated hereby to be consummated at or prior to the Closing
and all documents incident thereto shall be reasonably satisfactory in form and
substance to Xxxx.
Section 8.6. Financing. The financing of the transactions contemplated in
---------
the Commitment Letters attached hereto as Exhibit 4.5 shall have been funded by
such lenders; provided, however, that the funding of the Financing Commitments
by the lenders shall only be a condition to the Closing to the extent the
Financing Commitments have not been waived, released, modified, rescinded,
terminated or otherwise amended in a manner which could reasonably be expected
to adversely affect the ability of Xxxx to obtain the financing and consummate
the Merger and the transactions contemplated hereby.
Section 8.7. Closing Documents. At the Closing, the Company shall have
-----------------
delivered to Xxxx all of the foregoing documents:
(a) certified copies of the resolutions duly adopted by the Company's
Manager and Sole Manager authorizing the execution, delivery and performance of
this Agreement and each of the other agreements contemplated hereby;
(b) certified copies of the Certificate of Formation of the Company as
in effect on the Closing Date and the Existing Operating Agreement;
(c) copies of all Material Consents; and
(d) such other documents relating to the transactions contemplated by
this Agreement as Xxxx or its special counsel may reasonably request.
Section 8.8. Waiver. Any condition specified in this Article 8 may be
------
waived if consented to by Xxxx and MergeCo; provided that, no such waiver shall
--------
be effective against Xxxx unless it is set forth in a writing executed by Xxxx
and MergeCo.
49
Article 9
Conditions to Raytheon's and the Company's Obligation to Close
--------------------------------------------------------------
Raytheon's and the Company's obligation to consummate the Merger is subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions:
Section 9.1. Representations, Warranties and Covenants of Xxxx.
--------------------------------------------------
(a) The representations and warranties of Xxxx and MergeCo contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date (except for representations and
warranties that speak as of a specific date or time, which need only be true and
correct as of such date or time).
(b) Xxxx and MergeCo shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects with
each covenant to be performed and complied with by it hereunder at or prior to
the Closing.
(c) Raytheon shall receive at or prior to the Closing certificates as to
the matters set forth in paragraphs (a) and (b), dated the Closing Date, and
validly executed by executive officers of Xxxx and MergeCo on behalf of Xxxx and
MergeCo.
Section 9.2. Filings: Consents: Waiting Periods. All waiting periods, if
-----------------------------------
any, applicable under the HSR Act shall have expired or been terminated and,
other than the filing of the Certificate of Merger with the Delaware Secretary
of State, all Material Consents shall have been made or obtained.
Section 9.3. No Injunction. At the Closing Date, (i) there shall be no
--------------
Order of any nature of any Governmental Authority, nor any pending Action, that
restrains, prohibits or enjoins or seeks to restrain, prohibit or enjoin, the
consummation of the Merger, and (ii) no Law shall have been enacted by any
Governmental Authority which prevents consummation of the Merger.
Section 9.4. Securityholders Agreement and Other Agreements.
----------------------------------------------
(a) The Company, Xxxx, Raytheon and other securityholders of the Company
shall have entered into the Securityholders Agreement and the Securityholders
Agreement shall be in full force and effect as of the Closing;
(b) The Company, Xxxx and Raytheon shall have entered into the Registration
Rights Agreement and the Registration Rights Agreement shall be in full force
and effect as of the Closing;
(c) The Company, Xxxx, Raytheon and other securityholders of the Company
shall have entered into the Operating Agreement and the Operating Agreement
shall be in full force and effect as of the Closing; and
50
(d) The Company shall have executed and delivered to Raytheon the
Subordinated Note, which shall be in full force and effect as of the Closing.
Section 9.5. Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by Xxxx and MergeCo in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Raytheon.
Section 9.6. Closing Documents. At the Closing, Xxxx and MergeCo shall
-----------------
have delivered to Raytheon all of the foregoing documents:
(a) certified copies of the resolutions duly adopted by the Board of
Managers of Xxxx and MergeCo authorizing the execution, delivery and performance
of this Agreement and each of the other agreements contemplated hereby;
(b) certified copies of the Certificate of Formation of Xxxx and
MergeCo, and the Limited Liability Company Operating Agreements of Xxxx and
MergeCo, each as in effect at the Closing; and
(c) such other documents relating to the transactions contemplated by
this Agreement as Raytheon or its special counsel may reasonably request.
Section 9.7. Waiver. Any condition specified in this Article 9 may be
------
waived if consented to by Raytheon and the Company; provided that, no such
--------
waiver shall be effective against Raytheon unless it is set forth in a writing
executed by Raytheon and the Company.
