CONFORMED COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of the 28th
day of July, 1998, by and between RAYTHEON TI SYSTEMS, INC., a Delaware
corporation ("RTIS"), RAYTHEON COMPANY, a Delaware corporation ("Raytheon"),
RAYTHEON SYSTEMS GEORGIA, INC. ("RSG" and together with Raytheon and RTIS, the
"Sellers") and DRS TECHNOLOGIES, INC., a Delaware corporation (the "Buyer").
On July 11, 1997, RTIS, a wholly-owned subsidiary of Raytheon, purchased
the second generation and third generation scanning and staring infrared
detector businesses of Texas Instruments Incorporated, a Delaware corporation
("TI"), operated out of the Semiconductor Building and the Research West
Building located at the TI Expressway site in Dallas, Texas, including all xxxxx
and cryogenic cooler manufacturing and xxxxx and cryogenic cooler assembly.
These businesses, excluding the uncooled FPA business, is referred to in this
Agreement as the "FPA Business" (collectively, the "FPA Business").
On December 17, 1997, HE Holdings, Inc. merged with Raytheon Company, a
Delaware corporation ("Old Raytheon"), pursuant to the Agreement and Plan of
Merger, dated as of January 16, 1997 (the "Xxxxxx Merger Agreement"), between HE
Holdings, Inc. and Old Raytheon. HE Holdings, Inc. was the surviving corporation
in the merger, and thereafter changed its name to "Raytheon Company" (referred
to herein as "Raytheon"). Raytheon and RSG own and operate the second generation
ground electro-optical business operated out of Raytheon's El Segundo,
California and LaGrange, Georgia facilities that produces A-Kits and B-Kits for
ground vehicles and other applications, including the IBAS, X-0 XXX, XXXX0 and
HTI programs (collectively, the "Ground EO Business");
Pursuant to a Final Judgment filed on October 24, 1997 (the "Final
Judgment") in the United States District Court for the District of Columbia in
Civil Case No. 97-2397 known as United States of America v. Raytheon Company,
General Motors Corp. and HE Holdings, Inc., and a related Hold Separate and
Partition Plan Stipulation and Order entered in the same case on October 24,
1997 (the "Hold Separate Order"), Raytheon has agreed to promptly divest the FPA
Business and the Ground EO Business (collectively, the "Businesses") and,
pending such divestiture, to maintain the Businesses as an independent
competitor held separate from Raytheon; and
The Sellers desire to sell and the Buyer desires to purchase the Businesses
(the "Acquisition"), and this transaction and the resulting business combination
is intended to result in the preservation of competition and a critical
capability that otherwise might be lost to the United States Department of
Defense.
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In connection with the negotiation and preparation of this Agreement, the
Sellers have prepared, and the Buyer has reviewed, a set of disclosure
schedules, dated the date hereof and delivered separately as one or more volumes
(the "Disclosure Schedule", with any reference in this Agreement to a Schedule
being a reference to the Disclosure Schedule).
Capitalized terms used herein and not otherwise defined have the meanings
set forth in Article 17.
In consideration of the mutual agreements and covenants herein contained,
the parties hereto agree as follows:
Article 1
Purchase And Sale
1.1. Acquired Assets. Subject to the terms and conditions set forth in this
Agreement, at the Closing referred to in Article 4 hereof, the Sellers shall
sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase,
acquire and take assignment and delivery of, all of the following assets of the
Sellers, with the exception of the Excluded Assets (as defined in Section 1.2)
(all of which assets are hereinafter referred to collectively as the "Acquired
Assets"):
(a) All machinery, equipment, installations, fixtures, furniture,
tools, supplies, booths, displays, materials and other personal property
used primarily in connection with either of the Businesses, including
without limitation those items described on Schedule 1.1(a) hereto, with
such additions and deletions thereto as may arise, or may have arisen, from
the date as of which such Schedule was prepared in the ordinary course of
business prior to the Closing consistent with the Sellers' obligations
under Article 8 hereof (the "Equipment");
(b) All of the Sellers' billed and unbilled accounts receivable
relating primarily to either of the Businesses outstanding on the Closing
Date, including the accounts receivable listed on Schedule 1.1(b) to the
extent not collected prior to the Closing Date, in each case to the extent
reflected on the Closing Balance Sheets (as defined in Section 3.2), as
finally adjusted pursuant to Section 3.2;
(c) All of the Sellers' inventories held for use primarily in either
of the Businesses, including raw materials, work in process (subject to the
customers' rights in the case of any government-funded work in process),
supplies, samples, prototypes and finished goods (the "Inventories"),
including the Inventories listed on Schedule 1.1(c) to the extent not
consumed in the operation of the Businesses prior to the Closing, in each
case to the extent reflected on the Closing Balance Sheets (as finally
adjusted pursuant to Section 3.2);
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(d) All of the Sellers' prepaid expenses relating primarily to either
of the Businesses and for which the Buyer will get the benefit after the
Closing, to the extent reflected on the Closing Balance Sheets (as finally
adjusted pursuant to Section 3.2);
(e) All of the Sellers' rights under all leases of personal property
used primarily in connection with either of the Businesses, including
without limitation any leases listed on Schedule 1.1(f) to the extent still
in effect on the Closing Date (the "Personal Property Leases");
(f) All of the Sellers' rights under all contracts and agreements,
including without limitation joint venture agreements, teaming agreements,
distribution agreements, service agreements, supply agreements, license
agreements, sublicense agreements, personal property leases and development
contracts, entered into by a Seller primarily in connection with either of
the Businesses, including without limitation the contracts listed on
Schedule 1.1(f), but excluding any such contracts that have been performed
in full by the Sellers prior to Closing (collectively the "Business
Contracts");
(g) All of the Sellers' rights under purchase orders, including
without limitation the purchase orders listed on Schedule 1.1(g), in each
case to the extent outstanding on the Closing Date and relating primarily
to either of the Businesses (collectively, the "Purchase Orders");
(h) All of the Sellers' rights with respect to those computer software
programs, licenses and sublicenses to be transferred to the Buyer pursuant
to the information technology partition and transition described in Section
12.9 and Schedule 12.9 (collectively, the "Transferred Software Licenses");
(i) to the extent transferable and permitted by applicable laws and
regulations, all of the Sellers' rights with respect to any licenses,
permits, consents, concessions, orders, authorizations, approvals or
registrations from, of or with any Governmental Entity (as defined in
Article 17) and relating primarily to either of the Businesses;
(j) subject to Section 12.3, all records of the Sellers relating
primarily to either of the Businesses, including, without limitation,
property records, shipping records, supplier lists, production records,
purchasing and sales records, customer lists, proposals, credit records,
accounting records and such other records as the Buyer may reasonably
require to conduct the Businesses subsequent to the Closing;
(k) if requested by the Buyer and to the extent such transfer is
permitted by applicable law, photocopies of the payroll and personnel
records (the "Personnel Records") of all the Assumed Employees (as defined
in Section 11.1) and any Optional Employees (as defined in Section 11.1)
accepting Buyer's offers of employment;
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(l) subject to Section 12.4, all sales and promotional literature and
other marketing and sales-related materials owned or used by the Sellers
primarily in connection with either of the Businesses;
(m) all files and documentation relating primarily to the Business
Contracts and programs entered into by the Sellers since the inception of
the Businesses and relating primarily to either of the Businesses; any such
materials subject to third party proprietary restrictions will be addressed
as provided in Section 12.1; and
(n) to the extent transferable, all claims, causes of action, chose in
action, rights of recovery and rights of set off of any kind against any
third parties, other than the Sellers and their Affiliates, and all rights
under and pursuant to all warranties, representations and guaranties made
by suppliers of products, materials or equipment or components thereof,
pertaining to, arising out of, and inuring to the benefit of the Sellers
and relating primarily to either of the Businesses.
1.2. Excluded Assets. Notwithstanding the foregoing, the Sellers are not
selling and the Buyer is not purchasing pursuant to this Agreement, and the term
"Acquired Assets" shall not include, any of the following assets (the "Excluded
Assets"):
(a) any of the Sellers' title to, interest in or rights with respect
to any real property other than to the extent set forth in the Lease
Agreement or Sublease Agreements (as hereinafter defined);
(b) any of the Sellers' cash, marketable or other securities,
commercial paper and cash equivalents or other investments, on hand or in
bank accounts, and all of the Sellers' bank accounts;
(c) (i) any computers not used primarily in either of the Businesses,
and any software embodied in any such computers, any communication or data
network systems not used primarily in either of the Businesses, and any
other equipment used to support either of the Businesses but not located at
the Sellers' EO Facilities or FPA Facilities, (ii) with respect to the
Ground EO Business, the Sellers' Hexagon and Xxxxx software (except as
provided in Section 12.21) and (iii) with respect to the Ground EO
Business, any computer and related equipment and any software made
available to the Ground EO Business pursuant to the Information Technology
Services Agreement, dated as of December 29, 1994 (the "CSC Agreement"),
among Raytheon Company (as successor to Xxxxxx Aircraft Company), Computer
Sciences Corporation and CSC Outsourcing (with all of the assets referred
to in this clause (iii) hereinafter referred to as the "CSC Assets"); this
paragraph (c) is not meant to exclude the software to be transferred to the
Buyer pursuant to Sections 1.1(h) and 12.9;
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(d) any rights under the Asset Purchase Agreement dated as of January
4, 1997 between Raytheon (as successor to Old Raytheon) and TI, or under
any agreement entered into in connection therewith;
(e) any rights under the Xxxxxx Merger Agreement or under any
agreement entered into in connection therewith;
(f) subject to Section 1.3 below, any other assets of the Sellers not
used primarily in either of the Businesses;
(g) the tangible assets listed on Schedule 1.3(b) hereto, which will
be made available for use by the Buyer pursuant to Section 1.3 hereto;
(h) the Request for Equitable Adjustment of Raytheon on the IBAS NDQS
contract currently pending against RTIS (the "Pending REA");
(i) except as provided in Section 12.25, any rights to any patents,
copyrights, mask works, invention disclosures, know-how, trade secrets,
technical information and other data, operating procedures, technology or
other intellectual property not included in the FPA Business Intellectual
Property and Ground EO Business Intellectual Property (as defined in
Article 17, and the transfer of which is being made pursuant to the FPA
Intellectual Property Agreement and EO Intellectual Property Agreement, as
applicable);
(j) any rights to any tradenames, trademarks or corporate names,
including, without limitation, the tradenames, trademarks or corporate
names "Raytheon", "TI," "Raytheon TI Systems," "Xxxxxx" and any derivations
thereof; certain transitional rights to use certain of these are addressed
in the Intellectual Property Agreements (as defined in Article 9);
(k) subject to Section 12.3, all corporate records of the Sellers, the
original copies of all personnel and payroll records of the Sellers, all
financial and tax records of the Sellers relating in whole or in part to
either of the Businesses and all other records and files not relating
primarily to either of the Businesses;
(l) any insurance policies of the Sellers;
(m) any rights of the Sellers with respect to any ERISA Plans and
Non-ERISA Plans;
(n) any prepaid expenses relating to Retained Liabilities; and
(o) the Teaming and Supply Agreement dated February 27, 1996 between
TI and Societe Francaise de Detecteurs Infrarouge (the "Sofradir
Contract").
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1.3. Determinations as to Mixed-Use Assets. (a) The Sellers and the Buyer
shall cooperate in good faith to resolve any disputes as to whether any specific
assets (including, without limitation, any contracts and agreements) of the
Sellers which relate to one of the Businesses and another business of one of the
Sellers are used primarily in, or relate primarily to either of the Businesses.
Further, without limiting the foregoing, with respect to any asset necessary to
and/or presently used in connection with either Business that is also used by
either Seller in connection with another business, excluding any assets to be
retained by a Seller and used to provide services pursuant to a Master Services
Agreement (as defined in Section 9.11) and excluding these assets specifically
excluded under Section 1.2, the parties shall cooperate in good faith to
determine which business predominantly uses such asset in order that such party
is vested with title thereof.
(b) With respect to any shared use tangible assets, Sellers and the
Buyer will allocate between them the costs of maintenance, upkeep and
repair based on their respective amounts of use. The Sellers and the Buyer
will also agree on time cut-offs for this shared usage, after which the
party owning such tangible assets shall have sole rights to use the
equipment. Unless the parties otherwise agree, in no event will such
cut-off period exceed the earlier of five (5) years after the Closing Date
or the useful life of the equipment or, in the case of the Ground EO
Business, when the Buyer vacates the premises subject to the Lease (as
defined below). A list of the tangible assets subject to these shared use
arrangements is set forth in Schedule 1.3(b). With respect to any contracts
or licenses applicable to one of the Businesses and other businesses of the
Seller, the Seller and the Buyer will cooperate to structure contractual
arrangements providing them both with the relevant economic and other
rights and obligations under such contract or license. These arrangements
may take the form of a subcontract or sublicense or causing the other
parties to such contract or license to agree to split the contract or
license into two separate agreements. To the extent that any contract or
agreement constituting part of the Acquired Assets is not capable of being
assigned because of the failure to obtain any required third party consent
or otherwise, the Seller and the Buyer shall enter into arrangements of the
type contemplated by Section 12.1. With respect to software and other
information technology assets, the Sellers and the Buyer will enter into
the transition and partition arrangements described in Section 12.9.
Article 2
Assumption of Certain Obligations
Anything in this Agreement to the contrary notwithstanding, the Buyer shall
not assume, and shall not be deemed to have assumed, any liability or obligation
of any nature, fixed or contingent or known or unknown, of the Sellers or
relating to the operation of the Businesses prior to the Closing (including
without limitation the Retained Environmental Liabilities referred to below),
except that, at the Closing the Buyer shall assume, and agree to pay, perform,
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fulfill and discharge, the following obligations and liabilities of the Sellers
(collectively, the "Assumed Obligations"):
(i) all obligations and liabilities under the Business Contracts, Purchase
Orders, Personal Property Leases and Transferred Software Licenses
(collectively, the "Assumed Contracts") that relate to the performance
of the Assumed Contracts after the Closing or relate to the operation
of either Business after the Closing;
(ii) all expenses of the Sellers relating to either Business ("Assumed
Expenses") and all trade payables of the Sellers relating to either
Business (the "Assumed Payables"), to the extent, and only to the
extent, that such Assumed Expenses and Assumed Payables are reflected
on the Closing Balance Sheets (as finally adjusted pursuant to Section
3.2); and
(iii) any other liability or obligation of the Sellers relating to either
Business arising with respect to the period prior to the Closing, but
only to the extent of the amount reflected on the Closing Balance
Sheets (as finally adjusted pursuant to Section 3.2) for such
obligation or liability.
All liabilities and obligations of any nature, fixed or contingent or known
or unknown, of the Sellers or relating to the operation of the Businesses prior
to the Closing, other than the Assumed Obligations, are referred to in this
Agreement as the "Retained Liabilities". The Retained Liabilities include
without limitation:
(i) liabilities for Indebtedness (as defined in Article 17) of the
Sellers;
(ii) those liabilities for Taxes (as defined in Article 17) that remain the
responsibility of the Sellers pursuant to Article 14;
(iii) those liabilities of the Sellers under their ERISA Plans and
Non-ERISA Plans retained by them pursuant to Article 11 and under the
Retention Agreements described on Schedule 5.10;
(iv) except for any liability or obligation referred to in clauses (ii) or
(iii) of the preceding paragraph and adequately reflected on the
Closing Balance Sheet, any obligations or liabilities relating to or
arising out of the performance by the Sellers prior to Closing of
contracts (including the Assumed Contracts) in connection with the
Businesses, including (A) any Defective Pricing Claims (as defined in
Article 17) relating to contracts entered into by the Sellers prior to
Closing, (B) compliance with any governmental regulations applicable
to the performance of such contracts prior to Closing and (C)
obligations and liabilities relating to product or service warranties
or product liability or similar claims relating to the quality of
goods and services provided by the Sellers in connection
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with the Businesses prior to the Closing (including any such
liabilities or obligations relating to the pre-Closing performance of
Assumed Contracts);
(v) any alleged or actual liability for the investigation, cleanup or
removal of any Hazardous Substances, or for death or injury to person
or property, as a result of the generation, transportation, disposal,
storage, release, emission or discharge of any Hazardous Substances
onsite or offsite and in, on, under, from or onto any real property
subject to the Lease or Subleases, past or present, solely to the
extent that such liability arises out of any matter or circumstances
that occurred or existed on or before the Closing Date;
(vi) any alleged or actual liability and penalties for violations of or
noncompliance with Environmental Laws, to the extent that such
liability arises out of any matter that occurred or existed on or
before the Closing Date (with the obligations and liabilities referred
to in clause (v) and this clause (vi) collectively referred to as the
"Retained Environmental Liabilities"); and
(vii) any obligations or liabilities under the Sofradir Contract or the PPI
Supply Agreement (as defined in Section 12.16)
Article 3
Purchase Price
3.1. Purchase Price. At the Closing, the Buyer shall pay Forty-Five Million
Dollars ($45,000,000) to the Sellers, as the aggregate purchase price for the
Acquired Assets, subject to adjustment as provided in Section 3.2 hereof (the
"Purchase Price"), by wire transfer of same day funds. The Purchase Price and
the liabilities assumed by the Buyer pursuant to Article 2 shall be allocated in
the manner set forth on Schedule 3.1 hereto. The Buyer and Sellers shall report
the purchase and sale of the Acquired Assets, including, without limitation, in
all federal, foreign, state, local and other Tax Returns (as defined in Article
17) prepared and filed by or for either of the Buyer or the Sellers, in
accordance with the basis of allocation set forth on Schedule 3.1 hereto. The
Buyer and the Sellers further agree that they will prepare and file asset
acquisition statements on Form 8594 reflecting such allocation and any
Adjustment (as defined in Section 3.2(d)) with their Federal income tax returns
for the taxable year that includes the Closing Date.
