EXHIBIT 10.4
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED XXXXXX CORPORATION
XXXXXX BROTHERS CAPITAL PARTNERS III, L.P.
XXXXX X. XXXXX
XXXXXX X. XXXXXXX
and
L-3 COMMUNICATIONS HOLDINGS, INC.
PERSONAL
AND
CONFIDENTIAL
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions . . . . . . . . . . . . . . . . 1
Section 2.02 Exchange Consideration . . . . . . . . . . . . . . . 4
Section 2.03 Adjustment of Exchange Consideration . . . . . . . . 4
Section 2.04 Closing . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.05 Cash True-Up . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LOCKHEED XXXXXX
Section 3.01 Representations and Warranties of Lockheed Xxxxxx . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Section 4.01 Representations and Warranties of Xxxxxx . . . . . . 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL PURCHASERS
Section 5.01 Representations and Warranties of the Individual
Purchasers . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO
Section 6.01 Representations and Warranties of Newco . . . . . . 8
ARTICLE VII
COVENANTS OF LOCKHEED XXXXXX
Section 7.01 Conduct of Business . . . . . . . . . . . . . . . . 8
Section 7.02 Access to Information; Confidentiality . . . . . . . 10
Section 7.03 Non-Solicitation of Offers . . . . . . . . . . . . . 12
Section 7.04 Non-Solicitation of Employees . . . . . . . . . . . 12
Section 7.05 Change of Lockbox Accounts . . . . . . . . . . . . . 13
Section 7.06 Access to Information; Cooperation After Closing . . 13
Section 7.07 Maintenance of Insurance Policies . . . . . . . . . 13
3
Section 7.08 Novation of Government Contracts . . . . . . . . . . 14
Section 7.09 Financial Statements . . . . . . . . . . . . . . . . 14
ARTICLE VIII
COVENANTS OF NEWCO AND THE PURCHASERS
Section 8.01 Confidentiality . . . . . . . . . . . . . . . . . . 15
Section 8.02 Provision and Preservation of and Access to Certain
Information; Cooperation . . . . . . . . . . . . . . 16
Section 8.03 Insurance; Financial Support Arrangements . . . . . 17
Section 8.04 Non-Solicitation of Employees . . . . . . . . . . . 20
Section 8.05 Financing . . . . . . . . . . . . . . . . . . . . . 21
Section 8.06 Use of Certain Trademarks, etc . . . . . . . . . . . 21
Section 8.07 Government Contract Novation; Cooperation . . . . . 21
Section 8.08 Reimbursement of Damages . . . . . . . . . . . . . . 22
ARTICLE IX
COVENANTS OF THE PARTIES
Section 9.01 Further Assurances . . . . . . . . . . . . . . . . . 22
Section 9.02 Certain Filings; Consents . . . . . . . . . . . . . 22
Section 9.03 Public Announcements . . . . . . . . . . . . . . . . 22
Section 9.04 Intellectual Property; License Agreements . . . . . 23
Section 9.05 HSR Act . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.06 Operation of Newco . . . . . . . . . . . . . . . . . 24
Section 9.07 Maintenance of Insurance Policies . . . . . . . . . 24
Section 9.08 Legal Privileges . . . . . . . . . . . . . . . . . . 25
Section 9.09 Non-Compete . . . . . . . . . . . . . . . . . . . . 25
ARTICLE X
TAX MATTERS
Section 10.01 Tax Matters . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XI
EMPLOYEE BENEFIT MATTERS
Section 11.01 Employee Benefit Matters . . . . . . . . . . . . . . 26
4
ARTICLE XII
CONDITIONS TO CLOSING
Section 12.01 Conditions to the Obligations of Each Party . . . . 26
Section 12.02 Conditions to Obligation of Newco and the Purchasers 27
Section 12.03 Conditions to Obligation of Lockheed Xxxxxx . . . . 28
Section 12.04 Effect of Waiver . . . . . . . . . . . . . . . . . . 28
ARTICLE XIII
SURVIVAL; INDEMNIFICATION
Section 13.01 Survival . . . . . . . . . . . . . . . . . . . . . . 29
Section 13.02 Indemnification. . . . . . . . . . . . . . . . . . . 30
Section 13.03 Procedures . . . . . . . . . . . . . . . . . . . . . 31
Section 13.04 Limitations . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIV
TERMINATION
Section 14.01 Termination . . . . . . . . . . . . . . . . . . . . 35
Section 14.02 Effect of Termination . . . . . . . . . . . . . . . 36
ARTICLE XV
MISCELLANEOUS
Section 15.01 Notices . . . . . . . . . . . . . . . . . . . . . . 37
Section 15.02 Amendments; Waivers . . . . . . . . . . . . . . . . 39
Section 15.03 Expenses . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.04 Successors and Assigns . . . . . . . . . . . . . . . 40
Section 15.05 Disclosure . . . . . . . . . . . . . . . . . . . . . 40
Section 15.06 Construction . . . . . . . . . . . . . . . . . . . . 40
Section 15.07 Entire Agreement . . . . . . . . . . . . . . . . . . 41
Section 15.08 Governing Law . . . . . . . . . . . . . . . . . . . 41
Section 15.09 Counterparts; Effectiveness . . . . . . . . . . . . 41
Section 15.10 Jurisdiction . . . . . . . . . . . . . . . . . . . . 41
Section 15.11 Captions . . . . . . . . . . . . . . . . . . . . . . 42
Section 15.12 Bulk Sales . . . . . . . . . . . . . . . . . . . . . 42
Section 15.13 Delivery of Disclosure Schedules; Certain
Attachments . . . . . . . . . . . . . . . . . . . . 42
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EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of Lockheed Xxxxxx
EXHIBIT C Representations and Warranties of Xxxxxx
EXHIBIT D Representations and Warranties of the Individual Purchasers
EXHIBIT E Representations and Warranties of Newco
EXHIBIT F Tax Matters
EXHIBIT G Employee Benefit Matters
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ATTACHMENTS
Attachment I Audited Business Financial Statements
Attachment II December Statement
Attachment III Transfer Agreement
Attachment IV Forms of Common Stock Subscription Agreements
Attachment V Form of Stockholders Agreement
Attachment VI Additional Matters Relating to the Calculation of
Net Tangible Assets
Attachment VII Form of Exchange Consideration Schedule
Attachment VIII Certificate of Incorporation of Newco
Attachment IX Bylaws of Newco
Attachment X Consents and Approvals Required Prior to Closing
Attachment XI Exceptions to Non-Solicitation of Employees
Attachment XII Lockheed Xxxxxx Legal Opinions
Attachment XIII Newco Legal Opinions
Attachment XIV Certain Employee Benefit Matters
Attachment XV Patents and Patent Applications Constituting
Transferred Assets
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TRANSACTION AGREEMENT
This Transaction Agreement (together with the Exhibits, Schedules and
Attachments hereto, this "Agreement") is made as of the 28th day of March,
1997, by and among Lockheed Xxxxxx Corporation, a Maryland corporation
("Lockheed Xxxxxx"), Xxxxxx Brothers Capital Partners III, L.P., a Delaware
limited partnership ("Xxxxxx"), Xxxxx X. Xxxxx ("Xxxxx"), Xxxxxx X. XxXxxxx
("XxXxxxx"; and together with Xxxxx, the "Individual Purchasers") and L-3
Communications Holdings, Inc., a Delaware corporation ("Newco"). For purposes
of this Agreement, Xxxxxx, Xxxxx and XxXxxxx each are individually referred to
as a "Purchaser" and collectively referred to as the "Purchasers."
W I T N E S S E T H:
WHEREAS, Lockheed Xxxxxx, in its own right and through certain of its
direct and indirect Subsidiaries is engaged in the Business;
WHEREAS, Lockheed Xxxxxx and the Purchasers, upon the terms and subject to
the conditions of this Agreement have agreed to the formation and organization
of Newco; and
WHEREAS, upon the terms and subject to the conditions of this Agreement,
Lockheed Xxxxxx desires to transfer, or to cause the Affiliated Transferors to
transfer, substantially all of the assets held or owned by, or used to conduct,
the Business and to assign certain liabilities associated with the Business to
Newco, and Newco desires to receive such assets and assume such liabilities;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Defined terms used in this Agreement shall have
the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions. Upon the terms and subject to the
conditions set forth in the Transaction Documents, the parties agree that at
the Closing, among other things:
(i) Lockheed Xxxxxx will transfer or cause to be transferred to Newco
all Transferred Assets and Newco will assume all Assumed Liabilities in
accordance with this Agreement and the terms of the Transfer Agreement
attached as Attachment III;
(ii) Newco will issue to Xxxxxx 10,020,000 shares of Newco Class A
Stock in exchange for $64,835,000 in cash;
(iii) Newco will issue to Xxxxx 1,500,000 shares of Newco Class B Stock
in exchange for $7,500,000 in cash;
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(iv) Newco will issue to XxXxxxx 1,500,000 shares of Newco Class B
Stock in exchange for $7,500,000 in cash; and
(v) Newco, Lockheed Xxxxxx and the Purchasers, as the case may be,
will enter into Common Stock Subscription Agreements and a Stockholders
Agreement in substantially the forms attached as Attachments IV and V,
will enter into License Agreements in the forms contemplated by Section
9.04, and will enter into an Exchange Agreement in substantially the form
attached to the Transfer Agreement attached as Attachment III;
(vi) Lockheed Xxxxxx and Newco will enter into a services agreement
for a term expiring on December 31, 1997 (other than with respect to
certain services to the Communications Systems Business Unit the term for
which shall be mutually agreed upon up to one year with a six-month option
exercisable by Newco) (which may be terminated (in whole or in part,
provided that related services may not be terminated in part) by the party
receiving such services upon 60 days advance written notice to the other
party at any time, it being understood that each party will use reasonable
commercial efforts to transition away from the other party as the source
for such services as soon as practicable) relating to the provision by the
Lockheed Xxxxxx Companies to Newco (or by Newco to the Lockheed Xxxxxx
Companies, as the case may be) following the Closing of certain services
(which may include making limited space and equipment available) of a type
provided by the Lockheed Xxxxxx Companies (other than services provided by
the Business Units or personnel at the location covered by the NY Leases)
to the Business (or services provided by the Business Units or the
personnel at the location covered by the NY Leases to the Lockheed Xxxxxx
Companies) as of the date of this Agreement, at costs consistent with past
practices (the "Interim Services Agreement"), which agreement is to be
negotiated by the parties in good faith prior to the Closing;
(vii) Lockheed Xxxxxx and Newco will enter into one or more supply
agreements to document intercompany work transfer agreements existing as
of the Closing or intercompany work transfer agreements or similar support
arrangements contemplated as of the Closing in connection with Bids in
existence as of the Closing between any of the Business Units and any of
the Lockheed Xxxxxx Companies, at prices and generally upon other terms
consistent with existing intercompany work transfer agreements, but
including such additional terms and conditions as are appropriate
(including indemnification and damage provisions consistent with the
underlying contract) to reflect the third-party nature of the agreements
(and in any event (1) including profit chargebacks (other than with
respect to the Eagle and Raptor programs) to Lockheed Xxxxxx of up to $1.9
million in 1997, $1.1 million in 1998, $700,000 in 1999 and $500,000 in
2000 consistent with the Long Range Plan for the Business prepared by
Lockheed Xxxxxx and previously provided to the Purchasers (the "Long Range
Plan"), but only to the extent in backlog at the Closing Date or
contemplated as of the Closing in connection with Bids in existence as of
the Closing, and in the case of the "Eagle" and "Raptor" (both long lead
material award and production award) programs, profit chargebacks to
Lockheed Xxxxxx of up to an aggregate of $1,000,000 and (2) providing
that, notwithstanding the terms of the Long Range Plan, after December 31,
2000 Newco shall not be entitled to any profit chargeback to Lockheed
Xxxxxx) (the "Supply Agreement"), which agreement is to be negotiated by
the parties in good faith prior to the Closing; and
9
(viii) Other than with respect to the matters referenced in clause (ix)
below, Lockheed Xxxxxx (and/or other Lockheed Xxxxxx Companies, as
appropriate) and Newco will enter into lease, sublease or assignment
agreements, as the case may be, in respect of those facilities used by the
Business Units on such terms and subject to such conditions as may be
negotiated by the parties in good faith prior to the Closing, it being
understood that such terms and conditions shall be consistent with
existing agreements; and
(ix) Lockheed Xxxxxx and Newco will enter into an agreement pursuant
to which (A)(1) Lockheed Xxxxxx will agree for a period beginning on the
Closing Date and ending on December 31, 1999, to lease 67,400 square feet
of space in Building 1 at the Communications Systems Business Unit at an
"all in" annual cost of $36.25 per square foot, (2) Newco will grant
Lockheed Xxxxxx an option (exercisable on or prior to December 31, 1998)
to continue to lease all of the space contemplated by the preceding clause
(A)(1) for the period from January 1, 2000 until March 14, 2003 at an "all
in" annual cost of $18.12 per square foot, and (3) Newco will agree to pay
Lockheed Xxxxxx $2,000,000 on the first Business Day of January 2000 in
the event that Lockheed Xxxxxx exercises the option contemplated by the
preceding clause (A)(2), and (B) Lockheed Xxxxxx will agree to lease on
behalf of its existing MAC-MAR business its current space in Building 1 at
the Communications Systems Business Unit at the current lease rates
through December 31, 1998, and will grant Newco the right, on a
year-to-year basis, to match any competing offer to provide space and
related services to MAC-MAR thereafter until the end of the current lease
term, it being understood that Newco must continue to use the services of
the MAC-MAR business as long as the MAC-MAR business is using Newco's
receiving services at the Communications Systems Business Unit.
Section 2.02 Exchange Consideration. The consideration to be paid to
Lockheed Xxxxxx and the Affiliated Transferors for the Transferred Assets (the
"Exchange Consideration") shall consist of the following:
(i) Subject to adjustment in accordance with Section 2.03 and
Section 2.04, $479,835,000 in cash;
(ii) 6,980,000 shares of Newco Class A Stock; and
(iii) Newco's assumption of the Assumed Liabilities in accordance
with this Agreement.
Section 2.03 Adjustment of Exchange Consideration.
(a) At least two Business Days prior to the Closing Date, Lockheed Xxxxxx
shall, in good faith and after consultation with the Individual Purchasers,
prepare an estimate of the Net Tangible Assets of the Business as of March 30
(if the Closing shall occur in April 1997) or April 27 (if the Closing shall
occur in May 1997) (such date being the date on which Lockheed Xxxxxx closes
its accounting books and records for the respective month and referred to as
the "Effective Date"; and such estimate being the "Estimated Final Net Tangible
Asset Amount") and shall provide a copy of its calculation of the Estimated
Final Net Tangible Asset Amount to Newco and the Purchasers.
(b) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Lockheed Xxxxxx shall, at its expense, with the
10
assistance of Newco prepare and submit to Newco an audited combined statement
of net tangible assets setting forth, in reasonable detail, Lockheed Xxxxxx'x
calculation of the Net Tangible Assets of the Business as of the close of
business on the Effective Date (the "Proposed Final Net Tangible Asset Amount")
together with an opinion of Ernst & Young LLP stating that such audited
combined statement of Net Tangible Assets presents fairly, in all material
respects, the Net Tangible Assets of the Business as of the close of business
on the Effective Date in accordance with the provisions of this Agreement. In
the event Newco disputes the correctness of the Proposed Final Net Tangible
Asset Amount, Newco shall notify Lockheed Xxxxxx of its objections within 45
days after receipt of Lockheed Xxxxxx'x calculation of the Proposed Final Net
Tangible Asset Amount and shall set forth, in writing and reasonable detail,
the reasons for Newco's objections. If Newco fails to deliver such notice of
objections within such time, Newco shall be deemed to have accepted Lockheed
Xxxxxx'x calculation. Lockheed Xxxxxx and Newco shall endeavor in good faith to
resolve any disputed items within 20 days after Lockheed Xxxxxx'x receipt of
Newco's notice of objections. If they are unable to do so, Lockheed Xxxxxx and
Newco shall select a nationally known independent accounting firm (other than
Ernst & Young LLP or Coopers & Xxxxxxx L.L.P.) to resolve the dispute (in a
manner consistent with Section 2.03(c) and with any items not in dispute), and
the determination of such firm in respect of the correctness of each item
remaining in dispute shall be conclusive and binding on Lockheed Xxxxxx and
Newco. The Net Tangible Assets of the Business as of the close of business on
the Effective Date as finally determined pursuant to this Section 2.03(b)
(whether by failure of Newco to deliver notice of objection, by agreement of
Lockheed Xxxxxx and Newco or by determination of the accountants selected as
set forth above) is referred to herein as the "Final Net Tangible Asset
Amount."
(c) The Estimated Final Net Tangible Asset Amount, the Proposed Final Net
Tangible Asset Amount and the Final Net Tangible Asset Amount shall be
determined in accordance with the accounting principles, policies, practices
and methods utilized in the preparation of the December Statement, as disclosed
in the notes to the December Statement, except as otherwise set forth in
Attachment VI.
(d) If the Final Net Tangible Asset Amount is greater than the Estimated
Final Net Tangible Asset Amount, the difference shall be paid to Lockheed
Xxxxxx by Newco with interest thereon from the Closing Date to the date of
payment at a rate per annum equal to the per annum interest rate announced from
time to time by Bank of America National Trust and Savings Association as its
reference rate in effect. If the Final Net Tangible Asset Amount is less than
the Estimated Final Net Tangible Asset Amount, the difference shall be paid to
Newco by Lockheed Xxxxxx with interest thereon from the Closing Date to the
date of payment at a rate per annum equal to the per annum interest rate
announced from time to time by Bank of America National Trust and Savings
Association as its reference rate in effect. Such payment shall be made in
immediately available funds not later than five Business Days after the
determination of the Final Net Tangible Asset Amount by wire transfer to a bank
account designated in writing by the party entitled to receive the payment;
provided, however, if Newco is prohibited from making such payment by the
financing arrangements of Newco in effect as of the Closing Date, then, in lieu
of making any payment in excess of the sum of (i) the difference between
$479,835,000 and the amount of the payment actually made pursuant to Section
2.04(i) and (ii) $5,000,000 by wire transfer in immediately available funds,
Newco may deliver to Lockheed Xxxxxx in satisfaction of its obligation in
excess of such sum a subordinated note
11
the principal amount of which shall equal such excess and providing for
repayment thereof in eight consecutive equal quarterly payments of principal
together with interest thereon, with an interest rate and such other terms and
conditions that reflect the financial condition of Newco and would be available
to Newco for similar subordinated debt on the date the subordinated note is
delivered to Lockheed Xxxxxx by Newco, which subordinated note is to be
negotiated by the parties in good faith in the event such subordinated note is
required to be issued pursuant to the terms hereof.
(e) Lockheed Xxxxxx shall make available and shall cause Ernst & Young LLP
to make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Ernst &
Young LLP shall impose, the books, records, documents and work papers
underlying the preparation and audit of the December Statement and the
calculation of the Proposed Final Net Tangible Asset Amount. Newco and the
Purchasers shall make available and shall cause Coopers & Xxxxxxx L.L.P. to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Coopers &
Xxxxxxx L.L.P. shall impose, the books, records, documents and work papers
created or prepared by or for Newco in connection with the review of the
Proposed Final Net Tangible Asset Amount and the other matters contemplated by
Section 2.03(b).
(f) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between Lockheed Xxxxxx and Newco in accordance with
Section 2.03(b) shall be paid one-half by Lockheed Xxxxxx and one-half by
Newco.
Section 2.04 Closing. The closing (the "Closing") of the Contemplated
Transactions shall take place at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx on April 25, 1997, provided, however, that
if all of the conditions to Closing set forth in Article XII have not been
satisfied (or waived) as of that date and if closing on that date therefore
would be impractical, the Closing shall take place on the fifth Business Day
following the satisfaction or waiver (by the party entitled to waive the
condition) of all conditions to the Closing set forth in Article XII, or at
such other time and place as the parties to this Agreement may agree. The
Closing will occur at 9:00 a.m. on the Closing Date. At the Closing, among
other things:
(i) Newco shall pay and deliver to Lockheed Xxxxxx, for its own
account and as agent for the Affiliated Transferors, $479,835,000 (minus
the difference between the Estimated Final Net Tangible Asset Amount and
$269,118,000 in the event the Estimated Final Net Tangible Asset Amount is
less than $269,118,000) in immediately available funds by wire transfer to
an account designated by Lockheed Xxxxxx (which account shall be
designated by Lockheed Xxxxxx by written notice to Newco at least two
Business Days prior to the Closing Date, or such shorter notice as Newco
shall agree to accept);
(ii) Newco shall issue to Lockheed Xxxxxx, for its own account and as
agent for the Affiliated Transferors, 6,980,000 shares of Newco Class A
Stock;
(iii) Newco shall issue to Xxxxxx 10,020,000 shares of Newco Class A
Stock in exchange for Xxxxxx paying and delivering to Newco $64,835,000 in
immediately available funds by wire transfer to an account designated
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by Newco (which account shall be designated by Newco by written notice to
Xxxxxx at least two Business Days prior to the Closing Date, or such
shorter notice as Xxxxxx shall agree to accept);
(iv) Newco shall issue to Xxxxx 1,500,000 shares of Newco Class B
Stock in exchange for Xxxxx paying and delivering to Newco $7,500,000 in
immediately available funds by wire transfer to an account designated by
Newco (which account shall be designated by Newco by written notice to
Xxxxx at least two Business Days prior to the Closing Date, or such
shorter notice as Xxxxx shall agree to accept); and
(v) Newco shall issue to XxXxxxx 1,500,000 shares of Newco Class B
Stock in exchange for XxXxxxx paying and delivering to Newco $7,500,000 in
immediately available funds by wire transfer to an account designated by
Newco (which account shall be designated by Newco by written notice to
XxXxxxx at least two Business Days prior to the Closing Date, or such
shorter notice as XxXxxxx shall agree to accept).
Section 2.05 Cash True-Up. Within fifteen Business Days after the Closing
Date, Lockheed Xxxxxx shall prepare and deliver to Newco a schedule setting
forth, on a daily basis, the cash generated by the Business from 12:01 a.m. on
the first day following the Effective Date (after subtracting any cash
investments made by any of the Lockheed Xxxxxx Companies in or for the benefit
of the Business after the Effective Date and the amount of any checks drawn on
the accounts of any of the Lockheed Xxxxxx Companies prior to Closing Date but
not yet debited from such accounts as of the close of business on the day prior
to the Closing Date). Within five Business Days of receipt of the foregoing
schedule, Newco shall make payment to Lockheed Xxxxxx if the schedule shows a
net cash usage by the Business during the period referenced in the preceding
sentence and Lockheed Xxxxxx shall make payment to Newco if the schedule shows
net cash generation during such period in an amount equal to such net cash
usage or net cash generation, as the case may be. Lockheed Xxxxxx shall give
Newco reasonable access to its books and records for the purpose of confirming
the calculations of Lockheed Xxxxxx pursuant to this Section 2.05. Any payment
made hereunder shall be made in immediately available funds by wire transfer to
a bank account designated in writing by the party entitled to receive the
payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LOCKHEED XXXXXX
Section 3.01 Representations and Warranties of Lockheed Xxxxxx. Lockheed
Xxxxxx represents and warrants prior to but not after the Closing to the
Purchasers, and as of and after the Closing to Newco, as set forth in Exhibit
B.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Section 4.01 Representations and Warranties of Xxxxxx. Xxxxxx represents
and warrants to Lockheed Xxxxxx, Newco and the Individual Purchasers as set
forth in Exhibit C.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL PURCHASERS
Section 5.01 Representations and Warranties of the Individual Purchasers.
Each of the Individual Purchasers represents and warrants to Lockheed Xxxxxx,
Newco and Xxxxxx as set forth in Exhibit D.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO
Section 6.01 Representations and Warranties of Newco. Newco represents
and warrants to Lockheed Xxxxxx and the Purchasers as set forth in Exhibit E.
ARTICLE VII
COVENANTS OF LOCKHEED XXXXXX
Section 7.01 Conduct of Business. From the date of this Agreement until
the Closing Date, except with the written consent of either of the Individual
Purchasers (which consent may not be unreasonably withheld or delayed) the
Lockheed Xxxxxx Companies shall conduct the Business in all material respects
in accordance with the historical and customary operating practices relating to
the conduct of the Business (except that Lockheed Xxxxxx and the Affiliated
Transferors may sell or otherwise dispose of obsolete Inventory whether or not
in accordance with such practices and shall cause its Subsidiaries to use
reasonable commercial efforts to preserve intact the Business and its
relationships with third parties. Without limiting the generality of the
foregoing, from the date of this Agreement through the Closing Date, subject to
any exceptions required to comply with Applicable Laws, the Lockheed Xxxxxx
Companies shall not, without the written consent of either of the Individual
Purchasers (which consent may not be unreasonably withheld or delayed):
(i) make any capital expenditure, or group of related capital
expenditures (other than as contemplated by the Long Range Plan) relating
to the Business in excess of $250,000;
(ii) sell or dispose of more than an aggregate of $250,000 of assets
(other than the sale of Inventory, any sale made in the ordinary course of
business, and other than pursuant to Bids or Contracts in existence on the
date of this Agreement) that would constitute Transferred Assets if owned,
held or used by any of the Lockheed Xxxxxx Companies on the Closing Date;
(iii) amend, modify, or terminate any Contract where the effect of such
amendment, modification or termination would be a decrease in the backlog
value of the relevant Contract or a decrease in the payments to be
received or made by Newco, in any such case by $250,000 or more;
(iv) submit any Bid which, if accepted, would result in a fixed price
Contract that would constitute a Transferred Asset with a backlog value in
excess of (1) $5,000,000 in the case of a fixed price
14
production Contract, or (2) $1,000,000 in the case of a fixed price
development Contract;
(v) except as required by Contracts in existence as of the date of
this Agreement or in the ordinary course of business, sell, transfer,
license or otherwise dispose of, any Intellectual Property relating to the
Business;
(vi) enter into any (1) fixed price production Contracts (other than
pursuant to a Bid in existence as of the date of this Agreement) that
would constitute a Transferred Asset if held by any of the Lockheed Xxxxxx
Companies on the Closing Date with a backlog value in excess of
$5,000,000, or (2) fixed price development Contracts (other than pursuant
to a Bid in existence as of the date of this Agreement) that would
constitute a Transferred Asset if held by any of the Lockheed Xxxxxx
Companies on the Closing Date with a backlog value in excess of
$1,000,000;
(vii) terminate the coverage of any policies of title, liability, fire,
workers' compensation, property and any other form of insurance covering
the Transferred Assets or operations of the Business, except where the
termination could not reasonably be expected to have a Material Adverse
Effect on the Business;
(viii) settle any lawsuit or claim if such settlement imposes a material
continuing non-monetary obligation on the Business or any of the
Transferred Assets;
(ix) except in respect of the Individual Purchasers, grant any new or
modified severance or termination arrangement or increase or accelerate in
any material respect any benefits payable under its severance or
termination pay policies in effect on the date of this Agreement with
respect to any Transferred Employee;
(x) other than with respect to the Individual Purchasers, except as
may be otherwise permitted or required by this Agreement, and except as
contemplated by Attachment XIV, adopt or amend in any material respect any
bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit or welfare of
any Transferred Employee or, other than compensation increases for
individuals below the level of vice president in the ordinary course of
business or compensation increases for individuals at the level of vice
president and above in accordance with nondiscretionary provisions of the
Employee Plans or Benefit Arrangements disclosed in Section B.21 of the
Disclosure Schedules or referenced in Exhibit G, increase the compensation
or fringe benefits of any Transferred Employee or pay any benefit not
required by any Employee Plan, Benefit Arrangement or any agreement with
respect to any Transferred Employee; and
(xi) effectuate a "plant closing" or "mass layoff," as those terms are
defined in WARN, affecting in whole or in part any site of employment,
facility, operating unit or employee of the Business, without complying
with the notice requirements and other provisions of WARN.
15
Section 7.02 Access to Information; Confidentiality.
(a) Except as may be necessary to comply with any Applicable Laws
(including, without limitation, any requirements with respect to security
clearances) and subject to any applicable privileges (including, without
limitation, the attorney-client privilege), from the date of this Agreement
until the Closing Date, Lockheed Xxxxxx will (a) give the Purchasers and their
Representatives reasonable access to the records of the Lockheed Xxxxxx
Companies relating to the Business during normal business hours and upon
reasonable prior notice, (b) give the Purchasers and their Representatives
reasonable access to any facilities the possession of which will be transferred
to Newco at Closing during normal business hours and upon reasonable prior
notice for the purpose of Purchasers' conduct of a Phase I Environmental Audit
of such facilities or documentary diligence, (c) furnish to the Purchasers and
their Representatives such financial and operating data and other information
relating to the Business as the Purchasers may reasonably request and (d)
instruct the employees and Representatives of the Lockheed Xxxxxx Companies to
cooperate with the Purchasers in their investigation of the Business. Without
limiting the generality of the foregoing, subject to the limitations set forth
in the first sentence of this Section 7.02(a), (i) Lockheed Xxxxxx shall use
reasonable commercial efforts to enable the Purchasers and the Purchasers'
Representatives to conduct, at the Purchasers' own expense, business and
financial reviews, investigations and studies as to the operation of the
various Business Units, including any tax, operating or other efficiencies that
may be achieved and (ii) from the date of this Agreement to the Closing Date,
Lockheed Xxxxxx shall give the Purchasers and their Representatives access to
information relating to the Business of the type, and with the same level of
detail, as in the ordinary course of business is made available to the
presidents or chief financial officers of the Business Units. Notwithstanding
the foregoing, the Purchasers shall not have access to personnel records of any
of the Lockheed Xxxxxx Companies relating to individual performance or
evaluation records, medical histories or other information which in Lockheed
Xxxxxx'x good faith opinion is sensitive or the disclosure of which could
subject any of the Lockheed Xxxxxx Companies to risk of liability.
(b) For a period of three years after the Closing Date, the Lockheed
Xxxxxx Companies will treat and hold as such, any confidential information
concerning the operations or affairs of the Business. In the event any of the
Lockheed Xxxxxx Companies is requested or required (by oral or written request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process or by Applicable Law) to disclose
any such confidential information, then Lockheed Xxxxxx will notify Newco
promptly of the request or requirement so that Newco, at its expense, may seek
an appropriate protective order or waive compliance with this Section 7.02(b).
If, in the absence of a protective order or receipt of a waiver hereunder, any
of the Lockheed Xxxxxx Companies is, on the advice of counsel, compelled to
disclose such confidential information the Lockheed Xxxxxx Company may so
disclose the confidential information, provided that the Lockheed Xxxxxx
Company will use its reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded to such confidential information. The
provisions of this Section 7.02(b) will not be deemed to prohibit the
disclosure of confidential information concerning the operations or affairs of
the Business by any of the Lockheed Xxxxxx Companies to the extent reasonably
required (i) to prepare or complete any required tax returns or financial
statements, (ii) in connection with audits or other proceedings by or on behalf
of a Governmental Authority, (iii) in connection
16
with any insurance or benefits claims, (iv) to the extent necessary to comply
with any Applicable Laws, (v) to provide services to Newco in accordance with
the Interim Services Agreement, or (vi) in connection with any other similar
administrative functions in the ordinary course of business. Notwithstanding
the foregoing, the provisions of this Section 7.02(b) shall not apply to
information that (i) is or becomes publicly available other than as a result of
a disclosure by any of the Lockheed Xxxxxx Companies, (ii) is or becomes
available to a Lockheed Xxxxxx Company on a non-confidential basis from a
source that, to Lockheed Xxxxxx'x knowledge, is not prohibited from disclosing
such information by a legal, contractual or fiduciary obligation, or (iii) is
or has been independently developed by a Lockheed Xxxxxx Company (other than
solely for the Business or by one of the Business Units). This Section 7.02(b)
shall not apply to the disclosure of confidential information concerning the
Instrumentation Recorder Product Line of Advanced Recorders in connection with
or after the sale thereof to a purchaser or potential purchaser (other than
Newco); provided, however, that such disclosure may only be made pursuant to a
confidentiality agreement containing reasonable terms and conditions.
Section 7.03 Non-Solicitation of Offers. From the date of this Agreement
to the earlier of the Closing Date or the termination of this Agreement,
Lockheed Xxxxxx shall not, and Lockheed Xxxxxx shall not authorize or permit
any of its Representatives to, directly or indirectly (through Affiliates or
otherwise), (i) solicit, initiate or take any action knowingly to facilitate
the submission of inquiries, proposals or offers from any Person (other than
Newco) relating to any acquisition or purchase of all or a substantial part of
the Business, in one transaction or a series of related transactions (whether
by asset or stock sale, business combination transaction or otherwise),
(collectively, the "Alternative Transaction Proposals"), or (ii) enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or furnish to any other Person any information with respect to the Business
(other than in the ordinary course of operating the Business and in connection
with the possible sale of the Instrumentation Recorder Product Line of Advanced
Recorders) or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or
seek any of the foregoing. Except to the extent that it is prohibited from
doing so by contractual agreements that were in existence as of January 31,
1997 (of which there are two), if Lockheed Xxxxxx, directly or indirectly,
receives an Alternative Transaction Proposal, Lockheed Xxxxxx shall promptly
inform the Purchasers of the terms and conditions of the Alternative
Transaction Proposal and the identity of the Person making it.
