1
Execution Copy
EXHIBIT 10.1
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AGREEMENT AND PLAN OF MERGER
by and among
ORBITAL SCIENCES CORPORATION,
MAGELLAN CORPORATION,
THALES NORTH AMERICA INC.
and
THOMSON-CSF ELECTRONICS INC.
Dated as of May 25, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS.........................................................2
1.1. Defined Terms.......................................................2
1.2. Other Defined Terms.................................................14
1.3. Interpretation Provisions...........................................15
ARTICLE II. CONVERSION OF ORBITAL DEBT; MERGER.................................16
2.1. Authorization of Preferred Stock....................................16
2.2. Conversion of Orbital Debt..........................................16
2.3. Filings with the Delaware Secretary of State........................16
2.4. Merger..............................................................16
2.5. Further Assurances..................................................17
ARTICLE III. EFFECT OF THE MERGER ON CAPITAL STOCK..............................17
3.1. Conversion of T Company Shares......................................17
3.2. Conversion of M Company Preferred Stock.............................17
3.3. Conversion of M Company Common Stock................................17
3.4. Cancellation of Treasury Stock......................................18
3.5. Certificate Surrenders and Transfers................................18
3.6. Taking of Necessary Action; Further Action..........................19
3.7. Dissenting Shares...................................................19
3.8. Withholding Rights..................................................19
3.9. Treatment of M Company Options......................................20
3.10. Escrow Arrangements.................................................20
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF T PARENT AND T COMPANY...........20
4.1. Organization........................................................21
4.2. Authorization.......................................................21
4.3. Officers and Directors..............................................21
4.4. No Conflict or Violation; Consents..................................21
4.5. No Material Impairment..............................................22
4.6. Brokers and Finders.................................................23
4.7. Litigation..........................................................23
4.8. Financing...........................................................23
4.9. Disclaimer of Additional and Implied Warranties.....................23
4.10. Ownership Interest in Orbital and M Company.........................23
ARTICLE V. REPRESENTATIONS AND WARRANTIES REGARDING M COMPANY.................23
5.1. Organization of M Company...........................................24
5.2 Capitalization of M Company.........................................24
5.3. Authorization.......................................................25
5.4. Officers and Directors..............................................25
5.5. Bank Accounts.......................................................25
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5.6. Subsidiaries, Etc...................................................26
5.7. Absence of Certain Changes or Events................................27
5.8. Title to Assets.....................................................30
5.9. Sufficiency of Assets...............................................30
5.10. Fixtures and Equipment..............................................30
5.11. Contracts...........................................................30
5.12. No Conflict or Violation; Consents..................................33
5.13. Permits.............................................................33
5.14. Financial Statements; Books and Records.............................34
5.15. Liabilities.........................................................34
5.16. Litigation..........................................................35
5.17. Labor Matters.......................................................35
5.18. Employee Benefit Plans..............................................37
5.19. Transactions with Related Parties...................................41
5.20. Compliance with Law.................................................41
5.21. Intellectual Property...............................................41
5.22. Tax Matters.........................................................43
5.23. Insurance...........................................................47
5.24. Purchase Commitments and Outstanding Bids...........................48
5.25. Payments............................................................48
5.26. Customers and Suppliers.............................................48
5.27. Environmental Matters...............................................49
5.28. Brokers; Transaction Costs..........................................50
5.29. Governmental Contracts..............................................50
5.30. Full Disclosure.....................................................51
5.31. Disclaimer of Additional and Implied Warranties.....................51
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF ORBITAL..........................52
6.1. Organization........................................................52
6.2. Authorization.......................................................52
6.3. No Conflict or Violation; Consents..................................52
6.4. Litigation..........................................................53
6.5. Ownership of M Company Common Stock.................................53
6.6. Full Disclosure.....................................................53
ARTICLE VII. ACTIONS PRIOR TO THE CLOSING.......................................54
7.1. Conduct of Business of M Company....................................54
7.2. Investigation.......................................................57
7.3. Notification of Certain Matters.....................................57
7.4. Restrictions on Certain Transactions................................57
7.5. Antitrust and Exon-Xxxxxx Provision.................................57
7.6. Further Assurances..................................................58
7.7. Tax Returns.........................................................59
7.8. M Company Intercompany Debt.........................................60
7.9 Meeting of M Company Stockholders...................................60
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7.10 Stockholder Agent of the Stockholders; Power of Attorney............60
7.11 Western Atlas.......................................................61
ARTICLE VIII. CONDITIONS PRECEDENT..............................................62
8.1 Conditions to Each Party's Obligation...............................62
8.2. Conditions to Obligations of T Parent and T Company.................63
8.3 Conditions To Obligations Of Orbital And M Company..................63
ARTICLE IX. CLOSING............................................................64
9.1. Deliveries by Orbital and M Company.................................64
9.2. Deliveries by T Parent and T Company................................65
ARTICLE X. TAX MATTERS........................................................66
10.1. Tax Allocation and Indemnification..................................66
10.2. Survival............................................................67
10.3. Exclusive Remedy....................................................67
10.4. Contests............................................................67
10.5. Tax Return Preparation..............................................69
10.6. Assistance and Cooperation..........................................70
10.7. Straddle Period and Closing Date Tax Allocation; Straddle Period
Tax...............................................................71
10.8. Pre-Closing Tax Returns Due After Closing Date......................73
10.9. Tax Sharing Agreements..............................................73
10.10. Filing of Amended Returns...........................................73
10.11. Treatment of Tax Indemnity Payments.................................73
10.12. Tax Refunds and Tax Benefits........................................74
ARTICLE XI. ADDITIONAL AGREEMENTS..............................................74
11.1. Survival of Representations, Warranties, Agreements and Covenants...74
11.2. Indemnification.....................................................75
11.3. Non-Compete; Non-Solicitation.......................................81
11.4. Books and Records; Tax Matters......................................82
11.5. Transition Services.................................................83
11.6. Acquisition of Rights to Confidentiality............................84
11.7. Orbital Matters.....................................................84
ARTICLE XII. MISCELLANEOUS......................................................84
12.1. Termination.........................................................84
12.2. Assignment; No Third-Party Beneficiaries............................85
12.3. Notices.............................................................86
12.4. Choice of Law.......................................................87
12.5. Entire Agreement; Amendments and Waivers............................88
12.6. Counterparts........................................................88
12.7. Invalidity..........................................................88
12.8. Expenses............................................................88
12.9. Publicity...........................................................88
12.10. Disputes............................................................89
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TABLE OF EXHIBITS
Exhibit A Form of Certificate of Amendment
Exhibit B Form of Certificate of Merger
Exhibit C Form of Escrow Agreement
Exhibit D Form of Exchange Agreement
Exhibit E Matters to be covered by Legal Opinions
Exhibit F Form of Stockholder Release
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Execution Copy
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is entered
into as of May 25, 2001 by and among Orbital Sciences Corporation, a Delaware
corporation ("Orbital"), Magellan Corporation, a Delaware corporation ("M
Company"), Thales North America Inc., a Delaware corporation ("T Parent"), and
Thomson-CSF Electronics Inc., a Delaware corporation ("T Company").
RECITALS
A. Upon the terms and subject to the conditions set forth in this
Agreement, M Company and T Company will enter into a business combination
transaction pursuant to which T Company will merge with and into M Company (the
"Merger"), with M Company continuing as the surviving corporation ("Surviving
Corporation").
B. The respective Boards of Directors of Orbital, M Company, T
Parent and T Company, including a special independent committee of the Board of
Directors of M Company, have determined that the Merger would be fair to and in
the best interests of their respective stockholders, and each such Board has
approved this Agreement and the transactions contemplated hereby. The Board of
Directors of M Company, including the special independent committee of the
Board, has declared the advisability of this Agreement and recommended approval
and adoption of this Agreement and the Merger by the stockholders of M Company.
C. In order to induce T Parent and T Company to enter into this
Agreement, concurrently herewith Orbital and certain other stockholders of M
Company are entering into a Stockholder Support Agreement (the "Stockholder
Support Agreement") pursuant to which, among other things, each such stockholder
has agreed to vote in favor of approval and adoption of this Agreement.
D. Orbital, M Company, T Parent and T Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also prescribe various conditions to the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the parties hereto agree as follows:
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ARTICLE I.
DEFINITIONS
1.1. DEFINED TERMS. As used herein, the terms below shall have
the following meanings:
"Action" means any action, order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding or investigation.
"Affiliate" of a Person means any other Person which directly or
indirectly controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person; means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Affiliated Group" means any affiliated group within the meaning
of Section 1504(a) of the Code or any similar group defined under any similar
provision of state, local or foreign law.
"Agreement" means this Agreement and Plan of Merger, including
the M Company Schedule and T Company Schedule, dated as of May 25, 2001, by and
among Orbital, M Company, T Parent and T Company, and all amendments hereto made
in accordance with Section 12.5.
"Ancillary Agreements" means the Purchase Agreement, the
Stockholder Support Agreement and the Escrow Agreement.
"Assets" means with respect to any Person, all of its right,
title and interest in and to its properties, assets and rights of any kind,
whether tangible or intangible, real or personal.
"Balance Sheet Date" means December 31, 2000.
"Benefit Arrangement" means with respect to any Person, any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, life, health,
disability or accident benefits (including any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the same
or other benefits) or for deferred compensation, profit-sharing bonuses, stock
options, stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance,
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compensation or benefits whether or not legally binding, which (A) is not a
Welfare Plan, Pension Plan or Multiemployer Plan, (B) is or has been entered
into, maintained, contributed to or required to be contributed to, by such
Person, or an ERISA Affiliate thereof or under which such Person, or any ERISA
Affiliate thereof may incur any liability, and (C) covers or has covered any
employee or former employee of such Person, or any ERISA Affiliate thereof (with
respect to their relationship with such entities).
"Books and Records" means, with respect to any Person, (a) all
product, business and marketing plans, sales and promotional literature and
artwork relating to its Assets or Business, (b) all books, records, lists,
ledgers, financial data, files, reports, product and design manuals, plans,
drawings, technical manuals and operating records of every kind relating to its
Assets or Business (including records and lists of customers, distributors,
suppliers and personnel) and (c) all telephone and fax numbers used in its
Business, in each case whether maintained as hard copy or stored in computer
memory and whether owned by such Person or its respective Affiliates.
"Business" means, with respect to any Person, the business of
such Person as conducted on the date hereof.
"Business Day" or "business day" means any day that is not a
Saturday, a Sunday or other day on which banks are required or authorized by law
to be closed in the United States or France.
"Certificate of Amendment" means the Certificate of Amendment of
Certificate of Incorporation of M Company substantially in the form of Exhibit A
attached hereto.
"Certificate of Merger" means the Certificate of Merger
substantially in the form of Exhibit B attached hereto.
"CFIUS" means the Committee on Foreign Investment in the United
States, an interagency committee chaired by a representative of the United
States Secretary of the Treasury.
"Closing" means the consummation of the transactions contemplated
by this Agreement on the Closing Date.
"Closing Date" means the date to be specified by Orbital, M
Company and T Company, which shall be no later than the fifth business day
following the satisfaction or waiver of all of the conditions set forth in
Article VIII hereof.
"Closing Place" means such location agreed upon by the parties
or, in the absence of such an agreement, the offices of Xxxxx & Xxxxxxx L.L.P.
in Washington, D.C.
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"Code" means Internal Revenue Code of 1986, as amended, and any
rules and regulations promulgated thereunder.
"Common Stock Consideration" means $14,029,734 minus an amount
equal to (i) the Minority Western Atlas Amount divided by (ii). 0.32.
"Company Proprietary Property" means all Proprietary Rights which
are used or are proposed to be used in connection with the conduct of the
business of M Company as currently conducted.
"Confidentiality Agreement" means that certain Confidential
Disclosure Agreement dated December 7, 2000 by and among Orbital, M Company and
T Company.
"Consents" means, with respect to any Person, any and all
licenses, permits, franchises, approvals, authorizations, novations, consents or
waivers from third parties (including governmental authorities and parties to
such Person's Contracts) that are (i) required for the consummation of the
transactions contemplated by this Agreement or (ii) necessary in order that the
Surviving Corporation can conduct the Business of M Company and the M Company
Subsidiaries after the Effective Time in substantially the same manner as before
the Effective Time.
"Contracts" means, with respect to any Person, all agreements,
contracts, leases, purchase orders, undertakings, covenants not to compete,
employment agreements, confidentiality agreements, licenses, instruments,
obligations, commitments, or other binding arrangements to which such Person is
a party or by which such Person or any of its Assets are bound or affected,
whether written or oral.
"Court Order" means, with respect to any Person, any judgment,
decision, consent decree, injunction, ruling or order of any federal, state or
local court or governmental agency, department or authority that is binding on
such Person or its property under applicable law.
"Debt" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, notes, debentures or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services
(excluding trade accounts payable arising in the ordinary course of business and
payable to any Person other than Orbital or any Affiliate of Orbital), (iv)
obligations as lessee under leases which shall have been, or should be, recorded
as capital leases in accordance with GAAP, and (v) obligations under direct or
indirect guarantees in respect of indebtedness or obligations of others of the
kind referred to in clauses (i) through (iv).
"Default" with respect to any Person means (a) a breach of or
default under any Contract of such Person, (b) the occurrence of an event that
with the
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passage of time or the giving of notice or both would constitute a breach of or
default under any such Contract, or (c) the occurrence of an event that with or
without the passage of time or the giving of notice or both would give rise to a
right of termination or acceleration under any such Contract.
"DGCL" means the General Corporation Law of the State of
Delaware, as in effect from time to time.
"Effective Time" means the time on the Closing Date when the
Certificate of Merger is filed with and accepted by the Secretary of State of
the State of Delaware, or such other date and time as the parties may agree in
writing.
"Employee" means each current, or retired employee, officer
(including any acting officer), consultant, independent contractor, agent or
director of M Company or any M Subsidiary.
"Employee Contract" or "Employment Contract" means each
management, employment, severance, consulting, non-compete, confidentiality, or
similar agreement or contract with M Company or any M Subsidiary, insofar as any
such Employee performs services for M Company or any M Subsidiary, pursuant to
which M Company or any M Subsidiary has or may have any liability contingent or
otherwise.
"Employee Plans" means, with respect to any Person, all of its
respective Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare
Plans.
"Encumbrance" means any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other similar right of any third parties, whether voluntarily
incurred or arising by operation of law, and includes any agreement to give any
of the foregoing in the future, and any contingent sale or other title retention
agreement or lease in the nature thereof.
"Environmental Conditions" means, with respect to any Person, the
introduction into the environment of any pollution, including any contaminant,
irritant or pollutant or other Hazardous Substance (whether or not such
pollution constituted at the time thereof a violation of any Environmental Law
as a result of any Release of any kind whatsoever of any Hazardous Substance) as
a result of which such Person, has or may become liable to any other Person or
by reason of which any of its Assets may suffer or be subjected to any
Encumbrance.
"Environmental Laws" means all Regulations which regulate or
relate to the protection or clean-up of the environment, the use, treatment,
storage, transportation, generation, manufacture, processing, distribution,
handling or
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disposal of, or emission, discharge or other release or threatened release of,
Hazardous Substances or otherwise dangerous substances, wastes, pollution or
materials (whether gas, liquid or solid), the preservation or protection of
waterways, groundwater, drinking water, air, wildlife, plants or other natural
resources, or the health and safety of persons or property, including protection
of the health and safety of employees. Environmental Laws include, without
limitation, the Federal Water Pollution Control Act, Resource Conservation &
Recovery Act, Clean Water Act, Safe Drinking Water Act, Atomic Energy Act,
Occupational Safety and Health Act, Toxic Substances Control Act, Clean Air Act,
Comprehensive Environmental Response, Compensation and Liability Act, Hazardous
Materials Transportation Act and all analogous or related federal, state or
local law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated or
proposed thereunder.
"ERISA Affiliate" means, with respect to any Person, any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations," under "common control," or an "affiliated service group" with
such Person as defined in Section 414(b), (c) or (m) of the Code or is under
"common control" with such Person within the meaning of Section 4001(a)(14) of
ERISA.
"Escrow Agent" means SunTrust Bank, a Georgia banking
corporation.
"Escrow Agreement" means the Escrow Agreement, to be dated the
Closing Date, by and among T Company, Orbital, OrbNav and the Escrow Agent,
substantially in the form of Exhibit C attached hereto, with such modifications
as may be reasonably requested by the Escrow Agent.
"Escrow Amount" shall mean $4,000,000 of the Preferred Stock
Consideration payable to holders of M Company Preferred Stock pursuant to
Section 3.2 hereof, to be deposited with the Escrow Agent on the Closing Date.
"Exchange Agreement" means the exchange agreement between M
Company and Orbital, substantially in the form of Exhibit D attached hereto.
"Exon-Xxxxxx Provision" means Section 721 of the Defense
Production Act of 1950, as amended, and the rules and regulations promulgated
thereunder.
"Fixtures and Equipment" means, with respect to any Person, all
of the furniture, fixtures, furnishings, office equipment, development tools and
equipment, lab equipment, spare parts, tooling, molds, mask sets, database
tapes, test tapes, test fixtures and equipment, patterns, dies, computers and
software (including any source or object codes therefore or documentation
relating thereto and computer aided design equipment and software), and other
tangible personal property owned
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by such Person, wherever located and including any such Fixtures and Equipment
in the possession of any of its respective suppliers or other vendors.
"FOCI" means Foreign Ownership Control and Influence, as
addressed in the National Industrial Security Program Operating Manual
("NISPOM"), DoD 5220.22-M.
"GAAP" means generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the facts and circumstances on the date of determination.
"Hazardous Substance" means any pollutants, contaminants,
chemicals, waste and any toxic, infectious, carcinogenic, reactive, corrosive,
ignitable or flammable chemical or chemical compound or hazardous substance,
material or waste, whether solid, liquid or gas, including any quantity of
asbestos in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance, waste waters, sludges, slag and any other
substance, material or waste that is subject to regulation, control or
remediation under any Environmental Laws.
"Intercompany Debt Taxes" means any Taxes arising from the
contribution or cancellation that may occur under Section 7.8.
"IRS" means the U.S. Internal Revenue Service.
"Inventory" means, with respect to any Person, all merchandise
owned and intended for resale and all raw materials, work in process, finished
goods, wrapping, supply and packaging items and similar items, whether or not
located on the premises, on consignment to a third party, or in transit or
storage.
"Law" or "Laws" means all foreign, federal, state and local
statutes, laws, ordinances, regulations, rules, resolutions, orders, tariffs,
determinations, writs, injunctions, awards (including, without limitation,
awards of any arbitrator), judgments and decrees applicable to the specified
Person and to the businesses and Assets thereof (including, without limitation,
laws relating to securities registration and regulation; the sale, leasing,
ownership or management of real property; employment practices, terms and
conditions, and wages and hours; building standards, land use and zoning;
safety, health and fire prevention; export control; and environmental
protection, including Environmental Laws).
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"Liabilities" means, with respect to any Person, any direct or
indirect liability, indebtedness, obligation, commitment, expense, claim,
deficiency, guaranty or endorsement of or by such Person of any type, whether
accrued, absolute, contingent, matured, unmatured, liquidated, unliquidated,
known or unknown.
"Losses" means, collectively, any and all out of pocket costs,
losses, taxes, liabilities, obligations, damages, lawsuits, deficiencies,
claims, demands, and expenses (whether or not arising out of third-party
claims), including but not limited to interest, penalties, costs of mitigation,
losses in connection with any Environmental Law (including any clean-up or
remedial action), damages to the environment, attorneys' fees and all amounts
paid in investigation, defense or settlement of any of the foregoing, in each
case after taking into account any insurance proceeds received by the
indemnified Person and related tax benefits.
"M Company Balance Sheet" means the consolidated balance sheet of
M Company as of the Balance Sheet Date.
"M Company Common Stock" means the issued and outstanding shares
of the common stock, $0.01 par value per share, of M Company.
"M Company Credit Facility" means the Loan and Security Agreement
dated March 16, 1998 between Silicon Valley Bank and M Company, as amended.
"M Company Financial Statements" means the draft consolidated
financial statements of M Company as of, and for the twelve months ended,
December 31, 2000 and its balance sheet as of December 31, 1999, copies of which
are included in Section 5.14 of the M Company Schedule.
"M Company Material Adverse Change" or "M Company Material
Adverse Effect" means any change, effect or event that, individually or when
taken together with other changes, effects or events, is or is reasonably likely
to be materially adverse to the financial condition, business, results of
operations, assets, liabilities or operations of M Company and the M Company
Subsidiaries, taken as a whole, except for adverse changes, effects or events
caused by (i) changes in the economy generally or in the market for consumer or
industrial global positioning systems generally and not specifically relating to
M Company or any M Subsidiary, (ii) the payment of reasonable out of pocket fees
and expenses (including legal, accounting, investment banking and other fees and
expenses incurred in connection with the transactions contemplated by this
Agreement), or the payment of any amounts due to, or the provision of any other
benefits (including the benefits relating to the acceleration of stock options)
to any officers or employees under employment contracts, employee benefit plans
or severance arrangements in existence on the date of this Agreement, and (iii)
any change in GAAP or applicable Laws or Regulations.
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"M Company Options" means options to purchase M Company Common
Stock granted by M Company prior to the Closing Date pursuant to the M Company
Stock Option Plans.
"M Company Schedule" means the Disclosure Schedule dated as of
the date hereof delivered by M Company to T Company.
"M Company Stock Option Plans" means the Ashtech Inc. 1995 Stock
Option/Stock Issuance Plan, the M Company 1996 Stock Option Plan and the M
Company 1998 Stock Option Plan, each, as amended.
"M Company Subsidiary" or "M Subsidiary" means any and all
Subsidiaries of M Company.
"Merger" means the merger of T Company into M Company in
accordance with this Agreement and the Certificate of Merger.
"Minority Escrow Amount" means $500,000 of the Common Stock
Consideration payable to the holders of Minority M Company Common Stock pursuant
to Section 3.3 hereof, to be deposited with the Escrow Agent on the Closing
Date, provided, however, that, if the Western Atlas Litigation is settled as
described in the first sentence of Section 7.11, then the Minority Escrow Amount
shall be zero.
"Minority M Company Common Stock" means all of the outstanding
shares of M Company Common Stock owned by holders other than Orbital.
"Minority Western Atlas Amount" means the lesser of (i) $500,000
or (ii) 32% of the Western Atlas Amount; provided, however, that if the Western
Atlas Litigation is not settled as described in the first sentence of Section
7.11 on or prior to the Closing Date, then the Minority Western Atlas Amount
shall be zero.
"Multiemployer Plan" means, with respect to any Person, any
"multiemployer plan," as defined in Sections 4001(a)(3) of ERISA or 3(37) of the
Code, (A) which such Person or any ERISA Affiliate thereof maintains,
administers, contributes to or is required to contribute to, or, after September
25, 1980, maintained, administered, contributed to or was required to contribute
to, or under which such Person or any ERISA Affiliate thereof may incur any
liability and (B) which covers any employee or former employee of such Person or
any ERISA Affiliate thereof (with respect to their relationship with such
entities).
"Net Debt Amount" means the result of the following calculation:
(i) the aggregate amount of all Debt of M Company and the M
Subsidiaries; plus
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(ii) the aggregate additional amount available to be borrowed
under the M Company Credit Facility; minus
(iii) lesser of (x) $800,000 or (y) the aggregate amount of all
cash and cash equivalents of M Company and the M
Subsidiaries plus the aggregate additional amount
available to be borrowed under the M Company Credit
Facility; minus
(iv) the aggregate amount, if any, paid by Orbital to Silicon
Valley Bank pursuant to the M Company Credit Facility (x)
to cure a default occurring after the date hereof or (y)
to satisfy a demand for payment made by Silicon Valley
Bank and which, at the time of payment, is required to be
paid under the terms of the M Company Credit Facility,
in each case on a consolidated basis, as of the Closing Date,
calculated in accordance with GAAP.