3.2. Purchase Price Adjustments.
(a) Within sixty (60) days after the Closing Date, the Sellers shall
prepare and deliver to the Buyer audited statements of the Acquired Assets
and Assumed Obligations of the Businesses as of the close of business on
the day immediately preceding the Closing Date (the "Closing Balance
Sheets"). The Closing Balance Sheets
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shall be prepared in accordance with GAAP applied on a basis consistent
with the December Balance Sheets (as defined in Section 5.5), except that
(i) the Closing Balance Sheets will not contain an accrued liability for
any pending purchase order for capital equipment that has not been
delivered and put in use as of the Closing Date and (ii) the Closing
Balance Sheets will not record a book value for any fixed assets that were
recorded on the December Balance Sheets at no book value. In addition,
except as may be otherwise agreed by the Buyer, there shall be no changes
to the methodologies and assumptions used to prepare the reserves and
contract estimates reflected on the Closing Balance Sheets as compared to
the methodologies and assumptions used to prepare the December Balance
Sheets. For those items, if any, where the December Balance Sheets were not
prepared in accordance with GAAP, the Closing Balance Sheets will be
prepared in accordance with GAAP and not on the same basis as the December
Balance Sheets.
(b) When the Sellers deliver the Closing Balance Sheets, the Sellers
shall also deliver a certificate (i) certifying that the Closing Balance
Sheets were prepared in accordance with paragraph (a) above, and (ii)
containing the Sellers' calculations, based on the Closing Balance Sheets
and calculated in a manner consistent with the Model Statement (as defined
below) (the "Sellers' Proposed Calculations"), of the Net Assets as of the
Closing Date. As used in this Agreement "Net Assets" means the difference
of (x) the book value of the total assets of the Businesses constituting
the Acquired Assets less (y) the book value of the total liabilities of the
Businesses constituting the Assumed Obligations, after giving effect to the
adjustments referred to in paragraph (a) above. Attached hereto as Schedule
3.2 is a preliminary statement of Net Assets as of December 31, 1997, based
upon the December Balance Sheets and the procedures for calculating Net
Assets as provided above (the "Model Statement").
(c) Within forty-five (45) days after receipt of the Closing Balance
Sheets and the accompanying certificate, the Buyer shall notify the Sellers
of its agreement or disagreement with the Closing Balance Sheets and the
accuracy of any of the Sellers' Proposed Calculations; provided, that the
Buyer may only dispute the Closing Balance Sheets and the Sellers' Proposed
Calculations to the extent that they deviate from the requirements of
paragraphs (a) and (b) above. During such period, the Sellers shall afford
the Buyer and its representatives reasonable access to any of the Sellers'
books, records and work papers, personnel, facilities and accountants
necessary to enable the Buyer and its representatives to review the Closing
Balance Sheets and the Sellers' Proposed Calculations. If the Buyer
disputes any such aspect of the Closing Balance Sheets or the amount of any
of the Sellers' Proposed Calculations, then the Buyer shall have the right
to direct its independent accountants, at the Buyer's expense, to review
and test the Closing Balance Sheets. The Buyer's representatives or
accountants shall complete their review and test within forty-five (45)
days after the date the Buyer disputes the Sellers' Proposed Calculations.
If the Buyer and its independent accountants, after such review and test,
still disagree with the Sellers' Proposed Calculations, and the Sellers do
not accept the Buyer's proposed alternative calculation
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(the "Buyer's Proposed Calculations"), then, within thirty (30) days after
the date of the Sellers' rejection of the Buyer's Proposed Calculations,
the Sellers and the Buyer shall select a third nationally recognized
independent accounting firm (the "Independent Accounting Firm") to resolve
the remaining disputed items (the "Remaining Disputed Items") by conducting
its own review and test of the Closing Balance Sheets and thereafter
selecting either the Buyer's Proposed Calculation of the Remaining Disputed
Items or the Sellers' Proposed Calculation of the Remaining Disputed Items
or an amount in between the two. The Independent Accounting Firm shall be
instructed (i) that the scope of its review shall be limited solely to the
Remaining Disputed Items, (ii) that it shall accept the Closing Balance
Sheets and the Sellers' Proposed Calculations except to the extent that
they deviate from the requirements of paragraphs (a) and (b) above, and
(iii) that it is to use every reasonable effort to complete such assignment
and deliver copies of such opinion and, if required, revised Closing
Balance Sheets to the Buyer and the Sellers within thirty (30) days
following the date such Remaining Disputed Items are referred to it. The
Buyer and the Sellers agree that they shall be bound by the determination
of the Remaining Disputed Items by the Independent Accounting Firm. The
fees and expenses of the Independent Accounting Firm shall be paid jointly
by the Buyer and the Sellers.
(d) Upon the determination pursuant to paragraph (c) of this Section
3.2 of the definitive Closing Balance Sheets and the Net Assets as of the
Closing Date, the Purchase Price shall be either (i) increased by the
amount, if any, by which the amount of Net Assets is greater than
$28,453,598 or (ii) decreased by the amount, if any, by which the amount of
Net Assets is less than $28,453,598 (the "Adjustment"); provided however in
no event will any upward Adjustment exceed $7 million, unless the Closing
occurs after September 30, 1998 (in which event the maximum upward
Adjustment shall be subject to modification by the parties), in which case
an upward adjustment may exceed $7 million. If the Purchase Price is
increased, the Buyer shall pay such amount to the Sellers, and if the
Purchase Price is decreased, the Sellers shall pay such amount to the
Buyer. Any such payment shall be made in cash or same day funds within ten
(10) days after the determination of the Adjustment pursuant to paragraph
(c). Any such payment shall bear interest from the Closing Date to the date
preceding payment at a rate equal to the "Prime Rate" as set forth from
time to time in The Wall Street Journal "Money Rates" column from the
Closing Date to the date preceding payment.
Article 4
Closing
4.1. Time and Place. The closing of the transfer and delivery of all
documents and instruments necessary to consummate the transactions contemplated
by this Agreement (the "Closing") shall be held at the offices of Xxxxxxx Xxxx
LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, on the third business day
following completion of the regulatory approval referred to in Section 7.1, or
at such other time or such other place as the Buyer and the Sellers
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may agree. The date on which the Closing is actually held hereunder is sometimes
referred to herein as the "Closing Date". The Closing will be deemed to be
effective for purposes of this Agreement as of the close of business on the
Closing Date.
4.2. Transactions at Closing. At the Closing (except as provided in
paragraphs (a), (c) and (e) below):
(a) The Sellers shall duly execute and deliver to the Buyer or its
nominee or nominees such bills of sale, certificates of title and other
instruments of assignment or transfer with respect to the Acquired Assets
as the Buyer may reasonably request and as may be necessary to vest in the
Buyer all of the Sellers' title to the Acquired Assets, including a Xxxx of
Sale and Conveyance in the form of Exhibit A1 hereto and Patent Assignments
in the form of Exhibit A2 hereto; certain ancillary transfer instruments,
such as vehicle certificates of title, may be delivered promptly after the
Closing Date.
(b) The Buyer shall deliver the Purchase Price by wire transfer to the
Sellers.
(c) The Buyer shall duly execute and deliver to the Sellers such
instruments of assumption with respect to the Assumed Obligations as the
Sellers may reasonably request, including an Assumption Agreement in the
form of Exhibit A3 hereto; certain ancillary instruments of assumption may
be delivered promptly after the Closing Date.
(d) The Buyer and the Sellers, as applicable, shall each duly execute
and deliver the Intellectual Property Agreements, the Master Services
Agreements, the Supply Agreements, the Lease Agreement, the Sublease
Agreements and the Non-Disclosure Agreement (as such terms are defined in
Article 9 hereof and referred to collectively with this Agreement as the
"Transaction Documents").
(e) At the Closing or as promptly as practicable thereafter and
subject to the Buyer having met applicable security requirements under
applicable law, the Sellers shall deliver all such keys, locks, safe
combinations, security system codes and other similar items as the Sellers
possess for the Buyer to obtain full occupation and control of the Acquired
Assets and access to the premises subject to the Subleases and Lease
Agreement.
(f) The Buyer and TI shall enter into the TI Manufacturing Agreement
(as defined in Section 9.15).
(g) The Sellers and the Buyer, as applicable, shall deliver a
certificate of its Secretary or Assistant Secretary certifying as to (i)
the resolutions of its Board of Directors and shareholders (if applicable)
authorizing and approving the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, (ii) the incumbency of
its officers, and (iii) its By-Laws.
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(h) The Sellers and the Buyer, as applicable, shall deliver a copy of
its charter certified by the Secretary of State of the State of Delaware.
(i) The Sellers and the Buyer, as applicable, shall deliver a
certificate as to its good standing certified by the Secretary of State of
the State of Delaware.
(j) To the extent obtained in accordance with Section 12.17, the Buyer
shall receive nondisturbance agreements and estoppel certificates from TI
relating to the Subleases.
Article 5
Representations And Warranties Of Sellers
The Sellers represent and warrant jointly and severally to the Buyer as
follows:
5.1. Incorporation; Authority. Each of the Sellers is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on the
relevant Business as now conducted.
5.2. Rights to Sell Acquired Assets; Approvals; Binding Effect. Each Seller
has all requisite corporate power and authority to enter into this Agreement and
each of the other Transaction Documents, to perform all of its agreements and
obligations hereunder and thereunder in accordance with their terms, and to sell
and transfer to the Buyer all of the Acquired Assets owned by it. The execution,
delivery and performance of this Agreement and each of the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby has been duly authorized by all necessary corporate action on the part
of the Sellers. This Agreement has been duly executed and delivered by each
Seller and constitutes, and each of the other Transaction Documents will at or
prior to the Closing be duly executed and delivered by the applicable Seller(s)
and will constitute, the legal, valid and binding obligation of such Seller
party thereto, enforceable against such Seller party thereto in accordance with
its terms, except as such validity, binding effect or enforcement may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights generally
or by equitable principles relating to the availability of remedies.
5.3. No Defaults. Except for (i) consents to transfer with respect to any
agreement or license that is part of the Acquired Assets, (ii) the consents
referred to in Section 7.1 hereof and (iii) as set forth on Schedules 9.5 or
10.5 hereto, the entering into of this Agreement, the performance and compliance
by the Sellers with the terms hereof, and the consummation of all the
transactions contemplated hereby, will not either currently, or after notice or
lapse of time or both:
(a) result in a violation of any provision of the charter, bylaws or
other organizational documents of either Seller; or
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(b) result in a violation by either Seller of any statute, regulation,
order, law, ordinance or restriction applicable to such Seller or by which
such Seller or any of the Acquired Assets is bound or subject, other than
any violation which would not have a Material Adverse Effect (as defined in
Article 17);
(c) result in a violation by either Seller of any judgment, order or
decree of any court or judicial or quasi-judicial tribunal applicable to
such Seller, other than any violation which would not have a Material
Adverse Effect;
(d) conflict with, violate, result in the breach or termination of, or
constitute a default under any contract, order, or permit to which any of
the Sellers is a party or by which any of them or any of the Acquired
Assets are bound or subject, except for any conflicts, violations,
breaches, terminations or defaults which would not have a Material Adverse
Effect; or
(e) result in the creation of any Encumbrance (as defined in Article
17) upon any of the Acquired Assets, except, in each case, for Permitted
Encumbrances (as defined in Article 17) and for Encumbrances which would
not materially hinder or impair the transactions contemplated hereby or
have a Material Adverse Effect.
5.4. Title to Assets. RTIS owns or has the right to transfer all of the
Acquired Assets relating to the FPA Business and Raytheon and RSG collectively
own or have the right to transfer all of the Acquired Assets relating to the
Ground EO Business. The Sellers have, and at and as of the Closing the Sellers
will convey to the Buyer, good and marketable title to the respective Acquired
Assets owned by them, free and clear of all Encumbrances except for Permitted
Encumbrances.
5.5. Financial Statements. The Sellers have furnished to the Buyer, and
attached as Schedule 5.5 hereto are, copies of the audited balance sheets (in
draft form) of the Ground EO Business and the FPA Business as of December 31,
1997 (the "December Balance Sheets"). Each of the December Balance Sheets has
been prepared in accordance with GAAP (subject to a lack of footnotes) and
fairly presents in all material respects the financial condition of the
applicable Business as of December 31, 1997, except as otherwise disclosed in
the notes to the December Balance Sheets.
5.6. Absence of Certain Changes. Except as set forth on Schedule 5.6, from
December 31, 1997 to the date of this Agreement the Businesses have operated
only in the ordinary course and there has not been:
(a) any change in the condition (financial or otherwise), results of
operations, assets, liabilities or business of the Businesses other than
changes arising in the ordinary course of business, none of which,
individually or in the aggregate, has had a Material Adverse Effect;
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(b) any acquisition or disposition by the Sellers outside the ordinary
course of business of any asset or property used primarily in either of the
Businesses or any disposition of any asset necessary to the performance by
the Sellers of any contracts included in the Acquired Assets;
(c) any damage, destruction or casualty loss to any asset of the
Sellers and relating to either of the Businesses, whether or not covered by
insurance, which has had a Material Adverse Effect;
(d) any increase in (or commitment to increase) the compensation,
pension or other benefits payable or to become payable to any of the
officers, employees, agents or representatives of either of the Businesses
or any bonus payments or arrangements made to or with any of them, that
will constitute an Assumed Obligation, other than (i) increases amounting
to less than $25,000 individually and effected on a basis consistent with
the past practice of the Sellers and (ii) any increase required under the
terms of any of the benefit plans listed on Schedule 5.10 hereto;
(e) any voluntary forgiveness or cancellation of any debt or material
claim of either of the Businesses or any voluntary waiver of any right of
material value other than compromises of accounts receivable in the
ordinary course of business;
(f) the imposition of any Encumbrance on any of the assets of either
of the Businesses except for Permitted Encumbrances;
(g) any sale, assignment, transfer or other disposition of or lapse of
any intellectual property right or termination of any agreement under which
the Sellers (insofar as it relates to either of the Businesses) has any
right or license, the sale, assignment, transfer or other disposition,
lapse or termination of which would have a Material Adverse Effect;
(h) any lapse, termination, expiration, amendment, modification or
waiver of any contract or agreement, including any joint venture agreement,
teaming agreement, distribution agreement, supply agreement, license
agreement, personal property lease or development contract, to which the
Sellers (insofar as it relates to either of the Businesses) had been a
party, the lapse, termination, expiration, amendment, modification or
waiver of which would have a Material Adverse Effect;
(i) any intercompany transactions relating to either of the Businesses
with any Affiliate (as defined in Article 17) of the Sellers, except (i) in
the ordinary course operation of either of the Businesses or (ii) involving
consideration or transfers in any one transaction of not more than $25,000
and not more than $100,000 in the aggregate;
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(j) any labor dispute (other than routine individual grievances) or
activity or proceeding by a labor union or representative thereof to
organize any employees of the Sellers involved in the Businesses who were
not subject to a collective bargaining agreement at December 31, 1997, or
any lockouts, strikes, slowdowns, work stoppages or to Sellers' knowledge,
written threats thereof by or with respect to any such employee;
(k) any investigation, institution, settlement or agreement to settle
any litigation, action or proceeding before any Governmental Entity in
connection with the Businesses including, without limitation, under the
Foreign Corrupt Practices Act;
(l) any change in any method of accounting or accounting practice or
policy used by the Sellers and relating to the Businesses including,
without limitation, with respect to the reserves for certain Ground EO
Business contracts as set forth on Schedule 5.6(l); or
(m) in connection with the Businesses, any agreement to incur, assume
or become subject to, any liabilities or obligations for returns or
allowances, other than in the ordinary course of business and consistent
with past practice, or any increase, or any change in any assumption
underlying, or methods of calculating, any bad debt, contingency or other
reserve.
5.7. Litigation, Etc. As of the date of this Agreement, no proceeding,
arbitration, action or suit is pending or, to the knowledge of the Sellers,
threatened against either Seller (insofar as it relates to either of the
Businesses, the Acquired Assets, the Assumed Obligations or the transactions
contemplated hereby), except as set forth on Schedule 5.7 hereto and except for
any such proceeding, arbitration, action, or suit that, singly or in the
aggregate, would not have a Material Adverse Effect. As of the date of this
Agreement, neither Seller (insofar as it relates to either of the Businesses)
has received any written notice from any Governmental Entity of any pending or
threatened governmental investigation relating to either of the Businesses
which, if concluded with a determination adverse to either of the Businesses,
would have a Material Adverse Effect. Except as set forth on Schedule 5.7
hereof, as of the date of this Agreement, there are no outstanding orders,
writs, judgments, injunctions, awards or decrees of any Governmental Entity
involving or affecting the Sellers relating to the Acquired Assets, the Assumed
Liabilities or the Businesses or the transactions contemplated hereby. As of the
date of this Agreement, the Sellers are not in default with respect to any writ,
injunction, decree known to or served upon it from any Governmental Entity,
except for any such defaults which would not have a Material Adverse Effect.
5.8. Labor Relations. (a) Except as set forth in Schedule 5.8 attached
hereto, as of the date of this Agreement the Sellers are in compliance with all
federal, state and local labor employment laws, except for any noncompliance
which would not have a Material Adverse Effect. Except as set forth on Schedule
5.8, as of the date of this Agreement there is no charge pending or, to the
knowledge of the Sellers, threatened against either Seller alleging, with
respect to any employee or employees of either of the Businesses, any breach of
contract, any
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violation of any statute or regulation relating to employment and employment
practices, or any violation of any collective bargaining agreement, any unlawful
discrimination in employment practices or any unfair labor practices before any
court, agency, or other judicial or arbitral body, except for any such violation
that would not have a Material Adverse Effect. As of the date of this Agreement,
there is no labor strike, dispute, slow-down or work stoppage actually pending
or, to the Sellers' knowledge, threatened against the Sellers (with respect to
employees of the Businesses). Except as set forth on Schedule 5.8, no employees
of either of the Businesses are covered by any collective bargaining agreement,
and no collective bargaining agreement or other labor union agreement or
agreement with organized labor for employees of either of the Businesses is
currently being negotiated or pending negotiation. Except as set forth on
Schedule 5.8 hereto, there has been no material concerted work stoppage with
respect to either of the Businesses during the last three years.
(b) All individuals who are performing services for the Businesses as
of the date of this Agreement and are treated by the Sellers as
"independent contractors" for purposes of tax withholding and related
compensation issues qualify for such treatment, except for such instances
which are not, in the aggregate, material.