Section 7.04 Non-Solicitation of Employees. From and after the date of
this Agreement until the second anniversary of the Closing Date, Lockheed
Xxxxxx shall not, without prior written approval of Newco, directly or
indirectly (through Affiliates or otherwise), knowingly solicit any individual
(other than individuals identified in Attachment XI) who at that time is an
employee of the Business to terminate his or her relationship with the Business
and will not knowingly hire any individual inadvertently solicited; provided,
however, that the foregoing shall not apply to (i) individuals solicited or
hired as a result of the use of an independent employment agency (so long as
the agency was not directed to solicit such individual and Lockheed Xxxxxx,
promptly following execution of this Agreement, advises the Vice President for
Human Resources of each Operating Sector of Lockheed Xxxxxx of the provisions
of this Section 7.04), and (ii) individuals solicited or hired as a result of
the use of a general
17
solicitation (such as an advertisement) not specifically directed to
employees of the Business.
Section 7.05 Change of Lockbox Accounts. Immediately after the Closing,
Lockheed Xxxxxx shall take such steps as Newco may reasonably request to cause
Newco to be substituted as the sole party having control over any lockbox or
similar bank account maintained exclusively by the Business Units to which
customers of the Business directly make payments in respect of the Business or
to direct the bank at which any such lockbox or similar account is maintained
to transfer any payments made thereto to an account established by Newco.
Section 7.06 Access to Information; Cooperation After Closing. On and
after the Closing Date and subject to any applicable privileges (including,
without limitation, the attorney-client privilege), Lockheed Xxxxxx shall, and
shall cause each of the other Lockheed Xxxxxx Companies to, at their expense
(i) afford Newco and its Representatives reasonable access upon reasonable
prior notice during normal business hours, to all employees, offices,
properties, agreements, records, books and affairs of the Lockheed Xxxxxx
Companies to the extent relating to the Business, (ii) provide copies of such
information concerning the Business as Newco may reasonably request for any
proper purpose, including, without limitation, in connection with any public or
private offering of securities by Newco or the preparation of any financial
statements or in connection with any judicial, quasi judicial, administrative,
or arbitration proceeding or audit (provided, however, that except as otherwise
provided in writing signed by an officer of Lockheed Xxxxxx specifically
approving the use of such information, the specific purpose for which such
information is to be used therein and the specific representations and
warranties at issue, Lockheed Xxxxxx makes no representations or warranties to
the Purchasers, Newco or any other Person in respect of any such information)
and (iii) cooperate fully with Newco for any proper purpose, including, without
limitation, in the defense or pursuit of any Transferred Asset, Assumed
Liability or any claim or action that relates to occurrences involving the
Business prior to the Closing Date.
Section 7.07 Maintenance of Insurance Policies. Except as otherwise
provided in Exhibit G, on and after the date of this Agreement and until the
Closing Date, Lockheed Xxxxxx shall not take or fail to take any action if such
action or inaction, as the case may be, would adversely affect the
applicability of any insurance (including reinsurance) in effect on the date of
this Agreement that covers all or any part of the assets that would constitute
Transferred Assets if owned, held or used by any of the Lockheed Xxxxxx
Companies on the Closing Date, the Business or the Transferred Employees.
Except as otherwise provided in Exhibit G or as may otherwise be agreed in
writing by the parties, Lockheed Xxxxxx shall not have any obligation to
maintain the effectiveness of any such insurance policy after the Closing Date
or to make any monetary payment in connection with any such policy.
Section 7.08 Novation of Government Contracts. As soon as is reasonably
practicable following the Closing, Lockheed Xxxxxx shall, in accordance with
Federal Acquisition Regulations Part 42, Section 42.12, submit in writing to
each Responsible Contracting Officer (as such term is defined in Federal
Acquisition Regulations Part 42, Section 42.102(a)), a request for the U.S.
Government to (i) recognize Newco as the successor in interest to all of the
Government Contracts being sold, assigned, transferred and conveyed to Newco in
accordance with this Agreement and (ii) enter into a
18
novation agreement (the "Novation Agreement") substantially in the form
contemplated by such regulations. Lockheed Xxxxxx shall use commercially
reasonable efforts to obtain all consents, approvals and waivers required for
the purpose of processing, entering into and completing the Novation Agreement
with regard to any of the Government Contracts, including responding to any
reasonable requests for information by the U.S. Government with regard to such
Novation Agreement.
Section 7.09 Financial Statements. Lockheed Xxxxxx shall, at Lockheed
Xxxxxx'x expense, furnish and shall cause its independent accountants for the
Communications Systems Business Unit to audit and furnish their opinion thereon
not later than March 28, 1997, financial statements for such Business Unit for
the years ended December 31, 1996, December 31, 1995 and December 31, 1994
prepared in accordance with GAAP applied consistently throughout the periods
covered thereby in a form meeting the requirements of Regulation S-X of the
Securities Act, and, consistent with appropriate terms and conditions and upon
receipt of appropriate management representation letters, to furnish the
consent of such independent accountants to the inclusion of their report on
such financial statements to the extent the financial statements are required
to be included in any registration statement of Newco under the Securities Act
and any amendments thereto or in any offering memoranda in connection with an
offering of securities exempt from registration under the Securities Act, and
to provide comfort letters in customary form in connection therewith; and for
the purposes of assisting Newco with any such registration statement and
subsequent reporting requirements under the Securities Act of 1934, as amended,
Lockheed Xxxxxx will deliver to Newco unaudited income statements and balance
sheets of the Communications Systems Business Unit for each 1996 calendar
quarter and each 1997 calendar quarter completed prior to or on the Closing
Date. The financial statements and schedules described in the preceding
sentence for the first quarter of 1997 and 1996, respectively, will be provided
by May 10, 1997. To the extent required, each subsequent 1997 quarter's
financial statements and schedules (together with the corresponding 1996
quarter's financial statements) shall be delivered to Newco by Lockheed Xxxxxx
within 40 days after the last day of such quarter. The parties acknowledge and
agree that time is of the essence in the performance of this Section 7.09 and
Lockheed Xxxxxx shall provide Newco unaudited financial information with
respect to the Communications Systems Business Unit for the years 1993 and 1992
meeting the requirements of Item 301 of Regulation S-K (Selected Financial
Data) of the Securities Act by April 4, 1997. Lockheed Xxxxxx acknowledges that
Newco's independent accountants will be performing the audit of the combined
financial statements of the Business for the year ended December 31, 1996 (and,
if required by applicable SEC regulations, for the period from January 1, 1997
to the Closing Date), and the combined financial statements of the Wideband
Systems Business Unit and the Products Group of the Business for the three
months ended March 31, 1996 and the years ended December 31, 1995 and December
31, 1994. Lockheed Xxxxxx agrees to cooperate and cause its independent
accountants to cooperate with Newco's independent accountants, and provide such
reasonable representation letters of Lockheed Xxxxxx'x management to Newco's
independent accountants in a form appropriate to enable such accountants to
issue an opinion on the financial statements they are auditing in accordance
with professional standards.
19
ARTICLE VIII
COVENANTS OF NEWCO AND THE PURCHASERS
Section 8.01 Confidentiality.
(a) Newco and the Purchasers agree that all information provided or
otherwise made available in connection with the Contemplated Transactions, to
any of the Purchasers, Newco or their Representatives will be treated as if
provided, in the case of Newco and Xxxxxx, under the Xxxxxx Confidentiality
Agreement (whether or not the Xxxxxx Confidentiality Agreement is in effect or
has been terminated) or, in the case of the Individual Purchasers, under
paragraph 7 of the Memorandum (whether or not the Memorandum is in effect or
has been terminated). In addition, until consummation of the Closing, Newco
agrees to be bound by the terms of the Xxxxxx Confidentiality Agreement as if
Newco were Xxxxxx thereunder (whether or not the Xxxxxx Confidentiality
Agreement is in effect or has been terminated). Upon consummation of the
Closing, the Xxxxxx Confidentiality Agreement and paragraph 7 of the Memorandum
shall cease to apply.
(b) For a period of three years after the Closing Date, the Purchasers,
Newco and each of their Affiliates will treat and hold as such, any
confidential information concerning the operations or affairs of businesses of
the Lockheed Xxxxxx Companies (other than the Business). In the event that any
of the Purchasers, Newco or any of their Affiliates is requested or required
(by oral or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process or by Applicable Law) to disclose any such confidential information,
then they will notify Lockheed Xxxxxx promptly of the request or requirement so
that Lockheed Xxxxxx, at its expense, may seek an appropriate protective order
or waive compliance with this Section 8.01(b). If, in the absence of a
protective order or receipt of a waiver hereunder, any of the Purchasers, Newco
or any of their Affiliates is, on the advice of counsel, compelled to disclose
such confidential information, they may so disclose the confidential
information, provided that they use reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded to such confidential
information. Notwithstanding the foregoing, the provisions of this Section
8.01(b) shall not apply to information that (i) is or becomes publicly
available other than as a result of a disclosure by any of the Purchasers,
Newco or any of their Affiliates, (ii) is or becomes available to any of the
Purchasers, Newco or any of their Affiliates on a non-confidential basis from a
source that, to the Purchasers', Newco's or any of their Affiliates' knowledge,
is not prohibited from disclosing such information by a legal, contractual or
fiduciary obligation, or (iii) is or has been independently developed by any of
the Purchasers, Newco or any of their Affiliates.
(c) Nothing in this Section 8.01 shall abrogate or otherwise limit the
fiduciary duties of, and any other duties or restrictions imposed by Applicable
Law on, the Individual Purchasers by virtue of their service as a director,
officer or employee of any of the Lockheed Xxxxxx Companies or their
predecessors.
20
Section 8.02 Provision and Preservation of and Access to Certain
Information; Cooperation.
(a) Prior to the Closing Date, each Purchaser shall provide to Lockheed
Xxxxxx promptly upon its receipt thereof copies of all environmental audit and
similar reports with respect to facilities the possession of which will be
transferred to Newco at the Closing.
(b) The Individual Purchasers acknowledge that effective as of February 3,
1997, Lockheed Xxxxxx turned over day-to-day management of the Business Units
to the Individual Purchasers. From the date of this Agreement until the Closing
Date, the Individual Purchasers agree to take reasonable steps to ensure that
the Business Units conduct their business and operations in accordance with the
provisions of Section 7.01. Notwithstanding the foregoing, the Individual
Purchasers shall not have liability to any Person for the breach of this
Section 8.02(b), it being understood that the effects of a breach of this
Section 8.02(b) shall be limited to the effects set forth in Section 13.04(d)
and Section 14.02.
(c) On and after the Closing Date, Newco shall preserve all books and
records of the Business for a period of five years commencing on the Closing
Date (or in the case of books and records relating to tax, employment and
employee benefits matters, until such time as Lockheed Xxxxxx notifies Newco in
writing that all statutes of limitations to which such records relate have
expired), and thereafter, not to destroy or dispose of such records without
giving notice to Lockheed Xxxxxx of such pending disposal and offering Lockheed
Xxxxxx the right to copy such records at its expense. In the event Lockheed
Xxxxxx has not copied such materials within 90 days following the receipt of
notice from Newco, Newco may proceed to destroy or dispose of such materials
without any liability. From and after the Closing Date and subject to any
applicable privileges (including, without limitation, the attorney-client
privilege), Newco shall at its expense (i) afford Lockheed Xxxxxx and its
Representatives reasonable access upon reasonable prior notice during normal
business hours, to all employees, offices, properties, agreements, records,
books and affairs of Newco, and provide copies of such information concerning
the Business as Lockheed Xxxxxx may reasonably request for any proper purpose,
including, without limitation, in connection with the preparation of any tax
returns or financial statements or in connection with any judicial, quasi
judicial, administrative, tax, audit or arbitration proceeding and in
connection with the preparation of any financial statements or reports in
accordance with past practices and procedures and (ii) cooperate fully with
Lockheed Xxxxxx for any proper purpose, including, without limitation, the
defense of or pursuit of any Excluded Liability, Excluded Asset or any claim or
action that relates to an Excluded Liability or Excluded Asset.
Section 8.03 Insurance; Financial Support Arrangements.
(a) Newco and the Purchasers acknowledge and agree that as of the Closing
Date, neither Newco, the Business or any of the Business Units, any property
owned or leased by any of the foregoing nor any of the directors, officers,
employees (including, without limitation, the Transferred Employees) or agents
of any of the foregoing will be insured under any insurance policies maintained
by Lockheed Xxxxxx or any of its Affiliates, except (i) in the case of certain
policies, to the extent that a claim has been reported as of the Closing Date,
(ii) in the case of a policy that is an occurrence policy, to the extent the
accident, event or occurrence that
21
results in an insurable loss occurs prior to the Closing Date and has been, is
or will be reported or noticed to the respective carrier by Newco or any of the
Lockheed Xxxxxx Companies in accordance with the requirements of such policies
(which claims Lockheed Xxxxxx shall, at Newco's cost and expense, pursue
diligently on Newco's behalf and the net proceeds of which claims shall be
remitted promptly to Newco upon receipt thereof), and (iii) as otherwise
provided in Exhibit G or agreed to in writing by the parties. Except as
otherwise provided in Exhibit G or as otherwise may be agreed to in writing by
the parties, from and after the Closing Date, Lockheed Xxxxxx shall have no
obligation of any kind to maintain any form of insurance covering all or any
part of the Transferred Assets, the Business or the Transferred Employees.
(b) Newco agrees to reimburse Lockheed Xxxxxx within 30 days of receipt of
an invoice for the items set forth below.
(i) The allocated cost to the Business of premiums, costs and
expenses (excluding Lockheed Xxxxxx risk management department costs and
expenses), including general and administrative charges, for all periods
prior to the Closing Date in respect of any and all insurance policies
that cover or covered the Business, whether or not a claim has been made
or ever will be made by the Business or Newco under such policies. The
"allocated cost" to the Business shall be determined by Lockheed Xxxxxx in
a manner consistent with prior practices and in conjunction with the Cost
Disclosure Statement filed by Lockheed Xxxxxx or any of its Affiliates and
their predecessors with the U.S. Government on the portion of the period
covered by the respective policies that ends prior to the Closing Date,
except that with respect to policies for which no premium rebate or refund
is available as a result of the consummation of the Contemplated
Transactions, the "allocated cost" to the Business shall be based on the
entire policy period. Newco and the Purchasers understand that Lockheed
Xxxxxx is in the process of reviewing with the U.S. Government the
methodology used by Lockheed Xxxxxx and its Affiliates to allocate
premiums, costs, expenses and reserves to various businesses and
divisions, including the Business Units, and acknowledge that any changes
to such allocation methodology may result in retroactive adjustments to
the allocated cost to the Business of premiums, costs and expenses. In the
event of any such change to the allocation methodology, Lockheed Xxxxxx
and Newco agree to adjust the allocated costs to the Business (either
through a special charge or credit to Newco under this Section 8.03(b)(i))
as appropriate.
(ii) Any self insurance, retention, deductible, retrospective premium,
cash payment for reserves calculated or charged on an incurred loss basis
and similar items, including but not limited to associated administrative
expenses and allocated loss adjustment or similar expenses (collectively,
"Insurance Liabilities") allocated to the Business by Lockheed Xxxxxx on a
basis consistent with past practices resulting from or arising under any
and all current or former insurance policies maintained by Lockheed Xxxxxx
or any of its Affiliates to the extent that such Insurance Liabilities
relate to or arise out of the Business or any activities of Newco.
Newco agrees that, to the extent any of the insurers under the insurance
policies, in accordance with the terms of the insurance policies, requests or
requires collateral, deposits or other security to be provided with respect to
claims made against such insurance policies relating to or arising from
22
the Business, Newco will provide the collateral, deposits or other security or,
upon request of Lockheed Xxxxxx, xxxx replace any collateral, deposits or other
security provided by Lockheed Xxxxxx or any of its Affiliates.
(c) Newco agrees that, for a period of at least six years commencing on
the Closing Date, to the extent it maintains insurance coverage, Newco will (at
Lockheed Xxxxxx'x cost to the extent of any additional cost therefor, provided
that, in the event there will be such a cost, Newco will give Lockheed Xxxxxx a
reasonable period of time to determine whether it desires to incur such cost
before Newco commits to such coverage with respect to Lockheed Xxxxxx) include
Lockheed Xxxxxx and its Affiliates as an additional insured/loss payee on any
policies in respect of which Lockheed Xxxxxx or its Affiliates has or may have
an insurable interest with respect to the Business, the Transferred Assets, any
of the Assumed Liabilities or any facilities the possession of which will be
transferred to Newco at the Closing.
(d) Newco and the Purchasers agree that, not later than September 30,
1997, and in a manner reasonably satisfactory to Lockheed Xxxxxx, Newco will in
good faith seek to release Lockheed Xxxxxx and its Affiliates from all
obligations under all Financial Support Arrangements maintained by Lockheed
Xxxxxx or any of its Affiliates in connection with the Business.
(e) Lockheed Xxxxxx will use reasonable commercial efforts to cause each
Financial Support Arrangement to remain in full force and effect in accordance
with its terms until the earliest of (i) the date (the "Release Date") on which
Newco ensures that Lockheed and its Affiliates are released from all
obligations of Lockheed Xxxxxx and its Affiliates under such Financial Support
Arrangement in accordance with Section 8.03(d), (ii) September 30, 1997 and
(iii) the date such Financial Support Arrangement terminates in accordance with
its terms. After the Closing Date and prior to the Release Date for any such
Financial Support Arrangement, Lockheed Xxxxxx will not waive any requirements
of or agree to amend such Financial Support Arrangement without the prior
written consent of Newco.
(f) If, after the Closing Date, (i) any amounts are drawn on or paid under
any Financial Support Arrangement where Lockheed Xxxxxx or any of its
Affiliates is obligated to reimburse the Person making such payment or (ii)
Lockheed Xxxxxx or any of its Affiliates pays any amounts under, or any fees,
costs or expenses relating to, any Financial Support Arrangement, Newco shall
pay Lockheed Xxxxxx such amounts promptly after receipt from Lockheed Xxxxxx of
notice thereof accompanied by written evidence of the underlying payment
obligation.
(g) In the event that Newco fails to ensure that Lockheed Xxxxxx and its
Affiliates are released from all obligations under the Financial Support
Arrangements not later than September 30, 1997, Newco shall either (i) promptly
deposit with Lockheed Xxxxxx xxxx in an amount equal to the aggregate principal
or stated amount, as may be applicable, of the Financial Support Arrangements
not so released or (ii) provide back-up letters of credit in form and substance
reasonably satisfactory to Lockheed Xxxxxx with respect to such Financial
Support Arrangements; provided that if Newco has used reasonable commercial
efforts to structure its financing arrangements to permit it to comply with the
foregoing obligations, Newco shall not be required to take any action under
this Section 8.03(g) that it is prohibited from taking under the terms of any
financing agreements of Newco in effect on the Closing Date. Any cash deposited
with Lockheed Xxxxxx in accordance with
23
clause (i) shall be held by Lockheed Xxxxxx in a segregated interest-bearing
account and shall be used by Lockheed Xxxxxx solely to satisfy its payment
obligations in respect of such Financial Support Arrangements, and the unused
portion of any cash (including interest) relating to a Financial Support
Arrangement shall be returned to Newco promptly after the occurrence of the
Release Date with respect to, or any other termination of, the Financial
Support Arrangement.
(h) In the event that Newco fails to ensure that Lockheed Xxxxxx and its
Affiliates are released from all obligations of Lockheed Xxxxxx and its
Affiliates under the Disclosed Financial Support Arrangements not later than
September 30, 1997, whether as a result of the proviso to the first sentence of
Section 8.03(g) or otherwise, and to the extent that Newco has not provided the
deposits or letters of credit contemplated by the first sentence of Section
8.03(g), on October 1, 1997 and on the first day of each calendar quarter
thereafter Newco agrees to pay to Lockheed Xxxxxx an amount equal to (i) .3125%
of the maximum aggregate potential liability of Lockheed Xxxxxx and its
Affiliates under such Disclosed Financial Support Arrangements in the case of
performance-related Disclosed Financial Support Arrangements or (ii) .625% of
the maximum aggregate potential liability of Lockheed Xxxxxx and its Affiliates
under such Disclosed Financial Support Arrangements in the case of all other
Disclosed Financial Support Arrangements (other than Disclosed Financial
Support Arrangements that constitute non-monetary performance guarantees or
similar non-monetary obligations) that have not been released or otherwise
secured by the deposits or letters of credit contemplated by the first sentence
of Section 8.03(g) (determined as of the last day of the preceding calendar
quarter). Any such payment by Newco shall be due and payable on October 1, 1997
or on the first day of the applicable calendar month thereafter, and shall be
nonrefundable regardless of any subsequent reduction of the liability of
Lockheed Xxxxxx or any of its Affiliates thereunder.
Section 8.04 Non-Solicitation of Employees. From and after the date of
this Agreement until the second anniversary of the Closing Date, Newco shall
not, without prior written approval of Lockheed Xxxxxx, directly or indirectly
(through Affiliates or otherwise), knowingly solicit any individual (other than
individuals identified in Attachment XI) who at that time is an employee of any
of the Lockheed Xxxxxx Companies (other than a Transferred Employee) to
terminate his or her relationship with the Lockheed Xxxxxx Companies and will
not knowingly hire any individual inadvertently solicited; provided, however,
that the foregoing shall not apply to individuals solicited or hired as a
result of the use of an independent employment agency (so long as the agency
was not directed to solicit such individual and Newco advises its Manager of
Human Resources of the provisions of this Section 8.04) or solicited or hired
as a result of the use of a general solicitation (such as an advertisement) not
specifically directed to employees of the Lockheed Xxxxxx Companies.
Section 8.05 Financing. Newco shall use reasonable commercial efforts to
obtain (on or prior to the Closing Date) sufficient funds on commercially
available terms acceptable to Newco in its sole discretion (i) to pay the cash
portion of the Exchange Consideration and (ii) to obtain adequate working
capital for the Business, provided that Newco shall not be considered to be in
breach of this Agreement if, notwithstanding its use of reasonable commercial
efforts as aforesaid, Newco does not have sufficient funds available for such
purposes on the Closing Date.
24
Section 8.06 Use of Certain Trademarks, etc. Newco acknowledges and agrees
that it is not obtaining any rights or licenses with respect to the names
"Lockheed Xxxxxx," "Lockheed," "Loral," "Xxxxxx Xxxxxxxx" or any derivative
thereof, or to their logos or trade dress, or to any other Intellectual
Property not constituting a Transferred Asset or not licensed to it under the
License Agreements. As soon as practicable following the Closing, but no later
than 180 days after the Closing Date, Newco shall remove and change signage,
change and substitute promotional and advertising material in whatever medium,
change stationery and packaging and take all such other steps as may be
required or appropriate to cease use of all such Intellectual Property not
constituting a Transferred Asset or not licensed to it under the License
Agreements; provided, however, that nothing in this Agreement shall obligate
Newco to change or copy over any engineering drawings, prints or copies of
correspondence, invoices and other documents prepared prior to the Closing Date
or to replace or alter any tools or dies included in the Transferred Assets.
Section 8.07 Government Contract Novation; Cooperation. Newco shall
provide to Lockheed Xxxxxx and each Responsible Contracting Officer all
information necessary to obtain the consent of the U.S. Government to recognize
Newco as the successor in interest to all of the Government Contracts being
sold, assigned, transferred and conveyed to Newco in accordance with this
Agreement. Newco shall use commercially reasonable efforts to obtain all
consents, approvals and waivers required for the purpose of processing,
entering into and completing the Novation Agreement with regard to any of the
Government Contracts, including responding to any requests for information by
the U.S. Government with regard to such Novation Agreement.
Section 8.08 Reimbursement of Damages. Newco shall use reasonable
commercial efforts to obtain reimbursement of any Damages suffered by it that
are subject to indemnification by Lockheed Xxxxxx hereunder as a reimbursable
cost under Government Contracts, provided the reimbursement of such Damages is
permitted by Applicable Law.
ARTICLE IX
COVENANTS OF THE PARTIES
Section 9.01 Further Assurances. Subject to the terms and conditions of
this Agreement, each party shall use all reasonable commercial efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Laws to consummate the Contemplated
Transactions. Lockheed Xxxxxx, Newco and the Purchasers shall execute and
deliver such other documents, certificates, agreements and other writings and
to take such other actions as may be necessary or desirable in order to
consummate or implement expeditiously the Contemplated Transactions. Except as
otherwise expressly set forth in the Transaction Documents, nothing in this
Section 9.01 shall require Lockheed Xxxxxx, Newco or any of the Purchasers to
make any payments in order to obtain any consents or approvals necessary or
desirable in connection with the consummation of the Contemplated Transactions.
Section 9.02 Certain Filings; Consents. Lockheed Xxxxxx, Newco and
the Purchasers shall cooperate with one another (i) in determining whether
any action by or in respect of, or filing with, any Governmental Authority is
25
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material Contracts, in connection with the
consummation of the Contemplated Transactions and (ii) subject to the terms and
conditions of this Agreement, in taking such actions or making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such actions, consents, approvals or waivers.
Section 9.03 Public Announcements. Prior to the Closing, Lockheed Xxxxxx,
Newco and the Purchasers shall consult with each other before issuing any press
release or making any public statement or communicating with the U.S.
Government as a customer with respect to this Agreement or the Contemplated
Transactions and, except as may be required by Applicable Law or any listing
agreement with any national or international securities exchange, will not
issue any such press release or make any such public statement prior to such
consultation. Notwithstanding the foregoing, no provision of this Agreement
(except as set forth in Section 8.01) shall relieve Xxxxxx from any of its
obligations under the Xxxxxx Confidentiality Agreement, or relieve the
Individual Purchasers from any of their respective obligations under paragraph
7 of the Memorandum, or terminate any of the restrictions imposed upon any
party by Section 8.01.
Section 9.04 Intellectual Property; License Agreements.
(a) In consideration of the grant described in Section 9.04(b), Lockheed
Xxxxxx shall xxxxx to Newco, effective as of the Closing Date and pursuant to a
License Agreement, a fully paid-up, worldwide, perpetual, non-exclusive license
in respect of all Intellectual Property owned by Lockheed Xxxxxx that is used
or currently planned for use by the Business (but not constituting Transferred
Assets) on the Closing Date, for such uses and currently planned uses by Newco
and its Affiliates. Such license shall not be transferable by Newco other than
in connection with the sale or transfer of all or a substantial portion (it
being understood that the sale of a Business Unit shall be deemed a substantial
portion) of the Business by Newco.
(b) In consideration of the grant described in Section 9.04(a), Newco
shall grant to the Lockheed Xxxxxx Companies, effective as of the Closing Date
and pursuant to a License Agreement, a fully paid-up, world-wide, perpetual,
non-exclusive license in respect of all Intellectual Property constituting
Transferred Assets (i) that is used or currently planned for use by the
Lockheed Xxxxxx Companies (other than the Business Units) on the Closing Date,
for such uses and currently planned uses by Lockheed Xxxxxx and its Affiliates
or (ii) used by Newco after the Closing Date in connection with the manufacture
of any products for sale to, or the provision of any services to, any of the
Lockheed Xxxxxx Companies pursuant to any agreement between Newco and any of
the Lockheed Xxxxxx Companies that is breached by Newco, for use by Lockheed
Xxxxxx and its Affiliates in making or using such products or providing such
services (other than in the case of clause (ii), the duration for which shall
be an appropriate length of time to permit completion of manufacture or
services). The license granted pursuant to clause (i) of the preceding sentence
shall be effective as of the Closing Date and the license granted pursuant to
clause (ii) of the preceding sentence shall be effective as of the date that
the agreement described therein is breached by Newco. Such license shall not be
transferable by Lockheed Xxxxxx other than in connection with the sale or
transfer of all or a substantial portion of a business by Lockheed Xxxxxx.
26
(c) Newco acknowledges and agrees that it shall hold all Intellectual
Property constituting part of the Transferred Assets subject to any licenses
thereof granted by Lockheed Xxxxxx and its Affiliates prior to the Closing
Date.
(d) The transfer of Intellectual Property constituting Transferred Assets
to Newco shall not affect Lockheed Xxxxxx'x right to use, disclose or otherwise
freely deal with any know-how, trade secrets and other technical information
not constituting Transferred Assets that is resident on the Closing Date at
businesses of the Lockheed Xxxxxx Companies other than the Business.
Section 9.05 HSR Act. The parties shall take all actions necessary or
appropriate to cause the prompt expiration or termination of any applicable
waiting period under the HSR Act in respect of the Contemplated Transactions,
including, without limitation, complying as promptly as practicable with any
requests for additional information; provided that Newco shall not be required
to provide any undertakings or comply with any condition that, in its good
faith judgment, would materially and adversely diminish Newco's rights under
this Agreement or materially and adversely affect its business, results or
operations.
Section 9.06 Operation of Newco. From and after the date of this Agreement
through the Closing, Newco will not engage in or conduct any activities other
than activities that are necessary or appropriate in connection with the
consummation of the Contemplated Transactions.
Section 9.07 Maintenance of Insurance Policies. Notwith-standing any
provision to the contrary in this Agreement, this Section 9.07 shall constitute
the parties' agreement regarding the allocation of insurance proceeds with
respect to claims for liabilities that arise under or relate to Environmental
Laws that are comprised, in whole or in part, of Environmental Liabilities that
constitute Assumed Liabilities (the "Environmental Insurance Claims"). Newco
and the Purchasers acknowledge that Lockheed Xxxxxx shall control the
Environmental Insurance Claims and shall have the right to compromise or settle
any Environmental Insurance Claims. Lockheed Xxxxxx will act in good faith and
with reasonable prudence to maximize recovery with respect to the Environmental
Insurance Claims and will allocate any recovery received with respect to such
Environmental Insurance Claims, first, to the costs it incurred to collect such
recovery and all net tax costs related to such recovery, and second, to
reimburse any Governmental Authority, prime contractor or subcontractor
pursuant to a Government Contract.
With respect to any recovery remaining (the "Remaining Recovery"):
(i) if the recovery applies to liabilities that are Assumed
Liabilities and to liabilities that are not Assumed Liabilities, and the
recovery was not designated as arising from specific liabilities (e.g., a
global settlement with an insurance carrier), Lockheed Xxxxxx will pay
Newco an amount equal to the Remaining Recovery multiplied by X multiplied
by (one minus Y); where X equals the total of the Environmental Insurance
Claims (estimated as of the date of recovery) under said insurance
policies divided by the total environmental and other claims by Lockheed
Xxxxxx under said insurance policies; and Y equals Lockheed Xxxxxx'x past
expenditures on said liabilities divided by the total estimated
expenditures made or to be made by Lockheed
27
Xxxxxx or Newco in respect of said liabilities (estimated as of the date
of recovery), or
(ii) if the recovery was designated as arising from a specific
liability that is an Assumed Liability, Lockheed Xxxxxx will pay Newco the
Remaining Recovery multiplied by (one minus Y).
Any obligations assumed in any such compromise or settlement of the
Environmental Insurance Claims will be apportioned between Lockheed Xxxxxx and
Newco in the same proportion as a recovery would be allocated pursuant to this
Section 9.07.
Section 9.08 Legal Privileges. Lockheed Xxxxxx and Newco acknowledge and
agree that all attorney-client, work product and other legal privileges that
may exist with respect to the Transferred Assets or the Assumed Liabilities,
shall, from and after the Closing Date, be deemed joint privileges of Lockheed
Xxxxxx and Newco. Both Lockheed Xxxxxx and Newco shall use all commercially
reasonable efforts after the Closing Date to preserve all such privileges and
neither Lockheed Xxxxxx nor Newco shall knowingly waive any such privilege
without the prior written consent of the other party (which consent will not be
unreasonably withheld or delayed).
Section 9.09 Non-Compete. Lockheed Xxxxxx, Newco and the Purchasers
covenant and agree that prior to the Closing Date they will discuss in good
faith the scope and nature of an appropriate non-competition agreement to
provide reasonable commercial protection to Newco for periods to be mutually
agreed upon of up to three years with respect to the material core businesses
of the Business while providing the Lockheed Xxxxxx Companies the ability to
continue, without impediment, all of its existing businesses and currently
planned businesses (other than those conducted only through the Business
Units), to enter into businesses reasonably related to its exiting businesses
and currently planned businesses, to make acquisitions and to otherwise provide
third-party sourced products similar to those manufactured or sold by the
Business as part of larger systems manufactured or sold by the Lockheed Xxxxxx
Companies. The non-competition agreement also will provide reasonable
commercial protection to the Lockheed Xxxxxx Companies on programs where Newco
performs substantial subcontract work for the Lockheed Xxxxxx Companies, it
being understood that this provision shall not prohibit Newco from entering
into subcontract agreements with other Persons on programs that compete against
the Lockheed Xxxxxx Companies, provided that appropriate safeguards (including,
for example, "firewalls" and confidentiality agreements) are implemented and in
place to protect the proprietary and confidential information of the Lockheed
Xxxxxx Companies. For the purposes of any such non-competition agreement, (i)
the businesses operated and managed by Lockheed Xxxxxx on behalf of the U.S.