"Orbital Debt" means the aggregate indebtedness of M Company and
the M Subsidiaries to Orbital or any Subsidiary of Orbital (other than M Company
or the M Subsidiaries), including the principal amount(s) and any accrued and
unpaid interest or fees.
"Orbital Taxes" means (i) all Taxes arising in the Pre-Closing
Tax Period and the portion of the Taxes for any Straddle Period allocable to the
period up to and including the Closing Date under Section 10.7(a) and (ii) any
Taxes arising from any retirement, redemption, cancellation, satisfaction or
contribution to capital of indebtedness of M Company or any M Subsidiary
occurring in the Pre-Closing Tax Period, but excluding for these purposes any
Section 338 Taxes, any Intercompany Debt Taxes (unless such Section 338 Taxes
and Intercompany Debt Taxes would not have been incurred but for a breach
referred to in Section 10.1(a)(ii)), and any Taxes arising from any actions
taken after the Effective Time by T Company, T Parent, Surviving Corporation or
any M Company Subsidiary.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means, with respect to any Person, any "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) (A) which such Person or any ERISA Affiliate thereof
maintains, administers, contributes to or is required to contribute to, or,
within the six years prior to the Closing Date, maintained, administered,
contributed to or was required to contribute to, or under which such Person or
any ERISA Affiliate thereof may incur any liability and (B) which covers any
employee or former employee of such Person or any ERISA Affiliate thereof (with
respect to their relationship with such entities).
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"Permits" means all licenses, permits, franchises, approvals, or
authorizations of any governmental authority, whether foreign, federal, state or
local.
"Person" means any person or entity, whether an individual,
trustee, corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any other entity.
"Post-Closing Tax Period" means any Tax period beginning after
the Closing Date.
"Post-Closing Tax Return" means any Tax Return that is required
to be filed by M Company or any M Subsidiary with respect to a Post-Closing Tax
Period.
"Pre-Closing Tax Period" means any Tax periods or portions
thereof ending on or before the Closing Date.
"Pre-Closing Tax Return" means any Tax Return that is required to
be filed with respect to M Company or any M Subsidiary with respect to a
Pre-Closing Tax Period.
"Preferred Stock Consideration" means (i) Forty-Three Million
Five Hundred Thousand Dollars ($43,500,000) minus (ii) the Net Debt Amount minus
(iii) the total amount of transaction bonuses and change of control payments
made or required to be made by M Company or any M Subsidiary in connection with
the transactions contemplated hereby minus (iv) the Common Stock Consideration
minus (v) the Western Atlas Amount.
"Proprietary Rights" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereon, and all patents, patent applications and patent disclosures, together
with all reissues, continuations, continuations-in-part, revisions, divisions,
extensions and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos, trade names, domain names and corporate names, together with all
translations, adaptations, derivations, and combinations thereof, and including
all goodwill associated therewith, and all applications, registrations and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations and renewals in connection therewith, (d)
all mask works and all applications, registrations and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including but not limited to research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, methods,
schematics, technology, flowcharts, block diagrams, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (f) all computer
software in whatever form (including data and related
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documentation), (g) all copies and tangible embodiments of any of the foregoing
(in whatever form or medium) and (h) all licenses, sublicenses, permissions or
Contracts in connection with any of the foregoing.
"Purchase Agreement" means the Purchase Agreement, dated as of
the date hereof, by and among Orbital, Orbital Navigation Corporation, a
Delaware corporation ("OrbNav"), and T Parent.
"Regulations" means any laws, statutes, ordinances, regulations,
rules, notice requirements, court decisions, agency guidelines, principles of
law and orders of any foreign, federal, state or local government and any other
governmental department or agency, including Environmental Laws, energy, motor
vehicle safety, public utility, zoning, building and health codes, occupational
safety and health and laws respecting employment practices, employee
documentation, terms and conditions of employment and wages and hours.
"Related Party" means as to any Person, any of such Person's
officers and directors, any Affiliate thereof or the respective officers and
directors of any such Affiliate, or any other Person in which any of the
foregoing Persons have any direct or material indirect interest.
"Release" means and includes any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or the workplace of any Hazardous Substance,
and otherwise as defined in any Environmental Law.
"Representative" means any officer, director, principal,
attorney, accountant, agent, employee or other representative of any Person.
"Section 338 Taxes" means any Taxes arising from any Section
338(g) or similar election under federal, state, local or foreign tax law made
by T Parent with respect to the acquisition of M Company or any M Company
Subsidiary.
"Stockholders" means all holders of M Company Common Stock or the
M Company Preferred Stock outstanding immediately prior to the Effective Time.
"Straddle Period" means a Tax period or year commencing before
and ending after the Closing Date.
"Straddle Return" means a Tax Return for a Straddle Period.
"Subsidiary" means, with respect to any Person, (A) any
corporation in an unbroken chain of corporations beginning with such Person if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing 50 percent or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain; (B) any
partnership in which
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such Person is a general partner; (C) any partnership in which such Person
possesses a 50 percent or greater interest in the total capital or total income
of such partnership; or (D) any limited liability company, joint venture,
association or other entity in which such Person possesses a direct or indirect
50 percent or greater equity interest.
"Surviving Corporation" means M Company after the Effective Time.
"T Company Schedule" means the Disclosure Schedule dated as of
the date hereof delivered by T Company to M Company.
"Tax Return" means any report, return, document, declaration,
claim for refund or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to Taxes,
including any schedule or attachment thereto, information returns, and any
documents with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration, claim for refund
or other information, including any amendment thereto.
"Taxes" means any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security (or similar), retirement,
unemployment, occupation, use, service, license, net worth, payroll, franchise,
employment, severance, stamp, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, capital stock,
value-added, disability, alternative or add-on minimum, estimated and transfer
and recording, imposed by the Internal Revenue Service or any taxing authority
(whether domestic or foreign, including any federal, state, county, local or
foreign government or any subdivision or taxing agency thereof (including a U.S.
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, whether disputed or not, or with respect to, any such taxes, charges,
fees, levies or other assessments.
"To the best knowledge" or "knowledge" of a party (or similar
phrases) means to the extent of matters (i) which are actually known by (x) its
executive officers (including Xxxxx Xxxxxx), in the case of Orbital, (y) by
Xxxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxxx,
Xxxxxxx Xxxxxxx and Xxxxx Xxxxxx, in the case of M Company, or (z) by its
executive officers, including but not limited to Xxx Xxxxxxx, Xxxx Xxxx and
Xxxxx Xxxxxxxx in the case of T Company or T Parent, or (ii) which, based on
facts of which such Person is aware, would be known to a reasonable Person in
similar circumstances.
"WARN" means the Worker Adjustment and Retraining Notification
Act of 1988, as amended, and any rules and regulations promulgated thereunder.
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"Welfare Plan" means with respect to any Person any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA, (A) which such Person
or any ERISA Affiliate thereof maintains, administers, contributes to or is
required to contribute to, or under which such Person or any ERISA Affiliate
thereof has or may incur any liability and (B) which covers any employee or
former employee of such Person or any ERISA Affiliate (with respect to their
relationship with such entities) thereof.
Western Atlas Amount" means Western Atlas Costs minus the lesser
of (a) $1,800,000 or (b) fifty percent (50%) of Western Atlas Costs.
"Western Atlas Costs" shall mean the aggregate of all claims,
judgments, costs, losses, fees, damages (including without limitation statutory
and punitive damages), settlements, past, present and future royalties, fines,
expenses, including, without limitation, interest, court costs and attorneys'
fees arising out of, based upon or relating in any way to any Western Atlas
Event.
"Western Atlas Event" shall mean any or all of the following: (1)
Western Atlas Litigation; (2) infringement of, interference with, or
misappropriation of Intellectual Property rights, that are the subject of the
Western Atlas Litigation and all related applications including, but not limited
to: (a) all patents and applications that claim priority (directly or
indirectly) to patents in suit; (b) all patents and applications from which such
patents in suit claim priority (directly or indirectly); and (c) all
continuations, continuations-in-part, divisionals, reissues, reexaminations and
foreign counterparts, (collectively, "Western Atlas IP") and (3) obtaining a
license to any Western Atlas IP (including the payment of future royalties).
"Western Atlas Litigation" shall mean the litigation entitled,
Western Atlas International, Inc. v. M Company, Orbital (U.S. Dist. Ct.,
Southern Dist. of Texas (Houston Division) C.A. No. H-01-1178).
1.2. OTHER DEFINED TERMS. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
---- -------
Agreement Preamble
Certificates 3.5
Designated Executive Officer(s) 12.10(a)
Dissenting Shares 3.7
Environmental Permits 5.27(b)
FAR 5.29(a)
ICC 12.10(b)
Indemnified Party(ies) 11.2(d)
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Term Section
---- -------
Indemnifying Party(ies) 11.2(d)
Material Contracts 5.11(a)
M Company Preamble
M Company Preferred Stock 2.1
M Foreign Companies 5.22(j)
Orbital Preamble
Rules 12.10(b)
T Company Preamble
1.3. INTERPRETATION PROVISIONS.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "or" is disjunctive but
not necessarily exclusive. The terms "include" and "including" are not limiting
and mean "including without limitation."
(b) References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications thereto
through the relevant date.
(c) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(e) The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against either party.
(f) The schedules and exhibits to this Agreement are a
material part hereof and shall be treated as if fully incorporated into the body
of the Agreement.
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ARTICLE II.
CONVERSION OF ORBITAL DEBT; MERGER
2.1. AUTHORIZATION OF PREFERRED STOCK. Prior to the Effective Time, M
Company will authorize the issuance and sale of up to one share of its Series A
Preferred Stock (the "M Company Preferred Stock"), having an aggregate
liquidation preference equal to the amount of the Orbital Debt and having the
other rights, privileges, preferences and restrictions set forth in the
Certificate of Amendment.
2.2. CONVERSION OF ORBITAL DEBT. Prior to the Effective Time, Orbital
and M Company shall enter into the Exchange Agreement pursuant to which,
immediately prior to the Effective Time, the Orbital Debt shall be converted
into a total of one share of M Company Preferred Stock, having an aggregate
liquidation preference equal to the amount of the Orbital Debt and having the
other rights, privileges, preferences and restrictions set forth in the
Certificate of Amendment.
2.3. FILINGS WITH THE DELAWARE SECRETARY OF STATE. Subject to the
provisions hereof, on or prior to the Closing Date, (i) M Company shall execute
the Certificate of Amendment and file it with the Delaware Secretary of State in
accordance with the DGCL, and (ii) M Company and T Company shall execute the
Certificate of Merger and file it with the Delaware Secretary of State in
accordance with the DGCL.
2.4. MERGER. At the Effective Time, subject to the terms and
conditions set forth in this Agreement and in accordance with the DGCL:
(a) the Merger shall become effective, T Company shall merge
into M Company, the separate existence of T Company shall cease, and M Company
shall continue as the Surviving Corporation;
(b) the Certificate of Incorporation of M Company as in effect
immediately prior to the Effective Time shall continue as the Certificate of
Incorporation of Surviving Corporation (subject always to the rights of
Surviving Corporation to amend its Certificate of Incorporation after the
Effective Time in accordance with applicable law);
(c) the Bylaws of M Company as in effect immediately prior to
the Effective Time shall continue as the Bylaws of Surviving Corporation, until
altered, amended, or repealed;
(d) the directors of T Company immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their
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death, resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
(e) the officers of T Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
2.5. FURTHER ASSURANCES. T Company agrees that if, at any time after
the Effective Time, Surviving Corporation shall consider or be advised that any
further deeds, assignments, or assurances are reasonably necessary or desirable
to vest, perfect, or confirm in Surviving Corporation title to any property or
rights of T Company, Surviving Corporation and its proper officers and directors
may execute and deliver all such proper deeds, assignments, and assurances as
are reasonably necessary and do all other things reasonably necessary or
desirable to vest, perfect or confirm title to such property or rights in
Surviving Corporation and otherwise to carry out the purpose of this Agreement,
in the name of T Company or otherwise and T Parent shall cooperate in all
respects with all such actions.
ARTICLE III.
EFFECT OF THE MERGER ON CAPITAL STOCK
3.1. CONVERSION OF T COMPANY SHARES. At the Effective Time, each
issued and outstanding share of capital stock of T Company shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into an issued and outstanding share of the same class of capital
stock of Surviving Corporation.
3.2. CONVERSION OF M COMPANY PREFERRED STOCK. At the Effective Time,
each share of M Company Preferred Stock issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive an amount
in cash, without interest, equal to (i) the Preferred Stock Consideration
divided by (ii) the total number of shares of M Company Preferred Stock
outstanding immediately prior to the Effective Time, subject to the holdback of
the Escrow Amount to be deposited with the Escrow Agent pursuant to Section
3.10. Any liquidation preference attributable to the M Company Preferred Stock
shall be waived to the extent necessary to permit the payment of the Common
Stock Consideration to the holders of M Company Common Stock as set forth in
Section 3.3 hereof.
3.3. CONVERSION OF M COMPANY COMMON STOCK. At the Effective Time, each
share of M Company Common Stock issued and outstanding immediately prior
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to the Effective Time (other than shares to be cancelled in accordance with
Section 3.4 and any Dissenting Shares) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive an amount in cash, without interest, equal to (i) the Common
Stock Consideration divided by (ii) the total number of shares of M Company
Common Stock outstanding immediately prior to the Effective Time, subject to the
holdback of the Minority Escrow Amount to be deposited with the Escrow Agent if
required pursuant to Section 3.10.
3.4. CANCELLATION OF TREASURY STOCK. Each share of M Company Common
Stock that is owned by M Company shall automatically be canceled and retired and
shall cease to exist without payment of any consideration therefor.
3.5. CERTIFICATE SURRENDERS AND TRANSFERS.
(a) Exchange Agent. On the Closing Date, T Company shall
deposit with the Exchange Agent for exchange in accordance with this Article
III, an amount in cash equal to (i) the Common Stock Consideration minus the
Minority Escrow Amount, and (ii) the Preferred Stock Consideration minus the
Escrow Amount.
(b) Exchange Procedures. Within five (5) business days after
the Effective Time, Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of capital stock of M Company (the
"Certificates") and which shares were converted into the right to receive cash
pursuant to Section 3.2 or Section 3.3 hereof, (i) a letter of transmittal in
customary form and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the right to receive cash. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefore such holder's portion of the Common Stock
Consideration or Preferred Stock Consideration determined pursuant to Section
3.3 or Section 3.2, as applicable (less such holder's portion of the Escrow
Amount or the Minority Escrow Amount, as applicable). Until surrendered, each
outstanding Certificate that, prior to the Effective Time, represented shares of
capital stock of M Company, will be deemed from and after the Effective Time,
for all corporate purposes, to evidence the right to receive the amount of cash
into which such shares of capital stock of M Company shall have been so
converted pursuant to Section 3.2 or Section 3.3 hereof, as applicable (subject
to the holdback of such holder's portion of the Escrow Amount or Minority Escrow
Amount, as applicable).
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(c) No Transfers After the Effective Time. After the Effective
Time, there shall be no transfers of any shares of M Company Preferred Stock or
M Company Common Stock on the stock transfer books of the Surviving Corporation.
3.6. TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of M Company
and T Company shall take all such reasonable lawful action as may be necessary
or appropriate in order to effect the Merger in accordance with this Agreement
as promptly as practicable.
3.7. DISSENTING SHARES. Notwithstanding any other provision of this
Agreement to the contrary, if there are any shares of M Company Common Stock
that are outstanding immediately prior to the Effective Time and which are held
by Stockholders who shall have not consented to the Merger in writing and who
shall have properly delivered a written demand for appraisal of such shares in
accordance with Section 262 of the DGCL and other provisions of applicable law
and shall not have failed to perfect or shall not have effectively withdrawn
such demand or otherwise lost their appraisal rights (the "Dissenting Shares"),
such Stockholders shall be entitled to have such shares of M Company capital
stock held by them appraised in accordance with the provisions of Section 262 of
the DGCL and other provisions of applicable law and shall be entitled to receive
payment from Surviving Corporation in the amount of the "fair value" of their
Dissenting Shares, except that all Dissenting Shares held by Stockholders who,
immediately prior to the Effective Time, shall have failed to perfect or shall
have effectively withdrawn or otherwise lost their right to appraisal of such
shares of M Company capital stock under such Section 262 and other provisions of
applicable law shall thereupon be deemed to have been converted into and
represent only the right to receive the amount per share set forth in Section
3.3 upon surrender to the Exchange Agent pursuant to Section 3.5 hereof.
Notwithstanding the foregoing, M Company shall not, except with the prior
written consent of T Company, voluntarily make any payment with respect to any
demands for appraisals of M Company Common Stock, or offer to settle or settle
any such demands or approve any withdrawal of any such demands.
3.8. WITHHOLDING RIGHTS. The Exchange Agent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
otherwise payable pursuant to this Agreement to any holder of Certificates such
amounts as it is required by Regulations to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Exchange
Agent or the Surviving Corporation, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the shares
of M Company Preferred Stock or M Company Common Stock in respect of which such
deduction and withholding was made.
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3.9. TREATMENT OF M COMPANY OPTIONS.
(a) Section 3.9 of the M Company Schedule sets forth a true
and complete list as of the date hereof of all holders of outstanding options
under the M Company Stock Option Plans, including the number of shares of M
Company capital stock subject to each such option, the exercise price per share
and the term of each such option. Two business days prior to the Closing Date, M
Company shall deliver to T Company an updated Section 3.9 of the M Company
Schedule current as of such date.
(b) Each outstanding M Company Option, (i) granted under the M
Company 1996 Stock Option Plan shall fully vest and become exercisable
immediately prior to the consummation of the Merger, and to the extent not
exercised, such option shall be canceled at the Effective Time; (ii) granted
under the M Company 1998 Stock Option Plan shall fully vest and become
exercisable for all of the shares at the time subject to such option, for a
period of no more than 15 days prior to the scheduled consummation of the
Merger, and to the extent not exercised, such option shall be canceled at the
Effective Time, and (iii) granted under the Ashtech Inc. 1995 Stock Option/
Stock Issuance Plan shall be canceled at the Effective Time.
(c) Prior to the Effective Time, M Company shall take all
steps necessary to cause the M Company Stock Option Plans to be terminated as of
the Effective Time and to otherwise make any amendments to the terms of such
stock option plans that are necessary to give effect to the transactions
contemplated by this Agreement.
3.10. ESCROW ARRANGEMENTS.
Notwithstanding the other provisions of Article III, on the
Closing Date, T Company shall deposit with the Escrow Agent the Escrow Amount
and the Minority Escrow Amount, if any, to be deposited into escrow accounts
pending determination of potential indemnification claims under this Agreement.
The Escrow Amount and the Minority Escrow Amount, if any, shall be held by the
Escrow Agent subject to the terms of the Escrow Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF T PARENT AND T COMPANY
Except as set forth on the T Company Schedule, T Parent and T
Company jointly and severally represent and warrant to Orbital and M Company as
follows:
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4.1. ORGANIZATION. Each of T Parent and T Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of T Parent and T Company has full corporate power and
authority to conduct its Business as it is presently being conducted and to own
or lease, as applicable, its Assets.
4.2. AUTHORIZATION. Each of T Parent and T Company has all necessary
corporate power and authority to enter into this Agreement and each of the
Ancillary Agreements to which it is a party and has taken or will take prior to
the Effective Time all action necessary to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Ancillary
Agreements by T Parent and T Company, and the performance by each of T Parent
and T Company of its respective obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by each of their respective Boards of Directors and stockholders.
This Agreement has been duly executed and delivered by each of T Parent and T
Company and constitutes a legal, valid and binding obligation of each of T
Parent and T Company enforceable against each of them in accordance with its
terms, except as enforceability may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors and general principles of equity. The
Ancillary Agreements to which either of T Parent or T Company is party will be
effective as of the Effective Time, duly and validly executed by T Parent and/or
T Company, and will be legal, valid and binding obligations of T Parent and/or T
Company, enforceable against T Parent and/or T Company in accordance with their
respective terms, except as enforceability may be limited by the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors and general principles of
equity.
4.3. OFFICERS AND DIRECTORS. Section 4.3 of the T Company Schedule
contains a list of all of the officers and directors of T Company as of the date
hereof.
4.4. NO CONFLICT OR VIOLATION; CONSENTS.
(a) None of the execution, delivery or performance of this
Agreement, the Certificate of Merger or any Ancillary Agreement to which either
T Parent or T Company is a party, the consummation of the transactions
contemplated hereby or thereby, nor compliance by either of T Parent or T
Company with any of the provisions hereof or thereof, will (i) violate or
conflict with any provision of the governing documents of T Parent or T Company,
(ii) violate, conflict with, or result in a breach of or constitute a default
(with or without notice or passage of time) under, or result in the termination
of, or accelerate the performance required by, or result in a right to
terminate, accelerate, modify or cancel under, or require a notice under, or
result in the creation of any
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Encumbrance upon any of its respective Assets under, any material Contract or
other arrangement to which either of T Parent or T Company is a party or by
which either of T Parent or T Company is bound or to which any of their
respective material Assets are subject, (iii) violate in any material respect
any applicable material Law, Regulation or Court Order or (iv) impose any
material Encumbrance on any of the material Assets of either T Parent or T
Company or their respective Businesses.
(b) Except for (i) the filings with the Delaware Secretary of
State contemplated by Section 2.3 hereof and (ii) applicable requirements of any
antitrust Laws, including those of foreign jurisdictions, and filings and
notices of the Exon-Xxxxxx Provision and FOCI related rules and regulations, no
notices to, declarations, filings or registrations with, approvals or consents
of, or assignments by, any Persons (including any federal, state or local
governmental or administrative authorities) are necessary to be made or obtained
by T Parent or T Company in connection with the execution, delivery or
performance of this Agreement or any Ancillary Agreement to which T Parent or T
Company is a party or the consummation of the Merger.
4.5. NO MATERIAL IMPAIRMENT. As of the date hereof, there has not been
any event, occurrence or development, including any Court Order which would
prohibit or materially impair the ability of T Parent or T Company to consummate
the transactions contemplated by this Agreement or any Ancillary Agreement to
which T Parent or T Company is a party.
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4.6. BROKERS AND FINDERS. T Company and T Parent have not entered into
any contract, arrangement or understanding with any Person or firm which may
result in the obligation of T Parent or T Company to pay any finder's fees,
brokerage or agent commissions or other like payments in connection with the
transactions contemplated hereby.
4.7. LITIGATION. There is no Action pending or, to the knowledge of T
Parent or T Company, threatened or anticipated against, relating to or affecting
T Parent or T Company, their material Assets or any of their officers and
directors as such, (i) which seeks to enjoin or obtain damages in respect of the
transactions contemplated hereby or by the Ancillary Agreements or (ii) with
respect to which there is a reasonable likelihood of a determination which would
prevent T Parent and T Company from consummating the transactions contemplated
hereby and by the Ancillary Agreements.
4.8. FINANCING. T Company will have on the Closing Date sufficient
cash to pay the Preferred Stock Consideration and the Common Stock Consideration
and to make all other payments necessary in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements.