5.9. Contracts. Except for contracts, commitments, plans, agreements and
licenses listed on Schedule 1.1(f), Schedule 1.1(g), Schedule 5.9 or Schedule
5.10, as of the date of this Agreement, no Seller (insofar as it relates
primarily to either of the Businesses) is a party to or otherwise bound by:
(a) any contract or purchase order to sell products or provide
services to any customer (i) providing for payments in excess of $25,000 or
(ii) not cancelable within sixty (60) days;
(b) except for any contract or agreement that is terminable upon less
than 90 days' notice by either Seller or that will not constitute an
Assumed Obligation, any contract or agreement with any director, officer or
employee of either of the Businesses;
(c) (i) any contract for the lease or sublease as lessee, lessor,
sublessee or sublessor of real or personal property of either of the
Businesses, or (ii) except for the CSC Agreement, any license of computer
software used primarily in either of the Businesses, in the case of this
clause (ii) requiring payments in excess of $25,000 per year;
(d) except for purchase orders issued in the ordinary course of
business, any contract requiring payments in excess of $25,000 for the
purchase or sale of any personal property used primarily in the Businesses;
(e) any contract or agreement containing non-competition covenants
limiting the freedom of either of the Sellers to operate the Businesses or
to compete in any line of business with any Person in any geographic area
or during any period of time, or, except
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as set forth on Attachment 3 or Attachment 5 to the FPA Intellectual
Property Agreement or Attachment 2 or Attachment 4 to the EO Intellectual
Property Agreement, any agreement granting a license or other right with
respect to the FPA Business Intellectual Property or RTIS Intellectual
Property (each as defined in the FPA Intellectual Property Agreement)
material to the conduct of the FPA Business or any agreement granting a
license or other right with respect to the Ground EO Business Intellectual
Property or Raytheon Intellectual Property (each as defined in the EO
Business Intellectual Property Agreement) material to the conduct of the
Ground EO Business;
(f) any partnership, joint venture, teaming, consortium, or other
similar contract, arrangement or agreement;
(g) any development contracts relating primarily to either of the
Businesses and requiring estimated or actual annual expenditures by Sellers
in 1997 in excess of $100,000;
(h) any contract or agreement for guaranty, indemnity or suretyship of
Indebtedness of either of the Businesses in excess of $100,000;
(i) any contract, purchase order or purchase commitment which contains
pricing of a contingent nature; or
(j) any broker, distributor, dealer, manufacturer's representative,
franchise, agency, sales promotion, market research, marketing consulting
and advertising contracts and similar agreements to which the Sellers are a
party which are not cancelable by the Sellers on not more than 30 days
notice or without penalty or further payment in excess of $25,000.
Neither the Sellers nor, to the knowledge of the Sellers, any other party
to any contract, agreement, lease or instrument listed on Schedule 1.1(f),
Schedule 1.1(g), Schedule 5.9 or Schedule 5.10 (collectively, the "Contracts")
is, as of the date of this Agreement, in default in complying with any
provisions thereof, except for any such default that would not have a Material
Adverse Effect. The Sellers have delivered or made available to the Buyer true
and correct copies of the Contracts. Without limiting the foregoing, as of the
date of this Agreement the Sellers are neither in default with respect to any
intercompany deliveries to customers nor anticipate being in default between now
and the Closing Date with respect to such customer deliveries, except for any
such defaults which would not have a Material Adverse Effect. To the Sellers'
knowledge, as of the date of this Agreement, there is no pending written claim
or request for equitable adjustment under any Government Contract (as defined in
Article 17) either by the Sellers or any Governmental Entity that would
reasonably be expected to have a Material Adverse Effect. As of the date of this
Agreement, except where the same would not, individually or in the aggregate,
have a Material Adverse Effect, neither Seller has (i) received any written
notice of the termination or the intention of any party to terminate any
Contract,
-18-
whether as a termination for convenience or for default of the applicable Seller
thereunder, or (ii) received any written cure notice or show cause notice (as
defined in the Federal Acquisition Regulations Part 49, P. 49.607(a) and (b),
respectively) in respect of any Government Contract. Insofar as it relates to
the Businesses, none of the Sellers has been notified of any violation of, and
to the Sellers' knowledge none of the Sellers has engaged in any violation of,
the Truth in Negotiations Act in the negotiation of any Government Contract (as
defined in Article 17). Insofar as it relates to the Businesses, as of the date
of this Agreement none of the Sellers has been notified of, and to the Sellers'
knowledge they have not engaged in, any accounting practices that does not
comply with the applicable regulations and standards of the Cost Accounting
Standard Board, except as set forth on Schedule 5.9 and except for any such
practices which would not have a Material Adverse Effect. The Businesses are in
compliance with all obligations relating to any equipment or fixtures owned by
any Governmental Entity and loaned, bailed or otherwise furnished to or held by
any part of either of the Businesses, except where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect.
5.10. Pensions and Benefits.
(a) Except as set forth on Schedule 5.10(a) hereto, as of the date of
this Agreement, no Seller maintains or has any obligation to make
contributions to, any employee benefit plan (an "ERISA Plan") within the
meaning of Section 3(3) of the United States Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any other retirement, profit
sharing, stock option, stock bonus or other benefit program (a "Non-ERISA
Plan"), in either case, for the benefit of any officers, employees or
consultants of either of the Businesses. The Sellers have heretofore
delivered or made available to the Buyer copies or summaries of each such
ERISA Plan and Non-ERISA Plan and any associated funding instruments and,
with respect to any such ERISA Plan, the most recently completed annual
report (with any required attachments), the most recent IRS determination
letter, and any other advisory opinions or rulings applicable to such Plan.
(b) To the Sellers' knowledge, except as set forth on Schedule
5.10(b), all of the Sellers' ERISA Plans and Non-ERISA Plans have been
maintained and operated in all material respects in accordance with all
federal, state, provincial and local laws applicable to such plans, and the
terms and conditions of the respective plan documents.
(c) Each of the Savings Plans (within the meaning of Section 11.3) is
intended to constitute a qualified plan within the meaning of Section
401(a) of the Code, Sellers' intend to submit each such Savings Plan to the
Internal Revenue Service for a determination of its qualified status in a
timely manner, and to the knowledge of the Sellers' there is no reason to
believe that favorable determination letters will not be issued in due
course.
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(d) No collective bargaining agreements are currently in effect which
obligate Sellers to make contributions on behalf of any of the Assumed
Employees to any "employee pension benefit plan", or "employee welfare
benefit plan", as such terms are defined in Sections 3(2) and 3(1) of
ERISA, respectively, nor to any multiemployer plan, as defined in Section
3(37) of ERISA.
(e) Other than as described in this Agreement, no agreement,
commitment or obligation exists on the part of any of the Sellers which
would increase benefits available under any ERISA Plan or any Non-ERISA
Plan or which require the adoption of any new plan or program by any Seller
with respect to employees of the Businesses.
5.11. Intellectual Property. (a) The Sellers own or have the right to use
all EO/FPA Business Intellectual Property necessary to operate the Businesses on
the date hereof and as of the Closing Date, except where the failure to own or
have the right to use such EO/FPA Business Intellectual Property would not
individually or in the aggregate have a Material Adverse Effect. Pursuant to the
Intellectual Property Agreements (as defined in Article 9 hereof), and subject
to the terms, conditions and restrictions set forth therein, the Buyer shall, as
of the Closing Date, have the right to use, hold for use or otherwise exploit
(to the extent set forth in the Intellectual Property Agreements) all the EO/FPA
Business Intellectual Property in the same manner in all material respects that
such EO/FPA Business Intellectual Property is used, held for use or is otherwise
exploited by the Sellers in the applicable Business as of the date hereof and as
of the Closing Date. The EO/FPA Business Intellectual Property and the Assigned
Intellectual Property are sufficient (except for any requirements of Buyer for
commercial off the shelf software) in all material respects for the fulfillment
by the Buyer of its obligations under the Supply Agreements as they exist as of
the Closing Date and to conduct the operations of the Businesses immediately
after the Closing Date in the same manner in all material respects as such
operations were conducted prior to the Closing Date. The provisions of this
Section 5.11(a) are not intended to be and shall not be considered as any
warranty or representation that Buyer's use of such EO/FPA Business Intellectual
Property shall be free from claims of infringement which may be made by third
parties. The obligations of Sellers and the remedies of Buyer with respect to
claims of infringement are solely as set forth in Section 13.1(v) below.
(b) The EO/FPA Business Intellectual Property (other than the TI
Licensed Intellectual Property (as defined in the FPA Intellectual Property
Agreement)) is not subject to any material Encumbrances, other than
Permitted Encumbrances, and is not subject to any obligations inconsistent
with the terms of the Intellectual Property Agreements. The Sellers have
used commercially reasonable measures to protect the secrecy,
confidentiality and value of the EO/FPA Business Intellectual Property
(other than the TI Licensed Intellectual Property) material to the
operation of the Businesses. Subject to Section 5.11(e) below, no EO/FPA
Business Intellectual Property (other than the TI Licensed Intellectual
Property and any copyrighted material) material to the operation of the
Businesses has been used, divulged or appropriated for the benefit of any
Person other than the Sellers, except where such use, divulgence or
appropriation
-20-
would not, individually or in the aggregate, have a Material Adverse Effect
and except in the ordinary course of business in connection with the
performance of contracts.
(c) Subject to Section 5.11(e) below, as of the date hereof, no Seller
has made any claim in writing of a violation, infringement, misuse or
misappropriation by others of rights of a Seller to or in connection with
any EO/FPA Business Intellectual Property.
(d) As of the date hereof, there is no pending or, to the knowledge of
Sellers, threatened claim by any third Person of a violation, infringement,
misuse or misappropriation by the Seller in connection with either of the
Businesses of any patents, trademarks, copyrights, or trade secrets owned
by any third Person, or of the invalidity of any patent included in the
EO/FPA Business Intellectual Property (other than TI Licensed Intellectual
Property), that would, individually or in the aggregate, have a Material
Adverse Effect. To the knowledge of the Sellers, except for any matters
previously disclosed to the Buyer in a letter agreement referring to this
Section, the conduct of the Businesses by the Buyer following the Closing
in the manner currently conducted by the applicable Seller will not result
in the infringement of any patent, trademark, copyright or trade secret
owned by any third Person that would, individually or in the aggregate,
have a Material Adverse Effect. There are no interferences or other
contested inter parties proceedings, either pending or, to the knowledge of
the Sellers, threatened, in any domestic or foreign copyright office,
patent and trademark office or any other Governmental Entity relating to
any pending application with respect to any material EO/FPA Business
Intellectual Property (other than TI Licensed Intellectual Property).
(e) As to the representations and warranties set forth above which
have been made expressly subject to this paragraph, it is understood that
with respect to the activities of HE Holdings, Inc., any predecessor in
interest of HE Holdings, Inc. and any affiliates thereof prior to December
17, 1997 such representation and warranties are made only to the extent of
the knowledge of Sellers.
5.12. Governmental Consent. Except for (i) the approvals required with
respect to the DOJ and DOD (as such terms are defined in Section 7.1), (ii)
consents to transfer or novations required with respect to contracts with
governments or governmental agencies, (iii) consents and approvals required
under U.S. export control laws and regulations and laws and regulations designed
to protect the national security of the United States, and (iv) for those items
set forth on Schedule 5.12, no consent, approval or authorization of or
registration, designation, declaration or filing with any Governmental Entity,
on the part of any Seller, is required in connection with the consummation of
any of the transactions contemplated hereby, except for any approval,
authorization, registration, designation, declaration or filing that, if not
obtained or made, would not have a Material Adverse Effect, and would not
materially adversely affect the ability of the Sellers to perform their
respective obligations under this Agreement.
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5.13. Compliance with Laws, Etc. Except as set forth on Schedule 5.13
hereto, each of the Sellers (insofar as it relates to the operation of either of
the Businesses) is in compliance with all laws, statutes, governmental
regulations and all judicial or administrative tribunal orders, judgments, writs
and injunctions and Permits (as defined in Section 5.20) applicable to it,
except for any noncompliance that would not have a Material Adverse Effect.
Except as set forth on Schedule 5.13, as of the date of this Agreement the
Sellers have neither received nor know of the issuance of, any written notice
from any Governmental Entity of any such violation or alleged violation.
5.14. Status and Sufficiency of Tangible Assets. (a) Schedule 5.14(a)
contains a true and complete list of all tangible personal property owned by or
leased to the Sellers primarily in connection with the Businesses (the "Tangible
Personal Property") having an original cost equal to or greater than $25,000.
With respect to Tangible Personal Property leased by the Sellers as lessee, all
leases, conditional sale contracts, franchises or licenses pursuant to which the
Sellers may hold or use (or permit others to hold or use) such Tangible Personal
Property are as of the date of this Agreement valid and in full force and effect
in all material respects, and there is not under any of such instruments any
existing default of the Sellers or, to Sellers' knowledge, of any other party
thereto, or event of default of the Sellers or, to Sellers' knowledge, of any
other party thereto or event which with notice or lapse of time or both would
constitute such a default, except for any defaults that would not have a
Material Adverse Effect. Except as disclosed in Schedule 5.14(a), the Sellers
own, lease or have the legal right to use in all material respects all Tangible
Personal Property used in the conduct of the Businesses. The Sellers have valid
and subsisting leasehold interests in all the leased Tangible Personal Property,
free and clear of all claims except as specifically set forth in Schedule
5.14(a), Permitted Encumbrances and claims which, individually or in the
aggregate, do not have or are not reasonably likely to have a Material Adverse
Effect.
(b) Except as set forth on Schedule 5.14(b), the Acquired Assets, the
Subleases and the Lease, when utilized by a labor force substantially
similar to that utilized by the Sellers for the Businesses as of the date
of this Agreement, and taken together with the services to be provided by
the Sellers pursuant to the Master Services Agreements, the partitioning
and transition efforts to be completed pursuant to Section 12.9, the Lease
and the Subleases, and the other assets to be made available to the Buyer
as provided in Section 1.3, are sufficient in all material respects for the
fulfillment by the Buyer of its obligations under the Supply Agreements as
they exist as of the Closing Date and are adequate to conduct the
operations of the Businesses immediately after the Closing Date in the same
manner in all material respects as such operations were conducted
immediately prior to the Closing Date. The preceding sentence shall not be
construed as a representation as to the adequacy or scope of the
intellectual property to be conveyed, licensed or sublicensed pursuant to
the Intellectual Property Agreements, with respect to which the Sellers are
making representations and warranties as provided in Section 5.11.
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(c) The Acquired Assets constituting tangible personal property are in
good working condition, ordinary wear and tear excepted, have been properly
maintained in all material respects, are suitable in all material respects
for the purposes for which they are used, and conform in all material
respects to the requirements of all laws, ordinances and regulations
applicable to their use and ownership or lease by the Sellers; and the
buildings and structures containing the space to be subleased to the Buyer
pursuant to the Subleases and leased to the Buyer pursuant to the Lease are
suitable in all material respects and properly zoned for the purpose for
which they are currently used, have been properly maintained in all
material respects to the extent the applicable Seller is required to do so,
and there are no material outstanding work orders with respect to any
maintenance, repair or alterations to be performed by the applicable Seller
thereon.
5.15. Location of Inventories. Except for the EO Facilities and FPA
Facilities, Schedule 5.15 hereto specifies all locations at which Inventories
having an aggregate value in excess of $100,000 are located as of the date of
this Agreement.
5.16. Customers. Schedule 5.16 hereto sets forth a list of each paying
account that represented more than $50,000 of gross sales in 1997 of either of
the Businesses and the amount of sales attributable to such customers during
such period. Except as set forth in Schedule 5.16, as of the date of this
Agreement no customer listed on Schedule 5.16 has terminated or materially
reduced its purchases of merchandise or services from the Sellers.
5.17. Environmental Matters. Except as referenced on Schedule 5.17:
(a) (i) Each of the Businesses has been and currently is in compliance
with all applicable Environmental Laws except where the failure to be in
compliance would not, individually or in the aggregate, have a Material
Adverse Effect.
(ii) Each of the Businesses has all licenses, permits and
governmental consents required under Environmental Laws for the
operation of the Businesses as presently conducted (the "Environmental
Permits") and there are no violations, investigations or proceedings
nor, to the knowledge of the Sellers, are any investigations or
proceedings pending or threatened, with respect to the Environmental
Permits except where the failure to have such Environmental Permits or
where the violation, investigation or proceeding relating thereto
would not, individually or in the aggregate, have a Material Adverse
Effect. Such Environmental Permits are listed on Schedule 5.20 hereto.
(iii) Since January 1, 1997 and to the Sellers' knowledge prior
to January 1, 1997, no notice, notification, demand, request for
information, citation, summons, complaint or order has been received
by any Seller or, to the knowledge of the Sellers, is pending or
threatened by any Person against, any part of the Businesses nor has
any material penalty been assessed against any part
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of the Businesses with respect to any alleged violation of any
Environmental Law or liability thereunder, other than where such
notice, notification, demand, request for information, citation,
summons, complaint or order has been fully resolved, or where
resolution would not, individually or in the aggregate, have a
Material Adverse Effect.
(iv) To the Sellers' knowledge, as of the date of this Agreement,
no Hazardous Substance has been discharged, generated, treated,
manufactured, handled, stored, transported, emitted, released or is
present at any property now or previously owned, leased or operated by
any part of the Businesses in violation of any Environmental Law,
which circumstance, individually or in the aggregate, would have a
Material Adverse Effect.
(b) Since January 1, 1997 and to the Sellers' knowledge prior to
January 1, 1997, there has been no environmental investigation conducted of
which the Sellers have knowledge in relation to the Businesses or any
property or facility now or previously owned or leased with respect to the
Businesses with respect to any matter which has had or would, individually
or in the aggregate, have a Material Adverse Effect.
(c) Insofar as it relates primarily to either of the Businesses, to
the knowledge of the Sellers no event, condition, circumstance, activity,
practice, action or plan of the Sellers has occurred or exists or is likely
to occur or exist, in each case which may interfere with or prevent
continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing, or investigation, based on or related to the disposal,
storage, handling, manufacture, processing, distribution, use, treatment,
or transport, or the emission, discharge, release or threatened release
into the environment, of any Hazardous Substances, except for any of the
foregoing which would not have a Material Adverse Effect. To the knowledge
of the Sellers, no part of the premises occupied or used by the Sellers in
connection with the Businesses has been listed or proposed for listing on
the National Priorities List of the United States Environmental Protection
Agency or comparable state or local governmental list.
