EXHIBIT 10.9
LIMITED NONCOMPETITION AGREEMENT
This Limited Noncompetition Agreement between Lockheed Xxxxxx
Corporation ("Lockheed Xxxxxx") and L-3 Communications Corporation ("L-3") is
dated as of April 30, 1997 with reference to the following:
Recitals
WHEREAS, Lockheed Martin, Lehman Brothers Capital Partners III, L.P.,
Xxxxx X. Xxxxx, Xxxxxx X. XxXxxxx and L-3 Communications Holdings, Inc.
("Holdings") have entered into a Transaction Agreement dated as of March 28,
1997 (as amended by Amendment No. 1 to Transaction Agreement dated as of
April 11, 1997, and as it may be further amended from time to time, the
"Transaction Agreement"); and
WHEREAS, the Transaction Agreement contemplates that the business and
assets of certain business elements of Lockheed Xxxxxx, the Business Units,
will be sold upon the terms and subject to the conditions of the Transaction
Agreement to Holdings; and
WHEREAS, Section 12.01 of the Transact on Agreement provides that the
obligations of Lockheed Xxxxxx, Holdings and the Purchasers to consummate the
Closing are subject to the satisfaction (or waiver) of certain enumerated
conditions one of which (contained with Section 12.01(e)) is that Lockheed
Xxxxxx and Holdings shall have executed and delivered the noncompetition
agreement contemplated by Section 9.09 of the Transaction Agreement; and
WHEREAS, Holdings will conduct the businesses sold to it under the
Transaction Agreement through L-3, a wholly-owned subsidiary of Holdings.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties contained herein, Lockheed Xxxxxx and
L-3 agree as follows:
1. Capitalized terms used but not defined in this Limited
Noncompetition Agreement shall have the meanings ascribed to them in the
Transaction Agreement.
2. Subject to the provisions of Xxxxxxxxx 0, Xxxxxxxxx 4, Paragraph 5
and Paragraph 6 hereof, the Lockheed Xxxxxx Companies shall not sell products
anywhere in the world in competition with products of L-3 listed on
"Attachment A" hereto, or being supplied as of the Closing Date by the
Business in connection with its Performance of the specific programs listed
on "Attachment A" hereto (collectively, the "competing businesses"), in each
instance for the applications listed opposite the product or program listed
on Attachment A and for a period of three years commencing as of the Closing
Date.
3. The provisions of Paragraph 2 shall prohibit the acquisition by
Lockheed Xxxxxx or any of its Affiliates of all or any part of a business or
Person (whether through the acquisition of assets, securities or other
ownership interest, the effecting of a merger, business combination,
reorganization, exchange or recapitalization or other similar transaction)
(the "Acquired Business") with any Person where a primary purpose of the
acquisition is the avoidance of the prohibitions of Paragraph 2. For
purposes of the foregoing, in the case of any such acquisition by Lockheed
Xxxxxx or any of its Affiliates where the competing business conducted by the
Acquired Business represents greater than 35% of the revenues of the Acquired
Business for its most recently completed fiscal year, a primary purpose of
the transaction shall be deemed to be the avoidance of the prohibitions of
Paragraph 2. Notwithstanding the provisions of the preceding sentence, the
provisions of Paragraph 2 shall not prohibit the acquisition by Lockheed
Xxxxxx or any of its Affiliates of an Acquired Business where the competing
business conducted by the Acquired Business represents greater than 35% of
the revenues of the Acquired Business (a "Disqualifying Acquisition," and the
portion of the Acquired Business that is a competing business being the
"Disqualified Business"), provided that Lockheed Xxxxxx or any of its
Affiliates offers to sell and assign the Disqualified Business (and
associated liabilities) obtained and assumed in the Disqualifying Acquisition
for cash to L-3 within 90 days of the consummation of the Disqualifying
Acquisition at the fair market value of such Disqualified Business (and
associated liabilities) with the benefit of substantially similar
representations, warranties and indemnification periods from the fair market
value of such Disqualified Business (and associated liabilities), L-3 and
such Lockheed Xxxxxx or their representatives shall meet within 15 days of
the date such offer is made and attempt mutually to determine in good faith
such fair market value. If L-3 and Lockheed Xxxxxx are unable to determine a
mutually acceptable fair market value within 20 days after their initial
meeting, L-3 and Lockheed Xxxxxx shall mutually engage (and share equally in
the fees and expenses of) an investment banking firm to determine within 20
days of such firm's engagement the fair market value of the Disqualified
Business (and associated liabilities), which determination shall be binding
upon L-3 and Lockheed Xxxxxx for purposes of Lockheed Xxxxxx'x offer to L-3
as contemplated herein. Lockheed Xxxxxx shall not be obligated to keep its
offer to L-3 open for more than 20 days after final determination of the fair
market value of the Disqualified Business and its assumption of the
associated liabilities within 75 days of such acceptance, otherwise Lockheed
Xxxxxx and its Affiliates shall be permitted to keep and operate, or divest,
such Disqualified Business (and associated liabilities) in Lockheed Xxxxxx'x
sole discretion.