4.9. DISCLAIMER OF ADDITIONAL AND IMPLIED WARRANTIES. Neither T
Parent nor T Company is making any representation or warranty, express or
implied, of any nature whatsoever except as specifically set forth in this
Agreement or the Ancillary Agreements.
4.10. OWNERSHIP INTEREST IN ORBITAL AND M COMPANY.
Neither T Parent nor any entity under common control with T
Parent holds, directly or indirectly, any voting stock or other rights to vote
the capital stock of Orbital or any entity under common control with Orbital,
nor does T Parent or any entity under common control with T Parent hold,
directly or indirectly, any Assets formerly held by Orbital or any entity under
common control with Orbital. As used in this Section 4.10, "hold" and "control"
shall have the meanings set forth in 16 C.F.R. Sections 801.1(c) and 801.1(b),
respectively.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES REGARDING
M COMPANY
Except as set forth on the M Company Schedule, Orbital and M
Company jointly and severally represent and warrant to T Parent and T Company as
follows:
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5.1. ORGANIZATION OF M COMPANY.
M Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. M Company has full
corporate power and authority to conduct its Business as it is presently being
conducted and to own or lease, as applicable, and operate its Assets. M Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is necessary under
applicable law as a result of the conduct of its Business or the ownership or
leasing of its properties, except where the failure to be so qualified would not
have, individually or in the aggregate, an M Company Material Adverse Effect.
Each jurisdiction in which M Company is qualified to do business as a foreign
corporation is set forth in Section 5.1 of the M Company Schedule.
5.2 CAPITALIZATION OF M COMPANY.
(a) The authorized capital stock of M Company consists of
110,000,000 shares of M Company Common Stock, of which as of April 1, 2001,
73,610,313 shares were issued and outstanding. M Company has no other stock
authorized, issued or outstanding.
(b) As of the date of this Agreement (i) 20,043,320 shares of
M Company Common Stock are reserved for issuance upon the exercise of M Company
Options granted or available for grant under the M Company Stock Option Plans,
(ii) M Company Options representing the right to purchase an aggregate of
9,290,288 shares of M Company Common Stock are outstanding under the M Company
Stock Option Plans and 10,753,032 shares of M Company Common Stock are available
for future grants of M Company Options under the M Company Stock Option Plans.
Section 5.2 of the M Company Schedule includes a complete and accurate list of
all such outstanding M Company Options and the vesting schedules and exercise
prices for such options.
(c) Except for the M Company Options listed above and for this
Agreement, there are no outstanding options, warrants, convertible securities or
rights of any kind to purchase or otherwise acquire any shares of capital stock
or other securities of M Company. Except for the aggregate of 20,043,320 shares
of M Company Common Stock reserved for issuance upon the exercise of M Company
Options granted or available for grant, no other shares of capital stock of M
Company are reserved for future issuance.
(d) All outstanding shares of M Company Common Stock are, and
any shares of M Company Common Stock issued upon exercise of any M Company
Option will be, validly issued, fully paid and non-assessable and not subject to
any preemptive rights created by statute, M Company's Certificate of
Incorporation, as
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amended, or M Company's Bylaws, as amended, or any M Company Contract. The
shares of M Company Common Stock and M Company Options have been or will be
issued in compliance with all federal and state corporate and securities laws.
(e) Except pursuant to this Agreement, there is outstanding no
vote, plan or pending proposal for any redemption of stock of M Company or
merger or consolidation of M Company with or into any other entity.
5.3. AUTHORIZATION.
M Company has all necessary corporate power and authority to
enter into this Agreement, the Certificate of Merger and the Ancillary
Agreements to which it is a party and has taken or will take prior to the
Closing Date all action necessary to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement, the Certificate of Merger and the
Ancillary Agreements to which M Company is a party by M Company, and the
performance by M Company of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by its Board of Directors unanimously. This Agreement has been duly
executed and delivered by M Company and constitutes a legal, valid and binding
obligation of M Company enforceable against it in accordance with its terms,
except as enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors and the general principles of equity. The Ancillary
Agreements to which M Company is party, including the Certificate of Merger,
will be as of the Effective Time, duly and validly executed by M Company, and
will be legal, valid and binding obligations of M Company, enforceable against M
Company in accordance with their respective terms, except as enforceability may
be limited by the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of creditors and
general principles of equity.
5.4. OFFICERS AND DIRECTORS. Section 5.4 of the M Company Schedule
contains a list of all of the officers and directors of M Company as of the date
hereof.
5.5. BANK ACCOUNTS. Section 5.5 of the M Company Schedule contains a
list of all bank accounts, safe deposit boxes, and related powers of attorney of
M Company and the M Subsidiaries, and persons authorized to draw thereon or have
access thereto. Neither M Company nor any M Subsidiary has any outstanding
powers of attorney except as contemplated above.
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5.6. SUBSIDIARIES, ETC.
(a) Section 5.6 of the M Company Schedule contains a list of
any equity interests in a Person held by M Company or any M Subsidiary. Other
than the equity interests provided on Section 5.6 of the M Company Schedule, M
Company and the M Subsidiaries do not own or hold any equity interest of any
kind in any Person.
(b) Section 5.6 of the M Company Schedule lists for each M
Company Subsidiary, its name, the type of entity it is, its jurisdiction and
date of incorporation, organization, or formation, its officers and directors,
its authorized stock, partnership capital or equivalent, the number and type of
its issued and outstanding shares of capital stock, partnership interests or
similar ownership interests and the current owners of its equity and their
respective ownership interests therein and any jurisdictions in which it is
qualified to do business as a foreign corporation, each as of the date of this
Agreement. Each M Subsidiary (i) is a business entity duly organized and validly
existing under the laws of its respective jurisdiction of organization, (ii) has
all necessary corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by such M Subsidiary and to
carry on its business in all respects as currently conducted by such M
Subsidiary and (iii) is duly qualified as a foreign business entity to do
business and is in good standing, in each jurisdiction where the character of
its properties owned, operated or leased or the nature of its activities
requires such qualification, except for such jurisdictions where failure to be
so qualified would not have, individually or in the aggregate, a M Company
Material Adverse Effect. Copies of the Articles or Certificate of Incorporation
and Bylaws (or similar organizational documents) of each M Subsidiary heretofore
delivered to T Company are accurate and complete. All of the shares of capital
stock of each M Subsidiary owned by M Company are owned free and clear of any
Encumbrances of any kind and such shares are fully paid and nonassessable. There
are no options, warrants or rights of conversion or any other Contract relating
to any M Subsidiary obligating an M Subsidiary, directly or indirectly, to issue
additional shares or capital stock or other securities.
(c) Except as set forth above, there are outstanding (i) no
other shares of capital stock or other voting securities of any M Subsidiary,
(ii) no securities of M Company or any M Subsidiary convertible into or
exchangeable for shares of capital stock or voting securities of any M
Subsidiary, (iii) no options, preemptive rights or other rights to acquire from
M Company or any M Company Subsidiary, and no obligation of M Company or any M
Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of any M
Subsidiary, (iv) no equity equivalent interests in the ownership or earnings of
M Company or any M Company Subsidiary or other similar rights, (v) no
agreements, arrangements or understandings of M Company or any M Subsidiary, to
the knowledge of M
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Company or any M Subsidiary, relating to or otherwise affecting the shares of
capital stock of any M Subsidiary, and (vi) no rights or obligations of M
Company or any M Subsidiary to repurchase, redeem or otherwise acquire any
securities of any M Subsidiary. No M Subsidiary owns any capital stock or other
voting securities of any other M Subsidiary.
5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet
Date there has not been any:
(a) M Company Material Adverse Change;
(b) failure to operate its Business and the Business of the M
Subsidiaries in the ordinary course or failure to use commercially reasonable
efforts to preserve such Business intact and to preserve for Surviving
Corporation the continued services of the employees and independent contractors
of M Company and the M Subsidiaries (other than those employees who are not
expected to become employees of Surviving Corporation) and the goodwill of
suppliers, customers and others having business relations with M Company or any
M Subsidiaries or their Representatives;
(c) employment, resignation or termination of any officer, or
key employee, or any increase in the rate of compensation (in excess of five
percent) payable or to become payable to any officer, employee or representative
of M Company or any M Subsidiary, including the making of any loan to, or the
payment, grant or accrual of any bonus, incentive compensation, service award or
other similar benefit to, any such Person, or the addition to, modification of,
or contribution to any Employee Plan of M Company or any M Subsidiary other than
the extension of coverage under such plan to others who became eligible after
the Balance Sheet Date;
(d) payment, loan or advance of any amount to or in respect
of, or the sale, transfer or lease of any properties or Assets of M Company or
any M Subsidiary to, or entering into of any Contract with, any Related Party of
M Company or any M Subsidiary, except (i) directors' fees, (ii) compensation to
employees at the rates disclosed pursuant to Section 5.17(e) and (iii) advances
and payments relating to indebtedness between M Company and any M Subsidiary;
(e) sale, assignment, license, transfer or encumbrance of any
Assets of M Company or any M Subsidiary, tangible or intangible, singly or in
the aggregate, other than sales of products and services and licenses in the
ordinary course of business and consistent with past practice;
(f) new Material Contracts of M Company or any M Subsidiary,
or extensions, modifications, terminations or renewals thereof, except for such
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Contracts entered into, modified or terminated in the ordinary course of
business or entered into, modified or terminated in connection with the
transactions contemplated hereby or by any Ancillary Agreement;
(g) actual or written threat of termination of any material
customer account or group of accounts or actual or written threat of material
reduction in purchases or royalties payable by any such customer or, to the
knowledge of M Company, the occurrence of any event that is likely to result in
any such termination or reduction;
(h) disposition or lapsing of any Proprietary Rights of M
Company or any M Subsidiary, in whole or in part, or, to the knowledge of M
Company, any disclosure of any trade secret, process or know-how to any Person
not an employee of M Company or its Affiliates except pursuant to agreements
contained on Section 5.11 of the M Company Schedule;
(i) change in accounting methods or practices by M Company or
any M Subsidiary;
(j) revaluation by M Company or any M Subsidiary of any of its
respective Assets, including writing off notes or accounts receivable other than
for which reserves have been established;
(k) damage, destruction or loss (whether or not covered by
insurance) that would likely have a M Company Material Adverse Effect;
(l) declaration, setting aside or payment of dividends or
distributions in respect of any stock of M Company or any redemption, purchase
or other acquisition of any of M Company's equity securities (other than
repurchases of common stock from employees or other service providers to M
Company pursuant to agreements providing for such repurchases upon termination
of such employee or service provider's employment with M Company);
(m) issuance or reservation for issuance by M Company of any
shares of stock or other equity securities or obligations or securities
convertible into or exchangeable for shares of stock or other equity securities
(other than the issuance of shares upon exercise of M Company Options or the
issuance of M Company Preferred Stock in accordance with Section 2.2 hereof);
(n) commitment by M Company or, to its knowledge, by its
officers on its behalf to issue or reserve for issuance, any shares of stock or
other equity securities or obligations or securities convertible into or
exchangeable for shares of stock or other equity securities (other than the
issuance of M Company Preferred Stock in accordance with Section 2.2 hereof);
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(o) increase, decrease or reclassification of M Company's
authorized capital stock;
(p) amendment of M Company's Certificate of Incorporation or
Bylaws (other than pursuant to the Certificate of Amendment in accordance with
Section 2.1 hereof);
(q) capital expenditure or execution of any lease or any
incurring of liability therefor by M Company or any M Subsidiary, involving
payments in excess of $25,000 in the aggregate;
(r) failure to pay any material obligation of M Company or any
M Subsidiary;
(s) cancellation of any material indebtedness or waiver of any
rights of substantial value to M Company or any M Subsidiary, except in the
ordinary course of business and excluding any indebtedness between M Company and
any M Subsidiary;
(t) indebtedness incurred by M Company or any M Subsidiary for
borrowed money or any commitment to borrow money entered into by M Company or
any M Subsidiary, or any loans made or agreed to be made by M Company or any M
Subsidiary (excluding any indebtedness between M Company and any M Subsidiary)
or trade indebtedness due within 180 days, other than indebtedness that,
individually is less than $10,000 or in the aggregate is less than $100,000;
(u) Liability incurred by M Company or any M Subsidiary except
in the ordinary course of business, or any increase or change in any assumptions
underlying or methods of calculating any bad debt, contingency or other
reserves;
(v) payment, discharge or satisfaction of any Liabilities of M
Company or any M Subsidiary, other than the payment, discharge or satisfaction
(i) in the ordinary course of business of Liabilities reflected or reserved
against in the M Company Financial Statements or incurred in the ordinary course
of business since the Balance Sheet Date, (ii) of other Liabilities of M Company
or any M Subsidiary involving $25,000 or less in the aggregate and (iii) of any
indebtedness between M Company and any M Subsidiary;
(w) acquisition by M Company or any M Subsidiary of any equity
interest in any other Person; or
(x) agreement by M Company or any M Subsidiary to do any of
the foregoing.
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5.8. TITLE TO ASSETS. None of the Assets of M Company or any M
Subsidiary are subject to any Encumbrances, other than (i) mechanics' liens and
other statutory Encumbrances and the lien of current Taxes not yet due and
payable and (ii) possible minor Encumbrances which do not, individually or in
the aggregate, in any case materially detract from the value of the property
subject thereto or materially impair the operations of M Company and which have
arisen in the ordinary course of business.
5.9. SUFFICIENCY OF ASSETS. The Assets of M Company and the M
Subsidiaries constitute all of the assets, rights and properties, tangible or
intangible, real or personal, that are required for the operation of their
Business as currently conducted.
5.10. FIXTURES AND EQUIPMENT. Section 5.10 of the M Company Schedule
contains accurate lists and summary descriptions of all material Fixtures and
Equipment of M Company and the M Subsidiaries. All material tangible assets and
properties of M Company and the M Subsidiaries are in good operating condition
and repair, normal wear and tear excepted, and are usable in the ordinary course
of business.
5.11. CONTRACTS.
(a) Disclosure. Section 5.11 of the M Company Schedule sets
forth a complete and accurate list of all Contracts of M Company and the M
Subsidiaries of the following categories that are currently enforceable with
respect to any provision thereof (such contracts being the "Material
Contracts"):
(i) Contracts not made in the ordinary course of
business which are material to M Company or any M Subsidiary;
(ii) Manufacturing or joint development agreements;
(iii) License agreements or royalty agreements, whether
M Company or any M Subsidiary is the licensor or licensee thereunder (other than
software licenses available to and used by businesses generally);
(iv) Confidentiality and non-disclosure agreements
(whether M Company or any M Subsidiary is the beneficiary or the obligated party
thereunder);
(v) Customer orders or sales contracts under which the
customer is to make a payment after March 31, 2001 of $75,000 or more;
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(vi) Original equipment manufacturer agreements or
distributor agreements;
(vii) Research agreements;
(viii) Output or requirement agreements;
(ix) Contracts involving future expenditures or
Liabilities, actual or potential, in excess of $50,000 after the date hereof;
(x) Contracts or commitments relating to commission
arrangements with others;
(xi) Employment Contracts, including contracts (A) to
employ or terminate Employees or former Employees, other than standard at-will
employment letters, a form of which has been provided to T Company or (B) that
reasonably could be expected to provide for the payment after the date hereof,
by M Company or any M Subsidiary any severance, termination, "golden parachute,"
or other similar payments to any present or former personnel following
termination of employment or otherwise as a result of the consummation of the
transactions contemplated by this Agreement;
(xii) Material indemnification agreements wherein M
Company is the indemnitor entered into with its officers, directors, lessors,
purchasers, licensees or licensors or otherwise (other than indemnification
provided in any standard-form purchase or license agreement);
(xiii) Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other instruments
relating individually to an obligation to pay money in excess of $25,000,
whether M Company or any M Subsidiary shall be the borrower, lender or guarantor
thereunder (excluding credit provided by M Company or any M Subsidiary in the
ordinary course of business to purchasers of its products, obligations to pay
vendors in the ordinary course of business and obligations to employees for
accrued salary, vacation, benefits or for reimbursable expenses);
(xiv) Contracts containing covenants limiting the freedom
of M Company or any M Subsidiary or any officer, director, employee or Affiliate
of M Company or any M Subsidiary, to engage in any line of business or compete
with any Person that relates directly or indirectly to its Business or the
Business of T Company or the T Subsidiaries;
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(xv) Any material Contract with the federal, state or
local government or any agency or department thereof (excluding purchase orders
for off-the-shelf products);
(xvi) Any Contract with a Related Party of M Company,
including Orbital, or any M Subsidiary (other than with respect to M Company
Options); and
(xvii) Leases of real or personal property individually
obligating M Company to pay in excess of $50,000.
True, correct and complete copies of all of the Contracts listed on Section 5.11
of the M Company Schedule, including all amendments and supplements thereto,
have been, or will have been prior to the Effective Time, made available to T
Company.
(b) Absence of Defaults. All Material Contracts of M Company
and any M Subsidiary are valid, binding and enforceable in accordance with their
terms with no existing (or to the knowledge of M Company, threatened) Default or
dispute. M Company and each M Subsidiary have fulfilled, or taken all action
necessary to enable them to fulfill when due, all of their material obligations
under each of such Contracts. To the knowledge of M Company, all parties to such
Contracts have complied in all material respects with the provisions thereof, no
party is in Default thereunder and no written notice of any claim of Default has
been given to M Company or any M Subsidiary. M Company has no reason to believe
that the products and services called for by any unfinished Contracts of M
Company or any M Subsidiary cannot be supplied in accordance with the terms of
such Contract, including time specifications.
(c) Product Warranty. To the best knowledge of M Company,
neither M Company nor any M Subsidiary has committed any act, and there has been
no omission, which may result in, and there has been no occurrence which may
give rise to, product liability or Liability for breach of warranty (whether
covered by insurance or not) on the part of M Company or any M Subsidiary, with
respect to products designed, manufactured, assembled, sold, repaired,
maintained, delivered or installed or services rendered prior to or on the
Closing Date other than as set forth in the M Company Financial Statements or as
may have occurred in the ordinary course of business.
(d) Real Property Matters. Neither M Company nor any M
Subsidiary owns any real property.
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5.12. NO CONFLICT OR VIOLATION; CONSENTS.
(a) None of the execution, delivery or performance of this
Agreement or any Ancillary Agreement to which M Company is a party, the
consummation of the transactions contemplated hereby or thereby, or compliance
by M Company with any of the provisions hereof or thereof, will (i) violate or
conflict with any provision of the Certificate of Incorporation, as amended, or
Bylaws, as amended of M Company, (ii) violate, conflict with, or result in a
breach of or constitute a default (with or without notice or passage of time)
under, or result in the termination of, or accelerate the performance required
by, or result in a right to terminate, accelerate, modify or cancel under, or
require a notice under, or result in the creation of any Encumbrance upon any of
its material Assets under, any Material Contract, (iii) violate in any material
respect any applicable material Law, Regulation or Court Order or (iv) impose
any material Encumbrance on any Assets of M Company or any M Subsidiaries or
their Business.
(b) Except for (i) the filings with the Delaware Secretary of
State contemplated by Section 2.3 hereof, (ii) applicable requirements of any
antitrust Laws, including those of foreign jurisdictions, and filings and
notices under the Exon-Xxxxxx Provision and FOCI related rules and regulations,
(iii) applicable requirements of federal and state securities laws, (iv) notice
to and approval by the Stockholders of the transactions contemplated by this
Agreement, and (v) any novations or Consents that may be required in connection
with any Contract with the United States Government (as defined in Section 5.29
hereof), no notices to, declarations, filings or registrations with, approvals,
authorizations, permissions or Consents of, or assignments by, any Persons
(including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by M Company or any M
Subsidiary in connection with the execution, delivery or performance of this
Agreement or any Ancillary Agreement to which M Company is a party or the
consummation of the Merger.
5.13. PERMITS. Section 5.13 of the M Company Schedule sets forth a
complete list of all material Permits of M Company and each M Subsidiary. M
Company and each M Subsidiary have, and at all times have had, all material
Permits required under any applicable Regulation in the operation of their
Business or in the ownership of their Assets, and own or possess such Permits
free and clear of all Encumbrances. Neither M Company nor any M Subsidiary is in
default, nor has M Company or any M Subsidiary received any notice of any claim
of default, with respect to any such material Permit. Except as otherwise
governed by law, all such material Permits are renewable by their terms or in
the ordinary course of business, and will not be adversely affected by the
completion of the transactions contemplated by this Agreement.
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5.14. FINANCIAL STATEMENTS; BOOKS AND RECORDS.
(a) The M Company Financial Statements, are complete in all
material respects, are in accordance with the Books and Records of M Company and
the M Subsidiaries in all material respects, fairly present the Assets,
Liabilities and financial condition and results of operations of M Company and
the M Subsidiaries indicated thereby in accordance with GAAP consistently
applied throughout the periods covered thereby.
(b) M Company and the M Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed with management's authorizations, (ii) transactions
are recorded as necessary to permit preparation of the M Company Financial
Statements in accordance with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
authorization and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(c) The Books and Records of M Company and the M Subsidiaries,
in reasonable detail, accurately and fairly reflect the activities of M Company
and the M Subsidiaries and their Business in all material respects and have been
provided or made available to T Company for its inspection.
(d) Neither M Company nor any M Subsidiary has engaged in any
transaction, maintained any bank account or used any corporate funds, except for
transactions, bank accounts or funds which have been and are reflected in the
normally maintained Books and Records of M Company and the M Subsidiaries.
(e) The stock records and minute books of M Company and the M
Subsidiaries heretofore made available to T Company, T Parent and their
Representatives are complete in all material respects and reflect all material
actions and proceedings of its stockholders and Board of Directors and all
committees thereof, all issuances, transfers and redemptions of M Company's
capital stock of which M Company has knowledge and contain true, correct and
complete copies of the Certificate of Incorporation and Bylaws (or similar
organizational documents) and all amendments thereto of M Company and the M
Subsidiaries through the date hereof.
5.15. LIABILITIES. Neither M Company nor any M Subsidiary has any
material Liabilities or obligations (absolute, accrued, contingent or otherwise)
except (i) Liabilities which are reflected or disclosed and properly reserved
against in the M Company Financial Statements, (ii) Liabilities incurred in the
ordinary course of business since the Balance Sheet Date and (iii) liabilities
arising under the Contracts of M Company and the M Subsidiaries (other than
obligations which are
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required to be reflected on a balance sheet prepared in accordance with GAAP)
and which have arisen or been incurred in the ordinary course of business.
5.16. LITIGATION.
There is no Action pending or, to the knowledge of M Company,
threatened or anticipated against, relating to or affecting M Company or any M
Subsidiary, any of their respective material Assets or any of their officers and
directors as such, including, without limitation, that which (i) seeks to enjoin
or obtain damages in respect of the transactions contemplated hereby or by the
Ancillary Agreements, (ii) with respect to which there is a reasonable
likelihood of a determination, would prevent M Company from consummating the
transactions contemplated hereby and by the Ancillary Agreements or (iii) if
adversely determined against M Company or any M Subsidiary, their directors or
officers, or any other Person could reasonably be expected to result in a loss
to M Company or any M Subsidiary, individually or in the aggregate, in excess of
$100,000. Except for matters which are applicable to or affect all companies
engaged in a business comparable or similar to the Business of M Company and the
M Subsidiaries, there are presently no outstanding judgments, decrees or orders
of any court or any governmental or administrative agency against or affecting M
Company or any M Subsidiary, their Business or any of their Assets. Section 5.16
of the M Company Schedule contains a complete and accurate description of all
material Actions since January 1, 1998 to which M Company or any M Subsidiary
has been or is a party or which related or relates to any of their Assets or
officers or directors as such, resulting in or likely to result in the payment
to or by M Company or any M Subsidiary of an amount greater than $50,000, other
than Actions brought by M Company or any M Subsidiary for collection of monies
owed in the ordinary course of business.