Article 10
Survival: Indemnification
-------------------------
Section 10.1 Survival Periods. All representations, warranties, covenants
----------------
and agreements (other than any such covenant or agreement which by its terms is
to be performed after the Closing Date) contained or made in, or in connection
with, this Agreement or in any Schedule, or any certificate, document or other
instrument delivered in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, regardless of any investigation made by any Party or on its behalf, the
knowledge of any such Party's officers, directors, stockholders, employees or
agents, or the acceptance of any certificate or opinion, for a period of twelve
months following the Closing; provided, however, that (a) Raytheon's
-----------------
representations and warranties contained in (i) Section 3.17 shall survive for
the applicable statute of limitations, (ii) Sections 3.11 and 3.16 shall survive
for a period of three years following the Closing, and (iii) Sections 3.1(c) and
3.14 shall survive indefinitely, (b) Raytheon's agreement to indemnify the
Surviving Entity for Known Environmental Liabilities shall survive for a period
of three years and (c) Xxxx'x representations and warranties contained in
Section 4.2 shall survive indefinitely.
51
Section 10.2. Indemnification by Raytheon. From and after the Closing
---------------------------
Date, Raytheon shall indemnify and hold harmless the Surviving Entity, its
Affiliates, each of their respective directors, officers, employees and agents,
and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Surviving Entity Indemnified Parties") from and against any
------------------------------------
and all damages, claims, losses, expenses, costs, obligations and liabilities,
including without limitation liabilities for all reasonable attorneys',
accountants', and experts' fees and expenses (collectively, "Covered
-------
Liabilities") including, but not limited to, those incurred to enforce the terms
-----------
of this Agreement, suffered, directly or indirectly, by Xxxx by reason of, or
arising out of (i) any breach of any representation or warranty (after giving
effect to any disclosure delivered in accordance with Section 3.21 that relate
to events or circumstance that occurred between the date hereof and the Closing
Date), covenant or agreement of Raytheon contained herein, (ii) any claims of
any brokers or finders claiming by, through or under Raytheon or (iii) any Known
Environmental Liabilities; provided, however, that Raytheon shall not be
-------- -------
required to indemnify the Surviving Entity Indemnified Parties with respect to
any claim for indemnification for breaches of representation and warranties
pursuant to this Section 10.2, other than claims made under Sections 3.1(c) and
3.14 or with respect to Known Environmental Liabilities, unless (i) the amount
of the Covered Liabilities incurred by the Surviving Entity Indemnified Parties
as a result of the breach or event giving rise to such claim or series of
related claims arising from the same set of facts or circumstances is in excess
of $10,000 (any breach or event exceeding such $10,000 threshold being herein
referred to as a "Covered Breach or Event") and (ii) the aggregate amount of all
-----------------------
Covered Liabilities incurred by the Surviving Entity Indemnified Parties as a
result of Covered Breaches or Events is in excess of Four Million Dollars
($4,000,000) and then only to the extent such aggregate amount exceeds such
amount, and provided, further, that in no event shall Raytheon be required to
-------- -------
pay or otherwise be liable for an amount in excess of ten percent (10%) of the
Cash Merger Consideration with respect to claims made under this Section 10.2.
Notwithstanding the fact that the $4,000,000 threshold in first proviso above
has not been satisfied, Raytheon agrees to indemnify the Surviving Entity
Indemnified Parties in respect of Covered Liabilities incurred by the Surviving
Entity Indemnified Parties as a result of Known Environmental Liabilities or
breaches of the representations set forth in Section 3.16 (other than Section
3.16(e)) that constitute Covered Breaches or Events at such time as the
aggregate amount of all such Covered Liabilities exceeds $1,500,000; provided
that amounts paid by Raytheon to the Surviving Entity Indemnified Parties in
respect of such Covered Liabilities shall not be counted in determining whether
the $4,000,000 threshold has been satisfied. (By way of illustration, if the
Surviving Entity Indemnified Parties' have Covered Liabilities of $3,000,000
resulting from Known Environmental Liabilities or Covered Breaches of Sections
3.16(a), 3.16(b), 3.16(c) and 3.16(d) and no other Covered Breaches or Events,
they would be entitled to collect $1,500,000 from Raytheon, but before they
would be entitled to recover in respect of any other Covered Liabilities (other
than in respect of Known Environmental Liabilities or breaches of Sections
3.1(c), 3.14, 3.16(a), 3.16(b), 3.16(c) or 3.16(d)), the aggregate of the other
Covered Liabilities incurred by the Surviving Entity Indemnified Parties as a
result of Covered Breaches or Events would have to exceed $2,500,000.) With
respect to any Covered Liabilities arising out of environmental conditions at
the Company's facility in Marianna, Florida, the Surviving Entity shall use its
reasonable best efforts (including, but not limited to, pursuing all legal
remedies) to recover any Covered Liabilities from Xxxxx Holdings Inc. ("CHI")
---
pursuant to the environmental escrow in the Asset Purchase Agreement by which
Raytheon Appliances, Inc. acquired UniMac Company, Inc. (the "Xxxxx Escrow").