4. The prohibitions of Paragraph 2 shall not apply to:
(a) businesses operated and managed by Lockheed Xxxxxx or its
Affiliates on behalf of the U.S. Government; or
(b) Acquired Businesses where the acquisition is permitted under
Paragraph 3; provided that in the case of any such acquisition (i) the
competing business was being conducted by the Acquired Business as of the
closing of the acquisition of the Acquired Business or (ii) Lockheed Xxxxxx
or the Acquired Business can affirmatively demonstrate that the Acquired
Business was considering entering the competing business as of the closing of
the acquisition of the Acquired Business, or (iii) the competing business is
reasonably related to the businesses referenced in either or both of the
preceding clauses (i) or (ii); or
(c) the acquisition by Lockheed Xxxxxx or any of its Affiliates of
not greater than twenty percent of the voting securities of any Person
engaged in a competing business; or
(d) the acquisition by Lockheed Xxxxxx or any of its Affiliates of
any non-voting securities of any Person engaged in a competing business.
5. Notwithstanding the provisions of Paragraph 2, nothing in this
Limited Noncompetition Agreement shall prevent Lockheed Xxxxxx or any of its
Affiliates from:
(a) continuing to engage without impediment in any business,
including but not limited to the unrestricted sale of products related to
that business, conducted by Lockheed Xxxxxx or any of its Affiliates as of
Closing (other than businesses conducted by Lockheed Xxxxxx solely through
the Business Units), any such business being hereinafter referred to as an
"Existing Business"; or
(b) entering into any business and thereafter engaging without
impediment in such business, including but not limited to the unrestricted
sale of products related to that business where Lockheed Xxxxxx can
affirmatively demonstrate that, as of the Closing, Lockheed Xxxxxx or any of
its Affiliates or any business element thereof (excluding the Business Units)
was considering entering such business, any such business being hereinafter
referred to as a "Planned Business"; or
(c) entering into any business and thereafter engaging without
impediment in such business, including but not limited to the unrestricted
sale of products related to that business, where such business is reasonably
related to either or both an Existing Business or a Planned Business.
6. For the purposes of Paragraph 2, the sale by Lockheed Xxxxxx or its
Affiliates (including, without limitation, any Acquired Business) of systems
manufactured, assembled, fabricated or integrated by Lockheed Xxxxxx or its
Affiliates (which systems may themselves be subsystems or components of
larger systems) where the system manufactured, assembled, fabricated or
integrated by Lockheed Xxxxxx or its Affiliates (A) includes as one or more
subsystems, components, subcomponents or other parts of the system products
sold by (i) L-3 or (ii) third-party sources other than L-3 or (B) where such
system includes as one or more subsystems, components, subcomponents or other
parts of the system products manufactured, assembled, fabricated or
integrated by Lockheed Xxxxxx or its Affiliates shall be deemed not to be a
sale in competition with products sold by L-3 and, therefore, is permitted
under Paragraph 2; provided, however, that, if sale of the product
manufactured, assembled, fabricated or integrated is not permitted by any of
the exceptions to Paragraph 2 other than by clause (B) of this Paragraph 6,
then prior to manufacturing the subsystem, component, subcomponent or other
part of the system Lockheed Xxxxxx shall in its good faith business judgment
(which may include, but is not limited to, consideration of the optimum
combination of performance, schedule, quality, cost, customer preference,
ability to provide a total solution and/or turnkey system and other factors
considered relevant to the decision by the Lockheed Xxxxxx company making the
make/buy decision) consider procuring the item from L-3 and provided further
that items manufactured by Lockheed Xxxxxx or any of its Affiliates in
reliance on the exception provided by clause (B) of this Paragraph 6 may only
be sold during the term of this Limited Noncompetition Agreement as part of a
system qualifying for the exception provided by clause (B) of this Paragraph
6.