5.17. LABOR MATTERS.
(a) Neither M Company nor any M Subsidiary is or has been a
party to, or bound by, any labor agreement with respect to its Employees or
former Employees with any labor organization, group or association and, to the
knowledge of M Company, has not experienced any attempt by organized labor or
its representatives to make M Company or any M Subsidiary conform to demands of
organized labor relating to its respective Employees or former Employees or to
enter into a binding agreement with organized labor that would cover the
Employees of M Company or any M Subsidiary. There is no unfair labor practice
charge or complaint against either M Company or any M Subsidiary pending before
the National Labor Relations Board or any other governmental agency arising out
of the activities of M Company or any M Subsidiary, and M Company is neither
involved in, nor has any knowledge of any facts or information which would give
rise thereto, including any labor dispute, grievance, or litigation relating to
labor
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matters involving any Employees or former Employees, including, without
limitation, violation of any federal, state or local labor, safety or employment
laws (domestic or foreign); there is no work stoppage, labor strike or labor
disturbance pending or, to the knowledge of M Company, threatened against M
Company or any M Subsidiary nor is any grievance currently being asserted
against it; and neither M Company nor any M Subsidiary has experienced a work
stoppage or labor strike. There are no material controversies pending or, to the
knowledge of M Company, threatened between M Company or any M Subsidiary and any
of their respective Employees, and M Company is not aware of any facts which are
reasonably likely to result in any such controversy.
(b) M Company and each M Subsidiary are in material compliance
with all applicable material Regulations respecting employment practices, terms
and conditions of employment, wages and hours, equal employment opportunity, and
the payment of social security and similar taxes, and has not and is not engaged
in any unfair labor practice. Neither M Company nor any M Subsidiary is liable
for any claims for past due wages or any penalties for failure to comply with
any of the foregoing.
(c) Neither M Company nor any M Subsidiary has entered into
any severance or similar arrangement in respect of any Employee or former
Employee that could be expected to result in any obligation (absolute or
contingent) of M Company or any M Subsidiary to make any payment after the
Balance Sheet Date to any Employee or former Employee following termination of
employment. Except as described in Section 3.9 hereof, neither the execution and
delivery of this Agreement, the Certificate of Merger or the Ancillary
Agreements to which M Company is a party nor the consummation of the
transactions contemplated hereby or thereby will result in the acceleration or
vesting of exercisability of any M Company Options or in the acceleration or
vesting of any other rights of any Person to benefits under any Employee Plans
of M Company or any M Subsidiary.
(d) M Company represents that no Employees or former Employees
have experienced or will experience an employment loss (as defined in WARN)
during the 90 calendar day period immediately preceding the Closing. M Company
will timely give all notices required to be given to Employees under, or
otherwise comply with, WARN or similar statutes or regulations of any
jurisdiction relating to any plant closing or mass layoff (or similar triggering
event) caused by or relating to the Merger.
(e) Section 5.17 of the M Company Schedule contains a list of
the names of all the present employees of M Company and the M Subsidiaries and
their current job titles, locations, salary or hourly wages and other
compensation payable by M Company and the M Subsidiaries as of the date hereof.
Such list shall be organized by location including, without limitation, the
Santa Xxxxx, San Xxxxx, Rochester Hills and Moscow locations of M Company and
the M Subsidiaries.
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(f) Employment Matters. M Company and each M Subsidiary (i) is
in compliance with all applicable federal, state and local laws, rules and
regulations (domestic and foreign) respecting employment, employment practices,
labor, terms and conditions of employment and wages and hours, in each case,
with respect to its Employees; (ii) has withheld all amounts required by law or
by agreement to be withheld from the wages, salaries and other payments to its
Employees; (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv) is not liable
for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits for its Employees or former Employees.
(g) At-Will Employment. Except as provided by law, the
employment of all Employees of M Company or any M Subsidiary is terminable at
will, at any time and without advance notice.
5.18. EMPLOYEE BENEFIT PLANS.
(a) Disclosure; Delivery of Copies of Relevant Documents and
Other Information. Section 5.18 of the M Company Schedule contains a complete
list of Employee Plans which cover or have covered employees of M Company or any
M Subsidiary (with respect to their relationship with such entities and each
Employee Contract). True and complete copies of each of the following documents
have been delivered or made available to T Company by M Company: (i) each
Welfare Plan and Pension Plan (and, if applicable, related trust agreements) and
all amendments thereto, all written interpretations thereof and written
descriptions thereof and all annuity contracts or other funding instruments,
(ii) each Benefit Arrangement including written interpretations thereof and
written descriptions thereof (including descriptions of the number and level of
employees covered thereby) and a complete description of any such Benefit
Arrangement which is not in writing, (iii) the most recent determination letter
issued by the IRS, if any, with respect to each Pension Plan, (iv) for the three
most recent plan years, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Pension Plan, (v) a description of
complete age, salary, service and related data as of the last day of the last
plan year for employees and former employees of M Company and each M Subsidiary,
and (vi) a description setting forth the amount of any Liability of M Company as
of the Closing Date for payments more than 30 days past due with respect to each
Employee Plan.
(b) Representations.
(i) Pension Plans. None of the Pension Plans sponsored
or maintained by M Company, any M Subsidiary or any ERISA Affiliate is subject
to the minimum funding requirements of Title IV of ERISA or the Code. Either (x)
the
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IRS has issued determination letters stating that each such Pension Plan is
qualified and each related trust agreement, annuity contract or other funding
instrument is tax-exempt under the provisions of Code Sections 401(a) (or
403(a), as appropriate) and 501(a) and have been so qualified and tax-exempt,
respectively, or (y) each such Pension Plan has been established under a
standardized prototype plan for which an IRS opinion letter has been obtained by
the plan sponsor and is valid as to the adopting employer, and in either case,
to M Company's knowledge, nothing has occurred or not occurred that would
adversely affect such qualified and tax-exempt status, respectively.
(ii) Multiemployer Plans. Neither M Company nor any
ERISA Affiliate thereof contributes to, or within the past six years has been
obligated to, contribute to or has incurred any withdrawal liability under any
Multiemployer Plan.
(iii) Welfare Plans. Except for the applicable health
care continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) and the proposed regulations thereunder or
similar state law, (A) none of M Company, any ERISA Affiliate thereof or any
Welfare Plan has any present or future obligation to make any payment to or with
respect to any Employee or former Employee of M Company or any ERISA Affiliate
thereof pursuant to any retiree medical benefit plan, or other retiree Welfare
Plan, (B) neither M Company nor any M Subsidiary has ever represented, promised
or contracted (whether in oral or written form) to any Employee or former
Employee (either individually or to Employees or former Employees as a group)
that such Employee(s) or former Employee(s) would be provided with life
insurance, medical, severance or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
Section 4980B of the Code or applicable state law, (C) each Welfare Plan of M
Company which is a "group health plan" as defined in Section 607(1) of ERISA has
been operated in material compliance with the provisions of Part 6 of Title I of
ERISA and Section 4980B of the Code at all times; and (D) no condition exists
which would prevent M Company from amending or terminating any such benefit plan
or Welfare Plan.
(iv) Compliance with Law. With respect to each Employee
Plan (i) M Company, each M Subsidiary and each ERISA Affiliate have performed in
all material respects all obligations required to be performed by them under
each Employee Plan and Employee Contract and neither M Company, any M Subsidiary
nor any ERISA Affiliate is in default under or in violation of such Employee
Plan in any material respect, (ii) each Employee Plan has been established and
maintained in accordance with its terms and in material compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, including without limiting the foregoing, the
timely filing of all required reports, documents and notices, where applicable,
with the IRS and the Department of Labor; (iii) there are no actions,
proceedings, arbitrations, suits or claims
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pending, or to the knowledge of M Company or any M Subsidiary, threatened or
anticipated (other than routine claims for benefits) against M Company, any M
Subsidiary or any ERISA Affiliate or any administrator, trustee or other
fiduciary of any Employee Benefit Plan with respect to any Employee Plan or
Employee Contract, or against any Employee Plan or against the assets of any
Employee Plan; (iv) no event or transaction has occurred with respect to any
Employee Plan that would result in the imposition of any tax under Chapter 43 of
Subtitle D of the Code; (v) each Employee Plan can be amended, terminated or
otherwise discontinued without liability (other than liability for ordinary
administrative expenses typically incurred in a termination event) to M Company,
any M Subsidiary or any ERISA Affiliate; (ix) M Company, each M Subsidiary and
each ERISA Affiliate have made all payments with respect to all periods through
the date hereof, and will make a pro-rata payment for the period ending as of
the Closing Date, in each case which are required by each Employee Plan, each
related trust, each collective bargaining agreement or by law to be made to, or
with respect to each Employee Plan (including all insurance premiums or
intercompany charges with respect to each Employee Plan); (vi) no Employee Plan
is under audit or investigation by the IRS, the Department of Labor or the PBGC,
and to the knowledge of M Company or any M Subsidiary, no such audit or
investigation is pending or threatened; and (vii) no liability under any
Employee Plan has been funded nor has any such obligation been satisfied with
the purchase of a contract from an insurance company as to which M Company or
any M Subsidiaries has received notice that such insurance company is insolvent
or is in rehabilitation or any similar proceeding.
(v) Benefit Arrangements. Each Benefit Arrangement
which covers or has covered Employees or former Employees of M Company or any
Subsidiary (with respect to their relationship with such entities) has been
maintained in material compliance with its terms and with the requirements
prescribed by any and all Regulations which are applicable to such Benefit
Arrangement, including the Code.
(vi) 501(c)(9) Trust. No Employee Plan nor Employee
Contract is funded by a trust described in Section 501(c)(9) of the Code.
(vii) Welfare Plan Funding. With respect to each Welfare
Plan, all claims incurred (including claims incurred but not reported) by
Employees or former Employees thereunder for which M Company is, or will become,
liable are (A) insured pursuant to a contract of insurance whereby the insurance
company bears any risk of loss with respect to such claims; (B) covered under a
contract with a health maintenance organization (an "HMO") pursuant to which the
HMO bears the liability for such claims, or (C) reflected as a liability or
accrued for on the M Company Balance Sheet.
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(viii) Deductibility of Payments. Notwithstanding the
items set forth on the M Company Schedule, there is no Contract or bonus plan,
covering any Employee or former Employee of M Company or any M subsidiary (with
respect to their relationship with such entities) that, individually or
collectively, provides for the payment by M Company or any Subsidiary of any
amount (i) that is not deductible under Section 162(a)(1) or 404 of the Code,
(ii) would be reasonably likely to give rise to the payment of any amount that
would result in a material loss of tax deductions pursuant to Section 162(m) of
the Code, or (iii) that is an "excess parachute payment" pursuant to Section
280G of the Code.
(ix) Fiduciary Duties and Prohibited Transactions. To
the knowledge of M Company, neither M Company nor any plan fiduciary of any
Welfare Plan or Pension Plan which covers or has covered employees or former
employees of M Company or any ERISA Affiliate, has engaged in any transaction in
violation of Sections 404 or 406 of ERISA or any "prohibited transaction," as
defined in Section 4975(c)(1) of the Code, for which no exemption exists under
Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code. To the knowledge
of M Company, no action or failure to act and no transaction or holding of any
asset by, or with respect to, any Employee Plan has or may subject M Company,
any M Subsidiary or any ERISA Affiliate or any fiduciary to any material tax,
penalty or other liability, whether by way of indemnity or otherwise.
(x) No Amendments. Neither M Company nor any ERISA
Affiliate thereof has any plan or legally binding commitment to create any
additional Employee Plans or Employee Agreements to amend, modify or terminate
any existing Employee Plan, or Employee Agreement, nor has any intention to do
any of the foregoing been communicated to Employees, except as required by
applicable law.
(xi) No Acceleration of Rights or Benefits. Except as
set forth in Section 5.18 of the M Company Schedule, neither the execution and
delivery of this Agreement, the Certificate of Merger or any of the Ancillary
Agreements nor the consummation of the transactions contemplated hereby or
thereby will result in any payment, the acceleration or creation of any rights
of any person to benefits under any of the Employee Plans or any Employee
Contract, including but not limited to the acceleration of the exercisability of
any stock options, the acceleration of the vesting of any restricted stock, the
forgiveness of any indebtedness, the acceleration of the accrual or vesting of,
distribution of or increase in any benefits under or the funding of any Pension
Plan or the creation of rights under any severance, parachute or change of
control agreement, or result in the triggering or imposition of any restrictions
or limitations on the right of M Company, any M Subsidiary or T Company to amend
or terminate any Employee Plan and receive the full amount of any excess assets
remaining or resulting from such amendment or termination, subject to applicable
taxes.
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(xii) No Other Material Liability. To the knowledge of M
Company, no event has occurred in connection with which M Company or any ERISA
Affiliate or any Employee Plan, directly or indirectly, could be subject to any
material liability (i) under any Regulation or governmental order relating to
any Employee Plans or (ii) pursuant to any obligation of M Company or any M
Subsidiary to indemnify any Person against liability incurred under, any such
Regulation or order as they relate to the Employee Plans.
5.19. TRANSACTIONS WITH RELATED PARTIES. Except for (i) compensation
arrangements in the ordinary course of business, (ii) transactions with Orbital
in the ordinary course of business, as disclosed on Section 5.19 of the M
Company Schedule, or (iii) transactions for amounts less than $25,000, or (iv)
the performance of agreements and arrangements described in Section 5.11(a)(xi)
hereof to the knowledge of M Company, no Related Party of M Company or any M
Subsidiary has (a) borrowed or loaned money or other property to M Company or
any M Subsidiary which has not been repaid or returned, (b) made any currently
enforceable contractual or other claims, express or implied, of any kind
whatsoever against M Company or any M Subsidiary or (c) has or in the past three
years had any interest in any property currently used by M Company or any M
Subsidiary that is material to the conduct of their business.
5.20. COMPLIANCE WITH LAW. M Company and each M Subsidiary have
conducted their Business in compliance in all material respects with all
applicable material Laws, Regulations and Court Orders. Neither M Company nor
any M Subsidiary has received any notice to the effect that, or has otherwise
been advised that, M Company or any M Subsidiary is not in compliance in all
material respects with any Laws, Regulations or Court Orders, and M Company has
no knowledge of any existing circumstances that are likely to result in any
material violation of any of the foregoing.
5.21. INTELLECTUAL PROPERTY.
Each item of Company Proprietary Property which is (i) a registered
patent or pending application therefor; (ii) a registered trademark, service
xxxx or domain name or pending application therefor, or constitutes a trade
dress, logo, trade name or corporate name; (iii) a registered copyright or mask
work or pending application therefor; (iv) licensed or sublicensed or is subject
to an agreement or permission to use to or from a third party (other than
commercial off-the-shelf software licenses and hardware, in each case on terms
and conditions available to and used by businesses generally) is set forth on
Section 5.21 of the M Company Schedule. Except as noted and set forth on Section
5.21 of the M Company Schedule:
(a) M Company either (i) is the sole and exclusive owner of,
with all right, title and interest in and to (free and clear of any
Encumbrances) all Company
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Proprietary Property (including but not limited to the Proprietary Rights set
forth on Schedule 5.21), or (ii) to its knowledge, has rights to the use and, as
necessary, distribute all Company Proprietary Property pursuant to license,
sublicense or other Contract (and is not contractually obligated to pay any
compensation or grant any rights to any third party in respect thereof);
(b) M Company has an agreement requiring each applicant,
inventor, or author of any Company Proprietary Property which constitutes an
application for registration, including, but not limited to, all patent
applications, trademark applications, service xxxx applications, copyright
applications and mask work applications, to transfer ownership including all
right, title and interest in and to (including any moral rights) to M Company of
the application and of the registration once it issues;
(c) to M Company's knowledge, all Company Proprietary Property
which are registrations, including, but not limited to, all issued patents,
trademarks, service marks, copyrights and mask works, are valid and subsisting
and in full force and effect;
(d) no claims have been asserted or threatened by any person,
nor is M Company aware of any basis for any bona fide claims, challenging the
ownership, legality, use, validity, enforceability or effectiveness of any of
the Company Proprietary Property;
(e) M Company has no knowledge of any third party interfering
with, infringing upon, misappropriating, or using without authorization any
Company Proprietary Property, and no employee or former employee of M Company,
has interfered with, infringed upon, misappropriated, used without
authorization, or otherwise come into conflict with any Company Proprietary
Property;
(f) to its knowledge, M Company has not infringed on,
interfered with, misappropriated or otherwise come in conflict with, and the
continued operation of the business of M Company as currently conducted and as
currently contemplated to be conducted, will not infringe on, interfere with,
misappropriate or otherwise come into conflict with, any Proprietary Right of
any other Person, and no such claim, complaint, charge, demand or notice has
been asserted or has been threatened by any person (including any claim that M
Company must license or refrain from using any Proprietary Rights of any third
party) nor is M Company aware of any basis for any claims therefor;
(g) M Company has not granted any licenses (implied or
express) to or other rights in Company Proprietary Property to any Person
(including, without limitation, governmental entities, but excluding M Company's
standard agreements with its end-user customers for M Company products and
services);
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(h) to M Company's knowledge, the Company Proprietary Property
are all the Proprietary Rights that are necessary for the ownership, and
unencumbered maintenance and operation of the properties, assets, and business
of M Company as currently conducted or currently contemplated to be conducted;
(i) the execution, delivery and performance by M Company of
this Agreement and associated documents and the consummation of the transactions
contemplated hereby and thereby will not alter, impair, diminish or result in
the loss of any rights or interests of M Company in any Company Proprietary
Property and all such Company Proprietary Property will be owned or available
for use by the Surviving Corporation on identical terms and conditions
immediately subsequent to the Merger;
(j) to its knowledge, M Company has taken all necessary action
to maintain and protect each item of Company Proprietary Property;
(k) to its knowledge, M Company has the right to use all of
the Company Proprietary Property in all jurisdictions in which M Company has
conducted, conducts, and currently contemplates conducting its business;
(l) M Company has not entered into any Contract to indemnify
any other person for or against any charge of infringement or misappropriation
of, or interference or conflict with respect to, any of the Company Proprietary
Property; and
(m) there are no M Company Contracts in effect with third
parties for the conversion, modifications or enhancements of computer software.
5.22. TAX MATTERS.
(a) Filing of Tax Returns. M Company and each M Subsidiary
have timely filed with the appropriate taxing authorities all material Tax
Returns required to be filed by them and such Tax Returns filed (including any
amendments thereof) are complete and accurate in all material respects. Each
Affiliated Group has timely filed all Tax Returns that it was required to file
for each taxable period for which any of M Company or any M Company Subsidiary
was a member of such Affiliated Group, other than Tax Returns for which an
immaterial amount of Taxes would be properly shown, and each such Tax Return was
correct and complete in all material respects when filed. Except as specified in
Section 5.22 of the M Company Schedule, neither M Company nor any M Subsidiary
has requested any extension of time within which to file Tax Returns. No claim
has been made on or after December 29, 1994, and to the best of Orbital's and M
Company's knowledge, no claim was made prior to December 29, 1994, by any taxing
authority in a jurisdiction where M Company or any M Subsidiary does not file
Tax Returns, nor has Tax Returns filed on its behalf, that M Company or any M
Subsidiary is or may
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be subject to taxation by that jurisdiction, or liable for Taxes owing to that
jurisdiction. Schedule 5.22 of the M Company Schedule lists all federal, state,
local and foreign income Tax Returns filed with respect to any of the M Company
and the M Company Subsidiaries for taxable periods ended on or after December
31, 1997. M Company and each M Subsidiary have delivered to T Company complete,
correct and accurate copies of their respective foreign, federal, state and
local Tax Returns (including any amendments thereof), examination reports and
statements of deficiencies assessed against or agreed to by any of M Company and
each M Subsidiary for the years ended December 31, 1999, December 31, 1998 and
December 31, 1997.
(b) Payment of Taxes. All Taxes due and payable on all filed
Tax Returns with respect to M Company and each M Subsidiary has been paid in
full or adequate reserves on the books and/or records have been established.
Each of the M Company and the M Subsidiaries has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any Employee, independent contractor, creditor, stockholder, or other third
party. The unpaid Taxes for all Pre-Closing Tax Periods of the M Company and any
M Company Subsidiary (A) did not, as of the Closing Date, exceed the reserve for
Tax liability (rather than any reserve for deferred Taxes established to reflect
the timing differences between book and Tax income) set forth on the face of the
M Company Balance Sheet (rather than any notes thereto) and (B) do not exceed
that reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the M Company and each M Company
Subsidiary in filing, or having filed on their behalf, their Tax Returns.
(c) Audits, Investigations or Claims. No deficiencies for
Taxes of M Company or any M Subsidiary have been claimed, proposed or assessed
by any taxing or other governmental authority. No director or officer (or
Employee responsible for Tax matters) of Orbital, M Company or any M Company
Subsidiary expects any taxing authority to assess any additional Taxes with
respect to the M Company and any M Company Subsidiary for any period for which
Tax Returns have been filed. There is no dispute or claim concerning any Tax
liability of the M Company or any M Company Subsidiary either (A) claimed or
raised by any taxing authority in writing or (B) as to which any of the
directors and officers (and Employees responsible for Tax matters) of Orbital, M
Company or any M Company Subsidiary has knowledge based upon personal contact
with any agent of such taxing authority. Each deficiency resulting from any
audit or examination relating to Taxes by any taxing authority has been paid. No
issues relating to Taxes were raised by the relevant taxing authority during any
presently pending audit or examination, and no issues relating to Taxes were
raised by the relevant taxing authority in any completed audit or examination
that can reasonably be expected to recur in a later taxable period. Audits of
foreign, federal, state and local Tax Returns by the relevant taxing authorities
have been completed or are currently
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ongoing where indicated for the periods set forth on Section 5.22 of the M
Company Schedule and, except as set forth in such Schedule, neither M Company
nor any M Subsidiary has been notified that any taxing authority intends to
audit a Tax Return for any other period. No extension of a statute of
limitations relating to Taxes is in effect with respect to M Company or any M
Subsidiary and none of M Company or the M Subsidiaries has waived any statute of
limitations in respect of Taxes.
(d) Lien. There are no Encumbrances for Taxes (other than for
current Taxes not yet due and payable) on any Assets of M Company or any M
Subsidiary.
(e) Tax Elections. All elections with respect to Taxes
affecting M Company or any M Subsidiary as of the date hereof are set forth on M
Company's latest Tax Returns. Neither M Company nor any M Subsidiary (i) has
made nor will make a deemed dividend election under Reg. Section 1.1502-32(f)(2)
or a consent dividend election under Section 565 of the Code; (ii) has consented
at any time under Section 341(f)(1) of the Code to have the provisions of
Section 341(f)(2) of the Code apply to any disposition of its Assets; (iii) has
agreed, or is required, to make any adjustment under Section 481(a) of the Code
by reason of a change in accounting method or otherwise; (iv) has made an
election, or is required, to treat any Asset as owned by another Person,
pursuant to the provisions of Section 168(f) of the Code or as tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168
of the Code; (v) owns any Assets that secure any debt the interest on which is
tax-exempt under Section 103(a) of the Code; (vi) has made an election pursuant
to Sections 338 or 336(e) of the Code or the regulations thereunder or any
comparable provisions of any foreign or other tax law; (vii) is subject to any
constructive elections under Section 338 of the Code or the regulations
thereunder; (viii) has made any payments, is obligated to make any payments, or
is a party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Section 280G of the Code;
(ix) has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code; (x) has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code; or (xi) has made any of the foregoing elections or is required to apply
any of the foregoing rules under any comparable state or local Tax provision.