Government, including the Department of Energy, shall not be included within
the prohibitions, and (ii) "currently planned" businesses of the Lockheed
Xxxxxx Companies shall mean those businesses that Lockheed Xxxxxx can
demonstrate are affirmatively under consideration as of the Closing Date.
ARTICLE X
TAX MATTERS
Section 10.01 Tax Matters. The parties agree as to tax matters as set
forth in Exhibit F.
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ARTICLE XI
EMPLOYEE BENEFIT MATTERS
Section 11.01 Employee Benefit Matters. The parties agree as to
employee benefit matters as set forth in Exhibit G.
ARTICLE XII
CONDITIONS TO CLOSING
Section 12.01 Conditions to the Obligations of Each Party. The obligations
of Lockheed Xxxxxx, Newco and the Purchasers to consummate the Closing are
subject to the satisfaction (or waiver) of the following conditions:
(a) Any applicable waiting period under the HSR Act relating to the
Contemplated Transactions shall have expired or been terminated;
(b) No provision of any Applicable Law or regulation and no judgment,
injunction, order or decree shall prohibit the Closing, and no action or
proceeding shall be pending before any court, arbitrator or governmental body,
agency or official with respect to which counsel reasonably satisfactory to
Lockheed Xxxxxx, Newco and the Purchasers shall have rendered a written opinion
that there is a substantial likelihood of a determination that would prohibit
the Closing;
(c) All actions by or in respect of or filings with any Governmental
Authority required to permit the consummation of the Closing shall have been
obtained;
(d) Lockheed Xxxxxx, Newco and the Purchasers shall have executed and
delivered the Common Stock Subscription Agreements and the Stockholders
Agreement in substantially the forms attached as Attachments IV and V, and
shall have executed and delivered the Exchange Agreement in substantially the
form attached to the Transfer Agreement attached as Attachment III, the Interim
Services Agreement, the License Agreements, the Supply Agreement and the
leases, subleases and assignment agreements referred to in Section 2.01(viii)
and the agreement referred to in Section 2.01(ix);
(e) Lockheed Xxxxxx and Newco shall have executed and delivered the
noncompetition agreement contemplated by Section 9.09;
(f) Lockheed Xxxxxx or the applicable Affiliated Transferor, as the case
may be, shall have obtained the consents, approvals or permits contemplated by
Attachment X; and
(g) There shall be (i) no conditions requested of Lockheed Xxxxxx by the
PBGC or of Newco by Lockheed Xxxxxx, in connection with the transfer of all of
the assets and liabilities of the Spinoff Plans or the Assumed Plans, that are
in either party's reasonable good faith judgment unacceptable to either
Lockheed Xxxxxx (as to conditions requested of Lockheed Xxxxxx by the PBGC) or
Newco (as to conditions requested of Newco by Lockheed Xxxxxx); or (ii) no
commencement of proceedings by the PBGC to terminate any Lockheed Xxxxxx
Pension Plan (or a reasonable good faith determination of Newco or
29
Lockheed Xxxxxx that the commencement of such proceedings is reasonably
likely).
Section 12.02 Conditions to Obligation of Newco and the Purchasers. The
obligations of Newco and the Purchasers to consummate the Closing are subject
to the satisfaction (or waiver by Newco and the Purchasers) of the following
further conditions:
(a) (i) Lockheed Xxxxxx shall have performed in all material respects all
of its obligations under the Transaction Documents required to be performed by
it on or prior to the Closing Date, (ii) the representations and warranties of
Lockheed Xxxxxx contained in the Transaction Documents shall be complete and
correct (in all material respects, in the case of those representations and
warranties which are not by their express terms qualified by reference to
materiality) at and as of the date of this Agreement and as of the Closing
Date, as if made at and as of each such date, except that those representations
and warranties which are by their express terms made as of a specific date
shall be complete and correct (in all material respects, in the case of those
representations and warranties which are not by their express terms qualified
by reference to materiality) only as of such date, and (iii) Newco shall have
received a certificate signed by an executive officer of Lockheed Xxxxxx to the
foregoing effect;
(b) Newco has sufficient funds available to pay the cash portion of the
Exchange Consideration for the Transferred Assets, provided that this Section
12.02(b) shall not be a condition to Newco and the Purchasers' obligation to
consummate the Closing unless the representations and warranties set forth in
Section C.08 of Exhibit C and Section D.06 of Exhibit D shall be, and continue
to be, accurate and Newco shall have complied in all material respects with its
obligations under Section 8.05;
(c) The Purchasers shall have completed their review of the litigation
titled Universal Navigation v. Loral Corporation and the results of such
review shall be satisfactory to the Purchasers;
(d) Since December 31, 1996, there shall not have been any material
adverse change in the assets, properties, business, financial condition or
results of operations of the Business taken as a whole or any developments that
reasonably could be expected to result in such a change;
(e) Lockheed Xxxxxx, the applicable Affiliated Transferor or Newco, as the
case may be, shall have obtained the consents, approvals or permits
contemplated by Attachment X;
(f) Newco shall have obtained such surveys and title insurance in respect
of the Owned Real Property as are sufficient to satisfy Newco's lenders and to
enable Newco to obtain financing; and
(g) Lockheed Xxxxxx shall have furnished Newco with an opinion dated the
Closing Date concerning the matters set forth in Attachment XII.
Section 12.03 Conditions to Obligation of Lockheed Xxxxxx. The obligation
of Lockheed Xxxxxx to consummate the Closing is subject to the satisfaction (or
waiver by Lockheed Xxxxxx) of the following further conditions:
30
(a) (i) Newco and the Purchasers shall have performed in all material
respects all of their respective obligations under the Transaction Documents
required to be performed by them at or prior to the Closing Date, (ii) the
representations and warranties of Newco and the Purchasers contained in the
Transaction Documents shall be complete and correct (in all material respects,
in the case of those representations and warranties which are not by their
express terms qualified by reference to materiality) at and as of the date of
this Agreement and as of the Closing Date, as if made at and as of each such
date, except that those representations and warranties which are by their
express terms made as of a specific date shall be complete and correct (in all
material respects, in the case of those representations and warranties which
are not by their express terms qualified by reference to materiality) only as
of such date, and (iii) Lockheed Xxxxxx shall have received certificates signed
by executive officers of Newco (as to Newco) and Xxxxxx (as to Xxxxxx), and
certificates signed by each of the Individual Purchasers, to the foregoing
effect; and
(b) Newco shall have furnished Lockheed Xxxxxx with an opinion dated the
Closing Date covering the matters set forth in Attachment XIII.
Section 12.04 Effect of Waiver. Any waiver by Newco and the Purchasers of
the conditions specified in clause (ii) of Section 12.02(a) and any waiver by
Lockheed Xxxxxx of the conditions specified in clause (ii) of Section 12.03, if
made knowingly, shall also be deemed a waiver by such Person of any claim for
Damages as the result of the matters waived.
ARTICLE XIII
SURVIVAL; INDEMNIFICATION
Section 13.01 Survival. None of the representations and warranties of the
parties contained in any Transaction Document or in any certificate or other
writing delivered pursuant to any Transaction Document or in connection with
any Transaction Document shall survive the Closing, except for:
(i) the representations and warranties in Sections X.00, X.00,
X.00(x) and B.12 shall survive indefinitely;
(ii) the representations and warranties in Section B.13 shall not
survive the Closing Date;
(iii) the representations and warranties in Section B.15 shall
survive for a period of three years from the Closing Date;
(iv) the representations and warranties in Section B.21 shall survive
until 30 days after the expiration of the applicable statute of
limitations (or extensions or waivers thereof);
(v) the representations and warranties in Exhibit B (other than those
Sections of Exhibit B referenced in the preceding clauses (i), (ii), (iii)
and (iv)), shall survive for a period of two years from the Closing Date;
(vi) the representations and warranties included in Exhibit F shall
survive until 30 days after the expiration of the applicable statute of
limitations (or extensions or waivers thereof);
31
(vii) the representations and warranties in Sections C.01, C.02 and
C.05 shall survive indefinitely;
(viii) the representations and warranties in Exhibit C (other than those
Sections of Exhibit C referenced in the preceding clause (vii)) shall
survive for a period of two years from the Closing Date;
(ix) the representations and warranties in Sections D.03 shall
survive indefinitely;
(x) the representations and warranties in Exhibit D (other than the
representations and warranties in Section D.03), shall survive for a
period of two years from the Closing Date;
(xi) the representations and warranties in Sections E.01, E.02 and
E.05 shall survive indefinitely; and
(xii) the representations and warranties in Exhibit E (other than those
Sections of Exhibit E referenced in the preceding clause (xi)) shall
survive for a period of two years from the Closing Date.
The covenants and agreements of the parties in the Transaction Documents and
the representations and warranties referenced in the preceding clauses (i) and
(iii) through (xii) are referred to herein as the "Surviving Representations or
Covenants." It is understood and agreed that, (1) before the Closing the
remedies expressly set forth in Article XIV are the sole and exclusive remedies
for any breach of any representation, warranty or covenant and (2) following
the Closing the sole and exclusive remedy with respect to any breach of any
representation, warranty or covenant (other than (i) with respect to a breach
of the terms of a covenant, as to which Newco or Lockheed Xxxxxx, as the case
may be, shall be entitled to seek specific performance or other equitable
relief and (ii) with respect to claims for fraud or for willful breach of a
covenant) shall be a claim for Damages made pursuant to this Article XIII.
Section 13.02 Indemnification.
(a) Effective as of the Closing and subject to the limitations set forth
in Section 13.04(a), Newco hereby indemnifies Lockheed Xxxxxx and its
Affiliates and their respective directors, officers, employees and agents,
against and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made or
to be performed by Newco pursuant to any of the Transaction Documents, (ii) the
Assumed Liabilities (including, without limitation, Newco's failure to perform
or in due course pay and discharge any Assumed Liability) or (iii) any
Financial Support Arrangement referred to in Section 8.03(b).
(b) Effective as of the Closing and subject to the limitations set forth
in Section 13.04(b), Lockheed Xxxxxx hereby indemnifies Newco and its
Affiliates and their respective directors, officers, employees and agents
against and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made or
to be performed by the Lockheed Xxxxxx Companies pursuant to any Transaction
Document, (ii) the Excluded Liabilities (including, without limitation,
Lockheed Xxxxxx'x (or any other Lockheed Xxxxxx Company's)
32
failure to perform or in due course pay and discharge any Excluded Liability),
(iii) the assumption by Newco of Environmental Liabilities arising out of,
relating to, based on or resulting from actions taken (or failures to take
action), conditions existing or events occurring prior to the Closing, (iv) the
Camden CAS 410 Issue, or (v) the Sarasota Asset Step-Up Issue; provided,
however, that Newco shall not have suffered or be deemed to have suffered any
Damages in the case of the foregoing clauses (iii), (iv), and (v) to the extent
that such Damages are recoverable as an allowable cost under Applicable Law or
under the terms of any applicable Government Contracts.
(c) Effective as of the Closing and subject to the limitations set forth
in Section 13.04(c), each of the Purchasers hereby, severally and not jointly
with the other Purchasers, indemnifies each of the other parties to this
Agreement and their respective Affiliates and their respective directors,
officers, employees and agents, against and agrees to hold them harmless from
any and all Damages incurred or suffered by any of them arising out of or
related in any way to any breach of any Surviving Representation or Covenant
made or to be performed by the Purchasers pursuant to any of the Transaction
Documents.
Section 13.03 Procedures.
(a) If Lockheed Xxxxxx or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
13.02(a) or Section 13.02(c), or if Newco or any of its Affiliates or any of
their directors, officers, employees and agents, shall seek indemnification
pursuant to Section 13.02(b), such Person seeking indemnification (the
"Indemnified Party") shall give written notice to the party from whom such
indemnification is sought (the "Indemnifying Party") promptly (and in any event
within 30 days) after the Indemnified Party (or, if the Indemnified Party is a
corporation, any officer of the Indemnified Party) becomes aware of the facts
giving rise to such claim for indemnification (an "Indemnified Claim")
specifying in reasonable detail the factual basis of the Indemnified Claim,
stating the amount of the Damages, if known, the method of computation thereof,
and containing a reference to the provision of the Transaction Documents in
respect of which such Indemnified Claim arises. The failure of an Indemnified
Party to provide notice pursuant to this Section 13.03 shall not constitute a
waiver of that party's claims to indemnification pursuant to Section 13.02 in
the absence of, and then only to the extent of, material prejudice to the
Indemnifying Party. If the Indemnified Claim arises from the assertion of any
claim, or the commencement of any suit, action, proceeding or Remedial Action
brought by a Person that is not a party hereto (a "Third Party Claim")any such
notice to the Indemnifying Party shall be accompanied by a copy of any papers
theretofore served on the Indemnified Party in connection with such Third Party
Claim. With respect to any Third Party Claim asserted or brought prior to the
Closing Date, notice of such Third Party Claim shall be deemed to have been
delivered on the Closing Date.
(b) (i) Upon receipt of notice of a Third Party Claim from an Indemnified
Party pursuant to Section 13.03(a), the Indemnifying Party will, subject
to the other provisions of this Section 13.03(b), assume the defense and
control of such Third Party Claim but shall allow the Indemnified Party a
reasonable opportunity to participate in the defense thereof with its own
counsel and at its own expense. The Indemnifying Party shall select
counsel, contractors and consultants of recognized
33
standing and competence after consultation with the Indemnified Party;
shall take all steps necessary in the defense or settlement thereof; and
shall at all times diligently and promptly pursue the resolution thereof.
In conducting the defense thereof, the Indemnifying Party shall at all
times act as if all Damages relating to such Third Party Claim were for
its own account and shall act in good faith and with reasonable prudence
to minimize Damages therefrom. The Indemnified Party shall, and shall
cause each of its Affiliates, directors, officers, employees, and agents
to, cooperate fully with the Indemnifying Party in the defense of any
Third Party Claim defended by the Indemnifying Party.
(ii) The Indemnifying Party shall give prompt and continuing notice to
the other Indemnified Party of any Third Party Claims that the
Indemnifying Party reasonably believes may: (1) result in the assertion of
criminal liability on the part of the Indemnified Party or any of its
Affiliates, directors, officers, employees or agents; (2) adversely affect
the ability of the Indemnified Party to do business in any jurisdiction or
in any manner or with any customer; or (3) materially affect the
reputation of the Indemnified Party or any of its Affiliates, directors,
officers, employees or agents.
(iii) Subject to the provisions of Section 13.03(b)(iv) and Section
13.03(b)(v), the Indemnifying Party shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any Third Party
Claims, without the consent of any Indemnified Party; provided, that the
Indemnifying Party shall (1) pay or cause to be paid all amounts arising
out of such settlement or judgment concurrently with the effectiveness
thereof; (2) shall not encumber any of the assets of any Indemnified Party
or agree to any restriction or condition that would apply to such
Indemnified Party or to the conduct of that party's business; and (3)
shall obtain, as a condition of any settlement or other resolution, a
complete release of each Indemnified Party. Except for the foregoing, no
settlement or entry of judgment in respect of any Third Party Claim shall
be consented to by any Indemnifying Party without the consent of the
Indemnified Party, which consent shall not be unreasonably withheld.
(iv) An Indemnified Party may elect to share the defense of a Third
Party Claim the defense of which has been assumed by the Indemnifying
Party pursuant to Section 13.03(b)(ii). In that event, the Indemnified
Party will so notify the Indemnifying Party in writing. Thereafter, the
Indemnifying Party and the Indemnified Party shall participate on an equal
basis in the defense, management and control of any such claim. The
Indemnifying Party and the Indemnified Party shall select mutually
satisfactory counsel, contractors and consultants to conduct the defense
or settlement thereof (the costs and expenses of which shall be shared
equally by the Indemnifying Party and the Indemnified Party), and shall at
all times diligently and promptly pursue the resolution thereof.
Notwithstanding the foregoing, Newco shall manage all Remedial Actions
conducted with respect to facilities which constitute Transferred Assets
or at which Newco will undertake operations pursuant to this Agreement,
provided that Lockheed Xxxxxx and its Representatives shall have the
right, consistent with Newco's right to manage such Remedial Actions as
aforesaid, to participate fully in all decisions regarding any Remedial
Action, including reasonable access to sites where any Remedial Action is
being conducted, reasonable access to all documents, correspondence,
34
data, reports or information regarding the Remedial Action, reasonable
access to employees and consultants of Newco with knowledge of relevant
facts about the Remedial Action and the right to attend all meetings and
participate in any telephone or other conferences with any government
agency or third party regarding the Remedial Action.
(v) In the case of the indemnification contemplated by clauses (iii),
(iv) and (v) of Section 13.02(b), in the event that either the Indemnified
Party or the Indemnifying Party desires to settle the matters referenced
therein or consent to the entry of any judgment arising thereunder and the
other party does not wish to consent to such settlement, the other party
shall have no obligation to consent to the settlement provided that it
agrees in writing to pay and be responsible for 100% of any Damages
thereafter incurred; provided that no Indemnified Party shall be required
to consent to any settlement or agree to be responsible for the payment of
Damages thereafter incurred with respect to any matter the settlement of
which would require the consent of such Indemnified Party pursuant to
Section 13.03(b)(iii). The obligation of the party that rejects any
proposed settlement offer or entry of any such judgment to pay and be
responsible for 100% of any Damages thereafter incurred in accordance with
this Section 13.03(b)(v) shall be conditioned upon and subject to the
payment, within five Business Days of the date such party provides the
written agreement contemplated by the preceding sentence, of an amount, in
immediately available funds, equal to the portion of the total settlement
that would have been payable by the party desiring to settle the matter or
consent to the entry of any such judgment according to the percentage
sharing arrangement contemplated by Section 13.04(b)(ii) or Section
13.04(b)(iii), as the case may be. Thereafter, the party that rejects the
proposed settlement shall be solely responsible for the defense of the
matter that is the subject of the proposed settlement.
(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 13.03(b)(iv),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party referee
("Referee"), who shall be an attorney and who shall have the authority to
review and resolve the disputed matter. The parties shall present their
differences in writing (each party simultaneously providing to the other a copy
of all documents submitted) to the Referee and shall cause the Referee promptly
to review any facts, law or arguments either the Indemnifying Party or the
Indemnified Party may present. The Referee shall be retained to resolve
specific differences between the parties within the range of such differences.
Either party may request that all oral arguments presented to the Referee by
either party be in each other's presence. The decision of the Referee shall be
final and binding unless both the Indemnifying Party and the Indemnified Party
agree. The parties shall share equally all costs and fees of the Referee.
Section 13.04 Limitations. Notwithstanding anything to the contrary in
this Agreement or in any of the Transaction Documents:
(a) Newco shall only have liability to Lockheed Xxxxxx and its Affiliates
with respect to the representations and warranties described in clause (i) of
Section 13.02(a) if such matters were the subject of a written notice given by
the Indemnified Party pursuant to Section 13.03(a) within the
35
period following the Closing Date specified for each respective matter in
Section 13.01.
(b) Lockheed Xxxxxx shall only have liability to Newco or any other Person
hereunder:
(i) with respect to the representations and warranties described in
clause (i) of Section 13.02(b), (y) to the extent that the aggregate
Damages of all Indemnified Parties as the result thereof exceed $5,000,000
but are not greater than $55,000,000 (it being understood that Lockheed
Xxxxxx'x maximum liability under Section 13.02(b)(i) with respect to
representations and warranties and this Section 13.04(b)(i) shall be
$50,000,000), and (z) if such matters were the subject of a written notice
given by the Indemnified Party pursuant to Section 13.03(a) within the
period following the Closing Date specified for each respective matter in
Section 13.01;
(ii) with respect to the matters described in clause (iii) of Section
13.02(b) (after giving effect to the proviso thereto), (y) to the extent
of 50% of the aggregate Damages incurred within eight years following the
Closing Date by all Indemnified Parties as the result thereof, and (z) to
the extent of 40% of the aggregate Operation and Maintenance Costs
incurred by all Indemnified Parties after the eighth anniversary of the
Closing Date and within 15 years following the Closing Date; provided,
however, that Lockheed Xxxxxx shall only have liability under Section
13.02(b)(iii) or this Section 13.04(b)(ii) for Damages and Operation and
Maintenance Costs incurred after the Closing Date in excess of $6,000,000;
(iii) with respect to the matters described in clause (iv) of Section
13.02(b) (after giving effect to the proviso thereto), (y) to the extent
of 75% of the aggregate Damages incurred by an Indemnified Party as the
result thereof, and (z) to the extent such Damages were incurred within
three years following the Closing Date; and
(iv) with respect to the matters described in clause (v) of Section
13.02(b) (after giving effect to the proviso thereto), (y) to the extent
of 75% of the aggregate Damages incurred by an Indemnified Party as the
result thereof, and (z) to the extent such Damages were incurred within
three years following the Closing Date.
(c) The Purchasers shall only have liability to Lockheed Xxxxxx and its
Affiliates with respect to the representations and warranties described in
Section 13.02(c) if such matters were the subject of a written notice given by
the Indemnified Party pursuant to Section 13.03(a) within the period following
the Closing Date specified for each respective matter in Section 13.01.
(d) Lockheed Xxxxxx shall not be liable to Newco or any other Person
hereunder for any Damages that result from a breach of the provisions of
Section 7.01 if such breach results from a breach by either of the Individual
Purchasers of Section 8.02(b).
(e) Lockheed Xxxxxx shall not be liable to Newco or any other Person under
this Article XIII for any Damages that result from any breach of any
representation or warranty made by Lockheed Xxxxxx hereunder to the extent such
representation or warranty is expressly qualified by reference to the
36
knowledge of the Individual Purchasers or a substantially similar clause
relating to their knowledge if either of the Individual Purchasers had such
knowledge as of the Closing.
ARTICLE XIV
TERMINATION
Section 14.01 Termination. The Transaction Documents may be terminated
at any time prior to the Closing:
(i) by mutual written agreement of Lockheed Xxxxxx and the
Purchasers;
(ii) by Lockheed Xxxxxx or the Purchasers (as a group) if the Closing
shall not have been consummated by May 30, 1997; provided, however, that
neither Lockheed Xxxxxx nor a Purchaser may terminate the Transaction
Documents pursuant to this clause (ii) if the Closing shall not have been
consummated by May 30, 1997, by reason of the failure of such party or any
of its Affiliates to perform in all material respects any of its or their
respective covenants or agreements contained in the Transaction Documents;
provided further, that either Lockheed Xxxxxx or Newco and the Purchasers
(as a group) shall be entitled to terminate the Transaction Documents
prior to May 30, 1997, if such party or parties, as the case may be, shall
reasonably conclude that any condition to such party's or parties'
obligations hereunder (as set forth in Section 12.01 with respect to
Lockheed Xxxxxx, Newco and the Purchasers, Section 12.02 with respect to
Newco and the Purchasers, and Section 12.03 with respect to Lockheed
Xxxxxx) cannot reasonably be expected to be satisfied prior to May 30,
1997; and provided, further, that as a condition to the right of a party
to elect to terminate the Transaction Documents pursuant to the
immediately preceding proviso, the party shall first provide ten Business
Days prior notice to the other party specifying in reasonable detail the
nature of the condition that such party has concluded will not be
satisfied, and the other party shall be entitled during such ten Business
Day period to take any actions it may elect consistent with the terms of
this Agreement such that the condition reasonably could be expected to be
satisfied prior to the expiration of such time period;
(iii) by either Lockheed Xxxxxx or Newco and the Purchasers (as a
group) if there shall be any law or regulation that makes consummation of
the Contemplated Transactions illegal or otherwise prohibited or if
consummation of the Contemplated Transactions would violate any
nonappealable final order, decree or judgment of any court or Governmental
Authority having competent jurisdiction; and
(iv) in accordance with the provisions of Section 15.13.
Any party desiring to terminate this Agreement pursuant to this Section 14.01
shall give written notice of such termination to the other parties to this
Agreement.
37
Section 14.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 14.01, such termination shall be without liability of any
party (or any Affiliate, shareholder, director, officer, employee, agent,
consultant or representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of any Transaction Document by Lockheed Xxxxxx,
Newco or any of the Purchasers, such party shall be fully liable for any and
all Damages incurred or suffered by any other party as a result of all such
breaches in an amount not to exceed $2,500,000, except that Lockheed Xxxxxx (i)
shall be fully liable for any and all Damages incurred or suffered by the
Purchasers as a result of any breach by Lockheed Xxxxxx of its obligations
under Section 7.03, (ii) shall be fully liable for any and all Damages incurred
or suffered by the Purchasers as a result of Lockheed Xxxxxx'x willful failure
to consummate the Closing (other than resulting from an unintentional failure
of any of the conditions set forth in Section 12.01 or Section 12.03) if Newco
and the Purchasers have sufficient funds available, and are ready and willing,
to pay the cash portion of the Exchange Consideration for the Transferred
Assets, and (iii) shall not be liable to the Purchasers or any other Person
hereunder for any Damages that result from a breach of the provisions of
Section 7.01 if such breach results from a breach by either of the Individual
Purchasers of Section 8.02(b). The provisions of Sections 8.01 and 15.03 and
this Section 14.02 shall survive any termination hereof pursuant to Section
14.01.
ARTICLE XV
MISCELLANEOUS
Section 15.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Lockheed Xxxxxx:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx.
Telecopy: (000) 000-0000
and
Miles & Stockbridge, a
Professional Corporation
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
38
if to Xxxxxx:
Xxxxxx Brothers Capital Partners III, L.P.
3 World Financial Center
New York, New York 10285
Attention: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
if to Xxxxx:
Xxxxx X. Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
if to XxXxxxx:
Xxxxxx X. XxXxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
If to Xxxxx:
X-0 Communications Holdings, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxxx
Telecopy: (000) 000-0000
39
with copies to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and
Xxxxxx Brothers Capital Partners III, L.P.
3 World Financial Center
New York, New York 10285
Attention: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
and
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx.
Telecopy: (000) 000-0000
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties.
Each such notice, request or other communication shall be effective (i) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 15.01 and evidence of receipt is received or (ii) if
given by any other means, upon delivery or refusal of delivery at the address
specified in this Section 15.01.
Section 15.02 Amendments; Waivers.
(a) Any provision of the Transaction Documents may be amended or waived
prior to the Closing Date if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Lockheed Xxxxxx, Newco and
the Purchasers, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under any Transaction Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
Section 15.03 Expenses. Except as otherwise provided in the Transaction
Documents and except that if the Closing shall occur the costs and expenses of
the Purchasers will be paid by Newco, all costs and expenses incurred in
connection with the Transaction Documents shall be paid by the party incurring
such cost or expense. Notwithstanding the foregoing, all transfer, sales, use
and similar fees and taxes resulting from or relating to the formation and
organization of Newco, including but not limited to the transfer of the
Transferred Assets to Newco by Lockheed Xxxxxx or any of the Affiliated
Transferors, shall be borne one-half by Lockheed Xxxxxx and one-half by Newco.
Each of Newco and Lockheed Xxxxxx shall reimburse the other
40
for one-half of such fees and taxes paid by the other promptly upon
presentation of a demand therefor.
Section 15.04 Successors and Assigns. The provisions of the Transaction
Documents shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its right or obligations under this
Agreement without the consent of Lockheed Xxxxxx, in the case of Newco or any
of the Purchasers, and Newco and the Purchasers in the case of Lockheed Xxxxxx.
Notwithstanding the foregoing proviso (i) Xxxxxx may assign all or part of its
rights to Xxxxxx Brothers Holdings Inc. and (ii) Newco may assign all or part
of its rights and obligations (other than the obligation to issue shares of its
capital stock) to a wholly owned Subsidiary of Newco, provided that Newco also
shall remain liable hereunder as if it had not assigned its rights and
obligations.
Section 15.05 Disclosure. Certain information set forth in the Disclosure
Schedules has been included and disclosed solely for informational purposes and
may not be required to be disclosed pursuant to the terms and conditions of the
Transaction Documents. The disclosure of any such information shall not be
deemed to constitute an acknowledgement or agreement that the information is
required to be disclosed in connection with the representations and warranties
made in the Transaction Documents or that the information is material, nor
shall any information so included and disclosed be deemed to establish a
standard of materiality or otherwise used to determine whether any other
information is material.
Section 15.06 Construction. As used in the Transaction Documents, any
reference to the masculine, feminine or neuter gender shall include all
genders, the plural shall include the singular, and the singular shall include
the plural. With regard to each and every term and condition of the Transaction
Documents, the parties understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and that if at any time the parties
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject hereto, no consideration shall be given to
the issue of which party actually prepared, drafted or requested any term or
condition of the Transaction Documents.
Section 15.07 Entire Agreement.
(a) The Transaction Documents and any other agreements contemplated
thereby (including, to the extent contemplated herein, the Xxxxxx
Confidentiality Agreement and paragraph 7 of the Memorandum) and certain other
letter agreements entered into contemporaneously herewith constitute the entire
agreement among the parties with respect to the subject matter of such
documents and supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect to the subject matter
thereof.
(b) The parties hereto acknowledge and agree that no representation,
warranty, promise, inducement, understanding, covenant or agreement has been
made or relied upon by any party hereto other than those expressly set forth in
the Transaction Documents. Without limiting the generality of the disclaimer
set forth in the preceding sentence, neither Lockheed Xxxxxx nor any of its
Affiliates has made or shall be deemed to have made any representations or
warranties, in any presentation or written information relating to the Business
given or to be given in connection with
41
the Contemplated Transactions, in any filing made or to be made by or on behalf
of Lockheed Xxxxxx or any of its Affiliates with any governmental agency, and
no statement, made in any such presentation or written materials, made in any
such filing or contained in any such other information shall be deemed a
representation or warranty hereunder or otherwise. The Purchasers acknowledge
that Lockheed Xxxxxx has informed them that no Person has been authorized by
Lockheed Xxxxxx or any of its Affiliates to make any representation or warranty
in respect of the Business or in connection with the Contemplated Transactions,
unless in writing and contained in this Agreement or in any of the Transaction
Documents to which they are a party.
(c) Except as expressly provided herein or in any other Transaction
Document, no Transaction Document or any provision thereof is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 15.08 Governing Law. Except as otherwise provided in any of the
Transaction Documents, this Agreement shall be construed in accordance with and
governed by the law of the State of New York.
Section 15.09 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have
received a counterpart hereof signed by the other parties hereto.
Section 15.10 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, any of the Transaction Documents or the Contemplated
Transactions may be brought against any of the parties in the United States
District Court for the Southern District of New York, and each of the parties
hereby consents to the exclusive jurisdiction of such court (and of the
appropriate appellate court) in any such suit, action or proceeding and waives
any objection to venue laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the State of New York. Without limiting the foregoing, Lockheed Xxxxxx,
Newco and the Purchasers agree that service of process upon such party at the
address referred to in Section 15.01, together with written notice of such
service to such party, shall be deemed effective service of process upon such
party.
Section 15.11 Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 15.12 Bulk Sales. Newco hereby waives compliance by Lockheed
Xxxxxx and each Affiliated Transferor, in connection with the Contemplated
Transactions, with the provisions of Article 6 of the Uniform Commercial Code
as adopted in the States of Georgia, Florida, California, Pennsylvania, New
York, Massachusetts, Utah and New Jersey, and as adopted in any other states
where any of the Transferred Assets are located, and any other applicable bulk
sales laws with respect to or requiring notice to Lockheed Xxxxxx'x (or any
Affiliated Transferor's) creditors, as the same may be in effect on the Closing
Date. Lockheed Xxxxxx shall indemnify and hold harmless Newco against any and
all liabilities (other than liabilities in respect of Assumed
42
Liabilities) which may be asserted by third parties against Newco as a result
of noncompliance with any such bulk sales law.
Section 15.13 Delivery of Disclosure Schedules; Certain Attachments.
(a) The parties acknowledge and agree that the Disclosure Schedules
contemplated by this Agreement are not being delivered at the time of signing
of this Agreement. Not later than the close of business on April 14, 1997,
Lockheed Xxxxxx shall deliver to Newco the Disclosure Schedules contemplated by
this Agreement, which Disclosure Schedules, once delivered, shall be effective
and speak as of the date of this Agreement as if delivered on the date of this
Agreement. In the event Newco or the Purchasers object to the Disclosure
Schedules, Newco or the Purchasers may, by written notice delivered to Lockheed
Xxxxxx prior to the close of business on the fifth Business Day following the
day on which the Disclosure Schedules are delivered to Newco, terminate this
Agreement. In the event Lockheed Xxxxxx does not receive such written notice
within the time period specified in the preceding sentence, Newco and the
Purchasers shall be deemed to have accepted the Disclosure Schedules. In the
event that Newco or any of the Purchasers elects to terminate this Agreement in
accordance with the provisions of this Section 15.13(a), no party to this
Agreement shall have any liability to any of the other parties to this
Agreement.