------------
Under no condition shall the Surviving
52
Entity release CHI from any of CHI's obligations under the Xxxxx Escrow or
otherwise modify the terms of the Xxxxx Escrow without the prior written consent
of Raytheon. Any amounts recovered by the Surviving Entity from CHI under the
Xxxxx Escrow for Covered Liabilities arising out of environmental conditions at
the Company's facility in Marianna, Florida shall not be counted in determining
whether the $1,500,000 threshold for environmental matters or the $4,000,000
threshold for all matters have been satisfied. For purposes of calculating any
liability arising under this Section 10.2, any and all "materiality" and/or
"Adverse Affect, Change or Effect" qualifiers included in any representation,
warranty, covenant or agreement herein shall be ignored for purposes of
determining whether any breach of such representation, warranty, covenant or
agreement has occurred.
Section 10.3. Indemnification by the Surviving Entity. From and after the
----------------------------
Closing Date, the Surviving Entity shall indemnify and hold harmless Raytheon,
its Affiliates, each of their respective directors, officers, employees and
agents, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "Raytheon Indemnified Parties") from and against
----------------------------
any and all Covered Liabilities incurred by or asserted against any of Raytheon
Indemnified Parties in connection with or arising (i) from any liability of the
Company or any of its subsidiaries or arising out of or in connection with any
of the businesses, assets, operations or activities of the Company (including
any predecessor of the Company, and any former business, asset, operation,
activity or subsidiary of any of the foregoing) owned or conducted, as the case
may be, on or prior to the Closing Date including any liability based on
negligence, gross negligence, strict liability or any other theory of liability,
whether in law (whether common or statutory) or equity (but only to the extent
the Surviving Entity or NewCo has or would have had liability with respect to
any such Covered Liability) or (ii) out of (x) any breach of any representation
or warranty, covenant or agreement of Bain contained herein, (y) any claims of
any brokers or finders claiming by, through or under Bain or (z) any breach of
any post-Closing covenants or agreements of the Company or the Surviving Entity
contained herein.
Section 10.4. Indemnification Procedures.
---------------------------
(a) If any indemnified party receives notice of the assertion of any Third-
Party Claim with respect to which an indemnifying party is obligated under this
Agreement to provide indemnification, such indemnified party shall give such
indemnifying party written notice thereof (together with a copy of such Third-
Party Claim, process or other legal pleading) promptly after becoming aware of
such Third-Party Claim; provided, however, that the failure of any indemnified
--------- -------
party to give notice as provided in this Section 10.4 shall not relieve any
indemnifying party of its obligations under this Section 10.4, except to the
extent that such indemnifying party is actually prejudiced by such failure to
give notice. Such notice shall describe such Third-Party Claim in reasonable
detail.
(b) An indemnifying party, at such indemnifying party's own expense and
through counsel chosen by such indemnifying party (which counsel shall be
reasonably acceptable to the indemnified party), may elect to defend any Third-
Party Claim. If an indemnifying party elects to defend a Third-Party Claim,
then, within ten (10) business days after receiving notice of such Third-Party
Claim (or sooner, if the nature of such Third-Party claim so requires), such
53
indemnifying party shall notify the indemnified party of its intent to do so,
and such indemnified party shall cooperate in the defense of such Third-Party
Claim (and pending such notice and assumption of defense, an indemnified party
may take such steps to defend against such Third-Party Claim as, in such
indemnified party's good-faith judgment, are appropriate to protect its
interests). Such indemnifying party shall pay such indemnified party's
reasonable out-of-pocket expenses incurred in connection with such cooperation.
Such indemnifying party shall keep the indemnified party reasonably informed as
to the status of the defense of such Third-Party Claim. After notice from an
indemnifying party to an indemnified party of its election to assume the defense
of a Third-Party Claim, such indemnifying party shall not be liable to such
indemnified party under this Section 10.4 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than those expenses referred to in the preceding sentence;
provided, however, that such indemnified party shall have the right to employ
--------- --------
one law firm as counsel, together with a separate local law firm in each
applicable jurisdiction ("Separate Counsel"), to represent such indemnified
----------------
party in any action or group of related actions (which firm or firms shall be
reasonably acceptable to the indemnifying party) if the indemnified party has
been advised by counsel that either there is a reasonable likelihood of a
conflict of interest between such indemnified party and such indemnifying party
in respect of such claim, or there may be defenses available to such indemnified
party which are different from or in addition to those available to such
indemnifying party and the representation of both parties by the same counsel
would be inappropriate, and in that event (i) the reasonable fees and expenses
of such Separate Counsel shall be paid by such indemnifying party (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one Separate Counsel (excluding local counsel) with
respect to any Third-Party Claim (even if against multiple indemnified
parties)), and (ii) each of such indemnifying party and such indemnified party
shall have the right to conduct its own defense in respect of such claim. If an
indemnifying party elects not to defend against a Third-Party Claim, or fails to
notify an indemnified party of its election as provided in this Section 10.4
within the period of ten (10) business days described above, the indemnified
party may defend, compromise, and settle such Third-Party Claim and shall be
entitled to indemnification hereunder (to the extent permitted hereunder);
provided, however, that no such indemnified party may compromise or settle any
--------- --------
such Third-Party claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the indemnifying party shall not, without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed, (i) settle or compromise any Third-Party Claim
or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
indemnified party of a written release from all liability in respect of such
Third-Party Claim or (ii) settle or compromise any Third-Party Claim in any
manner that would reasonably be expected to have a material adverse effect on
the indemnified party or result in an injunction or other equitable relief will
be imposed against the indemnified party.