(f) Prior Affiliated Groups. Except as set forth on Section
5.22 of the M Company Schedule, neither M Company nor any M Subsidiary (A) has
ever been a member of an affiliated group of corporations within the meaning of
Section 1504 of the Code that does not have Orbital as its "common parent,"
within the meaning of Section 1504 of the Code or (B) has any Liability for the
Taxes of any
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Person (other than any of the M Company and the M Subsidiaries) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law)
as a transferee or successor, by contract or otherwise. Neither M Company nor
any M Subsidiary is a successor to any other Person by way of merger,
reorganization or similar transaction.
(g) Partnerships. Each partnership with respect to which M
Company or any M Company Subsidiary owns an interest, directly or indirectly, is
a partnership for Tax purposes. Each entity that has made an election to be
treated as a partnership under applicable Tax laws, with respect to which the M
Company or any M Company Subsidiary owns an interest, directly or indirectly,
will be treated as a partnership for Tax purposes. Each entity that has made an
election to be disregarded as a separate entity under applicable Tax laws, with
respect to which the M Company and or any M Company Subsidiary owns an interest,
directly or indirectly, will be disregarded for Tax purposes. Neither M Company
nor any M Subsidiary is a successor to any other Person by way of merger,
reorganization or similar transaction.
(h) Transfer Pricing Agreements. Neither M Company nor any M
Subsidiary has entered into transfer pricing agreements or other like agreements
with respect to any foreign jurisdiction.
(i) International Boycott. Neither M Company nor any M
Subsidiary has participated in or cooperated with an international boycott or
has been requested to do so in connection with any transaction or proposed
transaction.
(j) Investment in U.S. Property. As of the Closing Date, no M
Subsidiary organized under the laws of a country other the United States (the "M
Foreign Companies") has an investment in U.S. property within the meaning of
Section 956 of the Code.
(k) Engaged in U.S. Trade or Business. None of the M Foreign
Companies is (i) engaged in a United States trade or business for U.S. federal
income tax purposes, (ii) a passive foreign investment company within the
meaning of the Code or (iii) a foreign investment company within the meaning of
the Code.
(l) Section 951. M Company would not be required to include
any amounts in gross income with respect to any of the M Foreign Companies
pursuant to Section 951 of the Code if the taxable year of any such M Foreign
Company were deemed to end on the day after the Closing Date, but not taking
into account any activities or income of any such Foreign Company on such day.
(m) Tax Sharing Agreements. There are no Tax-sharing
agreements or similar arrangements (including indemnity agreements) with respect
to or
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involving M Company or any M Company Subsidiary, and, after the Closing Date, M
Company shall not be bound by any such Tax-sharing agreements or similar
arrangements (entered into prior to the Closing) or have any liability
thereunder for amounts due by M Company or any M Company Subsidiary in respect
of periods prior to or after the Closing Date.
(n) Net Operating Losses. As of December 31, 1999, the net
operating loss carryforward of the M Company and M Subsidiaries for federal
income Tax purposes was not less than $48,000,000, as of December 31, 2000 the
estimated net operating loss carryforward of the M Company and M Subsidiaries
for federal income Tax purposes was not less than $61,000,000 and as of March
31, 2001, the estimated net operating loss of the M Company and the M
Subsidiaries for federal income Tax purposes was not less than $64,000,000.
(o) Section 355. Neither M Company nor any M Company
Subsidiary has distributed the stock of a "controlled corporation" (within the
meaning of that term as used in Section 355(a) of the Code) in a transaction
subject to Section 355 of the Code within the past two years.
(p) Intercompany Transactions. None of (i) M Company with
respect to Magellan DIS, Inc., (ii) M Company with respect to any other M
Company Subsidiary (excluding Magellan DIS, Inc. for these purposes) which is a
member of M Company's consolidated group for federal income tax purposes and
(iii) any M Company Subsidiary which is a member of M Company's consolidated
group for federal income tax purposes with respect to any other such entity has
any "excess loss accounts" or "deferred gains" with respect to any "deferred
intercompany transactions" within the meaning of Treas. Reg. Sections 1.1502-19
and 1.1502-13, respectively.
5.23. INSURANCE. Schedule 5.23 of the M Company Schedule contains a
complete and accurate list of all policies or binders of insurance (showing as
to each policy or binder the carrier, policy number, coverage limits, including
the extended reporting period, expiration dates, annual premiums, deductibles, a
general description of the type of coverage provided, including whether it is a
"claims made" or an "occurrence" policy and a brief description of the interests
insured thereby, and any pending claims or damages thereunder) of which M
Company or any M Subsidiary is the owner, insured or beneficiary. All of such
policies are sufficient for (i) compliance with all material Regulations and all
material Contracts of M Company and the M Subsidiaries, (ii) covering all
reasonably foreseeable damage to and liabilities or contingencies relating to
the conduct by M Company and the M Subsidiaries (or their directors and
officers) of their Business and (iii) providing replacement cost insurance
coverage for all Fixtures and Equipment of M Company and the M Subsidiaries and
all their leasehold improvements. Neither M Company nor any M Subsidiary is in
Default under any of such policies or binders, nor has it
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failed to give any notice or to present any claim, including potential claims,
damages and/or losses, under any such policy or binder in a due and timely
fashion. There are no facts known to Orbital, M Company or any M Subsidiary upon
which an insurer might be justified in reducing or denying coverage or
increasing premiums on existing policies or binders. There are no outstanding
unpaid claims under any such policies or binders. Such policies and binders are
in full force and effect on the date hereof and shall be kept in full force and
effect through the Effective Time.
5.24. PURCHASE COMMITMENTS AND OUTSTANDING BIDS. To M Company's
knowledge, there are no claims against M Company or any M Subsidiary to return
merchandise by reason of alleged overshipments, defective merchandise or
otherwise, or of merchandise in the hands of customers under a written agreement
that such merchandise would be returnable, other than in the ordinary course of
business. No outstanding non-cancelable (without penalty) purchase or
outstanding lease commitment of M Company or any M Subsidiary presently is in
excess of the normal, ordinary and usual requirements of their Business.
5.25. PAYMENTS. To the knowledge of M Company, neither M Company nor
any M Subsidiary nor any of their Representatives acting on their behalf have,
directly or indirectly, paid or delivered any fee, commission or other sum of
money or property, however characterized, to any finder, agent, government
official or other party, in the U.S. or any other country which M Company knows
or has reason to believe to have been illegal under any federal, state or local
laws of the U.S. or any other country having jurisdiction. To the knowledge of M
Company, neither M Company nor any M Subsidiary nor any of their Representatives
acting on their behalf, have accepted or received any unlawful contributions,
payments, gifts or expenditures.
5.26. CUSTOMERS AND SUPPLIERS. Section 5.26 of the M Company Schedule
sets forth a complete and accurate list of the names and addresses of (i) the
ten customers who purchased from M Company and any M Subsidiaries the greatest
dollar volume of products during M Company's last fiscal year, showing the
approximate total sales in dollars to each such customer during such fiscal
year; and (ii) suppliers with sales to M Company and any M Subsidiaries greater
than $100,000 during the period commencing on January 1, 2000 and ending on
March 31, 2001, showing the approximate total purchases in dollars by M Company
and the M Subsidiaries from each such supplier during such period. Since the
Balance Sheet Date, there has been no adverse change in any material respect in
the business relationship of M Company or any M Subsidiary with any customer or
supplier named on Section 5.26 of the M Company Disclosure Schedule. Neither M
Company nor any M Subsidiary has received any written communication from any
customer or supplier named on such Section 5.26 of any intention to return,
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terminate or materially reduce purchases from or supplies to M Company or any M
Subsidiary.
5.27. ENVIRONMENTAL MATTERS.
(a) Definition. "M Company" for purposes of this Section 5.27
includes (A) all M Subsidiaries, (B) all partnerships, joint ventures and other
entities or organizations in which M Company was at any time or is a partner,
joint venturer, member or participant and (C) all predecessor or former
corporations, partnerships, joint ventures, organizations, businesses or other
entities, whether in existence as of the date hereof or at any time prior to the
date hereof, the assets or obligations of which have been acquired or assumed by
M Company or to which M Company has succeeded.
(b) M Company is and always has been in compliance with all
applicable Environmental Laws, has obtained, and is and always has been in
compliance with, all permits, licenses, authorizations, registrations and other
governmental consents required by applicable Environmental Laws ("Environmental
Permits"), and has made all appropriate filings for issuance or renewal of such
Environmental Permits.
(c) Notice of Violation. M Company has not received any notice
of alleged, actual or potential responsibility for, or any inquiry or
investigation regarding, (i) any Release or threatened Release by M Company of
any Hazardous Substance at any location or (ii) an alleged violation of or
non-compliance by M Company with the conditions of any Permit required under any
Environmental Law or the provisions of any Environmental Law. M Company has not
received any notice of any other claim, demand or Action by any Person alleging
any actual or threatened injury or damage to any Person, property, natural
resource or the environment arising from or relating to any Release or
threatened Release by M Company of any Hazardous Substances.
(d) Environmental Conditions. To the knowledge of M Company,
there are no present or past Environmental Conditions in any way relating to M
Company, its Business or its Assets.
(e) Notices, Warnings and Records. M Company has given all
notices and warnings, made all reports, and has kept and maintained all records
required by and in compliance with all Environmental Laws, except where the
failure to do so would not have an M Company Material Adverse Effect.
(f) M Company has not used any waste disposal site, or
otherwise disposed of, transported, or arranged for the transportation of, any
Hazardous Substances to any place or location, or in violation of any
Environmental Laws.
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(g) Orbital and M Company have delivered or made available to
T Company, T Parent or their Representatives true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed by
them pertaining to Hazardous Substances at, on, about, under, or within any real
property currently or formerly owned, leased or operated by M Company, or
concerning compliance by M Company, or any other Person for whose conduct they
are or may be held responsible, with Environmental Laws, which reports, studies,
analyses, tests or monitoring are described on Section 5.27 to the M Company
Schedule.
5.28. BROKERS; TRANSACTION COSTS.
Except for its arrangements with Xxxxxx Xxxxxx Partners LLC (the
terms of which have been fully disclosed to T Company and T Parent), M Company
has not entered into and will not enter into any contract, agreement,
arrangement or understanding with any Person which will result in the obligation
of T Parent, T Company or M Company to pay any finder's fee, brokerage
commission or similar payment in connection with the transactions contemplated
hereby. M Company shall not otherwise be liable for any costs or expenses
pertaining to any finder's fees, brokerage commission or similar payment
incurred by or on behalf of M Company as a result of the consummation of the
transactions contemplated hereby.
5.29. GOVERNMENTAL CONTRACTS.
(a) Customers and Suppliers. Neither M Company nor any M
Subsidiary is currently in, nor will the execution and delivery of this
Agreement and the Ancillary Agreements to which M Company is a party by M
Company and the consummation of the transactions contemplated by this Agreement
and the Ancillary Agreements to which M Company is a party by M Company result
in, any material violation, breach or default of any term or provision of (i)
any Contract with the United States Government, (ii) any subcontract issued at
any tier under a prime Contract with the United States Government, or (iii) any
bid, proposal or quotation relating to a Contract with the United States
Government or a subcontract issued under a Contract with the United States
Government. For the purposes this Section 5.29, the term "United States
Government" includes all departments and agencies of any branch of the United
States Government, all independent agencies or instrumentalities and all
non-appropriated fund activities within the United States Government and United
States Government corporations. Neither M Company nor any M Subsidiary is in any
material violation, breach or default of any provision of any federal order,
statute, rule or regulation (including the Federal Acquisition Regulations
("FAR"), agency supplements to the FAR, the Arms Export Control Act (22 U.S.C.
277 et. seq), and agency export regulations) governing any Contract,
subcontract, bid, proposal, quote, arrangement or
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transaction of any kind with the United States Government. Neither M Company nor
any M subsidiary has received a cure notice, a show cause notice, a stop work
notice, been threatened with termination for default, or has a reasonable basis
to believe that cause exists for a termination for default under any Government
Contract or subcontract. Neither M Company nor any M subsidiary has knowledge of
any claims or requests for equitable adjustments by any of their vendors or
subcontractors, against them.
(b) Suspension or Debarment. Neither M Company nor any M
Subsidiary has been suspended or debarred from bidding on Contracts or
subcontracts with the United States Government in connection with the conduct of
its business; no such suspension or debarment has been initiated or, to the
knowledge of M Company and each M Subsidiary, threatened, and neither M Company
nor any M Subsidiary has any reasonable basis to believe that one will be.
Neither M Company nor any M Subsidiary is aware of any ongoing Government
investigations, prosecutions, civil or administrative proceedings or settlement
negotiations, or internal investigations, relating to the United States
Government Contracts or subcontracts or the violation of any federal order,
statute, rule, or regulation relating to Government Contracts, subcontracts, or
export controls.
(c) Technical Data. The United States Government has no rights
with respect to any "technical data" or "computer software" that are material to
the Company's business.
(d) Clearances. Section 5.29 of the M Company Schedule sets
forth all security clearances (including facility clearances) held by M Company,
any M Subsidiary and any of their officers, directors, managers or employees.
5.30. FULL DISCLOSURE.
No representation or warranty of M Company contained in this
Agreement or any Ancillary Agreement to which M Company is a party, and no
exhibit or schedule hereto or thereto furnished by or on behalf of M Company to
T Company, T Parent or their Representatives pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact or omits (when taken as a whole with all other
representations and warranties of M Company in this Agreement and the Ancillary
Agreements) to state a material fact required to be stated therein or necessary
to make the statements made therein, in the context in which such statements are
made, not false or misleading.
5.31. DISCLAIMER OF ADDITIONAL AND IMPLIED WARRANTIES. Neither Orbital
nor M Company is making any representation or warranty, express or
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implied, of any nature whatsoever except as specifically set forth in this
Agreement or the Ancillary Agreements to which either is a party.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF ORBITAL
Orbital represents and warrants to T Parent and T Company as
follows:
6.1. ORGANIZATION. Orbital is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Orbital
has full corporate power and authority to conduct its Business as it is
presently being conducted and to own or lease, as applicable, and operate its
Assets.
6.2. AUTHORIZATION. Orbital has all necessary corporate power and
authority to enter into and to deliver this Agreement and the Ancillary
Agreements to which it is a party and has taken or will take prior to the
Closing Date all action necessary to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. The
execution and delivery by Orbital of this Agreement and the Ancillary Agreements
to which it is a party, and the performance by Orbital of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by its Board of Directors. This
Agreement has been duly executed and delivered by Orbital and constitutes a
legal, valid and binding obligation of Orbital enforceable against it in
accordance with its terms, except as enforceability may be limited by the effect
of bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors and the general principles of
equity. The Ancillary Agreements to which Orbital is party will be as of the
Effective Time, duly and validly executed by Orbital, and will be legal, valid
and binding obligations of Orbital, enforceable against Orbital in accordance
with their respective terms, except as enforceability may be limited by the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors and general principles of
equity.
6.3. NO CONFLICT OR VIOLATION; CONSENTS.
(a) Except as set forth on Section 6.3 of the M Company
Schedule, none of the execution, delivery or performance of this Agreement or
any Ancillary Agreement, the consummation of the transactions contemplated
hereby or thereby, nor compliance by Orbital with any of the provisions hereof
or thereof, will (i) violate or conflict with any provision of the Certificate
of Incorporation, as amended, or Bylaws, as amended of Orbital, (ii) violate,
conflict with, or result in a breach of
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or constitute a default (with or without notice or passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
material Assets under, any material Contract or other arrangement to which
Orbital is a party or by which Orbital is bound or to which any of its material
Assets are subject, (iii) violate in any material respect any applicable
material Law Regulation or Court Order, or (iv) impose any material Encumbrance
on any Assets of Orbital or its Business.
(b) Except for (i) the filings with the Delaware Secretary of
State contemplated by Section 2.3 hereof, (ii) applicable requirements of any
antitrust Laws, including those foreign jurisdictions, and filings and notices
under the Exon-Xxxxxx Provision and FOCI related rules and regulations, (iii)
applicable requirements of federal and state securities laws, and (iv) as set
forth on Section 6.3 of the M Company Schedule, no notices to, declarations,
filings or registrations with, approvals, authorizations, permissions or
consents of, or assignments by, any Persons (including any federal, state or
local governmental or administrative authorities) are necessary to be made or
obtained by Orbital in connection with the execution, delivery or performance of
this Agreement or any Ancillary Agreement to which Orbital is a party or the
consummation of the Merger.
6.4. LITIGATION. There is no Action pending or, to the knowledge of
Orbital, threatened or anticipated against, relating to or affecting Orbital,
its material Assets or any of its officers and directors as such, (i) which
seeks to enjoin or obtain damages in respect of the transactions contemplated
hereby or by the Ancillary Agreements, (ii) with respect to which there is a
reasonable likelihood of a determination which would prevent Orbital from
consummating the transactions contemplated hereby and by the Ancillary
Agreements, or (iii) with respect to which there is a reasonable likelihood of a
determination which would have a M Company Material Adverse Effect or result in
a M Company Material Adverse Change.
6.5. OWNERSHIP OF M COMPANY COMMON STOCK. Except as set forth on
Section 5.31 of the M Company Schedule, Orbital owns (or will own prior to the
Effective Time) the M Company Preferred Stock free and clear of any Encumbrances
and subject to no restriction with respect to voting or transfer thereof.
6.6. FULL DISCLOSURE.
No representation or warranty of Orbital or M Company contained
in this Agreement or any Ancillary Agreement to which M Company is a party, and
no exhibit or schedule hereto or thereto furnished by or on behalf of M Company
to T Company, T Parent or their Representatives pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains any untrue
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statement of a material fact or omits (when taken as a whole with all other
representations and warranties of M Company in this Agreement and the Ancillary
Agreements) to state a material fact required to be stated therein or necessary
to make the statements made therein, in the context in which such statements are
made, not false or misleading.
ARTICLE VII.
ACTIONS PRIOR TO THE CLOSING
Each of Orbital, M Company, T Parent and T Company covenants as
follows for the period from the date hereof through the Effective Time:
7.1. CONDUCT OF BUSINESS OF M COMPANY. From the date hereof through
the Effective Time, M Company shall and shall cause each M Subsidiary (i) to
operate its Business in the ordinary course of business and in accordance with
past practice and (ii) to not take any action inconsistent with this Agreement,
the Certificate of Merger, the Ancillary Agreements to which it is a party or
the consummation of the Merger, except as contemplated by this Agreement or as
consented to by T Company in writing. Without limiting the generality of the
foregoing, from the date hereof through the Effective Time, M Company shall not,
and shall not permit any M Subsidiary to, except as specifically contemplated by
this Agreement (including Section 6.1 of the M Company Disclosure Schedule) or
as consented to in writing by T Company:
(a) incur any indebtedness for borrowed money (other than
under existing credit lines and credit facilities), or assume, guarantee,
endorse (other than endorsements for deposit or collection in the ordinary
course of business), or otherwise become responsible for obligations of any
other Person (except for intercompany indebtedness consistent with past
practice);
(b) issue or commit to issue any shares of its capital stock
or any other securities or any securities convertible into shares of its capital
stock or any other securities, including options and warrants therefor (other
than the issuance of M Company Common Stock upon the exercise of M Company
Options and the issuance of M Company Preferred Stock in accordance with Section
2.2 hereof);
(c) declare, pay or incur any obligation to pay any dividend
on its capital stock or declare, make or incur any obligation to make any
distribution or redemption with respect to-capital stock (other than repurchases
of capital stock at cost from employees and service providers in connection with
their termination of service with M Company or any M Subsidiary);
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(d) make any change to its Certificate of Incorporation or
Bylaws (other than pursuant to the Certificate of Amendment to be filed in
accordance with Section 2.1 hereof);
(e) mortgage, pledge or otherwise encumber any of its Assets
or sell, transfer, license or otherwise dispose of any of its Assets, except for
sales of products and services and standard customer non-exclusive licenses, in
each case in the ordinary course of business and consistent with past practice;
(f) cancel, release or assign any indebtedness owed to it or
any claims or rights held by it, except in the ordinary course of business and
consistent with past practice;
(g) make any investment of a capital nature in any Person
either by purchase of stock or securities, contributions to capital, property
transfer, loan, advance or otherwise, or by the purchase of any property or
Assets of any other Person, except capital expenditures in the ordinary course
of business and consistent with past practice;
(h) terminate any Material Contract or make any change in any
Material Contract, except in the ordinary course of business and consistent with
past practice;
(i) (A) enter into or amend any Employment Contract (other
than at-will employment arrangements in the ordinary course of business), (B)
pay or agree to pay any compensation to or for any employee, officer or director
other than in the ordinary course of business (except pursuant to Contracts
entered into prior to the date hereof and disclosed in Section 5.11 of the M
Company Schedule), (C) pay or agree to pay any bonus, incentive compensation,
service award or other like benefit (or pursuant to Contracts entered into prior
to the date hereof and disclosed in Section 5.11 of the M Company Schedule), or
(D) enter into or modify any other Employee Plan, except as contemplated hereby;
(j) enter into or modify any Contract with any Related Party
thereof;
(k) enter into any Contract with a value in excess of $100,000
unless the same is terminable by such Person on no more than 30 days' written
notice without penalty or payment or is entered into in the ordinary course of
business consistent with past practice;
(l) make any change in any method of accounting or accounting
practice other than as required by any change in Law or Regulation;
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(m) fail to use its commercially reasonable efforts to (i)
retain its employees, (ii) maintain its Business so that such employees will
remain available to M Company on and after the Closing Date (other than those
employees who are not expected to become employees of Surviving Corporation),
(iii) maintain existing relationships with suppliers and customers and others
having business dealings with such Person and (iv) otherwise preserve the
goodwill of its Business;
(n) cancel, materially amend or fail to renew any material
insurance policy;
(o) fail to pay or otherwise satisfy its monetary commitments
as they become due, except (i) such as are being contested in good faith or (ii)
where the failure would not cause the aggregate amount of past due trade
payables to exceed $13,000,000;
(p) except as provided in Section 7.1(p) of the M Company
Schedule, make or change any election with respect to Taxes, settle any audit,
claim or examination of Taxes, adopt or apply to change any method of accounting
or accounting practice for Tax purposes, enter into any closing agreement, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes, or take any action or fail to take any
action that would have a M Company Material Adverse Effect on the Tax liability
of the M Company or any of the M Company Subsidiaries;
(q) enter into or amend any partnership arrangements, joint
ventures, joint development agreements or similar strategic alliances;
(r) transfer or license to any Person or otherwise extend,
amend or modify any rights to the Proprietary Rights of the Company or enter
into grants to future patent rights, other than in the ordinary course of
business;
(s) make any grant of exclusive rights to any third party,
except in the ordinary course of business;
(t) settle any claims or litigation with respect to items
listed on the M Company Schedule under Sections 5.16 and 6.4;
(u) do any other act which would cause any representation or
warranty of M Company in this Agreement to be or become untrue in any material
respect; or
(v) accept any contracts or purchase orders for the supply of
ZY-12 products or any other products requiring security clearances or classified
work; or
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(w) take or agree in writing or otherwise to take any of the
actions described in this Section 7.1.