(b) The parties acknowledge and agree that Attachment X contemplated
by this Agreement is not being delivered at the time of signing of this
Agreement. Not later than the close of business on the third Business Day after
delivery of the Disclosure Schedules, Newco shall deliver to Lockheed Xxxxxx a
draft of the portions of Attachment X contemplated by Section 12.01 and Section
12.02. Not later than the close of business on the third Business Day after
delivery of the Disclosure Schedules, Lockheed Xxxxxx shall deliver to Newco a
draft of the portion of Attachment X contemplated by Section 12.01. In the
event either Newco or Lockheed Xxxxxx objects to any of the matters proposed to
be included by the other party in Attachment X, Newco and Lockheed Xxxxxx shall
in good faith discuss the matters to be included in Attachment X. In the event
Newco and Lockheed Xxxxxx are unable to reach agreement on the matters to be
included in Attachment X prior to the close of business on the sixth Business
Day after the delivery of the Disclosure Schedules, Attachment X shall include
all matters proposed to be included by each of Newco and Lockheed Xxxxxx.
(c) The parties acknowledge and agree that Attachments IV, V, VIII,
IX, XI and XV as attached to this Agreement at the time of signing of this
Agreement are subject to modification by any of the Purchasers or Lockheed
Xxxxxx at any time not later than the close of business on April 4, 1997. In
the event that any of the Purchasers or Lockheed Xxxxxx desires to amend either
Attachment IV, Attachment V, Attachment VIII, Attachment IX, Attachment XI or
Attachment XV, it shall notify the other parties in writing of the proposed
amendment and the Purchasers and Lockheed Xxxxxx shall, in good faith, discuss
the proposed amendment. In the event that, notwithstanding those discussions,
the Purchasers and Lockheed Xxxxxx are unable to resolve the differences as to
the provisions of either Attachment IV, Attachment V, Attachment VIII,
Attachment IX, Attachment XI or Attachment XV, any of the parties may terminate
this Agreement prior to the close of business on April 11, 1997 by written
notice to the other parties to this Agreement and upon any such termination no
party to this Agreement shall have any liability to any other parties to this
Agreement. If this Agreement shall not have been terminated in accordance with
the provisions of this
43
Section 15.13(c) by the close of business on April 11, 1997, the amended
versions of Attachments IV, V, VIII, IX, XI and XV shall replace Attachments
IV, V, VIII, IX, XI and XV as attached to this Agreement at the time of signing
of this Agreement.
44
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first
above written.
WITNESS: LOCKHEED XXXXXX CORPORATION
____________________________ By:________________________________
Name:
Title:
XXXXXX BROTHERS CAPITAL
PARTNERS III, L.P.
By: XXXXXX BROTHERS HOLDINGS INC.,
its General Partner
____________________________ By:___________________________
Name:
Title:
XXXXX X. XXXXX
---------------------------- -----------------------------------
XXXXXX X. XXXXXXX
---------------------------- -----------------------------------
L-3 COMMUNICATIONS HOLDINGS, INC.
____________________________ By:________________________________
Name:
Title:
45
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise.
Notwith-standing the foregoing, for purposes of the Agreement neither Lockheed
Xxxxxx nor any of the Lockheed Xxxxxx Companies shall be considered an
Affiliate of Newco or any of the Purchasers.
"Affiliated Transferors" means Lockheed Xxxxxx Tactical Systems, Inc.,
Randtron Systems, Inc., Lockheed Xxxxxx Xxxxxxxxx Corporation, Conic
Corporation, Lockheed Xxxxxx Microcom Corporation, Lockheed Xxxxxx Hycor, Inc.,
The XXXXX Microwave Corporation and any other Affiliate of Lockheed Xxxxxx that
owns any of the assets that would constitute Transferred Assets if owned, held
or used by Lockheed Xxxxxx or any of the Affiliated Transferors specified above
on the Closing Date or is liable for any of the Assumed Liabilities.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
decree or other requirement of any Governmental Authority (including any
Environmental Law) applicable to such Person or any of their respective
properties, assets, officers, directors, employees, consultants or agents (in
connection with such officer's, director's, employee's, consultant's or agent's
activities on behalf of such Person).
"Assumed Liabilities" means all of the following liabilities and
obligations of any of the Lockheed Xxxxxx Companies relating to or arising out
of the operation and affairs of the Business, the Transferred Assets or the NY
Leases:
(i) Balance Sheet and Scheduled Liabilities. All liabilities and
obligations relating to the Business, the Transferred Assets or the NY Leases
whether accrued, liquidated, contingent, matured or unmatured, at or prior to
the Closing, which (a) are disclosed in any of the Disclosure Schedules
delivered hereunder, (b) would be subject to disclosure in any of the
Disclosure Schedules delivered in connection with any of Lockheed Xxxxxx'x
representations and warranties but for the materiality standards contained in
such representation and warranty, (c) are reflected in the Final Net Tangible
Asset Amount as determined in accordance with Section 2.03 herein (including
without limitation accounts payable and reserves reflected as contra-asset
accounts, and those reflected in the estimates at completion), (d) are incurred
in the ordinary course of business subsequent to the Effective Date, other than
with respect to the matters covered by Exhibits F and G, or (e) are otherwise a
liability or obligation that Newco is expressly assuming pursuant to this
Agreement;
46
(ii) Contracts. All liabilities and obligations arising under the
Contracts, whether or not such Contracts have been completed or terminated
prior to the Closing Date, including, without limitation, any such liabilities
and obligations arising from or relating to the performance or non-performance
of the Contracts by the Business Units, Newco or any other party, whether
arising prior to, on or after the Closing Date, except to the extent they
constitute Excluded Liabilities;
(iii) Employment. All liabilities and obligations in respect of
employees and former employees of the Business provided in Exhibit G to be
assumed by Newco;
(iv) Benefit Plans; Workers' Compensation. The liabilities and
obligations under the Employee Plans and Benefit Arrangements provided in
Exhibit G to be assumed by Newco;
(v) Product Warranty and Liability Claims. All liabilities and
obligations relating to warranty obligations or services, or claims of
manufacturing or design defects, with respect to any product or service sold or
provided by the Business whether prior to, on or after the Closing Date;
(vi) Taxes. All liabilities and obligations in respect of Taxes
provided in Exhibit F to be assumed by Newco;
(vii) Environmental Liabilities. All Environmental Liabilities,
whether arising prior to, on or after the Closing Date and whether such
Environmental Liabilities are "onsite" or "offsite," but only to the extent
relating to or arising out of conditions at, or the current or former
operations of the Business Units at, the facilities owned or leased by the
Business as of the Closing Date and included in the Transferred Assets (whether
by fee ownership or leasehold interest), it being understood that the term
"Assumed Liabilities" shall not include any Environmental Liabilities included
in clause (viii) of the definition of Excluded Liabilities;
(viii) NY Leases. All liabilities and obligations relating to the NY
Leases, whether arising prior to, on or after the Closing Date;
(ix) OSHA Liabilities. All liabilities and obligations relating to the
Occupational Safety and Health Act of 1970, as amended, and any regulations,
decisions or orders promulgated thereunder, together with any state or local
law, regulation or ordinance pertaining to worker, employee or occupational
safety or health in effect as of the Closing Date or as thereinafter may be
amended or superseded, whether arising prior to, on or after the Closing Date;
(x) Litigation. All matters of governmental, judicial or adversarial
proceedings (public or private), litigation, arbitration, disputes, claims,
causes of action or investigations (collectively, "Proceedings") of a civil
nature arising from or directly or indirectly relating to any of the enumerated
"Assumed Liabilities" in clauses (i) through (ix), whether or not such matters
were accrued, liquidated, contingent, matured, unmatured, or known or unknown
to Lockheed Xxxxxx at or prior to the Closing; and
(xi) Post-Closing Liabilities. All liabilities and obligations
relating to Newco's ownership of the Transferred Assets, directly or
47
indirectly relating to or arising under the Employee Plans and Benefit
Arrangements or relating to the Transferred Employees, the lease of properties
under the NY Leases or otherwise or its conduct of the Business and any related
operations, in each case, from and after the Closing Date including, without
limitation, any and all Proceedings in respect thereof.
"Audited Business Financial Statements" means the audited combined
financial statements of the Lockheed Xxxxxx Predecessor Businesses, together
with the notes thereto, as attached in Attachment I to the Agreement.
"Bid" means any quotation, bid or proposal made by Lockheed Xxxxxx or any
of its Affiliates primarily in connection with the Business that if accepted or
awarded would lead to a Contract with the U.S. Government or any other Person
for the design, manufacture and sale of products or the provision of services
by the Business.
"Business" means the businesses conducted by the Business Units (together
with their predecessors), which in the aggregate comprise the Products Group
(excluding the business of Frequency Sources Inc. (other than its semiconductor
products business) and the assembly plant in Goodyear, Arizona), the Wideband
Systems business and the Communications Systems business of the Lockheed Xxxxxx
Companies.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Business Units" means (i) Display Systems headquartered in Atlanta,
Georgia, (ii) Advanced Recorders headquartered in Sarasota, Florida, (iii)
Conic headquartered in San Diego, California, (iv) Microcom headquartered in
Warminster, Pennsylvania, (v) Telemetry & Instrumentation headquartered in San
Diego, California, (vi) Randtron headquartered in Menlo Park, California, (vii)
Microwave--Xxxxx East headquartered in Hauppauge, New York (including the XXXXX
Semiconductor Products business in Lowell, Massachusetts), (viii)
Microwave--Xxxxx Xxxx headquartered in Rancho Cordova, California, (ix) Hycor
headquartered in Woburn, Massachusetts, (x) Wideband Systems headquartered in
Salt Lake City, Utah, (xi) Communications Systems headquartered in Camden, New
Jersey, and (xii) the Airport Explosive Detection Business represented by the
Grant from the Federal Aviation Administration held by Lockheed Xxxxxx
Specialty Components, Inc.
"Camden CAS 410 Issue" means the assertions raised by the United States
Defense Contract Audit Agency that the Communications Systems Business Unit
overallocated general and administrative expenses during its transition from a
"cost of sales" to a "total cost input" allocation methodology for such
expenses in a manner inconsistent with CAS 410.
"Closing Date" means the date of the Closing.
"Common Stock Subscription Agreements" means the Common Stock Subscription
Agreements dated the Closing Date and entered into by each of Lockheed Xxxxxx
and the Purchasers with Newco (in substantially the forms of Attachment IV to
the Agreement), as the same may be amended from time to time.
"Contemplated Transactions" means the transactions contemplated by the
Transaction Documents.
48
"Contracts" means all contracts, agreements, leases (including leases of
real property), licenses, commitments, sales and purchase orders, intercompany
work transfer agreements (with respect to work by or for other Lockheed Xxxxxx
businesses) and other instruments of any kind, whether written or oral, that
relate primarily to the Business.
"Damages" means (subject in the case of Damages suffered by Newco to
Newco's fulfillment of its obligations under Section 8.08 of the Agreement) all
demands, claims, actions or causes of action, assessments, losses, damages,
costs, expenses, liabilities, judgments, awards, fines, sanctions, penalties,
charges and amounts paid in settlement, including, without limitation,
reasonable costs, fees and expenses of attorneys, experts, accountants,
appraisers, consultants, witnesses, investigators and any other agents or
representatives of such Person (with such amounts to be determined net of any
resulting tax benefit actually received or realized and net of any refund or
reimbursement of any portion of such amounts actually received or realized,
including, without limitation, reimbursement by way of insurance, third party
indemnification or the inclusion of any portion of such amounts as a cost under
Government Contracts), but specifically excluding (i) any costs incurred by or
allocated to an Indemnified Party with respect to time spent by employees of
the Indemnified Party or any of its Affiliates, (ii) any lost profits or
opportunity costs (except to the extent assessed in connection with a
third-party claim with respect to which the party against which such damages
are assessed is entitled to indemnification hereunder), exemplary or punitive
damages and (iii) the decrease in the value of any Transferred Asset to the
extent that such valuation is based on any use of such Transferred Asset other
than its use as of the Closing Date. Notwithstanding the foregoing, in respect
of any breach of the representations and warranties set forth in Section B.05
with respect to the Audited Business Financial Statements, "Damages" shall be
limited to (i) the reasonable costs of defense by Newco of any demands, claims,
actions or causes of action to the extent related to or arising out of
allegations that the Audited Business Financial Statements as included in the
offering document used by Newco in the sale of high yield debt securities to
finance the Contemplated Transactions (and the related exchange offer
registration statement) and (ii) liability of Newco to third parties for
violations of the Securities Act or related blue sky or state securities laws
in connection with the offerings of securities referenced in the foregoing
clause (i) (with such amounts in each case to be determined net of any
resulting tax benefit actually received or realized and net of any refund or
reimbursement of any portion of such amounts actually received or realized,
including, without limitation, reimbursement by way of insurance, third party
indemnification or the inclusion of any portion of such amounts as a cost under
Government Contracts).
"December Statement" means the audited combined statement of net tangible
assets of the Business at December 31, 1996, together with the notes thereto,
as attached in Attachment II to the Agreement.
"Disclosed Financial Support Arrangements" means the Financial Support
Arrangements listed or referred to in Section B.10 of the Disclosure Schedules.
"Disclosure Schedule" means the Disclosure Schedule dated the date of this
Agreement and acknowledged by the parties hereto relating to the Agreement.
49
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any third Person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage,
personal injury, fines or penalties) arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Substances at any location, (ii) circumstances forming
the basis of any violation or alleged violation of any Environmental Laws, or
(iii) otherwise relating to obligations or liabilities under any Environmental
Laws.
"Environmental Laws" means any and all past, present or future federal,
state, local and foreign statutes, laws, regulations, ordinances, judgments,
orders, codes, or injunctions, which (i) imposes liability for or standards of
conduct concerning the manufacture, processing, generation, distribution, use,
treatment, storage, disposal, cleanup, transport or handling of Hazardous
Substances including, The Resource Conservation and Recovery Act of 1976, as
amended, The Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, The Superfund Amendment and Reauthorization Act of
1984, as amended, The Toxic Substances Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, to the extent it
relates to the handling of and exposure to hazardous or toxic materials or
similar substances, and any other so-called "Superfund" or "Superlien" law or
(ii) otherwise relates to the protection of human health or the environment.
"Environmental Liabilities" means all liabilities to the extent arising in
connection with or in any way relating to the Business or Lockheed Xxxxxx'x or
its Affiliates' use or ownership thereof, whether vested or unvested,
contingent or fixed, actual or potential, which arise under or relate to
Environmental Laws including, without limitation, (i) Remedial Actions, (ii)
personal injury, wrongful death, economic loss or property damage claims, (iii)
claims for natural resource damages, (iv) violations of law or (v) any other
cost, loss or damage with respect thereto.
"Exchange Agreement" means the Exchange Agreement referred to in the
Transfer Agreement.
"Excluded Assets" means:
(i) cash and cash equivalents of Lockheed Xxxxxx or any of its
Affiliates, including, without limitation, cash and cash equivalents used as
collateral for letters of credit, deposits with utilities, insurance companies
and other Persons;
(ii) all original books and records that Lockheed Xxxxxx or any of its
Affiliates shall be required to retain pursuant to any Applicable Law (in which
case copies of such books and records shall be provided to Newco upon request),
or that contain information relating primarily to any business or activity of
Lockheed Xxxxxx or any of its Affiliates not forming a part of the Business, or
any employee of Lockheed Xxxxxx or any of its Affiliates that is not a
Transferred Employee;
(iii) tax assets specified as Excluded Assets in Exhibit F;
50
(iv) all assets of Lockheed Xxxxxx or any of its Affiliates not held
or owned by or used primarily in connection with the Business (including the
Chelmsford, Massachusetts location of Frequency Sources, Inc.), other than the
NY Leases;
(v) all assets of Lockheed Xxxxxx or any of its Affiliates (other
than the Business Units) held or used in connection with the provision of
services, or the sale of goods, to the Business;
(vi) all rights of Lockheed Xxxxxx under any of the Transaction
Documents and the agreements and instruments delivered to Lockheed Xxxxxx by
Newco pursuant to any of the Transaction Documents;
(vii) "Legacy Intellectual Property" identified as such in Section B.16
of the Disclosure Schedules, including but not limited to income, losses and
rights relating thereto;
(viii) any accounts receivable, notes receivable or similar claims or
rights (whether billed or accrued) of the Business from Lockheed Xxxxxx or any
Affiliate of Lockheed Xxxxxx other than a Business Unit except for accounts
receivable, notes receivable or similar claims or rights (whether billed or
accrued) relating to materials sold or services rendered by the Business Units
to or for Lockheed Xxxxxx or any such Affiliates;
(ix) capital stock or any other securities of any Subsidiaries of
Lockheed Xxxxxx;
(x) Intellectual Property not used primarily in the Business, it
being understood and agreed that the only Intellectual Property consisting of
patents and patent applications used primarily in the Business are those listed
on Attachment XV;
(xi) the leasehold interest of the Lockheed Xxxxxx Companies in
respect of the Horsham, Pennsylvania property of the Microcom Business Unit;
and
(xii) any Intellectual Property developed by a Business Unit at the
expense of a Lockheed Xxxxxx Company (other than a Business Unit) unless such
Intellectual Property may fairly be characterized as an immaterial improvement,
modification or derivative work to or of Intellectual Property developed by a
Business Unit at its own expense, including but not limited to income, losses
and rights relating thereto.
"Excluded Liabilities" means the following obligations and liabilities:
(i) any obligations or liabilities in respect of events occurring
prior to the Closing Date and arising out of (1) any criminal investigations,
grand jury proceedings, or counts in any causes of action specifically alleging
criminal conduct; provided, however, that if such investigations, grand jury
proceedings or counts become civil in nature, at such time they will no longer
constitute Excluded Liabilities pursuant to this provision or (2) counts or
actions alleging civil fraud or intentional misconduct by the Communications
Systems Business Unit (or its predecessors) headquartered in Camden, New
Jersey;
51
(ii) all obligations and liabilities of Lockheed Xxxxxx or any of its
Affiliates not arising out of the conduct of the Business, except as otherwise
specifically provided in the Transaction Documents;
(iii) to the extent set forth in Exhibit F to the Agreement, any
obligation or liability for any Tax arising from or with respect to the
Transferred Assets or the operations of the Business for the Pre-Closing Tax
Period;
(iv) any liability whether presently in existence or arising after the
date of the Agreement in respect of accounts payable, notes payable (including
intercompany promissory notes and similar financing arrangements) or similar
obligations (whether billed or unbilled) to or allocated to Lockheed Xxxxxx or
any Affiliate of Lockheed Xxxxxx, except for accounts payable, notes payable or
similar obligations (whether billed or unbilled) relating to materials sold or
services rendered to, or any insurance procured for, the Business Units by
Lockheed Xxxxxx or any Affiliate of Lockheed Xxxxxx other than a Business Unit;
(v) any liability whether presently in existence or arising after the
date of the Agreement relating to fees, commissions or expenses owed to any
broker, finder, investment banker, accountant, attorney or other intermediary
or advisor employed by Lockheed Xxxxxx or any of its Affiliates in connection
with the Contemplated Transactions;
(vi) any obligation or liability retained by Lockheed Xxxxxx pursuant
to Exhibit G;
(vii) all obligations and liabilities related to Excluded Assets;
(viii) all Environmental Liabilities whether arising prior to, on or
after the Closing Date and whether such Environmental Liabilities are "onsite"
or "offsite," (1) relating to or arising out of conditions at or the operations
of the Camden Truck Depot located at 0000 0xx Xxxxxx, Xxxxxx, Xxx Xxxxxx, or
(2) relating to or arising out of conditions at, or the current or former
operations at, any facilities not included in the Transferred Assets (whether
by fee ownership or leasehold interest) (including any predecessors to such
facilities); and
(vi) all obligations and liabilities related to the closing of the
assembly plant formerly operated by the Conic Business Unit in Goodyear,
Arizona.
"Financial Support Arrangements" means any obligations, contingent or
otherwise, of a Person in respect of any indebtedness, obligation or liability
(including assumed indebtedness, obligations or liabilities) of another Person,
including but not limited to remaining obligations or liabilities associated
with indebtedness, obligations or liabilities that are assigned, transferred or
otherwise delegated to another Person, if any, letters of credit and standby
letters of credit (including any related reimbursement or indemnity
agreements), direct or indirect guarantees, endorsements (except for collection
or deposit in the ordinary course of business), notes co-made or discounted,
recourse agreements, take-or-pay agreements, keep-well agreements, agreements
to purchase or repurchase such indebtedness, obligation or liability or any
security therefor or to provide funds for the payment or discharge thereof,
agreements to maintain solvency,
52
assets, level of income or other financial condition, agreements to make
payment other than for value received and any other financial accommodations.
"GAAP" means Generally Accepted Accounting Principles as in effect on
the date of the Agreement.
"Government Contract" means any prime contract, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, pricing
agreement, letter contract, purchase order, delivery order, change order, Bid
or other arrangement of any kind relating exclusively to the Business between
Lockheed Xxxxxx or any of the Affiliated Transferors and (i) the U.S.
Government (acting on its own behalf or on behalf of another country or
international organization), (ii) any prime contractor of the U.S. Government
or (iii) any subcontractor with respect to any contract of a type described in
clauses (i) or (ii) above.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Hazardous Substances" means substances defined as "hazardous substances,"
"hazardous materials" or "hazardous waste" in The Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or The Resource
Conservation and Recovery Act of 1976, as amended, those substances defined as
"hazardous wastes" in the regulations adopted and publications promulgated
pursuant to any of said laws, those substances defined as "toxic substances" in
The Toxic Substances Control Act, as amended, petroleum, its derivatives and
petroleum products, and asbestos and asbestos containing materials.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Intellectual Property" means all patents, copyrights, technology,
know-how, processes, trade secrets, inventions, proprietary data, formulae,
research and development data and computer software programs; all trademarks,
trade names, service marks and service names; all registrations, applications,
recordings, licenses and common-law rights relating thereto, all rights to xxx
at law or in equity for any infringement or other impairment thereto, including
the right to receive all proceeds and damages therefrom, and all rights to
obtain renewals, continuations, divisions or other extensions of legal
protections pertaining thereto; and all other United States, state and foreign
intellectual property owned by Lockheed Xxxxxx or the Affiliated Transferors on
the Closing Date.
"Interim Services Agreement" means the Interim Services Agreement dated
the Closing Date by and among Newco and Lockheed Xxxxxx as contemplated by
Section 2.01, as the same may be amended from time to time.
"Inventory" means all items of inventory notwithstanding how classified in
Lockheed Xxxxxx'x financial records, including all raw materials,
work-in-process and finished goods, together with costs accumulated under all
Contracts in progress.
53
"Xxxxxx Confidentiality Agreement" means the letter agreement dated
November 13, 1996, by and between Lockheed Xxxxxx and Xxxxxx, as the same has
been or may be amended from time to time.
"License Agreements" means the license agreements dated the Closing Date
by and among Newco and Lockheed Xxxxxx as contemplated by Section 9.04, as the
same may be amended from time to time.
"Lien" means, with respect to any asset, any mortgage, lien, claim,
pledge, charge, security interest or other encumbrance of any kind in respect
of such asset.
"Lockheed Xxxxxx Companies" means Lockheed Xxxxxx and its Subsidiaries.
"Material Adverse Effect" means (i) with respect to the Business, a
material adverse effect on the assets, properties, business, financial
condition or results of operations of the Business taken as a whole, or (ii)
with respect to any other Person, a material adverse effect on the assets,
properties, business, financial condition or results of operations of such
Person and its Subsidiaries taken as a whole.
"Memorandum" means the Memorandum of Understanding dated January 31, 1997,
by and among Lockheed Xxxxxx and the Purchasers, as the same may be amended
from time to time.
"Net Tangible Assets" means (i) all Transferred Assets of the Business,
(ii) minus all (1) Assumed Liabilities of the Business, (2) goodwill, (3)
intangible assets related to contracts and programs acquired, and (4) any
reserve, liability or asset resulting from or relating to pension benefits,
retirement benefits or other post-employment benefits, (iii) in accordance with
the practices and policies of Lockheed Xxxxxx on December 31, 1996 and employed
in the preparation of the December Statement, determined, in each case, in
accordance with the December Statement and Attachment VI.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Newco Bylaws" means the Bylaws of Newco as attached in Attachment IX.
"Newco Certificate of Incorporation" means the Certificate of
Incorporation of Newco as attached in Attachment VIII.
"Newco Class A Stock" means the Class A Common Stock, par value $.01 per
share, of Newco.
"Newco Class B Stock" means the Class B Common Stock, par value $.01 per
share, of Newco.
"NY Leases" means the lease by and between Loral Corporation (now known as
Lockheed Xxxxxx Tactical Systems, Inc.) and 000 Xxxxx Xxxxxx Associates in
respect of the property located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as the
same may be amended and supplemented from time to time, including the interests
of the Lockheed Xxxxxx Companies in any related fixtures, improvements and
personal property located therein.
"Operation and Maintenance Costs" means the reasonable costs (including
routine monitoring and sampling) required to operate and maintain the
54
effectiveness of an environmental response action that, on or prior to the
eighth anniversary of the Closing Date, has been constructed or effectuated
and, if required, have been approved (or subsequently are approved as
constructed or effectuated as of the eighth anniversary of the Closing Date) by
the applicable environmental regulatory authority, it being understood that
Operation and Maintenance Costs does not include (i) any capital costs (other
than replacement in kind) relating to any such action, (ii) any claim for
property damage, damages to natural resources or personal injury or similar
claims or damages, whether or not arising out of the operation or maintenance
of such action or otherwise or (iii) any fines or penalties, whether or not
arising out of the operation or maintenance of such action or otherwise.
"Permitted Liens" means any of the following:
(i) Liens for taxes that (x) are not yet due or delinquent or (y)
are being contested in good faith by appropriate proceedings;
(ii) statutory Liens or landlords' carriers' warehousemen's
mechanic's, suppliers' materialmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue for a
period of 45 days or amounts being contested in good faith by appropriate
proceedings;
(iii) easements, rights of way, restrictions and other similar charges
or encumbrances on real property interests, that, individually or in the
aggregate, do not materially interfere with the ordinary course of operation of
the Business or the use of any such real property for its current uses;
(iv) leases or subleases granted to others that do not materially
interfere with the ordinary conduct of the Business;
(v) with respect to real property, title defects or irregularities
that do not in the aggregate materially impair the use of such real property
for its current use;
(vi) Liens in favor of the U.S. Government or any other customer of
the Business arising in the ordinary course of business;
(vii) rights and licenses granted to others in Intellectual Property;
(viii) with respect to any Real Property Lease where any of the Lockheed
Xxxxxx Companies is a lessee, any Lien affecting the interest of the landlord
thereunder;
(ix) Liens, title defects, encumbrances, easements and restrictions,
invalidities of leasehold interests (collectively, "Encumbrances") that have
not had, and could not reasonably be expected to have, a Material Adverse
Effect on the Business; and
(x) Encumbrances disclosed in the Disclosure Schedule or taken
into account in the December Statement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, an association, a trust or
55
any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Prime Government Contract" means any Government Contract relating
primarily to the Business in connection with which Lockheed Xxxxxx or an
Affiliated Transferor is the prime contractor.
"Remedial Action(s)" means the investigation, clean-up or remediation of
contamination or environmental degradation or damage caused by, related to or
arising from the generation, use, handling, treatment, storage, transportation,
disposal, discharge, release, or emission of Hazardous Substances, including,
without limitation, investigations, response, removal and remedial actions
under The Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, corrective action under The Resource Conservation and
Recovery Act of 1976, as amended, and clean-up requirements under similar state
Environmental Laws.
"Representatives" means (i) with respect to Xxxxxx, any of the
"Representatives" as defined in the Xxxxxx Confidentiality Agreement, (ii) with
respect to the Individual Purchasers, any of the "Representatives" as defined
in the Memorandum and (iii) with respect to Lockheed Xxxxxx or Newco, each of
their respective directors, officers, advisors, attorneys, accountants,
employees or agents.
"Responsible Contracting Officer" means, with respect to any Prime
Government Contract, the Person identified as such with respect thereto in
Section 42.1202(a) of the Federal Acquisition Regulation, Part 42 of the Code
of Federal Regulations.
"Sarasota Asset Step-Up Issue" means the position of the U.S. Government
that the amendment of the provisions of the Federal Acquisition Regulations
relating to the ability of a contractor to include in its overhead the "stepped
up" value of acquired assets shall have retroactive effect and the related
impact on the Advanced Recorders Business Unit of its agreements in June 1994,
April 1995 and January 1997 with the cognizant Administrative Contracting
Officer to authorize the Advanced Recorders Business Unit to include in its
overhead the "stepped up" assets relating to the acquisition of Advanced
Recorders by Loral Corporation in 1989.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders Agreement" means the Stockholders Agreement dated the
Closing Date by and among Newco, Lockheed Xxxxxx and the Purchasers (in
substantially the form of Attachment V to the Agreement), as the same may be
amended from time to time.
"Subsidiary" as it relates to any Person, shall mean with respect to any
Person, any corporation, partnership, joint venture or other legal entity of
which such Person, either directly or through or together with any other
Subsidiary of such Person, owns more than 50% of the voting power in the
election of directors or their equivalents, other than as affected by events of
default.
56
"Supply Agreement" means the Supply Agreement dated the Closing Date by
and among Newco and Lockheed Xxxxxx as contemplated by Section 2.01, as the
same may be amended from time to time.
"Transaction Documents" means the Agreement, the Transfer Agreement, the
Exchange Agreement, the Common Stock Subscription Agreements, the Stockholders
Agreement, the Interim Services Agreement, the Supply Agreement, the License
Agreements, the Newco Certificate of Incorporation, the Newco Bylaws and any
exhibits or attachments to any of the foregoing, as the same may be amended
from time to time.
"Transfer Agreement" means the Transfer Agreement dated March 28, 1997, by
and between Lockheed Xxxxxx and Newco (a copy of which is attached as
Attachment III to the Agreement), as the same may be amended from time to time.
"Transferred Assets" means all of the assets, properties, rights,
licenses, permits, contracts, causes of action and business of every kind and
description as the same shall exist on the Closing Date, other than the
Excluded Assets, wherever located, real, personal or mixed, tangible or
intangible, owned by, leased by or in the possession of Lockheed Xxxxxx or any
Affiliated Transferor, whether or not reflected in the books and records
thereof, and held or used primarily in the conduct of the Business as the same
shall exist on the Closing Date, including but not limited to all assets
reflected in the December Statement and not disposed of in the ordinary course
of business or as permitted or contemplated by the Agreement, and all assets of
the Business acquired by Lockheed Xxxxxx or any Affiliated Transferor, on or
prior to the Closing Date and not disposed of in the ordinary course of
business or as permitted or contemplated by the Agreement and including,
without limitation, except as otherwise specified herein, all direct or
indirect right, title and interest of Lockheed Xxxxxx or any Affiliated
Transferor in, to and under:
(i) all real property and leases (including, without limitation, the
NY Leases), whether capitalized or operating, of, and other interests in, real
property, owned by Lockheed Xxxxxx or any of its Affiliates that are used
primarily in the Business, in each case together with all buildings, fixtures,
easements, rights of way, and improvements thereon and appurtenances thereto;
(ii) all personal property and interests therein, including machinery,
equipment, furniture, office equipment, communications equipment, vehicles,
storage tanks, spare and replacement parts, fuel and other tangible property
(and interests in any of the foregoing) owned by Lockheed Xxxxxx or any of its
Affiliates that are used primarily in connection with the Business:
(iii) all costs accumulated for all Contracts in progress, raw
materials, work-in-process, finished goods, supplies and other inventories that
are owned by Lockheed Xxxxxx or any of its Affiliates and held for sale, use or
consumption primarily in the Business;
(iv) all Contracts;
(v) all Bids (with any Contracts (including, without limitation,
Government Contracts) awarded to Lockheed Xxxxxx or any of its Affiliates on or
before the Closing Date in respect of such Bids to be deemed Contracts);
57
(vi) all accounts, accounts receivable and notes receivable whether or
not billed, accrued or otherwise recognized in the December Statement or taken
into account in the determination of the Final Net Tangible Asset Amount,
together with any unpaid interest or fees accrued thereon or other amounts due
with respect thereto, of Lockheed Xxxxxx or any of its Affiliates that relate
primarily to the Business, and any security or collateral for any of the
foregoing;
(vii) all expenses that have been prepaid by Lockheed Xxxxxx or any of
its Affiliates to the extent relating to the operation of the Business,
including but not limited to ad valorem taxes, lease and rental payments;
(viii) all of Lockheed Xxxxxx'x or any of its Affiliates' rights,
claims, credits, causes of action or rights of set-off against third parties
relating prima rily to the Business or the Transferred Assets, including,
without limitation, unliquidated rights under manufacturers' and vendors'
warranties;
(ix) all Intellectual Property (other than Intellectual Property
constituting an Excluded Asset) used primarily in the Business, including the
goodwill of the Business symbolized thereby (including, without limitation, the
rights to the name "Xxxxxxxxx" when used by or in connection with the Advanced
Recorders Business Unit and the names "Xxxxx," "Conic," and "Randtron," but
excluding "Lockheed Xxxxxx," "Loral," "Lockheed" and "Xxxxxx Xxxxxxxx" and any
derivatives thereof together with any logos, trade dress or other intellectual
property rights relating thereto);
(x) all transferable franchises, licenses, permits or other
governmental authorizations owned by, or granted to, or held or used by,
Lockheed Xxxxxx or any of its Affiliates and primarily related to the Business;
(xi) except to the extent Lockheed Xxxxxx or any of its Affiliates is
required to retain the originals pursuant to any Applicable Law (in which case
copies will be provided to Newco upon request), all business books, records,
files and papers, whether in hard copy or computer format, of Lockheed Xxxxxx
or any of its Affiliates used primarily in the Business, including, without
limitation, bank account records, books of account, invoices, engineering
information, sales and promotional literature, manuals and data, sales and
purchase correspondence, lists of present and former suppliers, lists of
present and former customers, personnel and employment records of present or
former employees, documentation developed or used for accounting, marketing,
engineering, manufacturing, or any other purpose relating to the conduct of the
Business at any time prior to the closing;
(xii) the right to represent to third parties that Newco is the
successor to the Business;
(xiii) all insurance proceeds, net of any retrospective premiums,
deductibles, retention or similar amounts, arising out of or related to damage,
destruction or loss of any property or asset of or used primarily in connection
with the Business to the extent of any damage or destruction that remains
unrepaired, or to the extent any property or asset remains unreplaced at the
Closing Date;
(xiv) any tax assets specified to be Transferred Assets in Exhibit F;
and
58
(xv) all of the Lockheed Xxxxxx Companies' right, title and interest
in the real property located at 0000 Xxxxxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxx.