(c) Any payment pursuant to a claim for indemnification shall be made
promptly after the amount of the claim is finally determined.
Section 10.5. Certain Limitations.
-------------------
54
(a) The amount of any Covered Liabilities for which indemnification is
provided under this Agreement shall be net of any amounts actually recovered by
the indemnified party from third parties (including amounts actually recovered
under insurance policies less the amount by which the premiums of such policy
have increased due to the claims being made) with respect to such Covered
Liabilities (it being understood that any indemnified party shall be under no
obligation to pursue any such third party). Except for claims involving
material customers and suppliers of the Company, any indemnifying party
hereunder shall be subrogated to the rights of the indemnified party upon
payment in full of the amount of the relevant indemnifiable loss. An insurer
who would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect thereto. If any
indemnified party recovers an amount from a third party in respect of an
indemnifiable loss for which indemnification is provided in this Agreement after
the full amount of such indemnifiable loss has been paid by an indemnifying
party or after an indemnifying party has made a partial payment of such
indemnifiable loss and the amount received from the third party exceeds the
remaining unpaid balance of such indemnifiable loss, then the indemnified party
shall promptly remit to the indemnifying party the excess of (A) the sum of the
amount theretofore paid by such indemnifying party in respect of such
indemnifiable loss plus the amount received from the third party in respect
thereof, less (B) the full amount of such Covered Liabilities.
(b) The amount of any Covered Liabilities for which indemnification is
provided under this Agreement shall be (i) increased to take account of any net
Tax cost actually incurred by the indemnified party arising from the receipt or
accrual of an indemnification payment hereunder (grossed up for such increase),
and (ii) reduced to take account of any net Tax benefit actually realized by the
indemnified party arising from incurring or paying such loss or other liability.
In computing the amount of any such Tax cost or Tax benefit, the indemnified
party shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any indemnification payment hereunder or incurring or paying any
indemnified loss. Any indemnification payment hereunder shall initially be made
without regard to this Section 10.5(b) and shall be increased or reduced to
reflect any such net Tax cost (including gross-up) or net Tax benefit only after
the indemnified party has actually realized such cost or benefit. For purposes
of this Agreement, an indemnified party shall be deemed to have "actually
realized" a net Tax cost or a net Tax benefit to the extent that, and at such
time as, the amount of Taxes payable by such indemnified party is increased
above or reduced below, as the case may be, the amount of Taxes that such
indemnified party would be required to pay but for the receipt or accrual of the
indemnification payment or the incurrence or payment of such Loss, as the case
may be. The amount of any increase or reduction hereunder shall be adjusted to
reflect any Final Determination with respect to the indemnified party's
liability for Taxes, and payments between such indemnified parties to reflect
such adjustment shall be made if necessary.
(c) The amount of any other liability for which indemnification is provided
under this Agreement shall be treated by Bain and Raytheon as an adjustment to
the total Cash Merger Consideration, and Raytheon and Bain agree not to take any
position inconsistent therewith for any purpose.
55
Section 10.6 Indemnification by Raytheon for Excluded Liabilities.
----------------------------------------------------
Notwithstanding anything to the contrary in Section 10.2, from and after the
Closing Date, Raytheon shall indemnify and hold harmless the Surviving Entity
Indemnified Parties from and against any and all Covered Liabilities relating to
any Excluded Liabilities. Raytheon will have sole control over all matters
relating to the Excluded Liabilities.
Section 10.7 Other Indemnification Provisions. In no event shall Raytheon
--------------------------------
seek contribution from the Company or any of its subsidiaries for any breaches
of Raytheon hereunder or in respect of any other payments required to be made by
Raytheon pursuant to this Agreement.
Section 10.8. Arbitration Procedure.