(d) Insofar as it relates to the Businesses, to the knowledge of the
Sellers no event has occurred or condition exists or operating practice is
being employed that could give rise to liability on the part of the
Sellers, either at the present time or in the future, for any losses,
liabilities, damages (whether consequential or otherwise), settlements,
penalties, interest, expenses and costs of responses (including any such
liability on account of the right of any Governmental Entity or Person, and
including closure expenses, costs of assessment, containment, removal or
response (other than monitoring transportation or disposal of materials
required to be transported or disposed of in the ordinary course of
business consistent with past practice)), other than any of the foregoing
which would not have a Material Adverse Effect, arising under any presently
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effective rule or federal, state, or local statute, or any regulation that
has been promulgated pursuant thereto, or common law, as a result of or in
connection with, or alleged to be as a result of or in connection with the
following:
(i) the handling, storage, use, transportation or disposal of any
Hazardous Substances in, or, under or near or from the facilities
used by the Sellers or its predecessors;
(ii) the handling, storage, use, transportation or disposal of any
Hazardous Substances by the Sellers or its predecessors which
Hazardous Substances were a product, by-product or otherwise
resulted from the operations conducted by or on behalf of the
Sellers or its predecessors;
(iii) any intentional or unintentional emission, discharge or release
of any Hazardous Substances in or near or from facilities of the
Sellers into or upon the air, surface water, ground water or land
or any disposal, handling, manufacturing, processing,
distribution, use, treatment, or transport of such Hazardous
Substances in or near or from facilities by or on behalf of the
Sellers or its predecessors; or
(iv) the presence of any toxic or hazardous building materials
(including but not limited to asbestos or similar substances) in
any facilities of the Sellers, including but not limited to the
inclusion of such materials in the exterior and interior walls,
floors, ceilings, tile, insulation or any other portion of
building structures.
5.18. Significant Suppliers. Set forth on Schedule 5.18 is a list of the
ten largest suppliers for each of the Businesses for 1997, together with the
amount of purchases attributable to such suppliers expressed in dollars. Except
as set forth on Schedule 5.18, no supplier listed on Schedule 5.18 during the
past year has terminated, materially reduced or threatened to terminate or
materially reduce its provision of merchandise or services to, the Sellers.
Copies of the Sellers' standard terms and conditions for purchase orders for the
Businesses are set forth in Schedule 5.18.
5.19. Transactions with Affiliates. Except for any obligations under the
Transaction Documents and as set forth on Schedule 5.19, none of the Assumed
Obligations under the Assumed Contracts will be owed to any Seller or its
Affiliate.
5.20. Licenses and Permits. Schedule 5.20 contains a complete and accurate
list of all licenses, permits and governmental authorizations ("Permits") held
by the Sellers as of the date of this Agreement primarily in connection with the
operation of the Businesses, other than any Permits that are not material to the
operation of the Businesses. The Sellers have complied with
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all conditions and requirements imposed by the Permits, except for any
noncompliances which would not have a Material Adverse Effect, and as of the
date of this Agreement the Sellers have not received any written notice that any
appropriate authority intends to cancel or terminate any of the Permits listed
on Schedule 5.20. The Sellers own or have the right to use in all material
respects the Permits in accordance with the terms thereof without any material
conflict or alleged conflict or infringement with the rights of others and
subject to no material claims of others, and each Permit is valid and in full
force and effect in all material respects.
5.21. Brokers. Except for XX Xxxxxx & Co. Incorporated, whose fees and
expenses will be paid by the Sellers, no finder, broker, agent or other
intermediary has worked for or on behalf of the Sellers in connection with the
negotiation or consummation of the transactions contemplated hereby.
Article 6
Representations and Warranties of the Buyer
The Buyer represents and warrants to the Sellers as follows:
6.1. Organization and Standing of the Buyer. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Buyer has all required corporate power and authority to
enter into this Agreement and the other Transaction Documents, to perform all of
its agreements and obligations hereunder and thereunder in accordance with their
terms and to purchase the Acquired Assets from the Sellers.
6.2. Corporate Approval; Binding Effect. The Buyer has obtained all
necessary authorizations and approvals from its Board of Directors and
shareholders required for the execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Buyer and constitutes, and each of the other Transaction
Documents will at or prior to the Closing be duly executed and delivered by the
Buyer and will constitute, the legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as such
validity, binding effect or enforcement may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally or by equitable principles
relating to the availability of remedies.
6.3. Non-Contravention. The execution, delivery and performance by the
Buyer of this Agreement and the other Transaction Documents will not result in
any violation of or be in conflict with its Certificate of Incorporation or
By-Laws, or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to it, or be in conflict with or constitute a
default under any of the foregoing.
6.4. Government Consents, Etc. Except for the approvals referred to in
clauses (i)(iv) of Section 5.12, no consent, approval or authorization of or
registration,
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designation, declaration or filing with any Governmental Entity, Federal or
other, on the part of the Buyer is required in connection with the purchase of
the Acquired Assets pursuant to this Agreement or the consummation of any other
transaction contemplated hereby.
6.5. Buyer's Capabilities. The Buyer intends to use the Acquired Assets as
part of a viable, ongoing business or businesses engaged in the development,
production and sale of FPAs and ground EO systems. The Buyer has the managerial,
operational and financial capability to compete effectively in the development,
production and sale of FPAs and ground EO systems and is eligible to receive the
applicable National Industrial Security Program security clearances necessary
for such activities. The Buyer has adequate financing or financial resources
available to consummate the transactions contemplated by this Agreement.
6.6. Brokers. Except for Bear, Xxxxxxx & Co. Inc., whose fees and expenses
will be paid by the Buyer, no finder, broker, agent or other intermediary has
worked for or on behalf of the Buyer in connection with the negotiation or
consummation of the transactions contemplated hereby.
Article 7
Certain Regulatory Approvals
7.1. Department of Justice and Department of Defense. As promptly as
practicable, and in any event within two (2) business days following the
execution of this Agreement by the parties, the Sellers shall notify the U.S.
Department of Justice (the "DOJ") and the U.S. Department of Defense ("DOD") of
the proposed transaction, in accordance with the terms of Section VII of the
Final Judgment; the Sellers and the Buyer shall respond with reasonable
diligence and dispatch to any request for additional information made in
response to such notice; and the Sellers shall promptly inform the Buyer of any
written notice of objection or non-objection or other material written
communications received from the DOJ or the DOD.
7.2. Other Governmental Approvals. The Sellers and Buyer shall use
commercially reasonable efforts to obtain the governmental approvals referred to
in Sections 9.5 and 10.5 as promptly as practicable after the date of this
Agreement.
Article 8
Conduct Of Business Pending Closing
The Sellers covenant and agree that, from and after the date of this
Agreement and until the Closing, and to the extent the Sellers are permitted
under the Final Judgment and Hold Separate Order to monitor or affect the
actions of the Businesses, except as otherwise specifically consented to or
approved by the Buyer in writing:
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8.1. Full Access. To the extent permitted under U.S. export control laws
and regulations, other applicable law, the Sellers' security clearances and any
third party requirements or restrictions, the Sellers shall afford to the Buyer
and its authorized representatives such access during normal business hours to
all properties, books, records, contracts and documents of the Businesses as the
Buyer shall reasonably request in connection with its review of the Businesses,
and the Sellers shall furnish or cause to be furnished to the Buyer and its
authorized representatives all such information with respect to the Businesses
as the Buyer may reasonably request. Any such investigation shall be on
reasonable prior notice and shall be carried out in such a manner as to minimize
any disruption of the Businesses.
8.2. Carry on in Regular Course. Except as may be otherwise contemplated by
this Agreement or required by any of the documents listed in any Schedule to
this Agreement and except for the transition of most of the operations of the
Ground EO Business in LaGrange, Georgia to the facility in El Segundo, the
Sellers shall carry on the Businesses in the ordinary course substantially in
the same manner as heretofore.
8.3. No General Increases. Except for any increase required under the terms
of any employment agreement or benefit plan referred to in Section 5.10 and any
increase in compensation that will not constitute an Assumed Obligation, the
Sellers shall not (i) grant any general or uniform increase in the rates of pay
of employees of either of the Businesses, except for increases in salary or
wages in the ordinary course operation of the applicable Business consistent
with past practice, or (ii) grant any general, uniform or individual increase in
the benefits under any bonus or pension plan or other contract or commitment for
the benefit of any employee of either of the Businesses, or to increase the
compensation payable or to become payable to officers, key salaried employees or
representatives of either of the Businesses, or (iii) increase any bonus,
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any such officers, key salaried employees or representatives.
8.4. Sale or Acquisition of Capital Assets. Except as may be otherwise
contemplated by this Agreement, the Sellers shall not sell or otherwise dispose
of or acquire any capital assets of either of the Businesses with a historical
cost in excess of $25,000.
8.5. Insurance. The Sellers shall maintain insurance coverage for the
Businesses comparable to the insurance coverage currently in effect.
8.6. Preservation of Organization. Except as may be otherwise contemplated
by this Agreement, the Sellers shall use reasonable efforts under the applicable
circumstances to keep the organization and material business relationships of
the Businesses intact in all material respects.
8.7. Compliance with Final Judgment. Except as may be otherwise permitted
by the DOJ or the DOD, the Sellers shall use their reasonable efforts to comply
in all material respects with the terms of the Final Judgment and the Hold
Separate Order.
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8.8. Advice of Change. The Sellers shall advise the Buyer in writing,
promptly after becoming aware thereof, of any material adverse change in the
condition (financial or otherwise), operations or assets of the Businesses.
8.9. Maintenance of Obligations. Insofar as it relates to the Businesses,
the Sellers shall perform all of their material obligations under agreements
relating to or affecting their assets, properties, equipment or rights.
8.10. Compliance with Law. The Sellers shall maintain compliance in all
material respects with all applicable laws, rules, regulations, permits and
orders with respect to the Businesses.
8.11. Maintenance of Records. Insofar as it relates to the Businesses, the
Sellers shall keep adequate records and books of account in accordance with
their past practices.
8.12. Retention of Employees. The Sellers shall use commercially reasonable
efforts to retain the employees of the Businesses during the period between the
execution of this Agreement and the Closing Date and to encourage all such
employees to accept offers of employment from the Buyer, including, but not
limited to, the following:
(a) maintaining all current compensation programs or benefits programs
that are intended to assist in retaining employees;
(b) assisting the Buyer in communicating with the Sellers' employees
regarding offers of employment by the Buyer; and
(c) advising the Buyer whenever any Seller has knowledge that any "key
employee" has received an offer of employment from another employer or is
contemplating terminating employment with the Sellers; provided, however,
that the Sellers have no obligation to make any inquiries as to those
matters. For these purposes, "key employee" will be determined jointly by
the Buyer and the Sellers as soon as is reasonably practicable following
execution of this Agreement.
Nothing contained in this Section 8.12 shall prohibit the Sellers from
terminating or disciplining any individual who the Sellers believe, in their
sole discretion, should be terminated or disciplined in a manner consistent with
past practices, policies and procedures.
8.13. Disclosure of Information. Immediately upon execution of this
Agreement, the Sellers agree to provide to the Buyer a list of all employees who
are on the Sellers' payroll with respect to the Businesses regardless of whether
such individuals are actively at work, identifying each individual by title,
location, and supervisor, and further agree that they will update such list
periodically through the Closing Date as reasonably requested by the Buyer. The
Sellers will also provide the Buyer with a list of employees currently actively
working on the programs constituting part of the Businesses who are not on the
list defined by the DOJ in the Final
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Judgment. The provision of the foregoing information is not intended to give the
Buyer any right to make employment offers to such persons except as provided in
Section 11.1.
8.14. Retained Liabilities. The Sellers will discharge the Retained
Liabilities when due in accordance with past practice.
8.15. Intellectual Property. The Sellers shall not, nor shall they agree in
writing or otherwise to, (i) transfer or license to any Person or otherwise
extend, amend or modify in any material respect any rights to the EO/FPA
Intellectual Property, or enter into grants to future patent rights, other than
non-exclusive licenses in the ordinary course of business and consistent with
past practice with respect to the EO/FPA Intellectual Property and other than
the grant of any rights with respect to the Raytheon Intellectual Property (as
defined in the EO Intellectual Property Agreement) that are not inconsistent
with and do not limit any of the rights to be granted to the Buyer pursuant to
the EO Intellectual Property Agreement, or (ii) disclose any of the EO/FPA
Intellectual Property or Assigned Intellectual Property except pursuant to
confidentiality agreements consistent with past practice.
8.16. No Shopping. Prior to any termination of this Agreement pursuant to
Article 15 hereof, the Sellers shall not solicit or enter into any agreement
with respect to the sale of any substantial portion of the Businesses or of the
Acquired Assets, or any merger or other business combination of the Sellers
(solely as it relates to either of the Businesses), to or with any Person other
than the Buyer.
8.17. Interim Financials. As promptly as practicable and in no event later
than August 7, 1998, the Sellers will deliver to the Buyer internal unaudited
balance sheets of the Businesses as of June 30, 1998, which except as may be
noted in any footnotes thereto will be prepared on a basis consistent with the
December Balance Sheets and fairly present in all material respects the
financial condition of the Businesses as of such date.
Article 9
Conditions Precedent To Buyer's Obligations
The obligation of the Buyer to consummate the Closing is subject to the
satisfaction prior to or at the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Buyer):
9.1. Representations and Warranties. The representations and warranties
made by the Sellers in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty), except to the
extent that such representations and warranties are no longer correct due to the
consummation prior to the Closing of transactions not prohibited hereby.
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9.2. Compliance with Agreement. The Sellers shall have performed and
complied in all material respects with all of their obligations under this
Agreement to be performed or complied with by them prior to or at the Closing
(in each case without giving duplicative effect to any materiality qualification
contained in such obligation).
9.3. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
9.4. DOJ and DOD Clearance. The DOJ and DOD shall have provided written
notice as contemplated by Section VII of the Final Judgment that they do not
object to the divestiture of the Businesses pursuant to this Agreement.
9.5. Other Government Approvals. The Buyer shall have received the required
preClosing approvals listed on Schedule 9.5.
9.6. EO Intellectual Property Agreement. Raytheon shall have entered into
the EO Intellectual Property License Agreement in the form of Exhibit B-1
attached hereto (the "EO Intellectual Property Agreement"), and the EO
Intellectual Property Agreement shall be in full force and effect. In connection
therewith, Raytheon shall have obtained the agreement of Xxxxxx Electronics
Corporation or its Affiliates permitting Raytheon and RSG to grant the rights
set forth in Section 2.6 of the EO Intellectual Property Agreement. In the event
Xxxxxx Electronics Corporation or its Affiliates requires changes affecting
Section 2.6 of the EO Intellectual Property Agreement, the Buyer agrees to
accept changes that do not add any additional material limitations on the
operation of the Ground EO Business.
9.7. FPA Intellectual Property Agreement. Raytheon and RSG shall have
entered into the FPA Intellectual Property Assignment, License and Sublicense
Agreement in the form of Exhibit B-2 attached hereto (the "FPA Intellectual
Property Agreement" and together with the EO Intellectual Property Agreement,
the "Intellectual Property Agreements"), and the FPA Intellectual Property
Agreement shall be in full force and effect. In connection therewith, Raytheon
shall have obtained the agreement of TI permitting RTIS to grant the rights set
forth in Section 2.6 of the FPA Intellectual Property Agreement. In the event TI
requires changes affecting Section 2.6 of the FPA Intellectual Property
Agreement, the Buyer agrees to accept changes that do not add any additional
material limitations on the operations of the FPA Business.
9.8. RTIS Supply Agreements. RTIS shall have entered into the Supply
Agreements in the form of Exhibits C-1 and C-2 attached hereto (the "RTIS Supply
Agreements"), and the RTIS Supply Agreements shall be in full force and effect.
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9.9. Raytheon Supply Agreements. Raytheon or one of its Affiliates shall
have entered into the Supply Agreements in the form of Xxxxxxxx X-0, X-0 and D3
attached hereto (the Raytheon Supply Agreements" and together with the RTIS
Supply Agreements, the "Supply Agreements"), and the Raytheon Supply Agreements
shall be in full force and effect.
9.10. RTIS Master Services Agreement. RTIS shall have entered into the
Master Services Agreement in the form of Exhibit E attached hereto (the "RTIS
Master Services Agreement"), and the RTIS Master Services Agreement shall be in
full force and effect.
9.11. Raytheon Master Services Agreement. Raytheon shall have entered into
the Master Services Agreement in the form of Exhibit F attached hereto (the
"Raytheon Master Services Agreement" and together with the RTIS Master Services
Agreement, the "Master Services Agreements"), and the Raytheon Master Services
Agreements shall be in full force and effect.
9.12. Lease Agreement. Raytheon shall have entered into the Lease Agreement
in the form of Exhibit G attached hereto with respect to that portion of the EO
Facilities in El Segundo, California specified therein (the "Lease Agreement"),
and the Lease Agreement shall be in full force and effect.
9.13. Sublease Agreements. RTIS shall have entered into the Sublease
Agreements in the form of Exhibits H-1 and H-2 attached hereto with respect to
that portion of the FPA Facilities specified therein (the "Sublease
Agreements"), the consent of TI, as lessor, shall have been obtained, and the
Sublease Agreements shall be in full force and effect.
9.14. Non-Disclosure Agreement. The Sellers shall have entered into the
Non-Disclosure Agreement in the form of Exhibit I attached hereto (the
"Non-Disclosure Agreement"), and the Non-Disclosure Agreement shall be in full
force and effect.
9.15. TI Manufacturing Agreement. TI shall have entered into a
Manufacturing Agreement with the Buyer in the form of Exhibit J hereto (the "TI
Manufacturing Agreement"), and the TI Manufacturing Agreement shall be in full
force and effect.