"U.S. Government" means the United States Government and any agencies,
instrumentalities and departments thereof.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means
(i) with respect to Lockheed Xxxxxx, to the actual knowledge of any of the
Senior Vice Presidents or higher ranking officers of Lockheed Xxxxxx, or the
Vice President, Financial Strategies of Lockheed Xxxxxx, or the President,
Chief Financial Officer and General Counsel of the Lockheed Xxxxxx Operating
Sector to which each of the Business Units reports, and shall be deemed to
include a representation that a reasonable investigation or inquiry of the
subject matter thereof has been conducted by or on behalf of the foregoing
specified Persons, which investigation shall include inquiries of the President
and the Chief Financial Officer of each of the Business Units, and (ii) with
respect to the Individual Purchasers, to the actual knowledge of either of the
Individual Purchasers as of the date the applicable representation or warranty
is made (by Lockheed Xxxxxx, in the case of representations in Exhibit B
limited by reference to the knowledge of the Individual Purchasers, or by the
Individual Purchasers, in the case of representations in Exhibit D), it being
understood that if there is any dispute as to whether an Individual Purchaser
had actual knowledge of any fact, event or circumstance and Lockheed Xxxxxx
seeks to assert such knowledge as a defense to any claim under any of the
Transaction Documents, Lockheed Xxxxxx shall have the burden of proof in
connection with any such determination. Notwithstanding the foregoing, the
knowledge of Lockheed Xxxxxx at any particular time shall not include knowledge
of any matters actually known by either of the Individual Purchasers at such
time if such matters are not also actually known by one or more of the other
individuals specified in clause (i) above (whether by disclosure to them by the
Individual Purchasers or otherwise).
(c) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
Accrued Liability . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Allocation Tax Loss . . . . . . . . . . . . . . . . . . . . . . . . F.01
Alternative Transaction Proposals . . . . . . . . . . . . . . . . . 7.04
Assumed Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Basis Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Benefit Arrangement . . . . . . . . . . . . . . . . . . . . . . . . G.01
Camden SERPs . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Camden Transferee . . . . . . . . . . . . . . . . . . . . . . . . . G.01
Camden Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Cash Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . B.21
Defending Party . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
Employee Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . G.01
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . A
59
Environmental Insurance Claims . . . . . . . . . . . . . . . . . . 9.07
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.01
Estimated Final Net Tangible Asset Amount . . . . . . . . . . . . . 2.03
Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . 2.02
Exchange Consideration Schedule . . . . . . . . . . . . . . . . . . F.05
Federal Systems Plan . . . . . . . . . . . . . . . . . . . . . . . G.05
Final Determination . . . . . . . . . . . . . . . . . . . . . . . . F.01
Final Net Tangible Asset Amount . . . . . . . . . . . . . . . . . . 2.03
Former GE Employees . . . . . . . . . . . . . . . . . . . . . . . . G.07
GE Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . G.07
GE Reimbursement Obligations . . . . . . . . . . . . . . . . . . . G.07
Government Bid . . . . . . . . . . . . . . . . . . . . . . . . . . B.15
Government Conditions . . . . . . . . . . . . . . . . . . . . . . . G.05
Hycor Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Indemnified Claim . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . 13.03
Individual Purchaser . . . . . . . . . . . . . . . . . . . . . Preamble
Initial Transfer Amount . . . . . . . . . . . . . . . . . . . . . . G.05
Initial Transfer Date . . . . . . . . . . . . . . . . . . . . . . . G.05
Insurance Liabilities . . . . . . . . . . . . . . . . . . . . . . . 8.03
Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
XxXxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . B.07
Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
LMC SERPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
LMTS SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
LMTS Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Lockheed Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Lockheed Xxxxxx Conditions . . . . . . . . . . . . . . . . . . . . G.05
Lockheed Xxxxxx Defined Contribution Plans . . . . . . . . . . . . G.06
Lockheed Xxxxxx Pension Plans . . . . . . . . . . . . . . . . . . . G.05
Lockheed Xxxxxx Savings Plans . . . . . . . . . . . . . . . . . . . G.06
Lockheed Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Long Range Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
Xxxxx Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Newco Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Newco's Savings Plans . . . . . . . . . . . . . . . . . . . . . . . G.06
Newco SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Newco Spinoff Plans . . . . . . . . . . . . . . . . . . . . . . . . G.05
Novation Agreement . . . . . . . . . . . . . . . . . . . . . . . . 7.08
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . B.07
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.21
Post-Closing Tax Period . . . . . . . . . . . . . . . . . . . . . . F.01
Pre-Closing Tax Period . . . . . . . . . . . . . . . . . . . . . . F.01
Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Program Agreements . . . . . . . . . . . . . . . . . . . . . . . . G.08
Proposed Final Net Tangible Asset Amount . . . . . . . . . . . . . 2.03
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . B.07
Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . B.07
Referee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Release Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03
Remaining Recovery . . . . . . . . . . . . . . . . . . . . . . . . 9.07
Section 351 Transfer . . . . . . . . . . . . . . . . . . . . . . . F.01
60
Section 4044 Amount . . . . . . . . . . . . . . . . . . . . . . . . G.05
SERP Liability . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Spinoff Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . G.08
Supplementary Plan . . . . . . . . . . . . . . . . . . . . . . . . G.05
Surviving Representation and Covenant . . . . . . . . . . . . . . 13.01
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.01
Tax Basis Shortfall . . . . . . . . . . . . . . . . . . . . . . . . F.01
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . 13.03
Transferred Beneficiary . . . . . . . . . . . . . . . . . . . . . . G.01
Transferred Benefit Plans . . . . . . . . . . . . . . . . . . . . . G.10
Transferred Employee . . . . . . . . . . . . . . . . . . . . . . . G.01
Transferred Savings Plans . . . . . . . . . . . . . . . . . . . . . G.06
True-Up Amount . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
True-Up Date . . . . . . . . . . . . . . . . . . . . . . . . . . . G.05
WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.02
61
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF LOCKHEED XXXXXX
Lockheed Xxxxxx hereby represents and warrants prior to but not after the
Closing to the Purchasers, and as of and after the Closing to Newco, that:
B.01. Corporate Existence and Power. Each of Lockheed Xxxxxx and each
Affiliated Transferor is a corporation duly incorporated, validly existing and
in good standing under the laws of the state of its incorporation and has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on the Business as now conducted, except where the
failure to have such licenses, authorizations, consents and approvals has not
had, and could not reasonably be expected to have, a Material Adverse Effect on
the Business. Each of Lockheed Xxxxxx and each Affiliated Transferor, as the
case may be, is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities make such qualification necessary to carry on the
Business as now conducted, except where the failure to be so qualified has not
had, and could not reasonably be expected to have, a Material Adverse Effect on
the Business.
B.02. Corporate Authorization. The execution, delivery and performance by
each of Lockheed Xxxxxx and each Affiliated Transferor of each of the
Transaction Documents to which it is a party and the consummation by Lockheed
Xxxxxx and each Affiliated Transferor of the Contemplated Transactions are
within its corporate powers and have been duly authorized by all necessary
corporate action on its part. Each of the Transaction Documents to which it is
a party constitutes a legal, valid and binding agreement of Lockheed Xxxxxx and
each Affiliated Transferor enforceable against it in accordance with its terms
(i) except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and (ii) subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding at law or in equity).
B.03. Governmental Authorization.
(a) The execution, delivery and performance by Lockheed Xxxxxx and
each Affiliated Transferor of the Transaction Documents to which it is a party
require no action by or in respect of, or consent or approval of, or filing
with, any Governmental Authority other than:
(i) compliance with any applicable requirements of the HSR
Act;
(ii) compliance with any applicable requirements of the New
Jersey Industrial Site Recovery Act;
62
(iii) the facilities clearance requirements of the Defense
Investigative Service of the United States Department of Defense ("DIS"),
as set forth in the DIS Industrial Security Regulation and the DIS
Industrial Security Manual, as each may be amended from time to time;
(iv) the novation of the Government Contracts as contemplated
by Section 7.08 herein;
(v) any actions, consents, approvals or filings set forth in
Section B.03 of the Disclosure Schedules or otherwise expressly referred
to in this Agreement; and
(vi) such other consents, approvals, authorizations, permits and
filings the failure to obtain or make would not have, in the aggregate, a
Material Adverse Effect on the Business.
(b) To the knowledge of Lockheed Xxxxxx, there are no facts relating
to the identity or circumstances of Lockheed Xxxxxx or any of its Affiliates
that would prevent or materially delay obtaining any of the consents referred
to in Section B.03(a).
B.04. Non-Contravention. Except as set forth in Section B.04 of the
Disclosure Schedules or known to the Individual Purchasers (in the case of
clauses (i)(B) and (i)(C) below), the execution, delivery and performance by
Lockheed Xxxxxx of the Transaction Documents do not and will not (i)(A)
contravene or conflict with the charter or bylaws of Lockheed Xxxxxx or any
Affiliated Transferor, (B) assuming compliance with the matters referred to in
Section B.03, contravene or conflict with or constitute a violation of any
provisions of any Applicable Law, regulation, judgment, injunction, order, writ
or decree binding upon Lockheed Xxxxxx or any Affiliated Transferor that is
applicable to the Business; (C) assuming compliance with the matters referred
to in Section B.03, constitute a default under or give rise to any right of
termination, cancellation or acceleration of, or to a loss of any benefit
relating primarily to the Business to which Lockheed Xxxxxx or any Affiliated
Transferor is entitled under, any agreement, Contract or other instrument
binding upon Lockheed Xxxxxx or any Affiliated Transferor and relating
primarily to the Business or by which any of the Transferred Assets is or may
be bound or any license, franchise, permit or similar authorization held by
Lockheed Xxxxxx or any Affiliated Transferor relating primarily to the Business
except, in the case of clauses (B) and (C), for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that could not reasonably be expected to have a Material Adverse Effect on the
Business or (ii) result in the creation or imposition of any Lien on any
transferred Asset, other than Permitted Liens and other than such Liens the
creation or imposition of which could not reasonably be expected to have a
Material Adverse Effect on the Business.
B.05. Financial Statements.
(a) The December Statement presents fairly, in all material respects,
the Net Tangible Assets of the Business (other than the Airport Explosive
Detection Business) as of December 31, 1996, in conformity with GAAP (except as
set forth in the notes thereto or in Attachment VI applied on a basis
consistent in all material respects with the manner in which the Business
reported as of December 31, 1996 its financial position for inclusion in the
financial statements of Lockheed Xxxxxx.
63
(b) The Audited Business Financial Statements have been prepared
based upon the books and records of Lockheed Xxxxxx and the Affiliated
Transferors relating to the Business and present fairly the financial
condition, results of operations and cash flows of the Business in conformity
with GAAP (except as set forth in the notes thereto) for the periods and as of
the dates included therein.
B.06. Absence of Certain Changes. Except for matters that would be
permitted (without consent of either of the Individual Purchasers) in
accordance with Section 7.01 if they occurred after the date of this Agreement,
as set forth in Section B.06 of the Disclosure Schedules and except as known to
the Individual Purchasers, from December 31, 1996 to the date of this
Agreement, there has not been any material adverse change in the business,
financial condition or results of operations of the Business and there has not
been:
(a) any event, occurrence, development or state of circumstances or
facts that has had a Material Adverse Effect on the Business, other than those
resulting from changes, whether actual or prospective, in general conditions
applicable to the industries in which the Business is involved or general
economic conditions;
(b) any damage, destruction or other casualty loss affecting the
Business or any assets that would constitute Transferred Assets if owned, held
or used by Lockheed Xxxxxx or any of the Affiliated Transferors on the Closing
Date that has had a Material Adverse Effect on the Business;
(c) any transaction or commitment made, or any contract or agreement
entered into, by Lockheed Xxxxxx or any Affiliated Transferor relating
primarily to the Business or any assets that would constitute Transferred
Assets if owned, held or used by Lockheed Xxxxxx or any of the Affiliated
Transferors on the Closing Date (including the acquisition or disposition of
any assets) or any termination or amendment by Lockheed Xxxxxx or any
Affiliated Transferor of any contract or other right relating primarily to the
Business, in either case, material to the Business taken as a whole, other than
transactions and commitments in the ordinary course of business and those
contemplated by this Agreement;
(d) any sale or other disposition of more than an aggregate of
$250,000 of assets (other than Inventory or any sale made in the ordinary
course of business) that would constitute Transferred Assets if owned, held or
used by any of the Lockheed Xxxxxx companies on the Closing Date;
(e) any increase in the compensation of any current employee of any
of the Business Units at a level of vice president or above, other than
nondiscretionary increases pursuant to Employee Plans or Benefit Arrangements
disclosed in Section B.21 of the Disclosure Schedules or referenced in Exhibit
G; and
(f) any cancellation, compromise, waiver or release by Lockheed
Xxxxxx of any claim or right (or a series of related rights and claims) related
to the Business, other than cancellations, compromises, waivers or releases in
the ordinary course of business.
64
B.07. Sufficiency of and Title to the Transferred Assets.
(a) The Transferred Assets, together with the services to be provided
to Newco pursuant to the Interim Services Agreement and the Intellectual
Property to be licensed to Newco pursuant to the License Agreements,
constitute, and on the Closing Date will constitute, all of the assets and
services that are necessary to permit the operation of the Business in
substantially the same manner as such operations have heretofore been
conducted.
(b) Upon consummation of the Contemplated Transactions, Newco will
have acquired good and marketable title in and to, or a valid leasehold
interest in, each of the Transferred Assets that are necessary to permit the
operation of the Business in substantially the same manner as operations have
heretofore been conducted, free and clear of all Liens, except for Permitted
Liens.
(c) Section B.07 of the Disclosure Schedules includes a true and
complete list of all real property owned by the Lockheed Xxxxxx Companies (or
property which the Lockheed Xxxxxx Companies have a right to acquire in
connection with the operation of the Business) which is included in the
Transferred Assets (collectively, the "Owned Real Property"; the Owned Real
Property and the Leased Real Property, collectively the "Real Property").
Section B.07(c) of the Disclosure Schedules specifies (i) the address of each
parcel of Owned Real Property and (ii) the owner of such Owned Real Property.
(d) Section B.07 of the Disclosure Schedules includes a true and
complete list of all agreements (together with any amendments thereof
collectively, the "Real Property Leases") pursuant to which the Lockheed Xxxxxx
Companies lease, sublease or otherwise occupy (whether as landlord, tenant,
subtenant or other occupancy arrangement) any real property used in the
Business (collectively, the "Leased Real Property"). Section B.07 of the
Disclosure Schedules specifies (i) the address of each parcel of Leased Real
Property and (ii) the owner of the leasehold, subleasehold or occupancy
interest for each Leased Real Property.
B.08. No Undisclosed Liabilities. To the knowledge of Lockheed Xxxxxx,
there are no liabilities of Lockheed Xxxxxx (or any Affiliated Transferor)
relating to the Business that constitute Assumed Liabilities of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities disclosed or provided for in the December Statement
and liabilities for matters taken into account in the determination of the
Final Net Tangible Asset Amount;
(b) liabilities (i) disclosed in Section B.08 of the Disclosure
Schedules, (ii) known to the Individual Purchasers, (iii) related to any
Contract disclosed in the Disclosure Schedules or (iv) related to any Employee
Plan or Benefit Arrangements identified in Exhibit G or disclosed in Section
B.08 of the Disclosure Schedules;
(c) liabilities incurred in the ordinary course of business since
December 31, 1996;
(d) liabilities not required to be accrued for or reserved against
in accordance with GAAP as of December 31, 1996; and
65
(e) with respect to the bring down of this representation and
warranty as of the Closing Date, liabilities not required to be accrued for or
reserved against in accordance with GAAP as of the Closing Date.
B.09. Litigation; Contract-Related Matters.
(a) Except as set forth in Section B.09 of the Disclosure Schedules
or reserved against or referred to in the December Statement, there is no
action, suit, investigation or proceeding (except for actions, suits or
proceedings referred to in Section B.09(b)) pending against, or to the
knowledge of Lockheed Xxxxxx, threatened against or affecting, the Business or
any Transferred Asset before any court or arbitrator or any governmental body,
agency, official or authority which could reasonably be expected to have a
Material Adverse Effect on the Business.
(b) Except as set forth in Section B.09 of the Disclosure Schedules
or reserved against or referred to in the December Statement or known to the
Individual Purchasers, there is no action, suit, investigation or proceeding
relating to any Government Contract or Bid, or relating to any proposed
suspension or debarment of the Business or any of its employees, pending
against, or to the knowledge of Lockheed Xxxxxx, threatened against or
affecting the Business or any Transferred Asset before any court or arbitrator
or any governmental body, agency, official or authority which could reasonably
be expected to have a Material Adverse Effect on the Business.
(c) None of the Lockheed Xxxxxx Companies is, in connection with the
Business, subject to any unsatisfied monetary judgment, order or decree that
would materially affect Newco's ability to conduct the business and operations
of the Business immediately after Closing as the Lockheed Xxxxxx Companies
currently conduct them.
B.10. Material Contracts and Bids; Backlog.
(a) Except as set forth in Section B.10 of the Disclosure Schedules,
to the knowledge of Lockheed Xxxxxx, as of the date of this Agreement, the
Lockheed Xxxxxx Companies, with respect to the Business, are not parties to or
otherwise bound by or subject to:
(i) any written employment, severance, consulting or sales
representative Contract which contains an obligation to pay more than
$100,000 per year and constitutes an Assumed Liability;
(ii) any Contract containing any covenant limiting the freedom of
the Lockheed Xxxxxx Companies, with respect of the Business or the
operations of any of the Business Units, to engage in any line of business
or compete with any Person in any geographic area in any material respect
if such Contract will be binding on Newco after the Closing;
(iii) any Contract in effect on the date of this Agreement
relating to the disposition or acquisition of the assets of, or any
interest in, any business enterprise which relates to the Business other
than in the ordinary course of business;
(iv) any Financial Support Arrangements;
66
(v) any indebtedness for borrowed money of the Business that
would constitute an Assumed Liability if in existence on the Closing Date,
other than indebtedness or borrowed money totaling not more than $100,000
in the aggregate; or
(vi) any offset agreement entered into in connection with an
international sales transaction and relating to any Contract that imposes
on the Business an obligation to perform that will continue in effect on
or after the Closing Date.
Notwithstanding the foregoing or any other provisions of this Agreement, the
failure of Lockheed Xxxxxx to include any Financial Support Arrangements in
Section B.10 of the Disclosure Schedules shall not constitute a breach of a
representation or warranty hereunder and shall have no effect on the rights,
duties and obligations of the parties under this Agreement, except that the
obligations of Newco under Section 8.03 in respect of Financial Support
Arrangements shall not include an obligation to seek the release of or comply
with Section 8.03(g) with respect to any Financial Support Arrangements in
existence on the date of this Agreement that are not disclosed in Section B.10
of the Disclosure Schedules.
(b) Except as disclosed in Section B.10 of the Disclosure Schedules,
or known to the Individual Purchasers, to the knowledge of Lockheed Xxxxxx all
cost or pricing data submitted or certified in connection with Bids and
Government Contracts were when filed current, accurate and complete in
accordance with the Truth in Negotiation Act, as amended, and the rules and
regulations thereunder, except any failures to be current, accurate and
complete which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Business.
(c) Except as disclosed in Section B.10 of the Disclosure Schedules,
or known to the Individual Purchasers, each Government Contract and each other
material Contract relating to the Business or any of the Transferred Assets is
a legal, valid and binding obligation of Lockheed Xxxxxx (or the applicable
Affiliated Transferor) enforceable against Lockheed Xxxxxx (or the applicable
Affiliated Transferor) in accordance with its terms (except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers, and subject to the
limitations imposed by general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity), and Lockheed
Xxxxxx (or the applicable Affiliated Transferor) is not in default and has not
failed to perform any obligation thereunder, and, to the knowledge of Lockheed
Xxxxxx, there does not exist any event, condition or omission which would
constitute a breach or default (whether by lapse of time or notice or both) by
any other Person, except for any such default, failure or breach as has not
had, and could not reasonably be expected to have, a Material Adverse Effect on
the Business.
B.11. Licenses and Permits. To the knowledge of Lockheed Xxxxxx, Lockheed
Xxxxxx (or the appropriate Affiliated Transferor) has all licenses, franchises,
permits and other similar authorizations affecting, or relating in any way to,
the Business required by law to be obtained by Lockheed Xxxxxx (or the
appropriate Affiliated Transferor) to permit Lockheed Xxxxxx to conduct the
Business in substantially the same manner as the Business has heretofore been
conducted.
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B.12. Finders' Fees. Except for Bear, Xxxxxxx & Co. Inc., whose fees will
be paid by Lockheed Xxxxxx, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Lockheed Xxxxxx who might be entitled to any fee or commission from Lockheed
Xxxxxx, Newco or the Purchasers or any of their Affiliates upon consummation of
the contemplated Transactions.
B.13. Environmental Compliance. Except as disclosed in Section B.13 of the
Disclosure Schedules or known to the Individual Purchasers, and except as
reserved against or referred to in the December Statement, to the knowledge of
Lockheed Xxxxxx the Business is and has been in substantial compliance with all
applicable Environmental Laws, and has obtained all material permits, licenses
and other authorizations that are required under applicable Environmental Laws.
Except as set forth in Section B.13 of the Disclosure Schedules or known to the
Individual Purchasers, and except as reserved against or referred to in the
December Statement, to the knowledge of Lockheed Xxxxxx (i) the Business is and
has been in material compliance with the terms and conditions under which the
permits, licenses and other authorizations referenced in the preceding sentence
were issued or granted, (ii) the Lockheed Xxxxxx Companies hold all permits
required by Environmental Laws that are appropriate to conduct the Business as
presently conducted in all material respects and to operate the Transferred
Assets in all material respects as they are presently operated; (iii) no
suspension, cancellation or termination of any of permit referred to in clause
(ii) is pending or to Lockheed Xxxxxx'x knowledge threatened; (iv) Lockheed
Xxxxxx has not received written notice of any material Environmental Claim
relating to or affecting the Business or the Transferred Assets, and to the
knowledge of Lockheed Xxxxxx, there is no such threatened Environmental Claim;
(v) Lockheed Xxxxxx, in connection with the Business or the Transferred Assets,
has not entered into, agreed in writing to, or is subject to any judgment,
decree, order or other similar requirement of any Governmental Authority under
any Environmental Laws.
B.14. Compliance with Laws. Except as set forth in Section B.14 of the
Disclosure Schedules and, except for violations or infringements of
Environmental Laws or orders, writs, injunctions or decrees relating to
Contracts or Bids and except for violations or infringements that have not had,
and may not reasonably be expected to have, a Material Adverse Effect on the
Business, to the knowledge of Lockheed Xxxxxx the operation of the Business and
condition of the Transferred Assets have not violated or infringed, and do not
violate or infringe, in any respect any Applicable Law or any order, writ,
injunction or decree of any Governmental Authority.
B.15. Government Contracts.
(a) Except as set forth in Section B.15 of the Disclosure Schedules
or known to the Individual Purchasers, and except for inaccuracies in the
following as have not had, and may not reasonably be expected to have a
Material Adverse Effect on the Business, with respect to each fixed price
Government Contract with a backlog value in excess of $5,000,000, each "cost
plus" Government Contract with a backlog value in excess of $7,500,000 and each
Bid that, if accepted, would result in such a Government Contract (a
"Government Bid") to which Lockheed Xxxxxx or any Affiliated Transferor is a
party with respect to the Business, (i) to the knowledge of Lockheed Xxxxxx,
Lockheed Xxxxxx (or the applicable Affiliated Transferor) has complied with all
terms and conditions of such Government Contract or Government Bid, including
all clauses, provisions and requirements incorporated expressly, by
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reference or by operation of law therein; (ii) to the knowledge of Lockheed
Xxxxxx, Lockheed Xxxxxx (or the applicable Affiliated Transferor) has complied
with all requirements of all Applicable Laws or agreements pertaining to such
Government Contract or Government Bid; (iii) to the knowledge of Lockheed
Xxxxxx, all representations and certifications executed, acknowledged or set
forth in or pertaining to such Government Contract or Government Bid were
complete and correct as of their effective date, and Lockheed Xxxxxx (or the
applicable Affiliated Transferor) has complied in all respects with all such
representations and certifications; (iv) neither the U.S. Government nor any
prime contractor, subcontractor or other Person has notified Lockheed Xxxxxx
(or the applicable Affiliated Transferor) that Lockheed Xxxxxx (or the
applicable Affiliated Transferor) has breached or violated any Applicable Law,
certification, representation, clause provision or requirement pertaining to
such Government Contract or Government Bid; (v) no termination for convenience,
termination for default, cure notice or show cause notice is currently in
effect pertaining to such Government Contract or Government Bid; (vi) to the
knowledge of Lockheed Xxxxxx, no cost incurred by Lockheed Xxxxxx (or the
applicable Affiliated Transferor) pertaining to such Government Contract or
Government Bid has been questioned or challenged, is the subject of any
investigation or has been (or could reasonably be expected to be) disallowed by
the U.S. Government; (vii) to the knowledge of Lockheed Xxxxxx, no money due to
Lockheed Xxxxxx (or the applicable Affiliated Transferor) pertaining to such
Government Contract or Government Bid has been (or has attempted to be)
withheld or set off and Lockheed Xxxxxx (or the applicable Affiliated
Transferor) is entitled to all progress payments with respect thereto and
(viii) each Government Contract is valid and subsisting.
(b) Except as set forth in Section B.15 of the Disclosure Schedules
or known to the Individual Purchasers, and except as has not had, and may not
reasonably be expected to have, a Material Adverse Effect on the Business, with
respect to the Business; (i) to the knowledge of Lockheed Xxxxxx, none of its
respective employees, consultants or agents is (or during the last five years
has been) under administrative, civil or criminal investigation, indictment or
information by any Governmental Authority, or any audit or investigation by
Lockheed Xxxxxx with respect to any alleged irregularity, misstatement or
omission arising under or relating to any Government Contract or Government
Bid; and (ii) during the last five years, Lockheed Xxxxxx has not conducted or
initiated any internal investigation or, to Lockheed Xxxxxx'x knowledge, had
reason to conduct, initiate or report any internal investigation, or made a
voluntary disclosure to the U.S. Government, with respect to any alleged
irregularity, misstatement or omission arising under or relating to a
Government Contract or Government Bid. Except as set forth in Section B.15 of
the Disclosure Schedules or known to the Individual Purchasers, Lockheed Xxxxxx
has no knowledge of any irregularity, misstatement or omission arising under or
relating to any Government Contract or Government Bid that has led or could
reasonably be expected to lead, either before or after the Closing Date, to any
of the consequences set forth in clause (i) or (ii) of the immediately
preceding sentence or any other material damage, penalty assessment, recoupment
of payment or disallowance of cost.
(c) Except as set forth in Section B.15 of the Disclosure Schedules
or known to the Individual Purchasers, and except as has not had, and may not
reasonably be expected to have, a Material Adverse Effect on the Business, with
respect to the Business, to the knowledge of Lockheed Xxxxxx, there exist (i)
no outstanding claims against Lockheed Xxxxxx or any
69
Affiliated Transferor, either by the U.S. Government or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract or Bid referred to in Section B.15(a) and
(ii) no disputes between Lockheed Xxxxxx or any Affiliated Transferor and the
U.S. Government under the Contract Disputes Act or any other Federal statute or
between Lockheed Xxxxxx or any Affiliated Transferor and any prime contractor,
subcontractor or vendor arising under or relating to any such Government
Contract or Government Bid. Except as set forth in Section B.15 of the
Disclosure Schedules or known to the Individual Purchasers, Lockheed Xxxxxx has
no knowledge of any fact that could reasonably be expected to result in a claim
or a dispute under clause (i) or (ii) of the immediately preceding sentence.
(d) Except as set forth in Section B.15 of the Disclosure Schedules
or known to the Individual Purchasers, neither Lockheed Xxxxxx (or any
Affiliated Transferor) (with respect to the Business), nor to Lockheed Xxxxxx'x
knowledge, any of its employees, consultants or agents is (or during the last
five years has been) suspended or debarred from doing business with the U.S.
Government or is (or during such period was) the subject of a finding of
nonresponsibility or ineligibility for U.S. Government contracting. Except as
set forth in Section B.15 of the Disclosure Schedules or known to the
Individual Purchasers, Lockheed Xxxxxx does not know of any facts or
circumstances that would warrant the suspension or debarment, or the finding of
nonresponsibility or ineligibility, on the part of Lockheed Xxxxxx (or any
Affiliated Transferor) or any of Lockheed Xxxxxx'x (or any Affiliated
Transferor's) employees, consultants or agents. Except as set forth in Section
B.15 of the Disclosure Schedules or known to the Individual Purchasers, and
except as has not had, and may not reasonably be expected to have, a Material
Adverse Effect on the Business, to Lockheed Xxxxxx'x knowledge, the Lockheed
Xxxxxx Companies have complied with all requirements of all material laws
pertaining to all Government Contracts and Bids.
(e) Except as set forth in Section B.15 of the Disclosure Schedules
or known to the Individual Purchasers, and except for any of the following as
has not had, and may not reasonably be expected to have, a Material Adverse
Effect on the Business, to the knowledge of Lockheed Xxxxxx, all test and
inspection results Lockheed Xxxxxx (or any Affiliated Transferor) has provided
to the U.S. Government pursuant to any Government Contract referred to in
Section B.15(a) or to any other Person pursuant to any such Government Contract
or as a part of the delivery to the U.S. Government pursuant to any such
Government Contract of any article designed, engineered or manufactured in the
Business were complete and correct as of the date so provided. Except as set
forth in Section B.15 of the Disclosure Schedules or known to the Individual
Purchasers, and except for any of the following as has not had, and may not
reasonably be expected to have, a Material Adverse Effect on the Business, to
the knowledge of Lockheed Xxxxxx, Lockheed Xxxxxx (or an Affiliated Transferor)
has provided all test and inspection results to the U.S. Government pursuant to
any such Government Contract as required by Applicable Law and the terms of the
applicable Government Contracts.
(f) Except as set forth in Section B.15 of the Disclosure Schedules
or known to the Individual Purchasers, and except for any of the following as
has not had, and may not reasonably be expected to have, a Material Adverse
Effect on the Business, to the knowledge of Lockheed Xxxxxx, no statement,
representation or warranty made by Lockheed Xxxxxx (or an Affiliated
Transferor) in any Government Contract, any exhibit thereto or in
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any certificate, statement, list, schedule or other document submitted or
furnished to the U.S. Government in connection with any Government Contract or
Government Bid (i) contained on the date so furnished or submitted any untrue
statement of a material fact, or failed to state a material fact necessary to
make the statements contained therein, in light of the circumstances in which
they were made, not misleading or (ii) contains on the date hereof any untrue
statement of a material fact, or fails to state a material fact necessary to
make the statements contained therein, in light of the circumstances in which
they are made, not misleading, except in the case of both clauses (i) and (ii)
any untrue statement or failure to state a material fact that would not result
in any material liability to the Business as a result of such untrue statement
or failure to state a material fact.