---------------------
(a) Each Party agrees that the arbitration procedure set forth below shall
be the sole and exclusive method for resolving and remedying claims for money
damages arising out of the provisions of this Section 10.8 (the "Disputes");
--------
provided that, nothing in this Section 10.8 shall prohibit a Party from
-------- ----
instituting litigation to enforce any Final Award (as defined below). The
Parties hereby acknowledge and agree that, except as otherwise provided in
subparagraph (f) below, the arbitration procedures and any Final Award hereunder
shall be governed by, and shall be enforced pursuant to the Commercial
Arbitration Rules of the American Arbitration Association as in effect from time
to time.
(b) In the event that any Party asserts that there exists a Dispute, such
Party shall deliver a written notice to each other Party involved therein
specifying the nature of the asserted Dispute and requesting a meeting to
attempt to resolve the same. If no such resolution is reached within ten (10)
business days after such delivery of such notice, the Party delivering such
notice of Dispute (the "Disputing Party") may, within 45 business days after
---------------
delivery of such notice, commence arbitration hereunder by delivering to each
other Party involved therein a notice of arbitration (a "Notice of
---------
Arbitration"). Such Notice of Arbitration shall specify the matters as to which
arbitration is sought, the nature of any Dispute, the claims of each Party to
the arbitration and shall specify the amount and nature of any damages, if any,
sought to be recovered as a result of any alleged claim, and any other matters
required by the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time to be included therein, if any.
(c) The Disputing Party, on the one hand, and the other Parties involved
therein, on the other hand, each shall select one non-neutral arbitrator expert
in the subject matter of the Dispute (the arbitrators so selected shall be
referred to herein as the "Disputing Party's Arbitrator" and the "Non-Disputing
---------------------------- -------------
Party's Arbitrator", respectively). In the event that either Party fails to
------------------
select an arbitrator as set forth herein within 20 days from the delivery of a
Notice of Arbitration, then the matter shall be resolved by the arbitrator
selected by the other party. The Disputing Party's Arbitrator and the Non-
Disputing Party's Arbitrator shall select a third independent, neutral
arbitrator expert in the subject matter of the dispute, and the three
arbitrators so selected shall resolve the matter according to the procedures set
forth in this Section 10.8. If the Disputing Party's Arbitrator and the Non-
Disputing Party's Arbitrator are unable to agree on a third arbitrator within 20
days after their selection, the Disputing Party's Arbitrator and the Non-
Disputing Party's Arbitrator shall each prepare a list of three independent
arbitrators. The Disputing Party's Arbitrator
56
and the Non-Disputing Party's Arbitrator shall each have the opportunity to
designate as objectionable and eliminate one arbitrator from the other
arbitrator's list within seven (7) days after submission thereof, and the third
arbitrator shall then be selected by lot from the arbitrators remaining on the
lists submitted by the Disputing Party's Arbitrator and the Non-Disputing
Party's Arbitrator.
(d) The arbitrator(s) selected pursuant to subparagraph (c) above will
determine the allocation of the costs and expenses of arbitration based upon the
percentage which the portion of the contested amount not awarded to each party
bears to the amount actually contested by such party. For example, if the
Disputing Party submits a claim for $1,000 and if the other Parties involved in
the Dispute contest only $500 of the amount claimed by the Disputing Party, and
if the arbitrator(s) ultimately resolves the dispute by awarding the Disputing
Party $300 of the $500 contested, then the costs and expenses of arbitration
will be allocated 40% (i.e., 200 / 500) to the Disputing Party and 60% (i.e.,
300 / 500) to the other Parties involved in the Dispute.
(e) The arbitration shall be conducted in Boston, Massachusetts under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the agreement of the Parties.
The arbitrator(s) shall conduct the arbitration so that a final result,
determination, finding, judgment and/or aware (the "Final Award") is made or
-----------
rendered as soon as practicable, but in no event later than the earlier to occur
of (a) the date which is 90 business days after the delivery of the Notice of
Arbitration and (b) the date which is ten (10) days after the completion of the
arbitration. The Final Award must be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case may be).
The Final Award shall be final and binding on all Parties and there shall be no
appeal from or reexamination of the Final Award, except for fraud, perjury,
evident partiality or misconduct by an arbitrator prejudicing the rights of any
Party and to correct manifest clerical errors.
(f) A Party may enforce any Final Award in any state or federal court
located in Boston, Massachusetts. For the purpose of any action or proceeding
instituted with respect to any Final Award, each Party hereby irrevocably
submits to the jurisdiction of such courts, irrevocably consents to the service
of process by registered mail or personal service and hereby irrevocably waives,
to the fullest extent permitted by law, any objection which it may have or
hereafter have as to personal jurisdiction, the laying of the venue of any such
action or proceeding brought in any such court and any claim that any such
action or proceeding brought in any court has been brought in an inconvenient
forum.