9.16. TI Amendments. TI shall have entered into amendments with RTIS
relating to the current services agreements between RTIS and TI and the services
of TI to be passed through to Buyer pursuant to the RTIS Master Services
Agreement (the "TI Amendments"), and the TI Amendments shall be in full force
and effect.
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Article 10
Conditions Precedent To Sellers' Obligations
The obligation of the Sellers to consummate the Closing is subject to the
satisfaction at or prior to the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Sellers):
10.1. Representations and Warranties. The representations and warranties
made by the Buyer in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty).
10.2. Compliance with Agreement. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing (in
each case without giving duplicative effect to any materiality qualification
contained in such obligation).
10.3. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
10.4. DOJ and DOD Clearance. The DOJ and DOD shall have provided written
notice as contemplated by Section VII of the Final Judgment that they do not
object to the divestiture of the Businesses pursuant to this Agreement.
10.5. Other Government Approvals. The Sellers shall have received the
required preClosing approvals listed on Schedule 10.5.
10.6. Other Agreements. The Buyer shall have entered into each of the
following, and such agreement shall be in full force and effect:
(i) the Intellectual Property Agreements (including the agreements of
Xxxxxx Electronics Corporation and its applicable Affiliates and TI
required under Sections 9.6 and 9.7);
(ii) the RTIS Supply Agreements;
(iii) the Raytheon Supply Agreements;
(iv) the RTIS Master Service Agreement;
(v) the Raytheon Master Service Agreement;
(vi) the Lease Agreement;
(vii) the Sublease Agreements (including the consent of TI required under
Section 9.13); and
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(viii) the Non-Disclosure Agreement.
10.7. TI Amendments. TI shall have entered into the TI Amendments and the
TI Amendments shall be in full force and effect.
10.8. Prior Sale Agreement. The Sellers shall have terminated the Amended
and Restated Asset Purchase Agreement, dated as of March 25, 1998, with
Kollsman, Inc. relating to the sale of the Ground EO Business (the "Prior Sale
Agreement").
Article 11
Employees and Employee Benefits
11.1. Hiring Employees.
(a) At the Closing, unless the Sellers and the Buyer otherwise agree
the Buyer will offer employment to the persons listed on Schedule 11.1(a)
unless otherwise indicated on that Schedule. In addition, the Buyer will be
permitted to make offers of employment to the employees listed on Schedule
11.1(b) (the "Optional Employees"). The Sellers will cooperate with the
Buyer to arrange interviews with the Optional Employees. All such offers
for Assumed Employees (as defined below) shall be for the same pay as in
effect at Closing and benefits meeting the requirements of Section 11.2.
Such offers and the benefits to be provided to the Assumed Employees shall
recognize the date of hire and time of service with or as recognized by the
Sellers for eligibility and vesting purposes under Buyer's benefit plans
and policies, and in the case only of vacation for purposes of determining
the amount of vacation allowed under Buyer's benefit plans and policies.
All employees listed on Schedule 11.1(a) accepting such offers, but none of
the Optional Employees accepting such offers, are referred to in this
Agreement as "Assumed Employees" and their employment with the Buyer will
be deemed to have commenced immediately after 11:59 p.m., applicable local
time, on the Closing Date.
(b) The Buyer agrees that, for a period of 60 days after the Closing
Date, it will not cause any of the Assumed Employees hired by it to suffer
"employment loss" for purposes of the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. ss.ss.2101-2109, and related regulations (the
"WARN Act") if such employment loss could create any liability for the
Sellers, unless the Buyer delivers notices under the WARN Act in such a
manner and at such a time that the Sellers bear no liability with respect
thereto.
11.2. Benefit Plans - General.
(a) Liabilities Generally. Except as expressly provided in this
Agreement, Sellers shall retain exclusive liability and responsibility for
providing any and all
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benefits due and payable to or in respect of Assumed Employees and related
participants and beneficiaries under any ERISA Plan or Non-ERISA Plan in
accordance with the terms of such plans and applicable law.
(b) Benefits Maintenance. Commencing as of the Closing Date and
continuing through the end of the sixth full calendar month after the
Closing Date (the "Benefits Maintenance Period"), with respect to the
Assumed Employees, spouses and dependents and beneficiaries thereof (the
"Eligible Individuals"), Buyer shall provide under its existing benefit
plans compensation, employee welfare plans and other employee benefits
which are substantially comparable in the aggregate to the compensation
paid by the Sellers, and the plans and other benefits provided by the
Sellers' applicable ERISA and Non-ERISA Plans, immediately prior to the
Closing Date. In determining whether benefits are substantially comparable
in the aggregate there shall be disregarded the benefits of Sellers' and
Buyer's defined benefit pension plans and retiree medical programs and the
benefits of Sellers' stock options. Nothing herein shall be construed to
require the Buyer to provide Assumed Employees with any retiree medical
benefits or stock options. Nothing contained herein shall be construed to
require Buyer to continue the employment of any Assumed Employee for a
specified period of time subsequent to Closing.
(c) Welfare Coverages. Any employee welfare plans established or
maintained by Buyer in satisfaction of Section 11.2(b) which cover or
reimburse Eligible Individuals for medical or dental expenses ("Buyer's
Medical Plans") shall not exclude from payment or reimbursements expenses
attributable to any condition of an Eligible Individual on the basis that
it is a pre-existing condition. The Buyer shall use its reasonable best
efforts to secure from its insurers an agreement, without the Buyer
incurring a substantial cost, to credit the dollar amount of all expenses
incurred by the Eligible Individuals during the applicable plan year of
Buyer's Medical Plans in which the Closing Date occurs for purposes of
satisfying any deductible and co-payment requirements applicable for such
year under Buyer's Medical Plans. During the Benefits Maintenance Period,
the Buyer shall maintain severance, reduction-in-force and
pay-in-lieu-of-notice benefits for the Assumed Employees no less favorable
than the severance, reduction-in-force and pay-in-lieu-of-notice benefits
provided to such Assumed Employees by Sellers immediately prior to the
Closing Date and disclosed on Schedule 5.10.
(d) COBRA Continuation Coverage. Sellers shall retain responsibility
for providing healthcare coverage to all beneficiaries of current or former
employees of Sellers (without regard to whether such employees become
Assumed Employees) who are receiving (or become entitled to receive)
continuation healthcare coverage pursuant to an election made under Section
4980A of the Code or Sections 601-608 of ERISA ("COBRA")(such an election
to be called a "COBRA election") arising as a result of a qualifying event
(as defined in COBRA) occurring prior to or on the Closing Date. Buyer
shall be responsible for providing COBRA coverage attributable to a COBRA
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election made by an Assumed Employee (or any individual who constitutes a
qualified beneficiary under COBRA with respect to an Assumed Employee)
which relates to a qualifying event (as defined in COBRA) which occurs
after the Closing Date.
(e) Retiree Medical Benefits. Sellers shall be solely responsible for,
and Buyer is specifically not assuming any pre- or post-Closing liability
or obligation for, any post-termination or retiree medical or dental
benefits ("Retiree Benefits") for which any Assumed Employee (or dependent)
may have been eligible under Sellers' Welfare Plans prior to the Closing
Date. Assumed Employees may be eligible to participate in a health plan
offering Retiree Benefits to Buyer's employees after the Closing Date, to
the extent that such benefits are made available under the terms of any of
Buyer's Welfare Plans; provided, that notwithstanding any other provision
of this Agreement to the contrary, an Assumed Employee's length of service
with Sellers shall only be counted under such plans, if at all, for
purposes of eligibility and shall not, in any event, be counted for
purposes of benefit accrual under such plan or plans.
(f) Tuition Aid. Buyer shall pay, and Sellers shall promptly reimburse
Buyer for, any tuition aid reimbursements in respect to Assumed Employees'
course work approved by Sellers and commenced prior to the Closing Date
which become payable after the Closing in accordance with and to the extent
provided by Sellers' tuition aid program. Sellers shall provide Buyer with
such information as Buyer may reasonably request to determine which and to
what extent any such reimbursements to Assumed Employees are or may become
due. From and after the Closing Date, Assumed Employees will be eligible to
participate in Buyer's tuition assistance program in accordance with
Buyer's policies then in effect.
(g) Vacation. On or before the Closing Date, Sellers shall pay to each
Assumed Employee the cash equivalent of his or her accumulated but unused
time under the Sellers' Paid Time Off Policy. From and after the Closing
Date, Assumed Employees shall receive annual vacation benefits pursuant to
Buyer's vacation policy with credit for purposes of determining the amount
of any entitlement for service with or recognized by Sellers as of the
Closing Date.
(h) Workers Compensation. Sellers shall remain responsible and liable
for all worker's compensation claims relating to occupational illnesses and
injuries of Assumed Employees that occurred or were incurred on or prior to
the Closing Date. Buyer shall be responsible and liable for Assumed
Employees' worker's compensation claims relating to all occupational
illnesses and injuries that occurred or are incurred subsequent to the
Closing Date.
11.3. Savings Plan. The Sellers will retain all liability and
responsibility for the disposition of interests under the Raytheon TI Systems
Savings Plan (the "RTIS Savings Plan") and the Raytheon Salaried Savings and
Investment Plan (10011) (the "Xxxxxx Savings Plan" and collectively, the
"Savings Plans"), with respect to those employees (or their beneficiaries) of
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the Businesses who, as of the Closing Date, are participants in one of the
Savings Plans. The Sellers agree that they will cause the accounts in the
Savings Plans of all such participants to be fully vested as of the Closing
Date. Effective as of the Closing Date, Sellers shall take such action, if any,
as may be necessary (i) to cause the active participation of the Assumed
Employees therein to cease as of the Closing Date, and (ii) to permit Assumed
Employees to elect to take distributions (subject to and if and to the extent
permitted by applicable law) of their accounts thereunder and, if such Assumed
Employees so elect, to roll them over, directly or otherwise, in accordance with
applicable law and regulations, to an individual retirement account or to one or
more defined contribution retirement plans qualified under Section 401(a) of the
Code (the "Buyer Defined Contribution Plans") and maintained by Buyer or one of
its subsidiaries, and the Buyer Defined Contribution Plans shall accept such
rollovers (including to the extent applicable any plan loans). The parties
acknowledge and agree that the Buyer Defined Contribution Plans are not required
in any case to accept "after-tax" contributions as part of any such rollover.
Sellers agree to provide Buyer with copies of the initial IRS favorable
determination letters with respect to the Savings Plans reasonably promptly
following their receipt of the same.
11.4. Pension Plans. The Sellers will retain all liability and
responsibility for the disposition of interests under the Raytheon TI Systems
Employees Pension Plan and the Raytheon TI Systems Supplemental Pension Plan and
Xxxxxx Non-Bargaining Retirement Plan and Xxxxxx Subsidiary Retirement Plan
(collectively, the "Pension Plans"), with respect to those employees (or their
beneficiaries) of the Ground EO Business or FPA Business who, as of the Closing
Date, are participants in any of the Pension Plans. Effective as of the Closing
Date, Sellers shall amend the Pension Plans so that, subject to the proviso set
forth below,
(i) the service of the Assumed Employees with the Buyer, if any, in
the Benefits Maintenance Period shall be recognized as service with the
Sellers for all plan purposes,
(ii) any compensation paid the Assumed Employees by the Buyer for
services rendered in the Benefits Maintenance Period shall be recognized as
compensation paid by the Sellers for all plan purposes,
(iii) those Assumed Employees in the FPA Business participating in the
Raytheon TI Systems Employees Pension Plan and the Raytheon TI Systems
Employees Supplemental Pension Plan who have at least 15 years of service
as of the Closing Date, are at least age 50 as of the Closing Date, and do
not terminate their employment with Buyer voluntarily, nor are terminated
for cause, within two years of the Closing Date, will be treated as on a
"Bridge to Retirement Leave of Absence" from their cessation of benefit
accruals under such Plan until first eligible for early retirement under
the relevant Plan,
(iv) those Assumed Employees in the Ground EO Business participating
in the contributory portion of the Xxxxxx Non-Bargaining Retirement Plan
who have at least 15 years of service "Continuous Service" (as defined in
that Plan) as of the later of (x) March 1,
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1999 and (y) the earlier of the end of the Benefits Maintenance Period and
March 31, 1999 (the "Determination Date"), are at least age 50 as of the
Determination Date, are within 5 years of satisfying the Rule of 75
contained in said Plan as of the Determination Date, and who execute an
agreement to arbitrate claims as required by such Plan will be entitled to
receive following their cessation of benefit accruals under such Plan the
reduced Rule of 75 benefit otherwise provided to Participants laid off in
such circumstances, and
(v) those Assumed Employees in the Ground EO Business participating in
the contributory portion of the Xxxxxx Non-Bargaining Retirement Plan who
have at least 15 years of "Continuous Service" (as defined in that Plan) as
of the Determination Date, are at least age 50 as of the Determination
Date, are within 5 years of satisfying the Rule of 75 contained in said
Plan as of the Determination Date, execute an agreement to arbitrate claims
as required by such Plan as well as a release and agreement to refund the
amounts paid pursuant to this clause (v) in the event of rehire by the
Sellers or their Affiliates and do not (x) terminate their employment with
Buyer voluntarily, nor (y) are terminated for cause (any termination other
than (x) and (y) to be deemed a "Qualified Termination"), within two years
of the Closing Date, shall be paid in cash by Sellers at the date of the
Assumed Employee's Qualified Termination or, if earlier, at the second
anniversary of the Closing Date, the value (determined as of each such
Employee's cessation of benefit accruals under such Plan), as reasonably
estimated by Sellers, of the difference between such reduced Rule of 75
benefit and the full Rule of 75 benefit such Assumed Employees might
otherwise have qualified for,
provided the Buyer shall have timely complied with any information request the
Sellers shall reasonably make to effect all such recognitions and otherwise
cooperated as reasonably requested by Sellers (including in collecting during
the Benefits Maintenance Period applicable employee contributions in respect of
Assumed Employees in the Ground EO Business who participate in the contributory
portion of the applicable Pension Plan) to effectuate the provision of such
benefit enhancements. The Sellers further agree that they will cause the accrued
benefit of each such employee under the Pension Plans as of the Closing Date to
be fully vested as of the Closing Date.
11.5. Incentive Plans. Attached as Schedule 11.5 is a description of the
Sellers' internal sales and marketing and other incentive plans relating to the
Businesses (the "Incentive Plans"). Sellers shall timely pay the Assumed
Employees all amounts accrued to the Closing Date in accordance with the terms
of the Incentive Plans. From and after the Closing Date, Assumed Employees shall
receive incentive plan amounts in accordance with and to the extent provided by
Buyers' incentive compensation arrangements.
11.6. Stock Options. One or more of the Assumed Employees hold options to
acquire shares of stock issued by the Sellers or one or more of their affiliates
("Outstanding Options"), which may not become exercisable in full as of the
Closing Date. In this paragraph, any Outstanding Option, or portion thereof,
which is not exercisable as of the Closing Date is referred to as an "Unvested
Outstanding Option". As and when each Unvested Outstanding Option expires in
accordance with its terms, Sellers shall pay the holder thereof an amount equal
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to the difference between the aggregate value as of the Closing Date of the
stock subject to such Unvested Outstanding Option, as reasonably determined by
Sellers in accordance with the terms of the relevant plans, and the aggregate
amount the holder of such Unvested Outstanding Option would have been required
to pay in order to exercise such Option.
Article 12
Certain Covenants
12.1. Third Party Consents.
(a) To the extent that any agreement constituting part of the Acquired
Assets is not capable of being transferred by the Sellers to the Buyer
pursuant to this Agreement without the consent, approval or waiver of a
third Person, and such consent is not obtained prior to the Closing, or if
such transfer or attempted transfer would constitute a breach thereof or a
violation of any law, rule or regulation in the absence of obtaining such
an approval, nothing in this Agreement will constitute a transfer or an
attempted transfer thereof. Each of the Buyer and the Sellers shall use
reasonable efforts at its own expense to obtain any such approvals.
(b) In the event that such consents, approvals and waivers referred to
in paragraph (a) are not obtained then the Sellers and the Buyer will each
use reasonable efforts, each at its own expense and in compliance with
applicable laws and regulations, to (i) provide to the Buyer the benefits
and burdens of any such agreement, (ii) cooperate in any reasonable and
lawful arrangement, including subcontracting, designed to provide such
benefits and burdens to the Buyer without incurring any obligation to any
other Person other than to provide such benefits to the Buyer, including
without limitation the appointment of the Buyer as the agent of the Sellers
for purposes of such agreement, and (iii) enforce, at the request of the
Buyer for the account of the Buyer, any rights of the Sellers arising from
any such agreement. With respect to any files and documentation relating to
any such contracts that are subject to third party proprietary
restrictions, the Sellers and Buyer will enter into arrangements as
described above to transition these materials to the Buyer.
12.2 Novation of Government Contracts.
(a) As soon as practicable following the Closing, the Buyer shall
prepare (with the Sellers' assistance), in accordance with Federal
Acquisition Regulations Part 42, (P) 42.12 and any applicable agency
regulations or policies, a written request meeting the requirements of the
Federal Acquisition Regulations Part 42, as reasonably interpreted by the
Responsible Contracting Officer (as such term is defined in Federal
Acquisition Regulations Part 42, (P) 42.1202(a)), which shall be submitted
by Sellers to each Responsible Contracting Officer, for the United States
Government (i) to recognize the Buyer as the Sellers' successor in interest
to all the Acquired Assets constituting a
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Government Contract; and (ii) to enter into a novation agreement (a
"Novation Agreement") in form and substance reasonably satisfactory to the
Buyer and the Sellers and their respective counsel, pursuant to which,
subject to the requirements of the Federal Acquisition Regulations Part 42,
all of Sellers' right, title and interest in and to, and all of the
Sellers' obligations and liabilities under, each such Government Contract
shall be validly conveyed, transferred and assigned and novated to the
Buyer by all parties thereto. The Sellers shall provide to the Buyer
promptly any information regarding the Sellers required in connection with
such request. The Sellers and the Buyer shall each use all reasonable
efforts to obtain all consents, approvals and waivers required for the
purpose of processing, entering into and completing the Novation Agreements
with regard to any of the Government Contracts, including responding to any
requests for information by the United States Government with regard to
such Novation Agreements. Until such time as the Novation Agreements are
completed, the Buyer and the applicable Seller will operate with respect to
the applicable Government Contract pursuant to the terms of an Agency
Designation in the form of Exhibit K hereto and the Buyer agrees that
pending novation it will perform the terms of such Government Contracts as
the Sellers' agent.