B.16. Intellectual Property. With respect to Intellectual Property
that constitute Transferred Assets, except as set forth in Section B.16 of
the Disclosure Schedules, to the knowledge of Lockheed Xxxxxx:
(a) Lockheed Xxxxxx (or an Affiliated Transferor) owns, free and
clear of all Liens other than Permitted Liens, and subject to any licenses
granted by Lockheed Xxxxxx and its Affiliates prior to the Closing Date, all
right, title and interest in such Intellectual Property. To the knowledge of
Lockheed Xxxxxx, the use of such Intellectual Property in connection with the
operation of the Business as heretofore conducted does not conflict with,
infringe upon or violate the intellectual property rights of any other Persons;
(b) Lockheed Xxxxxx (or an Affiliated Transferor) has the right to
use all Intellectual Property used by the Business and necessary for the
continued operation of the Business in substantially the same manner as its
operations have heretofore been conducted except where the failure to have any
such Intellectual Property has not had, and could not reasonably be expected to
have, a Material Adverse Effect on the Business; and
(c) Upon the consummation of the Closing hereunder, (i) Newco will be
vested with all of Lockheed Xxxxxx'x (or the Affiliated Transferors') rights,
title and interest in, and Lockheed Xxxxxx'x (or the Affiliated Transferors')
rights and authority to use in connection with the Business, all of the
Intellectual Property that constitute Transferred Assets and (ii) such
Intellectual Property, together with the Intellectual Property licensed to
Newco in accordance with Section 9.04 of the Agreement and any other interests
in Intellectual Property transferred hereunder will collectively constitute
such rights and interests in Intellectual Property which are necessary for the
continued operation of the Business as a whole in substantially the same manner
as its operations have heretofore been conducted, except where any inaccuracy
of clause (ii) has not had, and could not reasonably be expected to have, a
Material Adverse Effect on the Business.
B.17. Government Furnished Equipment. Section B.17 of the Disclosure
Schedules incorporates the most recent schedule delivered to the U.S.
Government which identifies by description or inventory number certain
equipment and fixtures loaned, bailed or otherwise furnished to or held by each
Business Unit by or on behalf of the United States. To Lockheed Xxxxxx'x
knowledge, such schedule was accurate and complete on its date and, if dated as
of the Closing Date, would contain only those additions and omit only those
deletions of equipment and fixtures that have occurred in the
71
ordinary course of business, except for such inaccuracies that could not
reasonably be expected to have a Material Adverse Effect on the Business.
B.18. Powers of Attorney. Section B.18 of the Disclosure Schedules
lists the names of each person holding powers of attorney from any of the
Lockheed Xxxxxx Companies in connection with the Business.
B.19. Insurance. Section B.19 of the Disclosure Schedules contains a
correct and complete list of all material policies of insurance held by any of
the Lockheed Xxxxxx Companies that have been procured specifically with respect
to the operation of the Business, other than workers' compensation policies.
B.20. Affiliate Transactions. Except as set forth in Section B.20 of the
Disclosure Schedule, (a) there is no ongoing agreement or arrangement between
Lockheed Xxxxxx or any Affiliated Transferor, on the one hand, and any of the
Business Units, on the other hand, having an annual cost to a Business Unit or
any of the Lockheed Xxxxxx Companies, individually, in excess of $120,000; (b)
there is no debt owed by any Business Unit to any of the Lockheed Xxxxxx
Companies (other than another Business Unit), other than debt which will be
eliminated prior to the Closing or otherwise will not be an Assumed Liability;
and (c) there is no indemnification or similar obligation owed by any Business
Unit to Lockheed Xxxxxx or any of its Affiliates (other than another Business
Unit), other than in connection with or resulting from the failure of a
Business Unit to perform its obligations under any Contracts involving Lockheed
Xxxxxx or any of its Affiliates.
B.21. Employee Benefit Matters.
(a) To the knowledge of Lockheed Xxxxxx, Section B.21 of the
Disclosure Schedule lists each Employee Plan or Benefit Arrangement which
covers Transferred Employees or Transferred Beneficiaries and each collective
bargaining agreement covering Transferred Employees.
(b) Except as set forth in Section B.21 of the Disclosure Schedule
and with respect to the Business:
(i) Neither Lockheed Xxxxxx nor any member of its "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code Sections 414(b), (c),
(m) or (o)) has ever contributed to or had any liability to a
multi-employer plan, as defined in Section 3(37) of ERISA, which could
reasonably be expected to have a Material Adverse Effect on the Business;
(ii) To the knowledge of Lockheed Xxxxxx, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, no fiduciary of any
funded Employee Plan has engaged in a "prohibited transaction" (as that
term is defined in Section 4975 of the Code and Section 406 of ERISA)
which could subject Newco to a penalty tax imposed by Section 4975 of the
Code;
(iii) No Employee Plan that is subject to Section 412 of the Code
has incurred an "accumulated funding deficiency" within the meaning of
Section 412 of the Code, whether or not waived;
72
(iv) To the knowledge of Lockheed Xxxxxx, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, each Employee Plan
and Benefit Arrangement has been established and administered in
accordance with its terms and in compliance with Applicable Law;
(v) To the knowledge of Lockheed Xxxxxx, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, no Employee Plan
subject to Title IV of ERISA has incurred any material liability under
such title other than for the payment of premiums to the Pension Benefit
Guaranty Corporation ("PBGC"), all of which to the knowledge of Lockheed
Xxxxxx and the Individual Purchasers have been paid when due;
(vi) No defined benefit Employee Plan has been terminated; nor
have there been any "reportable events" (as that term is defined in
Section 4043 of ERISA and the regulations thereunder), other than
reportable events arising directly from the Contemplated Transactions,
which would present a risk that an Employee Plan would be terminated by
the PBGC in a distress termination;
(vii) Each Employee Plan intended to qualify under Section 401 of
the Code has received a determination letter that it is so qualified and
to the knowledge of Lockheed Xxxxxx, except to the extent known by the
Individual Purchasers with respect to the Business Units other than the
Communications Systems Business Unit, no event has occurred with respect
to any such Employee Plan which could cause the loss of such qualification
or exemption;
(viii) With respect to each Employee Plan listed on Section B.21 of
the Disclosure Schedule, Lockheed Xxxxxx has made available to Newco the
most recent copy (where applicable) of (A) the plan document; (B) the most
recent determination letter; (C) any summary plan description; (D) Form
5500; and (E) actuarial valuation report; and with respect to each Benefit
Arrangement that covers any Transferred Employee or Transferred
Beneficiary, Lockheed Xxxxxx has made available to Newco a current,
accurate and complete copy (or, to the extent that no such copy exists, an
accurate description) thereof; and
(ix) To the knowledge of Lockheed Xxxxxx, except to the extent
known by the Individual Purchasers with respect to the Business Units
other than the Communications Systems Business Unit, no Employee Plan or
Benefit Arrangement exists which could result in the payment to any
Transferred Employee or Transferred Beneficiary of any money or other
property or rights or accelerate or provide any other rights or benefits
to any Transferred Employee or Transferred Beneficiary as a result of the
transaction contemplated by this Agreement, whether or not such payment
would constitute a parachute payment (within the meaning of Section 280G
of the Code).
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EXHIBIT C
REPRESENTATION AND WARRANTIES OF XXXXXX
Xxxxxx hereby represents and warrants to Lockheed Xxxxxx and the
individual Purchasers and, upon the Closing, to Newco that:
C.01. Organization and Existence. Xxxxxx is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware and has all partnership powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to have such licenses, authorizations,
consents and approvals has not had and may not reasonably be expected to have,
a Material Adverse Effect on Xxxxxx. Xxxxxx is duly qualified to do business as
a foreign limited partnership in each jurisdiction where the character of the
property owned or leased by it or the nature of its activities make such
qualification necessary to carry on its business as now conducted, except for
those jurisdictions where failure to be so qualified has not had, and may not
reasonably be expected to have, a Material Adverse Effect on Xxxxxx.
C.02. Authorizations. The execution, delivery and performance by Xxxxxx of
the Transaction Documents and the consummation by Xxxxxx of the Contemplated
Transactions are within the partnership powers of Xxxxxx and have been duly
authorized by all necessary partnership action on the part of Xxxxxx. Each of
the Transaction Documents constitutes a legal, valid and binding agreement of
Xxxxxx, enforceable against Xxxxxx in accordance with its terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and (ii) subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
C.03. Governmental Authorization.
(a) The execution, delivery and performance by Xxxxxx of the
Transaction Documents require no action by or in respect of, consents or
approvals of, or filing with, any governmental body, agency, official or
authority other than:
(i) compliance with any applicable requirements of the HSR
Act; and
(ii) compliance with any applicable requirements of the 1933
Act.
(b) To the actual knowledge of Xxxxxx, there are no facts relating to
the identity or circumstances of Xxxxxx or any of its Affiliates that would
prevent or materially delay obtaining the consents or approvals referred to in
Section C.03(a).
C.04. Non-Contravention. The execution, delivery and performance by
Xxxxxx of the Transaction Documents do not and will not (i) contravene or
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conflict with the certificate of limited partnership or Amended and Restated
Agreement of Limited Partnership of Xxxxxx, (ii) assuming compliance with the
matter referred to in Section C.03, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Xxxxxx, or (iii) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Xxxxxx or to a loss of any benefit to which Xxxxxx
is entitled under any provision of any agreement, contract or other instrument
binding upon Xxxxxx or any license, franchise, permit or other similar
authorization held by Xxxxxx, except, in the case of clauses (ii) and (iii),
for any such contravention, conflict, violation, default, termination,
cancellation, acceleration or loss that would not have a Material Adverse
Effect on Xxxxxx.
C.05. Finders' Fees. Except for Xxxxxx Brothers Inc., there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of Xxxxxx who might be entitled to any fee
or commission from Newco, Lockheed Xxxxxx or any of its Affiliates, or either
of the Individual Purchasers, upon consummation of the Contemplated
Transactions by the Transaction Documents.
C.06. Litigation. There is no action, suit, investigation or proceeding
pending against, or to the actual knowledge of Xxxxxx, threatened against or
affecting, Xxxxxx before any court or arbitrator or any governmental body,
agency or official which in any matter challenges or seeks to prevent, enjoin,
alter or materially delay the Contemplated Transactions.
C.07. Inspections. Xxxxxx is an informed and sophisticated participant in
the Contemplated Transactions, and has engaged expert advisors, experienced in
the evaluation and purchase of enterprises such as the Business. Xxxxxx has
undertaken an investigation and has been provided with, has evaluated and has
relied upon certain documents and information to assist Xxxxxx in making an
informed and intelligent decision with respect to the execution of the
Transaction Documents. Xxxxxx will undertake prior to Closing such further
investigation and request such additional documents and information as it deems
necessary. Xxxxxx acknowledges that Lockheed Xxxxxx has made no representation
or warranty as to the prospects, financial or otherwise of the Business. Xxxxxx
agrees that Newco shall accept the Transferred Assets and the Assumed
Liabilities as they exist on the Closing Date based upon Xxxxxx'x and the
Individual Purchasers' inspection, examination and determination with respect
thereto as to all matters, and without reliance upon any express or implied
representations or warranties of any nature, whether in writing, orally or
otherwise, made by or on behalf of or imputed to Lockheed Xxxxxx except as
expressly set forth in the Transaction Documents.
C.08. Financing. Xxxxxx has available to it cash, marketable securities or
other investments, or presently available sources of credit, to enable it to
purchase the shares of Newco Class A Stock contemplated by this Agreement.
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EXHIBIT D
REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL PURCHASERS
Each of the Individual Purchasers hereby represents and warrants, with
respect to himself, to Lockheed Xxxxxx and Xxxxxx and, upon the Closing, to
Newco that:
D.01. Governmental Authorization.
(a) The execution, delivery and performance by each Individual
Purchaser of the Transaction Documents require no action by or in respect of,
consents or approvals of, or filing with, any governmental body, agency,
official or authority other than:
(i) compliance with any applicable requirements of the HSR
Act; and
(ii) compliance with any applicable requirements of the 0000
Xxx.
(b) To the knowledge of each of the Individual Purchasers, there are
no facts relating to the identity or circumstances of the Individual Purchasers
that would prevent or materially delay obtaining any of the consents or
approvals referred to in Section D.01(a).
D.02. Non-Contravention. The execution, delivery and performance by each
of the Individual Purchasers of the Transaction Documents do not and will not
(i) assuming compliance with the matters referred to in Section D.01,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Individual Purchasers or (ii) constitute a default under or
give rise to any right of termination, cancellation or acceleration of any
right or obligation of either of the Individual Purchasers or to a loss of any
benefit to which either of the Individual Purchasers is entitled under any
provision of any agreement, contract or other instrument binding upon either of
the Individual Purchasers or any license, franchise, permit or other similar
authorization held by either of the Individual Purchasers, except for any such
contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that is immaterial to the Contemplated Transactions and
the operation of the Business after Closing.
D.03. Finders' Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of either of the Individual Purchasers who might be entitled to any fee or
commission from Newco, Lockheed Xxxxxx or Xxxxxx, or any of their Affiliates,
upon consummation of the Contemplated Transactions.
D.04. Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of either of the Individual Purchasers,
threatened against or effecting, either of the Individual Purchasers before any
court or arbitrator or any governmental body, agency or official which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
Contemplated Transactions.
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D.05. Inspections. Each of the Individual Purchasers is an informed and
sophisticated participant in the Contemplated Transactions, and has engaged
such expert's advisors as he deems appropriate. Each of the Individual
Purchasers has undertaken an investigation and has been provided with, has
evaluated and has relied upon certain documents and information to assist him
in making an informed and intelligent decision with respect to the execution of
the Transaction Documents. Each of the Individual Purchasers will undertake
prior to Closing such further investigation and request such additional
documents and information as he deems necessary. Each of the Individual
Purchasers acknowledges that Lockheed Xxxxxx has made no representation or
warranty as to the prospects, financial or otherwise of the Business. Each of
the Individual Purchasers agrees that Newco shall accept the Transferred Assets
and the Assumed Liabilities as they exist on the Closing Date based upon
Xxxxxx'x and the Individual Purchasers' inspection, examination and
determination with respect thereto as to all matters, and without reliance upon
any express or implied representations or warranties of any nature, whether in
writing, orally or otherwise, made by or on behalf of or imputed to Lockheed
Xxxxxx, except as expressly set forth in the Transaction Documents.
D.06. Financing. Each of the Individual Purchasers has available
sufficient cash, marketable securities or other investments, or presently
available sources of credit, to enable him to purchase the shares of Newco
Class B Stock contemplated by this Agreement.
00
XXXXXXX X
XXXXXXXXXXXXXX XXX XXXXXXXXXX XX XXXXX
Xxxxx hereby represents and warrants to Lockheed Martin, Lehman and the
Individual Purchasers that:
E.01. Organization and Existence. Newco is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has (or, prior to the Closing Date, will have) all corporate
powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except where the failure to
have such licenses, authorizations, consents and approvals has not had and may
not reasonably be expected to have, a Material Adverse Effect on Newco (after
giving effect to the Contemplated Transactions). As of the Closing Date, Newco
will be duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities (after giving effect to the Contemplated Transactions)
make such qualification necessary to carry on its business as now conducted,
except for those jurisdictions where failure to be so qualified has not had,
and may not reasonably be expected to have, a Material Adverse Effect on Newco
(after giving effect to the Contemplated Transactions).
E.02. Corporate Authorizations. The execution, delivery and performance by
Newco of the Transaction Documents and the consummation by Newco of the
Contemplated Transactions are within the corporate powers of Newco and have
been (or, prior to the Closing, will have been) duly authorized by all
necessary corporate action on the part of Newco. Each of the Transaction
Documents constitutes a legal, valid and binding agreement of Newco,
enforceable against Newco in accordance with its terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and (ii) subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
E.03. Governmental Authorization.
(a) Except as set forth on Attachment X, the execution, delivery and
performance by Newco of the Transaction Documents require no action by or in
respect of, consents or approvals of, or filing with, any governmental body,
agency, official or authority other than:
(i) compliance with any applicable requirements of the HSR
Act; and
(ii) compliance with any applicable requirements of the 1933
Act.
(b) There are no facts relating to the identity or circumstances of
Newco known to Newco that would prevent or materially delay obtaining any of
the consents or approvals referred to in Section E.03(a).
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E.04. Non-Contravention. The execution, delivery and performance by Newco
of the Transaction Documents do not and will not (i) contravene or conflict
with the charter or bylaws of Newco, (ii) assuming compliance with the matters
referred to in Section E.03, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Newco, or (iii) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Newco or to a loss of any benefit to which Newco is
entitled under any provision of any agreement, contract or other instrument
binding upon Newco or any license, franchise, permit or other similar
authorization held by Newco, except, in the case of clauses (ii) and (iii), for
any such contravention, conflict, violation, default, termination,
cancellation, acceleration or loss that could not reasonably be expected to
have a Material Adverse Effect on Newco.
E.05. Finders' Fees. Except for Xxxxxx Brothers Inc., there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of Newco who might be entitled to any fee
or commission from Lockheed Xxxxxx or Xxxxxx (or any of their Affiliates), or
from either of the Individual Purchasers, upon consummation of the Contemplated
Transactions.
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EXHIBIT F
TAX MATTERS
F.01. Tax Definitions. The following terms shall have the following
meanings:
"Allocation Tax Loss" means an amount equal to 20% of the first $5,000,000
of the Tax Basis Shortfall and 25% of the next $20,000,000 of the Tax
Basis Shortfall.
"Basis Liabilities" means Assumed Liabilities which upon the Tax Closing
Date give rise to the creation of, or increase in, basis to Newco of one
or more Transferred Assets for Income Tax purposes.
"Cash Sale" means a transfer of assets to Newco pursuant to the
Transaction Agreement whereby Lockheed Xxxxxx or any of its Affiliated
Transferors, as the case may be, does not receive any Newco Class A Stock
as Exchange Consideration for Transferred Assets.
"Code" means the Internal Revenue Code of 1986, as amended.
"Final Determination" means a determination as defined in Section 1313(a)
of the Code or any other event which finally and conclusively establishes
the amount of any liability for Taxes.
"Income Taxes" means any Taxes determined by reference to net income.
"Post-Closing Tax Period" means that portion of any Tax period ending
after the Tax Closing Date, which is after the Tax Closing Date.
"Pre-Closing Tax Period" means that portion of any Tax period ending on or
before the Tax Closing Date, which is on or before the Tax Closing Date.
"Section 351 Transfer" means a transfer of assets to Newco pursuant to the
Transaction Agreement whereby Lockheed Xxxxxx or any of its Affiliated
Transferors, as the case may be, receives Newco Class A Stock as part or
all of the Exchange Consideration for Transferred Assets.
"Tax" means any tax imposed of any nature including federal, state, local
or foreign net income tax, alternative or add-on minimum tax, profits or
excess profits tax, franchise tax, gross income, adjusted gross income or
gross receipts tax, employment related tax (including employee withholding
or employer payroll tax, FICA, or FUTA), real or personal property tax or
ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any
withholding or backup withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax, together with
any interest or any penalty, addition to tax or additional amount imposed
by any Governmental Authority responsible for the imposition of any such
tax.
"Tax Basis Shortfall" means the amount by which Newco's adjusted tax basis
in the Transferred Assets (after the recognition of gains pursuant to
Section F.07.(a)(i)(C)) is less than $525,000,000 plus or minus any
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adjustment to the Exchange Consideration in accordance with Sections 2.03
and 2.04 and plus the Basis Liabilities.
"Tax Closing Date" means the Effective Date.
F.02. Tax Return Packages. Newco will use its reasonable efforts to cause
appropriate employees of the Business to prepare usual and customary Tax return
packages (in the form provided to the Business Units for the 1996 calendar
year) with respect to (1) the taxable period ended December 31, 1996, in the
event that such packages have not been prepared prior to Closing and (2) the
tax period beginning January 1, 1997 and ending as of the Tax Closing Date. In
the event that Tax return packages for the taxable period ended December 31,
1996 have not been prepared prior to Closing, then Newco will use reasonable
efforts to cause the Tax return packages for such taxable period to be
delivered to Lockheed Xxxxxx no later than 30 days subsequent to Closing. Newco
will use reasonable efforts to cause the Tax return packages for the period
beginning on January 1, 1997 and ending as of the Tax Closing Date to be
delivered to Lockheed Xxxxxx no later than the last day of the third calendar
month succeeding the month in which the Closing occurs.
F.03.A. Assumed Liabilities. The term Assumed Liabilities as defined in
Exhibit A shall include any and all liabilities and obligations of Lockheed
Xxxxxx and the Affiliated Transferors for Taxes arising from or with respect to
the Transferred Assets or the operation of the Business with respect to any
period ending prior to on or after the Tax Closing Date other than (i) income
or franchise taxes arising from or with respect to the Transferred Assets or
the operations of the Business for the Pre-Closing Tax Period (other than state
or local income or franchise taxes attributable to the Business with respect to
a Pre-Closing Tax Period to the extent reimbursable (but not actually
reimbursed as of the Tax Closing Date) by the U.S. Government pursuant to the
principles of Federal Acquisition Regulation Part 31, Contract Cost Principles
and Procedures), and (ii) income or franchise taxes imposed on Lockheed Xxxxxx
or any of the Affiliated Transferors with respect to gain or loss on the
disposition of the Transferred Assets pursuant to the Transaction Agreement
(other than Taxes borne by Newco pursuant to Section 15.03). Notwithstanding
the foregoing, the parties agree that, with respect to Tax liabilities
attributable to the Communications Systems Business Unit relating to the
Pre-Closing Tax Period, Newco shall not assume any liability or obligation
other than and only to the extent (i) disclosed or provided for in the December
Statement or taken into account in the determination of the Final Net Tangible
Asset Amount or (ii) relating to Tax periods for which Tax returns (including
any applicable extensions) are not required to have been filed prior to the Tax
Closing Date.
F.03.B. Excluded Liabilities. The term Excluded Liabilities as defined in
Exhibit A shall include any and all liabilities or obligations for any and all
Taxes arising from or with respect to the Transferred Assets or operations of
the Business that are not Assumed Liabilities as defined in Section F.03.A.
F.04.A. Transferred Assets. The term Transferred Assets as defined in
Exhibit A shall include any and all refunds, credits or rights of recovery in
respect of any Taxes that are Assumed Liabilities as defined in Section F.03.A.
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F.04.B. Excluded Assets. The term Excluded Assets as defined in Exhibit A
shall include any refund, credit or right of recovery in respect of any Taxes
that are not Assumed Liabilities as defined in Section F.03.A.
F.05. Allocation of Exchange Consideration.
(a) Within 30 days after the appraisal of the Transferred Assets by
Coopers & Xxxxxxx L.L.P. as referred to in Section F.07 has been completed,
Lockheed Xxxxxx shall prepare a schedule (the "Exchange Consideration
Schedule") setting forth the allocation of the cash amount of the Exchange
Consideration among Lockheed Xxxxxx and each of the Affiliated Transferors. The
allocation shall be determined based on such appraisal by Coopers & Xxxxxxx
L.L.P., and shall take into account the allocation of Newco Class A Stock among
Lockheed Xxxxxx and the Affiliated Transferors, as determined by Lockheed
Xxxxxx in its sole discretion. In connection with the preparation of the
Exchange Consideration Schedule, Lockheed Xxxxxx shall give Newco reasonable
access to the books and records of Lockheed Xxxxxx in respect of the
Transferred Assets and the Basis Liabilities. Lockheed Xxxxxx agrees to make
reasonable efforts to allocate the Exchange Consideration in the Exchange
Consideration Schedule in a manner calculated to allow Newco to obtain a tax
basis in the Transferred Assets equal to, but not greater than, $525,000,000
plus or minus any adjustment to the Exchange Consideration in accordance with
Sections 2.03 and 2.04 and plus the Basis Liabilities. Lockheed Xxxxxx
covenants and agrees that the Exchange Consideration will be allocated so that
the adjusted tax basis of Newco in the Transferred Assets, based on the
allocation in the Exchange Consideration Schedule, will be not less than
$500,000,000 plus or minus any adjustment to the Exchange Consideration in
accordance with Sections 2.03 and 2.04 and plus the Basis Liabilities.
(b) The Allocation Tax Loss shall be determined jointly by Lockheed
Xxxxxx and Newco within 90 days after the Exchange Consideration Schedule is
delivered to Newco. Any dispute with respect to the determination of the
Allocation Tax Loss shall be resolved in the manner specified in Section 2.03
(b) (regarding determination of the Final Net Tangible Asset Amount). Within 10
days after the Allocation Tax Loss is determined, Lockheed Xxxxxx shall pay to
Newco the amount of the Allocation Tax Loss with interest thereon from the
Closing Date to the date of payment at a rate per annum equal to the per annum
interest rate announced from time to time by Bank of America National Trust and
Savings Association as its reference rate in effect. Such payment shall be made
in immediately available funds by wire transfer to a bank account designated in
writing by Newco. Newco agrees that the aforementioned payment by Lockheed
Xxxxxx shall satisfy all obligations assumed by Lockheed Xxxxxx pursuant to
this Section F.05. Lockheed Xxxxxx shall have no further obligation to
indemnify Newco with regard to any adjustment to the tax basis of the
Transferred Assets in the hands of Newco as a result of an audit by the
Internal Revenue Service or any other Tax authority, or as a result of any
other adjustment which is treated for Tax purposes as an adjustment to the
Exchange Consideration.
F.06. Representations and Warranties of Lockheed Xxxxxx. Lockheed Xxxxxx
hereby represents prior to but not after the Closing to the Purchasers, and as
of and after the Closing to Newco that:
(a) there are no liens on any of the Transferred Assets that arose
in connection with any failure (or alleged failure) to pay any Tax;
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(b) neither Lockheed Xxxxxx nor any of the Affiliated Transferors
will take part in both a Section 351 Transfer and a Cash Sale in the context of
the Contemplated Transactions;
(c) neither Lockheed Xxxxxx nor any of the Affiliated Transferors has
transferred or otherwise altered the ownership of any of the Transferred Assets
in anticipation of the Contemplated Transactions.
F.07. Consistent Reporting.
(a) Section 351 Transfers
(i) Unless there has been a Final Determination to the contrary,
Lockheed Xxxxxx, the Affiliated Transferors and Newco covenant and agree,
for all Tax purposes including all Tax returns and Tax controversies, to
(and to cause any Affiliate or successor to their assets or business to)
take each of the positions set forth in subparagraph (A) through (E) below
with respect to Section 351 Transfers.
(A) The transfer of assets by each transferor will qualify
under Section 351(b) of the Internal Revenue Code of 1986.
(B) The amount of cash received in exchange for any
Transferred Asset will be determined by (A) allocating Basis Liabilities
to the Transferred Assets in proportion to the adjusted tax basis of such
Transferred Assets, and then (B) allocating the total amount of cash
received by the transferor among the Transferred Assets in proportion to
the net fair market value of such Transferred Assets (the net fair market
value being the fair market value of a Transferred Asset reduced by the
amount of any Basis Liabilities allocated to the asset).
(C) The tax basis of each Transferred Asset to be received
by Newco will be the same as the tax basis of such asset in the hands of
the transferor increased by the amount of any gain recognized by the
transferor on the transfer of such asset.
(D) The fair market value of each category of Transferred
Assets will be determined based on an independent appraisal by Coopers &
Xxxxxxx L.L.P.
(E) Neither Newco, nor any successor to its assets or
businesses will be entitled to claim any deduction in respect of any Basis
Liability to the extent previously deducted by the transferor, unless such
previous deduction is later denied.
(ii) Lockheed Xxxxxx and the Affiliated Transferors will file
with their consolidated federal income tax return for the tax period which
includes the Tax Closing Date the information required by Treas. Reg.
1.351-3(a) and will deliver copies of such statements, including
attachments, to Newco at least 10 days prior to the date on which such
return is filed, and Newco will file with its federal income tax return
for the taxable period within which the Tax Closing Date falls the
information required by Treas. Reg. 1.351-(b) and will deliver a copy of
that statement to Lockheed Xxxxxx within ten days thereafter. Within 180
days after the Closing Date, Lockheed Xxxxxx will deliver to Newco all of
the cost and other basis information relating to the Transferred
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Assets and Basis Liabilities reasonably required for Newco to prepare
the Statement required by Treas. Reg. 1.351-3(b)(2).
(iii) Lockheed Xxxxxx and Newco will jointly prepare schedules
showing (A) the amount of any gain recognized on the transfer of each
category of Transferred Assets, (B) the tax basis of each category of
Transferred Assets in the hands of the transferor, and (C) the amount
previously deducted in respect of each category of Basis Liabilities. Such
schedules will be prepared in a manner consistent with each of the
positions described in Section F.07.(a)(i). In the event of any adjustment
to the tax basis of the Transferred Assets or Basis Liabilities, as the
result of an audit or otherwise, Lockheed Xxxxxx, the Affiliated
Transferors and Newco will jointly prepare any necessary revisions to such
schedules. Unless there has been a Final Determination to the contrary,
Lockheed Xxxxxx, the Affiliated Transferors and Newco covenant and agree,
for all Income Tax purposes, including all Income Tax returns and any
Income Tax controversies, not to take (and to cause any Affiliate or
successors to their assets or businesses not to take) any position
inconsistent with the basis in assets shown on such schedules (including
any revised schedules from and after the date of revision) prepared
pursuant to this Section F.07.(a)(iii).
(iv) Lockheed Xxxxxx and the Affiliated Transferors covenant and
agree to make the election necessary under Section 197(f)(9)(B) of the
Code and pay the Tax that is required to be paid thereunder, so that
intangible assets will be amortizable to the extent allowable under
Section 197 of the Code. Lockheed Xxxxxx will deliver a copy of the
election to Newco within 10 days of filing or making such election.
(b) Cash Sales
With respect to Cash Sales, the Exchange Consideration shall be
allocated among the Transferred Assets in accordance with Section 1060 of the
Code and Treasury Regulations thereunder. Such allocation shall be based on an
independent appraisal by Coopers & Xxxxxxx L.L.P. Lockheed Xxxxxx, the
Affiliated Transferors and Newco shall not take any position on their
respective Tax returns that is inconsistent with such allocation of the
Exchange Consideration for purposes of determining the amount of gain or loss
recognized by Lockheed Xxxxxx and/or any of the Affiliated Transferors pursuant
to Cash Sales, and Lockheed Xxxxxx and Newco shall duly prepare and timely file
such reports and information returns as may be required to report the
allocation, including Internal Revenue Service Form 8594. Lockheed Xxxxxx and
Newco will each deliver a copy of Form 8594, including attachments, to the
other at least 10 days prior to filing it with its tax return.
F.08. Allocation of Income, Deductions and Other Items. For purposes of
the Transaction Agreement, income, deductions, and other items will be
allocated between the Pre-Closing Tax Period and the Post-Closing Tax Period
based on an actual closing of the books of the Business on the Tax Closing
Date. Income, deductions and other items attributable to the Pre-Closing Tax
Period will be included in the federal and state income and/or franchise tax
returns of Lockheed Xxxxxx. Income, deductions and other items attributable to
the Post-Closing Tax Period will be included in the federal and state income
and/or franchise tax returns of Newco.
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F.09. Allocation of Taxes. Any pre-paid asset or accrued liability for
real property tax, personal property tax or any similar ad valorem obligation
levied with respect to any Transferred Asset for a Post-Closing Tax Period
which includes the Tax Closing Date will be apportioned as of the Tax Closing
Date and included in the determination of the Estimated Final Net Tangible
Asset Amount, the Proposed Final Net Tangible Asset Amount and the Final Net
Tangible Asset Amount based on the number of days of such taxable period
included in the Pre-Closing Tax Period and the number of days of such taxable
period included in the Post-Closing Tax Period.
F.10. Credit for Increasing Research Activities. Lockheed Xxxxxx, the
Affiliated Transferors and Newco agree that the transfers of assets pursuant to
the Transaction Agreement constitute dispositions of trades or businesses
within the meaning of Section 41(f)(3) of the Code. Lockheed Xxxxxx and the
Affiliated Transferors agree to provide Newco within 150 days after the Closing
Date with all information necessary to permit Newco to timely apply the
provisions of Section 41(f)(3)(A) of the Code with respect to the Businesses.
F.11. Costs and Expenses of Appraisal. The costs and expenses of the
appraisal by Coopers & Xxxxxxx L.L.P. which is referred to in Sections F.05.,
F.07.(a)(i)(D) and F.07.(b) shall be shared equally by Lockheed Xxxxxx and
Newco.
F.12. Resale Certificates. Within 45 days after the Closing Date, where
applicable, Newco shall remit to Lockheed Xxxxxx such properly completed resale
exemption certificates or similar certificates or instruments as are necessary
to claim exemptions from the payment of sales, transfer, use or other similar
taxes under Applicable Law.
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EXHIBIT G
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
G.01. Employee Benefits Definitions. The following terms shall have the
following meanings:
"Benefit Arrangement" means each employment, severance, continuation pay,
termination pay, layoff, or other similar written contract, arrangement or
policy and each written plan or arrangement providing for health, medical, life
or other welfare or fringe benefit coverage (including any insurance,
self-insurance or other arrangements), workers' compensation, severance pay,
retention agreements, disability benefits, supplemental unemployment benefits,
holiday, education or vacation benefits, retirement benefits or deferred
compensation, profit-sharing, benefits in the event of a sale of the Business
or other change in the control, management or the ownership of the Business,
bonuses, stock options, stock appreciation rights and other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (i)
is not an Employee Plan, (ii) is or has been entered into, maintained,
administered or contributed to, as the case may be, by Lockheed Xxxxxx or any
of its Affiliates and (iii) covers any Transferred Employee, Transferred
Beneficiary and/or his or her dependent, spouse or beneficiary or for which a
Transferred Employee would be eligible upon retirement or other termination of
service.