(g) Any party required to make a payment pursuant to this Section 10.8
shall pay the party entitled to receive such payment within three (3) days of
the delivery of the Final Award to such responsible party. If any party shall
fail to pay the amount of damages, if any, assessed against it within ten (10)
days of the delivery to such party of such award, the unpaid amount shall bear
interest from the date of such delivery at the maximum rate permitted by and on
the basis provided for under the laws of the Commonwealth of Massachusetts with
respect to unpaid judgments for breach of contract in civil cases. In addition,
such party shall reimburse the other party for any and all costs or expenses of
any nature or kind whatsoever (including but not limited to all attorneys'
57
fees) incurred in seeking to collect such damages or to enforce any such award,
but only to the extent approved and ordered by a court exercising jurisdiction
to enforce a Final Award.
Section 10.9. Exclusive Remedy. Except as otherwise provided in this
----------------
Article, the indemnification provided in this Article shall be the sole and
exclusive post-Closing remedy available to the Parties hereto for any claim
under this Agreement (other than equitable relief if available).
Article 11
Termination
-----------
Section 11.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing by:
(a) The mutual written consent of Raytheon and Bain; or
(b) Either Raytheon or Bain if the Closing has not occurred by the
close of business on May 15, 1998, and if the failure to consummate the Merger
on or before such date did not result from the failure by the party seeking
termination of this Agreement to fulfill any undertaking or commitment provided
for herein that is required to be fulfilled prior to Closing.
(c) Raytheon, provided it is not then in breach of any of its
obligations hereunder, if Bain fails to perform in any material respect any
covenant in this Agreement when performance thereof is due or Bain shall have
breached in any material respect any of the representations or warranties
contained in this Agreement and does not cure the failure or breach within
thirty (30) business days after Raytheon delivers written notice thereof; or
(d) Bain, provided it is not then in breach of any of its obligations
hereunder, if Raytheon fails to perform in any material respect any covenant in
this Agreement when performance thereof is due or Raytheon shall have breached
in any material respect any of the representations and warranties contained in
this Agreement and does not cure the failure or breach within thirty (30)
business days after Bain delivers written notice thereof.
Section 11.2 Procedure and Effect of Termination. In the event of
-----------------------------------
termination of this Agreement by either or both of Raytheon and Bain pursuant to
Section 11.1, written notice thereof shall forthwith be given by the terminating
party to the other party hereto, and this Agreement shall thereupon terminate
and become void and have no effect, and the transactions contemplated hereby
shall be abandoned without further action by the parties hereto, except that the
provisions of Sections 5.1(b), 5.13 (as they relate to reimbursement of
Raytheon's expenses) and 12.4 shall survive the termination of this Agreement;
provided, however, that such termination shall not relieve any party hereto of
-------- --------
any liability for any breach of this Agreement. If this Agreement is terminated
as provided herein, all filings, applications and other submissions made
pursuant to Sections 3.8 and 4.3, if any, shall, to the extent practicable, be
withdrawn from the agency or other persons to which they were made.
58
Article 12
Miscellaneous
-------------
Section 12.1 Counterparts. This Agreement may be executed in one or more
-------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
Section 12.2 Governing Law; Consent to Jurisdiction. This Agreement shall
---------------------------------------
be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts without reference to the choice of law principles thereof. Bain
and Raytheon consent to and hereby submit to the exclusive jurisdiction of any
state or federal court located in the Commonwealth of Massachusetts in
connection with any action, suit or proceeding arising out of or relating to
this Agreement, and each of the parties hereto irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
Section 12.3 Entire Agreement. This Agreement (including agreements
-----------------
incorporated herein) and the Schedules hereto contain the entire agreement
between the parties with respect to the subject matter hereof and there are no
agreements, understandings, representations or warranties between the parties
other than those set forth or referred to herein.
Section 12.4 Expenses. Except as set forth in this Agreement, whether the
---------
Merger is or is not consummated, all legal and other costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
Section 12.5 Notices. All notices hereunder shall be sufficiently given
--------
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Raytheon shall be addressed to:
Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Telecopy No: (000) 000-0000
59
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No: (000) 000-0000
or at such other address and to the attention of such other Person as Raytheon
may designate by written notice to Bain. Notices to Bain shall be addressed to:
Bain/RCL, L.L.C.
c/o Bain Capital, Inc.
Two Xxxxxx Place
Boston, Massachusetts 02116
Attention: Mr. Xxxxxx Xxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Learner, Esq.
Telecopy No.: (000) 000-0000
or at such other address and to the attention of such other Person as Bain may
designate by written notice to Raytheon.
Section 12.6. Successors and Assigns. This Agreement shall be binding upon
-----------------------
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that no party hereto will assign its rights or
--------- --------
delegate its obligations under this Agreement without the express prior written
consent of each other party hereto, except that Raytheon may assign this
Agreement to any Entity that succeeds to substantially all of Raytheon's assets
and liabilities and Bain may assign this Agreement to (i) a subsidiary of Bain
or MergeCo and/or (ii) any of its financing sources as collateral security,
provided that any such assignment shall not relieve Bain or MergeCo of its
obligations under the Agreement.