(b) In connection with obtaining the consents contemplated in Section
12.2(a) hereof, the Sellers shall not consent to any modification of any
Government Contract included in the Acquired Assets without the prior
written consent of the Buyer, not to be unreasonably withheld or delayed.
The parties agree that until all Government Contracts have been novated in
accordance with paragraphs (a) and (b) above, the Sellers shall wire to the
Buyer all payments received by them with respect to any Government Contract
performed by the Buyer and any of the billed and unbilled accounts receivables
included as part of the Acquired Assets as provided above by wire transfer on a
weekly basis, with interest at the prime rate less 1.5% for each day the Sellers
hold the funds more than one (1) business day, and the Sellers and Buyer will
operate with respect to such Government Contract as provided in Section 12.1(b).
12.3. Access to Books and Records.
(a) The Buyer agrees to cooperate with and to make available to the
Sellers such documents, books, records or information relating to the
operation of either of the Businesses prior to the Closing Date as the
Sellers may reasonably require after the Closing.
(b) The Buyer agrees to preserve and protect all books, records, files
and data referred to in paragraph (a) above for a period of six (6) years
after the Closing Date.
(c) The Buyer agrees not to destroy any files or records which are
subject to this Section 12.3 (i) for the period described in clause (b) of
this Section 12.3, and (ii) thereafter, without giving at least thirty (30)
days' notice to the Sellers. Upon receipt
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of such notice, the Sellers may (A) cause to be delivered to it the files
or records intended to be destroyed, at the Sellers' expense, or (B) notify
the Buyer that the Sellers will pay the cost of storing and maintaining
such files or records (including any necessary costs of moving such files
or records to a location under control of the Sellers).
12.4. Use of Certain Names. The Buyer agrees that promptly after the
Closing Date it will cease using any references to the Sellers, TI, Xxxxxx or
any of their respective Affiliates, except to the extent permitted under
Sections 2.6 or 2.7 of the EO Intellectual Property Agreement or Sections 2.6 or
2.7 of the FPA Intellectual Property Agreement.
12.5 Compliance With Final Judgment. After the Closing, the Buyer agrees to
be bound by the provisions of the Final Judgment. The Sellers acknowledge that
after the Closing Date they will continue to be bound by the Final Judgment.
12.6 Certain FPA Test Equipment. With respect to the test equipment used
occasionally in the FPA Business and described in Schedule 12.6, the Buyer shall
continue to have access to such equipment as contemplated by Section 1.3. In
addition, RTIS shall at its expense build equivalent test equipment for the
Buyer's sole use and ownership at no charge to Buyer.
12.7. Extension of HTI Teaming Agreement and Associate Contractor
Agreement.
(a) With respect to the Teaming Agreement, dated as of February 26,
1994 between Raytheon Company (as successor to Xxxxxx Aircraft Company
("HAC")) and RTIS (as assignee of Texas Instruments Incorporated) (the "HTI
Teaming Agreement") and the Associate Contractor Agreement, dated as of
June 18, 1997 between Raytheon (as successor to HAC) and RTIS (as assignee
of TI) (the "HTI ACA"), Raytheon is transferring its interest in the HTI
Teaming Agreement and the HTI ACA to the Buyer as part of the Acquired
Assets relating to the Ground EO Business. RTIS and the Buyer shall extend
the stated terms of the HTI Teaming Agreement and the HTI ACA to December
31, 2004 on terms similar in scope to the existing arrangements except as
contemplated by paragraph (b) below. The Buyer and Sellers also acknowledge
that such an extension would require approval of the DOJ, DOD and the U.S.
Government customer.
(b) The Sellers and the Buyer expect that the extensions of the
relationship contemplated by paragraph (a) above would continue in the form
of an associate contractor arrangement, but that continuing to satisfy
their customer on the HTI program through an associate contractor
arrangement will require the parties to maintain the performance and
cooperation shown to date by the HAC and TI (now Raytheon and RTIS) teams
working on the HTI program. If their customer on the HTI program wishes to
transition to a single contract environment, then the parties will convert
their relationship to a prime/subcontractor relationship, with the prime
contractor to be
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designated by RTIS and the Buyer by mutual agreement, with RTIS as the
preferred prime contractor. To the extent practicable, in connection with
this conversion, the parties will structure the work share balance to be
similar to the current arrangements.
(c) The Sellers and the Buyer acknowledge that the foregoing are
necessary for a successful business transition but additional activities
such as an aggressive cost reduction program and forward production pricing
commitments will be required.
(d) The Sellers and the Buyer agree to proceed expeditiously to
complete the extension contemplated by this Section 12.7 prior to Closing,
but completion of such extension is not a condition to Closing.
12.8. New LRAS3 Teaming Agreement and Extension of Associate Contractor
Arrangement.
(a) With respect to the LRAS3 program, and the existing EMD Associate
Contractor Agreement (the "LRAS3 ACA"), subject to the approval of DOJ, DOD
and the U.S. government customer, Raytheon will enter into a Teaming
Agreement for the LRAS3 EMD program (the "LRAS3 Teaming Agreement") and
extend the LRAS3 ACA. The LRAS3 Teaming Agreement and the LRAS3 ACA as
extended will have terms expiring December 31, 2004, and the LRAS3 Teaming
Agreement will have terms generally comparable to the HTI Teaming
Agreement.
(b) The Sellers and the Buyer expect that the extensions of the
relationship contemplated by paragraph (a) above would continue in the form
of an associate contractor arrangement, but that continuing to satisfy
their customer on the LRAS3 program through an associate contractor
arrangement will require the parties to maintain the performance and
cooperation shown to date by the HAC and TI (now Raytheon and RTIS) teams
working on the LRAS3 program. If their customers on the LRAS3 program wish
to transition to a single contract environment, then the parties will
convert their relationship to a prime/subcontractor relationship, with the
prime contractor to be designated by RTIS and the Buyer by mutual
agreement, with RTIS as the preferred prime contractor. To the extent
practicable, in connection with this conversion, the parties will structure
the work share balance to be similar to the current arrangements.
(c) The Sellers and the Buyer acknowledge that the foregoing are
necessary for a successful business transition but additional activities
such as an aggressive cost reduction program and forward production pricing
commitments will be required.
12.9. Information Technology Transition. The Sellers agree that, in
connection with the delivery of Acquired Assets and the treatment of shareduse
assets contemplated by Section 1.3, they will take the steps required to obtain
consents from software vendors or obtain new software licenses so that the Buyer
will have access to the software and information technology described in
Schedule 12.9. A description of the scope of the transitioning work and
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a budget and timetable is set forth in Schedule 12.9. The costs of completing
this transaction as contemplated will be borne by the Sellers, but only up to
the budgeted amounts in Schedule 12.9. At the Buyer's request, in connection
with this transitioning work the Sellers will purchase or furnish software for
the Buyer other than the software described in Schedule 12.9 and not including
any software that is proprietary to the Sellers, subject to the maximum budgets
set forth in Schedule 12.9. In the event that the Sellers and the Buyer are able
to mutually agree upon and implement changes to the partition plan described in
Schedule 12.9 which result in cost savings to the budgets described in Schedule
12.9, the Buyer will be entitled to payment of half of the saved amount, to be
paid by Sellers to the Buyer to be used by the Buyer to establish its
operational capability to compete effectively in the Businesses.
12.10 Pending REA. The Buyer acknowledges that the Pending REA is not being
transferred to the Buyer as part of the Acquired Assets. The Buyer agrees that
it will not, at any time, assert or otherwise pursue the Pending REA against
RTIS or any of its Affiliates. RTIS, both on its behalf and for its assignees
and Affiliates, agrees that it will not pursue the Pending REA Claim against the
customer.
12.11. Non-Solicitation.
(a) Prior to the third anniversary of the Closing Date, (i) the Sellers
shall not solicit to hire any individual who, on October 16, 1997, was an
employee of either of the Businesses and (ii) the Sellers shall not hire
any individual who, on October 16, 1997, was an employee of either of the
Businesses. Notwithstanding the foregoing, the Sellers may solicit to hire
and hire any individual referred to above if such individual's employment
with the Buyer had previously been terminated by the Buyer.
(b) Prior to the third anniversary of the Closing Date, (i) the Buyer shall
not solicit to hire any individual listed on Schedule 12.11 and (ii) the
Buyer shall not hire any individual listed on Schedule 12.11.
Notwithstanding the foregoing, the Buyer may solicit to hire and hire any
individual referred to above if such individual's employment with the
Sellers or any subsidiaries of the Sellers had previously been terminated
by a Seller or such other subsidiary of a Seller.
12.12. Mail and Other Communications Received After the Closing Date. The
Buyer and the Sellers will appoint representatives to discuss and agree upon
procedures, for each of the locations subject to the Subleases and Lease
Agreement, for the prompt receipt and delivery of mail or funds received by the
Sellers but relating to the Businesses or received by the Buyer but relating to
one of the Seller's other businesses.
12.13. Warranty Work. In the event any third party asserts a warranty or
similar claim in connection with the pre-Closing operation of the Businesses
that constitutes a Retained Liability, then at the request of the Sellers the
Buyer agrees to perform any required warranty repair or rework. The Sellers
agree to reimburse the Buyer for its cost plus 5% fee incurred in connection
with the foregoing.
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12.14. Interim Operating.
(a) With respect to the export licenses referred to in Schedule 9.5
and 10.5, the Sellers and the Buyer will meet the appropriate government
officials as promptly as practicable in order to assure a rapid transition
process and the Sellers will cooperate with and provide reasonable
assistance to the Buyer in connection with such transition process. During
a reasonable transition period but in any event only so long as it is
permitted by applicable law, at Buyer's request the Sellers will export
products of the Buyer under the Sellers' export licenses.
(b) With respect to the environmental permits set forth on Schedule
12.14, the Sellers agree to permit the Buyer to operate under these permits
for a reasonable transition period. The Buyer agrees to operate in
accordance with such permits. In addition, the Sellers will provide
reasonable assistance to the Buyer in connection with the Buyer obtaining
other required permits.
(c) The Buyer agrees to reimburse the Sellers for any outofpocket
costs incurred in connection with the arrangements described in (a) and (b)
above and to indemnify the Sellers against any claims or damages arising
out of the arrangements described in (a) and (b) above except to the extent
such claims or damages are caused by Sellers' gross negligence and willful.
12.15. Asbestos. In the event that the Buyer tears down walls or makes
other structural changes to any of the facilities subject to the Lease Agreement
or Subleases, it will be responsible for, and the Retained Liabilities will not
include, any costs associated with remediating or removing asbestos in the areas
affected by such structural changes triggered by such structural changes.
12.16. Palomar Products.
(a) With respect to Raytheon's EOS Supply Agreement dated October 6,
1995 (the PPI Supply Agreement") with Palomar Products Inc. ("PPI"),
Raytheon will provide reasonable cooperation to assist the Buyer in
obtaining a separate supply agreement with PPI. In connection therewith,
Raytheon will prior to the Closing provide its consent for PPI to utilize
know-how and/or proprietary data provided to PPI by Raytheon in connection
with proposals for or in the manufacturing of product for the Buyer.
(b) In the event that the Buyer is unable to obtain a separate supply
arrangement with PPI, Raytheon will cooperate to buy products from PPI
under its EOS Supply
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Agreement on behalf of the Buyer and sell to the Buyer at the PPI price,
plus an administrative fee in the amount of 1.5%.
12.17. TI Lessor Documents. The Sellers agree to use commercially
reasonable efforts (not requiring the payment of a consent fee or other amounts)
to obtain from TI nondisturbance agreements and landlord estoppel certificates
relating to the Subleases, in a form reasonably acceptable to the Buyer.
12.18. Physical Partitioning. In connection with the physical partitioning
provided for by the Transition Agreements to be entered into by the Sellers and
the Buyer pursuant to the Lease Agreement and Subleases, in the event the
Sellers and the Buyer are able to mutually agree upon and implement changes to
the partition plans which result in cost savings to the Sellers as compared to
their budgets (which are $14.2 million for Texas and $550,000 for El Segundo),
the Buyer will be entitled to payment of half of the saved amount, to be paid by
the Sellers to the Buyer to be used by the Buyer to establish its operational
capability to compete effectively in the Businesses.
12.19. TI Trademarks. If the VIP, HDVIP and/or SLICE PROCESSING trademarks
are owned by one of the Sellers or one of their Affiliates, then such trademarks
shall be conveyed to Buyer for no consideration. If such trademarks are owned by
TI, the Sellers agree to use their reasonable best efforts, which will not
require the payment by the Sellers of a transfer fee or other amount, to obtain
these trademarks from TI, unless the Buyer agrees to reimburse Sellers therefor.
In the event the Sellers ever obtain these trademarks from TI, they will
promptly transfer them to the Buyer for no consideration.
12.20. Xxxxxx Trademarks. In connection with the transition of tradenames
and trademarks contemplated by Sections 2.6 and 2.7 of the EO Intellectual
Property Agreement, the Sellers and the Buyer agree that they will share 50/50
the costs of such transition.
12.21. Xxxxx and Hexagon Software. At or promptly after the Closing, the
Sellers will furnish to the Buyer a copy of the Sellers' Xxxxx and Hexagon
software. The Buyer shall be responsible for all subsequent software
maintenance. Raytheon hereby grants to Buyer, effective as of the Closing Date,
a non-exclusive, perpetual, fully paid-up, royalty-free license to use the Xxxxx
and the Hexagon software.
12.22. Georgia Space.
(a) With respect to RSG's facility in LaGrange, Georgia (the "Georgia
Facility"), RSG agrees to provide space for one or more employees of the
Ground EO Business working on printed circuit board fabrication on the HTI
program. RSG and the Buyer estimate that this employee or employees will
require approximately 150 square feet of space. RSG will provide this space
so long as it is manufacturing circuit cards for the Ground EO Business for
the HTI program, which it expects to complete by September 30, 1998. The
Buyer agrees that it will cause this employee or employees to comply
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with RSG's rules and regulations. RSG will provide this space at no charge;
however, the Buyer will reimburse RSG for any costs incurred in furnishing
the space, with such reimbursement to be made promptly after reasonable
supporting documentation.
(b) With respect to the access described in paragraph (a) above, each
of Raytheon and the Buyer agrees to indemnify and hold harmless the other
with respect to:
(1) such party's breach of or noncompliance with any
Environmental Law relating to such party's occupancy or use of the
Georgia Facility during such access period; and
(2) any act, omission, event or circumstance resulting in any
release, discharge, disposal or emission on or adjacent to the Georgia
Facility, or release, discharge, disposal or emission from or adjacent
to the Georgia Facility, of any Hazardous Substance, regardless of
whether the act, omission, event or circumstance constituted a
violation of any Environmental Law at the time of the existence or
occurrence, to the extent caused by the acts or omissions of such
party, its employees, contractors or other invitees, agents, officers
or directors, occurring during such access period.
12.23. Termination of Agreement. The Sellers agree that, in the event the
condition referred to in Sections 9.4 and 10.4 is met, the Sellers will
terminate the Prior Sale Agreement.
12.24. Provision of Financial Information. Sellers shall provide reasonable
cooperation in providing information and documentation as (i) may be reasonably
required by the Buyer in connection with its financing arrangements and (ii) may
be reasonably necessary for Buyer to comply with applicable securities laws. The
Buyer will reimburse the Sellers for any out-of-pocket expenses incurred in
connection with the foregoing, including the fees of its outside accountants.
12.25. License Grants.
(a) RTIS hereby grants to the Buyer, effective upon the Closing, (i) a
non-exclusive, irrevocable, non-transferable (except an assignment
permitted under Section 18.3), world-wide, royalty free, fully paid up
license to use the patents described on Schedule 12.25 to make, have made,
use, develop, have developed, sell, offer for sale, distribute, export and
import A-Kits and B-Kits and components thereof for use in connection with
and for purposes of ground-based applications only and (ii) an option to
acquire a non-exclusive, irrevocable, non-transferable (except an
assignment permitted under Section 18.3), world-wide, royalty-bearing
license to use the patents described on Schedule 12.25 to make, have made,
use, develop, have developed, sell, offer for sale, distribute, export and
import electro-optical products, future generations thereof and components
thereof.
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(b) As a condition to the exercise of the option referred to in
paragraph (a)(ii) above, RTIS and the Buyer will agree on the terms of a
reasonable royalty to be paid with respect to such license.
12.26. Other Cooperation.
(a) To the extent that the Businesses as conducted by the Sellers have
benefited from volume discounts for germanium available to Sellers for
purchases made for the Businesses' and the Sellers' other operations
("volume discounts") and so long as the Sellers' are able to obtain
germanium at prices more favorable than those available to Buyer, the
Sellers agree to provide reasonable cooperation to the Buyer after the
Closing Date to combine orders for germanium (or use other similar
commercially reasonable methods) to ensure the availability of such volume
discounts for purchases made for the Businesses after the Closing Date.