"Camden Transferee" means each Transferred Employee who worked in the
Communications Systems Business Unit immediately prior to Closing and any
Transferred Beneficiary related to such Transferred Employee.
"Employee Plan" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is or has been entered into, maintained, administered or
contributed to by Lockheed Xxxxxx or any of its Affiliates and (iii) covers any
Transferred Employee and/or Transferred Beneficiary.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Transferred Employee" means any Person who, (i) on the Closing Date, is
actively employed in the Business, or who, with respect to the Business, is on
vacation, approved illness absence, long-term disability, authorized leave of
absence (including leave under the Family and Medical Leave Act) or military
service leave of absence as of the Closing Date, (ii) was laid off from the
Business and has recall rights with respect to the Business, or (iii) is
identified on Attachment XI, to be delivered to Newco at the same time as the
Disclosure Schedules are delivered.
"Transferred Beneficiary" means any Person who, at Closing, is not a
Transferred Employee but (i) who was formerly employed in the Business (other
than at the Communications Systems Business Unit)(whether by Lockheed Xxxxxx
and/or its Affiliates or by their predecessors with respect to the Business)
and to whom or with respect to whom Lockheed Xxxxxx or any of its Affiliates
now has or may have in the future any obligation or liability (whether or not
contingent) arising from that Person's employment in the Business or who is now
or may become entitled to any coverage or benefit (whether or not
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contingent) provided under any Employee Plan or Benefit Arrangement as a result
of his or her employment in the Business; (ii) who is the spouse, dependent or
beneficiary of a Person who qualifies as a Transferred Employee or a Person
described in clause (i), if that spouse, dependent or beneficiary is or may
become entitled to any coverage or benefit (whether or not contingent) provided
under any Employee Plan or Benefit Arrangement as a result of that Person's
employment in the Business.
G.02. Employees and Offers of Employment.
(a) Newco shall offer employment to commence on the Closing Date to
all Transferred Employees; provided that, for any Transferred Employee who is
on vacation, approved illness absence, authorized leave of absence (including
leave under the Family and Medical Leave Act), long-term disability or military
service leave of absence as of the Closing, the offer shall remain open until
the date he or she is able to return to active employment to the extent
consistent with any applicable collective bargaining agreement and/or existing
company policy; provided, further, that any Camden Transferee entitled to
recall rights shall be offered employment by Newco in accordance with the terms
of the applicable bargaining agreement. Each Transferred Employee shall be
offered a position by Newco similar to his or her position immediately prior to
the Closing Date, at the same job and salary or wage levels, with non-equity
based bonus and incentive plans and other non-equity based employee benefit
plans substantially similar to those provided by Lockheed Xxxxxx and its
Affiliates immediately prior to the Closing Date. Such offers of employment
shall be at the same respective locations as those at which such Transferred
Employees are employed immediately prior to the Closing. Subject to Applicable
Law and this Agreement, Newco shall have the right to dismiss any Transferred
Employee at any time, with or without cause, and to change the terms of
employment of any Transferred Employee.
(b) Lockheed Xxxxxx shall provide any notices to Transferred
Employees which may be required under the Worker Adjustment Retraining and
Notification Act, 29 USC Section 2101 et seq., ("WARN") with respect to events
which occur prior to the Closing Date and Newco shall provide any notices to
Transferred Employees which may be required under WARN with respect to events
which occur on or after the Closing Date.
(c) Commencing on the Closing Date, Newco shall assume all
responsibility and liability for all matters arising out of or relating to
Transferred Employees and Transferred Beneficiaries regardless of whether such
matter arises from or relates to events prior to, on or after the Closing Date,
including but not limited to (i) accrued but unpaid wages, bonuses and salary;
(ii) all liabilities for workers compensation claims made at any time by
Transferred Employees or Transferred Beneficiaries whether or not reported as
of the Closing Date and all expenses of administration of such claims; (iii)
all incurred but not reported claims for life insurance, medical, disability or
similar benefits; (iv) all claims relating to the terms and conditions of
employment, hiring, firing, supervision, occupational safety and health,
workplace, wages and hours promotion, employment practices or treatment of
Transferred Employees or Transferred Beneficiaries; provided, however, that
with respect to any responsibility and liability relating to a Camden
Transferee for a matter described in clause (iv), Newco shall only assume such
responsibility and liability if it arises from or relates to (A) a matter
described in Section B.09 of the Disclosure Schedule, or (B) events occurring
on or after the Closing Date.
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G.03. Plans Following the Closing.
(a) Except to the extent changes are (i) required by Applicable Law;
(ii) necessary to maintain the tax favored status of any employee plan or
benefit arrangement; (iii) permitted or required under any applicable
collective bargaining agreement; or (iv) necessary to eliminate the use of any
equity securities as the basis for any equity-based incentive compensation,
during the one-year period following the Closing, Newco will maintain employee
compensation and employee plans and benefit arrangements for the benefit of the
Transferred Employees and Transferred Beneficiaries, in either case, who are
not covered by collective bargaining agreements, that are substantially similar
to the Employee Plans and Benefit Arrangements (excluding any stock options,
stock appreciation or other equity based incentive compensation) in effect on
the Closing Date; provided, however, that layoff, severance and retention
benefits (including the Special Severance Program) shall be identical during
this period; provided, further, that post-retirement benefits for Camden
Transferees shall also be provided in accordance with Sections G.03(b) and
G.05(f). During such period, for Transferred Employees and Transferred
Beneficiaries who are covered by collective bargaining agreements, Newco shall
provide such benefits as are required by any and such collective bargaining
agreements as are assumed pursuant to Section G.04. Newco will give Transferred
Employees full credit for purposes of eligibility, vesting and benefit accrual
under any such plans or arrangements maintained by Newco pursuant to this
Section G.03 for such Transferred Employees' service recognized for such
purposes under the Employee Plans and Benefit Arrangements at Closing;
provided, however, that any Newco pension plan may offset pension benefits
provided under Newco's pension plan to a Transferred Employee and attributable
to service before the Closing Date by any pension benefits provided to that
Transferred Employee under any Lockheed Xxxxxx pension plan and attributable to
that same pre-Closing service.
(b) Effective as of the Closing Date, Lockheed Xxxxxx and its
Affiliates shall cease to have any liability or obligation to provide
post-retirement medical and life insurance benefits to Transferred Employees
and Transferred Beneficiaries and Newco shall assume all such liabilities and
obligations to provide post-retirement life and medical benefits and shall
provide post-retirement medical and life insurance benefits in accordance with
Section G.03(a). In addition, Newco will provide (i) substantially equivalent
post-retirement medical benefits for Camden Transferees who meet the age and
service requirements for those benefits (as such requirements are in effect
under the applicable Lockheed Xxxxxx plan immediately prior to the Closing
Date) by the five-year anniversary of the Closing Date and who retire before
that 5th year anniversary; (ii) substantially equivalent post retirement life
insurance benefits for those Camden Transferees who were at least age 50 as of
December 31, 1994 and have ten years of continuous service at retirement; and
(iii) post-retirement medical benefits and life insurance for Transferred
Employees and Transferred Beneficiaries covered by a collective bargaining
agreement in accordance with the terms of that agreement. Notwithstanding the
foregoing, nothing herein shall prevent Newco from increasing the cost to
Transferred Employees or Transferred Beneficiaries who became participants in
such plans to the extent permitted by law, but only if the proportion of any
required payments by such participants does not change in relation to the
payments made prior to the Closing Date by such participant's employer;
provided, however, nothing herein permits the level of benefits provided under
the plans to be decreased.
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(c) Newco's plans that are welfare plans (as defined in Section 3(1)
of ERISA) shall not contain a clause excluding coverage for preexisting
conditions of Transferred Employees or Transferred Beneficiaries (unless and
only to the extent and for the period that such pre-existing condition as of
the Closing Date would be excluded from coverage under the welfare plans of the
Business) and shall provide that any expenses incurred by a Transferred
Employee or Transferred Beneficiary during 1997 on or before the Closing shall
be taken into account from the Closing until December 31, 1997 under such
welfare plans for the purposes of deductible and coinsurance requirements and
satisfaction of maximum out-of-pocket provisions to the same extent as if such
expenses had been incurred after the Closing.
(d) Effective as of the Closing Date, Newco and Lockheed Xxxxxx shall
enter into a benefit administration agreement or agreements, whereby Newco
shall provide to Lockheed Xxxxxx and Lockheed Xxxxxx shall provide to Newco,
upon reasonable request, assistance in the administration of benefit plans and
arrangements after the Closing Date. Newco and Lockheed Xxxxxx agree to
negotiate in good faith the cost of such services and actual terms of such
benefit administration agreement(s).
G.04. Collective Bargaining Agreements. Newco shall (i) expressly
recognize any collective bargaining representative recognized by Lockheed
Xxxxxx or any of its Affiliates as of the Closing for bargaining units
consisting of Transferred Employees; (ii) expressly assume any and all of
Lockheed Xxxxxx'x and its Affiliates' obligations under the collective
bargaining agreements set forth on Section B.21 of the Disclosure Schedules
with respect to the Transferred Employees; and (iii) be a successor employer
for purposes of such collective bargaining agreements.
G.05. Pension Plan Obligations
(a) Transferred Employees currently participate in the following
defined benefit pension plans: (i) Lockheed Xxxxxx Tactical Defense Systems
Retirement Plan; (ii) Lockheed Xxxxxx Corporation Retirement Income Plan II;
(iii) Lockheed Xxxxxx Corporation Pension Plan for Employees in Participating
Bargaining Units; (iv) The Xxxxx Microwave Corporation Pension Plan; (v)
Lockheed Xxxxxx Tactical Systems, Inc. Pension Plan; (vi) Lockheed Xxxxxx
Xxxxxxxxx Corporation Retirement Plan; (vii) Lockheed Xxxxxx Hycor Pension
Plan; (viii) Lockheed Xxxxxx Retirement Income Plan; (ix) Lockheed Xxxxxx
Supplemental Retirement Income Plan; (x) Lockheed Xxxxxx Retirement Plan for
Certain Salaried Employees; (xi) Lockheed Xxxxxx Tactical Systems, Inc.
Supplemental Executive Retirement Plan; (xii) Lockheed Xxxxxx Corporation
Supplementary Pension Plan for Employees of Transferred GE Operations; (xiii)
Supplemental Executive Retirement Plan for Certain Management Employees of the
Xxxxx Microwave Corporation; (xiv) Lockheed Xxxxxx Xxxxxxxxx Corporation
Supplemental Benefit Plan; (xv) Lockheed Xxxxxx Supplemental Executive
Retirement Plan ("Lockheed Xxxxxx Pension Plans"). As of the Closing Date,
Transferred Employees shall cease to accrue service credit or benefits under
Lockheed Xxxxxx Pension Plans, other than the Assumed Plans described in
Section G.05(b).
(b) With respect to The Xxxxx Microwave Corporation Pension Plan
("Xxxxx Plan") and the Lockheed Xxxxxx Hycor Pension Plan ("Hycor Plan")
(collectively, the "Assumed Plans"), as of the Closing Date, Lockheed Xxxxxx
and its Affiliates shall cease to sponsor, administer, pay benefits or
contribute to the Assumed Plans (other than for contributions due prior to the
Effective Date) and thereby cease to be responsible for any acts,
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omissions and transactions under or in connection with any such Assumed Plan,
whether occurring before or after Closing. Effective as of the Closing Date,
Newco shall become the sponsor of the Assumed Plans. Contingent upon receipt of
the Initial Transfer Amount in the case of the Xxxxx Plan or the transfer of
sponsorship of the trust in the case of the Hycor Plan, Newco shall assume all
liabilities with respect to such Assumed Plan (including liabilities with
respect to Transferred Beneficiaries), shall assume responsibility for paying
pension benefits in respect of Transferred Employees and Transferred
Beneficiaries, and shall become responsible for all acts, omissions and
transactions under or in connection with that Assumed Plan, whether arising
before or after the Closing. As soon as practicable after the Closing Date, the
parties shall cause the sponsorship of the trust agreement maintained to fund
the Hycor Plan to be transferred to Newco and Newco, as of the Closing Date,
shall assume all of Lockheed Xxxxxx'x and its Affiliates rights, obligations
and duties under that trust agreement. Lockheed Xxxxxx shall cause the trusts
holding the assets of the Xxxxx Plan to transfer the assets attributable to the
Xxxxx Plan (determined as of the end of the month in which the Closing Date
occurs) to be transferred to a trust (or trusts) designated by Newco for the
purpose of holding the assets of the Xxxxx Plan.
(c) With respect to the (i) Lockheed Xxxxxx Tactical Defense Systems
Retirement Plan; (ii) Lockheed Xxxxxx Corporation Retirement Income Plan II;
(iii) Lockheed Xxxxxx Corporation Pension Plan for Employees in Participating
Bargaining Units; (iv) Lockheed Xxxxxx Tactical Systems, Inc. Pension Plan; (v)
Lockheed Xxxxxx Xxxxxxxxx Corporation Retirement Plan; and (vi) Lockheed Xxxxxx
Retirement Income Plan (the "Spinoff Plans"), Newco shall establish a defined
benefit plan or plans which provide substantially similar benefits in
accordance with Section G.03(a), where applicable,(the "Newco Spinoff Plans")
for the benefit of the Transferred Employees and Transferred Beneficiaries
participating in the Spinoff Plans. As soon as practicable following the
Closing, Lockheed Xxxxxx shall cause its actuary to calculate the Accrued
Liability of all participants in each of the Spinoff Plans and then to compare,
on a plan by plan basis, the Accrued Liability of all the participants in each
of the Spinoff Plans to the fair market value of the assets in the respective
Spinoff Plan as of the end of the month in which the Closing Date occurs. If
the Accrued Liability of all participants in the respective Spinoff Plan is
less than the fair market value of the assets in that Spinoff Plan, then
Lockheed Xxxxxx shall cause assets (determined as of the end of the month in
which the Closing Date occurs) to be transferred to a trust established to hold
assets of the respective Newco Spinoff Plan equal to such fair market value of
the assets multiplied by a fraction the numerator of which is the Accrued
Liability of Transferred Employees and Transferred Beneficiaries under such
Spinoff Plan and the denominator of which is the Accrued Liability of all
participants in such plan. If the Accrued Liability of all participants in the
respective Spinoff Plan is equal to or more than the fair market value of the
assets in that Spinoff Plan, then Lockheed Xxxxxx shall cause its actuary to
determine the amount of assets allocable to the liabilities of Transferred
Employees and Transferred Beneficiaries participating in that plan based on
Section 4044 of ERISA ("Section 4044 Amount"). Lockheed Xxxxxx shall cause
assets in cash equal to the Section 4044 Amount applicable to Transferred
Employees and Transferred Beneficiaries under such Spinoff Plan to be
transferred to a trust established by Newco to hold assets of the respective
Newco Spinoff Plans. Contingent upon the transfer of the Initial Transfer
Amount (as described in Section G.05(b)) to each Newco Spinoff Plan, Newco
shall assume all liabilities of Lockheed Xxxxxx and its affiliates with respect
to Transferred Employees and Transferred Beneficiaries under the Spinoff Plan
from which
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that transfer was made and shall become with respect to such Transferred
Employees and Transferred Beneficiaries responsible for all acts, omissions and
transactions under or in connection with such Spinoff Plan, whether arising
before or after the Closing; provided, however, that in the case of liabilities
with respect to Camden Transferees, Newco shall only assume liabilities and
shall only become responsible for all acts, omissions and transactions under or
in connection with that Spinoff Plan arising on or after the Closing or
disclosed in Section B.21 of the Disclosure Schedules.
(d) All transfers to the Xxxxx Plan and the Newco Spinoff Plans shall
be made in accordance with the provisions of this Section G.05(d). Within 30
days of the Closing Date, or if later, 20 days following the date on which
Lockheed Xxxxxx has been provided evidence reasonably satisfactory to it that
Newco has established a trust (or trusts) to hold the assets of the Xxxxx Plan
and the Newco Spinoff Plans and that the Newco Spinoff Plans are qualified
under Section 401(a) of the Code and the trusts holding assets of the Newco
Spinoff Plans or Xxxxx Plan are tax exempt under Section 501(a) of the Code
("Initial Transfer Date"), Lockheed Xxxxxx shall cause its trusts to make an
initial transfer of assets in cash equal to 85% of the amount estimated by
Lockheed Xxxxxx in good faith to be equal to X (as defined below) with respect
to each plan (using the same assumptions and methodologies consistent with
estimates previously provided to Newco and as set forth in a schedule to be
presented at Closing by Lockheed Xxxxxx) ("Initial Transfer Amount"). In
addition, prior to the Initial Transfer Date Lockheed Xxxxxx shall provide
Newco with evidence reasonably satisfactory to Newco that the appropriate
Lockheed Xxxxxx Pension Plans remain qualified under Section 401(a) of the
Code. As soon as practicable after the final determination of the amounts to be
transferred ("True-Up Date"), Lockheed Xxxxxx shall cause a second transfer to
be made in cash of the "True-Up Amount." The True-Up Amount shall be equal to
the sum of the following amount with respect to the Xxxxx Plan and each Spinoff
Plan:
(X minus Initial Transfer Amount), minus benefit payments, adjusted for
Earnings,
where X equals in the case of the Spinoff Plans, the Accrued Liability or the
Section 4044 Amount, whichever is applicable, and in the case of the Xxxxx
Plan, the fair market value of the assets attributable to the Xxxxx Plan at the
end of the month in which the Closing Date occurs. Earnings shall be calculated
(i) from the last day of the month following the Closing until the Initial
Transfer Date on the amount equal to the Initial Transfer Amount using the rate
paid on a 90-day Treasury Xxxx on the auction date coincident with or
immediately preceding the Closing, (ii) from the Initial Transfer Date until
the True-Up Date on an amount equal to X minus the sum of the Initial Transfer
Amount and the benefit payments using (A) with respect to the period from the
Closing Date to the last day of the month preceding the True-Up Date, the
cumulative rate of return (considering both gain and loss) earned or lost on
the assets of the trust from which the True-Up Amount is being transferred and
(B) with respect to the period from the first day of the month in which the
True-Up Date occurs and the True-Up Date the rate paid on a 90-Day Treasury
Xxxx on the auction date coincident with or immediately preceding the first day
of the month in which the True-Up Date occurs. If the Initial Transfer Amount
exceeds X with respect to any plan, as soon as practicable following such
determination Newco shall cause a transfer to be made to the respective
Lockheed Xxxxxx Pension Plan equal to the difference between the Initial
Transfer Amount and X, adjusted to reflect Earnings (i) from the last day of
the month in which the Closing occurs until the Initial
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Transfer Date using the rate paid on a 90-day Treasury Xxxx on the auction date
coincident with or immediately preceding the Closing; (ii) from the Initial
Transfer Date until the date of transfer, such Earnings shall be calculated
using (A) with respect to the period from that Initial Transfer Date to the
last day of the month preceding such transfer, the cumulative rate of return
(considering both gain and loss) on the assets of the plan from which the
transfer is being transferred and (B) with respect to the period from the first
day of the month in which the transfer occurs and the date of such transfer,
the rate paid on a 90-Day Treasury Xxxx on the auction date coincident with or
immediately preceding the first day of the month in which the transfer occurs.
The True-Up Amount shall be transferred in cash except benefits of Transferred
Employees and Transferred Beneficiaries attributable to Xxxx Xxxxxxx Group
Annuity Contract 8474 shall be transferred in kind. Unless the parties agree
otherwise, all transfers will occur on the last business day of a month.
Notwithstanding anything contained herein to the contrary, the transfers
contemplated by this section G.05(d) shall be determined in accordance with
Section 414(l) of the Code and Treasury Regulation 1.414(l)-1. The amounts to
be transferred pursuant to this section G.05(d) shall be reduced to the extent
necessary to satisfy Section 414(l) of the Code, and any regulations
promulgated thereunder, ERISA Section 4044, and any regulations promulgated
thereunder.
(e) For the purposes of this Section, the term "Accrued Liability"
shall mean the present value of the accrued benefit of the Transferred Employee
or Transferred Beneficiary, determined on a termination basis using the
interest factors specified by the PBGC for an immediate or deferred annuity as
appropriate for such Transferred Employee or Transferred Beneficiary and the
other methods and factors specified in the regulations of the PBGC for the
valuation of accrued benefits upon plan termination, including, but not limited
to, expected retirement ages and expense load assumptions published by the
PBGC, and the 1983 Group Annuity Mortality Table. The interest factors shall be
those in effect on the Closing Date. The Accrued Liability and Section 4044
Amount shall be determined by an enrolled actuary designated by Lockheed
Xxxxxx. Lockheed Xxxxxx shall provide any actuary designated by Newco with all
information reasonably necessary to review the calculation of the Accrued
Liability and the Section 4044 Amount in all material respects and to verify
that such calculations have been performed in a manner consistent with the
terms of this Agreement. If there is a good faith dispute between Lockheed
Xxxxxx'x actuary and Newco's actuary as to the amount to be transferred to any
plan, and such dispute remains unresolved for 30 days, the chief financial
officers of the respective companies shall endeavor to resolve the issue.
Should such dispute remain unresolved for 60 days, Lockheed Xxxxxx and Newco
shall select and appoint a third actuary who is mutually satisfactory to both
of the parties hereto. The decision of such third party actuary shall be
rendered within 30 days and shall be conclusive as to any dispute for which it
was appointed. The cost of such third party actuary shall be divided equally
between Lockheed Xxxxxx and Newco. Each party shall be responsible for the cost
of its own actuary.
(f) Newco shall take all action necessary to qualify each Newco
Spinoff Plan under the applicable provisions of the Code and Newco and Lockheed
Xxxxxx shall cooperate to make any and all filings and submissions to the
appropriate governmental agencies required to be made by Newco as are
appropriate in effectuating the provisions hereof. The Newco Spinoff Plans and
Assumed Plans and any successor plans thereto shall contain appropriate
provisions providing that through the first year anniversary of the Closing
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(fifth anniversary in the case of Lockheed Xxxxxx Retirement Income Plan II and
Lockheed Xxxxxx Retirement Income Plan), each Newco Spinoff Plan shall provide
for a benefit formula that is no less favorable than the formula provided in
the corresponding Spinoff Plan at Closing. The Newco Spinoff Plans or Assumed
Plans receiving a transfer from the Lockheed Xxxxxx Corporation Retirement
Income Plan II and the Lockheed Xxxxxx Corporation Pension Plan for Employees
in Participating Bargaining Units and any successor plans thereto shall contain
appropriate provisions providing that (i) to the extent assets transferred are
attributable to assets transferred from the GE Pension Plan or are governed by
collective bargaining agreements, any such assets shall be held by trusts
forming a part of such Newco Spinoff Plans (or successor plans) and shall be
held for the exclusive benefit of the participants in such Newco Spinoff Plans
(or successor plans) and such assets shall not upon termination of those Newco
Spinoff Plans (or successor plans) revert to the employer or sponsor of such
Newco Spinoff Plans (or successor plans); (ii) the accrued benefits as of the
Closing of Transferred Employees under such plans may not be decreased by
amendment or otherwise; and (iii) each Transferred Employee retiring under
Newco Spinoff Plans (or successor plans) will be entitled to receive pension
benefits no less than what would have been received under the GE Pension Plan
as in effect as of April 5, 1993, taking into account the Transferred
Employee's combined service with Newco, Lockheed Xxxxxx, XX, and RCA and each
of their Affiliates.
(g) With respect to the (i) Lockheed Xxxxxx Tactical Systems, Inc.
Supplemental Executive Retirement Plan ("LMTS SERP"); (ii) the Lockheed Xxxxxx
Corporation Supplementary Pension Plan for Employees of Transferred GE
Operations ("Supplementary Plan"), the Lockheed Xxxxxx Supplemental Executive
Retirement Plan, the Lockheed Xxxxxx Supplemental Retirement Income Plan (the
"Camden SERPs"); and (iii) the Supplemental Executive Retirement Plan for
Certain Management Employees of Xxxxx Microwave Corporation, and Lockheed
Xxxxxx Xxxxxxxxx Corporation Supplemental Benefit Plan, (the plans in (i),
(ii), and (iii) collectively referred to as the "LMC SERPs"), Newco shall
establish a nonqualified plan or plans (the "Newco SERP") for the benefit of
Transferred Employees and Transferred Beneficiaries participating in the LMC
SERPs as of the Closing Date and Newco shall assume all obligations and
liabilities under the LMC SERPs, with respect to the Transferred Employees and
the Transferred Beneficiaries. Effective as of the Closing Date, all
Transferred Employees will cease to accrue benefits under the LMC SERPs. With
respect to the Supplementary Plan, Newco will provide an equivalent plan for
Transferred Employees and Transferred Beneficiaries eligible to participate in
that plan as of the Closing Date that provides equivalent benefits during the
entire term of their employment with Newco, its Affiliates and their
successors. With respect to the LMC SERPs (other than the Supplementary Plan),
Newco shall provide a substantially similar plan in accordance with the
provisions of Section G.03(a). As soon as practicable (but not more than 180
days) after the Closing Date, Lockheed Xxxxxx shall cause its actuary to
calculate the SERP Liability of all participants in the LMTS SERP and the
Camden SERPS, respectively, and the SERP Liability for Transferred Employees
and Transferred Beneficiaries in the LMTS and Camden SERPS respectively and
shall cause the following transfers. As soon as practicable thereafter, but in
no event later than the later of (i) the acceptance of the calculation of the
SERP Liability by Newco or (ii) 20 days following submission to Lockheed Xxxxxx
of evidence reasonably satisfactory to it that Newco has established a
corresponding rabbi trust or trusts, Lockheed Xxxxxx shall cause a transfer of
assets from the rabbi trust established in connection with the LMTS SERP ("LMTS
Trust") to a rabbi trust established by Newco in an amount equal to the product
of the (i) fair market
93
value of the assets of the LMTS Trust as of the last day of the month in which
the Closing Date occurs; and (ii) a fraction, the numerator of which is the
"SERP Liability" for Transferred Employees and Transferred Beneficiaries
participating in the LMTS SERP and the denominator of which is the SERP
Liability for all participants in the LMTS SERP. Lockheed Xxxxxx shall also
cause a transfer of assets from the rabbi trust established in connection with
the Camden SERPs ("Camden Trust") to a rabbi trust established by Newco in an
amount equal to the product of the (i) fair market value of the assets of the
Camden Trust as of the last day of the month in which the Closing Date occurs;
and (ii) a fraction, the numerator of which is the "SERP Liability" for
Transferred Employees and Transferred Beneficiaries participating in the Camden
SERPs and the denominator of which is the SERP Liability for all participants
in the Camden SERPs. The amount of the transfer shall be reduced by benefits
paid by Lockheed Xxxxxx prior to the transfer. If the amount of the benefits
paid exceeds the amount of the transfer, Newco shall promptly pay Lockheed
Xxxxxx such excess. For the purpose of this section, the "SERP Liability" with
respect to a participant shall be the lump sum present value (determined as of
the end of the month in which the Closing Date occurs) of the accrued benefit
of the participant under the applicable SERP calculated utilizing the
assumptions used by Lockheed Xxxxxx for reporting accrued benefit obligations
relative to Seller Pension Plans under FAS No. 87 in its 1996 Annual Report.
The calculation of the amount to be transferred shall be subject to the review
and dispute resolution procedures contained in subsection (e).
(h) No later than the True-Up Date, Lockheed Xxxxxx shall also cause
the Lockheed Xxxxxx Federal Systems, Inc. Retirement Plan ("Federal Systems
Plan") to make a transfer to a qualified defined benefit plan designated by
Newco in an amount equal to the accrued benefit of the Transferred Employees
who participated in the Federal Systems Plan immediately prior to the Closing.
For the purposes of this section, the accrued benefit of the Transferred
Employees shall mean the present value of the accrued benefit determined on a
termination basis using the interest factors for an immediate or deferred
annuity as appropriate for each such Transferred Employee. The assumptions used
in determining the accrued benefit of each such Transferred Employee shall be
the same as the assumptions used to determine Accrued Liability under Section
G.05(e). The transfer shall be contingent upon Newco providing evidence
reasonably satisfactory to Lockheed Xxxxxx that such designated plan is
qualified under Section 401(a) of the Code and the trust of which it is a part
is exempt from taxation under Section 501(a) of the Code. Lockheed Xxxxxx shall
also provide to Newco evidence reasonably satisfactory to Newco that the
Federal Systems Plan is qualified under Section 401(a) of the Code and the
trust of which it is a part is exempt from taxation under Section 501(a) of the
Code. Upon receipt of such transfer of assets, Newco shall assume all
liabilities of Lockheed Xxxxxx and its Affiliates with respect to such
Transferred Employees under the Federal Systems Plan and shall become with
respect to such Transferred Employees responsible for all acts, obligations,
omissions and transactions under or in connection with the Federal Systems
Plan, whether arising before or after the Closing. Lockheed Xxxxxx shall cause
the benefits accrued as of the Closing Date by any Transferred Employee or
Transferred Beneficiary under the Lockheed Xxxxxx Retirement Plan for Certain
Salaried Employees (the "Lockheed Plan") or any other defined benefit pension
plan that is not listed in Schedule G.05(a) or this G.05(h) to be fully vested
at the Closing Date and any such Transferred Employee or Transferred
Beneficiary shall be eligible on the Closing Date to participate in the Newco
defined benefit plans (the "Newco Plans") established for other Transferred
94
Employees or Transferred Beneficiaries who were formerly employed in the
Communications Systems Business Unit (or such other plan as Newco designates in
the case of Transferred Employees covered under any plan other than the
Lockheed Plan). Newco shall credit such Transferred Employees and Transferred
Beneficiaries with all service recognized under the Lockheed Plan or such other
plans as the case may be. If the Transferred Employee participated in the plan
for more than one year, Lockheed Xxxxxx shall credit such Transferred Employees
and Transferred Beneficiaries with all service recognized under the Newco Plans
for all purposes, other than benefit accrual and will recognize Newco
compensation for calculating pensionable earnings under the Lockheed Plan or
any other such plan which is a final average pay plan.
G.06. Savings Plan Obligations.
(a) Transferred Employees currently participate in the following
defined contribution plans: (i) Lockheed Xxxxxx Defense Systems Savings and
Investment Plan; (ii) Lockheed Xxxxxx Salaried Savings Plan; (iii) Lockheed
Xxxxxx Salaried Savings Plan II; (iv) Lockheed Xxxxxx Performance Sharing Plan;
(v) Lockheed Xxxxxx Supplemental Savings Plan; (vi) Conic Corporation Deferred
Income Retirement Plan; (vii) Xxxxx Microwave Supplemental Retirement Savings
Plan; (viii) Xxxxx Western Operations 401(k) Deferred Income Retirement Plan;
(ix) Lockheed Xxxxxx Tactical Systems, Inc. Deferred Income Savings Plan; (x)
Lockheed Xxxxxx Xxxxxxxxx Corporation Savings Plan; (xi) Randtron Employees
Retirement Savings Plan; (xii) Microcom Corporation 401(k) Plan; (xiii) Profit
Sharing Plan and Trust of Lockheed Xxxxxx Hycor, Inc., (xiv) Lockheed Xxxxxx
Tactical Systems Inc. Frequency Sources, Inc. 401(k) Retirement Plan and (xv)
Lockheed Xxxxxx Federal Systems Deferred Income Retirement Plan (collectively,
"Lockheed Xxxxxx Defined Contribution Plans"). The plans listed in (i), (vi),
(vii), (viii), (ix), (xiv) and (xv) are all sub-plans in the Lockheed Xxxxxx
Tactical Systems Master Savings Plan.
(b) Effective as of the Closing Date, Lockheed Xxxxxx and Newco shall
cause (i) Randtron Employees Retirement Plan; (ii) Microcom Corporation 401K
Plan; (iii) Profit Sharing Plan and Trust of Lockheed Xxxxxx Hycor, Inc.
("Transferred Savings Plans") to be amended to provide that sponsorship and
maintenance thereof shall be transferred to Newco and Newco shall assume all of
the obligations and liabilities of Lockheed Xxxxxx and its Affiliates with
respect to each such Transferred Plan (including liabilities with respect to
Transferred Beneficiaries) and contingent upon receipt of the transferred
assets described in Section G.06(c), shall become responsible for all acts,
omissions and transactions under or in connection with the Transferred Savings
Plan, whether arising before or after Closing. Effective as of the Closing
Date, Lockheed Xxxxxx and/or its Affiliates shall cease to sponsor, administer
or contribute (other than contributions in respect of benefits accrued prior to
the Effective Date) to the Transferred Savings Plans and thereby cease to be
responsible for any acts, omissions and transactions under or in connection
with any such Transferred Savings Plan.