Section 12.7. Headings: Definitions. The section and article headings
---------------------
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
60
Section 12.8 Amendment. This Agreement may not be amended, modified,
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superseded, canceled, renewed or extended except by a written instrument signed
by the party to be charged therewith.
Section 12.9 Waiver; Effect of Waiver. No provision of this Agreement may
-------------------------
be waived except by a written instrument signed by the party waiving compliance.
No waiver by any party hereto of any of the requirements hereof or of any of
such party's rights hereunder shall release the other parties from full
performance of their remaining obligations stated herein. No failure to exercise
or delay in exercising on the part of any party hereto any right, power or
privilege of such party shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
by such party.
Section 12.10 Interpretation; Absence of Presumption.
--------------------------------------
(a) For the purposes hereof, (i) the terms "hereof" "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
hereto) and not to any particular provision of this Agreement, and Article,
Section, paragraph and Schedule references are to the Articles, Sections,
paragraphs and Schedules to this Agreement unless otherwise specified, (ii) the
word "including" and words of similar import when used in this Agreement means
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iii) the word "or" shall not be exclusive, (iv) provisions
shall apply, when appropriate, to successive events and transactions, and (v)
all references to any period of days shall be deemed to be to the relevant
number of calendar days.
(b) This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(c) For the purposes of this Agreement, a "subsidiary" of a Person means
any corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains and losses or shall otherwise control such limited liability company,
partnership, association or other business entity.
61
Section 12.11 Specific Performance. The parties hereto each acknowledge
--------------------
that, in view of the uniqueness of the subject matter hereof, the parties hereto
would not have an adequate remedy at law for money damages in the event that
this Agreement were not performed in accordance with its terms, and therefore
agree that the parties hereto shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.
Section 12.12 Remedies Cumulative. Except as otherwise provided in Article
--------------------
11, all rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party. Notwithstanding the foregoing, however, no
remedy under this Agreement or at law or in equity shall include, provide for or
permit the payment of multiple, exemplary, punitive or consequential damages or
any equitable equivalent thereof or substitute therefor, and the burden shall be
on the party claiming loss to show actual loss in the amount claimed.
[The remainder of this page has been intentionally left blank.]
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered, as an instrument under seal, in their names and on their
behalf by their respective officers, thereunto duly authorized, on and as of the
date first set forth above.
MERGECO:
-------
RCL ACQUISITIONS, L.L.C.
By:______________________________
Name:
Title:
XXXX:
----
XXXX/RCL, L.L.C.
By:______________________________
Name:
Title:
RAYTHEON:
--------
RAYTHEON COMPANY
By:______________________________
Name:
Title:
THE COMPANY
-----------
RAYTHEON COMMERCIAL
LAUNDRY LLC
By:______________________________
Name:
Title:
TABLE OF CONTENTS
Article 1..................................................................... 1
Section 1.1. Definitions............................................ 1
Section 1.2. Other Definitions...................................... 8
Article 2..................................................................... 11
Section 2.1. The Merger; Effect of Merger........................... 11
Section 2.2. Time and Place of Closing.............................. 11
Section 2.3. Effective Time......................................... 11
Section 2.4. Certificate of Formation and Operating Agreement
of Surviving Entity.................................... 11
Section 2.5. Managers and Officers of Surviving Entity.............. 11
Section 2.6. Effect on the Interests of the Company and MergeCo..... 12
Section 2.7. Consummation of the Merger............................. 12
Section 2.8. Cash Merger Consideration Adjustment................... 12
Section 2.9. Allocation of Merger Consideration..................... 14
Section 2.10. Intercompany Account; Distributions.................... 15
Section 2.11. Transfer of Assets..................................... 15
Article 3..................................................................... 16
Section 3.1. Incorporation; Authorization; Capitalization; Etc...... 16
Section 3.2. Financial Statements................................... 17
Section 3.3. Undisclosed Liabilities................................ 17
Section 3.4. Properties; Sufficiency of Assets...................... 18
Section 3.5. Intellectual Property.................................. 19
Section 3.6. Absence of Certain Changes............................. 20
Section 3.7. Litigation; Orders..................................... 21
Section 3.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc........................................... 21
Section 3.9. Labor Matters.......................................... 21
Section 3.10. Compliance with Laws................................... 21
Section 3.11. Employee Benefits...................................... 22
Section 3.12. Material Contracts..................................... 23
Section 3.13. Guaranty of Obligations of the Company................. 24
Section 3.14. Brokers, Finders, Etc.................................. 24
Section 3.15. No Implied Representation.............................. 24
Section 3.16. Environmental Matters.................................. 25
Section 3.17. Tax Matters............................................ 25
Section 3.18. Insurance.............................................. 26
Section 3.19. Locations.............................................. 27