7.2. INVESTIGATION. Subject to the Confidentiality Agreement, from the
date hereof through the Effective Time, M Company shall (i) afford T Company and
its Representatives complete access at all reasonable times upon reasonable
notice to the Business and Assets and Liabilities of M Company and the M
Subsidiaries for the purpose of inspecting the same, to the officers, employees
and Representatives, properties, Books and Records and Contracts of M Company
and the M Subsidiaries, (ii) make copies or extracts from such Books and Records
and Contracts and (iii) furnish T Company and its Representatives all financial,
operating and other data and information as such Persons may reasonably request;
provided, however, that in the event this Agreement is terminated, pursuant to
Section 13.1 hereof, such copies shall be returned to M Company within three
Business Days of the date of such termination.
7.3. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
notice to the other of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate in
any material respect and (ii) any material failure of such party to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that such disclosure shall not be deemed to
cure any breach of a representation, warranty, covenant or agreement or to
satisfy any condition. T Company and M Company shall promptly notify the other
of the threat or commencement of any Action, or any development that occurs
before the Closing that would reasonably be expected to result in an M Company
Material Adverse Effect, or that could reasonably be expected to delay, limit or
enjoin the transactions contemplated by this Agreement.
7.4. RESTRICTIONS ON CERTAIN TRANSACTIONS. Orbital and M Company shall
not, directly or indirectly, solicit any inquiries or proposals or enter into or
continue any discussions, negotiations or agreements relating to the sale or
exchange of any shares of M Company capital stock (other than in connection with
the exercise of M Company Options or the issuance of the M Company Preferred
Stock in accordance with Section 2.2 hereof), the merger of M Company with, or
the direct or indirect disposition of a significant amount of its Assets or the
Business to, any Person other than as contemplated hereunder, or provide any
assistance or any information to or otherwise cooperate with any Person in
connection with any such inquiry, proposal or transaction.
7.5. ANTITRUST AND EXON-XXXXXX PROVISION. Orbital, M Company, T Parent
and T Company shall promptly determine whether notifications under any
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antitrust Laws, including those of foreign jurisdictions, and the Exon-Xxxxxx
Provision are required and shall file as soon as practicable applicable
notifications under any antitrust Laws, including those of foreign
jurisdictions, and the Exon-Xxxxxx Provision in connection with the Merger and
the transactions contemplated hereby and to respond as promptly as practicable
to any inquiries received from any governmental authority in connection with
antitrust and CFIUS for additional information or documentation and to respond
as promptly as practicable to all inquiries and requests received from any State
Attorney General or other governmental authority in connection with antitrust or
Exon-Xxxxxx Provision matters, and shall cooperate with each other with respect
to the foregoing. T Parent, T Company and M Company shall give each other prior
notice and consult with each other prior to any meeting with any governmental
authority in connection with antitrust or CFIUS with respect to their respective
filings under any antitrust Laws, including those of foreign jurisdictions, or
the Exon-Xxxxxx Provision or any review by either of the foregoing agencies.
Each of T Parent, T Company, Orbital and M Company shall take all reasonable
actions necessary to cause the termination or expiration of the waiting periods
under any antitrust Laws, including those of foreign jurisdictions, or
Exon-Xxxxxx Provision as promptly as possible.
7.6. FURTHER ASSURANCES. Upon the terms and subject to the conditions
contained herein, the parties agree, in each case both before and after the
Effective Time, (i) to use all commercially reasonable 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 the transactions
contemplated by this Agreement, the Certificate of Merger and the Ancillary
Agreements, (ii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder and thereunder, and (iii) to cooperate with
each other in connection with the foregoing. Without limiting the foregoing, the
parties agree to use their respective commercially reasonable efforts to:
(A) obtain any necessary Consents, including any and all
governmental consents to the transaction, such as CFIUS and FOCI related filings
(provided, however, that no amendment or modification shall be made to any M
Company Contract to obtain such Consent without T Company's consent);
(B) obtain all necessary Permits;
(C) give all notices to, and make all registrations and
filings with third parties, including submissions of information requested by
governmental authorities;
(D) address any concerns on the part of any governmental
agency or authority with jurisdiction over the enforcement of any applicable
antitrust laws or
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national security laws or regulations regarding the legality of T Company's
acquisition of M Company. Such actions may, but need not, include: entering into
negotiations, providing information, making proposals, entering into and
performing agreements or submitting to judicial or administrative orders, or
selling or otherwise disposing of, or holding separate (through the
establishment of a trust or otherwise), particular assets or categories of
assets, or businesses, of M Company or T Company or any of the M Subsidiaries or
affiliates, each within the sole discretion of T Company;
(E) prevent the entry in a judicial or administrative
proceeding brought under any antitrust law or the Exon-Xxxxxx Provision by any
government antitrust authority or government national security authority (such
as CFIUS), respectively, or any other Person of any permanent or preliminary
injunction or other order that would make consummation of the acquisition of the
M Company Common Stock in accordance with the terms of this Agreement unlawful
or that would prevent or delay such consummation;
(F) in the event that such an injunction or order has been
issued in such a proceeding, take steps, including, without limitation, the
appeal thereof, or the posting of a bond, necessary to vacate, modify or suspend
such injunction or order to permit such consummation on a schedule as close as
possible to that contemplated by this Agreement; and
(G) take actions to avoid or eliminate each and every
impediment under any antitrust law or the Exon-Xxxxxx Provision that may be
asserted by any government antitrust authority or government national security
Authority, respectively, or any other Person to the consummation of the
transactions contemplated hereby in accordance with the terms of this Agreement;
provided, however, that nothing in this Section shall require any party hereto
to take any step or agree to any action which shall materially diminish the
benefit to it of the transactions contemplated by this Agreement.
7.7. TAX RETURNS. M Company and the M Company Subsidiaries covenant
and agree with T Company that until the Effective Time they shall prepare and
file (i) all M Company and M Subsidiary Tax Returns required to be filed and pay
all required Taxes due in accordance with applicable law, and (ii) the amended M
Company and M Subsidiary Tax Returns for the tax years ended December 31, 1997,
1998 and 1999 to state that an ownership change within the meaning of Section
382 of the Code occurred on December 31, 1997, with respect to M Company, and
such amended Tax Returns shall state the value of the M Company for purposes of
computing the annual Section 382 limitations is at least $60 Million and that
the annual limitation for such years is at least $3 Million.
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7.8. M COMPANY INTERCOMPANY DEBT. M Company covenants and agrees with
T Company that prior to the Effective Time if requested by T Company or T
Parent, (i) M Company will contribute any indebtedness owed by Magellan DIS,
Inc. to Magellan DIS, Inc. as a contribution to capital and (ii) M Company will
cancel all other intercompany accounts between M Company and any M Company
Subsidiary. M Company covenants and agrees with T Company that it will not claim
a capital loss or bad debt deduction with respect to the intercompany debt
described in Section 7.8(i) hereof, at any time prior to or at the Effective
Time.
7.9 MEETING OF M COMPANY STOCKHOLDERS.
M Company shall promptly after the date of this Agreement take
all action necessary in accordance with the DGCL and the M Company Certificate
of Incorporation and Bylaws to duly call, give notice of, convene and hold a
meeting of the stockholders of M Company to consider this Agreement (including
the Certificate of Amendment and the Merger). M Company shall use its best
efforts to secure the vote or consent of the stockholders of M Company required
by the DGLC or this Agreement to approve this Agreement and the transactions
contemplated hereby.
7.10 STOCKHOLDER AGENT OF THE STOCKHOLDERS; POWER OF ATTORNEY.
At the meeting of the stockholders of M Company, the holders of a
majority of the Minority M Company Common Stock shall appoint a Person as agent
and attorney-in-fact (the "Stockholder Agent") for each holder of Minority M
Company Common Stock (except such stockholders, if any, as shall have perfected
their appraisal or dissenters' rights under the DGCL), for and on behalf of such
stockholders, to give and receive notices and communications, to authorize
withdrawal by Orbital of cash from the escrow fund created from the deposit of
the Minority Escrow Amount pursuant to Section 3.10 hereof (the "Minority Escrow
Fund") in satisfaction of claims by Orbital pursuant to Section 11.2(g) hereof,
to object to such withdrawals, to agree to, negotiate, enter into settlements
and compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of the Stockholder Agent for the
accomplishment of the foregoing. Such agency may be changed by the holders of a
majority of the Minority M Company Common Stock from time to time upon not less
than 30 days prior written notice to T Parent; provided, however, that the
Stockholder Agent may not be removed unless holders of a two-thirds interest in
the Minority Escrow Fund agree to such removal and to the identity of the
substituted stockholder agent. Any vacancy in the position of Stockholder Agent
may be filled by approval of the holders of a majority in interest of the
Minority Escrow Fund. No bond shall be required of the Stockholder Agent, and
the Stockholder Agent shall not receive compensation for his services. Notices
or communications to or from the
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Stockholder Agent shall constitute notice to or from each of the holders in
interest in the Minority Escrow Fund.
The Stockholder Agent shall not be liable for any act done or
omitted hereunder as Stockholder Agent while acting in good faith and in the
exercise of reasonable judgment.
7.11 WESTERN ATLAS.
Orbital and M Company shall use commercially reasonable efforts
to enter into a binding agreement with Western Atlas, conditioned only upon the
Closing hereunder, unconditionally settling the Western Atlas Litigation and
unconditionally extinguishing, releasing and discharging all past, present and
future liability arising out of or related to all Western Atlas Events, and,
upon the Closing hereunder, to cause a notice of dismissal with prejudice to
have been filed in the Western Atlas Litigation, signed by all parties in the
Western Atlas Litigation; provided however, that (i) Orbital and M Company shall
not be required to enter into a settlement agreement requiring the payment of
more than $3.6 million to Western Atlas (it being understood that, if Orbital
and M Company enter into such a settlement, T Parent, T Company and M Company
shall not bear any Western Atlas Costs in excess of $1.8 million in the
aggregate) and (ii) prior to entering into any settlement, M Company and/or
Orbital shall submit such proposed settlement agreement and associated documents
and/or license agreements to T Company and obtain written approval (which shall
not be unreasonably withheld) to all terms and conditions other than monetary
amounts included in Western Atlas Costs. Once such settlement has been signed,
Orbital and/or M Company shall submit an accounting of all Western Atlas Costs
to T Company. M Company and/or Orbital shall, at T Company's option, include T
Company or its Representatives in all negotiations with Western Atlas or its
Representatives, and shall keep T Company informed of all material developments,
communications, events and negotiations related to all Western Atlas Events. If
Orbital and M Company are unable to settle the Western Atlas Litigation as
described in the first sentence of this Section 7.11, then at such time as all
other conditions precedent specified in Article VIII hereof have been satisfied,
T Company and Orbital shall negotiate in good faith to determine the nature and
scope of indemnification to be provided with respect to Western Atlas Costs
after the Closing; provided that the parties may begin to negotiate such
indemnification arrangements prior to the satisfaction of such conditions
precedent.
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ARTICLE VIII.
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION
The obligation of each party to effect the Merger and consummate
the transactions to be consummated at the Closing is subject to the satisfaction
or waiver on or prior to the Closing Date of the following conditions:
(a) Governmental Approvals. All Consents from governmental
authorities necessary for the valid consummation of the Merger (including the
expiration or early termination of any waiting period applicable to the Merger
under any antitrust Laws, including those of foreign jurisdictions, and the
expiration of the period of time for any applicable review process by CFIUS
under the Exon-Xxxxxx Provision or by any other agency relating to government
security concerns (including the negotiation of any security agreement or other
FOCI negation measures reasonably acceptable to T Company that, in its
reasonable discretion, are necessary to the performance of M Company's or any M
Subsidiary's Contracts and the operation of the Business after the Merger))
shall have been obtained. CFIUS shall not have taken any action or made any
recommendation to the President of the United States that has not been
terminated or withdrawn (i) to block or prevent the consummation of the Merger,
(ii) to block or prevent the performance of any of M Company's and any M
Subsidiary's Contracts after the Merger or (iii) to condition the Merger on the
consummation of transactions, restrictions or actions that could materially
diminish the value of M Company or any M Subsidiary to T Company.
(b) Third Party Consents. All Consents from other parties in
connection with the transactions contemplated hereby and by the Certificate of
Merger and the Ancillary Agreements and necessary for the operation of the
Business of M Company after the Closing (including all required third party
consents under the Contracts of M Company, as listed on Section 5.12 of the M
Company Disclosure Schedule, except individually or in the aggregate as shall
not be material to the conduct of the Business of M Company) shall have been
obtained.
(c) Release of Encumbrances. Xxxxxx Guaranty Trust Company of
New York, as Agent and The Northwestern Mutual Life Insurance Company shall have
released any Encumbrances on the Assets of M Company in their favor.
(d) No Actions or Court Orders. No Action by any court,
governmental authority or other Person shall have been instituted or threatened
in writing and no Regulation shall have been enacted which questions the
validity or legality of the transactions contemplated hereby or by the
Certificate of Merger or the Ancillary Agreements and which could reasonably be
expected to damage
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M Company or T Company or their respective Assets or Businesses materially if
the transactions contemplated hereby or thereby are consummated.
(e) Stockholder Approval. The holders of a majority of
Minority M Company Common Stock which are voted at the stockholders' meeting
held pursuant to Section 7.9 shall have voted to approve the Merger.
8.2. CONDITIONS TO OBLIGATIONS OF T PARENT AND T COMPANY.
The obligations of T Parent and T Company to consummate the
Merger and the other transactions contemplated by this Agreement are subject, in
the discretion of T Company or T Parent, to the satisfaction or waiver, on or
prior to the Closing Date, of each of the following conditions:
(a) Representations, Warranties and Covenants. All
representations and warranties of Orbital and M Company contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if such representations and warranties were made at and as of
the Closing Date (or in the case of representations and warranties made as of a
particular date, as of such date), and Orbital and M Company shall have
performed in all material respects all agreements and covenants required hereby
to be performed by them prior to or at the Closing Date. There shall be
delivered to T Company a certificate from each of Orbital and M Company to the
foregoing effect signed by a duly authorized officer of Orbital and M Company,
respectively.
(b) Closing Documents. Orbital and M Company shall have
delivered the documents and other items to be delivered by such Persons pursuant
to Section 9.1 of this Agreement.
(c) Material Adverse Change. There shall not have been any M
Company Material Adverse Change.
(d) Purchase Agreement. The Purchase Agreement shall be in
full force and effect in accordance with its terms. Orbital and OrbNav shall
have performed and complied in all material respects with all covenants and
agreements required to be performed or complied with by them thereunder as of
the Closing. The closing under the Purchase Agreement shall occur
contemporaneously with the Closing hereunder.
8.3 CONDITIONS TO OBLIGATIONS OF ORBITAL AND M COMPANY.
The obligations of Orbital and M Company to consummate the Merger
and the other transactions contemplated by this Agreement are subject, in the
discretion of Orbital or M Company, to the satisfaction or waiver, on or prior
to the Closing Date, of each of the following conditions:
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(a) Representations, Warranties and Covenants. All
representations and warranties of T Parent and T Company contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if such representations and warranties were made at and as of
the Closing Date (or in the case of representations and warranties made as of a
particular date, as of such date), and T Parent and T Company shall have
performed in all material respects all agreements and covenants required hereby
to be performed by them prior to or at the Closing Date. There shall be
delivered to Orbital and M Company a certificate from each of T Parent and T
Company to the foregoing effect signed by a duly authorized officer of T Parent
and T Company, respectively.
(b) Closing Documents. M Company shall have received the
documents and other items described in Section 9.2 and such other documents and
items as M Company may reasonably require.
(c) Purchase Agreement. The Purchase Agreement shall be in
full force and effect in accordance with its terms. T Parent shall have
performed and complied in all material respect with all covenants and agreements
required to be performed or complied with by it thereunder as of the Closing.
The closing under the Purchase Agreement shall occur contemporaneously with the
Closing hereunder.
(d) Release of Orbital. Orbital shall have been released from
any liabilities or obligations as guarantor under the M Company Credit Facility.
ARTICLE IX.
CLOSING
On the Closing Date at the Closing Place:
9.1. DELIVERIES BY ORBITAL AND M COMPANY. Orbital and M Company shall
deliver (or cause to be delivered) to T Company the following:
(a) the Ancillary Agreements to which each of Orbital and M
Company is a party;
(b) a certificate of corporate good standing issued by the
Secretary of State of the State of Delaware for M Company and Orbital, each
dated not more than five days prior to the Closing Date;
(c) the officer's certificates referenced in Section 8.2(a);
(d) a copy of the resolutions of the Board of Directors of
Orbital, as certified as of the date of the Closing by the Secretary of Orbital,
as being true,
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correct and complete and in full force and effect, authorizing the execution,
delivery and performance by Orbital of this Agreement and the Ancillary
Agreements to which it is a party, the Merger, and the performance of Orbital's
obligations hereunder;
(e) a copy of the resolutions of the Board of Directors of M
Company, as certified as of the date of the Closing by the Secretary of M
Company, as being true, correct and complete and in full force and effect,
authorizing the execution, delivery and performance by M Company of this
Agreement and the Ancillary Agreements to which it is a party, the Merger, and
the performance of M Company's obligations hereunder;
(f) duly executed resignations, effective as of the Effective
Time, of each officer or director of M Company and the M Subsidiaries whose
resignation is requested by T Company prior to the Effective Time;
(g) a legal opinion of Xxxxx & Xxxxxxx LLP, counsel to
Orbital, dated the Closing Date and addressed to T Parent and T Company, in form
and substance reasonably satisfactory to T Parent and its counsel and covering
the matters described on Exhibit E;
(h) a legal opinion of Xxxxxxx, Phleger & Xxxxxxxx LLP,
counsel to the special independent committee of the Board of Directors of M
Company, dated the Closing Date and addressed to T Parent and T Company, in form
and substance reasonably satisfactory to T Parent and its counsel and covering
the matters described on Exhibit E;
(i) evidence, in form and substance reasonably satisfactory to
T Parent and T Company, that Xxxxxx Guaranty Trust Company of New York, as
Agent, and The Northwestern Mutual Life Insurance Company shall have released
any Encumbrances on the capital stock or Assets of M Company in their favor;
(j) a Stockholder Release, in the form attached hereto as
Exhibit F, duly executed by Orbital; and
(k) copy of the audited M Company Financial Statements.
9.2. DELIVERIES BY T PARENT AND T COMPANY. T Parent and T Company
shall deliver:
(a) the officer's certificates referenced in Section 8.3(a);
(b) a copy of the resolutions of the Board of Directors of T
Company and T Parent, as certified as of the date of the Closing by the
Secretary of T
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Company and T Parent, respectively, as being true, correct and complete and in
full force and effect, authorizing the execution, delivery and performance by
each of T Company and T Parent of this Agreement and the Ancillary Agreements to
which either of them is a party, the Merger, and the performance of each of T
Company's and T Parent's obligations hereunder.
(c) the Ancillary Agreements to which each of T Company and
T Parent is a party;
(d) a certificate of corporate good standing issued by the
Secretary of State of the State of Delaware for T Company and T Parent, each
dated not more than five days prior to the Closing Date;
(e) to the Exchange Agent, (i) the Common Stock Consideration
and (ii) the Preferred Stock Consideration, less the Escrow Amount deposited in
the escrow account pursuant to Section 3.10;
(f) to the Escrow Agent, the Escrow Amount to be deposited in
the escrow account subject to the Escrow Agreement; and
(g) a legal opinion of Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx, counsel to T Company and T Parent, dated the Closing Date, and
addressed to Orbital and M Company in form and substance reasonably satisfactory
to Orbital and its counsel, and covering the matters described on Exhibit E.
ARTICLE X.
TAX MATTERS
10.1. TAX ALLOCATION AND INDEMNIFICATION.
(a) Orbital shall be solely responsible for, shall pay and
shall indemnify T Parent, T Company and the Surviving Corporation and hold T
Parent, T Company, Surviving Corporation, M Company or any M Subsidiary, (each
and including Orbital with respect to Section 10.1(c), a "Tax Indemnitee")
harmless from any Losses resulting from, arising out of, or relating to, any
Liability (i) of M Company or any M Subsidiary for, any and all Orbital Taxes
and (ii) of any and all Taxes relating to any breach of any representation or
warranty contained in Section 5.22 hereof (excluding Section 338 Taxes and
Intercompany Debt Taxes unless such Taxes would not have been incurred but for
such breach). A payment made by Orbital pursuant to this Section 10.1, shall be
referred to herein as a "Tax Indemnity Payment."
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(b) Orbital shall be solely responsible for and shall
indemnify T Parent, T Company and the Surviving Corporation from and against
Losses arising out of, or relating to any Liability of M Company or any M
Subsidiary for Taxes (excluding Section 338 Taxes and Intercompany Debt Taxes
except to the extent such Taxes would not have been incurred but for a breach
referred to in Section 10.1(a)(ii)) (i) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) by reason of
any of the M Company or any M Subsidiary having been a member of any
consolidated, combined or unitary group during any Pre-Closing Tax Period or
(ii) with respect to a Pre-Closing Tax Period, as a transferee or successor.
(c) T Parent, T Company and the Surviving Corporation shall be
solely responsible for, shall pay, and shall indemnify Orbital and hold Orbital
harmless from any Losses resulting from, arising out of, or relating to, any
Liability of M Company or M Subsidiary for, any and all Taxes of the M Company
or any M Company Subsidiary relating to (i) any Post-Closing Tax Period, (ii)
the portion of the Taxes for any Straddle Period which are allocable to the
period after the Closing Date under Section 10.7(a), (iii) Section 338 Taxes,
and (iv) Intercompany Debt Taxes, except to the extent any such Taxes described
in this Section 10.1(c) would not have been incurred but for a breach referred
to in Section 10.1(a)(ii).
10.2. SURVIVAL. All obligations, covenants and agreements under this
Article X shall survive the Closing hereunder and continue until 30 days
following the expiration (taking into account any waiver, extension or
mitigation thereof) of the applicable statute of limitations on assessment of
the relevant Tax.
10.3. EXCLUSIVE REMEDY. Notwithstanding anything to the contrary in
this Agreement, an alleged claim for indemnification under this Article X (such
claim, a "Tax Claim"), will be governed exclusively by this Article X, together
with the applicable provisions of Article XI and XII.
10.4. CONTESTS. (a) If any claim for Tax is asserted in a Contest (as
defined below) against any Tax Indemnitee that would result in the
indemnification of any such Tax Indemnitee by Orbital pursuant to this Article X
then the following provisions of this Section 10.4(a) will apply to the handling
of such claim. For purposes of this Agreement, "Contest" means any audit, court
proceeding or other dispute with respect to any Tax matter that affects M
Company and any M Subsidiary. Unless T Parent, T Company or the Surviving
Corporation has previously received written notice from Orbital of the existence
of such Contest, T Parent, T Company or the Surviving Corporation shall give
written notice to Orbital of the existence of any Contest relating to a Tax
matter that is or may be Orbital's responsibility under this Article X as soon
as practicable after the receipt by T Parent, T Company or the Surviving
Corporation of any written notice of such Contest, but in no event later than 15
days prior to the time that a written response
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to the written notice is required, unless such written notice is received and a
written response is due in less than 15 days, in which case T Parent, T Company
or the Surviving Corporation shall give written notice to Orbital as soon as
practicable. If T Parent, T Company or the Surviving Corporation fails to comply
with the foregoing sentence, Orbital shall not be liable to T Parent, T Company
or the Surviving Corporation, M Company or any M Subsidiary to the extent that
Orbital's position is actually prejudiced as a result thereof. Orbital shall, at
its election, have the right to represent the interests of M Company or the M
Subsidiaries in any Contest relating to a Tax matter for which Orbital may be
required to make a Tax Indemnity Payment, to employ counsel of Orbital's choice
at the expense of Orbital and to control the conduct of such Contest, including
settlement or other disposition thereof, provided, however, that Orbital will
keep T Parent, T Company or the Surviving Corporation informed of the progress
and disposition of the Contest and no settlement or compromise of issues will be
made without T Parent's, T Company's or the Surviving Corporation's written
consent, which consent shall not be unreasonably withheld and provided, further,
that to the extent such Contest could adversely affect T Parent's, T Company's
or the Surviving Corporation's Tax Liability (after taking into account any
required Tax Indemnity Payment), T Parent, T Company or the Surviving
Corporation will have the right to control the conduct of the Contest at its
expense, and in which case no settlement or compromise of issues will be made
without Orbital's written consent, which consent shall not be unreasonably
withheld. T Parent, T Company or the Surviving Corporation shall handle any Tax
Claim relating to any Tax period of the M Company and any M Subsidiary included
in a Pre-Closing Tax Period which Orbital elects in writing not to control, and
T Parent, T Company or the Surviving Corporation shall be entitled to defend,
compromise or settle such Tax Claim in its sole discretion.