7. Lockheed Xxxxxx acknowledges that in the event of its or its
Subsidiaries' breach of the covenants contained in this Limited
Noncompetition Agreement, money damages would be an inadequate remedy.
Accordingly, without prejudice to the rights of L-3 also to seek such damages
or other remedies available to it, L-3 may seek, and Lockheed Xxxxxx shall
not contest the appropriateness of injunctive or other equitable relief in
any proceeding that L-3 may bring to enforce the covenants contained in this
Limited Noncompetition Agreement. No waiver of any breach of the covenants
contained in this Limited Noncompetition Agreement shall be implied from
forbearance or failure of L-3 to take action in respect thereof.
8. Lockheed Xxxxxx and L-3 agree that, if any provision of this
Limited Noncompetition Agreement should be adjudicated to be invalid or
unenforceable, such provision shall be deemed deleted herefrom with respect,
and only with respect, to the operation of such provision in the particular
jurisdiction in which such adjudication was made. To the extent any such
provisions may be valid and enforceable in such jurisdiction by limitations
on the scope of the activities, geographical area or time period covered, L-3
and Lockheed Xxxxxx agree that such provision instead shall be deemed limited
to the extent, and only to the extent, necessary to make such provision
enforceable to the fullest extent permissible under the laws and public
policies in such jurisdiction.
9. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
if to Lockheed Xxxxxx:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx.
Telecopy: (000) 000-0000
and
Miles & Stockbridge, a
Professional Corporation
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
If to L-3:
L-3 Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with copies to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and
Xxxxxx Brothers Capital Partners III, L.P.
3 World Financial Center
New York, New York 10285
Attention: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
and
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx.
Telecopy: (000) 000-0000
or to such other address or telecopy number and with such other copies, as
such party may hereafter specify for the purpose by notice to the other
parties. Each such notice, request or other communication shall be effective
(i) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Paragraph 9 and evidence of receipt is received or
(ii) if given by any other means, upon delivery or refusal of delivery at the
address specified in this Paragraph 9.
10. Any provision of this Limited Noncompetition Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Lockheed Xxxxxx and L-3, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
under this Limited Noncompetition Agreement shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
11. The provisions of this Limited Noncompetition Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns; provided that no party may assign, delegate or
otherwise transfer any of its right or obligations under this Agreement
without the consent of Lockheed Xxxxxx, in the case of L-3, and L-3 in the
case of Lockheed Xxxxxx. Notwithstanding the foregoing, the provisions of
this Limited Noncompetition Agreement shall not apply to any of the Lockheed
Xxxxxx Companies to the extent that such companies no longer are Subsidiaries
of Lockheed Xxxxxx.
12. As used in this Limited Noncompetition Agreement, any reference to
the plural shall include the singular, and the singular shall include the
plural. With regard to each and every term and condition of this Limited
Noncompetition Agreement, the parties understand and agree that the same have
or has been mutually negotiated, prepared and drafted, and that if at any
time the parties desire or are required to interpret or construe any such
term or condition or any agreement or instrument subject hereto, no
consideration shall be given to the issue of which party actually prepared,
drafted or requested any term or condition of this Limited Noncompetition
Agreement.
13. This Limited Noncompetition Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof,
supersedes all prior agreements, understandings and negotiations, both
written and oral, between the parties with respect to the subject matter
thereof, and satisfies all obligations, covenants and agreements of Lockheed
Xxxxxx under Section 9.09 of the Transaction Agreement.
14. This Limited Noncompetition Agreement shall be construed in
accordance with and governed by the law of the State of New York.
15. This Limited Noncompetition Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Limited
Noncompetition Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Limited
Noncompetition Agreement as of the date first set forth above.
LOCKHEED XXXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Assistant Secretary
L-3 COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Vice President, Finance and
Controller