(c) With respect to all Lockheed Xxxxxx Defined Contribution Plans
except the Transferred Savings Plans described in Section G.06(b) (the
"Lockheed Xxxxxx Savings Plans"), the Transferred Employees shall cease to
accrue benefits and service credits under such plans as of the Closing Date
and, effective as of the Closing Date, Newco shall establish new savings plans
("Newco's Savings Plans") and associated trusts to hold the assets of those
plans for the Transferred Employees, to be effective as of the Closing
95
Date, and shall provide to Lockheed Xxxxxx evidence reasonably satisfactory to
Lockheed Xxxxxx that Newco's Savings Plans and the associated trusts have been
established and that the Newco's Savings Plans qualify under the requirements
of Section 401(a) of the Code, and that the trusts are exempt from tax under
Section 501(a) of the Code. Lockheed Xxxxxx shall provide to Newco evidence
reasonably satisfactory to Newco that the Lockheed Xxxxxx Savings Plans remain
qualified under the requirements of Section 401(a) of the Code. Provided
Lockheed Xxxxxx and Newco have received evidence reasonably satisfactory to
them in accordance with the preceding sentences, as soon as is reasonably
practicable following the Closing Date, in no event later than 60 days
following receipt of such mutually satisfactory evidence, Lockheed Xxxxxx shall
take or cause to be taken all action required or appropriate to transfer the
account balances of all Transferred Employees and Transferred Beneficiaries to
the respective trusts associated with Newco's Savings Plans. Such transfers
shall be made in cash in an amount equal to the value of the account balances
to be transferred, determined as of the close of business on the last business
day immediately preceding the transfer, except that (i) to the extent a
participant's or beneficiary's account balance in the transferor plan includes
one or more promissory notes evidencing a participant loan or loans, such
promissory notes shall be transferred in kind for the participant's or
beneficiary's credit under the transferee plan and (ii) any assets in the
transferor trust consisting of securities issued by Lockheed Xxxxxx, Xxxxxx
Xxxxxxxx Materials, Inc. or Loral Space & Communications, Ltd. that are
allocable to the respective transferee plan shall be transferred in kind. For
the period from the Closing Date until the transfer, Newco shall collect by
payroll deduction and promptly pay over to the respective Lockheed Xxxxxx
Defined Contribution Plan all loan payments required on participant loans made
by the respective plan to any Transferred Employee and Lockheed Xxxxxx shall
cause the respective Lockheed Xxxxxx Defined Contribution Plan to administer
and pay all distributions, withdrawals and loans payable under the terms of the
respective plan to any Transferred Employee or Transferred Beneficiary until
the transfer. Contingent upon the transfer of the account balances to each of
Newco's Savings Plans, Newco shall assume all liabilities of Lockheed Xxxxxx
and its affiliates with respect to Transferred Employees and Transferred
Beneficiaries under the Lockheed Xxxxxx Defined Contribution Plan from which
that transfer was made and shall become with respect to such Transferred
Employees and Transferred Beneficiaries responsible for all acts, omissions and
transactions under or in connection with such Lockheed Xxxxxx Defined
Contribution Plan, whether arising before or after the Closing; provided,
however, that in the case of liabilities with respect to Camden Transferees,
Newco shall only assume liabilities and shall only become responsible for all
acts, omissions and transactions under or in connection with that Lockheed
Xxxxxx Defined Contribution Plan arising after the Closing or disclosed in
Section B.21 of the Disclosure Schedules.
G.07. GE Special Benefits Protections. Pursuant to Section V.II of Exhibit
V to a Transaction Agreement (the "GE Agreement") dated November 22, 1992, as
amended, among GE, Xxxxxx Xxxxxxxx Corporation, a Maryland corporation and
Lockheed Xxxxxx, Lockheed Xxxxxx has agreed to reimburse GE (the "GE
Reimbursement Obligations") for certain specified expenses relating to benefits
for certain individuals who were formerly employed by GE and who became
employees of Lockheed Xxxxxx or its Affiliates as a result of the transaction
contemplated by the GE Agreement (the "Former GE Employees"). Newco shall
assume, effective on the Closing Date, all of the GE Reimbursement Obligations
in respect of Transferred Employees and Transferred Beneficiaries for such
specified expenses, and shall indemnify and hold
96
harmless Lockheed Xxxxxx and its Affiliates from any and all such GE
Reimbursement Obligations. Lockheed Xxxxxx shall provide Newco with copies of
any documentation it receives from GE documenting the basis for such expenses.
G.08. Severance and Retention Agreements. In accordance with Section 6.9
of the Agreement and Plan of Merger dated as of January 7, 1996, by and among
Loral Corporation, Lockheed Xxxxxx Corporation and LAC Acquisition Corporation,
Lockheed Xxxxxx Tactical Systems, Inc. has adopted the Supplemental Severance
Program. Lockheed Xxxxxx has entered into Key Employee Supplemental Severance
Program and Key Executive Supplemental Severance Program agreements (the
"Program Agreements"). In addition, Lockheed Xxxxxx has entered into Retention
Agreements (collectively with the Supplemental Severance Program and the
Program Agreements, the "Supplemental Agreements") with certain Transferred
Employees who participate in the Supplemental Severance Program. Other than
with respect to the Transferred Employees set forth on Section B.21 of the
Disclosure Schedules, Newco assumes all obligations and liabilities of Lockheed
Xxxxxx and its Affiliates under the Supplemental Agreements for all claims made
after the Closing Date by Transferred Employees, including claims based on the
Contemplated Transactions, which shall be Assumed Liabilities for purposes of
this Agreement. All obligations and liabilities of Lockheed Xxxxxx with respect
to the Transferred Employees on Section B.21 of the Disclosure Schedules and
any other individual covered by a Supplemental Agreement who is not a
Transferred Employee shall constitute Excluded Liabilities.
G.09. Vacation and Holidays. As of the Closing, Newco shall adopt at its
expense, vacation and holiday plans for Transferred Employees to succeed
Lockheed Xxxxxx'x and its Affiliates' vacation and holiday plans. For the
12-month period beginning with the Closing Date, such plans shall provide for
accrued vacation and holidays no less favorable than, and in substitution for,
those Lockheed Xxxxxx and its Affiliates would have provided to such
Transferred Employees had they remained employees of Lockheed Xxxxxx and its
Affiliates, and Lockheed Xxxxxx and its Affiliates shall have no liability or
obligation to pay or provide any vacation or holiday payments claimed on or
after the Closing Date. Thereafter, such plans shall provide vacation, accrued
vacation and holidays to each eligible Transferred Employee on the basis of his
or her continuous service with Lockheed Xxxxxx, Newco and their Affiliates.
G.10. Other Employee Plans.
(a) Newco shall, as of the Closing Date, assume all obligations and
liabilities of Lockheed Xxxxxx and its Affiliates in respect of Transferred
Employees and Transferred Beneficiaries under the Deferred
Management Incentive Compensation Plan.
(b) Newco shall, as of the Closing Date, assume all obligations and
liabilities (including, without limitation, all obligations and liabilities
attributable to the period prior to the Closing Date) of Lockheed Xxxxxx and
its Affiliates in respect of Transferred Employees and Transferred
Beneficiaries under each Employee Plan and Benefit Arrangement not covered
under Sections X.00, X.00, X.00, X.00, X.00, G.10(a) and G.10(c) and shall be a
successor employer with respect to such plans; provided, however, that with
respect to obligations and liabilities to Camden Transferees arising from
events occurring prior to the Closing Date, Newco shall assume such obligations
and liabilities only to the extent that they (i) arise under a
97
Benefit Arrangement or Employee Plan disclosed in Section B.21 of the
Disclosure Schedules; (ii) are reflected in the Final Net Tangible Asset
Amount; or (iii) are incurred after the Effective Date.
(c) With respect to each Employee Plan and Benefit Arrangement (other
than those referred to in Sections X.00, X.00, X.00, X.00, X.00 and G.10(a)),
including any employment agreement, that covers only Transferred Employees
and/or Transferred Beneficiaries ("Transferred Benefit Plans"), Lockheed Xxxxxx
and Newco shall cause each Transferred Benefit Plan to be amended to provide
that sponsorship and maintenance thereof shall be transferred as of the Closing
Date to Newco and Newco shall assume all obligations and liabilities of
Lockheed Xxxxxx and its Affiliates with respect to each such plan (including
liabilities with respect to Transferred Beneficiaries), and shall become
responsible for all acts, omissions and transactions under or in connection
with the Transferred Benefit Plans, whether arising before or after Closing;
provided, however, that with respect to obligations and liabilities to Camden
Transferees under or otherwise arising in connection with an Employee Plan or
Benefit Arrangement arising from events occurring prior to the Closing Date,
Newco shall assume such obligations and liabilities only to the extent that
they (i) arise under an Employee Plan or Benefit Arrangement disclosed in
Section B.21 of the Disclosure Schedules; (ii) are reflected in the Final Net
Tangible Asset Amount; or (iii) are incurred after the Closing Date. Effective
as of the Closing Date, Lockheed Xxxxxx and/or its Affiliates shall cease to
sponsor, administer or contribute to the Transferred Benefit Plans and thereby
cease to be responsible for any acts, omissions and transactions under or in
connection with any such Transferred Benefit Plan, whether occurring before or
after Closing. Except as otherwise agreed to by the parties or as it relates
solely to an Individual Purchaser, Lockheed Xxxxxx agrees to transfer any
assets which are separately identifiable or attributable to the Employee Plans
and Benefit Arrangements described in this Section G.10(c).
(d) As of the Closing Date, Transferred Employees and Transferred
Beneficiaries shall cease to accrue or enjoy benefits under any Employee Plans
and Benefit Arrangements (excluding those referred to in Sections G.05(b),
G.06(b), X.00, X.00, X.00 and G.10(c)) and shall commence accrual of benefits
and participation in those employee compensation and benefit plan and
arrangements maintained by Newco pursuant to Section G.03.
(e) For any full or partial contract year or plan year prior to the
Closing Date of any Employee Plan or Benefit Arrangement covering Transferred
Employees or Transferred Beneficiaries (other than Camden Transferees): (i)
Lockheed Xxxxxx agrees to carve out and transfer to the corresponding Newco
plan, any surpluses, refunds or rebates received by or attributable to Lockheed
Xxxxxx for any Employee Plan or Benefit Arrangement and (ii) Newco agrees to
transfer to the corresponding Lockheed Xxxxxx Plan an amount equal to any
deficit charged to or attributable to Lockheed Xxxxxx for any Employee Plan or
Benefit Arrangement, in either case that is attributable to Transferred
Employees and/or Transferred Beneficiaries.
(f) The flexible spending accounts established on behalf of the
Transferred Employees and Transferred Beneficiaries in accordance with Section
G.03(a) will be maintained through the end of the applicable plan year in which
the Closing occurs in a manner that ensures that each Transferred Employee and
Transferred Beneficiary receives no more and no less than he or she would have
received had the Contemplated Transactions not occurred. Lockheed Xxxxxx and
Newco shall coordinate management of their
98
respective flexible spending accounts to achieve this result. As soon as
practicable following the close of the 1997 plan year, Lockheed Xxxxxx and
Newco shall reconcile flexible spending account balances so as to achieve an
equitable result as between Lockheed Xxxxxx and Newco.
G.11. Necessary Action. Newco and Lockheed Xxxxxx agree to take all action
which may be necessary in order to effectuate the transactions contemplated by
this Exhibit G, including, without limitation, adopting any necessary
amendments to the Employee Plans and Benefit Arrangements and making all
filings and submissions to the appropriate governmental agencies required to be
made in connection with the segregation and/or transfer of assets contemplated
by Sections G.05 and G.06.
G.12. Third Party Beneficiaries. No provision of this Exhibit G shall
create any third party beneficiary rights in any employee or former employee of
the Business (including any beneficiary or dependent thereof) including,
without limitation, any right to continued employment or employment in any
particular position by Newco for any specified period of time after the Closing
Date.
G.13. Plan Administration. Newco shall prepare and file all Forms 5500 and
other government reports or returns that are required to be filed after the
Closing Date with respect to each of the Assumed Plans described in Section
G.05(b), the Transferred Savings Plans described in Section G.06(b) and the
Transferred Benefit Plans described in Section G.10(c).
G.14. Mutual Assistance. At all times after the Closing Date, Newco and
Lockheed Xxxxxx agree to make reasonably available to each other and each
other's agents, employees, accountants and other representatives such
actuarial, financial, personnel and related information as may be requested
with respect to any Employee Plan or Benefit Arrangement, Transferred Employee
or Transferred Beneficiary, including but not limited to benefit records,
compensation and employment histories, policies, interpretations and other
records relating to the Employee Plans and Benefit Arrangements.
G.15. Xxxxxxxx v. G.E. Newco shall not by reason of the transactions
contemplated by this Agreement or otherwise be deemed to have assumed any
liability or obligation with respect to any claim or cause of action asserted
against GE or Lockheed Xxxxxx in the lawsuit Xxxxxxxx v. G.E. filed in the
federal district court in Connecticut in March, 1993. All such claims and
causes of action shall constitute Excluded Liabilities for purposes of this
Agreement. Nothing in this Section G.15. or elsewhere, however, shall be deemed
to require Lockheed Xxxxxx to indemnify or otherwise to relieve Newco of any
liability or obligation it may incur as a result of a purported claim or
purported cause of action asserted against Newco which is based on this
Agreement, the Contemplated Transactions, or any actions or transactions that
occur on or after the date of this Agreement.
99
-------------------------------------------------------------------------------
AMENDMENT NO. 1
Dated as of April 11, 1997
to
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED MARTIN CORPORATION
LEHMAN BROTHERS CAPITAL PARTNERS III, L.P.
FRANK C. LANZA
ROBERT V. LAPENTA
and
L-3 COMMUNICATIONS HOLDINGS, INC.
-------------------------------------------------------------------------------
AMENDMENT NO. 1 TO TRANSACTION AGREEMENT
This Amendment No. 1 to Transaction Agreement (the "Amendment") is made as
of the 11th day of April, 1997, by and among Lockheed Martin Corporation, a
Maryland corporation ("Lockheed Martin"), Lehman Brothers Capital Partners III,
L.P., a Delaware limited partnership ("Lehman"), Frank C. Lanza ("Lanza"),
Robert V. LaPenta ("LaPenta"; and together with Lanza, the "Individual
Purchasers") and L-3 Communications Holdings, Inc., a Delaware corporation
("Newco"). For purposes of this Amendment, Lehman, Lanza and LaPenta each are
individually referred to as a "Purchaser" and collectively referred to as the
"Purchasers."
W I T N E S S E T H:
WHEREAS, Lockheed Martin, in its own right and through certain of its
direct and indirect Subsidiaries is engaged in the Business;
WHEREAS, Lockheed Martin and the Purchasers, upon the terms and subject to
the conditions of the Agreement have agreed to the formation and organization
of Newco;
WHEREAS, upon the terms and subject to the conditions of the Agreement,
Lockheed Martin has agreed to transfer, or to cause the Affiliated Transferors
to transfer, substantially all of the assets held or owned by, or used to
conduct, the Business and to assign certain liabilities associated with the
Business to Newco, and Newco has agreed to receive such assets and assume such
liabilities; and
WHEREAS, Lockheed Martin, Newco and the Purchasers desire to amend the
Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the meanings
given to them in the Transaction Agreement dated as of March 28, 1997, by and
among Lockheed Martin, Newco and the Purchasers.
Section 2. Section 15.13(a) of the Agreement is amended by deleting the
reference to "April 14, 1997" in the second sentence of Section 15.13(a) and
inserting in its place and stead "April 17, 1997."
Section 3. Section 15.13(c) of the Agreement is amended by deleting the
references to "April 11, 1997" in each of the last two sentences of Section
15.13(c) and inserting in its place and stead "April 18, 1997."
2
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first
above written.
WITNESS: LOCKHEED MARTIN CORPORATION
____________________________ By:________________________________
Name:
Title:
LEHMAN BROTHERS CAPITAL
PARTNERS III, L.P.
By: LEHMAN BROTHERS HOLDINGS INC.,
its General Partner
____________________________ By:___________________________
Name:
Title:
FRANK C. LANZA
---------------------------- -----------------------------------
ROBERT V. LAPENTA
---------------------------- -----------------------------------
L-3 COMMUNICATIONS HOLDINGS, INC.
____________________________ By:________________________________
Name:
Title:
3
-------------------------------------------------------------------------------
AMENDMENT NO. 2
Dated as of April 30, 1997
to
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED MARTIN CORPORATION
LEHMAN BROTHERS CAPITAL PARTNERS III, L.P.
FRANK C. LANZA
ROBERT V. LAPENTA
and
L-3 COMMUNICATIONS HOLDINGS, INC.
-------------------------------------------------------------------------------
AMENDMENT NO. 2 TO TRANSACTION AGREEMENT
This Amendment No. 2 to Transaction Agreement (the "Amendment") is made as
of the 30th day of April, 1997, by and among Lockheed Martin Corporation, a
Maryland corporation ("Lockheed Martin"), Lehman Brothers Capital Partners III,
L.P., a Delaware limited partnership ("Lehman"), Frank C. Lanza ("Lanza"),
Robert V. LaPenta ("LaPenta"; and together with Lanza, the "Individual
Purchasers") and L-3 Communications Holdings, Inc., a Delaware corporation
("Newco"). For purposes of this Amendment, Lehman, Lanza and LaPenta each are
individually referred to as a "Purchaser" and collectively referred to as the
"Purchasers."
W I T N E S S E T H:
WHEREAS, Lockheed Martin, in its own right and through certain of its
direct and indirect Subsidiaries is engaged in the Business;
WHEREAS, Lockheed Martin and the Purchasers, upon the terms and subject to
the conditions of the Agreement have agreed to the formation and organization
of Newco;
WHEREAS, upon the terms and subject to the conditions of the Agreement,
Lockheed Martin has agreed to transfer, or to cause the Affiliated Transferors
to transfer, substantially all of the assets held or owned by, or used to
conduct, the Business and to assign certain liabilities associated with the
Business to Newco, and Newco has agreed to receive such assets and assume such
liabilities; and
WHEREAS, Lockheed Martin, Newco and the Purchasers desire to amend the
Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the meanings
given to them in the Transaction Agreement dated as of March 28, 1997, by and
among Lockheed Martin, Newco and the Purchasers, as amended by Amendment No. 1
to Transaction Agreement dated as of April 11, 1997 (as amended, the
"Agreement").
Section 2. The list of Attachments set forth in the index to the Agreement
is revised by amending the description of Attachment XI to read as follows:
"Other Transferred Employees".
Section 3. Section 2.04(i) of the Agreement is amended by deleting the
references to "$269,118,000" in the first parenthetical of that Section and
inserting in their place and stead "$272,618,000".
Section 4. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment IV shall be as set forth
in Exhibit A to this Amendment.
Section 5. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment V shall be as set forth in
Exhibit B to this Amendment.
1
Section 6. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment VIII shall be as set forth
in Exhibit C to this Amendment.
Section 7. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment IX shall be as set forth
in Exhibit D to this Amendment.
Section 8. Notwithstanding the provisions of Section 15.13(b) of the
Agreement, for purposes of the Agreement, Attachment X shall as set forth in
Exhibit E to this Amendment.
Section 9. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment XI shall be as set forth
in Exhibit F to the Amendment.
Section 10. For purposes of the Agreement, Attachment XIV shall be as set
forth in Exhibit G to this Amendment.
Section 11. Notwithstanding the provisions of Section 15.13(c) of the
Agreement, for purposes of the Agreement, Attachment XV shall be as set forth
in Exhibit H to this Amendment.
Section 12. The Disclosure Schedules attached to this Amendment as Exhibit
I are, and for all purposes shall be, the Disclosure Schedules referenced in
the Agreement.
Section 13. Section 7.04 of the Agreement is amended by deleting the
reference to "Attachment XI" in the second parenthetical of the first sentence
and inserting in its place and stead the phrase "writing by Lockheed Martin and
Newco on or prior to the Closing Date".
Section 14. Section 8.04 of the Agreement is amended by deleting the
reference to "Attachment XI" in the second parenthetical of the first sentence
and inserting in its place and stead the phrase "writing by Lockheed Martin and
Newco on or prior to the Closing Date".
Section 15. Section 13.02(b) of the Agreement is amended by deleting the
word "or" before the beginning of clause (v); inserting the phrase ", or (vi)
the Universal Litigation" after clause (v) and before the semicolon; deleting
the word "and" before "(v)" in the proviso; and inserting the phrase "and (vi)"
after "(v)" in the proviso.
Section 16. Section 13.04(b)(iii) of the Agreement is amended by deleting
the word "and" after the semicolon.
Section 17. Section 13.04(b)(iv) of the Agreement is amended by deleting
the period at the end and inserting in its place and stead the phrase "; and".
Section 18. Section 13.04(b) of the Agreement is amended by adding a new
clause (v) as follows:
"(v) with respect to the matter described in clause (vi) of
Section 13.02(b) (after giving effect to the proviso thereto), to the
extent of 50% of the aggregate Damages incurred by all Indemnified
Parties as the result thereof in
2
excess of the Reserve Amount but not in excess of the Reserve Amount
plus $1,000,000 (it being understood that Lockheed Martin's maximum
liability under Section 13.02(b)(vi) and this Section 13.04(b)(v)
shall be $500,000)."
Section 19. Section 15.01 of the Agreement is amended to change the notice
address for notices to Newco to the following:
"L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attention: Robert V. LaPenta
Telecopy: (212) 805-5470"
Section 20. Section (a) of Exhibit A to the Agreement is amended by adding
the following after the definition of "Prime Government Contract" and before
the definition of "Remedial Action(s)":
""Reserve Amount" means the amount referenced in the letter from
Lockheed Martin to Newco dated as of the Closing Date making specific
reference to the Agreement and this definition.
Section 21. Section (a) of Exhibit A to the Agreement is amended by
adding the following after the definition of "Transferred Assets" and before
the definition of "U.S. Government":
""Universal Litigation" means the matter titled Universal
Navigation Corporation, a California corporation; and
Microcomputer Electronics Corporation, a Washington
corporation v. Loral Corporation, a New York corporation; and
Loral Fairchild Corp., a Delaware corporation (CIV93-743TUC
WDB) pending in the United States District Court for the
District of Arizona."
Section 22. Clause (ii) of the definition of "Transferred Employee" in
Section G.01 of Exhibit G to the Agreement is amended by deleting the existing
provision in its entirety and inserting in its place and stead the following:
"(ii) was laid off from the Business and has recall rights with
respect to the Business other than any Person with such rights who is
either employed by Lockheed Martin on the Closing Date (other than in
the Business) or who has recall rights at another Lockheed Martin
facility, or"
Section 23. Section G.08 of Exhibit G to the Agreement is amended by
deleting the existing provision in its entirety and inserting in its place and
stead the following:
3
"G.08. Severance and Retention Agreements. In accordance with
Section 6.9 of the Agreement and Plan of Merger dated as of January 7,
1996, by and among Loral Corporation, Lockheed Martin Corporation and LAC
Acquisition Corporation, Lockheed Martin Tactical Systems, Inc. has
adopted the Supplemental Severance Program. Lockheed Martin has entered
into Key Employee Supplemental Severance Program and Key Executive
Supplemental Severance Program agreements (the "Program Agreements"). In
addition, Lockheed Martin has entered into Retention Agreements
(collectively with the Supplemental Severance Program and the Program
Agreements, the "Supplemental Agreements") with certain Transferred
Employees who participate in the Supplemental Severance Program. Lockheed
Martin also sponsors the Lockheed Martin Tactical Systems Severance Plan
(the "Tactical Severance Plan"), the Severance Benefit Plan for Employees
of Lockheed Martin Corporation (the "LMC Severance Plan") and the Special
Supplemental Severance Program relating to the retention (as set forth in
a memorandum from Steve Jackson dated October 28, 1996 of C3I and Systems
Integration Sector administrative personnel (collectively with the
Supplemental Agreements, the Tactical Severance Plan and the LMC Severance
Plan, the "Severance Arrangements"). Other than with respect to the
Transferred Employees set forth on Section B.21 of the Disclosure
Schedules, Newco assumes all obligations and liabilities of Lockheed
Martin and its Affiliates under the Severance Arrangements and any other
severance benefit obligation (collectively with the Severance
Arrangements, the "Severance Obligations") whether oral or written, for
all claims made after the Closing Date by Transferred Employees, including
claims based on the Contemplated Transactions, which shall be Assumed
Liabilities for purposes of this Agreement. All obligations and
Liabilities of Lockheed Martin with respect to any Severance Obligation
for the Transferred Employees on Section B.21 of the Disclosure Schedules
and any other individual covered by a Supplemental Agreement under any
Severance Obligation who is not a Transferred Employee shall constitute
Excluded Liabilities."
4
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first
above written.
LOCKHEED MARTIN CORPORATION
By:________________________________
Name:
Title:
LEHMAN BROTHERS CAPITAL
PARTNERS III, L.P.
By: LEHMAN BROTHERS HOLDINGS INC.,
its General Partner
By:___________________________
Name:
Title:
FRANK C. LANZA
-----------------------------------
ROBERT V. LAPENTA
-----------------------------------
L-3 COMMUNICATIONS HOLDINGS, INC.
By:________________________________
Name:
Title:
5
AMENDMENT NO. 3
Dated as of May 21, 1997
to
TRANSACTION AGREEMENT
Dated as of March 28, 1997
By and Among
LOCKHEED MARTIN CORPORATION
LEHMAN BROTHERS CAPITAL PARTNERS III, L.P.
LEHMAN BROTHERS HOLDINGS INC.
FRANK C. LANZA
ROBERT V. LAPENTA
L-3 COMMUNICATIONS HOLDINGS, INC.
and
L-3 COMMUNICATIONS CORPORATION
AMENDMENT NO. 3 TO TRANSACTION AGREEMENT
This Amendment No. 3 to Transaction Agreement (the "Amendment") is
made as of the 15th day of May, 1997, by and among Lockheed Martin Corporation,
a Maryland corporation ("Lockheed Martin"), Lehman Brothers Capital Partners
III, L.P., a Delaware limited partnership, Lehman Brothers Holdings Inc., a
Delaware corporation (together with Lehman Brothers Capital Partners III, L.P.,
"Lehman"), Frank C. Lanza ("Lanza"), Robert V. LaPenta ("LaPenta"; and together
with Lanza, the "Individual Purchasers"), L-3 Communications Holdings, Inc., a
Delaware corporation ("Newco"), and L-3 Communications Corporation, a Delaware
corporation. For purposes of this Amendment, Lehman, Lanza and LaPenta each are
individually referred to as a "Purchaser" and collectively referred to as the
"Purchasers."
W I T N E S S E T H
WHEREAS, Lockheed Martin, in its own right and through certain of its
direct and indirect Subsidiaries previously was engaged in the Business;
WHEREAS, Lockheed Martin and the Purchasers, upon the terms and
subject to the conditions of the Agreement have formed and organized Newco;
WHEREAS, upon the terms and subject to the conditions of the
Agreement, Lockheed Martin has transferred or caused the Affiliated Transferors
to transfer, substantially all of the assets held or owned by, or used to
conduct, the Business and to assign certain liabilities associated with the
Business to Newco, and Newco has received such assets and assumed such
liabilities;
WHEREAS, Lehman Brothers Capital Partners III L.P. has assigned
certain of its rights and obligations under the Agreement to Lehman Brothers
Holdings Inc., and Newco has assigned certain of its rights and obligations
under the Agreement to L-3 Communications Corporation, a Delaware corporation
and wholly owned subsidiary of Newco; and
WHEREAS, Lockheed Martin, Newco and the Purchasers desire to amend
the Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the
meanings given to them in the Transaction Agreement dated as of March 28, 1997,
by and among Lockheed Martin, Newco and the Purchasers, as amended by Amendment
No. 1 to Transaction Agreement dated as of April 11, 1997, and by Amendment No.
2 to the Transaction Agreement dated as of April 30, 1997 (as amended, the
"Agreement").
Section 2. Section G.06(c) of the Transaction Agreement shall be
amended to read as follows:
With respect to all Lockheed Martin Defined Contribution Plans except
the Transferred Savings Plans described in Section G.06(b) (the
"Lockheed Martin Savings Plans"), the Transferred Employees shall
cease to accrue benefits and service credits under such plans as of
the Closing Date and, effective as of
1
the Closing Date, Newco shall establish new savings plans ("Newco's
Savings Plans") and associated trusts to hold the assets of those
plans for the Transferred Employees, to be effective as of the
Closing Date, and shall provide to Lockheed Martin evidence
reasonably satisfactory to Lockheed Martin that Newco's Savings Plans
and the associated trusts have been established and that Newco's
Savings Plans qualify under the requirements of Section 401(a) of the
Code, and that the trusts are exempt from tax under Section 501(a) of
the Code. Lockheed Martin shall provide to Newco evidence reasonably
satisfactory to Newco that the Lockheed Martin Savings Plans remain
qualified under the requirements of Section 401(a) of the Code.
Provided Lockheed Martin and Newco have received evidence reasonably
satisfactory to them in accordance with the preceding sentences, as
soon as is reasonably practicable following the Closing Date, but in
no event later than 60 days following receipt of such mutually
satisfactory evidence, (i) Lockheed Martin shall take all action
required or appropriate to transfer the account balances of all
Transferred Employees and Transferred Beneficiaries (other than
account balances in the Lockheed Martin Savings Plan, Lockheed Martin
Savings Plan II and Lockheed Martin Performance Sharing Plan,
collectively the "Camden Plans") to the respective trust associated
with Newco's Savings Plans; and (ii) with respect to account balances
in the Camden Plans, Lockheed Martin shall amend the Camden Plans, to
the extent permitted by Section 401(k)(10) of the Code, to permit
each Transferred Employee or Transferred Beneficiary with an account
balance in the Camden Plans during the period between the Closing and
the end of the second calendar year following the Closing, to (x)
receive a distribution from the Camden Plans; (y) make a direct
rollover in accordance with Section 401(a)(31) of the Code; or (z)
leave his or her account balances in the Camden Plans. Transfers
shall be made in the form of cash in an amount equal to the value of
the account balances to be transferred, determined as of the close of
business on the last business day immediately preceding the transfer,
except that (i) to the extent a participant's or beneficiary's
account balance in the transferor plan includes one or more
promissory notes evidencing a participant loan or loans, such
promissory note shall be transferred in kind for the participant's or
beneficiary's credit under the transferee plan and (ii) any assets in
the transferor trust consisting of securities issued by Lockheed
Martin, Martin Marietta Materials, Inc. and Loral Space &
Communications, Ltd. that are allocable to the respective transferee
plan shall be transferred in kind. Amounts distributed or rolled over
from the Camden Plans shall be payable in cash only. For the period
from the Closing Date until such time as the Transferred Employee or
Transferred Beneficiary no longer has an account balance in any
Lockheed Martin Defined Contribution Plan, Newco shall collect by
payroll deduction and promptly pay over to the respective Lockheed
Martin Defined Contribution Plan all loan payments required on
participant loans made by the respective plan to any Transferred
Employee and Lockheed Martin shall cause the respective Lockheed
Martin Defined Contribution Plan to
2
administer and pay all distributions, withdrawals and loans payable
under the terms of the respective plan. Contingent upon the transfer
of an account balance to each of Newco's Savings Plans, Newco shall
assume all liabilities of Lockheed Martin and its affiliates with
respect to that Transferred Employee or Transferred Beneficiary under
the Lockheed Martin Defined Contribution Plan from which that
transfer was made and shall become with respect to such Transferred
Employee and Transferred Beneficiary responsible for all acts,
omissions and transactions under or in connection with such Lockheed
Martin Defined Contribution Plan, whether arising before or after the
Closing; provided, however, that in the case of any liabilities with
respect to Camden Transferees (other than Camden Transferrees for
whom no such transfer was made), Newco shall only assume liabilities
and shall only become responsible for all acts, omissions and
transactions under or in connection with that Lockheed Martin Defined
Contribution Plan arising after the Closing or disclosed in Section
B.21 of the Disclosure Schedules."
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers on the day and year
first above written.
WITNESS: LOCKHEED MARTIN CORPORATION
_______________________________ By: ____________________________
Name: Marian S. Block
Title: Associate General
Counsel
LEHMAN BROTHERS CAPITAL
PARTNERS III, L.P.
By: LEHMAN BROTHERS HOLDINGS
INC., its General Partner
_______________________________ By: ____________________________
Name: Robert B. Millard
Title: Managing Director
LEHMAN BROTHERS HOLDINGS INC.
_______________________________ By: ____________________________
Name: Steven J. Berger
Title: Managing Director
L-3 COMMUNICATIONS HOLDINGS,
INC.
_______________________________ By: ____________________________
Name: Michael T. Strianese
Title: VP Finance and
Controller
FRANK C. LANZA
------------------------------- ----------------------------
ROBERT V. LAPENTA
------------------------------- ----------------------------
4
L-3 COMMUNICATIONS CORPORATION
_______________________________ By: ____________________________
Name: Michael T. Strianese
Title: VP Finance and
Controller
5