(b) With respect to any Straddle Period, T Parent, T Company
or the Surviving Corporation shall control, and Orbital, at its own expense,
shall have the right to participate in, the defense and settlement of any
Contest and each party shall cooperate with the other party and there shall be
no settlement or closing or other agreement with respect thereto without the
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that T Parent, T Company or the Surviving Corporation will
keep Orbital informed of the progress and disposition of the Contest and
provided, further, that to the extent such Contest could adversely affect
Orbital's Tax Liability (after taking into account any required Tax Indemnity
Payment), Orbital will have the right to participate in the conduct of the
Contest, and no settlement or compromise of issues will be made without
Orbital's written consent, which consent shall not be unreasonably withheld.
(c) With respect to any claim for Tax in a Contest against any
Tax Indemnitee that would result in the indemnification of Orbital by T Company,
T Parent or the Surviving Corporation pursuant to Section 10.1(c), then the
following provisions of this Section 10.4(c) will apply to the handling of such
claim. Unless
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Orbital has previously received written notice from T Parent, T Company or the
Surviving Corporation of the existence of such Contest, T Parent, T Company or
the Surviving Corporation shall give written notice to Orbital of the existence
of any Contest relating to a Tax matter that is or may be T Parent's, T
Company's or Surviving Corporation's responsibility under Section 10.1(c) as
soon as practicable after the receipt by T Parent, T Company or the Surviving
Corporation of any written notice of such Contest. T Parent, T Company or the
Surviving Corporation shall control, defend and settle any such Contest.
(d) If, after good faith negotiations, either party reasonably
withholds its consent where consent is required pursuant to this Section 10.4 or
the parties cannot agree to the settlement or compromise of issues under this
Section 10.4, then the Tax matter requiring such consent, settlement or
compromise will be referred to an independent accounting firm mutually agreeable
to the parties. Such accounting firm shall furnish written notice to the parties
of its resolution of any such disagreement as soon as practical, but in any
event no later than 45 days after its acceptance of the matter for resolution.
Any such resolution by the accounting firm will be conclusive and binding on all
parties of this Agreement. All fees and expenses of the accounting firm in
connection with such referral shall be shared equally by the parties affected by
the matter.
(e) Each party shall, at no cost to the other party, cooperate
with the other party hereto and the other's representatives in a prompt and
timely manner in connection with any Contest. Such cooperation shall include,
but not be limited to, making available to the other party, during normal
business hours, all books, records, returns, documents, files, other information
(including, without limitation, working papers and schedules), officers or
employees (without substantial interruption of employment) or other relevant
information necessary or useful in connection with any Contest requiring any
such books, records and files.
10.5. TAX RETURN PREPARATION. (a) Orbital agrees that (i) it shall be
responsible for preparing and filing on M Company's behalf all Pre-Closing Tax
Returns, for which the parties agree that Orbital may designate at its own cost
and expense an independent accounting firm that is mutually agreeable to both
Orbital and the Surviving Corporation to prepare such Returns, (ii) such
Pre-Closing Tax Returns will accurately set forth in all material respects, all
items relating to the business activities of the M Company and M Subsidiaries to
the extent required to be reflected or included in such Pre-Closing Tax Returns
by applicable federal, state, local or foreign Tax laws, regulations or rules on
a basis consistent with prior Tax Returns filed by Orbital, (iii) such
Pre-Closing Tax Returns shall include any income resulting from the cancellation
of any indebtedness and any items under Treas. Regs. Sections 1.1502-13,
1.1502-14 and 1.1502-19, (iv) such Pre-Closing Tax Returns shall state that an
ownership change within the meaning of Section 382 of the Code occurred on
December 31, 1997, with respect to M Company, and shall
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state the value of the M Company for purposes of computing the annual Section
382 limitation is at least $60 Million and that the annual limitation in effect
throughout the related Pre-Closing Tax Period is at least $3 Million, (v) if a
Section 338(g) election is made by T Parent with respect to the M Company and
any M Subsidiary, such Pre-Closing Tax Returns shall reflect the Section 338
deemed sale, and (vi) all Taxes shown to be payable on such Pre-Closing Tax
Returns shall be paid or will be paid by Orbital as and when required by Law,
except that any Section 338 Taxes and any Intercompany Debt Taxes shall be the
responsibility of T Parent, T Company or the Surviving Corporation, unless such
Taxes would not have been incurred but for a breach referred to in Section
10.1(a)(ii).
(b) T Parent, T Company or the Surviving Corporation shall be
responsible for preparing and filing on M Company's behalf all Post-Closing Tax
Returns and Straddle Returns provided however, that such preparation and filing
shall not be deemed to relieve Orbital of its obligations under Sections 10.1
and 10.7. Such Straddle Returns shall be prepared on a basis consistent with
those prepared for prior taxable periods unless a different treatment of any
item is required by Tax Laws, regulations or rules.
(c) T Parent, T Company or the Surviving Corporation shall be
responsible for the filing and preparation of Forms W-2 and 1099, and any
similar or related information reporting Tax returns or forms, of M Corporation
and any M Subsidiary for the 2001 year.
10.6. ASSISTANCE AND COOPERATION.
(a) After the Closing, Orbital and T Parent, T Company and the
Surviving Corporation shall cooperate (and cause their affiliates and agents to
cooperate) with each other and with each other's agents, including accounting
firms and legal counsel, in connection with Tax matters relating to M Company
and any M Subsidiary, including (i) providing information with respect to T
Parent's decision to make an election under Section 338(g) of the code, (ii)
preparation and filing of Tax Returns, (iii) determining the liability and
amount of any Taxes due, the right to and amount of any refund of Taxes, and the
liability and amount of any Tax benefit payments, (iv) examinations of Tax
Returns, and (v) any administrative or judicial proceeding in respect of Taxes
assessed or proposed to be assessed. Each party shall (i) retain all Tax
Returns, schedules and work papers, and all material records and other documents
relating thereto, until the expiration of the applicable statute of limitations
(including, to the extent notified by any party, any extensions thereof) of the
Tax period to which such Tax Returns and other documents and information relate
or until the final determination of any controversy with respect to such Tax
period and until the final determination of any payments that may be required
with respect to such Tax period under this Agreement and (ii) give the other
party reasonable written notice prior to transferring, destroying or discarding
any such Tax Returns, records and documents and, if the other party so requests,
T
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Parent, T Company or the Surviving Corporation or Orbital, as the case may be,
shall allow the other party to take possession of such Tax Returns, records and
documents. Each of the parties shall also make available to the other parties,
as reasonably requested and to the extent available, personnel (including
officers, directors, employees and agents) responsible for preparing,
maintaining, and interpreting information and providing information or documents
in connection with any administrative or judicial proceedings relating to Taxes.
(b) No later than 195 days after the Closing Date, M Company and M
Company Subsidiaries shall provide to T Company the following information with
respect to each of the M Company and each M Company Subsidiary as of the Closing
Date: (A) the basis of the M Company and each M Company Subsidiary in its
assets; (B) the basis of the M Company or M Company Subsidiary in each M Company
Subsidiary stock held; and (C) the amount of any net capital loss, unused
investment or other credit, research and development credits, unused foreign
tax, or excess charitable contribution allocable to M Company and each M Company
Subsidiary.
10.7. STRADDLE PERIOD AND CLOSING DATE TAX ALLOCATION; STRADDLE PERIOD
TAX.
(a) (1) With respect to any Straddle Period, to the extent
permitted by applicable law, Orbital, T Company, T Parent or Surviving
Corporation shall elect to treat the Closing Date as the last day of the Tax
period. (2) Any real or personal property taxes with respect to any Straddle
Period will be allocated between Orbital and T Company or T Parent with (i)
Orbital being responsible for the amount of such taxes times a fraction, the
numerator of which is the number of days in the Straddle Period through the
Closing Date and the denominator of which is the total number of days in the
Straddle Period and (ii) T Company and T Parent being responsible for the
remainder of such Straddle Period Taxes. (3) Any flat or minimum dollar Taxes
with respect to any Straddle Period shall be the responsibility of (i) Orbital,
if such Tax is required to be filed and paid in the Pre-Closing Tax Period and
(ii) T Parent or T Company if such Tax is required to be filed and paid in the
Post-Closing Tax Period. (4) Any other Taxes with respect to any Straddle Period
will be allocated on the basis of a closing of the books at the Effective Time
with Orbital being responsible for the Pre-Closing Tax Period except for any
Section 338 Taxes, any Intercompany Debt Taxes (unless such Section 338 Taxes
and Intercompany Debt Taxes would not have been incurred but for a breach
referred to in Section 10.1(a)(ii)) or any Taxes arising
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from any actions taken after the Effective Time by T Company, T Parent,
Surviving Corporation or any M Company Subsidiary and with T Parent and T
Company being responsible for the Post-Closing Tax Period, any Section 338
Taxes, any Intercompany Debt Taxes (unless such Section 338 Taxes and
Intercompany Debt Taxes would not have been incurred but for a breach referred
to in Section 10.1(a)(ii)) and any Taxes arising from actions taken after the
Effective Time by T Company, T Parent, Surviving Corporation or any M Company
Subsidiary; provided that, in no event, will the allocation to Orbital or T
Parent and T Company be greater than the total liability for the period.
(b) With respect to any Straddle Returns, T Parent, T Company
or the Surviving Corporation shall deliver at least 60 days prior to the due
date for filing such Straddle Return (including any extension) to Orbital a
statement setting forth the amount of Tax that Orbital owes, pursuant to Section
10.1(a). In the case of a Straddle Return, T Parent, T Company or the Surviving
Corporation shall include the allocation of taxable income and Taxes under
Section 10.7(a), and copies of such Straddle Return, including copies of any
partnership returns relating to Magna Works LLC, together with workpapers
supporting the allocation of partnership income, with respect to Magna Works
LLC, with respect to the partnership Tax period (or portion thereof) through the
Closing Date.
(c) Orbital shall have the right to review such Straddle
Returns and the allocation of taxable income and the liability for Taxes and to
suggest to T Parent, T Company or the Surviving Corporation any reasonable
changes to such Straddle Returns no later than 15 days prior to the date for the
filing of such Straddle Returns. Orbital, T Parent, T Company and the Surviving
Corporation agree to consult and to attempt to resolve in good faith any issue
arising as a result of the review of such Straddle Returns and allocation of
taxable income and liability for Taxes and mutually agree to consent to the
filing as promptly as possible of such Straddle Returns.
(d) Not later than 7 days before the due date for the payment
of Taxes with respect to such Straddle Returns, Orbital shall pay to T Parent, T
Company or the Surviving Corporation an amount equal to the Taxes as agreed to
by Orbital and T Parent, T Company or the Surviving Corporation as being owed by
Orbital with respect to a Straddle Return pursuant to Section 10.1(a).
(e) If (i) T Parent, T Company or the Surviving Corporation
and (ii) Orbital cannot agree on the amount of Taxes owed by Orbital with
respect to a Straddle Return, Orbital shall pay to T Parent, T Company or the
Surviving Corporation the amount of Taxes shown as due on the statement sent to
Orbital pursuant to Section 10.7(b). Within 10 days after such payment, T
Parent, T Company or the Surviving Corporation and Orbital shall refer the
matter to an independent accounting firm agreed to by Orbital and T Parent, T
Company or the Surviving Corporation to arbitrate the dispute. T Parent, T
Company or the Surviving Corporation, as applicable, and Orbital shall equally
share the fees and expenses of such accounting firm and its determination as to
the amount owing by Orbital pursuant to Section 10.1(a) with respect to a
Straddle Return shall be binding on Orbital and T Parent, T Company or the
Surviving Corporation. Within five days after the determination by such
accounting firm, if necessary, either (i)
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Orbital or (ii) T Parent, T Company or the Surviving Corporation shall pay to
the other party any amount which is determined by such accounting firm to be
owed.
10.8. PRE-CLOSING TAX RETURNS DUE AFTER CLOSING DATE. Not later than
165 days after the Closing Date, T Parent shall notify Orbital whether T Parent
intends to make an election under Section 338(g) of the Code. Not later than 195
days after the Closing Date, Orbital shall have prepared a final draft of the
Pre-Closing Tax Returns due after the Closing Date reflecting, if applicable,
that a Section 338(g) election has been made. Not later than 195 days after the
Closing Date, when practical, Orbital shall make available to T Parent, T
Company and the Surviving Corporation a draft of such Tax Returns as Orbital
proposes to file. T Parent, T Company and the Surviving Corporation shall have
the opportunity to review and comment on the draft of such Tax Returns at their
expense and Orbital shall make such revisions to such Tax Returns as reasonably
requested by them. Not later than 255 days after the Closing Date, Orbital will
file any Pre-Closing Tax Returns due after the Closing Date.
10.9. TAX SHARING AGREEMENTS. Any Tax sharing agreement; Tax allocation
agreement or Tax indemnification agreement between Orbital and M Company or any
M Subsidiary is terminated as of the Closing Date and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year), and nothing shall be paid in respect of any amounts owing under such
agreements as of such date and all rights and obligations of either M Company or
any M Subsidiary with respect to Taxes shall be as provided herein.
10.10. FILING OF AMENDED RETURNS. M Company and the M Company
Subsidiaries shall not file any amended Tax Returns, except as provided in
Section 7.7, without T Parent's, T Company's or the Surviving Corporation's
prior written consent.
10.11. TREATMENT OF TAX INDEMNITY PAYMENTS. T Parent, T Company, the
Surviving Corporation and Orbital, shall, to the extent permitted by applicable
law, treat any payments made pursuant to this Article X as adjustments to the
purchase price payable to Orbital. To the extent that any such payment is not
permitted to be treated as an adjustment to the purchase price, the amount of
such payment shall be increased by the amount of any actual additional Tax cost
incurred as a result of the receipt of such payment. Any Tax benefit actually
received by the recipient of such payment as a result of its payment of the Tax
to which such indemnity payment relates shall either reduce the amount of such
indemnity payment or otherwise be paid by the recipient to the payor of such
indemnity.
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10.12. TAX REFUNDS AND TAX BENEFITS.
(a) Any Tax refunds or credits with respect to Taxes
(including any interest paid or credit with respect thereto) received by T
Parent, T Company or the Surviving Company relating to Pre-Closing Tax Periods,
shall be for the account of Orbital, and such amount shall (i) first, reduce any
obligation of Orbital under Section 10.7(a), if received before payment is due
thereunder and if received after payment is due thereunder, Orbital shall
receive a reimbursement in the amount of the refund for any payments made by
Orbital under Section 10.7(a) and (ii) second, reduce any amount payable by
Orbital to a Tax Indemnitee under this Article X.
(b) Any Tax refunds relating to Post-Closing Tax Periods shall
be for T Parent's, T Company's or Surviving Corporation's account. To the extent
any refunds or credits with respect to Taxes paid by M Company or any M
Subsidiary are attributable to a Straddle Period, such refunds or credits with
respect to Taxes shall be apportioned between Orbital and T Parent, T Company or
Surviving Corporation as set forth in Section 10.7(a).
(c) Any amount otherwise payable by one party to the other
party under this Article X shall be reduced by any Tax benefit actually realized
by the other party, that it would not have otherwise been entitled to but for
the Tax or circumstances that gave rise to payment under this Article X. If a
Tax benefit is actually realized by one party after payment has been received
under this Article X, then such party shall pay an amount to the other party
equal to the Tax benefit realized (including by way of reduction in any
estimated Tax payments).
ARTICLE XI.
ADDITIONAL AGREEMENTS
11.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS.
The representations, warranties and covenants contained herein
shall survive the Closing Date for a period of (and claims based upon or arising
out of such representations, warranties, covenants and agreements may be
asserted at any time before the date which shall be) three (3) years after the
Closing Date; provided that the representations, warranties and covenants set
forth in Section 5.22 shall survive until thirty (30) days following the
expiration of the applicable statute of limitations (giving effect to any
waiver, mitigation or extension thereof); provided, however, that, except as set
forth in Section 11.2(g) hereto, no holder of Minority M Company Common Stock
shall, in such holder's capacity as a holder of M Company Common Stock, be
liable to any Person (other than for fraud, gross negligence or willful
misconduct) for any Losses incurred in connection with (i) the execution of this
Agreement, the Ancillary Agreements or any other agreement
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contemplated hereby (other than the Stockholder Support Agreement) or (ii) the
consummation of the transactions contemplated in this Agreement. No
investigation or waiver made by any of the parties hereto shall in any way limit
the representations and warranties of the parties. On the Closing Date, all
representations and warranties contained in this Agreement and made by T Parent
and T Company for the benefit of Orbital and M Company shall expire as to T
Company and thereafter will be deemed to have been made by the T Parent and
Surviving Corporation for the benefit of Orbital. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any claim made by such party in a writing received on a
timely basis by the other party prior to the expiration of the applicable
survival period provided herein.
11.2. INDEMNIFICATION.
(a) General Indemnity by Orbital. Orbital shall indemnify,
save and hold harmless T Parent and T Company and the Surviving Corporation from
and against any and all Losses incurred in connection with, arising out of,
resulting from or incident to:
(i) any breach of any representation or warranty or the
inaccuracy of any representation or warranty made by Orbital or M Company in
this Agreement;
(ii) any breach or non-fulfillment of any covenant or
agreement made by Orbital or M Company in this Agreement;
(iii) any claim by a stockholder or former stockholder of
M Company, or any other Person seeking to assert, or based upon or related to:
(w) ownership or rights to ownership of any shares of capital stock of M
Company; (x) any rights of a stockholder (other than dissenters' appraisal
rights demanded by holders of up to two percent of the M Company Common Stock
under Section 262 of the DGCL); (y) any claim that the Merger is not fair to
stockholders of M Company or not in the best interests of M Company and its
stockholders; or (z) the indemnification of any director, officer or agent of M
Company or any M Subsidiary with respect to any claim described in this Section
11.2(a)(iii);
(iv) any and all Debt of M Company as of the Closing
Date (except to the extent taken into account in calculating the Net Debt Amount
at Closing);
(v) any and all transaction bonuses or change of
control payments made by M Company or any M Subsidiary in connection with the
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transactions contemplated hereby (except to the extent reflected on the M
Company Schedule and taken into account in calculating the Preferred Stock
Consideration);
(vi) if the Western Atlas Litigation is settled as
described in the first sentence of Section 7.11, any and all Western Atlas
Costs, except to the extent such Western Atlas Costs were used to calculate the
Western Atlas Amount at Closing; and
(vii) any of the claims asserted by Xxxxxx Xxxxxx and
described in Section 5.16 of the M Company Schedule or otherwise to any acts,
omissions, circumstances, claims or allegations set forth in the letter dated
April 9, 2001 from J. Xxxxx Xxxxxxxx, Xxxxx & Xxxxxxxx, L.L.P., representing
Xxxxxx Xxxxxx d/b/a Global Technology, to Xxxxxxx X. Xxxxxxx, President and CEO
of Magellan Corporation, and Xxxxxx X. Xxxxxx, Executive Vice President and
General Counsel of Orbital Sciences Corporation.
The term "Losses" is not limited to matters asserted by third
parties against an Indemnified Party (as hereinafter defined), but includes
Losses incurred or sustained by the Indemnified Party in the absence of third
party claims. Payments by an Indemnified Party of amounts for which it is
indemnified hereunder shall not be a condition precedent to recovery.
(b) Government Contracts Indemnity By Orbital. Orbital shall
indemnify T Parent, T Company and the Surviving Corporation from and against any
and all Losses arising out of the United States Government's termination or
failure to renew any contract as a result of the Merger.
(c) General Indemnity by T Parent and T Company. T Parent and
T Company and Surviving Corporation hereby agree to indemnify, save and hold
harmless M Company, the holders of Minority M Company Common Stock and Orbital
from and against any and all Losses arising out of (i) any breach of any
representation or warranty or the inaccuracy of any representation or warranty,
made by T Parent or T Company in this Agreement; and (ii) any breach or
non-fulfillment of any covenant or agreement made by T Parent or T Company in
this Agreement.
(d) Procedure for Making Claims between Parties. If a claim (a
"Claim") for Losses is to be made by any party seeking indemnification (each an
"Indemnified Party" and collectively, the "Indemnified Parties"), such
Indemnified Party shall give written notice (the "Claim Notice") to any party
from whom such indemnification may be sought (each an "Indemnifying Party" and
collectively, the "Indemnifying Parties"), as soon as practicable after the
Indemnified Party becomes aware of any fact, condition or event which may give
rise to Losses for which indemnification may be sought under this Section 11.2.
Failure to submit any such
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notice of claim to any Indemnifying Party shall not relieve such Indemnifying
Party of any liability hereunder, except to the extent the Indemnifying Party is
actually prejudiced by such failure. The Indemnifying Party shall be deemed to
have accepted the Claim Notice and to have agreed to pay the Losses at issue if
such Indemnifying Party does not send a notice of dispute to the Indemnified
Party within forty-five (45) calendar days after receiving the Claim Notice, and
in such case payment procedures shall be as set forth in Section 11.2(d)(ii)
below. In the case of a disputed Claim, the parties shall follow the procedures
set forth in Section 11.2(d)(i) below.
(i) If the Indemnifying Party disputes the validity,
amount or calculation of any Claim, the following procedures shall be followed
with respect to such Claim:
(A) the Indemnifying Party shall give written
notice of such dispute to the Indemnified Party, within 45 days after the
delivery of the Claim Notice to the Indemnifying Party.
(B) If the Indemnifying Party and the
Indemnified Party reach an agreement with respect to the proper determination of
the Claim, the parties shall follow the procedures set forth in Section
11.2(d)(ii) below.
(C) If the Indemnifying Party and the
Indemnified Party are unable to reach agreement with respect to the proper
determination of the Claim within 60 days after delivery by Indemnifying Party
of its response to the Claim Notice, each of the parties agrees that such
dispute shall be resolved pursuant to the dispute resolution procedures set
forth in Section 12.10 hereof. Following the issuance of the decision from such
dispute resolution procedure, the parties shall follow the procedures set forth
in Section 11.2(d)(ii) below.
(ii) If the Indemnifying Party does not dispute the
validity, amount and calculation of a Claim or any dispute regarding such Claim
has been resolved pursuant to the procedures set forth in Section 11.2(d)(i)
above, the following procedures shall be followed:
(A) If the Indemnifying Party is Orbital, the
Indemnified Party shall indicate in writing (a "Payment Notice") whether payment
will be sought either directly from Orbital or from the Orbital Escrow Account
(as defined in the Escrow Agreement).