Article 13
Indemnity
13.1. Indemnification by the Sellers.
The Sellers, jointly and severally and subject to the applicable
limits of liability hereinafter set forth, agree to defend, indemnify and
hold the Buyer (and its directors, officers, employees and Affiliates)
harmless from and with respect to any and all claims, liabilities, losses,
damages, costs and expenses (including without limitation the reasonable
fees and disbursements of counsel), net of insurance proceeds received
(collectively, "Losses"), incurred by the Buyer or any of its directors,
officers, employees or Affiliates, in connection with or arising out of:
(i) any breach by the Sellers of any representation or warranty
contained in Article 5 hereof;
(ii) any breach by the Sellers of any covenant, obligation or
undertaking made by the Sellers in this Agreement;
(iii) any of the Retained Liabilities, including without
limitation any Retained Environmental Liabilities and the Sellers'
failure to timely discharge any of the Retained Liabilities; and
(iv) any Defective Pricing Claims relating to proposals submitted
by Sellers prior to the Closing Date and relating to the Businesses
which have not resulted in definitive contracts as of the Closing
Date, and any failure of such proposals to comply as of the Closing
with government regulations applicable to the making of such
proposals, but in each case only if the Buyer does not subsequently
amend or modify the costs or pricing data forming a part of such
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proposals after the Closing Date (other than any amendment or
modification relating solely to the transfer of such proposal to the
Buyer pursuant to this Agreement) ("Open Bid Claims")
(v) any claim made or suit brought against Buyer prior to the
fifth anniversary of the Closing Date alleging that the Buyer's
making, having made, using, selling, offering for sale, distributing,
exporting or importing EO/FPA Products (as defined below) or
practicing EO/FPA Processes (as defined below) in connection with the
FPA Business and/or Ground EO Business (a "Covered Activity")
infringes any intellectual property right of any third party;
provided, however, that (1) Sellers shall be given exclusive control
of the defense of such claim or suit and all negotiations relative to
the settlement thereof, but Buyer shall have the right to be
represented in any such claim or suit by advisory counsel of its own
selection at is own expense and Sellers shall consult with any such
advisory counsel regarding the defense of any such claim or suit and
advise any such advisory counsel with respect to the settlement of
such claim or suit, (2) Buyer assists Sellers by providing all
information in Buyer's possession relevant to the defense or
settlement of any such claim or suit, which is reasonably requested by
Sellers, (3) Buyer promptly informs Sellers in writing of any such
claim of infringement or threat of any such claim (provided, however,
that the failure to provide such notice shall not relieve Sellers of
their obligations hereunder except to the extent Sellers are
prejudiced by such failure), (4) the claimed infringement arises as
the result of Covered Activities related to the EO/FPA Products or
EO/FPA Processes and not as a result of any modifications thereto made
by Buyer or as a result of combinations of any EO/FPA Product with
other components or any combination of any EO/FPA Process with any
other process, (5) if the claimed infringement can be avoided by
modifications to the EO/FPA Products requested by Sellers, Buyer
agrees to make such modifications at Sellers' expense, provided that
the form, fit and function of the EO/FPA Product and the manufacturing
cost (including capital costs) for such EO/FPA Product is not
adversely affected in any material way, (6) if the claimed
infringement can be avoided by modifications to the applicable EO/FPA
Process requested by Sellers, Buyer agrees to make such modification
at Sellers' expense, provided that the utility of the EO/FPA Process
and any related manufacturing cost (including capital costs) is not
adversely affected in any material way, and (7) the Covered Activity
is authorized by and within the scope of any applicable license grant,
the claimed infringement is not the result of Buyer's loss of any
intellectual property rights arising out of Buyer's breach of any
contractual obligations and the claimed infringement is not a claim of
infringement of TI Licensed Intellectual Property made by TI based on
Buyer's activities outside the scope of the sublicense grant to Buyer
of TI Licensed Intellectual Property. Sellers' liability under this
paragraph (v) is subject to the applicable provisions of Section 13.4
below. The Sellers will not make a settlement without the Buyer's
prior written consent, which consent shall not be unreasonably
withheld, if as a
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result of such settlement the Buyer would incur any obligation,
including if the Buyer would incur an obligation under the terms of
the proposed settlement not covered by the Sellers' indemnity, or if
such settlement would otherwise result in any detriment to the Buyer.
Sellers' obligations under this paragraph (v) shall not apply with
respect to infringement claims (x) arising out of patents issued after
the date of this Agreement or (y) with respect to claims arising out
of performance of contracts or supply of goods or services to
government agencies where the Covered Activities are subject to the
provisions of 28 U.S.C. 1498 or equivalent United States or foreign
law or regulation. For purposes of this paragraph (v) "EO/FPA
Product(s)" shall mean any EO Products or Transferred FPA Products
which have either been manufactured and offered for sale by Sellers
immediately prior to the Closing Date in connection with either the
FPA Business or the Ground EO Business or which are described in pages
70 to 78 of the Raytheon Electro-Optical Systems Descriptive
Memorandum of November, 1997 ("Offering Memorandum") and an "EO/FPA
Process" shall mean any process being practiced by Sellers for the
manufacture of EO/FPA Products in connection with the operation of the
Ground EO Business or the FPA Business prior to the Closing Date, or
which are described in pages 70 to 78 of the Offering Memorandum.
13.2. Indemnification by the Buyer. Subject to the applicable limits of
liability hereinafter set forth, the Buyer agrees to defend, indemnify and hold
the Sellers (and their directors, officers, employees and Affiliates) harmless
from and with respect to any and all Losses incurred by the Sellers or any of
their directors, officers, employees or Affiliates arising out of:
(i) any breach by the Buyer of any representation or warranty
contained in Article 6;
(ii) any breach by the Buyer of any covenant, obligation or
undertaking made by the Buyer in this Agreement (including the assumption
referred to in Article 2);
(iii) the transfer to or use by the Buyer of the Personnel Records; or
(iv) except for the Retained Liabilities, the operation of the
Businesses or the use of the Acquired Assets in the operation thereof after
the Closing Date.
13.3. Time Limitations. Neither the Sellers nor the Buyer shall be liable
to the other under this Article 13 for any claim relating to a breach of any
representation or warranty referred to in Section 13.1(i) or Section 13.2(i) (a
"Representation Claim") unless in the case of any Representation Claim, other
than under Section 5.4 ("Title Claims"), Section 5.10 ("ERISA Claims"), Sections
5.13 ("NonCompliance Claims") or Section 5.17 ("Enviro Claims"), the claim is
asserted in writing prior to the second anniversary of the Closing Date. Any
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NonCompliance Claim must be asserted in writing prior to the third anniversary
of the Closing Date. An Title Claim, ERISA Claim, Enviro Claim, Open Bid Claim
and any claim under Sections 13.1(ii) or 13.1(iii) or 13.2(ii) or 13.2(iii) or
13.2(iv) may be made at any time in the future, subject to any applicable
statute of limitations.
13.4. Dollar Thresholds.
(a) Neither the Sellers nor the Buyer shall be liable to the other for
any Representation Claim (i) if the total Losses with respect to such
Representation Claim, including any Representation Claims arising out of
the same event or series of related events, do not exceed $10,000 (a "Minor
Claim") or (ii) except to the extent that the cumulative amount of Losses
with respect to all Representation Claims asserted against the Buyer or the
Sellers, as applicable, excluding Minor Claims, exceeds $500,000, and then
only to the extent of such excess. Indemnification claims under Sections
13.1(ii) or 13.1(iii) or 13.1(iv) or 13.1(v) or 13.2(ii), 13.2(iii) or
13.2(iv) shall not be subject to any threshold or deductible amount.
(b) The total amount payable by the Sellers under Section 13.1(i) with
respect to all Representation Claims, other than Title Claims, ERISA Claims
and Enviro Claims and Representation Claims that also fall within the scope
of Section 13.1(iv), together with all claims under Section 13.1(v)
("Infringement Claims"), shall not exceed $18,000,000, the total amount
payable with respect to Open Bid Claims shall not exceed $22,190,000 and
the total amount payable under Section 13.1(ii) or Section 13.1(iii) shall
not be subject to any cap on liability. The total amount payable by the
Sellers with respect to Title Claims, ERISA Claims and Enviro Claims shall
not exceed the Purchase Price (as finally adjusted pursuant to Section 3.2)
less any amounts paid with respect to other Representation Claims and with
respect to Infringement Claims. All Representation Claims that also fall
within the scope of Section 13.1(iv) shall be treated as Open Bid Claims
for purposes of this Article 13. The total amount payable by the Buyer
under Section 13.2(i) with respect to all Representation Claims shall not
exceed $18,000,000 and the total amount payable by the Buyer under Sections
13.2(ii), 13.2(iii) or Section 13.2(iv) shall not be subject to any cap on
liability.
13.5. Indemnification Procedures.
(a) In the event that any party hereto (an "Indemnified Party")
desires to make a claim against another party hereto other than pursuant to
Section 13.1(v) (the "Indemnifying Party", which term shall include all
Indemnifying Parties if there be more than one) in connection with any
action, suit, proceeding or demand at any time instituted against or made
upon it for which it may seek indemnification hereunder (a "Third-Party
Claim"), the Indemnified Party shall promptly notify the Indemnifying Party
in writing of such Third-Party Claim and of its claims of indemnification
with respect thereto; provided, however, that the failure to provide such
notice shall not release the Indemnifying Party from any obligation under
this Article 13 except to the
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extent such Indemnifying Party is prejudiced by such failure. Upon receipt
of such notice from the Indemnified Party, the Indemnifying Party shall be
entitled to participate in the defense of such Third-Party Claim, and
assume the defense of such Third-Party Claim, and in the case of such an
assumption the Indemnifying Party shall have the authority to negotiate,
compromise and settle such Third-Party Claim; provided, that (i) the
Indemnifying Party shall not be entitled to settle any such Third-Party
Claim without the consent of the Indemnified Party unless as part of such
settlement the Indemnified Party is released from all liability with
respect to such Third-Party Claim and (ii) the Indemnified Party shall
cooperate with the Indemnifying Party in connection with the defense of
such Third Party Claim, and provide all information possessed by the
Indemnified Party relevant to the defense or settlement of such Third Party
Claim.
(b) The Indemnified Party shall retain the right to employ its own
counsel and to participate in the defense of any Third-Party Claim, the
defense of which has been assumed by an Indemnifying Party pursuant hereto,
but the claimant shall bear and shall be solely responsible for its own
costs and expenses in connection with such participation.
13.6. Election of Remedies. In the event the Buyer has a claim which falls
within the scope of more than one subparagraph of Section 13.1, the Buyer shall
be free to elect the subparagraph pursuant to which it asserts its claim (or to
assert its claim in the alternative under more than one subparagraph), except as
provided in the third sentence of Section 13.4(b). In the event the Sellers have
a claim which falls within the scope of more than one subparagraph of Section
13.2, the Sellers shall be free to elect the subparagraph pursuant to which they
asserts their claim (or to assert their claim in the alternative under more than
one subparagraph). Any claim which falls within the scope of Retained
Liabilities shall not be subject to the time and monetary limitations set forth
in Sections 13.3 and 13.4 even if such claim may also arise under any other
provisions of this Agreement under which recovery may otherwise be subject to
such limitations.
13.7. Environmental Matters. Section 4(g) of the Sublease relating to the
S/C Building and Section 3(f) of the Sublease relating to the Research West
Building provide that, with respect to indemnification for certain environmental
matters, RTIS will have the burden of proof to establish that such matter for
which indemnity is claimed was caused in part or entirely by Buyer, or in part
or entirely by a third party (other than TI under certain circumstances). That
burden of proof will also apply to any claim under this Article 13 relating to
Retained Environmental Liabilities and the facilities subject to the Subleases.
13.8. Scope of Indemnity. Except as provided in Article 14, each of the
Sellers and the Buyer acknowledges that, except for equitable relief, including
specific performance, its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions of this Article 13.
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Article 14
Tax Matters
14.1. General. The Sellers shall remain responsible for all Taxes (as
defined in Article 17) of the Sellers payable in connection with the operation
of either of the Businesses through the closing of business on the business day
immediately preceding the Closing Date, except for any Taxes that constitute
Assumed Obligations. The Sellers shall also remain responsible for the filing of
all related Tax Returns (as defined in Article 17).
14.2. Cooperation on Tax Matters; Conduct of Proceedings.
(a) The Buyer and the Sellers shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
preparation and filing of Tax Returns pursuant to this Article 14 and any
audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to such preparation and filing and to any audit, litigation or
other proceeding relating thereto and making employees available on a
mutually convenient basis to provide additional information and explanation
of any material provided hereunder.
(b) The Sellers shall be responsible for defending any audit,
litigation or other proceeding with respect to any Taxes of the Sellers for
which the Sellers are wholly or partially responsible for payment pursuant
to this Article 14 and shall have the authority to negotiate, compromise
and settle any such audit, litigation or other proceeding.
14.3. Allocation of Transfer and Property Taxes.
(a) All excise, sales, use, value added, registration stamp,
recording, documentary, conveyancing, franchise, property, transfer, gains
and similar Taxes, levies, charges and fees including any deficiencies,
interest, penalties, additions to Tax or additional amounts excluding any
Income Taxes (collectively, "Transfer Taxes") incurred in connection with
the transactions contemplated by this Agreement (including the Intellectual
Property Agreements) shall be shared equally by the Buyer and the Sellers.
Buyer and Sellers shall use reasonable efforts to minimize the amount of
all Transfer Taxes and shall cooperate in providing each other with any
appropriate resale exemption certifications and other similar
documentation. The party that is required by applicable law to make the
filings, reports or returns and to handle any audits or controversies with
respect to any applicable Transfer Taxes shall do so, and the other party
shall cooperate with respect thereto as necessary.
(b) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Acquired Assets for a
taxable period which
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includes (but does not end on) the Closing Date (collectively, the
"Apportioned Obligations") shall be apportioned between Sellers and Buyer
based on the number of days of such taxable period which fall on or before
the Closing Date (this and any other tax period which includes one or more
days falling on or before the Closing Date, a "Pre-Closing Tax Period") and
the number of days of such taxable period after the Closing Date (a
"Post-Closing Tax Period"). Except to the extent reflected on the Closing
Balance Sheets as an Assumed Obligation, Sellers shall be liable for the
proportionate amount of such taxes that is attributable to the Pre-Closing
Tax Period. Buyer shall be liable for any such taxes attributable to a
Pre-Closing Tax Period to the extent reflected on the Closing Balance
Sheets as an Assumed Obligation and Buyer shall be liable for the
proportionate amount of such taxes that is attributable to the Post-Closing
Tax Period. Upon receipt of any xxxx for real or personal property taxes
relating to the Acquired Assets, each of Sellers and Buyer shall present a
statement to the other setting forth the amount of reimbursement to which
each is entitled under this Section together with such supporting evidence
as is reasonably necessary to calculate the proration amount. The proration
amount shall be paid by the party owing it to the other within 30 days
after delivery of such statement. In the event that either Sellers or Buyer
shall make any payments for which it is entitled to reimbursement under
this Section, the other party shall make such reimbursement promptly but in
no event later than ten (10) days after the presentation of a statement
setting forth the amount of reimbursement to which the presenting party is
entitled along with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement.
14.4. Allowable Taxes.
(a) For purposes of this Section, "Allowable Tax" shall mean the
allocable share of any Tax of any Seller or any of its Affiliates which is
an allowable cost under the Federal Acquisition Regulation, 48 CFR Chapter
1, and associated regulations and agreements between any Seller and any
U.S. governmental entity, allocated based on the Sellers' existing finance
policy (as it is in effect on the date hereof).
(b) If Sellers have paid or reimbursed Buyer for any Allowable Tax
which is attributable to a Pre-Closing Tax Period, Buyer agrees to repay to
Sellers promptly upon receipt any portion of such Allowable Tax that Buyer
or any of its Affiliates is ultimately able to recover from the United
States government.
(c) If Buyer or any of its Affiliates receives a refund with respect
to an Allowable Tax that is attributable to a Pre-Closing Tax Period, Buyer
shall pay to Sellers the amount of such refund reduced by the amount, if
any, that Buyer will be required to pay to the United States government or
suffer by reason of offset in accordance with the Federal Acquisition
Regulation, 48 CFR Chapter 1, and associated regulations and agreements
between Seller and any U.S. governmental entity. If Sellers receive a
refund after the Closing Date with respect to an Allowable Tax that is
attributable to a Pre-Closing Tax Period, Sellers will pay to Buyer the
amount, if any, which Buyer will be
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required to pay to the U.S. government, or suffers by reason of an offset,
in accordance with the foregoing regulations.
(d) Sellers and Buyer agree to cooperate with respect to the
calculation of any amounts payable pursuant to this Section and to give
each other written notice of events reasonably likely to result in the
increase or decrease of any Allowable Tax attributable to a Pre-Closing Tax
Period.
14.5. Scope of Article 14.
(a) Notwithstanding the provisions of Article 13, the provisions of
this Article 14 (and not Article 13) shall govern the allocation of
responsibility between the Sellers and the Buyer for Taxes of the
Businesses.
(b) Claims under this Article 14 may be made by the Buyer and the
Seller at any time prior to the expiration of the statute of limitations
applicable to the Tax matter to which the Claim relates.
14.6. Payroll Taxes. To the extent such treatment is permitted by
applicable law, for purposes of computing payroll taxes since December 31, 1997,
the Sellers will be treated as a predecessor employer and Buyer agrees to treat
the Sellers as such.
Article 15
Termination, Amendment and Waiver
15.1. Termination. This Agreement may be terminated and abandoned at any
time prior to the Closing: (a) by either the Buyer or the Sellers in writing,
without liability to the non-terminating party on account of such termination,
if: (i) the Closing shall not have occurred on or before September 30, 1998 or,
in the event the DOJ provides an extension as contemplated by Section IV of the
Final Judgment, until the end of such extension, other than as a consequence of
the material breach or the material default of this Agreement by the terminating
party, (ii) there shall be a final nonappealable order of a federal or state
court in effect preventing consummation of the Acquisition; (iii) there shall be
any statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Acquisition by any Governmental Entity that would make
consummation of the Acquisition illegal or (iv) the DOJ or DOD object in
writing, pursuant to the Final Judgment, to the divestiture contemplated by this
Agreement, or notify the Sellers that it intends to so object; or (b) by mutual
written consent of the Sellers and the Buyer. In the event of the termination
and abandonment of this Agreement by the Sellers or the Buyer, as herein
provided, written notice thereof shall be given to the other party and this
Agreement shall terminate without any further action of the parties hereto.
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15.2. Effect of Termination. If this Agreement is terminated as provided
herein: (i) each party will redeliver all documents, work papers and other
material of the other party or parties relating to the transactions contemplated
hereby including such memoranda, notes, lists, records or other documents
compiled or derived from such material, whether so obtained before or after the
execution hereof, to the party furnishing the same; (ii) all information
received by any party hereto with respect to the business of the other parties
or their affiliated companies shall remain subject to the terms of the
Confidentiality Agreement (as defined in Article 16); and (iii) no party shall
have any liability or further obligation to any other party to this Agreement
except as provided by this Article 15, and except that any termination of this
Agreement shall not relieve a defaulting or breaching party from any liability
to the other party hereto. In addition, the provisions of Article 18 shall
remain in full force and effect and survive any termination of this Agreement.