Section 3.20. Suppliers and Customers................................ 27
Section 3.21. Closing Date........................................... 27
Section 3.22. Schedules.............................................. 27
Article 4..................................................................... 27
Section 4.1. Incorporation; Authorization; Etc...................... 28
Section 4.2. Brokers, Finders, Etc.................................. 28
Section 4.3. Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc................................. 28
Section 4.4. Investment Representation.............................. 29
Section 4.5. Financing.............................................. 29
Section 4.6. Solvency............................................... 29
Article 5..................................................................... 30
Section 5.1. Investigation of Business; Access to Properties,
Records and Employees.................................. 30
Section 5.2. Best Efforts; Obtaining Consents....................... 31
Section 5.3. Further Assurances..................................... 32
Section 5.4. Conduct of Business.................................... 32
Section 5.5. Public Announcements................................... 34
Section 5.6. Use of Raytheon Name................................... 34
Section 5.7. Notice of Material Developments:....................... 34
Section 5.8. Exclusivity............................................ 34
Section 5.9. Receivable Financing Facilities and Other Receivables
Obligations............................................ 35
Section 5.10. Warranty Obligation.................................... 38
Section 5.11. Noncompetition......................................... 38
Section 5.12. Nonsolicitation........................................ 39
Section 5.13. Regulation S-X......................................... 39
Section 5.14. Lines of Business...................................... 40
Article 6..................................................................... 40
Section 6.1. Retention of Employees................................. 40
Section 6.2. Investment Plans....................................... 41
Section 6.3. Retention Plans........................................ 41
Section 6.4. Access to Books and Records............................ 42
Article 7..................................................................... 43
Section 7.1. Tax Treatment of Purchase and Sale of Interest;
Cooperation............................................ 43
Section 7.2. Allocation of Transfer and Property Taxes.............. 43
Section 7.3. Refunds................................................ 44
Section 7.4. [Intentionally Omitted]................................ 44
Section 7.5. Tax Indemnity by Xxxx and Raytheon..................... 44
Section 7.6. Allocation of Certain Taxes............................ 45
ii
Section 7.7. Filing Responsibility.................................. 45
Section 7.8. Refunds and Carrybacks................................. 46
Section 7.9. Cooperation and Exchange of Information................ 46
Section 7.10. Tax Sharing Agreements................................. 48
Article 8..................................................................... 48
Section 8.1. Representations, Warranties and Covenants of Raytheon.. 48
Section 8.2. Filings; Consents; Waiting Periods..................... 48
Section 8.3. No Injunction.......................................... 48
Section 8.4. Securityholders Agreement and Other Agreements......... 48
Section 8.5. Proceedings............................................ 49
Section 8.6. Financing.............................................. 49
Section 8.7. Closing Documents...................................... 49
Section 8.8. Waiver................................................. 49
Article 9..................................................................... 50
Section 9.1. Representations, Warranties and Covenants of Xxxx...... 50
Section 9.2. Filings: Consents: Waiting Periods..................... 50
Section 9.3. No Injunction.......................................... 50
Section 9.4. Securityholders Agreement and Other Agreements......... 50
Section 9.5. Proceedings............................................ 51
Section 9.6. Closing Documents...................................... 51
Section 9.7. Waiver................................................. 51
Article 10.................................................................... 51
Section 10.1. Survival Periods....................................... 51
Section 10.2. Indemnification by Raytheon............................ 52
Section 10.3. Indemnification by the Surviving Entity................ 53
Section 10.4. Indemnification Procedures............................. 53
Section 10.5. Certain Limitations.................................... 54
Section 10.6. Indemnification by Raytheon for Excluded Liabilities... 56
Section 10.7. Other Indemnification Provisions....................... 56
Section 10.8. Arbitration Procedure.................................. 56
Section 10.9. Exclusive Remedy....................................... 58
Article 11.................................................................... 58
Section 11.1. Termination............................................ 58
Section 11.2. Procedure and Effect of Termination.................... 58
Article 12.................................................................... 59
Section 12.1. Counterparts........................................... 59
Section 12.2. Governing Law; Consent to Jurisdiction................. 59
Section 12.3. Entire Agreement....................................... 59
Section 12.4. Expenses............................................... 59
Section 12.5. Notices................................................ 59
iii
Section 12.6. Successors and Assigns................................. 60
Section 12.7. Headings: Definitions.................................. 60
Section 12.8. Amendment.............................................. 61
Section 12.9. Waiver; Effect of Waiver............................... 61
Section 12.10. Interpretation; Absence of Presumption................. 61
Section 12.11. Specific Performance................................... 62
Section 12.12. Remedies Cumulative.................................... 62
iv