(1) If the Payment Notice indicates that
Orbital is to pay such Claim, then Orbital will, within 10 business days of
receiving such Payment Notice, either make such payment or provide written
notice to the Indemnified Party indicating that Orbital has made a good faith
determination, as
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certified in writing by an executive officer of the Company, that Orbital is
financially unable to make such payment in such amount or within such period, as
the case may be, in which case the Indemnified Party may either notify Orbital
that it will extend the period for payment or seek payment from the Orbital
Escrow Account as set forth in Section 11.2(d)(ii)(A)(3) below.
(2) If the Payment Notice indicates that
payment for such Claim is to come from the Orbital Escrow Account or the
Indemnified Party seeks payment from the Orbital Escrow Account pursuant to
Section 11.2(d)(ii)(A)(1) above, Orbital and T Parent shall prepare a final
instruction (a "Final Instruction") to the Escrow Agent indicating the amount of
funds to be disbursed from the Orbital Escrow Account and the Person to whom
such funds should be disbursed. The Escrow Agent shall be entitled to act in
accordance with such decision and disburse the applicable Escrow Fund in
accordance therewith.
(3) Notwithstanding the foregoing
procedures of this Section 11.2(d)(ii), if payment for any Claim is sought from
the Orbital Escrow Account, and sufficient funds are not available from the
Orbital Escrow Account to satisfy such Claim, to the extent such Claim exceeds
the funds available in the Orbital Escrow Account, the Indemnified Party shall
provide written notice of such deficiency to Orbital and Orbital shall pay such
amount within 10 business days of receiving such notice.
(B) If the Indemnifying Party is not Orbital,
payment shall be made within 45 days of receipt of the Claim Notice, if the
Claim was undisputed, or within 10 business days of the resolution of the
dispute, which shall occur pursuant to the procedures set forth in Section
11.2(d)(i) above.
(e) Defense of Third-Party Claims. If any lawsuit or
enforcement action is filed against any Indemnified Party, written notice
thereof shall be given to the Indemnifying Party, as the case may be, as
promptly as practicable (and in any event within fifteen (15) calendar days
after the service of the citation or summons); provided, however, the failure of
any Indemnified Party to give timely notice hereunder shall not affect its
rights to indemnification hereunder, except to the extent that any Indemnifying
Party demonstrates it was prejudiced by such failure. After such notice, if the
Indemnifying Party shall send a written acknowledgement to the Indemnified Party
that the Indemnifying Party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the Indemnifying
Party, shall be entitled, if it so elects at its own cost, risk and expense, (i)
to take control of the defense and investigation of such lawsuit or action, (ii)
to employ and engage attorneys of their own choice to handle and defend the same
unless the named parties to such action or proceeding include both any
Indemnifying Party and any Indemnified Party and the Indemnified Party has been
advised in writing by counsel that there may be one or
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more legal defenses available to such Indemnified Party that are different from
or additional to those available to the Indemnifying Party, in which event the
Indemnified Party shall be entitled, at the Indemnifying Party's cost, risk and
expense, to separate counsel of its own choosing, and (iii) to compromise or
settle such claim, which compromise or settlement shall be made only with the
written consent of the Indemnified Party, such consent not to be unreasonably
withheld. The Indemnified Party shall cooperate in all reasonable respects with
the Indemnifying Party and its attorneys in the investigation, trial and defense
of such lawsuit or action and any appeal arising therefrom; provided, however,
that the Indemnified Party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall cooperate with each other in any
notifications to insurers. If the Indemnifying Party fails to assume the defense
of such claim within fifteen (15) calendar days after receipt of the notice of
claim, the Indemnified Party against which such claim has been asserted will
(upon delivering notice to such effect to the Indemnifying Party) have the right
to undertake, at the Indemnified Party's cost, risk and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of Indemnifying Parties; provided, however, that such claim shall not be
compromised or settled without the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. If the Indemnified Party
assumes the defense of the claim, the Indemnified Party will keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement of any action effected pursuant to and in accordance
with this Section 11.2 and for any final judgment (subject to any right of
appeal), and the Indemnifying Party agrees to indemnify and hold harmless the
Indemnified Party from and against any Losses by reason of such settlement or
judgment, subject to any limitations set forth herein.
(f) Limitation on Losses.
(i) except with respect to claims based on fraud or
intentional misrepresentation, with respect to claims for indemnification under
Article X and Sections 11.2(a)(i), 11.2(a)(ii) and 11.2(b) of this Agreement and
Sections 8 and 9.2(a) of the Purchase Agreement:
(A) Orbital shall not be liable for Losses in
excess of (w) $35 million, for claims made on or before the first anniversary of
the Closing Date, (x) $28 million, for claims made after the first anniversary
of the Closing Date and on or before the second anniversary of the Closing Date,
and (z) $14 million for claims made after the second anniversary of the Closing
Date and on or before the third anniversary of the Closing Date; and (z) $2
million per year for claims with respect to Section 5.22 and Article X hereof
made after the third anniversary of the Closing Date and on or before the
expiration of the applicable statute of limitations (giving effect to any
waiver, mitigation or extension thereof).
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(B) Orbital shall not be liable unless and until
the aggregate amount of such Losses (with losses with respect to Taxes as
adjusted pursuant to Section 10.12(b)) exceeds $250,000, in which case, T
Parent, T Company or the Surviving Corporation, as the case may be, shall be
entitled to indemnification with respect to such full $250,000 amount and all
amounts in excess of such $250,000 amount. This Section 11.2(f)(i)(B) will
continue to apply with respect to Section 5.22 and Article X claims made after
the third anniversary of the Closing Date and on or before the expiration of the
applicable statute of limitations (giving effect to any waiver, mitigation or
extension thereof).
(ii) Except with respect to claims based on fraud or
intentional misrepresentation, with respect to claims for indemnification under
Section 11.2(c) of this Agreement and Sections 9.2(c) of the Purchase Agreement:
(A) T Parent, T Company and the Surviving
Corporation shall not be liable for Losses in excess of (x) $35 million, for
claims made on or before the first anniversary of the Closing Date, (y) $28
million, for claims made after the first anniversary of the Closing Date and on
or before the second anniversary of the Closing Date, and (z) $14 million for
claims made after the second anniversary of the Closing Date and on or before
the third anniversary of the Closing Date and;
(B) T Parent, T Company or the Surviving
Corporation, as the case may be, shall not be liable unless and until the
aggregate amount of such Losses exceeds $250,000, in which case, Orbital shall
be entitled to indemnification with respect to such full $250,000 amount and all
amounts in excess of such $250,000 amount.
(iii) Except to the extent provided in Schedule 11.2(a)
hereto, the holders of Minority M Company Common Stock shall not be liable for
Losses arising out of the transactions contemplated by this Agreement or the
breach of any representations, warranty or covenant by any party hereto.
(g) Indemnity by Holders of Minority M Company Common Stock.
The holders of Minority M Company Common Stock shall
indemnify, save and hold harmless Orbital from and against any and all Western
Atlas Costs up to the lesser of (i) $500,000 or (ii) 32% of the Western Atlas
Amount; provided, however, that if the Western Atlas Litigation is settled on or
before the Closing Date then there shall be no indemnification of Orbital by the
holders of Minority M Company Common Stock. M Company and/or Orbital shall keep
the Stockholder Agent informed of all material developments, communications,
events and negotiations related to all Western Atlas Events.
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11.3. NON-COMPETE; NON-SOLICITATION.
(a) In consideration of the benefits to Orbital hereunder and
in order to induce T Parent, T Company to enter into this Agreement, Orbital
hereby covenants and agrees that for a period of three (3) years after the
Closing Date, Orbital shall not, directly or indirectly, (i) as a proprietor,
partner, stockholder, joint venturer, investor, lender or in any other capacity
own, engage in, conduct, manage, operate or control, or participate in, be
associated with or be connected in any manner whatsoever in the ownership,
management, operation or control of, any business which, directly or indirectly,
engages in the same Business as M Company [in the United States] (or any
business which is substantially similar to the Business of M Company) as
currently conducted by M Company or as conducted at any time during the
preceding five-year period; or (ii) recruit, solicit, encourage, entice or
induce any Person who is then an employee, customer or otherwise has a business
relationship with the Business of M Company to terminate his or her relationship
with M Company.
Nothing herein shall limit the right of Orbital or its Affiliates
to own less than five (5%) percent of the voting securities of any company
having securities registered under the Securities Exchange Act of 1934, as
amended.
(b) The parties hereto agree that the duration, area and scope
that the covenants not-to-compete and not-to-solicit set forth in subsection (a)
of this Section 11.3 are designed to ensure such covenants effectively and
adequately protect the Business of M Company and are essential elements of this
Agreement. T Company, M Company and Orbital have independently consulted with
their respective counsel and have been advised concerning the reasonableness and
propriety of such covenants with specific regard to the nature of the Business
of M Company.
(c) In the event that any court determines that the duration,
area or scope of the covenants not-to-compete and not-to-solicit set forth in
subsection (a) of this Section 11.3 are unreasonable and that any covenant is to
that extent unenforceable, the parties hereto agree that such restriction shall
remain in full force and effect for the greatest duration and in the greatest
area and scope that would not render it unenforceable. The parties intend that
each covenant shall be deemed to be a series of separate covenants, one for each
of the jurisdictions where these covenants are intended to be effective.
(d) Orbital acknowledges and agrees that, if it breaches any
provision of this Section 11.3, any remedy at law would be inadequate and that T
Company, in addition to seeking monetary damages in connection with any such
breach, shall be entitled to specific performance, injunctive and other
equitable relief in the form of preliminary and permanent injunctions (without
bond or other
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security) upon any breach of any such covenant to prevent or restrain a breach
of this Section 11.3 or to enforce the provisions of this Section 11.3.
11.4. BOOKS AND RECORDS; TAX MATTERS.
(a) T Company agrees that so long as any books, records and
files relating to the business, assets or operations of T Company, to the extent
that they pertain to the operations of M Company, remain in existence and
available, Orbital (at its expense) shall, upon prior notice, have the right to
inspect and to make copies of the same at any time during business hours for any
proper purpose.
(b) T Company covenants and agrees that in the event it
receives any notice or inquiry from the Internal Revenue Service with respect to
the characterization of any payments made under this Agreement, the Certificate
of Merger or any Ancillary Agreement, T Company will give prompt written notice
to Orbital concerning such notice or inquiry. T Company agrees to report the
consideration delivered under this Agreement in a manner consistent with the
terms hereof.
(c) Post-Closing Statement.
(i) Within sixty (60) days after the Closing Date, the
Surviving Corporation will prepare and deliver to Orbital, a proposed closing
statement (the "Closing Statement") setting forth the financial statements of
the Surviving Corporation and Magellan DIS, Inc. as of the Closing Date.
(ii) Within fifteen (15) days after the delivery by the
Surviving Corporation of the Closing Statement, Orbital and its accountants
shall have the right to review the Closing Statement and the calculations
included therein. If Orbital objects to the manner in which the Closing
Statement has been prepared, Orbital shall deliver written notice (the "Dispute
Notice") to the Surviving Corporation setting forth in reasonable detail a
description of the basis of their objection and the adjustments to the Closing
Statement that Orbital believes should be made.
(iii) Within fifteen (15) days after the Surviving
Corporation's receipt of the Dispute Notice, the Surviving Corporation and its
Representatives and accountants shall review the Dispute Notice and deliver a
written response to Orbital (the "Response") indicating whether and the extent
to which the Surviving Corporation agrees or disagrees with the objections set
forth in the Dispute Notice.
(iv) During a period of fifteen (15) days after
Orbital's receipt of the Response, the Surviving Corporation and Orbital shall
attempt in good faith to resolve in writing any such disputed items, and any
such resolution will be conclusive and binding upon the parties. If the parties
are unable to reach an
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agreement with respect to any disputed item during such 15-day period, the
parties shall, promptly after the expiration of such period, submit all
unresolved disputes to an independent public accounting firm mutually agreeable
to the parties (the "CPA Firm"). If the parties cannot agree on the selection of
the independent public accounting firm to act as the CPA Firm, either party may
request the American Arbitration Association to appoint such a firm, and such
appointment shall be conclusive and binding on the parties. Promptly, but no
later than fifteen (15) days after its acceptance of its appointment, the CPA
Firm shall determine, only with respect to the remaining items in dispute so
submitted, whether and to what extent, if any, the Closing Statement requires
adjustment. The parties shall instruct the CPA Firm to deliver its written
report as to the resolution of all disputes no later than fifteen (15) days
after the disputes are submitted to the CPA Firm. The Surviving Corporation and
Orbital shall make available to the CPA Firm all relevant books and records and
any work papers (including those of the parties' respective accountants)
relating to the Closing Statement and all other items reasonably requested by
the CPA Firm. The CPA Firm shall have exclusive jurisdiction over, and resort to
the CPA Firm as provided in this paragraph (iv) shall be the sole recourse and
remedy of the parties against one another or any other person with respect to,
any disputes arising out of or relating to the Closing Statement; and the CPA
Firm's determination shall be conclusive and binding on the parties and shall be
enforceable in a court of law.
(v) The Surviving Corporation and Orbital shall bear
the fees and expenses of their respective accountants and other Representatives.
The fees and expenses of the CPA Firm shall be borne equally by the Surviving
Corporation and Orbital.
(vi) The "Final Closing Statement" shall be (A) the
Closing Statement, if (x) no Dispute Notice is delivered to the Surviving
Corporation in the 15-day period referred to in paragraph (ii) above, or (y) the
Surviving Corporation and Orbital so agree; (B) the Closing Statement, as
adjusted in accordance with the Dispute Notice, if the Surviving Corporation
agrees with the Dispute Notice or fails to respond to the Dispute Notice within
the 15-day period referred to in paragraph (iii) above; or (C) the Closing
Statement, as adjusted by either (x) the mutual agreement of the Surviving
Corporation and Orbital or (y) the CPA Firm.
11.5. TRANSITION SERVICES.
If, as of the Effective Time, T Parent and T Company have not
hired an individual to serve as the new chief executive officer of the Surviving
Corporation, then Orbital will cause Magellan's current acting chief executive
officer, Xxxxxxx Xxxxxxx, to continue to provide services to the Surviving
Corporation substantially similar to the services he currently provides as
acting chief executive officer of M Company; provided, that (i) Xx. Xxxxxxx
shall not be required to continue to provide such services following the period
ending or the earlier of three months after the
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Closing Date or one month after the Surviving Corporation has hired a new chief
executive officer, and (ii) the Surviving Corporation shall reimburse Orbital
for the base salary paid to Xx. Xxxxxxx during this transition period. To the
extent that Xx. Xxxxxxx is required to provide services in accordance with the
preceding sentence, he shall provide such services (i) on a full-time basis
(based at M Company's headquarters) during the first month following the
Effective Time, (ii) for two working days per week (based at Orbital's
headquarters) during the second month after the Effective Time, and (iii) for
one working day per week (based at Orbital's headquarters) during the third
month after the Effective Time.
11.6. ACQUISITION OF RIGHTS TO CONFIDENTIALITY.
At the Closing, Orbital shall assign to the Surviving
Corporation Orbital's rights under any confidentiality or non-disclosure
agreements between Orbital and Persons other than T Parent or its Affiliates
that were entered into in connection with or relating to a possible sale of the
capital stock, Assets or Business of M Company or any part thereof, including,
without limitation, the right to enforce all of the terms of such
confidentiality or non-disclosure agreements. At the Closing, Orbital shall
deliver to T Parent executed copies of all such confidentiality or
non-disclosure agreements.
11.7. ORBITAL MATTERS.
If the Closing occurs, (i) T Parent agrees to use its
commerically reasonable efforts to cause Orbital and its Affiliates (other than
M Company and any M Subsidiary) to be released from any liabilities or
obligations under any guarantee of leases entered into by M Company, and (ii) T
Parent agrees to indemnify and hold harmless Orbital and its Affiliates from any
Loss arising out of any such guarantees in connection with the failure of M
Company after the Closing to pay when due any amounts guaranteed.
ARTICLE XII
MISCELLANEOUS
12.1. TERMINATION.
(a) This Agreement shall be terminated and the Merger abandoned
at any time prior to the Effective Time as follows:
(i) By the mutual written consent of Orbital, M
Company, T Parent and T Company;
(ii) By Orbital or M Company (provided that Orbital and
M Company are not otherwise in material breach of this Agreement) if there is a
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material breach of any representation or warranty set forth in Article IV or any
material covenant or agreement to be complied with or performed by T Company or
T Parent pursuant to the terms of this Agreement, which breach shall not have
been cured within five business days after notice thereof has been given to T
Parent and T Company;
(iii) By T Parent or T Company (provided that T Parent
and T Company are not otherwise in material breach of this Agreement) if there
is a material breach of any representation or warranty set forth in Article V or
VI hereof or of any material covenant or agreement to be complied with or
performed by Orbital or M Company pursuant to the terms of this Agreement, which
breach shall not have been cured within five business days after notice thereof
has been given to Orbital or M Company;
(iv) By T Parent, T Company or Orbital (provided that
the terminating party has complied in good faith with its obligations under
Section 7.11 hereof) if on or before September 30, 2001, (A) Orbital and M
Company have not (i) entered into a binding agreement with Western Atlas,
conditioned only upon the Closing hereunder, unconditionally settling the
Western Atlas Litigation and unconditionally extinguishing, releasing and
discharging all past, present and future liability arising out of or related to
all Western Atlas Events, and (ii) agreed to cause, upon the Closing hereunder,
a notice of dismissal with prejudice to be filed in the Western Atlas
Litigation, signed by all parties in the Western Atlas Litigation, and (B)
Orbital and T Company have not mutually agreed on the nature and scope of
indemnification to be provided with respect to Western Atlas Costs after the
Closing; or
(v) By any of the parties, if the Closing Date shall
not have occurred by September 30, 2001.
(b) In the event of termination of this Agreement:
(i) The provisions of the Confidentiality Agreement
and the provisions of this Article XII shall continue in full force and effect;
and
(ii) No party hereto shall have any further obligation
to any other party to this Agreement, provided, however, that termination shall
not relieve the breaching or defaulting party from any liability to the other
party for such breach or default. Notwithstanding the foregoing, no party hereto
shall be liable for consequential or punitive damages in connection with such
termination.
12.2. ASSIGNMENT; NO THIRD-PARTY BENEFICIARIES. Neither this Agreement
nor any of the rights or obligations hereunder may be assigned prior to the
Effective Time (i) by T Parent or T Company without the prior written consent
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of Orbital and M Company, or (ii) by Orbital or M Company without the prior
written consent of T Parent or T Company, and any such purported or attempted
assignment shall be null and void ab initio and of no force or effect. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Nothing herein expressed or implied shall give or be construed to give to any
Person, other than the parties hereto and such successors and assigns any legal
or equitable rights hereunder. Notwithstanding the foregoing, T Company may
assign this Agreement, and other rights, privileges, duties and obligations
hereunder to any Affiliate of T Company, which is wholly or substantially owned
directly or indirectly by T Parent so long as Orbital and M Company receive
prompt notice of such assignment and such assignment does not in any way
materially delay or otherwise materially adversely impact the ability of the
parties hereto to effect the transactions contemplated hereby.
12.3. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy; the day after it is sent, if sent
for next day delivery to a domestic address by recognized overnight delivery
service (e.g., Federal Express); and upon receipt, if sent by certified or
registered mail, return receipt requested, as follows:
If to Orbital:
Orbital Sciences Corporation
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
With a copy to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
If to M Company:
000 Xx Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
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Attention: Xxxx Xxxxxxx
With a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
If to T Company, T Parent or the Surviving Corporation:
Thales S.A.
000, xxxxxxxxx Xxxxxxxxx
00000 Xxxxx, Xxxxxx
Telecopy: 00.0.00.00.00.00
Attention: Xxxxxxxx Xxxxxx and Xxxxxx Got
and
Thales Inc.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: President and General Counsel
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
or to such other place and with such other copies as any of the parties may
designate as to itself by written notice to the others.
12.4. CHOICE OF LAW. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
New York except with respect to matters of law concerning the internal corporate
affairs
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of any corporate entity which is a party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.
12.5. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
together with all exhibits and schedules hereto, the Certificate of Merger, the
Ancillary Agreements, and the Confidentiality Agreement (which the parties agree
shall terminate on the Closing Date), constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, including the letter agreement dated April 3, 2001 by
and between Orbital and Thales S.A., a French company. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
12.6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.7. INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
12.8. EXPENSES. Except as otherwise provided in this Agreement, each of
Orbital, M Company, T Parent and T Company shall be liable for their own
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Agreement and the transactions contemplated hereby;
provided, however, that Orbital shall pay all legal, accounting and investment
banking and other fees and expenses incurred by M Company in connection with the
transactions contemplated by this Agreement and the Ancillary Agreements to the
extent such fees and expenses exceed $100,000 in the aggregate. The Surviving
Corporation will be responsible for paying the first $100,000 of expenses
incurred by M Company in connection with the transactions contemplated hereby.
The fees and expenses of M Company described in this Section 12.8 shall be paid
at Closing.
12.9. XXXXXXXXX.Xx party hereto shall issue any press release or make
any public statement regarding the transactions contemplated hereby without the
prior written approval of the other parties, and the parties hereto shall issue
a mutually
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acceptable press release as soon as practicable after the date hereof, except as
required by law or on advice of counsel (in which case, the party making such
announcement or issuing such press release will provide each other party with a
copy of any said written statement or announcement that it proposes to make
prior to making such announcement and will consult with the other parties with
respect thereto).
12.10. DISPUTES.
(a) Amicable Settlement. Each of the parties agrees to use
diligent, good faith efforts to settle amicably any dispute which arises out of
or in connection with this Agreement. Whenever a dispute arises, other than
under Article XI hereof in which case the Procedures described therein shall
control, any of the parties may serve written notice upon the other parties
stating that a dispute has arisen and containing a brief statement describing
the nature of the dispute. Any of Orbital, M Company, T Company or the Surviving
Corporation, as applicable, shall communicate such notice to its President or
Chief Financial Officer (individually, the "Designated Executive Officer" and
together with the Designated Executive Officers of the other parties, the
"Designated Executive Officers") with the request that the Designated Executive
Officers negotiate a settlement of any such dispute. For such purpose, the
Designated Executive Officers may have access to the personnel of the other
parties to assist in resolving the dispute. Any settlement accepted by all the
parties in accordance with this Section 12.10 shall be binding on the parties
for all purposes. If the Designated Executive Officers are unable to resolve any
such dispute within twenty (20) days of its having been referred to them
hereunder, the arbitration provisions of Section 12.10(b) shall apply.
(b) Composition of the Arbitration Tribunal. Any dispute among
the parties arising out of or in connection with this Agreement which they are
unable to resolve amicably in accordance with the provisions of Section 12.10(a)
or Section 11.2(e) shall be finally settled by arbitration in accordance with
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce ("ICC") then in effect (the "Rules").
The arbitration tribunal will be composed of three arbitrators appointed in
accordance with the Rules. The arbitration panel shall decide the dispute in
accordance with applicable law and not act as "amiables compositeurs." Unless
otherwise agreed among the parties in writing, the arbitration shall take place
in New York, New York. The language of the arbitration shall be English.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be duly executed on its behalf by its
officer thereunto duly authorized, as of the day and year first above written.
ORBITAL SCIENCES CORPORATION,
a Delaware corporation
----------------------------------------
Name:
Its:
MAGELLAN CORPORATION,
a Delaware corporation
----------------------------------------
Name:
Its:
THALES NORTH AMERICA INC.,
a Delaware corporation
----------------------------------------
Name:
Its:
THOMSON-CSF ELECTRONICS INC.,
a Delaware corporation
----------------------------------------
Name:
Its:
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