Article 16
Confidentiality
16.1 Confidentiality Agreement. Any and all information disclosed by the
Buyer to the Sellers or by the Sellers to the Buyer as a result of the
negotiations leading to the execution of this Agreement, or in furtherance
thereof, which information was not already known to the Sellers or to the Buyer,
as the case may be, shall be subject to the Confidentiality Agreement, dated as
of November 20, 1997, between the Buyer and X.X. Xxxxxx & Co. Incorporated (the
"Confidentiality Agreement"), all of the provisions of which are incorporated
into this Section 16.1 by this reference. Notwithstanding the foregoing, the
Confidentiality Agreement shall terminate upon the Closing.
16.2. Classified Information. Buyer acknowledges that Know-How (as defined
in the Intellectual Property Agreements) and other intellectual property to be
disclosed to Buyer pursuant to this Agreement and/or the Intellectual Property
Agreements may be considered as classified information by the United States
Government and nothing in this Agreement or the Intellectual Property Agreements
shall require Sellers to disclose classified information to Buyer until such
time as Buyer has received necessary clearances from the United States
Government to receive same.
Article 17
Definitions
As used herein the following terms not otherwise defined have the following
respective meanings:
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. As used
in this definition the term "control" (including the
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terms "controlled by" and "under common control with") means, with respect to
the relationship between or among two or more Persons, the possession, directly
or indirectly or as trustee or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person. The term "control" (including
the terms "controlled by" and "under common control with") also includes
ownership of fifty percent (50%) or more of the voting securities of a Person.
"A-Kit" means all components necessary to fit a B-Kit into a particular
ground vehicle, including the optics, electronics, software, visual display,
stabilization, and fire control as required.
"Assigned Intellectual Property" means any intellectual property (other
than software, trademarks or trade names) provided to the Businesses pursuant to
licenses or sublicenses and transferred to the Buyer as part of the Business
Contracts.
"B-Kit" means the common components for second generation Forward Looking
Infrared Systems ("FLIRs") designed under the HTI program, including SADA II
integrated cooler/xxxxx detector assemblies, afocal assemblies, and associated
electronics.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Defective Pricing Claims" means any claims arising under the Truth in
Negotiations Act (10 USC ss. 2306(a)) because Sellers furnished cost or pricing
data that were not complete, accurate and current as certified in Certificates
of Current Cost or Pricing Data submitted by Sellers.
"DOD" means the Department of Defense.
"DOJ" means the Antitrust Division of the Department of Justice.
"Encumbrance" means all liens, security interests, pledges, charges,
mortgages, conditional sales agreements, title retention agreements and other
encumbrances.
"Environmental Law" means any applicable Federal, state, local or foreign
law, treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, approval, agreement or governmental restriction, each as in
effect on or prior to the Closing Date, relating to the environment, human
health, human safety or to any Hazardous Substance.
"EO/FPA Business Intellectual Property" means the "Raytheon Intellectual
Property", "Ground EO Business Intellectual Property", "FPA Business
Intellectual Property", "RTIS
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Intellectual Property" and "TI Licensed Intellectual Property" as defined in the
applicable Intellectual Property Agreement.
"EO Facilities" means that portion of the facilities located at 2000 and
0000 Xxxx Xx Xxxxxxx Xxxx., Xx Xxxxxxx, Xxxxxxxxxx and at 0000 Xxxxxxx Xxxx
Xxxx, XxXxxxxx, Xxxxxxx, XxXxxxxx, Xxxxxxx where the Ground EO Business is
currently conducted.
"EO Product" means electro-optical products.
"FPA" means a matrix of detectors or pixels made of material that is
sensitive to infrared ("IR") radiation, which is used to detect and analyze IR
radiation.
"FPA Business Intellectual Property" has the same meaning set forth in the
FPA Intellectual Property Agreement.
"FPA Facilities" means that portion of the S/C Building and the Research
West Building on the North Central Expressway in Dallas, Texas where the FPA
Business is currently conducted.
"GAAP" means generally accepted accounting principles which are consistent
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the applicable fiscal year.
"Government Contract" means (i) any contract, agreement, lease or
instrument relating to the Businesses between a Seller and any Governmental
Entity and (ii) any contract, agreement, lease or instrument relating to either
of the Businesses entered into by a Seller as subcontractor (at any tier) in
connection with a contract between another Person and any Governmental Entity.
"Governmental Entity" means any government or any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, Federal, state, local, transnational or foreign.
"Ground EO Business Intellectual Property" has the meaning set forth in the
EO Business Intellectual Property Agreement.
"Hazardous Substance" means any substance, pollutant, contaminant,
chemical, waste or material, including petroleum, its derivatives, by-products,
and other hydrocarbons, that is listed, identified in, or regulated under any
applicable Environmental Laws, including without limitation polychlorinated
biphenyls and asbestos.
"HTI" means the Horizontal Technology Integration program to develop a
common B-Kit to be used on different ground vehicle platforms.
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"IBAS" means the Improved Xxxxxxx Acquisition System, a program to upgrade
the sights on a Xxxxxxx Fighting Vehicle.
"Income Taxes" means any Taxes based upon or related to income, including
any Taxes calculated in whole or in part based upon net revenues.
"Indebtedness" as applied to any Person, means all indebtedness of such
Person to any other Person for borrowed money, whether current or funded, or
secured or unsecured and all such Indebtedness of any other Person which is
directly or indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured against loss, but not including the endorsement
of checks and similar instruments.
"Knowledge of the Sellers" or "to the Sellers' knowledge" means and is
limited to the actual knowledge of any of the following persons: Xxxxxxx
Xxxxxxx, Xxx Xxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx Xxxxx,
Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxxxxxxxx,
Xxxx Xxxxxxx, Xxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxx
Board, Xxxxxx Xxxxxxx, Xxxxx Xxxxxxx and Xxxxxx Xxxx.
"LRAS3" means the Long-Range Advanced Scout Surveillance System, a future
surveillance system to be mounted on light ground vehicles.
"M1-TIS" means the Thermal Imaging System for the M1 Xxxxxx tank.
"Material Adverse Effect" means any material adverse effect on the
operations, assets or financial condition of the Businesses taken as a whole.
"Non-Income Taxes" means any Taxes other than Income Taxes.
"Permitted Encumbrances" means Encumbrances that (i) arise out of Taxes not
in default and payable without penalty or interest or the validity of which is
being contested in good faith by appropriate proceedings, (ii) are mechanics',
carriers', workers', repairmen's, or other similar liens that do not,
individually or in the aggregate, have a Material Adverse Effect, (iii) in
connection with any agreement or instrument constituting part of the Acquired
Assets, relate to restrictions on transfer embodied in the terms of such
agreement or instrument, (iv) represent the rights of customers, suppliers and
subcontractors in the ordinary course of business under contracts or under
general principles of commercial law, (v) are referred to in Section 2.4 of the
FPA Intellectual Property Agreement and Section 2.4 of the EO Intellectual
Property Agreement or (vi) that individually and in the aggregate could not
reasonably be expected to interfere with the use of the Acquired Assets in the
conduct of the normal business operations of the Businesses.
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"Person" means any corporation, association, partnership, limited liability
company, organization, business, individual, government or political subdivision
thereof or governmental agency.
"XXXX" means the Standardized Advanced Xxxxx Assembly and consists of a
scanning FPA mounted in an evacuated xxxxx. The XXXX program is an effort by the
United States Army to develop a family of IR detectors that can be used in a
variety of battlefield systems.
"Tax" means any federal, state, provincial, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"Tax Return" Any return, declaration, report, claim for refund, information
return, or other document (including any related or supporting estimates,
elections, schedules, statements, or information) filed or required to be filed
in connection with the determination, assessment, or collection of any Tax or
the administration of any laws, regulations, or administrative requirements
relating to any Tax.
"Transferred FPA Product" means scanning and staring cooled IR detectors,
including all xxxxx and cryogenic cooler manufacturing and xxxxx and cryogenic
cooler assembly, but excluding uncooled FPAs and first generation cooled IR
detectors.
Article 18
General
18.1 Survival of Representations and Warranties. Each of the
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing and shall expire on the last day, if any, a claim for
breach of representation may be made under Section 13.3 with respect thereto.
18.2. Expenses. Except as expressly provided otherwise in this Agreement,
each party shall pay its own expenses and costs incidental to the preparation of
this Agreement and to the consummation of the transactions contemplated hereby.
18.3. Assigns. This Agreement may not be assigned in whole or in part by
either party hereto without the prior written consent of the other party.
otwithstanding the foregoing:
(i) at the Closing, subject to approval of the DOJ and DoD, the Buyer
may, pursuant to written notice to the Sellers, assign its rights hereunder
to
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acquire the Acquired Assets relating to the Ground EO Business or the FPA
Business, to assume the Assumed Obligations and to enter into the
applicable Transaction Documents to a whollyowned domestic subsidiary of
the Buyer (provided that (x) no such assignment shall relieve the Buyer of
any of its obligations hereunder, (y) both the Buyer and such assignee
shall be parties to the NonDisclosure Agreement and (z) at the Closing, the
Buyer shall execute and deliver to the Sellers a Guaranty Agreement in the
form of Exhibit L attached hereto); and
(ii) after the Closing, the Buyer may, pursuant to written notice to
the Sellers, assign its rights hereunder, insofar as they relate to either
the Ground EO Business or the FPA Business, and the applicable Transaction
Documents to any Affiliate of the Buyer (provided that (w) no such
assignment shall relieve the Buyer of any of its obligations hereunder, (x)
both the Buyer and such assignee shall be parties to the NonDisclosure
Agreement, (y) at the time of such assignment, the Buyer shall execute and
deliver to the Sellers a Guaranty Agreement in the form of Exhibit L
attached hereto) and (z) unless such assignment is to a whollyowned
domestic subsidiary of the Buyer, at the request of the Sellers the Buyer
will install at its cost information technology and security safeguards to
the extent required to eliminate any remaining contact between the
applicable portions of the Sellers' and Buyer's businesses; and
(iii) either party may assign this Agreement and the applicable
Transaction Documents to any successor in interest (whether by sale,
merger, consolidation or otherwise) to all or substantially all of such
party's business, and, in addition, any of the Sellers may assign this
Agreement to any successor in interest (whether by sale, merger,
consolidation or otherwise) to all or substantially all of Sellers' defense
business.
Any assignment of any rights under this Agreement by the Sellers or
the Buyer will be subject, in addition to any other requirements set forth
in this Agreement, (i) to compliance with applicable U.S. laws and
regulations governing control or export of products, technology and
technical data, including without limitation the U.S. International Traffic
in Arms Regulations, and other laws and regulations designed to protect the
national security of the United States and (ii) to the consent of TI as
provided in the FPA Intellectual Property Agreement, the FPA Master
Services Agreement and the TI Manufacturing Agreement. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns.
18.4. Entire Agreement, Etc. This Agreement (including the Schedules and
Exhibits and the Confidentiality Agreement) contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto.
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EXCEPT AS SET FORTH IN ARTICLE 5, SELLERS MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WITH RESPECT TO THE SALE OF THE ACQUIRED ASSETS HEREUNDER OR THE BUSINESSES.
18.5. Waiver of Certain Damages. EACH OF THE SELLERS AND THE BUYER TO THE
FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY
HAVE TO INCIDENTAL, CONSEQUENTIAL OR SPECIAL (INCLUDING PUNITIVE OR MULTIPLE)
DAMAGES BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS OR ACTIONS OF ANY OF THEM RELATING THERETO.
18.6. Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
18.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE CHOICE-OF-LAW RULES)
OF THE COMMONWEALTH OF MASSACHUSETTS.
18.8. Notices. All notices, requests, payments, instructions or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
If to the Sellers, to:
Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxx
with a copy sent contemporaneously to:
Xxxx X. Xxxxxxxxxxxx, Esq.
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
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If to the Buyer, to:
DRS Technologies, Inc.
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxx Xxxx
with a copy sent contemporaneously to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-715-1399
Attention: Xxxxx X. Tata
18.9. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
18.10. Section Headings. All enumerated subdivisions of this Agreement are
herein referred to as "section" or "subsection." The headings of sections or
subsections are for reference only and shall not limit or control the meaning
thereof.
18.11. Public Statements or Releases. The parties hereto each agree that
prior to the Closing no party to this Agreement shall make, issue or release any
public announcement, statement or acknowledgment of the existence of, or reveal
the status of, this Agreement or the transactions provided for herein, without
first obtaining the consent of the other party hereto. Nothing contained in this
Section 18.11 shall prevent any party from making such public announcements as
such party may consider necessary in order to satisfy such party's legal
obligations, provided that such disclosing party shall to the extent practicable
give prior notice to the other party of the contents of, and requirement for,
such disclosure.
18.12. No Third Party Beneficiaries. No Assumed Employee, Optional Employee
or other current or former employee of the Sellers or any of their Affiliates
(or respective spouses or beneficiaries of such persons), or any other person
not a named party to this Agreement, shall be entitled to assert any claim
hereunder. This Agreement shall be binding upon and inure to and benefit only
the named parties hereto and their respective successors. Notwithstanding any
other provisions to the contrary, except with respect to such successors, this
Agreement is not intended and shall not be construed for the benefit of any
thirdparty or person not a signatory hereto. In no event shall this Agreement
constitute a third party beneficiary contract.
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18.13. Disclosure in Schedules. For purposes of this Agreement, with
respect to any matter that is clearly disclosed in any portion of the Disclosure
Schedule in such a way as to make its relevance to the information called for by
another Section of this Agreement readily apparent, such matter shall be deemed
to have been included in the Disclosure Schedule in response to such other
Section, notwithstanding the omission of any appropriate crossreference thereto.
18.14. Arbitration.
(a) All disputes or claims arising under or in any way relating to
this Agreement or the Transaction Documents or to the acquisition of the
Businesses by the Buyer shall be settled by arbitration before a panel of
three (3) arbitrators (with one designated by the Sellers and one
designated by the Buyer, and the third arbitrator designated by the first
two) pursuant to the rules of the American Arbitration Association. Any
arbitrator designated by the Sellers or the Buyer must be an "Independent
Person". For the purposes of this Section 18.14, an "Independent Person"
shall be an individual who is not and has not been (i) a director, officer,
employee, agent or shareholder of either party hereto, (ii) a consultant to
either party hereto, (iii) a person with a direct or indirect financial
interest in any contract with either party hereto, (iv) a director, officer
or key employee of a company at a time when such company was party to a
contract with either party hereto, or (v) a relative of any person referred
to in clauses (i), (ii), (iii) or (iv) above. As used in the immediately
preceding sentence, the term "either party hereto" shall be deemed to
include any Affiliates of the parties hereto. Any such arbitration shall
take place in Boston, Massachusetts. Arbitration may be commenced at any
time by any party hereto giving written notice to the other party or
parties hereto that such dispute has been referred to arbitration under
this Section 18.14. The third arbitrator shall be selected as prescribed
above, but if the first two (2) arbitrators do not so agree within thirty
(30) days after the date of the notice referred to above, the selection
shall be made pursuant to the rules of the American Arbitration Association
from the Commercial Arbitration Panel maintained by such Association. Any
award rendered by the arbitrators shall be conclusive and binding upon the
parties hereto; provided, however, that any such award shall be accompanied
by a written opinion of the arbitrators giving the reasons for the award.
In making such award, the arbitrators shall be authorized to award interest
on any amount awarded. This provision for arbitration shall be specifically
enforceable by the Sellers and the Buyer and the decision of the
arbitrators in accordance herewith shall be final and binding and there
shall be no right of appeal therefrom. Each of the Sellers and the Buyer
shall pay its own expenses of arbitration and the expenses of the
arbitrators shall be equally shared; provided, however, that if in the
opinion of a majority of the arbitrators any claim or any defense or
objection thereto was frivolous or in bad faith, the arbitrators may
assess, as part of the award, all or any part of the arbitration expenses
of the other party (including reasonable attorneys' fees) and of the
arbitrators against the party raising such unreasonable claim, defense or
objection.
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(b) To the extent that arbitration may not be legally permitted
hereunder and the Sellers and the Buyer do not at the time of such dispute
or claim mutually agree to submit such dispute or claim to arbitration
either the Sellers or the Buyer may commence a civil action in a court of
appropriate jurisdiction to solve disputes or claims hereunder. Nothing
contained in this Section 18.14 shall prevent the Sellers and the Buyer
from settling any dispute or claim by mutual agreement at any time.
(c) Neither party shall be precluded hereby from seeking, from the
courts of any jurisdiction, provisional or equitable remedies of a type not
available in arbitration, including without limitation, temporary
restraining orders and preliminary or permanent injunctions, nor shall the
pursuit of such provisional or equitable relief constitute a waiver or
modification of such party's right and obligation to arbitrate any related
or unrelated dispute which is otherwise subject to arbitration under this
Agreement, unless such waiver is expressed in writing and signed by such
party. In the event any Person not a party to this Agreement shall commence
any interpleader or similar action which either directly or indirectly
raises issues which are subject to arbitration hereunder, the Sellers and
the Buyer shall seek a stay of such proceedings pending arbitration in
accordance with this Agreement.
(d) In the event of any Third Party Claim or any Infringement Claim
where the Indemnifying Party does not assume the defense of such Third
Party Claim, nothing in this Section 18.14 shall prevent the Indemnified
Party from impleading the Indemnifying Party or otherwise joining the
Indemnifying Party to any litigation relating to such Third Party Claim or
Infringement Claim.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
an instrument under seal as of the day and year first above written.
RAYTHEON COMPANY
By: /s/ XXXXX X. XXXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
RAYTHEON TI SYSTEMS, INC.
By: /s/ XXXXX X. XXXX
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: President
RAYTHEON SYSTEMS GEORGIA, INC.
By: /s/ XXXXXX X. XXXXX XX.
-----------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Secretary
DRS TECHNOLOGIES, INC.
By: /s/ XXXX XXXXXX
-----------------------------------------
Name: Xxxx Xxxxxx
Title: President
